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SEC File Nos. 2-97999
811-4309
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 21
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 17
THE GROWTH FUND OF WASHINGTON, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
1101 VERMONT AVENUE, N.W.
WASHINGTON, D.C. 20005
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(202) 842-5665
HARRY J. LISTER
WASHINGTON MANAGEMENT CORPORATION
1101 VERMONT AVENUE, N.W.
WASHINGTON, D.C. 20005
(NAME AND ADDRESS OF AGENT FOR SERVICE)
COPIES TO:
ALLAN S. MOSTOFF
DECHERT PRICE & RHOADS
1500 K STREET, N.W.
WASHINGTON, D.C. 20005
(COUNSEL FOR THE REGISTRANT)
THE REGISTRANT HAS FILED A DECLARATION PURSUANT TO RULE 24F-2 REGISTERING AN
INDEFINITE NUMBER OF SHARES UNDER THE SECURITIES ACT OF 1933.
ON FEBRUARY 19, 1997 IT FILED ITS 24F-2 NOTICE FOR FISCAL 1996.
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
$ IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE ON MAY 1, 1997,
PURSUANT TO PARAGRAPH (B) OF RULE 485.
===============================================
THE GROWTH FUND OF WASHINGTON, INC.
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
ITEM NUMBER CAPTIONS IN PROSPECTUS (PART "A")
OF PART "A"
OF FORM N-1A
<S> <C>
1. Cover Page Cover Page
2. Synopsis Summary of Fees and Expenses
3. Condensed Financial Information Financial Highlights
4. General Description of Registrant Investment Objective, Policies and
Techniques
5. Management of the Fund Management of the Fund
6. Capital Stock and Other Securities Investment Objective, Policies and Techniques; Dividends, Distributions and
Taxes; General Information
7. Purchase of Securities Being Offered How to Purchase Shares; Reduced Sales Charges
8. Redemption or Repurchase How to Redeem Shares
9. Legal Proceedings N/A
</TABLE>
__________
<TABLE>
<CAPTION>
ITEM NUMBER CAPTIONS IN STATEMENT OF
OF PART "B" OF FORM N-1A ADDITIONAL INFORMATION (PART "B")
<S> <C>
10. Cover Page Cover
11. Table of Contents Table of Contents
12. General Information and History General Information and History
13. Investment Objectives and Policies Investment Objective and Policies
14. Management of the Registrant Fund Directors and Officers; Directors
Compensation
15. Control Persons and Principal Fund Directors and Officers
Holders of Securities
16. Investment Advisory and Other Investment Advisory and Other Services
Services
17. Brokerage Allocation Execution of Portfolio Transactions and Brokerage Allocation
18. Capital Stock and Other Securities Part "A"
19. Purchase, Redemption and Pricing Purchase, Redemption and Pricing of Securities Being Offered; Determination of
of Securities Being Offered Net Asset Value
20. Tax Status Tax Status
21. Underwriters Management of the Fund, the Distributor
(Part "A")
22. Calculations of Performance Data Investment Results
23. Financial Statements Financial Statements
</TABLE>
_____________
ITEM IN PART "C"
OF FORM N-1A
24. Financial Statements and Exhibits
25. Persons Controlled by or under Common Control with Registrant
26. Number of Holders of Securities
27. Indemnification
28. Business and Other Connections of Investment Adviser
29. Principal Underwriters
30. Location of Accounts and Records
31. Management Services
32. Undertakings
Signature Page
[VISTA LOGO]
PROSPECTUS
THE GROWTH FUND OF WASHINGTON, INC.
1101 VERMONT AVENUE, NW
WASHINGTON, DC 20005
(202) 842-5665
-----------------------------------
INVESTMENT STRATEGY: CAPITAL GROWTH
-----------------------------------
May 1, 1997
The Growth Fund of Washington, Inc. (the "Fund") is a diversified, open-end
investment company incorporated in Maryland on May 24, 1985 which seeks to
provide an opportunity for long-term growth of capital by investing primarily in
securities of companies headquartered or having a major place of business in
Washington, D.C., Maryland or Virginia. There can be no guarantee the Fund will
achieve its objective.
This Prospectus sets forth concisely the information about the Fund that an
investor ought to know before investing. It should be read and retained for
future reference. A Statement of Additional Information about the Fund dated May
1, 1997 has been filed with the Securities and Exchange Commission and is
incorporated herein by reference. It may be obtained without charge by writing
or calling the Secretary of the Fund at the above address and requesting "The
Statement of Additional Information."
Shares of the Fund are not deposits or obligations of, or insured, guaranteed,
or endorsed by the U.S. government, any bank, The Federal Deposit Insurance
Corporation, The Federal Reserve Board, or any other agency, entity or person.
The purchase of Fund shares involves investment risks, including the possible
loss of principal.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
Summary of Fees and Expenses ............................................... 3
The expenses you might pay on your Fund investment, including examples
Financial Highlights ....................................................... 4
How the Fund has performed
Investment Objective, Policies and Techniques .............................. 6
The Fund's investment objective, the kinds of securities in which
the Fund invests, investment policies and techniques, and risks
Management of the Fund ..................................................... 9
The business manager, the investment adviser and the individual
who manages the Fund; the custodian, the distribution plan, and
the shareholder servicing agent
How to Purchase Shares ..................................................... 12
Sales Charges .............................................................. 14
Sales charges and reduced sales charges
How to Redeem Shares ....................................................... 17
Dividends, Distributions and Taxes ......................................... 19
How the Fund distributes its earnings, and tax treatment related
to those earnings
Shareholder Account Services and Privileges ................................ 20
How to make the most of your Vista privileges
General Information ........................................................ 22
2
<PAGE>
SUMMARY OF FEES AND EXPENSES
----------------------------
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) ............................... 4.75%
Maximum Sales Charge Imposed on Reinvested Dividends ............... None
Deferred Sales Charge .............................................. None
Redemption Fees .................................................... None
Exchange Fee ....................................................... None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets):
Management Fees .................................................... 0.74%
12b-1 Fees ......................................................... 0.25%(1)
Other Expenses ..................................................... 0.43%
------
TOTAL FUND OPERATING EXPENSES ...................................... 1.42%
======
EXAMPLE
<TABLE>
1 Year 3 Years 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and
(2) redemption at the end of each time period ........ $61 $90 $121 $210
</TABLE>
The example should not be considered a representation of past or future
expenses. Actual expenses may be greater or lesser than those shown.
The purpose of the preceding Summary of Fees and Expenses is to assist the
investor in understanding the various costs and expenses that an investor in the
Fund will bear directly or indirectly. It does not purport to reflect the Fund's
investment performance, past or future. Past performance which, of course, is
not necessarily indicative of future results, is shown in the Financial
Highlights which follow. For more complete descriptions of the management fees,
see "Management of the Fund" and for uses of the 12b-1 fees, see "Distribution
Plan" below.
1 These expenses may not exceed 0.25% of the Fund's average net assets
annually. (See "Management of the Fund--Distribution Plan".) After a
substantial period, these expenses, together with the initial sales charge,
may total more than the maximum sales expense that would have been
permissible if imposed entirely as an initial sales charge.
3
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial information has been audited by Johnson Lambert & Co.
The report of Johnson Lambert & Co. on the financial statements for the year
ended December 31, 1996 appears in the Annual Report which is incorporated by
reference in the Statement of Additional Information. This information should be
read in conjunction with the financial statements and notes thereto which also
appear in the Annual Report.
- --------------------------------------------------------------------
Year Ended December 31
-------------------------------
PER SHARE OPERATING PERFORMANCE 1996 1995 1994
------- ------- ---------
Net Asset Value, Beginning of Year ............ $18.19 $13.32 $ 15.37
------- ------- ---------
Income From Investment Operations:
Net Investment Income ..................... .07 .14 .18
Net Realized and Unrealized Gains
(Losses) on Investments ..................... 2.60 5.72 (1.61)
------- ------- ---------
Total from Investment Operations ............ 2.67 5.86 (1.43)
------- ------- ---------
Less Distributions:
Dividends (from net investment income) ...... (.07) (.14) (.18)
Distributions (from capital gains) ......... (.79) (.85) (.44)
------- ------- ---------
Total Distributions ........................ (.86) (.99) (.62)
------- ------- ---------
Net Asset Value, End of Year .................. $20.00 $18.19 $ 13.32
======= ======= =========
Total Return* ................................. 14.65% 44.25% (9.32%)
Ratios/Supplemental Data:
Net Assets, End of Period (in thousands) ... $48,801 $45,397 $33,715
Ratio of Expenses to Average Net Assets ...... 1.42% 1.46% 1.50%
Ratio of Net Income to Average Net Assets ... .35% .87% 1.20%
Average Commission Rate Paid+ .................. 6.96(cent)
Portfolio Turnover Rate ..................... 24.20% 25.65% 13.34%
<TABLE>
<CAPTION>
Year Ended December 31
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE 1993 1992 1991 1990 1989 1988 1987
------- ------- ------- ------- ------ ------ ------
Net Asset Value, Beginning of Year ............... $14.16 $12.34 $10.62 $13.34 $12.22 $10.72 $11.12
------- ------- ------- ------- ------ ------ ------
Income From Investment Operations:
Net Investment Income ........................ .14 .14 .18 .23 .23 .20 .15
Net Realized and Unrealized Gains
(Losses) on Investments ........................ 1.63 2.03 2.54 (2.68) 1.65 1.64 .29
------- ------- ------- ------- ------ ------ ------
Total from Investment Operations ............... 1.77 2.17 2.72 (2.45) 1.88 1.84 .44
------- ------- ------- ------- ------ ------ ------
Less Distributions:
Dividends (from net investment income) ......... (.14) (.13) (.18) (.26) (.28) (.20) (.24)
Distributions (from capital gains) ............ (.42) (.22) (.82) (.01) (.48) (.14) (.60)
------- ------- ------- ------- ------ ------ ------
Total Distributions ........................... (.56) (.35) (1.00) (.27) (.76) (.34) (.84)
------ ------- ------- ------- ------ ------ ------
Net Asset Value, End of Year ..................... $15.37 $14.16 $12.34 $10.62 $13.34 $12.22 $10.72
======= ======= ======= ======= ====== ====== ======
Total Return* .................................... 12.52% 17.72% 26.37% (18.49%) 15.50% 17.23% 4.24%
Ratios/Supplemental Data:
Net Assets, End of Period (in thousands) ...... $39,990 $37,162 $35,266 $38,260 $58,425 $51,770 $48,158
Ratio of Expenses to Average Net Assets ......... 1.55% 1.55% 1.67% 1.72% 1.66% 1.76% 1.74%
Ratio of Net Income to Average Net Assets ...... 0.87% 1.04% 1.43% 1.95% 1.69% 1.65% 1.17%
Average Commission Rate Paid+ .....................
Portfolio Turnover Rate ........................ 13.52% 12.89% 11.33% 10.07% 12.23% 10.88% 18.62%
</TABLE>
* Excludes maximum sales charge of 4.75%.
+ Brokerage commissions paid on portfolio transactions increase the cost of
securities being purchased or reduce the proceeds of securities sold, and are
not reflected in the Fund's statement of operations. Shares traded on a
principal basis, such as most over-the-counter and fixed-income transactions,
are excluded.
4-5
<PAGE>
PERFORMANCE INFORMATION
From time to time, quotations of the Fund's "total return" may be included in
advertisements or reports to current or prospective shareholders. Total return
figures reflect only the performance of a hypothetical investment in the Fund
during the particular historical time period on which the calculations are
based. Any quotation of the Fund's total return will be expressed in terms of
the average annual compounded rate of return on a hypothetical investment in the
Fund over a period of 1, 5 and 10 years. Unless otherwise stated, such quotation
reflects the maximum initial sales charge and assumes that all dividends and
distributions are reinvested when paid. Excluding sales charges would increase
total return. Historical performance information should be considered in light
of the Fund's investment objectives and policies, the level of Fund expenses,
the characteristics and quality of the Fund's portfolio and market conditions
during the period indicated, and should not be considered representative of what
may be achieved in the future. For a description of the method used to determine
total return for the Fund, see the Statement of Additional Information.
Management's discussion of Fund performance and other information regarding the
Fund's investment results are contained in the Fund's annual report which may be
obtained without charge by writing to the Secretary of the Fund at the address
indicated on the cover of this Prospectus.
INVESTMENT
OBJECTIVE, POLICIES
AND TECHNIQUES
- --------------
In seeking to meet its objective of long-term growth of capital, the Fund will
invest at least 65% of its total assets in common stocks or securities
convertible into common stock of companies headquartered or having a major place
of business, i.e., deriving at least 40% of their gross revenues from
activities, in Washington, D.C., Maryland or Virginia. The Fund may invest up to
35% of its total assets in common stocks or securities convertible into common
stock of other U.S. companies that are headquartered elsewhere in the United
States or that do not meet the 40% of gross revenues test. For temporary
defensive purposes, the Fund may exceed the 35% limit and may also invest in
certain money market instruments. Within the 35% limit, money market instruments
may also be utilized to provide funds to meet redemptions. The Fund may engage
in certain investment techniques designed to protect against fluctuations in the
value of its portfolio securities.
It is anticipated that the assets of the Fund ordinarily will be substantially
invested in common stocks or securities convertible into common stocks which
offer an opportunity, in the Investment Adviser's opinion, to achieve long-term
growth of capital. The Fund may invest in the entire range of Washington area
companies, and there is no limitation as to the size of such companies or where
their securities are traded. The Fund may, for temporary defensive purposes or
to provide funds to meet redemptions, invest a portion of its assets in U.S.
Government securities,
6
<PAGE>
commercial paper issued by domestic corporations rated at the time of purchase
Prime-1 by Moody's Investors Service, Inc. or A-1 by Standard & Poor's
Corporation, or certificates of deposit issued by U.S. banks having assets in
excess of $1 billion and may enter into repurchase agreements with banks or
broker-dealers with respect to such securities. In addition, as a means of
minimizing the impact of market price fluctuations on the value of securities in
the Fund's portfolio, the Fund may, to a limited extent, purchase put and call
options, write covered call options and engage in related closing transactions.
The Fund's investment restrictions (which are described in the Statement of
Additional Information) and objective cannot be changed without shareholder
approval. All other investment practices may be changed by the Board of
Directors (the "Directors"). Except as otherwise provided in this Prospectus,
the following investment techniques are not fundamental policies of the Fund
and, therefore, may be changed by the Directors.
REPURCHASE AGREEMENTS
The Fund may invest in repurchase agreements with commercial banks or
broker-dealers meeting creditworthiness standards set and monitored by the
Fund's Directors. A repurchase agreement involves the purchase by the Fund of
U.S. Government securities or other debt obligations with the condition that,
after a stated period of time, the seller will buy back the same securities (the
"collateral") at a predetermined price or yield. The collateral will be
maintained in an amount equal to the repurchase price under the agreement
(including accrued interest due thereunder). In the event the original seller
defaults on its obligation to repurchase, the Fund will seek to sell the
collateral, which action could involve costs or delays. The Fund's rights to the
collateral are unclear where the seller is a bank which becomes insolvent.
Moreover, the Fund could suffer a loss to the extent proceeds from the sale of
the collateral may be less than the repurchase price. Either the Fund or its
custodian will have physical custody of the collateral or the Fund will have
constructive possession by entry to the Fund's account in the federal book-entry
system. No more than 10% of the Fund's assets, at the time of investment, may be
invested in repurchase agreements which are not terminable within seven days.
COVERED CALL OPTIONS
The Fund may write (i.e., sell) covered call options on portfolio securities
worth up to 25% of the value of its net assets. Options give the option
purchaser the right to buy the security from the Fund at the stated exercise
price at any time during the option period, generally ranging up to nine months.
The Fund would expect to set the exercise price at a favorable level but, in
return for the net premium for the option, forgoes the opportunity during the
option period to realize increases above the exercise price. The Fund may close
out its obligation under an option by purchasing a call option for the same
security with the same
7
<PAGE>
expiration date and exercise price, if such option is available.
When the Fund writes a covered call option, it gives the purchaser of the option
the right to buy the underlying security at the price specified in the option
(the "exercise price") at any time during the option period, generally ranging
up to nine months. If the option expires unexercised, the Fund will realize gain
to the extent of the amount received for the option (the "premium") less any
commission paid. If the option is exercised, a decision over which the Fund has
no control, the Fund must sell the underlying security to the option holder at
the exercise price. By writing a covered option, the Fund forgoes, in exchange
for the premium less the commission ("net premium"), the opportunity to profit
during the option period from an increase in the market value of the underlying
security above the exercise price. The price at which the Fund would agree to
dispose of portfolio securities pursuant to covered call options written by the
Fund or put options purchased by the Fund would be a price determined by the
Investment Adviser to be attractive for sale of that security by the Fund in any
event. Thus, it is not anticipated that these options activities would conflict
with the Fund's capital growth objective.
PURCHASES OF OPTIONS
The Fund may purchase put options ("puts") which relate to securities held by
the Fund only in order to protect against a decline in value of such securities.
The Fund may purchase call options ("calls") but only (a) if the investments to
which the calls relate are equity securities which may be held by the Fund or
(b) the calls are purchased to effect "closing purchase transactions" to
terminate the Fund's obligations with respect to calls which it has previously
written. In addition, puts and calls may be purchased only if, after any such
purchase, the value of all put and call options held by the Fund would not
exceed 5% of the Fund's total assets.
PRINCIPAL RISKS
RELATING TO OPTIONS
The principal risks relating to the use of options by the Fund are: (a) there
may not be a perfect correlation between the prices of the options and the cash
(market value) prices of the securities held by the Fund, and between the
movements in their prices; (b) there is no assurance of a liquid secondary
market for closing out an options position; (c) the use of options requires
skills and techniques in addition to those required to manage the Fund's
securities portfolio; and (d) the use of these instruments involves additional
transaction costs to the Fund. Additionally, the Fund may lose the anticipated
benefit of an options transaction if the market moves in an unanticipated
manner.
Options transactions may be engaged in by the Fund to hedge against market price
fluctuations. A put option may be purchased to attempt to protect against a
decline in the market value of a security held by the Fund, while a call option
may be purchased as an anticipatory hedge against a rise in a security's market
value. A covered call option may be written when the premium for writing the
call plus the appreciation in market value of the underlying security up to the
8
<PAGE>
exercise price of the call are expected to be greater than the appreciation in
the price of the security alone. Should the market price of the security
underlying a covered call option decline, the amount of such decline will be
offset wholly or in part by the premium received for the sale of the call and
the Fund may or may not realize a loss. There is no assurance these techniques
will achieve their intended purpose. These activities may generate incidental
income for the Fund. The Fund will engage in options transactions only to the
extent permitted by the policies of state securities authorities in states where
shares of the Fund are qualified for offer and sale.
LOANS OF PORTFOLIO SECURITIES
The Fund may lend up to one third of the value of its portfolio securities to
qualified broker-dealers or other institutional investors, provided it receives
collateral consisting of U.S. Government obligations, cash or cash equivalents
which at all times is maintained in an amount equal to at least 100% of the
current market value of the securities loaned. The Fund would be at risk to the
extent the borrower failed to continue to provide adequate collateral and failed
to return the borrowed security. By lending its portfolio securities, the Fund
may be able to increase its income through the investment of any cash collateral
or may receive a premium from the loan.
RISK FACTORS
Investments in securities involve inherent risks of market fluctuation. The Fund
attempts to reduce these risks by spreading its investments over many companies
in a variety of industries and by engaging in the options activities described
above which are designed to minimize the impact of market price fluctuations.
These actions, however, will not eliminate all of the risks inherent in an
investment of this type. Thus, the value of the Fund's portfolio securities and
the value of its shares is expected to fluctuate. The Fund is not intended to
provide a balanced investment program to meet all requirements of every
investor.
In addition, concentration of the Fund's investments in companies in the
Washington region involves risk. The economic, geographic and demographic
factors which, to the Investment Adviser, make this area a favorable one for
long-term investment may become less favorable or reverse themselves at some
time in the future.
MANAGEMENT
OF THE FUND
- -----------
The Fund's Board of Directors, which is responsible for the overall supervision
of the operations of the Fund and which performs various duties imposed on
directors of investment companies by the Investment Company Act of 1940 (the
"Act") and by applicable state and federal law, has retained the companies
listed below to provide certain services to the Fund.
THE BUSINESS MANAGER
Pursuant to an agreement with the Fund (the "Business Management Agreement"),
Washington Management Corporation (the "Business Manager") provides the
facilities and services required to carry on the Fund's general administrative
9
<PAGE>
and corporate affairs. The Business Manager, a wholly-owned subsidiary of The
Johnston-Lemon Group, Incorporated ("JLG"), maintains its principal business
address at 1101 Vermont Avenue, NW, Washington, D.C. 20005. The Business Manager
provides business management and administrative services to three other mutual
funds with assets of more than $25 billion. The Business Manager may in the
future provide similar services to parties not affiliated with the Fund.
The Business Management Agreement provides that the Fund will pay the Business
Manager a fee of 0.375% per annum on the Fund's first $40 million of net assets,
0.30% on net assets in excess of $40 million but not exceeding $100 million and
0.25% on net assets in excess of $100 million. The fee is computed daily and
paid monthly. During fiscal year ended December 31, 1996, the Business Manager's
fees amounted to $172,781 (0.363% of average net assets).
THE INVESTMENT ADVISER
Pursuant to an agreement with the Fund (the "Investment Advisory Agreement") and
subject to the policies of the Fund's Directors, Washington Investment Advisers
Inc. (the "Investment Adviser") provides general portfolio management services
for the Fund. The Investment Adviser, located at 1101 Vermont Avenue, NW,
Washington, D.C. 20005, is a wholly-owned subsidiary of JLG.
Pursuant to the Investment Advisory Agreement, the Fund will pay the Investment
Adviser a fee of 0.375% per annum on the Fund's net assets up to $100 million
decreasing to 0.35% on the net assets in excess of $100 million. The fee is
computed daily and paid monthly. During the fiscal year ended December 31, 1996,
the Investment Adviser's fees amounted to $178,474 (0.375% of average net
assets). The combined fees to the Business Manager and to the Investment Adviser
are higher than similar fees paid by most investment companies. However, such
fees are similar to those charged by equity mutual funds of comparable size.
In its discretion and at no additional cost to the Fund, the Investment Adviser
may contract for certain services such as research and administration. It
currently has such a contract with Chase Manhattan Bank to provide it with
research assistance.
The primary portfolio counselor is shown below.
<TABLE>
<CAPTION>
Years of Experience as
Investment Professional
(approximate)
-------------------------
Years of
Experience as With
Portfolio Portfolio Washington
Counselor Counselor for The Investment
for The Growth Growth Fund of Advisers, Inc.
Fund Washington or its Total
of Washington Primary Title(s) (approximate) predecessors Years
- ------------------- ------------------------------- ----------------- -------------- --------
<S> <C> <C> <C> <C>
Prabha S. Carpenter Vice President, The Growth Fund 10 years 10 years 18 years
of Washington; Vice President,
Washington Investment
Advisers, Inc.
</TABLE>
10
<PAGE>
FUND EXPENSES
The Fund pays all expenses not assumed by the Investment Adviser or Business
Manager, but will be reimbursed in equal parts out of fees paid to those parties
to the extent certain of its expenses exceed applicable state limits. No such
reimbursement was required for fiscal year 1996. Expenses paid by the Fund
include custodian, stock transfer and dividend disbursing fees and accounting
and recordkeeping expenses; distribution expenses pursuant to a plan under Rule
12b-1 of the Act; costs of designing, printing and mailing reports,
prospectuses, proxy statements and notices to its shareholders; taxes and
insurance; expenses of the issuance, sale, or repurchase of shares of the Fund
(including federal registration and state fees); legal and auditing fees and
expenses; compensation, fees and expenses paid to Directors who are not
interested persons of the Fund; association dues; and costs of stationery and
forms prepared exclusively for the Fund.
PORTFOLIO TRANSACTIONS
The Directors of the Fund have authorized the Investment Adviser, subject to the
objective of obtaining the best price and execution, to consider sales of Fund
shares, and the provision of research, statistical and other related services to
the Fund or other funds served by the Investment Adviser as factors in selecting
broker-dealers to execute portfolio transactions for the Fund. The Investment
Adviser is also authorized, subject to applicable regulatory limitations, to pay
brokerage commissions for agency transactions to Johnston, Lemon & Co.
Incorporated ("Johnston, Lemon") a wholly-owned subsidiary of JLG. Johnston,
Lemon will not participate in commissions from brokerage given by the Fund to
other broker-dealers, and the Fund will in no event effect principal
transactions with Johnston, Lemon, even with respect to securities in which
Johnston, Lemon is a market maker.
THE CUSTODIAN
Pursuant to a Custodian Agreement, The Chase Manhattan Bank ("Chase") acts as
the custodian of the assets of the Fund for which Chase receives compensation as
is agreed upon by the Fund and Chase. The Custodian's responsibilities include
safeguarding and monitoring the Fund's cash and securities, handling the receipt
and delivery of securities, determining income and collecting interest on the
Fund's investments, maintaining books of original entry for portfolio and Fund
accounting and other required books and accounts, and calculating the daily net
asset value of shares of the Fund.
THE DISTRIBUTOR
Vista Fund Distributors, Inc. (the "Distributor"), a wholly-owned subsidiary of
The BISYS Group, Inc., acts as the principal underwriter of the Fund's shares.
The Distributor, as agent of the Fund in the offering of its shares, will
receive the commissions consisting of that portion of the sales charge remaining
after the dealer concession which it pays to selling Dealers. The amount of the
11
<PAGE>
sales charge and dealer concession is set forth under "Sales Charges."
DISTRIBUTION PLAN
The Fund has adopted a Distribution Plan (the "Plan") providing that the Fund
will pay to the Distributor monthly a fee at a maximum annual rate of 0.25% of
the Fund's net assets. Payments under this Plan will be made to the Distributor
to finance activity which is primarily intended to result in the sale and
retention of Fund shares including, but not limited to, advertising, salaries
and other expenses of the Distributor relating to selling or servicing efforts,
expenses of organizing and conducting sales seminars, printing of prospectuses
and reports for other than existing shareholders, preparation and distribution
of advertising material and sales literature and payments to Dealers whose
customers purchase Fund shares. The Directors have authorized payment, as a
service fee, of up to 20 of the total 25 basis points available under the Plan
to be used to pay Dealers who advise shareholders regarding the purchase, sale,
or retention of Fund shares. The total amount spent under the Plan for the
fiscal year ended December 31, 1996 was $116,761 (0.25% of the Fund's average
net assets). Any unreimbursed expenses incurred in one plan year are not carried
over to future plan years. At least quarterly, the Directors review a written
report of the amounts expended under the Plan and the purpose for which
expenditures were made.
TRANSFER AGENT
DST Systems, Inc., 210 W. 10th Street, Kansas City, MO 64105 is the Fund's
transfer agent (the "Transfer Agent") and performs shareholder service
functions. Telephone conversations with the Transfer Agent or Vista Service
Center may be recorded or monitored for verification, recordkeeping and quality
assurance purposes. Their telephone number is 1-800 34-VISTA.
HOW TO
PURCHASE SHARES
- ---------------
The Fund's shares may be purchased in states where they are qualified for offer
and sale at their net asset value next computed after receipt of an order, plus
a sales charge (the "Offering Price"), through selected financial service firms
such as broker-dealer firms and banks ("Dealer(s)") who have entered into a
Selected Dealers Agreement with Vista Fund Distributors, Inc. In the
alternative, once an account has been established and the selling dealer has
been recorded, additional Fund shares may be purchased by sending a check
payable to The Growth Fund of Washington, Inc. with the shareholder's Fund
account number indicated on the check, to:
Vista Service Center
P.O. Box 419392
Kansas City, MO 64141-6392
The "Invest by Mail" stub which accompanies each Fund confirmation statement
should be included with any purchase order. The shareholder will receive a
statement confirming the number of shares purchased.
12
<PAGE>
A minimum initial investment of $2,500 ($1,000 for a regular or SEP IRA account
or $250 for a spousal IRA) is required to open a shareholder account and each
subsequent investment must be $100 or more.
All purchases made by check should be in U.S. dollars. Third party checks,
credit cards and cash will not be accepted. The Fund reserves the right to
reject any purchase order or cease offering shares for purchase at any time.
When purchases are made by check, redemptions will not be allowed until the
check clears, which may take 15 calendar days or longer. In addition, the
redemption of shares purchased through Automated Clearing House (ACH) will not
be allowed until your payment clears, which may take 7 business days or longer.
Fund shares may be purchased in full and fractional shares calculated to three
decimal places and acquired through a Dealer or Vista Service Center. No stock
certificate will be issued unless a shareholder makes a written request therefor
to Vista Service Center at the above address, in which case a certificate will
be provided at no cost to the shareholder. No certificates will be issued for
fractional shares.
DETERMINING NET ASSET VALUE
The Fund's net asset value per share is determined as of the close of trading
(currently 4:00 P.M. Eastern time for stocks and 4:15 P.M. for options) on the
New York Stock Exchange ("NYSE") on each day Monday thru Friday, on which the
NYSE is open for trading. The Fund is not required to determine its net asset
value per share on days when changes in the value of its portfolio securities
will not materially affect such value or on days during which no orders to
purchase or sell Fund shares are received. Net asset value per share is computed
by dividing the value of the Fund's total assets less liabilities by the total
number of shares outstanding. The Fund's expenses and fees are accrued daily and
taken into account in determining the net asset value.
For purposes of computing the Fund's net asset value per share, portfolio
securities and liabilities with respect to covered call options written will be
valued at the last sales price on the valuation day on the exchange or national
securities market on which such securities primarily are traded. Securities not
listed on an exchange or national securities market, or securities in which
there were no reported transactions (except for short-term obligations), will be
valued at the latest reliable quoted bid price. Premiums paid for options are
recorded as assets and are subsequently adjusted to market value. Short-term
obligations with maturities of 60 days or less will be valued at amortized cost,
so long as such valuation continues to constitute fair value as determined by
the Fund's Board of Directors. Any securities or other assets for which reliable
recent market quotations are not readily available will be valued at fair value
as determined in good faith by the Directors.
PRICE OF SHARES
The offering price per share is equal to the net asset value per share plus a
sales charge which decreases as the
13
<PAGE>
amount of investment increases ("Offering Price"), as described below.
Approximately 90% of the sales charge is reallowed to Dealers. During special
promotions, the entire sales charge may be reallowed to Dealers and at such
times such Dealers may be deemed to be underwriters for purposes of the
Securities Act of 1933. Orders received by Dealers or by the Transfer Agent
prior to the close of trading on the NYSE will be filled at that day's price,
while orders received after the close of trading on the NYSE will be filled at
the Offering Price next computed after receipt of the order. The Fund assumes no
responsibility for the failure of a Dealer to transmit an order promptly.
SALES CHARGES
-------------
The following table shows (a) the sales charge as a percentage of the amount
invested, (b) the sales charge as a percentage of the Offering Price, and (c)
the Dealer concession as a percentage of the Offering Price.
Dealer
Sales Charge Concession
----------------------- -----------
(a) (b) (c)
Percentage Percentage Percentage
Dollar Amount of Amount of Offering of Offering
of Purchase Invested Price Price
- --------------------------------------------------------------------------------
Less than $100,000 ......................... 4.99% 4.75% 4.00%
$100,000 but less than $250,000 ............ 3.90% 3.75% 3.25%
$250,000 but less than $500,000 ............ 2.56% 2.50% 2.25%
$500,000 but less than $1,000,000 .......... 2.04% 2.00% 1.75%
$1,000,000 but less than $2,500,000 ........ 0.00% 0.00% 1.00%
$2,500,000 but less than $10,000,000 ....... 0.00% 0.00% 0.75%
$10,000,000 but less than $50,000,000 ...... 0.00% 0.00% 0.50%
$50,000,000 or more ........................ 0.00% 0.00% 0.20%
The sales charge varies with the size of the purchase as shown above. The
reduced charges apply to the aggregate of purchases of the Fund made at one time
by "any person", which term includes an individual, spouse and children under
the age of 21, or a trustee or other fiduciary of a trust estate or fiduciary
account. The Distributor may compensate Dealers for sales of $1,000,000 or more
from its own resources and/or the Distribution Plan.
Upon notice to Dealers with whom it has a Sales Agreement, the Distributor will
reallow up to the full applicable sales charge and such Dealers may therefore be
deemed an "underwriter" under the Securities Act of 1933, as amended, during
such periods. The Distributor will, from time to time, provide promotional
incentives to Dealers whose representatives have sold or are expected to sell
significant amounts of the Fund or other Vista Funds. These incentives may
include cash payments or attendance at sales seminars or business conferences
sponsored by the Distributor. The Distributor will provide marketing services to
Dealers with whom it has Sales Agreements, consisting of written informational
material relating to
14
<PAGE>
sales incentive campaigns sponsored by such Dealers.
