<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN A PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Republic Funds
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0- 11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total Fee Paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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(4) Date Filed:
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<PAGE>
REPUBLIC FUNDS
3435 STELZER ROAD
COLUMBUS, OHIO 43219-3035
April 21, 1997
Dear Shareholder:
The enclosed proxy materials relate to a special meeting of the
shareholders of the Republic Equity Fund, a series of the Republic Funds, to be
held on May 5, 1997 at 10:00 a.m., Eastern time, at 3435 Stelzer Road, Columbus,
Ohio 43219-3035.
The purpose of the meeting is to seek your approval of Subadvisory
Agreements between Republic National Bank of New York, the Fund's investment
manager, and Alliance Capital Management L.P. and Brinson Partners, Inc.
Alliance and Brinson have replaced the former sub-adviser of the Fund, which was
terminated effective on January 21, 1997. Your Board of Trustees now requests
that you formally approve the appointments of Alliance and Brinson as
sub-advisers of the Fund.
Under the proposed Agreements, the new sub-advisers will manage the
day-to-day investment operations of the Fund, subject to the supervision of
Republic. In connection with the change of sub-advisers, the Fund is
implementing more flexible investment policies that enable it to invest in a
wider variety of securities and other financial instruments. These changes are
described in the accompanying proxy materials. However, please note that these
changes do not affect the Fund's investment objective, which continues to be
long-term growth of capital and income without excessive fluctuations in market
value.
I am very pleased to present both Alliance and Brinson for your
approval. These two sub-advisers, with their separate investment styles, should
complement each other, and offer the prospect of enhanced investment
performance. After reviewing these matters, your Board of Trustees unanimously
approved the appointments of Alliance and Brinson, and now asks that you do the
same by voting FOR each proposal. For more information about the proposals
requiring your vote (including the new Subadvisory Agreements), please refer to
the accompanying proxy materials.
Thank you in advance for your prompt attention to this matter and for
your continued investment in the Fund. Please take the time to review the
enclosed proxy materials and vote your shares today by signing and returning the
enclosed proxy.
Sincerely,
/s/ George O. Martinez
George O. Martinez,
President and Secretary
P.S. Please make the effort to complete, sign, date and mail the enclosed
proxy promptly, in order to avoid the expense of additional mailings and
proxy solicitations.
<PAGE>
REPUBLIC FUNDS
3435 STELZER ROAD
COLUMBUS, OHIO 43219-3035
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
OF THE REPUBLIC EQUITY FUND
MAY 5, 1997
------------------
To the Shareholders of the Republic Equity Fund:
Notice is hereby given that a Special Meeting of Shareholders (the
"Meeting") of the Republic Equity Fund (the "Fund") of Republic Funds (the
"Trust") will be held at 10:00 a.m., Eastern time, on May 5, 1997 at 3435
Stelzer Road, Columbus, Ohio 43219-3035 for the following purposes:
I. To consider and vote on approval of the following:
A. A Subadvisory Agreement between Republic National Bank of New York
("Republic") and Alliance Capital Management L.P. ("Alliance"), on
behalf of the Fund, under which Alliance would serve as one of the
Sub-Advisers to replace the former Sub-Adviser of the Fund.
B. A Subadvisory Agreement between Republic and Brinson Partners, Inc.
("Brinson"), on behalf of the Fund, under which Brinson would serve
as one of the Sub-Advisers to replace the former Sub-Adviser of the
Fund.
II. To transact such other business as may properly come before the Meeting
or any adjournment thereof.
The Board of Trustees has fixed the close of business on March 31, 1997
as the record date for the determination of shareholders entitled to notice of,
and to vote at, the Meeting or any adjournment thereof. You are cordially
invited to attend the Meeting. All shareholders are requested to complete, sign
and return the enclosed proxy promptly. The enclosed proxy is being solicited on
behalf of the Board of Trustees of the Trust.
PLEASE RESPOND - YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO
ATTEND THE MEETING, PLEASE COMPLETE, SIGN, AND MAIL THE PROXY IN THE ENVELOPE
PROVIDED.
By Order of the Board of Trustees
/s/ George O. Martinez
George O. Martinez,
President and Secretary
Columbus, Ohio
April 21, 1997
<PAGE>
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PROXY STATEMENT
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REPUBLIC FUNDS
3435 STELZER ROAD
COLUMBUS, OHIO 43219-3035
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
OF THE REPUBLIC EQUITY FUND
APRIL 21, 1997
SOLICITATION OF PROXIES
This proxy statement is furnished in connection with the solicitation
of proxies on behalf of the Board of Trustees of Republic Funds (the "Trust"), a
Massachusetts business trust, for use at a special meeting of shareholders (the
"Meeting") of the Republic Equity Fund (the "Fund") of the Trust to be held at
10:00 a.m., Eastern time, on May 5, 1997 at 3435 Stelzer Road, Columbus, Ohio
43219-3035, and at any adjournment thereof, for the purposes set forth in the
accompanying Notice of Meeting ("Notice"). The date of the first mailing of this
proxy statement was on or about April 21, 1997.
The Annual Report of the Trust, including audited financial statements
for its last fiscal year ended October 31, 1996, has previously been sent to
shareholders. Copies of the reports are available without charge upon request to
the Trust by calling (888) 525-5757 or by writing to the above address.
Shareholders of record at the close of business on March 31, 1997 (the
"Record Date") are entitled to notice of, and to vote at, the Meeting. Approval
of each proposal requires a vote of 67% or more of the voting securities present
at the Meeting, if the holders of more than 50% of the outstanding voting
securities of the Fund are present or represented by proxy at the Meeting; or
the vote of more than 50% of the outstanding voting securities of the Fund,
whichever is less ("Majority Shareholder Vote").
PROPOSALS I.A. & I.B.
APPROVAL OF SUBADVISORY
AGREEMENTS
INTRODUCTION
At a meeting held on November 5, 1996, the Board of Trustees approved
Subadvisory Agreements (each, an "Agreement") between the Fund's investment
manager, Republic National Bank of New York ("Republic" or the "Manager"), and
two prospective Sub-Advisers to replace the former Sub-Adviser of the Fund.
Subject to approval by the Fund's shareholders, Alliance Capital Management L.P.
("Alliance") and Brinson Partners, Inc. ("Brinson") have assumed responsibility
for the management of the Fund following the termination of the former
Sub-Adviser, Lord Abbett & Co. ("Lord Abbett"). Forms of the Agreements are
attached hereto as Exhibits A (Alliance) and B (Brinson).
The termination of Lord Abbett and the proposed Agreements with
Alliance and Brinson are a result of a review of overall Fund performance by the
Manager and the Board of Trustees. The proposed combination of Sub-Advisers adds
diversification and the potential for improved performance. Allocation of the
Fund's assets between the proposed Sub-Advisers will vary from time to time as
determined by the Manager. While the Manager maintains complete discretion
regarding the allocation of the Fund's assets, the Manager anticipates that it
typically will allocate the Fund's assets evenly between the Sub-Advisers.
Lord Abbett served as Sub-Adviser of the Fund since commencement of the
Fund's operations pursuant to a Subadvisory Agreement ("Prior Agreement")
between Republic and Lord Abbett, the terms of which were substantially similar
to those of the proposed Agreements, as described below. The Prior Agreement,
dated April 7, 1995, was originally approved by the Board of Trustees, including
a majority of Trustees who are not interested parties of Republic or Lord
Abbett, at its meeting held on April 7, 1995, and by the sole shareholder of the
Fund by written consent dated April 7, 1995. Lord Abbett was terminated from its
position as Sub-Adviser of the Fund effective as of January 21, 1997.
THE FUND'S INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund is to seek long-term growth of
capital and income without excessive fluctuations in market value. In seeking
this objective, Lord Abbett invested in securities selling at reasonable prices
in relation to value, and normally invested the Fund's assets in common stocks
of large, seasoned companies in sound financial condition which were expected to
show above-average price appreciation.
In managing the Fund, Lord Abbett attempted to anticipate major changes
in the economy and to select securities that it believed would benefit most from
those changes. Lord Abbett managed the Fund to minimize share price fluctuation,
and passed up investment opportunities that, in its opinion, carried excessive
risk. Portfolio securities judged to be overpriced were sold by Lord Abbett, and
it would reinvest the proceeds in other securities believed to offer better
value.
The investment objective of the Fund will not change in connection with
the proposed replacement of the former Sub-Adviser. However, portfolio
management of the Fund is expected to change somewhat, so that the Fund will
invest in a wider array of equity securities issued by seasoned companies in
sound financial condition with large or intermediate capitalization which are
expected to show above-average price appreciation. In addition, the proposed
Sub-Advisers will have greater investment flexibility to invest in futures
contracts and option contracts on futures, securities, securities indices, and
foreign currencies, although the Sub-Advisers will not necessarily invest in all
of these instruments or hold all of these instruments in the Fund's portfolio at
all times. These changes are intended to result in investment policies that are
more flexible than the Fund's current policies and which are more consistent
with the investment approaches employed by Alliance and Brinson. A description
of these investment techniques and their associated risks is contained in
Exhibit C.
