SCHEDULE 14A
(Rule 14a-101)
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant []
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Section 240.14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
The Chapman Funds, Inc.
(Name of Registrant as Specified in its Charter)
________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
[] No fee required.
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction
applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth
the amount on which the filing fee is calculated and
state how it was determined):
<PAGE>
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
__________________________________________________________
[ ] Fee paid previously with preliminary materials:
_____________________________________________________________
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
(1)Amount Previously Paid:
(2)Form, Schedule or Registration Statement No.:
(3)Filing Party:
(4)Date Filed:
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THE CHAPMAN FUNDS, INC.
The World Trade Center-Baltimore
28th Floor
401 East Pratt Street
Baltimore, Maryland 21202
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
An annual meeting of stockholders of The Chapman Funds, Inc.
(the "Company"), will be held at The Chapman Co., The World Trade
Center-Baltimore, 28th Floor, 401 East Pratt Street, Baltimore,
Maryland, on April 30, 1997, at 11:00 A.M. local time to act on
the following matters:
1. Election of directors to serve until
their successors are elected and qualify;
2. Approval of the Investment Advisory and
Administrative Services Agreement between the
Company and Chapman Capital Management, Inc.;
3. Approval of the Distribution Agreement
between the Company and The Chapman Co.;
4. Ratification of the selection of Ernst &
Young as certified independent auditors for the
Company;
5. Such other business as may properly come
before the meeting.
Only stockholders of record at the close of business on
April 14, 1997, are entitled to notice of and to vote at such
meeting or any adjournments thereof.
[April 15], 1997 By:/s/ BONNIE S. GILLETTE
Name: Bonnie S. Gillette
Title: Secretary
Please mark, sign and date the enclosed proxy and return it
promptly in the enclosed envelope. If you attend the meeting and
wish to vote in person, you may revoke your proxy.
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THE CHAPMAN FUNDS, INC.
The World Trade Center-Baltimore
28th Floor
401 East Pratt Street
Baltimore, Maryland 21202
PROXY STATEMENT
Annual Meeting of Stockholders
April 30, 1997
The enclosed proxy is solicited by the Board of Directors of
The Chapman Funds, Inc. (the "Company") for use at the annual
meeting of stockholders of the Company to be held at the offices
of The Chapman Co., The World Trade Center-Baltimore, 28th Floor,
401 East Pratt Street, Baltimore, Maryland, on April 30, 1997, at
11:00 A.M. local time. This Proxy Statement and form of Proxy
were first mailed to stockholders on [April 15], 1997.
Proxies will be solicited by mail and may be solicited in
person or by telephone by directors, officers and employees of
the Company. Nominees will, upon request, be supplied with
additional proxy materials and will be reimbursed by the Company
for their reasonable expenses in sending these materials to their
principals. The cost of printing and mailing this notice and
proxy statement and proxy form and of soliciting proxies will be
borne by the Company.
Management knows of no business to be brought before the
meeting except as set forth in the notice of the meeting. If any
other matters should come before the meeting, the persons named
in the enclosed form of proxy intend to vote on such matters in
accordance with their best judgment.
A stockholder may revoke his proxy by notifying the Company
in writing prior to the meeting, by subsequently executing
another proxy or by attending the meeting and giving oral notice
of revocation to the Chairman of the meeting.
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<PAGE>
Stockholders are urged to return their proxies promptly in
order to ensure action by a quorum and to avoid the expense of
additional solicitation.
The Company will furnish, without charge, a copy of the
annual report to any shareholder upon request. Any such request
should be directed to Lisa Fullagar, The Chapman Funds, Inc., The
World Trade Center-Baltimore, 28th Floor, 401 East Pratt Street,
Baltimore, Maryland 21202, telephone (800) 752-1013.
Stockholders of record at the close of business on April 14,
1997, are entitled to vote at the meeting ("record date"). On
the record date the Company had outstanding [__________] shares
of The Chapman U.S. Treasury Money Fund and no shares of The
Chapman Institutional Cash Management Fund (each a "Fund").
Stockholders of each Fund are entitled to one vote for each share
held and will vote as a single class on each matter to be
considered at the meeting. The presence in person or by proxy of
the holders of one-third of the shares entitled to vote at the
meeting is required to constitute a quorum for the transaction of
business.
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PRINCIPAL STOCKHOLDERS
The following table sets forth the name and the number of
shares and percentage of the outstanding shares of The Chapman
U.S. Treasury Money Fund owned beneficially by each person who
owned beneficially 5% or more of the outstanding shares on
February 28, 1997, the latest practicable date. No shares of The
Chapman Institutional Cash Management Fund were outstanding on
that date. No shares of The Chapman U.S. Treasury Money Fund are
beneficially owned by any director, director nominee or executive
officer of the Company.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF BENEFICIAL OWNER TOTAL SHARES %
<S> <C> <C>
City of Philadelphia Consolidated 10,000,000.00 28.8%
Cash
Treasurer's Office
640 MSB, 1404 JFK Boulevard
Philadelphia, PA 19102-1681
Treasurer, State of Mississippi 5,000,000.00 14.4%
PO Box 138
Jackson, MS 39205
Bank of New York 4,059,982.84 11.7%
Trustee for Prince George's County,
Maryland
101 Barclay St., 21st Floor
Corporate Trust Administration
New York, NY 10286
Prince George's County, Maryland 3,053,298.02 8.8%
CAB Room 3200
14741 Governor Oden Bowie Drive
Upper Marlboro, MD 20772
Union Planners National Bank 2,135,100.89 6.1%
P.O. Box 387
Memphis, TN 38147
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
Maryland State Treasurer 1,974,011.38 5.7%
80 Calvert Street
Annapolis, MD 21401
Total of Accounts Holding Less than 8,555,873.79 24.5%
5%
TOTAL FUND SHARES 34,778,266.92 100%
</TABLE>
1. ELECTION OF DIRECTORS
Nine directors are to be elected at the meeting. The Board
of Directors has nominated the persons named below for election
as directors.
Nathan A. Chapman, Jr. Lottie H. Shackelford
Wilfred Marshall David E. Rivers
James B. Lewis Ronald A. White
Levi Watkins, Jr. Benjamin Hooks
Unless directed to the contrary, proxies will be voted for
the election of such nominees.
In accordance with Maryland law and the Company's Bylaws,
the Company does not expect to hold annual meetings of
stockholders unless the election of directors is required by law.
