<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
The Legends Fund, 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):
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(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):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[X] 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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Notes:
<PAGE>
THE LEGENDS FUND, INC.
200 East Wilson Bridge Road
Worthington, Ohio 43085
PINNACLE FIXED INCOME PORTFOLIO
____________________________________
Notice of Special Meeting of Shareholders
____________________________________
To the Shareholders of the Pinnacle Fixed Income Portfolio (formerly the
Mitchell Hutchins Fixed Income Portfolio) of The Legends Fund, Inc.:
A special meeting of shareholders of the Pinnacle Fixed Income Portfolio
(the "Portfolio") of The Legends Fund, Inc. (the "Fund") will be held at 239 S.
Fifth Street, Louisville, Kentucky 40202, on Friday, May 17, 1996, at 3:00 p.m.,
Eastern Time, for the following purposes:
1. To approve or disapprove amendments to the Management Agreement between the
Fund and ARM Capital Advisors, Inc. (the "Manager"), including a reduction
of the investment advisory fee for the Portfolio.
2. To approve or disapprove the Sub-Advisory Agreement between the Manager and
J.P. Morgan Investment Management Inc. ("J.P. Morgan"), as sub-adviser for
the Portfolio.
3. To transact such other matters as may properly come before the meeting or
any adjournment thereof.
The Board of Directors of the Fund has fixed the close of business on April
10, 1996 as the record date for determining the number of shares outstanding and
the certificate holders entitled to give voting instructions with respect to the
Portfolio.
By Order of the Board of Directors,
Kevin L. Howard
Secretary
April 15, 1996
EACH CERTIFICATE HOLDER IS URGED TO EXERCISE THE RIGHT TO GIVE VOTING
INSTRUCTIONS FOR THE SPECIAL MEETING OF SHAREHOLDERS OF THE PORTFOLIO BY FILLING
IN, DATING AND SIGNING THE ENCLOSED VOTING INSTRUCTIONS FORM AND RETURNING IT IN
THE RETURN ENVELOPE PROVIDED.
<PAGE>
THE LEGENDS FUND, INC.
200 East Wilson Bridge Road
Worthington, Ohio 43085
PINNACLE FIXED INCOME PORTFOLIO
____________________________________
PROXY STATEMENT
Special Meeting of Shareholders
May 17, 1996, 3:00 p.m.
____________________________________
The Legends Fund, Inc. (the "Fund") was incorporated in Maryland on
July 22, 1992, under the name "Integrity Series Fund, Inc." and is an open-end
management investment company registered under the Investment Company Act of
1940, as amended (the "1940 Act"). It is a series-type investment company
currently consisting of ten investment portfolios, including the Pinnacle Fixed
Income Portfolio (formerly the Mitchell Hutchins Fixed Income Portfolio, and
referred to herein as the "Portfolio"). Shares of the Portfolio are offered to
Separate Account II of Integrity Life Insurance Company ("Integrity") and
Separate Account II of National Integrity Life Insurance Company ("National
Integrity"), a wholly-owned subsidiary of Integrity, for the investment of
contributions under certain variable annuity contracts and certificates
("certificates") issued by Integrity and National Integrity.
This Proxy Statement is being furnished, on or about April 15, 1996,
on behalf of the Board of Directors of the Fund to the shareholders of the
Portfolio for their use in obtaining voting instructions from the certificate
holders on the proposals to be considered at a special meeting of shareholders
of the Portfolio scheduled to be held at 239 S. Fifth Street, Louisville,
Kentucky 40202, on Friday, May 17, 1996, at 3:00 p.m. The Board of Directors
has fixed the close of business on April 10, 1996 as the record date (the
"Record Date") for determining the number of shares outstanding and the
certificate holders entitled to give voting instructions to Integrity and
National Integrity.
At the Record Date, the total number of shares of the Portfolio
outstanding was 452,581.151, of which 309,001.020 shares (approximately 68%)
were held by Separate Account II of Integrity and 143,580.131 shares
(approximately 32%) were held by Separate Account II of National Integrity.
Based upon information supplied to the Fund, as of the Record Date, John Ray,
P.O. Box 640550, Kenner, Louisiana 70064 and Marion Clinchy, 4089 Nesconset
Highway #227, Centereach, New York 11720, had allocated, respectively,
contributions under variable annuity contracts such that upon the pass-through
of voting rights by Integrity and National Integrity, they would have the right
to give voting instructions with respect to 26,221.340 shares (approximately 6%)
and 26,507.19 shares (approximately 6%) of the Fund. Other than the foregoing,
as of the Record Date, no person or "group" (as such term is defined in the
Securities Exchange Act of 1934, as amended, and the rules thereunder) were
known to the Fund to have allocated contributions under their variable annuity
contracts such that, upon the pass-
<PAGE>
through of voting rights by Integrity and National Integrity, they would have
the right to give voting instructions with respect to more than 5% of the
outstanding shares of the Portfolio. The Directors and officers of the Fund,
both individually and as a group, own less than 1% of the Portfolio's
outstanding shares.
The Fund expects that the solicitation of voting instructions from
certificate holders will be made by mail, and solicitation also may be made by
telephone communications from employees of ARM Capital Advisors, Inc. (the
"Manager"), the Fund's investment manager, or its affiliates, who will not
receive compensation for such services. All costs of the meeting and soliciting
proxies will be borne by the Portfolio.
Integrity and National Integrity, the holders of record of shares of
the Portfolio, are required to "pass through" to their certificate holders the
right to vote shares of the Portfolio. The Fund expects that Integrity and
National Integrity will solicit voting instructions from their certificate
holders and that Integrity and National Integrity will vote 100% of the shares
of the Portfolio held by their respective Separate Accounts. Integrity and
National Integrity will vote shares of the Portfolio for which no instructions
have been received in the same proportion as they vote shares for which they
have received instructions. Abstentions will have the effect of a negative vote
on a proposal. Unmarked voting instructions from certificate holders will be
voted in favor of the proposals. Integrity and National Integrity, as record
shareholders of the Portfolio, may adjourn the meeting of shareholders for a
period or periods of not more than 60 days in the aggregate if necessary to
obtain additional voting instructions from certificate holders. The cost of
preparing and distributing to certificate holders additional proxy materials if
required in connection with any adjournment will be borne by the Portfolio.
Proxies executed by shareholders may be revoked by a written
instrument received by the Secretary of the Fund at any time before they are
exercised, by the delivery of a later-dated proxy or by attendance at the
meeting and voting in person. Pursuant to the Fund's Articles of Incorporation,
the presence in person or by proxy of the holders of record of one-third of the
shares issued and outstanding and entitled to vote at a meeting shall constitute
a quorum for the transaction of business at such meeting. Approval of Proposals
Nos. 1 and 2 will require the affirmative vote of the lesser of (1) more than
50% of the outstanding shares of the Portfolio, or (2) 67% or more of the shares
of the Portfolio present at the meeting, in person or by proxy, if the holders
of 50% or more of the outstanding shares of the Portfolio are present or
represented by proxy.
As described in more detail below, the purpose of the meeting is to
seek shareholder approval of recent changes to the Portfolio's advisory
arrangements, including amendments to the Investment Management Agreement
between the Fund and the Manager (the "Management Agreement") as it pertains to
the Portfolio, and a new Sub-Advisory Agreement pertaining to the Portfolio
between the Manager and J.P. Morgan Investment Management Inc. ("J.P. Morgan").
The new arrangements became effective April 1, 1996. The information contained
in this Proxy Statement concerning J.P. Morgan has been provided by J.P. Morgan
for use in this Proxy Statement.
2
<PAGE>
EACH CERTIFICATE HOLDER IS URGED TO EXERCISE THE RIGHT TO GIVE VOTING
INSTRUCTIONS FOR THE SPECIAL MEETING OF SHAREHOLDERS OF THE PORTFOLIO BY FILLING
IN, DATING AND SIGNING THE VOTING INSTRUCTIONS FORM FOR THE PORTFOLIO AND
RETURNING THE FORM IN THE RETURN ENVELOPE PROVIDED.