The changes in investment policies and techniques of the Fund are not
submitted for approval by shareholders, and are discussed for the purpose of
permitting shareholders to consider the overall policies of the Fund. More
information regarding the investment management styles of the proposed
Sub-Advisers is set forth below.
SUBADVISORY FEES
For services provided under the Prior Agreement, the Fund paid Lord
Abbett a subadvisory fee, computed daily and based on the Fund's average daily
net assets, equal to an annual rate of 0.325% of net assets up to $50 million,
0.25% of net assets over $50 million up to $100 million, 0.20% of net assets
over $100 million up to $200 million, and 0.15% of net assets over $200 million.
For the fiscal year ended October 31, 1996, the Fund paid Lord Abbett $101,285
for its services. The Fund did not incur any obligation to pay Lord Abbett under
the Prior Agreement upon termination of the Prior Agreement.
Under the proposed Agreements, the Fund will pay each Sub-Adviser a
subadvisory fee, computed daily and based on the Fund's average daily net assets
allocated to such Sub-Adviser for management, equal to an annual rate of 0.325%
of net assets up to $50 million, 0.25% of net assets over $50 million up to $100
million, 0.20% of net assets over $100 million up to $200 million, and 0.15% of
net assets over $200 million. Accordingly, the level of assets at which the Fund
will realize a reduction of its subadvisory fee will, effectively, be doubled
from the current level. However, at the Fund's current level of assets,
shareholders of the Fund will not incur any additional fees as a result of the
proposed change.
TERMS OF THE AGREEMENTS
The Agreements require the Sub-Advisers to provide, subject to the
supervision of the Manager, a continuous investment program for the Fund,
including investment research and management with respect to all securities and
investments and cash equivalents in the Fund, in accordance with the Fund's
investment objective, policies, and restrictions. The Sub-Advisers will
determine from time to time what securities and other investments will be
purchased, retained, or sold by the Fund and will place orders according to
their investment determinations.
Under the Agreements, the Sub-Advisers are not subject to liability to
the Fund for, or subject to, any damages, expenses, or losses to the Fund in
connection with or arising out of any services rendered under the Agreements,
except by reason of willful misfeasance, bad faith, or gross negligence in the
performance of the Sub-Advisers' duties, or by reason of reckless disregard of
their obligations and duties under the Agreements.
Each of the Agreements will terminate automatically in the event of its
assignment. In addition, each may be terminated by Republic upon 30 days'
written notice to the Sub-Adviser, by the Sub-Adviser upon 30 days' written
notice to the Trust, and by the Trust upon the vote of a majority of the Trust's
Board of Trustees or a Majority Shareholder Vote of the Fund, upon 30 days'
written notice to the Sub-Adviser.
Subject to the terms of applicable regulations, Alliance and Brinson
assumed responsibility for the management of the Fund effective January 21,
1997. If the proposed Agreements are approved by a Majority Shareholder Vote,
each Agreement will become effective and remain in force for an initial term of
two years from January 21, 1997. Following its initial term, each Agreement will
continue from year to year thereafter, provided that such continuance is
approved annually by the Board of Trustees or by a Majority Shareholder Vote,
and in either event, by a majority of the Trustees who are not interested
persons of any party to the Agreement at a meeting called for that purpose.
PROPOSAL I.A. - AGREEMENT BETWEEN
REPUBLIC AND ALLIANCE
ALLIANCE
In managing its portion of the Fund's portfolio, and consistent with
the Fund's investment objective, Alliance will pursue a "growth" style of
investing in marketable equity securities, primarily of U.S. companies. However,
Alliance may purchase for the Fund foreign, as well as domestic, equity
securities. Alliance normally will invest substantially all of the Fund's assets
allocated to it in common stocks which Alliance believes will appreciate in
value.
Alliance generally seeks to invest the Fund's assets in financially
secure firms with established operating histories that are proven leaders in
their industry or market sector. Such companies may demonstrate characteristics
such as participation in expanding markets, increasing unit sales volume, growth
in revenues and earnings per share, and increasing return on investments.
However, Alliance may invest the Fund's assets in companies that do not
demonstrate such characteristics if it expects such companies to undergo an
acceleration in growth of earnings because of special factors such as new
management, new products, changes in consumer demand or basic changes in the
economic environment.
Alliance analyzes each company considered for investment, using
internal fundamental research analysts, to determine its source of earnings,
competitive edge, management strength, and level of industry dominance as
measured by market share. At the same time, Alliance conducts an analysis of the
financial condition of each company and selects those prospects that demonstrate
the greatest potential for above-average capital appreciation and growth in
earnings. Alliance's philosophy is to seek the best available combination of
relative earnings growth and attractive valuations.
Alliance, a Delaware limited partnership with principal offices at 1345
Avenue of the Americas, New York, New York 10105, is a leading international
investment manager supervising client accounts with assets as of September 30,
1996 totalling approximately $173.7 billion. Alliance has six offices in the
United States, and subsidiaries of Alliance operate out of offices in Bahrain,
Istanbul, London, Luxembourg, Mumbai (Bombay), Paris, Singapore, Sao Paulo,
Sydney, Tokyo and Toronto. Alliance and its subsidiaries employ over 1,300
persons worldwide.
Alliance's clients are primarily major corporate employee benefit
funds, public employee retirement systems, investment companies, foundations and
endowment funds. The 51 registered investment companies managed by Alliance
comprising 110 separate investment portfolios currently have over two million
shareholders. There are 20 other non-U.S. investment companies comprising 20
separate investment portfolios also managed by Alliance. As of September 30,
1996, Alliance was retained as an investment manager of employee benefit fund
assets for 33 of the Fortune 100 companies.
John L. Blundin, a Senior Vice President and Portfolio Manager, and
Christopher Toub, a Senior Vice President and Portfolio Manager, have primary
portfolio management responsibility for the Fund's assets allocated to Alliance.
Mr. Blundin has 32 years of investment experience, including 24 years of
experience as a portfolio manager at Alliance. Mr. Toub has 14 years of
investment experience, including four years of experience as a portfolio manager
at Alliance. Prior to joining Alliance in 1992, Mr. Toub was with Marcus
Schloss, a private investment partnership, as an analyst and portfolio manager.
See Exhibit D for additional information regarding Alliance, including
a list of the partners and executive officers of Alliance. Exhibit D also sets
forth the registered investment companies, or series thereof, that are
comparable to the Fund for which Alliance serves as investment adviser,
including the fees payable by such investment companies, or series, and their
approximate net assets.
THE TRUSTEES' RECOMMENDATION
In approving the Agreement with Alliance and recommending approval to
shareholders, the Board of Trustees, including the Trustees who are not
interested persons of Republic or Alliance, considered various matters and
materials provided by Republic. Information considered by the Trustees included,
among other things: (1) the compensation to be received by Alliance and the
fairness of such compensation in light of the investment policies of the Fund
and the fees paid by investment companies with comparable policies; (2) the
nature and quality of the services anticipated to be rendered, based on the
needs of the Fund, the Board of Trustees' desire to increase the level of Fund
assets, and performance information regarding other accounts managed by
Alliance; and (3) Alliance's investment style and philosophy, which are
anticipated to add greater diversification and growth potential to the Fund's
portfolio.
ACCORDINGLY, THE BOARD OF TRUSTEES, INCLUDING THE TRUSTEES WHO ARE NOT
INTERESTED PERSONS OF ANY PARTY TO THE AGREEMENT, RECOMMENDS APPROVAL OF THE
AGREEMENT BETWEEN REPUBLIC AND ALLIANCE.
PROPOSAL I.B. - AGREEMENT BETWEEN
REPUBLIC AND BRINSON
BRINSON
Brinson seeks the Fund's investment objective by pursuing a "value"
style of investment management. Brinson's approach to investing for the Fund is
to invest in the equity securities of U.S. companies believed to be undervalued
based upon internal research and proprietary valuation systems. Investment
decisions are based on fundamental research, internally developed valuation
systems and seasoned judgment. Brinson's research focuses on several levels of
analysis; first, on understanding wealth shifts that occur within the equity
market, and second, on individual company research. At the company level,
Brinson quantifies expectations of a company's ability to generate profit and to
grow business into the future.
For each stock under analysis, Brinson discounts to the present all of
the future cash flows that it believes will accrue to the Fund from the
investment in order to calculate a present or intrinsic value. This value
estimate generated by Brinson's proprietary valuation model is compared to
observed market price and ranked against other stocks accordingly. The rankings,
in combination with Brinson's investment judgment, determine which securities
are included in the portfolio.