There is no sales charge for "Qualified Persons", which are the following (a)
active or retired Trustees, Directors, officers, partners or employees (their
spouses and children under age 21) of (i) the Business Manager, Investment
Adviser, Custodian, Distributor, Transfer Agent or any affiliates or
subsidiaries thereof (the Directors, officers or employees of which shall also
include parents and siblings), (ii) Dealers having an Agreement with the
Distributor, or (iii) trade organizations to which the Business Manager,
Investment Adviser, and Custodian or any affiliates or subsidiaries thereof
belong, and (b) trustees or custodians of any qualified retirement plan or IRA
established for the benefit of a person in (a) above and (c) the Business
Manager, and Investment Adviser or any affiliates or subsidiaries thereof. In
addition, no sales charge will apply to any purchase of Fund shares by an
investor through certain 401(k) Plans sponsored by an institution which has a
custodial relationship with the Fund's Custodian or through a Dealer which
imposes a transaction charge with respect to such purchase.
Additionally, some participant-directed employee benefit plans participate in a
"multi-fund" program which offers both Vista and non-Vista mutual funds. With
Board approval, the money that is invested in Vista Funds may be combined with
the other mutual funds in the same program when determining the plan's
eligibility to buy shares without a sales charge. These investments will also be
included for purposes of the discount privileges and programs described above.
No initial sales charge will apply to the purchase of the Fund's shares if you
are investing the proceeds of a qualified retirement plan where a portion of the
plan was invested in the Vista Family of Funds, any qualified retirement plan
with 50 or more participants, or an individual participant in a tax-qualified
plan making a tax-free rollover or transfer of assets from the plan in which
Chase or an affiliate serves as trustee or custodian of the plan or manages some
portion of the plan's assets.
The Fund reserves the right to cease offering shares for sale at any time or to
reject any order for the purchase of shares and to cease offering any services
it has previously provided.
CUMULATIVE QUANTITY DISCOUNT
Shares of the Fund may be purchased by any person at a reduced sales charge
which is determined by (a) aggregating the dollar amount of the new purchase and
the net asset value of all shares of the Fund and Class A shares of other Vista
Funds, including shares of Vista money market funds, acquired by exchange from
such other Vista Fund, provided such other Vista Fund charged a sales commission
on the shares exchanged and (b) applying the sales charge applicable to such
aggregate. The privilege of the cumulative quantity discount is subject to
modification or discontinuance at any time with respect to all shares purchased
thereafter.
15
<PAGE>
GROUP PURCHASES
An individual who is a member of a qualified group (as hereinafter defined) may
also purchase shares of the Fund at the reduced sales charge applicable to the
group taken as a whole. The reduced sales charge is based upon the aggregate
dollar value of shares previously purchased and still owned by the group plus
the securities currently being purchased and is determined as stated in
"Cumulative Quantity Discount". For example, if members of the group had
previously invested and still held $90,000 of Fund shares and an individual
member of the group is now investing $10,000, the individual's sales charge
would be 3.75%. In order to obtain such discount, the purchaser or Dealer must
provide the Vista Service Center with sufficient information, including the
purchaser's total cost, at the time of purchase to permit verification that the
purchaser qualifies for a cumulative quantity discount, and confirmation of the
order is subject to such verification. Information concerning the current sales
charge applicable to a group may be obtained by contacting the Vista Service
Center.
A "qualified group" is one which (a) has been in existence for more than six
months, (b) has a purpose other than acquiring Fund shares at a discount and (c)
satisfies uniform criteria which enables the Distributor to realize economies of
scale in its costs of distributing shares. A qualified group must have more than
10 members, must be available to arrange for group meetings between
representatives of the Fund and the members, must agree to include sales and
other materials related to the Fund in its publications and mailings to members
at reduced or no cost to the Distributor, and must seek to arrange for payroll
deduction or other bulk transmission of investments of the Fund. This privilege
is subject to modification or discontinuance at any time with respect to all
shares purchased thereafter.
STATEMENT OF INTENTION
Investors may also qualify for reduced sales charges by signing a Statement of
Intention (the "Statement"). This enables the investor to aggregate purchases of
the Fund with purchases of Class A shares of any other Vista Fund, including
shares of any Vista money market fund acquired by exchange from such other Vista
Fund, provided such other Vista Fund charged a sales load on the shares
exchanged, during a 13-month period. All shares of the Fund and Class A shares
of other Vista Funds currently owned by the investor will be credited as
purchases (at their current offering prices on the date the Statement is signed)
toward completion of the Statement. The sales charge is based on the total
amount of such purchases during the 13-month period. A 90-day back-dating period
can be used to include earlier purchases at the investor's cost. The 13-month
period would then begin on the date of the first purchase during the 90-day
period. No retroactive adjustment will be made if purchases exceed the amount
indicated in the Statement. A shareholder must notify the Vista Service Center
or Distributor whenever a purchase is being made pursuant to a Statement.
16
<PAGE>
The Statement is not a binding obligation on the investor to purchase the full
amount indicated; however, on the initial purchase, if required (or subsequent
purchases if necessary), up to 4.75% of the dollar amount specified in the
Statement will be held in escrow by the Transfer Agent in shares registered in
the shareholder's name in order to assure payment of the proper sales charge. If
total purchases pursuant to the Statement (less any dispositions and exclusive
of any distributions on such shares automatically reinvested) are less than the
amount specified, the investor will be requested to remit to the Transfer Agent
an amount equal to the difference between the sales charge paid and the sales
charge applicable to the aggregate purchases actually made. If not remitted
within 20 days after written request, an appropriate number of escrowed shares
will be redeemed in order to realize the difference. This privilege is subject
to modification or discontinuance at any time with respect to all shares
purchased thereafter.
HOW TO
REDEEM SHARES
- -------------
Redemption requests may be made in writing directly to Vista Service Center,
P.O. Box 419392, Kansas City, MO 64141-6392. The redemption price of shares of
the Fund will be the net asset value next determined after receipt of all
required documents in good order. "Good order" means that the request must
include the following:
(1) the stock certificate, if issued;
(2) a letter of instruction or stock assignment specifying the number or dollar
value of shares to be redeemed, signed by all owners of the shares in the exact
names in which they appear on the account, or by an authorized officer of a
corporate shareholder including the capacity in which such officer is signing;
(3) a signature guarantee executed by an eligible guarantor institution
including banks, savings associations, credit unions, and member firms of a
domestic stock exchange or the National Association of Securities Dealers, Inc.
You should verify with the institution that it is an eligible guarantor prior to
signing. Notarization by a Notary Public is not an acceptable signature
guarantee; and
(4) other supporting legal documents if required by applicable law in the case
of estates, trusts, guardianships, corporations and pension and profit-sharing
plans.
Although payment of the redemption price (calculated as of the time all required
redemption request documents are received in good order) will ordinarily be made
within seven days after a redemption request is received, payment to investors
redeeming shares which were purchased by check will not be made until the Fund
can verify that the payment for the purchase has been, or will be, collected,
which may take up to fifteen days. The Fund may suspend redemption privileges or
postpone the date of payment:
(1) during any period that trading on the NYSE is restricted as determined by
the Securities and
17
<PAGE>
Exchange Commission (the "Commission");
(2) during any period when an emergency exists, as defined by the rules of the
Commission, as a result of which it is not reasonably practicable for the Fund
to dispose of securities owned by it or to determine fairly the value of its
assets; and
(3) for such other periods as the Commission may permit.
If the Directors of the Fund determine that it would be detrimental to the best
interests of the remaining shareholders of the Fund to make payment wholly or
partly in cash, the Fund may pay the redemption price in whole or part by a
distribution in kind of securities from the portfolio of the Fund in lieu of
cash in conformity with applicable rules of the Commission. Investors would
incur brokerage charges on the sale of portfolio securities so received.
No charge will be made for the redemption of Fund shares tendered directly to
the Vista Service Center but shares tendered for redemption through Dealers, who
are responsible for the prompt transmission of such request, may be subject to a
service charge by such Dealers. The redemption price may be more or less than
the shareholder's cost for the redeemed shares depending on the market value of
the Fund's portfolio securities at the time of redemption.
The payment of redemption requests may be wired or mailed directly to a
previously designated domestic commercial bank account. For the protection of
shareholders, all telephone redemption requests in excess of $25,000 will be
wired directly to such previously designated bank account. Normally, redemption
payments will be transmitted on the next business day following receipt of the
request (provided it is made prior to 4:00 P.M. Eastern time on any day
redemptions may be made). Redemption payments requested by telephone may not be
available in a previously designated bank account for up to four days. There is
a $10 charge for each wire transaction. If no share certificates have been
issued, a wire redemption may be requested by telephone or wire to the Vista
Service Center. Preauthorizations or indemnifications must be accepted and on
file for the acceptance of instructions by telephone to redeem shares for
deposit to designated banks. For telephone redemptions, call 1-800 34-VISTA.
The Fund reserves the right to terminate and distribute to a shareholder, upon
60 days' written notice, the proceeds of any account where the shareholder has
made no additions to the account during the prior twelve months and its value is
less than $500 for reasons other than market action.
SYSTEMATIC REDEMPTION PLAN
A shareholder whose shares are worth at least $5,000 may elect to have regular
monthly or quarterly withdrawals of $50 or more made from his account to be sent
directly to him, to a designated bank account or to another recipient. Call the
Vista Service Center at 1-800-34-VISTA for complete instructions.
18
<PAGE>
REINSTATEMENT PRIVILEGE
Shareholders who redeem their shares have a one-time privilege of reinstating
their investment by investing any portion or all of the proceeds of the
redemption at net asset value without a sales charge in shares of the Fund. To
exercise this reinstatement privilege, a shareholder must notify the Vista
Service Center in writing within 90 days after such redemption. The
reinstatement request must be accompanied by a check for the amount to be
reinstated, which cannot exceed the redemption proceeds. The reinstatement
purchase will be made at the net asset value per share next determined after
receipt of the request for reinstatement. Any gain realized on the redemption
would be subject to federal income tax but any loss would be disallowed for tax
purposes. This privilege is subject to modification or discontinuance at any
time.
DIVIDENDS, DISTRIBUTIONS
AND TAXES
- ---------
Dividends from the Fund's net income and capital gain distributions will be
automatically reinvested in additional shares of the Fund at their net asset
value next determined on the reinvestment date, unless a shareholder elects in
writing to receive either such dividends or distributions, or both, in cash. Any
election with respect to such dividends and distributions may be changed at any
time by written notice from the shareholder to the Vista Service Center and will
be effective for any payment made no sooner than 5 days after receipt of the
notice. Generally, any income dividends will be paid semi-annually and any
capital gain distributions will be paid annually.
The Fund intends to qualify and elect to be taxed as a regulated investment
company under Subchapter M of the Internal Revenue Code. In any year in which
the Fund so qualifies and distributes at least 90% of its net investment income,
the Fund will not be subject to Federal income tax on that portion of its net
investment income and net realized capital gains distributed to shareholders. A
distribution will be treated as paid during the calendar year if it is declared
by the Fund in December, with a record date in that month, and paid by the Fund
by January 31 of the following year. Such distributions will be taxable to
shareholders in the year the distributions are declared, rather than the year in
which the distributions are received.
Dividends from net investment income and distributions of net realized
short-term capital gains (except to the extent reduced by capital losses of the
shareholder) are taxable at ordinary income rates to shareholders (except
tax-exempt shareholder accounts) whether or not they are reinvested in shares of
the Fund. Shareholders will be notified annually as to the federal tax status of
such payments.
Upon redemption, sale or exchange of shares, a shareholder will realize a
taxable gain or loss depending upon the shareholder's basis in the shares. A
loss realized by a shareholder on the sale of shares of the Fund with respect to
which long-term capital gain distributions have been paid will, to the extent of
such long-term
19
<PAGE>
capital gain distributions, be treated as long-term capital loss if such shares
have been held by the shareholder for less than six months.
Certain of the options transactions which may be undertaken by the Fund would
result in "straddles" for federal income tax purposes. The straddle rules may
affect the character of gains (or losses) realized from the options or
underlying securities and results in losses being deferred. In order to ensure
qualification as a regulated investment company, the Fund may have to limit the
amount of its options transactions. Because only a few of the regulations
implementing the straddle rules have been promulgated, the consequences of
straddle transactions to the Fund are not entirely clear.
Federal law requires the Fund to withhold 31% from dividends and/or redemptions
(including exchanges) that occur in certain shareholder accounts if the
shareholder has not properly furnished a certified correct Taxpayer
Identification Number and has not certified that withholding does not apply.
Amounts withheld are applied to the shareholder's tax liability and a refund may
be obtained from the Internal Revenue Service if withholding results in
overpayment of taxes.
The foregoing discussion relates only to federal income tax law. Distributions
and dividends from the Fund also may be subject to state and local taxes.
Shareholders should consult their tax advisers with respect to particular
questions of federal, state and local taxation.
SHAREHOLDER
ACCOUNT SERVICES
AND PRIVILEGES
- --------------
TAX-SHELTERED RETIREMENT PLANS
Shares of the Fund are offered in connection with various qualified prototype
retirement plans. Information about establishing any such plan, including fees,
charges and minimum investments may be obtained from the Vista Service Center.
SYSTEMATIC INVESTMENT PLAN
A shareholder may establish a monthly investment plan to make automatic
investments through drafts automatically drawn on their checking account. With
shareholder authorization and bank approval, the Transfer Agent will forward
systematic investment plan drafts to the bank for the amount specified ($100
minimum). This amount will be automatically invested in shares at the offering
price on the date selected on the Application (or the preceding business day if
such date falls on a weekend or a holiday). The shareholder may change the
amount of the investment or discontinue the plan at any time by writing to the
Vista Service Center.
EXCHANGE PRIVILEGE
Shareholders may exchange, at respective net asset value, shares of the Fund for
Class A shares of the other Vista Funds in accordance
20
<PAGE>
with the terms of the then current prospectus of the Vista Fund being acquired.
Under the Exchange Privilege, shares of the Fund may be exchanged for shares of
other Vista funds only if those Funds are registered in the states where the
exchange may legally be made and if the account registrations are identical. The
prospectus of the Vista Fund into which shares are being exchanged should be
read carefully prior to any exchange and retained for future reference.
Additionally, with respect to exchanges from the Vista money market funds,
shareholders must have acquired their shares in such money market fund by
exchange from the Fund or one of the other Vista Funds or any exchange directly
from one of such money market funds will be done at relative net asset value
plus the appropriate sales charge. Class B shareholders of other Vista funds who
have redeemed Class B shares and paid a contingent deferred sales charge in
connection with such redemption may purchase shares with no initial sales charge
(in an amount not exceeding the redemption proceeds) if the purchase occurs
within 30 days of the redemption of the Class B shares. Any such exchange may
create a gain or loss to be recognized for federal income tax purposes.
Normally, shares of any Vista Fund to be acquired are purchased on the
redemption date, but such purchase may be delayed up to five business days if
the Fund determines that it would be disadvantaged by an immediate transfer of
the proceeds. Certain preauthorizations or indemnifications must be accepted and
on file for the acceptance of instructions by telephone to exchange shares.
Further information and telephone exchange forms are available from the Vista
Service Center.
The exchange privilege is not intended as a vehicle for short-term trading.
Excessive exchange activity may interfere with portfolio management and have an
adverse effect on all shareholders. The Fund reserves the right, without notice,
to revise or terminate the exchange privilege, limit the amount or number of
exchanges or reject any exchange in order to limit excessive exchange activity
or in other circumstances where the Directors or Investment Adviser believes
doing so would be in the best interest of the Fund.
REPORTS
When a shareholder makes an initial investment in the Fund, a shareholder
account is opened in accordance with registration instructions. A shareholder
will receive a confirmation statement showing any current transaction, such as
an additional investment or reinvestment of a dividend or distribution, along
with a summary of the status of the account as of the transaction date, except
that transactions through a Systematic Investment Plan or a Systematic
Redemption Plan will be confirmed by a regular quarterly statement. Shareholders
(except IRA accounts) will receive each January a Form 1099 showing dividends
and capital gain distributions received during the preceding calendar year.
Additionally, shareholders will receive reports at least semi-annually
containing information about the Fund, its operations and a
21
<PAGE>
list of the Fund's investments, and will receive the Fund's annual financial
statements audited by independent public accountants.
GENERAL INFORMATION
- -------------------
All shareholders have one vote per share owned and each Fund share participates
equally in dividends and distributions or, upon liquidation or dissolution, in
the net assets remaining after satisfaction of outstanding liabilities. At the
request of the holders of at least 10% of the shares, the Fund will hold a
meeting at which the board could be removed by a majority vote. There will not
usually be a shareholder meeting in any year except, for example, when the
election of the board is required to be acted upon by shareholders under the
Act.
The Fund has filed with the Commission a Registration Statement under the
Investment Company Act of 1940 and the Securities Act of 1933 with respect to
the shares offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement and the exhibits thereto.
For further information with respect to the Fund and such shares, reference is
hereby made to such Registration Statement and exhibits, which may be inspected
at the Commission's office in Washington, D.C. without charge, and copies of
which may be obtained therefrom upon payment of prescribed fees. Statements
contained in this Prospectus as to the contents of any agreements or other
documents are not necessarily complete and in each instance reference is made to
the copy of such agreement or other document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference.
22
<PAGE>
MAKE THE MOST OF YOUR VISTA PRIVILEGES
--------------------------------------
The following services are available to you as a Vista mutual fund shareholder.
[bullet] SYSTEMATIC INVESTMENT PLAN--Invest as much as you wish ($100 or more)
in the first or third week of any month. The amount will be
automatically transferred from your checking or savings account.
[bullet] SYSTEMATIC WITHDRAWAL PLAN--Make regular withdrawals of $50 or more
monthly, quarterly or semiannually. A minimum account balance of $5,000
is required to establish a systematic withdrawal plan.
[bullet] SYSTEMATIC EXCHANGE--Transfer assets automatically from one Vista
account to another on a regular, prearranged basis. There is no
additional charge for this service.
[bullet] FREE EXCHANGE PRIVILEGE--Exchange money between Vista funds in the same
class of shares without charge. The exchange privilege allows you to
adjust your investments as your objectives change. Investors may not
maintain, within the same fund, simultaneous plans for systematic
investment or exchange and systematic withdrawal or exchange.
[bullet] REINSTATEMENT PRIVILEGE--Shareholders have a one time privilege of
reinstating their investment in the Fund at net asset value next
determined subject to written request within 90 calendar days of the
redemption, accompanied by payment for the shares (not in excess of the
redemption).
For more information about any of these services and privileges, call your
shareholder servicing agent, investment representative or the Vista Service
Center at 1-800-34-VISTA. These privileges are subject to change or termination.
23
<PAGE>
<PAGE>
VISTA SERVICE CENTER
P.O. Box 419392
Kansas City, MO 64141-6392
1-800-34-VISTA
OFFICE OF THE FUND AND
BUSINESS MANAGER
Washington Management Corporation
1101 Vermont Avenue, NW
Washington, D.C. 20005
(202) 842-5665
INVESTMENT ADVISER
Washington Investment Advisers, Inc.
DISTRIBUTOR
Vista Fund Distributors, Inc.
CUSTODIAN
The Chase Manhattan Bank
TRANSFER AGENT
DST Systems, Inc.
INDEPENDENT ACCOUNTANTS
Johnson Lambert & Co.
COUNSEL
Dechert Price & Rhoads
[VISTA LOGO]
THE GROWTH FUND OF WASHINGTON, INC.
Part B
STATEMENT OF ADDITIONAL INFORMATION
May 1, 1997
1101 Vermont Avenue, NW
Washington, D.C. 20005
(202) 842-5665
The Growth Fund of Washington, Inc. (the "Fund") is a diversified, open-end
investment company that seeks long-term capital growth by investing primarily
in securities of companies headquartered or having a major place of business in
Washington, D.C., Maryland or Virginia. This Statement of Additional
Information relating to the Fund is not a prospectus and should be read in
conjunction with the Fund's Prospectus. A copy of the Fund's Prospectus can be
obtained by writing or calling the Secretary of the Fund at the above address.
The date of the Prospectus to which this statement relates is May 1, 1997.
__________________________
Vista Fund Distributors, Inc.
Distributor
Washington Management Corporation
Business Manager
Washington Investment Advisers, Inc.
Investment Adviser
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
CAPTION PAGE
General Information and History 3
Investment Objective and Policies 3
Management of the Fund 8
Directors and Director Compensation 8
Investment Advisory and Other Services 9
Execution of Portfolio Transactions and Brokerage Allocation 12
Purchase, Redemption and Pricing of Securities Being Offered 13
Determination of Net Asset Value 15
Tax Status 15
Investment Results 17
Financial Statements 18
</TABLE>
GENERAL INFORMATION AND HISTORY
The Growth Fund of Washington, Inc. (the "Fund") is a diversified, open-end
investment company that seeks long-term capital growth by investing primarily
in securities of companies headquartered or having a major place of business in
Washington, D.C., Maryland or Virginia. The Fund was incorporated under the
laws of the State of Maryland on May 24, 1985.
Washington Management Corporation, a wholly-owned subsidiary of The
Johnston-Lemon Group, Incorporated ("JLG"), is the Fund's Business Manager.
Washington Investment Advisers, Inc., a wholly-owned subsidiary of JLG, is the
Fund's Investment Adviser. Vista Fund Distributors, Inc., a wholly-owned
subsidiary of The BISYS Group, Inc., is the Distributor of the Fund's shares.
The Investment Adviser believes economic and demographic strengths of the
Washington-Maryland-Virginia area benefit both area businesses and their
shareholders. In the opinion of the Investment Adviser, one measure of such
strengths is the performance of area securities as reflected in the Johnston,
Lemon Index (the "Index"), an unmanaged index of the common stocks of 30
Washington area companies, which is published weekly in THE WASHINGTON POST.
The Fund is not required to invest in stocks in the Index, and may invest a
large portion or all of its assets in stocks not in the Index, so the
performance of the Fund could be better or worse than the performance of the
Index. Past performance of the Index does not predict future performance of
the Index or the Fund. Johnston, Lemon & Co. Incorporated ("Johnston, Lemon"),
a Washington, D.C. based regional brokerage firm and a member of the New York
Stock Exchange, developed the Index. Johnston, Lemon is a wholly-owned
subsidiary of JLG.
Washington Investment Advisers, Inc. has adopted a personal investing policy
based upon Investment Company Institute guidelines. This policy includes: a
ban on acquisitions of securities pursuant to an initial public offering;
restrictions on acquisitions of private placement securities; pre-clearance and
reporting requirements; review of duplicate confirmation statements; annual
recertification of compliance with codes of ethics; disclosure of personal
holdings by certain investment personnel prior to recommendation for purchase
for the Fund; blackout periods for certain investment personnel; limitations on
service as a director of publicly traded companies; and disclosure of personal
securities transactions.
INVESTMENT OBJECTIVE AND POLICIES
Options
The Fund may, to a limited extent, engage in transactions involving options,
as described in the Prospectus.
Covered Call Options
The Fund may write covered call options on its portfolio securities. The
writing of covered call options by the Fund is subject to limitations imposed
by certain state securities authorities. The Fund has been advised that under
the most restrictive of such limitations currently in effect, no more than 25%
of the Fund's net assets may be subject to covered options. Further, such
options and the securities underlying the call must both be listed on a
national securities exchange.
When the Fund sells an option, an amount equal to the net premium received by
the Fund is included in the liability section of the Fund's Statement of Assets
and Liabilities as a deferred credit. The amount of the deferred credit will be
subsequently marked-to-market to reflect the current market value of the option
written. The current market value of a traded option is the last sale price or,
in the absence of a sale, the mean between the closing bid and asked price. If
an option expires on its stipulated expiration date or if the Fund enters into
a closing purchase transaction (i.e., the Fund terminates its obligation as
the writer of the option by purchasing a call option on the same security with
the same exercise price and expiration date as the option previously written),
the Fund will realize a gain (or loss if the cost of a closing purchase
transaction exceeds the net premium received when the option was sold) and the
deferred credit related to such option will be eliminated. If an option is
exercised, the Fund will realize a long-term or short-term gain or loss from
the sale of the underlying security and the proceeds of the sale will be
increased by the net premium originally received. The writing of covered
options may be deemed to involve the pledge of the securities against which the
option is being written. Securities against which options are written will be
segregated on the books of the Fund's custodian.
Purchasing Put Options
The Fund may purchase exchange traded put options to protect its portfolio
holdings in an underlying security against a substantial decline in market
value. Such hedge protection is provided during the life of the put options
since the Fund, as holder of the put option, is able to sell the underlying
security at the put exercise price regardless of any decline in the underlying
security's market price. In order for a put option to be profitable, the
market price of the underlying security must decline sufficiently below the
exercise price to cover the premium and transaction costs. By using put
options in this manner, the Fund will reduce any profit it might otherwise have
realized on its underlying security by the premium paid for the put option and
by transaction costs.
State Regulations on Options
The Fund will purchase put options and write call options only to the extent
permitted by the policies of state securities authorities in states where
shares of the Fund are qualified for offer and sale. Since certain of these
states do not permit investment in options not listed on national securities
exchanges, the Fund will not purchase such put options unless and until such
restrictions are removed and appropriate changes are made to the prospectus.
Loans of Portfolio Securities
The Fund may lend its portfolio securities provided: (1) the loan is
secured continuously by collateral consisting of U.S. Government securities,
cash or cash equivalents adjusted daily to have a market value at least equal
to the current market value of the securities loaned; (2) the Fund may at any
time call the loan and regain the securities loaned; (3) the Fund will receive
any interest or dividends paid on the loaned securities; and (4) the aggregate
market value of securities loaned will not at any time exceed one-third of the
total assets of the Fund. In addition, it is anticipated that the Fund may
share with the borrower some of the income received on the collateral for the
loan or that it will be paid a premium for the loan. Before the Fund enters
into a loan, the Fund's Investment Adviser considers all relevant facts and
circumstances including the creditworthiness of the borrower.
Investment Restrictions
The Fund has adopted the following restrictions which, together with its
investment objective, are its fundamental policies. These fundamental policies
cannot be changed without approval of the holders of a majority (as defined in
the Investment Company Act of 1940, the "Act") of the Fund's outstanding
shares. The Act defines "majority" as the lesser of (1) 67% of the Fund's
outstanding shares present at a meeting at which the holders of more than 50%
of the outstanding shares are present in person or by proxy, or (2) more than
50% of the Fund's outstanding shares.
The Fund may not:
(1) borrow money, except for temporary or emergency purposes and not for
investment purposes and then only from banks in an amount not exceeding at the
time of borrowing the lesser of 10% of the Fund's total assets taken at cost or
5% of the market value of the Fund's total assets;
(2) underwrite any securities issued by other persons, except to the extent
that the purchase of portfolio securities and the later disposition thereof may
be deemed to be underwriting;
(3) purchase or sell real estate, but this shall not prevent the Fund from
investing in securities secured by real estate or interests therein;
(4) purchase or sell commodities, commodities contracts or oil, gas or other
mineral exploration or development programs (although it may invest in
companies which own or invest in such interests);
(5) make loans to other persons, except to the extent that the purchase of
debt obligations in accordance with the Fund's investment objectives is
considered the making of loans, and except that the Fund may (i) lend its
portfolio securities and (ii) enter into repurchase agreements;
(6) purchase any securities which would cause 25% or more of the value of its
total assets at the time of such purchase to be invested in the securities of
one or more issuers having their principal business activities in the same
industry, provided that there is no limitation in respect to investments in
obligations issued or guaranteed by the U.S. Government or its agencies or
instrumentalities;
(7) issue senior securities except as appropriate to evidence indebtedness
which it is permitted to incur;
(8) with respect to 75% of its assets, invest more than 5% of its total assets
(taken at market value) in the securities of any one issuer;
(9) with respect to 75% of its assets, purchase more than 10% of the voting
securities of any one issuer (except for investments in obligations issued or
guaranteed by the U.S. Government or its agencies or instrumentalities). In
order to comply with current state rules this restriction shall be applicable
to 100% of the Fund's assets, but may be lowered to no less than 75% without
shareholder approval if state rules are changed.
The following restrictions are not fundamental and may be changed by the
Fund without shareholder approval, in compliance with applicable law,
regulation, or regulatory policy. The Fund may not:
(a) make short sales of securities or purchase any securities on margin,
except for such short-term credits as are necessary for the clearance of
transactions;
(b) purchase or sell any put or call options or any combination thereof,
except to the extent described above and in the Prospectus under "Investment
Objective, Policies and Techniques";
(c) purchase any securities subject to legal or contractual restrictions on
the resale thereof, or purchase securities which are not readily marketable, or
enter into repurchase agreements not terminable within seven business days, if
such purchase or entering into a repurchase agreement would cause more than 10%
of the value of its total assets to be invested in such securities and such
repurchase agreements;
(d) purchase securities of any issuer with a record of less than three years
continuous operation, including predecessors, except obligations issued or
guaranteed by the U.S. Government or its agencies, if such purchase would cause
the investments of the Fund in all such issuers to exceed 5% of the value of
its total assets;
(e) invest its assets in securities of other open-end investment companies,
but may invest up to 5% of its assets in closed-end investment companies, and
may (together with other investment companies having the same investment
adviser or controlled by the Fund or such other investment companies) purchase
or acquire up to 10% of the outstanding voting stock of a closed-end fund, and
may acquire securities of other investment companies as part of a merger,
consolidation or acquisition of assets; or
(f) purchase warrants of any issuer if, as a result more than 2% of the value
of its total assets would be invested in warrants which are not listed on the
New York Stock Exchange or the American Stock Exchange, or more than 5% of the
value of its total assets would be invested in warrants whether or not so
listed, such warrants in each case to be valued at market or fair value, but
assigning no value to warrants acquired by the Fund in units with or attached
to debt securities.
(g) pledge, mortgage or hypothecate its assets, (i) except to the extent that
the writing of covered call options may be deemed to involve the pledge of
securities against which the option is being written and (ii) except to secure
borrowings permitted by subparagraph (1) above, it may pledge securities having
a value at the time of pledge not exceeding 15% of the cost of its total
assets.
For the purposes of subparagraphs (1), (6), (c), (d) and (f) "value" shall
mean the value used in determining the Fund's net asset value.
All percentage limitations shall be computed as of the time of making the
investment or taking the action to which the limitation refers. Moreover, any
investment restriction which involves a maximum percentage of securities or
assets shall not be considered to be violated unless an excess over the
percentage occurs immediately after, and is caused by, the restricted activity.
MANAGEMENT OF THE FUND
FUND DIRECTORS AND OFFICERS
Directors and Director Compensation
(with their principal occupations during the past five years)#
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Name and Address Position with Principal Occupation(s) during Aggregate Compensation from Registrant during
Fiscal Year ended otal Compensation from
Registrant Past 5 Years# 12/31/96 Registrant and Fund
Complex/3/
Cyrus A. Ansary Director President, Investment Services $2,000 $2,000
1725 K Street, NW Suite 410 International Co.
Washington, DC 20006
Age: 63
*James H. Lemon, Jr./1,2/ Chairman of the Chairman and Chief Executive 0 0
Age: 61 Board Officer, The Johnston-Lemon
Group, Incorporated
*Harry J. Lister/1,2/ President and Director President and Director, Washington Management Corporation 0
0
Age: 61
T. Eugene Smith Director President, T. Eugene Smith, Inc. $2,000 $2,000
666 Tintagel Lane
McLean, VA 22101
Age: 66
Leonard P. Steuart II Director Vice President, Steuart Investment Company $2,000
$2,000
5454 Wisconsin Avenue
Chevy Chase, MD 20815
Age: 62
Margita E. White Director President, Association for Maximum Service Television, $2,000
$2,000
1776 Massachusetts Ave., NW Inc.
Suite 310
Washington, DC 20036
Age: 59
</TABLE>
#Positions within the organizations listed may have changed during the period.
* Address is 1101 Vermont Avenue, NW, Washington, DC 20005
/1/ James H. Lemon, Jr. and Harry J. Lister are affiliated with the Business
Manager and, accordingly, receive no remuneration from the Fund.
/2/ Directors who are considered "interested persons" as defined in the Act.
The Fund pays all Directors who are not "interested persons" an attendance fee
of $400 per meeting and $200 for each committee meeting attended. The total
compensation paid by the Fund to such Directors for the fiscal year ended
December 31, 1996 was $8,000. All directors who are not "interested persons"
of the Fund serve on the Contracts, Audit and Nominating Committees. No
officers, directors or employees of the Business Manager or Investment Adviser
receive remuneration directly from the Fund.