3
<PAGE>
THE ADVISORY ARRANGEMENTS OF THE PORTFOLIO
Pursuant to the Management Agreement, the Manager serves as investment
manager of the Fund and each investment portfolio thereof (including the
Portfolio) and in connection therewith is authorized to enter into sub-advisory
agreements with registered investment advisers pursuant to which it may delegate
its obligations for providing investment advisory and certain other services in
connection with one or more of such investment portfolios.
On February 16, 1996, the Board of Directors of the Fund voted to
terminate the sub-advisory agreement with the then sub-adviser for the
Portfolio, Mitchell Hutchins Institutional Investors, Inc. ("MHII"), and
selected J.P. Morgan to be the new sub-adviser for the Portfolio. In connection
therewith, the Board of Directors voted to amend the Management Agreement
between the Fund and the Manager to reduce the annual advisory fee relating to
the Portfolio from .90% to.70% of average net assets, and approved a Sub-
Advisory Agreement with J.P. Morgan pursuant to which J.P. Morgan will be
compensated by the Manager (and not the Portfolio) for its services as sub-
adviser to the Portfolio at the annual rate of .50% of average net assets of the
Portfolio. (MHII was compensated at the annual rate of .75% of average net
assets for its services as sub-adviser to the Portfolio.) The Board of Directors
also called a special meeting of shareholders of the Portfolio for the purpose
of approving the new advisory arrangements.
The Sub-Advisory Agreement with MHII terminated effective as of March
31, 1996. As of April 1, 1996, J.P. Morgan became the sub-adviser for the
Portfolio under the new Sub-Advisory Agreement, and the name of the Portfolio
was changed from "Mitchell Hutchins Fixed Income Portfolio" to "Pinnacle Fixed
Income Portfolio." In addition, the amendment to the Management Agreement which
reduced the annual advisory fee rate became effective as of April 1, 1996. The
Manager has voluntarily agreed to waive a portion of its fee equal to .05% of
average net assets (on an annual basis), which waiver will remain in effect
until shareholder approval of Proposal No. 1 has been obtained.
Integrity served as investment manager of the Fund until January 31,
1996. The Manager assumed the duties and responsibilities of investment manager
to the Fund from Integrity on February 1, 1996, following an internal corporate
reorganization. Both the Manager and Integrity are wholly-owned subsidiaries of
ARM Financial Group, Inc. ("ARM"). The transaction involving the transfer of
duties and responsibilities from Integrity to the Manager did not result in a
change in the actual management or control of the investment manager of the
Fund; there was no change in the management or personnel actually providing
advisory services to the Fund; and there was no change in the terms of the
Fund's management agreement, including no change in the compensation received by
the investment manager. The Management Agreement is dated as of November 26,
1993, and was submitted to shareholders of the Fund for approval at a meeting
held November 3, 1993. The
4
<PAGE>
Management Agreement was reviewed and continued by the Directors of the Fund at
a meeting held November 3, 1995. Information concerning the Manager is contained
below under "Information About the Manager."
5
<PAGE>
PROPOSAL NO. 1: APPROVAL OR DISAPPROVAL OF PROPOSED
AMENDMENTS TO MANAGEMENT AGREEMENT
The principal amendment to the Management Agreement reflects a
reduction in the annual advisory fee rate relating to the Portfolio from .90%
to.70% of average net assets. The other amendments make certain changes
appropriate to reflect the change in the name of the Portfolio and the change in
the sub-adviser to the Portfolio. Other than the foregoing, there is no change
to the terms of the Management Agreement in respect of the Portfolio.
Information concerning the advisory fees for the Portfolio, and the effect
thereon of the amendment to the Portfolio's advisory fee under the Management
Agreement, is contained below under "General Information -Information About the
Portfolio's Management Fees."
Pursuant to the Management Agreement, the Manager is responsible,
among other things, for general supervision of the respective sub-advisers,
including J.P. Morgan, subject to general oversight by the Fund's Board of
Directors. In addition, the Manager is obligated to keep certain books and
records of the Fund and administers the Fund's corporate affairs. In connection
therewith, the Manager furnishes the Fund with office facilities, together with
those ordinary clerical and bookkeeping services which are not being furnished
by the Fund's custodians or transfer and dividend disbursing agent.
Under the terms of the Management Agreement, the Portfolio bears all
expenses incurred in its operation that are not specifically assumed by the
Manager or SBM Financial Services, Inc. ("SBMFS"), the Fund's distributor.
General expenses of the Fund not readily identifiable as belonging to one of the
portfolios are allocated among the portfolios by or under the direction of the
Board of Directors in such manner as the Board determines to be fair and
equitable. Expenses borne by the Portfolio include, but are not limited to, the
following (or the Portfolio's allocated share of the following): (1) the cost
(including brokerage commissions, if any) of securities purchased or sold by the
Portfolio and any losses incurred in connection therewith; (2) investment
management fees; (3) organizational expenses; (4) filing fees and expenses
relating to the registration and qualification of the Fund or the shares of the
Portfolio under federal or state securities laws and maintenance of such
registrations and qualifications; (5) fees and expenses payable to the Directors
who are not interested persons (as defined in the 1940 Act) of the Fund or the
Manager, Integrity, National Integrity or any sub-adviser; (6) taxes (including
any income or franchise taxes) and governmental fees; (7) costs of any
liability, directors' and officers', uncollectable items of deposit and other
insurance and fidelity bonds; (8) legal, accounting and auditing expenses; (9)
charges of custodians, transfer agents and other agents; (10) expenses of
setting in type and providing a camera-ready copy of prospectuses and
supplements thereto, expenses of setting in type and printing or otherwise
reproducing statements of additional information and supplements thereto and
reports and proxy materials for existing shareholders; (11) any extraordinary
expenses (including fees and disbursements of counsel) incurred by the Fund or
the Portfolio; (12) fees, voluntary assessments and other expenses incurred in
connection with membership in investment company organizations; and (13) costs
of meetings of shareholders.
6
<PAGE>
The Manager voluntarily limits the expenses of the Portfolio, other
than for brokerage commissions and the investment management fee, to .50% of
average net assets on an annualized basis. The Manager's reimbursement of
Portfolio expenses results in an increase to the Portfolio's yield and total
return. The Manager has reserved the right to withdraw or modify its policy of
expense reimbursement for the Portfolio.
CONSIDERATIONS OF THE DIRECTORS
The Directors of the Fund believe that the amendments to the
Management Agreement are in the best interests of the Portfolio and its
shareholders.
In considering the amendments to the Management Agreement, the
Directors, including the Directors who are not interested persons of the Fund
(as defined in the 1940 Act) (the "Disinterested Directors"), were provided such
information as they deemed necessary in order to enable them to consider whether
the amendments were in the best interests of the Portfolio and its shareholders.
In connection with the Directors' consideration of the amendments, the Manager
represented that there would be no diminution in the quality or scope of
services under the Management Agreement as proposed to be amended. Upon
consideration of the information presented to them, and based upon the foregoing
representations, the Directors concluded that because there were no material
changes to the terms of the Management Agreement with respect to the Portfolio
in connection with the reduction in investment advisory fee, the reduction in
the fee in the present instance was in the best interests of the Portfolio and
its shareholders because it could result in an overall benefit to shareholders
by producing a reduction in the Portfolio's overall expense ratio without
resulting in any reduction in the services provided to the Portfolio.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR
PROPOSAL NO. 1.
PROPOSAL NO. 2: APPROVAL OR DISAPPROVAL OF
THE NEW SUB-ADVISORY AGREEMENT FOR THE PORTFOLIO
As discussed above, on February 16, 1996 the Board of Directors voted
to terminate the Sub-Advisory Agreement with MHII (the "Old Sub-Advisory
Agreement") and selected J.P. Morgan to be the new sub-adviser for the
Portfolio. In connection therewith, the Board of Directors approved a Sub-
Advisory Agreement with J.P. Morgan (the "New Sub-Advisory Agreement") pursuant
to which J.P. Morgan will be compensated by the Manager for its services as sub-
adviser to the Portfolio at the annual rate of .50% of average net assets of the
Portfolio (reflecting a reduction from the fee paid to MHII, which fee was
payable at the annual rate of .75% of average net assets of the Portfolio).
