AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 1, 1998
File No. 33-70958
File No. 811-8104
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 /X/
POST-EFFECTIVE AMENDMENT NO. 7
and
REGISTRATION STATEMENT UNDER
INVESTMENT COMPANY ACT OF 1940 /X/
AMENDMENT NO. 8
TIP INSTITUTIONAL FUNDS
(formerly, The Solon Funds)
--------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
1235 Westlakes Drive, Suite 350
Berwyn, Pennsylvania 19312-2414
--------------------------------------------------
(Address of Principal Executive Offices, Zip Code)
STEPHEN KNEELEY
TURNER INVESTMENT PARTNERS, INC.
1235 WESTLAKES DRIVE, SUITE 350
BERWYN, PENNSYLVANIA 19312-2414
Copies to:
JAMES W. JENNINGS, ESQUIRE JOHN H. GRADY, JR., ESQUIRE
MORGAN, LEWIS & BOCKIUS LLP MORGAN, LEWIS & BOCKIUS LLP
2000 ONE LOGAN SQUARE 2000 ONE LOGAN SQUARE
PHILADELPHIA, PENNSYLVANIA 19103 PHILADELPHIA, PENNSYLVANIA 19103
- --------------------------------------------------------------------------------
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)
- ---
on [date] pursuant to paragraph (a) of Rule 485
- ---
X 75 days after filing pursuant to paragraph (a)(2)
- ---
================================================================================
<PAGE>
[LOGO] TIP INSTITUTIONAL
FUNDS
CLASS A SHARES
CLASS C SHARES
CLASS I SHARES
PROSPECTUS
DECEMBER 31, 1998
-----------------------------------
SELECT LARGE CAP GROWTH FUND
SELECT LARGE CAP VALUE FUND
SELECT SMALL CAP GROWTH FUND
SELECT SMALL CAP VALUE FUND
SELECT PREMIER CORE EQUITY FUND
SELECT INTERNATIONAL CORE FUND
SELECT INTERNATIONAL SMALL CAP FUND
SELECT PREMIER GLOBAL EQUITY FUND
SELECT GLOBAL FINANCIAL SERVICES FUND
SELECT GLOBAL TECHNOLOGY FUND
SELECT BALANCED CAPITAL APPRECIATION FUND
SELECT BALANCED GROWTH AND INCOME FUND
SELECT BALANCED INCOME AND GROWTH FUND
SELECT STRATEGIC FIXED INCOME FUND
--------------------------------------
INVESTMENT ADVISER: TURNER INVESTMENT PARTNERS, INC.
INVESTMENT SUB-ADVISERS: [INSERT LIST]
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED ANY FUND SHARES OR
DETERMINED WHETHER THIS PROSPECTUS IS ACCURATE OR COMPLETE.
IT IS A CRIME FOR ANYONE TO TELL YOU OTHERWISE.
<PAGE>
[LOGO] TIP Institutional
Funds
HOW TO READ THIS PROSPECTUS
- --------------------------------------------------------------------------------
TIP Institutional Funds is a mutual fund family that offers different classes of
shares in separate investment portfolios (Funds). The Funds have individual
investment goals and strategies. This prospectus gives you important information
about the Class A, Class C, and Class I Shares of the Funds that you should know
before investing. Please read this prospectus and keep it for future reference.
We arranged the prospectus into different sections so that you can easily review
this important information. On the next page, we discuss general information you
should know about investing in Funds. If you would like more detailed
information about the Funds, please see:
<TABLE>
<S> <C>
Each Fund's principal investments.....................................................
The Adviser, Sub-Advisers and portfolio managers......................................
Purchasing, selling and exchanging Fund shares........................................
Dividends, distributions and taxes....................................................
How Fund shares are distributed.......................................................
How to obtain more information about TIP Institutional Funds................Back Cover
</TABLE>
For information about key terms and concepts, look for our "________________"
explanations.
[INSERT ICON MAP]
2
<PAGE>
INTRODUCTION
- --------------------------------------------------------------------------------
Each Fund is a mutual fund. A mutual fund pools shareholders' money and, using
professional investment managers, invests it in securities like stocks and
bonds. Before you invest, you should know a few things about investing in mutual
funds.
The value of your investment in a Fund is based on the market value of the
securities the Fund holds. These prices change daily due to economic and other
events that affect the securities market generally, as well as those that affect
particular companies or governments. These price movements, sometimes called
volatility, will vary depending on the types of securities the Fund owns and the
markets in which they trade. The effect on a Fund of a change in the value of a
single security will depend on how widely the Fund diversifies its holdings.
Each Fund has its own investment goal and strategies for reaching that goal. We
cannot guarantee that a Fund will achieve its goal. Before investing, make sure
that the Fund's goal matches your own.
The Investment Adviser and the Sub-Advisers invest each Fund's assets in a way
that they believe will help the Fund achieve its goal. The Adviser's (or
Sub-Advisers') judgments about the stock markets, the economy, or companies may
not reflect actual market movements, economic conditions or company performance,
and these judgments may affect the return of your investment.
The Funds employ a multi-manager approach that attempts to take advantage of
each Sub-Adviser's best investment ideas. In other words, each Fund's assets may
be managed by more than one Sub-Adviser under the direction of Turner Investment
Partners, where each such Sub-Adviser handles a portion of the Fund's assets.
Using this approach, each Sub-Adviser may select a relatively small number of
securities for its portion of a Fund. As each Fund's "Investment Adviser,"
Turner Investment Partners will act as a "manager of managers" of each Fund, and
will ensure that the Sub- Advisers comply with the Funds' investment policies
and guidelines. Turner Investment Partners will also recommend the appointment
of additional or replacement Sub-Advisers to the Funds' Board.
- --------------------------------------------------------------------------------
Like other investments, you could lose money on your investment in a Fund. Your
investment in a Fund is not a bank deposit. It is not insured or guaranteed by
the FDIC or any government agency.
3
<PAGE>
[ICON] CHOOSING CLASS A, CLASS C OR CLASS I SHARES
- --------------------------------------------------------------------------------
Class A, Class C and Class I Shares have different expenses and other
characteristics, allowing you to choose the class that best suits your needs.
You should consider the amount you want to invest, how long you plan to have it
invested, and whether you plan to make additional investments.
<TABLE>
<S> <C> <C>
CLASS A SHARES CLASS C SHARES CLASS I SHARES
* Front-end sales charge * Contingent Deferred sales charge * No sales charge
* Lower annual expenses * Higher annual expenses * Low annual expenses
* $1,000 minimum initial investment * $1,000 minimum initial investment * $500,000 minimum
initial investment (can be
aggregated across Funds)
</TABLE>
For Class A and Class C Shares, the minimum initial investment for IRAs is $500.
If you participate in the Systematic Investment Plan, the minimum initial
investment is $250. Additional investments into Class A and Class C Shares must
be at least $100 ($50 per month for the Systematic Investment Plan).
[ICON] SALES LOADS
- --------------------------------------------------------------------------------
This table describes the shareholder fees and expenses that you may pay if you
purchase or sell Fund shares. You would pay these fees directly from your
investment in a Fund. These fees are in addition to the fees and expenses that
you pay indirectly by holding Fund shares (see "Fund Fees and Expenses" for each
Fund).
<TABLE>
<CAPTION>
CLASS A SHARES CLASS C SHARES CLASS I SHARES
<S> <C> <C> <C>
SHAREHOLDER FEES
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price)* 5.50% None None
Maximum Deferred Sales Charge (Load)
(as a percentage of net asset value)** None 1.00% None
</TABLE>
* This sales charge may be lower, depending upon how much you invest.
See "Purchasing Fund Shares."
** This sales charge is imposed only if you sell Class C Shares within one year
of your purchase. See "Selling Fund Shares."
4
<PAGE>
SELECT LARGE CAP GROWTH FUND
- --------------------------------------------------------------------------------
[ICON] FUND SUMMARY
INVESTMENT GOAL Capital appreciation
INVESTMENT FOCUS Large cap U.S. common stocks
SHARE PRICE VOLATILITY Medium to high
PRINCIPAL INVESTMENT STRATEGY Attempts to identify large cap U.S.
companies with above average growth
potential
INVESTOR PROFILE Investors seeking long-term growth of
capital who do not need considerable
amounts of investment income and who can
accept the risks of investing in equities.
- --------------------------------------------------------------------------------
[ICON] INVESTMENT STRATEGY OF THE SELECT LARGE CAP GROWTH FUND
The Select Large Cap Growth Fund invests primarily in U.S. common stocks and
other equity securities that the Fund's sub-advisers believe to have long-term
growth potential. The Fund may also purchase stocks of smaller companies with
growth potential. In selecting investments for the Fund, the sub-advisers choose
stocks of large cap companies that have above-average growth potential. The Fund
will invest in securities of companies in a broad range of industries based
primarily on their growth characteristics. Due to its investment strategy, the
Fund may buy and sell securities frequently. This may result in higher
transaction costs and additional capital gains taxes.
- --------------------------------------------------------------------------------
[ICON] WHAT ARE THE RISKS OF INVESTING IN THE FUND?
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. The equity markets move
in cycles, and the value of the Fund's equity securities may fluctuate
drastically from day-to-day. This price volatility is the principal risk of
investing in the Fund.
The Fund is non-diversified, which means that it may invest in the securities of
a relatively few number of issuers. Since the assets of the Fund may be invested
in a limited number of issuers, the Fund may be more susceptible to a single
adverse economic or regulatory occurrence affecting these issuers.
- --------------------------------------------------------------------------------
The Fund's investment approach, with its emphasis on large companies with growth
potential, is expected to offer potentially higher returns and a higher level of
volatility relative to equity funds that invest in value-oriented stocks.
- --------------------------------------------------------------------------------
[ICON] PERFORMANCE
The Fund will compare its performance to that of the _________ Index. The
________ Index is a widely recognized index of ________ securities.
- --------------------------------------------------------------------------------
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a particular market sector. You cannot invest
directly in an index. An index does not have an investment adviser and does not
pay commissions or expenses. If an index had expenses, its performance would be
lower.
- --------------------------------------------------------------------------------
5
<PAGE>
SELECT LARGE CAP GROWTH FUND
- --------------------------------------------------------------------------------
[ICON] FUND FEES AND EXPENSES
This table describes the shareholders fees and expenses that you may pay if you
purchase or sell Fund Shares. You would pay these fees directly from your
investment in the Fund.
<TABLE>
<CAPTION>
SHAREHOLDER FEES CLASS A SHARES CLASS C SHARES CLASS I SHARES
<S> <C> <C> <C>
Maximum Sales Charge (Load) 5.50% None None
Imposed on Purchases (as a
percentage of offering price).*
Maximum Deferred Sales Charge None 1.00% None
(Load) (as a percentage of net
asset value).**
</TABLE>
* This sales charge varies depending on how much you invest. See Purchasing
Fund Shares.
** This sales charge is imposed if you sell Class C Shares with one year of your
purchase. See "Selling Fund Shares."
- --------------------------------------------------------------------------------
This table describes the Fund's fees and expenses that you may pay indirectly if
you hold shares of the Fund.
- --------------------------------------------------------------------------------
FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. These expenses are deducted from the Fund's income. The Fund's
expenses in the table below are shown as a percentage of the Fund's average net
assets. This table shows the highest fees and expenses that could be currently
charged to the Fund [THE ADVISER WILL REIMBURSE EXPENSES IN ORDER TO LIMIT OTHER
EXPENSES FOR THE FUND TO .50% (.25% FOR CLASS I SHARES). THE ADVISER COULD
DISCONTINUE ITS VOLUNTARY REIMBURSEMENTS AT ANY TIME.] For more information
about these fees, see "Investment Adviser" and "Distribution of Fund Shares."
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
<TABLE>
<CAPTION>
CLASS A SHARES CLASS C SHARES CLASS I SHARES
<S> <C> <C> <C>
Investment Advisory Fees 0.75% 0.75% 0.75%
Distribution and Service (12b-1) Fees None 0.75% None
Other Expenses 0.50% 0.50% 0.25%
---- ---- -----
Total Annual Fund Operating Expenses 1.25% 2.00% 1.00%
</TABLE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS
If you sell your shares at the end of the period:
Class A Shares $127 $397
Class C Shares $403 $627
Class I Shares $102 $318
If you do not sell your shares:
Class A Shares $127 $397
Class C Shares $303 $627
Class I Shares $102 $318
- --------------------------------------------------------------------------------
6
<PAGE>
SELECT LARGE CAP VALUE FUND
- --------------------------------------------------------------------------------
[ICON] FUND SUMMARY
INVESTMENT GOAL Capital appreciation and income
INVESTMENT FOCUS Large cap U.S. common stocks
SHARE PRICE VOLATILITY Medium to high
PRINCIPAL INVESTMENT STRATEGY Attempts to identify undervalued stocks of
U.S. large cap companies
INVESTOR PROFILE Investors who are looking for long-term
growth of capital as well as investment
income, but who are willing to accept the
risks of investing in equities.
- --------------------------------------------------------------------------------
[ICON] INVESTMENT STRATEGY OF THE SELECT LARGE CAP VALUE FUND
The Select Large Cap Value Fund invests primarily in U.S. common stocks and
other equity securities that the Fund's sub-advisers believe are undervalued by
the market. The Fund may also purchase stocks of undervalued smaller companies.
In selecting investments for the Fund, the sub-advisers choose stocks of quality
large cap companies that are presently out-of-favor with many investors. The
Fund will invest in securities of companies operating in a broad range of
industries based primarily on their value characteristics. Due to its investment
strategy, the Fund may buy and sell securities frequently. This may result in
higher transaction costs and additional capital gains taxes.
- --------------------------------------------------------------------------------
[ICON] WHAT ARE THE RISKS OF INVESTING IN THE FUND?
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. The equity markets move
in cycles, and the value of the Fund's equity securities may fluctuate
drastically from day-to-day. This price volatility is the principal risk of
investing in the Fund.
The Fund is non-diversified, which means that it may invest in the securities of
a relatively few number of issuers. Since the assets of the Fund may be invested
in a limited number of issuers, the Fund may be more susceptible to a single
adverse economic or regulatory occurrence affecting these issuers.
- --------------------------------------------------------------------------------
The Fund's investment approach, with its emphasis on large cap value investing,
is expected to offer potentially lower returns and a lower level of volatility
relative to equity funds that invest in growth companies.
- --------------------------------------------------------------------------------
[ICON] PERFORMANCE
The Fund will compare its performance to that of the _________ Index. The
________ Index is a widely recognized index of ________ securities.
- --------------------------------------------------------------------------------
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a particular market sector. You cannot invest
directly in an index. An index does not have an investment adviser and does not
pay commissions or expenses. If an index had expenses, its performance would be
lower.
- --------------------------------------------------------------------------------
7
<PAGE>
SELECT LARGE CAP VALUE FUND
- --------------------------------------------------------------------------------
[ICON] FUND FEES AND EXPENSES
This table describes the shareholders fees and expenses that you may pay if you
purchase or sell Fund Shares. You would pay these fees directly from your
investment in the Fund.
<TABLE>
<CAPTION>
SHAREHOLDER FEES CLASS A SHARES CLASS C SHARES CLASS I SHARES
<S> <C> <C> <C>
Maximum Sales Charge (Load) 5.50% None None
Imposed on Purchases (as a
percentage of offering price).*
Maximum Deferred Sales Charge None 1.00% None
(Load) (as a percentage of net
asset value).**
</TABLE>
* This sales charge varies depending on how much you invest. See Purchasing
Fund Shares.
** This sales charge is imposed if you sell Class C Shares with one year of your
purchase. See "Selling Fund Shares."
- --------------------------------------------------------------------------------
This table describes the Fund's fees and expenses that you may pay indirectly if
you hold shares of the Fund.
- --------------------------------------------------------------------------------
FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. These expenses are deducted from the Fund's income. The Fund's
expenses in the table below are shown as a percentage of the Fund's average net
assets. This table shows the highest fees and expenses that could be currently
charged to the Fund. [THE ADVISER WILL REIMBURSE EXPENSES IN ORDER TO LIMIT
OTHER EXPENSES FOR THE FUND TO .50%(.25% FOR CLASS I SHARES). THE ADVISER COULD
DISCONTINUE ITS VOLUNTARY REIMBURSEMENTS AT ANY TIME.] For more information
about these fees, see "Investment Adviser" and "Distribution of Fund Shares."
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
<TABLE>
<CAPTION>
CLASS A SHARES CLASS C SHARES CLASS I SHARES
<S> <C> <C> <C>
Investment Advisory Fees 0.75% 0.75% 0.75%
Distribution and Service (12b-1) Fees None 0.75% None
Other Expenses 0.50% 0.50% 0.25%
----- ----- -----
Total Annual Fund Operating Expenses 1.25% 2.00% 1.00%
</TABLE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS
If you sell your shares at the end of the period:
Class A Shares $127 $397
Class C Shares $403 $627
Class I Shares $102 $318
If you do not sell your shares:
Class A Shares $127 $397
Class C Shares $303 $627
Class I Shares $102 $318
- --------------------------------------------------------------------------------
8
<PAGE>
SELECT SMALL CAP GROWTH FUND
- --------------------------------------------------------------------------------
[ICON] FUND SUMMARY
INVESTMENT GOAL Capital appreciation
INVESTMENT FOCUS Small cap U.S. common stocks
SHARE PRICE VOLATILITY High
PRINCIPAL INVESTMENT STRATEGY Attempts to identify U.S. small cap
companies with above-average growth
potential
INVESTOR Profile Investors seeking long-term growth
of capital who can withstand the share
price volatility of small cap investing.
- --------------------------------------------------------------------------------
[ICON] INVESTMENT STRATEGY OF THE SELECT SMALL CAP GROWTH FUND
The Select Small Cap Growth Fund invests primarily in common stocks and other
equity securities of U.S. issuers with small market capitalizations. In
selecting investments for the Fund, the sub-advisers choose stocks of companies
that the sub-advisers believe have above-average growth potential. The Fund will
invest in securities of companies operating in a broad range of industries based
primarily on their growth characteristics. Due to its investment strategy, the
Fund may buy and sell securities frequently. This may result in higher
transaction costs and additional capital gains taxes.
- --------------------------------------------------------------------------------
[ICON] WHAT ARE THE RISKS OF INVESTING IN THE FUND?
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. The equity markets move
in cycles, and the value of the Fund's equity securities may fluctuate
drastically from day-to-day. This price volatility is the principal risk of
investing in the Fund.
The small capitalization companies the Fund invests in may be more vulnerable to
adverse business or economic events than larger, more established companies. In
particular, these small companies may have limited product lines, markets and
financial resources, and may depend upon a relatively small management group.
The Fund is non-diversified, which means that it may invest in the securities of
a relatively few number of issuers. Since the assets of the Fund may be invested
in a limited number of issuers, the Fund may be more susceptible to a single
adverse economic or regulatory occurrence affecting these issuers.
- --------------------------------------------------------------------------------
The Fund's investment approach, with its emphasis on small companies with growth
potential, is expected to offer potentially higher returns and a significant
level of volatility relative to equity funds that invest in undervalued small
cap companies.
- --------------------------------------------------------------------------------
[ICON] PERFORMANCE
The Fund will compare its performance to that of the _________ Index. The
________ Index is a widely recognized index of ________ securities.
- --------------------------------------------------------------------------------
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a particular market sector. You cannot invest
directly in an index. An index does not have an investment adviser and does not
pay commissions or expenses. If an index had expenses, its performance would be
lower.
- --------------------------------------------------------------------------------
9
<PAGE>
SELECT SMALL CAP GROWTH FUND
- --------------------------------------------------------------------------------
[ICON] FUND FEES AND EXPENSES
This table describes the shareholders fees and expenses that you may pay if you
purchase or sell Fund Shares. You would pay these fees directly from your
investment in the Fund.
<TABLE>
<CAPTION>
SHAREHOLDER FEES CLASS A SHARES CLASS C SHARES CLASS I SHARES
<S> <C> <C> <C>
Maximum Sales Charge (Load) 5.50% None None
Imposed on Purchases (as a
percentage of offering price).*
Maximum Deferred Sales Charge None 1.00% None
(Load) (as a percentage of net
asset value).**
</TABLE>
* This sales charge varies depending on how much you invest. See Purchasing
Fund Shares.
** This sales charge is imposed if you sell Class C Shares with one year of your
purchase. See "Selling Fund Shares."
- --------------------------------------------------------------------------------
This table describes the Fund's fees and expenses that you may pay indirectly if
you hold shares of the Fund.
- --------------------------------------------------------------------------------
FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. These expenses are deducted from the Fund's income. The Fund's
expenses in the table below are shown as a percentage of the Fund's average net
assets. This table shows the highest fees and expenses that could be currently
charged to the Fund. [THE ADVISER WILL REIMBURSE EXPENSES IN ORDER TO LIMIT
OTHER EXPENSES FOR THE FUND TO .50% (.25% FOR CLASS I SHARES). THE ADVISER COULD
DISCONTINUE ITS VOLUNTARY REIMBURSEMENTS AT ANY TIME.] For more information
about these fees, see "Investment Adviser" and "Distribution of Fund Shares."
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
<TABLE>
<CAPTION>
CLASS A SHARES CLASS C SHARES CLASS I SHARES
<S> <C> <C> <C>
Investment Advisory Fees 0.90% 0.90% 0.90%
Distribution and Service (12b-1) Fees None 0.75% None
Other Expenses 0.50% 0.50% 0.25%
---- ----- -----
Total Annual Fund Operating Expenses 1.40% 2.15% 1.15%
</TABLE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS
If you sell your shares at the end of the period:
Class A Shares $143 $443
Class C Shares $418 $673
Class I Shares $117 $365
If you do not sell your shares:
Class A Shares $143 $443
Class C Shares $318 $673
Class I Shares $117 $365
- --------------------------------------------------------------------------------
10
<PAGE>
SELECT SMALL CAP VALUE FUND
- --------------------------------------------------------------------------------
[ICON] FUND SUMMARY
INVESTMENT GOAL Capital appreciation
INVESTMENT FOCUS U.S. small cap common stocks
SHARE PRICE VOLATILITY High
PRINCIPAL INVESTMENT STRATEGY Attempts to identify undervalued U.S. small
cap common stocks
INVESTOR PROFILE Long-term investors who want the value of
their investment to grow, but who can
withstand the share price volatility of
small cap investing.
- --------------------------------------------------------------------------------
[ICON] INVESTMENT STRATEGY OF THE SELECT SMALL CAP VALUE FUND
The Select Small Cap Value Fund invests primarily in common stocks and other
equity securities of U.S. small cap issuers that the sub-advisers believe are
undervalued by the market. In selecting investments for the Fund, the
sub-advisers choose stocks of companies with small market capitalizations that
are presently out of favor with many investors. The Fund will invest in
securities of companies operating in a broad range of industries based primarily
on their value characteristics. Due to its investment strategy, the Fund may buy
and sell securities frequently. This may result in higher transaction costs and
additional capital gains taxes.
- --------------------------------------------------------------------------------
[ICON] WHAT ARE THE RISKS OF INVESTING IN THE FUND?
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. The equity markets move
in cycles, and the value of the Fund's equity securities may fluctuate
drastically from day-to-day. This price volatility is the principal risk of
investing in the Fund.
The small capitalization companies the Fund invests in may be more vulnerable to
adverse business or economic events than larger, more established companies. In
particular, these small companies may have limited product lines, markets and
financial resources, and may depend upon a relatively small management group.
The Fund is non-diversified, which means that it may invest in the securities of
a relatively few number of issuers. Since the assets of the Fund may be invested
in a limited number of issuers, the Fund may be more susceptible to a single
adverse economic or regulatory occurrence affecting these issuers.
- --------------------------------------------------------------------------------
The Fund's investment approach, with its emphasis on investing in undervalued
small companies, is expected to offer potentially lower returns and a lower
level of volatility relative to equity funds that invest in small cap growth
companies.
- --------------------------------------------------------------------------------
[ICON] PERFORMANCE
The Fund will compare its performance to that of the _________ Index. The
________ Index is a widely recognized index of ________ securities.
- --------------------------------------------------------------------------------
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a particular market sector. You cannot invest
directly in an index. An index does not have an investment adviser and does not
pay commissions or expenses. If an index had expenses, its performance would be
lower.
- --------------------------------------------------------------------------------
11
<PAGE>
SELECT SMALL CAP VALUE FUND
- --------------------------------------------------------------------------------
[ICON] FUND FEES AND EXPENSES
This table describes the shareholders fees and expenses that you may pay if you
purchase or sell Fund Shares. You would pay these fees directly from your
investment in the Fund.
<TABLE>
<CAPTION>
SHAREHOLDER FEES CLASS A SHARES CLASS C SHARES CLASS I SHARES
<S> <C> <C> <C>
Maximum Sales Charge (Load) 5.50% None None
Imposed on Purchases (as a
percentage of offering price).*
Maximum Deferred Sales Charge None 1.00% None
(Load) (as a percentage of net
asset value).**
</TABLE>
* This sales charge varies depending on how much you invest. See Purchasing
Fund Shares.
** This sales charge is imposed if you sell Class C Shares with one year of your
purchase. See "Selling Fund Shares."
- --------------------------------------------------------------------------------
This table describes the Fund's fees and expenses that you may pay indirectly if
you hold shares of the Fund.
- --------------------------------------------------------------------------------
FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. These expenses are deducted from the Fund's income. The Fund's
expenses in the table below are shown as a percentage of the Fund's average net
assets. This table shows the highest fees and expenses that could be currently
charged to the Fund. [THE ADVISER WILL REIMBURSE EXPENSES IN ORDER TO LIMIT
OTHER EXPENSES FOR THE FUND TO .50% (.25% FOR CLASS I SHARES). THE ADVISER COULD
DISCONTINUE ITS VOLUNTARY REIMBURSEMENTS AT ANY TIME.] For more information
about these fees, see "Investment Adviser" and "Distribution of Fund Shares."
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
<TABLE>
<CAPTION>
CLASS A SHARES CLASS C SHARES CLASS I SHARES
<S> <C> <C> <C>
Investment Advisory Fees 0.90% 0.90% 0.90%
Distribution and Service (12b-1) Fees None 0.75% None
Other Expenses 0.50% 0.50% 0.25%
----- ----- -----
Total Annual Fund Operating Expenses 1.40% 2.15% 1.15%
</TABLE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS
If you sell your shares at the end of the period:
Class A Shares $143 $443
Class C Shares $418 $673
Class I Shares $117 $365
If you do not sell your shares:
Class A Shares $143 $443
Class C Shares $318 $673
Class I Shares $117 $365
- --------------------------------------------------------------------------------
12
<PAGE>
SELECT PREMIER CORE EQUITY FUND
- --------------------------------------------------------------------------------
[ICON] FUND SUMMARY
INVESTMENT GOAL Long-term capital appreciation
INVESTMENT FOCUS Common stocks of mid-cap issuers
SHARE PRICE VOLATILITY High
PRINCIPAL INVESTMENT STRATEGY Attempts to identify quality mid-cap
companies that have growth potential or
that are undervalued
INVESTOR PROFILE Investors who want capital appreciation but
who can tolerate the risks of investing
in mid-cap companies.
