Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or
240.14a-12
Midwest Trust
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(Name of Registrant as Specified in Its Charter)
- ------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii),
14a-6(i)(1), 14a-6(i)(2) or Item 22(a)(2) of
Schedule 14A.
[ ] $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
1) Title of each class of securities to which
transaction applies:
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2) Aggregate number of securities to which transaction
applies:
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3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule
0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
---------------------------------------------------
4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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<PAGE>
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided
by Exchange Act Rule 0-11(a)(2) and identify the filing
for which the offsetting fee was paid previously.
Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its
filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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MIDWEST TRUST
SPECIAL MEETING OF SHAREHOLDERS
FEBRUARY 28, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
(Name of Fund)
The undersigned hereby appoints Robert H. Leshner and John F. Splain, and each
of them, as Proxies with power of substitution and hereby authorizes each of
them to represent and to vote as provided on the reverse side, all shares of
beneficial interest of the above Fund which the undersigned is entitled to vote
at the special meeting of shareholders to be held on February 28, 1997 or at any
adjournment thereof.
The undersigned acknowledges receipt of the Notice of Special Meeting and Proxy
Statement dated January __, 1997.
Date: ____________________
NOTE: Please sign exactly as your
name appears on this proxy. If
signing for an estate, trust or
corporation, title or capacity
should be stated. If the shares are
held jointly, both signers should
sign, although the signature
of one will bind the other.
-------------------------------
--------------------------------
Signature(s) PLEASE SIGN IN BOX
ABOVE
<PAGE>
PLEASE INDICATE YOUR VOTE BY FILLING IN THE APPROPRIATE BOX
BELOW, AS SHOWN, USING BLUE OR BLACK INK OR DARK PENCIL. DO NOT
USE RED INK.
IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF THE NOMINEES INDICATED AND FOR THE PROPOSALS
DESCRIBED HEREIN
1. With respect to approval of a new investment advisory
agreement with Midwest Group Financial Services, Inc., to become
effective upon the closing of the proposed acquisition of Leshner
Financial, Inc. by Countrywide Credit Industries, Inc.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. Authority to vote for the election of all nominees for
trustee as listed below (except as marked to the contrary below).
FOR WITHHOLD
[ ] [ ]
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME LISTED BELOW.
D. Bogdon, J. Delfino, H.J. Lerner, R. Leshner, A. Mozilo,
O. Robertson, J. Seymour, S. Sterpa
3. With respect to ratification of the selection of Arthur Andersen LLP as the
Trust's independent public accountants for the current fiscal year.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. In their discretion, the Proxies are authorized to vote upon such other
matters as may properly come before the meeting.
PLEASE MARK YOUR PROXY, DATE AND SIGN IT ON THE REVERSE SIDE, AND
RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
MIDWEST TRUST
SPECIAL MEETING OF SHAREHOLDERS
FEBRUARY 28, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
Global Bond Fund
The undersigned hereby appoints Robert H. Leshner and John F. Splain, and each
of them, as Proxies with power of substitution and hereby authorizes each of
them to represent and to vote as provided on the reverse side, all shares of
beneficial interest of the above Fund which the undersigned is entitled to vote
at the special meeting of shareholders to be held on February 28, 1997 or at any
adjournment thereof.
The undersigned acknowledges receipt of the Notice of Special Meeting and Proxy
Statement dated January __, 1997.
Date: ____________________
NOTE: Please sign exactly as your
name appears on this proxy. If
signing for an estate, trust or
corporation, title or capacity
should be stated. If the shares are
held jointly, both signers should
sign, although the signature
of one will bind the other.
-------------------------------
--------------------------------
Signature(s) PLEASE SIGN IN BOX
ABOVE
<PAGE>
PLEASE INDICATE YOUR VOTE BY FILLING IN THE APPROPRIATE BOX
BELOW, AS SHOWN, USING BLUE OR BLACK INK OR DARK PENCIL. DO NOT
USE RED INK.
IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF THE NOMINEES INDICATED AND FOR THE PROPOSALS
DESCRIBED HEREIN
1. With respect to approval of a new investment advisory
agreement with Midwest Group Financial Services, Inc., to become
effective upon the closing of the proposed acquisition of Leshner
Financial, Inc. by Countrywide Credit Industries, Inc.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. With respect to approval of a new subadvisory agreement with
Rogge Global Partners plc, to become effective upon the closing
of the proposed acquisition of Leshner Financial, Inc. by
Countrywide Credit Industries, Inc.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Authority to vote for the election of all nominees for
trustee as listed below (except as marked to the contrary below).
FOR WITHHOLD
[ ] [ ]
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME LISTED BELOW.
D. Bogdon, J. Delfino, H.J. Lerner, R. Leshner, A. Mozilo,
O. Robertson, J. Seymour, S. Sterpa
4. With respect to ratification of the selection of Arthur Andersen LLP as the
Trust's independent public accountants for the current fiscal year.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
5. In their discretion, the Proxies are authorized to vote upon such other
matters as may properly come before the meeting.
PLEASE MARK YOUR PROXY, DATE AND SIGN IT ON THE REVERSE SIDE, AND
RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
January __, 1997
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders
of Midwest Trust to be held on Friday, February 28, 1997 at 10:00 a.m., Eastern
time, in the 10th Floor Conference Center at 312 Walnut Street, Cincinnati, Ohio
45202.
We have previously informed you of some recent developments involving
Midwest Group Financial Services, Inc. (the "Adviser"), the Trust's investment
adviser and principal underwriter, and its parent company, Leshner Financial,
Inc. ("LFI"). On December 10, 1996, the shareholders of LFI entered into an
Agreement for Exchange of Stock with Countrywide Credit Industries, Inc.
("CCI"), a publicly-held company and the nation's largest independent mortgage
lender and servicer. Pursuant to the Agreement, CCI will acquire all of the
outstanding stock of LFI.
Widely recognized as a skilled innovator of financial products and
services, CCI offers mortgage products to home buyers. In addition, CCI has a
loan servicing operation and a variety of ancillary financial products and
services which augments its mortgage lending and servicing operations.
We view this transaction as very positive for a number of reasons. We
will have access to CCI's broad managerial, financial and technological
resources. Moreover, nothing will change regarding the management of the Trust
or the investment strategies we employ. The full team of investment
professionals assigned to the Trust will remain as it currently exists.
Moreover, founder Robert H. Leshner will continue his role as President of the
Trust and as Chairman of the Adviser.
This transaction with CCI will allow the present management team to stay
active in the Trust's operations without changing the existing corporate culture
or the delivery of client service. We believe that these events will further
strengthen the Trust as we plan for the future.
Under the Investment Company Act of 1940, the stock transaction is
considered an assignment of the investment advisory agreements between the
Adviser and the Trust. The advisory agreements require that we obtain approval
from shareholders of new investment advisory agreements for the Funds as a
result of the transaction. Upon completion of such transaction, the Adviser will
change its name but will continue to carry on its business with its current
management. You are
<PAGE>
also being asked to elect a new slate of trustees and to ratify the selection of
Arthur Andersen LLP as the Trust's independent public accountants for the
current fiscal year.
The Board of Trustees has given full and careful consideration to each of
these matters and has concluded that the proposals are in the best interests of
the Trust and its shareholders. The Board of Trustees therefore recommends that
you vote "FOR" each of the matters discussed herein.
Regardless of the number of shares you own, it is important that they
are represented and voted. If you cannot personally attend the special
shareholders' meeting, we would appreciate your promptly voting, signing and
returning the enclosed proxy in the postage-paid envelope provided.
Very truly yours,
Robert H. Leshner
President
<PAGE>
MIDWEST TRUST
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 28, 1997
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NOTICE IS HEREBY GIVEN that a special meeting of shareholders of
Midwest Trust (the "Trust") will be held in the 10th Floor Conference Center at
312 Walnut Street, Cincinnati, Ohio 45202, on Friday, February 28, 1997 at 10:00
a.m., Eastern time, to consider and vote on the following matters:
1. To approve or disapprove, with respect to each series of the
Trust, a new investment advisory agreement with Midwest
Group Financial Services, Inc., to become effective upon the
closing of the proposed acquisition of Leshner Financial,
Inc. by Countrywide Credit Industries, Inc. No fee increase is
proposed.;
2. To approve or disapprove, with respect to the Global Bond
Fund series of the Trust, a new subadvisory agreement with
Rogge Global Partners plc., to become effective upon the
closing of the proposed acquisition of Leshner Financial,
Inc. by Countrywide Credit Industries, Inc. No fee increase is
proposed.;
3. To elect eight trustees, each to serve until his successor
is duly elected and shall qualify;
4. To ratify or reject the selection of Arthur Andersen LLP as
the Trust's independent public accountants for the current
fiscal year. No change in accountants is proposed.; and
5. To transact any other business, not currently contemplated,
that may properly come before the meeting in the discretion
of the proxies or their substitutes.
Shareholders of record at the close of business on January 3, 1997 are
entitled to notice of and to vote at this meeting or any adjournment thereof.
By order of the Board of Trustees,
John F. Splain
January __, 1997 Secretary
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Please execute the enclosed proxy and return it promptly in the enclosed
envelope, thus avoiding unnecessary expense and delay. No postage is required if
mailed in the United States. The proxy is revocable and will not affect your
right to vote in person if you attend the meeting.
<PAGE>
MIDWEST TRUST
SPECIAL MEETING OF SHAREHOLDERS
To Be Held on February 28, 1997
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PROXY STATEMENT
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This proxy statement is furnished in connection with the solicitation
by the Board of Trustees of Midwest Trust ("the Trust") of proxies for use at
the special meeting of shareholders or at any adjournment thereof. The proxy
statement and form of proxy were first mailed to shareholders on or about
January __, 1997.
The purpose of the meeting is to consider approval of new investment
advisory agreements between Midwest Group Financial Services, Inc. (the
"Adviser") and the Trust as a result of a proposed transaction whereby the
Adviser, by means of an exchange of stock of the Adviser's parent company, will
become a wholly-owned indirect subsidiary of Countrywide Credit Industries, Inc.
("CCI"). Shareholders of the Global Bond Fund are also being asked to consider
approval of a new subadvisory agreement with Rogge Global Partners plc ("Rogge")
as a result of the proposed transaction. Upon completion of such transaction, it
is anticipated that the Adviser will continue to carry on its business with its
current management at its current location. Shareholders are being asked to
elect a new slate of trustees, subject to consummation of the proposed
transaction. Shareholders are also being asked to ratify the selection of Arthur
Andersen LLP as the Trust's independent accountants.
A summary of the proposals to be voted on by shareholders of each
series is set forth below:
<TABLE>
<C> <C> <C> <C> <C>
New Ratification
New Advisory Subadvisory of
Agreement with Agreement Election Public
the Adviser with Rogge of Trustees Accountants
Short Term Government Income Fund x x x
Intermediate Term Government Income Fund x x x
Institutional Government Income Fund x x x
Adjustable Rate U.S. Government Securities Fund x x x
Global Bond Fund x x x x
</TABLE>
A proxy, if properly executed, duly returned and not revoked, will be
voted in accordance with the specifications thereon. A proxy which is properly
executed that has no voting instructions with respect to a proposal will be
voted for that proposal. A shareholder may revoke a proxy at any time prior to
use by filing with the Secretary of the Trust an instrument revoking the proxy,
by submitting a proxy bearing a later date, or by attending and voting at the
meeting.
<PAGE>
The Trust has retained Management Information Services Corp. ("MIS") to
solicit proxies for the special meeting. MIS is responsible for printing proxy
cards, mailing proxy material to shareholders, soliciting brokers, custodians,
nominees and fiduciaries, tabulating the returned proxies and performing other
proxy solicitation services. The anticipated cost of such services is
approximately $______, and will be paid by LFI. LFI will also pay the printing
and postage costs of the solicitation.
In addition to solicitation through the mail, proxies may be solicited
by officers, employees and agents of the Trust without cost to the Trust. Such
solicitation may be by telephone, facsimile or otherwise. LFI will reimburse
MIS, brokers, custodians, nominees and fiduciaries for the reasonable expenses
incurred by them in connection with forwarding solicitation material to the
beneficial owners of shares held of record by such persons.
THE TRUST'S ANNUAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1996
IS AVAILABLE AT NO CHARGE BY WRITING TO THE TRUST AT 312 WALNUT STREET, 21ST
FLOOR, CINCINNATI, OHIO 45202- 4094, OR BY CALLING THE TRUST NATIONWIDE
TOLL-FREE 800-543-0407, IN CINCINNATI 629-2050.
OUTSTANDING SHARES AND VOTING REQUIREMENTS
The Board of Trustees has fixed the close of business on January 3,
1997 as the record date for the determination of shareholders entitled to notice
of and to vote at the special meeting of shareholders or any adjournment
thereof. The Trust is composed of five separate funds, the Short Term Government
Income Fund, the Intermediate Term Government Income Fund, the Institutional
Government Income Fund, the Adjustable Rate U.S. Government Securities Fund and
the Global Bond Fund (individually a "Fund" and collectively, the "Funds"), each
of which is represented by a separate series of the Trust's shares. The
Intermediate Term Government Income Fund, the Adjustable Rate U.S. Government
Securities Fund and the Global Bond Fund series each offer two classes of
shares, Class A and Class C shares. As of the record date there were
_______________ shares of beneficial interest, no par value, of the Trust
outstanding, comprised of ___________ shares of the Short Term Government Income
Fund, _____________ shares of the Intermediate Term Government Income Fund,
______________ shares of the Institutional Government Income Fund, _____________
shares of the Adjustable Rate U.S. Government Securities Fund and _____________
shares of the Global Bond Fund. All full shares of the Trust are entitled to one
vote, with proportionate voting for fractional shares.
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<PAGE>
On January 3, 1997, [list 5% shareholders]. No other person owned of record
and, according to information available to the Trust, no other person owned
beneficially 5% or more of the outstanding shares of the Trust (or any Fund) on
the record date.
If a quorum (more than 50% of the outstanding shares of the Trust and
of each Fund) is represented at the meeting, the vote of a majority of the
outstanding shares of a Fund is required for approval of the new investment
advisory agreement with the Adviser with respect to that Fund (Item I below).
The vote of a majority of the outstanding shares of the Global Bond Fund is
required for approval of the new subadvisory agreement with Rogge (Item II
below). The vote of a majority of the outstanding shares for purposes of Items I
and II means the vote of the lesser of (1) 67% or more of the shares present or
represented by proxy at the meeting, if the holders of more than 50% of the
outstanding shares are present or represented by proxy, or (2) more than 50% of
the outstanding shares. The vote of a plurality of the Trust's shares
represented at the meeting is required for the election of trustees (Item III
below). The vote of a majority of the outstanding shares of each Fund is
required for the ratification of the selection of Arthur Andersen LLP as the
Trust's independent public accountants (Item IV below).