Information concerning the fee paid by the Manager to J.P. Morgan in respect of
the Portfolio, and the effect of the reduction in the sub-adviser's fee is
contained below under "General Information - Information About the Portfolio's
Management Fees."
7
<PAGE>
COMPARISON OF THE OLD SUB-ADVISORY AGREEMENT AND THE NEW SUB-ADVISORY AGREEMENT
The terms of the New Sub-Advisory Agreement are substantially the same
in all material respects to the terms of the Old Sub-Advisory Agreement. The
principal difference is the reduction of the annual rate of the fee payable
thereunder from .70% to .50% of average net assets of the Portfolio. The New
Sub-Advisory Agreement is attached to this proxy statement as Appendix A. The
following is a comparison of the material terms of the two agreements:
Advisory Services. Both the Old and New Sub-Advisory Agreements
provide that the sub-adviser will provide a continuous investment program for
the Portfolio, including investment research with respect to all securities and
investments and cash equivalents in the Portfolio.
Payments of Expenses and Transaction Charges. Under both the Old and
New Sub-Advisory Agreements, the sub-adviser agrees to assume and pay all of the
costs and expenses of performing its obligations thereunder.
Limitation of Liability. Both the Old and New Sub-Advisory Agreements
provide that the sub-adviser and any of its affiliated persons will not be
liable for, or subject to any damages, expenses, or losses in connection with,
any act or omission connected with or arising out of any services rendered
thereunder, except by reason of willful misfeasance, bad faith, or gross
negligence in the performance of the sub-adviser's duties, or by reason of
reckless disregard of the sub-adviser's obligations and duties thereunder.
Term. The Old Sub-Advisory Agreement provides that it will continue
from year to year, provided that its continuation is annually approved (an
"annual approval") by a majority of the Directors of the Fund, including a
majority of the Disinterested Directors, cast in person at a meeting called for
the purpose of voting on such approval. The New Sub-Advisory Agreement provides
that it will remain in effect until November 26, 1997, and thereafter subject to
such annual approval.
Termination; Assignment. Both the Old and New Sub-Advisory Agreements
provide that they may be terminated at any time without penalty upon 60 days'
written notice by the sub-adviser, the Fund's investment manager, the Directors
of the Fund, or by the affirmative vote of the holders of a "majority of the
outstanding voting securities" of the Portfolio (as defined in the 1940 Act).
Both Agreements also provide that they will automatically terminate in the event
of their assignment (as defined in the 1940 Act) or termination of the
Management Agreement.
CONSIDERATIONS OF THE DIRECTORS
The Directors of the Fund believe that the New Sub-Advisory Agreement
between the Manager and J.P. Morgan is in the best interests of the Portfolio
and its shareholders.
In approving the New Sub-Advisory Agreement, the Directors, including
the Disinterested Directors, considered, among other factors, the similarity of
the terms of the New Sub-Advisory
8
<PAGE>
Agreement to the terms of the Old Sub-Advisory Agreement. In connection with
such consideration, the Directors concluded that although the rate of the fee
payable to J.P. Morgan was less than that payable to the sub-adviser under the
Old Sub-Advisory Agreement, there did not appear to be any reduction in the
proposed level of services to be provided. The Directors also considered the
investment performance of J.P. Morgan in respect of its other investment company
clients, and representations by J.P. Morgan as to its financial condition and
the overall commitment of J.P. Morgan and its affiliates to the investment
advisory business. Based upon these factors, and upon the information provided
by J.P. Morgan, the Directors concluded that J.P. Morgan would provide high
quality investment advisory services to the Portfolio at a lower fee than
previously in effect.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR
PROPOSAL NO. 2.
GENERAL INFORMATION
INFORMATION ABOUT THE PORTFOLIO'S MANAGEMENT FEES
For the fiscal year ended June 30, 1995, the Portfolio paid Integrity,
as investment manager, a fee of $45,180, of which $37,650 was paid to MHII. In
addition, for the fiscal year ended June 30, 1995, Integrity reimbursed the
Portfolio for aggregate expenses in the amount of $9,482.
If the amended Management Agreement and New Sub-Advisory Agreement,
and the new reduced fee rates thereunder, had been in effect during the fiscal
year ended June 30, 1995, the total fees paid to the Manager by the Portfolio
would have been $35,140, of which $25,100 would have been paid to the sub-
adviser. These fees would have amounted to reductions of 22% and 33%,
respectively, from the fees actually paid during such fiscal year.
INFORMATION ABOUT J.P. MORGAN
J.P. Morgan is an investment manager for corporate, public, and union
employee benefit funds, foundations, endowments, insurance companies, government
agencies and the accounts of other institutional investors. A wholly-owned
subsidiary of J.P. Morgan & Co. Incorporated ("Morgan"), J.P. Morgan was
incorporated in the state of Delaware on February 7, 1984 and commenced
operations on July 2, 1984. It was formed from the Institutional Trust and
Investment Division of Morgan Guaranty Trust Company of New York ("Morgan
Guaranty"), also a wholly-owned subsidiary of Morgan. The principal business
address of J.P. Morgan is 522 Fifth Avenue, New York, New York 10036.
Morgan acquired its first tax-exempt client in 1913 and its first
pension account in 1940. J.P. Morgan's assets under management have grown to
over $139 billion as of December 31, 1995. With offices around the globe, J.P.
Morgan draws from a worldwide resources base to provide comprehensive investment
management services to an international group of clients. Investment
9
<PAGE>
management activities in Japan, Australia, and Germany are carried out by
affiliates: J.P. Morgan Trust Bank Limited in Tokyo, J.P. Morgan Investment
Management Australia Limited in Melbourne, and J.P. Morgan Investment GmbH in
Frankfurt.
The following persons are primarily responsible for the day-to-day
management and implementation of J.P. Morgan's process for the Portfolio (their
business experience for the past 5 years is indicated parenthetically): Ronald
Arons, Vice President (employed by J.P. Morgan since September 1994, previously
a portfolio manager with MetLife Investment Management Corp.) and Arun Lyng,
Vice President (employed by J.P. Morgan since March 1992, previously a portfolio
manager with Aetna Capital Markets).
The names, positions with J.P. Morgan and principal occupations of the
persons who are its principal executive officers and its directors are as shown
below. Unless otherwise indicated, the business address of each such person is
522 Fifth Avenue, New York, New York 10036:
<TABLE>
<CAPTION>
Name and Address Position with J.P. Morgan and Principal Occupation
- ---------------------------------------------------------------------------------------------
<S> <C>
Kenneth W. Anderson Director and Managing Director, J.P. Morgan;
J.P. Morgan Investment Management Inc. Managing Director, Morgan Guaranty
28 King Street
London SW1Y 6XA
United Kingdom
Robert A. Anselmi Director, Managing Director, General Counsel and
Secretary, J.P. Morgan: Managing Director and
Assistant Secretary, Morgan Guaranty
George E. Austin Managing Director, J.P. Morgan; Managing Director,
Morgan Guaranty
Jean L.P. Brunel Director, J.P. Morgan; Managing Director, Morgan
Guaranty
William L. Cobb, Jr. Director, Vice Chairman and Managing Director, J.P.
Morgan; Managing Director, Morgan Guaranty
Louis George Gardella Managing Director, J.P. Morgan; Managing Director,
Morgan Guaranty
Michael R. Granito Director and Managing Director, J.P. Morgan;
Managing Director, Morgan Guaranty
Thomas M. Luddy Director and Managing Director, J.P. Morgan;
Managing Director, Morgan Guaranty
Michael E. Patterson Director, J.P. Morgan; Vice Chairman and Director,
J.P. Morgan & Co. Incorporated Morgan and Morgan Guaranty
60 Wall Street
New York, New York 10260-0060
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Name and Address Position with J.P. Morgan and Principal Occupation
- ----------------------------------------------------------------------------------------------
<S> <C>
C. Nicholas Potter Chairman of the Board and Director, J.P. Morgan;
Managing Director, Morgan Guaranty
Keith M. Schappert President, Director and Managing Director, J.P.