- --------------------------------------------------------------------------------
[ICON] INVESTMENT STRATEGY OF THE SELECT PREMIER CORE EQUITY FUND
The Select Premier Core Equity Fund invests primarily in common stocks and other
equity securities of companies regardless of their market capitalization. In
selecting investments for the Fund, the sub-advisers choose stocks of companies
that have above-average growth potential or that have been undervalued by the
market. The Fund will invest in securities of companies operating in a broad
range of industries based on their growth potential or their relatively
attractive price. Due to its investment strategy, the Fund may buy and sell
securities frequently. This may result in higher transaction costs and
additional capital gains taxes.
- --------------------------------------------------------------------------------
[ICON] WHAT ARE THE RISKS OF INVESTING IN THE FUND?
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. The equity markets move
in cycles, and the value of the Fund's equity securities may fluctuate
drastically from day-to-day. This price volatility is the principal risk of
investing in the Fund.
The small and medium capitalization companies the Fund invests in may be more
vulnerable to adverse business or economic events than larger, more established
companies. In particular, these small and mid-sized companies may have limited
product lines, markets and financial resources, and may depend upon a relatively
small management group.
The Fund is non-diversified, which means that it may invest in the securities of
a relatively few number of issuers. Since the assets of the Fund may be invested
in a limited number of issuers, the Fund may be more susceptible to a single
adverse economic or regulatory occurrence affecting these issuers.
- --------------------------------------------------------------------------------
The Fund's investment approach, with its emphasis on stocks in a variety of
capitalization ranges, is expected to offer potentially higher returns and a
higher level of volatility relative to equity funds that invest solely in large
cap companies. In addition, because the Fund does not employ a specific "growth"
or "value" discipline, the Fund can be expected to perform differently than
funds that employ a specific investment style.
- --------------------------------------------------------------------------------
[ICON] PERFORMANCE
The Fund will compare its performance to that of the _________ Index. The
________ Index is a widely recognized index of ________ securities.
- --------------------------------------------------------------------------------
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a particular market sector. You cannot invest
directly in an index. An index does not have an investment adviser and does not
pay commissions or expenses. If an index had expenses, its performance would be
lower.
- --------------------------------------------------------------------------------
13
<PAGE>
SELECT PREMIER CORE EQUITY FUND
- --------------------------------------------------------------------------------
[ICON] FUND FEES AND EXPENSES
This table describes the shareholders fees and expenses that you may pay if you
purchase or sell Fund Shares. You would pay these fees directly from your
investment in the Fund.
<TABLE>
<CAPTION>
SHAREHOLDER FEES CLASS A SHARES CLASS C SHARES CLASS I SHARES
<S> <C> <C> <C>
Maximum Sales Charge (Load) 5.50% None None
Imposed on Purchases (as a
percentage of offering price).*
Maximum Deferred Sales Charge None 1.00% None
(Load) (as a percentage of net
asset value).**
</TABLE>
* This sales charge varies depending on how much you invest. See Purchasing
Fund Shares.
** This sales charge is imposed if you sell Class C Shares with one year of
your purchase. See "Selling Fund Shares."
- --------------------------------------------------------------------------------
This table describes the Fund's fees and expenses that you may pay indirectly if
you hold shares of the Fund.
- --------------------------------------------------------------------------------
FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. These expenses are deducted from the Fund's income. The Fund's
expenses in the table below are shown as a percentage of the Fund's average net
assets. This table shows the highest fees and expenses that could be currently
charged to the Fund. [THE ADVISER WILL REIMBURSE EXPENSES IN ORDER TO LIMIT
OTHER EXPENSES FOR THE FUND TO .50% (.25% FOR CLASS I SHARES). THE ADVISER COULD
DISCONTINUE ITS VOLUNTARY REIMBURSEMENTS AT ANY TIME.] For more information
about these fees, see "Investment Adviser" and "Distribution of Fund Shares."
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
<TABLE>
<CAPTION>
CLASS A SHARES CLASS C SHARES CLASS I SHARES
<S> <C> <C> <C>
Investment Advisory Fees 0.75% 0.75% 0.75%
Distribution and Service (12b-1) Fees None 0.75% None
Other Expenses 0.50% 0.50% 0.25%
---- ---- -----
Total Annual Fund Operating Expenses 1.25% 2.00% 1.00%
</TABLE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS
If you sell your shares at the end of the period:
Class A Shares $127 $397
Class C Shares $403 $627
Class I Shares $102 $318
If you do not sell your shares:
Class A Shares $127 $397
Class C Shares $303 $627
Class I Shares $102 $317
- --------------------------------------------------------------------------------
14
<PAGE>
SELECT INTERNATIONAL CORE FUND
- --------------------------------------------------------------------------------
[ICON] FUND SUMMARY
INVESTMENT GOAL Long-term capital appreciation
INVESTMENT FOCUS Large cap common stocks of foreign issuers
SHARE PRICE VOLATILITY Medium to high
PRINCIPAL INVESTMENT STRATEGY Attempts to identify quality foreign companies
that have growth potential or that are
undervalued
INVESTOR PROFILE Investors who want capital appreciation, who are
willing to accept the risks of international
investing, and who want to diversify their
portfolio by investing overseas.
- --------------------------------------------------------------------------------
[ICON] INVESTMENT STRATEGY OF THE SELECT INTERNATIONAL CORE FUND
The Select International Core Fund invests primarily in common stocks and other
equity securities of large cap foreign issuers. In selecting investments for the
Fund, the sub-advisers choose stocks of companies located in at least three
foreign countries. The Fund primarily invests in companies located in developed
countries, but may also invest in companies located in emerging markets. The
Fund will invest in securities of companies operating in a broad range of
industries and countries that have growth potential or that are undervalued. Due
to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and additional capital gains taxes.
- --------------------------------------------------------------------------------
[ICON] WHAT ARE THE RISKS OF INVESTING IN THE FUND?
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. The equity markets move
in cycles, and the value of the Fund's equity securities may fluctuate
drastically from day-to-day. This price volatility is the principal risk of
investing in the Fund.
The Fund's investments in securities of foreign issuers can be more volatile
than investments in U.S. issuers. Diplomatic, political, or economic
developments may cause investments in foreign countries to lose value. The
Fund's investments may be dominated in foreign currencies that might change in
value compared to the U.S. dollar, reducing returns to U.S. investors. Foreign
issuers may not have the same accounting, auditing, and financial reporting
standards as U.S. issuers. Foreign stock markets, brokers and companies are
generally subject to less supervision and regulation than their U.S.
counterparts. All of these risks are even greater if the Fund purchases
securities of emerging market issuers.
The Fund is non-diversified, which means that it may invest in the securities of
a relatively few number of issuers. Since the assets of the Fund may be invested
in a limited number of issuers, the Fund may be more susceptible to a single
adverse economic or regulatory occurrence affecting these issuers.
- --------------------------------------------------------------------------------
The Fund's investment approach, with its emphasis on large cap foreign stocks,
is expected to offer potentially higher returns and a significant level of
volatility relative to equity funds that invest in U.S. large cap companies.
- --------------------------------------------------------------------------------
[ICON] PERFORMANCE
The Fund will compare its performance to that of the _________ Index. The
________ Index is a widely recognized index of ________ securities.
- --------------------------------------------------------------------------------
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a particular market sector. You cannot invest
directly in an index. An index does not have an investment adviser and does not
pay commissions or expenses. If an index had expenses, its performance would be
lower.
- --------------------------------------------------------------------------------
15
<PAGE>
SELECT INTERNATIONAL CORE FUND
- --------------------------------------------------------------------------------
[ICON] FUND FEES AND EXPENSES
This table describes the shareholders fees and expenses that you may pay if you
purchase or sell Fund Shares. You would pay these fees directly from your
investment in the Fund.
<TABLE>
<CAPTION>
SHAREHOLDER FEES CLASS A SHARES CLASS C SHARES CLASS I SHARES
<S> <C> <C> <C>
Maximum Sales Charge (Load) 5.50% None None
Imposed on Purchases (as a
percentage of offering price).*
Maximum Deferred Sales Charge None 1.00% None
(Load) (as a percentage of net
asset value).**
</TABLE>
* This sales charge varies depending on how much you invest. See Purchasing
Fund Shares.
** This sales charge is imposed if you sell Class C Shares with one year of your
purchase. See "Selling Fund Shares."
- --------------------------------------------------------------------------------
This table describes the Fund's fees and expenses that you may pay indirectly if
you hold shares of the Fund.
- --------------------------------------------------------------------------------
FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. These expenses are deducted from the Fund's income. The Fund's
expenses in the table below are shown as a percentage of the Fund's average net
assets. This table shows the highest fees and expenses that could be currently
charged to the Fund. [THE ADVISER WILL REIMBURSE EXPENSES IN ORDER TO LIMIT
OTHER EXPENSES FOR THE FUND TO .65% (.40% FOR CLASS I SHARES). THE ADVISER COULD
DISCONTINUE ITS VOLUNTARY REIMBURSEMENTS AT ANY TIME.] For more information
about these fees, see "Investment Adviser" and "Distribution of Fund Shares."
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
CLASS A SHARES CLASS C SHARES CLASS I SHARES
<S> <C> <C> <C>
Investment Advisory Fees 0.90% 0.90% 0.90%
Distribution and Service (12b-1) Fees None 0.75% None
Other Expenses 0.65% 0.65% 0.40%
---- ---- ----
Total Annual Fund Operating Expenses 1.55% 2.30% 1.30%
</TABLE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS
If you sell your shares at the end of the period:
Class A Shares $158 $490
Class C Shares $433 $718
Class I Shares $132 $412
If you do not sell your shares:
Class A Shares $158 $490
Class C Shares $333 $718
Class I Shares $132 $412
- --------------------------------------------------------------------------------
16
<PAGE>
SELECT INTERNATIONAL SMALL CAP FUND
- --------------------------------------------------------------------------------
[ICON] FUND SUMMARY
INVESTMENT GOAL Long-term capital appreciation
INVESTMENT FOCUS Small cap common stocks of foreign issuers
SHARE PRICE VOLATILITY Very high
PRINCIPAL INVESTMENT STRATEGY Attempts to identify quality foreign small cap
companies that have growth potential or that
are undervalued
INVESTOR PROFILE Investors who want capital appreciation, who are
willing to accept the risks of small cap and
international investing, and who want to
diversify their portfolio by investing
overseas.
- --------------------------------------------------------------------------------
[ICON] INVESTMENT STRATEGY OF THE SELECT INTERNATIONAL SMALL CAP FUND
The Select International Small Cap Fund invests primarily in common stocks and
other equity securities of companies that have small market capitalizations. In
selecting investments for the Fund, the sub-advisers choose stocks of companies
located in at least three foreign countries. The Fund invests primarily in
companies located in developed countries, but may also invest in companies
located in emerging markets. The Fund will invest in securities of companies
operating in a broad range of industries and countries that have growth
potential or that are undervalued. Due to its investment strategy, the Fund may
buy and sell securities frequently. This may result in higher transaction costs
and additional capital gains taxes.
- --------------------------------------------------------------------------------
[ICON] WHAT ARE THE RISKS OF INVESTING IN THE FUND?
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. The equity markets move
in cycles, and the value of the Fund's equity securities may fluctuate
drastically from day-to-day. This price volatility is the principal risk of
investing in the Fund.
The small capitalization companies the Fund invests in may be more vulnerable to
adverse business or economic events than larger, more established companies. In
particular, these small companies may have limited product lines, markets and
financial resources, and may depend upon a relatively small management group.
The Fund's investments in securities of foreign issuers can be more volatile
than investments in U.S. issuers. Diplomatic, political, or economic
developments may cause investments in foreign countries to lose value. The
Fund's investments may be dominated in foreign currencies that might change in
value compared to the U.S. dollar, reducing returns to U.S. investors. Foreign
issuers may not have the same accounting, auditing, and financial reporting
standards as U.S. issuers. Foreign stock markets, brokers and companies are
generally subject to less supervision and regulation than their U.S.
counterparts. All of these risks are even greater if the Fund purchases
securities of emerging market issuers.
The Fund is non-diversified, which means that it may invest in the securities of
a relatively few number of issuers. Since the assets of the Fund may be invested
in a limited number of issuers, the Fund may be more susceptible to a single
adverse economic or regulatory occurrence affecting these issuers.
- --------------------------------------------------------------------------------
The Fund's investment approach, with its emphasis on small cap foreign stocks,
is expected to offer potentially higher returns and a significant level of
volatility relative to equity funds that invest in large cap foreign companies.
- --------------------------------------------------------------------------------
[ICON] PERFORMANCE
The Fund will compare its performance to that of the _________ Index. The
________ Index is a widely recognized index of ________ securities.
- --------------------------------------------------------------------------------
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a particular market sector. You cannot invest
directly in an index. An index does not have an investment adviser and does not
pay commissions or expenses. If an index had expenses, its performance would be
lower.
- --------------------------------------------------------------------------------
17
<PAGE>
SELECT INTERNATIONAL SMALL CAP FUND
- --------------------------------------------------------------------------------
[ICON] FUND FEES AND EXPENSES
This table describes the shareholders fees and expenses that you may pay if you
purchase or sell Fund Shares. You would pay these fees directly from your
investment in the Fund.
<TABLE>
<CAPTION>
SHAREHOLDER FEES CLASS A SHARES CLASS C SHARES CLASS I SHARES
<S> <C> <C> <C>
Maximum Sales Charge (Load) 5.50% None None
Imposed on Purchases (as a
percentage of offering price).*
Maximum Deferred Sales Charge None 1.00% None
(Load) (as a percentage of net
asset value).**
</TABLE>
* This sales charge varies depending on how much you invest. See Purchasing
Fund Shares.
** This sales charge is imposed if you sell Class C Shares with one year of your
purchase. See "Selling Fund Shares."
- --------------------------------------------------------------------------------
This table describes the Fund's fees and expenses that you may pay indirectly if
you hold shares of the Fund.
- --------------------------------------------------------------------------------
FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. These expenses are deducted from the Fund's income. The Fund's
expenses in the table below are shown as a percentage of the Fund's average net
assets. This table shows the highest fees and expenses that could be currently
charged to the Fund. [THE ADVISER WILL REIMBURSE EXPENSES IN ORDER TO LIMIT
OTHER EXPENSES FOR THE FUND TO .65% (.40% FOR CLASS I SHARES). THE ADVISER COULD
DISCONTINUE ITS VOLUNTARY REIMBURSEMENTS AT ANY TIME.] For more information
about these fees, see "Investment Adviser" and "Distribution of Fund Shares."
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
<TABLE>
<CAPTION>
CLASS A SHARES CLASS C SHARES CLASS I SHARES
<S> <C> <C> <C>
Investment Advisory Fees 1.05% 1.05% 1.05%
Distribution and Service (12b-1) Fees None 0.75% None
Other Expenses 0.65% 0.65% 0.40%
---- ---- ----
Total Annual Fund Operating Expenses 1.70% 2.45% 1.45%
</TABLE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS
If you sell your shares at the end of the period:
Class A Shares $173 $536
Class C Shares $448 $764
Class I Shares $148 $459
If you do not sell your shares:
Class A Shares $173 $536
Class C Shares $348 $764
Class I Shares $148 $459
- --------------------------------------------------------------------------------
18
<PAGE>
SELECT PREMIER GLOBAL EQUITY FUND
- --------------------------------------------------------------------------------
[ICON] FUND SUMMARY
INVESTMENT GOAL Long-term capital appreciation
INVESTMENT FOCUS Common stocks of U.S. and foreign small cap
issuers
SHARE PRICE VOLATILITY Very high
PRINCIPAL INVESTMENT STRATEGY Attempts to identify quality small
capitalization companies both domestically
and internationally
INVESTOR PROFILE Investors who want capital appreciation, who
are willing to accept the risks of small
cap and international investing, and who
want to diversify their portfolio by
investing globally.
- --------------------------------------------------------------------------------
[ICON] INVESTMENT STRATEGY OF THE SELECT PREMIER GLOBAL EQUITY FUND
The Select Premier Global Equity Fund invests primarily in common stocks and
other equity securities of companies located in the U.S. and abroad that have
small market capitalizations. In selecting investments for the Fund, the
sub-advisers choose stocks of companies from the U.S. and at least three other
countries. The Fund invests mainly in companies located in developed countries,
but also may invest in companies located in emerging markets. The Fund will
invest in securities of companies in a broad range of industries and countries
that have growth potential or that are undervalued. Due to its investment
strategy, the Fund may buy and sell securities frequently. This may result in
higher transaction costs and additional capital gains taxes.
- --------------------------------------------------------------------------------
[ICON] WHAT ARE THE RISKS OF INVESTING IN THE FUND?
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. The equity markets move
in cycles, and the value of the Fund's equity securities may fluctuate
drastically from day-to-day. This price volatility is the principal risk of
investing in the Fund.
The small capitalization companies the Fund invests in may be more vulnerable to
adverse business or economic events than larger, more established companies. In
particular, these small companies may have limited product lines, markets and
financial resources, and may depend upon a relatively small management group.
The Fund's investments in securities of foreign issuers can be more volatile
than investments in U.S. issuers. Diplomatic, political, or economic
developments may cause investments in foreign countries to lose value. The
Fund's investments may be dominated in foreign currencies that might change in
value compared to the U.S. dollar, reducing returns to U.S. investors. Foreign
issuers may not have the same accounting, auditing, and financial reporting
standards as U.S. issuers. Foreign stock markets, brokers and companies are
generally subject to less supervision and regulation than their U.S.
counterparts. All of these risks are even greater if the Fund purchases
securities of emerging market issuers.
The Fund is non-diversified, which means that it may invest in the securities of
a relatively few number of issuers. Since the assets of the Fund may be invested
in a limited number of issuers, the Fund may be more susceptible to a single
adverse economic or regulatory occurrence affecting these issuers.
- --------------------------------------------------------------------------------
The Fund's investment approach, with its emphasis on global small cap issuers,
is expected to offer potentially higher returns and a significant level of
volatility relative to equity funds that invest in large cap U.S. and foreign
companies.
- --------------------------------------------------------------------------------
[ICON] PERFORMANCE
The Fund will compare its performance to that of the _________ Index. The
________ Index is a widely recognized index of ________ securities.
- --------------------------------------------------------------------------------
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a particular market sector. You cannot invest
directly in an index. An index does not have an investment adviser and does not
pay commissions or expenses. If an index had expenses, its performance would be
lower.
- --------------------------------------------------------------------------------
19
<PAGE>
SELECT PREMIER GLOBAL EQUITY FUND
- --------------------------------------------------------------------------------
[ICON] FUND FEES AND EXPENSES
This table describes the shareholders fees and expenses that you may pay if you
purchase or sell Fund Shares. You would pay these fees directly from your
investment in the Fund.
<TABLE>
<CAPTION>
SHAREHOLDER FEES CLASS A SHARES CLASS C SHARES CLASS I SHARES
<S> <C> <C> <C>
Maximum Sales Charge (Load) 5.50% None None
Imposed on Purchases (as a
percentage of offering price).*
Maximum Deferred Sales Charge None 1.00% None
(Load) (as a percentage of net
asset value).**
</TABLE>
* This sales charge varies depending on how much you invest. See Purchasing
Fund Shares.
** This sales charge is imposed if you sell Class C Shares with one year of your
purchase. See "Selling Fund Shares."
- --------------------------------------------------------------------------------
This table describes the Fund's fees and expenses that you may pay indirectly if
you hold shares of the Fund.
- --------------------------------------------------------------------------------
FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. These expenses are deducted from the Fund's income. The Fund's
expenses in the table below are shown as a percentage of the Fund's average net
assets. This table shows the highest fees and expenses that could be currently
charged to the Fund. [THE ADVISER WILL REIMBURSE EXPENSES IN ORDER TO LIMIT
OTHER EXPENSES FOR THE FUND TO .65% (.40% FOR CLASS I SHARES). THE ADVISER COULD
DISCONTINUE ITS VOLUNTARY REIMBURSEMENTS AT ANY TIME.] For more information
about these fees, see "Investment Adviser" and "Distribution of Fund Shares."
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
<TABLE>
<CAPTION>
CLASS A SHARES CLASS C SHARES CLASS I SHARES
<S> <C> <C> <C>
Investment Advisory Fees 1.00% 1.00% 1.00%
Distribution and Service (12b-1) Fees None 0.75% None
Other Expenses 0.65% 0.65% 0.40%
---- ---- -----
Total Annual Fund Operating Expenses 1.65% 2.40% 1.40%
</TABLE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS
If you sell your shares at the end of the period:
Class A Shares $168 $520
Class C Shares $443 $748
Class I Shares $143 $443
If you do not sell your shares:
Class A Shares $168 $520
Class C Shares $343 $748
Class I Shares $143 $443
- --------------------------------------------------------------------------------
20
<PAGE>
SELECT GLOBAL FINANCIAL SERVICES FUND
- --------------------------------------------------------------------------------
[ICON] FUND SUMMARY
INVESTMENT GOAL Long-term capital appreciation
INVESTMENT FOCUS Common stocks of U.S. and foreign financial
institutions
SHARE PRICE VOLATILITY High
PRINCIPAL INVESTMENT STRATEGY Attempts to identify securities of quality
financial services firms both
domestically and internationally
INVESTOR PROFILE Investors who want capital appreciation,
who are willing to accept the risks of
international and sector investing, and
who want to diversify their portfolio by
investing in global financial services
firms.
- --------------------------------------------------------------------------------
[ICON] INVESTMENT STRATEGY OF THE SELECT GLOBAL FINANCIAL SERVICES FUND
The Select Global Financial Services Fund invests primarily in common stocks and
other equity securities of financial services companies located in the U.S. and
abroad. In selecting investments for the Fund, the sub-advisers choose financial
services companies from the U.S. and at least three other countries. The Fund
invests mainly in companies located in developed countries, but also may invest
in companies located in emerging markets. The Fund will invest in securities of
financial services companies, including banks, brokerage houses, insurance
companies and investment advisory companies, that have long-term growth
potential. Due to its investment strategy, the Fund may buy and sell securities
frequently. This may result in higher transaction costs and additional capital
gains taxes.
The Fund's investment approach, with its emphasis on U.S. and foreign financial
services companies, is expected to offer potentially higher returns and a
significant level of volatility relative to equity funds whose investments are
diversified across a variety of global industries and sectors.
- --------------------------------------------------------------------------------
[ICON] WHAT ARE THE RISKS OF INVESTING IN THE FUND?
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. The equity markets move
in cycles, and the value of the Fund's equity securities may fluctuate
drastically from day-to-day. This price volatility is the principal risk of
investing in the Fund.
Since the Fund's investments are focused on a single economic sector, it is
subject to the risk that the financial services sector will under perform the
broader market, as well as the risk that issuers in that sector will be impacted
by market conditions, legislative or regulatory changes, or competition. The
Fund may also be more susceptible to changes in interest rates and other market
and economic factors that affect financial services firms.
The Fund's investments in securities of foreign issuers can be more volatile
than investments in U.S. issuers. Diplomatic, political, or economic
developments may cause investments in foreign countries to lose value. The
Fund's investments may be dominated in foreign currencies that might change in
value compared to the U.S. dollar, reducing returns to U.S. investors. Foreign
issuers may not have the same accounting, auditing, and financial reporting
standards as U.S. issuers. Foreign stock markets, brokers and companies are
generally subject to less supervision and regulation than their U.S.
counterparts. All of these risks are even greater if the Fund purchases
securities of emerging market issuers.
The Fund is non-diversified, which means that it may invest in the securities of
a relatively few number of issuers. Since the assets of the Fund may be invested
in a limited number of issuers, the Fund may be more susceptible to a single
adverse economic or regulatory occurrence affecting these issuers.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[ICON] PERFORMANCE
The Fund will compare its performance to that of the _________ Index. The
________ Index is a widely recognized index of ________ securities.
- --------------------------------------------------------------------------------
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a particular market sector. You cannot invest
directly in an index. An index does not have an investment adviser and does not
pay commissions or expenses. If an index had expenses, its performance would be
lower.
- --------------------------------------------------------------------------------
21
<PAGE>
SELECT GLOBAL FINANCIAL SERVICES FUND
- --------------------------------------------------------------------------------
[ICON] FUND FEES AND EXPENSES
This table describes the shareholders fees and expenses that you may pay if you
purchase or sell Fund Shares. You would pay these fees directly from your
investment in the Fund.
<TABLE>
<CAPTION>
SHAREHOLDER FEES CLASS A SHARES CLASS C SHARES CLASS I SHARES
<S> <C> <C> <C>
Maximum Sales Charge (Load) 5.50% None None
Imposed on Purchases (as a
percentage of offering price).*
Maximum Deferred Sales Charge None 1.00% None
(Load) (as a percentage of net
asset value).**
</TABLE>
* This sales charge varies depending on how much you invest. See Purchasing
Fund Shares.
** This sales charge is imposed if you sell Class C Shares with one year of your
purchase. See "Selling Fund Shares."
- --------------------------------------------------------------------------------
This table describes the Fund's fees and expenses that you may pay indirectly if
you hold shares of the Fund.
- --------------------------------------------------------------------------------
FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. These expenses are deducted from the Fund's income. The Fund's
expenses in the table below are shown as a percentage of the Fund's average net
assets. This table shows the highest fees and expenses that could be currently
charged to the Fund. [THE ADVISER WILL REIMBURSE EXPENSES IN ORDER TO LIMIT
OTHER EXPENSES FOR THE FUND TO .65% ( .40% FOR CLASS I SHARES). THE ADVISER
COULD DISCONTINUE ITS VOLUNTARY REIMBURSEMENTS AT ANY TIME.] For more
information about these fees, see "Investment Adviser" and "Distribution of Fund
Shares."
ANNUAL FUND OPERATING EXPENSES
<TABLE>
<CAPTION>
CLASS A SHARES CLASS C SHARES CLASS I Shares
<S> <C> <C> <C>
Investment Advisory Fees 1.00% 1.00% 1.00%
Distribution and Service (12b-1) Fees None 0.75% None
Other Expenses 0.65% 0.65% 0.40%
---- ---- ----
Total Annual Fund Operating Expenses 1.65% 2.40% 1.40%
</TABLE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS
If you sell your shares at the end of the period:
Class A Shares $168 $520
Class C Shares $443 $748
Class I Shares $143 $443
If you do not sell your shares:
Class A Shares $168 $520
Class C Shares $343 $748
Class I Shares $143 $443
- --------------------------------------------------------------------------------
22
<PAGE>
SELECT GLOBAL TECHNOLOGY FUND
- --------------------------------------------------------------------------------
[ICON] FUND SUMMARY
INVESTMENT GOAL Long-term capital appreciation
INVESTMENT FOCUS Common stocks of U.S. and foreign technology
companies
SHARE PRICE VOLATILITY Very high
PRINCIPAL INVESTMENT STRATEGY Attempts to identify U.S. and foreign
technology companies with strong growth
potential
INVESTOR PROFILE Investors who want capital appreciation, who
are willing to accept the risks of
international and sector investing, and
who want to diversify their portfolio by
investing in global technology companies
- --------------------------------------------------------------------------------
[ICON] INVESTMENT STRATEGY OF THE SELECT GLOBAL TECHNOLOGY FUND
The Select Global Technology Fund invests primarily in common stocks and other
equity securities of technology companies located in the U.S. and abroad. In
selecting investments for the Fund, the sub-advisers choose technology companies
from the U.S. and at least three other countries. The Fund invests mainly in
companies located in developed countries, but also may invest in companies
located in emerging markets. The Fund will invest in securities of technology
companies, including computer, telecommunications and electronics companies,
that have long-term growth potential. Due to its investment strategy, the Fund
may buy and sell securities frequently. This may result in higher transaction
costs and additional capital gains taxes.