/3/ No director serves on any other fund boards in the complex and none has any
pension or retirement benefits from the Fund.
Officers
(with their principal occupations during the past five years)#
* Stephen Hartwell (Age: 82), EXECUTIVE VICE PRESIDENT. Washington Management
Corporation, Chairman
* Howard L. Kitzmiller (Age: 66), SENIOR VICE PRESIDENT, SECRETARY/TREASURER
AND CHIEF FINANCIAL OFFICER. Washington Management Corporation, Senior Vice
President, Secretary, Assistant Treasurer and Director
* Prabha S. Carpenter (Age: 43), VICE PRESIDENT. Washington Investment
Advisers, Inc., Vice President
* Lois A. Erhard (Age: 44), VICE PRESIDENT. Washington Management Corporation,
Vice President
* J. Lanier Frank (Age: 36), ASSISTANT SECRETARY. Washington Management
Corporation, Assistant Vice President
* Michael W. Stockton (Age: 30), ASSISTANT VICE PRESIDENT, ASSISTANT SECRETARY
AND ASSISTANT TREASURER. Washington Management Corporation, Assistant Vice
President and Assistant Treasurer
#Positions within the organizations listed may have changed during the period.
* Address is 1101 Vermont Avenue, NW, Washington, DC 20005
Directors of the Fund, acting on behalf of shareholders, direct and coordinate
the Fund's overall policy and have retained the services of the Business
Manager and Investment Adviser to operate the Fund.
As of April 4, 1997 and directors as a group owned beneficially or of record
approximately 157,000 shares of the Fund (6.5%).
INVESTMENT ADVISORY AND OTHER SERVICES
As compensation for services rendered to the Fund, the Fund pays the
Investment Adviser a fee, computed daily and paid monthly, of .375% per annum
on the Fund's net assets up to $100,000,000, decreasing to .35% per annum on
the net assets in excess of $100,000,000. The Fund also pays the Business
Manager, as compensation for services rendered to the Fund, a fee computed
daily and paid monthly, of .375% per annum on the Fund's net assets up to
$40,000,000, decreasing to .30% on the next $60,000,000 of net assets and .25%
per annum on net assets in excess of $100,000,000. During the fiscal year ended
December 31, 1996 the Business Manager received a fee of $172,781 and the
Investment Adviser $178,474. During fiscal year ended December 31, 1995, the
Business Manager received $147,686 and the Investment Adviser received
$148,597. Comparable fees for the fiscal year ended December 31, 1994 were
$142,311 and $142,348 respectively.
Subject to the supervision and direction of the Fund's Board of Directors, the
Investment Adviser determines the securities to be bought, sold or held in the
Fund's portfolio, determines the timing and amount of transactions, and places
orders with broker-dealers of its choice. The Business Manager provides the
facilities and services required to carry on the Fund's general administrative
and corporate affairs. Such services include providing executive personnel,
clerical staff, office space and equipment, arranging for and supervising all
shareholder services and federal and state regulatory compliance.
The Business Manager and the Investment Adviser will reimburse the Fund in
equal parts to the extent that the Fund's annual operating expenses, exclusive
of taxes, interest, brokerage commissions or transaction costs, distribution
fees and extraordinary expenses, exceed the applicable expense limitations
imposed by the securities regulations in any state in which its shares are
qualified for sale to the public. Reimbursement will be limited to the amount
of fees otherwise payable to the Investment Adviser and Business Manager. No
such limits were exceeded during the year ended December 31, 1996.
The Investment Advisory and Business Management Agreements are subject to
annual approval by (i)the Board of Directors of the Fund or (ii)vote of a
majority (as defined in the Act) of the outstanding voting securities of the
Fund, provided that in either event the continuance is also approved by a
majority of the Directors who are not "interested persons" of the Fund by vote
cast in person at a meeting called for the purpose of voting on such approval.
The Investment Advisory and the Business Management Agreements were last
approved by shareholders at the annual meeting on April 29, 1991. The Board of
Directors, including a majority of the Directors who are not "interested
persons" of the Fund, at a meeting held on March 6, 1997, voted to extend the
Investment Advisory and Business Management Agreements for one year beginning
May 1, 1997 until April 30, 1998. The Investment Advisory and Business
Management Agreements are each terminable without penalty on not less than 60
days' notice by the Board of Directors of the Fund or by vote of the holders of
a majority of the Fund's shares. Each will terminate automatically in the
event of their assignment.
The Chase Manhattan Bank (the "Custodian"), 1211 Avenue of the Americas, New
York, NY 10036, serves as the Fund's custodian. As Custodian, it maintains
custody of Fund assets, settles portfolio purchases and sales, collects
portfolio income, maintains general ledger and capital stock accounts and
investment ledgers, prepares daily trial balances and calculates net asset
values. DST Systems, Inc. (the "Transfer Agent"), located at 210 W. 10th
Street, Kansas City, MO 64105 serves as the Fund's transfer agent. The
Transfer Agent maintains the Fund's official record of shareholders and, as
dividend agent, it is responsible for crediting dividends to shareholders
accounts.
Johnson Lambert & Co., independent certified public accountants, located at
7500 Old Georgetown Road, Bethesda, Maryland 20814, has been selected as
auditor for the Fund. In such capacity, Johnson Lambert & Co. conducts an
annual audit of the Fund, meets with the Fund's Audit Committee and management
at least annually, reads filings, such as Form N-SAR and registration statement
amendments, prepares tax returns, and reads the Fund's annual and semi-annual
reports.
Distribution Plan
The Fund has adopted a Distribution Plan (the "Plan") under which the Fund
will pay to the Distributor a monthly fee at a maximum annual rate of .25 of 1%
of the Fund's net assets. Payments under the Plan will be made to the
Distributor to finance activity which is primarily intended to result in the
sale and retention of Fund shares including, but not limited to, advertising,
salaries and other expenses of the Distributor relating to selling or servicing
efforts, expenses of organizing and conducting sales seminars, printing of
prospectuses and reports for other than existing shareholders, preparation and
distribution of advertising material and sales literature and payments to
dealers whose customers purchase Fund shares.
The Plan, together with a distribution agreement with the Distributor, was
approved by the Directors including a majority of the Directors who are not
"interested persons", as defined in the Act, who have no direct or indirect
financial interest in the operation of the Plan or the Distribution Agreement
("Plan Directors"). While the Plan is in effect, the selection and nomination
of Directors who are not "interested persons" shall be committed to the
discretion of Plan Directors. The Plan was approved by shareholders at the
annual meeting on August 28, 1986. Renewal of the Plan must be considered by
the Board of Directors annually after their review of information and
consideration of all pertinent factors with respect to the Plan at a meeting
called for that purpose. In considering whether to continue the Plan and any
agreement related to it, the Directors have a duty to request and evaluate, and
the Distributor has a duty to furnish, such information as the Directors deem
reasonably necessary for them to reach an informed determination. Each year
that the Plan remains in effect the Distributor will prepare and furnish to the
Directors at least quarterly, and the Directors will review, a written report
of the amounts expended under the Plan and the purpose for which expenditures
were made.
All material amendments to the Plan must be approved by a vote of the
Directors, including a majority of the Plan Directors, at a meeting called for
that purpose. The Plan may not be amended to increase materially the amount to
be spent for distribution without shareholder approval. The Plan may be
terminated without penalty at any time by a vote of a majority of the Plan
Directors or a majority of the outstanding shares of the Fund. Any agreement
under the Plan may be terminated upon 60 days' written notice and will
terminate automatically in the event of its assignment.
The total amount paid to the Distributor under the Plan for the fiscal year
ended December 31, 1996 was $116,761. Those amounts were expended as follows
and such expenditures were reviewed quarterly by the Fund's Board of Directors:
Service Fees to Dealers $67,330
Distributor's Selling and
Servicing Expenses $49,431
All officers of the Fund and two of its Directors, who are "interested
persons" of the Fund, are officers or directors of Washington Management
Corporation or Washington Investment Advisers, Inc., wholly-owned subsidiaries
of JLG. Johnston, Lemon, also a subsidiary of JLG, participates in receiving
dealer service fee payments from the Plan. Some of the Fund's officers and two
Directors who are "interested persons" of the Fund are also registered
representatives with Johnston, Lemon and, as such, to the extent they have sold
shares of the Fund, receive a portion of the service fee payments in the same
manner as all other Johnston, Lemon registered representatives.
During the fiscal year ended December 31, 1996, the Fund's Distributor,
Vista Fund Distributors, Inc. ("VFD"), received $13,111 (after allowance to
dealers), as its portion of sales charges paid by purchasers of the Fund's
shares. Additionally, VFD received $116,761 from the Fund's Distribution Plan.
Johnston, Lemon received $31,013 in commissions from sales and $36,304 in
dealer service fees from VFD in accordance with the terms of VFD's Selling
Group Agreement. All of the officers of the Fund and two of its directors are
officers of or associated with JLG.
Brokerage commissions paid on portfolio transactions for the fiscal years
ended December 31, 1996, 1995, and 1994 amounted to $21,010, $31,032 and
$22,026, respectively. Differences in commission amounts reflect essentially
differences in aggregate dollar amount of the portfolio transactions. During
fiscal years ended December 31, 1996, 1995, and 1994 Johnston, Lemon received
$0, $1,096 and $3,755, respectively, in commissions for executing portfolio
transactions for the Fund.
EXECUTION OF PORTFOLIO TRANSACTIONS
AND BROKERAGE ALLOCATION
Orders for the Fund's portfolio securities transactions are placed by the
Investment Adviser. The objective of the Fund is to obtain the best available
prices in its portfolio transactions taking into account the costs and
promptness of executions. There is no agreement or commitment to place orders
with any broker-dealer. In transactions executed in the over-the-counter
market, purchases and sales are transacted directly with principal
market-makers except in those circumstances where, in the opinion of the
Investment Adviser, better prices and executions are available elsewhere.
Subject to the requirement of seeking the best available prices and
executions, the Investment Adviser may, in circumstances in which two or more
broker-dealers are in a position to offer comparable prices and execution, give
preference to broker-dealers which have provided research, statistical, and
other related services to the Investment Adviser for the benefit of the Fund
if, in its judgment, the Fund will obtain prices and executions comparable with
those available from other qualified firms. The Investment Adviser is of the
opinion that while such research and related services are useful in varying
degrees, they are of indeterminable value and do not reduce the expenses of the
Investment Adviser.
The Directors of the Fund have adopted a policy which permits the Investment
Adviser, subject to the objective of obtaining the best price and execution, to
consider a broker-dealer's sale of Fund shares as a factor in selecting from
among broker-dealers qualified to offer comparable prices and execution of
portfolio transactions. This policy does not imply a commitment by the Fund to
execute portfolio transactions through all broker-dealers which sell shares of
the Fund. The Investment Adviser will periodically report to the Directors to
enable them to assure themselves that the best execution objective continues to
be paramount in selection of executing broker-dealers.
The Fund's Board of Directors has determined that the Fund may effect
portfolio transactions through Johnston, Lemon (i) if, in the Investment
Adviser's judgment, the use of Johnston, Lemon is likely to result in prices
and executions at least as favorable as those of other qualified
broker-dealers, (ii) if, in the transaction, the commission, fee or other
remuneration to be received by Johnston, Lemon is consistent with those charged
by Johnston, Lemon to comparable unaffiliated customers in similar transactions
and (iii) if such commission, fee or other remuneration is reasonable and fair
compared to the commission, fee or other remuneration received by other
broker-dealers in connection with comparable transactions involving similar
securities being purchased or sold on an exchange during a comparable period of
time. The Fund's Board of Directors, including a majority of those Directors
who are not "interested persons" of the Fund, have adopted procedures which are
reasonably designed to provide that any commission, fee or other remuneration
received by Johnston, Lemon is consistent with these standards. Johnston,
Lemon will not participate in commissions from brokerage given by the Fund to
other brokers or dealers. Over-the-counter purchases and sales are transacted
directly with principal market makers except in those cases in which better
prices and executions may be obtained elsewhere. The Fund will in no event
effect principal transactions with Johnston, Lemon, even in securities in which
Johnston, Lemon makes a market.
The Fund does not consider that it has an obligation to obtain the lowest
available commission rate to the exclusion of price, service and qualitative
considerations. Nevertheless, the personnel of the Investment Adviser are
authorized to negotiate payment only for brokerage services rendered and not
for research, statistical or other services. The Fund does not authorize the
payment of commissions to broker-dealers in excess of commissions other
qualified broker-dealers would have charged for handling comparable
transactions in recognition of their having provided research, statistical, or
other related services, or of their having sold Fund shares.
PURCHASE, REDEMPTION AND
PRICING OF SECURITIES BEING OFFERED
How to Purchase Shares
Vista Fund Distributors, Inc., is the Distributor of the Fund shares. The
information pertaining to the purchase and redemption of the Fund's shares
appearing in the Prospectus under the caption "HOW TO PURCHASE SHARES" is
hereby incorporated by reference.
The Fund's shares may be purchased at their net asset value next computed
after receipt of an order, plus a sales charge (the "Offering Price"), through
broker-dealers who have current sales agreements with the Distributor. In the
alternative, once an account has been established and the selling broker-dealer
has been recorded, additional Fund shares may be purchased by wire or by
sending a check payable to The Growth Fund of Washington, Inc. with the
shareholder's Fund account number indicated on the check, to:
Vista Service Center
P.O. Box 419392
Kansas City, MO 64141-6392
The "Invest by Mail" stub which accompanies each Fund confirmation statement
should be included with any purchase order. The Fund will send each
shareholder a statement confirming the number of shares purchased.
Purchases may also be made by automatic investment plan whereby your bank
account is debited at specified amounts and intervals or by telephone if
certain preauthorization and indemnification is made (see items 5, 6, 8 and 10
of the Account Application in the Fund's Prospectus).
A minimum initial investment of $2,500 ($1,000 for a regular or SEP IRA
account and $250 for a spousal IRA) is required to open a shareholder account
and each subsequent investment must be $100 or more.
Fund shares may be purchased in full and fractional shares calculated to three
decimal places and acquired through a broker-dealer or the transfer agent. No
stock certificate will be issued unless a shareholder makes a written request
therefor to the Transfer Agent at the above address, in which case a
certificate will be provided at no cost to the shareholder. No certificates
will be issued for fractional shares.
How to Redeem Shares
The information pertaining to redemption of the Fund's shares appearing in the
Prospectus under the caption "HOW TO REDEEM SHARES" is hereby incorporated by
reference.
Shares tendered for redemption to Vista Service Center at the address given
above under "How to Purchase Shares" are redeemed without charge but shares
tendered for redemption through Dealers may be subject to a service charge by
such Dealers. The redemption price may be more or less than the shareholder's
cost for the redeemed shares depending on the market value of the Fund's
portfolio securities at the time of redemption.
DETERMINATION OF NET ASSET VALUE
The Fund's net asset value per share is determined as of the close of trading
on the New York Stock Exchange (the "NYSE") (currently 4:00 p.m. New York time
for stocks and 4:15 p.m. for options) on each day, Monday through Friday, on
which the NYSE is open for trading. The Fund is not required to determine its
net asset value per share on days when changes in the value of its portfolio
securities will not affect such value or on days during which no orders to
purchase or sell Fund shares are received. Net asset value per share is
computed by dividing the value of the Fund's total assets less liabilities by
the total number of shares outstanding. The Fund's expenses and fees are
accrued daily and taken into account in determining the net asset value.
TAX STATUS
The Fund intends to qualify and elect to be taxed as a regulated investment
company under Subchapter M of the Internal Revenue Code ("Code").
Qualification and election to be taxed as a regulated investment company
involve no supervision or management by any government agency. To qualify as
a regulated investment company the Fund must distribute to shareholders at
least 90% of its net investment income, and meet certain diversification of
assets, source of income, and other requirements of the Code. By so doing, the
Fund will not be subject to income tax on that portion of its net investment
income and net realized capital gains distributed to shareholders. If the Fund
does not meet all of these Code requirements, it will be taxed as an ordinary
corporation and its dividends and distributions will be taxable to shareholders
as ordinary income dividends regardless of whether such distributions were
derived from the Fund's net long-term capital gains.
The Fund will be subject to a non-deductible 4% excise tax on amounts not
distributed on a timely basis in accordance with a calendar year distribution
requirement. To avoid the tax the Fund must distribute during each calendar
year (1) at least 98% of its ordinary income (not taking into account any
capital gains or losses) for the calendar year, (2) at least 98% of its capital
gains in excess of its capital losses for the twelve-month period ending on
October 31 of the calendar year, and (3) all ordinary income and capital gains
for previous years that were not distributed during such years. To avoid
application of the excise tax, the Fund intends, to the extent practicable, to
make its distributions in accordance with the calendar year distribution
requirement. A distribution will be treated as paid during the calendar year
if it is declared by the Fund in December, with a record date in that month,
and paid by the Fund by January 31 of the following year. Such distributions
will be taxable to shareholders in the year the distributions are declared,
rather than the year in which the distributions are received.
Dividends from net investment income and net short-term capital gain
distributions are taxable to shareholders as ordinary income. To the extent
determined each year, such dividends are eligible for the dividends received
deduction available to corporations.
Distributions of net long-term capital gains are taxable to shareholders as
long-term capital gains, regardless of the length of time the Fund shares have
been held by a shareholder, and are not eligible for the dividends received
deduction. A loss by a shareholder on the sale of shares of the Fund with
respect to which long-term capital gain distributions have been paid will, to
the extent of such long-term capital gain distributions, be treated as
long-term capital loss even though such shares have been held by the
shareholder for less than one year.
All dividends and distributions are taxable to the shareholder whether
reinvested in additional shares or received in cash. Shareholders receiving
distributions in the form of additional shares will have a cost basis for
federal income tax purposes in each share equal to the net asset value of a
share of the Fund on the reinvestment date. Shareholders will be notified
annually as to the federal tax status of such payments.
Distributions and dividends by the Fund reduce the net asset value of the
Fund's shares. Should a distribution reduce the net asset value below a
shareholder's cost basis, it nevertheless would be taxable to the shareholder
as ordinary income or capital gains as described above, even though, from an
investment standpoint, it may constitute a partial return of capital. In
particular, investors should be careful to consider the tax implications of
buying shares just prior to a distribution. The price of shares purchased at
that time includes the amount of the forthcoming distribution. Therefore,
those purchasing Fund shares just prior to a distribution will receive a return
of capital upon the ensuing distribution which will nevertheless be taxable to
them.
Upon redemption, sale or exchange of his shares, a shareholder will realize a
taxable gain or loss depending upon his cost basis in his shares. Such gain or
loss will be treated as capital gain or loss if the shares are capital assets
in the shareholder's hands. Such gain or loss will be long-term or short-term
depending on the shareholder's holding period for the shares.
A gain realized on a redemption will not be affected by exercise of the
reinstatement privilege. A loss realized on a redemption, however, will be
disallowed to the extent the shares redeemed are replaced pursuant to exercise
of the reinstatement privilege. In such case, the basis of the shares acquired
pursuant to the exercise of the reinstatement privilege will be adjusted to
reflect the disallowed loss.
Certain of the options transactions that may be undertaken by the Fund would
result in "straddles" for federal income tax purposes. Without regard to
the straddle rules, any gains (or losses) on the options are generally
considered short-term capital gains (or losses) for federal income tax
purposes. The straddle rules, however, may affect the character of gains (or
losses) realized. The options transactions may also result in short sales
which could eliminate the holding period of the underlying securities for
purposes of the 30% limit on gains from securities held for less than three
months which applies to regulated investment companies. As a result, the Fund
may be restricted by the 30% limit in the amount of options transactions it may
undertake. In addition, losses realized by the Fund on either options or the
underlying securities may be deferred under the straddle rules, rather than
being taken into account in calculating the taxable income for the taxable year
in which the losses are realized. Because only a few of the regulations
implementing the straddle rules have been promulgated, the consequences of
straddle transactions to the Fund are not entirely clear.
The Fund is required to report to the Internal Revenue Service all dividends
and distributions as well as gross proceeds from the redemption of Fund shares,
except in the case of certain exempt shareholders. All dividends and proceeds
will be subject to withholding of federal income tax at a rate of 31% ("backup
withholding") in the case of non-exempt shareholders if (1) the shareholder
fails to furnish the Fund with the shareholder's correct taxpayer
identification number or social security number, (2) the Internal Revenue
Service notifies the Fund that the shareholder has failed to report properly
certain interest and dividend income to the IRS and to respond to notices to
that effect, or (3) when required to do so, the shareholder fails to certify
that he is not subject to backup withholding. If the withholding provisions
are applicable, any such dividends or proceeds, whether reinvested in
additional shares or taken in cash, will be reduced by the amounts required to
be withheld.
The foregoing discussion relates only to federal income tax law as applicable
to U.S. persons (i.e., U.S. citizens and residents and U.S. domestic
corporations, partnerships, trusts and estates). Distributions and dividends
by the Fund also may be subject to state and local taxes, and their treatment
under state and local income tax laws may differ from federal income tax
treatment. Shareholders should consult their tax advisers with respect to
particular questions of federal, state and local taxation. Shareholders who
are not U.S. persons should consult their tax advisers regarding U.S. and
foreign tax consequences of ownership of shares of the Fund, including the
likelihood that dividends to them would be subject to withholding of U.S. tax.
INVESTMENT RESULTS
From time to time, the Fund may use hypothetical investment examples and
performance information in advertisements, shareholder reports or other
communications to shareholders. From time to time, the performance and yield
of the Fund may be quoted and compared to those of other mutual funds with
similar investment objectives, unmanaged investment accounts, including savings
accounts, or other similar products and to stock or other relevant indices or
to rankings prepared by independent services or other financial or industry
publications that monitor the performance of mutual funds. For example, the
performance of the Fund may be compared to data prepared by CDA/Wiesenberger,
Ibbotson Associates, Lipper Analytical Services and Morningstar, Inc.
Performance and yield data as reported in national financial publications
including, but not limited to, MONEY MAGAZINE, FORBES, BARRON'S, THE WALL
STREET JOURNAL and THE NEW YORK TIMES, or in local or regional publications,
may also be used in comparing the performance and yield of the Fund.
Additionally, the Fund may, with proper authorization, reprint articles written
about the Fund and provide them to prospective shareholders.
Quotations of total return for the Fund will be expressed in terms of the
annual compound rate of return of a hypothetical investment in the Fund over
periods of 1 year, five years and 10 years, calculated pursuant to the
following formula required by the Securities and Exchange Commission: P(1 +
T)/n/ = ERV (where P = a hypothetical initial payment of $1,000, T = the
average annual total return, n = the number of years, and ERV = the ending
redeemable value of a hypothetical $1,000 payment made at the beginning of the
period.
The Fund's average annual compound rates of return for the 1, 5 and 10 year
periods, ending December 31, 1996 were +9.19%, +13.60% and +10.65%
respectively. These figures assume deduction of the maximum sales charge of
4.75% from the investment at the beginning of each period and assume that all
dividends and distributions are reinvested at net asset value on the
reinvestment date. (Sales charges are reduced under certain circumstances as
described in the Prospectus under "How to Purchase Shares", but these
reductions are not reflected in the quoted return figures above.) The average
annual compound rates of return for the same periods without assuming deduction
of a sales charge would be +14.65%, +14.71% and +11.19%, respectively.
The Fund's investment results will vary from time to time depending upon
market conditions, the composition of the Fund's portfolio and operating
expenses, so that total return should not be considered representative of what
an investment in the Fund may earn in any future period. These factors and
possible differences in the methods used in calculating performance should be
considered when comparing the Fund's investment results with those published
for other investment companies, other investment vehicles and unmanaged
indices. The Fund's results also should be considered relative to the risks
associated with its investment objective and policies.
FINANCIAL STATEMENTS
The Investment Portfolio, Statement of Assets and Liabilities, Statement of
Operations, Statement of Changes in Net Assets, Notes to Financial Statements,
and Report of Independent Accountants contained in the Attached Annual Report
dated December 31, 1996, are hereby incorporated by reference into this
statement of additional information.
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Included in Prospectus - Part A
Selected Per Share Data and Ratios
Incorporated by reference to the Registrant's Annual Report - Part B
Investment Portfolio
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Notes to Financial Statements
Report of Independent Accountants
(b) Exhibits:
1. Articles of Incorporation
2. By-laws
3. None
4. Specimen of share certificate
5. Investment Advisory and Business Management Contracts
6. Prinicpal Underwriting Agreement
7. None
8. Tranfer Agency Agreement
9. On file (see SEC files nos. 811-4309 and 2-97999)
10. Not applicable to this filing
11. Consent of Independent Accountants
12. None
13. None
14. Model Plans
15. Plan of Distribution (12b-1 Plan)
16. On file (see SEC files nos. 811-4309 and 2-97999)
17. Financial Data Schedule
Item 25. Persons Controlled by or under Common Control With Registrant.
None
Item 26. Number of Holders of Securities.
As of April 1, 1997
Number of
Title of Class
Record-Holders
Capital Stock
2,943
($.01 par value)
Item 27. Indemnification.
Article VI, paragraph (3) of the Registrant's Articles of Incorporation
provides as follows:
(3) Each director and each officer of the Corporation shall be indemnified by
the Corporation to the full extent permitted by the general laws of the State
of Maryland, subject to the requirements of the 1940 Act.
Article XII of Registrant's By-Laws provides as follows:
ARTICLE XII
Indemnification of Directors, Officers, and Employees
The Corporation shall indemnify to the full extent authorized by law any
person made or threatened to be made a party to any action, suit or proceeding,
whether criminal, civil, administrative or investigative, by reason of the fact
that he, is or was a director, officer, or employee of the Corporation or
serves or served any other enterprise as a director, officer, or employee at
the request of the Corporation, except that such indemnity shall not protect
any such person against any liability to the Corporation or any stockholder
thereof to which such person 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.
Section 2-418 of the Maryland General Corporation Law provides as follows:
<UNDEF> 2-418. Indemnification of directors, officers, employees and agents.
(a) Definitions. -- In this section the following words have the meanings
indicated.
(1) "Director" means any person who is or was a director of a corporation
and any person who, while a director of a corporation, is or was serving at the
request of the corporation as a director, officer, partner, trustee, employee,
or agent of another foreign or domestic corporation, partnership, joint
venture, trust, other enterprise, or employee benefit plan.
(2) "Corporation" includes any domestic or foreign predecessor entity of a
corporation in a merger, consolidation, or other transaction in which the
predecessor's existence ceased upon consummation of the transaction.
(3) "Expenses" include attorney's fees.
(4) "Official capacity" means the following:
(i) When used with respect to a director, the officer or a director in the
corporation; and
(ii) When used with respect to a person other than a director as
contemplated in subsection (j), the elective or appointive office in the
corporation held by the officer, or the employment or agency relationship
undertaken by the employee or agent in behalf of the corporation.
(iii) "Official capacity" does not include service for any other foreign or
domestic corporation or any partnership, joint venture, other enterprise, or
employee benefit plan.
(5) "Party" includes a person who was, is, or is threatened to be made a
named defendant or respondent in a proceeding.
(6) "Proceeding" means any threatened pending or contemplated action, suit or
proceeding, whether civil, criminal, administrative, or investigative.
(b) Permitted indemnification of director.
(1) A Corporation may indemnify any director made a party to any proceeding
by reason of service in that capacity if the director:
(i) Acted in good faith;
(ii) Reasonably believed:
1. In the case of conduct in the director's official capacity with the
corporation, that the conduct was in the best interests of the corporation; and
2. In all other cases, that the conduct was at least not opposed to the
best interests of the corporation; and
(iii) In the case of any criminal proceeding, had no reasonable cause to
believe that the conduct was unlawful.
(2)(i) Indemnification may be against judgments, penalties, fines,
settlements, and reasonable expenses actually incurred by the director in
connection with the proceeding.
(ii) However, if the proceeding was one by or in the right of the
corporation, indemnification may be made only against reasonable expenses and
may not be made in respect of any proceeding in which the director shall have
been adjudged to be liable to the corporation.
(3) The termination of any proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent creates a
rebuttable presumption that the director did not meet the requisite standard of
conduct set forth in this subsection.
(c) No indemnification of director liable for improper personal benefit. -- A
director may not be indemnified under subsection (b) of this section in respect
of any proceeding charging improper personal benefit to the director, whether
or not involving action in the director's official capacity, in which the
director was adjudged to be liable on the basis that personal benefit was
improperly received.
(d) Required indemnification against expenses incurred in successful defense.
- -- Unless limited by the charter:
(1) A director who has been successful, on the merits or otherwise, in the
defense of any proceeding referred to in subsection (b) of this section shall
be indemnified against reasonable expenses incurred by the director in
connection with the proceeding.
(2) A court of appropriate jurisdiction, upon application of a director and
such notice as the court shall require, may order indemnification in the
following circumstances:
(i) If it determines a director is entitled to reimbursement under paragraph
(1) of this subsection, the court shall order indemnification, in which case
the director shall be entitled to recover the expenses of securing such
reimbursement; or
(ii) If it determines that the director is fairly and reasonably entitled to
indemnification in view of all the relevant circumstances, whether or not the
director has met the standards of conduct set forth in subsection (b) of this
section or has been adjudged liable under the circumstances described in
subsection (c) of this section, the court may order such indemnification as the
court shall deem proper. However, indemnification with respect to any
proceeding by or in the right of the corporation or in which liability shall
have been adjudged in the circumstances described in subsection (c) shall be
limited to expenses.
(3) A court of appropriate jurisdiction may be the same court in which the
proceeding involving the director's liability took place.
(e) Determination that indemnification is proper.
(1) Indemnification under subsection (b) of this section may not be made by
the corporation unless authorized in the specific case after a determination
has been made that indemnification of the director is permissible in the
circumstances because the director has met the standard of conduct set forth in
subsection (b) of this section.
(2) Such determination shall be made:
(i) By the board of directors by a majority vote of a quorum consisting of
directors not, at the time, parties to the proceeding, or, if such a quorum
cannot be obtained, then by a majority vote of a committee of the board
consisting solely of two or more directors not, at the time, parties to such
proceeding and who were duly designated to act in the matter by a majority vote
of the full board in which the designated directors who are parties may
participate;
(ii) By special legal counsel selected by the board of directors or a
committee of the board by vote as set forth in subparagraph (i) of this
paragraph, or, if the requisite quorum of the full board cannot be obtained
therefor and the committee cannot be established, by a majority vote of the
full board in which directors who are parties may participate; or
(iii) By the stockholders.
(3) Authorization of indemnification and determination as to reasonableness of
expenses shall be made in the same manner as the determination that
indemnification is permissible. However, if the determination that
indemnification is permissible is made by special legal counsel, authorization
of indemnification and determination as to reasonableness of expenses shall be
made in the manner specified in subparagraph (ii) of paragraph (2) of this
subsection for selection of such counsel.
(4) Shares held by directors who are parties to the proceeding may not be
voted on the subject matter under this subsection.
(f) Payment of expenses in advance of final disposition of action.
(1) Reasonable expenses incurred by a director who is a party to a proceeding
may be paid or reimbursed by the corporation in advance of the final
disposition of the proceeding, after a determination that the facts then known
to those making the determination would not preclude indemnification under this
section, upon receipt by the corporation of:
(i) A written affirmation by the director of the director's good faith belief
that the standard of conduct necessary for indemnification by the corporation
as authorized in this section has been met; and
(ii) A written undertaking by or on behalf of the director to repay the
amount if it shall ultimately be determined that the standard of conduct has
not been met.
(2) The undertaking required by subparagraph (ii) of paragraph (1) of this
subsection shall be an unlimited general obligation of the director but need
not be secured and may be accepted without reference to financial ability to
make the repayment.
(3) Determinations and authorizations of payments under this subsection shall
be in the manner specified in subsection (e) of this section.
(g) Validity of indemnification provision. -- A provision for the corporation
to indemnify a director who is made a party to a proceeding, whether contained
in the charter, the bylaws, a resolution of stockholders or directors, an
agreement or otherwise, except as
contemplated by subsection (k) of this section, is not valid unless consistent
with this section or, to the extent that indemnity under this section is
limited by the charter, consistent with the charter.
(h) Reimbursement of director's expenses incurred while appearing as witness.
- -- This section does not limit the corporation's power to pay or reimburse
expenses incurred by a director in connection with an appearance as a witness
in a proceeding at a time when the director has not been made a named defendant
or respondent in the proceeding.
