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. 43 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 44 [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
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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
Fund
Item 5. Management of the Fund............... Management
of the Fund
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
Fund's Per
Share Value
is Determined
Item 7. Purchase of Securities Being Offered . . How to Invest
in the Fund;
How the
Fund's Per
Share Value
is Determined
Item 8. Redemption or Repurchase. . . . . . . . How to Redeem
an Investment
in the Fund
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 Fund's Investment
Advisor; the Fund's
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 &
Redemption
Information
Item 20. Tax Status.............................. Distributions
& Tax Infor-
mation
Item 21. Underwriters............................ The Fund's
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>
PACIFIC GEMINI PARTNERS, L.L.C.
PGP Korea Growth Fund
PGP Asia Growth Fund
633 W. Fifth Street, Suite 3600
Los Angeles, CA 90071
The PGP Korea Growth Fund & PGP Asia Growth Fund (the "Funds") are mutual funds
with the investment objective of seeking long-term growth of capital. The Funds
seek to achieve their objective by investing their assets in the securities of
Korean issuers (Korea Growth Fund) and Asian issuers (Asia Growth Fund) as
defined in this prospectus. Under normal circumstances, at least 65% of their
assets will be invested in securities of Korean/Asian issuers respectively. To
the extent permitted by laws and regulations of Korean and Asian nations, the
Funds may also invest in debt securities and other types of investments if
Pacific Gemini Partners, L.L.C. ("Pacific Gemini" or the "Advisor") believes
they would help achieve the Funds' objectives.
There can be no assurance that the Funds will achieve their investment
objective. Each Fund is an investment company designed for long-term investors
and not as a trading vehicle. The Funds do not present a complete investment
program nor are they suitable for all investors. An investment in either of the
Funds is subject to special risk factors, related primarily to the Funds'
investment in Korean and Asian issuers and in other emerging markets. These
markets and the Funds are subject to greater potential volatility and other
risks than in the more developed market of the U.S. and in funds that invest in
more geographically diverse emerging markets. The Korean economy is currently
experiencing an economic and currency crisis which has had a substantial adverse
effect on its securities markets. There can be no assurance as to whether or
when the Korean economic and market conditions will improve. Such factors should
be reviewed carefully by potential investors. See "Appendix-Korean Risk
Factors."
This Prospectus sets forth basic information about the Funds that prospective
investors should know before investing. It should be read and retained for
future reference. A Statement of Additional Information dated February 9, 1998
as may be amended from time to time, has been filed with the Securities and
Exchange Commission and is incorporated herein by reference. The Statement of
Additional Information is available without charge upon written request to each
Fund at the address given above. The SEC maintains an internet site
(http://www.sec.gov) that contains the SAI, other material incorporated by
reference and other information about companies that file electronically with
the SEC.
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 February 9, 1998
TABLE OF CONTENTS
Expense Table 2
Philosophy, Objective and Investment
Approach of the Funds 3
Risk Factors 7
Management and Administration 9
Distribution Plan 11
How to Invest in the Funds 11
How to Redeem an Investment in the Funds 13
Services Available to the Funds' Shareholders 15
How the Funds' Per Share Value is Determined 15
Distributions and Taxes 16
General Information 16
Appendix: Korean Risk Factors 17
EXPENSE TABLE
Expenses are one of several factors to consider when investing in the Funds. 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 Funds. Actual expenses may be more or less than those shown. Shares will be
redeemed at net asset value per share.
Shareholder Transaction Expenses Korea Asia
Growth Fund Growth Fund
Maximum Sales Load Imposed on
Purchases 2.50% 2.50%
Maximum Sales Load Imposed on
Reinvested Dividends None None
Deferred Sales Load None None
Redemption Fees 2.00% 2.00%
Annual Fund Operating Expenses
(As a percentage of average net assets)
Advisory Fees 1.25% 1.25%
12b-1 Expenses 0.65% 0.65%
Other Expenses
(after advisor reduction) 0.90%* 0.90%*
Total Fund Operating Expenses
(after advisor reduction) 2.80%* 2.80%*
*The Advisor has undertaken to reduce its fees or make payments of fund expenses
to assure that each Fund's ratio of operating expenses to average net assets
will not exceed 2.80% of average net assets annually. Without the Advisor's
undertaking, it is estimated that "Other Expenses" in the above table would be
1.40% and "Total Operating Expenses" would be 3.30%. If the Advisor does waive
fees or pay Funds' expenses, the Funds may reimburse the Advisor within the
following three years. See "Management of the Funds." Each Fund has adopted a
Distribution Plan under which it will pay the Advisor a fee at an annual rate of
up to 0.65% of the Funds' net assets for distribution expenses and services.
Over an extended period of time, a long-term shareholder may pay more, directly
and indirectly, in sales charges and such fees than the maximum sales charge
permitted under the rules of the National Association of Securities Dealers
Regulation, Inc. ("NASD"). This is recognized and permitted by the NASD.
Example
This table illustrates the net transaction and operating expenses that would be
incurred for an investment in each Fund over different time periods assuming a
$1,000 investment, a 5% annual return, and redemption at the end of each time
period.
1 year 3 years
$28 $85
The Example shown above should not be considered a representation of past or
future expenses and actual expenses may be greater or less than shown. In
addition, federal regulations require the Example to assume a 5% annual return,
but a Fund's actual return may be higher or lower. See "Management of the
Funds."
Each Fund is a non-diversified series of Professionally Managed Portfolios (the
"Trust"), an open-end management investment company offering redeemable shares
of beneficial interest. Shares of the Funds may be purchased at their net asset
value per share plus the applicable sales charge. The minimum initial investment
in each Fund is US $10,000 with subsequent investments of US $100 or more.
Shares will be redeemed at net asset value per share.
Philosophy, Objective, and Investment Approach of the Funds
PGP Korea Growth Fund & PGP Asia Growth Fund (collectively, the "Funds",
separately, "Korea Growth Fund" and "Asia Growth Fund", respectively).
Philosophy
At Pacific Gemini Partners, L.L.C., ("Pacific Gemini" or the "Advisor") we
believe that investing in emerging markets, given their unique risks, requires a
thorough understanding of the economic and political factors specific to the
region and each country. As experts on Korea and Asia, our ability to seek out
superior investment returns is based upon a combination of two factors. First,
we believe that the investment process must start through the use of objective,
measurable data used in a systematic way. Combined with this quantitative
approach is our "insider's" knowledge of the markets, itself a combination of
our personnel's long experience in the region and our strategic tie with
Ssanyong Investment and Securities Co. (see Investment Approach). This is
essential for the evaluation of subjective, qualitative factors. Through this
differentiated and focused approach, we seek to unlock exceptional investment
values supported by excellent growth prospects at advantageous prices due to the
pricing inefficiency of securities in these markets.
Objective
The Funds' objectives are to seek long-term growth of capital. They invest
primarily in securities of Korean companies in the Korea Growth Fund and Asian
companies in the Asia Growth Fund. The objective is a fundamental policy of each
Fund and may not be changed without shareholder approval. There is no assurance
that the Funds' objectives will be achieved. With respect to Asian issuers, the
Morgan Stanley Capital Asia Pacific ex-Japan Index is used as the benchmark for
choosing the countries in which the Asia Fund will invest. This includes issuers
from the following countries: Australia, China, Hong Kong, India, Indonesia,
Korea, Malaysia, New Zealand, Pakistan, Philippines, Singapore, Sri Lanka,
Taiwan and Thailand. However, investments may be made in other markets in the
Asia Pacific region which are not included in the index.
Investment Approach
With respect to the Asian Growth Fund, Pacific Gemini's research team applies
three levels of evaluation in selecting investments. First the team applies
active country asset allocation analysis. This includes an examination of
macro-economic data, such as GDP growth and inflation, in anticipation of trends
and in light of past performance. What emerges from this model are the countries
which we believe to present the greatest opportunity. Particular "drivers" of
individual markets are also studied such as, in Hong Kong, the state of the
property market. To this is added a qualitative assessment, which includes a
review of the political situation and any localized country themes that may
affect timings of an investment. In addition, the team undertakes sectoral or
industry evaluations. The starting point is the economic data used at the
country level but also includes specific analysis of industries prospects and
industrial themes across the Asia-Pacific region. Thirdly, the team conducts
analysis at the individual stock level. Earnings and balance sheet data are
examined so as to evaluate both growth (earnings growth and margin expansion,
for example) and value (price to earnings, price to book) criteria. In addition,
the team conducts qualitative research such as an assessment of the company
management and the possibility of Government interference. This screening of
countries and stocks provides a disciplined background against which undervalued
situations can be found and fully valued countries and stock can be sold.
The Fund will be invested in a minimum of four countries in the Asia-Pacific
region at all times and may substantially underweight or overweight certain
Asian-Pacific markets depending on the Advisor's assessment of these markets. In
deciding the allocation of these investments, a company is considered to be
located in the country in which it is domiciled, in which it is primarily traded
and from which it derives the largest part of its revenues.
In the Korean market, Pacific Gemini takes a similar approach. The
macro-economic picture is first studied to gain an overall picture of where the
economy is heading and at what stage of the economic cycle it has reached. From
this and from cross-referencing the rest of Asia, sectoral research is carried
out. The team evaluates individual stocks within the favored industries through
a comprehensive analysis of company fundamentals as well as growth prospects.
Moreover, by utilizing its strategic tie with Ssangyong Investment & Securities
Co., Ltd., a leading securities firm in Korea and the Advisor's co-owner, the
Advisor believes that continuous access to locally available company information
is provided and the ability to explore regulatory issues concerning a specific
company is enhanced. Finally, through real-time coverage of the Korean market,
the team executes a buy/sell transaction when intra-day timing conditions are
optimal.
Although the Advisor intends to invest primarily in equity securities, it may
invest up to 35% of each Fund's assets in Korean and Asian fixed income
securities. Due to limited liquidity and relatively high transaction costs, the
Funds will invest in Korea and Asian fixed income securities as permitted by
applicable regulations in such countries primarily as a hedging vehicle against
perceived negative stock market trends. Accordingly, the focus for such
investments will be analysis of credit risks and yield, rather than an attempt
to anticipate interest rate movements. As such fixed income markets develop
further, however, the Advisor may consider more active investment in fixed
income securities of issuers located in Korea and other Asian countries.
Investment Criteria
Pacific Gemini focuses on the following investment criteria in Korea and Asia:
1) Financial criteria (earnings, pre and after-tax, debt/equity ratio, cash flow
and book value multiples, etc.)
2) Growth prospects (technology, future competitiveness, market share, etc.)
3) Turn-around situations (cyclicality, restructuring, niche-market, etc.) 4)
Quality of management (shareholder value-driven, visionary, cost-conscious,
etc.)
Other Investment Practices
Equity Securities
The funds emphasize investments in common stock. The Funds may also invest in
other types of equity securities (such as preferred stocks or convertible
securities) and equity derivative securities.
Depository Receipts Convertible Securities and Warrants
The Funds may invest in ADRs, EDRs and GDRs and convertible securities that the
Manager regards as a form of equity security. The Funds may invest in warrants,
including those not listed on a securities exchange.
Special Situations
The Advisor believes that carefully selected investments in joint ventures,
cooperatives, partnerships, private placements, foreign government programs of
selling interests in government-controlled or owned enterprises
("privatizations"), unlisted securities and similar vehicles ("special
situations") could enhance the Funds' growth potential. The Funds may also
invest in certain vehicles or derivative securities that represent indirect
investments in foreign markets or securities in which it is impracticable for
the Funds to invest directly. Investments in special situations may be illiquid,
as determined by the Advisor based on criteria reviewed by the Trustees. Neither
Fund invests more than 15% of its net assets in illiquid investments, including
any illiquid special situations.
Investment Companies
Consistent with the provisions of the Investment Company Act of 1940 (the "1940
Act"), the Funds may invest in the securities of other investment companies that
invest in Korean/Asian securities. Absent special relief from the Securities and
Exchange Commission (the "SEC"), each Fund may invest up to 10% of its assets in
the aggregate in shares of other investment companies and up to 5% of its assets
in any one investment company, as long as that investment does not represent
more than 3% of the voting stock of the other investment company. As a
shareholder in any investment company, each Fund will bear its ratable share of
such company's expenses, including its advisory and administration fees.
Options and Futures
The Funds may purchase and write call and put options on securities, securities
indexes and on foreign currencies, and enter into futures contracts and use
options on futures contracts. The Funds also may enter into swap agreements with
other institutional investors with respect to foreign currencies, interest
rates, and securities indexes. The Funds may use these techniques to hedge
against changes in interest rates, foreign currency exchange rates or securities
prices or as part of their overall investment strategies. Each Fund segregates
liquid assets to cover its obligations under options, futures contracts and swap
agreements to avoid leveraging of the Fund.
The Fund may buy or sell interest rate futures contracts, options on interest
rate futures contracts and options on debt securities for the purpose of hedging
against changes in the value of securities which a Fund owns or anticipates
purchasing due to anticipated changes in interest rates. The Funds may also
engage in currency exchange transactions by means of buying or selling foreign
currency on a spot basis, entering into forward foreign currency exchange
contracts, and buying and selling foreign currency options, futures and options
on futures. Foreign currency exchange transactions may be entered into for the
purpose of hedging against foreign currency exchange risk arising from the
Funds' investment or anticipated investment in securities dominated in foreign
currencies. A Fund will not enter into futures contracts or options thereon for
non-hedging purposes if, immediately thereafter, the aggregate initial margin
deposits on the Fund's futures positions and premiums paid for options thereon
would exceed 5% of the liquidation value of the Fund's total assets.
Illiquid Securities
Neither Fund may invest nor hold more than 15% of its net assets in illiquid
securities. Each Fund will treat any Korean securities that are subject to
restrictions on repatriation for more than seven days as illiquid securities for
purposes of this limitation. The Funds will also treat as illiquid for this
purpose repurchase agreements with maturities in excess of seven days,
securities subject to conversion and transfer restrictions, securities in which
a Fund cannot receive the approximate amount at which it values such securities
within seven days, securities of Korean companies that are not publicly traded
and over-the-counter options and their underlying securities.
Restricted securities issued pursuant to Rule 144A under the Securities Act of
1933 that have a readily available market are not deemed illiquid for purposes
of this limitation. Investing in Rule 144A securities could result in increasing
the level of a Fund's illiquidity if qualified institutional buyers become, for
a time, uninterested in purchasing these securities. The Adviser will monitor
the liquidity of such securities subject to review by the Board of Trustees.
Short-term Investments
At times, the Funds may invest in short-term cash-equivalent securities either
for temporary or defensive purposes when the market is significantly overvalued.
These consist of high quality debt obligations maturing in one year or less from
the date of purchase, such as securities issued by the U.S. Government, its
agencies and instrumentalities, certificates of deposit, banker's acceptances
and commercial paper. High quality means that the obligations have been rated at
least A-1 by Standard & Poor's Corporation ("S&P") or Prime-1 by Moody's
Investor's Service, Inc. (Moody's), that the issuer has an outstanding issue of
debt securities rated at least AA by S&P or Aa by Moody's, or are of comparable
quality in the opinion of the Advisor.
Repurchase Agreements
The Funds may enter into repurchase agreements in order to earn additional
income on available cash, or as a defensive investment in which the purchaser
(i.e., the Funds) 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 Funds engage will require full
collateralization of the seller's obligation during the entire term of the
repurchase agreement. In the event of a bankruptcy or other default of the
seller, the Funds could experience both delays in liquidating the underlying
security and losses in value. However, the Funds intend 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 with the most creditworthy
registered securities dealers with all such transactions governed by 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
Funds engage in repurchase transactions.
When-Issued Securities
The Funds may purchase securities on a when-issued basis, for payment and
delivery at a later date, generally from 15 to 45 days after the transaction.
The price and yield are generally fixed on the date of commitment to purchase,
and the value of the security is thereafter reflected in the Funds' net asset
value. During the period between purchase and settlement, no payment is made by
the Funds and no interest accrues to the Funds. There is a risk in these
transactions that the value of the securities at settlement may be more or less
than the agreed-upon price, or that the party with which a Fund enters into such
transaction may not perform its commitment. When a Fund purchases securities on
a when-issued basis, it segregates liquid assets with its Custodian in an amount
equal to the purchase price as long as the obligation to purchase continues.
Portfolio Turnover
The annual rate of portfolio turnover for each Fund is not expected to exceed
75%. In general, the Advisor will 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 Funds' objectives.
RISK FACTORS
Non-Diversification. Each Fund is a non-diversified investment company
portfolio, which means that the Fund is required to comply only with the
diversification requirements of the Internal Revenue Code (the "Code') (and in
the case of the Korea Growth Fund, certain Korean regulatory requirements set
forth below) so that each Fund will not be subject to U.S. taxes on its net
investment income. These provisions, among others, require that at the end of
each calendar quarter, (1) not more than 25% of the value of a Fund's total
assets can be invested in the securities of a single issuer, and (2) with
respect to 50% of the value of a Fund's total assets, no more than 5% of the
value of its total assets can be invested in the securities of a single issuer
and a Fund may not own more than 10% of the outstanding voting securities of a
single issuer. Since each Fund, as a non-diversified investment company
portfolio, could invest in a smaller number of individual issuers than a
diversified investment company, the value of a Fund's investments could be more
affected by any single adverse occurrence than would the value of the
investments of a diversified investment company.
Risk Factors: the Korean Markets. The Korea Growth Fund's portfolio will be
subject to economic, political and regulatory developments in Korea. Korea is
currently experiencing a severe currency and economic crisis, and the value of
Korean securities has dropped substantially in recent months. In connection with
the intervention and economic assistance package on the part of the
International Monetary Fund ("IMF"), the Korean economic system may be expected
to undergo painful restructuring in the short-term, and there can be no
assurance as to whether or when Korean economy will overcome the current crisis.
See "Appendix--Korean Risk Factors." While the relatively greater investment in
securities of particular companies permitted to the Korea Growth Fund as a
non-diversified company is expected to increase risk, and could result in
greater fluctuation in the Fund's net asset value than for a diversified
company, it also reflects the composition of the Korean securities market, in
that securities of relatively few companies account for a greater share of the
total capitalization of such market and trading in those securities represents a
greater share of the total trading market than is the case in the United States.
A Fund's investment in Korean issuers involves certain risk factors not
typically associated with investing in most U.S. issuers. The securities market
is substantially smaller, less developed, less liquid and more volatile than the
major securities markets in the United States. Disclosure and regulatory
standards are in many respects less stringent that U.S. standards. Furthermore,
there is a lower level of monitoring and regulation of the markets and the
activities of investors in such markets, and enforcement of existing regulations
has been extremely limited.
The limited size of the Korean securities market and limited trading volume in
issues compared to volume of trading in U.S. securities could cause prices to be
erratic for reasons apart from factors that affect the quality of the
securities. For example, limited market size may cause prices to be unduly
influenced by traders who control large positions. Adverse publicity and
investors' perceptions, whether or not based on fundamental analysis, may
decrease the value and liquidity of portfolio securities, especially in these
markets.
Risk Factors: The Korean and Asian Markets
Further, there is a risk that an emergency situation may arise in the Korean or
Asian market as a result of which prices for portfolio securities in such
markets may not be readily available. Section 22(e) of the Investment Company
Act of 1940 (the "1940 Act") permits registered investment companies such as the
Funds to suspend redemption of its shares for any period during which an
emergency, as determined by the SEC, exists. Accordingly, if the Funds believe
that appropriate circumstances exist, they will promptly apply to the SEC for a
determination that an emergency, within the meaning of Section 22(e) of the 1940
Act, is present. During the period commencing from the Fund's identification of
such conditions until the date of SEC action, the Fund's portfolio securities in
the affected markets will be valued at fair value in good faith by or under the
direction of the Board of Trustees.
Because the Funds invest in securities denominated in Korean Won, changes in the
value of the Korean Won against the U.S. dollar will result in corresponding
changes in the U.S. dollar value of a Fund's assets denominated in Korean Won.
Such changes also will affect that Fund's income.
The economy of Korea may differ favorably or unfavorably from the U.S. economy
in such respects as the rate of growth of domestic product, the rate of
inflation, capital reinvestment, resource self-sufficiency and balance of
payments position. Companies in Korea are subject to accounting, auditing, and
financial standards and requirements that differ from those applicable to U.S.
companies. There is substantially less publicly available information about
Korean companies and the Korean government that there is about U.S. companies
and the U.S. Government. See "Appendix--Korean Risk Factors."
Since foreign securities are normally denominated and traded in foreign
currencies, the value of fund assets may be affected favorably or unfavorably by
changes in currency exchange rates relative to the U.S. dollar. There may be
less information publicly available about a foreign issuer than about a U.S.
issuer, and foreign issuers may not be subject to accounting standards
comparable to those in the United States.
The securities of some foreign companies are less liquid and at times more
volatile than securities of comparable U.S. companies. Foreign brokerage
commissions and other fees are also generally higher than in the United States.
Foreign settlement procedures and trade regulations may involve certain risks
(such as delay in payment or delivery of securities or in the recovery of fund
assets held abroad) and expenses not present in the settlement of domestic
investments.
In addition, there may be a possibility of nationalization or expropriation of
assets, imposition of currency exchange controls, confiscatory taxation,
political or financial instability and diplomatic developments that could affect
the value of investments in certain foreign countries.
Legal remedies available to investors in certain foreign countries may be
limited. The laws of some foreign countries may limit investments in securities
of certain issuers located in those foreign countries. Special tax
considerations apply to foreign securities.
Prior Government approval for foreign investments may be required under certain
circumstances in some foreign countries, and the extent of foreign investment in
foreign companies may be subject to limitation. Foreign ownership limitations
also may be imposed by the charters of individual companies to prevent, among
other concerns, violation of foreign investment limitations. Repatriation of
investment income, capital and the proceeds of sales by foreign investors may
require government registration and approval in some foreign countries. A Fund
could be adversely affected by delays in or a refusal to grant any required
governmental approval for such repatriation.
The risks described above are typically greater in less developed nations,
sometimes referred to as "emerging markets." For instance, political and
economic structures in these countries may be in their infancy and developing
rapidly, causing instability. High rates of inflation may adversely affect the
economies and securities markets of such countries. In addition, the small size,
limited trading volume and relative inexperience of the securities markets in
these countries may make investments in such countries less liquid and more
volatile than investments in more developed countries. Investments in emerging
markets are regarded as speculative, and in non-geographically diverse emerging
markets as especially speculative.
The Funds have adopted certain investment restrictions, which are described
fully in the Statement of Additional Information. Like the Funds' investment
objectives, certain of these restrictions are fundamental and may be changed
only by a majority vote of a Fund's outstanding shares.
MANAGEMENT AND ADMINISTRATION
Investment Advisor
Pacific Gemini Partners, L.L.C. (the "Advisor" or "Pacific Gemini") has been
appointed to act as investment advisor to the Funds pursuant to the Investment
Advisory Agreement. The Investment Advisor, on a fully discretionary and
on-going basis, will be responsible for the investment management of the Funds'
portfolio.
Overview
Pacific Gemini is a financial services firm specializing in global asset
management services. The firm was founded in 1995 as a joint venture between
Ssangyong Investment & Securities Co., Ltd. ("SISC") and White Tiger Capital,
Inc.("WTC") As of February 1, 1998, Pacific Gemini managed over US$55 million in
assets.
Ssangyong Investment & Securities Co., Ltd. is one of the leading securities
firms in Korea with approximately US$1 billion in assets and is a major
international broker of Korean equity transactions.