Brinson monitors and assesses the degree to which the portfolio becomes
concentrated in industry or common types of stocks, and adjusts the portfolio to
balance the price/value opportunities with their concentrations. Brinson imposes
limits on the degree of concentration, as the Fund does not intend to
concentrate its investments in a particular industry.
Brinson, a Delaware corporation, is an investment management firm
managing, as of June 30, 1996, approximately $58 billion, primarily for pension
and profit sharing institutional accounts. Brinson also serves as the investment
adviser to seven other investment companies. Brinson was organized in 1989 when
it acquired the institutional asset management business of The First National
Bank of Chicago and First Chicago Investment Advisors, N.A. Brinson and its
predecessor entities have managed domestic and international investment assets
since 1974 and global investment assets since 1982. Brinson has offices in
Basel, London, Melbourne, New York, Paris, Singapore, Sydney and Tokyo, in
addition to its principal office at 209 South LaSalle Street, Chicago, IL
60604-1295.
Jeffrey J. Diermeier, Managing Partner-U.S. Equities at Brinson, has
primary portfolio management responsibility for the Fund's assets allocated to
Brinson. Mr. Diermeier has 21 years of investment experience at Brinson.
See Exhibit E for additional information regarding Brinson, including a
list of the directors and executive officers of Brinson.
THE TRUSTEES' RECOMMENDATION
In approving the Agreement with Brinson and recommending approval to
shareholders, the Board of Trustees, including the Trustees who are not
interested persons of Republic or Brinson, considered various matters and
materials provided by Republic. Information considered by the Trustees included,
among other things: (1) the compensation to be received by Brinson and the
fairness of such compensation in light of the investment policies of the Fund
and the fees paid by other investment companies with comparable policies; (2)
the nature and quality of the services anticipated to be rendered, based on the
Fund's needs, the Board of Trustees' desire to increase the level of Fund
assets, and performance information for other accounts managed by Brinson; and
(3) Brinson's investment style and philosophy, which are anticipated to
complement Alliance's growth-oriented style of management and limit potential
volatility.
ACCORDINGLY, THE BOARD OF TRUSTEES, INCLUDING THE TRUSTEES WHO ARE NOT
INTERESTED PERSONS OF ANY PARTY TO THE AGREEMENT, RECOMMENDS APPROVAL OF THE
AGREEMENT BETWEEN REPUBLIC AND BRINSON.
PROPOSAL II.
OTHER MATTERS
The Trustees know of no business to be brought before the Meeting other
than as set forth above. If, however, any other matters properly come before the
Meeting, it is the intention of the persons named in the enclosed form of proxy
to vote on such matters in accordance with their best judgment.
OTHER VOTING INFORMATION
As of the close of business on the Record Date, the Fund had 3,278,153
shares of beneficial interest outstanding. As of that date, the Trustees and
officers of the Trust as a group owned of record and beneficially less than 1%
of the Fund's shares. As of the close of business on the Record Date, the
following shareholders of record owned 5% or more of the outstanding shares of
the Fund:
Name and Address of Amount of Percent of
Owner Ownership Outstanding Shares
------------------- --------- ------------------
Kinco & Co. c/o 2,967,016 90.51
RNB Securities Services
One Hanson Place
Brooklyn, NY 11243
Each shareholder is entitled to one vote for each full share and an
appropriate fraction of a vote for each fractional share held. Shares
represented by timely and properly executed proxies will be voted as specified.
Executed proxies that are unmarked will be voted in favor of the proposals set
forth in the attached Notice. A proxy may be revoked at any time prior to its
exercise by written notice, by execution of a subsequent proxy, or by voting in
person by attending the Meeting. However, attendance at the Meeting alone will
not serve to revoke the proxy.
Shares held by shareholders present in person or represented by proxy
at the Meeting will be counted both for the purpose of determining the presence
of a quorum and for calculating the votes cast on the issues before the Meeting.
Abstentions and broker "non-votes" (that is, proxies from brokers or nominees
indicating that such persons have not received instructions from the beneficial
owner or other persons entitled to vote shares on a particular matter with
respect to which the brokers or nominees do not have discretionary power) will
be counted for quorum purposes. However, abstentions and non-votes will have the
same effect as a negative vote on the issues presented for consideration.
In the event that a quorum is present at the Meeting, but sufficient
votes to approve a proposal are not received, the persons named as proxies may
propose one or more adjournments of the Meeting to permit further solicitation
of proxies. Any such adjournment will require the affirmative vote of a majority
of those shares represented at the Meeting in person or by proxy. Unless
otherwise instructed, the persons named as proxies will vote proxies in favor of
such an adjournment. A shareholder vote may be taken on one or both of the
proposals in this proxy statement prior to any such adjournment if sufficient
votes have been received for approval.
PORTFOLIO TURNOVER
Following the assumption of portfolio management duties by Alliance and
Brinson, significant portfolio turnover may occur in connection with a
restructuring of the Fund's portfolio to reflect the management styles of the
Sub-Advisers. Such restructuring may result in increased transaction costs and
realization of capital gains and losses in the Fund's current fiscal year.
OTHER SERVICE PROVIDERS
BISYS Fund Services ("BISYS"), 3435 Stelzer Road, Columbus, Ohio
43219-3035, serves as administrator to the Fund and to the other funds of the
Trust pursuant to an Administration Agreement dated October 1, 1996.
BISYS also distributes shares of the Fund.
EXPENSES OF THE MEETING
The costs of the Meeting, including the solicitation of proxies, will
be paid by the Fund. The principal solicitation of the proxies will be by mail,
but proxies also may be solicited by telephone or personal interview by officers
or agents of the Trust or the Manager, or by proxy solicitation firms retained
by the Manager.
PROPOSALS FOR FUTURE SHAREHOLDER MEETINGS
The Trust does not intend to hold shareholder meetings each year, but
meetings may be called by the Trustees from time to time. Proposals of
shareholders that are intended to be presented at a future shareholder meeting
must be received by the Trust a reasonable time prior to the Trust's
solicitation of proxies relating to such meeting.
YOU ARE URGED TO COMPLETE, DATE, SIGN, AND RETURN THE ENCLOSED PROXY PROMPTLY.
By Order of the Trustees
George O. Martinez,
President and Secretary
April 21, 1997
<PAGE>
EXHIBIT A
REPUBLIC FUNDS
REPUBLIC EQUITY FUND
SUBADVISORY AGREEMENT
AGREEMENT, effective commencing on January 21, 1997, between Alliance
Capital Management L.P. (the "Subadviser") and Republic National Bank of New
York (the "Manager").
WHEREAS, the Manager has been retained by Republic Funds, a
Massachusetts business trust (the "Trust") registered as an open-end diversified
investment management company under the Investment Company Act of 1940, as
amended (the "1940 Act"), to provide investment advisory services to Republic
Equity Fund (the "Fund") pursuant to an Investment Management Contract and
Supplement thereto dated April 7, 1995 (the "Management Agreement");
WHEREAS, the Trust's Board of Trustees, including a majority of the
trustees who are not "interested persons," as defined in the 1940 Act, and the
Fund's stockholders have approved the appointment of the Subadviser to perform
certain investment advisory services for the Fund pursuant to this Subadvisory
Agreement and the Subadviser is willing to perform such services for the Fund;
WHEREAS, the Subadviser is registered or exempt from registration as an
investment adviser under the Investment Advisers Act of 1940, as amended
("Advisers Act");
NOW THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the Manager and the Subadviser as
follows:
1. Appointment. The Manager hereby appoints the Subadviser to perform
advisory services to the Fund for the periods and on the terms set forth in this
Subadvisory Agreement. The Subadviser accepts such appointment and agrees to
furnish the services herein set forth, for the compensation herein provided.
2. Investment Advisory Duties. Subject to the supervision of the Board
of Trustees of the Trust and the Manager, the Subadviser will, in coordination
with the Manager, (a) provide a program of continuous investment management for
the portion of the Fund allocated by the Manager to the Subadviser (the
"Subadviser's Portfolio") for management in accordance with the Fund's
investment objectives, policies and limitations as stated in the Fund's
Prospectus and Statement of Additional Information included as part of the
Trust's Registration Statement on behalf of the Fund filed with the Securities
and Exchange Commission, as they may be amended from time to time, copies of
which shall be provided to the Subadviser by the Manager; (b) make investment
decisions for the Subadviser's Portfolio; and (c) place orders to purchase and
sell securities for the Subadviser's Portfolio. In particular, the Subadviser
will be responsible for the market timing of purchases and sales and for all
yield enhancement strategies used in managing the Subadviser's Portfolio.
In performing its investment management services to the Fund hereunder,
the Subadviser will provide the Fund with ongoing investment guidance and policy
direction, including oral and written research, analysis, advice, statistical
and economic data and judgments regarding individual investments, general
economic conditions and trends and long-range investment policy, with respect,
in all cases, to the Subadviser's Portfolio. The Subadviser will determine the
securities, instruments, repurchase agreements, options and other investments
and techniques that the Subadviser's Portfolio will purchase, sell, enter into
or use, and will provide an ongoing evaluation of the Subadviser's Portfolio.
