SECURITIES ACT FILE NO. 33-12213
INVESTMENT COMPANY ACT FILE NO. 811-5037
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post Effective Amendment No. 48 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 49 [X]
(Check appropriate box or boxes)
PROFESSIONALLY MANAGED PORTFOLIOS
(Exact Name of Registrant as Specified in Charter)
479 West 22nd Street
New York, NY 10011
Registrant's Telephone Number, including Area Code:
(212) 633-9700
Steven J. Paggioli
Professionally Managed Portfolios
479 West 22nd Street
New York, NY 10011
(Name and Address of Agent for Service)
Copy to:
Julie Allecta, Esq.
Paul, Hastings, Janofsky & Walker
345 California Street
San Francisco, CA 94104
------------------------
It is proposed that this filing will become effective (check appropriate box)
[X] Immediately upon filing pursuant to paragraph (b)
[ ] On pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] On pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] On pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
CROSS REFERENCE SHEET
(as required by Rule 495)
N-1A Item No. Location
Part A
Item 1. Cover Page........................... Cover Page
Item 2. Synopsis............................. Expense
Table
Item 3. Financial Highlights................. Financial
Highlights
Item 4. General Description of Registrant.... Objective and
Investment
Approach of the
Funds
Item 5. Management of the Funds.............. Management
of the Funds
Item 5A Management's Discussion of Fund See Annual
Performance Reports to
Shareholders
Item 6. Capital Stock and Other Securities. . . Distributions
and Taxes;
How the
Funds' Per
Share Value
is Determined
Item 7. Purchase of Securities Being Offered . . How to Invest
in the Funds;
How the
Funds' Per
Share Value
is Determined
Item 8. Redemption or Repurchase. . . . . . . . How to Redeem
an Investment
in the Funds
Item 9. Pending Legal Proceedings . . . . . . . N/A
Part B
Item 10. Cover Page ............................. Cover Page
Item 11. Table of Contents....................... Table of
Contents
Item 12. General Information and History . . . . The Trust;
General
Information
Item 13 Investment Objectives and Policies .... Investment
Objective and
Policies;
Investment
Restrictions
Item 14. Management of the Fund................... Trustees and
Executive Officers
Item 15. Control Persons and Principal Holders
of Securities............................ General Information
Item 16. Investment Advisory and Other Services.... The Funds' Investment
Advisor; the Funds'
Administrator; General
Information
Item 17. Brokerage Allocation...................... Execution of
Portfolio
Transactions
Item 18. Capital Stock and Other Securities........ General
Information
Item 19. Purchase, Redemption and Pricing of
Shares Being Offered.............. Additional
Purchase and
Redemption
Information
Item 20. Tax Status.............................. Distributions
and Tax Infor-
mation
Item 21. Underwriters............................ The Funds'
Distributor
Item 22. Performance Information.................. Performance
Information
Item 23. Financial Statements.................... N/A
Part C
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement
<PAGE>
625 Market Street, 16th Floor
San Francisco, California 94105
(415) 547-9135
(800) 282-2340
The PRO-CONSCIENCE WOMEN'S EQUITY MUTUAL FUND (the "Fund") is a mutual fund with
the investment objective of providing long-term capital appreciation by
investing primarily in equity securities (common and preferred stocks). The Fund
invests in securities of publicly traded companies that satisfy certain social
responsibility criteria and that are proactive toward women's social and
economic equality. Pro-Conscience Funds Incorporated (the "Advisor"), serves as
investment advisor to the Fund. United States Trust Company of Boston (the
"Sub-Advisor") acts as Sub-Advisor to the Fund.
This Prospectus sets forth basic information about the Fund that prospective
investors should know before investing. It should be read and retained for
future reference. A Statement of Additional Information dated June 15, 1998, as
may be amended from time to time, has been filed with the Securities and
Exchange Commission and is incorporated herein by reference. This Statement of
Additional Information is available without charge upon request by calling (800)
282-2340 or (415) 547-9135. The SEC maintains an internet site
(http://www.sec.gov) that contains the SAI, other material incorporated by
reference and information about other companies that file electronically with
the SEC.
TABLE OF CONTENTS
Expense Table 2
Financial Highlights 3
Objective, Investment Approach and Risk 4
Management of the Fund 6
Distribution Plan 7
How To Invest in the Fund 7
How To Redeem an Investment in the Fund 8
Services Available to the Fund's Shareholders 9
How the Fund's Per Share Value Is Determined 10
Distributions and Taxes 10
General Information 11
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.
Prospectus dated June 15, 1998
EXPENSE TABLE
Expenses are one of several factors to consider when investing in the Fund.
The purpose of the following fee table is to provide an understanding of the
various costs and expenses which may be borne directly or indirectly by an
investment in the Fund. Actual expenses may be more or less than those shown.
For a more complete discussion of the expenses of the Fund, see "Management of
the Fund."
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases None
Maximum Sales Load Imposed
on Reinvested Dividends None
Deferred Sales Load None
Redemption Fees None
Exchange Fee None
Annual Fund Operating Expenses
(As a percentage of average net assets)
Management Fees 1.00%
12b-1 Fees 0.25%
Other Expenses (after waiver)* 0.25%
Total Fund Operating Expenses
(after waiver)* 1.50%
*Total annual operating expenses are capped at 1.50% by agreement with the
Advisor. In the absence of this limitation, the Fund's ratio of expenses to
average net assets would have been 3.12% for the fiscal year ended March 31,
1998.
Example
This table illustrates the net transaction and operating expenses that would be
incurred by an investment in the Fund over different time periods assuming a
$1,000 investment, a 5% annual return, and redemption at the end of:
One year $ 15
Three years $ 47
Five years $ 82
Ten years $179
The Example shown above should not be considered a representation of past or
future expenses and actual expenses may be greater or less than those shown. In
addition, Federal regulations require the Example to assume a 5% annual return,
but the Fund's actual return may be higher or lower. See "Management of the
Fund."
The PRO-CONSCIENCE WOMEN'S EQUITY MUTUAL FUND (the "Fund") is a diversified
series of Professionally Managed Portfolios (the "Trust"), an open-end
management investment company offering redeemable shares of beneficial interest.
Shares are purchased and redeemed at their net asset value per share, without a
sales charge. The minimum initial investment is $1,000, with subsequent minimum
investments of $100 or more, except that the minimum initial investment for
Individual Retirement Accounts is $500. Under the Fund's Distribution (Rule
12b-1) Plan, long-term shareholders may pay more than the economic equivalent of
the maximum front-end sales charges permitted by the rules of the National
Association of Securities Dealers.
FINANCIAL HIGHLIGHTS
For a share outstanding throughout the period
The following information has been audited by Tait, Weller & Baker, independent
accountants, whose unqualified report covering the fiscal period ended March 31,
1998 is incorporated by reference herein and appears in the annual report to
shareholders. This information should be read in conjunction with the financial
statements and accompanying notes thereto which appear in the annual report to
shareholders and are incorporated by reference into the Statement of Additional
Information. Further information about the Fund's performance may be included in
its annual report, which may be obtained without charge by writing or calling
the address or telephone number on the Prospectus cover page.
<TABLE>
<CAPTION>
October 1, 1993*
Year Ended March 31, through
1998 1997 1996 1995 March 31, 1994
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.10 $11.22 $ 9.93 $10.46 $10.00
Income from investment operations:
Net investment income (loss) (0.04) (0.01) 0.01 0.36 (0.01)
Net realized and unrealized
gain (loss) on investments 6.16 0.90 1.59 (0.28) 0.47
Total from investment operations 6.12 0.89 1.60 0.08 0.46
Less distributions:
From net investment income 0.00 (0.01) (0.31) (0.02) 0.00
From net capital gains (0.15) 0.00 0.00 (0.59) 0.00
Total distributions (0.15) (0.01) (0.31) (0.61) 0.00
Net asset value, end of period $18.07 $12.10 $11.22 $ 9.93 $10.46
Total return 50.77% 7.92% 16.17% 0.97% 4.60%
Ratios/supplemental data:
Net assets, end of period (millions) $ 7.0 $ 4.4 $ 3.3 $ 1.5 $ 0.6
Ratio of expenses to average net assets:
Before expense reimbursement and waiver 3.12% 4.09% 4.75% 8.69% 21.93%+
After expense reimbursement and waiver 1.50% 1.50% 1.50% 1.50% 1.50%+
Ratio of net investment income (loss)
to average net assets:
Before expense reimbursement and waiver (1.88%) (2.64%) (1.97%) (1.97%) (20.74%)+
After expense reimbursement and waiver (0.26%) (0.05%) 1.28% 5.22% (0.31%)+
Portfolio turnover rate 27.21% 51.13% 120.64% 705.88% 139.26%
Average commission rate paid per share0 $.0567 $.0548 - - -
</TABLE>
*Commencement of operations.
+Annualized.
0For fiscal years beginning on or after September 1, 1995, a fund is required to
disclose its average commission rate paid per share for security trades on which
commissions are charged. This amount may vary from period to period and fund to
fund depending on the mix of trades executed in various markets where trading
practices and commission rate structures may differ.
OBJECTIVE, INVESTMENT APPROACH AND RISK
The investment objective of the Fund is to provide long-term capital
appreciation by investing primarily in equity securities (common and preferred
stocks) in a manner consistent with preservation of the Fund's assets. There is,
of course, no assurance that the Fund's objective will be achieved. The Fund
will invest in securities of publicly traded companies that satisfy certain
social responsibility criteria and that are proactive toward women's social and
economic equality. Under normal circumstances, at least 65% of the Fund's total
assets will be invested in equity securities of companies believed to have these
characteristics.
An investment in the Fund, as is the case with regard to all mutual funds,
involves certain risk factors. Because prices of equity and other securities
fluctuate, the value of an investment in the Fund will vary, as the market value
of its investment portfolio changes.
The Fund is diversified, which under applicable federal law means that as to 75%
of its total assets, no more than 5% may be invested in the securities of a
single issuer and it may hold no more than 10% of the voting securities of any
such issuer.
Investment Approach
The Fund seeks long term capital appreciation. The amount of income generated by
a stock will not be an important consideration in seeking to purchase or retain
it. The portfolio will normally be fully invested in stocks, except for
liquidity needs.
The expected returns and risks of different sectors of the equity market change
over time. The ability to evaluate and determine the relative attractiveness of
these sectors is advantageous in controlling risk and achieving attractive
returns. In determining the sector allocation of the Fund, the Fund's Advisor
and Sub-Advisor consider different likely outcomes for inflation, profits,
employment, the dollar and other macroeconomic variables together with the
prices of stocks in various sectors to determine which sectors combined are
expected to maximize returns while controlling portfolio risk. This may involve
substantial changes in industry weightings as economic conditions and asset
prices change. Within each industry sector, the Fund seeks stocks with the best
value to price relationships by assessing each company's financial strength,
examining each firm's business strategy and employing quantitative measures such
as dividend discount models.
The Fund may purchase both common and preferred stocks. Within different
industries, individual stock selection is based upon analysis of the company's
fundamental characteristics including financial strength, response to industry
and economy-wide changes, and price and cost trends. The Fund seeks to purchase
companies with sound competitive positions and strategies. Although companies
with varying fundamental characteristics may be purchased to achieve
diversification, emphasis is given to companies with above-average earnings
growth, sustained profitability, and above-average return on invested capital.
Company management is also evaluated based on multiple measures of social
responsibility. The Fund's Sub-Advisor, which is recognized as one of the
premier firms in the business of managing investment portfolios subject to
socially responsive investment criteria, with the oversight and assistance of
the Advisor, will provide the social screening for the portfolio as well as the
investment management. The investment universe is screened for policies toward
women's social and economic equality. The Advisor and Sub-Advisor look for
companies that exhibit some or all of the following socially responsible
characteristics:
promotes women to top executive positions and compensates them accordingly
has a high percentage of women directors on the board
has strong support from senior executives for workplace equality
provides career development and training programs for women employees
including mentoring and company-sponsored women networking groups
monitors hiring and promotion activity closely
offers programs addressing work/family concerns
uses women-owned companies as vendors and service providers
presents positive images of women in their advertising, promotion, and
marketing
is accountable to employees, investors, and the communities in which it
operates
The following characteristics are viewed negatively when selecting potential
investments:
has a pattern of Equal Employment Opportunity Act violations
promotes sexist stereotypes in the workplace or in their advertising
markets products that adversely affect women
unwillingness to engage in dialogue concerning women's issues
Companies that exhibit some or all of the following characteristics are also
considered:
sensitive to minority issues
exhibit fair employee relations
provide high quality products or services
sensitive to environmental concerns
Fixed Income Securities
Bond investments made by the Fund normally are those which are considered
investment grade, including bonds which are direct or indirect obligations of
the U.S. government, or which at the date of investment are rated Baa or better
by Moody's Investor Services ("Moody's") or BBB or better by Standard & Poor's
("S&P") or of comparable quality as determined by the Fund. Bonds rated Baa or
BBB are considered medium grade obligations with speculative characteristics and
are more susceptible to changing market conditions.
Money market instruments selected for investment include high grade, short-term
obligations, including those of the U.S. government, its agencies and
instrumentalities. U.S. dollar-denominated certificates of deposit, time
deposits and bankers' acceptances of U.S. banks, generally banks with assets in
excess of $500 million, repurchase agreements with recognized dealers and banks
and commercial paper (including participation interests in loans extended by
banks to issuers of commercial paper) that at the date of investment is rated
A-1 by S&P or P-1 by Moody's, or, if unrated, of comparable quality as
determined by the Advisor.
Repurchase Agreements
The Fund may enter into repurchase agreements in order to earn additional income
on available cash, or as a defensive investment in periods when the Fund is
invested primarily in short-term maturities. A repurchase agreement is a
short-term investment in which the purchaser (that is, the Fund) acquires
ownership of a U.S. Government security (which may be of any maturity) and the
seller agrees to repurchase the obligation at a future time at a set price,
thereby determining the yield during the purchaser's holding period (usually not
more than seven days from the date of purchase). Any repurchase transaction in
which the Fund engages will require full collateralization of the seller's
obligation during the entire term of the repurchase agreement. The Fund intends
to enter into repurchase agreements only with banks with assets of $500 million
or more that are insured by the Federal Deposit Insurance Corporation and the
most creditworthy registered securities dealers pursuant to procedures adopted
and regularly reviewed by the Trust's Board of Trustees. The Advisor monitors
the creditworthiness of the banks and securities dealers with whom the Fund
engages in repurchase transactions.
Foreign Securities
The Fund may invest up to 20% of its assets in securities of foreign issuers or
in American Depository Receipts of such issuers. Such investments may involve
risks that are in addition to the usual risks inherent in domestic investments.
There may be less publicly available information about these issuers than is
available about companies in the U.S., and foreign auditing requirements may not
be comparable to those in the U.S. In addition, the value of the foreign
securities may be adversely affected by movements in the exchange rates between
foreign currencies and the U.S. dollar, as well as other political and economic
developments, including the possibility of expropriation, confiscatory taxation,
exchange controls or other foreign governmental restrictions. Dividends and
interest on foreign securities may be subject to foreign withholding taxes. The
Fund may also invest without limit in securities of foreign issuers which are
listed and traded on a domestic national securities exchange.
Portfolio Turnover
The normal annual rate of portfolio turnover will usually be under 60%. However,
in periods of unusual market activity, the annual rate of portfolio turnover may
exceed 100%. In general, the Advisor does not consider the rate of portfolio
turnover to be a limiting factor in determining when or whether to purchase or
sell securities in order to achieve the Fund's objective. Higher rates of
portfolio turnover involve greater brokerage commission expenses and can result
in increased taxable capital gain distributions.
Investment Restrictions
The Fund has adopted certain investment restrictions, which are described fully
in the Statement of Additional Information. Certain of these restrictions are
fundamental and may be changed only by a majority vote of the Fund's outstanding
shares.
MANAGEMENT OF THE FUND
The Board of Trustees of the Trust establishes the Fund's policies and
supervises and reviews the management of the Fund. The Fund's Advisor is
Pro-Conscience Funds Incorporated, a California corporation organized in 1993,
which is located at 625 Market Street, 16th Floor, San Francisco, California
94105. The Advisor develops the Fund's investment policy, including guidelines
and social criteria for screening companies for their policies on behalf of
women, oversees the management of the Fund's investments, furnishes the Fund
with office space and certain administrative services and provides most of the
personnel needed by the Fund. As compensation, the Fund pays the Advisor a
monthly management fee (accrued daily) based on the average daily net assets of
the Fund at the rate of 1.00% annually.
United States Trust Company of Boston is the Sub-Advisor to the Fund. The
Sub-Advisor together with the Advisor is responsible for formulating and
implementing the Fund's investment program. The Sub-Advisor is a
Massachusetts-chartered banking and trust company and is a wholly-owned
subsidiary of UST Corporation, a Massachusetts bank holding company. It is
located at 40 Court Street, Boston, MA 02108. The Sub-Advisor has approximately
$3.4 billion of assets under management. The Trust Department of the Sub-Advisor
has managed funds as a fiduciary since 1895. Effective November 3, 1997, Maria
McCormack, Assistant Vice President of the Sub-Advisor, is the Fund's Portfolio
Manager. Ms. McCormack is a Chartered Financial Analyst and has been associated
with the Sub-Advisor since 1985. Prior to becoming a portfolio manager in 1990,
Ms. McCormack was head trader for both equity and fixed-income securities at the
Sub-Advisor. She is a member of the Sub-Advisor's Securities Research Committee.
Neither the Sub-Advisor nor UST Corporation is affiliated with United States
Trust Company of New York. For its services, the Sub-Advisor is entitled to
receive a Sub-Advisory fee from the Advisor at the rate of 0.25% of the Fund's
average net assets annually.
Investment Company Administration Corporation (the "Administrator") acts as the
Fund's Administrator under an Administration Agreement. Under that agreement,
the Administrator prepares various federal and state regulatory filings, reports
and returns for the Fund, prepares reports and materials to be supplied to the
trustees, monitors the activities of the Fund's custodian, transfer agent and
accountants, and coordinates the preparation and payment of Fund expenses and
reviews the Fund's expense accruals. For its services, the Administrator
receives a monthly fee at the following annual rate:
Average Net Assets Fee or Fee Rate
Under $15 million $30,000
$15 to $50 million 0.20%
$50 to $100 million 0.15%
$100 to $150 million 0.10%
Over $150 million 0.05%
The Fund is responsible for its own operating expenses. The Advisor has
undertaken to reduce its fees or reimburse the Fund for its annual operating
expenses that exceed 1.50% of the Fund's average daily net assets. The Advisor
also may reimburse additional amounts to the Fund at any time in order to reduce
the Fund's expenses. To the extent the Advisor performs a service for which the
Fund is obligated to pay, the Fund shall reimburse the Advisor for its costs
incurred in rendering such service.
