<PAGE>
As filed with the Securities and Exchange Commission on December 31, 1997
FILE NO. 811-15893
2-12893
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
---------------------
FORM N-1A
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
POST EFFECTIVE AMENDMENT NO. 59
And
THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. __
---------------------
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
(Exact name of registrant as specified in its charter)
370 17th Street, Suite 3100
Denver, Colorado 80202
(800) 639-3935
(Address of principal executive offices)
James V. Hyatt, Secretary
Stonebridge Aggressive Growth Fund, Inc.
370 17th Street, Suite 3100
Denver, Colorado 80202
(Name and address of agent for service)
---------------------
Copy to:
Michael Glazer, Esq.
Paul, Hastings, Janofsky & Walker, LLP
555 S. Flower St.
Los Angeles, California 90071
---------------------
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX)
/ / immediately upon filing pursuant to paragraph (b)
/ / on (date) pursuant to paragraph (b)
/X/ 60 days after filing pursuant to paragraph (a)(i)
/ / on (date) pursuant to paragraph (a)(i)
/ / 75 days after filing pursuant to paragraph (a) (ii)
/ / on (date) pursuant to paragraph (a)(ii) of rule 485
IF APPROPRIATE; CHECK THE FOLLOWING BOX:
/ / this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of securities being registered: Common Stock, $1.00 par value.
- --------------------------------------------------------------------------------
<PAGE>
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
CROSS REFERENCE SHEET SHOWING LOCATION IN PROSPECTUS AND IN STATEMENT OF
ADDITIONAL INFORMATION REQUIRED BY ITEMS OF FORM N-1A
FORM N-1A
ITEM AND HEADING PROSPECTUS CAPTION
---------------- ------------------
PART A --
Item:
1. Cover Page . . . . . . . . . . . . . . . . . Cover Page
2. Synopsis . . . . . . . . . . . . . . . . . . Summary of Expenses
3. Condensed Financial Information. . . . . . . Financial Highlights
4. General Description of Registrant. . . . . . What is the Fund?; Objectives
and Investment Policies
5. Management of the Fund. . . . . . . . . . . Management of the Fund-Board
of Directors; Investment
Adviser; Administrator; The
Distributor; The Custodian;
The Transfer Agent
6. Capital Stock and Other Securities . . . . . Capital Stock; Distributions
and Taxes
7. Purchases of Securities Being Offered. . . . Cover Page; How to Invest
8. Redemption or Repurchase . . . . . . . . . . How to Redeem Fund Shares;
General Account Policies
9. Pending Legal Proceedings. . . . . . . . . . Inapplicable
PART B --
STATEMENT OF ADDITIONAL
INFORMATION CAPTION
Item: -------------------
10. Cover Page. . . . . . . . . . . . . . . . Cover Page
11. Table of Contents . . . . . . . . . . . . Table of Contents
12. General Information and History . . . . . Inapplicable
13. Investment Objectives and Policies. . . . Investment Objectives;
Brokerage Transactions
14. Management of the Fund. . . . . . . . . . Management of the Registrant
15. Control Persons and Principal Holders of
Securities. . . . . . . . . . . . . . . . Management of the Registrant
16. Investment Advisory and Other Services. . Investment Advisory and Other
Services
17. Brokerage Allocation. . . . . . . . . . . Brokerage Transactions
18. Capital Stock and Other Securities. . . . Inapplicable
19. Purchases, Redemption and Pricing of
Securities Being Offered. . . . . . . . . Pricing
20. Tax Status. . . . . . . . . . . . . . . . Taxation
21. Underwriters. . . . . . . . . . . . . . . Inapplicable
22. Calculation of Yield Quotations of
Money Market Funds. . . . . . . . . . . . Inapplicable
23. Financial Statements. . . . . . . . . . . Financial Statements
PART C --
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C to this Registration Statement.
<PAGE>
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
370 17th Street, Suite 3100
Denver, Colorado 80202
(800) 639-3935
PROSPECTUS
Stonebridge Aggressive Growth Fund, Inc. (the "Fund") is a no-load, diversified,
open-end investment company. Its principal objective is long-term growth of
capital. A secondary consideration is the production of short-term income. In
order to achieve its investment objectives, the Fund invests in securities of
companies which appear to have good prospects for increased earnings and
dividends and uses certain other investment techniques in an effort to enhance
income and reduce market risks.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE INVESTOR IS ADVISED TO READ THIS PROSPECTUS
AND TO RETAIN IT FOR FUTURE REFERENCE.
THIS PROSPECTUS SETS FORTH BASIC INFORMATION THAT INVESTORS SHOULD KNOW ABOUT
THE FUND PRIOR TO INVESTING AND SHOULD BE RETAINED FOR FUTURE REFERENCE. A
STATEMENT OF ADDITIONAL INFORMATION DATED FEBRUARY __, 1998 HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION AND IS HEREBY INCORPORATED BY REFERENCE.
A COPY OF THE STATEMENT OF ADDITIONAL INFORMATION IS AVAILABLE UPON REQUEST AND
WITHOUT CHARGE BY WRITING OR CALLING THE FUND.
This Prospectus is dated February __, 1998
<PAGE>
PROSPECTUS
TABLE OF CONTENTS
Summary of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Financial Highlights. . . . . . . . . . . . . . . . . . . . . . . . . . . .4
What is the Fund? . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Objectives and Investment Policies. . . . . . . . . . . . . . . . . . . . .5
Management of the Fund. . . . . . . . . . . . . . . . . . . . . . . . . . .8
Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Reports to Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . .9
Distributions and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . .9
How to Invest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
How to Redeem Fund Shares . . . . . . . . . . . . . . . . . . . . . . . . .11
General Account Policies. . . . . . . . . . . . . . . . . . . . . . . . . .12
2
<PAGE>
SUMMARY OF EXPENSES
This table is designed to assist stockholders in understanding the various
fees and expenses associated with investing in the Fund. The Example shown
below should not be considered a representation of past or future expenses.
Actual expenses may be greater or less than those shown.
STOCKHOLDER TRANSACTION EXPENSES are charges you pay when buying,
exchanging, or selling shares of the Fund. ANNUAL FUND OPERATING EXPENSES, for
the year ended October 31, 1997, are paid out of the Fund' s assets and include
fees for portfolio management, maintenance of shareholder accounts, general fund
administration, shareholder servicing, accounting and other services. For more
complete descriptions of shareholder transaction expenses and the Fund's
operating expenses, see "General Account Policies" and "Management of the Fund"
in this prospectus and the financial statements and related notes included in
the statement of additional information.
If you own shares through certain service organizations, you may pay
account charges in connection with the maintenance of your account at the
service organization. These account charges are in addition to the expenses
shown below.
STOCKHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases (as a
percentage of offering price. . . . . . . . . . . . . .none
Maximum Deferred Sales Load (as a percentage of original
purchase price or redemption proceeds, as
applicable) . . . . . . . . . . . . . . . . . . . . . .none
Maximum Sales Load Imposed on Reinvested
Dividends (as a percentage of offering price) . . . . .none
Redemption Fees (as a percentage of amount
redeemed, if applicable). . . . . . . . . . . . . . . .none
Exchange Fee . . . . . . . . . . . . . . . . . . . . . . . .none
ANNUAL FUND OPERATING EXPENSES (FOR THE YEAR ENDED OCTOBER 31, 1997
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees. . . . . . . . . . . . . . . . . . . . . . .1.00%
12b-1 Fees . . . . . . . . . . . . . . . . . . . . . . . . .none
Other Expenses (audit, legal, stockholder services,
transfer agent, custodian, and miscellaneous) . . . . .1.90%
Total Fund Operating Expenses. . . . . . . . . . . . . . . .2.90%
-----
-----
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------- ------ ------- ------- --------
You would pay the following
fees and expenses on a $1,000
investment, assuming
(1) 5% annual return* and
(2) redemption at the end of
each time period $29 $91 $155 $326
* Use of this assumed annual return is mandated by the Securities and
Exchange Commission and is not intended to be an illustration of past or
future investment results.
3
<PAGE>
FINANCIAL HIGHLIGHTS
The per share data and ratios in the following table for the years ended
October 31, 1997, 1996, 1995, 1994, 1993 and 1992 have been audited by Hein +
Associates LLP, independent auditors, whose report thereon and on the financial
statements and the related notes, appears in the Annual Report for the Fund
dated October 31, 1997. The per share data and ratios for each of the five
years in the period ended October 31, 1991, were audited by other auditors,
whose report dated November 21, 1991 expressed an unqualified opinion on such
selected per share data and ratios. Further information about the performance
of the Fund is contained in the Fund's Annual Report which may be obtained from
the Fund without charge by contacting ALPS Mutual Funds Services, Inc. or
Stonebridge Aggressive Growth Fund, Inc. at (800) 639-3935.
<TABLE>
<CAPTION>
SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
FOR THE YEARS ENDED OCTOBER 31,
1997 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF YEAR $13.19 $13.97 $10.24 $12.07 $11.58 $13.22
INCOME FROM INVESTMENT
OPERATIONS:
NET INVESTMENT INCOME
(LOSS) (.20) (.17) (.26) (.29) (.21) (.27)
NET GAINS OR LOSSES ON
SECURITIES (BOTH REALIZED AND
UNREALIZED) 2.83 .90 4.51 .55 1.56 (.20)
TOTAL FROM INVESTMENT
OPERATIONS 2.63 .73 4.25 .26 1.35 (.47)
LESS DISTRIBUTIONS:
DIVIDENDS (FROM NET
INVESTMENT INCOME) -- -- -- -- -- --
DIVIDENDS (FROM CAPITAL
GAINS) (2.55) (1.51) (.52) (2.09) (.86) (1.17)
NET ASSET VALUE,
END OF YEAR $13.27 $13.19 $13.97 $10.24 $12.07 $11.58
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
TOTAL RETURN 22.89% 5.70% 43.71% 1.86% 11.80% (4.67)%
RATIOS AND SUPPLEMENTAL DATA:
NET ASSETS, END OF PERIOD
(IN 000S): $5,428 $4,539 $4,151 $2,992 $3,024 $3,032
RATIO OF OPERATING EXPENSES 2.90 2.29% 3.10% 3.51% 2.81% 3.03%
RATIO OF NET INVESTMENT INCOME
(LOSS TO AVERAGE NET ASSETS) (1.62) (1.26)% (2.10)% (2.86)% (1.82)% (2.24)%
PORTFOLIO TURNOVER RATE* 88% 108% 60% 43% 50% 67%
AVERAGE COMMISSION RATE
PAID** $.1044 $.1248
<CAPTION>
1991 1990 1989 1988 1987
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF YEAR $8.37 $12.27 $11.41 $10.73 $11.58
INCOME FROM INVESTMENT
OPERATIONS:
NET INVESTMENT INCOME
(LOSS) (.23) (.22) (.17) (.30) (.43)
NET GAINS OR LOSSES ON
SECURITIES (BOTH REALIZED AND
UNREALIZED) 5.30 (1.22) 1.66 .98 .10
TOTAL FROM INVESTMENT
OPERATIONS 5.07 (1.44) 1.49 .68 (.33)
LESS DISTRIBUTIONS:
DIVIDENDS (FROM NET
INVESTMENT INCOME) -- -- -- -- --
DIVIDENDS (FROM CAPITAL
GAINS) (.22) (2.46) (.63) -- (.52)
NET ASSET VALUE,
END OF YEAR $13.22 $8.37 $12.27 $11.41 $10.73
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN 61.63% (15.30)% 13.54% 6.34% (3.16)%
RATIOS AND SUPPLEMENTAL DATA:
NET ASSETS, END OF PERIOD
(IN 000S): $3,459 $2,247 $2,672 $2,686 $2,862
RATIO OF OPERATING EXPENSES 3.49% 3.99% 3.28% 3.31% 3.87%
RATIO OF NET INVESTMENT INCOME
(LOSS TO AVERAGE NET ASSETS) (2.08)% (2.29)% (1.32)% (2.50)% (3.16)%
PORTFOLIO TURNOVER RATE* 49% 69% 49% 11% 33%
AVERAGE COMMISSION RATE
PAID**
</TABLE>
* A portfolio turnover rate is the percentage computed by taking the lesser
of purchases or sales of portfolio securities (excluding short-term
investments) for a year and dividing it by the monthly average of the
market value of the portfolio securities during the year.
** For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for security
trades on which commissions are charged.
4
<PAGE>
WHAT IS THE FUND?
Stonebridge Aggressive Growth Fund, Inc. (the "Fund") is an investment
company which was organized in the State of Delaware. Purchasers of the Fund's
shares invest in a company that itself invests in securities. The Fund is an
open-end investment company because, upon demand of an investor, the Fund has a
legal duty to redeem its shares held by the investor and to pay the investor the
net asset value of the shares. See "How to Invest" and "General Account
Policies." The Fund makes investments in various securities and is a type of
management company commonly known as a mutual fund.
The purpose of the Fund is to provide investors with an opportunity to
acquire an interest in a comprehensive common stock program under the
continuous supervision of impartial and experienced professional investment
management. Investment companies operate in accordance with their objectives
and policies. The Fund's investment objectives and policies are set forth below
under "Objectives and Investment Policies."
With respect to the purchase and sale of investments, the Fund receives
investment advice and other services from Stonebridge Capital Management,
Incorporated (the "Adviser"), which is paid a fee pursuant to its contract with
the Fund approved by the stockholders at the July 23, 1997 annual meeting. See
"Investment Adviser" for a discussion of the Adviser. The Fund pays costs
including custodian, management, and transfer agency fees, audit and legal fees,
brokerage fees and fees for certain administrative services.
The value of the Fund's shares, which are priced daily, fluctuates with the
value of the securities in which the Fund invests. When the Fund sells
portfolio securities it may realize a gain or a loss, depending on whether it
sells them for more or less than their cost. The Fund will earn dividend or
interest income to the extent that it receives dividends and interest from its
investments.
The Fund offers its shares to the public at net asset value on a continuous
basis.
OBJECTIVES AND INVESTMENT POLICIES
The principal objective of the Fund is long-term growth of capital. The
production of short-term income is a secondary consideration. In order to
achieve these objectives, management obtains careful and intensive studies of
trends of various industries and companies, including their earnings, as well as
the appreciation possibilities and relative investment values of their
securities.
The Adviser seeks to attain the objectives of the Fund primarily through
the ownership of securities of companies which appear to have good prospects for
superior earnings growth. In order to achieve its growth objective, the Fund
will often invest in small capitalization companies which the Adviser believes
may have higher growth rates than larger companies. There can be no assurance
that these objectives will be achieved since all investments are subject to risk
in varying degrees. Such investment policies can be changed by the Board of
Directors of the Fund.
It is a policy of the Fund, which may not be changed without approval of a
majority of the outstanding voting securities of the Fund, to diversify its
investments and not to concentrate its assets in any one industry.
Diversification and non-concentration tend to reduce, though they do not
eliminate, the market risk inherent in all securities. At the same time they
broaden investment opportunities.
The Fund is not restricted to investment in companies of any particular
size, and it will often invest in smaller growth companies as well as
established companies. The securities of smaller companies may be subject to
more volatile market movements and greater risk than the securities of more
established companies. The Adviser believes that proper diversification
will tend to ameliorate the higher volatility. The Fund does not usually invest
in stocks which are not listed on an exchange or on the NASDAQ National Market
System.
It is the general policy of the Fund to remain fully invested in common
stocks. However, under certain circumstances, investments may be made in other
types of securities such as convertible bonds, preferred stocks, American
Depository Receipts, futures and options. There may also be times when, in
order to protect and preserve the assets of the Fund, the Adviser may hold
significant portions of the Fund's assets in cash, money market funds or
short-term U.S. Treasury securities, or make investments in those industries
which will best afford such protection. In no event will more than 25% of the
Fund's assets be invested in any one industry (other than the U.S. Government).
The Fund may not invest an amount which exceeds 5% of the value of its
total assets in the securities of any one issuer. This restriction does not
apply to holdings of Government securities.
The Fund does not trade actively for quick profits; however, changes are
made in the portfolio whenever such action appears advisable to the Adviser.
During periods of broad economic growth, emphasis is placed on seeking
investments in leading companies in those industries that are expected to lead
the expansion. During periods when the economy is sluggish, emphasis is placed
on seeking to invest in companies selected because of their individual prospects
for improved earnings. The Adviser has approached these decisions with
essentially the point of view of long-term investing but securities may
occasionally be sold for investment reasons
5
<PAGE>
even though they have been held for short periods. Therefore, there may be a
limited number of short term transactions. This flexibility gives the Adviser
freedom to adjust the portfolio to changing business conditions. Because of
this policy, it is anticipated that the annual portfolio turnover will normally
be in the range of 25%-100%. A 50% turnover rate would occur, for example, if
half of the value of the Fund's portfolio were replaced in a period of one year.
The rate of portfolio turnover in the Fund for the most recent fiscal year
ended October 31 and for prior fiscal years appears in the table of Financial
Highlights above. Brokerage cost to the Fund is normally commensurate with the
rate of portfolio activity. The investor should consider the tax consequences
of these policies as discussed in the section "Distributions and Taxes" below.
Maintaining the purchasing power of the capital of the Fund is an
important consideration of management in the determination of investment
policy, but there can be no assurance that investors in the Fund will be
protected from the effects of inflation. The principal risk factor generally
attendant to investment in an investment company with investment policies and
objectives similar to the Fund's is the market risk inherent in investment in
the underlying securities in which the Fund invests. An additional risk factor
peculiar to investment in the Fund arises from the fact that long-term growth
is sought by the Fund at the possible expense of short-term profits.
FOREIGN INVESTMENTS. The Fund may invest up to 20% of its assets, either
directly or indirectly through investments in American Depository Receipts
("ADRs") and closed-end investment companies and in securities issued by foreign
companies wherever organized. ADRs are receipts issued by an American bank or
trust company evidencing ownership of underlying securities issued by a foreign
issuer. ADRs may be listed on a national securities exchange or may trade in
the over-the-counter market. ADR prices are denominated in United States
dollars; the underlying security may be subject to foreign government taxes
which would reduce the yield on such securities. ADRs may be sponsored by the
foreign issuer or may be unsponsored (organized independently from the foreign
issuer). Available information regarding the foreign securities underlying
unsponsored ADRs may not be as current as for sponsored ADRs, and the prices of
unsponsored ADRs may be more volatile.
Securities of closed-end investment companies investing in foreign
securities may be acquired by the Fund within the limits prescribed by the
Investment Company Act of 1940. The Fund currently intends to limit such
investments so that, immediately after such investment: (a) not more than 5% of
the value of its total assets will be invested in the securities of any one
investment company; (b) not more than 10% of the value of its total assets will
be invested in the aggregate in securities of investment companies as a group;
and (c) not more than 3% of the outstanding voting stock of any one investment
company will be owned by the Fund. The Fund will invest in closed-end
investment companies only in furtherance of its investment objective. Growth in
appreciation and dividends in foreign markets sometimes occurs at a faster rate
than in domestic markets. The ability of the Fund to invest in closed-end
investment companies that invest in foreign securities would provide,
indirectly, greater variety and added expertise with respect to investments in
foreign markets than if the Fund invested directly in such markets. Such
companies themselves, however, may have policies that are different from those
of the Fund and will bear management and other expenses of the same type as
those paid by the Fund that may be greater or lesser in amount than those paid
by the Fund. No adjustments will be made to the advisory fee with respect to
assets of the Fund invested in such investment companies.
Investing in securities issued by companies whose principal business
activities are outside the United States may involve significant risks not
present in domestic investments. For example, there is generally less publicly
available information about foreign companies, particularly those not subject
to the disclosure and reporting requirements of the United States securities
laws. Foreign issuers are generally not bound by uniform accounting, auditing
and financial reporting requirements comparable to those applicable to domestic
issuers. Investments in foreign securities also involve the risk of possible
adverse changes in investment or exchange control regulations, expropriation or
confiscatory taxation, political or financial instability or diplomatic and
other developments which could affect such investments. Further, economies of
particular countries or areas of the world may differ favorably or unfavorably
from the economy of the United States. The extent to which the Fund will be
invested in foreign companies will fluctuate from time to time within the 20%
limitation stated above depending on the Adviser's assessment of prevailing
market, economic and other conditions.
The Fund may enter into currency exchange contracts (agreements to exchange
dollars for foreign currencies at a future date) to manage exchange rate risk.
Currency exchange contracts allow the Adviser to hedge the Fund's foreign
investments against adverse exchange rate changes. Successful currency hedging
depends upon the Adviser's ability to predict foreign currency values. A
currency exchange contract will tend to offset both positive and negative
currency fluctuations but will not offset other changes in the value of the
Fund's foreign investments. The Fund does not and will not use currency
exchange contracts for speculative purposes.
HEDGING AND INCOME ENHANCEMENT STRATEGIES. In addition to its investments
in securities, the Fund may buy and sell stock and stock index options, stock
index and foreign currency futures contracts, and options on futures with
respect to all or a portion of its assets. Transactions in such options and
futures contracts may afford the Fund the opportunity to hedge against a decline
in the value of securities it owns, may provide a means for the Fund to generate
additional income on its investments or may provide opportunities for capital
appreciation. The Fund may also purchase and sell stock index futures contracts
and options to manage cash flow and to attempt to remain fully invested in the
stock market. Although the Fund has no specific fundamental limitations on its
ability to engage in options and futures contracts, it does not use options or
futures contracts for speculative purposes. The Fund may engage in additional
hedging techniques as new techniques become available.
6
<PAGE>
OPTIONS TRANSACTIONS. The Fund may write covered put and call options on
stocks and stock indexes to attempt to increase the return on its investments
through the receipt of premium income. The Fund also may write put options and
purchase call options on stocks and stock indexes to increase its exposure to
the stock market when the Fund has cash from new investments or holds a portion
of its assets in money market instruments or to protect against an increase in
prices of securities it intends to purchase. When the Fund wishes to sell
securities because of stockholder redemptions or to protect the value of a
security it owns against a decline in market value, it may write call options
and purchase put options.
A call option gives the purchaser, in return for payment of the option
premium (the option's current market price), the right to buy the option's
underlying security at a specified exercise price at any time during the term of
the option. The writer of a call option, who receives the premium, assumes the
obligation to deliver the underlying security against payment of the exercise
price at any time the option is exercised. A put option is a similar contract
that gives the purchaser of the option, in return for the premium paid, the
right to sell the underlying security at a specified exercise price at any time
during the term of the option. The writer of the put receives the premium and
assumes the obligation to buy the underlying security at the exercise price
whenever the option is exercised. The premium paid for purchasing an option
reflects, among other things, the relationship of the exercise price to the
market price and volatility of the underlying security, the remaining term of
the option, supply and demand and interest rates. The Fund intends to limit the
aggregate value of the securities underlying the calls or obligations underlying
the put options to no more than 25% of the net assets of the Fund taken at
market value, determined as of the date the options are written. All options,
whether written or purchased, will be listed on a national securities exchange
and issued by the Options Clearing Corporation.
A call option written by the Fund is "covered" if the Fund owns the call
option's underlying security or has an absolute and immediate right to acquire
that security without the payment of additional consideration (or upon payment
of additional cash consideration held in a segregated account by its custodian)
upon conversion or exchange of other securities it owns. A call option written
by the Fund is also covered if the Fund owns, on a share-for-share basis, a call
option on the same security whose exercise price is equal to or less than the
call written, or greater than the exercise price of the call written if the
difference is maintained by the Fund in cash or liquid securities in a
segregated account with its custodian. A put option written by the Fund is
"covered" if the Fund maintains cash or liquid securities with a value equal to
the put option's exercise price in a segregated account with its custodian, or
else owns, on a share-for-share basis, a put option on the same security whose
exercise price is equal to or greater than the put written. Securities held to
cover an option may not be sold so long as the Fund remains obligated under the
option, unless they are replaced by other appropriate securities.
A stock index assigns relative value to the common stocks included in the
index (for example, the Standard & Poor's 500 or the New York Stock Exchange
Composite Index), and the stock index fluctuates with changes in the market
value of such stocks. An option on an index gives the holder the right, in
return for the premium paid, to require the writer to pay cash equal to the
difference between the closing price of the index and the exercise price of the
option, times a specified multiplier. No actual delivery of the stocks
underlying the index is made.
FUTURES TRANSACTIONS AND OPTIONS ON FUTURES. The Fund may purchase and
sell stock index and foreign currency futures contracts (as well as purchase and
sell related options on such futures contracts) as a hedge against changes
resulting from market conditions and exchange rates in the values of the
domestic and foreign securities held in the Fund or which it intends to purchase
and where the transactions are economically appropriate for the reduction of
risks inherent in the ongoing management of the Fund.
A stock index futures contract is a bilateral agreement pursuant to which
two parties agree to take or make delivery of an amount of cash equal to a
specified dollar amount times the difference between the stock index value at
the close of the last trading day of the contract and the price at which the
futures contract is originally struck. No physical delivery of the underlying
stocks in the index is made. A foreign currency futures contract creates an
obligation on one party to deliver, and a corresponding obligation on another
party to accept delivery of, a stated quantity of a foreign currency, for an
amount fixed in United States dollars. The Fund may purchase and sell foreign
currency futures contracts as a hedge against changes in currency exchange rates
when the Fund is invested in the securities of foreign issuers.
The Fund may not purchase or sell futures contracts and related options
unless immediately after any such transaction, the aggregate initial margin that
is required to be posted by the Fund under the rules of the exchange on which
the futures contract ( or futures option) is traded, plus any premium paid by
the Fund on its open futures options positions, does not exceed 5% of the Fund's
total assets, after taking into account any unrealized profits and losses on the
Fund's open contracts and excluding the amount that a futures option is "in the
money" at the time of purchase. (An option to buy a futures contract is "in the
money" if the then current purchase price of the contract that is subject to the
option exceeds the exercise or strike price; an option to sell a futures
contract is "in the money" if the exercise or strike price exceeds the then
current purchase price of the contract that is the subject of the option.)
RISKS INHERENT IN TRANSACTIONS IN OPTIONS AND FUTURES CONTRACTS. In
selecting futures contracts and options for the Fund, the Adviser will assess
such factors as current and anticipated stock prices and interest rates, the
relative liquidity and price levels in the options and futures markets compared
to the securities markets, and the Fund's cash flow and cash management needs.
If the Adviser judges these factors incorrectly, or if price changes in the
Fund's futures or options positions are not well correlated with its other
investments, use of the futures contracts and options may leave the Fund in a
worse position than if it had not used these strategies. Other risks inherent in
the use of options, foreign currency and stock index futures contracts and
options on futures contracts include the fact that skills needed to use these
strategies are different from those needed to select portfolio securities, the
7
<PAGE>
imperfect correlation between movements in the price of the options and futures
contracts and movements in the price of the securities or currencies which are
the subject of the hedge, the possible absence of a liquid secondary market for
any particular instrument at any time and the possible need to defer closing out
certain hedged positions to avoid adverse tax consequences.
MANAGEMENT OF THE FUND
BOARD OF DIRECTORS
The overall management of the business and affairs of the Fund is vested
with the Board of Directors. The Board of Directors approves all significant
agreements between the Fund and persons or companies furnishing services to
the Fund, including the Fund's agreements with its investment adviser,
administrator, transfer agent, custodian and dividend disbursing agent. The
day-to-day operations of the Fund (apart from the Adviser's duties as
investment adviser) are delegated to the Administrator, subject always to the
objectives and policies of the Fund and the general supervision of the Fund's
Board of Directors.
INVESTMENT ADVISER
Stonebridge Capital Management, Incorporated, 1801 Century Park East, Suite
1800, Los Angeles, California 90067, is retained as the Adviser to the Fund
pursuant to a written Investment Advisory Agreement. The Investment Advisory
Agreement (the "Agreement") was approved by the Board of Directors on April 10,
1997 subject to stockholder approval. The Agreement was approved by the
stockholders of the Fund on July 23, 1997.
The Agreement requires the Adviser to supervise the investment of the
assets of the Fund, and place orders with securities broker/dealers for the
purchase or sale of securities on behalf of the Fund, subject to the policies
and controls of the Board of Directors of the Fund. In doing so, the Adviser is
to obtain and evaluate information, reports and studies, some or all of which
may be provided to the Adviser by the securities broker/dealers that execute
securities transactions for the Fund, for which their compensation may consist
solely of the brokerage commissions paid by the Fund.
As consideration for furnishing such services, the Agreement provides that
the Adviser will receive a monthly advisory fee from the Fund at the annual rate
of 1.00% of the Fund's average daily net assets. The Adviser has agreed that it
will limit the overall annual expenses of the Fund to 2.90% of average annual
net assets for the current fiscal year and all future fiscal years through
October 31, 2002: any unreimbursed Fund expenses borne by the Adviser in any
fiscal year pursuant to this limitation will be reimbursed to the Adviser at any
year in the future if, after the reimbursement, the expenses of the Fund for
such year are less than 2.90% of its average net assets.
During the fiscal years ended October 31, 1995, 1996 and 1997, the
Adviser received $17,491, $25,253 and $33,293 respectively, in fees for
investment and advisory services pursuant to the Agreement (or prior
investment advisory agreements in effect), representing .5%, .5% and .65%,
respectively, of the Fund's net assets in each year.
The Agreement provides that it shall remain in force and effect for two
years and thereafter from year to year so long as such continuance is approved
at least annually by the Board of Directors of the Fund or by a majority of the
outstanding voting securities of the Fund, but in either event it must be
approved by a majority of the directors who are not parties to the Investment
Advisory Agreement or interested persons of any such party. The Agreement also
provides that it may be terminated without penalty at any time by the Board of
Directors of the Fund or by vote of a majority of the Fund's outstanding voting
securities or by the Adviser upon sixty days written notice and that it shall
terminate automatically in the event of its assignment.
