SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Amendment No. ___ )
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
THE OMNI INVESTMENT FUND
(Name of Registrant as Specified In Its Charter)
_________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
PAYMENT OF FILING FEE (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
________________
(2) Aggregate number of securities to which transaction applies:
________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
______________________________________
(4) Proposed maximum aggregate value of transaction:
_______________________
(5) Total fee paid: _____________________________________________________
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[ ] Fee paid previously with preliminary proxy materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ____________________________________________
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party: ______________________________________________________
(4) Date Filed: ________________________________________________________
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THE OMNI INVESTMENT FUND
January 13, 1997
Dear Shareholder:
I am writing to ask for your favorable vote on the important proposals
being presented at the February 13, 1997, meeting of shareholders. These
proposals will permit your Fund to become part of the Berger Funds family
of mutual funds. Under the direction of new Berger Fund trustees and
officers, the Fund will benefit from the Berger's more than twenty years'
experience in mutual fund operations, and become part of a dynamic and
respected mutual fund family.
These proposals will not result in any change in the Fund's investment
objective or approach. We at Perkins, Wolf, McDonnell & Company will
continue to manage the portfolio as the Fund's sub-advisor, and I will
continue using the same investment style I have used since the Fund's
beginning. Since Berger will assume the Fund's overall administration, I
look forward to having more time and attention to devote to selecting and
managing the Fund's investments.
A reduction in your overall Fund expenses is anticipated if these
proposals are implemented, as explained in the accompanying Proxy Statement.
Most significantly, the Fund's advisory fee will decrease from the annual
rate of 1.00% to .90% of the Fund's average net assets. Even with this
reduction in expenses, the Fund is expected to enjoy enhanced service
levels when it joins the Berger Funds family. As a part of the Berger
Funds family, you will benefit from the many conveniences and services
available to all Berger Fund shareholders that we currently are not able
to offer, such as telephone transaction privileges, fund-to-fund exchange
privileges, a number of investment plans and programs and shareholder
newsletters.
The proposals will also permit the Fund to join the large number of
mutual funds today that issue more than one class of shares. Different
classes of shares will give the Fund the ability to offer different
investor markets a separate class of shares with features that are
tailored to that market. Your shares will be included in the class
known as "Institutional Shares" and otherwise be unchanged. As an
existing shareholder, you will be permitted to hold and purchase more
Institutional Shares, subject only to the existing minimum purchase and
account requirements for the Fund rather than the higher purchase and
account balance requirements that new holders of Institutional Shares
will have to meet. The Fund will also create a seperate, new class
of shares known as "Investor Shares" for new investors from the general
public. There will be no federal income tax impact to you or the Fund
when your existing shares are designated as Institutional Shares and
the new Investor Shares are created.
All of these matters on which you are asked to vote are significant
to the future of your Fund. Your vote is important, and I am counting
on you to respond. The Board of Trustees, which is responsible for
protecting your interest as a shareholder, has reviewed these matters
and recommends that you vote FOR each of the proposals.
Whether or not you plan to attend the meeting, please note your
shares promptly by using the enclosed proxy card and postage-paid
envelope. Be sure to complete and sign each proxy card if you receive
more than one. If shares representing a quorum are not present by
proxy or in person at the meeting, implementation of the proposals will
be delayed and additional expenses may be incurred to send second
mailings. A speedy return of your proxy card will benefit yourself
and all other shareholders.
Very truly yours,
/s/ Robert H. Perkins
Robert H. Perkins, President
P.S. If you have any questions, please call our proxy information line
at 800-371-6772.
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THE OMNI INVESTMENT FUND
53 WEST JACKSON BOULEVARD
CHICAGO, ILLINOIS 60604
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held February 13, 1997
A special meeting of the shareholders of The Omni Investment Fund (the
"Fund"), a series of the Massachusetts business trust also known as The Omni
Investment Fund (the "TRUST"), will be held at 10:00 a.m. (Chicago time), at the
office of the Trust, 53 West Jackson Boulevard, Suite 818, Chicago, Illinois, on
February 13, 1997, to vote on the following proposals:
PROPOSAL 1: To elect 10 Trustees of the Trust, in each case to serve until the
next shareholders meeting held to elect Trustees and until their successors are
elected and qualified;
PROPOSAL 2: To approve a new Investment Advisory Agreement in respect to the
Fund between the Trust and Berger Associates, Inc. ("BERGER");
PROPOSAL 3: To approve a Sub-Advisory Agreement in respect to the Fund between
Perkins, Wolf, McDonnell & Company ("PWM") and Berger;
PROPOSAL 4: To approve amendments to the Trust's Restated and Amended
Declaration of Trust to permit the Fund's Board of Trustees to establish
multiple classes of shares of any series of the Trust having such variations
among classes as the Fund's Board of Trustees shall approve; and
PROPOSAL 5: To transact such other business as may properly come before the
special meeting or any adjournment thereof.
If Proposals 1, 2, 3, and 4 are approved, it is anticipated that the new
Trustees will take office and the Investment Advisory Agreement with Berger, the
Sub-Advisory Agreement with PWM, and the changes effected by the amendment to
the Restated and Amended Declaration of Trust will become effective as soon as
practicable after shareholder approval. Implementation of each of Proposals 1,
2, 3, and 4 is conditioned upon shareholder approval of each of the others.
Accordingly, if any of these four Proposals is not approved by the shareholders,
none of them will be implemented.
YOUR BOARD OF TRUSTEES RECOMMENDS YOUR ELECTION OF THE SLATE OF TRUSTEES
AND AFFIRMATIVE VOTE ON ALL OTHER PROPOSALS DESCRIBED IN THE ATTACHED
PROXY STATEMENT.
By Order of the Board of Trustees,
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N. Theodore Hans
January 13, 1997 Secretary
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE URGED TO DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING STAMPED ENVELOPE. IN ORDER TO
AVOID UNNECESSARY DELAY, WE ASK YOUR COOPERATION IN MAILING THE PROXY PROMPTLY.
IF YOU DECIDE TO ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE YOUR
SHARES IN PERSON.
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TABLE OF CONTENTS
THE PROPOSALS TO BE VOTED UPON 2
INTRODUCTION 3
PROPOSAL 1. ELECTION OF NEW BOARD OF TRUSTEES TO SERVE UPON
CONSUMMATION OF THE PROPOSED ARRANGEMENT 5
BACKGROUND 5
NOMINEES FOR TRUSTEES 5
EXISTING TRUSTEES AND OFFICERS 10
SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS,TRUSTEES,
TRUSTEE NOMINEES, AND EXECUTIVE OFFICERS 12
RECOMMENDATION OF THE TRUSTEES 13
PROPOSAL 2. APPROVAL OF THE BERGER ADVISORY AGREEMENT 13
BACKGROUND 13
THE EXISTING AND PROPOSED ADVISORY AGREEMENTS 15
BOARD CONSIDERATIONS 21
RECOMMENDATION OF THE TRUSTEES 23
PROPOSAL 3. APPROVAL OF THE SUB-ADVISORY AGREEMENT 23
BACKGROUND 23
THE SUB-ADVISORY AGREEMENT 23
BOARD CONSIDERATIONS 25
RECOMMENDATION OF THE TRUSTEES 27
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PROPOSAL 4.APPROVAL OF AMENDMENTS TO THE TRUST'S DECLARATION OF
TRUST TO PERMIT THE CREATION OF CLASSES OF SHARES 27
BACKGROUND 27
SUMMARY OF AMENDMENT 27
BOARD CONSIDERATIONS 29
RECOMMENDATIONS OF THE TRUSTEES 30
VOTES NEEDED TO ADOPT PROPOSALS 30
GENERAL INFORMATION 31
OTHER INFORMATION 32
APPENDIX A A-1
APPENDIX B B-1
APPENDIX C C-1
APPENDIX D D-1
ii
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THE OMNI INVESTMENT FUND
53 West Jackson Boulevard
Chicago, Illinois 60604
PROXY STATEMENT
FOR THE SPECIAL MEETING OF SHAREHOLDERS
To Be Held on February 13, 1997
This Proxy Statement is furnished in connection with the solicitation of
the enclosed Proxy by the Board of Trustees on behalf of The Omni Investment
Fund, a Massachusetts business trust (the "TRUST"), to be used at the Special
Meeting of Shareholders (the "MEETING") to be held on February 13, 1997, at
10:00 a.m. (Chicago time), at the office of the Trust, 53 West Jackson
Boulevard, Suite 818, Chicago, Illinois 60604, for the purposes set forth in
the accompanying Notice of Special Meeting of Shareholders, as further
described below.
Shareholders of record at the close of business on December 30, 1996 (the
"RECORD DATE") are entitled to attend and to vote at the Meeting and at any and
all adjournments of the Meeting. On the Record Date, there were outstanding
1,983,482,888 shares (the "SHARES") of the only outstanding series of the Trust,
also known as The Omni Investment Fund (the "FUND"). Each proposal and each
item of which may properly come before the Meeting will be voted on
separately by the shareholders of the Fund. The holders of Shares shall be
entitled to one vote for each full Share and a fractional vote for each
fractional Share.
If the accompanying form of Proxy is properly executed, returned in time to
be voted at the Meeting, and unrevoked, the Shares covered thereby will be voted
in accordance with the instructions marked thereon by the shareholder(s). In
the event that the shareholder signs and returns the Proxy, but does not
indicate a choice as to any of the proposals on the Proxy, the persons named in
the accompanying Proxy will vote those shares in favor of all proposals. An
executed and returned Proxy may nevertheless be revoked by a shareholder at any
time before it is voted by sending written notice of the revocation to the Trust
or by appearing personally and voting at the Meeting.
This Proxy Statement and the accompanying Notice of Special Meeting of
Shareholders and Proxy are first being mailed to shareholders on or about
January 13, 1997. The cost of preparing and mailing the Notice of Special
Meeting of Shareholders, the Proxy, this Proxy Statement, and any additional
proxy material will be borne by the Fund's current investment adviser, Perkins,
Wolf, McDonnell & Company ("PWM"), which in turn will be reimbursed by Berger
Associates, Inc. ("BERGER") for such cost. Proxy solicitations will be made
primarily by mail, but may also be made by telephone, facsimile, or personal
interview conducted by certain officers or employees of the Trust or PWM.
The Trust may engage the services of a proxy solicitation firm to solicit
proxies. The expenses associated with engaging a proxy solicitation firm
cannot be reasonably estimated at this time. If such expenses are incurred,
they will be paid by PWM and reimbursed by Berger. The Trust will request
broker-dealer firms, custodians, nominees, and fiduciaries to forward proxy
materials to the beneficial owners of the Shares as of the Record Date.
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The Fund's annual report dated December 31, 1995, and semi-annual report
dated June 30, 1996, have been mailed to shareholders. If you have not
received these reports or would like to receive an additional copy, without
charge, please call the Fund at (800) 223-790 and they will be sent by
first-class mail. The 1996 annual report will be mailed to you upon completion.
THE PROPOSALS TO BE VOTED UPON
At the Meeting, Shareholders will be asked to vote their Shares:
1. To elect 10 Trustees of the Trust;
2. To approve a new Investment Advisory Agreement in respect of the Fund
between the Fund and Berger (the "BERGER ADVISORY AGREEMENT");
3. To approve a Sub-Advisory Agreement between Berger and PWM (the "SUB-
ADVISORY AGREEMENT");
4. To amend the Fund's Amended and Restated Declaration of Trust, dated
April 19, 1990 (as amended on September 30, 1994 and December 12,
1996, the "DECLARATION OF TRUST") to permit the Fund's Board of
Trustees to establish multiple classes of shares within each series
of the Trust; and
5. To transact such other business as may properly come before the Meeting
or any adjournment thereof.
YOUR BOARD OF TRUSTEES RECOMMENDS YOUR ELECTION OF THE SLATE OF TRUSTEES
AND AFFIRMATIVE VOTE ON ALL OTHER PROPOSALS.
If Proposals 1, 2, 3 and 4 are approved, it is anticipated that the new
Trustees will take office and the Berger Advisory Agreement, the Sub-Advisory
Agreement, and the changes effected by the amendment to the Declaration of Trust
will become effective as soon as practicable after shareholder approval. The
implementation of each of Proposals 1, 2, 3, and 4 is conditioned upon
shareholder approval of each of the others. Accordingly, if any of these four
Proposals is not approved by the shareholders, none of them will be implemented.
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INTRODUCTION
BACKGROUND. On November 18, 1996, PWM and Berger entered into an agreement
(the "NOVEMBER 18 AGREEMENT") which would facilitate the Fund becoming part of
the Berger Funds family of mutual funds. Specifically, the November 18
Agreement, among other things, proposes that Berger become the investment
adviser to the Fund under a new Investment Advisory Agreement, PWM become
the sub-adviser to the Fund under a Sub-Advisory Agreement, the Fund adopt a
multiple class share structure offering two classes of shares (having such
variations as the Board of Trustees shall approve), and 10 new Trustees be
elected to the Board of Trustees (the "PROPOSED ARRANGEMENT"). The November
18 Agreement requires PWM and Berger to use their reasonable best efforts to
cause such proposals to be approved and implemented. It is expected that the
Proposed Arrangement will be consummated on February 14, 1997, upon the
satisfaction of specified terms and conditions of the Agreement and the
approvals by the Fund shareholders of the relevant parts of the Proposed
Arrangement.
No change in the day-to-day portfolio management of the Fund or in the
Fund's investment objective or approach is anticipated in connection with the
Proposed Arrangement. Under the new Sub-Advisory Agreement, PWM would continue
to manage the portfolio of the Fund using the same investment advisory personnel
who have been responsible for managing the Fund's investments since the Fund
commenced operation in 1985.
To emphasize the Fund's membership in the Berger Funds family, the name of
the Trust will be changed to "Berger Omni Investment Trust." To correlate the
Fund's name more closely with its investment emphasis and with its portfolio
manager's investment style, the Board of Trustees of the Fund renamed the Fund
the "Berger Small Cap Value Fund" at a meeting held on December 12, 1996, to
become effective upon the consummation of the Proposed Arrangement. Shareholder
approval of the name changes is not required.
Upon the consummation of the Proposed Arrangement, (a) the shares held by
the existing shareholders (on the date of such consummation) will be
redesignated as "Institutional Shares" and otherwise will be unchanged,
and (b) a new class of "Investor Shares" will be created. The implementation
of a new class of Investor Shares will not alter your rights and privileges
as an existing shareholder of the Fund (i.e., an Institutional Shareholder),
nor will it affect the net asset value of your investment.
Additional information regarding the rights and obligations of PWM and
Berger under the November 18 Agreement and other significant aspects of the
Proposed Arrangement which you should consider before voting your shares are set
forth on Appendix A attached hereto.
REDUCTION IN OVERALL FUND EXPENSES. If approved, the new Investment
Advisory Agreement under the Proposed Arrangement will result in a reduction in
the advisory fee payable by the Fund from the annual rate of 1.00% to .90% of
the Fund's average daily net assets. On the other hand, certain items of
expense are expected to go up under the Proposed Arrangement, such as custodian
fees, since before January 1, 1997, the Fund's adviser was acting as the Fund's
custodian. As of January 1, 1997, the Fund engaged an unaffiliated custodian
and engaged certain other outside professional service organizations to serve
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the Fund, as discussed in more detail in Appendix A attached hereto.
However, the Fund's overall expenses are expected to go down under the Proposed
Arrangement, as reflected in the following table:
FUND EXPENSES -- INSTITUTIONAL SHARES
(In dollars and as a percentage of average net assets)
YEAR ENDED IF PROPOSED ARRANGEMENT
12/31/96 Actual HAD BEEN IN EFFECT*
---------------- ------------------------
Investment Advisory Fee $325,488.00 1.00% $293,375.00 0.90%
Other Expenses $155,337.00 0.48% $121,125.00 0.37%
Total Fund Operating Expenses $480,825.00 1.48% $414,500.00 1.27%
* Unaudied figures.
** For comparability with the 1996 actual year-end data, this column shows
adjusted expense data for the class of shares known as Institutional Shares,
since all shares outstanding during 1996 will be designated as Institutional
Shares if the Proposed Arrangement is consummated.
EXAMPLE: You would indirectly pay the following expenses on a $1,000
investment, assuming a 5% annual return and that the Fund's expenses are the
same as those stated above, with or without redemption at the end of each
period:
UNDER THE CURRENT UNDER THE PROPOSED
ARRANGEMENT ARRANGEMENT
----------------- ------------------
1 Year $ 15 $ 13
3 Years $ 47 $ 40
5 Years $ 81 $ 70
10 Years $177 $153
THE EXPENSES SET FORTH IN THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED
A REPRESENTATION OF PAST OR FUTURE EXPENSES, AND ACTUAL EXPENSES MAY BE
GREATER OR LESSER THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN IS
HYPOTEHTICAL AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE ANNUAL RETURNS, WHICH MAY BE GREATER OR LESSER THAN THOSE SHOWN
IN THE EXAMPLE.
Despite the reduction in expenses anticipated if the Proposed Arrangement
is implemented, the Fund is expected to enjoy an enhanced level of service when
it becomes part of the Berger Funds family and is expected to be able to offer
to its shareholders services and other conveniences that the Fund was unable to
offer previously, as described in more detail in the following pages.
Your Board of Trustees carefully considered and approved the Proposed
Arrangement, having concluded that it is in the best interests of the Fund and
its shareholders. Accordingly, Proposals 1, 2, 3 and 4 are submitted for
shareholder approval and the Board unanimously recommends that shareholders vote
"FOR" each of the Proposals. Because the various elements of the Proposed
Arrangement are interrelated, all four of the Proposals must be approved by
shareholders or none of them will be implemented.
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PROPOSAL 1. ELECTION OF NEW BOARD OF TRUSTEES TO SERVE UPON CONSUMMATION OF THE
PROPOSED ARRANGEMENT
BACKGROUND
The Board of Trustees of the Fund currently consists of five Trustees. In
accordance with its obligations under the November 18 Agreement, PWM has agreed
to use its reasonable best efforts, consistent with its fiduciary duties, to
cause the number of Trustees to increase to 10. Pursuant to its authority
under the Declaration of Trust, on December 12, 1996, the Board of Trustees
authorized an increase in the size of the Board to 10 Trustees. Further, in
accordance with its obligations under the November 18 Agreement, PWM has agreed
to use its reasonable best efforts, consistent with its fiduciary duties, to
(a) cause the resignation of the Trust's current Trustees and executive
officers, and (b) obtain (i) the nomination, selection, and recommendation by
the current Trustees, and the election by the shareholders, of the trustees of
the mutual funds advised by Berger as the Trustees of the Fund and (ii) the
appointment of executive officers of Berger as the executive officers of the
Trust. In addition, Berger and PWM have agreed to use their best efforts so
that, for a period of three years after the consummation of the Proposed
Arrangement, at least 75% of the Trustees are not "interested persons" (as
defined in the 1940 Act) of PWM or Berger, or of any entity which succeeds
Berger as investment adviser to the Fund.
It is proposed that, contingent upon the consummation of the Proposed
Arrangement, the shareholders elect each of the 10 individuals described below
as a Trustee to hold office during the lifetime of the Trust or until his or her
death, retirement, resignation, or removal from office. Each nominee has
consented to being named in this Proxy Statement and to serve as a Trustee if
elected. It is not expected that any of such nominees will later decline or
become unavailable for election. In case this should happen, however, the
discretionary power given in the Proxy may be used to vote for a substitute
nominee or nominees. The Proxies solicited hereby cannot be voted by
shareholders for persons other than the nominees named.
NOMINEES FOR TRUSTEES
TRUSTEE NOMINEES. The current Trustees, each of whom will resign as a
Trustee upon the consummation of the Proposed Arrangement, have nominated the 10
individuals described below for election as new Trustees of the Fund. Each of
the nominees serves as a trustee for other Berger Funds. The name, age,
address, and principal occupation, and directorships in other publicly held
companies during at least the last five years of each nominee for election as
Trustee are set forth below:
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DENNIS E. BALDWIN (Age: 68), 3481 South Race Street, Englewood, Colorado 80110.
President, Baldwin Financial Counseling. Formerly (1978-1990), Vice
President and Denver Office Manager of Merrill Lynch Capital Markets.
Director of Berger 100 Fund and Berger Growth and Income Fund. Trustee
of Berger Investment Portfolio Trust, Berger Institutional Products
Trust, Berger/BIAM Worldwide Funds Trust, and Berger/BIAM Worldwide
Portfolios Trust.
* WILLIAM M. B. BERGER (Age: 71), 210 University Boulevard, Suite 900, Denver,
Colorado 80206. Director and, formerly (1974-1994), President of
Berger 100 Fund and Berger Growth and Income Fund. Trustee of Berger
Investment Portfolio Trust since its inception in August 1993 (Chairman
of the Trustees through November 1994). Trustee of Berger Institutional
Products Trust since its inception in October 1995. Trustee of
Berger/BIAM Worldwide Funds Trust and Berger/BIAM Worldwide Portfolios
Trust since their inception in May 1996. Chairman (since 1994) and a
Director (since 1973) and, formerly (1973-1994), President of Berger.
LOUIS R. BINDNER (Age: 71), 1075 South Fox, Denver, Colorado 80223. President,
Climate Engineering, Inc. (building environmental systems). Director of
Berger 100 Fund and Berger Growth and Income Fund. Trustee of Berger
Investment Portfolio Trust, Berger Institutional Products Trust,
Berger/BIAM Worldwide Funds Trust, and Berger/BIAM Worldwide Portfolios
Trust.
KATHERINE A. CATTANACH (Age: 51), 384 South Ogden, Denver, Colorado 80209.
Managing Principal, Sovereign Financial Services, L.L.C. (investment
consulting firm). Formerly (1981-1988), Executive Vice President,
Captiva Corporation, Denver, Colorado (private investment management
firm). Ph.D. in Finance (Arizona State University); Chartered Financial
Analyst (CFA). Director of Berger 100 Fund and Berger Growth and Income
Fund. Trustee of Berger Investment Portfolio Trust, Berger
Institutional Products Trust, Berger/BIAM Worldwide Funds Trust, and
Berger/BIAM Worldwide Portfolios Trust.
LUCY BLACK CREIGHTON (Age: 69), 1917 Leyden Street, Denver, Colorado 80220.
Associate, University College, University of Denver. Formerly,
President of the Colorado State Board of Land Commissioners (1989-1995),
and Vice President and Economist (1983-1988), and Consulting Economist
(1989) for First Interstate Bank of Denver. Ph.D. in Economics
(Harvard University). Director of Berger 100 Fund and Berger Growth and
Income Fund. Trustee of Berger Investment Portfolio Trust, Berger
Institutional Products Trust, Berger/BIAM Worldwide Funds Trust, and
Berger/BIAM Worldwide Portfolios Trust.
PAUL R. KNAPP (Age: 51), 33 North LaSalle Street, Suite 1920, Chicago, Illinois
60602. Since 1991, Director, Chairman, President and Chief Executive
Officer of Catalyst Institute (international public policy research
organization focused primarily on financial markets and institutions)
and Catalyst Consulting (international financial institutions business
consulting firm). Formerly (1988-1991), Director, President and Chief
Executive Officer of Kessler Asher Group (brokerage, clearing and
trading firm). Director of Berger 100 Fund and Berger Growth and
Income Fund. Trustee of Berger Investment Portfolio Trust, Berger
Institutional Products Trust, Berger/BIAM Worldwide Funds Trust, and
Berger/BIAM Worldwide Portfolios Trust.