The Advisor consider a number of factors in determining which brokers or dealers
to use for the Fund's portfolio transactions. While these are more fully
discussed in the Statement of Additional Information, the factors include, but
are not limited to, the reasonableness of commissions, quality of services and
execution and the availability of research that the Advisor may lawfully and
appropriately use in its investment management and advisory capacities. The
Advisor may also consider the sale of Fund shares as a factor in selecting
broker-dealers for the Fund's portfolio transactions provided that the Fund
receives prompt execution at competitive prices.
DISTRIBUTION PLAN
The Fund has adopted a distribution plan pursuant to Rule 12b-1. The Plan
provides that the Fund may pay distribution and related expenses of up to an
annual rate of 0.25% of the Fund's average net assets to the Advisor as
distribution coordinator. Expenses permitted to be paid by the Fund under its
Plan include: preparation, printing and mailing of prospectuses; shareholder
reports such as semiannual and annual reports, performance reports and
newsletters; sales literature and other promotional material to prospective
investors; direct mail solicitation; advertising; public relations; compensation
of sales personnel, advisors or other third parties for their assistance with
respect to the distribution of the Fund's shares; payments to financial
intermediaries for shareholder support; administrative and accounting services
with respect to the shareholders of the Fund; and such other expenses as may be
approved from time to time by the Board of Trustees.
The Rule 12b-1 Distribution Plan allows excess distribution expenses to be
carried forward by the Advisor, as distribution coordinator, and resubmitted in
a subsequent fiscal year provided that (i) distribution expenses cannot be
carried forward for more than three years following initial submission; (ii) the
Board of Trustees has made a determination at the time of initial submission
that the distribution expenses are appropriate to be carried forward; and (iii)
the Board of Trustees makes a further determination, at the time any
distribution expenses which have been carried forward are resubmitted for
payment, to the effect that payment at the time is appropriate, consistent with
the objectives of the Plan and in the current best interests of shareholders.
HOW TO INVEST IN THE FUND
The minimum initial investment is $1,000, except that the minimum for Individual
Retirement Accounts is $500. Subsequent investments must be at least $100. See
"Services Available to the Fund's Shareholders." First Fund Distributors, Inc.
(the "Distributor"), acts as Distributor of the Fund's shares. The Distributor
may, at its discretion, waive the minimum investment requirements. The Advisor,
in its discretion, may pay finder's fees or commissions at its own expense.
Investors who effect purchases or redemptions through a broker or agent may be
charged a fee by that broker or agent.
Investors may purchase shares of the Fund by check or wire.
By Check:
Initial Investment. Complete the Fund's Account Application (included with this
Prospectus). Make your check payable to "Pro-Conscience Women's Equity Mutual
Fund." Mail or deliver the completed Account Application and your check to:
Pro-Conscience Women's Equity Mutual Fund, P.O. Box 640856, Cincinnati, OH
45264-0856. For purchases by overnight mail, please contact the Transfer Agent
at (800) 282-2340 for instructions.
Subsequent Investments.
Detach and complete the stub attached to your account statement. Make your check
payable to "Pro-Conscience Women's Equity Mutual Fund." Write your shareholder
account number on the check. Mail or deliver the check and reinvestment form in
the envelope provided or send it to the Fund at the address indicated above.
By Wire:
Initial Investment. Before wiring funds, call the Fund at (800) 282-2340 to
advise that you intend to make an initial investment by wire and to receive an
account number. Provide your name, and the dollar amount to be invested.
Complete the Fund's Account Application (included with this Prospectus). Be sure
to include the date and the order confirmation number. Mail or deliver the
completed Application to the appropriate address shown at the top of the Account
Application.
Request your bank to transmit immediately available funds by wire for purchase
of shares in your name to the Fund's Custodian, as follows:
Star Bank, N.A. Cinti/Trust
ABA Routing Number: 0420-0001-3
for further credit to Pro-Conscience Women's
Equity Mutual Fund
DDA #483898037
Account Number [Name of Shareholder]
Subsequent Investments. Instruct your bank to wire funds as indicated above. It
is essential that complete information regarding your account be included in all
wire instructions in order to facilitate prompt and accurate handling of
investments. Investors may obtain further information about remitting funds in
this manner from the Transfer Agent, and any fees that may be imposed by their
own banks.
General
Payments of redemption proceeds will not be made with respect to any shares
purchased with an initial investment made by wire until one business day after
the completed Account Application is received by the Fund. All investments must
be made in U.S. dollars and, to avoid fees and delays, checks should be drawn
only on U.S. banks and should not be made by third party check. A charge may be
imposed if any check used for investment does not clear. The Fund and the
Distributor reserve the right to reject any purchase order in whole or in part.
If an order, together with payment in proper form, is received by the Transfer
Agent by the close of trading on the New York Stock Exchange (currently 4:00
p.m., Eastern time), Fund shares will be purchased at the offering price
determined as of the close of trading on that day. Otherwise, Fund shares will
be purchased at the offering price determined as of the close of trading on the
New York Stock Exchange on the next business day. Federal tax regulations
require that investors provide a certified Taxpayer Identification Number and
certain other required certifications upon opening or reopening an account in
order to avoid backup withholding of taxes at the rate of 31% on taxable
distributions and proceeds of redemptions. See the Fund's Account Application
for further information concerning this requirement.
The Fund does not issue share certificates. All shares are held in
non-certificated form registered on the books of the Fund and the Fund's
Transfer Agent for the account of the shareholder.
HOW TO REDEEM AN INVESTMENT IN THE FUND
Shareholders have the right to have the Fund redeem all or any portion of their
outstanding shares at their current net asset value on each day the New York
Stock Exchange is open for trading. The redemption price is the net asset value
per share next determined after the shares are validly tendered for redemption.
Direct Redemption
A written request for redemption must be received by the Fund's Transfer Agent
in order to constitute a valid tender for redemption. Redemption requests should
be sent to Women's Equity Mutual Fund, American Data Services, Inc., P. O. Box
5536, Hauppauge, NY 11788-0132. To protect the Fund and its shareholders, a
signature guarantee is required for certain transactions, including redemptions.
Signature(s) on the redemption request must be guaranteed by an "eligible
guarantor institution" as defined in the federal securities laws; these
institutions include banks, broker-dealers, credit unions and savings
institutions. A broker-dealer guaranteeing signatures must be a member of a
clearing corporation or maintain net capital of at least $100,000. Credit unions
must be authorized to issue signature guarantees. Signature guarantees will be
accepted from any eligible guarantor institution which participates in a
signature guarantee program. A notary public is not an acceptable guarantor.
Telephone Redemption
Shareholders who complete the Telephone Privileges Authorization portion of the
Fund's Account Application may redeem shares on any business day the New York
Stock Exchange is open by calling the Fund's Transfer Agent at (800) 282-2340
before 4:00 p.m. Eastern time. Redemption proceeds will be mailed or wired at
the shareholder's direction the next business day to the predesignated account.
The minimum amount that may be wired is $1,000 (wire charges, if any, will be
deducted from redemption proceeds).
By establishing telephone redemption privileges, a shareholder authorizes the
Fund and its Transfer Agent to act upon the instruction of any person by
telephone to redeem from the account for which such service has been authorized
and transfer the proceeds to the bank account designated in the Authorization.
The Fund and Transfer Agent will use procedures to confirm that redemption
instructions received by telephone are genuine, including recording of telephone
instructions and requiring a form of personal identification before acting on
such instructions. Neither the Fund nor the Transfer Agent will be liable for
any loss, expense, or cost arising out of any telephone redemption or exchange
request, including any fraudulent or unauthorized requests that are reasonably
believed to be genuine, provided that such procedures are followed. The Fund may
change, modify, or terminate these privileges at any time upon at least 60 days'
notice to shareholders.
Shareholders may request telephone redemption after an account is opened;
however, the authorization form will require a separate signature guarantee.
Shareholders may experience delays in exercising telephone redemption privileges
during periods of abnormal market activity.
General
Payment of the redemption proceeds will be made promptly, but not later than
seven days after the receipt of all documents in proper form, including a
written redemption order with appropriate signature guarantee in cases where
telephone redemption privileges are not being utilized. The Fund may suspend the
right of redemption under certain extraordinary circumstances in accordance with
the rules of the Securities and Exchange Commission. In the case of shares
purchased by check and redeemed shortly after purchase, the Fund will not mail
redemption proceeds until it has been notified that the check used for the
purchase has been collected, which may take up to 15 days from the purchase
date. To minimize or avoid such delay, investors may purchase shares by
certified check or federal funds wire. A redemption may result in recognition of
a gain or loss for federal income tax purposes.
Due to the relatively high cost of maintaining smaller accounts, the Fund
reserves the right to redeem shares in any account, other than retirement plan
or Uniform Gifts/Transfers to Minors Acts accounts, if at any time, due to
redemptions by the shareholder, the total value of a shareholder's account does
not equal at least $1,000. If the Fund determines to make such an involuntary
redemption, shareholders will first be notified that the value of their account
is less than $1,000 and will be allowed 30 days to make an additional investment
to bring the value of their account to at least $1,000 before the Fund takes any
action.
SERVICES AVAILABLE TO THE FUND'S SHAREHOLDERS
Retirement Plans
The Fund offers a prototype Individual Retirement Account ("IRA") plan and Roth
IRA plan, and information is available from the Distributor or from your
securities dealer with respect to Keogh, Section 403(b) and other retirement
plans offered. Investors should consult a tax adviser before establishing any
retirement plan.
Check-A-Matic Plan
For the convenience of shareholders, the Fund offers a preauthorized check
service under which a check is automatically drawn on the shareholder's personal
checking account each month for a predetermined amount (but not less than $50).
Upon receipt of the check, the Fund automatically invests the money in
additional shares of the Fund at the current offering price. Applications for
this service are available from the Distributor. There is no charge by the Fund
for this service. The Distributor may terminate or modify this privilege at any
time, and shareholders may terminate their participation by notifying the
Transfer Agent in writing.
Systematic Withdrawal Program
As another convenience, the Fund offers a Systematic Withdrawal Program whereby
shareholders may request that a check drawn in a predetermined amount be sent to
them each month or calendar quarter. A shareholder's account must have Fund
shares with a value of at least $10,000 in order to start a Systematic
Withdrawal Program, and the minimum amount that may be withdrawn each month or
quarter under the Systematic Withdrawal Program is $100. This Program may be
terminated or modified by a shareholder or the Fund at any time without charge
or penalty.
A withdrawal under the Systematic Withdrawal Program involves a redemption of
shares, and may result in recognition of a gain or loss for federal income tax
purposes. In addition, if the amount withdrawn exceeds the dividends credited to
the shareholder's account, the account ultimately may be depleted.
HOW THE FUND'S SHARE VALUE IS DETERMINED
The net asset value of a Fund share is determined once daily as of the close of
public trading on the New York Stock Exchange (currently 4:00 p.m. Eastern time)
on each day the New York Stock Exchange is open for trading. Net asset value per
share is calculated by dividing the value of the Fund's total assets, less its
liabilities, by the number of Fund shares outstanding.
Portfolio securities are valued using current market values, if available.
Securities for which market quotations are not readily available are valued at
fair values as determined in good faith by or under the supervision of the
Trust's officers in accordance with methods which are specifically authorized by
the Board of Trustees. Short-term obligations with remaining maturities of sixty
days or less are valued at amortized cost as reflecting fair value.
DISTRIBUTIONS AND TAXES
Dividends and Distributions
Dividends from net investment income are declared and paid at least annually,
typically at the end of the Fund's fiscal year (March 31). Any undistributed net
capital gains realized during the Fund's fiscal year will also be distributed to
shareholders after the end of the year, with a supplemental distribution on or
about December 31 of any undistributed net investment income as well as any
additional undistributed capital gains earned during the 12-month period ended
October 31.
Dividends and capital gain distributions (net of any required tax withholding)
are automatically reinvested in additional shares of the Fund at the net asset
value per share on the reinvestment date unless the shareholder has previously
requested in writing to the Transfer Agent that payment be made in cash.
Any dividend or distribution paid by the Fund has the effect of reducing the net
asset value per share on the reinvestment date by the amount of the dividend or
distribution. Investors should note that a dividend or distribution paid on
shares purchased shortly before such dividend or distribution was declared will
be subject to income taxes as discussed below even though the dividend or
distribution represents, in substance, a partial return of capital to the
shareholder.
Taxes
The Fund has qualified and elected to be treated as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"). As long as the fund continues to qualify, and as long as the Fund
distributes all of its income each year to the shareholders, the Fund will not
be subject to any federal income or excise taxes. Distributions made by the Fund
will be taxable to shareholders whether received in shares (through dividend
reinvestment) or in cash. Distributions derived from net investment income,
including net short-term capital gains, are taxable to shareholders as ordinary
income. A portion of these distributions may qualify for the dividends-received
deduction available to corporate shareholders. Distributions designated as
capital gain dividends are taxable as long-term or mid-term capital gains
regardless of the length of time shares of the Fund have been held. Although
distributions are generally taxable when received, certain distributions made in
January are taxable as if received the prior December. Shareholders will be
informed annually of the amount and nature of the Fund's distributions.
Additional information about taxes is set forth in the Statement of Additional
Information. Shareholders should consult their own advisers concerning federal,
state and local taxation of distributions from the Fund.
GENERAL INFORMATION
The Trust
The Trust was organized as a Massachusetts business trust on February 17, 1987.
The Agreement and Declaration of Trust permits the Board of Trustees to issue an
unlimited number of full and fractional shares of beneficial interest, without
par value, which may be issued in any number of series. The Board of Trustees
may from time to time issue other series, the assets and liabilities of which
will be separate and distinct from any other series. The fiscal year end of the
Fund is March 31.
Shareholder Rights
Shares issued by the Fund have no preemptive, conversion, or subscription
rights. Shareholders have equal and exclusive rights as to dividends and
distributions as declared by the Fund and to the net assets of the Fund upon
liquidation or dissolution. The Fund, as a separate series of the Trust, votes
separately on matters affecting only the Fund (for example, approval of the
Management Agreement); all series of the Trust vote as a single class on matters
affecting all series jointly or the Trust as a whole (for example, election or
removal of Trustees). Voting rights are not cumulative, so that the holders of
more than 50% of the shares voting in any election of Trustees can, if they so
choose, elect all of the Trustees. While the Trust is not required and does not
intend to hold annual meetings of shareholders, such meetings may be called by
the Trustees in their discretion, or upon demand by the holders of 10% or more
of the outstanding shares of the Trust for the purpose of electing or removing
Trustees.
Performance Information
From time to time, the Fund may publish its total return in advertisements and
communications to investors. Total return information will include the Fund's
average annual compounded rate of return over the most recent year and over the
period from the Fund's commencement of operations. The Fund may also advertise
aggregate and average total return information over different periods of time.
The Fund's total return will be based upon the value of the shares acquired
through a hypothetical $1,000 investment at the beginning of the specified
period and the net asset value of such shares at the end of the period, assuming
reinvestment of all distributions. Total return figures will reflect all
recurring charges against Fund income. Investors should note that the investment
results of the Fund will fluctuate over time, and any presentation of the Fund's
total return for any prior period should not be considered as a representation
of what an investor's total return may be in any future period.
Year 2000
Like other business organizations around the world, the Fund could be adversely
affected if the computer systems used by its Advisor, Sub-Advisor and other
service providers do not properly process and calculate information related to
dates beginning January 1, 2000. This is commonly known as the "Year 2000
Issue." The Fund's Advisor is taking steps that it believes are reasonably
designed to address the Year 2000 Issue with respect to its own computer
systems, and it has obtained assurances from the Fund's other service providers
that they are taking comparable steps. However, there can be no assurance that
these actions will be sufficient to avoid any adverse impact on the Fund.
Shareholder Inquiries
Shareholder inquiries should be directed to the Fund at the number shown on the
cover of the Prospectus.
Advisor
Pro-Conscience Funds Incorporated
625 Market Street, 16th Floor
San Francisco, California 94105
(415) 547-9135
Distributor
First Fund Distributors, Inc.
4455 E. Camelback Road, Suite 261-E
Phoenix, Arizona 85018
Custodian
Star Bank, N.A.
425 Walnut St.
Cincinnati, Ohio 45202
Transfer and Shareholder Service Agent
American Data Services
P. O. Box 5536
Hauppauge, NY 11788-0132
Auditors
Tait, Weller & Baker
8 Penn Center Plaza, Suite 800
Philadelphia, Pennsylvania 19103
Legal Counsel
Paul, Hastings, Janofsky, Walker LLP
345 California Street
San Francisco, California 94104
June 15, 1998
625 Market Street, 16th Floor
San Francisco, California 94105
(415) 547-9135
(800) 282-2340
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
June 15, 1998
PRO-CONSCIENCE
WOMEN'S EQUITY MUTUAL FUND
a series of
PROFESSIONALLY MANAGED PORTFOLIOS
625 Market St., 16th Floor
San Francisco, CA 94105
(415) 547-9135
(800) 282-2340
This Statement of Additional Information is not a prospectus and it
should be read in conjunction with the prospectus of the Pro-Conscience Women's
Equity Mutual Fund (the "Fund"). A copy of the prospectus of the Fund dated June
15, 1998 is available by calling either of the numbers listed above.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
The Trust.......................................................................................................B-2
Investment Objective and Policies...............................................................................B-2
Investment Restrictions.........................................................................................B-4
Distributions and Tax Information...............................................................................B-6
Trustees and Executive Officers.................................................................................B-8
The Fund's Investment Advisor..................................................................................B-10
The Fund's Administrator.......................................................................................B-11
The Fund's Distributor.........................................................................................B-12
Execution of Portfolio Transactions............................................................................B-13
Additional Purchase And Redemption Information.................................................................B-14
Determination of Share Price...................................................................................B-15
Performance Information........................................................................................B-16
General Information............................................................................................B-17
Financial Statements...........................................................................................B-18
Appendix.......................................................................................................B-19
</TABLE>
WEMF SAI B-1
<PAGE>
THE TRUST
Professionally Managed Portfolios (the "Trust") is an open-end
management investment company organized as a Massachusetts business trust. The
Trust consists of various series which represent separate investment portfolios.
This Statement of Additional Information relates only to the Fund.
INVESTMENT OBJECTIVE AND POLICIES
The Fund is a mutual fund with the investment objective of providing
long-term capital appreciation by investing primarily in equity securities
(common and preferred stocks). The following discussion supplements the
discussion of the Fund's investment objective and policies as set forth in the
Prospectus. There can be no assurance the objective of the Fund will be
attained.
Repurchase Agreements
The Fund may enter into repurchase agreements as discussed in the
Prospectus. Under such agreements, the seller of the security agrees to
repurchase it at a mutually agreed upon time and price. The repurchase price may
be higher than the purchase price, the difference being income to the Fund, or
the purchase and repurchase prices may be the same, with interest at a stated
rate due to the Fund together with the repurchase price on repurchase. In either
case, the income to the Fund is unrelated to the interest rate on the U.S.
