FILE NO. 2-10002
FILE NO. 811-495
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
Pre-Effective Amendment No. ____ /_/
Post Effective Amendment No. 99 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 /X/
Amendment No. 99
(Check appropriate box or boxes.)
D.L. BABSON BOND TRUST
(Exact name of Registrant as Specified in Charter)
BMA Tower, 700 Karnes Blvd., Kansas City, MO 64108-3306
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (816) 751-5900
Larry D. Armel, BMA Tower, 700 Karnes Blvd., Kansas City, MO
64108-3306
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering
It is proposed that this filing become effective (check
appropriate box)
/_/ immediately upon filing pursuant to paragraph (b)
/_/ on (date) pursuant to paragraph (b)
/_/ 60 days after filing pursuant to paragraph (a)(1)
/X/ on March 31, 1999 pursuant to paragraph (a)(1)
/_/ 75 days after filing pursuant to paragraph (a)(2)
/_/ on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
/_/ This post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
<PAGE>
BABSON
Bond Trust
Prospectus
March 31, 1999
A no-load mutual fund that
emphasizes current income.
BABSON FUNDS
JONES & BABSON DISTRIBUTORS
A member of the Generali Group
<PAGE>
PROSPECTUS
March 31, 1999
D.L. BABSON
BOND TRUST
Investment Counsel:
DAVID L. BABSON & CO., INC.
Cambridge, Massachusetts
Managed and Distributed By:
JONES & BABSON, INC.
Kansas City, Missouri
TABLE OF CONTENTS
Page
Information About the Trust
Investment Objective and
Portfolio Management Policy 2
Risk Factors 2
Past Performance 3
Fees and Expenses 4
Management and Investment Counsel 6
Financial Highlights 7
Information about Investing
How to Purchase Shares 9
How to Redeem Shares 9
Shareholder Services 10
How Share Price is Determined 10
Dividends, Distributions and their Taxation 11
Additional Policies about Transactions 12
Conducting Business with the Babson Funds 13
Shares of the Trust have not been approved or disapproved by the Securities
and Exchange Commission nor has the Commission passed upon the adequacy of
this Prospectus. Any representation to the contrary is a criminal offense.
INVESTMENT OBJECTIVE AND PORTFOLIO MANAGEMENT POLICY
The objective of Babson Bond Trust is to provide shareholders with maximum
current income and reasonable
stability of principal, consistent with its quality and maturity standards.
To pursue this objective, the Trust offers shares of two separate portfolios
of fixed income securities with differing maturity lengths. Portfolio L
(which invests in longer term bonds) is expected to have a weighted average
maturity of more than five years. Portfolio S (which invests in shorter term
bonds) is expected to have a weighted average maturity of five years or less.
The Trust's Investment Counsel is David L. Babson & Co., Inc. which manages
the Portfolios under the supervision of Jones & Babson, Inc., the Trust's
Manager.
For both Portfolios the Fund will invest at time of purchase:
At least 80% of its assets in debt securities to include: (1)
direct or guaranteed obligations of the U.S.
government and its agencies, and (2) investment quality debt securities
issued by corporations or other business organizations, including notes and
bonds.
Debt securities secured by specific assets of the issuing
corporation (such as mortgage bonds and equipment trusts) as well as
unsecured debt securities that represent claims on the general credit of the
issuer.
Securities rated in the top three classifications by Mode's (Aaa,
Aa and A) or Standard & Poor's, however,
up to 25% of a Portfolio's assets may be invested in securities rated Baa or
better by Moody's or BBB or better by S&P. The Trust's Board of Trustees may
change this policy without shareholder approval.
Up to 25% of its assets in Yankee Bonds. Yankee Bonds are issued
by foreign-domiciled entities and
underwritten by a U.S. syndicate for delivery in the U.S.
Cash or short-term debt obligations.
Variable rate master demand notes, which represent a borrowing
agreement between an institutional lender
and borrower.
The average weighted maturity of Portfolio L is maintained within a range of
7 to 15 years, and the average weighted maturity of Portfolio S is maintained
within a range of 2 to 5 years unless management believes that an average
weighted maturity outside these ranges best suits a Portfolio's objective.
The Portfolios may shorten or lengthen
portfolio maturities as interest rates change. The Portfolios may also
increase the level of cash or short term debt obligations to over 20% of the
assets for temporary defensive purposes. Keep in mind that a temporary
defensive strategy still has the potential to lose money. In addition, the
Trust intends to maintain a position in cash or high quality short term debt
obligations for reserves to cover redemptions and unanticipated expenses.
RISK FACTORS
The Portfolios are not designed to offer a complete or balanced investment
program.
The yields and principal values of debt securities fluctuate. Generally,
values of debt securities change inversely with changes in interest rates.
That is, as interest rates go up, the values of debt securities tend to go
down and vice versa. Future interest rates cannot be accurately and
consistently forecast. As a result, the values of the Portfolios will go up
or down and you will make or lose money with these fluctuations. The amount
of the dividends paid by a Portfolio will change based on the amount of
income it earns on its investments. Also, it is possible that the issuer of a
debt security may default on the interest and principal payments due to a
Portfolio.
While we cannot eliminate these risks, the Trust's Investment Counsel will
try to minimize risk by selecting securities considered to be high quality
and by diversifying - spreading the risk by putting each Portfolio's
investment into a broad range of debt securities.
Variable rate master demand notes are not generally traded, and there is no
secondary market. The securities are immediately repayable by the borrower at
face value, plus accrued interest, at any time. The Trust monitors, on an
ongoing basis, the issuer's earning power, cash flow and other liquidity
ratios, and the borrower's ability to pay
principal and interest on demand.
Computer systems that cannot process and calculate date-related information
as of and after January 1, 2000 are a concern for financial and business
organizations around the world. We are taking steps to address the Year 2000
issue with respect to the computers we use, and have asked that our major
service providers take comparable steps. However, there is no way to be sure
that these steps will completely protect the Trust from being affected.
PAST PERFORMANCE
The tables below show each Portfolio's annual total returns and its long-term
performance. The bar charts show how each Portfolio's return has changed from
year to year. The next table shows how Portfolio L's and Portfolio S's
average annual returns for certain periods compare with those of Lehman
Brothers Aggregate Bond Index and Lehman Brothers Intermediate
Government/Corporate Index, respectively. Each table reflects all expenses of
the Portfolios and Trust and assumes that all dividends and capital gain
distributions have been reinvested in new shares of the Portfolios. Past
performance is not necessarily an indication of how a Portfolio will perform
in the future.
CHART - PORTFOLIO L
[PERFORMANCE BAR CHART - ANNUAL RETURNS]
89 13.12%
90 7.78%
91 14.99%
92 7.96%
93 11.14%
94 -3.29%
95 15.94%
96 3.16%
97 9.30%
98 7.40%
Best Quarter Q2 '89 7.82%
Worst Quarter Q1 '94 -2.67%
Average Annual Total Return as of December 31, 1998
1 Year 5 Years 10 Years
Lehman Bros.
Aggregate
Bond Index 2.03% 0.21% 1.46%
Portfolio L 7.40% 6.31% 8.62%
CHART - PORTFOLIO S
[PERFORMANCE BAR CHART - ANNUAL RETURNS]
89 10.81%
90 8.09%
91 14.47%
92 6.99%
93 8.42%
94 -2.09%
95 13.61%
96 4.42%
97 8.20%
98 6.88%
Best Quarter Q2 '95 4.15%
Worst Quarter Q1 '94 -2.04%
Average Annual Total Return as of December 31, 1998
1 Year 5 Years 10 Years
Lehman Bros.
Intermediate
Government/
Corporate Index 8.44% 6.60% 8.52%
Portfolio S 6.88% 6.08% 7.89%
fees & Expenses
The following tables describe the fees and expenses that you may pay if you
buy and hold shares of the Portfolio.
Portfolio L
Shareholder Fees
(fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases None
Maximum Deferred Sales Charge (Load) None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends None
Redemption Fee None
Exchange Fee None
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
Management Fees .95%
Distribution (12b-1) Fees None
Other Expenses .02%*
Total Annual Fund Operating Expenses .97%*
*As a percentage of average daily net assets.
Fee Examples
The following examples are intended to help you compare the cost of investing
in the Portfolio with the cost of investing in other mutual funds. The
examples assume that you invest $10,000 in the Portfolio for the time periods
indicated and then redeem all of your shares at the end of those periods. The
examples also assume that your investment has a 5% return each year and that
the PortfolioOs operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would be:
1 Year 3 Years 5 Years 10 Years
$99 $309 $536 $1,190
fees & Expenses
The following tables describe the fees and expenses that you may pay if you
buy and hold shares of the Portfolio.
Portfolio S
Shareholder Fees
(fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases None
Maximum Deferred Sales Charge (Load) None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends None
Redemption Fee None
Exchange Fee None
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
Management Fees .95%**
Distribution (12b-1) Fees None
Other Expenses .02%*
Total Annual Fund Operating Expenses .97%*
*As a percentage of average daily net assets.
**Reduced to .65% by the Board of Trustees through March 31, 2000.
Fee Examples
The following examples are intended to help you compare the cost of investing
in the Portfolio with the cost of investing in other mutual funds. The
examples assume that you invest $10,000 in the Portfolio for the time periods
indicated and then redeem all of your shares at the end of those periods. The
examples also assume that your investment has a 5% return each year and that
the Portfolio's operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would be:
1 Year 3 Years 5 Years 10 Years
$68 $214 $373 $835
MANAGEMENT AND INVESTMENT COUNSEL
Jones & Babson, Inc. was founded in 1959. It began managing the Trust on
March 1, 1972, and it acts as the Trust's principal underwriter. Pursuant to
the current Management Agreement, Jones & Babson, Inc. provides or pays the
cost of all management, supervisory and administrative services required in
the normal operation of the Trust. This includes investment management and
supervision; fees of the custodian, independent auditors and legal counsel;
officers, trustees and other personnel; rent; shareholder services; and other
items incidental to corporate administration.
Operating expenses not required in the normal operation of the Trust are
payable by the Trust. These expenses include taxes, interest, governmental
charges and fees, including registration of the Trust with the Securities and
Exchange Commission and the various States, brokerage costs, dues, and all
extraordinary costs including expenses arising out of anticipated or actual
litigation or administrative proceedings.
As a part of the Management Agreement, Jones & Babson, Inc. employs at its
own expense David L. Babson & Co., Inc. as its Investment Counsel to assist
in the investment advisory function. David L. Babson & Co., Inc. is an
investment counseling firm founded in 1940. It serves a broad variety of
individual, corporate and other institutional clients by maintaining an
extensive research and analytical staff. It has an experienced investment
analysis and research staff which eliminates the need for Jones & Babson,
Inc. and the Trust to maintain an extensive duplicate staff. Edward L. Martin
has been the manager of Babson Bond Trust since 1984. Mr. Martin joined David
L. Babson & Co. in 1984. He is a Chartered Financial Analyst with 27 years of
investment management experience, and he heads the Babson fixed income
department.
For its services, Portfolio L and Portfolio S pay Jones & Babson, Inc. a fee
of 95/100 of one percent (.95%) of each Portfolio's average daily net assets.
However, during the period from May 1, 1988 through March 31, 1999, Jones &
Babson has waived 30/100 of one percent (.30%) of the fee for Portfolio S. As
a result, the fee paid by Portfolio S is 65/100 of one percent (.65%). The
Management Agreement limits the liability of the Manager or its Investment
Counsel, as well as their officers, directors and personnel, to acts or
omissions involving willful malfeasance, bad faith, gross negligence or
reckless disregard of their duties.
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Trust's
financial performance for the past five years. Certain information reflects
financial results for a single Portfolio share. The total returns in the
table represent the rate that an investor would have earned on an investment
in the Trust (assuming reinvestment of all dividends and distributions). This
information has been audited by Ernst & Young LLP, whose report, along with
the Trust's financial statements, are included in the annual report, which is
available upon request.
Portfolio L
<TABLE>
<CAPTION>
For the Year Ended November 30th
1998 1997 1996 1995 1994
</CAPTION>
<S> <C>
Net asset value, beginning of period $ 1.56 $ 1.55 $ 1.58 $ 1.47 $ 1.67
Income (loss) from investment operations:
Net investment income (loss) .094 .098 .107 .108 .108
Net gains or losses on securities
(both realized and unrealized) .030 .010 (.030) .110 (.149)
Total from investment operations .124 .108 .077 .218 (.041)
Less distributions:
Dividends (from net investment income) (.094) (.098) (.107) (.108) (.108)
Distributions (from capital gains) - - - - (.051)
Total distributions (.094) (.098) (.107) (.108) (.159)
Net asset value, end of period $ 1.59 $ 1.56 $ 1.55 $ 1.58 $ 1.47
Total return 8.13% 7.26% 5.17% 15.28% (2.71)%
Ratios/Supplemental Data
Net assets, end of period (in millions) $ 128 $ 132 $ 142 $ 161 $ 140
Ratio of expenses to average net assets .97% .97% .97% .97% .97%
Ratio of net investment income to average net assets 5.93% 6.38% 6.96% 7.06% 6.95%
Portfolio turnover rate 43% 59% 61% 50% 40%
</TABLE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Trust's
financial performance for the past five years. Certain information reflects
financial results for a single Portfolio share. The total returns in the
table represent the rate that an investor would have earned on an investment
in the Trust (assuming reinvestment of all dividends and distributions). This
information has been audited by Ernst & Young LLP, whose report, along with
the Trust's financial statements, are included in the annual report, which is
available upon request.
Portfolio S
<TABLE>
<CAPTION>
For the Year Ended November 30th
1998 1997 1996 1995 1994
</CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.78 $ 9.77 $ 9.90 $ 9.43 $ 10.48
Income (loss) from investment operations:
Net investment income (loss) .582 .618 .692 .726 .694
Net gains or losses on securities
(both realized and unrealized) .130 .010 (.130) .470 (.899)
Total from investment operations .712 .628 .562 1.196
(.205)
Less distributions:
Dividends (from net investment income) (.582) (.618) (.692) (.726) (.694)
Distributions (from capital gains) - - - - (.151)
Total distributions (.582) (.618) (.692) (.726) (.845)
Net asset value, end of period $ 9.91 $ 9.78 $ 9.77 $ 9.90 $ 9.43
Total return 7.47% 6.70% 5.96% 13.10% (2.06)%
Ratios/Supplemental Data
Net assets, end of period (in millions) $ 38 $ 41 $ 34 $ 33 $ 30
Ratio of expenses to average net assets .67% .67% .66% .67% .67%
Ratio of net investment income to average net assets 5.90% 6.42% 7.10% 7.47% 7.02%
Ratio of expenses to average net assets before
voluntary reduction of management fee .97% .97% .96% .97% .97%
Portfolio turnover rate 60% 65% 48% 57% 42%
</TABLE>
HOW TO PURCHASE SHARES
No Load Fund
There are no sales commissions or Rule 12b-1 fees
How to Buy Shares (see accompanying chart for details)
By phone, mail or wire
Through Automatic Monthly Investments
Through exchanges from a Babson or Buffalo Fund
Minimum Initial Investment
$1,000 for most accounts
$250 for IRA and Uniform Transfer (Gift) to Minors accounts
$100 for Automatic Monthly Investments
$1,000 for exchanges from another fund
Minimum Additional Investment
$100 for purchases by phone or mail ($1,000 for wire purchases)
$50 for Automatic Monthly Investments
$1,000 for exchanges from another fund
Minimum Account Size
You must maintain a minimum account size equal to the current minimum initial
investment (usually $1,000). If your account falls below this amount due to
redemptions (not market action) we may notify you and ask you to increase the
account to the minimum. We will close the account and send your money if you
do not bring the account up to the minimum within 60 days after we mail you
the notice.
HOW TO REDEEM SHARES
You may withdraw from your Trust account at any time in the following
amounts:
any amount for redemptions requested by mail, phone or telegraph
$1,000 or more for redemptions wired to your account ($10 fee)
$50 or more for redemptions by a systematic redemption plan (there
may be a fee)
$1,000 or more for exchanges to another fund
$100 or more for redemptions by automatic monthly exchange to another
fund
SHAREHOLDER SERVICES
The following services are also available to shareholders. Please call 1-800-
4-BABSON (1-800-422-2766) for more information:
Uniform Transfers (Gifts) to Minors accounts
Accounts for corporations or partnerships
Sub-Accounting Services for Keogh, tax qualified retirement plans, and
others
Prototype Retirement Plans for the self-employed, partnerships and
corporations.
Traditional IRA accounts
Roth IRA accounts
Education IRA accounts
Simplified Employee Pensions (SEPs)
HOW SHARE PRICE IS DETERMINED
Shares of each Portfolio are purchased or redeemed at the net asset value per
share next calculated after your purchase order and payment or redemption
order is received in good order. In the case of certain institutions which
have made satisfactory payment or redemption arrangements with the Trust,
orders may be processed at the net asset value per share next effective after
receipt by us.
The per share calculation is made by subtracting from each Portfolio's total
assets any liabilities and then dividing into this amount the total
outstanding shares as of the date of the calculation. The net asset value per
share is computed once daily, Monday through Friday, at 4:00 p.m. (Eastern
Time) on days when the Trust is open for business (generally the same days
that the New York Stock Exchange is open for trading).
Debt securities (other than short-term obligations), including listed issues,
are valued by a pricing service which uses both dealer-supplied valuations
and electronic data processing techniques. These values take into account
appropriate factors such as institution-size trading in similar groups of
securities, yield, quality, coupon rate, maturity, type of issue, trading
characteristics and other market data. They do not exclusively rely on
exchange or over-the-counter prices, so that they reflect more accurately the
fair value of such securities. The Trust's Board of Trustees has approved the
use of the pricing service. Short-term obligations are valued at amortized
cost, which constitutes fair value as determined by the Board of Trustees.
Preferred stocks, common stocks and warrants, if listed on an exchange, will
be valued at the last sale price on the principal exchange upon which the
security is traded on the day it is valued. If not traded, or if unlisted,
the security is valued at the mean between the last current bid and asked
prices. If there are no such quotations or valuations, they are valued at
fair value as determined by or at the direction of the Board of Trustees.
DIVIDENDS, DISTRIBUTIONS AND THEIR TAXATION
At the end of each business day, each Portfolio declares dividends from its
net investment income. These dividends are payable to those who were
shareholders of record at the end of the previous business day. On the last
day of the month, all dividends declared during that month are credited to
the accounts of those shareholders. Any net capital gains that a Portfolio
has realized on the sale of securities, if any, will be declared annually on
or before December 31. Your dividends and distributions will be reinvested
automatically in additional shares of the same Portfolio, unless you have
elected on your original application, or by written instructions filed with
the Trust, to have them paid in cash. There are no fees or sales charges on
reinvestments.
If at the time you close your account, there is net undistributed income, we
will pay it to you by check on the next dividend distribution date. If you
redeem some but not all your shares, any net undistributed credit will be
distributed on the next dividend date as usual. Shares begin earning income
on the day following the effective date of purchase. Income earned by a
Portfolio on weekends, holidays and other days on which the Trust is closed
for business is declared as a dividend on the next day on which the Trust is
open for business. However, on month-ends such dividend is declared as of the
last day of the month.
Dividends from net investment income or net short-term gains will be taxable
(for investors subject to income taxes) as ordinary income, whether paid in
cash or in additional shares. Whether paid in cash or additional shares, and
regardless of the length of time shares have been owned by the shareholder,
distributions from long-term capital gains are taxable to shareholders as
such, but are not eligible for the dividends-received deduction for
corporations. Also, if purchases of shares in a Portfolio are made shortly
before a record date for a dividend or capital gains distribution, a portion
of the investment will be returned as a taxable distribution (for investors
subject to tax).
Many states grant tax-free status to dividends paid from interest earned on
direct obligations of the U.S. Government, subject to certain restrictions.
The Trust will provide you with information at the end of each calendar year
on the amount of such dividends that may qualify for exemption on your
individual tax return.
Distributions declared in October, November or December and made payable to
shareholders of record in such a month are deemed to have been received by
shareholders on December 31 of such year, so long as the distributions are
actually paid before February 1 of the following year. You will be notified
each January as to the federal tax status of distributions paid by the
Portfolios. Such distributions may also be subject to state and local taxes.
Taxes on Transactions - Exchange and redemption of Portfolio shares are
taxable events for federal income tax purposes. Any loss incurred on a sale
or exchange of shares held for six months or less will be treated as a long-
term capital loss to the extent of capital gains received with respect to
such shares. Starting January 1, 2001, sales of
securities held for more than five years will be taxed at special lower
rates. You may also be subject to state and municipal taxes on such exchanges
and redemptions.
Because everyone's tax situation is unique, always consult your tax
professional about federal, state and local tax consequences.
Dividends-Received Deduction for Corporations - It is expected that only a
small portion of the dividends paid by each Portfolio will qualify for the
70% dividends-received deduction for corporations. The Trust will send to
shareholders a statement each year advising the amount of the dividend income
which qualifies for such treatment.
Withholding - You must certify on your application, or on a separate form
supplied by us, that your Social Security or Taxpayer Identification Number
provided is correct and that you are not currently subject to backup
withholding, or that you are exempt from backup withholding. Otherwise, we
are required by federal law to withhold 31% of reportable payments paid to
you.
ADDITIONAL POLICIES ABOUT TRANSACTIONS
We cannot process transaction requests that are not complete and in good
order. We may cancel or change our
transaction policies without notice. To avoid delays, please call us if you
have any questions about these policies.
Purchases - We may reject orders when not accompanied by payment or when in
the best interest of the Trust and its shareholders.
Redemptions - We try to send proceeds as soon as practicable. In any event,
we send proceeds by the third business day after we receive a request in good
order. We cannot accept requests that contain special conditions or effective
dates. We may request additional documentation to insure that a request is
genuine. Under certain circumstances, we may pay you proceeds in the form of
portfolio securities owned by the Trust. If you receive securities instead of
cash, you may incur brokerage costs when converting into cash.
If you request a redemption within 15 days of purchase, we will delay sending
your proceeds until we are certain that we have collected unconditional
payment, or until 15 days from the date of purchase. For your protection, if
your account address has been changed within the last 30 days, your
redemption request must be in writing and signed by each account owner, with
signature guarantees.
Signature Guarantees - You can get a signature guarantee from most banks or
securities dealers, but not a notary public. For your protection, we require
a guaranteed signature if you request:
A redemption check sent to a different payee, bank or address than
we have on file.
A redemption check mailed to an address that has been changed within
the last 30 days.
A redemption for $50,000 or more in writing.
A change in account registration or redemption instructions.
Corporations, Trusts and Other Entities - Additional documentation is
normally required for corporations, fiduciaries and others who hold shares in
a representative or nominee capacity. We cannot process your request until we
have all documents in the form required. Please call us first to avoid
delays.
Exchanges to Another Fund - You must meet the minimum investment requirement
of the fund you are exchanging into. The names and registrations on the two
accounts must be identical. Your shares must have been held in an open
account for 15 days or more and we must have received good payment before we
will exchange shares. You should review the prospectus of the fund being
purchased. Call us for a free copy.
Telephone Services - During periods of increased market activity, you may
have difficulty reaching us by telephone. If this happens, contact us by mail
or telegraph. We may refuse a telephone request, including a telephone or
telegraph redemption request. We will use reasonable procedures to confirm
that telephone instructions are genuine. If such procedures are not followed,
the Trust may be liable for losses due to unauthorized or fraudulent
instructions. At our option, we may limit the frequency or the amount of
telephone redemption requests. Neither the Trust nor Jones & Babson, Inc.
assumes responsibility for the authenticity of telephone redemption requests.
CONDUCTING BUSINESS WITH THE BABSON FUNDS
CONDUCTING BUSINESS WITH THE BABSON FUNDS
[CHART-ROWS]
BY PHONE
BY MAIL
BY WIRE
THROUGH AUTOMATIC TRANSACTION PLANS
[CHART-COLUMB HEADINGS]
HOW TO OPEN AN ACCOUNT
HOW TO SELL SHARES
HOW TO EXCHANGE SHARES BY WIRE
BY PHONE
1-800-4-BABSON
(1-800-422-2766)
in the Kansas City area 751-5900
You must authorize each type of telephone transaction on your account
application or the appropriate form, available from us. All account owners
must sign. When you call, we may request personal identification and tape
record the call.
[How to Open an Account]
If you already have an account with us and you have authorized telephone
exchanges, you may call to open an account in another Babson or Buffalo Fund
by exchange ($1,000 minimum). The names and registrations on the accounts
must be identical.
[How to Add to an Account]
You may make investments ($100 minimum) by telephone. After we have received
your telephone call, we will deduct from your checking account the cost of
the shares.
Availability of this service is subject to approval by the Trust and
participating banks.
[How to Sell Shares]
You may withdraw any amount ($1,000 minimum if wired) by telephone or
telegram. We will send funds only to the address or bank account on file with
us. Provide the Trust's name, your account number, the names of each account
owner (exactly as registered), and the number of shares or dollar amount to
be redeemed. For wires, also provide the bank name and bank account number.
[How to Exchange Shares By Wire]
You may exchange shares ($1,000 minimum or the initial minimum fund
requirement) for shares in another Babson or Buffalo Fund which have been
held in open account for 15 days or more.
BY MAIL
Initial Purchases and all Redemptions:
D.L. Babson Bond Trust
(designate Portfolio L or S)
P.O. Box 419757
Kansas City, MO 64141-6757
Subsequent Purchases:
D.L. Babson Bond Trust
(designate Portfolio L or S)
P.O. Box 419779
Kansas City, MO 64141-6779
[How to Open an Account]
Complete and sign the application which accompanies this Prospectus. Your
initial investment must meet the minimum amount. Make your check payable to
UMB Bank, n.a.
[How to Add to an Account]
Make your check ($50 minimum) payable to UMB Bank, n.a. and mail it to us.
Always identify your account number or include the detachable reminder stub
(from your confirmation statement).
[How to Sell Shares]
In a letter, include the genuine signature of each registered owner (exactly
as registered), the name of each account owner, the account number and the
number of shares or the dollar amount to be redeemed. We will send funds only
to the address of record.
[How to Exchange Shares By Wire]
In a letter, include the genuine signature of each registered owner, the
account number, the number of shares or dollar amount to be exchanged ($1,000
minimum) and the Babson or Buffalo Fund into which the amount is being
transferred.
BY WIRE
UMB Bank, n.a.,
Kansas City, Missouri, ABA #101000695
For D.L. Babson Bond Trust
Portfolio L/AC=987032-6256
Portfolio S/AC=987032-6248
OBI=(your account number and account name)
[How to Open an Account]
Call us first to get an account number. We will require information such as
your Social Security or Taxpayer Identification Number, the amount being
wired ($1,000 minimum), and the name and telephone number of the wiring bank.
Then tell your bank to wire the amount. You must send us a completed
application as soon as possible or payment of your redemption proceeds will
be delayed.
[How to Add to an Account]
Wire share purchases ($1,000 minimum) should include the names of each
account owner, your account number and the Babson or Buffalo Fund in which
you are purchasing shares. You should notify us by telephone that you have
sent a wire purchase order to UMB Bank, n.a.
[How to Sell Shares]
Redemption proceeds ($1,000 minimum) may be wired to your pre-identified bank
account. A $10 fee is deducted. If we receive your request before 4:00 P.M.
(Eastern Time) we will normally wire funds the following business day. If we
receive your request later in the day, we will normally wire funds on the
second business day. Contact your bank about the time of receipt and
availability.
[How to Exchange Shares By Wire]
Not applicable.
THROUGH AUTOMATIC TRANSACTION PLANS
You must authorize each type of automatic transaction on your account
application or complete an authorization form, available from us upon
request. All registered owners must sign.
[How to Open an Account]
Not applicable.
[How to Add to an Account]
Automatic Monthly Investment:
You may authorize automatic monthly investments in a constant dollar amount
($50 minimum) from your checking account. We will draft your checking account
on the same day each month in the amount you authorize.
[How to Sell Shares]
Systematic Redemption Plan:
You may specify a dollar amount ($50 minimum) to be withdrawn monthly or
quarterly or have your shares redeemed at a rate calculated to exhaust the
account at the end of a specified period. A fee of $1.50 or less may be
charged for each withdrawal. You must own shares in an open account valued at
$10,000 when you first authorize the systematic redemption plan. You may
cancel or change your plan or redeem all your shares at any time. We will
continue withdrawals until your shares are gone or until the Trust or you
cancel the plan.
[How to Exchange Shares By Wire]
Monthly Exchanges:
You may authorize monthly exchanges from your account ($100 minimum) to
another Babson or Buffalo Fund. Exchanges will be continued until all shares
have been exchanged or until you terminate the service.
Equities
Growth Fund
Enterprise Fund*
Enterprise Fund II
Value Fund
Shadow Stock Fund
International Fund
Fixed Income
Bond Trust
Money Market Fund
Tax-Free Income Fund
* Closed to new investors.
ADDITIONAL INFORMATION
The Statement of Additional Information (SAI) contains additional information
about the Trust and is incorporated by reference into this Prospectus. The
Trust's annual and semi-annual reports to shareholders contain additional
information about the Trust's investments. In the Trust's annual report, you
will find a discussion of the market conditions and investment strategies
that significantly affected the Trust's performance during its last fiscal
year.
You may obtain a free copy of these documents by calling, writing or e-
mailing the Trust as shown below. You also may call the toll free number
given below to request other information about the Trust and to make
shareholder inquiries.
You may review and copy the SAI and other information about the Trust by
visiting the Securities and Exchange Commission's Public Reference Room in
Washington, DC (1-800-SEC-0330) or by visiting the Commission's Internet site
at http://www.sec.gov. Copies of this information also may be obtained, upon
payment of a duplicating fee, by writing to the Public Reference Section of
the Commission, Washington, DC 20549-609.
BABSON FUNDS
JONES & BABSON DISTRIBUTORS
A member of the Generali Group
P.O. Box 419757
Kansas City, MO 64141-6757
816-751-5900
1-800-4-BABSON
(1-800-422-2766)
www.babsonfunds.com
PART B
D. L. BABSON BOND TRUST
STATEMENT OF ADDITIONAL INFORMATION
March 31, 1999
This Statement is not a Prospectus but should be read in
conjunction with the Trust's current Prospectus dated March 31, 1999. To
obtain the Prospectus or Annual Report to Shareholders, please call the
Trust toll-free at 1-800-4-BABSON (1-800-422-2766), or in the Kansas City
area 751-5900. Certain information from the Annual Report to
Shareholders is incorporated by reference into this Statement.
TABLE OF CONTENTS
Page
Investment Objective and Policies 2
Repurchase Agreements 2
Risk Factors applicable to Repurchase Agreements 2
Portfolio Transactions 2
Investment Restrictions 3
Performance Measures 4
Total Return 4
How the Trust's Shares are Distributed 5
Purchase and Redemption Services 5
How Share Purchases are Handled 5
Redemption of Shares 6
Management and Investment Counsel 7
Holidays 7
Trustees and Officers 7
Dividends, Distributions and Their Taxation 9
General Information and History 11
Custodian 11
Transfer Agent 11
Independent Auditors 12
Other Jones & Babson Funds 12
Fixed Income Securities Described and Ratings 13
Financial Statements 15
INVESTMENT OBJECTIVE AND POLICIES
The following policies supplement the Trust's
investment objective and policies set forth in the
Prospectus. The D. L. Babson Bond Trust is an
open-end, diversified investment company. It is
organized as a common law trust and is referred to
throughout the Prospectus and this "Statement of
Additional Information" as the Trust.
Portfolio L will generally have a duration of
between 3.5 and 7 years (excluding short-term
investments). Portfolio S will generally have a
duration of between 2 and 4 years (excluding short-
term investments). Duration is a portfolio
management tool used to determine the price
sensitivity of an individual bond or portfolio of fixed
income securities to a change in interest rates.
Unlike maturity, which only states when the final
payment is received, the duration of a fixed income
security is the weighted average maturity, expressed
in years, of the present value of all future cash flows,
including coupon payments and principal
repayments. The Fund's portfolio may include
securities with maturities and durations outside these
ranges.
REPURCHASE AGREEMENTS
The Trust may invest in issues of the United States
Treasury or a United States government agency
subject to repurchase agreements. A repurchase
agreement involves the sale of securities to the Trust
with the concurrent agreement by the seller to
repurchase the securities at the Trust's cost plus
interest at an agreed rate upon demand or within a
specified time, thereby determining the yield during
the purchaser's period of ownership. The result is a
fixed rate of return insulated from market fluctuations
during such period. Under the Investment Company
Act of 1940, repurchase agreements are considered
loans by the Trust.
The Trust will enter into such repurchase
agreements only with United States banks having
assets in excess of $1 billion which are members of
the Federal Deposit Insurance Corporation, and with
certain securities dealers who meet the qualifications
set from time to time by the Board of Trustees of the
Trust. The term to maturity of a repurchase
agreement normally will be no longer than a few
days. Repurchase agreements maturing in more than
seven days and other illiquid securities will not
exceed 10% of the net assets of the Trust.
RISK FACTORS APPLICABLE TO
REPURCHASE AGREEMENTS
The use of repurchase agreements involves certain
risks. For example, if the seller of the agreement
defaults on its obligation to repurchase the underlying
securities at a time when the value of these securities
has declined, the Trust may incur a loss upon
disposition of them. If the seller of the agreement
becomes insolvent and subject to liquidation or
reorganization under the Bankruptcy Code or other
laws, disposition of the underlying securities may be
delayed pending court proceedings. Finally, it is
possible that the Trust may not be able to perfect its
interest in the underlying securities. While the
Trust's management acknowledges these risks, it is
expected that they can be controlled through stringent
security selection criteria and careful monitoring
procedures.
PORTFOLIO TRANSACTIONS
Decisions to buy and sell securities for the Trust
are made by Jones & Babson, Inc. pursuant to
recommendations by David L. Babson & Co. Inc.
Trustees of the Trust and officers of Jones & Babson,
Inc. are generally responsible for implementing or
supervising these decisions, including allocation of
portfolio brokerage and principal business and the
negotiation of commissions and/or the price of the
securities. Although short-term trading profits are
not a goal of the Trust, it is possible that it may
engage in trading activity in order to take advantage
of opportunities to enhance yield, protect principal or
improve quality. However, under normal
circumstances, it is anticipated that each Portfolio's
turnover will not exceed 100% on an annual basis.
In instances where securities are purchased on a
commission basis the Trust will seek competitive and
reasonable commission rates based on the
circumstances of the trade involved and to the extent
that they do not detract from the quality of the
execution.
The Trust, in purchasing and selling portfolio
securities, will seek the best available combination of
execution and overall price (which shall include the
cost of the transaction) consistent with the
circumstances which exist at the time. The Trust
does not intend to solicit competitive bids on each
transaction. The Trust expects that purchases and
sales of portfolio securities usually will be principal
transactions from a principal market maker for the
securities, unless it appears that a better combination
of price and execution may be obtained elsewhere.
Usually there will be no brokerage commission paid
by the Trust for such purchases. Purchases from
underwriters of portfolio securities will include a
commission or concession paid by the issuer to the
underwriter, and purchases from dealers serving as
market makers will include the spread between the
bid and asked price.
The Trust believes it is in its best interest and that
of its shareholders to have a stable and continuous
relationship with a diverse group of financially strong
and technically qualified broker-dealers who will
provide quality executions at competitive rates.
Broker-dealers meeting these qualifications also will
be selected for their demonstrated loyalty to the
Trust, when acting on its behalf, as well as for any
research or other services provided to the Trust.
When buying securities in over-the-counter markets,
the Trust will select a broker who maintains a
primary market for the security unless it appears that
a better combination of price and execution may be
obtained elsewhere. The Trust normally will not pay
a higher commission rate to broker-dealers providing
benefits or services to it than it would pay to broker-
dealers who do not provide it such benefits or
services. However, the Trust reserves the right to do
so within the principles set out in Section 28(e) of the
Securities Exchange Act of 1934 when it appears that
this would be in the best interests of the share-
holders.
No commitment is made to any broker or dealer
with regard to placing of orders for the purchase or
sale of portfolio securities, and no specific formula is
used in placing such business. Allocation is reviewed
regularly by both the Board of Trustees of the Trust
and Jones & Babson, Inc.
Since the Trust does not market its shares through
intermediary brokers or dealers, it is not the Trust's
practice to allocate brokerage or principal business on
the basis of sales of its shares which may be made
through such firms. However, it may place portfolio
orders with qualified broker-dealers who recommend
the Trust to other clients, or who act as agents in the
purchase of the Trust's shares for their clients.
Research services furnished by broker-dealers may
be useful to the Trust's manager and its investment
counsel in serving other clients, as well as the Trust.
Conversely, the Trust may benefit from research
services obtained by the manager or its investment
counsel from the placement of portfolio brokerage of
other clients.
When it appears to be in the best interests of its
shareholders, the Trust may join with other clients of
the manager and its investment counsel in acquiring
or disposing of a portfolio holding. Securities
acquired or proceeds obtained will be equitably
distributed between the Trust and other clients
participating in the transaction. In some instances,
this investment procedure may affect the price paid
or received by the Trust or the size of the position
obtained by the Trust.
INVESTMENT RESTRICTIONS
In addition to the investment objective and
portfolio management policies set forth in the
Prospectus under the caption "Investment Objective
and Portfolio Management Policy," the following
restrictions also may not be changed without
approval of the "holders of a majority of the
outstanding shares" of the Trust or the affected
Portfolio series.
The Trust will not: (1) purchase any investment
security for credit or on margin, except such short-
term credits as are necessary for the clearance of
transactions; (2) participate on a joint or a joint-and-
several basis in any trading account in securities; (3)
sell any securities short; (4) borrow money, securities
or other property in any event or for any purpose
whatsoever, or issue any security senior to the shares
authorized by the Trust Indenture; (5) lend money,
securities or other assets of the Trust for any purpose
whatsoever, provided however, that the acquisition of
any publicly distributed securities shall not be held or
construed to be the making of a loan; (6) mortgage,
pledge, hypothecate or encumber in any manner
whatsoever any investment securities at any time
owned or held by the Trust; (7) underwrite or
participate in the underwriting of any securities; (8)
purchase shares of other investment companies
except in the open market at ordinary broker's
commission or pursuant to a plan of merger or
consolidation; (9) acquire any security issued by any
issuer in which an officer, director or stockholder of
such issuer is a Trustee of the Trust or an officer or
director of a principal underwriter (as defined in the
Investment Company Act of 1940) if after the
purchase of such security one or more of the Trustees
owns beneficially more than one-half (1/2) of one per
centum (1%) of the capital stock of such issuer
and such Trustees together own beneficially more
than five per centum (5%) of the capital stock of such
issuer; (10) acquire any security of another issuer if
immediately after and as a result of such acquisition
the market value of such securities of such other
issuer shall exceed five per centum (5%) of the
market value of the total assets of the Trust or
the Trust shall own more than ten per centum
(10%) of the outstanding voting securities of such
issuer. This restriction does not apply to securities
issued by the United States or any state, county, or
municipality thereof; (11) invest more than 25% of
the value of its assets in any one industry; (12)
engage in the purchase or sale of real estate or
commodities; (13) invest in companies for the
purpose of exercising control of management; or (14)
purchase any securities which are subject to legal or
contractual restrictions, i.e., restricted securities
which may not be distributed publicly without
registration under the Securities Act of 1933.