The Adviser is owned by six of its employees. Dr. John G. Ayer, President
of the Fund, has been primarily responsible for the day-to-day management of the
Fund's portfolio since 1982. Although the organizational arrangements of the
Adviser do not require that all investment decisions be made by committee, it is
the practice of the Adviser to make such decisions by committee.
ADMINISTRATOR
ALPS Mutual Funds Services, Inc., 370 17th Street, Suite 3100, Denver,
Colorado 80202, is the Administrator of the Fund. The Administration Agreement
was approved by the Board of Directors on April 10, 1997.
The Administration Agreement provides that ALPS will supervise and
manage the business of the Fund subject to the direction and control of the
officers and directors of the Fund. This responsibility requires that ALPS
provide certain services and facilities including, but not limited to, the
services of an administrator for the Fund and other personnel required by the
Fund, office space, furniture, equipment, supplies, files and records,
supervision of the maintenance of the books and records of the Fund, and the
supervising of the relationship between the Fund and the stockholders,
custodian, fund accounting agent, transfer agent and others, including the
preparation of registration statements and proxy material.
8
<PAGE>
The Administration Agreement provides that it will remain in force and
effect for an initial three-year term and will continue thereafter from year to
year provided that its continuance is specifically approved at least annually by
a majority of the directors of the Fund. The Administration Agreement may be
terminated for cause during its initial term and thereafter may be terminated
without penalty at any time by the Board of Directors of the Fund or by the
Administrator upon ninety days written notice.
As consideration for furnishing such administration services, the
Administration Agreement provides that the ALPS will receive a monthly
management fee equal to the annual rate of .10% of the average daily net assets
in the Fund up to $250,000,000 and .075% of the average daily net assets of the
Fund in excess of $250,000,000. At all times ALPS' fee will be no less than
$5,000 per month in the first year of the term of the Administration Agreement
and $6,250 per month in years two and three.
THE DISTRIBUTOR
ALPS Mutual Funds Services, Inc. 370 17th Street, Suite 3100, Denver,
Colorado 80202 serves as the Distributor and principal underwriter of the
Fund's shares without compensation and bears the expense of distribution of the
shares of the Fund.
THE CUSTODIAN
Fifth Third Bank, Fifth Third Center, Cincinnati, Ohio 45263, is retained
as Custodian for the Fund.
THE TRANSFER AGENT
The Fund's transfer agent and dividend disbursing agent is National
Financial Data Services, 1004 Baltimore, Kansas City, Missouri 64105.
CAPITAL STOCK
The Fund was organized as a corporation in the state of Delaware on October
1, 1956. The authorized capitalization of the Fund consists of an unlimited
number of shares of capital stock, all of one class, having a par value of $1.00
per share. All shares participate equally in dividends and distributions and in
net assets on liquidation. The shares are fully paid and non-assessable: they
have no preference, pre-emptive, conversion, or exchange rights. Fractional
share interests have proportionate dividend and redemption rights, but no voting
rights.
Each full share has one vote, except that each stockholder entitled to vote
at any election of directors has the right to cumulate his votes. Under the
cumulative voting method, each stockholder is entitled ot cast a total number of
votes equal to the number of directors to be elected multiplied by the number of
his shares. The total number of cumulative votes may be cast for one candidate
or distributed among any number of candidates.
At the Fund's annual shareholder meeting on March 28, 1996, its
shareholders approved an amendment to the Fund's Certificate of Incorporation
changing its name to "Stonebridge Aggressive Growth Fund." The Adviser has
entered into a license agreement with the Fund permitting the Fund to use the
phrase "Stonebridge" in its name for so long as the Adviser continues to act as
the Fund's investment adviser.
Shareholder inquiries concerning the Fund should be directed to shareholder
services by calling (800) 639-3935.
REPORTS TO STOCKHOLDERS
The Fund issues semi-annual and annual reports to its stockholders listing
securities held in its portfolio, complete financial statements, and other
information. The financial statements of the Fund are audited annually by
independent public accountants.
DISTRIBUTIONS AND TAXES
The Fund has qualified and intends to continue to qualify and elect to be
taxed as a "regulated investment company" under Subchapter M of the Internal
Revenue Code (the "Code"). In any fiscal year in which the Fund so qualifies
and distributes at least 90% of its taxable net investment income, the Fund will
be relieved of Federal income tax on the net investment income and net realized
capital gains distributed to stockholders. One of the requirements the Fund
must meet in order to qualify under Subchapter M as a regulated investment
company is that at least 90% of the Fund's gross income be derived from certain
sources, which include dividends, interest, payments with respect to securities,
loans and gains from the sale or other disposition of stock or securities. In
addition the Fund must meet certain asset diversification requirements.
The Fund's income from dividends and interest and any net realized
short-term capital gains are paid to shareholders as income dividends. The Fund
realizes capital gains whenever it sells securities for a higher price than it
paid for them. Net realized long-term gains are paid to shareholders as capital
gain dividends. A dividend will reduce the net asset value of a Fund share by
the amount of the dividend.
9
<PAGE>
Net investment income and net short-term capital gains distributed by the
Fund, if any, will be taxable to stockholders as ordinary income whether
received in cash or additional shares. Any net long-term capital gains realized
by the Fund, and distributed, will be taxable to stockholders as long-term
capital gains regardless of the length of time investors have held their shares.
A 4% non-deductible excise tax is imposed on a regulated investment company
which fails to distribute to its stockholders a specified amount of its taxable
ordinary income and capital gains during a calendar year.
The Fund may be required to withhold for Federal income taxes 31% of
distributions payable to stockholders who fail to provide the Fund with their
correct taxpayer identification numbers or make required representations, or
who have been notified by the Internal Revenue Service they are subject to
back-up withholding. Corporate stockholders, and other stockholders specified
by the Internal Revenue Code, are exempt from back-up withholding.
Dividends from net investment income are taxable to the shareholders as
ordinary income and are generally eligible, in the case of corporations, for the
70% deduction for corporate shareholders provided by the Internal Revenue Code.
Capital gains distributions do not qualify for such exclusion. For the fiscal
year ended October 31, 1997, there were no dividends paid from investment income
of the Fund so none were eligible for such exclusion. Stockholders who are
citizens or residents of the United States pay federal taxes at capital gains
rates on long-term capital gains which are distributed to them, whether or not
reinvested in the Fund, and regardless of the period of time that such shares
have been owned by the stockholders. Advice as to the tax status and amount of
each year's dividends and distributions will be mailed annually.
HOW TO INVEST
This section tells you how to purchase, exchange and redeem your shares. It
also explains various services and features offered in connection with your
account. Please call the Fund at 1-800-639-3935 to speak with an Investor
Services Representative if you have any questions or need information. ALPS
Mutual Funds Services, Inc. is the distributor for the Fund and Stonebridge
Growth Fund, Inc. (collectively, the "Stonebridge Funds") and has as its
principal office 370 17th Street, Suite 3100, Denver, CO 80202.
HOW TO OPEN AND ADD TO YOUR ACCOUNT
You may open an account and purchase shares of the Fund by completing an Account
Application and returning it to Stonebridge Funds with your check made payable
to the Fund. You may obtain an Account Application by calling 1-800-639-3935.
To Open An Account
- ------------------
By Mail Send a completed Account Application and a check
or money order payable in U.S. dollars and drawn
on a bank located in the U.S. to Stonebridge
Funds, P.O. Box 419247, Kansas City, MO
64141-9247.
In Person Bring your completed Account Application and a
check or money order payable to Stonebridge
Aggressive Growth Fund, 370 17th Street, Suite
3100, Denver, CO 80202.
Automatically (from your Complete the Automatic Investment Plan Section of
bank account) your new Account Application or Account Options
form to have money automatically withdrawn from
your bank account ($100 minimum per transaction),
and return it to Stonebridge Funds, P.O. Box
419247, Kansas City, MO 64141-9247.
By Wire Call 1-800-639-3935 to receive wiring instructions
To Add An Account
- -----------------
By Mail Send a check or money order payable in U.S.
dollars and drawn on a bank located in the U.S. to
Stonebridge Funds, P.O. Box 419247, Kansas City,
MO 64141-9247. Specify your account number and
the name of the Fund(s) in which you are
investing.
In Person Bring your check or money order payable to
Stonebridge Aggressive Growth Fund, 370 17th
Street, Suite 3100, Denver, CO 80202.
Automatically (from your Complete at any time an Automatic Investment Plan
bank account) application to have $100 or more automatically
withdrawn from your bank account monthly. Call
1-800-639-3935 to receive an application.
By Wire Call 1-800-639-3935 to receive wiring
instructions.
10
<PAGE>
MINIMUM INVESTMENTS Amount
To open a new account $1,000
To open a new retirement or certain other accounts $1,000
To open a new account with an Automatic Investment Plan $0
To add to any type of an account $100
The minimum investment requirements do not apply to reinvested dividends,
purchases by Service Organizations acting on behalf of their customers,
officers, trustees, directors, employees and retirees of the Fund, Investment
Adviser, Administrators or any direct or indirect subsidiary or any spouse,
parent or child of any of these persons.
Please note: Third-party checks will not be accepted for the purchase of shares
of the Fund.
The Fund reserves the right to suspend the continuing offering of shares and to
reject any purchase order in its sole discretion.
HOW TO EXCHANGE FUND SHARES
You may exchange your Fund shares for shares of Stonebridge Growth Fund.
Exchanges must be for at least $1,000 in value per transaction. You should
first read the Prospectus for the Stonebridge Growth Fund. For further
information on the exchange privilege, please call an Investor Services
Representative at 1-800-639-3935.
Stonebridge Funds may modify or terminate the exchange privilege, but will not
materially modify or terminate it without giving shareholders 60 days' notice.
By Telephone Call 1-800-639-3935, and give the account name,
account number, name of Fund and amount of
exchange ($1,000 minimum).
By Mail Send a written request to: Stonebridge Funds, P.O.
Box 419247, Kansas City, MO 64141-9247. Submit
any share certificates being exchanged, endorsed
for transfer.
Your written request must:
- be signed by each account owner
- state the number or dollar amount of shares to
be exchanged
- include your account number or tax
identification number
HOW TO REDEEM FUND SHARES
You may redeem your Fund shares on any business day. If you have any questions
on how to redeem your shares, please call an Investor Services Representative at
1-800-639-3935. Your shares will be redeemed at the current-day closing price
if you call before the NYSE close (normally, 4:00 p.m. Eastern Time on a
business day.) Otherwise, you will receive the closing price on the next
business day. Redemption proceeds generally will be sent by check to the
shareholder(s) of record at the address of record within 7 days after receipt of
a valid redemption request.
If you have authorized the wire redemption service, your redemption proceeds
will be wired directly into your designated bank account, normally within 3
business days after receipt of a valid redemption request. A wire fee of $10
will be added to your redemption request. Payment may be postponed or the right
of redemption suspended at times when the New York Stock Exchange is closed for
other than customary weekends and holidays, when trading on such Exchange is
restricted, when an emergency exists as a result of which disposal by the Fund
of securities owned by it is not reasonably practicable or it is not reasonably
practicable for the Fund fairly to determine the value of its net assets, or
during any other period when the Securities and Exchange Commission, by order,
so permits.
If you have selected the Systematic Withdrawal Plan, your redemption proceeds
will be electronically transferred to your designated bank account within 7 days
after withdrawal on approximately the 20th day of the month.
If the shares being redeemed were purchased by check, telephone or through the
Automatic Investment Program, the Fund may delay the mailing of your redemption
check for up to 15 days from the day of purchase to allow the purchase check to
clear.
Back-up withholding is deducted if your account has no tax identification
number. In this situation, the Fund must remit 31% of redemption proceeds and
dividend distributions to the IRS as an advance tax payment. Back-up
withholding should not apply if your provided your tax identification number on
your account application or on IRS Form W-9.
The Fund has filed an election pursuant to Rule 18f-1 under the Investment
Company Act of 1940 which provides that the Fund is obligated to redeem shares
solely in cash up to $250,000 or 1% of the Fund's net asset value, whichever is
less, for any one
11
<PAGE>
stockholder within a 90-day period. Any redemption beyond this amount may be
made in proceeds other than cash.
By Telephone Call 1-800-639-3935 and give the account name,
(Available only if you account number, name of Fund and amount of
check the appropriate redemption ($1,000 minimum).
box on the Account
Application).
Not available for If you do not have and would like to add the
retirement accounts or telephone redemption feature, send a written
shares held in certificate request to Stonebridge Funds, P.O. Box 419247,
form. Kansas City, MO 64141-9247. The request must be
signed (and signatures guaranteed) by each account
owner.
The Fund may impose a dollar limit on telephone
redemptions.
In Person During normal business hours, bring your written
request to:
Stonebridge Funds
370 17th Street
Suite 3100
Denver, CO 80202
By Mail Send a written request to Stonebridge Funds, P.O.
Box 419247, Kansas City, MO 64141-9247. Submit
any share certificates being redeemed, endorsed
for transfer.
Your written request must:
- be signed by each account owner; a signature
guarantee is required for any redemption over
$10,000 or any redemption being mailed to any
address or payee other than that which is on
record;
- state the number or dollar amount of shares to
be redeemed;
- include your account number and tax
identification number.
By Wire Call 1-800-639-3935 or write Stonebridge Funds,
P.O. Box 419247, Kansas City, MO 64141-9247. You
will need to provide account name and number, name
of Fund and amount of redemption ($1,000 minimum
per transaction if made by wire).
If you have already opened your account and would
like to have the wire redemption feature, send a
written request to Stonebridge Funds, P.O. Box
419247, Kansas City, MO 64141-9247. The request
must be signed (and signatures guaranteed) by each
account owner.
The Fund charges a fee of $10 for wire transfers
which is added to any redemption (your proceeds
are reduced by $10 in the event there is an
insufficient amount remaining). In addition, your
bank may charge a fee for receiving a wire.
By Systematic Withdrawal Request monthly or quarterly withdrawals of $50 or
more in multiples of $10. Participation requires
$10,000 in the Fund.
GENERAL ACCOUNT POLICIES
SYSTEMATIC CASH WITHDRAWAL PLAN
A stockholder owning $10,000 or more of Fund shares at net asset value may
establish a Systematic Cash Withdrawal Plan (a "Withdrawal Plan") upon
completion of an authorized form. Qualified participants may then receive
monthly or quarterly checks of $50 or more in multiples of $10 as they choose.
The redemption is made on the 20th day of the month and payment is made within
seven days thereafter. These payments are drawn from shares redeemed from the
stockholder's account to meet the payment amounts requested. To the extent that
these redemptions exceed dividends and capital gains distributions, participants
will eventually deplete their investments, particularly if the net asset value
of the Fund decreases. A systematic withdrawal participant may discontinue
receiving payments at any time, and resume them at any time thereafter. The
Fund also reserves the right to cancel any Withdrawal Plan.
Under this program, all dividends and capital gains distributions are
automatically reinvested, and share certificates are not issued. Amounts
paid to stockholders should not be considered income. No particular amount
of periodic or quarterly payments is recommended. An authorization form may
be obtained from the Fund upon request.
12
<PAGE>
SIGNATURE GUARANTEE
A signature guarantee assures that a signature is genuine. The signature
guarantee protects shareholders from unauthorized transfers. A signature
guarantee is not the same as a notarized signature. You can obtain a signature
guarantee from a bank or trust company, credit union, broker, dealer, securities
exchange or association, clearing agency or savings association.
The guarantee must be an ink stamp or medallion that states "Signature(s)
Guaranteed" and must be signed in the name of the guarantor by an authorized
person with that person's title and the date. The Fund may reject a signature
guarantee if the guarantor is not a member of or participant in a signature
guarantee program. Call your financial institution to see if they have the
ability to guarantee a signature.
To protect your accounts from fraud, the following transactions will require a
signature guarantee:
- - Transferring ownership of an account.
- - Redemption check is more than $10,000.
- - Redemption check is being mailed to an address other than the address of
record
- - Redemption check is being mailed to an address which has been changed within
the last 30 days of the redemption request without a signature guarantee.
The Fund reserves the right to require a signature guarantee under other
circumstances or to reject or delay a redemption on certain legal grounds.
REDEMPTION OF LOW BALANCE ACCOUNTS
If your account balance falls below $1,000 as a result of redemption a letter
will be sent advising you to either bring the value of the shares held in the
account up to the minimum or to establish an automatic investment that is the
equivalent of at least $100 per month. If the action is not taken within 90
days after notice, your account may be closed and the proceeds sent to you at
the address of record. We reserve the right to increase investment minimums.
INVOLUNTARY REDEMPTIONS
We reserve the right to close an account in the shareholder is deemed to engage
in activities which are illegal or otherwise believed to be detrimental to the
Fund.
TELEPHONE TRANSACTIONS
You may choose to initiate certain transactions by telephone subject to your
authorization. The Fund and its agents will not be responsible for any losses
resulting from unauthorized transactions when procedures designed to verify the
identity of the caller are followed. It may be difficult to reach the Fund by
telephone during periods of unusual market activity. If this happens, you may
redeem your shares by mail as described above.
ADDRESS CHANGES
To change the address on your account, call 1-800-639-3935 or send a written
request signed by all account owners. Include the name of the Fund, the account
number(s), the name(s) on the account and both the old address and new
addresses. Certain options may be suspended for 30 days following an address
change unless a signature guarantee is provided.
REGISTRATION CHANGES
To change the name on an account, the shares are generally transferred to a new
account. In some cases, legal documentation may be required.
PRICE OF FUND SHARES
All purchases, redemptions and exchanges will be processed at the net asset
value ("NAV") next calculated after your request and payment, if required, are
received by the transfer agent in proper form. A Fund's NAV is determined by
the Administrator as of the close of regular trading on the New York Stock
Exchange (the "NYSE"), normally 4:00 p.m. (Eastern time), on each day that the
NYSE is open.
In order to receive a day's price, your order must be received by the transfer
agent by the close of regular trading on the NYSE on that day. If not, your
request will be processed at the Fund's NAV at the close of regular trading on
the next day. To be in proper form, your order must include your account number
and must state the Fund shares you wish to purchase, redeem or exchange. In the
case of participants in certain employee benefit plans investing in certain
Funds, purchase orders will be processed at the NAV next determined after the
Service Organization acting their behalf receives the purchase order.
13
<PAGE>
The Fund's NAV is calculated by dividing the total value of its investments and
other assets, less liabilities, by the total number of shares outstanding. The
Fund's investments are valued at market value or, when market quotations are not
readily available, at fair value as determined in good faith by or under the
direction of the Board of Directors. Debt securities with maturities of 60 days
or less are valued at amortized cost, which generally equals market value.
ACCOUNTS OPENED THROUGH A SERVICE ORGANIZATION
You may purchase or sell Fund shares through an account you have with
Stonebridge Capital Management, any qualified broker/dealer, any bank or any
other institution (your "Service Organization"). Your Service Organization may
charge transaction fees on the purchase and/or sale of Fund shares and may
require different minimum initial and subsequent investments than the Fund
requires. Service Organizations may also impose charges, restrictions,
transaction procedures or cut-off times different from those applicable to
shareholders who invest in the Fund directly.
A Service Organization may receive fees from the Fund or Stonebridge Capital
Management for providing services to the Fund or its shareholders. Such
services may include, but are not limited to, shareholder assistance and
communication, transaction processing and settlement, account set-up and
maintenance, tax reporting and accounting. In certain cases, a Service
Organization may elect to credit against the fees payable by its customers all
or a portion of the fees received from the Fund or Stonebridge Capital
Management with respect to their customers' assets invested in the Fund. The
Service Organization, rather than you, may be the shareholder of record of your
Fund shares. The Fund is not responsible for the failure of any Service
Organization to carry out its obligations to its customers.
MAILING INFORMATION
The Fund or your Service Organization will send you a statement of your account
quarterly and a confirmation after every transaction that affects your share
balance or your account registration with the exception of automatic investment
plan transaction and dividend reinvestment transactions. These transactions are
reflected on a statement which is sent to you on a quarterly basis.
A statement with tax information will be mailed to you by January 31 of each
year and filed with the Internal Revenue Service. Each year, we will send you
an annual and a semi-annual report. The annual report includes audited
financial statements and a list of portfolio securities as of the fiscal year
end. The semi-annual report includes unaudited financial statements for the
first six months of the fiscal year, as well as a list of portfolio securities
at the end of the period. You will also receive an updated prospectus at least
once each year. Please read these materials carefully, as they will help you
understand your investments in the the fund.
Duplicate mailings of Fund materials to shareholders who reside at the same
address may be eliminated.
CERTIFICATES
The Fund will issue share certificates upon written request only. Lost share
certificates may require a fee for reissue.
DISTRIBUTION SCHEDULE
Income Dividends Capital Gains
---------------- -------------
Declared and paid in December Declared and paid in December
When you open an account, you must specify on your Account Application whether
you want to receive your distributions in cash. Otherwise, all distributions
will be reinvested. You may change your distribution option at any time by
writing or calling 1-800-639-3935.
Prior to purchasing shares of the Fund, the impact of dividends or capital gains
distributions which have been declared but not paid should be carefully
considered. Any such dividends or capital gains distributions paid to an
investor shortly after the purchase of shares by the investor will have the
effect of reducing the per share net asset value of the shares by the amount of
the dividends or distributions. All or a portion of such dividends or
distribution, although in effect a return of capital, are subject to taxes,
which may be at ordinary income tax rates.
14
<PAGE>
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
370 17th Street, Suite 3100
Denver, Colorado 80202
15
<PAGE>
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
OFFICERS AND DIRECTORS
DR. JOHN G. AYER, President and Director
DEBRA L. NEWMAN, Treasurer
RICHARD C. BARRETT, Vice President and Director
CHARLES E. WOODHOUSE, Vice President and Director
CRAIG B. BURGER, Vice President
CHAD S. CHRISTENSEN, Vice President
JAMES V. HYATT, Secretary
SELVYN B. BLEIFER, M.D., Director
MARVIN FREEDMAN, Director
CHARLES F. HAAS, Director
WILLIAM H. TAYLOR, II, Director
EXECUTIVE OFFICES
370 17th Street, Suite 3100
Denver, Colorado 80202
Telephone - (800) 639-3935
DISTRIBUTOR
ALPS Mutual Funds Services, Inc.
370 17th Street, Suite 3100
Denver, Colorado 80202
TRANSFER AGENT
National Financial Data Services
1004 Baltimore
Kansas City, Missouri 64105-1807
INVESTMENT ADVISER
Stonebridge Capital Management, Incorporated
1801 Century Park East, Suite 1800
Los Angeles, California 90067
CUSTODIAN
Fifth Third Bank
Fifth Third Center
38 Fountain Square Plaza
Cincinnati, Ohio 45263
AUDITORS
Hein + Associates LLP
717 17th Street, Suite 1600, Denver, Colorado 80202
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
370 17th Street, Suite 3100
Denver, Colorado 80202
PROSPECTUS
FEBRUARY__, 1998
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
370 17th Street, Suite 3100
Denver, Colorado 80202
(800) 639-3935
- --------------------------------------------------------------------------------
Stonebridge Aggressive Growth Fund, Inc. (the "Fund") is a no-load diversified,
open-end investment company, commonly known as a mutual fund. The rules and
regulations of the United States Securities and Exchange Commission (the "SEC")
require all mutual funds to furnish prospective investors certain information
concerning the activities of the company being considered for investment. This
information is included in a Prospectus dated February ___, 1998 (the
"Prospectus"), which may be obtained without charge by writing or calling the
Fund. This Statement of Additional Information is intended to furnish investors
with additional information concerning the Fund. Some of the information
required to be in this Statement of Additional Information is also included in
the Fund's current Prospectus. Additionally, the Prospectus and this Statement
of Additional Information omit certain information contained in the registration
statement filed with the SEC. Copies of the registration statement, including
items omitted from the Prospectus and this Statement of Additional Information,
may be obtained from the SEC by paying the charges prescribed under its rules
and regulations.
TABLE OF CONTENTS
PAGE
Investment Objectives and Policies . . . . . . . . . . . . . . . . . . . . 2
Management of the Registrant . . . . . . . . . . . . . . . . . . . . . . . 5
Investment Advisory and Other Services . . . . . . . . . . . . . . . . . . 6
Brokerage Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Redemptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Pricing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Performance Information. . . . . . . . . . . . . . . . . . . . . . . . . . 10
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS. IT SHOULD BE READ
IN CONJUNCTION WITH A PROSPECTUS, WHICH MAY BE OBTAINED BY WRITING STONEBRIDGE
AGGRESSIVE GROWTH FUND, INC., 370 17TH STREET, SUITE 3100, DENVER, COLORADO
80202, (800) 639-3935.
STATEMENT OF ADDITIONAL INFORMATION DATED FEBRUARY ____, 1998
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
Information concerning the Fund's fundamental investment objective is set
forth in the Prospectus under the heading "Objectives and Investment Policy."
The Fund's principal objective is long-term growth of capital. Production of
short-term income is a secondary consideration. In order to achieve its
investment objectives, the Fund invests in securities of companies which appear
to have good prospects for increased earnings and dividends and uses certain
other investment techniques in an effort to enhance income and reduce market
risks.
SHORT-TERM TREASURY SECURITIES. The Fund may invest in US Treasury bills,
which mature in one year or less, have fixed interest rates, and are guaranteed
by the full faith and credit of the US Government.
CONVERTIBLE BONDS. The Fund may invest in convertible bonds, which are
fixed income securities that may be converted at a stated price within a
specified period of time into a certain quantity of the common stock of the same
or a different issuer. Convertible bonds are senior to common stocks in an
issuer's capital structure, but are usually subordinated to similar
non-convertible securities. While providing a fixed income stream (generally
higher in yield than the income derivable from common stock but lower than that
afforded by a similar nonconvertible security), a convertible security also
provides the investor the opportunity, through its conversion feature, to
participate in the capital appreciation of the underlying common stock.
Like other debt securities, the value of a convertible bond tends to vary
inversely with the level of interest rates. However, to the extent that the
market price of the underlying common stock approaches or exceeds the conversion
price, the price of the convertible bond will be increasingly influenced by its
conversion value (the security's worth, at market value, if converted into the
underlying common stock).
PREFERRED STOCKS. The Fund may invest in preferred stocks. Preferred
stock, unlike common stock, offers a stated dividend rate payable from a
corporation's earnings. Such preferred stock dividends may be cumulative or
non-cumulative, participating, or auction rate. If interest rates rise, the
fixed dividend on preferred stocks may be less attractive, causing the price of
preferred stocks to decline. Preferred stock may have mandatory sinking fund
provisions, as well as call/redemption provisions prior to maturity, a negative
feature when interest rates decline. Dividends on some preferred stock may be
"cumulative," requiring all or a portion or prior unpaid dividends to be paid
before dividends are paid on the issuer's common stock. Preferred stock also
generally has a preference over common stock on the distribution of a
corporation's assets in the event of liquidation of the corporation, and may be
"participating," which means that it may be entitled to a dividend exceeding the
stated dividend in certain cases. The rights of preferred stocks on the
distribution of a corporation's assets in the event of a liquidation are
generally subordinate to the rights associated with a corporation's debt
securities.
OPTIONS AND FUTURES TRANSACTIONS. The Fund intends to limit its
transactions in options to writing covered call options on stocks and stock
indexes, purchasing put options on stocks and on stock indexes, and closing out
such options in closing transactions. The Fund intends to limit its
transactions in futures contracts (contracts to purchase or sell an underlying
instrument at a future date), to purchasing and selling stock index and foreign
currency futures contracts, and to the purchase of related options.
Transactions in such options and futures contracts may afford the Fund the
opportunity to hedge against a decline in the value of securities it owns, may
provide a means for the Fund to generate additional income on its investments,
or may provide opportunities for capital appreciation.
In purchasing futures contracts and related options the Fund will comply
with rules and interpretations of the Commodity Futures Trading Commission
("CFTC"), under which the Fund is excluded from regulation as a "commodity pool
operator." CFTC regulations require, among other things, (1) that futures be
used solely for "bona fide hedging" purposes, as defined in CFTC regulations,
and (2) other positions for the establishment of which the aggregate initial
margin and option premiums (less the amount by which such options are "in the
money") do not exceed 5% of the Fund's net assets (after taking into account
unrealized gains and unrealized losses on any contract it has entered into).
The extent to which the Fund may engage in futures transactions may also be
limited by the Internal Revenue Code's requirements for qualification as a
regulated investment company.
The above limitations on the Fund's investments in futures contracts and
options, and the Fund's policies regarding futures contracts and options
discussed elsewhere in this Statement of Additional Information, are not
fundamental policies and may be changed as regulatory agencies permit. The
Fund will not modify the above limitations to increase the permissible
futures and options activities without supplying additional information in a
current Prospectus or Statement of Additional Information that has been
distributed or made available to the Fund's shareholders.
OPTIONS ON SECURITIES. The Fund may write covered call options on
securities it owns to attempt to realize, through the receipt of premium income,
a greater return than would be realized on the securities alone. In return for
the premium, the Fund forfeits the right to any appreciation in the value of the
underlying security above the option's exercise price for the life of the option
(or until a closing transaction can be effected). The Fund also gives up some
control over when it may sell the underlying securities, and must be prepared to
deliver the underlying securities against payment of the option's exercise price
at any time during the life of the option. The Fund retains the full risk of a
decline in the price of the underlying security held to cover the call for as
long as its obligation as a writer continues, except to the extent that the
effect of such a decline may be offset in part by the premium received.