The Fund's investment approach, with its emphasis on U.S. and foreign technology
companies, is expected to offer potentially higher returns and a significant
level of volatility relative to equity funds whose investments are diversified
across a variety of global industries and sectors.
- --------------------------------------------------------------------------------
[ICON] WHAT ARE THE RISKS OF INVESTING IN THE FUND?
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. The equity markets move
in cycles, and the value of the Fund's equity securities may fluctuate
drastically from day-to-day. This price volatility is the principal risk of
investing in the Fund.
Since the Fund's investments are focused on a single economic sector, it is
subject to the risk that the technology sector will under perform the broader
market, as well as the risk that issuers in that sector will be impacted by
market conditions, legislative or regulatory changes, or competition.
The Fund's investments in equity securities of foreign issuers can be more
volatile than investments in U.S. issuers. Diplomatic, political, or economic
developments may cause investments in foreign countries to lose value.
The Fund's investments may be dominated in foreign currencies that might
change in value compared to the U.S. dollar, reducing returns to U.S.
investors. Foreign issuers may not have the same accounting, auditing, and
financial reporting standards as U.S. issuers. Foreign stock markets, brokers
and companies are generally subject to less supervision and regulation than
their U.S. counterparts.
The Fund is non-diversified, which means that it may invest in the securities of
a relatively few number of issuers. Since the assets of the Fund may be invested
in a limited number of issuers, the Fund may be more susceptible to a single
adverse economic or regulatory occurrence affecting these issuers.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[ICON] PERFORMANCE
The Fund will compare its performance to that of the _________ Index. The
________ Index is a widely recognized index of ________ securities.
- --------------------------------------------------------------------------------
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a particular market sector. You cannot invest
directly in an index. An index does not have an investment adviser and does not
pay commissions or expenses. If an index had expenses, its performance would be
lower.
- --------------------------------------------------------------------------------
23
<PAGE>
SELECT GLOBAL TECHNOLOGY FUND
- --------------------------------------------------------------------------------
[ICON] FUND FEES AND EXPENSES
This table describes the shareholders fees and expenses that you may pay if you
purchase or sell Fund Shares. You would pay these fees directly from your
investment in the Fund.
<TABLE>
<CAPTION>
SHAREHOLDER FEES CLASS A SHARES CLASS C SHARES CLASS I SHARES
<S> <C> <C> <C>
Maximum Sales Charge (Load) 5.50% None None
Imposed on Purchases (as a
percentage of offering price).*
Maximum Deferred Sales Charge None 1.00% None
(Load) (as a percentage of net
asset value).**
</TABLE>
* This sales charge varies depending on how much you invest. See Purchasing
Fund Shares.
** This sales charge is imposed if you sell Class C Shares with one year of your
purchase. See "Selling Fund Shares."
- --------------------------------------------------------------------------------
This table describes the Fund's fees and expenses that you may pay indirectly if
you hold shares of the Fund.
- --------------------------------------------------------------------------------
FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. These expenses are deducted from the Fund's income. The Fund's
expenses in the table below are shown as a percentage of the Fund's average net
assets. This table shows the highest fees and expenses that could be currently
charged to the Fund. [THE ADVISER WILL REIMBURSE EXPENSES IN ORDER TO LIMIT
OTHER EXPENSES FOR THE FUND TO .65% (.40% FOR CLASS I SHARES). THE ADVISER COULD
DISCONTINUE ITS VOLUNTARY REIMBURSEMENTS AT ANY TIME.] For more information
about these fees, see "Investment Adviser" and "Distribution of Fund Shares."
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
<TABLE>
<CAPTION>
CLASS A SHARES CLASS C SHARES CLASS I SHARES
<S> <C> <C> <C>
Investment Advisory Fees 1.00% 1.00% 1.00%
Distribution and Service (12b-1) Fees None 0.75% None
Other Expenses 0.65% 0.65% 0.40%
---- ---- ----
Total Annual Fund Operating Expenses 1.65% 2.40% 1.40%
</TABLE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS
If you sell your shares at the end of the period:
Class A Shares $168 $520
Class C Shares $443 $748
Class I Shares $143 $443
If you do not sell your shares:
Class A Shares $168 $520
Class C Shares $343 $748
Class I Shares $143 $443
- --------------------------------------------------------------------------------
24
<PAGE>
SELECT BALANCED CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
[ICON] FUND SUMMARY
INVESTMENT GOAL Long-term capital appreciation and a limited
amount of income
INVESTMENT FOCUS Common stocks, as well as some bonds and
cash equivalents
SHARE PRICE VOLATILITY Medium to high
PRINCIPAL INVESTMENT STRATEGY Attempts to allocate assets among stocks,
bonds and cash to produce investment
returns that correspond to a specific
risk level
INVESTOR PROFILE Investors who want capital appreciation, but
who want to diversify their portfolio by
investing in a variety of asset classes.
- --------------------------------------------------------------------------------
[ICON] INVESTMENT STRATEGY OF THE SELECT BALANCED CAPITAL APPRECIATION FUND
The Select Balanced Capital Appreciation Fund invests primarily in common stocks
and other equity securities. The Fund also invests in investment grade fixed
income securities and in money market securities or cash equivalents. In
selecting investments for the Fund, the sub-advisers allocate assets between
stocks, bonds and cash equivalents based on their outlook for the market. The
Fund will typically invest a larger percentage of its assets in equity
securities, but at times may invest more in debt securities or cash equivalents.
Due to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and additional capital gains taxes.
- --------------------------------------------------------------------------------
[ICON] WHAT ARE THE RISKS OF INVESTING IN THE FUND?
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. The equity markets move
in cycles, and the value of the Fund's equity securities may fluctuate
drastically from day-to-day. This price volatility is the principal risk of
investing in the Fund.
The Fund's fixed income securities will change in value in response to interest
rate changes and other factors. Since the value of securities with longer
maturities will fluctuate more in response to interest rate changes, this risk
is greater for long-term debt securities than for short-term debt securities. In
addition, an issuer may be unable to make timely payments of principal or
interest to the Fund. Some investment grade debt securities have speculative
characteristics. Fixed income securities, regardless of credit quality,
experience price volatility, especially in response to interest rate changes.
The Fund is also subject to the risk that the adviser's and the Sub-Advisers'
asset allocation decisions will lead the Fund to underperform the broader
markets.
- --------------------------------------------------------------------------------
The Fund's investment approach, with its emphasis on a larger equity allocation
and a smaller fixed income allocation, is expected to offer potentially higher
returns and higher volatility relative to funds that invest to a greater extent
in fixed income securities.
- --------------------------------------------------------------------------------
[ICON] PERFORMANCE
The Fund will compare its performance to that of the _________ Index and the
______ Index. The ________ Index is a widely recognized index of ________
securities. The _______ Index is a widely recognized index of domestic fixed
income securities.
- --------------------------------------------------------------------------------
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a particular market sector. You cannot invest
directly in an index. An index does not have an investment adviser and does not
pay commissions or expenses. If an index had expenses, its performance would be
lower.
- --------------------------------------------------------------------------------
25
<PAGE>
SELECT BALANCED CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
[ICON] FUND FEES AND EXPENSES
This table describes the shareholders fees and expenses that you may pay if you
purchase or sell Fund Shares. You would pay these fees directly from your
investment in the Fund.
<TABLE>
<CAPTION>
SHAREHOLDER FEES CLASS A SHARES CLASS C SHARES CLASS I SHARES
<S> <C> <C> <C>
Maximum Sales Charge (Load) 5.50% None None
Imposed on Purchases (as a
percentage of offering price).*
Maximum Deferred Sales Charge None 1.00% None
(Load) (as a percentage of net
asset value).**
</TABLE>
* This sales charge varies depending on how much you invest. See Purchasing
Fund Shares.
** This sales charge is imposed if you sell Class C Shares with one year of your
purchase. See "Selling Fund Shares."
- --------------------------------------------------------------------------------
This table describes the Fund's fees and expenses that you may pay indirectly if
you hold shares of the Fund.
- --------------------------------------------------------------------------------
FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. These expenses are deducted from the Fund's income. The Fund's
expenses in the table below are shown as a percentage of the Fund's average net
assets. This table shows the highest fees and expenses that could be currently
charged to the Fund. [THE ADVISER WILL REIMBURSE EXPENSES IN ORDER TO LIMIT
OTHER EXPENSES FOR THE FUND TO .50% (.25% FOR CLASS I SHARES). THE ADVISER COULD
DISCONTINUE ITS VOLUNTARY REIMBURSEMENTS AT ANY TIME.] For more information
about these fees, see "Investment Adviser" and "Distribution of Fund Shares."
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
<TABLE>
<CAPTION>
CLASS A SHARES CLASS C SHARES CLASS I SHARES
<S> <C> <C> <C>
Investment Advisory Fees 0.90% 0.90% 0.90%
Distribution and Service (12b-1) Fees None 0.75% None
Other Expenses 0.50% 0.50% 0.25%
---- ---- ----
Total Annual Fund Operating Expenses 1.40% 2.15% 1.15%
</TABLE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS
If you sell your shares at the end of the period:
Class A Shares $143 $443
Class C Shares $418 $673
Class I Shares $117 $365
If you do not sell your shares:
Class A Shares $143 $443
Class C Shares $318 $673
Class I Shares $117 $365
- --------------------------------------------------------------------------------
26
<PAGE>
SELECT BALANCED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
[ICON] FUND SUMMARY
INVESTMENT GOAL Capital appreciation and income
INVESTMENT FOCUS Common stocks, bonds and cash equivalents
SHARE PRICE VOLATILITY Medium
PRINCIPAL INVESTMENT STRATEGY Attempts to allocate assets among stocks,
bonds and cash to produce investment
returns that correspond to a specific
risk level
INVESTOR PROFILE Investors who want capital appreciation as
well as income and who want to diversity
their portfolio by investing in a variety
of asset classes.
- --------------------------------------------------------------------------------
[ICON] INVESTMENT STRATEGY OF THE SELECT BALANCED GROWTH AND INCOME FUND
The Select Balanced Growth and Income Fund invests primarily in common stocks
and other equity securities and in investment grade fixed income securities of
corporate and governmental issuers. The Fund also invests in money market
instruments and cash equivalents. In selecting investments for the Fund, the
sub-advisers allocate assets between stocks, bonds and cash equivalents based on
their outlook for the market. The Fund will invest roughly equal percentages in
equity and debt securities, but at times may invest more or less in debt
securities and in cash equivalents. Due to its investment strategy, the Fund may
buy and sell securities frequently. This may result in higher transaction costs
and additional capital gains taxes.
The Fund's investment approach, with its emphasis on a balanced equity/fixed
income allocation, is expected to offer potentially higher returns and higher
volatility relative to funds that invest to a greater extent in fixed income
securities.
- --------------------------------------------------------------------------------
[ICON] WHAT ARE THE RISKS OF INVESTING IN THE FUND?
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. The equity markets move
in cycles, and the value of the Fund's equity securities may fluctuate
drastically from day-to-day. This price volatility is the principal risk of
investing in the Fund.
The Fund's fixed income securities will change in value in response to interest
rate changes and other factors. Since the value of securities with longer
maturities will fluctuate more in response to interest rate changes, this risk
is greater for long-term debt securities than for short-term debt securities. In
addition, an issuer may be unable to make timely payments of principal or
interest to the Fund. Some investment grade debt securities have speculative
characteristics. Fixed income securities, regardless of credit quality,
experience price volatility, especially in response to interest rate changes.
The Fund is also subject to the risk that the Adviser's and the Sub- Advisers'
asset allocation decision will lead the Fund to underperform the broader
markets.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[ICON] PERFORMANCE
The Fund will compare its performance to that of the _________ Index and the
______ Index. The ________ Index is a widely recognized index of ________
securities. The ______ Index is a widely recognized index of domestic fixed
income securities.
- --------------------------------------------------------------------------------
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a particular market sector. You cannot invest
directly in an index. An index does not have an investment adviser and does not
pay commissions or expenses. If an index had expenses, its performance would be
lower.
- --------------------------------------------------------------------------------
27
<PAGE>
SELECT BALANCED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
[icon] FUND FEES AND EXPENSES
This table describes the shareholders fees and expenses that you may pay if you
purchase or sell Fund Shares. You would pay these fees directly from your
investment in the Fund.
<TABLE>
<CAPTION>
SHAREHOLDER FEES CLASS A SHARES CLASS C SHARES CLASS I SHARES
<S> <C>
Maximum Sales Charge (Load) 5.50% None None
Imposed on Purchases (as a
percentage of offering price).*
Maximum Deferred Sales Charge None 1.00% None
(Load) (as a percentage of net
asset value).**
</TABLE>
* This sales charge varies depending on how much you invest. See Purchasing
Fund Shares.
** This sales charge is imposed if you sell Class C Shares with one year of your
purchase. See "Selling Fund Shares."
- --------------------------------------------------------------------------------
This table describes the Fund's fees and expenses that you may pay indirectly if
you hold shares of the Fund.
FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. These expenses are deducted from the Fund's income. The Fund's
expenses in the table below are shown as a percentage of the Fund's average net
assets. This table shows the highest fees and expenses that could be currently
charged to the Fund. [THE ADVISER WILL REIMBURSE EXPENSES IN ORDER TO LIMIT
OTHER EXPENSES FOR THE FUND TO .50% (.25% FOR CLASS I SHARES). THE ADVISER COULD
DISCONTINUE ITS VOLUNTARY REIMBURSEMENTS AT ANY TIME.] For more information
about these fees, see "Investment Adviser" and "Distribution of Fund Shares."
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
CLASS A SHARES CLASS C SHARES CLASS I SHARES
<S> <C> <C> <C>
Investment Advisory Fees 0.90% 0.90% 0.90%
Distribution and Service (12b-1) Fees None 0.75% None
Other Expenses 0.50% 0.50% 0.25%
----- ----- -----
Total Annual Fund Operating Expenses 1.40% 2.15% 1.15%
</TABLE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
If you sell your shares at the end of the period:
<S> <C> <C>
Class A Shares $143 $443
Class C Shares $418 $673
Class I Shares $117 $365
If you do not sell your shares:
Class A Shares $143 $443
Class C Shares $318 $673
Class I Shares $117 $365
</TABLE>
- --------------------------------------------------------------------------------
28
<PAGE>
SELECT BALANCED INCOME AND GROWTH FUND
- --------------------------------------------------------------------------------
[ICON] FUND SUMMARY
INVESTMENT GOAL Current income with modest amount of capital
appreciation
INVESTMENT FOCUS Bonds, common stocks and cash equivalents
SHARE PRICE VOLATILITY Medium
PRINCIPAL INVESTMENT STRATEGY Attempts to allocate assets among bonds,
stocks and cash equivalents to produce
returns that correspond to a specific
risk level
INVESTOR PROFILE Investors who want current income along with
some capital appreciation, but who are
unwilling to invest to a significant
extent in equity securities.
- --------------------------------------------------------------------------------
[ICON] INVESTMENT STRATEGY OF THE SELECT BALANCED INCOME AND GROWTH FUND
The Select Balanced Income and Growth Fund invests primarily in investment grade
fixed income securities of corporate and government issuers. The Fund also
invests in common stocks and other equity securities and in money market
securities and cash equivalents. In selecting investments for the Fund, the
sub-advisers allocate assets between bonds, stocks and cash equivalents based on
their outlook for the market. The Fund will typically invest a larger percentage
of its assets in fixed income securities, but at times may invest more in equity
securities or cash equivalents. Due to its investment strategy, the Fund may buy
and sell securities frequently. This may result in higher transaction costs and
additional capital gains taxes.
- --------------------------------------------------------------------------------
[ICON] WHAT ARE THE RISKS OF INVESTING IN THE FUND?
The Fund's fixed income securities will change in value in response to interest
rate changes and other factors. Since the value of securities with longer
maturities will fluctuate more in response to interest rate changes, this risk
is greater for long-term debt securities than for short-term debt securities. In
addition, an issuer may be unable to make timely payments of principal or
interest to the Fund. Some investment grade debt securities have speculative
characteristics. The Fund's fixed income securities, regardless of credit
quality, experience price volatility, especially in response to interest rate
changes. The mortgages underlying mortgage-backed securities may be paid off
early, which may cause the Fund to lose money. The Fund will then have to
reinvest the proceeds at lower interest rates.
Since it also purchases equity securities, the Fund is subject to the risk that
stock prices will fall over short or extended periods of time. The equity
markets move in cycles, and the value of the Fund's equity securities may
fluctuate drastically from day-to-day.
The Fund is also subject to the risk that the Adviser's and the Sub-Advisers'
asset allocation decisions will lead the Fund to underperform the broader
markets.
- --------------------------------------------------------------------------------
The Fund's investment approach, with its emphasis on a larger fixed income
allocation and a smaller equity allocation, is expected to offer potentially
lower returns and lower volatility relative to funds that invest to a greater
extent in equity securities.
- --------------------------------------------------------------------------------
[ICON] PERFORMANCE
The Fund will compare its performance to that of the _________ Index and the
______ Index. The ________ Index is a widely recognized index of ________
securities. The ______ Index is a widely recognized index of domestic fixed
income securities.
- --------------------------------------------------------------------------------
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a particular market sector. You cannot invest
directly in an index. An index does not have an investment adviser and does not
pay commissions or expenses. If an index had expenses, its performance would be
lower.
- --------------------------------------------------------------------------------
29
<PAGE>
SELECT BALANCED INCOME AND GROWTH FUND
- --------------------------------------------------------------------------------
[ICON] FUND FEES AND EXPENSES
This table describes the shareholders fees and expenses that you may pay if you
purchase or sell Fund Shares. You would pay these fees directly from your
investment in the Fund.
<TABLE>
<CAPTION>
SHAREHOLDER FEES CLASS A SHARES CLASS C SHARES CLASS I SHARES
<S> <C>
Maximum Sales Charge (Load) 5.50% None None
Imposed on Purchases (as a
percentage of offering price).*
Maximum Deferred Sales Charge None 1.00% None
(Load) (as a percentage of net
asset value).**
</TABLE>
* This sales charge varies depending on how much you invest. See Purchasing
Fund Shares.
** This sales charge is imposed if you sell Class C Shares with one year of your
purchase. See "Selling Fund Shares."
- --------------------------------------------------------------------------------
This table describes the Fund's fees and expenses that you may pay indirectly if
you hold shares of the Fund.
- --------------------------------------------------------------------------------
FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. These expenses are deducted from the Fund's income. The Fund's
expenses in the table below are shown as a percentage of the Fund's average net
assets. This table shows the highest fees and expenses that could be currently
charged to the Fund. [THE ADVISER WILL REIMBURSE EXPENSES IN ORDER TO LIMIT
OTHER EXPENSES FOR THE FUND TO .50% (.25% FOR CLASS I SHARES). THE ADVISER COULD
DISCONTINUE ITS VOLUNTARY REIMBURSEMENTS AT ANY TIME.] For more information
about these fees, see "Investment Adviser" and "Distribution of Fund Shares."
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
CLASS A SHARES CLASS C SHARES CLASS I SHARES
<S> <C> <C> <C>
Investment Advisory Fees 0.90% 0.90% 0.90%
Distribution and Service (12b-1) Fees None 0.75% None
Other Expenses 0.50% 0.50% 0.25%
----- ----- -----
Total Annual Fund Operating Expenses 1.40% 2.15% 1.15%
</TABLE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
If you sell your shares at the end of the period:
<S> <C> <C>
Class A Shares $143 $443
Class C Shares $418 $673
Class I Shares $117 $365
If you do not sell your shares:
Class A Shares $143 $443
Class C Shares $318 $673
Class I Shares $117 $365
</TABLE>
- --------------------------------------------------------------------------------
30
<PAGE>
SELECT STRATEGIC FIXED INCOME FUND
- --------------------------------------------------------------------------------
[ICON] FUND SUMMARY
INVESTMENT GOAL Current income
INVESTMENT FOCUS Investment grade corporate and government
bonds
SHARE PRICE VOLATILITY Medium
PRINCIPAL INVESTMENT STRATEGY Attempts to identify quality bonds with
intermediate maturities
INVESTOR PROFILE Investors who are seeking current income and
who are willing to accept principal risk.
- --------------------------------------------------------------------------------
[ICON] INVESTMENT STRATEGY OF THE SELECT STRATEGIC FIXED INCOME FUND
The Select Strategic Fixed Income Fund invests primarily in investment grade
U.S. and foreign government securities, corporate debt securities,
mortgage-backed securities, and asset-backed securities. The Fund may purchase
securities rated below investment grade (or "junk bonds"). In selecting
investments for the Fund, the sub-advisers choose securities of quality
companies and of the U.S. and foreign governments and their agencies with
intermediate durations. The sub-advisers will allocate the Fund's assets among
various market sectors based on their analysis of historical data, yield trends
and credit ratings. The Funds average duration will typically be between 3 and 6
years, although the Fund can hold securities with longer or shorter durations.
The Fund may buy and sell securities frequently. This may result in higher
transaction costs and additional capital gains taxes.
- --------------------------------------------------------------------------------
[ICON] WHAT ARE THE RISKS OF INVESTING IN THE FUND?
The Fund's fixed income securities will change in value in response to interest
rate changes and other factors. Since the value of securities with longer
maturities will fluctuate more in response to interest rate changes, this risk
is greater for long-term debt securities than for short-term debt securities. In
addition, an issuer may be unable to make timely payments of principal or
interest to the Fund. Some investment grade debt securities have speculative
characteristics. Fixed income securities, regardless of credit quality,
experience price volatility, especially in response to interest rate changes.
There is a risk that the Fund's mortgage-backed and asset-backed securities may
be retired substantially earlier than their stated maturities or final
distribution dates, resulting in a loss of all, or part, of any premium paid.
This may cause the Funds' average weighted maturity to fluctuate. For instance,
the mortgages underlying mortgage-backed securities may be paid off early. The
Fund may then have to reinvest the proceeds at lower interest rates.
Although the Fund's U.S. government securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates.
The Fund's investments in securities of foreign issuers can be more volatile
than investments in U.S. issuers. Diplomatic, political, or economic
developments may cause investments in foreign countries to lose value. Some of
the Fund's investments may be dominated in foreign currencies that might change
in value compared to the U.S. dollar, reducing returns to U.S. investors.
Foreign issuers may not have the same accounting, auditing, and financial
reporting standards as U.S. issuers. Foreign stock markets, brokers and
companies are generally subject to less supervision and regulation than their
U.S. counterparts.
"Junk bonds" are securities rated below investment grade. Junk bonds involve
greater risks of default or downgrade, are more volatile than the Fund's
investment grade securities, and are susceptible to legislative and regulatory
developments that affect the value of these securities.
- --------------------------------------------------------------------------------
The Fund's investment approach, with its emphasis on intermediate-term fixed
income securities, is expected to produce current income with some risk to
principal. As a result, while an investor's exposure to principal fluctuation
may be higher, the Fund may produce more income than funds that invest in
shorter duration securities or that invest solely in investment grade
securities.
- --------------------------------------------------------------------------------
[ICON] PERFORMANCE
The Fund will compare its performance to that of the _________ Index. The
________ Index is a widely recognized index of domestic fixed income securities.
- --------------------------------------------------------------------------------
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a particular market sector. You cannot invest
directly in an index. An index does not have an investment adviser and does not
pay commissions or expenses. If an index had expenses, its performance would be
lower.
- --------------------------------------------------------------------------------
31
<PAGE>
SELECT STRATEGIC FIXED INCOME FUND
- --------------------------------------------------------------------------------
[ICON] FUND FEES AND EXPENSES
This table describes the shareholders fees and expenses that you may pay if you
purchase or sell Fund Shares. You would pay these fees directly from your
investment in the Fund.
<TABLE>
<CAPTION>
SHAREHOLDER FEES CLASS A SHARES CLASS C SHARES CLASS I SHARES
<S> <C>
Maximum Sales Charge (Load) 4.50% None None
Imposed on Purchases (as a
percentage of offering price).*
Maximum Deferred Sales Charge None 1.00% None
(Load) (as a percentage of net
asset value).**
</TABLE>
* This sales charge varies depending on how much you invest. See Purchasing
Fund Shares.
** This sales charge is imposed if you sell Class C Shares with one year of your
purchase. See "Selling Fund Shares."
- --------------------------------------------------------------------------------
This table describes the Fund's fees and expenses that you may pay indirectly if
you hold shares of the Fund.
- --------------------------------------------------------------------------------
FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. These expenses are deducted from the Fund's income. The Fund's
expenses in the table below are shown as a percentage of the Fund's average net
assets. This table shows the highest fees and expenses that could be currently
charged to the Fund. [THE ADVISER WILL REIMBURSE EXPENSES IN ORDER TO LIMIT
OTHER EXPENSES FOR THE FUND TO .45% (.20% FOR CLASS I SHARES). THE ADVISER COULD
DISCONTINUE ITS VOLUNTARY REIMBURSEMENTS AT ANY TIME.] For more information
about these fees, see "Investment Adviser" and "Distribution of Fund Shares."
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
CLASS A SHARES CLASS C SHARES CLASS I SHARES
<S> <C> <C> <C>
Investment Advisory Fees 0.45% 0.45% 0.45%
Distribution and Service (12b-1) Fees None 0.75% None
Other Expenses 0.45% 0.45% 0.20%
----- ----- -----
Total Annual Fund Operating Expenses 0.90% 1.65% 0.65%
</TABLE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
If you sell your shares at the end of the period:
<S> <C> <C>
Class A Shares $ 97 $303
Class C Shares $373 $536
Class I Shares $ 72 $224
If you do not sell your shares:
Class A Shares $ 97 $303
Class C Shares $273 $536
Class I Shares $ 72 $224
</TABLE>
- --------------------------------------------------------------------------------
32
<PAGE>
[ICON] THE FUNDS' PRINCIPAL INVESTMENTS
- --------------------------------------------------------------------------------
The table below shows each Fund's principal investments. In other words, the
table describes the type or types of investments that we believe will most
likely help each Fund achieve its investment goal.
<TABLE>
<CAPTION>
LARGE LARGE SMALL SMALL PREMIER PREMIER GLOBAL
CAP CAP CAP CAP CORE INTERNATIONAL INTERNATIONAL GLOBAL FINANCIAL GLOBAL
GROWTH VALUE GROWTH VALUE EQUITY CORE SMALL CAP EQUITY SERVICES TECHNOLOGY
FUND FUND FUND FUND FUND FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Common X X X X X X X X
Stocks
Foreign Stocks X X X X X X
</TABLE>
<TABLE>
<CAPTION>
BALANCED CAPITAL BALANCED GROWTH AND BALANCED INCOME STRATEGIC FIXED
APPRECIATION FUND INCOME FUND AND GROWTH FUND INCOME FUND
<S> <C> <C> <C> <C>
Fixed Income Obligations X X X X
U.S. Common Stocks X X X
Foreign Stocks X X X
Foreign Fixed Income Obligations X
Cash Equivalents X X X X
</TABLE>
Each Fund also may invest in other securities, use other strategies and engage
in other investment practices, which are described in detail in our Statement of
Additional Information (SAI). Of course, we cannot guarantee that any Fund will
achieve its investment goal.