White Tiger Capital, Inc. is a collection of investment management professionals
that comprise the team at Pacific Gemini Partners. Over 90% of the common stock
of White Tiger Capital, Inc. is owned by Pacific Gemini employees.
Management of the Funds
The Fund's investments are to be managed by the portfolio management team at
Pacific Gemini. In its role as investment adviser, Pacific Gemini is responsible
for the continuing management of the affairs of the Funds, including the
investment of the assets of the Funds on a discretionary basis. Information
gathered during the initial investment screening process will serve as the basis
for closely tracking the performance of each security. The Funds' Advisor will
continuously gather additional information and perform fundamental sector and
individual company analysis to support its monitoring efforts. Pacific Gemini
became a registered investment advisor with the United States Securities and
Exchange Commission in August of 1995. Pacific Gemini has not previously managed
a registered investment company.
Pacific Gemini Team
Stewart M. Kim, Managing Partner
Mr. Kim is responsible for the overall strategy and management of Pacific Gemini
with a day-to-day focus on administration, marketing and the evaluation of
acquisition opportunities. He is also the head of the Company's Investment
Policy Committee. Mr. Kim spent six years in the Mergers & Acquisitions
Department at Merrill Lynch & Co. before establishing White Tiger Capital, Inc.
and Pacific Gemini Partners, L.L.C. in 1995. While at Merrill Lynch, Mr. Kim
worked on a variety of high yield financings, restructurings, divestitures and
acquisitions. As a Vice President in the 72-employee Mergers & Acquisitions
Group, Mr. Kim had formal management responsibility for project assignments,
performance reviews, and recruiting. Prior to joining Merrill Lynch, Mr. Kim
graduated from Dartmouth College and received his MBA from the Wharton School.
Hugh W.E. Ferrand, Portfolio Manager
Mr. Ferrand is the Senior Portfolio Manager at Pacific Gemini and oversees the
investment management policies and procedures at the firm. He also manages the
investment team consisting of the Korea portfolio manager and research analysts
and sits on the Investment Policy Committee. Before joining Pacific Gemini, Mr.
Ferrand was a senior manager on the international portfolio team at Blairlogie
Capital Management from June 1993 to June 1996. His primary country
responsibilities were Hong Kong, Taiwan, China, Australia, New Zealand, India,
Pakistan, and Sri Lanka. Mr. Ferrand had secondary oversight for Singapore,
Malaysia, Thailand, Indonesia, Philippines and all of Latin America. Mr. Ferrand
attended and graduated from Oxford University in 1981.
Young Kim, Vice President/Portfolio Manager
Mr. Kim manages the daily activities of Pacific Gemini's Korean portfolios of
$90 million. He is also a member of the Company's Investment Policy Committee.
Prior to coming to Pacific Gemini's Los Angeles office, Mr. Kim assumed various
responsibilities at Ssangyong Investment & Securities Co. Starting his career as
an electronics analyst in Ssangyong's Research Department, he has forecasted
corporate earnings and analyzed industry performance since 1987. While at
Ssangyong, Mr. Kim also worked in Corporate Finance, leading the marketing teams
on two major equity-linked financings for Sunkyong Industries and Jinro Group in
1992 and 1991 respectively. Before joining Ssangyong, he worked at Samsung
Aerospace Industries on its new business project team. Mr. Kim attended Seoul
National University for his BA in economics, and received his MBA from Yonsei
University.
Sokho Jung, Associate
Mr. Jung is primarily responsible for extensive company research and portfolio
analysis. He is also responsible for compliance issues involving Pacific
Gemini's off-shore funds as well as the US mutual funds. Mr. Jung previously
worked at Bankers Trust International PLC in Seoul, structuring financing
vehicles for domestic institutions and orchestrating catapulation of foreign
capital investment funds into Korea. He attended the Seoul National University
for his BA in economics, and the Stern School of New York University for his
MBA.
Michelle S. Lee, Associate
Ms. Lee is involved in company research and data analysis for Pacific Gemini's
portfolios. She also administers and tracks Pacific Gemini's other funds. Ms.
Lee on a daily basis communicates with the funds' custodians and administrators
in order to control cash movements and to resolve any trade settlement related
issues. She graduated from the University of California at Berkeley with a BA in
Sociology.
Martin S.C. Lee, Analyst
Mr. Lee performs industry research and stock valuation analysis, and executes
trades with a variety of Korean equity brokers. In conjunction with the
Investment Policy Committee, he oversees Pacific Gemini's approach for
investments in the U.S. securities market. Mr. Lee received his BA in economics
from the University of Chicago.
Pacific Gemini provides the Funds with advice on buying and selling securities,
manages the investments of the Funds, furnishes the Funds with office space and
certain administrative services, and provides most of the personnel needed by
the Funds. As compensation, each Fund pays the Adviser a monthly management fee
(accrued daily) based upon the average daily net assets of that Fund at the rate
of 1.25% annually.
Investment Company Administration Corporation (the "Administrator") acts as the
Funds' Administrator under an Administration Agreement. Under that agreement,
the Administrator prepares various federal and state regulatory filings, reports
and returns for the Funds, prepares reports and materials to be supplied to the
trustees, monitors the activities of the Funds' custodian, transfer agent and
accountants, and coordinates the preparation and payment of Fund expenses and
reviews the Funds' expense accruals. For its services, the Administrator
receives a monthly fee from each Fund at the following annual rate:
Fee rate (% of
Average net assets of the Funds Average net assets)
Less than $15 million $30,000
$15 to $50 million 0.20%
$50 to $100 million 0.15%
$100 million to $150 million 0.10%
More than $150 million 0.05%
Each Fund is responsible for its own operating expenses. The Advisor has agreed
to limit each Fund's operating expenses to assure that each Fund's ratio of
operating expenses to average net assets will not exceed 2.80%. The Advisor also
may waive fees or reimburse additional amounts to a Fund at any time in order to
reduce the Fund's expenses. Reductions made by the Advisor in its fees or
payments or reimbursement of expenses which are the Fund's obligation are
subject to reimbursement within the following three years by that Fund provided
that the Fund is able to do so and remain in compliance with applicable expense
limitations then in effect.
The Advisor considers a number of factors in determining which brokers or
dealers to use for the Funds' 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 which the Adviser may lawfully and
appropriately use in its investment management and advisory capacities. Provided
the Fund receives prompt execution at competitive prices, the Adviser may also
consider the sale of Fund shares as a factor in selecting broker-dealers for a
Fund's portfolio transactions.
DISTRIBUTION PLAN
Each Fund has adopted a distribution plan pursuant to Rule 12b-1. The Plan
provides that each Fund will pay for distribution and related expenses at an
annual rate of 0.65% of the Fund's average net assets to the Advisor as
distribution coordinator. Activities covered by the Funds under the 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 Funds' shares; payments to financial intermediaries for
shareholder support; administrative and accounting services with respect to Fund
shareholders; and such other expenses related to the distribution of the Fund's
shares.
Plan payments will be reviewed by the Trustees. However, it is possible that at
times the amount of the Advisor's compensation could exceed the Advisor's
distribution expenses, resulting in a profit to the Advisor. If the Plan is
terminated, the Fund will not be required to make payments for expenses incurred
after the termination.
HOW TO INVEST IN THE FUNDS
The minimum initial investment in each Fund is US$10,000. Subsequent investments
must be at least $100. First Fund Distributors, Inc. (the "Distributor"), acts
as Distributor of the Funds' shares. The Distributor may, at its discretion,
waive the minimum investment requirements for purchases in conjunction with
certain group or periodic plans. Shares of each Fund are offered continuously
for purchase at the public offering price next determined after a purchase order
is received. The public offering price is effective for orders received by the
Fund or investment dealers prior to the time of the next determination of the
Fund's net asset value and, in the case of orders placed with dealers,
transmitted properly to the Transfer Agent or other authorized agent of the
Fund. Orders received after the time of the next determination of the applicable
Fund's net asset value will be entered at the next calculated public offering
price. The Advisor and the Distributor reserve the right to reject any order, to
instruct the transfer agent to temporarily halt the acceptance of new orders, or
to fair value price some or all of a Fund's portfolio if events occuring since
the close of the Asian markets have rendered the market price stale.
The public offering price per share is equal to the net asset value per share
plus a sales charge, which is reduced on purchases of $50,000 or more, as set
forth in the table below. The reduced sales charges apply to quantity purchases
made at one time by a"person," which means ( i) an individual, (ii) members of a
family (i.e., an individual, spouse, children under age 21), or (iii) a trustee
or fiduciary of a single trust estate or a single fiduciary account. In
addition, purchases of shares made during a thirteen month period pursuant to a
written Letter of Intent are eligible for a reduced sales charge. Reduced sales
charges are also applicable to subsequent purchases by a "person," based on the
aggregate of the amount being purchased and the value, at offering price, of
shares owned at the time of investment.
Sales Charge Portion of
as percent of sales charge
offering net asset retained by
Amount of Purchase price value dealers
Less than $50,000 2.50% 2.56% 2.00%
$50,000 but less
than $250,000 2.00% 2.04% 1.60%
$200,000 but less
than $350,000 1.50% 1.52% 1.20%
$500,000 but less
than $1,500,000 1.00% 1.01% 0.80%
$1,500,000 but less
than $3,000,000 0.75% 0.76% 0.60%
$3,000,000 or more 0.60% 0.60% 0.48%
Purchase Order Placed with Investment Dealers
Dealers who have a sales agreement with the Distributor may place orders for
shares of the Funds on behalf of clients at the offering price next determined
after receipt of the client's order by calling the Transfer Agent at (800)
841-0980. Shares are also available for purchase by financial intermediaries
through brokers or dealers which have service or sales agreements with the Funds
or the Distributor. The Distributor or its affiliates, at their expense may
provide additional compensation to dealers in connection with sales of shares of
the Funds. If the order is placed with the dealer by 4:00 p.m. New York City
time and forwarded promptly to the Transfer Agent or other service agent, it
will be confirmed at the applicable offering price on that date. The dealer is
responsible for placing orders promptly and for forwarding payment promptly.
Investors may purchase shares of the Funds by sending an application form
directly to the Funds, with payment made by either check or wire.
Purchases Sent To The Transfer Agent
By Check: For initial investments, an investor should complete the Funds'
Account Application (included with this Prospectus). The completed application,
together with a check payable to "PGP Korea Growth Fund," or "PGP Asia Growth
Fund" and should be mailed to the Funds at P.O. Box 5354, Cincinnati, OH
45201-5354. For purchases by overnight mail, please contact the Transfer Agent
at (800) 841-0980 for instructions. A stub is attached to the account statement
sent to shareholders after each transaction. For subsequent investments the stub
should be detached from the statement and, together with a check payable to "PGP
Korea Growth Fund," or "PGP Asia Growth Fund" and mailed to the Fund in the
envelope provided at the address indicated above. The investor's account number
should be written on the check.
By Wire: For initial investments, before wiring funds, an investor should call
(800) 841-2858 between the hours of 8:30 a.m. and 7:00 p.m. Eastern time, on a
day when the NYSE is open for trading in order to receive an account number. It
is necessary to notify the Funds prior to each wire purchase. Wires sent without
notifying the Funds will result in a delay of the effective date of your
purchase. The Funds' Transfer Agent will request the investor's name, address,
taxpayer identification number, amount being wired and wiring bank. The investor
should then instruct the wiring bank to transfer funds by wire to: Star Bank,
N.A. Cinti/Trust, ABA #0420-0001-3, for credit to PGP Korea Growth Fund , DDA
#4838-99457 or PGP Asia Growth Fund, DDA #4838-49457 for further credit to
[investor's name and account number]. The investor should also ensure that the
wiring bank includes the name of the Fund and the account number with the wire.
If the funds are received by the Transfer Agent prior to the time that a Fund's
net asset value is calculated, the funds will be invested on that day; otherwise
they will be invested on the next business day. Finally, the investor should
write the account number provided by the Transfer Agent on the Application Form
and mail the Form promptly to the Transfer Agent.
It is essential that complete information regarding the investor's account be
included in all wire instructions in order to facilitate prompt and accurate
handling of investments. Investors may obtain further information from the
Transfer Agent about remitting funds in this manner and from their own banks
about any fees that may be imposed.
Purchase at Net Asset Value. Shares of the Funds may be purchased at net asset
value by officers, trustees, directors and full time employees of the Trust, the
Advisor, the Administrator, the Distributor and affiliates of such companies, by
their family members, by persons and their family members who are direct
investment advisory clients of the Advisor, by registered representatives and
employees of firms which have sales agreements with the Distributor, by
investment advisors, financial planners or other intermediaries who place trades
for their own accounts or the accounts of their clients and who charge a
management, consulting or other fee for their services, by clients of such
investment advisors, financial planners or other intermediaries who place trades
for their own accounts if the client accounts are linked to the master account
of such investment advisor, financial planner or other intermediaries on the
books and records of the broker or agent, by retirement and deferred
compensation plans and trusts used to fund such plans, including, but not
limited to, those defined in Section 401(a), 403(b) or 457 of the Internal
Revenue Code and "rabbi trusts" and by such other persons who are determined to
have acquired shares under circumstances not involving any sales expense to the
Funds or Distributor. Investors who are entitled to make purchases at net asset
value may nevertheless may be charged a fee if they effect transactions in fund
shares through a broker or agent.
General. Payments of redemption proceeds will not be made with respect to any
shares of a Fund 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 Funds 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 NYSE (currently 4:00 p.m., New York City
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 NYSE on the next
business day.
Federal tax law requires 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 Funds do not intend to issue share certificates. All shares are normally
held in non-certificated form registered on the books of the Funds and the
Funds' Transfer Agent for the account of the shareholder.
HOW TO REDEEM AN INVESTMENT IN THE FUNDS
A shareholder has the right to have a Fund redeem all or any portion of his
outstanding shares at their current net asset value on each day the NYSE is open
for trading, subject to a 2% redemption fee imposed on redemptions of shares
within six months of purchase. These fees are paid to the Fund and are designed
to reduce transaction costs and disruptive effects of short-term investment in
the Funds. 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
Funds' Transfer Agent in order to constitute a valid tender for redemption.
Requests for redemption of fund shares should be mailed to the Funds at P.O. Box
5354, Cincinnati, OH 45201-5354. To protect the Funds and their 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 Redemption by Telephone
portion of the Funds' Account Application may redeem shares on any business day
the NYSE is open by calling the Funds' Transfer Agent at (800) 841-2858 between
the hours of 8:30 a.m. and 7:00 p.m. Eastern time. Redemption proceeds will be
mailed to the address of record 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 Funds
and the 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 send the
proceeds to the address of record on the account or transfer the proceeds to the
bank account designated in the Authorization. The Funds and the 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.
If these procedures are followed, neither the Funds nor their agents will be
liable for any loss, liability or cost which results from acting upon
instructions of a person believed to be a shareholder with respect to the
telephone redemption privilege. The Funds 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 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 Funds may suspend
the right of redemption under certain extraordinary circumstances in accordance
with the rules of the SEC. In the case of shares purchased by check and redeemed
shortly after purchase, the Funds will not mail redemption proceeds until they
have 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 Funds
reserve the right to redeem shares in any account, other than retirement plan or
Uniform Gift to Minors Act accounts, if at any time, due to redemptions by the
shareholder, the total value of a shareholder's account does not equal at least
$5,000. If a Fund determines to make such an involuntary redemption, the
shareholder will first be notified that the value of the account is less than
$5,000 and will be allowed 30 days to make an additional investment to bring the
value of the account to at least $5,000 before the Fund takes any action.
SERVICES AVAILABLE TO THE FUND'S SHAREHOLDERS
Retirement Plans. The Funds offer a prototype Individual Retirement Account
("IRA") plan and information is available from the Distributor or from your
securities dealer with respect to other retirement plans offered. Investors
should consult a tax adviser before establishing any retirement plan.
Automatic Investment Plan. For the convenience of shareholders, the Funds offer
an automatic investment plan whereby a preauthorized amount is automatically
drawn on the shareholder's personal checking account each month (but not less
than $100). Upon receipt of the withdrawn funds, a 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, sufficiently in advance of the next
scheduled withdrawal.
Automatic Withdrawals. As another convenience, the Funds offer 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 in a Fund must have 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 Funds at any time without charge or penalty.
A withdrawal under the Systematic Withdrawal Program is treated as a redemption
of shares, and may result in a gain or loss for federal income tax purposes. In
addition, if the amounts withdrawn exceed the dividends credited to the
shareholder's account, the account ultimately may be depleted.
HOW THE FUND'S PER 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 that 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 or for which
market quotations are stale 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 60 days or less are valued at amortized
cost as reflecting fair value.
Because both Funds' portfolio securities are listed primarily on the Korean and
other Asian Stock Exchanges, which trade on days when the NYSE may be closed
(such as a Saturday), the net asset values of the Funds may be significantly
affected by such trading on days when shareholders have no access to the Funds.
With respect to Korean securities, currently the Korean government imposes
significant restrictions and controls on foreign investors. As a result, the
Funds may be limited in their investments or precluded from investing in certain
Korean companies. This limitation may adversely affect the performance of the
Funds. Under Korean Stock Exchange ("KSE") regulations, total foreign investment
is currently limited to 55% of each class of a company's shares listed on the
KSE and a single foreign investor may only purchase up to 50% of such shares.
The 50% and 55% limitations are reduced to 1% and 25%, respectively, for certain
government-designated public corporations with shares listed on the KSE. These
limits are subject to change. As a result of these limitations, some of the
securities trade among non-Korean residents at a premium over the market price.
The Funds may effect transactions with other foreign investors off the KSE in
the shares of companies that have reached the maximum aggregate foreign
ownership limit through a securities company in Korea. These transactions
typically occur at a premium over prices on the KSE. There can be no assurance
that the Funds, when they purchase shares at a premium, will be able to realize
such premium on the sale of shares, or that such premium will not be adversely
affected by changes in regulations or otherwise. Accordingly, this premium will
generally not be included in calculating the Funds' net asset value.
Current restrictions which govern the Korean stock market provide that on any
given trading day, a security's price is permitted to move a maximum of 8% from
the previous day's closing price. The Trustees will give consideration as to
whether any such restriction on the price movement of a particular security
affects the accuracy of such a security's valuation in determining a Fund's net
asset value per share.
DISTRIBUTIONS AND TAXES
Dividends and Distributions. Any dividends from net investment income (which
includes realized short term capital gains) are declared and paid at least
annually, typically at the end of each Fund's fiscal year (August 31). Any
undistributed long term net capital gains realized during the 12-month period
ended each October 31, as well as any additional undistributed capital gains
realized during the Fund's fiscal year, will also be distributed to shareholders
on or about December 31 of each year.
Dividends and capital gain distributions (net of any required tax withholding)
are automatically reinvested in additional shares of a 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 distributions be made in cash.
Any dividend or distribution paid by a 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. Each Fund intends 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"). As long as each fund continues to so qualify, and as long
as each Fund distributes all of its income each year to the shareholders, the
Fund will not be subject to any federal income tax or excise taxes based on net
income. Distributions made by the Funds 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. Distributions designated as capital
gains dividends are taxable as long-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 Funds' distributions.
Portions of each Fund's investment income may subject to foreign income taxes
withheld at the source. If a Fund meets certain requirements, it may elect to
"pass-through" to shareholders any such foreign taxes, which may enable
shareholders to claim a foreign tax credit or a deduction with respect to their
share thereof. Additional information about taxes is set forth in the Statement
of Additional Information. Shareholders should consult their own advisers
concerning federal, state and local tax consequences of investing in the Funds.
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 classify shares and issue other series,
the assets and liabilities of which will be separate and distinct from any other
series.
Shareholder Rights. Shares issued by the Funds have no preemptive, conversion,
or subscription rights. Shareholders have equal and exclusive rights as to
dividends and distributions as declared by the Funds and to the net assets of
the Fund upon liquidation or dissolution. Each Fund, as a separate series of the
Trust, votes separately on matters affecting only that Fund (e.g., approval of
the Advisory Agreement); all series of the Trust vote as a single class on
matters affecting all series jointly or the Trust as a whole (e.g., 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, a 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 inception of operations. A Fund may
also advertise aggregate and average total return information over different
periods of time. A 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, and any applicable sales
charges. Investors should note that the investment results of each Fund will
fluctuate over time, and any presentation of a 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.
Custodian and Transfer Agent; Shareholder Inquiries. Star Bank, N.A., 425 Walnut
St., Cincinnati, OH 45202, serves as custodian of the Funds' assets. CountryWide
Services, P. O. Box 5354, Cincinnati, OH 45201-5354 is the Funds' Transfer and
Dividend Disbursing Agent. Shareholder inquiries should be directed to the
Transfer Agent at (800) 841-2858.
APPENDIX: KOREAN RISK FACTORS
Investing in securities of Korean companies and of the government (the
"Government") of the Republic of Korea (the "Republic" or "Korea") involves
certain risks not typically associated with investing in securities of United
States companies or the United States Government, in addition to those discussed
under "Investment Objective, Policies and Risks."
Investment and Repatriation Restrictions.
Under current Korean Stock Exchange regulations, total foreign investment is
limited to 55% of each class of a company's shares listed on the Korean Stock
Exchange ("KSE") and a single foreign investor may purchase up to 50% of such
shares. These limitations are subject to change. These limitations are reduced
to 1% and 25%, respectively, for certain government-listed designated public
corporations with shares listed on the KSE.
Transfer of funds from Korea to foreign countries and repatriation of foreign
capital invested in Korea are subject to certain regulatory approvals pursuant
to foreign exchange control laws and regulations. Generally, as long as the
original investment was approved or allowed under the applicable laws and
regulations of Korea, the conversion and remittance of cash or cash equivalents
into U.S. dollars in relation to such investment will be freely allowed upon
receipt of the appropriate payment approvals from the Bank of Korea or a
designated Class A foreign exchange bank depending on the type of transaction.
Currency Fluctuations. The Korea Fund's assets will be invested primarily in
Korean securities, the market value of which is determined in Won, and
substantially all of its income will be received or realized in Korean Won. The
Fund will be required, however, to compute its net asset value and income, and
to distribute its income, in U.S. dollars. As a result, the Fund's net asset
value and its distribution amounts will be subject to foreign exchange rate
fluctuations relative to the Won.
The Korean Won was devalued against the U.S. dollar in the early 1980's to reach
approximately Won 890 to the US dollar by the end of 1985. The Korean Won
appreciated against the US dollar from 1986 to approximately 665 Won per US
dollar by May 1989. Since then the Korean Won has slowly lost value against the
US dollar until late October 1997 and suddenly plunged thereafter due to the
foreign currency crisis which resulted in the International Monetary Fund
intervention in December, 1997. The exchange rate stood at approximately 1606
Won per US dollar as of the date of this Prospectus.
The Fund expects to incur certain transaction costs in connection with its
conversions between currencies and, in light of the history of the fluctuating
currency values of the Korean Won relative to the dollar, it is impossible to
predict what effect currency conversion costs may have on the operations of this
Fund.
Potential Market Volatility. The Korean securities market is still relatively
small in comparison to the Japanese, United States and other major securities
markets. Because of its small size and low trading volume, the Korean securities
market is subject to greater price volatility and less liquidity than is usual
in the Japanese, United States or major European securities markets. Because of
these liquidity limitations and the Fund's investment policies, it may be more
difficult for the Fund to purchase and sell portfolio positions than would be
the case in the United States. Accordingly, in periods of rising market prices,
the Fund may be unable to participate fully in such price increases to the
extent that it is unable to acquire desired portfolio positions quickly;
conversely, the Fund's inability to dispose fully and promptly of positions in
declining markets will cause its net asset value to decline as the value of
unsold positions is determined by references to lower prices.