If the meeting is called to order but a quorum is not represented at the
meeting, the persons named as proxies may vote the proxies which have been
received to adjourn the meeting to a later date. If a quorum is present at the
meeting but sufficient votes to approve the proposals described herein are not
received, the persons named as proxies may propose one or more adjournments of
the meeting to permit further solicitation of proxies. Any such adjournment will
require the affirmative vote of a majority of those shares represented at the
meeting in person or by proxy. The persons named as proxies will vote those
proxies received which voted in favor of the proposal in favor of such an
adjournment and will vote those proxies received which voted against the
proposal against any such adjournment. A shareholder vote may be taken on one or
more of the proposals in this proxy statement prior to any such adjournment if
sufficient votes have been received and it is otherwise appropriate. Abstentions
and "broker non-votes" are counted for purposes of determining whether a quorum
is present but do not represent votes cast with respect to a proposal. "Broker
non-votes" are shares held by a broker or nominee for which an executed proxy is
received by the Trust, but are not voted as to one or more proposals because
instructions have not been received from the beneficial owners or persons
entitled to vote and the broker or nominee does not have discretionary voting
power.
The trustees of the Trust intend to vote all of their shares in favor
of the proposals described herein. On the record date, all nominees for election
of trustees and officers as a group
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<PAGE>
owned of record or beneficially [state 1% owners of each Fund] and less than 1%
of the outstanding shares of each of the other Funds.
I. APPROVAL OR DISAPPROVAL OF NEW INVESTMENT ADVISORY
AGREEMENTS WITH MIDWEST GROUP FINANCIAL SERVICES, INC.
TERMS OF THE ACQUISITION. Pursuant to an Agreement for Exchange of
Stock (the "Acquisition Agreement") dated December 10, 1996 between CCI and the
shareholders of Leshner Financial, Inc. ("LFI"), CCI has agreed to acquire all
of the outstanding common stock of LFI in exchange for newly issued common stock
of CCI (the "Acquisition"). The Adviser is a wholly-owned subsidiary of LFI, of
which Robert H. Leshner is the controlling shareholder. MGF Service Corp.
("MGF"), the Trust's administrator, transfer agent and accounting and pricing
agent, is also a wholly-owned subsidiary of LFI. As a result of the Acquisition,
the Adviser and MGF will become wholly-owned indirect subsidiaries of CCI. The
value of the CCI common stock to be issued in the Acquisition is approximately
$16 million, subject to an upward adjustment of up to $3 million if certain
performance goals are met over the next five years. In addition, the Acquisition
Agreement contemplates that certain key personnel of the Adviser will enter into
employment agreements with the Adviser, which is intended to assure that the
Adviser will continue to operate with its same investment personnel and
officers.
The consummation of the Acquisition is subject to the satisfaction of
various conditions subsequent to closing, including, but not limited to,
obtaining shareholder approval of new investment advisory agreements for the
Funds and the other funds within the Midwest Group complex, such that the assets
under management by the Adviser under such new agreements are at least 90% of
the amount of assets managed under the present investment advisory agreements on
the date the Acquisition Agreement was executed; obtaining approval of new
servicing agreements between MGF and its other investment company clients from
each client's board, such that the projected fee income under all such new
agreements is at least 90% of the projected fee income under the present
servicing agreements; obtaining consent to the assignment of non-investment
company advisory contracts of the Adviser, such that projected fee income for
such contracts for which consent has been given is at least 90% of the projected
fee income for all such contracts presently in force; any further consents and
regulatory approvals required to consummate the Acquisition; favorable
composition, in the sole discretion of CCI, of the Board of Trustees of the
Trust and the other funds within the Midwest Group complex, which shall be in
compliance with Section 15(f) of the Investment Company Act of 1940 (the "1940
Act"); the execution and delivery of an employment and non-competition agreement
from certain key
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<PAGE>
employees of LFI and its subsidiaries; the receipt by the parties to the
Acquisition Agreement of certain legal and tax opinions; the absence of any
litigation or other event prior to consummation of the Acquisition that could
have a material adverse affect on LFI or its subsidiaries; and the receipt of an
opinion and independent appraisal which provides that the Acquisition is fair to
the participants in LFI's Employee Stock Ownership Plan and that the fair market
value of the LFI shares held by LFI's Employee Stock Ownership Plan is not
greater than the consideration to be received by the participants in connection
with the Acquisition.
Upon completion of the Acquisition, the Adviser expects to retain the
services of all of its current management personnel. The employees of the
Adviser who currently provide portfolio management services to the Funds,
including Robert H. Leshner, are expected to enter into employment and
non-competition agreements with CCI, and there will be no change in their
responsibilities with respect to the Funds following the Acquisition. Mr.
Leshner intends to enter into a five-year employment agreement with CCI.
Furthermore, no changes in the Adviser's method of operation, or the location
where it conducts its business, are contemplated.
Under the 1940 Act, a transaction which results in a change of control
or management of an investment adviser may be deemed an "assignment." The 1940
Act further provides that an investment advisory agreement will automatically
terminate in the event of its assignment. The Acquisition constitutes a "change
in control" of the Adviser for purposes of the 1940 Act and will cause the
"assignment" and resulting termination of the present investment advisory
agreements. Accordingly, the Board of Trustees recommends that new investment
advisory agreements (the "New Management Agreements") between the Trust and the
Adviser, on behalf of each Fund, be approved by shareholders of the applicable
Fund.
Section 15(f) of the 1940 Act provides that when a change in the
control of an investment adviser occurs, the investment adviser or any of its
affiliated persons may receive any amount or benefit in connection therewith as
long as two conditions are satisfied. First, an "unfair burden" must not be
imposed on the investment company as a result of the transaction relating to the
change of control, or any express or implied terms, conditions or understandings
applicable thereto. The term includes any arrangement during the two-year period
after the change in control whereby the investment adviser (or predecessor or
successor adviser), or any interested person of any such adviser, receives or is
entitled to receive any compensation, directly or indirectly, from the
investment company or its security holders (other than fees for bona fide
investment advisory or other services) or from any person in connection with the
purchase or
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<PAGE>
sale of securities or other property to, from, or on behalf of the investment
company (other than fees for bona fide principal underwriting services). No such
compensation arrangements are contemplated as a result of the Acquisition.
The second condition is that, during the three-year period immediately
following consummation of the transaction, at least 75% of the Trust's Board of
Trustees must not be "interested persons" of the investment adviser or
predecessor investment adviser within the meaning of the 1940 Act. No interested
person of the Adviser within the meaning of the 1940 Act will serve on the Board
of Trustees of the Trust during such period if such service would cause this
condition to be violated.
THE PRESENT MANAGEMENT AGREEMENTS. The Adviser currently provides
investment advisory services to the Funds pursuant to four separate investment
advisory agreements. The investment advisory agreement between the Trust and the
Adviser with respect to the Short Term Government Income Fund and the
Intermediate Term Government Income Fund is dated January 30, 1990 and was last
approved by shareholders on that date. The investment advisory agreement between
the Trust and the Adviser with respect to the Institutional Government Income
Fund is dated January 30, 1990 and was last approved by shareholders on that
date. The investment advisory agreement between the Adviser and the Trust with
respect to the Adjustable Rate U.S. Government Securities Fund is dated November
30, 1992 and was last approved by shareholders on December 1, 1992. The
investment advisory agreement between the Trust and the Adviser with respect to
the Global Bond Fund is dated January 31, 1995 and was approved by the Adviser,
as the sole shareholder, on that date. Each of the current investment advisory
agreements are referred to individually as a "Present Management Agreement" and
collectively as the "Present Management Agreements." The Present Management
Agreements were last approved by the Board of Trustees, including a majority of
the Trustees who are not interested persons, as defined in the Investment
Company Act of 1940, as amended (the "1940 Act"), of the Adviser or the Trust
(the "Independent Trustees") on December 11, 1996.
THE NEW MANAGEMENT AGREEMENTS. The terms and conditions of the New
Management Agreements are substantially identical in all material respects to
those of the Present Management Agreements with the exception of a change in the
effective date and the termination date and the removal of three provisions
contained in the Present Management Agreements which management of the Trust
believe to be non-material:
(1) The New Management Agreements will not provide, as do the Present
Management Agreements, that each Fund will pay the compensation and
expenses of the Chief Financial Officer of the Trust since, in the
past, the Funds have not actually
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<PAGE>
paid these expenses. The removal of this provision will not
result in a reduction in the expenses of any Fund.
(2) The New Management Agreements do not contain a provision requiring
the Adviser to reduce its compensation during any fiscal year in the
event expenses exceed the lowest expense limitations imposed by state
securities administrators in the states where a Fund's shares are
qualified for sale. This language has not been provided for in the New
Management Agreements because of the enactment, in October 1996, of the
National Securities Markets Improvement Act of 1996, which eliminates
substantive state regulation of mutual funds.
(3) The final provision contained in the Present Management Agreements
but which is not included in the New Management Agreements is one which
permits the Adviser to use the name "Midwest" or "Midwest Income" in
connection with another business enterprise in which the Adviser is, or
may become associated. This provision has been removed because it is
anticipated that the name of the Trust will be changed to "Countrywide
Investment Trust" upon completion of the Acquisition. It is
contemplated that CCI will retain all rights to the name "Countrywide"
by means of a Licensing Agreement to be entered into between CCI and
the Trust.
SHORT TERM GOVERNMENT INCOME FUND
Under the New Management Agreement for the Short Term Government Income
Fund, the Adviser will select portfolio securities for investment by the Fund,
purchase and sell securities of the Fund, and upon making any purchase or sale
decision, place orders for the execution of such portfolio transactions, all in
accordance with the 1940 Act and any rules thereunder, the supervision and
control of the Board of Trustees of the Trust, such specific instructions as the
Board of Trustees may adopt and communicate to the Adviser and the investment
objectives, policies and restrictions of the Fund. Under the New Management
Agreement, the Adviser will receive from the Short Term Government Income Fund a
fee, computed and accrued daily and paid monthly, at an annual rate of .50% of
the average value of the daily net assets of such Fund up to $50 million; .45%
of the average value of the next $100 million of such assets; .40% of the
average value of the next $100 million of such assets; and .375% of the average
value of such assets in excess of $250 million. This is the same fee that the
Adviser currently receives from the Fund under its Present Management Agreement.
During the fiscal year ended September 30, 1996, the Short Term Government
Income Fund paid advisory fees of $419,926 to the Adviser. The form of the New
Management Agreement for the Short Term Government Income Fund is attached as
Exhibit A.
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<PAGE>
INTERMEDIATE TERM GOVERNMENT INCOME FUND
Under the New Management Agreement for the Intermediate Term Government
Income Fund, the Adviser will select portfolio securities for investment by the
Fund, purchase and sell securities of the Fund, and upon making any purchase or
sale decision, place orders for the execution of such portfolio transactions,
all in accordance with the 1940 Act and any rules thereunder, the supervision
and control of the Board of Trustees of the Trust, such specific instructions as
the Board of Trustees may adopt and communicate to the Adviser and the
investment objectives, policies and restrictions of the Fund. Under the New
Management Agreement, the Adviser will receive from the Intermediate Term
Government Income Fund a fee, computed and accrued daily and paid monthly, at an
annual rate of .50% of the average value of the daily net assets of such Fund up
to $50 million; .45% of the average value of the next $100 million of such
assets; .40% of the average value of the next $100 million of such assets; and
.375% of the average value of such assets in excess of $250 million. This is the
same fee that the Adviser currently receives from the Fund under its Present
Management Agreement. During the fiscal year ended September 30, 1996, the
Intermediate Term Government Income Fund paid advisory fees of $289,680 to the
Adviser. The form of the New Management Agreement for the Intermediate Term
Government Income Fund is attached as Exhibit A.
ADJUSTABLE RATE U.S. GOVERNMENT SECURITIES FUND
Under the New Management Agreement for the Adjustable Rate U.S. Government
Securities Fund, the Adviser will select portfolio securities for investment by
the Fund, purchase and sell securities of the Fund, and upon making any purchase
or sale decision, place orders for the execution of such portfolio transactions,
all in accordance with the 1940 Act and any rules thereunder, the supervision
and control of the Board of Trustees of the Trust, such specific instructions as
the Board of Trustees may adopt and communicate to the Adviser and the
investment objectives, policies and restrictions of the Fund. Under the New
Management Agreement, the Adviser will receive from the Adjustable Rate U.S.
Government Securities Fund a fee, computed and accrued daily and paid monthly,
at an annual rate of .50% of the average value of the daily net assets of such
Fund up to $50 million; .45% of the average value of the next $100 million of
such assets; .40% of the average value of the next $100 million of such assets;
and .375% of the average value of such assets in excess of $250 million. This is
the same fee that the Adviser currently receives from the Fund under its Present
Management Agreement. During the fiscal year ended September 30, 1996, the
Adviser waived all of its advisory fees from the Adjustable Rate U.S. Government
Securities Fund and reimbursed the Fund for
- 8 -
<PAGE>
$45,450 of its other operating expenses. There is no assurance that any fee
waivers will continue in the future. The form of the New Management Agreement
for the Adjustable Rate U.S. Government Securities Fund is attached as Exhibit
A.
The Adviser currently retains Hanover Capital Advisors Inc. ("Hanover")
to review the Adjustable Rate U.S. Government Securities Fund's portfolio
holdings and overall investment strategy pursuant to the terms of a Subadvisory
Agreement dated November 30, 1992 between the Adviser and Hanover. The Adviser
(not the Fund) pays Hanover a fee for these services at an annual rate of .25%
of the average value of the daily net assets of the Fund up to $50 million,
.225% of the average value of the next $100 million of assets; .2% of the
average value of the next $100 million of assets; and .1875% of the average
value of such assets in excess of $250 million. The fee is subject to a
reduction in the event the Adviser waives any portion of its advisory fee. For
the fiscal year ended September 30, 1996, the Adviser paid advisory fees of $322
to Hanover. Upon the consummation of the Acquisition, the Subadvisory Agreement
with Hanover will terminate and Hanover will no longer provide subadvisory
services to the Adjustable Rate U.S. Government Securities Fund.
INSTITUTIONAL GOVERNMENT INCOME FUND
Under the New Management Agreement for the Institutional Government Income
Fund, the Adviser will select portfolio securities for investment by the Fund,
purchase and sell securities of the Fund, and upon making any purchase or sale
decision, place orders for the execution of such portfolio transactions, all in
accordance with the 1940 Act and any rules thereunder, the supervision and
control of the Board of Trustees of the Trust, such specific instructions as the
Board of Trustees may adopt and communicate to the Adviser and the investment
objectives, policies and restrictions of the Fund. Under the New Management
Agreement, the Adviser will receive a fee from the Institutional Government
Income Fund, computed and accrued daily and paid monthly, at an annual rate of
.20% of the average value of the daily net assets of the Fund. This is the same
fee that the Adviser currently receives from the Institutional Government Income
Fund under the Present Management Agreement. During the fiscal year ended
September 30, 1996, the Institutional Government Income Fund paid advisory fees
(net of voluntary fee waivers) of $37,969 to the Adviser. There is no assurance
that any fee waivers will continue in the future. The form of the New Management
Agreement for the Institutional Government Income Fund is attached as Exhibit B.
