<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 21, 1999
1933 ACT REGISTRATION NO. 2-78808
1940 ACT REGISTRATION NO. 811-3541
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933 [ ]
PRE-EFFECTIVE AMENDMENT NO. [ ]
POST-EFFECTIVE AMENDMENT NO. 34 [X]
AND/OR
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [ ]
AMENDMENT NO. 35 [X]
(Check appropriate box or boxes)
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ASSET MANAGEMENT FUND
(Exact name of Registrant as specified in Charter)
230 WEST MONROE STREET, CHICAGO, ILLINOIS 60606
(Address of principal executive offices) (Zip code)
Registrant's Telephone Number, including Area Code: 312-644-3100
EDWARD E. SAMMONS, JR. with a copy to:
PRESIDENT AND TREASURER CATHY G. O'KELLY, ESQ.
ASSET MANAGEMENT FUND, INC. VEDDER, PRICE, KAUFMAN & KAMMHOLZ
230 WEST MONROE STREET 222 NORTH LASALLE STREET
CHICAGO, ILLINOIS 60606 CHICAGO, ILLINOIS 60601
(Name and address of agent for service)
It is proposed that this filing will become effective (check appropriate box)
[X] immediately upon filing pursuant to paragraph (b); or
[ ] on (date) pursuant to paragraph (b); or
[ ] 60 days after filing pursuant to paragraph (a)(1); or
[ ] on (date) pursuant to paragraph (a)(1); or
[ ] 75 days after filing pursuant to paragraph (a)(2); or
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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<PAGE> 2
ASSET MANAGEMENT FUND
Money Market Portfolio
D Shares
Prospectus October 21,1999
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Providing Investment
Opportunities Covering
The Complete Maturity
Range of Fixed Income
Securities
October 21, 1999
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Prospectus
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[AMF LOGO]
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Asset Management Fund
Money Market Portfolio
D Shares
The Securities and Exchange Commission has not approved or disapproved
these securities or passed on the adequacy of this prospectus.
It is a federal offense to suggest otherwise.
<PAGE> 4
TABLE OF CONTENTS
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<TABLE>
<S> <C>
SUMMARY
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Money Market Portfolio 1
INVESTMENT INFORMATION 4
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Investment Objectives and Principal
Investment Strategies 4
Description of Securities and
Related Risks 5
Variable and Floating Rate
Securities 5
Repurchase Agreements 5
Year 2000 6
FUND AND PORTFOLIO INFORMATION 6
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Investment Adviser 6
Advisory Fee Expenses 6
Portfolio Managers 6
Distributor 7
NET ASSET VALUE 7
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INVESTING IN THE FUND 7
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Purchases and Redemptions 7
Purchases 8
Redemptions 8
ADDITIONAL INFORMATION 8
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Statements and Reports 8
What Shares Cost 9
Dividends 9
Capital Gains 9
REDEEMING SHARES 9
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SHAREHOLDER INFORMATION 9
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Voting Rights 9
Tax Information 10
SHAREHOLDER REFERENCE INFORMATION
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</TABLE>
<PAGE> 5
Money Market Portfolio SUMMARY
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Investment Objective
The Money Market Portfolio (the "Portfolio"), a portfolio of the Asset
Management Fund (the "Fund"), seeks to achieve as high a level of current
income as is consistent with the preservation of capital, the maintenance
of liquidity and the average maturity of investments held by the
Portfolio.
Principal Investment Strategies
The Portfolio invests in high quality short-term money market instruments
(including assets subject to repurchase agreements). The Portfolio is
managed to keep its share price stable at $1.00.
Main Risks of Investing
Despite the Portfolio's policies of purchasing primarily government
securities and maintaining a short average portfolio maturity, the
Portfolio could experience principal losses and may lose money in the
rare event that portfolio holdings default or interest rates rise sharply
in an unusually short period. Therefore, there is no assurance that the
Portfolio will be able to maintain a stable net asset value of $1.00 per
share. Yields may vary with different interest rates. In addition,
neither the Federal Deposit Insurance Corporation ("FDIC") nor any other
government agency insures or guarantees investments in the Portfolio. The
Portfolio is not federally insured, has no bank or government guarantees,
is not endorsed by any bank or government agency, and may lose value.
1
<PAGE> 6
Portfolio Performance History
The following bar chart provides an illustration of how the performance
of the Portfolio has varied over time and it depicts the change in the
Portfolio's performance from year-to-year during the period indicated. A
Portfolio's past performance does not necessarily indicate how it will
perform in the future.
Annual Returns for the Years Ended December 31(1)
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
----------------------
<S> <C>
1989 9.42
1990 8.08
1991 5.62
1992 3.34
1993 2.78
1994 3.93
1995 5.69
1996 5.19
1997 5.32
1998 5.25
</TABLE>
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* The year to date return for the three month period ended July 31, 1999 is
1.22%.
(1) The information above reflects the actual performance of the Class I Shares
of the Portfolio. The Class D Shares of the Portfolio is a new Class for the
Fund for which performance is not yet available. The Class I Shares of the
Fund are offered in a separate Prospectus. The returns for the Class D
Shares will be substantially similar to those of the Class I Shares shown in
the chart below because all shares of the Fund are invested in the same
portfolio of securities. The annual returns of the different Classes of
shares will differ only to the extent that the expenses of the Classes
differ.
During the period shown in the bar chart, the highest return for a quarter was
2.41% (quarter ended 6/30/89) and the lowest return for a quarter was 0.68%
(quarter ended 12/31/93). The Money Market Portfolio's 7-day yield ending on
September 30, 1999, 5.18%. To obtain the Portfolio's current 7-day yield
information, please call us toll-free at 1-800-527-3713.
AVERAGE ANNUAL TOTAL RETURNS (years ended December 31, 1998)
<TABLE>
<CAPTION>
1 YEAR 5 YEARS 10 YEARS
------ ------- --------
<S> <C> <C> <C>
Money Market Portfolio, Class I Shares................... 5.25% 5.07% 5.44%
</TABLE>
2
<PAGE> 7
FEES AND EXPENSES:
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Portfolio.
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
CLASS D SHARES
----------------------
<S> <C>
SHAREHOLDER FEES
Maximum Sales Charge Imposed on Purchases................... None
Maximum Sales Charge Imposed on Reinvested Dividends........ None
Redemption Fees............................................. None
Exchange Fees............................................... None
Maximum Account Fee......................................... None
ANNUAL PORTFOLIO OPERATING EXPENSES (AS A PERCENTAGE OF
AVERAGE NET ASSETS)
Advisory Fee................................................ 0.15%
12b-1 Fees.................................................. 0.60%*
Other Expenses.............................................. 0.10%
-----
Total Fund Operating Expenses............................... 0.85%*
Fee Waivers................................................. 0.10%
-----
Net Expenses................................................ 0.75%
=====
</TABLE>
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* Under the Investment Advisory Agreement, the Adviser has agreed to limit total
operating expenses of the Money Market Portfolio to 0.75%. Although the
Distributor has the right to collect 12b-1 fees of 0.60%, it has agreed to
waive 0.10% of this fee in order to keep Total Fund Operating Expenses at or
below 0.75%.
EXAMPLE
This example is intended to help you compare the cost of investing in Class D
Shares of the Money Market Portfolio with the cost of investing in other mutual
funds. The example assumes that you invest $10,000 in Class D Shares for the
time periods indicated and then redeem all of your shares at the end of those
periods. The example also assumes that your investment has a 5% return each year
and that a Portfolio's operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Money Market Portfolio, Class D Shares......... $77 $261 $461 $1039
</TABLE>
3
<PAGE> 8
Investment Information
Investment Objectives and Principal Investment Strategies
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The investment objective of the Portfolio is to achieve as high a level
of current income as is consistent with the preservation of capital, the
maintenance of liquidity and the average maturity of investments held by
the Portfolio. The Portfolio pursues this investment objective by
investing in the securities described below. While there is no assurance
that the Portfolio will achieve its investment objective, it endeavors to
do so by following the investment policies and limitations described
below. The Portfolio will limit its investments and investment techniques
so as to qualify for investment by national banks, federal savings
associations, and federal credit unions. The Portfolio's investment
objective and this policy cannot be changed as to the Portfolio without
approval of the Portfolio's shareholders.
The Portfolio invests, directly or subject to repurchase agreements, only
in high quality short-term assets. The Portfolio will not invest in
securities which cannot be purchased by national banks, federal savings
and loan associations, or federal credit unions. The Portfolio will
maintain a stable net asset value of $1.00 per share and will use the
amortized cost method of valuation, pursuant to Rule 2a-7.
Permissible investments for the Portfolio include:
- Obligations issued directly by the U.S. Government or issued by an
agency or instrumentality of the U.S. Government and fully guaranteed
as to principal and interest by the U.S. Government, although not as to
market value. These obligations include U.S. Treasury bonds, notes and
bills and obligations issued by the Federal Financing Bank and the
Government National Mortgage Association. These obligations may also
include variable and floating rate securities.
- Obligations issued by or fully guaranteed as to principal and interest
by the following U.S. Government agencies or instrumentalities: the
Federal Home Loan Banks, Freddie Mac, Fannie Mae, the Federal Farm
Credit Banks and the Student Loan Marketing Association. Since the
obligations issued or guaranteed by these U.S. Government agencies or
instrumentalities are not backed by the full faith and credit of the
U.S. Government, the Portfolio must look principally to the agencies or
instrumentalities for ultimate repayment, and may not be able to assert
claims against the U.S. Government itself if those agencies or
instrumentalities do not meet their commitments.
- Certificates of deposit and other time deposits and savings accounts in
a commercial or savings bank or savings association whose accounts are
insured by the Federal Deposit Insurance Corporation ("FDIC Insured
Institution"), including certificates of deposit issued by and other
time deposits in foreign branches of FDIC insured banks, if they have
remaining maturities of 397 days or less (if negotiable) or 90 days or
less (if non-negotiable). Investments in certificates of
4
<PAGE> 9
deposit issued by and other time deposits in foreign branches of FDIC
insured banks involve somewhat different investment risks from those
affecting deposits in United States branches of such banks, including
the risk of future political or economic developments, or government
action, that would adversely affect payments on deposits.
- Bankers' acceptances of an FDIC Insured Institution if such acceptances
have remaining maturities of 6 months or less and the Portfolio's total
investment in such acceptances of the same institution does not exceed
0.25% of such institution's total deposits.
The Portfolio's investments in repurchase agreements and certificates of
deposit and other time deposits of or in FDIC Insured Institutions will
generally not be insured by any government agency. The Board of Trustees
has adopted operating policies to further restrict certain investments
(see the Statement of Additional Information for the Portfolio).
Description of Securities and Related Risks
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Variable and Floating Rate Securities
The Portfolio may purchase U.S. Government securities that have variable
or floating rates of interest ("Variable Rate Securities"). These
securities pay interest at rates that are adjusted periodically according
to a specified formula, usually with reference to some interest rate
index or market interest rate. The interest paid on Variable Rate
Securities is a function primarily of the index or market rate upon which
the interest rate adjustments are based. Similar to fixed rate debt
instruments, variable and floating rate instruments are subject to
changes in value based on changes in market interest rates, but because
of the interest reset provision, the potential for capital appreciation
or depreciation is generally less than for fixed rate obligations. The
Portfolio determines the maturity of Variable Rate Securities in
accordance with Securities and Exchange Commission rules which allow the
Portfolio to consider certain of such instruments as having maturities
shorter than the maturity date on the face of the instrument.
Repurchase Agreements
The Portfolio may enter into repurchase agreements under which it may
acquire securities in which the Portfolio may invest for a relatively
short period (usually not more than 30 days) subject to an obligation of
the seller to repurchase and the Portfolio to resell the instrument at a
fixed price and time, thereby determining the yield during the
Portfolio's holding period. If the seller defaults in its obligation to
repurchase from the Portfolio the underlying collateral, the Portfolio
may incur a loss. The Portfolio will make payment for such instruments
only upon their physical delivery to or evidence of their book entry
transfer to the account of the Portfolio's custodian. The Portfolio will
not enter into any repurchase agreements maturing in more than 60 days.
5
<PAGE> 10
Year 2000
Like other mutual funds and business organizations worldwide, the Fund's
service providers (among them, the Adviser, Distributor, administrator,
custodian and transfer agent) must ensure that their computer systems are
adjusted to properly process and calculate date-related information from
and after January 1, 2000. Many software programs and, to a lesser
extent, the computer hardware in use today cannot distinguish the year
2000 from the year 1900. Such a design flaw could have a negative impact
in the handling of securities trades, pricing and accounting services.
The Fund and its service providers are actively working on necessary
changes to computer systems to deal with the year 2000 issue and believe
that their systems will be year 2000 compliant when required, but there
can be no assurance that they will be successful. In addition there can
be no assurance that the year 2000 issue will not have an adverse effect
on the issuers whose securities are held by the Portfolio or on markets
or on the economy in general.
Fund and Portfolio Information
Investment Adviser
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Investment decisions for the Portfolio are made by Shay Assets
Management, Inc. ("Adviser"), a company controlled by Rodger D. Shay. The
Adviser, which is located at 230 West Monroe Street, Chicago, Illinois
60606, is registered under the Investment Advisers Act of 1940 and
manages approximately $1.5 billion in assets. The Adviser is responsible
for placing purchase and sale orders for portfolio instruments.
Advisory Fee Expenses
The Portfolio pays an annual advisory fee based upon a percentage of
average daily net assets. During the period from November 1, 1997 through
December 7, 1997, the advisory fee was paid to Shay Assets Management
Co., the Fund's previous investment adviser, and from December 8, 1997
through October 31, 1998, the advisory fee was paid to the Adviser as
follows:
<TABLE>
<S> <C>
Money Market Portfolio.............................. 0.00%*
</TABLE>
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* The investment advisers voluntarily waived all advisory fees for the
Portfolio. Without such waivers, the fee would have been 0.15%.
Beginning October 19, 1999 the Adviser will no longer waive its advisory
fee.
Portfolio Managers
The Portfolio Managers of the Adviser manage the Portfolio's investments
as a team under the day-to-day direction of Edward E. Sammons, Jr.,
President of the Adviser. Mr. Sammons has served as President of the Fund
since 1998 and was Vice
6
<PAGE> 11
President of the Fund from 1985 through 1997. Mr. Sammons assumed primary
responsibility for the Fund's investments in 1985.
Distributor
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Pursuant to the Distribution Agreement, the Distributor, as the principal
distributor of the Class D Shares, directly and through other firms
advertises and promotes the Fund. In addition, the Distributor retains
BISYS Fund Services Ohio, Inc. and various financial institutions to
administer and operate, respectively, sweep programs through which
investors may invest in the Class D Shares. For its distribution
services, the Distributor receives an annual fee from the Fund in
accordance with the distribution plan adopted by the Fund pursuant to
Rule 12b-1 under the Investment Company Act of 1940 (the "12b-1 Plan").
Because these fees are paid out of the Class's assets on an ongoing basis
over time, these fees will increase the cost of your investment. This
charge could cost you more over time than you would pay through some
other types of sales charges.
Net Asset Value
The Portfolio's net asset value per share is determined by dividing the
value of all securities and all other assets, less liabilities, by the
number of shares outstanding. The Portfolio's investments are valued in
accordance with Rule 2a-7 under the Investment Company Act of 1940 based
on their amortized cost, which does not take into account unrealized
appreciation or depreciation. The Fund's Board of Trustees has
established procedures reasonably designed to stabilize the net asset
value per share at $1.00, although there is no assurance that the
Portfolio will be able to do so.
Investing in the Fund
Purchases and Redemptions
- --------------------------------------------------------------------------------
The following information pertains only to investors who establish
accounts and invest automatically through cash sweep arrangements offered
and operated by participating financial institutions. Clients should also
read, sign and retain the Sweep Agreement governing the sweep arrangement
at their financial institution, as this agreement contains additional
information.
Investors who wish to establish accounts and invest other than through
such sweep arrangements should call the Distributor at 1-800-527-3713 to
receive a copy of the Retail Investors Purchase and Redemption
Instructions and Additional Information.
7
<PAGE> 12
Purchases
Shares of the Portfolio may be purchased only through cash sweep
transactions generated by the Investor's financial institution in their
role as operator of the cash sweep arrangement. Establishment of an
account requires that certain documents and applications be signed before
any cash sweep investments can be processed. Participating financial
institutions are responsible for prompt transmission of orders relating
to the program, and they may charge for their services.
The Portfolio reserves the right to reject any purchase order. Purchase
orders may be refused if, for example, they are of a size that could
disrupt management of the Portfolio.
Redemptions
Shares of the Portfolio may be redeemed only through cash sweep
transactions generated by the investor's financial institution in their
role as operator of the cash sweep arrangement.
If making immediate payment of redemption proceeds could adversely affect
the Portfolio, shareholders may be paid up to seven days after receipt of
the redemption request. Also, when the U.S. government and agency
securities market is closed (or when trading is restricted) for any
reason other than its respective customary weekend or holiday closing, or
under any emergency circumstances as determined by the Securities and
Exchange Commission ("SEC") to merit such action, redemption or payment
may be suspended or postponed.
Additional Information
The following information pertains only to investors who establish
accounts and invest automatically through cash sweep arrangements offered
and administered by participating financial institutions. Investors who
wish to establish accounts and invest other than through such sweep
arrangements should call the Distributor at 1-800-527-3713 to receive a
copy of the Retail Investors Purchase and Redemption Instructions and
Additional Information.
Statements and Reports
- --------------------------------------------------------------------------------
Shareholders will receive a monthly statement listing each purchase and
redemption and any dividends paid during the month. Daily confirmations
will not be sent. A statement with tax information will be mailed by
January 31st following each tax year and also will be filed with the
Internal Revenue Service. At least twice a year shareholders will receive
the Portfolio's financial statements.
8
<PAGE> 13
What Shares Cost
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D Shares are sold at their net asset value next determined after the
purchase order becomes effective. The Portfolio seeks to maintain a net
asset value of $1.00 per share. (See "Net Asset Value.") There is no
sales charge imposed by the Portfolio. Net asset value is determined
twice on each Business Day, at 1:00 p.m. and at 4:00 p.m., New York City
time. For purposes of pricing redemption orders, net asset value is
determined at 4:00 p.m., New York City time, on any day redemptions are
permitted and a proper redemption request is received (see "Redeeming
Shares").
Dividends
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Dividends are declared daily and paid monthly. Such dividends are
declared immediately prior to 4:00 p.m., New York City time, and are
automatically paid in cash and credited to the shareholder's account at
the participating financial institution.
An investor will receive the dividend declared on the day its purchase
order is settled but will not receive the dividend declared on the day
its redemption order is effected.
Capital Gains
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Net capital gains, if any, realized by the Portfolio are declared and
paid once each year and reinvested in shares or, at the shareholder's
option, paid in cash.
Redeeming Shares
The Portfolio redeems shares at its net asset value next determined after
the Distributor receives the redemption request. Redemptions may be made
on Business Days when the U.S. Government and agency securities market is
open.
Shareholder Information
Voting Rights
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Besides the Money Market Portfolio, the Fund has four other portfolios:
the Short U.S. Government Securities Portfolio, the Adjustable Rate
Mortgage (ARM) Portfolio, the Intermediate Mortgage Securities Portfolio
and the U.S. Government Mortgage Securities Portfolio; shares of each
Portfolio represent interests only in the corresponding Portfolio and
having equal voting rights within that Portfolio. The Money Market
Portfolio is the only portfolio of the Fund that has two classes of
shares, the
9
<PAGE> 14
D Shares and the I Shares; shares of each class have equal voting rights
within each class and within the Money Market Portfolio. The Fund's
Declaration of Trust provides that on any matter submitted to a vote of
shareholders, all shares, irrespective of portfolio or class, shall be
voted in the aggregate and not by portfolio or class, except that (i) as
to any matter with respect to which a separate vote of any portfolio or
class is required by the Investment Company Act of 1940, such
requirements as to a separate vote by that portfolio or class shall apply
in lieu of the aggregate voting as described above, and (ii) as to any
matter which does not affect the interest of a particular portfolio or
class, only shareholders of the affected portfolio or class shall be
entitled to vote thereon. The Bylaws of the Fund require that a special
meeting of shareholders be held upon the written request of shareholders
holding not less than 10% of the issued and outstanding shares of the
Fund (or the Portfolio or Classes thereof).
Tax Information
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The Portfolio has not been required to pay federal income taxes because
it has taken all necessary action to qualify as a regulated investment
company under the Internal Revenue Code. The Portfolio intends to remain
so qualified for its future taxable years so long as such qualification
is in the best interests of shareholders.
The Fund intends to distribute all of the net income and any gains of the
Portfolio to shareholders. Unless otherwise exempt, shareholders are
required to pay federal income tax on any dividends and other
distributions received. This applies whether dividends are received in
cash or as additional shares. Dividends declared in December to
shareholders of record as of a date in that month and paid during the
following January are treated as if received on December 31 of the
calendar year declared.
Information on the tax status of dividends and distributions is provided
annually.
10
<PAGE> 15
SHAREHOLDER REFERENCE INFORMATION
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Distributor
Shay Financial Services, Inc.
230 West Monroe Street
Chicago, Illinois 60606
Investment Adviser
Shay Assets Management, Inc.
230 West Monroe Street
Chicago, Illinois 60606
Administrator and Transfer and
Dividend Agent
BISYS Fund Services Ohio, Inc.
3435 Stelzer Road
Columbus, Ohio 43219
Legal Counsel
Vedder, Price, Kaufman & Kammholz
222 North LaSalle Street
Chicago, Illinois 60601
Custodian
The Bank of New York
100 Church Street, 10th Floor
New York, New York 10286
Independent Accountants
PriceWaterhouseCoopers LLP
2400 Eleven Penn Center
Philadelphia, Pennsylvania 19103
Trustees and Officers
Richard M. Amis
Trustee
Arthur G. De Russo
Trustee
David F. Holland
Trustee
Gerald J. Levy
Trustee and Vice Chairman
Rodger D. Shay
Trustee and Chairman
Edward E. Sammons, Jr.
President
Robert T. Podraza
Vice President and Assistant Treasurer
Steve Pierce
Treasurer
Daniel K. Ellenwood
Secretary
Chris Cwik
Assistant Secretary
Additional information about the Portfolio may be found in the Statement of
Additional Information. The Statement of Additional Information contains more
detailed information on the Fund's investments and operations. The semiannual
and annual shareholder reports contain a discussion of the market conditions and
the investment strategies that significantly affected the Portfolio's
performance during the last fiscal year, as well as a listing of portfolio
holdings and financial statements. These documents may be obtained without
charge from the following sources:
By Phone:
1-800-527-3713
By Mail:
Shay Financial Services, Inc.
Attn: Asset Management Fund
230 West Monroe Street
Chicago, IL 60606
Public Reference Section
Securities and Exchange Commission
Washington, D.C. 20549-6009
(a duplication fee is charged)
In Person:
Public Reference Room
Securities and Exchange Commission,
Washington, D.C.
(Call 1-800-SEC-0330 for more information)
By Internet:
http://www.amffunds.com
http://www.sec.gov
The Statement of Additional Information is incorporated by reference into this
prospectus (is legally a part of this prospectus).
Investment Company Act file number: Asset Management Fund 811-3541
<PAGE> 16
STATEMENT OF ADDITIONAL INFORMATION
OCTOBER 21, 1999
MONEY MARKET PORTFOLIO
ASSET MANAGEMENT FUND
230 WEST MONROE STREET, CHICAGO, ILLINOIS 60606
The Money Market Portfolio (the "Portfolio") is a portfolio of Asset
Management Fund (the "Fund"), a professionally managed, diversified, open-end
management investment company. The Portfolio is represented by two classes of
shares separate from those of the Fund's other portfolios.
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Portfolio's Prospectus, dated October 19, 1999
(the "Prospectus"), a copy of which may be obtained from the Fund at the address
noted above.
The financial statements pertaining to this portfolio which appears in
the Fund's 1998 Annual Report to Shareholders are incorporated herein by
reference.
<PAGE> 17
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
FUND HISTORY..................................................................B-1
THE PORTFOLIO'S OBJECTIVE AND ITS INVESTMENT POLICIES.........................B-1
PURCHASE AND REDEMPTION OF SHARES.............................................B-2
DIVIDENDS, DISTRIBUTIONS, YIELD AND TOTAL RETURN QUOTATIONS...................B-2
MANAGEMENT OF THE FUND........................................................B-3
Board of Trustees....................................................B-3
Trustees and Officers................................................B-3
INVESTMENT ADVISER AND ADMINISTRATOR..........................................B-7
DISTRIBUTOR...................................................................B-9
ADMINISTRATOR AND TRANSFER AND DIVIDEND AGENT................................B-10
CUSTODIAN....................................................................B-10
DETERMINATION OF NET ASSET VALUE.............................................B-10
TAXES .......................................................................B-11
PORTFOLIO TRANSACTIONS.......................................................B-12
INVESTMENT RESTRICTIONS......................................................B-12
ORGANIZATION AND DESCRIPTION OF FUND SHARES..................................B-14
COUNSEL AND INDEPENDENT ACCOUNTANTS..........................................B-14
GENERAL INFORMATION..........................................................B-14
FINANCIAL STATEMENTS.........................................................B-15
</TABLE>
<PAGE> 18
Capitalized terms not defined in this Statement of Additional
Information and defined in the Prospectus shall have the meanings defined in the
Prospectus.
FUND HISTORY
Asset Management Fund (the "Fund") is a Delaware business trust
organized under a Declaration of Trust ("Declaration of Trust") dated July 22,
1999. The Fund was formerly a Maryland corporation, which commenced operations
on November 9, 1982. In September 1994, the Fund changed its name from Asset
Management Fund for Financial Institutions, Inc. to Asset Management Fund, Inc.
and on September 30, 1999, as part of the reorganization into a Delaware
business trust, changed its name to Asset Management Fund.
THE PORTFOLIO'S OBJECTIVE AND ITS INVESTMENT POLICIES
Under the policies adopted by the Board of Trustees of the Fund,
permissible investments for the Portfolio include those described in the
Prospectus, together with the following, as long as principal and interest on
such investments are not in default:
Time deposits (negotiable and non-negotiable) in a Federal Home Loan
Bank, the Bank for Savings and Loan Associations, Chicago, Illinois, or the
Savings Banks Trust Company, New York, New York.
Repurchase Agreements. If the seller defaults in its obligation to
repurchase from the Portfolio the underlying instrument, which in effect
constitutes collateral for the seller's obligation, at the price and time fixed
in the repurchase agreement, the Portfolio might incur a loss if the value of
the collateral declines and might incur disposition costs in connection with
liquidating the collateral. In addition, if bankruptcy proceedings are commenced
with respect to the seller, realization upon the collateral by the Portfolio may
be delayed or limited. The Portfolio will always receive as collateral
instruments whose market value, including accrued interest, will be at least
equal to 100% of the dollar amount invested by the Portfolio in each agreement.
The Portfolio enters into repurchase agreements with primary government
securities dealers.
Certificates of Deposit. The Portfolio may invest in certificates of
deposit issued by and other time deposits in foreign branches of FDIC insured
banks. Investment in such deposits may involve somewhat different investment
risks from those affecting deposits in United States branches of such banks.
These risks, which might adversely affect the payment of principal and interest
on such deposits, include the possibility that a foreign jurisdiction might
impose withholding taxes on interest income payable on such deposits, the
possible seizure or nationalization of foreign deposits or the possible adoption
of foreign governmental restrictions, such as exchange controls.
FDIC Insured Institutions. Although the Portfolio's investment in
savings accounts and in certificates of deposit and other time deposits in an
FDIC Insured Institution is insured to the extent of $100,000 by the Federal
Deposit Insurance Corporation, the Portfolio may invest more than $100,000 with
a single Institution, and any such excess and any interest on the investment
would not be so insured. Deposits in foreign branches of FDIC insured banks are
not insured by the Federal Deposit Insurance Corporation.
The Portfolio will invest in securities issued by an FDIC Insured
Institution only if such Institution or a security issued by such Institution
(i) has a short-term debt obligation rating in the highest category by at least
two nationally recognized statistical rating organizations ("NRSROs"), or (ii)
if rated by two NRSROs in the second-highest category for short-term debt
obligations, are purchased only in the amounts prescribed for "Second Tier
Securities" by Rule 2a-7 under the Investment Company Act of 1940, as amended,
or (iii) if rated only by one NRSRO (with such rating in the highest category),
the investment is submitted to the Board of Trustees for approval or
ratification, or (iv) if no such ratings are available, is of comparable quality
in the opinion of the Adviser and, except in the case of a government security,
the investment is submitted to the Board of Trustees of the Fund for approval or
ratification.
The Portfolio does not invest in securities with a remaining maturity
of greater than 397 calendar days.
<PAGE> 19
Other Current Policies. Under current policies of the Board of
Trustees, the Fund has adopted certain voluntary restrictions with respect to
the Portfolio's investments. These restrictions:
(1) prohibit the purchase of obligations of Federal Land Banks, Federal
Intermediate Credit Banks, the Export-Import Bank of the United States, the
Commodity Credit Corporation, the National Credit Union Administration and the
Tennessee Valley Authority;
(2) limit the use of repurchase agreements to repurchase agreements
involving obligations of the U.S. Government, including zero coupon Treasury
securities that have been stripped of either principal or interest by the U.S.
Government so long as the maturity of these securities does not exceed ten
years, and obligations of the Federal Home Loan Banks, Fannie Mae, the
Government National Mortgage Association, the Federal Farm Credit Banks, the
Federal Financing Bank, the Student Loan Marketing Association and Freddie Mac;
(3) prohibit investments in reverse repurchase agreements until such
time as federal credit unions may invest in them without limitation;
(4) limit the maturities of bankers' acceptances to six months and
prohibit investments in bankers' acceptances of Edge Act corporations guaranteed
by their FDIC-insured parent banks until such time as the appropriateness of
these latter investments for federal credit unions is clarified; and
(5) prohibit loans of federal funds until such time as investors are
limited to institutions meeting the requirements of Regulation D of the Board of
Governors of the Federal Reserve System.
Although these restrictions are not fundamental policies of the Fund
and may be changed without shareholder vote, the Fund will not alter these
restrictions without notice to shareholders.
See "Investment Restrictions" in this Statement of Additional
Information for a description of additional investment restrictions of the
Portfolio.
PURCHASE AND REDEMPTION OF SHARES
The Fund has designed shares of the Portfolio to be eligible for
purchase without limitation by federal thrifts, national banks and federal
credit unions.
Investors may be charged a fee if they effect transactions through a
broker or agent. Brokers and intermediaries are authorized to accept orders on
the Fund's behalf.
The Fund reserves the right to suspend the right of redemption and to
postpone the date of payment upon redemption (1) for any period during which the
New York Stock Exchange (the "Exchange") is closed, other than customary weekend
and holiday closings, or during which trading on the Exchange is restricted, or
(2) for any period during which an emergency, as defined by the rules of the
Securities and Exchange Commission, exists as a result of which (i) disposal by
the Fund of securities held by the Portfolio is not reasonably practicable, or
(ii) it is not reasonably practicable for the Fund to determine the value of the
Portfolio's net assets, or (3) for such other periods as the Securities and
Exchange Commission, or any successor governmental authority, may by order
permit for the protection of shareholders of the Portfolio.
DIVIDENDS, DISTRIBUTIONS, YIELD AND TOTAL RETURN QUOTATIONS
Dividends on shares of each class of the Portfolio are paid monthly on
the first Business Day of each month.
The Fund seeks to maintain for the Portfolio a net asset value of $1.00
per share for purchases and redemptions. In order to effectuate this policy, the
Fund may, under certain circumstances, withhold dividends or make distributions
from capital or capital gains.
B-2
<PAGE> 20
Net income of each Class of the Portfolio for dividend purposes (from
the time of the immediately preceding determination thereof) will consist of (i)
interest accrued and discount earned (including both original issue and market
discount) less amortization of any premium, (ii) plus all realized net
short-term and long-term gains, if any, on portfolio securities, (iii) less the
accrued expenses attributable to the Portfolio and the relevant Class and the
general expenses of the Fund prorated on the basis of relative net assets of the
Portfolio and the Class in relation to the net assets of the Fund's other
portfolios applicable to that period.
From time to time each Class of the Portfolio advertises its "yield"
and "effective yield." Both yield figures are based on historical earnings and
are not intended to indicate future performance. The "yield" of the Class refers
to the income generated by an investment in the Class over a seven-day period
(which period will be stated in the advertisement). This income is then
"annualized." That is, the amount of income generated by the investment during
that week is assumed to be generated each week over a 52-week period and is
shown as a percentage of the investment. The "effective yield" is calculated
similarly but, when annualized, the income earned by an investment in the Class
is assumed to be reinvested. The "effective yield" will be slightly higher than
the "yield" because of the compounding effect of this assumed reinvestment. Any
agreement by the Adviser and Distributor to reduce or waive their fees under
certain circumstances may cause the Class's yields to be higher than they
otherwise would be.
The seven-day yield and seven-day effective yield of the Class I Shares
for the period ended September 30, 1999, were [UPDATE]% and [UPDATE]%
respectively. Without fee waivers, the seven-day yield would have been [UPDATE]%
and the seven-day effective yield would have been [UPDATE]%. The seven-day yield
was calculated by dividing the aggregate net income per share for dividend
purposes (excluding, however, any realized gains or losses) for the seven-day
period by the average net asset value per share for such period and multiplying
this return by 365/7. The seven-day effective yield was calculated similarly,
but, when annualized, all income earned over the seven-day period was assumed to
be reinvested.
From time to time in sales literature, the Class may quote a yield for
a period either less than or greater than seven days. Any quotation of yield for
a period of either less than or greater than seven days will identify the length
of and the date of the last day in the base period used in computing that
quotation. Any such quotation will also include the seven-day yield and
effective yields of the same day.
From time to time the Class may also compare its performance with
various indices and investments, other performance measures or rankings, or
other mutual funds, or indices or averages of other mutual funds.
MANAGEMENT OF THE FUND
BOARD OF TRUSTEES
The Fund is managed by a Board of Trustees. The Trustees are
responsible for managing the Fund's business affairs and for exercising all the
Fund's powers except those reserved for the shareholders. The Trustees'
responsibilities include reviewing the actions of the Fund's investment adviser,
distributor and administrator.
TRUSTEES AND OFFICERS
Trustees and Officers of the Fund, together with information as to
their principal business occupations during the last five years, are shown
below. Each trustee who is an "interested person" of the Fund, as defined in the
Investment Company Act of 1940, as amended (the "1940 Act"), is indicated by an
asterisk.
<TABLE>
<CAPTION>
POSITION(S) PRINCIPAL OCCUPATION(S)
NAME; ADDRESS AGE HELD WITH FUND DURING PAST FIVE YEARS
- ------------- --- -------------- ----------------------
<S> <C> <C> <C>
Richard M. Amis 48 Trustee President, First Federal Savings & Loan
630 Clarksville Street Association since 1984; Director, First Financial
Paris, TX 75460 Trust Company; formerly Chairman, Texas
Savings and Community Bankers Association.
</TABLE>
B-3
<PAGE> 21
<TABLE>
<CAPTION>
POSITION(S) PRINCIPAL OCCUPATION(S)
NAME; ADDRESS AGE HELD WITH FUND DURING PAST FIVE YEARS
- ------------- --- -------------- ----------------------
<S> <C> <C> <C>
Arthur G. De Russo 78 Trustee Chief Executive Officer, Eastern Financial Federal
5397 S.E. Major Way Credit Union from 1974 to 1992; Chairman and
Stuart, FL 34997 Director, First Credit Union Trust Co., Inc. from
1988 to 1992; President of the Airline
Credit Union Conference in 1991; Director,
Honor ATM Network, Florida from 1985 to 1990.
David F. Holland 57 Trustee Chairman of the Board since 1989 and Chief
17 New England Executive Park Executive Officer since 1986 of Boston Federal
Burlington, MA 01803 Savings Bank; Director of Fund from 1988 to 1989
and since 1993; Director of Federal
Home Loan Bank of Boston; until December
1997 Chairman of America's Community
Banking Partners, Inc. and Director
of ACB Investment Services, Inc.; Director
of M.S.B. Fund, Inc. since 1997;
Director and Chairman since December 1995
of Center for Financial Studies;
Director of NYCE Corporation since
1995; Director from 1990 to 1995 and
Chairman 1993-1994 of America's
Community Bankers; member from 1995
to 1997 and President since 1997 of
Thrift Institutions Advisory Council.
Gerald J. Levy 67 Vice Chairman of Chairman and Chief Executive Officer, Guaranty
4000 W. Brown Deer Road the Board and Bank, S.S.B. since 1984 (from 1959 to 1984, he
Milwaukee, WI 53209 Trustee held a series of officer's positions, including
President). Chairman, 1986, United
States League of Savings Institutions; Director of
FIserv, Inc. since 1986; Director since 1995
of the Republic Mortgage Insurance Company; Director
of the Federal Asset Disposition Association from
1986 to 1989; and, previously Director and Vice
Chairman, Federal Home Loan Bank of Chicago and member
of Advisory Committee of the Federal Home Loan Mortgage
Corporation and Federal National Mortgage Corporation.
</TABLE>
B-4
<PAGE> 22
<TABLE>
<CAPTION>
POSITION(S) PRINCIPAL OCCUPATION(S)
NAME; ADDRESS AGE HELD WITH FUND DURING PAST FIVE YEARS
- ------------- --- -------------- ----------------------
<S> <C> <C> <C>
Rodger D. Shay 62 Chairman of the Chairman and Director of Shay Assets
1000 Brickell Avenue Board and Trustee Management, Inc. since August 1997 (previously
Miami, FL 33131 President and Director from 1990 to August 1997);
Chairman and Director of Shay Financial
Services, Inc. since August 1997 (previously
President and Director from 1990 to August
1997); President, Chief Executive Officer and
member of the Managing Board of Shay Assets
Management Co. from 1990 to December 1997;
President, Chief Executive Officer and
member of the Managing Board of Shay
Financial Services Co. from 1990 to
December 1997; [Director from 1986 to 1991
and President from 1986 to 1992, U.S.
League Securities, Inc.; Vice President
since 1995 of Institutional Investors
Capital Appreciation Fund, Inc. and
M.S.B. Fund, Inc.; Director, First Home
Savings Bank, S.L.A. since 1990;
previously Director, Asset Management
Fund, from 1985 to 1990; President of
Bolton Shay and Company and Director
and officer of its affiliates from 1981 to
1985; Previously, employed by certain
subsidiaries of Merrill Lynch & Co.
from 1955 to 1981, where he served in
various executive positions including
Chairman of the Board of Merrill Lynch
Government Securities, Inc., Chairman
of the Board of Merrill Lynch Money Market
Securities, Inc. and Managing Director of
the Debt Trading Division of Merrill Lynch,
Pierce, Fenner & Smith Inc.
Edward E. Sammons, Jr. 59 President President of Shay Assets Management, Inc. since
230 West Monroe Street August 1997 (previously Executive Vice President
Chicago, IL 60606 from 1990 to August 1997); Executive Vice
President and member of the Managing Board of
Shay Assets Management Co. from 1990 to
December 1997. Executive Vice President and
member of the Managing Board of Shay Financial
Services Co. from 1990 to December 1997 and
Executive Vice President of Shay Financial
Services, Inc., from 1990 to August 1997; Vice
President and Secretary since 1995 of Institutional
Investors Capital Appreciation Fund, Inc. and
M.S.B. Fund, Inc.
</TABLE>
B-5
<PAGE> 23
<TABLE>
<CAPTION>
POSITION(S) PRINCIPAL OCCUPATION(S)
NAME; ADDRESS AGE HELD WITH FUND DURING PAST FIVE YEARS
- ------------- --- -------------- ----------------------
<S> <C> <C> <C>
Robert T. Podraza 54 Vice President and Vice President of Shay Investment Services, Inc.
230 West Monroe Street Assistant Treasurer since 1990; Vice President since 1990 and Chief
Chicago, IL 60606 Compliance Officer since 1997 of Shay Financial
Services, Inc.; Vice President since 1990 and Chief
Compliance Officer since 1997 of Shay Assets
Management, Inc.; Chief Compliance Officer of
Shay Financial Services Co. and Shay Assets
Management Co. from 1989 to 1997; Director of
the National Society of Compliance Professionals
since 1996.
Steve Pierce 34 Treasurer Director of Financial Services of BISYS Fund
3435 Stelzer Road Services since 1998; Manager of Financial
Columbus, OH 43219 Operations at CNA Insurance from 1996-1998;
Trust Officer of First Chicago NBD Corporation
from 1994-1996; Senior Financial Accountant at
Kemper Financial Services from 1989-1994.
Daniel K. Ellenwood 29 Secretary Secretary of the Fund since April 1998; Operations
230 West Monroe Street Analyst, Shay Assets Management, Inc. since
Chicago, IL 60606 November 1997; Compliance Analyst, Shay
Financial Services, Inc. since October 1996; B.S. in
Finance, University of Illinois at Chicago, 1996.
</TABLE>
The following table sets forth the compensation earned by trustees from
the Fund for the fiscal year ended October 31, 1998:
<TABLE>
<CAPTION>
PENSION OR
AGGREGATE RETIREMENT BENEFITS ESTIMATED ANNUAL
COMPENSATION ACCRUED AS PART BENEFITS TOTAL
TRUSTEE FROM THE FUND OF FUND EXPENSES UPON RETIREMENT COMPENSATION
- ------- ------------- ------------------- ---------------- ------------
<S> <C> <C> <C> <C>
Richard M. Amis $14,500 0 0 $14,500
Arthur G. DeRusso 13,500 0 0 13,500
David F. Holland 14,500 0 0 14,500
Leon T. Kendall(1) 3,375 0 0 3,375
Gerald J. Levy 13,000 0 0 13,000
Rodger D. Shay 0 0 0 0
</TABLE>
- ----------------
(1) Retired December 6, 1997.
The following table provides certain information as of September 30,
1999, as to the Portfolio with respect to persons known to the Fund to be
beneficial (and record) owners (having sole voting and dispositive power) of 5%
or more of the shares of the Portfolio:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
PERCENT OF PORTFOLIO'S
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OF SHARES OUTSTANDING COMMON SHARES
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
BROOKLYN FEDERAL SAVINGS BANK 4,300,153.660 8.5095%
81 COURT STREET
BROOKLYN, NY 11201
- ------------------------------------------------------------------------------------------------------------------
ANCHORBANK SSB 15,000,000.000 29.6832%
P O BOX 7933
MADISON, WI 53707-7933
- ------------------------------------------------------------------------------------------------------------------
WINDSOR FEDERAL SAVINGS BANK 3,240,352.940 8.4123%
250 BROAD STREET
WINDSOR, CT 06095
- ------------------------------------------------------------------------------------------------------------------
FIRST FEDERAL SVGS & LN OF EAST HARTFORD 5,879,496.840 11.5348%
1007 MAIN STREET
MANCHESTER, CT 06040
- ------------------------------------------------------------------------------------------------------------------
FFS CAPITAL CORP 3,476,727.510 6.8800%
1007 MAIN STREET
MANCHESTER, CT 06040
- ------------------------------------------------------------------------------------------------------------------
CALUMET FEDERAL SAVINGS & LOAN 1,031,802.699 9.3100%
1350 EAST SIBLEY BLVD
DOLTON, IL 60419
- ------------------------------------------------------------------------------------------------------------------
SOUTH JERSEY SAVINGS AND LOAN 792,827.115 7.1537%
4651 ROUTE 42
TURNERSVILLE, NJ 08012
- ------------------------------------------------------------------------------------------------------------------
FIRST FEDERAL SAVINGS & LOAN ASSOC OF LINCOLNTON 680,194.279 6.1374%
320 E MAIN ST
LINCOLNTON, NC 28092
- ------------------------------------------------------------------------------------------------------------------
FOURTH FEDERAL SAVINGS BANK 551,894.948 5.8803%
325 HAMILTON AVENUE
WHITE PLAINS, NY 10601-1715
- ------------------------------------------------------------------------------------------------------------------
FEDERAL HOME LOAN BANK OF DALLAS 997,202.718 8.9978%
P O BOX 619028
DALLAS/FT WORTH, TX 75261-9026
- ------------------------------------------------------------------------------------------------------------------
FIRST FEDERAL SAVINGS BANK 935,182.019 10.9983%
PO BOX 6007
SHERIDAN, WY 82801
- ------------------------------------------------------------------------------------------------------------------
FIRST FEDERAL BANK FSB 1,324,986.038 15.5830%
109 E DEPOT
COLCHESTER, IL 62326
- ------------------------------------------------------------------------------------------------------------------
ST CASIMIRS SAVINGS BANK 593,202.056 6.9766%
2703 FOSTER AVENUE
BALTIMORE, MD 21224
- ------------------------------------------------------------------------------------------------------------------
SKOWHEGAN SAVINGS BANK 1,401,132.905 16.4755%
PO BOX 250
SKOWHEGAN, ME 04976
- ------------------------------------------------------------------------------------------------------------------
MECHANICS SAVINGS BANK 505,123.219 5.9407%
100 PEARL STREET
HARTFORD, CT 06103
- ------------------------------------------------------------------------------------------------------------------
BFS SECURITY CORP 788,451.463 9.2729%
17 NEW ENGLAND EXECUTIVE PARK
BURLINGTON, MA 01803
- ------------------------------------------------------------------------------------------------------------------
FULLERTON COMMUNITY BANK 1,156,156.611 10.5916%
200 W COMMONWEALTH AVE
FULLERTON, CA 92832
- ------------------------------------------------------------------------------------------------------------------
FOX VALLEY SAVINGS AND LOAN 666,533.426 5.1298%
51 E FIRST STREET
FOND DU LAC, WI 54935
- ------------------------------------------------------------------------------------------------------------------
SOVEREIGN BANK 1,548,283.250 14.1980%
PO BOX 12646
READING, PA 19612
- ------------------------------------------------------------------------------------------------------------------
FIRST FEDERAL SAVINGS AND LOAN 936,719.608 8.5888%
P O BOX 884
MARTINSVILLE, VA 24114
- ------------------------------------------------------------------------------------------------------------------
BFS SECURITY CORP 870,106.617 7.9780%
17 NEW ENGLAND EXECUTIVE PARK
BURLINGTON, MA 01803
- ------------------------------------------------------------------------------------------------------------------
CUERO STATE BANK SSB 816,806.833 7.4893%
PO BOX 808
CUERO, TX 77954
- ------------------------------------------------------------------------------------------------------------------
TEACHERS CREDIT UNION 5,576,454.552 6.2168%
110 SO MAIN STREET
SOUTH BEND, IN 48601
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
As of September 30, 1999, the amount of shares owned by all officers
and trustees as a group aggregated less than 1% of any Class or Portfolio.
B-6
<PAGE> 24
INVESTMENT ADVISER AND ADMINISTRATOR
The investment adviser of the Fund since December 8, 1997, is Shay
Assets Management, Inc. (the "Adviser"), a Florida corporation, with its
principal office at 230 West Monroe Street, Chicago, Illinois 60606. The Adviser
is registered as an investment adviser under the Investment Advisers Act of
1940, as amended, and is a wholly owned subsidiary of Shay Investment Services,
Inc., a closely held corporation controlled by Rodger D. Shay, the President of
the Fund.
The initial term of the Investment Advisory Agreement between the Fund
and the Adviser (the "Advisory Agreement"), was completed as to the Portfolio on
March 1, 1999, and now continues from year to year thereafter, subject to
termination by the Fund or the Adviser as hereinafter provided, if such
continuance is approved at least annually by a majority of the outstanding
shares (as defined under "General Information" in this Statement of Additional
Information) of the Portfolio or by the Fund's Board of Trustees. The Advisory
Agreement must also be approved annually by the vote of a majority of the
trustees of the Fund who are not parties to the Advisory Agreement or
"interested persons" of any party thereto. All trustees' votes must be cast in
person at a meeting called for the purpose of voting on such approval.
As compensation for the services rendered by the Adviser under the
Advisory Agreement, the Fund pays the Adviser a fee, payable monthly, computed
as follows with respect to the Portfolio: 0.15% per annum of the average daily
net assets of the Portfolio up to and including $500 million; 0.125% per annum
of the next $500 million of such net assets; and 0.10% per annum of such net
assets over $1 billion. The Adviser may supplementally waive advisory fees in an
amount up to but not to exceed 0.15% of the average daily net assets of the
Portfolio. This supplemental waiver agreement may be terminated at any time by
the Adviser. For the Fund's fiscal year ended October 31, 1998 (for the period
beginning December 8, 1997), the Adviser was paid $0 (net of fee waivers of
$80,505) with respect to the Portfolio. For the Fund's fiscal years ended
October 31, 1998 (through December 7, 1997), 1997 and 1996, the Fund paid SAMC
fees of $0 (net of fee waivers of $7,695), $0 (net of fee waivers of $83,068),
and $0 (net of fee waivers of $101,717), respectively, with respect to the
Portfolio.
The Adviser may from time to time enter into arrangements with entities
such as trade associations and affinity groups ("Organizations") whereby the
Adviser agrees to make payments to such an organization with respect to assets
invested in the Fund by members of the organization for certain services or
products (such as use of logos or membership lists, bundling with or placement
of articles in newsletters or other organization publications, directory
listings, and space at trade shows) provided by the organization.
The Advisory Agreement provides that the Adviser shall not be liable
for any error of judgment or mistake of law or for any loss suffered by any
portfolio of the Fund in connection with the matters to which the Advisory
Agreement relates, except a loss resulting from a breach of fiduciary duty with
respect to the receipt of compensation for services (in which case any award of
damages shall be limited to the period and the amount set forth in Section
36(b)(3) of the 1940 Act) or a loss resulting from willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or from
reckless disregard by it of its obligations and duties under the Advisory
Agreement.
The Advisory Agreement will terminate automatically upon its assignment
and is terminable with respect to the Portfolio at any time without penalty by
the Board of Trustees of the Fund or by a vote of a majority of the outstanding
shares (as defined under "General Information" in this Statement of Additional
Information) of the Portfolio on 60 days' written notice to the Adviser, or by
the Adviser on 90 days' written notice to the Fund.
The Portfolio Managers of the Adviser responsible for making
investment decisions concerning the Fund's investments are Edward E. Sammons,
Jr., Rodger D. Shay, Richard Blackburn, Rodger D. Shay, Jr. and Gregory J.
Wisniewski. For information as to the principal occupations during the past five
years of Messrs. Sammons and Shay, who are also officers of the Fund, see
"Management of the Fund" in this Statement of Additional Information. The
principal business occupations during the past five years and professional
backgrounds of the Portfolio Managers who are not also officers of the Fund are
shown below following each of their names and business addresses.
B-7
<PAGE> 25
RICHARD BLACKBURN
230 West Monroe Street
Chicago, IL 60606
Portfolio Manager of the Adviser and SAMC, the Fund's former adviser,
since 1991. With approximately twenty-five years of experience in the securities
industry, his previous employers also include Harris Trust & Savings Bank,
Merrill Lynch, Pierce, Fenner & Smith Inc. and the First National Bank of
Chicago. Mr. Blackburn's primary expertise is in the mortgage securities
markets, particularly in the area of floating and/or adjustable rate securities.
RODGER D. SHAY, JR.
1000 Brickell Avenue
Miami, FL 33131
Portfolio Manager of the Adviser and SAMC, the Fund's former adviser,
since 1991. President of Shay Financial Services, Inc., since August, 1997,
previously Senior Vice President from 1994 to August, 1997, and Vice President
from 1991 to 1993. He was previously employed by Merrill Lynch, Pierce, Fenner
and Smith Inc. where he served as a senior trader and manager of collateralized
mortgage obligation trading. Mr. Shay's primary expertise is in the mortgage
securities market, particularly in the area of collateralized mortgage
obligations.