PERFORMANCE MEASURES
The Trust may advertise "average annual total
return" for each Portfolio over various periods of
time. Such total return figures show the average
percentage change in value of an investment in a
Portfolio from the beginning date of the measuring
period to the end of the measuring period. These
figures reflect changes in the price of the Trusts'
shares and assume that any income dividends and/or
capital gains distributions made by a Portfolio during
the period were reinvested in shares of the Portfolio.
Figures will be given for recent one-, five- and ten-
year periods (if applicable), and may be given for
other periods as well (such as from commencement
of a Portfolio's operations, or on a year-by-year
basis). When considering "average" total return
figures for periods longer than one year, it is
important to note that a Portfolio's annual total return
for any one year in the period might have been
greater or less than the average for the entire period.
Performance Comparisons. In advertisements or
in reports to shareholders, each Portfolio may
compare its performance to that of other mutual
funds with similar investment objectives and to bond
or other relevant indices. For example, the Trust may
compare its performance to rankings prepared by
Lipper Analytical Services, Inc. (Lipper), a widely
recognized independent service which monitors the
performance of mutual funds. The Trust may
compare its performance to the Shearson/Lehman
Government/Corporate Index, an unmanaged index
of government and corporate bonds. Performance
information, rankings, ratings, published editorial
comments and listings as reported in national
financial publications such as Kiplinger's Personal
Finance Magazine, Business Week, Morningstar
Mutual Funds, Investor's Business Daily,
Institutional Investor, The Wall Street Journal,
Mutual Fund Forecaster, No- Load Investor, Money,
Forbes, Fortune and Barron's may also be used in
comparing performance of the Trust. Performance
comparisons should not be considered as
representative of the future performance of any
Portfolio.
Performance rankings, recommendations,
published editorial comments and listings reported in
Money, Barron's, Kiplinger's Personal Finance
Magazine, Financial World, Forbes, U.S. News &
World Report, Business Week, The Wall Street
Journal, Investors Business Daily, USA Today,
Fortune and Stanger's may also be cited (if the Trust
is listed in any such publication) or used for
comparison, as well as performance listings and
rankings from Morningstar Mutual Funds, Personal
Finance, Income and Safety, The Mutual Fund Letter,
No-Load Fund Investor, United Mutual Fund
Selector, No-Load Fund Analyst, No-Load Fund X,
Louis Rukeyser's Wall Street newsletter, Donoghue's
Money Letter, CDA Investment Technologies, Inc.,
Wiesenberger Investment Companies Service and
Donoghue's Mutual Fund Almanac.
TOTAL RETURN
The Trust's "average annual total return" figures
described and shown below are computed according
to a formula prescribed by the Securities and
Exchange Commission. The formula can be
expressed as follows:
P(1+T)n = ERV
Where: P = a hypothetical initial payment of
$1000
T = average annual total return
n = number of years
ERV = Ending Redeemable Value of a
hypothetical $1000 payment made
at the beginning of the 1, 5 or 10
year (or other) periods at the end of
the 1, 5 or 10 year (or other)
periods (or fractional portions
thereof).
The table below shows the average total return for
the Portfolios for the specified periods.
Portfolio L Portfolio S
For the one year
12/1/97-11/30/98 8.13% 7.47%
For the five years
12/1/93-11/30/98 6.47% 6.12%
For the ten years
12/1/88-11/30/98 8.58% 7.87%
From
commencement
of operation
to 11/30/98* 7.68% 7.68%
_______________________________________
* Portfolio L commenced operation
November 2, 1944.
* Portfolio S commenced operation
April 19, 1988.
HOW THE TRUST'S SHARES ARE
DISTRIBUTED
Jones & Babson, Inc., as agent of the Trust, agrees
to supply its best efforts as sole distributor of the
Trust's shares and, at its own expense, pay all sales
and distribution expenses in connection with their
offering other than registration fees and other
government charges. Jones & Babson, Inc. is located
at BMA Tower, 700 Karnes Blvd., Kansas City, MO
64108-3306
Jones & Babson, Inc. does not receive any fee or
other compensation under the distribution agreement
which continues in effect until October 31, 1999, and
which will continue automatically for successive
annual periods ending each October 31, if continued
at least annually by the Trustees, including a majority
of those Trustees who are not parties to such
Agreements or interested persons of any such party.
It terminates automatically if assigned by either party
or upon 60 days written notice by either party to the
other.
Jones & Babson, Inc. also acts as sole distributor of
the shares for David L. Babson Growth Fund, Inc.,
D.L. Babson Money Market Fund, Inc., D. L. Babson
Tax-Free Income Fund, Inc., Babson Enterprise
Fund, Inc., Babson Enterprise Fund II, Inc., Babson
Value Fund, Inc., Shadow Stock Fund, Inc., Babson-
Stewart Ivory International Fund, Inc., UMB Scout
Stock Fund, Inc., UMB Scout Bond Fund, Inc., UMB
Scout Money Market Fund, Inc., UMB Scout Tax-
Free Money Market Fund, Inc., UMB Scout Regional
Fund, Inc., UMB Scout WorldWide Fund, Inc., UMB
Scout Balanced Fund, Inc., UMB Scout Capital
Preservation Fund, Inc., UMB Scout Kansas Tax-
Exempt Bond Fund, Inc., Buffalo Balanced Fund,
Inc., Buffalo Equity Fund, Inc., Buffalo High Yield
Fund, Inc., Buffalo USA Global Fund, Inc., Buffalo
Small Cap Fund, Inc. and AFBA Five Star Fund, Inc.
PURCHASE AND REDEMPTION SERVICES
We reserve the right to:
Waive or increase the minimum investment
requirements with respect to any person or
class of persons, which include shareholders
of the Trust's special investment programs.
Cancel or change the telephone investment
service, the telephone/telegraph exchange
service and the automatic monthly
investment plan without prior notice to you
where in the best interest of the Trust and its
investors.
Cancel or change the telephone/telegraph
redemption service at any time without
notice.
Begin charging a fee for the telephone
investment service or the automatic monthly
investment plan and to cancel or change
these services upon 15 days written notice to
you.
Begin charging a fee for the
telephone/telegraph service and to cancel or
change the service upon 60 days written
notice to you.
Begin charging a fee for the systematic
redemption plan upon 30 days written notice
to you.
Waive signature guarantee requirements in
certain instances where it appears reasonable
to do so and will not unduly affect the
interests of other shareholders. We may
waive the signature guarantee requirement if
you authorize the telephone/telegraph
redemption method at the same time you
submit the initial application to purchase
shares.
Require signature guarantees if there
appears to be a pattern of redemptions
designed to avoid the signature guarantee
requirement, or if we have other reason to
believe that this requirement would be in the
best interests of the Trust and its
shareholders.
HOW SHARE PURCHASES ARE HANDLED
We will not be responsible for the consequences of
delays, including delays in the banking or Federal
Reserve wire systems. We cannot process
transaction requests that are not complete and in good
order. If you use the services of any other broker to
purchase or redeem shares of the Trust, that broker
may charge you a fee. Each order accepted will be
fully invested in whole and fractional shares, unless
the purchase of a certain number of whole shares is
specified, at the net asset value per share next
effective after the order is accepted by theTrust.
Each investment is confirmed by a year-to-date
statement which provides the details of the immediate
transaction, plus all prior transactions in your account
during the current year. This includes the dollar
amount invested, the number of shares purchased or
redeemed, the price per share, and the aggregate
shares owned. A transcript of all activity in your
account during the previous year will be furnished
each January. By retaining each annual summary and
the last year-to-date statement, you have a complete
detailed history of your account which provides
necessary tax information. A duplicate copy of a past
annual statement is available from Jones & Babson,
Inc. at its cost, subject to a minimum charge of $5 per
account, per year requested.
Normally, the shares which you purchase are held
by the Trust in open account, thereby relieving you of
the responsibility of providing for the safekeeping of
a negotiable share certificate. Should you have a
special need for a certificate, one will be issued on
request for all or a portion of the whole shares in your
account. There is no charge for the first certificate
issued. A charge of $3.50 will be made for any
replacement certificates issued. In order to protect
the interests of the other shareholders, share
certificates will be sent to those shareholders who
request them only after the Trust has determined that
unconditional payment for the shares represented by
the certificate has been received by its custodian,
UMB Bank, n.a.
If an order to purchase shares must be canceled due
to non-payment, the purchaser will be responsible for
any loss incurred by the Trust arising out of such
cancellation. To recover any such loss, the Trust
reserves the right to redeem shares owned by any
purchaser whose order is canceled, and such
purchaser may be prohibited or restricted in the
manner of placing further orders.
The Trust reserves the right in its sole discretion to
withdraw all or any part of the offering made by the
prospectus or to reject purchase orders when, in the
judgment of management, such withdrawal or
rejection is in the best interest of the Trust and its
shareholders. The Trust also reserves the right at any
time to waive or increase the minimum requirements
applicable to initial or subsequent investments with
respect to any person or class of persons, which
include shareholders of the Trust's special investment
programs.
The Trust reserves the right to refuse to accept
orders for Trust shares unless accompanied by
payment, except when a responsible person has
indemnified the Trust against losses resulting from
the failure of investors to make payment. In the event
that the Trust sustains a loss as the result of failure by
a purchaser to make payment, the Trust's
underwriter, Jones & Babson, Inc., will cover the
loss.
REDEMPTION OF SHARES
We will not be responsible for the consequences of
delays, including delays in the banking or Federal
Reserve wire systems. We cannot process
transaction requests that are not complete and in good
order. We must receive an endorsed share certificate
with a signature guarantee, where a certificate has
been issued.
The Telephone/Telegraph Redemption Service
may only be used for non certificated shares held in
an open account. We reserve the right to refuse a
telephone or telegraph redemption request. At our
option, we may pay such redemption by wire or
check. We may reduce or waive the $10 charge for
wiring redemption proceeds in connection with
certain accounts.
To participate in the Systematic Redemption Plan
your dividends and capital gains distributions must be
reinvested in additional shares of the Trust.
The right of redemption may be suspended, or the
date of payment postponed beyond the normal three-
day period by the Trust's Board of Trustees under the
following conditions authorized by the Investment
Company Act of 1940: (1) for any period (a) during
which the New York Stock Exchange is closed, other
than customary weekend and holiday closing, or (b)
during which trading on the New York Stock
Exchange is restricted; (2) for any period during
which an emergency exists as a result of which (a)
disposal by the Trust of securities owned by it is not
reasonably practicable, or (b) it is not reasonably
practicable for the Trust to determine the fair value of
its net assets; or (3) for such other periods as the
Securities and Exchange Commission may by order
permit for the protection of the Trust's shareholders.
MANAGEMENT AND INVESTMENT
COUNSEL
As a part of the Management Agreement, Jones &
Babson, Inc. employs at its own expense David L.
Babson & Co. Inc., as its investment counsel. David
L. Babson & Co. Inc. was founded in 1940, as a
private investment research and counseling organiza-
tion. David L. Babson & Co. Inc. serves individual,
corporate and other institutional clients and
participates with Jones & Babson, Inc. in the
management of nine Babson no-load mutual funds.
The aggregate management fees paid to Jones & Babson, Inc.
during the three most recent fiscal years ended
November 30, 1998, 1997 and 1996 (from which Jones & Babson, Inc.
paid all the Fund's expenses except those payable directly by the Fund)
were $________, $1,275,822 and $________, respectively for the services
provided to the Trust.
The aggregate management fees paid to Jones &
Babson, Inc. by the Trust during the three most recent
fiscal years ended November 30, 1998, 1997 and
1996 (from which Jones & Babson, Inc. paid all the
Trust's expenses except those payable directly by the
Trust) were $ 1,226,260, $1,275,822, and $1,408,223,
respectively, for Portfolio L and $370,143, $254,164,
and $205,831, respectively, for Portfolio S. The
annual fee charged by Jones & Babson, Inc. covers
all normal operating costs of the Trust. The annual
fee charged by Jones & Babson, Inc. is higher than
the fees of most other investment advisers whose
charges cover only investment advisory services with
all remaining operational expenses absorbed directly
by the fund. Yet, it compares favorably with these
other advisers when all expenses to shareholders are
taken into account. The total expenses of the Trust
for the fiscal year ended November 30, 1998,
amounted to 97/100 of one percent (.97%) of the
average net assets of Portfolio L and 67/100 of one
percent (.67%) of the average net assets of Portfolio
S.
David L. Babson & Co. Inc. has an experienced
investment analysis and research staff which
eliminates the need for Jones & Babson, Inc. and the
Trust to maintain an extensive duplicate staff, with
the consequent increase in the cost of investment
advisory service. Jones & Babson, Inc. pays David
L. Babson & Co. Inc. a fee for each Portfolio of
25/100 of one percent (.25%) of the average daily
total net assets, which is computed daily and paid
semimonthly. This fee has been reduced to 15/100 of
one percent (.15%) for Portfolio S until March 31,
1999. The cost of the services of David L. Babson &
Co. Inc. is included in the services of Jones &
Babson, Inc. During the three most recent fiscal
years ended November 30, 1998, 1997 and 1996,
Jones & Babson, Inc. paid David L. Babson & Co.
Inc. fees amounting to $323,879, $335,133, and
$371,539, respectively, for Portfolio L and $58,443,
$58,337, and $47,623, respectively, for Portfolio S.
Certain officers and trustees of the Trust are also
officers or directors or both of other Babson Funds,
Jones & Babson, Inc. or David L. Babson & Co. Inc.
Jones & Babson, Inc. is a wholly-owned subsidiary
of Business Men's Assurance Company of America
which is considered to be a controlling person under
the Investment Company Act of 1940. Assicurazioni
Generali S.p.A., an insurance organization founded in
1831 based in Trieste, Italy, is considered to be a
controlling person and is the ultimate parent of
Business Men's Assurance Company of America.
Mediobanca is a 5% owner of Generali.
David L. Babson & Co. Inc. is a wholly-owned
subsidiary of DLB Acquisition Corporation, an
indirect, majority owned subsidiary of Massachusetts
Mutual Life Insurance Company headquartered in
Springfield, Massachusetts. Massachusetts Mutual
Life Insurance Company is an insurance organization
founded in 1851 and is considered to be a controlling
person of David L. Babson & Co. Inc., under the
Investment Company Act of 1940.
HOLIDAYS
The net asset value per share of each Portfolio is
computed once daily, Monday through Friday, 4:00
p.m. (Eastern Time) except: days when the Trust is
not open for business; days on which changes in the
value of a Portfolio's securities will not materially
affect the net asset value; days during which no
redemption or purchase order is received by the
Trust; and customary holidays.
The Trust does not compute its net asset value on
the following customary holidays:
New Year's Day January 1
Martin Luther Third Monday
King, Jr. Day in January
Presidents' Holiday Third Monday
in February
Good Friday Friday before Easter
Memorial Day Last Monday
in May
Independence Day July 4
Labor Day First Monday
in September
Thanksgiving Day Fourth Thursday
in November
Christmas Day December 25
TRUSTEES AND OFFICERS
The officers of the Trust manage its day-to-day
operations. The Trust's manager and its officers are
subject to the supervision and control of the Board of
Trustees.
The Trust is managed by Jones & Babson, Inc.
subject to the supervision and control of the Board of
Trustees. Following is a list of the officers and
trustees of the Trust and their ages. Unless noted
otherwise, the address of each officer and trustee is
BMA Tower, 700 Karnes Blvd., Kansas City,
Missouri 64108-3306. Except as indicated, each has
been an employee of Jones & Babson, Inc. for more
than five years.
* Larry D. Armel (57), President and Trustee.
President and Director, Jones & Babson, Inc.,
David L. Babson Growth Fund, Inc. , D. L. Babson
Money Market Fund, Inc., D. L. Babson Tax-Free
Income Fund, Inc., Babson Enterprise Fund, Inc.,
Babson Enterprise Fund II, Inc., Babson Value
Fund, Inc., Shadow Stock Fund, Inc., Babson-
Stewart Ivory International Fund, Inc., UMB Scout
Stock Fund, Inc., UMB Scout Bond Fund, Inc.,
UMB Scout Money Market Fund, Inc., UMB Scout
Tax-Free Money Market Fund, Inc., UMB Scout
Regional Fund, Inc., UMB Scout WorldWide Fund,
Inc., UMB Scout Balanced Fund, Inc., UMB Scout
Capital Preservation Fund, Inc., UMB Scout
Kansas Tax-Exempt Bond Fund, Inc., Buffalo
Balanced Fund, Inc., Buffalo Equity Fund, Inc.,
Buffalo High Yield Fund, Inc., Buffalo USA
Global Fund, Inc., Buffalo Small Cap Fund, Inc.,
Investors Mark Series Fund, Inc.; Director, AFBA
Five Star Fund, Inc.
Francis C. Rood (64), Trustee. Retired, 73-395
Agave Lane, Palm Desert, California 92260-6653.
Formerly Vice President of Finance, Hallmark
Cards, Inc.; Director, David L. Babson Growth
Fund, Inc., D. L. Babson Money Market Fund,
Inc., D. L. Babson Tax-Free Income Fund, Inc.,
Babson Enterprise Fund, Inc., Babson Enterprise
Fund II, Inc., Babson Value Fund, Inc., Shadow
Stock Fund, Inc., Buffalo Balanced Fund, Inc.,
Buffalo Equity Fund, Inc., Buffalo High Yield
Fund, Inc., Buffalo USA Global Fund, Inc.,
Buffalo Small Cap Fund, Inc., Investors Mark
Series Fund, Inc.
William H. Russell (75), Trustee. Financial
Consultant, 645 West 67th Street, Kansas City,
Missouri 64113; previously Vice President, Sprint;
Director, David L. Babson Growth Fund, Inc., D.
L. Babson Money Market Fund, Inc., D. L. Babson
Tax-Free Income Fund, Inc., Babson Enterprise
Fund, Inc. , Babson Enterprise Fund II, Inc.,
Babson Value Fund Inc., Shadow Stock Fund, Inc.,
Babson-Stewart Ivory International Fund, Inc.,
Buffalo Balanced Fund, Inc., Buffalo Equity Fund,
Inc., Buffalo High Yield Fund, Inc., Buffalo USA
Global Fund, Inc., Buffalo Small Cap Fund, Inc.,
Investors Mark Series Fund, Inc.
H. David Rybolt (56), Trustee. Consultant, HDR
Associates, P.O. Box 2468, Shawnee Mission,
Kansas 66201; Director, David L. Babson Growth
Fund, Inc., D.L. Babson Money Market Fund, Inc.,
D.L. Babson Tax-Free Income Fund, Inc., Babson
Enterprise Fund, Inc., Babson Enterprise Fund II,
Inc., Babson Value Fund, Inc., Shadow Stock
Fund, Inc., Buffalo Balanced Fund, Inc., Buffalo
Equity Fund, Inc., Buffalo High Yield Fund, Inc.,
Buffalo USA Global Fund, Inc., Buffalo Small Cap
Fund, Inc., Investors Mark Series Fund, Inc.
P. Bradley Adams (38), Vice President and
Treasurer. Vice President and Treasurer, Jones &
Babson, Inc., David L. Babson Growth Fund, Inc.,
D.L. Babson Money Market Fund, Inc., D.L.
Babson Tax-Free Income Fund, Inc., Babson
Enterprise Fund, Inc., Babson Enterprise Fund II,
Inc., Babson Value Fund, Inc., Shadow Stock
Fund, Inc., Babson-Stewart Ivory International
Fund, Inc., UMB Scout Stock Fund, Inc., UMB
Scout Bond Fund, Inc., UMB Scout Fund, Inc.,
UMB Scout Regional Fund, Inc., UMB Scout
WorldWide Fund, Inc., UMB Scout Balanced
Fund, Inc., UMB Scout Capital Preservation Fund,
Inc., UMB Scout Kansas Tax-Exempt Bond Fund,
Inc., Buffalo Balanced Fund, Inc., Buffalo Equity
Fund, Inc., Buffalo High Yield Fund, Inc., Buffalo
USA Global Fund, Inc., Buffalo Small Cap Fund,
Inc.; Vice President and Chief Financial Officer,
AFBA Five Star Fund, Inc.; Principal Financial
Officer, Investors Mark Series Fund, Inc.
Martin A. Cramer (49), Vice President and
Secretary. Vice President and Secretary, Jones &
Babson, Inc., David L. Babson Growth Fund, Inc.,
D.L. Babson Money Market Fund, Inc., D.L.
Babson Tax-Free Income Fund, Inc., Babson
Enterprise Fund, Inc., Babson Enterprise Fund II,
Inc., Babson Value Fund, Inc., Shadow Stock
Fund, Inc., Babson-Stewart Ivory International
Fund, Inc., UMB Scout Stock Fund, Inc., UMB
Scout Bond Fund, Inc., UMB Scout Money Market
Fund, Inc., UMB Scout Tax-Free Money Market
Fund, Inc., UMB Scout Regional Fund, Inc., UMB
Scout WorldWide Fund, Inc., UMB Scout
Balanced Fund, Inc., UMB Scout Capital
Preservation Fund, Inc., UMB Scout Kansas Tax-
Exempt Bond Fund, Inc., Buffalo Balanced Fund,
Inc., Buffalo Equity Fund, Inc., Buffalo High Yield
Fund, Inc., Buffalo USA Global Fund, Inc.,
Buffalo Small Cap Fund, Inc.; Secretary and
Assistant Vice President, AFBA Five Star Fund,
Inc.; Secretary, Investors Mark Series Fund, Inc.
Constance E. Martin (37), Vice President.
Assistant Vice President, Jones & Babson, Inc.;
Vice President, David L. Babson Growth Fund,
_______________________________________
* Trustees who are interested persons as
that term is defined in the Investment Company
Act of 1940, as amended.
Inc., D.L. Babson Money Market Fund, Inc., D.L.
Babson Tax-Free Income Fund, Inc., Babson
Enterprise Fund, Inc., Babson Enterprise Fund II,
Inc., Babson Value Fund, Inc., Babson-Stewart
Ivory International Fund, Inc., Shadow Stock Fund,
Inc., UMB Scout Stock Fund, Inc., UMB Scout
Bond Fund, Inc., UMB Scout Money Market Fund,
Inc., UMB Scout Tax-Free Money Market Fund,
Inc., UMB Scout Regional Fund, Inc., UMB Scout
WorldWide Fund, Inc., UMB Scout Balanced
Fund, Inc., UMB Scout Capital Preservation Fund,
Inc., UMB Scout Kansas Tax-Exempt Bond Fund,
Inc., Buffalo Balanced Fund, Inc., Buffalo Equity
Fund, Inc., Buffalo High Yield Fund, Inc., Buffalo
USA Global Fund, Inc., Buffalo Small Cap Fund,
Inc.
Edward L. Martin (49), Vice President-
Portfolio. Executive Vice President and Director,
David L. Babson & Co. Inc., One Memorial Drive,
Cambridge, Massachusetts 02142; Vice President,
D. L. Babson Money Market Fund, Inc., D. L.
Babson Tax-Free Income Fund, Inc.
Remuneration of Officers and Trustees. None of
the officers or trustees of the Trust will be
remunerated by the Trust for their normal duties and
services. Their compensation and expenses arising
out of normal operations will be paid by Jones &
Babson, Inc. under the provisions of the Management
Agreement.
<TABLE>
<CAPTION>
COMPENSATION TABLE
Aggregate Pension or Retirement Estimated Total Compensation
Compensation Benefits Accrued As Annual Benefits From All Babson Funds
Name of Director From the Fund Part of Fund Expenses Upon Retirement Paid to Directors**
______________ _____________ __________________ _____________ ___________________
</CAPTION>
<S> <C> <C> <C> <C>
Larry D. Armel* -- -- -- --
Francis C. Rood $500 -- -- $7,250
William H. Russell $500 -- -- $7,250
H. David Rybolt $500 -- -- $7,000
</TABLE>
* As an "interested trustee," Mr. Armel received no compensation for
his services as a trustee.
** The amounts reported in this column reflect the total compensation
paid to Messrs. Rood and Rybolt for services as trustees or directors of
eight Babson Funds and to Mr. Russell for services as a trustee or director
of nine Babson Funds during the fiscal year ended November 30, 1998.
Director/Trustees' fees are paid by the Trust's manager and not by the Trust
or the Funds themselves.
Messrs. Rood, Russell and Rybolt have no
financial interest in, nor are they affiliated with either
Jones & Babson, Inc. or David L. Babson & Co. Inc.
The Audit Committee of the Board of Trustees is
composed of Messrs. Rood, Russell and Rybolt.
The trustees of the Trust as a group own less than
1% of the Trust.
The Trust will not hold annual meetings except as
required by the Investment Company Act of 1940
and other applicable laws. The Trust is a common
law trust organized under the laws of Missouri.
Under the terms of the Declaration of Trust, a special
meeting of shareholders of the Trust must be held if
the Trust receives the written request for a meeting
from the shareholders entitled to cast at least 25% of
all the votes entitled to be cast at the meeting. The
Trust has undertaken that its Trustees will call a
meeting of shareholders if such a meeting is
requested in writing by the holders of not less than
10% of the outstanding shares of the Trust. To the
extent required by the undertaking, the Trust will
assist shareholder communications in such matters.
DIVIDENDS, DISTRIBUTIONS
AND THEIR TAXATION
Election to be Taxed as a Regulated Investment
Company. The Trust has elected to be treated as a
regulated investment company under Subchapter M
of the Internal Revenue Code (the "Code"), has
qualified as such for its most recent fiscal year, and
intends to so qualify during the current fiscal year.
The trustees reserve the right not to maintain the
qualification of the Trust as a regulated investment
company if they determine such course of action to
be beneficial to shareholders. In such case, the Trust
will be subject to federal, and possibly state,
corporate taxes on its taxable income and gains, and
distributions to you will be taxed as ordinary
dividend income to the extent of the Trust's available
earnings and profits.
All or a portion of any loss that you realize upon
the redemption of your shares will be disallowed to
the extent that you purchase other shares in the Trust
(through reinvestment of dividends or otherwise)
within 30 days before or after your share redemption.
Any loss disallowed under these rules will be added
to your tax basis in the new shares you purchase.
U.S. Government Obligations. Many states grant
tax-free status to dividends paid to you from interest
earned on direct obligations of the U.S. Government,
subject in some states to minimum investment
requirements that must be met by the Trust.
Investments in GNMA/FNMA securities, bankers'
acceptances, commercial paper and repurchase
agreements collateralized by U.S. Government
securities do not generally qualify for tax-free
treatment. At the end of each calendar year, the Trust
will provide you with the percentage of any
dividends paid that may qualify for tax-free treatment
on your personal income tax return. You should
consult with your own tax advisor to determine the
application of your state and local laws to these
distributions. Because the rules on exclusion of this
income are different for corporations, corporate
shareholders should consult with their corporate tax
advisors about whether any of their distributions may
be exempt from corporate income or franchise taxes.
Dividends-Received Deduction for
Corporations. Because the Trust's income is derived
primarily from interest rather than dividends, it is
anticipated that only a small percentage, if any, of the
dividends paid by the Trust for the most recent
calendar year will qualify for the dividends-received
deduction. You will be permitted in some
circumstances to deduct these qualified dividends,
thereby reducing the tax that you would otherwise be
required to pay on these dividends. The dividends-
received deduction will be available only with respect
to dividends designated by the Trust as eligible for
such treatment. Dividends so designated by the Trust
must be attributable to dividends earned by the Trust
from U.S. corporations that were not debt-financed.
Conversion Transactions. Gains realized by the
Trust from transactions that are deemed to be
"conversion transactions" under the Code, and that
would otherwise produce capital gain may be
recharacterized as ordinary income to the extent that
such gain does not exceed an amount defined as the
"applicable imputed income amount." A conversion
transaction is any transaction in which substantially
all of the Trust's expected return is attributable to the
time value of the Trust's net investment in such
transaction, and any one of the following criteria are
met:
(1) there is an acquisition of property with a
substantially contemporaneous agreement
to sell the same or substantially identical
property in the future;
(2) the transaction is an applicable straddle;
(3) the transaction was marketed or sold to the
Trust on the basis that it would have the
economic characteristics of a loan but
would be taxed as capital gain; or
(4) the transaction is specified in Treasury
regulations to be promulgated in the future.
The applicable imputed income amount, which
represents the deemed return on the conversion
transaction based upon the time value of money, is
computed using a yield equal to 120% of the
applicable federal rate, reduced by any prior
recharacterizations under this provision or the
provisions of Section 263(g) of the Code dealing with
capitalized carrying costs.
Investments in Original Issue Discount (OID)
and Market Discount (MD) Bonds. The Trust's
investments in zero coupon bonds, bonds issued or
acquired at a discount, delayed interest bonds or
bonds that provide for payment of interest-in-kind
(PIK) may cause the Trust to recognize income and
make distributions to you prior to its receipt of cash
payments. Zero coupon and delayed interest bonds
are normally issued at a discount and are, therefore,
generally subject to tax reporting as OID obligations.
The Trust is required to accrue as income a portion of
the discount at which these securities were issued,
and to distribute such income each year (as ordinary
dividends) in order to maintain its qualification as a
regulated investment company and to avoid income
and excise taxes at the Trust level. PIK bonds are
subject to similar tax rules concerning the amount,
character and timing of income required to be
accrued by the Trust. Bonds acquired in the
secondary market for a price less than their stated
redemption price, or revised issue price in the case of
a bond having OID, are said to have been acquired
with market discount. For these bonds, the Trust may
elect to accrue market discount on a current basis, in
which case the Trust will be required to distribute any
such accrued discount. If the Trust does not elect to
accrue market discount into income currently, gain
recognized on sale will be recharacterized as ordinary
income instead of capital gain to the extent of any
accumulated market discount on the obligation.
Defaulted Obligations. The Trust may be
required to accrue income on defaulted obligations
and to distribute such income to you even though it is
not currently receiving interest or principal payments
on such obligations. In order to generate cash to
satisfy these distribution requirements, the Trust may
be required to dispose of portfolio securities that it
otherwise would have continued to hold or to use
cash flows from other sources such as the sale of
Trust shares.
GENERAL INFORMATION AND HISTORY
The Trust was organized in Kansas City, Missouri,
as a common law trust under an Agreement and
Declaration of Trust dated November 2, 1944, which
was amended and restated on February 24, 1989. It
originally was known as Mutual Trust. When it came
under the management of Jones & Babson, Inc., its
name was changed to Babson (D.L.) Income Trust.
On February 14, 1984, shareholders changed its name
to D.L. Babson Bond Trust. On March 31, 1988, the
issued and outstanding shares of beneficial interest of
the Trust were redesignated as "Portfolio L" (longer
term) and a second class or series of shares known as
"Portfolio S" (shorter term) was created. The Trust is
an open-end, diversified, fully-managed investment
company commonly known as a mutual fund. Each
full and fractional share, when issued and
outstanding, has: (1) equal voting rights with respect
to matters which affect the Trust in general and with
respect to matters relating solely to the interests of
the Portfolio for which issued, and (2) equal
dividend, distribution and redemption rights to the
assets of the Portfolio for which issued and to general
assets, if any, of the Trust which are not specifically
allocated to either Portfolio. Shares when issued are
fully paid and non-assessable. Except for the priority
of each share in the assets of its Portfolio, the Trust
will not issue any class of securities senior to any
other class. The initial par value of the shares was
$1.00 each. On September 30, 1955, this was
changed to $0.25 each, and three additional shares at
that time were issued for each share then outstanding.
Shareholders do not have pre-emptive or conversion
rights.
Non-cumulative voting - These shares have non-
cumulative voting rights, which means that the
holders of more than 50% of the shares voting for the
election of Trustees can elect 100% of the Trustees, if
they choose to do so, and in such event, the holders
of the remaining less than 50% of the shares voting
will not be able to elect any Trustees.
The Trust's Agreement and Declaration of Trust
permits the Trust to operate without an annual
meeting of shareholders under specified
circumstances if an annual meeting is not required by
the Investment Company Act of 1940. There are
procedures whereby the shareholders may remove
trustees. These procedures are described in the
"Statement of Additional Information" under the
caption "Officers and Trustees." The Trust has
adopted the appropriate provisions in its By-Laws
and may not, at its discretion, hold annual meetings
of shareholders for the following purposes unless
required to do so: (1) election of trustees; (2)
approval of any investment advisory agreement; (3)
ratification of the selection of independent auditors;
and (4) approval of a distribution plan. As a result,
the Trust does not intend to hold annual meetings.
The Trust may use the name "Babson" in its name
so long as Jones & Babson, Inc. is continued as
manager and David L. Babson & Co. Inc. as its
investment counsel. Complete details with respect to
the use of the name are set out in the Management
Agreement between the Trust and Jones & Babson,
Inc.
CUSTODIAN
The Trust's assets are held for safekeeping by an
independent custodian, UMB Bank, n.a. This means
the bank, rather than the Trust, has possession of the
Trust's cash and securities. The custodian bank is not
responsible for the Trust's investment management or
administration. But, as directed by the Trust's
Trustees, it delivers cash to those who have sold
securities to the Trust in return for such securities,
and to those who have purchased portfolio securities
from the Trust, it delivers such securities in return for
their cash purchase price. It also collects income
directly from issuers of securities owned by the Trust
and holds this for payment to shareholders after
deduction of the Trust's expenses. The custodian is
compensated for its services by the manager. There
is no separate charge to the Trust.
TRANSFER AGENT
Jones & Babson, Inc. also serves as transfer agent
to the Trust.
INDEPENDENT AUDITORS
The Trust's financial statements are audited
annually by independent auditors approved by the
trustees each year, and in years in which an annual
meeting is held the trustees may submit their
selection of independent auditors to the shareholders
for ratification. Ernst & Young LLP, One Kansas
City Place, 1200 Main Street, Suite 2000, Kansas
City, Missouri 64105, is the Trust's present
independent auditor.
OTHER JONES & BABSON FUNDS
The Trust is one of nine no-load funds comprising
the Babson Mutual Fund Group managed by Jones &
Babson, Inc. in association with its investment
counsel, David L. Babson & Co. Inc. The other
funds are:
BABSON EQUITY FUNDS
DAVID L. BABSON GROWTH FUND, INC.
was organized in 1960, with the objective of long-
term growth of both capital and dividend income
through investment in the common stocks of well-
managed companies which have a record of long
term above-average growth of both earnings and
dividends.
BABSON ENTERPRISE FUND, INC. was
organized in 1983, with the objective of long-term
growth of capital by investing in a diversified
portfolio of common stocks of smaller, faster-
growing companies with market capital of $15
million to $300 million at the time of purchase.
This Fund is intended to be an investment vehicle
for that part of an investor's capital which can ap-
propriately be exposed to above-average risk in
anticipation of greater rewards. This Fund is
currently closed to new shareholders.
BABSON ENTERPRISE FUND II, INC. was
organized in 1991, with the objective of long-term
growth of capital by investing in a diversified
portfolio of common stocks of smaller, faster-
growing companies which at the time of purchase
are considered by the Investment Adviser to be
realistically valued in the smaller company sector of
the market. This Fund is intended to be an
investment vehicle for that part of an investor's
capital which can appropriately be exposed to
above-average risk in anticipation of greater
rewards.
BABSON VALUE FUND, INC. was organized in
1984, with the objective of long-term growth of
capital and income by investing in a diversified
portfolio of common stocks which are considered to
be undervalued in relation to earnings, dividends
and/or assets.
SHADOW STOCK FUND, INC. was organized in
1987, with the objective of long-term growth of
capital that can be exposed to above-average risk in
anticipation of greater-than-average rewards. The
Fund expects to reach its objective by investing in
small company stocks called "Shadow Stocks," i.e.,
stocks that combine the characteristics of "small
stocks" (as ranked by market capitalization) and
"neglected stocks" (least held by institutions and
least covered by analysts).
BABSON-STEWART IVORY INTER-
NATIONAL FUND, INC. was organized in 1987,
with the objective of seeking a favorable total return
(from market appreciation and income) by investing
primarily in a diversified portfolio of equity
securities (common stocks and securities convertible
into common stocks) of established companies
whose primary business is carried on outside the
United States.
BABSON FIXED INCOME FUNDS
D. L. BABSON MONEY MARKET FUND, INC.
was organized in 1979, to provide investors the
opportunity to manage their money over the short
term by investing in high-quality short-term debt
instruments for the purpose of maximizing income
to the extent consistent with safety of principal and
maintenance of liquidity. It offers two portfolios -
Prime and Federal. Money market funds are neither
insured nor guaranteed by the U.S. Government and
there is no assurance that the funds will maintain a
stable net asset value.
D. L. BABSON TAX-FREE INCOME FUND,
INC. was organized in 1979, to provide
shareholders the highest level of regular income
exempt from federal income taxes consistent with
investing in quality municipal securities. It offers
three separate high quality portfolios (including a
money market portfolio) which vary as to average
length of maturity. Income from the Tax-Free
Money Market portfolio may be subject to state and
local taxes as well as the Alternative Minimum Tax.
BUFFALO FUNDS
Jones & Babson also sponsors and manages the
Buffalo Group of Mutual Funds. They are:
BUFFALO BALANCED FUND, INC. was
organized in 1994, with the objective of long-term
capital growth and high current income through
investing in common stocks and secondarily by
investing in convertible bonds, preferred stocks and
convertible preferred stocks.
BUFFALO EQUITY FUND, INC. was organized
in 1994, with the objective of long-term capital
appreciation to be achieved primarily by
investment in common stocks. Realization of
dividend income is a secondary consideration.
BUFFALO HIGH YIELD FUND, INC. was
organized in 1994, with the objective of a high
level of current income and secondarily, capital
growth by investing primarily in high-yielding
fixed income securities.
BUFFALO USA GLOBAL FUND, INC. was
organized in 1994, with the objective of capital
growth by investing in common stocks of
companies based in the United States that receive
greater than 40% of their revenues or pre-tax
income from international operations.
BUFFALO SMALL CAP FUND, INC. was
organized in 1998, with the objective of long-term
capital growth by investment in equity securities of
small companies.
A prospectus for any of the Funds may be obtained
from Jones & Babson, Inc., BMA Tower, 700 Karnes
Blvd., Kansas City, MO 64108-3306.
Jones & Babson, Inc. also sponsors nine mutual
funds which especially seek to provide services to
customers of affiliate banks of UMB Financial
Corporation. They are: UMB Scout Stock Fund, Inc.,
UMB Scout Bond Fund, Inc., UMB Scout Money
Market Fund, Inc., UMB Scout Tax-Free Money
Market Fund, Inc., UMB Scout Regional Fund, Inc.,
UMB Scout WorldWide Fund, Inc., UMB Scout
Balanced Fund, Inc., UMB Scout Capital
Preservation Fund, Inc. and UMB Scout Kansas Tax-
Exempt Bond Fund, Inc.
Jones & Babson, Inc. also sponsors the AFBA Five
Star Fund, Inc.