2
<PAGE>
The principal purpose of writing a covered put option would be to realize
income in the form of the option premium, in return for which the Fund would
assume the risk of a decline in the price of the underlying security below the
option's exercise price less the premium received. The Fund's potential profit
from writing a put option would be limited to the premium received.
When the Fund has written an option, it may terminate its obligation by
effecting a closing purchase transaction. This is accomplished by purchasing at
the current market price an option identical as to underlying instrument,
exercise price and expiration date to the option written by the Fund. The Fund
may not effect a closing purchase transaction, however, after it has been
notified that the option it has written has been exercised. When the Fund has
purchased an option it may liquidate its position by exercising the
option, or by entering into a closing sale transaction by selling an option
identical to the option it has purchased. There is no guarantee that closing
transactions can be effected.
The Fund will realize a profit from a closing transaction if the price at
which the option is closed out is less than the premium received for writing the
option or more than the premium paid for purchasing the option. Similarly, the
Fund will realize a loss from a closing transaction if the price at which the
option is closed out is more than the premium received or less than the premium
paid. Transaction costs for opening and closing option positions must be taken
into account in these calculations.
The Fund may purchase put options on securities it owns to attempt to
protect those securities against a decline in market value during the term of
the option. To the extent that the value of the securities declines, the Fund
may be able to realize a gain by closing out the put option (or, if the value of
the securities falls below the put option's exercise price, may exercise the
option and sell the securities at the exercise price), and thereby may partially
or completely offset the depreciation of the securities. If the price of the
securities does not fall during the life of the option, the Fund may lose all or
a portion of the premium it paid for the put option, and would lose the entire
premium if an option were allowed to expire unexercised. Such a loss could,
however, be offset entirely or in part if the value of the securities owned
should rise.
OPTIONS ON STOCK INDEXES. The Fund may write covered call options on stock
indexes to attempt to increase the return on its investments through the receipt
of premium income. The Fund will cover index calls by owning securities whose
price changes, in the opinion of the Fund's investment adviser, are expected to
be similar to those of the index. If the value of an index on which the Fund
has written a call option falls or remains the same, the Fund would realize a
profit in the form of the premium received (less transaction costs) that could
offset all or a portion of any decline in the value of the securities it owns.
If the value of the index rises, however, the Fund would realize a loss in its
call option position, which would reduce the benefit of any unrealized
appreciation of the Fund's stock investments.
The principal reason for writing a covered put option on a stock index
would be to realize income in return for assuming the risk of a decline in the
index. To the extent that the price changes of securities owned by the Fund
correlate with changes in the value of the index, writing covered put options on
indexes would increase the Fund's losses in the event of a market decline,
although such losses would be offset in part by the premium received for writing
the option. The Fund would cover put options on indexes by segregating assets
equal to the option's exercise price, in the same manner as put options on
securities.
The Fund may purchase put options on stock indexes to hedge its investments
against a decline in value. By purchasing a put option on a stock index, the
Fund will seek to offset a decline in the value of securities it owns through
appreciation of the put option. If the value of the Fund's investments did not
decline as anticipated, or if the value of the option did not increase, the
Fund's loss would be limited to the premium paid for the option. The success of
this strategy will largely depend on the accuracy of the correlation between the
changes in value of the index and the changes in value of the Fund's security
holdings.
STOCK INDEX AND FOREIGN CURRENCY FUTURES AND RELATED OPTIONS. The Fund may
purchase and sell stock index and foreign currency futures contracts (as well as
purchase related options) as a hedge against changes resulting from market
conditions and exchange rates in the values of the domestic and foreign
securities held in the Fund or which it intends to purchase and where the
transactions are economically appropriate for the reduction of risks inherent in
the ongoing management of the Fund.
The Fund will sell stock index futures contracts in order to offset a
decrease in market value of its portfolio securities that might otherwise result
from a market decline. The Fund may do so either to hedge the value of its
portfolio as a whole, or to protect against declines, occurring prior to sales
of securities, in the value of the securities to be sold. Conversely, the Fund
will purchase stock index futures contracts in anticipation of purchases of
securities. In a substantial majority of these transactions, the Fund will
purchase such securities upon termination of the long futures positions, but a
long futures position may be terminated without a corre
sponding purchase of securities.
In addition, the Fund may utilize stock index futures contracts in
anticipation of changes in the composition of its portfolio holdings. For
example, in the event that the Fund expects to narrow the range of industry
groups represented in its holdings it may, prior to making purchases of the
actual securities, establish a long futures position based on a more restricted
index, such as an index comprised of securities of a particular industry group.
The Fund may also sell futures contracts in connection with this strategy, in
order to protect against the possibility that the value of the securities to be
sold as part of the restructuring of the portfolio will decline prior to the
time of sale.
3
<PAGE>
Foreign currency futures may be used to hedge against a decline of the US
dollar and to hedge against the currency risk of
some foreign securities. We do not expect this to happen often.
No price is paid or received by the Fund upon the purchase or sale of a
futures contract. Initially, the Fund will be required to deposit with the
broker or in a segregated account with the Fund's custodian an amount of cash
or cash equivalents, the value of which may vary but is generally equal to
10% or less of the value of the contract. This amount is known as initial
margin. The nature of initial margin in futures transactions is different
from that of margin in securities transactions in that futures contract
margin does not involve the borrowing of funds by the customer to finance the
transactions. Rather, the initial margin is in the nature of a performance
bond or good faith deposit on the contract which is returned to the Fund upon
termination of the futures contract assuming all contractual obligations have
been satisfied. Subsequent payments, called variation margin, to and from the
broker, will be made on a daily basis as the price of the underlying
instruments fluctuates making the long and short positions in the futures
contract more or less valuable, a process known as marking-to-market. For
example, when the Fund has purchased a futures contract and the price of the
contract has risen in response to a rise in the underlying instruments, that
position will have increased in value and the Fund will be entitled to
receive from the broker a variation margin payment equal to that increase in
value. Conversely, where the Fund has purchased a futures contract and the
price of the futures contract has declined in response to a decrease in the
underlying instruments, the position would be less valuable and the Fund
would be required to make a variation margin payment to the broker. At any
time prior to expiration of the futures contract, the Adviser may elect to
close the position by taking an opposite position, subject to the availabil
ity of a secondary market, which will operate to terminate the Fund's
position in the futures contract. A final determination of variation margin
is then made, additional cash is required to be paid by or released to the
Fund, and the Fund realizes a loss or gain.
Futures options possess many of the same characteristics as options on
securities. A futures option gives the holder the right, in return for the
premium paid, to assume a long positions (call) or short position (put) in a
futures contract at a specified exercise price at any time during the period of
the option. Upon exercise of a call option, the holder acquires a long position
in the futures contract and the writer is assigned the opposite short position.
In the case of a put option, the opposite is true.
Futures positions may be closed out only on an exchange or board of trade
which provides a market for such futures. Although the Fund intends to purchase
futures which appear to have an active market, there is no assurance that a
liquid market will exist for any particular contract or at any particular time.
Thus, it may not be possible to close a futures position in anticipation of
adverse price movements.
SHORT SALES AGAINST THE BOX. The Fund may from time to time make short
sales of securities if at the time of the short sale it owns or has the right to
acquire, at no additional cost, an equal amount of the securities sold short.
This investment technique is known as a "short sale against the box." While the
short position is maintained, the Fund will collateralize its obligation to
deliver the securities sold short in an amount equal to the proceeds of the
short sale plus an additional margin amount established by the Board of
Governors of the Federal Reserve (presently 10% of the market value of the
securities sold short). If the Fund engages in a short sale the collateral
account will be maintained by the Fund's custodian or a duly qualified
subcustodian. While the short sale is open the Fund will maintain in a
segregated custodial account an amount of securities equal in kind and amount to
the securities sold short or securities convertible into or exchangeable for
such equivalent securities at no additional cost. The Fund's Adviser currently
anticipates that no more than 25% of the Fund's total assets would be invested
in short sales against the box, but this limitation is a nonfundamental policy
which could be changed by the Board of Directors of the Fund.
The Fund may make a short sale against the box when it believes that the
price of a security may decline, causing a decline in the value of a security
owned by the Fund (or a security convertible into or exchangeable for such
security), or when the Fund want to sell the security it wants at a current
attractive price, but also wishes to defer recognition of gain or loss for
federal income tax purposes and for purposes of satisfying certain tests
applicable to regulated investment companies under the Interal Revenue Code. In
such a case, any future losses in the Fund's long position should be reduced by
a gain in the short position. The extent to which such gains or losses are
reduced would depend upon the amount of the security sold short relative to the
amount the Fund owns. There will be certain additional transaction costs
associated with short sales against the box, but the Fund will endeavor to
offset these costs with income from the investment of the cash proceeds of short
sales.
INVESTMENT RESTRICTIONS
The following is a more detailed description of certain policies and
practices of the Fund which augments the summary of the Fund's investment
program which appears above and in the Prospectus under the heading "Objectives
and Investment Policy."
Certain investment limitations and restrictions cannot be changed without
the approval of the lesser of (i) 67% or more of the voting securities of the
Fund represented at a meeting if the holders of more than 50% of the outstanding
voting securities of the Fund are present or represented by proxy, or (ii) more
than 50% of the outstanding voting securities of the Fund. These restrictions
are as follows:
(1) The Fund may not invest an amount which exceeds 5% of the value of the
Fund's total assets in the securities of any one issuer. This
restriction does not apply to holdings of Government securities.
(2) The Fund may not issue any senior securities.
4
<PAGE>
(3) The Fund may not purchase the securities of any issuer for the purpose
of exercising control of management and it may not acquire or own more
than 10% of any class of the securities of any company.
(4) The Fund may not make short sales of securities or maintain a short
position unless at the time of the short sale the Fund owns or has the
right to acquire at no additional cost an equal amount of the
securities sold short.
(5) The Fund may borrow money only for temporary emergency purposes and
then not in excess of 5% of its total assets.
(6) The Fund may not underwrite securities, buy or sell real estate or
commodities or commodity contracts, or make loans to individuals,
except that the Fund may invest in futures contracts and options as
described in "Futures, Stock Index and Options Transactions."
(7) The Fund will not invest in the securities of other investment
companies if immediately after such investment the Fund will own (a)
securities issued by an investment company having an aggregate value
in excess of 5% of the value of the total assets of the Fund, or (b)
securities issued by all investment companies having an aggregate
value in excess of 10% of the value of the total assets of the Fund,
except to the extent permitted by the Investment Company Act of 1940
and any applicable rules or exemptive orders issued thereunder.
(8) The Fund may not invest in any security if information is not
available with respect to the history, management, assets, owners and
income of the issuer of such security, and may not make any investment
which would subject the Fund to unlimited liability.
(9) The Fund may not purchase any securities on margin except for
short-term credits as are necessary for the clearance of transactions;
provided, however, the Fund may make initial and variation margin
payments in connection with purchases or sales of options or futures
contracts.
Although the Fund is not prohibited from purchases of restricted securities, the
Fund has never held such securities in its portfolio and does not presently
intend to purchase restricted securities.
MANAGEMENT OF THE REGISTRANT
OFFICERS AND DIRECTORS OF THE FUND
Overall operations of the Fund are conducted by its officers under the
control of the Board of Directors. The officers and directors of the Fund,
their addresses and their principal occupation during the past 5 years are:
JOHN G. AYER (age 74) - President
Executive Vice President and Director of Stonebridge Capital Management,
Inc.; Director, Taylor & Turner Assoc., Ltd., a venture capital organization,
1801 Century Park East, Suite 1800, Los Angeles, California 90067.
RICHARD C. BARRETT (age 55) - Vice President and Director*
President and Director, Stonebridge Capital Management, Incorporated, 1801
Century Park East, Los Angeles, California 90067; Vice President and Director,
Stonebridge Growth Fund, Inc.
SELVYN B. BLEIFER, M.D. (age 67) - Director
Physician, Cardiovascular Medical Group, 414 North Camden Drive, Beverly
Hills, California 90212; Director, Stonebridge Growth Fund, Inc.
MARVIN FREEDMAN (age 71) - Director
Partner, Freedman, Broder & Angen, Certified Public Accountants, 2501
Colorado Avenue, Suite 350, Santa Monica, California 90404; Director,
Stonebridge Growth Fund, Inc.
CHARLES F. HAAS (age 83) - Director
Retired motion picture and television director, 12626 Hortense Street,
Studio City, California, 91604; Director, Stonebridge Growth Fund, Inc.
WILLIAM H. TAYLOR (age 58) - Director
General Partner, Taylor & Company (venture capital organization), 18730
Canyon Road, Sonoma California 91604; Director, Stonebridge Growth Fund, Inc.
CHARLES E. WOODHOUSE (age 34) - Vice President and Director
Executive Vice President, Managing Director and Director of Research of
Stonebridge Capital Management, Inc.; Teaching and Research Assistant at
University of Southern California, 1801 Century Park East, Suite 1800, Los
Angeles, California, 90067.
5
<PAGE>
CRAIG B. BURGER (age 40) - Vice President
Senior Vice President and Director, Stonebridge Capital Management,
Incorporated, 1801 Century Park East, Los Angeles, California 90067; Vice
President, Stonebridge Growth Fund, Inc.
CHAD CHRISTENSEN (age 27) - Vice President
Fund Controller, ALPS Mutual Funds Services, Inc., 370 17th Street, Suite
3100, Denver, Colorado 80202; Vice President, Stonebridge Growth Fund, Inc. and
Assistant Treasurer, Westcore Trust.
JAMES V. HYATT (age 47) - Secretary
General Counsel, ALPS Mutual Funds Services, Inc., 370 17th Street, Suite
3100, Denver, Colorado 80202; Secretary, Stonebridge Growth Fund, Inc. and First
Funds Trust, and Assistant Secretary, Financial Investors Trust.
DEBRA L. NEWMAN (age 41) - Treasurer
Vice President, Chief Financial Officer, Secretary and Director,
Stonebridge Capital Management, Incorporated, 1801 Century Park East, Los
Angeles, California 90067; Vice President and Treasurer, Stonebridge Growth
Fund, Inc.
*"Interested person" of the Fund as defined by the Investment Company Act
of 1940, as amended.
As of December 15, 1997, the directors and officers of the Fund, as a
group, owned beneficially 1,511.84 shares of stock of the Fund, which
constituted less than 1% of the Fund's outstanding shares. No one officer or
director or nominee for director owns more than 1% of the Fund's outstanding
shares.
None of the officers of the Fund received any compensation from the Fund
for his or her services during the fiscal year ended October 31, 1997. Each
director who is not an "interested person" of the Fund is entitled to receive
from the Fund $150 for each meeting of the Board of Directors. The following
table sets forth more detailed compensation information for the directors of the
Fund during the fiscal year ended October 31, 1997:
TOTAL COMPENSATION
AGGREGATE PENSION OR FROM FUND AND
COMPENSATION RETIREMENT FUND COMPLEX, PAID
DIRECTOR FROM FUND BENEFITS TO DIRECTORS*
- --------------------------------------------------------------------------------
SELVYN B. BLEIFER, MD $300 $ 0 $2,650
MARVIN FREEDMAN $300 $ 0 $2,650
CHARLES F. HAAS $300 $ 0 $2,650
WILLIAM H. TAYLOR, II $150 $ 0 $ 150
*Stonebridge Growth Fund, Inc. and the Fund comprise a "Fund Complex" as such
term is defined in Item 22(a)(1)(v) of Rule 14a-1 of the Securities Exchange Act
of 1934, because they have the same investment adviser.
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISER. The Fund's investment adviser is Stonebridge Capital
Management, Incorporated, 1801 Century Park East, Los Angeles, California 90067
(the "Adviser"), which provides investment advisery services pursuant to an
investment advisery agreement (the "Agreement") approved by the stockholders on
August 1, 1997. The Adviser is engaged in the business of providing investment
advice to [individual and institutional clients], and managed assets aggregating
$509 million as of October 31, 1997. It currently has 13 employees. John G.
Ayer owns 9.8%, Richard C. Barrett owns 39.2%, Debra L. Newman owns 15.6%, and
Karen H. Parris, Timothy G. Walt and Charles E. Woodhouse each owns 11.8% of the
outstanding stock of the Adviser.
Personnel of the Adviser may invest in securities for their own accounts
pursuant to a Code of Ethics that sets forth all employees' fiduciary
responsibilities regarding the Fund, establishes procedures for personal
investing, and restricts certain transactions. In addition, restrictions on the
timing of personal investing in relation to trades by the Fund and on short-term
trading have been adopted.
The Agreement provides that the Adviser will not be liable for any error of
judgment or loss suffered by the Fund, except for liability resulting from
willful misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and duties
under the Agreement. The Fund has agreed to indemnify the Adviser against
liabilities, costs and expenses that the Adviser may incure in connection with
any action, suit, investigation or other proceeding arising out of or otherwise
based on any action actually or allegedly taken or omitted to be taken by the
Adviser in connection with the performance of its duties or obligations under
the Agreement. The Adviser is not entitled to indemnification with respect to
any liability to the Fund or its shareholders by reason of willful misfeasance,
bad faith or gross negligence in the performance of its duties, or of its
reckless disregard of its duties and obligations under the Agreement.
6
<PAGE>
ADMINISTRATOR. The Fund's Administrator is ALPS Mutual Funds Services,
Inc., 370 17th Street, Suite 3100, Denver, Colorado 80202. Pursuant to its
Administration Agreement with the Fund, the Administrator is not liable for any
error of judgment or mistake of law or for any loss suffered by the Fund in
connection with the matters to which the Agreement relates, except for losses
resulting from willful misfeasance, bad faith or gross negligence on its part in
the performance of its duties or from reckless disregard by it of its
obligations and duties under the Agreement.
DISTRIBUTOR. The Fund's Distributor is ALPS Mutual Funds Services, Inc.,
370 17th Street, Suite 3100, Denver, Colorado 80202. Pursuant to its General
Distribution Agreement with the Fund, the Distributor has agreed to use all
reasonable efforts, consistent with its other business, to secure purchasers for
shares of the Fund, but is not obligated to sell any specified number of shares.
The General Distribution Agreement contains provisions with respect to renewal
and termination similar to those in the Investment Advisery Agreement. Pursuant
to the General Distribution Agreement, the Fund has agreed to indemnify the
Distributor to the extent permitted by applicable law against certain
liabilities under the Securities Act of 1933 and other applicable laws.
CUSTODIAN. The Fund's Custodian is Fifth Third Bank, Fifth Third Center,
Cincinnati, Ohio 45263. It receives and deposits all cash and receives and
collects income from the Fund's investments. These institutions also receive
and deliver securities bought or sold by the Fund. The Custodian has no part in
the management or investment decisions of the Fund. The Custodian is entitled
to receive compensation based on the market value of all assets in the
aggregate, plus certain transaction based charges.
TRANSFER AGENT. The Fund's transfer agent and dividend disbursing agent
is National Financial Data Services, 1004 Baltimore, Kansas City, Missouri
64105. As transfer agent, National Financial Data Services maintains the Fund's
records for the stockholders who purchase shares. It accepts, confirms and
processes payments for purchase and redemptions, and disburses and reinvests
dividends and capital gains distributions, if any, made by the Fund to these
stockholders.
INDEPENDENT ACCOUNTANTS. Hein + Associates LLP, Denver Colorado (the
"Auditors") serve as independent accountants to the Fund. The Auditors conduct
the audit of the Fund's annual financial statements and prepare the Fund's tax
returns. The Auditors have no part in the management or investment decisions of
the Fund. The annual fee is estimated to be $9,500 per year.
BROKERAGE TRANSACTIONS
Decisions to buy and sell securities for the Fund, assignment of its
portfolio business and negotiation of its commission rates are made by the
Adviser. It is the Fund's policy that the Adviser shall seek to obtain both
quality research and "bet execution" of purchase and sales transactions, and
that the Adviser shall seek to negotiate the brokerage commissions to provide
fair, competitive compensation for the broker's services, giving consideration
to the statistical and research services provided as well as the brokerage
execution services. Research services furnished by brokers through whom the
Fund effects security transactions may be used by the Adviser in servicing all
of its accounts and not all such services may be used by the Adviser in
connection with the Fund. Subject to periodic review by the Board of Directors,
the Adviser is authorized to pay higher commissions to brokerage firms that
provide it with investment and research information if the Adviser determines
such commissions are reasonable in relation to the overall services provided.
None of the broker/dealer firms with which the Fund conducts business is engaged
in sales of shares of the Fund and none is affiliated with either the Fund or
the Adviser.
Statistical and research material furnished to the Adviser may be useful to
the Adviser in providing services to clients other than the Fund. Similarly,
such material furnished to the Adviser by brokers through which other clients of
the Adviser trade may be useful in providing services to the Fund. The Board of
Directors of the Fund reviews from time to time the extent and continuation of
this practice.
Although investment decisions for the Fund are made independently from
those of the other accounts managed by the Adviser, investments of the kind made
by the Fund may also be made by other such accounts. When a purchase or sale of
the same security is made at substantially the same time on behalf of the Fund
and one or more other accounts managed by the Adviser, available investments are
allocated in the discretion of the Adviser by such means as, in its judgment,
result in fair treatment. The Adviser aggregates orders for purchases and sales
of securities of the same issuer on the same day among the Fund and its other
managed accounts, and the price paid to or received by the Fund and those
accounts is the average obtained in those orders. In some cases, such
aggregation and allocation procedures may affect adversely the price paid or
received by the Fund or the size of the position purchased or sold by the Fund.
When the Fund purchases or sells a security which is not listed on a
national securities exchange but which is traded in the over-the-counter market,
the transaction generally takes place directly with a principal market maker,
except in those circumstances where, in the opinion of the Fund, better prices
and executions will be achieved through the use of other broker-dealers. The
Adviser does not receive any benefit directly or indirectly arising from these
transactions.
The following provides information regarding the Fund's brokerage
transactions during the fiscal years ended October 31, 1997, 1996, and 1995.
7
<PAGE>
ANNUAL TOTAL
PORTFOLIO TURNOVER BROKERAGE
RATE COMMISSIONS PAID
------------------ ----------------
1997 88% $ 11,746
1996 108% $ 12,402
1995 60% $ 8,995
The Fund's anticipated annual portfolio turnover will normally be in the
range of 25% to 100%. Portfolio turnover is a function of market shifts and
relative valuation of individual securities and market sectors. The Fund's
Adviser attempts to keep the fund invested in those securities that have the
potential to meet the Fund's growth objective and that represent the best
relative value.
The Fund did not acquire securities of any brokers or dealers, or the
parents thereof, during the year ended October 31, 1997.
REDEMPTIONS
The Fund will redeem shares solely in cash up to the lesser of $250,000 or
1% of its net assets during any 90-day period for any one shareholder. Each
Fund reserves the right to pay any redemption price exceeding this amount in
whole or in part by a distribution in kind of securities held by the Fund in
lieu of cash. It is highly unlikely that shares would ever be redeemed in kind.
If shares are redeemed in kind, however, the redeeming shareholder would incur
transaction costs upon the disposition of the securities received in the
distribution.
PRICING
The Fund's public offering price per share, which is the net asset value
per share, is determined once daily as of the close of the New York Stock
Exchange ("NYSE") on each day it is open for trading. This price is
applicable to all orders to buy or sell Fund shares received prior to the
close of trading on the NYSE each day the NYSE is open. Orders received
after such time are held until the next day on which the public offering
price is determined.
Securities listed or traded on a registered securities exchange are
valued at the last sale price on the day of the computation or, if there is
not a sale on that day, the last reported bid price. Where market quotations
of over-the-counter stocks or other securities are readily available, the
mean between the bid and asked price is used; however, for dates on which the
last sale price is available from NASDAQ, or other source of equivalent
reliability, the last sale price for such date is used. Short-term debt
securities with maturities of less than 60 days are valued at amortized cost,
which generally equals market value.
Trading in securities on foreign securities exchanges and
over-the-counter markets is normally completed well before the close of
business day in New York. In addition, foreign securities trading may not
take place on all business days in New York, and may occur in various foreign
markets on days which are not business days in New York and on which net
asset value is not calculated. The calculation of net asset value may not
take place contemporaneously with the determination of the prices of
portfolio securities used in such calculation. Events affecting the values
of portfolio securities that occur between the time their prices are
determined and the close of the New York Stock Exchange will not be reflected
in the calculation of net asset value unless the Board of Directors deems
that the particular event would materially affect net asset value, in which
case an adjustment will be made. Assets or liabilities initially expressed
in terms of foreign currencies are translated prior to the next determination
of the net asset value into U.S. dollars at the spot exchange rates at 1:00
p.m. Eastern Time or at such other rates as the Adviser may determine to be
appropriate in computing net asset value.
The value of any other securities for which no market quotations are
available and other assets will be determined at fair value in good faith by or
pursuant to the policies adopted by the Board of Directors.
Dividends receivable are treated as assets from the date on which stocks go
ex-dividend.
The net asset value per share is determined by dividing the total market
value of all the Fund's portfolio securities and other assets, less all
liabilities, by the total number of Fund shares outstanding.
8
<PAGE>
TAXATION
The Fund intends to qualify annually and has elected to be treated as a
regulated investment company under the Internal Revenue Code of 1986, as
amended (the "Code"). To qualify as a regulated investment company, the Fund
must, among other things, (a) derive in each taxable year at least 90% of its
gross income from dividends, interest, payments with respect to securities
loans, and gains from the sale or other disposition of stock, securities or
foreign currencies, or other income (including gains from options, futures
and forward contracts) derived with respect to its business of investing in
such stock, securities or currencies ("Qualifying Income Test"); (b) for
taxable years beginning on or before August 5, 1997, derive in each taxable
year less than 30% of its gross income from the sale or other disposition of
certain assets held less than three months, namely (1) stocks or securities,
(2) options, futures, or forward contracts (other than those on foreign
currencies), and (3) foreign currencies (or options, futures, and forward
contracts on foreign currencies) not directly related to its business of
investing in stocks or securities; (c) diversify its holdings so that, at the
end of each quarter of the taxable year, (i) at least 50% of the market value
of a Fund's assets is represented by cash, U.S. Government securities, the
securities of other regulated investment companies and other securities, with
such other securities of any one issuer limited for the purposes of this
calculation to an amount not greater than 5% of the value of the Fund's total
assets and 10% of the outstanding voting securities of such issuer, and (ii)
not more than 25% of the value of its total assets is invested in the
securities of any one issuer (other than U.S. Government securities or the
securities of other regulated investment companies) (the "Diversification
Test"); and (d) distribute at least 90% of its investment company taxable
income (which includes dividends, interest and net short-term capital gains
in excess of any net long-term capital losses) each taxable year.
As a regulated investment company, the Fund will not be subject to U.S.
federal income tax on its investment company taxable income and net capital
gains (any net long-term capital gains in excess of the sum of net short-term
capital losses and capital loss carryovers from the prior eight years)
designated by the Fund as capital gain dividends, if any, that it distributes to
shareholders. The Fund intends to distribute to its shareholders substantially
all of its investment company taxable income monthly and any net capital gains
annually. Investment company taxable income or net capital gains not
distributed by the Fund on a timely basis in accordance with a calendar year
distribution requirement may be subject to a nondeductible 4% excise tax. The
avoid the tax, the Fund must distribute during each calendar year an amount at
least equal to the sum of (1) 98% of its ordinary income (with adjustments) for
the calendar year and foreign currency gains or losses for the twelve month
period ending on October 31 of the calendar year, (2) at least 98% of its
capital gains in excess of its capital losses (and adjusted for certain ordinary
losses) for the twelve month period ending on October 31 of the calendar year,
and (3) all ordinary income and capital gains for previous years that were not
distributed during such years. A distribution will be treated as paid on
December 31 of the calendar year, if it is declared by the Fund in October,
November, or December of that year to shareholders of record on a date in such a
month and actually paid by the Fund during January of the following year. Such
distributions will be taxable to shareholders (other than those not subject to
federal income tax) in the calendar year in which the distributions are
received. To avoid application of the excise tax, the Fund intends to make its
distributions in accordance with the calendar year distribution requirement.
DISTRIBUTIONS. Dividends paid out of the Fund's investment company taxable
income will be taxable to a U.S. shareholder as ordinary income. Distributions
received by tax-exempt shareholders will not be subject to federal income tax to
the extent permitted under the applicable tax exemption.
Dividends paid by the Fund are not expected to qualify for the deduction
for dividends received by corporations. Distributions of net capital gains, if
any, are taxable as long-term capital gains, regardless of how long the
shareholder has held the Fund's shares and are not eligible for the dividends
received deduction. The tax treatment of dividends and distributions will be
the same whether a shareholder reinvests them in additional shares or elects to
receive them in cash.
SALES OF SHARES. Upon disposition of shares of the Fund (whether by
redemption, sale or exchange), a shareholder will realize a gain or loss. Such
gain or loss will be a capital gain or loss if the shares are capital assets in
the shareholder's hands, and will be long-term or short-term generally depending
upon the shareholder's holding period for the shares. Any loss realized on a
disposition will be disallowed by "wash sale" rules to the extent the shares
disposed of are replaced within a period of 61 days beginning 30 days before and
ending 30 days after the disposition. In such a case, the basis of the shares
acquired will be adjusted to reflect the disallowed loss. Any loss realized by
a shareholder on a disposition of shares held by the shareholder for six months
or less will be treated as a long-term capital loss to the extent of any
distributions of capital gain dividends received by the shareholder with respect
to such shares.
