<PAGE> 1
As filed with the Securities and Exchange Commission on April 30, 1996
1933 Act Registration No. 2-23727
1940 Act Registration No. 811-1311
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [x]
Pre-Effective Amendment No. [ ]
--
Post-Effective Amendment No. 55 [x]
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [x]
Amendment No. 16
(Check appropriate box or boxes.)
MATHERS FUND, INC.
(Exact Name of Registrant as Specified in Charter)
100 Corporate North
Bannockburn, Illinois 60015
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code (847) 295-7400
Andrew H. Shaw, Sidley & Austin, One First National Plaza,
Chicago, Illinois 60603
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
(check appropriate box)
immediately upon filing pursuant to paragraph (b)
----
x on May 1, 1996 pursuant to paragraph (b)
----
60 days after filing pursuant to paragraph (a)
----
on (date) pursuant to paragraph (a) of rule 485
----
Registrant has registered an indefinite amount of securities under the
Securities Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act
of 1940, and Registrant's Rule 24f-2 Notice for its most recent fiscal year was
filed on February 28, 1996.
<PAGE> 2
Mathers Fund, Inc.
------------
CROSS REFERENCE SHEET
BETWEEN PROSPECTUS, TOGETHER WITH THE
STATEMENT OF ADDITIONAL INFORMATION, AND FORM N-1A
PART A
- ------
Information Required
in a Prospectus Prospectus Caption
- -------------------- ------------------
Item 1. Cover Page Cover Page.
Item 2. Synopsis Synopsis of Expense Infor
mation.
Item 3. Condensed Financial Financial Highlights;
Information Performance Information.
Item 4. General Description Investment Objective and
of Registrant Policies; Capital Structure.
Item 5. Management of the Management and Operation
Fund of the Fund.
Item 5A. Management's Included in Annual Report
Discussion of Fund to Shareholders.
Performance
Item 6. Capital Stock and Shareholder Inquiries;
Other Securities Dividend Reinvestment;
Dividends, Distributions and
Taxes; Capital Structure.
Item 7. Purchase of Securities Purchase of Shares; Automatic
Being Offered Investment Program, Retirement
Plans; Determination of Net
Asset Value; Dividend
Reinvestment.
Item 8. Redemption or How to Redeem Shares;
Repurchase Systematic Withdrawal Plan.
Item 9. Pending Legal None.
Proceedings
<PAGE> 3
PART B
- ------
Information Required Statement of
in a Statement of Additional Information
Additional Information Caption
- ---------------------- --------------------------
Item 10. Cover Page Cover Page.
Item 11. Table of Contents Cover Page.
Item 12. General Information Not Applicable.
and History
Item 13. Investment Objectives Investment Practices and
and Policies Restrictions; Brokerage.
Item 14. Management of the Directors and Officers of
Registrant the Fund.
Item 15. Control Persons and Principal Holders of the
Principal Holders Fund's Shares.
of Securities
Item 16. Investment Advisory Investment Adviser;
and Other Services Investment Advisory
Agreement; Custodian and
Independent Accountants.
Item 17. Brokerage Allocation Brokerage.
Item 18. Capital Stock and Not Applicable.
Other Securities
Item 19. Purchase, Redemption Purchase, Redemption
and Pricing of and Pricing of Shares;
Securities Being Retirement Programs.
Offered
Item 20. Tax Status Tax Status.
Item 21. Underwriters Not Applicable.
Item 22. Calculation Of Performance Information.
Performance Data and
Yield Quotations of
Money Market Funds
Item 23. Financial Statements Financial Statements.
<PAGE> 4
MATHERS FUND
100 CORPORATE NORTH, SUITE 201
BANNOCKBURN, ILLINOIS 60015
(800) 962-FUND (847) 295-7400
PROSPECTUS
MAY 1, 1996
Mathers Fund, Inc. is a pure no-load* mutual fund, the primary objective of
which is capital appreciation over the long term principally through investment
in common stocks; however, the Fund may invest all or any portion of its assets
in securities other than common stocks as described herein when, for instance,
the adviser believes that the risk of owning equity securities is high. See
"Investment Objective and Policies."
*A PURE NO-LOAD FUND
-No Sales Charges -No 12b-1 Charges
-No Redemption Charges -No Reinvestment Charges
This Prospectus should be read carefully and retained for future reference.
It sets forth concisely the information about the Fund that an investor should
know before investing. A Statement of Additional Information dated May 1, 1996
containing additional information about the Fund has been filed with the
Securities and Exchange Commission and is available without charge upon request
of the Fund at the address and telephone number set forth above. The Statement
of Additional Information is incorporated by reference into this Prospectus.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE> 5
SYNOPSIS OF EXPENSE INFORMATION
The following table illustrates the Fund's expenses. The amounts shown are
based on the actual expenses and average net assets of the Fund for the fiscal
year ended December 31, 1995.
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
<S> <C>
Maximum Sales Load Imposed on Purchases or Reinvested Dividends.................. None
Deferred Sales Load.............................................................. None
Redemption Fee................................................................... None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees.................................................................. .71%
12b-1 Fees....................................................................... None
Other Expenses (principally transfer agent, legal, auditing, custodian, taxes,
registration and printing).................................................... .27%
-----
Total Fund Operating Expenses....................................... .98%
=====
</TABLE>
EXAMPLE:
<TABLE>
<CAPTION>
1 3 5 10
YEAR YEARS YEARS YEARS
---- ---- ---- -----
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a $1,000
investment, assuming (1) a 5% annual return, and (2) redemp-
tion at the end of each time period. As noted in the table
above, the Fund charges no redemption fees of any kind ..... $ 10 $ 31 $ 54 $ 120
</TABLE>
The purpose of the preceding tables and example is to assist investors in
understanding the various costs and expenses that an investor in the Fund will
bear, directly and indirectly. They should not be considered a representation of
past or future expenses. Actual expenses may be greater or less than those
shown.
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES
The primary investment objective of Mathers Fund, Inc. is capital appreciation
over the long term principally through investment in common stocks; however, the
Fund also gives significant consideration to the preservation of capital and may
invest all or any portion of its assets in other securities, including
fixed-income securities, as described below.
There are market risks inherent in any investment, and there is no assurance
that the primary objective of the Fund will be realized or that any income will
be earned. Nor is there any assurance that the Fund's portfolio will not decline
in value.
The policy of the Fund is generally to invest in securities which are believed
to offer the possibility of increase in value. Current income is a secondary
consideration in the selection of equity investments. To the extent that the
Fund's portfolio consists principally of common stocks, its net asset value may
be subject to greater volatility than a portfolio containing a
substantial amount of fixed-income securities.
However, no minimum or maximum percentage of the Fund's assets is required to
be invested in any type of security. The Fund may invest all or any portion of
its assets in U.S. Treasury bills, notes or bonds or, subject to certain
limitations, certificates of deposit, prime-rated commercial paper or repurchase
agreements (agreements under which the seller of a security agrees at the time
of sale to repurchase it at an agreed time and price) when general conditions
are believed to warrant such action or during periods when the adviser believes
that the risk of owning equity securities
2
<PAGE> 6
FINANCIAL HIGHLIGHTS
The table below presents financial highlights for each of the ten years in the
period ended December 31, 1995 based on the average number of shares of capital
stock outstanding throughout each year. This table has been derived from the
Fund's financial statements which have been audited by the Fund's independent
public accountants. The Fund's Annual Report to Shareholders, which may be
obtained upon request from the Fund without charge, contains further information
about the performance of the Fund.
<TABLE>
<CAPTION>
---------------------------------------- Year Ended December 31 -----------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value per
share -- beginning
of period.......... $ 13.55 $ 15.11 $ 15.02 $ 15.06 $ 14.95 $ 14.52 $ 15.60 $ 14.46 $ 16.96 $ 22.65
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Income from
investment
operations:
Net investment
income........... 0.601 0.563 0.21 0.500 0.84 0.95 0.89 0.34 0.43 0.34
Net realized and
unrealized gains
(losses) on
investments...... 0.349 (1.448) 0.11 (0.035) 0.56 0.56 0.73 1.63 3.92 2.16
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total from
investment
operations... 0.950 (0.885) 0.32 0.465 1.40 1.51 1.62 1.97 4.35 2.50
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net
investment
income........... (0.719) (0.675) (0.23) (0.505) (0.74) (0.84) (0.97) (0.33) (0.88) (0.81)
Distributions from
net realized
capital gains.... (0.031) 0.000 0.00 0.000 (0.55) (0.24) (1.73) (0.50) (5.97) (7.38)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total
distributions... (0.750) (0.675) (0.23) (0.505) (1.29) (1.08) (2.70) (0.83) (6.85) (8.19)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net asset value per
share --
end of period...... $ 13.75 $ 13.55 $ 15.11 $ 15.02 $ 15.06 $ 14.95 $ 14.52 $ 15.60 $ 14.46 $ 16.96
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Ratio of total
expenses to average
net assets......... 0.98% 0.93% 0.89% 0.88% 0.94% 0.98% 1.01% 0.98% 0.82% 0.77%
Ratio of net
investment income
to average net
assets............. 4.25% 3.86% 1.39% 3.33% 5.39% 6.29% 5.45% 2.18% 2.37% 1.76%
Portfolio turnover
rate............... 58% 211% 136% 212% 80% 190% 303% 148% 202% 174%
Total return........ 7.01% (5.89%) 2.13% 3.11% 9.45% 10.43% 10.41% 13.73% 27.04% 13.97%
Net assets, end of
period
(000s omitted)..... $232,303 $293,285 $435,862 $554,162 $516,670 $299,707 $214,608 $201,035 $151,528 $134,788
</TABLE>
Effective May 1, 1988, the Fund entered into a new investment advisory agreement
which revised the advisory fee previously payable to the adviser.
- --------------------------------------------------------------------------------
is high. At such times, which may continue for extended periods, equity
securities may represent a relatively low percentage of the Fund's assets. For
instance, during most of 1989 through 1995, a majority of the Fund's assets were
invested in U.S. Treasury securities. The equity portion of the Fund's portfolio
was hedged to varying extents by short sales of Standard & Poor's 500 stock
index futures contracts throughout this period for the purpose of protecting the
Fund's assets from potential loss in a declining market. Fixed income
investments are subject to loss of principal as interest rates rise and may
entail other risks.
Securities of unseasoned companies, where the risks are considerably greater
than with common stock of more established companies, and securities of foreign
issuers, may be acquired by the Fund from time to time when the adviser believes
such investments offer the
3
<PAGE> 7
possibility of capital growth. However, not more than 5% of the Fund's assets
may be invested in securities of companies which have a record of less than
three years' continuous operation (including the operation of any predecessor
business of a company which came into existence as a result of a merger,
consolidation, reorganization or purchase of substantially all of the assets of
such predecessor business), and not more than 10% of the Fund's assets may be
invested in securities of foreign issuers which are not publicly traded in the
United States.
The Fund may hedge its stock positions through the purchase of exchange-traded
put and call options on stock indices and/or the purchase or sale of stock index
futures contracts and options on such contracts. Stock index options confer upon
the holder the right to receive an amount of cash upon exercise if the closing
level of the underlying stock index is greater than, in the case of a call, or
less than, in the case of a put, the exercise price of the option. A stock index
futures contract provides that a person with an open position in such a contract
will be entitled to receive, or will be obligated to pay, cash amounts on a
daily basis during the period such position is held based on the difference
between the current price level of such contract and the price at which the
contract is originally made. An option on a stock index futures contract gives
the holder the right, but not the obligation, to acquire either a long or short
position in such futures contract at a specified price.
The percentage fluctuations in the value of the Fund's investments in stock
index options and futures may be many times greater than those of the underlying
index, and investments in such options and futures are subject to certain other
risk factors. However, the total cost of outstanding stock index options
(determined as of the time of purchase) held by the Fund may not exceed 5% of
the Fund's net assets, and the Fund will not enter into stock index futures
contracts or options on such contracts if immediately thereafter the aggregate
initial margin and premiums (less the amount by which any such options are
"in-the-money" at the time of purchase) would exceed 5% of the value of the
Fund's total assets after taking into account any unrealized profits and losses
on such instruments.
The Fund may also purchase corporate debentures or notes (without limitation
as to rating) and preferred stocks, particularly those which are convertible
into or carry rights to acquire common stock, and warrants when such investments
appear to offer the possibility of appreciation in value.
The Fund will not enter into repurchase agreements except with State Street
Bank and Trust Company or invest over 10% of its assets in repurchase agreements
with maturities of over seven days. Underlying securities subject to a
repurchase agreement between the Fund and State Street are held in a segregated
account in which State Street holds assets on behalf of the Fund and others. If
State Street fails to repurchase any such securities, the Fund could experience
losses that include possible decline in their value while the Fund seeks to
enforce its rights, possible loss of all or a part of the income or proceeds of
the repurchase, possible loss of rights in such securities, and additional
expenses to the Fund in enforcing its rights.
While the Fund's objective is to seek capital appreciation over the long term,
individual securities are not necessarily purchased or held to qualify for
long-term capital gains treatment. A variety of factors other than the holding
period, including but not limited to financial market conditions, corporate
developments, other investment opportunities, Fund redemptions, tax
considerations and changed expectations, may be considered in determining
whether to sell a security. As a result, turnover in the Fund's portfolio may be
high.
The primary investment objective and the other policies described under this
caption are not fundamental policies and may be changed without shareholder
approval, except that the policies with respect to entering into stock index
futures contracts and options on such
4
<PAGE> 8
contracts are fundamental policies which may not be changed without shareholder
approval.
MANAGEMENT AND OPERATION OF THE FUND
The business and affairs of the Fund are managed under the direction of its
Board of Directors. MATHERS AND COMPANY, INC., 100 CORPORATE NORTH, SUITE 201,
BANNOCKBURN, ILLINOIS 60015, (847) 295-7400, serves as investment adviser to the
Fund. The adviser is an investment counselling firm which has served as
investment adviser to the Fund since its inception in 1965 and as investment
adviser to pension, profit sharing, endowment and charitable funds, insurance
company separate accounts and others since 1961. Henry G. Van der Eb, Jr.,
President of the adviser and Chairman and a Director of the Fund, owns a
majority of the outstanding shares of the adviser and is thus the controlling
person of the adviser.
Mr. Van der Eb has been primarily responsible for the day-to-day management of
the Fund's portfolio for more than the last ten years. Robert J. Reynolds,
Senior Vice President of the adviser and President and a Director of the Fund,
and, to a lesser extent, Anne E. Morrissy, Vice President of the adviser and
Senior Vice President and Secretary of the Fund, also play significant roles in
such management.
Under its investment advisory agreement with the Fund, the adviser furnishes
continuous investment advisory services and management to the Fund, subject to
the authority of the Fund's Board of Directors. The adviser receives an annual
fee of 0.75% of the first $200,000,000 of the Fund's average net asset value,
plus 0.625% of such value in excess of $200,000,000 but not exceeding
$500,000,000, plus 0.50% of such value in excess of $500,000,000, payable
monthly and determined by valuations made as of the close of the previous month.
For 1995, the fee approximated 0.71% of the Fund's average net assets.
The Fund's total operating expenses for 1995 were approximately 0.98% of its
average net assets.
DST SYSTEMS, INC., P.O. BOX 419103, KANSAS CITY, MISSOURI 64141, serves as
transfer agent and dividend paying agent and performs shareholder accounting
services for the Fund.
DETERMINATION OF NET ASSET VALUE
The per share net asset value of the Fund is determined by dividing the total
value of its net assets (meaning its assets less its liabilities excluding
capital) by the total number of its shares outstanding at that time. The net
asset value is determined as of the close of regular trading on the New York
Stock Exchange on each day it is open for trading and on any other day such
determination is required by the rules and regulations of the Securities and
Exchange Commission. This determination is applicable to all share transactions
prior to that time and after the previous time of determination of net asset
value. Accordingly, purchase orders accepted or shares tendered for redemption
prior to the close of trading on a day the Exchange is open for trading will be
valued as of the close of trading, and purchase orders accepted or shares
tendered for redemption after that time will be valued as of the close of the
next trading day.
Securities traded on any stock exchange or in the NASDAQ National Market
System will ordinarily be valued on the basis of the last sale price as of the
close of the New York Stock Exchange on the date of valuation, or, in the
absence of any sale on that date, the last reported bid price. Other securities
will generally be valued at the current bid price, if market quotations are
readily available. Short-term securities are valued at amortized cost. Any
securities for which there are no readily available market quotations and other
assets will be valued at their fair value as determined in good faith by the
Board of Directors.
PURCHASE OF SHARES
Shares are issued directly by the Fund. The price per share is the next
determined net asset value after acceptance of an application. See
"Determination of Net Asset Value".
A purchase application is enclosed on page 9. (A special application is
required for
5
<PAGE> 9
IRA and Keogh Plan accounts. See "Retirement Plans.") Purchase applications
should be mailed directly to:
MATHERS FUND, INC.
C/O DST SYSTEMS, INC.
P.O. BOX 419103
KANSAS CITY, MISSOURI 64141
or, if next-day delivery is desired, express mailed to:
MATHERS FUND, INC.
C/O DST SYSTEMS, INC.
1004 BALTIMORE AVENUE
KANSAS CITY, MISSOURI 64105
All applications must be accompanied by payment and are subject to acceptance
by the Fund. Payment for shares may be made by check, payable to Mathers Fund,
Inc., or, if a completed purchase application has been received and an account
established, by Federal funds wire. Funds may be wired directly to Investors
Fiduciary Trust Company, Kansas City, MO., using the following instructions:
INV/FID/KC, ABA No. 101003621, Mathers Fund A/C No. 750-123-4, for credit to
(shareholder's name and account number). The Fund does not accept telephone
orders and reserves the right to reject applications in whole or in part. The
Board of Directors of the Fund has established $1,000 as the minimum initial
purchase and $200 as the minimum for any subsequent purchase (except through
dividend reinvestment or participation in the automatic investment program),
which minimum amounts are subject to change at any time. Stock certificates are
not issued unless requested in writing. Requests for certificates should be
directed to DST at the above address.
AUTOMATIC INVESTMENT PROGRAM
Once the minimum initial purchase requirement is satisfied, a shareholder may
establish an automatic investment program whereby periodic investments (minimum
$50) may be made in shares of the Fund by the automatic debit of the
shareholder's bank account. Shareholders will be notified of the number of
shares purchased and the price following each investment. There is no obligation
to continue periodic investments and the shareholder may withdraw from the plan
at any time by giving written notice to the Fund or DST at their respective
addresses. No charge is made in connection with this service. An application
form for participation in the automatic investment program may be obtained from
the Fund by calling (800) 962-FUND.
RETIREMENT PLANS
The Fund makes available a retirement plan for self-employed individuals
(Keogh Plan), simplified employee pension plans (SEPs), and individual
retirement accounts (IRAs) for all individuals. The minimum initial investment
to establish an IRA, SEP or Keogh Plan account is $200. Unless a different
custodian is specified, Investors Fiduciary Trust Company, Kansas City,
Missouri, provides the custodial service for these accounts for an annual
maintenance fee which is currently $12.00 per account and is payable by the
shareholder. If the fee is not prepaid, it will be deducted from the
shareholder's account.
Applications and additional information concerning these plans and accounts
may be obtained from the Fund by calling (800) 962-FUND.
HOW TO REDEEM SHARES
A shareholder may request the Fund to redeem his shares in whole or in part on
any business day prior to the close of the market on the New York Stock
Exchange. Redemption requests must be made in writing and mailed to:
MATHERS FUND, INC.
C/O DST SYSTEMS, INC.
P.O. BOX 419103
KANSAS CITY, MISSOURI 64141
or, if next-day delivery is desired, express mailed to:
MATHERS FUND, INC.
C/O DST SYSTEMS, INC.
1004 BALTIMORE AVENUE
KANSAS CITY, MISSOURI 64105
If a redemption request is inadvertently sent to the Fund at its Bannockburn,
Illinois address,
6
<PAGE> 10
such request will be forwarded to DST but the effective date of redemption will
be delayed until the request is received by DST. Requests for redemption by
telephone, telegram or facsimile and requests which are subject to any special
conditions or which specify an effective date other than as provided herein
cannot be honored. A request for redemption must be signed by each shareholder
exactly as the shares are registered, including the signature of each joint
owner. Signatures must be guaranteed if (i) the redemption request is received
within 30 days after an address change, (ii) the amount being redeemed is
$25,000 or greater, or (iii) the proceeds of redemption are requested to be paid
or sent to a person other than the registered holder or holders of the shares to
be redeemed or to an address other than the address of record. In such cases,
each signature on the redemption request should be guaranteed. A signature
guarantee may be obtained from a commercial bank or trust company in the United
States or a member firm of the New York Stock Exchange. If certificates have
been issued for any of the shares to be redeemed, the certificates, properly
endorsed or accompanied by a properly executed stock power, must accompany the
request for redemption. Additional documentation may be required for redemptions
by corporations, executors, administrators, trustees, guardians or others who
hold shares in a fiduciary or representative capacity or are not natural
persons. In case of any question concerning the nature of such documentation,
please call DST at (800) 235-7458 or the Fund at (800) 962-FUND. Redemptions
will not be effective or complete until all of the foregoing conditions have
been satisfied and documents received.
The redemption price is the net asset value per share next determined after
receipt by DST of the written request in proper form with all required
documentation. The amount received will depend on the market value of the Fund's
investments at the time of determination of net asset value, and may be more or
less than the original cost of the shares redeemed. A check in payment for
shares redeemed will be mailed to the holder no later than the seventh day after
receipt by DST of the redemption request in proper form and all required
documentation. However, payment of redemption proceeds may be delayed for a
period of up to 20 days after purchase pending clearance of any check delivered
in connection with the purchase of such shares.
The right to redeem shares of the Fund will be suspended for any period during
which the New York Stock Exchange is closed because of financial conditions or
any other extraordinary reason and may be suspended for any period during which
(i) trading on the Exchange is restricted, (ii) the Securities and Exchange
Commission has by order permitted such suspension or (iii) an emergency, as
defined by rules and regulations of the Commission, exists as a result of which
it is not reasonably practicable for the Fund to dispose of its securities or
fairly to determine the value of its net assets.
If the value of a shareholder's account (other than a retirement account)
drops to less than $1,000 (except as a result of market fluctuations), the Fund
reserves the right to redeem the shares in that account at net asset value after
providing 30 days' written notice to the shareholder.
SYSTEMATIC WITHDRAWAL PLAN
A systematic withdrawal plan is available to any shareholder who wishes to
withdraw a fixed sum or percentage (minimum $200 except for IRA, SEP or Keogh
Plan accounts) monthly, quarterly, semiannually or annually. Shares are redeemed
at the net asset value per share on or about the fifteenth day of any month
specified for a withdrawal and sent by check to the shareholder's address of
record. Alternatively, the proceeds may be wired to the shareholder's bank
account on any business day of the month. The initial withdrawal request must
meet all requirements for redemption as described under "How to Redeem Shares".
There is no charge for this service.
A form for participating in this withdrawal plan may be obtained by calling
the Fund at (800) 962-FUND.
7
<PAGE> 11
DIVIDEND REINVESTMENT
Unless a shareholder otherwise directs, all income dividends and capital gains
distributions are automatically reinvested in full and fractional shares of the
Fund, calculated to the nearest 1,000th of a share. Shares are purchased at the
net asset value per share next determined after the dividend declaration and are
credited to the shareholder's account. Stock certificates are not issued unless
requested in writing. Shareholders will be advised of the number of shares
purchased and the purchase price following each investment. A shareholder may
instead elect to receive all income dividends and capital gains distributions in
cash or to reinvest capital gains distributions and receive income dividends in
cash. Unless a Federal funds wire transfer is requested in writing, all cash
distributions will be made by check delivered by U.S. mail. If the U.S. Postal
Service cannot deliver the check, or if it remains uncashed for six months, it,
as well as future dividends and distributions, may at the option of the Fund
thereafter be reinvested in additional shares at the net asset value per share
on the day such shares are purchased. If a shareholder elects to have cash
distributions sent to an address other than the address of record or wire
transferred, a written request to such effect must be made (including wire
transfer instructions, if appropriate), and the shareholder's signature should
be guaranteed. A signature guarantee may be obtained from a commercial bank or
trust company in the United States or a member firm of the New York Stock
Exchange. An election to reinvest or receive dividends and distributions in cash
will apply to all shares of the Fund registered under the same account number,
including those previously purchased.
Shareholders may withdraw from the dividend reinvestment program and elect to
receive income dividends or all distributions in cash at any time. Any
shareholder who is not participating may elect to do so by giving written notice
to DST. If an election to withdraw from or participate in the dividend
reinvestment program is received between a dividend declaration date and payment
date, it will become effective on the day following the payment date. The Fund
may modify or terminate its dividend reinvestment program at any time on 30
days' notice to participants.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund intends to distribute substantially all of its net investment income
(i.e., net income and gains exclusive of net long-term capital gains) and net
long-term capital gains, if any (computed after taking into account any
available capital loss carryover) to its shareholders each year. The Fund
qualified in 1995, and intends to remain qualified, as a "regulated investment
company" under Subchapter M of the Internal Revenue Code. As a regulated
investment company, the Fund is not subject to Federal income tax on its income
and gains distributed to shareholders. If the Fund were to fail in any year to
so qualify under Subchapter M of the Code, it would become subject to a
corporate level tax and distributions to shareholders would generally be treated
as ordinary income.
Shareholders (except those who are not subject to tax on their income) are
subject to Federal income tax on distributions of net investment income and net
long-term capital gains, regardless of whether such distributions are paid in
cash or reinvested in shares of the Fund. Distributions by the Fund of its net
investment income will be taxable to shareholders as ordinary income, and will
qualify for the 70% dividends received deduction available to corporations to
the extent the Fund's net investment income consists of qualifying dividend
income from U.S. corporations. Distributions by the Fund of its net long-term
capital gains will be taxable to shareholders as long-term capital gain,
regardless of the length of time a shareholder has owned shares of the Fund, and
will not qualify for the dividends received deduction. There can be no assurance
that long-term capital gains treatment will be achieved with respect to any
portion of realized capital gains for any given tax year. Shareholders are
advised of the amount and nature of any income or gains. Distributions may also
be subject to state and local tax.
(Continued on p. 11)
8
<PAGE> 12
MATHERS FUND, INC. PURCHASE APPLICATION
(THIS APPLICATION IS NOT VALID FOR IRA OR KEOGH ACCOUNTS)
LOGO
<TABLE>
<CAPTION>
Regular mail: Express or overnight mail: Call (800) 962-FUND
<S> <C> <C>
Mathers Fund, Inc. Mathers Fund, Inc. with any questions
c/o DST Systems, Inc. c/o DST Systems, Inc.
P.O. Box 419103 1004 Baltimore Avenue Minimum Initial Investment $1,000
Kansas City, MO 64141 Kansas City, MO 64105
</TABLE>
I hereby apply for the purchase of $ in full and fractional shares
of Mathers Fund, Inc. Capital Stock, in accordance with your current prospectus
dated May 1, 1996 (a copy of which I have received) and the terms and
instructions below and on the reverse side of this application (which I have
read). ALL APPLICATIONS MUST BE ACCOMPANIED BY PAYMENT. CHECKS SHOULD BE MADE
PAYABLE TO MATHERS FUND, INC.
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
1. REGISTRATION--Please Print:
<S> <C> <C>
/ / Individual
or ------------------------------------------------- ----------------------------------
Joint Owners Name Social security number
-------------------------------------------------
Name of joint owner (see note below)
/ / Gift to
Minors ------------------------------------------------- ----------------------------------
Name of custodian (one name only) Minor's social security
number
------------------------------------------------- ----------------------------------
Name of minor (one name only) Minor's state of residence
/ / Corporation,
Partnership, ------------------------------------------------- ----------------------------------
Trust, Other Name of corporation or other entity Social security or tax I.D. number
(circle one)
------------------------------------------------- ----------------------------------
Name(s) of trustees If a trust, include date of trust
Street or P.O. Box / / U.S. citizen/resident
alien
City State Zip Code or
/ / Non-resident alien:
( )
- ------------------------ ----------------------------------
Daytime telephone number (Please specify country of tax
residency.)