GLOBAL BOND FUND
Under the New Management Agreement for the Global Bond Fund, the
Adviser will provide general investment supervisory services
- 9 -
<PAGE>
to the Fund. The Adviser will provide various management and administrative
services, statistical services and programs and strategies to the Global Bond
Fund, subject to the supervision of the Board of Trustees. The Adviser will
receive from the Fund a fee, computed and accrued daily and paid monthly, at an
annual rate of .70% of the average value of the daily net assets of such Fund up
to $100 million and .60% of the average value of such assets in excess of $100
million. This is the same fee that the Adviser currently receives from the
Global Bond Fund under the Present Management Agreement. During the fiscal year
ended September 30, 1996, the Global Bond Fund paid advisory fees (net of
voluntary fee waivers) of $113,961 to the Adviser. There is no assurance that
any fee waivers will continue in the future. The form of the New Management
Agreement for the Global Bond Fund is attached as Exhibit C.
ALL FUNDS
If the New Management Agreements are approved by shareholders of the Funds,
they will become effective upon the consummation of the Acquisition. The New
Management Agreements provide that they will remain in force for an initial term
of two years, and from year to year thereafter, subject to annual approval by
(a) the Board of Trustees or (b) a vote of a majority (as defined in the 1940
Act) of the outstanding shares of a Fund; provided that in either event
continuance is also approved by a majority of the Independent Trustees, by a
vote cast in person at a meeting called for the purpose of voting such approval.
The New Management Agreements may be terminated at any time, on sixty days'
written notice, without the payment of any penalty, by the Board of Trustees, by
a vote of the majority of the outstanding voting securities of the applicable
Fund, or by the Adviser. The New Management Agreements automatically terminate
in the event of their assignment, as defined by the 1940 Act and the rules
thereunder.
Each New Management Agreement provides that the Adviser shall not be
liable for any action taken or omitted to be taken by it in its reasonable
judgment, in good faith and believed by it to be authorized or within the
discretion or rights conferred upon it by such Agreement, or in accordance with
specific instructions from the Trust, provided that such acts or omissions shall
not have resulted from the Adviser's willful misfeasance, bad faith or gross
negligence, a violation of the standard of care established by and applicable to
the Adviser in its actions under such Agreement, or breach of its obligations
thereunder.
The descriptions set forth in this Proxy Statement of the New
Management Agreements are qualified in their entirety by reference to Exhibits
A, B and C.
- 10 -
<PAGE>
In the event that shareholders of a Fund do not approve the New
Management Agreement with respect to such Fund and the Acquisition is
consummated, the Board of Trustees will promptly seek to obtain for such Fund
interim advisory services either from the Adviser or from another advisory
organization. Thereafter, the Board of Trustees would either negotiate a new
investment advisory agreement with an advisory organization selected by the
Board or make other appropriate arrangements, in either event subject to
approval by the shareholders of the Fund. In the event the Acquisition is not
consummated for any reason, the Adviser will continue to serve as the investment
adviser of the Funds pursuant to the terms of the Present Advisory Agreements.
INFORMATION CONCERNING CCI. CCI is a New York Stock Exchange listed
company principally engaged in residential mortgage lending. CCI offers a
variety of mortgage products to home buyers, including home equity loans and
subprime credit quality first-lien mortgages. In addition, CCI has a loan
servicing operation which serves over 1.4 million homeowners as well as a
variety of ancillary financial products and services which augment its mortgage
lending and servicing operations. Founded in 1969, CCI is the nation's largest
independent residential mortgage lender and servicer. CCI has more than 5,500
employees and 350 offices across the nation. Angelo R. Mozilo, who has been
nominated to serve as a trustee of the Trust, is the Vice Chairman of the Board
and Executive Vice President of CCI, and is the beneficial owner of % of the
outstanding shares of CCI common stock. As of January 3, 1997, according to
reports filed with the Securities and Exchange Commission, Neuberger & Berman,
605 Third Avenue, New York, New York 10158, was the beneficial owner of __% of
the outstanding shares of CCI common stock and Oppenheimer Group, Inc.,
Oppenheimer Tower, World Financial Center, New York, New York 10281, was the
beneficial owner of __% of the outstanding shares of CCI common stock.
INFORMATION CONCERNING THE ADVISER. The Adviser is a wholly-owned
subsidiary of LFI, of which Robert H. Leshner is the controlling shareholder.
The Adviser also serves as the Trust's principal underwriter. If the Acquisition
is consummated, the Adviser will continue to serve as the Trust's principal
underwriter pursuant to the terms of a new underwriting agreement which was
approved by the Board of Trustees, including a majority of the Independent
Trustees, on December 11, 1996.
Mr. Leshner, his wife and two daughters together own of record
and beneficially 64.2% of the issued and outstanding shares of LFI.
Mr. Leshner, in his capacity as trustee of LFI's Employee Stock Ownership Plan,
is the record owner of an additional 32.2% of the issued and outstanding
shares of LFI. James A. Markley, Jr. and Noretta Markley, as trustees of the
Noretta Markley Trust, are the record owners of 3.6% of the issued and
outstanding shares of LFI.
- 11 -
<PAGE>
During LFI's fiscal year ended September 30, 1996, Mr. Leshner
purchased a total of 8,441.75 shares (representing approximately 7.4% of the
outstanding shares) of the common stock of LFI from three officers of LFI.
During such fiscal year, LFI purchased and retired as treasury shares a total of
1,840.5 shares (representing approximately 1.6% of the outstanding shares) of
its common stock from two officers of LFI. The purchase price for each
transaction was $163 per share. Upon consummation of the Acquisition, the
current shareholders of LFI will own of record and beneficially less than 1% of
the outstanding common shares of CCI.
The directors and principal executive officers of the Adviser are
Robert H. Leshner, who is Chairman of the Board and a director of the Adviser,
MGF and LFI; Michael F. Andrews, who is President of the Adviser and a director
and Vice President of LFI; and James A. Markley, Jr., who is a director of the
Adviser, MGF and LFI and is also President of LFI. The address of the Adviser
and of each director and principal executive officer is 312 Walnut Street,
Cincinnati, Ohio 45202.
The Adviser serves as investment adviser to the following affiliated
registered investment companies listed below:
<TABLE>
<C> <C> <C>
Amount of the
Net Assets as of Adviser's Annual
Name of Fund December 31, 1996 Advisory Fees
- ------------ ----------------- -------------
MIDWEST GROUP
TAX FREE TRUST:
Tax-Free Money Fund $ With respect to each
Ohio Tax-Free Money Fund, .50% of average
Fund daily net assets up to
California Tax-Free $100 million; .45% of
Money Fund* next $100 million of
Royal Palm Florida such assets; .40% of
Tax-Free Money Fund* next $100 million of
Tax-Free Intermediate such assets; and .375%
Term Fund of such assets in
Ohio Insured Tax-Free excess of $300 million
Fund
MIDWEST STRATEGIC
TRUST:
U.S. Government With respect to each
Securities Fund* $ Fund, .75% of average
Treasury Total daily net assets up to
Return Fund* $200 million; .70% of
Utility Fund next $300 million of
Equity Fund* such assets; and .50%
of such assets in
excess of $500 million
</TABLE>
- 12 -
<PAGE>
* During the 1996 fiscal year, the Adviser waived a portion of its
advisory fees for such funds. There is no assurance that any fee
waivers will continue in the future.
INFORMATION CONCERNING MGF. MGF provides transfer agency, shareholder
servicing and accounting and pricing services to the Funds. The address of MGF
is 312 Walnut Street, 21st Floor, Cincinnati, Ohio 45202. During the fiscal year
ended September 30, 1996, MGF received fees from the Funds for its services as
transfer and shareholder servicing agent and accounting and pricing service
agent as follows:
<TABLE>
<C> <C> <C>
As Transfer As Accounting
and Shareholder and Pricing
Servicing Agent Service Agent
Short Term Government Income Fund $183,219 $36,000
Intermediate Term Government Income Fund 64,558 51,000
Adjustable Rate U.S. Government Securities Fund 26,221 51,000
Institutional Government Income Fund 12,862 36,000
Global Bond Fund 24,000 57,000
</TABLE>
MGF is retained by the Adviser to assist the Adviser in providing
administrative services to the Funds. In this capacity, MGF supplies executive,
administrative and regulatory services, supervises the preparation of tax
returns, and coordinates the preparation of reports to shareholders and reports
to and filings with the Securities and Exchange Commission and state securities
authorities. The Adviser (not the Funds) pays MGF a fee for these services equal
to .1% of the average value of each Fund's daily net assets.
If the Acquisition is consummated, MGF will continue to provide transfer
agent, accounting and pricing and administrative services to the Trust at the
same rates as are currently in effect, pursuant to new service agreements which
were approved by the Board of Trustees, including a majority of the Independent
Trustees, on December 11, 1996.
EVALUATION BY THE BOARD OF TRUSTEES. On December 11, 1996, the Board of
Trustees, including a majority of the Independent Trustees, by vote cast in
person, unanimously approved, subject to the required shareholder approval
described herein, the New Management Agreements. Prior to such approval, the
Independent Trustees met separately with their counsel, which did not represent
other LFI or CCI, for the purpose of assisting them in reaching a determination
with respect to the New Management Agreements.
In considering approval of the New Management Agreements, the Board of
Trustees carefully evaluated information they deemed
- 13 -
<PAGE>
necessary to enable them to determine whether the New Management Agreements will
be in the best interests of each Fund and its shareholders. In making this
recommendation, the Trustees evaluated the experience of the Adviser's key
personnel in investing, the quality of services the Adviser is expected to
provide to the Funds and the compensation proposed to be paid to the Adviser.
The Trustees have given careful consideration to all factors deemed to be
relevant to the Trust, including, but not limited to: (1) the fees and expense
ratios of comparable mutual funds; (2) the performance of the Funds as compared
to similar mutual funds; (3) the nature and quality of the services expected to
be rendered to the Trust by the Adviser; (4) the distinct investment objective
and policies of each Fund; (5) the research services received by the Adviser
from brokers as a result of placement of the Funds' brokerage, which may benefit
the Funds; (6) that the compensation payable to the Adviser under the New
Management Agreements will be at the same rate as the compensation now payable
to the Adviser under the Present Management Agreements; (7) that the terms of
the New Management Agreements are substantially identical in all material
respects as the terms of the Present Management Agreements except for different
effective and termination dates and the removal of several non-material
provisions; (8) the history, reputation, qualification and background of the
Adviser and CCI, as well as the qualifications of their personnel and their
respective financial conditions; (9) the commitment of LFI to pay or reimburse
the Trust for the expenses incurred in connection with the Acquisition; and (10)
the substantial benefits expected to be realized as a result of the Adviser's
ownership by CCI, such as the potential for increasing Fund assets and the
opportunity to gain access to CCI's managerial and technological resources.
In making the determination to recommend approval of the New Management
Agreements to shareholders of the Trust, the Board of Trustees gave substantial
weight to the Adviser's representations that (i) the Acquisition should benefit
the Adviser and the Funds by preserving the Adviser's independent management
structure and portfolio management style, while providing stability from a
strengthening balance sheet, more attractive financial incentives to the
Adviser's employees and increased resources for the Adviser's operations; (ii)
the Acquisition will not materially affect the advisory operations of the
Adviser or the level or quality of advisory services provided to the Funds;
(iii) the same personnel of the Adviser who currently provide services to the
Trust will continue to do so after the Acquisition; (iv) the Trust will not be
subject to any unfair burden as a result of the Acquisition; (v) access to CCI's
broad managerial, financial and technological resources should allow the Adviser
to increase the range and quality of services provided to the Trust; and (vi)
the Acquisition could potentially result in an increase in assets of
- 14 -
<PAGE>
the Funds, thereby possibly reducing the effective rate of the Adviser's fees
and other expenses of the Funds. In considering approval of the New Management
Agreements, the Board of Trustees reviewed the most recent audited financial
statements of the Adviser and of CCI. The Board of Trustees believes that the
Acquisition should benefit the Adviser and the Funds and that the Funds should
receive investment advisory services under the New Management Agreements equal
or superior to those currently received under the Present Management Agreements,
at the same fee levels. The Board of Trustees therefore unanimously recommends
approval of the New Management Agreements by shareholders of each Fund.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS APPROVE
THE NEW MANAGEMENT AGREEMENTS.
II. APPROVAL OR DISAPPROVAL OF A NEW SUBADVISORY AGREEMENT WITH
ROGGE GLOBAL PARTNERS PLC FOR THE GLOBAL BOND FUND
The Adviser has retained Rogge Global Partners plc ("Rogge") to manage
the Global Bond Fund's investments pursuant to an Investment Advisory Agreement
between the Trust, Rogge and the Adviser (the "Present Subadvisory Agreement").
The Present Subadvisory Agreement is dated August 28, 1996 and was approved by
the Board of Trustees, including a majority of the Independent Trustees of the
Adviser, Rogge or the Trust, on August 6, 1996 and by shareholders of the Global
Bond Fund on August 27, 1996.
The Acquisition could be viewed as constituting a "change in control"
of the Adviser, a party to the Present Subadvisory Agreement, for purposes of
the 1940 Act and cause the "assignment" and resulting termination of the Present
Subadvisory Agreement. Accordingly, the Board of Trustees proposes that a new
subadvisory agreement among the Trust, the Adviser and Rogge (the "New
Subadvisory Agreement") be approved by shareholders of the Global Bond Fund.
THE NEW SUBADVISORY AGREEMENT. The terms and conditions of the New
Subadvisory Agreement are identical in all material respects to those of the
Present Subadvisory Agreement with the exception of the effective and
termination dates.
Under the New Subadvisory Agreement, Rogge will select the portfolio
securities for investment by the Global Bond Fund, purchase and sell securities
for the Fund, and upon making any purchase or sale decision, place orders for
the execution of such portfolio transactions, subject to the supervision and
control of the Adviser and the Board of Trustees, such specific instructions as
the Board of Trustees may adopt and communicate to Rogge, the investment
objectives, policies and restrictions of the Fund and
- 15 -
<PAGE>
instructions from the Adviser. The Adviser (not the Fund) will pay Rogge a fee
for these services, computed and accrued daily and paid monthly, at an annual
rate of .35% of the average value of the daily net assets of the Fund up to $100
million and .30% of the average value of such assets in excess of $100 million.
This is the same fee that Rogge currently receives from the Adviser under the
Present Subadvisory Agreement. The Adviser is solely responsible for the payment
of fees to Rogge and Rogge agrees to seek payment of its fees solely from the
Adviser. During the fiscal year ended September 30, 1996, the Adviser paid
advisory fees of $68,532 to Rogge.
If the New Subadvisory Agreement is approved by shareholders of the
Global Bond Fund, it will become effective upon the consummation of the
Acquisition. The New Subadvisory Agreement provides that it will remain in force
for an initial term of two years and from year to year thereafter, subject to
annual approval by (a) the Board of Trustees or (b) a vote of a majority (as
defined in the 1940 Act) of the outstanding shares of the Fund; provided that in
either event continuance is also approved by a majority of the Independent
Trustees, by a vote cast in person at a meeting called for the purpose of voting
such approval. The New Subadvisory Agreement may be terminated at any time, on
sixty days' written notice, without the payment of any penalty, by the Board of
Trustees, by a vote of the majority of the outstanding voting securities of the
Fund, by the Adviser or by Rogge. The New Subadvisory Agreement automatically
terminates in the event of its assignment, as defined by the 1940 Act and the
rules thereunder.