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* GERARD M. LAVIN (Age: 54), 210 University Boulevard, Suite 900, Denver,
Colorado 80206. President and a Trustee of Berger/BIAM Worldwide
Portfolios Trust and Berger/BIAM Worldwide Funds Trust since their
inception in May 1996. President and a Trustee of Berger Institutional
Products Trust since its inception in October 1995. President and a
director since April 1995 of Berger. Member and Chairman of the Board
of Managers and a Chief Executive Officer of the Management Committee of
BBOI Worldwide LLC since November 1996. Vice President of DST
Systems, Inc. ("DST") (data processing) since July 1995. Director of
First of Michigan Capital Corp. (holding company) and First of Michigan
Corp. (broker-dealer) since March 1995. Formerly President and Chief
Executive Officer of Investors Fiduciary Trust Company ("IFTC")
(banking) (February 1992 to March 1995) and Chief Operating Officer
of SUNAMERICA Asset Management Co. (money management) (January 1990
to February 1992).
HARRY T. LEWIS, JR. (Age: 63), 370 17th Street, Suite 3560, Denver, Colorado
80202. Self-employed as a private investor. Formerly (1981-1988),
Senior Vice President, Rocky Mountain Region, of Dain Bosworth
Incorporated and member of that firm's Management Committee. Director
of Berger 100 Fund and Berger Growth and Income Fund. Trustee of
Berger Investment Portfolio Trust, Berger Institutional Products Trust,
Berger/BIAM Worldwide Funds Trust, and Berger/BIAM Worldwide Portfolios
Trust.
MICHAEL OWEN (Age: 59), 412 Reid Hall, Montana State University, Bozeman,
Montana 59717. Since 1994, Dean and, from 1989 to 1994, a member
of the Finance faculty of the College of Business, Montana State
University. Self- employed as a financial and management consultant,
and in real estate development. Formerly (1976-1989), Chairman and
Chief Executive Officer of Royal Gold, Inc. (mining). Chairman of the
Board of Berger 100 Fund and Berger Growth and Income Fund. Chairman
of the Trustees of Berger Investment Portfolio Trust, Berger
Institutional Products Trust, Berger/BIAM Worldwide Funds Trust, and
Berger/BIAM Worldwide Portfolios Trust.
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WILLIAM SINCLAIRE (Age: 68), 3049 S. Perry Park Road, Sedalia, Colorado 80135.
President, Sinclaire Cattle Co., and private investor. Director of
Berger 100 Fund and Berger Growth and Income Fund. Trustee of Berger
Investment Portfolio Trust, Berger Institutional Products Trust,
Berger/BIAM Worldwide Funds Trust, and Berger/BIAM Worldwide Portfolios
Trust.
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* If elected and upon consummation of the Proposed Arrangement, Messrs.
Berger and Lavin would be "interested persons" (as defined in the 1940 Act) of
the Fund and of Berger by virtue of their positions with the Fund and/or with
Berger.
REMUNERATION OF BERGER TRUSTEE NOMINEES AND OFFICERS. For the period ended
December 31, 1996, each of the nominees for Trustee who was not an interested
person of any of the Berger Funds or their adviser was compensated for services
as a trustee or director of the Berger Funds with the fees shown on the
following table, which are composed of an annual retainer and a per meeting
fee. Since the Fund was not part of the Berger Funds family during that
period, none of the fees shown were borne by the Fund. If the Proposed
Arrangement is implemented and the Fund becomes part of the Berger Funds
family, the Fund will bear its pro rata share of Trustee compensation, along
with all the other Berger Funds, of which there are currently 10.
NAME AND POSITION AGGREGATE AGGREGATE
WITH BERGER FUNDS COMPENSATION FROM COMPENSATION(1)
THE FUND FROM ALL 10
BERGER FUNDS(2)
Dennis E. Baldwin(3) $0* $45,000
William M.B. Berger(3),(5) $0* $ 0
Louis R. Bindner(3) $0* $36,000
Katherine A. Cattanach(3) $0* $43,500
Lucy Black Creighton(3) $0* $36,000
Paul R. Knapp(3) $0* $45,000
Gerard M. Lavin(4),(5) $0* $ 0
Harry T. Lewis(3) $0* $40,500
Michael Owen(3) $0* $55,000
William Sinclaire(3) $0* $34,500
* The trustee nominees named above were not Trustees of the Fund during
the fiscal year ended December 31, 1996, and accordingly did not receive any
compensation from the Fund during that fiscal year.
(1) Directors/trustees who are not interested persons of Berger received
as a group compensation from the 10 Berger Funds of approximately $335,500
for the year ended December 31, 1996. Of the aggregate amounts shown for each
trustee, the following amounts were deferred under applicable deferred
compensation plans: Dennis E. Baldwin $3,375; Louis R. Bindner $22,500;
Katherine A. Cattanach $43,500; Lucy Black Creighton $26,981; Paul
R. Knapp $0; Harry T. Lewis $0; Michael Owen $10,992; William Sinclaire $14,250.
(2) Includes Berger 100 Fund, Berger Growth and Income Fund and Berger
Investment Portfolio Trust (two funds), Berger Institutional Products Trust
(three funds), Berger/BIAM Worldwide Portfolios Trust and Berger/BIAM Worldwide
Funds Trust (three funds). The Fund was not part of the Berger Funds complex
during the fiscal year ended December 31, 1996.
(3) Director of Berger 100 Fund and Berger Growth and Income Fund.
Trustee of Berger Investment Portfolio Trust, Berger Institutional Products
Trust, Berger/BIAM Worldwide Funds Trust and Berger/BIAM Worldwide Portfolios
Trust.
(4) Trustee of Berger Institutional Products Trust, Berger/BIAM Worldwide
Funds Trust and Berger/BIAM Worldwide Portfolios Trust.
(5) Is anticipated to become an "interested person" of the Fund or the
Fund's adviser or sub-adviser.
Trustees may elect to defer receipt of all or a portion of their fees
pursuant to a fee deferral plan adopted by certain of the Berger Funds. Under
the plan, deferred fees are credited to an account and adjusted thereafter to
reflect the investment experience of whichever of the Berger Funds (or approved
money market funds) is designated by the trustee for this purpose. Pursuant to
a Securities and Exchange Commission ("SEC") exemptive order, those Berger Funds
that have adopted the plan are permitted to purchase shares of the designated
funds in order to offset their obligation to the trustees participating in the
plan. Purchases made pursuant to the plan are excepted from any otherwise
applicable investment restriction limiting the purchase of securities of any
other investment company. The obligation of a Berger Fund to make payments of
deferred fees under the plan is a general obligation of that fund.
APPOINTMENT OF NEW EXECUTIVE OFFICERS. In accordance with its obligations
under the November 18 Agreement, PWM has agreed to use its reasonable best
efforts, consistent with its fiduciary duties, to cause the resignation of the
current officers of the Trust and cause the current Trustees to appoint officers
and/or employees of Berger as officers of the Trust. If the Proposed
Arrangement is consummated, the current officers are expected to resign and the
following individuals are expected to be appointed as new executive officers
of the Trust:
GERARD M. LAVIN (Age: 54), President
CRAIG D. CLOYED (Age: 50), Vice President
KEVIN R. FAY (Age: 41), Vice President, Secretary and Treasurer
The address of each of the persons referred to above is 210 University
Boulevard, Suite 900, Denver, Colorado 80206.
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EXISTING TRUSTEES AND OFFICERS
EXISTING TRUSTEES AND OFFICERS. If the Proposed Arrangement is not
consummated, the election of new Trustees and the appointment of new executive
officers would not be effected, and the Trust's current Trustees and officers
would continue in office for the life of the Trust or until their death,
retirement, resignation, or removal from office. The name of each existing
Trustee and officer, his age, address, current principal occupation during at
least the last five years, the year in which he was first elected to the Board
of Trustees, and his directorships in other publicly held companies are set
forth below:
*ROBERT H. PERKINS (Age: 56), 1424 Darmouth Road, Flossmoor, Illinois 60422.
President and Trustee of the Fund since March 1985. Chief Executive
Officer and Secretary of PWM since January 1981.
*GREGORY E. WOLF (AGE: 47), 529 South Beverly Place, Lake Forest, Illinois
60045. Treasurer and Trustee of the Fund since March 1985. President
and Director of PWM since October 1981.
BURT W. ENGELBERG (Age: 42), 1457 North Oakley, Chicago, Illinois 60622.
Trustee of the Fund since March 1987. Attorney with Martin Cohn &
Associates, Ltd., Chicago, Illinois, since 1985.
JOHN R. HALL (Age: 54), 216 North Grant Street, Hinsdale, Illinois 60521.
Trustee of the Fund since March 1985. President of Goose Island Beer
Co., a microbrewery, since 1994. President and Director of Lincoln Park
Brewery, Inc., a microbrewery, since 1987; Director of the Institute for
Brewing Studies, a trade organization for the microbrewery industry,
since 1989. Broker with Dreher & Associates, a financial consulting
firm, since 1989.
KEITH L. COOK (Age: 69), 2527 Hacienda Drive, Dubuque, Iowa 52002. Trustee of
the Fund since March 1988. Private investor. Formerly Vice-President
and Associate Director of the Investment Advisory Division of Kemper
Financial.
N. THEODORE HANS (Age: 36), 27 Blodgett, Clarendon Hills, Illinois 60514.
Secretary of the Fund since January 1996. Account Executive at PWM since
1994. Manager at DST in 1993. Arbitrage Clerk at H.Q. Trade from 1991
to 1993.
- -----------------------------------------
* Messrs. Perkins and Wolf are interested persons (as defined in the 1940 Act)
of the Fund and PWM, as the current investment adviser to the Fund, by virtue of
their offices with the Trust and/or PWM.
TRUSTEES' AND COMMITTEE MEETINGS. During its most recent fiscal year, the
Fund's Board of Trustees held 10 meetings. The Board of Trustees has no
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audit, compensation or nominating committee. Each of the Trustees attended at
least 75% of the total number of meetings of (a) the Board of Trustees and (b)
all committees of the Board of Trustees on which he served, in each case during
the periods that he served. If elected, the Trustee nominees would expect to
appoint audit and nominating committees, each comprised of all Trustees who are
not interested persons of the Fund. The nominating committee does not intend to
routinely consider nominees recommended by shareholders.
REMUNERATION OF EXISTING TRUSTEES AND OFFICERS. Officers and Trustees who
are interested persons of the Fund receive no compensation from the Fund.
In the last fiscal year, each Trustee of the Fund who was not an interested
person of the Fund was compensated as set forth in the following table:
NAME AND POSITION AGGREGATE MEETING
WITH FUND FEES
- ---------------------------------------------------------------------------
Robert H. Perkins
President and Trustee $ 0
Gregory E. Wolf
Treasurer and Trustee $ 0
Burt W. Engelberg
Trustee $1,650.00
John R. Hall
Trustee $1,050.00
Keith L. Cook
Trustee $1,650.00
CERTAIN RELATIONSHIPS. Although the Trustees are not paid any additional
compensation pursuant to any standard or other arrangement, each Trustee may
currently engage in securities transactions brokered by PWM, in its capacity as
a broker-dealer, free of charge as a gratuity for his service as a member of the
Board of Trustees. For the fiscal year ended December 31, 1996, the value of
free brokerage services received by all of the Trustees was less than $1,300.
The provision of free brokerage services to the Trustees by the Fund's
investment adviser will not continue if the Proposed Arrangement is
consummated.
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SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS,
TRUSTEES, TRUSTEE NOMINEES, AND EXECUTIVE OFFICERS
The following table sets forth information as of November 11, 1996, with
respect to the beneficial ownership of Shares by the existing Trustees and
executive officers of the Trust, all existing Trustees and executive officers as
a group, Fund shareholders known by the Trust to own beneficially more than 5%
of the Shares, and nominees for Trustees. The information appearing in the
following table has been furnished by or on behalf of the indicated
shareholders and/or reflects record ownership as shown in the Fund's share
transfer records.
NAME OF BENEFICIAL OWNER AMOUNT AND PERCENT OF
AND ADDRESS (IF NOT NATURE OF BENEFICIAL OUTSTANDING
FURNISHED ABOVE) OWNERSHIP SHARES
- ------------------------------------------------------------------------------
Robert H. Perkins 31,453.767 Shares 1.58%
Gregory H. Wolf 1,701.640 Shares *
Burt W. Engelberg 1,203.381 Shares *
John R. Hall 5,329.988 Shares *
Keith L. Cook 35,407.048 Shares 1.78%
N. Theodore Hans 57.267 Shares *
Existing Trustees and Officers
of the Fund as a Group 75,152.710 Shares 3.78%
United Missouri Bank of
Kansas City, N.A.,
as trustee for the Kansas City
Southern Industries, Inc.
Profit Sharing Plan
1010 Grand
Kansas City, Missouri 64106 397,071.166 Shares 19.96%
* Percent of outstanding shares held is less than 1%.
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RECOMMENDATION OF THE TRUSTEES
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR
THE ELECTION OF THE TRUSTEE NOMINEES DESCRIBED ABOVE.
PROPOSAL 2. APPROVAL OF THE BERGER ADVISORY AGREEMENT
BACKGROUND
In accordance with its obligations under the November 18 Agreement, PWM has
agreed to use its reasonable best efforts, consistent with its fiduciary duties,
to obtain the necessary approvals of the Berger Advisory Agreement. It is
proposed that the shareholders adopt the Berger Advisory Agreement attached
hereto as APPENDIX B. If the Proposed Arrangement is not consummated, the
Berger Advisory Agreement will not be effected, and the existing PWM Advisory
Agreement would continue in effect.
PROPOSED INVESTMENT ADVISER. Berger, whose business address is 210
University Boulevard, Suite 900, Denver, Colorado 80206, is the proposed new
investment adviser to the Trust (with respect to the Fund). Berger has been in
the investment advisory business for over 20 years. Berger currently serves as
(a) the registered investment adviser, sub-adviser, administrator or sub-
administrator for 12 mutual funds (including Berger New Generation Fund, Berger
100 Fund, Berger Growth and Income Fund, Berger Small Company Growth Fund,
Berger IPT-100 Fund, Berger IPT-Growth and Income Fund, Berger IPT-Small
Company Growth Fund, Berger/BIAM International Fund, Berger/BIAM International
Institutional Fund and Berger/BIAM International CORE Fund) and (b) as adviser
to pension and profit-sharing plans, institutional and private investors.
Berger had mutual fund assets under management of more than $3.6 billion as
of September 30, 1996.
Berger is controlled by Kansas City Southern Industries, Inc. ("KCSI"),
which owns approximately 87% of the outstanding shares of Berger. KCSI is a
publicly traded holding company whose principal subsidiaries are engaged in
transportation services and financial asset management. KCSI also owns
approximately 41% of the outstanding shares of DST, a publicly traded
information and transaction processing company which acts as the Trust's current
sub-transfer agent.
The directors of Berger are Messrs. William M. B. Berger, Gerard M. Lavin,
Rodney L. Linafelter (210 University Boulevard, Suite 900, Denver, CO 80206),
and Landon H. Rowland (114 West 11th Street, Kansas City, MO 64105). If the
Proposed Arrangement is consummated, Mr. Berger, Chairman of Berger, is expected
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to serve as Trustee and a director of the Fund, Mr. Lavin, President, Chief
Executive Officer of Berger, is expected to serve as President
and Trustee of the Fund. Craig D. Cloyed, Vice President and Chief Marketing
Officer of Berger, is expected to serve as Vice President of the Fund. Kevin R.
Fay, Vice President-Administration and Finance, Secretary and Treasurer of
Berger, is expected to serve as Vice President, Secretary and Treasurer of the
Fund.
The following table sets forth, with respect to other Berger-advised or
sub-advised mutual funds having a similar investment objective to the Fund, (a)
the names of such other funds, (b) their size (in terms of total net assets),
(c) the maximum contract rate of Berger's compensation from such other funds,
and (d) the actual rate of compensation paid by the funds for the most recently
completed fiscal year end after voluntary waivers.
BERGER-ADVISED FUND SIZE RATE OF BERGER'S RATE OF COMPENSATION
FUND NAME (as of 9/30/96) COMPENSATION FROM AFTER VOLUNTARY WAIVER
(000'S) FUND (for last fiscal year end)
- ------------------------------------------------------------------------------
Berger 100 Fund $2,012,706 0.75% 0.75%
Berger Growth and
Income Fund $ 315,538 0.75% 0.75%
Berger Small
Company Growth Fund $ 871,417 0.90% 0.90%
Berger New
Generation Fund $ 116,908 0.90% 0.71%
Berger/BIAM
International
Portfolio(1) $ 0 0.90% N/A(1)
Berger IPT -
100 Fund(2) $ 287 0.75% N/A(2)
Berger IPT -
Growth and
Income Fund(2) $ 267 0.75% N/A(2)
Berger IPT -
Small Company
Growth Fund(2) $ 275 0.90% N/A(2)
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Berger Capital Growth
Portfolio of the
American Skandia
Trust(3) $ 117,403 0.55%(3) N/A(3)
New England Star
Advisers Fund --
Berger Advised
Segment(4) $ 173,313 0.55%(4) N/A(4)
(1) The Berger/BIAM International Portfolio, the master portfolio of the
Berger/BIAM International Fund and Berger/BIAM International Institutional
Fund, Berger/BIAM International CORE Fund, is advised by BBOI Worldwide LLC,
a limited liability company 50% of which is owned by Berger. The Berger/BIAM
International Portfolio commenced operations in October 1996, and has not
completed a fiscal year of operations.
(2) Shares of these funds are not sold to the general public. Each of
these funds is sold exclusively to insurance companies in connection with
investment in and payments under variable annuity contracts and variable life
insurance contracts. The funds commenced operations on May 1, 1996, and have
not completed a fiscal year of operations.
(3) As sub-adviser, Berger is paid a fee at an annual rate of 0.55% of the
portfolio's net assets not in excess of $25 million; 0.50% of the portion of net
assets in excess of $25 million but not in excess of $50 million; and 0.40% of
the portion in excess of $50 million.
(4) As sub-adviser, Berger is paid a fee at an annual rate of 0.55% of the
first $50 million of the daily net assets of the segment of the fund that it
manages and 0.50% of such assets in excess of $50 million.
CURRENT INVESTMENT ADVISER. PWM currently serves as the Fund's investment
adviser pursuant to an Investment Advisory Agreement, dated May 17, 1990 (the
"PWM Advisory Agreement"). The PWM Advisory Agreement was last submitted to a
vote of the Fund shareholders on April 27, 1990, for the purpose of approving
such agreement upon the Fund's reorganization from a Delaware corporation to a
Massachusetts business trust. If the Proposed Arrangement is consummated, the
PWM Advisory Agreement will terminate and Berger will become the investment
adviser of the Fund. If the Proposed Arrangement is not consummated, the Berger
Advisory Agreement will not be entered into and the PWM Advisory Agreement will
continue in effect.
PWM, located at Suite 818, 53 West Jackson Boulevard, Chicago, Illinois
60604, was organized as a Delaware corporation in 1980 under the name Mac-Per-
Wolf Co. to operate primarily as a securities broker-dealer. In September 1983,
PWM changed its name to "Perkins, Wolf, McDonnell & Company." PWM is a member
of the National Association of Securities Dealers, Inc. (the "NASD") and, in
1984, became registered as an investment adviser with the SEC. PWM has operated
as the Fund's investment adviser since the Fund's commencement of investment
operations in February 1985.
Messrs. Perkins and Wolf own 49% and 20% of PWM's outstanding common stock,
respectively. Mr. Perkins' brother, Thomas M. Perkins, and Mr. Perkins' son,
Todd H. Perkins, each own 10% of PWM. The directors of PWM are Messrs. Perkins
and Wolf. The officers of PWM are Messrs. Wolf (President) and Perkins
(Secretary). The business address of each of the persons referred to above
is Suite 818, 53 West Jackson Boulevard, Chicago, Illinois 60604.
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<PAGE>
THE EXISTING AND PROPOSED ADVISORY AGREEMENTS
The Berger Advisory Agreement is similar in many respects to the PWM
Advisory Agreement. The Berger Advisory Agreement contains many of the material
terms of the PWM Advisory Agreement, but reflects the proposed change of the
investment adviser from PWM to Berger and incorporates additional provisions
designed to clarify and supplement the rights and obligations of the parties.
The following summarizes certain material features of the PWM Advisory Agreement
and the Berger Advisory Agreement (collectively, the "Advisory Agreements") and
other relevant matters in your consideration of the Berger Advisory Agreement:
KEY FEATURES OF THE ADVISORY AGREEMENTS
ADVISORY SERVICES. The PWM Advisory Agreement currently requires PWM to
(a) manage the investment and reinvestment of the Fund's assets, subject to the
overall control of the Board of Trustees, and (b) cause its officers to attend
meetings and furnish oral or written reports, as the Fund may reasonably
require, in order to keep the Board of Trustees and appropriate officers of the
Trust fully informed as to the condition of the investment portfolio of the
Fund, the investment recommendations of PWM, and the investment considerations
which gave rise to those recommendations. The Trust, however, shall regard
the investment advice and recommendations of PWM as being advisory only, and
shall retain full control over its own investment policies. Although the PWM
Advisory Agreement does not expressly permit PWM to engage a sub-adviser,
under the Declaration of Trust, the appointment by the Trustees of one or
more sub-advisers is permitted.
The Berger Advisory Agreement is similar to the PWM Advisory Agreement in
that Berger will be appointed by the Trust as investment adviser and manager
with respect to the Fund. Under the Berger Advisory Agreement, Berger would
be responsible for (a) managing the investment operations of the Fund and the
composition of its investment portfolio and determine what securities and other
assets of the Fund will be acquired, held, disposed of, or loaned, (b) causing
its officers to attend meetings and furnish oral or written reports in order to
fully inform the Trustees and appropriate officers as to the condition of the
investment portfolio, (c) supervising the purchase and sale of securities as
directed by the Trust's officers or sub-adviser, (d) maintaining the books and
records of the Trust as required by applicable law, and (e) furnishing the
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<PAGE>
Trustees with such periodic and special reports as the Trustees reasonably
request. Under the Berger Advisory Agreement, Berger is authorized to engage a
sub-adviser to fulfill its obligations.
ADVISORY FEE. Under the provisions of both Advisory Agreements, the Fund
is required to pay the adviser a monthly fee equal to a stated percentage per
annum of its average daily net assets. The annual advisory fee payable to PWM
for the performance of its advisory services under the PWM Advisory Agreement is
1.00% of the Fund's annual net asset value (computed on the net asset value of
the Fund as of the close of business each day and payable monthly). The
adoption of the proposed Berger Advisory Agreement would result in a reduction
of the advisory fee payable by the Fund from the annual rate of 1.00% to 0.90%
of the Fund's average daily net assets.
The advisory fee received by PWM from the Fund in the fiscal year ended
December 31, 1996 was $325,488. The advisory fee which Berger would have
received had the proposed Berger Advisory Agreement been in effect for such
fiscal year is $293,375, or a 10% reduction in the amount of the advisory fee
paid for such year.
OPERATING EXPENSES BORNE BY ADVISER AND THE FUND. Both Advisory Agreements
provide that the adviser shall bear the following expenses relating to the
Fund's operations: (a) reasonable compensation of interested officers,
Trustees, and other personnel of the Fund and (b) rental of the Fund's offices
and facilities for conducting the business of the Fund. In addition, the
Berger Advisory Agreement requires Berger to bear all fees of any sub-adviser
which it engages.
Under each Advisory Agreement, the Fund is responsible for all expenses
incidental to its organization, operations and business not specifically assumed
by PWM or Berger, as the case may be. These expenses include, but are not
limited to, the advisory fee, interest, taxes, brokerage fees, fees to certain
Trustees, legal, accounting and printing expenses, custodian, registrar,
dividend disbursement agent, and transfer agent expenses, administrative,
clerical, recordkeeping and bookkeeping expenses, expenses of preparing and
filing reports and tax returns with regulatory authorities, expenses of
shareholders' meetings and of preparing, printing and distributing proxy
statements, notices and reports to shareholders, fees, dues and expenses
incurred in connection with membership in any trade association, expenses
incurred in complying with all federal and state laws and the laws of any
foreign country applicable to the issue, offer, and sale of shares of the
Trust, share issuance costs, and certain registration costs.