FIXED INCOME SECURITIES
DESCRIBED AND RATINGS
Description of Bond Ratings:
Standard & Poor's Corporation (S&P).
AAA Highest Grade. These securities possess the
ultimate degree of protection as to principal
and interest. Marketwise, they move with
interest rates, and hence provide the
maximum safety on all counts.
AA High Grade. Generally, these bonds differ
from AAA issues only in a small degree.
Here too, prices move with the long-term
money market.
A Upper-medium Grade. They have
considerable investment strength, but are not
entirely free from adverse effects of changes
in economic and trade conditions. Interest
and principal are regarded as safe. They
predominately reflect money rates in their
market behavior but, to some extent, also
economic conditions.
BBB Bonds rated BBB are regarded as having
an adequate capacity to pay principal and
interest. Whereas they normally exhibit
protection parameters, adverse economic
conditions or changing circumstances are
more likely to lead to a weakened capacity
to pay principal and interest for bonds in
this category than for bonds in the A
category.
BB, B, CCC, CC Bonds rated BB, B, CCC and CC
are regarded, on balance, as predominantly
speculative with respect to the issuer's capacity to pay
interest and repay principal in accordance with the
terms of the obligations. BB indicates the lowest
degree of speculation and CC the highest degree of
speculation. While such bonds will likely have some
quality and protective characteristics, these are
outweighed by large uncertainties or major risk
exposures to adverse conditions.
Moody's Investors Service, Inc. (Moody's).
Aaa Best Quality. These securities carry the
smallest degree of investment risk and are
generally referred to as "gilt-edge." Interest
payments are protected by a large, or by an
exceptionally stable margin, and principal is
secure. While the various protective
elements are likely to change, such changes
as can be visualized are most unlikely to
impair the fundamentally strong position of
such issues.
Aa High Quality by All Standards. They are
rated lower than the best bonds because
margins of protection may not be as large as
in Aaa securities, fluctuation of protective
elements may be of greater amplitude, or
there may be other elements present which
make the long-term risks appear somewhat
greater.
A Upper-medium Grade. Factors giving
security to principal and interest are
considered adequate, but elements may be
present which suggest a susceptibility to
impairment sometime in the future.
Baa Bonds which are rated Baa are considered as
medium grade obligations, i.e., they are
neither highly protected nor poorly secured.
Interest payments and principal security
appear adequate for the present, but certain
protective elements may be lacking or may
be characteristically unreliable over any
great length of time. Such bonds lack
outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba Bonds which are rated Ba are judged to have
predominantly speculative elements; their
future cannot be considered as well assured.
Often the protection of interest and principal
payments may be very moderate and thereby
not well safeguarded during both good and
bad times over the future. Uncertainty of
position characterizes bonds in this class.
B Bonds which are rated B generally lack
characteristics of the desirable investment.
Assurance of interest and principal
payments or maintenance of other terms of
the contract over any long period of time
may be small.
Caa Bonds which are rated Caa are of poor
standing. Such issues may be in default or
there may be present elements of danger
with respect to principal or interest.
Ca Bonds which are rated Ca represent
obligations which are speculative in a high
degree. Such issues are often in default or
have other marked shortcomings.
Description of Commercial Paper Ratings:
Moody's . . . Moody's commercial paper rating is an
opinion of the ability of an issuer to repay punctually
promissory obligations not having an original
maturity in excess of nine months. Moody's has one
rating - prime. Every such prime rating means
Moody's believes that the commercial paper note will
be redeemed as agreed. Within this single rating
category are the following classifications:
Prime - 1 Highest Quality
Prime - 2 Higher Quality
Prime - 3 High Quality
The criteria used by Moody's for rating a
commercial paper issuer under this graded system
include, but are not limited to the following factors:
(1) evaluation of the management of the issuer;
(2) economic evaluation of the issuer's industry
or industries and an appraisal of speculative
type risks which may be inherent in certain
areas;
(3) evaluation of the issuer's products in relation
to competition and customer acceptance;
(4) liquidity;
(5) amount and quality of long-term debt;
(6) trend of earnings over a period of ten years;
(7) financial strength of a parent company and
relationships which exist with the issuer; and
(8) recognition by the management of
obligations which may be present or may
arise as a result of public interest questions
and preparations to meet such obligations.
S&P . . .Standard & Poor's commercial paper rating
is a current assessment of the likelihood of timely
repayment of debt having an original maturity of no
more than 270 days. Ratings are graded into four
categories, ranging from "A" for the highest quality
obligations to "D" for the lowest. The four categories
are as follows:
A Issues assigned this highest rating are
regarded as having the greatest capacity
for timely payment. Issues in this
category are further refined with the
designations 1, 2, and 3 to indicate the
relative degree of safety.
A-1 This designation indicates that the degree
of safety regarding timely payment is very
strong.
A-2 Capacity for timely payment on issues
with this designation is strong. However,
the relative degree of safety is not as over-
whelming.
A-3 Issues carrying this designation have a
satisfactory capacity for timely payment.
They are, however, somewhat more
vulnerable to the adverse effects of
changes in circumstances than obligations
carrying the higher designations.
B Issues rated "B" are regarded as having
only an adequate capacity for timely
payment. Furthermore, such capacity may
be damaged by changing conditions or
short-term adversities.
C This rating is assigned to short-term debt
obligations with a doubtful capacity for
payment.
D This rating indicates that the issuer is
either in default or is expected to be in
default upon maturity.
The Trust may invest a portion of its assets in
lower rated fixed-income securities and unrated
securities of comparable quality. The market values
of such securities tend to reflect individual corporate
developments to a greater extent than do higher rated
securities, which react primarily to fluctuations in the
general level of interest rates. Such lower rated
securities also tend to be more sensitive to economic
conditions than higher rated securities. These lower
rated fixed-income securities are considered by S&P
and Moody's, on balance, to be predominantly
speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of
the obligation and will generally involve more credit
risk than securities in the higher rating categories.
Even securities rated BBB by S&P or Baa by
Moody's, which are considered investment grade,
possess some speculative characteristics.
The risk of loss due to default by the issuer may be
significantly greater for the holders of high yielding
securities, because such securities are generally
unsecured and are often subordinated to other
creditors of the issuer. In addition, since the high
yield bond market is relatively new, its growth has
paralleled a long economic expansion, and it has not
weathered a recession in its present size and form.
An economic downturn could disrupt the market for
high yield bonds and adversely affect the value of
outstanding bonds and the ability of issuers of such
bonds to repay principal and interest.
The Trust may have difficulty disposing of certain
high yielding securities because there may be a thin
trading market for a particular security at any given
time. To the extent a secondary trading market for
high yielding, fixed-income securities does exist, it is
generally not as liquid as the secondary market for
higher rated securities. Reduced liquidity in the
secondary market may have an adverse impact on
market price and the Trust's ability to dispose of
particular issues, when necessary, to meet the Trust's
liquidity needs or in response to a specific economic
event, such as the deterioration in the creditworthi-
ness of the issuer. Reduced liquidity in the secondary
market for certain securities may also make it more
difficult for the Trust to obtain market quotations
based on actual trades for purposes of valuing the
Portfolios.
FINANCIAL STATEMENTS
The audited financial statements of the Trust which
are contained in the November 30, 1998, Annual
Report to Shareholders are incorporated herein by
reference.
15
D. L. BABSON BOND TRUST
PART C
OTHER INFORMATION
ITEM 23. EXHIBITS:
(a) (1) Amended and Restated Agreement and
Declaration of Trust of the Registrant dated
March 31, 1988
is filed herewith as
Exhibit No. EX99.23(a)(1).
(2) Provisions of Supplementary Agreement
and Declaration of Trust of the Registrant dated
March 31, 1988
is filed herewith as
Exhibit No. EX99.23(a)(2).
(c) Specimen copy of each security to be issued by
the Registrant as Exhibit No. EX99.23(c).
(d) (1) Investment Management Agreement between
Registrant and Jones & Babson, Inc. dated
June 30, 1995
is filed herewith as Exhibit No. EX99.23(d)(1).
(2) Investment Counsel Agreement between
Jones & Babson, Inc. and
David L. Babson & Co., Inc. dated
June 30, 1995
is filed herewith as Exhibit No. EX99.23(d)(2).
(e) Principal Underwriting Agreement between the
Registrant and Jones & Babson, Inc. dated
September 30, 1993
is filed herewith as Exhibit No. EX99.23(e).
(f) Not Applicable.
(g) Custodian Agreement between Registrant and
UMB Bank, N.A. dated
May 5, 1997
is filed herewith at Exhibit No. EX99.23(g).
(h) Transfer Agency Agreement between
Registrant and Jones & Babson, Inc. is
filed herewith at Exhibit No. EX99.23(h).
(i) Opinion and Consent of Counsel as to the
Legality of the Securities to be Issued is
filed herewith as Exhibit No. EX99.23(i).
(j) (1) Consent of Independent Auditors is
filed herewith as Exhibit No. EX99.23(j)(1).
(2) Power of Attorney dated
January 23, 1992
is filed herewith as Exhibit No. EX99.23(j)(2).
(k) Not Applicable.
(l) Not Applicable.
(m) Not Applicable.
(n) Financial Data Schedule for the fiscal year
ended November 30, 1998 is filed herewith as
Exhibit No. EX27.23(n).
(o) Not Applicable.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE
REGISTRANT: None.
ITEM 25. INDEMNIFICATION:
Under the terms of the Missouri general trust law and the
Registrant's Amended and Restated Agreement and Declaration of Trust,
the Registrant shall indemnify any person who was or is a trustee, agent
or employee of the Registrant to the maximum extent permitted by the
Missouri general law; provided however, that any such indemnification
(unless ordered by a court) shall be made by the Registrant only as
authorized in the specific case upon a determination that
indemnification of such persons is proper in the circumstances. Such
determination shall be made
(i) by the Trustees by a majority vote of a quorum which
consists of the Trustees who are neither "interested persons" of the
company as defined in Section 2(a)(19) of the 1940 Act, nor parties to
the proceedings, or
(ii) if the required quorum is not obtainable or if a
quorum of such Trustees so directs, by independent legal counsel in a
written opinion.
No indemnification will be provided by the Registrant to any
Trustee or agent of the Registrant for any liability to the company or
shareholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of duty.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER.
The principal business of Jones & Babson, Inc. is the
management of the Babson and Buffalo families of mutual
funds. It also has expertise in the tax and pension plan
field. It supervises a number of prototype and profit-
sharing plan programs sponsored by various organizations
eligible to be prototype plan sponsors. The principal
business of David L. Babson & Co., Inc. is to provide
investment counsel and advice to a wide variety of clients.
ITEM 27. PRINCIPAL UNDERWRITER:
(a) Jones & Babson, Inc., the only principal underwriter
of the Registrant, also acts as principal underwriter
for David L. Babson Growth Fund, Inc., D.L. Babson
Money Market Fund, Inc., D.L. Babson Tax-Free Income
Fund, Inc., Babson Enterprise Fund, Inc., Babson
Enterprise Fund II, Inc., Babson Value Fund, Inc.,
Shadow Stock Fund, Inc., Babson-Stewart Ivory
International Fund, Inc., UMB Scout Stock Fund, Inc.,
UMB Scout Bond Fund, Inc., UMB Scout Money Market
Fund, Inc., UMB Scout Tax-Free Money Market Fund,
Inc., UMB Scout Balanced Fund, Inc., UMB Scout
Regional Fund, Inc., UMB Scout WorldWide Fund, Inc.,
UMB Scout Capital Preservation Fund, Inc., UMB Scout
Kansas Tax-Exempt Bond Fund, Inc., Buffalo Balanced
Fund, Inc., Buffalo Equity Fund, Inc., Buffalo High
Yield Fund, Inc., Buffalo Small Cap Fund, Inc.,
Buffalo USA Global Fund, Inc. and AFBA Five Star Fund,
Inc.
(b) The tables below set forth certain information as to
the Underwriter's Directors, Officers, Partners and
Control Persons:
Name and Business Positions and Offices Positions and Offices
Address with Underwriter with the Registrant
Stephen S. Soden Chairman and Director None
BMA Tower
700 Karnes Blvd.
Kansas City, MO 64108-
3306
Larry D. Armel President and Director President and Director
BMA Tower
700 Karnes Blvd.
Kansas City, MO 64108-
3306
Giorgio Balzer Director None
BMA Tower
700 Karnes Blvd.
Kansas City, MO 64108-
3306
Robert T. Rakich Director None
BMA Tower
700 Karnes Blvd.
Kansas City, MO 64108-
3306
Edward S. Ritter Director None
BMA Tower
700 Karnes Blvd.
Kansas City, MO 64108-
3306
Robert N. Sawyer Director None
BMA Tower
700 Karnes Blvd.
Kansas City, MO 64108-
3306
Vernon W. Voorhees Director None
BMA Tower
700 Karnes Blvd.
Kansas City, MO 64108-
3306
P. Bradley Adams Vice President and Vice Presdient and
BMA Tower Treasurer Treasurer
700 Karnes Blvd.
Kansas City, MO 64108-
3306
Martin A. Cramer Vice Presdient and Vice President and
BMA Tower Secretary Secretary
700 Karnes Blvd.
Kansas City, MO 64108-
3306
Constance E. Martin Asst. Vice President Asst. Vice President
BMA Tower
700 Karnes Blvd.
Kansas City, MO 64108-
3306
(c) Not applicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS:
Each account, book or other document required to be
maintained by Section 31(a) of the Investment Company Act of 1940, as
amended and Rules (17 CFR 270-31a-1 to 31a-3) promulgated thereunder, is
in the physical possession of Jones and Babson, Inc., at BMA Tower, 700
Karnes Blvd., Kansas City, Missouri 64108-3306.
ITEM 29. MANAGEMENT SERVICES:
There are no management related service contracts not
discussed in Part A or Part B.
ITEM 30. UNDERTAKINGS
Registrant undertakes that, if requested to do so by the
holders of at least 10% of the registrant's outstanding shares, to call
a meeting of shareholders for the purpose of voting upon the question of
removal of a director or directors and to assist in communications with
other shareholders as required by Section 16(c) of the Investment
Company Act of 1940, as amended.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, each as amended, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, duly authorized, in the City of Kansas City, and State of
Missouri, on the 20th day of January, 1999.
D. L. BABSON BOND TRUST
By: /s/ Larry D. Armel
Larry D. Armel
President, Principal Executive Officer
and Director
Pursuant to the requirement of the Securities Act of 1933, this Registration
Statement has been signed below on by the following persons in the capacities
and on the date indicated:
Signature Title Date
/s/ Larry D. Armel President, Principal Executive January 20, 1999
Larry D. Armel Officer and Trustee
/s/ Francis C. Rood Trustee January 20, 1999
Francis C. Rood*
/s/ William H. Russell Trustee January 20, 1999
William H. Russell*
/s/ H. David Rybolt Trustee January 20, 1999
H. David Rybolt*
/s/ P. Bradley Adams Treasurer and Principal January 20, 1999
P Bradley Adams Financial and Accounting
Officer
* By: /s/ Larry D. Armel
Larry D. Armel, Attorney-in-Fact
(Pursuant to Power of Attorney filed herewith)
<PAGE>
D. L. BABSON BOND TRUST
EXHIBIT INDEX
Exhibit Exhibit No.
Amended and Restated Agreement and
Declaration of Trust EX99.23(a)(1)
Provisions of Supplementary
Agreement to Declaration of Trust EX99.23(a)(2)
Bylaws EX99.23(b)
Specimen Security EX99.23(c)
Investment Management Agreement EX99.23(d)(1)
Investment Counsel Agreement EX99.23(d)(2)
Underwriting Agreement EX99.23(e)
Custodian Agreement EX99.23(g)
Transfer Agency Agreement EX99.23(h)
Legal Opinion EX99.23(i)
Auditor Consent EX99.23(j)(1)
Power of Attorney EX99.23(j)(2)
Financial Data Schedule EX27.23(n)
EX99.23(a)(1)
D. L. BABSON BOND TRUST
RESTATED PROVISIONS OF
AGREEMENT AND DECLARATION OF TRUST
WHEREAS, D. L. Babson Bond Trust is a common law trust organized and existing
under the laws of the state of Missouri, and,
WHEREAS, numerous amendments have been made to the Agreement and Declaration
of Trust dated November 2, 1944, since its inception, and as a result, the
said Agreement and Declaration of Trust has become cumbersome and confusing
to read and understand, and
WHEREAS, the Trustees desire to incorporate the Agreement and Declaration of
Trust together with the amendments into a single document;
NOW, THEREFORE, the Agreement and Declaration of Trust dated November 2,
1944, is hereby amended and restated to read as follows:
ARTICLE I
Concerning the Trust and its Purposes and Powers
Section 1. The Trust hereby created shall be known as D.
L. BABSON BOND TRUST. For convenience it is referred to in the Agreement and
Declaration of Trust as the "Trust." The Trustees shall have the right and
power from time to time to change the name of the Trust by resolution adopted
at any regular or special meeting of the Trustees.
Section 2. The objects and purposes of the Trust shall be to
establish and maintain selected and diversified investments in investment
securities, to supervise and manage said investments, and, in furtherance but
not in limitation of the foregoing, to acquire, own, hold and dispose of
investment securities as defined in ARTICLE II hereof.
Section 3. The Trustees acting for and in behalf of the Trust shall
have power and authority:
(a) to buy, sell, exchange, own, hold, transfer, assign, negotiate
and otherwise acquire or dispose of and deal in and with
investment securities, and while the owners thereof to exercise
all the rights, powers and privileges of ownership thereof,
including, without limitation, the right and privilege of voting,
in person or by proxy, upon all voting securities at any time and
from time to time included among the assets and properties of the
Trust; and
PAGE 1
(b) in general to carry on any other activity in connection with the
foregoing and to do any and all things necessary to promote the
objects and purposes of the Trust to the same extent as they
might or could to in respective personal and individual
capacities.
Section 4. Notwithstanding anything contained in this ARTICLE I or
elsewhere in the Agreement and Declaration of Trust, the Trustees acting for
and in behalf of the Trust may not and shall not:
(a) purchase any investment security for credit or on margin, except
such short-term credits as are necessary for the clearance of
transactions;
(b) participate on a joint or a joint-and-several basis in any
trading account in securities;
(c) sell any securities short;
(d) borrow money, securities or other property in any event or for
any purpose whatsoever, or issue any security senior to the
shares authorized by the Trust Indenture;
(e) lend money, securities or other assets of the Trust for any
purpose whatsoever, provided however, that the acquisition of any
publicly distributed securities shall not be held or construed to
be the making of a loan;
(f) mortgage, pledge, hypothecate or encumber in any manner
whatsoever any investment securities at any time owned or held by
the Trust;
(g) underwrite or participate in the underwriting of any securities;
(h) purchase shares of other investment companies except in the open
market at ordinary broker's commission or pursuant to a plan of
merger or consolidation;
(i) acquire any security issued by any issuer in which an officer,
director or stockholder of such issuer is a Trustee of the Trust
or an officer or director of a principal underwriter (as defined
in the Investment Company Act of 1940) if after the purchase of
such security one or more of the Trustees owns beneficially more
than one-half (1/2) of one per centum (1%) of the capital stock
of such issuer and such Trustees together own beneficially more
than five per centum (5%) of the capital stock of such issuer;
(j) acquire any security of another issuer if immediately after and
as a result of such acquisition the market value of such
securities of such other issuer shall
PAGE 2
exceed five per centum (5%) of the market value of the total
assets of the Trust or the Trust shall own more than ten per
centum (10%) of the outstanding voting securities of such issuer.
This restriction does not apply to securities issued by the
United States or any state, county, or municipality thereof;
(k) invest more than 25% of the value of its assets in any one
industry;
(1) engage in the purchase or sale of real estate or commodities;
(m) invest in companies for the purpose of exercising control of
management;
(n) purchase any securities which are subject to legal or contractual
restrictions; i.e., restricted securities which may not be
distributed publicly without registration under the Securities
Act of 1933.
ARTICLE II
Definitions of Terms and Rules of Construction
Section 1. Definition of Certain Terms. As used in this
Declaration of Trust, the terms set forth below shall have the following
meanings:
(a) The "Act" refers to the Investment Company Act of 1940, as
amended.
(b) "Beneficial Shares," "Shares of Beneficial Interest" or "Shares"
means the equal proportionate units of interest of any of the
classes or series into which the beneficial interest of any class
or series of the Trust shall be divided from time to time and
includes fractions of Beneficial Shares as well as whole
Beneficial Shares.
(c) "Beneficial Shareholder" or "Shareholder" means a record owner
of Beneficial Shares of a class or series of the Trust.
(d) The term "business day" means a day on which the New York Stock
Exchange is open for business.
(e) The term "distribution" means an actual or constructive payment
to a Beneficial Shareholder in cash.
PAGE 3
(f) The term "gross income" as used herein is hereby defined to mean the
gross earnings of any class or series of the Trust from all sources,
other than and excluding gains and losses realized from sales or other
dispositions of that class or series' assets.
(g) "Investment securities" shall be deemed to mean and include: (a)
shares of capital stock, bonds, debentures, debenture stocks,
participation certificates, script, notes and other securities,
obligations and evidences of debt of corporations; (b) certificates of
deposit, warrants and rights to subscribe for or purchase any of the
foregoing, including commercial paper, bankers' acceptances, variable
rate master demand notes and repurchase agreements; (c) obligations of
the United States of America or of any state, county, township, school
district, municipality or political subdivision thereof, and
obligations guaranteed as to both principal and interest by the United
States of America; (d) U.S. dollar-denominated securities issued in the
United States by (1) the Canadian Federal Government or by Canadian
Provincial Governments including any agency or instrumentality of
either principal and interest by either government, and (2) Canadian
corporations.
(h) The term "net income", as used herein, is hereby defined to mean gross
income less taxes, expenses and reserves therefor including, without
limitation, all fees and other costs and charges properly charged for
the administration and maintenance of the Trust, or a class or series.
(i) "Person" shall mean a natural person, a corporation, a partnership, an
association, a joint-stock company, a trust, a fund or any organized
group of persons whether incorporated or not.
(j) The term "Supplemental Declaration of Trust" or "Supplemental
Declaration" means a document adopted by the Trustees at any regular or
special meeting of the Trustees which sets forth a description of any
Beneficial Shares or class or series of Beneficial shares to be issued
under this Declaration of Trust, and which shall be annexed to this
Declaration and made a part of
it.
(k) The "Trustees" means the original individual Trustees in their capacity
as trustees of the Trust and their successor or successors for the time
being in office as such trustees.
(1) The terms "assignment," "interested person," a "majority vote of
shareholders" and "Principal Underwriter" shall have the respective
meanings set forth in Section
PAGE 4
2(a)(4), Section 2(a)(19), Section 2(a)(42) and Section
2(a) (29) of the Act, and "series trust" shall mean an entity
such as that described in Section 18(f)(2) of the Act, and
subject to Rule 18f-2 thereunder.
Section 2. Construction. The following rules shall
apply concerning interpretation and construction of this Declaration of
Trust:
(a) The purpose of this Declaration of Trust is to establish the
relationship of Trustee and Beneficiary between the Trustees and
Shareholders defined herein. This Declaration of Trust shall not
be construed to create any other type of relationship or entity,
including but not limited to, a general or limited partnership,
corporation, or joint stock association.
(b) This Declaration of Trust shall be construed under the laws of
the State of Missouri.
(c) Unless clearly indicated otherwise within the context of this
Declaration of Trust, the masculine for of words used herein
shall be deemed to include the feminine and neuter, and the
singular shall be deemed to include the plural.
(d) Headings of Articles, Sections, Paragraphs, or other subdivisions
hereof are for convenience of reference only, and shall not be
deemed to be of the substance of this Declaration of Trust.
Headings are placed herein for convenience of reference only and
in case of any conflict, the test of this instrument rather than
the headings, shall control.
(e) In this instrument or in any Supplemental Declaration of Trust,
references to this instrument and all expressions like "herein,"
"hereof" and "hereunder," shall be deemed to refer to this
instrument as amended, restated or affected by any such
Supplemental Declaration of Trust.
ARTICLE III
Concerning the Shareholders and their
Shares and Certificates
Section 1. Shares of Beneficial Interest. The beneficial interest
in the Trust shall at all times be divided into an unlimited number of
transferable Beneficial Shares of one or more classes or series as the
Trustees shall designate from time to time by Supplemental Declaration. Each
such Beneficial Share of each such class or series shall represent an
interest in that class or series of the Trust equal with each other
Beneficial Share of such class or series then outstanding. No Beneficial
PAGE 5
Share shall have priority over any other Beneficial Share of the same class
or series. No class or series of Beneficial Shares shall have any preference
or priority to general assets of the Trust over any other class or series of
Beneficial Shares. The Trustee may, from time to time, divide or combine the
Beneficial Shares of any class or series into a greater or lesser number of
Beneficial Shares without thereby changing the proportionate beneficial
interests in such class or series, or the respective priority or preference
of such Shares and any other class or series.
Section 2. Purchase of Beneficial Shares in the Trust. The Trustees
shall have power from time to time to accept from any person, firm or
corporation, including any or all of the original Shareholders, contributions
in cash to the Trust from such persons and on such terms as they may from
time to time authorize. Each contribution shall be credited to the
individual Beneficial Shareholder's account in the form of full and frac-
tional Beneficial Shares of the Trust, in such class or series as the
purchaser shall select, at the net asset value per Beneficial Share next
determined for such class or series after receipt of the contribution.
Shares shall be issued hereunder only to or through a principal underwriter
duly selected and appointed as provided by law, except that in the event of
an offer of exchange or plan of reorganization permitted by law, shares may
be issued by the Trustees without utilizing the services of a principal un-
derwriter, and for a consideration other than cash provided that in no event
shall shares be issued for consideration other than cash provided that in no
event shall shares be issued for consideration less than the prevailing net
asset value of the shares already issued and outstanding as computed at a
time in accordance with the pricing provisions hereinbefore set out in this
section. Shares shall be issued only on business days. The Trustees may,
in their sole discretion, promulgate rules, regulations and procedures
governing purchases of shares in the Trust or impose a sales charge or such
other charges as they deem necessary or proper, upon investments in the
Trust.
Section 3. Ownership of Beneficial Shares. The ownership of
Beneficial Shares shall be recorded on the books of the Trust or its transfer
agent. The Trustees may make such rules as they consider appropriate for the
transfer of Beneficial Shares and similar matters. The record books of the
Trust or any transfer agent, shall be conclusive as to who are the holders of
Beneficial Shares and as to the number of Beneficial Shares held by each
Beneficial Shareholder. The Trustees, in their discretion, may authorize the
issuance of beneficial share certificates and may promulgate appropriate
rules and regulations with respect thereto.
Section 4. Certificate Register. The Trustees shall keep and
maintain a certificate register and shall enter therein the name and address
of each registered owner or holder of certificates and with respect to each
certificate the date of issue
PAGE 6
and the number of Shares represented thereby. The Trustees shall be entitled
for all purposes to treat and deem the addresses appearing on such
certificate register as the true and correct addresses of the respective
Shareholders. Subject to the provisions of ARTICLE IV of this Agreement and
Declaration of Trust, the Trustees shall treat the Shareholder in whose name
any certificate is registered as the absolute owner of such certificate for
all purposes.
Section 5. Pre-emptive Rights. Beneficial Shareholders shall have
no pre-emptive or other right to subscribe to any additional Beneficial
Shares or other securities issued by the Trust or the Trustees.
Section 6. Decedent Shareholder. The death of a Shareholder
shall not operate to terminate the Trust nor entitle the representatives of
the deceased Shareholder to an accounting or to take any action against the
Trustees or the Trust except in accordance with the provisions of the
Agreement and Declaration of Trust. The Shareholder shall not be liable for
any assessments or for the payment of any sum or sums of money other than the
purchase price of their respective Shares as set forth and provided herein.
Section 7. Record Date. The Trustees shall not have power to
close the transfer books for any purpose but shall be required, in lieu of
closing the transfer books, to fix in advance a date, not exceeding forty-
five (45) days preceding the date of any meeting of the Shareholders or the
date for the payment of any dividend, as a record date for determination of
the Shareholders entitled to notice of and to vote at any such meeting, or
entitled to receive payment of any such dividend; and in such case such
Shareholders, and only such Shareholders, as shall be Shareholders of record
on the record date so fixed, shall be entitled to notice of and to vote at
such meeting and any adjournment thereof, or to receive payment of such
dividend, notwithstanding any transfer of any Shares after such record date
fixed as aforesaid.
ARTICLE IV
Shareholders may designate a Beneficiary
Section 1. Any Shareholder shall have the right at any time to
designate a beneficiary or beneficiaries with respect to any Shares
registered in the name of such Shareholder. Such designation shall be
substantially of the form and tenor as the Trustees shall establish by rule
and shall not be valid until registered with the Trustees and such
registration evidenced by signature in behalf of the Trustees by one of their
authorized members, officers or agents.
PAGE 7
Section 2. Any such designation of beneficiary shall be revocable
by the Shareholder in his sole. discretion at any time during his lifetime,
provided that the Shareholder shall give to the Trustees written notice of
any such revocation and shall present his certificate to the Trustees for
cancellation of the designation of beneficiary thereon. The surrender of any
certificate by the registered owner or holder thereof for transfer shall,
ipso facto, cancel and revoke any designation of beneficiary with respect
thereto. In event of the death of the Shareholder and upon proof thereof
satisfactory to the Trustees the registered beneficiary alone shall be
entitled to have and to exercise all the rights appertaining to such
certificate and the Shares represented thereby.
Section 3. In the event the beneficiary shall predecease the
Shareholder, then the designation of beneficiary and all rights thereunder of
the deceased beneficiary or his estate or assigns shall immediately terminate
and be canceled.
ARTICLE V
Concerning the Net Asset Value of Shares
The net asset value of a Share of each class or series of the Trust
outstanding shall be determined not less frequently than the close of each
business day in accordance with statutes, regulations and rules of
appropriate governmental or regulatory agencies or authorities, applicable to
regulated investment companies and such rules and regulations as The Trustees
in their discretion, may promulgate.
ARTICLE VI
Shares are Redeemable
Section 1. Redemption of Beneficial Shares. A Beneficial
Shareholder of the Trust shall have the right, subject to the provisions of
this Article VI, to require the Trust to redeem his full and fractional
Beneficial Shares at a redemption price equal to the net asset value per
Beneficial Share of such class or series next determined after receipt of a
request to redeem. The Trustees shall establish such rules and procedures as
they deem appropriate for the redemption of Beneficial Shares provided that
all redemptions are made in accordance within the provisions of the Act, as
amended, and rules and regulations thereunder.
Section 2. Any Shareholder may surrender to the Trustees on any
business day, for redemption;
(a) a certificate or certificates representing Shares, bearing
thereon a demand for redemption, in substantially the form as the
Trustees shall establish by rule or regulation, duly signed by
such Shareholder, or;
PAGE 8
(b) in the case where Shares are held in open account and no
certificates have been issued, a demand for redemption in
substantially the form as the Trustees shall establish by rule or
regulation, duly signed by such Shareholder; and
the Trustees shall redeem the same and pay therefor, out of the assets of the
Trust, to such Shareholder or other person entitled thereto, in cash, the net
asset value of the surrendered Shares next computed and effective after
acceptance of a proper redemption request, less expenses and taxes, if any,
incidental to such surrender.
Section 3. Payment for Shares surrendered for redemption shall be
made as soon thereafter as is practicable and in any event, shall be made
within seven (7) calendar days after such surrender for redemption, except
that the Trustees may suspend the right of redemption or postpone the date of
payment in whole or in part (i) during any period that the New York Stock
Exchange is closed (other than customary weekend or holiday closing), or
trading on the Exchange is restricted as determined by the Securities and
Exchange Commission (the "Commission"), (ii) During any period when an
emergency exists as defined by the rules of the Commission, as a result of
which it is not reasonably practicable for the Fund to dispose of securities
owned by it, or fairly to determine the value of its assets, and (iii) for
such other periods as the Commission may permit. Such suspension shall take
effect at such time as the Trustees shall specify but not later than the
close of business on the business day following the declaration of
suspension, and thereafter there shall be no right of redemption or payment
until the Trustees shall declare the suspension at an end, except that the
suspension shall terminate in any event on the first day on which said Stock
Exchange shall have reopened for unrestricted trading or the period specified
in (ii) or (iii) above shall have expired. In the case of suspension of the
right of redemption, a Beneficial Shareholder may either withdraw his request
for redemption or receive payment based on the net asset value next
determined after the termination of the suspension.
Section 4. The Board of Trustees may, in its discretion, establish
from time to time uniform rules for the closing of shareholder accounts, the
value of which, by virtue of a partial liquidation, has fallen below the
minimum initial amount required of new Shareholders.
ARTICLE VII
Concerning the Title and Custody of Trust Assets
Section 1. The legal title to the Trust assets and all avails and
proceeds thereof shall at all times be vested in the Trustees.
PAGE 9
Section 2. Notwithstanding the provisions of Section 1 of this
ARTICLE VII, the Trustees shall deposit with the Custodian all monies and
other property received by them hereunder, and the Custodian shall receive
and keep the same as a special Trust Estate in the name of "D. L. Babson Bond
Trust" or in such other name or names as the Trust may bear from time to
time. The Trust Estate may be kept in one or more accounts as the Trustees
shall designate. The Trustees may cause any of the trust property to be
transferred into the name of, or to be acquired or held in the name of, the
Custodian, or in the name of any nominee or nominees of the Custodian
satisfactory to the Trustees. The Custodian may from time to time deposit
monies of the Trust in such other banks or trust companies and in such
amounts as the Trustees may in writing direct, but subject only to the draft
or order of the Custodian. The Custodian shall deliver to the Trustees, or
on their written order and in accordance therewith, any or all of the
properties and monies of said Trust Estate, as the Trustees may at any time
in writing require, but only in the following manner and subject to the
following provisions:
(a) In case of sale of any of said Trust Estate the broker's
notification of sale, in customary form, shall be delivered to
the Custodian duly identified and verified by the Trustees or by
their duly appointed and authorized agent or representative; and
concurrently therewith there shall be delivered to the Custodian
a check, draft or order for the payment to the Custodian of the
net proceeds of said sale as shown by said broker's notification.
Such net proceeds shall be received by the Custodian and credited
to said Trust Estate.
(b) In case of exchange of any of said Trust Estate, the property or
assets to be received in exchange therefor, or evidence of title
thereof, shall be delivered to the Custodian before the Custodian
shall part with custody of the property so to be exchanged;
provided, however, that if any plan of exchange shall require the
deposit of property with a depository, the Custodian, upon in-
structions from the Trustees, may deposit with such depository
the trust property to be exchanged, taking the receipt of such
depository therefor.
(c) In case funds are needed for the purpose of paying a dividend
declared by the Trustees upon the Shares of the Trust, the
certificate of the Trustees stating the amount necessary to pay
the same shall be furnished to the Custodian before the Funds are
withdrawn from said Trust Estate.
(d) In case Shares are surrendered to the Trustees for redemption in
accordance with the provisions of ARTICLE VI of the Agreement and
Declaration of Trust, evidence satisfactory to the Custodian of
the surrender and can-
PAGE 10
cellation of said Shares and the certificate or certificates
evidencing the same shall be furnished to the Custodian before
the redemption price of said Shares is withdrawn or disbursed out
of the Trust assets.
(e) In case funds are needed for the purpose of paying taxes,
compensation of the Custodian and Investment Adviser, if any,
management fees and expenses, if any, of the Trustees, or any
other expenses of administration and operation of the Trust and
the care, preservation and maintenance of the Trust assets, or
for any other lawful purpose hereunder, the Trustees shall
deliver to the Custodian their certificate specifying the amount
so to be withdrawn and the person or persons to whom the same
shall be paid.
The Custodian shall have no duty or responsibility whatsoever relative to
monies or other property received by the Trustees and not deposited with the
Custodian. The Custodian shall have no duty or responsibility whatsoever
with respect to the disposition of monies or other property delivered by the
Custodian to or on the order of the Trustees in accordance with the foregoing
provisions of this Section 2, and the Custodian shall not be required to
request or receive any accounting from the Trustees. The Custodian shall
receive all dividends, interest and other income paid to it upon and with
respect to properties and assets of the Trust held by the Custodian, and
shall properly credit such receipts to said Trust Estate.
Section 3. The Custodian shall not have any duty or liability with
respect to the management of the Trust assets, but shall be liable only for
the custody and safekeeping thereof in accordance with the provisions of
Section 2 of this ARTICLE VII. If any action directed to be taken by the
Custodian involves probable expense, costs or liability upon the part of the
Custodian, the Custodian may require the Trustees to indemnify it with
respect thereto, and the furnishing of such indemnity shall be a condition
precedent to the obligation of the Custodian to comply with such directions.
The Custodian shall not be required to look into or investigate the propriety
of any action which the Trustees shall direct it to take with respect to the
Trust assets nor to inquire into or ascertain whether such action is within
the powers of the Trustees, it being specifically provided hereby that full
responsibility for the acts of the Trustees shall be borne by the Trustees
themselves and shall not in any event be borne either in whole or in part by
the Custodian.
Section 4. The Custodian shall not at any time or for any purpose
be required to determine, ascertain, calculate, inquire into or investigate
the net asset value of the Trust or the net asset value of the Shares, but
the duty to determine, ascertain and calculate the net asset value of the
Trust and the net asset value of the Shares from time to time shall rest ex-
clusively upon the Trustees. In case any action or decision of
PAGE 11
the Custodian is conditioned in any way upon or has reference to the net
asset value of the Shares, the Custodian shall be entitled to, and shall,
rely conclusively upon the certificate of the Trustees with respect to such
net asset value, and the Custodian shall not be required to make any inquiry
or investigation into such net asset value other than to require the
certificate of the Trustees with respect thereto.
Section 5. The fiscal year of the Trust shall commence on the first
day of December in each year, or such other date as the Trustees may set from
time to time by resolution.
Section 6. Not less often than annually the Trustees shall cause an
audit to be made of the assets of the Trust and of the books, records and
accounts of the Trustees and the Custodian by independent certified public
accountants. Not less often than semiannually the Trustees shall prepare and
submit to each Shareholder a report of the operations of the Trust for the
preceding semiannual period, which reports shall set forth such information
and financial statements as may be required by law or regulation.
Section 7. The appointment of independent certified public
accountants shall be made each year by the Trustees in the manner prescribed
by law, and each such appointment shall be subject to ratification by the
Shareholders. Each such appointment shall be conditioned upon the right of
the Trust by a majority vote of the Shareholders to terminate such employment
forthwith without penalty. Each such accountant's report and certificate
rendered shall be addressed both to the Trustees and to the Shareholders.
ARTICLE VIII
Concerning the Investment and Management of
the Trust Assets
Section 1. There shall be vested in the Trustees, subject to the
provisions of the Agreement and Declaration of Trust, the power and authority
to make all decisions, determinations and conclusions with respect to the
investment and reinvestment of the assets of the Trust, including, without
limitation, the power and authority to designate the investment securities to
be purchased from time to time and the amount or quantity thereof to be
purchased, the securities to be sold from time to time and the amount or
quantity to be sold, the amount or quantity of cash to kept on hand without
investment, and determinations concerning the selection, acquisition, holding
and disposition of the Trust assets, and in general the power to fix and
determine the investment policy of the Trust.