The New Subadvisory Agreement provides that Rogge shall not be liable
for any action taken or omitted to be taken by it in its reasonable judgment, in
good faith and believed by it to be authorized or within the discretion or
rights conferred upon it by such Agreement, or in accordance with specific
instructions from the Trust, provided that such acts or omissions shall not have
resulted from Rogge's willful misfeasance, bad faith or gross negligence, a
violation of the standard of care established by and applicable to Rogge in its
actions under such Agreement, or breach of its obligations thereunder.
The New Subadvisory Agreement is attached as Exhibit D. The description
set forth in this Proxy Statement of the New Subadvisory Agreement is qualified
in its entirety by reference to Exhibit D.
In the event that shareholders of the Global Bond Fund do not approve
the New Subadvisory Agreement and the Acquisition is consummated, the Board of
Trustees will promptly seek to obtain for the Fund interim subadvisory services
either from Rogge or
- 16 -
<PAGE>
from another advisory organization. Thereafter, the Board of Trustees would
either negotiate a new subadvisory agreement with an advisory organization
selected by the Board or make other appropriate arrangements, in either event
subject to approval by the shareholders of the Fund. In the event the
Acquisition is not completed for any reason, Rogge will continue to serve as the
subadviser of the Fund pursuant to the terms of the Present Subadvisory
Agreement.
INFORMATION CONCERNING ROGGE. Rogge, an English public company, is a
wholly-owned subsidiary of United Asset Management Corporation ("UAM"), a New
York Stock Exchange listed company principally engaged, through affiliated firms
in the United States and abroad, in providing institutional investment
management services and acquiring institutional investment management firms.
The directors and principal executive officers of Rogge are Olaf Rogge,
who is the principal executive and managing director of Rogge, John Graham, the
senior executive and a director of Rogge, Richard Bell, an executive and a
director of Rogge, Adrian James, an executive and a director of Rogge, and David
Russell, a director of UAM and of Rogge. The address of Rogge and of each
director and principal executive officer (except for David Russell) is 5-6 St.
Andrew's Hill, London EC4V 5BY, England. The address of UAM and of David Russell
is One International Place, Boston, Massachusetts 02110.
Rogge serves as investment adviser to the following unaffiliated
registered investment companies listed below:
<TABLE>
<C> <C> <C>
Net Assets As of Amount of Rogge's
Name of Fund December 31, 1996 Annual Advisory Fee
- ------------ ----------------- -------------------
Pace Global Fixed $ .35% of average
Income Investments Fund daily net assets
Manager's Global $ .35% of average
Bond Fund daily net assets up
to $20 million and
.25% of such assets
in excess of $20
million
</TABLE>
EVALUATION BY THE BOARD OF TRUSTEES. On December 11, 1996, the Board of
Trustees, including a majority of the Independent Trustees, by vote cast in
person, unanimously approved, subject to the required shareholder approval
described herein, the New Subadvisory Agreement.
In considering approval of the New Subadvisory Agreement, the Board of
Trustees relied on the Adviser's representation that there have been no material
changes in the personnel, financial
- 17 -
<PAGE>
condition or management style of Rogge since August 6, 1996, on which date the
Board of Trustees approved the Present Subadvisory Agreement. On August 6, 1996,
the trustees had reviewed all factors deemed to be relevant, including, but not
limited to: (1) the fees and expense ratios of comparable mutual funds; (2) the
performance of the Fund as compared to similar mutual funds; (3) the nature and
quality of the services expected to be rendered to the Fund by Rogge; (4) the
distinct investment objective and policies of the Fund; (5) Rogge's investment
performance records; (6) that the compensation payable to Rogge under the New
Subadvisory Agreement will be at the same rate as the compensation now payable
to Rogge under the Present Subadvisory Agreement; (7) that the terms of the New
Subadvisory Agreement are substantially identical in all material respects as
the terms of the Present Subadvisory Agreement except for different effective
and termination dates; and (8) the history, reputation, qualification and
background of Rogge and UAM, as well as the qualifications of their personnel
and their respective financial conditions.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS OF THE
GLOBAL BOND FUND APPROVE THE NEW SUBADVISORY AGREEMENT WITH
ROGGE.
III. ELECTION OF TRUSTEES TO SERVE UPON CONSUMMATION OF THE
ACQUISITION
On January _, 1997, the Board of Trustees, including a majority of the
Independent Trustees, met to review pertinent information on the nominees for
election to the Board of Trustees and unanimously determined to nominate each of
the individuals named below to serve on the Board, subject to the required
shareholder approval. At such meeting, the Independent Trustees were represented
by their counsel for the purpose of assisting them in reaching a determination
with respect to the nominees.
Five individuals not currently serving on the Board of Trustees have
been nominated to serve as trustees, effective upon consummation of the
Acquisition. If elected by shareholders, the five nominess will serve together
with three members of the present Board of Trustees, Robert H. Leshner, H.
Jerome Lerner and Oscar P. Robertson. Upon consummation of the Acquisition,
Dale P. Brown, Gary W. Heldman, Richard A. Lipsey, Donald J. Rahilly,
Fred A. Rappoport and Robert B. Sumerel intend to resign from the Board of
Trustees. In the event the Acquisition is not consummated for any reason, the
members of the present Board of Trustees will continue to serve as trustees.
Consummation of the Acquisition is conditioned upon satisfactory composition
of the Board of Trustees, in the sole discretion of CCI.
Eight nominees are to be elected, each to serve until his or
her successor is duly elected and shall qualify. The current
- 18 -
<PAGE>
Independent Trustees reserve the right to substitute another person or persons
of their choice as nominee or nominees if a nominee is unable to serve as a
trustee at the time of the meeting for any reason. Nothing, however, indicates
that such a situation will arise. The following table sets forth certain
information regarding each nominee for election as a trustee by shareholders.
<TABLE>
<C> <C> <C>
Compensation During
Amount of the Fiscal Year
Name and Principal Occupation Beneficial Ended September 30,
During the Past Five Years Ownership 1996 From:
and Directorships of Trustee of Shares of The The Midwest
Public Companies Age Since the Trust (1) Trust Complex(2)
- ----------------------------- --- ------- ------------- --------- ----------
DONALD L. BOGDON, M.D. 66 Nominee None -- --
Physician with Hematology
Oncology Consultants and
director of Verdugo VNA (a
hospice facility). He was
formerly President of Western
Hematology/Oncology (1971-1996)
and Chairman of the Board of
Glendale Memorial Hospital
(1991-1993).
JOHN R. DELFINO 63 Nominee None -- --
President of Concorde Capital
Corporation (an investment firm).
He was formerly a director of
Cypress Financial (1984-1993)
and Chairman of Rancho Santa
Margarita (1989-1993), mortgage
banking firms.
H. JEROME LERNER 58 1981 $2,849 $8,100
Principal of HJL Enterprises
and Chairman of Crane
Electronics, Inc. (a
manufacturer of electronic
connectors). He is also
a trustee of Midwest Group
Tax Free Trust and Midwest
Strategic Trust.
*ROBERT H. LESHNER 57 1981 $0 $0
Chairman of the Board
of Midwest Group
Financial Services, Inc. (the
investment adviser and
principal underwriter of the
Trust), MGF Service Corp. (a
registered transfer agent) and
Leshner Financial, Inc. (a
financial services company and
parent of Midwest Group
Financial Services, Inc.
and MGF Service Corp.).
He is also President and a
- 19 -
<PAGE>
trustee of Midwest Group Tax
Free Trust and Midwest
Strategic Trust.
**ANGELO R. MOZILO 58 Nominee None -- --
Vice Chairman of the Board
and Executive Vice President
of Countrywide Credit Industries,
Inc. He is also President and
a director of CWM Mortgage Holdings,
Inc. (a publicly-held real estate
investment trust managed by CCI).
OSCAR P. ROBERTSON 57 1981 $2,549 $6,600
President of Orchem Corp.
(a chemical specialties
distributor) and Orpack
Stone Corporation (a
corrugated box
manufacturer). He is also
a trustee of Midwest
Group Tax Free Trust
and Midwest Strategic
Trust.
JOHN F. SEYMOUR, JR. 59 Nominee None -- --
Chief Executive Officer
of the Southern California
Housing Development Agency
and a consultant for Orange
Coast Title Co. (a mortgage
title insurance company).
He is also a director of
Irvine Apartment Communities
(a real estate investment trust)
and Inco Homes (a home builder).
He was formerly a Senator in the
United States Congress (1991-2)
and a director of the
California Housing Finance
Agency (1993-4).
SEBASTIANO STERPA 67 Nominee None -- --
Chairman of Sterpa Realty,
Inc. and Chairman and a
director of the California
Housing Finance Agency. He
is also a director of Real
Estate Business Services and
a director of the SunAmerica
Mutual Funds.
</TABLE>
- 20 -
<PAGE>
(1) Voting and investment power as of January 3, 1997. Unless otherwise
indicated, the percentage of shares of a Fund owned beneficially by any nominee
does not exceed one percent of the outstanding shares of such Fund.
(2) The Midwest Complex consists of the Trust, Midwest Group Tax
Free Trust and Midwest Strategic Trust.
* Robert H. Leshner, as an affiliated person of Midwest Group Financial
Services, Inc., the Trust's investment adviser and principal underwriter,
is an "interested person" of the Trust within the meaning of Section
2(a)(19) of the 1940 Act. Mr. Leshner may directly or indirectly receive
benefits from the New Management Agreements as a result of such
affiliation.
** Angelo R. Mozilo, as an affiliated person of Countrywide
Credit Industries, Inc., will be an "interested person" of
the Trust within the meaning of Section 2(a)(19) of the 1940
Act. Mr. Mozilo may directly or indirectly receive benefits
from the New Management Agreements as a result of such
affiliation.
Dr. Bogdon and Messrs. Delfino and Sterpa currently have outstanding
mortgage loans through CCI. Each mortgage loan was entered into as a result of
an arms-length transaction at competitive interest rates. Each of such loans
was placed prior to the beginning of the last two completed fiscal yeaars of
the Trust. The outstanding aggregate balances of such loans are approximately
$315,000 for Dr. Bogdon, $950,000 for Mr. Delfino and $954,000 for Mr. Sterpa.
In addition, since April 15, 1989, CCI has leased a commercial property from Mr.
Sterpa at a competitive monthly rate of approximately $2,520.
All nominees have consented to being named in this proxy statement and
have agreed to serve if elected. Each nominee is also standing for election as a
trustee of Midwest Group Tax Free Trust and Midwest Strategic Trust. Trustees on
the Board who are not interested persons of the Trust will receive a quarterly
retainer of $1,000 plus $750 for each Board meeting attended. Such fees are
split equally among the Trust, Midwest Group Tax Free Trust and Midwest
Strategic Trust.
The Trust has an Audit Committee currently consisting of Dale P. Brown,
H. Jerome Lerner and Richard A. Lipsey. If all of the nominees to serve on the
Board are elected by shareholders, it is anticipated that the Audit Committee
will consist of Mr. Lerner and two nominees for election as trustees who are not
interested persons of the Trust or the Adviser. The Audit Committee makes
recommendations to the Board of Trustees concerning the selection of the Trust's
independent public accountants, reviews with such accountants the scope and
results of the Trust's annual audit, reviews the semiannual financial reports of
the Trust and considers any comments which the accountants may have regarding
the Trust's financial statements or books of account. Audit Committee members
will each receive $300 ($100 payable by each of the Trust, Midwest Group Tax
Free Trust and Midwest Strategic Trust) for attending an Audit Committee
meeting.
During the fiscal year ended September 30, 1996, the Board of Trustees
held five meetings and the Audit Committee held four meetings. During such
fiscal year, each trustee attended at
- 21 -
<PAGE>
least 75% of the aggregate of (i) the total number of meetings of the Board of
Trustees (held during the period during which he has been a trustee) and (ii)
the total number of meetings held by the committee of the Board of Trustees on
which he served.
EXECUTIVE OFFICERS. The Trust's executive officers are set
forth below. The business address of each officer is 312 Walnut
Street, Cincinnati, Ohio 45202.
Name and Principal Occupation Officer Position with
During the Past Five Years Age Since the Trust
- ---------------------------- --- -------- -------------
ROBERT H. LESHNER 57 1981 President
(See Page ) and Trustee
JOHN F. SPLAIN 40 1988 Secretary
Secretary and General Counsel
of Leshner Financial, Inc.,
Midwest Group Financial
Services, Inc. and MGF Service
Corp. He is also Secretary of
Midwest Group Tax Free Trust,
Midwest Strategic Trust, Brundage
Story and Rose Investment Trust,
Williamsburg Investment Trust,
Markman MultiFund Trust, The
Tuscarora Investment Trust,
PRAGMA Investment Trust, Maplewood
Investment Trust and The Thermo
Opportunity Fund, Inc. and
Assistant Secretary of Fremont
Mutual Funds, Inc., Schwartz
Investment Trust, The Gannett
Welsh & Kotler Funds and
Capitol Square Funds (all of
which are registered investment
companies).
MARK J. SEGER, C.P.A. 34 1989 Treasurer
Vice President of Leshner
Financial, Inc. and MGF
Service Corp. He is also
Treasurer of Midwest Group
Tax Free Trust, Midwest
Strategic Trust, Brundage,
Story and Rose Investment
Trust, Williamsburg Investment
Trust, Markman MultiFund
Trust, PRAGMA Investment Trust,
Maplewood Investment Trust, The
Thermo Opportunity Fund, Inc. and
- 22 -
<PAGE>
Capitol Square Funds; Assistant
Treasurer of Schwartz Investment
Trust, The Tuscarora Investment
Trust and The Gannett Welsh &
Kotler Funds; and Assistant
Secretary of Fremont Mutual
Funds, Inc.
John F. Splain and Mark J. Seger, as participants in LFI's Employee Stock
Ownership Plan, own beneficially less than 1% of the outstanding shares of LFI
and, as a result, have an interest in the approval of the New Management
Agreements. It is expected that Mr. Splain and Mr. Seger will enter into
employment and non-competition agreements with CCI.
IV. RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP has been selected as the Trust's independent public
accountants for the current fiscal year by vote of the Board of Trustees,
including a majority of the Independent Trustees. The employment of Arthur
Andersen LLP is conditional upon the right of the Trust, by a vote of a majority
of its outstanding shares, to terminate the employment without any penalties.
Arthur Andersen LLP has acted as the Trust's independent public
accountants since 1981. If the Trust's shareholders do not ratify the selection
of Arthur Andersen LLP, other certified public accountants will be considered
for selection by the Board of Trustees.
Representatives of Arthur Andersen LLP are not expected to be present at
the meeting although they will have an opportunity to attend and to make a
statement, if they desire to do so. If representatives of Arthur Andersen LLP
are present, they will be available to respond to appropriate questions from
shareholders.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS RATIFY THE SELECTION
OF ARTHUR ANDERSEN LLP. Adoption of this Proposal is not conditioned upon
consummation of the Acquisition.
V. OTHER BUSINESS
The proxy holders have no present intention of bringing any matter before
the meeting other than that specifically referred to above or matters in
connection with or for the purpose of effecting the same. Neither the proxy
holders nor the Board of Trustees are aware of any matters which may be
presented by others. If any other business shall properly come before the
meeting, the proxy holders intend to vote thereon in accordance with their best
judgment.