The Subadviser will determine what portion of the Subadviser's Portfolio shall
be invested in securities and other assets.
The Subadviser further agrees that, in performing its duties hereunder,
it will:
(a) comply with the 1940 Act and all rules and regulations thereunder,
the Advisers Act, the Internal Revenue Code of 1986, as amended (the "Code"),
and all other applicable federal and state laws and regulations, and with any
applicable procedures adopted by the Trustees;
(b) manage the Subadviser's Portfolio so that it will qualify, and
continue to qualify (except where extraordinary circumstances dictate
otherwise), as a regulated investment company under Subchapter M of the Code and
regulations issued thereunder, and conduct periodically such Subchapter M
compliance reviews as the Manager and Subadviser determine appropriate;
(c) place orders pursuant to its investment determinations for the
Subadviser's Portfolio directly with the issuer, or with any broker or dealer,
in accordance with applicable policies expressed in the Fund's Prospectus and/or
Statement of Additional Information and in accordance with applicable legal
requirements;
(d) furnish to the Trust whatever statistical information the Trust may
reasonably request with respect to the Subadviser's Portfolio's assets or
contemplated investments. In addition, the Subadviser will keep the Trust and
the Trustees informed of developments materially affecting the Subadviser's
Portfolio and shall, on the Subadviser's own initiative, furnish to the Trust
from time to time whatever information the Subadviser believes appropriate for
this purpose;
(e) provide the Manager and the Board of Trustees of the Trust with a
copy of a written code of ethics complying with the requirements of Rule 17j-1
under the 1940 Act, together with evidence of its adoption. Within fifteen days
of the end of the calendar quarter of each year that this Subadvisory Agreement
is in effect, the president or a vice-president of the Subadviser shall certify
to the Manager that the Subadviser has complied with the requirements of Rule
17j-1 during the previous year and that there has been no violation of the
Subadviser's code of ethics or, if such a violation has occurred, that
appropriate action was taken in response to such violation. Upon the written
request of the Manager, the Subadviser shall permit the Manager, its employees
or its agents to examine the reports required to be made to the Subadviser by
Rule 17j-l(c)(1) and all other records relevant to the Subadviser's code of
ethics;
(f) provide the Manager with a copy of its Form ADV as most recently
filed with the Securities and Exchange Commission ("SEC") and promptly will
furnish a copy of all amendments to the Manager at least annually;
(g) notify the Manager of any change of control of the Subadviser and
any changes in the key personnel or general partners of the Subadviser, in each
case prior to or promptly after such change;
(h) make available to the Manager and the Trust, promptly upon their
request, such copies of its investment records and ledgers with respect to the
Subadviser's Portfolio as may be required to assist the Manager and the Trust in
their compliance with applicable laws and regulations. The Subadviser will
furnish the Trustees with such periodic and special reports regarding the
Subadviser's Portfolio as they may reasonably request;
(i) immediately notify the Manager and the Trust in the event that the
Subadviser or any of its affiliates: (1) becomes aware that it is subject to a
statutory disqualification that prevents the Subadviser from serving as an
investment adviser pursuant to this Subadvisory Agreement; or (2) becomes aware
that it is the subject of an administrative proceeding or enforcement action by
the SEC or other regulatory authority. The Subadviser further agrees to notify
the Trust and the Manager immediately of any material fact known to the
Subadviser respecting or relating to the Subadviser that is not contained in the
Trust's Registration Statement with respect to the Fund, or any amendment or
supplement thereto, but that is required to be disclosed therein, and of any
statement contained therein that becomes untrue in any material respect.
3. Allocation of Charges and Expenses. Except as otherwise specifically
provided in this Section 3, the Subadviser shall pay the compensation and
expenses of all its directors, partners, officers and employees, if any, who
serve as officers and executive employees of the Trust (including the Fund's
share of payroll taxes), and the Subadviser shall make available, without
expense to the Fund, the service of its directors, partners, officers and
employees, if any, who may be duly elected officers of the Trust, subject to
their individual consent to serve and to any limitations imposed by law.
The Subadviser shall not be required to pay any expenses of the Fund
other than those specifically allocated to the Subadviser in this Section 3. In
particular, but without limiting the generality of the foregoing, the Subadviser
shall not be responsible for any of the following expenses of the Fund:
organization and offering expenses of the Fund (including out-of-pocket
expenses); fees payable to the Manager and to any other Fund advisers or
consultants; legal expenses; auditing and accounting expenses; interest
expenses; telephone, telex, facsimile, postage and other communications
expenses; taxes and governmental fees; dues and expenses incurred by or with
respect to the Fund in connection with membership in investment company trade
organizations; cost of insurance relating to fidelity coverage for the Trust's
officers and employees; fees and expenses of any custodian, subcustodian,
transfer agent, registrar, or dividend disbursing agent of the Fund; payments
for maintaining the Fund's financial books and records and calculating the daily
net asset value of the Fund's shares; other payments for portfolio pricing or
valuation services to pricing agents, accountants, bankers and other
specialists, if any; expenses of preparing share certificates and other expenses
in connection with the issuance, offering, distribution or sale of securities
issued by the Fund; expenses relating to investor and public relations; expenses
of registering and qualifying shares of the Fund for sale; freight, insurance
and other charges in connection with the shipment of the portfolio securities of
the Fund; brokerage commissions or other costs of acquiring or disposing of any
portfolio securities or other assets of the Fund, or of entering into other
transactions or engaging in any investment practices with respect to the Fund;
expenses of printing and distributing prospectuses, Statements of Additional
Information, reports, notices and dividends to stockholders; costs of
stationery; litigation expenses; costs of stockholders' and other meetings; the
compensation and all expenses (specifically including travel expenses relating
to the Fund's business) of officers, trustees and employees of the Trust who are
not interested persons of the Subadviser; and travel expenses (or an appropriate
portion thereof) of officers or trustees of the Trust who are officers,
directors or employees of the Subadviser to the extent that such expenses relate
to attendance at meetings of the Board of Trustees of the Trust or any
committees thereof or advisers thereto.
4. Compensation. As compensation for the services provided and expenses
assumed by the Subadviser under this Agreement, the Trust will pay the
Subadviser within 21 calendar days after the end of each calendar quarter an
advisory fee computed daily on the basis of the Subadviser's Portfolio's average
daily net assets allocated to the Subadviser at an annual rate of 0.325% of net
assets up to $50 million, 0.25% of net assets over $50 million up to $100
million, 0.20% of net assets over $100 million up to $200 million, and 0.15% of
net assets over $200 million. The "average daily net assets" of the Subadviser's
Portfolio shall mean the average of the values placed on the Subadviser's
Portfolio's net assets as of 4:00 p.m. (New York time) on each day on which the
net asset value 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 its
net assets as of some other time on each business day, as of such other time.
The value of net assets of the Fund shall always be determined pursuant to the
applicable provisions of the Trust's Declaration of Trust and 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 4, the value of the net assets of the Fund as last determined shall be
deemed to be the value of its net assets as of the close of regular trading on
the New York Stock Exchange, or as of such other time as the value of the net
assets of the Fund's portfolio may lawfully be determined, on that day. If the
determination of the net asset value of the shares of the Fund has been so
suspended for a period including any quarter end when the Subadviser's
compensation is payable pursuant to this Section, then the Subadviser'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 quarter). If the Fund determines the value of the net assets of
its portfolio more than once on any day, then the last such determination
thereof on that day shall be deemed to be the sole determination thereof on that
day for the purposes of this Section 4. In the event that this Agreement is
terminated pursuant to Section 10 hereof, the Subadviser shall be entitled to a
pro rata portion of the fee under this Section 4 through and including the date
upon which the Agreement is terminated and the Subadviser ceases to provide
investment advisory services to the Fund hereunder.
5. Books and Records. The Subadviser agrees to maintain such books and
records with respect to its services to the Fund as are required by Section 31
under the 1940 Act, and rules adopted thereunder, and by other applicable legal
provisions, and to preserve such records for the periods and in the manner
required by that Section, and those rules and legal provisions. The Subadviser
also agrees that records it maintains and preserves pursuant to Rules 31a-1 and
Rule 31a-2 under the 1940 Act and otherwise in connection with its services
hereunder are the property of the Fund and will be surrendered promptly to the
Fund upon its request. The Subadviser further agrees that it will furnish to
regulatory authorities having the requisite authority any information or reports
in connection with its services hereunder which may be requested in order to
determine whether the operations of the Fund are being conducted in accordance
with applicable laws and regulations.