The Investment Company Act of 1940 requires a meeting of
stockholders for election of directors to fill vacancies when
less than a majority of the directors then in office were elected
by the stockholders. The directors elected at this meeting will
serve until their successors have been elected and qualify or
until their earlier death, resignation or removal. Any vacancies
on the Board will be filled by the remaining directors, subject
to the requirements of the Investment Company Act of 1940.
Each nominee has consented to the nomination and has agreed
to serve if elected. If any of the nominees should not be
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available for election, the persons named as proxies may vote for
other persons in their discretion. The Board of Directors has no
reason to believe that any of the nominees will be unable or
unwilling to serve if elected.
The name and age, positions held with the Company and
principal occupation for the past five years of each nominee are
set forth below:
<TABLE>
<CAPTION>
POSITION(S)
HELD WITH PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS REGISTRANT AGE DURING PAST 5 YEARS
<S> <C> <C> <C>
*Nathan A. Nominee 39 President, Chief Executive
Chapman, Jr. for Officer and Treasurer since
401 E. Pratt Director 1986 of The Chapman Co.,
St., 28th Flr and the Funds' distributor, and
Baltimore, MD President President and Chief
21202 Executive Officer of
Chapman Capital Management,
Inc., the Funds' advisor,
since 1988. President,
Chairman of the Board of
Directors and Director of
DEM, Inc. (a closed-end
investment company managed
by the advisor) since 1995.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
James B. Lewis Nominee 49 City Administrator/Manager,
401 E. Pratt for City of Rio Rancho, New
St., 28th Flr Director Mexico since March 1996,
Baltimore, MD Chief Clerk - State
21202 Corporation Commission from
April 1995 to March 1996,
Chief of Staff, Office of
the Governor from Jan. 1991
to April 1995. New Mexico
State Treasurer, December
1985 to January 1991.
County Treasurer,
Bernadillo County 1982-
1985. Director DEM, Inc.
Wilfred Marshall Nominee 61 Vice President, Gateway
401 E. Pratt for Express Inc. since 1994,
St., 28th Flr Director Director, Mayor's Office of
Baltimore, MD Small Business Assistance -
21202 City of Los Angeles from
October 1981 to 1994,
Economic Development
Representative U.S.
Department of Commerce,
Economic Development
Administration 1972 to
October 1981.
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C> <C>
Lottie H. Nominee 55 Executive Vice President,
Shackelford for Global USA - since 1995,
401 E. Pratt Director City Director of the City
St., 28th Flr of Little Rock, Arkansas,
Baltimore, MD 1978 to 1995, the City
21202 Mayor of Little Rock,
Arkansas, 1987-1989; Vice
Chair, Democratic National
Committee, 1989, Co-Chair,
Democratic National
Committee, 1988. Director
DEM, Inc.
*Levi Watkins, Nominee 53 Professor of Surgery, Johns
Jr., MD for Hopkins University, School
401 E. Pratt Director of Medicine since July,
St., 28th Flr 1984.
Baltimore, MD
21202
Ronald A. White Nominee 47 President, Ronald A. White,
401 E. Pratt for P.C. since 1982. Director
St., 28th Flr Director DEM, Inc.
Baltimore, MD
21202
*Dr. Benjamin Nominee 72 Senior Vice President of
Hooks for The Chapman Co., since May
401 E. Pratt Director 1993. Executive Director
St., 28th Flr of the NAACP from 1977 to
Baltimore, MD April 1993.
21202
David E. Rivers Nominee 54 Director of Outreach and
401 E. Pratt for Community Development,
St., 28th Flr Director Medical University of South
Baltimore, MD Carolina 1994 to Present;
21202 President of Research,
Planning and Management,
January 1991 to Present.
</TABLE>
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* Directors deemed to be "interested persons" of the Company
for purposes of the Investment Company Act of 1940 are indicated
by an asterisk. In addition to the positions indicated with the
Funds' advisor and distributor, Mr. Chapman is a principal
stockholder of the Funds' distributor. Dr. Watkins is the
brother of Donald Watkins, a member of the Board of Directors of
the Funds' distributor.
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COMPENSATION TABLE
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
Pension or Total
Retirement Estimated Compensati
Aggregate Benefit Annual on from
Name of Person Compensatio Accrued as Benefits Fund and
Position n From Fund part of upon Fund
Fund Retiremen Complex
Expenses t Paid to
Directors
<S> <C> <C> <C> <C>
Nathan A.
Chapman, Jr. -0- -0- -0- -0-
Director and
President
Dr. Benjamin
Hooks 1,000 -0- -0- 1,000
Director
James B. Lewis
Director 4,181 -0- -0- 7,181
Wilfred Marshall
Director 2,000 -0- -0- 2,000
Joseph Quash, MD
Director 2,000 -0- -0- 2,000
David Rivers
Director 1,000 -0- -0- 1,000
Lottie H.
Shackelford 2,000 -0- -0- 4,000
Director
Levi Watkins,
Jr., MD -0- -0- -0-
Director -0-
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Ronald A. White
Director -0- -0- 2,000
-0-
</TABLE>
No officer of the Company receives any compensation from the
Company. The Board of Directors of the Company met three times
during the fiscal year ended October 31, 1996. Messrs. White
and Watkins attended no meetings, Messrs. Hooks and Rivers
attended one meeting, Messrs. Marshall and Quash and Ms.
Shackelford attended two meetings. The Board of Directors has no
committees.
Directors of the Company who are not officers receive from
the Company a fee of $1,000 for each Board of Directors meeting
attended and are reimbursed for all out-of-pocket expenses
relating to attendance at meetings.
The names, ages, and positions held with the Company and
with the Funds' advisor or distributor, and principal occupation
for the past five years of each officer of the Company, in
addition to Mr. Chapman, are set forth below:
<TABLE>
<CAPTION>
Positions with the Funds' Advisor or
Distributor, Other Positions Held
and Principal Occupations for the
Name and Age With Company Past Five Years
<S> <C> <C>
Valerie A. Vice Administrator of The Chapman Co.
Chapman President since March, 1988. She is married
(36) to Nathan A. Chapman, Jr.
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
Bonnie Shay Secretary Secretary of Chapman Capital
Gillette Management, Inc. since 1988;
(44) Secretary of The Chapman Co. since
February 1987; Assistant Secretary
of DEM, Inc. since October 1995.