Section 2. The Trustees, in their discretion, subject to
ratification by the Shareholders, or the Shareholders by majority vote, at
any annual or special meeting, may appoint an Investment
PAGE 12
Adviser duly and legally registered as such according to the provisions of
the laws of the United States. There may be delegated to any Investment
Adviser so elected and appointed the power and authority to make all
decisions, determinations and conclusions with respect to the investment and
reinvestment of the assets of the Trust as set out in the foregoing Section
1. The Trustees and the Custodian shall be fully and completely protected in
acting upon any and all of the recommendations of the Investment Adviser from
time to time appointed and acting as such under the provisions of the
Agreement and Declaration of Trust, subject always to the provisions of the
Agreement and Declaration of Trust, provided, however, that the Trustees and
not the Investment Adviser, in the absence of willful malfeasance or
misfeasance, bad faith or gross negligence by the Investment Adviser in the
performance of if its duties, or reckless disregard by the Investment Adviser
of its obligations and duties to the Trust, shall be solely responsible for
complying with the requirements of Section 4, ARTICLE I of the Agreement and
Declaration of Trust. Neither the Trustees, Custodian nor such Investment
Adviser shall be liable or responsible for any errors or mistakes of judgment
in connection with the management of the Trust Assets or the determination of
the investment policy of the Trust, but shall be liable only for their own
respective willful misconduct or gross negligence; provided always, that
nothing herein contained shall protect or purport to protect any Trustee
against any liability to the Trust or to its Shareholders by reason of his
willful malfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office.; and provided, further, that
nothing herein contained shall protect or purport to protect the Investment
Adviser against any liability to the Trust or its Shareholders by reason of
its willful misfeasance, bad faith, or gross negligence in the performance of
its duties or by reason of its reckless disregard of its obligations and
duties hereunder or under its contract of employment.
Section 3. Every Investment Adviser elected or appointed according
to the provisions of the foregoing Section 2 shall hold office subject to the
rights of the Trustees and the Shareholders to terminate the employment of
such Investment Adviser and to remove the same. Any Investment Adviser
appointed and acting as such under the provisions of the Agreement and
Declaration of Trust shall be permitted to resign upon giving to the Trustees
written notice thereof not less than thirty (30) days prior to the date upon
which such resignation shall be effective. At or prior to the effective date
of any such resignation the Investment Adviser so resigning shall turn over
and deliver to the Trustees or to any successor Investment Adviser designated
by the Trustees, all property and all books, records and documents and
papers, if any, belonging to the Trust.
Section 4. The Trustees shall at all times and with diligence keep
the Investment Adviser, if any, then appointed and acting as such hereunder
fully advised and informed concerning
PAGE 13
the business and affairs of the Trust so that the Investment Adviser shall at
all times have on hand or available all such facts, information and data as
may be necessary or desirable in order to consider, determine and decide the
investment policy of the Trust.
Section 5. No Investment Adviser at any time appointed and acting
hereunder shall have the right by any means or method to assign its contract
of employment with the Trust or its position or employment thereunder or
under this Agreement and Declaration of Trust to any other person, firm or
corporation and if any Investment Adviser shall attempt or purport to assign
its contract of employment or its position or employment thereunder or
hereunder, the same shall, ipso facto, terminate its said contract and
employment. For all purposes of this section the words "assignment" and
"assign" shall include any direct or indirect transfer or hypothecation of a
contract or any position or employment thereunder or hereunder, or of a
controlling block if the assignor's outstanding voting securities by a
security holder of the assignor; but shall not include an assignment of
partnership interests incidental to the death or withdrawal of a minority of
the members of the partnership having only a minority interest in the
partnership business or the admission to the partnership of one or more
members who, after such admission, shall be only a minority of the members
and shall have only a minority interest in the business.
Section 6. The Investment Adviser, if any, appointed and acting as
such under the provisions of the Agreement and Declaration of Trust shall be
entitled to receive reasonable compensation for services performed, and such
compensation or the rate thereof shall be fully set forth in the contracts of
employment submitted to the Shareholders for ratification from time to time.
Such compensation, or the rate thereof, shall always be consistent and
commensurate with the rate of compensation currently paid by others for
services of like or similar nature.
Section 7. The Trustees elected and acting as such under the
provisions of the Agreement and Declaration of Trust shall be entitled to
receive reasonable compensation for their services with respect to the
investment, reinvestment and general management of the assets of the Trust.
In addition, they shall be responsible for providing the Trust with such
administration and professional services as it may require and may pay
reasonable compensation for such services to themselves, their agents and
such independent contractors as they deem necessary.
ARTICLE IX
Shareholders' Meetings and Voting Rights
Section 1. An annual meeting of the Shareholders shall
be held each February on such date as the Trustees may select.
PAGE 14
Section 2. Special meetings of the Shareholders may be called by
the Trustees from time to time upon their own motion, and shall be called by
the Trustees from time to time upon written request of any ten (10)
Shareholders who possess the following qualifications:
(a) They must have been Shareholders of record for at least six (6)
months; and
(b) They must hold in the aggregate, shares having a net asset value
of at least $25,000.00 or their Shares must amount in the
aggregate to not less than one per centum (1%) of the number of
Shares then issued and outstanding hereunder, whichever shall be
the lesser.
Section 3. Notice. Not less than ten nor more than ninety days
before the date of every annual or special Shareholders' meeting, the
Trustees shall give to each Shareholder entitled to vote at such meeting
written notice stating the time and place of the meeting and, in the case of
a special meeting, the purpose or purposes for which the meeting is called.
Business transacted at any special meeting of Shareholders shall be limited
to the purposes stated in the notice.
Section 4. At each meeting of the Shareholders a majority in number
of the issued and outstanding Shares entitled to vote thereat, represented by
the registered owners and holders thereof in person or by proxies, shall be
requisite and shall constitute a quorum for the transaction of business. All
actions and decisions done or taken by the holders of a majority of the
Shares present in person or by proxies at any meeting at which a quorum for
the transaction of business is present shall be valid to all intents and
purposes and shall be deemed to be the action of the Shareholders in like
manner as if done or taken by the holders of all of the issued and
outstanding Shares. At each meeting of the Shareholders every Shareholder
having the right to vote shall be entitled to vote in person or by proxy
appointed by an instrument in writing subscribed by such Shareholder and
bearing a date not more than six (6) months prior to said meeting unless said
instrument provides that it shall be valid for a longer period. Each
Shareholder shall have one vote for each Share registered in his name on the
books of the Trustees and entitled to vote at said meeting.
Section 5. If the Trust has more than one class or series of Shares
outstanding, then each class or series shall vote separately on matters which
affect that class or series.
PAGE 15
ARTICLE X
Concerning the Trust Income and Dividends to Shareholders
Section 1. Dividends paid by any corporation out of earnings shall
be treated as income, except that stock dividends shall be deemed and treated
as corpus or principal unless the corporation declaring and issuing such
stock dividends shall establish, or has established, the practice of paying
stock dividends in lieu of or in addition to cash dividends, in which cases
the Trustees 'nay treat stock dividends declared and issued in accordance
with such established practice as income and not as corpus. The Trustees
shall have power to determine, subject to the provisions of the Agreement and
Declaration of Trust, whether receipts shall be classified as income or
corpus.
Section 2. (a) The Trustees may from time to time, at their sole
discretion, declare and pay to the Shareholders dividends out of income, net
capital gains or profits realized or resulting from the sale, exchange or
other disposition of Assets.
(b) The Trustees 'nay from time to time, at their sole
discretion, declare special dividends out of income or net capital gains or
profits realized or resulting from the sale, exchange or other disposition of
Trust Assets, and may, in and by the resolution or resolutions declaring such
special dividends, provide that the same shall be paid to the persons then
occupying the positions of Trustees under this Agreement and Declaration of
Trust, as agents of and for the Shareholders, and payment of any such
dividend to such agents shall for all purposes be deemed and treated as if
made direct to the Shareholder; provided, however, that such agents, as such,
and acting for and in behalf of the Shareholder, shall forthwith upon receipt
of such payment pay the full amount so received into the assets of the Trust
in the hands of the Custodian as a contribution to the capital of the Trust
by the Shareholders, but no additional Shares shall be issued in
consideration therefor, and for all purposes the net asset value of the Trust
and of the Shares shall be computed and determined as if such dividend had
not been declared and paid.
(c) The Trustees may, at their sole discretion, establish such
rules and procedures and delegate such authority as they deem necessary or
proper to provide for payment of dividends on a periodic basis.
Section 3. The Trustees shall prepare and mail to the Shareholders,
accompanying each distribution, either out of income or out of net capital
gains, a statement disclosing the source of such distribution and such other
information and in such form as may be prescribed or required by law. The
Shareholders, as a condition precedent to their right to receive such
distribution, shall be required to comply with all provisions of law and the
lawful regulations of the Treasury Depart-
PAGE 16
ment of the United States with respect to the taxation of Regulated
Investment Companies insofar as the same impose requirements on the
Shareholders.
ARTICLE XI
Concerning the Trustees
Section 1. The number of Trustees appointed, elected and acting as
such under the Agreement and Declaration of Trust shall be three (3) or more
as may be determined from time to time by the Shareholders at any annual or
special meeting of the Shareholders. The Trustees shall be divided into
three (3)' classes and the number of Trustees from time to time appointed,
elected and acting as such shall be distributed as nearly equally as possible
among said three (3) classes. The Trustee or Trustees of the first class
shall hold office until the annual meeting of shareholders to be held in
1989; the Trustee or Trustees of the second class shall hold office until the
annual meeting of Shareholders to be held in 1990; and the Trustee or
Trustees of the third class shall hold office until the annual meeting of
Shareholders to be held in 1991. The Shareholders shall have power to
determine the class to which each of the Trustees shall be elected. At each
annual meeting of the Shareholders a Trustee or Trustees equal in number to
the Trustees whose terms of office then expire shall be elected for terms of
three (3) years. If the Shareholders at any annual or special meeting
determine that there shall be more than three (3) Trustees, the Shareholders
shall elect the additional Trustees and assign them to their classes so that
their terms of office will expire at the same time as all other Trustees of
the same respective classes. All Trustees shall serve until their respective
successors are elected and qualified.
Section 2. Any Trustee may be removed at any time by an instrument
of writing signed by all the other Trustees setting forth the fact of such
removal and the date upon which it is effective. A copy of any such written
instrument removing the Trustee shall be lodged with the Custodian. Any
Trustee may also be removed at any time by a majority vote of the
Shareholders present in person or by proxy at any annual or special meeting
of the Shareholders at which a quorum for the transaction of business is
present. Notice of the action of the Shareholders in removing any Trustee
shall be given to the Custodian by the remaining Trustees.
Section 3. Any Trustee may resign from office as such by written
instrument signed by him and delivered to the other Trustees specifying the
date upon which such resignation shall become effective. A copy of any such
resignation shall be lodged with the Custodian.
PAGE 17
Section 4. In case of the death, resignation or removal of a
Trustee, or in case a vacancy among the Trustees shall exist for any reason,
the surviving or remaining Trustees shall have power to fill the vacancy by
electing or appointing to the office of Trustee such other person as they in
their discretion shall see fit; provided, that the surviving or remaining
Trustees shall have no power to fill such vacancy unless at least two-thirds
of the Trustees holding office after such vacancy has been filled were
elected by the Shareholders. If at any time less than two-thirds of the
Trustees in office were so elected by the Shareholders, the Trustees shall
cause a special meeting of the Shareholders to be convened within thirty (30)
days for the purpose of ratifying any appointments made by the surviving or'
remaining Trustees; and if the Shareholders shall fail or refuse to ratify
any such appointments, the vacancy or vacancies shall be filled by the
Shareholders themselves. The Trustees shall give prompt notice to the
Custodian of the election or appointment of a new Trustee or Trustees by any
method, and the Custodian shall always be entitled to rely conclusively upon
the certificate of the Trustees concerning the identity of the persons then
elected and in office as such Trustees.
Section 5. The Trustees in their discretion may engage in,
prosecute, compromise, abandon or adjust by arbitration, or otherwise, any
actions, suits, proceedings, disputes, claims, demands and other matters
relating to the Trust, and out of the Trust assets to pay, or to satisfy any
debts, claims or expenses incurred in connection therewith, including those
of litigation, upon any evidence that the Trustees may deem sufficient,
including any such matters relating to the Trust wherein any of the Trustees
may be named individually, the subject matter of which arises by reason of
business for and on behalf of the Trust.
Section 6. The Trustees may make, adopt, amend, restate and repeal
from time to time such rules, regulations, resolutions, by-laws and
procedures, not inconsistent with the provisions of the Agreement and
Declaration of Trust, as they may deem necessary or desirable for the
management of the Trust and for the government of themselves, their officers,
agents and employees. The Trustees may take any action with or without
meeting, as they may determine. The acts of a majority of the Trustees at
any time duly elected or appointed and in office as such under the provisions
of the Agreement and Declaration of Trust, shall be deemed and construed for
all purposes as the lawful acts and actions of the Trustees in like manner as
if done or taken by unanimous action of the Trustees.
Section 7. The Trustees shall have power and authority to appoint
such officers, agents and employees as the business of the Trust may require,
to define and delimit the powers and duties of such officers, agents and
employees, and to fix and pay out of the funds of the Trust, reasonable
compensation for their services as Trustees and for the services of such
officers, agents and employees. All Trustees and their officers, agents
PAGE 18
and employees handling the funds, monies, properties and assets of the Trust,
or having access thereto, but not including the Custodian, shall be required
to give bonds in such reasonable penal sums, respectively, as may be fixed by
the Trustees.
Section 8. Any Trustee shall have power and authority to acquire,
own and dispose of Shares of the Trust and to be a Shareholder, in like
manner and to the same extent as if he were not a Trustee. Any Trustee,
except as may be prohibited by law, may deal with the Trust in relation to
any matter in like manner and to the same extent as if he were not a Trustee.
Section 9. The Trustees shall have power and authority to enter
into agreements or contractual arrangements on behalf of the Trust with
management companies, investment advisors, accounting firms, banks or trust
companies, and such other persons as may be necessary or proper to provide
such services to the Trust.
Section 10. No recourse shall at any time be had under or upon any
contract, instrument, certificate, undertaking, obligation, covenant, or
agreement, whether oral or written, made, issued or executed by the Trustees
in pursuance of the terms of the Agreement and Declaration of Trust, or by
any officer or agent of the Trustees, or by reason of anything done or
omitted to be done by them or any of them, against the Trustees individually,
or against any such officer or agent or against any Shareholder, by legal or
equitable proceedings, or by virtue of any suit or otherwise, except only to
compel the proper application or distribution of the Trust assets, it being
expressly understood and agreed that the Agreement and Declaration of Trust,
and all obligations and instruments executed hereunder or pursuant hereto, by
the Trustees, and any acts done or omitted to be done by them, are solely the
obligations, instruments, acts and omissions of, or in respect of, the Trust,
and that all the obligations, instruments, liabilities, covenants and
agreements, acts of omission of the Trustees, as Trustees, shall be enforced
against and be satisfied out of the Trust assets only, and all personal and
individual liability of Trustees, except as herein stated, and of all
officers and agents, and of the Shareholders, is hereby expressly waived and
negated. Nothing herein contained shall be construed as empowering or
authorizing the Trustees to contract any debt or to do anything which will
bind any of the Shareholders or any of the Trustees personally, and any
person, firm, corporation or association contracting or dealing with the
Trustees shall be obligated to enforce any obligation, liability or covenant
with said Trustees against, and be satisfied out of, the Trust assets only
and not against any Shareholder or any Trustees personally. Nothing herein
contained shall be construed or deemed to protect or indemnify, or to purport
to protect or indemnify, any Trustee or any officer or agent of the Trustees
against any liability to the Trust or to the Shareholders to which any such
Trustee, officer or agent would otherwise be subject by reason of willful
misfeasance, bad faith, gross
PAGE 19
negligence, or reckless disregard of the duties involved in the conduct of
his office, or by reason of any liabilities incurred under, or any violation
by him of, the Securities Act of 1933, as amended, or the Investment Company
Act of 1940, or both said Acts.
Section 11. No person, firm or corporation dealing with the Trustees
or the Trust shall be required to investigate the Trustees' authority for
entering into any transaction or to see to the application of the proceeds of
any transaction.
ARTICLE XII
Concerning the Custodian
Section 1. The Custodian shall not be liable for the exercise of
any discretion or power or for mistakes or errors of judgment nor otherwise
in connection with the Custodianship except for its own willful misconduct or
gross negligence. The Custodian shall be indemnified by the Trustees against
all costs and expenses (including amounts of judgments where the adjudication
does not involve a dereliction in the performance of its duties) reasonably
incurred by or imposed upon the Custodian in connection with or resulting
from any action, suit or proceeding to which it may be made a party by reason
of its being or having been the Custodian, except in relation to matters in
which a recovery shall be had against it by reason of its having been finally
adjudged in such action, suit or proceeding to have been derelict in the
performance of its duties as such Custodian. The foregoing right of
indemnity shall include reimbursement for the amounts and expenses, including
attorneys' fees, paid in settling any such action, suit or proceeding when
settling appears to be in the interest of the Trust and the Trustees shall
determine there has been no dereliction, and shall not be exclusive of other
rights to which the Custodian may be entitled as a matter of law.
Indemnification for amounts of judgment and amounts paid by the Custodian to
the Trust itself;
Section 2. Any statement or certification by the Trustees shall be
sufficient if made by the Trustees or by a majority of the Trustees or by
their duly appointed agent or agents and may be accepted by the Custodian as
conclusive evidence of all matters therein contained and the Custodian shall
be protected in any action which it may take or refrain from taking by reason
of the supposed existence of such fact or matter;
Section 3. The Custodian shall not be responsible for any breach by
the Trustees of any covenant contained in this Agreement and Declaration of
Trust or any Supplemental Declaration of Trust pursuant thereto;
PAGE 20
Section 4. The Custodian shall not be personally liable for any
taxes, assessments or other governmental charges imposed upon or in respect
of the Trust assets or the income therefrom, or upon it as Custodian
hereunder, under any present or future law of the United States of America or
of any state, county, municipality or other taxing authority; and the
Trustees shall reimburse the Custodian for, and indemnify it against any and
all liability imposed upon it by reason of any of the foregoing matters and
the trust estate shall be responsible and liable there-for;
Section 5. The Custodian covenants and agrees that no person or
persons nominated by it to hold any Shares of stock' constituting the Trust
assets shall (1) pledge, sell or otherwise dispose of such Shares of stock,
(2) exercise any right to vote or execute any proxy to vote or consent with
respect thereto, except as instructed by the Trustees, or (3) receive, hold
or dispose of any income or proceeds from or out of, or distribution upon or
with respect to, any such Shares of stock for his, their or its account or
otherwise than for the account of the Custodian;
Section 6. The Custodian or any successor Custodian may resign and
be discharged of the custodianship hereunder upon giving thirty (30) days
written notice thereof to the Trustees; provided that no resignation of the
Custodian or any successor Custodian shall take effect until (1) the Trust
has been completely liquidated and the proceeds of the liquidation dis-
tributed to the Shareholders, or (2) a successor Custodian, having the
qualifications prescribed in the Agreement and Declaration of Trust, has been
designated and has accepted such custodianship;
Section 7. The Custodian shall be entitled to receive from the
Trustees, and the Trustees agree to pay to the Custodian, all expenses
incurred and paid by the Custodian in performance of its duties hereunder and
compensation for its services as Custodian in such reasonable amounts as may
be agreed upon between the Custodian and the Trustees; provided that during
the life of the Trust hereby created the Custodian, if not otherwise
remunerated, may charge against and collect from the income of the Trust, and
from the corpus thereof if no income is available, such fees for its services
and such reimbursement for its expenses as are provided for in the Agreement
and Declaration of Trust, but no such charge or collection shall be made
except for services theretofore performed or expenses theretofore incurred.
Section 8. The Custodian or any successor may be removed at any
time (a) by an instrument in writing signed by the Trustees, or (b) by a
majority vote of the Shareholders present in person or represented by proxy
at any annual or special meeting of the Shareholders at which a quorum for
the transaction of business is present.
PAGE 21
Section 9. In case the Custodian or any successor custodian shall
resign or be removed or a vacancy shall otherwise occur in the position of
Custodian hereunder, a successor Custodian shall be appointed by the
Trustees. Every Successor Custodian shall execute and deliver to its
predecessor last in office, and also to the Trustees, an instrument accepting
such appointment hereunder, the acceptance of the appointment by any
successor Custodian and the receipt by it of the Trust assets shall
constitute a full and complete discharge of the predecessor Custodian from
any and all obligations hereunder.
Section 10. The Custodian and every successor to the Custodian shall
always be a bank or trust company having capital,' surplus and undivided
profits aggregating at least One Million Dollars ($1,000,000.00), or such
other sum as may be required by any applicable law, rule or regulation.
ARTICLE XIII
Location of Trust Records
The original or a copy of this instrument and of each Declaration of Trust
Supplemental hereto, shall be kept at the office of the Trust where it may be
inspected by any Beneficial Shareholder. Anyone dealing with the Trust may
rely on a certificate by a Trustee of the Trust as to whether or not any such
supplemental Declarations of Trust have been made as to any matter in connec-
tion with the Trust hereunder, and with the same effect as if it were the
original, may rely on a copy certified by a Trustee of the Trust to be a copy
of this instrument or of any such supplemental Declaration of Trust.
ARTICLE XIV
Concerning the Termination of the Trust
Section 1. The Trust created by the Agreement and Declaration of
Trust may be terminated by the Trustees under the following conditions:
(a) if the net assets of the Trust have been reduced, through
redemption of outstanding Shares or otherwise to such an amount that,
in the opinion of the Trustees it is impracticable to continue the
Trust; or
(b) if a vacancy in the position of Custodian hereunder occurs and it
is not possible to secure a successor Custodian; or
(c) if there shall exist at the same time vacancies in the
positions of three (3) or more Trustees hereunder and the
Shareholders shall fail or refuse to elect successor
Trustees; or
PAGE 22
(d) if voted by the registered holders of a two-thirds majority or
more of all the outstanding Shares, present in person or represented by
proxy and entitled to vote at any meeting of the Shareholders called
for that purpose.
Section 2. Upon termination of the Trust, the Trustees shall notify
each Shareholder thereof by mail, or in such other manner as may be
prescribed by law, and shall proceed to sell the Trust assets and convert the
same into cash and apply the proceeds as follows:
(a) to the payment of all prior costs, expenses, charges, taxes and
other obligations, entitled by law to priority of payment
(b) to distribution ratably among the Shareholders in proportion to
the numbers of Shares registered in their names respectively.
Upon termination of the Trust and final distribution of the Trust's assets,
the Trustees shall be discharged from any and all further liabilities and
duties hereunder and the rights, title and interest of all parties to the
Trust shall be canceled and discharged.
ARTICLE XV
Concerning Amendments to the Agreement and Declaration of Trust
Section 1. The Trustees may amend, modify, supplement and restate
the Agreement and Declaration of Trust from time to time with the consent or
approval of the Shareholders holding a majority of the Shares then issued and
outstanding. No such amendment, modification, supplement or restatement
shall affect the validity of any lawful act theretofore done.
Section 2. Notwithstanding the foregoing provisions, the Trustees,
without the consent or approval of Shareholders, may amend, alter, supplement
or restate the Agreement and Declaration of Trust in any respect necessary or
required to comply with any
PAGE 23
law now in effect or hereafter enacted, or any rule, regulation or order of
any lawfully constituted body or commission having jurisdiction.
IN WITNESS WHEREOF, the undersigned have executed this Agreement and
Declaration of Trust as of the 31st day of March,
1988.
/s/Larry D. Armel
Larry D. Armel, Trustee
/s/Stephen W. Harris
Stephen W. Harris, Trustee
/s/Alfred J. Hoffman
Alfred J. Hoffman, Trustee
/s/Robert H. Lange
Robert H. Lange, Trustee
/s/Edward L. Martin
Edward L. Martin, Trustee
/s/Francis C. Rood
/s/Francis C. Rood, Trustee
/s/William H. Russell
William H. Russell, Trustee
PAGE 24
EX99.23(a)(2)
ADOPTED AS OF MARCH 31, 1988
D. L. BABSON BOND TRUST
PROVISIONS OF SUPPLEMENTARY
AGREEMENT AND DECLARATION OP TRUST
WHEREAS, D. L. Babson Bond Trust is a common law trust organized and existing
under the laws of the state of Missouri, and,
WHEREAS, the Trustees thereof desire to classify or reclassify certain Shares
of Beneficial Interest of the Trust dated November 2, 1944, as restated March
31, 1988, pursuant to the terms and conditions of Section 1 of ARTICLE III
thereof;
NOW, THEREFORE, this Supplementary Declaration of Trust is hereby annexed and
made a part of the Agreement and Declaration of Trust dated November 2, 1944,
as restated March 31, 1988:
ARTICLE I
Section 1. Share of Beneficial Interest. The Shares of Beneficial
Interest at any time and from time to time issued and outstanding under the
Agreement and Declaration of Trust dated November 2, 1944, prior to April 1,
1988, are hereby classified or reclassified as "Portfolio L" shares, and, in
addition, an unlimited number of new shares are hereby classified or reclas-
sified as Portfolio L" shares, and an unlimited number of new shares are
hereby classified or reclassified as "Portfolio S" shares.
Section 2. Portfolio L Shares described. The shares designated as
Portfolio L, herein, shall have a par value of Twenty-Five Cents ($0.25)
each. Each Share shall at all times be exactly equal and identical in
quantum and amount with each and every other Portfolio L share issued and
outstanding hereunder; and each and every Portfolio L share shall at all
times represent an aliquot part or portion of the net assets of the Trust,
designated as Portfolio L assets, and a pro-rata share of general assets of
the Trust which are not designated as belonging to any portfolio.
Section 3. Portfolio S Shares described. The shares designated as
Portfolio S, herein, shall have a par value of one dollar ($1.00) each. Each
Share shall at all times be exactly equal and identical in quantum and amount
with each and every other Portfolio S share issued and outstanding hereunder;
and each and every Portfolio S share shall at all times represent an aliquot
part or portion of the net assets of the Trust, designated as Portfolio S
assets, and a pro-rata share of general assets of the Trust which are not
designated as belonging to any portfolio.
Section 4. Shares Are Personal Property. Shares of any Portfolio
shall be personal property only, vesting in the respective owners and holders
thereof only such rights as are provided
PAGE 1
and set forth herein and in the Restated Agreement and Declaration of Trust,
dated March 31, 1988, and no owner or holder of any Share or Shares shall
have any legal title in or to the properties and assets of the Trust, it
being specifically understood and agreed that the legal title to all
properties and assets of the Trust shall at all times be vested in the
Trustees. The owners and holders of any Shares shall not be deemed or con-
strued for any purpose to be partners. The death of a Shareholder shall
not operate to terminate the Trust nor entitle the representatives of the
deceased Shareholder to an accounting or to take any action against the
Trustees or the Trust except in accordance with the provisions of the
Agreement and Declaration of Trust, this Supplementary Declaration, or any
law, rule, regulation, by-law or resolution. The Shareholder shall not be
liable for any assessments or for the payment of any sum or sums of money
other than the purchase price of their respective Shares as set forth and
provided in the Agreement and Declaration of Trust, this Supplementary
Declaration, or any law, rule, regulation, by-law or resolution.
IN WITNESS WHEREOF, the undersigned have executed this Supplementary
Declaration of Trust as of the 31st day of March 1988.
/s/Larry D. Armel
Larry D. Armel, Trustee
/s/Stephen W. Harris
Stephen W. Harris, Trustee
/s/Alfred J. Hoffman
Alfred J. Hoffman, Trustee
/s/Robert H. Lange
Robert H. Lange, Trustee
/s/Edward L. Martin
Edward L. Martin, Trustee
/s/Francis C. Rood
Francis C. Rood, Trustee
/s/William H. Russell
William H. Russell, Trustee
PAGE 2
EX99.23(b)
AMENDED AND RESTATED BY-LAWS
AS OF NOVEMBER 30, 1996
OF
D. L. BABSON BOND TRUST
ARTICLE I
FISCAL YEAR AND OFFICES
Section 1. Fiscal Year. Unless otherwise provided by
resolution of the Board of Trustees, the fiscal year of the trust shall
begin on the first day of December and end on the last day of
November.
Section 2. Registered Office. The registered office of the trust
in Missouri shall be C/O JONES & BABSON, INC., 2440 Pershing Road, Suite
G-15, Kansas City, Missouri 64108.
Section 3. Other Offices. The trust shall have the power to
open additional offices for the conduct of its business, either within
or outside the State of Missouri, at such places as the Board of
Trustees may from time to time designate.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. Place of Meeting. Meetings of the shareholders for
the election of trustees shall be held in such place as the Board of
Trustees may by resolution establish. In the absence of any specific
resolution, annual meetings of shareholders shall be held at the trust's
principal office in the State of Missouri. Meetings of shareholders for
any other purpose may be held at such place and time as shall be stated
in the notice of the meeting, or in a duly executed waiver of notice
thereof.
Section 2. Annual Meetings. The annual meetings of shareholders,
if held, shall be held at such time during the month of September as
may be fixed by the Board of Trustees by resolution each year. At any
annual meeting, the shareholders shall elect a Board of Trustees and
transact any other business which may properly be brought before the
meeting. No annual meeting of shareholders shall be required in any
year in which the only business to be transacted at such meeting does
not require action by shareholders on any one or more of the following:
(1) the election of trustees;
(2) approval of the investment advisory agreement;
(3) ratification of the selection of independent public
accountants;
(4) approval of a distribution agreement.
Section 3. Special Meetings. At any time in the interval between
annual meetings, special meetings of the shareholders may be called by
the president or by a majority of the Board of Trustees and shall be
called by the president or secretary upon written request of the
holders of shares entitled to cast not less than ten percent of all the
votes entitled to be cast at such meeting.
Section 4. Notice. Not less than ten nor more than ninety days
before the date of every annual or special shareholders' meeting,
the secretary shall give to each shareholder entitled to vote at such
meeting written notice stating the time and place of the meeting and, in
the case of a special meeting, the purpose or purposes for which the
meeting is called. Business transacted at any special meeting of
shareholders shall be limited to the purposes stated in the notice.
Section 5. Record Date for Meetings. The Board of Trustees may
fix in advance a date not more than ninety days, nor less than ten days,
prior to the date of any annual or special meeting of the shareholders
as a record date for the determination of the shareholders entitled to
receive notice of, and to vote at any meeting and any adjournment
thereof; and in such case such shareholders and only such shareholders
as shall be shareholders of record on the date so fixed shall be
entitled to receive notice of and to vote only such shares held and
outstanding on such record date that continue to be held and outstanding
at the time of voting.
Section 6. Quorum. At any meeting of shareholders, the
presence in person or by proxy of the holders of a majority of the
aggregate shares of beneficial interest at the time outstanding shall
constitute a quorum. If, however, such quorum shall not be present or
represented at any meeting of the shareholders, the shareholders
entitled to vote thereat, present in person or represented by proxy,
shall have the power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be
present or represented. At such adjourned meeting at which a quorum
shall be present or represented any business may be transacted which
might have been transacted at the meeting originally notified.
Section 7. Majority. The vote of the holders of a majority of
the shares of beneficial interest having voting power, as measured by
the applicable quorum requirements set forth in Section 6, present in
person or represented by proxy, at a meeting duly called and at
which a quorum is present, shall be sufficient to take or authorize
action upon any matter which may properly come before the meeting,
unless otherwise required by the Investment Company Act of 1940, as
amended.
Section 8. Voting. Each shareholder shall have one vote for each
full share and a fractional vote for each fractional share of beneficial
interest having voting power held by such shareholder on each matter
submitted to a vote at a meeting of shareholders. A shareholder may
cast his vote in person or by proxy, but no proxy shall be valid after
eleven months from its date, unless otherwise provided in the proxy. At
all meetings of shareholders, unless the voting is conducted by
inspectors, all questions relating to the qualification of voters and
the validity of proxies and the acceptance or rejection of votes shall
be decided by the chairman of the meeting.
Section 9. Inspectors. At any election of trustees, the Board of
Trustees prior thereto may, or, if they have not so acted, the
chairman of the meeting may, and upon the request of the holders of ten
percent (10%) of the shares entitled to vote at such election shall,
appoint two inspectors of election who shall first subscribe an oath of
affirmation to execute faithfully the duties of inspectors at such
election with strict impartiality and according to the best of their
ability, and shall after the election make a certificate of the result
of the vote taken. No candidate for the office of trustee shall
be appointed such inspector. The chairman of the meeting may cause a
vote by ballot to be taken upon any election or matter, and such vote
shall be taken upon the request of the holders of ten percent (10%)
of the shares of beneficial interest entitled to vote on such election
or matter.
Section 10. Shareholder List. The officer who has charge of the
share ledger of the trust shall, at least ten days before every
election of trustees, prepare and make a complete list of the
shareholders entitled to vote at said election, arranged in
alphabetical order, showing the address and the number of shares
registered in the name of each shareholder. Such list shall be open to
the examination of any shareholder, during ordinary business hours,
for a period of at least ten days prior to the election, either at a
place within the city, town or village where the election is to be
held and which place shall be specified in the notice of meeting, or
if not specified, at the place where said meeting is to be held,
and the list shall be produced and kept at the time and place of
election during the whole time thereof, and subject to the
inspection of any shareholder who may be present.
ARTICLE III
TRUSTEES
Section 1. General Powers. The business of the trust shall be
managed by its Board of Trustees, which may exercise all powers of
the trust, except such as are by statute, or the Agreement and
Declaration of Trust, or by these By-laws conferred upon or reserved to
the shareholders.
Section 2. Number and Term of Office. The number of trustees
which shall constitute the whole Board shall be determined from time to
time by the Board of Trustees, but shall not be fewer than three. Each
trustee elected shall hold office until his successor is elected and
qualified. Trustees need not be shareholders.
Section 3. Elections. The Trustees shall all be of one class
and shall serve until their respective successors are elected and
qualified.
Section 4. Place of Meeting. Meetings of the Board of
Trustees, regular or special, may be held at any place in or out of the
State of Missouri as the Board may from time to time determine.
Section 5. Quorum. At all meetings of the Board of Trustees a
majority of the entire Board of Trustees shall constitute a quorum for
the transaction of business and the action of a majority of the
trustees present at any meeting at which a quorum is present shall be
the action of the Board of Trustees unless the concurrence of a
greater proportion is required for such action by the laws of the State
of Missouri, these By-laws or the Agreement and Declaration of Trust or
a different number is required by the Investment Company Act of 1940, as
amended. If a quorum shall not be present at any meeting of
trustees, the trustees present thereat may by a majority vote adjourn
the meeting from time to time, without notice other than announcement
at the meeting, until a quorum shall be present.
Section 6. First Meeting. The first meeting of each newly
constituted Board of Trustees shall be held as soon as practicable
after the annual meeting of shareholders in each year, at such time
and place as shall be specified in a notice given as hereinafter
provided for meetings of the Board of Trustees, or as shall be
specified in a written waiver signed by all of the trustees.
Section 7. Regular Meetings. Regular meetings of the Board of
Trustees may be held without notice at such time and place as shall from
time to time be determined by the Board of Trustees.
Section 8. Special Meetings. Special meetings of the Board of
Trustees may be called by the president on one day's notice to each
trustee; special meetings shall be called by the president or secretary
in like manner and on like notice on the written request of two
trustees.
Section 9. Telephonic Meetings. Regular or special meetings,
except for meetings to approve an investment advisory agreement or a
distribution plan, of the Board of Trustees or any committee thereof,
may be held by means of a conference telephone or similar communications
equipment so that all persons participating in the meeting can hear each
other at the same time. Participation in a meeting by these means
constitutes presence in person at the meeting.
Section 10. Informal Actions. Any action, except approval of an
investment advisory agreement, or a distribution plan, required or
permitted to be taken at any meeting of the Board of Trustees or
any committee thereof may be taken without a meeting, if written
consent to such action is signed in one or more counterparts by all
members of the Board or of such committee, as the case may be, and
such written consent is filed with the minutes of proceedings of the
Board or committee.
Section 11. Committees. The Board of Trustees may by
resolution passed by a majority of the whole Board appoint from among
its members an executive committee and other committees composed of two
or more trustees, and may delegate to such committees, in the
intervals between meetings of the Board of Trustees, any or all of
the power of the Board of Trustees in the management of the business and
affairs of the trust, except the power to declare dividends, to issue
shares of beneficial interest or to recommend to shareholders any action
requiring shareholders' approval. In the absence of any member of such
committee, the members thereof present at any meeting, whether or
not they constitute a quorum, may appoint a member of the Board of
Trustees to act in the place of such absent member.
Section 12. Action of Committees. The committees shall keep
minutes of their proceedings and shall report the same to the Board
of Trustees at the meeting next succeeding, and any action by
committees shall be subject to revision and alteration by the Board of
Trustees, provided that no rights of third persons shall be affected by
any such revision or alteration.
Section 13. Compensation. Any trustee, whether or not he is a
salaried officer or employee of the trust, may be compensated for his
services as a trustee or as a member of a committee of trustees, or as
chairman of the Board or chairman of a committee by fixed or periodic
payments or by fees for attendance at meetings or by both, and in
addition may be reimbursed for transportation and other expenses, all
in such manner and amounts as the Board of Trustees may from time to
time determine.
Section 14. Removal. The shareholders of this trust may remove
any trustee with or without cause by the affirmative vote of a
majority of all the votes entitled to be cast for the election of
trustees.
ARTICLE IV
NOTICES
Section 1. Form. Notices to shareholders shall be in writing and
delivered personally or mailed to the shareholders at their addresses
appearing on the books of the trust. Notice by mail shall be deemed to
be given at the time when the same shall be mailed. Notice to
trustees need not state the purpose of a regular or special meeting.
Section 2. Waiver. Whenever any notice of the time, place or
purpose of any meeting of shareholders, trustees or committee is
required to be given under the provisions of Missouri law or under the
provisions of the Agreement and Declaration of Trust or these By-laws,
a waiver thereof in writing, signed by the person or persons entitled to
such notice and filed with the records of the meeting, whether
before or after the holding thereof, or actual attendance at the
meeting of shareholders in person or by proxy, or at the meeting of
trustees or committee in person, shall be deemed equivalent to the
giving of such notice to such persons.
ARTICLE V
OFFICERS
Section 1. Officers of the Trust. The officers of the trust
shall be elected by the Board of Trustees and shall include a
president, who shall be a trustee, a secretary and a treasurer. The
Board of Trustees may, from time to time, elect or appoint a controller,
one or more vice-presidents, assistant secretaries and assistant
treasurers. The president shall preside at meetings of the Board of
Trustees, unless the Board of Trustees, at its discretion, elects a
chairman of the Board to preside at such meetings. In addition, such
chairman shall perform and execute such executive and administrative
duties and have such powers as the Board of Trustees may from time to
time prescribe. Two or more offices may be held by the same person
but no officer shall execute, acknowledge or verify any instrument in
more than one capacity, if such instrument is required by law, the
Agreement and Declaration of Trust or these By-laws to be executed,
acknowledged or verified by two or more officers.