Morgan; Managing Director, Morgan Guaranty
M. Steven Soltis Director, Managing Director and Chief
Administrative
and Financial Officer, J.P. Morgan; Managing
Director, Morgan Guaranty
John R. Thomas Director, J.P. Morgan; President, Director and
J.P. Morgan Trust Bank Ltd. Managing Director, J.P. Morgan Trust Bank Ltd.
Akasaka Park Building
2-20, Akasaka 5-chome
Minato-ku, Tokyo, Japan
</TABLE>
Following is table setting forth the registered investment companies
having similar investment objectives to the Portfolio for which J.P. Morgan
serves as sub-adviser, including the fees payable to J.P. Morgan on an annual
basis:
<TABLE>
<CAPTION>
Name of Fund and Series or Portfolio Fee Rate
- -------------------------------------------------------------------------------------------
<S> <C>
The Preferred Group of Mutual Funds .30% on first $75 million; .25% on next $75
Preferred Fixed Income Fund million; .22% on next $150 million; .15% on
balance
Alexander Hamilton Variable Insurance Trust .30%
Investment Grade Bond Fund
John Hancock Variable Series Trust I .50% on first $25 million; .40% on next $50
Strategic Bond Fund million; .30% on next $75 million; .25% on
balance
Van Kampen Merritt/Cova Series Trust .30% on first $25 million; .25% on balance
Quality Bond Portfolio
</TABLE>
INFORMATION ABOUT THE MANAGER
The Manager is a wholly-owned subsidiary of ARM Financial Group, Inc.,
a Delaware corporation. ARM is a financial services company providing retail and
institutional products and services to the long-term savings and retirement
market. The Morgan Stanley Leveraged Equity Fund II, L.P., Morgan Stanley
Capital Partners III, L.P., Morgan Stanley Capital Investors, L.P. and MSCP III
892 Investors, L.P., investment funds sponsored by Morgan Stanley Group, Inc.
("Morgan Stanley"), own approximately 91% of the outstanding shares of voting
stock of ARM. The Manager currently provides investment management services to
institutional and individual clients, including ARM and its subsidiaries, with
combined assets in excess of $5.0 billion. The address of the Manager
11
<PAGE>
is 200 Park Avenue, 20th Floor, New York, New York 10166. The address of ARM is
239 S. Fifth Street, Louisville, Kentucky 40202. The address of each of each of
Morgan Stanley and the investment funds sponsored by it is 1221 Avenue of the
Americas, New York, New York 10020.
The Manager commenced investment advisory operations on January 5,
1995, on which date it acquired the domestic fixed income unit of Kleinwort
Benson Investment Management Americas Inc. The Manager is also the investment
adviser to the mutual funds comprising the State Bond Group.
The following chart lists those officers and Directors of the Fund who
are also affiliated with ARM and/or the Manager, and sets forth the nature of
those affiliations:
<TABLE>
<CAPTION>
Name Position with the Fund Position with ARM and/or the Manager
- ---------------- ---------------------- ------------------------------------------
<S> <C> <C>
John R. Lindholm Chairman and Director Executive Vice President-Chief Marketing
Officer of ARM
Edward J. Haines President Vice President, Marketing, ARM
Don W. Cummings Controller Controller, ARM and the Manager
Peter S. Resnik Treasurer Treasurer, ARM and the Manager
Kevin L. Howard Secretary Assistant General Counsel, ARM;
Compliance Officer, the Manager
</TABLE>
The principal occupation of each person listed above is his occupation with ARM.
The address of each of the above listed persons is 239 S. Fifth Street,
Louisville, Kentucky 40202.
DISTRIBUTOR
Pursuant to a distribution agreement dated August 30, 1995, SBMFS acts
without remuneration as the Fund's agent for distribution of the Portfolio's
shares. SBMFS is a wholly-owned subsidiary of ARM, and has no obligation to sell
any stated number of shares. Shares of the Fund and the Portfolio are sold only
to separate accounts of Integrity and National Integrity. SBMFS's address is 100
North Minnesota Street, P.O. Box 69, New Ulm, Minnesota 56073-0069.
TRANSFER AGENT, DIVIDEND AGENT AND RECORDKEEPING AGENT
Investors Fiduciary Trust Company, 127 West 10th Street, Kansas City,
Missouri 64105, acts as the Fund's transfer agent, dividend agent and
recordkeeping agent.
PORTFOLIO TRANSACTIONS
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Subject to policies established by the Fund's Board of Directors, J.P.
Morgan, as sub-adviser to the Portfolio (the "Sub-Adviser"), is responsible for
the execution of portfolio transactions and the allocation of brokerage
transactions for the Portfolio. As a general matter, in executing portfolio
transactions, the Sub-Adviser employs or deals with such brokers or dealers as
may, in its best judgment, provide prompt and reliable execution of the
transaction at favorable security prices and reasonable commission rates. In
selecting brokers or dealers, the Sub-Adviser considers all relevant factors,
including the price (including the applicable brokerage commission or dealer
spread), size of the order, nature of the market for the security, timing of the
transaction, the reputation, experience and financial stability of the broker-
dealer, the quality of service, difficulty of execution and execution
capabilities and operational facilities of the firm involved and in the case of
securities, the firm's risk in positioning a block of securities. Prices paid to
dealers in principal transactions, on which no brokerage commission is paid and
through which most debt securities and some equity securities are traded,
generally include a spread, which is the difference between the prices at which
the dealer is willing to purchase and sell a specific security at that time. To
the extent the Portfolio invests in securities traded in the over-the-counter
markets, it engages primarily in transactions with the dealers who make markets
in such securities, unless a better price or execution can be obtained by using
a broker. The Fund has no obligation to deal with any broker or group of brokers
in the execution of portfolio transactions. Brokerage arrangements may take into
account the distribution of certificates by broker-dealers, subject to best
price and execution.
To the extent consistent with Rule 17e-1 under the 1940 Act, the
Portfolio may enter into transactions with broker-dealers that are affiliated
persons, or affiliated persons of such affiliated persons, of the Portfolio
("affiliated brokers"). The Fund's Board of Directors has adopted procedures
pursuant to Rule 17e-1 under the 1940 Act to ensure that all brokerage
commissions paid to affiliated brokers are fair and reasonable. No transactions
may be effected by the Portfolio with an affiliate of the Manager, Integrity,
National Integrity or Morgan Stanley, or of the Sub-Adviser, acting as principal
for its own account. During the fiscal year ended June 30, 1995, the Portfolio
paid no brokerage commissions to affiliates of the Manager, Integrity, National
Integrity or Morgan Stanley, or the Portfolio's previous sub-adviser.
OTHER MATTERS
The Board of Directors of the Fund does not know of any other business
to be brought before the meeting. If any other matters properly come before the
meeting, the shareholders will vote on such matters in their discretion.
REPORTS TO SHAREHOLDERS AND FINANCIAL STATEMENTS
The Fund's Annual Report to shareholders, including the audited
financial statements of the Portfolio for the fiscal year ended June 30, 1995,
and the Fund's Semi-Annual Report to shareholders, including the unaudited
financial statements of the Portfolio for the six-month period ended December
31, 1995, are available from the Fund. The Fund's Reports should be read in
conjunction with this Proxy Statement, but are not part of the proxy soliciting
material. Copies of the Reports may be
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obtained from the Fund, without charge, by contacting the Fund in writing at the
address on the cover of this Proxy Statement, or by calling 1-800-325-8583.