GREGORY J. WISNIEWSKI
230 West Monroe Street
Chicago, Illinois 60606
Portfolio Manager of the Adviser and SAMC, the Fund's former adviser,
since 1994. From 1990 to 1994, Vice President of Shay Financial Services, Inc.
and of an affiliate, Shay Government Securities, Inc., and from 1985 to 1990, an
account executive of predecessors of these firms. His previous employers also
include The Chicago Corporation, where he served as an account executive and
financial futures trader, and Harris Trust and Savings Bank, where he served
variously as a manager of the portfolios of correspondent banks and as the
manager of the commercial paper portfolio of Harris Bankcorp.
The Fund's current administrative agent (the "Administrator") with
respect to the Portfolio is BISYS Fund Services Ohio, Inc. ("BISYS"). Prior to
August 1, 1999 PFPC Inc. ("PFPC"), a wholly owned subsidiary of PNC Bank Corp.,
was the Fund's former administrative agent. Pursuant to the terms of the
Administration Agreement (the "Administration Agreement") dated as of August 1,
1999, as amended, between the Fund and the Administrator, the Administrator
performs various administrative services for the Fund, including (i) assisting
in supervising all aspects of the Portfolio operations other than those assumed
by the Adviser, the Distributor, the custodian or the transfer and dividend
agent, (ii) providing the Portfolio with the services of persons competent to
perform such administrative and clerical functions as are necessary in order to
provide effective administration of the Portfolio, (iii) maintenance of the
Portfolio's books and records, (iv) preparation of various filings, reports,
statements and returns filed with governmental authorities or distributed to
shareholders of the Portfolio, (v) computation of the Portfolio's net asset
value for purposes of the sale and redemption of its shares, and (vi)
computation of the Portfolio's daily dividend. Certain functions relating to
state "blue sky" qualification services in any of the states where the Portfolio
is registered are subject to additional charges by the Administrator that are
not included in the fee rates and minimum annual fee described below.
As compensation for the services rendered by the Administrator under
the Administration Agreement, the Fund pays the Administrator a fee, computed
daily and payable monthly, with respect to the Portfolio at the rate of 0.03%
per annum of the Portfolio's net assets up to and including $1 billion; 0.02%
per annum of the next $1 billion of net assets; and 0.01% per annum of the
Portfolio's net assets over $2 billion, with a minimum annual fee of $393,200
for all the Fund's five portfolios taken together. If applicable, the minimum
fee is allocated among the Fund's five portfolios based on relative average net
assets. For the fiscal years ended October 31, 1998, 1997 and 1996, the Fund
paid PFPC, the former Administrator, fees pursuant to the Administration
Agreement of $20,308, $20,809, and $20,328, respectively, for the Portfolio.
B-8
<PAGE> 26
The Fund is responsible for the payment of its expenses. Such expenses
include, without limitation, the fees payable to the Adviser, the Administrator
and the Distributor (see "Distributor" below) with respect to the Portfolio, the
fees and expenses of the Fund's custodian and transfer and dividend agent with
respect to the Portfolio, any brokerage fees and commissions of the Portfolio,
any portfolio losses of the Portfolio, filing fees for the registration or
qualification of the Portfolio's shares under Federal or state securities laws,
the Portfolio's pro rata share of taxes, interest, costs of liability insurance,
fidelity bonds or indemnification, any costs, expenses or losses arising out of
any liability of, or claim for damages or other relief asserted against, the
Fund with respect to the Portfolio for violation of any law, the Portfolio's pro
rata share of legal and auditing fees and expenses, expenses of preparing and
setting in type prospectuses, proxy material, reports and notices and the
printing and distributing of the same to the shareholders of the Portfolio and
regulatory authorities, the Portfolio's pro rata share of compensation and
expenses of the Fund's trustees and officers who are not affiliated with the
Adviser, the Administrator, the Distributor, or the transfer and dividend agent,
and extraordinary expenses incurred by the Fund with respect to the Portfolio.
DISTRIBUTOR
Shay Financial Services, Inc. is a registered broker-dealer and the
Fund's principal distributor (the "Distributor"). The Distributor, a Florida
corporation, is a wholly owned subsidiary of Shay Investment Services, Inc.,
which is a closely held corporation controlled by Rodger D. Shay.
As compensation for distribution services with regard to the Class I
Shares of the Portfolio, the Fund pays the Distributor a fee, payable monthly,
with respect to the Class I Shares at the rate of 0.15% per annum of the
combined average daily net assets of the Class I Shares up to and including $500
million; plus 0.125% per annum of the next $500 million of such combined net
assets; plus 0.10% per annum of the next $1 billion of such combined net assets;
plus 0.075% per annum of such combined net assets over $2 billion. As
compensation for distribution services with regard to the Class D Shares of the
Portfolio, the Fund pays the Distributor a fee, payable monthly, with respect to
the Class D Shares at the rate of 0.60% per annum of the daily net assets of the
Class D Shares.
For the fiscal year ended October 31, 1998 (for the period beginning
December 8, 1997), the Fund paid the Distributor fees of $85,505 with respect to
the Portfolio. For the fiscal years ended October 31, 1998 (through December 7,
1997), 1997 and 1996, the Fund paid SFSC fees pursuant to the Rule 12b-1 plan,
as in effect, of $7,695 (through December 7, 1997), $83,068, and $101,717,
respectively, with respect to the Portfolio.
The Distributor is obligated under the Distribution Agreement to bear
the costs and expenses of printing and distributing copies of prospectuses and
annual and interim reports of the Fund (after such items have been prepared and
set in type) that are used in connection with the offering of shares of the Fund
to investors, and the costs and expenses of preparing, printing and distributing
any other literature used by the Distributor in connection with the offering of
the shares of the Portfolio for sale to investors.
The Fund has been informed by the Distributor that during its fiscal
year ended October 31, 1998, of the $595,550 fee received in the aggregate by
SFSC and the Distributor from the Fund with respect to the Portfolio, the
following expenditures were made:
<TABLE>
<S> <C>
Advertising................................. $ 11,609
Printing.................................... 8,777
Employee compensation and costs............. 342,474
Staff travel and expense.................... 25,433
Other administrative expense................ 48,482
----------
Total................................. $ 436,775
==========
</TABLE>
Shay Financial Services, Inc., the Fund's Distributor, and its
affiliated persons, including Rodger D. Shay, who is a Trustee and the Chairman
of the Board of the Fund, Edward E. Sammons Jr., who is President and Treasurer
of the Fund, Robert T. Podraza, who is Vice President and Assistant Treasurer of
the Fund, and Daniel K. Ellenwood, who is the Secretary of the Fund, have a
direct or indirect financial interest in the operation of the Fund's Rule 12b-1
Plan and related Distribution Agreement. None of the Trustees who are not
interested persons of
B-9
<PAGE> 27
the Fund have any direct or indirect financial interest in the operation of the
Fund's Rule 12b-1 Plan and related Distribution Agreement.
The Fund has appointed the Distributor to act as the principal
distributor of the Fund's shares pursuant to the Distribution Agreement dated
December 8, 1997 between the Fund and the Distributor (the "Distribution
Agreement"). The initial term of the Distribution Agreement was completed as of
March 1, 1999 and now continues in effect from year to year thereafter, subject
to termination by the Fund or the Distributor as hereinafter provided, if
approved at least annually by the Fund's Board of Trustees and by a majority of
the trustees who are not "interested persons" of the Fund and have no direct or
indirect financial interest in the arrangements contemplated by the agreement.
The Fund's Rule 12b-1 Plan requires the Fund's Board of Trustees to make a
quarterly review of the amount expended under the Rule 12b-1 Plan and the
purposes for which such expenditures were made. The Rule 12b-1 Plan may not be
amended to increase materially the amount paid by the Fund thereunder without
shareholder approval. All material amendments to the Rule 12b-1 Plan must be
approved by the Fund's Board of Trustees and by the "disinterested" trustees
referred to above. The Rule 12b-1 Plan will terminate automatically upon its
assignment and is terminable at any time without penalty by a majority of the
Fund's trustees who are "disinterested" as described above or by a vote of a
majority of the outstanding shares (as defined under "General Information" in
this Statement of Additional Information) of the Portfolio affected thereby on
60 days' written notice to the Distributor, or by the Distributor on 90 days'
written notice to the Fund. Although the Distributor's fee is calculable
separately with respect to the Portfolio of the Fund and the Distributor reports
expense information to the Fund on a portfolio-by-portfolio basis, any 12b-1 fee
received by the Distributor in excess of expenses for a given Portfolio may be
used for any purpose, including payment of otherwise unreimbursed expenses
incurred in distributing shares of another Portfolio or to compensate another
dealer for distribution assistance. The 12b-1 Plan does not permit a Portfolio
to be charged for interest, carrying, or other financing charges on any such
unreimbursed carryover amounts, but it does provide for reimbursement for a
portion of the Distributor's overhead expenses.
ADMINISTRATOR AND TRANSFER AND DIVIDEND AGENT
Since August 1, 1999, BISYS Fund Services Ohio, Inc. ("BISYS"), 3435
Stelzer Road, Columbus, Ohio 43219, an Ohio corporation, has performed various
administrative services for the Fund with respect to the Portfolio. These
services include maintenance of books and records, preparation of governmental
filings and shareholder reports, and computation of net asset values and daily
dividends. BISYS is also the transfer and dividend agent for the Portfolio's
shares. For the Fund's fiscal year ended October 31, 1998, the Fund paid the
former administrator, PFPC Inc., a fee of 0.03% of the Portfolio's average net
assets for administrative services.
CUSTODIAN
As of July 30, 1999, the Bank of New York became the custodian of the
Portfolio's investments. PFPC Trust Company, an affiliate of PNC BankCorp,
served as the Fund's former custodian.
DETERMINATION OF NET ASSET VALUE
The Fund relies on an exemptive rule (Rule 2a-7) promulgated by the
Securities and Exchange Commission permitting the Fund to use the amortized cost
procedure in valuing the Money Market Portfolio's investments. This involves
valuing an instrument at its cost and thereafter assuming a constant
amortization to maturity of any discount or premium, regardless of the impact of
fluctuating interest rates on the market value of the instrument. While this
method provides certainty in valuation, it may result in periods during which
value, as determined by amortized cost, is higher or lower than the price the
Fund would receive if it sold the instrument. The Board of Trustees of the Fund
has determined that, absent unusual circumstances, the amortized cost method of
valuation will fairly reflect the value of each shareholder's interest in the
Portfolio. As a condition to the use of the amortized cost method of valuation
pursuant to such exemptive rule, the Portfolio is required to maintain a
dollar-weighted average portfolio maturity of 90 days or less, purchase
instruments having remaining maturities of thirteen months or less only, and
invest only in securities determined by the Board of Trustees to be of eligible
B-10
<PAGE> 28
quality with minimal credit risks. (See rating requirements under "FDIC Insured
Institutions" in this Statement of Additional Information.) An instrument which
has a variable or floating rate of interest may be deemed under certain
circumstances to have a maturity equal to the longer of the period remaining
until the next readjustment of the interest rate or the period remaining until
the principal amount can be recovered through demand.
The Board of Trustees has established procedures reasonably designed,
taking into account current market conditions and the Portfolio's investment
objective, to stabilize the price per share of shares of the Portfolio as
computed for the purpose of distribution and redemption at $1.00. Such
procedures include review by the Board of Trustees, as it may deem appropriate
and at such intervals as are reasonable in light of current market conditions,
of the deviation between the net asset value per share calculated by using
available indications of market value and the net asset value per share using
amortized cost values. The Portfolio's investment adviser has been delegated the
authority to determine the market values of the securities held by the Portfolio
through use of its matrix pricing system, provided that any changes in the
methods used to determine market values are reported to and reviewed by the
Board of Trustees.
The extent of any deviation between the net asset value per share of
the Portfolio based upon available market quotations or market equivalents and
$1.00 per share based on amortized cost will be examined by the Board of
Trustees. If such deviation exceeds 1/2 of 1%, the Board of Trustees will
promptly consider what action, if any, will be initiated. In the event the Board
of Trustees determines that a deviation exists that may result in material
dilution or other unfair results to investors or existing shareholders, it shall
take such corrective action as it deems appropriate to eliminate or reduce to
the extent reasonably practicable such dilution or unfair results, including the
sale of portfolio instruments prior to maturity to realize capital gains or
losses or to shorten average portfolio maturity, withholding dividends or
payment of distributions from capital or capital gains, redemptions of shares in
kind, or establishing a net asset value per share by using available market
quotations.
TAXES
The following discussion is not intended to be a full discussion of
income tax laws and their effect on shareholders. Investors should consult their
own tax advisors as to the tax consequences of ownership of shares.
The Portfolio is treated as a separate entity for accounting and
federal income tax purposes, and thus the provisions of Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"), applicable to regulated
investment companies are applied to the Portfolio separately, rather than to the
Fund as a whole. In addition, net long-term and short-term capital gains and
losses, net investment income, and operating expenses are determined separately
for each portfolio.
The Portfolio qualifies as a regulated investment company under
Subchapter M of the Code. In order to so qualify the Portfolio must, among other
things: (a) diversify its holdings so that, at the end of each fiscal quarter,
(i) at least 50% of the total value of its total assets is represented by cash
or cash items, government securities and other securities, including loans of
federal funds for the Portfolio only, with such other securities limited, in
respect of any one issuer, to an amount not greater than 5% of the value of the
Portfolio's assets or not more than 10% of the outstanding voting securities of
such issuer, and (ii) not more than 25% of the total value of its total assets
is invested in the securities of any one issuer (other than government
securities) and (b) derive at least 90% of its gross income from dividends,
interest, proceeds from loans of share and securities, gains from the sale or
other disposition of stock or securities, and other income derived with respect
to its business of investing in stock or securities. If the Portfolio qualifies
as a regulated investment company, it will not be subject to federal income tax
on its income and gains distributed to shareholders, provided at least 90% of
its investment company taxable income earned in the taxable year (computed
without regard to the deduction for dividends paid) is so distributed.
Dividends of the Portfolio's net investment income (which generally
includes income net of operating expenses), and distributions of net short-term
capital gains are taxable to shareholders as ordinary income whether reinvested
in shares or paid in cash.
B-11
<PAGE> 29
Because none of the Portfolio's income will consist of dividends from
domestic corporations, dividends of net investment income as well as
distributions of net long-term and short-term capital gains will not qualify for
the dividends received deduction available to corporate shareholders.
The Portfolio generally will be subject to a 4% nondeductible excise
tax to the extent the Portfolio does not meet certain minimum distribution
requirements by the end of each calendar year. To avoid the imposition of the 4%
excise tax, it may be necessary for a dividend to be declared in December and
actually paid in January of the following year, which will be treated as having
been received by shareholders on December 31 of the calendar year in which
declared. Under this rule, therefore, a shareholder may be taxed in one year on
dividends or distributions actually received in January of the following year.
Dividends and distributions may be subject to state and local taxes.
PORTFOLIO TRANSACTIONS
Purchases and sales of securities for the Portfolio usually are
principal transactions. Portfolio securities normally are purchased directly
from the issuer or from an underwriter or market maker for the securities. There
usually, but not always, are no brokerage commissions paid by the Fund for such
purchases, and during the fiscal year ended October 31, 1998, the Fund paid no
brokerage commissions for the Portfolio. Purchases from dealers serving as
market makers may include the spread between the bid and asked prices. The
Adviser attempts to obtain the best price and execution for portfolio
transactions.
The Portfolio will not purchase securities from, sell securities to, or
enter into repurchase or reverse repurchase agreements with, the Adviser or any
of its affiliates.
Allocation of transactions, including their frequency, to various
dealers is determined by the Adviser in its best judgment under the general
supervision of the Board of Trustees of the Fund and in a manner deemed fair and
reasonable to shareholders. The primary consideration is prompt execution of
orders in an effective manner at the best price. On occasion the Adviser on
behalf of the Portfolio may effect securities transactions on an agency basis
with broker-dealers providing research services and/or research-related products
for the Fund. Research services or research-related products may include
information in the form of written reports, reports accessed by computers or
terminals, statistical collations and appraisals and analysis relating to
companies or industries. However, in selecting such broker-dealers, the Adviser
adheres to the primary consideration of best price and execution.
Investment decisions for the Portfolio of the Fund are made
independently from those for the other portfolios or other clients advised by
the Adviser. It may happen, on occasion, that the same security is held in one
portfolio of the Fund and the other portfolios of one or more of such other
clients. Simultaneous transactions are likely when several portfolios and
clients are advised by the same investment adviser, particularly when a security
is suitable for the investment objectives of more than one of such portfolios or
clients. When two or more portfolios or other clients advised by the Adviser are
simultaneously engaged in the purchase or sale of the same security, the
transactions are allocated to the respective portfolios or clients, both as to
amount and price, in accordance with a method deemed equitable to each portfolio
or client. In some cases this system may adversely affect the price paid or
received by a portfolio of the Fund or the size of the security position
obtainable for such portfolio.
INVESTMENT RESTRICTIONS
The Fund has adopted the following investment restrictions for the
Portfolio, none of which may be changed without the approval of a majority of
the outstanding shares of the Portfolio, as defined under "General Information"
in this Statement of Additional Information. Accordingly, the Portfolio may not:
(1) Invest more than 5% of its total assets in the securities of
any one issuer, other than securities issued or guaranteed by
the United States Government or its agencies or
instrumentalities, except that up to 25% of the value of the
Portfolio's total assets may be invested without regard to
this 5% limitation.
B-12
<PAGE> 30
(2) Enter into repurchase agreements or purchase any other
investments for which market quotations are not readily
available, in each case maturing in more than 7 days if, as a
result, more than 10% of the market value of its total assets
would be invested in such repurchase agreements and such other
illiquid investments.
(3) Enter into reverse repurchase agreements exceeding in the
aggregate one-third of the market value of its total assets,
less liabilities other than the obligations created by reverse
repurchase agreements.
(4) Borrow money except from banks for temporary or emergency
purposes and in an amount not exceeding 10% of the value of
its net assets, or mortgage, pledge or hypothecate its assets
except in connection with any such borrowing and in amounts
not in excess of 20% of the value of its net assets. This
borrowing provision is not for investment leverage, but solely
to facilitate management of the Portfolio by enabling the Fund
to meet redemption requests when the liquidation of portfolio
securities is considered to be disadvantageous. The
Portfolio's net income will be reduced if the interest expense
of borrowings incurred to meet redemption requests and avoid
liquidation of portfolio securities exceeds the interest
income of those securities. To the extent that borrowings
exceed 5% of the value of the Portfolio's net assets, such
borrowings will be repaid before any investments are made. The
Portfolio's ability to enter into reverse repurchase
agreements is not restricted by this paragraph (4).
(5) Invest more than 25% of its total assets in the securities of
issuers in any single industry; provided that there shall be
no such limitation on the purchase of obligations issued or
guaranteed by the United States Government or its agencies or
instrumentalities, or time deposits (including certificates of
deposit), savings deposits and bankers' acceptances of United
States branches of United States banks.
(6) Act as an underwriter of securities, except to the extent that
the Fund may be deemed to be an "underwriter" in connection
with the purchase of securities for the Portfolio directly
from an issuer or an underwriter thereof.
(7) Lend any of its assets, except portfolio securities. This
shall not prevent the Portfolio from purchasing or holding
debt obligations, entering into repurchase agreements, and
loaning Federal funds and other day(s) funds to FDIC Insurance
Institutions (as defined in the Prospectus), in each case to
the extent permitted by the Portfolio's investment objective
and management policies.
(8) Purchase securities on margin or make short sales of
securities; write or purchase put or call options or
combinations thereof; or purchase or sell real estate, real
estate mortgage loans, real estate investment trust
securities, commodities or commodity contracts, or oil and gas
interests.
For purposes of investment restrictions (1) and (5) above as applicable
to the Money Market Portfolio, the Fund considers loans of federal funds to be
cash equivalents and not securities for purposes of diversification.
The Fund has also adopted certain investment restrictions which are
non-fundamental policies. Unlike fundamental policies, which may only be changed
with the approval of a majority of the outstanding shares of the Portfolio,
non-fundamental policies may be changed by the Fund's Trustees without
shareholder approval. However, in the event the Fund's Trustees agree to change
a non-fundamental policy, shareholders will be notified in advance of such
change. Accordingly, the Portfolio has adopted the following non-fundamental
policies:
(1) The Portfolio invests only in high quality assets (including
assets subject to repurchase agreements) that qualify as
"liquid assets" for savings associations under the regulations
of the Office of Thrift Supervision of the Department of the
Treasury ("OTS Regulations") and that, if included in the
Portfolio, will qualify its shares as "liquid assets."
(2) The Portfolio will not invest more than 10% of its net assets
in illiquid securities, including repurchase agreements
maturing in more than seven days.
B-13
<PAGE> 31
ORGANIZATION AND DESCRIPTION OF FUND SHARES
The Fund consists of an unlimited number of shares of beneficial
interest divided into five Portfolios: the Money Market Portfolio, the Short
U.S. Government Securities Portfolio, the Adjustable Rate Mortgage (ARM)
Portfolio, the Intermediate Mortgage Securities Portfolio, and the U.S.
Government Securities Portfolio. Shares of the Money Market Portfolio are issued
in two classes: D shares and I shares. The shares of each Portfolio represent
interests only in the corresponding portfolio. When issued and paid for in
accordance with the terms of offering, each share is fully paid and
nonassessable. All shares of beneficial interest of the same class have equal
dividend, distribution, liquidation and voting rights and are redeemable at net
asset value, at the option of the shareholder. In addition, the shares have no
preemptive, subscription or conversion rights and are freely transferable.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted by the provisions of such Act or applicable state law, or otherwise,
to the holders of the outstanding voting securities of an investment company
such as the Fund shall not be deemed to have been effectively acted upon unless
approved by the holders of a majority of the outstanding shares (as defined
under "General Information" in this Statement of Additional Information) of each
class affected by such matter. Rule 18f-2 further provides that a class shall be
deemed to be affected by a matter unless it is clear that the interests of each
class in the matter are identical or that the matter does not affect any
interest of such class. However, the Rule exempts the selection of independent
accountants and the election of trustees from the separate voting requirements
of the Rule.
COUNSEL AND INDEPENDENT ACCOUNTANTS
Vedder, Price, Kaufman & Kammholz is legal counsel to the Fund and
passes upon the validity of the shares offered by the Prospectus.
PricewaterhouseCoopers LLP has been selected as the Fund's independent
accountants. The financial statements of the Portfolio incorporated in this
Statement of Additional Information by reference to the Fund's Annual Report to
Shareholders for the year ended October 31, 1998 (see "Financial Statements"
below) have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, given on the authority of such firm as experts in
accounting and auditing.
GENERAL INFORMATION
The Fund sends to all of the shareholders of the Portfolio semi-annual
reports and annual reports, including a list of investment securities held by
the Portfolio, and, for annual reports, audited financial statements of the
Portfolio.
As used in the Prospectus and this Statement of Additional Information,
the term "majority," when referring to the approvals to be obtained from
shareholders, means the vote of the lesser of (1) 67% of the Fund's shares of
each class or of the class entitled to a separate vote present at a meeting if
the holders of more than 50% of the outstanding shares of all classes or of the
class entitled to a separate vote are present in person or by proxy, or (2) more
than 50% of the Fund's outstanding shares of all classes or of the class
entitled to a separate vote. The Bylaws of the Fund provide that an annual
meeting of shareholders is not required to be held in any year in which none of
the following is required to be acted on by shareholders pursuant to the 1940
Act: election of trustees; approval of the investment advisory agreement;
ratification of the selection of independent public accountants; and approval of
a distribution agreement.
The Prospectus and this Statement of Additional Information do not
contain all the information included in the registration statement filed with
the Securities and Exchange Commission under the Securities Act of 1933 with
respect to the securities offered hereby, certain portions of which have been
omitted pursuant to the rules and regulations of the Securities and Exchange
Commission. The registration statement, including the exhibits filed therewith,
may be examined at the office of the Securities and Exchange Commission in
Washington, D.C.
B-14
<PAGE> 32
Statements contained in the Prospectus and this Statement of Additional
Information as to the contents of any contract or other document referred to are
not necessarily complete, and, in each instance, reference is made to the copy
of such contract or other document filed as an exhibit to the registration
statement of which the Prospectus and this Statement of Additional Information
form a part, each such statement being qualified in all respects by such
reference.
FINANCIAL STATEMENTS
The financial statements required to be included in this Statement of
Additional Information are incorporated herein by reference to the Fund's Annual
Report to Shareholders for the year ended October 31, 1998 (the "Annual
Report"). The Fund will provide the Annual Report without charge to each person
to whom this Statement of Additional Information is delivered.
B-15
<PAGE> 33
ASSET MANAGEMENT FUND, INC
PART C
OTHER INFORMATION
Item 23. Exhibits
(a) (1) Articles of Amendment and Restatement of Articles of
Incorporation of Registrant dated November 9, 1982.
(1)/
(2) Articles Supplementary to Articles of Amendment and
Restatement of Articles of Incorporation of
Registrant dated November 1, 1983. (1)/
(3) Form of Articles of Amendment of Articles of
Incorporation of Registrant. (1)/
(4) Articles Supplementary to Articles of Amendment and
Restatement of Articles of Incorporation of
Registrant dated August 16, 1986. (1)/
(5) Articles of Amendment of Articles of Incorporation
dated May 4,1989. (1)/
(6) Articles of Amendment of Articles of Incorporation
dated February 23, 1990. (1)/
(7) Articles Supplementary to Articles of Amendment and
Restatement of Articles of Incorporation of
Registrant dated June 28, 1991. (1)/
(8) Form of Articles of Amendment of Articles of
Incorporation. (1)/
(9) Articles of Amendment of Articles of Incorporation
dated September 26, 1994. (1)/
(10) Declaration of Trust dated July 22, 1999.*
(11) Certificate of Trust dated July 22, 1999.*
(b) (1) By-Laws as restated as of September 20, 1991. (1)/
(2) By-Laws as adopted as of July 22, 1999.*
(c) Not applicable.
(d) (1) Investment Advisory Agreement, dated September 1,
1990, between Registrant and Shay Assets Management
Co. with respect to the Short-Term Liquidity
Portfolio, the Intermediate-Term Liquidity Portfolio,
the Mortgage Securities Performance Portfolio and the
Corporate Bond Portfolio. (1)/
(2) Form of Amendment to the Investment Advisory
Agreement with respect to the Adjustable Rate
Mortgage (ARM) Portfolio. (1)/
(3) Amendment to the Investment Advisory Agreement, dated
November 30, 1992, with respect to the Adjustable
Rate Mortgage (ARM) Portfolio. (1)/
(4) Investment Advisory Agreement dated December 8, 1997
between Registrant and Shay Assets Management, Inc.
(3)/
C-1
<PAGE> 34
(e) (1) Distribution Agreement. (2)/
(2) Distribution Agreement dated December 8, 1997 between
Registrant and Shay Financial Services, Inc. (3)/
(f) Not applicable.
(g) (1) Restated Custodian Agreement between Registrant and
Provident National Bank dated March 1, 1991. (1)/
(2) Amendment No. 1 to Restated Custodian Agreement dated
June 28, 1991. (1)/
(3) Amendment No. 2 to Restated Custodian Agreement dated
June 29, 1991. (1)/
(4) Custody Agreement dated July 30, 1999.*
(5) Form of Cash Management and Related Services
Agreement between Registrant and the Bank of New
York.*
(h) (1) (A) Restated Transfer Agency Agreement between
Registrant and Provident Financial
Processing Corporation dated March 1, 1991.
(1)/
(1) (B) Amendment No. 1 to Restated Transfer Agency
Agreement dated June 28, 1991. (1)/
(1) (C) Transfer Agency Agreement between Registrant
and BISYS dated September 13, 1999.*
(2) (A) Restated Administration Agreement between
Registrant and Provident Financial
Processing Corporation dated March 1, 1991.
(1)/
(2) (B) Amendment No. 1 to Restated Administration
Agreement dated June 28, 1991. (1)/
(2) (C) Amendment No. 2 to Restated Administration
Agreement dated September 20, 1991. (1)/
(3) Administration Agreement between Registrant and BISYS
dated August 1, 1999.*
(4) Fund Accounting Agreement between Registrant and
BISYS dated August 1, 1999.*
(5) OMNIBUS Fee Agreement between Registrant and BISYS
dated August 1, 1999.*
(i) (1) Opinion and Consent of Vedder, Price, Kaufman &
Kammholz with respect to the Short-Term Liquidity
Portfolio, the Intermediate-Term Liquidity Portfolio,
the Mortgage Securities Performance Portfolio and the
Corporate Bond Portfolio dated December 28, 1990.
(1)/
(2) Opinion and Consent of Vedder, Price, Kaufman &
Kammholz with respect to the Adjustable Rate Mortgage
(ARM) Portfolio dated July 2, 1991. (1)/
(3) Opinion and Consent of Vedder, Price, Kaufman &
Kammholz with respect to Class D shares of the Ready
Reserves Fund dated October 19, 1999.*
(j) Consent of PricewaterhouseCoopers
C-2
<PAGE> 35
(k) None.
(l) (1) Form of Purchase Agreement between Registrant and
initial investors with respect to the Short-Term
Liquidity Portfolio. (1)/
(2) Form of Purchase Agreement between Registrant and
initial investors with respect to the Mortgage
Securities Performance Portfolio dated November 2,
1983. (1)/
(m) (1) Plan and Agreement Pursuant to Rule 12b-1 between
Registrant and Shay Financial Services Co. dated
September 1, 1990. (1)/
(2) Form of Amendment to Plan and Agreement Pursuant to
Rule 12b-1 with respect to the Adjustable Rate
Mortgage (ARM) Portfolio. (1)/
(3) Amendment to Plan and Agreement Pursuant to Rule
12b-1 with respect to the Adjustable Rate Mortgage
(ARM) Portfolio dated June 28, 1991. (1)/
(4) Amendment to Plan and Agreement Pursuant to Rule
12b-1 dated September 18, 1996. (2)/
(5) Amended and Restated Rule 12b-1 Plan. (3)/
(6) Rule 12b-1 Plan dated July 22, 1999.*
(n) Multi-Class Plan dated July 22, 1999.*.
(o) Not applicable.
(1)/ Previously filed with Post-Effective Amendment No. 26 on or about
February 29, 1996 and incorporated herein by reference.
(2)/ Previously filed with Post-Effective Amendment No. 27 on or about
December 30, 1996 and incorporated herein by reference.
(3)/ Previously filed with Post-Effective Amendment No. 28 on or about
December 21, 1997.
Item 24. Persons Controlled By or Under Common Control with Registrant
None.
Item 25. Indemnification.
Section 5.2 of the Registrant's Declaration of Trust provides that the
Trust shall indemnify each of its Trustees, officers, employees, and agents
against all liabilities and expenses reasonably incurred by him or her in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, in which he or she may be involved or
with which he or she may be threatened, while in office or thereafter, by reason
of his or her being or having been such a Trustee, officer, employee or agent,
except with respect to any matter as to which he or she shall have been
adjudicated to have acted in bad faith, willful misfeasance, gross negligence or
reckless disregard of his or her duties.
The foregoing indemnification arrangements are subject to the
provisions of Sections 17(h) and (i) of the Investment Company Act of 1940.
Insofar as indemnification by the Registrant for liabilities arising
under the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
C-3
<PAGE> 36
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted against the Registrant by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
The Registrant maintains an insurance policy which insures its
directors and officers against certain civil liabilities.
Item 26. Business and Other Connections of Investment Adviser.
Incorporated herein by reference from the Statements of Additional
Information relating to the Portfolios are the following: the description of the
business of Shay Assets Management, Inc. (the "Adviser") contained in the
Section entitled "Investment Adviser and Administrator"; the information
concerning the organization of ShayFinancial Services, Inc. (the "Distributor")
contained in the Section entitled "Distributor" and the biographical information
pertaining to Messrs. Shay, Sammons, Podraza and Ellenwood contained in the
Section entitled "Investment Adviser and Administrator."
Effective December 8, 1997, the Adviser was appointed the investment
adviser to three registered investment companies:
Institutional Investors Capital Appreciation Fund, Inc., Asset
Management Fund and M.S.B. Fund, Inc. In addition, the Adviser serves as the
investment adviser to several savings banks located in New York on a non-
discretionary basis. To service the foregoing funds and accounts, the Adviser
maintains an office in New York City.
The Adviser is located at 230 West Monroe Street, Chicago, Illinois
60606 and at 1000 Brickell Avenue, Miami, Florida 33131 and also has an office
in New York City. The Adviser is a wholly owned subsidiary of Shay Investment
Services, Inc. ("SISI"), which is a closely held corporation controlled by
Rodger D. Shay. Shay Financial Services, Inc., the Distributor of the Fund, is
also a closely held corporation of SISI.
<TABLE>
<CAPTION>
BUSINESS AND OTHER CONNECTIONS OF
NAME BOARD OF DIRECTORS AND OFFICERS
- ---- ---------------------------------
<S> <C>
Rodger D. Shay Chairman and Director of the Adviser and
Distributor; Shareholder of First
Home Savings Bank, S.L.A., 48 West Main
Street, Pennsville, New Jersey 08070 and
has been a member of its Board of
Directors since December 1990.
Rodger D. Shay, Jr. President of the Distributor.
Edward E. Sammons, Jr. President of the Adviser.
Robert T. Podraza Vice President, Secretary and Treasurer of
both the Adviser and the Distributor.
</TABLE>
Item 27. Principal Underwriters.
(a) The Distributor serves as the principal distributor for
Institutional Investors Capital Appreciation Fund, Inc., Asset
Management Fund and M.S.B. Fund, Inc.
C-4
<PAGE> 37
(b) Certain information required by this Item 27 is incorporated
herein by reference to Item 26. Set forth below are the names
of the officers of the Distributor. (Other than those officers
who are also officers of the Registrant)
Item 28. Location of Accounts and Records.
Books and other documents required to be maintained pursuant to Rule
31a-1(b)(4) and (b)(10) are in the physical possession of the Fund's Secretary,
230 West Monroe Street, Chicago, Illinois 60606; accounts, books and other
documents required by Rule 31a-1(b)(5) through (7) and (b)(11) and Rule 31a-1(f)
are in the physical possession of Shay Assets Management, Inc., 230 West Monroe
Street, Chicago, Illinois 60606; all other books, accounts and other documents
required to be maintained under Section 31(a) of the Investment Company Act of
1940 and the Rules promulgated thereunder are in the physical possession of
BISYS Fund Services Ohio, Inc., 3435 Stelzer Road, Columbus, Ohio 43219.
Item 29. Management Services
Not Applicable.
Item 30. Undertakings
(a) Not applicable.
(b) Not applicable.
(c) Registrant undertakes to furnish each person to whom a
prospectus is delivered a copy of registrant's latest annual
report to shareholders upon request and without charge.
C-5
<PAGE> 38
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this amendment
to the registration statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of Chicago and State of Illinois on the
21st day of October, 1999.
ASSET MANAGEMENT FUND
By: /s/ Edward E. Sammons, Jr.
------------------------------
Edward E. Sammons, Jr.,
President
Pursuant to the requirements of the Securities Act of 1933, this
amendment to the registration statement has been signed below on October 21,
1999 by the following persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C>
/s/ Rodger D. Shay Trustee and Chairman of the Board
- ------------------------------------
Rodger D. Shay
/s/ Edward E. Sammons, Jr. President (principal executive officer)
- ------------------------------------ and Treasurer (principal financial and
Edward E. Sammons, Jr. accounting officer)
/s/ Richard M. Amis Trustee
- ------------------------------------
Richard M. Amis
/s/ Arthur G. De Russo Trustee
- ------------------------------------
Arthur G. De Russo
/s/ David F. Holland Trustee
- ------------------------------------
David F. Holland
/s/ Gerald J. Levy Trustee
- ------------------------------------
Gerald J. Levy
</TABLE>
C-6
<PAGE> 39
Exhibit Index
<TABLE>
<CAPTION>
Exhibit No. Description
<S> <C>
(a)(10) Declaration of Trust dated July 22, 1999
(a)(11) Certificate of Trust dated July 22, 1999
(b)(2) By-Laws dated July 22, 1999
(g)(4) Custody Agreement between Registrant and The Bank of New York dated
July 30, 1999
(g)(5) Form of Cash Management and Related Services Agreement between Registrant and
The Bank of New York
(h)(1)(C) Transfer Agency Agreement between Registrant and BISYS dated September
13, 1999
(h)(3) Administration Agreement between Registrant and BISYS dated August 1,
1999
(h)(4) Fund Accounting Agreement between Registrant and BISYS dated August
1, 1999
(h)(5) Omnibus Fee Agreement between Registrant and BISYS dated August 1,
1999
(i)(3) Opinion and Consent of Vedder, Price, Kaufman & Kammholz dated
October 21, 1999
(j) Consent of PricewaterhouseCoopers LLP
(m)(6) Rule 12b-1 Plan dated July 22, 1999
(n) Multi-Class Plan dated July 22, 1999
</TABLE>
<PAGE> 1
EXHIBIT (a)(10)
DECLARATION OF TRUST
OF
ASSET MANAGEMENT FUND
A Delaware Business Trust
July 22, 1999
<PAGE> 2
DECLARATION OF TRUST
OF
ASSET MANAGEMENT FUND
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
The Trust.........................................................................................................1
1.1 Name............................................................................................1
1.2 Trust Purpose...................................................................................1
1.3 Definitions.....................................................................................2
ARTICLE II
Trustees..........................................................................................................3
2.1 Number and Qualification........................................................................3
2.2 Term and Election...............................................................................4
2.3 Resignation and Removal.........................................................................4
2.4 Vacancies.......................................................................................4
2.5 Meetings........................................................................................4
2.6 Officers; Chairperson of the Board..............................................................5
2.7 By-Laws.........................................................................................6
ARTICLE III
Powers of Trustees................................................................................................6
3.1 General.........................................................................................6
3.2 Investments.....................................................................................6
3.3 Legal Title.....................................................................................7
3.4 Sale of Interests...............................................................................7
3.5 Borrow Money....................................................................................7
3.6 Delegation; Committee...........................................................................7
3.7 Collection and Payment..........................................................................7
3.8 Expenses........................................................................................7
3.9 Miscellaneous Powers............................................................................8
3.10 Further Powers..................................................................................8
ARTICLE IV
Investment Advisory, Administrative, and Placement Agent Services.................................................8
4.1 Investment Advisory and Other Services..........................................................8
4.2 Parties to Contract.............................................................................9
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE V
Limitations of Liability..........................................................................................9
5.1 No Personal Liability of Trustees, Officers, Employees or Agents................................9
5.2 Indemnification of Trustees, Officers, Employees and Agents.....................................9
5.3 Liability of Holders; Indemnification..........................................................10
5.4 No Bond Required of Trustees...................................................................10
5.5 No Duty of Investigation; Notice in Trust Instruments, Etc.....................................10
5.6 Reliance on Experts, Etc.......................................................................11
5.7 Assent to Declaration..........................................................................11
ARTICLE VI
Interests in the Trust...........................................................................................11
6.1 General Characteristics........................................................................11
6.2 Establishment of Series of Interests...........................................................12
6.3 Establishment of Classes.......................................................................13
6.4 Assets of Series...............................................................................13
6.5 Liabilities of Series..........................................................................13
6.6 Dividends and Distributions....................................................................14
6.7 Voting Rights..................................................................................15
6.8 Record Dates...................................................................................15
6.9 Transfer.......................................................................................15
6.10 Equality.......................................................................................15
6.11 Fractions......................................................................................15
6.12 Class Differences..............................................................................16
6.13 Conversion of Interests........................................................................16
6.14 Investments in the Trust.......................................................................16
6.15 Trustees and Officers as Holders...............................................................16
6.16 No Preemptive Rights; Derivative Suits.........................................................16
6.17 No Appraisal Rights............................................................................16
6.18 Status of Interests and Limitation of Personal Liability.......................................16
6.19 Elimination of Series..........................................................................17
ARTICLE VII
Purchases and Redemptions........................................................................................17
7.1 Purchases......................................................................................17
7.2 Redemption by Holder...........................................................................17
7.3 Redemption by Trust............................................................................18
7.4 Net Asset Value................................................................................18
ARTICLE VIII
Holders..........................................................................................................18
8.1 Rights of Holders..............................................................................18
8.2 Register of Interests..........................................................................19
8.3 Notices........................................................................................19
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
8.4 Meetings of Holders............................................................................19
8.5 Notice of Meetings.............................................................................19
8.6 Record Date....................................................................................19
8.7 Proxies, Etc...................................................................................20
8.8 Reports........................................................................................20
8.9 Inspection of Records..........................................................................20
8.10 Voting Powers..................................................................................21
8.11 Holder Action by Written Consent...............................................................21
8.12 Holder Communications..........................................................................21
ARTICLE IX
Duration; Termination of Trust;Amendment; Mergers; Etc...........................................................22
9.1 Duration.......................................................................................22
9.2 Termination of Trust...........................................................................22
9.3 Amendment Procedure............................................................................23
9.4 Merger, Consolidation and Sale of Assets.......................................................23
9.5 Incorporation..................................................................................23
ARTICLE X
Miscellaneous....................................................................................................24
10.1 Certificate of Designation; Agent for Service of Process.......................................24
10.2 Governing Law..................................................................................24
10.3 Counterparts...................................................................................24
10.4 Reliance by Third Parties......................................................................25
10.5 Provisions in Conflict With Law or Regulations.................................................25
10.6 Trust Only.....................................................................................25
10.7 Withholding....................................................................................25
10.8 Headings and Construction......................................................................26
</TABLE>
iii
<PAGE> 5
DECLARATION OF TRUST
OF
ASSET MANAGEMENT FUND
This DECLARATION OF TRUST OF ASSET MANAGEMENT FUND is made on
the 22nd day of July, 1999 by the parties signatory hereto, as Trustees.
WHEREAS, the Trustees desire to form a business trust under
the law of Delaware for the investment and reinvestment of its assets; and
WHEREAS, it is proposed that the Trust assets be composed of
cash, securities and other assets contributed to the Trust by the Holders of
Interests in the Trust entitled to ownership rights in the Trust;
NOW, THEREFORE, the Trustees hereby declare that the Trustees
will hold in trust all cash, securities and other assets which they may from
time to time acquire in any manner as Trustees hereunder, and manage and dispose
of the same for the benefit of the Holders of Interests in the Trust, and
subject to the following terms and conditions.
ARTICLE I
The Trust
1.1 Name. The name of the Trust created hereby (the "Trust") shall
be "Asset Management Fund," and so far as may be practicable the Trustees shall
conduct the Trust's activities, execute all documents and sue or be sued under
that name, which name (and the word "Trust" wherever hereinafter used) shall not
refer to the Trustees in their individual capacities or to the officers, agents,
employees or Holders of Interest in the Trust. However, should the Trustees
determine that the use of the name of the Trust is not advisable, they may
select such other name for the Trust as they deem proper and the Trust may hold
its property and conduct its activities under such other name. Any name change
shall become effective upon the execution by a majority of the then Trustees of
an instrument setting forth the new name and the filing of a certificate of
amendment pursuant to Section 3810(b) of the DBTA. Any such instrument shall not
require the approval of the Holders of Interests in the Trust, but shall have
the status of an amendment to this Declaration.
1.2 Trust Purpose. The purpose of the Trust is to conduct, operate
and carry on the business of an open-end management investment company
registered under the 1940 Act. In furtherance of the foregoing, it shall be the
purpose of the Trust to do everything necessary, suitable, convenient or proper
for the conduct, promotion and attainment of any businesses and purposes which
at any time may be incidental or may appear conducive or expedient for the
accomplishment
<PAGE> 6
of the business of an open-end management investment company registered under
the 1940 Act and which may be engaged in or carried on by a trust organized
under the DBTA, and in connection therewith, the Trust shall have and may
exercise all of the powers conferred by the laws of the State of Delaware upon a
Delaware business trust.
1.3 Definitions. As used in this Declaration, the following terms
shall have the following meanings:
(a) "1940 Act" shall mean the Investment Company Act of 1940,
as amended from time to time, and the rules and regulations thereunder, as
adopted or amended from time to time.
(b) "Affiliated Person," "Assignment" and "Interested Person"
shall have the meanings given such terms in the 1940 Act.
(c) "Administrator" shall mean any party furnishing services
to the Trust pursuant to any administrative services contract described in
Section 4.1.
(d) "By-Laws" shall mean the By-Laws of the Trust as amended
from time to time.
(e) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and the rules and regulations thereunder, as adopted
or amended from time to time.
(f) "Commission" shall mean the Securities and Exchange
Commission.
(g) "Declaration" shall mean this Declaration of Trust, as
amended from time to time. References in this Declaration to "Declaration,"
"hereof," "herein" and "hereunder" shall be deemed to refer to the Declaration
rather than the article or section in which such words appear. This Declaration
shall, together with the By-Laws, constitute the governing instrument of the
Trust under the DBTA.
(h) "DBTA" shall mean the Delaware Business Trust Act,
Delaware Code Annotated Title 12, Sections 3801, et seq., as amended from time
to time.
(i) "Fiscal Year" shall mean an annual period as determined by
the Trustees unless otherwise provided by the Code or applicable regulations.
(j) "Holders" shall mean as of any particular time any or all
holders of record of Interests in the Trust or in Trust Property, as the case
may be, at such time.
(k) "Interest" shall mean a Holder's units of interest into
which the beneficial interest in the Trust and each series and class of the
Trust shall be divided from time to time.
2
<PAGE> 7
(l) "Investment Adviser" shall mean any party furnishing
services to the Trust pursuant to any investment advisory contract described in
Section 4.1 hereof.
(m) "Majority Interests Vote" shall mean the vote, at a
meeting of the Holders of Interests, of the lesser of (i) 67% or more of the
Interests present or represented at such meeting, provided the Holders of more
than 50% of the Interests are present or represented by proxy or (ii) more than
50% of the Interests.
(n) "Person" shall mean and include an individual,
corporation, partnership, trust, foundation, plan, association, joint venture,
estate and other entity, whether or not a legal entity, and a government and
agencies and political subdivisions thereof, whether domestic or foreign.
(o) "Registration Statement" as of any particular time shall
mean the Registration Statement of the Trust which is effective at such time
under the 1940 Act.
(p) "Trust Property" shall mean as of any particular time any
and all property, real or personal, tangible or intangible, which at such time
is owned or held by or for the account of the Trust or the Trustees or any
series of the Trust established in accordance with Section 6.2.
(q) "Trustees" shall mean such persons who have signed this
Declaration, so long as they shall continue in office in accordance with the
terms of this Declaration, and all other persons who at the time in question
have been duly elected or appointed as trustees in accordance with the
provisions of this Declaration and are then in office, in their capacity as
trustees hereunder.
ARTICLE II
Trustees
2.1 Number and Qualification. The number of Trustees shall
initially be five and shall thereafter be fixed from time to time by written
instrument signed, or by resolution approved at a duly constituted meeting, by a
majority of the Trustees so fixed, then in office, provided, however, that the
number of Trustees shall in no event be less than one. A Trustee shall be an
individual at least 21 years of age who is not under a legal disability.
(a) Any vacancy created by an increase in Trustees shall be
filled by the appointment or election of an individual having the qualifications
described in this Article as provided in Section 2.4. Any such appointment shall
not become effective, however, until the individual appointed or elected shall
have accepted in writing such appointment or election and agreed in writing to
be bound by the terms of the Declaration. No reduction in the number of Trustees
shall have the effect of removing any Trustee from office.
(b) Whenever a vacancy in the number of Trustees shall occur,
until such vacancy is filled as provided in Section 2.4 hereof, the Trustees in
office, regardless of their number, shall have all the powers granted to the
Trustees and shall discharge all the duties imposed upon the Trustees by this
Declaration.
3
<PAGE> 8
2.2 Term and Election. Each Trustee named herein, or elected or
appointed prior to the first meeting of the Holders, shall (except in the event
of resignations or removals or vacancies pursuant to Section 2.3 or 2.4 hereof)
hold office until his or her successor has been elected at such meeting and has
qualified to serve as Trustee. Beginning with the Trustees elected at the first
meeting of Holders, each Trustee shall hold office during the lifetime of this
Trust and until its termination as hereinafter provided unless such Trustee
resigns or is removed as provided in Section 2.3 below or his term expires
pursuant to Section 2.4 hereof.
2.3 Resignation and Removal. Any Trustee may resign (without need
for prior or subsequent accounting) by an instrument in writing signed by him or
her and delivered or mailed to the Chairperson, if any, the President or the
Secretary and such resignation shall be effective upon such delivery, or at a
later date according to the terms of the instrument.
(a) Any of the Trustees may be removed with or without cause
by the affirmative vote of the Holders of two-thirds (2/3) of the Interests or
(provided the aggregate number of Trustees, after such removal and after giving
effect to any appointment made to fill the vacancy created by such removal,
shall not be less than the number required by Section 2.1 hereof) with cause, by
the action of two-thirds (2/3) of the remaining Trustees, or without cause, by
the action of eighty percent (80%) of the remaining Trustees. Removal with cause
shall include, but not be limited to, the removal of a Trustee due to physical
or mental incapacity.
(b) Upon the resignation or removal of a Trustee, or his or
her otherwise ceasing to be a Trustee, he or she shall execute and deliver such
documents as the remaining Trustees shall require for the purpose of conveying
to the Trust or the remaining Trustees any Trust Property held in the name of
the resigning or removed Trustee. Upon the death of any Trustee or upon removal
or resignation due to any Trustee's incapacity to serve as trustee, his or her
legal representative shall execute and deliver on his or her behalf such
documents as the remaining Trustees shall require as provided in the preceding
sentence.
2.4 Vacancies. The term of office of a Trustee shall terminate and
a vacancy shall occur in the event of the earliest to occur of the following:
the Trustee's death, resignation, adjudicated incompetence or other incapacity
to perform the duties of the office, or the removal of the Trustee. A vacancy
shall also occur in the event of an increase in the number of Trustees as
provided in Section 2.1. No such vacancy shall operate to annul this Declaration
or to revoke any existing trust created pursuant to the terms of this
Declaration. In the case of a vacancy, the Holders of a plurality of the
Interests entitled to vote, acting at any meeting of the Holders held in
accordance with Article VIII hereof, or, to the extent permitted by the 1940
Act, a majority vote of the Trustees continuing in office acting by written
instrument or instruments, may fill such vacancy, and any Trustee so elected by
the Trustees or the Holders shall hold office as provided in this Declaration.
There shall be no cumulative voting by the Holders in the election of Trustees.
2.5 Meetings. Meetings of the Trustees shall be held from time to
time within or without the State of Delaware upon the call of the Chairperson,
if any, the President, the Chief Operating Officer, the Secretary, an Assistant
Secretary or any two Trustees.
4
<PAGE> 9
(a) Regular meetings of the Trustees may be held without call
or notice at a time and place fixed by the By-Laws or by resolution of the
Trustees. Notice of any other meeting shall be given not later than 72 hours
preceding the meeting by United States mail or by electronic transmission to
each Trustee at his or her business address as set forth in the records of the
Trust or otherwise given personally not less than 24 hours before the meeting
but may be waived in writing by any Trustee either before or after such meeting.
The attendance of a Trustee at a meeting shall constitute a waiver of notice of
such meeting except where a Trustee attends a meeting for the express purpose of
objecting to the transaction of any business on the ground that the meeting has
not been lawfully called or convened.
(b) A quorum for all meetings of the Trustees shall be
one-third of the total number of Trustees, but (except at such time as there is
only one Trustee) no less than two Trustees. Unless provided otherwise in this
Declaration, any action of the Trustees may be taken at a meeting by vote of a
majority of the Trustees present (a quorum being present) or without a meeting
by written consent of a majority of the Trustees, which written consent shall be
filed with the minutes of proceedings of the Trustees or any such committee. If
there be less than a quorum present at any meeting of the Trustees, a majority
of those present may adjourn the meeting until a quorum shall have been
obtained.