Section 2. Election. The Board of Trustees at its first meeting
after each annual meeting of shareholders shall choose a president, a
secretary and a treasurer.
Section 3. Compensation. The salaries or other compensation of
all officers and agents of the trust paid directly by the trust shall
be fixed by the Board of Trustees, except that the Board of Trustees
may delegate to any person or group of persons the power to fix such
salaries or other compensation.
Section 4. Tenure. The officers of the trust shall serve for one
year and until the successors are chosen and qualify. Any
officer or agent may be removed by the affirmative vote of a majority of
the Board of Trustees whenever, in its judgment, the best interests of
the trust will be served thereby. Any vacancy occurring in any office
of the trust by death, resignation, removal or otherwise shall be
filled by the Board of Trustees.
Section 5. President. The president, unless the chairman has
been so designated, shall be the chief executive officer of the trust.
He shall preside at all meetings of the shareholders and trustees and
shall see that all orders and resolutions of the Board are carried
into effect. The president shall also be the chief administrative
officer of the trust and shall perform such other duties and have such
other powers as the Board of Trustees may from time to time prescribe.
Section 6. Vice-Presidents. The vice-presidents, in the order
of their seniority, shall in the absence or disability of the
president, perform the duties and exercise the powers of the president
and shall perform such other duties as the Board of Trustees may
from time to time prescribe.
Section 7. Secretary. The secretary shall attend all meetings
of the Board of Trustees and all meetings of the shareholders and
record all the proceedings thereof and shall perform like duties for
any committee when required. In the absence of the secretary or an
assistant secretary, proceedings of such meetings shall be recorded by a
person selected by the chairman of the meeting. He shall give, or
cause to be given, notice of meetings of the shareholders and of the
Board of Trustees, and shall perform such other duties as may be
prescribed by the Board of Trustees or president, under whose
supervision he shall be.
Section 8. Assistant Secretaries. The assistant secretaries, in
order of their seniority, shall in the absence or disability of the
secretary, perform the duties and exercise the powers of the
secretary and shall perform such other duties as the Board of Trustees
shall prescribe.
Section 9. Treasurer. The treasurer, unless another officer
has been so designated, shall be the chief financial officer of the
trust. He shall be responsible for the maintenance of its accounting
records and shall render to the Board of Trustees, at its regular
meetings, or when the Board of Trustees so requires, an account of all
the trust's financial transactions and a report of the financial
condition of the trust.
Section 10. Controller. The controller shall be under the direct
supervision of the treasurer. He shall maintain adequate records of all
assets, liabilities and transactions of the trust, establish and
maintain internal accounting control and, in cooperation with the
independent public accountants selected by the Board of Trustees, shall
supervise internal auditing. He shall have such further powers and
duties as may be conferred upon him from time to time by the
president or the Board of Trustees.
Section 11. Assistant Treasurers. The assistant treasurers, in
the order of their seniority, shall in the absence or disability of
the treasurer, perform the duties and exercise the powers of the
treasurer and shall perform such other duties as the president or
the Board of Trustees may from time to time prescribe.
Section 12. Other Officers. The Board of Trustees from time to
time may appoint such other officers and agents as it shall deem
advisable, who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be determined
from time to time by the Board of Trustees. The Board of Trustees from
time to time may delegate to one or more officers or agents the power
to appoint any such subordinate officers or agents, except assistant
treasurers and to prescribe the respective rights, terms of office,
authorities and duties.
ARTICLE VI
NET ASSET VALUE
The net asset value per share of beneficial interest of the trust
shall be determined at least once each day at the close of business on
the New York Stock Exchange on each day the New York Stock Exchange
is open for trading. Net asset value shall be calculated by adding the
value of all securities and other assets of the Fund, deducting its
liabilities and dividing by the number of shares outstanding.
ARTICLE VII
INVESTMENT RESTRICTIONS
The following investment restriction cannot be changed
without the consent of the holders of a majority of the trust's
outstanding shares of beneficial interest; the trust shall not:
(1) purchase any investment security for credit or on margin, except
such short-term credits as are necessary for the clearance of
transactions; (2) participate on a joint or a joint-and-several basis in
any trading account in securities; (3) sell any securities short; (4)
borrow money, securities or other property in any event or for any
purpose whatsoever, or issue any security senior to the shares
authorized by the Trust Indenture; (5) lend money, securities or other
assets of the Trust for any purpose whatsoever, provided however, that
the acquisition of any publicly distributed securities shall not be held
or construed to be the making of a loan; (6) mortgage, pledge,
hypothecate or encumber in any manner whatsoever any investment
securities at any time owned or held by the Trust; (7) underwrite or
participate in the underwriting of any securities; (8) purchase shares
of other investment companies except in the open market at ordinary
broker's commission or pursuant to a plan of merger or consolidation;
(9) acquire any security issued by any issuer in which an officer,
director or stockholder of such issuer is a Trustee of the Trust or an
officer or director of a principal underwriter (as defined in the
Investment Company Act of 1940) if after the purchase of such security
one or more of the Trustees owns beneficially more than one-half (1/2)
of one per centum (1%) of the capital stock of such issuer and such
Trustees together own beneficially more than five per centum (5%) of the
capital stock of such issuer; (10) acquire any security of another
issuer if immediately after and as a result of such acquisition the
market value of such securities of such other issuer shall exceed
five per centum (5%) of the market value of the total assets
of the Trust or the Trust shall own more than ten per centum
(10%) of the outstanding voting securities of such issuer. This
restriction does not apply to securities issued by the United States or
any state, county, or municipality thereof; (11) invest more than 25%
of the value of its assets in any one industry; (12) engage in the
purchase or sale of real estate or commodities; (13) invest in companies
for the purpose of exercising control of management; (14) purchase any
securities which are subject to legal or contractual restrictions, i.e.,
restricted securities which may not be distributed publicly without
registration under the Securities Act of 1933.
ARTICLE VIII
OTHER RESTRICTIONS
Section 1. Dealings. The officers and trustees of the trust and
its investment adviser shall have no dealings for or on behalf of the
trust with themselves as principal or agent, or with any
corporation, partnership, trust, joint venture or association in which
they have a financial interest, provided that this section shall not
prevent:
(A) Officers or trustees of the trust from having a
financial interest in the trust, in any sponsor, manager, investment
adviser or promoter of the trust, or in any underwriter or securities
issued by the trust.
(B) The purchase of securities for the portfolio of the trust,
or sale of securities owned by the trust through a security
dealer, one or more of whose partners, officers, directors or
security holders is an officer or trustee of the trust, provided such
transactions are handled in a brokerage capacity only, and provided
commissions charged do not exceed customary brokerage charges for such
services.
(C) The employment of any legal counsel, registrar, transfer
agent, dividend disbursing agent or custodian having a partner,
officer, director or security holder who is an officer or trustee of the
trust; provided only customary fees are charged for services rendered
to or for the benefit of the trust.
(D) The purchase for the portfolio of the trust of securities
issued by an issuer having an officer, director or security holder who
is an officer or trustee of the trust or of any manager of the trust,
unless the retention of such securities in the portfolio of the trust
would otherwise be a violation of these By-laws or the Agreement and
Declaration of Trust of the trust.
ARTICLE IX
SHARES OF BENEFICIAL INTEREST
Section 1. Certificates. Each shareholder shall be entitled to
a certificate or certificates which shall certify the number of shares
owned by him in the trust. Each certificate shall be signed by the
president or a vice-president and countersigned by the secretary
or an assistant secretary or the treasurer or an assistant treasurer.
Section 2. Signature. When a certificate is signed by a transfer
agent or an assistant transfer agent or by a transfer clerk acting
on behalf of the trust and a registrar, the signature of any such
president, vice-president, treasurer, assistant treasurer, secretary or
assistant secretary may be facsimile. In case any officer who
has signed any certificate ceases to be an officer of the trust before
the certificate is issued, the certificate may nevertheless be issued by
the trust with the same effect as if the officer had not ceased to be
such officer as of the date of its issue.
Section 3. Recording and Transfer Without Certificates.
Notwithstanding the foregoing provisions of this article, the trust
shall have full power to participate in any program approved by the
Board of Trustees providing for the recording and transfer of
ownership of shares of the trust's beneficial interest by electronic
or other means without the issuance of certificates.
Section 4. Lost Certificates. The Board of Trustees may direct a
new certificate or certificates to be issued in place of any certificate
or certificates theretofore issued by the trust alleged to have been
stolen, lost or destroyed, upon the making of an affidavit of that
fact by the person claiming the certificate of beneficial interest
to be stolen, lost or destroyed, or upon other satisfactory evidence
of such loss or destruction. When authorizing such issuance of a
new certificate or certificates, the Board of Trustees may, in its
discretion and as a condition precedent to the issuance thereof,
require the owner of such stolen, lost or destroyed certificate or
certificates, or his legal representative to advertise the same in
such manner as it shall require and to give the trust a bond with
sufficient surety, to the trust to indemnify it against any loss or
claim that may be made by reason of the issuance of a new certificate.
Section 5. Registered Shareholders. The trust shall be entitled
to recognize the exclusive right of a person registered on its books as
the owner of shares to receive dividends, and to vote as such owner,
and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof,
except, as otherwise provided by the laws of Missouri.
Section 6. Transfer Agents and Registrars. The trust may act
as its own transfer agent and/or registrar, or it may delegate those
duties to others. The Board of Trustees may from time to time, appoint
or remove transfer agents and/or registrars of shares of beneficial
interest of the trust, and it may appoint the same person as both
transfer agent and registrar. Upon any such appointment being made all
certificates representing shares of beneficial interest thereafter
issued shall be countersigned by one of such transfer agents or by
one of such registrars or by both and shall not be valid unless so
countersigned. If the same person shall be both transfer agent and
registrar, only countersignature by such person shall be required.
Section 7. Share Ledger. The trust shall maintain an original
share ledger containing the names and addresses of all shareholders
and the number and class of shares held by each shareholder. Such
share ledger may be in written form or any other form capable of
being converted into written form within a reasonable time for visual
inspection.
Section 8. Transfers of Shares. The trust shall transfer or
otherwise change the registration of its issued and outstanding shares
in its share ledger upon receipt of an authorization in a form proper
and acceptable to it or its duly appointed agent. To the extent such
shares are evidenced by a certificate or certificates, the surrender
of such certificate properly endorsed shall be required where necessary.
Upon receipt of the transfer instructions in proper order by the
trust, the trust shall change its share ledger records accordingly
and record the transaction upon its books.
ARTICLE X
GENERAL PROVISIONS
Section 1. Dividends. With respect to dividends (including
"dividends" designated as "short" or "long" term "capital gains"
distributions to satisfy requirements of the Investment Company Act of
1940, as amended, or the Internal Revenue Code of 1954, as amended from
time to time):
(A) Such dividends, at the election of the shareholders,
may be automatically reinvested in additional shares (or fractions
thereof) of the trust at the "net asset value" determined on the
reinvestment date fixed by the Board of Trustees.
(B) The Board of Trustees in declaring any dividend, may fix a
record date not earlier than the date of declaration or more than 40
days prior to the date of payment, as of which the shareholders
entitled to receive such dividend shall be determined,
notwithstanding any transfer or the repurchase or issue (or sale) of
any shares after such record date.
(C) Dividends or distributions on shares of beneficial
interest whether payable in shares or cash, shall be paid out of
earnings, surplus or other lawfully available assets; provided that
no dividend payment, or distribution in the nature of a dividend
payment, may be made wholly or partly from any source other than
accumulated, undistributed net income, determined in accordance with
good accounting practice, and not including profits or losses
realized in the sale of securities or other properties, unless such
payment is accompanied by a written statement clearly indicating what
portion of such payment per share is made from the following sources:
(i) accumulated or undistributed net income not
including profits or losses from the sale of securities or other
properties;
(ii) accumulated undistributed net profits from the sale of
securities or other properties;
(iii) net profits from the sale of securities or other
properties during the then current fiscal year; and
(iv) paid-in surplus or other capital source.
(D) In declaring dividends and in recognition that the one goal
of the trust is to qualify as a "regulated investment company" under
the Internal Revenue Code of 1954, as amended, the Board of
Trustees shall be entitled to rely upon estimates made in the last two
months of the fiscal year as to the amounts of distribution
necessary for this purpose; and the Board of Trustees, acting
consistently with good accounting practice and with the express
provisions of these By-laws, may credit receipts and charge payments to
income or otherwise, as it may seem proper.
(E) Any dividends declared, except as aforesaid, shall be
deemed liquidating dividends and the shareholders shall be so informed
to whatever extent may be required by law. A notice that dividends
have been paid from paid-in surplus, or a notice that dividends have
been paid from paid-in capital, shall be deemed to be a sufficient
notice that the same constitutes liquidating dividends.
(F) Anything in these By-laws to the contrary
notwithstanding, the Board of Trustees may at any time declare and
distribute pro rata among the shareholders of a record date fixed as
above, a "share dividend" out of either authorized but unissued,
or treasury shares of the trust, or both.
Section 2. Rights in Securities. The Board of Trustees, on
behalf of the trust, shall have the authority to exercise all of the
rights of the trust as owners of any securities which might be
exercised by any individual owning such securities in his own right;
including but not limited to, the rights to vote by proxy for any and
all purposes (including the right to authorize any officer of
the manager to execute proxies), to consent to the reorganization,
merger or consolidation of any company or to consent to the sale, lease
or mortgage of all or substantially all of the property and assets of
any company; and to exchange any of the shares of stock of any company
for shares of stock issued therefor upon any such reorganization,
merger, consolidation, sale, lease or mortgage.
Section 3. Custodianship. Securities owned by the trust and
cash representing (A) the proceeds from sales of securities owned
by the trust and of shares issued by the trust, (B) payments of
principal upon securities owned by the trust, or (C) capital
distributions in respect of securities owned by the trust shall be
held by one or more custodians, as permitted by the Investment Company
Act of 1940, as amended, to be selected by the Board of Trustees.
Each bank and/or trust company selected as a custodian shall be
organized and existing under a state banking and/or trust company law,
or shall be a national banking association incorporated under the
laws of the United States of America and qualified to act as a trust
company, and shall have an aggregate capital, surplus and undivided
profits of not less than $2,000,000. Each custodian shall enter into
an agreement with the trust to serve as a custodian of such
securities and cash on terms consistent with the provisions of these By-
laws. From the time any such trust company, banking association or
other permissible entity becomes a custodian of such securities and
cash, it shall:
(A) Deliver securities owned by the trust, only upon sale of
such securities for the account of the trust and receipt of payment
therefor by the custodian, or when such securities may be called,
redeemed, retired or otherwise become payable, provided that this
provision shall not prevent:
(i) Delivery of securities for examination to the broker
selling the same, in accordance with the "street delivery" custom,
whereby such securities are delivered to such broker in exchange
for a delivery receipt exchanged on the same day for an
uncertified check of such broker to be presented on the same day
for certification.
(ii) Delivery of securities of an issuer in exchange
for or for conversion into, other securities alone, or cash and
other securities, pursuant to any plan or merger, consolidation,
reorganization, recapitalization or readjustment of the
securities of such issuer or for deposit with a reorganization
committee or protective committee, pursuant to a deposit
agreement.
(iii) The conversion by the custodian of securities owned
by the trust, pursuant to the provisions of such securities
into other securities.
(iv) The surrender by the custodian of warrants, rights
or similar securities owned by the trust in the exercise of such
warrants, rights or similar securities, or the surrender of
interim receipts or temporary securities for definitive
securities.
(v) The delivery of securities as collateral on
borrowing affected by the trust, subject to the limitations of
Article VII of these By-laws.
(vi) The delivery of securities owned by the trust, as a
complete or partial redemption in kind of securities issued
by the trust.
(B) Deliver funds on the trust only upon the purchase of
securities for the portfolio of the trust, and the delivery of such
securities to the custodian; provided always, that such limitation
shall not prevent the release of funds by the custodian for
redemption of shares issued by the trust, for payment of interest,
dividend disbursements, taxes, management fees, custodian fees, other
operating expenses properly authorized by an officer or officers as
required by the custodian agreement, payments in connection with
conversion, exchange or surrender of securities owned by the trust (as
set forth in Subsection A of this Section) and for organizational and
such other obligations as approved by the Board of Trustees certified in
writing.
(C) Upon the resignation or inability of a custodian to serve as
custodian of the assets of the trust, the trust shall use its best
efforts to obtain a successor custodian, to require that the cash and
securities owned by the trust be delivered directly to such
successor custodian and, in the event that no such successor can be
found, to submit to the shareholders -- before permitting delivery of
the cash and securities owned by the trust to anyone other than a
successor custodian -- the question of whether the trust shall be
liquidated or shall function without such custodian.
(D) Nothing hereinbefore contained shall prevent any such
custodian from delivering assets of the trust to a successor custodian
having the qualifications hereinabove prescribed.
(E) No trustees, officers, employees or agents of the trust
shall be authorized or permitted to withdraw any assets held by the
custodian, except as permitted in this Article X and in the Custodian
Agreement. Directions, notices or instructions to the custodian,
with respect to delivery of securities, payment of cash or otherwise,
shall be given by such officer or officers and/or such person or
persons, and in such manner, as the Board of Trustees may from time to
time designate.
Section 4. Reports. The trust shall transmit to the
shareholders, at least semiannually, a report of the operations of the
trust based at least annually upon an audit by independent public
accountants. Said report shall clearly set forth the information
customarily furnished in a balance sheet and profit and loss
statement, and in addition, shall clearly set forth a statement
of all amounts paid directly to securities dealers, legal counsel,
transfer agents, disbursing agents, registrars, custodians or
trustees, where such payments are made to a firm, corporation, bank or
trust company having an officer, director or partner who is also an
officer or trustee of this trust. A copy or copies, of all reports
submitted to the shareholders of this trust shall also be sent, as
required to the regulatory agencies of the United States of America
and the states in which the securities of this trust are registered and
sold.
Section 5. Bonding of Officers and Employees. All officers and
employees of the trust shall be bonded to such extent, and in such
manner, as may be required by law.
ARTICLE XI
AMENDMENTS
These By-laws may be altered, amended, repealed or restated at any
regular or special meeting of the Board of Trustees, provided that
the provisions of Article VII may not be altered, amended, repealed
or restated without the consent of a majority of the holders of the
trust's outstanding shares of beneficial interest (as defined in the
Investment Company Act of 1940, as amended, and the trust's Agreement
and Declaration of Trust) and provided further that the right of the
Board of Trustees to alter, amend, repeal or restate and the
procedures therefor meet the requirements of the Investment Company Act
of 1940, as amended, if any.
13
15
EX99.23(d)(1)
MANAGEMENT AGREEMENT
Between
JONES & BABSON, INC.
and
D. L. BABSON BOND TRUST
THIS AGREEMENT, made and entered into this 30th day of June, 1995,
by and between D. L. BABSON BOND TRUST, (a Missouri trust, hereinafter
referred to as the "Fund") and JONES & BABSON, INC. , a corporation
organized under the laws of the State of Missouri (hereinafter referred
to as the "Manager"), and which Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original,
but all of which together shall constitute but one instrument.
WHEREAS the Fund was founded and incorporated by the Manager for
the purpose of engaging in the business of investing and reinvesting its
property and assets and to operate as an open-end, diversified ,
management investment company, as defined in the Investment Company Act
of 1940 as amended (Act), under which it is registered with the
Securities and Exchange Commission, and
WHEREAS the Manager was formed for and is engaged in the business
of supplying investment advice and management service to the Fund, as an
independent contractor and,
WHEREAS the Manager desires to enter into a contractual
arrangement whereby the Manager provides investment advice and
management service to the Fund for a fee.
NOW THEREFORE, in consideration of the mutual promises herein
contained, and other good and valuable consideration, receipt of which
is hereby acknowledged, it is mutually agreed and contracted by and
between the parties hereto that:
1. The Fund hereby employs the Manager, for the period set forth
in Paragraph 5 hereof, and on the terms set forth herein, to render
investment advice and management service to the Fund, subject to the
supervision and direction of the Board of Trustees of the Fund. The
Manager hereby accepts such employment and agrees, during such period,
to render the services and assume the obligations herein set forth, for
the compensation herein provided. The Management shall, for all purposes
herein, be deemed to be an independent contractor, and shall, except as
provided in the Underwriting Agreement between the Manager and the Fund
or unless otherwise expressly provided and authorized, have no authority
to act for or represent the Fund in any way, or in any other way be
deemed an agent of the Fund.
The Manager shall furnish the Fund investment management and
administrative services. Investment management shall include analysis,
research and portfolio recommendations consistent with the Fund's
objectives and policies. Administrative services shall include the
services and compensation of such members of the manager's organization
as shall be duly elected officers and /or Trustees of the Fund and such
other personnel as shall be necessary to carry out its normal
operations; fees of the independent Trustees, the custodian, the
Page 1 of 5
independent public accountant, investment counsel and legal counsel (but
not legal and audit fees and other costs in contemplation of or arising
out of litigation or administrative actions to which the Fund, its
officers or Trustees are a party or incurred in anticipation of becoming
a party); rent; the cost of a transfer and dividend disbursing agent or
similar in-house services; bookkeeping; accounting; and all other
clerical and administrative functions as may be reasonable and necessary
to maintain the Fund's records and for it to operate as an open-end
management investment company. Exclusive of the management fee, the
Fund shall bear the cost of any interest, taxes, dues, fees and other
charges of governments and their agencies including the cost of
qualifying the Fund's shares for sale in any jurisdiction, brokerage
commissions, or any other expenses incurred by it which are not assumed
herein by the Manager.
All property, equipment and information used by the Manager in the
management and administration of the Fund shall belong to the manager.
Should the management and administrative relationship between the Fund
and the manager terminate, the Fund shall be entitled to, and the
manager shall provide the Fund, a copy of all information and records in
the Manager's file necessary for the Fund to continue its functions,
which shall include computer systems and programs in use as of the date
of such termination; but nothing herein shall prohibit thereafter the
use of such information, systems or programs by the manager, so long as
such does not unfairly interfere with the continued operation of the
Fund.
2. As compensation for the services to be rendered to the Fund by
the Manager under the provisions of this agreement, the Fund agrees to
pay semimonthly to the Manager an annual fee based on the average total
net assets of the Fund computed daily in accordance with its Declaration
of Trust and By-Laws as follows:
a. Ninety five one-hundredths of one percent (95/100 of 1%) of the
average total net assets of the Fund.
b. Should the Fund's normal operating expenses exclusive of taxes,
interest, brokerage commission and extraordinary costs exceed
limits established by any law, rule or regulation of any
jurisdiction in which the Fund's shares are registered for
sale, the Manager shall reimburse the Fund in the amount of the
excess.
3. It is understood and agreed that the services to be rendered
by the Manager to the Fund under the provisions of the Agreement are not
to be deemed exclusive, and the Manager shall be free to render similar
or different services to others so long as its ability to render the
services provided for in this Agreement shall not be impaired thereby.
4. It is understood and agreed that the Trustees, officers,
agents, employees, and shareholders of the Fund may be interested in the
Manager as owners, employees, agents or otherwise, and that owners,
employees and agents of the Manager may be interested in the Fund as
shareholders or otherwise. It is understood and agreed that
shareholders, officers, Trustees, and other personnel of the Manager are
and may continue to be officers and Trustees of the Fund, but that they
receive no remuneration from the Fund solely for acting in those
capacities.
5. This Agreement shall become effective pursuant to its approval
by the Fund's Board of Trustees and by the vote of a majority of the
outstanding shares of the Fund as prescribed by the Act. It shall remain
in force through the 31st day of October, 1996, and thereafter may be
renewed for successive periods not exceeding one year only so long as
such renewal and
Page 2 of 5
continuance is specifically approved at least annually
by the Board of Trustees or by vote of a majority of the outstanding
shares of the Fund as prescribed by the Act, and only if the terms and
the renewal of this Agreement have been approved by a vote of a majority
of the Trustees of the Fund including a majority of the Trustees who are
not parties to the Agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of voting on such
approval. No amendment to this Agreement shall be effective unless the
terms thereof have been approved by the vote of a majority of
outstanding shares of the Fund as prescribed by the Act and by vote of a
majority of the Trustees of the Fund who are not parties to the
Agreement or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval. It shall be
the duty of the Trustees of the Fund to request and evaluate, and the
duty of the Manager to furnish, such information as may reasonably be
necessary to evaluate the terms of this Agreement and any amendment
thereto. This Agreement may be terminated at any time, without the
payment of any penalty, by the Trustees of the Fund, or by the vote of a
majority of the outstanding voting shares of the Fund as prescribed by
the Act on not more than sixty days written notice to the Manager, and
it may be terminated by the Manager upon not less than sixty days
written notice to the Fund. It shall terminate automatically in the
event of its assignment by either party unless the parties hereby, by
agreement, obtain an exemption from the Securities and Exchange
Commission from the provisions of the Act pertaining to the subject
matter of this paragraph. Any notice, request or instruction provided
for herein, or for the giving of which, the occasion may arise
hereunder, shall be deemed duly given, if in writing and mailed by
registered mail, postage prepaid, addressed to the regular executive
office of the Fund or the Manager as the case may be. As used in this
Agreement, the terms "assignment", "a majority of the outstanding voting
shares", and "interested persons" shall have the same meaning as
similar terms contained in the Act.
6. It is specifically provided in this Agreement that the Manager
is to secure the services of DAVID L. BABSON & CO. INC. of Cambridge,
Massachusetts (at the sole expense of the Manager), as its Investment
Counsel to furnish advice and recommendations with respect to the
purchase and sale of securities and the making of portfolio commitments;
to place at the disposal of the Manager such statistical information as
may reasonably be required and in general to superintend the investments
of the Fund, subject to the control and approval of the Board of
Trustees of the Manager and the Board of Trustees of the Fund.
7. As a condition of this agreement, the Manager will provide in
its Investment Counsel agreement with DAVID L. BABSON & CO. INC. for the
exclusive right of the Fund to use the name "Babson" as part of its
name, so long as JONES & BABSON, INC., or any successor in interest,
continues as its manager and DAVID L. BABSON & CO. INC., or any
successor in interest, continues as an Investment Counsel to the
manager. The term "exclusive right of the Fund" appearing in the
preceding sentence means that no other investment company, whether or
not registered under the Investment Company Act of 1940, as amended,
will be entitled to use the precise name "Babson" so long as the Fund
has the right to use it as a part of its name. However, nothing herein
shall prohibit the right of JONES & BABSON, INC., Mr. Babson, or DAVID
L. BABSON & CO. INC. from granting to another investment company managed
by JONES & BABSON, INC. with DAVID L. BABSON & CO. INC. as its
Investment Counsel, and which has investment objectives and policies
different from those of the Fund, to use in its name either the name
"Babson" or "D. L. Babson" or "Babson (D. L.)" or "Jones & Babson" or
any combination of these names. Should the Fund terminate either JONES
& BABSON, INC. or its successor as Manager for the Fund, or DAVID L.
BABSON & CO. INC., or its successor, as its Investment Counsel, either
JONES & BABSON, INC. or DAVID L. BABSON & CO. INC.,
Page 3 of 5
or their respective
successors in interest, may elect to notify the Fund in writing that
permission to use the name "David L. Babson" (or any part thereof) has
been withdrawn, whereupon the Fund, its officers, directors and
shareholders, expressly agree to take all necessary corporate action and
to proceed expeditiously to change the name of the Fund and not use any
other name or take any other action which would indicate the Fund's
continued association with DAVID L. BABSON & CO. INC., Mr. Babson, or
JONES & BABSON, INC. If the use of the name "David L. Babson" (or any
part thereof) is so withdrawn as aforesaid, the Fund, its officers,
directors and shareholders, understand and agree that there shall be no
limitation with respect to the future use of the name "David L. Babson"
(or any part thereof) by DAVID L. BABSON & CO. INC., or its successor in
interest, or with the permission of DAVID L. BABSON & CO. INC., or its
successor, by JONES & BABSON, INC. or its successor.
8. The agreement between JONES & BABSON, INC. and DAVID L. BABSON
& CO. INC. also shall provide that, although it is not anticipated,
there may occur some unforeseen reason which would prohibit DAVID L.
BABSON & CO. INC., as a matter of reasonable business necessity,
continuing as an Investment Counsel to JONES & BABSON, INC. Should such
circumstances occur, DAVID L. BABSON & CO. INC., or its successor may
elect to terminate its services, even though the Fund would want to
continue to use the name "Babson" and continue JONES & BABSON, INC., or
its successor, as manager. Upon receipt of such a written notice, the
Fund, its officers, directors and shareholders, agree to take all
necessary corporate action and proceed expeditiously to change the name
of the Fund not later than one year after the effective date of the
termination notice, and not use any other name or take any other action
which would indicate the Fund's continued association with DAVID L.
BABSON & CO. INC., Mr. Babson or JONES & BABSON, INC. In consideration
for this right, DAVID L. BABSON & CO. INC. and JONES & BABSON, INC.
agree that should the name "Babson" be withdrawn, they will not permit
another investment company, whether or not registered under the
Investment Company Act of 1940, to use the name "Babson" as part of its
name for a period of five years subsequent to the effective date of the
written withdrawal request, unless this prohibition is waived or
modified by a majority vote of the Fund's shareholders entitled to vote
at the next annual meeting of the Fund's shareholders following receipt
of the request, and if any such action is also approved by the majority
of shares entitled to vote at a duly constituted meeting of the
shareholders of JONES & BABSON, INC. For this right to withdraw the
name "Babson" from the use of the Fund, DAVID L. BABSON & CO. INC. will
agree in its contract with JONES & BABSON, INC. that it will not compete
with JONES & BABSON, INC. for the management of the Fund during said
five-year period, unless this no-compete provision is waived by a
majority of the shares entitled to vote at a duly constituted meeting of
the shareholders of JONES & BABSON, INC.
9. It is further agreed that the provisions of Paragraphs 7 and 8
shall inure to the benefit of DAVID L. BABSON & CO. INC. and may be
imposed by it or any successor in interest as if it or such successor in
interest were parties to this Agreement.
10. The Manager shall not be liable for any error in judgment or
mistake at law for any loss suffered by the Fund in connection with any
matters to which this Agreement relates, except that nothing herein
contained shall be construed to protect the Manager against any
liability by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties or by reckless disregard of its
obligations or duties under this Agreement.
Page 4 of 5
11. This Agreement may not be amended, transferred, assigned,
sold or in any manner hypothecated or pledged nor may any new Agreement
become effective without affirmative vote or written consent of the
holders of a majority of the shares of the Fund.
D. L. BABSON BOND TRUST
By/s/Larry D. Armel
Larry D. Armel
President
ATTEST:
/s/Martin A. Cramer
Martin A. Cramer
Vice President and Secretary
JONES & BABSON, INC.
By/s/Larry D. Armel
Larry D. Armel
ATTEST:
/s/Martin A. Cramer
Martin A. Cramer
Vice President and Secretary
Page 5 of 5
EX99.23(d)(2)
INVESTMENT COUNSEL AGREEMENT
Between
JONES & BABSON, INC.
and
DAVID L. BABSON & CO. INC.
THIS AGREEMENT by and between JONES & BABSON, INC., a Missouri
corporation with its principal office at Three Crown Center, 2440 Pershing
Road, Kansas City, Missouri 64108 (hereinafter referred to as the
"Manager"), and DAVID L. BABSON & CO. INC., a Massachusetts corporation with
its principal office at One Memorial Drive, Cambridge, Massachusetts 02142
(hereinafter referred to as the "Investment Counsel"), is made pursuant to
the approval and direction of the parties' respective Board of Directors and
may be executed in any number of counterparts, each of which shall be deemed
to be an original, but all of which together shall constitute but one
instrument.
WITNESSETH:
WHEREAS, the Manager has entered into a Management Agreement with the D.
L. BABSON BOND TRUST (Fund) of concurrent date to provide management services,
including investment advisory services, the Manager desires the assistance of
the Investment Counsel which can supply the following services:
Research, analysis, advice and recommendations with respect to the
purchase and sale of securities and the making of investment commitments;
statistical information and reports as may reasonably be required, and general
assistance in the supervision of the investments of the Fund, subject to the
control of the Trustees of the Fund and the Directors of JONES & BABSON, INC.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties agree as follows:
1. During the term of this Agreement, or any extension or extensions
thereof, the Investment Counsel will, to the best of its ability, furnish the
foregoing services.
2. As compensation, the Manager will pay Investment Counsel for its
services the following annual fee computed daily as determined by the Fund's
price make-up sheet and which shall be payable monthly or at such other
intervals as agreed by the parties.
a. Twenty-five one-hundredths of one percent (25/100 of 1%) of the
average daily total net assets of the Fund.
3. This Agreement shall become effective and run concurrently with the
Management Agreement of the same date between the Manager and the Fund, an
executed copy of which shall be supplied the Investment Counsel.
Page 1 of 4
4. The last day of the initial period of this Agreement shall coincide
with the last day of the Management Agreement which shall be the 31st day of
October, 1996. Thereafter this Agreement may be renewed in conjunction with
the Management Agreement for successive periods not exceeding one year only so
long as such renewal and continuance is specifically approved at least
annually by the Board of Trustees of the Fund or by a vote of the majority of
the outstanding voting securities of the Fund as prescribed by the Investment
Company Act of 1940 (Act) and provided further that such continuance is
approved at least annually thereafter by a vote of a majority of the Trustees
who are not parties to such Agreement or interested persons (as defined by the
Act) of such party, cast in person at a meeting called for the purpose of
voting on such approval. The Investment Counsel shall provide the Manager such
information as may be reasonably necessary to assist the Trustees of the Fund
to evaluate the terms of the Management Agreement. This Agreement
automatically will terminate with the Management Agreement without the payment
of any penalty, upon sixty days written notice by the Fund to the Manager that
the Board of Trustees or the shareholders by vote of a majority of the
outstanding voting securities of the Fund, as provided by the Act, has
terminated the Management Agreement. This Agreement shall automatically
terminate in the event of its assignment or assignment of the Management
Agreement unless such assignment is approved by the Trustees and the
shareholders of the Fund as herein before provided or unless an exemption is
obtained from the Securities and Exchange Commission from the provisions of
the Act pertaining to the subject matter of this paragraph. The Manager shall
promptly notify the Investment Counsel of any notice of termination or of any
circumstances which are likely to result in a termination of the Management
Agreement.
5. It is understood and agreed that the services to be rendered by the
Investment Counsel to the Manager under the provisions of this Agreement are
not to be deemed to be exclusive, and the Investment Counsel shall be free to
render similar or different services to others so long as its ability to
render the services provided for in this Agreement shall not be impaired
thereby, and provided further that the services to be rendered by the
Investment Counsel to the Manager under this Agreement and the compensation
provided for in Paragraph 2 hereof shall be limited solely to services with
reference to the Fund.
6. The Manager agrees that it will furnish currently to Investment
Counsel all information reasonably necessary to permit Investment Counsel to
give the advice called for under this Agreement and such information with
reference to the Fund that is reasonably necessary to permit Investment
Counsel to carry out its responsibilities under this Agreement, and the
parties agree that they will from time to time consult and make appropriate
arrangements as to specific information that is required under this paragraph
and the frequency and manner with which it shall be supplied.
7. The Investment Counsel shall not be liable for any error of judgment
or mistake at law or for any loss suffered by Manager of the Fund in
connection with any matters to which this Agreement relates except that
nothing herein contained shall be construed to protect the Investment Counsel
against any liability by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reckless disregard of its
obligations or duties under this agreement.
Page 2 of 4
8. In compliance with the provisions of the Management Agreement between
the Fund and JONES & BABSON, INC., Investment Counsel agrees with Manager that
subject to the terms and conditions of this Paragraph 8, the Fund may use the
name of "David L. Babson" (or any part thereof) as part of its name so long
as JONES & BABSON, INC., or any successor in interest, continues as Manager
and DAVID L. BABSON & CO. INC., or any successor in interest, continues as
Investment Counsel. Should the Fund terminate either JONES & BABSON, INC., or
its successor as Manager, or DAVID L. BABSON & CO. INC., or its successor as
Investment Counsel, either JONES & BABSON, INC., or DAVID L. BABSON & CO.
INC., or their respective successors in interest, may elect to notify the Fund
in writing that permission to use the name "David L. Babson" (or any part
thereof) has been withdrawn. It is understood that the Fund has, in its
Management Agreement with JONES & BABSON, INC., expressly agreed that it, its
officers, directors and shareholders will take all necessary corporate action
and proceed expeditiously to change the name of the Fund and not use any other
name or take any action which would indicate the Fund's continued association
with DAVID L. BABSON & CO. INC. If the use of the name "David L. Babson" (or
any part thereof) is so withdrawn as aforesaid, it is understood and agreed
that there shall be no limitation with respect to the future use of the name
"David L. Babson" (or any part thereof) by DAVID L. BABSON & CO. INC., or its
successor in interest, or by JONES & BABSON, INC. or its successor in
interest.
9. Although it is not anticipated, there may occur some unforeseen
reason which would prohibit DAVID L. BABSON & CO. INC., as a matter of
reasonable business necessity, continuing as Investment Counsel. Should such
circumstances occur, DAVID L. BABSON & CO. INC., or its successor may elect to
terminate its services, even though the Fund would want to continue to use the
name "David L. Babson" (or any part thereof) and continue JONES & BABSON,
INC., or its successor, as manager with DAVID L. BABSON & CO. INC., or its
successor, as Investment Counsel. Upon receipt of such a written notice, the
Fund, its officers, directors and shareholders, have agreed in the Management
Agreement between the Fund and JONES & BABSON, INC., for the benefit of DAVID
L. BABSON & CO. INC., to take all necessary corporate action and proceed
expeditiously to change the name of the Fund (but if necessary, take up to one
year from the effective date of the termination of the Management Agreement)
and not use any other name or take any other action which would indicate the
Fund's continued association with DAVID L. BABSON & CO. INC. In consideration
for this right, DAVID L. BABSON & CO. INC. agrees that should it so request
the withdrawal of the name "David L. Babson" (or any part thereof) it will not
permit another investment company, whether or not registered under the
Investment Company Act of 1940, to use the name "David L. Babson" (or any part
thereof) as part of its name for a period of five years subsequent to the
effective date of the written withdrawal request, unless this prohibition is
waived or modified by a majority vote of the Fund's shareholders entitled to
vote at a duly constituted meeting of the Fund's shareholders following
receipt of the request, and if any such action is also approved by the
majority of shares entitled to vote at a duly constituted meeting of the
shareholders of JONES & BABSON, INC. For this right to withdraw the name
"David L. Babson" (or any part thereof) from the use of the Fund, DAVID L.
BABSON & CO. INC. agrees that it will not compete with JONES & BABSON, INC.
for the management of the Fund during said five-year period, unless this no-
compete provision is waived by a majority of the shares entitled to vote at a
duly
Page 3 of 4
constituted meeting of the shareholders of JONES & BABSON, INC.