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<PAGE>
Any shareholder proposal intended to be presented at the next shareholder
meeting must be received by the Trust for inclusion in its Proxy Statement and
form of Proxy relating to such meeting at a reasonable time before the
solicitation of proxies for the meeting is made.
By Order of the Board of Trustees,
John F. Splain
Secretary
Date: January __, 1997
Please complete, date and sign the enclosed Proxy and return it promptly in
the enclosed reply envelope. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES.
- 24 -
<PAGE>
EXHIBIT A
FORM OF
MANAGEMENT AGREEMENT:
SHORT TERM GOVERNMENT INCOME FUND
INTERMEDIATE TERM GOVERNMENT INCOME FUND
ADJUSTABLE RATE U.S. GOVERNMENT SECURITIES FUND
TO: MIDWEST GROUP FINANCIAL SERVICES, INC.
312 Walnut Street
Cincinnati, Ohio 45202
Dear Sirs:
Midwest Trust (hereinafter referred to as the "Trust") herewith
confirms our agreement with you.
The Trust has been organized to engage in the business of an investment
company. The [ ] Fund (the "Fund") has been established as a series of the
Trust. You have been selected to act as the investment adviser of the Fund and
to provide certain other services, as more fully set forth below, and you are
willing to act as such investment adviser and to perform such services under the
terms and conditions hereinafter set forth. Accordingly, the Trust agrees with
you as follows upon the date of the execution of this Agreement.
1. ADVISORY SERVICES
You will regularly provide the Fund with such investment advice as you
in your discretion deem advisable and will furnish a continuous investment
program for the Fund consistent with its investment objectives and policies. You
will determine what securities shall be purchased for the Fund, what portfolio
securities shall be held or sold by the Fund, and what portion of the Fund's
assets shall be held uninvested, subject always to the Fund's investment
objectives, policies and restrictions, as each of the same shall be from time to
time in effect, and subject further, to such policies and instructions as the
Board of Trustees (the "Board") of the Trust may from time to time establish and
supply to you copies thereof. You will advise and assist the officers of the
Trust in taking such steps as are necessary or appropriate to carry out the
decisions of the Board and the appropriate committees of the Board regarding the
conduct of the business of the Fund.
2. ALLOCATION OF CHARGES AND EXPENSES
You will pay the compensation and expenses of any persons rendering any
services to the Fund who are officers, directors, stockholders or employees of
your corporation and will make available, without expense to the Fund, the
services of such of your employees as may duly be elected officers or trustees
of the Trust, subject to their individual consent to serve and to any
- 25 -
<PAGE>
limitations imposed by law. The compensation and expenses of any officers,
trustees and employees of the Trust who are not officers, directors, employees
or stockholders of your corporation will be paid by the Trust.
You will pay all advertising and promotion expenses incurred in
connection with the sale or distribution of the Fund's shares to the extent such
expenses are not assumed by the Fund under the Trust's Plans of Distribution
Pursuant to Rule 12b-1.
The Fund will also be responsible for the payment of all other
operating expenses of the Fund, including fees and expenses incurred by the Fund
in connection with membership in investment company organizations, brokerage
fees and commissions, legal, auditing and accounting expenses, expenses of
registering shares under federal and state securities laws, insurance expenses,
taxes or governmental fees, fees and expenses of the custodian, transfer,
shareholder service and dividend disbursing agent and accounting and pricing
agent of the Fund, expenses including clerical expenses of issue, sale,
redemption or repurchase of shares of the Fund, the fees and expenses of
trustees of the Trust who are not affiliated with you, the cost of preparing and
distributing reports and notices to shareholders, the cost of printing or
preparing prospectuses for delivery to the Fund's shareholders, the cost of
printing or preparing stock certificates or any other documents, statements or
reports to shareholders, expenses of shareholders' meetings and proxy
solicitations, such extraordinary or nonrecurring expenses as may arise,
including litigation to which the Fund may be a party and indemnification of the
Trust's officers and trustees with respect thereto, or any other expense not
specifically described above incurred in the performance of the Fund's
obligations. All other expenses not assumed by you herein incurred by the Fund
in connection with the organization, registration of shares and operations of
the Fund will be borne by the Fund.
3. COMPENSATION OF THE ADVISER
For all of the services to be rendered and payments made as provided in
this Agreement, the Fund will pay you as of the last day of each month, a fee
equal to the annual rate of .50% of the average value of the daily net assets of
the Fund up to $50,000,000; .45% of such assets from $50,000,000 to
$150,000,000; .40% of such assets from $150,000,000 to and including
$250,000,000; and .375% of such assets in excess of $250,000,000.
The total fees payable during each of the first and second halves of
each fiscal year of the Trust shall not exceed the semiannual total of the daily
fee accruals requested by you during the applicable six month period. The
average value of net assets shall be determined pursuant to the applicable
provisions of the Declaration of Trust of the Trust or a resolution of the
Board, if required. If, pursuant to such provisions, the
- 26 -
<PAGE>
determination of net asset value of the Fund is suspended for any particular
business day, then for the purposes of this paragraph, the value of the net
assets of the Fund as last determined shall be deemed to be the value of the net
assets as of the close of the business day, or as of such other time as the
value of the Fund's net assets may lawfully be determined, on that day. If the
determination of the net asset value of the Fund's shares has been suspended for
a period including such month, your compensation payable at the end of such
month shall be computed on the basis of the value of the net assets of the Fund
as last determined (whether during or prior to such month).
Your compensation with respect to each additional series of the Trust
effectively registered for sale in a public offering after the date of this
Agreement shall be determined by the Board, including a majority of the Trustees
who are not "interested persons" (as defined in the Investment Company Act of
1940) of you or of the Trust, and approved pursuant to the provisions of Section
15 of the Investment Company Act of 1940.
4. EXECUTION OF PURCHASE AND SALE ORDERS
In connection with purchases or sales of portfolio securities for the
account of the Fund, it is understood that you will arrange for the placing of
all orders for the purchase and sale of portfolio securities for the Fund's
accounts with brokers or dealers selected by you, subject to review of this
selection by the Board from time to time. You will be responsible for the
negotiation and the allocation of principal business and portfolio brokerage. In
the selection of such brokers or dealers and the placing of such orders, you are
directed at all times to seek for the Fund the best qualitative execution,
taking into account such factors as price (including the applicable brokerage
commission or dealer spread), the execution capability, financial responsibility
and responsiveness of the broker or dealer and the brokerage and research
services provided by the broker or dealer.
You should generally seek favorable prices and commission rates that
are reasonable in relation to the benefits received. In seeking best qualitative
execution, you are authorized to select brokers or dealers who also provide
brokerage and research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934) to the Fund and/or the other accounts over
which you exercise investment discretion. You are authorized to pay a broker or
dealer who provides such brokerage and research services a commission for
executing a portfolio transaction which is in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction if
you determine in good faith that the amount of the commission is reasonable in
relation to the value of the brokerage and research services provided by the
executing broker or dealer. The determination may be viewed in terms of either a
particular transaction or your overall responsibilities with respect to the Fund
and to accounts over which you exercise
- 27 -
<PAGE>
investment discretion. The Trust and you understand that, although the
information may be useful to the Fund and you, it is not possible to place a
dollar value on such information. The Board shall periodically review the
commissions paid by the Fund to determine if the commissions paid over
representative periods of time were reasonable in relation to the benefits to
the Fund.
Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc., and subject to seeking best qualitative execution,
you may give consideration to sales of shares of the Fund as a factor in the
selection of brokers and dealers to execute Fund portfolio transactions.
If any occasion should arise in which you give any advice to clients of
yours concerning the shares of the Fund, you will act solely as investment
counsel for such client and not in any way on behalf of the Trust. Your services
to the Fund pursuant to this Agreement are not to be deemed to be exclusive and
it is understood that you may render investment advice, management and other
services to others.
5. LIMITATION OF LIABILITY OF ADVISER
You (including your directors, officers, shareholders, employees,
control persons and affiliates of any thereof) shall not be liable for any error
of judgment or mistake of law or for any loss suffered by the Fund in connection
with the matters to which this Agreement relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence on your part in the
performance of your duties or from the reckless disregard by you of your
obligations and duties under this Agreement ("disabling conduct"). However, you
will not be indemnified for any liability unless (1) a final decision is made on
the merits by a court or other body before whom the proceeding was brought that
you were not liable by reason of disabling conduct, or (2) in the absence of
such a decision, a reasonable determination is made, based upon a review of the
facts, that you were not liable by reason of disabling conduct, by (a) the vote
of a majority of a quorum of trustees who are neither "interested persons" of
the Trust as defined in the Investment Company Act of 1940 nor parties to the
proceeding ("disinterested, non-party trustees"), or (b) an independent legal
counsel in a written opinion. The Fund will advance attorneys' fees or other
expenses incurred by you in defending a proceeding, upon the undertaking by or
on behalf of you to repay the advance unless it is ultimately determined that
you are entitled to indemnification, so long as you meet at least one of the
following as a condition to the advance: (1) you shall provide a security for
your undertaking, (2) the Fund shall be insured against losses arising by reason
of any lawful advances, or (3) a majority of a quorum of the disinterested,
non-party trustees of the Trust, or an independent legal counsel in a written
opinion, shall determine, based on a review of readily available facts (as
opposed to a full trial- type inquiry), that there is reason to believe that you
ultimately will be found entitled to indemnification. Any person employed by you
who may also be or become an employee of the Trust shall be deemed, when acting
within the scope of his
- 28 -
<PAGE>
employment by the Trust, to be acting in such employment solely for the Trust
and not as your employee or agent.
6. DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall be effective upon its execution, shall remain in
force for a period of two (2) years from that date and remain in force from year
to year thereafter, subject to annual approval by (i) the Board of the Trust or
(ii) a vote of a majority (as defined in the Investment Company Act of 1940) of
the outstanding voting securities of the Fund, provided that in either event
continuance is also approved by a majority of the trustees who are not
interested persons of you or of the Trust, by a vote cast in person at a meeting
called for the purpose of voting such approval.
If the shareholders of the Fund fail to approve the Agreement in the
manner set forth above, upon approval of the Board, including a majority of the
trustees who are not interested persons of you or of the Trust, you may continue
to serve or act in such capacity for the Fund for the period of time (not
exceeding one hundred and twenty days after the termination of the Agreement)
pending required approval of the Agreement, of a new agreement with you or a
different adviser or other definitive action; provided that the compensation to
be paid by the Fund to you will be equal to the lesser of your actual costs
incurred in furnishing investment advisory services to the Fund or the amount
you would have received under this Agreement.
This Agreement may, on sixty days' written notice, be terminated at any
time without the payment of any penalty, by the Board, by a vote of a majority
of the outstanding voting securities of the Fund or by you. This Agreement shall
automatically terminate in the event of its assignment.
7. AMENDMENT OF THIS AGREEMENT
No provision of this Agreement may be changed, waived, discharged or
terminated orally, and no amendment of this Agreement shall be effective until
approved by vote of the holders of a majority of the outstanding voting
securities of the Fund and by the Board, including a majority of the trustees
who are not interested persons of you or of the Trust, cast in person at a
meeting called for the purpose of voting on such approval.
8. LIMITATION OF LIABILITY
It is expressly agreed that the obligations of the Fund hereunder shall
not be binding upon any of the trustees, shareholders, nominees, officers,
agents or employees of the Trust, personally, but bind only the trust property
of the Fund, as provided in the Declaration of Trust of the Trust. The execution
and delivery of this Agreement have been authorized by the trustees of the Trust
and the shareholders of the Fund and signed by the officers of the Trust, acting
as such, and neither such authorization by such trustees and shareholders nor
such execution and delivery by such officers shall be deemed to have
- 29 -
<PAGE>
been made by any of them individually or to impose any liability on any of them
personally, but shall bind only the trust property of the Fund as provided in
the Trust's Declaration of Trust.
9. MISCELLANEOUS
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same Agreement.
If you are in agreement with the foregoing, please sign the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Trust, whereupon this letter shall become a binding contract
upon the date thereof.
Yours very truly,
ATTEST: MIDWEST TRUST
___________________________ By: ___________________________________
Dated: , 1997
ACCEPTANCE
The foregoing Agreement is hereby accepted.
ATTEST: MIDWEST GROUP FINANCIAL SERVICES, INC.
_________________________ By: _________________________________
Dated: , 1997
- 30 -
<PAGE>
EXHIBIT B
FORM OF
MANAGEMENT AGREEMENT:
INSTITUTIONAL GOVERNMENT INCOME FUND
TO: MIDWEST GROUP FINANCIAL SERVICES, INC.
312 Walnut Street
Cincinnati, Ohio 45202
Dear Sirs:
Midwest Trust (hereinafter referred to as the "Trust") herewith
confirms our agreement with you.
The Trust has been organized to engage in the business of an investment
company. The Institutional Government Income Fund (the "Fund") has been
established as a series of the Trust. You have been selected to act as the
investment adviser of the Fund and to provide certain other services, as more
fully set forth below, and you are willing to act as such investment adviser and
to perform such services under the terms and conditions hereinafter set forth.
Accordingly, the Trust agrees with you as follows upon the date of the execution
of this Agreement.
1. ADVISORY SERVICES
You will regularly provide the Fund with such investment advice as you
in your discretion deem advisable and will furnish a continuous investment
program for the Fund consistent with its investment objectives and policies. You
will determine what securities shall be purchased for the Fund, what portfolio
securities shall be held or sold by the Fund, and what portion of the Fund's
assets shall be held uninvested, subject always to the Fund's investment
objectives, policies and restrictions, as each of the same shall be from time to
time in effect, and subject further, to such policies and instructions as the
Board of Trustees (the "Board") of the Trust may from time to time establish and
supply to you copies thereof. You will advise and assist the officers of the
Trust in taking such steps as are necessary or appropriate to carry out the
decisions of the Board and the appropriate committees of the Board regarding the
conduct of the business of the Fund.
2. ALLOCATION OF CHARGES AND EXPENSES
You will pay the compensation and expenses of any persons rendering any
services to the Fund who are officers, directors, stockholders or employees of
your corporation and will make available, without expense to the Fund, the
services of such of your employees as may duly be elected officers or trustees
of the Trust, subject to their individual consent to serve and to any
limitations imposed by law. The compensation and expenses of any officers,
trustees and employees of the Trust who are not
- 31 -
<PAGE>
officers, directors, employees or stockholders of your corporation will be
paid by the Trust.
You will pay all advertising and promotion expenses incurred in
connection with the sale or distribution of the Fund's shares to the extent such
expenses are not assumed by the Fund under the Trust's Plans of Distribution
Pursuant to Rule 12b-1.
The Fund will also be responsible for the payment of all other
operating expenses of the Fund, including fees and expenses incurred by the Fund
in connection with membership in investment company organizations, brokerage
fees and commissions, legal, auditing and accounting expenses, expenses of
registering shares under federal and state securities laws, insurance expenses,
taxes or governmental fees, fees and expenses of the custodian, transfer,
shareholder service and dividend disbursing agent and accounting and pricing
agent of the Fund, expenses including clerical expenses of issue, sale,
redemption or repurchase of shares of the Fund, the fees and expenses of
trustees of the Trust who are not affiliated with you, the cost of preparing and
distributing reports and notices to shareholders, the cost of printing or
preparing prospectuses for delivery to the Fund's shareholders, the cost of
printing or preparing stock certificates or any other documents, statements or
reports to shareholders, expenses of shareholders' meetings and proxy
solicitations, such extraordinary or nonrecurring expenses as may arise,
including litigation to which the Fund may be a party and indemnification of the
Trust's officers and trustees with respect thereto, or any other expense not
specifically described above incurred in the performance of the Fund's
obligations. All other expenses not assumed by you herein incurred by the Fund
in connection with the organization, registration of shares and operations of
the Fund will be borne by the Fund.