(i) Director's service to employee benefit plan. -- For purposes of this
section:
(1) The corporation shall be deemed to have requested a director to serve an
employee benefit plan where the performance of the director's duties to the
corporation also imposes duties on, or otherwise involves services by, the
director to the plan or participants or beneficiaries of the plan;
(2) Excise taxes assessed on a director with respect to an employee benefit
plan pursuant to applicable law shall be deemed fines; and
(3) Action taken or omitted by the director with respect to an employee
benefit plan in the performance of the director's duties for a purpose
reasonably believed by the director to be in the interest of the participants
and beneficiaries of the plan shall be deemed to be for a purpose which is not
opposed to the best interests of the corporation.
(j) Officer, employee or agent. -- Unless limited by the charter:
(1) An officer of the corporation shall be indemnified as and to the extent
provided in subsection (d) of this section for a director and shall be
entitled, to the same extent as a director, to seek indemnification pursuant to
the provisions of subsection (d);
(2) A corporation may indemnify and advance expenses to an officer, employee,
or agent of the corporation to the same extent that it may indemnify directors
under this section; and
(3) A corporation, in addition, may indemnify and advance expenses to an
officer, employee, or agent who is not a director to such further extent,
consistent with law, as may be provided by its charter, bylaws, general or
specific action of its board of directors, or contract.
(k) Insurance. -- A corporation may purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee, or agent of the
corporation, or who, while a director, officer, employee, or agent of the
corporation, is or was serving at the request of the corporation as a director,
officer, partner, trustee, employee, or agent of another foreign or domestic
corporation, partnership, joint venture, trust, other enterprise, or employee
benefit plan against any liability asserted against and incurred by such person
in any such capacity or arising out of such person's position, whether or not
the corporation would have the power to indemnify against liability under the
provisions of this section.
(l) Report of indemnification to stockholders. -- Any indemnification of, or
advance of expenses to, a director in accordance with this section, if arising
out of a proceeding by or in the right of the corporation, shall be reported in
writing to the stockholders with the notice of the next stockholders' meeting
or prior to the meeting. (1981, ch. 737.)
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer of controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Reference is also made to the Distribution Agreement and Underwriting
Agreement previously filed with the Commission.
Item 28. Business and Other Connections of Investment Adviser
For information concerning Washington Investment Advisers, Inc., see
"Management of the Fund" in Part B of the Prospectus. Set forth below is a list
of each officer and director of Washington Investment Advisers, Inc. indicating
each business, profession, vocation or employment of a substantial nature in
which each such person has been engaged since January, 1994 for his own account
or in the capacity of director, trustee, officer, partner or employee. All
addresses are Washington Investment Advisers, Inc., 1101 Vermont Avenue, N.W.,
Washington, D.C. 20005.
<TABLE>
<CAPTION>
Name Position with Washington Investment Advisers, Inc. Principal Occupation or Other Employment of a Substantial
Nature During Past Two Years
<S> <C> <C>
Prabha S. Carpenter Vice President and Portfolio Manager Vice President, The Growth Fund of Washington, Inc.
Stephen Hartwell President and Director Chairman of the Board, Washington Management Corporation
Howard L. Kitzmiller Secretary and Treasurer Senior Vice President, Secretary, Assistant Treasurer, and Director, Washington
Management Corporation
James H. Lemon, Jr. Director Chairman and Chief Executive Officer of The Johnston-Lemon Group, Incorporated
Harry J. Lister Chairman of the Board President and Director, Washington Management Corporation
Michael W. Stockton Asst. Vice President, Assistant Secretary and Assistant Treasurer Assistant Vice President and Assistant
Treasurer, Washington Management Corporation
</TABLE>
____________
* For information with respect to other substantial business, profession,
vocation or employment of the above directors and officers, see "Management of
the Fund" in Part B of the Prospectus which is incorporated herein by
reference.
ITEM 29. Principal Underwriters
(a) Vista Fund Distributors, Inc., formerly called Vista Broker-Dealer
Services, Inc., a wholly-owned subsidiary of The BISYS Group, Inc., is the
underwriter for the Registrant.
(b) The following are the Directors and officers of Vista Fund Distributors,
Inc., a wholly-owned subsidiary of The BISYS Group, Inc..
<TABLE>
<CAPTION>
Name Position and Offices with Position and Offices with
Distributor the Registrant
<S> <C> <C> <C>
* Lynn J. Mangum Chairman None
* Robert J. McMullan Director, Exec. V.P. None
& Treasurer
# J. David Huber President None
# Stephen G. Mintos Exec. Vice President None
Lee W. Shultheis Senior Vice President None
16th Floor
101 Park Avenue
New York, NY 10178
* Dennis Sheehan Senior Vice President None
Mark Rybarczyk Senior Vice President None
Suite 300
11 Greenway Plaza
Houston, TX 77046
W. Anthony Turner Senior Vice President None
125 West 55th Street
New York, NY 10019
# Michael Burns Vice President / Chief None
Compliance Officer
# Dale Smith Vice President None
# John Gilliam Vice President None
* Kevin Dell V.P., General Counsel None
& Secretary
# Robert L. Tuch Asst. Secretary None
* Annamaria Porcaro Assistant Secretary None
</TABLE>
* Address is 150 Clove Street, Little Falls, NJ 07424
# Address is 3435 Stelzer Road, Columbus, OH 43219
(c) None
ITEM 30. Location of Accounts and Records
The accounts and records of the Registrant are located, in whole or in part,
at the office of the Registrant and the following locations:
<TABLE>
<CAPTION>
Name Address
<S> <C>
Vista Fund Distributors, Inc., a wholly-owned subsidiary of The BISYS Group, Inc. 3435 Stelzer Road
Columbus, OH 43219
DST Systems, Inc. (transfer agent) 210 W. 10th Street
Kansas City, MO 64105
The Chase Manhattan Bank (custodian) 1211 Avenue of the Americas
New York, NY 10036
Washington Management Corporation (business manager) 1101 Vermont Ave., NW
Washington, DC 20005
Washington Investment Advisers, Inc. (investment adviser) 1101 Vermont Ave., NW
Washington, DC 20005
</TABLE>
ITEM 31. Management Services
Not applicable
ITEM 32. Undertakings
(c) As reflected in the Prospectus, the Fund undertakes to provide each
person to whom a prospectus is delivered with a copy of the Fund's latest
annual report to shareholders, upon request and without charge.
SIGNATURE OF REGISTRANT
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940 the Registrant has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereto duly authorized, in the
City of Washington, District of Columbia, on the 18th day of April, 1997.
The amendment does not contain disclosures that would make the amendment
ineligible for effectiveness under the provisions of Rule 485(b).
By Howard L. Kitzmiller, Esquire
THE GROWTH FUND OF WASHINGTON, INC.
By Harry J. Lister, President
Pursuant to the requirement of the Securities Act of 1933, this Amendment to
the Registration Statement has been signed below on April 18, 1997 by the
following persons in the capacities indicated.
SIGNATURE TITLE
(1) Principal Executive Officer:
Harry J. Lister President
(2) Principal Financial Officer and
Principal Accounting Officer:
Howard L. Kitzmiller Senior Vice President,
Secretary, Treasurer and Chief Financial Officer
(3) Directors
James H. Lemon* Chairman of the Board
Cyrus A. Ansary* Director
Harry J. Lister Director
T. Eugene Smith* Director
Leonard P. Steuart II* Director
Margita E. White* Director
* By Howard L. Kitzmiller, Attorney-in-fact
POWER OF ATTORNEY
The undersigned directors of The Growth Fund of Washington, Inc., a Maryland
Corporation, do hereby constitute and appoint Stephen Hartwell, Harry J. Lister
and Howard L. Kitzmiller, or any of them to act as attorneys-in-fact for and in
his or her name, place and stead (1) to sign his or her name as a director of
said Corporation to any and all amendments to the Registration Statement of The
Growth Fund of Washington, Inc., File No. 2-97999 under the Securities Act of
1933 as amended, said amendments to be filed with the Securities and Exchange
Commission, and to any and all reports, applications or renewal of applications
required by any State in the United States of America in which this Corporation
is registered to sell shares, and (2) to deliver any and all such amendments to
such Registration Statement, so signed, for filing with the Securities and
Exchange Commission under the provisions of the Securities Act of 1933 as
amended, granting to said attorneys-in-fact, and each of them, full power and
authority to do and perform every act and thing whatsoever requisite and
necessary to be done in and about the premises as fully to all intents and
purposes as the undersigned might or could do if personally present, hereby
ratifying and approving the acts of said attorneys-in-fact.
EXECUTED at Washington, D.C., this 22nd day of February, 1996.
The Growth Fund of Washington, Inc.
Cyrus A. Ansary T. Eugene Smith
James H. Lemon, Jr. Leonard P. Steuart II
Harry J. Lister Margita E. White
ARTICLES OF INCORPORATION
OF
THE GROWTH FUND OF WASHINGTON, INC.
ARTICLE I
THE UNDERSIGNED, Harry J, Lister, whose post office address is 1101 Vermont
Avenue, N.W., Washington, D.C. 20005, being at least eighteen years of age,
does hereby form a corporation under the general laws of the State of Maryland.
ARTICLE II
Name
The name of the Corporation is:
THE GROWTH FUND OF WASHINGTON, INC.
ARTICLE III
Purposes and Powers
The purpose or purposes for which the Corporation is formed and the business
or objects to be transacted, carried on and promoted by it are as follows:
(1) To conduct and carry on the business of an investment company of the
management type.
(2) To hold, invest and reinvest its assets in securities, and in connection
therewith to hold part or all of its assets in cash.
-2-
(3) To issue and sell shares of its own capital stock in such amounts and on
such terms and conditions, for such purposes and for such amount or kind of
consideration now or hereafter permitted by the general laws of the State of
Maryland, by the Investment Company Act of 1940, as amended (the "1940 Act"),
and by these Articles of Incorporation, as its Board of Directors may
determine.
(4) To redeem, purchase or otherwise acquire, hold, dispose of, resell,
transfer, reissue or cancel (all without the vote or consent of the
stockholders of the Corporation) shares of its capital stock, in any manner and
to the extent now or hereafter permitted by the general laws of the State of
Maryland, by the 1940 Act and by these Articles of Incorporation.
(5) To do any and all such further acts or things and to exercise any and all
such further powers or rights as may be necessary, desirable or appropriate
for, or incidental, related or conducive to, the accomplishment, carrying out
or attainment of all or any of the foregoing purposes or objects.
The Corporation shall be authorized to exercise and enjoy all of the powers,
rights and privileges granted to, or conferred upon, corporations by the
general laws of the State of Maryland now or hereafter in force, and the
enumeration of the foregoing shall not be deemed to exclude any powers, rights
or privileges so granted or conferred.
ARTICLE IV
Principal Office and Resident Agent
The post office address of the principal office of the Corporation in the
-3-
State of Maryland is c/o The Corporation Trust Incorporated, 32 South Street,
Baltimore, Maryland 21202. The name of the resident agent of the Corporation
in this State is The Corporation Trust Incorporated, a Maryland corporation,
and the post office address of the resident agent is 32 South Street,
Baltimore, Maryland 21202.
ARTICLE V
Capital Stock
(1) The total number of shares of capital stock that the Corporation shall be
authorized to issue is Twenty-five Million (25,000,000) shares, of par value of
One Cent ($0.01) per share, all of one class designated as Common Stock and of
the aggregate par value of $250,000.
(2) The Corporation may issue shares of stock in fractional denominations to
the same extent as its whole shares, and shares in fractional denominations
shall be shares of stock having proportionately, to the respective fractions
represented thereby, all the rights of whole shares including without
limitation the right to vote, the right to receive dividends or distributions
and the right to participate upon liquidation of the Corporation, but excluding
the right to receive a certificate representing the fractional shares.
(3) No holder of stock of the Corporation shall, as such holder, have any
preemptive or other right to purchase or subscribe for any shares of the
capital stock of the Corporation or any other security of the Corporation that
it may issue or sell (whether out of the number of shares authorized by these
Articles of Incorporation or out of any shares of the capital
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stock of the Corporation acquired by it after the issuance thereof, or
otherwise) other than such right, if any, as the Board of Directors, in its
discretion, may determine.
(4) All persons who shall acquire stock in the Corporation shall acquire the
same subject to the provisions of these Articles of Incorporation and the
By-Laws of the
Corporation.
ARTICLE VI
Provisions for Defining, Limiting
and Regulating Certain Powers
of the Corporation and of the
Directors and Shareholders
(1) The number of directors of the Corporation shall be four (4), which
number may be increased or decreased pursuant to the By-Laws of the Corporation
but shall never be less than the minimum number required by the Maryland
General Corporation Law. The names of the directors who shall act until the
first annual meeting of the Corporation and until their successors are duly
elected and qualify are:
James H. Lemon, Jr.
Harry J. Lister
Richard A. Ollen
William B. Snyder
(2) the Board of Directors of the Corporation is hereby empowered to
authorize the issuance from time to time of shares of capital stock, whether
now or hereafter authorized, for such consideration as the Board of Directors
may deem advisable subject to such limitations as
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may be set forth in these Articles of Incorporation or in the By-Laws of the
Corporation, the Maryland General Corporation Law or the 1940 Act.
(3) The Corporation shall indemnify any person who is or was a director or
officer of the Corporation to the full extent permitted by the general laws of
the State of Maryland,
subject to the requirements of the 1940 Act.
(4) The Corporation shall purchase and maintain insurance on behalf of any
person who is or was a director or officer of the Corporation against any
liability asserted against him and incurred by him in or arising out of his
position, whether or not the Corporation would have the power to indemnify him
against such liability.
(5) The Corporation may advance expenses to a director or officer of the
Corporation who is a party to any action, suit or proceeding in or arising out
of his position in advance of the final disposition of such action, suit or
proceeding to the full extent permitted by law.
(6) The Board of Directors of the Corporation may make, alter or repeal from
time to time any of the By-Laws of the Corporation except any particular By-Law
which is specified as not subject to alteration or repeal by the Board of
Directors, subject to the requirements of the 1940 Act.
ARTICLE VII
Redemption
Each holder of shares of capital stock of the Corporation shall be entitled
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to require the Corporation to redeem all or any part of the shares of capital
stock of the Corporation standing in the name of such holder on the books of
the Corporation, and all shares of capital stock issued by the Corporation
shall be subject to redemption by the Corporation at the redemption price of
such shares as in effect from time to time, subject to the right of the Board
of
Directors of the Corporation to suspend the right of redemption of shares of
capital stock of the Corporation or postpone the time of payment of such
redemption price in accordance with provisions of applicable law. The
redemption price of shares of capital stock of the Corporation shall be the net
asset value thereof as determined by, or pursuant to the direction of, the
Board of Directors of the Corporation from time to time in accordance with the
provisions of applicable law, less such redemption fee or other charge, if any,
as may be fixed by resolution of the Board of Directors. Payment of the
redemption price shall be made in cash or by check on current funds, or in
assets other than cash, by the Corporation, at such time and in such manner as
may be determined, from time to time, by the Board of Directors.
ARTICLE VIII
Determination Bonding
Any determination made in good faith and, so far as accounting matters are
involved, in accordance with generally accepted accounting principles, by or
pursuant to the direction of the Board of Directors, as to the amount of the
assets, debts, obligations or liabilities of the Corporation, as to the amount
of any reserves or charges set up and the proprietary thereof, as to the time
of or purpose for creating such reserves or charges, as to the use, alteration
or
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cancellation of any reserves or charges (whether or not any debt, obligation or
liability for which such reserves or charges shall have been created shall have
been paid or discharged or shall be then or thereafter required to be paid or
discharged), as to the establishment or designation of procedures or methods to
be employed for valuing any asset of the Corporation and as to the value of any
asset, as to the funds available for the declaration of dividends and as to the
declaration of dividends, as to the price of any security owned by the
Corporation, as to the estimated expense to the Corporation in connection with
purchases or redemptions of its shares, as to the ability to liquidate
investments in orderly fashion or as to any other matters relating to the
issue, sale, purchase or redemption or other acquisition or disposition of
investments or shares of capital stock of the Corporation or the determination
of the net asset value per share of shares of the stock of the Corporation, and
any reasonable determination made in good faith by the Board of Directors as to
whether any transaction constitutes a purchase of securities on "margin," a
sale of securities "short" or an underwriting of the sale of, or a
participation in any underwriting or selling group in connection with the
public distribution of, any securities, shall be final and conclusive, and
shall be binding upon the Corporation and all holders of its capital stock,
past, present and future, and shares of the capital stock of the Corporation
are issued and sold on the condition and understanding, evidenced by the
purchase of shares of capital stock or acceptance of share certificates, that
any and all such determinations shall be binding as aforesaid. No provision of
these Articles of Incorporation shall be effective to (a) require a waiver of
compliance with any provision of the Securities Act of 1933, as amended, or the
1940 Act, or of any valid rule, regulation or order of the Securities and
Exchange Commission thereunder or (b)
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protect or purport to protect any director or officer of the Corporation
against any liability to the Corporation or its security holders 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.
ARTICLE IX
Amendment
The Corporation reserves the right from time to time to make any amendment of
its Articles of Incorporation, now or hereafter authorized by law, including
any amendment that alters the contract rights, as expressly set forth in these
Articles of Incorporation, of any outstanding stock. Any amendment to these
Articles of Incorporation shall be approved by the stockholders of the
Corporation by the affirmative vote of a majority of all the votes entitled to
be cast thereon.
IN WITNESS WHEREOF, the undersigned incorporator of WASHINGTON AREA GROWTH
FUND, INC. hereby executes the foregoing Articles of Incorporation and
acknowledges the same to be his act and further acknowledges that, to the best
of his knowledge, information and belief the matters and facts set forth
therein are true in all material respects under the penalties of perjury.
Dated this 25th day of July, 1985, as amended.
___________________________
Harry J. Lister
BY-LAWS
OF
THE GROWTH FUND OF WASHINGTON, INC.
ARTICLE I
Offices
Section 1. Principal Office. The principal office of the Corporation shall
be in the City of Baltimore, State of Maryland.
Section 2. Other Offices. The Corporation may have such other offices in
such places within and without the State of Maryland as the Board of Directors
may from time to time determine.
ARTICLE II
Meetings of Stockholders
Section 1. Annual Meeting. An annual meeting of the stockholders of the
Corporation need not be held except where required by the laws of Maryland or
The Investment Company Act of 1940. When such a meeting is required, or deemed
desirable by the Board of Directors, it shall be held on a designated day in
April or such other time as may be set by the Board of Directors from time to
time. Any business of the Corporation may be transacted at such meeting
without being specifically designated in the notice unless required by statute
to be stated in the notice.
Section 2. Special Meetings. Special meetings of the stockholders, unless
otherwise provided by law or by the Articles of Incorporation, may be called
for any purpose or purposes by a majority of the Board of Directors, the
Chairman of the Board, the President, or on the written request of the holders
of at least 25% of the outstanding capital stock of the Corporation entitled to
vote at such meeting.
Section 3. Place of Meetings. The annual meeting and any special meeting
of the stockholders shall be held at such place within the United States as the
Board of Directors may from time to time determine.
Section 4. Notice of Meetings; Waiver of Notice. Written or printed notice
of every annual or special meeting of stockholders stating the time and place
thereof and the purpose or purposes of each special meeting shall be delivered
personally or mailed not less than ten nor more than ninety days prior thereto
to each stockholder of record entitled to vote at the meeting and to each other
stockholder entitled to notice of the meeting at his address as the same
appears on the books of the Corporation. Meetings may be held without notice
if all of the stockholders entitled to vote are present or represented at the
meeting or, if notice is waived in writing either before or after the meeting,
by those not present or represented at the meeting. When a meeting is
adjourned to another time and place, unless the Board of Directors, after the
adjournment, shall fix a new record date for an adjourned meeting, or the
adjournment is for more than one hundred and twenty days after the original
record date, notice of such adjourned meeting need not be given if the time and
place to which the meeting shall be adjourned were announced at the meeting at
which the adjournment is taken.
Section 5. Quorum. At every meeting of the stockholders, the holders of
record of a majority of the shares of stock of the Corporation entitled to vote
at the meeting, present in person or by proxy, shall constitute a quorum,
except as otherwise provided by law. If at any meeting there shall be no
quorum, the holders of record of a majority of the shares of stock present in
person or by proxy, may adjourn the meeting from time to time, without notice
other than announcement thereat except as otherwise required by these By-Laws,
until the holders of the requisite amount of shares of stock shall be so
present. At any such adjourned meeting at which a quorum may be present, any
business may be transacted which might have been transacted at the meeting as
originally called. The absence from any meeting, in person or by proxy of
holders of the number of shares of stock of the Corporation in excess of a
majority thereof which may be required by the laws of the State of Maryland,
the Investment Company Act of 1940, as amended, or other applicable law, the
Articles of Incorporation, or these By-Laws, for action upon any given matter
shall not prevent action at such meeting upon any other matter or matters which
may properly come before the meeting if there shall be present thereat, in
person or by proxy, holders of the number of shares of stock of the Corporation
required for action in respect of such other matter or matters.
Section 6. Organization; Order of Business. At each meeting of the
stockholders, the Chairman of the Board or, in the event of his absence or
inability or refusal to act, the President, shall act as chairman of the
meeting. The Secretary, or in his absence or inability to act, any Assistant
Secretary or any person appointed by the chairman of the meeting, shall act as
secretary of the meeting and keep the minutes thereof.
The order of business at all meetings of the stockholders shall be as
determined by the chairman of the meeting.
Section 7. Voting. Except as otherwise provided by law or the Articles of
Incorporation, each holder of record of shares of stock of the Corporation
having voting power shall be entitled at each meeting of the stockholders to
one vote for every share of such stock standing in his name on the record of
stockholders of the Corporation as of the record date determined pursuant to
Section 8 of this Article or if such record date shall not have been so fixed,
then at the later of (i) the close of business on the day on which notice of
the meeting is mailed or (ii) the thirtieth day before the meeting.
Each stockholder entitled to vote at any meeting of stockholders may
authorize another person or persons to act for him by a proxy signed by such
stockholder or his attorney-in-fact. No proxy shall be valid after the
expiration of eleven months from the date thereof, unless otherwise provided in
the proxy. Every proxy shall be revocable at the pleasure of the stockholder
executing it, except in those cases where such proxy states that it is
irrevocable and where an irrevocable proxy is permitted by law. Except as
otherwise provided by law, the Articles of Incorporation or these By-Laws, any
corporate action to be taken by vote of the stockholders shall be authorized by
a majority of the total votes cast at a meeting of stockholders by the holders
of shares present in person or represented by proxy and entitled to vote on
such action.
If a vote shall be taken on any question other than the election of
directors, which shall be by written ballot, then unless required by statute or
these By-Laws, or determined by the chairman of the meeting to be advisable,
any such vote need not be by ballot. On a vote by ballot, each ballot shall be
signed by the stockholder voting or by his proxy, if there be such proxy, and
shall state the number of shares voted.
Section 8. Fixing of Record Date. The Board of Directors may set a record
date for the purpose of determining stockholders entitled to vote at any
meeting of the stockholders. The record date, which may not be prior to the
close of business on the day the record date is fixed, shall be not more than
ninety nor less than ten days before the date of the meeting of the
stockholders. All persons who were holders of record of shares at such time,
and no others, shall be entitled to vote at such meeting and any adjournment
thereof.
Section 9. Registered Ownership. The Corporation shall be entitled to
recognize the exclusive right of a person registered to vote as the shareholder
of record, and shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person whether or
not it shall have express or other notice thereof, except as otherwise provided
by the Maryland General Corporation Law.
Section 10. Inspectors. The Board may, in advance of any meeting of
stockholders, appoint one or more inspectors to act at such meeting or any
adjournment thereof. If the inspectors shall not be so appointed or if any of
them shall fail to appear or act, the chairman of the meeting may appoint
inspectors. Each inspector, before entering upon the discharge of his duties,
shall take and sign an oath to execute faithfully the duties of inspector at
such meeting with strict impartiality and according to the best of his ability.
The inspectors shall determine the number of shares outstanding and the voting
power of each, the number of shares represented at the meeting, the existence
of a quorum, and the validity and effect of proxies, and shall receive votes,
ballots, or consents, hear and determine all challenges and questions arising
in connection with the right to vote, count and tabulate all votes, ballots or
consents, determine the result, and do such acts as are proper to conduct the
election or vote with fairness to all stockholders. On request of the chairman
of the meeting, the inspectors shall make a report in writing of any challenge,
request, or matter determined by them and shall execute a certificate of any
fact found by them. No director or candidate for the office of director shall
act as inspector of an election of directors. Inspectors need not be
stockholders.
Section 11. Consent of Stockholders in Lieu of Meeting. Except as
otherwise provided by law or the Articles of Incorporation, any action required
to be taken at any annual or special meeting of stockholders, or any action
which may be taken at any annual or special meeting of stockholders, may be
taken without a meeting, without prior notice and without a vote, if the
following are filed with the records of stockholders' meetings: (i) a
unanimous written consent which sets forth the action and is signed by each
stockholder entitled to vote on the matter and (ii) a written waiver of any
right to dissent signed by each stockholder entitled to notice of the meeting
but not entitled to vote thereat.
ARTICLE III
Board of Directors
Section 1. General Powers. Except as otherwise provided in the Articles of
Incorporation, the business and affairs of the Corporation shall be managed
under the direction of the Board of Directors. The Board may exercise all the
powers of the Corporation and do all such lawful acts and things as are not by
statute or the Articles of Incorporation directed or required to be exercised
or done by the stockholders exclusively.
Section 2. Number of Directors. The number of directors shall be fixed
from time to time by resolution of the Board of Directors adopted by a majority
of the Directors then in office; provided, however, that the number of
directors shall in no event be less than the minimum number required by the
Maryland General Corporation Law nor more than fifteen. No reduction in the
number of directors shall have the effect of removing any director from office
prior to the expiration of his term unless such director is specifically
removed pursuant to Section 5 of this Article III at the time of such decrease.
Directors need not be stockholders.
Section 3. Election and Term of Directors. Directors shall be elected
annually, by written ballot at the annual meeting of stockholders or a special
meeting held for that purpose. The term of office of each director shall be
from the time of his election and qualification until the annual election of
directors next succeeding his election and until his successor shall have been
elected and shall have qualified, or until his death, or until he shall have
resigned or have been removed as hereinafter provided in these By-Laws, or as
otherwise provided by statute or the Articles of Incorporation.
Section 4. Resignation. A director of the Corporation may resign at any
time by giving written notice of his resignation to the Board or the Chairman
of the Board or the President or the Secretary. Any such resignation shall
take effect at the time specified therein or, if the time when it shall become
effective shall not be specified therein, immediately upon its receipt; and,
unless otherwise specified therein, the acceptance of such resignation shall
not be necessary to make it effective.
Section 5. Removal of Directors. Any director of the Corporation may be
removed, with or without cause, by the stockholders by a vote of a majority of
the votes entitled to be cast for the election of directors at any meeting of
stockholders, duly called and at which a quorum is present.
Section 6. Vacancies. Subject to the provisions of the Investment Company
Act of 1940, as amended, any vacancies in the Board, whether arising from
death, resignation, removal, an increase in the number of directors, or any
other cause, shall be filled by a vote of the majority of the Board of
Directors then in office even though such majority is less than a quorum,
provided that no vacancies shall be filled by action of the remaining directors
if after the filling of said vacancy or vacancies less than two-thirds of the
directors then holding office shall have been elected by the stockholders of
the Corporation. In the event that at any time there is a vacancy in any
office of a director which vacancy may not be filled by the remaining
directors, a special meeting of the stockholders shall be held as promptly as
possible and in any event within sixty days, for the purpose of filling said
vacancy or vacancies. Any directors elected or appointed to fill a vacancy
shall hold office only until the next annual meeting of stockholders of the
Corporation and until a successor shall have been chosen and qualifies or until
his earlier resignation or removal.
Section 7. Place of Meetings. Meetings of the Board may be held at such
place as the Board may from time to time determine or as shall be specified in
the notice of such meeting.
Section 8. Regular Meetings. Regular meetings of the Board may be held
without notice at such time and place as may be determined by the Board of
Directors.
Section 9. Special Meetings. Special meetings of the Board may be called by
two or more directors of the Corporation or by the Chairman of the Board or the
President.
Section 10. Annual Meeting. The annual meeting of each newly elected Board
of Directors shall be held as soon as practicable after the meeting of
stockholders at which the directors were elected. No notice of such annual
meeting shall be necessary if held immediately after the adjournment, and at
the site, of the meeting of stockholders. If not so held, notice shall be
given as hereinafter provided for special meetings of the Board of Directors.
Section 11. Notice of Special Meetings. Notice of each special meeting of
the Board shall be given by the Secretary as hereinafter provided, in which
notice shall be stated the time and place of the meeting. Notice of each such
meeting shall be delivered to each director, either personally or by telephone
or any standard form of telecommunication, at least twenty-four hours before
the time at which such meeting is to be held, or by first-class mail, postage
prepaid, addressed to him at his residence or usual place of business, at least
three days before the day on which such meeting is to be held.
Section 12. Waiver of Notice of Meetings. Notice of any special meeting need
not be given to any director who shall, either before or after the meeting,
sign a written waiver of notice or who shall attend such meeting. Except as
otherwise specifically required by these By-Laws, a notice or waiver of notice
of any meeting need not state the purposes of such meeting.
Section 13. Quorum and Voting. One third of the members of the entire Board
(but not less than two directors) shall be present in person at any meeting of
the Board in order to constitute a quorum for the transaction of business at
such meeting, and except as otherwise expressly required by the Articles of
Incorporation, these By-Laws, the Investment Company Act of 1940, as amended,
or other law, the act of a majority of the directors present at any meeting at
which a quorum is present shall be the act of the Board. In the absence of a
quorum at any meeting of the Board, a majority of the directors present thereat
may adjourn such meeting to another time and place until a quorum shall be
present thereat. Notice of the time and place of any such adjourned meeting
shall be given to the directors who were not present at the time of the
adjournment and, unless such time and place were announced at the meeting at
which the adjournment was taken, to the other directors. At any adjourned
meeting at which a quorum is present, any business may be transacted which
might have been transacted at the meeting as originally called.
Section 14. Meeting by Conference Telephone. Members of the Board of
Directors may participate in a meeting by means of a conference telephone or
similar communications equipment if all persons participating in the meeting
can hear each other at the same time. Participation in a meeting by these
means constitutes presence in person at a meeting.
Section 15. Written Consent of Directors in Lieu of a Meeting. Subject to
the provisions of the Investment Company Act of 1940, as amended, any action
required or permitted to be taken at any meeting of the Board of Directors or
of any committee thereof may be taken without a meeting if all members of the
Board or committee, as the case may be, consent thereto in writing, and the
writing or writings are filed with the minutes of the proceedings of the Board
or committee.
Section 16. Compensation. Directors may receive compensation and
reimbursement for expenses for services to the Corporation in their capacities
as directors or otherwise in such manner and in such amounts as may be fixed
from time to time by the Board. No provision in the By-Laws shall be construed
to preclude any director from serving the Corporation in any other capacity or
from receiving compensation therefor.
ARTICLE IV
Committees
Section 1. Executive Committee. The Board may, by resolution adopted by a
majority of the entire Board, designate an Executive Committee consisting of
two or more of the directors of the Corporation, which committee shall have and
may exercise all the powers and authority of the Board with respect to all
matters as may be lawfully delegated by the Board.
The Executive Committee shall keep written minutes of its proceedings and
shall report such minutes to the Board.
Section 2. Other Committees of the Board. The Board of Directors may from
time to time, by resolution adopted by a majority of the whole Board, designate
one or more other committees of the Board, each such committee to consist of
two or more directors and to have such powers and duties as the Board of
Directors may, by resolution, prescribe.
Section 3. General. A majority, but not less than two of the members of any
committee shall be present in person at any meeting of such committee in order
to constitute a quorum for the transaction of business at such meeting, and the
act of a majority present shall be the act of such committee. The Board may
designate a chairman of any committee and such chairman or any two members of
any committee may fix the time and place of its meetings unless the Board shall
otherwise provide. In the absence or disqualification of any member of any
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. The Board
shall have the power at any time to change the membership of any committee, to
fill all vacancies, to designate alternate members to replace any absent of
disqualified member, or to dissolve any such committee. Nothing herein shall
be deemed to prevent the Board from appointing one or more committees
consisting in whole or in part of persons who are not directors of the
Corporation; provided, however, that no such committee shall have or may
exercise any authority or power of the Board in the management of the business
or affairs of the Corporation.