6. Standard of Care and Limitation of Liability. The Subadviser shall
exercise its best judgment in rendering the services provided by it under this
Subadvisory Agreement. The Subadviser shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund or the holders
of the Fund's shares in connection with the matters to which this Subadvisory
Agreement relate, provided that nothing in this Subadvisory Agreement shall be
deemed to protect or purport to protect the Subadviser against any liability to
the Fund or to holders of the Fund's shares to which the Subadviser would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or by reason of the
Subadviser's reckless disregard of its obligations and duties under this
Subadvisory Agreement. As used in this Section 6, the term "Subadviser" shall
include any officers, directors, partners, employees or other affiliates of the
Subadviser performing services for the Fund.
7. Indemnification.
(a) The Subadviser hereby agrees to indemnify and hold harmless the
Manager from any controversies, claims, suits, losses, liabilities, judgments,
awards or settlements, and costs or expenses, including reasonable legal fees,
caused by, or in any way related to, the investment decisions rendered by the
Subadviser concerning the Subadviser's Portfolio in a manner inconsistent with
Section 6 hereof, any failure of the Subadviser to fulfill any of its other
obligations under this Subadvisory Agreement, any material misrepresentation, or
omission to disclose material facts, by the Subadviser to the Manager or any
shareholder of the Fund, or any violation of applicable law by the Subadviser.
The Subadviser also agrees to indemnify and hold harmless the Manager with
respect to any losses incurred as the result of errors made by the Subadviser in
transmitting orders to any broker for execution.
(b) The Manager hereby agrees to indemnify and hold harmless the
Subadviser from any controversies, claims, suits, losses, liabilities,
judgments, awards or settlements, and costs or expenses, including reasonable
legal fees, caused by, or in any related to, its failure to fulfill any of its
obligations under this Subadvisory Agreement. The Manager also agrees to
indemnify and hold harmless the Subadviser with respect to any losses related to
the failure of any other subadviser to the Fund to perform its obligations to
the Fund in a manner consistent with the applicable subadvisory agreement
between the Manager and such other subadviser, provided that the Manager's
liability to the Subadviser shall be limited to the extent that the Manager is
indemnified by the other subadviser and the Manager uses all reasonable efforts
to obtain any indemnification that is available to the Manager from the other
subadviser.
(c) If any party seeks indemnification under this Agreement (an
"indemnified party"), it shall notify the other party (the "indemnifying party")
in writing of the assertion of any third party claim or action and shall deliver
all copies of materials received in connection with the matter to the
indemnifying party. The indemnifying party shall have the right to participate
at its own expense in the defense of any such claim or action with counsel of
its own choosing satisfactory to the indemnified party, and the indemnified
party shall cooperate fully with the indemnifying party in the defense or
settlement of any matter that is covered by paragraphs (a) or (b) above, subject
to reimbursement by the indemnifying party for expenses incurred by the
indemnified party in connection with the indemnifying party's participation in
the defense.
8. Services Not Exclusive. It is understood that the services of the
Subadviser are not exclusive, and that nothing in this Subadvisory Agreement
shall prevent the Subadviser from providing similar services to other
individuals, institutions or investment companies (whether or not their
investment objectives and policies are similar to those of the Fund) or from
engaging in other activities, provided such other services and activities do
not, during the term of this Subadvisory Agreement, interfere in a material
manner with the Subadviser's ability to meet its obligations to the Trust and
the Fund hereunder. When the Subadviser recommends the purchase or sale of a
security for other investment companies and other clients, and at the same time
the Subadviser recommends the purchase or sale of the same security for the
Fund, the Subadviser may, but shall not be obligated to, aggregate the orders
for securities to be purchased or sold. It is understood that in light of its
fiduciary duty to the Fund, such transactions will be executed on a basis that
is fair and equitable to the Fund. In connection with purchases or sales of
portfolio securities for the account of the Fund, neither the Subadviser nor any
of its directors, partners, officers or employees shall act as a principal or
agent or receive any commission.
9. Documentation. The Fund shall provide the Subadviser with the
following documents, as soon as they are available:
(a) the Trust's registration statement relating to the Fund, and any
amendments thereto;
(b) the Declaration of Trust and By-laws (and any amendments thereto)
of the Trust;
(c) resolutions of the Board of Trustees of the Trust authorizing the
appointment of Alliance Capital Management L.P. to serve as
Subadviser and approving this Subadvisory Agreement;
(d) the Trust's Notification of Registration on Form N-8A; and
(e) the Fund's current Prospectus and Statement of Additional
Information, and any supplements thereto.
10. Duration and Termination. This Subadvisory Agreement shall continue
for an initial term of two years from the date set forth above, unless sooner
terminated as provided herein. Notwithstanding the foregoing, this Subadvisory
Agreement may be terminated: (a) at any time without penalty upon thirty (30)
days' written notice to the Subadviser by (i) the Fund upon the vote of a
majority of the Trustees or upon the vote of a majority of the Fund's
outstanding voting securities, or (ii) the Manager, or (b) by the Subadviser
upon thirty (30) days' written notice to the Fund, provided that the Subadviser
shall continue to be responsible for managing the assets of the Fund for sixty
(60) business days after the end of the notice period unless the Fund shall
agree in writing to shorten the period. Anything to the contrary herein
notwithstanding, any termination carried out pursuant to this Section 10(b)
shall be without penalty and, further, the compensation schedule set forth in
Section 4 hereof shall apply to the service of the Subadviser beyond the end of
the notice period provided in this Section 10(b). This Subadvisory Agreement
will also terminate automatically in the event of its assignment (as defined in
the 1940 Act) or the assignment or termination of the Management Agreement.
11. Amendments. No provision of this Subadvisory 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, and no amendment of this Subadvisory
Agreement shall be effective until approved by an affirmative vote of (i) a
majority of the outstanding voting securities of the Fund, and (ii) a majority
of the Trustees of the Fund, including a majority of Trustees who are not
interested persons of any party to this Subadvisory Agreement, cast in person at
a meeting called for the purpose of voting on such approval, if such approval is
required by applicable law.
12. Notices. Any notice or other communication required or permitted to
be given hereunder shall be given in writing and mailed, faxed or delivered to
the other party at its address as follows:
If to the Manager:
Republic National Bank of New York
452 Fifth Avenue
New York, New York 10018
Attention: Ms. Mary E. Martinez
If to the Subadviser:
Alliance Capital Management L.P.
1345 Avenue of the Americas, 38th Floor
New York, NY 10105
Attention: John L. Blundin
Copy to: Mark R. Manley
Any party may specify a different or additional address for notice by
sending a written notice to the other at the address above, or at that or those
last given hereunder.
13. Miscellaneous.
(a) This Subadvisory Agreement shall be governed by the laws of the
State of New York, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Advisers Act, or rules or orders of the SEC
thereunder. Exclusive original jurisdiction to any claim, action or dispute
between the parties arising out of this Agreement shall be solely in state or
federal district courts sitting in the State of New York.
(b) The captions of this Subadvisory Agreement are included for
convenience only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
(c) If any provision of this Subadvisory Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Subadvisory Agreement shall not be affected hereby and, to this extent, the
provisions of this Subadvisory Agreement shall be deemed to be severable. Where
the effect of a requirement of the federal securities laws reflected in any
provision of this Subadvisory Agreement is made less restrictive by a rule,
regulation or order of the SEC, whether of special or general application, such
provision shall be deemed to incorporate the effect of such rule, regulation or
order. This Agreement may be signed in counterpart.
(d) Nothing herein shall be construed as constituting the Subadviser,
or any of its directors, officers or employees, an agent of the Manager or the
Fund, nor the Manager, or any of its directors, officers or employees, an agent
of the Subadviser.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of _______________, 199_.
ALLIANCE CAPITAL MANAGEMENT L.P.
By -------------------------------------
Alliance Capital Management Corporation,
General Partner
By -------------------------------------
Name:
Title:
REPUBLIC NATIONAL BANK OF NEW YORK
By -------------------------------------
Name:
Title:
<PAGE>
EXHIBIT B
REPUBLIC FUNDS
REPUBLIC EQUITY FUND
SUBADVISORY AGREEMENT
AGREEMENT, effective commencing on January 21, 1997, between Brinson
Partners, Inc. (the "Subadviser") and Republic National Bank of New York (the
"Manager").
WHEREAS, the Manager has been retained by Republic Funds, a
Massachusetts business trust (the "Trust") registered as an open-end diversified
investment management company under the Investment Company Act of 1940, as
amended (the "1940 Act"), to provide investment advisory services to Republic
Equity Fund (the "Fund") pursuant to an Investment Management Contract and
Supplement thereto dated April 7, 1995 (the "Management Agreement");
WHEREAS, the Trust's Board of Trustees, including a majority of the
trustees who are not "interested persons," as defined in the 1940 Act, and the
Fund's stockholders have approved the appointment of the Subadviser to perform
certain investment advisory services for the Fund pursuant to this Subadvisory
Agreement and the Subadviser is willing to perform such services for the Fund;
WHEREAS, the Subadviser is registered or exempt from registration as an
investment adviser under the Investment Advisers Act of 1940, as amended
("Advisers Act");
NOW THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the Manager and the Subadviser as
follows:
1. Appointment. The Manager hereby appoints the Subadviser to perform
advisory services to the Fund for the periods and on the terms set forth in this
Subadvisory Agreement. The Subadviser accepts such appointment and agrees to
furnish the services herein set forth, for the compensation herein provided.