</TABLE>
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
2. DISTRIBUTIONS--Please Check One:
<S> <C>
/ / Income dividends and capital gains distributions automatically
reinvested in additional shares.
/ / Income dividends in cash with capital gains distributions
reinvested.
/ / Income dividends and capital gains distributions in cash.
(If no election is checked, all income dividends and capital gains
distributions will be reinvested.)
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
3. SIGNATURES AND CERTIFICATIONS
NOTE: If shares are to be registered jointly, all owners must sign but only one
social security number should be given. Any registration in the names of two or
more co-owners will, unless otherwise specified, be as joint tenants with right
of survivorship and not as tenants in common. Shares may be registered in the
name of a custodian for a minor in accordance with the Uniform Gift to Minors
Act (UGMA) and any applicable state law. For a custodian registration, give
social security number of minor. If signing in other than individual capacity,
please indicate title or capacity.
Under penalties of perjury, I certify that: (1) The number shown on this
form is my correct social security number or taxpayer identification number, and
(2) I am not subject to backup withholding because: (a) I am exempt from backup
withholding, or (b) I have not been notified by the Internal Revenue Service
that I am subject to backup withholding as a result of a failure to report all
interest or dividends, or (c) the Internal Revenue Service has notified me that
I am no longer subject to backup withholding. (Cross out (2) above if you have
been notified by the Internal Revenue Service that you are currently subject to
backup withholding because of underreporting interest or dividends on your tax
return.)
<TABLE>
<CAPTION>
<S> <C> <C>
Date
------------------- -------------------------------- ----------------------------------
Signature Signature of Joint Owner (If Any)
</TABLE>
CONTINUED ON THE REVERSE SIDE.
9
<PAGE> 13
GENERAL TERMS
This application is subject to acceptance by the Fund in Bannockburn,
Illinois. The passage of title to and delivery of shares purchased (including
shares hereafter purchased through dividend reinvestment or otherwise), whether
or not certificates are issued, shall be deemed to take place in Illinois. The
applicant certifies that the applicant has full capacity to enter into this
subscription agreement. The purchase price shall be the net asset value next
determined after the time this application is accepted by the Fund.
INSTRUCTIONS RELATING TO IRS CERTIFICATIONS
The Fund is required by law to withhold Federal income tax at a rate of 31%
("backup withholding") from your dividends, capital gain distributions and
redemption payments if you do not provide the Fund with your social security or
other taxpayer identification number ("TIN") and certify that such number is
your correct TIN. In addition, the Fund is required to withhold from your
dividends and capital gain distributions (but not redemption payments) if you
fail to certify to the Fund that you are not subject to backup withholding.
Under the law, you are entitled to certify that you are not subject to backup
withholding unless the Internal Revenue Service (the "IRS") has notified you
that you are subject to backup withholding for failure to report interest or
dividends (and the IRS has not thereafter notified you that you are no longer
subject to backup withholding). Any such withholding applies to all dividends
and distributions, including those which would otherwise be invested in
additional shares of the Fund.
If you do not supply the Fund with your correct TIN, you may be subject to
a $50 penalty. If you falsify information on this form or make any other false
statement which results in a failure to implement backup withholding on an
account which should be subject to backup withholding, you may be subject to a
$500 penalty and to certain criminal penalties, including fines and
imprisonment.
10
<PAGE> 14
Any gain or loss realized upon the sale or exchange of shares of the Fund by a
shareholder who is not a dealer in securities will be treated as long-term
capital gain or loss if the shares have been held for more than one year, and
otherwise as short-term capital gain or loss. However, any loss realized by a
shareholder upon the sale of shares held for six months or less will be treated
as long-term capital loss to the extent of any distributions of net long-term
capital gains received on such shares. Additionally, any loss realized on the
sale or exchange of shares of the Fund will be disallowed to the extent the
shares disposed of are replaced, through the reinvestment of dividends or
otherwise, during the 61-day period beginning 30 days before and ending 30 days
after the shares are sold or exchanged.
PERFORMANCE INFORMATION
From time to time, the Fund may report its historical performance for various
periods on a total return basis in reports or other communications to
shareholders or in advertising material. Total return combines principal changes
and dividends for the periods shown. Principal changes are the difference
between the beginning and ending net asset values for a given period and assume
reinvestment of dividends. Dividends include income dividends and capital gains
distributions paid during the period. Percentage changes are determined by
subtracting the beginning net asset value from ending net asset value (computed
on a total return basis) and dividing the remainder by the beginning net asset
value.
The Fund's performance will vary from time to time and an investor's shares,
when redeemed, may be worth more or less than their original cost. Past results
should not be considered representative of future performance. Factors affecting
the Fund's performance include, among other things, general market conditions,
the composition of its portfolio, and operating expenses. See "Management and
Operation of the Fund" and "Investment Objective and Policies." No adjustment is
made in reporting performance for taxes payable by shareholders on reinvested
income dividends and capital gains distributions.
Comparative performance information or rankings may be used from time to time
in reports or other communications to shareholders or in advertising material.
CAPITAL STRUCTURE
The Fund is an open-end, diversified management investment company
incorporated in Maryland on March 31, 1965.
The Fund has only one class of authorized stock--Capital Stock, $1.00 par
value. Shareholders are entitled to one vote per full share, to such
distributions per share as may be declared by the Fund's Board of Directors out
of funds legally available therefor and upon liquidation to participate ratably
in the assets available for distribution. There are no conversion or sinking
fund provisions applicable to the shares, and the holders have no preemptive
rights and may not cumulate their votes in the election of directors. The shares
are redeemable (as described under "How to Redeem Shares" and "Determination of
Net Asset Value") and are transferable. All shares issued and sold by the Fund
will be fully paid and non-assessable.
The Fund is not required to hold annual meetings of shareholders in each year.
Under certain circumstances shareholders have the right to call for a meeting of
shareholders to consider the removal of one or more directors or for other
purposes.
SHAREHOLDER INQUIRIES
Shareholder inquiries relating to the status of a shareholder's account or to
the requirements for purchase or redemption of shares may be directed to:
MATHERS FUND, INC.
C/O DST SYSTEMS, INC.
P.O. BOX 419103
KANSAS CITY, MISSOURI 64141
(800) 235-7458
Other inquiries may be directed to:
MATHERS FUND, INC.
100 CORPORATE NORTH, SUITE 201
BANNOCKBURN, ILLINOIS 60015
(800) 962-FUND
Those shareholders who wish to obtain a Mathers Fund daily price and asset mix
via recorded message may call (800) 962-FUND after 4:30 p.m., Central time,
Monday through Friday.
11
<PAGE> 15
MATHERS FUND, INC.
100 Corporate North, Suite 201
Bannockburn, Illinois 60015
Investment Adviser
MATHERS AND COMPANY, INC.
Bannockburn, Illinois
Custodian
STATE STREET BANK AND TRUST COMPANY
Boston, Massachusetts
Transfer Agent
DST SYSTEMS, INC.
Kansas City, Missouri
Counsel
SIDLEY & AUSTIN
Chicago, Illinois
Auditors
ARTHUR ANDERSEN LLP
Chicago, Illinois
[MATHERS FUND,INC. LOGO]
MATHERS FUND
PROSPECTUS
MAY 1, 1996
<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
<S> <C>
Synopsis of Expense Information........ 2
Investment Objective and Policies...... 2
Financial Highlights................... 3
Management and Operation of the Fund.. 5
Determination of Net Asset Value....... 5
Purchase of Shares..................... 5
Automatic Investment Program........... 6
Retirement Plans....................... 6
How to Redeem Shares................... 6
Systematic Withdrawal Plan............. 7
Dividend Reinvestment.................. 8
Dividends, Distributions and Taxes..... 8
Purchase Application................... 9
Performance Information................ 11
Capital Structure...................... 11
Shareholder Inquiries.................. 11
</TABLE>
<PAGE> 16
(tear out along dotted line)
- --------------------------------------------------------------------------------
<PAGE> 17
MATHERS FUND, INC.
Suite 201
100 Corporate North
Bannockburn, Illinois 60015
(800) 962-FUND
(847) 295-7400
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information is not a prospectus. A copy of
the Prospectus dated May 1, 1996 (the "Prospectus") of the Fund may be obtained
without charge by writing or telephoning the Fund at the address and telephone
number set forth above. The Prospectus provides basic information about the
Fund. This Statement of Additional Information contains information in
addition to and more detailed than that set forth in the Prospectus, and should
be read in conjunction with the Prospectus.
TABLE OF CONTENTS
-----------------
Investment Practices and Restrictions..................... 2
Fixed-Income Securities.............................. 2
Stock Index Options.................................. 2
Stock Index Futures Contracts and Options on
Such Contracts.................................. 3
Fundamental Policies................................. 6
Nonfundamental Policies.............................. 7
General.............................................. 8
Directors and Officers of the Fund........................ 9
Code of Ethics............................................ 11
Principal Holders of the Fund's Shares.................... 12
Investment Adviser........................................ 12
Investment Advisory Agreement............................. 12
Brokerage................................................. 13
Purchase, Redemption and Pricing of Shares................ 15
Retirement Programs....................................... 16
Tax Status................................................ 17
Description of Shares..................................... 20
Custodian and Independent Accountants..................... 21
Performance Information................................... 21
Financial Statements...................................... 21
May 1, 1996
<PAGE> 18
INVESTMENT PRACTICES AND RESTRICTIONS
A general discussion of the Fund's investment objective and policies
appears in the Prospectus under "Investment Objective and Policies."
Fixed-Income Securities
- -----------------------
As discussed on pages 2-3 of the Prospectus, the Fund may, subject to the
limitation described in paragraph 3 under "Fundamental Policies" below, invest
all or any portion of its assets in high quality fixed-income securities which
may include the following: (1) U.S. treasury bills, notes or bonds; (2)
banker's acceptances and certificates of deposit of the 50 largest commercial
banks in the United States, measured by total assets as shown by their most
recent annual financial statements; (3) commercial paper rated A-l or A-2 by
Standard & Poor's, Inc. ("S&P") or P-l or P-2 by Moody's Investors Service,
Inc. ("Moody's"), or, if not rated, issued by companies having an outstanding
debt issue rated AA or better by S&P or Aa or better by Moody's; and (4)
repurchase agreements with respect to the foregoing.
Stock Index Options
- -------------------
As discussed on page 4 of the Prospectus, the Fund may, subject to the
limitation described in paragraph 7 under "Nonfundamental Policies" below,
purchase put and call options on stock indices for hedging purposes in
circumstances believed appropriate by the adviser. Stock index options are
issued by the Options Clearing Corporation ("OCC"). The Fund will only
purchase stock index options which are traded on a national securities exchange
such as the Chicago Board Options Exchange, Inc. Upon purchase of a stock
index option, the Fund will pay a purchase price (the "premium") and brokerage
commissions and fees (collectively, together with the premium, "transaction
costs"). Such options confer upon the holder the right to receive upon
exercise an amount of cash which is based on the difference between the
exercise price of the option and the closing level of the underlying stock
index on the exercise date multiplied by a specified dollar amount. The right
to receive any cash amount depends on the closing level of the stock index upon
which the option is based being greater than (in the case of a call) or less
than (in the case of a put) the exercise price of the option.
A stock index option may be exercised only during its remaining life and
may be sold prior to expiration. The value of an option will generally vary
directly in the case of a call, and inversely in the case of a put, with
movements in the underlying index, and the percentage fluctuations in the value
of an option may be many times greater than those of the underlying index. The
adviser may purchase call index options as a hedge against an
2
<PAGE> 19
increase in the price of securities generally in connection with either sales
of portfolio securities or deferrals to a later date of purchases of securities
it may desire to purchase. Put index options may be purchased as a hedge
against a decline in the price of securities generally rather than selling
portfolio securities.
Any protection provided by stock index options is effective only against
changes in the level of a stock index and not necessarily against a change in
the value of individual securities. Thus, the effectiveness of the use of
stock index options as a hedge is dependent on the extent to which price
movements of individual securities which are being hedged correlate
with price movements in the underlying stock index. Unless a stock index
option can be sold or can be exercised at a profit prior to expiration, the
Fund will forfeit the entire amount of its transaction costs, often in a
relatively short period of time. Any profit that may be realized from the sale
or exercise of stock index options will be reduced by related transaction
costs.
Stock Index Futures Contracts and Options on Such Contracts
- -----------------------------------------------------------
As discussed on pages 3-4 of the Prospectus, the Fund may, subject to the
limitation described in paragraph 8 under "Nonfundamental Policies" below,
invest in stock index futures contracts and options on such contracts for
hedging purposes in circumstances believed to be appropriate by the adviser. A
stock index futures contract provides that a person with an open position in
such a contract will be entitled to receive, or will be obligated to pay, cash
amounts on a daily basis during the period such position is held based on the
daily changes in the difference between the price at which the contract is
originally made and the current level of the underlying stock index multiplied
by a specified dollar amount. An option on a stock index futures contract
gives the holder (purchaser) the right, but not the obligation, in return for
payment of the premium (option price), to acquire either a long or a short
position (a long position if the option is a call and a short position if the
option is a put) in such futures contract at a specified exercise price at any
time during the option exercise period. The writer of the stock index futures
option is required upon exercise to assume the opposite position on the stock
index futures contract.
The Fund's transactions in stock index futures contracts will be executed
on U.S. boards of trade designated by the Commodity Futures Trading Commission
("CFTC") as contract markets ("contract markets") through a futures commission
merchant (an "FCM") which is a member of the relevant contract market. The
contract markets, through their clearing houses, effectively guarantee that the
payments due in respect of stock index futures contracts will be made so that
traders need not rely solely on the solvency of individual traders or brokers
for
3
<PAGE> 20
the satisfaction of the obligations under open positions. However, in the
event of a bankruptcy of the Fund's broker, the Fund may be unable to recover
its assets -- even assets directly traceable to the Fund -- from such broker.
At the time the Fund enters into a stock index futures contract, it is
required to deposit as "initial margin" a specified amount of cash or cash
equivalents per contract. Thereafter, subsequent payments of "variation
margin" are made daily to or from the FCM based upon daily changes in the value
of the contract (a process known as "marking to market"). Initial margin is in
the nature of a performance deposit which is returned to the Fund unless it
defaults in making variation margin payments. Variation margin is the
settlement made each day between the Fund and the FCM based upon fluctuations
in the price level of such contracts, which under normal market conditions
directly reflect fluctuations in the level of the stock index on which the
contract is based. A person with a long position in a stock index futures
contract (purchaser) will be entitled to receive payments to the extent that
the market price level of such futures contract increases above the level at
which he acquired his long position, and will be obligated to make payments to
the extent that such market price level falls below the acquisition price
level. The converse is the case for a person with a short position in a stock
index futures contract (seller).
Upon exercise of a stock index futures option, the simultaneous
acquisition of open positions in the underlying stock index futures contract by
the person exercising the option and the writer is accomplished by delivery for
the account of the person exercising the option of the accumulated cash balance
in the writer's futures margin account which represents the amount by which the
market price of the stock index futures contract, at exercise, exceeds (in the
case of a call) or is less than (in the case of a put) the strike price of the
stock index futures option. If the stock index futures option is exercised on
the last trading day for such option, the writer delivers to the holder cash in
an amount equal to the difference between the option strike price and the
closing level of the relevant stock index on the date the option expires.
Pursuant to limitations imposed by the Securities and Exchange Commission
("SEC"), the Fund will not sell stock index futures contracts if, immediately
thereafter, the aggregate underlying value of all such stock index futures
contracts would exceed the total market value (or, if higher, a
volatility-adjusted value) of the Fund's portfolio securities (although it is
possible that the value of all such futures contracts could exceed such total
market value or such volatility-adjusted value of portfolio securities due to
subsequent market movements), and the Fund will not purchase stock index
futures contracts unless it maintains with its custodian in a segregated
account cash or
4
<PAGE> 21
cash equivalents in an amount equal to the market value of all such stock
index futures contracts (less the amount of initial margin deposits with
respect thereof).
The Fund has obtained from the Commodity Futures Trading Commission (the
"CFTC") an exclusion from registration as a "commodity pool operator" pursuant
to the regulations under the Commodity Exchange Act.
The Fund may purchase and sell stock index futures contracts and options
on such contracts as a hedge against market fluctuations in its portfolio of
equity investments or as a means of quickly and efficiently converting the
Fund's cash into an equity position. For example, the Fund might use stock
index futures contracts to hedge against fluctuations in the general level of
stock prices which might adversely affect either the value of the Fund's
portfolio securities or the price of securities which the Fund intends to
purchase. The Fund's hedging may include sales of stock index futures
contracts as an offset against the effect of expected declines in stock prices
and purchases of stock index futures contracts as an offset against the effect
of expected increases in stock prices.
Several risk factors are associated with trading stock index futures
contracts and options on such contracts. These risks include: (i) an imperfect
correlation, limiting the effectiveness of any hedge the Fund may attempt in
the futures markets, between the change in market value of the stocks in the
Fund's portfolio and the prices of stock index futures contracts and options on
such contracts in the Fund's portfolio due to the stocks held by the Fund not
fully replicating the stocks underlying the relevant stock index; (ii) possible
illiquidity in the markets for stock index futures contracts and options on
such contracts which could result in the Fund's inability to close out an
existing position resulting in a continuing exposure to adverse price
movements; (iii) the highly leveraged nature of stock index futures contracts
and options on such contracts, resulting in extreme volatility in the value of
such contracts as a percentage of the Fund's assets committed to such positions
in the form of futures margins or option premiums; (iv) the fact that the
decision of whether, when and how to hedge involves the exercise of skill
and judgment, and unless the Fund's investment adviser correctly predicts
market movements it is possible that as to a particular hedge the Fund would
have been better off had a decision to hedge not been made; and (v) the
possibility that a stock index futures option purchased by the Fund may expire
worthless, in which case the Fund would lose the premium paid for it as well as
related transaction costs. In addition, in response to the market turbulence
in October 1987, certain contract markets have adopted rules requiring the
cessation of trading for specified periods in the event of certain substantial
intra-day price changes and overall daily price fluctuation
5
<PAGE> 22
limits (the maximum amount that the price of a stock index futures contract may
vary up or down from the previous day's settlement price). The Federal Reserve
Board has the authority to oversee the levels of required margin on stock index
futures and options. The Federal Reserve Board or the CFTC, acting pursuant to
delegated authority, could require that minimum margin levels be set at levels
which exceed those historically applied by the contract markets.
The price level of a stock index futures contract should be determined by
the current level of the related stock index, after adjustment to reflect that
a person with a long open futures position will receive interest on the funds
he otherwise would have had to use to acquire the stocks which comprise such
index but, at the same time, will receive no dividends on his futures position
as he would have if he had actually acquired such stocks. In turbulent market
conditions, however, the price level of stock index futures contracts can
become disassociated from the level of the related stock index (as, in fact,
happened during October 1987), materially impairing the usefulness of the stock
index futures markets for hedging stock positions.
Fundamental Policies
- --------------------
The Fund has adopted certain fundamental investment restrictions which may
not be changed without approval of the holders of the lesser of: (i) 67% of
the Fund's shares present or represented at a shareholders meeting at which the
holders of more than 50% of such shares are present or represented, or (ii)
more than 50% of the outstanding shares of the Fund. Under its fundamental
investment restrictions, the Fund may not:
1. Purchase securities on margin (except that the Fund may make margin
payments in connection with transactions in stock index futures contracts and
options on such contracts), participate in a joint-trading account (the
bunching of securities transaction orders with orders of other accounts managed
by the adviser not being considered participation in a joint-trading account
for this purpose), sell securities short (except that the Fund may purchase or
sell stock index futures contracts and options on such contracts), act as an
underwriter or distributor of securities other than shares of the Fund, lend
money (except by purchasing publicly distributed debt securities or entering
into repurchase agreements) or purchase or sell commodities or commodity
futures (except that the Fund may purchase or sell stock index futures
contracts and options on such contracts) or real estate (marketable securities
of companies whose business involves the purchase or sale of real estate,
including real estate investment trusts, not being considered real estate for
this purpose).
2. Borrow money or issue senior securities, except for temporary bank
borrowings (not in excess of 5% of the value
6
<PAGE> 23
of its assets) for emergency or extraordinary purposes, or pledge any of its
assets (collateral arrangements with respect to margin for stock index futures
contracts and options on such contracts not being considered a pledge of assets
for this purpose), except to secure such borrowings and only to an extent not
greater than 10% of the value of the Fund's net assets. The Fund has not,
however, employed the practices of borrowing money, issuing senior securities
or pledging any of its assets nor does it intend to employ such practices in
the absence of unforeseen circumstances.
3. Purchase debt securities other than those which are publicly held
(repurchase agreements not being considered debt securities for this purpose).
4. Purchase securities of other investment companies, except on the open
market where no profit or commission results other than the broker's
commission, or as part of a plan of merger, consolidation or reorganization
approved by the shareholders of the Fund.
5. Make investments for the purpose of exercising control or management of
any company.
6. Purchase securities of any issuer (other than the United States or an
instrumentality of the United States) if, as a result of such purchase, the
Fund would hold more than 10% of the voting securities of any class of such
issuer or more than 5% of the Fund's assets would be invested in securities of
such issuer.
7. Concentrate more than 25% of the value of its assets, exclusive of
government securities, in securities issued by companies primarily engaged in
the same industry.
8. Acquire or retain any security issued by a company, an officer or
director of which is an officer or director of the Fund or an officer, director
or other affiliated person of its investment adviser.
Nonfundamental Policies
- -----------------------
The Fund has adopted the following nonfundamental policies which may be
changed without shareholder approval. The Fund will not:
1. Purchase any securities which are restricted from sale to the public
without registration under the Securities Act of 1933.
2. Purchase any interest in any oil, gas or any other mineral exploration
or development program or, except for options
7
<PAGE> 24
on stock indices as set forth in paragraph 7 below, invest in put and call
options.
3. Purchase any security if, as a result of such purchase, the Fund would
hold more than 10% of any class of the securities of an issuer.
4. Acquire or retain any security issued by a company if the directors or
officers of the Fund or directors, officers or other affiliated persons of its
investment adviser beneficially owning more than 1/2% of such company's
securities together own more than 5% of its securities.
5. Enter into repurchase agreements, except with State Street Bank and
Trust Company, or invest over 10% of its assets in repurchase agreements with
maturities of more than seven days.
6. Invest over 10% of its net assets in securities of foreign issuers
which are not publicly traded in the United States.
7. Purchase put and call options on stock indices if the total cost
(determined as of the time of purchase) of all such options held by the Fund
would exceed 5% of the value of the Fund's net assets considered each time such
an option is acquired.
8. Enter into stock index futures contracts or options on such contracts
if immediately thereafter the aggregate initial margin and premiums (less the
amount by which any such options are "in-the-money" at the time of purchase)
would exceed 5% of the value of the Fund's total assets after taking into
account any unrealized profits and losses on such instruments.
9. Invest more than 5% of its net assets in warrants (valued at the lower
of cost or market value) or more than 2% of its net assets in warrants not
listed on the New York or American Stock Exchange (warrants acquired by the
Fund in units or attached to securities to be considered without value for
these purposes).
General
- -------
Any percentage limitations referred to in the above investment
restrictions are determined at the time a purchase or initial investment is
made and any subsequent change in any applicable percentage resulting from
market fluctuations does not require elimination of any security from the
Fund's portfolio.
The Fund's fundamental investment restriction as to concentration
described in paragraph 7 under "Fundamental Policies" above, does not apply to
investments in government
8
<PAGE> 25
securities (e.g., U.S. Treasury securities) since their issuers are not members
of any industry. The Fund includes government securities in determining the
value of all of its assets for purposes of calculating the percentage of the
value of its assets invested in issuers primarily engaged in an industry.
The Fund may invest, without limitation under the nonfundamental policy
described in paragraph 6 under "Nonfundamental Policies" above, in foreign
securities that are U.S. dollar denominated and are publicly traded in the
United States and in U.S. dollar denominated American Depositary Receipts
(receipts issued by an American bank or trust company evidencing ownership of
underlying securities issued by a foreign issuer). As of December 31, 1995,
none of the Fund's net assets were invested in securities of foreign issuers.
Dividends and interest on securities of foreign issuers may be subject to
foreign withholding tax, which would reduce the Fund's income without providing
a tax credit for the Fund's shareholders. Other risks of investing in foreign
securities include political, social or economic instability in the country
where the issuer is domiciled, the difficulty of predicting international trade
patterns, exchange rate fluctuations, and, in certain countries, the
possibility of expropriation or diplomatic developments that could affect
investments in those countries. In addition, less information may be publicly
available about a foreign company than about a domestic company, foreign
companies may not be subject to uniform accounting, auditing and financial
reporting standards comparable to those applicable to domestic companies, and
securities of some foreign companies may be less liquid and more volatile than
securities of comparable U.S. companies.
The Fund may purchase securities in underwritten public offerings but will
generally do so only on the basis of investment considerations and not solely
on supply and demand factors.
DIRECTORS AND OFFICERS OF THE FUND
Name and Address Position(s) held with Fund
---------------- --------------------------
Henry G. Van der Eb, Jr.* Chairman and Director
100 Corporate North
Bannockburn, Illinois 60015
Robert J. Reynolds* President and Director
100 Corporate North
Bannockburn, Illinois 60015
Karl M. Becker Director
31 Hearthwood Drive
Hilton Head Island, SC 29928
9
<PAGE> 26
Tyler R. Cain Director
3 Market Square Court
Lake Forest, Illinois 60045
Charles G. Freund Director
30 Plymouth Court
Lincolnshire, Illinois 60069
Edwin H. Watkins Director
225 West Wacker Drive
Suite 1500
Chicago, Illinois 60606
Anne E. Morrissy Senior Vice President
100 Corporate North and Secretary
Bannockburn, Illinois 60015
Edith L. Cook Vice President and Treasurer
100 Corporate North
Bannockburn, Illinois 60015
Lawrence A. Kenyon Vice President and Controller
100 Corporate North
Bannockburn, Illinois 60015
Mary Anne Kinnucan Vice President
100 Corporate North
Bannockburn, Illinois 60015
Heidi M. Stubner Assistant Vice President
100 Corporate North
Bannockburn, Illinois 60015
* Interested director under the Investment Company Act of 1940.
Mr. Van der Eb and Mr. Reynolds have been employed by Mathers and
Company, Inc. since 1970 and 1982, respectively. Ms. Cook, Ms. Morrissy, Mr.
Kenyon and Ms. Kinnucan have each been employed by Mathers and Company, Inc.
for more than five years. Ms. Stubner has been employed by Mathers and
Company, Inc. since January 1994. For more than four years prior thereto, she
was an administrative assistant with Video Jet Systems International, a
manufacturer of ink-jet equipment.
Mr. Becker is an attorney. He served as Senior Vice President and General
Counsel of Beatrice Company, a food company, from 1988 to 1990. Mr. Cain has
been president and sole shareholder of TRC Trading, Inc., a private investment
company, for more than the last five years. For more than five years
10
<PAGE> 27
prior to his retirement in 1986, Mr. Freund was Vice President, Secretary and
Treasurer of MidCon Corp., a natural gas pipeline company. Prior to his
retirement in 1990, Mr. Watkins was Executive Vice President of the Old
Mountain Company, Inc., a financial services concern. Mr. Watkins is now an
investment and financial consultant.
The Fund does not pay any fees to its directors who are considered
"interested persons" of the Fund or the adviser, as defined in the Investment
Company Act of 1940, as amended (the "1940 Act"). The aggregate compensation
paid by the Fund to each of its non-interested directors during its fiscal year
ended December 31, 1995 is set forth below. The adviser does not provide
investment advisory services to any other registered investment company, and
therefore the Fund's directors receive compensation only from the Fund. The
Fund does not maintain any deferred compensation, pension or retirement plans,
and no pension or retirement benefits are accrued as part of Fund expenses.