ADMINISTRATIVE SERVICES. Both Advisory Agreements provide that the adviser
is entitled to compensation, or reimbursement of expenses in connection with the
adviser's performance of certain administrative and clerical functions on behalf
of the Fund, including transfer agency, registry, dividend disbursing,
recordkeeping, and bookkeeping services and preparation of reports and returns.
Under each such agreement, the administrative services compensation shall be a
fee to be mutually agreed upon by the Trust and PWM or Berger, as the case may
be. For the fiscal year ended December 31, 1996, PWM did not charge a fee for
any administrative and clerical services performed.
If the Proposed Arrangement is consummated, Berger will serve as the Fund's
administrator, pursuant to an Administrative Services Agreement which is
discussed below under "Other Considerations".
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<PAGE>
DISTRIBUTION AND PROMOTIONAL EXPENSES. The PWM Advisory Agreement requires
PWM to bear all expenses of promoting the sale of the shares of the Fund (other
than expenses incurred in complying with federal and state laws applicable to
the issue, offer or sale of shares of the Fund). Although Berger is not
required to bear any expenses relating to the promotion or distribution of
Fund shares, it may do so at its election. For information regarding the
promotion and distribution expenses if the Proposed Arrangement is
consummated, see "Other Considerations".
BROKERAGE ALLOCATION. Both Advisory Agreements set forth specific terms as
to brokerage transactions and the adviser's use of broker-dealers. For example,
the adviser must place Fund portfolio transactions only with brokers and dealers
who render satisfactory service in the execution of orders at the most favorable
prices and at reasonable commission rates. Each Advisory Agreement also
provides that the adviser must seek the best execution of each transaction
and permits the adviser to pay commissions to brokers that may be higher
than another broker would have charged if the adviser makes a good faith
determination that the commission is reasonable in relation to the value of
the brokerage and research services provided by such broker, viewed in terms
of either that particular transaction or the overall responsibilities of the
adviser. Each Advisory Agreement further provides that the adviser may also
consider the sales of Fund shares by particular brokers as a factor in the
selection of brokers for its portfolio transactions. Each adviser may select
a broker with which it or any of its affiliates or the Fund is affiliated.
The Berger Advisory Agreement also provides that purchase or sell orders
for the Fund may be aggregated with simultaneous purchase or sell orders for
other clients of Berger. In such cases, such orders will be allocated as to
price and amount among all such clients in a manner reasonably believed by
Berger to be fair and equitable to each client. In some cases, this allocation
could have a detrimental effect on the results achieved by the Fund. In other
cases, however, the ability of the Fund to participate in volume transactions
may produce better executions for the Fund.
For the fiscal year ended December 31, 1996, PWM, in its capacity as a
broker-dealer, executed all portfolio transactions for the Fund. All brokerage
commissions paid by the Fund in the fiscal year ended December 31, 1996 were
paid to PWM and the aggregate amount of such commissions was $306,562.
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<PAGE>
TERM AND TERMINATION. The PWM Advisory Agreement is dated May 17, 1990,
and by renewal, will continue in effect until May 17, 1997. The Berger
Advisory Agreement will continue in effect from its effective date (i.e.,
the consummation of the Proposed Arrangement) until April 30, 1998. After
its initial term, each Advisory Agreement continues from year to year (subject
to termination as hereinafter described) if approved annually by the
shareholders or Board of Trustees and, in either case, by a majority of the
Trustees who are not interested persons of the Fund by a vote in person at a
meeting called for such purpose, all as required by the 1940 Act.
Under both Advisory Agreements, the Trust may terminate the Advisory
Agreement without penalty on not less than 60 days' written notice when
authorized by either a vote of shareholders holding a "majority of the
outstanding voting securities" (within the meaning of the 1940 Act) of the Fund
or by a vote of a majority of the Board of Trustees. Both Advisory Agreements
also permit the adviser to terminate its respective Advisory Agreement on not
less than 60 days' written notice to the Fund. Each Advisory Agreement
automatically terminates in the event of its assignment (as defined in the 1940
Act).
LIABILITY. Each Advisory Agreement provides that the adviser shall have
no liability in connection with rendering services thereunder, other than
liability resulting from the adviser's willful misfeasance, bad faith, gross
negligence, or reckless disregard of the obligations or duties of the adviser.
OTHER CONSIDERATIONS
ADMINISTRATIVE SERVICES AGREEMENT. If the Proposed Arrangement is
consummated, Berger will serve as the Fund's administrator, pursuant to an
Administrative Services Agreement approved by the Board of Trustees on December
12, 1996 (the "ADMINISTRATIVE SERVICES AGREEMENT"), and assist in coordinating
all aspects of the Fund's operations in exchange for a fee at the annual rate of
0.01% of the value of the Fund's average daily net assets. The particular
administrative services to be provided will include coordinating the provision
or performance by other parties of services or operational functions of the
Fund, providing personnel and assistance necessary to maintain the Fund's
federal and state securities registrations and/or qualifications, monitoring
the Fund's compliance with the Declaration of Trust, bylaws, currently
effective registration statement, written policies and procedures, and
applicable law, supervising the preparation of registration statements,
tax returns, proxy materials, financial statements, notices and reports for
filing with regulatory authorities and/or distribution to shareholders of
the Fund, issuing correspondence to Fund shareholders, maintaining or
supervising the maintenance of certain books and records, providing the Trust
with adequate personnel, office space, and communications and other facilities,
and preparing and rendering to the Board of Trustees such periodic and special
reports as the Trustees may reasonably request.
DISTRIBUTION AND PROMOTIONAL EXPENSES. The Board of Trustees has
adopted a Rule 12b-1 Plan for the proposed Investor Shares and has approved a
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Distribution Agreement, for the Trust with Berger Distributors, Inc. ("BERGER
DISTRIBUTORS") which would become effective upon the consummation of the
Proposed Arrangement (the "DISTRIBUTION AGREEMENT").
RULE 12B-1 PLAN FOR PROPOSED INVESTOR SHARES. At a special meeting
of the Trustees held on December 12, 1996, the Trustees adopted a multiple
class structure offering two classes of shares: (a) the existing shares
(i.e., Institutional Shares) and (b) a new class of Investor Shares which
bear distribution expenses as provided in the Rule 12b-1 Plan. The Rule 12b-1
Plan would allow the Trust to finance activities primarily intended to result
in the sale of Investor Shares (e.g., the expenditure of time and resources
in preparing, printing and mailing prospectuses to other than existing
shareholders, as well as promotional expenses directed at marketing of the
Investor Shares). Under the 12b-1 Plan, the Trust will pay Berger an annual
fee of 0.25% of the average daily net assets of the Fund represented by the
Investor Shares. Such fee shall be imposed only against the assets of the
Fund represented by the Investor Shares. In other words, this fee will be
borne exclusively by the holders of the Investor Shares, and not by the
holders of the Institutional Shares, the class of shares into which your
outstanding shares of the Fund will be converted upon consummation of the
Proposed Arrangement. Since no Investor Shares are yet outstanding,
shareholder approval of the 12b-1 Plan is not required.
Among the expenses which may be paid by Berger under the Rule 12b-1
Plan are payments made to and expenses of persons (including Berger
Distributors or employees of Berger) who are engaged in, or provide support
services in connection with, the distribution of the Investor Shares (such as
answering routine telephone inquiries and processing shareholder requests
for information), compensation (including incentive compensation and/or
continuing compensation based on the amount of customer assets maintained
in a Fund) paid to securities dealers, financial institutions, and other
organizations which render distribution and administrative services in
connection with the distribution of the Investor Shares, costs related to the
formulation and implementation of marketing and promotional activities
(including direct mail promotions and television, radio, newspaper, magazine
and other mass media advertising), costs of printing and distributing
prospectuses and reports to prospective holders of Investor Shares), costs
involved in preparing, printing and distributing sales literature for the
Investor Shares, and costs involved in obtaining whatever information,
analyses and reports with respect to marketing and promotional
activities on behalf of the Investor Shares that Berger deems advisable.
The Rule 12b-1 fee will be paid to Berger by the Fund (as to the
proposed Investor Shares only) with respect to each fiscal year of the Fund
without regard to the actual distribution expenses incurred by Berger in such
year. In other words, if the distribution expenditures incurred by Berger are
less than the total of such payments in such year, the difference is not to
be reimbursed to the Fund by Berger, and if the distribution expenditures
incurred by Berger are more than the total of such payments, the excess
is not to be reimbursed to Berger by the Fund. The Rule 12b-1 Plan also
provides that, from time to time, the Fund may engage in activities which
jointly promote the sale of the Investor Shares and the shares of other
funds advised or administered by Berger, which costs are not readily
identifiable as related to any one fund. In such cases, Berger will allocate
the cost of the activity among the funds involved on the basis of their
respective net assets, unless otherwise directed by the Trustees.
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The proposed Rule 12b-1 Plan for the Investor Shares would continue in
effect from year to year if approved at least annually by the Fund's Trustees
and those Trustees who are not interested persons of the Fund and have no
direct or indirect financial interest in the operation of the Rule 12b-1 Plan
(or any related agreements) by votes cast in person at a meeting called for
such purpose. The Rule 12b-1 Plan may not be amended to increase materially
the amount to be spent on distribution of Investor Shares of the Fund without
approval of the holders of Investor Shares.
DISTRIBUTION AGREEMENT. If the Proposed Arrangement is consummated,
Berger Distributors, a wholly-owned broker-dealer subsidiary of Berger which is
registered under the Securities Exchange Act of 1934 and a member of the NASD,
will serve as the principal underwriter of the shares of the Fund (and any other
series of the Trust subsequently created by the Trustees) pursuant to the
Distribution Agreement approved by the Board of Trustees on December 12, 1996.
Shareholder approval of the Distribution Agreement is not required.
As such, Berger Distributors may solicit (as the Trust's agent)
unconditional orders for the purchase of Fund shares at the net asset value per
share determined after the Trust accepts the order. Berger Distributors will
not be entitled to any compensation for the performance of its services,
but will be required to pay its own expenses incurred in the discharge of
its duties under the Distribution Agreement. However, the Trust will be
responsible for paying any expenses of the Trust or the Fund, such as
transfer, recordkeeping, dividend disbursing and redemption agent charges,
expenses of preparation, printing, and mailing of confirmations of purchases,
expenses of preparation and printing of prospectuses and statements of
additional information for shareholders, and expenses of registering the
sale of Fund shares. In addition, the Trust must make available to Berger
Distributors, at no cost to the Trust, such number of copies of the Fund's
currently effective prospectus, statement of additional information, and
reports to shareholders as Berger Distributors may reasonably request for
use in connection with the distribution of shares.
The Distribution Agreement provides that it may be terminated without
penalty (a) by the Trust on not less than 60 days' written notice when
authorized by either a vote of shareholders holding a "majority of the
outstanding voting securities" of the Fund or by a vote of a majority of
the Board of Trustees, (b) by Berger Distributors on not less than 60 days'
written notice to the Fund, or (c) automatically in the event of its
assignment. The Distribution Agreement also provides that, unless sooner
terminated, it will continue in effect until April 30, 1998, and thereafter
only so long as such continuance is specifically approved at least annually
by vote (a) of a majority of either the Trustees or the outstanding voting
securities of the Fund and (b) such Trustees who are not parties to the
Distribution Agreement or interested persons of Berger Distributors or
the Trust, voting in person at a meeting.
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BOARD CONSIDERATIONS
At a meeting held on December 12, 1996, the Board of Trustees of the Fund,
including a majority of the Trustees who are not "interested persons" (as
defined in the 1940 Act) of the Fund (a) approved the Berger Advisory
Agreement, to take effect upon the consummation of the Proposed
Arrangement, and (b) directed that the Berger Advisory Agreement be
submitted to Fund's shareholders for approval with the Board's
recommendation for approval.
In considering whether to approve the Berger Advisory Agreement and to
recommend approval of such agreement to the shareholders, the Board of Trustees
of the Fund inquired into a number of matters and considered several material
factors. In particular, the Trustees considered (a) PWM and Berger's belief
that there would be no diminution in the scope and quality of advisory and
other services provided by Berger under the Berger Advisory Agreement
relative to those currently provided by PWM, (b) the similarities between
the Berger Advisory Agreement and the PWM Advisory Agreement and (c)
additional benefits of the Fund becoming a member of the Berger Funds
family.
NO DIMINUTION IN THE SCOPE AND QUALITY OF INVESTMENT ADVISORY SERVICES.
The Trustees expect that the financial strength and stability of Berger
would be likely to (a) enhance its ability to attract and retain desirable
advisory and other management personnel, (b) create opportunities for
augmenting the technological and other support infrastructure available
for portfolio management and administrative services, and (c) provide the
Fund with access to research and other resources of Berger. The Trustees
concluded that the foregoing potential benefits would be in the best
interest of the Fund and its shareholders.
SIMILARITY OF THE ADVISORY AGREEMENTS. Upon a careful review of the
Advisory Agreements, the Trustees concluded that the management and investment
advisory services to be performed by Berger under the Berger Advisory Agreement
combined with the administrative services to be provided under the
Administrative Services Agreement are at least substantially the same as
those currently provided under the existing PWM Advisory Agreement. The
Trustees were also influenced by the facts that (a) there would be a reduction
in the percentage upon which advisory fees are based under the Berger
Advisory Agreement from 1.00% to 0.90% of the Fund's average daily net assets
and (b) PWM, as sub-adviser (see discussion below in "Proposal 3"), would
continue the day-to-day management of the Fund's portfolio and render
substantially the same advisory services with regard to the Fund that
it is currently rendering.
ADDITIONAL BENEFITS OF BECOMING A MEMBER OF THE BERGER FUNDS FAMILY OF
FUNDS. The Trustees considered that the addition of the Fund to the Berger
Funds family will enable the Fund to enjoy economies of scale that could
possibly result in a reduction of, or reduce the necessity for increases in,
transfer agency, custodian and other expenses for the Fund. The Trustees
also concluded that the enhanced distribution capabilities, exchange
privileges, telephone and on-line transaction privileges, investor plans
and programs, and other
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shareholder services and conveniences that the Berger affiliation will provide
to the Fund and its shareholders would be a significant benefit.
After examining relevant materials furnished to them by PWM, Berger, and
legal counsel, meeting with representatives of Berger, and discussing the
foregoing factors, the Trustees determined that the proposed Berger Advisory
Agreement would be in the best interests of the Fund and the shareholders.
Accordingly, the terms of the Berger Advisory Agreement and the execution of
such agreement, subject to Fund shareholder approval of the Berger Advisory
Agreement and the consummation of the Proposed Arrangement, were
unanimously approved by all of the Trustees at their special meeting on
December 12, 1996. If the Proposed Arrangement is consummated, PWM will
cease to serve as the Fund's investment adviser and Berger will become the
investment adviser. If the shareholders of the Fund do not approve the
Berger Advisory Agreement, the Proposed Arrangement will not be consummated,
and the PWM Advisory Agreement will continue in effect.
RECOMMENDATION OF THE TRUSTEES
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS OF THE
FUND VOTE TO APPROVE THE BERGER ADVISORY AGREEMENT.
PROPOSAL 3. APPROVAL OF THE SUB-ADVISORY AGREEMENT
BACKGROUND
Under the November 18 Agreement, Berger and PWM agreed that, upon the
effectiveness of the Berger Advisory Agreement, PWM will serve as the
sub-adviser to the Fund under the terms of the Sub-Advisory Agreement.
Because the Sub-Advisory Agreement is an agreement to provide the Fund
investment advice, it is subject to shareholder approval under applicable
law. It is proposed that the shareholders approve the Sub-Advisory Agreement
attached hereto as APPENDIX C If the Proposed Arrangement is not consummated,
the Sub-Advisory Agreement will not be implemented.
THE SUB-ADVISORY AGREEMENT
To provide sub-advisory services for the Fund, Berger proposes to enter
into a Sub-Advisory Agreement with PWM. Under the terms of the Sub-Advisory
Agreement, PWM would have the discretion to select the portfolio securities for
the Fund, except as limited by the Fund's investment objective, policies and
restrictions.
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DESCRIPTION OF THE PROPOSED SUB-ADVISORY AGREEMENT. The key provisions of the
proposed Sub-Advisory Agreement are set forth below:
SUB-ADVISORY SERVICES. Under the Sub-Advisory Agreement, PWM would (a)
manage the investment operations of the Fund and the composition of its
investment portfolio, subject to the oversight of Berger and the overall control
of the Fund's officers and the Trustees, (b) cause its officers to attend
meetings and furnish such oral or written reports, as the Trust or Berger may
reasonably require, in order to keep the Board of Trustees, Berger and
appropriate officers of the Trust fully informed as to the condition of the
investment portfolio of the Fund, the investment decisions of PWM, and the
investment considerations which gave rise to those decisions, (c) maintain books
and records required to be maintained by PWM under applicable law, and (d)
furnish the Trustees and Berger with such information for regulatory filings and
economic, operational, and investment data and reports as the Trustees or Berger
may reasonably request. PWM will be able to render services to other parties so
long as its services under the Sub-Advisory Agreement are not materially
adversely affected or impaired.
PORTFOLIO TRANSACTIONS. Although PWM's sub-advisory activities will be
subject to general oversight by the Board of Trustees and Berger, selection of
specific securities which the Fund may acquire, hold, dispose of, or loan will
be made by PWM. PWM will direct Berger with respect to the execution of
securities trades.
FEES. Berger will bear responsibility for payment of sub-advisory fees to
PWM. The Fund will not bear any increase in advisory fee rates resulting from
the Sub-Advisory Agreement. Under the Sub-Advisory Agreement, Berger will pay
PWM a fee, computed and accrued daily and paid monthly, at the annual rate of
(a) 0.90% of the first $75 million of average daily net assets of the Fund,
(b) 0.50% of the next $125 million of average daily net assets of the Fund,
and (c) 0.20% on any part of the average daily net assets of the Fund in
excess of $200 million.
In the event that the Sub-Advisory Agreement continues in effect for a
period of more than four years, the fee payable by Berger to PWM after such
four-year period for PWM's services will be at the annual rate of (a) 0.50% of
the first $200 million of average daily net assets of the Fund and (b) 0.20%
of the average daily net assets of the Fund in excess of $200 million.
EXPENSES. PWM will bear all expenses in connection with the performance of
its services under the Sub-Advisory Agreement.
TERM. The Sub-Advisory Agreement will remain in effect until April 30,
1998 and will thereafter continue for successive one-year periods, provided
that such continuation is specifically approved at least annually by the
Board of Trustees, or by the vote of a "majority of the outstanding voting
securities" of the Fund as defined under the 1940 Act and, in either case,
by a majority of the Trustees of Fund who are not interested persons of
Berger, PWM or the Fund by votes cast in person at a meeting called
for such purpose.
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TERMINATION. The Sub-Advisory Agreement may be terminated at any time,
without penalty, by vote of the Board of Trustees, by the vote of "a majority of
the outstanding voting securities" of the Fund, or by PWM, upon not less than 60
days' written notice. The Sub-Advisory Agreement may also be terminated by
Berger or the Fund upon a material breach by PWM of any representation or
warranty set forth in the Sub-Advisory Agreement, if such breach is not
cured within a 20-day period after notice of such breach, or if PWM becomes
unable to discharge its duties and obligations under the Sub-Advisory
Agreement. The Sub-Advisory Agreement will terminate automatically in the
event of the termination of the Berger Advisory Agreement or the "assignment"
(as defined under the 1940 Act) of the Sub-Advisory Agreement.
OTHER CONSIDERATIONS. The following additional matters, although not
addressed in the proposed Sub-Advisory Agreement, should be considered in
connection with the Sub-Advisory Agreement:
EARLY TERMINATION OF SUB-ADVISORY AGREEMENT. Under the November 18
Agreement, Berger and PWM have agreed that, if (during the five-year period
after the effective date of the Sub-Advisory Agreement) the Sub-Advisory
Agreement is terminated or not renewed (in either case other than "for cause
as defined in the November 18 Agreement) and Berger or any "affiliate"
(as defined in the 1940 Act) of Berger continues to perform investment
advisory services for the Fund, Berger will be in breach of the November
18 Agreement and must pay liquidated damages to PWM as follows:
Year of Breach Liquidated Damages
3 $4 million
4 $3 million
5 $2 million
No part of any liquidated damages payment will be borne by the Fund.
CONSULTING AGREEMENT. If, at the earlier to occur of (i) the end of the
five-year period beginning with the date of the Berger Advisory Agreement or
(ii) the termination or non-renewal of the Sub-Advisory Agreement for reasons
other than "cause" and Berger continues to provide investment advisory
services to the Trust (in respect to the Fund), PWM and Berger will enter
into a Consulting Agreement (the "CONSULTING AGREEMENT"). Under the
Consulting Agreement, PWM will provide consulting services to Berger with
respect to the Fund. Such services will include the provision by PWM of
(a) training and assistance to Berger analysts and (b) upon the mutual
consent of PWM and Berger, marketing support appropriate to the marketing
and promotion of the Fund. In exchange for the performance of these
services, Berger will pay PWM a consulting fee (computed and accrued daily
and paid monthly) at an annual rate of (a) 0.10% of the first $100
million of the Fund's average daily net assets, (b) 0.05% of the next $100
million, and (c) 0.02% of any amount in excess of $200 million. No part of this
consulting fee will be borne by the Fund.
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<PAGE>
AGREEMENT BY PWM NOT TO COMPETE WITH THE FUND. Under the November 18
Agreement, PWM agreed that, so long as Berger acts as investment adviser to (and
PWM provides sub-advisory services in connection with) the Fund, PWM may not,
among other things, manage or provide any advisory services to any other
registered investment company that competes, or might compete, with the Fund.
INFORMATION ABOUT PWM. For information about PWM and its executive
officers and directors see the discussion above in "Proposal 2."
BOARD CONSIDERATIONS
At a meeting held on December 12, 1996, the Board of Trustees of the Fund,
including a majority of the Trustees who are not "interested persons" (as
defined in the 1940 Act) of the Fund (a) approved the Sub-Advisory Agreement
between the Fund and PWM, to take effect upon the consummation of the Proposed
Arrangement, and (b) directed that the Sub-Advisory Agreement be submitted
to the Fund's shareholders for approval with the Board's recommendation for
approval.
In considering whether to approve the Sub-Advisory Agreement and to
recommend approval of such agreement to the shareholders, the Board of Trustees
of the Fund inquired into a number of matters and considered several material
factors. In particular, the Trustees considered (a) the fact that PWM has acted
as the Fund's investment adviser since the Fund commenced operations in 1985,
(b) the nature and quality of services provided and to be provided by PWM
under the Sub-Advisory Agreement, and (c) the likelihood that PWM's level of
service would be enhanced under the Proposed Arrangement.
PAST PERFORMANCE AND SERVICES TO BE PROVIDED. Given the Fund's past
performance under the management of PWM and the desire to reduce or eliminate
any impairment that might result from too sudden a change in management, the
Trustees were influenced by the fact that PWM, as sub-adviser, would
continue with its day-to-day management of the portfolio of the Fund and
render substantially the same portfolio management services with regard to
the Fund that it is currently rendering. It was also important to the
Trustees that, although there is no anticipated diminution of advisory
services, there would nonetheless be a reduction in the percentage upon
which advisory fees are based under the Berger Advisory Agreement from 1.00%
to 0.90% of the Funds' average daily net assets and the Fund would not be
responsible for any part of the sub-advisory fee.
QUALITY OF SERVICES. In light of the greater resources of the more
financially sound Berger and Berger's ability to deliver enhanced administrative
services to be provided under the Administrative Services Agreement (or, in any
event, administrative services which are at least substantially the same as
those currently provided under the existing PWM Advisory Agreement), the
Trustees believe PWM will be able to devote more of its time and attention to
managing the
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Fund's portfolio as a sub-adviser under the Sub-Advisory Agreement than it is
able to with full management responsibility under the existing Investment
Advisory Agreement.