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SHAREHOLDER PROPOSALS
The Fund is not required to hold annual meetings of shareholders and
the Directors currently do not intend to hold such meetings unless shareholder
action is required in accordance with the 1940 Act or the Fund's Articles of
Incorporation. A shareholder proposal to be considered for inclusion in the
proxy statement at any meeting of shareholders hereafter called must be
submitted a reasonable time before the proxy statement relating thereto is
mailed. Whether a proposal submitted will be included in the proxy statement
will be determined in accordance with applicable federal and state laws.
Respectfully Submitted,
Kevin L. Howard
Secretary
Dated: April 15, 1996
CERTIFICATE HOLDERS ARE REQUESTED TO FILL IN, DATE AND SIGN THE VOTING
INSTRUCTIONS CARD AND RETURN IT PROMPTLY IN THE ENCLOSED PREPAID ENVELOPE.
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APPENDIX A
SUB-ADVISORY AGREEMENT
AGREEMENT, made this 1st day of April, 1996, between ARM Capital Advisors, Inc.
(ARM Capital), a Delaware corporation, and J.P. Morgan Investment Management
Inc., a Delaware corporation.
WHEREAS, ARM Capital, a wholly-owned subsidiary of ARM Financial Group, Inc., is
an investment adviser registered under the Investment Advisers Act of 1940, as
amended (the Advisers Act);
WHEREAS, the Sub-Adviser is an investment adviser registered under the Advisers
Act;
WHEREAS, pursuant to a Management Agreement dated November 26, 1993 (the
Management Agreement), ARM Capital acts as Investment Manager to The Legends
Fund, Inc. (the Fund), an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the 1940 Act);
WHEREAS, the Fund is authorized to issue multiple series of shares, each such
series representing a separate portfolio of securities and investments; and
WHEREAS, ARM Capital desires to retain the Sub-Adviser to furnish investment
advisory services to the Pinnacle Fixed Income Portfolio of the Fund (the
Portfolio), and the Sub-Adviser is willing to accept such appointment on the
terms and conditions set forth herein.
NOW, THEREFORE, based on the premises and the consideration set forth herein,
ARM Capital and the Sub-Adviser agree as follows:
SECTION 1. INVESTMENT ADVISORY SERVICES.
Subject to the supervision of the Fund's Board of Directors and ARM Capital, the
Sub-Adviser will provide a continuous investment program for the Portfolio and
determine the composition of the assets of the Portfolio, including
determination of the purchase, retention or sale of the securities, cash, and
other investments contained in the Portfolio's holdings. The Sub-Adviser will
provide investment research and conduct a continuous program of evaluation,
investment, sales, and reinvestment of the Portfolio's assets by determining the
securities and other investments that shall be purchased, entered into, sold,
closed, or exchanged for the Portfolio, when these transactions should be
executed, and what portion of the assets of the Portfolio should be held in the
various securities and other investments in which it may invest, and the Sub-
Adviser is hereby authorized to execute and perform such services on behalf of
the Portfolio. To the extent, if any, permitted by the investment policies of
the Portfolio, the Sub-Adviser shall make determinations as to and execute and
perform futures contracts and options on behalf of the Portfolio. The Sub-
Adviser will provide the services under this Agreement in accordance with the
Portfolio's investment objective or objectives,
<PAGE>
policies, and restrictions as stated in the Fund's Registration Statement filed
with the Securities and Exchange Commission (SEC). ARM Capital agrees to supply
the Sub-Adviser with a copy of the Registration Statement and each amendment
thereto (the Registration Statement as amended from time to time hereinafter
referred to as the Registration Statement) and any other documents that set
forth investment policies, procedures or restrictions governing the Portfolio
and to notify the Sub-Adviser in writing of any changes in the investment
objectives, policies, procedures and restrictions governing the Portfolio.
The Sub-Adviser further agrees as follows:
(a) The Sub-Adviser will manage the Portfolio (i) so that it will qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended (the Code), and (ii) so as to ensure compliance by the
Portfolio with the diversification requirements of Section 817(h) of the Code
and regulations issued thereunder. In managing the Portfolio in accordance with
these requirements, the Sub-Adviser shall be entitled to receive and act upon
advice of counsel to the Fund, counsel to ARM Capital or counsel to the Sub-
Adviser, provided the Sub-Adviser's counsel is acceptable to ARM Capital.
(b) In undertaking its duties under this Agreement, the Sub-Adviser will comply
with the 1940 Act and all rules and regulations thereunder, all other applicable
federal and state laws and regulations, with any applicable procedures adopted
by the Fund's Board of Directors of which it has notice and the provisions of
the Registration Statement.
(c) On occasions when the Sub-Adviser deems the purchase or sale of a security
to be in the best interest of the Portfolio as well as of the Sub-Adviser's or
the Sub-Adviser's affiliates' other investment advisory clients, the Sub-Adviser
may, to the extent permitted by applicable laws and regulations, but shall not
be obligated to, aggregate the securities to be so sold or purchased with those
of its other clients where such aggregation is not inconsistent with the
policies set forth in the Registration Statement. In such event, the Sub-Adviser
will allocate the securities so purchased or sold, as well as the expenses
incurred in the transaction, in a manner that is fair and equitable in the Sub-
Adviser's judgment in the exercise of the Sub-Adviser's fiduciary obligations to
the Fund and to such other clients.
(d) In connection with the purchase and sale of securities for the Portfolio,
the Sub-Adviser, together with ARM Capital, will arrange for the transmission to
the custodian, transfer agent, dividend disbursing agent and record keeping
agent for the Fund (such custodian and agent or agents hereinafter referred to
as the Agent), on a daily basis, such confirmation, trade tickets (which shall
state industry classifications unless the Sub-Adviser has previously furnished a
list of classifications for portfolio securities), and other documents and
information including (but not limited to) Cusip or other numbers that identify
securities to be purchased or sold on behalf of the Portfolio and, with respect
to mortgage derivative and asset-backed securities purchased by the Sub-Adviser
for the Portfolio, 1066Q reports and supplemental information as required to be
available pursuant to IRS Publication 938, as may be reasonably necessary to
enable the Agent to perform its administrative and
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record keeping responsibilities with respect to the Portfolio. With respect to
portfolio securities to be purchased or sold through the Depository Trust
Company, the Sub-Adviser will arrange for the automatic transmission of the
confirmation of such trades to the Fund's Agent, and if requested, ARM Capital.
(e) The Sub-Adviser will be provided daily pricing reports by the Agent,
including the determination by the Agent for the Fund of the valuation of
portfolio securities and other investments of the Portfolio. The Sub-Adviser
shall not be obligated to independently verify the Agent's pricing
determinations. The Sub-Adviser will assist the Agent in determining or
confirming, consistent with the procedures and policies stated in the
Registration Statement, the value of any portfolio securities or other assets of
the Portfolio for which the Agent seeks assistance from or identifies for review
by the Sub-Adviser. The Agent's responsibility for accurate pricing
determinations of the value of the Portfolios's securities shall not be reduced
by the Sub-Adviser's duty to provide such assistance.
(f) The Sub-Adviser will make available to the Fund and ARM Capital, promptly
upon request, all of the Portfolio's investment records and ledgers maintained
by the Sub-Adviser as are necessary to assist the Fund and ARM Capital to comply
with requirements of the 1940 Act and the Advisers Act, as well as other
applicable laws. The Sub-Adviser will furnish to regulatory authorities having
the requisite authority any information or reports in connection with its
services which may be requested in order to ascertain whether the operations of
the Fund are being conducted in a manner consistent with applicable laws and
regulations.
(g) The Sub-Adviser will provide reports, which may be prepared by the Agent, to
the Fund's Board of Directors for consideration at meetings of the Board on the
investment program for the Portfolio and the issuers and securities represented
in the Portfolio's securities holdings, including a schedule of the investments
and other assets held in the Portfolio and a statement of all purchases and
sales for the Portfolio since the last such statement, and will furnish the
Fund's Board of Directors with periodic and special reports with respect to the
Portfolio as the Directors and ARM Capital may reasonably request, including
statistical information with respect to the Portfolio's securities. In addition,
the Sub-Adviser will make available at each meeting of the Board of Directors,
either in person or by telephone conference call as instructed by ARM Capital on
behalf of the Board of Directors of the Fund, an appropriate person to discuss
the investment performance of the Portfolio.