Government security itself. Such repurchase agreements will be made only with
banks with assets of $500 million or more that are insured by the Federal
Deposit Insurance Corporation or with Government securities dealers recognized
by the Federal Reserve Board and registered as broker-dealers with the
Securities and Exchange Commission ("SEC") or exempt from such registration. The
Fund will generally enter into repurchase agreements of short durations, from
overnight to one week, although the underlying securities generally have longer
maturities. The Fund may not enter into a repurchase agreement with more than
seven days to maturity if, as a result, more than 15% of the value of the Fund's
total assets would be invested in illiquid securities including such repurchase
agreements.
For purposes of the Investment Company Act of 1940 (the "1940 Act"), a
repurchase agreement is deemed to be a loan from the Fund to the seller of the
U.S. Government security subject to the repurchase agreement. In the event of
the insolvency or default of the seller, the Fund could encounter delays and
incur costs before being able to sell the security. Delays may involve loss of
interest or a decline in price of the U.S. Government security. As an unsecured
creditor, the Fund would be at the risk of losing some or all of the principal
and income involved in the transaction. As with any unsecured debt instrument
purchased for the Fund, the Investment Advisor and Sub-Advisor seek to minimize
the risk of loss through repurchase agreements by analyzing the creditworthiness
of the obligor, in this case the seller of the U.S. Government security.
WEMF SAI B-2
<PAGE>
There is also the risk that the seller may fail to repurchase the
security. However, the Fund will always receive as collateral for any repurchase
agreement to which it is a party securities acceptable to it, the market value
of which is equal to at least 100% of the amount invested by the Fund plus
accrued interest, and the Fund will make payment against such securities only
upon physical delivery or evidence of book entry transfer to the account of its
Custodian. If the market value of the U.S. Government security subject to the
repurchase agreement becomes less than the repurchase price (including
interest), the Fund will direct the seller of the U.S. Government security to
deliver additional securities so that the market value of all securities subject
to the repurchase agreement will equal or exceed the repurchase price. It is
possible that the Fund will be unsuccessful in seeking to impose on the seller a
contractual obligation to deliver additional securities.
When-Issued Securities
The Fund is authorized to purchase securities on a "when-issued" basis.
The price of such securities, which may be expressed in yield terms, is fixed at
the time the commitment to purchase is made, but delivery and payment for the
when-issued securities take place at a later date. Normally, the settlement date
occurs within one month of the purchase; during the period between purchase and
settlement, no payment is made by the Fund to the issuer and no interest accrues
to the Fund. To the extent that assets of the Fund are held in cash pending the
settlement of a purchase of securities, the Fund would earn no income; however,
it is the Fund's intention to be fully invested to the extent practicable and
subject to the policies stated above. While when-issued securities may be sold
prior to the settlement date, any purchase of such securities would be made with
the purpose of actually acquiring them unless a sale appears desirable for
investment reasons. At the time the Fund makes the commitment to purchase a
security on a when-issued basis, it will record the transaction and reflect the
value of the security in determining its net asset value. The market value of
the when-issued securities may be more or less than the purchase price. The Fund
does not believe that its net asset value or income will be adversely affected
by its purchase of securities on a when-issued basis. The Fund will segregate
liquid assets with its Custodian equal in value to commitments for when-issued
securities. Such segregated assets either will mature or, if necessary, be sold
on or before the settlement date.
Foreign Securities; Currency Contracts and Related Options
Among the means through which the Fund may invest in foreign securities
is the purchase of American Depository Receipts ("ADR's") or European Depository
Receipts ("EDR's"). Generally, ADR's, in registered form, are denominated in
U.S. dollars and are designed for use in the U.S. securities markets, while
EDR's, in bearer form, may be denominated in other currencies and are designed
for use in European securities markets. ADR's are receipts typically issued by a
U.S. bank or trust company evidencing ownership of the underlying securities.
EDR's are European receipts evidencing a similar arrangement. For purposes of
the Fund's investment policies, ADR's and EDR's
WEMF SAI B-3
<PAGE>
are deemed to have the same classification as the underlying securities they
represent. Thus an ADR or EDR representing ownership of common stock will be
treated as common stock.
As indicated in the prospectus, to the extent consistent with its
investment objectives and policies relating to investment in foreign securities,
the Fund is authorized to engage in currency exchange transactions by means of
buying and selling foreign currency on a spot basis, entering into foreign
currency forward contracts, buying and selling currency options, futures and
options on futures to the extent of up to 5% of its assets. The Fund has no
present intention to do so.
These transactions involve certain risks. For example, there are
significant differences between the securities markets and options, futures or
currency contract markets that could result in an imperfect correlation between
these markets, causing a given transaction not to achieve its objectives. A
decision as to whether, when and how to use these transactions involves the
exercise of skill and judgment, and even a well-conceived transaction may be
unsuccessful to some degree because of market behavior or unexpected events.
There can be no assurance that a liquid market will exist when the Fund
seeks to close out an options, futures or currency contract position. The
variable degree of correlation between price movements of options, futures or
currency contracts and price movements in the related portfolio positions of the
Fund creates the possibility that losses on these transactions may be greater
than gains in the value of the Fund's position. Also, options, futures and
currency contract markets may not be liquid in all circumstances and certain
over-the-counter options may have no markets. As a result, in certain markets,
the Fund might not be able to close out a transaction at all or might incur a
loss. Although the use of these transactions is intended to reduce the risk of
loss due to a decline in the value of the Fund's underlying position, at the
same time they tend to limit any potential gain which might result from an
increase in the value of such position. If losses were to result from the use of
such transactions, they could reduce net asset value and possibly income. If the
Fund determines to make use of these transactions to the limited degree set
forth above, the Fund will observe the federal and other regulatory requirements
pertaining to such transactions and will segregate liquid assets (or, as
permitted by applicable regulation, enter into certain offsetting positions) to
cover its obligations under such transactions to avoid leveraging of the Fund.
INVESTMENT RESTRICTIONS
The following policies and investment restrictions have been adopted by
the Fund and (unless otherwise noted) are fundamental and cannot be changed
without the affirmative vote of a majority of the Fund's outstanding voting
securities as defined in the 1940 Act. The Fund may not:
1. Make loans to others, except (a) through the purchase of debt
securities in accordance with its investment objectives and policies, (b) to the
extent the entry into a repurchase agreement is deemed to be a loan.
WEMF SAI B-4
<PAGE>
2. (a) Borrow money, except as stated in the Prospectus and this
Statement of Additional Information. Any such borrowing will be made only if
immediately thereafter there is an asset coverage of at least 300% of all
borrowings.
(b) Mortgage, pledge or hypothecate any of its assets except in
connection with any such borrowings.
3. Purchase securities on margin, participate on a joint or joint and
several basis in any securities trading account, or underwrite securities. (Does
not preclude the Fund from obtaining such short-term credit as may be necessary
for the clearance of purchases and sales of its portfolio securities.)
4. Purchase or sell commodities or commodity contracts (other than
futures transactions for the purposes and under the conditions described in the
prospectus and in this Statement of Additional Information).
5. Invest 25% or more of the market value of its assets in the
securities of companies engaged in any one industry. (Does not apply to
investment in the securities of the U.S. Government, its agencies or
instrumentalities.)
6. Issue senior securities, as defined in the 1940 Act, except that
this restriction shall not be deemed to prohibit the Fund from (a) making any
permitted borrowings, mortgages or pledges, or (b) entering into options,
futures, currency contract or repurchase transactions.
7. Purchase the securities of any issuer, if as a result more than 5%
of the total assets of the Fund would be invested in the securities of that
issuer, other than obligations of the U.S. Government, its agencies or
instrumentalities, provided that up to 25% of the value of the Fund's assets may
be invested without regard to this limitation.
8. Purchase or sell real estate; however, the Fund may invest in debt
securities secured by real estate or interests therein or issued by companies
which invest in real estate or interests therein, including real estate
investment trusts.
The Fund observes the following policies, which are not deemed
fundamental and which may be changed without shareholder vote. The Fund may not:
9. Purchase any security if as a result the Fund would then hold more
than 10% of any class of securities of an issuer (taking all common stock issues
of an issuer as a single class, all preferred stock issues as a single class,
and all debt issues as a single class) or more than 10% of the outstanding
voting securities of an issuer.
10. Invest in any issuer for purposes of exercising control or
management.
WEMF SAI B-5
<PAGE>
11. Invest in securities of other investment companies which would
result in the Fund owning more than 3% of the outstanding voting securities of
any one such investment company, the Fund owning securities of another
investment company having an aggregate value in excess of 5% of the value of the
Fund's total assets, or the Fund owning securities of investment companies in
the aggregate which would exceed 10% of the value of the Fund's total assets.
12. Invest, in the aggregate, more than 15% of its total assets in
securities which are not readily marketable or are illiquid.
If a percentage restriction is adhered to at the time of investment, a
subsequent increase or decrease in a percentage resulting from a change in the
values of assets will not constitute a violation of that restriction, except as
otherwise noted.
DISTRIBUTIONS AND TAX INFORMATION
Distributions
Dividends from net investment income and distributions from net profits
from the sale of securities are generally made annually. Also, the Fund expects
to distribute any undistributed net investment income on or about December 31 of
each year. Any net capital gains realized through the period ended October 31 of
each year will also be distributed by December 31 of each year.
Each distribution by the Fund is accompanied by a brief explanation of
the form and character of the distribution. In January of each year the Fund
will issue to each shareholder a statement of the federal income tax status of
all distributions.
Tax Information
Each series of the Trust is treated as a separate entity for federal
income tax purposes. The Fund intends to continue to qualify and elect to be
treated as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"), provided it complies with all
applicable requirements regarding the source of its income, diversification of
its assets and timing of distributions. The Fund's policy is to distribute to
its shareholders all of its investment company taxable income and any net
realized long-term capital gains for each fiscal year in a manner that complies
with the distribution requirements of the Code, so that the Fund will not be
subject to any federal income or excise taxes. To comply with the requirements,
the Fund must also distribute (or be deemed to have distributed) by December 31
of each calendar year (i) at least 98% of its ordinary income for such year,
(ii) at least 98% of the excess of its realized capital gains over its realized
capital losses for the 12-month period ending on October 31 during such year and
(iii) any amounts from the prior calendar year that were not distributed and on
which the Fund paid no federal income tax.
WEMF SAI B-6
<PAGE>
Net investment income consists of interest and dividend income, less
expenses. Net realized capital gains for a fiscal period are computed by taking
into account any capital loss carryforward of the Fund.
Distributions of net investment income and net short-term capital gains
are taxable to shareholders as ordinary income. In the case of corporate
shareholders, a portion of the distributions may qualify for the intercorporate
dividends-received deduction to the extent the Fund designates the amount
distributed as a qualifying dividend. The aggregate amount so designated cannot,
however, exceed the aggregate amount of qualifying dividends received by the
Fund for its taxable year. In view of the Fund's investment policy, it is
expected that dividends from domestic corporations will be part of the Fund's
gross income and that, accordingly, part of the distributions by the Fund may be
eligible for the dividends-received deduction for corporate shareholders.
However, the portion of the Fund's gross income attributable to qualifying
dividends is largely dependent on that Fund's investment activities for a
particular year and therefore cannot be predicted with any certainty. The
deduction may be reduced or eliminated if the Fund shares held by a corporate
investor are treated as debt-financed or are held for less than 46 days during
the 90-day period that begins 45 days before the stock becomes ex-dividend with
respect to the dividend.
Any long-term or mid-term capital gain distributions are taxable to
shareholders as long-term or mid-term capital gains, respectively, regardless of
the length of time shares have been held. The maximum federal capital gains rate
for individuals is 28% with respect to capital assets held for more than 12
months, but not more than 18 months, and 20% with respect to capital assets held
more than 18 months. The maximum capital gains rate for corporate shareholders
is the same as the maximum tax rate for ordinary income. Capital gains
distributions are not eligible for the dividends-received deduction referred to
in the previous paragraph. Distributions of any net investment income and net
realized capital gains will be taxable as described above, whether received in
shares or in cash. Shareholders electing to receive distributions in the form of
additional shares will have a cost basis for federal income tax purposes in each
share so received equal to the net asset value of a share on the reinvestment
date. Distributions are generally taxable when received. However, distributions
declared in October, November or December to shareholders of record on a date in
such a month and paid the following January are taxable as if received on
December 31. Distributions are includable in alternative minimum taxable income
in computing a shareholder's liability for the alternative minimum tax.
A redemption or exchange of Fund shares may result in recognition of a
taxable gain or loss. Any loss realized upon a redemption or exchange of shares
within six months from the date of their purchase will be treated as a long-term
capital loss to the extent of any amounts treated as distributions of long-term
capital gains during such six-month period. In determining gain or loss from an
exchange of Fund shares for shares of another mutual fund, the sales charge
incurred in purchasing the shares that are surrendered will be excluded from
their tax basis to the extent that a sales charge that would otherwise be
imposed in the purchase of the shares received in the exchange is reduced. Any
portion of a sales charge excluded from the basis of the shares surrendered will
be added to the basis of the shares received. Any loss realized upon a
redemption or exchange
WEMF SAI B-7
<PAGE>
may be disallowed under certain wash sale rules to the extent shares of the same
Fund are purchased (through reinvestment of distributions or otherwise) within
30 days before or after the redemption or exchange.
Under the Code, the Fund will be required to report to the Internal
Revenue Service ("IRS") all distributions of taxable income and capital gains as
well as gross proceeds from the redemption or exchange of Fund shares, except in
the case of exempt shareholders, which includes most corporations. Pursuant to
the backup withholding provisions of the Internal Revenue Code, distributions of
any taxable income and capital gains and proceeds from the redemption of Fund
shares may be subject to withholding of federal income tax at the rate of 31
percent in the case of non-exempt shareholders who fail to furnish the Fund with
their taxpayer identification numbers and with required certifications regarding
their status under the federal income tax law. If the withholding provisions are
applicable, any such distributions and proceeds, whether taken in cash or
reinvested in additional shares, will be reduced by the amounts required to be
withheld. Corporate and other exempt shareholders should provide the Fund with
their taxpayer identification numbers or certify their exempt status in order to
avoid possible erroneous application of backup withholding. The Fund reserves
the right to refuse to open an account for any person failing to provide a
certified taxpayer identification number.
The Fund will not be subject to tax in the Commonwealth of
Massachusetts as long as it qualifies as a regulated investment company for
federal income tax purposes. Distributions and the transactions referred to in
the preceding paragraphs may be subject to state and local income taxes, and the
tax treatment thereof may differ from the federal income tax treatment.
Moreover, the above discussion is not intended to be a complete discussion of
all applicable federal tax consequences of an investment in the Fund.
Shareholders are advised to consult with their own tax advisers concerning the
application of federal, state and local taxes to an investment in the Fund.
The foregoing discussion of U.S. federal income tax law relates solely
to the application of that law to U.S. citizens or residents and U.S. domestic
corporations, partnerships, trusts and estates. Each shareholder who is not a
U.S. person should consider the U.S. and foreign tax consequences of ownership
of shares of the Fund, including the possibility that such a shareholder may be
subject to a U.S. withholding tax at a rate of 30 percent (or at a lower rate
under an applicable income tax treaty) on amounts constituting ordinary income.
This discussion and the related discussion in the prospectus have been
prepared by Fund management, and counsel to the Fund has expressed no opinion in
respect thereof.
TRUSTEES AND EXECUTIVE OFFICERS
The Trustees of the Trust, who were elected for an indefinite term by
the initial shareholders of the Trust, are responsible for the overall
management of the Trust, including general supervision and review of the
investment activities of the Fund. The Trustees, in turn, elect the officers of
the
WEMF SAI B-8
<PAGE>
Trust, who are responsible for administering the day-to-day operations of the
Trust and its separate series. The current Trustees and officers, their
affiliations, dates of birth and principal occupations for the past five years
are set forth below.
Steven J. Paggioli,* 04/03/50 President and Trustee
479 West 22nd Street, New York, NY 10011. Executive Vice President, The
Wadsworth Group (consultants) since 1986; Executive Vice President of Investment
Company Administration Corporation ("ICAC") (mutual fund administrator and the
Trust's administrator), and Vice President of First Fund Distributors, Inc.
("FFD") (a registered broker-dealer and the Fund's Distributor) since 1990.
Dorothy A. Berry, 08/12/43 Trustee
14 Five Roses East, Ancram, NY 12517. President, Talon Industries (venture
capital and business consulting); formerly Chief Operating Officer, Integrated
Asset Management (investment advisor and manager) and formerly President, Value
Line, Inc., (investment advisory and financial publishing firm).
Wallace L. Cook, 09/10/39 Trustee
One Peabody Lane, Darien, CT 06820. Retired. Formerly Senior Vice President,
Rockefeller Trust Co. Financial Counselor, Rockefeller & Co.
Carl A. Froebel, 05/23/38 Trustee
2 Crown Cove Lane, Savannah, GA 31411. Private Investor. Formerly Managing
Director, Premier Solutions, Ltd. (asset management computer and software
products). Formerly President and Founder, National Investor Data Services, Inc.
(investment related computer software).
Rowley W.P. Redington, 06/01/44 Trustee
1191 Valley Road, Clifton, NJ 07103. President, Intertech (consumer electronics
and computer service and marketing); formerly Vice President, PRS of New Jersey,
Inc. (management consulting), and Chief Executive Officer, Rowley Associates
(consultants).
Eric M. Banhazl*, 08/05/57 Treasurer
2020 E. Financial Way, Glendora, CA 91741. Senior Vice President, The Wadsworth
Group, Senior Vice President of ICAC and Vice President of FFD since 1990.
WEMF SAI B-9
<PAGE>
Robin Berger*, 11/17/56 Secretary
479 West 22nd St., New York, NY 10011. Vice President, The Wadsworth Group since
June, 1993; formerly Regulatory and Compliance Coordinator, Equitable Capital
Management, Inc. (investment management) (1991-93).
Robert H. Wadsworth*, 01/25/40 Vice President
4455 E. Camelback Road, Suite 261E, Phoenix, AZ 85018. President of The
Wadsworth Group since 1982, President of ICAC and FFD since 1990.
*Indicates an "interested person" of the Trust as defined in the 1940 Act.
Set forth below is the rate of compensation received by the following
Trustees from the Fund and all other portfolios of the Trust. This total amount
is allocated among the portfolios. Disinterested trustees receive an annual
retainer of $7,500 and a fee of $2,500 for each regularly scheduled meeting.
These trustees also receive a fee of $1000 for any special meeting attended. The
Chairman of the Board of Trustees receives an additional annual retainer of
$4,500. Disinterested trustees are also reimbursed for expenses in connection
with each Board meeting attended. No other compensation or retirement benefits
were received by any Trustee or officer from the Fund or any other portfolios of
the Trust.