<TABLE>
<CAPTION>
Aggregate
Name of Non-Interested Compensation
Director of the Fund from the Fund
---------------------- -------------
<S> <C>
Karl M. Becker $9,000
Tyler R. Cain $9,000
Charles G. Freund $9,000
Edwin H. Watkins $9,000
</TABLE>
As of March 31, 1996, the directors and officers of the Fund, as a group,
beneficially owned 328,123, or 2.14% of the Fund's outstanding shares,
including the shares held in the Employees' Profit Sharing and Savings Trust of
the adviser.
CODE OF ETHICS
The Fund and the adviser have adopted a Code of Ethics which restricts
their affiliated personnel from engaging in personal investment activities in
conflict with the interests of the Fund. The Code of Ethics complies in all
material respects with the recommendations set forth in the May 9, 1994 Report
of the Advisory Group on Personal Investing of the Investment Company
Institute.
11
<PAGE> 28
PRINCIPAL HOLDERS OF THE FUND'S SHARES
As of March 31, 1996, no person owned of record or was known by the Fund
to own beneficially more than 5% of the Fund's outstanding shares except for
Edward Pauls, who owned of record 8.54% of the Fund's outstanding shares as of
such date.
INVESTMENT ADVISER
Under an investment advisory agreement with the Fund, Mathers and Company,
Inc., 100 Corporate North, Suite 201, Bannockburn, Illinois, furnishes
continuous investment advisory services and management to the Fund. The
adviser receives an annual fee of 0.75% of the first $200,000,000 of the Fund's
average net asset value, plus 0.625% of such value in excess of $200,000,000
but not exceeding $500,000,000, plus 0.50% of such value in excess of
$500,000,000, payable monthly and determined by valuations made as of the close
of the previous month. The fees paid by the Fund to the adviser for 1995, 1994
and 1993 were $1,906,941, $2,465,719 and $3,242,541, respectively.
Mr. Van der Eb, an officer and director of the Fund, is President and a
director of the adviser, and Mr. Reynolds is Senior Vice President and
Secretary, Ms. Morrissy is Vice President, Mr. Kenyon is Vice President,
Treasurer and Assistant Secretary, and Ms. Cook is Vice President and Assistant
Treasurer of the adviser. Mr. Van der Eb owns a majority of the outstanding
shares of the adviser and is the controlling person of the adviser. Gabelli
Funds, Inc. ("Gabelli") owns a non-controlling interest in the adviser. Such
interest is subject to certain put and call options between Gabelli and the
adviser which may be exercised at future dates.
Mr. Van der Eb has been primarily responsible for the day-to-day
management of the Fund's portfolio for more than the last ten years. Mr.
Reynolds and, to a lesser extent, Ms. Morrissy also play significant roles in
such management.
INVESTMENT ADVISORY AGREEMENT
The investment advisory agreement was approved by the shareholders of the
Fund on April 20, 1988. The directors last approved the continuation of the
investment advisory agreement on April 19, 1996, by the votes of directors
described in the following paragraph. Under the agreement, the adviser, at its
own expense and without reimbursement from the Fund, furnishes office space,
office facilities, equipment, personnel (including executive officers but
excluding the services of directors who are not affiliated persons of the
adviser) and clerical and bookkeeping services for managing the assets of the
Fund, and bears all sales and promotional expenses of the Fund, other than
12
<PAGE> 29
expenses incurred in complying with laws regulating the issuance or sale of
securities. The Fund bears all other expenses of its operations (principally
transfer agent, legal, auditing, custodian, taxes, shareholder communication
expenses, registration and printing proxy material, shareholder reports,
prospectuses sent to existing shareholders and filed with regulatory
authorities, and toll-free telephone expense for use by existing shareholders),
but is reimbursed quarterly by the adviser for any such expenses, other than
taxes, in excess of 1-1/2% of the first $30,000,000 of its average net asset
value plus 1% of such value in excess of $30,000,000 for each year, in each
case as determined by evaluations made as of the close of each month of the
year. Brokerage commissions are not treated as expenses for purposes of this
limitation.
The agreement is not assignable and may be terminated by either party,
without penalty, on 60 days' notice. Otherwise, the agreement will continue in
effect until April 30, 1997 (unless sooner terminated), and thereafter from
year to year so long as it is approved annually by (a) vote of a majority of
the directors of the Fund who are not "interested persons" of the Fund or of
the adviser, as defined in the 1940 Act, cast in person at a meeting called for
the purpose of voting on such approval, and (b) either by the Board of
Directors or by the vote of shareholders described in the first paragraph under
"Investment Practices and Restrictions -- Fundamental Policies."
The agreement provides that the services of the adviser to the Fund are
not to be deemed exclusive and that the adviser may furnish similar services to
others so long as the services to the Fund are not impaired thereby. The
adviser currently serves as investment adviser to other accounts, primarily
long-term investment accounts, including pension funds, insurance company
separate accounts, individuals and others. The adviser maintains investment
allocation policies intended to afford each of its accounts fair treatment over
time.
BROKERAGE
In placing purchase and sale orders of portfolio securities for the Fund,
it is the policy of the adviser to seek the best execution of orders at the
most favorable price in light of the overall quality of brokerage and research
services provided, as described in this and the following paragraph. In
selecting brokers to effect portfolio transactions, the determination of what
is expected to result in best execution at the most favorable price involves a
number of largely judgmental considerations. Among these are the adviser's
evaluation of the broker's efficiency in executing and clearing transactions,
block trading capability (including the broker's willingness to position
securities) and the broker's financial strength and stability. The most
favorable price to the Fund means the best
13
<PAGE> 30
net price without regard to the mix between purchase or sale price and
commission, if any. Primary market makers are used for transactions in the
over-the-counter market except in those instances where the adviser believes
better execution or a more favorable price is obtainable elsewhere.
In allocating brokerage business for the Fund, the adviser also takes into
consideration the research, analytical, statistical and other information and
services provided by the broker, such as general economic reports and
information, performance measurement and portfolio analysis reports,
computer-based equity valuation models, reports or analyses of particular
companies or industry groups, market timing and technical information and the
availability of the brokerage firm's analysts for consultation. While the
adviser believes these services have substantial value, they are considered
supplemental to the adviser's own efforts in the performance of its duties
under the investment advisory agreement. Other advisory clients may indirectly
benefit from the availability of these services to the adviser, and the Fund
may indirectly benefit from services available to the adviser as a result of
transactions for other clients. The Fund may absorb higher brokerage
commissions than might be available from other brokers where the amount is
believed by the adviser to be reasonable in relation to the value and overall
quality of the brokerage and research services provided.
Arrangements exist with broker-dealers whereby the adviser obtains
computerized stock quotation services and other research services in exchange
for the direction of portfolio transactions which have generated certain
amounts of dealer concessions or brokerage commissions for such broker-dealers.
From time to time, the adviser may make other similar arrangements with brokers
or dealers which agree to provide research services in consideration for
certain amounts of dealer concessions or brokerage commissions. Although the
adviser has not done so in the past, the adviser may also allocate brokerage to
brokers or dealers who recommend the purchase of shares of the Fund to their
clients. Brokerage will be directed to such brokers or dealers pursuant to any
such arrangement only when the adviser believes that the commissions charged
are reasonable in relation to the value and overall quality of the brokerage
and research services provided. During 1995, no brokerage transactions or
related brokerage commissions were allocated by the Fund to brokers because of
directed research services, exclusive of dealer concessions from underwritten
offerings.
During 1995, 1994, and 1993, the Fund paid total brokerage commissions of
$376,212, $1,000,484 and $1,389,982, respectively, virtually all of which was
paid to firms providing research as well as brokerage services. The Fund's
annual portfolio turnover rate is set forth in the Prospectus under "Financial
Highlights." Portfolio turnover has generally tended
14
<PAGE> 31
to be high over the past decade. Several factors have contributed to this,
including (i) a volatile market, combined with a willingness of the adviser to
respond to certain market conditions believed by the adviser to warrant holding
a security for a period shorter than the long-term, (ii) the adviser's
willingness to invest in fixed income securities with maturities greater than
one year (which, unlike short-term debt instruments, are included in
calculating portfolio turnover) under the circumstances described in the
Prospectus and (iii) the requirement that more than 70% of the Fund's gains
from the sale of securities be from securities held three months or more (see
"Tax Status"), together with the fact that the Fund has made use of hedging
techniques the gains (if any) from which generally do not satisfy such
requirement.
PURCHASE, REDEMPTION AND PRICING OF SHARES
For a general discussion of how shares of the Fund are purchased and
redeemed and how the Fund values such shares for such purposes, see
"Determination of Net Asset Value," "Purchase of Shares," "Automatic Investment
Program," "How to Redeem Shares" and "Systematic Withdrawal Plan" in the
Prospectus. Such discussions are incorporated herein by reference.
Stock index futures contracts held by the Fund are valued at the
close-of-trading settlement price established each day by the exchange on which
they are traded, and options on stock index futures and options on cash stock
indices are valued at their daily end-of-trading closing prices on the
exchanges on which they are traded.
The Fund does not consider the U.S. Postal Service or express mail
delivery services to be its agents. Therefore, deposit in the mail or with
such services, or receipt at the post office box of DST Systems Inc., the
Fund's transfer agent, of purchase applications (or redemption requests) does
not constitute receipt by DST or the Fund.
The Fund, at its discretion, may permit an investor to purchase shares of
the Fund at net asset value in exchange for securities held by the investor,
provided that the Fund's acquisition of such securities is consistent with its
investment policies. For purposes of determining the number of Fund shares to
be received in exchange for any accepted securities, the Fund will value such
securities in the same manner as is used by the Fund to value its own assets.
For more information on this method of purchase, please contact the Fund at 100
Corporate North, Suite 201, Bannockburn, Illinois 60015, (800) 962-FUND.
Broker-dealers which effect purchases or sales of shares of the Fund on
behalf of their customers may impose a transaction charge on such customers for
performing such
15
<PAGE> 32
services. No such transaction charge is imposed if shares are purchased
directly from the Fund, without the employment of the services of a broker-
dealer.
RETIREMENT PROGRAMS
The Fund makes available a Retirement Plan for Self-Employed Individuals
("Keogh Plan") with both money purchase pension plan and profit sharing plan
options, Simplified Employee Pension Plans ("SEPs") and Individual Retirement
Accounts ("IRAs"). Contributions to each are invested, and dividends and
distributions are automatically reinvested, in shares of the Fund. Generally,
the maximum contribution allowable each year to an IRA is the lesser of $2,000
and 100% of compensation includible in gross income for the year, and the
maximum annual contribution allowable to a Keogh Plan is the lesser of (i)
$30,000 and (ii) 25% of an employee's compensation or a self-employed
individual's earned income (net earnings reduced by Keogh Plan contributions)
for the year. Additionally, the maximum deduction allowable each year for
contribution to the profit sharing plan option of a Keogh Plan is, generally,
15% of an employee's compensation or a self-employed individual's earned income
(net earnings reduced by Keogh Plan contributions) for the year. Under a SEP,
an employer, or self-employed individual, is permitted to contribute a
discretionary amount each year up to the lesser of $30,000 or 15% of an
employee's compensation for the year, or a self-employed individual's earned
income (net earnings reduced by SEP contributions) for the year, into an
individual IRA for each employee or self-employed individual. The annual
compensation of each employee and the earned income of each self-employed
individual which can be taken into account under the Keogh Plan and a SEP for
any year cannot exceed $150,000 as increased by the cost-of-living adjustments
for the calendar years after 1994 as determined by the Internal Revenue
Service. A self-employed individual may contribute to either a Keogh Plan or a
SEP and, in either case, may also contribute to an IRA. The custodial
agreements for the Keogh Plan and IRAs provide that Investors Fiduciary Trust
Company, Kansas City, Missouri, will provide the custodial service unless a
different custodian is specified.
Investors Fiduciary Trust Company receives as compensation from the
participant under the Keogh Plan an annual maintenance fee of $12.00 per
participant. Special services not contemplated in the annual maintenance fee
will be rendered by Investors Fiduciary Trust Company for such additional
charges as will reasonably compensate it for the services provided. Fees may
be changed with at least 45 days' prior written notice. The annual maintenance
fee payable to Investors Fiduciary Trust Company with respect to an IRA,
including each individual IRA established under a SEP, is presently $12.00 and
may be changed at any time. Fees under any of these types of accounts remaining
16
<PAGE> 33
unpaid may be charged against the accounts. If a custodian other than
Investors Fiduciary Trust Company is specified, fees will be determined by such
custodian.
The Keogh Plan has been approved by the Internal Revenue Service for use
by self-employed persons as a plan qualified under Section 401 of the Internal
Revenue Code. The Internal Revenue Service has also approved the money purchase
pension plan and profit sharing plan options of the Keogh Plan as paired plans
with the result that self-employed persons may adopt either or both of such
plans. Copies of the Keogh Plan may be obtained from the Fund at the address
indicated below. The IRA Custodial Agreement has not been submitted to the IRS
for approval because it incorporates IRS Form 5305-A which makes such
submission unnecessary. The Fund makes available IRS Forms 5305-SEP and
5305A-SEP for employers or self-employed persons who want to establish a SEP.
The employer or individual, as the case may be, should consult his or her
tax adviser or attorney as to the applicability of the Keogh Plan, SEP or IRA
to his particular circumstances. Additionally, since these retirement programs
involve commitments covering future years, the investment objectives of the
Fund, as described in the Prospectus and in this Statement of Additional
Information, should be carefully considered.
For further details, including the right to appoint a successor custodian,
see the Keogh Plan, Keogh Custodial Agreement and Keogh Application Form and
the IRA Application Form, IRA Custodial Agreement and IRA Disclosure Statement
which are available from the Fund, 100 Corporate North, Suite 201, Bannockburn,
Illinois 60015, (800) 962-FUND.
For a discussion of income tax withholding on certain distributions from
qualified retirement plans or tax-sheltered annuity plans, see "Tax Status"
below.
TAX STATUS
The Fund has qualified, and intends to remain qualified, as a "regulated
investment company" under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). As a regulated investment company, the Fund is generally
not subject to U.S. Federal income tax on its income and gains distributed to
shareholders, provided the Fund distributes to its shareholders at least 90% of
its net investment income (i.e., net income and gains exclusive of net
long-term capital gains) each year.
To qualify for favorable tax treatment as a regulated investment company,
the Fund must, among other things, (i) derive
17
<PAGE> 34
in each taxable year at least 90% of its gross income from dividends, interest,
gains from the sale or other disposition of stock or securities and certain
other income (including, but not limited to, gains from options and futures
contracts) derived with respect to its business of investing in stocks and
securities, (ii) derive in each taxable year less than 30% of its gross income
from gains (without, in most cases, deduction for losses) from the sale or
other disposition of stock, securities, options, and futures contracts, held
for less than three months and (iii) diversify its holdings so that, at the end
of each quarter of its taxable year, (a) at least 50% of the value of its
assets is represented by cash, cash items, U.S. Government securities, and
other securities limited, in respect of any one issuer, to a value not greater
than 5% of the value of the Fund's total assets and 10% of the outstanding
voting securities of such issuer and (b) not more than 25% of the value of its
assets is invested in the securities of any one issuer (other than the U.S.
Government).
The risk of the Fund failing the 30% test described in the preceding
paragraph is increased to some extent by the Fund's relatively high portfolio
turnover and its trading in stock index options, stock index futures contracts
and options on such contracts. For example, in certain publicized cases,
regulated investment companies holding "short" positions in stock index futures
contracts on October 19, 1987 (at which time there was a sharp drop in the
values of publicly traded equity securities) unexpectedly realized large gains
on those contracts, some of which had been held for less than three months.
For purposes of the 30% test described above, losses on offsetting positions
with respect to those contracts would not have been taken into account.
Therefore, although those contracts might have effectively hedged a company's
loss on the offsetting positions, the resulting gain on those contracts could
have caused the company to lose its status as a regulated investment company
under Subchapter M of the Code.
In the event the Fund does not qualify in any year as a regulated
investment company under Subchapter M of the Code, its income would be taxed to
the Fund whether or not distributed, and distributions to shareholders would
generally be treated as ordinary dividend income.
Under the "mark-to-market" rules of the Code, most stock index options,
stock index futures contracts and options on such contracts will be treated for
Federal income tax purposes as having been sold for their fair market value on
the last business day of the Fund's taxable year. Any gain or loss resulting
from such deemed sales, and from actual sales of such options and futures
contracts, will be treated as 60% long-term capital gain or loss and 40%
short-term capital gain or loss. The mark-to-market rules of the Code may
cause the Fund to have taxable gains
18
<PAGE> 35
which, due to subsequent declines in value, are never actually realized.
Gains or losses recognized by the Fund on sales of its securities will be
long-term or short-term capital gains or losses, depending on the Fund's
holding period for its securities. Similarly, gains or losses realized by the
Fund from transactions in options not subject to the mark-to-market rules of
the Code will be long-term or short-term capital gains or losses depending on
the nature of the transaction and the length of time the option is held by the
Fund.
If the net asset value of shares is reduced below a shareholder's cost by
a distribution, such distribution would be taxable as described in the
Prospectus even though it might be viewed in economic terms as a return of
capital. For Federal income tax purposes the shareholder's original cost
continues as his tax basis and on redemption his gain or loss is the difference
between such basis and the redemption price. At December 31, 1995, an amount
equal to approximately 1.8% of the net asset value of the Fund's shares
represented net unrealized depreciation.
A non-deductible 4% excise tax will be imposed on the Fund to the extent
the Fund does not distribute during each calendar year (i) 98% of its ordinary
income for such calendar year, (ii) 98% of its capital gain net income for the
one-year period ending October 31 of such calendar year (or the Fund's actual
taxable year ending December 31, if elected) and (iii) certain other amounts
not distributed in previous years. The Fund intends to distribute its income
and gains in a manner so as to avoid the imposition of such 4% excise tax.
For purposes of applying the distribution requirements described above,
and for purposes of determining the taxable income of shareholders each year,
dividends declared by the Fund in October, November or December of a year,
payable to shareholders as of a record date in any such month, and paid during
the following January, will be treated for Federal income tax purposes as paid
by the Fund and received by shareholders as of December 31 of the calendar year
declared.
Income tax withholding at a rate of 20% is applicable to any distribution
from a qualified retirement plan, such as the Keogh Plan, or a tax-sheltered
annuity plan where the distribution is eligible for tax-free rollover treatment
but is not transferred directly to a specified retirement vehicle such as
another qualified plan or an IRA. Also, all qualified plans must provide
participants and certain other distributees with an election to have an
eligible rollover distribution transferred directly to certain specified
retirement vehicles. If a shareholder receives a distribution which is subject
to the 20% withholding requirement and wishes to roll the distribution into
19
<PAGE> 36
another vehicle such as an IRA within 60 days, the shareholder will have to
contribute to the IRA the amount of the distribution (after withholding) plus
an amount equal to the amount withheld. The amount withheld can be applied to
reduce the shareholder's Federal income tax liability and may be refunded to
the shareholder upon filing a Federal income tax return if it exceeds such tax
liability. If the amount withheld is not rolled over into the IRA, it will be
subject to income taxes plus, if the shareholder has not attained age 59 1/2,
an additional 10% penalty tax.
The rules broadly define distributions which qualify for rollover
treatment. Shareholders who expect to receive distributions which may qualify
for rollover treatment and therefore may be subject to 20% withholding should
consult their own tax advisers for a complete discussion on the impact of these
rules on such distributions.
The foregoing is only a general summary of the certain provisions of the
Internal Revenue Code and current Treasury regulations applicable to the Fund
and its shareholders. The Internal Revenue Code and such regulations are
subject to change by legislative or administrative action.
The tax consequences to a foreign shareholder of the Fund may be different
from those described herein. Foreign shareholders are advised to consult their
own tax advisers with respect to the particular tax consequences to them of an
investment in the Fund.
Distributions to shareholders may also be subject to state and local
taxes. Investors are urged to consult their own tax advisers regarding the
application of Federal, state and local tax laws.
DESCRIPTION OF SHARES
As a general matter, the Fund is not required to hold annual meetings of
shareholders. Under the Fund's By-Laws, an annual meeting of shareholders is
not required to be held in any year in which the Fund is not required under the
Investment Company Act of 1940 to submit for shareholder approval (i) the
election of directors, (ii) any investment advisory agreement, (iii) the
selection of the Fund's independent public accountants or (iv) any distribution
agreement. Each director serves until the next meeting of shareholders called
for the purpose of electing directors and until the election and qualification
of his successor. Under certain circumstances, shareholders have the right to
call for a meeting of shareholders to consider the removal of one or more
directors. The Fund will assist in shareholder communication in such matters.
20
<PAGE> 37
CUSTODIAN AND INDEPENDENT ACCOUNTANTS
State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02101, acts as Custodian of the Fund. As such, the Bank holds
all securities and cash of the Fund, delivers and receives payment for
securities sold, receives and pays for securities purchased, collects income
from investments and performs other duties, all as directed by officers of the
Fund. The Bank does not exercise any supervisory function over the management
of the Fund, the purchase and sale of securities or the payment of
distributions to shareholders.
Arthur Andersen LLP, 33 West Monroe Street, Chicago, Illinois 60603,
Certified Public Accountants, serves as the auditors of the Fund. The auditors
are responsible for auditing the financial statements of the Fund. The
independent accountants are selected by the vote of a majority of directors of
the Fund who are not interested persons of the Fund or the adviser. Such
selection is subject to ratification by the Fund's shareholders in such years
as the Fund is required to hold a meeting of shareholders. See "Description of
Shares."
PERFORMANCE INFORMATION
The compound annual rates of return of the Fund for the one, five and ten
year periods ended December 31, 1995 were
7.01%, 3.03% and 8.83%, respectively, computed in accordance with the rules for
standardized computation of performance as established by the SEC. Such rules
for standardized computation of performance provide for determining compound
annual rates of return by taking the total return of the Fund over the period
in question calculated as described in the Prospectus and "annualizing" such
total return -- i.e., computing the annual rate of return which, if earned in
each year of such period, would produce the total return actually earned over
such period.
Inasmuch as the Fund has no sales load on purchases or reinvested
dividends, no deferred sales load or redemption fee and no 12b-1 fees, no
adjustments are made for such items in calculating performance.
FINANCIAL STATEMENTS
The Fund's audited balance sheet and schedule of investments as of
December 31, 1995, and the related statement of operations for the year then
ended and statements of changes in net assets for each of the two years in the
period ended December 31, 1995, and the auditors' report of Arthur Andersen LLP
dated January 12, 1996 relating to such financial statements, are incorporated
herein by reference to the Fund's 1995 Annual Report to Shareholders. No other
portion of such
21
<PAGE> 38
Annual Report is incorporated by reference herein or is a part of the
registration statement of which this Statement of Additional Information is a
part. A copy of the Annual Report to Shareholders referred to above is
provided herewith to each person who is not a shareholder of the Fund and has
not otherwise received a copy of such Report. Shareholders of the Fund may
obtain a copy of the Report without charge by writing or telephoning the Fund
at the address and telephone number set forth on the cover page of this
Statement of Additional Information.
22
<PAGE> 39
[Letterhead of Arthur Andersen LLP]
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
We have previously audited, in accordance with generally accepted auditing
standards, the balance sheets and schedules of investments of MATHERS FUND,
INC. as of December 31 for each of the years 1986 through 1995 and the related
statements of operations and changes in net assets for each of the 10 years in
the period ended December 31, 1995 (none of which are presented herein), and
expressed an unqualified opinion on those statements. The information set
forth in the table entitled "Financial Highlights" for each of the 10 years in
the period ended December 31, 1995, as presented in the Prospectus of Mathers
Fund, Inc. dated May 1, 1996, is fairly stated in all material respects in
relation to the financial statements from which it has been derived.
/s/ Arthur Andersen LLP
Chicago, Illinois,
April 23, 1996
<PAGE> 40
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
The following financial statements are included in
Part B (by incorporation by reference):
Report of Independent Public Accountants
Balance Sheet--December 31, 1995
Schedule of Investments--December 31, 1995
Statement of Operations for the Year Ended December
31, 1995
Statements of Changes in Net Assets for the Years
Ended December 31, 1995 and 1994
(b) Exhibits:
1.1 Articles of Incorporation*
1.2 Articles of Amendment, filed July 21, 1967*
1.3 Articles of Amendment, filed July, 1968*
1.4 Articles of Amendment, filed December 26, 1968*
1.5 Articles of Amendment, filed July 22, 1969*
1.6 Change of Principal Office and Change of Address of
Resident Agent*
1.7 Notice of Change of Resident Agent's Address and
Principal Office*
1.8 Articles Supplementary*
1.9 Articles Supplementary*
2.1 Amended and Restated By-Laws of the Registrant*
2.2 Amendment to Amended and Restated By-Laws*, adopted
March 4, 1991*
2.3 Amendment to Amended and Restated By-Laws,
adopted November 2, 1992*
2.4 Amendment to Amended and Restated By-Laws, adopted
April 27,1993*
2.5 Amendment to Amended and Restated By-Laws , adopted
August 9, 1993*
2.6 Amendment to Amended and Restated By-Laws, adopted
April 21, 1995*
3. Not Applicable
4. Not Applicable
5. Investment Advisory Agreement between the Registrant
and Mathers and Company, Inc.*
6. Not Applicable
7. Not Applicable
8. Custodian Agreement between the Registrant and State
Street Bank and Trust Company and the Schedule of
Remuneration*
9. Service Agreement between the Registrant and DST,
Inc.*
C-1
<PAGE> 41
10. Opinion and Consent of Leibman, Williams, Bennett,
Baird and Minow**
11. Consent of Independent Accountants
12. Not Applicable
13. Not Applicable
14.1 Revised Individual Retirement Account Package***
14.2 Revised Retirement Plan for Self-Employed Individuals
and related documents***
15. Not Applicable
16. Schedule for Computation of Performance Quotations
17. Not Applicable
__________
* Filed in electric format solely to comply with Rule 102 of
Regulation S-T.
** Previously filed.
*** Previously filed in Post-Effective Amendment No. 53 on April
29, 1994 and hereby incorporated by reference.
(c) Consents:
The consent of Arthur Andersen LLP is filed herewith.
Item 25. Persons Controlled by or under
Common Control with Registrant
None.
Item 26. Number of Holders of Securities
<TABLE>
<CAPTION>
(2)
(1) Number of Record
Title of Class as of March 31, 1996
-------------- --------------------
<S> <C>
Capital Stock,
$1 par value 12,345
</TABLE>
Item 27. Indemnification
As authorized by Section 2-418 of the General
Corporation Law of the State of Maryland, directors and
officers of the Registrant are indemnified against liability
under certain circumstances. Reference is made to Section 7
of Article VII of the Registrant's By-Laws.
The Registrant has obtained an investment trust
errors and omissions policy, effective May 15, 1995,
C-2
<PAGE> 42
which (subject to certain limits and deductibles) insures the
Registrant and its officers and directors against loss arising from
certain claims if made against them for actions taken as such.
Item 28. Business and Other Connections
of Investment Adviser
Mathers and Company, Inc., Registrant's investment
adviser (the "Adviser"), provides investment advisory services to
pension and profit-sharing funds, individuals, insurance company
separate accounts and others, as well as to Registrant.
Item 29. Principal Underwriters
Inapplicable.
Item 30. Location of Accounts and Records
Such records are located at:
1. Mathers Fund, Inc.
100 Corporate North
Suite 201
Bannockburn, IL 60015
2. State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02101
3. DST Systems, Inc.
1004 Baltimore Avenue
Kansas City, MO 64105
4. Sidley & Austin
One First National Plaza
Chicago, IL 60603
Item 31. Management Services
Inapplicable.
Item 32. Undertakings
Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a
C-3
<PAGE> 43
copy of Registrant's latest annual report to shareholders,
upon request and without charge.