2. Investment Advisory Duties. Subject to the supervision of the Board
of Trustees of the Trust and the Manager, the Subadviser will, in coordination
with the Manager, (a) provide a program of continuous investment management for
the portion of the Fund allocated by the Manager to the Subadviser (the
"Subadviser's Portfolio") for management in accordance with the Fund's
investment objectives, policies and limitations as stated in the Fund's
Prospectus and Statement of Additional Information included as part of the
Trust's Registration Statement on behalf of the Fund filed with the Securities
and Exchange Commission, as they may be amended from time to time, copies of
which shall be provided to the Subadviser by the Manager; (b) make investment
decisions for the Subadviser's Portfolio; and (c) place orders to purchase and
sell securities for the Subadviser's Portfolio. In particular, the Subadviser
will be responsible for the market timing of purchases and sales and for all
yield enhancement strategies used in managing the Subadviser's Portfolio.
In performing its investment management services to the Fund hereunder,
the Subadviser will provide the Fund with ongoing investment guidance and policy
direction, including oral and written research, analysis, advice, statistical
and economic data and judgments regarding individual investments, general
economic conditions and trends and long-range investment policy, with respect,
in all cases, to the Subadviser's Portfolio. The Subadviser will determine the
securities, instruments, repurchase agreements, options and other investments
and techniques that the Subadviser's Portfolio will purchase, sell, enter into
or use, and will provide an ongoing evaluation of the Subadviser's Portfolio.
The Subadviser will determine what portion of the Subadviser's Portfolio shall
be invested in securities and other assets.
The Subadviser further agrees that, in performing its duties hereunder,
it will:
(a) comply with the 1940 Act and all rules and regulations thereunder,
the Advisers Act, the Internal Revenue Code of 1986, as amended (the "Code"),
and all other applicable federal and state laws and regulations, and with any
applicable procedures adopted by the Trustees;
(b) manage the Subadviser's Portfolio so that it will qualify, and
continue to qualify (except where extraordinary circumstances dictate
otherwise), as a regulated investment company under Subchapter M of the Code and
regulations issued thereunder, and conduct periodically such Subchapter M
compliance reviews as the Manager and Subadviser determine appropriate based on
reports prepared and issued by the Custodian;
(c) place orders pursuant to its investment determinations for the
Subadviser's Portfolio directly with the issuer, or with any broker or dealer,
in accordance with applicable policies expressed in the Fund's Prospectus and/or
Statement of Additional Information and in accordance with applicable legal
requirements;
(d) furnish to the Trust whatever statistical information the Trust may
reasonably request with respect to the Subadviser's Portfolio's assets or
contemplated investments. In addition, the Subadviser will keep the Trust and
the Trustees informed of developments materially affecting the Subadviser's
Portfolio's and shall, on the Subadviser's own initiative, furnish to the Trust
from time to time whatever information the Subadviser believes appropriate for
this purpose;
(e) provide the Manager and the Board of Trustees of the Trust with a
copy of a written code of ethics complying with the requirements of Rule 17j-1
under the 1940 Act, together with evidence of its adoption. Within fifteen days
of the end of the calendar quarter of each year that this Subadvisory Agreement
is in effect, the president or a vice-president of the Subadviser shall certify
to the Manager that the Subadviser has complied with the requirements of Rule
17j-1 during the previous year and that there has been no violation of the
Subadviser's code of ethics or, if such a violation has occurred, that
appropriate action was taken in response to such violation. Upon the written
request of the Manager, the Subadviser shall permit the Securities and Exchange
Commission, its employees or its agents to examine the reports required to be
made to the Subadviser by Rule 17j-l(c)(1) and all other records relevant to the
Subadviser's code of ethics;
(f) provide the Manager with a copy of its Form ADV as most recently
filed with the Securities and Exchange Commission ("SEC") and promptly will
furnish a copy of all amendments to the Manager at least annually;
(g) notify the Manager of any material change of control of the
Subadviser and any changes in the key personnel of the Subadviser, in each case
prior to or promptly after such change;
(h) make available to the Manager and the Trust, promptly upon their
request, such copies of its investment records and ledgers with respect to the
Subadviser's Portfolio as may be required to assist the Manager and the Trust in
their compliance with applicable laws and regulations. The Subadviser will
furnish the Trustees with such periodic and special reports regarding the
Subadviser's Portfolio as they may reasonably request;
(i) immediately notify the Manager and the Trust in the event that the
Subadviser or any of its affiliates: (1) becomes aware that it is subject to a
statutory disqualification that prevents the Subadviser from serving as an
investment adviser pursuant to this Subadvisory Agreement; or (2) becomes aware
that it is the subject of an administrative proceeding or enforcement action by
the SEC or other regulatory authority. The Subadviser further agrees to notify
the Trust and the Manager immediately of any material fact known to the
Subadviser respecting or relating to the Subadviser that is not contained in the
Trust's Registration Statement with respect to the Fund, or any amendment or
supplement thereto, but that is required to be disclosed therein, and of any
statement contained therein that becomes untrue in any material respect.
3. Allocation of Charges and Expenses. Except as otherwise specifically
provided in this Section 3, the Subadviser shall pay the compensation and
expenses of all its directors, partners, officers and employees, if any, who
serve as officers and executive employees of the Trust (including the Fund's
share of payroll taxes), and the Subadviser shall make available, without
expense to the Fund, the service of its directors, partners, officers and
employees.
The Subadviser shall not be required to pay any expenses of the Fund
other than those specifically allocated to the Subadviser in this Section 3. In
particular, but without limiting the generality of the foregoing, the Subadviser
shall not be responsible, except to the extent of the reasonable compensation of
such of the Trust's employees as are officers or employees of the Subadviser
whose services may be involved, for the following expenses of the Fund:
organization and offering expenses of the Fund (including out-of-pocket
expenses); fees payable to the Manager and to any other Fund advisers or
consultants; legal expenses; auditing and accounting expenses; interest
expenses; telephone, telex, facsimile, postage and other communications
expenses; taxes and governmental fees; dues and expenses incurred by or with
respect to the Fund in connection with membership in investment company trade
organizations; cost of insurance relating to fidelity coverage for the Trust's
officers and employees; fees and expenses of any custodian, subcustodian,
transfer agent, registrar, or dividend disbursing agent of the Fund; payments
for maintaining the Fund's financial books and records and calculating the daily
net asset value of the Fund's shares; other payments for portfolio pricing or
valuation services to pricing agents, accountants, bankers and other
specialists, if any; expenses of preparing share certificates and other expenses
in connection with the issuance, offering, distribution or sale of securities
issued by the Fund; expenses relating to investor and public relations; expenses
of registering and qualifying shares of the Fund for sale; freight, insurance
and other charges in connection with the shipment of the portfolio securities of
the Fund; brokerage commissions or other costs of acquiring or disposing of any
portfolio securities or other assets of the Fund, or of entering into other
transactions or engaging in any investment practices with respect to the Fund;
expenses of printing and distributing prospectuses, Statements of Additional
Information, reports, notices and dividends to stockholders; costs of
stationery; litigation expenses; costs of stockholders' and other meetings; the
compensation and all expenses (specifically including travel expenses relating
to the Fund's business) of officers, trustees and employees of the Trust who are
not interested persons of the Subadviser; and travel expenses (or an appropriate
portion thereof) of officers or trustees of the Trust who are officers,
directors or employees of the Subadviser to the extent that such expenses relate
to attendance at meetings of the Board of Trustees of the Trust or any
committees thereof or advisers thereto.
4. Compensation. As compensation for the services provided and expenses
assumed by the Subadviser under this Agreement, the Trust will pay the
Subadviser within 21 calendar days after the end of each calendar quarter an
advisory fee computed daily on the basis of the Subadviser's Portfolio's average
daily net assets allocated to the Subadviser at an annual rate of 0.325% of net
assets up to $50 million, 0.25% of net assets over $50 million up to $100
million, 0.20% of net assets over $100 million up to $200 million, and 0.15% of
net assets over $200 million. The "average daily net assets" of the Subadviser's
Portfolio shall mean the average of the values placed on the Subadviser's
Portfolio's net assets as of 4:00 p.m. (New York time) on each day on which the
net asset value 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 its
net assets as of some other time on each business day, as of such other time.