Political and Economic Factors. The partition of Korea following World War II
has created a political risk to the Republic. The Demilitarized Zone at the
boundary between the Republic and North Korea established after the Korean War
of 1950-53 is supervised by United Nations forces. The United States maintains a
significant military force in the Republic. The situation remains a source of
tension, although negotiations to resolve the political division of the Korean
peninsula have been carried on intermittently for several years, and in recent
years there have been several meetings between representatives of the Republic
and of North Korea on political, economic and humanitarian issues.
Amid the economic crisis which began in the fall of 1997, Dae Joong Kim, a
leader of an opposition party, was elected as president of Korea in December,
1997. Despite somewhat negative views about him prior to the election, he has so
far stabilized the financial markets' reaction to the crisis even before his
inauguration by assuring his commitment to the agreement with the IMF and by
accelerating a timetable for structural reforms in the Korean economy.
Under the IMF bailout package and its conditions, the Korean economic system
will undergo unprecedented changes. Starting from December, 1997, the Korean
government has already begun to implement the measures suggested by the IMF such
as increasing foreign investment ceiling for stocks, opening of Korean fixed
income securities markets, and reforming the financial sector. Many observers
believe that Korea will suffer from painful restructuring of its economy in the
short term, but also believe that the Korean economy will eventually benefit
from the restructuring in the long run, if it can overcome the current crisis.
Advisor
Pacific Gemini Partners, L.L.C.
633 West Fifth St., Suite 3600
Los Angeles, CA 90071
Distributor
First Fund Distributors, Inc.
4455 E. Camelback Rd., Ste. 261E
Phoenix, AZ 85018
Custodian
Star Bank, N.A.
425 Walnut St.
Cincinnati, Ohio 45202
Transfer and Dividend Disbursing Agent
CountryWide Fund Services
P.O. Box 5354
Cincinnati, OH 45201-5354
(800) 841-0980
Auditors
Ernst & Young
515 South Flower St.
Los Angeles, CA 90071
Legal Counsel
Paul, Hastings, Janofsky & Walker LLP
345 California St.
San Francisco, CA 94104
Pacific Gemini Partners
Fund Group
PROSPECTUS
February 9, 1998
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
February 9, 1998
PGP KOREA EQUITY GROWTH FUND
PGP ASIA GROWTH FUND
series of
PROFESSIONALLY MANAGED PORTFOLIOS
633 W. Fifth Street, Suite 3600
Los Angeles, CA 90071
(213) 624-3355
This Statement of Additional Information is not a prospectus and it should be
read in conjunction with the prospectus of the PGP Korea Growth Fund and the PGP
Asia Growth Fund (a "Fund" or the "Funds"). A copy of the prospectus of the Fund
dated February 9, 1998 is available by calling the number listed above or (626)
852-1033.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Reference to page
Page In Prospectus
<S> <C> <C>
The Trust B-1 16
Investment Objective and Policies B-2 3
Investment Restrictions B-6 8
Distributions and Tax Information B-8 16
Management B-12 8
The Fund's Investment Advisor B-14 8
The Fund's Administrator B-15 10
The Fund's Distributor B-15 11
Execution of Portfolio Transactions B-16 10
Additional Purchase and Redemption Information B-17 13
Determination of Share Price B-18 15
Performance Information B-20 17
General Information B-21 12
</TABLE>
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 PGP Korea Equity
Growth Fund and PGP Asia Growth Fund series (the 'Funds"). Pacific Gemini
Partners LLC (the 'Advisor') is the Fund's investment advisor.
INVESTMENT OBJECTIVE AND POLICIES
The Funds are mutual funds with the investment objective of seeking
long-term growth of capital. The following discussion supplements the discussion
of the Funds' investment objectives and policies as set forth in the Prospectus.
There can be no assurance that the objectives of the Funds will be attained.
Depositary Receipts
The Funds may invest securities of foreign issuers in the form of
American Depositary Receipts ("ADRs"), European Depositary Receipts ('EDRs'),
Global Depositary Receipts ("GDRs") or other securities convertible into
securities of Korean and other Asian issuers. These securities may not
necessarily be denominated in the same currency as the securities for which they
may be exchanged. The Fund may also hold American Depository Shares ("ADSs")
which are similar to ADRS. ADRs and ADSs are typically issued by an American
bank or trust company and evidence ownership of underlying securities issued by
a foreign corporation. EDRs, which are sometimes referred to as Continental
Depository Receipts ("CDRs"), are receipts issued in Europe typically by foreign
banks and trust companies that evidence ownership of either foreign or domestic
securities. Generally, ADRs in registered form are designed for use in U.S.
securities markets. For purposes of the Funds' investment policies, the Funds'
investments in ADRs, ADSs, EDRs, GDRs and CDRs will be deemed to be investments
in the equity securities representing securities of foreign issuers into which
they may be converted.
Repurchase Agreements
The Funds 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 a 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
B-2
<PAGE>
broker-dealers with the Securities and Exchange Commission ("SEC") or exempt
from such registration. The Funds will generally enter into repurchase
agreements of short durations, from overnight to one week, although the
underlying securities generally have longer maturities. The Funds 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 either 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 a Fund to the seller
of the U.S. Government security subject to the repurchase agreement. It is not
clear whether a court would consider the U.S. Government security acquired by a
Fund subject to a repurchase agreement as being owned by the Fund or as being
collateral for a loan by the Fund to the seller. In the event of the
commencement of bankruptcy or insolvency proceedings with respect to the seller
of the U.S. Government security before its repurchase under a repurchase
agreement, a Fund may
B-3
<PAGE>
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. If a court characterizes the transaction as a loan and the Fund has
not perfected a security interest in the U.S. Government security, the Fund may
be required to return the security to the seller's estate and be treated as an
unsecured creditor of the seller. As an unsecured creditor, a 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 Funds, the
Advisor seeks 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.
Apart from the risk of bankruptcy or insolvency proceedings, there
is also the risk that the seller may fail to repurchase the security. However, a
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 a Fund
might be unsuccessful in seeking to impose on the seller a contractual
obligation to deliver additional securities.
When-Issued Securities
The Funds may from time to time 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 a Fund to the
issuer
B-4
<PAGE>
and no interest accrues to the Fund. To the extent that assets of a Fund are
held in cash pending the settlement of a purchase of securities, the Fund would
earn no income; however, it is the Funds' 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, the Funds intend to
purchase such securities with the purpose of actually acquiring them unless a
sale appears desirable for investment reasons. At the time a 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 Funds do not believe that net asset value or income will
be adversely affected by the purchase of securities on a when-issued basis. The
Funds will segregate liquid assets with the Custodian in which they will
maintain cash and marketable securities equal in value to commitments for
when-issued securities.
Forward Currency Contracts and Options on Currency
A forward currency contract ("Forward Contract" or 'Contract") is
an obligation to purchase or sell a currency against another currency at a
future date and price as agreed upon by the parties. The Funds may either accept
or make delivery of the currency at the maturity of the Forward Contract or,
prior to maturity, enter into a closing transaction involving the purchase or
sale of an offsetting contract. The Funds will utilize Forward Contracts only on
a covered basis, which means that the Funds will segregate liquid assets in an
amount not less than the contract price at all times while the contract is
outstanding. The Funds will engage in forward currency transactions in
anticipation of, or to protect against, fluctuations in exchange rates. The
Funds may enter into Forward Contracts either with respect to specific
transactions or with respect to the Funds' portfolio positions. For example,
when a Fund anticipates making a purchase or sale of a security, it may enter
into a Forward Contract to set the rate (either relative to the U.S. dollar, the
Korean Won or another currency) at which a currency exchange transaction related
to the purchase or sale will be made. Further, when the Advisor believes that
the Won or other currency may decline compared to the U.S. dollar or another
currency, a Fund may enter into a Forward Contract to sell the Won or other
currency the Advisor expects to decline in an amount approximating the value of
some or all of the Fund's portfolio securities denominated in that currency.
Forward Contracts are transferable in the interbank market
conducted directly between currency traders (usually large commercial banks) and
their customers. A Forward Contract generally has no deposit requirement, and no
commissions are charged at any stage for trades. The Funds will enter into such
Forward Contracts with major U.S. or foreign banks and securities or currency
dealers in accordance with guidelines approved by the Trust's Board of Trustees.
The Funds may enter into Forward Contracts either with respect to
specific transactions or with respect to the Funds' portfolio positions. The
precise matching of the Forward Contract amounts and the value of specific
securities will not generally be possible
B-5
<PAGE>
because the future value of such securities in foreign currencies will change as
a consequence of market movements in the value of those securities between the
date the Forward Contract is entered into and the date it matures. Accordingly,
it may be necessary for a Fund to purchase additional foreign currency on the
spot (i.e., cash) market (and bear the expense of such purchase) if the market
value of the security is less than the amount of foreign currency the Fund is
obligated to deliver and if a decision is made to sell the security and make
delivery of the foreign currency. Conversely, it may be necessary to sell on the
spot market some of the foreign currency the Fund is obligated to deliver. The
projection of short-term currency market movements is extreme difficult, and the
successful execution of a short-term hedging strategy is highly uncertain.
Forward Contracts involve the risk that anticipated currency movements will not
be accurately predicted, which may cause a Fund to sustain losses on these
Contracts and transaction costs.
At or before the maturity of a Forward Contract requiring a Fund to
sell a currency, a Fund may either sell a portfolio security and use the sale
proceeds to make delivery of the currency or retain the security and offset its
contractual obligation to deliver the currency by purchasing a second contract
pursuant to which the Fund will obtain, on the same maturity date, the same
amount of the currency which it is obligated to deliver. Similarly, a Fund may
close out a Forward Contract requiring it to purchase a specified currency by
entering into a second Contract entitling it to sell the same amount of the same
currency on the maturity date of the first Contract. A Fund would realize a gain
or loss as a result of entering into such an offsetting Forward Contract under
either circumstance to the extent the exchange rate or rates between the
currencies involved moved between the execution of the first Contract and the
offsetting Contract.
The cost to a Fund of engaging in Forward Contracts varies with
factors such as the currencies involved, the length of the contract period and
the market conditions then prevailing. Because Forward Contracts are usually
entered into on a principal basis, no fees or commissions are involved. The use
of Forward Contracts does not eliminate fluctuations in the prices of the
underlying securities a Fund owns or intends to acquire, but it does establish a
rate of exchange in advance. In addition, although Forward Contracts limit the
risk of loss due to a decline in the value of the hedge currencies, at the same
time they limit any potential gain that might result should the value of the
currencies increase.
While Forward Contracts are not presently regulated by the U.S.
Commodity Futures Trading Commission ("CFTC"), the CFTC may in the future assert
authority to regulate Forward Contracts. In that event, the Funds' ability to
utilize Forward Contracts in the manner set forth above may be restricted.
Illiquid Securities. A Fund may invest no more than 15% of its
total assets in illiquid securities. Securities may be considered illiquid if,
among other things, the Fund cannot reasonably expect to receive approximately
the amount at which the Fund values such securities within seven days. See
"Investment Limitations' and "Additional Risk Factors" in the Prospectus. The
sale of illiquid securities, if they can be sold at all, generally will require
more
B-6
<PAGE>
time and result in higher brokerage charges or dealer discounts and other
selling expense than would the sale of liquid securities such as securities
eligible for trading on U.S. securities exchanges or in the over-the-counter
markets. Moreover, restricted securities, which may be illiquid for purposes of
this limitation, often sell, if at all, at a price lower than similar securities
that are not subject to restrictions on resale.
With respect to liquidity determinations generally, the Board of
Trustees has the ultimate responsibility for determining whether specific
Securities are liquid or illiquid. The Board has delegated the function of
making day-to-day determinations of liquidity to the Advisor. Factors
encompassed in the evaluation of liquidity, include, but are not limited to: (i)
the frequency of trading in the security; (ii) the number of dealers that make
quotes for the security; (iii) the number of dealers that have undertaken to
make a market in the security; (iv) the number of other potential purchasers;
and (v) the nature of the security and how trading is effected (e.g., the time
needed to sell the security, how offers are solicited and the mechanics of
transfer). The Advisor will monitor the liquidity of securities in the Funds'
portfolios and report periodically on such decisions to the Board of Trustees,
consistent with the guidelines established for making liquidity determinations.
Illiquid securities are more difficult to value accurately due to,
among other things, the fact that such securities often trade infrequently or
only in smaller amounts. In addition, certain major events affecting Korean or
other markets of emerging Asian countries may cause all or a high proportion of
a Fund's holdings to become illiquid. Such circumstances may make it impossible
to determine net asset value per share which, in turn, would cause a Fund to
suspend sales and redemptions of its shares until net asset value could be
determined. In such a case, the Funds would apply to the SEC for a determination
that an emergency, within the meaning of Section 22(e) of the 1940 Act, is
present.
INVESTMENT RESTRICTIONS
The following policies and investment restrictions have been
adopted by each 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)
through the lending of its portfolio securities as described above and in its
Prospectus, or (c) to the extent the entry into a repurchase agreement is deemed
to be a loan.
2. (a) Borrow money, except temporarily for extraordinary or
emergency purposes from a bank and then not in excess of 10% of its total assets
(at the lower of cost or fair market value; any such borrowing will be made only
if immediately thereafter there is an asset
B-7
<PAGE>
coverage of at least 300% of all borrowings and no additional investments may be
made while any borrowings are in excess of 5% of total assets.
(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,
except that this restriction does not preclude a 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 real estate, or commodities or commodity
contracts, except that a Fund may purchase or sell currencies (including forward
currency exchange contracts), futures contracts and related options generally as
described in the Prospectus and 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, except that this
restriction 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 a Fund from (a) making any
permitted borrowings, mortgages or pledges, or (b) entering into repurchase
transactions.
7. Invest in any issuer for purposes of exercising control or
management.
Each Fund observes the following policies, which are not deemed
fundamental and which may be changed without shareholder vote. The Funds may
not:
8. 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.
9. Invest, in the aggregate, more than 15% of its net assets in
securities with legal or contractual restrictions on resale, securities which
are not readily marketable and repurchase agreements with more than seven days
to maturity.
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 with respect to borrowing and illiquid securities, or as
otherwise noted.
B-8
<PAGE>
DISTRIBUTIONS AND TAX INFORMATION
Distributions
Dividends from net investment income and distributions from net
profits from the sale of securities are generally made annually, as described in
the Prospectus, after the conclusion of the Funds' fiscal year (December 31).
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
one-year period ended October 31 of each year will also be distributed by
December 31 of each year.
Each distribution by the Funds is accompanied by a brief
explanation of the form and character of the distribution. In January of each
year the Funds will issue to each shareholder a statement of the federal income
tax status of all distributions made during the preceding calendar year.
Tax Information
Each series of the Trust is treated as a separate entity for
federal income tax purposes. Each Fund expects to qualify to be treated as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended, (the "Code") provided that it complies with all applicable
requirements regarding the source of its income, diversification of its assets
and timing of distributions. The Funds' policy is to distribute to their
shareholders all of their 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 Funds will not be subject to
any federal income tax or excise taxes based on net income. To avoid the excise
tax, 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 one-year 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 excise tax.
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 carry forward of a Fund.
The Funds may write, purchase or sell certain option, futures and
foreign currency contracts. Such transactions are subject to special tax rules
that may affect the amount, timing and character of distributions to
shareholders. Unless a Fund is eligible to make and makes a special election,
such contracts that are "Section 1256 contracts" will be "marked-to-market" for
Federal income tax purposes at the end of each taxable year (i.e., each contract
will be treated as sold for its fair market value on the last day of the taxable
year). In general, unless
B-9
<PAGE>
the special election referred to in the previous sentence is made, gain or loss
from transactions in such contracts will be 60% long term and 40% short-term
capital gain or loss. Section 1092 of the Code, which applies to certain
"straddles", may affect the taxation of a Fund's transactions in option,
futures, and foreign currency contracts. Under Section 1092 of the Code, a Fund
may be required to postpone recognition for tax purposes of losses incurred in
certain closing transactions.
Section 988 of the Code contains special tax rules applicable to
certain foreign currency transactions that may affect the amount, timing and
character of income, gain or loss recognized by the Funds. Under these rules,
foreign exchange gain or loss realized with respect to foreign currency
denominated debt instruments, foreign currency forward contracts, foreign
currency denominated payables and receivables, and foreing currency options and
futures contracts (other than options, futures and foreign currency contracts
governed by Section 1256 of the Code and for which no election is made) is
treated as ordinary income or loss.
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 a Fund
for its taxable year. In view of the Funds' investment policies, it is unlikely
that any dividends from domestic corporations will be part of the Funds' gross
income and, accordingly, it is unlikely that any part of the distributions by
the Funds may be eligible for the dividends-received deduction for corporate
shareholders. The deduction, if any, may be reduced or eliminated if Fund shares
held by a corporate investor are treated as debt-financed or are held for fewer
than 46 days.
Distributions of the excess of net long-term capital gains over net
short-term capital losses are taxable to shareholders as long-term capital
gains, regardless of the length of time they have held their shares. 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 with respect to such shares 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 sha1l be added to the basis of the shares received.
Any loss realized upon a redemption or exchange may be disallowed under certain
wash sale rules to the extent shares of the Fund are purchased (through
reinvestment of distributions or otherwise) within 30 days before or after the
redemption or exchange.
Under the Code, the Funds will be required to report to the
Internal Revenue Service 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 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 Funds with their
taxpayer identification numbers and with required certifications regarding their
status under the federal income tax law. If the backup 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 Funds reserve
the right to refuse to open an account for any person failing to certify the
person's 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.
The Fund will be subject to Korean income taxes, including certain
withholding taxes. So long as more than 50% in value of the Fund's total assets
at the close of any taxable year in which it is a regulated investment company
consists of stocks or securities of non-U.S. corporations, the Fund may elect to
treat any such foreign income, taxes paid by it during such year as paid by its
shareholders. The Funds expect to qualify for this election annually. The Funds
will notify shareholders in writing each year if it makes the election and of
the amount of foreign income taxes, if any, to be treated as paid by the
shareholders and the amount to be treated by them as income from non-U.S.
sources. If the Funds make the election, shareholders will be required to
include in income their proportionate shares of the amount of foreign income
taxes paid by the Funds and will be entitled to claim either a credit (subject
to the limitations discussed below) or, if they itemize their deductions, a
deduction for their shares of the foreign income taxes in computing their U.S.
Federal income tax liability. (No deduction will be permitted in computing the
alternative minimum tax imposed on corporations and individuals.) Shareholders
that are exempt from tax under Section 501(a) of the Code, such as pension,
B-10
<PAGE>
plans, generally will derive no benefit from the Funds' election. However, such
shareholders should not be disadvantaged because the amount of additional income
they are deemed to receive generally will not be subject to U.S. Federal income
tax.
Generally, a credit for foreign taxes may not exceed the
shareholder's U.S. federal income tax (determined without reward to the
availability of the credit) attributable to his or her total foreign source
taxable income. For this purpose, the portion of distributions paid by the Funds
from foreign source income, will be treated as foreign source income. The Funds'
gains from the sale of securities will generally be treated as derived from U.S.
sources, and certain currency fluctuation gains and losses, including
fluctuation gains from foreign currency denominated debt securities, receivables
and payables will be treated as derived from U.S. sources. The limitation on the
foreign tax credit is applied separately to foreign source "passive income",
such as the portion of dividends received from a Fund which qualifies as foreign
source income. In addition, the foreign tax credit is allowed to offset only 90%
of the alternative minimum tax imposed on corporations and individuals. Because
of these limitations, shareholders may be unable to claim a credit for the full
amount of their proportionate shares of foreign income taxes paid by the Funds.
The foregoing is only a general description of the treatment of
foreign income taxes under the U.S. federal income tax laws. Because the
availability of a credit or deduction depends on the particular circumstances of
each shareholder, shareholders are advised to consult their own tax advisers.
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 Funds, 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.
Passive Foreign Investment Companies
The Funds may invest in the stock of "passive foreign investment
companies" ("PFICs"). A PFIC is a foreign corporation that, in general meets
either of the following tests: (1) at least 75% of its gross income is passive
or (2) an average of at least 50% of its assets produce, or are held for the
production of, passive income. Under certain circumstances, the Funds will be
subject to federal income tax on a portion of any "excess distribution" received
on the stock of a PFIC or of any gain from disposition of that stock
(collectively "PFIC income"), plus interest thereon, even if the Funds
distribute the PFIC income as a taxable dividend to its shareholders. The
balance of the PFIC income will be included in the Funds' investment company
taxable income and, accordingly, will not be taxable to it to the extent that
income is distributed to its shareholders. If a Fund invests in a PFIC and
elects to treat the PFIC as a "qualified electing fund" ("QEF") then in lieu of
the foregoing tax and interest
B-11
<PAGE>
obligation, the Fund will be required to include in income each year its pro
rata share of the QEF's annual ordinary earnings and net capital gain, even if
they are not distributed to the Fund; those amounts would be subject to the
distribution requirements described above. In most instances it will be very
difficult, if not impossible, to make this election because of certain
requirements thereof.
Korean Taxes
As stated above, under current Korean law, payments to nonresidents
of Korea (such as the Fund) by Korean corporations in respect of income are
subject to Korean withholding tax and capital gains derived by nonresidents of
Korea (such as the Fund) with respect to stock and securities of Korean
corporations are subject to Korean withholding tax, unless exempted by relevant
laws or tax treaties.
The applicable withholding tax rate under the United States-Korea
income tax treaty, as presently in effect, generally is 15%, plus a resident tax
of 7.5% of such amount, or a total of 16.125%, on dividends paid to the Fund by
Korean issuers, and generally 12% (plus a resident tax of 7.5% of such amount,
or a total of 12.9%) on interest paid to the Fund by Korean issuers. Under the
'United States-Korea income tax treaty, as presently in effect, no withholding
tax will be applicable to capital gains realized by the Fund. This tax treatment
could change in the event of changes in Korean or United States tax laws or
changes, in the terms of, or the Korean Ministry of Finance and Economy's
interpretation of, the United States-Korea income tax treaty.
Notwithstanding the foregoing, the Tax Exemption and Reduction
Control Law (the "TERCL") exempts interest on bonds denominated in a non-Korean
currency. The residents tax referred to above is therefore eliminated with
respect to such investments.
Under present Korean law, the Korean Inheritance and Gift Tax will
not apply to any testate, intestate or inter vivos transfer of shares of the
Fund to the extent the deceased or the donee, as the case may be, is not
domiciled in Korea; Korean stamp duty will not apply to transfers of Fund shares
unless any document for such transfer is executed in Korea, nor to the Fund's
portfolio securities transactions; but the Korean Securities Transaction Tax
will apply to the sale of securities made through the Korean Stock Exchange by
the Fund.
The foregoing discussion and the related discussion in the
prospectus have been prepared by Fund management, and do not purport to be a
complete description of all tax implications of an investment in the Fund.
Shareholders should conslut with their own tax advisors for more information
about Federal, state, local or foreign taxes. Paul, Hastings, Janofsky & Walker
LLP has expressed no opinion in respect thereof..
MANAGEMENT
TRUSTEES
B-12
<PAGE>
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 Trust, who are responsible for administering the day-to-day operations of
the Trust and its separate series. The current Trustees and officers and their
affiliations and principal occupations for the past five years are set forth
below.
Steven J. Paggioli,* 47 President and Trustee
479 West 22nd Street, New York, New York 10011. Executive Vice President,
Wadsworth Group (consultants) since 1986; Executive Vice President of Investment
Company Administration Corporation ("ICAC"; mutual fund administration and the
Funds' administrator), and Vice President of First Fund Distributors, Inc.