Lynn Ballard Treasurer Controller of The Chapman Co. since
(54) May 1988; Treasurer of Chapman
Capital Management, Inc. since 1988;
Treasurer of DEM, Inc. since October
1995.
</TABLE>
No director or officer of the Company owns beneficially any
shares of either Fund. All of the outstanding equity securities
of Chapman Capital Management, Inc., the Funds' investment
advisor, are held by The Chapman Co., the Funds' distributor.
Mr. Chapman owns 92% of the outstanding equity securities of The
Chapman Co. on a fully diluted basis and has the right to cast
approximately 99% of the votes entitled to be cast by its
stockholders. Dr. Hooks owns less than 5% of the outstanding
stock of The Chapman Co. The Chapman Co. repurchased 411 shares
of The Chapman Co. Preferred Stock-Series B from Mr. White for an
aggregate consideration of $144,000 in December 1996. Mr. White
no longer owns any securities of The Chapman Co. With the
exception of Mr. White, no director or nominee for election as a
director of the Company has entered into a transaction in the
stock of Chapman Capital Management, Inc. or The Chapman Co.
since at least November 1, 1995.
If a quorum is present, a plurality of the votes cast at the
meeting is required for election of a director. Abstentions and
broker non-votes will not constitute a vote "for" or "against"
any matter but will be counted toward a quorum.
The Board of Directors recommends a vote FOR election of
each of the nominees named above as a director of the
Corporation.
2. APPROVAL OF THE INVESTMENT ADVISORY AGREEMENT
Chapman Capital Management, Inc., The World Trade Center-
Baltimore, 28th Floor, 401 East Pratt Street, Baltimore, MD 21202
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(the "Advisor") acts as the investment advisor and administrator
for each of the Funds pursuant to an advisory and administrative
services agreement dated May 16, 1989 which was last approved by
the stockholders of the Company at a meeting on March 27, 1990.
At a meeting held on January 31, 1996, a majority of the
Company's directors who are not "interested persons" of the
Company for purposes of the Investment Company Act of 1940, with
concurrence of the entire Board of Directors, approved a revised
advisory and administrative services agreement with the Advisor
(the "Advisory Agreement"), subject to ratification by the
stockholders.
THE ADVISOR
The Advisor is a wholly-owned subsidiary of The Chapman Co.,
the Funds' distributor. Mr. Chapman owns approximately 91% of
the equity and has the right to cast approximately 99% of the
votes entitled to be cast by stockholders of The Chapman Co.
The name, address and principal occupation of the principal
executive officer and each director of the Advisor are as
follows:
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITION WITH OTHER BUSINESS
BUSINESS ADDRESS ADVISOR
<S> <C> <C>
Nathan A. Chapman, Director and President, Chief Executive
Jr. Chairman of the Officer and Treasurer since
401 E. Pratt St., Board 1986 of The Chapman Co. and
28th Floor President and Chief
Baltimore, MD Executive Officer of Chapman
21202 Capital Management, Inc.,
since 1988. President,
Chairman of the Board of
Directors and Director of
DEM, Inc. (a closed-end
investment company managed
by the Advisor) since 1995.
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
Theron Stokes Director Attorney for the Alabama
401 E. Pratt St., Education Association.
28th Floor
Baltimore, MD
21202
Earl U. Bravo Director Chief Operating Officer of
401 E. Pratt St., the Chapman Co. since 1992.
28th Floor President of Chapman Capital
Baltimore, MD Management, Inc. from 1990
21202 until 1992. Since November
1995, Vice President and
Secretary of DEM, Inc.
</TABLE>
Mr. Chapman is President and a director of the Company.
TERMS OF THE ADVISORY AGREEMENT
The following summary of the Advisory Agreement is not
intended to be a complete description and is qualified by
reference to the terms of the Advisory Agreement, a copy of which
is attached hereto as Annex A.
Under the terms of this Advisory Agreement, the Advisor is
responsible for supervision and management of the Company's
operations and formulation and implementation of the investment
policies of each Fund. It is also responsible for administration
of the Funds, including executive management, office facilities
and administrative services.
The Advisor receives from each Fund an advisory fee at an
annual rate of .5% of each Fund's average daily net assets and an
administrative fee of .1% of each Fund's average daily net
assets. Both fees are calculated daily and paid monthly.
The Advisor has agreed to bear all expenses in connection
with the performance of its advisory and administrative services.
The Company bears all other expenses incurred in its operations.
The expenses the Company pays include the Advisor's management
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and administration fees, taxes, fees of its directors who are not
officers, cost of director's meetings, fees payable to the
Securities and Exchange Commission, state securities
qualification fees, costs of preparing and printing prospectuses
for existing stockholders, fees and expenses of the custodian and
transfer agent, certain insurance costs, auditing and legal
expenses, costs of stockholder reports and meetings, and any
extraordinary expenses. The Funds also pay for brokerage fees
and commissions in connection with the purchase and sale of
portfolio securities.
Effective January 1, 1997 the Advisor has agreed to bear
annual expenses (excluding income, excise and other taxes and
extraordinary expenses) of each Fund in excess of .65% of the
average daily net assets for The Chapman U.S. Treasury Money Fund
and .75% of the average daily net assets for The Chapman
Institutional Cash Management Fund until December 31, 1997 (the
"Expense Limitation"). The Advisor's obligation will be limited
to the total of its advisory and administration fees.
For the period November 1, 1995 to October 31, 1996, the
Advisor received management and administrative fees of $200,323
and $40,046, respectively, from the Chapman U.S. Treasury Money
Fund and management and administrative fees of $0 from The
Chapman Institutional Cash Management Fund. These amounts are
net of expenses reimbursed to the Company by the Advisor of
$48,517 for The Chapman U.S. Treasury Money Fund and $0 for The
Chapman Institutional Cash Management Fund. These amounts
include administrative amounts paid by the Advisor to others for
administrative services with respect to the Fund.
The Advisor serves as transfer, redemption and dividend
disbursing agent for the Company pursuant to a shareholder
services agreement dated September 12, 1994. For the period
November 1, 1995 to October 31, 1996, pursuant to such agreement,
the Advisor was paid $18,000 by the Company. The Company
intends to continue such agreement in the event the Advisory
Agreement is approved by the stockholders.