(c) Any committee of the Trustees, including an executive
committee, if any, may act with or without a meeting. A quorum for all meetings
of any such committee shall be two or more of the members thereof, unless the
Board shall provide otherwise. Unless provided otherwise in this Declaration,
any action of any such committee may be taken at a meeting by vote of a majority
of the members present (a quorum being present) or without a meeting by written
consent of a majority of the members, which written consent shall be filed with
the minutes of proceedings of the Trustees or any such committee.
(d) With respect to actions of the Trustees and any committee
of the Trustees, Trustees who are Interested Persons of the Trust or are
otherwise interested in any action to be taken may be counted for quorum
purposes under this Section 2.5 and shall be entitled to vote to the extent
permitted by the 1940 Act.
(e) All or any one or more Trustees may participate in a
meeting of the Trustees or any committee thereof by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
pursuant to such communications system shall constitute presence in person at
such meeting, unless the 1940 Act specifically requires the Trustees to act "in
person," in which case such term shall be construed consistent with Commission
or staff releases or interpretations.
2.6 Officers; Chairperson of the Board. The Trustees shall, from
time to time, elect officers of the Trust, including a President, a Secretary
and a Treasurer. The Trustees shall elect or appoint, from time to time, a
Trustee to act as Chairperson of the Board who shall preside at all meetings of
the Trustees and carry out such other duties as the Trustees shall designate.
The Trustees may elect or appoint or authorize the President to appoint such
other officers or agents with
5
<PAGE> 10
such powers as the Trustees may deem to be advisable. The President, Secretary
and Treasurer may, but need not, be a Trustee. The Chairperson of the Board and
such officers of the Trust shall serve in such capacity for such time and with
such authority as the Trustees may, in their discretion, so designate or as
provided for in the By-Laws.
2.7 By-Laws. The Trustees may adopt and, from time to time, amend
or repeal the By-Laws for the conduct of the business of the Trust not
inconsistent with this Declaration, and such By-Laws are hereby incorporated in
this Declaration by reference thereto.
ARTICLE III
Powers of Trustees
3.1 General. The Trustees shall have exclusive and absolute
control over management of the business and affairs of the Trust, but with such
powers of delegation as may be permitted by this Declaration and the DBTA. The
Trustees may perform such acts as in their sole discretion are proper for
conducting the business and affairs of the Trust. The enumeration of any
specific power herein shall not be construed as limiting the aforesaid power.
Such powers of the Trustee may be exercised without order of, or recourse to,
any court.
3.2 Investments. The Trustees shall have power to:
(a) conduct, operate and carry on the business of an
investment company; and
(b) subscribe for, invest in, reinvest in, purchase or
otherwise acquire, hold, pledge, sell, assign, lend, transfer, exchange,
distribute, write or otherwise deal in or dispose of United States and foreign
currencies and related instruments including forward contracts, and securities,
including common and preferred stock, warrants, bonds, debentures, time notes,
bankers acceptances and all other evidences of indebtedness, negotiable or
non-negotiable instruments, obligations, certificates of deposit or
indebtedness, commercial paper, repurchase agreements, reverse repurchase
agreements, convertible securities, forward contracts, options, futures
contracts, and other securities, including, without limitation, those issued,
guaranteed or sponsored by any state, territory or possession of the United
States and the District of Columbia and their political subdivisions, agencies
and instrumentalities, or by the United States Government, any foreign
government, or any agency, instrumentality or political subdivision of the
United States Government or any foreign government, or international
instrumentalities, or by any bank, savings institution, corporation or other
business entity organized under the laws of the United States or under foreign
laws or in "when-issued" contracts for such securities; and to exercise any and
all rights, powers and privileges of ownership or interest in respect of any and
all such investments of every kind and description, including, without
limitation, the right to consent and otherwise act with respect thereto, with
power to designate one or more persons, firms, associations, or corporations to
exercise any of said rights, powers and privileges in respect of any of said
instruments; and the Trustees shall be deemed to have the foregoing powers with
respect to any additional securities in which the Trustees may determine to
invest.
6
<PAGE> 11
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust, nor shall the Trustees be limited
by any law limiting the investments which may be made by fiduciaries.
3.3 Legal Title. Legal title to all the Trust Property shall be
vested in the Trust as a separate legal entity under the DBTA, except that the
Trustees shall have the power to cause legal title to any Trust Property to be
held by or in the name of one or more of the Trustees or in the name of any
other Person on behalf of the Trust on such terms as the Trustees may determine.
In the event that title to any part of the Trust Property is vested in
one or more Trustees, the right, title and interest of the Trustees in the Trust
Property shall vest automatically in each person who may hereafter become a
Trustee upon his or her due election and qualification. Upon the resignation,
removal or death of a Trustee he or she shall automatically cease to have any
right, title or interest in any of the Trust Property, and the right, title and
interest of such Trustee in the Trust Property shall vest automatically in the
remaining Trustees. To the extent permitted by law, such vesting and cessation
of title shall be effective whether or not conveyancing documents have been
executed and delivered.
3.4 Sale of Interests. Subject to the more detailed provisions set
forth in Article VII, the Trustees shall have the power to permit persons to
purchase Interests and to add or reduce, in whole or in part, their Interest in
the Trust.
3.5 Borrow Money. The Trustees shall have power to borrow money or
otherwise obtain credit and to secure the same by mortgaging, pledging or
otherwise subjecting as security the assets of the Trust, including the lending
of portfolio securities, and to endorse, guarantee or undertake the performance
of any obligation, contract or engagement of any other person, firm, association
or corporation.
3.6 Delegation; Committee. The Trustees shall have the power,
consistent with their continuing exclusive authority over the management of the
Trust and the Trust Property, to delegate from time to time to such of their
number or to officers, employees or agents of the Trust the doing of such things
and the execution of such instruments, either in the name of the Trust or the
names of the Trustees or otherwise, as the Trustees may deem expedient.
3.7 Collection and Payment. The Trustees shall have the power to
collect all property due to the Trust; to pay all claims, including taxes,
against the Trust Property; to prosecute, defend, compromise or abandon any
claims relating to the Trust Property; to foreclose any security interest
securing any obligations, by virtue of which any property is owed to the Trust;
and to enter into releases, agreements and other instruments.
3.8 Expenses. The Trustees shall have the power to incur and pay
any expenses which in the opinion of the Trustees are necessary or incidental to
carry out any of the purposes of this Declaration, and to pay reasonable
compensation from the funds of the Trust to themselves as Trustees. The Trustees
shall fix the compensation of all officers, employees and Trustees. The
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Trustees may pay themselves such compensation for special services, including
legal and brokerage services, as they in good faith may deem reasonable (subject
to any limitations in the 1940 Act), and reimbursement for expenses reasonably
incurred by themselves on behalf of the Trust. There shall be no retirement
compensation plan for the Trustees; provided, however, that the Trustees may
adopt a deferred compensation plan consistent with industry and regulatory
standards.
3.9 Miscellaneous Powers. The Trustees shall have the power to:
(a) employ or contract with such Persons as the Trustees may deem desirable for
the transaction of the business of the Trust and terminate such employees or
contractual relationships as they consider appropriate; (b) enter into joint
ventures, partnerships and any other combinations or associations; (c) purchase,
and pay for out of Trust Property, insurance policies (including, but not
limited to, fidelity bonding and errors and omission policies) insuring the
Investment Adviser, Administrator, distributor, Holders, Trustees, officers,
employees, agents, or independent contractors of the Trust against all claims
arising by reason of holding any such position or by reason of any action taken
or omitted by any such Person in such capacity, whether or not the Trust would
have the power to indemnify such Person against liability; (d) establish
pension, profit-sharing and other retirement, incentive and benefit plans for
any officers, employees and agents of the Trust; (e) to the extent permitted by
law, indemnify any Person with whom the Trust has dealings, including the
Investment Adviser, Administrator, distributor, Holders, Trustees, officers,
employees, agents or independent contractors of the Trust, to such extent as the
Trustees shall determine; (f) guarantee indebtedness or contractual obligations
of others; (g) determine and change the Fiscal Year of the Trust and the method
by which its accounts shall be kept; and (h) adopt a seal for the Trust, but the
absence of such seal shall not impair the validity of any instrument executed on
behalf of the Trust.
3.10 Further Powers. The Trustees shall have power to conduct the
business of the Trust and carry on its operations in any and all of its branches
and maintain offices, whether within or without the State of Delaware, in any
and all states of the United States of America, in the District of Columbia, in
any foreign countries, and in any and all commonwealths, territories,
dependencies, colonies, possessions, agencies or instrumentalities of the United
States of America and of foreign countries, and to do all such other things and
execute all such instruments as they deem necessary, proper or desirable in
order to promote the interests of the Trust although such things are not herein
specifically mentioned. Any determination as to what is in the interests of the
Trust made by the Trustees in good faith shall be conclusive and shall be
binding upon the Trust and the Holders, past, present and future. In construing
the provisions of this Declaration, the presumption shall be in favor of a grant
of power to the Trustees. The Trustees shall not be required to obtain any court
order to deal with Trust Property.
ARTICLE IV
Investment Advisory, Administrative, and Placement Agent Services
4.1 Investment Advisory and Other Services. The Trustees may in
their discretion, from time to time, enter into contracts or agreements for
investment advisory services, administrative services (including management,
transfer and dividend disbursing agency services), distribution services,
fiduciary (including custodian, subcustodian and depository) services, placement
agent
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services, Holder servicing and distribution services, or other services, whereby
the other party to such contract or agreement shall undertake to furnish the
Trustees such services as the Trustees shall, from time to time, consider
desirable and all upon such terms and conditions as the Trustees may in their
discretion determine. Notwithstanding any other provisions of this Declaration
to the contrary, the Trustees may authorize any Investment Adviser (subject to
such general or specific instructions as the Trustees may, from time to time,
adopt) to effect purchases, sales, loans or exchanges of Trust Property on
behalf of the Trustees or may authorize any officer, employee or Trustee to
effect such purchases, sales, loans or exchanges pursuant to recommendations of
any such Investment Adviser (all without further action by the Trustees). Any
such purchases, sales, loans or exchanges shall be binding upon the Trust.
4.2 Parties to Contract. Any contract or agreement of the
character described in Section 4.1 of this Article IV or in the By-Laws of the
Trust may be entered into with any Person, although one or more of the Trustees
or officers of the Trust or any Holder may be an officer, director, trustee,
shareholder, or member of such other party to the contract or agreement, and no
such contract or agreement shall be invalidated or rendered voidable by reason
of the existence of any such relationship, nor shall any person holding such
relationship be liable merely by reason of such relationship for any loss or
expense to the Trust under or by reason of such contract or agreement or held
accountable for any profit realized directly or indirectly therefrom, provided
that the contract or agreement when entered into was reasonable and fair and not
inconsistent with the provisions of this Article IV or the By-Laws. Any Trustee
or officer of the Trust or any Holder may be the other party to contracts or
agreements entered into pursuant to Section 4.1 hereof or the By-Laws of the
Trust, and any Trustee or officer of the Trust or any Holder may be financially
interested or otherwise affiliated with Persons who are parties to any or all of
the contracts or agreements mentioned in this Section 4.2.
ARTICLE V
Limitations of Liability
5.1 No Personal Liability of Trustees, Officers, Employees or
Agents. No Trustee, officer, employee or agent of the Trust when acting in such
capacity shall be subject to any personal liability whatsoever, in his or her
individual capacity, to any Person, other than the Trust or its Holders, in
connection with Trust Property or the affairs of the Trust; and all such Persons
shall look solely to the Trust Property for satisfaction of claims of any nature
against a Trustee, officer, employee or agent of the Trust arising in connection
with the affairs of the Trust. No Trustee, officer, employee or agent of the
Trust shall be liable to the Trust, Holders of Interests therein, or to any
Trustee, officer, employee, or agent thereof for any action or failure to act
(including, without limitation, the failure to compel in any way any former or
acting Trustee to redress any breach of trust), except for his or her own bad
faith, willful misfeasance, gross negligence or reckless disregard of his or her
duties.
5.2 Indemnification of Trustees, Officers, Employees and Agents.
The Trust shall indemnify each of its Trustees, officers, employees, and agents
(including Persons who serve at its request as directors, officers or trustees
of another organization in which it has any interest, as a
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shareholder, creditor or otherwise) against all liabilities and expenses
(including amounts paid in satisfaction of judgments, in compromise, as fines
and penalties, and as counsel fees) reasonably incurred by him or her in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, in which he or she may be involved or
with which he or she may be threatened, while in office or thereafter, by reason
of his or her being or having been such a Trustee, officer, employee or agent,
except with respect to any matter as to which he or she shall have been
adjudicated to have acted in bad faith, willful misfeasance, gross negligence or
reckless disregard of his or her duties; provided, however, that as to any
matter disposed of by a compromise payment by such Person, pursuant to a consent
decree or otherwise, no indemnification either for said payment or for any other
expenses shall be provided unless there has been a determination that such
Person did not engage in willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his or her office by
the court or other body approving the settlement or other disposition or by a
reasonable determination, based upon review of readily available facts (as
opposed to a full trial-type inquiry), that he or she did not engage in such
conduct or by a reasonable determination, based upon a review of the facts, that
such Person was not liable by reason of such conduct, by (a) the vote of a
majority of a quorum of Trustees who are neither "interested persons" of the
Trust as defined in Section 2(a)(19) of the 1940 Act nor parties to the
proceeding, or (b) a written opinion from independent legal counsel approved by
the Trustees. The rights accruing to any Person under these provisions shall not
exclude any other right to which he or she may be lawfully entitled; provided
that no Person may satisfy any right of indemnity or reimbursement granted
herein or in Section 5.1 or to which he or she may be otherwise entitled except
out of the Trust Property. The Trustees may make advance payments in connection
with indemnification under this Section 5.2, provided that the indemnified
Person shall have given a written undertaking to reimburse the Trust in the
event it is subsequently determined that he or she is not entitled to such
indemnification. All payments shall be made in compliance with Section 17(h) of
the 1940 Act.
5.3 Liability of Holders; Indemnification. The Trust shall
indemnify and hold each Holder harmless from and against any claim or liability
to which such Holder may become subject solely by reason of his or her being or
having been a Holder and not because of such Holder's acts or omissions or for
some other reason, and shall reimburse such Holder for all legal and other
expenses reasonably incurred by him or her in connection with any such claim or
liability (upon proper and timely request by the Holder); provided, however,
that no Holder shall be entitled to indemnification by any series established in
accordance with Section 8.8 unless such Holder is a Holder of Interests of such
series. The rights accruing to a Holder under this Section 5.3 shall not exclude
any other right to which such Holder may be lawfully entitled, nor shall
anything herein contained restrict the right of the Trust to indemnify or
reimburse a Holder in any appropriate situation even though not specifically
provided herein.
5.4 No Bond Required of Trustees. No Trustee shall, as such, be
obligated to give any bond or surety or other security for the performance of
any of his or her duties hereunder.
5.5 No Duty of Investigation; Notice in Trust Instruments, Etc. No
purchaser, lender, or other Person dealing with the Trustees or any officer,
employee or agent of the Trust shall be bound to make any inquiry concerning the
validity of any transaction purporting to be made by the Trustees
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or by said officer, employee or agent or be liable for the application of money
or property paid, loaned, or delivered to or on the order of the Trustees or of
said officer, employee or agent. Every obligation, contract, instrument,
certificate or other interest or undertaking of the Trust, and every other act
or thing whatsoever executed in connection with the Trust, shall be conclusively
relied upon as having been executed or done by the executors thereof only in
their capacities as Trustees, officers, employees or agents of the Trust. Every
written obligation, contract, instrument, certificate or other interest or
undertaking of the Trust made by the Trustees or by any officer, employee or
agent of the Trust, in his or her capacity as such, shall contain an appropriate
recital to the effect that the Trustee, officer, employee or agent of the Trust
shall not personally be bound by or liable thereunder, nor shall resort be had
to their private property or the private property of the Holders for the
satisfaction of any obligation or claim thereunder, and appropriate references
shall be made therein to the Declaration, and may contain any further recital
which they may deem appropriate, but the omission of such recital shall not
operate to impose personal liability on any of the Trustees, officers, employees
or agents of the Trust. The Trustees may maintain insurance for the protection
of the Trust Property, Holders, Trustees, officers, employees and agents in such
amount as the Trustees shall deem advisable.
5.6 Reliance on Experts, Etc. Each Trustee and officer or employee
of the Trust shall, in the performance of his or her duties, be fully and
completely justified and protected with regard to any act or any failure to act
resulting from reliance in good faith upon the books of account or other records
of the Trust, upon an opinion of counsel, or upon reports made to the Trust by
any of its officers or employees or by any Investment Adviser, Administrator,
accountant, appraiser or other experts or consultants selected with reasonable
care by the Trustees, officers or employees of the Trust, regardless of whether
such counsel or expert may also be a Trustee.
5.7 Assent to Declaration. Every Holder, by virtue of having
become a Holder in accordance with the terms of this Declaration, shall be held
to have expressly assented and agreed to the terms hereof and to have become a
party hereto.
ARTICLE VI
Interests in the Trust
6.1 General Characteristics. (a) The Trustees shall have the power
and authority, without Holder approval, to issue Interests in one or more series
from time to time as they deem necessary or desirable. Each series shall be
separate from all other series in respect to the assets and liabilities
allocated to that series and shall represent a separate investment portfolio of
the Trust. The Trustees shall have exclusive power, without Holder approval, to
establish and designate such separate and distinct series, as set forth in
Section 6.2, and to fix and determine the relative rights and preferences as
between the Interests of the separate series as to right of redemption, special
and relative rights as to dividends and other distributions and on liquidation,
conversion rights, and conditions under which the series shall have separate
voting rights or no voting rights.
(b) The Trustees may, without Holder approval, divide
Interests of any series into two or more classes, Interests of each such class
having such preferences and special or relative
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rights and privileges (including conversion rights, if any) as the Trustees may
determine as provided in Section 6.3. The fact that a series shall have been
initially established and designated without any specific establishment or
designation of classes, shall not limit the authority of the Trustees to divide
a series and establish and designate separate classes thereof.
(c) The number of Interests authorized shall be unlimited, and
the Interests so authorized may be represented in part by fractional Interests.
From time to time, the Trustees may divide or combine the Interests of any
series or class into a greater or lesser number without thereby changing the
proportionate beneficial interests in the series or class. The Trustees may
issue Interests of any series or class thereof for such consideration and on
such terms as they may determine (or for no consideration if pursuant to an
Interest dividend or split-up), all without action or approval of the Holders.
All Interests when so issued on the terms determined by the Trustees shall be
fully paid and non-assessable. The Trustees may classify or reclassify any
unissued Interests or any Interests previously issued and reacquired of any
series or class thereof into one or more series or classes thereof that may be
established and designated from time to time. The Trustees may hold as treasury
Interests, reissue for such consideration and on such terms as they may
determine, or cancel, at their discretion from time to time, any Interests of
any series or class thereof reacquired by the Trust.
6.2 Establishment of Series of Interests. (a) Without limiting the
authority of the Trustees set forth in Section 6.2(b) to establish and designate
any further series, the Trustees hereby establish and designate five series, as
follows:
Money Market Portfolio
Short U.S. Government Securities Portfolio
Adjustable Rate Mortgage (ARM) Portfolio
Intermediate Mortgage Securities Portfolio
U.S. Government Mortgage Securities Portfolio
The provisions of this Article VI shall be applicable to the
above designated series and any further series that may from time to time be
established and designated by the Trustees as provided in Section 6.2(b).
(b) The establishment and designation of any series of
Interests other than the one set forth above shall be effective upon the
execution, by a majority of the Trustees, of an instrument setting forth such
establishment and designation and the relative rights and preferences of such
series, or as otherwise provided in such instrument. At any time that there are
no Interests outstanding of any particular series previously established and
designated, the Trustees may by an instrument executed by a majority of their
number abolish that series and the establishment and designation thereof. Each
instrument referred to in this paragraph shall have the status of an amendment
of this Declaration.
(c) Section 9.2 of this Declaration of Trust shall apply also
with respect to each such series as if such series were a separate trust.
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6.3 Establishment of Classes. (a) Without limiting the authority
of the Trustees set forth in Section 6.3(b) to establish and designate any
further series, the Trustee hereby establish two classes of Money Market
Portfolio as follows:
I Shares Class
D Shares Class
The provision of this Article VI shall be applicable to the above
designated classes and any further classes that may from time to time be
established and designated by the Trustees as provided in Section 6.3(b).
(b) The division of any series into two or more classes and
the establishment and designation of such classes shall be effective upon the
execution by a majority of the Trustees of an instrument setting forth such
division, and the establishment, designation, and relative rights and
preferences of such classes, or as otherwise provided in such instrument. The
relative rights and preferences of the classes of any series may differ in such
respects as the Trustees may determine to be appropriate, provided that such
differences are set forth in the aforementioned instrument. At any time that
there are no Interests outstanding of any particular class previously
established and designated, the Trustees may by an instrument executed by a
majority of their number abolish that class and the establishment and
designation thereof. Each instrument referred to in this paragraph shall have
the status of an amendment to this Declaration.
(c) Section 9.2 of this Declaration of Trust shall apply also
with respect to each such class as if such class were a separate trust.
6.4 Assets of Series. All consideration received by the Trust for
the issue or sale of Interests of a particular series together with all Trust
Property in which such consideration is invested or reinvested, all income,
earnings, profits, and proceeds thereof, including any proceeds derived from the
sale, exchange or liquidation of such assets, and any funds or payments derived
from any reinvestment of such proceeds in whatever form the same may be, shall
irrevocably belong to that series for all purposes, subject only to the rights
of creditors of such series and except as may otherwise be required by
applicable tax laws, and shall be so recorded upon the books of account of the
Trust. Separate and distinct records shall be maintained for each series and the
assets associated with a series shall be held and accounted for separately from
the other assets of the Trust, or any other series. In the event that there is
any Trust Property, or any income, earnings, profits, and proceeds thereof,
funds, or payments which are not readily identifiable as belonging to any
particular series, the Trustees shall allocate them among any one or more of the
series established and designated from time to time in such manner and on such
basis as they, in their sole discretion, deem fair and equitable. Each such
allocation by the Trustees shall be conclusive and binding upon the Holders of
all Interests for all purposes.
6.5 Liabilities of Series. (a) The Trust Property belonging to
each particular series shall be charged with the liabilities of the Trust in
respect to that series and all expenses, costs, charges and reserves
attributable to that series, and any general liabilities, expenses, costs,
charges or reserves of the Trust which are not readily identifiable as belonging
to any particular series shall be
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allocated and charged by the Trustees to and among any one or more of the series
established and designated from time to time in such manner and on such basis as
the Trustees in their sole discretion deem fair and equitable. Each allocation
of liabilities, expenses, costs, charges and reserves by the Trustees shall be
conclusive and binding upon the Holders of all Interests for all purposes. The
Trustees shall have full discretion, to the extent not inconsistent with the
1940 Act, to determine which items shall be treated as income and which items as
capital, and each such determination and allocation shall be conclusive and
binding upon the Holders.
(b) Without limitation of the foregoing provisions of this
Section, but subject to the right of the Trustees in their discretion to
allocate general liabilities, expenses, costs, charges or reserves as herein
provided, the debts, liabilities, obligations and expenses incurred, contracted
for or otherwise existing with respect to a particular series shall be
enforceable against the assets of such series only, and not against the assets
of any other series. Notice of this limitation on interseries liabilities shall
be set forth in the certificate of trust of the Trust (whether originally or by
amendment) as filed or to be filed in the Office of the Secretary of State of
the State of Delaware pursuant to the DBTA, and upon the giving of such notice
in the certificate of trust, the statutory provisions of Section 3804 of the
DBTA relating to limitations on interseries liabilities (and the statutory
effect under Section 3804 of setting forth such notice in the certificate of
trust) shall become applicable to the Trust and each series. Every note, bond,
contract or other undertaking issued by or on behalf of a particular series
shall include a recitation limiting the obligation represented thereby to that
series and its assets.
6.6 Dividends and Distributions. (a) Dividends and distributions
on Interests of a particular series or any class thereof may be paid with such
frequency as the Trustees may determine, which may be daily or otherwise,
pursuant to a standing resolution or a resolution adopted only once or with such
frequency as the Trustees may determine, to the Holders of Interests in that
series or class, from such of the income and capital gains, accrued or realized,
from the Trust Property belonging to that series, or in the case of a class,
belonging to that series and allocable to that class, as the Trustees may
determine, after providing for actual and accrued liabilities belonging to that
series. All dividends and distributions on Interests in a particular series or
class thereof shall be distributed pro rata to the Holders of Interests in that
series or class in proportion to the total outstanding Interests in that series
or class held by such Holders at the date and time of record established for the
payment of such dividends or distribution, except to the extent otherwise
required or permitted by the preferences and special or relative rights and
privileges of any series or class. Such dividends and distributions may be made
in cash or Interests of that series or class or a combination thereof as
determined by the Trustees or pursuant to any program that the Trustees may have
in effect at the time for the election by each Holder of the mode of the paying
of such dividend or distribution to that Holder. Any such dividend or
distribution paid in Interests will be paid at the net asset value thereof as
determined in accordance with Section 7.4.
(b) The Interests in a series or a class of the Trust shall
represent beneficial interests in the Trust Property belonging to such series or
in the case of a class, belonging to such series and allocable to such class.
Each Holder of Interests in a series or a class shall be entitled to receive its
pro rata share of distributions of income and capital gains made with respect to
such series or such class. Upon reduction or withdrawal of its Interests or
indemnification for liabilities incurred
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by reason of being or having been a Holder of Interests in a series or a class,
such Holder shall be paid solely out of the funds and property of such series or
in the case of a class, the funds and property of such series and allocable to
such class of the Trust. Upon liquidation or termination of a series or class of
the Trust, Holders of Interests in such series or class shall be entitled to
receive a pro rata share of the Trust Property belonging to such series or in
the case of a class, belonging to such series and allocable to such class.
6.7 Voting Rights. Notwithstanding any other provision hereof, on
each matter submitted to a vote of the Holders, each Holder shall be entitled to
one vote for each whole Interest standing in his name on the books of the Trust,
and each fractional Interest shall be entitled to a proportionate fractional
vote, irrespective of the series thereof or class thereof, and all Interests of
all series and classes thereof shall vote together as a single class; provided,
however, that (a) as to any matter with respect to which a separate vote of one
or more series or classes thereof is permitted or required by the 1940 Act or
the provisions of the instrument establishing and designating the series or
class, such requirements as to a separate vote by such series or class thereof
shall apply in lieu of all Interests of all series and classes thereof voting
together; and (b) as to any matter which affects only the interests of one or
more particular series or classes thereof, only the Holders of the one or more
affected series or classes shall be entitled to vote, and each such series or
class shall vote as a separate series or class.
6.8 Record Dates. The Trustees may from time to time close the
transfer books or establish record dates and times for the purposes of
determining the Holders entitled to be treated as such, to the extent provided
or referred to in Section 8.6.
6.9 Transfer. All Interests of each particular series or class
thereof shall be transferable, but transfers of Interests of a particular series
or class thereof will be recorded on the Interest transfer records of the Trust
applicable to that series or class only at such times as Holders shall have the
right to require the Trust to redeem Interests of that series or class and at
such other times as may be permitted by the Trustees.
6.10 Equality. Except as provided herein or in the instrument
designating and establishing any class or series, all Interests of each
particular series or class thereof shall represent an equal proportionate
interest in the assets belonging to that series, or in the case of a class,
belonging to that series and allocable to that class, subject to the liabilities
belonging to that series, and each Interest of any particular series or class
shall be equal to each other Interest of that series or class; but the
provisions of this sentence shall not restrict any distinctions permissible
under Section 6.6 that may exist with respect to dividends and distributions on
Interests of the same series or class. The Trustees may from time to time divide
or combine the Interests of any particular series or class into a greater or
lesser number of Interests of that series or class without thereby changing the
proportionate beneficial interest in the assets belonging to that series or
class or in any way affecting the rights or Interests of any other series or
class.
6.11 Fractions. Any fractional Interest of any series or class, if
any such fractional Interest is outstanding, shall carry proportionately all the
rights and obligations of a whole Interest of that
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series or class, including rights and obligations with respect to voting,
receipt of dividends and distributions, redemption of Interests, and liquidation
of the Trust.
6.12 Class Differences. Subject to Section 6.3, the relative rights
and preferences of the classes of any series may differ in such other respects
as the Trustees may determine to be appropriate in their sole discretion,
provided that such differences are set forth in the instrument establishing and
designating such classes and executed by a majority of the Trustees.
6.13 Conversion of Interests. Subject to compliance with the
requirements of the 1940 Act, the Trustees shall have the authority to provide
that Holders of Interests of any series shall have the right to convert said
Interests into one or more other series in accordance with such requirements and
procedures as may be established by the Trustees. The Trustees shall also have
the authority to provide that Holders of Interests of any class of a particular
series shall have the right to convert said Interests into one or more other
classes of that particular series or any other series in accordance with such
requirements and procedures as may be established by the Trustees.
6.14 Investments in the Trust. The Trustees may accept investments
in the Trust from such persons and on such terms and for such consideration, not
inconsistent with the provisions of the 1940 Act, as they from time to time
authorize. The Trustees may authorize any distributor, principal underwriter,
custodian, transfer agent or other person to accept orders for the purchase of
Interests that conform to such authorized terms and to reject any purchase
orders for Interests whether or not conforming to such authorized terms.
6.15 Trustees and Officers as Holders. Any Trustee, officer or
other agent of the Trust, and any organization in which any such person is
interested, may acquire, own, hold and dispose of Interests of the Trust to the
same extent as if such person were not a Trustee, officer or other agent of the
Trust; and the Trust may issue and sell or cause to be issued and sold and may
purchase Interests from any such person or any such organization subject only to
the general limitations, restrictions or other provisions applicable to the sale
or purchase of Interests generally.
6.16 No Preemptive Rights; Derivative Suits. Holders shall have no
preemptive or other right to subscribe to any additional Interests or other
securities issued by the Trust. No action may be brought by a Holder on behalf
of the Trust unless Holders owning no less than 10% of the then outstanding
Interests, or series or class thereof, join in the bringing of such action. A
Holder of Interests in a particular series or a particular class of the Trust
shall not be entitled to participate in a derivative or class action lawsuit on
behalf of any other series or any other class or on behalf of the Holders of
Interests in any other series or any other class of the Trust.
6.17 No Appraisal Rights. Holders shall have no right to demand
payment for their Interests or to any other rights of dissenting Holders in the
event the Trust participates in any transaction which would give rise to
appraisal or dissenters' rights by a stockholder of a corporation organized
under the General Corporation Law of Delaware, or otherwise.
6.18 Status of Interests and Limitation of Personal Liability.
Interests shall be deemed to be personal property giving only the rights
provided in this Declaration of Trust. Every Holder by
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virtue of acquiring Interests shall be held to have expressly assented and
agreed to the terms hereof and to be bound hereby. The death, incapacity,
dissolution, termination or bankruptcy of a Holder during the continuance of the
Trust shall not operate to dissolve or terminate the Trust or any series thereof
nor entitle the representative of such Holder to an accounting or to take any
action in court or elsewhere against the Trust or the Trustees, but shall
entitle the representative of such Holder only to the rights of such Holder
under this Trust. Ownership of Interests shall not entitle the Holder to any
title in or to the whole or any part of the Trust Property or right to call for
a partition or division of the same or for an accounting, nor shall the
ownership of Interests constitute the Holders as partners or joint venturers.
Neither the Trust nor the Trustees, nor any officer, employee or agent of the
Trust, shall have any power to bind personally any Holder, nor except as
specifically provided herein to call upon any Holder for the payment of any sum
of money or assessment whatsoever other than such as the Holder may at any time
personally agree to pay.
6.19 Elimination of Series. Without limiting the authority of the
Trustees set forth in Section 9.2 of this Declaration of Trust, at any time that
there are no Interests outstanding of a series (or class), the Trustees may
abolish such series (or class).
ARTICLE VII
Purchases and Redemptions
7.1 Purchases. The Trustees, in their discretion, may, from time
to time, without a vote of the Holders, permit the purchase of Interests by such
party or parties (or increase in the Interests of a Holder), for such type of
consideration, including, without limitation, cash or property, at such time or
times (including, without limitation, each business day), and on such terms as
the Trustees may deem best, and may in such manner acquire other assets
(including, without limitation, the acquisition of assets subject to, and in
connection with the assumption of, liabilities) and businesses.
7.2 Redemption by Holder. Each Holder of Interests of the Trust or
any series or class thereof shall have the right at such times as may be
permitted by the Trust to require the Trust to redeem all or any part of his or
her Interests of the Trust, or series or class thereof, at a redemption price
equal to the net asset value per Interest of the Trust or series or class
thereof, next determined in accordance with Section 7.4 hereof after the
Interests are properly tendered for redemption, subject to any contingent
deferred sales charge or redemption charge in effect at the time of redemption.
Payment of the redemption price shall be in cash; provided, however, that if the
Trustees determine, which determination shall be conclusive, that conditions
exist which make payment wholly in cash unwise or undesirable, the Trust may,
subject to the requirements of the 1940 Act, make payment wholly or partly in
securities or other assets belonging to the Trust or series or class thereof of
which the Interests being redeemed are part of the value of such securities or
assets used in such determination of the net asset value.
Notwithstanding the foregoing, the Trust may postpone payment of the
redemption price and may suspend the right of the Holders of Interests of the
Trust, or series or class thereof, to require the Trust to redeem Interests of
the Trust, or of any series or class thereof, during any period or at any time
when and to the extent permissible under the 1940 Act.
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7.3 Redemption by Trust. Each Interest of the Trust, or series or
class thereof that has been established and designated is subject to redemption
by the Trust at the redemption price which would be applicable if such Interest
was then being redeemed by the Holder pursuant to Section 7.2 hereof: (a) at any
time, if the Trustees determine in their sole discretion and by majority vote
that it is in the best interest of the Trust, or any series or class thereof, to
so redeem, or (b) upon such other conditions as may from time to time be
determined by the Trustees and set forth in the then current Prospectus of the
Trust with respect to maintenance of Holder accounts of a minimum or maximum
amount or percentage. Upon such redemption the Holders of the Interests so
redeemed shall have no further right with respect thereto other than to receive
payment of such redemption price.
7.4 Net Asset Value. The net asset value per Interest of any
series shall be (a) in the case of a series whose Interests are not divided into
classes, the quotient obtained by dividing the value of the net assets of that
series (being the value of the assets belonging to that series less the
liabilities belonging to that series) by the total number of Interests of that
series outstanding, and (b) in the case of a class of Interests of a series
whose Interests are divided into classes, the quotient obtained by dividing the
value of the net assets of that series allocable to such class (being the value
of the assets belonging to that series allocable to such class less the
liabilities belonging to such class) by the total number of Interests of such
class outstanding; all determined in accordance with the methods and procedures,
including without limitation those with respect to rounding, established by the
Trustees from time to time.
The Trustees may determine to maintain the net asset value per Interest
of any series or any class at a designated constant dollar amount and in
connection therewith may adopt procedures consistent with the 1940 Act for
continuing declarations of income attributable to that series or that class as
dividends payable in additional Interests of that series at the designated
constant dollar amount and for the handling of any losses attributable to that
series or that class. Such procedures may provide that in the event of any loss
each Holder shall be deemed to have contributed to the capital of the Trust
attributable to that series his or her pro rata portion of the total number of
Interests required to be canceled in order to permit the net asset value per
Interest of that series or class to be maintained, after reflecting such loss,
at the designated constant dollar amount. Each Holder of the Trust shall be
deemed to have agreed, by his or her investment in any series or class with
respect to which the Trustees shall have adopted any such procedure, to make the
contribution referred to in the preceding sentence in the event of any such
loss.
ARTICLE VIII
Holders
8.1 Rights of Holders. The right to conduct any business
hereinbefore described is vested exclusively in the Trustees, and the Holders
shall have no rights under this Declaration or with respect to the Trust
Property other than the beneficial interest conferred by their Interests and the
voting rights accorded to them under this Declaration.
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8.2 Register of Interests. A register shall be kept by the Trust
under the direction of the Trustees which shall contain the names and addresses
of the Holders and the number of Interests held by each Holder. Each such
register shall be conclusive as to the identity of the Holders of the Trust and
the Persons who shall be entitled to payments of distributions or otherwise to
exercise or enjoy the rights of Holders. No Holder shall be entitled to receive
payment of any distribution, nor to have notice given to it as herein provided,
until it has given its address to such officer or agent of the Trustees as shall
keep the said register for entry thereon. No certificates certifying the
ownership of interests need be issued except as the Trustees may otherwise
determine from time to time.
8.3 Notices. Any and all notices to which any Holder hereunder may
be entitled and any and all communications shall be deemed duly served or given
if presented personally to a Holder, left at his or her residence or usual place
of business, or sent via United States mail or by electronic transmission to a
Holder at his or her address as it is registered with the Trust, as provided in
Section 8.2. If mailed, such notice shall be deemed to be given when deposited
in the United States mail addressed to the Holder at his or her address as it is
registered with the Trust, as provided in Section 8.2, with postage thereon
prepaid.
8.4 Meetings of Holders. Meetings of the Holders may be called at
any time by a majority of the Trustees and shall be called by any Trustee upon
written request of Holders holding, in the aggregate, not less than 10% of the
Interests (or series or class thereof), such request specifying the purpose or
purposes for which such meeting is to be called. Any such meeting shall be held
within or without the State of Delaware on such day and at such time as the
Trustees shall designate. Holders of one-third of the Interests in the Trust,
present in person or by proxy, shall constitute a quorum for the transaction of
any business, except as may otherwise be required by the 1940 Act or other
applicable law or by this Declaration or the By-Laws of the Trust. If a quorum
is present at a meeting, an affirmative vote by the Holders present, in person
or by proxy, holding more than 50% of the total Interests (or series or class
thereof) of the Holders present, either in person or by proxy, at such meeting
constitutes the action of the Holders, unless the 1940 Act, other applicable
law, this Declaration or the By-Laws of the Trust require a greater number of
affirmative votes. Notwithstanding the foregoing, the affirmative vote by the
Holders present, in person or by proxy, holding less than 50% of the Interests
(or class or series thereof) of the Holders present, in person or by proxy, at
such meeting shall be sufficient for adjournments. Any meeting of Holders,
whether or not a quorum is present, may be adjourned for any lawful purpose
provided that no meeting shall be adjourned for more than six months beyond the
originally scheduled meeting date. Any adjourned session or sessions may be
held, within a reasonable time after the date set for the original meeting
without the necessity of further notice.
8.5 Notice of Meetings. Written or printed notice of all meetings
of the Holders, stating the time, place and purposes of the meeting, shall be
given as provided in Section 8.3. At any such meeting, any business properly
before the meeting may be considered, whether or not stated in the notice of the
meeting. Any adjourned meeting held as provided in Section 8.4 shall not require
the giving of additional notice.
8.6 Record Date. For the purpose of determining the Holders who
are entitled to notice of any meeting, to vote at any meeting, to participate in
any distribution, or for the purpose of any
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other action, the Trustees may from time to time fix a date, not more than 90
calendar days prior to the date of any meeting of the Holders or payment of
distributions or other action, as the case may be, as a record date for the
determination of the persons to be treated as Holders of record for such
purposes, and any Holder who was a Holder at the date and time so fixed shall be
entitled to vote at such meeting or to be treated as a Holder of record for
purposes of such other action, even though he or she has since that date and
time disposed of his or her Interests, and no Holder becoming such after that
date and time shall be so entitled to vote at such meeting or to be treated as a
Holder of record for purposes of such other action. If the Trustees shall divide
the Interests into two or more series in accordance with Section 6.2 herein,
nothing in this Section shall be construed as precluding the Trustees from
setting different record dates for different series and if the Trustees shall
divide any series into two or more classes in accordance with Section 6.3
herein, nothing in this Section 8.6 shall be construed as precluding the
Trustees from setting different record dates for different classes.
8.7 Proxies, Etc. At any meeting of Holders, any Holder entitled
to vote thereat may vote by proxy, provided that no proxy shall be voted at any
meeting unless it shall have been placed on file with the Secretary, or with
such other officer or agent of the Trust as the Secretary may direct, for
verification prior to the time at which such vote shall be taken.
(a) Pursuant to a resolution of a majority of the Trustees,
proxies may be solicited in the name of one or more Trustees or one or more of
the officers of the Trust. Only Holders of record shall be entitled to vote.
Each Holder shall be entitled to a vote proportionate to its Interest in the
Trust.
(b) When Interests are held jointly by several persons, any
one of them may vote at any meeting in person or by proxy in respect to such
Interest, but if more than one of them shall be present at such meeting in
person or by proxy, and such joint owners or their proxies so present disagree
as to any vote to be cast, such vote shall not be received in respect to such
Interest.
(c) A proxy purporting to be executed by or on behalf of a
Holder shall be deemed valid unless challenged at or prior to its exercise, and
the burden of proving invalidity shall rest on the challenger. If the Holder is
a minor or a person of unsound mind, and subject to guardianship or to the legal
control of any other person regarding the charge or management of his or her
Interest, he or she may vote by his or her guardian or such other person
appointed or having such control, and such vote may be given in person or by
proxy.
8.8 Reports. The Trustees shall cause to be prepared, at least
annually, a report of operations containing a balance sheet and statement of
income and undistributed income of the Trust prepared in conformity with
generally accepted accounting principles and an opinion of an independent public
accountant on such financial statements. The Trustees shall, in addition,
furnish to the Holders at least semi-annually an interim report containing an
unaudited balance sheet as of the end of such period and an unaudited statement
of income and surplus for the period from the beginning of the current Fiscal
Year to the end of such period.
8.9 Inspection of Records. The records of the Trust shall be open
to inspection by Holders during normal business hours and for any purpose not
harmful to the Trust.
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8.10 Voting Powers. (a) The Holders shall have power to vote only
(i) for the election or removal of Trustees as contemplated by Section 2.2 and
2.3 hereof, (ii) with respect to any investment advisory contract as
contemplated by Section 4.1 hereof, (iii) with respect to termination of the
Trust as provided in Section 9.2 hereof, (iv) with respect to amendments to the
Declaration of Trust as provided in Section 9.3 hereof, (v) with respect to any
merger, consolidation or sale of assets as provided in Section 9.4 hereof, (vi)
with respect to incorporation of the Trust to the extent and as provided in
Section 9.5 hereof, and (vii) with respect to such additional matters relating
to the Trust as may be required by the 1940 Act, DBTA, or any other applicable
law, the Declaration, the By-Laws or any registration of the Trust with the
Commission (or any successor agency) or any state, or as and when the Trustees
may consider necessary or desirable.
(b) Each Holder shall be entitled to vote based on the ratio
his or her Interest bears to the Interests of all Holders entitled to vote.
Until Interests are issued, the Trustees may exercise all rights of Holders and
may take any action required by law, the Declaration or the By-Laws to be taken
by Holders. The By-Laws may include further provisions for Holders' votes and
meetings and related matters not inconsistent with this Declaration.
8.11 Holder Action by Written Consent. Any action which may be
taken by the Holders may be taken without notice and without a meeting if
Holders holding more than 50% of the total Interests entitled to vote (or such
larger proportion thereof as shall be required by any express provision of this
Declaration) shall consent to the action in writing and the written consents
shall be filed with the records of the meetings of Holders. Such consents shall
be treated for all purposes as votes taken at a meeting of the Holders.
8.12 Holder Communications. (a) Whenever ten or more Holders who
have been such for at least six months preceding the date of application, and
who hold in the aggregate at least 1% of the total Interests, shall apply to the
Trustees in writing, stating that they wish to communicate with other Holders
with a view to obtaining signatures for a request for a meeting of Holders and
accompanied by a form of communication and request which they wish to transmit,
the Trustees shall within five business days after receipt of such application
either (i) afford to such applicants access to a list of the names and addresses
of all Holders as recorded on the books of the Trust; or (ii) inform such
applicants as to the approximate number of Holders, and the approximate cost of
transmitting to them the proposed communication and form of request.
(b) If the Trustees elect to follow the course specified in
clause (ii) above, the Trustees, upon the written request of such applicants,
accompanied by a tender of the material to be transmitted and of the reasonable
expenses of transmission, shall, with reasonable promptness, transmit, by United
States mail or by electronic transmission, such material to all Holders at their
addresses as recorded on the books, unless within five business days after such
tender the Trustees shall transmit, by United States mail or by electronic
transmission, to such applicants and file with the Commission, together with a
copy of the material to be transmitted, a written statement signed by at least a
majority of the Trustees to the effect that in their opinion either such
material contains untrue statements of fact or omits to state facts necessary to
make the statements contained therein not misleading, or would be in violation
of applicable law, and specifying the basis of such opinion.
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The Trustees shall thereafter comply with any order entered by the Commission
and the requirements of the 1940 Act and the Securities Exchange Act of 1934.
ARTICLE IX
Duration; Termination of Trust;Amendment; Mergers; Etc.
9.1 Duration. Subject to possible termination in accordance with
the provisions of Section 9.2, the Trust created hereby shall continue
perpetually pursuant to Section 3808 of DBTA.
9.2 Termination of Trust. (a) The Trust may be terminated (i) by
the affirmative vote of the Holders of not less than two-thirds of the Interests
in the Trust at any meeting of the Holders, or (ii) by an instrument in writing,
without a meeting, signed by a majority of the Trustees and consented to by the
Holders of not less than two-thirds of such Interests, or (iii) by the Trustees
by written notice to the Holders. Upon any such termination,
(i) The Trust shall carry on no business except for the
purpose of winding up its affairs.
(ii) The Trustees shall proceed to wind up the affairs of
the Trust and all of the powers of the Trustees under this Declaration
shall continue until the affairs of the Trust shall have been wound up,
including the power to fulfill or discharge the contracts of the Trust,
collect its assets, sell, convey, assign, exchange, or otherwise
dispose of all or any part of the remaining Trust Property to one or
more Persons at public or private sale for consideration which may
consist in whole or in part of cash, securities or other property of
any kind, discharge or pay its liabilities, and do all other acts
appropriate to liquidate its business; provided that any sale,
conveyance, assignment, exchange, or other disposition of all or
substantially all of the Trust Property shall require approval of the
principal terms of the transaction and the nature and amount of the
consideration by the Holders with a Majority Interests Vote.
(iii) After paying or adequately providing for the
payment of all liabilities, and upon receipt of such releases,
indemnities and refunding agreements, as they deem necessary for their
protection, the Trustees may distribute the remaining Trust Property,
in cash or in kind or partly each, among the Holders according to their
respective rights.
(b) Upon termination of the Trust and distribution to the
Holders as herein provided, a majority of the Trustees shall execute and lodge
among the records of the Trust an instrument in writing setting forth the fact
of such termination and file a certificate of cancellation in accordance with
Section 3810 of the DBTA. Upon termination of the Trust, the Trustees shall
thereon be discharged from all further liabilities and duties hereunder, and the
rights and interests of all Holders shall thereupon cease.
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9.3 Amendment Procedure.
(a) All rights granted to the Holders under this Declaration
of Trust are granted subject to the reservation of the right of the Trustees to
amend this Declaration of Trust as herein provided, except as set forth herein
to the contrary. Subject to the foregoing, the provisions of this Declaration of
Trust (whether or not related to the rights of Holders) may be amended at any
time, so long as such amendment is not in contravention of applicable law,
including the 1940 Act, by an instrument in writing signed by a majority of the
Trustees (or by an officer of the Trust pursuant to the vote of a majority of
such Trustees). Any such amendment shall be effective as provided in the
instrument containing the terms of such amendment or, if there is no provision
therein with respect to effectiveness, upon the execution of such instrument and
of a certificate (which may be a part of such instrument) executed by a Trustee
or officer of the Trust to the effect that such amendment has been duly adopted.
(b) No amendment may be made, under Section 9.3(a) above,
which would change any rights with respect to any Interest in the Trust by
reducing the amount payable thereon upon liquidation of the Trust, by repealing
the limitations on personal liability of any Holder or Trustee, or by
diminishing or eliminating any voting rights pertaining thereto, except with a
Majority Interests Vote.
(c) A certification signed by a majority of the Trustees
setting forth an amendment and reciting that it was duly adopted by the Holders
or by the Trustees as aforesaid or a copy of the Declaration, as amended, and
executed by a majority of the Trustees, shall be conclusive evidence of such
amendment when lodged among the records of the Trust.
(d) Notwithstanding any other provision hereof, until such
time as Interests are first sold, this Declaration may be terminated or amended
in any respect by the affirmative vote of a majority of the Trustees or by an
instrument signed by a majority of the Trustees.
9.4 Merger, Consolidation and Sale of Assets. The Trust may merge
or consolidate with any other corporation, association, trust or other
organization or may sell, lease or exchange all or substantially all of its
property, including its good will, upon such terms and conditions and for such
consideration when and as authorized by no less than a majority of the Trustees
and by a Majority Interests Vote of the Trust or by an instrument or instruments
in writing without a meeting, consented to by the Holders of not less than 50%
of the total Interests of the Trust or such series, as the case may be, and any
such merger, consolidation, sale, lease or exchange shall be deemed for all
purposes to have been accomplished under and pursuant to the statutes of the
State of Delaware. In accordance with Section 3815(f) of DBTA, an agreement of
merger or consolidation may effect any amendment to the Declaration or By-Laws
or effect the adoption of a new declaration of trust or by-laws of the Trust if
the Trust is the surviving or resulting business trust. A certificate of merger
or consolidation of the Trust shall be signed by a majority of the Trustees.
9.5 Incorporation. Upon a Majority Interests Vote, the Trustees
may cause to be organized or assist in organizing a corporation or corporations
under the laws of any jurisdiction or any other trust, partnership, association
or other organization to take over all of the Trust Property
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or to carry on any business in which the Trust shall directly or indirectly have
any interest, and to sell, convey and transfer the Trust Property to any such
corporation, trust, association or organization in exchange for the equity
interests thereof or otherwise, and to lend money to, subscribe for the equity
interests of, and enter into any contracts with any such corporation, trust,
partnership, association or organization, or any corporation, partnership,
trust, association or organization in which the Trust holds or is about to
acquire equity interests. The Trustees may also cause a merger or consolidation
between the Trust or any successor thereto and any such corporation, trust,
partnership, association or other organization if and to the extent permitted by
law, as provided under the law then in effect. Nothing contained herein shall be
construed as requiring approval of the Holders for the Trustees to organize or
assist in organizing one or more corporations, trusts, partnerships,
associations or other organizations and selling, conveying or transferring a
portion of the Trust Property to such organizations or entities.
ARTICLE X
Miscellaneous
10.1 Certificate of Designation; Agent for Service of Process. The
Trust shall file, in accordance with Section 3812 of DBTA, in the office of the
Secretary of State of Delaware, a certificate of trust, in the form and with
such information required by Section 3810 of DBTA and executed in the manner
specified in Section 3811 of DBTA. In the event the Trust does not have at least
one Trustee qualified under Section 3807(a) of DBTA, then the Trust shall comply
with Section 3807(b) of DBTA by having and maintaining a registered office in
Delaware and by designating a registered agent for service of process on the
Trust, which agent shall have the same business office as the Trust's registered
office. The failure to file any such certificate, to maintain a registered
office, to designate a registered agent for service of process, or to include
such other information shall not affect the validity of the establishment of the
Trust, the Declaration, the By-Laws or any action taken by the Trustees, the
Trust officers or any other Person with respect to the Trust except insofar as a
provision of the DBTA would have governed, in which case the Delaware common law
governs.