("FFD"; registered broker-dealer and the Fund's Distributor) since 1990.
Dorothy A. Berry, 53 Chairman and Trustee
14 Five Roses East, Ancram, NY 12516. 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, 57 Trustee
One Peabody Lane, Darien, CT 06820. Retired, Formerly Senior Vice President,
Rockefeller Trust Co. Financial Counselor, Rockefeller & Co.
Carl A. Froebel, 59 Trustee
2 Crown Cove Lane, Savannah, GA 31411. Private Investor. Formerly Managing
Director, Premier Solutions, Ltd. Formerly President and Founder, National
Investor Data Services, Inc. (investment related computer software).
Rowley W.P. Redington, 53 Trustee
1191 Valley Rd., Clifton, New Jersey 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*, 40 Treasurer
2025 E. Financial Way, Suite 101, Glendora, California 91741. Senior Vice
President, The Wadsworth Group., Senior Vice President of ICAC and Vice
President of FFD since 1990.
B-13
<PAGE>
Robin Berger*, 40 Secretary
479 West 22nd St., New York, New York 10011. Vice President, The Wadsworth Group
since June, 1993; formerly Regulatory and Compliance Coordinator, Equitable
Capital Management, Inc. (1991-93).
Robert H. Wadsworth*, 58 Vice President
4455 E. Camelback Road, Suite 261E, Phoenix, Arizona 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 total compensation received by the following
Trustees from 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.
It is estimated that each Fund's portion of allocated trustees'
fees and expenses will not exceed $2,000 for the Funds' initial fiscal period.
Name of Trustee Total Compensation
--------------- ------------------
Dorothy A. Berry $22,000
Wallace L. Cook $17,500
Carl A. Froebel $17,500
Rowley W.P. Redington $17,500
THE FUND'S INVESTMENT ADVISOR
As stated in the Prospectus, investment advisory services are
provided to the Funds by the Advisor, pursuant to an Investment Advisory
Agreement.
The Investment Advisory Agreement continues in effect after its
intial two year term from year to year so long as such continuation is approved
at least annually by (1) the Board of Trustees of the Trust or the vote of a
majority of the outstanding shares of a Fund, 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. The
Agreement may be terminated at any time, without penalty, by either the Funds or
the Advisor
B-14
<PAGE>
upon sixty days' written notice and is automatically terminated in the event of
its assignment as defined in the 1940 Act.
The Advisor has agreed to reduce fees payable to it or reimburse
the Funds' operating expenses to the extent necessary to limit each Fund"s ratio
of operating expenses to average net assets to no more than 2.80% annually. Any
such reduction of fees or payment of expenses may be subject to reimbursement by
the Funds provided that they are able to do so and remain in compliance with
applicable limitations.
THE FUND'S ADMINISTRATOR
The Funds have entered into an Administration Agreement with
Investment Company Administration Corporation (the "Administrator"), a
corporation owned in part and controlled by Messrs. Banhazl, Paggioli and
Wadsworth. The Administration Agreement provides that the Administrator 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,
tax returns, shareholder reports and other regulatory reports or filings
required of the Funds; prepare all required notice filings necessary to maintain
the Funds' ability 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 Funds' servicing agents (i.e., transfer agent,
custodian, fund accountants, etc.); review and adjust as necessary the Funds'
daily expense accruals; and perform such additional services as may be agreed
upon by the Funds and the Administrator. For its services, the Administrator
receives a monthly fee from each Fund at the following annual rate:
Average net assets Fee or Fee rate
---------------------- ------------------
under $15 million $30,000
$15 million to $50 million 0.20% of average net assets
$50 million to $100 million 0.15% of average net assets
$100 million to $150 million 0.10% of average net assets
Over $150 million 0.05% of average net assets
THE FUNDS' DISTRIBUTOR
First Fund Distributors, Inc. (the 'Distributor"), an affiliate of
the Administrator, acts as the Funds' principal underwriter in a continuous
public offering of the Funds' shares. The Distribution Agreement between the
Funds and the Distributor continues in effect from year to 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
B-15
<PAGE>
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 Distribution
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.
EXECUTION OF PORTFOLIO TRANSACTIONS
Pursuant to the Investment Advisory Agreement, the Advisor determines
which securities are to be purchased and sold by the Funds and which
broker-dealers are eligible to execute the Funds' portfolio transactions.
Purchases and sales of securities in the over-the-counter market will generally
be executed directly with a 'market-maker" unless, in the opinion of the
Advisor, a better price and execution can otherwise be obtained by using a
broker for the transaction.
Purchases of portfolio securities for the Funds 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 Funds 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 dealer or underwriter are comparable, the order
may be allocated to a dealer or underwriter that has provided research or other
services as discussed below.
In placing portfolio transactions, the Advisor will use its 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 services needed to
obtain 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 that it may lawfully and appropriately use in its
investment advisory capacities, as well as provide other services in addition to
execution services. The Advisor considers such information, which is in addition
to and not in lieu of the services required to be performed by it under its
Agreement with the Funds, to be useful in varying degrees, but of indeterminable
value. Portfolio transactions may be placed with broker-dealers who sell shares
of the Funds subject to rules adopted by the National Association of Securities
Dealers, Inc.
While it is the Funds' 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 Funds, weight may also be given to the
ability of a broker-dealer to furnish brokerage and research services to the
Funds or to the Advisor, even if the specific services were not imputed
B-16
<PAGE>
just to the Funds and may be useful to the Advisor in advising other clients. In
negotiating commissions with a broker or evaluating the spread to be paid to a
dealer, the Funds 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 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
overall responsibilities to the Funds.
Investment decisions for the Funds are made independently from
those of other client accounts or mutual funds managed or advised by the
Advisor. Nevertheless, it is possible that at times identical securities will be
acceptable for both the Funds and one or more of such client accounts or other
Funds. In such event, the position of the Funds and such client account(s) or
other Funds 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 or other Funds seeks to acquire the same
security as the Funds at the same time, the Funds may not be able to acquire as
large a portion of such security as is desired, or may have to pay a higher
price or obtain a lower yield for such security. Similarly, the Funds 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 or other Funds simultaneously purchases or sells the same security that
a Fund is purchasing or selling, each day's transactions in such security will
be allocated between the Fund and all such client accounts or other Funds in a
manner deemed equitable by the 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 Funds are 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 Funds.
The Funds contemplate purchasing most Korean equity securities
through the Korea Stock Exchange or in the over-the-counter markets to the
extent the securities available in the over-the-counter markets are consistent
with the investment policies of the Funds. There generally is less government
supervision and regulation of the Korea Stock Exchange and brokers than in the
United States. Security settlements of Korean securities may in some instances
be subject to delays and related administrative uncertainties.
The Funds do not effect securities transactions through brokers in
accordance with any formula, nor do they effect securities transactions through
such brokers solely for selling shares of the Funds, although the Funds may
consider the sale of shares as a factor in allocating brokerage. However, as
stated above, broker-dealers who execute brokerage transactions may effect
purchase of shares of the Fund for their customers.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
The Trust reserves the right in its sole discretion (i) to suspend the continued
offering
B-17
<PAGE>
of the Funds' 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 Funds, and (iii) to reduce or waive the minimum for initial and
subsequent investments for certain fiduciary accounts or under circumstances
where certain economies can be achieved in sales of the Funds' shares.
Payments to shareholders for shares of a Fund redeemed directly
from the Fund will be made as promptly as possible but no later than seven days
after receipt by the Funds' Transfer Agent of the written request in proper
form, with the appropriate documentation as stated in the Prospectus, except
that the Funds 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 Funds' shareholders. At various times, the Funds may be
requested to redeem shares for which they have not yet received confirmation of
good payment; in this circumstance, the Funds may delay the redemption until
payment for the purchase of such shares has been collected and confirmed to the
Funds.
The Funds intend to pay cash (U.S. dollars) for all shares
redeemed, but, under abnormal conditions which make payment in cash unwise, the
Funds may make payment partly in securities with a current market value equal to
the redemption price. Although the Funds do not anticipate that they 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
Funds have elected to be governed by the provisions of Rule 18f-1 under the
1940Act, 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 Funds'
portfolio securities at the time of redemption or repurchase.
As discussed in the Prospectus, the Funds provide 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 Funds. The market value of the Funds' 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 Funds will be determined once daily as of 4:00 p.m., New York
City time, on each day the New York Stock Exchange (the "NYSE") is open for
trading. It is expected that the Exchange will
B-18
<PAGE>
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 Funds do not expect to determine the net
asset value of their shares on any day when the Exchange is not open for trading
even if there is sufficient trading in their portfolio securities on such days
to materially affect the net asset value per share.
In valuing the Funds' assets for calculating net asset value,
readily marketable portfolio securities listed on The Korean Stock Exchange, a
national securities exchange or 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 an
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 the Funds 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 Funds 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.
Although the Funds value their assets daily in terms of U.S.
dollars, the Funds do not intend to convert its holdings of Korean Won or other
currencies into U.S. dollars on a daily basis. The Funds will do so from to
time, and investors should be aware of the costs of currency conversion.
Although foreign exchange dealers do not charge a fee for conversion, they do
realize a profit based on the difference (the N spread") between the prices at
which they are buying and selling various currencies. Thus, a dealer may offer
to sell a currency to a Fund at one rate, while offering a lesser rate of
exchange should a Fund desire to sell that currency to the dealer.
Any assets or liabilities initially expressed in terms of Korean
Won or other foreign currencies are translated into U.S. dollars at the official
exchange rate or, alternatively, at the mean of the current bid and asked prices
of such currencies against the U.S. dollar last quoted by a major bank that is a
regular participant in the foreign exchange market or on the basis of a pricing
service that takes into account the quotes provided by a number of such major
banks. If neither of these alternatives is available or both are deemed not to
provide a suitable methodology for converting a foreign currency into U.S.
dollars, the Board of Trustees in good faith will establish a conversion rate
for such currency.
Securities trading in Korea or other Asian markets may not take
place on all days on which the NYSE is open, or trading may take place on days
on which the NYSE is not open and therefore the Funds' net asset value is not
calculated. The calculation of the Funds' net asset
B-19
<PAGE>
value, therefore, may not take place contemporaneously with the determination of
the prices of securities held by the Funds. Events affecting the values of
portfolio securities that occur between the time their prices are determined and
the close of the NYSE will not be reflected in the Funds' net asset value unless
the Advisor, under the supervision of the Board of Trustees, determines that the
particular event would materially affect net asset value. As a result, the
Funds' net asset value may be significantly affected by such trading on days
when a shareholder has no access to the Funds.
PERFORMANCE INFORMATION
From time to time, the Funds may state their 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 a Fund's
average annual compounded rate of return over the most recent year and the
period from the Fund's inception of operations. A Fund may also advertise
aggregate and average total return information over different periods of time. A
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:
P(1+T)n = ERV
Where: = 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.
The Funds' total return may be compared to relevant domestic and
foreign indices, including those published by Lipper Analytical Services, Inc.
From time to time, evaluations of the Funds' 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 Funds will
fluctuate over time, and any presentation of the Funds' 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
B-20
<PAGE>
future period.
GENERAL INFORMATION
Investors in the Funds will be informed of the Funds' progress
through periodic reports. Financial statements certified by independent public
accountants will be submitted to shareholders at least annually.
Star Bank, N.A., 425 Walnut Street, Cincinnati, OH 45202 acts as
Custodian of the securities and other assets of the Fund. Countrywide Fund
Services, P.O. Box 5534, Cincinnati, OH 45201-5354 acts as the Fund's transfer
and shareholder service agent.
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 Funds' 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 Funds or Trust and satisfy any judgment thereon. All-such rights are limited
to the assets of the Funds. 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 Funds are themselves unable to meet their
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 Funds 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.
B-21
<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 and 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, 1996;
Incorporated by Reference from the annual reports to shareholders for
the fiscal year ended December 31, 1996 (Matrix Growth Fund Series,
Matrix Emerging Growth Fund Series)
(b) Exhibits:
(1) Agreement and Declaration of Trust--1
(2) By-Laws--1
(3) Voting Trust Agreement -- Not applicable
(4) Specimen Share Certificate-2
(5) Form of Investment Advisory Agreement
(6) Form of Distribution Agreement
(7) Benefit Plan -- Not applicable
(8) Form of Custodian and Transfer Agent
Agreements
(9) Form of Administration Agreement
(10) Consent and Opinion of Counsel as to legality of
shares
(11) Consent of Accountants--Not applicable
(12) All Financial Statements omitted from Item 23 --
Not applicable
(13) Letter of Understanding relating to initial
capital--2
(14) Model Retirement Plan Documents - Not applicable
(15) Form of Plan pursuant to Rule 12b-1
(16) Schedule for Computation of Performance
Quotations--3
1 Incorporated by reference from Post-Effective Amendment No. 23 to the
Registration Statement on Form N-1A, filed on December 29, 1995.
2 Incorporated by reference from Pre-Effective Amendment No. 1 to the
Registration Statement on Form N-1A, filed on April 13, 1987.
3 Incorporated by reference to Post-Effective Amendment No. 7 to the
Registration Statement on Form N-1A filed on June 17, 1992.
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 February 4, 1998
Shares of Beneficial Interest, no par value:
Academy Value Fund 189
Avondale Total Return Fund 147
Boston Balalced Fund 212
Hodges Fund 1333
Osterweis Fund 127
Perkins Opportunity Fund 6,781
ProConscience Womens Equity Fund 506
Trent Equity Fund 123
Matrix Growth Fund 392
Matrix Emerging Growth Fund 71
Leonetti Balanced Fund 329
Lighthouse Contrarian Fund 404
U.S.Global Leaders Growth Fund 337
Harris, Bretall, Sullivan & Smith
Growth Equity Fund 77
Pzena Focused Value Fund 183
Titan Financial Services Fund 792
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
Guinness Flight Investment Funds
Fremont Mutual Funds, Inc.
Fleming Capital Mutual Fund Group, Inc.
The Purisima Funds
Jurika & Voyles Fund Group
Kayne Anderson Mutual Funds
Masters' Select Investment Trust
O'Shaughnessy Funds, Inc.
PIC Investment Trust
Rainier Investment Management Mutual Funds
RNC Mutual Fund Group, Inc.
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 2025 E. Financial Way, Ste. 101, Glendora,
CA 91741.
Item 31. Management Services.
There are no management-related service contracts not discussed in
Parts A and B.
Item 32. Undertakings
(a) File a post-effective amendment for the PGP Korea
Growth Fund and PGP Asia Growth Fund series, using financial
statements which may not be certified, within four to six
months of the effective date of this Registration Statement
as such requirement is interpreted by the staff of the
Commission; and
(b) Furnish each person to whom a Prospectus is delivered a copy
of Registrant's latest annual report to shareholders, upon
request and without charge.
(c) If requested to do so by the holders of at least 10% of the
Trust's outstanding shares, 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 February 4, 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 February 4, 1998
Steven J. Paggioli
/S/ Eric M. Banhazl Principal February 4, 1998
Eric M. Banhazl Financial
Officer
Dorothy A. Berry Trustee February 4, 1998
*Dorothy A. Berry
Wallace L. Cook Trustee February 4, 1998
*Wallace L. Cook
Carl A. Froebel Trustee February 4, 1998
*Carl A. Froebel
Rowley W. P. Redington Trustee February 4, 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
Exhibit 5
PROFESSIONALLY MANAGED PORTFOLIOS
INVESTMENT ADVISORY AGREEMENT
PGP Korea Growth Fund
PGP Asia Growth Fund
THIS INVESTMENT ADVISORY AGREEMENT is made as of the 9th day of
February, 1998, by and between PROFESSIONALLY MANAGED PORTFOLIOS, a
Massachusetts business trust (hereinafter called the "Trust"), on behalf of the
following series of the Trust, the PGP Korea Growth Fund and the PGP Asia Growth
Fund (a "Fund" or the "Funds") and Pacific Gemini Partners, LLC., a California
Limited Liability Company(hereinafter called the "Advisor").
WITNESSETH:
WHEREAS, the Trust is an open-end management investment
company, registered as such under the Investment Company Act of 1940, as amended
(the "Investment Company Act"); and
WHEREAS, each Fund is a series of the Trust having
separate assets and liabilities; and
WHEREAS, the Advisor is registered as an investment adviser
under the Investment Advisers Act of 1940, as amended, and is engaged in the
business of supplying investment advice as an independent contractor; and
WHEREAS, the Trust desires to retain the Advisor to render
advice and services to the Funds pursuant to the terms and provisions of this
Agreement, and the Advisor desires to furnish said advice and services;
NOW, THEREFORE, in consideration of the covenants and the
mutual promises hereinafter set forth, the parties to this Agreement, intending
to be legally bound hereby, mutually agree as follows:
1. Appointment of Advisor. The Trust hereby employs the
Advisor and the Advisor hereby accepts such employment, to render investment
advice and related services with respect to the assets of the Funds for the
period and on the terms set forth in this Agreement, subject to the supervision
and direction of the Trust's Board of Trustees.
2. Duties of Advisor.
(a) General Duties. The Advisor shall act as
investment adviser to the Funds and shall supervise investments of the Fund on
behalf of the Funds in accordance with the investment objectives, policies and
restrictions of the Funds as set forth in the Funds' and Trust's governing
documents, including, without limitation, the Trust's Agreement and
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Declaration of Trust and By-Laws; the Funds' prospectus, statement of additional
information and undertakings; and such other limitations, policies and
procedures as the Trustees may impose from time to time in writing to the
Advisor. In providing such services, the Advisor shall at all times adhere to
the provisions and restrictions contained in the federal securities laws,
applicable state securities laws, the Internal Revenue Code, the Uniform
Commercial Code and other applicable law.
Without limiting the generality of the foregoing, the Advisor
shall: (I) furnish the Funds with advice and recommendations with respect to the
investment of the Funds' assets and the purchase and sale of portfolio
securities for the Funds, including the taking of such steps as may be necessary
to implement such advice and recommendations (i.e., placing the orders); (ii)
manage and oversee the investments of the Funds, subject to the ultimate
supervision and direction of the Trust's Board of Trustees; (iii) vote proxies
for the Fund, file ownership reports under Section 13 of the Securities Exchange
Act of 1934 for the Fund, and take other actions on behalf of the Funds; (iv)
maintain the books and records required to be maintained by the Funds except to
the extent arrangements have been made for such books and records to be
maintained by the administrator or another agent of the Funds; (v) furnish
reports, statements and other data on securities, economic conditions and other
matters related to the investment of the Funds' assets which the Funds'
administrator or distributor or the officers of the Trust may reasonably
request; and (vi) render to the Trust's Board of Trustees such periodic and
special reports with respect to each Fund's investment activities as the Board
may reasonably request, including at least one in-person appearance annually
before the Board of Trustees.
(b) Brokerage. The Advisor shall be responsible
for decisions to buy and sell securities for the Funds, for broker-dealer
selection, and for negotiation of brokerage commission rates, provided that the
Advisor shall not direct order to an affiliated person of the Advisor without
general prior authorization to use such affiliated broker or dealer for the
Trust's Board of Trustees. The Advisor's primary consideration in effecting a
securities transaction will be execution at the most favorable price. In
selecting a broker-dealer to execute each particular transaction, the Advisor
may take the following into consideration: the best net price available; the
reliability, integrity and financial condition of the broker-dealer; the size of
and difficulty in executing the order; and the value of the expected
contribution of the broker-dealer to the investment performance of the Funds on
a continuing basis. The price to the Funds in any transaction may be less
favorable than that available from another broker-dealer if the difference is
reasonably justified by other aspects of the portfolio execution services
offered.
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Subject to such policies as the Board of Trustees of the Trust
may determine, the Advisor shall not be deemed to have acted unlawfully or to
have breached any duty created by this Agreement or otherwise solely by reason
of its having caused a Fund to pay a broker or dealer that provides (directly or
indirectly) brokerage or research services to the Advisor an amount of
commission for effecting a portfolio transaction in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction, if the Advisor determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of either that
particular transaction or the Advisor's overall responsibilities with respect to
the Trust. The Advisor is further authorized to allocate the orders placed by it
on behalf of the Funds to such brokers or dealers who also provide research or
statistical material, or other services, to the Trust, the Advisor, or any
affiliate of either. Such allocation shall be in such amounts and proportions as
the Advisor shall determine, and the Advisor shall report on such allocations
regularly to the Trust, indicating the broker-dealers to whom such allocations
have been made and the basis therefor. The Advisor is also authorized to
consider sales of shares as a factor in the selection of brokers or dealers to
execute portfolio transactions, subject to the requirements of best execution,
i.e., that such brokers or dealers are able to execute the order promptly and at
the best obtainable securities price.
On occasions when the Advisor deems the purchase or sale of a
security to be in the best interest of one or more of the Fund as well as of
other clients, the Advisor, to the extent permitted by applicable laws and
regulations, may aggregate the securities to be so purchased or sold in order to
obtain the most favorable price or lower brokerage commissions and the most
efficient execution. In such event, allocation of the securities so purchased or
sold, as well as the expenses incurred in the transaction, will be made by the
Advisor in the manner it considers to be the most equitable and consistent with
its fiduciary obligations to the Funds and to such other clients.
3. Representations of the Advisor.
(a) The Advisor shall use its best judgment and
efforts in rendering the advice and services to the Funds as
contemplated by this Agreement.
(b) The Advisor shall maintain all licenses and
registrations necessary to perform its duties hereunder in good
order.
(C) The Advisor shall conduct its operations at
all times in conformance with the Investment Advisers Act of 1940, the
Investment Company Act of 1940, and any other applicable state and/or
self-regulatory organization regulations.
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(d) The Advisor shall maintain errors and
omissions insurance in an amount at least equal to that disclosed to the Board
of Trustees in connection with their approval of this Agreement.
4. Independent Contractor. The Advisor shall, for all purposes
herein, be deemed to be an independent contractor, and shall, unless otherwise
expressly provided and authorized to do so, have no authority to act for or
represent the Trust or the Funds in any way, or in any way be deemed an agent
for the Trust or for the Funds. It is expressly understood and agreed that the
services to be rendered by the Advisor to the Funds under the provisions of this
Agreement are not to be deemed exclusive, and the Advisor shall be free to
render similar or different services to others so long as its ability to render
the services provided for in this Agreement shall not be impaired thereby.
5. Advisor's Personnel. The Advisor shall, at its own expense,
maintain such staff and employ or retain such personnel and consult with such
other persons as it shall from time to time determine to be necessary to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Advisor shall be
deemed to include persons employed or retained by the Advisor to furnish
statistical information, research, and other factual information, advice
regarding economic factors and trends, information with respect to technical and
scientific developments, and such other information, advice and assistance as
the Advisor or the Trust's Board of Trustees may desire and reasonably request.
6. Expenses.
(a) With respect to the operation of the Funds,
the Advisor shall be responsible for (I) providing the personnel, office space
and equipment reasonably necessary for the operation of the Funds, (ii) the
expenses of printing and distributing extra copies of the Funds' prospectus,
statement of additional information, and sales and advertising materials (but
not the legal, auditing or accounting fees attendant thereto) to prospective
investors (but not to existing shareholders), and (iii) the costs of any special
Board of Trustees meetings or shareholder meetings convened for the primary
benefit of the Advisor. If the Advisor has agreed to limit the operating
expenses of the Funds, the Advisor shall also be responsible on a monthly basis
for any operating expenses that exceed the agreed upon expense limit.