The Advisory Agreement provides that the Advisor and other
persons who assist the Advisor in providing services to the Funds
will not be liable for any mistake in judgment or liability to
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the Company of its stockholders and the Company will indemnify
the Advisor and such other persons against liability incurred by
them in providing service to the Funds, except for willful
misfeasance, bad faith or gross negligence of the Advisor or such
other persons in the performance of duties or reckless disregard
of obligations and duties.
Unless sooner terminated, the Advisory Agreement will
continue in effect until December 29, 1998 and from year to year
thereafter if such continuance is approved at least annually by
the Company's Board of Directors or by a vote of the majority of
the outstanding shares of each Fund, and, in either case, by a
majority of the Directors who are not parties to the Advisory
Agreement or interested persons, as defined in the Investment
Company Act of 1940, of any party, by votes cast in person at a
meeting called for such purpose. The Advisory Agreement may be
terminated by the Company or the Advisor on 60 days' written
notice, and will terminate immediately in the event of its
assignment.
The Advisory Agreement provides that if the Advisor ceases
to be the Company's investment advisor, the Company will change
its name to a name which does not include "Chapman" at the
Advisor's request.
The Advisory Agreement provides that the Expense Limitation
will be in effect until December 31, 1997, at which time it may
be extended as is, increased, decreased or eliminated solely at
the discretion of the Advisor, whereas the advisory and
administrative services agreement dated May 16, 1989 between the
Company and the Advisor (the "Existing Advisory Agreement") does
not limit the term of the Expense Limitation. In other material
respects, the terms of the Advisory Agreement are substantially
similar to the terms of the Existing Agreement.
PORTFOLIO TRANSACTIONS
The Advisor is responsible for decisions to buy or sell
securities and the selection of broker-dealers for the Funds
subject to policies adopted by the Company's Board of Directors.
Portfolio securities may be purchased directly from the issuer or
from a dealer serving as market maker or may be purchased in
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broker's transactions. If securities are sold prior to maturity,
they may be sold directly to an issuer or dealer or in broker's
transactions. When securities are purchased or sold directly
from or to an issuer, no commissions or discounts are paid. The
price paid to or received from a dealer for a security may
include a spread between bid and asked prices. When securities
are purchased or sold in a broker's transaction, a commission
will be paid.
The Company's policy for placing orders for purchases and
sales of securities for the Funds is to give primary
consideration to obtaining the most favorable price and efficient
execution of transactions. Sales of Fund shares is not a factor
in allocating portfolio transactions.
The Chapman Co. may effect brokerage transactions for the
Funds when it is able to provide a net price and execution at
least as favorable to the Funds as those determined to be
available from unaffiliated brokers or dealers. The commissions
paid to The Chapman Co. on transactions for the Funds may not
exceed those charges by The Chapman Co. to comparable
unaffiliated clients in similar transactions or the limits set
forth in rules adopted by the Securities and Exchange Commission.
The Board of Directors of the Company has adopted procedures,
which it will review annually, intended to ensure compliance with
these limitations. The procedures require that The Chapman Co.
report each transaction to the Company and that the Board of
Directors determine at least quarterly that all transactions
effected by The Chapman Co. have been effected in accordance with
the procedures.
During the period November 1, 1995 to October 31, 1996, the
total purchases and sales (excluding maturities) of the Chapman
U.S. Treasury Money Fund were $8,780,446,693 of which $0 was
transacted through The Chapman Co. During such period The
Chapman Co. received compensation of $0 for portfolio
transactions executed on behalf of The Chapman U.S. Treasury
Money Fund. The Chapman U.S. Treasury Money Fund did not pay any
other commissions for portfolio transactions during the fiscal
year ended October 31, 1996.
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When comparable price and execution can be obtained from
more than one broker or dealer, consideration may be given to
placing portfolio transactions with those brokers or dealers who
also furnish research and other services to the Fund or the
Advisor. These services may include information as to the
availability of securities for purchase or sale, statistical or
factual information or opinions pertaining to investments,
evaluations of portfolio securities, and research related
computer software or hardware. These services may benefit the
Advisor in the management of accounts of other clients and may
not benefit the Fund directly. While such services are useful
and important in supplementing their own research, the Advisor
believes the value of such services is not determinable and does
not significantly reduce its expenses. The fees payable to the
Advisor will not be reduced by the value of such services.
The Advisor and its affiliates deal, trade and invest for
its own account in the types of securities in which the Fund may
invest and may have relationships with the issuers of securities
purchased by the Fund.
Investment decisions for the Fund are made independently
from those for other accounts advised by the Advisor. The
Advisor's other accounts may also invest in the same securities
as the Fund. When a purchase or sale of the same security is
made at substantially the same time on behalf of the Fund and
another account, the transaction will be averaged as to price,
and available instruments allocated as to amount, in a manner
believed to be equitable to the Fund and/or account. In some
instances, this procedure may adversely affect the price paid or
received by a Fund or the size of the position obtained or sold
by a Fund. To the extent permitted by law, the securities to be
sold or purchased for a Fund may be aggregated with those to be
sold or purchased for the other Fund or accounts in order to
obtain the best execution.
In approving the Advisory Agreement at its meeting on
January 31, 1997, the Board of Directors considered, among other
factors, the nature and extent of the services to be performed by
the Advisor, the Advisor's experience in providing such services
to investment companies, the fees to be paid to the Advisor, the
Agreement of the Advisor to reduce its fees if the Fund's
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expenses exceeded agreed levels, the other terms of the Advisory
Agreement, and the financial condition of the Advisor.
The approval of the Advisory Agreement requires the vote of
either (i) the holders of 67% or more of the shares of The
Chapman U.S. Treasury Money Fund present at the Meeting, if the
holders of over 50% of the outstanding shares of such Fund are
present or represented by proxy, or (ii) the vote of holders of
over 50% of the outstanding shares of such Fund, whichever is
less.
If the Advisory Agreement is not approved by the
stockholders, the Board of Directors will consider what actions
it should take, including the substitution of a new advisor.
The Board of Directors recommends that the stockholders vote
"FOR" approval of the Advisory Agreement.
3. APPROVAL OF THE DISTRIBUTION AGREEMENT
The Chapman Co., The World Trade Center-Baltimore, 28th
Floor, 401 East Pratt Street, Baltimore, MD 21202 (the
"Distributor") acts as the exclusive underwriter for the Funds on
a best efforts basis pursuant to a distribution agreement with
the Company. At a meeting held on January 31, 1997, a majority
of the Company's directors who are not "interested persons" of
the Company for purposes of the Investment Company Act of 1940,
with concurrence of the entire Board of Directors, approved a
revised distribution agreement with the Distributor (the
"Distribution Agreement"), subject to ratification by the
stockholders. Mr. Chapman owns approximately 91% of the equity
and has the right to cast approximately 99% of the votes entitled
to be cast by stockholders of the Distributor.