The investments listed above and the investments and strategies described
throughout this prospectus are those that we use under normal conditions. During
unusual economic or market conditions or for temporary defensive or liquidity
purposes, each Fund may invest up to 100% of its assets in cash, repurchase
agreements and short-term obligations. When a Fund is investing for temporary
defensive purposes, it is not pursuing its investment goal.
[ICON] INVESTMENT ADVISER
- --------------------------------------------------------------------------------
As the Funds' Investment Adviser, Turner Investment Partners makes investment
decisions for the Funds and continuously reviews, supervises and administers the
Funds' investment programs. The Adviser also oversees each Fund's Sub-Advisers
to ensure compliance with the Funds' investment policies and guidelines. The
Board of Trustees supervises the Adviser and establishes policies that the
Adviser must follow in its management activities, and oversees the hiring and
termination of Sub-Advisers. Since Turner is responsible for selecting
Sub-Advisers for the Funds, it is also responsible for paying the Sub-Advisers.
Turner pays the Sub-Advisers fees out of the investment advisory fees described
below.
Turner Investment Partners, Inc., an SEC-registered adviser, serves as the
Adviser to each Fund. As of October 30, 1998, Turner had approximately $3
billion in assets under management. The Funds pay Turner base investment
advisory fees as follows:
Select Large Cap Growth Fund .75%
Select Large Cap Value Fund .75%
Select Small Cap Growth Fund .90%
Select Small Cap Value Fund .90%
33
<PAGE>
Select Premier Core Equity Fund .75%
Select International Core Fund .90%
Select International Small Cap Fund 1.05%
Select Premier Global Equity Fund 1.00%
Select Global Financial Services Fund 1.00%
Select Global Technology Fund 1.00%
Select Balanced Capital Appreciation Fund .90%
Select Balanced Growth and Income Fund .90%
Select Balanced Income and Growth Fund .90%
Select Strategic Fixed Income Fund .45%
The Adviser may also receive incentive fees based on the investment performance
of each Fund. Specifically, the Adviser's fees for a Fund may go up (or down) by
35% of the Adviser's base fees for a Fund if that Fund's performance exceeds (or
lags) its benchmark by 2.25% (___% for the Strategic Fixed Income Fund). As a
result, the investment advisory fees disclosed in the "Fund Fees and Expenses"
section for each Fund may be higher or lower depending on the Fund's
performance.
The Sub-Advisers' fees also are tied to each Sub-Adviser's individual investment
performance. In addition, if a Sub-Adviser's performance is truly exceptional
and the performance of the portion of the Fund's assets managed by the
Sub-Adviser exceeds that Fund's benchmark by 3.00% or more, the Adviser will pay
that Sub-Adviser an additional amount out of its advisory fees. These advisory
and sub-advisory fee arrangements are described in more detail in the SAI.
In the future, the Trust may operate as a "manager of managers" fund under an
SEC exemptive order. This type of order will permit Turner to hire or fire
Sub-Advisers with Board (rather than shareholder) approval. We will notify you
if we make this change.
The Adviser may use its affiliates (including affiliates of the Sub-Advisers) as
brokers for Fund transactions provided certain SEC guidelines are followed.
These guidelines are described in the SAI.
PORTFOLIO MANAGERS
[ADD AS APPROPRIATE]
________________ has served as _____________________________________ of
__________ since ____. He has managed the ______________ Fund since
_______________________________. He has more than ____ years of investment
experience. Prior to joining ________, __________________ served as
________________.
34
<PAGE>
[ICON] PURCHASING, SELLING AND EXCHANGING FUND SHARES
- --------------------------------------------------------------------------------
HOW TO PURCHASE FUND SHARES
- --------------------------------------------------------------------------------
WHEN CAN YOU PURCHASE SHARES?
You may purchase shares on any day that the New York Stock Exchange is open for
business (a Business Day).
- --------------------------------------------------------------------------------
You may purchase Class A, Class C and Class I Shares directly from us by:
o mail
o telephone
o wire
o direct deposit, or
o Automated Clearing House (ACH).
- --------------------------------------------------------------------------------
FOR CUSTOMERS OF FINANCIAL INSTITUTIONS
If you purchase, sell or exchange Fund shares through a financial institution
(rather than directly from us), you may have to transmit your purchase, sale and
exchange requests to your financial institution at an earlier time for your
transaction to become effective that day. This allows the financial institution
time to process your request and transmit it to us. For more information about
how to purchase, sell or exchange Fund shares through your financial
institution, you should contact your financial institution directly.
- --------------------------------------------------------------------------------
To purchase shares directly from us, please call 1-888-TIP-7654. Write your
check, payable in U.S. dollars, to "TIP Institutional Funds" and include the
name of the appropriate Fund(s) on the check. We cannot accept third-party
checks, credit cards, credit card checks or cash. We may reject any purchase
order if we determine that accepting the order would not be in the best
interests of the TIP Institutional Funds or its shareholders.
The price per share (the offering price) will be the net asset value per share
(NAV) next determined after we receive your purchase order plus, in the case of
Class A Shares, the applicable front-end sales charge. We calculate each Fund's
NAV once each Business Day at the regularly-scheduled close of normal trading on
the New York Stock Exchange (normally, 4:00 p.m. Eastern time). So, if you want
to receive the current Business Day's NAV, generally we must receive your
purchase order before 4:00 p.m. Eastern time.
HOW WE CALCULATE NAV
- --------------------------------------------------------------------------------
NET ASSET VALUE
NAV for one Fund share is the value of that share's portion of all of the assets
in the Fund.
- --------------------------------------------------------------------------------
In calculating NAV, we generally value a Fund's portfolio at market price. If
market prices are unavailable or we think that they are unreliable, fair value
prices may be determined in good faith using methods approved by the Board of
Trustees. Some Funds hold portfolio securities that are listed on foreign
exchanges. These securities may trade on weekends or other days when the
Funds do not calculate NAV. As a result, the NAV of these Funds' shares may
change on days when you cannot purchase or sell Fund shares.
MINIMUM PURCHASES
To purchase Class A Shares for the first time, you must invest at least $1,000
in any Fund. To purchase Class C Shares for the first time, you must invest at
least $1,000 in any Fund ($500 for retirement plans). To purchase Class I Shares
for the first time, you must invest at least $500,000 in any Fund. To purchase
additional Class A or Class C Shares of any Fund, you must invest at least $100.
We may accept investments of smaller amounts at our discretion.
35
<PAGE>
SYSTEMATIC INVESTMENT PLAN
If you have a checking or savings account with certain banks, you may purchase
Class A or Class C Shares automatically through regular deductions from your
account. Please call 1-888-TIP-7654 for information regarding participating
banks. With a $250 minimum initial investment, you may begin regularly scheduled
investments from $50 up to $250 once or twice a month. The Distributor may close
your account if you do not maintain a minimum investment of [$100] at the end of
two years.
SALES CHARGES
FRONT-END SALES CHARGES - CLASS A SHARES
The amount of any front-end sales charge included in your offering price varies,
depending on the amount of your investment.
For any Equity or Balanced Fund, you will pay the following sales charge:
<TABLE>
<CAPTION>
YOUR SALES CHARGE YOUR SALES CHARGE AS A
AS A PERCENTAGE OF PERCENTAGE OF
IF YOUR INVESTMENT IS: OFFERING PRICE YOUR NET INVESTMENT
<S> <C> <C>
Less than $25,000 5.50% 5.82%
$25,000 but less than $50,000 5.25% 5.54%
$50,000 but less than $100,000 4.50% 4.71%
$100,000 but less than $250,000 3.50% 3.63%
$250,000 but less than $500,000 3.00% 3.10%
$500,000 but less than $1,000,000 2.00% 2.04%
$1,000,000 and over None
</TABLE>
For the Strategic Fixed Income Fund, you will pay the following sales charge:
<TABLE>
<CAPTION>
YOUR SALES CHARGE YOUR SALES CHARGE AS A
AS A PERCENTAGE OF PERCENTAGE OF
IF YOUR INVESTMENT IS: OFFERING PRICE YOUR NET INVESTMENT
<S> <C> <C> <C>
Less than $50,000 4.50% 4.71%
$50,000 but less than $100,000 4.00% 4.17%
$100,000 but less than $250,000 3.50% 3.63%
$250,000 but less than $500,000 2.50% 2.56%
$500,000 but less than $1,000,000 2.00% 2.04%
$1,000,000 and over None
</TABLE>
WAIVER OF FRONT-END SALES CHARGE -- CLASS A SHARES
The front-end sales charge will be waived on Class A Shares purchased: (1)
through reinvestment of dividends and distributions; (2) through an asset
allocation account opened by a financial intermediary; (3) by persons
repurchasing shares they redeemed within the last 60 days (see Repurchase of
Class A Shares); (4) by employees, affiliates, and members of the immediate
family, of firms that have entered into a selling agreement with the
Distributor; (5) by persons reinvesting distributions from qualified employee
benefit retirement plans and rollovers from individual retirement accounts
("IRAs") previously with firms that have entered into a selling agreement with
36
<PAGE>
the Distributor; (6) by persons investing an amount less than or equal to the
value of an account distribution when an account for which a bank affiliated
with firms that have entered into a selling agreement with the Distributor acted
in a fiduciary, administrative, custodial or investment advisory capacity is
closed; or (7) through dealers, retirement plans, asset allocation programs and
financial institutions that, under their dealer agreements with the Distributor
or otherwise, do not receive any or receive a reduced portion of the front-end
sales charge. The Funds may also enter into waiver arrangements with various
other financial intermediaries who sell Class A Shares of the Funds.
Purchases of Class A Shares of different Funds will be aggregated for purposes
of determining sales charge waivers.
REPURCHASE OF CLASS A SHARES
You may repurchase any amount of Class A Shares of any Fund at NAV (without the
normal front-end sales charge), equal to or less than the value of any amount of
Class A Shares (for which you paid a front-end sales charge) that you redeemed
within the past 60 days. In effect, this allows you to repurchase shares that
you may have had to redeem, without repaying the front-end sales charge. To
exercise this privilege, we must receive your purchase order within 60 days of
your redemption. In addition, you must notify us when you send in your purchase
order that you are repurchasing shares.
REDUCED SALES CHARGES -- CLASS A SHARES
RIGHTS OF ACCUMULATION. In calculating the appropriate sales charge
rate, this right allows you to add the value of the Class A Shares you
already own to the amount that you are currently purchasing. We will
combine the value of your current purchases with the current value of
any Class A Shares you purchased previously for (i) your account, (ii)
your spouse's account, (iii) a joint account with your spouse, or (iv)
your minor children's trust or custodial accounts. A fiduciary
purchasing shares for the same fiduciary account, trust or estate may
also use this right of accumulation. We will only consider the value of
Class A Shares purchased previously that were sold subject to a sales
charge. To be entitled to a reduced sales charge based on shares
already owned, you must ask us for the reduction at the time of
purchase. You must provide us with your account number(s) and, if
applicable, the account numbers for your spouse and/or children (and
provide the children's ages). We may amend or terminate this right of
accumulation at any time.
LETTER OF INTENT. You may purchase Class A Shares at the sales charge
rate applicable to the total amount of the purchases you intend to make
over a 13-month period. In other words, a Letter of Intent allows you
to purchase Class A Shares of a Fund over a 13-month period and receive
the same sales charge as if you had purchased all the shares at the
same time. We will only consider the value of Class A Shares sold
subject to a sales charge. To be entitled to a reduced sales charge
based on shares you intend to purchase over the 13-month period, you
must send us a Letter of Intent. Class A Shares purchased with
dividends or distributions will not be included in the calculation. In
calculating the total amount of purchases you may include in your
letter purchases made up to 90 days before the date of the Letter. The
13-month period begins on the date of the first purchase, including
those purchases made in the 90-day period before the date of the
Letter. Please note that the purchase price of these prior purchases
will not be adjusted.
You are not legally bound by the terms of your Letter of Intent to
purchase the amount of your shares stated in the Letter. The Letter
does, however, authorize us to hold in escrow [5]% of the total amount
you intend to purchase. If you do not complete the total intended
purchase at the end of the 13-month period, the transfer agent will
redeem the necessary portion of the escrowed shares to make up the
difference between
37
<PAGE>
the reduced rate sales charge (based on the amount you intended to
purchase) and the sales charge that would normally apply (based on the
actual amount you purchased).
COMBINED PURCHASE/QUANTITY DISCOUNT PRIVILEGE. When calculating the
appropriate sales charge rate, we will combine same day purchases of
Class A Shares (that are subject to a sales charge) made by you, your
spouse and your minor children (under age 21). This combination also
applies to Class A Shares you purchase with a Letter of Intent.
CONTINGENT DEFERRED SALES CHARGES - CLASS C SHARES
- --------------------------------------------------------------------------------
OFFERING PRICE OF FUND SHARES
The offering price of Class A Shares is the NAV next calculated after we receive
your request, plus the front-end sales load. The offering price of Class C and
Class I Shares is simply the next calculated NAV.
- --------------------------------------------------------------------------------
If you sell your Class C Shares within the first year after your purchase, you
will pay a contingent deferred sales charge equal to 1.00% of either (1) the NAV
of the shares at the time of purchase, or (2) NAV of the shares next calculated
after we receive your sale request, whichever is less. The maximum deferred
sales charge as a percentage of the net amount invested is [1.01]%. The sales
charge does not apply to Class C Shares you purchase through reinvestment of
dividends or distributions. So, you never pay a deferred sales charge on any
increase in your investment above the initial offering price. This sales charge
does not apply to exchanges of Class C Shares of one Fund for Class C Shares of
another Fund.
The contingent deferred sales charge will be waived if you sell your Class C
Shares for the following reasons: (1) to make certain withdrawals from a
retirement plan (NOT INCLUDING IRAS); (2) because of death or disability; or (3)
for certain payments under the Systematic Withdrawal Plan (which is discussed
below).
SELLING FUND SHARES
- --------------------------------------------------------------------------------
TELEPHONE TRANSACTIONS
Purchasing, selling and exchanging Fund shares over the telephone is extremely
convenient, but not without risk. Although we have certain safeguards and
procedures to confirm the identity of callers and the authenticity of
instructions, we are not responsible for any losses or costs incurred by
following telephone instructions we reasonably believe to be genuine. If you or
your financial institution transact with us over the telephone, you will
generally bear the risk of any loss.
- --------------------------------------------------------------------------------
HOW TO SELL YOUR FUND SHARES
You may sell (sometimes called "redeem") your shares on any Business Day by
contacting us directly by mail or telephone. You may also sell your shares by
contacting your financial institution by mail or telephone. The sale price of
each share will be the next NAV determined after we receive your request less,
in the case of Class C Shares, any applicable deferred sales charge.
SYSTEMATIC WITHDRAWAL PLAN
If you have at least $10,000 in your account, you may use the systematic
withdrawal plan. Under the plan you may arrange monthly, quarterly, semi-annual
or annual automatic withdrawals of at least $50 from any Fund. The proceeds of
each withdrawal will be mailed to you by check or, if you have an account with
certain banks, electronically transferred to your account. Please call
1-888-TIP-7654 for information regarding banks that participate in the
Systematic Withdrawal Plan.
RECEIVING YOUR MONEY
Normally, we will send your sale proceeds within three Business Days after we
receive your request, but it may take up to seven Business Days. Your proceeds
can be wired to your bank account (subject to a $10 wire fee) or sent to you by
check. IF YOU RECENTLY PURCHASED YOUR SHARES BY CHECK OR THROUGH ACH, REDEMPTION
PROCEEDS MAY NOT BE AVAILABLE UNTIL YOUR CHECK HAS CLEARED (WHICH MAY TAKE UP TO
15 BUSINESS DAYS).
38
<PAGE>
REDEMPTIONS IN KIND
We generally pay sale proceeds in cash. However, under unusual conditions that
make the payment of cash unwise (and for the protection of the Fund's remaining
shareholders) we might pay all or part of your redemption proceeds in liquid
securities with a market value equal to the redemption price (redemption in
kind). Although it is highly unlikely that your shares would ever be redeemed in
kind, you would probably have to pay brokerage costs to sell the securities
distributed to you, as well as taxes on any capital gains from the sale as with
any redemption.
INVOLUNTARY SALES OF YOUR SHARES
If your account balance drops below the required minimum of $1,000 for Class A
Shares or for Class C Shares, you may be required to sell your shares. You will
always be given at least 60 days' written notice to give you time to add to your
account and avoid selling your shares.
SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES
We may suspend your right to sell your shares if the NYSE restricts trading, the
SEC declares an emergency or for other reasons. More information about this is
in our Statement of Additional Information.
EXCHANGING FUND SHARES
- --------------------------------------------------------------------------------
HOW TO EXCHANGE YOUR SHARES
- --------------------------------------------------------------------------------
EXCHANGES
When you exchange shares, you are really selling your shares and buying other
Fund shares. So, your sale price and purchase price will be based on the NAV
next calculated after we receive your exchange request.
- --------------------------------------------------------------------------------
You may exchange your shares on any Business Day by contacting us directly by
mail or telephone. You may also exchange shares through your financial
institution by mail or telephone. IF YOU RECENTLY PURCHASED SHARES BY CHECK OR
THROUGH ACH, YOU MAY NOT BE ABLE TO EXCHANGE YOUR SHARES UNTIL YOUR CHECK HAS
CLEARED (WHICH MAY TAKE UP TO 15 BUSINESS DAYS). This exchange privilege may be
changed or canceled at any time upon 60 days' notice.
CLASS A SHARES
You may exchange Class A Shares of any Fund for Class A Shares of any other Fund
[DESCRIBED IN THIS PROSPECTUS]. If you exchange shares that you purchased
without a sales charge or with a lower sales charge into a Fund with a sales
charge or with a higher sales charge, the exchange is subject to an incremental
sales charge (e.g., the difference between the lower and higher applicable sales
charges). If you exchange shares into a Fund with the same, lower or no sales
charge there is no incremental sales charge for the exchange.
Class C Shares
You may exchange Class C Shares of any Fund for Class C Shares of any other Fund
[DESCRIBED IN THIS PROSPECTUS]. You will not pay a contingent-deferred sales
charge on exchanges of Class C Shares.
CLASS I SHARES
You may exchange Class I Shares of any Fund for Class I Shares of any other Fund
[DESCRIBED IN THIS PROSPECTUS].
39
<PAGE>
DIVIDENDS, DISTRIBUTIONS AND TAXES
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS
The Large Cap Growth, Large Cap Value, Small Cap Growth, Small Cap Value,
Premier Core Equity, Balanced Capital Appreciation, Balanced Growth and Income
and Balanced Income and Growth Funds distribute their investment income
quarterly as a dividend to shareholders. The International Large Cap,
International Small Cap, Premier Global Equity, Global Financial Services, and
Global Technology Funds distribute their investment income at least annually as
a dividend to shareholders. The Strategic Fixed Income Fund distributes its
investment income monthly as a dividend to shareholders. The Funds make
distributions of capital gains, if any, at least annually.
- --------------------------------------------------------------------------------
THE "RECORD DATE"
If you own Fund shares on a Fund's record date, you will be entitled to receive
the distribution.
- --------------------------------------------------------------------------------
You will receive dividends and distributions in the form of additional Fund
shares unless you elect to receive payment in cash. To elect cash payment, you
must notify us in writing prior to the date of the distribution. Your election
will be effective for dividends and distributions paid after we receive your
written notice. To cancel your election, simply send us written notice.
TAXES
PLEASE CONSULT YOUR TAX ADVISOR REGARDING YOUR SPECIFIC QUESTIONS ABOUT FEDERAL,
STATE AND LOCAL INCOME TAXES. Below we have summarized some important tax issues
that affect the Funds and their shareholders. This summary is based on current
tax laws, which may change.
- --------------------------------------------------------------------------------
FUND DISTRIBUTIONS
Distributions you receive from a Fund may be taxable whether or not you reinvest
them.
- --------------------------------------------------------------------------------
Each Fund will distribute substantially all of its investment income and capital
gains, if any. The dividends and distributions you receive may be subject to
federal, state and local taxation, depending upon your tax situation.
Capital gains distributions may be taxable at different rates depending on the
length of time a Fund holds its portfolio securities. YOU MAY BE TAXED ON EACH
SALE OR EXCHANGE OF FUND SHARES.
The Funds use a tax management technique known as "highest in, first out." Using
this technique, the portfolio holdings that have experienced the smallest
gain or largest loss are sold first in an effort to minimize capital gains and
enhance after-tax returns.
MORE INFORMATION ABOUT TAXES IS IN OUR SAI.
40
<PAGE>
DISTRIBUTION OF FUND SHARES
- --------------------------------------------------------------------------------
Each Fund has adopted a distribution plan that allows the Fund to pay
distribution and service fees for the sale and distribution of its shares, and
for services provided to shareholders. Because these fees are paid out of a
Fund's assets continuously, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
For Class C Shares, the distribution fee is .75% of the average daily net assets
of each Fund. In addition, Class C Shares pay a shareholder servicing fee of
.25% of average daily net assets.
For Class A Shares, shareholder servicing fees, as a percentage of average daily
net assets, are .25%.
Class I Shares do not pay distribution or shareholder servicing fees.
41
<PAGE>
[LOGO] Institutional
Funds
--------------------------------
INVESTMENT ADVISER
Turner Investment Partners, Inc.
DISTRIBUTOR
SEI Investments Distribution Co.
LEGAL COUNSEL
Morgan, Lewis & Bockius LLP
More information about the Funds is available without charge through the
following:
STATEMENT OF ADDITIONAL INFORMATION (SAI)
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More detailed information about TIP Institutional Funds is included in our SAI
dated December 31, 1998. The SAI has been filed with the SEC and is incorporated
by reference into this prospectus. This means that the SAI, for legal purposes,
is a part of this prospectus.
ANNUAL AND SEMIANNUAL REPORTS
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These reports list the Funds' holdings and contain information from the Funds'
managers about fund strategies and recent market conditions and trends.
TO OBTAIN MORE INFORMATION:
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BY TELEPHONE: Call 1-888-TIP-7654
BY MAIL: Write to us at:
P.O. Box 419805
Kansas City, MO 64141-6805
BY INTERNET: http://www.turner-invest.com
FROM THE SEC: You can also obtain these documents, and other information about
the TIP Institutional Funds, from the SEC's website ("http://www.sec.gov"). You
may review and copy documents at the SEC Public Reference Room in Washington, DC
(for information call 1-800-SEC-0330). You may request documents by mail from
the SEC, upon payment of a duplicating fee, by writing to: Securities and
Exchange Commission, Public Reference Section, Washington, DC 20549-6009.
The Fund's Investment Company Act registration number is 811-8104.
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<PAGE>
TIP INSTITUTIONAL FUNDS
SELECT LARGE CAP GROWTH FUND
SELECT LARGE CAP VALUE FUND
SELECT SMALL CAP GROWTH FUND
SELECT SMALL CAP VALUE FUND
SELECT PREMIER CORE EQUITY FUND
SELECT INTERNATIONAL CORE FUND
SELECT INTERNATIONAL SMALL CAP FUND
SELECT PREMIER GLOBAL EQUITY FUND
SELECT GLOBAL FINANCIAL SERVICES FUND
SELECT GLOBAL TECHNOLOGY FUND
SELECT BALANCED CAPITAL APPRECIATION FUND
SELECT BALANCED GROWTH AND INCOME FUND
SELECT BALANCED INCOME AND GROWTH FUND
SELECT STRATEGIC FIXED INCOME FUND
INVESTMENT ADVISER:
TURNER INVESTMENT PARTNERS, INC.
INVESTMENT SUB-ADVISERS:
[LIST]
This Statement of Additional Information is not a prospectus and relates only to
the Select Large Cap Growth Fund, Select Large Cap Value Fund, Select Small Cap
Growth Fund, Select Small Cap Value Fund, Select Premier Core Equity Fund,
Select International Core Fund, Select International Small Cap Fund, Select
Premier Global Equity Fund, Select Global Financial Services Fund, Select Global
Technology Fund, Select Balanced Capital Appreciation Fund Select Balanced
Growth and Income Fund, Select Balanced Income and Growth Fund and Select
Strategic Fixed Income Fund (each a "Fund" and, together, the "Funds"). It is
intended to provide additional information regarding the activities and
operations of the TIP Institutional Funds (the "Trust"), and should be read in
conjunction with the Funds' Prospectus dated December 31, 1998. The Prospectus
may be obtained without charge by calling 1-888-TIP-7654.
December 31, 1998
<PAGE>
TABLE OF CONTENTS
THE TRUST................................................................. S-3
DESCRIPTION OF PERMITTED INVESTMENTS...................................... S-3
INVESTMENT LIMITATIONS.................................................... S-18
THE ADVISER............................................................... S-21
THE SUB-ADVISERS.......................................................... S-23
THE ADMINISTRATOR......................................................... S-24
THE DISTRIBUTOR........................................................... S-25
TRUSTEES AND OFFICERS OF THE TRUST........................................ S-26
COMPUTATION OF YIELD AND TOTAL RETURN..................................... S-29
PURCHASE AND REDEMPTION OF SHARES......................................... S-30
DETERMINATION OF NET ASSET VALUE.......................................... S-30
TAXES..................................................................... S-31
PORTFOLIO TRANSACTIONS.................................................... S-33
DESCRIPTION OF SHARES..................................................... S-35
SHAREHOLDER LIABILITY..................................................... S-35
LIMITATION OF TRUSTEES' LIABILITY......................................... S-36
EXPERTS................................................................... S-36
LEGAL COUNSEL............................................................. S-36
APPENDIX ................................................................. A-1
S-2
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THE TRUST
This Statement of Additional Information relates only to Class A, Class C, and
Class I shares of the Select Large Cap Growth Fund, Select Large Cap Value Fund,
Select Small Cap Growth Fund, Select Small Cap Value Fund, Select Premier Core
Equity Fund, Select International Core Fund, Select International Small Cap
Fund, Select Premier Global Equity Fund, Select Global Financial Services Fund,
Select Global Technology Fund, Select Balanced Capital Appreciation Fund, Select
Balanced Growth and Income Fund, Select Balanced Income and Growth Fund and
Select Strategic Fixed Income Fund (each a "Fund" and, together, the "Funds").
Each Fund is a separate series of the TIP Institutional Funds (the "Trust"), an
open-end management investment company established as a Delaware business trust
under a Declaration of Trust dated October 25, 1993. The Declaration of Trust
permits the Trust to offer separate series ("portfolios") of shares of
beneficial interest ("shares"). Each portfolio is a separate mutual fund, and
each share of each portfolio represents an equal proportionate interest in that
portfolio. See "Description of Shares." The Trust also offers Institutional
Class Shares of the Turner Micro Cap Growth Fund and Adviser and Institutional
Class Shares of the Turner Short Duration Funds-One Year Portfolio, Turner Short
Duration Funds-Three Year Portfolio, and Penn Capital Strategic High Yield Bond
Fund in separate prospectuses. Capitalized terms not defined herein are defined
in the Prospectus offering shares of the Funds.