ARTICLE V
Officers, Agents, and Employees
Section 1. Number, Qualifications, and Election. The officers of the
Corporation shall be a Chairman of the Board, a President, an Executive Vice
President, a Secretary and a Treasurer, each of whom shall be elected by the
Board of Directors. The Board of Directors may elect or appoint one or more
other Vice Presidents and may also appoint such other officers, agents and
employees as it may deem necessary or proper. Any two or more offices may be
held by the same person, except the offices of President and Executive Vice
President or any other Vice President, but no officer shall execute,
acknowledge, or verify any instrument in more than one capacity. Such officers
shall be elected by the Board of Directors each year at its first meeting held
after the annual meeting of stockholders, each to hold office until the meeting
of the Board following the next annual meeting of the stockholders and until
his successor shall have been duly elected and shall have qualified, or until
his death, or until he shall have resigned, or have been removed, as
hereinafter provided in these By-laws. The Board may from time to time elect,
or delegate to the President the power to appoint, such officers (including one
or more Assistant Vice Presidents, one or more Assistant Treasurers, and one or
more Assistant Secretaries) and such agents as may be necessary or desirable
for the business of the Corporation. Such other officers and agents shall have
such duties and shall hold their offices for such terms as may be prescribed by
the Board or by the appointing authority.
Section 2. Removal and Resignation. An officer, agent, or employee of the
Corporation may be removed with or without cause at any time by the vote of a
majority of the Board of Directors. Any officer of the Corporation may resign
at any time by giving written notice of his resignation to the Board, the
Chairman of the Board, the President, or the Secretary. Any such resignation
shall take effect at the time specified therein or, if not specified,
immediately upon its receipt. The acceptance of such resignation shall not be
necessary to make it effective.
Section 3. Vacancies. A vacancy in any office, whether arising from death,
resignation, removal, or any other cause, may be filled for the unexpired
portion of the term of the office which shall be vacant in the manner
prescribed in these By-Laws for the regular election or appointment to such
office.
Section 4. Compensation. The compensation of the officers of the Corporation
shall be fixed by the Board of Directors, but this power may be delegated to
any officer in respect of other officers under his control.
Section 5. Bonds or Other Security. If required by the Board, any officer,
agent, or employee of the Corporation shall give a bond or other security for
the faithful performance of his duties in such amount and with such surety or
sureties as the Board may require.
Section 6. Chairman of the Board. The Chairman of the Board shall preside at
all meetings of the Board of Directors and stockholders and shall see that all
orders and resolutions of the Board are carried into effect and perform such
other duties as the Board of Directors may prescribe.
Section 7. President. In the absence of the Chairman of the Board or in the
event of his inability or refusal to act, the President shall preside at all
meetings of the stockholders and of the Board of Directors. He shall have,
subject to the control of the Board of Directors, general charge of the
business and affairs of the Corporation. He may employ and discharge employees
and agents of the Corporation, except such as shall be appointed by the Board,
and he may delegate these powers.
Section 8. Executive Vice President. The Executive Vice President shall, in
the absence of the President or in the event of his inability or refusal to
act, have the powers of, and be subject to all of the restrictions upon, the
President. The Executive Vice President shall perform such other duties and
have such other powers as the Board of Directors may from time to time
prescribe.
Section 9. Other Vice Presidents. Each other Vice President shall have such
other powers and perform such other duties, and have such additional
descriptive designations in his title (if any) as the Board of Directors may
from time to time prescribe.
Section 10. Secretary. The Secretary shall
(a) keep or cause to be kept in one or more books provided for the purpose,
the minutes of all meetings of the Board, the committees of the Board and the
stockholders;
(b) see that all notices are duly given in accordance with the provisions of
these By-Laws and as required by law;
(c) be custodian of the records and the seal of the Corporation and affix and
attest the seal to all stock certificates of the Corporation (unless the seal
of the Corporation on such certificates shall be a facsimile, as hereinafter
provided) and affix and attest the seal to all other documents to be executed
on behalf of the Corporation under its seal;
(d) see that the books, reports, statements, certificates, and other
documents and records required by law to be kept and filed are properly kept
and filed; and
(e) in general, perform all the duties incident to the office of Secretary
and such other duties as from time to time may be assigned to him by the Board
or the President.
Section 11. Treasurer. The Treasurer shall
(a) have charge and custody of, and be responsible for, all the funds and
securities of the Corporation, except those that the Corporation has placed in
the custody of a bank or trust company or member of a national securities
exchange (as that term is defined in the Securities Exchange Act of 1934, as
amended), pursuant to a written agreement designating such bank or trust
company or member of a national securities exchange as custodian of the
property of the Corporation;
(b) keep full and accurate accounts of receipts and disbursements in books
belonging to the Corporation;
(c) cause all moneys and other valuables to be deposited to the credit of the
Corporation;
(d) receive, and give receipts for, moneys due and payable to the Corporation
from any source whatsoever;
(e) disburse the funds of the Corporation and supervise the investment of its
funds as ordered or authorized by the Board, taking proper vouchers therefor;
and
(f) in general, perform all the duties incident to the office of Treasurer
and such other duties as from time to time may be assigned to him by the Board
or the President.
Section 12. Assistant Officers. The Assistant Vice Presidents shall have
such duties as may from time to time be assigned to them by the Board of
Directors or the President. The Assistant Secretaries shall have such duties
as may from time to time be assigned to them by the Board of Directors or the
Secretary. The Assistant Treasurers shall have such duties as may from time to
time be assigned to them by the Board of Directors or the Treasurer.
Section 13. Delegation of Duties. In case of the absence of any officer of
the Corporation, or for any other reason that the Board may deem sufficient,
the Board may confer for a specific time the powers or duties or any of them of
such officer upon any other officers or upon any Director.
ARTICLE VI
Capital Stock
Section 1. Shares Represented by Certificates. Each holder of stock of the
Corporation shall be entitled upon request to have a certificate or
certificates, in such form as shall be approved by the Board, representing the
number of shares of stock of the Corporation owned by him, provided, however,
that certificates for fractional shares shall not be delivered in any case.
The certificates representing shares of stock shall be signed by or in the name
of the Corporation by the President or a Vice President and by the Secretary or
an Assistant Secretary or the Treasurer or an Assistant Treasurer and sealed
with the seal of the Corporation. Any or all of the signatures or the seal on
the certificate may be a facsimile. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent, or registrar
before such certificate shall be issued, it may be issued by the Corporation
with the same effect as if such officer, transfer agent, or registrar were
still in office on the date of issue.
Section 2. Lost, Destroyed, or Stolen Certificate. No certificate for shares
of stock of the Corporation shall be issued in place of any certificate alleged
to have been lost, stolen, mutilated, or destroyed except upon production of
such evidence of the loss, theft, mutilation, or destruction and upon
indemnification of the Corporation and its agents to such extent and in such
manner as the Board of Directors may from time to time prescribe.
Section 3. Transfer of Shares. Transfers of shares for which certificates
have been issued shall be made only upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment, or authority to
transfer, whereupon the Corporation shall issue a new certificate to the person
entitled thereto, cancel the old certificate, and record the transaction on its
books. Transfer of shares for which certificates have not been issued shall be
made upon delivery to the Corporation or the transfer agent of the Corporation
of instructions for transfer or evidence of assignment or succession, in each
case executed in such manner and with such supporting evidence as the
Corporation or transfer agent may reasonably require.
Section 4. Stock Regulations. The Board of Directors shall have authority to
make such other rules and regulations not inconsistent with these By-Laws
concerning the issue, transfer, and registration of certificates representing
shares of the Corporation as it may deem expedient.
Section 5. Record Date and Closing of Transfer Books. The Board of Directors
may set a record date or direct that the stock transfer books be closed for a
stated period for the purpose of making any proper determination with respect
to stockholders, including which stockholders are entitled to notice of a
meeting, vote at a meeting, receive a divided, or be allotted other rights.
The record date shall not be more than ninety days before the date on which the
action requiring the determination will be taken; the transfer books may not be
closed for a period longer than twenty days; and, in the case of a meeting of
stockholders, the record date or the closing of the transfer books shall be at
least ten days before the date of the meeting.
Section 6. Books of Account and Record of
Stockholders. There shall be kept at the principal executive office of the
Corporation correct and complete books and records of account of all the
business and transactions of the Corporation.
Section 7. Information to Stockholders and Others. Any stockholder of the
Corporation or his agent may inspect and copy during usual business hours the
Corporation's By-Laws, minutes of the proceedings of its stockholders, annual
reports, and voting trust agreements on file at its principal executive office.
ARTICLE VII
Depositories and Custodians
Section 1. Depositories. The funds of the Corporation shall be deposited
with such banks or other depositories as the Board of Directors may from time
to time determine.
Section 2. Custodians. All securities and other investments shall be
deposited in the safe keeping of such banks or other companies as the Board of
Directors may from time to time determine. Every arrangement entered into with
any bank or other company for the safekeeping of the securities and investments
of the Corporation shall contain provisions complying with the Investment
Company Act of 1940, as amended, and the rules and regulations thereunder.
ARTICLE VIII
Execution of Instruments
Section 1. Checks, Notes, Drafts, etc. Checks, notes, drafts, acceptances,
bills of exchange, and other orders or obligations for the payment of money
shall be signed by such officer or officers or person or persons as the Board
of Directors by resolution shall from time to time designate.
Section 2. Sale or Transfer of Securities. Stock certificates, bonds, or
other securities at any time owned by the Corporation may be held on behalf of
the Corporation or sold, transferred, or otherwise disposed of subject to any
limits imposed by these By-Laws and pursuant to authorization by the Board and,
when so authorized to be held on behalf of the Corporation or sold,
transferred, or otherwise disposed of, may be transferred from the name of the
Corporation by the signature of the President or a Vice President or the
Treasurer or pursuant to any procedure approved by the Board of Directors,
subject to applicable law.
ARTICLE IX
Independent Public Accountants
The firm of independent public accountants that shall sign or certify the
financial statements of the Corporation that are filed with the Securities and
Exchange Commission shall be selected annually by the Board of Directors and
ratified by the shareholders in accordance with the provisions of the
Investment Company Act of 1940, as amended.
ARTICLE X
Seal
The seal of the Corporation shall be circular in form and bear, in addition
to any other emblem or device approved by the Board of Directors, the name of
the Corporation, the year of its incorporation, and the words "Corporate Seal"
and "Maryland." Said seal may be used by causing it or a facsimile thereof to
be impressed or affixed or in any other manner reproduced.
ARTICLE XI
Amendment of By-Laws
The Board of Directors shall have the power and authority to amend, alter, or
repeal these By-Laws or any provision thereof, and may from time to time make
additional By-Laws.
ARTICLE XII
Indemnification of Directors, Officers, and Employees
The Corporation shall indemnify to the full extent authorized by law any
person made or threatened to be made a party to any action, suit or proceeding,
whether criminal, civil, administrative or investigative, by reason of the fact
that he is or was a director or officer of the Corporation, except that such
indemnity shall not protect any such person against any liability to the
Corporation or any stockholder thereof to which such person 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.
In connection with any such indemnification, the Corporation shall comply
with Securities and Exchange Commission Investment Company Act Release Nos.
7221 and 11330.
NUMBER SHARES
(Void)
THE GROWTH FUND OF WASHINGTON
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
THIS CERTIFIES that is the owner of
*SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP 399878 10 7
FULLY-PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, PAR VALUE OF $.01 PER
SHARE, OF THE GROWTH FUND OF WASHINGTON, INC. transferable on the books of the
Corporation by the holder thereof in person or by duly authorized Attorney upon
surrender of this Certificate properly endorsed. This Certificate is not valid
unless countersigned by the Transfer Agent.
WITNESS the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
Dated
/s/ Howard L. Kitzmiller /s/ Harry J. Lister
SECRETARY PRESIDENT
THE GROWTH FUND OF WASHINGTON, INC.
CORPORATE SEAL MARYLAND
1985
COUNTERSIGNED: INVESTORS FIDUCIARY TRUST COMPANY
TRANSFER AGENT
P.O. BOX 419392, KANSAS CITY, MO 64141-6392
By
________________________________________
Authorized Officer
[BACK]
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM-as tenants in common UNIF GIFT MIN ACT-____Custodian____
TEN ENT-as tenants by the entireties (Cust) (Minor)
JT TEN -as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act_________________________
in common ( State)
Additional abbreviations may also be used though not in the above list.
For value received,________________hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_____________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF
ASSIGNEE
_____________________________________________________________________________
_____________________________________________________________________________
______________________________________________________________________Shares
of the Common Stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint___________________________________________
_____________________________________________________________________________
Attorney to transfer the said stock on the books of the within-named
Corporation with full power of substitution in the premises.
Dated,______________________
_________________________________________
In Presence of
_____________________________
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the Certificate, in every particular, without
alteration or enlargement, or any change whatever.
INVESTMENT ADVISORY CONTRACT
AGREEMENT made this 1st day of May, 1991, between THE GROWTH FUND OF
WASHINGTON, INC., a Maryland corporation (the "Fund"), and GEICO INVESTMENT
SERVICES COMPANY, a Delaware corporation (the "Company").
WHEREAS, the Fund is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end, diversified management investment
company and the Company is registered under the Investment Advisers Act of
1940, as amended, as an investment adviser; and
WHEREAS, the Fund desires to retain the Company to furnish investment advisory
services to the Fund, and the Company is willing to so furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained, it is agreed between the Fund and the Company as follows:
1. Services to be Provided by the Company. The Company will regularly
provide, or cause to be provided pursuant to paragraph 6 hereof, the Fund
with investment research, advice and supervision and will furnish
continuously an investment program for the Fund consistent with its
investment objectives and policies. The Company will determine the identity
and amount of securities that shall be purchased for the Fund, securities
that shall be held or sold by the Fund, and what portion of the assets of the
Fund shall be held uninvested, subject always to the provisions of the Fund's
Articles of Incorporation and By-Laws and of the 1940 Act, and to the
investment objectives , policies and restrictions of the Fund, as each of the
same shall be from time to time in effect, and subject, further, to such
policies and instructions as the Directors of the Fund may from time to time
establish. The Company will advise and assist the officers of the Fund in
taking such steps as are necessary or appropriate to carry out the decisions
of the Directors and any appropriate committees of the Directors regarding
the conduct of the business of the Fund. The Company will supervise and
direct the acquisition and disposition of investments for the Fund,
including the selection of any brokers or dealers for execution of portfolio
transactions, in accordance with policies approved by the Fund's Board of
Directors and set forth in the then current registration statement of the
Fund under the 1940 Act and the Securities Act of 1933 ("Registration
Statement"). The Company will report to the Directors concerning its
activities pursuant to this Agreement at regular meetings of the Directors
and at such other times as the Directors shall request.
2. Expenses. The Company shall bear expenses incurred by it which are
necessary for the performance of its duties and activities specified in this
Agreement, except such expenses as are assumed by the Fund under this
Agreement. The Company (or its affiliates, as applicable) will also pay the
compensation and expenses of all officers and executive employees of the Fund
who are directors, officers or employees of the Company or of its affiliates
and will make available or cause to be made available, without expense to the
Fund, the services of such of the directors , officers and employees of the
Company or its affiliates as may duly be elected officers or directors of the
Fund, subject to their individual consent to serve and to any limitations
imposed by law. The Company will provide, or cause to be provided,
investment advisory, research and statistical services and facilities and all
clerical services relating to research, statistical and investment work. The
Fund shall bear all of its other expenses incurred in its operation and not
specifically assumed by the Company. The expenses assumed by the Fund shall
include, without limitation: organizational expenses of the Fund; fees and
expenses incurred in connection with the Fund's membership in investment
company organizations; fees of the business manager; interest expenses;
taxes and governmental fees; distribution fees; brokerage commissions and
other expenses incurred in acquiring or disposing of the Fund's portfolio
securities; expenses of registering and qualifying the Fund's shares for sale
with the Securities and Exchange Commission and with various state securities
authorities; the expenses of qualifying the Fund to do business in
jurisdictions where such qualification is required; accounting, auditing and
legal costs; the cost of preparing share certificates or any other expenses,
including clerical and administrative expenses, related to the issue,
redemption and repurchase of Fund shares; insurance premiums; fees and
expenses of the Custodian and Transfer Agent for the Fund and for any related
services; expenses of obtaining quotations on the Fund's portfolio securities
and pricing of the Fund's shares; expenses of shareholders' meetings;
expenses of preparing and distributing reports, proxies and prospectuses to
existing shareholders; and expenses and fees of the Fund's Directors who are
not "interested persons" of the Fund, as that term is defined in the 1940
Act.
3. Compensation. For the services provided and the expenses assumed by the
Company, the Fund shall pay to the Company a fee, computed daily and to be
paid on the last business day of each month, equal on an annual basis to:
0.375% of the first $100,000,000 of the average daily net assets of the Fund,
and 0.35% of the average daily net assets of the Fund in excess of
$100,000,000.
The term "average daily net assets of the Fund" is defined as the average of
the values placed on the net assets of the Fund as of the close of the New
York Stock Exchange, on each day on which the net asset value of the
portfolio of the Fund is determined consistent with the provisions of Rule
22c-1 under the 1940 Act or, if the Fund lawfully determines the value of the
net assets of its portfolio as of some other time on each business day, as of
such time. The value of the net assets of the Fund shall be determined
pursuant to the applicable provisions of the Fund's then current registration
statement under the 1940 Act and the Securities Act of 1933 ("Registration
Statement"). If, pursuant to such provisions, the determination of net asset
value is suspended for any particular business day, then, for the purposes of
this Section 3, the value of the net assets of the Fund shall be deemed to be
the value of such net assets as last determined in accordance with the
Registration Statement. If the determination of the net asset value of the
Fund has been suspended pursuant to the Registration Statement for a period
including a month for which payment pursuant to this Agreement is due, the
Company's compensation payable at the end of such month shall be computed on
the basis of the value of the net assets of the Fund as last determined
(whether during or prior to such month).
Notwithstanding the foregoing, the Company agrees to waive its fee or
reimburse the Fund, as may be required by any expense limitations applicable
to the Fund by reason of state securities laws or regulations, as such laws
or regulations may be amended from time to time, to the extent the expenses
of the Fund (including amounts payable to the Company pursuant to this
Section 3, but excluding interest, taxes, brokerage commissions or
transaction costs, distribution fees and extraordinary expenses) for any
fiscal year ending on a date on which this Agreement is in effect, exceed
any such expense limitations. The amount of the monthly advisory fee payable
by the Fund under this Section 3 shall be reduced by one half of the amount,
if any, that the annualized expenses of the Fund for that month exceed such
expense limitations. At the end of the each fiscal year of the Fund, if the
aggregate annual expenses of the Fund for that year exceed such expense
limitations, the Company will promptly reimburse the Fund for one half the
amount of such excess. If such expenses are within the expense limitations,
one half of any excess amount previously withheld from the management and
advisory fees during that fiscal year will be promptly paid by the Fund to the
Company. Should two or more of such expense limitations be applicable as at
the end of the last business day of the month, that expense limitation which
results in the largest waiver or reimbursement shall be applicable. The
amount of any waiver or reimbursement hereunder shall be limited with respect
to expenses incurred by the Fund in any fiscal year, to the amount of the fee
otherwise payable to the Company hereunder for such fiscal year.
4. Execution of Portfolio Transactions. In connection with purchases or
sales of portfolio securities for the account of the Fund, neither the
Company nor any of its directors, officers or employees will act as a
principal or agent or receive any commission. The Company in its sole
discretion, or its agent, shall arrange for the placing of all orders for the
purchase and sale of portfolio securities for the Fund's account with brokers
or dealers selected by the Company, and the timing and amounts of such
orders. In the selection of such brokers or dealers and the placing of such
orders, the Company will at all times comply with policies concerning the
Fund's portfolio transactions which are set forth in the Registration
Statement. The Fund agrees promptly to provide the Company with its most
current Registration Statement and any changes thereto and to inform the
Company directly of any changes in such policies.
5. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Company hereby agrees that all records which it
maintains or causes to be maintained for the Fund are the property of the
Fund and further agrees to surrender promptly to the Fund any of such records
upon the Fund's request. The Company further agrees to preserve or cause to
be preserved for the periods prescribed by Rule 31a-2 under the 1940 Act the
records required to be maintained by Rule 31a-1 under the 1940 Act.
6. Sub-contracts. The Company may, from time to time, at its own expense,
employ or associate with itself such person or persons as it believes
necessary to assist it in carrying out its obligations under this Agreement.
7. Limitation of Liability. Except as may otherwise be required by the
1940 Act or the rules thereunder, neither the Company nor its stockholders,
officers, directors, employees or agents shall be subject to any liability
for, or any damages , expenses or losses incurred in connection with, any act
or omission connected with or arising out of any services rendered under this
Agreement, except by reason of willful misfeasance, bad faith or gross
negligence in the performance of the Company's duties or by reason of
reckless disregard of the Company's obligations and duties under this
Agreement. Notwithstanding the foregoing, the Company shall not be liable to
the Fund for the acts and omissions of any party engaged by the Company to
assist it in carrying out its obligations under this Agreement except to the
extent that such party is liable to the Company for such acts and omissions
pursuant to the contract under which the Company shall have retained such
party. Any person, even though also employed by the Company, who may be or
become an employee of and paid by the Fund shall be deemed, when acting
within the scope of his employment by the Fund, to be acting in such employment
solely for the Fund and not as the employee or agent of the Company.
8. Services Not Exclusive. It is understood that the services of the
Company are not exclusive, and nothing in this Agreement shall prevent the
Company, or any affiliate thereof, from providing similar services to other
investment companies (whether or not their investment objectives and policies
are similar to those of the Fund) or other clients or from engaging in other
activities. When other clients, including investment company clients, of the
Company desire to purchase or sell a security at the same time such security
is purchased or sold for the Fund, it is understood that such purchases and
sales will be made in a manner designed to be as equitable as possible to
each client.
9. Duration and Termination. This Agreement shall become effective as of
May 1, 1991 and shall continue in force until April 30, 1992, if not sooner
terminated. This Agreement shall continue in effect for successive 12-month
periods, unless terminated, provided that each such continuance is
specifically approved at least annually by (a) the vote of a majority of
the entire Board of Directors of the Fund, or by the vote of a majority of
the outstanding voting securities of the Fund (as defined in the 1940 Act),
and (b) the vote of a majority of those Directors who are not parties to
this Agreement or interested persons (as such term is defined in the 1940
Act) of any such party cast in person at a meeting called for the purpose of
voting on such approval. This Agreement may be terminated at any time
without payment of any penalty, by the Fund upon the vote of a majority of
the Fund's Board of Directors or by a majority of the outstanding voting
securities of the Fund, or by the Company, in each case, on sixty (60) days'
written notice to the other party. This Agreement shall automatically
terminate in the event of its assignment (as such term is defined in the 1940
Act).
10. Amendments. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought.
11. Miscellaneous.
(a) This Agreement shall be construed in accordance with the laws of the
State of Maryland, provided that nothing herein shall be construed in a
manner inconsistent with the 1940 Act, the Investment Advisers Act of 1940,
as amended, or rules or orders of the Securities and Exchange Commission
thereunder.
(b) The captions of this Agreement are included for convenience only and in
no way define or delimit any of the provisions hereof or otherwise affect
their construction or effect.
(c) If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby and to this extent, the provisions of this
Agreement shall be deemed to be severable.
(d) The Company shall for all purposes herein be deemed to be an independent
contractor and shall have, unless otherwise expressly provided or
authorized, no authority to act for or represent the Fund in any way or
otherwise be deemed an agent of the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed as of the day and year first above written.
Corporate Seal THE GROWTH FUND OF WASHINGTON, INC.
Attest:
/s/ Howard L. Kitzmiller By:/s/ Harry J. Lister
Corporate Seal GEICO INVESTMENT SERVICES COMPANY
Attest:
/s/ Michael W. Stockton By: /s/ Richard A. Ollen
BUSINESS MANAGEMENT AGREEMENT
AGREEMENT made this 1st day of May 1991, between THE GROWTH FUND OF
WASHINGTON,INC.(a Maryland corporation, hereinafter referred to as the "Fund"),
and WASHINGTON MANAGEMENT CORPORATION
(a Delaware corporation, hereinafter referred to as the "Corporation").
WHEREAS, the Fund is a registered investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Corporation is experienced and able to act as business manager of
the Fund;
NOW, THEREFORE, for good and valuable consideration, the receipt whereof is
hereby acknowledged, and the mutual performance of undertakings herein, it is
agreed by and between the parties hereto as follows:
1. Services to be Provided by the Corporation. The Corporation, as business
manager for the Fund, will, at its own expense:
a. Furnish to the Fund the services of its employees and agents in the
management and conduct of the corporate business and affairs of the Fund;
b. Provide the services of its officers as administrative executives of the
Fund and the services of any directors of the Fund who are "interested persons"
of the Corporation or its affiliates, as that term is defined in the Act,
subject in each case to their individual consent to serve and to applicable
legal limitations;
c. Provide office space, secretarial and clerical services and wire and
telephone services (not including toll charges, which will be reimbursed), and
monitor and review Fund contracted services and the distribution plan;
d. Prepare periodic reports to the Fund's stockholders and prepare and
file, with such advice of counsel as reasonably deemed necessary by the
Corporation, such documents and other papers as may be required to comply with
the rules, regulations and requirements of the Securities and Exchange
Commission ("SEC") and other governmental agencies, whether state or federal.
(Special services, if any, rendered to individual stockholders or groups of
stockholders shall not be included in the services to be rendered by the
Corporation pursuant to this paragraph, but the Corporation shall be
reimbursed for the actual cost of such services pursuant to the provisions of
paragraph 2 below); and
e. Report to the Directors concerning its activities pursuant to this
Agreement at regular meetings of the Directors and at such other times as the
Directors may request.
-2-
2. Expenses. The Corporation shall bear expenses incurred by it which are
necessary for the performance of its duties and activities specified in this
Agreement, except such expenses as are assumed by the Fund under this
Agreement. The Corporation (or its affiliates, as applicable) will also pay
the compensation and expenses of all officers and executive employees of the
Fund who are directors, officers or employees of the Corporation or of its
affiliates and will make available or cause to be made available, without
expense to the Fund, the services of such of the directors, officers and
employees of the Corporation or its affiliates as may duly be elected officers
or directors of the Fund, subject to their individual consent to serve and to
any limitations imposed by law. The Fund shall bear all of its other expenses
incurred in its operation and not specifically assumed by the Corporation. The
expenses assumed by the Fund shall include, without limitation: organizational
expenses of the Fund; fees and expenses incurred in connection with the Fund's
membership in investment company organizations; fees of the investment adviser;
interest expenses; taxes and governmental fees; distribution fees; brokerage
commissions and other expenses incurred in acquiring or disposing of the Fund's
portfolio securities; expenses of registering and qualifying the Fund's shares
for sale with the Securities and Exchange Commission and with various state
securities authorities; the expenses of qualifying the Fund to do business in
jurisdictions where such qualification is required; accounting, auditing and
legal costs; the cost of preparing share certificates or any other expenses,
including clerical and administrative expenses, related to the issue,
redemption and repurchase of Fund shares; insurance premiums; fees and expenses
of the Custodian and Transfer Agent for the Fund and for any related services;
expenses of obtaining quotations on the Fund's portfolio securities and pricing
of the Fund's shares; expenses of shareholders' meetings; expenses of preparing
and distributing reports, proxies and prospectuses to existing shareholders;
and expenses and fees of the Fund's Directors who are not "interested persons"
of the Fund, as that term is defined in the 1940 Act.
3. Compensation. For the services provided and the expenses assumed by the
Corporation, the Fund shall pay to the Corporation a fee, computed daily and to
be paid on or about the last business day of each month, equal on an annual
basis to: 0.375% of the first $40,000,000 of the average daily net assets of
the Fund, and 0.30% of the average daily net assets of the Fund on the next
$60,000,000 and 0.25% of the average daily net assets of the Fund in excess of
$100,000,000.
The term "average daily net assets of the Fund" is defined as the average
of the values placed on the net assets of the Fund as of the close of the New
York Stock Exchange, on each day on which the net asset value of the portfolio
of the Fund is determined consistent with the provisions of Rule 22c-1 under
the 1940 Act or, if the Fund lawfully determines the value of the net assets of
its
portfolio as of some other time on each business day, as of such
-3-
time. The value of the net assets of the Fund shall be determined pursuant to
the applicable provisions of the Fund's then current Registration Statement
under the 1940 Act and the Securities Act of 1933 ("Registration Statement").
If, pursuant to such provisions, the determination of net asset value is
suspended for any particular business day, then for the purposes of this
paragraph 3, the value of the net assets of the Fund shall be deemed to be the
value of such net assets as last determined in accordance with the Registration
Statement. If the determination of the net asset value of the Fund has been
suspended pursuant to the Registration Statement for a period including a month
for which payment pursuant to this Agreement is due, the Corporation's
compensation payable at the end of such month shall be computed on the basis of
the value of the net assets of the Fund as last determined (whether during or
prior to such month).
Notwithstanding the foregoing, the Corporation agrees to waive its fee or
reimburse the Fund, as may be required by any expense limitations applicable to
the Fund by reason of state securities laws or regulations, as such laws or
regulations may be amended from time to time, to the extent the expenses of the
Fund (including amounts payable to the Corporation pursuant to this paragraph
3, but excluding interest, taxes, brokerage commissions or transaction costs,
distribution fees and extraordinary expenses) for any fiscal year ending on a
date on which this Agreement is in effect, exceed any such expense
limitations. The amount of the monthly management fee payable by the Fund
under this paragraph 3 shall be reduced by one half of the amount, if any, that
the annualized expenses of the Fund for that month exceed such expense
limitations. At the end of each fiscal year of the Fund, if the aggregate
annual expenses of the Fund for that year exceed such expense limitations, the
Corporation will promptly reimburse the Fund for one half the amount of such
excess. If such expenses are within the expense limitations, one half of any
excess amount previously withheld from the management and advisory fees during
that fiscal year will be promptly paid by the Fund to the Corporation. Should
two or more of such expense limitations be applicable as at the end of the last
business day of the month, that expense limitation which results in the largest
waiver or reimbursement shall be applicable. The amount of any waiver or
reimbursement hereunder shall be limited with respect to expenses incurred by
the Fund in any fiscal year, to the amount of the fee otherwise payable to the
Corporation hereunder.
4. Books and Records. In compliance with the requirements of Rule 31a-3 under
the 1940 Act, the Corporation hereby agrees that all records which it maintains
or causes to be maintained for the Fund are the property of the Fund and
further agrees to surrender promptly to the Fund any of such records upon the
Fund's request. The Corporation further agrees to preserve or cause to be
preserved for the periods prescribed by Rule 31a-2 under the 1940 Act the
records required to be maintained by Rule 31a-1 under the 1940 Act.
-4-
5. Sub-contracts. The Corporation may, from time to time, at its own expense,
employ or associate with itself such person or persons as it believes necessary
to assist it in carrying out its obligations under this Agreement.
6. Limitation of Liability. Except as may otherwise be required by the 1940
Act or the rules thereunder, neither the Corporation nor its stockholders,
officers, directors, employees or agents shall be subject to any liability for,
or any damages, expenses or losses incurred in connection with, any act or
omission connected with or arising out of any services rendered under this
Agreement, except by reason of willful misfeasance, bad faith or gross
negligence in the performance of the Corporation's duties or by reason of
reckless disregard of the Corporation's obligations and duties under this
Agreement. Notwithstanding the foregoing, the Corporation shall not be liable
to the Fund for the acts and omissions of any party engaged by the Corporation
to assist it in carrying out its obligations under this Agreement except to the
extent that such party is liable to the Corporation for such acts and omissions
pursuant to the contract under which the Corporation shall have retained such
party. Any person, even though also employed by the Corporation, who may be or
become an employee of and paid by the Fund shall be deemed, when acting within
the scope of his employment by the Fund, to be acting in such employment solely
for the Fund and not as the employee or agent of the Corporation.
7. Services Not Exclusive. It is understood that the services of the
Corporation are not exclusive, and nothing in this Agreement shall prevent the
Corporation, or any affiliate thereof, from providing similar services to other
investment companies (whether or not their investment objectives and policies
are similar to those of the Fund) or other clients or from engaging in other
activities.
8. Duration and Termination. This Agreement shall become effective as of May
1, 1991 and shall continue in force until April 30, 1992, if not sooner
terminated. This Agreement shall continue in effect for successive 12-month
periods, unless terminated, provided that each such continuance is specifically
approved at least annually by (a) the vote of a majority of the entire Board of
Directors of the Fund, or by the vote of a majority of the outstanding voting
securities of the Fund (as defined in the 1940 Act), and (b) the vote of a
majority of those Directors who are not parties to this Agreement or interested
persons (as such term is defined in the 1940 Act) of any such party cast in
person at a meeting called for the purpose of voting on such approval. This
Agreement may be terminated at any time without payment of any penalty, by the
Fund upon the vote of a majority of the Fund's Board of Directors or by a
majority of the outstanding voting securities of the Fund, or by the
Corporation, in each case, on sixty (60) days' written notice to the other
party. This Agreement shall automatically terminate in the event of its
assignment (as such term is defined in the 1940 Act).