3. COMPENSATION OF THE ADVISER
For all of the services to be rendered and payments made as provided in
this Agreement, the Fund will pay you as of the last day of each month, a fee
equal to the annual rate of .20% of the average value of the daily net assets of
the Fund.
The total fees payable during each of the first and second halves of
each fiscal year of the Trust shall not exceed the semiannual total of the daily
fee accruals requested by you during the applicable six month period. The
average value of net assets shall be determined pursuant to the applicable
provisions of the Declaration of Trust of the Trust or a resolution of the
Board, if required. If, pursuant to such provisions, the determination of net
asset value of the Fund is suspended for any particular business day, then for
the purposes of this paragraph, the value of the net assets of the Fund as last
determined shall be deemed to be the value of the net assets as of the close of
the business day, or as of such other time as the value of the
- 32 -
<PAGE>
Fund's net assets may lawfully be determined, on that day. If the determination
of the net asset value of the Fund's shares has been suspended for a period
including such month, your compensation payable at the end of such month shall
be computed on the basis of the value of the net assets of the Fund as last
determined (whether during or prior to such month).
Your compensation with respect to each additional series of the Trust
effectively registered for sale in a public offering after the date of this
Agreement shall be determined by the Board, including a majority of the Trustees
who are not "interested persons" (as defined in the Investment Company Act of
1940) of you or of the Trust, and approved pursuant to the provisions of Section
15 of the Investment Company Act of 1940.
4. EXECUTION OF PURCHASE AND SALE ORDERS
In connection with purchases or sales of portfolio securities for the
account of the Fund, it is understood that you will arrange for the placing of
all orders for the purchase and sale of portfolio securities for the Fund's
accounts with brokers or dealers selected by you, subject to review of this
selection by the Board from time to time. You will be responsible for the
negotiation and the allocation of principal business and portfolio brokerage. In
the selection of such brokers or dealers and the placing of such orders, you are
directed at all times to seek for the Fund the best qualitative execution,
taking into account such factors as price (including the applicable brokerage
commission or dealer spread), the execution capability, financial responsibility
and responsiveness of the broker or dealer and the brokerage and research
services provided by the broker or dealer.
You should generally seek favorable prices and commission rates that
are reasonable in relation to the benefits received. In seeking best qualitative
execution, you are authorized to select brokers or dealers who also provide
brokerage and research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934) to the Fund and/or the other accounts over
which you exercise investment discretion. You are authorized to pay a broker or
dealer who provides such brokerage and research services a commission for
executing a portfolio transaction which is in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction if
you determine in good faith that the amount of the commission is reasonable in
relation to the value of the brokerage and research services provided by the
executing broker or dealer. The determination may be viewed in terms of either a
particular transaction or your overall responsibilities with respect to the Fund
and to accounts over which you exercise investment discretion. The Trust and you
understand that, although the information may be useful to the Fund and you, it
is
- 33 -
<PAGE>
not possible to place a dollar value on such information. The Board shall
periodically review the commissions paid by the Fund to determine if the
commissions paid over representative periods of time were reasonable in relation
to the benefits to the Fund.
Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc., and subject to seeking best qualitative execution,
you may give consideration to sales of shares of the Fund as a factor in the
selection of brokers and dealers to execute portfolio transactions of the Fund.
If any occasion should arise in which you give any advice to clients of
yours concerning the shares of the Fund, you will act solely as investment
counsel for such client and not in any way on behalf of the Trust. Your services
to the Fund pursuant to this Agreement are not to be deemed to be exclusive and
it is understood that you may render investment advice, management and other
services to others.
5. LIMITATION OF LIABILITY OF ADVISER
You (including your directors, officers, shareholders, employees,
control persons and affiliates of any thereof) shall not be liable for any error
of judgment or mistake of law or for any loss suffered by the Fund in connection
with the matters to which this Agreement relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence on your part in the
performance of your duties or from the reckless disregard by you of your
obligations and duties under this Agreement ("disabling conduct"). However, you
will not be indemnified for any liability unless (1) a final decision is made on
the merits by a court or other body before whom the proceeding was brought that
you were not liable by reason of disabling conduct, or (2) in the absence of
such a decision, a reasonable determination is made, based upon a review of the
facts, that you were not liable by reason of disabling conduct, by (a) the vote
of a majority of a quorum of trustees who are neither "interested persons" of
the Trust as defined in the Investment Company Act of 1940 nor parties to the
proceeding ("disinterested, non-party trustees"), or (b) an independent legal
counsel in a written opinion. The Fund will advance attorneys' fees or other
expenses incurred by you in defending a proceeding, upon the undertaking by or
on behalf of you to repay the advance unless it is ultimately determined that
you are entitled to indemnification, so long as you meet at least one of the
following as a condition to the advance: (1) you shall provide a security for
your undertaking, (2) the Fund shall be insured against losses arising by reason
of any lawful advances, or (3) a majority of a quorum of the disinterested,
non-party trustees of the Trust, or an independent legal counsel in a written
opinion, shall determine, based on a review of readily available facts (as
opposed to a full trial-
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type inquiry), that there is reason to believe that you ultimately will be found
entitled to indemnification. Any person employed by you who may also be or
become an employee of the Trust shall be deemed, when acting within the scope of
his employment by the Trust, to be acting in such employment solely for the
Trust and not as your employee or agent.
6. DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall be effective upon its execution, shall remain in
force for a period of two (2) years from that date and remain from year to year
thereafter, subject to annual approval by (i) the Board of the Trust or (ii) a
vote of a majority (as defined in the Investment Company Act of 1940) of the
outstanding voting securities of the Fund, provided that in either event
continuance is also approved by a majority of the trustees who are not
"interested persons" (as defined in the Investment Company Act of 1940) of you
or of the Trust, by a vote cast in person at a meeting called for the purpose of
voting such approval.
If the shareholders of the Fund fail to approve the Agreement in the
manner set forth above, upon approval of the Board, including a majority of the
trustees who are not interested persons of you or of the Trust, you may continue
to serve or act in such capacity for the Fund for the period of time (not
exceeding one hundred and twenty days after the termination of the Agreement)
pending required approval of the Agreement, of a new agreement with you or a
different adviser or other definitive action; provided that the compensation to
be paid by the Fund to you will be equal to the lesser of your actual costs
incurred in furnishing investment advisory services to the Fund or the amount
you would have received under this Agreement.
This Agreement may, on sixty days' written notice, be terminated at any
time without the payment of any penalty, by the Board, by a vote of a majority
of the outstanding voting securities of the Fund or by you. This Agreement shall
automatically terminate in the event of its assignment.
7. AMENDMENT OF THIS AGREEMENT
No provision of this Agreement may be changed, waived, discharged or
terminated orally, and no amendment of this Agreement shall be effective until
approved by vote of the holders of a majority of the outstanding voting
securities of the Fund and by the Board, including a majority of the trustees
who are not interested persons of you or of the Trust, cast in person at a
meeting called for the purpose of voting on such approval.
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8. LIMITATION OF LIABILITY
It is expressly agreed that the obligations of the Fund hereunder shall
not be binding upon any of the trustees, shareholders, nominees, officers,
agents or employees of the Trust, personally, but bind only the trust property
of the Fund, as provided in the Declaration of Trust of the Trust. The execution
and delivery of this Agreement have been authorized by the trustees of the Trust
and the shareholders of the Fund and signed by the officers of the Trust, acting
as such, and neither such authorization by such trustees and shareholders nor
such execution and delivery by such officers shall be deemed to have been made
by any of them individually or to impose any liability on any of them
personally, but shall bind only the trust property of the Fund as provided in
the Trust's Declaration of Trust.
9. MISCELLANEOUS
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same Agreement.
If you are in agreement with the foregoing, please sign the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Trust, whereupon this letter shall become a binding contract
upon the date thereof.
Yours very truly,
ATTEST: MIDWEST TRUST
________________________ By: _____________________________
Dated: , 1997
ACCEPTANCE
The foregoing Agreement is hereby accepted.
ATTEST: MIDWEST GROUP FINANCIAL SERVICES, INC.
________________________ By: _____________________________
Dated: , 1997
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EXHIBIT C
FORM OF
MANAGEMENT AGREEMENT:
GLOBAL BOND FUND
THIS MANAGEMENT AGREEMENT is made this day of , 1997, between Midwest
Trust (the "Trust"), a business trust organized under the laws of the State of
Massachusetts, and Midwest Group Financial Services, Inc. (the "Manager"), a
corporation organized under the laws of the State of Ohio.
WHEREAS, the Trust has been organized to operate as an investment
company registered under the Investment Company Act of 1940, as amended (the
"Act");
WHEREAS, the Trust's shares of beneficial interest are divided into
separate series and each such share of a series represents an undivided interest
in the assets, subject to the liabilities, located to that series, and each
series has separate investment objectives and policies; and
WHEREAS, the Global Bond Fund (the "Fund"), a series of the Trust has
been created for the purpose of investing and reinvesting its assets in
securities pursuant to the investment objectives and policies as set forth in
its registration statements under the Act and the Securities Act of 1933
("Registration Statements"), as heretofore amended and supplemented; and the
Trust desires to avail itself of the services, information, advice, assistance
and facilities of a manager and to have a manager provide or perform for it
various management, statistical, portfolio adviser selection and other services
for the Fund; and
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WHEREAS, the Manager is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended;
NOW, THEREFORE, the Trust and Manager agree as follows:
1. Employment of the Manager. The Trust hereby employs the
Manager to manage the investment and reinvestment of the assets of the Fund in
the manner set forth in subparagraph 2B of this Agreement, subject to the
direction of the Board of Trustees and the officers of the Trust, for the
period, in the manner, and on the terms hereinafter set forth. The Manager
hereby accepts such employment and agrees during such period to render the
services and to assume the obligations herein set forth. The Manager shall for
all purposes herein be deemed to be an independent contractor and shall, except
as expressly provided or authorized (whether herein or otherwise), have no
authority to act for or represent the Fund in any way or otherwise be deemed an
agent of the Fund.
2. Obligation of and Services to be Provided by the Manager.
The Manager undertakes to provide the services hereinafter set forth
and to assume the following obligations:
A. Corporate Management and Administrative Services.
The Manager shall furnish to the Fund, or retain another
party or parties to furnish, the following described services
to the Fund: (i) office space, which may be space within the
offices of the Manager or in such other place as may be
agreed upon from time to time, and (ii) office furnishings,
facilities and equipment as may be reasonably required for
managing and administering the operations and conducting the
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business of the Fund, including complying with the securities,
tax and other reporting requirements of the United States and
the various states in which the Fund does business, conducting
correspondence and other communications with the shareholders
of the Fund, and maintaining or supervising the maintenance of
all records in connection with the investment and business
activities of the Fund.
B. Investment Management Services.
(a) The Manager shall have overall supervisory
responsibility for the general management and
investment of the assets and portfolio securities of
the Fund subject to and in accordance with the
investment objectives and policies of the Fund, and
any directions which the Trust's Board of Trustees
may issue to the Manager from time to time.
(b) The Manager shall provide overall investment programs
and strategies for the Fund, shall revise such
programs as necessary and shall monitor and report
periodically to the Board of Trustees concerning the
implementation of the programs.
(c) The Manager, with the approval of the Board of
Trustees of the Trust as to particular appointments,
intends to (i) appoint one or more persons or
companies (the "Adviser") and, subject to the terms
and conditions of this Agreement, the Adviser shall
have full investment discretion and shall make all
determinations with respect to the investment of the
Fund's assets and the
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<PAGE>
purchase and sale of portfolio securities with those
assets, and (ii) take such steps as may be necessary
to implement such appointments. The Manager shall be
solely responsible for paying the fees and expenses
of the Adviser for its services to the Fund. The
Manager shall not be responsible or liable for the
investment merits of any decision by the Adviser to
purchase, hold or sell a portfolio security for the
Fund.
(d) The Manager shall evaluate advisers and shall
recommend to the Board of Trustees the Adviser which
the Manager believes is best suited to invest the
assets of the Fund; shall monitor and evaluate the
investment performance of the Fund's Adviser; shall
recommend changes in the Adviser when appropriate;
shall coordinate the investment activities of the
Adviser to ensure compliance with applicable
restrictions and limitations applicable to the Fund;
and shall compensate the Adviser.
(e) The Manager shall render regular reports to the
Trust, at regular meetings of the Board of Trustees,
of, among other things, the portfolio investments of
the Fund and measurement and analysis of the results
achieved by the Fund.
(f) The Manager shall employ or provide and compensate
the executive, administrative, secretarial and
clerical personnel necessary to provide the services
set forth in this subparagraph 2B, and shall bear the
expense
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thereof, except as may otherwise be provided in
Section 4 of this Agreement. The Manager shall also
compensate all officers and employees of the Fund who
are officers or employees of the Manager.
(g) The Manager shall pay all advertising and promotion
expenses incurred in connection with the sale or
distribution of the Fund's shares to the extent such
expenses are not assumed by the Fund under its Plans
of Distribution.
C. Provision of Information Necessary for Preparation of
Securities Registration Statements, Amendments and Other
Materials.
The Manager will make available and provide financial,
accounting and statistical information required by the Fund in
the preparation of registration statements, reports and other
documents required by federal and state securities laws, and
such information as the Fund may reasonably request for use in
the preparation of registration statements, reports and other
documents required by federal and state securities laws.
D. Other Obligations and Services.
The Manager shall make available its officers and employees to
the Board of Trustees and officers of the Trust for
consultation and discussions regarding the administration and
management of the Fund and its investment activities.
3. Execution and Allocation of Portfolio Brokerage Commissions.
The Adviser, subject to the limitations contained in this paragraph
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3, shall place, on behalf of the Fund, orders for the execution of portfolio
transactions. The Adviser is not authorized by the Fund to take any action,
including the purchase or sale of securities for the Fund's account, (a) in
contravention of (i) any investment restrictions set forth in the Act and the
rules thereunder, (ii) specific instructions adopted by the Board of Trustees
and communicated to the Adviser, (iii) the investment objectives, policies and
restrictions of the Fund as set forth in the Trust's Registration Statement, or
(iv) instructions from the Manager communicated to the Adviser, or (b) which
would have the effect of causing the Fund to fail to qualify or to cease to
qualify as a regulated investment company under the Internal Revenue Code of
1986, as amended, or any succeeding statute.
Subject to the foregoing, the Adviser shall determine the securities to
be purchased or sold by the Fund and will place orders pursuant to its
determination with or through such persons, brokers or dealers in conformity
with the policy with respect to brokerage as set forth in the Trust's
Registration Statement or as the Board of Trustees may direct from time to time.