BACKUP WITHHOLDING. The Fund may be required to withhold for U.S. federal
income taxes 31% of all taxable distributions payable to shareholders who fail
to provide the Fund with their correct taxpayer identification number or to make
required certifications, or who have been notified by the Internal Revenue
Service that they are subject to backup withholding. Corporate shareholders and
certain other shareholders specified in the Code generally are exempt from such
backup withholding. Backup withholding is not an additional tax. Any amounts
withheld may be credited against the shareholder's U.S. federal tax liability.
FOREIGN INVESTMENTS. Income received by the Fund from sources within
foreign countries may be subject to withholding and other taxes imposed by such
countries. Tax conventions between certain countries and the U.S. may reduce or
eliminate such taxes. In addition, the Adviser intends to manage the Fund with
the intention of minimizing foreign taxation in cases where it is deemed prudent
to do so. If more than 50% of the value of the Fund's total assets at the close
of its taxable year consists of securities of foreign corporations, the Fund
will be eligible to elect to "pass-through" to the Fund's shareholders the
amount of foreign income
9
<PAGE>
and similar taxes paid by the Fund. If this election is made, a shareholder
generally subject to tax will be required to in clude in gross income (in
addition to taxable dividends actually received) his pro rata share of the
foreign income taxes paid by the Fund, and may be entitled either to deduct
(as an itemized deduction) his or her pro rata share of foreign taxes in
computing his taxable income or to use it (subject to limitations) as a
foreign tax credit against his or her U.S. federal income tax liability. No
deduction for foreign taxes may be claimed by a shareholder who does not
itemize deductions. Each shareholder will be notified in writing within 60
days after the close of the Fund's taxable year whether the foreign taxes
paid by the Fund will "pass-through" for that year. Absent the Fund making
the election to "pass through" the foreign source income and foreign taxes,
none of the distributions may be treated as foreign source income for
purposes of the foreign tax credit calculation.
Investment income received from sources within foreign countries may be
subject to foreign income taxes. The U.S. has entered into tax treaties with
many foreign countries which entitle certain investors to a reduced rate of tax
or to certain exemptions from tax. The Fund will operate so as to qualify for
such reduced tax ratesor tax exemptions whenever practicable. The Fund may
qualify for and make an election permitted under section 853 of the Code so that
shareholders will be able to claim a credit or deduction on their Federal income
tax returns for, and will be required to treat as part of the amouts distributed
to them, their pro rata portion of the income taxes paid by the Funds to foreign
countries (which taxes relate primarily to investment income). The shareholders
of the Fund may claim a credit by reason of the Fund's election subject to
certain limitations imposed by Section 904 of the Code. However, no deduction
for foreign taxes may be claimed under the Code by individual shareholders who
do not elect to itemize deductions on their Federal income tax returns, although
such a shareholder may claim a credit for foreign taxes and in any event will be
treated as having taxable income in the amount of the shareholder's pro rata
share of foreign taxes paid by the Fund. Although the Fund intends to meet the
requirements of the Code to "pass through" such taxes, there can be no assurance
that the Fund will be able to do so.
Generally, a credit for foreign taxes is subject to the limitation that it
may not exceed the shareholder's U.S. tax attributable to his or her total
foreign source taxable income. For this purpose, if the pass-through election
is made, the source of the Fund's income will flow through to shareholders of
the Fund. With respect to such election, gains from the sale of securities will
be treated as derived from U.S. sources. The limitation on the foreign tax
credit is applied separately to foreign source passive income, and to certain
other types of income. Shareholders may be unable to claim a credit for the
full amount of their proportionate share of the foreign taxes paid by the Fund.
The foreign tax credit is modified for purposes of the Federal alternative
minimum tax and can be used to offset only 90% of the alternative minimum tax
imposed on corporations and individuals and foreign taxes generally are not
deductible in computing alternative minimum taxable income.
OTHER TAXES. Distributions also may be subject to additional state,
local and foreign taxes, depending on each shareholder's particular
situation. Shareholders are advised to consult their own tax advisers with
respect to the particular tax consequences to them of an investment in the
Fund.
PERFORMANCE INFORMATION
The Fund may from time to time advertise total returns, compare Fund
performance to various indices, and publish rankings of the Fund prepared by
various ranking services. Any performance information should be considered in
light of the Fund's investment objectives and policies, characteristics and
quality of its portfolio, and the market conditions during the given time
period, and should not be considered to be representative of what may be
achieved in the future.
The total return for the Fund is computed by assuming a hypothetical
initial payment of $1,000. It is assumed that all investments are made at net
asset value (as opposed to market price) and that all of the dividends and
distributions by the Fund over
the relevant time periods are invested at net asset value. It is then assumed
that, at the end of each period, the entire amount is redeemed without regard to
any redemption fees or costs. The average annual total return is then
determined by calculating the annual rate required for the initial payment to
grow to the amount which would have been received upon redemption. Total return
does not take into account any federal or state income taxes.
Total return is computed according to the following formula:
n
P(1 + T) = ERV
Where P= a hypothetical initial payment of $1,000.
T= average annual total return.
n= number of years.
ERV= ending redeemable value at the end of the period (or fractional
portion thereof) of a hypothetical $1,000 payment made at the
beginning of the period.
10
<PAGE>
TOTAL RETURNS FOR THE FUND HAVE BEEN AS FOLLOWS:
-----------------------------------------------
1997 22.89%
1996 5.70%
1995 43.71%
1994 1.86%
1993 11.80%
1992 (4.67)%
1991 61.63%
1990 (15.30)%
1989 13.54%
1988 6.34%
1987 (3.16)%
Performance information for the Fund may be compared to various unmanaged
indices, such as S&P500, Russell 2000, Russell 3000 and indices prepared by
Lipper Analytical Services. Unmanaged indices (i.e., other than Lipper)
generally do not reflect deductions for administrative and management costs and
expenses.
Performance rankings are prepared by a number of mutual fund ranking
entities that are independent of the Fund and its affiliates. These entities
categorize and rank funds by various criteria, including fund type, performance
over a given period of years, total return, variations in sales charges and
risk/reward considerations.
FINANCIAL STATEMENTS
The financial statements in the 1997 Annual Report are incorporated in this
Statement of Additional Information by reference. The financial statements in
the Annual Report have been audited by the Fund's independent accountants, Hein
+ Associates LLP, whose report thereon appears in the Annual Report, and have
been incorporated herein in reliance upon such report given upon their authority
as experts in accounting and auditing. Additional copies of the Annual Report
may be obtained at no charge by writing or telephoning the Fund at the address
or number on the front page of this Statement of Additional Information.
11
<PAGE>
PART C
OTHER INFORMATION
ITEM
24. (a) Financial Statements
In Part A:
Schedule of Condensed Financial Information
In Part B:
Reference is made to the financial statements and accompanying
notes which appear in the Fund's Annual Report and Semi-Annual
Reports to Stockholders dated October 31, 1997 and May 31,
1997, respectively, which are hereby incorporated herein.
(b) Exhibits (1) through (4), (7) and (9) through (10):
Reference is made to the Exhibits to the Fund's Form N-1 and Form
N-1A and post-effective amendments thereto previously filed with
the Securities and Exchange Commission which are hereby
incorporated herein.
5 Investment Advisory Agreement between Stonebridge Aggressive
Growth Fund, Inc. and Stonebridge Capital Management, Inc.
dated August 1, 1997 is incorporated herein as Exhibit 5.
6(a) General Distribution Agreement between Stonebridge Aggressive
Growth Fund, Inc. and ALPS Mutual Funds Services, Inc. is
incorporated herein as Exhibit 6(a).
(b) Administration Agreement between Stonebridge Aggressive Growth
Fund, Inc. and ALPS Mutual Funds Services, Inc. dated August 1,
1997 is incorporated herein as Exhibit 6(b).
7(a) Custody Agreement between Stonebridge Aggressive Growth Fund,
Inc. and The Fifth Third Bank dated June 30, 1997 is
incorporated herein as Exhibit 7(a).
(b) Fund Accounting and Services Agreement between Stonebridge
Aggressive Growth Fund, Inc. and The Fifth Third Bank dated
June 30, 1997 is incorporated herein as Exhibit 7(b).
(c) Form of Transfer Agency and Service Agreement between
Stonebridge Aggressive Growth Fund, Inc. and ALPS Mutual Funds
Services, Inc. is incorporated herein as Exhibit 7(c).
11 Consent of Hein & Associates LLP independent auditors, is
incorporated herein as Exhibit 11.
Exhibits (12) through (16) and (18):
Not applicable.
17 Financial Data Schedules for the fiscal year ended October 31,
1997 are incorporated herein as Exhibit 8.
25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Selvyn G. Bleifer, Marvin Freedman, Charles F. Haas, William H.
Taylor II and Richard C. Barrett, comprising all of the Directors of
the Fund, also comprise a majority of the members of the Board of
Directors of Stonebridge Growth Fund, Inc., a registered investment
company. In addition, Mr. Barrett, Debra L. Newman and Craig Burger,
officers of the Fund and Stonebridge Growth Fund, Inc. may be deemed
to be under common control.
26. NUMBER OF HOLDERS OF SECURITIES
As of December 15, 1997, the number of record holders of each class of
securities of the Registrant were:
TITLE OF CLASS
--------------
Capital Stock
(par value $1.00 per share)
NUMBER OF RECORD HOLDERS
------------------------
306
27. INDEMNIFICATION
The following indemnification of the corporation's directors and officers
is provided by Section 145 of the General Corporation Law of Delaware and
Section 7 of the Fund's bylaws:
(a) This corporation shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or
completed action, suit, or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the
right of the corporation) by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgement order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person
did not act in food faith and in a manner which he reasonably
believedto be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding,
had reasonable cause to believe that his conduct was unlawful.
S-1
<PAGE>
(b) This corporation shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that he is or
was a director, officer, employee or agent of the corporation, or is
or was serving at the request of the corporation as a director,
officer, employee, or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including
attorney's fees) actually and reasonably incurred by him in connection
with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter
as to which such person shall have been adjudged to be liable for
negligence or misconduct in the performance of his duty to the
corporation unless and only to the extent that the Delaware Court of
Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability
but in view of all the circumstances of the case, such person is
fairly and reasonable entitled to indemnity for such expenses which
the Delaware Court of Chancery or such other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of this
corporation has been successful on the merits or otherwise in defense
of any action, suit or proceeding referred to in subsections (a) and
(b), or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and
reasonable incurred by him in connection therewith.
(d) Any indemnification under subsections (a) or (b) (unless ordered by a
court) shall be made by the corporation only as authorized in the
specific case upon a determination that indemnification of the
director, officer, employee or agent is proper in the circumstances
because he has met the applicable standard of conduct set forth in
subsections (a) and (b). Such determination shall be made (1) by the
board of directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or proceeding, or
(2) if such a quorum is not obtainable, or, even if obtainable a
quorum of disinterested directors so directs, by independent legal
counsel in a written option, or (3) by the stockholders.
(e) Expenses incurred by an officer or director in defending a civil or
criminal action, suit or proceeding may be paid by the corporation in
advance of the final disposition of such action, suit or proceeding as
authorized by the board of directors in the specific case upon receipt
of an undertaking by or on behalf of such director or officer to repay
such amount unless it shall ultimately be determined that he is
entitled to be indemnified by the corporation as authorized in this
section. Such expenses incurred by other employees and agents may be
so paid upon such terms and conditions, if any, as the board of
directors deems appropriate.
(f) The indemnification provided by this section shall not be deemed
exclusive of any other rights to which those seeking indemnification
may be entitled under any agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding
such office, and shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of
the heirs, executors and administrators of such a person.
(g) This corporation may, if the board of directors determines, purchase
and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status
as such, whether or not the corporation would have the power to
indemnify him against such liability under the provisions of this
section.
(h) For purposes of this section, references to "corporation" and to
"other enterprises" shall include the entities as defined in Section
145 of the Delaware General Corporation Law.
Section 8 of Registrant's Investment Advisory Agreement, filed herewith
as Exhibit 5, provides for the indemnification of Registrant's Adviser against
all liabilities incurred by it in performing its obligations under the
Agreement, except with respect to matters as to which it has been determined
that they acted with willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of their office.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to trustees, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the 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 the Registrant of expenses incurred
or paid by a trustee, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
trustee, 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
jusridiction 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.
S-2
<PAGE>
28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
During the period ended October 31, 1997 and the two fiscal years ended
October 31, 1996 and 1995, Stonebridge Capital Management, Incorporated, the
Investment Adviser to the Fund, has engaged principally in the business of
providing investment management services to institutional and individual
clients. All of the additional information required by this Item 28 with
respect to the Investment Adviser is set forth in the form ADV, as amended, of
the Investment Adviser (File No. 801-5363), which is incorporated herein by
reference.
29. PRINCIPAL UNDERWRITERS
(a) ALPS Mutual Funds Services, Inc. acts as a principal underwriter to
the Registrant and Stonebridge Growth Fund, Inc., Westcore Trust,
First Funds Trust, Midcap SPDR Trust, SPDR Trust and Financial
Investors Trust.
(b) The following table sets forth the principal business positions of
each director and officer of ALPS Mutual Funds Services, Inc.
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES WITH POSITIONS AND OFFICES WITH
BUSINESS ADDRESS UNDERWRITER REGISTRANT
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
W. Robert Alexander Chairman and Ceo None
370 17th, Suite 3100
Denver, Colorado 80202
Arthur J.l. Lucey Secretary, President and Director None
370 17th, Suite 3100
Denver, Colorado 80202
James V. Hyatt General Counsel Secretary
370 17th, Suite 3100
Denver, Colorado 80202
Edmund Burke Senior Vice President None
370 17th, Suite 3100
Denver, Colorado 80202
Thomas A. Carter Chief Financial Officer None
370 17th, Suite 3100
Denver, Colorado 80202
William Paston Vice President None
370 17th, Suite 3100
Denver, Colorado 80202
Chris Woessner Director None
370 17th St., Suite 3100
Denver, Colorado 80202
Rick Pederson Director None
370 17th St., Suite 3100
Denver, Colorado 80202
</TABLE>
30. LOCATION OF ACCOUNTS AND RECORDS
1801 Century Park East,
Suite 1800
Los Angeles, California 90067
National Financial Data Services
1004 Baltimore
Kansas City, Missouri 64105
Fifth Third Bank
Fifth Third Center
Cincinnati, Ohio 45263
S-3
<PAGE>
ALPS Mutual Funds Services, Inc.
370 17th, Suite 3100
Denver, Colorado 80202
31. MANAGEMENT SERVICES
Inapplicable
32. UNDERTAKINGS
The Fund hereby undertakes to furnish each person to whom a prospectus is
delivered with a copy of the Fund's latest annual report to its
shareholders upon the request of such person and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Amendment to
Registration Statement to be signed on its behalf by the undersigned, thereto
duly authorized in the City of Los Angeles and State of California on the 31st
day of December, 1997.
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
By:/s/ Debra L. Newman
---------------------------------
Debra L. Newman, Treasurer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Post-Effective Amendment No. 59 to the Registration Statement has been
signed below by the following persons in the capacities and on the date
indicated.
SIGNATURE TITLE DATE
(1) Principal Executive Officers:
/s/ John G. Ayer
-------------------------
John G. Ayer President December 31, 1997
/s/ Richard C. Barrett
-------------------------
Richard C. Barrett Vice President December 31, 1997
(2) Principal Financial and
Accounting Officer:
/s/ Debra L. Newman
-------------------------
Debra L. Newman Vice President December 31, 1997
(3) Directors:*
-------------------------
Richard C. Barrett Director December 31, 1997
-------------------------
Selvyn B. Bleifer, M.D. Director December 31, 1997
-------------------------
Marvin Freedman Director December 31, 1997
S-4
<PAGE>
-------------------------
Charles F. Haas Director December 31, 1997
-------------------------
William H. Taylor II Director December 31, 1997
*By: /s/ Debra L. Newman
-------------------------
Debra L. Newman
Attorney-in-Fact
S-5
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
- --------------------------------------------------------------------------------
EXHIBITS
to
FORM N-1A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
AND
THE INVESTMENT COMPANY ACT OF 1940
- --------------------------------------------------------------------------------
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
<PAGE>
EXHIBIT INDEX
Exhibit
Number Document
- ------ --------
5 Investment Advisory Agreement between Stonebridge Aggressive
Growth Fund, Inc. and Stonebridge Capital Management, Inc. dated
August 1, 1997.
6(a) General Distribution Agreement between Stonebridge Aggressive
Growth Fund, Inc. and ALPS Mutual Funds Services, Inc. dated
August 1, 1997.
6(b) Administration Agreement between Stonebridge Aggressive Growth
Fund, Inc. and ALPS Mutual Funds Services, Inc. dated August 1,
1997.
7(a) Custody Agreement between Stonebridge Aggressive Growth Fund,
Inc. and The Fifth Third Bank dated June 30, 1997.
7(b) Fund Accounting and Services Agreement between Stonebridge
Aggressive Growth Fund, Inc. and The Fifth Third Bank dated June
30, 1997.
7(c) Form of Transfer Agency and Service Agreement between Stonebridge
Aggressive Growth Fund, Inc. and ALPS Mutual Funds Services, Inc.
11 Consent of Hein + Associates LLP, independent auditors.
17 Financial Data Schedules for the fiscal year ended October 31,
1997.
<PAGE>
INVESTMENT ADVISORY AGREEMENT
THIS INVESTMENT ADVISORY AGREEMENT is made as of August 1, 1997
between STONEBRIDGE AGGRESSIVE GROWTH FUND, INC. a Delaware corporation (the
"Fund"), and STONEBRIDGE CAPITAL MANAGEMENT, INCORPORATED, a California
corporation (the "Investment Adviser").
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, the Fund desires to retain the Investment Adviser to furnish
investment advisory services to the Fund;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties agree as follows:
1. APPOINTMENT. The Fund hereby appoints the Investment Adviser to
serve as investment adviser to the Fund for the period and on the terms set
forth in this Agreement. The Investment Adviser accepts such appointment and
agrees to furnish the services herein set forth for the compensation herein
provided.
2. SERVICES. Subject to the supervision of the Fund's Board of
Directors (the "Board"), the Investment Adviser will provide a continuous
investment program for the Fund, including investment research and management
with respect to all securities and investments and cash equivalents held by the
Fund. The Investment Adviser will determine from time to time what securities
and other investments will be purchased, retained or sold by the Fund. The
Investment Adviser will provide its services under this Agreement in accordance
with the Fund's investment objective, policies and restrictions as stated in the
Fund's prospectus and statement of additional information, as currently in
effect and as amended from time to time (collectively, the "Prospectus"), and
resolutions of the Board. The Investment Adviser further agrees that it:
(a) Will conform with all applicable rules and regulations of the
Securities and Exchange Commission and will conduct its activities under this
Agreement in accordance with all other applicable laws.
(b) Will place all orders for the purchase and sale of portfolio
securities for the account of the Fund with brokers or dealers selected by the
Investment Adviser. In executing portfolio transactions and selecting brokers
or dealers, the Investment Adviser will use its best efforts to seek on behalf
of the Fund the best available price and execution. In assessing the best
<PAGE>
overall terms available for any transaction, the Investment Adviser will
consider all factors it deems relevant, including the breadth of the market in
the security, the price of the security, the size of the order, the difficulty
and risk of execution, the financial condition and execution capability of the
broker or dealer, and the reasonableness of the commission, if any, both for the
specific transaction and on a continuing basis.
In evaluating the best overall terms available, and in selecting the
broker or dealer to execute a particular transaction, the Investment Adviser may
also consider the brokerage and research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934, as amended) provided to
the Fund and/or other accounts over which the Investment Adviser exercises
investment discretion. The Investment Adviser is authorized to pay to a broker
or dealer who provides such brokerage and research services a commission or
spread for executing a portfolio transaction for the Fund which is in excess of
the amount of commission or spread another broker or dealer would have charged
for effecting that transaction, if the Investment Adviser determines in good
faith that such commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer viewed in
terms of that particular transaction or in terms of the overall responsibilities
of the Investment Adviser to the Fund. The Investment Adviser may also select
brokers who sell shares Fund to execute portfolio transactions. The extent and
continuation of these practices will be subject to periodic review by the Board.
In executing portfolio transactions for the Fund, the Investment
Adviser may, but will not be obligated to, aggregate the securities to be sold
or purchased with those of its other clients where such aggregation is not
inconsistent with the policies set forth in the Prospectus, to the extent
permitted by applicable laws and regulations. In such event, the Investment
Adviser will allocate the securities so purchased or sold, and the expenses
incurred in the transaction, in the manner it considers to be the most equitable
and consistent with its fiduciary obligations to the Fund and such other
clients.
(c) Will maintain all books and records with respect to the
securities transactions of the Fund, keep books of account with respect to the
Fund and furnish the Board with such periodic and special reports as the Board
may request.
(d) Will treat confidentially and as proprietary information of
the Fund all records and other information relative to the Fund and shareholders
of the Fund or those persons or entities who respond to inquiries concerning
investment in the Fund, and will not use such records and information for any
purpose other than performance of its responsibilities and duties hereunder or
under any other agreement with the Fund except after prior notification to and
approval in writing by the Fund, which approval will not be unreasonably
withheld and may not be withheld where the Investment Adviser may be exposed to
civil or criminal contempt proceedings for failure to comply, when requested to
divulge such information by duly constituted authorities, or when so requested
by the Fund. Nothing contained herein, however,-will prohibit the Investment
Adviser from advertising to or soliciting the public generally with respect to
other products or services, including, but not limited to, any advertising or
marketing via radio, television, newspapers, magazines or direct mail
solicitation, regardless of whether
<PAGE>
such advertisement or solicitation may coincidentally include prior or present
Investors or those persons or entities who have responded to inquiries regarding
the Fund.
3. SERVICES NOT EXCLUSIVE. The Investment Adviser will for all
purposes herein be deemed to be an independent contractor and will, unless
otherwise expressly provided herein or authorized by the Board from time to
time, have no authority to act for or represent the Fund in any way or otherwise
be deemed its agent. The investment management services furnished by the
Investment Adviser hereunder are not deemed exclusive, and the Investment
Adviser will be free to furnish similar services to others so long as its
services under this Agreement are not impaired thereby.
4. BOOKS AND RECORDS. In compliance with the requirements of Rule
3la-3 under the 1940 Act, the Investment Adviser agrees that all records which
it maintains for the Fund are the property of the Fund and further agrees to
surrender promptly to the Fund any such
records upon the Fund's request. In addition, the Investment Adviser agrees to
preserve for the periods prescribed by Rule 3la-2 under the 1940 Act the records
required to be maintained by Rule 3la-1 under the 1940 Act.
5. EXPENSES. During the term of this Agreement, the Investment
Adviser will pay all expenses incurred by it in connection with its activities
under this Agreement other than the cost of securities (including brokerage
commissions, if any) purchased for the Fund.
6. COMPENSATION. For the services provided and the expenses
assumed pursuant to this Agreement, the Fund will pay the Investment Adviser
and the Investment Adviser will accept as full compensation therefor a fee,
computed daily and paid monthly (in arrears), at the annual rate of 1.00% of the
average daily net assets of the Fund.
The Investment Adviser may from time to time voluntarily agree to
reduce its fees or absorb other operating expenses to ensure that the expenses
of the Fund do not exceed certain limitations. In such event, any such
reductions and other expenses paid by the Investment Adviser will be repaid to
the Investment Adviser by the Fund, without interest, at such later time or
times as they may be repaid without causing the aggregate operating expenses of
the Fund to exceed such voluntary expense limitation. In the event this
Agreement is terminated for any reason, any such repayment obligation will also
be terminated without further liability to the Fund.
7. REPRESENTATIONS AND WARRANTIES.
(a) The Fund represents and warrants to the Investment Adviser that:
(i) it is a corporation duly organized and existing and in good standing under
the laws of the State of Delaware and is duly qualified to conduct its business
in the State of Delaware and in such other jurisdictions where the nature of its
activities or its properties owned or leased makes such qualification necessary;
(ii) it is a registered open-end management investment company under the 1940
Act; (iii) a registration statement on Form N-lA under the Securities Act of
1933, as
<PAGE>
amended, on behalf of the Fund is currently effective and will remain effective,
and 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; (iv) it
is empowered under applicable laws and by its Articles of Incorporation and
Bylaws to enter into and perform this Agreement; and (v) all requisite corporate
proceedings have been taken to authorize it to enter into and perform this
Agreement.
(b) The Investment Adviser represents and warrants to the Fund that:
(i) it is a corporation duly organized and existing and in good standing under
the laws of the State of California and is duly qualified to conduct its
business in the State of California and in such other jurisdictions where the
nature of its activities or its properties owned or leased makes such
qualification necessary; (ii) it is empowered under applicable laws and by its
Articles of Incorporation and Bylaws to enter into and perform this Agreement;
(iii) all requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement; and (iv) it is a registered investment
adviser under the Investment Advisers Act of 1940 and applicable state laws.
8. LIMITATION OF LIABILITY; INDEMNIFICATION.
(a) The Investment Adviser will not be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund in connection
with the matters to which this Agreement relates, except for liability resulting
from willful misfeasance, bad faith or gross negligence on the part of the
Investment Adviser in the performance of its duties, or by reason of the
Investment Adviser's reckless disregard of its obligations and duties under this
Agreement.
(b) The Fund will indemnify and hold harmless the Investment Adviser
from and against all liabilities, damages, costs and expenses that the
Investment Adviser may incur in connection with any action, suit, investigation
or proceeding arising out of or otherwise based on any action actually or
allegedly taken or omitted to be taken by the Investment Adviser with respect to
the performance of its duties or obligations hereunder or otherwise as an
investment adviser of the Fund; provided, however, that the Investment Adviser
will not be entitled to indemnification with respect to any liability to the
Fund or the shareholders of the Fund by reason of willful misfeasance, bad faith
or gross negligence on the part of the Investment Adviser in the performance of
its duties, or by reason of the Investment Adviser's reckless disregard of its
obligations and duties under this Agreement.
9. DURATION AND TERMINATION. This Agreement will become effective
on the date first written above. Unless sooner terminated as provided herein,
this Agreement will continue in effect for a period of two years from the date
hereof. Thereafter, if not terminated, this Agreement will continue in effect
for successive annual periods, provided such continuance is specifically
approved at least annually (a) by the vote of a majority of those members of the
Board who are not interested persons of any party to this Agreement, cast in
person at a meeting called for the purpose of voting on such approval, and (b)
by the Board or by vote of a majority of the outstanding voting securities of
the Fund. Notwithstanding the foregoing, this Agreement may be terminated at
any time, without the payment of any penalty, by the Fund (by vote of the
<PAGE>
Board or by vote of a majority of the outstanding voting securities of such
Fund), or by the Investment Adviser, upon not less than 60 days' written notice.
This Agreement will immediately terminate in the event of its assignment. (As
used in this Agreement, the terms "majority of the outstanding voting
securities," "interested persons" and "assignment" have the same meaning as the
meaning of such terms in the 1940 Act.)
10. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may
be changed, waived, discharged or terminated orally, but only by an instrument
in writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. No amendment of this Agreement will be
effective as to the Fund until approved by vote of a majority of the outstanding
voting securities of the Fund, except as may be permitted by the 1940 Act.
11. NOTICES. Notices of any kind to be given to the either party
will be in writing and will be duly given if mailed, delivered or communicated
by answer back facsimile transmission to the party at 1801 Century Park East,
Suite 1800, Los Angeles, California 90067, Facsimile 310/277-1456, Attention:
President, or at such other address or to such individual as will be so
specified by the party.
12. MISCELLANEOUS.
(a) This Agreement constitutes the entire agreement and understanding
between the parties hereto, and supersedes all prior agreements and
understandings relating to the subject matter hereof.
(b) The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
(c) If any provision of this Agreement is held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement will
not be affected thereby.
(d) This Agreement will be binding upon and will inure to the benefit
of the parties hereto and their respective successors and will be governed by
the internal laws, and not the law of conflicts of laws, of the State of
Delaware; provided that nothing herein will be construed in a manner
inconsistent with the 1940 Act, the Investment Advisers Act of 1940, as amended,
or any rule or regulation of. the Securities and Exchange Commission thereunder.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the date first above
written.
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
BY:
------------------------
PRESIDENT
STONEBRIDGE CAPITAL MANAGEMENT,
INCORPORATED
BY:
------------------------
PRESIDENT
<PAGE>
GENERAL DISTRIBUTION AGREEMENT
AGREEMENT dated as of August 1, 1997 between Stonebridge Aggressive Growth
Fund, Inc., a Delaware corporation (the "Fund"), and ALPS Mutual Funds Services,
Inc., a Colorado corporation and a registered broker-dealer under the Securities
Exchange Act of 1934, having its principal place of business in Denver, Colorado
(the "Distributor").
WHEREAS, the Fund wishes to employ the services of the Distributor in
connection with the promotion and distribution of the Fund's shares of common
stock (the "Shares");
NOW, THEREFORE, in consideration of the mutual promises and undertakings
herein contained, the parties agree as follows:
1. Documents - The Fund has furnished the Distributor with copies of the
Fund's Articles of Incorporation, Investment Advisory Agreement, Administration
Agreement, Custody Agreement, Transfer Agency and Service Agreement, current
Prospectus and Statement of Additional Information, and all forms relating to
any plan, program or service offered by the Fund. The Fund shall furnish
promptly to the Distributor a copy of any amendment or supplement to any of the
above-mentioned documents. The Fund shall furnish promptly to the Distributor
any additional documents necessary or advisable to perform its functions
hereunder.