Name of Trustee Total Annual Compensation
Dorothy A. Berry $22,000
Wallace L. Cook $17,500
Carl A. Froebel $17,500
Rowley W.P. Redington $17,500
During the fiscal year ended March 31, 1998, trustees' fees and expenses of
$4,400 were allocated to the Fund. As of the date of this Statement of
Additional Information, the Trustees and Officers of the Trust as a group did
not own more than 1% of the outstanding shares of the Fund.
THE FUND'S INVESTMENT ADVISOR
The use of the name "Pro-Conscience" by the Fund is pursuant to a
license granted by the Advisor, and in the event the Investment Advisory
Agreement with the Fund is terminated, the Advisor has reserved the right to
require the Fund to remove any references to the name "Pro-Conscience."
The Advisor has undertaken to limit the Fund's operating expenses to no
more than 1.50% of the Fund's average net assets annually. For the fiscal year
ended March 31, 1996, the Advisor waived its advisory fee and reimbursed
expenses totaling $68,805. For the fiscal year ended March
WEMF SAI B-10
<PAGE>
31, 1997, the Advisor waived its advisory fee and reimbursed expenses totaling
$79,519. For the fiscal year ended March 31, 1998, the Advisor waived a portion
of its advisory fee and reimbursed expenses totaling $89,230.
Sub-Advisor
United States Trust Company of Boston is the Sub-Advisor to the Fund,
pursuant to a Sub-Advisory agreement approved by shareholders at a meeting held
on September 15, 1995. The Sub-Advisor, together with the Advisor, is
responsible for formulating and implementing the Fund's investment program. The
Sub-Advisor is a Massachusetts-chartered banking and trust company and is a
wholly-owned subsidiary of UST Corporation, a Massachusetts bank holding
company. It is located at 40 Court St., Boston, MA 02108. The Sub-Advisor has
approximately $3.3 billion of assets under management. The Trust Department of
the Sub-Advisor has managed funds as a fiduciary since 1895. Ms. Maria
McCormack, Vice President of the Sub-Advisor, is the Fund's portfolio manager.
For its services, the Sub-Advisor receives a Sub-Advisory fee from the Advisor
at the rate of 0.25% of the Fund's average net assets annually. During the
fiscal year ended March 31, 1998, the subadvisor waived its fee.
The Fund receives investment advisory services pursuant to agreements
with the Advisor and the Trust. Each such agreement, after its initial term,
continues in effect for successive annual periods so long as such continuation
is approved at least annually by the vote of (1) the Board of Trustees of the
Trust (or a majority of the outstanding shares of the Fund to which the
agreement applies), and (2) a majority of the Trustees who are not interested
persons of any party to the Agreement, in each case cast in person at a meeting
called for the purpose of voting on such approval. Any such agreement may be
terminated at any time, without penalty, by either party to the agreement upon
sixty days' written notice and is automatically terminated in the event of its
"assignment," as defined in the 1940 Act.
THE FUND'S ADMINISTRATOR
The Fund has entered into an Administration Agreement with Investment
Company Administration Corporation ("ICAC"), a corporation owned and controlled
by Messrs. Banhazl, Paggioli and Wadsworth. The Agreement provides that ICAC
will prepare and coordinate reports and other materials supplied to the
Trustees; prepare and/or supervise the preparation and filing of all securities
filings, periodic financial reports, prospectuses, statements of additional
information, marketing materials, tax returns, shareholder reports and other
regulatory reports or filings required of the Fund; prepare all required filings
necessary to maintain the Fund's qualification and/or registration to sell
shares in all states where the Fund currently does, or intends to do business;
coordinate the preparation, printing and mailing of all materials (e.g., Annual
Reports) required to be sent to shareholders; coordinate the preparation and
payment of Fund related expenses; monitor and oversee the activities of the
Fund's servicing agents (i.e., transfer agent, custodian, fund accountants,
etc.); review and adjust as necessary the Fund's daily expense accruals; and
perform such additional services as may be agreed upon by the Fund and ICAC.
ICAC received fees of $30,000
WEMF SAI B-11
<PAGE>
for each of the fiscal years ended March 31, 1996 and March 31, 1998. For the
fiscal year ended March, 31, 1997, ICAC waived $22,603 of its $30,000 fee due
from the Fund.
THE FUND'S DISTRIBUTOR
First Fund Distributors, Inc., (the "Distributor"), a corporation owned
by Mr. Banhazl, Mr. Paggioli and Mr. Wadsworth, acts as the Fund's principal
underwriter in a continuous public offering of the Fund's shares. The
Distribution Agreement between the Fund and the Distributor continues in effect
for periods not exceeding one year if approved at least annually by (i) the
Board of Trustees or the vote of a majority of the outstanding shares of the
Fund (as defined in the 1940 Act) and (ii) a majority of the Trustees who are
not interested persons of any such party, in each case cast in person at a
meeting called for the purpose of voting on such approval. The Distributing
Agreement may be terminated without penalty by the parties thereto upon sixty
days' written notice, and is automatically terminated in the event of its
assignment as defined in the 1940 Act.
Distribution Plan
At a meeting held on September 15, 1995, shareholders approved a
distribution plan under Investment Company Act Rule 12b-1. The Plan provides
that the Fund may pay distribution and related expenses of up to 0.25% of the
Fund's average net assets to the Advisor as distribution coordinator. Expenses
permitted to be paid include preparation, printing and mailing of prospectuses,
shareholder reports such as semi-annual and annual reports, performance reports
and newsletters, sales literature and other promotional material to prospective
investors, direct mail solicitations, advertising, public relations,
compensation of sales personnel, advisors or other third parties for their
assistance with respect to the distribution of the Fund's shares, payments to
financial intermediaries for shareholder support, administrative and accounting
services with respect to shareholders of the Fund and such other expenses as may
be approved from time to time by the Board of Trustees.
The Plan allows excess distribution expenses to be carried forward by
the Advisor, as distribution coordinator, and resubmitted in a subsequent fiscal
year, provided that (i) distribution expenses cannot be carried forward for more
than three years following initial submission; (ii) the Board of Trustees has
made a determination at the time of initial submission that the distribution
expenses are appropriate to be carried forward and (iii) the Trustees make a
further determination, at the time any distribution expenses which have been
carried forward are submitted for payment, that payment at the time is
appropriate, consistent with the objectives of the Plan and in the current best
interests of shareholders.
Under the Plan, the Trustees are furnished quarterly with information
detailing the amount of expenses paid under the plan and the purposes for which
payments were made. The Plan may be terminated at any time by vote of a majority
of the Trustees of the Trust who are not interested persons. Continuation of the
Plan is considered by such Trustees no less frequently than annually. During the
year ended March 31, 1998, the Fund paid fees of $13,762 to the Advisor as
Distribution
WEMF SAI B-12
<PAGE>
Coordinator, of which $229 was for selling compensation, $7,704 was for expenses
related to advertising and sales material, $2,442 was for reimbursement of
travel and entertainment expenses and $3,388 related to Distributor printing
expenses.
EXECUTION OF PORTFOLIO TRANSACTIONS
Pursuant to the Investment Advisory Agreement, the Advisor and
Sub-Advisor determine which securities are to be purchased and sold by the Fund
and which broker-dealers will be used to execute the Fund's portfolio
transactions. Purchases and sales of securities in the over-the-counter market
will be executed directly with a "market-maker" unless, in the opinion of the
Advisor and Sub-Advisor, a better price and execution can otherwise be obtained
by using a broker for the transaction.
Purchases of portfolio securities for the Fund also may be made
directly from issuers or from underwriters. Where possible, purchase and sale
transactions will be effected through dealers (including banks) which specialize
in the types of securities which the Fund will be holding, unless better
executions are available elsewhere. Dealers and underwriters usually act as
principal for their own account. Purchases from underwriters will include a
concession paid by the issuer to the underwriter and purchases from dealers will
include the spread between the bid and the asked price. If the execution and
price offered by more than one broker, dealer or underwriter are comparable, the
order may be allocated to a broker, dealer or underwriter that has provided
research or other services as discussed below.
In placing portfolio transactions, the Advisor and Sub-Advisor will use
their best efforts to choose a broker-dealer capable of providing the services
necessary to obtain the most favorable price and execution available. The full
range and quality of services available will be considered in making these
determinations, such as the size of the order, the difficulty of execution, the
operational facilities of the firm involved, the firm's risk in positioning a
block of securities, and other factors. In those instances where it is
reasonably determined that more than one broker-dealer can offer the most
favorable price and execution available, consideration may be given to those
broker-dealers which furnish or supply research and statistical information to
the Advisor and Sub-Advisor that they may lawfully and appropriately use in
their investment advisory capacities, as well as provide other services in
addition to execution services. The Advisor and Sub-Advisor consider such
information, which is in addition to and not in lieu of the services required to
be performed by them under their Agreements with the Fund, to be useful in
varying degrees, but of indeterminable value. Portfolio transactions may be
placed with broker-dealers who sell shares of the Fund subject to rules adopted
by the National Association of Securities Dealers, Inc.
While it is the Fund's general policy to seek first to obtain the most
favorable price and execution available, in selecting a broker-dealer to execute
portfolio transactions for the Fund, weight is also given to the ability of a
broker-dealer to furnish brokerage and research services to the Fund or to the
Advisor or Sub-Advisor, even if the specific services are not directly useful to
the Fund and may be useful to the Advisor and Sub-Advisor in advising other
clients. In negotiating commissions
WEMF SAI B-13
<PAGE>
with a broker or evaluating the spread to be paid to a dealer, the Fund may
therefore pay a higher commission or spread than would be the case if no weight
were given to the furnishing of these supplemental services, provided that the
amount of such commission or spread has been determined in good faith by the
Advisor and Sub-Advisor to be reasonable in relation to the value of the
brokerage and/or research services provided by such broker-dealer. The standard
of reasonableness is to be measured in light of the Advisor's and Sub-Advisor's
overall responsibilities to the Fund.
Investment decisions for the Fund are made independently from those of
other client accounts or mutual funds managed or advised by the Advisor and
Sub-Advisor. Nevertheless, it is possible that at times identical securities
will be acceptable for both the Fund and one or more of such client accounts. In
such event, the position of the Fund and such client account(s) in the same
issuer may vary and the length of time that each may choose to hold its
investment in the same issuer may likewise vary. However, to the extent any of
these client accounts seeks to acquire the same security as the Fund at the same
time, the Fund may not be able to acquire as large a portion of such security as
it desires, or it may have to pay a higher price or obtain a lower yield for
such security. Similarly, the Fund may not be able to obtain as high a price
for, or as large an execution of, an order to sell any particular security at
the same time. If one or more of such client accounts simultaneously purchases
or sells the same security that the Fund is purchasing or selling, each day's
transactions in such security will be allocated between the Fund and all such
client accounts in a manner deemed equitable by the Advisor and Sub-Advisor,
taking into account the respective sizes of the accounts and the amount being
purchased or sold. It is recognized that in some cases this system could have a
detrimental effect on the price or value of the security insofar as the Fund is
concerned. In other cases, however, it is believed that the ability of the Fund
to participate in volume transactions may produce better executions for the
Fund.
The Fund does not effect securities transactions through brokers solely
for selling shares of the Fund, although the Fund may consider the sale of
shares as a factor in allocating brokerage. However, as stated above,
broker-dealers who execute brokerage transactions may effect purchases of shares
of the Fund for their customers.
The Fund does not use the Distributor to execute its portfolio
transactions. During the Fund's fiscal years ended March 31, 1996. March 31,
1997 and March 31, 1998, brokerage commissions paid by the Fund totaled $12,822,
$6,012 and $3,421, respectively.
Of the total commissions paid by the Fund during the fiscal year ended
March 31, 1998, $751 (21.95 %) was paid to firms for research, statistical or
other services provided to the Advisor.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
The Trust reserves the right in its sole discretion (i) to suspend the
continued offering of the Fund's shares, (ii) to reject purchase orders in whole
or in part when in the judgment of the Advisor or the Distributor such rejection
is in the best interest of the Fund, and (iii) to reduce or waive the
WEMF SAI B-14
<PAGE>
minimum for initial and subsequent investments for certain fiduciary accounts or
under circumstances where certain economies can be achieved in sales of the
Fund's shares.
Payments to shareholders for shares of the Fund redeemed directly from
the Fund will be made as promptly as possible but no later than seven days after
receipt by the Fund's Transfer Agent of the written request in proper form, with
the appropriate documentation as stated in the Prospectus, except that the Fund
may suspend the right of redemption or postpone the date of payment during any
period when (a) trading on the New York Stock Exchange is restricted as
determined by the SEC or such Exchange is closed for other than weekends and
holidays; (b) an emergency exists as determined by the SEC making disposal of
portfolio securities or valuation of net assets of the Fund not reasonably
practicable; or (c) for such other period as the SEC may permit for the
protection of the Fund's shareholders. At various times, the Fund may be
requested to redeem shares for which it has not yet received confirmation of
good payment; in this circumstance, the Fund may delay the redemption until
payment for the purchase of such shares has been collected and confirmed to the
Fund.
The Fund intends to pay cash (U.S. dollars) for all shares redeemed,
but, under abnormal conditions which make payment in cash unwise, the Fund may
make payment partly in securities with a current market value equal to the
redemption price. Although the Fund does not anticipate that it will make any
part of a redemption payment in securities, if such payment were made, an
investor may incur brokerage costs in converting such securities to cash. The
Fund has elected to be governed by the provisions of Rule 18f-1 under the 1940
Act, which contains a formula for determining the minimum redemption amounts
that must be paid in cash.
The value of shares on redemption or repurchase may be more or less
than the investor's cost, depending upon the market value of the Fund's
portfolio securities at the time of redemption or repurchase.
Check-A-Matic
As discussed in the Prospectus, the Fund provides a Check-A-Matic Plan
for the convenience of investors who wish to purchase shares of the Fund on a
regular basis. All record keeping and custodial costs of the Check-A-Matic Plan
are paid by the Fund. The market value of the Fund's shares is subject to
fluctuation, so before undertaking any plan for systematic investment, the
investor should keep in mind that this plan does not assure a profit nor protect
against depreciation in declining markets.
DETERMINATION OF SHARE PRICE
As noted in the Prospectus, the net asset value and offering price of
shares of the Fund will be determined once daily as of the close of public
trading on the New York Stock Exchange (currently 4:00 p.m. Eastern time) on
each day that the Exchange is open for trading. It is expected
WEMF SAI B-15
<PAGE>
that the Exchange will be closed on Saturdays and Sundays and on New Year's Day,
Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas. The Fund does not
expect to determine the net asset value of its shares on any day when the
Exchange is not open for trading even if there is sufficient trading in its
portfolio securities on such days to materially affect the net asset value per
share.
In valuing the Fund's assets for calculating net asset value, readily
marketable portfolio securities listed on a national securities exchange or on
NASDAQ are valued at the last sale price on the business day as of which such
value is being determined. If there has been no sale on such exchange or on
NASDAQ on such day, the security is valued at the closing bid price on such day.
Readily marketable securities traded only in the over-the-counter market and not
on NASDAQ are valued at the current or last bid price. If no bid is quoted on
such day, the security is valued by such method as the Board of Trustees of the
Trust shall determine in good faith to reflect the security's fair value. All
other assets of each Fund are valued in such manner as the Board of Trustees in
good faith deems appropriate to reflect their fair value.
The net asset value per share of the Fund is calculated as follows: all
liabilities incurred or accrued are deducted from the valuation of total assets
which includes accrued but undistributed income; the resulting net assets are
divided by the number of shares of the Fund outstanding at the time of the
valuation and the result (adjusted to the nearest cent) is the net asset value
per share.
PERFORMANCE INFORMATION
From time to time, the Fund may state its total return in
advertisements and investor communications. Total return may be stated for any
relevant period as specified in the advertisement or communication. Any
statements of total return will be accompanied by information on the Fund's
average annual compounded rate of return over the most recent four calendar
quarters and the period from the Fund's inception of operations. The Fund may
also advertise aggregate and average total return information over different
periods of time.
The Fund's total return may be compared to relevant indices, including
Standard & Poor's 500 Composite Stock Index and indices published by Lipper
Analytical Services, Inc. From time to time, evaluations of a Fund's performance
by independent sources may also be used in advertisements and in information
furnished to present or prospective investors in the Funds.
Investors should note that the investment results of the Fund will
fluctuate over time, and any presentation of the Fund's total return for any
period should not be considered as a representation of what an investment may
earn or what an investor's total return may be in any future period.
The Fund's average annual compounded rate of return is determined by
reference to a hypothetical $1,000 investment that includes capital appreciation
and depreciation for the stated period, according to the following formula:
WEMF SAI B-16
<PAGE>
P(1+T)n = ERV
Where: P = a hypothetical initial purchase order of $1,000 from which the
maximum sales load is deducted
T = average annual total return n = number of years
ERV = ending redeemable value of the hypothetical $1,000 purchase at
the end of the period
Aggregate total return is calculated in a similar manner, except that
the results are not annualized. Each calculation assumes that all dividends and
distributions are reinvested at net asset value on the reinvestment dates during
the period and gives effect to the maximum applicable sales charge.
The Fund's average annual total returns for the one year period and
from inception on October 1, 1993 through March 31, 1998 were 50.77% and 16.60%
respectively.
GENERAL INFORMATION
Investors in the Fund will be informed of the Fund's progress through
periodic reports. Financial statements certified by independent public
accountants will be submitted to shareholders at least annually.
Star Bank, located at 425 Walnut St., Cincinnati, Ohio 45201 acts as
Custodian of the securities and other assets of the Fund. American Data
Services, P.O. Box 5536, Hauppauge, NY 11788-0132 acts as the Fund's transfer
and shareholder service agent. The Custodian and Transfer Agent do not
participate in decisions relating to the purchase and sale of securities by the
Fund.
Tait, Weller & Baker, Eight Penn Center Plaza, Philadelphia, PA 19101,
are the independent auditors for the Fund.
Paul, Hastings, Janofsky & Walker, 345 California Street, 29th Floor,
San Francisco, California 94104, are legal counsel to the Fund.
The following persons are beneficial owners of more than 5% of the
Fund's outstanding voting securities as of May 27, 1998. An asterisk denotes an
account affiliated with the Fund's investment advisor, officers, or trustees:
*Star Bank, Cust., L. Christian IRA, Seattle, WA 98119; 6.51%
Seattle First National Bank, Trustee, Rosebud Trust, Los Angeles, CA
90051; 6.03%.
WEMF SAI B-17
<PAGE>
Charles Schwab & Co., Inc. For Exclusive Benefit of Customers, San
Francisco CA 94104; 16.83%
The shareholders of a Massachusetts business trust could, under certain
circumstances, be held personally liable as partners for its obligations.