C-4
<PAGE> 44
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant certifies that it meets all
of the requirements for effectiveness of this Amendment to the Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this amendment to the Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in Bannockburn, Illinois, on the
30th day of April, 1996.
MATHERS FUND, INC.
By /s/ Henry G. Van der Eb, Jr.
----------------------------
Henry G. Van der Eb, Jr.
Chairman
Pursuant to the requirements of the Securities Act of 1933,
this amendment to the Registration Statement has been signed below on April 30,
1996 by the following persons in the capacities indicated:
<TABLE>
<CAPTION>
Signature Capacity
- --------- --------
<S> <C>
/s/ Henry G. Van der Eb, Jr. Chairman and Director,
- ---------------------------- principal executive officer
Henry G. Van der Eb, Jr.
/s/ Edith L. Cook Treasurer, principal
- ---------------------------- financial and accounting officer
Edith L. Cook
/*/ Karl M. Becker Director
- ----------------------------
Karl M. Becker
/*/ Tyler R. Cain Director
- ----------------------------
Tyler R. Cain
/*/ Charles G. Freund Director
- ----------------------------
Charles G. Freund
/*/ Robert J. Reynolds Director
- ----------------------------
Robert J. Reynolds
/*/ Edwin H. Watkins Director
- ----------------------------
Edwin H. Watkins
*By /s/ Henry G. Van der Eb, Jr.
-----------------------------
Henry G. Van der Eb, Jr.
Attorney-in-Fact
</TABLE>
<PAGE> 45
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EDGAR
Exhibit Exhibit
Number Description of Document Number
- ------ ----------------------- ------
<S> <C>
1.1 Articles of Incorporation
1.2 Articles of Amendment, filed July 21, 1967
1.3 Articles of Amendment, filed July, 1968
1.4 Articles of Amendment, filed December 26, 1968
1.5 Articles of Amendment, filed July 22, 1969
1.6 Change of Principal Office and Change of Address of Resident Agent
1.7 Notice of Change of Resident Agent's Address and Principal Office
1.8 Articles Supplementary
1.9 Articles Supplementary
2.1 Amended and Restated By-Laws of the Registrant
2.2 Amendment to Amended and Restated By-Laws, adopted March 4, 1991
2.3 Amendment to Amended and Restated By-Laws, adopted November 2, 1992
2.4 Amendment to Amended and Restated By-Laws, adopted April 27, 1993
2.5 Amendment to Amended and Restated By-Laws, adopted August 9, 1993
2.6 Amendment to Amended and Restated By-Laws, adopted April 21, 1995
5. Investment Advisory Agreement between the Registrant and Mathers and Company, Inc.
8. Custodian Agreement between the Registrant and State Street Bank
and Trust Company and the Schedule of Remuneration
9. Service Agreement between the Registrant and DST, Inc.
11. Consent of Independent Accountants
16. Schedule for Computation of Performance Quotations
</TABLE>
<PAGE> 1
EXHIBIT 1.1
ARTICLES OF INCORPORATION
OF
MATHERS FUND, INC.
approved and received for record by the State Department of Assessments
and Taxation of Maryland March 31, 1965, ___________ at 9:00 o'clock A.M. as in
conformity with law and ordered recorded.
A 14422
______________
Recorded in Liber 2470, folia 247, one of the Charter Records of the
State Department of Assessments and Taxation of Maryland.
______________
Bonus tax paid $200.00 Recording fee paid $22.00
______________
To the clerk of the Superior Court of Baltimore City
IT IS HEREBY CERTIFIED that the within instrument, together with all
endorsements thereon, has been received, approved and recorded by the State
Department of Assessments and Taxation of Maryland.
AS WITNESS my hand and seal of the said Department at Baltimore.
<PAGE> 2
ARTICLES OF INCORPORATION
OF
MATHERS FUND, INC.
FIRST: WE, THE UNDERSIGNED, RUSSELL O. BENNETT, GEORGE J.
McLAUGHLIN, JR. and NEIL FLANAGIN, whose post office address is 208 South
LaSalle Street, Chicago, Illinois 60604, each being at least twenty-one years
of age, do, under and by virtue of the General Laws of the State of Maryland
authorizing the formation of corporations, associate ourselves as incorporators
with the intention of forming a corporation.
SECOND: The name of the corporation (which is hereinafter
called the "Corporation") is MATHERS FUND, INC.
THIRD: The purposes for which the Corporation is formed are:
A. To purchase or otherwise acquire, hold for investment or
otherwise, and to sell, exchange or otherwise dispose of securities, or rights
or warrants to acquire securities, of any private or public company,
corporation, association, trust or syndicate however organized, and to engage
in the business of a diversified open-end management investment company.
B. To purchase or otherwise acquire, hold for investment or
otherwise and to sell, exchange, or otherwise dispose of, securities issued or
guaranteed by the United States of America, by any State of the United States
of America, by any political subdivision of any State, by any public
instrumentality of a State, or by any person controlled or supervised by and
acting as an instrumentality of the United States of America.
C. To deposit its funds from time to time in such checking
account or accounts as may reasonably be required and to deposit its funds at
interest in any bank, savings bank or trust company in good standing organized
under the laws of the United States of America or any State thereof, or of the
District of Columbia.
D. To conduct research and investigations with respect to
securities, organizations and business conditions in the United States and
elsewhere; to secure information and advice pertaining to the investment and
employment of the assets and funds of the Corporation and to pay compensation
to others for the furnishing of any or all of the foregoing.
<PAGE> 3
E. Subject to any restrictions contained in the Investment
Company Act of 1940, in applicable state securities or "blue sky" laws, or in
any rules or regulations issued pursuant to any of the foregoing, to exercise
in respect of all securities, property and assets owned by it all rights,
powers and privileges which could be exercised by any natural personal owning
the same securities, property or assets.
F. To acquire all or any part of the good will, property and
business of any firm, person, association or corporation heretofore or
hereafter engaged in any business similar to any business which it has power to
conduct, and to hold, utilize, enjoy, and in any manner dispose of the whole or
any part of the rights, property and business so acquired and to assume in
connection therewith any liabilities of any such person, firm, association or
corporation.
G. Without the vote or consent of the stockholders of the
Corporation, to purchase, acquire, hold, dispose of, transfer and reissue or
cancel shares of its own capital stock in any manner or to any extent now or
hereafter permitted by the laws of Maryland and by these Articles of
Incorporation.
H. To carry out all or any part of the aforesaid objects and
purposes and to conduct its business in all or any of its branches in any or
all states, territories, districts and possessions of the United States of
America and in foreign countries; and to maintain offices and agencies in any
and all states, territories, districts and possessions of the United States of
America and in foreign countries.
The foregoing objects and purposes shall, expect when
otherwise expressed, be in no way limited or restricted by reference to or
inference from the terms of any clause of this or any other Section of these
Articles of Incorporation, or of any amendment thereto, and shall each by
regarded as independent and construed as powers as well as objects and
purposes.
The Corporation shall be authorized to exercise and enjoy all
of the powers, rights and privileges granted to or conferred upon corporations
of a similar character by the General Laws of the State of Maryland now or
hereafter in force and the enumeration of the foregoing powers shall not be
deemed to exclude any powers, rights or privileges so granted or conferred.
-2-
<PAGE> 4
FOURTH: The post office address of the principal office of
the corporation in this State is c/o The Corporation Trust Incorporated, First
National Bank Building, Light and Redwood Streets, Baltimore, Maryland 21202.
The name of the resident agent of the corporation in this State is The
Corporation Trust Incorporated, a corporation of this State, and the post
office address of the resident agent is First National Bank Building, Light and
Redwood Streets, Baltimore, Maryland 21202.
FIFTH: The total number of shares of capital stock which the
Corporation has authority to issue is One Million (1,000,000) shares, all of
one class, of the par value of One Dollar ($1.00) and of the aggregate par
value of One Million Dollars ($1,000,000).
SIXTH: The Corporation shall have not less than three nor
more than fifteen directors, as determined by the by-laws of the Corporation
from time to time. The first board shall consist of three directors, who shall
act until the first annual meeting or until their successors are duly chosen
and qualify. These directors are:
Thomas N. Mathers
Robert B. Bruce
Arnold C. Schumacher
SEVENTH: The following provisions are hereby adopted for the
purposes of defining, limiting and regulating the powers of the Corporation and
of the directors and stockholders:
A. The board of directors of the Corporation shall authorize
an initial issuance of shares of the capital stock of the Corporation for such
consideration not less than the aggregate par value of the shares included in
the issuance as the board of directors shall determine. After such initial
issuance, the board of directors may authorize the issuance (and reissuance)
from time to time of shares of capital stock of any class, whether now or
hereafter authorized, for such consideration as said board of directors may
deem advisable, provided that such consideration shall be not less than the
aggregate par value of such shares issued nor less than the net asset value of
such shares applicable at the time an order for purchase is accepted by the
Corporation, as such net asset value is computed in accordance with Section K
of this Article Seventh. That portion of the
-3-
<PAGE> 5
consideration received by the Corporation for shares issued (or reissued) which
is equal to the aggregate par value of such shares shall be capital and any
consideration received in excess of said aggregate par value shall be capital
surplus. The board of directors may, in its sole and absolute discretion,
reject in whole or in part orders for the purchase of shares of capital stock,
and may, in addition, require such orders to be in such minimum amounts as it
shall determine.
B. The holders of any fractional shares of the capital stock
of the Corporation shall be entitled to the payment of dividends on such
fractional shares, to receive the net asset value thereof upon redemption and
to share in the assets of the Corporation upon liquidation, but no holder of a
fractional share shall be entitled to receive a certificate representing any
fractional share, nor shall any such holder have any voting rights with respect
to any fractional share. Whenever a stockholder owns fractional shares
aggregating a full share he shall have all rights provided herein with respect
to such full share and shall be entitled to receive a certificate representing
such full share.
C. The board of directors shall have full power in accordance
with good accounting practice: (a) to determine what receipts of the
Corporation shall constitute income available for payment of dividends and what
receipts shall constitute principal and to make such allocation of any
particular receipt between principal and income as it may deem proper; and (b)
from time to time, in its discretion (i) to determine whether any and all
expenses and other outlays paid or incurred (including any and all taxes,
assessments or governmental charges which the Corporation may be required to
pay or hold under any present or future law of the United States of America or
of any other taxing authority therein) shall be charged to or paid from
principal or income or both; and (ii) to apportion any and all of said expenses
and outlays, including taxes, between principal and income.
D. No holder of any of the stock of this Corporation shall,
as such holder, have any preemptive or other right to purchase or subscribe for
any stock which this Corporation may issue or sell, other than such rights, if
any, as the board of directors in its discretion may from time to time
determine to offer to stockholders of this Corporation.
-4-
<PAGE> 6
E. Each holder of record of stock of this Corporation shall
be entitled to one (1) vote for each share thereof standing registered in his
name on the books of the Corporation. At all elections of directors of the
Corporation, each stockholder shall be entitled to vote the shares owned of
record by him for as many persons as there are directors to be elected, but
shall not be entitled to exercise any right of cumulative voting.
F. The board of directors shall have power to determine from
time to time whether and to what extent and at what time and places and under
what conditions and regulations the books, accounts and documents of the
Corporation, or any of them, shall be open to the inspection of stockholders,
except as otherwise provided by statute or by law; and except as so provided,
no stockholder shall have any right to inspect any book, account or document of
the Corporation unless authorized to do so by resolution of the board of
directors.
G. Each holder of shares of the capital stock of the
Corporation shall be entitled at any time to require the Corporation to redeem
all or any part of the shares standing in the name of such holder on the books
of the Corporation at the net asset value of such shares as determined in
accordance with the provisions of this Article Seventh, subject to the
provisions of Section L of this Article.
H. The net asset value to which a holder of shares of capital
stock of the Corporation shall be entitled upon redemption of shares held by
him is the net asset value applicable at the time when certificates
representing said shares, duly endorsed or accompanied by proper instruments of
assignment, with proper stock transfer stamps affixed, and accompanied by
irrevocable instructions in writing in form acceptable to the board of
directors to redeem the stock represented by such certificates, shall have been
received by the Corporation at such place as the board of directors may from
time to time designate.
I. The time of payment of shares redeemed shall be within
seven (7) days after certificates representing the shares to be redeemed have
been received by the Corporation in accordance with Section H of this Article
Seventh.
-5-
<PAGE> 7
J. The net asset value of each share of the Corporation shall
be determined as of the close of trading on the New York Stock Exchange each
day that said Exchange is open for trading and any such net asset value shall
be applicable to all transactions of the Corporation occurring before the close
of trading on that day and after the close of trading on the last preceding day
on which said Exchange was open for trading, or in accordance with any
provisions of the Investment Company Act of 1940, any rule or regulation
thereunder, or any rule or regulation made or adopted by any securities
association registered under the Securities Exchange Act of 1934.
K. The net asset value of each share of the capital stock of
the Corporation at the any particular time shall be the quotient obtained by
dividing the value of the net assets of the Corporation (i.e., the value of the
assets of the Corporation, less its liabilities exclusive of capital and
surplus) at such time, by the total number of shares (including fractional
shares) outstanding at such time, all determined and computed as follows:
(1) The value of any cash on hand or on deposit, bills and
demand notes and accounts receivable (from and after the ex-dividend
date) and interest declared or accrued and not yet received shall be
deemed to be the full amount thereof unless the board of directors
shall have determined that any such deposit, bill, demand note or
account receivable is not worth the full amount thereof, in which
event such value shall be the fair value thereof as determined in good
faith by the board of directors.
(2) Securities listed or commonly dealt in on the New York
Stock Exchange or the American Stock Exchange shall be valued at the
last sale prices on such Exchanges on the day on which such value is
being computed (or lacking any such sales, the last bid price) unless
it appears to the board of directors that some other price reflects
more closely the true market value, but in no case shall such other
price be lower than the last bid price or higher than the last asked
price at the time as of which the net asset value is being determined,
all as reported by any means in common use; provided, however, that
the board of directors may by resolution
-6-
<PAGE> 8
permit over-the-counter rather than stock exchange quotations to be
used when they appear to be used when they appear to the board of
directors to reflect more closely the true market value of any
particular security in the portfolio.
(3) Other securities as to which market quotations are
readily available shall be valued in the same manner as securities
listed or commonly dealt in on the New York or American Stock
Exchanges.
(4) In the case of all other securities and assets the value
thereof shall be the fair value as determined in good faith by the
board of directors (but no value shall be assigned to good will of the
Corporation).
(5) The liabilities of the Corporation shall be deemed to
include all bills and accounts payable; all administrative expenses
payable and/or accrued, including the estimated amount of any fees
payable under an investment advisory agreement, all contractual
obligations for the payment of money or property, including the amount
of any unpaid dividends upon the shares of the Corporation, declared
at or before the time as of which the net asset value is being
determined; all reserves authorized or approved by the board of
directors for taxes or contingencies, including such reserves, if any,
for taxes based on any unrealized appreciation in the value of the
assets of the Corporation; and all other liabilities of the
Corporation of whatsoever kind and nature, except liabilities
represented by outstanding shares and surplus of the Corporation.
(6) Securities purchased shall be included among the assets
of the Corporation, and the cost thereof shall simultaneously be
regarded as a liability, not later than the day following the date of
purchase; and securities sold shall be excluded from such assets, and
the amount receivable therefor shall simultaneously be included as an
asset, not later than the day following the date of sale.
-7-
<PAGE> 9
(7) Shares of the capital stock of the Corporation for which
purchase orders have been accepted shall be considered as issued and
outstanding as soon as the net asset value thereof can reasonably be
ascertained pursuant to the provisions of this Article Seventh and the
amount receivable therefor shall simultaneously become an asset of the
Corporation.
(8) Shares of the capital stock of the Corporation delivered
for redemption or repurchase shall be considered as no longer
outstanding as soon as the net asset value thereof can reasonably be
ascertained pursuant to the provisions of this Article Seventh and the
amount payable on such redemption or repurchase shall simultaneously
become a liability of the Corporation.
(9) Notwithstanding the provisions of paragraphs (1) and (5)
of this Section K, interest declared or accrued and not yet received,
and accrued expenses, may be omitted from any calculation of net asset
value, in the discretion of the board of directors, if the net amount
of all such interest and expenses is less than one percent of the net
asset value per share.
L. In the event that the New York Stock Exchange shall be
closed at any time because of then existing financial conditions or for any
other unusual or extraordinary reason, the right of a holder of shares of the
capital stock of the Corporation to have his shares redeemed by the Corporation
shall be suspended for a period from and including the day on which the action
is taken for the closing of said Exchange and the day on which said Exchange is
reopened. In accordance with the provisions of the Investment Company Act of
1940 and the rules and regulations promulgated thereunder by the Securities and
Exchange Commission, the Corporation may also suspend such right of redemption
(a) for any period during which trading on the New York Stock Exchange is
restricted; (b) for any period during which an emergency exists as a result of
which (i) disposal by the Corporation of securities owned by it is not
reasonably practicable or (ii) it is not reasonably practicable for the
Corporation fairly to determine the value of its net assets; or (c) for such
other periods
-8-
<PAGE> 10
as the Commission may by order permit for the protection of stockholders of the
Corporation.
M. The Corporation may purchase in the open market or
otherwise acquire from any owner or holder thereof any shares of its capital
stock, in which case the consideration paid therefor (in case or in securities
in which the funds of the Corporation shall then be invested) shall not exceed
the net asset value thereof determined or estimated in accordance with any
method deemed proper by the board of directors and producing an amount
approximately equal to the net asset value of said shares (determined in
accordance with the provisions of this Article Seventh) at the time of the
purchase or acquisition by the Corporation thereof.
In respect of all powers, duties and authorities conferred by
the preceding Sections K and L and this Section M the Corporation may act by
and through agents from time to time designated and appointed by the board of
directors and the board of directors may delegate to any such agent any and all
powers, duties and authorities conferred upon the Corporation or upon the board
of directors by said Sections.
EIGHTH: The Corporation reserves the right to enter into from
time to time investment advisory agreements providing for the management and
supervision of the investments of the Corporation and the furnishing of advice
to the Corporation with respect to the desirability of investing in, purchasing
or selling securities or other property. Such agreement shall contain such
other terms, provisions and conditions as the board of directors of the
Corporation may deem advisable.
The Corporation may designate custodians, transfer agents,
registrars and/or disbursing agents for the stock and assets of the Corporation
and employ and fix the powers, rights, duties, responsibilities and
compensation of each such custodian, transfer agent, registrar and/or
disbursing agent.
NINTH: The duration of the Corporation shall be perpetual.
TENTH: The Corporation reserves the right from time to time
to make any amendment of these Articles of Incorporation now or hereafter
authorized by law, including any amendment which alters the
-9-
<PAGE> 11
contract rights as expressly set forth in these Articles of Incorporation of
any outstanding stock. The Corporation may take or authorize such action upon
the concurrence of a majority of the aggregate number of the votes entitled to
be cast thereon.
IN WITNESS WHEREOF, we have signed these Articles of
Incorporation on the 19th day of March, 1965.
_________________________
Russell O. Bennett
_________________________
George J. McLaughlin, Jr.
_________________________
Neil Flanagin
Witness:
___________________
-10-
<PAGE> 12
STATE OF ILLINOIS )
) SS.
COUNTY OF COOK )
I hereby certify that on March 19, 1965, before me, the subscriber, a Notary
Public of the State of Illinois in and for the County of Cook, personally
appeared Russell O. Bennett, George J. McLaughlin, Jr. and Neil Flanagin, and
severally acknowledged the foregoing Articles of Incorporation to be their act.
WITNESS my hand and notarial seal the day and year last above written.
_________________________
Notary Public
-11-
<PAGE> 1
EXHIBIT 1.2
ARTICLES OF AMENDMENT
OF
MATHERS FUND, INC.
approved and received for record by the State Department of Assessments and
Taxation of Maryland July 21, 1967 at 11:29 o'clock A.M. as in conformity with
law and ordered recorded.
________________________
Recorded in ________________, one of the Charter Records of the State
Department of Assessments and Taxation of Maryland.
Bonus tax paid $ Recording fee paid $15.00
_________________________
To the clerk of the Superior Court of Baltimore City
IT IS HEREBY CERTIFIED, that the within instrument, together with all
endorsements thereon, has been received, approved and recorded by the State
Department of Assessments and Taxation of Maryland.
AS WITNESS my hand and seal of the said Department at Baltimore.
<PAGE> 2
MATHERS FUND, INC.
ARTICLES OF AMENDMENT
MATHERS FUND, INC., a Maryland corporation, having its
principal office in the State at c/o The Corporation Trust Incorporated, First
National Bank Building, Light and Redwood Streets, Baltimore, Maryland, hereby
certifies to the State Department of Assessments and Taxation of Maryland,
that:
First: The charter of the Corporation is hereby amended by
striking out Article SEVENTH J. and inserting in lieu thereof the following:
"J. The net asset value of each share of the Corporation
shall be determined as of the close of trading on the New York Stock
Exchange each day that said Exchange is open for trading and any such
net asset value shall be applicable to all transactions in the capital
stock of the Corporation occurring before the close of business on
that day and after the close of business on the last preceding day on
which said Exchange was open for trading, or in accordance with any
controlling provisions of the Investment Company Act of 1940 or any
rule or regulation thereunder."
Second: The Board of Directors of the Corporation on June 6,
1967, duly adopted a resolution in which was set forth the foregoing amendment
to the charter, declaring that the said amendment of the charter as proposed
was advisable and directing that it be submitted for action thereon by the
stockholders of the Corporation at the annual meeting to be held on July 19,
1967.
-2-
<PAGE> 3
Third: Notice setting forth the said amendment of the charter
and stating that a purpose of the meeting of the stockholders would be to take
action thereon, was given, as required by law, to all stockholders entitled to
vote thereon. The amendment of the charter of the Corporation as hereinabove
set forth was approved by the stockholders of the Corporation at said meeting
by the vote 86,391 for and 25 against, being more than a majority of all of the
votes entitled to be cast thereon.
Fourth: The amendment of the charter of the Corporation as
hereinabove set forth has been duly advised by the board of directors and
approved by the stockholders of the Corporation.
IN WITNESS WHEREOF, Mathers Fund, Inc. has caused these
presents to be signed in its name and on its behalf by its President and its
corporate seal to be hereunto affixed and attested by its Secretary on July 19,
1967.
MATHERS FUND, INC.
By____________________________
Thomas N. Mathers, President
Attest:
__________________________
Robert B. Bruce, Secretary
-3-
<PAGE> 4
STATE OF ILLINOIS)
) SS.
COUNTY OF COOK)
I HEREBY CERTIFY that on July 19, 1967, before me, the
subscriber, a Notary Public of the State of Illinois, in and for the County of
Cook, personally appeared Thomas N. Mathers, President of Mathers Fund, Inc., a
Maryland Corporation, and in the name and on behalf of said Corporation
acknowledged the foregoing Articles of Amendment to be the corporate act of
said Corporation; and at the same time personally appeared Thomas N. Mathers
and made oath in due form of law that he was chairman of the meeting of the
stockholders of said corporation at which the amendment of the charter of the
Corporation therein set forth was approved, and that the matters and facts set
forth in said Articles of Amendment with respect to the approval of the said
amendment are true to the best of his knowledge, information and belief.
WITNESS my hand and notarial seal or stamp, the day and year
last above written.
_________________________
Notary Public
-4-
<PAGE> 1
EXHIBIT 1.3
ARTICLES OF AMENDMENT
OF
MATHERS FUND, INC.
approved and received for record by the State Department of Assessments and
Taxation of Maryland _____ at __ o'clock __ A.M. as in conformity with law and
ordered recorded.
A 4871
______________
Recorded in Liber ---, folio ---, one of the Charter Records of the
State Department of Assessments and Taxation of Maryland.
______________
Bonus tax paid $_____ Recording fee paid $_____
______________
To the clerk of the Superior Court of Baltimore City.
IT IS HEREBY CERTIFIED that the within instrument, together with all
indorsements thereon, has been received, approved and recorded by the State
Department of Assessments and Taxation of Maryland.
<PAGE> 2
AS WITNESS my hand and seal of the said Department of Baltimore.
- 2 -
<PAGE> 3
MATHERS FUND, INC.
ARTICLES OF AMENDMENT
MATHERS FUND, INC. a Maryland corporation, having its
principal office in the State at c/o The Corporation Trust Incorporated, First
National Bank Building, Light and Redwood Streets, Baltimore, Maryland, hereby
certifies to the State Department of Assessments and Taxation of Maryland,
that:
First: the charter of the Corporation is hereby amended by
striking out Sections A and J of Article SEVENTH of the Articles of
Incorporation, as heretofore amended, and inserting in lieu thereof the
following:
"A. The board of directors of the Corporation shall authorize
an initial issuance of shares of the capital stock of the Corporation
for such consideration not less than the aggregate par value of the
shares included in the issuance as the board of directors shall
determine. After such initial issuance, the board of directors may
authorize the issuance (and reissuance) from time to time of shares of
capital stock of any class, whether now or hereafter authorized, for
such consideration, not less than the aggregate par value of the
shares so issued, as said board of directors may deem advisable,
provided that, except with respect to shares issued as a share
dividend or distribution, such consideration shall be not less than
the net asset value of such shares computed in accordance with this
Article Seventh. That portion of the consideration received by the
Corporation for shares issued (or reissued) which is equal to the
aggregate par value of such shares shall be capital and any
consideration received in excess of said aggregate
-3-
<PAGE> 4
par value shall be capital surplus. The board of directors may, in its
sole and absolute discretion, reject in whole or in part orders for
the purchase of shares of capital stock, and may, in addition, require
such order to be in such minimum amounts as it shall determine."
"J. The net asset value of each share of the Corporation
shall be determined as of the close of trading on the New York Stock
Exchange each day that said Exchange is open for trading and any such
net asset value shall be applicable to all transactions in the capital
stock of the Corporation occurring at or before the close of business
on that day and after the close of business on the last preceding day
on which said Exchange was open for trading, subject to adjustment for
declared dividends or distributions, or in accordance with any
controlling provisions of the Investment Company Act of 1940 or any
rule or regulation thereunder."
Second: The Board of Directors of the Corporation on April
24, 1968, duly adopted a resolution in which was set forth the foregoing
amendment to the charter, declaring that the said amendment of the charter as
proposed was advisable and directing that it be submitted for action thereon by
the stockholders of the Corporation at the annual meeting to be held on July
17, 1968.
Third: Notice setting forth the said amendment of the charter
and stating that a purpose of the meeting of the stockholders would be to take
action thereon, was given, as required by law, to all stockholders entitled to
vote thereon. The amendment of the charter of the Corporation as hereinabove
set forth
-4-
<PAGE> 5
was approved by the stockholders of the Corporation at said meeting by the vote
of 239,884 for and 1,555 against, being more than a majority of all the votes
entitled to be cast thereon.
Fourth: The amendment of the charter of the Corporation as
hereinabove set forth has been duly advised by the board of directors and
approved by the stockholders of the corporation.
IN WITNESS WHEREOF, Mathers Fund, Inc. has caused these
presents to be signed in its name and on its behalf by its President and its
corporate seal to be hereunto affixed and attested by its Secretary on July 19,
1968.
MATHERS FUND, INC.
By___________________
Thomas N. Mathers, President
Attest:
__________________________
Robert B. Bruce, Secretary
-5-
<PAGE> 6
STATE OF ILLINOIS)
) SS.
COUNTY OF COOK )
On this 19th day of July, 1968, before me, Dorothy M. Belina, a notary
public of the State of Illinois in and for the County of Cook, personally
appeared Thomas N. Mathers, who acknowledged himself to be the President of
Mathers Fund, Inc., a Maryland Corporation, that he, as such President, being
authorized so to do, executed the foregoing instrument for the purposes therein
contained, by signing the name of the Corporation by himself as President, that
in the name and on behalf of the Corporation he acknowledged the foregoing
Articles of Amendment to be the act and deed of the Corporation, and he
acknowledged that he was chairman of the meeting of the stockholders of the
Corporation at which the amendment of the charter of the Corporation therein
set forth was approved, and that the matters and facts set forth in said
Articles of Amendment with respect to the approval of the said amendment are
true to the best of his knowledge, information and belief.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
________________
Notary Public
My Commission expires: --- 24, 1970
-6-
<PAGE> 7
STATE OF ILLINOIS )
) SS.