Each party hereby executes this Agreement as of the 30th day of June,
1995, pursuant to the authority granted by its Board of Trustees.
DAVID L. BABSON & CO. INC.
By: /s/ Peter C. Thompson
Peter C. Thompson
ATTEST:
By: /s/ Paula C. Howell
Paula C. Howell
JONES & BABSON, INC.
By: /s/ Larry D. Armel
Larry D. Armel
ATTEST:
By: /s/ Martin A. Cramer
Martin A. Cramer
Page 4 of 4
EX99.23(e)
UNDERWRITING AGREEMENT
Between
D. L. BABSON BOND TRUST
and
JONES & BABSON, INC.
THIS AGREEMENT, made and entered into this 30th day of September, 1993, by
and between D. L. BABSON BOND TRUST, (a Missouri Trust, hereinafter referred
to as the "Fund") and JONES & BABSON, Inc. (a Missouri corporation,
hereinafter referred to as "Principal Underwriter")
1. Subject to the provisions of its Certificate of Incorporation and By-
Laws, copies of which have been delivered to and are acknowledged by the
Principal Underwriter, the Board of Directors of the Fund hereby appoint the
firm of Jones & Babson, Inc. as the Principal Underwriter and sole
distributor of the shares of the Fund, except for shares which the Fund may
elect pursuant to authority of its Board of Directors to issue direct to
registered owners, which shall include by definition but not by limitation
stock issued by virtue of reinvestment of dividends, or as the result of a
splitting of shares, or as the result of the Fund merging or consolidating
with another organization, or in return for acquisition of assets, or as the
result of shares issued in connection with a contractual plan for which the
Fund is the underlying investment, or for the purpose of complying with the
registration laws of a particular state or jurisdiction.
2. In consideration of its appointment under this Agreement as Principal
Underwriter, Jones & Babson, Inc. agrees to pay all costs of all management,
supervisory and administrative services required in the normal operation of
the Fund. This includes investment management and supervision; fees of the
custodian, independent public accountants and legal counsel; remuneration of
directors, officers and other personnel; rent; shareholder services,
including the maintenance of the shareholder accounting system and transfer
agency; and such other items as are incidental to corpor~te adm~nistration.
Not considered normal operating expenses and therefore payable by the Fund,
are taxes, interest, fees and other charges of governments and their agencies
including the cost of qualifying the Fund's shares for sale in any
jurisdiction, brokerage costs, dues and all extraordinary costs and expenses
including but not limited to legal and accounting fees incurred in
anticipation of or arising out of litigation or administrative proceedings to
which the Fund, its directors or officers may be subject or a party thereto.
3. The Fund agrees to prepare and file registration statements with the
Securities and Exchange Commission and the Securities Departments of the
various states and other jurisdictions in
1 OF 3 PAGES
which the shares may be offered, and do such other things and to take such
other actions as may be mutually agreed upon by and between the parties as
shall be reasonably necessary in order to effect the registration and the
sale of the Fund's shares.
4. The Principal Underwriter agrees to place its full facilities at the
disposal of the Fund and to assist and cooperate fully with respect to the
registration and qualification of the Fund's shares, as well as perform all
functions required in connection with any offering including, but not limited
to, the creation and preparation of literature, advertising, and any other
promotional material for the purpose of selling the Fund's shares.
5. Jones & Babson, Inc. will act as agent of the Fund and not as principal
in the solicitation and sale of the shares of the Fund unless expressly
agreed to in writing by the Principal Underwriter and the Fund.
6. Normally, the Fund shall not exercise any direction or control over the
time and place of solicitation, the persons to be solicited, or the manner of
solicitation; but the Principal Underwriter agrees that solicitations shall
be in a form acceptable to the Fund and shall be subject to such terms and
conditions as may be prescribed from time to time by the Fund, the
Registration Statement, the Prospectus, the Certificate of Incorporation, and
By-Laws of the Fund, and shall not violate any provision of the laws of the
United States or of any other jurisdiction to which solicitations are
subject, or violate any rule or regulation promulgated by any lawfully
constituted authority to which the Fund or Principal Underwriter may be
subject.
7. The Fund agrees to issue new shares direct to the registered owner
pursuant to this Agreement and according to instructions from the Principal
Underwriter, subject to the net asset value of such shares next effective
after acceptance of the order by the Fund and as more fully set out in
paragraph 8.
8. The Fund hereby authorizes the Principal Underwriter to sell its shares
in accordance with the following schedule of prices:
The applicable price will be the net asset value per share next
effective after receipt and acceptance by the Fund of a proper offer to
purchase, determined in accordance with the Certificate of
Incorporation, By-Laws, Registration Statement and Prospectus of the
Fund.
9. The Fund agrees that, as long as this Agreement is in effect, it will
not authorize anyone else to offer or solicit applications for shares of the
Fund and will not accept any such application if submitted by or through
anyone other than the Principal Underwriter, unless the Principal Underwriter
shall first have agreed in writing to such authorization.
2 OF 3 PAGES
10. This Agreement (i) may be terminated without the payment of any
penalty, either by vote of the Board of Directors of the Fund or by vote of a
majority of the outstanding voting securities of the Fund, on sixty (60) days
written notice to the Principal Underwriter; (ii) may be terminated without
penalty by the Principal Underwriter on sixty (60) days written notice to the
Fund; and (iii) shall immediately terminate in the event of its assignment.
11. The Principal Underwriter agrees that it will not take either a short
or long position with respect to shares of the Fund; that it will not place
orders for more shares than are required to fill the requests received by it
as agent of the Fund; and that it will expeditiously transmit all such orders
to the Fund.
12. Nothing contained in this Agreement shall be deemed to protect the
Principal Underwriter against any liability to the Fund or to its securities
holders to which the Principal Underwriter would otherwise be subject by
reason of willful misfeasance, bad faith, or gross negligence in the
performance of its duties hereunder, or by reason of its reckless disregard
of its obligations and duties hereunder.
13. This Agreement shall become effective on the date first above written,
and continue in effect through the 31st day of October, 1994 and thereafter
shall continue automatically for successive annual periods ending with each
31st day of October, provided that such continuance is specifically approved
at least annually by the Board of Directors or by vote of a majority of the
outstanding voting securities of the Fund and provided further that this
Agreement or any renewal thereof shall be approved by the vote of a majority
of the Directors who are not parties to the Agreement or interested persons
of any such party, cast in person, at a meeting called for the purpose of
voting on such approval.
D. L. BABSON BOND TRUST
By /s/Larry D. Armel
Larry D. Armel
President
ATTEST:
/s/Martin A. Cramer
Martin A. Cramer
Secretary
JONES & BABSON, INC.
By /s/Larry D. Armel
Larry D. Armel
ATTEST:
/s/Martin A. Cramer
Martin A. Cramer
3 OF 3 PAGES
EX99.23(g)
CUSTODY AGREEMENT
Dated May 5, 1997
Between
UMB BANK, N.A.
and
JONES & BABSON FUNDS
TABLE OF CONTENTS
SECTION PAGE
1. Appointment of Custodian 1
2. Definitions 1
(a) Securities 1
(b) Assets 2
(c) Instructions and Special Instructions 2
3. Delivery of Corporate Documents 2
4. Powers and Duties of Custodian and Domestic Subcustodian 3
(a) Safekeeping 4
(b) Manner of Holding Securities 4
(c) Free Delivery of Assets 5
(d) Exchange of Securities 6
(e) Purchases of Assets 6
(f) Sales of Assets 7
(g) Options 7
(h) Futures Contracts 8
(i) Segregated Accounts 9
(j) Depository Receipts 9
(k) Corporate Actions, Put Bonds, Called Bonds, Etc. 9
(l) Interest Bearing Deposits 10
(m) Foreign Exchange Transactions 10
(n) Pledges or Loans of Securities 11
(o) Stock Dividends, Rights, Etc. 12
(p) Routine Dealings 12
(q) Collections 12
(r) Bank Accounts 13
(s) Dividends, Distributions and Redemptions 13
(t) Proceeds from Shares Sold 13
(u) Proxies and Notices; Compliance with the Shareholders
Communication Act of 1985 13
(v) Books and Records 14
(w) Opinion of Fund's Independent Certified Public Accountants 14
(x) Reports by Independent Certified Public Accountants 14
(y) Bills and Others Disbursements 14
5. Subcustodians 15
(a) Domestic Subcustodians 15
(b) Foreign Subcustodians 15
(c) Interim Subcustodians 16
(d) Special Subcustodians 16
(e) Termination of a Subcustodian 17
(f) Certification Regarding Foreign Subcustodians 17
6. Standard of Care 17
(a) General Standard of Care 17
(b) Actions Prohibited by Applicable Law, Events Beyond
Custodian's Control, Armed 17
Conflict, Sovereign Risk, etc.
(c) Liability for Past Records 18
(d) Advice of Counsel 18
(e) Advice of the Fund and Others 18
(f) Instructions Appearing to be Genuine 18
(g) Exceptions from Liability 19
7. Liability of the Custodian for Actions of Others 19
(a) Domestic Subcustodians 19
(b) Liability for Acts and Omissions of Foreign Subcustodians 19
(c) Securities Systems, Interim Subcustodians, Special
Subcustodians, Securities 20
Depositories and Clearing Agencies
(d) Defaults or Insolvencies of Brokers, Banks, Etc. 20
(e) Reimbursement of Expenses 20
8. Indemnification 20
(a) Indemnification by Fund 20
(b) Indemnification by Custodian 21
9. Advances 21
10. Liens 21
11. Compensation 22
12. Powers of Attorney 22
13. Termination and Assignment 22
14. Additional Funds 23
15. Notices 23
16. Miscellaneous 23
CUSTODY AGREEMENT
This agreement made as of this 5th day of May, 1997, between UMB Bank,
n.a., a national banking association with its principal place of business
located at Kansas City, Missouri (hereinafter "Custodian"), and each of the
Funds which have executed the signature page hereof together with such
additional Funds which shall be made parties to this Agreement by the
execution of a separate signature page hereto (individually, a "Fund" and
collectively, the "Funds").
WITNESSETH:
WHEREAS, each Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended; and
WHEREAS, each Fund desires to appoint Custodian as its custodian for the
custody of Assets (as hereinafter defined) owned by such Fund which Assets are
to be held in such accounts as such Fund may establish from time to time; and
WHEREAS, Custodian is willing to accept such appointment on the terms
and conditions hereof.
NOW, THEREFORE, in consideration of the mutual promises contained
herein, the parties hereto, intending to be legally bound, mutually covenant
and agree as follows:
1. APPOINTMENT OF CUSTODIAN.
Each Fund hereby constitutes and appoints the Custodian as custodian of
Assets belonging to each such Fund which have been or may be from time to time
deposited with the Custodian. Custodian accepts such appointment as a
custodian and agrees to perform the duties and responsibilities of Custodian
as set forth herein on the conditions set forth herein.
2. DEFINITIONS.
For purposes of this Agreement, the following terms shall have the
meanings so indicated:
(a) "Security" or "Securities" shall mean stocks, bonds, bills, rights,
script, warrants, interim certificates and all negotiable or nonnegotiable
paper commonly known as Securities and other instruments or obligations.
(b) "Assets" shall mean Securities, monies and other property held by
the Custodian for the benefit of a Fund.
(c)(1) "Instructions", as used herein, shall mean: (i) a tested telex,
a written (including, without limitation, facsimile transmission) request,
direction, instruction or certification signed or initialed by or on behalf of
a Fund by an Authorized Person; (ii) a telephonic or other oral communication
from a person the Custodian reasonably believes to be an Authorized Person; or
(iii) a communication effected directly between an electro-mechanical or
electronic device or system (including, without limitation, computers) on
behalf of a Fund. Instructions in the form of oral communications shall be
confirmed by the appropriate Fund by tested telex or in writing in the manner
set forth in clause (i) above, but the lack of such confirmation shall in no
way affect any action taken by the Custodian in reliance upon such oral
Instructions prior to the Custodian's receipt of such confirmation. Each Fund
authorizes the Custodian to record any and all telephonic or other oral
Instructions communicated to the Custodian.
(c)(2) "Special Instructions", as used herein, shall mean Instructions
countersigned or confirmed in writing by the Treasurer or any Assistant
Treasurer of a Fund or any other person designated by the Treasurer of such
Fund in writing, which countersignature or confirmation shall be included on
the same instrument containing the Instructions or on a separate instrument
relating thereto.
(c)(3) Instructions and Special Instructions shall be delivered to the
Custodian at the address and/or telephone, facsimile transmission or telex
number agreed upon from time to time by the Custodian and each Fund.
(c)(4) Where appropriate, Instructions and Special Instructions shall
be continuing instructions.
3. DELIVERY OF CORPORATE DOCUMENTS.
Each of the parties to this Agreement represents that its execution does
not violate any of the provisions of its respective charter, articles of
incorporation, articles of association or bylaws and all required corporate
action to authorize the execution and delivery of this Agreement has been
taken.
Each Fund has furnished the Custodian with copies, properly certified or
authenticated, with all amendments or supplements thereto, of the following
documents:
(a) Certificate of Incorporation (or equivalent document) of the Fund
as in effect on the date hereof;
(b) By-Laws of the Fund as in effect on the date hereof;
(c) Resolutions of the Board of Directors of the Fund appointing the
Custodian and approving the form of this Agreement; and
(d) The Fund's current prospectus and statements of additional
information.
Each Fund shall promptly furnish the Custodian with copies of any
updates, amendments or supplements to the foregoing documents.
In addition, each Fund has delivered or will promptly deliver to the
Custodian, copies of the Resolution(s) of its Board of Directors or Trustees
and all amendments or supplements thereto, properly certified or
authenticated, designating certain officers or employees of each such Fund who
will have continuing authority to certify to the Custodian: (a) the names,
titles, signatures and scope of authority of all persons authorized to give
Instructions or any other notice, request, direction, instruction, certificate
or instrument on behalf of each Fund, and (b) the names, titles and signatures
of those persons authorized to countersign or confirm Special Instructions on
behalf of each Fund (in both cases collectively, the "Authorized Persons" and
individually, an "Authorized Person"). Such Resolutions and certificates may
be accepted and relied upon by the Custodian as conclusive evidence of the
facts set forth therein and shall be considered to be in full force and effect
until delivery to the Custodian of a similar Resolution or certificate to the
contrary. Upon delivery of a certificate which deletes or does not include
the name(s) of a person previously authorized to give Instructions or to
countersign or confirm Special Instructions, such persons shall no longer be
considered an Authorized Person authorized to give Instructions or to
countersign or confirm Special Instructions. Unless the certificate
specifically requires that the approval of anyone else will first have been
obtained, the Custodian will be under no obligation to inquire into the right
of the person giving such Instructions or Special Instructions to do so.
Notwithstanding any of the foregoing, no Instructions or Special Instructions
received by the Custodian from a Fund will be deemed to authorize or permit
any director, trustee, officer, employee, or agent of such Fund to withdraw
any of the Assets of such Fund upon the mere receipt of such authorization,
Special Instructions or Instructions from such director, trustee, officer,
employee or agent.
4. POWERS AND DUTIES OF CUSTODIAN AND DOMESTIC SUBCUSTODIAN.
Except for Assets held by any Subcustodian appointed pursuant to
Sections 5(b), (c), or (d) of this Agreement, the Custodian shall have and
perform the powers and duties hereinafter set forth in this Section 4. For
purposes of this Section 4 all references to powers and duties of the
"Custodian" shall also refer to any Domestic Subcustodian appointed pursuant
to Section 5(a).
(a) Safekeeping.
The Custodian will keep safely the Assets of each Fund which are
delivered to it from time to time. The Custodian shall not be responsible for
any property of a Fund held or received by such Fund and not delivered to the
Custodian.
(b) Manner of Holding Securities.
(1) The Custodian shall at all times hold Securities of each
Fund
either: (i) by physical possession of the share certificates or
other
instruments representing such Securities in registered or bearer form; or (ii)
in book-entry form by a Securities System (as hereinafter defined) in
accordance with the provisions of sub-paragraph (3) below.
(2) The Custodian may hold registrable portfolio Securities
which
have been delivered to it in physical form, by registering the same in the
name of the appropriate Fund or its nominee, or in the name of the Custodian
or its nominee, for whose actions such Fund and Custodian, respectively, shall
be fully responsible. Upon the receipt of Instructions, the Custodian shall
hold such Securities in street certificate form, so called, with or without
any indication of fiduciary capacity. However, unless it receives
Instructions to the contrary, the Custodian will register all such portfolio
Securities in the name of the Custodian's authorized nominee. All such
Securities shall be held in an account of the Custodian containing only assets
of the appropriate Fund or only assets held by the Custodian as a fiduciary,
provided that the records of the Custodian shall indicate at all times the
Fund or other customer for which such Securities are held in such accounts and
the respective interests therein.
(3) The Custodian may deposit and/or maintain domestic
Securities
owned by a Fund in, and each Fund hereby approves use of: (a) The Depository
Trust Company; (b) The Participants Trust Company; and (c) any book-entry
system as provided in (i) Subpart O of Treasury Circular No. 300, 31 CFR
306.115, (ii) Subpart B of Treasury Circular Public Debt Series No. 27-76, 31
CFR 350.2, or (iii) the book-entry regulations of federal agencies
substantially in the form of 31 CFR 306.115. Upon the receipt of Special
Instructions, the Custodian may deposit and/or maintain domestic Securities
owned by a Fund in any other domestic clearing agency registered with the
Securities and Exchange Commission ("SEC") under Section 17A of the Securities
Exchange Act of 1934 (or as may otherwise be authorized by the SEC to serve in
the capacity of depository or clearing agent for the Securities or other
assets of investment companies) which acts as a Securities depository. Each
of the foregoing shall be referred to in this Agreement as a "Securities
System", and all such Securities Systems shall be listed on the attached
Appendix A. Use of a Securities System shall be in accordance with applicable
Federal Reserve Board and SEC rules and regulations, if any, and subject to
the following provisions:
(i) The Custodian may deposit the Securities directly
or through
one or more agents or Subcustodians which are also qualified to act as
custodians for investment companies.
(ii) The Custodian shall deposit and/or maintain the
Securities
in a Securities System, provided that such Securities are represented in an
account ("Account") of the Custodian in the Securities System that includes
only assets held by the Custodian as a fiduciary, custodian or otherwise for
customers.
(iii) The books and records of the Custodian shall at
all times
identify those Securities belonging to any one or more Funds which are
maintained in a Securities System.
(iv) The Custodian shall pay for Securities purchased
for the
account of a Fund only upon (a) receipt of advice from the Securities System
that such Securities have been transferred to the Account of the Custodian in
accordance with the rules of the Securities System, and (b) the making of an
entry on the records of the Custodian to reflect such payment and transfer for
the account of such Fund. The Custodian shall transfer Securities sold for
the account of a Fund only upon (a) receipt of advice from the Securities
System that payment for such Securities has been transferred to the Account of
the Custodian in accordance with the rules of the Securities System, and (b)
the making of an entry on the records of the Custodian to reflect such
transfer and payment for the account of such Fund. Copies of all advices from
the Securities System relating to transfers of Securities for the account of a
Fund shall be maintained for such Fund by the Custodian. The Custodian shall
deliver to a Fund on the next succeeding business day daily transaction
reports which shall include each day's transactions in the Securities System
for the account of such Fund. Such transaction reports shall be delivered to
such Fund or any agent designated by such Fund pursuant to Instructions, by
computer or in such other manner as such Fund and Custodian may agree.
(v) The Custodian shall, if requested by a Fund
pursuant to
Instructions, provide such Fund with reports obtained by the Custodian or any
Subcustodian with respect to a Securities System's accounting system, internal
accounting control and procedures for safeguarding Securities deposited in the
Securities System.
(vi) Upon receipt of Special Instructions, the
Custodian shall
terminate the use of any Securities System on behalf of a Fund as promptly as
practicable and shall take all actions reasonably practicable to safeguard the
Securities of such Fund maintained with such Securities System.
(c) Free Delivery of Assets.
Notwithstanding any other provision of this Agreement and except as
provided in Section 3 hereof, the Custodian, upon receipt of Special
Instructions, will undertake to make free delivery of Assets, provided such
Assets are on hand and available, in connection with a Fund's transactions and
to transfer such Assets to such broker, dealer, Subcustodian, bank, agent,
Securities System or otherwise as specified in such Special Instructions.
(d) Exchange of Securities.
Upon receipt of Instructions, the Custodian will exchange portfolio
Securities held by it for a Fund for other Securities or cash paid in
connection with any reorganization, recapitalization, merger, consolidation,
or conversion of convertible Securities, and will deposit any such Securities
in accordance with the terms of any reorganization or protective plan.
Without Instructions, the Custodian is authorized to exchange Securities
held by it in temporary form for Securities in definitive form, to surrender
Securities for transfer into a name or nominee name as permitted in Section
4(b)(2), to effect an exchange of shares in a stock split or when the par
value of the stock is changed, to sell any fractional shares, and, upon
receiving payment therefor, to surrender bonds or other Securities held by it
at maturity or call.
(e) Purchases of Assets.
(1) Securities Purchases. In accordance with Instructions, the
Custodian shall, with respect to a purchase of Securities, pay for such
Securities out of monies held for a Fund's account for which the purchase was
made, but only insofar as monies are available therein for such purpose, and
receive the portfolio Securities so purchased. Unless the Custodian has
received Special Instructions to the contrary, such payment will be made only
upon receipt of Securities by the Custodian, a clearing corporation of a
national Securities exchange of which the Custodian is a member, or a
Securities System in accordance with the provisions of Section 4(b)(3) hereof.
Notwithstanding the foregoing, upon receipt of Instructions: (i) in
connection with a repurchase agreement, the Custodian may release funds to a
Securities System prior to the receipt of advice from the Securities System
that the Securities underlying such repurchase agreement have been transferred
by book-entry into the Account maintained with such Securities System by the
Custodian, provided that the Custodian's instructions to the Securities System
require that the Securities System may make payment of such funds to the other
party to the repurchase agreement only upon transfer by book-entry of the
Securities underlying the repurchase agreement into such Account; (ii) in the
case of Interest Bearing Deposits, currency deposits, and other deposits,
foreign exchange transactions, futures contracts or options, pursuant to
Sections 4(g), 4(h), 4(l), and 4(m) hereof, the Custodian may make payment
therefor before receipt of an advice of transaction; and (iii) in the case of
Securities as to which payment for the Security and receipt of the instrument
evidencing the Security are under generally accepted trade practice or the
terms of the instrument representing the Security expected to take place in
different locations or through separate parties, such as commercial paper
which is indexed to foreign currency exchange rates, derivatives and similar
Securities, the Custodian may make payment for such Securities prior to
delivery thereof in accordance with such generally accepted trade practice or
the terms of the instrument representing such Security.
(2) Other Assets Purchased. Upon receipt of Instructions and
except as
otherwise provided herein, the Custodian shall pay for and receive other
Assets for the account of a Fund as provided in Instructions.
(f) Sales of Assets.
(1) Securities Sold. In accordance with Instructions, the
Custodian
will, with respect to a sale, deliver or cause to be delivered the Securities
thus designated as sold to the broker or other person specified in the
Instructions relating to such sale. Unless the Custodian has received Special
Instructions to the contrary, such delivery shall be made only upon receipt of
payment therefor in the form of: (a) cash, certified check, bank cashier's
check, bank credit, or bank wire transfer; (b) credit to the account of the
Custodian with a clearing corporation of a national Securities exchange of
which the Custodian is a member; or (c) credit to the Account of the Custodian
with a Securities System, in accordance with the provisions of Section 4(b)(3)
hereof. Notwithstanding the foregoing, Securities held in physical form may
be delivered and paid for in accordance with "street delivery custom" to a
broker or its clearing agent, against delivery to the Custodian of a receipt
for such Securities, provided that the Custodian shall have taken reasonable
steps to ensure prompt collection of the payment for, or return of, such
Securities by the broker or its clearing agent, and provided further that the
Custodian shall not be responsible for the selection of or the failure or
inability to perform of such broker or its clearing agent or for any related
loss arising from delivery or custody of such Securities prior to receiving
payment therefor.
(2) Other Assets Sold. Upon receipt of Instructions and except
as
otherwise provided herein, the Custodian shall receive payment for and deliver
other Assets for the account of a Fund as provided in Instructions.
(g) Options.
(1) Upon receipt of Instructions relating to the purchase of an
option
or sale of a covered call option, the Custodian shall: (a) receive and retain
confirmations or other documents, if any, evidencing the purchase or writing
of the option by a Fund; (b) if the transaction involves the sale of a covered
call option, deposit and maintain in a segregated account the Securities
(either physically or by book-entry in a Securities System) subject to the
covered call option written on behalf of such Fund; and (c) pay, release
and/or transfer such Securities, cash or other Assets in accordance with any
notices or other communications evidencing the expiration, termination or
exercise of such options which are furnished to the Custodian by the Options
Clearing Corporation (the "OCC"), the securities or options exchanges on which
such options were traded, or such other organization as may be responsible for
handling such option transactions.
(2) Upon receipt of Instructions relating to the sale of a
naked option
(including stock index and commodity options), the Custodian, the appropriate
Fund and the broker-dealer shall enter into an agreement to comply with the
rules of the OCC or of any registered national securities exchange or similar
organizations(s). Pursuant to that agreement and such Fund's Instructions,
the Custodian shall: (a) receive and retain confirmations or other documents,
if any, evidencing the writing of the option; (b) deposit and maintain in a
segregated account, Securities (either physically or by book-entry in a
Securities System), cash and/or other Assets; and (c) pay, release and/or
transfer such Securities, cash or other Assets in accordance with any such
agreement and with any notices or other communications evidencing the
expiration, termination or exercise of such option which are furnished to the
Custodian by the OCC, the securities or options exchanges on which such
options were traded, or such other organization as may be responsible for
handling such option transactions. The appropriate Fund and the broker-dealer
shall be responsible for determining the quality and quantity of assets held
in any segregated account established in compliance with applicable margin
maintenance requirements and the performance of other terms of any option
contract.
(h) Futures Contracts.
Upon receipt of Instructions, the Custodian shall enter into a futures
margin procedural agreement among the appropriate Fund, the Custodian and the
designated futures commission merchant (a "Procedural Agreement"). Under the
Procedural Agreement the Custodian shall: (a) receive and retain
confirmations, if any, evidencing the purchase or sale of a futures contract
or an option on a futures contract by such Fund; (b) deposit and maintain in a
segregated account cash, Securities and/or other Assets designated as initial,
maintenance or variation "margin" deposits intended to secure such Fund's
performance of its obligations under any futures contracts purchased or sold,
or any options on futures contracts written by such Fund, in accordance with
the provisions of any Procedural Agreement designed to comply with the
provisions of the Commodity Futures Trading Commission and/or any commodity
exchange or contract market (such as the Chicago Board of Trade), or any
similar organization(s), regarding such margin deposits; and (c) release
Assets from and/or transfer Assets into such margin accounts only in
accordance with any such Procedural Agreements. The appropriate Fund and such
futures commission merchant shall be responsible for determining the type and
amount of Assets held in the segregated account or paid to the broker-dealer
in compliance with applicable margin maintenance requirements and the
performance of any futures contract or option on a futures contract in
accordance with its terms.
(i) Segregated Accounts.
Upon receipt of Instructions, the Custodian shall establish and maintain
on its books a segregated account or accounts for and on behalf of a Fund,
into which account or accounts may be transferred Assets of such Fund,
including Securities maintained by the Custodian in a Securities System
pursuant to Paragraph (b)(3) of this Section 4, said account or accounts to be
maintained (i) for the purposes set forth in Sections 4(g), 4(h) and 4(n) and
(ii) for the purpose of compliance by such Fund with the procedures required
by the SEC Investment Company Act Release Number 10666 or any subsequent
release or releases relating to the maintenance of segregated accounts by
registered investment companies, or (iii) for such other purposes as may be
set forth, from time to time, in Special Instructions. The Custodian shall
not be responsible for the determination of the type or amount of Assets to be
held in any segregated account referred to in this paragraph, or for
compliance by the Fund with required procedures noted in (ii) above.
(j) Depository Receipts.
Upon receipt of Instructions, the Custodian shall surrender or cause to
be
surrendered Securities to the depository used for such Securities by an issuer
of American Depository Receipts or International Depository Receipts
(hereinafter referred to, collectively, as "ADRs"), against a written receipt
therefor adequately describing such Securities and written evidence
satisfactory to the organization surrendering the same that the depository has
acknowledged receipt of instructions to issue ADRs with respect to such
Securities in the name of the Custodian or a nominee of the Custodian, for
delivery in accordance with such instructions.
Upon receipt of Instructions, the Custodian shall surrender or cause to
be
surrendered ADRs to the issuer thereof, against a written receipt therefor
adequately describing the ADRs surrendered and written evidence satisfactory
to the organization surrendering the same that the issuer of the ADRs has
acknowledged receipt of instructions to cause its depository to deliver the
Securities underlying such ADRs in accordance with such instructions.
(k) Corporate Actions, Put Bonds, Called Bonds, Etc.
Upon receipt of Instructions, the Custodian shall: (a) deliver warrants,
puts, calls, rights or similar Securities to the issuer or trustee thereof (or
to the agent of such issuer or trustee) for the purpose of exercise or sale,
provided that the new Securities, cash or other Assets, if any, acquired as a
result of such actions are to be delivered to the Custodian; and (b) deposit
Securities upon invitations for tenders thereof, provided that the
consideration for such Securities is to be paid or delivered to the Custodian,
or the tendered Securities are to be returned to the Custodian.
Notwithstanding any provision of this Agreement to the contrary, the
Custodian shall take all necessary action, unless otherwise directed to the
contrary in Instructions, to comply with the terms of all mandatory or
compulsory exchanges, calls, tenders, redemptions, or similar rights of
security ownership, and shall notify the appropriate Fund of such action in
writing by facsimile transmission or in such other manner as such Fund and
Custodian may agree in writing.
The Fund agrees that if it gives an Instruction for the performance of
an
act on the last permissible date of a period established by any optional offer
or on the last permissible date for the performance of such act, the Fund
shall hold the Bank harmless from any adverse consequences in connection with
acting upon or failing to act upon such Instructions.
(l) Interest Bearing Deposits.
Upon receipt of Instructions directing the Custodian to purchase
interest
bearing fixed term and call deposits (hereinafter referred to, collectively,
as "Interest Bearing Deposits") for the account of a Fund, the Custodian shall
purchase such Interest Bearing Deposits in the name of such Fund with such
banks or trust companies, including the Custodian, any Subcustodian or any
subsidiary or affiliate of the Custodian (hereinafter referred to as "Banking
Institutions"), and in such amounts as such Fund may direct pursuant to
Instructions. Such Interest Bearing Deposits may be denominated in U.S.
dollars or other currencies, as such Fund may determine and direct pursuant to
Instructions. The responsibilities of the Custodian to a Fund for Interest
Bearing Deposits issued by the Custodian shall be that of a U.S. bank for a
similar deposit. With respect to Interest Bearing Deposits other than those
issued by the Custodian, (a) the Custodian shall be responsible for the
collection of income and the transmission of cash to and from such accounts;
and (b) the Custodian shall have no duty with respect to the selection of the
Banking Institution or for the failure of such Banking Institution to pay upon
demand.
(m) Foreign Exchange Transactions.
(l) Each Fund hereby appoints the Custodian as its agent in the
execution of all currency exchange transactions. The Custodian agrees to
provide exchange rate and U.S. Dollar information, in writing, to the Funds.
Such information shall be supplied by the Custodian at least by the business
day prior to the value date of the foreign exchange transaction, provided that
the Custodian receives the request for such information at least two business
days prior to the value date of the transaction.
(2) Upon receipt of Instructions, the Custodian shall settle
foreign
exchange contracts or options to purchase and sell foreign currencies for spot
and future delivery on behalf of and for the account of a Fund with such
currency brokers or Banking Institutions as such Fund may determine and direct
pursuant to Instructions. If, in its Instructions, a Fund does not direct the
Custodian to utilize a particular currency broker or Banking Institution, the
Custodian is authorized to select such currency broker or Banking Institution
as it deems appropriate to execute the Fund's foreign currency transaction.
(3) Each Fund accepts full responsibility for its use of third
party
foreign exchange brokers and for execution of said foreign exchange contracts
and understands that the Fund shall be responsible for any and all costs and
interest charges which may be incurred as a result of the failure or delay of
its third party broker to deliver foreign exchange. The Custodian shall have
no responsibility or liability with respect to the selection of the currency
brokers or Banking Institutions with which a Fund deals or the performance of
such brokers or Banking Institutions.
(4) Notwithstanding anything to the contrary contained herein,
upon
receipt of Instructions the Custodian may, in connection with a foreign
exchange contract, make free outgoing payments of cash in the form of U.S.
Dollars or foreign currency prior to receipt of confirmation of such foreign
exchange contract or confirmation that the countervalue currency completing
such contract has been delivered or received.
(5) The Custodian shall not be obligated to enter into foreign
exchange
transactions as principal. However, if the Custodian has made available to a
Fund its services as a principal in foreign exchange transactions
and subject to any separate agreement between the parties relating to such
transactions, the Custodian shall enter into foreign exchange contracts or
options to purchase and sell foreign currencies for spot and future delivery
on behalf of and for the account of the Fund, with the Custodian as principal.
(n) Pledges or Loans of Securities.
(1) Upon receipt of Instructions from a Fund, the Custodian
will
release or cause to be released Securities held in custody to the pledgees
designated in such Instructions by way of pledge or hypothecation to secure
loans incurred by such Fund with various lenders including but not limited to
UMB Bank, n.a.; provided, however, that the Securities shall be released only
upon payment to the Custodian of the monies borrowed, except that in cases
where additional collateral is required to secure existing borrowings, further
Securities may be released or delivered, or caused to be released or delivered
for that purpose upon receipt of Instructions. Upon receipt of Instructions,
the Custodian will pay, but only from funds available for such purpose, any
such loan upon re-delivery to it of the Securities pledged or hypothecated
therefor and upon surrender of the note or notes evidencing such loan. In
lieu of delivering collateral to a pledgee, the Custodian, on the receipt of
Instructions, shall transfer the pledged Securities to a segregated account
for the benefit of the pledgee.
(2) Upon receipt of Special Instructions, and execution of a
separate
Securities Lending Agreement, the Custodian will release Securities held in
custody to the borrower designated in such Instructions and may, except as
otherwise provided below, deliver such Securities prior to the receipt of
collateral, if any, for such borrowing, provided that, in case of loans of
Securities held by a Securities System that are secured by cash collateral,
the Custodian's instructions to the Securities System shall require that the
Securities System deliver the Securities of the appropriate Fund to the
borrower thereof only upon receipt of the collateral for such borrowing. The
Custodian shall have no responsibility or liability for any loss arising from
the delivery of Securities prior to the receipt of collateral. Upon receipt
of Instructions and the loaned Securities, the Custodian will release the
collateral to the borrower.
(o) Stock Dividends, Rights, Etc.
The Custodian shall receive and collect all stock dividends, rights, and
other items of like nature and, upon receipt of Instructions, take action with
respect to the same as directed in such Instructions.
(p) Routine Dealings.
The Custodian will, in general, attend to all routine and mechanical
matters in accordance with industry standards in connection with the sale,
exchange, substitution, purchase, transfer, or other dealings with Securities
or other property of each Fund except as may be otherwise provided in this
Agreement or directed from time to time by Instructions from any particular
Fund. The Custodian may also make payments to itself or others from the
Assets for disbursements and out-of-pocket expenses incidental to handling
Securities or other similar items relating to its duties under this Agreement,
provided that all such payments shall be accounted for to the appropriate
Fund.
(q) Collections.
The Custodian shall (a) collect amounts due and payable to each Fund
with
respect to portfolio Securities and other Assets; (b) promptly credit to the
account of each Fund all income and other payments relating to portfolio
Securities and other Assets held by the Custodian hereunder upon Custodian's
receipt of such income or payments or as otherwise agreed in writing by the
Custodian and any particular Fund; (c) promptly endorse and deliver any
instruments required to effect such collection; and (d) promptly execute
ownership and other certificates and affidavits for all federal, state, local
and foreign tax purposes in connection with receipt of income or other
payments with respect to portfolio Securities and other Assets, or in
connection with the transfer of such Securities or other Assets; provided,
however, that with respect to portfolio Securities registered in so-called
street name, or physical Securities with variable interest rates, the
Custodian shall use its best efforts to collect amounts due and payable to any
such Fund. The Custodian shall notify a Fund in writing by facsimile
transmission or in such other manner as such Fund and Custodian may agree in
writing if any amount payable with respect to portfolio Securities or other
Assets is not received by the Custodian when due. The Custodian shall not be
responsible for the collection of amounts due and payable with respect to
portfolio Securities or other Assets that are in default.
(r) Bank Accounts.
Upon Instructions, the Custodian shall open and operate a bank account
or
accounts on the books of the Custodian; provided that such bank account(s)
shall be in the name of the Custodian or a nominee thereof, for the account of
one or more Funds, and shall be subject only to draft or order of the
Custodian. The responsibilities of the Custodian to any one or more such
Funds for deposits accepted on the Custodian's books shall be that of a U.S.
bank for a similar deposit.
(s) Dividends, Distributions and Redemptions.
To enable each Fund to pay dividends or other distributions to
shareholders of each such Fund and to make payment to shareholders who have
requested repurchase or redemption of their shares of each such Fund
(collectively, the "Shares"), the Custodian shall release cash or Securities
insofar as available. In the case of cash, the Custodian shall, upon the
receipt of Instructions, transfer such funds by check or wire transfer to any
account at any bank or trust company designated by each such Fund in such
Instructions. In the case of Securities, the Custodian shall, upon the
receipt of Special Instructions, make such transfer to any entity or account
designated by each such Fund in such Special Instructions.
(t) Proceeds from Shares Sold.
The Custodian shall receive funds representing cash payments received
for
shares issued or sold from time to time by each Fund, and shall credit such
funds to the account of the appropriate Fund. The Custodian shall notify the
appropriate Fund of Custodian's receipt of cash in payment for shares issued
by such Fund by facsimile transmission or in such other manner as such Fund
and the Custodian shall agree. Upon receipt of Instructions, the Custodian
shall: (a) deliver all federal funds received by the Custodian in payment for
shares as may be set forth in such Instructions and at a time agreed upon
between the Custodian and such Fund; and (b) make federal funds available to a
Fund as of specified times agreed upon from time to time by such Fund and the
Custodian, in the amount of checks received in payment for shares which are
deposited to the accounts of such Fund.
(u) Proxies and Notices; Compliance with the Shareholders Communication
Act of 1985.
The Custodian shall deliver or cause to be delivered to the appropriate
Fund all forms of proxies, all notices of meetings, and any other notices or
announcements affecting or relating to Securities owned by such Fund that are
received by the Custodian, any Subcustodian, or any nominee of either of them,
and, upon receipt of Instructions, the Custodian shall execute and deliver, or
cause such Subcustodian or nominee to execute and deliver, such proxies or
other authorizations as may be required. Except as directed pursuant to
Instructions, neither the Custodian nor any Subcustodian or nominee shall vote
upon any such Securities, or execute any proxy to vote thereon, or give any
consent or take any other action with respect thereto.