-5-
9. Amendments. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought.
10. Miscellaneous.
a. This Agreement shall be construed in accordance with the laws of the State
of Maryland, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, as amended, or rules or orders of the
Securities and Exchange Commission thereunder.
b. The captions of this Agreement are included for convenience only and in
no way define or delimit any of the provisions hereof or otherwise affect their
construction or effect.
c. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby and, to this extent, the provisions of this
Agreement shall be deemed to be severable.
d. The Corporation shall for all purposes herein be deemed to be an
independent contractor and shall have, unless otherwise expressly provided or
authorized, no authority to act for or represent the Fund in any way or
otherwise be deemed an agent of the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed as of the day and year first above written.
Corporate Seal THE GROWTH FUND OF WASHINGTON, INC.
Attest:
/s/Howard L. Kitzmiller By: /s/ Harry J. Lister
Corporate Seal WASHINGTON MANAGEMENT CORPORATION
Attest:
/s/ Ralph S. Richard By:/s/ Stephen Hartwell
DISTRIBUTION AGREEMENT
AGREEMENT made this 1st day of August, 1993 between THE GROWTH FUND OF
WASHINGTON, INC. a Maryland corporation (the "Fund"), and Vista Broker-Dealer
Services, Inc., a Delaware corporation (the "Distributor").
WHEREAS, the Fund is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end diversified management investment
company and its shares of common stock ("Shares") are registered pursuant to a
registration statement filed under the 1940 Act and the Securities Act of 1933
("1933 Act") (such registration statement as it may be amended from time to
time hereinafter referred to as the "Registration Statement");
WHEREAS, the Distributor is registered as a broker-dealer under the
Securities Exchange Act of 1934 (the "1934 Act"); and
WHEREAS, the Fund desires to engage the services of the Distributor to act as
distributor of the Fund's Shares;
NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained, the Fund and the Distributor hereby agree upon the following terms
and conditions:
1. The Distributor shall be the exclusive distributor (except as provided in
paragraph 6 hereof) and principal underwriter of the Fund's Shares with the
functions hereinafter stated, and agrees to use its best efforts to bring about
and maintain a broad distribution of the Fund's Shares among bona fide
investors.
2. The Fund will periodically take actions necessary to register under the
1933 Act such Shares as the Distributor may reasonably be expected to sell on
behalf of the Fund. The Fund will cooperate in taking such action as may be
necessary from time to time to qualify Shares so registered for sale by the
Distributor or the Fund in any jurisdictions mutually agreeable to the
Distributor and the Fund, and to maintain such qualifications. This Agreement
relates to the issue and sale of Shares that are duly authorized and registered
and available for sale by the Fund, including redeemed or repurchased Shares if
and to the extent that they may be legally sold and if, but only if, the Fund
sees fit to sell them.
3. The Distributor shall solicit responsible dealers for orders to purchase
as principal Shares of the Fund and may sign selling contracts with any such
dealers, the forms of such contracts to be as mutually agreed upon between the
Fund and the Distributor. The Distributor may sell Shares of the Fund to
individual investors. While this Agreement is in force, the Fund shall not
solicit sales or sell its Shares to any person other than the Distributor,
except as provided in paragraph 6, below.
4. All orders for Shares shall be subject to acceptance and confirmation by
the Fund. All of the Shares of the Fund sold under this Agreement shall be
sold only at the offering price in effect at the time of such sale (as
described in and determined in accordance with the then current prospectus of
the Fund ("Prospectus"), including any applicable reductions or eliminations of
sales charges described therein) and the Fund shall receive not less than the
full net asset value thereof, calculated as provided in the Prospectus. The
difference between offering price and net asset value shall be retained by the
Distributor, it being understood that such amounts will not be in excess of
those set forth in the Prospectus. The Distributor shall issue shares at net
asset value to individuals, groups and organizations as permitted by the Fund's
current Prospectus.
5. The Distributor may re-allow to dealers all or any part of the discount it
is allowed, in accordance with the Prospectus.
6. Any right granted to the Distributor to accept orders for Shares or to
make sales on behalf of the Fund or to purchase Shares for resale will not
apply to Shares issued in connection with the merger or consolidation of any
other investment company with the Fund or the Fund's acquisition, by purchase
or otherwise, of all or substantially all of the assets of any investment
company or substantially all the outstanding shares of any such company, and,
unless the Distributor is otherwise notified by the Fund, such right shall not
apply to Shares that may be offered by the Fund to shareholders by virtue of
their being holders of Shares of the Fund, including Shares to be purchased
through reinvestment of income dividends and capital gains distributions.
7. The Distributor will conduct its business in accordance with the
applicable requirements of the Articles of Incorporation and the By-Laws of the
Fund as from time to time amended, and in accordance with all applicable United
States statutes, rules and regulations, and the rules and regulations of the
National Association of Securities Dealers, Inc. and of the various
jurisdictions in which Shares are offered for sale.
8. The Fund is not authorized to give any information or to make any
representations on behalf of the Distributor other than the information and
representations contained in the Registration Statement or Prospectus, or
reports prepared for distribution to shareholders of the Fund. The Distributor
is not authorized to give any information or to make any representations on
behalf of the Fund in connection with the sale of Shares other than the
information and representations contained in the Registration Statement or
Prospectus, or reports prepared for distribution to shareholder of the Fund.
9. All sales literature and advertising developed by the Distributor in
connection with the Fund is subject to the approval of the Fund.
10. The Distributor shall be deemed an independent contractor and neither the
Distributor nor any of its officers or employees is or shall be deemed an
employee of the Fund in the performance of its duties hereunder.
11. The Fund shall furnish the Distributor from time to time, for use in
connection with the sale of Shares, such financial statements and written
information with respect to the Fund as the Distributor may reasonably request.
In each case such written information shall be signed by an authorized officer
of the Fund. The Fund represents and warrants that such information, when
signed by one of its officers, shall be true and correct. The Fund also shall
furnish to the Distributor copies of its reports to its stockholders and such
additional information regarding the Fund's financial condition as the
Distributor may reasonably request from time to time.
12. The Fund represents and warrants to the Distributor that the Registration
Statement and the Prospectus have been prepared in conformity with the 1933
Act, the 1940 Act and the rules and regulations of the Securities and Exchange
Commission (the "SEC") thereunder. The Fund represents and warrants to the
Distributor that the Registration Statement and the Prospectus contain all
statements required to be stated therein in accordance with the 1933 Act, the
1940 Act and the rules and regulations thereunder, that all statements of fact
contained therein are true and correct and that neither the Registration
Statement nor the Prospectus include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading to a purchaser of Shares; provided,
however, that the Fund makes no representations or warranties as to the
information contained in the Registration Statement or the Prospectus in
reliance upon and in conformity with information furnished in writing to the
Fund by or on behalf of the Distributor specifically for use in connection with
the preparation of the Registration Statement or Prospectus. On its own
initiative or upon request from the Distributor the Fund shall from time to
time file such amendment or amendments to the Registration Statement and the
Prospectus as, in the light of future developments, shall, in the opinion of
counsel for the Fund or the Distributor, be necessary in order to have the
Registration Statement and the Prospectus at all times contain all material
facts required to be stated therein or necessary to make the statements therein
not misleading to a purchaser of Shares. If the Fund shall not file such
amendment or amendments within 15 days after receipt by the Fund of a written
request from the Distributor to do so, the Distributor may, at its option,
terminate this contract immediately. The Fund represents and warrants to the
Distributor that any amendment to the Registration Statement or the Prospectus
filed hereafter by the Fund will, when it becomes effective under the 1933 Act,
contain all statements required to be stated therein in accordance with the
1933 Act, the 1940 Act and the rules and regulations thereunder, that all
statements of fact contained therein will, when the same shall become
effective, be true and correct, and that no such amendment, when it becomes
effective, will include an untrue statement of a material fact or will omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading to a purchaser of Shares; provided, however,
that the Fund makes no representations or warranties as to the information
contained in any such amendment in reliance upon and in conformity with
information furnished in writing to the Fund by or on behalf of the Distributor
specifically for use in connection with the preparation of such amendment.
13. The Fund shall prepare and furnish to the Distributor from time to time,
at the Distributor's expense, such number of copies of the most recent form of
the Prospectus filed with the SEC as the Distributor may reasonably request.
The Fund authorizes the Distributor to use the Prospectus, in the form
furnished to the Distributor from time to time, in connection with the sale of
Shares. The Fund shall indemnify, defend and hold harmless the Distributor,
its officers and directors and any person who controls the Distributor within
the meaning of the 1933 Act, from and against any and all claims, demands,
liabilities and expenses (including the cost of investigating or defending such
claims, demands, or liabilities and any counsel fees incurred in connection
therewith) which the Distributor, any of its officers and directors or any such
controlling person may incur under the 1933 Act, the 1940 Act, the common law
or otherwise, arising out of or based upon any alleged untrue statement of a
material fact contained in the Registration Statement or the Prospectus or
arising out of or based upon any alleged omission to state a material fact
required to be stated in either or necessary to make the statements in either
not misleading. This Agreement shall not be construed to protect the
Distributor against any liability to the Fund or its shareholders to which the
Distributor would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence in the performance of its duties or by reason of its
reckless disregard of its obligations and duties under this Agreement. If any
such action is brought against the Distributor or any of its officers,
directors or controlling persons, such person shall notify the Fund, which
notification shall be given by letter or by telegram addressed to the Fund at
its principal office in Washington, D.C., and sent to the Fund by the person
against whom such action is brought within 10 days after the summons or other
first legal process shall have been served. Failure to so notify the Fund will
not prevent indemnification hereunder. The indemnity agreement contained in
this paragraph shall not relieve the Fund from any liability which it may have
to the person against whom such action is brought by reason of any such alleged
untrue statement or omission otherwise than on account of such indemnity
agreement. The Fund shall be entitled to assume the defense of any suit
brought to enforce any such claim, demand or liability, but, in any such case,
the defense shall be conducted by counsel chosen by the Fund and approved by
the Distributor, such approval not to be unreasonably withheld by the
Distributor. If the Fund elects to assume the defense of any such suit and
retain counsel approved by the Distributor, the defendant or defendants in such
suit shall bear the fees and expenses of any additional counsel retained by any
of them, but in the case the Fund does not elect to assume the defense of any
such suit, or in case the Distributor does not approve of counsel chosen by the
Fund, the Fund will reimburse the Distributor, any of its officers and
directors or controlling persons named as defendant or defendants in such suit,
for the fees and expenses of any counsel retained by the Distributor or any of
such persons. In addition, the Distributor shall have the right to employ
counsel to represent it, or any of its officers, directors or any such
controlling person who may be subject to liability arising out of any claim in
respect of which the indemnity may be sought by the Distributor against the
Fund hereunder if in the reasonable judgement of the Distributor or any of such
officers, directors or controlling persons it is advisable for the Distributor
or such officer, director or controlling person to be represented by separate
counsel, in which event the fees and expenses of such separate counsel shall be
borne by the Fund. This indemnity agreement and the Fund's representations and
warranties in this agreement shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of the Distributor
or any of its officers and directors or any such controlling person. This
indemnity agreement shall inure exclusively to the benefit of the Distributor
and its successors, the Distributor's officers and directors and their
respective successors and estates and any such controlling persons and their
successors and estates. The Fund shall promptly notify the Distributor of the
commencement of any litigation or proceedings against it in connection with the
issue and sale of any Shares.
14. The Distributor agrees to indemnify, defend and hold harmless the Fund,
its officers and directors and any person who controls the Fund within the
meaning of the 1933 Act, from and against any and all such claims, demands,
liabilities and expenses (including the cost of investigating or defending such
claims, demand or liabilities and any counsel fees incurred in connection
therewith) which the Fund, any of its officers or directors or any such
controlling person, may incur under the 1933 Act, the 1940 Act, the common law
or otherwise, but only to the extent that such liability or expense incurred by
the Fund, or any of its officers or directors or controlling persons resulting
from such claims or demands shall arise out of or be based upon any alleged
untrue statement of a material fact contained in information furnished in
writing by the Distributor to the Fund specifically for use in the Registration
Statement or the Prospectus or shall arise out of or be based upon any alleged
omission to state a material fact in connection with such information required
to be stated or necessary to make such information not misleading. If any such
action is brought against the Fund or any of its officers, directors or
controlling persons, such person shall notify the Distributor, which
notification shall be given by letter or telegram addressed to the Distributor
at its principal office in New York City, N.Y., and sent to the Distributor by
the person against whom such action is brought within 10 days after the summons
or other first legal process shall have been served. Failure to so notify the
Distributor will not prevent indemnification hereunder. The indemnity
agreement contained in this paragraph shall not relieve the Distributor from
any liability which it may have to the Fund, its officers or directors or such
controlling persons by reason of any such alleged misstatement or omission on
the Distributor's part otherwise than on account of such indemnity agreement.
The Distributor shall have a right to control the defense of such action with
the counsel of its own choosing and approved by the Fund, such approval not to
be unreasonably withheld by the Fund.
15. No Shares shall be sold through the Distributor or by the Fund under
this contract and no orders for the purchase of shares shall be confirmed or
accepted by the Fund if and so long as the effectiveness of the Registration
Statement shall be suspended under any provisions of the 1933 Act. Nothing
contained in this paragraph 15 shall in any way restrict, limit or have any
application to or bearing upon the Fund's obligation to redeem Shares from any
shareholder as described in the Prospectus.
16. The Fund's Board of Directors or, upon authority from the Directors, the
Fund's officers, at any time such action is deemed advisable, may suspend or
terminate the offer or sale of Shares, give the Distributor notice of such
suspension or termination and decline to accept or confirm any purchase orders
for or make any sales of Shares under this agreement until such time as may be
deemed advisable.
17. The Fund agrees to advise the Distributor immediately:
(a) of any comments or actions of the SEC on the Registration Statement or
Prospectus and of any request by the SEC for amendments to the Registration
Statement or the Prospectus or for additional information, with matters
directly related to the Distributor's functions supplied in advance of filing;
(b) in the event of the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement or Prospectus under the 1933 Act or
the initiation of any proceedings for that purpose;
(c) of the happening of any material event which makes untrue any statement
made in the Registration Statement or Prospectus or which requires the making
of a change in either document in order to make the statements therein not
misleading; and
18. Insofar as they concern the Fund, the Fund shall comply with all
applicable laws,
rules and regulations, including without limiting the generality of the
foregoing, all rules or regulations made or adopted pursuant to the 1933 Act,
the 1940 Act or by any securities association registered under the 1934 Act.
19. (a) The Distributor shall from time to time employ or associate with it
such persons as it believes necessary to assist it in carrying out its
obligations under this contract. The compensation of such persons shall be
paid by the Distributor.
(b) The Distributor shall pay all expenses incurred in connection with its
qualification as a dealer or broker under Federal or state law.
(c) The Fund shall pay all expenses incurred in connection with (i) the
preparation, printing and distribution to stockholders of the Prospectus and
reports and other communications to stockholders , (ii) future registrations of
Shares under the 1933 Act and the 1940 Act, (iii) amendments of the
Registration Statement, (iv) qualification of Shares for sale in jurisdictions
mutually agreed to by the Fund and the Distributor, (v) qualification of the
Fund as a foreign corporation authorized to do business in any jurisdiction if
the Fund and the Distributor determine that such qualification is necessary or
desirable for the purpose of facilitating sales of Shares, (vi) maintaining
facilities for the issue and transfer of Shares and (vii) supplying
information, prices and other data to be furnished by the Fund under this
contract.
(d) The Fund shall pay any original issue taxes or transfer taxes
applicable to the sale or delivery of Shares or certificates therefor.
(e) The Fund shall execute all documents and furnish any information which
may be reasonably necessary in conjunction with the qualification of Shares of
the Fund for sale in applicable jurisdictions.
20. Except as may otherwise be provided in any plan, or any agreement
pursuant to a plan, adopted by the Fund under Rule 12b-1 under the 1940 Act,
the Distributor will render all services hereunder without compensation or
reimbursement other than that specified in paragraph 4 hereof.
21. This Agreement shall become effective as of the date first named above,
and shall continue in effect until the close of business on July 31, 1994,
provided that this Agreement may continue in effect for periods of no more than
one year from August 1, 1993 only so long as such continuance is specifically
approved at least annually by (a) the Fund's Board of Directors or by the vote
of a majority of the Fund's outstanding voting securities (as defined by the
1940 Act), and (b) by the vote, cast in person at a meeting called for the
purpose, of a majority of the Fund's directors who are not parties to this
Agreement or "interested persons" (as defined in the 1940 Act). This Agreement
may, in any event, be terminated at any time, without the payment of any
penalty, by the Fund upon 60 days' written notice to the Distributor and by the
Distributor upon 60 days' written notice to the Fund.
22. No provisions of this Agreement may be changed, waived, discharged or
terminated orally, but only by instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought. If the Fund should at any time deem it necessary or advisable in the
best interests of the Fund that any amendment of this Agreement be made in
order to comply with the recommendations or requirements of the Securities and
Exchange Commission or other governmental authority or to obtain any advantage
under state or Federal tax laws and should notify the Distributor of the form
of such amendment, and the reasons therefor, and if the Distributor should
decline to assent to such amendment, the Fund may terminate this Agreement
forthwith. If the Distributor should at any time request that a change be made
in the Fund's Articles of Incorporation or By-Laws or in the Fund's method of
doing business, in order to comply with any requirements of Federal law or
regulations of the Securities and Exchange Commission or of a national
securities exchange or association of which the Distributor is or may be a
member relating to the sale of Shares, and the Fund should not make such
necessary change within a reasonable time, the Distributor may terminate this
Agreement forthwith.
23. Except to the extent necessary to perform the Distributor's obligation
under this Agreement, nothing herein shall be deemed to limit or restrict the
right of the Distributor, or any affiliate of the Distributor, or any employee
of the Distributor, to engage in any other business or to devote time and
attention to the management or other aspects of any other business, whether of
a similar or dissimilar nature, or to render services of any kind to any other
corporation, firm, individual or association.
24. This Agreement shall be construed under and shall be governed by the
laws of the State of New York.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and
delivered on the date first above written.
The Growth Fund of Washington, Inc.
/s/ Howard L. Kitzmiller By: /s/ Harry J. Lister
Attest
Vista Broker Dealer Services, Inc.
/s/ James Bernaiche By: /s/ Joseph Kissel
Attest
TRANSFER AGENCY AGREEMENT
THIS AGREEMENT made the 1st day of May, 1993, by and between The Growth Fund of
Washington, Inc., a Maryland corporation, having its principal place of
business at 1101 Vermont Ave., N.W., Washington, D.C. 20005 ("Fund"), and
INVESTORS FIDUCIARY TRUST COMPANY, a state chartered trust company organized
and existing under the laws of the State of Missouri, having its principal
place of business at 21 West 10th Street, Kansas City, Missouri 64105
("IFTC"):
WITNESSETH:
WHEREAS, the Fund is a Maryland corporation registered with the Securities and
Exchange Commission as an investment company pursuant to the Investment Company
Act of 1940, as amended; and
WHEREAS, the Fund wishes to appoint IFTC as transfer agent and dividend
disbursing agent as to any and all shares issued by the Fund; and
WHEREAS, IFTC wishes to accept such appointment; and
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:
1. Documents to be Filed with Appointment.
In connection with the appointment of IFTC as Transfer Agent and Dividend
Disbursing Agent for the Fund, there will be filed with IFTC the following
documents:
A. A certified copy of the Votes of the Board of Directors of the Fund
appointing IFTC as Transfer Agent and Dividend Disbursing Agent, approving the
form of this Agreement, and designating certain persons to sign stock
certificates, if any, and give written instructions and requests on behalf of
the Fund;
B. A certified copy of the Articles of Incorporation and all future
amendments affecting the number of authorized shares or IFTC's provision of
services hereunder;
C. A certified copy of the Bylaws of the Fund;
D. Copies of all current and future Registration Statements and amendments
thereto, filed with the Securities and Exchange Commission.
E. Specimens of all forms of outstanding stock certificates, if any;
F. An opinion of counsel for the Fund with respect to:
(1) Fund's organization and existence under the laws of its state of
organization,
(2) The status of all shares of stock of Fund covered by the appointment
under the Securities Act of 1933, as amended, and any other applicable federal
or state statute and
(3) That all issued shares are, and all unissued shares will be when issued,
validly issued, fully paid and nonassessable.
2. Certain Representations and Warranties of IFTC. IFTC represents and
warrants to the Fund that:
A. It is a trust company duly organized and existing and in good standing
under the laws of Missouri.
B. It is duly qualified to carry on its business in the State of Missouri.
C. It is empowered under applicable laws and by its Articles of Incorporation
and bylaws to enter into and perform the services contemplated in this
Agreement.
D. It is registered as a transfer agent to the extent required under the
Securities Exchange Act of 1934.
E. All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
F. It has and will continue to have and maintain the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
3. Certain Representations and Warranties of the Fund. The Fund represents
and warrants to IFTC that:
A. It is a corporation duly organized and existing and in good standing under
the laws of the State of Maryland.
B. It is an open-end diversified management investment company registered
under the Investment Company Act of 1940, as amended.
C. A registration statement under the Securities Act of 1933 has been filed
and is effective with respect to the shares of the Fund being offered for sale.
D. All requisite steps have been and, in the future, will be taken to
register the Fund's shares for sale in applicable states.
E. The Fund is empowered under applicable laws and by Articles of
Incorporation and bylaws to enter into and perform this Agreement.
4. Scope of Appointment.
A. Subject to the conditions set forth in this Agreement, effective the 1st
day of May, 1993, the Fund hereby employs and appoints IFTC as Transfer Agent
and Dividend Disbursing Agent as to all current and future issued and
outstanding shares of the Fund.
B. IFTC hereby accepts such employment and appointment and agrees that it
will act as the Fund's Transfer Agent and Dividend Disbursing Agent. IFTC
agrees that it will also act as agent in connection with the Fund's periodic
investment and withdrawal payment accounts, other open-account and similar
plans for shareholders, if any.
C. IFTC agrees to provide the necessary facilities, equipment and personnel
to perform its duties and obligations hereunder in accordance with industry
practice.
D. The Fund agrees to deliver to IFTC in Kansas City, Missouri, as soon as
they are available, all of its shareholder account records.
E. Subject to the provisions of Sections 19. and 20. hereof, IFTC agrees that
it will perform all of the usual and ordinary services of Transfer Agent and
Dividend Disbursing Agent and as Agent for the various shareholder accounts,
including, without limitation, the following: issuing, transferring and
cancelling stock certificates; maintaining all shareholder accounts; preparing
shareholder meeting lists, mailing proxies, receiving and tabulating proxies
(outside agency bills treated as out-of-pocket expenses); mailing shareholder
reports and prospectuses; withholding taxes on nonresident alien and foreign
corporation accounts, for pension and deferred income accounts for which IFTC
is the named trustee or custodian, on accounts which IFTC has been advised are
subject to backup withholding or other instances agreed upon by the parties;
preparing and mailing checks for disbursement of income dividends and capital
gains distributions, preparing and filing U.S. Treasury Department Form 1099
for shareholders as directed by the Fund; preparing and mailing confirmation
forms to shareholders and dealers with respect to purchases and liquidation of
the Fund shares and other transactions in shareholder accounts for which
confirmations are required or as directed by the Fund; recording reinvestments
of dividends and distributions in Fund shares; and preparing and mailing checks
for payments upon redemption and for disbursements to withdrawal plan holders.
5. Limit of Authority.
Unless otherwise expressly limited by the resolution of appointment or by
subsequent action by the Fund, the appointment of IFTC as Transfer Agent will
be construed to cover the full amount of the Shares of the Fund for which IFTC
is appointed as the same will, from time to time, be constituted, and any
subsequent increases in such authorized amount.
In case of such increase the Fund will file with IFTC:
A. If the appointment of IFTC was theretofore expressly limited, a certified
copy of a Vote of the Board of Directors of the Fund increasing the authority
of IFTC;
B. A certified copy of the amendment to the Articles of Incorporation
authorizing the increase of shares.
6. Compensation and Expenses.
A. In consideration for its services hereunder as Transfer Agent and Dividend
Disbursing Agent, the Fund will pay to IFTC from time to time a reasonable
compensation for all services rendered as Agent, and also, all its reasonable
out-of-pocket expenses, charges, counsel fees, and other disbursements incurred
in connection with the agency. Such compensation will be set forth in a
separate schedule to be agreed to by the Fund and IFTC, a copy of which is
attached hereto and incorporated herein by reference. If the Fund has not paid
such compensation and expenses to IFTC within a reasonable time, and as
permitted by applicable law, IFTC may charge against any monies held under this
Agreement in the Fund's name, the amount of any compensation, expense, loss or
liability for which IFTC shall be entitled to reimbursement under this
Agreement.
B. The Fund agrees to promptly reimburse IFTC for all reasonable
out-of-pocket expenses or advances incurred by IFTC in connection with the
performance of services under this Agreement, for postage (which may be
required to be paid in advance) and first class mail insurance in connection
with mailing stock certificates, envelopes, check forms, continuous forms,
forms for reports and statements, stationery, and other similar items,
telephone and telegraph charges incurred in answering or making inquiries from
or of dealers or shareholders, microfilm used each year to record the previous
year's transactions in shareholder accounts and computer tapes used for
permanent storage of records and cost of insertion of materials in mailing
envelopes by outside firms.
7. Operation of IFTC System.
A. In connection with the performance of its services under this Agreement,
IFTC is responsible for such items as:
(1) The accuracy of entries made by IFTC in IFTC's records reflecting orders
and instructions received by IFTC from dealers, shareholders, the Fund or its
principal underwriter;
(2) The availability and the accuracy of shareholder lists, shareholder
account verifications, confirmations and other shareholder account information
to be produced from its records or data;
(3) The accurate and timely issuance of dividend and distribution checks in
accordance with instructions received from the Fund;
(4) The accuracy of redemption transactions and payments in accordance with
redemption instructions received from dealers, shareholders or the Fund;
(5) The deposit daily in the Fund's appropriate bank account of all checks
and payments received directly or individually from dealers or shareholders for
investment in shares;
(6) The requiring of proper forms of instructions, signatures and signature
guarantees and any necessary documents supporting the legality of transfers,
redemptions and other shareholder account transactions, all in conformance with
IFTC's present procedures with such changes as may be required or approved by
the Fund; and
(7) The maintenance of a current duplicate set of the Fund's essential
records maintained by IFTC for the Fund under this Agreement at a secure
distant location.
B. IFTC is not responsible for and shall have no liability as a result of or
which arises out of errors, inaccuracies or omissions in the Fund's books and
records as received by IFTC from the prior transfer and dividend disbursing
agent and any errors, inaccuracies or omissions in reports, lists,
verifications, confirmations or other information or data derived or produced
therefrom.
8. Indemnification
A. IFTC will not be responsible for, and the Fund will hold harmless and
indemnify IFTC from and against any loss by or liability to the Fund or a third
party, including attorney's fees, in connection with any claim or suit
asserting any such liability arising out of or attributable to actions taken or
omitted by IFTC pursuant to this Agreement, unless IFTC has acted negligently
or in bad faith. Nothing in section 8.A. shall affect IFTC's right to receive
payment from any insurance. IFTC shall not be entitled to payment by the Fund
to the extent it recovers payment from its insurance company, but is not
required to file a claim thereunder. The matters covered by this
indemnification include but are not limited to those of Section 14. hereof and
any costs, including legal fees, incurred in enforcing this right of
indemnification.
The Fund will be responsible for, and will have the right to conduct or control
the defense of any litigation asserting liability against which IFTC is
indemnified hereunder. IFTC will not be under any obligation to prosecute or
defend any action or suit in respect of the agency relationship hereunder,
which, in its opinion, may involve it in expense or liability, unless the Fund
will, as often as requested, furnish IFTC with reasonable, satisfactory
security and indemnity against such expense or liability and pay all costs,
including attorney's fees, as incurred.
B. IFTC will hold harmless and indemnify the Fund from and against any loss
or liability arising out of IFTC's failure to comply with the terms of this
Agreement or out of IFTC's negligence, misconduct, or bad faith, except to the
extent IFTC is entitled to indemnification under Subsection A. hereof.
9. Certain Covenants of IFTC and the Fund.
A. The Fund hereby agrees that all requisite steps will be taken by the Fund
from time to time when and as necessary to register the Fund's shares for sale
in all states in which the Fund's shares shall at the time be offered for sale
and require registration. If at any time the Fund will receive notice of any
stop order or other proceeding in any such state affecting such registration or
the sale of the Fund's shares, or of any stop order or other proceeding under
the Federal securities laws affecting the sale of the Fund's shares, the Fund
will give prompt notice thereof to IFTC.
B. IFTC hereby agrees to perform such transfer agency functions as are
attached hereto as Exhibit A and establish and maintain facilities and
procedures reasonably acceptable to the Fund for safekeeping of stock
certificates, check forms, and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account of, such certificates,
forms and devices, and to carry such insurance as specified in Exhibit B.
C. To the extent required by Section 31 of the Investment Company Act of 1940
as amended and Rules thereunder, IFTC agrees that all records maintained by
IFTC relating to the services to be performed by IFTC under this Agreement are
the property of the Fund and will be preserved and will be surrendered promptly
to the Fund on request. The Fund will be responsible for the costs of storing
and retrieving such records.
D. IFTC agrees to furnish the Fund semi-annual reports of its financial
condition, consisting of a balance sheet, earnings statement and any other
financial information reasonably requested by the Fund. The annual financial
statements will be certified by IFTC's certified public accountants.
E. IFTC represents and agrees that it will use its best efforts to keep
current on the trends of the investment company industry relating to transfer
agent services and will use its best efforts to continue to modernize and
improve its system without additional cost to the Fund. Notwithstanding the
foregoing, the Fund may be charged for utilization of any modification or
improvement if utilization of such modification or improvement is charged to
IFTC's clients generally, and provided such modification or improvement is
utilized to provide services to the Fund hereunder.
F. IFTC will permit the Fund and its authorized representatives to make
periodic inspections of its operations as such would involve the Fund at
reasonable times during business hours.
10. Recapitalization or Readjustment.
In case of any recapitalization, readjustment or other change in the capital
structure of the Fund requiring a change in the form of share certificates,
IFTC will issue or register certificates in the new form in exchange for, or in
transfer of, the outstanding certificates in the old form, upon receiving:
A. Written instructions from an officer of the Fund;
B. Certified copy of the amendment to the Articles of Incorporation or other
document effecting the change;
C. Certified copy of the order or consent of each governmental or regulatory
authority, required by law to the issuance of the shares in the new form, and
an opinion of counsel that the order or consent of no other government or
regulatory authority is required;
D. Specimens of the new certificates in the form approved by the Board of
Directors of the Fund, with a certificate of the Secretary of the Fund as to
such approval;
E. Opinion of counsel for the Fund stating:
(1) The status of the shares of stock of the Fund in the new form under the
Securities Act of 1933, as amended and any other applicable federal or state
statute; and
(2) That the issued shares in the new form are, and all unissued shares will
be, when issued, validly issued, fully paid and nonassessable.
11. Stock Certificates.
The Fund will furnish IFTC with a sufficient supply of blank stock certificates
and from time to time will renew such supply upon the request of IFTC. Such
certificates will be signed manually or by facsimile signatures of the officers
of the Fund authorized by law and by bylaws to sign share certificates, and if
required, will bear the Funds's seal or facsimile thereof.
12. Death, Resignation or Removal of Signing Officer.
The Fund will file promptly with IFTC written notice of any change in the
officers authorized to sign share certificates, written instructions or
requests, together with two signature cards bearing the specimen signature of
each newly authorized officer. In case any officer of the Fund who will have
signed manually or whose facsimile signature will have been affixed to blank
share certificates will die, resign, or be removed prior to the issuance of
such certificates, IFTC may issue or register such share certificates as the
share certificates of the Fund notwithstanding such death, resignation, or
removal, until specifically directed to the contrary by the Fund in writing.
In the absence of such direction, the Fund will file promptly with IFTC such
approval, adoption, or ratification as may be required by law.
13. Future Amendments of Articles of Incorporation and Bylaws. The Fund will
promptly file with IFTC copies of all material amendments to its Articles of
Incorporation or bylaws made after the date of this Agreement.