(h) The Sub-Adviser will provide information and reports to ARM Capital as ARM
Capital shall reasonably request to enable it to review the performance of the
Sub-Adviser under this Agreement.
SECTION 2. BROKER-DEALER SELECTION.
The Sub-Adviser is responsible for decisions to buy and sell securities and
other investments for the Portfolio, broker-dealer and futures commission
merchant selection, and negotiation of brokerage commission and futures
commission merchants' rates. As a general matter, in executing portfolio
transactions the Sub-Adviser may employ or deal with such broker-dealers or
futures commission merchants as may, in the Sub-Adviser's best judgment, provide
prompt and reliable execution of the
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transactions at favorable prices and reasonable commission rates. In selecting
such broker-dealers or futures commission merchants, the Sub-Adviser shall
consider all relevant factors, including price (including the applicable
brokerage commission, dealer spread or futures commission merchant rate), the
size of the order, the nature of the market for the security or other
investment, the timing of the transaction, the reputation, experience and
financial stability of the broker-dealer or futures commission merchant
involved, the quality of the service, the difficulty of execution, and the
execution capabilities and operational facilities of the firm involved, and, in
the case of securities, the firm's risk in positioning a block of securities.
Subject to such policies as the Board of Directors may determine and consistent
with Section 28(e) of the Securities Exchange Act of 1934, as amended (the 1934
Act), the Sub-Adviser shall not be deemed to have acted unlawfully or to have
breached any duty created by this Agreement or otherwise solely by reason of the
Sub-Adviser's having caused the Portfolio to pay a member of an exchange, broker
or dealer an amount of commission for effecting a securities transaction in
excess of the amount of commission another member of an exchange, broker or
dealer would have charged for effecting that transaction, if the Sub-Adviser
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
member of an exchange, broker or dealer, viewed in terms of either that
particular transaction or the Sub-Adviser's overall responsibilities with
respect to the Portfolio and to the Sub-Adviser's other clients as to which the
Sub-Adviser exercises investment discretion. In accordance with Section 11 (a)
of the 1934 Act, and subject to any other applicable laws and regulations
including Section 17(e) of the 1940 Act and Rule 17e-1 thereunder, the Sub-
Adviser may engage its affiliates, ARM Capital and its affiliates or any other
sub-adviser to the Fund and its respective affiliates as broker-dealers or
futures commission merchants to effect portfolio transactions in securities and
other investments for the Portfolio.
SECTION 3. RECORDS, REPORTS, ETC.
In compliance with the requirements of Rule 31a-3 under the 1940 Act, the Sub-
Adviser hereby agrees that all records which the Sub-Adviser maintains for the
Portfolio are the property of the Fund and further agrees to surrender promptly
to the Fund any of such records upon the Fund's or ARM Capital's request or upon
termination of this Agreement, although the Sub-Adviser may, at the Sub-
Adviser's own expense, make and retain a copy of such records. The Sub-Adviser
further agrees to preserve for the periods prescribed by Rule 31a-2 under the
1940 Act the records required to be maintained by Rule 31a-1 under the 1940 Act
and to preserve the records required by the Rule 204-2 under the Advisers Act
for the period specified in the Rule.
SECTION 4. PAYMENT OF EXPENSES.
The Sub-Adviser shall assume and pay all of the costs and expenses of performing
its obligations under this Agreement.
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SECTION 5. COMPENSATION FOR SERVICES.
ARM Capital will pay to the Sub-Adviser a monthly sub-advisory fee (adjusted pro
rata for any shorter applicable period) at an annual rate of .50% of the average
daily net assets of the Portfolio. The sub-advisory fee shall be computed,
accrue and be payable in the same manner as the management fee which is payable
by the Fund to ARM Capital pursuant to the Management Agreement and as specified
in the Fund's Registration Statement.
SECTION 6. LIABILITY FOR SERVICES.
Except as may otherwise be required by the 1940 Act or the rules thereunder or
other applicable law, and except as set forth in the next paragraph, the Fund
and ARM Capital agree that the Sub-Adviser, any of its affiliated persons, and
each person, if any, who, within the meaning of Section 15 of the Securities Act
of 1933, as amended, controls the Sub-Adviser, shall not be liable for, or
subject to any damages, expenses, or losses in connection with, any act or
omission connected with or arising out of any services rendered under this
Agreement, except by reason of willful misfeasance, bad faith, or gross
negligence in the performance of the Sub-Adviser's duties, or by reason of
reckless disregard of the Sub-Adviser's obligations and duties under this
Agreement.
SECTION 7. INDEMNIFICATION BY SUB-ADVISER.
The Sub-Adviser agrees to indemnify and hold harmless ARM Capital against any
losses, expenses, claims, damages or liabilities (or actions or proceedings in
respect thereof), to which ARM Capital may become subject arising out of or
based on the material breach by the Sub-Adviser of any provisions of this
Agreement; provided, however, that the Sub-Adviser shall not be liable under
this paragraph in respect of any loss, expense, claim, damage or liability to
the extent that a court having jurisdiction shall have determined by a final
judgment, or independent counsel agreed upon by ARM Capital and the Sub-Adviser
shall have concluded in a written opinion, that such loss, expense, claim,
damage or liability resulted primarily from ARM Capital's willful misfeasance,
bad faith or gross negligence or by reason of the reckless disregard by ARM
Capital of its duties. The foregoing indemnification shall be in addition to any
rights that ARM Capital may have at common law or otherwise. Under no
circumstances whatsoever shall the Sub-Adviser be liable to ARM Capital for
punitive, consequential, or special damages. Each party agrees to pay its own
attorney's fees for any claims, actions or lawsuits brought pursuant to or
relating in any way to this Agreement. The Sub-Adviser's agreements in this
paragraph shall, upon the same terms and conditions, extend to and inure to the
benefit of each person who may be deemed to control ARM Capital, be controlled
by ARM Capital or be under common control with ARM Capital and its affiliates,
directors, officers, employees and agents. The Sub-Adviser's agreements in this
paragraph shall also extend to any of ARM Capital's successors or the successors
of the aforementioned affiliates, directors, officers, employees or agents.
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<PAGE>
SECTION 8. INDEMNIFICATION BY ARM CAPITAL.
ARM Capital agrees to indemnify and hold harmless the Sub-Adviser against any
losses, expenses, claims, damages or liabilities (or actions or proceedings in
respect thereof), to which the Sub-Adviser may become subject arising out of or
based on the material breach by ARM Capital of any provisions of this Agreement
or the Management Agreement, or any wrongful action or alleged wrongful action
by ARM Capital or its affiliates in the distribution of the Fund's shares, or
any wrongful action or alleged wrongful action by the Fund other than wrongful
action or alleged wrongful action that was caused by the breach by the Sub-
Adviser of the provisions of this Agreement; provided, however, that ARM Capital
shall not be liable under this paragraph in respect of any loss, expense, claim,
damage or liability to the extent that a court having jurisdiction shall have
determined by a final judgment, or independent counsel agreed upon by ARM
Capital and the Sub-Adviser shall have concluded in a written opinion, that such
loss, expense, claim, damage or liability resulted primarily from the Sub-
Adviser's willful misfeasance, bad faith or gross negligence or by reason of the
reckless disregard by the Sub-Adviser of its duties. The foregoing
indemnification shall be in addition to any rights that the Sub-Adviser may have
at common law or otherwise. Under no circumstances whatsoever shall ARM Capital
be liable to the Sub-Adviser for punitive, consequential, or special damages.
Each party agrees to pay its own attorney's fees for any claims, actions or
lawsuits brought pursuant to or relating in any way to this Agreement. ARM
Capital's agreements in this paragraph shall, upon the same terms and
conditions, extend to and inure to the benefit of each person who may be deemed
to control the Sub-Adviser, be controlled by the Sub-Adviser or be under common
control with the Sub-Adviser and to each of the Sub-Adviser's and each such
person's respective affiliates, directors, officers, employees and agents. ARM
Capital's agreements in this paragraph shall also extend to any of the Sub-
Adviser's successors or the successors of the aforementioned affiliates,
directors, officers, employees or agents.