10.2 Governing Law. This Declaration is executed by all of the
Trustees and delivered with reference to DBTA and the laws of the State of
Delaware, and the rights of all parties and the validity and construction of
every provision hereof shall be subject to and construed according to DBTA and
the laws of the State of Delaware (unless and to the extent otherwise provided
for and/or preempted by the 1940 Act or other applicable federal securities
laws); provided, however, that there shall not be applicable to the Trust, the
Trustees or this Declaration (a) the provisions of Section 3540 of Title 12 of
the Delaware Code, or (b) any provisions of the laws (statutory or common) of
the State of Delaware (other than the DBTA) pertaining to trusts which are
inconsistent with the rights, duties, powers, limitations or liabilities of the
Trustees set forth or referenced in this Declaration.
10.3 Counterparts. This Declaration may be simultaneously executed
in several counterparts, each of which shall be deemed to be an original, and
such counterparts, together, shall
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constitute one and the same instrument, which shall be sufficiently evidenced by
any such original counterpart.
10.4 Reliance by Third Parties. The original or a copy of this
instrument and of each restatement and/or amendment hereto shall be kept at the
office of the Trust where it may be inspected by any Holder. Any certificate
executed by an individual who, according to the records of the Trust or of any
recording office in which this Declaration may be recorded, appears to be a
Trustee hereunder, certifying to (a) the number or identity of Trustees or
Holders, (b) the due authorization of the execution of any instrument or
writing, (c) the form of any vote passed at a meeting of Trustees or Holders,
(d) the fact that the number of Trustees or Holders present at any meeting or
executing any written instrument satisfies the requirements of this Declaration,
(e) the form of any By-Laws adopted by or the identity of any officers elected
by the Trustees, or (f) the existence of any fact or facts which in any manner
relate to the affairs of the Trust, shall be conclusive evidence as to the
matters so certified in favor of any person dealing with the Trustees and their
successors.
10.5 Provisions in Conflict With Law or Regulations. (a) The
provisions of this Declaration are severable, and if the Trustees shall
determine, with the advice of counsel, that any of such provisions is in
conflict with the 1940 Act, the DBTA, or with other applicable laws and
regulations, the conflicting provisions shall be deemed never to have
constituted a part of this Declaration; provided, however, that such
determination shall not affect any of the remaining provisions of this
Declaration or render invalid or improper any action taken or omitted prior to
such determination.
(b) If any provision of this Declaration shall be held invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not in any manner
affect such provision in any other jurisdiction or any other provision of this
Declaration in any jurisdiction.
10.6 Trust Only. It is the intention of the Trustees to create only
a business trust under DBTA with the relationship of trustee and beneficiary
between the Trustees and each Holder from time to time. It is not the intention
of the Trustees to create a general partnership, limited partnership, joint
stock association, corporation, bailment, or any form of legal relationship
other than a Delaware business trust except to the extent such trust is deemed
to constitute a corporation under the Code and applicable state tax laws.
Nothing in this Declaration of Trust shall be construed to make the Holders,
either by themselves or with the Trustees, partners or members of a joint stock
association.
10.7 Withholding. Should any Holder be subject to withholding
pursuant to the Code or any other provision of law, the Trust shall withhold all
amounts otherwise distributable to such Holder as shall be required by law and
any amounts so withheld shall be deemed to have been distributed to such Holder
under this Declaration of Trust. If any sums are withheld pursuant to this
provision, the Trust shall remit the sums so withheld to and file the required
forms with the Internal Revenue Service, or other applicable government agency.
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10.8 Headings and Construction. Headings are placed herein for
convenience of reference only and shall not be taken as a part hereof or control
or affect the meaning, construction or effect of this instrument. Whenever the
singular number is used herein, the same shall include the plural; and the
neuter, masculine and feminine genders shall include each other, as applicable.
IN WITNESS WHEREOF, the undersigned have caused these presents
to be executed as of the day and year first above written.
/s/ Richard M. Amis July 22, 1999
- -----------------------------------------------------
Richard M. Amis, Trustee
/s/ Arthur G. De Russo July 22, 1999
- -----------------------------------------------------
Arthur G. De Russo, Trustee
/s/ David F. Holland July 22, 1999
- -----------------------------------------------------
David F. Holland, Trustee
/s/ Gerald J. Levy July 22, 1999
- -----------------------------------------------------
Gerald J. Levy, Trustee
/s/ Rodger D. Shay July 22, 1999
- -----------------------------------------------------
Rodger D. Shay, Trustee
26
<PAGE> 1
EXHIBIT (a)(11)
CERTIFICATE OF TRUST
OF
ASSET MANAGEMENT FUND
The undersigned, constituting the members of the Board of Trustees of
Asset Management Fund (the "Trust"), in order to form a Delaware business trust
pursuant to Section 3810 of the Delaware Business Trust Act, hereby certify the
following:
1. The name of the Delaware business trust is Asset Management Fund.
2. Prior to the issuance of beneficial interests, the Trust will become
a registered investment company under the Investment Company Act of 1940, as
amended.
3. Notice is hereby given that pursuant to Section 3804 of the Delaware
Business Trust Act, the debts, liabilities, obligations and expenses incurred,
contracted for or otherwise existing with respect to a particular series of the
Trust shall be enforceable against the assets of such series only and not
against the assets of the Trust generally.
4. The registered office of the Trust in Delaware is c/o The
Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware 19801.
5. The registered agent for service of process on the Trust is The
Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware 19801.
6. This Certificate of Trust shall be effective on the date it is filed
with the Office of the Delaware Secretary of State.
IN WITNESS WHEREOF, the undersigned Trustees of Asset Management Fund
have executed this Certificate as of the 22nd day of July, 1999.
/s/ Richard M. Amis
----------------------------
Richard M. Amis, Trustee
/s/ Arthur G. De Russo
----------------------------
Arthur G. De Russo, Trustee
/s/ David F. Holland
----------------------------
David F. Holland, Trustee
/s/ Gerald J. Levy
----------------------------
Gerald J. Levy, Trustee
/s/ Rodger D. Shay
----------------------------
Rodger D. Shay, Trustee
<PAGE> 1
EXHIBIT (b)(2)
BY-LAWS
OF
ASSET MANAGEMENT FUND
Section 1. Agreement and Declaration of Trust and Principal Office
1.1 Agreement and Declaration of Trust. These By-Laws shall be subject to the
Agreement and Declaration of Trust, as from time to time in effect (the
"Declaration of Trust"), of Asset Management Fund, a Delaware business trust
established by the Declaration of Trust (the "Trust").
1.2 Principal Office of the Trust. The principal office of the Trust shall be
located at 230 W. Monroe Street, Chicago, Illinois 60606.
Section 2. Shareholders
2.1 Shareholder Meetings. A meeting of the shareholders of the Trust or of any
one or more series of shares may be called at any time by the Trustees, by the
president or, if the Trustees and the president shall fail to call any meeting
of shareholders for a period of 30 days after written application of one or more
shareholders who hold at least 10% of all outstanding shares of the Trust, if
shareholders of all series are required under the Declaration of Trust to vote
in the aggregate and not by individual series at such meeting, or of any series,
if shareholders of such series are entitled under the Declaration of Trust to
vote by individual series at such meeting, then such shareholders may call such
meeting. If the meeting is a meeting of the shareholders of one or more series,
but not a meeting of all shareholders of the Trust, then only the shareholders
of such one or more series shall be entitled to notice of and to vote at the
meeting. Each call of a meeting shall state the place, date, hour and purposes
of the meeting.
2.2 Place of Meetings. All meetings of the shareholders shall be held at the
principal office of the Trust or at such other place within the United States as
shall be designated by the Trustees or the president of the Trust.
2.3 Notice of Meetings. A written notice of each meeting of shareholders,
stating the place, date and hour and the purposes of the meeting, shall be given
at least seven days before the meeting to each shareholder entitled to vote
thereat by leaving such notice with him or her or at his or her residence or
usual place of business or by mailing it, postage prepaid, and addressed to such
shareholder at his or her address as it appears in the records of the Trust.
Such notice shall be given by the secretary or an assistant secretary or by an
officer designated by the Trustees. No notice of any meeting of shareholders
need be given to a shareholder if a written waiver of notice, executed
<PAGE> 2
before or after the meeting by such shareholder or his or her attorney thereunto
duly authorized, is filed with the records of the meeting.
2.4 Ballots. No ballot shall be required for any election unless requested by a
shareholder present or represented at the meeting and entitled to vote in the
election.
2.5 Proxies. Shareholders entitled to vote may vote either in person or by proxy
in writing dated not more than six months before the meeting named therein,
which proxies shall be filed with the secretary or other person responsible to
record the proceedings of the meeting before being voted. Unless otherwise
specifically limited by their terms, such proxies shall entitle the holders
thereof to vote at any adjournment of such meeting but shall not be valid after
the final adjournment of such meeting.
SECTION 3. TRUSTEES
3.1 Committees and Advisory Board. The Trustees may appoint from their number an
executive committee and other committees. Except as the Trustees may otherwise
determine, and subject to the provisions of the Declaration of Trust, any such
committee may make rules for conduct of its business. The Trustees may appoint
an advisory board to consist of not less than one nor more than five members.
The members of the advisory board shall be compensated in such manner as the
Trustees may determine and shall confer with and advise the Trustees regarding
the investments and other affairs of the Trust. Each member of the advisory
board shall hold office until the first meeting of the Trustees following the
next meeting of the shareholders and until his or her successor is elected and
qualified, or until he or she sooner dies, resigns, is removed or becomes
disqualified, or until the advisory board is sooner abolished by the Trustees.
3.2 Nominating Committee of Disinterested Directors. The Trustees who are not
interested persons (as defined in the Investment Company Act of 1940) of the
Trust shall, without any action by the Board of Trustees, constitute a
Nominating Committee that has all the powers of the Board of Trustees in the
selection and nomination for election or appointment to the Board of Trustees of
Trustees who are not interested persons (as so defined) of the Trust. The
Chairman of the Nominating Committee shall be elected by the Nominating
Committee. The Nominating Committee may fix its own rules of procedure and may
meet when and as provided by such rules.
3.3 Regular Meetings. Regular meetings of the Trustees may be held without call
or notice at such places and at such times as the trustees may from time to time
determine, provided that notice of the first regular meeting following any such
determination shall be given to absent Trustees.
3.4 Special Meetings. Special meetings of the Trustees may be held at any time
and at any place designated in the call of the meeting, when called by the
president or the treasurer or by two or more Trustees, sufficient notice thereof
being given to each Trustee by the secretary or an assistant secretary or by the
officer or one of the Trustees calling the meeting.
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3.5 Compensation of Trustees. No Trustee shall receive any stated salary or fees
from the Trust for his or her services as such if such Trustee is, otherwise
than by reason of being such Trustee, an interested person (as such term is
defined by the Investment Company Act of 1940) of the Trust or of its investment
adviser, administrator or principal underwriter, if any. Except as provided in
the preceding sentence, Trustees shall be entitled to receive such compensation
from the Trust for their services in such manner and such amounts as may from
time to time be voted by the Board of Trustees.
3.6 Notice. It shall be sufficient notice to a Trustee to send notice by mail or
electronic transmission at least seventy-two hours before the meeting addressed
to the Trustee at his or her usual or last known business or residence address
or to give notice to him or her in person or by telephone at least twenty-four
hours before the meeting. Notice of a meeting need not be given to any Trustee
if a written waiver of notice, executed by him or her before or after the
meeting, is filed with the records of the meeting, or to any Trustee who attends
the meeting without protesting prior thereto or at its commencement the lack of
notice to him or her. Neither notice of a meeting nor a waiver of a notice need
specify the purposes of the meeting.
3.7 Quorum. At any meeting of the Trustees one-third of the Trustees then in
office shall constitute a quorum; provided, however, a quorum shall not be less
than two (except at such time as there is only one Trustee). Any meeting may be
adjourned from time to time by a majority of the votes cast upon the question,
whether or not a quorum is present, and the meeting may be held as adjourned
without further notice.
SECTION 4. OFFICERS AND AGENTS
4.1 Enumeration; Qualification. The officers of the Trust shall be a president,
a vice president, a treasurer, a secretary and such other officers, if any, as
the Trustees from time to time may in their discretion elect or appoint. The
Trust may also have such agents, if any, as the Trustees from time to time may
in their discretion appoint. Any officer may be but none need be a Trustee or
shareholder. Any two or more offices may be held by the same person.
4.2 Powers. Subject to the other provisions of these By-Laws, each officer shall
have, in addition to the duties and powers herein and in the Declaration of
Trust set forth, such duties and powers as are commonly incident to his or her
office as if the Trust were organized as a Delaware business corporation and
such other duties and powers as the Trustees may from time to time designate,
including without limitation the power to make purchases and sales of portfolio
securities of the Trust pursuant to recommendations of the Trust's investment
adviser in accordance with the policies and objectives of the Trust set forth in
its prospectus and with such general or specific instructions as the Trustees
may from time to time have issued.
4.3 Election. The president, the vice president, the treasurer and the secretary
shall be elected annually by the Trustees. Other officers, if any, may be
elected or appointed by the Trustees at any time.
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4.4 Tenure. The president, the vice president, the treasurer and the secretary
shall hold office until their respective successors are chosen and qualified, or
in each case until he or she sooner dies, resigns, is removed or becomes
disqualified. Each other officer shall hold office at the pleasure of the
Trustee. Each agent shall retain his or her authority at the pleasure of the
Trustees.
4.5 President. The president shall be the chief executive officer of the Trust.
Subject to the control of the Board of Trustees, the president shall in general
supervise the business and affairs of the Trust and shall see that the
resolutions and directions of the Board of Trustees are carried into effect
except when that responsibility is specifically assigned to some other person by
the Board of Trustees. In general, the president shall perform all duties
incident to the office of President and such other duties as from time to time
may be prescribed by the Board of Trustees. The president shall preside at all
meetings of the shareholders and of the Trustees at which he or she is present,
except as otherwise voted by the Trustees.
4.6 Vice President. In the absence of the president or in the event of his
inability or refusal to act, the vice president shall perform the duties of the
president. The vice president shall perform such other duties as from time to
time may be prescribed by the president or the Board of Trustees.
4.7 Treasurer and Assistant Treasurer. Subject to any arrangement made by the
Trustees with a bank or trust company or other organization as custodian or
transfer or shareholder services agent, the treasurer shall be in charge of the
Trust's valuable papers and shall keep or cause to be kept correct and complete
books and records of account. The treasurer shall keep such records of the
financial transactions of the Trust as the Board of Trustees shall prescribe.
The treasurer shall have power to sign all certificates for shares of beneficial
interest, if authorized by the Trustees, and shall perform such other duties as
from time to time may be prescribed by the president or the Board of Trustees.
Any assistant treasurer shall have such duties and powers as shall be designated
from time to time by the Trustees.
4.8 Secretary and Assistant Secretary. The secretary shall record all
proceedings of the shareholders and the Trustees in books to be kept therefor,
which books shall be kept at the principal office of the Trust. In the absence
of the secretary from any meeting of shareholders or Trustees, an assistant
secretary, or if there be none or he or she is absent, a temporary clerk chosen
at the meeting, shall record the proceedings thereof in the aforesaid books.
SECTION 5. RESIGNATIONS AND REMOVALS
Any Trustee, officer or advisory board member may resign at any time by
delivering his or her resignation in writing to the president, the vice
president or the secretary or to a meeting of the Trustees. The Trustees may
remove any officer elected by them with or without cause by the vote of a
majority of the Trustees then in office. Except to the extent expressly provided
in a written agreement with the Trust, no Trustee, officer, or advisory board
member resigning, and no officer or advisory board member removed, shall have
any right to any compensation for any period following his or her resignation or
removal, or any right to damages on account of such removal.
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SECTION 6. VACANCIES
A vacancy in any office may be filled at any time. Each successor shall hold
office for the unexpired term, and in the case of the president, the vice
president, the treasurer and the secretary, until his or her successor is chosen
and qualified, or in each case until he or she sooner dies, resigns, is removed
or becomes disqualified.
SECTION 7. SHARES OF BENEFICIAL INTEREST
Certificates certifying the ownership of shares may be issued as the Trustees
may authorize. In lieu of issuing certificates for shares, the Trustees or the
transfer agent shall keep accounts upon the books of the Trust for the record
holders of such shares, who shall be deemed, for all purposes hereunder, to be
the holders of certificates for such shares as if they had accepted such
certificates and shall be held to have expressly assented and agreed to the
terms hereof. Any certificates issued shall be in such form as the Board of
Trustees may from time to time prescribe, including on its face the name of the
Trust, the name of the person to whom it is issued, and the class of shares and
number of shares it represents. The certificate shall contain on its face or
back either a full statement or summary of the designations and any preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends, qualifications, and terms and conditions of redemption of the shares
of each class which the Trust is authorized to issue or a statement that the
Trust will furnish such statement or summary to any shareholder on request and
without charge. Each stock certificate issued shall be signed by the President,
a Vice-President or the Chairman of the Board and countersigned by the
Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer. Such
signatures may be either manual or facsimile signatures. A certificate is valid
whether or not an officer who signed it is still an officer when it is issued.
Each certificate may be sealed with the actual seal of the Trust or a facsimile
of it or in any other form.
SECTION 8. RECORD DATE AND CLOSING TRANSFER BOOKS
The Trustees may fix in advance a time, which shall not be more than 90 days
before the date of any meeting of shareholders or the date for the payment of
any dividend or making of any other distribution to shareholders, as the record
date for determining the shareholders having the right to notice and to vote at
such meeting and any adjournment thereof or the right to receive such dividend
or distribution, and in such case only shareholders of record on such record
date shall have such right, notwithstanding any transfer of shares on the books
of the Trust after the record date; or without fixing such record date the
Trustees may for any of such purposes close the transfer books for all or any
part of such period.
SECTION 9. SEAL
The Board of Trustees may provide for a suitable seal for the Trust, in such
form and bearing such inscriptions as it may determine.
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SECTION 10. EXECUTION OF PAPERS
Except as the Trustees may generally or in particular cases authorize the
execution thereof in some other manner, all deeds, leases, transfers, contracts,
bonds, notes, checks, drafts and other obligations made, accepted or endorsed by
the Trust shall be signed, and all transfers of securities standing in the name
of the Trust shall be executed, by the president, by the vice president,
secretary, treasurer or assistant secretary or treasurer or by whomsoever else
shall be designated for that purpose by the vote of the Trustees and need not
bear the seal of the Trust.
SECTION 11. FISCAL YEAR
Except as from time to time otherwise provided by the Trustees, the fiscal year
of the Trust shall end on October 31.
SECTION 12. AMENDMENTS
These By-Laws may be amended or repealed, in whole or in part, by a majority of
the Trustees then in office at any meeting of the Trustees, or by one or more
writings signed by such a majority.
Approved:
July 22, 1999
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EXHIBIT (g)(4)
CUSTODY AGREEMENT
Agreement made as of this 30th day of July, 1999, between ASSET
MANAGEMENT FUND, INC., a Maryland Corporation organized and existing under the
laws of the State of New York, having its principal office and place of business
at 230 W. Monroe Street, Chicago, IL 60606 (hereinafter called the "Fund"), and
THE BANK OF NEW YORK, a Maryland Corporation authorized to do a banking
business, having its principal office and place of business at One Wall Street,
New York, New York 10286 (hereinafter called the "Custodian").
W I T N E S S E T H:
that for and in consideration of the mutual promises hereinafter set forth, the
Fund and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
1. "Authorized Persons" shall be deemed to include any person, whether
or not such person is an officer or employee of the Fund, duly authorized by the
Board of Directors of the Fund to execute any Certificate, instruction, notice
or other instrument on behalf of the Fund and listed in the Certificate annexed
hereto as Appendix A or such other Certificate as may be received by the
Custodian from time to time, to the extent of the authority indicated in
Appendix A or such Certificate.
2. "Book-Entry System" shall mean the Federal Reserve/Treasury
book-entry system for United States and federal agency securities, its successor
or successors and its nominee or nominees.
3. "Call Option" shall mean an exchange traded option with respect to
Securities other than Stock Index Options, Futures Contracts, and Futures
Contract Options entitling the holder, upon timely exercise and payment of the
exercise price, as specified therein, to purchase from the writer thereof the
specified underlying Securities.
4. "Certificate" shall mean any notice, instruction, or other
instrument in writing, authorized or required by this Agreement to be given to
the Custodian which is actually received by the Custodian and signed on behalf
of the Fund by any two Authorized Persons, and the term Certificate shall also
include Instructions.
5. "Clearing Member" shall mean a registered broker-dealer which is a
clearing member under the rules of O.C.C. and a member of a national securities
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exchange qualified to act as a custodian for an investment company, or any
broker-dealer reasonably believed by the Custodian to be such a clearing member.
6. "Collateral Account" shall mean a segregated account so denominated
which is specifically allocated to a Series and pledged to the Custodian as
security for, and in consideration of, the Custodian's issuance of (a) any Put
Option guarantee letter or similar document described in paragraph 8 of Article
V herein, or (b) any receipt described in Article V or VIII herein.
7. "Composite Currency Unit" shall mean the European Currency Unit or
any other composite unit consisting of the aggregate of specified amounts of
specified Currencies as such unit may be constituted from time to time.
8. "Covered Call Option" shall mean an exchange traded option entitling
the holder, upon timely exercise and payment of the exercise price, as specified
therein, to purchase from the writer thereof the specified underlying Securities
(excluding Futures Contracts) which are owned by the writer thereof and subject
to appropriate restrictions.
9. "Currency" shall mean money denominated in a lawful currency of any
country or the European Currency Unit.
10. "Depository" shall mean The Depository Trust Company ("DTC"), a
clearing agency registered with the Securities and Exchange Commission, its
successor or successors and its nominee or nominees. The term "Depository" shall
further mean and include any other person authorized to act as a depository
under the Investment Company Act of 1940, its successor or successors and its
nominee or nominees, specifically identified in a certified copy of a resolution
of the Fund's Board of Directors specifically approving deposits therein by the
Custodian.
11. "Financial Futures Contract" shall mean the firm commitment to buy
or sell fixed income securities including, without limitation, U.S. Treasury
Bills, U.S. Treasury Notes, U.S. Treasury Bonds, domestic bank certificates of
deposit, and Eurodollar certificates of deposit, during a specified month at an
agreed upon price.
12. "Futures Contract" shall mean a Financial Futures Contract and/or
Stock Index Futures Contracts.
13. "Futures Contract Option" shall mean an option with respect to a
Futures Contract.
14. "FX Transaction" shall mean any transaction for the purchase by one
party of an agreed amount in one Currency against the sale by it to the other
party of an agreed amount in another Currency.
15. "Instructions" shall mean instructional communications transmitted
by electronic or telecommunications media including S.W.I.F.T.,
computer-to-computer interface, dedicated transmission line, facsimile
transmission signed by an Authorized Person and tested telex.
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16. "Margin Account" shall mean a segregated account in the name of a
broker, dealer, futures commission merchant, or a Clearing Member, or in the
name of the Fund for the benefit of a broker, dealer, futures commission
merchant, or Clearing Member, or otherwise, in accordance with an agreement
between the Fund, the Custodian and a broker, dealer, futures commission
merchant or a Clearing Member (a "Margin Account Agreement"), separate and
distinct from the custody account, in which certain Securities and/or money of
the Fund shall be deposited and withdrawn from time to time in connection with
such transactions as the Fund may from time to time determine. Securities held
in the Book-Entry System or the Depository shall be deemed to have been
deposited in, or withdrawn from, a Margin Account upon the Custodian's effecting
an appropriate entry in its books and records.
17. "Money Market Security" shall be deemed to include, without
limitation, certain Reverse Repurchase Agreements, debt obligations issued or
guaranteed as to interest and principal by the government of the United States
or agencies or instrumentalities thereof, any tax, bond or revenue anticipation
note issued by any state or municipal government or public authority, commercial
paper, certificates of deposit and bankers' acceptances, repurchase agreements
with respect to the same and bank time deposits, where the purchase and sale of
such securities normally requires settlement in federal funds on the same day as
such purchase or sale.
18. "O.C.C." shall mean the Options Clearing Corporation, a clearing
agency registered under Section 17A of the Securities Exchange Act of 1934, its
successor or successors, and its nominee or nominees.
19. "Option" shall mean a Call Option, Covered Call Option, Stock Index
Option and/or a Put Option.
20. "Oral Instructions" shall mean verbal instructions actually
received by the Custodian from an Authorized Person or from a person reasonably
believed by the Custodian to be an Authorized Person, provided that
notwithstanding any other provision in this Custody Agreement, no Oral
Instruction with respect to a purchase or sale of a Security shall be deemed
received by the Custodian unless and until the Custodian receives a trade
ticket, advice, or similar document including specific information matching the
information orally communicated.
21. "Put Option" shall mean an exchange traded option with respect to
Securities other than Stock Index Options, Futures Contracts, and Futures
Contract Options entitling the holder, upon timely exercise and tender of the
specified underlying Securities, to sell such Securities to the writer thereof
for the exercise price.
22. "Reverse Repurchase Agreement" shall mean an agreement pursuant to
which the Fund sells Securities and agrees to repurchase such Securities at a
described or specified date and price.
23. "Security" shall be deemed to include, without limitation, Money
Market Securities, Call Options, Put Options, Stock Index Options, Stock Index
Futures Contracts, Stock Index Futures Contract Options, Financial Futures
Contracts, Financial
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Futures Contract Options, Reverse Repurchase Agreements, common stocks and other
securities having characteristics similar to common stocks, preferred stocks,
debt obligations issued by state or municipal governments and by public
authorities, (including, without limitation, general obligation bonds, revenue
bonds, industrial bonds and industrial development bonds), bonds, debentures,
notes, mortgages or other obligations, and any certificates, receipts, warrants
or other instruments representing rights to receive, purchase, sell or subscribe
for the same, or evidencing or representing any other rights or interest
therein, or any property or assets.
24. "Senior Security Account" shall mean an account maintained and
specifically allocated to a Series under the terms of this Agreement as a
segregated account, by recordation or otherwise, within the custody account in
which certain Securities and/or other assets of the Fund specifically allocated
to such Series shall be deposited and withdrawn from time to time in accordance
with Certificates received by the Custodian in connection with such transactions
as the Fund may from time to time determine.
25. "Series" shall mean the various portfolios, if any, of the Fund
listed on Appendix B hereto as amended from time to time.
26. "Shares" shall mean the shares of capital stock of the Fund, each
of which is, in the case of a Fund having Series, allocated to a particular
Series.
27. "Stock Index Futures Contract" shall mean a bilateral agreement
pursuant to which the parties agree to take or make delivery of an amount of
cash equal to a specified dollar amount times the difference between the value
of a particular stock index at the close of the last business day of the
contract and the price at which the futures contract is originally struck.
28. "Stock Index Option" shall mean an exchange traded option entitling
the holder, upon timely exercise, to receive an amount of cash determined by
reference to the difference between the exercise price and the value of the
index on the date of exercise.
ARTICLE II
APPOINTMENT OF CUSTODIAN
1. The Fund hereby constitutes and appoints the Custodian as custodian
of the Securities and money at any time owned by the Fund during the period of
this Agreement.
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2. The Custodian hereby accepts appointment as such custodian and
agrees to perform the duties thereof as hereinafter set forth.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
1. Except as otherwise provided in paragraph 7 of this Article and in
Article VIII, the Fund will deliver or cause to be delivered to the Custodian
all Securities and all money owned by it, at any time during the period of this
Agreement, and shall specify with respect to such Securities and money the
Series to which the same are specifically allocated. The Custodian shall
segregate, keep and maintain the assets of the Series separate and apart from
the assets of the Custodian, and the Custodian shall by separate recordation on
its books and records segregate, keep and maintain the assets of the Series
separate and apart from the assets of any other Series or person, except that
all cash shall be maintained as a demand deposit. The Custodian will not be
responsible for the safekeeping of any Securities and money not actually
received by it. The Custodian will be entitled to reverse any credits made on
the Fund's behalf where such credits have been previously made and money is not
finally collected. The Fund shall deliver to the Custodian a certified
resolution of the Board of Directors of the Fund, substantially in the form of
Exhibit A hereto, approving, authorizing and instructing the Custodian on a
continuous and on-going basis to deposit in the Book-Entry System all Securities
eligible for deposit therein, regardless of the Series to which the same are
specifically allocated and to utilize the Book-Entry System to the extent
possible in connection with its performance hereunder, including, without
limitation, in connection with settlements of purchases and sales of Securities,
loans of Securities and deliveries and returns of Securities collateral. Prior
to a deposit of Securities specifically allocated to a Series in the Depository,
the Fund shall deliver to the Custodian a certified resolution of the Board of
Directors of the Fund, substantially in the form of Exhibit B hereto, approving,
authorizing and instructing the Custodian on a continuous and ongoing basis
until instructed to the contrary by a Certificate actually received by the
Custodian to deposit in the Depository all Securities specifically allocated to
such Series eligible for deposit therein, and to utilize the Depository to the
extent possible with respect to such Securities in connection with its
performance hereunder, including, without limitation, in connection with
settlements of purchases and sales of Securities, loans of Securities, and
deliveries and returns of Securities collateral. Securities and money deposited
in either the Book-Entry System or the Depository will be represented in
accounts which include only assets held by the Custodian for customers,
including, but not limited to, accounts in which the Custodian acts in a
fiduciary or representative capacity and will be specifically allocated on the
Custodian's books to the separate account for the applicable Series. Prior to
the Custodian's accepting, utilizing and acting with respect to Clearing Member
confirmations for Options and transactions in Options for a Series as provided
in this Agreement, the Custodian shall have received a certified resolution of
the Fund's Board of Directors, substantially in the form of Exhibit C hereto,
approving, authorizing and instructing the Custodian on a continuous and
on-going basis, until instructed to the contrary by a Certificate actually
received by the Custodian, to accept, utilize and act in
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accordance with such confirmations as provided in this Agreement with respect to
such Series.
2. The Custodian shall establish and maintain separate accounts, in the
name of each Series, and shall credit to the separate account for each Series
all money received by it for the account of the Fund with respect to such
Series. Money credited to a separate account for a Series shall be disbursed by
the Custodian only:
(a) as hereinafter provided;
(b) pursuant to Certificates setting forth the name and
address of the person to whom the payment is to be made, the Series account from
which payment is to be made and the purpose for which payment is to be made; or
(c) In payment of the fees and in reimbursement of the
expenses and liabilities of the Custodian attributable to such Series.
3. Promptly after the close of business on each day, the Custodian
shall furnish the Fund with confirmations and a summary, on a per Series basis,
of all transfers to or from the account of the Fund for a Series, either
hereunder or with any co-custodian or sub-custodian appointed in accordance with
this Agreement during said day. Where Securities are transferred to the account
of the Fund for a Series, the Custodian shall also by book-entry or otherwise
identify as belonging to such Series a quantity of Securities in a fungible bulk
of Securities registered in the name of the Custodian (or its nominee) or shown
on the Custodian's account on the books of the Book-Entry System or the
Depository. At least monthly and from time to time, the Custodian shall furnish
the Fund with a detailed statement, on a per Series basis, of the Securities and
money held by the Custodian for the Fund. The Custodian shall furnish such other
reports for such additional compensation as the Fund and the Custodian may
mutually agree upon, provided, first, that such reports are not identical with,
or similar to, reports generally furnished by The Bank of New York to mutual
fund customers under its standard agreements (including, without limitation, a
Fund Accounting Agreement or a Cash Management Agreement), and second, such
reports are limited to information maintained by the Custodian hereunder.
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4. Except as otherwise provided in paragraph 7 of this Article and in
Article VIII, all Securities held by the Custodian hereunder, which are issued
or issuable only in bearer form, except such Securities as are held in the
Book-Entry System, shall be held by the Custodian in that form; all other
Securities held hereunder may be registered in the name of the Fund, in the name
of any duly appointed registered nominee of the Custodian as the Custodian may
from time to time determine, or in the name of the Book-Entry System or the
Depository or their successor or successors, or their nominee or nominees. The
Fund agrees to furnish to the Custodian appropriate instruments to enable the
Custodian to hold or deliver in proper form for transfer, or to register in the
name of its registered nominee or in the name of the Book-Entry System or the
Depository any Securities which it may hold hereunder and which may from time to
time be registered in the name of the Fund. The Custodian shall hold all such
Securities specifically allocated to a Series which are not held in the
Book-Entry System or in the Depository in a separate account in the name of such
Series physically segregated at all times from those of any other person or
persons.
5. Except as otherwise provided in this Agreement and unless otherwise
instructed to the contrary by a Certificate, the Custodian by itself, or through
the use of the Book-Entry System or the Depository with respect to Securities
held hereunder and therein deposited, shall with respect to all Securities held
for the Fund hereunder in accordance with preceding paragraph 4:
(a) collect all income, dividends and distributions due or payable;
(b) give notice to the Fund and present payment and collect
the amount payable upon such Securities which are called, but only if either (i)
the Custodian receives a written notice of such call, or (ii) notice of such
call appears in one or more of the publications listed in Appendix C annexed
hereto, which may be amended at any time by the Custodian upon prior
notification to the Fund, but without consent;
(c) present for payment and collect the amount payable upon
all Securities which mature;
(d) surrender Securities in temporary form for definitive
Securities;
(e) execute, as custodian, any necessary declarations or
certificates of ownership under the Federal Income Tax Laws or the laws or
regulations of any other taxing authority now or hereafter in effect;
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(f) hold directly, or through the Book-Entry System or the
Depository with respect to Securities therein deposited, for the account of a
Series, all rights and similar securities issued with respect to any Securities
held by the Custodian for such Series hereunder; and
(g) deliver to the Fund all notices, proxies, proxy soliciting
materials, consents and other written information (including, without
limitation, notices of tender offers and exchange offers, pendency of calls,
maturities of Securities and expiration of rights) relating to Securities held
pursuant to this Agreement which are actually received by the Custodian, such
proxies and other similar materials to be executed by the registered owner (if
Securities are registered otherwise than in the name of the Fund), but without
indicating the manner in which proxies or consents are to be voted.
6. Upon receipt of a Certificate and not otherwise, the Custodian,
directly or through the use of the Book-Entry System or the Depository, shall:
(a) execute and deliver to such persons as may be designated
in such Certificate proxies, consents, authorizations, and any other instruments
whereby the authority of the Fund as owner of any Securities held by the
Custodian hereunder for the Series specified in such Certificate may be
exercised;
(b) deliver any Securities held by the Custodian hereunder for
the Series specified in such Certificate in exchange for other Securities or
cash issued or paid in connection with the liquidation, reorganization,
refinancing, merger, consolidation or recapitalization of any corporation, or
the exercise of any conversion privilege and receive and hold hereunder
specifically allocated to such Series any cash or other Securities received in
exchange;
(c) deliver any Securities held by the Custodian hereunder for
the Series specified in such Certificate to any protective committee,
reorganization committee or other person in connection with the reorganization,
refinancing, merger, consolidation, recapitalization or sale of assets of any
corporation, and receive and hold hereunder specifically allocated to such
Series such certificates of deposit, interim receipts or other instruments or
documents as may be issued to it to evidence such delivery;
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(d) make such transfers or exchanges of the assets of the
Series specified in such Certificate, and take such other steps as shall be
stated in such Certificate to be for the purpose of effectuating any duly
authorized plan of liquidation, reorganization, merger, consolidation or
recapitalization of the Fund; and
(e) present for payment and collect the amount payable upon
Securities not described in preceding paragraph 5(b) of this Article which may
be called as specified in the Certificate.
7. Notwithstanding any provision elsewhere contained herein, the
Custodian shall not be required to obtain possession of any instrument or
certificate representing any Futures Contract, any Option, or any Futures
Contract Option until after it shall have determined, or shall have received a
Certificate from the Fund stating, that any such instruments or certificates are
available. The Fund shall deliver to the Custodian such a Certificate no later
than the business day preceding the availability of any such instrument or
certificate. Prior to such availability, the Custodian shall comply with Section
17(f) of the Investment Company Act of 1940, as amended, in connection with the
purchase, sale, settlement, closing out or writing of Futures Contracts,
Options, or Futures Contract Options by making payments or deliveries specified
in Certificates received by the Custodian in connection with any such purchase,
sale, writing, settlement or closing out upon its receipt from a broker, dealer,
or futures commission merchant of a statement or confirmation reasonably
believed by the Custodian to be in the form customarily used by brokers,
dealers, or futures commission merchants with respect to such Futures Contracts,
Options, or Futures Contract Options, as the case may be, confirming that such
Security is held by such broker, dealer or futures commission merchant, in
book-entry form or otherwise, in the name of the Custodian (or any nominee of
the Custodian) as custodian for the Fund, provided, however, that
notwithstanding the foregoing, payments to or deliveries from the Margin
Account, and payments with respect to Securities to which a Margin Account
relates, shall be made in accordance with the terms and conditions of the Margin
Account Agreement. Whenever any such instruments or certificates are available,
the Custodian shall, notwithstanding any provision in this Agreement to the
contrary, make payment for any Futures Contract, Option, or Futures Contract
Option for which such instruments or such certificates are available only
against the delivery to the Custodian of such instrument or such certificate,
and deliver any Futures Contract, Option or Futures Contract Option for which
such instruments or such certificates are available only against receipt by the
Custodian of payment therefor. Any such instrument or certificate delivered to
the Custodian shall be held by the Custodian hereunder in accordance with, and
subject to, the provisions of this Agreement.
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<PAGE> 10
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND OTHER THAN
OPTIONS, FUTURES CONTRACTS AND FUTURES CONTRACT OPTIONS
1. Promptly after each purchase of Securities by the Fund, other than a
purchase of an Option, a Futures Contract, or a Futures Contract Option, the
Fund shall deliver to the Custodian (i) with respect to each purchase of
Securities which are not Money Market Securities, a Certificate, and (ii) with
respect to each purchase of Money Market Securities, a Certificate or Oral
Instructions, specifying with respect to each such purchase: (a) the Series to
which such Securities are to be specifically allocated; (b) the name of the
issuer and the title of the Securities; (c) the number of shares or the
principal amount purchased and accrued interest, if any; (d) the date of
purchase and settlement; (e) the purchase price per unit; (f) the total amount
payable upon such purchase; (g) the name of the person from whom or the broker
through whom the purchase was made, and the name of the clearing broker, if any;
and (h) the name of the broker to whom payment is to be made. The Custodian
shall, upon receipt of Securities purchased by or for the Fund, pay to the
broker specified in the Certificate out of the money held for the account of
such Series the total amount payable upon such purchase, provided that the same
conforms to the total amount payable as set forth in such Certificate or Oral
Instructions.
2. Promptly after each sale of Securities by the Fund, other than a
sale of any Option, Futures Contract, Futures Contract Option, or any Reverse
Repurchase Agreement, the Fund shall deliver to the Custodian (i) with respect
to each sale of Securities which are not Money Market Securities, a Certificate,
and (ii) with respect to each sale of Money Market Securities, a Certificate or
Oral Instructions, specifying with respect to each such sale: (a) the Series to
which such Securities were specifically allocated; (b) the name of the issuer
and the title of the Security; (c) the number of shares or principal amount
sold, and accrued interest, if any; (d) the date of sale; (e) the sale price per
unit; (f) the total amount payable to the Fund upon such sale; (g) the name of
the broker through whom or the person to whom the sale was made, and the name of
the clearing broker, if any; and (h) the name of the broker to whom the
Securities are to be delivered. The Custodian shall deliver the Securities
specifically allocated to such Series to the broker specified in the Certificate
against payment of the total amount payable to the Fund upon such sale, provided
that the same conforms to the total amount payable as set forth in such
Certificate or Oral Instructions.
ARTICLE V
OPTIONS
1. Promptly after the purchase of any Option by the Fund, the Fund
shall deliver to the Custodian a Certificate specifying with respect to each
Option purchased: (a) the Series to which such Option is specifically allocated;
(b) the type of Option (put or
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<PAGE> 11
call); (c) the name of the issuer and the title and number of shares subject to
such Option or, in the case of a Stock Index Option, the stock index to which
such Option relates and the number of Stock Index Options purchased; (d) the
expiration date; (e) the exercise price; (f) the dates of purchase and
settlement; (g) the total amount payable by the Fund in connection with such
purchase; (h) the name of the Clearing Member through whom such Option was
purchased; and (i) the name of the broker to whom payment is to be made. The
Custodian shall pay, upon receipt of a Clearing Member's statement confirming
the purchase of such Option held by such Clearing Member for the account of the
Custodian (or any duly appointed and registered nominee of the Custodian) as
custodian for the Fund, out of money held for the account of the Series to which
such Option is to be specifically allocated, the total amount payable upon such
purchase to the Clearing Member through whom the purchase was made, provided
that the same conforms to the total amount payable as set forth in such
Certificate.
2. Promptly after the sale of any Option purchased by the Fund pursuant
to paragraph 1 hereof, the Fund shall deliver to the Custodian a Certificate
specifying with respect to each such sale: (a) the Series to which such Option
was specifically allocated; (b) the type of Option (put or call); (c) the name
of the issuer and the title and number of shares subject to such Option or, in
the case of a Stock Index Option, the stock index to which such Option relates
and the number of Stock Index Options sold; (d) the date of sale; (e) the sale
price; (f) the date of settlement; (g) the total amount payable to the Fund upon
such sale; and (h) the name of the Clearing Member through whom the sale was
made. The Custodian shall consent to the delivery of the Option sold by the
Clearing Member which previously supplied the confirmation described in
preceding paragraph 1 of this Article with respect to such Option against
payment to the Custodian of the total amount payable to the Fund, provided that
the same conforms to the total amount payable as set forth in such Certificate.
3. Promptly after the exercise by the Fund of any Call Option purchased
by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to the
Custodian a Certificate specifying with respect to such Call Option: (a) the
Series to which such Call Option was specifically allocated; (b) the name of the
issuer and the title and number of shares subject to the Call Option; (c) the
expiration date; (d) the date of exercise and settlement; (e) the exercise price
per share; (f) the total amount to be paid by the Fund upon such exercise; and
(g) the name of the Clearing Member through whom such Call Option was exercised.
The Custodian shall, upon receipt of the Securities underlying the Call Option
which was exercised, pay out of the money held for the account of the Series to
which such Call Option was specifically allocated the total amount payable to
the Clearing Member through whom the Call Option was exercised, provided that
the same conforms to the total amount payable as set forth in such Certificate.
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<PAGE> 12
4. Promptly after the exercise by the Fund of any Put Option purchased
by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to the
Custodian a Certificate specifying with respect to such Put Option: (a) the
Series to which such Put Option was specifically allocated; (b) the name of the
issuer and the title and number of shares subject to the Put Option; (c) the
expiration date; (d) the date of exercise and settlement; (e) the exercise price
per share; (f) the total amount to be paid to the Fund upon such exercise; and
(g) the name of the Clearing Member through whom such Put Option was exercised.
The Custodian shall, upon receipt of the amount payable upon the exercise of the
Put Option, deliver or direct the Depository to deliver the Securities
specifically allocated to such Series, provided the same conforms to the amount
payable to the Fund as set forth in such Certificate.
5. Promptly after the exercise by the Fund of any Stock Index Option
purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to
the Custodian Certificate specifying with respect to such Stock Index Option:
(a) the Series to which such Stock Index Option was specifically allocated; (b)
the type of Stock Index Option (put or call); (c) the number of Options being
exercised; (d) the stock index to which such Option relates; (e) the expiration
date; (f) the exercise price; (g) the total amount to be received by the Fund in
connection with such exercise; and (h) the Clearing Member from whom such
payment is to be received.
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6. Whenever the Fund writes a Covered Call Option, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect to such
Covered Call Option: (a) the Series for which such Covered Call Option was
written; (b) the name of the issuer and the title and number of shares for which
the Covered Call Option was written and which underlie the same; (c) the
expiration date; (d) the exercise price; (e) the premium to be received by the
Fund; (f) the date such Covered Call Option was written; and (g) the name of the
Clearing Member through whom the premium is to be received. The Custodian shall
deliver or cause to be delivered, in exchange for receipt of the premium
specified in the Certificate with respect to such Covered Call Option, such
receipts as are required in accordance with the customs prevailing among
Clearing Members dealing in Covered Call Options and shall impose, or direct the
Depository to impose, upon the underlying Securities specified in the
Certificate specifically allocated to such Series such restrictions as may be
required by such receipts. Notwithstanding the foregoing, the Custodian has the
right, upon prior written notification to the Fund, at any time to refuse to
issue any receipts for Securities in the possession of the Custodian and not
deposited with the Depository underlying a Covered Call Option.
7. Whenever a Covered Call Option written by the Fund and described in
the preceding paragraph of this Article is exercised, the Fund shall promptly
deliver to the Custodian a Certificate instructing the Custodian to deliver, or
to direct the Depository to deliver, the Securities subject to such Covered Call
Option and specifying: (a) the Series for which such Covered Call Option was
written; (b) the name of the issuer and the title and number of shares subject
to the Covered Call Option; (c) the Clearing Member to whom the underlying
Securities are to be delivered; and (d) the total amount payable to the Fund
upon such delivery. Upon the return and/or cancellation of any receipts
delivered pursuant to paragraph 6 of this Article, the Custodian shall deliver,
or direct the Depository to deliver, the underlying Securities as specified in
the Certificate against payment of the amount to be received as set forth in
such Certificate.
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<PAGE> 14
8. Whenever the Fund writes a Put Option, the Fund shall promptly
deliver to the Custodian a Certificate specifying with respect to such Put
Option: (a) the Series for which such Put Option was written; (b) the name of
the issuer and the title and number of shares for which the Put Option is
written and which underlie the same; (c) the expiration date; (d) the exercise
price; (e) the premium to be received by the Fund; (f) the date such Put Option
is written; (g) the name of the Clearing Member through whom the premium is to
be received and to whom a Put Option guarantee letter is to be delivered; (h)
the amount of cash, and/or the amount and kind of Securities, if any,
specifically allocated to such Series to be deposited in the Senior Security
Account for such Series; and (i) the amount of cash and/or the amount and kind
of Securities specifically allocated to such Series to be deposited into the
Collateral Account for such Series. The Custodian shall, after making the
deposits into the Collateral Account specified in the Certificate, issue a Put
Option guarantee letter substantially in the form utilized by the Custodian on
the date hereof, and deliver the same to the Clearing Member specified in the
Certificate against receipt of the premium specified in said Certificate.
Notwithstanding the foregoing, the Custodian shall be under no obligation to
issue any Put Option guarantee letter or similar document if it is unable to
make any of the representations contained therein.
9. Whenever a Put Option written by the Fund and described in the
preceding paragraph is exercised, the Fund shall promptly deliver to the
Custodian a Certificate specifying: (a) the Series to which such Put Option was
written; (b) the name of the issuer and title and number of shares subject to
the Put Option; (c) the Clearing Member from whom the underlying Securities are
to be received; (d) the total amount payable by the Fund upon such delivery; (e)
the amount of cash and/or the amount and kind of Securities specifically
allocated to such Series to be withdrawn from the Collateral Account for such
Series and (f) the amount of cash and/or the amount and kind of Securities,
specifically allocated to such Series, if any, to be withdrawn from the Senior
Security Account. Upon the return and/or cancellation of any Put Option
guarantee letter or similar document issued by the Custodian in connection with
such Put Option, the Custodian shall pay out of the money held for the account
of the Series to which such Put Option was specifically allocated the total
amount payable to the Clearing Member specified in the Certificate as set forth
in such Certificate against delivery of such Securities, and shall make the
withdrawals specified in such Certificate.
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<PAGE> 15
10. Whenever the Fund writes a Stock Index Option, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect to such
Stock Index Option: (a) the Series for which such Stock Index Option was
written; (b) whether such Stock Index Option is a put or a call; (c) the number
of options written; (d) the stock index to which such Option relates; (e) the
expiration date; (f) the exercise price; (g) the Clearing Member through whom
such Option was written; (h) the premium to be received by the Fund; (i) the
amount of cash and/or the amount and kind of Securities, if any, specifically
allocated to such Series to be deposited in the Senior Security Account for such
Series; (j) the amount of cash and/or the amount and kind of Securities, if any,
specifically allocated to such Series to be deposited in the Collateral Account
for such Series; and (k) the amount of cash and/or the amount and kind of
Securities, if any, specifically allocated to such Series to be deposited in a
Margin Account, and the name in which such account is to be or has been
established. The Custodian shall, upon receipt of the premium specified in the
Certificate, make the deposits, if any, into the Senior Security Account
specified in the Certificate, and either (1) deliver such receipts, if any,
which the Custodian has specifically agreed to issue, which are in accordance
with the customs prevailing among Clearing Members in Stock Index Options and
make the deposits into the Collateral Account specified in the Certificate, or
(2) make the deposits into the Margin Account specified in the Certificate.
11. Whenever a Stock Index Option written by the Fund and described in
the preceding paragraph of this Article is exercised, the Fund shall promptly
deliver to the Custodian a Certificate specifying with respect to such Stock
Index Option: (a) the Series for which such Stock Index Option was written; (b)
such information as may be necessary to identify the Stock Index Option being
exercised; (c) the Clearing Member through whom such Stock Index Option is being
exercised; (d) the total amount payable upon such exercise, and whether such
amount is to be paid by or to the Fund; (e) the amount of cash and/or amount and
kind of Securities, if any, to be withdrawn from the Margin Account; and (f) the
amount of cash and/or amount and kind of Securities, if any, to be withdrawn
from the Senior Security Account for such Series; and the amount of cash and/or
the amount and kind of Securities, if any, to be withdrawn from the Collateral
Account for such Series. Upon the return and/or cancellation of the receipt, if
any, delivered pursuant to the preceding paragraph of this Article, the
Custodian shall pay out of the money held for the account of the Series to which
such Stock Index Option was specifically allocated to the Clearing Member
specified in the Certificate the total amount payable, if any, as specified
therein.
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<PAGE> 16
12. Whenever the Fund purchases any Option identical to a previously
written Option described in paragraphs 6, 8 or 10 of this Article in a
transaction expressly designated as a "Closing Purchase Transaction" in order to
liquidate its position as a writer of an Option, the Fund shall promptly deliver
to the Custodian a Certificate specifying with respect to the Option being
purchased: (a) that the transaction is a Closing Purchase Transaction; (b) the
Series for which the Option was written; (c) the name of the issuer and the
title and number of shares subject to the Option, or, in the case of a Stock
Index Option, the stock index to which such Option relates and the number of
Options held; (d) the exercise price; (e) the premium to be paid by the Fund;
(f) the expiration date; (g) the type of Option (put or call); (h) the date of
such purchase; (i) the name of the Clearing Member to whom the premium is to be
paid; and (j) the amount of cash and/or the amount and kind of Securities, if
any, to be withdrawn from the Collateral Account, a specified Margin Account, or
the Senior Security Account for such Series. Upon the Custodian's payment of the
premium and the return and/or cancellation of any receipt issued pursuant to
paragraphs 6, 8 or 10 of this Article with respect to the Option being
liquidated through the Closing Purchase Transaction, the Custodian shall remove,
or direct the Depository to remove, the previously imposed restrictions on the
Securities underlying the Call Option.
13. Upon the expiration, exercise or consummation of a Closing Purchase
Transaction with respect to any Option purchased or written by the Fund and
described in this Article, the Custodian shall delete such Option from the
statements delivered to the Fund pursuant to paragraph 3 of Article III herein,
and upon the return and/or cancellation of any receipts issued by the Custodian,
shall make such withdrawals from the Collateral Account, and the Margin Account
and/or the Senior Security Account as may be specified in a Certificate received
in connection with such expiration, exercise, or consummation.