However, the Trust's Agreement and Declaration of Trust contains an express
disclaimer of shareholder liability for acts or obligations of the Trust. The
Agreement and Declaration of Trust also provides for indemnification and
reimbursement of expenses out of the Fund's assets for any shareholder held
personally liable for obligations of the Fund or Trust. The Agreement and
Declaration of Trust provides that the Trust shall, upon request, assume the
defense of any claim made against any shareholder for any act or obligation of
the Fund or Trust and satisfy any judgment thereon. All such rights are limited
to the assets of the Fund. The Agreement and Declaration of Trust further
provides that the Trust may maintain appropriate insurance (for example,
fidelity bonding and errors and omissions insurance) for the protection of the
Trust, its shareholders, trustees, officers, employees and agents to cover
possible tort and other liabilities. Furthermore, the activities of the Trust as
an investment company would not likely give rise to liabilities in excess of the
Trust's total assets. Thus, the risk of a shareholder incurring financial loss
on account of shareholder liability is limited to circumstances in which both
inadequate insurance exists and the Fund itself is unable to meet its
obligations.
The Trust is registered with the SEC as a management investment
company. Such a registration does not involve supervision of the management or
policies of the Fund. The Prospectus of the Fund and this Statement of
Additional Information omit certain of the information contained in the
Registration Statement filed with the SEC. Copies of such information may be
obtained from the SEC upon payment of the prescribed fee.
FINANCIAL STATEMENTS
The annual report to shareholders for the Fund for the fiscal year
ended March 31, 1998 is a separate document supplied with this Statement of
Additional Information and the financial statements, accompanying notes and
report of independent accountants appearing therein are incorporated by
reference in this Statement of Additional Information.
WEMF SAI B-18
<PAGE>
APPENDIX
Description of Bond Ratings*
Moody's Investors Service
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuations or protective elements
may be of greater amplitude or there may be other elements present which make
long-term risks appear somewhat larger than in Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa: Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba: Bonds which are rated Ba are judged to have speculative elements: their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B: Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
WEMF SAI B-19
<PAGE>
Ca: Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
Standard & Poor's Corporation
AAA: Bonds rated AAA are highest grade debt obligations. This rating indicates
an extremely strong capacity to pay principal and interest.
AA: Bonds rated AA also qualify as high-quality debt obligations. Capacity to
pay principal and interest is very strong, and in the majority of instances they
differ from AAA issues only in small degree.
A: Bonds rated A have a strong capacity to pay principal and interest, although
they are more susceptible to the adverse effects of changes in circumstances and
economic conditions.
BBB: Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in the A category.
BB, B, CCC, CC: Bonds rated BB, B, CCC and CC are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB indicates
the lowest degree of speculation and CC the highest degree of speculation. While
such bonds will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
The ratings from AA to CCC may be modified by the addition of a plus or minus
sign to show relative standing within the major rating categories.
*Ratings are generally given to securities at the time of issuance. While the
rating agencies may from time to time revise such ratings, they undertake no
obligation to do so.
WEMF SAI B-20
<PAGE>
PROFESSIONALLY MANAGED PORTFOLIOS
FORM N-1A
PART C
Item 24. Financial Statements and Exhibits.
(a) Financial Statements for the fiscal year ended June 30, 1997:
Incorporated by Reference from the annual reports to shareholders for
the fiscal year ended June 30, 1997 (Boston Managed Growth Fund,
Leonetti Balanced Fund and U.S. Global Leaders Growth Fund Series).
Financial Statements: Financial Statements for the fiscal year ended
March 31, 1997: Incorporated by reference from the annual reports to
shareholders for the fiscal year ended March 31, 1997) (Avondale Total
Return, Harris Bretall Sullivan & Smith Growth Equity, Hodges,
Osterweis, Perkins Opportunity Fund Series).
Financial Statements: Financial Statements for the fiscal year ended
March 31, 1998: Incorporated by reference from the annual report to
shareholders for the fiscal year ended March 31, 1998) (Pro-Conscience
Women's Equity Mutual Fund Series).
Financial Statements for the fiscal year ended April 30, 1997:
Incorporated by Reference from the annual reports to shareholders for
the fiscal year ended April 30, 1997 (Pzena Focused Value Fund and
Titan Financial Services Fund series).
Financial Statements for the fiscal year ended August 31, 1997:
Incorporated by Reference from the annual reports to shareholders for
the fiscal year ended August 31, 1997 (Academy Value, Lighthouse
Contrarian and Trent Equity Fund Series).
Financial Statements for the fiscal year ended December 31, 1997;
Incorporated by Reference from the annual reports to shareholders for
the fiscal year ended December 31, 1997 (Matrix Growth Fund Series,
Matrix Emerging Growth Fund Series)
(b) Exhibits:
(1) Agreement and Declaration of Trust (2)
(2) By-Laws (2)
(3) Voting Trust Agreement--Not applicable
(4) Specimen stock certificate (3)
(5) Form of Investment Advisory Agreement (1)
(6) Form of Distribution Agreement (1)
(7) Benefit Plan--Not applicable
(8) Form of Custodian Agreement
(9) (1) Form of Administration Agreement with Investment
Company Administration Corporation (5)
(2)(a) Fund Accounting Service Agreement with
American Data Services
(2)(b) Transfer Agency and Service Agreement with
American Data Services
(3) Transfer Agency and Fund Accounting Agreement with
Countrywide Fund Services (6)
(4) Transfer Agency Agreement with Provident Financial
Processing Corporation (7)
(10) Opinion and consent of counsel (3)
(11) Consent of Independent Auditors
(12) All financial statements omitted from Item 23
--Not applicable
(13) Letter of understanding relating to initial capital (3)
(14) Model Retirement Plan Documents--Not applicable
(15) Form of Plan pursuant to Rule 12b-1 (1)
(16) Schedule for Computation of Performance
Quotations (4)
(17) Financial Data Schedule (3)
1 Incorporated by reference from Post-Effective Amendment No. 24 to the
Registration Statement on Form N-1A, filed on January 16, 1996.
2 Incorporated by reference from Post-Effective Amendment No. 23 to the
Registration Statement on Form N-1A, filed on December 29, 1995.
3 Incorporated by reference from Pre-Effective Amendment No. 1 to the
Registration Statement on Form N-1A, filed on April 13, 1987.
4 Incorporated by reference to Post-Effective Amendment No. 7 to the
Registration Statement on Form N-1A filed on June 17, 1992.
5 Incorporated by reference from Post-Effective Amendment No. 35 to the
Registration Statement on Form N-1A, filed on April 24, 1997.
6 Incorporated by reference from Post-Effective Amendment No. 43 to the
Registration Statement on Form N-1A, filed on February 5, 1998.
7 To be filed by amendment.
Item 25. Persons Controlled by or under Common Control with Registrant.
As of the date of this Amendment to the Registration Statement, there
are no persons controlled or under common control with the Registrant.
Item 26. Number of Holders of Securities.
Number of Record
Holders as of
Title of Class April 8, 1998
Shares of Beneficial Interest, no par value:
Academy Value Fund 218
Avondale Total Return Fund 145
Boston Balanced Fund 251
Hodges Fund 1041
Osterweis Fund 128
PGP Korea Growth Fund 23
Perkins Opportunity Fund 6,307
Pro-Conscience Women's Equity Mutual Fd. 602
Trent Equity Fund 149
Matrix Growth Fund 388
Matrix Emerging Growth Fund 83
Leonetti Balanced Fund 355
Lighthouse Contrarian Fund 406
U.S.Global Leaders Growth Fund 459
Harris, Bretall, Sullivan & Smith
Growth Equity Fund 110
Pzena Focused Value Fund 230
Titan Financial Services Fund 980
Item 27. Indemnification
The information on insurance and indemnification is incorporated by
reference to Pre-Effective Amendment No. 1 and Post-Effective Amendment No. 1 to
the Registrant's Registration Statement.
In addition, insurance coverage for the officers and trustees of the
Registrant also is provided under a Directors and Officers/Errors and Omissions
Liability insurance policy issued by ICI Mutual Insurance Company with a
$1,000,000 limit of liability.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 ("Securities Act") 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 Securities Act and is therefore unenforceable. In the event
that a claim for indemnification against such liabilities (other than payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in connection with the successful defense
of any action, suit or proceeding) is asserted against the Registrant by such
director, officer or controlling person in connection with the shares 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 Securities Act and will be governed by the final
adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser.
With respect to Investment Advisors, the response to this item is
incorporated by reference to their Form ADVs as amended:
Herbert R. Smith & Co, Inc. File No. 801-7098
Hodges Capital Management, Inc. File No. 801-35811
Perkins Capital Management, Inc. File No. 801-22888
Osterweis Capital Management File No. 801-18395
Pro-Conscience Funds, Inc. File No. 801-43868
Trent Capital Management, Inc. File No. 801-34570
Academy Capital Management File No. 801-27836
Sena, Weller, Rohs, Williams File No. 801-5326
Leonetti & Associates, Inc. File No. 801-36381
Lighthouse Capital Management File No. 801-32168
Yeager, Wood & Marshall, Inc. File No. 801-4995
Harris Bretall Sullivan & Smith File No. 801-7369
Pzena Investment Management LLC File No. 801-50838
Titan Investment Advisers, LLC File No. 801-51306
Pacific Gemini Partners LLC File No. 801-50007
With respect to United States Trust Company of Boston, the response to this
item is incorporated by reference to the responses to Item 5 of Part A and Item
16 of Part B ("Management")of Post-Effective Amendment No. 20 to the
Registration Statement.
Item 29. Principal Underwriters.
(a) First Fund Distributors, Inc. (the "Distributor") is the principal
underwriter all series of the Registrant except for the Hodges Fund, the Matrix
Growth Fund and the Matrix Emerging Growth Fund. The Distributor acts as
principal underwriter for the following other investment companies:
Advisors Series Trust
Brandes Investment Trust
Fleming Mutual Fund Group
Fremont Mutual Funds
Guinness Flight Investment Funds
Jurika & Voyles Fund Group
Kayne Anderson Mutual Funds
Masters' Select Investment Trust
O'Shaughnessy Funds, Inc.
PIC Investment Trust
Purisima Funds
Rainier Investment Management Mutual Funds
RNC Mutual Fund Group
UBS Private Investor Funds
First Dallas Securities, Inc., 2311 Cedar Springs Rd., Ste. 100, Dallas, TX
75201, an affiliate of Hodges Capital Management, acts as Distributor of the
Hodges Fund. The President and Chief Financial Officer of First Dallas
Securities, Inc. is Don W. Hodges. First Dallas does not act as principal
underwriter for any other investment companies. Reynolds, DeWitt Securities Co.,
an affiliate of Sena Weller Rohs Williams, 300 Main St., Cincinnati, OH 45202,
acts as Distributor for the Matrix Growth Fund and Matrix Emerging Growth Fund.
(b) The officers of First Fund Distributors, Inc. are:
Robert H. Wadsworth President & Treasurer
Eric Banhazl Vice President
Steven J. Paggioli Secretary
Each officer's business address is 4455 E. Camelback Rd., Ste. 261-E,
Phoenix, AZ 85018. Mr. Paggioli serves as President and a Trustee of the
Registrant. Mr. Wadsworth serves as Vice President of the Registrant. Mr.
Banhazl serves as Treasurer of the Registrant.
c. Incorporated by reference from the Statement of Additional
Information filed herewith as Part B.
Item 30. Location of Accounts and Records.
The accounts, books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940 and
the rules promulgated thereunder are in the possession the Registrant's
custodian and transfer agent, except those records relating to portfolio
transactions and the basic organizational and Trust documents of the Registrant
(see Subsections (2) (iii). (4), (5), (6), (7), (9), (10) and (11) of Rule
31a-1(b)), which, with respect to portfolio transactions are kept by each Fund's
Advisor at its address set forth in the prospectus and statement of additional
information and with respect to trust documents by its administrator at 479 West
22nd Street, New York, NY 10011 and 2020 E. Financial Way, Ste. 100, Glendora,
CA 91741.
Item 31. Management Services.
There are no management-related service contracts not discussed in
Parts A and B.
Item 32. Undertakings
The registrant undertakes:
(a) To furnish each person to whom a Prospectus is delivered a
copy of Registrant's latest annual report to shareholders,
upon request and without charge.
(b) If requested to do so by the holders of at least 10% of the
Trust's outstanding shares, to call a meeting of shareholders
for the purposes of voting upon the question of removal of a
director and assist in communications with other shareholders.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940 the Registrant certifies that it meets all of the
requirements for effectiveness of this amendment to this registration statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused
this amendment to this Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the City of New York in the State of
New York on June 2, 1998.
PROFESSIONALLY MANAGED PORTFOLIOS
By /S/ Steven J. Paggioli
Steven J. Paggioli
President
Pursuant to the requirements of the Securities Act of 1933, this amendment
to this Registration Statement has been signed below by the following persons in
the capacities and on the date indicated.
/S/ Steven J. Paggioli Trustee June 2, 1998
Steven J. Paggioli
/S/ Eric M. Banhazl Principal June 2, 1998
Eric M. Banhazl Financial
Officer
Dorothy A. Berry Trustee June 2, 1998
*Dorothy A. Berry
Wallace L. Cook Trustee June 2, 1998
*Wallace L. Cook
Carl A. Froebel Trustee June 2, 1998
*Carl A. Froebel
Rowley W. P. Redington Trustee June 2, 1998
*Rowley W. P. Redington
* By /S/ Steven J. Paggioli
Steven J. Paggioli, Attorney-in-Fact under powers of
attorney as filed with Post-Effective Amendment No. 20 to the
Registration Statement filed on May 17, 1995
CUSTODY AGREEMENT
This agreement (the "Agreement") is entered into as of March 1, 1996, by
and between PROFESSIONALLY MANAGED PORTFOLIOS on behalf of its series listed in
Attachment A to this Agreement (the "Trust") and Star Bank, National
Association, (the "Custodian"), a national banking association having its
principal office at 425 Walnut Street, Cincinnati, Ohio, 45202.
WHEREAS, the Trust and the Custodian desire to enter into this
Agreement to provide for the custody and safekeeping of the assets of the Trust
as required by the Act (as hereafter defined).
THEREFORE, in consideration of the mutual promises hereinafter set
forth, the Trust and the Custodian agree as follows:
ARTICLE I
Definitions
The following words and phrases, when used in this Agreement, unless
the context otherwise requires, shall have the following meanings:
Act - the Investment Company Act of 1940, as amended. 1934 Act - the
Securities and Exchange Act of 1934, as amended.
Authorized Person - any (i) Officer of the Trust or (ii) any other
person, whether or not any such person is an officer or employee of the Trust,
who is duly authorized by the Board of Trustees of the Trust to give Oral
Instructions and Written Instructions on behalf of the Trust or any Fund, and
named in Appendix A attached hereto and as amended from time to time by
resolution of the Board of Trustees, certified by an Officer, and received by
the Custodian.
Board of Trustees - the Trustees from time to time serving under the
Trust's Agreement and Declaration of Trust, as from time to time
amended.
Book-Entry System - a federal book-entry system as provided in Subpart
O of Treasury Circular No. 300, 31 CFR 306, in Subpart B of 31 CFT Part 350, or
in such book-entry regulations of federal agencies as are substantially in the
form of Subpart O.
Business Day - any day recognized as a settlement day by The New York
Stock Exchange, Inc. and any other day for which the Trust computes the net
asset value of Shares of any fund.
Depository - The Depository Trust Company ("DTC"), a limited purpose
trust company, its successor(s) and its nominee(s). Depository shall include any
other clearing agency registered with the SEC under Section 17A of the 1934 Act
which acts as a system for the central handling of Securities where all
Securities of any particular class or series of an issuer deposited within the
system are treated as fungible and may be transferred or pledged by bookkeeping
entry without physical delivery of the Securities provided that the Custodian
shall have received a copy of a resolution of the Board of Trustees, certified
by an Officer, specifically approving the use of such clearing agency as a
depository for the Funds.
Dividend and Transfer Agent - the dividend and transfer agent
appointed, from time to time, pursuant to a written agreement between the
dividend and transfer agent and the Trust.
Foreign Securities - a) securities issued and sold primarily outside of
the United States by a foreign government, a national of any foreign country, or
a trust or other organization incorporated or organized under the laws of any
foreign country or; b) securities issued or guaranteed by the government of the
United States, by any state, by any political subdivision or agency thereof, or
by any entity organized under the laws of the United States or of any state
thereof, which have been issued and sold primarily outside of the United States.
Fund - each series of the Trust listed in Appendix B and any additional
series added pursuant to Proper Instructions. A series is individually referred
to as a "Fund" and collectively referred to as the "Funds."
Money Market Security - debt obligations issued or guaranteed as to
principal and/or interest by the government of the United States or agencies or
instrumentalities thereof, commercial paper, obligations (including certificates
of deposit, bankers' acceptances, repurchase agreements and reverse repurchase
agreements with respect to the same), and time deposits of domestic banks and
thrift institutions whose deposits are insured by the Federal Deposit Insurance
Corporation, and short-term corporate obligations where the purchase and sale of
such securities normally require settlement in federal funds or their equivalent
on the same day as such purchase and sale, all of which mature in not more than
thirteen (13) months.
NASD - the National Association of Securities Dealers, Inc.
Officer - the Chairman, President, Secretary, Treasurer, any Vice
President, Assistant Secretary or Assistant Treasurer of the Trust.
Oral Instructions - instructions orally transmitted to and received by
the Custodian from an Authorized Person (or from a person that the Custodian
reasonably believes in good faith to be an Authorized Person) and confirmed by
Written Instructions in such a manner that such Written Instructions are
received by the Custodian on the Business Day immediately following receipt of
such Oral Instructions.
Proper Instructions - Oral Instructions or Written Instructions. Proper
Instructions may be continuing Written Instructions when deemed appropriate by
both parties.
Prospectus - the then currently effective prospectus and Statement of
Additional Information of each Fund, as filed with and declared effective from
time to time by the Securities and Exchange Commission.
Security or Securities - Money Market Securities, common stock,
preferred stock, options, financial futures, bonds, notes, debentures, corporate
debt securities, mortgages, bank certificates of deposit, bankers' acceptances,
mortgage-backed securities or other obligations and any certificates, receipts,
warrants, or other instruments or documents representing rights to receive,
purchase, or subscribe for the same or evidencing or representing any other
rights or interest therein, or any similar property or assets that the Custodian
has the facilities to clear and to service.
SEC - the Securities and Exchange Commission of the United States of
America.
Shares - with respect to a Fund, the shares of beneficial interest
issued by the Trust on account of such Fund. Trust - the U.S.
Global Leaders Variable Insurance Trust, a business trust organized
under the laws of Delaware, which is an open-end management
investment company registered under the Act.
Written Instructions - communications in writing actually received by
the Custodian from an Authorized Person. A communication in writing includes a
communication by facsimile, telex or between electro-mechanical or electronic
devices (where the use of such devices have been approved by resolution of the
Trustees and the resolution is certified by an Officer and delivered to the
Custodian). All written communications shall be directed to the Custodian,
attention: Mutual Fund Custody Department.