COUNTY OF COOK )
I HEREBY CERTIFY that on December 11, 1968, before me, the
subscriber, a Notary Public of the State of Illinois, in and for the County of
Cook, personally appeared Thomas N. Mathers, President of Mathers Fund, Inc., a
Maryland Corporation, and in the name and on behalf of said Corporation
acknowledged the foregoing Articles of Amendment to be the corporate act of
said Corporation; and at the same time personally appeared Thomas N. Mathers
and made oath in due form of law that he was chairman of the meeting of the
stockholders of said corporation at which the amendment of the charter of the
corporation at which the amendment of the charter of the Corporation therein
set forth was approved, and that the matters and facts set forth in said
Articles of Amendment with respect to the approval of the said amendment are
true to the best of his knowledge, information and belief.
WITNESS my hand and notarial seal or stamp, the day and year
last above written.
(SEAL) ___________________
Notary Public
Dorothy M. Belina
<PAGE> 1
EXHIBIT 1.4
ARTICLES OF AMENDMENT
OF
MATHERS FUND, INC.
approved and received for record by the State Department of Assessments and
Taxation of Maryland, December 26, 1968, at 8:00 o'clock A.M. as in conformity
with law and ordered recorded.
A 7587
______________
Recorded in Liber ____, folio 517, one of the Charter Records of the State
Department of Assessments and Taxation of Maryland.
______________
Bonus tax paid $290.00 Recording fee paid $15.00
______________
To the clerk of the Superior Court of Baltimore City
IT IS HEREBY CERTIFIED, that the within instrument, together with all
indorsements thereon, has been received, approved and recorded by the State
Department of Assessments and Taxation of Maryland.
<PAGE> 2
AS WITNESS my hand and seal of the said Department at Baltimore.
-2-
<PAGE> 3
MATHERS FUND, INC.
ARTICLES OF AMENDMENT
MATHERS FUND, INC., a Maryland corporation, having its
principal office in the State at c/o The Corporation Trust Incorporated, First
National Bank Building, Light and Redwood Streets, Baltimore, Maryland, hereby
certifies to the State Department of Assessments and Taxation of Maryland,
that:
First: The charter of the Corporation is hereby amended, to
increase the total number of authorized shares of capital stock from 1,000,000
shares, by striking out Article FIFTH and inserting in lieu thereof the
following:
"FIFTH: The total number of shares of capital stock which the
corporation has authority to issue is Five Million (5,000,000) shares,
all of one class of the par value of One Dollar ($1.00) and of the
aggregate par value of Five Million Dollars ($5,000,000)."
Second: The Board of Directors of the Corporation on July 17,
1968, duly adopted a resolution in which was set forth the foregoing amendment
to the charter, declaring that the said amendment of the charter as proposed
was advisable and directing that it be submitted for action thereon by the
stockholders of
<PAGE> 4
the Corporation at the special meeting to be held on December 11, 1968.
Third: Notice setting forth the said amendment of the charter
and stating that a purpose of the meeting of the stockholders would be to take
action thereon, was given, as required by law, to all stockholders entitled to
vote thereon. The amendment of the charter of the Corporation as hereinabove
set forth was approved by the stockholders of the Corporation at said meeting
by the vote 431,061 for and 30,618 against, being more than a majority of all
the votes entitled to be cast thereon.
Fourth: The amendment of the charter of the Corporation as
hereinabove set forth has been duly advised by the board of directors and
approved by the stockholders of the Corporation.
-2-
<PAGE> 5
IN WITNESS WHEREOF, Mathers Fund, Inc. has caused these
presents to be signed in its name and on its behalf by its President and its
corporate seal to be hereunto affixed and attested by its Secretary on December
11, 1968.
MATHERS FUND, INC.
By__________________
Thomas N. Mathers, President
ATTEST:
__________________________
Robert B. Bruce, Secretary
-3-
<PAGE> 1
EXHIBIT 1.5
ARTICLES OF AMENDMENT
OF
MATHERS FUND, INC.
approved and received for record by the State Department of Assessments and
Taxation of Maryland, July 22, 1969 at 3:00 o'clock P.M. as in conformity with
law and ordered recorded.
A 11661
Recorded in Liber 7746, folio 562, one of the Charter Records of the
State Department of Assessments and Taxation of Maryland.
____________
Bonus tax paid $300.00 Recording fee paid $15.00
____________
To the clerk of the Superior Court of Baltimore City.
IT IS HEREBY CERTIFIED, that the within instrument, together with all
indorsements thereon, has been received, approved and recorded by the State
Department of Assessments and Taxation of Maryland.
AS WITNESS my hand and seal of the said Department at Baltimore.
<PAGE> 2
MATHERS FUND, INC.
ARTICLES OF AMENDMENT
MATHERS FUND, INC., a Maryland corporation, having its
principal office in the State at c/o The Corporation Trust Incorporated, First
National Bank Building, Light and Redwood Streets, Baltimore, Maryland 21202,
hereby certifies to the State Department of Assessments and Taxation of
Maryland, that:
First: The charter of the Corporation is hereby amended, to
increase the total number of authorized shares of One Dollar ($1.00) par value
capital stock from 5,000,000 shares having an aggregate par value of $5,000,000
to 20,000,000 shares having an aggregate par value of $20,000,000, by striking
out Article FIFTH and inserting in lieu thereof the following:
"FIFTH: The total number of shares of capital stock which the
corporation has authority to issue is Twenty Million (20,000,000)
shares, all of one class, of the par value of One Dollar ($1.00) and
of the aggregate par value of Twenty Million Dollars ($20,000,000)."
<PAGE> 3
Second: The Board of Directors of the Corporation on June 4,
1969, duly adopted a resolution in which was set forth the foregoing amendment
of the charter, declaring that the said amendment of the charter as proposed
was advisable and directing that it be submitted for action thereon by the
stockholders of the Corporation at the 1969 Annual Meeting of its stockholders
to be held on July 16, 1969.
Third: Notice setting forth the said amendment of said
charter and stating that a purpose of the meeting of the stockholders would be
to take action thereon was given, as required by law, to all stockholders
entitled to vote thereon. The amendment of the charter of the Corporation as
hereinabove set forth was approved by the stockholders of the Corporation at
said meeting by the vote of 1,667,018 shares for and 184,680 shares against,
being more than a majority of all of the votes entitled to be cast thereon.
Fourth: The amendment of the charter of the Corporation as
hereinabove set forth has been duly advised by the board of directors and
approved by the stockholders of the Corporation.
-2-
<PAGE> 4
IN WITNESS WHEREOF, Mathers Fund, Inc. has caused these
presents to be signed in its name and on its behalf by its President and its
corporate seal to be hereunto affixed and attested by its Secretary on July 16,
1969.
MATHERS FUND, INC.
(SEAL)
by_________________
President
ATTEST:
________________
Secretary
-3-
<PAGE> 5
STATE OF ILLINOIS )
) SS.
COUNTY OF COOK )
I HEREBY CERTIFY that on July 16, 1969, before me, the
subscriber, a Notary Public of the State of Illinois, in and for the County of
Cook, personally appeared Thomas N. Mathers, President of Mathers Fund, Inc., a
Maryland corporation, and in the name and on behalf of said Corporation
acknowledged the foregoing Articles of Amendment to be the corporate act of
said Corporation; and at the same time personally appeared Thomas N. Mathers
and made an oath in due form of law that he was Chairman of the meeting of the
stockholders of said Corporation at which the amendment of the charter of the
Corporation therein set forth was approved, and that the matters and facts set
forth in said Articles of Amendment with respect to the approval of the said
amendment are true to the best of his knowledge, information and belief.
WITNESS my hand and notarial seal or stamp, the day and year last
above written. (SEAL)
_________________
Notary Public
-4-
<PAGE> 1
EXHIBIT 1.6
CHANGE OF PRINCIPAL OFFICE
AND
CHANGE OF ADDRESS OF RESIDENT AGENT
OF
THE A & B FOUNDATION, INC. AND ET. AL.
received for record June 23, 1972 at 8:30 A.M. and recorded on Film No. F1003
Frame No. 354 one of the charter records of the State Department of Assessments
and Taxation of Maryland. To the clerk of the SUPERIOR court of BALTIMORE
CITY.
AA No. 8959
<TABLE>
<S> <C> <C>
6/72 12/72
Special Fee Paid $ 3.00 Special Fee Paid $3,471
Recording Fee Paid 96.00
------
$99.00
</TABLE>
Mr. Clerk: Mail to: The Corporation Trust Incorporated
First Maryland Building
25 South Charles Street
Baltimore, Maryland 21201
<PAGE> 2
DOMESTIC CORPORATIONS
STATEMENT OF CHANGE OF THE POST OFFICE ADDRESS OF
THE RESIDENT AGENT AND OF PRINCIPAL OFFICE
State Department of Assessments and Taxation
301 West Preston Street
Baltimore, Maryland 21201
Pursuant to the provisions of the Code of Maryland, Article 23,
Section 8, THE CORPORATION TRUST INCORPORATED hereby gives notice to the State
Department of Assessments and Taxation:
That the address of THE CORPORATION TRUST INCORPORATED, the resident
agent for each of the domestic corporations named in the list attached hereto
and made a part hereof, has been changed
FROM: First National Bank Building,
Light and Redwood Streets,
Baltimore, Maryland 21202
TO: First Maryland Building,
25 South Charles Street,
Baltimore, Maryland 21201
That the principal office of each of such corporations has been changed
FROM: c/o THE CORPORATION TRUST INCORPORATED
First National Bank Building,
Light and Redwood Streets,
Baltimore, Maryland 21202
TO: c/o THE CORPORATION TRUST INCORPORATED
First Maryland Building,
25 South Charles Street,
Baltimore, Maryland 21201
That the post office address of the principal office of each of said
corporations is the same as the post office address of the resident agent.
Written notice of the above change in principal office has been sent
to each of the named corporations by THE CORPORATION TRUST INCORPORATED, as
resident agent of each of the said corporation.
<PAGE> 3
The change of the post office address of the resident agent and of the
principal office of each of the corporations named shall become effective upon
the date of filing of this certificate in the Office of the State Department of
Assessments and Taxation.
Dated June 19, 1972. THE CORPORATION TRUST INCORPORATED
----------------------------------
(Resident Agent)
By________________________________
CLINT G. DEDERICK
Vice President
-2-
<PAGE> 4
(DOMESTIC)
MASSEY-FERGUSON REALTY CORPORATION
MATHERS FUND INC
THE HORACE AND FLORENCE MAYER FOUNDATION INC
THE MAYER FURNITURE CO
MCDONALDS OF ANNAPOLIS-50 MD INC
MCDONALDS OF ANNAPOLIS-LEE MD INC
MCDONALDS OF BEL PRE AND LAYHILL ROAD MD INC
MCDONALDS OF BETHESDA MD INC
MCDONALDS OF BELTSVILLE MD INC
MCDONALDS OF CLINTON MD INC
MCDONALDS OF COLESVILLE MD INC
MCDONALDS OF COLLEGE PARK MD INC
MCDONALDS OF CORAL HILLS MD INC
MCDONALDS OF DERWOOD MD INC
MCDONALDS OF FORESTVILLE MD INC
MCDONALDS OF FORREST HTS MD INC
MCDONALDS OF GLEN BURNIE MD INC
MCDONALDS OF GREENBELT MD INC
MCDONALDS OF HYATTSVILLE MD INC
MCDONALDS OF KENILWORTH AND RIVERDALE MD INC
MCDONALDS OF LANHAM MD INC
MCDONALDS OF LAUREL-FT MEADE MD INC
MCDONALDS OF LAUREL MD INC
MCDONALDS OF LAUREL-WASHINGTON MD INC
MCDONALDS OF LEXINGTON PARK MD INC
-3-
<PAGE> 1
EXHIBIT 1.7
NOTICE OF CHANGE OF RESIDENT AGENT'S ADDRESS
AND PRINCIPAL OFFICE
OF
ABC DEMOLITION CORPORATION etal
received for record August 16, 1982, at 8:30 A.M. and recorded on Film No.
2570, Frame No. 0001 one of the charter records of the State Department of
Assessments and Taxation of Maryland.
To the clerk of the Superior Court of Baltimore City.
AA No. 21596
<TABLE>
<S> <C>
Special Fee Paid $5790.00
Recording Fee Paid 129.00
--------
5919.00
</TABLE>
<PAGE> 2
DOMESTIC CORPORATIONS
STATEMENT OF CHANGE OF THE POST OFFICE ADDRESS OF
THE RESIDENT AGENT AND OF PRINCIPAL OFFICE
State Department of Assessments and Taxation
301 West Preston Street
Baltimore, Maryland 21201
Pursuant to the provisions of the Annotated Code of Maryland, Section
2-108(c), Corporations and Associations Article, THE CORPORATION TRUST
INCORPORATED hereby gives notice to the State Department of Assessments and
Taxation:
That the address of THE CORPORATION TRUST INCORPORATED, the resident
agent for each of the domestic corporations named in the list attached hereto
and made a part hereof, has been changed
FROM: First Maryland Building,
25 South Charles Street,
Baltimore, Maryland 21201
TO: 22 South Street,
Baltimore, Maryland 21202
For these domestic corporations on the attached list having an
asterisk following their name, THE CORPORATION TRUST INCORPORATED is furnishing
only the resident agent, and not the principal office. Therefore, for such
corporations, this document is changing only the post office address of the
resident agent.
That the principal office of each of such corporations not having
their name followed by an asterisk has been changed
FROM: c/o THE CORPORATION TRUST INCORPORATED
First Maryland Building
26 South Charles Street
Baltimore, Maryland 21201
TO: c/o THE CORPORATION TRUST INCORPORATED
32 South Street,
Baltimore, Maryland 21202
That the post office address of the principal office of each of said
corporations not having their name followed by an asterisk is the same as the
post office address of the resident agent.
Written notice of the above change in principal office and/or address
of resident agent has been sent to each of the named corporations by THE
CORPORATION TRUST INCORPORATED, as resident agent of each of the said
corporations.
<PAGE> 3
The change of the post office address of the resident agent and/or of
the principal office of each of the corporations name shall become effective
upon the date of filing of this certificate in the Office of the State
Department of Assessments and Taxation.
Dated August 1_, 1982. THE CORPORATION TRUST INCORPORATED
----------------------------------
(Resident Agent)
By
--------------------------------
JAMES D. GRIGSBY
Vice President
<PAGE> 4
MARINER INSTITUTIONAL FUNDS INC
MARKET TIRE COMPANY OF MARYLAND INC
MARKET TIRE EDUCATIONAL SERVICES INC
MARLOW DATSUN INC
MAROUBRA MARYLAND CORPORATION
MARYLAND BELSCOT MERCHANDISERS INC
MARYLAND COAL EXCHANGE INC
THE MARYLAND COLOR PRINTING CO
MARYLAND CONDOMINIUMS INC
MARYLAND CREDIT ASSOCIATES INC
MARYLAND-D C CONSOLIDATION INC
MARYLAND INSTITUTE OF REAL ESTATE INC
MARYLAND LOTUS CORP
MARYLAND OUTLET CORPORATION
MARYLAND SHIPBUILDING AND DRYDOCK COMPANY
MARYLAND SPORTSERVICE INC
MARYLAND WESTERN COAT PAD COMPANY INC
MARYMARSH PROPERTIES CORP
MASSEY-FERGUSON CREDIT CORPORATION
MASSEY-FERGUSON INC
MASSMUTUAL INCOME INVESTORS INC
MATHERS FUND INC
THE MATTHEWS COMPANY
THE MAYER FURNITURE CO
MC DONNELL DOUGLAS CORPORATION
MCDONALD MONEY MARKET FUND INC
MCGRATH PUBLISHING COMPANY
MCLEAN SCIENTIFIC INSTRUMENTS INC
<PAGE> 1
EXHIBIT 1.8
ARTICLES SUPPLEMENTARY
OF
MATHERS FUND, INC.
APPROVED AND RECEIVED FOR RECORD BY THE STATE DEPARTMENT OF ASSESSMENTS AND
TAXATION OF MARYLAND JULY 11, 1990 AT 11:24 O'CLOCK A.M. AS IN CONFORMITY WITH
LAW AND ORDERED RECORDED.
____________________________
ORGANIZATION AND
CAPITALIZATION RECORDING FEE SPECIAL FEE
FEE PAID: PAID: PAID:
$200.00 $20.00 $___________
____________________________
D0147512
TO THE CLERK OF THE COURT OF BALTIMORE CITY
IT IS HEREBY CERTIFIED, THAT THE WITHIN INSTRUMENT, TOGETHER
WITH ALL INDORSEMENTS THEREON, HAS BEEN RECEIVED, APPROVED AND RECORDED BY THE
STATE DEPARTMENT OF ASSESSMENTS AND TAXATION OF MARYLAND.
RETURN TO:
THE CORPORATION TRUST INCORPORATE
D-ALYSHA
32 SOUTH STREET
BALTIMORE, MD 21202
<PAGE> 2
MATHERS FUND, INC.
ARTICLES SUPPLEMENTARY
INCREASING AUTHORIZED STOCK
AS AUTHORIZED BY SECTION 2-105(C) OF
THE MARYLAND GENERAL CORPORATION LAW
Mathers Fund, Inc., a Maryland corporation, having its
principal office in the State of Maryland at c/o The Corporation Trust
Incorporated, 32 South State Street, Baltimore, Maryland, (hereinafter called
the "Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: In accordance with Section 2-105(c) of the Maryland
General Corporation Law, the Board of Directors has increased the
authorized capital stock of the Corporation to 30,000,000 shares of
Common Stock (par value $1.00 per share).
SECOND: The Corporation is registered as an open-end
investment company under the Investment Company Act of 1940.
THIRD: (a) As of immediately before the increase the total
number of shares of stock of all classes which the Corporation has
authority to issue is 20,000,000 shares of Common Stock (par value
$1.00 per share).
(b) As increased the total of shares of stock of all classes
which the Corporation has authority to issue is 30,000,000 shares of
Common Stock (par value $1.00 per share).
(c) The aggregate par value of all shares having a par value
is $20,000,000 before the increase and $30,000,000 as increased.
IN WITNESS WHEREOF, Mathers Fund, Inc. has caused these
presents to be signed in its name and on its behalf by its Chairman and
witnessed by its Secretary of June 28, 1990.
WITNESS: MATHERS FUND, INC.
- ----------------------------- --------------------------
Robert J. Reynolds, Secretary Richard T. Glenn
Chairman
-2-
<PAGE> 3
THE UNDERSIGNED, Chairman of Mathers Fund, Inc., who executed
on behalf of the Corporation Articles Supplementary of which this Certificate
is made a part, hereby acknowledges in the name and on behalf of said
Corporation the foregoing Articles Supplementary to be the corporate act of
said Corporation and hereby certifies that the matters and facts set forth
herein with respect to the authorization and approval thereof are true in all
material respects under the penalties of perjury.
--------------------------
Richard T. Glenn, Chairman
-3-
<PAGE> 1
EXHIBIT 1.9
ARTICLES SUPPLEMENTARY
OF
MATHERS FUND, INC.
APPROVED AND RECEIVED FOR RECORD BY THE STATE DEPARTMENT OF ASSESSMENTS AND
TAXATION OF MARYLAND APRIL 1, 1991 AT 11:01 O'CLOCK A.M. AS IN CONFORMITY WITH
LAW AND ORDERED RECORDED.
___________________________
ORGANIZATIONS AND
CAPITALIZATION RECORDING FEE SPECIAL FEE
FEE PAID: PAID: PAID:
$1,400.00 $20.00 $____________
___________________________
D0147512
TO THE CLERK OF THE COURT OF BALTIMORE CITY
IT IS HEREBY CERTIFIED, THAT THE WITHIN INSTRUMENT, TOGETHER WITH ALL
INDORSEMENTS THEREON, HAS BEEN RECEIVED, APPROVED AND RECORDED BY THE STATE
DEPARTMENT OF ASSESSMENTS AND TAXATION OF MARYLAND.
RETURN TO:
THE CORPORATION TRUST
INCORPORATED
32 SOUTH STREET
BALTIMORE, MD 21202
<PAGE> 2
MATHERS FUND, INC.
ARTICLES SUPPLEMENTARY
INCREASING AUTHORIZED STOCK
AS AUTHORIZED BY SECTION 2-105(C) OF
THE MARYLAND GENERAL CORPORATION LAW
Mathers Fund, Inc., a Maryland corporation, having its
principal office in the State of Maryland at c/o The Corporation Trust
Incorporated, 32 South Street, Baltimore, Maryland, (hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: In accordance with Section 2-105(c) of the Maryland
General Corporation Law, the Board of Directors has increased the
authorized capital stock of the Corporation to 100,000,000 shares of
Common Stock (par value $1.00 per share).
SECOND: The Corporation is registered as an open-end
investment company under the Investment Company Act of 1940.
THIRD: (a) As of immediately before the increase the total
number of shares of stock of all classes which the Corporation has
authority to issue is 30,000,000 shares of Common Stock (par value
$1.00 per share).
(b) As increased the total of shares of stock of all classes
which the Corporation has authority to issue is 100,000,000 shares of
Common Stock (par value $1.00 per share).
(c) The aggregate par value of all shares having a par value
is $30,000,000 before the increase and $100,000,000 as increased.
IN WITNESS WHEREOF, Mathers Fund, Inc. has caused these
presents to be signed in its name and on its behalf by its Chairman and
witnessed by its Secretary of March 25, 1991.
WITNESS: MATHERS FUND, INC.
_____________________________ _________________________________
Robert J. Reynolds, Secretary Richard T. Glenn
Chairman
-2-
<PAGE> 3
THE UNDERSIGNED, Chairman of Mathers Fund, Inc., who executed
on behalf of the Corporation Articles Supplementary of which this Certificate
is made a part, hereby acknowledges in the name and on behalf of said
Corporation the foregoing Articles Supplementary to be the corporate act of
said Corporation and hereby certifies that the matters and facts set forth
herein with respect to the authorization and approval thereof are true in all
material respects under the penalties of perjury.
__________________________
Richard T. Glenn, Chairman
-3-
<PAGE> 1
EXHIBIT 2.1
February 1, 1990
AMENDED AND RESTATED BY-LAWS OF MATHERS FUND, INC.
ARTICLE I
STOCKHOLDERS' MEETINGS
SECTION 1. PLACE OF MEETINGS. All meetings of stockholders
shall be held at such place, within the United States, as is fixed by the board
of directors.
SECTION 2. ANNUAL MEETING. The board of directors may
determine not to have an annual meeting in any year in which none the following
is required to be acted on by stockholders under the Investment Company Act of
1940:
(1) Election of directors
(2) Approval of the investment advisory agreement;
(3) Ratification of the selection of independent public accountants; and
(4) Approval of a distribution agreement.
Subject to the preceding sentence, if an annual meeting of
stockholder is held, it shall be held for such purposes, on such date, at such
time, within the month of April of each year as is fixed by the board of
directors.
SECTION 3. SPECIAL MEETINGS. Special meetings of the
stockholders may be called by the board of directors, the president, a vice
president, or the secretary, and shall be called by the secretary upon the
written request of the holders of shares entitled to not less than 25% of all
the votes entitled to be cast at such meeting; provided, however, that the
board of directors shall promptly call a special meeting of stockholders for
the purpose of voting upon the question of removal of any director upon the
written request of holders of shares entitled to not less than 10% of all the
votes entitles to be cast at such meeting. Such request shall state the
purpose or purposes of such meeting and the matters proposed to be acted on
thereat. The secretary shall inform such stockholders of the reasonably
estimated cost of preparing and mailing such notice of the meeting, upon
payment to the corporation of such costs the secretary shall give notice
stating the purpose or purposes of the meeting to all stockholders entitled to
vote at such meeting. No special meeting need be called upon the request of
the holders
<PAGE> 2
of shares entitled to cast less than a majority of all votes entitled to be
cast at such meeting, to consider any matter which is substantially the same as
a matter voted upon at any special meeting of the stockholders held during the
preceding twelve months. The business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the notice.
SECTION 4. NOTICE OF MEETING. Not less than ten days nor
more than ninety days before the date of every stockholders' meeting, the
secretary shall give to each stockholder entitled to vote at such meeting,
written or printed notice stating the time and place of the meeting, and in the
case of a special meeting the purpose or purposes for which the meeting is
called, either by mail or by presenting it to him personally or by leaving it
at his residence or place of business. If mailed, such notice shall be deemed
to be given when deposited in the United States mail addressed to the
stockholder at his post office address as it appears on the records of the
corporation, with postage thereon prepaid.
SECTION 5. QUORUM. At any meeting of stockholders the
presence in person or by proxy of stockholders entitled to cast a majority of
the votes thereat shall constitute a quorum; but this section shall not effect
any requirement under the statute or under the charter for the vote necessary
for the adoption of any measure. If at any meeting a quorum is not present or
represented, the chairman of the meeting or the holders of a majority of the
stock present or represented may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum is present or
represented. At such adjourned meeting at which a quorum is present or
represented, any business may be transacted which might have been transacted at
the meeting as originally called.
SECTION 6. STOCK ENTITLED TO VOTE. Each issued share of
stock shall be entitled to vote at any meeting of stockholders except (i)
shares as to which any installment payable thereof is overdue and unpaid, and
(ii) shares owned, other than in a fiduciary capacity, by the corporation or by
another corporation in which the corporation owns shares entitled to more than
50% of the votes entitled to be cast by all shares outstanding of such
corporation.
SECTION 7. VOTING. Each outstanding share of stock entitled
to vote at a meeting of stockholders shall be entitled to one vote on each
matter submitted to a vote. In all elections for directors every stockholder
shall have the right to vote the shares owned of record by him for as many
persons as there are directors to be elected. A stockholder may vote the
shares owned of record by him either in person or by proxy executed in writing
by the stockholder or by his duly authorized attorney-in-fact.
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No proxy shall be valid after eleven months from its date unless otherwise
provided in the proxy. At all meetings of stockholders, unless the voting is
conducted by inspectors, all questions relating to the qualification of voters,
the validity of proxies and the acceptance or rejection of votes shall be
decided by the chairman of the meeting. A majority of the votes cast at a
meeting of stockholders, duly called and at which a quorum is present, shall be
sufficient to take or authorize any action which may properly come before the
meeting, unless a greater number is required by the statute or by the charter.
No vote upon any matter, except the election of directors, need be by ballot
unless demanded by the holders of at least 10% of the shares of stock present
of represented at the meeting.
SECTION 8. INFORMAL ACTION. Any action required or permitted
to be taken at any meeting of stockholders may be taken without a meeting, if a
consent in writing, setting forth such action, is signed by all the
stockholders entitled to vote on the subject matter thereof and such consent is
filed with the records of the corporation.
ARTICLE II
DIRECTORS
SECTION 1. NUMBER. The number of directors of the
corporation shall be nine. By vote of a majority of the entire board of
directors, the number of directors fixed by the charter or by these by-laws may
be increased or decreased from time to time to not exceeding fifteen nor less
than three, but the tenure of office of a director shall not be affected by any
decrease in the number of directors so made by the board.
SECTION 2. ELECTION AND QUALIFICATION. Until the first
annual meeting of stockholders or until successors are duly elected and
qualify, the board of directors shall consist of the persons named as such in
the charter. At the first annual meeting of stockholders and at each
stockholders' meeting thereafter called for the purpose of electing directors,
the stockholders shall elect directors to hold office until the next
stockholders' meeting called for the purpose of electing directors and until
their successors are elected and qualify. A director need not be a stockholder
of the corporation, but must be eligible to serve as director of a registered
investment company under the Investment Company Act of 1940. Each director but
one may be affiliated person of the investment adviser of the corporation, as
defined in the Investment Company Act of 1940.