DESCRIPTION OF PERMITTED INVESTMENTS
AMERICAN DEPOSITORY RECEIPTS ("ADRS")
Holders of an unsponsored depositary receipt generally bear all the costs of the
unsponsored facility. The depositary of an unsponsored facility frequently is
under no obligation to distribute shareholder communications received from the
issuer of the deposited security or to pass through to the holders of the
receipts voting rights with respect to the deposited securities.
ASSET-BACKED SECURITIES
Certain Funds may invest in securities backed by automobile, credit-card or
other types of receivables in securities backed by other types of assets. Credit
support or asset-backed securities may be based on the underlying assets and/or
provided by a third party through credit enhancements. Credit enhancement
techniques include letters of credit, insurance bonds, limited guarantees (which
are generally provided by the issuer), senior-subordinated structures and
overcollateralization.
Asset-backed securities are not issued or guaranteed by the United States
Government or its agencies or instrumentalities; however, the payment of
principal and interest on such obligations may be guaranteed up to certain
amounts for a certain period by a letter of credit issued by a financial
institution (such as a bank or insurance company) unaffiliated with the issuers
of such securities. The purchase of asset-backed securities raises risk
considerations peculiar to the
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financing of the instruments underlying such securities. For example, there is a
risk that another party could acquire an interest in the obligations superior to
that of the holders of the asset-backed securities. There also is the
possibility that recoveries on repossessed securities entail prepayment risk,
which may vary depending on the type of asset, but is generally less than the
prepayment risk associated with mortgage-backed securities. In addition, credit
card receivables are unsecured obligations of the card holders.
The market for asset-backed securities is at a relatively early stage of
development. Accordingly, there may be a limited secondary market for such
securities.
CONVERTIBLE SECURITIES
Convertible securities have characteristics similar to both fixed income and
equity securities. Because of the conversion feature, the market value of
convertible securities tends to move together with the market value of the
underlying stock. As a result, a Fund's selection of convertible securities is
based, to a great extent, on the potential for capital appreciation that may
exist in the underlying stock.
DOLLAR ROLL TRANSACTIONS
Certain Funds may enter into dollar roll transactions. A dollar roll transaction
involves a sale by a Fund of a security to a financial institution concurrently
with an agreement by the Fund to repurchase a similar security from the
institution at a later date at an agreed-upon price. The securities that are
repurchased will bear the same interest rate as those sold, but generally will
be collateralized by different pools of mortgages with different prepayment
histories than those sold. During the period between the sale and repurchase, a
Fund will not be entitled to receive interest and principal payments on the
securities sold. Proceeds of the sale will be invested in additional portfolio
securities of the particular Fund, and the income from these investments,
together with any additional fee income received on the sale, may or may not
generate income from the Fund exceeding the yield on the securities sold.
At the time that a Fund enters into a dollar roll transaction, it causes the
Fund's custodian to segregate cash or liquid securities having a value equal to
the repurchase price (including accrued interest) and will subsequently mark the
assets to market daily to ensure that full collateralization is maintained.
EQUITY SECURITIES
Equity securities represent ownership interests in a company or corporation and
consist of common stock, preferred stock, warrants and other rights to acquire
such instruments. Equity securities may be listed on exchanges or traded in the
over-the-counter market. Investments in common stocks are subject to market
risks which may cause their priced to fluctuate over time. The value of
convertible securities is also affected by prevailing interest rates, the credit
quality
S-4
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of the issuer and any call provisions. Changes in the value of fund securities
will not necessarily affect cash income derived from these securities, but will
affect a Fund's net asset value.
Investments in the equity securities of small capitalization companies involves
greater risk than is customarily associated with larger, more established
companies due to the greater business risks of small size, limited markets and
financial resources, narrow product lines and the frequent lack of depth of
management. The securities of small companies are often traded over-the-counter
and may not be traded in volumes typical on a national securities exchange.
Consequently, the securities of smaller companies may have limited market
stability and may be subject to more abrupt or erratic market movements than
securities of larger, more established growth companies or the market averages
in general.
FIXED INCOME SECURITIES
Fixed income securities are debt obligations issued by governments,
corporations, municipalities and other borrowers. The market value of fixed
income investments will generally change in response to interest rate changes
and other factors. During periods of falling interest rates, the values of
outstanding fixed income securities generally rise. Conversely, during periods
of rising interest rates, the values of such securities generally decline.
Moreover, while securities with longer maturities tend to produce higher yields,
the prices of longer maturity securities are also subject to greater market
fluctuations as a result of changes in interest rates. Changes by recognized
agencies in the rating of any fixed income security and in the ability of an
issuer to make payments of interest and principal will also affect the value of
these investments. Changes in the value of portfolio securities will not affect
cash income derived from these securities, but will affect a Fund's net asset
value.
FORWARD FOREIGN CURRENCY CONTRACTS
Forward foreign currency contracts involve an obligation to purchase or sell a
specified currency at a future date at a price set at the time of the contract.
Forward currency contracts do not eliminate fluctuations in the values of
portfolio securities but rather allow a Fund to establish a rate of exchange for
a future point in time.
When entering into a contract for the purchase or sale of a security in a
foreign currency, a Fund may enter into a forward foreign currency contract for
the amount of the purchase or sale price to protect against variations between
the date the security is purchased or sold and the date on which payment is made
or received, in the value of the foreign currency relative to the United States
dollar or other foreign currency.
Also, when an adviser anticipates that a particular foreign currency may decline
substantially relative to the United States dollar or other leading currencies,
in order to reduce risk, a Fund may enter into a forward contract to sell, for a
fixed amount, the amount of foreign currency approximating the value of its
securities denominated in such foreign currency. With respect to
S-5
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any such forward foreign currency contract, it will not generally be possible to
match precisely the amount covered by that contract and the value of the
securities involved due to changes in the values of such securities resulting
from market movements between the date the forward contract is entered into and
the date it matures. In addition, while forward currency contracts may offer
protection from losses resulting from declines in value of a particular foreign
currency, they also limit potential gains which might result from increases in
the value of particular foreign currency, they also limit potential gains which
might result from increases in the value of such currency. A Fund will also
incur costs in connection with forward foreign currency contracts and
conversions of foreign currencies to United States dollars. A Fund will place
assets in a segregated account to assure that its obligations under forward
foreign currency contracts are covered.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS
Futures contracts provide for the future sale by one party and purchase by
another party of a specified amount of a specific security at a specified future
time and at a specified price. An option on a futures contract gives the
purchaser the right, in exchange for a premium, to assume a position in a
futures contract at a specified exercise price during the term of the option. A
Fund may use futures contracts and related options for bona fide hedging
purposes, to offset changes in the value of securities held or expected to be
acquired or be disposed of, to minimize fluctuations in foreign currencies, or
to gain exposure to a particular market or instrument. A Fund will minimize the
risk that it will be unable to close out a futures contract by only entering
into futures contracts which are traded on national futures exchanges. In
addition, a Fund will only sell covered futures contracts and options on futures
contracts.
Stock and bond index futures are futures contracts for various stock and bond
indices that are traded on registered securities exchanges. Stock and bond index
futures contracts obligate the seller to deliver (and the purchaser to take) an
amount of cash equal to a specific dollar amount times the difference between
the value of a specific stock or bond index at the close of the last trading day
of the contract and the price at which the agreement is made.
Stock and bond index futures contracts are bilateral agreements pursuant to
which two parties agree to take or make delivery of an amount of cash equal to a
specified dollar amount times the difference between the stock or bond index
value at the close of trading of the contract and the price at which the futures
contract is originally struck. No physical delivery of the stocks or bonds
comprising the Index is made; generally contracts are closed out prior to the
expiration date of the contracts.
No price is paid upon entering into futures contracts. Instead, a Fund would be
required to deposit an amount of cash or U.S. Treasury securities known as
"initial margin." Subsequent payments, called "variation margin," to and from
the broker, would be made on a daily basis as the value of the futures position
varies (a process known as "marking to market"). The margin is in the nature of
a performance bond or good-faith deposit on a futures contract.
S-6
<PAGE>
There are risks associated with these activities, including the following: (1)
the success of a hedging strategy may depend on an ability to predict movements
in the prices of individual securities, fluctuations in markets and movements in
interest rates; (2) there may be an imperfect or no correlation between the
changes in market value of the securities held by the Fund and the prices of
futures and options on futures; (3) there may not be a liquid secondary market
for a futures contract or option; (4) trading restrictions or limitations may be
imposed by an exchange; and (5) government regulations may restrict trading in
futures contracts and futures options.
A Fund may enter into futures contracts and options on futures contracts traded
on an exchange regulated by the Commodities Futures Trading Commission ("CFTC"),
as long as, to the extent that such transactions are not for "bona fide hedging
purposes," the aggregate initial margin and premiums on such positions
(excluding the amount by which such options are in the money) do not exceed 5%
of a Fund's net assets. A Fund may buy and sell futures contracts and related
options to manage its exposure to changing interest rates and securities prices.
Some strategies reduce a Fund's exposure to price fluctuations, while others
tend to increase its market exposure. Futures and options on futures can be
volatile instruments and involve certain risks that could negatively impact a
Fund's return.
In order to avoid leveraging and related risks, when a Fund purchases futures
contracts, it will collateralize its position by depositing an amount of cash or
liquid securities, equal to the market value of the futures positions held, less
margin deposits, in a segregated account with its custodian. Collateral equal to
the current market value of the futures position will be marked to market on a
daily basis.
GLOBAL DEPOSITORY RECEIPTS ("GDRs")
GDRs are issued globally and evidence a similar ownership interests in a
security or a pool of securities issued by either a U.S. or foreign issuer. GDRs
are designed for trading in non-U.S. securities markets. GDRs may be available
for investment through "sponsored" or "unsponsored" facilities. A sponsored
facility is established jointly by the issuer of the security underlying the
receipt and a depository, whereas an unsponsored facility may be established by
a depository without participation by the issuer of the receipt's underlying
security.
ILLIQUID SECURITIES
Illiquid securities are securities that cannot be disposed of within seven
business days at approximately the price at which they are being carried on the
Fund's books, Illiquid securities include demand instruments with demand notice
periods exceeding seven days, securities for which there is no active secondary
market, and repurchase agreements with maturities of over seven days in length.
S-7
<PAGE>
INVESTMENT COMPANY SHARES
Each Fund may invest in shares of other investment companies to the extent
permitted by applicable law and subject to certain restrictions. A Fund's
purchase of such investment company securities results in the layering of
expenses, such that shareholders would indirectly bear a proportionate share of
the operating expenses of such investment companies, including advisory fees, in
addition to paying Fund expenses. Under applicable regulations, a Fund is
prohibited from acquiring the securities of another investment company if, as a
result of such acquisition: (1) the Fund owns more than 3% of the total voting
stock of the other company; (2) securities issued by any one investment company
represent more than 5% of the Fund's total assets; or (3) securities (other than
treasury stock) issued by all investment companies represent more than 10% of
the total assets of the Fund.
JUNK BONDS
Securities rated below investment grade are often referred to as "junk bonds."
Fixed income securities are subject to the risk of an issuer's ability to meet
principal and interest payments on the obligation (credit risk), and may also be
subject to price volatility due to such factors as interest rate sensitivity,
market perception of the creditworthiness of the issuer and general market
liquidity (market risk). Lower rated or unrated (i.e., high yield) securities
are more likely to react to developments affecting market and credit risk than
are more highly rated securities, which primarily react to movements in the
general level of interest rates. The market values of fixed-income securities
tend to vary inversely with the level of interest rates. Yields and market
values of high yield securities will fluctuate over time, reflecting not only
changing interest rates but the market's perception of credit quality and the
outlook for economic growth. When economic conditions appear to be
deteriorating, medium to lower rated securities may decline in value due to
heightened concern over credit quality, regardless of prevailing interest rates.
Investors should carefully consider the relative risks of investing in high
yield securities and understand that such securities are not generally meant for
short-term investing.
The high yield market is relatively new and its growth has paralleled a long
period of economic expansion and an increase in merger, acquisition and
leveraged buyout activity. Adverse economic developments can disrupt the market
for high yield securities, and severely affect the ability of issuers,
especially highly leveraged issuers, to service their debt obligations or to
repay their obligations upon maturity which may lead to a higher incidence of
default on such securities. In addition, the secondary market for high yield
securities, which is concentrated in relatively few market makers, may not be as
liquid as the secondary market for more highly rated securities. As a result,
the Fund's adviser could find it more difficult to sell these securities or may
be able to sell the securities only at prices lower than if such securities were
widely traded. Furthermore, the Fund may experience difficulty in valuing
certain securities at certain times. Prices realized upon the sale of such lower
rated or unrated securities, under these circumstances, may be less than the
prices used in calculating the Fund's net asset value.
S-8
<PAGE>
Prices for high yield securities may be affected by legislative and regulatory
developments. These laws could adversely affect the Fund's net asset value and
investment practices, the secondary market value for high yield securities, the
financial condition of issuers of these securities and the value of outstanding
high yield securities.
Lower rated or unrated debt obligations also present risks based on payment
expectations. If an issuer calls the obligations for redemption, the Fund may
have to replace the security with a lower yielding security, resulting in a
decreased return for investors. If the Fund experiences unexpected net
redemptions, it may be forced to sell its higher rated securities, resulting in
a decline in the overall credit quality of the Fund's investment portfolio and
increasing the exposure of the Fund to the risks of high yield securities.
Credit quality in the junk bond market can change suddenly and unexpectedly, and
even recently issued credit ratings may not fully reflect the actual risks
imposed by a particular security.
MORTGAGE-RELATED SECURITIES
ADJUSTABLE RATE MORTGAGE-RELATED SECURITIES: As the interest rate on the
mortgages underlying adjustable rate mortgage-related securities ("ARMS") are
reset periodically, yields of such portfolio securities will gradually align
themselves to reflect changes in market rates. Unlike fixed rate mortgages,
which generally decline in value during periods of rising interest rates, ARMS
allow the Funds to participate in increases in interest rates through periodic
adjustments in the coupons of the underlying mortgages, resulting in both higher
current yields and low price fluctuations. Furthermore, if prepayments of
principal are made on the underlying mortgages during periods of rising interest
rates, the Funds may be able to reinvest such amounts in securities with a
higher current rate of return. During periods of declining interest rates, of
course, the coupon rates may readjust downward, resulting in lower yields to the
Funds. Further, because of this feature, the value of ARMS are unlikely to rise
during periods of declining interest rates to the same extent as fixed rate
instruments.
FANNIE MAE SECURITIES: Fannie Mae is a federally chartered and privately owned
corporation established under the Federal National Mortgage Association Charter
Act. Fannie Mae provides funds to the mortgage market primarily by purchasing
home mortgage loans from local lenders, thereby providing them with funds for
additional lending. Fannie Mae acquires funds to purchase loans from investors
that may not ordinarily invest in mortgage loans directly, thereby expanding the
total amount of funds available for housing.
Each Fannie Mae pass-through security represents a proportionate interest in one
or more pools of loans, including conventional mortgage loans (that is, mortgage
loans that are not insured or guaranteed by any U.S. Government agency). The
loans contained in those pools consist of one or more of the following: (1)
fixed-rate level payment mortgage loans; (2) fixed-rate growing equity mortgage
loans; (3) fixed-rate graduated payment mortgage loans; (4) variable rate
mortgage loans; (5) other adjustable rate mortgage loans; and (6) fixed-rate
mortgage loans secured by multifamily projects.
S-9
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FEDERAL HOME LOAN MORTGAGE CORPORATION SECURITIES: The operations of FHLMC
currently consist primarily of the purchase of first lien, conventional,
residential mortgage loans and participation interests in mortgage loan and the
resale of the mortgage loans in the form of mortgage-backed securities.
The mortgage loans underlying FHLMC securities typically consist of fixed rate
or adjustable rate mortgage loans with original terms to maturity of between 10
to 30 years, substantially all of which are secured by first liens on
one-to-four-family residential properties or multifamily projects. Each mortgage
loan must include whole loans, participation interests in whole loans and
undivided interests in whole loans and participation in another FHLMC security.
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION SECURITIES: GNMA is a wholly owned
corporate instrumentality of the U.S. Government within the Department of
Housing and Urban Development. In order to meet its obligations under a
guarantee, GNMA is authorized to borrow from the U.S. Treasury with no
limitations as to amount.
GNMA pass-through securities may represent a proportionate interest in one or
more pools of the following types of mortgage loans: (1) fixed-rate level
payment mortgage loans; (2) fixed rate graduated payment mortgage loans; (3)
fixed-rate growing equity mortgage loans; (4) fixed-rate mortgage loans secured
by manufactured (mobile) homes; (5) mortgage loans on multifamily residential
properties under construction; (6) mortgage loans on completed multifamily
projects; (7) fixed-rate mortgage loans as to which escrowed funds are used to
reduce the borrower's monthly payments during the early years of the mortgage
loans ("buydown" mortgage loans); (8) mortgage loans that provide for
adjustments on payments based on periodic changes in interest rates or in other
payment terms of the mortgage loans; and (9) mortgage-backed serial notes.
PRIVATELY ISSUED MORTGAGE-RELATED SECURITIES: The Funds may invest in
mortgage-related securities offered by private issuers including pass-through
securities comprised of pools of conventional residential mortgage loans;
mortgage-backed bonds which are considered to be obligations of the institution
issuing the bonds and are collateralized mortgage obligations ("CMOs"), provided
such securities are "mortgage related securities" within the meaning of the
Secondary Mortgage Market Enhancement Act of 1984, as amended.
The Funds may invest in, among other things, "parallel pay" CMOs and Planned
Amortization Class CMOs ("PAC Bonds"). Parallel pay CMOs are structured to
provide payments of principal on each payment date to more than one class. These
simultaneous payments are taken into account in calculating the stated maturity
date or final distribution date of each class, which like the other CMO
structures, must be retired by its stated maturity date or final distribution
date but may be retired earlier. PAC Bonds are parallel pay CMOs that generally
require payments of a specified amount of principal on each payment date. The
required principal payment on PAC Bonds have the highest priority after interest
has been paid to all classes.
S-10
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NON-DIVERSIFICATION
Each Fund (except the Balanced Capital Appreciation, Balanced Growth and Income,
Balanced Income and Growth and Strategic Fixed Income Funds) is a
non-diversified company, as defined in the Investment Company Act of 1940, as
amended (the "1940 Act"), which means that a relatively high percentage of
assets of the Fund may be invested in the obligations of a limited number of
issuers. Although the Adviser and the Sub-Advisers do not intend to invest more
than 5% of the Fund's assets in any single issuer (with the exception of
securities which are issued or guaranteed by a national government), the value
of the shares of the Fund may be more susceptible to any single economic,
political or regulatory occurrence than the shares of a diversified investment
company would be. The Fund intends to satisfy the diversification requirements
necessary to qualify as a regulated investment company under the Internal
Revenue Code of 1986, as amended (the "Code"), which requires that the Fund be
diversified (i.e., not invest more than 5% of its assets in the securities in
any one issuer) as to 50% of its assets.
OBLIGATIONS OF SUPRANATIONAL ENTITIES
Supranational entities are entities established through the joint participation
of several governments, including the Asian Development Bank, the Inter-American
Development Bank, International Bank for Reconstruction and Development (World
Bank), African Development Bank, European Economic Community, European
Investment Bank and the Nordic Investment Bank. The governmental members, or
"stock holders." usually make initial capital contributions to the supranational
entity and, in many cases, are committed to make additional capital
contributions if the supranational entity is unable to repay its borrowings.
OPTIONS
A put option gives the purchaser of the option the right to sell, and the writer
of the option the obligation to buy, the underlying security at any time during
the option period. A call option gives the purchaser of the option the right to
buy, and the writer of the option the obligation to sell, the underlying
security at any time during the option period. The premium paid to the writer is
the consideration for undertaking the obligations under the option contract. The
initial purchase (sale) of an option contract is an "opening transaction." In
order to close out an option position, a Fund may enter into a "closing
transaction," which is simply the sale (purchase) of an option contract on the
same security with the same exercise price and expiration date as the option
contract originally opened. If a Fund is unable to effect a closing purchase
transaction with respect to an option it has written, it will not be able to
sell the underlying security until the option expires or the Fund delivers the
security upon exercise.
A Fund may purchase put and call options to protect against a decline in the
market value of the securities in its portfolio or to anticipate an increase in
the market value of securities that the Fund may seek to purchase in the future.
A Fund purchasing put and call options pays a premium therefor. If price
movements in the underlying securities are such that exercise of the options
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would not be profitable for a Fund, loss of the premium paid may be offset by an
increase in the value of the Fund's securities or by a decrease in the cost of
acquisition of securities by the Fund.
A Fund may write covered call options as a means of increasing the yield on its
portfolio and as a means of providing limited protection against decreases in
its market value. When a Fund sells an option, if the underlying securities do
not increase or decrease to a price level that would make the exercise of the
option profitable to the holder thereof, the option generally will expire
without being exercised and the Fund will realized as profit the premium
received for such option. When a call option written by a Fund is exercised, the
Fund will be required to sell the underlying securities to the option holder at
the strike price, and will not participate in any increase in the price of such
securities above the strike price. When a put option written by a Fund is
exercised, the Fund will be required to purchase the underlying securities at
the strike price, which may be in excess of the market value of such securities.
A Fund may purchase and write options on an exchange or over-the-counter.
Over-the-counter options ("OTC options") differ from exchange-traded options in
several respects. They are transacted directly with dealers and not with a
clearing corporation, and therefore entail the risk of non-performance by the
dealer. OTC options are available for a greater variety of securities and for a
wider range of expiration dates and exercise prices than are available for
exchange-traded options. Because OTC options are not traded on an exchange,
pricing is done normally by reference to information from a market maker. It is
the position of the SEC that OTC options are generally illiquid.
A Fund may purchase and write put and call options on foreign currencies (traded
on U.S. and foreign exchanges or over-the-counter markets) to manage its
exposure to exchange rates. Call options on foreign currency written by a Fund
will be "covered," which means that the Fund will own an equal amount of the
underlying foreign currency. With respect to put options on foreign currency
written by a Fund, the Fund will establish a segregated account with its
Custodian consisting of cash or liquid, high grade debt securities in an amount
equal to the amount the Fund would be required to pay upon exercise of the put.
A Fund may purchase and write put and call options on indices and enter into
related closing transactions. Put and call options on indices are similar to
options on securities except that options on an index give the holder the right
to receive, upon exercise of the option, an amount of cash if the closing level
of the underlying index is greater than (or less than, in the case of puts) the
exercise price of the option. This amount of cash is equal to the difference
between the closing price of the index and the exercise price of the option,
expressed in dollars multiplied by a specified number. Thus, unlike options on
individual securities, all settlements are in cash, and gain or loss depends on
price movements in the particular market represented by the index generally,
rather than the price movements in individual securities. A Fund may choose to
terminate an option position by entering into a closing transaction. The ability
of a Fund to enter into closing transactions depends upon the existence of a
liquid secondary market for such transactions.
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All options written on indices must be covered. When a Fund writes an option on
an index, it will establish a segregated account containing cash or liquid
securities with its custodian in an amount at least equal to the market value of
the option and will maintain the account while the option is open or will
otherwise cover the transaction.
RISK FACTORS: Risks associated with options transactions include: (1) the
success of a hedging strategy may depend on an ability to predict movements in
the prices of individual securities, fluctuations in markets and movements in
interest rates; (2) there may be an imperfect correlation between the movement
in prices of options and the securities underlying them; (3) there may not be a
liquid secondary market for options; and (4) while a Fund will receive a premium
when it writes covered call options, it may not participate fully in a rise in
the market value of the underlying security.
REPURCHASE AGREEMENTS
Repurchase agreements are agreements by which a Fund obtains a security and
simultaneously commits to return the security to the seller (a member bank of
the Federal Reserve System or primary securities dealer as recognized by the
Federal Reserve Bank of New York) at an agreed upon price (including principal
and interest) on an agreed upon date within a number of days (usually not more
than seven) from the date of purchase. The resale price reflects the purchase
price plus an agreed upon market rate of interest which is unrelated to the
coupon rate or maturity of the underlying security. A repurchase agreement
involves the obligation of the seller to pay the agreed upon price, which
obligation is in effect secured by the value of the underlying security.
Repurchase agreements are considered to be loans by a Fund for purposes of its
investment limitations. The repurchase agreements entered into by a Fund will
provide that the underlying security at all times shall have a value at least
equal to 102% of the resale price stated in the agreement (the Adviser monitors
compliance with this requirement). Under all repurchase agreements entered into
by a Fund, the Trust's Custodian or its agent must take possession of the
underlying collateral. However, if the seller defaults, the Fund could realize a
loss on the sale of the underlying security to the extent that the proceeds of
sale, including accrued interest, are less than the resale price provided in the
agreement including interest. In addition, even though the Bankruptcy Code
provides protection for most repurchase agreements, if the seller should be
involved in bankruptcy or insolvency proceedings, a Fund may incur delay and
costs in selling the underlying security or may suffer a loss of principal and
interest if the Fund is treated as an unsecured creditor and is required to
return the underlying security to the seller's estate.
RESTRICTED SECURITIES
Restricted securities are securities that may not be sold freely to the public
absent registration under the Securities Act of 1933, as amended (the "1933
Act"), or an exemption from registration. Section 4(2) commercial paper is
issued in reliance on an exemption from
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registration under Section 4(2) of the 1933 Act, and is generally sold to
institutional investors who purchase for investment. Any resale of such
commercial paper must be in an exempt transaction, usually to any institutional
investor through the issuer or investment dealers who make a market on such
commercial paper. Rule 144A securities are securities re-sold in reliance on an
exemption from registration provided by Rule 144A under the 1933 Act.
REVERSE REPURCHASE AGREEMENTS
Certain Funds may enter into reverse repurchase agreements. The Funds typically
will invest the proceeds of a reverse repurchase agreement in money market
instruments or repurchase agreements maturing not later than the expiration of
the reverse repurchase agreement. This use of proceeds involves leverage. The
Funds will enter into a reverse repurchase agreement for leveraging purposes
only when the Adviser believes that the interest income to be earned from the
investment of the proceeds or the gain for the security to be obtained by
effecting the transaction would be greater than the interest expense of the
transaction. The Funds also may use the proceeds of reverse repurchase
agreements to provide liquidity to meet redemption requests when the sale of the
Funds' securities is considered to be disadvantageous.
SECURITIES OF FOREIGN ISSUERS
There are certain risks connected with investing in foreign securities. These
include risks of adverse political and economic developments (including possible
governmental seizure or nationalization of assets), the possible imposition of
exchange controls or other governmental restrictions, less uniformity in
accounting and reporting requirements, the possibility that there will be less
information on such securities and their issuers available to the public, the
difficulty of obtaining or enforcing court judgments abroad, restrictions on
foreign investments in other jurisdictions, difficulties in effecting
repatriation of capital invested abroad and difficulties in transaction
settlements and the effect of delay on shareholder equity. Foreign securities
may be subject to foreign taxes, and may be less marketable than comparable U.S.
securities. The value of a Fund's investments denominated in foreign currencies
will depend on the relative strengths of those currencies and the U.S. dollars,
and a Fund may be affected favorably or unfavorably by changes in the exchange
rates or exchange control regulations between foreign currencies and the U.S.
dollar. Changes in foreign currency exchange rates also may affect the value of
dividends and interest earned, gains and losses realized on the sale of
securities and net investment income and gains if any, to be distributed to
shareholders by a Fund. Furthermore, emerging market countries may have less
stable political environments than more developed countries.