2. Sale of Shares - The Fund grants to the Distributor the right to sell the
Shares as agent on behalf of the Fund, during the term of this Agreement,
subject to the registration requirements of the Securities Act of 1933, as
amended (the "1933 Act"), and of the laws governing the sale of securities in
the various states ("Blue Sky Laws"), under the terms and conditions set forth
in this Agreement. The Distributor (i) shall have the right to sell, as agent
on behalf of the Fund, Shares authorized for issue and registered under the 1933
Act, and (ii) may sell Shares under offers of exchange, if available, between
and among other funds advised by the Fund's investment adviser, Stonebridge
Capital Management, Incorporated (the "Investment Adviser").
3. Sale of Shares by the Fund - The rights granted to the Distributor shall be
nonexclusive in that the Fund reserves the right to sell Shares to investors on
applications received and accepted by the Fund. Further, the Fund reserves the
right to issue Shares in connection with the merger, consolidation or other
combination by the Fund, through purchase or otherwise, with any other entity.
4. Shares Covered by this Agreement - This Agreement shall apply to unissued
Shares of the Fund, Shares of the Fund held in its treasury in the event that in
the discretion of the Fund, treasury Shares shall be sold, and Shares of the
Fund repurchased for resale.
5. Public Offering Price - Except as otherwise noted in the Fund's current
Prospectus and/or Statement of Additional Information, all Shares sold to
investors by the Distributor or the Fund will be sold at the public offering
price. The public offering price for all accepted subscriptions will be the net
asset value per Share, as determined in the manner described in the Fund's
current
<PAGE>
Prospectus and/or Statement of Additional Information, plus a sales charge
(if any) described in the Fund's current Prospectus and/or Statement of
Additional Information. The Fund shall in all cases receive the net asset
value per Share on all sales. If a sales charge is in effect, the
Distributor shall have the right, subject to such rules or regulations of the
Securities and Exchange Commission ("SEC") as may then be in effect pursuant
to Section 22 of the Investment Company Act of 1940, as amended (the "1940
Act"), to pay a portion of the sales charge to dealers who have sold Shares
of the Fund. If a fee in connection with shareholder redemptions is in
effect, the Fund shall collect the fee on behalf of the Distributor and,
unless otherwise agreed upon by the Fund and the Distributor, the Distributor
shall be entitled to receive all of such fees.
6. Suspension of Sales - If and whenever the determination of net asset value
is suspended and until such suspension is terminated, no further orders for
Shares shall be processed by the Distributor except such unconditional orders as
may have been placed with the Distributor before it had knowledge of the
suspension. In addition, the Fund reserves the right to suspend sales and the
Distributor's authority to process orders for Shares on behalf of the Fund if,
in the judgment of the Fund, it is in the best interests of the Fund to do so.
Suspension will continue for such period as may be determined by the Fund.
7. Solicitation of Sales - In consideration of these rights granted to the
Distributor, the Distributor agrees to use all reasonable efforts, consistent
with its other business, to secure purchasers for Shares of the Fund. This
shall not prevent the Distributor from entering into like arrangements
(including arrangements involving the payment of underwriting commissions) with
other issuers. If a sales charge is in effect, the Distributor shall have the
right to enter into sales agreements with dealers of its choice for the sale of
Shares of the Fund to the public at the public offering price only and fix in
such agreements the portion of the sales charge which may be retained by
dealers, provided that the Fund shall approve the form of the dealer agreement
and the dealer discounts set forth therein and shall evidence such approval by
filing said form of dealer agreement and amendments thereto as an exhibit to its
currently effective Registration Statement.
All activities by Distributor and its agents and employees as distributor of the
Shares shall comply with all applicable laws, rules and regulations, including,
without limitation, all rules and regulations made or adopted pursuant to the
1940 Act by the SEC or any securities association registered under the
Securities Exchange Act of 1934.
The Distributor will provide one or more persons, during normal business hours
(7:00 a.m. to 6:00 p.m. Mountain Time), as required, to respond to telephone
questions with respect to the Fund.
The Distributor will promptly transmit any orders received by it for purchase,
redemption or exchange of the Shares to the Fund's transfer agent, and will
promptly transmit any payments for shares to the Fund's transfer agent or
custodian.
8. Authorized Representations - The Distributor is not authorized by the Fund
to give any information or to make any representations other than those
contained in the appropriate
2
<PAGE>
Registration Statement or Prospectus and Statement of Additional Information
filed with the SEC under the 1933 Act (as such Registration Statement,
Prospectus and Statement of Additional Information may be amended from time to
time), or contained in shareholder reports or other material that may be
prepared by or on behalf of the Fund for the Distributor's use. Consistent with
the foregoing, the Distributor may prepare and distribute sales literature or
other material as it may deem appropriate in consultation with the Fund,
provided such sales literature complies with applicable law and regulation.
9. Registration of Shares - The Fund agrees that it will take all action
necessary to register the Shares under the 1933 Act so that there will be
available for sale the number of Shares the Distributor may reasonably be
expected to sell. The Fund shall make available to the Distributor, at the
Distributor's expense, such number of copies of its currently effective
Prospectus and Statement of Additional Information as the Distributor may
reasonably request. The Fund, at its expense, shall furnish to the Distributor
copies of all information, financial statements and other records which the
Distributor may reasonably request for use in connection with the distribution
of Shares of the Fund.
10. Distribution Expenses - Unless otherwise agreed to by the parties hereto in
writing, the Distributor shall bear all expenses in connection with the
performance of its services hereunder, including, but not limited to, the cost
of printing and distributing any Prospectuses and Statements of Additional
Information or reports in connection with the offering of Shares for sale to the
public other than those required to be distributed to existing shareholders of
the Fund. The cost to the Distributor shall be the incremental cost of
preparing materials above those required to satisfy existing shareholder
requirements. The Distributor shall have no obligation to pay or to reimburse
the Fund for any other expenses incurred by or on behalf of the Fund.
11. Fund Expenses - Unless otherwise agreed to by the parties hereto in writing
or by the Fund and the Fund's other agents, the Fund shall pay all fees and
expenses in connection with (a) the filing of any registration statement under
the 1933 Act and amendments prepared for use in connection with the offering of
Shares for sale to the public, (b) preparing, setting in type, printing and
mailing Prospectuses, Statements of Additional Information and any supplements
thereto sent to existing shareholders, (c) preparing, setting in type, printing
and mailing any report (including Annual and Semi-Annual Reports) or other
communication to shareholders of the Fund, and (d) the Blue Sky registration and
qualification of Shares for sale in the various states in which the Board of
Directors of the Fund shall determine it advisable to qualify such Shares for
sale (including registering the Fund as a broker or dealer or any officer of the
Fund as agent or salesman in any state).
12. Use of the Distributor's Name - The Fund shall not use the name of the
Distributor, or any of its affiliates, in any Prospectus or Statement of
Additional Information, sales literature, and other material relating to the
Fund in any manner without the prior written consent of the Distributor (which
shall not be unreasonably withheld); provided, however, that the Distributor
hereby approves all lawful uses of the names of the Distributor and its
affiliates in the Prospectuses and Statements of Additional Information of the
Fund and in all other materials
3
<PAGE>
which merely refer in accurate terms to their appointments hereunder or which
are required by the SEC, NASD, OCC or any state securities authority
13. Use of the Fund's Name - Neither the Distributor nor any of its affiliates
shall use the name of the Fund in any Prospectuses or Statements of Additional
Information, sales literature, or other material relating to the Fund on any
forms for other than internal use in any manner without the prior consent of the
Fund (which shall not be unreasonably withheld); provided however, that the Fund
hereby approves all lawful uses of its name in sales literature and all other
materials which are required by the Distributor in the discharge of its duties
hereunder which merely refer in accurate terms to the appointment of the
Distributor hereunder, or which are required by the SEC, NASD, OCC or any state
securities authority.
14. Insurance - The Distributor agrees to maintain fidelity bond and liability
insurance coverages which are, in scope and amount, consistent with coverages
customary for distribution activities. The Distributor shall notify the Fund
upon receipt of any notice of material, adverse change in the terms or
provisions of its insurance coverage. Such notification shall include the date
of change and the reason or reasons therefor. The Distributor shall notify the
Fund of any material claim against the Distributor, whether or not covered by
insurance, and shall notify the Fund from time to time as may be appropriate of
the total outstanding claims made by the Distributor under its insurance
coverage.
15. Indemnification - The Fund agrees to indemnify and hold harmless the
Distributor and each of its directors, officers and employees, and each person,
if any, who controls the Distributor within the meaning of Section 15 of the
1933 Act, against any loss, liability, claim, damages or expenses (including the
reasonable cost of investigating or defending any alleged loss, liability,
claim, damages, or expense and reasonable counsel fees incurred in connection
therewith) which any such person may incur in connection with any action, suit,
investigation or proceeding arising out of or based upon the ground that the
Registration Statement, Prospectus, Statement of Additional Information,
shareholder reports or other information filed or made public by the Fund (as
from time to time amended) included an untrue statement of a material fact or
omitted to state a material fact required to be stated or necessary in order to
make the statements not misleading under the 1933 Act, or any other statute or
the common law. However, the Fund does not agree to indemnify the Distributor
or hold it harmless to the extent that the statement or omission was made in
reliance upon, and in conformity with, information furnished to the Fund by or
on behalf of the Distributor.
Notwithstanding the foregoing, the Fund shall not be required to indemnify any
person hereunder unless a court of competent jurisdiction has determined, in a
final decision on the merits, that the person to be indemnified was not liable
by reason of willful misfeasance, bad faith, or gross negligence in the
performance of such person's duties, or by reason of such person's reckless
disregard of such person's obligations under this Agreement ("disabling
conduct"), or, in the absence of such a decision, a reasonable determination,
based upon a review of the facts, that the indemnified person was not liable by
reason of disabling conduct by (i) a vote of a majority of a quorum of the Board
of Directors of the Fund who are neither "interested persons" of the Fund as
defined in Section 2(a)(19) of the 1940 Act nor parties to the proceeding, or
(ii) an independent legal counsel in a written opinion.
4
<PAGE>
In no case (i) is the indemnity of the Fund in favor of the Distributor or any
other person indemnified herein to be deemed to protect the Distributor or any
other person against any liability to the Fund or its security holders to which
the Distributor or such other person would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and duties
under this Agreement, or (ii) is the Fund to be liable under its indemnity
agreement contained in this paragraph with respect to any claim made against the
Distributor or such other person indemnified herein unless the Distributor or
such other person, as the case may be, shall have notified the Fund in writing
of the claim within a reasonable time after the summons or other first written
notification giving information of the nature of the claim shall have been
served upon the Distributor or such other person (or after the Distributor or
such other person shall have received notice of service on any designated
agent). However, failure to notify the Fund of any claim shall not relieve the
Fund from any liability which it may have to the Distributor or such other
person against whom such action is brought otherwise than on account of its
indemnity agreement contained in this paragraph. The Fund shall be entitled to
participate at its own expense in the defense, or, if it so elects, to assume
the defense of any suit brought to enforce any such claims, but if the Fund
elects to assume the defense, the defense shall be conducted by counsel chosen
by the Fund and reasonably satisfactory to the Distributor or such other person
or persons, defendant or defendants in the suit. In the event the Fund elects
to assume the defense of any suit and retain counsel, the Distributor, its
officers or directors or controlling person or persons, or such other person or
persons, defendant or defendants in the suit, shall bear the fees and expenses
of any additional counsel retained by it or them. If the Fund does not elect to
assume the defense of any suit, it will reimburse the Distributor, its officers
or directors or controlling person or persons, or such other person or persons,
defendant or defendants in the suit for the reasonable fees and expenses of any
counsel retained by it or them. The Fund agrees to notify the Distributor
promptly of the commencement of any litigation or proceedings against it or any
of its officers or Directors in connection with the issuance or sale of any of
the Shares.
The Distributor agrees to indemnify and hold harmless the Fund and each of its
Directors, officers and employees, and each person, if any, who controls the
Fund within the meaning of Section 15 of the 1933 Act, against any loss,
liability, damages, claims or expense (including the reasonable cost of
investigating or defending any alleged loss, liability, damages, claim or
expense and reasonable counsel fees incurred in connection therewith) which such
person may incur in connection with any action, suit, investigation or
proceeding arising out of or based upon the 1933 Act or any other statute or
common law, alleging any wrongful act of the Distributor or any of its employees
or alleging that the Registration Statement, Prospectus, Statement of Additional
Information, shareholder reports or other information filed or made public by
the Fund (as from time to time amended) included an untrue statement of a
material fact or omitted to state a material fact required to be stated or
necessary in order to make the statements not misleading, insofar as the
statement or omission was made in reliance upon, and in conformity with,
information furnished to the Fund by or on behalf of the Distributor. In no
case (i) is the indemnity of the Distributor in favor of the Fund or such other
person indemnified to be deemed to protect the Fund or such other person against
any liability to which the Fund or such other person would otherwise be subject
by reason of willful misfeasance, bad faith or gross negligence in
5
<PAGE>
the performance of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement, or (ii) is the Distributor to be
liable under its indemnity agreement contained in this paragraph with respect to
any claim made against the Fund or such other person indemnified unless the Fund
or such other person, as the case may be, shall have notified the Distributor in
writing of the claim within a reasonable time after the summons or other first
written notification giving information of the nature of the claim shall have
been served upon the Fund or such other person (or after the Fund or such other
person shall have received notice of service on any designated agent). However,
failure to notify the Distributor of any claim shall not relieve the Distributor
from any liability which it may have to the Fund or such other person against
whom the action is brought otherwise than on account of its indemnity agreement
contained in this paragraph. In the case of any notice to the Distributor, it
shall be entitled to participate, at its own expense, in the defense or, if it
so elects, to assume the defense of any suit brought to enforce any such claim,
but if the Distributor elects to assume the defense, the defense shall be
conducted by counsel chosen by it and reasonably satisfactory to the Fund, to
its officers and Directors and to any controlling person or persons, or such
other person or persons, defendant or defendants in the suit. In the event
that the Distributor elects to assume the defense of any suit and retain
counsel, the Fund or its controlling person or persons, or such other person or
persons, defendant or defendants in the suit, shall bear the fees and expense of
any additional counsel retained by it or them. If the Distributor does not
elect to assume the defense of any suit, it will reimburse the Fund, its
officers and Directors or controlling person or persons, or such other person or
persons, defendant or defendants in the suit, for the reasonable fees and
expenses of any counsel retained by it or them. The Distributor agrees to
notify the Fund promptly of the commencement of any litigation or proceedings
against it in connection with the issuance and sale of any of the Shares.
16. Liability of the Distributor - The Distributor shall not be liable for any
damages or loss suffered by the Fund in connection with the matters to which
this Agreement relates, except for (a) damage or loss resulting from willful
misfeasance, bad faith or gross negligence on the Distributor's part in the
performance, or reckless disregard, of its duties under this Agreement, and (b)
damage and loss for which the Distributor has agreed to indemnify the Fund under
Section 15 of this Agreement. Any person, even though also an officer, partner,
employee or agent of the Distributor or any of its affiliates, who may be or
become an officer of the Fund, shall be deemed, when rendering services to or
acting on any business of the Fund in any such capacity (other than services or
business in connection with the Distributor's duties under this Agreement), to
be rendering such services to or acting solely for the Fund and not as an
officer, partner, employee or agent or one under the control or direction of the
Distributor or any of its affiliates, even if paid by the Distributor or an
affiliate thereof.
17. Acts of God, Etc. - The Distributor shall not be liable for delays or
errors occurring by reason of circumstances not reasonably foreseeable and
beyond its control, including but not limited to acts of civil or military
authority, national emergencies, work stoppages, fire, flood, catastrophe, acts
of God, insurrection, war riot, or failure of communication or power supply. In
addition, in the event of equipment breakdowns which are (i) beyond the
reasonable control of the Distributor and (ii) not primarily attributable to the
failure of the Distributor to reasonably maintain or provide for the maintenance
of such equipment, the Distributor shall, at no additional
6
<PAGE>
expense to the Fund, take reasonable steps in good faith to minimize service
interruptions but shall have no liability with respect thereto.
18. Supplemental Information - The Distributor and the Fund shall regularly
consult with each other regarding the Distributor's performance of its
obligations under this Agreement. In connection therewith, the Fund shall
submit to the Distributor at a reasonable time in advance of filing with the SEC
copies of any amended or supplemented Registration Statements (including
exhibits) under the 1933 Act and the 1940 Act, and, a reasonable time in advance
of their proposed use, copies of any amended or supplemented forms relating to
any plan, program or service offered by the Fund. Any change in such material
which would require any change in the Distributor's obligations under the
foregoing provisions shall be subject to the Distributor's approval, which shall
not be unreasonably withheld.
19. Term - This Agreement will become effective as of the date first written
above or such later date as may be agreed upon by the parties hereto, and shall
continue until ___________, 1999, and thereafter shall continue automatically
for successive annual periods, provided such continuance is specifically
approved at least annually (i) by the Fund's Board of Directors or (ii) by a
vote of a majority of the outstanding Shares of the Fund (as defined in the 1940
Act), provided that in either event the continuance is also approved by the
majority of the Fund's Directors who are not parties to the Agreement or
interested persons (as defined in the 1940 Act) of any party to this Agreement,
by vote cast in person at a meeting called for the purpose of voting on such
approval. This Agreement is terminable without penalty on not less than sixty
days' notice by the Fund's Directors, by vote of a majority of the outstanding
Shares of the Fund (as defined in the 1940 Act) or by the Distributor. Any
termination shall not affect the rights and obligations of the parties under
Sections 15, 19 or 21 hereof. This Agreement shall automatically terminate in
the event of its assignment (as defined in the 1940 Act).
Upon the termination of this Agreement, the Distributor, at the Fund's expense
and direction, shall transfer to such successor as the Fund shall specify all
relevant books, records and other data established or maintained by the
Distributor under this Agreement.
20. Notice - Any notice required or permitted to be given by either party to
the other hereunder shall be deemed sufficient if sent by (i) telex, (ii)
telecopier, or (iii) registered or certified mail, postage prepaid, addressed by
the party giving notice to the other party at the following address or at such
other address as may from time to time be furnished by the other party to the
party giving notice: if to the Fund at 1801 Century Park East, Suite 1800, Los
Angeles, California 90067, Attn: Craig B. Burger and if to the Distributor, at
370 17th Street, Suite 2700, Denver, Colorado, 80202, Attn: James V. Hyatt.
21. Confidential Information - The Distributor, its officers, directors,
employees and agents will treat confidentially and as proprietary information of
the Fund all records and other information relative to the Fund and to prior or
present shareholders or to those persons or entities who respond to the
Distributor's inquiries concerning investment in the Fund, and will not use such
records and information for any purposes other than performance of its
responsibilities
7
<PAGE>
and duties hereunder. If the Distributor is requested or required by oral
questions, interrogatories, request for information or documents, or subpoena in
connection with any civil investigation, demand or other action, proceeding or
process or is otherwise required by law, statute, regulation, writ, decree or
the like to disclose such information, the Distributor will provide the Fund
with prompt written notice of any such request or requirement so that the Fund
may seek an appropriate protective order or other appropriate remedy and/or
waive compliance with this provision. If such order or other remedy is not
sought, or obtained, or waiver not received, the Distributor may, without
liability hereunder, disclose to the person, entity or agency requesting or
requiring the information that portion of the information that is legally
required in the opinion of Distributor's counsel.
22. Miscellaneous - Each party agrees to perform such further acts and execute
such further documents as are necessary to effectuate the purposes hereof. This
Agreement shall be construed and enforced in accordance with and governed by the
laws of the State of Colorado to the extent federal law does not govern. The
captions in this Agreement are included for convenience of reference only and in
no way define or delimit any of the provisions hereof or otherwise affect their
construction or effect. Except as otherwise provided herein or under the 1940
Act, this Agreement may not be changed, waived, discharged or amended except by
written instrument which shall make specific reference to this Agreement and
which shall be signed by the party against which enforcement of such change,
waiver, discharge or amendment is sought. This Agreement may be executed
simultaneously in two or more counterparts, each of which taken together shall
constitute one and the same instrument.
8
<PAGE>
IN WITNESS WHEREOF, the Fund has executed this instrument in its name and
behalf by one of its officers duly authorized, and the Distributor has executed
this instrument in its name and behalf by one of its officers duly authorized,
as of the day and year first above written.
ALPS MUTUAL FUNDS
SERVICES, INC.
By: /s/ Edmund J Burke
Name: Edmund J. Burke
Title: Senior Vice President
STONEBRIDGE AGGRESSIVE GROWTH
FUND, INC.
By: /s/ John G. Ayer
Name: John G. Ayer
Title: President
9
<PAGE>
ADMINISTRATION AGREEMENT
As of August 1, 1997
ALPS Mutual Funds Services, Inc.
370 Seventeenth Street
Suite 2700
Denver, Colorado 80202
Dear Sirs:
Stonebridge Aggressive Growth Fund, Inc., a Delaware corporation (the
"Fund"), herewith confirms its agreement with ALPS Mutual Funds Services, Inc.
("ALPS") as follows:
The Fund desires to employ its capital by investing and reinvesting
the same in investments of the type and in accordance with the limitations
specified in the Fund's Prospectus and Statement of Additional Information as
from time to time in effect, copies of which have been or will be submitted to
ALPS, and resolutions of the Fund's Board of Directors. The Fund desires to
employ ALPS as its administrator for the Fund.
1. SERVICES AS ADMINISTRATOR
Subject to the direction and control of the Board of Directors of the
Fund, ALPS will: (a) assist in maintaining office facilities (which may be in
the offices of ALPS or a corporate affiliate but shall be in such location as
the Fund and ALPS shall reasonably determine); (b) furnish clerical services and
stationery and office supplies; (c) compile data for and prepare with respect to
the Fund timely Notices to the Securities and Exchange Commission required
pursuant to Rule 24f-2 under the Investment Company Act of 1940 (the "1940 Act")
and Semi-Annual Reports on Form N-SAR; (d) coordinate execution and filing by
the Fund of all federal and state tax returns and required tax filings other
than those required to be made by the Fund's custodian; (e) prepare compliance
filings pursuant to state "Blue Sky" securities laws with the advice of the
Fund's counsel; (f) assist to the extent requested by the Fund with the Fund's
preparation of Annual and Semi-Annual Reports to Fund shareholders and
Registration Statements for the Fund (on Form N-1A or any replacement therefor);
(g) monitor the Fund's expense accruals and pay all expenses on proper
authorization from the Fund; (h) monitor the Fund's status as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986, as
amended from time to time; (i) maintain the Fund's fidelity bond as required by
the 1940 Act; (j) monitor compliance with the policies and limitations of the
Fund as set forth in the Prospectus, Statement of Additional Information, Code
of Regulations and Declaration of Fund; (k) generally assist in the Fund's
operations; (l) perform Transfer Agency services as set out in the "Transfer
Agency Agreement" and 800-line servicing; and (m) act as principal underwriter
and distributor of the Fund's securities pursuant to a Distribution Agreement.
<PAGE>
In compliance with the requirements of Rule 31a-3 under the 1940 Act,
ALPS hereby agrees that all records which it maintains for the Fund are the
property of the Fund and further agrees to surrender promptly to the Fund any of
such records upon the Fund's request. ALPS further agrees to preserve for the
periods prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
2. FEES; DELEGATION; EXPENSES
In consideration of services rendered pursuant to this Agreement, the
Transfer Agency Agreement, and all other services described herein, the Fund
will pay ALPS a fee, computed daily and payable monthly in arrears, at the
annual rate of .10% of the average daily net assets of the Fund up to
$250,000,000 and 0.075% of the average daily net assets of the Fund in excess of
$250,000,000. At all times ALPS' fee will be no less than $5,000 per month in
the first year, and $6,250 per month in years two and three. Net asset value
shall be computed in accordance with the Fund's Prospectus and Statement of
Additional Information and resolutions of the Fund's Board of Directors. The
fee for any portion of a month shall be pro-rated according to the proportion
which such portion bears to the full monthly period.
This fee arrangement is based on the fact that: (a) any foreign
holdings of the Fund are invested via American Depository Receipts ("ADRs") or
other securities which trade on a U.S. exchange (should the Fund have
investments in non-U.S. exchange traded securities the Fund will bear
incremental pricing and custody costs associated with such international
securities); (b) the Fund has a single class of shares (additional minimum
fees would apply for each additional class); (c) shareholders receive quarterly
statements; and (e) any NASD registration and insurance costs of any Stonebridge
Capital Management employees who become licensed with ALPS pursuant to a
separate arrangement shall be borne by Stonebridge Capital Management and not
the Fund or ALPS.
ALPS will from time to time employ or associate itself with such
person or persons or organizations as ALPS may believe to be desirable in the
performance of its duties. Such person or persons may be officers and employees
who are employed by both ALPS and the Fund. The compensation of such person or
persons or organizations shall be paid by ALPS and no obligation shall be
incurred on behalf of the Fund in such respect.
ALPS will bear all expenses in connection with the performance of its
services under this Agreement and all related agreements, except as otherwise
provided herein. ALPS will not bear any of the costs of Stonebridge Capital
Management personnel. Other expenses incurred in the operation of the Fund
shall be borne by the Fund, including costs of bookkeeping, pricing, and
accounting services; transfer agency and custodial expenses; taxes; interest;
Directors' fees; brokerage fees and commissions; state Blue Sky qualification
fees; advisory fees; insurance premiums; fidelity bond premiums; Fund and
advisory related legal expenses; costs of maintenance of corporate existence;
printing and delivery of materials in connection with meetings of the Directors;
and SEC registration fees.
3. PROPRIETARY AND CONFIDENTIAL INFORMATION
2
<PAGE>
ALPS agrees on behalf of itself and its officers, directors, employees
and agents, to treat confidentially and as proprietary information of the Fund
all records and other information relative to the Fund and its shareholders and
not to use such records and information for any purpose other than performance
of its responsibilities and duties hereunder, except after prior notification to
and approval in writing by the Fund, which approval shall not be unreasonably
withheld and may not be withheld where ALPS may be exposed to civil, regulatory
or criminal proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, or when so requested by the Fund.
4. LIMITATION OF LIABILITY
ALPS shall not be liable for any error of judgment or mistake of law
or for any loss suffered by the Fund in connection with the matters to which
this Agreement relates, except for a loss resulting from willful misfeasance,
bad faith or gross negligence on its part in the performance of its duties or
from reckless disregard by it of its obligations and duties under this
Agreement.
5. TERM
This Agreement shall become effective as of the date set forth above
and, unless sooner terminated as provided herein, shall continue for a period of
three years (the "Initial Term"). Thereafter, this Agreement shall continue
automatically for successive annual periods ending December 31 of each year,
PROVIDED such continuance is specifically approved at least annually by the
Fund's Board of Directors. During the Initial Term, the performance of ALPS'
obligations and duties as Administrator shall be specifically reviewed at least
annually by the Fund's Board of Directors. During the Initial Term, this
Agreement may be terminated, without penalty, solely by agreement of the parties
or for cause (as defined below) on not less than ninety days written notice by
the Fund's Board of Directors. After the Initial Term, this Agreement may be
terminated with or without cause and without penalty, by the Fund's Board of
Directors, or by ALPS, on not less than ninety days written notice.
Termination for "cause" for the Initial Term shall mean:
(i) willful misfeasance, bad faith, gross negligence, or reckless disregard
on the part of ALPS with respect to its obligations and duties hereunder;
(ii) Regulatory, administrative, or judicial proceedings against ALPS which
result in a determination that it has violated any rule, regulation, order, or
law and which, in the reasonable judgment of the Fund's Board of Directors,
substantially impairs the performance of ALPS' obligations and duties hereunder;
(iii) financial difficulties on the part of ALPS which are evidenced by the
authorization or commencement of, or involvement by way of pleading, answer,
consent, or acquiescence in, a voluntary or involuntary case under Title 11 of
the United States Code, as from time to time in effect, or any applicable law
other than said Title 11, of any jurisdiction relating to the
3
<PAGE>
liquidation or reorganization of debtors or to the modification or alteration of
the rights of creditors; or
(iv) failure by ALPS to keep in effect professional liability insurance
naming ALPS as insured and providing coverage with respect to ALPS' activities
on behalf of the Fund in the amount of at least $1,000,000.
6. GOVERNING LAW
This Agreement shall be governed by the laws of the State of Colorado
to the extent federal law does not govern.
7. OTHER PROVISIONS
The Fund recognizes that from time to time directors, officers and
employees of ALPS may serve as directors, officers and employees of other
corporations or businesses (including other investment companies) and that such
other corporations and funds may include ALPS as part of their name and that
ALPS or its affiliates may enter into administration or other agreements with
such other corporations and funds.
If the foregoing is in accordance with your understanding, will you kindly so
indicate by signing and returning to us the enclosed copy hereof.
Accepted: Very Truly Yours,
ALPS MUTUAL FUNDS SERVICES, INC. STONEBRIDGE AGGRESSIVE
GROWTH FUND, INC.
By: /s/ Edmund J. Burke By: /s/ John G. Ayer
Name: Edmund J. Burke Name: John G. Ayer
Title: Senior Vice President Title: President
4
<PAGE>
CUSTODY AGREEMENT
THIS AGREEMENT, is made as of June 30, 1997, by and between STONEBRIDGE
AGGRESSIVE GROWTH FUNDS, INC., a corporation organized under the laws of the
State of Delaware the "Fund"), and THE FIFTH THIRD BANK, a banking company
organized under the laws of the State of Ohio (the "Custodian").