After examining relevant materials furnished to them by PWM and legal
counsel, meeting with executive officers of PWM, and discussing the foregoing
factors, the Trustees determined that the proposed Sub-Advisory Agreement would
be in the best interests of the Fund and the shareholders. Accordingly, the
terms of the Sub-Advisory Agreement and the execution of such agreement, subject
to Fund shareholder approval of the Sub-Advisory Agreement and the consummation
of the Proposed Arrangement, were unanimously approved by the Trustees
(including a majority of the Trustees who are not interested persons of the
Fund or PWM) at their special meeting on December 12, 1996. If the
shareholders do not approve the Sub-Advisory Agreement, the Proposed
Arrangement will not be consummated, and the PWM Advisory Agreement for the
Fund will continue in effect.
RECOMMENDATION OF THE TRUSTEES
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE TO
APPROVE THE SUB-ADVISORY AGREEMENT.
PROPOSAL 4. APPROVAL OF AMENDMENTS TO THE TRUST'S DECLARATION OF TRUST TO
PERMIT THE CREATION OF CLASSES OF SHARES
BACKGROUND
The Trust proposes to amend its Declaration of Trust (the "AMENDMENT") to
permit the Trustees to authorize the division of shares of any series of the
Trust into shares of one or more classes of such series. The full text of the
proposed Amendment is attached hereto as APPENDIX D. The following summary is
qualified in its entirety by the provisions of APPENDIX D.
SUMMARY OF AMENDMENT
EXISTING AUTHORITY TO CREATE MULTIPLE SERIES. Under the Declaration of
Trust currently in effect, the Trust is permitted to establish one or more
series of its shares of beneficial interest. Currently, the Fund is the
Trust's only series. Each share of a series represents an equal beneficial
interest with each other share of that series in the assets of the Trust
pertaining to that series.
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PROPOSED AMENDMENT. Under the Amendment, the Board of Trustees would be
authorized, in its discretion, to divide shares of any series into one or more
classes. All shares of a class will be identical with each other and with the
shares of each other class of the same series except for such variations between
classes as may be approved by the Board of Trustees and be permitted by law. If
the Trust offers shares of a new class, among other things, it will amend its
Prospectus and Statement of Additional Information, or issue a new Prospectus
and Statement of Additional Information, setting forth all required
information regarding the new class of shares.
BOARD ACTION. The Amendment was unanimously approved by the Trustees at a
special meeting called for such purpose and held on December 12, 1996. At that
meeting, subject to the approval of the Amendment by the shareholders and the
consummation of the Proposed Arrangement, the Trustees unanimously (a) adopted
a Rule 18f-3 Plan which describes the Fund's anticipated multiple class
structure, including the different characteristics of the initial two classes of
shares-- the Institutional Shares and the Investor Shares, (b) designated the
existing Fund shares as Institutional Shares, and (c) approved the creation of
a class of Investor Shares of the Fund. The creation of a new class of Investor
Shares would not alter the rights and privileges of the existing shareholders of
the Fund (i.e., the holders of Institutional Shares), nor would it affect the
net asset value of an existing shareholder's investment.
RULE 18F-3 PLAN. Upon the consummation of the Proposed Arrangement, the
shares of the Fund will be subject to a Rule 18f-3 Plan adopted by the Board of
Trustees (including a majority of the Trustees who are not "interested persons"
(as defined in the 1940 Act) of the Fund) pursuant to Rule 18f-3 under the 1940
Act. The Rule 18f-3 Plan adopted by the Trustees permits the Trust to offer
multiple classes of shares of the Fund. The plan (a) provides that each class
represents an identical interest in the investment portfolio of the Fund and
will have identical voting, dividend, and liquidation rights as to each other
class, except for variations set forth in the plan, (b) designates two initial
classes of Fund shares as (i) Institutional Shares (which will be offered at
their net asset value, without any initial sales charge, and will not bear
any distribution expenses) and (ii) the Investor Shares (which will also be
offered at their net asset value, without any initial sales charge, but which
bear distribution expenses as provided in the Rule 12b-1 Plan for Investor
Shares), (c) requires that the Fund's gross income, realized and unrealized
capital gains and losses, and expenses (other than class expenses for services
provided to or incurred with respect to a particular class, such as the
Rule 12b-1 fee adopted for the Investor Shares) must be allocated to each
class on the basis of the net asset value of the Fund attributable to shares
of such class relative to the net asset value of the Fund as a whole, and
(d) provides that each class has exclusive voting rights as a class on any
matter submitted to Fund shareholders that relates solely to such class, to
any Rule 12b-1 plan adopted with respect to such class, or to the arrangements
contained in the Rule 18f-3 Plan concerning the allocation of expenses
of such class.
The Rule 18f-3 Plan also requires dividends to be calculated with respect
to each class in the same manner and at the same time and to be in the same
amount, except that any payments under a Rule 12b-1 plan or other service
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arrangements adopted by a particular class and other class expenses will be
borne exclusively by that class. Shareholders of any class of Fund shares may
exchange their shares for shares of any other fund made available by Berger,
with no sales charge, on the basis of relative net asset value (subject to
any investment minimums and other conditions of eligibility of the fund into
which the shareholder wishes to exchange). There will be no conversion feature
associated with the Institutional Shares or the Investor Shares except upon a
change in a shareholder's eligibility to purchase or hold a particular class
of shares.
DESIGNATION OF EXISTING SHARES AS INSTITUTIONAL SHARES. Upon the
consummation of the Proposed Arrangement, the shares held by the Fund's existing
shareholders (on the date of such consummation) will be designated as
Institutional Shares and otherwise will be unchanged. Thereafter, sales of
Institutional Shares, which will not bear a Rule 12b-1 fee, would be limited to
(a) shareholders invested in the Fund on the date of consummation of the
Proposed Arrangement, subject only to the Fund's then applicable minimum
account balance requirement of $500, and (b) investors who maintain a higher
account balance, currently set at $100,000.
CREATION OF CLASS OF INVESTOR SHARES. Upon the consummation of the
Proposed Arrangement, a new class of Investor Shares will be created. The
proposed Investor Shares will be identical to the Institutional Shares, except
that the Investor Shares will bear a 12b-1 fee at the annual rate of 0.25% of
the average daily net assets of the Fund attributable to the Investor Shares
(see the discussion of the Rule 12b-1 Plan above in "Proposal 2"). Investor
Shares will be made available to the general public, subject to the Fund's
regular initial minimum investment requirements.
TAX CONSEQUENCES. Blackwell Sanders Matheny Weary & Lombardi L.C., the
Trust's legal counsel, has advised that, for Federal income tax purposes,
neither the creation of a class of Investor Shares of the Fund nor the
designation of the existing shares as Institutional Shares will (a) cause
the Fund or its shareholders to recognize gain or loss, or (b) affect the
basis or holding period of the existing shares
BOARD CONSIDERATIONS
At a meeting held on December 12, 1996, the Trustees unanimously (a)
approved the Amendment, to take effect upon the consummation of the Proposed
Arrangement, and (b) directed that the Amendment be submitted to Fund's
shareholders for approval with the Board's recommendation for approval.
In considering whether to approve the Amendment and to recommend approval
of the Amendment, the Board of Trustees of the Fund inquired into a number of
matters and considered several material factors. Primarily, the Trustees
considered the flexibility that would be afforded the Trust and the Fund to
offer different types of investors (with different attributes and needs)
different classes of shares in the same Fund with varying levels of services
and fees appropriate to that class.
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ACCESS TO DISTRIBUTION CHANNELS. The Trustees considered that many mutual
funds issue more than one class of shares representing interests in the same
portfolio of securities and that some of these funds use different classes to
offer investors a choice of methods for paying for the costs of selling fund
shares (e.g., a fund may offer one class with a front-end sales charge and a low
Rule 12b-1 fee and another class with a higher rule 12b-1 fee and either a
deferred sales charge or a low front-end (or perhaps no) sales charge). By
having the ability to create different classes, the Trustees believe the Trust
will have access to different channels of distribution and different investor
markets. In other words, the Trust will be able to target different investor
markets, offering each a separate class with an arrangement for shareholder
services or a distribution plan that is tailored to that market. As an example,
financial institutions, such as banks, pension plans, and insurance companies,
that invest on behalf of their customers, may already provide certain services
to their customers (e.g., maintaining client records, processing purchase
orders, and responding to customer inquiries) and may need less service.
Accordingly, the Trust could offer them a separate class with reduced fees
and no sales loads. On the other hand, individual investors using retail
brokers or investing directly in a Trust series may have greater service
needs that the Trust may meet by offering a different class with somewhat
higher fees and a distribution fee.
LARGER ASSET BASE AND ECONOMIES OF SCALE. The Trustees also concluded that
multiple classes may enable a series of the Trust to attract a larger asset
base, which, in turn, may permit it to spread fixed costs over more shares,
and otherwise experience economies of scale, all of which may lower per share
fees and expenses. In addition, the Trustees felt that a larger asset base
would permit greater portfolio liquidity and diversification.
After examining relevant materials furnished to them by PWM and legal
counsel, and discussing the foregoing factors, the Trustees determined that the
proposed Amendment would be in the best interests of the Trust and the
shareholders. Accordingly, the terms of the Amendment to take effect upon the
consummation of the Proposed Arrangement, were unanimously approved by the
Trustees at their special meeting on December 12, 1996.
If the shareholders do not approve the Amendment, the Proposed Arrangement
will not be consummated, and existing shares of the Fund outstanding at that
time will continue without class designation.
RECOMMENDATION OF THE TRUSTEES
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE TO
APPROVE THE AMENDMENT.
VOTES NEEDED TO ADOPT PROPOSALS
Trustee nominees under Proposal 1 will be elected by a "plurality" vote.
Approval of Proposals 2, 3, and 4 requires the affirmative vote of a "majority
of the outstanding voting securities" of the Fund, within the meaning of the
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Investment Company Act of 1940 (as amended, the "1940 ACT"). The term "majority
of the outstanding voting securities" is defined under the 1940 Act to mean (a)
67% or more of the outstanding shares present at a meeting of shareholders of
the Fund, where the holders of more than 50% of the outstanding shares are
present or represented by proxy, or (b) more than 50% of the outstanding
shares of the Fund, whichever is less.
For purposes of determining the presence of a quorum and counting votes on
the matters presented, shares represented by abstentions and broker "non-votes"
(i.e., proxies from brokers or nominees indicating that such persons have not
received instructions from the beneficial owner or other persons entitled to
vote the shares of such beneficial owner or other person on a particular
matter with respect to which the brokers or nominees do not have discretionary
power) will be counted as present, but not as shares voted, at the Meeting.
Under the 1940 Act, the affirmative vote necessary to approve a matter under
consideration may be determined with reference to a percentage of votes
present at a meeting of shareholders, which would have the effect of treating
abstentions and broker "non-votes" as if they were votes against the
proposal.
If at the time any session of the Meeting is called to order a quorum is
not present, in person or by proxy, the persons named as proxies may propose
one or more adjournments of the Meeting to permit further solicitation of
proxies. In determining whether to adjourn the Meeting, the Proxies may
consider the following factors: the nature and purposes of the proposals
that are the subject of the Meeting, the percentage of votes actually cast
and what percentage were negative votes, the nature of any further
solicitation, and whether adjournment is in the best interest of the
shareholders. Any adjournment will require the affirmative vote of a
majority of the shares present in person or by proxy at the session of the
Meeting to be adjourned. A vote may be taken on one or more of
the proposals in this Proxy Statement prior to any such adjournment if
sufficient votes for its approval have been received.
While the Meeting is called to act upon any other business that may
properly come before it, at the date of this Proxy Statement the only
business which the management of the Fund intends to present or knows that
others will present is the business mentioned in the Notice of Special Meeting
of Shareholders. If any other matters lawfully come before the Meeting, and
in all procedural matters at the Meeting, the enclosed Proxy will be voted
in accordance with the best judgment of the persons named as proxies therein,
or their substitutes, present and acting at the Meeting.
GENERAL INFORMATION
INDEPENDENT PUBLIC ACCOUNTANTS. The Board of Trustees of the Fund,
including a majority of Trustees who are interested persons of the Fund, have
selected the firm of Ernst & Young LLP as the Fund's independent accountants to
examine its financial statements for the fiscal year ended December 31, 1997.
Services performed by Ernst & Young LLP during the most recent year included an
audit of the financial statements of the Fund, services related to filings with
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the SEC, and tax return preparation. Ernst & Young LLP has informed the Fund
that representatives of their firm are not expected to be present at the
Meeting, but they have been given the opportunity to make a statement if
they so desire and will be available should any matter arise that requires
their attention.
TRANSFER AGENT. IFTC (indirectly through its sub-agent, DST) is the
current transfer agent of the Fund and performs transfer agency,
recordkeeping, dividend disbursing, and other related services for the Fund.
If the Proposed Arrangement is not consummated, the IFTC agency relationship
may be terminated by the Trust and the Trust may enter into a new transfer
agreement with a transfer agent to be selected by the Trustees.
CUSTODIAN. IFTC currently acts as the custodian for all monies, stocks,
bonds and other property deposited by the Trust (for the Fund). If the Proposed
Arrangement is not consummated, IFTC's service as the Trust's custodian may be
terminated by the Trust and the Trust may enter into a new custody agreement
with a custodian to be selected by the Trustees.
DIVERSIFIED STATUS OF THE FUND. At the time of its initial registration as
an investment company, the Fund was classified as a "non-diversified" fund. A
"diversified" fund in general terms is one that keeps a diversified mix of
issuers in its portfolio within federal legal limits. A non-diversified fund is
not required to meet these limits and therefore has the ability to take larger
positions in a smaller number of issuers than a diversified fund. Consequently,
a non-diversified fund may be subject to greater risk with respect to its
portfolio securities. It has been determined that for at least the last few
years, the Fund's portfolio has in fact been diversified under the applicable
definition. As a result, the Fund has changed its classification to
"diversified" and intends to maintain its portfolio within the federal
diversification limits, which will require that at least 75% of its total assets
be represented by cash, government securities, securities of other investment
companies and other securities limited in respect of any one issuer to not more
than 5% of the Fund's total assets and to not more than 10% of the outstanding
voting securities of that issuer. The Fund may not change its classification
back to non-diversified without shareholder approval.
OTHER INFORMATION
OTHER BUSINESS. The management of the Fund knows of no other business to
be brought before the Meeting. However, if any other matters come before the
Meeting, it is the intention that the Proxies which do not contain specific
restrictions to the contrary will be voted on such matters in accordance with
the judgment of the persons named in the enclosed form of Proxy.
PROPOSALS OF SHAREHOLDERS. The Fund need not hold annual shareholder
meetings, except as required by the 1940 Act, applicable state law, or the
Declaration of Trust. Therefore, it is not presently anticipated that the Fund
will hold regular meetings of shareholders in subsequent years. Accordingly, no
anticipated date of the next meeting can be provided.
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IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WHETHER OR NOT YOU EXPECT TO
ATTEND THE MEETING, PLEASE SIGN YOUR PROXY CARD PROMPTLY AND RETURN IT IN THE
ENCLOSED ENVELOPE TO AVOID UNNECESSARY EXPENSE AND DELAY. NO POSTAGE IS
NECESSARY.
BY ORDER OF THE BOARD OF
TRUSTEES OF THE TRUST,
N. Theodore Hans
Secretary
Chicago, Illinois
January 13, 1997
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APPENDIX A
SUMMARY OF THE
PROPOSED ARRANGEMENT
PROPOSED ARRANGEMENT. In accordance with the terms of the November 18
Agreement, upon approval by the shareholders of Proposals 1, 2, 3, and 4 of this
Proxy Statement, and the satisfactory completion by each of PWM and Berger of a
due diligence review of the books and records of the other party, the actions
discussed above will occur (or, as noted above, occurred on January 1, 1997,
subject to termination):
* THE TRUST WILL BE UNDER THE DIRECTION OF NEW BERGER TRUSTEES AND
OFFICERS. As described in detail under "Proposal 1" above, the number
of Trustees of the Trust will be increased from 5 to 10 and Trustees
and officers of other funds advised by Berger will become the new
Trustees and officers of the Fund.
* BERGER AND THE TRUST WILL ENTER INTO THE BERGER ADVISORY AGREEMENT (WITH
RESPECT TO THE FUND). As described in detail under "Proposal 2" above,
under the Berger Advisory Agreement, Berger will manage the investment
operations of the Fund in exchange for a fee at the annual rate of 0.90%
of the average daily net assets of the Fund--a reduction in the
percentage upon which advisory fees are based under the existing
Investment Advisory Agreement of 0.10% of the Fund's average daily net
assets. Upon execution of the Berger Advisory Agreement, the Trust's
existing Investment Advisory Agreement with PWM will terminate. A copy
of the form of the Berger Advisory Agreement is attached hereto as
APPENDIX B and should be read in conjunction with the discussion under
"Proposal 2" above.
* BERGER AND THE TRUST WILL ENTER INTO AN ADMINISTRATIVE SERVICES
AGREEMENT (WITH RESPECT TO THE FUND). As described in detail under
"Proposal 2" above, Berger and the Trust will enter into the
Administrative Services Agreement under which Berger will serve as
the Fund's administrator and assist in coordinating all aspects of
the Fund's operations in exchange for a monthly fee at the annual
rate of 0.01% of the value of the Fund's average daily net assets.
Shareholder approval of the Trust's execution of the Administrative
Services Agreement is not required.
* THE TRUST AND BERGER DISTRIBUTORS, INC. WILL ENTER INTO A
DISTRIBUTION AGREEMENT. As described in detail under "Proposal 2"
above, the Trust and Berger Distributors, a wholly owned subsidiary
of Berger, will enter into the Distribution Agreement under which
Berger Distributors will act as the distributor of the shares of each
series (and all classes) of the Trust, whether now existing or
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hereafter created, without compensation by the Trust or any series
with respect to Berger Distributors' services under the Distribution
Agreement. Shareholder approval of the Trust's execution of the
Distribution Agreement is not required.
* BERGER AND PWM WILL ENTER INTO A SUB-ADVISORY AGREEMENT (WITH RESPECT TO
THE FUND). As described in detail under "Proposal 3" above, under the
Sub-Advisory Agreement, PWM will continue its day-to-day portfolio
management of the Fund in exchange for a fee paid by Berger at an annual
rate of 0.90% of the first $75 million of the Fund's average daily net
assets, 0.50% of the next $125 million, and 0.20% of any amount in excess
of $200 million. No part of this sub-advisory fee will be borne by the
Fund. A copy of the form of the Sub-Advisory Agreement is attached
hereto as APPENDIX C and should be read in conjunction with the
discussion under "Proposal 3" above.
* BERGER AND PWM WILL BECOME OBLIGATED TO ENTER INTO A CONSULTING
AGREEMENT (WITH RESPECT TO THE FUND) UPON CERTAIN EVENTS THAT OCCUR
IN THE FUTURE. As described in detail under "Proposal 3" above, Berger
and PWM will become obligated to enter into a Consulting Agreement
upon the earlier to occur of (i) the end of the five-year period
beginning with the date of the Berger Advisory Agreement or (ii) the
termination or non-renewal of the Sub-Advisory Agreement for reasons
other than "cause", provided Berger continues to provide investment
advisory services to the Trust (in respect to the Fund). Under the
Consulting Agreement, PWM will provide Berger consulting services
with respect to the Fund, including training Berger analysts and,
upon the mutual consent of Berger and PWM, marketing support in
exchange for a fee from Berger at an annual rate of 0.10% of the
first $100 million of the Fund's average daily net assets, 0.05% of
the next $100 million, and 0.02% of any amount in excess of $200
million. No part of this consulting fee would be borne by the Fund.
The shareholders are not being asked to approve the Consulting
Agreement.
* THE TRUST WILL AMEND THE FUND'S DECLARATION OF TRUST TO PERMIT THE BOARD TO
CREATE CLASSES OF SHARES WITHIN A SERIES. As described in detail under
"Proposal 4" above, the Trust will amend the Declaration of Trust to
authorize the Board of Trustees to create multiple classes of shares of
any series of the Trust, having such variations as the Board of Trustees
shall approve. A copy of the form of amendment to the Declaration of
Trust is attached hereto as APPENDIX D, and should be read in conjunction
with the discussion under "Proposal 4" above.
* Upon approval of this amendment, your existing shares of the Fund will
be designated as "Institutional Shares" and a new class of shares, the
"Investor Shares," will be created.
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* THE FUND'S MULTIPLE CLASS SHARE STRUCTURE WILL BE SET FORTH IN A RULE
18F-3 PLAN. As described in detail under "Proposal 4" above, the
Trustees will adopt a Rule 18f-3 Plan (named after the federal rule
permitting such plans) which, among other things, (a) provides that
the Fund may offer multiple classes of shares, (b) designates the
initial two classes of Fund shares as Institutional Shares and
Investor Shares, (c) requires Fund income, gains, losses, and
expenses to be allocated to each class on the basis of the net
asset value of the Fund attributable to shares of such class
(relative to the net asset value of the Fund as a whole), except
for specified class expenses which may be allocated specially to
the class which incurred the expenses, (d) provides that each class
has exclusive voting rights as a class on any matter submitted to
Fund shareholders that relates solely to (i) such class, (ii) any
Rule 12b-1 plan adopted with respect to such class, or (iii) the
arrangements contained in the Rule 18f-3 Plan, and (e) permits
shareholders of any Fund class to exchange their shares for shares of
any other fund made available by Berger, with no sales charge, on
the basis of relative net asset value. Shareholder approval of the
Rule 18f-3 Plan is not required.
* PURSUANT TO A RULE 12B-1 PLAN, THE TRUST WILL PAY TO BERGER A RULE
12B-1 FEE OUT OF THE ASSETS OF THE FUND REPRESENTED BY THE PROPOSED
INVESTOR SHARES. As described in detail under "Proposal 2" above,
under a Rule 12b-1 Plan (named after the federal rule permitting
such plans) adopted for the Investor Shares, in order to finance
activities primarily intended to result in the sale of Investor
Shares, the Trust will pay Berger a 12b-1 fee of 0.25% of the average
daily net assets of the Fund represented by the Investor Shares.
Such fee shall be imposed only against the assets of the Fund
represented by the Investor Shares. No such Rule 12b-1 fee
will be assessed to or paid by the Institutional Shares. Shareholder
approval of the Board of Trustees' adoption of the Rule 12b-1 Plan is
not required.
* THE TRUST AND INVESTORS FIDUCIARY TRUST COMPANY WILL CONTINUE IN THEIR
EXISTING CUSTODY AGREEMENT (WITH RESPECT TO THE FUND). On January 1,
1997, the Trust and IFTC entered into a Custody Agreement (the "IFTC
CUSTODY AGREEMENT") under which IFTC serves as the custodian for all
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monies, stocks, bonds, and other property now or hereafter deposited by
the Trust (for the Fund) in exchange for a fee based on a percentage of
the Fund's assets (subject to certain minimums). Upon execution of the
IFTC Custody Agreement, the Trust's prior Custody Agreement with PWM
terminated. Shareholder approval of the Trust's execution of the IFTC
Custody Agreement is not required.
* The Trust and IFTC will Continue in Their Existing Agency Agreement
(with respect to the Fund). On January 1, 1997, the Trust and IFTC
entered into an Agency Agreement (the "IFTC AGENCY AGREEMENT") under
which IFTC serves as the transfer and dividend disbursing agent for
the Fund in exchange for a fee based primarily on the number of
accounts maintained on behalf of the Fund. IFTC has engaged DST as
sub-agent to provide transfer agency and dividend disbursing services
for the Fund. The agency fees paid by the Fund to IFTC are in turn
passed through to DST as sub-agent. Upon the execution of the IFTC
Agency Agreement, the Trust's prior Agency Agreement with DST
terminated. Shareholder approval of the Trust's execution of the
IFTC Agency Agreement is not required.