SECURITIES LENDING
Each Fund may lend its portfolio securities having a value of up to 30% of its
total assets in order to generate additional income. Such loans may be made to
broker-dealers or other financial institutions whose creditworthiness is
acceptable to the Adviser and subject to certain terms and conditions. These
loans are required to be secured continuously by collateral, including cash or
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other liquid securities, maintained on a current basis (i.e., marked to market
daily) at an amount at least equal to 100% of the market value of the securities
loaned plus accrued interest. The Funds may pay reasonable administrative and
custodial fees in connection with a loan and may pay a negotiated portion of the
income earned on the cash to the borrower or placing broker. Loans are subject
to termination at the option of the Funds or the borrower at any time. Upon such
termination, the Funds are entitled to obtain the return of the securities
loaned within five business days.
For the term of the loan, the particular Fund continues to receive the
equivalent of the interest paid by the issuer on the securities loaned, receives
proceeds from the investment of the collateral and continues to retain any
voting rights with respect to the securities. As with other extensions of
credit, there are risks of delay in recovery or even losses of rights in the
securities loaned should the borrower of the securities fail financially.
However, the loans are made only to borrowers deemed by the Adviser to be
creditworthy, and only when, in the judgment of the Adviser, the income which
can be earned currently from such loans justifies the attendant risk.
SHORT SALES
A short sale is "against the box" if at all times during which the short
position is open, the Fund owns at least an equal amount of the securities or
securities convertible into, or exchangeable without further consideration for,
securities of the same issue as the securities that are sold short.
SHORT-TERM OBLIGATIONS
Commercial paper (including variable amount master demand notes), bankers'
acceptances, certificates of deposit, repurchase agreements, obligations issued
or guaranteed by the U.S. Government or its agencies or instrumentalities, and
demand and time deposits of domestic and foreign banks and savings and loan
associations.
SWAPS, CAPS, FLOORS AND COLLARS
In a typical interest rate swap, one party agrees to make regular payments equal
to a floating interest rate times a "notional principal amount," in return for
payments equal to a fixed rate times the same amount, for a specific period of
time. If a swap agreement provides for payment in different currencies, the
parties might agree to exchange the notional principal amount as well. Swaps may
also depend on other prices or rates, such as the value of an index or mortgage
prepayment rates.
In a typical cap or floor agreement, the buyer of an interest rate cap obtains
the right to receive payments to the extent that a specific interest rate
exceeds an agreed-upon level, while the seller of an interest rate floor is
obligated to make payments to the extent that a specified interest rate falls
below an agreed-upon level. An interest rate collar combines elements of buying
a cap and selling a floor. In swap agreements, if a Fund agrees to exchange
payments in dollars for
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payments in foreign currency, the swap agreement would tend to decrease the
Fund's exposure to U.S. interest rates and increase its exposure to foreign
currency and interest rates. Caps and floors have an effect similar to buying or
writing options. Depending on how they are used, swap agreements may increase or
decrease the overall volatility of a Fund's investment and their share price and
yield.
Swap agreements are sophisticated hedging instruments that typically involve a
small investment of cash relative to the magnitude of risk assumed. As a result,
swaps can be highly volatile and have a considerable impact on a Fund's
performance.
Swap agreements are subject to risks related to the counterparty's ability to
perform, and may decline in value if the counterparty's creditworthiness
deteriorates. A Fund may also suffer losses if it is unable to terminate
outstanding swap agreements or reduce its exposure through offsetting
transactions. Any obligation a Fund may have under these types of arrangements
will be covered by setting aside cash or liquid securities in a segregated
account. A Fund will enter into swaps only with counterparties believed to be
creditworthy.
U.S. GOVERNMENT SECURITIES
U.S. Government securities in which the Funds may invest include debt
obligations of varying maturities issued by the U.S. Treasury or issued or
guaranteed by certain agencies or instrumentalities of the U.S. Government,
including GNMA, Fannie Mae, FHLMC, Federal Farm Credit Bank, Farm Credit System
Financial Assistance Corporation, Federal Home Loan Banks, Financing
Corporation, Federal Home Loan Bank, Maritime Administration, Resolution Funding
Corporation, Small Business Administration (SBA loan pools and the guaranteed
portions of single loan sales), Student Loan Marketing Association and
Washington Metropolitan Area Transit Authority. Direct obligations of the U.S.
Treasury include a variety of securities that differ primarily in their interest
rates, maturities and dates of issuance. Because the U.S. Government is not
obligated by law to provide support to an instrumentality that it sponsors, the
Funds will not invest in obligations issued by an instrumentality of the U.S.
Government unless the Adviser determines that the instrumentality's credit risk
makes its securities suitable for investment by the Funds.
VARIABLE AND FLOATING RATE INSTRUMENTS
There is a risk that the current interest rate on such obligations may not
accurately reflect existing market interest rates. A demand instrument with a
demand notice exceeding seven days may be considered illiquid if there is no
secondary market for such security.
WARRANTS
Warrants are instruments giving holders the right, but not the obligation, to
buy equity or fixed income securities of a company at a given price during a
specified period.
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WHEN-ISSUED AND DELAYED DELIVERY SECURITIES
When-issued or delayed delivery securities are subject to market fluctuations
due to changes in market interest rates and it is possible that the market value
at the time of settlement could be higher or lower than the purchase price if
the general level of interest rates has changed. Although a Fund generally
purchases securities on a when-issued or forward commitment basis with the
intention of actually acquiring securities for its investment portfolio, a Fund
may dispose of a when-issued security or forward commitment prior to settlement
if it deems appropriate.
YANKEE OBLIGATIONS
Yankee Obligations ("Yankees") are U.S. dollar-denominated instruments of
foreign issuers who either register with the SEC or issue under Rule 144A under
the Securities Act of 1933. These obligations consist of debt securities
(including preferred or preference stock of non-governmental issuers),
certificates of deposit, fixed time deposits and bankers' acceptances issued by
foreign banks, and debt obligations of foreign governments or their
subdivisions, agencies and instrumentalities, international agencies and
supranational entities. Some securities issued by foreign governments or their
subdivisions, agencies and instrumentalities may not be backed by the full faith
and credit of the foreign government.
The Yankee obligations selected for a Fund will adhere to the same quality
standards as those utilized or the selection of domestic debt obligations.
ZERO COUPON SECURITIES
STRIPS and Receipts (TRs, TIGRs, LYONS and CATS) are sold as zero coupon
securities, that is, fixed income securities that have been stripped of their
unmatured interest coupons. Zero coupon securities are sold at a (usually
substantial) discount and redeemed at face value at their maturity date without
interim cash payments of interest or principal. The amount of this discount is
accreted over the life of the security, and the accretion constitutes the income
earned on the security for both accounting and tax purposes. Because of these
features, the market prices of zero coupon securities are generally more
volatile than the market prices of securities that have similar maturity but
that pay interest periodically. Zero coupon securities are likely to respond to
a greater degree to interest rate changes that are non-zero coupon securities
with similar maturity and credit qualities. The Fund may have to dispose of its
portfolio securities under disadvantageous circumstances to generate cash, or
may have to leverage itself by borrowing cash to satisfy income distribution
requirements. A Fund accrues income with respect to the securities prior to the
receipt of cash payments. Pay-in-kind securities are securities that have
interest payable by delivery of additional securities. Deferred payment
securities are securities that remain zero coupon securities until a
predetermined date, at which time the stated coupon rate becomes effective and
interest becomes payable at regular intervals.
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CORPORATE ZERO COUPON SECURITIES - Corporate zero coupon securities are: (i)
notes or debentures which do not pay current interest and are issued at
substantial discounts from par value, or (ii) notes or debentures that pay no
current interest until a stated date one or more years into the future, after
which date the issuer is obligated to pay interest until maturity, usually at a
higher rate than if interest were payable from the date of issuance, and may
also make interest payments in kind (e.g., with identical zero coupon
securities). Such corporate zero coupon securities, in addition to the risks
identified above, are subject to the risk of the issuer's failure to pay
interest and repay principal in accordance with the terms of the obligation.
INVESTMENT LIMITATIONS
FUNDAMENTAL POLICIES
The following investment limitations (and those set forth in the Prospectus) are
fundamental policies of each Fund which cannot be changed with respect to a Fund
without the consent of the holders of a majority of that Fund's outstanding
shares. The term "majority of the outstanding shares" means the vote of (i) 67%
or more of a Fund's shares present at a meeting, if more than 50% of the
outstanding shares of a Fund are present or represented by proxy, or (ii) more
than 50% of a Fund's outstanding shares, whichever is less.
No Fund may:
1. (i) purchase securities of any issuer (except securities issued or
guaranteed by the United States Government, its agencies or
instrumentalities and repurchase agreements involving such securities) if,
as a result, more than 5% of the total assets of the Fund would be invested
in the securities of such an issuer; or (ii) acquire more than 10% of the
outstanding voting securities of any one issuer. This restriction applies
to 75% of the Fund's total assets.
2. The Fund may not purchase any securities which would cause 25% or more of
the total assets of such Fund to be invested in the securities of one or
more issuers conducting their principal business activities in the same
industry. This limitation does not apply to obligations issued or
guaranteed by the U.S. Government or its agencies and instrumentalities and
repurchase agreements involving such securities.
3. Borrow money in an amount exceeding 33 1/3% of the value of its total
assets, provided that, for purposes of this limitation, investment
strategies which either obligate fund to purchase securities or require a
Fund to segregate assets are not considered to be borrowings. Asset
coverage of a least 300% is required for all borrowings, except where a
Fund has borrowed money for temporary purposes in amounts not exceeding 5%
of its total assets. A Fund will not purchase securities while its
borrowings exceed 5% of its total assets.
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4. Make loans if, as a result, more than 33 1/3% of its total assets would be
lent to other parties, except that each Fund may (i) purchase or hold debt
instruments in accordance with its investment objective and policies; (ii)
enter into repurchase agreements; and (iii) lend its securities.
5. Purchase or sell real estate, physical commodities, or commodities
contracts, except that each Fund may purchase (i) marketable securities
issued by companies which own or invest in real estate (including real
estate investment trusts), commodities, or commodities contracts; and (ii)
commodities contracts relating to financial instruments, such as financial
futures contracts and options on such contracts.
6. Issue senior securities (as defined in the Investment Company Act of 1940
(the "1940 Act")) except as permitted by rule, regulation or order of the
Securities and Exchange Commission (the "SEC").
7. Act as an underwriter of securities of other issuers except as it may be
deemed an underwriter in selling a portfolio security.
8. Invest in interests in oil, gas, or other mineral exploration or
development programs and oil, gas or mineral leases.
The foregoing percentages (except with respect to the limitation on borrowing)
will apply at the time of the purchase of a security and shall not be considered
violated unless an excess or deficiency occurs immediately after or as a result
of a purchase of such security.
NON-FUNDAMENTAL POLICIES
The following investment limitations are non-fundamental policies of each Fund
and may be changed with respect to a Fund by the Board of Trustees.
No Fund may:
1. Pledge, mortgage or hypothecate assets except to secure borrowings
permitted by the Fund's fundamental limitation on borrowing.
2. Invest in companies for the purpose of exercising control.
3. Purchase securities on margin or effect short sales, except that each Fund
may (i) obtain short-term credits as necessary for the clearance of
security transactions; (ii) provide initial and variation margin payments
in connection with transactions involving futures contracts and options on
such contracts; and (iii) make short sales "against the box" or in
compliance with the SEC's position regarding the asset segregation
requirements imposed by Section 18 of the 1940 Act.
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4. Invest its assets in securities of any investment company, except as
permitted by the 1940 Act.
5. Purchase or hold illiquid securities, i.e., securities that cannot be
disposed of for their approximate carrying value in seven days or less
(which term includes repurchase agreements and time deposits maturing in
more than seven days) if, in the aggregate, more than 15% of its net assets
would be invested in illiquid securities.
GLOBAL FINANCIAL SERVICES FUND
The Global Financial Services Fund may invest in companies that are involved in
the financial sector, including commercial and investment banks, savings and
loan associations, consumer and industrial finance companies, securities
brokerage companies, real estate-related companies, leasing companies, and a
variety of firms in all segments of the insurance industry such as multi- line,
property and casualty, and life insurance.
Securities and Exchange Commission ("SEC") regulations provide that the Fund may
not invest more than 5% of its total assets in the securities of any one company
that derives more than 15% of its revenues from brokerage or investment
management activities. These companies, as well as those deriving more than 15%
of profits from brokerage and investment management activities, will be
considered to be "principally engaged" in this Fund's business activity. Rule
12d3-1 under the Investment Company Act of 1940 (the "1940 Act"), allows
investment portfolios such as this Fund, to invest in companies engaged in
securities-related activities subject to certain conditions. Purchases of
securities of a company that derived 15% or less of gross revenues during its
most recent fiscal year from securities-related activities (i.e., broker/dealer,
underwriting, or investment advisory activities) are subject only to the same
percentage limitations as would apply to any other security the Fund may
purchase. The Fund may purchase securities of an issuer that derived more than
15% of it gross revenues in its most recent fiscal year from securities-related
activities, subject to the following conditions:
a. the purchase cannot cause more than 5% of the Fund's total assets to be
invested in securities of that issuer;
b. for any equity security, the purchase cannot result in the Fund owing more
than 5% of the issuer's outstanding securities in that class;
c. for a debt security, the purchase cannot result in the fund owing more than
10% of the outstanding principal amount of the issuer's debt securities.
In applying the gross revenue test, an issuer's own securities-related
activities must be combined with its ratable share of securities-related
revenues from enterprises in which it owns a 20% or greater voting or equity
interest. All of the above percentage limitations, as well as the issuer's gross
revenue test, are applicable at the time of purchase. With respect to warrants,
rights, and
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convertible securities, a determination of compliance with the above limitations
shall be made as though such warrant, right, or conversion privilege had been
exercised. The Fund will not be required to divest its holding of a particular
issuer when circumstances subsequent to the purchase cause one of the above
conditions to not be met. The purchase of a general partnership interest in a
securities-related business is prohibited.
THE ADVISER
The Trust and Turner Investment Partners, Inc. (the "Adviser"), have entered
into an advisory agreement (the "Advisory Agreement"). The Advisory Agreement
provides that the Adviser shall not be liable for any error of judgment or
mistake of law or for any loss arising out of any investment or for any act or
omission in carrying out its duties, but shall not be protected against any
liability to the Trust or its shareholders by reason of willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or from
reckless disregard of its obligations or duties thereunder.
The Advisory Agreement provides that if, for any fiscal year, the ratio of
expenses of the Funds (including amounts payable to the Adviser but excluding
interest, taxes, brokerage, litigation, and other extraordinary expenses)
exceeds established limitations, the Adviser will bear the amount of such
excess. The Adviser will not be required to bear expenses of the Funds to an
extent which would result in the Fund's inability to qualify as a regulated
investment company under provisions of the Internal Revenue Code of 1986, as
amended (the "Code").
The continuance of the Advisory Agreement as to the Funds after the first two
years must be specifically approved at least annually (i) by the vote of the
Trustees or by a vote of the shareholders of the Funds, and (ii) by the vote of
a majority of the Trustees who are not parties to the Advisory Agreement or
"interested persons" of any party thereto, cast in person at a meeting called
for the purpose of voting on such approval. The Advisory Agreement will
terminate automatically in the event of its assignment, and is terminable at any
time without penalty by the Trustees of the Trust or, with respect to the Funds,
by a majority of the outstanding shares of the Funds, on not less than 30 days'
nor more than 60 days' written notice to the Adviser, or by the Adviser on 90
days' written notice to the Trust.
Turner's investment advisory fee may be adjusted based on each Fund's total
return performance as compared to specific benchmarks. Under the schedule set
forth below, Turner's base advisory fee for a Fund may be increased by 35% if
the Fund outperforms its stated benchmark by 2.25% (___% in the case of the
Strategic Fixed Income Fund).
The Funds will pay Turner its base fee on a monthly basis. Commencing on
December 31, 1999, Turner's fee will be paid by including an increase or
decrease in the basic fee each based on each Fund's performance.
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For purposes of the performance adjustments, the investment performance of a
Fund for any period is expressed as a percentage of the Fund's net asset value
per share at the beginning of the period. This percentage is equal to the sum of
(i) the change in the Fund's net asset value per share during the period; (ii)
the value of the Fund's cash distributions per share having an ex- dividend date
occurring within the period; and (iii) the per share amount of capital gains
taxes paid or accrued during the period by the Fund for undistributed realized
long-term capital gains. The investment record for a specific index is expressed
as a percentage of the starting level of that index at the beginning of the
period, as modified by the change in the level of the index during the period
and by the value computed consistently with the index, of cash distributions
having an ex-dividend date occurring within the period made by issuers whose
securities are included in the index.
Turner pays the Sub-Advisers out of the advisory fees it receives from each
Fund.
- --------------------------------------------------------------------------------
ADVISORY FEE
FUND NAME ---------------------------------------
LOW BASE HIGH
- --------------------------------------------------------------------------------
Select Large Cap Growth 0.195% 0.30% 0.405%
- --------------------------------------------------------------------------------
Select Large Cap Value 0.195% 0.30% 0.405%
- --------------------------------------------------------------------------------
Select Premier Core Equity 0.195% 0.30% 0.405%
- --------------------------------------------------------------------------------
Select Small Cap Growth 0.195% 0.30% 0.405%
- --------------------------------------------------------------------------------
Select Small Cap Value 0.195% 0.30% 0.405%
- --------------------------------------------------------------------------------
Select International Core 0.195% 0.30% 0.405%
- --------------------------------------------------------------------------------
Select International Small Cap 0.195% 0.30% 0.405%
- --------------------------------------------------------------------------------
Select Premier Global Equity 0.195% 0.30% 0.405%
- --------------------------------------------------------------------------------
Select Global Financial Services 0.195% 0.30% 0.405%
- --------------------------------------------------------------------------------
Select Global Technology 0.195% 0.30% 0.405%
- --------------------------------------------------------------------------------
Strategic Fixed Income 0.130% 0.20% 0.270%
- --------------------------------------------------------------------------------
Select Balanced Income & Growth 0.225% 0.30% 0.375%
- --------------------------------------------------------------------------------
Select Balanced Growth & Income 0.225% 0.30% 0.375%
- --------------------------------------------------------------------------------
Select Balanced Capital Appreciation 0.225% 0.30% 0.375%
- --------------------------------------------------------------------------------
SPECIAL CONSIDERATIONS REGARDING THE MULTI-ADVISER APPROACH
Turner Investment Partners, Inc. (the "Adviser"), the Adviser of each Fund,
oversees the portfolio management services provided to each Fund by each of its
[three] Sub-Advisers.
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Subject to the review of TIP Institutional Funds' Board of Trustees, the Adviser
monitors each Sub-Adviser to assure that the Sub-Adviser is managing its segment
of each Fund consistently with that Fund's investment objective and restrictions
and applicable laws and guidelines, including, but not limited to, compliance
with the diversification requirements set forth in Subchapter M of the Code. The
Adviser also provides each Fund with certain administrative services, including
maintenance of certain Fund records and assistance in the preparation of the
Fund's registration statement under federal and state laws. Because each
Sub-Adviser will be managing its segment of its Fund independently from the
other Sub-Advisers, the same security may be held in two different segments of a
Fund, or may be acquired for one segment of the Fund at a time when the
Sub-Adviser of another segment deems it appropriate to dispose of the security
from that other segment. Similarly, under some market conditions, the Adviser or
one or more of the Sub-Advisers may believe that temporary, defensive
investments in short-term instruments or cash are appropriate when the Adviser
or another Sub-Adviser believes continued exposure to the equity markets is
appropriate for their segments of a Fund. Because the Adviser and each
Sub-Adviser directs the trading for its own segment of a Fund, and does not
aggregate its transactions with those of the Adviser or the other Sub-Advisers,
the Fund may incur higher brokerage costs than would be the case if a single
Adviser were managing the entire Fund.
On a daily basis, capital activity will be allocated equally by the Adviser
among the segments of each Fund. However, the Adviser may, subject to review by
TIP Funds' Board of Trustees, allocate new investment capital differently among
the Sub-Advisers. This action may be necessary, if, for example, the Adviser or
a Sub-Adviser determines that it desires no additional investment capital. Also,
because each segment of the portfolio will perform differently from the other
segments depending upon the investments it holds and changing market conditions,
one segment may be larger or smaller at various times than the other segments.
Although it reserves the right to do so, subject to the review of the TIP
Institutional Funds' Board of Trustees, the Adviser does not intend to
reallocate a Fund's assets among the segments to reduce these differences in
size.
MANAGER OF MANAGERS OPTION
The Trust may, in the future, seek to achieve its investment objective by using
a "manager of managers" structure. Under a manager of managers structure, Turner
Investment Partners would act as investment adviser in much the same way as is
currently contemplated. However, as manager of managers, Turner would be
permitted, subject to direction from and oversight by the Board of Trustees, to
allocate and reallocate each Fund's assets among sub-advisers, and to recommend
that the Board of Trustees hire, terminate or replace sub-advisers without
shareholder approval. By reducing the number of shareholder meetings that may
have to be held to approve new or additional sub-advisers for the Funds, the
Funds anticipate that there will be substantial potential cost savings, as well
as the opportunity to achieve certain management efficiencies.
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Before it can operate using a manager of managers structure, the Trust and
Turner will have to obtain exemptive relief from the Securities and Exchange
Commission ("SEC") to permit such an arrangement. The Trust has requested this
relief from the SEC. There is no assurance that such an order will be granted by
the SEC. The initial shareholder of the Funds voted to vest authority to
implement a manager of managers structure with the Trustees, and such a
structure may be adopted without shareholder approval. However, shareholders of
the Funds will be given at least 30 days' prior written notice of any such
change, and any such change would only be made if the Trustees determine that it
would be in the best interests of each Fund and its shareholders. In making that
determination, the Trustees will consider, among other factors, the benefits to
shareholders and/or the opportunity to reduce costs and achieve operational
efficiencies.
THE SUB-ADVISERS
[INFORMATION TO BE ADDED FOR EACH SUB-ADVISER.]
_____________ ("__________") serves as a Sub-Adviser to a portion of the assets
of the __________ Fund. Founded in _______, ___________ the Sub-Adviser is a
registered investment adviser that managed approximately $______ billion in
assets as of September 30, 1998. ________ is an indirect, wholly-owned
subsidiary of _________, a full-service financial services firm. The principal
business address of ______________ is __________.
Each Sub-Adviser sub-advisory fee may be adjusted based on each Fund's total
return performance as compared to specific benchmarks. Under the schedule set
forth below, a Sub-Adviser's base advisory fee for a Fund may be increased by
35% if the Fund outperforms its stated benchmark by 2.00% (___% in the case of
the Strategic Fixed Income Fund).
Turner will pay each Sub-Adviser its base fee on a monthly basis. Commencing on
December 31, 1999, each Sub-Adviser fee will be paid by including an increase or
decrease in the basic fee each based on the performance of that Sub-Adviser's
portion of a Fund's assets.
For purposes of the performance adjustments, the investment performance of a
Fund for any period is expressed as a percentage of the Fund's net asset value
per share at the beginning of the period. This percentage is equal to the sum of
(i) the change in the Fund's net asset value per share during the period; (ii)
the value of the Fund's cash distributions per share having an ex- dividend date
occurring within the period; and (iii) the per share amount of capital gains
taxes paid or accrued during the period by the Fund for undistributed realized
long-term capital gains. The investment record for a specific index is expressed
as a percentage of the starting level of that index at the beginning of the
period, as modified by the change in the level of the index during the period
and by the value computed consistently with the index, of cash distributions
having an ex-dividend date occurring within the period made by issuers whose
securities are included in the index.
- --------------------------------------------------------------------------------
Sub-Advisory Fee
Fund Name -----------------------------------
Low Base High
- --------------------------------------------------------------------------------
Select Large Cap Growth 0.338% 0.450% 0.563%
- --------------------------------------------------------------------------------
S-24
<PAGE>
- --------------------------------------------------------------------------------
Sub-Advisory Fee
Fund Name -----------------------------------
Low Base High
- --------------------------------------------------------------------------------
Select Large Cap Value 0.338% 0.450% 0.563%
- --------------------------------------------------------------------------------
Select Premier Core Equity 0.338% 0.450% 0.563%
- --------------------------------------------------------------------------------
Select Small Cap Growth 0.450% 0.600% 0.750%
- --------------------------------------------------------------------------------
Select Small Cap Value 0.450% 0.600% 0.750%
- --------------------------------------------------------------------------------
Select International Core 0.450% 0.600% 0.750%
- --------------------------------------------------------------------------------
Select International Small Cap 0.563% 0.750% 0.938%
- --------------------------------------------------------------------------------
Select Premier Global Equity 0.525% 0.700% 0.875%
- --------------------------------------------------------------------------------
Select Global Financial Services 0.525% 0.700% 0.875%
- --------------------------------------------------------------------------------
Select Global Technology 0.525% 0.700% 0.875%
- --------------------------------------------------------------------------------
Strategic Fixed Income 0.188% 0.250% 0.313%
- --------------------------------------------------------------------------------
Select Balanced Income & Growth 0.450% 0.600% 0.750%
- --------------------------------------------------------------------------------
Select Balanced Growth & Income 0.450% 0.600% 0.750%
- --------------------------------------------------------------------------------
Selected Balanced Capital Appreciation 0.450% 0.600% 0.750%
- --------------------------------------------------------------------------------
THE ADMINISTRATOR
The Trust and SEI Investments Fund Resources (the "Administrator") have entered
into an administration agreement (the "Administration Agreement"). The
Administration Agreement provides that the Administrator shall not be liable for
any error of judgment or mistake of law or for any loss suffered by the Trust in
connection with the matters to which the Administration Agreement relates,
except a loss resulting from willful misfeasance, bad faith or gross negligence
on the part of the Administrator in the performance of its duties or from
reckless disregard by it of its duties and obligations thereunder. The
Administration Agreement shall remain in effect for a period of three (3) years
after the effective date of the agreement and shall continue in effect for
successive periods of three (3) years unless terminated by either party on not
less than 90 days' prior written notice to the other party.
The Administrator, a Delaware business trust, has its principal business offices
at Oaks, Pennsylvania 19456. SEI Investments Management Corporation ("SIMC"), a
wholly-owned subsidiary of SEI Investments Company ("SEI Investments"), is the
owner of all beneficial interest in the Administrator. SEI Investments and its
subsidiaries and affiliates, including the Administrator, are leading providers
of funds evaluation services, trust accounting systems, and brokerage and
information services to financial institutions, institutional investors and
money
S-25
<PAGE>
managers. The Administrator and its affiliates also serve as administrator or
sub-administrator to the following other mutual funds: The Achievement Funds
Trust, The Advisors' Inner Circle Fund, The Arbor Fund, ARK Funds, Armada Funds,
Bishop Street Funds, Boston 1784 Funds(R), CrestFunds, Inc., CUFUND, The
Expedition Funds, First American Funds, Inc., First American Investment Funds,
Inc., First American Strategy Funds, Inc., HighMark Funds, Monitor Funds, Morgan
Grenfell Investment Trust, The Nevis Funds, Oak Associates Funds, PBHG Advisor
Funds, Inc., The PBHG Funds, Inc., PBHG Insurance Series Fund, Inc., The Pillar
Funds, SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI
Institutional Investments Trust, SEI Institutional Managed Trust, SEI
Institutional International Trust, SEI Liquid Asset Trust, SEI Tax Exempt Trust,
STI Classic Funds, STI Classic Variable Trust and TIP Funds.