ARTICLE VI
FUTURES CONTRACTS
1. Whenever the Fund shall enter into a Futures Contract, the Fund
shall deliver to the Custodian a Certificate specifying with respect to such
Futures Contract, (or with respect to any number of identical Futures
Contract(s)): (a) the Series for which the Futures Contract is being entered;
(b) the category of Futures Contract (the name of the underlying stock index or
financial instrument); (c) the number of identical Futures Contracts entered
into; (d) the delivery or settlement date of the Futures Contract(s); (e) the
date the Futures Contract(s) was (were) entered into and the maturity date; (f)
whether the Fund is buying (going long) or selling (going short) on such Futures
Contract(s); (g) the amount of cash and/or the amount and kind of Securities, if
any, to be deposited in the Senior Security Account for such Series; (h) the
name of the broker, dealer, or futures commission merchant through whom the
Futures Contract was entered into; and (i) the amount of fee or commission, if
any, to be paid and the name of the broker, dealer, or futures commission
merchant to whom such amount is to be paid. The Custodian shall
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<PAGE> 17
make the deposits, if any, to the Margin Account in accordance with the terms
and conditions of the Margin Account Agreement. The Custodian shall make payment
out of the money specifically allocated to such Series of the fee or commission,
if any, specified in the Certificate and deposit in the Senior Security Account
for such Series the amount of cash and/or the amount and kind of Securities
specified in said Certificate.
2. (a) Any variation margin payment or similar payment required to be
made by the Fund to a broker, dealer, or futures commission merchant with
respect to an outstanding Futures Contract, shall be made by the Custodian in
accordance with the terms and conditions of the Margin Account Agreement.
(b) Any variation margin payment or similar payment from a
broker, dealer, or futures commission merchant to the Fund with respect to an
outstanding Futures Contract, shall be received and dealt with by the Custodian
in accordance with the terms and conditions of the Margin Account Agreement.
3. Whenever a Futures Contract held by the Custodian hereunder is
retained by the Fund until delivery or settlement is made on such Futures
Contract, the Fund shall deliver to the Custodian a Certificate specifying: (a)
the Futures Contract and the Series to which the same relates; (b) with respect
to a Stock Index Futures Contract, the total cash settlement amount to be paid
or received, and with respect to a Financial Futures Contract, the Securities
and/or amount of cash to be delivered or received; (c) the broker, dealer, or
futures commission merchant to or from whom payment or delivery is to be made or
received; and (d) the amount of cash and/or Securities to be withdrawn from the
Senior Security Account for such Series. The Custodian shall make the payment or
delivery specified in the Certificate, and delete such Futures Contract from the
statements delivered to the Fund pursuant to paragraph 3 of Article III herein.
4. Whenever the Fund shall enter into a Futures Contract to offset a
Futures Contract held by the Custodian hereunder, the Fund shall deliver to the
Custodian a Certificate specifying: (a) the items of information required in a
Certificate described in paragraph 1 of this Article, and (b) the Futures
Contract being offset. The Custodian shall make payment out of the money
specifically allocated to such Series of the fee or commission, if any,
specified in the Certificate and delete the Futures Contract being offset from
the statements delivered to the Fund pursuant to paragraph 3 of Article III
herein, and make such withdrawals from the Senior Security Account for such
Series as may be specified in such Certificate. The withdrawals, if any, to be
made from the Margin Account shall be made by the Custodian in accordance with
the terms and conditions of the Margin Account Agreement.
5. Notwithstanding any other provision in this Agreement to the
contrary, the Custodian shall deliver cash and Securities to a futures
commission merchant upon receipt of a Certificate from the Fund specifying: (a)
the name of the futures commission merchant; (b) the specific cash and
Securities to be delivered; (c) the date of such delivery; and (d) the date of
the agreement between the Fund and such futures commission merchant entered
pursuant to Rule 17f-6 under the Investment Company Act 1940, as amended. Each
delivery of such a Certificate by the Fund shall constitute (x) a
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<PAGE> 18
representation and warranty by the Fund that the Rule 17f-6 agreement has been
duly authorized, executed and delivered by the Fund and the futures commission
merchant and complies with Rule 17f-6, and (y) an agreement by the Fund that the
Custodian shall not be liable for the acts or omissions of any such futures
commission merchant.
ARTICLE VII
FUTURES CONTRACT OPTIONS
1. Promptly after the purchase of any Futures Contract Option by the
Fund, the Fund shall promptly deliver to the Custodian a Certificate specifying
with respect to such Futures Contract Option: (a) the Series to which such
Option is specifically allocated; (b) the type of Futures Contract Option (put
or call); (c) the type of Futures Contract and such other information as may be
necessary to identify the Futures Contract underlying the Futures Contract
Option purchased; (d) the expiration date; (e) the exercise price; (f) the dates
of purchase and settlement; (g) the amount of premium to be paid by the Fund
upon such purchase; (h) the name of the broker or futures commission merchant
through whom such option was purchased; and (i) the name of the broker, or
futures commission merchant, to whom payment is to be made. The Custodian shall
pay out of the money specifically allocated to such Series, the total amount to
be paid upon such purchase to the broker or futures commissions merchant through
whom the purchase was made, provided that the same conforms to the amount set
forth in such Certificate.
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2. Promptly after the sale of any Futures Contract Option purchased by
the Fund pursuant to paragraph 1 hereof, the Fund shall promptly deliver to the
Custodian a Certificate specifying with respect to each such sale: (a) the
Series to which such Futures Contract Option was specifically allocated; (b) the
type of Futures Contract Option (put or call); (c) the type of Futures Contract
and such other information as may be necessary to identify the Futures Contract
underlying the Futures Contract Option; (d) the date of sale; (e) the sale
price; (f) the date of settlement; (g) the total amount payable to the Fund upon
such sale; and (h) the name of the broker or futures commission merchant through
whom the sale was made. The Custodian shall consent to the cancellation of the
Futures Contract Option being closed against payment to the Custodian of the
total amount payable to the Fund, provided the same conforms to the total amount
payable as set forth in such Certificate.
3. Whenever a Futures Contract Option purchased by the Fund pursuant to
paragraph 1 is exercised by the Fund, the Fund shall promptly deliver to the
Custodian a Certificate specifying: (a) the Series to which such Futures
Contract Option was specifically allocated; (b) the particular Futures Contract
Option (put or call) being exercised; (c) the type of Futures Contract
underlying the Futures Contract Option; (d) the date of exercise; (e) the name
of the broker or futures commission merchant through whom the Futures Contract
Option is exercised; (f) the net total amount, if any, payable by the Fund; (g)
the amount, if any, to be received by the Fund; and (h) the amount of cash
and/or the amount and kind of Securities to be deposited in the Senior Security
Account for such Series. The Custodian shall make, out of the money and
Securities specifically allocated to such Series, the payments, if any, and the
deposits, if any, into the Senior Security Account as specified in the
Certificate. The deposits, if any, to be made to the Margin Account shall be
made by the Custodian in accordance with the terms and conditions of the Margin
Account Agreement.
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4. Whenever the Fund writes a Futures Contract Option, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect to such
Futures Contract Option: (a) the Series for which such Futures Contract Option
was written; (b) the type of Futures Contract Option (put or call); (c) the type
of Futures Contract and such other information as may be necessary to identify
the Futures Contract underlying the Futures Contract Option; (d) the expiration
date; (e) the exercise price; (f) the premium to be received by the Fund; (g)
the name of the broker or futures commission merchant through whom the premium
is to be received; and (h) the amount of cash and/or the amount and kind of
Securities, if any, to be deposited in the Senior Security Account for such
Series. The Custodian shall, upon receipt of the premium specified in the
Certificate, make out of the money and Securities specifically allocated to such
Series the deposits into the Senior Security Account, if any, as specified in
the Certificate. The deposits, if any, to be made to the Margin Account shall be
made by the Custodian in accordance with the terms and conditions of the Margin
Account Agreement.
5. Whenever a Futures Contract Option written by the Fund which is a
call is exercised, the Fund shall promptly deliver to the Custodian a
Certificate specifying: (a) the Series to which such Futures Contract Option was
specifically allocated; (b) the particular Futures Contract Option exercised;
(c) the type of Futures Contract underlying the Futures Contract Option; (d) the
name of the broker or futures commission merchant through whom such Futures
Contract Option was exercised; (e) the net total amount, if any, payable to the
Fund upon such exercise; (f) the net total amount, if any, payable by the Fund
upon such exercise; and (g) the amount of cash and/or the amount and kind of
Securities to be deposited in the Senior Security Account for such Series. The
Custodian shall, upon its receipt of the net total amount payable to the Fund,
if any, specified in such Certificate make the payments, if any, and the
deposits, if any, into the Senior Security Account as specified in the
Certificate. The deposits, if any, to be made to the Margin Account shall be
made by the Custodian in accordance with the terms and conditions of the Margin
Account Agreement.
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6. Whenever a Futures Contract Option which is written by the Fund and
which is a put is exercised, the Fund shall promptly deliver to the Custodian a
Certificate specifying: (a) the Series to which such Option was specifically
allocated; (b) the particular Futures Contract Option exercised; (c) the type of
Futures Contract underlying such Futures Contract Option; (d) the name of the
broker or futures commission merchant through whom such Futures Contract Option
is exercised; (e) the net total amount, if any, payable to the Fund upon such
exercise; (f) the net total amount, if any, payable by the Fund upon such
exercise; and (g) the amount and kind of Securities and/or cash to be withdrawn
from or deposited in, the Senior Security Account for such Series, if any. The
Custodian shall, upon its receipt of the net total amount payable to the Fund,
if any, specified in the Certificate, make out of the money and Securities
specifically allocated to such Series, the payments, if any, and the deposits,
if any, into the Senior Security Account as specified in the Certificate. The
deposits to and/or withdrawals from the Margin Account, if any, shall be made by
the Custodian in accordance with the terms and conditions of the Margin Account
Agreement.
7. Whenever the Fund purchases any Futures Contract Option identical to
a previously written Futures Contract Option described in this Article in order
to liquidate its position as a writer of such Futures Contract Option, the Fund
shall promptly deliver to the Custodian a Certificate specifying with respect to
the Futures Contract Option being purchased: (a) the Series to which such Option
is specifically allocated; (b) that the transaction is a closing transaction;
(c) the type of Futures Contract and such other information as may be necessary
to identify the Futures Contract underlying the Futures Option Contract; (d) the
exercise price; (e) the premium to be paid by the Fund; (f) the expiration date;
(g) the name of the broker or futures commission merchant to whom the premium is
to be paid; and (h) the amount of cash and/or the amount and kind of Securities,
if any, to be withdrawn from the Senior Security Account for such Series. The
Custodian shall effect the withdrawals from the Senior Security Account
specified in the Certificate. The withdrawals, if any, to be made from the
Margin Account shall be made by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.
8. Upon the expiration, exercise, or consummation of a closing
transaction with respect to, any Futures Contract Option written or purchased by
the Fund and described in this Article, the Custodian shall (a) delete such
Futures Contract Option from the statements delivered to the Fund pursuant to
paragraph 3 of Article III herein and, (b) make such withdrawals from and/or in
the case of an exercise such deposits into the Senior Security Account as may be
specified in a Certificate. The deposits to and/or withdrawals from the Margin
Account, if any, shall be made by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.
9. Futures Contracts acquired by the Fund through the exercise of a
Futures Contract Option described in this Article shall be subject to Article VI
hereof.
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10. Notwithstanding any other provision in this Agreement to the
contrary, the Custodian shall deliver cash and Securities to a futures
commission merchant upon receipt of a Certificate from the Fund specifying: (a)
the name of the futures commission merchant; (b) the specific cash and
Securities to be delivered; (c) the date of such delivery; and (d) the date of
the agreement between the Fund and such futures commission merchant entered
pursuant to Rule 17f-6 under the Investment Company Act 1940, as amended. Each
delivery of such a Certificate by the Fund shall constitute (x) a representation
and warranty by the Fund that the Rule 17f-6 agreement has been duly authorized,
executed and delivered by the Fund and the futures commission merchant and
complies with Rule 17f-6, and (y) an agreement by the Fund that the Custodian
shall not be liable for the acts or omissions of any such futures commission
merchant.
ARTICLE VIII
SHORT SALES
1. Promptly after any short sales by any Series of the Fund, the Fund
shall promptly deliver to the Custodian a Certificate specifying: (a) the Series
for which such short sale was made; (b) the name of the issuer and the title of
the Security; (c) the number of shares or principal amount sold, and accrued
interest or dividends, if any; (d) the dates of the sale and settlement; (e) the
sale price per unit; (f) the total amount credited to the Fund upon such sale,
if any, (g) the amount of cash and/or the amount and kind of Securities, if any,
which are to be deposited in a Margin Account and the name in which such Margin
Account has been or is to be established; (h) the amount of cash and/or the
amount and kind of Securities, if any, to be deposited in a Senior Security
Account, and (i) the name of the broker through whom such short sale was made.
The Custodian shall upon its receipt of a statement from such broker confirming
such sale and that the total amount credited to the Fund upon such sale, if any,
as specified in the Certificate is held by such broker for the account of the
Custodian (or any nominee of the Custodian) as custodian of the Fund, issue a
receipt or make the deposits into the Margin Account and the Senior Security
Account specified in the Certificate.
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2. In connection with the closing-out of any short sale, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect to each
such closing out: (a) the Series for which such transaction is being made; (b)
the name of the issuer and the title of the Security; (c) the number of shares
or the principal amount, and accrued interest or dividends, if any, required to
effect such closing-out to be delivered to the broker; (d) the dates of
closing-out and settlement; (e) the purchase price per unit; (f) the net total
amount payable to the Fund upon such closing-out; (g) the net total amount
payable to the broker upon such closing-out; (h) the amount of cash and the
amount and kind of Securities to be withdrawn, if any, from the Margin Account;
(i) the amount of cash and/or the amount and kind of Securities, if any, to be
withdrawn from the Senior Security Account; and (j) the name of the broker
through whom the Fund is effecting such closing-out. The Custodian shall, upon
receipt of the net total amount payable to the Fund upon such closing-out, and
the return and/or cancellation of the receipts, if any, issued by the Custodian
with respect to the short sale being closed-out, pay out of the money held for
the account of the Fund to the broker the net total amount payable to the
broker, and make the withdrawals from the Margin Account and the Senior Security
Account, as the same are specified in the Certificate.
ARTICLE IX
REVERSE REPURCHASE AGREEMENTS
1. Promptly after the Fund enters into a Reverse Repurchase Agreement
with respect to Securities and money held by the Custodian hereunder, the Fund
shall deliver to the Custodian a Certificate, or in the event such Reverse
Repurchase Agreement is a Money Market Security, a Certificate or Oral
Instructions specifying: (a) the Series for which the Reverse Repurchase
Agreement is entered; (b) the total amount payable to the Fund in connection
with such Reverse Repurchase Agreement and specifically allocated to such
Series; (c) the broker or dealer through or with whom the Reverse Repurchase
Agreement is entered; (d) the amount and kind of Securities to be delivered by
the Fund to such broker or dealer; (e) the date of such Reverse Repurchase
Agreement; and (f) the amount of cash and/or the amount and kind of Securities,
if any, specifically allocated to such Series to be deposited in a Senior
Security Account for such Series in connection with such Reverse Repurchase
Agreement. The Custodian shall, upon receipt of the total amount payable to the
Fund specified in the Certificate or Oral Instructions make the delivery to the
broker or dealer, and the deposits, if any, to the Senior Security Account,
specified in such Certificate or Oral Instructions.
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2. Upon the termination of a Reverse Repurchase Agreement described in
preceding paragraph 1 of this Article, the Fund shall promptly deliver a
Certificate or, in the event such Reverse Repurchase Agreement is a Money Market
Security, a Certificate or Oral Instructions to the Custodian specifying: (a)
the Reverse Repurchase Agreement being terminated and the Series for which same
was entered; (b) the total amount payable by the Fund in connection with such
termination; (c) the amount and kind of Securities to be received by the Fund
and specifically allocated to such Series in connection with such termination;
(d) the date of termination; (e) the name of the broker or dealer with or
through whom the Reverse Repurchase Agreement is to be terminated; and (f) the
amount of cash and/or the amount and kind of Securities to be withdrawn from the
Senior Securities Account for such Series. The Custodian shall, upon receipt of
the amount and kind of Securities to be received by the Fund specified in the
Certificate or Oral Instructions, make the payment to the broker or dealer, and
the withdrawals, if any, from the Senior Security Account, specified in such
Certificate or Oral Instructions.
ARTICLE X
LOAN OF PORTFOLIO SECURITIES OF THE FUND
1. Promptly after each loan of portfolio Securities specifically
allocated to a Series held by the Custodian hereunder, the Fund shall deliver or
cause to be delivered to the Custodian a Certificate specifying with respect to
each such loan: (a) the Series to which the loaned Securities are specifically
allocated; (b) the name of the issuer and the title of the Securities, (c) the
number of shares or the principal amount loaned, (d) the date of loan and
delivery, (e) the total amount to be delivered to the Custodian against the loan
of the Securities, including the amount of cash collateral and the premium, if
any, separately identified, and (f) the name of the broker, dealer, or financial
institution to which the loan was made. The Custodian shall deliver the
Securities thus designated to the broker, dealer or financial institution to
which the loan was made upon receipt of the total amount designated as to be
delivered against the loan of Securities. The Custodian may accept payment in
connection with a delivery otherwise than through the Book-Entry System or
Depository only in the form of a certified or bank cashier's check payable to
the order of the Fund or the Custodian drawn on New York Clearing House funds
and may deliver Securities in accordance with the customs prevailing among
dealers in securities.
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2. Promptly after each termination of the loan of Securities by the
Fund, the Fund shall deliver or cause to be delivered to the Custodian a
Certificate specifying with respect to each such loan termination and return of
Securities: (a) the Series to which the loaned Securities are specifically
allocated; (b) the name of the issuer and the title of the Securities to be
returned, (c) the number of shares or the principal amount to be returned, (d)
the date of termination, (e) the total amount to be delivered by the Custodian
(including the cash collateral for such Securities minus any offsetting credits
as described in said Certificate), and (f) the name of the broker, dealer, or
financial institution from which the Securities will be returned. The Custodian
shall receive all Securities returned from the broker, dealer, or financial
institution to which such Securities were loaned and upon receipt thereof shall
pay, out of the money held for the account of the Fund, the total amount payable
upon such return of Securities as set forth in the Certificate.
ARTICLE XI
CONCERNING MARGIN ACCOUNTS, SENIOR: SECURITY ACCOUNTS, AND
COLLATERAL ACCOUNTS
1. The Custodian shall, from time to time, make such deposits to, or
withdrawals from, a Senior Security Account as specified in a Certificate
received by the Custodian. Such Certificate shall specify the Series for which
such deposit or withdrawal is to be made and the amount of cash and/or the
amount and kind of Securities specifically allocated to such Series to be
deposited in, or withdrawn from, such Senior Security Account for such Series.
In the event that the Fund fails to specify in a Certificate the Series, the
name of the issuer, the title and the number of shares or the principal amount
of any particular Securities to be deposited by the Custodian into, or withdrawn
from, a Senior Securities Account, the Custodian shall be under no obligation to
make any such deposit or withdrawal and shall so notify the Fund.
2. The Custodian shall make deliveries or payments from a Margin
Account to the broker, dealer, futures commission merchant or Clearing Member in
whose name, or for whose benefit, the account was established as specified in
the Margin Account Agreement.
3. Amounts received by the Custodian as payments or distributions with
respect to Securities deposited in any Margin Account shall be dealt with in
accordance with the terms and conditions of the Margin Account Agreement.
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4. The Custodian shall have a continuing lien and security interest in
and to any property at any time held by the Custodian in any Collateral Account
described herein. In accordance with applicable law the Custodian may enforce
its lien and realize on any such property whenever the Custodian has made
payment or delivery pursuant to any Put Option guarantee letter or similar
document or any receipt issued hereunder by the Custodian. In the event the
Custodian should realize on any such property net proceeds which are less than
the Custodian's obligations under any Put Option guarantee letter or similar
document or any receipt, such deficiency shall be a debt owed the Custodian by
the Fund within the scope of Article XIV herein.
5. On each business day the Custodian shall furnish the Fund with a
statement with respect to each Margin Account in which money or Securities are
held specifying as of the close of business on the previous business day: (a)
the name of the Margin Account; (b) the amount and kind of Securities held
therein; and (c) the amount of money held therein. The Custodian shall make
available upon request to any broker, dealer, or futures commission merchant
specified in the name of a Margin Account a copy of the statement furnished the
Fund with respect to such Margin Account.
6. Promptly after the close of business on each business day in which
cash and/or Securities are maintained in a Collateral Account for any Series,
the Custodian shall furnish the Fund with a statement with respect to such
Collateral Account specifying the amount of cash and/or the amount and kind of
Securities held therein. No later than the close of business next succeeding the
delivery to the Fund of such statement, the Fund shall furnish to the Custodian
a Certificate specifying the then market value of the Securities described in
such statement. In the event such then market value is indicated to be less than
the Custodian's obligation with respect to any outstanding Put Option guarantee
letter or similar document, the Fund shall promptly specify in a Certificate the
additional cash and/or Securities to be deposited in such Collateral Account to
eliminate such deficiency.
ARTICLE XII
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. The Fund shall furnish to the Custodian a copy of the resolution of
the Board of Directors of the Fund, certified by the Secretary or any Assistant
Secretary, either (i) setting forth with respect to the Series specified therein
the date of the declaration of a dividend or distribution, the date of payment
thereof, the record date as of which shareholders entitled to payment shall be
determined, the amount payable per Share of such Series to the shareholders of
record as of that date and the total amount payable to the Dividend Agent and
any sub-dividend agent or co-dividend agent of the Fund on the payment date, or
(ii) authorizing with respect to the Series specified therein the declaration of
dividends and distributions and shall furnish to the Custodian Oral Instructions
or a Certificate setting forth the date of the declaration of such dividend or
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distribution, the date of payment thereof, the record date as of which
shareholders entitled to payment shall be determined, the amount payable per
Share of such Series to the shareholders of record as of that date and the total
amount payable to the Dividend Agent on the payment date.
2. Upon the payment date specified in such resolution, Oral
Instructions or Certificate, as the case may be, the Custodian shall pay out of
the money held for the account of each Series the total amount payable to the
Dividend Agent and any sub-dividend agent or co-dividend agent of the Fund with
respect to such Series.
ARTICLE XIII
SALE AND REDEMPTION OF SHARES
1. Whenever the Fund shall sell any Shares, it shall deliver to the
Custodian a Certificate duly specifying:
(a) the Series, the number of Shares sold, trade date, and price;
and
(b) the amount of money to be received by the Custodian for
the sale of such Shares and specifically allocated to the separate account in
the name of such Series.
2. Upon receipt of such money from the Transfer Agent, the Custodian
shall credit such money to the separate account in the name of the Series for
which such money was received.
3. Upon issuance of any Shares of any Series described in the foregoing
provisions of this Article, the Custodian shall pay, out of the money held for
the account of such Series, all original issue or other taxes required to be
paid by the Fund in connection with such issuance upon the receipt of a
Certificate specifying the amount to be paid.
4. Except as provided hereinafter, whenever the Fund desires the
Custodian to make payment out of the money held by the Custodian hereunder in
connection with a redemption of any Shares, it shall furnish to the Custodian a
Certificate specifying:
(a) the number and Series of Shares redeemed; and
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(b) the amount to be paid for such Shares.
5. Upon receipt from the Transfer Agent of an advice setting forth the
Series and number of Shares received by the Transfer Agent for redemption and
that such Shares are in good form for redemption, the Custodian shall make
payment to the Transfer Agent out of the money held in the separate account in
the name of the Series the total amount specified in the Certificate issued
pursuant to the foregoing paragraph 4 of this Article.
6. Notwithstanding the above provisions regarding the redemption of any
Shares, whenever any Shares are redeemed pursuant to any check redemption
privilege which may from time to time be offered by the Fund, the Custodian,
unless otherwise instructed by a Certificate, shall, upon receipt of an advice
from the Fund or its agent setting forth that the redemption is in good form for
redemption in accordance with the check redemption procedure, honor the check
presented as part of such check redemption privilege out of the money held in
the separate account of the Series of the Shares being redeemed.
ARTICLE XIV
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian should in its sole discretion advance funds on
behalf of any Series which results in an overdraft because the money held by the
Custodian in the separate account for such Series shall be insufficient to pay
the total amount payable upon a purchase of Securities specifically allocated to
such Series, as set forth in a Certificate or Oral Instructions, or which
results in an overdraft in the separate account of such Series for some other
reason, or if the Fund is for any other reason indebted to the Custodian with
respect to a Series, including any indebtedness to The Bank of New York under
the Fund's Cash Management and Related Services Agreement (except a borrowing
for investment or for temporary or emergency purposes using Securities as
collateral pursuant to a separate agreement and subject to the provisions of
paragraph 2 of this Article), such overdraft or indebtedness shall be deemed to
be a loan made by the Custodian to the Fund for such Series payable on demand
and shall bear interest from the date incurred at a rate per annum (based on a
360-day year for the actual number of days involved) equal to 1/2% over
Custodian's prime commercial lending rate in effect from time to time, such rate
to be adjusted on the effective date of any change in such prime commercial
lending rate but in no event to be less than 6% per annum. In addition, the Fund
hereby agrees that the Custodian shall have a continuing lien, security
interest, and security entitlement in and to any property including any
investment property or any financial asset specifically allocated to such Series
at any time held by it for the benefit of such Series or in which the Fund may
have an interest which is then in the Custodian's possession or control or in
possession or control of any third party acting in the Custodian's behalf. The
Fund authorizes the Custodian, in its sole discretion, at any time to charge any
such overdraft or indebtedness together with interest due thereon against
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any balance of account standing to such Series' credit on the Custodian's books.
In addition, the Fund hereby covenants that on each Business Day on which either
it intends to enter a Reverse Repurchase Agreement and/or otherwise borrow from
a third party, or which next succeeds a Business Day on which at the close of
business the Fund had outstanding a Reverse Repurchase Agreement or such a
borrowing, it shall prior to 9 a.m., New York City time, advise the Custodian,
in writing, of each such borrowing, shall specify the Series to which the same
relates, and shall not incur any indebtedness not so specified other than from
the Custodian.
2. The Fund will cause to be delivered to the Custodian by any bank
(including, if the borrowing is pursuant to a separate agreement, the Custodian)
from which it borrows money for investment or for temporary or emergency
purposes using Securities held by the Custodian hereunder as collateral for such
borrowings, a notice or undertaking in the form currently employed by any such
bank setting forth the amount which such bank will loan to the Fund against
delivery of a stated amount of collateral. The Fund shall promptly deliver to
the Custodian a Certificate specifying with respect to each such borrowing: (a)
the Series to which such borrowing relates; (b) the name of the bank, (c) the
amount and terms of the borrowing, which may be set forth by incorporating by
reference an attached promissory note, duly endorsed by the Fund, or other loan
agreement, (d) the time and date, if known, on which the loan is to be entered
into, (e) the date on which the loan becomes due and payable, (f) the total
amount payable to the Fund on the borrowing date, (g) the market value of
Securities to be delivered as collateral for such loan, including the name of
the issuer, the title and the number of shares or the principal amount of any
particular Securities, and (h) a statement specifying whether such loan is for
investment purposes or for temporary or emergency purposes and that such loan is
in conformance with the Investment Company Act of 1940 and the Fund's
prospectus. The Custodian shall deliver on the borrowing date specified in a
Certificate the specified collateral and the executed promissory note, if any,
against delivery by the lending bank of the total amount of the loan payable,
provided that the same conforms to the total amount payable as set forth in the
Certificate. The Custodian may, at the option of the lending bank, keep such
collateral in its possession, but such collateral shall be subject to all rights
therein given the lending bank by virtue of any promissory note or loan
agreement. The Custodian shall deliver such Securities as additional collateral
as may be specified in a Certificate to collateralize further any transaction
described in this paragraph. The Fund shall cause all Securities released from
collateral status to be returned directly to the Custodian, and the Custodian
shall receive from time to time such return of collateral as may be tendered to
it. In the event that the Fund fails to specify in a Certificate the Series, the
name of the issuer, the title and number of shares or the principal amount of
any particular Securities to be delivered as collateral by the Custodian, the
Custodian shall not be under any obligation to deliver any Securities.
ARTICLE XV
INSTRUCTIONS
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1. With respect to any software provided by the Custodian to a Fund in
order for the Fund to transmit Instructions to the Custodian (the "Software"),
the Custodian grants to such Fund a personal, nontransferable and nonexclusive
license to use the Software solely for the purpose of transmitting Instructions
to, and receiving communications from, the Custodian in connection with its
account(s). The Fund shall use the Software solely for its own internal and
proper business purposes, and not in the operation of a service bureau, and
agrees not to sell, reproduce, lease or otherwise provide, directly or
indirectly, the Software or any portion thereof to any third party without the
prior written consent of the Custodian. The Fund acknowledges that the Custodian
and its suppliers have title and exclusive proprietary rights to the Software,
including any trade secrets or other ideas, concepts, know how, methodologies,
or information incorporated therein and the exclusive rights to any copyrights,
trademarks and patents (including registrations and applications for
registration of either) or statutory or legal protections available with respect
thereof. The Fund further acknowledges that all or a part of the Software may be
copyrighted or trademarked (or a registration or claim made therefor) by the
Custodian or its suppliers. The Fund shall not take any action with respect to
the Software inconsistent with the foregoing acknowledgments shall the Fund
attempt to decompile, reverse engineer or modify the Software. The Fund may not
copy, sell, lease or provide, directly or indirectly, any of the Software or any
portion thereof to any other person or entity without the Custodian's prior
written consent. The Fund may not remove any statutory copyright notice, or
other notice including the software or on any media containing the Software. The
Fund shall reproduce any such notice on any reproduction of the Software and
shall add statutory copyright notice or other notice to the Software or media
upon the Bank's request. Custodian agrees to provide reasonable training,
instruction manuals and access to Custodian's "help desk" in connection with the
Fund's user support necessary to use of the Software. At the Fund's request,
Custodian agrees to permit reasonable testing of the Software by the Fund.
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2. The Fund shall obtain and maintain at its own cost and expense all
equipment and services, including but not limited to communications services,
necessary for it to utilize the Software and transmit Instructions to the
Custodian. The Custodian shall not be responsible for the reliability,
compatibility with the Software or availability of any such equipment or
services or the performance or nonperformance by any nonparty to this Custody
Agreement.
3. The Fund acknowledges that the Software, all data bases made
available to the Fund by utilizing the Software (other than data bases relating
solely to the assets of the Fund and transactions with respect thereto), and any
proprietary data, processes, information and documentation (other than which are
or become part of the public domain or are legally required to be made available
to the public) (collectively, the "Information"), are the exclusive and
confidential property of the Custodian. The Fund shall keep the Information
confidential by using the same care and discretion that the Fund uses with
respect to its own confidential property and trade secrets and shall neither
make nor permit any disclosure without the prior written consent of the
Custodian. Upon termination of this Agreement or the Software license granted
hereunder for any reason, the Fund shall return to the Custodian all copies of
the Information which are in its possession or under its control or which the
Fund distributed to third parties. The provisions of this Article shall not
affect the copyright status of any of the Information which may be copyrighted
and shall apply to all Information whether or not copyrighted.
4. The Custodian reserves the right to modify, at its own expense, the
Software from time to time without prior notice and the Fund shall install new
releases of the Software as the Custodian may direct. The Fund agrees not to
modify or attempt to modify the Software without the Custodian's prior written
consent. The Fund acknowledges that any modifications to the Software, whether
by the Fund or the Custodian and whether with or without the Custodian's
consent, shall become the property of the Custodian.
5. THE CUSTODIAN AND ITS MANUFACTURERS AND SUPPLIERS MAKE NO WARRANTIES
OR REPRESENTATIONS OF ANY KIND WITH REGARD TO THE SOFTWARE OR THE METHOD(S) BY
WHICH THE FUND MAY TRANSMIT INSTRUCTIONS TO THE CUSTODIAN, EXPRESS OR IMPLIED,
INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.
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6. EXPORT RESTRICTIONS. EXPORT OF THE SOFTWARE IS PROHIBITED BY UNITED
STATES LAW. THE FUND AGREES THAT IT WILL NOT UNDER ANY CIRCUMSTANCES RESELL,
DIVERT, TRANSFER, TRANSSHIP OR OTHERWISE DISPOSE OF THE SOFTWARE (IN ANY FORM)
IN OR TO ANY OTHER COUNTRY. IF THE CUSTODIAN DELIVERS THE SOFTWARE TO THE FUND
OUTSIDE THE UNITED STATES, THE SOFTWARE WAS EXPORTED FROM THE UNITED STATES IN
ACCORDANCE WITH EXPORT ADMINISTRATIVE REGULATIONS. DIVERSION CONTRARY TO U.S.
LAWS PROHIBITED. The Fund hereby authorizes Custodian to report its name and
address to government agencies to which Custodian is required to provide such
information by law.
7. Where the method for transmitting Instructions by the Fund involves
an automatic systems acknowledgment by the Custodian of its receipt of such
Instructions, then in the absence of such acknowledgment the Custodian shall not
be liable for any failure to act pursuant to such Instructions, the Fund may not
claim that such Instructions were received by the Custodian, and the Fund shall
deliver a Certificate by some other means.
8. (a) The Fund agrees that where it delivers to the Custodian
Instructions hereunder, it shall be the Fund's sole responsibility to ensure
that only persons duly authorized by the Fund transmit such Instructions to the
Custodian. The Fund will cause all persons transmitting Instructions to the
Custodian to treat applicable user and authorization codes, passwords and
authentication keys with extreme care, and irrevocably authorizes the Custodian
to act in accordance with and rely upon Instructions received by it pursuant
hereto.
(b) The Fund hereby represents, acknowledges and agrees that
it is fully informed of the protections and risks associated with the various
methods of transmitting Instructions to the Custodian and that there may be more
secure methods of transmitting instructions to the Custodian than the method(s)
selected by the Fund. The Fund hereby agrees that the security procedures (if
any) to be followed in connection with the Fund's transmission of Instructions
provide to it a commercially reasonable degree of protection in light of its
particular needs and circumstances.
9. The Fund hereby represents, warrants and covenants to the Custodian
that this Agreement has been duly approved by a resolution of its Board of
Directors, and that its transmission of Instructions pursuant hereto shall at
all times comply with the Investment Company Act.
10. The Fund shall notify the Custodian of any errors, omissions or
interruptions in, or delay or unavailability of, its ability to send
Instructions as promptly as practicable, and in any event within 24 hours after
the earliest of (i) discovery thereof, (ii) the Business Day on which discovery
should have occurred through the exercise of reasonable care and (iii) in the
case of any error, the date of actual receipt of the earliest
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notice which reflects such error, it being agreed that discovery and receipt of
notice may only occur on a business day. The Custodian shall promptly advise the
Fund whenever the Custodian learns of any errors, omissions or interruption in,
or delay or unavailability of, the Fund's ability to send Instructions.
11. Custodian will indemnify and hold harmless the Fund with respect to
any liability, damages, loss or claim incurred by or brought against Fund by
reason any claim or infringement against any patent, copyright, license or other
property right arising out or by reason of the Fund's use of the Software in the
form provided under this Section. Custodian at its own expense will defend such
action or claim brought against Fund to the extent that it is based on a claim
that the Software in the form provided by Custodian infringes any patents,
copyrights, license or other property right, provided that the Fund has not
settled, compromised or confessed any such claim without the Custodian's written
consent, in which event Custodian shall have no liability or obligation
hereunder. The Fund shall provide prompt written notice of any such action or
claim to the Custodian upon the Fund's receipt of notice of such claim or
action, and the Fund shall reasonably cooperate with and assist Custodian in the
defense of such claim. Custodian shall have the right to control the defense of
all such claims, lawsuits and other proceedings. If, as a result of any claim of
infringement against any patent, copyright, license or other property right,
Custodian is enjoined from using the Software, or if Custodian believes that the
System is likely to become the subject of a claim of infringement, Custodian at
its option may in its sole discretion either (a) at its expenses procure the
right for the Fund to continue to use the Software, or (b), replace or modify
the Software so as to make it non-infringing, or (c) may discontinue the license
granted herein upon written notice to Fund.
ARTICLE XVI
DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY
OF ANY SERIES HELD OUTSIDE OF THE UNITED STATES
1. The Custodian is authorized and instructed to employ, as
sub-custodian for each Series' Securities for which the primary market is
outside the United States ("Foreign Securities") and other assets, the foreign
banking institutions, foreign branches of U.S. banks, and foreign securities
depositories and clearing agencies designated on Schedule I hereto ("Foreign
Sub-Custodians"). The Fund may designate any additional foreign sub-custodian
with which the Custodian has an agreement for such entity to act as the
Custodian's agent, as its sub-custodian and any such additional foreign
sub-custodian shall be deemed added to Schedule I. Upon receipt of a Certificate
from the Fund, the Custodian shall cease the employment of any one or more
Foreign Sub-Custodians for maintaining custody of the Fund's assets and such
Foreign Sub-Custodian shall be deemed deleted from Schedule I.
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<PAGE> 34
2. Each delivery of a Certificate to the Custodian in connection with a
transaction involving the use of a Foreign Sub-Custodian shall constitute a
representation and warranty by the Fund that its Board of Directors, or its
third party foreign custody manager as defined in Rule 17f-5 under the
Investment Company Act of 1940, as amended, if any, has determined that use of
such Foreign Sub-Custodian satisfies the requirements of such Investment Company
Act of 1940 and such Rule 17f-5 thereunder.
3. The Custodian shall identify on its books as belonging to each
Series of the Fund the Foreign Securities of such Series held by each Foreign
Sub-Custodian. At the election of the Fund, it shall be entitled to be
subrogated to the rights of the Custodian with respect to any claims by the Fund
or any Series against a Foreign Sub-Custodian as a consequence of any loss,
damage, cost, expense, liability or claim sustained or incurred by the Fund or
any Series if and to the extent that the Fund or such Series has not been made
whole for any such loss, damage, cost, expense, liability or claim.
4. Upon request of the Fund, the Custodian will, consistent with the
terms of the applicable Foreign Sub-Custodian agreement, use reasonable efforts
to arrange for the independent accountants of the Fund to be afforded access to
the books and records of any Foreign Sub-Custodian insofar as such books and
records relate to the performance of such Foreign Sub-Custodian under its
agreement with the Custodian on behalf of the Fund.
5. The Custodian will supply to the Fund from time to time, as mutually
agreed upon, statements in respect of the securities and other assets of each
Series held by Foreign Sub-Custodians, including but not limited to an
identification of entities having possession of each Series' Foreign Securities
and other assets, and advices or notifications of any transfers of Foreign
Securities to or from each custodial account maintained by a Foreign
Sub-Custodian for the Custodian on behalf of the Series.
6. The Custodian shall transmit promptly to the Fund all notices,
reports or other written information received pertaining to the Fund's Foreign
Securities, including without limitation, notices of corporate action, proxies
and proxy solicitation materials.
7. Notwithstanding any provision of this Agreement to the contrary,
settlement and payment for securities received for the account of any Series and
delivery of securities maintained for the account of such Series may be effected
in accordance with the customary or established securities trading or securities
processing practices and procedures in the jurisdiction or market in which the
transaction occurs, including, without limitation, delivery of securities to the
purchaser thereof or to a dealer therefor (or an agent for such purchaser or
dealer) against a receipt with the expectation of receiving later payment for
such securities from such purchaser or dealer.
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<PAGE> 35
8. Notwithstanding any other provision in this Agreement to the
contrary, with respect to any losses or damages arising out of or relating to
any actions or omissions of any Foreign Sub-Custodian the sole responsibility
and liability of the Custodian shall be to take appropriate action at the Fund's
expense to recover such loss or damage from the Foreign Sub-Custodian. It is
expressly understood and agreed that the Custodian's sole responsibility and
liability shall be limited to amounts so recovered from the Foreign
Sub-Custodian.
9. Notwithstanding any other provision in this Custody Agreement, the
Custodian shall not utilize any Foreign Sub-Custodian unless and until it
receives a certified resolution of the Fund's board specifically approving each
Foreign Sub- Custodian the Custodian is to utilize.
ARTICLE XVII
FX TRANSACTIONS
1. Whenever the Fund shall enter into an FX Transaction, the Fund shall
promptly deliver to the Custodian a Certificate or Oral Instructions specifying
with respect to such FX Transaction: (a) the Series to which such FX Transaction
is specifically allocated; (b) the type and amount of Currency to be purchased
by the Fund; (c) the type and amount of Currency to be sold by the Fund; (d) the
date on which the Currency to be purchased is to be delivered; (e) the date on
which the Currency to be sold is to be delivered; and (f) the name of the person
from whom or through whom such currencies are to be purchased and sold. Unless
otherwise instructed by a Certificate or Oral Instructions, the Custodian shall
deliver, or shall instruct a Foreign Sub-Custodian to deliver, the Currency to
be sold on the date on which such delivery is to be made, as set forth in the
Certificate, and shall receive, or instruct a Foreign Sub-Custodian to receive,
the Currency to be purchased on the date as set forth in the Certificate.
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<PAGE> 36
2. Where the Currency to be sold is to be delivered on the same day as
the Currency to be purchased, as specified in the Certificate or Oral
Instructions, the Custodian or a Foreign Sub-Custodian may arrange for such
deliveries and receipts to be made in accordance with the customs prevailing
from time to time among brokers or dealers in Currencies, and such receipt and
delivery may not be completed simultaneously. The Fund assumes all
responsibility and liability for all credit risks involved in connection with
such receipts and deliveries, which responsibility and liability shall continue
until the Currency to be received by the Fund has been received in full.
3. Any FX Transaction effected by the Custodian in connection with this
Agreement may be entered with the Custodian, any office, branch or subsidiary of
The Bank of New York Company, Inc., or any Foreign Sub-Custodian acting as
principal or otherwise through customary banking channels. The Fund may issue a
standing Certificate with respect to FX Transaction but the Custodian may
establish rules or limitations concerning any foreign exchange facility made
available to the Fund. The Fund shall bear all risks of investing in Securities
or holding Currency. Without limiting the foregoing, the Fund shall bear the
risks that rules or procedures imposed by a Foreign Sub-Custodian or foreign
depositories, exchange controls, asset freezes or other laws, rules, regulations
or orders shall prohibit or impose burdens or costs on the transfer to, by or
for the account of the Fund of Securities or any cash held outside the Fund's
jurisdiction or denominated in Currency other than its home jurisdiction or the
conversion of cash from one Currency into another currency. The Custodian shall
not be obligated to substitute another Currency for a Currency (including a
Currency that is a component of a Composite Currency Unit) whose
transferability, convertibility or availability has been affected by such law,
regulation, rule or procedure. Neither the Custodian nor any Foreign
Sub-Custodian shall be liable to the Fund for any loss resulting from any of the
foregoing events.
ARTICLE XVIII
CONCERNING THE CUSTODIAN
1. Except as hereinafter provided, or as provided in Article XVI,
neither the Custodian nor its nominee shall be liable for any loss or damage,
including reasonable counsel fees, resulting from its action or omission to act
or otherwise, either hereunder or under any Margin Account Agreement, except for
any such loss or damage arising out of its own negligence or willful misconduct.
In no event shall the Custodian be liable to the Fund or any third party for
special, indirect or consequential damages or lost profits or loss of business,
arising under or in connection with this Agreement, even if previously informed
of the possibility of such damages and regardless of the form of action. The
Custodian may, with respect to questions of law arising hereunder or under any
Margin Account Agreement, apply for and obtain the advice and opinion of counsel
to the Fund, at the expense of the Fund, or of its own counsel at its own
expense, and shall be fully protected with respect to anything done or omitted
by it in good faith in conformity with
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<PAGE> 37
such advice or opinion. The Custodian shall be liable to the Fund for any loss
or damage resulting from the use of the Book-Entry System or any Depository
arising by reason of any negligence or willful misconduct on the part of the
Custodian or any of its employees or agents.
2. Without limiting the generality of the foregoing, the Custodian
shall be under no obligation to inquire into, and shall not be liable for:
(a) the validity of the issue of any Securities purchased,
sold, or written by or for the Fund, the legality of the purchase, sale or
writing thereof, or the propriety of the amount paid or received therefor;
(b) the legality of the sale or redemption of any Shares, or
the propriety of the amount to be received or paid therefor;
(c) the legality of the declaration or payment of any dividend
by the Fund;
(d) the legality of any borrowing by the Fund using Securities as
collateral;
(e) the legality of any loan of portfolio Securities, nor
shall the Custodian be under any duty or obligation to see to it that any cash
collateral delivered to it by a broker, dealer, or financial institution or held
by it at any time as a result of such loan of portfolio Securities of the Fund
is adequate collateral for the Fund against any loss it might sustain as a
result of such loan. The Custodian specifically, but not by way of limitation,
shall not be under any duty or obligation periodically to check or notify the
Fund that the amount of such cash collateral held by it for the Fund is
sufficient collateral for the Fund, but such duty or obligation shall be the
sole responsibility of the Fund. In addition, the Custodian shall be under no
duty or obligation to see that any broker, dealer or financial institution to
which portfolio Securities of the Fund are lent pursuant to Article X of this
Agreement makes payment to it of any dividends or interest which are payable to
or for the account of the Fund during the period of such loan or at the
termination of such loan, provided, however, that the Custodian shall promptly
notify the Fund in the event that such dividends or interest are not paid and
received when due; or
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<PAGE> 38
(f) the sufficiency or value of any amounts of money and/or
Securities held in any Margin Account, Senior Security Account or Collateral
Account in connection with transactions by the Fund. In addition, the Custodian
shall be under no duty or obligation to see that any broker, dealer, futures
commission merchant or Clearing Member makes payment to the Fund of any
variation margin payment or similar payment which the Fund may be entitled to
receive from such broker, dealer, futures commission merchant or Clearing
Member, to see that any payment received by the Custodian from any broker,
dealer, futures commission merchant or Clearing Member is the amount the Fund is
entitled to receive, or to notify the Fund of the Custodian's receipt or
non-receipt of any such payment.
3. The Custodian shall not be liable for, or considered to be the
Custodian of, any money, whether or not represented by any check, draft, or
other instrument for the payment of money, received by it on behalf of the Fund
until the Custodian actually receives and collects such money directly or by the
final crediting of the account representing the Fund's interest at the
Book-Entry System or the Depository.
4. The Custodian shall have no responsibility and shall not be liable
for ascertaining or acting upon any calls, conversions, exchange offers,
tenders, interest rate changes or similar matters relating to Securities held in
the Depository, unless the Custodian shall have actually received timely notice
from the Depository or notice appears in one or more of the publications listed
in Appendix C. In no event shall the Custodian have any responsibility or
liability for the failure of the Depository to collect, or for the late
collection or late crediting by the Depository of any amount payable upon
Securities deposited in the Depository which may mature or be redeemed, retired,
called or otherwise become payable. However, upon receipt of a Certificate from
the Fund of an overdue amount on Securities held in the Depository the Custodian
shall make a claim against the Depository on behalf of the Fund, except that the
Custodian shall not be under any obligation to appear in, prosecute or defend
any action, suit or proceeding in respect to any Securities held by the
Depository which in its opinion may involve it in expense or liability, unless
indemnity satisfactory to it against all expense and liability be furnished as
often as may be required.
5. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount due to the Fund from the Transfer
Agent of the Fund or to take any action to effect payment or distribution by the
Transfer Agent of the Fund of any amount paid by the Custodian to the Transfer
Agent of the Fund in accordance with this Agreement.
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<PAGE> 39
6. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount if the Securities upon which such
amount is payable are in default, or if payment is refused after due demand or
presentation, unless and until (i) it shall be directed to take such action by a
Certificate and (ii) it shall be assured to its satisfaction of reimbursement of
its costs and expenses in connection with any such action.
7. The Custodian may in addition to the employment of Foreign
Sub-Custodians pursuant to Article XVI appoint one or more banking institutions
as Depository or Depositories, as Sub-Custodian or Sub-Custodians, or as
Co-Custodian or Co-Custodians including, but not limited to, banking
institutions located in foreign countries, of Securities and money at any time
owned by the Fund, upon such terms and conditions as may be approved in a
Certificate or contained in an agreement executed by the Custodian, the Fund and
the appointed institution.
8. The Custodian shall not be under any duty or obligation (a) to
ascertain whether any Securities at any time delivered to, or held by it or by
any Foreign Sub-Custodian, for the account of the Fund and specifically
allocated to a Series are such as properly may be held by the Fund or such
Series under the provisions of its then current prospectus, or (b) to ascertain
whether any transactions by the Fund, whether or not involving the Custodian,
are such transactions as may properly be engaged in by the Fund.
9. The Custodian shall be entitled to receive and the Fund agrees to
pay to the Custodian all out-of-pocket expenses and such compensation as may be
agreed upon from time to time between the Custodian and the Fund. The Custodian
may charge such compensation and any expenses with respect to a Series incurred
by the Custodian in the performance of its duties pursuant to such agreement
against any money specifically allocated to such Series. Unless and until the
Fund instructs the Custodian by a Certificate to apportion any loss, damage,
liability or expense among the Series in a specified manner, the Custodian shall
also be entitled to charge against any money held by it for the account of a
Series such Series' pro rata share (based on such Series, net asset value at the
time of the charge to the aggregate net asset value of all Series at that time)
of the amount of any loss, damage, liability or expense, including counsel fees,
for which it shall be entitled to reimbursement under the provisions of this
Agreement. The expenses for which the Custodian shall be entitled to
reimbursement hereunder shall include, but are not limited to, the expenses of
sub-custodians and foreign branches of the Custodian incurred in settling
outside of New York City transactions involving the purchase and sale of
Securities of the Fund, but only if the Fund specifically agrees pursuant to
paragraph 7 of this Article or Article XVI to pay such expenses.
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<PAGE> 40
10. The Custodian shall be entitled to rely upon any Certificate,
notice or other instrument in writing received by the Custodian and reasonably
believed by the Custodian to be a Certificate. The Custodian shall be entitled
to rely upon any Oral Instructions actually received by the Custodian
hereinabove provided for. The Fund agrees to forward to the Custodian a
Certificate or facsimile thereof confirming such Oral Instructions in such
manner so that such Certificate or facsimile thereof is received by the
Custodian, whether by hand delivery, telecopier or other similar device, or
otherwise, by the close of business of the same day that such Oral Instructions
are given to the Custodian. The Fund agrees that the fact that such confirming
instructions are not received, or that contrary instructions are received, by
the Custodian shall in no way affect the validity of the transactions or
enforceability of the transactions hereby authorized by the Fund. The Fund
agrees that the Custodian shall incur no liability to the Fund in acting upon
Oral Instructions given to the Custodian hereunder concerning such transactions
provided such instructions reasonably appear to have been received from an
Authorized Person.
11. The Custodian shall be entitled to rely upon any instrument,
instruction or notice received by the Custodian and reasonably believed by the
Custodian to be given in accordance with the terms and conditions of any Margin
Account Agreement. Without limiting the generality of the foregoing, the
Custodian shall be under no duty to inquire into, and shall not be liable for,
the accuracy of any statements or representations contained in any such
instrument or other notice including, without limitation, any specification of
any amount to be paid to a broker, dealer, futures commission merchant or
Clearing Member.
12. The books and records pertaining to the Fund which are in the
possession of the Custodian shall be the property of the Fund. Such books and
records shall be prepared and maintained as required by the Investment Company
Act of 1940, as amended, and other applicable securities laws and rules and
regulations. The Fund, or the Fund's authorized representatives, shall have
access to such books and records during the Custodian's normal business hours.