SECTION 3. VACANCIES. Any vacancy on the board of directors
occurring between stockholders' meetings called for the
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purpose of electing directors may be filled, if immediately after filling any
such vacancy at least two-thirds of the directors then holding office shall
have been elected to such office at an annual or special meeting of
stockholders, in the following manner: (i) for a vacancy occurring other than
by reason of an increase in directors, by a majority of the remaining members
of the board, although such majority is less than a quorum; (ii) for a vacancy
occurring by reason of an increase in the number of directors, by action of a
majority of the entire board. A director elected by the board to fill a
vacancy shall be elected to hold office until the next meeting of stockholders
called for the purpose of electing directors and until his successors is
elected and qualifies. If by reason of the death, disqualification or bona
fide resignation of any director or directors, there is no member of the board
who is not an affiliated person of the investment adviser of the corporation as
defined in the Investment Company Act of 1940, such vacancy shall be filled
within thirty days if it may be filled by the board, or within sixty days if a
vote of stockholders is required to fill such vacancy; provided that such
vacancy may be filled within such longer period as the Securities and Exchange
Commission may prescribe, by rules and regulations upon its own motion or by
order upon application. In the event that at any time less than a majority of
the directors were elected by the stockholders, the board or proper officer
shall forthwith cause to be held as promptly as possible and in any event
within sixty days a meeting of stockholders for the purpose of electing
directors to fill any existing vacancies in the board unless the Securities and
Exchange Commission shall by order extend such period.
SECTION 4. POWERS. The business and affairs of the
corporation shall be managed by the board of directors, which may exercise all
of the powers of the corporation, except such as are by law or by the charter
or by these by-laws conferred upon or reserved to the stockholders.
SECTION 5. REMOVAL. At any meeting of stockholders, duly
called and at which a quorum is present, the stockholders may, by the
affirmative vote of the holders of a majority of the votes entitled to be cast
thereon, remove any director or directors from office any may elect a successor
or successors to fill any resulting vacancies for the unexpired terms of
removed directors.
SECTION 6. PLACE OF MEETINGS. Meetings of the board of
directors, regular or special, may be held at any place in or out of the State
of Maryland as the board may from time to time determine or as may be specified
in the call of any meeting.
SECTION 7. FIRST MEETING OF NEWLY ELECTED BOARD. The first
meeting of each newly elected board of directors shall be held without call or
notice immediately after and at the same
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general place as the meeting of stockholders called for the purpose of electing
such directors, for the purpose of organizing the board, electing officers and
transacting any other business that may properly come before the meeting.
SECTION 8. REGULAR MEETING. Regular meeting of the board of
directors may be held without notice at such time and place as shall from time
to time be determined by the board.
SECTION 9. SPECIAL MEETINGS. Special meetings of the board
of directors may be called at any time either by the board, the president, a
vice president or a majority of the directors in writing with or without a
meeting. Notice of special meetings shall either be mailed by the secretary to
each director at least three days before the meeting or shall be given
personally or telegraphed to each director at least one day before the meeting.
Such notice shall set forth the time and place of such meeting but need not,
unless otherwise required by law, state the purposes of the meeting.
SECTION 10. QUORUM AND VOTE REQUIRED FOR ACTION. At all
meetings of the board of directors a majority of the entire board shall
constitute a quorum for the transaction of business, and the action of a
majority of the directors present at any meeting at which a quorum is present
shall be the action of the board of directors unless the concurrence of a
greater proportion is required for such action by statute, the articles of
incorporation or these by- laws. If at any meeting a quorum is not present, a
majority of the directors present may adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a quorum is
present.
SECTION 11. INFORMAL ACTION. Any action required or
permitted to be taken at any meeting of the board of director may be taken
without a meeting, if a written consent to such action is signed by all members
of the board and such written consent is filed with the minutes of proceedings
of the board.
SECTION 12. COMMITTEES. The directors may at any time
appoint any two or more of their number as an executive committee or other
committee, which shall exercise such powers and perform such duties as may from
time to time be prescribed by the board of directors, except that no committee
shall have the power to fill vacancies among the directors or in any committee
of the directors or take any action which may not lawfully be delegated to a
committee of the board of directors. Any such committee shall be subject at
all times to the control and direction of the board of directors, and any such
committee may act by a majority of its members at a meeting or by a writing or
writings signed by all its members. An act or authorization of an act by any
such committee within the authority delegated to it shall be as effective for
all purposes as the act or authorization of the
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board of directors. Any committee established pursuant to this Section shall
keep regular minutes of the proceedings of such committee and report the same
to the board when required.
ARTICLE III
OFFICERS AND EMPLOYEES
SECTION 1. ELECTION AND QUALIFICATION. At the first meeting
of each newly elected board of directors there shall be elected a chairman, a
president, one or more vice presidents, a secretary, a treasurer and a
controller. The board may also elect one or more assistant secretaries and
assistant treasurers. No officer except the president need be a director. Two
or more offices, except those of president and vice president, may be held by
the same person but no officer shall execute, acknowledge or verify any
instrument in more than one capacity, if such instrument is required by law,
charter or these by-laws to be executed, acknowledged or verified by two or
more officers. Each officer must be eligible to serve as an officer of a
registered investment company under the Investment Company of 1940. Nothing
herein shall preclude the employment of other employees or agents by the
corporation from time to time without action by the board.
SECTION 2. TERM, REMOVAL AND VACANCIES. The officers shall
be elected to serve until the next first meeting of a newly elected board of
directors and until their successors are elected and quality. Any officer may
be removed by the board, with or without cause, whenever in its judgement the
best interests of the corporation will be served thereby, but such removal
shall be without prejudice to the contractual rights, if any, of the person so
removed. A vacancy in any office shall be filled by the board for the
unexpired term.
SECTION 3. BONDING. Each officer and employee of the
corporation who singly or jointly with others has access to securities of funds
of the corporation, either directly or through authority to draw upon such
funds or to direct generally the disposition of such securities shall be bonded
against larceny and embezzlement by a reputable fidelity insurance company
authorized to do business in Illinois. Each such bond, which may be in the
form of an individual bond or a schedule or blanket bond covering all such
officers and employees, shall be in such form and for such amount (determined
at least annually) as the board of directors shall determine in compliance with
the requirements of Section 17(g) of the Investment Company Act of 1940 and the
rules, regulations or orders of the Securities and Exchange Commission
thereunder.
SECTION 4. CHAIRMAN AND VICE CHAIRMAN. The chairman shall
preside at all meetings of the stockholders and directors
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and shall have other duties and powers as the board of directors may from time
to time prescribe. The vice chairman shall have such duties and powers as the
board of directors may from time to time prescribe. To the extent set forth in
Section 5 of this Article III, the chairman and the vice chairman shall execute
in the name of the corporation all authorized instruments of the corporation.
SECTION 5. PRESIDENT. The president shall be the principal
executive officer of the corporation. He shall have general and active
management of the business of the corporation and see that all orders and
resolutions of the board of directors are carried into effect. Any of
chairman, vice chairman, the president or any executive vice president shall
execute in the name of the corporation all authorized instruments of the
corporation, except where the signing shall be expressly delegated by the board
to some other officer or agent of the corporation. The president shall, in the
absence or disability of the chairman, perform the duties and exercise the
power of the chairman, and shall have such other duties and powers as the board
may from time prescribe.
SECTION 6. VICE PRESIDENT. The president, or, if there be
more than one, the vice presidents in the order determined by the board of
directors, shall, in the absence or disability of the president, perform the
duties and exercise the powers of the president, and shall have such other
duties and powers as the board may from time to time prescribe or the president
delegate.
SECTION 7. SECRETARY AND ASSISTANT SECRETARIES. The
secretary shall give notice of, attend and record the minutes of meetings of
stockholders and directors, keep the corporate seal and, when authorized by the
board, affix the same to any instrument requiring it, attesting to the same by
his signature, and shall have such further duties and powers as are incident to
his office or as the board may from time to time prescribe. The assistant
secretary, if any, or if there be more than one the assistant secretaries in
the order determined by the board, shall, in the absence or disability of the
secretary, perform the duties and exercise the powers of the secretary, and
shall have such other duties and powers as the board may from time to time
prescribe or the secretary delegate.
SECTION 8. TREASURER AND ASSISTANT TREASURES. The treasurer
shall be the principal financial and accounting officer of the corporation. He
shall be responsible for the custody and supervision of the corporation's books
of account and subsidiary accounting records, and shall have such further
duties and powers as are incident to his office or as the board of directors
may from time to time prescribe. The assistant treasurer, if any, or if there
be more than one the assistant treasurers in the order
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determined by the board of directors, shall, in the absence or disability of
the treasurer, perform duties and exercise the powers of the treasurer, and
shall have such other duties and powers as the board may from time to time
prescribe or the treasurer delegate.
SECTION 9. CONTROLLER. The controller shall have such duties
and powers as the board may from time to time prescribe or the treasurer
delegate.
ARTICLE IV
RESTRICTIONS ON COMPENSATION
TRANSACTIONS AND INVESTMENTS
SECTION 1. SALARY AND EXPENSES. Directors, officers and
employees as such shall not receive any salary for their services or
reimbursement for any expenses from the corporation; provided that each
director of the corporation who is not an affiliated person of the investment
adviser of the corporation, as defined in the Investment Company Act of 1940,
as amended, or an officer or employee of the corporation may be paid a
reasonable fee, as from time to time established by the board, for attendance
at directors' meetings.
SECTION 2. COMPENSATION AND PROFIT FROM PURCHASES AND SALES.
No affiliated person of the corporation, as defined in the Investment Company
Act of 1940, or affiliated person of such person, shall, except as permitted by
Section 17(e) of the Act, or the rules, regulations or orders of the Securities
and Exchange Commission thereunder, (i) acting as agent, accept from any source
any compensation for the purchase or sale of any property or securities to or
for the corporation or any controlled company of the corporation, as defined in
the Act, or (ii) receive from any source a commission, fee or other
remuneration for effecting such transaction. The investment adviser of the
corporation shall not profit directly or indirectly from sales of securities to
or from the corporation.
SECTION 3. TRANSACTIONS WITH AFFILIATED PERSONS. No
affiliated person of the corporation, as defined in the Investment Company Act
of 1940, or affiliated person of such a person shall knowingly (i) sell any
security or other property to the corporation to any company controlled by the
corporation, as defined in the Act, except shares of stock of the corporation
or securities of which such person is the issuer and which are part of a
general offering to the holders of a class of its securities, (ii) purchase
from the corporation or any such controlled company any security or property,
other than shares of stock of the corporation, (iii) acting as principal,
effect any transaction in which the corporation or controlled company is a
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joint or joint and several participant with such person; provided, however,
that this section shall not apply to any transaction permitted by Sections
17(b), (c) or (d) of the Act or the rules, regulations or orders of the
Securities and Exchange Commission thereunder.
SECTION 4. INVESTMENT ADVISER. The corporation shall employ
only one investment adviser, which employment shall be pursuant to a written
agreement in accordance with Section 15 of Investment Company Act of 1940.
SECTION 5. OWNERSHIP OF STOCK BY OFFICERS AND DIRECTORS. No
officer or director shall take a long or short position in the stock of the
corporation, provided, however, that officers or directors may purchase stock
of the corporation for investment purposes at the same price as that available
to the public at the time of purchase, or in connection with the original
capitalization of the corporation.
SECTION 6. PORTFOLIO TRANSACTIONS. The corporation shall not
purchase, acquire or retain:
(a) any security of an issuer, any of whose officers or
directors is an officer, director or investment
adviser of the corporation or affiliated person, as
defined in the Investment Company Act of 1940, of
such investment adviser;
(b) any security issued by or any interest in the
business of an investment company, insurance company,
broker, dealer, underwriter or investment adviser,
except as permitted under Sections 12(d), (e) and (g)
of the Act or the rules, regulations or orders of the
Securities and Exchange Commission thereunder;
(c) voting securities of another issuer, the acquisition
or retention of which would result in circular or
cross ownership, as defined in Section 20(c) of the
Act, or
(d) during the existence of any underwriting or selling
syndicate, any security, except stock of the
corporation, a principal underwriter of which is an
officer, director, investment adviser or employee of
the corporation, or is a person (other than a company
of the character described in Section 12(d) (3) (A)
and (B) of the Act) of which any such officer,
director investment adviser or employee is an
affiliated person, as defined in the Act, unless in
acquiring such security the corporation is itself
acting as a principal
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underwriter for the issue, except as the Securities
and Exchange Commission, by rules, regulations or
other shall permit.
SECTION 7. GENERAL BUSINESS AND INVESTMENT ACTIVITIES. The
corporation shall not:
(a) purchase any security on margin (except that the
corporation may make margin payments in connection
with transactions in stock index futures contracts
and options on such contracts), except such
short-term credits as are necessary for the clearance
of transactions;
(b) participate on a joint or joint and several basis in
any trading account in securities;
(c) effect a short sale of any security (except that the
corporation may purchase and sell stock index futures
contracts and options on such contracts);
(d) act as an underwriter in the distribution of any
security other than stock of the corporation;
(e) lend money (except by purchasing portions of issues
of publicly distributed debt securities or entering
into repurchase agreements);
(f) borrow money or issue senior securities, except to
the extent permitted under Sections 18(f), (g) and
(h) of the Investment Company Act of 1940;
(g) purchase or sell commodities or commodity futures
(except that the corporation may purchase or sell
stock index futures contracts and options on such
contracts) or real estate;
(h) issue any warrant or right to subscribe to or
purchase stock of the corporation, except in the form
of warrants or rights to subscribe expiring not later
than one hundred twenty days after their issuance and
issued exclusively and ratably to its stockholders,
or any voting trust certificate relating to stock of
the corporation;
(i) change its sub-classification under Section 5(b) of
the Investment Company Act of 1940 from a diversified
to a non-diversified company;
(j) deviate from its policy in respect to concentration
of investments in any particular industry or group of
industries as reported in its
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registration statement under the Investment Company
Act of 1940, or deviate from any fundamental policy
recited in such registration statement pursuant to
Section 8(b)(2) of the Investment Company Act of
1940;
(k) change the nature of its business so as to cease to
be an investment company;
(l) charge any sales load or commission in connection
with the sale or redemption of any stock of the
corporation.
ARTICLE V
STOCK CERTIFICATE AND TRANSFER BOOKS
SECTION 1. CERTIFICATES. Each stockholder shall be entitled
to a certificate or certificates, in such form as the board of directors shall
from time to time approve, representing and certifying the number of whole
shares of stock owned by him in the corporation. Each certificate shall be
signed, manually or by facsimile signature, by the president or a vice
president, countersigned, manually or by facsimile signature, by either the
secretary, an assistant secretary, the treasurer or an assistant treasurer, and
sealed with the corporate seal or facsimile thereof. In case any officer who
has signed any certificate, or whose facsimile signature appears thereon,
ceases to be an officer of the corporation before the certificate is issued,
the certificate may nevertheless be issued with the same effect as if the
officer had not ceased to be such officer as of the date of its issue. Each
certificate shall have a summary, in such form as might be included in a
registration statement permitted to become effective under the Securities Act
of 1933, as now or hereafter amended, of the redemption provisions applicable
to the stock plainly stated thereon. Any certificate representing stock which
is restricted or limited as to transferability shall have a similar summary of
such restriction or limitation plainly stated thereon. No certificate shall be
issued for any share of stock until such share is fully paid.
SECTION 2. LOST CERTIFICATES. The board of directors may
direct a new certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the corporation alleged to
have been lost, stolen, destroyed or mutilated (or may delegate such authority
to one or more officers of the corporation) upon the making of an affidavit of
that fact by the person claiming the certificate to be lost, stolen, destroyed
or mutilated. The board or such officer may, in its or his discretion, require
the owner of such certificate or his legal representative to give bond with
sufficient surety to the
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corporation to indemnify it against any loss or claim which may arise or
expense which may be incurred by reason of the issuance of a new certificate.
SECTION 3. STOCK LEDGER. The corporation shall maintain at
its office in Bannockburn, Illinois, or at the office of its principal transfer
agent, if any, an original or duplicate stock ledger containing the names and
addresses of all stockholders and the number of shares held by each
stockholder.
SECTION 4. REGISTERED STOCKHOLDERS. The corporation shall be
entitled to recognize the exclusive right of a person registered on its books
as such, as the owner of shares for all purposes, and shall not be bound to
recognize any equitable or other claim to or interest in such shares on the
part of any other person, whether or not it shall have express or other notice
thereof, except as otherwise provided by the laws of Maryland.
SECTION 5. TRANSFER AGENT AND REGISTRAR. The corporation may
maintain one or more transfer offices or agencies, each in charge of a transfer
agent designated by the board of directors, where the shares of stock of the
corporation shall be transferable. The corporation may also maintain one or
more registry offices, each in charge of a registrar designated by the board,
where such shares of stock shall be registered.
SECTION 6. TRANSFERS OF STOCK. Upon surrender to the
corporation or a transfer agent of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
SECTION 7. FIXING OF RECORD DATES AND CLOSING OF TRANSFER
BOOKS. The board of directors may fix, in advance, a date as the record date
for the purpose of determining stockholders entitled to notice of, or to vote
at, any meeting of stockholders, or stockholders entitled to receive payment of
any dividend or the allotment of any rights, or in order to make a
determination of stockholders for any other proper purpose. Such date, in any
case, shall not be more than sixty days, and in case of a meeting of
stockholders not less than ten days, prior to the date on which the particular
action requiring such determination of stockholders is to be taken. In lieu of
fixing a record date, the board may provide that the stock transfer books shall
be closed for a stated period but not to exceed, in any case, twenty days. If
the stock transfer books are closed for the purpose of determining stockholders
entitled to vote at a meeting of stockholders, such books shall be closed for
at least ten days immediately preceding such action.
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ARTICLE VI
ACCOUNTS, REPORTS AND CUSTODIAN
SECTION 1. INSPECTION OF BOOKS. The board of directors shall
determine from time to time whether, and, if allowed, when and under what
conditions and regulations the accounts and books of the corporation (except
such as may by statute be specifically open to inspection) or any of them,
shall be open to the inspection of the stockholders and the stockholders'
rights in this respect are and shall be limited accordingly.
SECTION 2. RELIANCE ON RECORDS. Each director and officer
shall, in the performance of his duties, be fully protected in relying in good
faith on the books of account or reports made to the corporation by any of its
officials, by an independent public accountant, or by any appraiser selected
with reasonable care by the board, and in relying in good faith upon other
records of the corporation.
SECTION 3. PREPARATION AND MAINTENANCE OF ACCOUNTS, RECORDS
AND STATEMENTS. The president, a vice president or the treasurer shall prepare
or cause to be prepared annually, a full and correct statement of the affairs
of the corporation, including a balance sheet or statement of financial
condition and a financial statement of operations for the preceding fiscal
year, which shall be submitted at the annual meeting of the stockholders and
filed within twenty days thereafter at the principal office of the corporation
in the state of Maryland. The proper officers of the corporation shall also
prepare, maintain and preserve or cause to be prepared, maintained and
preserved the accounts, books and other documents required by Section 31 of the
Investment Company Act of 1940 and shall prepare and file or cause to be
prepared and filed the reports required by Section 30 of the Act. No financial
statement shall be filed with the Securities and Exchange Commission unless any
officer or employee who prepared or participated in the preparation of such
financial statement has been specifically designated for such purposes by the
board of directors.
SECTION 4. AUDITORS. No independent public accountant shall
be retained or employed by the corporation to examine, certify or report on its
financial statements for any fiscal year unless such selection (i) shall have
been approved by a majority of the entire board of directors within thirty days
before or after the beginning of such fiscal year or before the annual meeting
of stockholders for such fiscal year; (ii) shall have been ratified at the next
succeeding annual meeting of
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stockholders, provided that any vacancy occurring between annual meetings due
to the death or resignation of such accountant may be filled by the board; and
(iii) shall otherwise meet the requirements of Section 32 of the Investment
Company Act of 1940.
SECTION 5. CUSTODIAN. All securities, evidences of
indebtedness and funds of the corporation shall be entrusted to the custody of
one or more custodians or depositaries, each of which shall be a bank or trust
company which is a member of the Federal Reserve System having capital, surplus
and undivided profits of not less than Two Million ($2,000,000) Dollars, as set
forth in its most recently published report of condition, and the
qualifications prescribed by and pursuant to Sections 17(f) and 26 of the
Investment Company Act of 1940, employed as agent or agents of the corporation
by the board of directors.
SECTION 6. AGREEMENT WITH CUSTODIAN. Each such custodian
shall be employed pursuant to a written agreement which shall conform to the
requirements prescribed by any applicable rules and regulations of the
Securities and Exchange Commission under the Investment Company Act of 1940,
and, except as otherwise provided by such rules and regulations, shall provide
substantially as follows:
(a) The custodian shall keep (i) all cash on deposit with
it or with such other banks in the name of the custodian as the
corporation shall direct, and (ii) all securities in a separate
account, not commingled with other assets, in the name of the
custodian, its nominee or the corporation in care of the custodian, or
in the custody of the custodian or its agents in street certificate or
bearer form. The custodian shall receive and collect the income or
funds due with respect to such securities.
(b) Securities and cash held by the custodian may be
withdrawn only upon written order signed on behalf of the corporation
by two employees, at least one of whom shall be an officer, included
within a list of five officers and employees certified for such
purpose by resolution of the board of directors.
(c) Securities held by the custodian may be withdrawn
only for the following purposes:
(i) The sale of such securities for the account of the corporation
with delivery and payment therefor in accord with procedures
and customs used by the custodian in the sale of securities
for the trust estates of which it is trustee;
(ii) The delivery of securities in exchange for or conversion into
other securities alone, cash or cash
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and other securities pursuant to the provisions of such
securities or a plan of merger, consolidation, reorganization,
recapitalization or readjustment of the securities of the
issuer thereof;
(iii) The surrender of warrants, rights or similar securities in the
exercise of such warrants, rights or similar securities or the
surrender of interim receipts or temporary securities for
definitive securities;
(iv) The delivery of securities to a lender as collateral on
borrowing effected by the corporation;
(v) The delivery of securities as a redemption in kind of or
distribution on stock of the corporation; provided that in
each case specified in clauses (ii), (iii) and (iv) the
payment, collateral or securities to be received are delivered
to the custodian simultaneously or as promptly thereafter as
possible.
(d) Cash held by the custodian may be withdrawn only for
the following purposes:
(i) The purchase of securities to be retained by the
custodian with delivery and payment therefor in
accord with procedures and customs used by the
custodian in the purchase of securities for the trust
estate of which it is trustee;
(ii) The redemption or purchase of stock of the
corporation;
(iii) The payment of dividends or other distributions on
stock of the corporation;
(iv) The payment of expenses incurred in the operation of
the corporation, or the reimbursement of the
investment adviser of the corporation for expenses
initially incurred by the adviser but properly
chargeable to the corporation;
(v) The payment in connection with the conversion,
exchange or surrender of securities owned by the
corporation;
(vi) The deposit of funds in the name of the custodian in
or with any other bank or trust company designated by
the corporation.
SECTION 7. TERMINATION OF CUSTODIAN AGREEMENT. Any
employment agreement with a custodian shall be terminable on sixty days' notice
in writing by the board of directors or the
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<PAGE> 16
custodian and upon any such termination the custodian shall turn over only to
the succeeding custodian designated by the board of directors all funds,
securities and property and documents of the corporation in its possession.
SECTION 8. CHECKS AND REQUISITIONS. Except as otherwise
authorized by the board of directors, all checks and drafts for the payment of
money shall be signed in the name of the corporation by a custodian, and all
requisitions or orders for the payment of money by a custodian or for the issue
of checks and drafts therefor, all promissory notes, all assignments, of stock
or securities standing in the name of the corporation, and all requisitions or
orders for the assignment of stock or securities standing in the name of a
custodian or its nominee, or for the execution of powers to transfer the same,
shall be signed in the name of the corporation by not less than two persons
(who shall be among those persons, not in excess of five, designated for this
purpose by the board of directors) at least one of which shall be an officer.
Promissory notes, checks or drafts payable to the corporation may be endorsed
only to the order of a custodian or its nominee by the treasurer or president
or by such other person or persons as shall be thereto authorized by the board
of directors.
ARTICLE VII
GENERAL PROVISIONS
SECTION 1. OFFICES. The principal office of the corporation
in the State of Maryland shall be in the City of Baltimore. The corporation
may also have offices at such other places within and without the State of
Maryland as the board of directors may from time to time determine. Except as
otherwise required by statute, the books and records of the corporation may be
kept outside the State of Maryland.
SECTION 2. SEAL. The corporate seal shall have inscribed
thereon the name of the corporation, and the words "Corporate Seal" and
"Maryland". The seal may be used by causing it or a facsimile thereof to be
impressed, affixed, reproduced or otherwise.
SECTION 3. FISCAL YEAR. The fiscal year of the corporation
shall be fixed by the board of directors.
SECTION 4. NOTICE AND WAIVER OF NOTICE. Whenever any notice
of the time, place or purpose of any meeting of stockholders or directors is
required to be given under the statute, the charter or these by-laws, a waiver
thereof in writing, signed by the person or persons entitled to such notice and
filed with the records of the meeting, either before or after
-16-
<PAGE> 17
the holding thereof, or actual attendance at the meeting of stockholders in
person or by proxy or at the meeting of directors in person, shall be deemed
equivalent to the giving of such notice to such persons. No notice need be
given to any person with whom communication is made unlawful by any law of the
United States or any rule, regulation, proclamation or executive order issued
under any such law.
SECTION 5. VOTING OF STOCK. Unless otherwise ordered by the
board of directors, the president shall have full power and authority, in the
name and on behalf of the corporation, (i) to attend, act and vote at any
meeting of stockholders of any company in which the corporation may own shares
of stock of record, beneficially (as the proxy or attorney-in-fact of the
record holder) or of record and beneficially, and (ii) to give voting
directions to the record stockholder of any such stock beneficially owned. At
any such meeting, he shall possess and may exercise any and all rights and
powers incident to the ownership of such shares and which, as the holder or
beneficial owner and proxy of the holder thereof, the corporation might posses
and exercise if personally present, and may exercise such power and authority
through the execution of proxies or may delegate such power and authority to
any other officer, agent or employee of the corporation.
SECTION 6. DIVIDENDS. Dividends upon the stock of the
corporation, subject to the provisions of the charter, if any, may be declared
by the board of directors at any regular or special meeting, pursuant to law.
The source of each dividend payment shall be disclosed to the stockholders
receiving such dividend, to the extent required by the laws of the State of
Maryland and by Section 19 of the Investment Company Act of 1940 and the rules
and regulations of the Securities and Exchange Commission thereunder. Before
payment of any dividend, there may be set aside out of any funds of the
corporation available for dividends such sum or sums as the directors from time
to time, in their absolute discretion, think proper as a reserve fund to meet
contingencies, or for equalizing dividends, or for repairing or maintaining any
property of the corporation, or for such other purpose as the directors shall
think conducive to the interests of the corporation, and the directors may
modify or abolish any such reserve in the manner in which it was created.
SECTION 7. INDEMNIFICATION. Any person who is serving or has
served as a director or officer of the corporation or, at its request, as a
director or officer of another corporation in which its own stock or of which
it is a creditor, shall be indemnified by the corporation against expenses
(including judgements, amounts paid in settlement and fees and expenses of
counsel and experts) actually and necessarily incurred by him in connection
with the defense of any action, suit or proceeding in which he is made a party,
or from any claim with which he is
-17-
<PAGE> 18
threatened by reason of his being or having been a director or officer of the
corporation or any such other corporation (whether or not he continues to be a
director or officer at the time such expense is incurred by him), except in
relation to matters as to which such person has been adjudged liable because of
willful misfeasance, bad faith or reckless disregard of the duties involved in
the conduct of his office. In the absence of an adjudication which expressly
absolves such person from liability to the corporation or its stockholders for
willful misfeasance, had faith or reckless disregard of the duties involved in
the conduct of his office, indemnification shall be conditioned upon the prior
determination by a resolution of two-thirds of those members of the board of
directors of the corporation who are not involved in the action, suit,
proceeding or claim (or, if a majority of such members are so involved, upon
the prior written opinion of independent counsel), that such person has no
liability by reason of willful misfeasance, bad faith or reckless disregard of
the duties involved in the conduct of his office. Amounts paid in settlement
shall not exceed costs, fees and expenses which would have been reasonably
incurred if the action, suit or proceeding had been litigated to a conclusion.