THE DISTRIBUTOR
SEI Investments Distribution Co. (the "Distributor"), a wholly-owned subsidiary
of SEI Investments, and the Trust are parties to a distribution agreement (the
"Distribution Agreement") with respect to shares of the Funds. The Distributor
receives no compensation for distribution of shares of the Funds.
The Distribution Agreement shall remain in effect for a period of two years
after the effective date of the agreement and is renewable annually. The
Distribution Agreement may be terminated by the Distributor, by a majority vote
of the Trustees who are not interested persons and have no financial interest in
the Distribution Agreement or by a majority vote of the outstanding securities
of the Trust upon not more than 60 days' written notice by either party or upon
assignment by the Distributor.
The Trust has adopted distribution plans pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended (the "1940 Act"). The Trust has
adopted a shareholder servicing plan for its Class C Shares.
The distribution plan for Class C shares provides for payments to the
Distributor at an annual rate of .75% of each Fund's average daily net assets.
These payments are characterized as "Compensation," and are not directly tied to
expenses incurred by the Distributor; the payments the Distributor receives
during any year may, therefore, be higher or lower than its actual expenses.
These payments may be used to compensate the Distributor for its services in
connection with distribution assistance or provision of shareholder services,
and some or all of it may be used to pay financial institutions and
intermediaries such as banks, savings and loan associations, insurance
companies, and investment counselors, broker-dealers and the Distributor's
affiliates and subsidiaries for services or reimbursement of expenses incurred
in connection with distribution assistance or provision of shareholder services.
If the Distributor's expenses are less than its fee under a plan, the Trust will
still pay the full fee and the Distributor will realize a profit, but the Trust
will not be obligated to pay in excess of the full fee, even if the
Distributor's actual expenses are higher.
S-26
<PAGE>
Under the shareholder service plans applicable to Class A and Class C, the
Distributor may provide those services itself, or may enter into arrangements
under which third parties provide such services and are compensated by the
Distributor. Under such arrangements, the Distributor may retain as profit any
difference between the fee it receives and the amount it pays such third
parties. In addition, the Funds may pay the Distributor a fee at a negotiated
rate of up to .25% annually of the average daily net assets of such Fund
attributable to Class A or Class C shares that are subject to the arrangement in
return for provision of a broad range of shareholder and administrative
services, including: maintaining client accounts; arranging for bank wires;
responding to client inquiries concerning services provided for investments;
changing dividend options; account designations and addresses; providing
sub-accounting; providing information on share positions to clients; forwarding
shareholder communications to clients; processing purchase, exchange and
redemption orders; and processing dividend payments.
TRUSTEES AND OFFICERS OF THE TRUST
The management and affairs of the Trust are supervised by the Trustees under the
laws of the State of Delaware.
The Trustees and Executive Officers of the Trust, their respective dates of
birth, and their principal occupations for the last five years are set forth
below. Each may have held other positions with named companies during that
period. Unless otherwise noted, the business address of each Trustee and each
Executive Officer is SEI Investments Company, Oaks, Pennsylvania 19456. Certain
officers of the Trust also serve as officers of some or all of the following:
The Achievement Funds Trust, The Advisors' Inner Circle Fund, The Arbor Fund,
ARK Funds, Armada Funds, Bishop Street Funds, Boston 1784 Funds(R), CrestFunds,
Inc., CUFUND, The Expedition Funds, First American Funds, Inc., First American
Investment Funds, Inc., First American Strategy Funds, Inc, HighMark Funds,
Monitor Funds, Morgan Grenfell Investment Trust, Oaks Associates Funds, PBHG
Advisor Funds, Inc., The PBHG Funds, Inc., PBHG Insurance Series Fund, Inc., The
Pillar Funds, SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Index
Funds, SEI Institutional Investments Trust, SEI Institutional Managed Trust, SEI
Institutional International Trust, SEI Liquid Asset Trust, SEI Tax Exempt Trust,
STI Classic Funds, STI Classic Variable Trust, and TIP Funds, each of which is
an open-end management investment company managed by SEI Investments Fund
Management or its affiliates and, except for PBHG Advisor Funds, are distributed
by SEI Investments Distribution Co.
ROBERT E. TURNER (DOB 11/26/56) - Trustee* - Chairman and Chief Investment
Officer of Turner Investment Partners, Inc. (the Adviser) since 1990.
ALFRED C. SALVATO (DOB 01/09/58) - Trustee - Treasurer, Thomas Jefferson
University, since 1995, and Assistant Treasurer, 1988-1995.
S-27
<PAGE>
RONALD FILANTE (DOB 11/19/45) - Trustee - Associate Professor of Finance, Pace
University, since 1987.
KATHERINE GRISWOLD (DOB 10/28/56) - Trustee - Director of Benefits Trusts,
Southern New England Telephone Company, since 1993 and the Director of the
Pension Fund from 1993-1989.
STEPHEN J. KNEELEY (DOB 02/09/63) - Vice President and Assistant Secretary -
Chief Operating Officer of Turner Investment Partners, Inc., since 1990.
JANET RADER ROTE (DOB 08/24/60) - Vice President and Assistant Secretary -
Director of Compliance of Turner Investment Partners, Inc., since 1992.
CYNTHIA KUNZE (DOB 12/15/56) - Vice President and Assistant Secretary -
Administrator of Solon Asset Management, L.P., since 1996. Post Production and
Assistant to the Producer, Twentieth Century Fox, 1989-1995.
TODD B. CIPPERMAN (DOB 02/14/66) - Vice President and Assistant Secretary - Vice
President and Assistant Secretary of SEI, the Manager and Distributor since
1995. Associate, Dewey Ballantine (law firm), 1994-1995. Associate, Winston and
Strawn (law firm), 1991-1994.
SANDRA K. ORLOW (DOB 10/18/53) - Vice President and Assistant Secretary - Vice
President and Assistant Secretary of the Manager and Distributor since 1988.
KEVIN P. ROBINS (DOB 04/15/61) - Vice President, Assistant Secretary - Senior
Vice President and General Counsel of SEI, the Manager and the Distributor since
1994. Vice President and Assistant Secretary of SEI, the Manager and Distributor
1992-1994. Associate, Morgan, Lewis & Bockius LLP (law firm), 1988-1992.
JOSEPH M. O'DONNELL (DOB 11/13/54) - Vice President, Assistant Secretary - Vice
President of SEI Investments Company. Vice President and General Counsel of FPS
Services, Inc., from 1993 to 1997. Staff Counsel and Secretary of Provident
Mutual Family of Funds from 1990 to 1993.
LYDIA A. GAVALIS (DOB ________) - Vice President, Assistant Secretary - Vice
President of SEI Investments Company. Assistant General Counsel and Director of
Arbitration, Philadelphia Stock Exchange from 1989-1998.
LYNDA J. STRIEGEL (DOB ________) - Vice President, Assistant Secretary - Vice
President of SEI Investments Company. Senior Asset Management Counsel, Barnett
Banks, Inc., from 1997-1998. Prior to that, she was a Partner at Groom and
Nordberg, Charted from 1996-1997 and Associate General Counsel at Riggs Bank,
N.A. from 1991-1995.
S-28
<PAGE>
KATHY HEILIG (DOB ________) - Vice President, Assistant Secretary - Treasurer of
SEI Investments Company since 1997, was Assistant Controller of SEI Investments
Company since 1995. Vice President of SEI Investments Company since 1991.
Director of Taxes of SEI Investments Company from 1987 to 1991. Tax Manager,
Arthur Andersen LLP prior to 1987.
ROBERT DELLACROCE (DOB 12/17/63) - Controller and Chief Accounting Officer -
Director, Funds Administration and Accounting - Director, Funds Administration
and Accounting of SEI since 1994. Senior Audit Manager, Arthur Andersen LLP,
1986-1994.
JAMES W. JENNINGS (DOB 01/15/37) - Secretary - Partner, Morgan, Lewis & Bockius
LLP (law firm), counsel to the Trust, the Adviser, the Administrator and
Distributor.
JOHN H. GRADY, JR. (DOB 06/01/61) - Assistant Secretary - 2000 One Logan Square,
Philadelphia, Pennsylvania, 19103, Partner, Morgan, Lewis & Bockius LLP, Counsel
to the Trust, the Adviser, the Administrator and the Distributor.
EDWARD B. BAER (DOB 09/27/68) - Assistant Secretary - 1800 M Street, N.W.,
Washington, D.C. 20036, Associate, Morgan, Lewis & Bockius LLP, Counsel to the
Trust, the Adviser, the Administrator and the Distributor, since 1995. Attorney,
Aquila Management Corporation, 1994. Rutgers University School of Law - Newark,
1991-1994.
--------------------
S-29
<PAGE>
The following table exhibits Trustee compensation for the fiscal year ended
February 28, 1998.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Total
Compensation
Aggregate From Registrant
Compensation Pension or and Fund
From Registrant Retirement Complex Paid to
for the Fiscal Benefits Estimated Trustees for the
Year Ended Accrued as Part Annual Benefits Fiscal Year
Name of Person, February 28, of Fund Upon Ended February
Position 1998 Expenses Retirement 28, 1998
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ronald Filante $______ 0 0 $______
- ------------------------------------------------------------------------------------------------
Katherine Griswold $______ 0 0 $______
- ------------------------------------------------------------------------------------------------
Alfred Salvato $______ 0 0 $______
- ------------------------------------------------------------------------------------------------
</TABLE>
The Trustees and Officers of the Trust own less than 1% of the outstanding
shares of the Trust. The Trust pays fees only to the non-interested Trustees of
the Trust. Compensation of Officers and interested Trustees of the Trust is paid
by the Adviser or the Administrator.
COMPUTATION OF YIELD AND TOTAL RETURN
From time to time the Trust may advertise yield and total return of the Funds.
These figures will be based on historical earnings and are not intended to
indicate future performance. No representation can be made concerning actual
future yields or returns. The yield of a Fund refers to the annualized income
generated by an investment in the Fund over a specified 30-day period. The yield
is calculated by assuming that the income generated by the investment during
that 30-day period is generated in each period over one year and is shown as a
percentage of the investment. In particular, yield will be calculated according
to the following formula:
Yield = 2[((a-b)/cd + 1)(6) - 1] where a = dividends and interest earned during
the period; b = expenses accrued for the period (net of reimbursement); c = the
current daily number of shares outstanding during the period that were entitled
to receive dividends; and d = the maximum offering price per share on the last
day of the period.
The total return of a Fund refers to the average compounded rate of return to a
hypothetical investment for designated time periods (including but not limited
to, the period from which the Fund commenced operations through the specified
date), assuming that the entire investment is redeemed at the end of each
period. In particular, total return will be calculated according to the
S-30
<PAGE>
following formula: P(1 + T)(n) = ERV, where P = a hypothetical initial payment
of $1,000; T = average annual total return; n = number of years; and ERV =
ending redeemable value, as of the end of the designated time period, of a
hypothetical $1,000 payment made at the beginning of the designated time period.
PURCHASE AND REDEMPTION OF SHARES
Purchases and redemptions may be made through the Transfer Agent on days when
the New York Stock Exchange is open for business. Currently, the weekdays on
which the Fund is closed for business are: New Year's Day, Martin Luther King,
Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day. Shares of each Fund are offered on a
continuous basis.
It is currently the Trust's policy to pay all redemptions in cash. The Trust
retains the right, however, to alter this policy to provide for redemptions in
whole or in part by a distribution in-kind of securities held by a Fund in lieu
of cash. Shareholders may incur brokerage charges on the sale of any such
securities so received in payment of redemptions.
The Trust reserves the right to suspend the right of redemption and/or to
postpone the date of payment upon redemption for any period on which trading on
the New York Stock Exchange is restricted, or during the existence of an
emergency (as determined by the SEC by rule or regulation) as a result of which
disposal or valuation of a Fund's securities is not reasonably practicable, or
for such other periods as the SEC has by order permitted. The Trust also
reserves the right to suspend sales of shares of any Fund for any period during
which the New York Stock Exchange, the Adviser, the Administrator, the Transfer
Agent and/or the Custodian are not open for business.
DETERMINATION OF NET ASSET VALUE
The securities of each Fund are valued by the Administrator. The Administrator
may use an independent pricing service to obtain valuations of securities. The
pricing service relies primarily on prices of actual market transactions as well
as on trade quotations obtained from third parties. The procedures of the
pricing service and its valuations are reviewed by the officers of the Trust
under the general supervision of the Trustees.
Corporate debt securities and mortgage-related securities held by the Funds are
valued on the basis of valuations provided by dealers in those instruments or by
an independent pricing service, approved by the Board of Trustees. Any such
pricing service, in determining value, will use information with respect to
transactions in the securities being valued, quotations from dealers, market
transactions in comparable securities, analyses and evaluations of various
relationships between securities and yield to maturity information.
S-31
<PAGE>
An option that is written by the Funds is generally valued at the last sale
price or, in the absence of the last sale price, the last offer price. An option
that is purchased by the Funds is generally valued at the last bid price. The
value of a futures contract equals the unrealized gain or loss on the contract
that is determined by marking the contract to the current settlement price for a
like contract on the valuation date of the futures contract. When a settlement
price cannot be used, futures contracts will be valued at their fair market
value as determined by or under the direction of the Trust's Board of Trustees.
If any securities held by the Funds are restricted as to resale or do not have
readily available market quotations, the Adviser determines their fair value for
purposes of determining market-based value, following procedures approved by the
Board of Trustees. The Trustees periodically review such procedures. The fair
value of such securities is generally determined as the amount which the Funds
could reasonably expect to realize from an orderly disposition of such
securities over a reasonable period of time. The valuation procedures applied in
any specific instance are likely to vary from case to case. However,
consideration is generally given to the financial position of the issuer and
other fundamental analytical data relating to the investment and to the nature
of the restrictions on disposition of the securities (including any registration
expenses that might be borne by the Funds in connection with disposition). In
addition, specific factors are also generally considered, such as the cost of
the investment, the market value of any unrestricted securities of the same
class (both at the time of purchase and at the time of valuation), the size of
the holding, the prices of any recent transactions or offers with respect to
such securities and any available analysts' reports regarding the issuer.
All other assets of the Funds are valued in such manner as the Board of Trustees
in good faith deems appropriate to reflect their fair value.
TAXES
The following is only a summary of certain tax considerations generally
affecting the Funds and their shareholders, and is not intended as a substitute
for careful tax planning. Shareholders are urged to consult their tax advisors
with specific reference to their own tax situations, including their state and
local tax liabilities.
FEDERAL INCOME TAX
The following discussion of federal income tax consequences is based on the Code
and the regulations issued thereunder as in effect on the date of this Statement
of Additional Information. New legislation, as well as administrative changes or
court decisions, may significantly change the conclusions expressed herein, and
may have a retroactive effect with respect to the transactions contemplated
herein.
S-32
<PAGE>
Each Fund intends to qualify as a "regulated investment company" ("RIC") as
defined under Subchapter M of the Code. By following such a policy, each Fund
expects to eliminate or reduce to a nominal amount the federal taxes to which it
may be subject.
In order to qualify for treatment as a RIC under the Code, each Fund must
distribute annually to its shareholders at least the sum of 90% of its net
interest income excludable from gross income plus 90% of its investment company
taxable income (generally, net investment income plus net short-term capital
gain) ("Distribution Requirement") and also must meet several additional
requirements. Among these requirements are the following: (i) at least 90% of
the Fund's gross income each taxable year must be derived from dividends,
interest, payments with respect to securities loans, gains from the sale or
other disposition of stock or securities, or certain other income (including
gains from options, futures or forward contracts); (ii) at the close of each
quarter of the Fund's taxable year, at least 50% of the value of its total
assets must be represented by cash and cash items, U.S. Government securities,
securities of other RICs and other securities, with such other securities
limited, in respect to any one issuer, to an amount that does not exceed 5% of
the value of the Fund's assets and that does not represent more than 10% of the
outstanding voting securities of such issuer; and (iii) at the close of each
quarter of the Fund's taxable year, not more than 25% of the value of its assets
may be invested in securities (other than U.S. Government securities or the
securities of other RICs) of any one issuer, or of two or more issuers which are
engaged in the same, similar or related trades or business if the Fund owns at
least 20% of the voting power of such issuer.
Notwithstanding the Distribution Requirement described above, which requires
only that the Fund distribute at least 90% of its annual investment company
taxable income and does not require any minimum distribution of net capital gain
(the excess of net long-term capital gain over net short-term capital loss),
each Fund will be subject to a nondeductible 4% federal excise tax to the extent
it fails to distribute by the end of any calendar year 98% of its ordinary
income for that year and 98% of its capital gain net income (the excess of
short- and long-term capital gains over short-and long-term capital losses) for
the one-year period ending on October 31 of that year, plus certain other
amounts.
In certain cases, a Fund will be required to withhold, and remit to the United
States Treasury, 31% of any distributions paid to a shareholder who (1) has
failed to provide a correct taxpayer identification number, (2) is subject to
backup withholding by the Internal Revenue Service, or (3) has not certified to
that Fund that such shareholder is not subject to backup withholding.
If any Fund fails to qualify as a RIC for any taxable year, it will be taxable
at regular corporate rates. In such an event, all distributions (including
capital gains distributions) will be taxable as ordinary dividends to the extent
of the Fund's current and accumulated earnings and profits, and such
distributions will generally be eligible for the corporate dividends-received
deduction.
S-33
<PAGE>
STATE TAXES
No Fund is liable for any income or franchise tax in Delaware if it qualifies as
a RIC for federal income tax purposes. Distributions by any Fund to shareholders
and the ownership of shares may be subject to state and local taxes.
PORTFOLIO TRANSACTIONS
In all purchases and sales of securities for the Funds, the primary
consideration is to be obtained the most favorable price and execution
available. Pursuant to the Agreements, the Adviser and Sub-Advisers determine
which securities are to be purchased and sold by each Fund and which
broker-dealers are eligible to execute the Funds' portfolio transactions,
subject to the instructions of the review by the Funds and the Trust's Board of
Trustees.
Purchases of portfolio securities for the Funds may be made directly from
issuers or from underwriters. Where possible, purchase and sale transactions
will be effected through dealers (including banks) which specialize in the types
of securities which the Funds will be holding, unless better executions are
available elsewhere. Dealers and underwriters usually act as principals for
their own accounts. Purchases from underwriters will include a commission paid
by the issuer to the underwriter and purchases from dealers will include the
spread between the bid and the asked price. If the execution and price offered
by more than one dealer or underwriter are comparable, the order may be
allocated to a dealer or underwriter that has provided research or other
services as discussed below.
In placing portfolio transactions, the Adviser and Sub-Advisers will use its
best efforts to choose a broker-dealer capable of providing the services
necessary to obtain the most favorable price and execution available. The full
range and quality of services available will be considered in making these
determinations, such as the size of the order, the difficulty of execution, the
operational facilities of the firm involved, the firm's risk in positioning a
block of securities, and other factors.
In those instances where it is reasonably determined that more than one
broker-dealer can offer the services needed to obtain the most favorable price
and execution available and the transaction involves a brokerage commission,
consideration may be given to those broker-dealers which furnish or supply
research and statistical information to the Adviser and Sub-Advisers or their
affiliates that they may lawfully and appropriately use in their investment
advisory capacity for the Funds and for other accounts, as well as provide other
services in addition to execution services. The Adviser and Sub-Advisers
consider such information, which is in addition to, and not in lieu of, the
services required to be performed by it under the agreement, to be useful in
varying degrees, but of indeterminable value. The Adviser and Sub-Advisers
anticipate that these opportunities will arise infrequently if at all.
S-34
<PAGE>
The placement of portfolio transactions with broker-dealers who sell shares of
the Funds is subject to rules adopted by the National Association of Securities
Dealers, Inc. ("NASD"). Provided the Trust's officers are satisfied that the
Funds are receiving the most favorable price and execution available, the
Adviser and Sub-Advisers may also consider the sale of the Funds' shares as a
factor in the selection of broker-dealers to execute their portfolio
transactions.
While the Funds' general policy is to seek first to obtain the most favorable
price and execution available, in selecting a broker-dealer to execute portfolio
transactions, weight may also be given to the ability of a broker-dealer to
furnish brokerage, research and statistical services to the Funds or to the
Adviser and Sub-Advisers, even if the specific services were not imputed just to
the Funds and may be lawfully and appropriately used by the Adviser and
Sub-Advisers in advising other clients. The Adviser and Sub-Advisers consider
such information, which is in addition to, and not in lieu of, the services
required to be performed by it under the agreements, to be useful in varying
degrees, but of indeterminable value. In negotiating any commissions with a
broker, the Funds may therefore pay a higher commission than would be the case
if no weight were given to the furnishing of these supplemental services,
provided that the amount of such commission has been determined in good faith by
the Funds and the Adviser and Sub-Advisers to be reasonable in relation to the
value of the brokerage and/or research services provided by such broker-dealer,
which services either produce a direct benefit to the Funds or assist the
Adviser and Sub-Advisers in carrying out its responsibilities to the Funds. The
standard of reasonableness is to be measured in light of the Adviser and
Sub-Advisers and the their overall responsibilities to the Funds.
Investment decisions for the Funds are made independently from those of other
client accounts of the Adviser and Sub-Advisers. Nevertheless, it is possible
that at times the same securities will be acceptable for the Funds and for one
or more of such client accounts. To the extent any of these client accounts and
one or both of the Funds seeks to acquire the same security at the same time,
the individual Fund may not be able to acquire as large a portion of such
security as it desires, or it may have to pay a higher price or obtain a lower
yield for such security. Similarly, the Funds may not be able to obtain as high
a price for, or as large an execution of, an order to sell any particular
security at the same time. If one or more of such client accounts simultaneously
purchases or sells the same security one or both of the Funds is purchasing or
selling, each day's transactions in such security will be allocated between the
particular Funds and all such client accounts in a manner deemed equitable by
the Adviser and Sub-Advisers, taking into account the respective sizes of the
accounts, the amount being purchased or sold and other factors deemed relevant
by the Adviser and Sub-Advisers. It is recognized that in some cases this system
could have a detrimental effect on the price or value of the security insofar as
the Funds are concerned. In other cases, however, it is believed that the
ability of the Funds to participate in volume transactions may produce better
trade execution for the Funds.
The Funds may use the Distributor and other affiliated brokers as a broker to
execute portfolio transactions. In accordance with the 1940 Act, the Trust has
adopted certain procedures which are designed to provide that commissions
payable to affiliated brokers are reasonable and fair as
S-35
<PAGE>
compared to the commissions received by other brokers in connection with
comparable transactions involving similar securities being purchased or sold on
securities or options exchanges during a comparable period of time. The Funds do
not deem it practicable and in their best interest to solicit competitive bids
for commission rates on each transaction. However, consideration is regularly
given to information concerning the prevailing level of commissions charged on
comparable transactions by other qualified brokers. The Board of Trustees
reviews the procedures adopted by the Trust with respect to the payment of
brokerage commissions at least annually to ensure their continuing
appropriateness, and determines, on at least a quarterly basis, that all such
transactions during the preceding quarter were effected in compliance with such
procedures.
Depending on the Adviser's and Sub-Advisers' view of market conditions, the
Funds may or may not purchase securities with the expectation of holding them to
maturity. The Funds may, however, sell securities prior to maturity to meet
redemptions or as a result of a revised evaluation of market conditions or of
the issuer.
DESCRIPTION OF SHARES
The Declaration of Trust authorizes the issuance of an unlimited number of
portfolios and shares of each portfolio. Each share of a portfolio represents an
equal proportionate interest in that portfolio with each other share. Shares are
entitled upon liquidation to a pro rata share in the net assets of the
portfolio. Shareholders have no preemptive rights. All consideration received by
the Trust for shares of any portfolio and all assets in which such consideration
is invested would belong to that portfolio and would be subject to the
liabilities related thereto. Share certificates representing shares will not be
issued.
The Class I Share have no 12b-1 plan and no sales charges. Class A Shares are
identical to Class I Shares, except that Class A Shares have a shareholder
servicing plan and a front-end sales charge. Class C Shares are identical to
Class I Shares, except that Class C Shares have a Rule 12b-1 plan, a shareholder
service plan and a contingent-deferred sales charge.
SHAREHOLDER LIABILITY
The Trust is an entity of the type commonly known as a "Delaware business
trust." The Trust's Declaration of Trust contains an express disclaimer of
shareholder liability for obligations of the Trust, and requires that notice of
such disclaimer be given in each agreement, obligation or instrument entered
into or executed by or on behalf of the Trust or the Trustees, and because the
Declaration of Trust provides for indemnification out of the Trust property for
any shareholder held personally liable for the obligations of the Trust.
S-36
<PAGE>
LIMITATION OF TRUSTEES' LIABILITY
The Declaration of Trust provides that a Trustee shall be liable only for his
own willful defaults and, if reasonable care has been exercised in the selection
of officers, agents, employees or investment adviser, shall not be liable for
any neglect or wrongdoing of any such person. The Declaration of Trust also
provides that the Trust will indemnify its Trustees and officers against
liabilities and expenses incurred in connection with actual or threatened
litigation in which they may be involved because of their offices with the Trust
unless it is determined in the manner provided in the Declaration of Trust that
they have not acted in good faith in the reasonable belief that their actions
were in the best interests of the Trust. However, nothing in the Declaration of
Trust shall protect or indemnify a Trustee against any liability for his willful
misfeasance, bad faith, gross negligence or reckless disregard of his duties.
EXPERTS
Ernst & Young LLP serves as independent public accountants to the Trust.
LEGAL COUNSEL
Morgan, Lewis & Bockius LLP serves as counsel to the Trust.
S-37
<PAGE>
APPENDIX
DESCRIPTION OF CORPORATE BOND RATINGS
DESCRIPTION OF MOODY'S LONG-TERM RATINGS
Aaa Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high-grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risk appear somewhat larger than the Aaa securities.
A Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment some time in the future.
Baa Bonds which are rated Baa are considered as medium-grade obligations (i.e.,
they are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
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.
C Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
A-1
<PAGE>
DESCRIPTION OF STANDARD & POOR'S LONG-TERM RATINGS
INVESTMENT GRADE
AAA Debt rated 'AAA' has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA Debt rated 'AA' has a very strong capacity to pay interest and repay
principal and differs from the highest rated debt only in small degree.
A Debt rated 'A' has a strong capacity to pay interest and repay
principal, although it is somewhat more susceptible to adverse effects
of changes in circumstances and economic conditions than debt in
higher-rated categories.
BBB Debt rated 'BBB' is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher
rated categories.