(b) Each Fund is responsible for and has assumed
the obligation for payment of all of its expenses, other than as stated in
Subparagraph 6(a) above, including but not limited to: fees and expenses
incurred in connection with the issuance, registration and transfer of its
shares; brokerage and commission expenses; all expenses of transfer, receipt,
safekeeping, servicing and accounting for the cash, securities and other
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<PAGE>
property of the Trust for the benefit of the Fund including all fees and
expenses of its custodian, shareholder services agent and accounting services
agent; interest charges on any borrowings; costs and expenses of pricing and
calculating its daily net asset value and of maintaining its books of account
required under the Investment Company Act; taxes, if any; a pro rata portion of
expenditures in connection with meetings of the Fund's shareholders and the
Trust's Board of Trustees that are properly payable by the Fund; salaries and
expenses of officers and fees and expenses of members of the Trust's Board of
Trustees or members of any advisory board or committee who are not members of,
affiliated with or interested persons of the Advisor; insurance premiums on
property or personnel of each Fund which inure to its benefit, including
liability and fidelity bond insurance; the cost of preparing and printing
reports, proxy statements, prospectuses and statements of additional information
of the Fund or other communications for distribution to existing shareholders;
legal, auditing and accounting fees; trade association dues; fees and expenses
(including legal fees) of registering and maintaining registration of its shares
for sale under federal and applicable state and foreign securities laws; all
expenses of maintaining and servicing shareholder accounts, including all
charges for transfer, shareholder recordkeeping, dividend disbursing,
redemption, and other agents for the benefit of the Funds, if any; and all other
charges and costs of its operation plus any extraordinary and non-recurring
expenses, except as herein otherwise prescribed.
(C) The Advisor may voluntarily absorb certain
Fund expenses or waive the Advisor's own advisory fee.
(d) To the extent the Advisor incurs any costs by
assuming expenses which are an obligation of a Fund as set forth herein, the
Fund shall promptly reimburse the Advisor for such costs and expenses, except to
the extent the Advisor has otherwise agreed to bear such expenses. To the extent
the services for which a Fund is obligated to pay are performed by the Advisor,
the Advisor shall be entitled to recover from such Fund to the extent of the
Advisor's actual costs for providing such services. In determining the Advisor's
actual costs, the Advisor may take into account an allocated portion of the
salaries and overhead of personnel performing such services.
7. Investment Advisory and Management Fee.
(a) Each Fund shall pay to the Advisor, and the
Advisor agrees to accept, as full compensation for all investment management and
advisory services furnished or provided to such Fund pursuant to this Agreement,
an annual management fee equal to 1.25% of the Fund's daily net assets, computed
on the value of the net assets of the Fund as of the close of business each day.
(b) The management fee shall be accrued daily by
each Fund and paid to the Advisor on the first business day of
the succeeding month.
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(C) The initial fee under this Agreement shall be
payable on the first business day of the first month following the effective
date of this Agreement and shall be prorated as set forth below. If this
Agreement is terminated prior to the end of any month, the fee to the Advisor
shall be prorated for the portion of any month in which this Agreement is in
effect which is not a complete month according to the proportion which the
number of calendar days in the month during which the Agreement is in effect
bears to the number of calendar days in the month, and shall be payable within
ten (10) days after the date of termination.
(d) The fee payable to the Advisor under this
Agreement will be reduced to the extent of any receivable owed by the Advisor to
a Fund and as required under any expense limitation applicable to a Fund.
(e) The Advisor voluntarily may reduce any
portion of the compensation or reimbursement of expenses due to it pursuant to
this Agreement and may agree to make payments to limit the expenses which are
the responsibility of a Fund under this Agreement. Any such reduction or payment
shall be applicable only to such specific reduction or payment and shall not
constitute an agreement to reduce any future compensation or reimbursement due
to the Advisor hereunder or to continue future payments. Any such reduction will
be agreed to prior to accrual of the related expense or fee and will be
estimated daily and reconciled and paid on a monthly basis.
(f) Any fee withheld or voluntarily reduced and
any Fund expense absorbed by the Advisor voluntarily or pursuant to an agreed
upon expense cap shall be reimbursed by a Fund to the Advisor, if so requested
by the Advisor, in the first, second or third (or any combination thereof)
fiscal year next succeeding the fiscal year of the withholding, reduction or
absorption if the aggregate amount actually paid by the Fund toward the
operating expenses for such fiscal year (taking into account the reimbursement)
do not exceed the applicable limitation on Fund expenses. Such reimbursement may
be paid prior to the Fund's payment of current expenses if so requested by the
Advisor even if such practice may require the Advisor to waive, reduce or absorb
current Fund expenses.
(g) The Advisor may agree not to require payment
of any portion of the compensation or reimbursement of expenses otherwise due to
it pursuant to this Agreement. Any such agreement shall be applicable only with
respect to the specific items covered thereby and shall not constitute an
agreement not to require payment of any future compensation or reimbursement due
to the Advisor hereunder.
8. No Shorting; No Borrowing. The Advisor agrees that neither
it nor any of its officers or employees shall take any short position in the
shares of the Funds. This prohibition shall not prevent the purchase of such
shares by any of the
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officers or employees of the Advisor or any trust, pension, profit-sharing or
other benefit plan for such persons or affiliates thereof, at a price not less
than the net asset value thereof at the time of purchase, as allowed pursuant to
rules promulgated under the Investment Company Act. The Advisor agrees that
neither it nor any of its officers or employees shall borrow from the Funds or
pledge or use the Funds' assets in connection with any borrowing not directly
for the Funds' benefit. For this purpose, failure to pay any amount due and
payable to a Fund for a period of more than thirty (30) days shall constitute a
borrowing.
9. Conflicts with Trust's Governing Documents and Applicable
Laws. Nothing herein contained shall be deemed to require the Trust or the Funds
to take any action contrary to the Trust's Agreement and Declaration of Trust,
By-Laws, or any applicable statute or regulation, or to relieve or deprive the
Board of Trustees of the Trust of its responsibility for and control of the
conduct of the affairs of the Trust and Funds. In this connection, the Advisor
acknowledges that the Trustees retain ultimate plenary authority over the Funds
and may take any and all actions necessary and reasonable to protect the
interests of shareholders.
10. Reports and Access. The Advisor agrees to supply such
information to the Funds' administrator and to permit such compliance
inspections by the Funds' administrator as shall be reasonably necessary to
permit the administrator to satisfy its obligations and respond to the
reasonable requests of the Trustees.
11. Advisor's Liabilities and Indemnification.
(a) The Advisor shall have responsibility for the
accuracy and completeness (and liability for the lack thereof) of the statements
in the Funds' offering materials (including the prospectus, the statement of
additional information, advertising and sales materials), except for information
supplied by the administrator or the Trust or another third party for inclusion
therein.
(b) In the absence of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the obligations or duties
hereunder on the part of the Advisor, the Advisor shall not be subject to
liability to the Trust or the Funds or to any shareholder of the Funds for any
act or omission in the course of, or connected with, rendering services
hereunder or for any losses that may be sustained in the purchase, holding or
sale of any security by the Funds.
(C) Each party to this Agreement shall indemnify and
hold harmless the other party and the shareholders, directors, officers and
employees of the other party (any such person, an "Indemnified Party") against
any loss, liability, claim, damage or expense (including the reasonable cost of
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investigating and defending any alleged loss, liability, claim, damage or
expenses and reasonable counsel fees incurred in connection therewith) arising
out of the Indemnified Party's performance or non-performance of any duties
under this Agreement provided, however, that nothing herein shall be deemed to
protect any Indemnified Party against any liability to which such Indemnified
Party would otherwise be subject by reason of willful misfeasance, bad faith or
negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties under this Agreement.
(e) No provision of this Agreement shall be
construed to protect any Trustee or officer of the Trust, or officer of the
Advisor, from liability in violation of Sections 17(h) and (I) of the Investment
Company Act.
12. Non-Exclusivity; Trading for Advisor's Own Account. The
Trust's employment of the Advisor is not an exclusive arrangement. The Trust may
from time to time employ other individuals or entities to furnish it with the
services provided for herein. Likewise, the Advisor may act as investment
adviser for any other person, and shall not in any way be limited or restricted
from buying, selling or trading any securities for its or their own accounts or
the accounts of others for whom it or they may be acting, provided, however,
that the Advisor expressly represents that it will undertake no activities which
will adversely affect the performance of its obligations to the Fund under this
Agreement; and provided further that the Advisor will adhere to a code of ethics
governing employee trading and trading for proprietary accounts that conforms to
the requirements of the Investment Company Act and the Investment Advisers Act
of 1940 and has been approved by the Trust' Board of Trustees.
13. Term.
(a) This Agreement shall become effective at the
time each Fund commences operations pursuant to an effective amendment to the
Trust's Registration Statement under the Securities Act of 1933 and shall remain
in effect for a period of two (2) years, unless sooner terminated as hereinafter
provided. This Agreement shall continue in effect thereafter for additional
periods not exceeding one (l) year so long as such continuation is approved for
the Funds at least annually by (I) the Board of Trustees of the Trust or by the
vote of a majority of the outstanding voting securities of each Fund and (ii)
the vote of a majority of the Trustees of the Trust who are not parties to this
Agreement nor interested persons thereof, cast in person at a meeting called for
the purpose of voting on such approval. The terms "majority of the outstanding
voting securities" and "interested persons" shall have the meanings as set forth
in the Investment Company Act.
(b) The Funds may use the name "PGP" or any name
derived from or using the name "PGP" or "Pacific Gemini Partners"
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only for so long as this Agreement or any extension, renewal or amendment hereof
remains in effect. Within sixty (60) days from such time as this Agreement shall
no longer be in effect, the Fund shall cease to use such a name or any other
name connected with the Advisor.
14. Termination; No Assignment.
(a) This Agreement may be terminated by the Trust
on behalf of the Fund at any time without payment of any penalty, by the Board
of Trustees of the Trust or by vote of a majority of the outstanding voting
securities of a Fund, upon sixty (60) days' written notice to the Advisor, and
by the Advisor upon sixty (60) days' written notice to a Fund. In the event of a
termination, the Advisor shall cooperate in the orderly transfer of the Fund's
affairs and, at the request of the Board of Trustees, transfer any and all books
and records of the Fund maintained by the Advisor on behalf of the Fund.
(b) This Agreement shall terminate automatically
in the event of any transfer or assignment thereof, as defined in
the Investment Company Act.
15. Severability. If any provision of this Agreement shall be
held or made invalid by a court decision, statute or rule, or shall be otherwise
rendered invalid, the remainder of this Agreement shall not be affected thereby.
16. Notice of Declaration of Trust. The Advisor agrees that
the Trust's obligations under this Agreement shall be limited to the Funds and
to their assets, and that the Advisor shall not seek satisfaction of any such
obligation from the shareholders of the Funds nor from any trustee, officer,
employee or agent of the Trust or the Funds.
17. Captions. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect.
18. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to the conflict of laws principles thereof; provided that nothing herein
shall be construed to preempt, or to be inconsistent with, any federal law,
regulation or rule, including the Investment Company Act and the Investment
Advisors Act of 1940 and any rules and regulations promulgated thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their duly authorized officers, all on the day
and year first above written.
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PROFESSIONALLY MANAGED PACIFIC GEMINI PARTNERS, LLC PORTFOLIOS on behalf of the
PGP Korea Growth Fund and the PGP Asia Growth Fund
By: By:
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Exhibit 6
PROFESSIONALLY MANAGED PORTFOLIOS
DISTRIBUTION AGREEMENT
This Agreement, made as of the 9th day of February, 1998 between
PROFESSIONALLY MANAGED PORTFOLIOS, a Massachusetts business trust (the "Trust"),
and FIRST FUND DISTRIBUTORS, INC., a Delaware corporation (the "Distributor").
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management
investment company and is registered as such under the Investment Company Act of
l940 (the "1940 Act"), and it is in the interest of the Trust to offer its class
of shares entitled the PGP KOREA GROWTH FUND and the PGP ASIA GROWTH FUND (a
"Fund" or the "Funds") for sale continuously; and
WHEREAS, the Distributor is registered as a broker-dealer under the
Securities Exchange Act of l934 (the "1934 Act") and is a member in good
standing of the National Association of Securities Dealers, Inc. (the "NASD");
and
WHEREAS, the Trust and the Distributor wish to enter into an agreement
with each other with respect to the continuous offering of the shares of
beneficial interest of the Funds (the "Shares"), to commence after the
effectiveness of amendment to the registration statement filed pursuant to the
Securities Act of 1933 (the "1933 Act") and the 1940 Act relating to the Funds.
NOW, THEREFORE, the parties agree as follows:
l. Appointment of Distributor. The Trust hereby appoints the
Distributor as its exclusive agent to sell and to arrange for the sale of the
Shares, on the terms and for the period set forth in this Agreement, and the
Distributor hereby accepts such appointment and agrees to act hereunder directly
and/or through the Trust's transfer agent in the manner set forth in the
Prospectuses (as defined below). It is understood and agreed that the services
of the Distributor hereunder are not exclusive, and the Distributor may act as
principal underwriter for the shares of any other registered investment company.
2. Services and Duties of the Distributor
(a) The Distributor agrees to sell the Shares, as agent for the Trust,
from time to time during the term of this Agreement upon the terms described in
the Funds's Prospectus. As used in this Agreement, the term "Prospectus" shall
mean the prospectus and statement of additional information of the Funds
included as part of the Trust's Registration Statement, as such prospectus and
statement of additional information may be amended or supplemented from time to
time, and the term "Registration Statement" shall mean the Registration
Statement most recently filed from time to time by the Trust with the Securities
and Exchange Commission and
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<PAGE>
effective under the 1933 Act and the 1940 Act, as such Registration Statement is
amended by any amendments thereto at the time in effect. The Distributor shall
not be obligated to sell any certain number of Shares.
(b) Upon commencement of the Funds' operations, the Distributor will
hold itself available to receive orders, satisfactory to the Distributor, for
the purchase of the Shares and will accept such orders and will transmit such
orders and funds received by it in payment for such Shares as are so accepted to
the Trust's transfer agent or custodian, as appropriate, as promptly as
practicable. Purchase orders shall be deemed effective at the time and in the
manner set forth in the Prospectus. The Distributor shall not make any short
sales of Shares.
(C) The offering price of the Shares shall be the net asset value per
share of the Shares (as defined in the Declaration of Trust), plus the sales
charge, if any, (determined as set forth in the prospectus). The Trust shall
furnish the Distributor, with all possible promptness, an advice of each
computation of net asset value and offering price.
3. Duties of the Trust.
(a) Maintenance of Federal Registration. The Trust shall, at its
expense, take, from time to time, all necessary action and such steps, including
payment of the related filing fees, as may be necessary to register and maintain
registration of a sufficient number of Shares under the 1933 Act. The Trust
agrees to file from time to time such amendments, reports and other documents as
may be necessary in order that there may be no untrue statement of a material
fact in a registration statement or prospectus, or necessary in order that there
may be no omission to state a material fact in the registration statement or
prospectus which omission would make the statements therein misleading.
(b) Maintenance of "Blue Sky" Qualifications. The Trust shall, at its
expense, use its best efforts to qualify and maintain the qualification of an
appropriate number of Shares for sale under the securities laws of such states
as the Distributor and the Trust may approve, and, if necessary or appropriate
in connection therewith, to qualify and maintain the qualification of the Trust
as a broker or dealer in such states; provided that the Trust shall not be
required to amend its Declaration of Trust or By-Laws to comply with the laws of
any state, to maintain an office in any state, to change the terms of the
offering of the Shares in any state, to change the terms of the offering of the
Shares in any state from the terms set forth in its Prospectuses, to qualify as
a foreign corporation in any state or to consent to service of process in any
state other than with respect to claims arising out of the offering and sale of
the Shares. The
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<PAGE>
Distributor shall furnish such information and other material relating to its
affairs and activities as may be required by the Trust in connection with such
qualifications.
(C) Copies of Reports and Prospectuses. The Trust shall, at its
expense, keep the Distributor fully informed with regard to its affairs and in
connection therewith shall furnish to the Distributor copies of all information,
financial statements and other papers which the Distributor may reasonably
request for use in connection with the distribution of Shares, including such
reasonable number of copies of its Prospectuses and annual and interim reports
as the Distributor may request and shall cooperate fully in the efforts of the
Distributor to sell and arrange for the sale of the Shares and in the
performance of the Distributor under this Agreement.
4. Conformity with Applicable Law and Rules. The Distributor agrees
that in selling Shares hereunder it shall conform in all respects with the laws
of the United States and of any state in which Shares may be offered, and with
applicable rules and regulations of the NASD.
5. Independent Contractor. In performing its duties hereunder, the
Distributor shall be an independent contractor and neither the Distributor, nor
any of its officers, directors, employees, or representatives is or shall be an
employee of the Trust in the performance of the Distributor's duties hereunder.
The Distributor shall be responsible for its own conduct and the employment,
control, and conduct of its agents and employees and for injury to such agents
or employees or to others through its agents or employees. The Distributor
assumes full responsibility for its agents and employees under applicable
statutes and agrees to pay all employee taxes thereunder.
6. Indemnification.
(a) Indemnification of Trust. The Distributor agrees to indemnify and
hold harmless the Trust and each of its present or former trustees, officers,
employees, representatives and each person, if any, who controls or previously
controlled the Trust within the meaning of Section l5 of the 1933 Act against
any and all losses, liabilities, damages, claims or expenses (including the
reasonable costs of investigating or defending any alleged loss, liability,
damage, claims or expense and reasonable legal counsel fees incurred in
connection therewith) to which the Trust or any such person may become subject
under the 1933 Act, under any other statute, at common law, or otherwise,
arising out of the acquisition of any Shares by any person which (I) may be
based upon any wrongful act by the Distributor or any of the Distributor's
directors, officers, employees or representatives, or (ii) may be based upon any
untrue statement or alleged untrue statement of a material fact contained in a
registration
3
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statement, prospectus, shareholder report or other information covering Shares
filed or made public by the Trust or any amendment thereof or supplement
thereto, or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading if such statement or omission was made in reliance upon information
furnished to the Trust by the Distributor. In no case (I) is the Distributor's
indemnity in favor of the Trust, or any person indemnified to be deemed to
protect the Trust or such indemnified person against any liability to which the
Trust or such person would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of his duties or
by reason of his reckless disregard of his obligations and duties under this
Agreement or (ii) is the Distributor to be liable under its indemnity agreement
contained in this Paragraph with respect to any claim made against the Trust or
any person indemnified unless the Trust or such person, as the case may be,
shall have notified the Distributor in writing of the claim within a reasonable
time after the summons or other first written notification giving information of
the nature of the claim shall have been served upon the Trust or upon such
person (or after the Trust or such person shall have received notice to such
service on any designated agent). However, failure to notify the Distributor of
any such claim shall not relieve the Distributor from any liability which the
Distributor may have to the Trust or any person against whom such action is
brought otherwise than on account of the Distributor's indemnity agreement
contained in this Paragraph.
The Distributor shall be entitled to participate, at its own expense,
in the defense, or, if the Distributor so elects, to assume the defense of any
suit brought to enforce any such claim, but, if the Distributor elects to assume
the defense, such defense shall be conducted by legal counsel chosen by the
Distributor and satisfactory to the Trust, to the persons indemnified defendant
or defendants, in the suit. In the event that the Distributor elects to assume
the defense of any such suit and retain such legal counsel, the Trust, the
persons indemnified defendant or defendants in the suit, shall bear the fees and
expenses of any additional legal counsel retained by them. If the Distributor
does not elect to assume the defense of any such suit, the Distributor will
reimburse the Trust and the persons indemnified defendant or defendants in such
suit for the reasonable fees and expenses of any legal counsel retained by them.
The Distributor agrees to promptly notify the Trust of the commencement of any
litigation of proceedings against it or any of its officers, employees or
representatives in connection with the issue or sale of any Shares.
(b) Indemnification of the Distributor. The Trust agrees to indemnify and hold
harmless the Distributor and each of its present or former directors, officers,
employees, representatives
4
<PAGE>
and each person, if any, who controls or previously controlled the Distributor
within the meaning of Section l5 of the 1933 Act against any and all losses,
liabilities, damages, claims or expenses (including the reasonable costs of
investigating or defending any alleged loss, liability, damage, claim or expense
and reasonable legal counsel fees incurred in connection therewith) to which the
Distributor or any such person may become subject under the 1933 Act, under any
other statute, at common law, or otherwise, arising out of the acquisition of
any Shares by any person which (I) may be based upon any wrongful act by the
Trust or any of the Trust's trustees, officers, employees or representatives, or
(ii) may be based upon any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus, shareholder
report or other information covering Shares filed or made public by the Trust or
any amendment thereof or supplement thereto, or the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading unless such statement or omission was
made in reliance upon information furnished to the Trust by the Distributor. In
no case (I) is the Trust's indemnity in favor of the Distributor, or any person
indemnified to be deemed to protect the Distributor or such indemnified person
against any liability to which the Distributor or such person would otherwise be
subject by reason of willful misfeasance, bad faith, or gross negligence in the
performance of his duties or by reason of his reckless disregard of his
obligations and duties under this Agreement, or (ii) is the Trust to be liable
under its indemnity agreement contained in this Paragraph with respect to any
claim made against Distributor, or person indemnified unless the Distributor, or
such person, as the case may be, shall have notified the Trust in writing of the
claim within a reasonable time after the summons or other first written
notification giving information of the nature of the claim shall have been
served upon the Distributor or upon such person (or after the Distributor or
such person shall have received notice of such service on any designated agent).
However, failure to notify the Trust of any such claim shall not relieve the
Trust from any liability which the Trust may have to the Distributor or any
person against whom such action is brought otherwise than on account of the
Trust's indemnity agreement contained in this Paragraph.
The Trust shall be entitled to participate, at its own expense, in the
defense, or, if the Trust so elects, to assume the defense of any suit brought
to enforce any such claim, but if the Trust elects to assume the defense, such
defense shall be conducted by legal counsel chosen by the Trust and satisfactory
to the Distributor, to the persons indemnified defendant or defendants, in the
suit. In the event that the Trust elects to assume the defense of any such suit
and retain such legal counsel, the Distributor, the persons indemnified
defendant or defendants in the suit, shall bear the fees and expenses of any
additional
5
<PAGE>
legal counsel retained by them. If the Trust does not elect to assume the
defense of any such suit, the Trust will reimburse the Distributor and the
persons indemnified defendant or defendants in such suit for the reasonable fees
and expenses of any legal counsel retained by them. The Trust agrees to promptly
notify the Distributor of the commencement of any litigation or proceedings
against it or any of its trustees, officers, employees or representatives in
connection with the issue or sale of any Shares.
7. Authorized Representations. The Distributor is not authorized by the
Trust to give on behalf of the Trust any information or to make any
representations in connection with the sale of Shares other than the information
and representations contained in a registration statement or prospectus filed
with the Securities and Exchange Commission ("SEC") under the 1933 Act and/or
the 1940 Act, covering Shares, as such registration statement and prospectus may
be amended or supplemented from time to time, or contained in shareholder
reports or other material that may be prepared by or on behalf of the Trust for
the Distributor's use. This shall not be construed to prevent the Distributor
from preparing and distributing tombstone ads and sales literature or other
material as it may deem appropriate. No person other than the Distributor is
authorized to act as principal underwriter (as such term is defined in the 1940
Act) for the Funds.