14. Instructions, Opinion of Counsel and Signatures.
Except as otherwise provided for in a written memorandum signed by both parties
hereto, at any time IFTC may apply to any officer of the Fund, Washington
Management Corporation, Washington Investment Advisers, Inc., Chase Manhattan
Bank, N.A. ("Chase"), or Chase's Mutual Fund Group for instructions, and if
such instructions are not received within a reasonable time following
subsequent notification with the Fund's Chief Executive Officer, then IFTC may
consult with legal counsel for the Fund or its own legal counsel at the expense
of the Fund, with respect to any matter arising in connection with the agency
and it will not be liable for any action taken or omitted by it in good faith
in reliance upon such instructions or upon the opinion of such counsel. IFTC
will be protected in acting upon any paper or document reasonably believed by
it to be genuine and to have been signed by the proper person or persons and
will not be held to have notice of any change of authority of any person, until
receipt of written notice thereof from the Fund. It will also be protected in
recognizing share certificates which it reasonably believes to bear the proper
manual or facsimile signatures of the officers of the Fund, and the proper
countersignature of any former Transfer Agent or Registrar, or of a co-Transfer
Agent or co-Registrar.
15. Papers Subject to Approval of Counsel.
The acceptance by IFTC, of its appointment as Transfer Agent and Dividend
Disbursing Agent and all documents filed in connection with such appointment
and thereafter in connection with the agencies, will be subject to the approval
of legal counsel for IFTC (which approval will be not unreasonably withheld).
16. Certification of Documents.
The required copy of the Articles of Incorporation of the Fund and copies of
all amendments thereto may be duplicates of the original certified by the
Secretary of State (or other appropriate official) of the State of Maryland.
The copy of the Bylaws, copies of all amendments thereto, and copies of
resolutions or Votes of the Board of Directors of the Fund, will be certified
by the Secretary or an Assistant Secretary of the Fund under the Fund's seal,
if any.
17. Records.
IFTC will maintain customary records in connection with its agency, and
particularly will maintain those records required to be maintained pursuant to
subparagraph (2) (iv) of paragraph (b) of Rule 31a-1 under the Investment
Company Act of 1940, if any.
18. Disposition of Books, Records and Cancelled Certificates.
IFTC may send periodically to the Fund, or to where designated by the Secretary
or an Assistant Secretary of the Fund, all books, documents, and all records no
longer deemed by it as needed for current purposes and stock certificates which
have been cancelled in transfer or in exchange. At a minimum all such records
will be maintained for the periods required by applicable law and under and in
compliance with the requirements of 17 C.F.R. Section 240.17Ad-7(g), adopted
under the Securities and Exchange Act of 1934.
19. Provisions Relating to IFTC as Transfer Agent.
A. IFTC will make original issues of stock certificates upon written request
of an officer of the Fund and upon being furnished with a certified copy of a
resolution of the Board of Directors authorizing such original issue, an
opinion of counsel as outlined in paragraphs 1.D. and G. of this Agreement, any
documents required by paragraphs 5. or 10. of this Agreement, and necessary
funds for the payment of any original issue tax.
B. Before making any original issue of certificates the Fund will furnish
IFTC with sufficient funds to pay all required taxes on the original issue of
the stock, if any. the Fund will furnish IFTC such evidence as may be required
by IFTC to show the actual value of the stock. If no taxes are payable IFTC
will be furnished with an opinion of outside counsel to that effect.
C. Stock certificates will be transferred and new certificates issued in
transfer, or stock certificates accepted for redemption and funds remitted
therefor, upon surrender of the old certificates in form deemed by IFTC
properly endorsed for transfer or redemption accompanied by such documents as
IFTC may deem necessary to evidence that authority of the person making the
transfer or redemption, and bearing satisfactory evidence of the payment of any
applicable transfer taxes. IFTC reserves the right to refuse to transfer or
redeem shares until it is satisfied that the endorsement or signature on the
certificate or any other document is valid and genuine, and for that purpose it
may require a guarantee of signature by a bank, broker or dealer, municipal
securities dealer or broker, government securities dealer or broker, credit
union, national securities exchange, registered securities association,
clearing agency, savings association (including savings bank and savings and
loan) or any entity which affixes a medallion which reasonably appears to be
that of a Signature Guarantee Program (collectively an "Eligible Guarantor
Institution"). IFTC will incur no liability and shall be indemnified and held
harmless by the Fund for any action taken by it in accordance with an
instruction bearing what purports to be a signature guarantee or medallion of
an Eligible Guarantor Institution or otherwise in accordance with IFTC's
Signature Guarantee Procedures adopted pursuant to 17 C.F.R. Section
240.17Ad-15 under the Securities and Exchange Act of 1934. IFTC also reserves
the right to refuse to transfer or redeem shares until it is satisfied that the
requested transfer or redemption is legally authorized, and it will incur no
liability and shall be indemnified and held harmless by the Fund for the
refusal in good faith to make transfers or redemptions which, in its judgment,
are improper or unauthorized. IFTC may, in effecting transfers or redemptions,
rely upon Simplification Acts or other statutes which protect it and the Fund
in not requiring complete fiduciary documentation. In cases in which IFTC is
not directed or otherwise required to maintain the consolidated records of
shareholder's accounts, IFTC will not be liable for any loss which may arise by
reason of not having such records, provided that such loss could not have been
prevented by the exercise of ordinary diligence. IFTC will be under no duty to
use a greater degree of diligence by reason of not having such records.
D. When mail is used for delivery of stock certificates IFTC will forward
share certificates in "nonnegotiable" form by first class or registered mail
and share certificates in "negotiable" form by registered mail, all such mail
deliveries to be covered while in transit to the addressee by insurance
arranged for by IFTC.
E. IFTC will issue and mail subscription warrants, certificates representing
dividends, exchanges or split ups, or act as Conversion Agent upon receiving
written instructions from any officer of the Fund and such other documents as
IFTC deems necessary.
F. IFTC will issue, transfer, and split up certificates and will issue
certificates representing full shares upon surrender of scrip certificates
aggregating one full share or more when presented to IFTC for that purpose upon
receiving written instructions from an officer of the Fund and such other
documents as IFTC may deem necessary.
G. IFTC may issue new certificates in place of certificates represented to
have been lost, destroyed, stolen or otherwise wrongfully taken upon receiving
instructions from the Fund and indemnity satisfactory to IFTC and the Fund, and
may issue new certificates in exchange for, and upon surrender of, mutilated
certificates.
H. IFTC will supply a shareholder's list to the Fund for one meeting of
shareholders upon receiving a request therfor from an officer of the Fund. It
will also supply lists at such other times as may be requested by an officer of
the Fund, but may, in its discretion, charge therefor.
I. Upon receipt of written instructions of an officer of the Fund, IFTC will
address and mail notices to shareholders.
J. In case of any request or demand for the inspection of the shareholder
records of the Fund or any other books in the possession of IFTC, IFTC will
endeavor to notify the Fund and endeavor to secure instructions as to
permitting or refusing such inspection. IFTC reserves the right, however, to
exhibit the shareholder records or other books to any person in case it is
advised by its counsel that it may be held responsible for the failure to
exhibit the shareholder records or other books to such person.
20. Provisions Relating to Dividend Disbursing Agency.
A. IFTC will, at the expense of the Fund, provide a special form of check
containing the imprint of any device or other matter desired by the Fund. Said
checks must, however, be of a form and size convenient for use by IFTC.
B. If the Fund desires to include additional printed matter, financial
statements, etc., with the dividend checks, the same will be furnished IFTC
within a reasonable time prior to the date of mailing of the dividend checks,
at the expense of the Fund.
C. If the Fund desires its distributions mailed in any special form of
envelopes, sufficient supply of the same will be furnished to IFTC but the size
and form of said envelopes will be subject to the approval of IFTC. If stamped
envelopes are used, they must be furnished by the Fund; or if postage stamps
are to be affixed to the envelopes, the stamps or the cash necessary for such
stamps must be furnished by the Fund (prior to mailing if so requested by
IFTC).
D. IFTC will maintain one or more deposit accounts as Agent for the Fund,
into which the funds for payment of dividends, distributions, redemptions or
other disbursements provided for hereunder will be deposited, and against which
checks will be drawn.
E. IFTC is authorized and directed to stop payment of checks theretofore
issued hereunder, but not presented for payment, when the payees thereof allege
either that they have not received the checks or that such checks have been
mislaid, lost, stolen, destroyed or through no fault of theirs, are otherwise
beyond their control, and cannot be produced by them for presentation and
collection, and, to issue and deliver duplicate checks in replacement thereof.
IFTC shall bear no liability if payment upon stopped checks is subsequently
compelled by a Holder in Due Course (or a Bona Fide Purchaser for Value).
21. Assumption of Duties By the Fund.
The Fund or its agent or affiliate may assume certain duties and
responsibilities of IFTC or those usual and ordinary services of Transfer Agent
and Dividend Disbursement Agent as those terms are referred to in Section 4.E.
of this Agreement including but not limited to accepting shareholder
instructions and transmitting orders based on such instructions to IFTC,
preparing and mailing confirmations, obtaining certified TIN numbers, and
disbursing monies of the Fund. To the extent the Fund or its agent or
affiliate assumes such duties and responsibilities, IFTC shall be relieved from
all responsibility and liability therefor.
22. Termination of Agreement.
A. This Agreement may be terminated by either party upon receipt of six (6)
months prior written notice from the other party.
B. The Fund, in addition to any other rights and remedies, shall have the
right to terminate this Agreement forthwith upon the occurrence at any time of
any of the following events:
(1) Any interruption or cessation of operations by IFTC or its assigns which
materially interferes with the business operation of the Fund;
(2) The bankruptcy of IFTC or its assigns or the appointment of a receiver
for IFTC or its assigns;
(3) Any merger, consolidation or sale of substantially all the assets of
IFTC or its assigns;
(4) The acquisition of a controlling interest in IFTC or its assigns, by any
broker, dealer, investment adviser or investment company except as may
presently exist; or
(5) Failure by IFTC or its assigns to perform its duties in accordance with
the Agreement, which failure materially adversely affects the business
operations of the Fund and which failure continues for thirty (30) days after
receipt of written notice from the Fund.
C. In the event of termination, the Fund will promptly pay IFTC all amounts
due to IFTC hereunder.
D. In the event of termination, IFTC will use its best efforts to transfer
the books and records of the Fund to the designated successor transfer agent
and to provide other information relating to its service provided hereunder for
reasonable compensation therefore. In this connection, IFTC's conversion
assistance shall be billed at its then current rates. IFTC's present rates
are: (i) for clerical assistance, thirty dollars ($30.00) per hour; (ii) for
Supervisor/Manager assistance, fifty dollars ($50.00) per hour; and (iii) for
programming assistance, to the extent IFTC agrees thereto, forty ($40.00),
fifty ($50.00) and seventy-seven ($77.00) dollars per hour for non-technical,
mainframe and work station personnel.
E. Nothing herein is intended to, nor does it, compel IFTC to disclose
non-public information or to provide programming assistance or information
which might tend to improve, enhance or add functionality to anyone else's
operating systems, respectively.
23. Assignment.
A. Neither this Agreement nor any rights or obligations hereunder may be
assigned by either party hereto without the written consent of the other party.
In the event of a mutually agreed to assignment, each party shall remain liable
for the performance of its assignee(s). IFTC may, however, employ agents to
assist it in performing its duties hereunder.
B. This Agreement will inure to the benefit of and be binding upon the
parties and their respective successors and assigns.
C. Notwithstanding anything herein to the contrary, it is the intention of the
parties hereto, and each party hereby consents, that the duties and obligations
hereby assumed by IFTC will in fact be sub-contracted by IFTC to, and, pursuant
to such sub-contract, be performed by, DST Systems, Inc. ("DST") upon the same
terms and conditions set forth herein. All indemnifications, representations
and warranties and covenants of the Fund shall extend to DST as if it were
named herein. DST shall be a third party beneficiary under this Agreement.
24. Confidentiality.
A. IFTC agrees that, except as provided in the last sentence of Section 19.H
hereof, or as otherwise required by law, IFTC will keep confidential all
records of and information in its possession relating to the Fund or its
shareholders or shareholder accounts and will not disclose the same to any
person except at the request or with the consent of the Fund.
B. The Fund agrees to keep confidential all financial statements and other
financial records (other than statements and records relating solely to the
Fund's business dealings with IFTC) and all manuals, systems and other
technical information and data, not publicly disclosed, relating to IFTC's
operations and programs furnished to it by IFTC pursuant to this Agreement and
will not disclose the same to any person except at the request or with the
consent of IFTC.
C. The Fund acknowledges that IFTC and DST have proprietary rights in and to
the computerized data processing recordkeeping system used by IFTC to perform
services hereunder including, but not limited to the maintenance of shareholder
accounts and records, processing of related information and generation of
output (the "MFS System"), including, without limitation any changes or
modifications of the MFS System and any other IFTC or DST programs, data bases,
supporting documentation, or procedures ("collectively IFTC Protected
Information") which the Fund's access to the MFS System or computer hardware or
software may permit the Fund or its employees or agents to become aware of or
to access and that the IFTC Protected Information constitutes confidential
material and trade secrets of IFTC. The Fund agrees to maintain the
confidentiality of the IFTC Protected Information. The Fund acknowledges that
any unauthorized use, misuse, disclosure or taking of IFTC Protected
Information which is confidential as provided by law, or which is a trade
secret, residing or existing internal or external to a computer, computer
system, or computer network, or the knowing and unauthorized accessing or
causing to be accessed of any computer, computer system, or computer network,
may be subject to civil liabilities and criminal penalties under applicable
state law. The Fund will advise all of its employees and agents who have
access to any IFTC Protected Information or to any computer equipment capable
of accessing IFTC or DST hardware or software of the foregoing. DST is
intended to be, and shall be, a third party beneficiary of the Fund's
obligations and undertakings contained in this Section.
25. Survival of Representations and Warranties, Indemnifications and
Miscellaneous Provisions.
A. All representations and warranties by either party herein contained will
survive the execution and delivery of this Agreement.
B. All indemnifications and undertakings of (i) confidential treatment of the
other's information, data, systems, materials, etc. and (ii) of
non-solicitation and non-employment of employees of the other (and of
affiliates of the other) shall survive the termination of this agreement.
26. Miscellaneous.
A. This Agreement is executed and delivered in the State of Missouri and is
intended to be and shall be governed by the laws of said state.
B. All the terms and provisions of this Agreement shall be binding upon,
inure to the benefit of, and be enforceable by the respective successor and
assigns of the parties hereto.
C. No provisions of the Agreement may be amended or modified, in any manner
except by a written agreement properly authorized and executed by both parties
hereto.
D. The captions in this Agreement are included for convenience of reference
only, and in no way define or delimit any of the provisions hereof or otherwise
affect their construction or effect.
E. This Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
F. If any part, term or provision of this Agreement is by the courts held to
be illegal, in conflict with any law or otherwise invalid, the remaining
portion or portions shall be considered severable and not be affected, and the
rights and obligations of the parties shall be construed and enforced as if the
Agreement did not contain the particular part, term or provision held to be
illegal or invalid.
G. The obligations of this Agreement shall only be binding upon the assets
and property of the Fund and shall not be binding upon any Director, officer or
shareholder of the Fund individually.
H. Each party hereto agrees not to offer employment to, solicit employment by
or employ any employee of the other or, in the case of IFTC, of the Fund and
its affiliated companies or, in the case of the Fund, of IFTC or DST or either
of their affiliated companies. For purposes hereof, an "affiliated company"
shall be any entity which directly or indirectly controls, is controlled by or
is under common control with the Fund or DST and "control" shall be deemed to
exist whenever a party owns twenty-five per cent (25%) or more of the voting
stock of or interest in another. This obligation shall continue for one (1)
year after the later of termination of this Agreement or termination of such
employee's employment with or by the other.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their respective duly authorized officers.
INVESTORS FIDUCIARY TRUST COMPANY
By: Richard A. Winegar
Executive Vice President
ATTEST:
Marvin Rau, Assistant Secretary
THE GROWTH FUND OF WASHINGTON, INC.
By: Harry J. Lister
Title: President
ATTEST:
Howard L. Kitzmiller
Secretary
EXHIBIT A
TRANSFER AGENCY SERVICES AND SYSTEMS FEATURES
FUNCTIONS
A. Issuance of stock certificates
B. Recording of non-certificate shares
C. Purchase, redemptions, exchanges, transfers and legal
D. Changes of address, etc.
E. Daily balancing of the Fund
F. Dividend calculation and disbursement
G. Mailing of quarterly and annual reports, if requested
H. Filing of 1099/1042 information to shareholders and government.
I. Provide N1R information
J. Systematic withdrawal plans
K. Pre-authorized checks
L. Purchase reminders
M. Reconcilement of dividend an disbursement accounts
N. Provide research and correspondence to shareholder's inquiries
O. Daily communication of reports to the Fund
P. Provide listings, labels and other special reports
Q. Proxy issuance and tabulation
R. Annual statements of shareholders on microfilm
S. Blue-sky reports
T. Wire order processing
U. 12B-1 processing.
EXHIBIT B
INSURANCE COVERAGE
Insurance coverages maintained by IFTC effective May 1, 1993, subject to
deductibles
DESCRIPTION OF POLICY:
BROKERS BLANKET BOND, STANDARD FORM 14
Covering losses caused by dishonesty of employees, physical loss of securities
on or outside of premises while in possession of authorized person, loss caused
by forgery or alteration of checks or similar instruments.
Coverage: $75,000,000
ERRORS AND OMISSIONS INSURANCE
Covering replacement of destroyed records and computer errors and omissions.
Coverage: $10,000,000
SPECIAL FORGERY BOND
Covering losses through forgery or alteration of checks or drafts of customers
processed by insured but drawn on or against them.
Coverage: $1,000,000
MAIL INSURANCE (APPLIES TO ALL FULL SERVICE OPERATIONS)
Provides indemnity for security lost in the mails.
Coverage:
$10,000,000 nonnegotiable securities mailed to
domestic locations via registered mail.
$1,000,000 nonnegotiable securities mailed to domestic locations via
first-class or certified mail.
$1,000,000 nonnegotiable securities mailed to foreign locations via
registered mail.
$1,000,000 negotiable securities mailed to all locations via registered mail.
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of The Growth Fund of Washington:
We consent to the incorporation by reference onto Post-Effective
Amendment No. 21 and to the Registration Statement of The Growth
Fund of Washington on Form N-1A of our report dated January 27, 1997
on our audit of the financial statements and financial highlights
of The Growth Fund of Washington, which report is included in the
Annual Report to Shareholders for the year ended December 31, 1996
and to the reference made to us under the caption "Financial
Highlights" which is included in the Post-Effective Amendment
to the Registration Statement.
/S/JOHNSON LAMBERT & CO.
Bethesda, MD
April 15, 1997
Individual Retirement Custodial Account Agreement (Under Section 408(a) of the
Internal Revenue Code)
WITNESSETH:
WHEREAS, the individual establishing the custodial account described herein
(the "Investor") desires to provide for his retirement and for the support of
his beneficiaries upon his death; and
WHEREAS, to accomplish this purpose, the Investor desires to establish an
Individual Retirement Account as described in section 408(a) of the Internal
Revenue Code of 1986, as amended, or any successor statute (hereinafter
referred to as the "Code"); and
WHEREAS, by executing the IRA application attached hereto, the Investor
accepts and agrees to the terms and provisions of this Custodial Agreement,
including the appointment of Investors Fiduciary Trust Company, or its
successors, as Custodian of the custodial account established hereunder (the
"Account");
NOW, THEREFORE, the Investor and the Custodian hereby agree as follows:
ARTICLE I
1. The Custodian will accept contributions in cash from the Investor during a
taxable year of the Investor subject to the limitations of paragraph 2. The
amount of each contribution by or on behalf of the Investor shall be applied to
the purchase of shares of one or more of the of the Vista Funds designated by
the Investor (hereinafter the "Fund(s)"). All dividends and capital gains
distributions received on securities held in the Account shall be reinvested in
additional shares of the designated Fund(s) and credited to the Account.
2. Except in the case of a rollover contribution as that term is described in
Sections 402(a)(5), 402(a)(7), 403(a)(4), 403(b)(8) or 408(d)(3) of the Code, a
direct transfer of assets from another individual retirement account described
under Section 408 of the Code, or as provided under Section 3, below, the
Custodian will not accept contributions on behalf of the Investor in excess of
$2,000 for any taxable year of the Investor.
3. If the Investor is a participating employee in a Simplified Employee
Pension ("SEP") as defined in section 408(k) of the Code, the Custodian will
accept cash contributions from the Investor's employer, which, in any year, are
not greater than the lesser of $30,000 or 15% of the Investor's total
compensation from such employer for that year.
ARTICLE II
Assets held in the Account will be held beneficially for the Investor in the
name of the Custodian or its nominee. The interest of an Investor in the
balance held under the Account shall at all times be nonforfeitable. The
Account is established for the exclusive benefit of the Investor and his or her
beneficiaries.
ARTICLE III
No part of the funds held in the Account shall be invested in life insurance
contracts or in collectibles, as defined in Section 408(m)(2) of the Code, nor
may the assets of the Account be commingled with other property except in a
common trust fund or common investment fund (within the meaning of section
408(a)(5) of the Code).
ARTICLE IV
1. (a) The entire interest of the Investor in the Account must be, or commence
to be, distributed by the April 1st immediately following the close of the
calendar year in which the Investor attains age 70-1/2 (the "Required Beginning
Date"). The minimum required distribution must be calculated separately for
each of the Investor's IRAs, but the amounts so determined may be totalled and
distributed from any one or more of the Investor's IRAs. Not later than the
March 1st immediately preceding the Required Beginning Date, the Investor may
elect, in a form and at such time as may be acceptable to the Custodian, to
have the balance in the Account distributed as follows (subject to the
provisions of Section 3 of this Article IV):
(i) a single sum payment;
(ii) an annuity contract providing equal or substantially equal monthly,
quarterly, semiannual or annual payments commencing not later than the Required
Beginning Date and paid over the life of the Investor;
(iii) an annuity contract providing equal or substantially equal monthly,
quarterly, semiannual or annual payments commencing not later than the Required
Beginning Date and paid over the joint and several lives of the Investor and
his beneficiary;
(iv) equal or substantially equal monthly, quarterly, semiannual or annual
payments commencing not later than the Required Beginning Date and paid over a
period certain not extending beyond the life expectancy of the Investor; or
(v) equal or substantially equal monthly, quarterly, semiannual or annual
payments commencing not later than the Required Beginning Date and paid over a
period certain not extending beyond the joint and last survivor life expectancy
of the Investor and his beneficiary.
(b) (i) If the Investor's entire interest is to be distributed in other than
a lump sum, then the amount to be distributed each year (commencing with the
Required Beginning Date and each year thereafter) must be at least equal to the
quotient obtained by dividing the Investor's benefit by the applicable life
expectancy.
(ii) For calendar years beginning before January 1, 1989, if the
Investor's spouse is not the designated beneficiary, the method of distribution
selected must assure that at least 50% of the present value of the amount
available for distribution is paid within the life expectancy of the Investor.
(iii) For calendar years beginning after December 31, 1988, the amount to
be distributed each year, beginning with the first year for which distributions
are required and then for each succeeding calendar year, shall not be less than
the quotient obtained by dividing the Investor's benefit by the lesser of (1)
the applicable life expectancy or (2) if the Investor's spouse is not the
designated beneficiary, the applicable divisor determined from the table set
forth in Q&A-4 of Section 1.401(a)(9)-2 of the Proposed Income Tax Regulations.
Distributions after the death of the Investor shall be calculated using the
applicable life expectancy as the relevant divisor without regard to Proposed
Regulations Section1.401(a)(9)-2.
(iv) Life expectancy is computed by use of the expected return multiples
in Tables V and VI of Section 1.72-9 of the Income Tax Regulations. Unless
otherwise elected by the Investor by the time distributions are required to
begin, life expectancies shall be recalculated annually. Such election shall be
irrevocable as to the Investor and shall apply to all subsequent years. The
life expectancy of a non-spouse beneficiary may not be recalculated; instead,
life expectancy will be calculated using the attained age of such beneficiary
during the calendar year in which distributions are required to begin pursuant
to this section, and payments for subsequent years shall be calculated based on
such life expectancy reduced by one for each calendar year which has elapsed
since the calendar year life expectancy was first calculated.
(v) If the Investor fails to elect any of the methods of distribution
described above on or before the March 1st immediately following the close of
his taxable year in which he or she attains the age 70-1/2, distribution to the
Investor will commence by the following April 1st under the mode of
distribution set forth under (a)(iv), above, (or under (a)(v), above, if the
Investor has previously designated a beneficiary and such designation was not
revoked prior to the Investor's death). Notwithstanding that distributions may
or may not have commenced pursuant to options (a)(iv) or (a)(v), and regardless
of whether such distributions are made pursuant to the election of the Investor
or upon application of the provisions of this paragraph, the Investor may
receive distribution of any additional portion of the balance in the Account at
any time upon written notice to the Custodian.
2. If the Investor dies before the entire interest in the Account is
distributed, the following provisions shall apply:
(a) If the Investor dies after the Required Beginning Date, the remaining
portion of such interest will be distributed to the Investor's beneficiary or
beneficiaries at least as rapidly as under the method of distribution being
used prior to the Investor's death.
(b) If the Investor dies before the Required Beginning Date, the remaining
portion of the Investor's interest will be distributed in accordance with one
of the following four provisions:
(i) If the Investor's interest is payable to a beneficiary or
beneficiaries designated by the Investor, then the remaining interest will be
distributed in substantially equal installments over a period not exceeding the
life expectancy or life expectancies of the beneficiary or beneficiaries
designated by the Investor commencing no later than December 31st of the year
following the year of the Investor's death. The beneficiary or beneficiaries
may elect at any time to accelerate the receipt of such payments.
(ii) The Investor's remaining interest will be paid to his beneficiary or
beneficiaries at any time on or before December 31st of the year which includes
the fifth anniversary of the Investor's death.
(iii) If the designated beneficiary of the Investor is the Investor's
surviving spouse, the spouse may elect to receive equal or substantially equal
payments over the life or life expectancy of the surviving spouse commencing at
any date prior to the later of (1) December 31 of the calendar year immediately
following the calendar year in which the Investor died and (2) December 31 of
the calendar year in which the Investor would have attained age 70-1/2. Such
election must be made no later than the earlier of December 31 of the calendar
year containing the fifth anniversary of the Investor's death or the date
distributions are required to begin pursuant to the preceding sentence. The
surviving spouse may accelerate these payments at any time, i.e., increase the
frequency or amount of such payments.
(iv) If the designated beneficiary is the Investor's surviving spouse, the
spouse may, by written notice to the Custodian, treat the Account as his or her
own IRA. Such election must be made by the December 31st of the calendar year
in which occurs the fifth anniversary of the Investor's death. This election
will be deemed to have been made if such surviving spouse makes a regular IRA
contribution to the Account or makes a rollover to or from the Account.
For purposes of the above, payments will be calculated by use of the return
multiples specified in Tables V and VI of Section 1.72-9 of the Income Tax
Regulations. At the election of the Investor or the surviving spouse, life
expectancy of the surviving spouse may be recalculated annually. In the event
the Investor fails to elect the method of distribution to his beneficiary or
beneficiaries, such election shall be made by his beneficiary or beneficiaries
but no later than November 30th of the year following the year of the
Investor's death. If the beneficiary or beneficiaries fail to make such an
election in a timely manner, distributions shall be made under item (i), above
(or, if the Investor's beneficiary is his or her surviving spouse, under item
(iii), above as if the election set forth under such item (iii) had been made)
and, if the beneficiary is the Investor's surviving spouse, by recalculating
the life expectancy of such surviving spouse.
3. Notwithstanding any other provision of this Agreement to the contrary, the
amount and timing of the distributions from the Account shall satisfy the
applicable requirements of Code Sections 408 and 401(a) and the regulations
promulgated thereunder.
ARTICLE V
Except in the case of the Investor's death or disability (as defined in Section
72(m)(7) of the Code) or attainment of age 59H, before distributing an amount
from the Account the Custodian shall receive from the Investor a declaration of
the Investor's intention as to the disposition of the amount distributed.
ARTICLE VI
1. The Investor agrees to provide information to the Custodian at such time
and in such manner and containing such information as may be necessary for the
Custodian to prepare any reports required pursuant to Section 408(i) of the
Code and the regulations thereunder.
2. The Investor and the successors of the Investor (including any executor or
administrator of the Investor's estate) shall, to the extent permitted by law,
indemnify the Custodian and its successors and assigns against any and all
claims or actions of the Investor or liabilities of the Custodian to the
Investor or the successors or beneficiaries of the Investor whatsoever
(including, without limitation, all reasonable expenses incurred in defending
against or in settlement of such claims, actions or liabilities) which may
arise in connection with this Agreement or the Custodial Account, except those
due to the Custodian's own bad faith, gross negligence or willful misconduct.
The Custodian shall not be under any duty to take any action not specified in
this Agreement unless the Investor shall furnish it with instructions in proper
form and such instructions shall have been specifically agreed to by the
Custodian, or to defend or engage in any suit with respect hereto unless it
shall have first agreed in writing to do so and shall have been fully
indemnified to its satisfaction.
3. The Custodian agrees to submit reports to the Internal Revenue Service and
the Investor at such time and in such manner and containing such information as
is prescribed by the Internal Revenue Service.
ARTICLE VII
1. Notwithstanding any other provision of this Agreement to the contrary, the
terms and operation of this Agreement shall be subject to the provisions of
Section 408 of the Code.
2. In the event the Account is established hereunder as part of a SEP
established by the Investor's employer pursuant to Section 408(k) of the Code,
and if such SEP is an employee pension benefit plan within the meaning of
section 3(2) of the Employee Retirement Income Security Act of 1974, as Amended
("ERISA"), this Agreement shall be subject to all of the applicable provisions
of Title I of ERISA.
ARTICLE VIII This Agreement shall be amended, from time to time, by Vista
Broker-Dealer Services, Inc. (the "Sponsor"), in order to comply with the
provisions of the Code and regulations thereunder. Such amendments shall be
made upon notice to, but without the consent of, the Investor. Other amendments
may be made, from time to time, by the Sponsor but shall be effective only upon
the consent of the Investor and the Custodian. The Investor's execution of a
new Application Form shall evidence his or her consent to such an amendment.
ARTICLE IX
1. The Custodian is under no duty to compel the Investor to make any
contributions to the Account and shall have no duty to assure that such
contributions are appropriate in amount, are deductible by the Investor, or
meet any other requirement or law. The Custodian shall not incur any liability
or responsibility for any tax imposed on the Investor or the Account resulting
from any contribution or distribution.
2. The Custodian shall deliver, by mail, to the Investor at the Investor's
last address of record, all shareholder notices, reports and other materials
required or permitted to be given by the Custodian. The Custodian shall vote at
all shareholder meetings of the Fund(s) in accordance with written instructions
of the Investor to the extent received by the Custodian.
ARTICLE X
The Custodian shall receive such reasonable compensation for its services
("fees") as from time to time are agreed upon by the Investor. Such fees shall
be paid by the Investor and shall constitute a charge upon the assets in the
Account until paid. Unless otherwise paid, the Custodian shall have the right
to sell sufficient shares of any Fund in which the Account assets are invested
and apply the proceeds to the payment of its annual fees. The Investor hereby
agrees to the schedule of fees of the Custodian in effect at the date of this
Agreement, and to any change therein by the Custodian after receipt of notice
at least 30 days prior to any such change. Any income taxes or other taxes or
penalties of any kind that may be levied or assessed against the Account and
all other reasonable administrative expenses incurred by the Custodian with
respect thereto, including fees for legal services rendered to the Custodian,
may be similarly paid from the assets of the Account and shall not be an
obligation of the Custodian. The annual fee in effect on the date of this
Agreement is set forth under the Application.
ARTICLE XI
The Custodian may resign upon 30 days' notice to the Investor and may be
removed by the Investor upon 30 days' written notice to the Custodian. Upon its
resignation or removal, the Custodian shall transfer the assets of the Account
in such manner as the Investor shall designate, but in the absence of such
designation, the Custodian will use its best efforts to transfer the assets of
the Account to a successor Custodian to be held under an Individual Retirement
Account qualifying under Section 408 of the Code. In the event the Investor
fails to appoint a successor custodian which has accepted its appointment
within 30 days after the Custodian's notice of resignation or the Investor's
notice of removal of the Custodian, the Custodian shall appoint a successor
custodian which satisfies the requirements of Code Section 408(h). The
Custodian shall not be liable for the acts or omissions of any such successor
custodian.
ARTICLE XII
By separate written document, the Investor may designate a method for payment
of benefits in accordance with Article IV of this Agreement and name a
beneficiary for the receipt of such benefit in the event of his/her death. Such
designations may be changed from time to time by the Investor. Should the
Investor die without an effective designation of beneficiary, the Investor's
surviving spouse shall be deemed the beneficiary. In the absence of a surviving
designated beneficiary and a surviving spouse, the assets of the Account shall
be distributed to the Investor's estate in a single payment.