ARTICLE II
Appointment; Acceptance; and Furnishing of Documents
A. Appointment of Custodian. The Trust hereby constitutes and appoints
the Custodian as custodian of all Securities and cash owned by the Trust at any
time during the term of this Agreement.
B. Acceptance of Custodian. The Custodian hereby accepts appointment as
such custodian and agrees to perform the duties thereof as hereinafter set
forth.
C. Documents to be Furnished. The following documents, including any
amendments thereto, will be provided contemporaneously with the execution of the
Agreement, to the Custodian by the Trust:
1. A copy of the Declaration of Trust of the Trust
certified by the Secretary or an Assistant Secretary..
2. A copy of the By-Laws of the Trust certified by the
Secretary or an Assistant Secretary.
3. A copy of the resolution of the Board of Trustees of
the Trust appointing the Custodian, certified by the
Secretary or an Assistant Secretary.
4. A copy of the latest amendment to the Trust's
Registration Statement.
5. A Certificate of the President and Secretary of
the Trust setting forth the names and signatures of the current Officers of the
Trust and other Authorized Persons.
D. Notice of Appointment of Dividend and Transfer Agent. The
Trust agrees to notify the Custodian in writing of the appointment, termination
or change in appointment of any Dividend and Transfer Agent.
ARTICLE III
Receipt of Trust Assets
A. Delivery of Moneys. During the term of this Agreement, the Trust
will deliver or cause to be delivered to the Custodian all moneys to be held by
the Custodian for the account of any Fund. The Custodian shall be entitled to
reverse any deposits made on any Fund's behalf where such deposits have been
entered and moneys are not finally collected within 30 days of the making of
such entry.
B. Delivery of Securities. During the term of this Agreement,
the Trust will deliver or cause to be delivered to the Custodian all Securities
to be held by the Custodian for the account of any Fund. The Custodian will not
have any duties or responsibilities with respect to such Securities until
actually received by the Custodian.
C. Payments for Shares. As and when received, the Custodian
shall deposit to the account(s) of a Fund any and all payments for Shares of
that Fund issued or sold from time to time as they are received from the Trust's
distributor or Dividend and Transfer Agent or from the Trust itself.
D. Duties Upon Receipt. The Custodian shall not be responsible
for any Securities, moneys or other assets of any Fund until actually received
by it.
E. Validity of Title. The Custodian shall not be responsible for the
title, validity or genuineness of any property or evidence of title thereto
received or delivered by it pursuant to this Agreement.
ARTICLE IV
Disbursement of Trust Assets
A. Declaration of Dividends by Trust. The Trust shall furnish to the
Custodian a copy of the resolution of the Board of Trustees of the Trust,
certified by the Trust's Secretary or an Assistant Secretary, either (i) setting
forth the date of the declaration of any dividend or distribution in respect of
Shares of any Fund of the Trust, the date of payment thereof, the record date as
of which the Fund shareholders entitled to payment shall be determined, the
amount payable per share to Fund shareholders of record as of that date, and the
total amount to be paid by the Dividend and Transfer Agent on the payment date,
or (ii) authorizing the declaration of dividends and distributions in respect of
Shares of a Fund on a daily basis and authorizing the Custodian to rely on
Written Instructions setting forth the date of the declaration of any such
dividend or distribution, the date of payment thereof, the record date as of
which the Fund shareholders entitled to payment shall be determined, the amount
payable per share to Fund shareholders of record as of that date, and the total
amount to be paid by the Dividend and Transfer Agent on the payment date.
On the payment date specified in the resolution or Written Instructions
described above, the Custodian shall segregate such amounts from moneys held for
the account of the Fund so that they are available for such payment.
B. Segregation of Redemption Proceeds. Upon receipt of Proper
Instructions so directing it, the Custodian shall segregate amounts necessary
for the payment of redemption proceeds to be made by the Dividend and Transfer
Agent from moneys held for the account of the Fund so that they are available
for such payment.
C. Disbursements of Custodian. Upon receipt of a Proper Instructions
directing payment and setting forth the name and address of the person to whom
such payment is to be made, the amount of such payment, the name of the Fund
from which payment is to be made, and the purpose for which payment is to be
made, the Custodian shall disburse amounts as and when directed from the assets
of that Fund. The Custodian is authorized to rely on such directions and shall
be under no obligation to inquire as to the propriety of such directions.
D. Payment of Custodian Fees. Upon receipt of Written
Instructions directing payment, the Custodian shall disburse moneys from the
assets of the Trust in payment of the Custodian's fees and expenses as provided
in Article VIII hereof.
ARTICLE V
Custody of Trust Assets
A. Separate Accounts for Each Fund. As to each Fund, the Custodian
shall open and maintain a separate bank account or accounts in the United States
in the name of the Trust coupled with the name of such Fund, subject only to
draft or order by the Custodian acting pursuant to the terms of this Agreement,
and shall hold all cash received by it from or for the account of the Fund,
other than cash maintained by the Fund in a bank account established and used by
the Fund in accordance with Rule 17f-3 under the Act. Moneys held by the
Custodian on behalf of a Fund may be deposited by the Custodian to its credit as
Custodian in the banking department of the Custodian. Such moneys shall be
deposited by the Custodian in its capacity as such, and shall be withdrawable by
the Custodian only in such capacity.
B. Segregation of Non-Cash Assets. All Securities and non-cash property
held by the Custodian for the account of a Fund (other than Securities
maintained in a Depository or Book-entry System) shall be physically segregated
from other Securities and non-cash property in the possession of the Custodian
(including the Securities and non-cash property of the other Funds) and shall be
identified as subject to this Agreement.
C. Securities in Bearer and Registered Form. All Securities held which
are issued or issuable only in bearer form, shall be held by the Custodian in
that form; all other Securities held for the Fund may be registered in the name
of the Custodian, any sub-custodian appointed in accordance with this Agreement,
or the nominee of any of them. The Trust agrees to furnish to the Custodian
appropriate instruments to enable the Custodian to hold, or deliver in proper
form for transfer, any Securities that it may hold for the account of any Fund
and which may, from time to time, be registered in the name of a Fund.
D. Duties of Custodian As to Securities. Unless otherwise instructed by
the Trust, with respect to all Securities held for the Trust, the Custodian
shall on a timely basis (concerning items 1 and 2 below, as defined in the
Custodian's Standards of Service Guide, as amended from time to time, annexed
hereto as Appendix D):
1.) Collect all income due and payable with respect to
such Securities;
2.) Present for payment and collect amounts payable
upon all Securities which may mature or be called,
redeemed, or retired, or otherwise become payable;
3.) Surrender interim receipts or Securities in temporary
form for Securities in definitive form; and
4.) Execute, as Custodian, any necessary declarations or
certificates of ownership under the Federal income tax laws or the laws or
regulations of any other taxing authority, including any foreign taxing
authority, now or hereafter in effect.
E. Certain Actions Upon Written Instructions. Upon receipt of a
Written Instructions and not otherwise, the Custodian shall:
1.) Execute and deliver to such persons as may be
designated in such Written Instructions proxies, consents, authorizations, and
any other instruments whereby the authority of the Trust as beneficial owner of
any Securities may be exercised;
2.) Deliver any Securities in exchange for other
Securities or cash issued or paid in connection with the liquidation,
reorganization, refinancing, merger, consolidation, or recapitalization of any
trust, or the exercise of any conversion privilege;
3.) Deliver any Securities to any protective committee,
reorganization committee, or other person in
connection with the reorganization, refinancing,
merger, consolidation, recapitalization, or sale of
assets of any trust, and receive and hold under the
terms of this Agreement such certificates of deposit,
interim receipts or other instruments or documents as
may be issued to it to evidence such delivery;
4.) Make such transfers or exchanges of the assets of any
Fund and take such other steps as shall be stated in
the Written Instructions to be for the purpose of
effectuating any duly authorized plan of liquidation,
reorganization, merger, consolidation or
recapitalization of the Trust; and
5.) Deliver any Securities held for any Fund to the
depository agent for tender or other similar offers.
F. Custodian to Deliver Proxy Materials. The Custodian shall promptly
deliver to the Trust all notices, proxy material and executed but unvoted
proxies pertaining to shareholder meetings of Securities held by any Fund. The
Custodian shall not vote or authorize the voting of any Securities or give any
consent, waiver or approval with respect thereto unless so directed by Written
Instructions.
G. Custodian to Deliver Tender Offer Information. The Custodian shall
promptly deliver to the Trust all information received by the Custodian and
pertaining to Securities held by any Fund with respect to tender or exchange
offers, calls for redemption or purchase, or expiration of rights. If the Trust
desires to take action with respect to any tender offer, exchange offer or other
similar transaction, the Trust shall notify the Custodian at least five Business
Days prior to the date on which the Custodian is to take such action. The Trust
will provide or cause to be provided to the Custodian all relevant information
for any Security which has unique put/option provisions at least five Business
Days prior to the beginning date of the tender period.
ARTICLE VI
Purchase and Sale of Securities
A. Purchase of Securities. Promptly after each purchase of Securities
by the Trust, the Trust shall deliver to the Custodian (i) with respect to each
purchase of Securities which are not Money Market Securities, Written
Instructions, and (ii) with respect to each purchase of Money Market Securities,
Proper Instructions, specifying with respect to each such purchase the;
1.) name of the issuer and the title of the Securities,
2.) the number of shares, principal amount purchased (and
accrued interest, if any) or other units purchased,
3.) date of purchase and settlement,
4.) purchase price per unit,
5.) total amount payable,
6.) name of the person from whom, or the broker through
which, the purchase was made,
7.) the name of the person to whom such amount is
payable, and
8.) the Fund for which the purchase was made. The Custodian
shall, against receipt of Securities purchased by or for the Trust, pay out of
the moneys held for the account of such Fund the total amount specified in the
Written Instructions, or Oral Instructions, if applicable, to the person named
therein. The Custodian shall not be under any obligation to pay out moneys to
cover the cost of a purchase of Securities for a Fund, if in the relevant Fund
custody account there is insufficient cash available to the Fund for which such
purchase was made.
B. Sale of Securities. Promptly after each sale of Securities by a
Fund, the Trust shall deliver to the Custodian (i) with respect to each sale of
Securities which are not Money Market Securities, Written Instructions, and (ii)
with respect to each sale of Money Market Securities, Proper Instructions,
specifying with respect to each such sale the:
1.) name of the issuer and the title of the Securities,
2.) number of shares, principal amount sold (and accrued
interest, if any) or other units sold,
3.) date of sale and settlement,
4.) sale price per unit,
5.) total amount receivable,
6.) name of the person to whom, or the broker through
which, the sale was made,
7.) name of the person to whom such Securities are to be
delivered, and
8.) Fund for which the sale was made. The Custodian shall
deliver the Securities against receipt of the total amount specified in the
Written Instructions, or Oral Instructions, if applicable. Notwithstanding any
other provision of this Agreement, the Custodian, when properly instructed as
provided herein to deliver Securities against payment, shall be entitled, if in
accordance with generally accepted market practice, to deliver such Securities
prior to actual receipt of final payment therefor. In any such case, the Fund
for which the Securities were delivered shall bear the risk that final payment
for the Securities may not be made or that the Securities may be returned or
otherwise held or disposed of by or through the person to whom they were
delivered, and the Custodian shall have no liability for any of the foregoing.
C. Payment on Settlement Date. On contractual settlement date, the
account of the Fund will be charged for all purchased Securities settling on
that day, regardless of whether or not delivery is made. Likewise, on
contractual settlement date, proceeds from the sale of Securities settling that
day will be credited to the account of the Fund, irrespective of delivery. Any
such credit shall be conditioned upon actual receipt by Custodian of final
payment and may be reversed if final payment is not actually received in full.
D. Credit of Moneys Prior to Receipt. With respect to any credit given
prior to actual receipt of final payment, the Custodian may, in its sole
discretion and from time to time, permit a Fund to use funds so credited to its
Fund custody account in anticipation of actual receipt of final payment. Any
such funds shall be deemed a loan from the Custodian to the Trust payable on
demand and bearing interest accruing from the date such loan is made up to but
not including the date on which such loan is repaid at the rate per annum
customarily charged by the Custodian on similar loans.
E. Segregated Accounts. The Custodian shall, upon receipt of
Proper Instructions so directing it, establish and maintain a segregated account
or accounts for and on behalf of a Fund. Cash and/or Securities may be
transferred into such account or accounts for specific purposes, to-wit:
1.) in accordance with the provision of any agreement
among the Trust, the Custodian, and a broker-dealer
registered under the 1934 Act, and also a member of
the NASD (or any futures commission merchant
registered under the Commodity Exchange Act),
relating to compliance with the rules of the Options
Clearing Corporation and of any registered national
securities exchange, the Commodity Futures Trading
Commission, any registered contract market, or any
similar organization or organizations requiring
escrow or other similar arrangements in connection
with transactions by the Fund;
2.) for purposes of segregating cash or Securities in
connection with options purchased, sold, or written by
the Fund or commodity futures contracts or options
thereon purchased or sold by the Fund;
3.) for the purpose of compliance by the Fund with the
procedures required for reverse repurchase agreements,
firm commitment agreements, standby commitment
agreements, and short sales by Act Release No. 10666,
or any subsequent release or releases or rule of the
SEC relating to the maintenance of segregated accounts
by registered investment companies;
4.) for the purpose of segregating collateral for loans of
Securities made by the Fund; and
5.) for other proper corporate purposes, but only upon
receipt of, in addition to Proper Instructions, a copy
of a resolution of the Board of Trustees, certified by
an Officer, setting forth the purposes of such
segregated account.
Each segregated account established hereunder shall be established and
maintained for a single Fund only. All Proper Instructions relating to a
segregated account shall specify the Fund involved.
F. Advances for Settlement. Except as otherwise may be agreed upon by
the parties hereto, the Custodian shall not be required to comply with any
Written Instructions to settle the purchase of any Securities on behalf of a
Fund unless there is sufficient cash in the account(s) pertaining to such Fund
at the time or to settle the sale of any Securities from such an account(s)
unless such Securities are in deliverable form. Notwithstanding the foregoing,
if the purchase price of such Securities exceeds the amount of cash in the
account(s) at the time of such purchase, the Custodian may, in its sole
discretion, advance the amount of the difference in order to settle the purchase
of such Securities. The amount of any such advance shall be deemed a loan from
the Custodian to the Trust payable on demand and bearing interest accruing from
the date such loan is made up to but not including the date such loan is repaid
at the rate per annum customarily charged by the Custodian on similar loans.
ARTICLE VII
Trust Indebtedness
In connection with any borrowings by the Trust, the Trust will cause to
be delivered to the Custodian by a bank or broker requiring Securities as
collateral for such borrowings (including the Custodian if the borrowing is from
the Custodian), a notice or undertaking in the form currently employed by such
bank or broker setting forth the amount of collateral. The Trust shall promptly
deliver to the Custodian Written Instructions specifying with respect to each
such borrowing: (a) the name of the bank or broker, (b) the amount and terms of
the borrowing, which may be set forth by incorporating by reference an attached
promissory note duly endorsed by the Trust, or a loan agreement, (c) the date,
and time if known, on which the loan is to be entered into, (d) the date on
which the loan becomes due and payable, (e) the total amount payable to the
Trust on the borrowing date, and (f) the description of the Securities securing
the loan, including the name of the issuer, the title and the number of shares
or other units or the principal amount. The Custodian shall deliver on the
borrowing date specified in the Written Instructions the required collateral
against the lender's delivery of the total loan amount then payable, provided
that the same conforms to that which is described in the Written Instructions.
The Custodian shall deliver, in the manner directed by the Trust, such
Securities as additional collateral, as may be specified in Written
Instructions, to secure further any transaction described in this Article VII.
The Trust shall cause all Securities released from collateral status to be
returned directly to the Custodian and the Custodian shall receive from time to
time such return of collateral as may be tendered to it.
The Custodian may, at the option of the lender, keep such collateral in
its possession, subject to all rights therein given to the lender because of the
loan. The Custodian may require such reasonable conditions regarding such
collateral and its dealings with third-party lenders as it may deem appropriate.
ARTICLE VIII
Concerning the Custodian
A. Limitations on Liability of Custodian. Except as otherwise provided
herein, the Custodian shall not be liable for any loss or damage resulting from
its action or omission to act or otherwise, except for any such loss or damage
arising out of its own gross negligence or willful misconduct. The Trust shall
defend, indemnify and hold harmless the Custodian and its directors, officers,
employees and agents with respect to any loss, claim, liability or cost
(including reasonable attorneys' fees) arising or alleged to arise from or
relating to the Trust's duties hereunder or any other action or inaction of the
Trust or its Trustees, officers, employees or agents, except such as may arise
from the grossly negligent action or omission, willful misconduct or breach of
this Agreement by the Custodian. The Custodian shall be entitled to rely on and
may act upon the advice and opinion of counsel on all matters, at the expense of
the Trust, and shall be without liability for any action reasonably taken or
omitted pursuant to such advice or opinion of counsel. The provisions under this
paragraph shall survive the termination of this Agreement.
B. Actions Not Required By Custodian. Without limiting the
generality of the foregoing, the Custodian, acting in the
capacity of Custodian hereunder, shall be under no obligation
to inquire into, and shall not be liable for:
1.) The validity of the issue of any Securities purchased
by or for the account of any Fund, the legality of the
purchase thereof, or the propriety of the amount paid
therefor;
2.) The legality of the sale of any Securities by or for
the account of any Fund, or the propriety of the
amount for which the same are sold;
3.) The legality of the issue or sale of any Shares of any
Fund, or the sufficiency of the amount to be received
therefor;
4.) The legality of the redemption of any Shares of any
Fund, or the propriety of the amount to be paid
therefor;
5.) The legality of the declaration or payment of any
dividend by the Trust in respect of Shares of any
Fund;
6.) The legality of any borrowing by the Trust on behalf
of the Trust or any Fund, using Securities as
collateral;
7.) Whether the Trust or a Fund is in compliance with the
1940 Act, the regulations thereunder, the provisions
of the Trust's Declaration of Trust or by-laws, or its
investment objectives and policies as then in effect.
C. No Duty to Collect Amounts Due From Dividend and Transfer Agent. The
Custodian shall not be under any duty or obligation to take action to effect
collection of any amount due to the Trust from any Dividend and Transfer Agent
of the Trust nor to take any action to effect payment or distribution by any
Dividend and Transfer Agent of the Trust of any amount paid by the Custodian to
any Dividend and Transfer Agent of the Trust in accordance with this Agreement.
D. No Enforcement Actions. Notwithstanding Section D of Article V, the
Custodian shall not be under any duty or obligation to take action, by legal
means or otherwise, to effect collection of any amount, if the Securities upon
which such amount is payable are in default, or if payment is refused after due
demand or presentation, unless and until (i) it shall be directed to take such
action by Written Instructions and (ii) it shall be assured to its satisfaction
(including prepayment thereof) of reimbursement of its costs and expenses in
connection with any such action.