WITNESSETH:
WHEREAS, the Fund desires that the Securities and cash of its investment
portfolio identified in Exhibit A hereto, be held and administered by the
Custodian pursuant to this Agreement; and
WHEREAS, the Fund is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Custodian represents that it is a bank having the
qualifications prescribed in Section 26(a)(i) of the 1940 Act;
NOW, THEREFORE, in consideration of the mutual agreements herein made, the
Fund and the Custodian hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
1.1 "AUTHORIZED PERSON" means any Officer or other person duly authorized
by resolution of the Board of Directors to give Oral Instructions and Written
Instructions on behalf of the Fund and named in Exhibit B hereto or in such
resolutions of the Board of Directors, certified by an Officer, as may be
received by the Custodian from time to time.
1.2 "BOARD OF DIRECTORS" shall mean the Directors from time to time
serving under the Fund's Articles of Incorporation and By-Laws, as from time to
time amended.
1.3 "BOOK-ENTRY SYSTEM" shall mean a federal book-entry system as provided
in Subpart O of Treasury Circular No. 300, 31 CFR 306, in Subpart B of 31 CFR
Part 350, or in such book-entry regulations of federal agencies as are
substantially in the form of such Subpart O.
1.4 "BUSINESS DAY" shall mean any day recognized as a settlement day by
The New York Stock Exchange, Inc. and any other day for which the Fund computes
the net asset value of the Fund.
1.5 "NASD" shall mean The National Association of Securities Dealers, Inc.
<PAGE>
1.6 "OFFICER" shall mean the President, any Vice President, the Secretary,
any Assistant Secretary, the Treasurer, or any Assistant Treasurer of the Fund.
1.7 "ORAL INSTRUCTIONS" shall mean instructions orally transmitted to and
accepted by the Custodian because such instructions are: (i) reasonably
believed by the Custodian to have been given by an Authorized Person, (ii)
recorded and kept among the records of the Custodian made in the ordinary course
of business and (iii) orally confirmed by the Custodian. The Fund shall cause
all Oral Instructions to be confirmed by Written Instructions. If such Written
Instructions confirming Oral Instructions are not received by the Custodian
prior to a transaction, it shall in no way affect the validity of the
transaction or the authorization thereof by the Fund. If Oral Instructions vary
from the Written Instructions which purport to confirm them, the Custodian shall
notify the Fund of such variance but such Oral Instructions will govern unless
the Custodian has not yet acted.
1.8 "CUSTODY ACCOUNT" shall mean any account in the name of the Fund,
which is provided for in Section 3.2 below.
1.9 "PROPER INSTRUCTIONS" shall mean Oral Instructions or Written
Instructions. Proper Instructions may be continuing Written Instructions when
deemed appropriate by both parties.
1.10 "SECURITIES DEPOSITORY" shall mean The Participants Fund Company or
The Depository Fund Company and (provided that Custodian shall have received a
copy of a resolution of the Board of Directors, certified by an Officer,
specifically approving the use of such clearing agency as a depository for the
Fund) any other clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Securities and Exchange Act of 1934 (the
"1934 Act"), which acts as a system for the central handling of Securities where
all Securities of any particular class or series of an issuer deposited within
the system are treated as fungible and may be transferred or pledged by
bookkeeping entry without physical delivery of the Securities.
1.11 "SECURITIES" shall include, without limitation, common and preferred
stocks, bonds, call options, put options, debentures, notes, bank certificates
of deposit, bankers' acceptances, mortgage-backed securities, other money market
instruments or other obligations, and any certificates, receipts, warrants or
other instruments or documents representing rights to receive, purchase or
subscribe for the same, or evidencing or representing any other rights or
interests therein, or any similar property or assets that the Custodian has the
facilities to clear and to service.
1.12 "SHARES" shall mean the units of beneficial interest issued by the
Fund.
1.13 "WRITTEN INSTRUCTIONS" shall mean (i) written communications actually
received by the Custodian and signed by one or more persons as the Board of
Directors shall have from time to time authorized, or (ii) communications by
telex or any other such system from a person or persons reasonably believed by
the Custodian to be Authorized, or (iii) communications transmitted
electronically through the Institutional Delivery System (IDS), or any other
similar electronic instruction system acceptable to Custodian and approved by
resolutions of the Board of Directors, a copy of which, certified by an Officer,
shall have been delivered to the Custodian.
2
<PAGE>
ARTICLE II
APPOINTMENT OF CUSTODIAN
2.1 APPOINTMENT. The Fund hereby constitutes and appoints the Custodian
as custodian of all Securities and cash owned by or in the possession of the
Fund at any time during the period of this Agreement, provided that such
Securities or cash at all times shall be and remain the property of the Fund.
2.2 ACCEPTANCE. The Custodian hereby accepts appointment as such
custodian and agrees to perform the duties thereof as hereinafter set forth and
in accordance with the 1940 Act as amended. Except as specifically set forth
herein, the Custodian shall have no liability and assumes no responsibly for any
non-compliance by the Fund of any laws, rules or regulations.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
3.1 SEGREGATION. All Securities and non-cash property held by the
Custodian for the account of the Fund, except Securities maintained in a
Securities Depository or Book-Entry System, shall be physically segregated from
other Securities and non-cash property in the possession of the Custodian and
shall be identified as subject to this Agreement.
3.2 CUSTODY ACCOUNT. The Custodian shall open and maintain in its trust
department a custody account in the name of each Fund, subject only to draft or
order of the Custodian, in which the Custodian shall enter and carry all
Securities, cash and other assets of the Fund which are delivered to it.
3.3 APPOINTMENT OF AGENTS. In its discretion, the Custodian may appoint,
and at any time remove, any domestic bank or trust company, which has been
approved by the Board of Directors and is qualified to act as a custodian under
the 1940 Act, as sub-custodian to hold Securities and cash of the Fund and to
carry out such other provisions of this Agreement as it may determine, and may
also open and maintain one or more banking accounts with such a bank or trust
company (any such accounts to be in the name of the Custodian and subject only
to its draft or order), provided, however, that the appointment of any such
agent shall not relieve the Custodian of any of its obligations or liabilities
under this Agreement.
3.4 DELIVERY OF ASSETS TO CUSTODIAN. The Fund shall deliver, or cause to
be delivered, to the Custodian all of the Fund's Securities, cash and other
assets, including (a) all payments of income, payments of principal and capital
distributions received by the Fund with respect to such Securities, cash or
other assets owned by the Fund at any time during the period of this Agreement,
and (b) all cash received by the Fund for the issuance, at any time during such
period, of Shares. The Custodian shall not be responsible for such Securities,
cash or other assets until actually received by it.
3.5 SECURITIES DEPOSITORIES AND BOOK-ENTRY SYSTEMS. The Custodian may
deposit and/or maintain Securities of the Fund in a Securities Depository or in
a Book-Entry System, subject to the
3
<PAGE>
following provisions:
(a) Prior to a deposit of Securities of the Fund in any Securities
Depository or Book-Entry System, the Fund shall deliver to the
Custodian a resolution of the Board of Directors, certified by an
Officer, authorizing and instructing the Custodian on an on-going
basis to deposit in such Securities Depository or Book-Entry System
all Securities eligible for deposit therein and to make use of such
Securities Depository or Book-Entry System to the extent possible and
practical in connection with its performance hereunder, including,
without limitation, in connection with settlements of purchases and
sales of Securities, loans of Securities, and deliveries and returns
of collateral consisting of Securities. So long as such Securities
Depository or Book-Entry System shall continue to be employed for the
deposit of Securities of the Fund, shall annually re-adopt such
resolution and deliver a copy thereof, certified by an Officer, to the
Custodian.
(b) Securities of the Fund kept in a Book-Entry System or Securities
Depository shall be kept in an account ("Depository Account") of the
Custodian in such Book-Entry System or Securities Depository which
includes only assets held by the Custodian as a fiduciary, custodian
or otherwise for customers.
(c) The records of the Custodian and the Custodian's account on the books
of the Book-Entry System and Securities Depository as the case may be,
with respect to Securities of the Fund maintained in a Book-Entry
System or Securities Depository shall, by book-entry, or otherwise
identify such Securities as belonging to the Fund.
(d) If Securities purchases by the Fund are to be held in a Book-Entry
System or Securities Depository, the Custodian shall pay for such
Securities upon (i) receipt of advice from the Book-Entry System or
Securities Depository that such Securities have been transferred to
the Depository Account, and (ii) the making of an entry on the records
of the Custodian to reflect such payment and transfer for the account
of the Fund. If Securities sold by the Fund are held in a Book-Entry
System or Securities Depository, the Custodian shall transfer such
Securities upon (i) receipt of advice from the Book-Entry System or
Securities depository that payment for such Securities has been
transferred to the Depository Account, and (ii) the making of an entry
on the records of the Custodian to reflect such transfer and payment
for the account of the Fund.
(e) Upon request, the Custodian shall provide the Fund with copies of any
report (obtained by the Custodian from a Book-Entry System or
Securities Depository in which Securities of the Fund is kept) on the
internal accounting controls and procedures for safeguarding
Securities deposited in such Book-Entry System or Securities
Depository.
(f) Anything to the contrary in this Agreement notwithstanding, the
Custodian shall be liable to the Fund for any loss or damage to the
Fund resulting (i) from the use of a Book-Entry System or Securities
Depository by reason of any negligence or willful misconduct on the
part of Custodian or any sub-custodian appointed pursuant to Section
3.3 above or any of its or their employees, or (ii) from failure of
Custodian or any such
4
<PAGE>
sub-custodian to enforce effectively such rights as it may have
against a Book-Entry System or Securities Depository. At its
election, the Fund shall be subrogated to the rights of the Custodian
with respect to any claim against a Book-Entry System or Securities
Depository or any other person for any loss or damage to the Fund
arising from the use of such Book-Entry System or Securities
Depository, if and to the extent that the Fund has been made whole for
any such loss or damage.
3.6 DISBURSEMENT OF MONEYS FROM CUSTODY ACCOUNTS. Upon receipt of Proper
Instructions, the Custodian shall disburse moneys from the Fund Custody Account
but only in the following cases:
(a) For the purchase of Securities for the Fund but only upon compliance
with Section 4.1 of this Agreement and only (i) in the case of
Securities (other than options on Securities, futures contracts and
options on futures contracts), against the delivery to the Custodian
(or any sub-custodian appointed pursuant to Section 3.3 above) of such
Securities registered as provided in Section 3.9 below in proper form
for transfer, or if the purchase of such Securities is effected
through a Book-Entry System or Securities Depository, in accordance
with the conditions set forth in Section 3.5 above; (ii) in the case
of options on Securities, against delivery to the Custodian (or such
sub-custodian) of such receipts as are required by the customs
prevailing among dealers in such options; (iii) in the case of futures
contracts and options on futures contracts, against delivery to the
Custodian (or such sub-custodian) of evidence of title thereto in
favor of the Fund or any nominee referred to in Section 3.9 below; and
(iv) in the case of repurchase or reverse repurchase agreements
entered into between the Fund and a bank which is a member of the
Federal Reserve System or between the Fund and a primary dealer in
U.S. Government securities, against delivery of the purchased
Securities either in certificate form or through an entry crediting
the Custodian's account at a Book-Entry System or Securities
Depository for the account of the Fund with such Securities;
(b) In connection with the conversion, exchange or surrender, as set forth
in Section 3.7(f) below, of Securities owned by the Fund;
(c) For the payment of any dividends or capital gain distributions
declared by the Fund;
(d) In payment of the redemption price of Shares as provided in Section
5.1 below;
(e) For the payment of any expense or liability incurred by the Fund,
including but not limited to the following payments for the account of
the Fund: interest; taxes; administration, investment management,
investment advisory, accounting, auditing, transfer agent, custodian,
trustee and legal fees; and other operating expenses of the Fund; in
all cases, whether or not such expenses are to be in whole or in part
capitalized or treated as deferred expenses;
(f) For transfer in accordance with the provisions of any agreement among
the Fund, the Custodian and a broker-dealer registered under the 1934
Act and a member of the NASD, relating to compliance with rules of The
Options Clearing Corporation and of
5
<PAGE>
any registered national securities exchange (or of any similar
organization or organizations) regarding escrow or other arrangements
in connection with transactions by the Fund;
(g) For transfer in accordance with the provisions of any agreement among
the Fund, the Custodian, and a futures commission merchant registered
under the Commodity Exchange Act, relating to compliance with the
rules of the Commodity Futures Trading Commission and/or any contract
market (or any similar organization or organizations) regarding
account deposits in connection with transactions by the Fund;
(h) For the funding of any uncertificated time deposit or other
interest-bearing account with any banking institution (including the
Custodian), which deposit or account has a term of one year or less;
and
(i) For any other proper purposes, but only upon receipt, in addition to
Proper Instructions, of a copy of a resolution of the Board of
Directors, certified by an Officer, specifying the amount and purpose
of such payment, declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom such payment is to
be made.
3.7 DELIVERY OF SECURITIES FROM FUND CUSTODY ACCOUNTS. Upon receipt of
Proper Instructions, the Custodian shall release and deliver Securities from a
Custody Account but only in the following cases:
(a) Upon the sale of Securities for the account of the Fund but only
against receipt of payment therefor in cash, by certified or cashiers
check or bank credit;
(b) In the case of a sale effected through a Book-Entry System or
Securities Depository, in accordance with the provisions of Section
3.5 above;
(c) To an Offeror's depository agent in connection with tender or other
similar offers for Securities of the Fund; provided that, in any such
case, the cash or other consideration is to be delivered to the
Custodian;
(d) To the issuer thereof or its agent (i) for transfer into the name of
the Fund, the Custodian or any sub-custodian appointed pursuant to
Section 3.3 above, or of any nominee or nominees of any of the
foregoing, or (ii) for exchange for a different number of certificates
or other evidence representing the same aggregate face amount or
number of units; provided that, in any such case, the new Securities
are to be delivered to the Custodian;
(e) To the broker selling Securities, for examination in accordance with
the "street delivery" custom;
(f) For exchange or conversion pursuant to any plan of merger,
consolidation,
6
<PAGE>
recapitalization, reorganization or readjustment of the issuer of such
Securities, or pursuant to provisions for conversion contained in such
Securities, or pursuant to any deposit agreement, including surrender
or receipt of underlying Securities in connection with the issuance or
cancellation of depository receipts; provided that, in any such case,
the new Securities and cash, if any, are to be delivered to the
Custodian;
(g) Upon receipt of payment therefor pursuant to any repurchase or reverse
repurchase agreement entered into by the Fund;
(h) In the case of warrants, rights or similar Securities, upon the
exercise thereof, provided that, in any such case, the new Securities
and cash, if any, are to be delivered to the Custodian;
(i) For delivery in connection with any loans of Securities of the Fund,
but only against receipt of such collateral as the Fund shall have
specified to the Custodian in Proper Instructions;
(j) For delivery as security in connection with any borrowings by the Fund
requiring a pledge of assets by such Fund, but only against receipt by
the Custodian of the amounts borrowed;
(k) Pursuant to any authorized plan of liquidation, reorganization,
merger, consolidation or recapitalization of the Fund;
(l) For delivery in accordance with the provisions of any agreement among
the Fund, the Custodian and a broker-dealer registered under the 1934
Act and a member of the NASD, relating to compliance with the rules of
The Options Clearing Corporation and of any registered national
securities exchange (or of any similar organization or organizations)
regarding escrow or other arrangements in connection with transactions
by the Fund;
(m) For delivery in accordance with the provisions of any agreement among
the Fund, the Custodian, and a futures commission merchant registered
under the Commodity Exchange Act, relating to compliance with the
rules of the Commodity Futures Trading Commission and/or any contract
market (or any similar organization or organizations) regarding
account deposits in connection with transactions by the Fund; or
(n) For any other proper corporate purposes, but only upon receipt, in
addition to Proper Instructions, of a copy of a resolution of the
Board of Directors, certified by an Officer, 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 corporate purpose,
and naming the person or persons to whom delivery of such Securities
shall be made.
3.8 ACTIONS NOT REQUIRING PROPER INSTRUCTIONS. Unless otherwise
instructed by the Fund, the Custodian shall with respect to all Securities held
for the Fund:
7
<PAGE>
(a) Subject to Section 7.4 below, collect on a timely basis all income and
other payments to which the Fund is entitled either by law or pursuant
to custom in the securities business;
(b) Present for payment and, subject to Section 7.4 below, collect on a
timely basis the amount payable upon all Securities which may mature
or be called, redeemed, or retired, or otherwise become payable;
(c) Endorse for collection, in the name of the Fund, checks, drafts and
other negotiable instruments;
(d) Surrender interim receipts or Securities in temporary form for
Securities in definitive form;
(e) Execute, as custodian, 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 prepare
and submit reports to the Internal Revenue Service ("IRS") and to the
Fund at such time, in such manner and containing such information as
is prescribed by the IRS;
(f) Hold for the Fund, either directly or, with respect to Securities held
therein, through a Book-Entry System or Securities Depository, all
rights and similar securities issued with respect to Securities of the
Fund; and
(g) In general, and except as otherwise directed in Proper Instructions,
attend to all non-discretionary details in connection with sale,
exchange, substitution, purchase, transfer and other dealings with
Securities and assets of the Fund.
3.9 REGISTRATION AND TRANSFER OF SECURITIES. All Securities held for the
Fund that are issued or issuable only in bearer form shall be held by the
Custodian in that form, provided that any such Securities shall be held in a
Book-Entry System for the account of the Fund, if eligible therefor. All other
Securities held for the Fund may be registered in the name of the Fund, the
Custodian, or any sub-custodian appointed pursuant to Section 3.3 above, or in
the name of any nominee of any of them, or in the name of a Book-Entry System,
Securities Depository or any nominee of either thereof; provided, however, that
such Securities are held specifically for the account of the Fund. The Fund
shall furnish to the Custodian appropriate instruments to enable the Custodian
to hold or deliver in proper form for transfer, or to register in the name of
any of the nominees hereinabove referred to or in the name of a Book-Entry
System or Securities Depository, any Securities registered in the name of the
Fund.
3.10 RECORDS. (a) The Custodian shall maintain complete and accurate
records with respect to Securities, cash or other property held for the Fund,
including (i) journals or other records of original entry containing an itemized
daily record in detail of all receipts and deliveries of Securities and all
receipts and disbursements of cash; (ii) ledgers (or other records) reflecting
(A) Securities in transfer, (B) Securities in physical possession, (C) monies
and Securities borrowed and monies and Securities
8
<PAGE>
loaned (together with a record of the collateral therefor and substitutions of
such collateral), (D) dividends and interest received, and (E) dividends
receivable and interest accrued; and (iii) canceled checks and bank records
related thereto. The Custodian shall keep such other books and records of the
Fund as the Fund shall reasonably request, or as may be required by the 1940
Act, including, but not limited to Section 3.1 and Rule 31a-1 and Rule 31a-2
promulgated thereunder.
(b) All such books and records maintained by the Custodian shall (i) be
maintained in a form acceptable to the Fund and in compliance with rules and
regulations of the Securities and Exchange Commission, (ii) be the property of
the Fund and at all times during the regular business hours of the Custodian be
made available upon request for inspection by duly authorized officers,
employees or agents of the Fund and employees or agents of the Securities and
Exchange Commission, and (iii) if required to be maintained by Rule 31a-1 under
the 1940 Act, be preserved for the periods prescribed in Rule 31a-2 under the
1940 Act.
3.11 FUND REPORTS BY CUSTODIAN. The Custodian shall furnish the Fund with
a daily activity statement a summary of all transfers to or from the Custody
Account on the day following such transfers. At least monthly and from time to
time, the Custodian shall furnish the Fund with a detailed statement, of the
Securities and moneys held for the Fund under this Agreement.
3.12 OTHER REPORTS BY CUSTODIAN. The Custodian shall provide the Fund with
such reports, as the Fund may reasonably request from time to time, on the
internal accounting controls and procedures for safeguarding Securities, which
are employed by the Custodian or any sub-custodian appointed pursuant to Section
3.3 above.
3.13 PROXIES AND OTHER MATERIALS. The Custodian shall cause all proxies if
any, relating to Securities which are not registered in the name of the Fund, to
be promptly executed by the registered holder of such Securities, without
indication of the manner in which such proxies are to be voted, and shall
include all other proxy materials, if any, promptly deliver to the Fund such
proxies, all proxy soliciting materials, which should include all other proxy
materials, if any, and all notices to such Securities.
3.14 INFORMATION ON CORPORATE ACTIONS. Custodian will promptly notify the
Fund of corporate actions, limited to those Securities registered in nominee
name and to those Securities held at a Depository or sub-Custodian acting as
agent for Custodian. Custodian will be responsible only if the notice of such
corporate actions is published by the Financial Daily Card Service, J.J. Kenny
Called Bond Service, DTC, or received by first class mail from the agent. For
market announcements not yet received and distributed by Custodian's services,
Fund will inform its custody representative with appropriate instructions.
Custodian will, upon receipt of Trust's response within the required deadline,
affect such action for receipt or payment for the Fund. For those responses
received after the deadline, Custodian will affect such action for receipt or
payment, subject to the limitations of the agent(s) affecting such actions.
Custodian will promptly notify Fund for put options only if the notice is
received by first class mail from the agent. The Fund will provide or cause to
be provided to Custodian with all relevant information contained in the
prospectus for any security which has unique put/option provisions and provide
Custodian with specific tender instructions at least ten business days prior to
the beginning date of the tender period.
9
<PAGE>
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
4.1 PURCHASE OF SECURITIES. Promptly upon each purchase of Securities for
the Fund, Written Instructions shall be delivered to the Custodian, specifying
(a) the name of the issuer or writer of such Securities, and the title or other
description thereof, (b) the number of shares, principal amount (and accrued
interest, if any) or other units purchased, (c) the date of purchase and
settlement, (d) the purchase price per unit, (e) the total amount payable upon
such purchase, and (f) the name of the person to whom such amount is payable.
The Custodian shall upon receipt of such Securities purchased by the Fund pay
out of the moneys held for the account of the Fund the total amount specified in
such Written Instructions to the person named therein. The Custodian shall not
be under any obligation to pay out moneys to cover the cost of a purchase of
Securities for the Fund, if in the relevant Custody Account there is
insufficient cash available to the Fund for which such purchase was made.
4.2 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES PURCHASED.
In any and every case where payment for the purchase of Securities for the Fund
is made by the Custodian in advance of receipt for the account of the Fund of
the Securities purchased but in the absence of specific Written or Oral
Instructions to so pay in advance, the Custodian shall be liable to the Fund for
such Securities to the same extent as if the Securities had been received by the
Custodian.
4.3 SALE OF SECURITIES. Promptly upon each sale of Securities by the
Fund, Written Instructions shall be delivered to the Custodian, specifying (a)
the name of the issuer or writer of such Securities, and the title or other
description thereof, (b) the number of shares, principal amount (and accrued
interest, if any), or other units sold, (c) the date of sale and settlement (d)
the sale price per unit, (e) the total amount payable upon such sale, and (f)
the person to whom such Securities are to be delivered. Upon receipt of the
total amount payable to the Fund as specified in such Written Instructions, the
Custodian shall deliver such Securities to the person specified in such Written
Instructions. Subject to the foregoing, the 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.
4.4 DELIVERY OF SECURITIES SOLD. Notwithstanding Section 4.3 above or any
other provision of this Agreement, the Custodian, when instructed to deliver
Securities against payment, shall be entitled, if in accordance with generally
accepted market practice, to deliver such Securities prior to actual receipt of
final payment therefor. In any such case, the Fund shall bear the risk that
final payment for such Securities may not be made or that such Securities may be
returned or otherwise held or disposed of by or through the person to whom they
were delivered, and the Custodian shall have no liability for any of the
foregoing.
4.5 PAYMENT FOR SECURITIES SOLD, ETC. In its sole discretion and from
time to time, the Custodian may credit the relevant Custody Account, prior to
actual receipt of final payment thereof, with (i) proceeds from the sale of
Securities which it has been instructed to deliver against payment, (ii)
proceeds from the redemption of Securities or other assets of the Fund, and
(iii) income from cash,
10
<PAGE>
Securities or other assets of the Fund. Any such credit shall be conditional
upon actual receipt by Custodian of final payment and may be reversed if final
payment is not actually received in full. The Custodian may, in its sole
discretion and from time to time, permit the Fund to use funds so credited to
its Custody Account in anticipation of actual receipt of final payment. Any
such funds shall be repayable immediately upon demand made by the Custodian at
any time prior to the actual receipt of all final payments in anticipation of
which funds were credited to the Custody Account.
4.6 ADVANCES BY CUSTODIAN FOR SETTLEMENT. The Custodian may, in its sole
discretion and from time to time, advance funds to the Fund to facilitate the
settlement of the Fund transactions on behalf of the Fund in its Custody
Account. Any such advance shall be repayable immediately upon demand made by
Custodian.
ARTICLE V
REDEMPTION OF TRUST SHARES
TRANSFER OF FUND. From such funds as may be available for the purpose in
the relevant Custody Account, and upon receipt of Proper Instructions specifying
that the funds are required to redeem Shares of the Fund, the Custodian shall
wire each amount specified in such Proper Instructions to or through such bank
as the Fund may designate with respect to such amount in such Proper
Instructions. Upon effecting payment or distribution in accordance with proper
Instruction, the Custodian shall not be under any obligation or have any
responsibility thereafter with respect to any such paying bank.
ARTICLE VI
SEGREGATED ACCOUNTS
Upon receipt of Proper Instructions, the Custodian shall establish and
maintain a segregated account or accounts for and on behalf of each Fund, into
which account or accounts may be transferred cash and/or Securities, including
Securities maintained in a Depository Account,
(a) in accordance with the provisions of any agreement among the Fund, the
Custodian and a broker-dealer registered under the 1934 Act and a
member of the NASD (or any futures commission merchant registered
under the Commodity Exchange Act), relating to compliance with the
rules of The Options Clearing Corporation and of any registered
national securities exchange (or the Commodity Futures Trading
commission or any registered contract market), or of any similar
organization or organizations, regarding escrow or other arrangements
in connection with transactions by the Fund,
(b) for purposes of segregating cash or Securities in connection with
securities options purchased or written by the Fund or in connection
with financial futures contracts (or options thereon) purchased or
sold by the Fund,
(c) which constitute collateral for loans of Securities made by the Fund,
(d) for purposes of compliance by the Fund with requirements under the
1940 Act for the
11
<PAGE>
maintenance of segregated accounts by registered investment companies
in connection with reverse repurchase agreements and when-issued,
delayed delivery and firm commitment transactions, and
(e) for other proper corporate purposes, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution of
the Board of Directors, certified by an Officer, setting forth the
purpose or purposes of such segregated account and declaring such
purposes to be proper corporate purposes.
ARTICLE VII
CONCERNING THE CUSTODIAN
7.1 STANDARD OF CARE. The Custodian shall be held to the exercise of
reasonable care in carrying out its obligations under this Agreement, and shall
be without liability to the Fund for any loss, damage, cost, expense (including
attorneys'' fees and disbursements), liability or claim unless such loss,
damages, cost, expense, liability or claim arises from negligence, bad faith or
willful misconduct on its part or on the part of any sub-custodian appointed
pursuant to Section 3.3 above. The Custodian's cumulative liability within a
calendar year shall be limited with respect to the Fund or any party claiming
by, through or on behalf of the Fund for the initial and all subsequent renewal
terms of this Agreement, to the lessor amount of (a) the actual damages
sustained by the Fund, (actual damages for uninvested funds shall be the
overnight Feds fund rate), or (b) to an amount not to exceed one-half of the net
fees paid to the Custodian within the prior year. The Custodian shall be
entitled to rely on and may act upon advice of counsel on all matters, and shall
be without liability for any action reasonably taken or omitted pursuant to such
advice. The Custodian shall promptly notify the Fund of any action taken or
omitted by the Custodian pursuant to advice of counsel. The Custodian shall not
be under any obligation at any time to ascertain whether the Fund is in
compliance with the 1940 Act, the regulations thereunder, the provisions of the
Fund's charter documents or by-laws, or its investment objectives and policies
as then in effect.
7.2 ACTUAL COLLECTION REQUIRED. The Custodian shall not be liable for, or
considered to be the custodian of, any cash belonging to the Fund or any money
represented by a check, draft or other instrument for the payment of money,
until the Custodian or its agents actually receive such cash or collect on such
instrument.
7.3 NO RESPONSIBILITY FOR TITLE, ETC. So long as and to the extent that
it is in the exercise of reasonable care, the Custodian shall not be responsible
for the title, validity or genuineness of any property or evidence of title
thereto received or delivered by it pursuant to this Agreement.
7.4 LIMITATION ON DUTY TO COLLECT. Custodian shall not be required to
enforce collection, by legal means or otherwise, of any money or property due
and payable with respect to Securities held for the Fund if such Securities are
in default or payment is not made after due demand or presentation.
7.5 RELIANCE UPON DOCUMENTS AND INSTRUCTIONS. The Custodian shall be
entitled to rely upon any certificate, notice or other instrument in writing
received by it and reasonably believed by it to be genuine. The Custodian shall
be entitled to rely upon any Oral Instructions and/or any Written
12
<PAGE>
Instructions actually received by it pursuant to this Agreement.
7.6 EXPRESS DUTIES ONLY. The Custodian shall have no duties or
obligations whatsoever except such duties and obligations as are specifically
set forth in this Agreement, and no covenant or obligation shall be implied in
this Agreement against the Custodian.