TERMS OF THE DISTRIBUTION AGREEMENT
The following summary of the Distribution Agreement is not
intended to be a complete description and is qualified in its
entirety by reference to the terms of the Distribution Agreement,
a copy of which is attached hereto as Annex B.
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<PAGE>
Under the terms of the Distribution Agreement, the
Distributor is required to use reasonable efforts to promote the
Funds, to solicit orders for the purchase of the Funds' stock and
to undertake such advertising and promotion as it believes
reasonable in connection with such solicitation. The Distributor
is the exclusive distributor of the Funds' stock and can sell the
Funds' stock only at the offering price at the time of such sale
(computed in the manner described in the Funds' then effective
prospectus). The Funds receive not less than the full net asset
value per share for all the stock sold. No sales charge is
imposed on sales of any of the Funds' stock. The Distributor
may pay commissions to its sales representatives or to other
broker-dealers for sales of Fund shares.
The Distributor has agreed to bear all its expenses in
connection with the performance of the Distribution Agreement,
including, but not limited to, the printing and distribution of
prospectuses to stockholders other than to existing stockholders
and shall receive no reimbursement or compensation in connection
therewith from the Company therefor.
For the period November 1, 1995 to October 31, 1996, the
Distributor received underwriting fees of $0 from the Company.
The Company has agreed to indemnify and hold harmless the
Distributor, each person, if any, who controls the Distributor
within the meaning of Section 15 of the Securities Act of 1933,
as amended, and any person with whom the Distributor enters into
agreements for the sale of Shares of the Company or to prepare
sales literature for the Company against any loss, liability,
claim, damage or expense (including the reasonable cost of
investigating or defending any alleged loss, liability, claim,
damage or expense and counsel fees incurred in connection
therewith), insofar as such loss, liability, claim, damage,
expense, actions or proceedings in respect thereof arise out of
or are based upon an untrue statement of a material fact
contained in the Registration Statement then in effect, annual or
interim reports to shareholders or sales literature used in
connection with the sale of Shares or omission to state a
material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading, unless such statement
22
<PAGE>
or omission was made in reliance upon, and in conformity with,
written information furnished to the Company specifically for use
therein; provided, however, no person shall be entitled to
indemnity in the event of its willful malfeasance, bad faith or
gross negligence in the performance of its duties under this
Agreement or such other agreement or by reason of its reckless
disregard of its obligations and duties under this Agreement or
such other agreement.
Unless sooner terminated, the Distribution Agreement shall
continue in effect until December 29, 1998, and from year to year
thereafter if such continuance is approved at least annually in
the manner required by the Investment Company Act of 1940, as
amended. The Distribution Agreement may be terminated by the
Company or the Advisor on 60 days' written notice, and will
terminate immediately in the event of its assignment.
In approving the Distribution Agreement at its meeting on
January 31, 1997, the Board of Directors considered, among other
factors, the nature and extent of the services to be performed by
the Distributor, the Distributor's experience in providing such
services to investment companies, the fact that the Distributor
will perform distribution services to the Funds without
compensation, the other terms of the Distribution Agreement, and
the financial condition of the Distributor.
The approval of the Distribution Agreement requires the vote
of either (i) the holders of 67% or more of the shares of The
Chapman U.S. Treasury Money Fund present at the Meeting, if the
holders of over 50% of the outstanding shares of such Fund are
present or represented by proxy, or (ii) the vote of holders of
over 50% of the outstanding shares of such Fund, whichever is
less.
If the Distribution Agreement is not approved by the
stockholders, the Board of Directors will consider what actions
it should take, including the substitution of a new distributor.
The Board of Directors recommends that the stockholders vote
"FOR" approval of the Distribution Agreement.
23
<PAGE>
4. SELECTION OF INDEPENDENT AUDITORS
Ernst & Young served as independent auditors of the Company
for its fiscal year ended October 31, 1996. Ernst & Young have
no direct or material indirect interest in the Company, Chapman
Capital Management, Inc. or The Chapman Co. At a meeting held on
January 31, 1997, a majority of the Company's Directors who are
not interested persons of the Company, with the concurrence of a
majority of the Board of Directors, selected Ernst & Young as
independent auditors of the Company for the current fiscal year,
subject to ratification by the stockholders.
The Board of Directors of the Company has determined that
utilizing the services of Ernst & Young, who have extensive
experience in auditing mutual funds, is in the best interests of
the Company.
Ernst & Young is not currently expected to have a
representative present at the meeting and, therefore, will not
make a statement or respond to questions at the meeting.
The affirmative vote of a majority of the shares voted at
the meeting, assuming a quorum is present, is required to ratify
the selection of auditors.
The Board of Directors recommends that the stockholders vote
"FOR" the ratification of the selection of Ernst & Young as
independent auditors of the Company.
STOCKHOLDER PROPOSALS
The Company does not expect to hold regular annual meetings
of stockholders. A stockholder who wishes to submit a proposal
to be considered at a meeting of stockholders should send the
proposal to the Company at the address set forth on the first
page of this Proxy Statement. It is suggested that proposals be
forwarded by certified mail, return receipt requested.
[April 15,] 1997 /s/ BONNIE S. GILLETTE
Name: Bonnie S. Gillette
Title: Secretary
BA3DOCS1\0056105.01
EDGAR\BA3DOCS1\0057790.01
24
<PAGE>
ANNEX A
ADVISORY AND ADMINISTRATIVE SERVICES AGREEMENT
THE CHAPMAN FUNDS, INC.
The World Trade Center-Baltimore
401 East Pratt Street
Suite 2800
Baltimore, Maryland 21202
[ ],
1997
Chapman Capital Management, Inc.