* THE TRUST AND IFTC WILL CONTINUE IN THEIR EXISTING RECORDKEEPING AND
PRICING AGENT AGREEMENT (WITH RESPECT TO THE FUND). On January 1, 1997,
the Trust and IFTC entered into a Recordkeeping and Pricing Agent
Agreement (the "IFTC PRICING AGREEMENT") under which IFTC serves as the
Trust's pricing agent in determining the price of the Fund's portfolio
securities, calculating the daily net asset value of the Fund, and
performing certain recordkeeping and accounting functions required by the
Fund in exchange for a fee based on a percentage of the Fund's assets
(subject to certain minimums). Shareholder approval of the Trust's
execution of the IFTC Pricing Agreement is not required.
* NEW NAME FOR THE FUND. In order to correlate the Fund's name more
closely with its investment emphasis and with its portfolio manager's
investment style, the Fund will be renamed the "Berger Small Cap Value
Fund" if the Proposed Arrangement is consummated. In order to indicate
its connection with the Berger Funds family, the Trust will be renamed
"Berger Omni Investment Trust." Shareholder approval of the new names is
not required.
If the Proposed Arrangement is not consummated, (a) the Berger Advisory
Agreement, the Sub-Advisory Agreement, the Distribution Agreement, and other
agreements and plans would not be entered into or implemented, (b) the election
of new Trustees and the appointment of new officers would not be effected, and
(c) the IFTC Custody Agreement, the IFTC Agency Agreement, and the IFTC Pricing
Agreement entered into on January 1, 1997, may be terminated by the Trust. In
such event, the Trust's current Trustees and officers would continue in office,
the Fund's existing investment advisory agreement would continue in effect, and
the Trust may enter into a new custody agreement and agency agreement with PWM
and/or other service providers to be selected by the Trustees.
Even if the Proposed Arrangement is consummated, if (a) at any time during
the five years after the effective date of the Berger Advisory Agreement, the
Fund's assets do not reach $100 million and (b) the Berger Advisory Agreement
remains in effect at the end of such five-year period, Berger has agreed to
use its reasonable best efforts at such time, consistent with its fiduciary
duties, together with PWM, to cause the Trust to enter into a new investment
advisory agreement with PWM (with respect to the Fund) whereupon the Berger
Advisory Agreement would terminate.
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APPENDIX B
FORM OF INVESTMENT ADVISORY AGREEMENT
BETWEEN THE TRUST AND BERGER
<PAGE>
INVESTMENT ADVISORY AGREEMENT
BERGER OMNI INVESTMENT TRUST
THIS INVESTMENT ADVISORY AGREEMENT (the "Agreement") is made this ____ day
of _________, 199__, between BERGER ASSOCIATES, INC., a Delaware corporation
("Berger Associates"), and BERGER OMNI INVESTMENT TRUST, a Massachusetts
business trust (the "Trust").
W I T N E S S E T H:
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
currently consisting of one portfolio series (the "Fund") having its own
investment policies, and has registered its shares for public offering under the
Securities Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Trust is authorized to create separate series of shares, each
with its own separate investment portfolio, one of such series created by the
Trust being the Fund; and
WHEREAS, the Trust and Berger Associates deem it mutually advantageous that
Berger Associates should assist the Trustees and officers of the Trust in the
management of the securities portfolio of the Fund.
NOW, THEREFORE, the parties agree as follows:
1. APPOINTMENT. The Trust hereby appoints Berger Associates as
investment adviser and manager with respect to the Fund for the period and on
the terms set forth in this Agreement. Berger Associates hereby accepts such
appointment and agrees to render the services herein set forth, for the
compensation herein provided.
2. INVESTMENT ADVISORY FUNCTIONS. Subject to the approval of the
Trustees of the Trust and, if required, the shareholders of the Fund, Berger
Associates is authorized to engage one or more sub-advisers in connection with
Berger Associates' duties and responsibilities under this Agreement, which sub-
advisers may be affiliates of Berger Associates. In its capacity as investment
adviser to the Fund, Berger Associates shall have the following duties and
responsibilities:
(a) To manage the investment operations of the Fund and the
composition of its investment portfolio, and to determine without prior
consultation with the Trust, what securities and other assets of the Fund will
be acquired, held, disposed of or loaned, in conformity with the investment
objective, policies and restrictions and the other statements concerning the
Fund in the Trust's declaration of trust, as amended from time to time (the
"Declaration of Trust"), bylaws, and registration statements under the 1940 Act
and the 1933 Act, the Investment Advisers Act of 1940, as amended (the
"Advisers Act"), the rules thereunder, and all other applicable federal and
state laws and regulations, and the provisions of the Internal Revenue Code of
1986, as amended, applicable to the Fund as a regulated investment company;
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(b) To cause its officers to attend meetings and furnish oral or
written reports, as the Trust may reasonably require, in order to keep the
Trustees and appropriate officers of the Trust fully informed as to the
condition of the investment portfolio of the Fund, the investment
recommendations of Berger Associates, and the investment considerations which
have given rise to those recommendations;
(c) To supervise the purchase and sale of securities as directed by
the appropriate officers of the Trust or any sub-adviser engaged by Berger
Associates pursuant to the authority granted in this Section 2;
(d) To maintain all books and records required to be maintained by
Berger Associates pursuant to the 1940 Act and the rules and regulations
promulgated thereunder, as the same may be amended from time to time, with
respect to transactions on behalf of the Fund, and shall furnish the Trustees
with such periodic and special reports as the Trustees reasonably may request.
Berger Associates agrees that all records which it maintains for the Fund or the
Trust are the property of the Trust, agrees to permit the reasonable inspection
thereof by the Trust or its designees and agrees to preserve for the periods
prescribed under the 1940 Act any records which it maintains for the Trust and
which are required to be maintained under the 1940 Act, and further agrees to
surrender promptly to the Trust or its designees any records which it maintains
for the Trust upon request by the Trust; and
(e) At such times as shall be reasonably requested by the Trustees,
to provide the Trustees with economic, operational and investment data and
reports, including without limitation all information and materials reasonably
requested by or requested to be delivered to the Trustees of the Trust pursuant
to Section 15(c) of the 1940 Act, and make available to the Trustees any
economic, statistical and investment services normally available to similar
investment company clients of Berger Associates.
3. FURTHER OBLIGATIONS. In all matters relating to the performance of
this Agreement, Berger Associates shall act in conformity with the Trust's
Declaration of Trust, bylaws and currently effective registration statements
under the 1940 ct and the 1933 Act and any amendments or supplements thereto
(the "Registration Statements") and with the written policies, procedures and
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guidelines of the Fund, and written instructions and directions of the
Trustees of the Trust and shall comply with the requirements of the 1940 Act,
the Advisers Act, the rules thereunder, and all other applicable federal and
state laws and regulations. The Trust agrees to provide Berger Associates
with copies of the Trust's Declaration of Trust, bylaws, Registration
Statements, written policies, procedures and guidelines, and written
instructions and directions of the Trustees, and any amendments or supplements
to any of them at, or, if practicable, before the time such materials become
effective.
4. OBLIGATIONS OF TRUST. The Trust shall have the following obligations
under this Agreement:
(a) To keep Berger Associates continuously and fully informed as to
the composition of the investment portfolio of the Fund and the nature of all of
the Fund's assets and liabilities from time to time;
(b) To furnish Berger Associates with a certified copy of any
financial statement or report prepared for the Fund by certified or independent
public accountants and with copies of any financial statements or reports made
to the Fund's shareholders or to any governmental body or securities exchange;
(c) To furnish Berger Associates with any further materials or
information which Berger Associates may reasonably request to enable it to
perform its function under this Agreement; and
(d) To compensate Berger Associates for its services in accordance
with the provisions of paragraph 5 hereof.
5. COMPENSATION. The Trust shall pay to Berger Associates for its
services under this Agreement a fee, payable in United States dollars, at an
annual rate of 0.90% of the average daily net asset value of the Fund. This
fee shall be computed and accrued daily and payable monthly on the last day of
each month during which or part of which this Agreement is in effect. For the
month during which this Agreement becomes effective and the month during which
it terminates, however, there shall be an appropriate proration of the fee
payable for such month based on the number of calendar days of such month
during which this Agreement is effective.
6. EXPENSES.
(a) EXPENSES PAID BY THE TRUST. The Trust assumes and shall pay all
expenses incidental to its operations and business not specifically assumed or
agreed to be paid by Berger Associates hereunder or otherwise, including, but
not limited to, any compensation, fees or reimbursements which the Trust pays
to its Trustees who are not interested persons of Berger Associates;
compensation of the Fund's custodian, transfer agent, registrar and dividend
disbursing agent and other service providers; legal, accounting, audit and
printing expenses; administrative, clerical, recordkeeping and bookkeeping
expenses; brokerage commissions and all other expenses in connection with
execution of portfolio transactions (including any appropriate commissions paid
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to Berger Associates or its affiliates for effecting exchange listed,
over-the-counter or other securities transactions); interest; all federal,
state and local taxes (including stamp, excise, income and franchise taxes);
costs of stock certificates and expenses of delivering such certificates to the
purchasers thereof; expenses of local representation in Massachusetts; expenses
of shareholders' meetings and of preparing, printing and distributing proxy
statements, notices, and reports to shareholders; expenses of preparing and
filing reports and tax returns with federal and state regulatory authorities;
all expenses incurred in complying with all federal and state laws and the
laws of any foreign country applicable to the issue, offer or sale of shares
of the Fund, including, but not limited to, all costs involved in preparing,
printing and mailing prospectuses and statements of additional information to
shareholders of the Fund; and all fees, dues and other expenses incurred by
the Trust in connection with the membership of the Trust in any trade
association or other investment company organization. To the extent
that Berger Associates shall perform any of the above described administrative
and clerical functions, including transfer agency, registry, dividend
disbursing, recordkeeping, bookkeeping, accounting and blue sky monitoring
and registration functions, and the preparation of reports and returns, the
Trust shall pay to Berger Associates compensation for, or reimburse Berger
Associates for its expenses incurred in connection with, such services as
Berger Associates and the Trust shall agree from time to time, any other
provision of this Agreement notwithstanding.
(b) EXPENSES PAID BY BERGER ASSOCIATES. Berger Associates shall
pay all its own costs and expenses incurred in rendering the services required
under this Agreement. In addition to such costs and expenses, Berger Associates
shall incur and pay the following expenses relating to the Fund's operations:
(i) Reasonable compensation, fees and related expenses of the
Trust's officers and Trustees, except for such Trustees who are not interested
persons of Berger Associates;
(ii) Rental of offices of the Trust; and
(iii) Fees of any sub-adviser engaged by Berger pursuant to
the authority granted in Section 2 hereof.
7. BROKERAGE COMMISSIONS. For purposes of this Agreement, brokerage
commissions paid by the Fund upon the purchase or sale of its portfolio
securities shall be considered a cost of securities of the Fund and shall be
paid by the Fund. Absent instructions from the Trust to the contrary, Berger
Associates is authorized and directed to place Fund portfolio transactions only
with brokers and dealers who render satisfactory service in the execution of
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orders at the most favorable prices and at reasonable commission rates,
provided, however, that Berger Associates may pay a broker an amount of
commission for effecting a securities transaction in excess of the amount of
commission another broker would have charged for effecting that transaction
if Berger Associates determines in good faith that such amount of commission
was reasonable in relation to the value of the brokerage and research services
provided by such broker viewed in terms of either that particular transaction
or the overall responsibilities of Berger Associates. Berger Associates is
also authorized to consider sales of Fund shares as a factor in selecting
broker-dealers to execute Fund portfolio transactions. In placing portfolio
business with such broker-dealers, Berger Associates shall seek the best
execution of each transaction. Subject to the terms of this Agreement and the
applicable requirements and provisions of the law, including the 1940 Act and
the Securities Exchange Act of 1934, as amended, and in the event that Berger
Associates or an affiliate is registered as a broker-dealer, Berger Associates
may select a broker with which it or any of its affiliates or the Fund is
affiliated. Berger Associates or such affiliated broker may effect or execute
Fund portfolio transactions, whether on a securities exchange or in the
over-the-counter market, and receive separate compensation from the Fund
therefor. Notwithstanding the foregoing, the Trust shall retain the right to
direct the placement of all portfolio transactions, and the Trustees of the
Trust may establish policies or guidelines to be followed by Berger Associates
in placing portfolio transactions for the Trust pursuant to the foregoing
provisions. Berger Associates shall report on the placement of portfolio
transactions in the prior fiscal quarter at each quarterly meeting of such
Trustees. To the extent consistent with applicable law, purchase or sell
orders for the Fund may be aggregated with simultaneous purchase or sell orders
for other clients of Berger Associates. Whenever Berger Associates
simultaneously places orders to purchase or sell the same security on behalf of
the Fund and one or more other clients of Berger Associates, such orders will be
allocated as to price and amount among all such clients in a manner reasonably
believed by Berger Associates to be fair and equitable to each client.
The Trust recognizes that in some cases, this procedure may adversely affect
the results obtained for the Fund.
8. TERMINATION. This Agreement may be terminated at any time, without
penalty, by the Trustees of the Trust, or by the shareholders of the Fund acting
by vote of at least a majority of its outstanding voting securities, provided in
either case that sixty (60) days' advance written notice of termination be given
to Berger Associates at its principal place of business. This Agreement may be
terminated by Berger Associates at any time, without penalty, by giving sixty
(60) days' advance written notice of termination to the Trust, addressed to its
principal place of business. The Trust agrees that, consistent with the terms of
the Trust's Declaration of Trust, the Trust shall cease to use the name "Berger"
in connection with the Fund as soon as reasonably practicable following any
termination of this Agreement if Berger Associates does not continue to provide
investment advice to the Fund after such termination.
9. ASSIGNMENT. This Agreement shall terminate automatically in the event
of any assignment of this Agreement.
10. TERM. This Agreement shall continue in effect until April 30, 1998,
unless sooner terminated in accordance with its terms, and shall continue in
effect from year to year thereafter only so long as such continuance is
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specifically approved at least annually by the vote of a majority of the
Trustees of the Trust who are not parties hereto or interested persons of
any such party, cast in person at a meeting called for the purpose of voting
on the approval of the terms of such renewal, and by either the Trustees of
the Trust or the affirmative vote of a majority of the outstanding voting
securities of the Fund.
11. AMENDMENTS. This Agreement may be amended by the parties only if such
amendment is specifically approved (i) by a majority of the Trustees, including
a majority of the Trustees who are not interested persons of the Fund or Berger
Associates and, (ii) if required by applicable law, by the affirmative vote of
a majority of the outstanding voting securities of the Fund.
12. ALLOCATION OF EXPENSES. The Trustees shall determine the basis for
making an appropriate allocation of the Trust's expenses (other than those
directly attributable to the Fund) between the Fund and any other series of the
Trust and between the Fund and other investment companies managed by Berger
Associates.
13. LIMITATION ON PERSONAL LIABILITY. NOTICE IS HEREBY GIVEN that the
Trust is a business trust organized under the laws of the Commonwealth of
Massachusetts pursuant to a Declaration of Trust filed in the office of the
Secretary of State of the Commonwealth of Massachusetts. All parties to this
Agreement acknowledge and agree that this Agreement was made by and on behalf of
the Trust by the person executing below as an officer of the Trust and not
individually, that the Trust is a series trust and all debts, liabilities,
obligations and expenses incurred, contracted for or otherwise existing with
respect to a particular series shall be enforceable against the assets held with
respect to such series only, and not against the assets of the Trust generally
or against the assets held with respect to any other series and further that no
trustee, officer or holder of shares of beneficial interest of the Trust shall
be personally liable for any of the foregoing.
14. LIMITATION OF LIABILITY OF BERGER ASSOCIATES. Berger Associates shall
not be liable for any error of judgment or mistake of law or for any loss
arising out of any investment or for any act or omission taken with respect
to the Fund, except for willful misfeasance, bad faith or gross negligence in
the performance of its duties, or by reason of reckless disregard of its
obligations and duties hereunder and except to the extent otherwise provided
by law. As used in this Section 14, "Berger Associates" shall include any
affiliate of Berger Associates performing services for the Trust contemplated
hereunder and directors, officers and employees of Berger Associates and
such affiliates.
15. ACTIVITIES OF BERGER ASSOCIATES. The services of Berger Associates to
the Trust hereunder are not to be deemed to be exclusive, and Berger Associates
and its affiliates are free to render services to other parties, so long as its
services under this Agreement are not materially adversely affected or otherwise
impaired thereby. Nothing in this Agreement shall limit or restrict the right
of any director, officer or employee of Berger Associates to engage in any other
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business or to devote his or her time and attention in part to the management or
other aspects of any other business, whether of a similar nature or a dissimilar
nature. It is understood that trustees, officers and shareholders of the Trust
are or may become interested in Berger Associates as directors, officers and
shareholders of Berger Associates, that directors, officers, employees and
shareholders of Berger Associates are or may become similarly interested in the
Trust, and that Berger Associates may become interested in the Trust as a
shareholder or otherwise.
16. CERTAIN DEFINITIONS. The terms "vote of a majority of the outstanding
voting securities", "assignment", "approved at least annually" and "interested
persons" when used herein, shall have the respective meanings specified in the
1940 Act, as now in effect or hereafter amended, and the rules and regulations
thereunder, subject to such orders, exemptions and interpretations as may be
issued by the Securities and Exchange Commission under said Act and as may be
then in effect. Where the effect of a requirement of the federal securities
laws reflected in any provision of this Agreement is made less restrictive by
a rule, regulation, order, interpretation or other authority of the Securities
and Exchange Commission, whether of special or general application, such
provision shall be deemed to incorporate the effect of such rule, regulation,
order, interpretation or other authority.
17. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Colorado (without giving effect to the conflicts of
laws principles thereof) and the 1940 Act. To the extent that the applicable
laws of the State of Colorado conflict with the applicable provisions of the
1940 Act, the latter shall control.
18. MISCELLANEOUS. The headings in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions thereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers
to execute this Investment Advisory Agreement as of the date and year first
above written.
BERGER ASSOCIATES, INC.
By:_________________________
Gerard M. Lavin
President
BERGER OMNI INVESTMENT TRUST
By:_________________________
Name:
Title:
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APPENDIX C
FORM OF PROPOSED
SUB-ADVISORY AGREEMENT
BETWEEN BERGER AND PWM
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SUB-ADVISORY AGREEMENT
This SUB-ADVISORY AGREEMENT (the "Agreement") is entered into effective as
of the _____ day of _______________, 1997, by and between BERGER ASSOCIATES,
INC., a Delaware corporation ("Berger") and PERKINS, WOLF, MCDONNELL & COMPANY,
a Delaware corporation ("PWM").
WHEREAS, Berger has entered into an Investment Advisory Agreement (the
"Advisory Agreement") with Berger Omni Investment Trust, a Massachusetts
business trust (the "Trust") and an open-end, management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), with respect to the Berger Small Cap Value Fund, a series of the Trust
(the "Fund") pursuant to which Berger has agreed to provide investment advisory
services with respect to the Fund; and
WHEREAS, PWM is engaged in the business of rendering investment advisory
services and is registered as an investment adviser under the Investment
Advisers Act of 1940, as amended (the "Advisers Act"); and
WHEREAS, Berger desires to retain PWM to furnish investment advisory
services with respect to the Fund, and PWM is willing to furnish such services;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. DUTIES OF PWM. Berger hereby engages the services of PWM as subadviser
in furtherance of the Advisory Agreement. PWM agrees to perform the following
duties, subject to the oversight of Berger and to the overall control of the
officers and the Board of Trustees (the "Trustees") of the Trust:
(a) PWM shall manage the investment operations of the Fund and the
composition of its investment portfolio, shall determine without prior
consultation with the Trust or Berger, what securities and other assets of the
Fund will be acquired, held, disposed of or loaned, and shall direct Berger with
respect to the execution of trades in connection with such determinations, in
conformity with the investment objectives, policies and restrictions and the
other statements concerning the Fund in the Trust's declaration of trust, as
amended from time to time (the "Declaration of Trust"), bylaws and registration
statements under the 1940 Act and the Securities Act of 1933, as amended (the
"1933 Act"), the Advisers Act, the rules thereunder and all other applicable
federal and state laws and regulations, and the provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), applicable to the Fund as a
regulated investment company;
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(b) PWM shall cause its officers to attend meetings and furnish oral
or written reports, as the Trust or Berger may reasonably require, in order to
keep Berger, the Trustees and appropriate officers of the Trust fully informed
as to the condition of the investment portfolio of the Fund, the investment
decisions of PWM, and the investment considerations which have given rise to
those decisions;
(c) PWM shall maintain all books and records required to be
maintained by PWM pursuant to the 1940 Act, the Advisers Act, and the rules
and regulations promulgated thereunder, as the same may be amended from time
to time, with respect to transactions on behalf of the Fund, and shall furnish
the Trustees and Berger with such periodic and special reports as the Trustees
or Berger reasonably may request. PWM hereby agrees that all records which it
maintains for the Fund or the Trust are the property of the Trust, agrees to
permit the reasonable inspection thereof by the Trust or its designees and
agrees to preserve for the periods prescribed under the 1940 Act and the
Advisers Act any records which it maintains for the Trust and which are
required to be maintained under the 1940 Act and the Advisers Act, and
further agrees to surrender promptly to the Trust or its designees any
records which it maintains for the Trust upon request by the Trust; and
(d) At such times as shall be reasonably requested by the Trustees or
Berger, PWM shall provide the Trustees and Berger with economic, operational and
investment data and reports, including without limitation all information and
materials reasonably requested by or requested to be delivered to the Trustees
of the Trust pursuant to Section 15(c) of the 1940 Act, and shall make available
to the Trustees and Berger any economic, statistical and investment services
normally available to similar investment company clients of PWM.
(e) PWM will provide to Berger for regulatory filings and other
appropriate uses materially accurate and complete information relating to PWM as
may reasonably be requested by Berger from time to time and, notwithstanding
anything herein to the contrary, PWM shall be liable to Berger for all damages,
costs and expenses, including without limitation reasonable attorneys' fees
(hereinafter referred to collectively as "Damages"), incurred by Berger as a
result of any material inaccuracies or omissions in such information provided by
PWM to Berger; provided, however, that PWM shall not be liable to the extent
that any Damages are based upon inaccuracies or omissions made in reliance upon
information furnished to PWM by Berger.
2. FURTHER OBLIGATIONS. In all matters relating to the performance of
this Agreement, PWM shall act in conformity with the Trust's Declaration of
Trust, bylaws and currently effective registration statements under the 1940
Act and the 1933 Act and any amendments or supplements thereto (the
"Registration Statements") and with the written policies, procedures and
guidelines of the Fund, and written instructions and directions of the
Trustees and Berger and shall comply with the requirements of the 1940 Act,
the Advisers Act, the rules thereunder, and all other applicable federal and
state laws and regulations. Berger agrees to provide to PWM copies of the
Trust's Declaration of Trust, bylaws, Registration Statement, written policies,
procedures and guidelines and written instructions and directions of the
Trustees and Berger, and any
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amendments or supplements to any of them at, or, if practicable, before the time
such materials become effective.
3. OBLIGATIONS OF BERGER. Berger shall have the following obligations
under this Agreement:
(a) To keep PWM continuously and fully informed (or cause the
custodian of the Fund's assets to keep PWM so informed) as to the composition of
the investment portfolio of the Fund and the nature of all of the Fund's assets
and liabilities from time to time;
(b) To furnish PWM with a certified copy of any financial statement
or report prepared for the Fund by certified or independent public accountants
and with copies of any financial statements or reports made to the Fund's
shareholders or to any governmental body or securities exchange;
(c) To furnish PWM with any further materials or information which
PWM may reasonably request to enable it to perform its function under this
Agreement; and
(d) To compensate PWM for its services in accordance with the
provisions of Section 4 hereof.