It is recognized that, in providing the Fund with investment supervision of the
placing of orders for portfolio transactions, the Adviser will give primary
consideration to securing the best qualitative execution, taking into account
such factors as price (including the applicable brokerage commission or dealer
spread), the execution capability, financial responsibility and responsiveness
of the broker or dealer and the brokerage and research services provided by the
broker or dealer. Consistent with this policy, the Adviser may select brokers
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<PAGE>
or dealers who also provide brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934) to other Funds
and/or the other accounts over which it exercises investment discretion. It is
understood that neither the Fund, the Manager nor the Adviser have adopted a
formula for allocation of the Fund's investment transaction business. It is also
understood that it is desirable for the Fund that the Adviser have access to
supplemental investment and market research and security and economic analyses
provided by certain brokers who may execute brokerage transactions at a higher
commission to the Fund than may result when allocating brokerage to other
brokers on the basis of seeking the lowest commission. Therefore, the Adviser is
authorized to place orders for the purchase and sale of securities for the Fund
with such certain brokers, subject to review by the Trust's Board of Trustees
from time to time with respect to the extent and continuation of this practice,
provided that the Adviser determines in good faith that the amount of the
commission is reasonable in relation to the value of the brokerage and research
services provided by the executing broker or dealer. The determination may be
viewed in terms of either a particular transaction or the Adviser's overall
responsibilities with respect to the Fund and to other accounts over which it
exercises investment discretion. It is understood that although the information
may be useful to the Trust and the Adviser, it is not possible to place a dollar
value on such information. Consistent with the Rules of Fair Practice of the
National Association of Securities Dealers, Inc., and subject to seeking best
qualitative execution, the Adviser may
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<PAGE>
give consideration to sales of shares of the Fund as a factor in the selection
of brokers and dealers to execute portfolio transactions of the Fund.
On occasions when the Adviser deems the purchase or sale of a security
to be in the best interest of the Fund as well as other clients, the Adviser, to
the extent permitted by applicable laws and regulations, may, but shall be under
no obligation to, aggregate the securities to be sold or purchased in order to
obtain the most favorable price or lower brokerage commissions and efficient
execution. In such event, allocation of the securities so purchased or sold, as
well as expenses incurred in the transaction, will be made by the Adviser in the
manner it considers to be the most equitable and consistent with its fiduciary
obligations to the Trust with respect to the Fund and to such other clients.
The Adviser will not execute any portfolio transactions for the Fund's
account with a broker or dealer which is an "affiliated person" (as defined in
the Act) of the Trust, the Manager or the Adviser without the prior written
approval of the Manager. The Manager agrees that it will provide the Adviser
with a list of brokers and dealers which are "affiliated persons" of the Trust,
the Manager or the Adviser.
The Adviser shall render regular reports to the Trust of the total
brokerage business placed by the Fund and the manner in which the allocation has
been accomplished.
4. Expenses of the Fund. It is understood that the Fund will
pay, or that the Fund will enter into arrangements that require
third parties to pay, all its expenses other than those expressly
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<PAGE>
assumed by the Manager herein, which expenses payable by the Fund
shall include:
A. Expenses of all audits by independent public accountants;
B. Expenses of transfer agent, dividend disbursing agent,
accounting and pricing agent and shareholder recordkeeping
services;
C. Expenses of custodial services including recordkeeping
services provided by the custodian;
D. Expenses of obtaining security valuation quotations for
calculating the value of the Fund's net assets;
E. Salaries and other compensation of any of its executive
officers and employees, if any, who are not officers,
directors, stockholders or employees of the Manager or the
Adviser, except that the Fund will pay the compensation and
expenses of the Chief Financial Officer of the Trust;
F. Taxes or governmental fees levied against the Fund;
G. Brokerage fees and commissions in connection with the
purchase and sale of the Fund's portfolio securities;
H. Costs, including the interest expense, of borrowing money;
I. Costs and/or fees incident to Board of Trustee and
shareholder meetings, the preparation and mailings of
prospectuses, reports and notices to the existing shareholders
of the Fund, the filing of reports with regulatory bodies, the
maintenance of the Trust's existence as a business trust,
membership in investment company organizations, and the
registration of shares with federal and state securities
authorities;
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<PAGE>
J. Legal fees, including the legal fees related to the
registration and continued qualification of the Fund's shares
for sale and legal fees arising from litigation to which the
Trust may be a party and indemnification of the Trust's
officers and trustees with respect thereto;
K. Costs of printing share certificates (in the event such
certificates are issued) representing shares of the Fund;
L. Trustees' fees and expenses of Trustees who are not
directors, officers, employees or stockholders of the
Manager, the Adviser or any of their affiliates; and
M. The Fund's pro rata portion of the fidelity bond required by
Section 17(g) of the Act and other insurance premiums.
5. Activities and Affiliates of the Manager.
A. The services of the Manager hereunder are not to be deemed
exclusive, and the Manager and any of its affiliates shall be
free to render similar services to others. The Manager shall
use the same skill and care in the management of the Fund's
assets as it uses in the administration of other accounts to
which it provides asset management, consulting and portfolio
manager selection services, but shall not be obligated to give
the Fund more favorable or preferential treatment vis-a-vis
its other clients.
B. Subject to and in accordance with the Declaration of Trust
and Bylaws of the Trust and to Section 10(a) of the Act, it
is understood that Trustees, officers and agents of the Trust
and shareholders of the Fund are or may be interested in the
Manager or its affiliates as directors, officers, agents or
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<PAGE>
stockholders of the Manager or its affiliates; that directors,
officers, agents and stockholders of the Manager or its
affiliates are or may be interested in the Trust as Trustees,
officers, agents, shareholders or otherwise; that the Manager
or its affiliates may be interested in the Trust as
shareholders or otherwise; and that the effect of any such
interests shall be governed by said Declaration of Trust,
Bylaws and the Act.
6. Compensation of the Manager. For all services to be rendered and
payments made as provided in this Agreement, the Fund will pay the Manager a
daily fee equal to the annual rate of 70/100 of 1% of the value of the daily net
assets of the Fund up to and including $100,000,000 and 60/100 of 1% of such
assets in excess of $100,000,000. Manager's fee shall be payable monthly and
shall be due with respect to any month as of the first business day following
the end of such month.
The value of the daily net assets of the Fund shall be determined
pursuant to the applicable provisions of the Declaration of Trust and to
resolutions of the Board of Trustees of the Trust. If, pursuant to such
provisions, the determination of net asset value is suspended for any particular
business day, then for the purposes of this paragraph 6, the value of the net
assets of the Fund as last determined shall be deemed to be the value of its net
assets as of the close of business on that day, or as of such other time as the
value of the Fund's net assets may lawfully be determined on that day. If the
determination of the net asset value of the Fund's shares has been suspended for
a period including such month, the
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<PAGE>
Manager's compensation payable for such month shall be computed on the basis of
the value of the net assets of the Fund as last determined (whether during or
prior to such month).
7. Liabilities of the Manager.
A. Except as provided below in this paragraph 7, in the absence
of willful misfeasance, bad faith, gross negligence, or
reckless disregard of obligations or duties hereunder on the
part of the Manager ("disabling conduct"), the Manager shall
not be subject to liability to the Fund or to any shareholder
of the Fund for any act or omission in the course of, or
connected with, rendering services hereunder or for any
losses that may be sustained in the purchase, holding or sale
of any security.
B. The Manager shall not be indemnified for any liability unless
(i) a final decision is made on the merits by a court or
other body before whom the proceeding was brought that the
Manager was not liable by reason of disabling conduct, or
(ii) in the absence of such a decision, a reasonable
determination is made, based upon a review of the facts, that
the Manager was not liable by reason of disabling conduct, by
(a) the vote of a majority of a quorum of the Trustees who
are not interested persons of the Trust or the Manager or (b)
an independent legal counsel in a written opinion. The Fund
will advance attorneys' fees or other expenses incurred by
the Manager in defending a proceeding, upon the undertaking
by or on behalf of the Manager to repay the advance unless it
is ultimately determined that the Manager is entitled to
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<PAGE>
indemnification, so long as the Manager meets at least one of
the following as a condition to the advance: (i) the Manager
shall provide a security for its undertaking, (ii) the Fund
shall be insured against losses arising by reason of any
lawful advances, or (iii) a majority of a quorum of the
Trustees who are not interested persons of the Trust or the
Manager, or an independent legal counsel in a written opinion,
shall determine, based on a review of the readily available
facts (as opposed to a full trial-type inquiry), that there is
reason to believe that the Manger ultimately will be found
entitled to indemnification. Any person employed by the
Manager who may also be or become an employee of the Trust
shall be deemed, when acting within the scope of his
employment by the Trust, to be acting in such employment
solely for the Trust and not as the Manager's employee or
agent.
C. No provision of this Agreement shall be construed to protect
any Trustee, director, officer or agent of the Trust or the
Manager from liability in violation of Sections 17(h) and (i)
of the Act.
8. Renewal and Termination.
A. This Agreement shall become effective upon its execution,
shall remain in force for a period of two (2) years from that
date and remain in force from year to year thereafter, but
only so long as such continuance is specifically approved at
least annually by the vote of a majority of the Trustees who
are not interested persons of the Trust, the Manager or the
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Adviser, cast in person at a meeting called for the purpose of
voting on such approval and by a vote of the Board of Trustees
or of a majority of the outstanding voting securities. The
aforesaid provision that this Agreement may be continued
"annually" shall be construed in a manner consistent with the
Act and the rules and regulations thereunder.
B. This Agreement:
(a) may at any time be terminated without the payment of
any penalty either by vote of the Board of Trustees
of the Trust or by vote of a majority of the
outstanding voting securities of the Fund, on sixty
(60) days' written notice to the Manager;
(b) shall immediately terminate in the event of its
assignment; and
(c) may be terminated by the Manager on sixty (60) days'
written notice to the Trust.
C. As used in this Section 8, the terms "assignment," "interested
person" and "vote of a majority of the outstanding voting
securities" shall have the meanings set forth in the Act and
the rules and regulations thereunder.
D. Any notice under this Agreement shall be given in writing
addressed and delivered or mailed postpaid, to the other
party to this Agreement at its principal place of business.
9. Severability. If any provision of this Agreement shall be
held or made invalid by a court decision, statute, rule or
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otherwise, the remainder of this Agreement shall not be affected
thereby.
10. Limitation of Liability. It is expressly agreed that the
obligations of the Fund hereunder shall not be binding upon any of the Trustees,
shareholders, nominees, officers, agents or employees of the Trust, personally,
but bind only the trust property of the Fund, as provided in the Declaration of
Trust of the Trust. The execution and delivery of this Agreement have been
authorized by the Trustees of the Trust and the shareholders of the Fund and
signed by the officers of the Trust, acting as such, and neither such
authorization by such Trustees and shareholders nor such execution and delivery
by such officers shall be deemed to have been made by any of them individually
or to impose any liability on any of them personally, but shall bind only the
trust property of the Fund as provided in the Trust's Declaration of Trust.
11. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, and no amendment of this
Agreement shall be effective until approved by vote of the holders of a majority
of the outstanding voting securities of the Fund and by the Board of Trustees,
including a majority of the Trustees who are not interested persons of the
Manager or of the Trust, cast in person at a meeting called for the purpose of
voting on such approval.
12. Governing Law. To the extent that state law has not been
preempted by the provisions of any law of the United States
heretofore or hereafter enacted, as the same may be amended from
time to time, this Agreement shall be administered, construed and
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enforced according to the laws of the State of Ohio.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed, as of the day and year first written above.
MIDWEST TRUST
ATTEST: By: __________________________________
Title: President
____________________________
MIDWEST GROUP FINANCIAL SERVICES, INC
____________________________ By: __________________________________
Title: President
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EXHIBIT D
FORM OF
SUBADVISORY AGREEMENT:
GLOBAL BOND FUND
Rogge Global Partners plc
5-6 St. Andrew's Hill
London EC4V 5BY England
Gentlemen:
Midwest Trust (the "Trust") is a diversified open-end management
investment company registered under the Investment Company Act of 1940, as
amended (the "Act"), and subject to the rules and regulations promulgated
thereunder. The Trust's shares of beneficial interest are divided into separate
series or funds. Each such share of a fund represents an undivided interest in
the assets, subject to the liabilities, allocated to that fund. Each fund has
separate investment objectives and policies. The Global Bond Fund (the "Fund")
has been established as a series of the Trust. Midwest Group Financial Services,
Inc. (the "Manager") acts as the investment manager for the Fund pursuant to the
terms of a Management Agreement. The Manager is responsible for the coordination
of investment of the Fund's assets in portfolio securities. However, specific
portfolio purchases and sales for the investment portfolio of the Fund are to be
made by advisory organizations recommended by the Manager and approved by the
Board of Trustees of the Trust.
1. Appointment as an Adviser. The Trust being duly authorized
hereby appoints and employs Rogge Global Partners, plc ("the
Adviser") as the discretionary portfolio manager of the Fund, on the
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terms and conditions set forth herein.
2. Acceptance of Appointment; Standard of Performance. The
Adviser accepts the appointment as the discretionary portfolio
manager and agrees to use its best professional judgment to make
timely investment decisions for the Fund in accordance with the
provisions of this Agreement.
3. Portfolio Management Services of Adviser. The Adviser is hereby
employed and authorized to select portfolio securities for investment by the
Fund, to purchase and sell securities of the Fund, and upon making any purchase
or sale decision, to place orders for the execution of such portfolio
transactions in accordance with paragraphs 5 and 6 hereof. In providing
portfolio management services to the Fund, the Adviser shall be subject to such
investment restrictions as are set forth in the Act and the rules thereunder,
the Internal Revenue Code, applicable state securities laws, the supervision and
control of the Board of Trustees of the Trust, such specific instructions as the
Board of Trustees may adopt and communicate to the Adviser, the investment
objectives, policies and restrictions of the Fund furnished pursuant to
paragraph 4, the provisions of Schedule A hereto and instructions from the
Manager. The Adviser is not authorized by the Fund to take any action, including
the purchase or sale of securities for the Fund, in contravention of any
restriction, limitation, objective, policy or instruction described in the
previous sentence. The Adviser shall maintain on behalf of the Fund the records
listed in Schedule A hereto (as amended from time to time). At the Trust's
reasonable request, the Adviser will consult with the Manager with respect to
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<PAGE>
any decision made by it with respect to the investments of the Fund.
4. Investment Objectives, Policies and Restrictions. The Trust will
provide the Adviser with the statement of investment objectives, policies and
restrictions applicable to the Fund as contained in the Fund's registration
statements under the Act and the Securities Act of 1933, and any instructions
adopted by the Board of Trustees supplemental thereto. The Trust will provide
the Adviser with such further information concerning the investment objectives,
policies and restrictions applicable thereto as the Adviser may from time to
time reasonably request. The Trust retains the right, on written notice to the
Adviser from the Trust or the Manager, to modify any such objectives, policies
or restrictions in any manner at any time.
5. Transaction Procedures. All transactions will be consummated by
payment to or delivery by The Northern Trust Company or any successor custodian
(the "Custodian"), or such depositories or agents as may be designated by the
Custodian in writing, as custodian for the Fund, of all cash and/or securities
due to or from the Fund, and the Adviser shall not have possession or custody
thereof. The Adviser shall advise the Custodian and confirm in writing to the
Trust and to the Manager all investment orders for the Fund placed by it with
brokers and dealers. The Adviser shall issue to the Custodian such instructions
as may be appropriate in connection with the settlement of any transaction
initiated by the Adviser. It shall be the responsibility of the Adviser to take
appropriate action if the Custodian fails to confirm in writing proper execution
of the instructions.