Upon the reasonable request of the Fund, copies of any such books and records
shall be provided by the Custodian to the Fund or the Fund's authorized
representative, and the Fund shall reimburse the Custodian its expenses of
providing such copies. Upon reasonable request of the Fund, the Custodian shall
provide in hard copy or on micro-film, whichever the Custodian elects, any
records included in any such delivery which are maintained by the Custodian on a
computer disc, or are similarly maintained, and the Fund shall reimburse the
Custodian for its expenses of providing such hard copy or micro-film.
13. The Custodian shall provide the Fund and the Fund's administrator
(as identified in Written Instructions) with any report obtained by the
Custodian on the system of internal accounting control of the Book-Entry System,
the Depository or O.C.C., and with such reports on its own systems of internal
accounting control as the Fund may reasonably request from time to time.
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14. The Fund agrees to indemnify the Custodian against and save the
Custodian harmless from all liability, claims, losses and demands whatsoever,
including reasonable attorney's fees, howsoever arising or incurred because of
or in connection with this Agreement, including the Custodian's payment or
non-payment of checks pursuant to paragraph 6 of Article XIII as part of any
check redemption privilege program of the Fund, except for any such liability,
claim, loss and demand arising out of the Custodian's own negligence or willful
misconduct, bad faith, reckless disregard of its duties, provided that prior to
confessing any claim against it which may be the subject to this
indemnification, the Custodian shall give the Fund written notice of and
reasonable opportunity to defend against said claim in its own name or in the
name of the Custodian. The Fund shall be entitled to participate at its own
expense or, if it acknowledges its responsibility to indemnify the Custodian, it
may elect to assume the defense of any suits brought to enforce any claims
subject to this indemnity provision. If the Fund elects to assume the defense of
any such claim, the defense shall be conducted by counsel chosen by the Fund and
satisfactory to the Custodian, whose approval shall not be unreasonably
withheld. In the event that the Fund elects to assume the defense of any suit
and retain counsel, the Custodian shall bear the fees and expenses of any
additional counsel retained by it. If the Fund does not elect to assume the
defense of a suit, it will reimburse the Custodian for reasonable fees and
expenses of any counsel retained by the Custodian.
15. Unless otherwise instructed by a Certificate, Oral Instructions or
Written Instructions, the Custodian shall settle all purchases and sales only on
a delivery versus payment basis. Subject to the foregoing provisions of this
Agreement, including, without limitation, those contained in Article XVI and
XVII the Custodian may deliver and receive Securities, and receipts with respect
to such Securities, and arrange for payments to be made and received by the
Custodian in accordance with the customs prevailing from time to time among
brokers or dealers in such Securities. When the Custodian is instructed to
deliver Securities against payment, delivery of such Securities and receipt of
payment therefor may not be completed simultaneously. The Fund assumes all
responsibility and liability for all credit risks involved in connection with
the Custodian's delivery of Securities pursuant to instructions of the Fund,
which responsibility and liability shall continue until final payment in full
has been received by the Custodian.
16. The Custodian shall have no duties or responsibilities whatsoever
except such duties and responsibilities as are specifically set forth in this
Agreement, and no covenant or obligation shall be implied in this Agreement
against the Custodian.
ARTICLE XIX
TERMINATION
1. Either of the parties hereto may terminate this Agreement by giving
to the other party a notice in writing specifying the date of such termination,
which shall be not less than ninety (90) days after the date of giving of such
notice. In the event such notice
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is given by the Fund, at least 30 days before the termination date the Fund
shall deliver to the Custodian by a copy of a resolution of the Board of
Directors of the Fund, certified by the Secretary or any Assistant Secretary,
electing to terminate this Agreement and designating a successor custodian or
custodians, each of which shall be a bank or trust company having not less than
$2,000,000 aggregate capital, surplus and undivided profits. In the event such
notice is given by the Custodian, the Fund shall, on or before the termination
date, deliver to the Custodian a copy of a resolution of the Board of Directors
of the Fund, certified by the Secretary or any Assistant Secretary, designating
a successor custodian or custodians. In the absence of such designation by the
Fund, the Custodian may designate a successor custodian which shall be a bank or
trust company having not less than $2,000,000 aggregate capital, surplus and
undivided profits. Upon the date set forth in such notice this Agreement shall
terminate, and the Custodian shall upon receipt of a notice of acceptance by the
successor custodian on that date deliver directly to the successor custodian all
Securities and money then owned by the Fund and held by it as Custodian, after
deducting all fees, expenses and other amounts for the payment or reimbursement
of which it shall then be entitled. Upon any termination of this Custody
Agreement the Custodian will cooperate with the Fund and use commercially
reasonable efforts to assist in the conversion, and the Fund shall pay to the
Custodian the Custodian's normal transaction charges and shall reimburse the
Custodian for its reasonable out-of-pocket expenses provided for in this
Agreement.
2. If a successor custodian is not designated by the Fund or the
Custodian in accordance with the preceding paragraph, the Fund shall upon the
date specified in the notice of termination of this Agreement and upon the
delivery by the Custodian of all Securities (other than Securities held in the
Book-Entry System which cannot be delivered to the Fund) and money then owned by
the Fund be deemed to be its own custodian and the Custodian shall thereby be
relieved of all duties and responsibilities pursuant to this Agreement, other
than the duty with respect to Securities held in the Book Entry System which
cannot be delivered to the Fund to hold such Securities hereunder in accordance
with this Agreement.
ARTICLE XX
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate signed by two of the
present Authorized Persons of the Fund under its seal, setting forth the names
and the signatures of the present Authorized Persons of the Fund. The Fund
agrees to furnish to the Custodian a new Certificate in similar form in the
event that any such present Authorized Person ceases to be an Authorized Person
of the Fund, or in the event that other or additional Authorized Persons are
elected or appointed. Until such new Certificate shall be received, the
Custodian shall be fully protected in acting under the provisions of this
Agreement or Oral Instructions upon the signatures of the Authorized Persons as
set forth in the last delivered Certificate.
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2. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Custodian, shall be sufficiently given if
addressed to the Custodian and mailed or delivered to it at its offices at 90
Washington Street, New York, New York 10286, or at such other place as the
Custodian may from time to time designate in writing.
3. (a) The Custodian warrants that it will use commercially reasonable
efforts to ensure that the computer software and hardware systems ("Systems")
that are owned by the Custodian and used to provide services under this
Agreement are 2000 Compliant or will be made 2000 Compliant before December 31,
1999. With respect to software that the Custodian licenses from third parties
and uses in providing such services ("Third Party Software"), the Custodian
warrants that it has used or will use commercially reasonable efforts to test
the same by September 30, 1999 to certify, in accordance with the Custodian's
standard practices, that the Third Party Software is 2000 Compliant. If the
Custodian cannot certify any Third Party Software as 2000 Compliant, the
Custodian will use commercially reasonable efforts to replace such Third Party
Software with software that is warranted or certified by its vendor as 2000
Compliant, if such replacement is available, compatible with the Custodian's
Systems an deemed by the Custodian as appropriate under the circumstances. In
the event that the Custodian uses third party service providers to provide
services or any portion thereof ("Third Party Services"), the Custodian warrants
that it has in place a program under which it will use commercially reasonable
efforts to contact such service providers and obtain from them assurances that
the Systems that they use in providing services are 2000 Compliant. As used
herein, the term "2000 Compliant" means that the Systems will function without
material error caused by the introduction of dates failing on or after January
1, 2000. Notwithstanding the foregoing, the Fund acknowledges and agrees that
the Custodian cannot and does not warrant that the Systems, Third Party Software
or Third Party Services will continue to interface with the hardware, firmware,
software (including operating systems), records or data used by the Fund or
third parties, nor does the Custodian make any warranties hereunder with respect
to any public utility, communications service provider, correspondent bank,
securities or commodities exchange, or funds transfer network.
(b) The Fund hereby makes the same warranty with respect to
the computer software and hardware systems it owns or the services it acquires
from third parties that the Custodian has made in (a).
4. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Fund shall be sufficiently given if addressed
to the Fund and mailed or delivered to it at its office at the address for the
Fund first above written, or at such other place as the Fund may from time to
time designate in writing.
5. This Agreement may not be amended or modified in any manner except
by a written agreement executed by both parties with the same formality as this
Agreement and approved by a resolution of the Board of Directors of the Fund.
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<PAGE> 44
6. This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided, however, that
this Agreement shall not be assignable by the Fund without the written consent
of the Custodian, or by the Custodian without the written consent of the Fund,
authorized or approved by a resolution of the Fund's Board of Directors.
7. This Agreement shall be construed in accordance with the laws of the
State of New York without giving effect to conflict of laws principles thereof.
Each party hereby consents to the jurisdiction of a state or federal court
situated in New York City, New York in connection with any dispute arising
hereunder and hereby waives its right to trial by jury.
8. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
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<PAGE> 45
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers, thereunto duly authorized and their
respective seals to be hereunto affixed, as of the day and year first above
written.
ASSET MANAGEMENT FUND, INC.
By: /s/ Edward E. Sammons, Jr.
[SEAL]
Attest: [illegible]
THE BANK OF NEW YORK
[SEAL] By:/s/ Stephen E. Grunston
------------------------------
Name: Stephen E. Grunston
Attest: [illegible] Title: Vice President
45
<PAGE> 46
APPENDIX A
I, ____________________, ____________________, and I,
____________________, ____________________, ____________________, ASSET
MANAGEMENT FUND, INC., a Maryland Corporation (the "Fund"), do hereby certify
that:
The following persons have been duly authorized in conformity with the
Fund's Declaration of Trust and By-Laws to execute any Certificate, instruction,
notice or other instrument on behalf of the Fund, and the signatures set forth
opposite their respective names are their true and correct signatures:
Name Position Signature
- --------------------- --------------------- --------------------
<PAGE> 47
APPENDIX B
Name of Fund
Money Market Portfolio
Short U.S. Government Securities Portfolio
Adjustable Rate Mortgage (ARM) Portfolio
Intermediate Mortgage Securities Portfolio
U.S. Government Mortgage Securities Portfolio
<PAGE> 48
APPENDIX C
I, ____________________, a Vice President with THE BANK OF NEW YORK do
hereby designate the following publications:
The Bond Buyer
Depository Trust Company Notices
Financial Daily Card Service
JJ Kenney Municipal Bond Service
London Financial Times
New York Times
Standard & Poor's Called Bond Record
Wall Street Journal
<PAGE> 49
EXHIBIT A
CERTIFICATION
The undersigned, Ed Sammons, hereby certifies that he or she is the
duly elected and acting President of ASSET MANAGEMENT FUND, INC., a Maryland
Corporation (the "Fund"), and further certifies that the following resolution
was adopted by the Board of Directors of the Fund at a meeting duly held on July
22, 1999, at which a quorum was at all times present and that such resolution
has not been modified or rescinded and is in full force and effect as of the
date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant to
a Custody Agreement between The Bank of New York and the Fund dated as
of __________, 1999, (the "Custody Agreement") is authorized and
instructed on a continuous and ongoing basis to deposit in the
Book-Entry System, as defined in the Custody Agreement, all securities
eligible for deposit therein, regardless of the Series to which the
same are specifically allocated, and to utilize the Book-Entry System
to the extent possible in connection with its performance thereunder,
including, without limitation, in connection with settlements of
purchases and sales of securities, loans of securities, and deliveries
and returns of securities collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of ASSET
MANAGEMENT FUND, INC., as of the 30th day of July, 1999.
[SEAL] /s/ Ed Sammons, Jr.
<PAGE> 50
EXHIBIT B
CERTIFICATION
The undersigned, Ed Sammons, hereby certifies that he or she is the
duly elected and acting President of ASSET MANAGEMENT FUND, INC., a Maryland
Corporation (the "Fund"), and further certifies that the following resolution
was adopted by the Board of Directors of the Fund at a meeting duly held on July
22, 1999, at which a quorum was at all times present and that such resolution
has not been modified or rescinded and is in full force and effect as of the
date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant to
a Custody Agreement between The Bank of New York and the Fund dated as
of __________, 1999, (the "Custody Agreement") is authorized and
instructed on a continuous and ongoing basis until such time as it
receives a Certificate, as defined in the Custody Agreement, to the
contrary to deposit in the Depository, as defined in the Custody
Agreement, all securities eligible for deposit therein, regardless of
the Series to which the same are specifically allocated, and to utilize
the Depository to the extent possible in connection with its
performance thereunder, including, without limitation, in connection
with settlements of purchases and sales of securities, loans of
securities, and deliveries and returns of securities collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of ASSET
MANAGEMENT FUND, INC., as of the 30th day of July, 1999.
[SEAL] /s/ Ed Sammons, Jr.
<PAGE> 51
EXHIBIT B-1
CERTIFICATION
The undersigned, Ed Sammons, hereby certifies that he or she is the
duly elected and acting President of ASSET MANAGEMENT FUND, INC., a Maryland
Corporation (the "Fund"), and further certifies that the following resolution
was adopted by the Board of Directors of the Fund at a meeting duly held on July
22, 1999, at which a quorum was at all times present and that such resolution
has not been modified or rescinded and is in full force and effect as of the
date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant to
a Custody Agreement between The Bank of New York and the Fund dated as
of __________, 1999, (the "Custody Agreement") is authorized and
instructed on a continuous and ongoing basis until such time as it
receives a Certificate, as defined in the Custody Agreement, to the
contrary to deposit in the Participants Trust Company as Depository, as
defined in the Custody Agreement, all securities eligible for deposit
therein, regardless of the Series to which the same are specifically
allocated, and to utilize the Participants Trust Company to the extent
possible in connection with its performance thereunder, including,
without limitation, in connection with settlements of purchases and
sales of securities, loans of securities, and deliveries and returns of
securities collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of ASSET
MANAGEMENT FUND, INC., as of the 30th day of July, 1999.
[SEAL] /s/ Ed Sammons, Jr.
<PAGE> 52
EXHIBIT C
CERTIFICATION
The undersigned, Ed Sammons, hereby certifies that he or she is the
duly elected and acting President of ASSET MANAGEMENT FUND, INC., a Maryland
Corporation (the "Fund"), and further certifies that the following resolution
was adopted by the Board of Directors of the Fund at a meeting duly held on July
22, 1999, at which a quorum was at all times present and that such resolution
has not been modified or rescinded and is in full force and effect as of the
date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant to
a Custody Agreement between The Bank of New York and the Fund dated as
of __________, 1999, (the "Custody Agreement") is authorized and
instructed on a continuous and ongoing basis until such time as it
receives a Certificate, as defined in the Custody Agreement, to the
contrary, to accept, utilize and act with respect to Clearing Member
confirmations for Options and transaction in Options, regardless of the
Series to which the same are specifically allocated, as such terms are
defined in the Custody Agreement, as provided in the Custody Agreement.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of ASSET
MANAGEMENT FUND, INC., as of the 30th day of July, 1999.
[SEAL] /s/ Ed Sammons, Jr.
<PAGE> 53
EXHIBIT D
The undersigned, Ed Sammons, hereby certifies that he or she is the
duly elected and acting President of ASSET MANAGEMENT FUND, INC., a Maryland
Corporation (the "Fund"), further certifies that the following resolutions were
adopted by the Board of Directors of the Fund at a meeting duly held on July 22,
1999, at which a quorum was at all times present and that such resolutions have
not been modified or rescinded and are in full force and effect as of the date
hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant to
the Custody Agreement between The Bank of New York and the Fund dated
as of __________, 1999 (the "Custody Agreement") is authorized and
instructed on a continuous and ongoing basis to act in accordance with,
and to rely on Instructions (as defined in the Custody Agreement).
RESOLVED, that the Fund shall establish access codes and grant
use of such access codes only to Authorized Persons of the Fund as
defined in the Custody Agreement, shall establish internal safekeeping
procedures to safeguard and protect the confidentiality and
availability of user and access codes, passwords and authentication
keys, and shall use Instructions only in a manner that does not
contravene the Investment Company Act of 1940, as amended, or the rules
and regulations thereunder.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of ASSET
MANAGEMENT FUND, INC., as of the 30th day of July, 1999.
[SEAL] /s/ Ed Sammons, Jr.
<PAGE> 54
DOMESTIC CUSTODIAN FEE SCHEDULE
FOR
ASSET MANAGEMENT FUND, INC.
SAFEKEEPING/INCOME COLLECTION/REPORTING/AFFIRMATIONS
1. basis point on the first $250 million in average net assets for each
portfolio.
3/4 basis point on the next $250 million in average net assets for each
portfolio.
1/2 basis point on the excess over $500 million in average net assets for each
portfolio.
CUSTODIAN TRANSACTION CHARGES
$6 Book Entry Settlements/Paydowns - DTC/FRB/PTC
$15 Physicals, options, futures
$40 Eurodollar C/D's
MISCELLANEOUS TRANSACTION CHARGES
$6 Federal Reserve Wires not related to securities transactions, and official
check requests.
EARNINGS CREDIT ON BALANCES/INTEREST FOR OVERDRAFTS
Earnings credits are provided to each Fund on 100% of the daily balance in the
domestic custodian accounts after reduction for Federal Reserve requirements,
computed at the Federal Reserve Funds rate, less 1/2% on the day of the balance.
Overdrafts, excluding bank errors will cause a reduction of earnings credits
daily, computed at 1/2% above the Federal Funds rate on the day of the
overdraft.
Credits and debits will be accumulated daily and offset monthly against the
Bank's domestic custodian fees. To the extent a net debit is accumulated, each
fund will be billed for the expense. To the extent a net earnings credit is
generated, such excess earnings credit can be carried forward to the next
succeeding month. However, no earnings credit will be carried forward after the
Fund's fiscal year-end.
OUT-OF-POCKET EXPENSES
Out-of-Pocket expenses traditionally include, but are not limited to, Federal
Reserve charges related to securities transactions, postage and insurance on
physical transfer items, attendance at closings, telecommunication charges, etc.
These expenses will be billed as they are incurred with no mark-up.
BILLING CYCLE
The above fees are billed monthly.
ASSET MANAGEMENT FUND, INC. THE BANK OF NEW YORK
Approved by: Ed Sammons, Jr. Submitted by: [illegible]
Date: 8/25/99 Date: July 30, 1999
<PAGE> 1
EXHIBIT (g)(5)
CASH MANAGEMENT AND RELATED SERVICES AGREEMENT, dated as of
between each mutual fund and/or portfolio series of each mutual
fund listed on Schedule A hereto (each a "Fund", collectively the "Funds"), and
The Bank of New York (the "Bank").
WITNESSETH:
That in consideration of the mutual agreements and covenants herein
contained, the Bank and each Fund hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, unless the context otherwise requires,
the following words shall have the meanings set forth below:
1. "ACCOUNT" shall mean an account in the name of a Fund or such
Fund's transfer agent for receiving and disbursing money as provided in this
Agreement.
2. "ACCOUNT AVAILABLE BALANCE" shall mean with respect to an
Account for any given day during a calendar month a positive or negative dollar
amount equal to (A) if such day is a Business Day, the Account Available Balance
as of the close of the last preceding Business Day plus a positive or negative
dollar amount equal to the difference, if any, between the Chargeable Credits
with respect to such day and such Account and the Chargeable Debits with respect
to such day and such Account, and (B) if such day is not a Business Day, the
Account Available Balance as of close of the last preceding Business Day, except
that both (A) and (B) shall be reduced by the United States Federal Reserve
reserve requirements then applicable to the Bank with respect to such Account.
The Account Available Balance of an Account shall be zero on the date
immediately preceding the first date on which an entry, consisting of either a
Chargeable Credit or Chargeable Debit, is first made to such Account hereunder.
3. "ACCESS" shall mean any on-line communication system provided by
the Bank hereunder whereby either the receiver of such communication is able to
verify by codes or otherwise with a reasonable degree of certainty the identity
of the sender of such communication, or the sender is required to provide a
password or other identification code.
4. "AUTHORIZED PERSON" shall mean either (A) any person duly
authorized by corporate resolutions of the board of directors or board of
trustees of a Fund (each, a "Board") to give Oral and/or Written Instructions on
behalf of such Fund, such persons to be designated in a certificate,
substantially in the form of Exhibit A, which contains a specimen signature of
such person, or (B) any person sending or transmitting any instruction or
direction through ACCESS.
<PAGE> 2
5. "BUSINESS DAY" shall mean any day on which the Federal Reserve
Bank of New York is open for business, except for any such day on which the Bank
is required by law or regulation to be closed, or elects to be closed.
6. "CALENDAR MONTH EARNINGS CREDIT" shall mean with respect to an
Account for any calendar month the dollar amount, whether positive or negative,
equal to the sum of the Gross Calendar Month Earnings Credit with respect to
such Account for such calendar month and the Monthly Overdraft Charges with
respect to such Account for such calendar month.
7. "CHARGEABLE CREDITS" shall mean with respect to an Account for
any given day during a calendar month a positive amount of dollars equal to the
sum, if any, of (A) the aggregate dollar amount of Federal Funds credited to
such Account by the Bank in accordance with the then applicable availability
schedule of the Federal Reserve Bank of New York, and (B) the aggregate dollar
amount of Bank internal transfers of Federal Funds to such Account.
8. "CHARGEABLE DEBITS" shall mean with respect to an Account for any
given day during a calendar month a negative dollar amount equal to the sum, if
any, of (A) the aggregate dollar amount of Federal Funds relating to such
Account charged against the Bank by the Federal Reserve Bank of New York on or
as of such day, and (B) the aggregate dollar amount of drafts drawn on such
Account which are deposited in the Bank by customers of the Bank on such day, or
Bank internal transfers from, or charges to, such Account.
9. "DAILY EARNINGS" shall mean with respect to an Account for any
day during a calendar month a positive dollar amount equal to the product of (A)
the positive Account Available Balance, if any, of such Account for such day,
multiplied by (B) the Daily Earnings Rate for such day. The Daily Earnings with
respect to an Account for any day during a calendar month on which the Account
Available Balance of such Account is negative shall be zero.
10. "DAILY EARNINGS RATE" shall mean for any day during a calendar
month one three hundred and sixty-fifth of the 91 day U.S. Treasury Bill
discount rate of the Monday auction first preceding such day (whether or not
such day is a Monday, and whether or not such Monday auction was in the
immediately prior month), as such Monday auction 91 day U.S. Treasury Bill
discount rate is reported in The Wall Street Journal.
11. "DAILY OVERDRAFT CHARGES" shall mean with respect to an Account
for any day during any calendar month a negative dollar amount equal to the
product, if any, of (A) the negative Account Available Balances, if any, with
respect to such Account for such day during such calendar month, multiplied by
(B) the Overdraft Rate.
12. "FEDERAL FUNDS" shall mean immediately available same day funds.
13. "GROSS CALENDAR MONTH EARNINGS CREDIT" shall mean with respect to
an Account for any calendar month a positive dollar amount equal to the
aggregate sum of the Daily Earnings of such Account for such calendar month.
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<PAGE> 3
14. "MONTHLY OVERDRAFT CHARGES" shall mean with respect to an Account
for any calendar month a negative dollar amount equal to the aggregate sum of
the Daily Overdraft Charges with respect to such Account for such calendar month
which have not been previously paid to the Bank by the Fund to which such
Account relates.
15. "OMNIBUS ACCOUNT" shall mean an account at the Bank for the
benefit of the Funds into which money (A) to be deposited into an Account is
initially credited pending its transfer to such Account pursuant to Article III
hereof, or (B) transferred from an Account pursuant to Article III is deposited
pending its disbursement pursuant to Article III.
16. "ORAL INSTRUCTIONS" shall mean verbal instructions actually
received by the Bank from an Authorized Person or from a person reasonably
believed by the Bank to be an Authorized Person.
17. "OVERDRAFT RATE" shall mean with respect to an Account for any
calendar day during any calendar month a rate equal to one three hundred and
sixtieth of the fed funds rate plus 1%.
18. "SHAREHOLDER" shall mean any record holder of any Shares, as
identified to the Bank from time to time pursuant to this Agreement.
19. "SHARES" shall mean all or any part of each class of the shares
of capital stock, beneficial interest, or limited partnership interest of a
Fund, as the case may be, which are authorized and/or issued from time to time.
20. "WRITTEN INSTRUCTIONS" shall mean written instructions actually
received by the Bank from an Authorized Person or from a person reasonably
believed by the Bank to be an Authorized Person by letter, memorandum, telegram,
cable, telex, facsimile or through ACCESS.
ARTICLE II
APPOINTMENT OF BANK; REPRESENTATIONS AND WARRANTIES
1. Appointment; Establishment of Accounts. Each Fund hereby appoints
the Bank as its agent for the term of this Agreement to perform the cash
management services set forth herein and in Schedule I attached hereto and made
a part hereof (as such Schedule may be amended or supplemented from time to time
by mutual agreement) which are selected by the Funds from time to time. The Bank
hereby accepts appointment as such agent for each Fund and agrees to establish
and maintain one or more Accounts and/or Omnibus Accounts as the parties shall
determine are necessary to receive and disburse money as provided in this
Agreement.
2. Representations and Warranties. Each Fund hereby represents and
warrants only as to itself, and not jointly, to the Bank, which representations
and warranties shall be deemed to be continuing and to be reaffirmed upon
delivery to the Bank of any Oral or Written Instructions, that:
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<PAGE> 4
(a) It is duly organized and existing under the laws of the
jurisdiction of its organization, with full power to carry on its business as
now conducted, to enter into this Agreement and to perform its obligations
hereunder;
(b) This Agreement has been duly authorized, executed and
delivered by the Fund in accordance with all requisite corporate action and
constitutes a valid and legally binding obligation of the Fund enforceable in
accordance with its terms, except to the extent such enforcement may be limited
by general equity principles or bankruptcy principles; and
(c) It is conducting its business in compliance with all
applicable laws and regulations, both state and federal, and has obtained all
regulatory licenses, approvals and consents necessary to carry on its business
as now conducted; there is no statute, regulation, rule, order or judgment
binding on it and no provision of its charter or by-laws, nor of any mortgage,
indenture, credit agreement or other contract binding on it or affecting its
property which would prohibit its execution or performance of this Agreement.
3. Board Resolutions. Each Fund shall provide the Bank with a
certified copy of a resolution of its Board appointing the Bank as its agent to
act hereunder and providing for the creation of such Fund's Account(s), the
utilization by such Fund of one or more Omnibus Accounts and the execution by
such Fund of this Agreement, it being understood that receipt of the same by the
Bank shall be a condition precedent to the Bank's establishing an Account for
such Fund or such Fund's utilization of an Omnibus Account.
ARTICLE III
CASH MANAGEMENT SERVICES
1. Receipt of Money. The Bank shall receive money for credit to an
Account only:
(i) by personal presentment of drafts by a Fund, but not by a
Shareholder of such Fund, at the branch or branches in Manhattan identified from
time to time by the Bank to such Fund, provided such presentment is in
accordance with the time frames specified by the Bank to such Fund;
(ii) by mailing of drafts to a post office box designated by the
Bank for such purpose, provided such drafts are accompanied by a properly
completed investment stub;
(iii) by wire transfer to an account maintained at the Federal
Reserve Bank of New York as identified in writing by the Bank to a Fund;
(iv) by transfer to an account identified in writing by the Bank
to a Fund through the New York Automated Clearing House;
(v) by transfer from another Account maintained by such Fund
with the Bank under this Agreement;
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<PAGE> 5
(vi) by transfer from another account maintained by such Fund
with the Bank, including such Fund's custodian account under its Custody
Agreement with the Bank as Custodian; or
(vii) by transfer from any other account maintained with the Bank.
All money received by the Bank shall be credited upon receipt, but subject to
final payment and receipt by the Bank of immediately available funds, and
receipt by the Bank of such forms, documents and information as are required by
the Bank from time to time and received in the appropriate time frames. If an
Omnibus Account has been established for the Funds, such money shall be
initially credited to the Omnibus Account pending its allocation to, and deposit
in, an Account. The Bank shall be entitled to reverse any credits previously
made to a Fund's Account or an Omnibus Account where money is not finally
collected or where a credit to such account was in error.
2. Disbursement of Money. The Bank shall disburse money credited to
an Account only:
(i) pursuant to Written Instructions of such Fund transmitted
through ACCESS (except as otherwise provided in Article V, Section 7 hereof), to
transfer funds as directed by such Fund (including transfers through the Federal
Reserve Bank of New York transfer wire and the New York Automated Clearing
House);
(ii) in payment of drafts drawn by an Authorized Person or
Shareholder (as appropriate for the particular Account), subject to the terms
hereof; or
(iii) in payment of charges to such Account representing amounts
payable to the Bank, and chargeable against such Account, as provided in this
Agreement.
The Bank shall be required to disburse money in accordance with the foregoing
only insofar as such money is immediately available and on deposit with the
Bank. If an Omnibus Account has been established for the Funds, such money shall
be credited to the Omnibus Account pending such disbursement. All instructions
directing the disbursement of money credited to an Account or Omnibus Account
under this Agreement (whether through ACCESS or by Oral Instructions pursuant to
Article V hereof) must identify an account to which such money shall be
transferred, and include all other information reasonably required by the Bank
from time to time. It is understood and agreed that with respect to any such
instructions, when instructed to credit or pay a party by both name and a unique
numeric or alphanumeric identifier (e.g., ABA number or account number), the
Bank and any other financial institution participating in the funds transfer may
rely solely on the unique identifier, even if it identifies a party different
than the party named. Such reliance on a unique identifier shall apply to
beneficiaries named in such instructions as well as any financial institution
which is designated in such instruction to act as an intermediary in a funds
transfer.
3. Redemption Drafts; Shareholder Information. (a) Each Fund shall be
entitled to supply its Shareholders with redemption drafts, but only in a form
and substance agreed to by the
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Bank. The Bank agrees to give each Fund sixty (60) days prior notice of any
changes to the form or substance of redemption drafts required by the Bank,
provided that if such change is required by applicable rules or procedures of
the Federal Reserve or any clearinghouse through which such drafts may be
presented, the Bank may give less than sixty (60) days prior notice of such
change.
(b) Each Fund will promptly furnish to the Bank (i) the name,
mailing address and telephone number of each Shareholder of such Fund, and (ii)
specimen signatures for all individuals authorized to draw redemption drafts
(whether on their own behalf or on behalf of third parties). Each Fund will
promptly advise the Bank of individuals no longer authorized to draw redemption
drafts, and those individuals newly authorized. Such information shall be
provided to the Bank in a mutually agreed upon format.
4. Redemption Draft Returns. A Fund may give the Bank Oral or Written
Instructions from time to time to return unpaid redemption drafts of the Fund to
the presenting financial institution for any reason, and the Bank shall use
reasonable efforts to comply with such Oral or Written Instructions provided
that such compliance would not prejudice or impair any rights or privileges of
the Bank under prevailing draft return procedures and would not be contrary to
prevailing industry rules, procedures, customs or practices. Notwithstanding the
foregoing, or any other provision in this Agreement or Schedule I hereto, the
Bank (i) may return redemption drafts with unauthorized or missing signatures to
the presenting financial institution in accordance with prevailing banking
industry draft return procedures, and (ii) shall have no obligation to request
Oral or Written Instructions from a Fund with respect to any redemption drafts.
ARTICLE IV
ADVANCES, OVERDRAFTS OR INDEBTEDNESS
1. If the Bank in its sole discretion advances funds, or if there
shall arise for whatever reason an overdraft or other indebtedness in connection
with any Account or Omnibus Account, such advance, overdraft or indebtedness
shall be deemed a loan made by the Bank to the Fund to which the Account
relates, or in the case of an Omnibus Account, to which such advance, overdraft
or indebtedness relates, payable on demand and bearing interest from the date
incurred at the Overdraft Rate, such Overdraft Rate to be adjusted on the
effective date of any change in the fed funds rate constituting a part thereof.
In the event of any advance, overdraft or other indebtedness in connection with
an Omnibus Account, the Bank shall be furnished promptly (and in any event by
12:00 p.m. on the next Business Day after such advance, overdraft or
indebtedness) with Written Instructions identifying each Fund to which such
advance, overdraft or indebtedness relates, and the amount allocable to such
Fund(s).
2. Each Fund hereby agrees with respect to its Account(s), any
Omnibus Account(s) and any advances, overdrafts or other indebtedness that the
Bank shall have a continuing lien and security interest in and to any property
at any time held by it for the benefit of the Fund either hereunder or under
such Fund's Custody Agreement with the Bank, or in which the Fund may have an
interest which is then in the Bank's possession or control or in possession or
control of any third party acting in the Bank's behalf, including in its behalf
as Custodian under the Fund's Custody Agreement with the Bank. Each Fund
authorizes the Bank, in its sole discretion, at any time to
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charge any advance, overdraft or indebtedness together with interest due thereon
at the Overdraft Rate against any balance of accounts standing to the Fund's
credit on the books of the Bank, including those books maintained by the Bank in
its capacity as Custodian for the Fund under its Custody Agreement with the
Fund.
3. Each Fund agrees that upon allocation of all advances, overdrafts
or indebtedness to its account pursuant to paragraph 1 above, its total
borrowings from all sources (including the Bank) shall be in conformity with the
requirements and limitations set forth in the Investment Company Act of 1940, as
amended, and the Fund's Prospectus. Each Fund shall promptly (and in any event
within one Business Day) notify the Bank in writing whenever it fails to comply
with any of the foregoing requirements.
ARTICLE V
ACCESS; CALL-BACK SECURITY PROCEDURE
1. Services Generally. Each Fund shall be permitted to utilize ACCESS
to obtain direct on-line access to its Accounts and Omnibus Accounts. ACCESS
shall permit each Fund at the times mutually agreed upon by the Bank and such
Fund to receive reports, make inquiries, instruct the Bank to disburse money in
accordance with Article III, and perform such other functions as are more fully
set forth in Schedule I hereto.
2. Permitted Use; Proprietary Information; Equipment. (a) Upon
delivery to a Fund of software enabling such Fund to utilize ACCESS (the
"Software"), the Bank grants to the Fund a personal, nontransferable and
nonexclusive license to use the Software solely for the purpose of transmitting
Written Instructions, receiving reports, making inquiries or otherwise
communicating with the Bank in connection with the Account(s) or the Omnibus
Account. Each Fund shall use the Software solely for its own internal and proper
business purposes and not in the operation of a service bureau. Except as set
forth herein, no license or right of any kind is granted to any Fund with
respect to the Software. Each Fund acknowledges that the Bank and its suppliers
retain and have title and exclusive proprietary rights to the Software,
including any trade secrets or other ideas, concepts, know-how, methodologies,
or information incorporated therein and the exclusive rights to any copyrights,
trademarks and patents (including registrations and applications for
registration of either), or other statutory or legal protections available in
respect thereof. Each Fund further acknowledges that all or a part of the
Software may be copyrighted or trademarked (or a registration or claim made
therefor) by the Bank or its suppliers. No Fund shall take any action with
respect to the Software inconsistent with the foregoing acknowledgments, nor
shall any Fund attempt to decompile, reverse engineer or modify the Software. No
Fund may copy, sell, lease or provide, directly or indirectly, any of the
Software or any portion thereof to any other person or entity without the Bank's
prior written consent. No Fund may remove any statutory copyright notice or
other notice included in the Software or on any media containing the Software.
Each Fund shall reproduce any such notice on any reproduction of the Software
and shall add any statutory copyright notice or other notice to the Software or
media upon the Bank's request.
(b) Each Fund acknowledges that all data bases made available as
part of, or through ACCESS, and any proprietary data, processes, information and
documentation (other than
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any such which are or become part of the public domain or are legally required
to be made available to the public) (collectively, the "Information"), are the
exclusive and confidential property of the Bank. Each Fund shall keep the
Information confidential by using the same care and discretion that each Fund
uses with respect to its own confidential property and trade secrets, and shall
neither make nor permit any disclosure without the express prior written consent
of the Bank.
(c) Each Fund shall obtain and maintain at its own cost and
expense all equipment and services, including but not limited to communications
services, necessary for it to utilize ACCESS and receive the services thereby,
and the Bank shall not be responsible for the reliability or availability of any
such equipment or any services used in connection with ACCESS.
(d) Upon termination of this Agreement for any reason, each Fund
shall return to the Bank any and all copies of the Information which are in such
Fund's possession or under its control, or distributed to third parties. The
provisions of this Article shall not affect the copyright status of any of the
Information which may be copyrighted and shall apply to all Information whether
or not copyrighted.
3. Modifications. The Bank reserves the right to modify ACCESS or the
Software from time to time without notice to any Fund. Each Fund agrees not to
modify or attempt to modify ACCESS or the Software without the Bank's prior
written consent. Each Fund acknowledges that ACCESS and the Software are the
property of the Bank and, accordingly, each Fund agrees that any modifications
to ACCESS or the Software, whether by such Fund or the Bank and whether with or
without the Bank's consent, shall become the property of the Bank.
4. No Representations or Warranties. The Bank and its manufacturers
and suppliers make no warranties or representations, express or implied, in fact
or in law, including but not limited to warranties of merchantability and
fitness for a particular purpose, in connection with any Fund's use of ACCESS or
the Software.
5. Security; Reliance; Unauthorized Use. Each Fund will, and will
cause all persons utilizing ACCESS to, treat the user and authorization codes,
passwords and authentication keys applicable to ACCESS with extreme care. The
Bank is hereby irrevocably authorized to act in accordance with and rely on
Written Instructions received by it through ACCESS. Each Fund acknowledges that
it is its sole responsibility to assure that only Authorized Persons use ACCESS
and that the Bank shall not be responsible nor liable for any unauthorized use
thereof, and agrees that the security procedures to be followed in connection
with the Fund's transmission of Written Instructions through ACCESS provide to
it a commercially reasonable degree of protection in light of its particular
needs and circumstances.
6. Limitations of Liability. (a) Except as otherwise specifically
provided in Section 6(b) below, the Bank shall have no liability for any losses,
damages, injuries, claims, costs or expenses of a Fund arising out of or in
connection with any failure, malfunction or other problem relating to any Fund's
use of ACCESS, except for money damages suffered as the direct result of the
negligence of the Bank in an amount not exceeding, in the aggregate for all such
losses, damages, injuries, claims, costs and expenses of a Fund arising during
any month, the total charges paid by
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such Fund to the Bank for ACCESS and services hereunder which caused such loss,
damage, injury, claim, cost or expense during the 12 months preceding the month
in question, or such lesser number of months as a Fund has used ACCESS if such
Fund has not received 12 months use of ACCESS; provided however, that the Bank
shall have no liability under this Section 6(a) if a Fund fails to comply with
the provisions of Section 6(d).
(b) The Bank's liability for its negligence in executing or
failing to execute a Fund's Written Instructions received through ACCESS shall
be only with respect to a transfer, or failure to transfer, funds not in
accordance with such Written Instructions after such instructions have been duly
acknowledged by the Bank, and shall be contingent upon the Fund complying with
the provisions of Section 6(d) below, and shall be limited to (i) restoration of
the principal amount mistransferred, if and to the extent that the Bank would be
required to make such restoration under applicable law, and (ii) the lesser of
(A) a Fund's actual pecuniary loss incurred by reason of its loss of use of the
mistransferred funds or the funds which were not transferred, as the case may
be, or (B) compensation for the loss of the use of the mistransferred funds or
the funds which were not transferred, as the case may be, at a rate per annum
equal to the average Federal Funds rate as computed from the Federal Reserve
Bank of New York's daily determination of the effective rate for Federal Funds,
for the period during which a Fund has lost use of such funds. In no event shall
the Bank have any liability for failing to execute Written Instructions for the
transfer of funds which are received by it through ACCESS other than through the
applicable transfer module for the particular instructions.
(c) Without limiting the generality of the foregoing, it is
hereby agreed that in no event shall the Bank or any manufacturer or supplier of
its computer equipment, software or services be responsible for any special,
indirect, incidental or consequential damages which a Fund may incur arising out
of or in connection with ACCESS or the services provided thereby, even if the
Bank or such manufacturer or supplier has been advised of the possibility of
such damages and regardless of the form of action.
(d) Each Fund shall notify the Bank of any errors, omissions or
interruptions in, or delay or unavailability of, ACCESS as promptly as
practicable, and in any event within one Business Day after the earliest of (i)
discovery thereof, (ii) the date discovery should have occurred through the
exercise of reasonable care, and (iii) in the case of any error, the date of the
earliest notice to such Fund which reflects such error.
(e) The Bank shall acknowledge through ACCESS its receipt of
each Written Instruction communicated through ACCESS, and in the absence of such
acknowledgement the Bank shall not be liable for any failure to act in
accordance with such Written Instruction and the Funds may not claim that such
Written Instruction was received by the Bank.
7. Funds Transfer Back-Up Procedure. (a) In the event ACCESS is
inoperable and a Fund is unable to utilize ACCESS for the transmission of
Written Instructions to the Bank to transfer funds, the Fund may give Oral
Instructions regarding funds transfers, it being expressly understood and agreed
that the Bank's acting pursuant to such Oral Instructions shall be contingent
upon the Bank's verification of the authenticity thereof pursuant to the
Call-Back Security Procedure set forth
9
<PAGE> 10
on Schedule III hereto (the "Procedure"). In this regard, each Fund shall
deliver to the Bank a Funds Transfer Telephone Instruction Authorization in the
form of Schedule III-A hereto, identifying the individuals authorized to deliver
and/or confirm all such Oral Instructions. Each Fund understands and agrees that
the Procedure is intended to determine whether Oral Instructions received
pursuant to this Section are authorized but is not intended to detect any errors
contained in such instructions. Each Fund hereby accepts the Procedure and
confirms its belief that the Procedure is commercially reasonable.
(b) The Bank shall have no liability whatsoever for any funds
transfer executed in accordance with Oral Instructions delivered and confirmed
pursuant to this Section 7 and Schedule III hereto. The Bank's liability for its
negligence in executing or failing to execute any such Oral Instructions shall
be determined by reference to Section 6(b) of this Article.
(c) The Bank reserves the right to suspend acceptance of Oral
Instructions pursuant to this Section 7 if conditions exist which the Bank, in
its sole discretion, believes have created an unacceptable security risk.
8. EXPORT RESTRICTIONS. EXPORT OF THE SOFTWARE IS PROHIBITED BY
UNITED STATES LAW. EACH FUND AGREES THAT IT WILL NOT UNDER ANY CIRCUMSTANCES
RESELL, DIVERT, TRANSFER, TRANSSHIP OR OTHERWISE DISPOSE OF THE SOFTWARE (IN ANY
FORM) IN OR TO ANY OTHER COUNTRY. IF THE BANK DELIVERED THE SOFTWARE TO ANY FUND
OUTSIDE OF THE UNITED STATES, THE SOFTWARE WAS EXPORTED FROM THE UNITED STATES
IN ACCORDANCE WITH THE EXPORT ADMINISTRATION REGULATIONS. DIVERSION CONTRARY TO
U.S. LAW IS PROHIBITED. Each Fund hereby authorizes the Bank to report its name
and address to government agencies to which the Bank is required to provide such
information by law.
ARTICLE VI
CONCERNING THE BANK
1. Standard of Care; Presentment of Claims. Except as otherwise
provided herein, the Bank shall not be liable for any costs, expenses, damages,
liabilities or claims (including attorney's fees) incurred by a Fund, except
those costs, expenses, damages, liabilities or claims arising out of the Bank's
own negligence, bad faith or willful misconduct. Notwithstanding the foregoing
or anything contained in Schedule I hereto, the Bank shall not be liable for any
loss or damage, including attorney's fees, resulting from the Bank paying any
redemption draft containing a forged drawer signature, unless such loss or
damage arises out of the Bank's gross negligence, bad faith or willful
misconduct. All claims against the Bank hereunder shall be made by the
respective Fund as promptly as practicable, and in any event within 6 months
from the date of the action or inaction on which such claim is based, and shall
include reasonable documentation evidencing such claim and loss.
2. No Liability. The Bank shall have no obligation hereunder for
costs, expenses, damages, liabilities or claims, including attorney's fees,
which are sustained or incurred by reason of any action or inaction by the
Federal Reserve wire transfer system or the New York Automated
10
<PAGE> 11
Clearing House. Notwithstanding any other provision elsewhere contained in this
Agreement, in no event shall the Bank be liable to any Fund or any third party
for special, indirect or consequential damages, or lost profits or loss of
business, arising under or in connection with this Agreement, even if previously
informed of the possibility of such damages and regardless of the form of
action.
3. Indemnification. Each Fund shall indemnify and exonerate, save and
hold harmless the Bank from and against any and all costs, expenses, damages,
liabilities or claims, including reasonable attorney's fees and expenses, which
the Bank may sustain or incur or which may be asserted against the Bank by
reason of or as a result of any action taken or omitted by the Bank in
connection with its performance under this Agreement, except those costs,
expenses, damages, liabilities or claims arising out of the Bank's own
negligence, bad faith or wilful misconduct. This indemnity shall be a continuing
obligation of each Fund notwithstanding the termination of this Agreement, any
Account or Omnibus Account with respect to a Fund.
4. No Obligation to Inquire. Without limiting the generality of the
foregoing, the Bank shall in no event be under any obligation to inquire into,
and shall not be liable for:
(a) the due authority of any Authorized Person acting on behalf
of a Fund in connection with this Agreement;
(b) the genuineness of any drawer signature on any draft
deposited in any Account or Omnibus Account, or whether such signature is a
forgery, other than the signature of the drawer of any draft drawn on the Bank;
(c) the existence or genuineness of any endorsement or any
marking purporting to be an endorsement on any draft deposited in any Account or
Omnibus Account, or whether such endorsement or marking is a forgery, it being
expressly understood that all risks associated with the acceptance by the Bank
of any draft payable to a payee other than a Fund for deposit in any Account or
Omnibus Account pursuant to Oral or Written Instructions by the Fund shall be
borne by such Fund;
(d) any discrepancy between the pre-printed investment stub
(other than a substitute stub created by the Bank) and the payee either named on
a draft or written on the face thereof, provided the Bank has acted in
accordance with the investment stub;
(e) any discrepancy between the written amount for which any
draft is drawn and the Magnetic Inscription Character Recognition ("MICR") code
enscribed thereon by any bank other than the Bank on any draft presented,
provided the Bank has acted in accordance with the MICR code;
(f) any disbursement directed by a Fund, regardless of the
purpose therefor;
(g) any determination of the Share balance of any Shareholder
whose name is signed on any redemption draft;
11
<PAGE> 12
(h) any determination of length of time any Shares have been
owned by any Shareholder or the method of payment utilized to purchase such
Shares by such Shareholder;
(i) any claims, liens, attachments, stays or stop payment orders
with respect to any Shares, proceeds, or money, other than a stop payment order
placed by a Fund on a draft drawn by such Fund on its Account or an Omnibus
Account;
(j) the propriety and/or legality of any transaction in any
Account or Omnibus Account;
(k) the lack of authority of any person signing as a drawer of a
draft, provided such person and his specimen signature is specified in the
certificate of authorized signatures last received by the Bank; or
(l) whether any redemption draft equals or exceeds any minimum
amount.
5. Reliance Upon Instructions. The Bank shall be entitled to rely
upon any Written or Oral Instructions received by the Bank. Each Fund agrees to
forward to the Bank Written Instructions confirming Oral Instructions in such
manner so that such Written Instructions are received by the Bank by the close
of business of the same day that such Oral Instructions are given to the Bank.
Each Fund agrees that the fact that such confirming Written Instructions are not
timely received or that contrary Written Instructions are received by the Bank
shall in no way affect the validity or enforceability of transactions previously
authorized.
6. Force Majeure. The Bank shall not be responsible or liable for any
failure or delay in the performance of its obligations under this Agreement
arising out of or caused, directly or indirectly, by circumstances beyond its
control, including acts of God; earthquakes; fires; floods; wars; civil or
military disturbances; sabotage; epidemics; riots; interruptions, loss or
malfunctions of utilities, computers (hardware or software), transportation, or
communications service; mechanical breakdowns; interruption or loss of ACCESS
(except as otherwise provided in Section 7 of Article V); accidents; acts of
civil or military authority; governmental actions; labor disputes; or inability
to obtain labor, material, equipment or transportation.
7. No Implied Duties; Performance According To Applicable Law. The
Bank shall have no duties or responsibilities except such duties and
responsibilities as are specifically set forth in this Agreement and Schedule I
hereto, and no covenant or obligation shall be implied against the Bank. The
Bank's duties and responsibilities hereunder shall be performed in accordance
with applicable laws, regulations and rules, including but not limited to
Federal Reserve Regulation CC and the Operating Rules of the New York Automated
Clearing House, and the Bank shall have no obligation to take actions which in
the reasonable opinion of the Bank are either inconsistent with, or prejudice or
impair the Bank's rights under, any such laws, regulations and rules.
8. Requests for Instructions. At any time the Bank may apply to an
officer of a Fund for Oral or Written Instructions with respect to any matter
arising in connection with the Bank's duties and obligations hereunder, and the
Bank shall not be liable for any action taken or permitted
12
<PAGE> 13
by it in good faith in accordance with such Oral or Written Instructions. Such
application for Oral or Written Instructions may, at the option of the Bank, set
forth in writing any action proposed to be taken or omitted by the Bank with
respect to its duties or obligations hereunder and the date on or after which
such action shall be taken, and the Bank shall not be liable for any action
taken or omitted in accordance with a proposal included in any such application
on or after the date specified therein (which shall be at least 5 days after the
date of such Fund's receipt of such application) unless, prior to taking or
omitting any such action, the Bank has received Oral or Written Instructions in
response to such application specifying the action to be taken or omitted. The
Bank may apply for and obtain the advice and opinion of counsel to the Fund or
of its own counsel, at the expense of the Fund, and shall be fully protected
with respect to anything done or omitted by it in good faith in conformity with
such advice or opinion.
9. Delegation of Duties. The Bank may delegate any of its duties and
obligations hereunder to any delegee and may employ agents or attorneys-in-fact;
provided however, that no such delegation or employment by the Bank shall
discharge the Bank from its obligations hereunder. The Bank shall have no
liability or responsibility whatsoever if any delegee, agent or attorney-in-fact
shall have been selected or approved by a Fund. Notwithstanding the foregoing,
nothing contained in this paragraph shall obligate the Bank to effect any
delegation or to employ any agent or attorney-in-fact.
10. Fees; Invoices. (a) For its services hereunder, each Fund agrees
to pay the Bank (i) its out-of-pocket expenses, (ii) the monthly fees and
compensation set forth on Schedule II attached hereto, and (iii) any negative
Calendar Month Earnings Credits, and such other amounts as may be mutually
agreed upon from time to time. The Bank shall provide each Fund with a monthly
activity analysis detailing service volumes, and including average Account
Available Balances and average ledger balances, and all fees owing for such
month.
(b) The Bank shall submit periodic invoices specifying the
amount of all out-of- pocket expenses, fees, compensation and negative Calendar
Month Earnings Credits then due hereunder. The Bank may, and is hereby
authorized by each Fund, to charge such amounts to an Omnibus Account or the
appropriate Fund's Account(s), but only if such amounts remain unpaid for
fifteen (15) days after the end of the period to which such amounts relate.
11. Application of Calendar Month Earnings Credits. (a) Any positive
Calendar Month Earnings Credit for a calendar month shall be applied only as
follows and only in the specified order:
i. First, applied against such compensation, fees, but not
out-of-pocket expenses, payable by such Fund to the Bank under this
Agreement for such month; and
ii. Second, applied against such compensation, fees, and
negative Calendar Month Earnings Credits, but not out-of-pocket
expenses, payable by such Fund to the Bank under this Agreement for any
subsequent month in the same calendar year.
(b) Except as provided above, in no event may any Calendar Month
Earnings Credit be applied to any month other than the month in which it was
earned. Calendar Month
13
<PAGE> 14
Earnings Credits may not be transferred to, or utilized by, any other Fund,
person or entity. The portion, if any, of any Calendar Month Earnings Credit not
used by a Fund may be carried, but only forward; provided, however, that in no
event may any Calendar Month Earnings Credit, including those earned during the
fourth calendar quarter, be carried beyond the end of the calendar year in which
earned.