SECTION 9. NOTICE AND DEFENSE OR PROCEEDINGS, ETC.
Promptly after receipt by a party indemnified under paragraph 7 or 8 above of
notice of the commencement of any action, proceeding or investigation for which
indemnification will be sought, such indemnified party shall promptly notify the
indemnifying party in writing; but the omission so to notify the indemnifying
party shall not relieve it from any liability which it may otherwise have to any
indemnified party unless such omission results in actual material prejudice to
the indemnifying party. In case any action or proceeding shall be brought
against any indemnified party, and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate in
and, individually or jointly with any other indemnifying party, to assume the
defense thereof with counsel reasonably satisfactory to the indemnified party.
After notice from the indemnifying party to the indemnified party of its
election to assume the defense of any action or proceeding, the indemnifying
party shall not be liable to the indemnified party for any legal or other
expenses subsequently incurred by the indemnified party in connection with the
defense thereof other than reasonable costs of investigation. If the
indemnifying party does not elect to assume the defense of any action or
proceeding, the indemnifying party on a monthly basis shall reimburse the
indemnified party for the legal fees and expenses incurred by the indemnified
party for continuing its defense thereof. Regardless of whether or not the
indemnifying party shall have assumed the defense of any
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action or proceeding, the indemnified party shall not settle or compromise the
action or proceeding without the prior written consent of the indemnifying
party.
SECTION 10. REPRESENTATIONS AND WARRANTIES; COVENANTS.
(a) The Sub-Adviser hereby represents and warrants as follows:
(i) The Sub-Adviser is registered with the SEC as an investment adviser under
the Advisers Act, and such registration is current, complete and in full
compliance with all material applicable provisions of the Advisers Act and the
rules and regulations thereunder;
(ii) The Sub-Adviser has all requisite authority to enter into, execute, deliver
and perform the Sub-Adviser's obligations under this Agreement;
(iii) The Sub-Adviser's performance of its obligations under this Agreement does
not conflict with any law, regulation or order to which the Sub-Adviser is
subject; and
(iv) The Sub-Adviser has reviewed the Registration Statement for the Fund filed
with the SEC, and with respect to the disclosure about the Sub-Adviser and the
Portfolio or information relating, directly or indirectly, to the Sub-Adviser or
the Portfolio which was made in reliance upon and in conformity with written
information provided by the Sub-Adviser to the Fund specifically for use therein
or, if written information was not provided, which the Sub-Adviser had the
opportunity to review prior to filing with the SEC, such Registration Statement
contains, as of its date, no untrue statement of any material fact and does not
omit any statement of a material fact which was required to be stated therein or
necessary to make the statements contained therein not misleading; provided,
however, that the Sub-Adviser makes no representation or warranty as to any
historical information relating to the Portfolio prior to the date hereof.
(b) The Sub-Adviser hereby covenants and agrees that, so long as this Agreement
shall remain in effect:
(i) The Sub-Adviser shall maintain the Sub-Adviser's registration as an
investment adviser under the Advisers Act, and such registration shall at all
times remain current, complete and in full compliance with all material
applicable provisions of the Advisers Act and the rules and regulations
thereunder;
(ii) The Sub-Adviser's performance of its obligations under this Agreement shall
not conflict with any law, regulation or order to which the Sub-Adviser is then
subject;
(iii) The Sub-Adviser shall at all times fully comply with the Advisers Act, the
1940 Act, all applicable rules and regulations under such Acts and all other
applicable law;
(iv) The Sub-Adviser shall promptly notify ARM Capital and the Fund upon the
occurrence of any event that might disqualify or prevent the Sub-Adviser from
performing its duties under this
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Agreement. The Sub-Adviser further agrees to notify ARM Capital and the Fund
promptly with respect to written material that has been provided to the Fund or
ARM Capital by the Sub-Adviser for inclusion in the Registration Statement or
prospectus for the Fund or any supplement or amendment thereto, or, if written
material has not been provided, with respect to the information in the
Registration Statement or Prospectus, or any amendment or supplement thereto,
reviewed by the Sub-Adviser, in either case of any untrue statement of a
material fact or of any omission of any statement of a material fact which is
required to be stated therein or is necessary to make the statements contained
therein not misleading; and
(v) If the Sub-Adviser is a partnership, the Sub-Adviser shall notify the Fund
and ARM Capital of any change in membership within a reasonable time after such
change.
SECTION 11. EXCLUSIVITY OF SERVICES AND USE OF NAMES.
The Sub-Adviser acknowledges and agrees that the names The Legends Fund and
Pinnacle, and abbreviations or logos associated with those names, are the
valuable property of ARM Capital and its affiliates; that the Fund, ARM Capital
and its affiliates have the right to use such names, abbreviations and logos:
and that the Sub-Adviser shall use the names The Legends Fund and Pinnacle, and
associated abbreviations and logos, only in connection with the Sub-Adviser's
performance of its duties hereunder.
ARM Capital acknowledges that "J.P. Morgan Investment Management Inc." (the Sub-
Adviser's name) is distinctive in connection with investment advisory and
related services provided by the Sub-Adviser, the Sub-Adviser's name is a
property right of the Sub-Adviser, and the Sub-Adviser's name is to be used by
the Fund only with the Sub-Adviser's prior written consent. The Sub-Adviser
hereby grants to the Fund a non-exclusive license to use the Sub-Adviser's name
in connection with the Portfolio upon the conditions hereinafter set forth;
provided that the Fund may use such name only so long as the Sub-Adviser shall
be retained as the investment sub-adviser of the Portfolio pursuant to the terms
of this Agreement. Any such use by the Fund shall in no way prevent the Sub-
Adviser or any of its successors or assigns from using or permitting the use of
the Sub-Adviser's name along with any other word or words, for, by or in
connection with any other entity or business, other than the Fund or its
business, whether or not the same directly competes or conflicts with the Fund
or its business in any manner.
In the event that the Sub-Adviser shall cease to be the investment sub-adviser
of the Portfolio, then the Fund at its own expense, upon the Sub-Adviser's
written request:
(i) shall cease to use the Sub-Adviser's name for any commercial purpose (other
than the right to refer to the Sub-Adviser's name in the Fund's Registration
Statement, proxy materials and other Fund documents to the extent required under
the 1940 Act);
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(ii) shall on all letterheads and other materials designed to be read or used by
salesmen, distributors or investors, state in a prominent position and prominent
type that the Sub-Adviser has ceased to be the investment sub-adviser of the
Portfolio; and
(iii) shall use its best efforts to cause the Fund's officers and directors to
take any and all actions which may be necessary or desirable to effect the
foregoing. ARM Capital agrees to take any and all actions as may be necessary or
desirable to effect the foregoing.
The Sub-Adviser hereby agrees and consents to the use of the Sub-Adviser's name
upon the foregoing terms and conditions.
SECTION 12. ENTIRE AGREEMENT; AMENDMENT, WAIVER.
This Agreement supersedes all prior agreements between the parties and
constitutes the entire agreement by the parties. No provision of this Agreement
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought, and no amendment of this
Agreement shall be effective with respect to the Portfolio until approved as
required by the 1940 Act.
SECTION 13. EFFECTIVENESS AND DURATION OF AGREEMENT.
Unless sooner terminated, this Agreement shall continue in effect until November
26, 1997 and thereafter for successive one year periods, provided that
continuation of this Agreement and the terms thereof are specifically approved
annually in accordance with the requirements of the 1940 Act by a majority of
the Directors of the Fund, including a majority of the Directors who are not
interested persons of the Sub-Adviser, ARM Capital or the Fund, cast in person
at a meeting called for the purpose of voting on such approval.
SECTION 14. TERMINATION OF AGREEMENT, ASSIGNMENT.