8. Term of Agreement. The term of this Agreement shall begin on the
date first above written, and unless sooner terminated as hereinafter provided,
this Agreement shall remain in effect for a period of two years from the date
first above written. Thereafter, this Agreement shall continue in effect from
year to year, subject to the termination provisions and all other terms and
conditions thereof, so long as such continuation shall be specifically approved
at least annually by the Board of Trustees or by vote of a majority of the
outstanding voting securities of the Funds and, concurrently with such approval
by the Board of Trustees or prior to such approval by the holders of the
outstanding voting securities of the Funds, as the case may be, by the vote,
cast in person at a meeting called for the purpose of voting on such approval,
of a majority of the trustees of the Trust who are not parties to this Agreement
or interested persons of any such party. The Distributor shall furnish to the
Trust, promptly upon its request, such information as may reasonably be
necessary to evaluate the terms of this Agreement or any extension, renewal or
amendment hereof.
9. Amendment or Assignment of Agreement. This Agreement may not be
amended or assigned except as permitted by the 1940 Act, and this Agreement
shall automatically and immediately terminate in the event of its assignment.
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10. Termination of Agreement. This Agreement may be terminated by
either party hereto, without the payment of any penalty, on not more than upon
60 days' nor less than 30 days' prior notice in writing to the other party;
provided, that in the case of termination by the Trust such action shall have
been authorized by resolution of a majority of the trustees of the Trust who are
not parties to this Agreement or interested persons of any such party, or by
vote of a majority of the outstanding voting securities of the Funds.
11. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Nothing herein contained shall be deemed to require the Trust to take
any action contrary to its Declaration of Trust or By-Laws, or any applicable
statutory or regulatory requirement to which it is subject or by which it is
bound, or to relieve or deprive the Board of Trustees of the Trust of
responsibility for and control of the conduct of the affairs of the Trust.
12. Definition of Terms. Any question of interpretation of any term or
provision of this Agreement having a counterpart in or otherwise derived from a
term or provision of the 1940 Act shall be resolved by reference to such term or
provision of the 1940 Act and to interpretation thereof, if any, by the United
States courts or, in the absence of any controlling decision of any such court,
by rules, regulations or orders of the Securities and Exchange Commission
validly issued pursuant to the 1940 Act. Specifically, the terms "vote of a
majority of the outstanding voting securities", "interested persons",
"assignment", and "affiliated person", as used in Paragraphs 8, 9 and 10 hereof,
shall have the meanings assigned to them by Section 2(a) of the 1940 Act. In
addition, where the effect of a requirement of the 1940 Act reflected in any
provision of this Agreement is relaxed by a rule, regulation or order of the
Securities and Exchange Commission, whether of special or of general
application, such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
13. Compliance with Securities Laws. The Trust represents that it is
registered as an open-end management investment company under the 1940 Act, and
agrees that it will comply with all the provisions of the 1940 Act and of the
rules and regulations thereunder. The Trust and the Distributor each agree to
comply with all of the applicable terms and provisions of the 1940 Act, the 1933
Act and, subject to the provisions of Section 4(d), all
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<PAGE>
applicable "Blue Sky" laws. The Distributor agrees to comply with all of the
applicable terms and provisions of the Securities Exchange Act of 1934.
14. Notices. Any notice required to be given pursuant to this Agreement
shall be deemed duly given if delivered or mailed by registered mail, postage
prepaid, to the Distributor at 4455 E. Camelback Rd., Ste. 261-E, Phoenix, AZ
85018 or to the Funds on behalf of the Trust at 633 West Fifth St., Ste. 3600,
Los Angeles, CA 90071.
15. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New York.
16. No Shareholder Liability. The Distributor understands that the
obligations of this Agreement are not binding upon any shareholder of the Trust
personally, but bind only the Trust's property; the Distributor represents that
it has notice of the provisions of the Declaration of Trust disclaiming
shareholder liability for acts or obligations of the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their duly authorized representatives and their
respective corporate seals to be hereunto affixed, as of the day and year first
above written.
PROFESSIONALLY MANAGED PORTFOLIOS
By:
Attest:
FIRST FUND DISTRIBUTORS, INC.
By: _____________________________
Attest:
8
Exhibit 9
ADMINISTRATION AGREEMENT
THIS AGREEMENT is made as of the 8th day of March, 1996 by and between
PROFESSIONALLY MANAGED PORTFOLIOS (the "Trust")a Massachusetts Business Trust
and INVESTMENT COMPANY ADMINISTRATION CORPORATION, a Delaware Corporation (the
"Administrator").
WITNESSETH
WHEREAS, the Trust is an open-end management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"), with shares of
beneficial interest organized into separate series ("series" or "portfolios");
and
WHEREAS, the Trust wishes to retain the Administrator to provide certain
administrative services in connection with the management of the operations of
the various portfolio series of the Trust and the Administrator is willing to
furnish such services:
NOW THEREFORE, in consideration of the premises and mutual covenants herein
contained, it is agreed between the parties hereto as follows:
1. Appointment. The Trust hereby appoints the Administrator to provide
certain administrative services, hereinafter enumerated, in connection with the
management of the portfolios' operations for the period and on the terms set
forth in this Agreement. The Administrator agrees to comply with all relevant
provisions of the 1940 Act, applicable rules and regulations thereunder, and
other applicable law.
2. Services on a Continuing Basis. The Administrator will perform the
following services on a regular basis which would be daily weekly or as
otherwise appropriate:
(A) prepare and coordinate reports and other materials to be supplied to
the Board of Trustees of the Trust;
(B) 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 Trust and the portfolios.
(C) prepare all required filings necessary to maintain the Trust's and
portfolios' qualification and/or registration to sell shares in all states where
the Trust and portfolios currently do, or intend to do business;
<PAGE>
(D) coordinate the preparation, printing and mailing of all materials
(e.g., Annual Reports) required to be sent to shareholders;
(E) coordinate the preparation and payment of Trust and portfolio related
expenses;
(F) monitor and oversee the activities of the Trust's and the portfolios'
servicing agents (i.e., transfer agent, custodian, fund accountants, etc.);
(G) review and adjust as necessary the portfolios' daily expense
accruals; and
(H) perform such additional services as may be agreed upon by the Trust
and the Administrator.
3. Responsibility of the Administrator. The Administrator shall be under no
duty to take any action on behalf of the Trust or the portfolios except as set
forth herein or as may be agreed to by the Administrator in writing. In the
performance of its duties hereunder, the Administrator shall be obligated to
exercise reasonable care and diligence and to act in good faith and to use its
best efforts. Without limiting the generality of the foregoing or any other
provision of this Agreement, the Administrator shall not be liable for delays or
errors or loss of data occurring by reason of circumstances beyond the
Administrator's control.
4. Reliance Upon Instructions. The Trust agrees that the Administrator
shall be entitled to rely upon any instructions, oral or written, actually
received by the Administrator from the Board of Trustees of the Trust and shall
incur no liability to the Trust or the investment adviser to any portfolio in
acting upon such oral or written instructions, provided such instructions
reasonably appear to have been received from a person duly authorized by the
Board of Trustees of the Trust to give oral or written instructions on behalf of
the Trust or any portfolio.
5. Confidentiality; Maintenance of Records. The Administrator agrees on
behalf of itself and its employees to treat confidentially all records and other
information relative to the Trust and portfolios and all prior, present or
potential shareholders of any and all portfolios, except after prior
notification to, and approval of release of information in writing by, the
Trust, which approval shall not be unreasonably withheld where the Administrator
may be exposed to civil or criminal contempt proceedings for failure to comply,
when requested to divulge such information by duly constituted authorities, or
when so requested by the Trust or by a portfolio. Any records required to be
maintained and preserved by the Trust or any of its portfolios which are
maintained or preserved by the Administrator under this Agreement are property
of the Trust and
<PAGE>
its portfolios and will be surrendered to the Trust or its
portfolios promptly upon request.
6. Equipment Failures. In the event of equipment failures or the occurrence
of events beyond the Administrator's control which render the performance of the
Administrator's functions under this agreement impossible, the Administrator
shall take reasonable steps to minimize service interruptions and is authorized
to engage the services of third parties to prevent or remedy such service
interruptions.
7. Compensation. As compensation for services rendered by the Administrator
during the term of this agreement, each portfolio of the Trust will pay to the
Administrator a monthly fee at the annual rate determined on Schedule A to this
agreement.
8. Indemnification. The Trust and portfolios agree to indemnify and hold
harmless the Administrator from all taxes, filing fees, charges, expenses,
assessments, claims and liabilities (including without limitation, liabilities
arising under the Securities Act of 1933, the Securities Exchange Act of 1934,
the 1940 Act, and any state and foreign securities laws, all as amended from
time to time) and expenses, including (without limitation) reasonable attorneys
fees and disbursements, arising directly or indirectly from any action or thing
which the Administrator takes or does or omits to take or do at the request of
or in reliance upon the advice of the Board of Trustees of the Trust, provided
that the Administrator will not be indemnified against any liability to a
Portfolio or to shareholders (or any expenses incident to such liability)
arising out of the Administrator's own willful misfeasance, bad faith,
negligence or reckless disregard of its duties and obligations under this
Agreement. The Administrator agrees to indemnify and hold harmless the Trust and
each of its Trustees from all claims and liabilities (including without
limitation, liabilities under the Securities Act of 1933, the Securities
Exchange Act of 1934, the 1940 Act, and any state and foreign securities laws,
all as amended from time to time) and expenses, including (without limitation)
reasonable attorneys fees and disbursements, arising directly or indirectly from
any action or thing which the Administrator takes or does or omits to take or do
which is in violation of this Agreement or not in accordance with instructions
properly given to the Administrator, or arising out of the Administrator's own
willful misfeasance, bad faith, gross negligence or reckless disregard of its
duties and obligations under this Agreement.
9. Duration and termination. This Agreement shall continue until
termination by the Trust on behalf of any portfolio (through the Board of
Trustees) or the Administrator on 60 days' written notice to the other. All
notices and other communications hereunder shall be in writing.
<PAGE>
10. Amendments. This Agreement or any part hereof may be changed or waived
only by instrument in writing signed by the party against which enforcement of
such change or waiver is sought.
11. Miscellaneous. This Agreement embodies the entire agreement and
understanding between the parties thereto with respect to the services to be
performed hereunder, and supersedes all prior agreements and understandings,
relating to the subject matter hereof. The captions in this Agreement are
included for convenience of reference only and in no way define or limit any of
the provisions hereof or otherwise affect their construction or effect. This
Agreement shall be deemed to be a contract made in New York and governed by New
York law. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement will
not be affected thereby. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the day and year first written
above.
By:________________________________________
Title:____________________________________
PROFESSIONALLY MANAGED PORTFOLIOS
By:________________________________________
Title:_____________________________________
INVESTMENT COMPANY ADMINISTRATION CORPORATION
<PAGE>
Schedule A
FEE RATES APPLICABLE TO PORTFOLIOS OF PROFESSIONALLY MANAGED
PORTFOLIOS
I.
Academy Value Fund Leonetti Balanced Fund
Hodges Fund Matrix Growth Fund
Matrix Emerging Growth Fund Pro-Conscience Womens Equity
Lighthouse Growth Fund Mutual Fund
Osterweis Fund Titan Financial Services Fund
U.S. Global Leaders Growth Fund Pzena Focused Value Fund
PGP Korea Growth Fund PGP Asia Growth Fund
Administration fee paid monthly at the following annual rate:
Average net assets of fund Fee or Fee Rate
Under $15 million $30,000
$15 to $50 million 0.20% of average net assets
$50 to $100 million 0.15% of average net assets
$100 million to $150 million 0.10% of average net assets
Over $150 million 0.05% of average net assets
II. Avondale Total Return Fund
0.15% of average net assets or $30,000, whichever is greater
III. Perkins Opportunity Fund
Perkins Discovery Fund
Under $12 million $30,000
$12 million to $50 million 0.25% of average net assets
$50 million to $100 million 0.20% of average net assets
$100 million to $200 million 0.15% of average net assets
Over $200 million 0.10% of average net assets
<PAGE>
IV. Trent Equity Fund
0.25% of average net assets or $15,000, whichever is greater
V. Harris, Bretall, Sullivan & Smith Growth Equity Fund
Under $25 million 0.12% of average net assets
$25 million to $50 million 0.07% of average net assets
$50 million to $100 million 0.05% of average net assets
Over $100 million 0.05% of average net assets
Minimum fee of $30,000 annually
VI. Boston Managed Growth Fund
0.10% of average net assets or $30,000, whichever is greater
January, 1998
Exhibit 10
PAUL, HASTINGS, JANOFSKY & WALKER, LLP
345 CALIFORNIA STREET
SAN FRANCISCO, CALIFORNIA 94104
Telephone (415) 835-1600
Facsimile (415) 217-5333
February 4, 1998
Professionally Managed Portfolios
479 West 22nd Street
New York, New York 10011
Re: PGP Asia Growth Fund
PGP Korea Growth Fund
Ladies and Gentlemen:
We have acted as counsel to Professionally Managed Portfolios,
a Massachusetts business trust (the "Trust"), in connection with Post-Effective
Amendments to the Trust's Registration Statement on Form N-1A filed with the
Securities and Exchange Commission (the "Post-Effective Amendments") and
relating to the issuance by the Trust of an indefinite number of no par value
shares of beneficial interest (the "Shares") of two series of the Trust, the PGP
Asia Growth Fund and the PGP Korea Growth Fund (the "Funds").
In connection with this opinion, we have assumed the
authenticity of all records, documents and instruments submitted to us as
originals, the genuineness of all signatures, the legal capacity of all natural
persons, and the conformity to the originals of all records, documents, and
instruments submitted to us as copies. We have based our opinion on the
following:
(a) the Trust's Agreement and Declaration of Trust dated
February 17, 1987 (filed with the Massachusetts Secretary of State on February
24, 1987), as amended on May 20, 1988 (filed on September 16, 1988) and April
12, 1991 (filed on May 31, 1991) (as so amended, the "Declaration of Trust"), as
certified to us by an officer of the Trust as being true and complete and in
effect on the date hereof;
(b) the By-laws of the Trust certified to us by an officer of
the Trust as being true and complete and in effect on the date hereof ;
(c) resolutions of the Trustees of the Trust adopted at a
meeting on October 23, 1997, authorizing the establishment of the Funds and the
issuance of the Shares;
SF\opinion.wpd
<PAGE>
Professional Managed Portfolios
February 4, 1998
Page 2
(d) the Post-Effective Amendments; and
(e) a certificate of an officer of the Trust as to certain
factual matters relevant to this opinion.
Our opinion below is limited to the federal law of the United
States of America and the business trust law of the State of Massachusetts. We
are not licensed to practice law in the State of Massachusetts, and we have
based our opinion below solely on our review of Chapter 182 of the General Laws
of the Commonwealth of Massachusetts and the case law interpreting such Chapter
as reported in Annotated Laws of Massachusetts (Law. Co-op. 1987 & Supp. 1996).
We have not undertaken a review of other Massachusetts law or of any
administrative or court decisions in connection with rendering this opinion. We
disclaim any opinion as to any law other than that of the United States of
America and the business trust law of the State of Massachusetts as described
above, and we disclaim any opinion as to any statute, rule, regulation,
ordinance, order or other promulgation of any regional or local governmental
authority.
Based on the foregoing and our examination of such questions
of law as we have deemed necessary and appropriate for the purpose of this
opinion, and assuming that (i) all of the Shares will be issued and sold for
cash at the per-share public offering price on the date of their issuance in
accordance with statements in the Trust's Prospectus included in the
Post-Effective Amendments and in accordance with the Declaration of Trust, (ii)
all consideration for the Shares will be actually received by the Trust, and
(iii) all applicable securities laws will be complied with, it is our opinion
that, when issued and sold by the Trust, the Shares will be legally issued,
fully paid and nonassessable.
This opinion is rendered to you in connection with the
Post-Effective Amendments and is solely for your benefit. This opinion may not
be relied upon by you for any other purpose or relied upon by any other person,
firm, corporation or other entity for any purpose, without our prior written
consent. We disclaim any obligation to advise you of any developments in areas
covered by this opinion that occur after the date of this opinion.
SF\opinion.wpd
<PAGE>
Professional Managed Portfolios
February 4, 1998
Page 3
We hereby consent to (i) the reference to our firm as Legal
Counsel in the Prospectus included in the Post-Effective Amendments, and (ii)
the filing of this opinion as an exhibit to a Post-Effective Amendment.
Very truly yours,
/s/ PAUL, HASTINGS, JANOFSKY & WALKER, LLP
SF\opinion.wpd
EXHIBIT 15
PROFESSIONALLY MANAGED PORTFOLIOS
PGP KOREA GROWTH FUND
PGP ASIA GROWTH FUND
SHARE MARKETING PLAN
(Rule 12b-1 Plan)
(Fixed Compensation Plan)
This Share Marketing Plan (the "Plan") is adopted in
accordance with Rule 12b-1 (the "Rule") under the Investment Company Act of
1940, as amended (the "Act"), by Professionally Managed Portfolios., a
Massachusetts Business Trust (the "Trust") with respect to certain series of its
shares as listed in Exhibit A (each such series, a "Fund"). The Plan has been
approved by a majority of the Trust's Board of Trustees, including a majority of
the Trustees who are not interested persons of the Trust and who have no direct
or indirect financial interest in the operation of the Plan (the "independent
Trustees"), cast in person at a meeting called for the purpose of voting on the
Plan.
In reviewing the Plan, the Board of Trustees considered the
proposed range and nature of payments and terms of the Investment Advisory
Agreement between the Trust on behalf of each Fund and Pacific Gemini Partners,
LLC, (the "Advisor") and the nature and amount of other payments, fees and
commissions that may be paid to the Advisor, its affiliates and other agents of
the Trust. The Board of Trustees, including the independent Trustees, concluded
that the proposed overall compensation of the Advisor and its affiliates was
fair and not excessive.
In its considerations, the Board of Trustees also recognized
that uncertainty may exist from time to time with respect to whether payments to
be made by a Fund to the Advisor, as the initial "distribution coordinator," or
other firms under agreements with respect to a Fund may be deemed to constitute
impermissible distribution expenses. As a general rule, an investment company
may not finance any activity primarily intended to result in the sale of its
shares, except pursuant to the Rule. Accordingly, the Board of Trustees
determined that the Plan also should provide that payments by the Trust and
expenditures made by others out of monies received from the Trust which are
later deemed to be for the financing of any activity primarily intended to
result in the sale of Fund shares shall be deemed to have been made pursuant to
the Plan.
The approval of the Board of Trustees included a determination
that in the exercise of the Trustees' reasonable business judgment and in light
of their fiduciary duties, there is a reasonable likelihood that the Plan will
benefit the Trust, the Fund to which the Plan applies and its shareholders.
SAN FRANCISCO\EXHA1.WPD
<PAGE>
The provisions of the Plan are:
1. Annual Fee. The Trust will pay to Advisor, as the Funds'
distribution coordinator, an annual fee for the Advisor's services in connection
with the promotion and distribution of the Fund's shares and related shareholder
servicing. The annual fee paid to Advisor under the Plan will be calculated
daily and paid monthly by each Fund on the first day of each month based on the
average daily net assets of each Fund, as follows: an annual rate of up to
0.65%. This fee is not tied exclusively to actual distribution and service
expenses, and the fee may exceed the expenses actually incurred.
2. Services Covered by the Plan. The fee paid under Section 1
of the Plan is intended to compensate the Advisor for performing the following
kinds of services: services primarily intended to result in the sale of the
Fund's shares ("distribution services"), including, but not limited to: (a)
making payments, including incentive compensation, to agents for and consultants
to Advisor, any affiliate of the Advisor or the Trust, including pension
administration firms that provide distribution and shareholder related services
and broker-dealers that engage in the distribution of the Fund's shares; (b)
making payments to persons who provide support services in connection with the
distribution of a Fund's shares and servicing of a Fund's shareholders,
including, but not limited to, personnel of Advisor, office space and equipment,
telephone facilities, answering routine inquiries regarding a Fund, processing
shareholder transactions and providing any other shareholder services not
otherwise provided by the Trust's transfer agency or other servicing
arrangements; (c) making payments pursuant to the form of Distribution Agreement
attached hereto as an exhibit; (d) formulating and implementing marketing and
promotional activities, including, but not limited to, direct mail promotions
and television, radio, newspaper, magazine and other mass media advertising; (e)
printing and distributing prospectuses, statements of additional information and
reports of the Fund to prospective shareholders of the Fund; (f) preparing,
printing and distributing sales literature pertaining to the Fund; and (g)
obtaining whatever information, analysis and reports with respect to marketing
and promotional activities that the Trust may, from time to time, deem
advisable. Such services and activities shall be deemed to be covered by this
Plan whether performed directly by the Advisor or by a third party.
3. Written Reports. Advisor shall furnish to the Board of
Trustees of the Trust, for its review, on a quarterly basis, a written report of
the monies paid to it under the Plan with respect to each Fund, and shall
furnish the Board of Trustees of the Trust with such other information as the
Board of Trustees may reasonably request in connection with the payments made
under the Plan in order to enable the Board of Trustees to make an informed
determination of whether the Plan should be continued as to each Fund.
4. Termination. The Plan may be terminated as to any Fund at
any time, without penalty, by vote of a majority of the outstanding voting
securities of a Fund, and any Distribution Agreement under the Plan may be
likewise terminated on not more than sixty (60) days' written notice. Once
terminated, no further payments shall be made under the Plan notwithstanding the
existence of any unreimbursed current or carried forward Distribution Expenses.
SAN FRANCISCO\EXHA1.WPD
<PAGE>
5. Amendments. The Plan and any Distribution Agreement may not
be amended to increase materially the amount to be spent for distribution and
servicing of Fund shares pursuant to Section 1 hereof without approval by a
majority of the outstanding voting securities of a Fund. All material amendments
to the Plan and any Distribution Agreement entered into with third parties shall
be approved by the independent Trustees cast in person at a meeting called for
the purpose of voting on any such amendment. The Advisor may assign its
responsibilities and liabilities under the Plan to another party who agrees to
act as "distribution coordinator" for the Trust with the consent of a majority
of the independent Trustees.
6. Selection of Independent Trustees. So long as the Plan is
in effect, the selection and nomination of the Trust's independent Trustees
shall be committed to the discretion of such independent Board of Trustees.
7. Effective Date of Plan. The Plan shall take effect at such
time as it has received requisite Trustee approval and, unless sooner
terminated, shall continue in effect for a period of more than one year from the
date of its execution only so long as such continuance is specifically approved
at least annually by the Board of Trustees of the Trust, including the
independent Trustees, cast in person at a meeting called for the purpose of
voting on such continuance.
8. Preservation of Materials. The Trust will preserve copies
of the Plan, any agreements relating to the Plan and any report made pursuant to
Section 5 above, for a period of not less than six years (the first two years in
an easily accessible place) from the date of the Plan, agreement or report.
9. Meanings of Certain Terms. As used in the Plan, the terms
"interested person" and "majority of the outstanding voting securities" will be
deemed to have the same meaning that those terms have under the Act and the
rules and regulations under the Act, subject to any exemption that may be
granted to the Trust under the Act by the Securities and Exchange Commission.
SAN FRANCISCO\EXHA1.WPD
<PAGE>
This Plan and the terms and provisions thereof are hereby
accepted and agreed to by the Trust and Advisor, as distribution coordinator, as
evidenced by their execution hereof, as of this ____ day of ___________ 1998.
PROFESSIONALLY MANAGED PORTFOLIOS
By:
Title: ____________________________
PACIFIC GEMINI PARTNERS, LLC
as Distribution Coordinator
By:
Title: ____________________________
SAN FRANCISCO\EXHA1.WPD
<PAGE>
PROFESSIONALLY MANAGED PORTFOLIOS.