ARTICLE XIII
1. In the event the Investor's contribution to the Account in any year exceeds
$2,000 or such other amount as may be allowed by the Code, the Investor must
notify the Custodian in form satisfactory to it that such excess amount is a
"rollover contribution," a transfer of assets permitted under Section 2 of
Article I of this Agreement, or a "SEP" contribution under paragraph 3 of
Article I of this Agreement.
2. A contribution to the Account is deemed to have been made with respect to
the preceding taxable year if the contribution is made by the deadline for
filing the Investor's income tax return (not including extensions) for such
year and if the Investor designates the contribution as a contribution for the
preceding taxable year in a manner acceptable to the Custodian. The Custodian
will not be liable or responsible for any consequences of postal delays or
delays resulting from an incomplete Application or a designation made in an
unacceptable form. Applications received by the Custodian postmarked after the
deadline and improperly completed applications will be returned to the sender.
ARTICLE XIV
1. This Agreement and the Custodial Account shall be construed, administered
and enforced according to the laws of the State of Missouri.
2. The Investor and the Custodian evidence their acceptance of this Agreement,
and their willingness to be subject to the terms set forth hereunder, by way of
(i) the Investor's execution of the Individual Retirement Account Application
attached hereto, and (ii) the Custodian's acceptance of the Application by way
of written confirmation to the Investor.
Vista Individual Retirement Account Disclosure Statement
The following information is provided to you in accordance with the
requirements of the Internal Revenue Code (the "Code") and Treasury regulations
and should be reviewed in conjunction with the Individual Retirement Custodial
Account Agreement (the "Custodial Agreement"), the Application for your IRA
(the "Application"), and the prospectus for The Vista Family of Mutual Funds
("Vista") that are allowable investments for your IRA. The provisions of the
Custodial Agreement, Application and prospectus govern in any instance where
the Disclosure Statement is incomplete or appears to conflict. This Disclosure
Statement reflects the provisions of the Code in effect on January 1, 1997.
This Disclosure Statement provides a nontechnical summary of the law. Please
consult with your advisor for more complete information and refer to IRS
Publication 590.
I. IRA STATUTORY REQUIREMENTS
An IRA is a trust or custodial account established for the exclusive benefit
of you and your beneficiaries. Current law requires that your IRA agreement be
in
writing and that it meet the following requirements:
1. All contributions must be in cash and, for any taxable year, cannot exceed
100% of your compensation or $2,000, whichever is less, unless the contribution
is a rollover contribution or an employer contribution to a simplified employee
pension plan ("SEP").
2. The custodian or trustee must be a bank or other institution or person
that is approved by the Internal Revenue Service to administer your IRA in
accordance with current tax laws.
3. None of your IRA assets may be invested in life insurance contracts, or
collectibles, or commingled with the assets of other people except in a common
trust fund or common investment fund.
4. Your interest in your IRA account is nonforfeitable.
5. Distribution from your IRA must be in accordance with certain minimum
distribution rules, which are explained in Section VII below.
II. RIGHT TO REVOKE
You may revoke your IRA at any time within seven days of the time your
Application is signed. To revoke your IRA, mail or deliver a written notice
stating "I hereby elect to revoke my Vista IRA." Sign your name exactly as it
appears on your Application, include your social security number, and mail the
notice to the Custodian, Investors Fiduciary Trust Company, c/o Vista Funds,
P.O. Box 419392, Kansas City, Missouri 64141-6392.
Your notice will be considered mailed on the date of postmark, or the date of
certification or registration if it is sent by certified or registered mail.
When Investors Fiduciary Trust Company ("IFTC"), the custodian of your IRA,
receives the proper notice of revocation, you will be entitled to a refund of
your full IRA contribution, without any adjustment for expenses or market
fluctuations. If you have any questions concerning your right of revocation,
please call the Custodian at (800) 34-VISTA during regular business hours.
III. ELIGIBILITY
You may make regular contributions to an IRA if you receive compensation from
employment, earnings from self-employment, or alimony, and you have not reached
age 70$ by the end of the tax year for which the contribution is made. In
addition, if you are married and file a joint tax return, you and your spouse
may each make contributions to an IRA whether or not both spouses receive
compensation. You may make a rollover contribution to an IRA if you have
received an eligible rollover distribution from a qualified retirement plan or
tax-sheltered annuity or an eligible distribution from another IRA and complete
the rollover within 60 days after receiving the distribution. You may also
make a trustee-to-trustee transfer from another IRA. Finally, your employer
may contribute to your IRA, and if your employer sponsors a simplified employer
pension ("SEP"), your employer can make contributions to a SEP/IRA on your
behalf.
IV. CONTRIBUTIONS
A. Regular Contributions
You may contribute each year up to $2,000 or 100% of your compensation,
whichever is less, to your IRA. If you are married and each spouse establishes
an IRA, each spouse may contribute up to $2,000 to his or her IRA as long as
the combined compensation of both spouses for the year (as shown on your joint
income tax return) is at least $4,000. If the combined compensation of both
spouses is less than $4,000, the higher compensated spouse's IRA contribution
may be any amount up to the lesser of that spouse's compensation or $2,000. The
lower compensated spouse's IRA contribution may be any amount up to the lesser
of that spouse's compensation or $2,000. In this case, the lower compensated
spouse's IRA contribution may be any amount up to the couple's combined
compensation, less the amount contributed to an IRA for the higher compensated
spouse.
If your employer contributes to your IRA, the contribution is treated as
compensation paid to you, whether or not the contribution is deductible, unless
the contribution is made under a SEP (see below).
Compensation for these purposes means wages, salaries, professional fees, or
other amounts derived from or received for personal services actually rendered.
It includes earned income from self-employment and alimony or separate
maintenance payments includable in income. It does not include pension or
annuity payments or deferred compensation.
B. Time for Making Regular Contributions
You may make regular contributions to your IRA (and/or your spouse may make
contributions to your spouse's IRA) anytime during a year, up to and including
the due date for filing your tax return for the year (without extensions). No
regular contributions may be made to an IRA for the calendar year in which you
reach age 70-1/2 or later years. No regular contributions to your spouse's IRA
may be made for years in which your spouse is age 70$ or older.
C. Deductibility
Regular IRA contributions are fully deductible unless you or your spouse is an
active participant in a tax-qualified plan of an employer. If you or your
spouse is an active participant in such a plan, then your allowable deduction
for regular IRA contributions is reduced or eliminated if your Adjusted Gross
Income ("AGI") exceeds certain levels. (If you file separately and are married
but live apart from your spouse at all times during the year, you will be
considered to be single when applying the following rules regarding deduction
limitations.) The deductible amount is determined as follows:
1. If you (and your spouse) are not active participants in a tax-qualified
plan, any contribution up to the maximum amount is deductible.
2. If you (or your spouse) are an active participant in a tax-qualified plan,
and
(a) your AGI is $25,000 or less ($40,000 for a married couple filing a joint
return and $0 for a married person filing separately), any contribution up to
the maximum amount is deductible.
(b) your AGI is $35,000 or more ($50,000 for a married couple filing a joint
return and $10,000 for a married person filing separately), no IRA contribution
is deductible.
(c) your AGI is between $25,000 and $35,000 ($40,000 and $50,000 for a
married couple filing a joint return and $0 to $10,000 for a married person
filing separately), the deductible amount is reduced. The reduction is $0.20
for each $1.00 of AGI over $25,000 ($40,000 for a married couple filing a
joint return and $0 for a married person filing separately). The deduction
will not be reduced below $200 unless it is eliminated entirely.
To the extent that the deductibility of IRA contributions is reduced or
eliminated, then nondeductible contributions may be made to your IRA (up to the
applicable contribution limit). Earnings on all IRA contributions, whether or
not the contributions themselves are deductible, are tax-deferred until
receipt. You must designate the amount of nondeductible IRA contributions when
filing your tax return for the year. If you overstate the amount of your
nondeductible contributions you must pay a $100 penalty, unless you can show
that such overstatement was due to reasonable cause. If you fail to report
nondeductible IRA contributions you will be subject to a $50 penalty, unless
your failure was due to reasonable cause.
D. Rollover Contributions
1. Payments from Plans and Tax-Sheltered Annuities that are Eligible for
Rollover
You may make a rollover contribution to your IRA of an "eligible rollover
distribution" from an employer tax-qualified plan (an "employer plan") or a
tax-sheltered annuity (including a 403(b)(7) account). The administrator of
the employer plan or the payor of a distribution from the tax-sheltered annuity
should be able to tell you what portion of your payment is an eligible rollover
distribution. The following types of payments cannot be rolled over:
Non-Taxable Payments. In general, only the "taxable portion" of your payment
is an eligible rollover distribution. If you have made "after-tax" employee
contributions to the plan or annuity, these contributions will be non-taxable
when they are paid to you, and they cannot be rolled over. (After-tax employee
contributions generally are contributions you made from your own pay that were
already taxed.) Payments Spread Over Long Periods. You cannot roll over a
payment if it is part of a series of equal (or almost equal) payments that are
made at least once a year and that will last for
<UNDEF> your lifetime (or your life expectancy), or
<UNDEF> your lifetime and your beneficiary's lifetime (or life expectancies),
or
<UNDEF> a period of ten years or more.
Required Minimum Payments. Beginning in the year you reach age 70-1/2, a
certain portion of your payment cannot be rolled (or transferred) over because
it is a "required minimum payment" that must be paid to you.
2. Direct Rollover
You can choose a direct rollover of all or any portion of your payment from
an employer plan or a tax-sheltered annuity that is an "eligible rollover
distribution," as described above. In a direct rollover, the eligible rollover
distribution is paid directly from the plan or tax-sheltered annuity to your
IRA. If you choose a direct rollover, you are not taxed on a payment until you
later take it out of the IRA.
3. Rollover of Plan Payments Paid To You
A payment to you of an eligible rollover distribution from an employer plan
or tax-sheltered annuity is taxed in the year you receive it unless, within 60
days, you roll it over to an IRA (or another plan that accepts rollovers). If
you do not roll it over, special tax rules may apply. If any portion of the
payment to you is an eligible rollover distribution, the payor is required by
law to withhold 20% of that amount. This amount is sent to the IRS as income
tax withholding.
Sixty-Day Rollover Option. If you have an eligible rollover distribution
paid to you, you can still decide to roll over all or part of it to an IRA (or
another employer plan that accepts rollovers). If you decide to roll over, you
must complete the rollover within 60 days after you receive the payment. The
portion of your payment that is rolled over will not be taxed until you take it
out of the IRA (or the employer plan).
You can roll over up to 100% of the eligible rollover distribution, including
an amount equal to the 20% that was withheld. If you choose to roll over 100%,
you must find other money within the 60-day period to contribute to the IRA or
the employer plan to replace the 20% that was withheld. (On the other hand, if
you roll over only the 80% that you received, you will be taxed on the 20% that
was withheld.)
See the Special Tax Notice Regarding Plan Payments, that must be provided by
the plan administrator or payor of your employer plan or tax-sheltered annuity,
for additional information on the rules governing rollover and taxation of plan
distributions, or consult your tax advisor for more details.
You should maintain a separate IRA account for any rollovers of funds from an
employer plan if you want to preserve your ability to later roll over these
funds and earnings into another employer plan. Similarly, you should maintain
a separate account for any rollover of funds from a tax-sheltered annuity.
If you are the surviving spouse of a deceased plan participant, you can make
a rollover to an IRA from a tax-qualified plan of your spouse's employer if you
received all or a part of your spouse's share as a result of his or her death.
A spouse or former spouse who is a recipient of a distribution made under a
qualified domestic relations order may roll over all or part of the
distribution.
Because complex rules apply to distributions and rollovers of payments from
employer plans and tax-sheltered annuities, you should seek competent tax
advice whenever you contemplate receiving a distribution from a qualified plan
or tax-sheltered annuity or an IRA funded by a rollover from a qualified plan
or tax-sheltered annuity.
4. Rollovers from Other IRAs
You may also make a rollover contribution of amounts held in another IRA.
There are no limits on the amount of rollover contributions made to an IRA from
another IRA, except you may not roll over (or transfer) any required minimum
distribution amount (described in VII.D.). The distribution from the first IRA
must be rolled over within 60 days of receipt. Also, after making a rollover
of a distribution from one IRA to another IRA, you must wait 12 full months
before you can make another IRA-to-IRA rollover.
5. Tax-Deferral on IRA Rollover or Trustee-to-Trustee Transfer
An effective rollover allows you to postpone paying taxes on the amount
distributed from an employer plan, tax-sheltered annuity or IRA until it is
withdrawn from the recipient IRA. You do not report the distribution as income
and you do not take a deduction for the rollover contribution. Earnings on
your rollover IRA are tax-deferred until receipt. (Similarly, a
trustee-to-trustee transfer is not treated as a distribution and the amount
transferred and earnings are tax-deferred until receipt.)
E. SEP Contributions
If your employer has established a simplified employee pension ("SEP"), your
employer may make contributions to your SEP/IRA. If the SEP contains a salary
reduction arrangement, you may elect to reduce your salary by up to the lesser
of 15% of compensation or $9,500 (indexed annually); and have that amount
contributed to your SEP/IRA. The maximum SEP contribution, including salary
reduction amounts and employer contributions, is the lesser of 15% of your
eligible compensation or $30,000. SEP contributions are not included in your
taxable income.
Please note that the tax law provisions permitting salary reduction SEPs were
repealed effective January 1, 1997. Therefore, no further salary reduction SEP
contributions are allowed except under salary reduction SEPs that were already
in existence on December 31, 1996.
V. EXCESS CONTRIBUTIONS
Amounts contributed to an IRA which exceed the maximum allowable contribution
are treated as "excess contributions" and are subject to a nondeductible 6%
penalty tax for each year in which the excess remains in the IRA. Excess
contributions may be corrected and the 6% penalty tax avoided by withdrawal of
the excess and any earnings thereon before the due date (including extensions)
of the tax return for the tax year for which the excess contribution was made.
No deduction may be taken for the excess contributions and the earnings must be
included in taxable income for the year the contribution was made. The
earnings withdrawn may be subject to a 10% premature distribution tax if you
are under age 59$. See Section VII.B.
An excess contribution may be withdrawn after the due date of the tax return
(including extensions) with the following consequences:
(a) If your total contribution for the tax year in which the
excess contribution was made is $2,000 or less (or below the limit of your
employer's SEP contribution), the excess contribution may be withdrawn without
being included in income or being subject to the 10% premature distribution
tax. No deduction may be taken for the excess contribution. Any earnings
withdrawn will be included in income and may be subject to the premature
distribution tax.
(b) If your total contribution for the tax year in which the
excess contribution was made exceeds $2,000 (or, if higher, the limit of your
employer's SEP contribution), any excess contribution and any earnings on the
excess withdrawn after the due date for tax filing (including extensions), will
be includable in income in the year received and will be subject to any 10%
premature distribution tax that may apply. Additionally, no deduction may be
taken for the excess contribution for the year in which it is made.
(c) Any excess contribution withdrawn after the due date for
the tax filing (including extensions) for the year for which the contribution
was made is subject to the 6% penalty tax on the amount of the excess
contribution for the taxable year in which it was made and each tax year that
it is still in your IRA at the end of the year.
You may also correct an excess contribution to your IRA by treating the excess
amount as contributed to your IRA in a subsequent year to the extent that the
excess, when aggregated with your IRA contribution (if any) for the subsequent
year, does not exceed the maximum amount for that year. You may be entitled to
a deduction for the amount of the excess contribution that is applied in the
subsequent year.
VI. INVESTMENT OF ACCOUNT AND FINANCIAL DISCLOSURE
The assets in your IRA will be invested by IFTC in mutual fund shares of Vista
in accordance with your instructions and Article I, Section 1 of the Custodial
Agreement.
Growth in the value of your IRA cannot be guaranteed or projected. However,
the income and operating expenses of each allowable investment that you select
for your IRA will affect the value of its shares and, therefore, the value of
your IRA. The Vista prospectus for such shares contains information regarding
current income and expenses of each of these investments. Reasonable fees and
other expenses of maintaining your IRA may be charged to you or your IRA. The
current annual Custodian's fee is set forth in the Application. A new fee may
be substituted from time to time as provided in Article X of the Custodial
Agreement.
VII. DISTRIBUTIONS
A. Taxation of Distribution as Ordinary Income
In general, you must include distributions from your IRA in your gross income
for the year in which the distributions are received. There is a 10%
additional income tax assessed against premature distributions to the extent
such distributions are includable in income, as described in B. below.
You may exclude from your income that portion of a distribution that
constitutes a return of your properly reported nondeductible contributions.
The amount of the distribution excludable from income is the portion that bears
the same ratio to the total distribution that your aggregate nondeductible
contributions (not distributed in prior years) bear to the balance at the end
of the year (calculated after adding back distributions made during the year)
of your IRA. For this purpose, all of your IRAs are treated as a single IRA,
and all distributions from an IRA during a taxable year are to be treated as
one distribution.
In addition, your gross income does not include any distribution from an IRA
that is properly rolled over. Except as provided in D. below, you may roll
over all or any part of property received in a distribution of assets, within
60 days of receipt, into another IRA or individual retirement annuity, and
maintain the tax-deferred status of such assets. A rollover from one IRA to
another may be made once every twelve months. Also, certain qualifying
distributions which were rolled over into an IRA from employer tax-qualified
plans may be rolled over into another employer tax-qualified plan. (You should
seek competent tax advice regarding these rollovers.)
As explained in Section V, certain distributions of excess contributions are
not included in income. In addition, IRA contributions for a taxable year
which do not exceed the contribution limits for such year may also be withdrawn
without being included in income or being subject to a 10% premature
distribution tax, as long as such contributions and earnings thereon are
withdrawn prior to the due date (including extensions) of your federal income
tax return for the tax year for which the contribution was made. The earnings
withdrawn must be included in taxable income for the year in which the
contribution was made and may be subject to the 10% premature distribution tax.
B. Tax on Premature Distributions
To the extent they are included in income, distributions from your IRA made
before you reach age 59$ will be subject to a 10% nondeductible penalty tax (in
addition to being taxable as ordinary income). Exceptions to the 10% penalty
tax include distributions made on account of your death or disability, and
distributions included in a scheduled series of payments over your life
expectancy or the joint life expectancies of you and your beneficiary.
In addition, distributions during a year are not subject to the 10% penalty
tax to the extent that the distributions do not exceed the amount of your
deductible medical expenses for the year (generally speaking, medical expenses
paid during a year are deductible if they are greater than 7$% of your adjusted
gross income for the year). Finally, distributions are not subject to the 10%
penalty if they do not exceed the amounts you paid for health insurance
coverage for yourself, your spouse and dependents. This exception is available
only if you have been unemployed and received federal or state unemployment
compensation for at least 12 weeks. Distributions during the year in which you
received the unemployment compensation or the following year are eligible for
this exception, but not any distributions received after you have been
reemployed for at least 60 days.
C. Tax on Excess Distributions
There is a 15% excise tax assessed against annual distributions from
tax-favored retirement plans, including IRAs, which exceed $155,000 (this
amount is for 1996; it is $160,000 for 1997 and is indexed annually for future
cost-of-living changes). To determine whether you have distributions in excess
of this limit, you must aggregate the amounts of all distributions received by
you during the calendar year from all retirement plans, including IRAs.
Certain individuals with account balances or accrued benefits equal to at least
$562,500 as of August 1, 1986, may have made an election to protect the August
1, 1986 balance from the 15% additional tax. Please consult with your tax
advisor for more complete information, if you made such an election.
Under the current tax laws, the 15% excise tax described in the preceding
paragraph will not apply to withdrawals from your IRA by you during the
calendar years 1997, 1998 and 1999 (or to distributions from other kinds of
retirement plans). However, a related 15% excise tax on certain excess amounts
remaining in your IRAs or retirement plan accounts upon your death continues to
apply during these calendar years. Consult your tax adviser to determine
whether it would be advantageous for you to make withdrawals from your IRA (or
receive distributions from other retirement plan accounts) during this
three-year period.
D. Required Minimum Distributions
1. During Your Life
The minimum distribution rules require that for your "70-1/2 year," and each
year thereafter, you must make withdrawals from your IRA accounts that are at
least
equal to the "minimum distribution." Your 70$ year is the calendar year that
contains the date six months after your 70th birthday.
Generally, you must withdraw an amount at least equal to the minimum
distribution by December 31 of each year. However, for your 70$ year, you may
wait to withdraw the minimum distribution until April 1 of the following year.
(This means that if you wait to make your withdrawal for the 70$ year until
April 1 of the following year, your total withdrawal in that year must equal
the minimum distributions for two years - a withdrawal by April 1 that is equal
to the minimum distribution for the 70-1/2 year and a second withdrawal by
December 31 that is equal to the minimum distribution for that year. In each
year thereafter, you must withdraw the minimum distribution for the year by
December 31.)
The amount of the minimum distribution is usually determined by dividing the
account balance of your IRA, as of December 31 of the prior year, by a divisor
(determined by Internal Revenue Service actuarial tables) that is based on your
life expectancy or the joint life and last survivor expectancy for you and your
designated beneficiary. See Article IV of the Custodial Agreement for a more
detailed explanation of how to calculate the minimum distribution. The
distributions must also satisfy the minimum distribution incidental benefit
rule, which generally will require distributions over a period less than the
joint and last survivor expectancy of you and your designated beneficiary
unless your beneficiary is your spouse or is no more than ten years younger
than you. The IRS provides tables for determining the distribution needed to
satisfy incidental benefit requirements.
The minimum distribution required must be calculated separately for each IRA
you own, but the amounts so determined may be totaled and taken from any one or
more of your IRAs.
You will be subject to a 50% excise tax on the amount by which the
distribution you actually received in any year falls short of the minimum
distribution required for the year.
You may take your distribution in:
<UNDEF> a lump sum;
<UNDEF> equal or substantially equal payments over a specified period no longer
than your life expectancy or the joint life and last survivor expectancy of you
and your designated beneficiary.
Also, as described in Section VII.A., you may roll over an eligible
distribution to purchase an individual retirement annuity payable in equal or
substantially equal payments over your life or the joint and last survivor
lives of you and your designated beneficiary. (See Article IV of the Custodial
Agreement and IRS Publication 590 for a full description of permissible
distribution methods.)
2. After Your Death
If you die before you reach age 70-1/2, distribution must be made to your
beneficiary by December 31 of the fifth year following the year of your death
unless, by December 31 of the year following your death, your designated
beneficiary begins receiving distributions over a period not extending beyond
your beneficiary's life expectancy. When your beneficiary is your spouse,
however, distributions can be postponed until December 31 of the year in which
you would have reached age 70-1/2, at which time your spouse must take them
over a period not extending beyond his or her life expectancy. See Article IV
of the Custodial Agreement and IRA Publication 590 for a more detailed
explanation of how to calculate the minimum distribution.
If you die after your required beginning date, the balance in the Custodial
Account must continue to be paid at least as rapidly as under the method of
payment being used prior to your death.
If your beneficiary is your spouse, your beneficiary can elect to treat your
IRA as his or her own IRA.
The minimum distribution required must be calculated separately for each IRA
you own, but the amounts so determined may be totalled and taken from any one
or more IRAs.
A payee is subject to a 50% excise tax on the amount by which a distribution
for the year falls short of the minimum distribution required.
Your beneficiary may take his or her distribution in:
<UNDEF> a lump sum;
<UNDEF> equal or substantially equal payments over a specified period no longer
than his or her life expectancy.
Also, as described in Section VII.A., a spousal beneficiary may roll over a
lump sum distribution to purchase an individual retirement annuity payable in
equal or substantially equal payments over his or her life expectancy. (See
Article IV of the Custodial Agreement and IRS Publication 590 for a full
description of permissible distribution methods.)
3. Further Information. This explanation only summarizes the minimum
distribution rules. Other rules and exceptions may apply to you that are not
discussed in this summary, including rules which, in some cases, would prevent
you from using certain options described above. You should consult your
personal tax advisor or IRS Publication 590 for more detailed information.
VIII. LOSS OF TAX-EXEMPT STATUS OF IRA
If you engage in any of the prohibited transactions listed in Section 4975 of
the Code (such as any sale, exchange, or leasing of any property between you
and your IRA) or if you take a loan from your IRA, your account will be
disqualified and the entire balance of your account will be treated as if it
had been distributed to you as of the first day of the year in which the
prohibited transaction occurred. The fair market value of your IRA will be
included in income in the year the prohibited transaction takes place and, if
you are under age 59$ at the time, you may be subject to the 10% penalty tax on
premature distributions. Should you or your beneficiary pledge all or any
portion of your IRA as security for a loan, the portion so pledged will be
treated as if distributed to you, will be included in your income, and may be
subject to the 10% premature distribution penalty during the year in which the
pledge occurred.
IX. OTHER TAX CONSIDERATIONS
A. Federal Income Tax Withholding
Federal income tax will be withheld on amounts distributed from your IRA
unless you elect not to have withholding apply. Generally, tax will be
withheld at a 10% rate. At the time of distribution from your IRA, you will be
notified of your right to elect not to have withholding apply and will be
provided with the appropriate election form. If your IRA distribution is to be
delivered outside of the U.S., you may elect not to have withholding apply only
if you certify to the Custodian that you are not a U.S. citizen residing
overseas or a "tax avoidance expatriate" as described in Section 877 of the
Internal Revenue Code. (The distribution may also be subject to state
withholding laws.)
B. Distribution not Eligible for Lump-Sum Averaging or Capital Gains Treatment
No distribution to you or anyone else from your account can qualify for
capital gains treatment under the federal income tax laws or for the five- or
ten-year averaging available with respect to certain lump sum distributions
from other types of retirement plans. The distribution is taxed to the person
receiving it as ordinary income.
C. Gift Tax
If you elect during your lifetime to have all or any part of your account
payable to a beneficiary at or after your death, the election will not subject
you to any gift tax liability.
D. Reporting for Tax Purposes
You must report deductible IRA contributions and distributions on your tax
Form 1040 or 1040A for the taxable year in which the contributions or
distributions were made. If you make any nondeductible contributions, you must
include the amount of such nondeductible contributions and the aggregate
account balance of all your IRAs as of the end of the calendar year on Form
8606. Additional reporting is required in the event that special taxes or
penalties described herein are due. You must file Form 5329 with the IRS for
each taxable year in which the contribution limits are exceeded, a premature
distribution takes place, less than the required minimum amount is distributed
from your IRA, or excess distributions are made.
X. IRS APPROVAL & INFORMATION
The Custodial Agreement which governs your IRA has been approved by the IRS as
to its form. Such IRS approval is a determination as to form only and does not
represent a determination of the merits of your account. This Disclosure
Statement provides only a summary of the laws governing IRAs. You should
consult your personal tax advisor or IRS Publication 590, Individual Retirement
Arrangements, for more detailed information. This publication is available
from your local IRS office or by calling 1-800-TAX-FORM.
DISTRIBUTION PLAN
OF
THE GROWTH FUND OF WASHINGTON, INC.
WHEREAS, The Growth Fund of Washington, Inc. (the "Company") intends to engage
in business as an open-end, diversified management investment company and is
registered as such under the Investment Company Act of 1940, as amended (the
"Act"); and
WHEREAS, the Company intends to engage in activities which may be primarily
intended to result in the sale of shares of its common stock as defined in Rule
12b-1 under the Act, and desires to adopt a Distribution Plan pursuant to such
Rule, and the Board of Directors has determined that there is a reasonable
likelihood that adoption of the Distribution Plan will benefit the Company and
its shareholders; and
WHEREAS, the Company intends to employ Vista Broker-Dealer Services, Inc. (the
"Distributor") as distributor of the securities of which the Company is the
issuer;
NOW, THEREFORE, the Company hereby adopts this Distribution Plan (the "Plan")
in accordance with Rule 12b-1 under the Act on the following terms and
conditions:
1. The Company shall pay to the Distributor expenses for distribution of the
Company's shares at a maximum annual rate of .25 of 1% of the Company's net
assets. Such expenses shall be calculated and accrued daily and paid monthly
or at such other intervals as the Board of Directors shall determine. The Fund
is under no legal obligation to reimburse any expenditures in excess of the
amount authorized by this Plan.
2. The amount set forth in paragraph 1 of this Plan shall be paid for the
Distributor's services as distributor of the shares of the Company and may be
spent by the Distributor on any activities or expenses primarily intended to
result in the sale or retention of the Company's shares, including, but not
limited to, compensation to and expenses of employees of the Distributor,
including overhead and telephone expenses, who engage in or support
distribution of shares, printing of prospectuses and reports for other than
existing shareholders, advertising, sales meetings, preparation and
distribution of sales literature, and payments to dealers.
3. This Plan was initially approved, along with the related Distribution
Agreement, by the Board of Directors (as provided in Paragraph 4) on July 8,
1985 and the Plan was approved by a vote of a majority of the outstanding
voting securities of the Company (as defined in the Act) on August 28, 1986.
4. This Plan shall not take effect until it has been approved, together with
any related agreements, by votes of a majority of both (a) the Board of
Directors of the Company and (b) those Directors of the Company who are not
"interested persons" of the Company (as defined in the Act) and have no direct
or indirect financial interest in the operation of this Plan or any agreements
related to it (the "Rule 12b-1 Directors"), cast in person at a meeting (or
meetings) called for the purpose of voting on this Plan and such related
agreements.
5. This Plan shall continue in effect for so long as such continuance is
specifically approved at least annually in the manner provided for approval of
this Plan in paragraph 4 after the Board of Directors has requested and
evaluated information from each party to an agreement related to the Plan
reasonably necessary to making an informed determination as to whether the Plan
should be continued.
6. Any person authorized to direct the disposition of monies paid or payable
by the Company pursuant to this Plan or any related agreement shall provide to
the Company's Board of Directors and the Board shall review, at least
quarterly, a written report of the amounts so expended and the purposes for
which such expenditures were made.
7. This Plan may be terminated at any time by vote of a majority of the Rule
12b-1 Directors, or by vote of a majority of the outstanding voting securities
of the Company.
8. This Plan may not be amended to increase materially the amount of
distribution expenses provided for in paragraph 2 hereof unless such amendment
is approved by a vote of at least a majority (as defined in the Act) of the
outstanding voting securities of the Company, and no material amendment to the
Plan shall be made unless approved in the manner provided for approval and
annual renewal in paragraph 4 hereof.
9. While this Plan is in effect, the selection and nomination of Directors who
are not interested persons (as defined in the Act) of the Company shall be
committed to the discretion of the Directors who are not interested persons.
10. The Company shall preserve copies of this Plan and any related agreements
and all reports made pursuant to paragraph 6 hereof, for a period of not less
than six years from the date of this Plan, or the agreements or such reports,
as the case may be, the first two years in an easily accessible place.
IN WITNESS WHEREOF, the Company has executed this Distribution Plan on the day
and year set forth below in Washington, D.C.
Date: 6/3/93 THE GROWTH FUND OF WASHINGTON, INC.
By: /s/ Harry J. Lister
Attest: /s/ Howard L. Kitzmiller
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 19846233
<INVESTMENTS-AT-VALUE> 49254124
<RECEIVABLES> 18070
<ASSETS-OTHER> 24526
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 49296720
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 495260
<TOTAL-LIABILITIES> 495260
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 19359941
<SHARES-COMMON-STOCK> 2440169
<SHARES-COMMON-PRIOR> 2496540
<ACCUMULATED-NII-CURRENT> 10127
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 963
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 29407891
<NET-ASSETS> 48801460
<DIVIDEND-INCOME> 721999
<INTEREST-INCOME> 118270
<OTHER-INCOME> 0
<EXPENSES-NET> 673257
<NET-INVESTMENT-INCOME> 167012
<REALIZED-GAINS-CURRENT> 1875107
<APPREC-INCREASE-CURRENT> 4460111
<NET-CHANGE-FROM-OPS> 6502230
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 156885
<DISTRIBUTIONS-OF-GAINS> 1874144
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 108114
<NUMBER-OF-SHARES-REDEEMED> 257397
<SHARES-REINVESTED> 92912
<NET-CHANGE-IN-ASSETS> 3404367
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 351255
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 673257
<AVERAGE-NET-ASSETS> 47588761
<PER-SHARE-NAV-BEGIN> 18.19
<PER-SHARE-NII> .07
<PER-SHARE-GAIN-APPREC> 2.60
<PER-SHARE-DIVIDEND> .07
<PER-SHARE-DISTRIBUTIONS> .79
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.00
<EXPENSE-RATIO> 1.42
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