4. COMPENSATION.
(a) Except as set forth in Section 4(b) hereof, Berger shall pay to
PWM for its services under this Agreement a fee, payable in United States
dollars, at an annual rate of 0.90% of the first $75,000,000 of average daily
net assets of the Fund, 0.50% of the next $125,000,000 of average daily net
assets of the Fund and 0.20% on any part of the average daily net assets of
the Fund in excess of $200,000,000. Such fee shall be computed and accrued
daily and payable monthly as of the last day of each month during which or
part of which this Agreement is in effect. For the month during which this
Agreement becomes effective and the month during which it terminates, however,
there shall be an appropriate proration of the fee payable for such month
based on the number of calendar days of such month during which this Agreement
is effective.
(b) Notwithstanding any provision in Section 4(a) hereof to the
contrary, in the event this Agreement continues in effect, pursuant to Section
8, for more than four years from the date first set forth above, the fee payable
by Berger to PWM after such four-year period for PWM's services under this
Agreement shall be at an annual rate of 0.50% of the first $200,000,000 of
average daily net assets of the Fund and 0.20% of the average daily net assets
of the Fund in excess of $200,000,000.
5. EXPENSES AND EXCLUDED EXPENSES. PWM shall pay all its own costs and
expenses incurred in rendering the services required under this Agreement.
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6. REPRESENTATIONS OF PWM. PWM hereby represents, warrants and covenants
to Berger as follows:
(a) PWM: (i) is registered as an investment adviser under the
Advisers Act and will continue to be so registered for so long as this Agreement
remains in effect; (ii) is not prohibited by the 1940 Act or the Advisers Act
from performing the services contemplated by this Agreement; (iii) has met, and
will continue to meet for so long as this Agreement remains in effect, any other
applicable federal or state requirements, or the applicable requirements of any
regulatory or industry self-regulatory organization necessary to be met in order
to perform the services contemplated by this Agreement; (iv) has the legal and
corporate authority to enter into and perform the services contemplated by this
Agreement; and (v) will immediately notify Berger of the occurrence of any event
that would disqualify PWM from serving as an investment adviser of an investment
company pursuant to Section 9(a) of the 1940 Act or otherwise, and of the
institution of any administrative, regulatory or judicial proceeding against PWM
that could have a material adverse effect upon PWM's ability to fulfill its
obligations under this Agreement.
(b) PWM has adopted a written code of ethics complying with the
requirements of Rule 17j-1 under the 1940 Act and will provide Berger with a
copy of such code of ethics, together with evidence of its adoption. Within 45
days after the end of the last calendar quarter of each year that this
Agreement is in effect, the president or a vice president of PWM shall certify
to Berger that PWM has complied with the requirements of Rule 17j-1 during the
previous year and that there has been no violation of PWM's code of ethics or,
if such a violation has occurred, that appropriate action was taken in response
to such violation. Upon the written request of Berger, PWM shall permit Berger,
its employees or its agents to examine the reports required to be made to PWM
by Rule 17j-1(c)(1) and all other records relevant to PWM's code of ethics.
(c) PWM has provided Berger with a copy of its Form ADV as most
recently filed with the U.S. Securities and Exchange Commission ("SEC") and
will, promptly after filing any amendment to its Form ADV with the SEC,
furnish a copy of such amendment to Berger.
(d) PWM will notify Berger of any change in the identity or control
of its shareholders owning a 10% or greater interest in PWM, or any change that
would constitute a change in control of PWM under the 1940 Act, prior to any
such change if PWM is aware, or should be aware, of any such change, but in
any event as soon as any such change becomes known to PWM.
7. REPRESENTATIONS OF BERGER. Berger hereby represents, warrants and
covenants to PWM as follows:
(a) Berger: (i) is registered as an investment adviser under the
Advisers Act and will continue to be so registered for so long as this Agreement
remains in effect; (ii) is not prohibited by the 1940 Act or the Advisers Act
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from fulfilling its obligations under this Agreement; (iii) has met, and will
continue to meet for so long as this Agreement remains in effect, any other
applicable federal or state requirements, or the applicable requirements of any
regulatory or industry self-regulatory organization necessary to be met in order
to fulfill its obligations under this Agreement; (iv) has the legal and
corporate authority to enter into and perform this Agreement; and (v) will
immediately notify PWM of the occurrence of any event that would disqualify
Berger from serving as an investment adviser of an investment company pursuant
to Section 9(a) of the 1940 Act or otherwise, and of the institution of any
administrative, regulatory or judicial proceeding against Berger that could
have a material adverse effect upon Berger's ability to fulfill its obligations
under this Agreement.
(b) Berger has adopted a written code of ethics complying with the
requirements of Rule 17j-1 under the 1940 Act and will provide PWM with a copy
of such code of ethics, together with evidence of its adoption.
(c) Berger has provided PWM with a copy of its Form ADV as most
recently filed with the U.S. Securities and Exchange Commission ("SEC") and
will, promptly after filing any amendment to its Form ADV with the SEC,
furnish a copy of such amendment to PWM.
(d) Berger will notify PWM of any change in the identity or control
of its shareholders owning a 10% or greater interest in Berger, or any change
that would constitute a change in control of Berger under the 1940 Act, prior to
any such change if Berger is aware, or should be aware, of any such change, but
in any event as soon as any such change becomes known to Berger.
8. TERM. This Agreement shall become effective as of the date first set
forth above and shall continue in effect until April 30, 1998, unless sooner
terminated in accordance with its terms, and shall continue in effect from year
to year thereafter for a period of three years or longer only so long as such
continuance is specifically approved at least annually by the vote of a majority
of the Trustees of the Trust who are not parties hereto or interested persons of
the Trust, Berger or PWM, cast in person at a meeting called for the purpose of
voting on the approval of the terms of such renewal, and by either the Trustees
of the Trust or the affirmative vote of a majority of the outstanding voting
securities of the Fund. Berger shall use its best efforts consistent with the
fiduciary obligations of all parties to obtain such annual approvals of this
Agreement.
9. TERMINATION. This Agreement may be terminated at any time, without
penalty, by the Trustees or by the shareholders of the Fund acting by vote of at
least a majority of its outstanding voting securities, provided in any such case
that 60 days' advance written notice of termination be given to PWM at its
principal place of business. This Agreement may also be terminated by Berger or
the Trust: (i) upon a material breach by PWM of any of the representations and
warranties set forth in Section 6 of this Agreement, if such breach shall not
have been cured within a 20-day period after notice of such breach; or (ii) if
PWM becomes unable to discharge its duties and obligations under this
Agreement. This Agreement may be terminated by PWM at any time, without
penalty: (i) by giving 60 days' advance written notice of termination to
Berger and to the Trust,
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or (ii) upon a material breach by Berger of any of the representations and
warranties set forth in Section 7 of this Agreement, if such breach shall not
have been cured within a 20-day period after notice of such breach. In
addition, this Agreement shall terminate, without penalty, upon the termination
of the Advisory Agreement.
10. ASSIGNMENT. This Agreement shall automatically terminate in the event
of its assignment.
11. AMENDMENTS. This Agreement may be amended by the parties only in a
written instrument signed by the parties to this Agreement and only if such
amendment is specifically approved (i) by a majority of the Trustees, including
a majority of the Trustees who are not interested persons of the Trust or
Berger, PWM or their affiliates, and (ii) if required by applicable law, by
the affirmative vote of a majority of the outstanding voting securities of the
Fund.
12. LIMITATION ON PERSONAL LIABILITY. NOTICE IS HEREBY GIVEN that the
Trust is a business trust organized under the laws of the Commonwealth of
Massachusetts pursuant to a Declaration of Trust filed in the Office of the
Secretary of State of the Commonwealth of Massachusetts. The parties hereto
acknowledge and agree that the Trust is a series trust and all debts,
liabilities, obligations and expenses incurred, contracted for or otherwise
existing with respect to a particular series shall be enforceable against the
assets held with respect to such series only, and not against the assets of the
Trust generally or against the assets held with respect to any other series and
further that no Trustee, officer or holder of shares of beneficial interest of
the Trust shall be personally liable for any of the foregoing.
13. LIMITATION OF LIABILITY OF PWM. Berger will not seek to hold PWM, and
PWM shall not be, liable for any error of judgment or mistake of law or for any
loss arising out of any investment or for any act or omission taken with respect
to the Fund, except for willful misfeasance, bad faith or gross negligence in
the performance of its duties, or by reason of reckless disregard of its
obligations and duties hereunder and except to the extent otherwise provided
by law. As used in this section, "PWM" shall include any affiliate of PWM
performing services for the Fund contemplated hereunder and directors, officers
and employees of PWM and such affiliates.
14. ACTIVITIES OF PWM. The services of PWM hereunder are not to be deemed
to be exclusive, and PWM is free to render services to other parties, so long as
its services under this Agreement are not materially adversely affected or
otherwise impaired thereby. Nothing in this Agreement shall limit or restrict
the right of any director, officer or employee of PWM to engage in any other
business or to devote his or her time and attention in part to the management or
other aspects of any other business, whether of a similar or a dissimilar
nature. It is understood that Trustees, officers and shareholders of the Trust
are or may become interested in PWM as directors, officers and shareholders of
PWM, that directors, officers, employees and shareholders of PWM are or may
become similarly interested in the Trust, and that PWM may become interested
in the Trust as a shareholder or otherwise.
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15. THIRD PARTY BENEFICIARY. The parties expressly acknowledge and agree
that the Trust is a third party beneficiary of this Agreement and that the Trust
shall have the full right to sue upon and enforce this Agreement in accordance
with its terms as if it were a signatory hereto.
16. NOTICES. Any notice or other communication required to be given
pursuant to this Agreement shall be deemed duly given if delivered personally or
by overnight delivery service or mailed by certified or registered mail, return
receipt requested and postage prepaid, or sent by facsimile addressed to the
parties at their respective addresses set forth below, or at such other address
as shall be designated by any party in a written notice to the other party.
(a) To Berger at:
Berger Associates, Inc.
210 University Boulevard
Denver, Colorado 80206
Attention: President
Phone: (303) 329-0200
Fax: (303) 394-4397
with a copy to:
Diane M. Bono, Esq.
Sonnenschein Nath & Rosenthal
4520 Main Street, 11th Floor
Kansas City, Missouri 64111
Phone: (816) 932-4400
Fax: (816) 531-7545
(b) To PWM at:
Perkins, Wolf, McDonnell & Company
53 W. Jackson Boulevard
Suite 818
Chicago, Illinois 60604
Attention: President
Phone: (312) 922-0355
Fax: (312) 922-0418
with a copy to:
Leslie J. Parrette, Jr., Esq.
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Blackwell Sanders Matheny Weary & Lombardi L.C.
2300 Main Street, Suite 1100
Kansas City, Missouri 64108
Phone: (816) 274-6800
Fax: (816) 274-6914
(c) To the Trust at:
Berger Omni Investment Trust
210 University Boulevard
Suite 900
Denver, Colorado 80206
with a copy to:
Lester R. Woodward, Esq.
Davis, Graham & Stubbs LLP
370 Seventeenth Street, Suite 4700
Denver, Colorado 80202
Phone: (303) 892-9400
Fax: (303) 892-7400
17. CERTAIN DEFINITIONS. As used in this Agreement, the terms "vote of a
majority of the outstanding voting securities," "assignment," "approved at least
annually," and "interested persons" shall have the respective meanings specified
in the 1940 Act, as now in effect or hereafter amended, and the rules and
regulations thereunder, subject to such orders, exemptions and interpretations
as may be issued by the SEC under the 1940 Act and as may be then in effect.
Where the effect of a requirement of the federal securities laws reflected in
any provision of this Agreement is made less restrictive by a rule,
regulation, order, interpretation or other authority of the SEC, whether of
special or general application, such provision shall be deemed to incorporate
the effect of such rule, regulation, order, interpretation or other authority.
18. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Colorado (without giving effect to the conflicts of
laws principles thereof) and the 1940 Act. To the extent that the applicable
laws of the State of Colorado conflict with the applicable provisions of the
1940 Act, the latter shall control.
19. MISCELLANEOUS. The headings in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions thereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors.
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20. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an originally, but all of which
taken together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers designated below as of the day and year first
above written.
BERGER ASSOCIATES, INC.
By:________________________________
Gerard M. Lavin
President
PERKINS, WOLF, MCDONNELL & COMPANY
By:________________________________
Gregory E. Wolf
President
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APPENDIX D
FORM OF THE PROPOSED
AMENDMENT TO THE TRUST'S
RESTATED AND AMENDED DECLARATION OF TRUST
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AMENDED AND RESTATED
DECLARATION OF TRUST
OF
BERGER OMNI INVESTMENT TRUST
(formerly known as THE OMNI INVESTMENT FUND)
Original Date: April 19, 1990
As Amended and Restated through: February ______, 1997
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TABLE OF CONTENTS
ARTICLE I
NAME AND DEFINITIONS D-2
NAME AND PRINCIPAL PLACE OF BUSINESS D-2
DEFINITIONS D-2
ARTICLE II
PURPOSE OF TRUST D-3
ARTICLE III
BENEFICIAL INTEREST D-3
SHARES OF BENEFICIAL INTEREST D-3
ESTABLISHMENT OF SERIES AND CLASSES D-4
OWNERSHIP OF SHARES D-4
INVESTMENT IN THE TRUST D-4
ASSETS AND LIABILITIES OF SERIES AND CLASSES D-5
NO PREEMPTIVE RIGHTS D-5
STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY D-5
ARTICLE IV
THE TRUSTEES D-6
MANAGEMENT OF THE TRUST D-6
ELECTION: INITIAL TRUSTEES D-6
TERM OF OFFICE OF TRUSTEES D-6
RESIGNATION AND APPOINTMENT OF TRUSTEES D-7
TEMPORARY ABSENCE OF TRUSTEE D-7
NUMBER OF TRUSTEES D-7
EFFECT OF DEATH, RESIGNATION, ETC. OF A TRUSTEE D-8
OWNERSHIP OF ASSETS OF THE TRUST D-8
ARTICLE V
POWERS OF THE TRUSTEES D-8
POWERS D-8
TRUSTEES AND OFFICERS AS SHAREHOLDERS D-11
ACTION BY THE TRUSTEES D-11
CHAIRMAN OF THE TRUSTEES D-11
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ARTICLE VI
EXPENSES OF THE TRUST D-11
TRUSTEE REIMBURSEMENT D-11
ARTICLE VII
INVESTMENT ADVISER, PRINCIPAL UNDERWRITER AND TRANSFER AGENT D-12
INVESTMENT ADVISER D-12
PRINCIPAL UNDERWRITER D-13
TRANSFER AGENT D-13
PARTIES TO CONTRACT D-13
PROVISIONS AND AMENDMENTS D-13
ARTICLE VIII
SHAREHOLDERS' VOTING POWERS AND MEETINGS D-14
VOTING POWERS D-14
MEETINGS D-14
QUORUM AND REQUIRED VOTE D-15
ARTICLE IX
CUSTODIAN D-15
APPOINTMENT AND DUTIES D-15
CENTRAL CERTIFICATE SYSTEM D-16
ARTICLE X
DISTRIBUTIONS AND REDEMPTIONS D-16
DISTRIBUTIONS D-16
REDEMPTION OF SHARES D-17
DETERMINATION OF NET ASSET VALUE AND VALUATION OF PORTFOLIO ASSETS D-17
SHAREHOLDERS D-21
ARTICLE XI
COMPENSATION AND LIMITATION OF LIABILITY OF TRUSTEES COMPENSATION D-20
LIMITATION OF LIABILITY D-20
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ARTICLE XII
INDEMNIFICATION D-21
COVERED PERSONS D-21
SHAREHOLDERS D-23
ARTICLE XIII
MISCELLANEOUS D-21
TRUST NOT A PARTNERSHIP; TRUSTEES, SHAREHOLDERS, ETC.
NOT PERSONALLY LIABLE; NOTICE D-21
TRUSTEE'S GOOD FAITH ACTION, EXPERT ADVICE D-22
ESTABLISHMENT OF RECORD DATES D-22
TERMINATION OF TRUST D-23
FILING OF COPIES, REFERENCES, HEADINGS, GENDER, ETC. D-23
APPLICABLE LAW D-24
AMENDMENTS D-24
FISCAL YEAR D-24
SEVERABILITY D-25
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AMENDED AND RESTATED
DECLARATION OF TRUST
DATE: February ___, 1997
AMENDED AND RESTATED DECLARATION OF TRUST (the "DECLARATION OF TRUST"),
made February, 1997, by Gerald M. Lavin, as President.
RECITALS
1. This Trust was organized as a Massachusetts business trust on April
19, 1990 when its original Declaration of Trust was filed with the Secretary
of State of the Commonwealth of Massachusetts.
2. On September 30, 1994, the original Declaration of Trust was amended
and restated by the Trustees in accordance with Article XIII, Section 7
thereof for the purpose of reducing the par value per share of the Trust from
$0.10 to $0.01 as a result of a 10 for 1 subdivision of the Trust's shares
outstanding at that time.
3. On December 12, 1996, the Amended and Restated Declaration of Trust
(adopted on September 30, 1994), was amended and restated by the Trustees in
accordance with Article XIII, Section 7 thereof for the purpose of supplying
omissions, curing defects and correcting or supplementing any defective or
inconsistent provisions.
4. Pursuant to Article XIII, Section 7 of the Amended and Restated
Declaration of Trust (adopted on December 12, 1996), this Amended and Restated
Declaration of Trust (adopted on the date hereof) restates and integrates and
further amends the Amended and Restated Declaration of Trust (adopted on
December 12, 1996).
5. The text of the Amended and Restated Declaration of Trust, as
heretofore amended or supplemented, is hereby restated and further amended to
read in its entirety as follows:
NOW, THEREFORE, the Trustees declare that all money and property
contributed to the trust fund hereunder shall be held and managed in trust
under this Declaration of Trust as herein set forth below.
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ARTICLE I
NAME AND DEFINITIONS
NAME AND PRINCIPAL PLACE OF BUSINESS
Section 1. This Trust shall be known as the "Berger Omni Investment
Trust", and the Trustees shall conduct the business of the Trust under that
name or any other name as they may from time to time determine. The principal
place of business of the Trust shall be Suite 818, 53 West Jackson Boulevard,
Chicago, Illinois, or such other place as the Trustees may from time to time
determine.
DEFINITIONS
Section 2. Wherever used herein, unless otherwise required by the
context or specifically provided:
(a) The terms "AFFILIATED PERSON", "ASSIGNMENT", "COMMISSION",
"INTERESTED PERSON", "MAJORITY SHAREHOLDER VOTE" (the 67 percent or 50 percent
requirement of the third sentence of Section 2(a)(42) of the 1940 Act,
whichever may be applicable) and "PRINCIPAL UNDERWRITER" shall have the
meanings given them in the 1940 Act;
(b) "BYLAWS" means the Bylaws of the Trust, as amended from time to
time;
(c) "CLASS" means any class of Shares of a Series established pursuant
to Article III;
(d) "NET ASSET VALUE" means the net asset value of each Series of the
Trust determined in the manner provided in Article X, Section 3;
(e) "SERIES" means a series of Shares established pursuant to Article
III;
(f) "SHAREHOLDER" means a record owner of Shares;
(g) "SHARES" means the equal proportionate transferable units of
interest into which the beneficial interest of each Series or Class shall be
divided from time to time, and includes fractions of shares as well as whole
shares consistent with the requirements of Federal and/or other securities
laws;
(h) The "TRUST" refers to Berger Omni Investment Trust and reference to
the Trust, when applicable to one or more Series of the Trust, shall refer to
any such Series;
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(i) The "TRUSTEES" refer to the individual Trustees in their capacity
as trustees hereunder of the Trust and their successor or successors for the
time being in office as such trustee or trustees; and
(j) The "1940 ACT" refers to the Investment Company Act of 1940 and the
rules and regulations promulgated thereunder by the Securities and Exchange
Commission, all as amended from time to time.
ARTICLE II
PURPOSE OF TRUST
Section 1. The purpose of this Trust is to provide investors a
continuous source of managed investment in securities and debt instruments
selected by the Trustees or by an investment adviser under their direction to
carry out the investment policies and achieve the investment objectives of the
Trust or any Series thereof.
ARTICLE III
BENEFICIAL INTEREST
SHARES OF BENEFICIAL INTEREST
Section 1. The beneficial interest in the Trust shall be divided into
such transferable Shares which may be of one or more separate and distinct
Series or Classes established by the Trustees from time to time. The number
of Shares of each Series or Class is unlimited and each Share shall have $0.01
par value or be without par value, as determined by resolution of the Trustees
and, when duly issued and paid for in accordance with the terms and conditions
of the Trust, shall be fully paid and nonassessable. The Trustees shall have
full power and authority, in their sole discretion and without obtaining any
prior authorization or vote of the Shareholders of the Trust: (a) to issue
original or additional Shares at such times and for the amount and type of
consideration and on such terms and conditions as they deem appropriate; (b)
to establish and to change in any manner Shares of any Series or Classes with
such preferences, terms of conversion, exchange privileges, voting powers,
rights and privileges as the Trustees may determine (but without a vote of a
majority of the outstanding Shares of the Series or Class, as the case may be,
voting as a class, the Trustees may not change outstanding Shares in a manner
materially adverse to the Shareholders of such Shares); (c) to divide or
combine the Shares of any Series or Classes into a greater or lesser number;
(d) to classify or reclassify any issued Shares into one or more Series or
Classes of Shares; (e) to abolish any one or more Series or Classes of Shares;
(f) to issue Shares to acquire other assets (including assets subject to, and
in connection with, the assumption of liabilities) and businesses; (g) to
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issue fractional Shares and Shares held in the treasury; and (h) to take such
other action consistent with the foregoing with respect to the Shares as the
Trustees may deem desirable.
ESTABLISHMENT OF SERIES AND CLASSES
Section 2. The Trust shall consist of one or more Series. The
establishment of any Series shall be effective upon the adoption of a
resolution of the Trustees setting forth such establishment and designation.
The Trustees may divide the Shares of any Series into Classes. In such case,
each Class of a Series shall represent interests in the assets of that Series.
The Trustees by resolution may designate the relative rights and preferences
of the Shares of each Series or Class. The Trust shall maintain separate and
distinct records for each Series and hold and account for the assets thereof
separately from the other assets of the Trust or of any other Series. A
Series may issue any number of Shares and need not issue Shares. Each Share
of a Series shall represent an equal beneficial interest in the net assets of
such Series. Each holder of Shares of a Series or Class shall be entitled to
receive his pro rata share of all distributions made with respect to such
Series or Class. Upon redemption of his Shares, such Shareholder shall be
paid solely out of the funds and property of such Series. The Trustees may
change the name of any Series or Class. At any time that there are no Shares
outstanding of any particular Series or Class previously established and
designated, the Trustees may by resolution abolish that Series or Class and
rescind the establishment and designation thereof.
OWNERSHIP OF SHARES
Section 3. The ownership of Shares shall be recorded in the books of the
Trust or a transfer or similar agent. The Trustees may make such rules as
they consider appropriate for the transfer of Shares and similar matters. The
record books of the Trust shall be conclusive as to who are the record holders
of Shares and as to the number of Shares held from time to time by each such
Shareholder.
INVESTMENT IN THE TRUST
Section 4. The Trustees shall accept investments in the Trust from such
persons and on such terms as they may from time to time authorize. Such
investments may be in the form of cash or securities in which the appropriate
Series is authorized to invest, valued in the same manner as are the Trust's
portfolio securities as provided in Article X, Section 3. Upon the initial
contribution of capital, the number of Shares to represent the initial
contribution may in the Trustees' discretion be considered as outstanding and
the amount received by the Trustees on account of the contribution shall be
treated as an asset of the Trust. Subsequent investments in the Trust shall
be credited to each Shareholder's account in the form of full or fractional
Shares at the Net Asset Value per Share next determined after the investment
is properly received in good form; provided, however, that the Trustees may,
in their sole discretion, impose a sales charge upon investments in the Trust.