7.7 COOPERATION. The Custodian shall cooperate with and supply necessary
information, by the Fund, to the entity or entities appointed by the Fund to
keep the books of account of the Fund and/or compute the value of the assets of
the Fund. The Custodian shall take all such reasonable actions as the Fund may
from time to time request to enable the Fund to obtain, from year to year,
favorable opinions from the Fund's independent accountants with respect to the
Custodian's activities hereunder in connection with (a) the preparation of the
Fund's report on Form N-1A and Form N-SAR and any other reports required by the
Securities and Exchange Commission, and (b) the fulfillment by the Fund of any
other requirements of the Securities and Exchange Commission.
ARTICLE VIII
INDEMNIFICATION
8.1 INDEMNIFICATION. The Fund shall indemnify and hold harmless the
Custodian and any sub-custodian appointed pursuant to Section 3.3 above, and any
nominee of the Custodian or of such sub-custodian from and against any loss,
damage, cost, expense (including attorneys' fees and disbursements), liability
(including, without limitation, liability arising under the Securities Act of
1933, the 1934 Act, the 1940 Act, and any state or foreign securities and/or
banking laws) or claim arising directly or indirectly (a) from the fact that
Securities are registered in the name of any such nominee, or (b) from any
action or inaction by the Custodian or such sub-custodian (i) at the request or
direction of or in reliance on the advice of the Fund, or (ii) upon Proper
Instructions, or (c) generally, from the performance of its obligations under
this Agreement or any sub-custody agreement with a sub-custodian appointed
pursuant to Section 3.3 above or, in the case of any such sub-custodian, from
the performance of its obligations under such custody agreement, provided that
neither the Custodian nor any such sub-custodian shall be indemnified and held
harmless from and against any such loss, damage, cost, expense, liability or
claim arising from the Custodian's or such sub-custodian's negligence, bad faith
or willful misconduct.
8.2 INDEMNITY TO BE PROVIDED. If the Fund requests the Custodian to take
any action with respect to Securities, which may, in the opinion of the
custodian, result in the Custodian or its nominee becoming liable for the
payment of money or incurring liability of some other form, the Custodian shall
not be required to take such action until the Fund shall have provided indemnity
therefor to the Custodian in an amount and form satisfactory to the Custodian.
ARTICLE IX
FORCE MAJEURE
Neither the Custodian nor the Fund shall be liable for any failure or delay
in performance of its obligations under this Agreement arising out of or caused,
directly or indirectly, by circumstances beyond its reasonable control,
including, without limitation, acts of God; earthquakes; fires; floods;
13
<PAGE>
wars; civil or military disturbances; sabotage; strikes; epidemics; riots; power
failures; computer failure and any such circumstances beyond its reasonable
control as may cause interruption, loss or malfunction of utility,
transportation, computer (hardware or software) or telephone communication
service; accidents; labor disputes, acts of civil or military authority;
governmental actions; or inability to obtain labor, material, equipment or
transportation; provided, however, that the Custodian in the event of a failure
or delay shall use its best efforts to ameliorate the effects of any such
failure or delay. Notwithstanding the foregoing, the Custodian shall maintain
sufficient disaster recovery procedures to minimize interruptions.
ARTICLE X
EFFECTIVE PERIOD; TERMINATION
10.1 EFFECTIVE PERIOD. This Agreement shall become effective as of the
date first set forth above and shall continue in full force and effect until
terminated as hereinafter provided.
10.2 TERMINATION. Either party hereto may terminate this Agreement by
giving to the other party a notice in writing specifying the date of such
termination, which shall be not less than ninety (90) days after the date of the
giving of such notice. If a successor custodian shall have been appointed by
the Board of Directors, the Custodian shall, upon receipt of a notice of
acceptance by the successor custodian, on such specified date of termination (a)
deliver directly to the successor custodian all Securities (other than
Securities held in a Book-Entry System or Securities Depository) and cash then
owned by the Fund and held by the Custodian as custodian, and (b) transfer any
Securities held in a Book-Entry System or Securities Depository to an account of
or for the benefit of the Fund at the successor custodian, provided that the
Fund shall have paid to the Custodian all fees, expenses and other amounts to
the payment or reimbursement of which it shall then be entitled. Upon such
delivery and transfer, the Custodian shall be relieved of all obligations under
this Agreement. The Fund may at any time immediately terminate this Agreement
in the event of the appointment of a conservator or receiver for the Custodian
by regulatory authorities in the State of Ohio or upon the happening of a like
event at the direction of an appropriate regulatory agency or court of competent
jurisdiction.
10.3 FAILURE TO APPOINT SUCCESSOR CUSTODIAN. If a successor custodian is
not designated by the Fund on or before the date of termination specified
pursuant to Section 10.1 above, then the Custodian shall have the right to
deliver to a bank or trust company of its own selection, which is (a) a "Bank"
as defined in the 1940 Act, (b) has aggregate capital, surplus and undivided
profits as shown on its then most recent published report of not less than $25
million, and (c) is doing business in New York, New York, all Securities, cash
and other property held by Custodian under this Agreement and to transfer to an
account of or for the Fund at such bank or trust company all Securities of the
Fund held in a Book-Entry System or Securities Depository. Upon such delivery
and transfer, such bank or trust company shall be the successor custodian under
this Agreement and the Custodian shall be relieved of all obligations under this
Agreement. If, after reasonable inquiry, Custodian cannot find a successor
custodian as contemplated in this Section 10.3, then Custodian shall have the
right to deliver to the Fund all Securities and cash then owned by the Fund and
to transfer any Securities held in a Book-Entry System or Securities Depository
to an account of or for the Fund. Thereafter, the Fund shall be deemed to be
its own custodian with respect to the Fund and the Custodian shall be relieved
of all obligations under this Agreement.
14
<PAGE>
ARTICLE XI
COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to compensation as agreed upon from time to
time by the Fund and the Custodian. The fees and other charges in effect on the
date hereof and applicable to the Fund are set forth in Exhibit B attached
hereto.
ARTICLE XII
LIMITATION OF LIABILITY
The Fund is a corporation organized under the laws of Delaware, to which
reference is hereby made a copy of which is on file at the office of the
Secretary of State of Delaware as required by law, and to any and all amendments
thereto so filed or hereafter filed. The obligations of the Fund entered into
in the name of the Fund or on behalf thereof by any of the Directors, officers,
employees or agents are made not individually, but in such capacities, and are
not binding upon any of the Directors, officers, employees, agents or
shareholders Fund personally, but bind only the assets of the Fund, and all
persons dealing with any of the Fund of the Fund must look solely to the assets
of the Fund for the enforcement of any claims against the Fund.
ARTICLE XIII
NOTICES
Unless otherwise specified herein, all demands, notices, instructions, and
other communications to be given hereunder shall be in writing and shall be sent
or delivered to The receipt at the address set forth after its name herein
below:
TO THE FUND:
Stonebridge Aggressive Growth Funds, Inc.
1801 Century Park East, Suite 1800
Los Angles, California 90069
Attn: Debra L. Newman
Telephone: (310) 277-1450
Facsimile: (310) 277-1456
TO THE CUSTODIAN:
The Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263
Attn: Area Manager - Fund Operations
Telephone: (513) 579-5300
Facsimile: (513) 579-4312
15
<PAGE>
or at such other address as either party shall have provided to the other by
notice given in accordance with this Article XIII. Writing shall include
transmission by or through teletype, facsimile, central processing unit
connection, on-line terminal and magnetic tape.
ARTICLE XIV
MISCELLANEOUS
14.1 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio.
14.2 REFERENCES TO CUSTODIAN. The Fund shall not circulate any printed
matter which contains any reference to Custodian without the prior written
approval of Custodian, excepting printed matter contained in the prospectus or
statement of additional information or its registration statement for the Fund
and such other printed matter as merely identifies Custodian as custodian for
the Fund. The Fund shall submit printed matter requiring approval to Custodian
in draft form, allowing sufficient time for review by Custodian and its counsel
prior to any deadline for printing.
14.3 NO WAIVER. No failure by either party hereto to exercise and no delay
by such party in exercising, any right hereunder shall operate as a waiver
thereof. The exercise by either party hereto of any right hereunder shall not
preclude the exercise of any other right, and the remedies provided herein are
cumulative and not exclusive of any remedies provided at law or in equity.
14.4 AMENDMENTS. This Agreement cannot be changed orally and no amendment
to this Agreement shall be effective unless evidenced by an instrument in
writing executed by the parties hereto.
14.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the parties hereto on separate counterparts, each of which
shall be deemed an original but all of which together shall constitute but one
and the same instrument.
14.6 SEVERABILITY. If any provision of this Agreement shall be invalid,
illegal or unenforceable in any respect under any applicable law, the validity,
legality and enforceability of the remaining provisions shall not be affected or
impaired thereby.
14.7 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns; provided, however, that this Agreement shall not be assignable by
either party hereto without the written consent of the other party hereto.
14.8 HEADINGS. The headings of sections in this Agreement are for
convenience of reference only and shall not affect the meaning or construction
of any provision of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed and delivered in its name and on its behalf by its representatives
thereunto duly authorized, all
16
<PAGE>
as of the day and year first above written.
ATTEST: STONEBRIDGE AGGRESSIVE GROWTH FUNDS,
INC.
/s/ Debra L. Newman By: /s/ John G. Ayer
Its: President
ATTEST: THE FIFTH THIRD BANK
/s/ Elizabeth Goldthwait By: /s/ Howard Kaplan
Its: Assistant Vice-President
17
<PAGE>
Dated: June 30, 1997
EXHIBIT A
TO THE CUSTODY AGREEMENT BETWEEN
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC. AND THE FIFTH THIRD BANK
JUNE 30, 1997
NAME OF FUND DATE
Stonebridge Aggressive Growth Fund, Inc. June 30, 1997
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
By: /s/ JOHN G. AYER
Its: President
THE FIFTH THIRD BANK
By: /s/ HOWARD KAPLAN
Its: Assistant Vice President
18
<PAGE>
Dated June 30, 1997
EXHIBIT B
TO THE CUSTODY AGREEMENT BETWEEN
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC. AND THE FIFTH THIRD BANK
JUNE 30, 1997
AUTHORIZED PERSONS
Set forth below are the names and specimen signatures of the persons
authorized by the Fund to Administer each Custody Account.
NAME SIGNATURE
John G. Ayer /s/ John G. Ayer
Richard C. Barrett /s/ Richard C. Barrett
Craig B. Burger /s/ Craig B. Burger
Debra L. Newman /s/ Debra L. Newman
Karen H. Parris /s/ Karen H. Parris
Charles E. Woodhouse /s/ Charles E. Woodhouse
Chad S. Christensen /s/ Chad S. Christensen
James V. Hyatt /s/ James V. Hyatt
19
<PAGE>
SIGNATURE RESOLUTION
RESOLVED, That all of the following officers of STONEBRIDGE AGGRESSIVE GROWTH
FUND, INC. and any of them, namely the Chairman, President, Vice President,
Secretary and Treasurer, are hereby authorized as signers for the conduct of
business for an on behalf of the Fund with THE FIFTH THIRD BANK:
Richard C. Barrett CHAIRMAN /s/ Richard C. Barrett
John G. Ayer PRESIDENT /s/ John G. Ayer
Craig B. Burger VICE PRESIDENT /s/ Craig B. Burger
Charles E. Woodhouse VICE PRESIDENT /s/ Charles E. Woodhouse
Chad S. Christensen VICE PRESIDENT /s/ Chad S Christensen
N/A VICE PRESIDENT ___________________________
Debra L. Newman TREASURER /s/ Debra L. Newman
James V. Hyatt SECRETARY /s/ James V. Hyatt
In addition, the following Assistant Treasurer is authorized to sign on behalf
of the Fund for the purpose of effecting securities transactions:
N/A ASSISTANT TREASURER ____________________
The undersigned officers of the Fund certify that the foregoing is within the
parameters of a Resolution adopted by Directors of the Fund in a meeting held
April 10, 1997, directing and authorizing preparation of documents and to do
everything necessary to effect the Custody Agreement between STONEBRIDGE
AGGRESSIVE GROWTH FUNDS, INC. and THE FIFTH THIRD BANK.
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
By: /s/ JOHN G. AYER
Its: President
By: /s/ R/ICHARD C. BARRETT
Its: Chariman of the Board
20
<PAGE>
EXHIBIT C
TO THE CUSTODY AGREEMENT BETWEEN
STONEBRIDGE AGGRESSIVE GROWTH FUNDS, INC. AND THE FIFTH THIRD BANK
JUNE 30 , 1997
MUTUAL FUND CUSTODY FEE SCHEDULE
BASIC ACCOUNT CHARGE
FUND SIZE:
Less than $50MM $
$50MM - $99MM $ (Fees per attached Schedule
A)
$200MM - $349MM $
Greater than $350MM $
TRANSACTION FEES
DTC/FED Eligible Trades $
DTC/FED Ineligible Trades $
Amortized Security Trades $
Repurchase Agreements (purchase and maturity) $
Third Party Repo's (purchase and maturity) $
Physical Commercial Paper Trades $
(purchase and maturity)
Book-Entry Commercial Paper Trades $
(purchase and maturity)
Options, each transaction $
Amortized Security Receipts $
A transaction is a purchase, sale, maturity, redemption, tender, exchange,
dividend reinvestment, deposit or withdrawal of a security (with the exception
of Fifth Third Certificates of Deposit, Commercial Paper & Repo's).
MISCELLANEOUS FEES
Wire Transfers & Check Disbursements $
Depository/Transfer Agent Reject $
21
<PAGE>
FIFTH THIRD BANK
FUND ACCOUNTING & CUSTODY SERVICE PROFORMA
STONEBRIDGE AGGRESSIVE GROWTH FUND
SCHEDULE A
I. FUND ACCOUNTING SERVICES
<TABLE>
<CAPTION>
Annual Units Per Unit Fee Total Annual
<S> <C> <C> <C>
Asset Based Fees $5,000,000 0.0003 bp $18,000.00
(Monthly Minimum of $1,500
</TABLE>
II. CUSTODY SERVICES
Book Entry (DTC, Fed, Fed amort, B) 195 9 1,755
Physical 0 25 0
PTC Eligible 0 25 0
Amortized P&I 0 5 0
Options (all types Equity & Index) 0 45 0
Mutual Funds 0 15 0
Foreign-Euroclear & Cedel 0 50 0
Turnaround Trade 0 50 0
Pair-off Trade 0 25 0
III. MISCELLANEOUS FEES
Voluntary Corporate Actions 0 25 0
Wire Transfer (In/Out) 22 7 154
Special Services-per hr. fee 0 75 0
Estimate Annual Fee $19,909
Estimate Monthly Fee $1,659.08
22
<PAGE>
FUND ACCOUNTING AND SERVICES AGREEMENT
THIS AGREEMENT is made as of June 30, 1997, by and among THE FIFTH THIRD BANK, a
banking company organized under the laws of the State of Ohio ("Fifth Third"),
and STONEBRIDGE AGGRESSIVE GROWTH FUNDS, INC. (the "Fund").
W I T N E S S E T H
WHEREAS, the Fund is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "Investment Company
Act") with portfolios as listed in Exhibit A (the "Portfolios");
WHEREAS, Fifth Third provides certain fund accounting, administrative and
other services to investment companies; and
WHEREAS, the Fund, desires to retain Fifth Third to provide fund accounting
and other services for the Fund's portfolios listed on EXHIBIT A, as may be
amended from time to time (each a Portfolio), and Fifth Third is willing to
provide such services, all as more fully set forth below;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, and intending to be legally bound hereby, the parties hereto
agree as follows:
(1) DEFINITIONS, AS USED IN THIS AGREEMENT.
(a) Authorized Person means any officer of the Fund and any other
person duly authorized by the Fund's Board of Directors to give Oral and
Written Instructions on behalf of the Fund and listed on the Authorized
Persons Appendix attached hereto and made a part hereof or any amendment
thereto as may be received by Fifth Third. An Authorized Person's scope of
authority may be limited by the Fund by setting forth such limitation in
the Authorized Persons Appendix.
(b) Oral Instructions mean instructions orally transmitted to and
accepted by Fifth Third because such instructions are: (i) given by an
Authorized Person or from a person reasonably believed by Fifth Third to
have been an Authorized Person, (ii) recorded and kept among the records of
Fifth Third made in the ordinary course of business and (iii) orally
confirmed by Fifth Third. The Fund shall cause all Oral Instructions to be
confirmed by Written Instructions. If such Written Instructions confirming
Oral Instructions are not received by Fifth Third prior to a transaction,
it shall in no way affect the validity of the transaction or the
authorization thereof by the Fund. If Oral Instructions vary from the
Written Instructions which purport to confirm them, Fifth Third shall
notify the Fund of such variance but such Oral Instructions will govern
unless Fifth Third has not yet acted.
(c) Written Instructions mean (i) written communications actually
received by Fifth Third and signed by one or more persons as the Board of
Directors shall have from time to time authorized, or (ii) communications
by fax or any other such system from a person or persons reasonably
believed by Fifth Third to be Authorized or (iii) communications
transmitted electronically through the Institutional Delivery System (IDS),
or any other similar electronic instruction system acceptable to Fifth
Third and approved by resolutions of the Board of Directors, a copy of
which, certified by the Secretary, shall have been delivered to Fifth
Third.
(d) Shares mean the shares of beneficial interest of any series or
class of the Fund.
2. APPOINTMENT. The Fund hereby appoints Fifth Third to provide fund
accounting and other specified services to each of the Portfolios set forth in
Exhibit A, as may be amended from time to time, in accordance with the terms set
forth in this Agreement. Fifth Third accepts such appointment and agrees to
furnish such specified services.
3. DELIVERY OF DOCUMENTS. The Fund has provided or, where applicable,
will provide Fifth Third with the following:
<PAGE>
(a) certified or authenticated copies of the resolutions of the
Fund's Board of Directors, approving the appointment of Fifth Third or its
affiliates to provide services to each Portfolio and approving this
Agreement;
(b) a copy of the Fund's most recent effective registration
statement;
(c) a copy of the Fund's advisory agreement or agreements;
(d) a copy of any distribution agreement or similar agreement made
with respect to each class of Shares;
(e) a copy of any management agreement and any administration
agreements or similar agreements with respect to the Fund;
(f) a copy of any shareholder servicing agreement made in respect of
the Fund or the Fund; and
(g) copies (certified or authenticated, where applicable) of any and
all amendments or supplements to the foregoing.
4. COMPLIANCE WITH RULES AND REGULATIONS. Fifth Third undertakes to
comply with all applicable requirements of the Investment Company Act, and any
laws, rules and regulations of governmental authorities having jurisdiction with
respect to the duties to be performed by Fifth Third hereunder. Except as
specifically set forth herein, Fifth Third assumes no responsibility for such
compliance by the Fund or any Portfolio.
5. INSTRUCTIONS. Fifth Third will provide fund accounting and such other
services as is agreed hereunder.
(a) With respect to other services Fifth Third shall act only upon
Oral or Written Instructions.
(b) Fifth Third shall be entitled to rely upon any Oral and Written
Instructions it receives from an Authorized Person (or from a person
reasonably believed by Fifth Third to be an Authorized Person) pursuant to
this Agreement. Fifth Third may assume that any Oral or Written
Instruction received hereunder is not in any way inconsistent with the
provisions of organizational documents or this Agreement or of any vote,
resolution or proceeding of the Fund's Board of Directors or of the Fund's
shareholders, unless and until Fifth Third receives Written Instructions to
the contrary.
(c) The Fund agrees to forward to Fifth Third, Written Instructions
confirming Oral Instructions so that Fifth Third receives the Written
Instructions by the close of business on the same day that such Oral
Instructions are received. The fact that such confirming Written
Instructions are not received by Fifth Third shall in no way invalidate the
transactions or enforceability of the transactions authorized by the Oral
Instructions. Where Oral or Written Instructions reasonably appear to have
been received from an Authorized Person, Fifth Third shall incur no
liability to the Fund in acting upon such Oral or Written Instructions.
6. RIGHT TO RECEIVE ADVICE.
(a) ADVICE OF THE FUND. If Fifth Third is in doubt as to any action
it should or should not take, Fifth Third shall request directions or
advice, including Oral or Written Instructions, from the Fund.
(b) ADVICE OF COUNSEL. If Fifth Third shall be in doubt as to any
question of law pertaining to any action it should or should not take,
Fifth Third shall request advice from such counsel of its own choosing and
the Fund shall reimburse such reasonable cost.
(c) CONFLICTING ADVICE. In the event of a conflict between
directions, advice or Oral or Written Instructions Fifth Third receives
from the Fund and the advice Fifth Third receives from counsel, Fifth Third
shall inform the Fund of the conflict and seek resolution.
2
<PAGE>
(d) PROTECTION OF FIFTH THIRD. Fifth Third shall be protected in any
action it takes or does not take in reliance upon directions, advice or
Oral or Written Instructions it receives from the Fund or counsel and which
Fifth Third believes, in good faith, to be consistent with those
directions, advice or Oral or Written Instructions. Nothing in this
section shall be construed so as to impose an obligation upon Fifth Third
(i) to seek such directions, advice or Oral or Written Instructions, or
(ii) to act in accordance with such directions, advice or Oral or Written
Instructions unless, under the terms of other provisions of this Agreement.
Nothing in this subsection shall excuse Fifth Third when an action or
omission on the part of Fifth Third constitutes willful misfeasance, lack
of good faith, or reckless disregard by Fifth Third of its duties,
obligation or responsibilities set forth in this Agreement.
7. RECORDS; VISITS.
(a) The books and records pertaining to the Fund and the Portfolios
which are in the possession or under the control of Fifth Third shall be
the property of the Fund. Such books and records shall be prepared,
maintained and preserved as required by the Investment Company Act and
other applicable Securities Laws, rules and regulations. The Fund and
Authorized Persons shall have access to such books and records at all times
during Fifth Third's normal business hours. Upon the reasonable request of
the Fund, copies of any such books and records shall be provided by Fifth
Third to the Fund or to an Authorized Person, at the Fund's expense.
(b) Fifth Third shall keep the following records:
(i) all books and records relating to the services it
performs hereunder with respect to a Portfolio's books of account;
(ii) records relating to the services it performs hereunder
with respect to a Portfolio's securities transactions; and
(iii) all other books and records as Fifth Third is required to
maintain pursuant to Rule 31a-1 of the Investment Company Act in
connection with the services provided hereunder.
8. CONFIDENTIALITY. Fifth Third agrees to keep confidential all records
of the Fund and information relating to the Fund and its shareholders (past,
present and future), unless the release of such records of information is
otherwise consented to, in writing, by the Fund. The Fund agrees that such
consent shall not be unreasonably withheld and may not be withheld where Fifth
Third may be exposed to civil or criminal contempt proceedings or when required
to divulge such information or records to duly constituted authorities.
9. LIAISON WITH ACCOUNTANTS. Fifth Third shall act as liaison with the
Fund's independent public accountants and shall provide account analysis, fiscal
year summaries, and other audit-related schedules with respect to the services
provided to each Portfolio. Fifth Third shall take all reasonable action in the
performance of its duties under this Agreement to assure that the necessary
information in Fifth Third's control is made available to such accountants for
the expression of their opinion, as required by the Fund.
10. DISASTER RECOVERY. Fifth Third shall maintain in effect a disaster
recovery plan, and enter into any agreement necessary with appropriate parties
making reasonable provisions for emergency use of electronic data processing
equipment customary in the industry. In the event of equipment failures, Fifth
Third shall, at no additional expense to the Fund, take reasonable steps to
minimize service interruptions. Fifth Third shall have no liability with
respect to the loss of data or service interruptions caused by equipment failure
provided such loss or interruption is not caused by Fifth Third's own willful
misfeasance or gross negligence.
11. COMPENSATION. As compensation for services rendered by Fifth Third
during the term of this Agreement, the Fund will pay to Fifth Third a fee or
fees set forth in Exhibit B, as may be amended from time to time. It is agreed
that fees set forth in Exhibit B may be increased with not less than ninety (90)
days written notice. In the event that Exhibit C is amended such that
additional services as requested by the Fund are required from Fifth Third on an
ongoing basis, with the approval of the Fund, additional fees may be charged as
applicable. The fee for the period from the day of the year this Agreement is
entered into until the end of that year shall be prorated according to the
proportion that such period bears to the full annual period.
3
<PAGE>
12. INDEMNIFICATION.
(a) The Fund agrees to indemnify and hold harmless Fifth Third and
its agents or subcontractor from all taxes, charges, expenses, assessments,
claims and liabilities (including, without limitation, liabilities arising
under the Securities Laws and any state or foreign securities and blue sky
laws, and amendments thereto), and expenses, including (without limitation)
attorneys' fees and disbursements arising directly or indirectly from any
action or omission to act which Fifth Third takes in reasonable reliance on
Oral or Written Instructions from the Fund. Fifth Third, shall not be
indemnified against any liability (or any expenses incident to such
liability) arising out of Fifth Third's own willful misfeasance, lack of
good faith or reckless disregard of its duties and obligations under this
Agreement. For any legal proceedings giving rise to this indemnification,
the Fund shall be entitled to defend or prosecute any claim in the name of
Fifth Third at the Fund's own expense through counsel of its own choosing
if it gives written notice to Fifth Third within ten (10) business days of
receiving notice of such claim.
(b) Fifth Third agrees to indemnify and hold harmless the Fund from
all taxes, charges, expenses, assessments, claims and liabilities
(excluding, liabilities arising under the Securities Laws and any state or
foreign securities and blue sky laws, and amendments thereto), and
expenses, including (without limitation) attorneys' fees and disbursements
arising directly from any action or omission of Fifth Third's own willful
misfeasance, bad faith, gross negligence or reckless disregard of its
duties and obligations under this Agreement. For any legal proceedings
giving rise to this indemnification, Fifth Third shall be entitled to
defend or prosecute any claim in the name of the Fund at Fifth Third's own
expense through counsel of its own choosing if it gives written notice to
the Fund within ten (10) business days of receiving notice of such claim.
13. RESPONSIBILITIES OF FIFTH THIRD.
(a) Fifth Third shall be under no duty to take any action on behalf
of the Fund or any Portfolio except as specifically set forth herein or as
may be specifically agreed to by Fifth Third in writing. Fifth Third shall
be obligated to exercise commercially reasonable care and diligence in the
performance of its duties hereunder, to act in good faith and act within
reasonable limits, in performing services provided for under this
Agreement. Fifth Third shall only be liable for actual damages arising out
of Fifth Third's failure to perform its duties under this Agreement to the
extent such damages arise out of Fifth Third's willful misfeasance, bad
faith, gross negligence or reckless disregard of such duties.
(b) In no event shall Bank be liable for any special, consequential,
extraordinary or punitive damages, arising from the performance or non-
performance of Bank under this Agreement, or Bank's failure to comply with
any of the terms of this Agreement. Bank's cumulative liability within a
calendar year shall be limited to the Fund or any party claiming by,
through or on behalf of the Fund for the initial and all subsequent renewal
terms of this Agreement, to the lessor of (a) the actual damages sustained
by the Fund; or (b) one-half of the net fees paid to the Bank, but not to
exceed one half of the net fees paid to the bank within the prior twelve
calendar months as in accordance with Agreement.
(c) Without limiting the generality of the foregoing or of any other
provision of this Agreement,
(i) Fifth Third shall not be liable for losses beyond its
reasonable control, provided that Fifth Third has acted in
accordance with the standard of care set forth above; and
(ii) Fifth Third shall not be liable for:
(A) the validity or invalidity or authority or lack
thereof of any Oral or Written Instruction, notice or other
instrument which conforms to the applicable requirements of this
Agreement, and which Fifth Third reasonably believes to be
genuine; or
(B) subject to Section 10, delays or errors or loss of
data occurring by reason of circumstances beyond Fifth Third's
control, including acts of civil or military authority, national
emergencies, non Fifth Third labor difficulties, fire, flood,
catastrophe, acts of God, insurrection, war, riots or failure of
the mails, transportation, communication or power supply.
4
<PAGE>
14. DESCRIPTION OF ACCOUNTING SERVICES ON A CONTINUOUS BASIS. Fifth Third
will perform accounting services as deemed industry standard and/or agreed upon
with Customer at the time of conversion.
15. DESCRIPTION OF OTHER SERVICES ON A CONTINUOUS BASIS. Fifth Third will
perform other services at the request of the Customer, documented previous to
conversion.
16. DURATION AND TERMINATION. This Agreement shall continue until
terminated by either the Fund or Fifth Third on ninety (90) days' prior written
notice to the other party.
17. NOTICES. All notices and other communications, including Written
Instructions, shall be in writing or by confirming telegram, cable, telex or
facsimile sending device. If notice is sent by confirming telegram, cable,
telex or facsimile sending device, it shall be deemed to have been given
immediately. If notice is sent by first class mail, it shall be deemed to have
been given three days after it has been mailed. If notice is sent by messenger,
it shall be deemed to have been given on the day it is delivered. Notices shall
be addressed
(a) if to Fifth Third:
38 Fountain Square Plaza
Cincinnati, Ohio 45263
Attention: Fund Accounting Manager
(b) if to the Fund:
1801 Century Park East, Suite 1800
Los Angles, California 90067
Attn:
(c) if to none of the foregoing, at such other address as shall have
been provided by like notice to the sender of any such notice or other
communication by the receiving party.
18. AMENDMENTS. This Agreement, or any term thereof, may be changed or
waived only by written amendment, signed by the party against whom enforcement
of such change or waiver is sought.