ARTICLE VII
TERMINATION
1. Notice. This Agreement may be terminated by either the Bank giving
to any Fund, or any Fund giving to the Bank, a notice in writing specifying the
date of such termination, which date shall be not less than 90 days after the
date of the giving of such notice. Notwithstanding the foregoing, the Bank
reserves the right to terminate this Agreement (a) at any time upon 30 days
prior written notice if the condition precedent set forth in Article II,
paragraph 3 is unfulfilled, and (b) upon notice if a Fund either (i) fails to
comply with Article IV, Section 3, or (ii) borrows funds from the Bank in an
amount exceeding the Bank's legal lending limit.
2. Obligations Upon Termination. Upon termination, the Bank's sole
obligations, which shall arise only after, and not before, each Fund which is
the subject of such termination has paid to the Bank all out-of-pocket expenses,
fees, compensation, negative Calendar Month Earnings Credits and other amounts
owed by such Fund to the Bank, shall be (i) to deliver to the affected Fund(s)
such records, if any, as may be owned by such Fund(s), in the form and manner
kept by the Bank on such date of termination, and (ii) to pay to the affected
Fund(s) any monies held for their account hereunder.
ARTICLE VIII
MISCELLANEOUS
1. Certificates of Authorized Persons. Each Fund agrees to furnish to
the Bank a new certificate of Authorized Persons in the event that any present
Authorized Person of such Fund ceases to be an Authorized Person or in the event
that any other Authorized Persons are appointed and authorized. Until such new
certificate is received, the Bank shall be fully protected in acting under the
provisions of this Agreement upon Oral or Written Instructions or signatures of
the present Authorized Persons as set forth in the last delivered certificate.
2. Notices. (a) Any notice or other instrument in writing, authorized
or required by this Agreement to be given to the Bank, shall be sufficiently
given if addressed to the Bank and received by it at its offices at 90
Washington Street, 22nd Floor, New York, New York 10286, Attention: Division
Manager - Mutual Funds, or at such other place as the Bank may from time to time
designate in writing.
(b) Any notice or other instrument in writing, authorized or
required by this Agreement to be given to a Fund shall be sufficiently given if
addressed to a Fund and received by it at
, or at such other place as such Fund may from time to time
designate in writing.
14
<PAGE> 15
3. Cumulative Rights and No Waiver. Each and every right granted to
the Bank hereunder or under any other document delivered hereunder or in
connection herewith, or allowed it by law or equity, shall be cumulative and may
be exercised from time to time. No failure on the part of the Bank to exercise,
and no delay in exercising, any right will operate as a waiver thereof, nor will
any single or partial exercise by the Bank of any right preclude any other or
future exercise thereof or the exercise of any other right.
4. Severability. In case any provision in or obligation under this
Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or obligations
shall not in any way be affected or impaired thereby, and if any provision is
inapplicable to any person or circumstances, it shall nevertheless remain
applicable to all other persons and circumstances.
5. Amendments. This Agreement may not be amended or modified in any
manner except by a written agreement executed by the Bank and each Fund to be
bound thereby, and, except in the case of an amendment to Schedule I hereto,
authorized or approved by a resolution of each Fund's Board.
6. Headings. The headings in this Agreement are inserted for
convenience and identification only and are in no way intended to describe,
interpret, define or limit the scope, extent or intent of this Agreement or any
provisions hereof.
7. Applicable Law; Consent to Jurisdiction; Jury Trial Waiver. This
Agreement shall be construed in accordance with the laws of the State of New
York without giving effect to conflict of laws principles thereof. Each party
hereby consents to the jurisdiction of a state or federal court situated in New
York City, New York in connection with any dispute arising hereunder and hereby
waives its right to trial by jury.
8. No Third Party Beneficiaries. The provisions of this Agreement are
intended to benefit only the Bank and each Fund and their respective permitted
successors and assigns, and no right shall be granted to any other person by
virtue of this Agreement.
9. Successors and Assigns. This Agreement shall extend to and shall
be binding upon the parties hereto, and their respective successors and assigns;
provided, however, that this Agreement shall not be assignable by any Fund
without the written consent of the Bank and authorized or approved by a
resolution of such Fund's Board.
10. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
11. Several Obligations. The parties acknowledge that the obligations
of the Funds are several and not joint, that no Fund shall be liable for any
amount owing by another Fund and that the Funds have executed one instrument for
convenience only.
15
<PAGE> 16
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective corporate officers, thereunto duly authorized, as
of the day and year first above written.
By:
---------------------------------------
on behalf of each Fund identified on
Schedule A attached hereto
THE BANK OF NEW YORK
By:
---------------------------------------
Title:
16
<PAGE> 17
SCHEDULE A
Name of Fund
ASSET MANAGEMENT FUND, INC.
Money Market Portfolio
Short U.S. Government Securities Portfolio
Adjustable Rate Mortgage (ARM) Portfolio
Intermediate Mortgage Securities Portfolio
U.S. Government Mortgage Securities Portfolio
INSTITUTIONAL INVESTORS CAPITAL APPRECIATION FUND, INC.
M.S.B. FUND, INC.
17
<PAGE> 18
EXHIBIT A
I, of (the "Fund"), a
corporation do hereby certify that:
The following individuals have been duly authorized by the [Board of
Directors] [Board of Trustees] of the Fund in conformity with the Fund's
[Articles of Incorporation] [Declaration of Trust] and By-Laws to give Oral
Instructions and Written Instructions on behalf of the Fund for purposes of the
Fund's Cash Management and Related Services Agreement, and the signatures set
forth opposite their respective names are their true and correct signatures.
<TABLE>
<CAPTION>
Name Signature
<S> <C>
- ---------------------------------------------------------- --------------------------------------------------------
- ---------------------------------------------------------- --------------------------------------------------------
- ---------------------------------------------------------- --------------------------------------------------------
- ---------------------------------------------------------- --------------------------------------------------------
- ---------------------------------------------------------- --------------------------------------------------------
</TABLE>
-------------------------------------
[Title of Officer]
18
<PAGE> 19
CASH MANAGEMENT SERVICES/FEES
FOR
SHAY ASSETS MANAGEMENT
DEPOSIT SERVICES
<TABLE>
<CAPTION>
FEE COMMENTS
--- --------
<S> <C> <C>
Monthly Maintenance $35.00 Checking Account
Deposit Ticket $ 1.10 Cash Letter/Deposit
Deposit Item $ 0.17 Uncoded Cash Letter Item E.G. Cash Letter, OCR
Deposit Item Returned $10.00
Paid Check .17
Stop Payment/Manual 20.00 Written/Oral
Stop Payment/Automated 6.00
Internal Debit $ 0.50
Internal Credit $ 0.50
MicroFilm (Reel or Cassette) 25.00 Paid Checks; Reports, etc.
Microfiche 5.00 Lock Box/Reports, etc.
Data Transmission 10.00 Paid Checks; Reports, etc.
</TABLE>
FUNDS TRANSFER
<TABLE>
<CAPTION>
Outgoing Fed Funds/Chips
- ------------------------
<S> <C> <C>
- Book to Book $ 4.00 No Charge for Credits
- Fast Process $ 4.00
- Operator Interventions-Repair $ 5.00
Incoming Fed Funds/Chips
- ------------------------
- Fast Process 5.50
Telephone Advice 5.00
- ----------------
Official Check Issuance
- -----------------------
- Fast Process $ 3.00
- Operator Intervention-Repair $ 5.00
</TABLE>
19
<PAGE> 20
CASH MANAGEMENT SERVICES/FEES
FOR
SHAY ASSETS MANAGEMENT
ELECTRONIC BANKING SERVICES
<TABLE>
<CAPTION>
<S> <C> <C>
Balance Reporting Prior Day Information
Per Access 4.50
Per Summary/Detail Fields Loaded .20
Per Summary/Detail Fields Reported .10
</TABLE>
TIME CRITICAL REPORTS
<TABLE>
<CAPTION>
DYNAMIC REPORT Intra-Day Balance/Detail
- -------------- Per Account
<S> <C> <C>
Per Access 3.00
Per Item - Abbreviation Text .25
Per Item - Full Text 1.00
</TABLE>
MICRO/CA$H-REGISTER SOFTWARE MAINTENANCE
<TABLE>
<S> <C> <C>
Installation Waived Per Installation
Per Customer ID $25.00 Per Month, Basic
Fund Transfer $25.00 Per Month, Basic
ITEMS STATUS REPORT
- -------------------
Per Month Waived
Direct Customer Inquiry No Charge
</TABLE>
EARNINGS CREDIT
- ---------------
Calculated based on the 90 day U.S. Treasury Bill rate on the average daily
balances less reserves. The Credit is applied against your Cash Management fees.
OVERDRAFT CHARGES
- -----------------
Overdraft charges will be computed at 1% above the Federal Funds Rate on the day
of the overdraft, based on negative account available balances.
20
<PAGE> 1
EXHIBIT (h)(1)(C)
TRANSFER AGENCY AGREEMENT
THIS AGREEMENT is made as of this 13th day of September, 1999, by and
between ASSET MANAGEMENT FUND, INC. (the "Company"), a Maryland corporation
having its principal place of business at 230 West Monroe Street, Chicago,
Illinois 60606, and BISYS FUND SERVICES OHIO, INC. ("BISYS"), an Ohio
corporation having its principal place of business at 3435 Stelzer Road,
Columbus, Ohio 43219.
WHEREAS, the Company desires that BISYS perform certain services for
the current investment portfolios of the Company and any additional investment
portfolios that may hereafter be created (individually referred to herein as a
"Fund" and collectively as the "Funds"); and
WHEREAS, BISYS is willing to perform such services on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. Services.
BISYS shall perform for the Company the transfer agent services set
forth in Schedule A hereto. BISYS also agrees to perform for the Company such
additional services that the Company may from time to time reasonably request;
provided, however, that, to the extent that the performance of any to such other
services requires BISYS to incur material additional costs, and BISYS notifies
the Company thereof promptly after such request, such services shall be provided
in exchange for such additional compensation that is agreed upon by the parties.
BISYS agrees to perform the services described herein in accordance
with all applicable laws, rules and regulations (including, where applicable,
Generally Acceptable Accounting Principles) and in accordance with any
reasonable instructions of the Company and the Company's Certificate of
Incorporation, Bylaws. Prospectus and State of Additional Information.
BISYS may, with the prior written consent of the Company, appoint in
writing other parties qualified to perform transfer agency services reasonably
acceptable to the Company (individually, a "Sub-transfer Agent") to carry out
some or all of its responsibilities under this Agreement with respect to a Fund;
provided, however, that the Sub-transfer Agent shall be the agent of BISYS and
not the agent of the Company or such Fund, and that BISYS shall be fully
responsible for the acts of such Sub-transfer Agent as if such acts were its own
and shall not be relieved of any of its responsibilities hereunder by the
appointment of such Sub-transfer Agent.
<PAGE> 2
BISYS shall provide on a timely basis to the Company's investment
adviser, administrator accounting agent, distributor and Custodian and other
persons providing services to the Company such Information as such persons may
reasonably request in connection with the performance of their respective duties
and obligations with respect to the Company. BISYS will report to the Board of
Directors of the Company at each meeting of the Board of Directors and keep the
Board of Directors informed of material developments affecting the Company.
BISYS will comply with any performance standards that may be agreed to
by BISYS and the Company from time to time.
2. Fees.
The Company shall pay BISYS for the services to be provided by BISYS
under this Agreement in accordance with, and in the manner set forth in the
Omnibus Fee Agreement between the Company and BISYS dated as of August 1, 1999
(the "Fee Agreement"). Fees for any additional services to be provided by BISYS
pursuant to an amendment to Schedule A hereto shall be subject to mutual
agreement at the time such amendment to Schedule A is proposed.
3. Reimbursement of Expenses.
In addition to paying BISYS the fees described in Section 2 hereof, the
Company agrees to reimburse BISYS for BISYS' out-of-pocket expenses in providing
services hereunder, including without limitation, the following:
(a) All freight and other delivery and bonding charges incurred
by BISYS in delivering materials to and from the Company and in delivering all
materials to shareholders;
(b) All direct telephone, telephone transmission and telecopy or
other electronic transmission expenses incurred by BISYS in communication with
the Company, the Company's investment adviser or custodian, dealers,
shareholders or others as required for BISYS to perform the services to be
provided hereunder;
(c) Costs of postage, couriers, stock computer paper, statements,
labels, envelopes, checks, reports, letters, tax forms, proxies, notices or
other forms of printed material which shall be required by BISYS for the
performance of the services to be provided hereunder;
(d) The cost of microfilm or microfiche of records or other
materials;
(e) Sales taxes paid on behalf of the Company;
2
<PAGE> 3
(f) Expenses associated with the tracking of "as-of" trades:
(g) All systems-related expenses associated with the provision of
special reports and services pursuant to Schedule B attached hereto; and
(h) Any expenses BISYS shall incur at the written direction of an
officer of the Company thereunto duly authorized.
4. Effective Date.
This Agreement shall become effective as of the date first written
above (the "Effective Date").
5. Term.
This Agreement shall continue in effect unless earlier terminated by
either party hereto as provided hereunder, until September 12, 2004 (the
"Initial Term"). Thereafter, unless otherwise terminated as provided herein,
this Agreement shall be renewed automatically for successive one-year periods
("Rollover Periods"). This Agreement may be terminated without penalty (i) by
provision of 90 days advance written notice of nonrenewal prior to the end of
the Initial Term or any Rollover Period, as the case may be, (ii) by mutual
agreement of the parties or (iii) for "cause," as defined below, upon the
provision of 90 days advance written notice by the party alleging cause.
Notwithstanding the foregoing, after September 12, 2001, either party may
terminate this Agreement, at any time and without penalty, upon the provision of
90 days advance written notice to the other party.
For purposes of this Agreement, "cause" shall mean (a) a material
breach of this Agreement that has not been remedied for thirty (30) days
following written notice of such breach from the non-breaching party; (b) a
series of negligent acts or omissions or other breaches of this Agreement which,
in the aggregate, constitutes, in the reasonable judgment of the Company's
Directors, a serious failure to perform satisfactorily BISYS's obligations
hereunder; (c) a service standard deficiency (as defined by the parties in the
service standards that are agreed to by BISYS and the Company from time to
time); (d) a final, unappealable judicial, regulatory or administrative ruling
or order in which the party to be terminated has been found guilty of criminal
or unethical behavior in the conduct of its business; or (e) financial
difficulties on the part of the party to be terminated which are evidenced by
the authorization or commencement of, or involvement by way of pleading, answer,
consent or acquiescence in, a voluntary or involuntary case under Title 11 of
the United States Code, as from time to time is in effect, or any applicable
law, other than said Title 11, of any jurisdiction relating to the liquidation
or reorganization of debtors or to the modification or alteration of the rights
of creditors.
After such termination, for so long as BISYS, with the written consent
of the Company, in fact continues to perform any one or more of the services
contemplated by this Agreement or any Schedule or exhibit hereto, the provisions
of this Agreement, including without limitation the provisions dealing with
indemnification, shall continue in full force and
3
<PAGE> 4
effect. Fees and out-of-pocket expenses incurred by BISYS but unpaid by the
Company upon such termination shall be immediately due and payable upon and
notwithstanding such termination. BISYS shall be entitled to collect from the
Company, in addition to the fees and disbursements provided by Sections 2 and 3
hereof, the amount of all of BISYS' cash disbursements in connection with BISYS'
activities in effecting such termination. including without limitation. the
delivery to the Company and/or its distributor or investment adviser and/or
other parties, of the Company's property, records, instruments and documents.
If, for any reason other than nonrenewal, mutual agreement of the
parties or "cause," as defined above, during the first two years of the Initial
Term of this Agreement, BISYS is replaced as transfer agent, then the Company
shall make a one-time cash payment, in consideration of the fee structure and
services to be provided under this Agreement, and not as a penalty, to BISYS
equal to the balance due BISYS for the remainder of such two-year period
assuming for purposes of calculation of the payment that such balance shall be
based upon the average number of Company shareholder accounts for the twelve
months prior to the date BISYS is replaced.
In the event the Company is merged into another legal entity in part or
in whole pursuant to any form of business reorganization (including without
limitation a purchase of assets) or is liquidated in part or in whole prior to
the expiration of the first two years of the Initial Term of this Agreement, the
parties acknowledge and agree that the Company shall be entitled to terminate
this Agreement; provided, however, that the liquidated damages provision set
forth above shall be applicable in those instances in which BISYS is not
retained by the other party to such business reorganization or any successor
entity to provide transfer agency services consistent with this Agreement. The
one-time cash payment referenced above shall be due and payable on the day prior
to the first day in which BISYS is replaced.
The parties further acknowledge and agree that, in the event BISYS is
replaced as set forth above, (i) a determination of actual damages incurred by
BISYS would be extremely difficult, and (ii) the liquidated damages provision
contained herein is intended to adequately compensate BISYS for damages incurred
and is not intended to constitute any form of penalty.
In the event that either party gives notice of the termination of this
Agreement as provided in this Section, BISYS will cooperate and use all
reasonable efforts to assist with the conversion of the data and records
maintained by it hereunder to, and the assumption of the services provided by it
hereunder by, a replacement provider of transfer agency services.
6. Uncontrollable Events.
BISYS shall enter into and shall maintain in effect with appropriate
parties one or more agreements making reasonable provisions for emergency use of
electronic data processing equipment and shall, at no additional expense to the
Company, take reasonable steps to minimize service interruptions.
4
<PAGE> 5
BISYS assumes no responsibility hereunder, and shall not be liable for
any damage, loss of data, delay or any other loss whatsoever caused by events
beyond its reasonable control: provided that such damage, loss, delay or other
loss is not caused by BISYS' own willful misfeasance, bad faith, negligence or
reckless disregard of its obligations under, or other noncompliance with this
Agreement.
7. Legal Advice.
BISYS shall notify the Company at any time BISYS believes that it is in
need of the advice of counsel (other than counsel in the regular employ of BISYS
or any affiliated companies) with regard to BISYS' responsibilities and duties
pursuant to this Agreement, and after so notifying the Company, BISYS, at its
discretion, shall be entitled to seek, receive and act upon advice of legal
counsel of its choosing and BISYS shall in no event be liable to the Company or
any Fund or any shareholder or beneficial owner of the Company for any action
reasonably taken pursuant to such advice.
8. Instructions.
Whenever BISYS is requested or authorized to take action hereunder
pursuant to instructions from a shareholder, or a properly authorized agent of a
shareholder ("shareholder's agent"), concerning an account in a Fund, BISYS
shall be entitled to rely upon any certificate, letter or other instrument or
communication, believed by BISYS to be genuine and to have been properly made,
signed or authorized by an officer or other authorized agent of the Company
(other than BISYS or any of its affiliates or an officer of the Company that is
an officer or employee of BISYS or any of its affiliates), or by the shareholder
or shareholder's agent, as the case may be, and shall be entitled to receive as
conclusive proof of any fact or matter required to be ascertained by it
hereunder a certificate signed by an officer of the Company (other than an
officer of the Company that is an officer or employee of BISYS or any of its
affiliates) or any other person authorized by the Company's Board of Directors
(hereafter referred to as the "Directors") or by the shareholder or
shareholder's agent, as the case may be.
As to the services to be provided hereunder, BISYS will comply with the
terms of the Prospectuses and the Statement of Additional Information of the
Company to the extent such terms address the manner in which the services
described herein are performed unless BISYS receives written instructions to the
contrary in a timely manner from the Company.
9. Standard of Care; Reliance on Records and Instructions;
Indemnification.
BISYS shall use its best efforts to ensure the accuracy of all services
performed under this Agreement, but shall not be liable to the Company for any
action taken or omitted by BISYS in the absence of bad faith, willful
misfeasance, negligence or from reckless disregard by it of its obligations and
duties. The Company agrees to indemnify and hold harmless BISYS, its employees,
agents, directors, officers and nominees from and against any and all claims,
demands, actions and suits, whether groundless or otherwise, and from and
against any and all judgments, liabilities, losses, damages, costs, charges,
reasonable counsel fees and other
5
<PAGE> 6
expenses of every nature and character arising out of or in any way relating to
BISYS' actions taken or nonactions with respect to the performance of services
under this Agreement or based, if applicable, upon reasonable reliance on
information, records, instructions or requests given or made to BISYS by the
Company, the investment adviser and on any records provided by any fund
accountant (other than BISYS) or custodian thereof, provided, however, that
BISYS shall not be protected in relying on any information, records,
instructions or requests given or made to or prepared by BISYS or any affiliate
of BISYS or any officer of the Company that is an officer or employee of BISYS
or any affiliate of BISYS; and provided, further, that this indemnification
shall not apply to actions or omissions of BISYS in cases of its own bad faith,
willful misfeasance, negligence or from reckless disregard by it of its
obligations and duties; and further provided that prior to confessing any claim
against it which may be the subject of this indemnification, BISYS shall give
the Company written notice of and reasonable opportunity to defend against said
claim in its own name or in the name of BISYS.
Notwithstanding the foregoing, BISYS agrees to indemnify and hold
harmless the Company, its employees, agents, directors, officers and nominees
from and against any and all actions, suits, demands and claims, whether
groundless or otherwise, and from and against any and all judgments,
liabilities, losses, damages, costs, charges, reasonable counsel fees and other
expenses of every nature and character arising out of or in any way relating to
BISYS's bad faith, willful malfeasance or misfeasance, negligence, or reckless
disregard by it of its obligations and duties with respect to the performance of
services under this Agreement.
The indemnifying party shall be entitled to participate at its own
expense or, if it acknowledges its responsibility to indemnify the other party,
it may elect to assume the defense of any suit brought to enforce any claims
subject to this indemnity provision. If the indemnifying party elects to assume
the defense of any such claim, the defense shall be conducted by counsel chosen
by the indemnifying party and satisfactory to the indemnified party, whose
approval shall not be unreasonably withheld. In the event that the indemnifying
party elects to assume the defense of any suit and retain counsel, the
indemnified party shall bear the fees and expenses of any additional counsel
retained by it. If the indemnifying party does not elect to assume the defense
of a suit, it will reimburse the indemnified party for the reasonable fees and
expenses of any counsel retained by the indemnified party.
10. Record Retention and Confidentiality.
BISYS shall keep and maintain on behalf of the Company all books and
records which the Company or BISYS is, or may be, required to keep and maintain
pursuant to any applicable statutes, rules and regulations, including without
limitation Rules 31a-1 and 31a-2 under the Investment Company Act of 1940, as
amended (the "1940 Act"), relating to the maintenance of books and records in
connection with the services to be provided hereunder. BISYS further agrees that
all such books and records shall be the property of the Company and to make such
books and records available for inspection by the Company or by the Securities
and Exchange Commission (the "Commission") at reasonable times and otherwise to
keep confidential all books and records and other information relative to the
Company and its shareholders, except when requested to divulge such information
by duly-constituted authorities or court process, or requested by a shareholder
or shareholder's agent with respect to information concerning an account as to
which such shareholder
6
<PAGE> 7
has either a legal or beneficial interest or when requested by the Company, the
shareholder, or shareholder's agent, or the dealer of record as to such account.
BISYS will promptly notify the Company of any such requests by duly constituted
authorities or court process.
11. Reports.
BISYS will furnish to the Company and to its properly-authorized
auditors, investment advisers, examiners, distributors, dealers, underwriters,
salesmen, insurance companies and others designated by the Company in writing,
such reports at such times as are prescribed in Schedule B attached hereto, or
as subsequently agreed upon by the parties pursuant to an amendment to Schedule
B. The Company agrees to examine each such report or copy promptly and will
report or cause to be reported any errors or discrepancies therein of which the
Company is aware.
12. Rights of Ownership.
All computer programs and procedures developed to perform services
required to be provided by BISYS under this Agreement are the property of BISYS.
All records and other data except such computer programs and procedures are the
exclusive property of the Company and all such other records and data will be
furnished to the Company in appropriate form as soon as practicable after
termination of this Agreement for any reason.
13. Return of Records.
BISYS may at its option at any time, and shall promptly upon the
Company's demand, turn over to the Company and cease to retain BISYS' files,
records and documents created and maintained by BISYS pursuant to this Agreement
which are no longer needed by BISYS in the performance of its services or for
its legal protection. If not so turned over to the Company, such documents and
records will be retained by BISYS for six years from the year of creation. At
the end of such six-year period, such records and documents will be turned over
to the Company unless the Company authorizes in writing the destruction of such
records and documents.
14. Bank Accounts.
The Company and the Funds shall establish and maintain such bank
accounts with such bank or banks as are selected by the Company, as are
necessary in order that BISYS may perform the services required to be performed
hereunder. To the extent that the performance of such services shall require
BISYS directly to disburse amounts for payment of dividends, redemption proceeds
or other purposes, the Company and Funds shall provide such bank or banks with
all instructions and authorizations necessary for BISYS to effect such
disbursements.
7
<PAGE> 8
15. Representations of the Company.
The Company certifies to BISYS that: (a) by virtue of its Articles of
Incorporation, shares of each Fund which are redeemed by the Company may be sold
by the Company from its treasury, and (b) this Agreement has been duly
authorized by the Company and, when executed and delivered by the Company, will
constitute a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors and secured parties.
16. Representations of BISYS.
BISYS represents and warrants that: (a) BISYS has been in, and shall
continue to be in, substantial compliance with all provisions of law, including
Section 17A(c) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") required in connection with the performance of its duties under this
Agreement; and (b) the various procedures and systems which BISYS has
implemented with regard to safekeeping from loss or damage attributable to fire,
theft or any other cause of the blank checks, records, and other data of the
Company and BISYS' records, data, equipment, facilities and other property used
in the performance of its obligations hereunder are adequate and that it will
make such changes therein from time to time as are required for the secure
performance of its obligations hereunder.
BISYS agrees to perform comprehensive tests on the systems it utilizes
to provide the services hereunder to identify any operational issues caused by
the century change. BISYS agrees to use all commercially reasonable efforts to
implement by December 31, 1999, all necessary updates and changes to such
systems, if any, to accommodate the turn of the century. BISYS agrees to provide
to the Company monthly updates on the status of its Year 2000 readiness project
and to make its personnel reasonably available to address any questions. In
particular and, without limiting the foregoing, BISYS shall notify the Company
of any circumstances known to BISYS which are likely to cause BISYS's systems to
be Year 2000 noncompliant and which would likely have an adverse effect on the
Funds.
In the event that the Company reasonably determines that any of the
systems BISYS utilizes to perform services hereunder will not be Year 2000
compliant and that such lack of compliance will have an adverse effect on the
Company, the Company shall provide written notice to BISYS describing, in
reasonable detail, any defect or problem relating to such system(s) promptly
upon becoming aware of any such defect or problem. BISYS agrees to use all
commercially reasonable efforts to cure any defect or deficiency that relates to
the turn of the century in any system that BISYS utilizes to provide services
hereunder. This paragraph does not alter the obligations of BISYS under the
preceding paragraph.
17. Insurance.
BISYS shall notify the Company should its insurance coverage with
respect to professional liability or errors and omissions coverage be canceled
or reduced. Such notification
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<PAGE> 9
shall include the date of change and the reasons therefor. BISYS shall notify
the Company of any material claims against it with respect to services performed
under this Agreement, whether or not they may be covered by insurance, and shall
notify the Company from time to time as may be appropriate of the total
outstanding claims made BISYS under its insurance coverage.
18. Information to be Furnished by the Company and Funds.
The Company has furnished to BISYS the following:
(a) Copies of the Articles of Incorporation of the Company and of
any amendments thereto, certified by the proper official of the state in which
such Articles has been filed.
(b) Copies of the following documents:
1. The Company's Bylaws and any amendments thereto;
2. Certified copies of resolutions of the Directors
covering the following matters:
A. Approval of this Agreement and authorization of a
specified officer of the Company to execute and
deliver this Agreement and authorization for
specified officers of the Company to instruct BISYS
hereunder; and
B. Authorization of BISYS to act as Transfer Agent for
the Company on behalf of the Funds.
(c) A list of all officers of the Company, together with specimen
signatures of those officers, who are authorized to instruct BISYS in all
matters.
(d) Two copies of the following (if such documents are employed
by the Company):
1. Prospectuses and Statement of Additional Information;
2. Distribution Agreement; and
3. All other forms commonly used by the Company or its
Distributor with regard to their relationships and
transactions with shareholders of the Funds.
(e) A certificate as to shares of beneficial interest or common
stock of the Company authorized, issued, and outstanding as of the Effective
Date of BISYS' appointment as Transfer Agent (or as of the date on which BISYS'
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<PAGE> 10
services are commenced, whichever is the later date) and as to receipt of full
consideration by the Company for all shares outstanding. Such statement to be
certified by the Treasurer of the Company.
19. Information Furnished by BISYS.
BISYS has furnished to the Company the following:
(a) BISYS' Articles of Incorporation.
(b) BISYS' Bylaws and any amendments thereto.
(c) Certified copies of actions of BISYS covering the following
matters:
1. Approval of this Agreement, and authorization of a
specified officer of BISYS to execute and deliver this
Agreement;
2. Authorization of BISYS to act as Transfer Agent for the
Company.
(d) A copy of the most recent independent accountants' report
relating to internal accounting control systems as filed with the Commission
pursuant to Rule 17Ad-13 under the Exchange Act.
20. Amendments to Documents.
The Company shall furnish BISYS written copies of any amendments to, or
changes in, any of the items referred to in Section 18 hereof forthwith upon
such amendments or changes becoming effective. In addition, the Company agrees
that no amendments will be made to the Prospectuses or Statement of Additional
Information of the Company which might have the effect of changing the
procedures employed by BISYS in providing the services agreed to hereunder or
which amendment might affect the duties of BISYS hereunder unless the Company
first obtains BISYS' approval of such amendments or changes.
21. Reliance on Amendments.
BISYS may rely on any amendments to or changes in any of the documents
and other items to be provided by the Company pursuant to Sections 18 and 20 of
this Agreement and the Company hereby indemnifies and holds harmless BISYS from
and against any and all claims, demands, actions, suits, judgments, liabilities,
losses, damages, costs, charges, counsel fees and other expenses of every nature
and character which may result from actions or omissions on the part of BISYS in
reasonable reliance upon such amendments and/or changes. Although BISYS is
authorized to rely on the above-mentioned amendments to and changes in the
documents and other items to be provided pursuant to Sections 18 and 20 hereof,
BISYS shall be under no duty to comply with or take any action as a result of
any of such amendments or changes unless the Company first obtains BISYS'
written consent to and approval of such amendments or changes.
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<PAGE> 11
22. Compliance with Law.
Except for the obligations of BISYS set forth in Sections 1, 10 and 11,
hereof, BISYS bears no responsibility under this Agreement for the preparation,
contents, and distribution of each prospectus of the Company as to compliance
with all applicable requirements of the Securities Act of 1933, as amended (the
"1933 Act"), the 1940 Act, and any other laws, rules and regulations of
governmental authorities having jurisdiction. BISYS shall have no obligation to
take cognizance of any laws relating to the sale of the Company's shares. The
Company represents and warrants that no shares of the Company will be offered to
the public until the Company's registration statement under the 1933 Act and the
1940 Act has been declared or becomes effective.
23. Notices.
Any notice provided hereunder shall be sufficiently given when sent by
registered or certified mail to the party required to be served with such notice
at the following address: if to the Company at 230 West Monroe Street, Chicago,
Illinois 60606; if to BISYS at 3435 Stelzer Road, Columbus, Ohio 43219; or at
such other address as such party may from time to time specify in writing to the
other party pursuant to this Section.
24. Headings.
Paragraph headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
25. Assignment.
This Agreement and the rights and duties hereunder shall not be
assignable by either of the parties hereto except by the specific written
consent of the other party. This Section 25 shall not limit or in any way affect
BISYS' right to appoint a Sub-transfer Agent pursuant to Section 1 hereof. This
Agreement shall be binding upon, and shall inure to the benefit of, the parties
hereto and their respective successors and permitted assigns. Any assignment not
in compliance with this Agreement shall be void.
26. Governing Law.
This Agreement shall be governed by and provisions shall be construed
in accordance with the laws of the State of Ohio.
27. Instructions, Approval or Consent by the Company; Imputation.
Any reference herein to any instructions, approval or consent of the
Company shall not include any instructions, approval or consent given by any
officer of the Company that is an officer, employee or agent of BISYS or any
affiliate of BISYS, unless specifically authorized by
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<PAGE> 12
the Board of Directors of the Company. No information known to any such officer
of the Company shall be imputed to the Company for purposes of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
ASSET MANAGEMENT FUND, INC.
By:/s/ Edward E. Sammons, Jr.
------------------------------------
Title:President
---------------------------------
BISYS FUND SERVICES OHIO, INC.
By:/s/ William J. Tomko
------------------------------------
Title:President
---------------------------------
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<PAGE> 13
SCHEDULE A
TO THE TRANSFER AGENCY AGREEMENT
DATED AS OF SEPTEMBER 13, 1999
BETWEEN
ASSET MANAGEMENT FUND, INC.
AND
BISYS FUND SERVICES OHIO, INC.
TRANSFER AGENCY SERVICES
1. Shareholder Transactions
a. Process shareholder purchase and redemption orders.
b. Set up account information, including address, dividend
option, taxpayer identification numbers and wire
instructions.
c. Issue confirmations in compliance with Rule 10b-10 under the
Securities Exchange Act of 1934, as amended.
d. Issue periodic statements for shareholders.
e. Process transfers and exchanges.
f. Process dividend payments, including the purchase of new
shares, through dividend reimbursement.
2. Shareholder Information Services
a. Make information available to shareholder servicing unit and
other remote access units regarding trade date, share price,
current holdings, yields, and dividend information.
b. Produce detailed history of transactions through duplicate or
special order statements upon request.
c. Provide mailing labels for distribution of financial reports,
prospectuses, proxy statements or marketing material to
current shareholders.
A-1
<PAGE> 14
3. Compliance Reporting
a. Provide reports to the Securities and Exchange Commission,
the National Association of Securities Dealers and the States
in which the Fund is registered.
b. Prepare and distribute appropriate Internal Revenue Service
forms for corresponding Fund and shareholder income and
capital gains.
c. Issue tax withholding reports to the Internal Revenue
Service.
4. Dealer/Load Processing (if applicable)
a. Provide reports for tracking rights of accumulation and
purchases made under a Letter of Intent.
b. Account for separation of shareholder investments from
transaction sale charges for purchase of Fund shares.
c. Calculate fees due under 12b-1 plans for distribution and
marketing expenses.
d. Track sales and commission statistics by dealer and provide
for payment of commissions on direct shareholder purchases in
a load Fund.
5. Shareholder Account Maintenance
a. Maintain all shareholder records for each account in the
Company.
b. Issue customer statements on scheduled cycle, providing
duplicate second and third party copies if required.
c. Record shareholder account information changes.
d. Maintain account documentation files for each shareholder.
A-2
<PAGE> 15
SCHEDULE B
TO THE TRANSFER AGENCY AGREEMENT
DATED AS OF SEPTEMBER 13, 1999
BETWEEN
ASSET MANAGEMENT FUND, INC.
AND
BISYS FUND SERVICES OHIO, INC.
REPORTS
-------
1. Daily Shareholder Activity Journal
2. Daily Fund Activity Summary Report
a. Beginning Balance
b. Dealer Transactions
c. Shareholder Transactions
d. Reinvested Dividends
e. Exchanges
f. Adjustments
g. Ending Balance
3. Daily Wire and Check Registers
4. Monthly Dealer Processing Reports
5. Monthly Dividend Reports
6. Sales Data Reports for Blue Sky Registration
7. Annual report by independent public accountants concerning BISYS'
shareholder system and internal accounting control systems to be filed
with the Securities and Exchange Commission pursuant to Rule 17Ad-13 of the
Securities Exchange Act of 1934, as amended.
8. Such special reports and additional information that the parties may agree
upon, from time to time.
B-1
<PAGE> 1
EXHIBIT (h)(3)
ADMINISTRATION AGREEMENT
THIS AGREEMENT is made as of this 1st day of August, 1999, by and
between ASSET MANAGEMENT FUND, INC. (the "Company"), a Maryland corporation
having its principal place of business at 230 West Monroe Street, Chicago,
Illinois 60606, and BISYS FUND SERVICES OHIO, INC. ('"BISYS"), an Ohio
corporation having its principal place of business at 3435 Stelzer Road,
Columbus, Ohio 43219.
WHEREAS, the Company is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, the Company desires BISYS to perform certain services, and
BISYS is willing to provide such services, for each current investment portfolio
of the Company and any additional investment portfolios that may hereafter be
created (individually, the "Portfolio," and collectively as the "Portfolios"),
on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Company and BISYS hereby agree as follows:
ARTICLE 1. Retention of BISYS. The Company hereby retains BISYS to act
as Administrator of the Portfolios and to furnish the Portfolios with the
management and administrative services as set forth in Article 2 below. BISYS
hereby accepts such employment to perform the duties set forth below.
BISYS shall, for all purposes herein, be deemed to be an independent
contractor and, unless otherwise expressly provided or authorized, shall have no
authority to act for or represent the Company in any way and shall not be deemed
an agent of the Company.
ARTICLE 2. Administrative Services. BISYS shall perform or supervise
the performance by others of other administrative services in connection with
the operations of the Portfolios, and, on behalf of the Company, will
investigate, assist in the selection of and conduct relations with custodians,
depositories, accountants, legal counsel, underwriters, brokers and dealers,
corporate fiduciaries, insurers, banks and persons in any other capacity deemed
to be necessary or desirable for the Portfolios' operations. BISYS shall provide
the Board of Directors of the Company (hereafter referred to as the "Directors")
with such reports regarding investment performance as they may reasonably
request but shall have no responsibility for supervising the performance by any
investment adviser or sub-adviser of its responsibilities.
BISYS agrees to perform the services described herein in accordance
with all applicable laws, rules and regulations (including, where applicable,
Generally Accepted Accounting Principles) and in accordance with any reasonable
instructions of the Company and the Company's Articles of Incorporation, Bylaws,
Prospectus and Statement of Additional Information.
<PAGE> 2
BISYS shall provide the Company with regulatory reporting, all
necessary office space, equipment, personnel, compensation and facilities
(including facilities for Shareholders' and Directors' meetings) for handling
the affairs of the Company and such other services as BISYS shall, from time to
time, determine to be necessary to perform its obligations under this Agreement.
In addition, at the request of the Directors, BISYS shall make reports to the
Company's Directors concerning the performance of its obligations hereunder.
Without limiting the generality of the foregoing, BISYS shall:
(a) calculate contractual Company expenses and control all
disbursements for the Company, and as appropriate compute the Company's yields,
total return, expense ratios, portfolio turnover rate and, if required,
portfolio average dollar-weighted maturity;
(b) assist Company counsel with the preparation of prospectuses,
statements of additional information, registration statements and proxy
materials;
(c) prepare such reports, applications and documents (including
reports regarding the sale and redemption of shares of common stock of the
Company ("Shares") as may be required in order to comply with Federal and state
securities law) as may be necessary or desirable to register the Company's
Shares with state securities authorities, monitor the sale of Company Shares for
compliance with state securities laws, and prepare and file with the appropriate
state securities authorities the registration statements and reports for the
Company and the Company's Shares and all amendments thereto, as may be necessary
or convenient to register and keep effective the Company and the Company's
Shares with state securities authorities to enable the Company to make a
continuous offering of its Shares;
(d) develop and prepare, with the assistance of the Company's
investment adviser, communications to Shareholders, including the annual report
to Shareholders, coordinate the mailing of prospectuses, notices, proxy
statements, proxies and other reports to Company Shareholders, and supervise and
facilitate the proxy solicitation process for all shareholder meetings,
including the tabulation of shareholder votes;
(e) administer contracts on behalf of the Company with, among
others, the Company's investment adviser, distributor, custodian, transfer agent
and fund accountant;
(f) supervise the Company's transfer agent with respect to the
payment of dividends and other distributions to Shareholders;
2
<PAGE> 3
(g) calculate performance data of the Portfolios for
dissemination to information services covering the investment company industry;
(h) coordinate, provide the necessary financial/tax data for and
supervise, the preparation of the Company's tax returns;
(i) examine and review the operations and performance of the
various organizations providing services to the Company, including, without
limitation, the Company's investment adviser, distributor, custodian, fund
accountant, transfer agent, outside legal counsel and independent public
accountants, including monitoring of all applicable contractual fee or expense
limitations, and at the request of the Directors, report to the Board on the
performance of organizations;
(j) assist with the layout and printing of publicly disseminated
prospectuses and assist with and coordinate layout and printing of the Company's
semi-annual and annual reports to Shareholders;
(k) assist with the design, development, and operation of the
Portfolios, including new classes, investment objectives, policies and
structure;
(l) provide individuals reasonably acceptable to the Company's
Directors to serve as officers of the Company (without compensation,
reimbursement of expenses or indemnification from the Company, other than as set
forth in this Agreement), who will be responsible for the management of certain
of the Company's affairs as determined by the Company's Directors;
(m) advise the Company and its Directors on matters concerning
the Company and its affairs;
(n) obtain and keep in effect fidelity bonds and directors and
officers/errors and omissions insurance policies for the Company in accordance
with the requirements of Rules 17g-1 and 17d-1(7) under the 1940 Act as such
bonds and policies are approved by the Company's Directors and make all
necessary filings with the SEC;
(o) monitor and advise the Company and its Portfolios on their
registered investment company status under the Internal Revenue Code of 1986, as
amended;
(p) perform all administrative services and functions of the
Company to the extent administrative services and functions are not provided to
the Company pursuant to the Company's investment advisory agreement,
distribution agreement, custodian agreement, transfer agent agreement and fund
accounting agreement;
3
<PAGE> 4
(q) furnish advice and recommendations with respect to other
aspects of the business and affairs of the Portfolios as the Company and BISYS
shall determine desirable; and
(r) prepare and file with the SEC in a timely manner (in order
to avoid interest charges) the semi-annual report for the Company on Form N-SAR
and all required notices pursuant to Rule 24f-2.
Without limiting the foregoing, the services to be provided by BISYS
hereunder shall include the services listed in the detailed service listing
attached hereto as Schedule B. BISYS shall perform such other services for the
Company that the Company may from time to time reasonably request; provided,
however, that, to the extent that the performance of any of such other services
requires BISYS to incur material additional costs, and BISYS notifies the
Company thereof promptly after such request, such services shall be provided in
exchange for such additional compensation that is agreed upon by the parties.
Such services may include performing internal audit examinations; mailing the
annual reports of the Portfolios; preparing an annual list of Shareholders; and
mailing notices of Shareholders' meetings, proxies and proxy statements, for all
of which the Company will pay BISYS's out-of-pocket expenses.
BISYS shall enter into and shall maintain in effect with appropriate
parties one or more agreements making reasonable provisions for emergency use of
electronic data processing equipment and shall, at no additional expense to the
Company, take reasonable steps to minimize service interruptions.
BISYS shall provide on a timely basis to the Company's investment
adviser, transfer agent, accounting agent, distributor and custodian and other
persons providing services to the Company such information as such persons may
reasonably request in connection with the performance of their respective duties
and obligations with respect to the Company. BISYS will report to the Board of
Directors of the Company at each meeting of the Board of Directors and will keep
the Board of Directors informed of material developments affecting the Company.
BISYS will comply with any performance standards that may be agreed to
by BISYS and the Company from time to time.
ARTICLE 3. Allocation of Charges and Expenses.
(A) BISYS. BISYS shall furnish at its own expense the executive,
supervisory and clerical personnel necessary to perform its obligations under
this Agreement. BISYS shall also provide the items which it is obligated to
provide under this Agreement, and shall pay all compensation, if any, of
officers of the Company as well as all Directors of the Company who are
affiliated persons of BISYS or any affiliated corporation of BISYS; provided,
however, that unless otherwise specifically provided, BISYS shall not be
obligated to pay the compensation of any employee of the Company retained by the
Directors of the Company to perform services on behalf of the Company.
4
<PAGE> 5
(B) The Company. The Company assumes and shall pay or cause to
be paid all other expenses of the Company not otherwise allocated herein,
including, without limitation, organization costs, taxes, expenses for legal and
auditing services, the expenses of preparing (including typesetting), printing
and mailing reports, prospectuses, statements of additional information, proxy
solicitation material and notices to existing Shareholders, all expenses
incurred in connection with issuing and redeeming Shares, the costs of custodial
services, the cost of initial and ongoing registration of the Shares under
Federal and state securities laws, fees and out-of-pocket expenses of Directors
who are not affiliated persons of BISYS or the Investment Adviser to the Company
or any affiliated corporation of BISYS or the Investment Adviser, insurance,
interest, brokerage costs, litigation and other extraordinary or nonrecurring
expenses, and all fees and charges of investment advisers to the Company.
ARTICLE 4. Compensation of BISYS.
(A) Administration Fee. For the services to be rendered, the
facilities furnished and the expenses assumed by BISYS pursuant to this
Agreement, the Company shall pay to BISYS compensation at an annual rate
specified in the Omnibus Fee Agreement between the Company and BISYS dated as of
August 1, 1999 (the "Fee Agreement"). Such compensation shall be calculated and
accrued daily, and paid to BISYS monthly. The Company shall also reimburse BISYS
for its reasonable out-of-pocket expenses, including the travel and lodging
expenses incurred by officers and employees of BISYS in connection with
attendance at Board meetings.
If this Agreement becomes effective subsequent to the first day of
a month or terminates before the last day of a month, BISYS's compensation for
that part of the month in which this Agreement is in effect shall be prorated in
a manner consistent with the calculation of the fees as set forth above. Payment
of BISYS's compensation for the preceding month shall be made promptly.
(B) Survival of Compensation Rights. All rights of compensation
under this Agreement for services performed as of the termination date shall
survive the termination of this Agreement.
ARTICLE 5. Standard of Care; Reliance on Records and Instructions;
Indemnification. BISYS shall use its best efforts to ensure the accuracy of all
services performed under this Agreement, but shall not be liable to the Company
for any action taken or omitted by BISYS in the absence of bad faith, willful
misfeasance, negligence or from reckless disregard by it of its obligations and
duties. The Company agrees to indemnify and hold harmless BISYS, its employees,
agents, directors, officers and nominees from and against any and all claims,
demands, actions and suits, whether groundless or otherwise, and from and
against any and all judgments, liabilities, losses, damages, costs, charges,
reasonable counsel fees and other expenses of every nature and character arising
out of or in any way relating to BISYS' actions taken or nonactions with respect
to the performance of services under this Agreement or based, if applicable,
upon reasonable reliance on information, records, instructions or requests given
or made to BISYS by the Company or an investment adviser of the Company and on
any records
5
<PAGE> 6
provided by any fund accountant or custodian thereof; provided, however, that
BISYS shall not be protected in relying on any information, records,
instructions or requests given, made or prepared by BISYS or any affiliate of
BISYS or any officer of the Company that is an officer or employee of BISYS or
any affiliate of BISYS; and provided, further, that this indemnification shall
not apply to actions or omissions of BISYS in cases of its own bad faith,
willful misfeasance, negligence or from reckless disregard by it of its
obligations and duties; and further provided that prior to confessing any claim
against it which may be the subject of this indemnification, BISYS shall give
the Company written notice of and a reasonable opportunity to defend against
said claim in its own name or in the name of BISYS.
Notwithstanding the foregoing, BISYS agrees to indemnify and hold
harmless the Company, its employees, agents, directors, officers and nominees
from and against any and all actions, suits, demands and claims, whether
groundless or otherwise, and from and against any and all judgments,
liabilities, losses, damages, costs, charges, reasonable counsel fees and other
expenses of every nature and character arising out of or in any way relating to
BISYS's bad faith, willful malfeasance or misfeasance, negligence, or reckless
disregard by it of its obligations and duties, with respect to the performance
of services under this Agreement.
The indemnifying party shall be entitled to participate at its own
expense or, if it acknowledges its responsibility to indemnify the other party,
it may elect to assume the defense of any suit brought to enforce any claims
subject to this indemnity provision. If the indemnifying party elects to assume
the defense of any such claim, the defense shall be conducted by counsel chosen
by the indemnifying party and satisfactory to the indemnified party, whose
approval shall not be unreasonably withheld. In the event that the indemnifying
party elects to assume the defense of any suit and retain counsel, the
indemnified party shall bear the fees and expenses of any additional counsel
retained by it. If the indemnifying party does not elect to assume the defense
of a suit, it will reimburse the indemnified party for the reasonable fees and
expenses of any counsel retained by the indemnified party.
ARTICLE 6. Activities of BISYS. The services of BISYS rendered to the
Company are not to be deemed to be exclusive. BISYS is free to render such
services to others and to have other businesses and interests. It is understood
that directors, officers, employees and Shareholders of the Company are or may
be or become interested in BISYS, as officers, employees or otherwise and that
partners, officers and employees of BISYS and its counsel are or may be or
become similarly interested in the Company, and that BISYS may be or become
interested in the Company as a Shareholder or otherwise.
ARTICLE 7. Duration of this Agreement. The Term of this Agreement shall
be as specified in Schedule A hereto. In the event either party gives notice of
the termination of this Agreement as provided in Schedule A, BISYS will
cooperate and use all reasonable efforts to assist with the conversion of the
data and records maintained by it hereunder to, and the assumption of the
services provided by it hereunder by, a replacement provider of administrative
services.
6
<PAGE> 7
ARTICLE 8. Assignment. This Agreement shall not be assignable by either
party, nor may BISYS subcontract or delegate any of its duties hereunder,
without the written consent of the other party; provided, however, that BISYS
may, at its expense, with the prior written consent of the Company, subcontract
with any entity or person concerning the provision of the services contemplated
hereunder. BISYS shall not, however, be relieved of any of its obligations under
this Agreement by the appointment of such subcontractor and provided further,
that BISYS shall be responsible, to the extent provided in Article 5 hereof, for
all acts of such subcontractor as if such acts were its own. This Agreement
shall be binding upon, and shall ensure to the benefit of, the parties hereto
and their respective successors and permitted assigns. BISYS will give the
Company prompt written notice of the appointment of any such subcontractor. Any
assignment not in compliance with this Agreement shall be void.
ARTICLE 9. Amendments. This Agreement may be amended by the parties
hereto only if such amendment is specifically approved (i) by the vote of a
majority of the Directors of the Company, and (ii) by the vote of a majority of
the Directors of the Company who are not parties to this Agreement or interested
persons of any such party, cast in person at a Directors meeting called for the
purpose of voting on such approval.
For special cases, the parties hereto may amend such procedures set
forth herein as may be appropriate or practical under the circumstances, and
BISYS may conclusively assume that any special procedure which has been approved
by the Company does not conflict with or violate any requirements of its
Certificate of Incorporation or then current prospectuses, or any rule,
regulation or requirement of any regulatory body.
ARTICLE 10. Certain Records. BISYS shall maintain customary records in
connection with its duties as specified in this Agreement, and, without limiting
the foregoing, BISYS shall maintain such books and records as the Company may be
required to maintain under the 1940 Act and the rules and regulations thereunder
that are not required to be maintained by the Company's investment adviser,
distributor, transfer agent, fund accountant or custodian, including, without
limitation, books and records relating to the operations of the Company prior to
the date of this Agreement, to the extent provided to BISYS. All such records,
including any records required to be maintained and preserved pursuant to Rules
31a-1 and 31a-2 under the 1940 Act, which are prepared or maintained by BISYS on
behalf of the Company shall be prepared and maintained at the expense of BISYS,
but shall be the property of the Company and will be made available to or
surrendered promptly to the Company on request.
In case of any request or demand for the inspection of such records by
another party, BISYS shall notify the Company and follow the Company's
instructions as to permitting or refusing such inspection; provided that BISYS
may exhibit such records to any person in any case where it is advised by its
counsel that it may be held liable for failure to do so, unless (in cases
involving potential exposure only to civil liability) the Company has agreed to
indemnify BISYS against such liability. BISYS will promptly notify the Company
of any such request.