The Custodian will not release the identity of any Fund to an issuer
which
requests such information pursuant to the Shareholder Communications Act of
1985 for the specific purpose of direct communications between such issuer and
any such Fund unless a particular Fund directs the Custodian otherwise in
writing.
(v) Books and Records.
The Custodian shall maintain such records relating to its activities
under
this Agreement as are required to be maintained by Rule 31a-1 under the
Investment Company Act of 1940 ("the 1940 Act") and to preserve them for the
periods prescribed in Rule 31a-2 under the 1940 Act. These records shall be
open for inspection by duly authorized officers, employees or agents
(including independent public accountants) of the appropriate Fund during
normal business hours of the Custodian.
The Custodian shall provide accountings relating to its activities under
this Agreement as shall be agreed upon by each Fund and the Custodian.
(w) Opinion of Fund's Independent Certified Public Accountants.
The Custodian shall take all reasonable action as each Fund may request
to
obtain from year to year favorable opinions from each such Fund's independent
certified public accountants with respect to the Custodian's activities
hereunder and in connection with the preparation of each such Fund's periodic
reports to the SEC and with respect to any other requirements of the SEC.
(x) Reports by Independent Certified Public Accountants.
At the request of a Fund, the Custodian shall deliver to such Fund a
written report prepared by the Custodian's independent certified public
accountants with respect to the services provided by the Custodian under this
Agreement, including, without limitation, the Custodian's accounting system,
internal accounting control and procedures for safeguarding cash, Securities
and other Assets, including cash, Securities and other Assets deposited and/or
maintained in a Securities System or with a Subcustodian. Such report shall
be of sufficient scope and in sufficient detail as may reasonably be required
by such Fund and as may reasonably be obtained by the Custodian.
(y) Bills and Other Disbursements.
Upon receipt of Instructions, the Custodian shall pay, or cause to be
paid, all bills, statements, or other obligations of a Fund.
5. SUBCUSTODIANS.
From time to time, in accordance with the relevant provisions of this
Agreement, the Custodian may appoint one or more Domestic Subcustodians,
Foreign Subcustodians, Special Subcustodians, or Interim Subcustodians (as
each are hereinafter defined) to act on behalf of any one or more Funds. A
Domestic Subcustodian, in accordance with the provisions of this Agreement,
may also appoint a Foreign Subcustodian, Special Subcustodian, or Interim
Subcustodian to act on behalf of any one or more Funds. For purposes of this
Agreement, all Domestic Subcustodians, Foreign Subcustodians, Special
Subcustodians and Interim Subcustodians shall be referred to collectively as
"Subcustodians".
(a) Domestic Subcustodians.
The Custodian may, at any time and from time to time, appoint any bank
as
defined in Section 2(a)(5) of the 1940 Act or any trust company or other
entity, any of which meet the requirements of a custodian under Section 17(f)
of the 1940 Act and the rules and regulations thereunder, to act for the
Custodian on behalf of any one or more Funds as a subcustodian for purposes of
holding Assets of such Fund(s) and performing other functions of the Custodian
within the United States (a "Domestic Subcustodian"). Each Fund shall approve
in writing the appointment of the proposed Domestic Subcustodian; and the
Custodian's appointment of any such Domestic Subcustodian shall not be
effective without such prior written approval of the Fund(s). Each such duly
approved Domestic Subcustodian shall be listed on Appendix A attached hereto,
as it may be amended, from time to time.
(b) Foreign Subcustodians.
The Custodian may at any time appoint, or cause a Domestic Subcustodian
to
appoint, any bank, trust company or other entity meeting the requirements of
an "eligible foreign custodian" under Section 17(f) of the 1940 Act and the
rules and regulations thereunder to act for the Custodian on behalf of any one
or more Funds as a subcustodian or sub-subcustodian (if appointed by a
Domestic Subcustodian) for purposes of holding Assets of the Fund(s) and
performing other functions of the Custodian in countries other than the United
States of America (hereinafter referred to as a "Foreign Subcustodian" in the
context of either a subcustodian or a sub-subcustodian); provided that the
Custodian shall have obtained written confirmation from each Fund of the
approval of the Board of Directors or other governing body of each such Fund
(which approval may be withheld in the sole discretion of such Board of
Directors or other governing body or entity) with respect to (i) the identity
of any proposed Foreign Subcustodian (including branch designation), (ii) the
country or countries in which, and the securities depositories or clearing
agencies (hereinafter "Securities Depositories and Clearing Agencies"), if
any, through which, the Custodian or any proposed Foreign Subcustodian is
authorized to hold Securities and other Assets of each such Fund, and (iii)
the form and terms of the subcustodian agreement to be entered into with such
proposed Foreign Subcustodian. Each such duly approved Foreign Subcustodian
and the countries where and the Securities Depositories and Clearing Agencies
through which they may hold Securities and other Assets of the Fund(s) shall
be listed on Appendix A attached hereto, as it may be amended, from time to
time. Each Fund shall be responsible for informing the Custodian sufficiently
in advance of a proposed investment which is to be held in a country in which
no Foreign Subcustodian is authorized to act, in order that there shall be
sufficient time for the Custodian, or any Domestic Subcustodian, to effect the
appropriate arrangements with a proposed Foreign Subcustodian, including
obtaining approval as provided in this Section 5(b). In connection with the
appointment of any Foreign Subcustodian, the Custodian shall, or shall cause
the Domestic Subcustodian to, enter into a subcustodian agreement with the
Foreign Subcustodian in form and substance approved by each such Fund. The
Custodian shall not consent to the amendment of, and shall cause any Domestic
Subcustodian not to consent to the amendment of, any agreement entered into
with a Foreign Subcustodian, which materially affects any Fund's rights under
such agreement, except upon prior written approval of such Fund pursuant to
Special Instructions.
(c) Interim Subcustodians.
Notwithstanding the foregoing, in the event that a Fund shall invest in
an
Asset to be held in a country in which no Foreign Subcustodian is authorized
to act, the Custodian shall notify such Fund in writing by facsimile
transmission or in such other manner as such Fund and the Custodian shall
agree in writing of the unavailability of an approved Foreign Subcustodian in
such country; and upon the receipt of Special Instructions from such Fund, the
Custodian shall, or shall cause its Domestic Subcustodian to, appoint or
approve an entity (referred to herein as an "Interim Subcustodian") designated
in such Special Instructions to hold such Security or other Asset.
(d) Special Subcustodians.
Upon receipt of Special Instructions, the Custodian shall, on behalf of
a
Fund, appoint one or more banks, trust companies or other entities designated
in such Special Instructions to act for the Custodian on behalf of such Fund
as a subcustodian for purposes of: (i) effecting third-party repurchase
transactions with banks, brokers, dealers or other entities through the use of
a common custodian or subcustodian; (ii) providing depository and clearing
agency services with respect to certain variable rate demand note Securities,
(iii) providing depository and clearing agency services with respect to dollar
denominated Securities, and (iv) effecting any other transactions designated
by such Fund in such Special Instructions. Each such designated subcustodian
(hereinafter referred to as a "Special Subcustodian") shall be listed on
Appendix A attached hereto, as it may be amended from time to time. In
connection with the appointment of any Special Subcustodian, the Custodian
shall enter into a subcustodian agreement with the Special Subcustodian in
form and substance approved by the appropriate Fund in Special Instructions.
The Custodian shall not amend any subcustodian agreement entered into with a
Special Subcustodian, or waive any rights under such agreement, except upon
prior approval pursuant to Special Instructions.
(e) Termination of a Subcustodian.
The Custodian may, at any time in its discretion upon notification to
the
appropriate Fund(s), terminate any Subcustodian of such Fund(s) in accordance
with the termination provisions under the applicable subcustodian agreement,
and upon the receipt of Special Instructions, the Custodian will terminate any
Subcustodian in accordance with the termination provisions under the
applicable subcustodian agreement.
(f) Certification Regarding Foreign Subcustodians.
Upon request of a Fund, the Custodian shall deliver to such Fund a
certificate stating: (i) the identity of each Foreign Subcustodian then
acting on behalf of the Custodian; (ii) the countries in which and the
Securities
Depositories and Clearing Agencies through which each such Foreign
Subcustodian is then holding cash, Securities and other Assets of such Fund;
and (iii) such other information as may be requested by such Fund, and as the
Custodian shall be reasonably able to obtain, to evidence compliance with
rules and regulations under the 1940 Act.
6. STANDARD OF CARE.
(a) General Standard of Care.
The Custodian shall be liable to a Fund for all losses, damages and
reasonable costs and expenses suffered or incurred by such Fund resulting from
the negligence or willful misfeasance of the Custodian; provided, however, in
no event shall the Custodian be liable for special, indirect or consequential
damages arising under or in connection with this Agreement.
(b) Actions Prohibited by Applicable Law, Events Beyond Custodian's
Control, Sovereign Risk, Etc.
In no event shall the Custodian or any Domestic Subcustodian incur
liability hereunder (i) if the Custodian or any Subcustodian or Securities
System, or any subcustodian, Securities System, Securities Depository or
Clearing Agency utilized by the Custodian or any such Subcustodian, or any
nominee of the Custodian or any Subcustodian (individually, a "Person") is
prevented, forbidden or delayed from performing, or omits to perform, any act
or thing which this Agreement provides shall be performed or omitted to be
performed, by reason of: (a) any provision of any present or future law or
regulation or order of the United States of America, or any state thereof, or
of any foreign country, or political subdivision thereof or of any court of
competent jurisdiction (and neither the Custodian nor any other Person shall
be obligated to take any action contrary thereto); or (b) any event beyond the
control of the Custodian or other Person such as armed conflict, riots,
strikes, lockouts, labor disputes, equipment or transmission failures, natural
disasters, or failure of the mails, transportation, communications or power
supply; or (ii) for any loss, damage, cost or expense resulting from
"Sovereign Risk." A "Sovereign Risk" shall mean nationalization,
expropriation, currency devaluation, revaluation or fluctuation, confiscation,
seizure, cancellation, destruction or similar action by any governmental
authority, de facto or de jure; or enactment, promulgation, imposition or
enforcement by any such governmental authority of currency restrictions,
exchange controls, taxes, levies or other charges affecting a Fund's Assets;
or acts of armed conflict, terrorism, insurrection or revolution; or any other
act or event beyond the Custodian's or such other Person's control.
(c) Liability for Past Records.
Neither the Custodian nor any Domestic Subcustodian shall have any
liability in respect of any loss, damage or expense suffered by a Fund,
insofar as such loss, damage or expense arises from the performance of the
Custodian or any Domestic Subcustodian in reliance upon records that were
maintained for such Fund by entities other than the Custodian or any Domestic
Subcustodian prior to the Custodian's employment hereunder.
(d) Advice of Counsel.
The Custodian and all Domestic Subcustodians shall be entitled to
receive
and act upon advice of counsel of its own choosing on all matters. The
Custodian and all Domestic Subcustodians shall be without liability for any
actions taken or omitted in good faith pursuant to the advice of counsel.
(e) Advice of the Fund and Others.
The Custodian and any Domestic Subcustodian may rely upon the advice of
any Fund and upon statements of such Fund's accountants and other persons
believed by it in good faith to be expert in matters upon which they are
consulted, and neither the Custodian nor any Domestic Subcustodian shall be
liable for any actions taken or omitted, in good faith, pursuant to such
advice or statements.
(f) Instructions Appearing to be Genuine.
The Custodian and all Domestic Subcustodians shall be fully protected
and
indemnified in acting as a custodian hereunder upon any Resolutions of the
Board of Directors or Trustees, Instructions, Special Instructions, advice,
notice, request, consent, certificate, instrument or paper appearing to it to
be genuine and to have been properly executed and shall, unless otherwise
specifically provided herein, be entitled to receive as conclusive proof of
any fact or matter required to be ascertained from any Fund hereunder a
certificate signed by any officer of such Fund authorized to countersign or
confirm Special Instructions.
(g) Exceptions from Liability.
Without limiting the generality of any other provisions hereof, neither
the Custodian nor any Domestic Subcustodian shall be under any duty or
obligation to inquire into, nor be liable for:
(i) the validity of the issue of any Securities purchased by
or for
any Fund, the legality of the purchase thereof or evidence of ownership
required to be received by any such Fund, or the propriety of the decision to
purchase or amount paid therefor;
(ii) the legality of the sale of any Securities by or for
any Fund,
or the propriety of the amount for which the same were sold; or
(iii) any other expenditures, encumbrances of Securities,
borrowings
or similar actions with respect to any Fund's Assets;
and may, until notified to the contrary, presume that all Instructions or
Special Instructions received by it are not in conflict with or in any way
contrary to any provisions of any such Fund's Declaration of Trust,
Partnership Agreement, Articles of Incorporation or By-Laws or votes or
proceedings of the shareholders, trustees, partners or directors of any such
Fund, or any such Fund's currently effective Registration Statement on file
with the SEC.
7. LIABILITY OF THE CUSTODIAN FOR ACTIONS OF OTHERS.
(a) Domestic Subcustodians
The Custodian shall be liable for the acts or omissions of any Domestic
Subcustodian to the same extent as if such actions or omissions were performed
by the Custodian itself.
(b) Liability for Acts and Omissions of Foreign Subcustodians.
The Custodian shall be liable to a Fund for any loss or damage to such
Fund caused by or resulting from the acts or omissions of any Foreign
Subcustodian to the extent that, under the terms set forth in the subcustodian
agreement between the Custodian or a Domestic Subcustodian and such Foreign
Subcustodian, the Foreign Subcustodian has failed to perform in accordance
with the standard of conduct imposed under such subcustodian agreement and the
Custodian or Domestic Subcustodian recovers from the Foreign Subcustodian
under the applicable subcustodian agreement.
(c) Securities Systems, Interim Subcustodians, Special Subcustodians,
Securities Depositories and Clearing Agencies.
The Custodian shall not be liable to any Fund for any loss, damage or
expense suffered or incurred by such Fund resulting from or occasioned by the
actions or omissions of a Securities System, Interim Subcustodian, Special
Subcustodian, or Securities Depository and Clearing Agency unless such loss,
damage or expense is caused by, or results from, the negligence or willful
misfeasance of the Custodian.
(d) Defaults or Insolvencies of Brokers, Banks, Etc.
The Custodian shall not be liable for any loss, damage or expense
suffered
or incurred by any Fund resulting from or occasioned by the actions,
omissions, neglects, defaults or insolvency of any broker, bank, trust company
or any other person with whom the Custodian may deal (other than any of such
entities acting as a Subcustodian, Securities System or Securities Depository
and Clearing Agency, for whose actions the liability of the Custodian is set
out elsewhere in this Agreement) unless such loss, damage or expense is caused
by, or results from, the negligence or willful misfeasance of the Custodian.
(e) Reimbursement of Expenses.
Each Fund agrees to reimburse the Custodian for all out-of-pocket
expenses
incurred by the Custodian in connection with this Agreement, but excluding
salaries and usual overhead expenses.
8. INDEMNIFICATION.
(a) Indemnification by Fund.
Subject to the limitations set forth in this Agreement, each Fund agrees
to indemnify and hold harmless the Custodian and its nominees from all losses,
damages and expenses (including attorneys' fees) suffered or incurred by the
Custodian or its nominee caused by or arising from actions taken by the
Custodian, its employees or agents in the performance of its duties and
obligations under this Agreement, including, but not limited to, any
indemnification obligations undertaken by the Custodian under any relevant
subcustodian agreement; provided, however, that such indemnity shall not apply
to the extent the Custodian is liable under Sections 6 or 7 hereof.
If any Fund requires the Custodian to take any action with respect to
Securities, which action involves the payment of money or which may, in the
opinion of the Custodian, result in the Custodian or its nominee assigned to
such Fund being liable for the payment of money or incurring liability of some
other form, such Fund, as a prerequisite to requiring the Custodian to take
such action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
(b) Indemnification by Custodian.
Subject to the limitations set forth in this Agreement and in addition
to
the obligations provided in Sections 6 and 7, the Custodian agrees to
indemnify and hold harmless each Fund from all losses, damages and expenses
suffered or incurred by each such Fund caused by the negligence or willful
misfeasance of the Custodian.
9. ADVANCES.
In the event that, pursuant to Instructions, the Custodian or any
Subcustodian, Securities System, or Securities Depository or Clearing Agency
acting either directly or indirectly under agreement with the Custodian (each
of which for purposes of this Section 9 shall be referred to as "Custodian"),
makes any payment or transfer of funds on behalf of any Fund as to which there
would be, at the close of business on the date of such payment or transfer,
insufficient funds held by the Custodian on behalf of any such Fund, the
Custodian may, in its discretion without further Instructions, provide an
advance ("Advance") to any such Fund in an amount sufficient to allow the
completion of the transaction by reason of which such payment or transfer of
funds is to be made. In addition, in the event the Custodian is directed by
Instructions to make any payment or transfer of funds on behalf of any Fund as
to which it is subsequently determined that such Fund has overdrawn its cash
account with the Custodian as of the close of business on the date of such
payment or transfer, said overdraft shall constitute an Advance. Any Advance
shall be payable by the Fund on behalf of which the Advance was made on demand
by Custodian, unless otherwise agreed by such Fund and the Custodian, and
shall accrue interest from the date of the Advance to the date of payment by
such Fund to the Custodian at a rate agreed upon in writing from time to time
by the Custodian and such Fund. It is understood that any transaction in
respect of which the Custodian shall have made an Advance, including but not
limited to a foreign exchange contract or transaction in respect of which the
Custodian is not acting as a principal, is for the account of and at the risk
of the Fund on behalf of which the Advance was made, and not, by reason of
such Advance, deemed to be a transaction undertaken by the Custodian for its
own account and risk. The Custodian and each of the Funds which are parties
to this Agreement acknowledge that the purpose of Advances is to finance
temporarily the purchase or sale of Securities for prompt delivery in
accordance with the settlement terms of such transactions or to meet emergency
expenses not reasonably foreseeable by a Fund. The Custodian shall promptly
notify the appropriate Fund of any Advance. Such notification shall be sent
by facsimile transmission or in such other manner as such Fund and the
Custodian may agree.
10. LIENS.
The Bank shall have a lien on the Property in the Custody Account to
secure payment of fees and expenses for the services rendered under this
Agreement. If the Bank advances cash or securities to the Fund for any
purpose or in the event that the Bank or its nominee shall incur or be
assessed any taxes, charges, expenses, assessments, claims or liabilities in
connection with the performance of its duties hereunder, except such as may
arise from its or its nominee's negligent action, negligent failure to act or
willful misconduct, any Property at any time held for the Custody Account
shall be security therefor and the Fund hereby grants a security interest
therein to the Bank. The Fund shall promptly reimburse the Bank for any such
advance of cash or securities or any such taxes, charges, expenses,
assessments, claims or liabilities upon request for payment, but should the
Fund fail to so reimburse the Bank, the Bank shall be entitled to dispose of
such Property to the extent necessary to obtain reimbursement. The Bank shall
be entitled to debit any account of the Fund with the Bank including, without
limitation, the Custody Account, in connection with any such advance and any
interest on such advance as the Bank deems reasonable.
11. COMPENSATION.
Each Fund will pay to the Custodian such compensation as is agreed to in
writing by the Custodian and each such Fund from time to time. Such
compensation, together with all amounts for which the Custodian is to be
reimbursed in accordance with Section 7(e), shall be billed to each such Fund
and paid in cash to the Custodian.
12. POWERS OF ATTORNEY.
Upon request, each Fund shall deliver to the Custodian such proxies,
powers of attorney or other instruments as may be reasonable and necessary or
desirable in connection with the performance by the Custodian or any
Subcustodian of their respective obligations under this Agreement or any
applicable subcustodian agreement.
13. TERMINATION AND ASSIGNMENT.
Any Fund or the Custodian may terminate this Agreement by notice in
writing, delivered or mailed, postage prepaid (certified mail, return receipt
requested) to the other not less than 90 days prior to the date upon which
such termination shall take effect. Upon termination of this Agreement, the
appropriate Fund shall pay to the Custodian such fees as may be due the
Custodian hereunder as well as its reimbursable disbursements, costs and
expenses paid or incurred. Upon termination of this Agreement, the Custodian
shall deliver, at the terminating party's expense, all Assets held by it
hereunder to the appropriate Fund or as otherwise designated by such Fund by
Special Instructions. Upon such delivery, the Custodian shall have no further
obligations or liabilities under this Agreement except as to the final
resolution of matters relating to activity occurring prior to the effective
date of termination.
This Agreement may not be assigned by the Custodian or any Fund without
the respective consent of the other, duly authorized by a resolution by its
Board of Directors or Trustees.
14. ADDITIONAL FUNDS.
An additional Fund or Funds may become a party to this Agreement after
the
date hereof by an instrument in writing to such effect signed by such Fund or
Funds and the Custodian. If this Agreement is terminated as to one or more of
the Funds (but less than all of the Funds) or if an additional Fund or Funds
shall become a party to this Agreement, there shall be delivered to each party
an Appendix #1 or an amended Appendix #1, signed by each of the additional
Funds (if any) and each of the remaining Funds as well as the Custodian,
deleting or adding such Fund or Funds, as the case may be. The termination of
this Agreement as to less than all of the Funds shall not affect the
obligations of the Custodian and the remaining Funds hereunder as set forth on
the signature page hereto and in Appendix #1 as revised from time to time.
15. NOTICES.
As to each Fund, notices, requests, instructions and other writings
delivered to Jones & Babson, Inc, 700 Karnes Blvd., Kansas City, Missouri
64108, postage prepaid, or to such other address as any particular Fund may
have designated to the Custodian in writing, shall be deemed to have been
properly delivered or given to a Fund.
Notices, requests, instructions and other writings delivered to the
Securities Administration Department of the Custodian at its office at 928
Grand Avenue, Kansas City, Missouri, or mailed postage prepaid, to the
Custodian's Securities Administration Department, Post Office Box 226, Kansas
City, Missouri 64141, or to such other addresses as the Custodian may have
designated to each Fund in writing, shall be deemed to have been properly
delivered or given to the Custodian hereunder; provided, however, that
procedures for the delivery of Instructions and Special Instructions shall be
governed by Section 2(c) hereof.
16. MISCELLANEOUS.
(a) This Agreement is executed and delivered in the State of Missouri
and
shall be governed by the laws of such state.
(b) All of the terms and provisions of this Agreement shall be binding
upon, and inure to the benefit of, and be enforceable by the respective
successors and assigns of the parties hereto.
(c) No provisions of this Agreement may be amended, modified or waived,
in any manner except in writing, properly executed by both parties hereto;
provided, however, Appendix A may be amended from time to time as Domestic
Subcustodians, Foreign Subcustodians, Special Subcustodians, and Securities
Depositories and Clearing Agencies are approved or terminated according to the
terms of this Agreement.
(d) 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 construction or effect.
(e) This Agreement shall be effective as of the date of execution
hereof.
(f) This Agreement may be executed simultaneously in two or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
(g) The following terms are defined terms within the meaning of this
Agreement, and the definitions thereof are found in the following sections of
the Agreement:
Term Section
Account 4(b)(3)(ii)
ADR'S 4(j)
Advance 9
Assets 2(b)
Authorized Person 3
Banking Institution 4(1)
Domestic Subcustodian 5(a)
Foreign Subcustodian 5(b)
Instruction 2(c)(1)
Interim Subcustodian 5(c)
Interest Bearing Deposit 4(1)
Term Section
Liability 10
OCC 4(g)(2)
Person 6(b)
Procedural Agreement 4(h)
SEC 4(b)(3)
Securities 2(a)
Securities Depositories and
Clearing Agencies 5(b)
Securities System 4(b)(3)
Shares 4(s)
Sovereign Risk 6(b)
Special Instruction 2(c)(2)
Special Subcustodian 5(c)
Subcustodian 5
1940 Act 4(v)
(h) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid by any court of
competent jurisdiction, the remaining portion or portions shall be considered
severable and shall not be affected, and the rights and obligations of the
parties shall be construed and enforced as if this Agreement did not contain
the particular part, term or provision held to be illegal or invalid.
(i) This Agreement constitutes the entire understanding and agreement
of the parties hereto with respect to the subject matter hereof, and
accordingly supersedes, as of the effective date of this Agreement, any
custodian agreement heretofore in effect between the Fund and the Custodian.
IN WITNESS WHEREOF, the parties hereto have caused this Custody
Agreement to be executed by their respective duly authorized officers.
JONES & BABSON FUNDS
By: P. Bradley Adams
Name: P. Bradley Adams
Title: Treasurer
Date: May 5, 1997
UMB BANK, N.A.
By: Ralph R. Santoro
Name: Ralph R. Santoro
Title: Vice President
Date: April 22, 1997
<PAGE>
APPENDIX A
CUSTODY AGREEMENT
DOMESTIC SUBCUSTODIANS:
United Missouri Trust Company of New York
Morgan Stanley Trust Company (Foreign Securities Only)
SECURITIES SYSTEMS:
Federal Book Entry
Depository Trust Company
Participant's Trust Company
SPECIAL SUBCUSTODIANS:
SECURITIES DEPOSITORIES
COUNTRIES FOREIGN SUBCUSTODIANS CLEARING AGENCIES
Euroclear
JONES & BABSON FUNDS
By: P. Bradley Adams
Name: P. Bradley Adams
Title: Treasurer
Date: May 5, 1997
UMB BANK, N.A.
By: Ralph R. Santoro
Name: Ralph R. Santoro
Title: Vice President
Date: April 22, 1997
<PAGE>
APPENDIX #1
UMB Bank, n.a.
AND
UNITED MISSOURI TRUST COMPANY OF NEW YORK
DOMESTIC CUSTODY FEE AGREEMENT
FOR THE
JONES AND BABSON FAMILY OF FUNDS
JONES AND BABSON FUNDS
David L. Babson Growth Fund, Inc.
Babson Enterprise Fund, Inc.
Babson Enterprise II, Fund, Inc.
Babson Value Fund, Inc.
Shadow Stock Fund, Inc.
D. L. Babson Tax-Free Income Fund, Inc. - Portfolio S
D. L. Babson Tax-Free Income Fund, Inc. - Portfolio L
D. L. Babson Tax-Free Income Fund, Inc. - Portfolio M
D. L. Babson Money Market Fund, Inc. - Prime Portfolio
D. L. Babson Money Market Fund, Inc. - Federal Portfolio
D. L. Babson Bond Trust - Short Portfolio
D. L. Babson Bond Trust - Long Portfolio
Buffalo Balanced Fund, Inc.
Buffalo Equity Fund, Inc.
Buffalo Global Fund, Inc.
Buffalo High Yield Fund, Inc.
Buffalo Small Cap Fund, Inc.
AFBA Five Star Fund, Inc. - Balanced Portfolio
AFBA Five Star Fund, Inc. - Equity Portfolio
AFBA Five Star Fund, Inc. - USA Global Portfolio
AFBA Five Star Fund, Inc. - High Yield Portfolio
Jones & Babson UMB Bank, n.a.
By: /s/P. Bradley Adams By: /s/Ralph R. Santoro
Name: P/ Bradley Adams Name: Ralph R. Santoro
Title: Treasurer Title: Vice President
Date: 5/5/97 Date: 04/22/97
TRANSFER AGENCY AGREEMENT
This Agreement made as of the 31st day of March 31, 1995 between
D. L. Babson Bond Trust, a Missouri common-law trust (the "Fund"), and
Jones & Babson, Inc., a Missouri corporation (the "Transfer Agent").
WITNESSETH
That in consideration of the mutual promises hereinafter set
forth, the parties hereto covenant and agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases
shall have the following meanings:
1. "Approved Institution" shall mean an entity so named in a
Certificate, as hereinafter defined. From time to time, the Fund may
amend a previously delivered Certificate by delivering to the Transfer
Agent a Certificate naming an additional entity or deleting any entity
named in a previously delivered Certificate.
2. The "Board of Directors" shall mean the Board of Trustees
of the Fund.
3. "Certificate" shall mean any notice, instruction or other
instrument in writing, authorized or required by this Agreement to be
given to the Transfer Agent by the Fund which is signed by any Officer,
as hereinafter defined, and actually received by the Transfer Agent.
4. "Custodian" shall mean the financial institution appointed
as custodian under the terms and conditions of the Custody Agreement
between the financial institution and the Fund, or its successor(s).
5. "Fund Business Day" shall be determined as set out in the
Fund's prospectuses as shall be effective from time to time.
6. "Officer" shall be deemed to be the Fund's President, any
Vice President, Secretary, Treasurer, Controller, any Assistant
Controller, any Assistant Treasurer and any Assistant Secretary, and any
other person duly authorized by the Board of Directors of the Fund to
execute any Certificate, instruction, notice or other instrument on
behalf of the Fund, and any person reasonably believed by the Transfer
Agent to be such a person.
7. "Out-of-Pocket Expenses" means amounts reasonably
necessary and actually incurred by Transfer Agent in the provision of
Transfer Agent services or pursuant to this Agreement for the following
purposes: postage (and first class mail insurance in connection with
mailing Share certificates), envelopes, check forms, continuous forms,
forms for reports and statements, stationery and other similar items,
telephone and telegraph charges incurred in answering inquiries from
dealers or shareholders, microfilm used to record transactions in
shareholder accounts and computer tapes used for permanent storage of
records and cost of insertion of materials in mailing envelopes by
outside firms. Any charges associated with special or exception
processing shall also be considered Out-of-Pocket Expenses.
8. "Prospectus" shall mean the most recent Fund prospectus
actually received by the Transfer Agent from the Fund with respect to
which the Fund has indicated a registration statement under the
Securities Act of 1933, as amended, has become effective, including the
Statement of Additional Information, incorporated by reference therein.
9. "Shares" shall mean all or any part of each class or
series of the shares of beneficial interest of the Fund or portfolio
listed in the Certificate as to which the Transfer Agent acts as
transfer agent hereunder, as may be amended from time to time, which are
authorized and/or issued by the Fund.
ARTICLE II
APPOINTMENT OF TRANSFER AGENT
1. Effective as of the date of this Agreement, the Fund hereby
constitutes and appoints the Transfer Agent as transfer agent of all the
Shares of the Fund and as dividend disbursing agent during the period of
this Agreement.
2. The Transfer Agent hereby accepts appointment as transfer
agent and dividend disbursing agent and agrees to perform duties thereof
as hereinafter set forth.
3. In connection with such appointment, the Fund upon the
request of the Transfer Agent, shall deliver the following documents to
the Transfer Agent:
(i) A copy of the Articles of Incorporation of the Fund
and all
amendments thereto certified by the Secretary of the Fund;
(ii) A copy of the By-laws of the Fund certified by the
Secretary of the
Fund;
(iii) A copy of a resolution of the Board of Directors of
the Fund
certified by the Secretary of the Fund appointing the Transfer
Agent and
authorizing the execution of this Transfer Agency Agreement;
(iv) A Certificate signed by the Secretary of the Fund
specifying: the number of authorized Shares, the number of such
authorized Shares issued, the number of such authorized Shares
issued and currently outstanding, the names and specimen
signatures of the Officers of the Fund and the name and address of
the legal counsel for the Fund;
(v) Specimen Share certificate for each or series class of
Shares in the form approved by the Board of Directors of the Fund
(and in a format compatible with the Transfer Agent's system),
together with a Certificate signed by the Secretary of the Fund as
to such approval;
(vi) Copies of the Fund's registration statement, as
amended to date, and the most recently filed Post-Effective
Amendment thereto, filed by the Fund with the Securities and
Exchange Commission under the Securities Act of 1933, as amended,
and under the Investment Company Act of 1940, as amended, together
with any applications filed in connection therewith; and
(vii) Opinion of counsel for the Fund with respect to the
validity of the authorized and outstanding Shares, whether such
Shares are fully paid and nonassessable and the status of such
Shares under the Securities Act of 1933, as amended, and any other
applicable federal law or regulation (i.e., if subject to
registration, that they have been registered and that the
registration statement has become effective or, if exempt, the
specific grounds therefor).
ARTICLE III
AUTHORIZATION AND ISSUANCE OF SHARES
1. If requested by the Transfer Agent, the Fund shall deliver
to the Transfer Agent the following documents on or before the effective
date of any increase or decrease in the total number of Shares
authorized to be issued:
(a) A certified copy of the amendment to the Articles of
Incorporation giving effect to such increase or decrease;
(b) In the case of an increase, an opinion of counsel for
the Fund with respect to the validity of the Shares of the Fund
and the status of such Shares under the Securities Act of 1933, as
amended, and any other applicable federal law or regulation (i.e.,
if subject to registration, that they have been registered and
that the registration statement has become effective or, if
exempt, the specific grounds therefor); and
(c) In the case of an increase, if the appointment of the
Transfer Agent was theretofore expressly limited, a certified copy
of a resolution of the Board of Directors of the Fund increasing
the authority of the Transfer Agent.
2. Prior to the issuance of any additional Shares pursuant to
stock dividends or stock splits, etc., and prior to any reduction in the
number of Shares outstanding, if requested by the Transfer Agent, the
Fund shall deliver the following documents to the Transfer Agent:
(a) A certified copy of the resolution(s) adopted by the
Board of Directors and/or the shareholders of the Fund authorizing
such issuance of additional Shares or such reduction, as the case
may be; and
(b) An opinion of counsel for the Fund with respect to
the validity of the Shares and the status of such Shares under the
Securities Act of 1933, as amended, and any other applicable
federal law or regulation (i.e., if subject to registration, that
they have been registered and that the registration statement has
become effective, or, if exempt, the specific grounds therefor).
ARTICLE IV
RECAPITALIZATION OR CAPITAL ADJUSTMENT
1. In the case of any negative stock split, recapitalization or
other capital adjustment requiring a change in the form of Share
certificates, the Transfer Agent will issue Share certificates in the
new form in exchange for, or upon transfer of, outstanding Share
certificates in the old form, upon receiving:
(a) A Certificate authorizing the issuance of the Share
certificates in the new form;
(b) A certified copy of any amendment to the Articles of
Incorporation with respect to the change;
(c) Specimen Share certificates for each class of Shares
in the new form approved by the Board of Directors of the Fund,
with a Certificate signed by the Secretary of the Fund as to such
approval; and
(d) An opinion of counsel for the Fund with respect to the
validity of the Shares in the new form and the status of such
Shares under the Securities Act of 1933, as amended, and any other
applicable federal law or regulation (i.e., if subject to
registration, that the Shares have been registered and that the
registration statement has become effective or, if exempt, the
specific grounds therefor).
2. The Fund at its expense shall furnish the Transfer Agent
with a sufficient supply of blank Share certificates in the new form and
from time to time will replenish such supply upon the request of the
Transfer Agent. Such blank Share certificates shall be compatible with
the Transfer Agent's system and shall be properly signed by facsimile or
otherwise by Officers of the Fund authorized by law or by the By-laws to
sign Share certificates and, if required, shall bear the corporate seal
or facsimile thereof. The Fund agrees to indemnify and exonerate, save
and hold the Transfer Agent harmless from and against any and all claims
or demands that may be asserted against the Transfer Agent with respect
to the genuineness of any Share certificate supplied to the Transfer
Agent pursuant to this Article.
ARTICLE V
ISSUANCE, REDEMPTION AND TRANSFER OF SHARES
1. (a) The Transfer Agent acknowledges that it has received a
copy of the Fund's Prospectus, which Prospectus describes how
sales and redemption of Shares of the Fund shall be made, and the
Transfer Agent agrees to accept purchase orders and redemption
requests with respect to Shares on each Fund Business Day in
accordance with such Prospectus. The Fund agrees to provide the
Transfer Agent with sufficient advance notice to enable the
Transfer Agent to effect any changes in the procedures set forth
in the Prospectus regarding such purchase and redemption
procedure; provided, however, that in no event will such advance
notice be less than thirty (30) days.
(b) The Transfer Agent shall also accept with respect to
each Fund Business Day, at such times as are agreed upon from time
to time by the Transfer Agent and the Fund, a computer tape or
electronic data transmission consistent in all respects with the
Transfer Agent's record format, as amended from time to time,
which is believed by the Transfer Agent to be furnished by or on
behalf of any Approved Institution. The Transfer Agent shall not
be liable for any losses or damages to the Fund or its
shareholders in the event that a computer tape or electronic data
transmission from an Approved Institution is unable to be
processed for any reason beyond the control of the Transfer Agent,
or if any of the information on such tape or transmission is found
to be incorrect.
2. On each Fund Business Day, the Transfer Agent shall, as of
the time at which the Fund computes the net asset value of the Fund,
issue to and redeem from the accounts specified in a purchase order,
redemption request or computer tape or electronic data transmission,
which in accordance with the Prospectus is effective on such Fund
Business Day, the appropriate number of full and fractional Shares based
on the net asset value per Share of such Fund specified in an advice
received on such Fund Business Day from the Fund. Notwithstanding the
foregoing, if a redemption specified in a computer tape or electronic
data transmission is for a dollar value of Shares in excess of the
dollar value of uncertificated Shares in the specified account, the
Transfer Agent shall not effect such redemption in whole or in part and
shall within twenty-four (24) hours orally advise the Approved
Institution which supplied such tape of the discrepancy.
3. In connection with a reinvestment of a dividend or
distribution of Shares of the Fund, the Transfer Agent shall as of each
Fund Business Day, as specified in a Certificate or resolution described
in paragraph 1 of succeeding Article VI, issue Shares of the Fund based
on the net asset value per Share of such Fund specified in an advice
received from the Fund on such Fund Business Day.
4. On each Fund Business Day, the Transfer Agent shall supply
the Fund with a statement specifying with respect to the immediately
preceding Fund Business Day: the total number of Shares of the Fund
(including fractional Shares) issued and outstanding at the opening of
business on such day; the total number of Shares of the Fund sold on
such day, pursuant to the preceding paragraph 2 of this Article; the
total number of Shares of the Fund redeemed from shareholders by the
Transfer Agent on such day; the total number of Shares of the Fund, if
any, sold on such day pursuant to the preceding paragraph 3 of this
Article, and the total number of Shares of the Fund issued and
outstanding.
5. In connection with each purchase and each redemption of
Shares, the Transfer Agent shall send such statements as are prescribed
by the Federal Securities laws applicable to transfer agents or as
described in the Prospectus. If the Prospectus indicates that
certificates for Shares are available and if specifically requested in
writing by any shareholder, or if otherwise required hereunder, the
Transfer Agent will countersign (if necessary), issue and mail to such
shareholder at the address set forth in the records of the Transfer
Agent a Share certificate for any full Share requested.
6. As of each Fund Business Day, the Transfer Agent shall
furnish the Fund with an advice setting forth the number and dollar
amount of Shares to be redeemed on such Fund Business Day in accordance
with paragraph 2 of this Article.