The value of net assets of the Fund shall always be determined pursuant to the
applicable provisions of the Trust's Declaration of Trust and 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 4, the value of the net assets of the Fund as last determined shall be
deemed to be the value of its net assets as of the close of regular trading on
the New York Stock Exchange, or as of such other time as the value of the net
assets of the Fund's portfolio may lawfully be determined, on that day. If the
determination of the net asset value of the shares of the Fund has been so
suspended for a period including any quarter end when the Subadviser's
compensation is payable pursuant to this Section, then the Subadviser'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 quarter). If the Fund determines the value of the net assets of
its portfolio more than once on any day, then the last such determination
thereof on that day shall be deemed to be the sole determination thereof on that
day for the purposes of this Section 4. In the event that this Agreement is
terminated pursuant to Section 10 hereof, the Subadviser shall be entitled to a
pro rata portion of the fee under this Section 4 through and including the date
upon which the Agreement is terminated and the Subadviser ceases to provide
investment advisory services to the Fund hereunder.
5. Books and Records. The Subadviser agrees to maintain such books and
records with respect to its services to the Fund as are required by Section 31
under the 1940 Act, and rules adopted thereunder, and by other applicable legal
provisions, and to preserve such records for the periods and in the manner
required by that Section, and those rules and legal provisions. The Subadviser
also agrees that records it maintains and preserves pursuant to Rules 31a-1 and
Rule 31a-2 under the 1940 Act and otherwise in connection with its services
hereunder are the property of the Fund and will be surrendered promptly to the
Fund upon its request. The Subadviser further agrees that it will furnish to
regulatory authorities having the requisite authority any information or reports
in connection with its services hereunder which may be requested in order to
determine whether the operations of the Fund are being conducted in accordance
with applicable laws and regulations.
6. Standard of Care and Limitation of Liability. The Subadviser shall
exercise its best judgment in rendering the services provided by it under this
Subadvisory Agreement. The Subadviser shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund or the holders
of the Fund's shares in connection with the matters to which this Subadvisory
Agreement relate, provided that nothing in this Subadvisory Agreement shall be
deemed to protect or purport to protect the Subadviser against any liability to
the Fund or to holders of the Fund's shares to which the Subadviser would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or by reason of the
Subadviser's reckless disregard of its obligations and duties under this
Subadvisory Agreement. As used in this Section 6, the term "Subadviser" shall
include any officers, directors, partners, employees or other affiliates of the
Subadviser performing services for the Fund.
7. Indemnification.
(a) Subject in all cases to the provisions of Section 6 hereof, the
Subadviser hereby agrees to indemnify and hold harmless the Manager from any
controversies, claims, suits, losses, liabilities, judgments, awards or
settlements, and costs or expenses, including reasonable legal fees, caused by,
or in any way related to: the investment decisions rendered by the Subadviser
concerning the Subadviser's Portfolio; any failure of the Subadviser to fulfill
any of its other obligations under this Subadvisory Agreement; any material
misrepresentation, or omission to disclose material facts, by the Subadviser to
the Manager or any shareholder of the Fund; or any violation of applicable law
by the Subadviser. Subject to Section 6 hereof, the Subadviser also agrees to
indemnify and hold harmless the Manager with respect to any losses incurred as
the result of errors made by the Subadviser in transmitting orders to any broker
for execution.
(b) The Manager hereby agrees to indemnify and hold harmless the
Subadviser from any controversies, claims, suits, losses, liabilities,
judgments, awards or settlements, and costs or expenses, including reasonable
legal fees, caused by, or in any related to, its failure to fulfill any of its
obligations under this Subadvisory Agreement.
(c) If any party seeks indemnification under this Agreement (an
"indemnified party"), it shall notify the other party (the "indemnifying party")
in writing of the assertion of any third party claim or action and shall deliver
all copies of materials received in connection with the matter to the
indemnifying party. The indemnifying party shall have the right to participate
at its own expense in the defense of any such claim or action with counsel of
its own choosing satisfactory to the indemnified party, and the indemnified
party shall cooperate fully with the indemnifying party in the defense or
settlement of any matter that is covered by paragraphs (a) or (b) above, subject
to reimbursement by the indemnifying party for expenses incurred by the
indemnified party in connection with the indemnifying party's participation in
the defense.
8. Services Not Exclusive. It is understood that the services of the
Subadviser are not exclusive, and that nothing in this Subadvisory Agreement
shall prevent the Subadviser from providing similar services to other
individuals, institutions or investment companies (whether or not their
investment objectives and policies are similar to those of the Fund) or from
engaging in other activities, provided such other services and activities do
not, during the term of this Subadvisory Agreement, interfere in a material
manner with the Subadviser's ability to meet its obligations to the Trust and
the Fund hereunder. When the Subadviser recommends the purchase or sale of a
security for other investment companies and other clients, and at the same time
the Subadviser recommends the purchase or sale of the same security for the
Fund, the Subadviser may, but shall not be obligated to, aggregate the orders
for securities to be purchased or sold. It is understood that in light of its
fiduciary duty to the Fund, such transactions will be executed on a basis that
is fair and equitable to the Fund. In connection with purchases or sales of
portfolio securities for the account of the Fund, neither the Subadviser nor any
of its directors, partners, officers or employees shall act as a principal or
agent or receive any commission.
9. Documentation. The Fund shall provide the Subadviser with the
following documents, as requested by the Subadviser:
(a) the Trust's registration statement relating to the Fund, and any
amendments thereto;
(b) the Declaration of Trust and By-laws (and any amendments thereto)
of the Trust;
(c) resolutions of the Board of Trustees of the Trust authorizing the
appointment of Brinson Partners, Inc. to serve as Subadviser and
approving this Subadvisory Agreement;
(d) the Trust's Notification of Registration on Form N-8A;
(e) the Fund's current Prospectus and Statement of Additional
Information, and any supplements thereto; and
(f) such information as the Subadviser reasonably may request in order
for the Subadviser to comply with Section 2 hereof.
10. Duration and Termination. This Subadvisory Agreement shall continue
for an initial term of two years from the date set forth above, unless sooner
terminated as provided herein. Notwithstanding the foregoing, this Subadvisory
Agreement may be terminated: (a) at any time without penalty upon thirty (30)
days' written notice to the Subadviser by (i) the Fund upon the vote of a
majority of the Trustees or upon the vote of a majority of the Fund's
outstanding voting securities, or (ii) the Manager, or (b) by the Subadviser
upon thirty (30) days' written notice to the Fund, provided that the Subadviser
shall continue to be responsible for managing the assets of the Fund for sixty
(60) business days after the end of the notice period unless the Fund shall
agree in writing to shorten the period. Anything to the contrary herein
notwithstanding, any termination carried out pursuant to this Section 10(b)
shall be without penalty and, further, the compensation schedule set forth in
Section 4 hereof shall apply to the service of the Subadviser beyond the end of
the notice period provided in this Section 10(b). This Subadvisory Agreement
will also terminate automatically in the event of its assignment (as defined in
the 1940 Act) or the assignment or termination of the Management Agreement.
11. Amendments. No provision of this Subadvisory 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, and no amendment of this Subadvisory
Agreement shall be effective until approved by an affirmative vote of (i) a
majority of the outstanding voting securities of the Fund, and (ii) a majority
of the Trustees of the Fund, including a majority of Trustees who are not
interested persons of any party to this Subadvisory Agreement, cast in person at
a meeting called for the purpose of voting on such approval, if such approval is
required by applicable law.
12. Notices. Any notice or other communication required or permitted to
be given hereunder shall be given in writing and mailed, faxed or delivered to
the other party at its address as follows:
If to the Manager:
Republic National Bank of New York
452 Fifth Avenue
New York, New York 10018
Attention: Ms. Mary E. Martinez
If to the Subadviser:
Brinson Partners, Inc.
209 South LaSalle Street
Chicago, Illinois 60604-1295
Attention: Charles J. Freund
Any party may specify a different or additional address for notice by
sending a written notice to the other at the address above, or at that or those
last given hereunder.
13. Miscellaneous.
(a) This Subadvisory Agreement shall be governed by the laws of the
State of New York, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Advisers Act, or rules or orders of the SEC
thereunder. Exclusive original jurisdiction to any claim, action or dispute
between the parties arising out of this Agreement shall be solely in state or
federal district courts sitting in the State of New York.
(b) The captions of this Subadvisory Agreement are included for
convenience only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
(c) If any provision of this Subadvisory Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Subadvisory Agreement shall not be affected hereby and, to this extent, the
provisions of this Subadvisory Agreement shall be deemed to be severable. Where
the effect of a requirement of the federal securities laws reflected in any
provision of this Subadvisory Agreement is made less restrictive by a rule,
regulation or order of the SEC, whether of special or general application, such
provision shall be deemed to incorporate the effect of such rule, regulation or
order. This Agreement may be signed in counterpart.
(d) Nothing herein shall be construed as constituting the Subadviser,
or any of its directors, officers or employees, an agent of the Manager or the
Fund, nor the Manager, or any of its directors, officers or employees, an agent
of the Subadviser.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of _______________, 199_.