ARTICLE 11. Definitions of Certain Terms. The terms "interested person"
and "affiliated person," when used in this Agreement, shall have the respective
meanings specified in
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<PAGE> 8
the 1940 Act and the rules and regulations thereunder, subject to such
exemptions as may be granted by the Securities and Exchange Commission.
ARTICLE 12. Notice. Any notice required or permitted to be given by
either party to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice to the
other party at the following address: if to the Company at 230 West Monroe
Street, Chicago, Illinois 60606; if to BISYS at 3435 Stelzer Road, Columbus,
Ohio 43219; or at such other address as such party may from time to time specify
in writing to the other party pursuant to this Section.
ARTICLE 13. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Ohio and the applicable provisions of
the 1940 Act or the rules and regulations thereunder. To the extent that the
applicable laws of the State of Ohio, or any of the provisions herein, conflict
with the applicable provisions of the 1940 Act, or such rules and regulations,
the latter shall control.
ARTICLE 14. Multiple Originals. This Agreement may be executed in two
or more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.
ARTICLE 15. Instructions, Approval or Consent by the Company;
Imputation. Any reference herein to any instructions, approval or consent of the
Company shall not include any instructions, approval or consent given by any
officer of the Company that is an officer, employee or agent of BISYS or any
affiliate of BISYS, unless specifically authorized by the Board of Directors of
the Company. No information known to any such officer of the Company shall be
imputed to the Company for purposes of this Agreement.
ARTICLE 16. Year 2000. BISYS agrees to perform comprehensive tests on
the systems it utilizes to provide the services hereunder to identify any
operational issues caused by the century change. BISYS agrees to use all
commercially reasonable efforts to implement by December 31, 1999, all necessary
updates and changes to such systems, if any, to accommodate the turn of the
century. BISYS agrees to provide to the Company monthly updates on the status of
its Year 2000 readiness project and to make its personnel reasonably available
to address any questions. In particular and, without limiting the foregoing,
BISYS shall notify the Company of any circumstances known to BISYS which are
likely to cause BISYS's systems to be Year 2000 non-compliant and which would
likely have an adverse effect on the Portfolios.
In the event that the Company reasonably determines that any of the
systems BISYS utilizes to perform services hereunder will not be Year 2000
compliant and that such lack of compliance will have an adverse effect on the
Company, the Company shall provide written notice to BISYS describing, in
reasonable detail, any defect or problem relating to such system(s) promptly
upon becoming aware of any such defect or problem. BISYS agrees to use all
commercially reasonable efforts to cure any defect or deficiency that relates to
the turn of the century in any system that BISYS utilizes to provide services
hereunder. This paragraph does not alter the obligations of BISYS under the
preceding paragraph.
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<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
ASSET MANAGEMENT FUND, INC.
By: /s/Edward E. Sammons, Jr.
-----------------------------
Title: President
--------------------------
BISYS FUND SERVICES OHIO, INC.
By:/s/ William J. Tomko
-----------------------------
Title: President
--------------------------
9
<PAGE> 10
SCHEDULE A
TO THE ADMINISTRATION AGREEMENT
DATED AS OF AUGUST 1, 1999
BETWEEN
ASSET MANAGEMENT FUND, INC.
AND
BISYS FUND SERVICES OHIO, INC.
Portfolios: This Agreement shall apply to all Portfolios of Asset
Management Fund, Inc., either now or hereafter created (individually, the
"Portfolio", and collectively, the "Portfolios"). The current Portfolios of the
Company are set forth below:
- U.S. Government Mortgage Securities Portfolio
- Intermediate Mortgage Securities Portfolio
- Short U.S. Government Securities Portfolio
- Adjustable Rate Mortgage (ARM) Portfolio
- Money Market Portfolio
Term: Pursuant to Article 7, the term of this Agreement shall commence
on August 1, 1999 and shall remain in effect through July 31, 2004 ("Initial
Term"). Thereafter, unless otherwise terminated as provided herein, this
Agreement shall be renewed automatically for successive one-year periods
("Rollover Periods"). This Agreement may be terminated without penalty (i) by
provision of 90 days advance written notice of nonrenewal prior to the end of
the Initial Term or any Rollover Period, as the case may be, (ii) by mutual
agreement of the parties or (iii) for "cause," as defined below, upon the
provision of 90 days advance written notice by the party alleging cause.
Notwithstanding the foregoing, after July 31, 2001, either party may terminate
this Agreement, at any time and without penalty, upon the provision of 90 days
advance written notice to the other party.
For purposes of this Agreement, "cause" shall mean (a) a material
breach of this Agreement that has not been remedied for thirty (30) days
following written notice of such breach from the non-breaching party; (b) a
series of negligent acts or omissions or breaches of this Agreement which, in
the aggregate, constitute, in the reasonable judgment of the Company's
Directors, a serious failure to perform satisfactorily BISYS's obligations
hereunder; (c) a service standard deficiency (as defined by the parties in the
service standards that are agreed to by BISYS and the Company from time to
time); (d) a final, unappealable judicial, regulatory or administrative ruling
or order in which the party to be terminated has been found guilty of criminal
or unethical behavior in the conduct of its business; or (e) financial
difficulties on the part of the party to be terminated which are evidenced by
the authorization or commencement of, or involvement by way of pleading, answer,
consent or acquiescence in, a voluntary or involuntary case under Title 11 of
the United States Code, as from time to time is in effect, or any applicable
law, other than said Title 11, of any jurisdiction relating to the liquidation
or reorganization of debtors or to the modification or alteration of the rights
of creditors.
Notwithstanding the foregoing, after such termination for so long as
BISYS, with the written consent of the Company, in fact continues to perform any
one or more of the services
A-1
<PAGE> 11
contemplated by this Agreement or any schedule or exhibit hereto, the provisions
of this Agreement, including without limitation the provisions dealing with
indemnification, shall continue in full force and effect. Compensation due BISYS
and unpaid by the Company upon such termination shall be immediately due and
payable upon and notwithstanding such termination. BISYS shall be entitled to
collect from the Company, in addition to the compensation described in this
Schedule A, the amount of all of BISYS's cash disbursements for services in
connection with BISYS's activities in effecting such termination, including
without limitation, the delivery to the Company and/or its designees of the
Company's property, records, instruments and documents.
If, for any reason other than nonrenewal, mutual agreement of the
parties or "cause," as defined above, during the first two years of the Initial
Term of this Agreement, BISYS is replaced as administrator, then the Company
shall make a one-time cash payment, in consideration of the fee structure and
services to be provided under this Agreement, and not as a penalty, to BISYS
equal to the balance due BISYS for the remainder of such two-year period,
assuming for purposes of calculation of the payment that such balance shall be
based upon the average amount of the Company's assets for the twelve months
prior to the date BISYS is replaced.
In the event the Company is merged into another legal entity in part or
in whole pursuant to any form of business reorganization (including without
limitation a purchase of assets) or is liquidated in part or in whole prior to
the expiration of the first two years of the Initial Term of this Agreement, the
parties acknowledge and agree that the Company shall be entitled to terminate
this Agreement; provided, however, that the liquidated damages provision set
forth above shall be applicable in those instances in which BISYS is not
retained by the other party to such business reorganization or any successor
entity to provide administration services consistent with this Agreement. The
one-time cash payment referenced above shall be due and payable on the day prior
to the first day in which BISYS is replaced.
The parties further acknowledge and agree that, in the event BISYS is
replaced as set forth above, (i) a determination of actual damages incurred by
BISYS would be extremely difficult, and (ii) the liquidated damages provision
contained herein is intended to adequately compensate BISYS for damages incurred
and is not intended to constitute any form of penalty.
A-2
<PAGE> 12
SCHEDULE B
TO THE ADMINISTRATION AGREEMENT
DATED AS OF AUGUST 1, 1999
BETWEEN
ASSET MANAGEMENT FUND, INC.
AND
BISYS FUND SERVICES OHIO, INC.
DETAILED SERVICE LISTING
ADMINISTRATION
1. Maintain and manage annual regulatory filing calendar.
2. Manage the process of printing and distributing prospectuses and
prospectus supplements. This includes, but is not limited to, decisions
regarding quantities and layout, price negotiation, invoice control and
management of the mailing process.
3. Manage the process of printing and distributing proxy materials. This
includes, but is not limited to, decisions regarding quantities,
compilation of shareholder data, price negotiation and management of
the mailing process.
4. Prepare and file Form N24-F2.
5. Obtain tax identification numbers from the IRS for each Fund portfolio.
6. Assist Fund in obtaining Fund ratings from NRSROs.
7. Obtain Fund CUSIPs.
8. Assist in the completion of trustee/officer questionnaires.
9. Assist the Fund in the preparation of appropriate documentation and
records relating to the contribution of seed money capital.
10. Maintain books and records on behalf of the Fund, as agreed upon by the
parties.
11. Make available persons to serve as officers of the Fund.
COMPLIANCE
1. Review monthly compliance reports that are prepared by the investment
adviser(s).
2. Perform independent monthly portfolio compliance testing.
3. Prepare quarterly tax compliance checklist for use by investment
adviser(s).
4. Notify appropriate Fund officers of mark-to-market issues pursuant to
Board-approved procedures.
5. Provide appropriate assistance with respect to SEC inspections
including (i) rendering advice regarding proposed responses (ii)
compiling data and other information in response to SEC requests for
information and (iii) communicating with SEC staff members, as
necessary.
6. Provide appropriate assistance with respect to audits conducted by the
Fund's independent accountants including (i) compiling data and other
information and (ii) communicating with independent accountants, as
necessary.
7. Consult with and advise, on a proactive basis, Fund portfolio managers
with respect to compliance matters.
B-1
<PAGE> 13
8. Prepare quarterly brokerage allocation compliance checklist and
supporting documentation for use by investment adviser(s).
9. Provide on-site compliance training for investment advisory personnel,
as requested.
10. Preparation of Fund-specific compliance manual.
TAX AND FINANCIAL SERVICES
1. Prepare semi-annual/annual financial statements.
2. Prepare and file Form N-SAR.
3. Calculate/distribute all standard performance information.
4. Prepare annual Fund expense budget and monthly accrual analyses.
5. Validate/approve Fund expenses to be paid.
6. Register Fund portfolios with NASDAQ.
7. Prepare financial materials for Board books.
8. Calculate declaration of income/capital gain distributions in
compliance with income/excise tax distribution requirements.
9. Review all dividend declarations to ensure that such distributions are
not "preferential" under the Internal Revenue Code.
10. Review and file federal and state income tax returns and federal excise
tax returns within statutory deadlines.
11. Prepare/distribute year-end shareholder tax information letters and
Forms 1099-MISC for trustee fees/vendor payments within 30 days of
calendar year-end.
12. Provide on-site compliance/consulting for portfolio managers focused on
the impact of changes in tax laws and managing a tax-efficient mutual
fund.
13. Provide on-site consulting services for conversions.
14. Provide expense budgeting consulting to review expense ratios/fee
waivers.
15. Leverage BISYS' relationships with all "Big 5" accounting firms for
clients' benefit.
16. Produce and coordinate the printing and distribution of
semi-annual/annual reports.
17. Calculate Funds performance information.
BLUE SKY
1. Qualify the Fund and its shares with appropriate state blue sky
authorities upon client authorization.
2. Amend and renew sales permits as required.
3. Monitor the sales of shares in individual states on a daily basis upon
receipt of sales information and, when required, report sales to
appropriate states.
4. Maintain Fund blue sky filing calendars.
5. Address all blue sky audit and examination issues.
6. Conduct blue sky fee analysis, upon request.
7. Produce checks required for state filing fees.
B-2
<PAGE> 14
LEGAL SERVICES
GENERAL
1. Maintain files of registration statements, Fund contracts, Fund proxies
and other Fund legal documents.
2. Provide legal consultation with respect to product development issues.
3. Provide assistance concerning matters pertaining to Federal securities
laws, bank regulatory issues, tax-related issues and ERISA issues.
4. Provide information concerning current legal and regulatory
developments.
5. Provide comments, as appropriate, concerning regulatory agency
proposals.
6. Maintain appropriate insurance coverage on behalf of the Fund in the
form of (i) a Directors & Officers/Errors & Omissions professional
liability and (ii) a Fidelity Bond.
7. Prepare memoranda and other correspondence that outlines the terms and
conditions of the insurance policies described in item 6 above.
BOARD MEETING MATTERS
1. Maintain calendar and files for all Board meetings, including the
maintenance of Fund minute books and corporate records (e.g., Articles
of Incorporation/Declaration of Trust, Bylaws).
2. Provide appropriate personnel to attend Board meetings.
3. Produce and distribute Board books.
4. Prepare relevant sections of Board materials.
5. Record minutes of Board meetings. (Counsel to the Fund will prepare
agendas and resolutions.)
REGISTRATION STATEMENTS
1. Manage the process of updating the registration statement by (i)
reviewing or recommending proposed disclosure changes, (ii) compiling
data for purposes of updating information, (iii) receiving disclosure
comments and communicating them to counsel to the Fund and to the
financial printer and (iv) overseeing the printing process and
approving revisions that are made by the financial printer. (Counsel to
the Fund will draft and file the registration statement.)
2. Prepare periodic supplements to Fund prospectuses or, if the parties
agree, review such supplements that are prepared by counsel to the
Fund.
PROXY MATERIALS
1. Review proxy statements that are prepared by counsel to the Fund.
B-3
<PAGE> 1
EXHIBIT (h)(4)
FUND ACCOUNTING AGREEMENT
THIS AGREEMENT is made as of this 1st day of August, 1999, by and
between ASSET MANAGEMENT FUND, INC. (the "Company"), a Maryland corporation
having its principal place of business at 230 West Monroe Street, Chicago,
Illinois 60606, and BISYS FUND SERVICES OHIO, INC. ("BISYS"), an Ohio
corporation having its principal place of business at 3435 Stelzer Road,
Columbus, Ohio 43219.
WHEREAS, the Company desires that BISYS perform certain fund accounting
services for the current investment portfolio of the Company and any additional
investment portfolio that may hereafter be created (individually referred to
herein as the "Fund" and collectively as the "Funds"); and
WHEREAS, BISYS is willing to perform such services on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. Services as Fund Accountant. BISYS agrees to perform the services
described herein in accordance with all applicable laws, rule and regulations
(including, where applicable, Generally Acceptable Accounting Principles), and
in accordance with any reasonable instructions of the Company and the Company's
Articles of Incorporation, Bylaws, Prospectus and Statement of Additional
Information.
(a) Maintenance of Books and Records. BISYS will keep and
maintain the following books and records of each Fund pursuant to Rule 31a-1
under the Investment Company Act of 1940 (the "Rule"):
(i) Journals containing an itemized daily record in
detail of all purchases and sales of securities, all receipts and
disbursements of cash and all other debits and credits, as required by
subsection (b)(1) of the Rule;
(ii) General and auxiliary ledgers reflecting all asset,
liability, reserve, capital, income and expense accounts, including
interest accrued and interest received, as required by subsection
(b)(2)(i) of the Rule;
(iii) Separate ledger accounts required by subsection (b)
(2)(ii) and (iii) of the Rule; and
(iv) A monthly trial balance of all ledger accounts
(except shareholder accounts) as required by subsection (b)(8) of the
Rule.
<PAGE> 2
(b) Performance of Daily Accounting Services. In addition to
the maintenance of the books and records specified above, BISYS shall perform
the following accounting services daily for each Fund:
(i) Calculate the net asset value per share utilizing
prices obtained from the sources described in subsection 1(b)(ii)
below;
(ii) Obtain security prices from independent pricing
services, or if such quotes are unavailable, then obtain such prices
from each Fund's investment adviser or its designee, as approved by the
Company's Board of Directors (hereafter referred to as "Directors");
(iii) Verify and reconcile with the Funds' custodian all
daily trade activity:
(iv) Compute, as appropriate, each Fund's net income and
capital gains, dividend payables, dividend factors, 7-day yields, 7-day
effective yields, 30-day yields, and weighted average portfolio
maturity;
(v) Review daily the net asset value calculation and
dividend factor (if any) for each Fund prior to release to
shareholders, check and confirm the net asset values and dividend
factors for reasonableness and deviations, and distribute net asset
values and yields to NASDAQ;
(vi) Report to the Company the daily market pricing of
securities in any money market Funds, with the comparison to the
amortized cost basis;
(vii) Determine unrealized appreciation and depreciation
on securities held in variable net asset value Funds;
(viii) Amortize premiums and accrete discounts on
securities purchased at a price other than face value, if requested by
the Company;
(ix) Update fund accounting system to reflect rate
changes, as received from a Fund's investment adviser, on variable
interest rate instruments;
(x) Post Fund transactions to appropriate categories;
(xi) Accrue expenses of each Fund according to instructions
received from the Company's Administrator;
2
<PAGE> 3
(xii) Determine the outstanding receivables and
payables for all (1) security trades, (2) Fund share transactions and
(3) income and expense accounts;
(xiii) Provide accounting reports in connection with the
Company's regular annual audit and other audits and examinations by
regulatory agencies; and
(xiv) Provide such periodic reports as the parties shall
agree upon, as set forth in a separate schedule.
(c) Special Reports and Services.
(i) BISYS shall provide additional special reports and
other similar services upon the request of the Company or the Company's
investment adviser.
(ii) To the extent that the provision of any such reports
or services requires BISYS to incur material additional costs and BISYS
notifies the Company thereof promptly after such requests, such reports
or services shall be provided in exchange for such additional
compensation that is agreed upon by the parties.
(d) Additional Accounting Services. BISYS shall also perform
the following additional accounting services for each Fund:
(i) Provide monthly a download (and hard copy thereof)
of the financial statements described below, upon request of the
Company. The download will include the following items:
Statement of Assets and Liabilities,
Statement of Operations,
Statement of Changes in Net Assets, and
Condensed Financial Information;
(ii) Provide accounting information (including financial
statements and schedules and pertinent statistical information) for the
following:
(A) federal and state income tax returns and federal
excise tax returns;
(B) the Company's semi-annual reports with the
Securities and Exchange Commission ("SEC") on Form N-SAR;
3
<PAGE> 4
(C) the Company's annual, semi-annual and quarterly (if
any) shareholder reports;
(D) registration statements on Form N-1A and other filings
relating to the registration or sale of shares;
(E) the Administrator's monitoring of the Company's status
as a regulated investment company under Subchapter M of the Internal
Revenue Code, as amended;
(F) annual audit by the Company's auditors; and
(G) examinations performed by the SEC.
BISYS shall provide on a timely basis to the Company's investment adviser,
administrator, transfer agent, distributor and custodian and other persons
providing services to the Company such information as such persons may
reasonably request in connection with the performance of their respective duties
and obligations with respect to the Company. BISYS will report to the Board of
Directors of the Company at each meeting of the Board of Directors and will keep
the Board of Directors informed of material developments affecting the Company.
BISYS will comply with any performance standards that may be agreed to
by BISYS and the Company from time to time.
2. Subcontracting. BISYS may, at its expense, with the prior written
consent of the Company, subcontract with any entity or person concerning the
provision of the services contemplated hereunder; provided, however, that BISYS
shall not be relieved of any of its obligations under this Agreement by the
appointment of such subcontractor and provided further, that BISYS shall be
responsible, to the extent provided in Section 7 hereof, for all acts of such
subcontractor as if such acts were its own; and provided, further, that no such
services shall be subcontracted without the prior written consent of the
Company.
3. Compensation. The Company shall pay BISYS for the services to be
provided by BISYS under this Agreement in accordance with, and in the manner set
forth in the Omnibus Fee Agreement between the Company and BISYS dated as of
August 1, 1999 (the "Fee Agreement").
4. Reimbursement of Expenses. In addition to paying BISYS the fees
described in Section 3 hereof, the Company agrees to reimburse BISYS for its
out-of-pocket expenses in providing services hereunder, including without
limitation the following:
4
<PAGE> 5
(a) All freight and other delivery and bonding charges incurred
by BISYS in delivering materials to and from the Company;
(b) All direct telephone, telephone transmission and telecopy
or other electronic transmission expenses incurred by BISYS in communication
with the Company, the Company's investment adviser or custodian, dealers or
others as required for BISYS to perform the services to be provided hereunder;
(c) The cost of obtaining security market quotes pursuant to Section 1
(b)(ii) above;
(d) The cost of microfilm or microfiche of records or other materials;
(e) All systems-related expenses associated with the provision
of special reports and services pursuant to Section 1(c) herein;
(f) Any expenses BISYS shall incur at the written direction of an
officer of the Company thereunto duly authorized; and
(g) Any additional expenses reasonably incurred by BISYS in the
performance of its duties and obligations under this Agreement.
5. Effective Date. This Agreement shall become effective as of the date
first written above (the "Effective Date").
6. Term. This Agreement shall continue in effect unless earlier
terminated by either party hereto as provided hereunder, until July 31, 2004
(the "Initial Term"). Thereafter, unless otherwise terminated as provided
herein, this Agreement shall be renewed automatically for successive one-year
periods ("Rollover Periods"). This Agreement may be terminated without penalty
(i) by provision of 90 days advance written notice of nonrenewal prior to the
end of the Initial Term or any Rollover Period, as the case may be, (ii) by
mutual agreement of the parties or (iii) for "cause," as defined below, upon the
provision of 90 days advance written notice by the party alleging cause.
Notwithstanding the foregoing, after July 31, 2001, either party may terminate
this Agreement, at any time and without penalty, upon the provision of 90 days
advance written notice to the other party.
For purposes of this Agreement, "cause" shall mean (a) a material
breach of this Agreement that has not been remedied for thirty (30) days
following written notice of such breach from the non-breaching party; (b) a
series of negligent acts or omissions or other breaches of this Agreement which,
in the aggregate, constitute, in the reasonable judgment of the Company's
5
<PAGE> 6
Directors, a serious failure to perform satisfactorily BISYS's obligations
hereunder; (c) a service standard deficiency (as defined by the parties in the
service standards that are agreed to by BISYS and the Company from time to
time); (d) a final, nonappealable judicial, regulatory or administrative ruling
or order in which the party to be terminated has been found guilty of criminal
or unethical behavior in the conduct of its business; or (e) financial
difficulties on the part of the party to be terminated which are evidenced by
the authorization or commencement of, or involvement by way of pleading, answer,
consent or acquiescence in, a voluntary or involuntary case under Title 11 of
the United States Code, as from time to time is in effect, or any applicable
law, other than said Title 11, of any jurisdiction relating to the liquidation
or reorganization of debtors or to the modification or alteration of the rights
of creditors.
After such termination for so long as BISYS, with the written consent
of the Company, in fact continues to perform any one or more of the services
contemplated by this Agreement or any schedule or exhibit hereto, the provisions
of this Agreement, including without limitation the provisions dealing with
indemnification, shall continue in full force and effect. Compensation due BISYS
and unpaid by the Company upon such termination shall be immediately due and
payable upon and notwithstanding such termination. BISYS shall be entitled to
collect from the Company, in addition to the compensation described under
Sections 3 and 4 hereof, the amount of all of BISYS's cash disbursements for
services in connection with BISYS's activities in effecting such termination,
including without limitation, the delivery to the Company and/or its designees
of the Company's property, records, instruments and documents.
If, for any reason other than nonrenewal, mutual agreement of the
parties or "cause," as defined above, during the first two years of the Initial
Term of this Agreement, BISYS is replaced as fund accountant, then the Company
shall make a one-time cash payment, in consideration of the fee structure and
services to be provided under this Agreement, and not as a penalty, to BISYS
equal to the balance due BISYS for the remainder of such two-year period
assuming for purposes of calculation of the payment that such balance shall be
based upon the average amount of the Company's assets for the twelve months
prior to the date BISYS is replaced.
In the event the Company is merged into another legal entity in part or
in whole pursuant to any form of business reorganization (including without
limitation a purchase of assets) or is liquidated in part or in whole prior to
the expiration of the first two years of the Initial Term of this Agreement, the
parties acknowledge and agree that the Company shall be entitled to terminate
this Agreement; provided, however, that the liquidated damages provision set
forth above shall be applicable in those instances in which BISYS is not
retained by the other party to such business reorganization or any successor
entity to provide fund accounting services consistent with this Agreement. The
one-time cash payment referenced above shall be due and payable on the day prior
to the first day in which BISYS is replaced or a third party is added.
The parties further acknowledge and agree that, in the event BISYS is
replaced as set forth above, (i) a determination of actual damages incurred by
BISYS would be extremely difficult, and (ii) the liquidated damages provision
contained herein is intended to adequately compensate
6
<PAGE> 7
BISYS for damages incurred and is not intended to constitute any form of
penalty.
In the event either party gives notice of the termination of this
Agreement as provided in this Section, BISYS will cooperate and use all
reasonable efforts to assist with the conversation of the data and records
maintained by it hereunder to, and the assumption of the services provided by it
hereunder by, a replacement provider of fund accounting services.
7. Standard of Care; Reliance on Records and Instructions;
Indemnification. BISYS shall use its best efforts to insure the accuracy of all
services performed under this Agreement, but shall not be liable to the Company
for any action taken or omitted by BISYS in the absence of bad faith, willful
misfeasance, negligence or from reckless disregard by it of its obligations and
duties. A Fund agrees to indemnify and hold harmless BISYS, its employees,
agents, directors, officers and nominees from and against any and all claims,
demands, actions and suits, whether groundless or otherwise, and from and
against any and all judgments, liabilities, losses, damages, costs, charges,
reasonable counsel fees and other expenses of every nature and character arising
out of or in any way relating to BISYS's actions taken or nonactions with
respect to the performance of services under this Agreement with respect to such
Fund or based, if applicable, upon reasonable reliance on information, records,
instructions or requests with respect to such Fund given or made to BISYS by a
duly authorized representative of the Company; provided, however, that BISYS
shall not be protected in relying on any information, records, instructions or
requests given or made to or prepared by BISYS or any affiliate of BISYS or any
officer of the Company that is an officer or employee of BISYS or any affiliate
of BISYS; and provided, further, that this indemnification shall not apply to
actions or omissions of BISYS in cases of its own bad faith, willful
misfeasance, negligence or from reckless disregard by it of its obligations and
duties, and further provided that prior to confessing any claim against it which
may be the subject of this indemnification, BISYS shall give the Company written
notice of and reasonable opportunity to defend against said claim in its own
name or in the name of BISYS.
Notwithstanding the foregoing, BISYS agrees to indemnify and hold
harmless the Company, its employees, agents, directors, officers and nominees
from and against any and all actions, suits, demands and claims, whether
groundless or otherwise, and from and against any and all judgments,
liabilities, losses, damages, costs, charges, reasonable counsel fees and other
expenses of every nature and character arising out of or in any way relating to
BISYS's bad faith, willful malfeasance or misfeasance, negligence, or reckless
disregard by it of its obligations and duties with respect to the performance of
services under this Agreement.
The indemnifying party shall be entitled to participate at its own
expense or, if it acknowledges its responsibility to indemnify the other party,
it may elect to assume the defense of any suit brought to enforce any claims
subject to this indemnity provision. If the indemnifying party elects to assume
the defense of any such claim, the defense shall be conducted by counsel chosen
by the indemnifying party and satisfactory to the indemnified party, whose
approval shall not be unreasonably withheld. In the event that the indemnifying
party elects to assume the defense of any suit and retain counsel, the
indemnified party shall bear the fees and expenses of any additional counsel
retained by it. If the indemnifying party does not elect to assume the defense
of a suit, it will reimburse the indemnified party for the reasonable fees and
expenses of any counsel retained by the indemnified party.
7
<PAGE> 8
8. Record Retention and Confidentiality. BISYS shall keep and maintain
on behalf of the Company all books and records which the Company and BISYS is,
or may be, required to keep and maintain pursuant to any applicable statutes,
rules and regulations, including without limitation Rules 31a-1 and 31a-2 under
the Investment Company Act of 1940, as amended (the "1940 Act"), relating to the
maintenance of books and records in connection with the services to be provided
hereunder. BISYS further agrees that all such books and records shall be the
property of the Company and to make such books and records available for
inspection by the Company or by the Securities and Exchange Commission at
reasonable times and otherwise to keep confidential all books and records and
other information relative to the Company and its shareholders; except when
requested to divulge such information by duly-constituted authorities or court
process. BISYS will promptly notify the Company of any such request.
9. Uncontrollable Events. BISYS shall enter into and shall maintain in
effect with appropriate parties one or more agreements making reasonable
provisions for emergency use of electronic data processing equipment and shall,
at no additional expense to the Company, take reasonable steps to minimize
service interruptions. BISYS assumes no responsibility hereunder, and shall not
be liable, for any damage, loss of data, delay or any other loss whatsoever
caused by events beyond its reasonable control; provided that such damage, delay
or other loss is not caused by BISYS' own willful misfeasance, bad faith,
negligence or reckless disregard of its obligations under, or other
noncompliance with this Agreement.
10. Reports. BISYS will furnish to the Company and to its properly
authorized auditors, investment advisers, examiners, distributors, dealers,
underwriters, salesmen, insurance companies and others designated by the Company
in writing, such reports and at such times as are prescribed pursuant to the
terms and the conditions of this Agreement to be provided or completed by BISYS,
or as subsequently agreed upon by the parties pursuant to an amendment hereto.
The Company agrees to examine each such report or copy promptly and will report
or cause to be reported any errors or discrepancies therein of which the Company
is aware.
8
<PAGE> 9
11. Rights of Ownership. All computer programs and procedures developed
to perform services required to be provided by BISYS under this Agreement are
the property of BISYS. All records and other data except such computer programs
and procedures are the exclusive property of the Company and all such other
records and data will be furnished to the Company in appropriate form as soon as
practicable after termination of this Agreement for any reason.
12. Return of Records. BISYS may at its option at any time, and shall
promptly upon the Company's demand, turn over to the Company and cease to retain
BISYS's files, records and documents created and maintained by BISYS pursuant to
this Agreement which are no longer needed by BISYS in the performance of its
services or for its legal protection. If not so turned over to the Company, such
documents and records will be retained by BISYS for six years from the year of
creation. At the end of such six-year period, such records and documents will be
turned over to the Company unless the Company authorizes in writing the
destruction of such records and documents.
13. Representations of the Company. The Company certifies to BISYS that
this Agreement has been duly authorized by the Company and, when executed and
delivered by the Company, will constitute a legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting the rights and remedies of creditors and secured
parties.
14. Representations of BISYS. BISYS represents and warrants that: (1)
the various procedures and systems which BISYS has implemented with regard to
safeguarding from loss or damage attributable to fire, theft, or any other cause
the records, and other data of the Company and BISYS's records, data, equipment
facilities and other property used in the performance of its obligations
hereunder are adequate and that it will make such changes therein from time to
time as are required for the secure performance of its obligations hereunder,
and (2) this Agreement has been duly authorized by BISYS and, when executed and
delivered by BISYS, will constitute a legal, valid and binding obligation of
BISYS, enforceable against BISYS in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured parties.
9
<PAGE> 10
15. Insurance. BISYS shall notify the Company should any of its
insurance coverage be canceled or reduced. Such notification shall include the
date of change and the reasons therefor. BISYS shall notify the Company of any
material claims against it with respect to services performed under this
Agreement, whether or not they may be covered by insurance, and shall notify the
Company from time to time as may be appropriate of the total outstanding claims
made by BISYS under its insurance coverage.
16. Information to be Furnished by the Company and Funds. The Company
has furnished to BISYS the following:
(a) Copies of the Articles of Incorporation of the Company and
of any amendments thereto, certified by the proper official of the state in
which such document has been filed.
(b) Copies of the following documents:
(i) The Company's Bylaws and any amendments thereto; and
(ii) Certified copies of resolutions of the Directors
covering the approval of this Agreement, authorization of a specified
officer of the Company to execute and deliver this Agreement and
authorization for specified officers of the Company to instruct BISYS
thereunder.
(c) A list of all the officers of the Company, together with
specimen signatures of those officers who are authorized to instruct BISYS in
all matters.
(d) Two copies of the Prospectuses and Statements of Additional
Information for each Fund.
17. Information Furnished by BISYS.
(a) BISYS has furnished to the Company the following:
(i) BISYS's Articles of Incorporation; and
(ii) BISYS's Bylaws and any amendments thereto.
(b) BISYS shall, upon request, furnish certified copies of
corporate actions covering the following matters:
10
<PAGE> 11
(i) Approval of this Agreement, and authorization of a
specified officer of BISYS to execute and deliver this Agreement; and
(ii) Authorization of BISYS to act as fund accountant
for the Company and to provide accounting services for the Company.
18. Amendments to Documents. The Company shall furnish BISYS written
copies of any amendments to, or changes in, any of the items referred to in
Section 16 hereof forthwith upon such amendments or changes becoming effective.
In addition, the Company agrees that no amendments will be made to the
Prospectuses or Statements of Additional Information of the Company which might
have the effect of changing the procedures employed by BISYS in providing the
services agreed to hereunder or which amendment might affect the duties of BISYS
hereunder unless the Company first obtains BISYS's approval of such amendments
or changes.
19. Compliance with Law. Except for the obligations of BISYS set forth
in Sections 1, 2, 7, 8 and 10 hereof, BISYS bears no responsibility under this
Agreement for the preparation, contents and distribution of each prospectus of
the Company as to compliance with all applicable requirements of the Securities
Act of 1933, as amended (the "Securities Act"), the 1940 Act and any other laws,
rules and regulations of governmental authorities having jurisdiction. The
Company represents and warrants that no shares of the Company will be offered to
the public until the Company's registration statement under the Securities Act
and the 1940 Act has been declared or becomes effective.
20. Notices. Any notice provided hereunder shall be sufficiently given
when sent by registered or certified mail to the party required to be served
with such notice at the following address: if to the Company at 230 West Monroe
Street, Chicago, Illinois 60606; if to BISYS at 3435 Stelzer Road, Columbus,
Ohio 43219; or at such other address as such party may from time to time specify
in writing to the other party pursuant to this Section.
21. Headings. Paragraph headings in this Agreement are included for
convenience only and are not to be used to construe or interpret this Agreement.
11
<PAGE> 12
22. Assignment. This Agreement and the rights and duties hereunder
shall not be assignable with respect to a Fund by either of the parties hereto
except by the specific written consent of the other party. This Agreement shall
be binding upon, and shall inure to the benefit of, the parties hereto and their
respective successors and permitted assigns. Any assignment not in compliance
with this Agreement shall be void.
23. Governing Law. This Agreement shall be governed by and provisions
shall be construed in accordance with the laws of the State of Ohio.
24. Instructions, Approval or Consent by the Company; Imputation. Any
reference herein to any instructions, approval or consent of the Company shall
not include any instructions, approval or consent given by any officer of the
Company that is an officer, employee or agent of BISYS or any affiliate of
BISYS, unless specifically authorized by the Board of Directors of the Company.
No information known to any such officer of the Company shall be imputed to the
Company for purposes of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
ASSET MANAGEMENT FUND, INC.
By:/s/ Edward E. Sammons, Jr.
---------------------------
Title: President
------------------------
BISYS FUND SERVICES OHIO, INC.
By:/s/ William J. Tomko
---------------------------
Title: President
------------------------
12
<PAGE> 1
EXHIBIT (h)(5)
OMNIBUS FEE AGREEMENT
THIS AGREEMENT is made as of this 1st day of August, 1999, by and
between ASSET MANAGEMENT FUND, INC. (the "Company"), a Maryland corporation
having its principal place of business at 230 West Monroe Street, Chicago,
Illinois 60606 and BISYS FUND SERVICES OHIO, INC. ("BISYS"), an Ohio corporation
having its principal place of business at 3435 Stelzer Road, Columbus, Ohio
43219.
WHEREAS, the Company is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act");
WHEREAS, the Company and BISYS have entered into an Administration
Agreement dated as of August 1, 1999, a Fund Accounting Agreement dated as of
August 1, 1999, and a Transfer Agency Agreement dated as of September 13, 1999,
concerning the provision of administration, fund accounting and transfer agency
services, respectively, for the investment portfolios of the Company
(individually referred to herein as a "Fund" and collectively as the "Funds");
and
WHEREAS, the parties desire to set forth the compensation payable to
BISYS by the Company under the Administration Agreement, Fund Accounting
Agreement and Transfer Agency Agreement (collectively the "Service Agreements")
in a separate written document.
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. The parties have agreed that a single integrated fee shall be
paid by the Company as compensation to BISYS for such services performed under
the Service Agreements. The aggregate amount of the compensation due and payable
to BISYS for such services is set forth in Schedule A hereto. Such compensation
shall be payable during the term of the Service Agreements. In addition to the
foregoing, BISYS shall be reimbursed for certain out-of-pocket expenses, as more
fully set forth in the Service Agreements.
2. This Agreement shall be governed by, and its provisions shall be
construed in accordance with, the laws of the State of Ohio.
<PAGE> 2
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
fully executed as of the day and year first written above.
ASSET MANAGEMENT FUND, INC.
By:/s/ Ed Sammons, Jr.
---------------------------
Title: President
------------------------
BISYS FUND SERVICES OHIO, INC.
By:/s/ William J. Tomko
---------------------------
Title: President
------------------------
2
<PAGE> 3
SCHEDULE A
TO THE OMNIBUS FEE AGREEMENT
DATED THIS 1ST DAY OF AUGUST, 1999
BETWEEN
ASSET MANAGEMENT FUND, INC.
AND
BISYS FUND SERVICES OHIO, INC.
FEES
1. Asset-Based Fees. Subject to the annual minimum fee set forth
below, the Company shall pay to BISYS on the first business day of each month,
or at such time(s) as BISYS shall request and the parties hereto shall agree, a
fee computed daily at the annual rate of:
Three one-hundredths of one percent (.03%) of each Fund's average
daily net assets up to and including $1 billion;
Two one-hundredths of one percent (.02%) of the next $1 billion
of each Fund's average daily net assets; and
One one-hundredth of one percent (.01%) of each Fund's average
daily net assets over $2 billion.
2. Annual Minimum Fee. The asset-based fees set forth above shall be
subject to a minimum annual fee for the Company in the amount of $393,200.
3. Blue-Sky Filing Fees. For the performance of blue-sky services,
BISYS shall be paid the following additional fees per Fund:
Base Fee
$125 per month (for the first 18 states; and $300 per month for
the remaining 32 states and U.S. territories).
State Fee
$100 per state per annum for the first 12 states;
$80 per stateper annum for the next 12 states; and
$60 per state per annum for the remaining states and territories.
For those states where Funds are required to be combined and filed
together in one form, only one state fee shall be charged. If a Fund adopts a
multi-class structure, a state fee shall be charged per class for those states
where a filing form must be submitted for each class.
A-1
<PAGE> 4
4. Per Account Fees. BISYS shall also be entitled to receive a $15.00
per account per Fund annual processing fee. The per account fees will not begin
to accrue until September 13, 1999.
A-2
<PAGE> 1
EXHIBIT (i)(3)
[VEDDER, PRICE, KAUFMAN, & KAMMHOLZ LETTERHEAD]
October 21, 1999
Asset Management Fund
230 West Monroe Street
Chicago, IL 60606
Ladies and Gentlemen:
Reference is made to Post-Effective Amendment No. 34 to the
Registration Statement on Form N-1A under the Securities Act of 1933 being filed
by Asset Management Fund (the "Trust") in connection with the public offering
from time to time of any or all of the units of beneficial interest, no par
value, designated as the Class D Shares of the Money Market Portfolio of the
Trust (the "Shares").
We have acted as counsel to the Trust since its inception, and in such
capacity are familiar with the Trust's organization and have counseled the Trust
regarding various legal matters. We have examined such Trust records and other
documents and certificates as we have considered necessary or appropriate for
the purposes of this opinion. In our examination of such materials, we have
assumed the genuineness of all signatures and the conformity to original
documents of all copies submitted to us.
Based upon the foregoing, and assuming that the Trust's Declaration of
Trust dated July 22, 1999, the By-Laws of the Trust dated July 22, 1999, and the
Certificate of Trust filed on July 23, 1999, are presently in full force and
effect and have not been amended in any respect and that the resolutions adopted
by the Board of Trustees of the Trust on July 22, 1999, to be effective upon the
filing of the Certificate of Trust relating to organizational matters,
securities matters and the issuance of shares of the Shares are presently in
full force and effect and have not been amended in any respect, we advise you
and opine that (a) the Trust is a validly existing business trust under the laws
of the State of Delaware and is authorized to issue an unlimited number of
Shares; and (b) presently and upon such further issuance of the Shares in
accordance with the Trust's Declaration of Trust and the receipt by the Trust of
a purchase price not less than the net asset value per Share, and when the
pertinent provisions of the Securities Act of 1933 and the "blue sky" and
securities laws as may be applicable have been complied with, assuming that the
Trust continues to validly exist as provided in (a) above, the Shares are and
will be legally issued and outstanding, fully paid and nonassessable.
This opinion is solely for the benefit of the Trust, the Trust's Board
of Trustees and the Trust's officers and may not be relied upon by any other
person without our prior written consent.
<PAGE> 2
VEDDER PRICE
Asset Management Fund
October 19, 1999
Page 2
We hereby consent to the use of this opinion in connection with said
Post-Effective Amendment.
Very truly yours,
Vedder, Price, Kaufman, & Kammholz
<PAGE> 1
EXHIBIT(j)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Post-Effective
Amendment No. 34 to the Registration Statement under the Securities Act of 1933
and Post-Effective Amendment No. 35 to the Registration Statement under the
Investment Company Act of 1940 on Form N-1A (File Nos. 2-78808 and 811-3541,
respectively) of our report dated December 4, 1998 on our audit of the financial
statements and financial highlights of Asset Management Fund, which report is
included in the Annual Report to Shareholders for the year ended October 31,
1998 and for the respective periods then ended. We also consent to the reference
of our firm under the headings "Shareholder Reference Information" in the
Prospectus and under the headings "Counsel and Independent Accountants" in the
Statement of Additional Information.
PricewaterhouseCoopers LLP
October 20, 1999
<PAGE> 1
EXHIBIT (m)(6)
ASSET MANAGEMENT FUND
12b-1 PLAN
The plan ("Plan") described below is adopted pursuant to the provisions
of Rule 12b-1 ("Rule 12b-1") under the Investment Company Act of 1940 (the "1940
Act") by the Board of Trustees ("Board") of Asset Management Fund ("Fund"),
including a majority of the members of the Board who are not "interested
persons" (as defined in the 1940 Act) of the Fund and who have no direct or
indirect financial interest in the Plan or any agreement related thereto. The
Fund currently issues units of beneficial interest ("Shares") in five (5)
portfolios, the Money Market Portfolio (which has two classes of shares, the I
Shares Class and the D Shares Class), Adjustable Rate Mortgage (ARM) Portfolio,
Short U.S. Government Securities Portfolio, Intermediate Mortgage Securities
Portfolio, and U.S. Government Mortgage Securities Portfolio (collectively
referred to as the "Portfolios" and individually referred to as a "Portfolio")
and the Fund desires to adopt the Plan with respect to Portfolios that are
presently designated and such other series or classes as may hereafter be
designated by the Board of Trustees ("Additional Portfolio"). The Board having
determined that there is a reasonable likelihood that the following described
Plan as amended will benefit the Fund and its shareholders and that said Plan is
otherwise in the best interests of the Fund and its shareholders, hereby adopts
and approves the Plan, and the related agreements described herein.
1. The Plan is adopted in order to induce firms (including brokerage
firms, depository institutions and other firms) to provide distribution and
administrative services to the Fund and its shareholders and to enable the Fund
to compensate such firms (including brokerage firms, depository institutions and
other firms) to provide distribution and administrative services to the Fund and
its shareholders and to enable the Fund to compensate such firms (including
depository institutions and other firms) for certain expenses associated with
the distribution services (in the case of broker-dealer and other firms) and
administrative services (in the case of all firms) to be provided under the
Plan.
2. Amounts paid under the Plan shall comply with the guidelines
concerning asset-based sales charges as set forth in the Conduct Rules of the
National Association of Security Dealers, Inc.
3. As full compensation under the Agreement, the Fund will pay the
Principal Distributor (i) a fee at an annual rate equal to 0.15 of 1% per annum
of the combined average daily net assets of the Short U.S. Government Securities
Portfolio and the I Shares Class of the Money Market Portfolio of the Fund (the
"Combined Assets") up to and including $0.5 billion; at an annual rate equal to
0.125 of 1% per annum of the Combined Assets between $0.5 billion and $1.0
billion; at an annual rate equal to 0.10 of 1% per annum of the Combined Assets
between $1.0 billion and $2.0 billion; and at an annual rate equal to 0.075 of
1% per annum of the Combined Assets over $2.0 billion; (ii) a fee with respect
to each of the U.S. Government Mortgage Securities Portfolio and the
Intermediate Mortgage Securities Portfolio at an annual rate equal to 0.15 of 1%
per annum of the average daily net assets of each Portfolio up to and including
$0.5 billion; at an annual rate equal to 0.125 of 1% per annum of the average
daily net assets between $0.5 billion and $1.0 billion; at an annual rate equal
to 0.10 of 1% per annum of the average daily net assets between $1.0 billion and
$1.5 billion; and 0.075 of 1% per annum of the average daily net assets over
$1.5 billion; (iii) a fee with respect to the Adjustable Rate Mortgage (ARM)
Portfolio at an annual rate equal to 0.25 of 1%
<PAGE> 2
per annum of the average daily net assets of the portfolio; and (iv) a fee with
respect to the D Shares Class of the Money Market Portfolio at an annual rate
equal to 0.60 of 1% per annum of the average daily net assets of the class.
This fee for each month will be paid to the Principal Distributor
during the succeeding month. In the event the Agreement becomes effective
subsequent to the first day of a month or terminates before the last day of a
month, the fee for the part of the month the Agreement is in effect will be
prorated in a manner consistent with the calculation of fees set forth above.
4. At least quarterly, the Principal Distributor will provide the
Treasurer of the Fund for submission to and review by the Fund's Board of
Trustees, the Treasurer of the Fund will submit to the Fund's Board of Trustees,
and the Fund's Board of Trustees will review, a written report of the amounts
expended under this Plan and the purposes for which the expenditures were made.
5. This Plan will become effective upon approval by at least a
majority of the outstanding voting shares (as defined in the Act) of the Fund
and upon approval by a vote of the Board of Trustees of the Fund and of the
Trustees who are not interested persons (as defined in the Act) of the Fund and
who have no direct or indirect financial interest in the Plan ("Qualified
Trustees"), cast in person at a meeting called for the purpose of voting on the
Plan.
6. The Plan will continue in effect until March 1, 2000, and shall
continue in effect from year to year thereafter, subject to termination as
hereinafter provided, if approved at least annually by a vote of the Board of
Trustees of the Fund and of the Qualified Trustees, cast in person at a meeting
called for the purpose of voting on the Plan or by a majority of the outstanding
shares (as defined in the Act) of the Fund. The Plan will terminate
automatically upon assignment (as defined in the Act) and is terminable at any
time without penalty by a majority of the Fund's Qualified Trustees or by at
least a majority of the outstanding voting shares (as defined in the Act) of the
Fund on 60 days' written notice to the Principal Distributor, or by the
Principal Distributor on 90 days' written notice to the Fund.
7. This Plan may not be amended to increase materially the amount to
be spent for the services, facilities, personnel and assistance of the Principal
Distributor described herein without approval of the shareholders of the Fund,
and all material amendments of the Plan must be approved by a vote of the Board
of Trustees of the Fund and of the Qualified Trustees, cast in person at a
meeting called for the purpose of voting on the amendment.
8. So long as this Plan is in effect, the selection and nomination of
Fund Trustees who are not interested persons (as defined in the Act) of the Fund
will be committed to the discretion of Fund Trustees who are themselves not
interested persons (as so defined) of the Fund.
9. The Fund will preserve copies of this Plan and all reports made
pursuant to Paragraph 8 above for a period of not less than six years from the
date of the Plan or any such report, as the case may be, the first two years in
an easily accessible place.
Date Adopted: July 22, 1999
2
<PAGE> 1
EXHIBIT (n)
ASSET MANAGEMENT FUND
MULTI-CLASS PLAN
WHEREAS, the Asset Management Fund (the "Fund") is an open-end
management investment company registered under the Investment Company Act of
1940 (the "1940 Act") with authorized separate series ("Portfolios");
WHEREAS, Shay Financial Services, Inc. serves as the principal
underwriter and distributor for the Fund;
WHEREAS, as described in its prospectus, the Money Market Portfolio has
established multiple classes enabling the Portfolio to offer investors the
option of purchasing shares directly or through a cash sweep program; and
WHEREAS, Rule 18f-3 under the 1940 Act permits open-end management
investment companies to issue multiple classes of voting stock representing
interests in the same portfolio notwithstanding Sections 18(f)(1) and 18(i)
under the 1940 Act if, among other things, such investment companies adopt a
written plan setting forth the separate arrangement and expense allocation of
each class and any related conversion features or exchange privileges.
NOW, THEREFORE, the Fund, wishing to be governed by Rule 18f-3 under
the 1940 Act, hereby adopts this Multi-Class Plan as follows:
1. Each class of shares of the Money Market Portfolio will represent
interests in the same portfolio of investments, and be identical in all respects
to each other class of the Portfolio, except as set forth below. The only
differences among the various classes of shares of the same Portfolio will
relate solely to: (a) different distribution fee payments associated with any
Distribution Plan for a particular class of shares and any other costs relating
to implementing or amending such Plan (including obtaining shareholder approval
of such Plan or any amendment thereto), which will be borne solely by
shareholders of such classes; (b) different shareholder services fees associated
with the Shareholder Services Agreement; and (c) different class expenses, which
will be limited to any additional expenses that are subsequently identified and
determined to be properly applied to one class of shares of a Portfolio upon
approval by a majority of the Trustees of the Fund, including a majority of the
Trustees who are not interested persons of the Fund.
2. Under this Multi-Class Plan, certain expenses may be attributable
to a Portfolio, but not to a particular class thereof. All such expenses will be
borne by each class on the basis of the relative aggregate net assets of the
classes. Expenses that are attributable to a particular Portfolio, but not to a
particular class thereof, will be borne by each class of such series on the
basis of the
<PAGE> 2
relative aggregate net assets of the classes. Notwithstanding the foregoing, the
distributor, the investment manager or other provider of services to the Fund
may waive or reimburse the expenses of a specific class or classes to the extent
permitted under Rule 18f-3 under the 1940 Act.
A class of shares may be permitted to bear expenses that are
directly attributable to such class including: (a) any distribution fees
associated with the Distribution Plan for a particular class and any other costs
relating to implementing or amending such Plan (including obtaining shareholder
approval of such Plan or any amendment thereto); (b) any shareholder services
fees associated with the Shareholder Services Agreement attributable to such
class; and (d) any class expenses determined by the Trustees to be attributable
to such class.
3. To the extent exchanges are permitted, shares of any class of a
Portfolio will be exchangeable with shares of the same class of another
Portfolio as described in the prospectus. Exchanges will comply with all
applicable provisions of Rule 11a-3 under the 1940 Act.
4. Dividends paid by a Portfolio as to each class of its shares, to
the extent any dividends are paid, will be calculated in the same manner, at the
same time, on the same day, and will be in the same amount, except that any
distribution fees, shareholder services fees and class expenses allocated to a
class will be borne exclusively by that class.
5. Any distribution arrangement of a Portfolio, including
distribution fees, will comply with Article III, Section 26, of the Rules of
Fair Practice of the National Association of Securities Dealers, Inc.
6. All material amendments to this Plan must be approved by a
majority of the members of the Fund's Board of Trustees, including a majority of
the board members who are not interested persons of the Fund.
Dated: July 22, 1999
2