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ASSETS AND LIABILITIES OF SERIES AND CLASSES
Section 5. All consideration received by the Trust for the issue or sale
of Shares of a particular Series, together with all assets 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 be
referred to as "assets belonging to" that Series. In addition any assets,
income, earnings, profits, and proceeds thereof, funds, or payments which are
not readily identifiable as belonging to any particular Series shall be
allocated by the Trustees between and among one or more of the Series in such
manner as they, in their sole discretion, deem fair and equitable. Each such
allocation shall be conclusive and binding upon the Shareholders of all Series
for all purposes and shall be referred to as assets belonging to that Series.
The assets belonging to each particular Series shall be charged with the
liabilities of that Series and all expenses, costs, charges and reserves
attributable to that Series, except that liabilities and expenses allocated
solely to a particular Class shall be borne by that Class. Any general
liabilities, expenses, costs, charges or reserves of the Trust which are not
readily identifiable as belonging to any particular Series or Class shall be
allocated and charged by the Trustees between or among any one or more of the
Series or Classes or, if appropriate, between or among any one or more of the
Series or Classes and any other investment company advised by the same
investment adviser, in such manner as the Trustees in their sole discretion
deem fair and equitable. In each case, each such allocation shall be
conclusive and binding upon the Shareholders of all Series or Classes for all
purposes. Any creditor of any Series may look only to the assets of that
Series to satisfy such creditor's debt.
NO PREEMPTIVE RIGHTS
Section 6. Shareholders shall have no preemptive or other right to
subscribe to any additional Shares or other securities issued by the Trust or
the Trustees.
STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY
Section 7. Shares shall be deemed to be personal property giving only
the rights provided in this instrument. Every Shareholder by virtue of having
become a Shareholder shall be held to have expressly assented and agreed to
the terms hereof and to have become a party hereto. The death of a
Shareholder during the continuance of the Trust shall not operate to terminate
the Trust or entitle the representative of any deceased Shareholder to an
accounting or to take any action in court or elsewhere against the Trust or
the Trustees. Ownership of Shares shall not entitle the Shareholder to any
title in or to the whole or any part of the Trust property nor any right to
call for a partition or division of the same or for an accounting. The
Trustees shall have no power to bind any Shareholder personally or to call
upon any Shareholder for the payment of any sum of money or assessment
whatsoever other than such as the Shareholder may at any time personally agree
to pay by way of subscription for any Shares or otherwise. Every note, bond,
contract or other undertaking issued by or on behalf of the Trust or the
Trustees relating to the Trust shall include a recitation limiting the
obligation represented thereby to the Trust and its assets (but the omission
of such a recitation shall not operate to bind any Shareholder).
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ARTICLE IV
THE TRUSTEES
MANAGEMENT OF THE TRUST
Section 1. The business and affairs of the Trust shall be managed by the
Trustees, and they shall have all powers necessary and desirable to fully
carry out that responsibility.
ELECTION: INITIAL TRUSTEES
Section 2. The initial Trustees shall be Robert H. Perkins, Gregory E.
Wolf, Burt W. Engelberg, John R. Hall and Keith L. Cook and such other
individuals as the Board of Trustees shall appoint pursuant to Section 4 of
Article IV. The Trustees shall be elected by the Shareholders of the Trust at
the first meeting of Shareholders immediately prior to the date that the Trust
acquires assets in addition to the original contribution of the settlor, and
the term of office of the initial Trustees in office before such election
shall terminate at the time of such election.
TERM OF OFFICE OF TRUSTEES
Section 3. The Trustees shall hold office during the lifetime of this
Trust, and until its termination as hereinafter provided; except (a) that any
Trustee may resign his trust by written instrument signed by him and delivered
to the other Trustees, which shall take effect upon such delivery or upon such
later date as is specified therein; (b) that any Trustee may be removed at any
time by written instrument, signed by at least three-fourths of the number of
Trustees prior to such removal (but not including any Trustee who is the
subject of the removal), specifying the date when such removal shall become
effective; (c) that any Trustee who requests in writing to be retired or who
has become incapacitated by illness or injury may be retired by written
instrument signed by a majority of the other Trustees, specifying the date of
his retirement; and (d) a Trustee may be removed at any special meeting of the
Trust by a vote of two-thirds of the outstanding Shares or such lesser vote as
may be mandated by the 1940 Act. As used herein, "incapacitated" and
"incapacity" shall mean the inability of a Trustee, for a period of 90 days,
whether or not consecutive, during a 180 day period, to perform his duties or
obligations to the Trust, as determined by at least three-fourths of the
number of the remaining Trustees.
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RESIGNATION AND APPOINTMENT OF TRUSTEES
Section 4. In case of the declination, death, resignation, retirement or
removal of any of the Trustees, or in case a vacancy shall, by reason of an
increase in number, or for any other reason, exist, the remaining Trustees
shall fill such vacancy by appointing such other person as they in their
discretion shall see fit consistent with the limitations under the 1940 Act.
Such appointment shall be evidenced by a written instrument signed by a
majority of the Trustees in office or by a recording in the records of the
Trust, whereupon the appointment shall take effect. Within three (3) months
of such appointment the Trustees shall cause notice of such appointment to be
mailed to each Shareholder at his address as recorded on the books of the
Trust. An appointment of a Trustee may be made by the Trustees then in office
and notice thereof mailed to Shareholders as aforesaid in anticipation of a
vacancy to occur by reason of retirement, resignation or increase in number of
Trustees effective at a later date, provided that said appointment shall
become effective only at or after the effective date of said retirement,
resignation or increase in number of Trustees. As soon as any Trustee so
appointed shall have accepted this trust, the trust estate shall vest in the
new Trustee or Trustees, together with the continuing Trustees, without any
further act or conveyance, and he shall be deemed a Trustee hereunder. The
power of appointment is subject to the applicable provisions of the 1940 Act.
TEMPORARY ABSENCE OF TRUSTEE
Section 5. Any Trustee may, by power of attorney, delegate his powers
hereunder for a period not exceeding six (6) months at any one time to any
other Trustee or Trustees, provided that in no case shall less than two (2)
Trustees personally exercise the other powers hereunder except as herein
otherwise expressly provided.
NUMBER OF TRUSTEES
Section 6. The number of Trustees serving hereunder shall initially be
five (5), but may hereafter be increased or decreased at any time by the
Trustees provided that there shall be at least three (3).
Whenever a vacancy in the Board of Trustees shall occur, until such
vacancy is filled, or while any Trustee is absent from The Commonwealth of
Massachusetts or, if not a domiciliary of Massachusetts, is absent from his
state of domicile, or is incapacitated by reason of disease or otherwise, the
other Trustees shall have all the power hereunder, and the certificate of the
other Trustees of such vacancy, absence or incapacity, shall be conclusive,
provided, however, that no vacancy shall remain unfilled for a period longer
than nine (9) calendar months.
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EFFECT OF DEATH, RESIGNATION, ETC. OF A TRUSTEE
Section 7. The death, declination, resignation, retirement, removal,
incapacity, or disability of the Trustees, or any one of them, shall not
operate to annul the Trust or to revoke any existing agency created pursuant
to the terms of this Declaration of Trust.
OWNERSHIP OF ASSETS OF THE TRUST
Section 8. The assets of the Trust shall be held separate and apart from
any assets now or hereafter held in any capacity other than as Trustee
hereunder by the Trustees or any successor Trustees. All of the assets of the
Trust shall at all times be considered as vested in the Trustees. No
Shareholder shall be deemed to have a severable ownership in any individual
asset of the Trust or any right of partition or possession thereof, but each
Shareholder shall have a proportionate undivided beneficial interest in the
Trust.
ARTICLE V
POWERS OF THE TRUSTEES
POWERS
Section 1. The Trustees in all instances shall act as principals, and
are and shall be free from the control of the Shareholders. The Trustees
shall have full power and authority to do any and all acts and to make and
execute any and all contracts and instruments that they may consider necessary
or appropriate in connection with the management of the Trust. The Trustees
shall not in any way be bound or limited by present or future laws or customs
in regard to trust investments, but shall have full authority and power to
make any and all investments which they, in their uncontrolled discretion,
shall deem proper to accomplish the purpose of this Trust. Subject to any
applicable limitation in the Declaration of Trust or the Bylaws, the Trustees'
power and authority shall include the power and authority:
(a) To invest and reinvest cash and other property, and to hold cash or
other property uninvested, without in any event being bound or limited by any
present or future law or custom in regard to investments by Trustees, and to
sell, exchange, lend, pledge, mortgage, hypothecate, write options on and
lease any or all of the assets of the Trust.
(b) To adopt Bylaws not inconsistent with this Declaration of Trust
providing for the conduct of the business of the Trust and to amend and repeal
them to the extent that right is not therein reserved to the Shareholders.
(c) To elect and remove such officers and appoint and terminate such
agents, independent contractors or delegates as they consider appropriate.
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(d) To employ one or more banks, trust companies or other business
firms as custodian of any assets of the Trust subject to any conditions set
forth in the law, this Declaration of Trust or in the Bylaws, if any.
(e) To retain a transfer agent and Shareholder servicing agent, or
both.
(f) To provide for the issuance and distribution of Shares of the Trust
or Series or Class thereof, either through a Principal Underwriter in the
manner hereinafter provided for or by the Trust itself (including issuances
and distributions of Shares pursuant to any written plan which meets the
requirements of Section 12 of the 1940 Act and Rule 12b-1 thereunder, and any
written agreements relating to the implementation of such plan), or both, or
to temporarily or permanently discontinue such issuance or distribution.
(g) To set record dates in the manner hereinafter provided for.
(h) To delegate such authority as they consider desirable to any
officers of the Trust and to any agent, subagent, custodian, underwriter,
independent contractor, delegatee, manager or investment adviser.
(i) To sell or exchange any or all of the assets of the Trust, subject
to the provisions of Article XIII, Section 4(b) hereof.
(j) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and deliver
powers of attorney to such person or persons as the Trustees shall deem
proper, granting to such person or persons such power and discretion with
relation to securities or property as the Trustees shall deem proper.
(k) To exercise powers and rights of subscription or otherwise which in
any manner arise out of ownership of securities.
(l) To hold any security or property (i) in a form not indicating any
trust, whether in bearer, bookkeeping entry, unregistered or other negotiable
form, or (ii) either in its own name or in the name of a custodian or a
nominee or nominees, subject in either case to proper safeguards according to
the usual practice of investment companies.
(m) To establish separate and distinct Series with separately defined
investment objectives and policies and distinct investment purposes, and with
separate Shares representing beneficial interests in such Series, and to
establish separate Classes, all in accordance with the provisions of
Article III.
(n) To allocate assets, liabilities and expenses of the Trust to a
particular Series or Class or to apportion the same between or among two or
more Series or Classes, provided that any liabilities or expenses incurred by
a particular Series or Class shall be payable solely out of the assets
belonging to that Series or Class as provided for in Article III.
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(o) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation, partnership, or concern, any
security of which is held in the Trust; to consent to any contract, lease,
mortgage, purchase, or sale of property by such corporation, partnership, or
concern, and to pay calls or subscriptions with respect to any security held
in the Trust.
(p) To compromise, arbitrate, or otherwise adjust claims in favor of or
against the Trust or any matter in controversy including, but not limited to,
claims for taxes.
(q) To pay dividends and other distributions of income and of capital
gains to Shareholders in the manner hereinafter provided for.
(r) To borrow money or securities to the extent permitted by the 1940
Act. The Trustees shall not pledge, mortgage or hypothecate the assets of the
Trust except that, to secure borrowings, the Trustees may pledge securities.
(s) To establish, from time to time, a minimum or maximum total,
investment for Shareholders, and to require the redemption in whole or in
part, of the Shares of any Shareholders (i) whose investment is less than or
greater than such minimum or maximum, as the case may be, or (ii) by lot or
other means the Trustees deem equitable, sufficient to maintain or bring the
direct or indirect ownership of Shares into conformity with the requirements
for qualification of any Series as a regulated investment company under the
Internal Revenue Code of 1986, as amended (the "CODE") and to refuse to
transfer or issue any Shares to any person whose acquisition of Shares in
question would, in the Trustee's judgment, result in such disqualification,
upon giving notice to such Shareholder.
(t) To adopt such form or forms of Share certificates as the Trustees
may, from time to time, deem appropriate.
(u) Such other powers and authority as are commonly exercised by or
permitted to investment companies.
The clauses above shall be construed as objects and powers, and the
enumeration of specific powers shall not limit in any way the general powers
of the Trustees. Any action by one or more of the Trustees in their capacity
as such hereunder shall be deemed an action on behalf of the Trust or the
applicable Series, and not an action in an individual capacity. No one
dealing with the Trustees shall be under any obligation to make any inquiry
concerning the authority of the Trustees, or to see to the application of any
payments made or property transferred to the Trustees or upon their order. In
construing this Declaration of Trust, the presumption shall be in favor of a
grant of power to the Trustees.
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TRUSTEES AND OFFICERS AS SHAREHOLDERS
Section 2. Any Trustee, officer or agent of the Trust may acquire, own
and dispose of Shares to the same extent as if he were not a Trustee, officer
or agent; and the Trustees may issue and sell or cause to be issued and sold
Shares to and buy such Shares from any such person or any firm or company in
which he is interested, subject only to the general limitations herein
contained as to the sale and purchase of such Shares, and all subject to any
restrictions which may be contained in the Bylaws.
ACTION BY THE TRUSTEES
Section 3. The Trustees shall act by majority vote at a meeting duly
called at which a quorum is present or by unanimous written consent without a
meeting. Trustees may participate in any meeting in person or by telephone
conference provided that all participants are able to hear one another,
subject to any requirement under the 1940 Act that a particular action be
taken at a meeting of the Trustees in person. At any meeting of the Trustees,
a majority of the Trustees shall constitute a quorum. Meetings of the
Trustees may be called orally or in writing by the Chairman of the Trustees or
at his order or discretion or by any two other Trustees. Notice of the time,
date and place of all meetings of the Trustees shall be given by the party
calling the meeting to each Trustee in the manner provided in the Bylaws.
Notice need not be given to any Trustee who attends the meeting without
objecting to the lack of notice or who executes a written waiver of notice
with respect to the meeting. Subject to the requirements of the 1940 Act, the
Trustees by majority vote may delegate to any one of their number their
authority to approve particular matters or take particular actions on behalf
of the Trust. Any written consent or waiver may be provided and delivered to
the Trust by facsimile or other similar electronic mechanism.
CHAIRMAN OF THE TRUSTEES
Section 4. The Trustees may appoint one of their number to be a non-
officer Chairman of the Board of Trustees. The Chairman shall preside at all
meetings of the Trustees, and he may be without limitation the chief
executive, financial and accounting officer of the Trust.
ARTICLE VI
EXPENSES OF THE TRUST
TRUSTEE REIMBURSEMENT
Section 1. Subject to the provisions of Article III, Section 5, the
Trustees shall be reimbursed from the Trust estate or the assets belonging to
the appropriate Series for their expenses and disbursements, including,
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without limitation, interest expenses, taxes, fees and commissions of every
kind, expenses of pricing Trust portfolio securities, expenses of issue,
repurchase and redemption of shares including expenses attributable to a
program of periodic repurchases or redemptions, under Federal and State laws
and regulations, charges of custodians, transfer agents, and registrars,
expenses of preparing and setting up in type Prospectuses and Statements of
Additional Information, expenses of printing and distributing Prospectuses
sent to existing Shareholders, auditing and legal expenses, reports to
Shareholders, expenses of meetings of Shareholders and proxy solicitations
therefor, insurance expenses, association membership dues and for such non-
securing items as may arise, including litigation to which the Trust is a
party, and for all losses and liabilities by them incurred in administering
the Trust, and for the payment of such expenses, disbursements, losses and
liabilities. The Trustees shall have a lien on the assets belonging to the
appropriate Series prior to any rights or interests of the Shareholders
thereto. This section shall not preclude the Trust from directly paying any
of the aforementioned fees and expenses.
ARTICLE VII
INVESTMENT ADVISER, PRINCIPAL UNDERWRITER
AND TRANSFER AGENT
INVESTMENT ADVISER
Section 1. Subject to the requirements of the 1940 Act, the Trustees may
in their discretion from time to time enter into one or more investment
advisory or management contract(s) with respect to the Trust or any Series
thereof whereby the other party(ies) to such contract(s) shall undertake to
furnish the Trustees such management, investment advisory, statistical and
research facilities and service and such other facilities and services, if
any, and all upon such terms and conditions, as the Trustees may in their
discretion determine. Notwithstanding any provisions of this Declaration of
Trust, the Trustees may authorize the investment adviser(s) (subject to such
general or specific instructions as the Trustees may from time to time adopt)
to effect purchases, sales or exchanges pursuant to recommendations of the
investment adviser (and all without further action by the Trustees). Any such
purchases, sales and exchanges shall be deemed to have been authorized by all
of the Trustees.
The Trustees may, subject to applicable requirements of the 1940 Act,
including those relating to Shareholder approval, authorize the investment
adviser to employ one or more subadvisers from time to time to perform such of
the acts and services of the investment adviser, and upon such terms and
conditions, as may be agreed upon between the investment adviser and
subadviser. Any reference in this Declaration of Trust to the investment
adviser shall be deemed to include such sub-advisers, unless the context
otherwise requires.
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PRINCIPAL UNDERWRITER
Section 2. The Trustees may in their discretion from time to time enter
into contract(s) providing for the sale of the Shares, whereby the Trust may
either agree to sell the Shares to the other party to the contract or appoint
such other party its sales agent for such Shares. In either case, the
contract shall be on such terms and conditions as may be prescribed in the
Bylaws, if any, and such further terms and conditions as the Trustees may in
their discretion determine not inconsistent with the provisions of this
Article VII, or of the Bylaws, if any; and such contract may also provide for
the repurchase or sale of Shares by such other party as principal or as agent
of the Trust.
TRANSFER AGENT
Section 3. The Trustees may in their discretion from time to time enter
into one or more contracts whereby the other party shall undertake to furnish
the Trustees with transfer agency and/or Shareholder services. The contracts
shall be on such terms and conditions as the Trustees may in their discretion
determine not inconsistent with the provisions of this Declaration of Trust or
of the Bylaws, if any. Such services may be provided by one or more entities.
PARTIES TO CONTRACT
Section 4. The Trust may enter into any contract with any corporation,
firm, partnership, trust or association, although one or more of the Trustees
or officers of the Trust may be an officer, director, trustee, shareholder,
partner or member of such other party to the contract, and no such contract
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 said contract or accountable for profit realized
directly or indirectly therefrom, provided that the contract when entered into
was reasonable and fair and not inconsistent with the provisions of this
Article VII or the Bylaws, if any.
PROVISIONS AND AMENDMENTS
Section 5. Any contract entered into pursuant to Sections 1 and 2 of
this Article VII and any amendments thereof shall be consistent with and
subject to the requirements of the 1940 Act (including any amendments thereof
or other applicable Act of Congress hereafter enacted) with respect to its
continuance in effect, its termination, and the method of authorization and
approval of such contract or renewal thereof.
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ARTICLE VIII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
VOTING POWERS
Section 1. The Shareholders shall have power to vote (i) for the
election of Trustees as provided in Article IV, Section 2, (ii) for the
removal of Trustees as provided in Article IV, Section 3(d), (iii) with
respect to any investment advisory or management contract as provided in
Article VII, Section 1, (iv) with respect to the amendment of this Declaration
of Trust as provided in Article XIII, Section 7, (v) to the same extent as the
shareholders of a Delaware business corporation, as to whether or not a court
action, proceeding or claim should be brought or maintained derivatively or as
a class action on behalf of the Trust or the Shareholders, provided, however,
that a Shareholder of a particular Series or Class shall not be entitled to
bring any derivative or class action on behalf of any other Series or Class of
the Trust, and (vi) with respect to such additional matters relating to the
Trust as may be required or authorized by Federal or state law, by this
Declaration of Trust, or the Bylaws, if any, or any registration of the Trust
with the Securities and Exchange Commission (the "COMMISSION"), as the
Trustees may consider desirable. On any matter submitted to a vote of the
Shareholders, all Shares shall be voted by individual Series or Class, except
(i) when required by the 1940 Act, Shares shall be voted in the aggregate and
not by individual Series or Class or (ii) when the Trustees have determined
that the matter affects only the interests of one or more Series or Classes,
then only the Shareholders of such Series or Classes shall be entitled to vote
thereon.
Each whole Share shall be entitled to one vote as to any matter on which
it is entitled to vote, and each fractional Share shall be entitled to a
proportionate fractional vote. There shall be no cumulative voting in the
election of Trustees. The Bylaws may provide that proxies may be given by any
electronic or telecommunications device or in any other manner, but if a
proposal by anyone other than the officers or Trustees is submitted to a vote
of the Shareholders of the Trust or of any Series or Class, or if there is a
proxy contest or proxy solicitation or proposal in opposition to any proposal
by the officers or Trustees, Shares may be voted only in person or by written
proxy. Until Shares of a Series or Class are issued, as to that Series or
Class the Trustees may exercise all rights of Shareholders and may take any
action required or permitted to be taken by Shareholders by law, this
Declaration of Trust or the Bylaws.
MEETINGS
Section 2. The first Shareholders' meeting shall be held at the time
specified in Section 2 of Article IV at the principal office of the Trust or
such other place as the Trustees may designate. Special meetings of the
Shareholders of any Series or Class may be called by the Trustees and shall be
called by the Trustees upon the written request of Shareholders owning at
least one-fifth (1/5th) of the outstanding Shares of such Series or Class
entitled to vote, except in cases where a lesser percentage of such Series of
Class is required by the 1940 Act. Whenever ten (10) or more Shareholders
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meeting the qualifications set forth in Section 16(c) of the 1940 Act, as the
same may be amended from time to time, seek the opportunity of furnishing
materials to the other Shareholders with a view to obtaining signatures on
such a request for a meeting, the Trustees shall comply with the provisions of
said Section 16(c) with respect to providing such Shareholders access to the
list of the Shareholders of record of the Trust or the mailing of such
materials to such Shareholders of record. Shareholders shall be entitled to
at least ten (10) days' notice of any meeting.
QUORUM AND REQUIRED VOTE
Section 3. A majority of Shares entitled to vote in person or by proxy
shall be a quorum for the transaction of business at a Shareholders' meeting,
except that where any provision of law or of this Declaration of Trust permits
or requires that holders of any Series or Class shall vote as a Series or
Class, then a majority of the aggregate number of Shares of that Series or
Class entitled to vote shall be necessary to constitute a quorum for the
transaction of business by that Series or Class. Any lesser number shall be
sufficient for adjournments. 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. Except when a larger vote is required by any
provision of this Declaration of Trust or the Bylaws or the 1940 Act, a
majority of the Shares voted in person or by proxy shall decide any questions
and a plurality shall elect a Trustee, provided that where any provision of
law or of this Declaration of Trust permits or requires that the holders of
any Series or Class shall vote as a Series or Class, then a majority of the
Shares of that Series or Class voted on the matter shall decide that matter
insofar as that Series or Class is concerned.
ARTICLE IX
CUSTODIAN
APPOINTMENT AND DUTIES
Section 1. The Trustees shall at all times employ one or several banks,
trust companies, or other business firms, which may be Interested Persons of
the Trust, as custodian with authority as its agent, but subject to such
restrictions, limitations and other requirements, if any, as may be contained
in the Bylaws:
(1) to hold the securities owned by the Trust and deliver the same upon
written order;
(2) to receive and give receipt for any moneys due to the Trust and
deposit the same in its own banking department or elsewhere as the Trustees
may direct; and
(3) to disburse such funds upon orders or vouchers; and the Trust may
also employ such custodian or custodians as its agent:
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(i) to keep the books and accounts of the Trust and furnish
clerical and accounting services; and
(ii) to compute, if authorized to do so by the Trustees, the Net
Asset Value of any Series or Class in accordance with the provisions hereof;
all upon such basis of compensation as may be agreed upon between the Trustees
and the custodian(s). If so directed by a Majority Shareholder Vote, the
custodian(s) shall deliver and pay over all property of the Trust held by it
as specified in such vote.