The World Trade Center-Baltimore
401 East Pratt street
Suite 2800
Baltimore, Maryland 21202
Dear Sirs:
This will confirm the agreement between the undersigned
(the "Company") and you as follows:
1. General. The Company is an open-end investment
company which currently has two investment portfolios -- The
Chapman US Treasury Money Fund and The Chapman Institutional Cash
Management Fund (individually, a "Fund" and collectively,
"Funds"). The Company proposes to engage in the business of
investing and reinvesting the assets of each Fund in the manner
and in accordance with the investment objectives, policies and
limitations specified with respect to each Fund in the Company's
Prospectus and Statement of Additional Information (the
"Prospectus") included in the Company's Registration Statement,
as amended from time to time (the "Registration Statement"),
filed under the Investment Company Act of 1940, as amended (the
"1940 Act"), and the Securities Act of 1933, as amended. Copies
of the Prospectus have been furnished to you. Any amendments to
the Prospectus shall be furnished to you promptly.
25
<PAGE>
2. Advisory Services. Subject to the supervision and
approval of the Company's Board of Directors, you will provide
investment management of each Fund's portfolio in accordance with
such Fund's investment objectives, policies and limitations as
stated in the Prospectus as from time to time in effect. In
connection therewith, you will obtain and provide investment
research and will supervise each Fund's investments and conduct a
continuous program of investment, evaluation and, if appropriate,
sale and reinvestment of such Fund's assets. You will place
orders for the purchase and sale of portfolio securities and will
solicit brokers to execute transactions, including The Chapman
Co., in accordance with the Funds' policies and restrictions
regarding brokerage allocations. You will furnish to each Fund
such statistical information with respect to the investments
which such Fund may hold or contemplate purchasing as the Fund
may reasonably request.
3. Administrative Services. You will supply office
facilities, data processing services, clerical, accounting and
bookkeeping services, internal auditing services, executive and
other administrative services; provide stationery and office
supplies; prepare reports to each Fund's stockholders, tax
returns and reports to and filings with the Securities and
Exchange Commission and state Blue Sky authorities; calculate the
net asset value of each Fund's shares; provide persons to serve
as the Company's officers and generally assist in all aspects of
each Fund's operations.
4. Assistance. You may employ or contract with other
persons to assist you in the performance of this Agreement. Such
persons may include other investment advisory or management firms
and officers or employees who are employed by both you and the
Company. The fees or other compensation of such persons shall be
paid by you and no obligation may be incurred on the Company's
behalf to any such person.
5. Fees. In consideration of the advisory services
rendered pursuant to this Agreement, each Fund will pay you on
the first business day of each month a fee at the annual rate of
.5 of 1% of the value of the Fund's average daily net assets
during the preceding month. In consideration of the
administrative services rendered pursuant to this Agreement, each
26
<PAGE>
Fund will pay you on the first business day of each month a fee
at the annual rate of .1 of 1% of the value of such Fund's
average daily net assets during the preceding month. Net asset
value shall be computed in the manner, on such days and at such
time or times as described in the Funds' Prospectus from time to
time. The fee for the period from the effective date of the
Registration Statement to the end of the first month thereafter
shall be pro-rated according to the proportion which such period
bears to the full monthly period, and upon any termination of
this Agreement before the end of any month, the fee for such part
of a month shall be pro-rated according to the proportion which
such period bears to the full monthly period and shall be payable
upon the date of termination of this Agreement.
6. Expenses:
(a) You will bear all expenses in connection with
the performance of your services under this Agreement. All other
expenses to be incurred in the operation of the Funds will be
borne by the Funds, except to the extent specifically assumed by
you. The expenses to be borne by the Funds include, without
limitation, the following: organizational costs, taxes,
interest, brokerage fees and commissions and other expenses in
any way related to the execution, recording and settlement of
portfolio security transactions, fees of Directors who are not
also your officers, Securities and Exchange Commission fees,
state Blue Sky qualification fees, charges of custodians,
transfer and dividend paying agents' premiums for directors and
officers liability insurance, costs of fidelity bonds, industry
association fees, outside auditing and legal expenses, costs of
maintaining corporate existence, costs of maintaining required
books and accounts, costs attributable to investor services
(including, without limitation, telephone and personnel
expenses), costs of shareholders' reports and meetings, costs of
preparing, printing and mailing share certificates, proxy
statements and prospectuses, and any extraordinary expenses.
(b) You will bear or will pay all expenses of
each Fund (excluding income, excise and other taxes and any
extraordinary expenses) to the extent they exceed .75% of the
average daily net assets of the Fund in any year. Such expenses
may be borne through a reduction in the advisory and
27
<PAGE>
administrative fees payable pursuant to this Agreement and will
not exceed the total of such fee. Reductions or payments, if
any, will be estimated, reconciled, and effected or paid monthly.
If in any month such expenses do not, on an annual basis, exceed
.75% of the average daily net assets of such Fund during such
month, any prior reductions or payments shall be repaid to
Advisor to the extent such repayment shall not cause the expenses
of such Fund to exceed .75% of the average daily net assets of
such Fund during such month. The expense limitation set forth in
this subparagraph 6(b) shall be in effect until December 31, 1997
at which time it may be extended as is, increased, decreased or
eliminated solely at your option. Notwithstanding the provisions
of this subparagraph 6(b), you may, at your option at any time
and from time to time, without the agreement of either Fund,
further lower the expense limitation for such periods as you see
fit.
(c) If in any fiscal year the aggregate expenses
of a Fund (including fees paid to you pursuant to this Agreement,
but excluding interest on borrowings, taxes, brokerage and, with
the prior written consent of the necessary state securities
commissions, extraordinary expenses) exceed the expense
limitation of any state having jurisdiction over a Fund, such
Fund may deduct from the payment to be made to you under this
Agreement, or you will bear, such excess expense to the extent
required by state law. Your obligation pursuant hereto will be
limited to the amount of your fees hereunder. Such deduction or
payment, if any, will be estimated, reconciled and effected or
paid, as the case may be, on a monthly basis.
7. Liability. You shall exercise your best judgment
in rendering the services to be provided to each Fund. Each Fund
agrees as an inducement to you and to others who may assist you
in providing services to the Funds that you and such other
persons shall not be liable for any error of judgment or mistake
of law or for any loss suffered by such Fund or the Company and
each Fund and the Company agree to indemnify and hold harmless
you and such other persons against and from any claims,
liabilities, actions, suits, proceedings, judgments or damages
(and expenses incurred in connection therewith, including the
reasonable cost of investigating or defending same, including,
but not limited to attorneys' fees) arising out of any such error
28
<PAGE>
of judgment or mistake of law or loss; provided that nothing
herein shall be deemed to protect or purport to protect you or
any other such person against any liability to the Company or to
its security holders to which you or they would otherwise be
subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties hereunder, or by reason
of reckless disregard of the obligations and duties hereunder.