EXHIBIT A TO SHARE MARKETING PLAN
The following Series of Professionally Managed Portfolios have
adopted the Share Marketing Plan:
Fund Date Adopted
PGP Korea Growth Fund Februay 9, 1998
PGP Asia Growth Fund February 9, 1998
SAN FRANCISCO\EXHA1.WPD
<PAGE>
PROFESSIONALLY MANAGED PORTFOLIOS
Share Marketing Agreement
EXHIBIT ONLY
- -----------------------------------
- -----------------------------------
- -----------------------------------
- -----------------------------------
Ladies and Gentlemen:
This Share Marketing Agreement has been adopted pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended (the "Company
Act"), by Pacific Gemini Partners., a Massachusetts business Trust (the
"Trust"), on behalf of various series of the Trust (each series, a "Fund"), as
governed by the terms of a Share Marketing Plan (Rule 12b-1 Plan) (the "Plan").
The Plan has been approved by a majority of the Trustees who
are not interested persons of the Trust or the Funds and who have no direct or
indirect financial interest in the operation of the Plan (the "independent
Trustees"), cast in person at a meeting called for the purpose of voting on such
Plan. Such approval included a determination that in the exercise of the
reasonable business judgment of the Board of Trustees and in light of the
Trustees' fiduciary duties, there is a reasonable likelihood that the Plan will
benefit each Fund and its shareholders.
1. To the extent you provide eligible shareholder services of
the type identified in the Plan to the Funds identified in the attached Schedule
(the "Schedule"), we shall pay you a monthly fee based on the average net asset
value of Fund shares during any month which are attributable to customers of
your firm, at the rate set forth on the Schedule.
2. In no event may the aggregate annual fee paid to you
pursuant to the Schedule exceed ____ percent of the value of the net assets of
each Fund held in your customers' accounts which are eligible for payment
pursuant to this Agreement (determined in the same manner as the Fund uses to
compute its net assets as set forth in its then effective Prospectus), without
approval
SAN FRANCISCO\EXHA1.WPD
<PAGE>
by a majority of the outstanding shares of each Fund.
3. You shall furnish us and the Trust with such information as
shall reasonably be requested by the Trust's Board of Trustees with respect to
the services performed by you and the fees paid to you pursuant to the Schedule.
4. We shall furnish to the Board of Trustees of the Trust, for
its review, on a quarterly basis, a written report of the amounts expended under
the Plan by us with respect to each Fund and the purposes for which such
expenditures were made.
5. You agree to make shares of the Funds available only (a) to
your customers or entities that you service at the net asset value per share
next determined after receipt of the relevant purchase instruction or (b) to
each such Fund itself at the redemption price for shares, as described in each
Fund's then-effective Prospectus.
6. No person is authorized to make any representations
concerning a Fund or shares of a Fund except those contained in each Fund's
then-effective Prospectus or Statement of Additional Information and any such
information as may be released by a Fund as information supplemental to such
Prospectus or Statement of Additional Information.
7. Additional copies of each such Prospectus or Statement of
Additional Information and any printed information issued as supplemental to
each such Prospectus or Statement of Additional Information will be supplied by
each Fund to you in reasonable quantities upon request.
8. In no transaction shall you have any authority whatever to
act as agent of the Funds and nothing in this Agreement shall constitute you or
the Fund the agent of the other. You are not authorized to act as an underwriter
of shares of the Funds or as a dealer in shares of the Funds.
9. All communications to the Funds shall be sent to: Mr.
Stewart Kim, Pacific Gemini Partners LLC, 633 W. Fifth St., Ste. 3600, Los
Angeles, CA 90071. Any notice to you shall be duly given if mailed or
telegraphed to you at your address as indicated in this Agreement.
10. This Agreement may be terminated by us or by you, by the
vote of a majority of the Trustees of the Trust who are independent Trustees, or
by a vote of a majority of the outstanding shares of a Fund, on sixty (60) days'
written notice, all without payment of any penalty. It shall also be terminated
automatically by any act that terminates the Plan.
11. The provisions of the Plan between the Trust and us,
insofar as they relate to you, are incorporated herein by reference.
This Agreement shall take effect on the date indicated below,
and the terms and
SAN FRANCISCO\EXHA1.WPD
<PAGE>
provisions thereof are hereby accepted and agreed to by us as evidenced by our
execution hereof.
PACIFIC GEMINI PARTNERS, LLC
Distribution Coordinator
By: EXHIBIT ONLY
Authorized Officer
Dated: ________________________
Agreed and Accepted:
- ----------------------------
(Name)
By: ________________________
(Authorized Officer)
SAN FRANCISCO\EXHA1.WPD
<PAGE>
PROFESSIONALLY MANAGED PORTFOLIOS
SCHEDULE TO SHARE MARKETING AGREEMENT
BETWEEN _____________________.
AND
PACIFIC GEMINI PARTNERS, LLC.
as distribution coordinator
Pursuant to the provisions of the Share Marketing Agreement
between the above parties with respect to Pacific Gemini Partners, LLC. as
Distribution Coordinator, shall pay a monthly fee to the above-named party based
on the average net asset value of shares of each Fund during the previous
calendar month the sales of which are attributable to the above-named party, as
follows:
Fund Fee
TRANSFER, DIVIDEND DISBURSING, SHAREHOLDER SERVICE
AND PLAN AGENCY AGREEMENT
AGREEMENT dated as of February ____, 1998 between Professionally
Managed Portfolios (the "Trust"), a Massachusetts business trust, and
Countrywide Fund Services, Inc.
("Countrywide"), an Ohio corporation.
WHEREAS, the Trust is an investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust wishes to employ the services of Countrywide to
serve as its transfer, dividend disbursing, shareholder service and plan agent;
and
WHEREAS, Countrywide wishes to provide such services under
the conditions set forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement, the Trust and Countrywide agree as follows:
1. APPOINTMENT.
The Trust hereby appoints and employs Countrywide as agent to
perform those services described in this Agreement for the Trust. Countrywide
shall act under such appointment and perform the obligations thereof upon the
terms and conditions hereinafter set forth.
2. DOCUMENTATION.
The Trust will furnish from time to time the following
documents:
A. Each resolution of the Board of Trustees of the Trust
authorizing the original issue of its shares;
B. Each Registration Statement filed with the Securities and
Exchange Commission (the "SEC") and amendments thereof;
C. A certified copy of each amendment to the Agreement and
Declaration of Trust and the Bylaws of the Trust;
D. Certified copies of each resolution of the Board of
Trustees authorizing officers to give instructions to
Countrywide;
E. Specimens of all new forms of share certificates
accompanied by Board of Trustees' resolutions approving
such forms;
GENERAL\taagmt.pmp
- 1 -
<PAGE>
F. Such other certificates, documents or opinions which
Countrywide may, in its discretion, deem necessary or
appropriate in the proper performance of its duties;
G. Copies of all Underwriting an Dealer Agreements in
effect;
H. Copies of all Investment Advisory Agreements in effect;
and
I. Copies of all documents relating to special investment or
withdrawal plans which are offered or may be offered in the
future by the Trust and for which Countrywide is to act as
plan agent.
3. COUNTRYWIDE TO RECORD SHARES.
Countrywide shall record the issuance of shares of the Trust
and maintain pursuant to applicable rules of the SEC a record of the total
number of shares of the Trust which are authorized, issued and outstanding,
based upon data provided to it by the Trust. Countrywide shall also provide the
Trust on a regular basis or upon reasonable request the total number of shares
which are authorized, issued and outstanding, but shall have no obligation when
recording the issuance of the Trust's shares, except as otherwise set forth
herein, to monitor the issuance of such shares or to take cognizance of any laws
relating to the issue or sale of such shares, which functions shall be the sole
responsibility of the Trust.
4. COUNTRYWIDE TO VALIDATE TRANSFERS.
Upon receipt of a proper request for transfer and upon
surrender to Countrywide of certificates, if any, in proper form for transfer,
Countrywide shall approve such transfer and shall take all necessary steps to
effectuate the transfer as indicated in the transfer request. Upon approval of
the transfer, Countrywide shall notify the Trust in writing of each such
transaction and shall make appropriate entries on the shareholder records
maintained by Countrywide.
5. SHARE CERTIFICATES.
If the Trust authorizes the issuance of share certificates and
an investor requests a share certificate, Countrywide will countersign and mail,
by insured first class mail, a share certificate to the investor at his address
as set forth on the transfer books of the Trust, subject to any other
instructions for delivery of certificates representing newly purchased shares
and subject to the limitation that no certificates representing newly purchased
shares shall be mailed to the investor until the cash purchase price of such
shares has
- 2 -
<PAGE>
been collected and credited to the account of the Trust maintained by the
Custodian. The Trust shall supply Countrywide with a sufficient supply of blank
share certificates and from time to time shall renew such supply upon request of
Countrywide. Such blank share certificates shall be properly signed, manually
or, if authorized by the Trust, by facsimile; and notwithstanding the death,
resignation or removal of any officers of the Trust authorized to sign share
certificates, Countrywide may continue to countersign certificates which bear
the manual or facsimile signature of such officer until otherwise directed by
the Trust. In case of the alleged loss or destruction of any share certificate,
no new certificates shall be issued in lieu thereof, unless there shall first be
furnished an appropriate bond satisfactory to Countrywide and the Trust, and
issued by a surety company satisfactory to Countrywide and the Trust.
6. RECEIPT OF FUNDS.
Upon receipt of any check or other instrument drawn or
endorsed to it as agent for, or identified as being for the account of, the
Trust, Countrywide shall stamp the check or instrument with the date of receipt,
determine the amount thereof due the Trust and shall forthwith process the same
for collection. Upon receipt of notification of receipt of funds eligible for
share purchases in accordance with the Trust's then current prospectus and
statement of additional information, Countrywide shall notify the Trust, at the
close of each business day, in writing of the amount of said funds credited to
the Trust and deposited in its account with the Custodian, and shall similarly
notify the Underwriter of the amount of said funds credited to the Underwriter
and eposited in its account with its designated bank.
7. PURCHASE ORDERS.
Upon receipt of an order for the purchase of shares of the
Trust, accompanied by sufficient information to enable Countrywide to establish
a shareholder account, Countrywide shall, as of the next determination of net
asset value after receipt of such order in accordance with the Trust's then
current prospectus and statement of additional information, compute the number
of shares due to the shareholder, credit the share account of the shareholder,
subject to collection of the funds, with the number of shares so purchased,
shall notify the Trust in writing or by computer report at the close of each
business day of such transactions and shall mail to the shareholder and/or
dealer of record a notice of such credit when requested to do so by the Trust.
8. RETURNED CHECKS.
In the event that Countrywide is notified by the Trust's
Custodian that any check or other order for the payment of money is returned
unpaid for any reason, Countrywide will:
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<PAGE>
A. Give prompt notification to the Trust and the
Underwriter of the non-payment of said check;
B. In the absence of other instructions from the Trust or the
Underwriter, take such steps as may be necessary to redeem any shares purchased
on the basis of such returned check and cause the proceeds of such redemption
plus any dividends declared with respect to such shares to be credited to the
account of the Trust and to request the Trust's Custodian to forward such
returned check to the person who originally submitted the check; and
C. Notify the Trust and Underwriter of such actions and correct the
Trust's records maintained by Countrywide pursuant to this Agreement.
9. SALES CHARGE.
In computing the number of shares to credit to the account of
a shareholder, Countrywide will calculate the total of the applicable sales
charges with respect to each purchase as set forth in the Trust's current
prosectus and statement of additional information and in accordance with any
notification filed with respect to combined and accumulaated purchases.
Countrywide will also determine the portion of each sales charge payable by the
Underwriter to the dealer of record participating in the sale in accordance with
such schedules as are from time to time delivered by the Underwriter to
Countrywide; provided, however, that Countrywide shall have no liability
hereunder arising from the incorrect selection by Countrywide of the gross rate
of sales charges except that this exculpation shall not apply in the event the
rate is specified by the Underwriter or the Trust and Countrywide fails to
select the rate specified.
10. DIVIDENDS AND DISTRIBUTIONS.
The Trust shall furnish Countrywide with appropriate evidence
of Trustee action authorizing the declaration of dividends and other
distributions. Countrywide shall establish procedures in accordance with the
Trust's then current prospectus and statement of additional information and with
other authorized actions of the Trust's Board of Trustees under which it will
have available from the Custodian or the Trust any required information for each
dividend and other distribution. After deducting any amount required to be
withheld by any applicable laws, Countrywide shall, as agent for each
shareholder who so requests, invest the dividends and other distributions in
full and fractional shares in accordance with the Trust's then current
prospectus and statement of additional information. If a shareholder has elected
to receive dividends or other distributions in cash, then Countrywide shall
disburse dividends to shareholders of record in accordance with the Trust's then
current prospectus and statement of additional information. Countrywide shall,
on or before the mailing date of such checks,
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<PAGE>
notify the Trust and the Custodian of the estimated amount of cash required to
pay such dividend or distribution, and the Trust shall instruct the Custodian to
make available sufficient funds therefor in the appropriate account of the
Trust. Countrywide shall mail to the shareholders periodic statements, as
requested by the Trust, showing the number of full and fractional shares and the
net asset value per share of shares so credited. When requested by the Trust,
Countrywide shall prepare and file with the Internal Revenue Service, and when
required, shall address and mail to shareholders, such returns and information
relating to dividends and distributions paid by the Trust as are required to be
so prepared, filed and mailed by applicable laws, rules and regulations.
11. UNCLAIMED DIVIDENDS AND UNCLAIMED REDEMPTION PROCEEDS.
Countrywide shall, at least annually, furnish in writing to
the Trust the names and addresses, as shown in the shareholder accounts
maintained by Countrywide, of all shareholders for which there are, as of the
end of the calendar year, dividends, distributions or redemption proceeds for
which checks or share certificates mailed in payment of distributions have been
returned. Countrywide shall use its best efforts to contact the shareholders
affected and to follow any other written instructions received from the Trust
concerning the disposition of any such unclaimed dividends, distributions or
redemption proceeds.
12. REDEMPTIONS AND EXCHANGES.
A. Countrywide shall process, in accordance with the Trust's then
current prospectus and statement of additional information, each order for the
redemption of shares accepted by Countrywide. Upon its approval of such
redemption transactions, Countrywide, if requested by the Trust, shall mail to
the shareholder and/or dealer of record a confirmation showing trade date,
number of full and fractional shares redeemed, the price per share and the total
redemption proceeds. For each such redemption, Countrywide shall either: (a)
prepare checks in the appropriate amounts for approval and verification by the
Trust and signature by an authorized officer of Countrywide and mail the checks
to the appropriate person, or (b) in the event redemption proceeds are to be
wired through the Federal Reserve Wire System or by bank wire, cause such
proceeds to be wired in federal funds to the bank account designated by the
shareholder, or (c) effectuate such other redemption procedures which are
authorized by the Trust's Board of Trustees or its then current prospectus and
statement of additional information. The requirements as to instruments of
transfer and other documentation, the applicable redemption price and the time
of payment shall be as provided in the then current prospectus and statement of
additional information, subject to such supplemental instructions as may be
furnished by the Trust and accepted by Countrywide. If Countrywide or the Trust
determines that a request for redemption does not comply with the requirements
for
- 5 -
<PAGE>
redemptions, Countrywide shall promptly notify the shareholder
indicating the reason therefor.
B. If shares of the Trust are eligible for exchange with shares of any
other investment company, Countrywide, in accordance with the then current
prospectus and statement of additional information and exchange rules of the
Trust and such other investment company, or such other investment company's
transfer agent, shall review and approve all exchange requests and shall, on
behalf of the Trust's shareholders, process such approved exchange requests.
C. Countrywide shall notify the Trust, the Custodian and the
Underwriter on each business day of the amount of cash required to meet payments
made pursuant to the provisions of this Paragraph 12, and, on the basis of such
notice, the Trust shall instruct the Custodian to make available from time to
time sufficient funds therefor in the appropriate account of the Trust.
Procedures for effecting redemption orders accepted from shareholders or dealers
of record by telephone or other methods shall be established by mutual agreement
between Countrywide and the Trust consistent with the Trust's then current
prospectus and statement of additional information.
D. The authority of Countrywide to perform its responsibilities under
Paragraph 7, Paragraph 10, and this Paragraph 12 shall be suspended with respect
to any series of the Trust upon receipt of notification by it of the suspension
of the determination of such series' net asset value.
13. AUTOMATIC WITHDRAWAL PLANS.
Countrywide will process automatic withdrawal orders pursuant
to the provisions of the withdrawal plans duly executed by shareholders and the
current prospectus and statement of additional information of the Trust.
Payments upon such withdrawal order shall be made by Countrywide from the
appropriate account maintained by the Trust with the Custodian on approximately
the last business day of each month in which a payment has been requested, and
Countrywide will withdraw from a shareholder's account and present for
repurchase or redemption as many shares as shall be sufficient to make such
withdrawal payment pursuant to the provisions of the shareholder's withdrawal
plan and the current prospectus and statement of additional information of the
Trust. From time to time on new automatic withdrawal plans a check for a payment
date already past may be issued upon request by the shareholder.
- 6 -
<PAGE>
14. LETTERS OF INTENT.
Countrywide will process such letters of intent for investing
in shares of the Trust as are provided for in the Trust's current prospectus and
statement of additional information. Countrywide will make appropriate deposits
to the account of the Underwrtier for the adjustment of sales charges as therein
provided and will currently report the same to the Underwriter.
15. WIRE-ORDER PURCHASES.
Countrywide will send written confirmations to the dealers of
record containing all details of the wire-order purchases placed by each such
dealer by the close of business on the business day following receipt of such
orders by Countrywide or the Underwriter, with copies to the Underwriter.. Upon
receipt of any check drawn or endorsed to the Trust (or Countrywide, as agent)
or otherwise identified as being payment of an outstanding wire-order,
Countrywide will stamp said check with the date of its receipt and deposit the
amount represented by such check to Countrywide's deposit accounts maintained
with the Custodian. Countrywide will cause the Custodian to transfer federal
funds in an amount equal to the net asset value of the shares so purchased to
the Trust's account with the Custodian and will notify the Trust and the
Underwriter before noon of each business day of the total amount deposited in
the Trust's deposit accounts, and in the event that payment for a purchase order
is not received by Countrywide or the Custodian on the tenth business day
following receipt of the order, prepare an NASD "notice of failure of dealer to
make payment" and forward such notification to the Underwriter.
16. OTHER PLANS.
Countrywide will process such accumulation plans, group
programs and other plans or programs for investing in shares of the Trust as are
now provided for in the Trust's current prospectus and statement of additional
information and will act as plan agent for shareholders pursuant to the terms of
such plans and programs duly executed by such shareholders.
17. RECORDKEEPING AND OTHER INFORMATION.
Countrywide shall create and maintain all records required by
applicable laws, rules and regulations, including but not limited to records
required by Section 31(a) of the 1940 Act and the rules thereunder, as the same
may be amended from time to time, pertaining to the various functions performed
by it and not otherwise created and maintained by another party pursuant to
contract with the Trust. All such records shall be the property of the Trust at
all times and shall be available for inspection and use by the Trust. Where
applicable, such records shall be
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<PAGE>
maintained by Countrywide for the periods and in the places required by Rule
31a-2 under the 1940 Act. The retention of such records shall be at the expense
of the Trust. Countrywide shall make available during regular business hours all
records and other data created and maintained pursuant to this Agreement for
reasonable audit and inspection by the Trust, any person retained by the Trust,
or any regulatory agency having authority over the Trust.
18. SHAREHOLDER RECORDS.
Countrywide shall maintain records for each shareholder
account showing the following:
A. Names, addresses and tax identifying numbers;
B. Name of the dealer of record, if any;
C. Number of shares held of each series;
D. Historical information regarding the account of each
shareholder, including dividends and distributions in
cash or invested in shares;
E. Information with respect to the source of all dividends and
distributions allocated among income, realized short-term
gains and realized long-term gains;
F. Any instructions from a shareholder including all forms
furnished by the Trust and executed by a shareholder with
respect to (i) dividend or distribution elections and (ii)
elections with respect to payment options in connection with
the redemption of shares;
G. Any correspondence relating to the current maintenance
of a shareholder's account;
H. Certificate numbers and denominations for any
shareholder holding certificates;
I. Any stop or restraining order placed against a
shareholder's account;
J. Information with respect to withholding in the case of
a foreign account or any other account for which
withholding is required by the Internal Revenue Code of
1986, as amended; and
K. Any information required in order for Countrywide to
perform the calculations contemplated under this
Agreement.
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<PAGE>
19. TAX RETURNS AND REPORTS.
Countrywide will prepare in the appropriate form, file with
the Internal Revenue Service and appropriate state agencies and, if required,
mail to shareholders of the Trust such returns for reporting dividends and
distributions paid by the Trust as are required to be so prepared, filed and
mailed and shall withhold such sums as are required to be withheld under
applicable federal and state income tax laws, rules and regulations.
20. OTHER INFORMATION TO THE TRUST.
Subject to such instructions, verification and approval of the
Custodian and the Trust as shall be required by any agreement or applicable law,
Countrywide will also maintain such records as shall be necessary to furnish to
the Trust the following: annual shareholder meeting lists, proxy lists and
mailing materials, shareholder reports and confirmations and checks for
disbursing redemption proceeds, dividends and other distributions or expense
disbursements.
21. ACCESS TO SHAREHOLDER INFORMATION.
Upon request, Countrywide shall arrange for the Trust's
investment adviser to have direct access to shareholder information contained in
Countrywide's computer system, including account balances, performance
information and such other information which is available to Countrywide with
respect to shareholder accounts.
22. COOPERATION WITH ACCOUNTANTS.
Countrywide shall cooperate with the Trust's independent
public accountants and shall take all reasonable action in the performance of
its obligations under this Agreement to assure that the necessary information is
made available to such accountants for the expression of their unqualified
opinion where required for any document for the Trust.
23. SHAREHOLDER SERVICE AND CORRESPONDENCE.
Countrywide will provide and maintain adequate personnel,
records and equipment to receive and answer all shareholder and dealer inquiries
relating to account status, share purchases, redemptions and exchanges and other
investment plans available to Trust shareholders. Countrywide will answer
written correspondence from shareholders relating to their share accounts and
such other written or oral inquiries as may from time to time be mutually agreed
upon, and Countrywide will notify the Trust of any correspondence or inquiries
which may require an answer from the Trust.
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<PAGE>
24. PROXIES.
Countrywide shall assist the Trust in the mailing of proxy
cards and other material in connection with shareholder meetings of the Trust,
shall receive, examine and tabulate returned proxies and shall, if requested by
the Trust, provide at least one inspector of election to attend and participate
as required by law in shareholder meetings of the Trust.
25. FURTHER ACTIONS.
Each party agrees to perform such further acts and execute
such further documents as are necessary to effectuate the purposes hereof.
26. COMPENSATION.
For the performance of Countrywide's obligations under this
Agreement, each series of the Trust shall pay Countrywide, on the first business
day following the end of each month, a monthly fee in accordance with the
schedule attached hereto as Schedule A. Countrywide shall not be required to
reimburse the Trust or the Trust's investment adviser for (or have deducted from
its fees) any expenses in excess of expense limitations imposed by certain state
securities commissions having jurisdiction over the Trust. The Trust shall
promptly reimburse Countrywide for any out-of-pocket expenses and advances which
are to be paid by the Trust in accordance with Paragraph 27.