Such a determination by the board of directors, or by independent counsel, and
the payments of amounts by the corporation on the basis thereof shall not
prevent a stockholder from challenging such indemnification by appropriate
legal proceedings on the grounds that the person indemnified was liable to the
corporation or its security holders by reason of willful misfeasance, bad faith
or reckless disregard of the duties involved in the conduct of his office. In
the event of such person's death, the right to indemnification shall extend to
his legal representative. The foregoing rights of indemnification shall not be
exclusive of any other rights to which the officers and directors may be
entitled according to law.
SECTION 8. AMENDMENTS. The board of directors shall have the
power to alter or repeal any by-laws of the corporation and to make new
by-laws, except that the board shall not alter or repeal any by-law made by the
stockholders and shall not alter or repeal Section 3 of Article III, Section 2,
3, 6 and 7 of Article IV, Sections 3 through 8 of Article VI and Sections 6
through 8 of Article VII. The stockholders shall have the power at any
meeting, if notice thereof be included in the notice of such meeting, to alter
or repeal any by-laws of the corporation and to make new by-laws.
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<PAGE> 1
EXHIBIT 2.2
MATHERS FUND, INC.
AMENDMENT TO AMENDED
AND RESTATED BY-LAWS
RESOLVED, that the first sentence of Article II, Section 1 of
the Amended and Restated By-laws of the corporation be, and hereby is, amended
to read as follows:
"The number of directors of the corporation
shall be seven."
Adopted March 4, 1991
<PAGE> 1
EXHIBIT 2.3
MATHERS FUND, INC.
AMENDMENT TO AMENDED AND
RESTATED BY-LAWS
RESOLVED, that effective January 1, 1993, ARTICLE III,
Sections 4 and 5, of the Amended and Restated By-laws of the corporation be,
and they hereby are, amended to read in their entirety as follows:
"Section 4. Chairman. The chairman shall be the principal
executive officer of the corporation. He shall preside at all
meetings of the stockholders and directors and shall have general and
active management of the business of the corporation and see that all
orders and resolutions of the board of directors are carried into
effect, and he shall have such other duties and powers as the board of
directors may from time to time prescribe. To the extent set forth in
Section 5 of this Article III, the chairman shall execute in the name
of the corporation all authorized instruments of the corporation."
"Section 5. President. The president shall have such duties
and powers as the board of directors may from time to time prescribe.
Either of the chairman or the president shall execute in the name of
the corporation all authorized instruments of the corporation, except
where the signing shall be expressly delegated by the board to some
other officer or agent of the corporation. The president shall, in
the absence or disability of the chairman, perform the duties and
exercise the powers of the chairman."
FURTHER RESOLVED, that effective January 1, 1993, the third
sentence of Section 1 of ARTICLE III of the Amended and Restated By-Laws of the
corporation be, and it hereby is, amended to read as follows:
"No officer except the chairman need be a director."
Adopted November 2, 1992
<PAGE> 1
EXHIBIT 2.4
MATHERS FUND, INC.
AMENDMENT TO AMENDED AND RESTATED BY-LAWS
RESOLVED, that the first sentence of Article II, Section 1 of
the Amended and Restated By-laws of the corporation be, and hereby is, amended
to read as follows:
"The number of directors of the corporation
shall be eight."
Adopted April 27, 1993
<PAGE> 1
EXHIBIT 2.5
MATHERS FUND, INC.
AMENDMENT TO
AMENDED AND RESTATED BY-LAWS
RESOLVED, that effective as of the date of Richard T. Glenn's
resignation as a director of the corporation, the first sentence of Article II,
Section 1 of the Amended and Restated By-laws of the corporation be, and hereby
is, amended to read as follows:
"The number of directors of the corporation shall be seven."
Adopted August 9, 1993
<PAGE> 1
EXHIBIT 2.6
MATHERS FUND, INC.
AMENDMENT TO AMENDED
AND RESTATED BY-LAWS
RESOLVED, that the first sentence of Article II, Section 1 of
the Amended and Restated By-laws of the corporation be, and hereby is, amended
to read as follows:
"The number of directors of the corporation shall be six."
Adopted April 21, 1995
<PAGE> 1
EXHIBIT 5
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this ___ day of May, 1988 between Mathers Fund,
Inc., a Maryland corporation (the "Fund"), and Mathers and Company, Inc., an
Illinois corporation (the "Adviser"):
1. The Fund hereby employs the Adviser to manage the
investment and reinvestment of the assets of the Fund for the period and on the
terms set forth in this Agreement. The Adviser hereby accepts such employment
for the compensation herein provided and agrees during such period to render
the services and to assume the obligations herein set forth.
2. The Adviser shall for all purposes herein be deemed
to be an independent contractor and shall, unless otherwise expressly provided
or authorized, have no authority to act for or represent the Fund in any way or
otherwise be deemed an agent for the Fund. However, one or more shareholders,
directors, officers or employees of the Adviser may serve as directors and/or
officers of the Fund, but without compensation or reimbursement of expenses for
such services from the Fund. Nothing herein contained shall be deemed to
require the Fund to take any action contrary to its Articles of Incorporation
or any applicable statute or regulation, or to relieve or deprive the board of
directors of the Fund of its responsibility for and control of the conduct of
the affairs of the Fund.
3. The Adviser, at its own expense and without
reimbursement from the Fund, shall furnish office space, office facilities,
equipment, personnel (other than the services of directors of the Fund who are
not affiliated persons of the Adviser as defined in the Investment Company Act
of 1940), and clerical and bookkeeping services for managing the assets of the
Fund and shall bear all sales and promotional expenses of the Fund, other than
expenses incurred in complying with laws regulating the issue or sale of
securities. The Fund shall bear all other expenses of its operations, or shall
reimburse the Adviser for any such other expenses initially incurred by it,
provided that the total expenses borne by the Fund, including the Adviser's fee
but excluding all federal, state and local taxes, shall not in any year exceed
1-1/2% of the first $30,000,000 of the average net asset value of the Fund for
such year plus 1% of the balance of such average net asset value in excess of
$30,000,000, based on a determination of the net asset value of the Fund on the
last business day of each month of the year. The Adviser shall reimburse the
Fund for any such expenses in excess of this amount.
4. For the services to be rendered and the charges and
expenses to be assumed by the Adviser hereunder, the Fund
<PAGE> 2
shall pay to the Adviser a fee, payable in monthly installments, equal to
75/100 of 1% per annum of the first $200,000,000 of the net asset value of the
Fund, plus 625/1000 of 1% per annum of such net asset value in excess of
$200,000,000 but not exceeding $500,000,000, plus 50/100 of 1% per annum of
such net asset value in excess of $500,000,000. This fee will be computed
based on the net asset value of the Fund on the last business day of each month
and will be payable on the first business day of the following month. Such fee
shall be prorated in any monthly period in which this Agreement is not in
effect for the entire period.
5. The Adviser shall not take, and shall not permit any
of its shareholders, directors, officers or employees to take, a long or short
position in the shares of the Fund, except for the purchase of shares of the
Fund for investment purposes at the same price as that available to the public
at the time of purchase.
6. The Adviser is specifically authorized, to the
fullest extent now and hereafter permitted by law, to cause the Fund to pay a
member of a securities exchange, broker, or dealer an amount of commission for
effecting a securities transaction in excess of the amount of commission
another member of an exchange, broker, or dealer would have charged for
effecting that transaction, if the Adviser determines in good faith that such
amount of commission is reasonable in relation to the value of the brokerage
and research services (within the meaning of Section 28(e) of the Securities
Exchange Act of 1934) provided by such member, broker, or dealer, viewed in
terms of either that particular transaction or the overall responsibilities of
the Adviser with respect to the accounts as to which the Adviser exercises
investment discretion (within the meaning of Section 3(a)(35) of the Securities
Exchange Act of 1934).
7. The services of the Adviser to the Fund hereunder are
not to be deemed exclusive, and the Adviser shall be free to furnish similar
services to others, so long as the services hereunder are not impaired thereby.
Although the predecessor to the Adviser, Mathers and Company, a partnership,
permitted the Fund to use the name "Mathers", said predecessor reserved the
right to use, and to permit other persons, firms or corporations, including
investment companies, to use such name, and it is understood and agreed that
said predecessor has transferred all such rights to the Adviser, which now has
all of the reserved rights to the name "Mathers" that Mathers and Company
previously possessed.
8. This Agreement may not be amended without the
approval of the board of directors of the Fund in the manner required by the
Investment Company Act of 1940, and by the vote
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<PAGE> 3
of a majority of the outstanding voting securities of the Fund, as defined in
the Investment Company Act of 1940.
9. This Agreement may be terminated at any time, without
the payment of any penalty, by the board of directors of the Fund or by a vote
of the majority of the outstanding voting securities of the Fund, as defined in
the Investment Company Act of 1940, upon giving 60 days' written notice to the
Adviser. This Agreement may be terminated by the Adviser at any time upon the
giving of 60 days' written notice to the Fund. This Agreement shall terminate
automatically in the event of its assignment (as defined in Section 2(a)(4) of
the Investment Company Act of 1940). Until terminated as hereinbefore
provided, this Agreement shall continue in effect until two years from the date
of its execution, and thereafter from year to year only so long as such
continuance is specifically approved at least annually (a) by a majority of
those directors of the Fund who are not interested persons of the Fund or of
the Adviser voting in person at a meeting called for the purpose of voting on
such approval, and (b) either by the board of directors or by a vote of a
majority of the outstanding voting securities of the Fund, as defined in the
Investment Company Act of 1940. Any such approval shall be made effective in
accordance with the Investment Company Act of 1940 and the rules and
regulations promulgated thereunder.
MATHERS FUND, INC.
By____________________________
MATHERS AND COMPANY, INC.
By____________________________
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<PAGE> 1
EXHIBIT 8
CUSTODIAN CONTRACT
Between
MATHERS FUND, INC.
and
STATE STREET BANK AND TRUST COMPANY
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. Employment of Custodian and Property to be
Held By It . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Duties of the Custodian with Respect to Property
of the Fund Held by the Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Holding Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Delivery of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Registration of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.4 Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.5 Payments for Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.6 Availability of Federal Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.7 Collection of Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.8 Payment of Fund Monies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.9 Liability for Payment in Advance of Receipt
of Securities Purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.10 Payments for Repurchases or Redemptions
of Shares of the Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.11 Appointment of Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.12 Deposit of Fund Assets in
Securities System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.12A Fund Assets Held in the Custodian's
Direct Paper System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.13 Segregated Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.14 Ownership Certificates for Tax Purposes . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.15 Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.16 Communications Relating to Fund
Portfolio Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.17 Proper Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.18 Actions Permitted Without Express
Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.19 Evidence of Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3. Duties of Custodian With Respect to the Books of
Account and Calculation of Net Asset Value and
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4. Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5. Opinion of Fund's Independent Accountant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6. Reports to Fund by Independent Public Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7. Compensation of Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8. Responsibility of Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9. Effective Period, Termination and Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10. Successor Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11. Interpretive and Additional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
12. Massachusetts Law to Apply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
13. Prior Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
</TABLE>
<PAGE> 4
CUSTODIAN CONTRACT
This Contract between Mathers Fund, Inc., a corporation
organized and existing under the laws of Maryland, having its principal place
of business at 100 Corporate North, Bannockburn, Illinois 60015, hereinafter
called the "Fund", and State Street Bank and Trust Company, a Massachusetts
trust company, having its principal place of business at 225 Franklin Street,
Boston, Massachusetts 02110, hereinafter called the "Custodian",
WITNESSETH, that in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby appoints the Custodian as the custodian of its
securities and cash pursuant to the provisions of the Articles of Incorporation
of the Fund, and the Custodian hereby accepts such appointment, upon the terms
and conditions set forth in this Contract. The Fund agrees to deliver to the
Custodian all securities and cash owned by it, and all payments of income,
payments of principal or capital distributions received by it with respect to
all securities owned by the Fund from time to time, and the cash consideration
received by it for such new or treasury shares of capital stock ("Shares") of
the Fund as may be issued or sold from time to time. The Custodian shall not
be responsible for any property of the Fund held or received by the Fund and
not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of
Section 2.17), the Custodian shall from time to time
<PAGE> 5
employ one or more sub-custodians, but only in accordance with an applicable
vote by the Board of Directors of the Fund, and provided that (i) the Custodian
shall have no more or less responsibility or liability to the Fund on account
of any actions or omissions of any sub-custodian so employed than any such
sub-custodian has to the Custodian and (ii) the responsibility of the
sub-custodian to the Custodian shall conform to the resolution of the Board of
Directors of the Fund authorizing the appointment of the particular
sub-custodian.
2. Duties of the Custodian with Respect to Property of the Fund
Held By the Custodian
2.1 Holding Securities. The Custodian shall hold and physically
segregate for the account of the Fund all non-cash property,
including all securities owned by the Fund, other than (a)
securities which are maintained pursuant to Section 2.12 in a
clearing agency which acts as a securities depository or in a
book-entry system authorized by the U.S. Department of the
Treasury, collectively referred to herein as a "Securities
System" and (b) commercial paper of an issuer for which State
Street Bank and Trust Company acts as issuing and paying agent
("Direct Paper") which is deposited and/or maintained in the
Direct Paper System of the Custodian pursuant to Section
2.12A.
2.2 Delivery of Securities. The Custodian shall release and
deliver securities owned by the Fund held by the
2
<PAGE> 6
Custodian or in a Securities System account of the Custodian
or in the Custodian's Direct Paper book entry system account
("Direct Paper Account") only upon receipt of Proper
Instructions, which may be continuing instructions when deemed
appropriate by the parties, and only in the following cases:
1) Upon sale of such securities for the account
of the Fund and receipt of payment therefor;
2) Upon the receipt of payment in connection
with any repurchase agreement related to such
securities entered into by the Fund;
3) In the case of a sale effected through a
Securities System, in accordance with the
provisions of Section 2.12 hereof;
4) To the depository agent in connection with
tender or other similar offers for portfolio
securities of the Fund;
5) To the issuer thereof or its agent when such
securities are called, redeemed, retired or
otherwise become payable; provided that, in
any such case, the cash or other
consideration is to be delivered to the
Custodian;
6) To the issuer thereof, or its agent, for
transfer into the name of the Fund or into
3
<PAGE> 7
the name of any nominee or nominees of the
Custodian or into the name or nominee name of
any agent appointed pursuant to Section 2.11
or into the name or nominee name of any
sub-custodian appointed pursuant to Article
1; or for exchange for a different number of
bonds, 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;
7) Upon the sale of such securities for the
account of the Fund, to the broker or its
clearing agent, against a receipt, for
examination in accordance with "street
delivery" custom; provided that in any such
case, the Custodian shall have no
responsibility or liability for any loss
arising from the delivery of such securities
prior to receiving payment for such
securities except as may arise from the
Custodian's own negligence or willful
misconduct;
8) For exchange or conversion pursuant to any
plan of merger, consolidation,
recapitalization, reorganization or
4
<PAGE> 8
readjustment of the securities of the issuer
of such securities, or pursuant to provisions
for conversion contained in such securities,
or pursuant to any deposit agreement;
provided that, in any such case, the new
securities and cash, if any, are to be
delivered to the Custodian;
9) In the case of warrants, rights or similar
securities, the surrender thereof in the
exercise of such warrants, rights or similar
securities or the surrender of interim
receipts or temporary securities for
definitive securities; provided that, in any
such case, the new securities and cash, if
any, are to be delivered to the Custodian;
10) For delivery in connection with any loans of
securities made by the Fund, but only against
receipt of adequate collateral as agreed upon
from time to time by the Custodian and the
Fund, which may be in the form of cash or
obligations issued by the United States
government, its agencies or
instrumentalities, except that in connection
with any loans for which collateral is to be
credited to the Custodian's account in the
book-entry system authorized by the U.S.
5
<PAGE> 9
Department of the Treasury, the Custodian
will not be held liable or responsible for
the delivery of securities owned by the Fund
prior to the receipt of such collateral;
11) For delivery as security in connection with
any borrowings by the Fund requiring a pledge
of assets by the Fund, but only against
receipt of amounts borrowed;
12) For delivery in accordance with the
provisions of any agreement among the Fund,
the Custodian and a broker-dealer registered
under the Securities Exchange Act of 1934
(the "Exchange Act") and a member of The
National Association of Securities Dealers,
Inc. ("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;
13) 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
6
<PAGE> 10
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;
14) Upon receipt of instructions from the
transfer agent ("Transfer Agent") for the
Fund, for delivery to such Transfer Agent or
to the holders of shares in connection with
distributions in kind, as may be described
from time to time in the Fund's currently
effective prospectus and statement of
additional information ("prospectus"), in
satisfaction of requests by holders of Shares
for repurchase or redemption; and
15) For any other proper corporate purpose, but
only upon receipt of, in addition to Proper
Instructions, a certified copy of a
resolution of the Board of Directors or of
the Executive Committee signed by an officer
of the Fund and certified by the Secretary or
an Assistant Secretary, 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
7
<PAGE> 11
persons to whom delivery of such securities
shall be made.
2.3 Registration of Securities. Securities held by the Custodian
(other than bearer securities) shall be registered in the name
of the Fund or in the name of any nominee of the Fund or of
any nominee of the Custodian which nominee shall be assigned
exclusively to the Fund, unless the Fund has authorized in
writing the appointment of a nominee to be used in common with
other registered investment companies having the same
investment adviser as the Fund, or in the name or nominee name
of any agent appointed pursuant to Section 2.11 or in the name
or nominee name of any sub-custodian appointed pursuant to
Article 1. All securities accepted by the Custodian on behalf
of the Fund under the terms of this Contract shall be in
"street name" or other good delivery form.
2.4 Bank Accounts. The Custodian shall open and maintain a
separate bank account or accounts in the name of the Fund,
subject only to draft or order by the Custodian acting
pursuant to the terms of this Contract, and shall hold in such
account or accounts, subject to the provisions hereof, all
cash received by it from or for the account of the Fund, other
than cash maintained by the Fund in a bank account established
and used in accordance with Rule 17f-3 under the Investment
Company
8
<PAGE> 12
Act of 1940. Funds held by the Custodian for the Fund may be
deposited by it to its credit as Custodian in the Banking
Department of the Custodian or in such other banks or trust
companies as it may in its discretion deem necessary or
desirable; provided, however, that every such bank or trust
company shall be qualified to act as a custodian under the
Investment Company Act of 1940 and that each such bank or
trust company and the funds to be deposited with each such
bank or trust company shall be approved by vote of a majority
of the Board of Directors of the Fund. Such funds shall be
deposited by the Custodian in its capacity as Custodian and
shall be withdrawable by the Custodian only in that capacity.
If requested by the Fund, the Custodian shall furnish to the
Fund promptly upon its availability a statement reflecting the
current status of its internal reconciliation of the closing
balance as of that day in all bank accounts described in this
Section 2.4 to the balance shown on the daily cash report for
that day rendered to the Fund.
2.5 Payments for Shares. The Custodian shall receive from the
distributor for the Fund's Shares or from the Transfer Agent
of the Fund and deposit into the Fund's account such payments
as are received for Shares of the Fund issued or sold from
time to time by the Fund. The
9
<PAGE> 13
Custodian will provide timely notification to the Fund and the
Transfer Agent of any receipt by it of payments for Shares of
the Fund.
2.6 Availability of Federal Funds. Upon mutual agreement between
the Fund and the Custodian, the Custodian shall, upon the
receipt of Proper Instructions, make federal funds available
to the Fund as of specified times agreed upon from time to
time by the Fund and the Custodian in the amount of checks
received in payment for Shares of the Fund which are deposited
into the Fund's account.
2.7 Collection of Income. The Custodian shall collect on a timely
basis all income and other payments with respect to registered
securities held hereunder to which the Fund shall be entitled
either by law or pursuant to custom in the securities
business, and shall collect on a timely basis all income and
other payments with respect to bearer securities if , on the
date of payment by the issuer, such securities are held by the
Custodian or its agent thereof and shall credit such income,
as collected, to the Fund's custodian account. Without
limiting the generality of the foregoing, the Custodian shall
detach and present for payment all coupons and other income
items requiring presentation as and when they become due and
shall collect interest when due on securities held hereunder.
Income due the
10
<PAGE> 14
Fund on securities loaned pursuant to the provisions of
Section 2.2(10) shall be the responsibility of the Fund. The
Custodian will have no duty or responsibility in connection
therewith, other than to provide the Fund with such
information or data as may be necessary to assist the Fund in
arranging for the timely delivery to the Custodian of the
income to which the Fund is properly entitled.
2.8 Payment of Fund Monies. Upon receipt of Proper Instructions,
which may be continuing instructions when deemed appropriate
by the parties, the Custodian shall pay out monies of the Fund
in the following cases only:
1) Upon the purchase of securities, options,
futures contracts or options on futures
contracts for the account of the Fund but
only (a) against the delivery of such
securities or evidence of title to such
options, future contracts or options on
future contracts, to the Custodian (or any
bank, banking firm or trust company doing
business in the United States or abroad which
is qualified under the Investment Company Act
of 1940, as amended, to act as a custodian
and has been designated by the Custodian as
its agent for this purpose) registered in the
name of the Fund or in the name of a nominee
11
<PAGE> 15
of the Custodian referred to in Section 2.3
hereof or in proper form for transfer; (b) in
the case of a purchase effected through a
Securities System, in accordance with the
conditions set forth in Section 2.12 hereof
or (c) in the case of a purchase involving
the Direct Paper System, in accordance with
the conditions set forth in Section 2.12A; or
(d) in the case of repurchase agreements
entered into between the Fund and the
Custodian, or another bank, or a
broker-dealer which is a member of NASD, (i)
against delivery of the securities either in
certificate form or through an entry
crediting the Custodian's account at the
Federal Reserve Bank with such securities or
(ii) against delivery of the receipt
evidencing purchase by the Fund of securities
owned by the Custodian along with written
evidence of the agreement by the Custodian to
repurchase such securities from the Fund, and
otherwise in accordance with the Master
Repurchase Agreement between the Custodian
and the Fund;
12
<PAGE> 16
2) In connection with conversion, exchange or
surrender of securities owned by the Fund as
set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares
issued by the Fund as set forth in Section
2.10 hereof;
4) 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,
management, accounting, transfer agent and
legal fees, and operating expenses of the
Fund whether or not such expenses are to be
in whole or part capitalized or treated as
deferred expenses;
5) For the payment of any dividends declared
pursuant to the governing documents of the
Fund;
6) For payment of the amount of dividends
received in respect of securities sold short;
7) For any other proper purpose, but only upon
receipt of, in addition to Proper
Instructions, a certified copy of a
resolution of the Board of Directors or of
the Executive Committee of the Fund signed by
an officer of the Fund and certified by its
13
<PAGE> 17
Secretary or an Assistant Secretary,
specifying the amount of such payment,
setting forth the purpose for which such
payment is to be made, declaring such purpose
to be a proper purpose, and naming the person
or persons to whom such payment is to be
made.
2.9 Liability for Payment in Advance of Receipt of Securities
Purchased. In any and every case where payment for purchase
of securities for the account of the Fund is made by the
Custodian in advance of receipt of the securities purchased in
the absence of specific written instructions from the Fund to
so pay in advance, the Custodian shall be absolutely liable to
the Fund for such securities to the same extent as if the
securities had been received by the Custodian.
2.10 Payments for Repurchase of Redemptions of Shares of the Fund.
From such funds as may be available for the purpose but
subject to the limitations of the Articles of Incorporation
and any applicable votes of the Board of Directors of the Fund
pursuant thereto, the Custodian shall, upon receipt of
instructions from the Transfer Agent, make funds available for
payment to holders of Shares who have delivered to the
Transfer Agent a request for redemption or repurchase of their
Shares. In connection with the redemption or
14
<PAGE> 18
repurchase of Shares of the Fund, the Custodian is authorized
upon receipt of instructions from the Transfer Agent to wire
funds to or through a commercial bank designated by the
redeeming shareholders. In connection with the redemption or
repurchase of Shares of the Fund, the Custodian shall honor
checks drawn on the Custodian by a holder of Shares, when
presented to the Custodian in accordance with such procedures
and controls as are mutually agreed upon from time to time
between the Fund and the Custodian.
2.11 Appointment of Agents. the Custodian may at any time or times
in its discretion appoint (and may at any time remove) any
other bank or trust company which is itself qualified under
the Investment Company Act of 1940, as amended, to act as a
custodian, as its agent to carry out such of the provisions of
this Article 2 as the Custodian may from time to time direct;
provided, however, that the appointment of any agent shall not
relieve the Custodian of its responsibilities or liabilities
hereunder.
2.12 Deposit of Fund Assets in Securities Systems. The Custodian
may deposit and/or maintain securities owned by the Fund in a
clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Securities Exchange Act of
1934, which acts as a securities depository, or in the
book-entry system
15
<PAGE> 19
authorized by the U.S. Department of Treasury and certain
federal agencies, collectively referred to herein as
"Securities System" in accordance with applicable Federal
Reserve Board and Securities and Exchange Commission rules and
regulations, if any, and subject to the following provisions:
1) The Custodian may keep securities of the Fund
in a Securities System provided that such
securities are represented in an account
("Account") of the Custodian in the
Securities System which shall not include any
assets of the Custodian other than assets
held as a fiduciary, custodian or otherwise
for customers;
2) The records of the Custodian with respect to
securities of the Fund which are maintained
in a Securities System shall identify by
book-entry those securities belonging to the
Fund;
3) The Custodian shall pay for securities
purchased for the account of the Fund upon
(i) receipt of advice from the Securities
System that such securities have been
transferred to the Account, and (ii) the
making of an entry on the records of the
16
<PAGE> 20
Custodian to reflect such payment and
transfer for the account of the Fund. The
Custodian shall transfer securities sold for
the account of the Fund upon (i) receipt of
advice from the Securities System that
payment for such securities has been
transferred to the 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. Copies
of all advices from the Securities System of
transfers of securities for the account of
the Fund shall identify the Fund, be
maintained for the Fund by the Custodian and
be provided to the Fund at its request. Upon
request, the Custodian shall furnish the Fund
confirmation of each transfer to or from the
account of the Fund in the form of a written
advice or notice and shall furnish to the
Fund copies of daily transaction sheets
reflecting each day's transactions in the
Securities System for the account of the
Fund.
4) The Custodian shall provide the Fund with any
report obtained by the Custodian on the
Securities System's accounting system,
17
<PAGE> 21
internal accounting control and procedures
for safeguarding securities deposited in the
Securities System;
5) The Custodian shall have received the initial
or annual certificate, as the case may be,
required by Article 9 hereof;
6) Anything to the contrary in this Contract
notwithstanding, the Custodian shall be
liable to the Fund for any loss or damage to
the Fund resulting from use of the Securities
System by reason of any negligence,
misfeasance or misconduct of the Custodian or
any of its agents or of any of its or their
employees or from failure of the Custodian or
any such agent to enforce effectively such
rights as it may have against the Securities
System; at the election of the Fund, it shall
be entitled to be subrogated to the rights of
the Custodian with respect to any claim
against the Securities System or any other
person which the Custodian may have as a
consequence of any such loss or damage if and
to the extent that the Fund has not been made
whole for any such loss or damage.