19. DELEGATION; ASSIGNMENT. Fifth Third may assign its rights and
delegate its duties hereunder upon prior written consent of the Fund to any
wholly-owned direct or indirect subsidiary of Fifth Third, provided that:
(a) Fifth Third gives the Fund sixty (60) days' prior written notice;
(b) the delegate (or assignee) agrees with Fifth Third and the Fund
to comply with all relevant provisions of the Securities Laws; and
(c) Fifth Third and such delegate (or assignee) promptly provide such
information as the Fund may request, and respond to such questions as the
Fund may ask, relative to the delegation (or assignment), including
(without limitation) the capabilities of the delegate (or assignee).
20. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
21. FURTHER ACTIONS. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
5
<PAGE>
22. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement embodies the entire agreement
and understanding among the parties and supersedes all prior agreements and
understandings relating to the subject matter hereof, provided that the
Fund and Fifth Third may embody in one or more separate documents their
agreement, if any, with respect to delegated duties and Oral Instructions.
(b) CAPTIONS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
(c) GOVERNING LAW. This Agreement will be governed and construed in
accordance with the laws of the State of Ohio without regard to principles
or conflicts of law. The parties agree that venue for any action or
proceeding brought pursuant to this Agreement shall be in the state or
federal courts located in the State of Ohio.
(d) PARTIAL INVALIDITY. If any provision of this Agreement shall be
held or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
(e) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
(f) FACSIMILE SIGNATURES. The facsimile signature of any party to
this Agreement shall constitute the valid and biding execution hereof by
such party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
THE FIFTH THIRD BANK STONEBRIDGE AGGRESSIVE GROWTH FUNDS, INC.
By: /s/ Howard Kaplan By: /s/ John G. Ayer
Its: Assistant Vice President Its: President
6
<PAGE>
EXHIBIT A
PORTFOLIOS OF FUNDS
THIS EXHIBIT A, dated as of June 30, 1997, is Exhibit A to the Fund
Accounting and Services Agreement dated as of June 30, 1997 by and among the
Fifth Third Bank and the Fund. This Exhibit A shall supersede all previous
forms of Exhibit A.
Stonebridge Aggressive Growth Fund, Inc.
THE FIFTH THIRD BANK STONEBRIDGE AGGRESSIVE GROWTH FUNDS, INC.
By: /s/ Howard Kaplan By: /s/ John G. Ayer
Its: Assistant Vice President Its: President
7
<PAGE>
EXHIBIT B
FEE SCHEDULE
THIS EXHIBIT B, dated as of June 30, 1997, is Exhibit B to the Fund
Accounting and Services Agreement dated as of June 30, 1997 by and among the
Fifth Third Bank and the Fund. This Exhibit B shall supersede all previous
forms of Exhibit B.
The Fund will pay Fifth Third an annual fund accounting and service fee (the
"Fee"), to be calculated daily and paid monthly. The annual Fee for each
Portfolio shall be an asset based fee, exclusive of out-of-pocket expenses, with
a minimum monthly payment as set forth below:
<TABLE>
<CAPTION>
Asset Minimum Additional Other Services
Based Fees Monthly Class Monthly Monthly
---------- ------- ------------- -------
Funds
- -----
<S> <C> <C> <C> <C>
(Fees per Attached Schedule A)
</TABLE>
The Fund will also reimburse Fifth Third for its out-of-pocket expenses incurred
in performing its services under this Agreement, including, but not limited to:
postage and mailing, telephone, telex, overnight courier services and outside
independent pricing service charges, and record retention/storage.
THE FIFTH THIRD BANK STONEBRIDGE AGGRESSIVE GROWTH FUNDS, INC.
By: /s/ Howard Kaplan By: /s/ John G. Ayer
Its: Assistant Vice President Its: President
8
<PAGE>
EXHIBIT C
FIFTH THIRD WILL PERFORM THE ACCOUNTING SERVICES WITH RESPECT TO EACH PORTFOLIO:
(a)Journalize investment, capital share and income and expense activities;
(b)Verify investment buy/sell trade tickets when received from the investment
adviser for a Portfolio (the "Money Manager") and transmit trades to the Fund's
custodian (the "Custodian") for proper settlement;
(c) Maintain individual ledgers for investment securities;
(d) Maintain historical tax lots for each security;
(e) Reconcile cash and investment balances with the Custodian, and provide
the Money Manager with the beginning cash balance available for investment
purposes;
(f) Update the cash availability daily;
(g) Post to and prepare the Statement of Assets and Liabilities and the
Statement of Operations;
(h) Calculate the various contractual expenses (e.g., advisory and custody
fees);
(i) Monitor the expense accruals and notify an officer of the Fund of any
proposed adjustments;
(j) Control all disbursements and authorize such disbursements upon
Written Instructions;
(k) Calculate capital gains and losses and only upon Written Instructions
from the Fund transmit such information to the Fund's transfer agent (or other
agreed upon procedures);
(l) Determine net income;
(m) Obtain security market quotes from independent pricing services, if
available, approved by the Money Manager, or if such quotes are unavailable,
then obtain such prices from the Money manager, and in either case calculate the
market value of each Portfolio's investments;
(n) Transmit or mail a copy of the daily portfolio valuation to the Money
Manager;
(o) Compute net asset value;
(p) As appropriate, compute yields, total return, expense ratios,
portfolio turnover rate, and, if required, portfolio average dollar-weighted
maturity; and
(q) Prepare a monthly financial statement, which will include the
following items:
Schedule of Investments
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Cash Statement
Schedule of Capital Gains and Losses.
9
<PAGE>
Fifth Third Bank
Fund Accounting & Custody Service ProForma
Stonebridge Aggressive Growth Fund
Schedule A
I. FUND ACCOUNTING SERVICES
Annual Units Per Unit Fee Total Annual
Asset Based Fees
(Monthly Minimum of $1,500 $5,000,000 0.0003 bp $18,000.00
II. CUSTODY SERVICES
- --------------------------------------------------------------------------------
Book Entry (DTC, Fed, Fed amort, B) 195 9 1,755
- --------------------------------------------------------------------------------
Physical 0 25 0
- --------------------------------------------------------------------------------
PTC Eligible 0 25 0
- --------------------------------------------------------------------------------
Amortized P&I 0 5 0
- --------------------------------------------------------------------------------
Options (all types Equity & Index) 0 45 0
- --------------------------------------------------------------------------------
Mutual Funds 0 15 0
- --------------------------------------------------------------------------------
Foreign-Euroclear & Cedel 0 50 0
- --------------------------------------------------------------------------------
Turnaround Trade 0 50 0
- --------------------------------------------------------------------------------
Pair-off Trade 0 25 0
- --------------------------------------------------------------------------------
III. MISCELLANEOUS FEES
- --------------------------------------------------------------------------------
Voluntary Corporate Actions 0 25 0
- --------------------------------------------------------------------------------
Wire Transfer (In/Out) 22 7 154
- --------------------------------------------------------------------------------
Special Services-per hr. fee 0 75 0
- --------------------------------------------------------------------------------
Estimate Annual Fee $19,909
Estimate Monthly Fee $1,659.08
10
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
BETWEEN
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
AND
ALPS MUTUAL FUNDS SERVICES, INC.
TABLE OF CONTENTS
Page No.
--------
Article 1. Terms of Appointment; Duties 2
Article 2. Fees and Expenses 6
Article 3. Representations and Warranties of ALPS 7
Article 4. Representations and Warranties of the Fund a
Article 5. Data Access and Proprietary Information 8
Article 6. Indemnification 11
Article 7. Standard of Care 14
Article 8. Covenants of the Fund and ALPS 14
Article 9. Termination of Agreement 16
Article 10. Assignment 16
Article 11. Amendment 17
Article 12. Colorado Law to Apply 17
Article 13. Merger of Agreement 17
Article 14. Counterparts 17
Article 15. Limitation of Liability of the Fundee and Shareholders 18
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the __th day of _______, 1997, by and between Stonebridge
Aggressive Growth Fund, Inc., a Delaware corporation, having its principal
office and place of business at 1801 Century Park East, los Angeles California
90067 (the "Fund"), and ALPS MUTUAL FUNDS SERVICES, INC., a Colorado Corporation
having its principal office and place of business at 370 17th Street, Suite
2700, Denver Colorado 80202 ("ALPS" or the "Administrator");
WHEREAS, the Fund and ALPS have entered into an Administration Agreement
dated as of ________________, 1997 (the "Administration Agreement") pursuant to
which ALPS is to provide various services,
WHEREAS, the Fund in accordance with the Administration Agreement desires
to appoint ALPS as its transfer agent, dividend disbursing agent and agent in
connection with certain other activities, and ALPS desires to accept such
appointment;
WHEREAS, the Fund is authorized to issue shares in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets; and
WHEREAS, the Fund presently offers Shares in one separate series;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
Article 1. TERMS OF APPOINTMENT; DUTIES OF ALPS
1.01 Subject to the terms and conditions set forth in this Agreement,
the Fund hereby employs and appoints ALPS to act as, and ALPS agrees to act as
its transfer agent for the Fund's authorized and issued shares of beneficial
interest in the Fund or any other fund of the Fund ("Shares"), dividend
disbursing agent and agent in connection with any accumulation, open-account or
similar plans provided to the shareholders of the Fund ("Shareholders") and set
out in the currently effective prospectus and statement of additional
information ("prospectus") of the Fund, including without limitation any
periodic investment plan or periodic withdrawal program.
<PAGE>
1.02 ALPS agrees that it will perform the following services in
accordance with the Fund's prospectus:
(a) In accordance with procedures established from time to time
by agreement between the Fund and ALPS, ALPS shall:
(i) Receive for acceptance, orders for the purchase of Shares, promptly
deliver payment and appropriate documentation thereof to the Custodian
of the Fund authorized pursuant to the Articles of Incorporation of
the Fund (who is referred to herein as the "Custodian"), and make
proper remittance of any sales load received by it to the persons
entitled to the same as instructed by the Fund's Administrator;
(ii) Pursuant to purchase orders, issue the appropriate number of Shares
and hold such Shares in the appropriate Shareholder account;
(iii) In the event any check or other order for the transfer of money is
returned unpaid, take such steps as it may deem appropriate or the
Fund may instruct to protect the Fund and ALPS from financial loss;
(iv) Receive for acceptance redemption requests and redemption directions
and deliver the appropriate documentation thereof to the appropriate
Custodian;
(v) In respect to the transactions in items (i), (ii) and (iv) above, ALPS
shall execute transactions directly with broker-dealers authorized by
the Fund who shall thereby be deemed to be acting on behalf of the
Fund;
(vi) At the appropriate time as and when it receives monies paid to it by
the Custodian with respect to any redemption, pay over or cause to be
paid over in the appropriate manner such monies as instructed by the
redeeming Shareholders;
(vii) Effect transfers of Shares by the registered owners thereof upon
receipt of appropriate instructions;
(viii) Prepare and transmit payments (or where appropriate credit a
Shareholder account) for dividends and distributions declared by the
Fund;
<PAGE>
(ix) Issue replacement certificates for those certificates alleged to have
been lost, stolen or destroyed upon receipt by ALPS of indemnification
satisfactory to ALPS and protecting ALPS and the Fund, and ALPS at its
option, may issue replacement certificates in place of mutilated stock
certificates upon presentation thereof and without such indemnity;
(x) Maintain records of account for and advise the Fund and its
Shareholders as to the foregoing; and
(xi) Record the issuance of Shares of the Fund and maintain pursuant to SEC
Rule 17Ad-10(e) a record of the total number of Shares of the Fund
which are authorized, based upon data provided to it by the Fund, and
issued and outstanding. ALPS shall also provide the Fund on a regular
basis with the total number of Shares which are authorized and issued
and outstanding and shall have no obligation, when recording the
issuance of Shares, to monitor the issuance of such Shares or to take
cognizance of any laws relating to the issue or sale of such Shares,
which functions shall be the sole responsibility of the Fund.
(b) In addition to and neither in lieu nor in contravention of the
services set forth in the above paragraph (a), ALPS shall:
(i) perform the customary services of a transfer agent, dividend
disbursing agent and, as relevant, agent in connection with accumulation,
open-account or similar plans (including without limitation any periodic
investment plan or periodic withdrawal program), including but not limited to:
maintaining all Shareholder accounts, preparing shareholder meeting lists,
mailing proxies, mailing Shareholder reports and prospectuses to current
Shareholders, withholding taxes on U.S. resident and non-resident alien accounts
and maintaining records with respect to such withholding, preparing and filing
U.S. Treasury Department Forms 1099 and other appropriate forms required with
respect to dividends and distributions by federal authorities for all
Shareholders, preparing and mailing confirmation forms and statements of account
to Shareholders for all purchases and redemptions of Shares and
<PAGE>
other confirmable transactions in Shareholder accounts, responding to
Shareholder telephone calls and Shareholder correspondence, preparing and
mailing activity statements for Shareholders, and providing Shareholder
account information and (ii) provide a system which will enable the Fund to
monitor the total number of Shares sold in each State.
(c) In addition, the Fund's outside legal counsel shall (i)
identify to ALPS 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 ALPS for a
Fund's blue sky State registration status is solely limited to the initial
establishment of transactions subject to blue sky compliance by such Fund and
the reporting of such transactions to the Fund as provided above.
(d) Procedures as to who shall provide certain of these services
in Article 1 may be established from time to time by agreement between the Fund
and ALPS per the attached service responsibility schedule. ALPS may at times
perform only a portion of these services and the Fund or its agent may perform
these services on the Fund's behalf.
(e) ALPS shall provide additional services on behalf of the Fund
(i.e., escheatment services) which may be agreed upon in writing between the
Fund and ALPS.
Article 2. FEES AND EXPENSES
2.01 For the performance by ALPS pursuant to this Agreement, the Fund
agrees to pay ALPS the fees in accordance with the terms of the Administration
Agreement.
2.02 In addition to the fee paid under Section 2.01 above, the Fund
agree(s) to reimburse ALPS for tabulating proxies. In addition, any other
expenses incurred by ALPS at the request or with the consent of the Fund, will
be reimbursed by the Fund.
2.03 The Fund agree(s) to pay all fees and reimbursable expenses
within thirty days following the receipt of the respective billing notice.
Postage for mailing of proxies to all
<PAGE>
Shareholder accounts shall be advanced to ALPS by the Fund at least seven (7)
days prior to the mailing date of such materials.
Article 3. REPRESENTATIONS AND WARRANTIES OF ALPS
ALPS represents and warrants to the Fund that:
3.01 It is a company duly organized and existing and in good standing
under the laws of the State of Colorado.
3.02 It is duly qualified to carry on its business in the State of
Colorado.
3.03 It is empowered under applicable laws and by its Charter and
By-Laws to enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been taken to authorize
it to enter into and perform this Agreement.
3.05 It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations under
this Agreement.
Article 4. REPRESENTATIONS AND WARRANTIES OF THE FUND The Fund represents and
warrants to ALPS that:
4.01 It is a business Fund duly organized and existing and in good
standing under the laws of Delaware.
4.02 It is empowered under applicable laws and by its Articles of
Incorporation and Code of Regulations to enter into and perform this Agreement.
4.03 All Fund proceedings required by said Articles of Incorporation
and Code of Regulations have been taken to authorize it to enter into and
perform this Agreement.
4.04 It is an open-end and diversified management investment company
registered under the Investment Company Act of 1940, as amended.
4.05 A registration statement under the Securities Act of 1933, as
amended is currently effective and will remain effective, and appropriate state
securities law filings have
<PAGE>
been made and will continue to be made, with respect to all Shares of the Fund
being offered for sale.
Article 5. DATA ACCESS AND PROPRIETARY INFORMATION
5.01 The Fund acknowledges that the data bases, computer programs,
screen formats, report formats, interactive design techniques, and documentation
manuals furnished to the Fund by ALPS as part of the Fund's ability to access
certain related data ("Customer Data") maintained by ALPS on data bases under
the control and ownership of ALPS ("Data Access Services") constitute
copyrighted, trade secret, or other proprietary information (collectively,
"Proprietary Information") of substantial value to ALPS. It is understood that
Customer Data, which includes data provided to ALPS by or on behalf of the Fund
and records belonging to the Fund pursuant to Section 31 of the Investment
Company Act of 1940 as amended (and the Rules thereunder), will not be deemed to
be Data Access Services or Proprietary Information. The Fund agrees to treat
all Proprietary Information as proprietary to ALPS and further agrees that it
shall not divulge any Proprietary Information to any person or organization
except as may be provided hereunder. Without limiting the foregoing, the Fund
agrees for itself and its employees and agents:
(a) to access Customer Data solely from locations as may be designated in
writing by and solely in accordance with ALPS' applicable user
documentation;
(b) to refrain from copying or duplicating in any way the
ProprietaryInformation;
(c) to refrain from obtaining unauthorized access to any portion of the
Proprietary Information, and if such access is inadvertently obtained,
to
<PAGE>
inform in a timely manner of such fact and dispose of such information
in accordance with ALPS' instructions;
(d) to refrain from causing or allowing third-party data acquired
hereunder from being retransmitted to any other computer facility or
other location, except with the prior written consent of ALPS;
(e) that the Fund shall have access only to those authorized transactions
agreed upon by the parties;
(f) to honor all reasonable written requests made by ALPS to protect at
ALPS' expense the rights of ALPS in Proprietary Information at common
law, under federal copyright law and under other federal or state law.
Each party shall take reasonable efforts to advise its employees or
independent service contractors of the obligations pursuant to this Article 5.
The obligations of this Article shall survive any earlier termination of this
Agreement.
5.02 If the Fund notifies ALPS that any of the Data Access Services do
not operate in material compliance with the most recently issued user
documentation for such services, ALPS shall endeavor in a timely manner to
correct such failure. organizations from which ALPS may obtain certain data
included in the Data Access Services are solely responsible for the contents of
such data and the Fund agrees to make no claim against ALPS arising out of the
contents of such third-party data, including, but not limited to, the accuracy
thereof, provided that ALPS will comply with all reasonable requests for
assistance from the Fund in resolving any claim or other discrepancy the Fund
may have with such third party organizations. DATA ACCESS SERVICES AND ALL
COMPUTER PROGRAMS AND SOFTWARE SPECIFICATIONS USED IN CONNECTION THEREWITH ARE
PROVIDED ON AN AS IS, AS AVAILABLE BASIS (PROVIDED THAT ALPS SHALL CONTINUE TO
BE RESPONSIBLE FOR ANY DELAY IN OR OTHER FAILURE OF PERFORMANCE THAT
<PAGE>
ARISES AS A RESULT OF A MATTER REASONABLY WITHIN ALPS" CONTROL). ALPS EXPRESSLY
DISCLAIMS ALL WARRANTIES EXCEPT THOSE EXPRESSLY STATED HEREIN INCLUDING, BUT NOT
LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.
5.03 If the transactions available to the Fund include the ability to
originate a customer originated electronic financial instruction to ALPS in
order to (i) effect the transfer or movement of cash or Shares or (ii) transmit
Shareholder information or other information, then in such event ALPS shall be
entitled to rely on the validity and authenticity of such instruction without
undertaking any further inquiry as long as such instruction is undertaken in
conformity with reasonable security procedures established by ALPS from time to
time.
Article 6. INDEMNIFICATION
6.01 ALPS shall not be responsible for, and the Fund shall indemnify
and hold ALPS harmless from and against, any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liability arising out of or
attributable to:
(a) All actions taken or omitted to be taken by ALPS or its
agent or subcontractors required to be taken pursuant to this Agreement,
provided that such actions are taken in good faith and without negligence or
willful misconduct.
(b) The Funds lack of good faith, negligence or willful
misconduct which arise out of the breach of any representation or warranty of
the Fund hereunder.
(c) The good faith reliance on or use by ALPS or its agents or
subcontractors of written information, records and documents or services which
(i) are received or relied upon by ALPS or its agents or subcontractors and
furnished to it or performed by or on behalf of the Fund, and (ii) have been
prepared, maintained and/or performed by the Fund or any other authorized person
or firm on behalf of the Fund.
<PAGE>
(d) The reliance on, or the carrying out by ALPS or its agents
or subcontractors of any instructions or requests of the Fund.
(e) The offer or sale of Shares in violation of any requirement
under the federal securities laws or regulations or the securities laws or
regulations of any state that such Shares be registered in such state or in
violation of any stop order or other determination or ruling by any federal
agency or any state with respect to the offer or sale of such Shares in such
state.
6.02 At any time ALPS may apply to any officer of the Fund for
instructions, and may consult with legal counsel with respect to any matter
arising in connection with the services to be performed by ALPS under this
Agreement, and ALPS and its agents or subcontractors shall not be liable and
shall be indemnified by the Fund for any action taken or omitted by it in
reliance upon such instructions or upon the opinion of such counsel (provided
such counsel is reasonably satisfactory to the Fund). ALPS, its agents and
subcontractors shall be protected and indemnified in acting upon any paper or
document furnished by or on behalf of the Fund, reasonably believed to be
genuine and to have been signed by the proper person or persons,, or upon any
instruction, information, data, records or documents provided ALPS or its agents
or subcontractors by machine readable input, telex, CRT data entry or other
similar means authorized by the Fund, and shall not be held to have notice of
any change of authority of any person, until receipt of written notice thereof
from the Fund. ALPS, its agents and subcontractors shall also be protected and
indemnified in recognizing stock certificates which are reasonably believed to
bear the proper manual or facsimile signatures of the officer(s) of the Fund,
and the proper countersignature of any former transfer agent or former
registrar, or of a co-transfer agent or co-registrar.
6.03 In the event either party is unable to perform its obligations
under the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party
<PAGE>
shall not be liable for damages to the other for any damages resulting from such
failure to perform or otherwise from such causes.
6.04 In order that the indemnification provisions contained in this
Article 6 shall apply, upon the assertion of a claim for which the Fund may be
required to indemnify ALPS, ALPS shall promptly notify the Fund of such
assertion, and shall keep the Fund advised with respect to all developments
concerning such claim. The Fund shall have the option to participate with ALPS
in the defense of such claim or to defend against said claim in its own name or
in the name of ALPS. ALPS shall in no case confess any claim or make any
compromise in any case in which the Fund may be required to indemnify ALPS
except with the Fund's prior, written consent.
Article 7. STANDARD OF CARE
7.01 ALPS shall at all times act in good faith and agrees to use its
best efforts within reasonable limits to insure the accuracy of all services
performed under this Agreement, but assumes no responsibility and shall not be
liable for loss or damage due to errors unless said errors are caused by its
negligence, bad faith, or willful misconduct or that of its employees.
Article 8. COVENANTS OF THE FUND AND ALPS
8.01 The Fund shall promptly furnish to ALPS the following:
(a) A certified copy of the resolution of the Board of Directors
of the Fund authorizing the appointment of ALPS and the execution and delivery
of this Agreement.
(b) A copy of the Articles of Incorporation and Code of
Regulations of the Fund and all amendments thereto.
(c) Copies of each vote of the Board of Directors of the Fund
designating authorized persons to give instructions to ALPS.
<PAGE>
8.02 ALPS hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Fund for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account of, such certificates,
forms and devices.
8.03 ALPS shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable, as required by
applicable laws, rules and regulations. To the extent required by Section 31 of
the Investment Company Act of 1940, as amended, and the Rules thereunder, ALPS
agrees that all such records prepared or maintained by ALPS relating to the
services to be performed by ALPS hereunder are the property of the Fund and will
be preserved, maintained and made available in accordance with such Section and
Rules, and will be surrendered promptly to the Fund on and in accordance with
its request. Additionally, ALPS will make reasonably available to the Fund and
its authorized representatives records maintained by ALPS pursuant to this
Agreement for reasonable inspection, use and audit, and will take all reasonable
action to assist the Fund's independent accountants in rendering their opinion.
8.04 ALPS and the Fund agree that all books, records, information and
data pertaining to the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of this Agreement shall
remain confidential, and shall not be voluntarily disclosed to any other person,
except as may be required by law.
8.05 In case of any requests or demands for the inspection of the
Shareholder records of the Fund, ALPS will endeavor to notify the Fund and to
secure instructions from an authorized officer of the Fund as to such
inspection. ALPS reserves the right, however, to exhibit the Shareholder
records to any person whenever it is advised by its counsel that it may be held
liable for the failure to exhibit the Shareholder records to such person.
Article 9. TERMINATION OF AGREEMENT
<PAGE>
9.01 This Agreement may be terminated by either party upon ninety (90)
days written notice to the other. Not withstanding anything to the contrary in
this Agreement, ALPS may not terminate this Agreement prior to the later of: (i)
the expiration of the initial or any renewal term of the Administration
Agreement; or (ii) the effectiveness of any termination notice pursuant to the
Administration Agreement. This Agreement may be terminated immediately by the
Fund should ALPS cease to be qualified to act as the Fund's transfer agent
pursuant to applicable law.
9.02 Should the Fund exercise its right to terminate, other than as a
result of a default under this Agreement by ALPS, all out-of-pocket expenses
associated with the movement of records and material will be borne by the Fund.
Additionally, ALPS reserves the right to charge for any other reasonable
expenses associated with such termination.
Article 10. ASSIGNMENT
10.01 Except as provided in Section 10.03 below, neither this Agreement
nor any rights or obligations hereunder may be assigned by either party without
the written consent of the other party.
10.02 This Agreement shall inure to the benefit of and be binding upon
the parties and their respective permitted successors and assigns.
10.03 ALPS may, without further consent on the part of the Fund,
subcontract for the performance hereof with (i) State Street Bank & Fund, a duly
registered transfer agent pursuant to Section 17A(c)(1) of the Securities
Exchange Act of 1934, as amended ("Section 17A(c)(l)"); provided, however, that
ALPS shall be as fully responsible to the Fund for the acts and omissions of any
subcontractor as it is for its own acts and omissions.
Article 11. AMENDMENT
<PAGE>
11.01 This Agreement may be amended or modified by a written agreement
executed by both parties and authorized or approved by a resolution of the Board
of Directors of the Fund.
Article 12. COLORADO LAW TO APPLY
12.01 This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the State of Colorado.
Article 13. MERGER OF AGREEMENT
13.01 This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to the subject
matter hereof whether oral or written.
Article 14. COUNTERPARTS
14.01 This Agreement may be executed by the parties hereto on any
number of counterparts, and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
Article 15. LIMITATION OF LIABILITY OF THE DIRECTORS AND SHAREHOLDERS
15.01 The names "Stonebridge Aggressive Growth Fund, Inc." and
"Directors of Stonebridge Aggressive Growth Fund, Inc " refer respectively to
the Fund created and the Directors, as Directors but not individually or
personally, acting from time to time under
<PAGE>
Articles of Incorporation dated ____________, which may be further amended from
time to time which is hereby referred to and a copy of which is on file at the
office of the Secretary of the State of Delaware and the principal office of the
Fund. The obligations of Stonebridge Aggressive Growth Fund, Inc. entered into
in the name or on behalf thereof by any of the Directors, representatives or
agents are made not individually, but in such capacities, and are not binding
upon any of the Directors, shareholders, or representatives of the Fund
personally, but bind only the Fund Property, and all persons dealing with any
class of shares of the Fund must look solely to the Fund Property belonging to
such class for the enforcement of any claims against the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
By:
-------------------------------------
ATTEST:
ALPS MUTUAL FUNDS SERVICES, INC.
By:
-------------------------------------
President
ATTEST:
<PAGE>
CONSENT OF INDEPENDENT AUDITOR
We consent to the use in this Post-Effective Amendment No. 59 to the
Registration Statement (Form N-1A No. 2-15893) of our report dated December 1,
1997 on the financial statements and the per share data and ratios of
Stonebridge Aggressive Growth Fund, Inc., incorporated herein by reference and
to the reference made to us under the caption "Financial Highlights" in the
Prospectus and under the caption "Investment Advisery and Other Services" in
the Statement of Additional Information.
HEIN + ASSOCIATES LLP
Denver, Colorado
December 23, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000051815
<NAME> STONEBRIDGE AGGRESSIVE GROWTH FUND,Inc
<SERIES>
<NUMBER> 1
<NAME>AGGRESSIVE GROWTH FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 4139372
<INVESTMENTS-AT-VALUE> 5309282
<RECEIVABLES> 174082
<ASSETS-OTHER> 2664
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5486028
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 57601
<TOTAL-LIABILITIES> 57601
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3961245
<SHARES-COMMON-STOCK> 409077
<SHARES-COMMON-PRIOR> 344077
<ACCUMULATED-NII-CURRENT> (930597)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1227869
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1169910
<NET-ASSETS> 5428427
<DIVIDEND-INCOME> 4220
<INTEREST-INCOME> 61858
<OTHER-INCOME> 0
<EXPENSES-NET> (149749)
<NET-INVESTMENT-INCOME> (83671)
<REALIZED-GAINS-CURRENT> 1006649
<APPREC-INCREASE-CURRENT> 53227
<NET-CHANGE-FROM-OPS> 976205
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (884196)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 28323
<NUMBER-OF-SHARES-REDEEMED> (34794)
<SHARES-REINVESTED> 71471
<NET-CHANGE-IN-ASSETS> 889829
<ACCUMULATED-NII-PRIOR> 846923
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 33694
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 149749
<AVERAGE-NET-ASSETS> 5155599
<PER-SHARE-NAV-BEGIN> 13.19
<PER-SHARE-NII> (.20)
<PER-SHARE-GAIN-APPREC> 2.83
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (2.55)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.27
<EXPENSE-RATIO> 2.90
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