8. Other Accounts. The Company understands that you
and other persons with whom you contract to provide the services
hereunder may from time to time act as investment adviser to one
or more other investment companies and fiduciary or other managed
accounts, and the Company has no objection to your or their so
acting. When purchase or sale of securities of the same issuer
is suitable for the investment objectives of two or more
companies or accounts managed by you or such other persons which
have available funds for investment, the available securities
will be allocated in a manner believed by you and such other
persons to be equitable to each company or account. It is
recognized that in some cases this procedure may adversely affect
the price paid or received by a Fund or the size of the position
obtainable for or disposed of by a Fund.
In addition, it is understood that you and the persons
with whom you contract to assist in the performance of your
duties hereunder will not devote their full time to such service
and nothing contained herein shall be deemed to limit or restrict
your or their right to engage in and devote time and attention to
similar or other businesses.
9. Term. This Agreement shall continue with respect
to each Fund until December 29, 1998 and thereafter shall
continue automatically for successive annual periods ending on
the anniversary of such date, provided such continuance with
respect to each Fund is specifically approved at least annually
by the Company's Board of Directors or vote of the lesser of (a)
67% of the shares of such Fund represented at a meeting if
holders of more than 50% of the outstanding shares of the Fund
are present in person or by proxy or (b) more than 50% of the
outstanding shares of such Fund, provided that in either event
its continuance also is approved by a majority of the Company's
Directors who are not "interested persons" (as defined in the
29
<PAGE>
1940 Act) of any party to this Agreement, by vote cast in person
at a meeting called for the purpose of voting on such approval.
This Agreement is terminable with respect to either Fund or both
Funds without penalty, on 60 days' notice, by you or by the
Company's Board of Directors or by vote of the lesser of (a) 67%
of the shares of such Fund represented at a meeting if holders of
more than 50% of the outstanding shares of the Fund are present
in person or by proxy or (b) more than 50% of the outstanding
shares of such Fund. This Agreement will terminate automatically
in the event of its assignment (as defined in the 1940 Act).
10. "Chapman" Name. The Company recognizes that from
time to time your directors, officers and employees may serve as
directors, trustees, partners, officers and employees of other
corporations, business trusts, partnerships or other entities
(including other investment companies) and that such other
entities may include the name "Chapman" as part of their name.
You or your affiliates may enter into investment advisory or
other agreements with such other entities. If you cease to act
as the Company's investment adviser, the Company agrees that, at
your request, the Company will take all necessary action to
change the name of the Company and its Funds to a name not
including "Chapman" in any form or combination of words.
If the foregoing is in accordance with your
understanding, will you kindly so indicate by signing and
returning to us the enclosed copy hereof.
Very truly yours,
THE CHAPMAN FUNDS, INC.
By: /s/NATHAN A. CHAPMAN, JR.
Name: Nathan A. Chapman, Jr.,
Title: President
Accepted:
CHAPMAN CAPITAL MANAGEMENT, INC.
By: /s/NATHAN A. CHAPMAN, JR.
Name: Nathan A. Chapman, Jr.
Title: President
30
<PAGE>
ANNEX B
DISTRIBUTION AGREEMENT
WHEREAS, The Chapman Funds, Inc., a Maryland
corporation (the "Company"), desires to enter into an agreement
regarding the distribution of the shares (the "Shares") of the
Company's two investment portfolios: The Chapman US Treasury
Money Fund and The Chapman Institutional Cash Management Fund
(collectively, the "Funds"); and
WHEREAS, the Company has agreed that The Chapman Co.,
Inc. (the "Distributor"), a Maryland corporation, shall act as
the exclusive distributor of the Shares;
WHEREAS, the Distributor agrees to act as the exclusive
distributor of the Shares for the period of this Distribution
Agreement (the "Agreement").
NOW, THEREFORE, in consideration of the agreements
hereinafter contained, it is agreed as follows:
1. Services as Distributor.
1.1 The Distributor shall use reasonable efforts
to promote the Company and to solicit orders for the purchase of
Shares and shall undertake such advertising and promotion as it
believes reasonable in connection with such solicitation.
Distributor shall be the exclusive distributor of the Shares.
The Distributor shall sell the Shares only at the offering price
at the time of such sale (computed in the manner described in the
Funds' then effective prospectus), and the Funds shall receive
not less than the full net asset value per share for all the
Shares sold. No sales charge shall be imposed on sales of any
Shares. The Company agrees, provided that the Shares may be
legally issued, to fill all orders confirmed by the Distributor
in accordance with the provisions of this Agreement.
1.2 The Distributor shall conduct the offering of
Shares and other activities pursuant hereto in strict accordance
with the Registration Statement and the applicable requirements
31
<PAGE>
of the Articles of Incorporation and the By-Laws of the Company,
as each may be from time to time amended, and in strict
accordance with all applicable state and federal statutes, rules
and regulations, including in particular, the Investment Company
Act of 1940 as amended (the "1940 Act"), the Securities Act of
1933 as amended (the "Securities Act"), the Securities Exchange
Act of 1934 as amended (the "Exchange Act"), the rules and
regulations of the Securities Exchange Commission promulgated
under the 1940 Act, the Securities Act and the Exchange Act, the
applicable rules and regulations of any securities association
registered under the Exchange Act, and all applicable state Blue
Sky laws, rules and regulations.
1.3 The Distributor shall transmit any orders
received by it for purchase or redemption of Shares to the
Company's transfer agent and custodian, process inquiries from
stockholders and communicate with the Company and transfer agent
on behalf of stockholders.
1.4 The Distributor shall bear all its expenses
in connection with the performance of this Agreement, including,
but not limited to, the printing and distribution of prospectuses
included in the Registration Statement as defined below to
stockholders other than to existing stockholders and shall
receive no reimbursement or compensation in connection therewith
from the Company therefor.
2. Duties of the Company.
2.1 The Company agrees to file all required
reports with the Securities and Exchange Commission in a timely
manner and to maintain on file with the Securities and Exchange
Commission a current prospectus and statement of additional
information during the term of this Agreement.
2.2 The Company agrees at its own expense to
execute any and all documents and to furnish, at its own expense,
any and all documents and all information and otherwise to take
all actions that may be reasonably necessary in connection with
the qualification of Shares for sale in such states as the
Company and the Distributor may designate.