18
<PAGE> 22
2.12A Fund Assets Held in the Custodian's Direct Paper System
The Custodian may deposit and/or maintain securities owned by
the Fund in the Direct Paper System of the Custodian subject to the following
provisions:
1) No transaction relating to securities in the Direct
Paper System will be effected in the absence of
Proper Instructions;
2) The Custodian may keep securities of the Fund in the
Direct Paper System only if such securities are
represented in an account ("Account") of the
Custodian in the Direct Paper System which shall not
include any assets of the Custodian other than assets
held as a fiduciary, custodian or otherwise for
customers;
3) The records of the Custodian with respect to
securities of the Fund which are maintained in the
Direct Paper System shall identify by book-entry
those securities belonging to the Fund;
4) The Custodian shall pay for securities purchased for
the account of the Fund upon the making of an entry
on the records of the Custodian to reflect such
payment and transfer of securities to the account of
the Fund. The Custodian shall transfer securities
sold for the account of the Fund upon the making of
an entry on the records of the
19
<PAGE> 23
Custodian to reflect such transfer and receipt of
payment for the account of the Fund;
5) The Custodian shall furnish the Fund confirmation of
each transfer to or from the account of the Fund, in
the form of a written advice or notice, of Direct
Paper on the next business day following such
transfer and shall furnish to the Fund copies of
daily transaction sheets reflecting each day's
transaction in the Direct Paper System for the
account of the Fund;
6) The Custodian shall provide the Fund with any report
on its system of internal accounting control as the
Fund may reasonably request form time to time.
2.13 Segregated Account. The Custodian shall upon receipt of
Proper Instructions establish and maintain a segregated
account or accounts for and on behalf of the Fund, into which
account or accounts may be transferred cash and/or securities,
including securities maintained in an account by the Custodian
pursuant to Section 2.12 hereof, (i) in accordance with the
provisions of any agreement among the Fund, the Custodian and
a broker-dealer registered under the Exchange Act and a member
of the NASD (or any futures commissions merchant registered
under the Commodity Exchange Act), relating to compliance with
the rules of The Options clearing
20
<PAGE> 24
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, (ii) for purposes of
segregating cash or government securities in connection with
options purchased, sold or written by the Fund or commodity
futures contracts or options thereon purchased or sold by the
Fund, (iii) for the purpose of compliance by the Fund with the
procedures required by Investment Company Act Release No.
10666, or any subsequent release or releases of the Securities
and Exchange Commission relating to the maintenance of
segregated accounts by registered investment companies and
(iv) for other proper corporate purposes, but only,in the case
of clause (iv), upon receipt of, in addition to Proper
Instructions, a certified copy of a resolution of the Board of
Directors or of the Executive Committee signed by an officer
of the Fund and certified by the Secretary or an Assistant
Secretary, setting forth the purpose or purposes of such
segregated account and declaring such purposes to be proper
corporate purposes.
2.14 Ownership Certificates for Tax Purposes. The Custodian shall
execute ownership and other certificates and
21
<PAGE> 25
affidavits for all federal and state tax purposes in
connection with receipt of income or other payments with
respect to securities of the Fund held by it and in connection
with transfers of securities.
2.15 Proxies. The Custodian shall, with respect to the securities
held hereunder, cause to be promptly executed by the
registered holder of such securities, if the securities are
registered otherwise than in the name of the Fund or a nominee
of the Fund, all proxies, without indication of the manner in
which such proxies are to be voted, and shall promptly deliver
to the Fund such proxies, all proxy soliciting materials and
all notices relating to such securities.
2.16 Communications Relating to Fund Portfolio Securities. The
Custodian shall transmit promptly to the Fund all written
information (including, without limitation, pendency of calls
and maturities of securities and expirations of rights in
connection therewith and notices of exercise of call and put
options written by the Fund and the maturity of futures
contracts purchased or sold by the Fund) received by the
Custodian from issuers of the securities being held for the
Fund. With respect to tender or exchange offers, the
Custodian shall transmit promptly to the Fund all written
information received by the Custodian from issuers of the
securities whose tender or exchange is
22
<PAGE> 26
sought and from the party (or his agents) making the tender or
exchange offer. If the Fund desires to take action with
respect to any tender offer, exchange offer or any other
similar transaction, the Fund shall notify the Custodian at
least three business days prior to the date on which the
Custodian is to take such action. If, however, the Fund
provides less than three business days prior notice, the
Custodian shall nonetheless use its best efforts to take the
requested action.
2.17 Proper Instructions. Proper Instructions as used throughout
this Article 2 means a writing signed or initialled by one or
more person or persons as the Board of Directors shall have
from time to time authorized. Each such writing shall set
forth the specific transaction or type of transaction
involved, including a specific statement of the purpose for
which such action is requested. Oral instructions will be
considered Proper Instructions if the Custodian reasonably
believes them to have been given by a person authorized to
give such instructions with respect to the transaction
involved. The Fund shall cause all oral instructions to be
confirmed in writing. Upon receipt of a certificate of the
Secretary or an Assistant Secretary as to the authorization by
the Board of Directors of the Fund accompanied by a detailed
description of procedures approved by the
23
<PAGE> 27
Board of Directors, Proper Instructions may include
communications effected directly between electromechanical
or electronic devices provided that the Board of Directors and
the Custodian are satisfied that such procedures afford
adequate safeguards for the Fund's assets. For purposes of
this Section, Proper Instructions shall include instructions
received by the Custodian pursuant to any three-party
agreement which requires a segregated asset account in
accordance with Section 2.13.
2.18 Actions Permitted without Express Authority. The Custodian
may in its discretion, without express authority from the
Fund:
1) make payments to itself or others for minor
expenses of handling securities or other
similar items relating to its duties under
this Contract, provided that all such
payments shall be accounted for to the Fund;
2) surrender securities in temporary form for
securities in definitive terms;
3) endorse for collection, in the name of the
Fund, checks, drafts and other negotiable
instruments; and
4) in general, attend to all non-discretionary
details in connection with the sale,
exchange, substitution, purchase, transfer
24
<PAGE> 28
and other dealings with the securities and
property of the Fund except as otherwise
directed by the Board of Directors of the
Fund.
2.19 Evidence of Authority. The Custodian shall be protected in
acting upon any instructions, notice, request, consent,
certificate or other instrument or paper believed by it to be
genuine and to have been properly executed by or on behalf of
the Fund. The Custodian may receive and accept a certified
copy of a vote of the Board of Directors of the Fund as
conclusive evidence (a) of the authority of any person to act
in accordance with such vote or (b) of any determination or of
any action by the Board of Directors pursuant to the Articles
of Incorporation as described in such vote, and such vote may
be considered as in full force and effect until receipt by the
Custodian of written notice to the contrary.
3. Duties of Custodian with Respect to the Books of Account and
Calculation of Net Asset Value and Net Income.
The Custodian shall cooperate with and supply necessary
information to the entity or entities appointed by the Board of Directors of
the Fund to keep the books of account of the Fund and/or compute the net asset
value per share of the outstanding shares of the Fund or, if directed in
writing to do so by the
25
<PAGE> 29
Fund, shall itself keep such books of account and/or compute such net asset
value per share. If so directed, the Custodian shall also calculate daily the
net income of the Fund as described in the fund's currently effective
prospectus and shall advise the Fund and the Transfer Agent daily of the total
amounts of such net income and, if instructed in writing by an officer of the
Fund to do so, shall advise the Transfer Agent periodically of the division of
such net income among its various components. The calculations of the net
asset value per share and the daily income of the Fund shall be made at the
time or times described from time to time in the Fund's currently effective
prospectus.
4. Records
The Custodian shall create and maintain all records relating
to its activities and obligations under this Contract in such manner as will
meet the obligations of the Fund under the Investment Company Act of 1940, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2
thereunder, applicable federal and state tax laws and any other law or
administrative rules or procedures which may be applicable to the Fund. All
such records shall be the property of the Fund and shall at all times during
the regular business hours of the Custodian be open for inspection by duly
authorized officers, employees or agents of the Fund and employees and agents
of the Securities and Exchange Commission. The Custodian shall, at the Fund's
request, supply the Fund with a tabulation of securities owned by the Fund and
held by the Custodian and shall, when
26
<PAGE> 30
requested to do so by the Fund and for such compensation as shall be agreed
upon between the Fund and the Custodian, include certificate numbers in such
tabulations.
5. Opinion of Fund's Independent Accountant
The Custodian shall take all reasonable action, as the fund
may from time to time request, to obtain from year to year favorable opinions
from the Fund's independent accountants with respect to its activities
hereunder in connection with the preparation of the Fund's Form N-1A, and Form
N-SAR or other reports to the Securities and Exchange Commission and with
respect to any other requirements of such Commission.
6. Reports to Fund by Independent Public Accountants
The Custodian shall provide the Fund, at such times as the
Fund may reasonably require, with reports by independent public accountants on
the accounting system, internal accounting control and procedures for
safeguarding securities, futures contracts and options on futures contracts,
including securities deposited and/or maintained in a Securities System,
relating to the services provided by the Custodian under this Contract; such
reports shall be of sufficient scope and in sufficient detail, as may
reasonably be required by the Fund to provide reasonable assurance that any
material inadequacies would be disclosed by such examination, and, if there are
no such inadequacies, the reports shall so state.
27
<PAGE> 31
7. Compensation of Custodian
The Custodian shall be entitled to reasonable compensation for
its services and expenses as Custodian, as agreed upon from time to time
between the Fund and the Custodian.
8. Responsibility of Custodian
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 by it or
delivered by it pursuant to this Contract and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties,
including any futures commission merchant acting pursuant to the terms of a
three-party futures or options agreement. The Custodian shall be held to the
exercise of reasonable care in carrying out the provisions of this Contract,
but shall be kept indemnified by and shall be without liability to the Fund for
any action taken or omitted by it in good faith without negligence. It shall
be entitled to rely on and may act upon advice of counsel (who may be counsel
for the Fund) on all matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice. Notwithstanding the
foregoing, the responsibility of the Custodian with respect to redemptions
effected by check shall be in accordance with a separate Agreement entered into
between the Custodian and the Fund.
28
<PAGE> 32
If the Fund requires the Custodian to take any action with
respect to securities, which action involves the payment of money or which
action may, in the opinion of the Custodian, result in the Custodian or its
nominee assigned to the Fund being liable for the payment of money or incurring
liability of some other form, the Fund, as a prerequisite to requiring the
Custodian to take such action, shall provide indemnity to the Custodian in an
amount and form satisfactory to it.
If the Fund requires the Custodian to advance cash or
securities for any purpose or in the event that the Custodian or its nominee
shall pay or be assessed any taxes, charges, expenses, assessments, claims or
liabilities on behalf of the Fund in connection with the performance of this
Contract, except such as may arise from its or its nominee's own negligent
action, negligent failure to act or willful misconduct, any property at any
time held for the account of the Fund shall be security therefor and should the
Fund fail to repay the Custodian promptly, the Custodian shall be entitled to
utilize available cash and to dispose of Fund assets to the extent necessary to
obtain reimbursement.
9. Effective Period, Termination and Amendment
This Contract shall become effective as of its execution,
shall continue in full force and effect until terminated as hereinafter
provided, may be amended at any time by mutual agreement of the parties hereto
and may be terminated by either party by an instrument in writing delivered or
mailed,
29
<PAGE> 33
postage prepaid to the other party, such termination to take effect not sooner
than thirty (30) days after the date of such delivery or mailing; provided,
however that the Custodian shall not act under Section 2.12 hereof in the
absence of receipt of an initial certificate of the Secretary or an Assistant
Secretary that the Board of Directors of the fund has approved the initial use
of a particular Securities System and the receipt of an annual certificate of
the Secretary or an Assistant Secretary that the Board of Directors has
reviewed the use by the Fund of such Securities System, as required in each
case by Rule 17f-4 under the Investment Company Act of 1940, as amended and
that the Custodian shall not act under Section 2.12A hereof in the absence of
receipt of an initial certificate of the Secretary or an Assistant Secretary
that the Board of Directors has approved the initial use of the Direct Paper
System and the receipt of an annual certificate of the Secretary or an
Assistant Secretary that the Board of Directors has reviewed the use by the
Fund of the Direct Paper System; provided further, that the Fund may at any
time by action of its Board of Directors (i) substitute another bank or trust
company for the Custodian by giving notice as described above to the Custodian,
or (ii) immediately terminate this Contract in the event of the appointment of
a conservator or receiver for the Custodian by the Comptroller of the Currency
or upon the happening of a like event at the direction of an appropriate
regulatory agency or court of competent jurisdiction.
30
<PAGE> 34
Upon termination of the Contract, the Fund shall pay to the
Custodian such compensation as may be due as of the date of such termination
and shall likewise reimburse the Custodian for its costs, expenses and
disbursements.
10. Successor Custodian
If a successor custodian shall be appointed by the Board of
Directors of the Fund, the Custodian shall, upon termination, deliver to such
successor custodian at the office of the Custodian, duly endorsed and in the
form for transfer, all securities then held by it hereunder and shall transfer,
all securities then held by it hereunder and shall transfer to an account of
the successor custodian all of the Fund's securities held in a Securities
System.
If no such successor custodian shall be appointed, the
Custodian shall, in like manner, upon receipt of a certified copy of a vote of
the Board of Directors of the Fund, deliver at the office of the Custodian and
transfer such securities, funds and other properties in accordance with such
vote.
In the event that no written order designating a successor
custodian or certified copy of a vote of the Board of Directors shall have been
delivered to the Custodian on or before the date when such termination shall
become effective, then the Custodian shall have the right to deliver to a bank
or trust company, which is a "bank" as defined in the Investment Company Act of
1940, doing business in Boston, Massachusetts, of its own selection, having an
aggregate capital surplus, and undivided
31
<PAGE> 35
profits, as shown by its last published report, of not less than $25,000,000,
all securities, funds and other properties held by the Custodian and all
instruments held by the Custodian relative thereto and all other property held
by it under this Contract and to transfer to an account of such successor
custodian all of the Fund's securities held in any Securities System.
Thereafter, such bank or trust company shall be the successor of the Custodian
under this Contract.
In the event that securities, funds and other properties
remain in the possession of the Custodian after the date of termination hereof
owing to failure of the Fund to procure the certified copy of the vote referred
to or of the Board of Directors to appoint a successor custodian, the Custodian
shall be entitled to fair compensation for its services during such period as
the Custodian retains possession of such securities, funds and other properties
and the provisions of this Contract relating to the duties and obligations of
the Custodian shall remain in full force and effect.
11. Interpretive and Additional Provisions
In connection with the operation of this Contract, the
Custodian and the Fund may from time to time agree on such provisions
interpretive of or in addition to the provisions of this Contract as may in
their joint opinion be consistent with the general tenor of this Contract. Any
such interpretive or additional provisions shall be in a writing signed by both
parties and shall be annexed hereto, provided that no such
32
<PAGE> 36
interpretive or additional provisions shall contravene any applicable federal
or state regulations or any provision of the Articles of Incorporation of the
Fund. No interpretive or additional provisions made as provided in the
preceding sentence shall be deemed to be an amendment of this Contract.
12. Massachusetts Law to Apply
This Contract shall be construed and the provisions thereof
interpreted under and in accordance with laws of The Commonwealth of
Massachusetts.
13. Prior Contracts
This Contract supersedes and terminates, as of the date
hereof, the contract dated November 10, 1977 between the Fund and the Custodian
relating to the custody of the Fund's assets.
33
<PAGE> 37
IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its name and behalf by its duly authorized
representative and its seal to be hereunder affixed as of the 1st day of
August, 1990.
ATTEST MATHERS FUND, INC.
_________________________ By_____________________________
Robert J. Reynolds, Richard T. Glenn, Chairman
Secretary
ATTEST STATE STREET BANK AND TRUST
COMPANY
__________________________ By_____________________________
Assistant Secretary Vice President
34
<PAGE> 1
EXHIBIT 9
SERVICE AGREEMENT
AGREEMENT made as of the 26th day of November, 1979, by and
between MATHERS FUND, INC., a Maryland corporation, having its principal office
and place of business at 125 South Wacker Drive, Chicago, Illinois 60606, (the
"Fund"), and DST, INC., a Missouri corporation, having its principal office and
place of business at 114 West 11th Street, Kansas City, Missouri 64105, (DST).
WHEREAS, the Fund desires to appoint DST as Transfer Agent and
Dividend Disbursing Agent, and DST desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, the parties hereto agree as follows:
Section 1. Terms of Appointment
1.01 Subject to the conditions set forth in this Agreement,
the Fund hereby employs and appoints DST as Transfer Agent and Dividend
Disbursing Agent effective November 30, 1979.
1.02 DST hereby accepts such employment and appointment and
agrees that on and after the effective date of its appointment it will act as
the Fund's Transfer Agent and Dividend Disbursing Agent. DST agrees that it
will also act as
<PAGE> 2
agent in connection with any periodic investment plan, periodic withdrawal
program or other accumulation, open-account or similar plans for the Fund's
shareholders.
1.03 DST agrees to provide the necessary facilities,
equipment and personnel to perform its duties and obligations hereunder in
accordance with industry practice.
1.04 DST agrees that it will perform all of the usual and
ordinary services as Transfer Agent and Dividend Disbursing Agent and as agent
for the various shareholder accounts including but not limited to: issuing,
transferring and cancelling stock certificates, maintaining all shareholder
accounts, preparing annual shareholder meeting lists, mailing proxies,
receiving and tabulating proxies, mailing shareholder reports and prospectuses,
withholding taxes on non-resident alien accounts, disbursing income dividends
and capital gains distributions, preparing and filing U.S. Treasury Department
Form 1099 for all shareholders, preparing and mailing confirmation forms to
shareholders for all purchases and liquidations of Fund shares and other
confirmable transactions in shareholders accounts, recording reinvestment of
dividends and distributions in Fund shares, causing liquidation of shares and
causing disbursements to be made to withdrawal planholders.
-2-
<PAGE> 3
Section 2. Fees and Expenses
2.01 For the services to be rendered by DST pursuant to
paragraph 1.04, the Fund agrees to pay DST such fees as are set out in the
appendix attached hereto and made a part hereof.
2.02 The Fund agrees to promptly reimburse DST for all
reasonable out-of-pocket expenses or advances incurred by DST in connection
with the performance? of services under this Agreement including, but not
limited to, expenditures for counsel fees, postage, envelopes, checks,
continuous forms, reports and statements, telephone, telegraph, stationery,
supplies, costs of outside mailing firms, record storage costs and media for
storage of records (e.g., microfilm, computer tapes). In addition, any other
expenses incurred by DST at the request or with the consent of the Fund will be
promptly reimbursed by the Fund.
Section 3. Representations and Warranties of DST
DST represents and warrants to the Fund that:
3.01 It is a corporation duly organized and existing in good
standing under the laws of the State of Missouri;
-3-
<PAGE> 4
3.02 It is duly qualified to carry on its business in the
State of Missouri;
3.03 It is duly registered as a Transfer Agent under the
Securities Exchange Act of 1934 and is in compliance with the applicable
requirements of said Act and the rules and regulations thereunder;
3.04 It is empowered under applicable laws and by its
Charter and By-Laws to enter into and perform the services contemplated in this
Agreement;
3.05 All requisite corporate proceedings have been taken
to authorize it to enter into and perform this Agreement; and
3.06 It has and will continue to have and maintain the
necessary facilities, equipment and personnel to perform its duties and
obligations under this Agreement.
Section 4. Representations and Warranties of the Fund.
The Fund represents and warrants to DST that:
4.01 It is a corporation duly organized and existing and
in good standing under the laws of the State of Maryland;
-4-
<PAGE> 5
4.02 It is an open-end RTG diversified management investment
company registered under the Investment Company Act of 1940;
4.03 A registration statement under the Securities Act of
1933 is currently effective with respect to all shares of the Fund being
offered for sale;
4.04 The Fund is empowered under the applicable laws and
regulations and by its Charter and By-Laws to enter into and perform this
Agreement; and all requisite corporate proceedings have been taken to authorize
it to enter into and perform this Agreement.
Section 5. Indemnification
5.01 DST shall not be responsible and the Fund shall
indemnify and hold DST 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 of DST required to be taken by
DST pursuant to this Agreement provided that DST has acted in
good faith and with due diligence.
-5-
<PAGE> 6
(b) The reliance on, or use by DST of,
information furnished or records and documents received by DST
which have been prepared and/or maintained by the Fund, or any
other persons or firm on behalf of the Fund.
(c) Defaults by dealers with respect to payment
for share orders previously entered.
(d) The reliance on, or the carrying out of, any
instructions or requests of the Fund.
(e) The offer or sale of the Fund's shares in
violation of any requirement under the securities laws or
regulations of any state that such shares be registered in
such state or in violation of any stop order or other
determination or ruling by any state with respect to the offer
or sale of such shares in such state (unless such violation
results from DST's failure to comply with written instructions
of the Fund or of any officer of the Fund that no offers or
sales be made in or to residents of such state).
5.02 DST shall indemnify and hold the Fund harmless from and
against any and all losses, damages, costs, charges, counsel fees, payments,
expenses and liability arising out of
-6-
<PAGE> 7
DST's failure to comply with the terms of this Agreement or which arise out of
DST's gross negligence or willful misconduct.
5.03 At any time DST may apply to any officer of the Fund for
instructions, and may consult with legal counsel for the Fund or its own legal
counsel, at the expense of the Fund, with respect to any matter arising in
connection with the services to be performed by DST under this Agreement, and
DST shall not be liable and shall be indemnified by the Fund for any action
taken or omitted by it in good faith in reliance upon such instructions or upon
the opinion of such counsel. DST shall be protected and indemnified in acting
upon any paper or document believed by it to be genuine and to have been signed
by the proper person or persons 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. DST shall also be protected and indemnified in recognizing stock
certificates which DST reasonably believes to bear the proper manual or
facsimile signatures of the officers of the Fund, and the proper
countersignature of any former transfer agent or registrar, or of a co-transfer
agent or co-registrar.
Section 6. Covenants of DST and the Fund
6.01 The Fund shall promptly furnish to DST the following:
-7-
<PAGE> 8
(a) A certified copy of the resolution of the
Board of Directors of the Fund authorizing the appointment of
DST and the execution and delivery of this Agreement.
(b) Specimens of all forms of outstanding stock
certificates in the form approved by the Fund's Board of
Directors with a certificate of the Secretary of the Fund as
to such approval.
6.02 DST 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.
6.03 To the extent required by Section 31 of the Investment
Company Act of 1940 and Rules thereunder, DST agrees that all records
maintained by DST relating to the services to be performed by DST under this
Agreement are the property of the Fund and will be preserved and will be
surrendered promptly to the Fund on request.
6.04 DST and the Fund agree that all books, records,
information and data pertaining to the business of the other
-8-
<PAGE> 9
party which are exchanged or received pursuant to the negotiation of and the
carrying out of the Agreement shall remain confidential, and shall not be
voluntarily disclosed to any other person.
Section 7. Termination of Agreement
7.01 This Agreement may be terminated by either party by
ninety (90) days written notice to the other.
Section 8. Assignment
8.01 Neither this Agreement nor any rights or obligations
hereunder may be assigned by DST without the written consent of the Fund.
8.02 This Agreement shall inure to the benefit of and be
binding upon the parties and their respective successors and assigns.
-9-
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in their names and on their behalf under their
corporate seals by and through their duly authorized officers, as of the day
and year first above written.
MATHERS FUND, INC.
By______________________________
President
ATTEST:
___________________________
Secretary
DST, INC.
By______________________________
President
ATTEST:
___________________________
Secretary
-10-
<PAGE> 11
DST SYSTEMS, INC.
TRANSFER AGENCY FEE PROPOSAL
MATHERS FUND, INC.
EFFECTIVE NOVEMBER 1, 1994 THROUGH OCTOBER 31, 1997
A. MINIMUM FEE
$30,000 per portfolio/cusip per year
Note: Minimum supersedes items outlined in Section B provided these
total charges do not exceed the minimum.
B. ACCOUNT MAINTENANCE FEES
Open Accounts:
Daily Accuraual Portfolio(s) - $19.60 per account per year
Non-Daily Accrual Portfolio(s):
Monthly Distribution - $16.60 per account per year
Quarterly (or less frequent) Distribution - $14.60 per account
per year
Closed Accounts - $2.95 per account per year
C. SHAREOWNER CHARGES
Fiduciary Trustee Fees - $12.00 per account per year
D. OPTIONAL SERVICES
Asset Allocation - $2.40 per nucleus account per year
Asset Relocation - $.25 per nucleus account per cycle
Contingent Deferred Sales Charge / Sharelot Accounting - $1.90 per
account per year
12b-1 Processing - $.20 per open and closed account per cycle
Trail Accounting Sub-System (TASS) - $1.00 per account per year
(in addition to 12b-1 fees)
State Withholding - $2.00 per year per fiduciary account
withholding/distribution
Investor Facility - $2.40 per year per master account with multiple
accounts
*Sales and Management Information System (PC based remote SAMIS) -
$1,500 per month for the relationship
*Mainframe Programming:
Dedicated Resource:
Mainframe Programmer - $98,000 per year
Client Services Technical Support - $62,000 per year
IWS/AWD Programming - $125,000 per year
On-Request:
Mainframe Programmer - $75 per hour
<PAGE> 12
Client Services Technical Support - $55 hour
IWS/AWD Programming - $100 per hour
Financial Intermediary Interface:
Automated:
First Four Funds - $17,000 per intermediary per year
Each Additional Fund - $3,000 per intermediary per year
Manual/Partially Automated:
First Four Funds - $34,000 per intermediary per year
Each Additional Fund - $6,000 per intermediary per year
Average Cost System:
$5,000 per year of history converted
$.25 per account per year
*Business Analysis
Senior Staff Support - $55 per hour
Staff Support - $35 per hour
Clerical Support - $25 per hour
Escheatment Costs - as incurred
Conversion Costs - Out of pocket expenses including but not limited to
travel and accommodations, programming, training, equipment installation,
etc.
NOTES TO THE ABOVE FEE SCHEDULE
A. The above schedule does not include reimbursable expenses that
are incurred on the Fund's behalf. Examples of reimbursable expenses
include but are not limited to forms, postage, mailing services,
telephone line/long distance charges, remote client hardware, disaster
recovery, proxy processing, magnetic tapes, printing,
microfilm/microfiche, Fed Fund wire charges, ACH bank charges, NSCC
charges, etc. Reimbursable expenses are billed separately from service
fees on a monthly basis.
B. Any fees or reimbursable expenses not paid within 30 days of
the date of the original invoice will be charged a late payment fee of
1% per month until payment is received.
C. The fees included in the above proposal, except for those
indicated by an "*", are guaranteed for a one year period. The annual
increase in fees for the second and third years of the contract will be
limited to the lesser of 5% or the annual percent change in the
Consumer Price Index (CPI) of the Kansas City Metropolitan Area. All
changes to the fee schedule will be communicated in writing at least 60
days prior to their effective date. Those items which have been marked
by an "*" are established by other entities and therefore are subject
to change with a 50 day notice and cannot be guaranteed for a one year
period.
-2-
<PAGE> 13
Fees Accepted by:
- ------------------------------- -------------------------------
DST Systems, Inc. Mathers Fund, Inc.
02/16/95 02/21/95
- ------------------------------- -------------------------------
Date Date
- 3 -
<PAGE> 1
EXHIBIT 11
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement of our report dated January 12, 1996,
included in Mathers Fund, Inc.'s Annual Report for the year ended December 31,
1995, and to all references to our firm included in this Registration
Statement.
Chicago, Illinois,
April 23, 1996
<PAGE> 1
EXHIBIT 16
SCHEDULE FOR COMPUTATION
OF PERFORMANCE QUOTATIONS
(Unaudited)
<TABLE>
<S> <C>
One Year:
- -------
$1,000 $1,000 (1 + .0701)1 = $1,070.10
Five Years:
- ---------
$1,000 $1,000 (1 + .0303)5 = $1,160.73
Ten Years:
- --------
$1,000 $1,000 (1 + .0883)10 = $2,330.20
</TABLE>