E. Authority to Use Agents and Sub-Custodians. The Trust acknowledges
and hereby authorizes the Custodian to hold Securities through its various
agents described in Appendix C annexed hereto. The Trust hereby represents that
such authorization has been duly approved by the Board of Trustees of the Trust
as required by the Act.
In addition, the Trust acknowledges that the Custodian may appoint one
or more financial institutions, as agent or agents or as sub-custodian or
sub-custodians, including, but not limited to, banking institutions located in
foreign countries, for the purpose of holding Securities and moneys at any time
owned by the Funds. The Custodian shall not be relieved of any obligation or
liability under this Agreement in connection with the appointment or activities
of such agents or sub-custodians. Any such agent or sub-custodian shall be
qualified to serve as such for assets of investment companies registered under
the Act. The Funds shall reimburse the Custodian for all costs incurred by the
Custodian in connection with opening accounts with any such agents or
sub-custodians. Upon request, the Custodian shall promptly forward to the Trust
any documents it receives from any agent or sub-custodian appointed hereunder
which may assist trustees of registered investment companies to fulfill their
responsibilities under Rule 17f-5 of the Act.
F. No Duty to Supervise Investments. The Custodian shall not be under
any duty or obligation to ascertain whether any Securities at any time delivered
to or held by it for the account of the Trust are such as properly may be held
by the Trust under the provisions of the Articles of Incorporation and the
Trust's By-Laws.
G. All Records Confidential. The Custodian shall treat all records and
other information relating to the Trust and the assets of all Funds as
confidential and shall not disclose any such records or information to any other
person unless (i) the Trust shall have consented thereto in writing or (ii) such
disclosure is required by law.
H. Compensation of Custodian. The Custodian shall be entitled to
receive and the Trust agrees to pay to the Custodian such compensation as shall
be determined pursuant to Appendix E attached hereto, or as shall be determined
pursuant to amendments to Appendix E. The Custodian shall be entitled to charge
against any money held by it for the account of any Fund, the amount of any of
its fees, any loss, damage, liability or expense, including counsel fees. The
expenses which the Custodian may charge against the account of a Fund include,
but are not limited to, the expenses of agents or sub-custodians incurred in
settling transactions involving the purchase and sale of Securities of the Fund.
I. Reliance Upon Instructions. The Custodian shall be entitled to rely
upon any Proper Instructions. The Trust agrees to forward to the Custodian
Written Instructions confirming Oral Instructions in such a manner so that such
Written Instructions are received by the Custodian, whether by hand delivery,
telex, facsimile or otherwise, on the same Business Day on which such Oral
Instructions were given. The Trust agrees that the failure of the Custodian to
receive such confirming instructions shall in no way affect the validity of the
transactions or enforceability of the transactions hereby authorized by the
Trust. The Trust agrees that the Custodian shall incur no liability to the Trust
for acting upon Oral Instructions given to the Custodian hereunder concerning
such transactions.
J. Books and Records. The Custodian will (i) set up and maintain proper
books of account and complete records of all transactions in the accounts
maintained by the Custodian hereunder in such manner as will meet the
obligations of the Fund under the Act, with particular attention to Section 31
thereof and Rules 3la-1 and 3la-2 thereunder and those records are the property
of the Trust, and (ii) preserve for the periods prescribed by applicable Federal
statute or regulation all records required to be so preserved. All such books
and records shall be the property of the Trust, and shall be available, upon
request, for inspection by duly authorized officers, employees or agents of the
Trust and employees of the SEC.
K. Internal Accounting Control Systems. The Custodian shall send to
the Trust any report received on the systems of internal accounting control of
the Custodian, or its agents or sub-custodians, as the Trust may reasonably
request from time to time.
L. No Management of Assets By Custodian. The Custodian performs only
the services of a custodian and shall have no responsibility for the management,
investment or reinvestment of the Securities or other assets from time to time
owned by any Fund. The Custodian is not a selling agent for Shares and
performance of its duties as custodian shall not be deemed to be a
recommendation to any Fund's shareholders or others of Shares as an investment.
The Custodian shall have no duties or obligations whatsoever except such duties
and obligations as are specifically set forth in this Agreement, and no covenant
or obligation shall be implied in this Agreement against the Custodian.
M. Assistance to Trust. The Custodian shall take all reasonable action,
that the Trust may from time to time request, to assist the Trust in obtaining
favorable opinions from the Trust's independent accountants, with respect to the
Custodian's activities hereunder, in connection with the preparation of the
Trust's Form N- IA, Form N-SAR, or other annual reports to the SEC.
N. Grant of Security Interest. The Trust hereby pledges to and grants
the Custodian a security interest in the assets of any Fund to secure the
payment of any liabilities of the Trust to the Custodian, whether acting in its
capacity as Custodian or otherwise, or on account of money borrowed from the
Custodian. This pledge is in addition to any other pledge of collateral by the
Trust to the Custodian.
ARTICLE IX
Initial Term; Termination
A. Initial Term. This Agreement shall become effective as of its
execution and shall continue in full force and effect until terminated as
hereinafter provided.
B. Termination. Either party hereto may terminate this Agreement after
the Initial Term for any reason by giving to the other party a notice in writing
specifying the date of such termination, which shall be not less than ninety
(90) days after the date of giving of such notice. If such notice is given by
the Trust, it shall be accompanied by a copy of a resolution of the Board of
Trustees of the Trust, certified by the Secretary or an Assistant Secretary of
the Trust, electing to terminate this Agreement and designating a successor
custodian or custodians. In the event such notice is given by the Custodian, the
Trust shall, on or before the termination date, deliver to the Custodian a copy
of a resolution of the Board of Trustees of the Trust, certified by the
Secretary or an Assistant Secretary, designating a successor custodian or
custodians to act on behalf of the Trust. In the absence of such designation by
the Trust, the Custodian may designate a successor custodian which shall be a
bank or trust company having not less than $100,000,000 aggregate capital,
surplus, and undivided profits. Upon the date set forth in such notice this
Agreement shall terminate, and the Custodian, provided that it has received a
notice of acceptance by the successor custodian, shall deliver, on that date,
directly to the successor custodian all Securities and moneys then owned by the
Fund and held by it as Custodian. Upon termination of this Agreement, the Trust
shall pay to the Custodian on behalf of the Trust such compensation as may be
due as of the date of such termination. The Trust agrees on behalf of the Trust
that the Custodian shall be reimbursed for its reasonable costs in connection
with the termination of this Agreement.
C. Failure to Designate Successor Trustee. If a successor custodian is
not designated by the Trust, or by the Custodian in accordance with the
preceding paragraph, or the designated successor cannot or will not serve, the
Trust shall, upon the delivery by the Custodian to the Trust of all Securities
(other than Securities held in the Book-Entry System which cannot be delivered
to the Trust) and moneys then owned by the Trust, be deemed to be the custodian
for the Trust, and the Custodian shall thereby be relieved of all duties and
responsibilities pursuant to this Agreement, other than the duty with respect to
Securities held in the Book-Entry System, which cannot be delivered to the
Trust, which shall be held by the Custodian in accordance with this Agreement.
ARTICLE X
Force Majeure
Neither the Custodian nor the Trust shall be liable for any failure or
delay in performance of its obligations under this Agreement arising out of or
caused, directly or indirectly, by circumstances beyond its reasonable control,
including, without limitation, acts of God; earthquakes; fires; floods; wars;
civil or military disturbances; sabotage; strikes; epidemics; riots; power
failures; computer failure and any such circumstances beyond its reasonable
control as may cause interruption, loss or malfunction of utility,
transportation, computer (hardware or software) or telephone communication
service; accidents; labor disputes; acts of civil or military authority;
governmental actions; or inability to obtain labor, material, equipment or
transportation; provided, however, that the Custodian, in the event of a failure
or delay, shall use its best efforts to ameliorate the effects of any such
failure or delay.
ARTICLE XI
Miscellaneous
A. Designation of Authorized Persons. Appendix A sets forth the names
and the signatures of all Authorized Persons as of this date, as certified by
the Secretary or an Assistant Secretary of the Trust. The Trust agrees to
furnish to the Custodian a new Appendix A in form similar to the attached
Appendix A, if any present Authorized Person ceases to be an Authorized Person
or if any other or additional Authorized Persons are elected or appointed. Until
such new Appendix A shall be received, the Custodian shall be fully protected in
acting under the provisions of this Agreement upon Oral Instructions or
signatures of the then current Authorized Persons as set forth in the last
delivered Appendix A.
B. Limitation of Personal Liability. No recourse under any obligation
of this Agreement or for any claim based thereon shall be had against any
organizer, shareholder, officer, trustee, past, present or future as such, of
the Trust or of any predecessor or successor, either directly or through the
Trust or any such predecessor or successor, whether by virtue of any
constitution, statute or rule of law or equity, or by the enforcement of any
assessment or penalty or otherwise; it being expressly agreed and understood
that this Agreement and the obligations thereunder are enforceable solely
against the Trust, and that no such personal liability whatever shall attach to,
or is or shall be incurred by, the organizers, shareholders, officers, or
trustees of the Trust or of any predecessor or successor, or any of them as
such. To the extent that any such liability exists, it is hereby expressly
waived and released by the Custodian as a condition of, and as a consideration
for, the execution of this Agreement.
C. Authorization By Board. The obligations set forth in this Agreement
as having been made by the Trust have been made by the Board of Trustees, acting
as such Trustees for and on behalf of the Trust, pursuant to the authority
vested in them under the laws of the State of Delaware, the Declaration of Trust
and the By-Laws of the Trust. This Agreement has been executed by Officers of
the Trust as officers, and not individually, and the obligations contained
herein are not binding upon any of the Trustees, Officers, agents or holders of
shares, personally, but bind only the Trust.
D. Custodian's Consent to Use of Its Name. The Trust shall review with
the Custodian all provisions of the Prospectus and any other documents
(including advertising material) specifically mentioning the Custodian (other
than merely by name and address) and shall obtain the Custodian's consent prior
to the publication and/or dissemination or distribution thereof.
E. Notices to Custodian. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the Custodian, shall be
sufficiently given if addressed to the Custodian and mailed or delivered to it
at its offices at Star Bank Center, 425 Walnut Street, M. L. 6118, Cincinnati,
Ohio 45202, attention Mutual Fund Custody Department, or at such other place as
the Custodian may from time to time designate in writing.
F. Notices to Trust. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the Trust shall be
sufficiently given when delivered to the Trust or on the second Business Day
following the time such notice is deposited in the U.S. mail postage prepaid and
addressed to the Trust at its office at 4455 E. Camelback Road, Suite E261,
Phoenix, AZ 85018, or at such other place as the Trust may from time to time
designate in writing.
G. Amendments In Writing. This Agreement, with the exception of the
Appendices, may not be amended or modified in any manner except by a written
agreement executed by both parties with the same formality as this Agreement,
and authorized and approved by a resolution of the Board of Trustees of the
Trust.
H. Successors and Assigns. This Agreement shall extend to and shall be
binding upon the parties hereto, and their respective successors and assigns;
provided, however, that this Agreement shall not be assignable by the Trust or
by the Custodian, and no attempted assignment by the Trust or the Custodian
shall be effective without the written consent of the other party hereto.
I. Governing Law. This Agreement shall be construed in accordance with
the laws of the State of Ohio.
J. Jurisdiction. Any legal action, suit or proceeding to be instituted
by either party with respect to this Agreement shall be brought by such party
exclusively in the courts of the State of Ohio or in the courts of the United
States for the Southern District of Ohio, and each party, by its execution of
this Agreement, irrevocably (i) submits to such jurisdiction and (ii) consents
to the service of any process or pleadings by first class U.S. mail, postage
prepaid and return receipt requested, or by any other means from time to time
authorized by the laws of such jurisdiction.
K. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
L. Headings. The headings of paragraphs in this Agreement are for
convenience of reference only and shall not affect the meaning or construction
of any provision of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective Officers, thereunto
duly authorized as of the day and year first above written.
ATTEST: TRUST: PROFESSIONALLY MANAGED PORTFOLIOS
By:________________________
Title:_______________________
ATTEST: CUSTODIAN: Star Bank, N.A.
By:_________________________
Title:_______________________
ATTACHMENT A
Academy Value Fund
Avondale Total Return Fund
Boston Balanced Fund
Harris Bretall Sullivan & Smith Growth Equity Fund
Hodges Fund
Leonetti Balanced Fund
Lighthouse Contrarian Fund
Matrix Emerging Growth Fund
Matrix Growth Fund
PGP Korea Growth Fund
Perkins Discovery Fund
Perkins Opportunity Fund
Pro-Conscience Women's Equity Mutual Fund
Pzena Focused Value Fund
The Osterweis Fund
Titan Financial Services Fund
Trent Equity Fund
U.S. Global Leaders Growth Fund
FUND ACCOUNTING SERVICE AGREEMENT
AGREEMENT made the 1st day of February, 1996 by and between AMERICAN DATA
SERVICES, INC., a New York corporation ("ADS") and each Fund (the "Fund") listed
on Attachment A to this Agreement, each Fund being a series of PROFESSIONALLY
MANAGED PORTFOLIOS (the "Trust").
BACKGROUND
WHEREAS, the Trust is an open-end management investment company registered with
the Securities and Exchange Commission under the Investment Company Act of 1940
(the "1940 Act"); and
WHEREAS, ADS is a corporation experienced in providing accounting services to
mutual funds and possesses facilities sufficient to provide such services; and
WHEREAS, the Trust desires to avail itself of the experience, assistance and
facilities of ADS and to have ADS perform for the Trust certain services
appropriate to the operations of the Fund, and ADS is willing to furnish such
services in accordance with the terms hereinafter set forth.
TERMS
NOW, THEREFORE, in consideration of the promises and mutual covenants
hereinafter contained, the Trust and ADS hereby agree as follows:
1. DUTIES OF ADS
ADS will perform the following services for the Fund:
(a) Timely calculate and transmit to NASDAQ the Fund's daily net asset
value and communicate such value to the Fund and its transfer agent. All
portfolio securities will be valued in accordance with the methods that are
specified in the section of the Fund's prospectus that sets forth the procedures
utilized to calculate the daily net asset value per share of the Fund.;
(b) The Trust will select the pricing agent used by ADS to obtain the daily
market quotations to value the securities in the Fund's portfolio. ADS has
electronic interfaces with the following pricing agents:
1. Interactive Data Services Corporation
2. Kenny S&P
3. Muller Data Corporation
Should the Trust select a pricing agent other than those listed above ( an
"Alternative Pricing Agent"), ADS will take the necessary steps to open an
account with the Alternative Pricing Agent, obtain the file formats of the
electronic download to be received from the Alternative Pricing Agent that will
contain the daily market quotations, and make the necessary programming changes
to enable the ADS portfolio accounting system, PAIRS, automatically receive the
electronic download from the Alternative Pricing Agent.
Should the Trust select an Alternative Pricing Agent, ADS will charge the Fund a
fee ("Programming Fee") to make the aforementioned programming changes to PAIRS.
The Programming Fee will be calculated using the rate specified in Schedule A of
this Agreement under the Heading "Custom Programming".
(c) Maintain and keep current all books and records of the Fund as required
by Rule 31a-1 under the 1940 Act, as such rule or any successor rule may be
amended from time to time ("Rule 31a-1"), that are applicable to the fulfillment
of ADS's duties hereunder, as well as any other documents necessary or advisable
for compliance with applicable regulations as may be mutually agreed to between
the Trust and ADS. Without limiting the generality of the foregoing, ADS will
prepare and maintain the following records upon receipt of information in proper
form from the Trust or its authorized agents:
o Cash receipts journal
o Cash disbursements journal
o Dividend record
o Capital Gain/Loss record
o Purchase and sales - portfolio securities
journals
o Subscription and redemption journals
o Security ledgers
o Broker ledger
o General ledger
o Daily expense accruals
o Daily income accruals
o Securities and monies borrowed or loaned and
collateral therefore
o Foreign currency journals
o Trial balances
(d) Provide the Fund and its investment adviser with daily portfolio
valuation, net asset value calculation and other standard operational reports as
requested from time to time.
(e) Provide all raw data available from our fund accounting system (PAIRS)
for management's or the administrators preparation of the following:
1. Semi-annual financial statements;
2. Semi-annual form N-SAR;
3. Annual tax returns;
4. Financial data necessary to update form N-1A;
5. Annual proxy statement.
6. Financial data necessary to calculate all dividends and
capital gains distributions in accordance with Subchapter
M of the Internal Revenue Code.
ADS shall for all purposes herein be deemed to be an independent contractor and
shall, unless otherwise expressly provided or authorized, have no authority to
act for or represent the Trust in any way or otherwise be deemed an agent of the
Trust.
2. COMPENSATION OF ADS
In consideration of the services to be performed by ADS as set forth herein
for each portfolio listed in Schedule B, ADS shall be entitled to receive
compensation and reimbursement for all reasonable out-of-pocket expenses. The
Trust agrees to pay ADS the fees and reimbursement of out-of-pocket expenses as
set forth in the fee schedule attached hereto as Schedule A.
3. LIMITATION OF LIABILITY OF ADS.
(a) ADS may rely upon the advice of the Trust, or of counsel for the Trust
and upon statements of the Trust's independent accountants, brokers and other
persons reasonably believed by it in good faith to be expert in the matters upon
which they are consulted and for any actions reasonably taken in good faith
reliance upon such statements and without negligence or misconduct, ADS shall
not be liable to anyone.
(b) ADS shall be liable to the Trust for any losses arising out of any act
or omission in the course of its duties, the negligence, misfeasance, bad faith
of ADS or breach of the agreement by ADS or disregard of ADS's obligations and
duties under this agreement or the willful violation of any applicable law.
(c) ADS, the Trust and their respective shareholders, officers, director,
trustees, employees and agents (as "Indemnified Parties") and each of ADS and
the Trust (as "Indemnifying Parties") agree to the following indemnifications.
Except as may otherwise be provided by applicable law, no Indemnified Party
shall be subject to, and the Indemnifying Party shall indemnify and hold such
Indemnified Party harmless from and against, any liability for and any damages,
expenses or losses incurred by reason of the inaccuracy of information furnished
to such Indemnified Party provided that the Trust shall not have any
indemnification obligations with respect to inaccurate information supplied by
pricing agents selected by ADS and ADS shall not have any indemnification
obligations in circumstances where ADS has acted in accordance with the standard
of care established in Subparagraph (b) of this Section. An Indemnified Party
shall promptly notify the Indemnifying Party of the assertion of a claim for
which the Indemnifying Party may be required to indemnify the Indemnified Party
and shall keep the Indemnifying Party advised with respect to all developments
regarding such claim. The Indemnifying Party shall have the option to
participate in the defense of such claim. An Indemnified Party in no case shall
confess any claim or make any compromise in any case in which the Indemnifying
Party may be required to indemnify the Indemnified Party except with the
Indemnifying Party `s prior written consent.