32
<PAGE>
2.3 The Company shall furnish from time to time,
for use in connection with the sale of Shares such information
with respect to the Funds and the Shares as the Distributor may
reasonably request; and the Company warrants that any such
information shall be true and correct.
3. Representations of the Company.
3.1 The Company represents to the Distributor
that any registration statement, prospectus, and statement of
additional information filed with the Commission and any
amendments and supplements thereto (the "Registration Statement")
with respect to the Shares have been prepared in conformity with
the requirements of the Securities Act, the 1940 Act and the
rules and regulations of the Commission thereunder. The Company
represents and warrants to the Distributor that any Registration
Statement, when such becomes effective, will contain all
statements required to be stated therein in conformity with the
Securities Act, the 1940 Act and the rules and regulations of
Commission; that all statements of fact contained in such
Registration Statement will be true and correct when such becomes
effective; and that no Registration Statement, when such becomes
effective will include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading to a
purchaser of Shares.
4. Indemnification.
4.1 The Company shall indemnify and hold harmless
the Distributor, each person, if any, who controls the
Distributor within the meaning of Section 15 of the Securities
Act, and any person with whom the Distributor enters into
agreements for the sale of Shares of the Company or to prepare
sales literature for the Company against any loss, liability,
claim, damage or expense (including the reasonable cost of
investigating or defending any alleged loss, liability, claim,
damage or expense and counsel fees incurred in connection
therewith), insofar as such loss, liability, claim, damage,
expense, actions or proceedings in respect thereof arise out of
or are based upon an untrue statement of a material fact
contained in the Registration Statement then in effect, annual or
33
<PAGE>
interim reports to shareholders or sales literature used in
connection with the sale of Shares or omission to state a
material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading, unless such statement
or omission was made in reliance upon, and in conformity with,
written information furnished to the Company specifically for use
therein; provided, however, no person shall be entitled to
indemnity in the event of its willful malfeasance, bad faith or
gross negligence in the performance of its duties under this
Agreement or such other agreement or by reason of its reckless
disregard of its obligations and duties under this Agreement or
such other agreement.
5. Offering of Shares.
5.1 None of the Shares shall be offered by the
Distributor under this Agreement, and no orders for the purchase
or sale of Shares hereunder shall be accepted by the Company, if
and so long as the effectiveness of the Registration Statement or
any necessary amendments thereto shall be suspended under any of
the provisions of the Securities Act; provided, however, that
nothing contained in this paragraph 5.1 shall in any way restrict
or have any application to or bearing upon the Company's
obligation to redeem Shares from any shareholder in accordance
with the provisions of the Company's prospectus or Articles of
Incorporation. The Company shall notify the Distributor of any
suspension of the effectiveness of the Registration Statement.
6. Term.
6.1 Either party shall have the right to
terminate this Agreement upon sixty (60) days' written notice to
the other. This agreement shall become effective as of the date
hereof and shall continue in effect, unless sooner terminated as
herein provided, until December 29, 1998, and from year to year
thereafter if such continuance is approved at least annually in
the manner required by the 1940 Act. This Agreement shall
terminate automatically in the event of its assignment (as
defined in the 1940 Act).
34
<PAGE>
7. Miscellaneous
7.1 This Agreement shall be governed by the laws
of the State of Maryland.
7.2 The captions in this Agreement are included
for convenience of reference only and in no way define or delimit
any of the provisions hereof or otherwise affect their
constructions or effect.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below as
of the [ ] day of [ ], 1997.
THE CHAPMAN FUNDS, INC.
By:______________________________
THE CHAPMAN CO.
By:______________________________
35
<PAGE>
THE CHAPMAN FUNDS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Nathan A. Chapman, Jr. and Earl
U. Bravo, Sr., or either of them, the proxy or proxies of the
undersigned with full powers of substitution, to vote all shares
of Common Stock of The Chapman Funds, Inc. held of record by
the undersigned at the close of business on April 14, 1997, at
the Annual Meeting of Stockholders of the Company to be held on
Wednesday, April 30, 1997 at 11:00 a.m., local time and at any
adjournment or adjournments thereof, upon the matters set forth
herein.
PLEASE MARK YOUR CHOICE IN BLUE OR BLACK INK, PLEASE SIGN, DATE
AND RETURN THIS PROXY PROMPTLY USING THE ACCOMPANYING ENVELOPE
Please If properly executed, the shares represented
mark by this proxy will be voted in the manner
votes directed herein by the undersigned
as in stockholder, or to the extent directions are
this not given, such shares will be voted FOR each
example of the nominees and each other proposal.
The Board of Directors recommends a vote "FOR" the nominees
listed below and a vote "FOR" Proposals 2, 3 and 4.
1. ELECTION OF DIRECTORS.
Nominees: Nathan A. Chapman, Jr., Wilfred
Marshall, James B. Lewis, Levi Watkins, Jr., Lottie
H. Shackelford, David E. Rivers, Ronald A. White
and Benjamin Hooks
FOR ALL NOMINEES LISTED WITHHOLD AUTHORITY FOR
(EXCEPT AS INDICATED) ALL NOMINEES LISTED
To withhold authority to vote for any nominee, write that
nominee's name in the space provided.
__________________________________________________________
36
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
For Against Abstain
2. APPROVAL OF THE INVESTMENT
ADVISORY AND ADMINISTRATIVE
SERVICES AGREEMENT BETWEEN
THE COMPANY AND CHAPMAN
CAPITAL MANAGEMENT, INC.
3. APPROVAL OF THE DISTRIBUTION
AGREEMENT BETWEEN THE
COMPANY AND THE CHAPMAN CO.
4. RATIFICATION OF APPOINTMENT
OF ERNST & YOUNG AS
INDEPENDENT AUDITORS.
5. IN THEIR DISCRETION, THE
PROXIES ARE AUTHORIZED TO
VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY
COME BEFORE THE MEETING OR
ANY ADJOURNMENT THEREOF.
</TABLE>
MARK HERE FOR
___________________ ADDRESS
____________ CHANGE AND NOTE
SUCH CHANGE
___________________ AT LEFT
____________
Please sign. Persons acting in a fiduciary capacity should so
indicate. PLEASE NOTE any change of address and supply any
missing Zip Code number.
Signature: Date:
Signature: Date:
37