This Agreement may be terminated at any time, without the payment of any
penalty, by the Sub-Adviser or by ARM Capital, upon sixty (60) days' written
notice from the terminating party to the other party and to the Fund, or by the
Fund, upon sixty (60) days written notice to the Sub-Adviser and ARM Capital,
acting pursuant to a resolution adopted by a majority of the members of the
Board of Directors who are not interested persons or by a vote of the holders of
the lesser of (l) 67% of the Portfolio's voting shares present if the holders of
more than 50% of the outstanding shares are present in person or by proxy, or
(2) more than 50% of the outstanding shares of the Portfolio.
This Agreement shall automatically terminate in the event of its assignment or
the termination of the Management Agreement pertaining to the Portfolio. ARM
Capital agrees to provide prompt written notice to the Sub-Adviser upon
termination of the Management Agreement. Termination of this Agreement shall not
affect rights of the parties which have accrued prior thereto.
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The provisions of paragraphs 6, 7, 8, 9 and 11 shall survive the termination of
this Agreement, except that if ARM Capital or the Fund terminates the Agreement,
the first paragraph of Section 11 shall not survive termination.
SECTION 15. DEFINITIONS.
The terms assignment and interested person when used in this Agreement shall
have the meanings given such terms in the 1940 Act and the rules and regulations
thereunder.
SECTION 16. CONCERNING APPLICABLE PROVISIONS OF LAW.
This Agreement shall be subject to all applicable provisions of law, including,
without limitation, the applicable provisions of the 1940 Act, and to the extent
that any provisions herein contained conflict with any such applicable
provisions of law, the latter shall control. This Agreement shall be governed by
the laws of the State of New York, without reference to principles of conflicts
of law.
SECTION 17. COUNTERPARTS.
This Agreement may be executed in counterparts, and each counterpart shall for
all purposes be deemed an original and all such counterparts shall together
constitute one and the same instrument.
IN WITNESS WHEREOF, authorized officers of ARM Capital and the Sub-Adviser have
executed this Agreement as of the day and year first written above.
ARM CAPITAL ADVISORS, INC J.P. MORGAN INVESTMENT
MANAGEMENT INC.
By: /s/ John McGeeney By: /s/ Diane J. Minardi
------------------------ ------------------------
Attest: /s/ Kevin Howard Attest: /s/ Kathy Barabas
-------------------- --------------------
10
<PAGE>
PROXY
THE LEGENDS FUND, INC.
200 EAST WILSON BRIDGE ROAD
WORTHINGTON, OHIO 43085
PINNACLE FIXED INCOME PORTFOLIO
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Kevin L. Howard and Don W. Cummings as proxies,
each with the power to appoint his substitute, and hereby authorizes each of
them acting singly or jointly to represent and to vote, as designated below, all
shares of the Pinnacle Fixed Income Portfolio (the "Portfolio") of The Legends
Fund, Inc. (the "Fund") held of record by the undersigned on April 10, 1996 at
the meeting of shareholders to be held on May 17, 1996, or any adjournment
thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1 AND 2.
BY SIGNING AND DATING THIS CARD YOU AUTHORIZE THE PROXIES TO VOTE THE PROPOSALS
AS MARKED OR, IF NOT MARKED, TO VOTE "FOR" THE PROPOSALS, AND TO USE THEIR
DISCRETION TO VOTE ANY OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
If you do not intend to personally attend the meeting, please complete and
return this card at once in the enclosed envelope.
1. To approve amendments to the Management Agreement between the Fund and ARM
Capital Advisors, Inc. (the "Manager"), including a reduction in the investment
advisory fee for the Portfolio.
FOR [_] AGAINST [_] ABSTAIN [_]
2. To approve the Sub-Advisory Agreement between the Manager and J.P. Morgan
Investment Management, Inc., as sub-adviser for the Portfolio.
FOR [_] AGAINST [_] ABSTAIN [_]
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN SHARES ARE
HELD BY JOINT TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS
ATTORNEY OR AS EXECUTOR, ADMINISTRATOR, TRUSTEE OR
GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A CORPORATION,
PLEASE SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN
PARTNERSHIP NAME BY AUTHORIZED PERSON.
- ---------------------------------------------------------------
SIGNATURE DATE SIGNATURE (IF HELD JOINTLY)
Please mark boxes [X] in blue or black ink.
<PAGE>
VOTING INSTRUCTIONS FORM
FOR PROXY SOLICITED BY THE LEGENDS FUND, INC.
FOR THE PINNACLE FIXED INCOME PORTFOLIO
The undersigned instructs Integrity Life Insurance Company (the "Company") to
vote, as shown below, all shares of the Pinnacle Fixed Income Portfolio of The
Legends Fund, Inc. (the "Portfolio") attributable as of April 10, 1996 to the
undersigned's variable annuity contract, at the Special Meeting of shareholders
of the Portfolio scheduled to be held on May 17, 1996, at 3 p.m., and at any
adjournment thereof, and to vote, in its sole discretion, on such other matters
as may properly come before the Meeting. Receipt of the Portfolio's Notice of
Special Meeting and accompanying Proxy Statement is hereby acknowledged. IF
THIS SHEET IS SIGNED AND RETURNED WITHOUT DIRECTION, THE COMPANY WILL VOTE FOR
ALL PROPOSALS. If this sheet is not returned or is returned unsigned, the
Company will vote shares attributable to your contract in the same proportion as
it votes shares for which it has received instructions. Please return this
voting instruction form promptly in the envelope provided.
1. Approval of amendments to the Management Agreement between the Fund and ARM
Capital Advisors, Inc. (the "Manager"), including a reduction in the
investment advisory fee for the Portfolio:
[_] FOR [_] AGAINST [_] ABSTAIN
2. Approval of the Sub-Advisory Agreement between the Manager and J.P. Morgan
Investment Management Inc., as sub-adviser for the Portfolio:
[_] FOR [_] AGAINST [_] ABSTAIN
Sign below exactly as your name (or names
for joint owners) appears on this card
and give your full title when signing as
executor, trustee or in any other
fiduciary capacity.
Owner:__________________________________
Joint Owner:_____________________________
Date:___________________________________
IMPORTANT: SIGN AND DATE THIS FORM
<PAGE>
VOTING INSTRUCTIONS FORM
FOR PROXY SOLICITED BY THE LEGENDS FUND, INC.
FOR THE PINNACLE FIXED INCOME PORTFOLIO
The undersigned instructs National Integrity Life Insurance Company (the
"Company") to vote, as shown below, all shares of the Pinnacle Fixed Income
Portfolio of The Legends Fund, Inc. (the "Portfolio") attributable as of April
10, 1996 to the undersigned's variable annuity contract, at the Special Meeting
of shareholders of the Portfolio scheduled to be held on May 17, 1996, at 3
p.m., and at any adjournment thereof, and to vote, in its sole discretion, on
such other matters as may properly come before the Meeting. Receipt of the
Portfolio's Notice of Special Meeting and accompanying Proxy Statement is hereby
acknowledged. IF THIS SHEET IS SIGNED AND RETURNED WITHOUT DIRECTION, THE
COMPANY WILL VOTE FOR ALL PROPOSALS. If this sheet is not returned or is
returned unsigned, the Company will vote shares attributable to your contract in
the same proportion as it votes shares for which it has received instructions.
Please return this voting instruction form promptly in the envelope
provided.
1. Approval of amendments to the Management Agreement
between the Fund and ARM Capital Advisors, Inc.
(the "Manager"), including a reduction in the investment
advisory fee for the Portfolio:
[_] FOR [_] AGAINST [_] ABSTAIN
2. Approval of the Sub-Advisory Agreement
between the Manager and J.P. Morgan Investment
Management Inc., as sub-adviser for the Portfolio:
[_] FOR [_] AGAINST [_] ABSTAIN
Sign below exactly as your name (or names for
joint owners) appears on this card and give
your full title when signing as executor,
trustee or in any other fiduciary capacity.
Owner:________________________________________
Joint Owner:__________________________________
Date:_________________________________________
IMPORTANT: SIGN AND DATE THIS FORM