BRINSON PARTNERS, INC.
By ----------------------------
Name:
Title:
REPUBLIC NATIONAL BANK OF
NEW YORK
By ----------------------------
Name:
Title:
<PAGE>
EXHIBIT C
DESCRIPTION AND RISKS OF
OPTIONS AND FUTURES
OPTIONS
The Fund may write (sell) covered call and put options and purchase
call and put options on domestic or foreign securities indices, securities, and
foreign currencies. The Fund may write such options for the purpose of
increasing its current income and/or to protect its portfolio against declines
in value. When the Fund writes an option and the value of the underlying index,
security, or currency moves adversely to the holder's position, the option will
not be exercised, and the Fund will either close out the option at a profit or
allow it to expire unexercised. The Fund will thereby retain the amount of the
premium, less related transaction costs, which will increase its gross income
and offset part of the reduced value of portfolio securities or the increased
cost of securities to be acquired. Such transactions, however, will constitute
only partial hedges against adverse price fluctuations, since any such
fluctuations will be offset only to the extent of the premium received by the
Fund for the writing of the option, less related transaction costs. In addition,
if the value of an underlying index, security, or currency moves adversely to
the Fund's option position, the option may be exercised, and the Fund will
experience a loss which may only be partially offset by the amount of the
premium received. The Fund may also write combinations of put and call options
on the same security or index, known as "straddles." Such transactions can
generate additional premium income but also present increased risk.
The Fund may also purchase put or call options in order, respectively,
to hedge its investments against a decline in value or to attempt to reduce the
risk of missing a market or industry segment advance. The Fund's possible loss
in either case will be limited to the premium paid for the option, plus related
transaction costs.
FUTURES CONTRACTS
The Fund may enter into futures contracts for the purchase or sale for
future delivery of securities or foreign currencies or contracts based on
indices of securities as such instruments become available for trading. Such
transactions will be entered into for hedging purposes, in order to protect the
Fund's current or intended investments from the effects of changes in interest
or exchange rates, or for non-hedging purposes, to the extent permitted by
applicable law. For example, in the event that an anticipated decrease in the
value of portfolio securities occurs as a result of a general increase in
interest rates or a decline in the dollar value of foreign currencies in which
portfolio securities are denominated, the adverse effects of such changes may be
offset, in whole or part, by gains on futures contracts sold by the Fund.
Conversely, the adverse effects of an increase in the cost of portfolio
securities to be acquired, occurring as a result of a decline in interest rates
or a rise in the dollar value of securities denominated in foreign currencies,
may be offset, in whole or in part, by gains on futures contracts purchased by
the Fund. The Fund will incur brokerage fees when it purchases and sells futures
contracts, and will be required to maintain margin deposits. In addition,
futures contracts entail risks. Although the Fund believes that use of such
contracts will benefit the Fund, if a Sub-Adviser's investment judgment about
the general direction of interest or exchange rates is incorrect, the Fund's
overall performance may be poorer than if it had not entered into any such
contract and the Fund may realize a loss. Transactions entered into for
non-hedging purposes involve greater risk, including the risk of losses which
are not offset by gains on other portfolio assets. The Fund will not enter into
any futures contract if immediately thereafter the value of securities and other
obligations underlying all such futures contracts would exceed 50% of the value
of its total assets.
OPTIONS ON FUTURES CONTRACTS
The Fund may purchase and write options on futures contracts for the
purpose of protecting against declines in the value of portfolio securities or
against increases in the costs of securities to be acquired, or for non-hedging
purposes, to the extent permitted by applicable law. Purchase of options on
futures contracts may present less risk in hedging the portfolio of the Fund
than the purchase or sale of the underlying futures contracts, since the
potential loss is limited to the amount of the premium paid for the option, plus
related transaction costs. The writing of such options, however, does not
present less risk than the trading of futures contracts, and will constitute
only a partial hedge, up to the amount of the premium received, less related
transaction costs. In addition, if an option is exercised, the Fund may suffer a
loss on the transaction. Transactions entered into for non-hedging purposes
involve greater risk, including the risk of losses which are not offset by gains
on other Fund assets.
<PAGE>
EXHIBIT D
The principal executive officer(s) and general partners of Alliance are
shown below. The business address of each such person is 1345 Avenue of the
Americas, New York, New York 10105.
Alliance has no executive officers. Alliance Capital Management
Corporation ("ACMC") is the sole general partner of Alliance and conducts no
other active business. Units representing assignment of beneficial ownership of
limited partnership interests of Alliance are publicly traded on the New York
Stock Exchange. As of September 30, 1996, The Equitable Life Assurance Society
of the United States ("Equitable"), ACMC, Inc. and Equitable Capital Management
Corporation ("ECMC") were the beneficial owners of approximately 57.4% of the
outstanding units of Alliance. ACMC, ECMC, and ACMC, Inc. are wholly owned
subsidiaries of Equitable. Equitable, a New York life insurance company, had
total assets as of June 30, 1996 of over $70.9 billion. Equitable is a wholly
owned subsidiary of The Equitable Companies Incorporated ("ECI"), a Delaware
corporation, whose shares are publicly traded on the New York Stock Exchange. As
of March 1, 1996, AXA, a French insurance holding company, owned 63.9% of the
issued and outstanding shares of the common stock of ECI.
Alliance receives investment advisory fees at an annual rate of 0.75%
from the Alliance Growth Fund, which has investment objectives substantially
similar to that of the Fund.
<PAGE>
EXHIBIT E
The principal executive officers and directors of Brinson are shown
below. The business address of each such person is 209 South LaSalle Street,
Chicago, Illinois 60604-1295.
NAME POSITION WITH BRINSON
- ---- ---------------------
Samuel W. Anderson Director, Vice President and Managing Partner
Gary P. Brinson Director, President and Managing Partner
Richard C. Carr Director and Managing Partner
Mario Cueni Director
Jeffrey J. Diermeier Director and Managing Partner
Henry Doorn, Jr. Treasurer, Chief Financial Officer and
Managing Partner
J. Gary Fencik Managing Partner
M. Dale Fritz Managing Partner
Dennis L. Hesse Director and Managing Partner
A. Bart Holaday Director and Managing Partner
Denis S. Karnosky Director and Managing Partner
Benjamin F. Lenhardt, Jr. Managing Partner
E. Thomas McFarlan Director and Managing Partner
Nicholas C. Rassas Director and Managing Partner
Brinson is an indirect wholly owned subsidiary of Swiss Bank
Corporation ("Swiss Bank"). Swiss Bank, with headquarters in Basel, Switzerland,
is an internationally diversified organization with operations in many aspects
of the financial services industry.
<PAGE>
REPUBLIC FUNDS
REPUBLIC EQUITY FUND
3435 STELZER ROAD
COLUMBUS, OHIO 43219-3035
PROXY CARD
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES of Republic Funds (the
"Trust") for use at the Special Meeting of Shareholders (the "Meeting") of the
Republic Equity Fund (the "Fund") of the Trust to be held on May 5, 1997 at
10:00 a.m., Eastern time, at the address above.
The undersigned, revoking previous proxies, hereby appoints George O.
Martinez and Frank Deutchki, and either of them, with full power of
substitution, as proxies of the undersigned to vote at the above-stated Meeting,
and at all adjournments thereof, all interests in the Fund that are held of
record by the undersigned on the record date of the Meeting, upon the following
matters and upon any other matter which may come before the Meeting, in their
discretion:
I.A. A Subadvisory Agreement between Republic National Bank of New
York ("Republic") and Alliance Capital Management L.P.
("Alliance"), on behalf of the Fund, under which Alliance would
serve as one of the Sub-Advisers to replace the former
Sub-Adviser of the Fund.
[ ] For [ ] Against [ ] Abstain
I.B. A Subadvisory Agreement between Republic and Brinson Partners,
Inc. ("Brinson"), on behalf of the Fund, under which Brinson
would serve as one of the Sub-Advisers to replace the former
Sub-Adviser of the Fund.
[ ] For [ ] Against [ ] Abstain
II. To transact such other business as may properly come before the
Meeting or any adjournment thereof.
Every properly signed proxy will be voted in the manner specified therein and,
IN THE ABSENCE OF SPECIFICATION, WILL BE TREATED AS GRANTING AUTHORITY TO VOTE
FOR PROPOSALS I.A. AND I.B. ABOVE.
PLEASE SIGN, DATE AND RETURN PROMPTLY
Receipt of Notice of Special Meeting
of Shareholders and Proxy Statement is
hereby acknowledged.
-------------------------------------
Sign here exactly as name(s) appears
on account.
-------------------------------------
Dated: ---------------------, 1997
IMPORTANT: Joint owners must EACH sign. When signing as attorney, trustee,
executor, administrator, guardian or corporate officer, please give your FULL
title.