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6. Allocation of Brokerage. The Adviser shall have the
authority and discretion to select brokers and dealers to execute
portfolio transactions initiated by the Adviser, and for the
selection of the markets on or in which the transactions will be
executed.
A. In doing so, the Adviser will give primary consideration to
securing the best qualitative execution, taking into account such factors as
price (including the applicable brokerage commission or dealer spread), the
execution capability, financial responsibility and responsiveness of the broker
or dealer and the brokerage and research services provided by the broker or
dealer. Consistent with this policy, the Adviser may select brokers or dealers
who also provide brokerage and research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934) to the other accounts over
which it exercises investment discretion. It is understood that neither the
Fund, the Manager nor the Adviser have adopted a formula for allocation of the
Fund's investment transaction business. It is also understood that it is
desirable for the Fund that the Adviser have access to supplemental investment
and market research and security and economic analyses provided by certain
brokers who may execute brokerage transactions at a higher commission to the
Fund than may result when allocating brokerage to other brokers on the basis of
seeking the lowest commission. Therefore, the Adviser is authorized to place
orders for the purchase and sale of securities for the Fund with such certain
brokers, subject to review by the Trust's Board of Trustees from time to time
with respect to the extent and continuation of this
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practice, provided that the Adviser determines in good faith that the amount of
the commission is reasonable in relation to the value of the brokerage and
research services provided by the executing broker or dealer. The determination
may be viewed in terms of either a particular transaction or the Adviser's
overall responsibilities with respect to the Fund and to the other accounts over
which it exercises investment discretion. It is understood that although the
information may be useful to the Trust and the Adviser, it is not possible to
place a dollar value on such information. Consistent with the Rules of Fair
Practice of the National Association of Securities Dealers, Inc., and subject to
seeking best qualitative execution, the Adviser may give consideration to sales
of shares of the Fund as a factor in the selection of brokers and dealers to
execute portfolio transactions of the Fund.
On occasions when the Adviser deems the purchase or sale of a security
to be in the best interest of the Fund as well as other clients, the Adviser, to
the extent permitted by applicable laws and regulations, may, but shall be under
no obligation to, aggregate the securities to be sold or purchased in order to
obtain the most favorable price or lower brokerage commissions and efficient
execution. In such event, allocation of the securities so purchased or sold, as
well as expenses incurred in the transaction, will be made by the Adviser in the
manner it considers to be the most equitable and consistent with its fiduciary
obligations to the Fund with respect to the Fund and to such other clients.
For each fiscal quarter of the Fund, the Adviser shall prepare and
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render reports to the Manager and the Trust's Board of Trustees of the total
brokerage business placed and the manner in which the allocation has been
accomplished. Such reports shall set forth at a minimum the information required
to be maintained by Rule 31a- 1(b)(9) under the Act.
B. Adviser agrees that it will not execute any portfolio
transactions for the Fund's account with a broker or dealer which is an
"affiliated person" (as defined in the Act) of the Trust, the Manager, the
Adviser or any portfolio manager of the Trust without the prior written approval
of the Manager. The Manager agrees that it will provide the Adviser with a list
of brokers and dealers which are "affiliated persons" of the Trust, the Manager
or the Adviser.
7. Proxies. The Trust will vote all proxies solicited by or
with respect to the issuers of securities in which assets of the
Fund may be invested from time to time. At the Fund's request, the
Adviser shall provide the Trust with its recommendations as to the
voting of such proxies.
8. Reports to the Adviser. The Trust will provide the Adviser
with such periodic reports concerning the status of the Fund as the
Adviser may reasonably request.
9. Fees for Services. For the services provided to the Fund, the
Manager shall pay the Adviser a fee equal to the annual rate of 35/100 of 1% of
the average value of the daily net assets of the Fund up to and including
$100,000,000 and 30/100 of 1% of such assets in excess of $100,000,000. The
Adviser agrees to waive all advisory fees for the first sixty days of the Fund's
operations. Thereafter, however, the Adviser shall not be required to waive any
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portion of its fees if not required by an applicable statute or
regulation.
The Adviser's fees shall be payable monthly within ten days following
the end of each month. Pursuant to the provisions of the Management Agreement
between the Trust and the Manager, the Manager is solely responsible for the
payment of fees to the Adviser, and the Adviser agrees to seek payment of the
Adviser's fees solely from the Manager.
10. Other Investment Activities of the Adviser. The Trust acknowledges
that the Adviser or one or more of its affiliates may have investment
responsibilities or render investment advice to or perform other investment
advisory services for other individuals or entities and that the Adviser, its
affiliates or any of its or their directors, officers, agents or employees may
buy, sell or trade in any securities for its or their respective accounts
("Affiliated Accounts"). Subject to the provisions of paragraph 2 hereof, the
Trust agrees that the Adviser or its affiliates may give advice or exercise
investment responsibility and take such other action with respect to other
Affiliated Accounts which may differ from the advice given or the timing or
nature of action taken with respect to the Fund, provided that the Adviser acts
in good faith, and provided further, that it is the Adviser's policy to
allocate, within its reasonable discretion, investment opportunities to the Fund
over a period of time on a fair and equitable basis relative to the Affiliated
Accounts, taking into account the investment objectives and policies of the Fund
and any specific investment restrictions
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applicable thereto. The Trust acknowledges that one or more of the Affiliated
Accounts may at any time hold, acquire, increase, decrease, dispose of or
otherwise deal with positions in investments in which the Fund may have an
interest from time to time, whether in transactions which involve the Fund or
otherwise. The Adviser shall have no obligation to acquire for the Fund a
position in any investment which any Affiliated Account may acquire, and the
Trust shall have no first refusal, co-investment or other rights in respect of
any such investment, either for the Fund or otherwise.
11. Certificate of Authority. The Trust, the Manager and the Adviser
shall furnish to each other from time to time certified copies of the
resolutions of their Board of Trustees or Board of Directors or executive
committees, as the case may be, evidencing the authority of officers and
employees who are authorized to act on behalf of the Trust, the Fund, the
Manager and/or the Adviser.
12. Limitation of Liability. The Adviser shall not be liable for
any action taken, omitted or suffered to be taken by it in its
reasonable judgment, in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred
upon it by this Agreement, or in accordance with (or in the absence
of) specific directions or instructions from the Trust, provided,
however, that such acts or omissions shall not have resulted from
the Adviser's willful misfeasance, bad faith or gross negligence, a
violation of the standard of care established by and applicable to
the Adviser in its actions under this Agreement or breach of its
duty or of its obligations hereunder. Nothing in this paragraph 12
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shall be construed in a manner inconsistent with Sections 17(h) and
(i) of the Act.
13. Confidentiality. Subject to the duty of the Adviser and the
Trust to comply with applicable law, including any demand of any
regulatory or taxing authority having jurisdiction, the parties
hereto shall treat as confidential all information pertaining to the
Fund and the actions of the Adviser and the Trust in respect
thereof.
14. Assignment. No assignment of this Agreement shall be made by the
Adviser, and this Agreement shall terminate automatically in the event of such
assignment. The Adviser shall notify the Trust in writing sufficiently in
advance of any proposed change of control, as defined in Section 2(a)(9) of the
Act, as will enable the Trust to consider whether an assignment will occur, and
to take the steps necessary to enter into a new contract with the Adviser.
15. Representations, Warranties and Agreements of the Trust. The
Trust represents, warrants and agrees that:
A. The Adviser has been duly appointed by the Board of
Trustees of the Trust to provide investment services to the Fund as
contemplated hereby.
B. The Trust will deliver to the Adviser a true and complete
copy of its then current prospectus and statement of additional information as
effective from time to time and such other documents or instruments governing
the investments of the Fund and such other information as is necessary for the
Adviser to carry out its obligations under this Agreement.
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C. The Trust is currently in compliance and shall at all
times comply with the requirements imposed upon the Fund by
applicable laws and regulations.
16. Representations, Warranties and Agreements of the Adviser.
The Adviser represents, warrants and agrees that:
A. The Adviser is registered as an "investment adviser"
under the Investment Advisers Act of 1940.
B. The Adviser will maintain, keep current and preserve on
behalf of the Fund, in the manner and for the time periods required or permitted
by the Act, the records identified in Schedule A. The Adviser agrees that such
records (unless otherwise indicated on Schedule A) are the property of the
Trust, and will be surrendered to the Trust promptly upon request.
C. The Adviser will complete such reports concerning purchases
or sales of securities on behalf of the Fund as the Manager or the Trust may
from time to time require to ensure compliance with the Act, the Internal
Revenue Code and applicable state securities laws.
D. The Adviser will adopt a written code of ethics complying
with the requirements of Rule 17j-1 under the Act and will provide the Trust
with a copy of the code of ethics and evidence of its adoption. Within
forty-five (45) days of the end of the last calendar quarter of each year while
this Agreement is in effect, the president or a vice president of the Adviser
shall certify to the Trust that the Adviser has complied with the requirements
of Rule 17j-1 during the previous year and that there has been no violation
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of the Adviser's code of ethics or, if such a violation has occurred, that
appropriate action was taken in response to such violation. Upon the written
request of the Trust, the Adviser shall submit to the Trust the reports required
to be made to the Adviser by Rule 17j-1(c)(1).
E. The Adviser will promptly after filing with the
Securities and Exchange Commission an amendment to its Form ADV
furnish a copy of such amendment to the Trust and to the Manager.
F. Upon request of the Trust, the Adviser will provide
assistance to the Custodian in the collection of income due or payable to the
Fund. With respect to income from foreign sources, the Adviser will undertake
any reasonable procedural steps required to reduce, eliminate or reclaim
non-U.S. withholding taxes under the terms of applicable United States income
tax treaties.
G. The Adviser will immediately notify the Trust and the
Manager of the occurrence of any event which would disqualify the Adviser from
serving as an investment adviser of an investment company pursuant to Section
9(a) of the Act or otherwise.
17. Amendment. This Agreement may be amended at any time, but only by
written agreement between the Adviser and the Trust, which amendment, other than
amendments to Schedule A, is subject to the approval of the Board of Trustees
and the shareholders of the Fund in the manner required by the Act and the rules
thereunder, subject to any applicable exemptive order of the Securities and
Exchange Commission modifying the provisions of the Act with respect to approval
of amendments to this Agreement.
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18. Effective Date; Term. This Agreement shall become effective on the
date of its execution and shall remain in force for a period of two (2) years
from that date; and from year to year thereafter but only so long as such
continuance is specifically approved at least annually by the vote of a majority
of the Trustees who are not interested persons of the Trust, the Manager or the
Adviser, cast in person at a meeting called for the purpose of voting on such
approval, and by a vote of the Board of Trustees or of a majority of the
outstanding voting securities of the Fund. The aforesaid requirement that this
Agreement may be continued "annually" shall be construed in a manner consistent
with the Act and the rules and regulations thereunder.
19. Termination. This Agreement may be terminated by either party
hereto, without the payment of any penalty, immediately upon written notice to
the other in the event of a breach of any provision thereof by the party so
notified, or otherwise upon sixty (60) days' written notice to the other, but
any such termination shall not affect the status, obligations or liabilities of
any party hereto to the other.
20. Shareholder Liability. The Adviser is hereby expressly put on
notice of the limitation of shareholder liability as set forth in the
Declaration of Trust of the Trust and agrees that obligations assumed by the
Trust pursuant to this Agreement shall be limited in all cases to the Fund and
its assets. The Adviser agrees that it shall not seek satisfaction of any such
obligations from the shareholders or any individual shareholder of the Fund, nor
from the Trustees or any individual Trustee of the Trust.
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21. Definitions. As used in paragraphs 14 and 18 of this
Agreement, the terms "assignment," interested person" and "vote of a
majority of the outstanding voting securities" shall have the
meanings set forth in the Act and the rules and regulations
thereunder.
22. Applicable Law. To the extent that state law is not
preempted by the provisions of any law of the United States
heretofore or hereafter enacted, as the same may be amended from
time to time, this Agreement shall be administered, construed and
enforced according to the laws of the State of Ohio.
MIDWEST GROUP FINANCIAL MIDWEST TRUST
SERVICES, INC.
By: ___________________________ By: __________________________
Title: President Title: President
Date: , 1997 Date: , 1997
----------- -----------
ACCEPTANCE
The foregoing Agreement is hereby accepted.
ROGGE GLOBAL PARTNERS, plc
By: _________________________
Title: _______________________
Date: _________________, 1997
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SCHEDULE A
RECORDS TO BE MAINTAINED BY THE ADVISER
1. (Rule 31a-1(b)(5) and (6)) A record of each brokerage order, and all
other portfolio purchases or sales, given by the Adviser on behalf of
the Fund for, or in connection with, the purchase or sale of
securities, whether executed or unexecuted. Such records shall include:
A. The name of the broker;
B. The terms and conditions of the order and of any modification
or cancellation thereof;
C. The time of entry or cancellation;
D. The price at which executed;
E. The time of receipt of a report of execution; and
F. The name of the person who placed the order on behalf of the
Fund.
2. (Rule 31a-1(b)(9)) A record for each fiscal quarter, completed within
ten (10) days after the end of the quarter, showing specifically the
basis or bases upon which the allocation of orders for the purchase and
sale of portfolio securities to named brokers or dealers was effected,
and the division of brokerage commissions or other compensation on such
purchase and sale orders. Such record:
A. Shall include the consideration given to:
(i) The sale of shares of the Fund by brokers or dealers.
(ii) The supplying of services or benefits by brokers or
dealers to:
(a) The Trust;
(b) the Manager;
(c) the Adviser;
(d) any other portfolio adviser of the Trust; and
(e) any person affiliated with the foregoing
persons.
(iii) Any other consideration other than the technical
qualifications of the brokers and dealers as such.
B. Shall show the nature of the services or benefits made
available.
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C. Shall describe in detail the application of any general or
specific formula or other determinant used in arriving at such
allocation of purchase and sale orders and such division of
brokerage commissions or other compensation.
D. The name of the person responsible for making the
determination of such allocation and such division of
brokerage commissions or other compensation.
3. (Rule 31a-1(b)(10)) A record in the form of an appropriate
memorandum identifying the person or persons, committees or
groups authorizing the purchase or sale of portfolio
securities. Where an authorization is made by a committee or
group, a record shall be kept of the names of its members who
participate in the authorization. There shall be retained as
part of this record: any memorandum, recommendation or
instruction supporting or authorizing the purchase or sale of
portfolio securities and such other information as is
appropriate to support the authorization.*
4. (Rule 31a-1(f)) Such accounts, books and other documents as are
required to be maintained by registered investment advisers by rules
adopted under Section 204 of the Investment Advisers Act of 1940, to
the extent such records are necessary or appropriate to record the
Adviser's transactions with respect to the Fund.
*Such information might include: the current Form 10-K, annual and
quarterly reports, press releases, reports by analysts and from brokerage firms
(including their recommendation; i.e., buy, sell, hold) or any internal reports
or portfolio adviser reviews.
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