7. Upon receipt of a proper redemption request and moneys paid
to it by the Custodian in connection with a redemption of Shares, the
Transfer Agent shall cancel the redeemed Shares and after making
appropriate deduction for any withholding of taxes required of it by
applicable law: (a) in the case of a redemption of Shares pursuant to a
redemption described in the preceding paragraph l(a) of this Article,
make payment in accordance with the Fund's redemption and payment
procedures described in the Prospectus; and (b) in the case of a
redemption of Shares pursuant to a computer tape or electronic data
transmission described in the preceding paragraph l(b) of this Article,
make payment by directing a federal funds wire order to the account
previously designated by the Approved Institution specified in said
computer tape or electronic data transmission.
8. The Transfer Agent shall not be required to issue any Shares
after it has received from an Officer of the Fund or from an appropriate
federal or state authority written notification that the sale of Shares
has been suspended or discontinued, and the Transfer Agent shall be
entitled to rely upon such written notification.
9. Upon the issuance of any Shares in accordance with this
Agreement, the Transfer Agent shall not be responsible for the payment
of any original issue or other taxes required to be paid by the Fund in
connection with such issuance of any Shares.
10. The Transfer Agent shall accept a computer tape or
electronic data transmission consistent with the Transfer Agent's record
format, as amended from time to time, which is reasonably believed by
the Transfer Agent to be furnished by or on behalf of any Approved
Institution and is represented to be instructions with respect to the
transfer of Shares from one account of such Approved Institution to
another such account, and shall effect the transfers specified in said
computer tape or electronic data transmission. The Transfer Agent shall
not be liable for any losses to the Fund or its shareholders in the
event that a computer tape or electronic data transmission from an
Approved Institution is unable to be processed for any reason beyond the
control of the Transfer Agent, or if any of the information on such tape
or transmission is found to be incorrect.
11. (a) Except as otherwise provided in subparagraph (b) of
this paragraph and in paragraph 13 of this Article, Shares will be
transferred or redeemed upon presentation to the Transfer Agent of
Share certificates or instructions properly endorsed for transfer
or redemption, accompanied by such documents as the Transfer Agent
deems necessary to evidence the authority of the person making
such transfer or redemption, and bearing satisfactory evidence of
the payment of stock transfer taxes. In the case of small estates
where no administration is contemplated, the Transfer Agent may,
when furnished with an appropriate surety bond, and without
further approval of the Fund, transfer or redeem Shares registered
in the name of a decedent where the current market value of the
Shares being transferred does not exceed such amount as may from
time to time be prescribed by various states. The Transfer Agent
reserves the right to refuse to transfer or redeem Shares until it
is satisfied that the endorsement on the stock certificate or
instructions is valid and genuine, and for that purpose it will
require, unless otherwise instructed by an authorized Officer of
the Fund, a guarantee of signature by an "Eligible Guarantor
Institution" as that term is defined by SEC Rule 17Ad-15. The
Transfer Agent also reserves the right to refuse to transfer or
redeem Shares until it is satisfied that the requested transfer or
redemption is legally authorized, and it shall incur no liability
for the refusal, in good faith, to make transfers or redemptions
which the Transfer Agent, in its judgment, deems improper or
unauthorized, or until it is satisfied that there is no basis to
any claims adverse to such transfer or redemption. The Transfer
Agent may, in effecting transfers and redemptions of Shares, rely
upon those provisions of the Uniform Act for the Simplification of
Fiduciary Security Transfers or the Uniform Commercial Code, as
the same may be amended from time to time, applicable to the
transfer of securities, and the Fund shall indemnify the Transfer
Agent for any act done or omitted by it in good faith in reliance
upon such laws. In no event will the Fund indemnify the Transfer
Agent for any act done by it as a result of willful misfeasance,
bad faith, gross negligence or reckless disregard of its duties.
The Transfer Agent shall be entitled to accept, and shall be fully
protected by the Fund in accepting, any request from any entity to
carry out any transaction in Shares received by the Transfer Agent
through any of the various programs offered through the National
Securities Clearing Corporation ("NSCC") (including, but not
limited to, Networking and FundServ). Any such entity shall
constitute an Approved Institution as defined herein.
(b) Notwithstanding the foregoing or any other provision
contained in this Agreement to the contrary, the Transfer Agent
shall be fully protected by the Fund in not requiring any
instruments, documents, assurances, endorsements or guarantees,
including, without limitation, any signature guarantees, in
connection with a redemption or transfer of Shares whenever the
Transfer Agent reasonably believes that requiring the same would
be inconsistent with the transfer and redemption procedures as
described in the Prospectus.
12. Notwithstanding any provision contained in this Agreement to
the contrary, the Transfer Agent shall not be required or expected to
require, as a condition to any transfer of any Shares pursuant to
paragraph 11 of this Article or any redemption of any Shares pursuant to
a computer tape or electronic data transmission described in this
Agreement, any documents, including, without limitation, any documents
of the kind described in subparagraph (a) of paragraph 11 of this
Article, to evidence the authority of the person requesting the transfer
or redemption and/or the payment of any stock transfer taxes, and shall
be fully protected in acting in accordance with the applicable
provisions of this Article.
13. (a) As used in this Agreement, the terms "computer tape
or electronic data transmission" and "computer tape believed by
the Transfer Agent to be furnished by an Approved Institution",
shall include any tapes generated by the Transfer Agent to reflect
information believed by the Transfer Agent to have been input by
an Approved Institution, via a remote terminal or other similar
link, into a data processing, storage or collection system, or
similar system (the "System"), located on the Transfer Agent's
premises. For purposes of paragraph 1 of this Article, such a
computer tape or electronic data transmission shall be deemed to
have been furnished at such times as are agreed upon from time to
time by the Transfer Agent and Fund only if the information
reflected thereon was input to the System at such times as are
agreed upon from time to time by the Transfer Agent and the Fund.
(b) Nothing contained in this Agreement shall constitute
any agreement or representation by the Transfer Agent to permit,
or to agree to permit, any Approved Institution to input
information into a System.
(c) The Transfer Agent reserves the right to approve, in
advance, any Approved Institution; such approval not to be
unreasonably withheld. The Transfer Agent also reserves the right
to terminate any and all automated data communications, at its
discretion, upon a reasonable attempt to notify the Fund when in
the opinion of the Transfer Agent continuation of such
communications would jeopardize the accuracy and/or integrity of
the Fund's records on the System.
ARTICLE VI
DIVIDENDS AND DISTRIBUTIONS
1. The Fund shall furnish to the Transfer Agent a copy of a
resolution of its Board of Directors, certified by the
Secretary or any Assistant Secretary, either: (i) setting forth
the date of the declaration of a dividend or distribution, the date of
accrual or payment, as the case may be, thereof, the record date as of
which shareholders entitled to payment, or accrual, as the case may be,
shall be determined, the amount per Share of such dividend or
distribution, the payment date on which all previously accrued and
unpaid dividends are to be paid and the total amount, if any, payable to
the Transfer Agent on such payment date; or (ii) authorizing the
declaration of dividends and distributions on a daily or other periodic
basis and authorizing the Transfer Agent to rely on a Certificate
setting forth the information described in subsection (i) of this
paragraph.
2. Upon the mail date specified in such Certificate or
resolution, as the case may be, the Fund shall, in the case of a cash
dividend or distribution, cause the Custodian to deposit in an account
in the name of the Transfer Agent on behalf of the Fund an amount of
cash, if any, sufficient for the Transfer Agent to make the payment, as
of the mail date, specified in such Certificate or resolution, as the
case may be, to the shareholders who were of record on the record date.
The Transfer Agent will, upon receipt of any such cash, make payment of
such cash dividends or distributions to the shareholders of record as of
the record date by: (i) mailing a check, payable to the registered
shareholder, to the address of record or dividend mailing address; or
(ii) wiring such amounts to the accounts previously designated by an
Approved Institution, as the case may be. The Transfer Agent shall not
be liable for any improper payments made in good faith and without
negligence, in accordance with a Certificate or resolution described in
the preceding paragraph. If the Transfer Agent shall not receive from
the Custodian sufficient cash to make payments of any cash dividend or
distribution to all shareholders of the Fund as of the record date, the
Transfer Agent shall, upon notifying the Fund, withhold payment to all
shareholders of record as of the record date until sufficient cash is
provided to the Transfer Agent.
3. It is understood that the Transfer Agent shall in no way be
responsible for the determination of the rate or form of dividends or
capital gain distributions due to the shareholders. It is expressly
agreed and understood that the Transfer Agent is not liable for any loss
as a result of processing a distribution based on information provided
in the Certificate that is incorrect. The Fund agrees to pay the
Transfer Agent for any and all costs, both direct and Out-of-Pocket
Expenses, incurred in such corrective work as necessary to remedy such
error.
4. It is understood that the Transfer Agent shall file such
appropriate information returns concerning the payment of dividend and
capital gain distributions with the proper federal, state and local
authorities as are required by law to be filed by the Fund, but shall in
no way be responsible for the collection or withholding of taxes due on
such dividends or distributions due to shareholders, except and only to
the extent required by applicable law. Anything in this Agreement to
the contrary notwithstanding, the Fund shall be solely responsible for
the accurate, complete and timely filing with the proper federal, state
and local authorities of all tax information with respect to any Fund
account maintained under Matrix Level 3 through any of the various
programs offered through the NSCC (including, but not limited to,
Networking and FundServ).
ARTICLE VII
CONCERNING THE FUND
1. The Fund represents to the Transfer Agent that:
(a) It is a common-law trust duly organized and existing
under the laws of the State of Missouri.
(b) It is empowered under applicable laws and by its
Articles of Incorporation and By-laws to enter into and perform this
Agreement.
(c) All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement.
(d) It is an investment company registered under the
Investment Company Act of 1940, as amended.
(e) A registration statement under the Securities Act of
1933, as amended, with respect to the Shares is effective. The
Fund shall notify the Transfer Agent if such registration
statement or any state securities registrations have been
terminated or a stop order has been entered with respect to the
Shares.
2. Each copy of the Articles of Incorporation of the Fund and
copies of all amendments thereto shall be certified by the Secretary of
State (or other appropriate official) of the state of organization, and
if such Articles of Incorporation and/or amendments are required by law
also to be filed with a county or other officer or official body, a
certificate of such filing shall be filed with a certified copy
submitted to the Transfer Agent. Each copy of the By-laws and copies of
all amendments thereto, and copies of resolutions of the Board of
Directors of the Fund shall be certified by the Secretary of the Fund
under seal.
3. The Fund shall promptly deliver to the Transfer Agent
written notice of any change in the Officers authorized to sign Share
certificates, notifications or requests, together with a specimen
signature of each new Officer. In the event any Officer who shall have
signed manually or whose facsimile signature shall have been affixed to
blank Share certificates shall die, resign or be removed prior to
issuance of such Share certificates, the Transfer Agent may issue such
Share certificates of the Fund notwithstanding such death, resignation
or removal, and the Fund shall promptly deliver to the Transfer Agent
such approval, adoption or ratification as may be required by law.
4. It shall be the sole responsibility of the Fund to deliver
to the Transfer Agent the Fund's currently effective Prospectus and, for
purposes of this Agreement, the Transfer Agent shall not be deemed to
have notice of any information contained in such Prospectus until a
reasonable time after it is actually received by the Transfer Agent.
ARTICLE VIII
CONCERNING THE TRANSFER AGENT
1. The Transfer Agent represents and warrants to the Fund that:
(a) It is a corporation duly organized and existing under
the laws of the State of Missouri.
(b) It is empowered under applicable law and by its
Articles of Incorporation and By-laws to enter into and perform
this Agreement.
(c) All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement.
(d) It is duly registered as a transfer agent under
Section 17A of the Securities Exchange Act of 1934, as amended.
2. The Transfer Agent shall not be liable and shall be
indemnified in acting upon any computer tape or electronic data
transmission, writing or document reasonably believed by it to be
genuine and to have been signed or made by an Officer of the Fund or
person designated by the Fund and shall not be held to have any notice
of any change of authority of any person until receipt of written notice
thereof from the Fund or such person. It shall also be protected in
processing Share certificates which bear the proper countersignature of
the Transfer Agent and which it reasonably believes to bear the proper
manual or facsimile signature of the Officers of the Fund.
3. The Transfer Agent upon notice to the Fund may establish
such additional procedures, rules and regulations governing the transfer
or registration of Share certificates as it may deem advisable and
consistent with such rules and regulations generally adopted by mutual
fund transfer agents.
4. The Transfer Agent shall keep such records as it may deem
advisable and is agreeable to the Fund, but not inconsistent with the
rules and regulations of appropriate government authorities, in
particular Rules 31a-2 and 31a-3 under the Investment Company Act of
1940, as amended. The Transfer Agent acknowledges that such records are
the property of the Fund. The Transfer Agent may deliver to the Fund
from time to time at its discretion, for safekeeping or disposition by
the Fund in accordance with law, such records, papers, documents
accumulated in the execution of its duties as such Transfer Agent, as
the Transfer Agent may deem expedient, other than those which the
Transfer Agent is itself required to maintain pursuant to applicable
laws and regulations. The Fund shall assume all responsibility for any
failure thereafter to produce any record, paper, cancelled Share
certificate or other document so returned, if and when required. Such
records maintained by the Transfer Agent pursuant to this paragraph 4,
which have not been previously delivered to the Fund pursuant to the
foregoing provisions of this paragraph 4, shall be considered to be the
property of the Fund, shall be made available upon request for
inspection by the Officers, employees and auditors of the Fund, and
records shall be delivered to the Fund upon request and in any event
upon the date of termination of this Agreement, as specified in Article
IX of this Agreement, in the form and manner kept by the Transfer Agent
on such date of termination or such earlier date as may be requested by
the Fund.
5. The Transfer Agent shall not be liable for any loss or
damage, including counsel fees, resulting from its actions or omissions
to act or otherwise, except for any loss or damage arising out of its
bad faith, willful misfeasance, gross negligence or reckless disregard
of its duties under this Agreement.
6. (a) The Fund shall indemnify and exonerate, save and hold
harmless the Transfer Agent from and against any and all claims
(whether with or without basis in fact or law), demands, expenses
(including reasonable attorneys' fees) and liabilities of any and
every nature which the Transfer Agent may sustain or incur or
which may be asserted against the Transfer Agent by any person by
reason of or as a result of any action taken or omitted to be
taken by any prior transfer agent of the Fund or as a result of
any action taken or omitted to be taken by the Transfer Agent in
good faith and without gross negligence or willful misfeasance or
in reliance upon: (i) any provision of this Agreement; (ii)
the Prospectus; (iii) any instruction or order including, without
limitation, any computer tape or electronic data transmission
reasonably believed by the Transfer Agent to have been received
from an Approved Institution; (iv) any instrument, order or Share
certificate reasonably believed by it to be genuine and to be
signed, countersigned or executed by any duly authorized Officer
of the Fund; (v) any Certificate or other instructions of an
Officer; (vi) any opinion of legal counsel for the Fund or the
Transfer Agent; or (vii) any request by any entity to carry out
any transaction in Shares received by the Transfer Agent through
any of the various programs offered through the NSCC (including,
but not limited to, Networking and FundServ). The Fund shall
indemnify and exonerate, save and hold the Transfer Agent harmless
from and against any and all claims (whether with or without basis
in fact or law), demands, expenses (including reasonable
attorneys' fees) and liabilities of any and every nature which the
Transfer Agent may sustain or incur or which may be asserted
against the Transfer Agent by any person by reason of or as a
result of any action taken or omitted to be taken by the Transfer
Agent in good faith in connection with its appointment or in
reliance upon any law, act, regulation or any interpretation of
the same even though such law, act or regulation may thereafter
have been altered, changed, amended or repealed.
(b) The Transfer Agent shall not settle any claim, demand,
expense or liability to which it may seek indemnity pursuant to
paragraph 6(a) above (each, an "Indemnifiable Claim") without
the express written consent of an Officer of the Fund. The
Transfer Agent shall notify the Fund within fifteen (15) days of
receipt of notification of an Indemnifiable Claim, provided that
the failure by the Transfer Agent to furnish such notification
shall not impair its right to seek indemnification from the Fund
unless the Fund is unable to adequately defend the Indemnifiable
Claim as a result of such failure, and further provided, that if
as a result of the Transfer Agent's failure to provide the Fund
with timely notice of the institution of litigation a judgment by
default is entered, prior to seeking indemnification from the Fund
the Transfer Agent, at its own cost and expense, shall open such
judgment. The Fund shall have the right to defend any
Indemnifiable Claim at its own expense, provided that such defense
shall be conducted by counsel selected by the Fund and reasonably
acceptable to the Transfer Agent. The Transfer Agent may join in
such defense at its own expense, but to the extent that it shall
so desire the Fund shall direct such defense. The Fund shall not
settle any Indemnifiable Claim without the express written consent
of the Transfer Agent if the Transfer Agent determines that such
settlement would have an adverse effect on the Transfer Agent
beyond the scope of this Agreement. In such event, the Fund and
the Transfer Agent shall each be responsible for their own defense
at their own cost and expense, and such claim shall not be deemed
an Indemnifiable Claim hereunder. If the Fund shall fail or refuse
to defend an Indemnifiable Claim, the Transfer Agent may provide
its own defense at the cost and expense of the Fund. Anything in
this Agreement to the contrary notwithstanding, the Fund shall not
indemnify the Transfer Agent against any liability or expense
arising out of the Transfer Agent's willful misfeasance, bad
faith, gross negligence or reckless disregard of its duties and
obligations under this Agreement. The Transfer Agent shall
indemnify and hold the Fund harmless from and against any and all
losses, damages, costs, charges, counsel fees, payments, expenses
and liability arising out of or attributable to any action or
failure or omission to act by the Transfer Agent as a result of
the Transfer Agent's lack of good faith, gross negligence or
willful misfeasance.
7. The Transfer Agent shall not be liable to the Fund with
respect to any redemption draft on which the signature of the drawer is
forged and which the Fund's Custodian has advised the Transfer Agent to
honor the redemption (but nothing herein is meant to impose any duties
upon the Fund's Custodian); nor shall the Transfer Agent be liable for
any material alteration or absence or forgery of any endorsement, it
being understood that the Transfer Agent's sole responsibility with
respect to inspecting redemption drafts is to use reasonable care to
verify the drawer's signature against signatures on file.
8. There shall be excluded from the consideration of whether
the Transfer Agent has breached this Agreement in any way, any period of
time, and only such period of time during which the Transfer Agent's
performance is materially affected, by reason of circumstances beyond
its control (collectively, "Causes"), including, without limitation,
mechanical breakdowns of equipment (including any alternative power
supply and operating systems software), flood or catastrophe, acts of
God, failures of transportation, communication or power supply, strikes,
lockouts, work stoppages or other similar circumstances.
9. At any time the Transfer Agent may apply to an Officer of
the Fund for written instructions with respect to any matter arising in
connection with the Transfer Agent's duties and obligations under this
Agreement, and the Transfer Agent shall not be liable for any action
taken or permitted by it in good faith in accordance with such written
instructions. Such application by the Transfer Agent for written
instructions from an Officer of the Fund may set forth in writing any
action proposed to be taken or omitted by the Transfer Agent with
respect to its duties or obligations under this Agreement and the date
on and/or after which such action shall be taken. The Transfer Agent
shall not be liable for any action taken or omitted in accordance with a
proposal included in any such application on or after the date specified
therein unless, prior to taking or omitting any such action, the
Transfer Agent has received written instructions in response to such
application specifying the action to be taken or omitted. The Transfer
Agent may consult counsel of the Fund, or upon notice to the Fund, its
own counsel, at the expense of the Fund and shall be fully protected
with respect to anything done or omitted by it in good faith in
accordance with the advice or opinion of counsel to the Fund or its own
counsel.
10. The Transfer Agent may issue new Share certificates in place
of certificates represented to have been lost, stolen or destroyed upon
receiving written instructions from the shareholder accompanied by proof
of an indemnity or surety bond issued by a recognized insurance
institution specified by the Fund or the Transfer Agent.
If the Transfer Agent receives written notification from the shareholder
or broker dealer that the certificate issued was never received, and
such notification is made within thirty (30) days of the date of
issuance, the Transfer Agent may reissue the certificate without
requiring a surety bond. The Transfer Agent may also reissue
certificates which are represented as lost, stolen or destroyed without
requiring a surety bond provided that the notification is in writing and
accompanied by an indemnification signed on behalf of a member firm of
the New York Stock Exchange and signed by an officer of said firm with
the signature guaranteed. Notwithstanding the foregoing, the Transfer
Agent will reissue a certificate upon written authorization from an
Officer of the Fund.
11. In case of any requests or demands for the inspection of the
shareholder records of the Fund, the Transfer Agent will endeavor to
notify the Fund promptly and to secure instructions from an Officer as
to such inspection. The Transfer Agent reserves the right, however, to
exhibit the shareholder records to any person whenever it receives an
opinion from its counsel that there is a reasonable likelihood that the
Transfer Agent will be held liable for the failure to exhibit the
shareholder records to such person; provided, however, that in
connection with any such disclosure the Transfer Agent shall promptly
notify the Fund that such disclosure has been made or is to be made.
12. At the request of an Officer of the Fund, the Transfer Agent
will address and mail such appropriate notices to shareholders as the
Fund may direct.
13. Notwithstanding any of the foregoing provisions of this
Agreement, the Transfer Agent shall be under no duty or obligation to
inquire into, and shall not be liable for:
(a) The legality of the issue or sale of any Shares, the
sufficiency of the amount to be received therefor, or the
authority of the Approved Institution or of the Fund, as the case
may be, to request such sale or issuance;
(b) The legality of a transfer of Shares, or of a
redemption of any Shares, the propriety of the amount to be paid
therefor, or the authority of the Approved Institution or of the
Fund, as the case may be, to request such transfer or redemption;
(c) The legality of the declaration of any dividend by the
Fund, or the legality of the issue of any Shares in payment of any
stock dividend; or
(d) The legality of any recapitalization or readjustment
of Shares.
14. The Transfer Agent shall have no duties or responsibilities
whatsoever except such duties and responsibilities as are specifically
set forth in this Agreement, and no covenant or obligation shall be
implied in this Agreement against the Transfer Agent.
15. Purchase and Prices of Services:
(a) The Fund will compensate the Transfer Agent for, and
Transfer Agent will provide, beginning on the execution date of
this Agreement and continuing until the termination of this
Agreement as provided hereinafter, the services set forth in
Schedule I.
(b) The current unit prices for the services are set forth
in Schedule II (the "Schedule II Fees"). Effective as of January
1, 1997, once in each calendar year, the Transfer Agent may elect
to raise the Schedule II Fees upon ninety (90) days prior notice
to the Fund, all subject to the mutual agreement of the parties
hereto. Notwithstanding the annual right to raise the Schedule II
Fees, the Transfer Agent may increase prices due to changes in
legal or regulatory requirements subject to the approval of the
Fund, which approval shall not be unreasonably withheld.
16. Billing and Payment:
(a) The Transfer Agent shall bill the Fund monthly in
arrears for accounts maintained and Out-of-Pocket Expenses. The
Transfer Agent may from time to time request that the Fund advance
estimated expenditures of an unusual nature subject to
reconciliation of actual expenses as soon as practicable
thereafter.
(b) The Fund shall pay the Transfer Agent in immediately
available funds at UMB Bank, n.a. in Kansas City, Missouri within
thirty (30) days of the date of the bill. Any amounts due under
this Agreement which are not paid within said thirty (30) day
period shall bear interest at the rate of one and one-half percent
(l 1/2%) per month from such date until paid in full.
ARTICLE IX
TERMINATION
Either of the parties hereto may terminate this Agreement by
giving to the other party a notice in writing specifying the date of
such termination, which shall be not less than sixty (60) days after the
date of receipt of such notice. In the event such notice is given by the
Fund, it shall be accompanied by a copy of a resolution of the Board of
Directors of the Fund, certified by the Secretary or any Assistant
Secretary, electing to terminate this Agreement and designating the
successor transfer agent or transfer agents. In the event such notice is
given by the Transfer Agent, the Fund shall on or before the termination
date, deliver to the Transfer Agent a copy of a resolution of its Board
of Directors, certified by the Secretary or any Assistant Secretary,
designating a successor transfer agent or transfer agents. In the
absence of such designation by the Fund, the Fund shall upon the date
specified in the notice of termination of this Agreement and delivery of
the records maintained hereunder, be deemed to be its own transfer agent
and the Transfer Agent shall thereby be relieved of all duties and
responsibilities pursuant to this Agreement.
In the event this Agreement is terminated as provided herein, the
Transfer Agent, upon the written request of the Fund, shall deliver the
records of the Fund on electromagnetic media to the Fund or its
successor transfer agent. The Fund shall be responsible to the Transfer
Agent for the reasonable costs and expenses associated with the
preparation and delivery of such media.
ARTICLE X
MISCELLANEOUS
1. The Fund agrees that prior to effecting any change in the
Prospectus which would increase or alter the duties and obligations of
the Transfer Agent hereunder, it shall advise the Transfer Agent of such
proposed change at least thirty (30) days prior to the intended date of
the same, and shall proceed with such change only if it shall have
received the written consent of the Transfer Agent thereto, which shall
not be unreasonably withheld.
2. Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Fund shall be sufficiently
given if addressed to the Fund and mailed or delivered to it at:
2440 Pershing Road
Kansas City, MO 64108
or at such other place as the Fund may from time to time designate in
writing.
3. Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Transfer Agent shall be
sufficiently given if addressed to the Transfer Agent and mailed or
delivered to:
2440 Pershing Road
Kansas City, MO 64108
or at such other place as the Transfer Agent may from time to time
designate in writing.
4. This Agreement may not be amended or modified in any manner
except by a written agreement executed by both parties with the
formality of this Agreement.
5. This Agreement shall extend to and shall be binding upon the
parties hereto, and their respective successors and assigns.
6. This Agreement shall be governed by and construed in
accordance with the laws of the State of Missouri.
7. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
8. The provisions of this Agreement are intended to benefit
only the Transfer Agent and the Fund, and no rights shall be granted to
any other person by virtue of this Agreement.
9. (a) The Transfer Agent shall endeavor to assist in
resolving shareholder inquiries and errors relating to the period
during which prior transfer agents acted as such for the Fund. Any
such inquiries or errors which cannot be expediently resolved by
the Transfer Agent will be referred to the Fund.
(b) The Transfer Agent shall only be responsible for the
safekeeping and maintenance of transfer agency records, cancelled
Share certificates and correspondence of the Fund created or
produced prior to the time of conversion which are under its
control and acknowledged in a writing to the Fund to be in its
possession. Any expenses or liabilities incurred by the Transfer
Agent as a result of shareholder inquiries, regulatory compliance
or audits related to such records and not caused as a result of
Transfer Agent's bad faith, willful misfeasance or gross
negligence shall be the responsibility of the Fund as provided in
Article VIII herein.
[The remainder of this page intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective corporate officer, thereunto duly
authorized and their respective corporate seals to be hereunto affixed,
as of the day and year first above written.
D. L. BABSON BOND TRUST
By /s/Larry D. Armel
Name: Larry D. Armel
Title: President
[SEAL]
JONES & BABSON, INC.
By /s/Michael A. Brummel
Name: Michael A. Brummel
Title: Assistant Secretary
[SEAL]
<PAGE>
SCHEDULE I
DESCRIPTION OF SERVICES
In consideration of the fees to be paid in such manner and at such
times as Fund and Transfer Agent may agree, Transfer Agent will provide the
services set forth below:
Examine and Process New Accounts, Subsequent Payments, Liquidations,
Exchanges, Telephone Transactions, Check Redemptions, Automatic Withdrawals,
Certificate Issuance, Wire Order Trades, Dividends, Dividend Statements,
Dealer Statements.
This Agreement does not apply to services with respect to qualified
plans. Such services, including, but not limited to fiduciary accounting
services and the preparation and mailing of Forms 5498 and 1099R, are
available subject to separate agreement for an additional charge.
DAILY ACTIVITY
Maintain the following shareholder information in such a manner as the
Transfer Agent shall determine:
Name and Address, including Zip Code
Balance of Uncertificated Shares
Balance of Certificated Shares
Certificate number, number of shares, issuance date of each certificate
outstanding and cancellation date for each certificate date for each
certificate no longer outstanding, if issued
Balance of dollars available for redemption
Dividend code (daily accrual, monthly reinvest, monthly cash or
quarterly cash)
Type of account code
Establishment date indicating the date an account was opened, carrying
forward pre-conversion data as available
Original establishment date for accounts opened by exchange W-9
withholding status and periodic reporting
State of residence code
Social Security or taxpayer identification number, and indication of
certification
Historical transactions on the account for the most recent 18 months,
or other period as mutually agreed to from time-to-time
Indication as to whether phone transactions can be accepted for this
account. Beneficial owner code, i.e. male, female, joint tenant, etc.
An alternate or "secondary" account number issued by a dealer (or bank,
etc.) to a customer for use, inquiry and transaction input by "remote
accessors"
FUNCTIONS
Answer investor and dealer telephone and/or written inquiries, except
those concerning Fund policy, or requests for investment advice which
will be referred to the Fund, or those which the Fund chooses to answer
Deposit Fund share certificates into accounts upon receipt of
instructions from the investor or other authorized person, if issued
Examine and process transfers of shares insuring that all transfer
requirements and legal documents have been supplied
Process and confirm address changes
Process standard account record changes as required, i.e. Dividend
Codes, etc.
Microfilm source documents for transactions, such as account
applications and correspondence
Perform backup withholding for those accounts which federal government
regulations indicate is necessary
Solicit missing taxpayer identification numbers
Provide remote access inquiry to Fund records via Fund supplied
hardware (Fund responsible for connection line and monthly fee)
REPORTS PROVIDED
Daily Journals Reflecting all shares and
dollar activity for the
previous day
Blue Sky Report Supply information monthly
for Fund's Preparation of
Blue Sky Reporting
N-SAR Report Supply monthly correspondence,
redemption and liquidation
information for use in fund's
N-SAR Report
Additionally, monthly average daily balance reports will be provided at
the Fund's request to the Fund at no charge.
Prepare and mail copies of summary statements to dealers and investment
advisers
Generate and mail confirmation statements for financial transactions
DIVIDEND ACTIVITY
Reinvest or pay in cash including reinvesting in other funds within the
fund group serviced by the Transfer Agent as described in each Fund
Prospectus
Distribute capital gains simultaneously with income dividends
DEALER SERVICES
Prepare and mail confirmation statements to dealers and
Prepare and mail copies of statements to dealers, same frequency as
investor statements
ANNUAL MEETINGS
Assist Fund in obtaining a qualified service to: address and mail
proxies and related material, tabulate returned proxies and supply
daily reports when sufficient proxies have been received
Prepare certified list of stockholders, hard copy or microform
PERIODIC ACTIVITIES
Mail transaction confirmation statements daily to investors
Address and mail four (4) periodic financial reports (material must be
adaptable to Transfer Agent's mechanical equipment as reasonably
specified by the Transfer Agent)
Mail periodic statement to investors
Compute, prepare and furnish all necessary reports to Governmental
authorities: Forms 1099DIV, 1099B, 1042 and 1042S
Enclose various marketing material as designated by the Fund in statement
mailings, i.e. monthly and quarterly statements (material must be adaptable
to mechanical equipment as reasonably specified by the Transfer Agent)
SCHEDULE II
TRANSFER AGENT FEE SCHEDULE
(None for this Fund)
EX99.23(i)
Law Office
Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, Pennsylvania 19103-7098
(215) 564-8000
Direct Dial: (215) 564-8024
January 18, 1999
D.L. Babson Bond Trust
BMA Tower 700 Karnes Blvd.
Kansas City, MO 64108-3306
Re: Legal Opinion-Securities Act of 1933
Ladies and Gentlemen:
We have examined the Agreement and Declaration of Trust, as
amended and restated (the "Agreement"), of D.L. Babson Bond Trust (the
"Trust"), a common law trust organized under Missouri law, the By-Laws
of the Trust, and its proposed form of Share Certificates (if any), all
as amended to date, and the various pertinent corporate proceedings we
deem material. We have also examined the Notification of Registration
and the Registration Statements filed under the Investment Company Act
of 1940, as amended, (the "Investment Company Act") and the Securities
Act of 1933, as amended (the "Securities Act"), all as amended to
date, as well as other items we deem material to this opinion.
The Trust is authorized by the Agreement to issue shares of
beneficial interest at a par value of $0.25 and currently issues share
interests in two separate portfolios desiganted as "Portfolio S" and
"Portfolio L." The Trust has filed with the U.S. Securities and
Exchange Commission, a Registration Statement under the Securities Act,
which Registration Statement is deemed to register an indefinite number
of shares of the Trust pursuant to the provisions of Section 24(f) of
the Investment Company Act. You have further advised us that the Trust
has filed, and each year hereafter will timely file, a Notice pursuant
to Rule 24f-2 under the Investment Company Act perfecting the
registration of the shares sold by the Trust during each fiscal year
during which such registration of an indefinite number of shares remains
in effect.
You have also informed us that the shares of the Trust have
been, and will continue to be, sold in accordance with the Trust's usual
method of distributing its registered shares, under which prospectuses
are made available for delivery to offerees and purchasers of such
shares in accordance with Section 5(b) of the Securities Act.
Based upon the foregoing information and examination, so
long as the Trust remains a valid and subsisting entity under the laws
of its state of organization, and the registration of an indefinite
number of shares of the Trust remains effective, the authorized shares
of the Trust when issued for the consideration set by the Board of
Trustees pursuant to the Agreement, and subject to compliance with Rule
24f-2, will be legally outstanding, fully-paid, and non-assessable
shares, and the holders of such shares will have all the rights provided
for with respect to such holding by the Agreement and the laws of the
State of Missouri.
We hereby consent to the use of this opinion, in lieu of any
other, as an exhibit to the Registration Statement of the Trust, along
with any amendments thereto, covering the registration of the shares of
the Trust under the Securities Act and the applications, registration
statements or notice filings, and amendments thereto, filed in
accordance with the securities laws of the several states in which
shares of the Trust are offered, and we further consent to reference in
the registration statement of the Trust to the fact that this opinion
concerning the legality of the issue has been rendered by us.
Very truly yours,
STRADLEY, RONON, STEVENS & YOUNG, LLP
BY: /s/ Mark H. Plafker
Mark H. Plafker
Doc. #163641 v.01
EX99.23(j)(1)
Consent of Independent Auditors
We consent to the references to our firm under the captions
"Financial Highlights" in the Prospectus and "Independent
Auditors" in the Statement of Additional Information and to the
incorporation by reference of our report dated December 30, 1998, in the
Registration Statement (Form N-1A) and related Prospectus of
D. L. Babson Bond Trust filed with the Securities and
Exchange Commission in this Post-Effective Amendment No. 99 under
the Securities Act of 1933 (Registration No. 2-10002) and
Amendment No. 99 under the Investment Company Act of 1940
(Registration No. 811-495).
/s/Ernst & Young LLP
Ernst & Young LLP
Kansas City, Missouri
January 13, 1999
EX99.23(j)(2)
POWER OF ATTORNEY
WHEREAS the undersigned is a Director of D. L. Babson Bond Trust, a Missouri
Trust which intends to do business as an open-end diversified investment
company (mutual fund), and
WHEREAS the D. L. Babson Bond Trust intends to register its shares with the
Securities and Exchange Commission under the Securities Act of 1933 and the
Investment Company Act of 1940 and with the Securities Departments of the
various states and the District of Columbia. Now, therefore,
KNOW ALL MEN BY THESE PRESENTS:
THAT the undersigned does hereby appoint each of the persons hereinafter set
out as his attorney each with the power to act severally in the name of the
undersigned and to execute on his behalf all forms and documents required by
the Securities and Exchange Commission, or any state of the United States of
America, or the District of Columbia, in connection with the initial
registration of the securities of the D. L. Babson Bond Trust and in the
maintenance of such registrations.
Larry D. Armel
Stephen R. Ross
Richard L. Graber
IN WITNESS WHEREOF, I have hereunto set my hand this of 23rd day
of January, 1992.
/s/Francis C. Rood
Francis C. Rood
Sworn to before me this of 23rd day of January, 1992.
Elizabeth L. Allwood, Notary Pub1ic
County of Jackson, State of Missouri
My commission expires November 19, 1995.
POWER OF ATTORNEY
WHEREAS the undersigned is a Director of D. L. Babson Bond Trust, a Missouri
Trust which intends to do business as an open-end diversified investment
company (mutual fund), and
WHEREAS the D. L. Babson Bond Trust intends to register its shares with the
Securities and Exchange Commission under the Securities Act of 1933 and the
Investment Company Act of 1940 and with the Securities Departments of the
various states and the District of Columbia. Now, therefore,
KNOW ALL MEN BY THESE PRESENTS:
THAT the undersigned does hereby appoint each of the persons hereinafter set
out as his attorney each with the power to act severally in the name of the
undersigned and to execute on his behalf all forms and documents required by
the Securities and Exchange Commission, or any state of the United States of
America, or the District of Columbia, in connection with the initial
registration of the securities of the D. L. Babson Bond Trust and in the
maintenance of such registrations.
Larry D. Armel
Stephen R. Ross
Richard L. Graber
IN WITNESS WHEREOF, I have hereunto set my hand this of 23rd day
of January, 1992.
/s/William H. Russell
William H. Russell
Sworn to before me this of 23rd day of January, 1992.
Elizabeth L. Allwood, Notary Pub1ic
County of Jackson, State of Missouri
My commission expires November 19, 1995.
POWER OF ATTORNEY
WHEREAS the undersigned is a Director of D. L. Babson Bond Trust, a Missouri
Trust which intends to do business as an open-end diversified investment
company (mutual fund), and
WHEREAS the D. L. Babson Bond Trust intends to register its shares with the
Securities and Exchange Commission under the Securities Act of 1933 and the
Investment Company Act of 1940 and with the Securities Departments of the
various states and the District of Columbia. Now, therefore,
KNOW ALL MEN BY THESE PRESENTS:
THAT the undersigned does hereby appoint each of the persons hereinafter set
out as his attorney each with the power to act severally in the name of the
undersigned and to execute on his behalf all forms and documents required by
the Securities and Exchange Commission, or any state of the United States of
America, or the District of Columbia, in connection with the initial
registration of the securities of the D. L. Babson Bond Trust and in the
maintenance of such registrations.
Larry D. Armel
Stephen R. Ross
Richard L. Graber
IN WITNESS WHEREOF, I have hereunto set my hand this of 23rd day
of January, 1992.
/s/H. David Rybolt
H. David Rybolt
Sworn to before me this of 23rd day of January, 1992.
Elizabeth L. Allwood, Notary Pub1ic
County of Jackson, State of Missouri
My commission expires November 19, 1995.
<TABLE> <S> <C>
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<NUMBER> 1
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<PERIOD-END> NOV-30-1998
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<PER-SHARE-NAV-BEGIN> 1.56
<PER-SHARE-NII> .094
<PER-SHARE-GAIN-APPREC> .03
<PER-SHARE-DIVIDEND> .094
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<AVG-DEBT-OUTSTANDING> 0
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</TABLE>
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<NAME> D L BABSON BOND TRUST
<SERIES>
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<NAME> PORTFOLIO S
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<PERIOD-END> NOV-30-1998
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<SHARES-REINVESTED> 203475
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</TABLE>