27. EXPENSES.
Countrywide shall furnish, at its expense and without cost to
the Trust (i) the services of its personnel to the extent that such services are
required to carry out its obligations under this Agreement and (ii) use of data
processing equipment. All costs and expenses not expressly assumed by
Countrywide under this Paragraph 27 shall be paid by the Trust, including, but
not limited to, costs and expenses of officers and employees of Countrywide in
attending meetings of the Board of Trustees and shareholders of the Trust, as
well as costs and expenses for postage, envelopes, checks, drafts, continuous
forms, reports, communications, statements and other materials, telephone,
telegraph and remote transmission lines, use of outside pricing services, use of
outside mailing firms, necessary outside record storage, media for storage of
records (e.g., microfilm, microfiche, computer tapes), printing, confirmations
and any other shareholder correspondence and any and all assessments, taxes or
levies assessed on Countrywide for services provided under this Agreement.
Postage for mailings of dividends, proxies, reports and other mailings to all
shareholders shall be advanced to Countrywide three business days prior to the
mailing date of such materials.
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<PAGE>
28. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS.
The parties hereto acknowledge and agree that nothing
contained herein shall be construed to require Countrywide to perform any
services for the Trust which services could cause Countrywide to be deemed an
"investment adviser" of the Trust within the meaning of Section 2(a)(20) of the
1940 Act or to supersede or contravene the Trust's prospectus or statement of
additional information or any provisions of the 1940 Act and the rules
thereunder. Except as otherwise provided in this Agreement and except for the
accuracy of information furnished to it by Countrywide, the Trust assumes full
responsibility for complying with all applicable requirements of the 1940 Act,
the Securities Act of 1933, as amended, and any other laws, rules and
regulations of governmental authorities having jurisdiction.
29. REFERENCES TO COUNTRYWIDE.
The Trust shall not circulate any printed matter which
contains any reference to Countrywide without the prior written approval of
Countrywide, excepting solely such printed matter as merely identifies
Countrywide as Administrative Services Agent, Transfer, Shareholder Servicing
and Dividend Disbursing Agent and Accounting Services Agent. The Trust will
submit printed matter requiring approval to Countrywide in draft form, allowing
sufficient time for review by Countrywide and its counsel prior to any deadline
for printing.
30. EQUIPMENT FAILURES.
Countrywide shall take all steps necessary to minimize or
avoid service interruptions, and has entered into one or more agreements making
provision for emergency use of electronic data processing equipment. Countrywide
shall have no liability with respect to equipment failures beyond its control.
31. INDEMNIFICATION OF COUNTRYWIDE.
A. Countrywide may rely on information reasonably believed by it to be
accurate and reliable. Except as may otherwise be required by the 1940 Act and
the rules thereunder, neither Countrywide nor its shareholders, officers,
directors, employees, agents, control persons or affiliates of any thereof shall
be subject to any liability for, or any damages, expenses or losses incurred by
the Trust in connection with any error of judgment, mistake of law, any act or
omission connected with or arising out of any services rendered under or
payments made pursuant to this Agreement or any other matter to which this
Agreement relates, except by reason of willful misfeasance, bad faith or
negligence on the part of any such persons in the performance of the duties of
Countrywide under this Agreement or by reason of reckless disregard by any of
such persons of the obligations and duties of Countrywide under this Agreement.
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<PAGE>
B. Any person, even though also a director, officer, employee,
shareholder or agent of Countrywide, or any of its affiliates, who may be or
become an officer, trustee, employee or agent of the Trust, shall be deemed,
when rendering services to the Trust or acting on any business of the Trust, to
be rendering such services to or acting solely as an officer, trustee, employee
or agent of the Trust and not as a director, officer, employee, shareholder or
agent of or one under the control or direction of Countrywide or any of its
affiliates, even though paid by one of these entities.
C. The Trust shall indemnify and hold harmless Countrywide, its
directors, officers, employees, shareholders, agents, control persons and
affiliates from and against any and all claims, demands, expenses and
liabilities (whether with or without basis in fact or law) of any and every
nature which Countrywide may sustain or incur or which may be asserted against
Countrywide by any person by reason of, or as a result of: (i) any action taken
or omitted to be taken by Countrywide in good faith in reliance upon any
certificate, instrument, order or share certificate reasonably believed by it to
be genuine and to be signed, countersigned or executed by any duly authorized
person, upon the oral instructions or written instructions of an authorized
person of the Trust or upon the opinion of legal counsel for the Trust or its
own counsel; or (ii) any action taken or omitted to be taken by Countrywide in
connection with its appointment in good faith in reliance upon any law, act,
regulation or interpretation of the same even though the same may thereafter
have been altered, changed, amended or repealed. However, indemnification under
this subparagraph shall not apply to actions or omissions of Countrywide or its
directors, officers, employees, shareholders or agents in cases of its or their
own negligence, willful misconduct, bad faith, or reckless disregard of its or
their own duties hereunder.
32. TERMINATION.
A. The provisions of this Agreement shall be effective on the date
first above written, shall continue in effect for two years from that date and
shall continue in force from year to year thereafter, but only so long as such
continuance is approved (1) by Countrywide, (2) by vote, cast in person at a
meeting called for the purpose, of a majority of the Trust's trustees who are
not parties to this Agreement or interested persons (as defined in the 1940 Act)
of any such party, and (3) by vote of a majority of the Trust's Board of
Trustees or a majority of the Trust's outstanding voting securities.
B. Either party may terminate this Agreement on any date by giving the
other party at least sixty (60) days' prior written notice of such termination
specifying the date fixed therefore. Upon termination of this Agreement, the
Trust shall pay to Countrywide such compensation as may be due as of the date of
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<PAGE>
such termination, and shall likewise reimburse Countrywide for any out-of-pocket
expenses and disbursements reasonably incurred by Countrywide to such date.
C. In the event that in connection with the termination of this
Agreement a successor to any of Countrywide's duties or responsibilities under
this Agreement is designated by the Trust by written notice to Countrywide,
Countrywide shall, promptly upon such termination and at the expense of the
Trust, transfer all records maintained by Countrywide under this Agreement and
shall cooperate in the transfer of such duties and responsibilities, including
providing for assistance from Countrywide's cognizant personnel in the
establishment of books, records and other data by such successor.
33. SERVICES FOR OTHERS.
Nothing in this Agreement shall prevent Countrywide or any
affiliated person (as defined in the 1940 Act) of Countrywide from providing
services for any other person, firm or corporation (including other investment
companies); provided, however, that Countrywide expressly represents that it
will undertake no activities which, in its judgment, will adversely affect the
performance of its obligations to the Trust under this Agreement.
34. LIMITATION OF LIABILITY.
It is expressly agreed that the obligations of the Trust
hereunder shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of the Trust, personally, but bind only the trust
property of the Trust. The execution and delivery of this Agreement have been
authorized by the Trustees of the Trust and signed by an officer of the Trust,
acting as such, and neither such authorization by such Trustees nor such
execution and delivery by such officer shall be deemed to have been made by any
of them individually or to impose any liability on any of them personally, but
shall bind only the trust property of the Trust.
35. SEVERABILITY.
In the event any provision of this Agreement is determined to
be void or unenforceable, such determination shall not affect the remainder of
this Agreement, which shall continue to be in force.
36. QUESTIONS OF INTERPRETATION.
This Agreement shall be governed by the laws of the State of
Ohio. Any question of interpretation of any term or provision of this Agreement
having a counterpart in or otherwise derived from a term or provision of the
1940 Act shall be
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<PAGE>
resolved by reference to such term or provision of the 1940 Act and to
interpretations thereof, if any, by the United States Courts or in the absence
of any controlling decision of any such court, by rules, regulations or orders
of the SEC issued pursuant to said 1940 Act. In addition, where the effect of a
requirement of the 1940 Act, reflected in any provision of this Agreement, is
revised by rule, regulation or order of the SEC, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
37. NOTICES.
All notices, requests, consents and other communications
required or permitted under this Agreement shall be in writing (including telex
and telegraphic communication) and shall be (as elected by the person giving
such notice) hand delivered by messenger or courier service, telecommunicated,
or mailed (airmail if international) by registered or certified mail (postage
prepaid), return receipt requested, addressed to:
To the Trust: Professionally Managed Portfolios
c/o Wadsworth Group
2025 East Financial Way, Suite 101
Glendora, California 91741
Attention: Emmy Butts
To Countrywide: Countrywide Fund Services, Inc.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Attention: Robert G. Dorsey
or to such other address as any party may designate by notice complying with the
terms of this Section 37. Each such notice shall be deemed delivered (a) on the
date delivered if by personal delivery; (b) on the date telecommunicated if by
telegraph; (c) on the date of transmission with confirmed answer back if by
telex, telefax or other telegraphic method; and (d) on the date upon which the
return receipt is signed or delivery is refused or the notice is designated by
the postal authorities as not deliverable, as the case may be, if mailed.
38. AMENDMENT.
This Agreement may not be amended or modified except by a
written agreement executed by both parties.
39. BINDING EFFECT.
Each of the undersigned expressly warrants and represents that
he has the full power and authority to sign this Agreement on behalf of the
party indicated, and that his signature will operate to bind the party indicated
to the foregoing terms.
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<PAGE>
40. COUNTERPARTS.
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
41. FORCE MAJEURE.
If Countrywide shall be delayed in its performance of services
or prevented entirely or in part from performing services due to causes or
events beyond its control, including and without limitation, acts of God,
interruption of power or other utility, transportation or communication
services, acts of civil or military authority, sabotages, national emergencies,
explosion, flood, accident, earthquake or other catastrophe, fire, strike or
other labor problems, legal action, present or future law, governmental order,
rule or regulation, or shortages of suitable parts, materials, labor or
transportation, such delay or non-performance shall be excused and a reasonable
time for performance in connection with this Agreement shall be extended to
include the period of such delay or non-performance.
42. MISCELLANEOUS.
The captions in this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
PROFESSIONALLY MANAGED PORTFOLIOS
By:
Its: President
COUNTRYWIDE FUND SERVICES, INC.
By:
Its: President
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<PAGE>
Schedule A
COMPENSATION
Services FEE
(Per Account)
As Transfer, Dividend Disbursing,
Shareholder Service and Plan Agent:
PGP Korea Growth Fund Payable monthly at
rate of $17.00/year
PGP Asia Growth Fund Payable monthly at
rate of $17.00/year
Each Fund will be subject to a minimum charge of $1,000 per month.
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<PAGE>
ACCOUNTING SERVICES AGREEMENT
AGREEMENT dated as of February ___, 1998 between Professionally Managed
Portfolios (the "Trust"), a Massachusetts business trust, and Countrywide Fund
Services, Inc. ("Countrywide"), an Ohio corporation.
WHEREAS, the Trust is an investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust wishes to employ the services of Countrywide to
provide the Trust with certain accounting and pricing services; and
WHEREAS, Countrywide wishes to provide such services under
the conditions set forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement, the Trust and Countrywide agree as follows:
1. APPOINTMENT.
The Trust hereby appoints and employs Countrywide as agent to
perform those services described in this Agreement for the Trust. Countrywide
shall act under such appointment and perform the obligations thereof upon the
terms and conditions hereinafter set forth.
2. CALCULATION OF NET ASSET VALUE.
Countrywide will calculate the net asset value of each series
of the Trust and the per share net asset value of each series of the Trust, in
accordance with the current prospectus and statement of additional information
of each series of the Trust, once daily as of the time selected by the Trust's
Board of Trustees. Countrywide will prepare and maintain a daily valuation of
all securities and other assets of the Trust in accordance with instructions
from a designated officer of the Trust or its investment adviser and in the
manner set forth in the Trust's current prospectus and statement of additional
information. In valuing securities of the Trust, Countrywide may contract with,
and rely upon market quotations provided by, outside services.
3. BOOKS AND RECORDS.
Countrywide will maintain and keep current the general ledger
for each series of the Trust, recording all income and expenses, capital share
activity and security transactions of the Trust. Countrywide will maintain such
further books and records as are necessary to enable it to perform its duties
under this Agreement, and will periodically provide reports to the Trust and
GENERAL\acctagm.pmp
- 1 -
<PAGE>
its authorized agents regarding share purchases and redemptions and trial
balances of each series of the Trust. Countrywide will prepare and maintain
complete, accurate and current all records with respect to the Trust required to
be maintained by the Trust under the Internal Revenue Code of 1986, as amended
(the "Code"), and under the rules and regulations of the 1940 Act, and will
preserve said records in the manner and for the periods prescribed in the Code
and the 1940 Act. The retention of such records shall be at the expense of the
Trust.
All of the records prepared and maintained by Countrywide pursuant to
this Section 3 which are required to be maintained by the Trust under the Code
and the 1940 Act will be the property of the Trust. In the event this Agreement
is terminated, all such records shall be delivered to the Trust at the Trust's
expense, and Countrywide shall be relieved of responsibility for the preparation
and maintenance of any such records delivered to the Trust.
4. PAYMENT OF TRUST EXPENSES.
Countrywide shall process each request received from the Trust
or its authorized agents for payment of the Trust's expenses. Upon receipt of
written instructions signed by an officer or other authorized agent of the
Trust, Countrywide shall prepare checks in the appropriate amounts which shall
be signed by an authorized officer of Countrywide and mailed to the appropriate
party.
5. FORM N-SAR.
Countrywide shall maintain such records within its control and
shall be requested by the Trust to assist the Trust in fulfilling the
requirements of Form N-SAR.
6. COOPERATION WITH ACCOUNTANTS.
Countrywide shall cooperate with the Trust's independent
public accountants and shall take all reasonable action in the performance of
its obligations under this Agreement to assure that the necessary information is
made available to such accountants for the expression of their unqualified
opinion where required for any document for the Trust.
7. FURTHER ACTIONS.
Each party agrees to perform such further acts and execute
such further documents as are necessary to effectuate the purposes hereof.
- 2 -
<PAGE>
8. FEES.
For the performance of the services under this Agreement, each
series of the Trust shall pay Countrywide a monthly fee in accordance with the
schedule attached hereto as Schedule A. The fees with respect to any month shall
be paid to Countrywide on the last business day of such month. The Trust shall
also promptly reimburse Countrywide for the cost of external pricing services
utilized by Countrywide. Countrywide shall not be required to reimburse the
Trust or the Trust's investment adviser for (or have deducted from its fees) any
expenses in excess of expense limitations imposed by certain state securities
commissions having jurisdiction over the Trust.
9. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS.
The parties hereto acknowledge and agree that nothing
contained herein shall be construed to require Countrywide to perform any
services for the Trust which services could cause Countrywide to be deemed an
"investment adviser" of the Trust within the meaning of Section 2(a)(20) of the
1940 Act or to supersede or contravene the Trust's prospectus or statement of
additional information or any provisions of the 1940 Act and the rules
thereunder. Except as otherwise provided in this Agreement and except for the
accuracy of information furnished to it by Countrywide, the Trust assumes full
responsibility for complying with all applicable requirements of the 1940 Act,
the Securities Act of 1933, as amended, and any other laws, rules and
regulations of governmental authorities having jurisdiction.
10. REFERENCES TO COUNTRYWIDE.
The Trust shall not circulate any printed matter which
contains any reference to Countrywide without the prior written approval of
Countrywide, excepting solely such printed matter as merely identifies
Countrywide as Administrative Services Agent, Transfer, Dividend Disbursing,
Shareholder Service and Plan Agent and Accounting Services Agent. The Trust will
submit printed matter requiring approval to Countrywide in draft form, allowing
sufficient time for review by Countrywide and its counsel prior to any deadline
for printing.
11. EQUIPMENT FAILURES.
Countrywide shall take all steps necessary to minimize or
avoid service interruptions, and has entered into one or more agreements making
provision for emergency use of electronic data processing equipment. Countrywide
shall have no liability with respect to equipment failures beyond its control.
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<PAGE>
12. INDEMNIFICATION OF COUNTRYWIDE.
A. Countrywide may rely on information reasonably believed by it to be
accurate and reliable. Except as may otherwise be required by the 1940 Act and
the rules thereunder, neither Countrywide nor its shareholders, officers,
directors, employees, agents, control persons or affiliates of any thereof shall
be subject to any liability for, or any damages, expenses or losses incurred by
the Trust in connection with any error of judgment, mistake of law, any act or
omission connected with or arising out of any services rendered under or
payments made pursuant to this Agreement or any other matter to which this
Agreement relates, except by reason of willful misfeasance, bad faith or
negligence on the part of any such persons in the performance of the duties of
Countrywide under this Agreement or by reason of reckless disregard by any of
such persons of the obligations and duties of Countrywide under this Agreement.
B. Any person, even though also a director, officer, employee,
shareholder, or agent of Countrywide, or any of its affiliates, who may be or
become an officer, trustee, employee or agent of the Trust, shall be deemed,
when rendering services to the Trust or acting on any business of the Trust, to
be rendering such services to or acting solely as an officer, trustee, employee
or agent of the Trust and not as a director, officer, employee, shareholder or
agent of or one under the control or direction of Countrywide or any of its
affiliates, even though paid by one of those entities.
C. Notwithstanding any other provision of this Agreement, the Trust
shall indemnify and hold harmless Countrywide, its directors, officers,
employees, shareholders, agents, control persons and affiliates from and against
any and all claims, demands, expenses and liabilities (whether with or without
basis in fact or law) of any and every nature which Countrywide may sustain or
incur or which may be asserted against Countrywide by any person by reason of,
or as a result of: (i) any action taken or omitted to be taken by Countrywide in
good faith in reliance upon any certificate, instrument, order or share
certificate reasonably believed by it to be genuine and to be signed,
countersigned or executed by any duly authorized person, upon the oral
instructions or written instructions of an authorized person of the Trust or
upon the opinion of legal counsel for the Trust or its own counsel; or (ii) any
action taken or omitted to be taken by Countrywide in connection with its
appointment in good faith in reliance upon any law, act, regulation or
interpretation of the same even though the same may thereafter have been
altered, changed, amended or repealed. However, indemnification under this
subparagraph shall not apply to actions or omissions of Countrywide or its
directors, officers, employees, shareholders or agents in cases of its or their
own negligence, willful misconduct, bad faith, or reckless disregard of its or
their own duties hereunder.
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<PAGE>
13. TERMINATION.
A. The provisions of this Agreement shall be effective on the date
first above written, shall continue in effect for two years from that date and
shall continue in force from year to year thereafter, but only so long as such
continuance is approved (1) by Countrywide, (2) by vote, cast in person at a
meeting called for the purpose, of a majority of the Trust's trustees who are
not parties to this Agreement or interested persons (as defined in the 1940 Act)
of any such party, and (3) by vote of a majority of the Trust's Board of
Trustees or a majority of the Trust's outstanding voting securities.
B. Either party may terminate this Agreement on any date by giving the
other party at least sixty (60) days' prior written notice of such termination
specifying the date fixed therefore. Upon termination of this Agreement, the
Trust shall pay to Countrywide such compensation as may be due as of the date of
such termination, and shall likewise reimburse Countrywide for any out-of-pocket
expenses and disbursements reasonably incurred by Countrywide to such date.
C. In the event that in connection with the termination of this
Agreement a successor to any of Countrywide's duties or responsibilities under
this Agreement is designated by the Trust by written notice to Countrywide,
Countrywide shall, promptly upon such termination and at the expense of the
Trust, transfer all records maintained by Countrywide under this Agreement and
shall cooperate in the transfer of such duties and responsibilities, including
providing for assistance from Countrywide's cognizant personnel in the
establishment of books, records and other data by such successor.
14. SERVICES FOR OTHERS.
Nothing in this Agreement shall prevent Countrywide or any
affiliated person (as defined in the 1940 Act) of Countrywide from providing
services for any other person, firm or corporation (including other investment
companies); provided, however, that Countrywide expressly represents that it
will undertake no activities which, in its judgment, will adversely affect the
performance of its obligations to the Trust under this Agreement.
15. LIMITATION OF LIABILITY.
It is expressly agreed that the obligations of the Trust
hereunder shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of the Trust, personally, but bind only the trust
property of the Trust. The execution and delivery of this Agreement have been
authorized by the Trustees of the Trust and signed by an officer of the Trust,
acting as such, and neither such authorization by such
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<PAGE>
Trustees nor such execution and delivery by such officer shall be deemed to have
been made by any of them individually or to impose any liability on any of them
personally, but shall bind only the trust property of the Trust.
16. SEVERABILITY.
In the event any provision of this Agreement is determined to
be void or unenforceable, such determination shall not affect the remainder of
this Agreement, which shall continue to be in force.
17. QUESTIONS OF INTERPRETATION.
This Agreement shall be governed by the laws of the State of
Ohio. Any question of interpretation of any term or provision of this Agreement
having a counterpart in or otherwise derived from a term or provision of the
1940 Act shall be resolved by reference to such term or provision of the 1940
Act and to interpretations thereof, if any, by the United States Courts or in
the absence of any controlling decision of any such court, by rules, regulations
or orders of the Securities and Exchange Commission issued pursuant to said 1940
Act. In addition, where the effect of a requirement of the 1940 Act, reflected
in any provision of this Agreement, is revised by rule, regulation or order of
the Securities and Exchange Commission, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
18. NOTICES.
All notices, requests, consents and other communications
required or permitted under this Agreement shall be in writing (including telex
and telegraphic communication) and shall be (as elected by the person giving
such notice) hand delivered by messenger or courier service, telecommunicated,
or mailed (airmail if international) by registered or certified mail (postage
prepaid), return receipt requested, addressed to:
To the Trust: Professionally Managed Portfolios
c/o Wadsworth Group
2025 East Financial Way, Suite 101
Glendora, California 91741
Attention: Emmy Butts
To Countrywide: Countrywide Fund Services, Inc.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Attention: Robert G. Dorsey
or to such other address as any party may designate by notice
complying with the terms of this Section 18. Each such notice
shall be deemed delivered (a) on the date delivered if by
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<PAGE>
personal delivery; (b) on the date telecommunicated if by telegraph; (c) on the
date of transmission with confirmed answer back if by telex, telefax or other
telegraphic method; and (d) on the date upon which the return receipt is signed
or delivery is refused or the notice is designated by the postal authorities as
not deliverable, as the case may be, if mailed.
19. AMENDMENT.
This Agreement may not be amended or modified except by a
written agreement executed by both parties.
20. BINDING EFFECT.
Each of the undersigned expressly warrants and represents that
he has the full power and authority to sign this Agreement on behalf of the
party indicated, and that his signature will operate to bind the party indicated
to the foregoing terms.
21. COUNTERPARTS.
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
22. FORCE MAJEURE.
If Countrywide shall be delayed in its performance of services
or prevented entirely or in part from performing services due to causes or
events beyond its control, including and without limitation, acts of God,
interruption of power or other utility, transportation or communication
services, acts of civil or military authority, sabotages, national emergencies,
explosion, flood, accident, earthquake or other catastrophe, fire, strike or
other labor problems, legal action, present or future law, governmental order,
rule or regulation, or shortages of suitable parts, materials, labor or
transportation, such delay or non-performance shall be excused and a reasonable
time for performance in connection with this Agreement shall be extended to
include the period of such delay or non-performance.
23. MISCELLANEOUS.
The captions in this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
PROFESSIONALLY MANAGED PORTFOLIOS
By:
Its: President
COUNTRYWIDE FUND SERVICES, INC.
By:
Its: President
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<PAGE>
Schedule A
COMPENSATION
Each series of the Trust will pay Countrywide a monthly fee, according
to the average net assets of such series during such month, as follows:
Average Monthly Net Assets Monthly Fee
0 - $ 25,000,000 $2,500
25 - 50,000,000 3,000
50 - 100,000,000 3,500
100 - 200,000,000 4,000
Over 200,000,000 5,000 plus .001%
of such assets in
excess of $200,000,000
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