The Trustees may also authorize the custodian(s) to employ one or more
sub-custodians, which may be Interested Persons of the Trust from time to time
to perform such of the acts and services of the custodians and upon such terms
and conditions, as may be agreed upon between the custodian(s) and such sub-
custodian(s) and approved by the Trustees, provided that in every case such
sub-custodian shall be a bank, trust company or other business firm organized
under the laws of the United States or one of the states thereof or such other
person as may be permitted by the Commission, or otherwise in accordance with
the 1940 Act.
CENTRAL CERTIFICATE SYSTEM
Section 2. Subject to such rules, regulations and order as the
Commission may adopt, the Trustees may direct the custodian(s) to deposit all
or any part of the securities owned by the Trust in a system for the central
handling of securities established by a national securities exchange or a
national securities association registered with the Commission under the
Securities Exchange Act of 1934, or such other person as may be permitted by
the Commission, or otherwise in accordance with the 1940 Act, pursuant to
which system all securities of any particular class or series of any issuer
deposited within the system are treated as fungible and may be transferred or
pledged by bookkeeping entry without physical delivery of such securities,
provided that all such deposits shall be subject to withdrawal only upon the
order of the Trust.
ARTICLE X
DISTRIBUTIONS AND REDEMPTIONS
DISTRIBUTIONS
Section 1.
(a) The Trustees may from time to time declare and pay dividends and
other distributions. The amount of such dividends and other distributions and
the payment of them shall be wholly in the discretion of the Trustees.
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(b) The Trustees shall have power, to the fullest extent permitted by
the laws of Massachusetts, at any time to declare and cause to be paid
dividends and other distributions on Shares of a particular Series, from the
assets belonging to that Series, which dividends or other distributions, at
the election of the Trustees, may be paid daily or otherwise pursuant to a
standing resolution or resolutions adopted only once or with such frequency as
the Trustees may determine, and may be payable in Shares of that Series at the
election of the Trustees or each Shareholder of that Series. All dividends
and other distributions on Shares of a particular Series shall be distributed
pro rata to the Shareholders of that Series in proportion to the number of
Shares of that Series they held on the record date established for such
payment, except that such dividends and distributions shall appropriately
reflect expenses allocated to a particular Class of such Series.
REDEMPTION OF SHARES
In case any holder of record of Shares of a particular Series desires to
dispose of his Shares, he may deposit at the office of the transfer agent or
other authorized agent of that Series, in accordance with any procedures
established by the Trustees, a written request or such other form of request
as the Trustees may from time to time authorize, requesting that the Series
redeem or purchase the Shares in accordance with this Section 2; and the
Shareholders so requesting shall be entitled to require the Series to redeem
or purchase, and the Series or the Principal Underwriter of the Series shall
redeem or purchase his said Shares, but only at the next determined Net Asset
Value thereof (as described in Section 3 hereof). The Series shall make
payment for any such Shares to be redeemed or purchased, as aforesaid, in cash
or, if permitted by law, at the Trustees' election in kind from the assets of
that Series and payment for such Shares shall be made by the Series or the
Principal Underwriter of the Series to the Shareholder of record within seven
(7) days after the date upon which the request is effective.
DETERMINATION OF NET ASSET VALUE AND VALUATION OF PORTFOLIO ASSETS
The term "NET ASSET VALUE" of any Series shall mean that amount which the
assets of each Series or Class exceed its liabilities, all as determined by or
under the direction of the Trustees. Such value per Share shall be determined
separately for each Series or Class of Shares and shall be determined on such
days and at such times as the Trustees may determine. Such determination
shall be made with respect to securities for which market quotations are
readily available, at the market value of such securities; and with respect to
other securities and assets, at the fair value as determined in good faith by
the Trustees, provided, however, that the Trustees, without Shareholder
approval, may alter the method of appraising portfolio securities insofar as
permitted under the 1940 Act and the interpretations thereof promulgated or
issued by the Commission or insofar as permitted by any order of the
Commission applicable to the Series. The Trustees may delegate any of their
powers and duties under this Section 3 with respect to appraisal of assets and
liabilities. At any time the Trustees may cause the value per Share last
determined to be determined again in similar manner and may fix the time when
such redetermined value shall become effective.
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SUSPENSION OF THE RIGHT OF REDEMPTION
Section 4. The Trustees may declare a suspension of the right of
redemption or postpone the date of payment as permitted under the 1940 Act.
Such suspension shall take effect at such time as the Trustees shall specify
but not later than the close of business on the business day next following
the declaration or suspension, and thereafter there shall be no right of
redemption or payment until the Trustees shall declare the suspension at an
end. In the case of a suspension of the right of redemption, a Shareholder
may either withdraw his request for redemption or receive payment based on the
next-determined Net Asset Value per Share after the termination of the
suspension.
ARTICLE XI
COMPENSATION AND LIMITATION OF LIABILITY
OF TRUSTEES COMPENSATION
Section 1. The Trustees as such shall be entitled to reasonable
compensation from the Trust; they may fix the amount of their compensation.
Nothing herein shall in any way prevent the employment of any Trustee for
advisory, management, legal, accounting, investment banking or other services
and payment for the same by the Trust.
LIMITATION OF LIABILITY
Section 2. Provided they have exercised reasonable care and have acted
under the reasonable belief that their actions are in the best interest of the
Trust, the Trustees shall not be responsible for or liable in any event for
neglect or wrongdoing of them or any officer, agent, employee or investment
adviser of the Trust, but nothing contained herein shall protect any Trustee
against any liability to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office. Every note, bond, contract,
instrument, certificate or undertaking and every other act or obligation
whatsoever executed or performed by or on behalf of the Trust or the Trustees
or any of them in connection with the Trust shall be conclusively deemed to
have been executed or done only in or with respect to their or his capacity as
Trustees or Trustee, and such Trustees or Trustee shall not be personally
liable thereon.
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ARTICLE XII
INDEMNIFICATION
COVERED PERSONS
Section 1.
(a) Subject to the exceptions and limitations contained in paragraph
(b) of this Section 1 below:
(i) every person who is, or has been, a Trustee or officer of
the Trust (including persons who serve at the Trust's request as directors,
officers or trustees of another organization in which the trust has any
interest as a shareholder, creditor or otherwise) (hereinafter referred to as
a "COVERED PERSON") shall be indemnified by the appropriate Series to the
fullest extent permitted by law against liability and against all expenses
reasonably incurred or paid by him in connection with any claim, action, suit
or proceeding in which he becomes involved as a party or otherwise by virtue
of his being or having been a Covered Person and against amounts paid or
incurred by him in the settlement thereof; and
(ii) the words "claim," "action," "suit," or "proceeding" shall
apply to all claims, actions, suits or proceedings (civil, criminal,
administrative or other, including appeals), actual or threatened while in
office or thereafter, and the words "liability" and "expenses" shall include,
without limitation, attorneys' fees, costs, judgments, amounts paid in
settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Covered
Person:
(i) who shall have been adjudicated by a court or body before
which the proceeding was brought (A) to be liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office,
unless, and only to the extent that, such court or body shall determine upon
application that, despite the adjudication of liability, but in view of all
the circumstances of the case, the Covered Person is fairly and reasonably
entitled to indemnification or (B) not to have acted in good faith in the
reasonable belief that his action was in the best interest of the Trust; or
(ii) in the event of a settlement, unless there has been a
determination that such Trustee or officer was not liable by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office,
(A) by the court or other body approving the settlement;
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(B) by at least a majority of those Trustees who are
neither Interested Persons of the Trust nor are parties to the matter based
upon a review of readily available facts (as opposed to a full trial-type
inquiry); or
(C) by written opinion of independent legal counsel
based upon a review of readily available facts (as opposed to a full trial-
type inquiry); provided, however, that any Shareholder may, by appropriate
legal proceedings, challenge any such determination by the Trustees, or by
independent counsel.
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall not be
exclusive of or affect any other rights to which any Covered Person may now or
hereafter be entitled, shall continue as to a person who has ceased to be such
Trustee or officer and shall inure to the benefit of the heirs, executors and
administrators of such a person. Nothing contained herein shall affect any
rights to indemnification to which Trust personnel, other than Trustees and
officers, and other persons may be entitled by contract or otherwise under
law.
(d) Expenses in connection with the preparation and presentation of
a defense to any claim, action, suit or proceeding of the character described
in paragraph (a) of this Section 1 may be paid by the applicable Series from
time to time prior to final disposition thereof upon receipt of an undertaking
by or on behalf of such Covered Person that such amount will be paid over by
him to the applicable Series if it is ultimately determined that he is not
entitled to indemnification under this Section 1; provided, however, that
either (i) such Covered Person shall have provided appropriate security for
such undertaking, (ii) the Trust is insured against losses arising out of any
such advance payments or (iii) either a majority of the Trustees who are
neither Interested Persons of the Trust nor parties to the matter, or
independent legal counsel in a written opinion, shall have determined, based
upon a review of readily available facts (as opposed to a trial type inquiry
or full investigation), that there is reason to believe that such Covered
Person will be found entitled to indemnification under this Section 1.
(e) The Trust shall be entitled to assume the defense of any such
claim, suit, action or proceeding, with counsel approved by the Covered Person
to be indemnified, upon the delivery to such Covered Person of written notice
of its election to do so. After delivery of such notice, approval of such
counsel by the Covered Person to be indemnified, and the retention of such
counsel by the Trust, the Trust will not be liable to the Covered Person to be
indemnified for any fees of counsel subsequently incurred by such Covered
Person with respect to the same proceeding, provided that (i) such Covered
Person shall have the right to employ his own counsel in any such claim, suit,
action or proceeding at his own expense and (ii) if (A) the employment of
counsel by such Covered Person has been previously authorized by the Trust,
(B) such Covered Person shall have reasonably concluded that there may be a
conflict of interest between the Trust and such Covered Person in the conduct
of any such defense, or (C) the Trust shall not, in fact, have employed
counsel to assume the defense of such claim, suit, action or proceeding, then
the fees and expenses of any counsel retained by such Covered Person shall be
at the expense of the Trust.
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(f) If this Section 1 is revoked or amended to eliminate or reduce the
effect thereof, the indemnification and advancement of expenses provided by,
or granted pursuant to, this Section 1 shall continue to be effective for
Covered Persons entitled to indemnification hereunder prior to such revocation
or amendment with respect to matters arising prior to such revocation or
amendment. Nothing herein is intended to require or shall be construed as
requiring the Trust to do or fail to do any act in violation of applicable
law.
SHAREHOLDERS
Section 2. In case any Shareholder or former Shareholder of any Series
of the Trust shall be held to be personally liable solely by reason of his
being or having been a Shareholder and not because of his acts or omissions or
for some other reason, the Shareholder or former Shareholder (or his heirs,
executors, administrators or other legal representatives or in the case of a
corporation or other entity, its corporate or other general successor) shall
be entitled out of the assets belonging to the applicable Series to be held
harmless from and indemnified against all loss and expenses arising from such
liability. The Trust, on behalf of the Series, shall, upon request by the
Shareholder, assume the defense of any such claim made against such
Shareholder for any act or obligation of the Series and satisfy any judgment
thereon from the assets of the Series.
ARTICLE XIII
MISCELLANEOUS
TRUST NOT A PARTNERSHIP; TRUSTEES, SHAREHOLDERS, ETC.
NOT PERSONALLY LIABLE; NOTICE
Section 1. It is hereby expressly declared that a trust and not a
partnership is created hereby. No Trustee hereunder shall have any power to
bind personally either the Trust's officers or any Shareholder. All persons
extending credit to, contracting with or having any claim against the Trust or
the Trustees shall look only to the assets of the appropriate Series for
payment under such credit, contract or claim; and neither the Shareholders nor
the Trustees, nor any of their agents, whether past, present or future, shall
be personally liable therefor. Nothing in this Declaration of Trust shall
protect a Trustee against any liability to which the Trustee would otherwise
be subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of the office of
Trustee hereunder. Every note, bond, contract, instrument, certificate or
undertaking made or issued by the Trustees or by any officer or officers shall
give notice that this Declaration of Trust is on file with the Secretary of
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The Commonwealth of Massachusetts and shall recite to the effect that the same
was executed or made by or on behalf of the Trust or by them as Trustee or
Trustees or as officer or officers and not individually and that the
obligations of such instrument are not binding upon any of them or the
Shareholders individually but are binding only upon the assets and property of
the Trust, and may contain such further recital as he or they may deem
appropriate, but the omission thereof shall not operate to bind any Trustee or
Trustees or officer or officers or Shareholder or Shareholders individually.
TRUSTEE'S GOOD FAITH ACTION, EXPERT ADVICE,
NO BOND OR SURETY
Section 2. The exercise by the Trustees of their powers and discretions
hereunder in good faith and with reasonable care under the circumstances then
prevailing, shall be binding upon everyone interested. Subject to the
provisions of Section 1 of this Article XIII and to Article XII, the Trustees
shall not be liable for errors of judgment or mistakes of fact or law. The
Trustees may take advice of counsel or other experts with respect to the
meaning and operation of this Declaration of Trust, and subject to the
provisions of Section 1 of this Article XIII and to Article XII, shall be
under no liability for any act or omission in accordance with such advice or
for failing to follow such advice. The Trustees shall not be required to give
any bond as such, nor any surety if a bond is obtained.
ESTABLISHMENT OF RECORD DATES
Section 3. The Trustees may close the stock transfer books of the Trust
for a period not exceeding sixty (60) days preceding the date of any meeting
of Shareholders, or the date for the payment of any dividends or other
distributions, or the date for the allotment of rights, or the date when any
change or conversion or exchange of Shares shall go into effect; or in lieu of
closing the stock transfer books as aforesaid, the Trustees may fix in advance
a date, not exceeding sixty (60) days preceding the date of any meeting of
shareholders, or the date for payment of any dividend or other distribution,
or the date for the allotment of rights, or the date when any change or
conversion or exchange of Shares shall go into effect, as a record date for
the determination of the Shareholders entitled to notice of, and to vote at,
any such meeting, or entitled to receive payment of any such dividend or other
distribution, or to any such allotment of rights, or to exercise the rights in
respect of any such change, conversion or exchange of Shares, and in such case
such Shareholders and only such Shareholders as shall be Shareholders of
record on the date so fixed shall be entitled to such notice of, and to vote
at, such meeting, or to receive payment of such dividend or other
distribution, or to receive such allotment or rights, or to exercise such
rights, as the case may be, notwithstanding any transfer of any Shares on the
books of the Trust after any such record date fixed as aforesaid.
D-22
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TERMINATION OF TRUST
Section 4.
(a) This Trust shall continue without limitation of time but subject to
the provisions of paragraph (b) of this Section 4.
(b) Subject to a Majority Shareholder Vote of each Series affected by
the matter or, if applicable, to a Majority Shareholder Vote of the Trust, the
Trustees may:
(i) sell and convey all or substantially all the assets of the
trust or any affected Series to another trust, partnership, association or
corporation organized under the laws of any state for adequate consideration
which may include the assumption of all outstanding obligations, taxes and
other liabilities, accrued or contingent, of the Trust or any affected Series,
and which may include shares of beneficial interest or stock of such trust,
partnership, association or corporation; or
(ii) at any time sell and convert into money all of the assets of
the Trust or any affected Series.
Upon making provision for the payment of all such liabilities in either
(i) or (ii), by such assumption or otherwise, the Trustees shall distribute
the remaining proceeds or assets (as the case may be) ratably among the
holders of the Shares of the Trust or any affected Series then outstanding;
however, the payment to any particular Class of such Series may be reduced by
any fees, expenses or charges allocated to that Class or Series.
(c) Upon completion of the distribution of the remaining proceeds or
the remaining assets as provided in paragraph (b), the Trust or any affected
Series shall terminate and the Trustees shall be discharged of any and all
further liabilities and duties hereunder and the right, title and interest of
all parties shall be canceled and discharged.
FILING OF COPIES, REFERENCES, HEADINGS, GENDER, ETC.
The original or a copy of this instrument and of each declaration of
trust supplemental hereto shall be kept at the office of the Trust where it
may be inspected by any Shareholder. A copy of this instrument and of each
supplemental declaration of trust shall be filed by the Trustees with the
Secretary of The Commonwealth of Massachusetts, as well as any other
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governmental office where such filing may from time to time be required.
Anyone dealing with the Trust may rely on a certificate by an officer or
Trustee of the Trust as to whether or not any such supplemental declarations
of trust have been made and as to any matters in connection with the Trust
hereunder, and with the same effect as if it were the original, may rely on a
copy certified by an officer or Trustee of the Trust to be a copy of this
instrument or of any such supplemental declaration of trust. In this
instrument or in any such supplemental declaration of trust, references to
this instrument, and all expressions like "herein," "hereof" and "hereunder,"
shall be deemed to refer to this instrument as amended or affected by any such
supplemental declaration of trust. Headings are placed herein for convenience
of reference only and in case of any conflict, the text of this instrument,
rather than the headings, shall control. This instrument may be executed in
any number of counterparts, each of which shall be deemed an original. In the
case of all terms used in this instrument, the singular shall include the
plural and the masculine gender shall include the feminine and neuter, and
vice versa, as the context requires.
APPLICABLE LAW
Section 6. The trust set forth in this instrument is made in The
Commonwealth of Massachusetts, and it is created under and is to be governed
by and construed and administered (a) according to the laws of said
Commonwealth and (b) in a manner not inconsistent with the provisions of the
1940 Act. The Trust shall be of the type commonly called a Massachusetts
business trust, and without limiting the provisions hereof, the Trust may
exercise all powers which are ordinarily exercised by such a trust.
AMENDMENTS
Section 7. If authorized by votes of the Trustees and a Majority
Shareholder Vote, or by any larger vote which may be required by applicable
law or this Declaration of Trust in any particular case, the Trustees shall
amend or otherwise supplement this instrument, by making a declaration of
trust supplemental hereto, which thereafter shall form a part hereof, except
that an amendment which shall affect the Shareholders of one or more Series
but not the Shareholders of all outstanding Series shall be authorized by vote
of the Shareholders holding a majority of the Shares entitled to vote of each
Series affected and no vote of Shareholders of a Series not affected shall be
required. Amendments having the purpose of changing the name of the Trust or
supplying any omission, curing any ambiguity or curing, correcting or
supplementing any defective or inconsistent provision contained herein shall
not require authorization by Shareholder vote. Copies of the supplemental
declaration of trust shall be filed as specified in Section 5 of this Article
XIII.
FISCAL YEAR
Section 8. The fiscal year of the Trust shall end on a specified date as
set forth in the Bylaws, provided, however, that the Trustees may, without
Shareholder approval, change the fiscal year of the Trust. The Trust's
principal business address is:
Suite 818
53 West Jackson Boulevard
Chicago, Illinois 60604
or such other address as the Trustees may determine from time to time.
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<PAGE>
The Trust's registered agent in Massachusetts is:
CT Corporation System
2 Oliver Street
Boston, MA 02109
The Trust's principal business address in Massachusetts is:
CT Corporation System
2 Oliver Street
Boston, MA 02109
SEVERABILITY
Section 9. The provisions of this Declaration of Trust are severable.
If the Trustees determine, with the advice of counsel, that any provision
hereof conflicts with the 1940 Act, the regulated investment company
provisions of the Code or with other applicable laws and regulations, the
conflicting provision shall be deemed never to have constituted a part of this
Declaration of Trust; provided, however, that such determination shall not
affect any of the remaining provisions of this Declaration of Trust or render
invalid or improper any action taken or omitted prior to such determination.
If any provision hereof shall be held invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall attach only to such
provision only in such jurisdiction and shall not affect any other provision
of this Declaration of Trust.
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<PAGE>
IN WITNESS WHEREOF, the undersigned, being all of the Trustees of the
Trust, have executed this instrument this ____ day of February, 1997.
PRESIDENT OF THE TRUST:
______________________________________
GERALD M. LAVIN
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<PAGE>
Cook, ss. Chicago, February ___, 1997
Then personally appeared the above named Gerald M. Lavin and
acknowledged the foregoing instrument to be his free act and deed, before me,
________________________________________
Notary Public
My Commission expires:
<PAGE>
PROXY PROXY
THE OMNI INVESTMENT FUND
FOR SPECIAL MEETING OF SHAREHOLDERS
FEBRUARY 13, 1997
The undersigned shareholder of THE OMNI INVESTMENT FUND (the "Fund"), a
series of the Massachusetts business trust also known as The Omni Investment
Fund (the "Trust"), hereby appoints Robert H. Perkins, Gregory E. Wolf, and
N. Theodore Hans, or any one of them, with power of substitution and
revocation, the true and lawful proxies to represent the undersigned and to
vote on behalf of the undersigned all shares of the Fund which the undersigned
is entitled to vote at the Special Meeting of Shareholders to be held on
February 13, 1997, at 53 West Jackson Boulevard, Suite 818, Chicago, Illinois,
at 10:00 a.m. (Chicago time), and at any adjournments thereof. The
undersigned authorizes and instructs the proxies to vote as indicated on the
reverse side hereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE TRUST.
The proxies named will vote the shares represented by this proxy in accordance
with the choice made on this card. IF NO CHOICE IS INDICATED FOR ANY MATTER,
THIS PROXY WILL BE VOTED FOR THE MATTER PRESENTED.
Please Date, Sign and Mail your Proxy Card Promptly in the Enclosed
Envelope.
Please sign exactly as your name(s) appear(s) on your shareholder account
statement. When signing as attorney, executor, administrator, guardian,
trustee, custodian, etc., please give full title as such. If a corporation,
partnership, or limited liability company, please sign the full name by an
authorized officer, partner, member or manager. If shares are owned jointly,
all parties should sign.
Has Your Address Changed? Do You Have Any Comments?
- ------------------------- ------------------------------
- ------------------------- ------------------------------
- ------------------------- ------------------------------
<PAGE>
[ X ] PLEASE MARK VOTES AS IN THIS EXAMPLE.
1. Election of 10 Trustees:
The election of all nominees listed below (except as marked to the
contrary below).
Dennis E. Baldwin
William M. B. Berger
Louis R. Binder
Katherine A. Cattanach
Lucy Black Creighton
Paul R. Knapp
Gerard M. Lavin
Harry T. Lewis, Jr.
Michael Owen
William Sinclaire
INSTRUCTION: To withhold authority to vote for any nominee, mark the
"For All Except" box and strike a line through the nominee's name in the list
above.
For Withhold For All Except
[__] [__] [__]
2. Approval of a new Investment Advisory Agreement in respect to the FUND
between the Trust and Berger Associates, Inc. under which Berger
Associates, Inc. would become the Fund's investment adviser:
For Against Abstain
[__] [__] [__]
3. Approval of a Sub-Advisory Agreement with respect to the FUND between
Perkins, Wolf, McDonnell & Company and Berger Associates, Inc. under which
Perkins, Wolf, McDonnell & Company would become the Fund's sub-adviser:
For Against Abstain
[__] [__] [__]
4. Approval of the Trust's Amended and Restated Declaration of Trust for the
purpose of permitting the Fund to adopt multiple classes of shares:
For Against Abstain
[__] [__] [__]
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE SPECIAL MEETING.
Mark box at right if comments or address change have been noted on the
reverse side of this card. [__]
RECORD DATE SHARES:
Please be sure to sign and date this Proxy.
Date: ___________________
_______________________________ _____________________________________
Shareholder sign here Co-owner sign here