4. REPORTS
(a) The Trust shall provide to ADS on a quarterly basis a report of a duly
authorized officer of the Trust representing that all information furnished to
ADS during the preceding quarter was true, complete and correct in all material
respects. ADS shall not be responsible for the accuracy of any information
furnished to it by the Trust or its authorized agents, and the Trust shall hold
ADS harmless in regard to any liability incurred by reason of the inaccuracy of
such information.
(b) Whenever, in the course of performing its duties under this Agreement,
ADS determines, on the basis of information supplied to ADS by the Trust or its
authorized agents, that a violation of applicable law has occurred or that, to
its knowledge, a possible violation of applicable law may have occurred or, with
the passage of time, would occur, ADS shall promptly notify the Trust and its
counsel of such violation.
5. ACTIVITIES OF ADS.
The services of ADS under this Agreement are not to be deemed exclusive,
and ADS shall be free to render similar services to others so long as its
services hereunder are not impaired thereby.
6. ACCOUNTS AND RECORDS
The accounts and records maintained by ADS shall be the property of the
Trust, and shall be surrendered to the Trust promptly upon request by the Trust
in the form in which such accounts and records have been maintained or preserved
(including the electronic or computerized format in which such accounts and
records have been maintained). ADS agrees to maintain a back-up set of accounts
and records of the Trust (which back-up set shall be updated on at least a
weekly basis) at a location other than that where the original accounts and
records are stored. ADS shall assist the Trust's independent auditors, or, upon
approval of the Trust, any regulatory body, in any requested review of the
Trust's accounts and records. ADS shall preserve the accounts and records as
they are required to be maintained and preserved by Rule 31a-1.
7. CONFIDENTIALITY
ADS agrees that it will, on behalf of itself and its officers and
employees, treat all information obtained pursuant to, and all transactions
contemplated by this Agreement, and all other information germane thereto, as
confidential and not to be disclosed to any person except as may be authorized
by the Trust.
8. DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall become effective as of the date hereof and shall
remain in force for a period of three (3) years, provided however, that both
parties to this Agreement have the option to terminate the Agreement, without
penalty, upon ninety (90) days prior written notice.
Should the Trust exercise its right to terminate, all expenses incurred by
ADS associated with the movement of records and material will be borne by the
Trust. Such expenses will include all out-of-pocket expenses and all time
incurred to train or consult with the successor fund accounting agent with
regard to the transfer of fund accounting responsibilities. The charge for all
time incurred by ADS will be calculated in accordance with the rates specified
in Schedule A paragraph (c).
9. ASSIGNMENT
This Agreement shall extend to and shall be binding upon the parties hereto
and their respective successors and assigns; provided, however, that this
Agreement shall not be assignable by the Trust without the prior written consent
of ADS, or by ADS without the prior written consent of the Trust.
10. NEW YORK LAWS TO APPLY
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the State of New York as at the time in effect and
the applicable provisions of the 1940 Act. To the extent that the applicable law
of the State of New York, or any of the provisions herein, conflict with the
applicable provisions of the 1940 Act, the latter shall control.
11. AMENDMENTS TO THIS AGREEMENT
This Agreement may be amended by the parties hereto only if such amendment
is in writing and signed by both parties.
12. MERGER OF AGREEMENT
This Agreement constitutes the entire agreement between the parties hereto
and supersedes any prior agreement with respect to the subject matter hereof
whether oral or written.
13. NOTICES.
All notices and other communications hereunder shall be in writing, shall
be deemed to have been given when received or when sent by telex or facsimile,
and shall be given to the following addresses (or such other addresses as to
which notice is given):
To the Trust: To ADS:
Steven J. Paggioli Michael Miola
President President
Professionally Managed Portfolios American Data Services, Inc.
479 West 22nd Street P.O. Box 5536
New York, NY 10011 Hauppauge, NY 11788-0132
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
PROFESSIONALLY MANAGED PORTFOLIOS AMERICAN DATA SERVICES, INC.
By:____________________________ By:__________________________
Michael Miola, President
----------------------------
ATTACHMENT A
Academy Value Fund
Avondale Total Return Fund
Boston Balanced Fund
Harris Bretall Sullivan & Smith Growth Equity Fund
Hodges Fund
Leonetti Balanced Fund
Lighthouse Contrarian Fund
Matrix Emerging Growth Fund
Matrix Growth Fund
Perkins Discovery Fund
Perkins Opportunity Fund
Pro-Conscience Women's Equity Mutual Fund
Pzena Focused Value Fund
The Osterweis Fund
Titan Financial Services Fund
Trent Equity Fund
U.S. Global Leaders Growth Fund
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made the 1st day of March, 1996, by and between PROFESSIONALLY
MANAGED PORTFOLIOS a Massachusetts business trust, (the "Trust") with respect to
each of the Trust's series listed on Attachment A to this Agreement (the
"Fund"), and American Data Services, Inc., a New York corporation having its
principal office and place of business at 150 Motor Parkway, Hauppauge, NY
11798("ADS").
WHEREAS, the Trust desires to appoint ADS as the transfer agent, dividend
disbursing agent and agent of the Fund in connection with certain other
activities, and ADS desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
1. TERMS OF APPOINTMENT; DUTIES OF ADS
1.01 Subject to the terms and conditions set forth in this agreement, the
Trust hereby employs and appoints ADS to act as, and ADS agrees to act as its
transfer agent for the Fund's authorized and issued shares of beneficial
interest, $________ par value, ("Shares"), dividend disbursing agent and agent
in connection with any accumulation, open-account or similar plans provided to
the shareholders of the fund ("Shareholders") set out in the currently effective
prospectus and statement of additional information ("prospectus") of the Fund.
1.02 ADS agrees that it will perform the following services:
(a) In accordance with the Trust's Registration Statement, which describes
how sales and redemptions of Shares shall be made, ADS shall:
(i) Receive for acceptance, orders for the purchase of Shares, and
promptly deliver payment and appropriate documentation therefore to the
Custodian of the Fund authorized by the Board of Trustees of the Trust (the
"Custodian");
(ii) Pursuant to purchase orders, issue the appropriate number of
full and fractional Shares and hold such Shares in the appropriate Shareholder
account;
(iii) Receive for acceptance redemption requests and redemption
directions and deliver the appropriate documentation therefore to the Custodian;
(iv) At the appropriate time as and when it receives monies paid
to it by the Custodian with respect to any redemption, pay over or cause to be
paid over in the appropriate manner such monies as instructed by the redeeming
Shareholders;
(v) Effect transfers of Shares by the registered owners thereof
upon receipt of appropriate instructions;
(vi) Prepare and transmit payments for dividends and distributions
declared by the Fund, and effect dividend and capital gains distribution
reinvestments in accordance with Shareholder instructions;
(vii) Serve as a record keeping transfer agent for the Fund, and
maintain records of account for and advise the Fund and its Shareholders as to
the foregoing; and
(viii) Record the issuance of Shares and maintain pursuant to SEC
Rule 17Ad-10(e) a record of the total number of Shares which are authorized,
based upon data provided to it by the Fund, and issued and outstanding. ADS
shall also provide the Fund each business day with the following: (I) the total
number and dollar amount of Shares issued and outstanding as of the close of
business on the preceding business day; (ii) the total number and dollar amount
of Shares sold on the preceding business day; (iii) the total number and dollar
amount of Shares redeemed on the preceding business day; (iv) the total number
and dollar amount of Shares sold on the preceding business day pursuant to
dividend and capital gains distribution reinvestments; and (v) the total number
and dollar amount of Shares which are authorized and issued and outstanding as
of the opening of business on such day.
(b) In addition to and not in lieu of the services set forth in the above
paragraph (a), ADS shall:
(i) Perform all of the customary services of a transfer agent,
dividend disbursing agent, including but not limited to: maintaining all
Shareholder accounts, preparing Shareholder meeting lists, mailing proxies,
receiving and tabulating proxies, mailing Shareholder reports and prospectuses
to current Shareholders, withholding taxes on U.S. resident and non-resident
alien accounts, preparing and filing U.S. Treasury Department Forms 1099 and
other appropriate forms required with respect to dividends and distributions by
federal authorities for all Shareholders, preparing and mailing confirmation
forms and statements of account to Shareholders for all purchases redemptions of
Shares and other confirmable transactions in Shareholder accounts as prescribed
in the federal securities laws or as described in the Trust's Registration
Statement, preparing and mailing activity statements for Shareholders, and
providing Shareholder account information and (ii) provide a system and reports
which will enable the Fund to monitor the total number of Shares sold in each
State.
(c) In addition, the Fund shall (i) identify to ADS in writing those
transactions and shares to be treated as exempt from blue sky reporting for each
State and (ii) monitor the daily activity for each State, as provided by ADS.
The responsibility of ADS pursuant to this Agreement for the Fund's blue sky
State registration status is solely limited to the initial establishment of
transactions subject to blue sky compliance by the Fund and the reporting of
such transactions to the Fund as provided above.
Procedures applicable to certain of these services may be established from
time to time by agreement between the Trust and ADS.
2. FEES AND EXPENSES
2.01 For performance by ADS pursuant to this Agreement, the Trust agrees to
pay ADS an annual maintenance fee for each Shareholder account and transaction
fees for each portfolio or class of Shares serviced under this Agreement (See
Schedule A) as set out in the fee schedule attached hereto. Such fees and out-of
pocket expenses and advances identified under Section 2.02 below may be changed
from time to time subject to mutual written agreement between the Trust and ADS.
2.02 In addition to the fee paid under Section 2.01 above, the Trust agrees
to reimburse ADS for out-of-pocket expenses or advances incurred by ADS for the
items set out in the fee schedule attached hereto. In addition, any other
expenses incurred by ADS at the request or with the consent of the Trust, will
be reimbursed by the Trust.
2.03 The Trust agrees to pay all fees and reimbursable expenses within five
days following the receipt of the respective billing notice. Postage for mailing
of dividends, proxies, Fund reports and other mailings to all shareholder
accounts shall be advanced to ADS by the Trust at least seven (7) days prior to
the mailing date of such materials.
3. REPRESENTATIONS AND WARRANTIES OF ADS
ADS represents and warrants to the Trust that:
3.01 It is a corporation duly organized and existing and in good standing
under the laws of The State of New York.
3.02 It is duly qualified to carry on its business in The State of New
York.
3.03 It is empowered under applicable laws and by its charter and by-laws
to enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
3.05 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
3.06 ADS is duly registered as a transfer agent under the Securities
Exchange Act of 1934 and shall continue to be registered throughout the
remainder of this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF THE TRUST
The Trust represents and warrants to ADS that;
4.01 It is a business trust duly organized and existing and in good
standing under the laws of Delaware.
4.02 It is empowered under applicable laws and by its Declaration of Trust
and By-Laws to enter into and perform this Agreement.
4.03 All proceedings required by said Declaration of Trust and By-Laws have
been taken to authorize it to enter into and perform this Agreement.
4.04 It is an open-end management investment company registered under the
Investment Company Act of 1940.
4.05 A registration statement under the Securities Act of 1933 is currently
or will become effective and will remain effective, and appropriate state
securities law filings as required, have been or will be made and will continue
to be made, with respect to all Shares being offered for sale.
5. INDEMNIFICATION
5.01 ADS shall not be responsible for, and the Trust shall indemnify and
hold ADS harmless from and against, any and all losses, damages, costs, charges,
counsel fees, payments, expenses and liability arising out of or attributable
to:
(a) All actions of ADS or its agents or subcontractors required to be
taken pursuant to this Agreement, provided that such actions are taken in good
faith and without negligence, willful misconduct, or in reckless disregard of
its duties under this Agreement..
(b) The Trust's refusal or failure to comply with the terms of this
Agreement, or which arise out of the Trust's lack good faith, negligence or
willful misconduct or which arise out of the breach of any representation or
warranty of the Trust hereunder.
(c) The reliance on or use by ADS or its agents or subcontractors of
information, records and documents which (i) are received by ADS or its agents
or subcontractors and furnished to it by or on behalf of the Trust, and (ii)
have been prepared and/or maintained by the Trust or any other person or firm on
behalf of the Trust.
(d) The reliance on, or the carrying out by ADS or its agents or
subcontractors of any written instruction signed by an officer of the Trust, or
any legal opinion of counsel to the Trust.
(e) The offer or sale of Shares in violation of any requirement under the
federal securities laws or regulations or the securities laws or regulations of
any state that such Shares be registered in such state or in violation of any
stop order or other determination or ruling by any federal agency or any state
with respect to the offer or sale of such Shares in such state.
5.02 ADS shall indemnify and hold the Trust harmless from and against any
and all losses, damages, costs, charges, counsel fees, payments, expenses and
liability arising out of or attributable to any action or failure or omission to
act by ADS as a result of ADS's lack of good faith, negligence or willful
misconduct or the breach of any warranty or representation of ADS hereunder.
5.03 At any time ADS may apply to any officer of the Trust for
instructions, and may consult with the Trust's legal counsel with respect to any
matter arising in connection with the services to be performed by ADS under this
Agreement, and ADS and its agents or subcontractors shall not be liable and
shall be indemnified by the Trust for any action taken or omitted by it in
reliance upon such instructions or upon the opinion of such counsel. ADS, its
agents and subcontractors shall be protected and indemnified in acting upon any
paper or document furnished by or on behalf of the Trust, reasonably believed to
be genuine and to have been signed by the proper person or persons, or upon any
instruction, information, data, records or documents provided ADS or its agents
or subcontractors by machine readable input, telex, CRT data entry or other
similar means authorized by the Trust, and shall not be held to have notice of
any change of authority of any person, until receipt of written notice thereof
from the Trust. ADS, its agents and subcontractors shall also be protected and
indemnified in recognizing stock certificates which are reasonably believed to
bear the proper manual or facsimile signatures of the officers of the Trust, and
the proper countersignature of any former transfer agent or registrar, or of a
co-transfer agent or co-registrar.
5.04 In the event either party is unable to perform its obligations under
the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable for damages to the
other for any damages resulting from such failure to perform or otherwise from
such causes.
5.05 Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement or for any act or
failure to act hereunder.
5.06 In order that the indemnification provisions contained in this Article
5 shall apply, upon the assertion of a claim for which either party may be
required to indemnify the other, the party of seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party's prior written consent.
6. COVENANTS OF THE TRUST AND ADS
6.01 The Trust Shall promptly furnish to ADS a certified copy of the
resolution of the Board of Trustees of the Trust authorizing the appointment of
ADS and the execution and delivery of this Agreement.
6.02 ADS hereby agrees to establish and maintain facilities and procedures
reasonably acceptable to the Trust 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.
6.03 ADS shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the Investment Company Act of 1940, as amended, and
the Rules thereunder, ADS agrees that all such records prepared or maintained by
ADS relating to the services to be performed by ADS hereunder are the property
of the Trust and will be preserved, maintained and made available in accordance
with such Section and Rules, and will be surrendered promptly to the Trust on
and in accordance with its request.
6.04 ADS and the Trust agree that all books, records, information and data
pertaining to the business of the other party which are exchanged or received
pursuant to the negotiation or the carrying out of this Agreement shall remain
confidential, and shall not be voluntarily disclosed to any other person, except
as may be required by law.
6.05 In case of any requests or demands for the inspection of the
Shareholder records of the Fund, ADS will endeavor to notify the Trust and to
secure instructions from an authorized officer of the Trust as to such
inspection. ADS reserves the right, however, to exhibit the Shareholder records
to any person whenever it is advised by its counsel that it may be held liable
for the failure to exhibit the Shareholder records to such person, and shall
promptly notify the Trust of any unusual request to inspect or copy the
shareholder records of the Fund or the receipt of any other unusual request to
inspect, copy or produce the records of the Trust.
7. TERMINATION OF AGREEMENT
7.01 This Agreement shall become effective as of the date hereof and shall
remain in force through and shall automatically terminate on , 199 , provided
however, that both parties to this Agreement have the option to terminate the
Agreement, without penalty, upon ninety (90) days prior written notice.
7.02 Should the Trust exercise its right to terminate, all expenses
incurred by ADS associated with the movement of records and material will be
borne by the Trust. Such expenses will include all out-of-pocket expenses and
all time incurred to train or consult with the successor transfer agent with
regard to the transfer of shareholder accounting and stock transfer
responsibilities. The charge for all time incurred by ADS will be calculated in
accordance with the rates specified in the Fee Schedule paragraph (e).
8. ASSIGNMENT
8.01 Neither this Agreement nor any rights or obligations hereunder may be
assigned by either party without the written consent of the other party.
8.02 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective successors and assigns.
9. AMENDMENT
9.01 This Agreement may be amended or modified by a written agreement
executed by both parties and authorized or approved by a resolution of the Board
of Trustees of the Trust.
10. NEW YORK LAWS TO APPLY
10.01 The provisions of this Agreement shall be construed and interpreted
in accordance with the laws of the State of New York as at the time in effect
and the applicable provisions of the 1940 Act. To the extent that the applicable
law of the State of New York, or any of the provisions herein, conflict with the
applicable provisions of the 1940 Act, the latter shall control.
11. MERGER OF AGREEMENT
11.01 This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof whether oral or written.
12. NOTICES.
All notices and other communications hereunder shall be in writing, shall
be deemed to have been given when received or when sent by telex or facsimile,
and shall be given to the following addresses (or such other addresses as to
which notice is given):
To the Trust: To ADS:
Steven J. Paggioli Michael Miola
President President
Professionally Managed Portfolios American Data Services, Inc.
479 West 22nd Street P.O. Box 5536
New York, NY 10011 Hauppauge, NY 11788-0132
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
PROFESSIONALLY MANAGED PORTFOLIOS AMERICAN DATA SERVICES, INC.
By:____________________________ By:__________________________
Michael Miola, President
----------------------------
ATTACHMENT A
Academy Value Fund
Avondale Total Return Fund
Boston Balanced Fund
Harris Bretall Sullivan & Smith Growth Equity Fund
Hodges Fund
Leonetti Balanced Fund
Lighthouse Contrarian Fund
Matrix Emerging Growth Fund
Matrix Growth Fund
Pro-Conscience Women's Equity Mutual Fund
Pzena Focused Value Fund
The Osterweis Fund
Titan Financial Services Fund
Trent Equity Fund
U.S. Global Leaders Growth Fund
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the references to our firm in the Post-Effective Amendment
No. 47 to the Registration Statement on Form N-1A of Professionally Managed
Portfolios and to the use of our report dated April 24, 1998 on the financial
statements and financial highlights of the Pro-Conscience Women's Equity Mutual
Fund series of Professionally Managed Portfolios. Such financial statements and
financial highlights appear in the 1998 Annual Report to Shareholders which is
incorporated by reference into the Statement of Additional Information.
Tait, Weller & Baker
Philadelphia, PA
June 2, 1998
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