SPECULATIVE GRADE
Debt rated 'BB', 'B', 'CCC', 'CC', and 'C' is regarded as having
predominantly speculative characteristics with respect to capacity to pay
interest and repay principal. 'BB' indicates the least degree of speculation and
'C' the highest degree of speculation. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
BB Debt rated 'BB' has less near-term vulnerability to default than other
speculative grade debt. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions that
could lead to inadequate capacity to meet timely interest and principal
payments. The 'BB' rating category is also used for debt subordinated to
senior debt that is assigned an actual or implied 'BBB-' rating.
B Debt rate 'B' has greater vulnerability to default but presently has the
capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions would likely impair capacity
or willingness to pay interest and repay principal. The 'B' rating
category also is used for debt subordinated to senior debt that is
assigned an actual or implied 'BB' or 'BB-' rating.
CCC Debt rated 'CCC' has a current identifiable vulnerability to default,
and is dependent on favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of
principal. In the event of adverse business, financial, or economic
conditions, it is not likely to have the capacity to pay interest and
repay principal. The 'CCC' rating category also is used for debt
subordinated to senior debt that is assigned an actual or implied 'B' or
'B-' rating.
CC The rating 'CC' is typically applied to debt subordinated to senior debt
which is assigned an actual or implied 'CCC' rating.
A-2
<PAGE>
C The rating 'C' is typically applied to debt subordinated to senior debt
which is assigned an actual or implied 'CCC-' debt rating. The 'C'
rating may be used to cover a situation where a bankruptcy petition has
been filed, but debt service payments are continued.
CI Debt rated 'CI' is reserved for income bonds on which no interest is
being paid.
D Debt is rated 'D' when the issue is in payment default, or the obligor
has filed for bankruptcy. The 'D' rating is used when interest or
principal payments are not made on the date due, even if the applicable
grace period has not expired, unless S&P believes that such payments
will be made during such grace period.
DESCRIPTION OF DUFF & PHELPS' LONG-TERM DEBT RATINGS
AAA Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.
AA+ High credit quality. Protection factors are strong. Risk is modest but
AA- may vary slightly from time to time because of economic conditions.
A+ Protection factors are average but adequate. However, risk factors are
A- more variable and greater in periods of economic stress.
BBB+ Below average protection factors but still considered sufficient for
BBB- prudent investment. Considerable variability in risk during economic
cycles.
BB+ Below investment grade but deemed likely to meet obligations when due.
BB Present or prospective financial protection factors fluctuate according
BB- to industry conditions or company fortunes. Overall quality may move up
or down frequently within this category.
B+ Below investment grade and possessing risk that obligations will not be
B met when due. Financial protection factors will fluctuate widely
B- according to economic cycles, industry conditions and/or company
fortunes. Potential exists for frequent changes in the rating within
this category or into a higher or lower rating grade.
CCC Well below investment grade securities. Considerable uncertainty exists
as to timely payment of principal, interest or preferred dividends.
Protection factors are narrow and risk can be substantial with
unfavorable economic/industry conditions, and/or with unfavorable
company developments.
DD Defaulted debt obligations. Issuer failed to meet scheduled principal
and/or interest payments.
DP Preferred stock with dividend arrearages.
A-3
<PAGE>
DESCRIPTION OF FITCH'S LONG-TERM RATINGS
INVESTMENT GRADE BOND
AAA Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by
reasonably foreseeable events.
AA Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is
very strong, although not quite as strong as bonds rated 'AAA'. Because
bonds rated in the 'AAA' and 'AA' categories are not significantly
vulnerable to foreseeable future developments, short-term debt of these
issuers is generally rated 'F-1+'.
A Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to
be strong, but may be more vulnerable to adverse changes in economic
conditions and circumstances than bonds with higher ratings.
BBB Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these
bonds, and therefore impair timely payment. The likelihood that the
ratings of these bonds will fall below investment grade is higher than
for bonds with higher ratings.
SPECULATIVE GRADE BOND
BB Bonds are considered speculative. The obligor's ability to pay interest
and repay principal may be affected over time by adverse economic
changes. However, business and financial alternatives can be identified
which could assist the obligor in satisfying its debt service
requirements.
B Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of
continued timely payment of principal and interest reflects the
obligor's limited margin of safety and the need for reasonable business
and economic activity throughout the life of the issue.
CCC Bonds have certain identifiable characteristics which, if not remedied,
may lead to default. The ability to meet obligations requires an
advantageous business and economic environment.
CC Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C Bonds are in imminent default in payment of interest or principal.
DDD, DD,
and D Bonds are in default on interest and/or principal payments. Such bonds
are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the
obligor. 'DDD' represents the highest potential for recovery on these
bonds, and 'D' represents the lowest potential for recovery.
A-4
<PAGE>
DESCRIPTION OF IBCA'S LONG-TERM RATINGS
AAA Obligations for which there is the lowest expectation of investment
risk. Capacity for timely repayment of principal and interest is
substantial, such that adverse changes in business, economic or
financial conditions are unlikely to increase investment risk
substantially.
AA Obligations for which there is a very low expectation of investment
risk. Capacity for timely repayment of principal and interest is
substantial. Adverse changes in business, economic or financial
conditions may increase investment risk, albeit not very significantly.
A Obligations for which there is a low expectation of investment risk.
Capacity for timely repayment of principal and interest is strong,
although adverse changes in business, economic or financial conditions
may lead to increased investment risk.
BBB Obligations for which there is currently a low expectation of
investment risk. Capacity for timely repayment of principal and
interest is adequate, although adverse changes in business, economic or
financial conditions are more likely to lead to increased investment
risk than for obligations in other categories.
BB Obligations for which there is a possibility of investment risk
developing. Capacity for timely repayment of principal and interest
exists, but is susceptible over time to adverse changes in business,
economic or financial conditions.
B Obligations for which investment risk exists. Timely repayment of
principal and interest is not sufficiently protected against adverse
changes in business, economic or financial conditions.
CCC Obligations for which there is a current perceived possibility of
default. Timely repayment of principal and interest is dependent on
favorable business, economic or financial conditions.
CC Obligations which are highly speculative or which have a high risk of
default.
C Obligations which are currently in default.
DESCRIPTION OF THOMSON BANKWATCH'S LONG-TERM DEBT RATINGS
INVESTMENT GRADE
AAA The highest category; indicates that the ability to repay principal and
interest on a timely basis is very high.
AA The second-highest category; indicates a superior ability to repay
principal and interest on a timely basis, with limited incremental risk
compared to issues rated in the highest category.
A The third-highest category; indicates the ability to repay principal
and interest is strong. Issues rated "A" could be more vulnerable to
adverse developments (both internal and external) than obligations with
higher ratings.
A-5
<PAGE>
BBB The lowest investment-grade category; indicates an acceptable capacity
to repay principal and interest. Issues rated "BBB" are, however, more
vulnerable to adverse developments (both internal and external) than
obligations with higher ratings.
NON-INVESTMENT GRADE
BB While not investment grade, the "BB" rating suggests that the
likelihood of default is considerably less than for lower-rated issues.
However, there are significant uncertainties that could affect the
ability to adequately service debt obligations.
B Issues rated "B" show a higher degree of uncertainty and therefore
greater likelihood of default than higher-rated issues. Adverse
developments could well negatively affect the payment of interest and
principal on a timely basis.
CCC Issues rated "CCC" clearly have a high likelihood of default, with
little capacity to address further adverse changes in financial
circumstances.
CC "CC" is applied to issues that are subordinate to other obligations
rated "CCC" and are afforded less protection in the event of bankruptcy
or reorganization.
D Default
A-6
<PAGE>
PART C: OTHER INFORMATION
Item 23. Exhibits:
(a)(1) Agreement and Declaration of Trust dated October 25, 1993, is
incorporated by reference to Exhibit 1(a) of the Registrant's
Registration Statement as filed with the Securities and Exchange
Commission on October 27, 1993.
(a)(2) Certificate of Amendment of Agreement and Declaration of Trust dated
December 11, 1993, is incorporated by reference to Exhibit 1(b) of the
Registrant's Registration Statement as filed with the Securities and
Exchange Commission on January 25, 1994.
(a)(3) Certificates of Amendment of Agreement and Declaration of Trust and
Certificate of Trust dated June 13, 1994, is incorporated by reference
to Exhibit 1(c) of the Registrant's Registration Statement as filed
with the Securities and Exchange Commission on September 1, 1994.
(a)(4) Certificate of Amendment of Agreement and Declaration of Trust dated
November 10, 1997, is incorporated by reference to Exhibit 1(d) of the
Registrant's Registration Statement as filed with the Securities and
Exchange Commission on December 16, 1997.
(a)(5) Amended and Restated Agreement and Declaration of Trust dated September
1998, is filed herewith.
(b) By-Laws are incorporated by reference to Exhibit 2 of the Registrant's
Registration Statement as filed with the Securities and Exchange
Commission on October 27, 1993.
(c) Not applicable
(d)(1) Investment Management Agreement is incorporated by reference to Exhibit
5(a) of the Registrant's Post-Effective Amendment No. 3 as filed with
the Securities and Exchange Commission on June 28, 1996.
(d)(2) Sub-Advisory Agreement is incorporated by reference to Exhibit 5(b) of
the Registrant's Post-Effective Amendment No. 3 as filed with the
Securities and Exchange Commission on June 28, 1996.
(d)(3) Investment Advisory Agreement between the Registrant and Turner
Investment Partners, Inc., on behalf of the Short Duration Funds - One
Year Portfolio and the Short Duration Funds - Three Year Portfolio, is
filed herewith.
(d)(4) Investment Advisory Agreement between the Registrant and Turner
Investment Partners, Inc., is filed herewith
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<PAGE>
(d)(5) Investment Advisory Agreement between the Registrant and Penn Capital
Management Company, Inc., is filed herewith.
(e)(1) Underwriting Agreement is incorporated by reference to Exhibit 6(a) of
the Registrant's Post-Effective Amendment No. 3 as filed with the
Securities and Exchange Commission on June 28, 1996.
(e)(2) Distribution Agreement between the Registrant and SEI Investments
Distribution Co., is filed herewith.
(f) Not applicable
(g) Custodian Agreement is incorporated by reference to Exhibit 8 of the
Registrant's Registration Statement as filed with the Securities and
Exchange Commission on June 29, 1995.
(h)(1) Administrative Services Contract is incorporated by reference to
Exhibit 9(a) of the Registrant's Post-Effective Amendment No. 3 as
filed with the Securities and Exchange Commission on June 28, 1996.
(h)(2) Services Agreement is incorporated by reference to Exhibit 9(b) of the
Registrant's Post-Effective Amendment No. 3 as filed with the
Securities and Exchange Commission on June 28, 1996.
(h)(3) Administration Agreement between the Registrant and SEI Fund Resources,
is filed herewith.
(h)(4) Transfer Agency Agreement between the Registrant and DST Systems, Inc.,
is filed herewith.
(i) Opinion and Consent of Counsel is incorporated by reference to Exhibit
10 of the Registrant's Registration Statement as filed with the
Securities and Exchange Commission on December 16, 1997.
(j) Not applicable
(k) Not applicable
(l) Not applicable
(m) Not applicable
(n) Not applicable
(o) Not applicable
C-2
<PAGE>
(p)(1) Powers of Attorney for Katherine Griswold and Ronald Filante are
incorporated by reference to Exhibit 24(a) of the Registrant's
Registration Statement as filed with the Securities and Exchange
Commission on December 16, 1997.
(p)(2) Powers of Attorney for Robert E. Turner and Alfred C. Salvato are
incorporated by reference to Exhibit 24(b) of the Registrant's
Registration Statement as filed with the Securities and Exchange
Commission on August 18, 1998.
Item 24. Persons Controlled by or Under Common Control with Registrant:
See the Prospectus and the Statement of Additional Information
regarding the Registrant's control relationships. SEI Investments Management
Corporation (formerly, SEI Financial Management Corporation) is the owner of all
beneficial interest in the Administrator and is a subsidiary of SEI Investments
Company, which also controls the distributor of the Registrant, SEI Investments
Distribution Co. (formerly, SEI Financial Services Company), as well as to other
corporations engaged in providing various financial and record keeping services,
primarily to bank trust departments, pension plan sponsors, and investment
managers.
Item 25. Indemnification:
Article VII of the Agreement and Declaration of Trust empowers the
Trustees of the Trust, to the full extent permitted by law, to purchase with
Trust assets insurance for indemnification from liability and to pay for all
expenses reasonably incurred or paid or expected to be paid by a Trustee or
officer in connection with any claim, action, suit or proceeding in which he or
she becomes involved by virtue of his or her capacity or former capacity with
the Trust.
Article VI of the By-Laws of the Trust provides that the Trust shall
indemnify any person who was or is a party or is threatened to be made a party
to any proceeding by reason of the fact that such person is and other amounts or
was an agent of the Trust, against expenses, judgments, fines, settlement and
other amounts actually and reasonable incurred in connection with such
proceeding if that person acted in good faith and reasonably believed his or her
conduct to be in the best interests of the Trust. Indemnification will not be
provided in certain circumstances, however, including instances of willful
misfeasance, bad faith, gross negligence, and reckless disregard of the duties
involved in the conduct of the particular office involved.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to the Trustees, officers and
controlling persons of the Registrant pursuant to the foregoing provisions or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable in the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a Trustee, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such Trustee, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
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<PAGE>
Item 26. Business and Other Connections of Investment Adviser:
ADVISERS
Turner Investment Partners, Inc.
Turner Investment Partners, Inc. ("Turner") is the investment adviser for the
Turner Ultra Large Cap Growth, Turner Growth Equity, Turner Midcap Growth,
Turner Small Cap Growth, Turner Fixed Income and TIP Target Select Equity Funds.
The principal address of Turner is 1235 Westlakes Drive, Suite 350, Berwyn, PA
19312. Turner is an investment adviser registered under the Advisers Act.
The list required by this Item 28 of officers and directors of Turner, together
with information as to any other business profession, vocation or employment of
substantial nature engaged in by such officers and directors during the past two
years is incorporated by reference to Schedules A and D of Form ADV filed by
Turner pursuant to the Advisers Act (SEC File No. 801-36220).
Penn Capital Management Company, Inc.
Penn Capital Management Company, Inc. is the investment adviser for the Penn
Capital Select Financial Services, Penn Capital Strategic High Yield Bond and
Penn Capital Value Plus Funds. Penn Capital Management Company, Inc. is the
sub-adviser for the TIP Target Select Equity Fund. The principal address of Penn
Capital Management Company, Inc., is 52 Haddonfield-Berlin Road, Suite 1000,
Cherry Hill, NJ 08034.
The list required by this Item 28 of officers and directors of Penn Capital
Management Company, Inc., together with information as to any other business
profession, vocation, or employment of a substantial nature engaged in by such
officers and directors during the past two years is incorporated by reference to
Schedules A and D of Form ADV filed by Penn Capital Management Company, Inc.
under the Advisers Act of 1940 (SEC File No. 801-31452).
Clover Capital Management, Inc.
Clover Capital Management, Inc. is the investment adviser for the Clover Max Cap
Value, Clover Capital Equity Value, Clover Capital Fixed Income and Clover
Capital Small Cap Value Funds. Clover Capital Management, Inc. is the
sub-adviser for the TIP Target 20 Equity Fund. The principal address of Clover
Capital Management, Inc. is 11 Tobey Village Office Park, Pittsford, NY 14534.
The list required by this Item 28 of officers and directors of Clover Capital
Management, Inc., together with information as to any other business profession,
vocation, or employment of a substantial nature engaged in by such officers and
directors during the past two years is incorporated by reference to Schedules A
and D of Form ADV filed by Clover Capital Management, Inc. under the Advisers
Act of 1940 (SEC File No. 801-27041).
Chartwell Investment Partners
Chartwell Investment Partners is the sub-adviser for the TIP Target 20 Equity
Fund. The principal address of Chartwell Investment Partners is 1235 Westlakes
Drive, Suite 330, Berwyn, PA 19312.
The list required by Item 28 of officers and directors of Chartwell Investment
Partners together with information as to any other business profession,
vacation, or employment of a substantial nature engaged
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<PAGE>
in by such officers and directors during the past two years is incorporated by
reference to Schedules A and D of Form ADV filed by Chartwell Investment
Partners under the Advisers Act of 1940 (SEC File No. 801-54124).
Item 27. Principal Underwriters:
(a) Furnish the name of each investment company (other than the Registrant) for
which each principal underwriter currently distributing the securities of
the Registrant also acts as a principal underwriter, distributor or
investment adviser.
Registrant's distributor, SEI Investments Distribution Co.
(the "Distributor"), acts as distributor for:
SEI Daily Income Trust July 15, 1982
SEI Liquid Asset Trust November 29, 1982
SEI Tax Exempt Trust December 3, 1982
SEI Index Funds July 10, 1985
SEI Institutional Managed Trust January 22, 1987
SEI International Trust August 30, 1988
The Advisors' Inner Circle Fund November 14, 1991
The Pillar Funds February 28, 1992
CUFUND May 1, 1992
STI Classic Funds May 29, 1992
CoreFunds, Inc. October 30, 1992
First American Funds, Inc. November 1, 1992
First American Investment Funds, Inc. November 1, 1992
The Arbor Fund January 28, 1993
Boston 1784 Funds(R) June 1, 1993
The PBHG Funds, Inc. July 16, 1993
Marquis Funds(R) August 17, 1993
Morgan Grenfell Investment Trust January 3, 1994
The Achievement Funds Trust December 27, 1994
Bishop Street Funds January 27, 1995
CrestFunds, Inc. March 1, 1995
STI Classic Variable Trust August 18, 1995
ARK Funds November 1, 1995
Monitor Funds January 11, 1996
SEI Asset Allocation Trust April 1, 1996
TIP Funds April 28, 1996
SEI Institutional Investments Trust June 14, 1996
First American Strategy Funds, Inc. October 1, 1996
HighMark Funds February 15, 1997
Armada Funds March 8, 1997
PBHG Insurance Series Fund, Inc. April 1, 1997
The Expedition Funds June 9, 1997
Oak Associates Funds February 27, 1998
The Nevis Funds June 29, 1998
The Distributor provides numerous financial services to investment
managers, pension plan sponsors, and bank trust departments. These services
include portfolio evaluation, performance measurement and consulting
services ("Funds Evaluation") and automated execution, clearing and
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<PAGE>
settlement of securities transactions ("MarketLink").
(b) Furnish the Information required by the following table with respect to
each director, officer or partner of each principal underwriter named in
the answer to Item 21 of Part B. Unless otherwise noted, the business
address of each director or officer is Oaks, PA 19456.
<TABLE>
<CAPTION>
Position and Office Positions and Offices
Name with Underwriter with Registrant
---- ------------------- ---------------------
<S> <C> <C>
Alfred P. West, Jr. Director, Chairman of the Board of Directors --
Henry H. Greer Director --
Carmen V. Romeo Director --
Mark J. Held President & Chief Operating Officer --
Gilbert L. Beebower Executive Vice President --
Richard B. Lieb Executive Vice President --
Dennis J. McGonigle Executive Vice President --
Robert M. Silvestri Chief Financial Officer & Treasurer --
Leo J. Dolan, Jr. Senior Vice President --
Carl A. Guarino Senior Vice President --
Larry Hutchison Senior Vice President --
Jack May Senior Vice President --
Hartland J. McKeown Senior Vice President --
Barbara J. Moore Senior Vice President --
Kevin P. Robins Senior Vice President & General Counsel Vice President,
Assistant Secretary
Patrick K. Walsh Senior Vice President --
Robert Aller Vice President --
Gordon W. Carpenter Vice President --
Todd Cipperman Vice President & Assistant Secretary Vice President,
Assistant Secretary
S. Courtney E. Collier Vice President & Assistant Secretary --
Robert Crudup Vice President & Managing Director --
Barbara Doyne Vice President --
Jeff Drennen Vice President --
Vic Galef Vice President & Managing Director --
Lydia A. Gavalis Vice President & Assistant Secretary --
Greg Gettinger Vice President & Assistant Secretary --
Kathy Heilig Vice President --
Jeff Jacobs Vice President --
Samuel King Vice President --
Kim Kirk Vice President & Managing Director --
John Krzeminski Vice President & Managing Director --
Carolyn McLaurin Vice President & Managing Director --
W. Kelso Morrill Vice President --
Mark Nagle Vice President --
Joanne Nelson Vice President --
Joseph M. O'Donnell Vice President & Assistant Secretary --
Sandra K. Orlow Vice President & Secretary Vice President,
Assistant Secretary
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
Cynthia M. Parrish Vice President & Assistant Secretary --
Kim Rainey Vice President --
Rob Redican Vice President --
Maria Rinehart Vice President --
Mark Samuels Vice President & Managing Director --
Steve Smith Vice President --
Daniel Spaventa Vice President --
Kathryn L. Stanton Vice President & Assistant Secretary Vice President,
Assistant Secretary
Lynda J. Striegel Vice President & Assistant Secretary --
Lori L. White Vice President & Assistant Secretary --
Wayne M. Withrow Vice President & Managing Director --
</TABLE>
Item 28. Location of Accounts and Records.
Books or other documents required to be maintained by Section 31(a) of the
Investment Company Act of 1940, and the rules promulgated thereunder, are
maintained as follows:
(a) With respect to Rules 31a-1(a); 31a-1(b)(1); (2)(a) and (b); (3); (6);
(8); (12); and 31a-1(d), the required books and records will be maintained
at the offices of Registrant's Custodian:
First Union National Bank
Broad & Chestnut Streets
P.O. Box 7618
Philadelphia, Pennsylvania 19101
(b)/(c) With respect to Rules 31a-1(a); 31a-1(b)(1),(4); (2)(C) and (D);
(4); (5); (6); (8); (9); (10); (11); and 31a-1(f), the required books and
records are maintained at the offices of Registrant's Administrator:
SEI Investments Mutual Funds Services
Oaks, Pennsylvania 19456
(c) With respect to Rules 31a-1(b)(5), (6), (9) and (10) and 31a-1(f), the
required books and records are maintained at the principal offices of the
Registrant's Advisers:
Turner Investment Partners, Inc.
1235 Westlakes Drive, Suite 350
Berwyn, Pennsylvania 19312
Penn Capital Management Company, Inc.
52 Haddonfield-Berlin Road
Suite 1000
Cherry Hill, New Jersey 08034
Item 29. Management Services: None
Item 30. Undertakings: None
C-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, as amended, the Registrant has duly caused this
Post-Effective Amendment No. 7 to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Oaks, Commonwealth of Pennsylvania on
the 28th day of September 1998.
TIP INSTITUTIONAL FUNDS
By: /s/ Stephen J. Kneeley
-----------------------------------
Stephen J. Kneeley
President & Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
* Trustee September 28, 1998
- ----------------------------
Robert E. Turner
* Trustee September 28, 1998
- ----------------------------
Alfred C. Salvato
* Trustee September 28, 1998
- ----------------------------
Ronald W. Filante
* Trustee September 28, 1998
- ----------------------------
Katherine R. Griswold
/s/ Stephen J. Kneeley President & Chief September 28, 1998
- ---------------------------- Executive Officer
Stephen J. Kneeley
/s/ Robert DellaCroce Controller and September 28, 1998
- ---------------------------- Chief Financial
Robert DellaCroce Officer
* By: /s/ Stephen J. Kneeley
----------------------
Stephen J. Kneeley
Attorney-in-Fact
C-8
<PAGE>
EXHIBIT INDEX
Name Exhibit
- ---- -------
Agreement and Declaration of Trust of the Registrant, dated Ex-99.a(1)
October 25, 1993, (incorporated herein by reference to Exhibit
1(a) of the Registration Statement filed on October 27, 1993).
Certificate Amendment to the Agreement and Declaration of Trust Ex-99.a(2)
of the Registrant, dated December 11, 1993, (incorporated herein
by reference to Exhibit 1(b) of the Registration Statement filed
on January 25, 1994)
Certificate Amendment to the Agreement and Declaration of Trust Ex-99.a(3)
of the Registrant, dated June 13, 1994, (incorporated herein by
reference to Exhibit 1(c) of the Registration Statement filed on
September 1, 1994)
Certificate Amendment to the Agreement and Declaration of Trust Ex-99.a(4)
of the Registrant, dated November 10, 1997, (incorporated herein
by reference to Exhibit 1(d) of the Registration Statement filed
on December 16, 1997)
Amended and Restated Agreement and Declaration of Trust, is filed Ex-99.a(5)
herewith.
By-Laws of the Registrant, (incorporated herein by reference to Ex-99.b
Exhibit 2 of the Registration Statement filed on October 27,
1993)
Investment Management Agreement (incorporated herein by reference Ex-99.d(1)
to Exhibit 5(a) of the Post-Effective Amendment No. 3 filed on
June 28, 1996)
Investment Sub-Advisory Agreement (incorporated herein by Ex-99.d(2)
reference to Exhibit 5(b) of the Post-Effective Amendment No. 3
filed on June 28, 1996)
Investment Advisory Agreement between the Registrant and Turner Ex-99.d(3)
Investment Partners, Inc., on behalf of the Short Duration Funds
- - One Year Portfolio and the Short Duration Funds - Three Year
Portfolio, is filed herewith.
Investment Advisory Agreement between the Registrant and Turner Ex-99.d(4)
Investment Partners, Inc., is filed herewith.
C-9
<PAGE>
Investment Advisory Agreement between the Registrant and Penn Ex-99.d(5)
Capital Management Company, Inc., is filed herewith.
Underwriting Agreement (incorporated herein by reference to Ex-99.e(1)
Exhibit 6(a) of the Post-Effective Amendment No. 3 filed on June
28, 1996)
Distribution Agreement between the Registrant and SEI Investments Ex-99.e(2)
Distribution Co., is filed herewith.
Custodian Agreement (incorporated herein Ex-99.g by reference to Ex-99.g
Exhibit 8 of the Registrant's Registration Statement filed on
June 29, 1995)
Administration Services Contract (incorporated herein by Ex-99.h(1)
reference to Exhibit 9(a) of Post-Effective Amendment No. 3 filed
on June 28, 1996)
Services Agreement (incorporated herein by reference to Exhibit Ex-99.h(2)
9(b) of Post-Effective Amendment No. 3 filed on June 28, 1996)
Administration Agreement between the Registrant and SEI Fund Ex-99.h(3)
Resources, is filed herewith.
Transfer Agency Agreement between the Registrant and Ex-99.h(4) Ex-99.h(4)
DST Systems, Inc., is filed herewith.
Opinion and Consent of Counsel (incorporated herein Ex-99.i by Ex-99.i
reference to Exhibit 10 of the Registration Statement filed on
December 16, 1997)
Powers of Attorney for Katherine Griswold and Ronald Filante Ex-99.p(1)
(incorporated herein by reference to Exhibit 24(a) of the
Registration Statement filed on December 16, 1997)
Powers of Attorney for Robert E. Turner and Alfred C. Salvato Ex-99.p(2)
(incorporated herein by reference to Exhibit 24(b) of the
Registration Statement filed on August 18, 1998)
C-10
AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST
OF
TIP INSTITUTIONAL FUNDS
A DELAWARE BUSINESS TRUST
PRINCIPAL PLACE OF BUSINESS:
237 PARK AVENUE, SUITE 2100
NEW YORK, NEW YORK 10017
<PAGE>
AGREEMENT AND DECLARATION OF TRUST
OF
CORONA INVESTMENT TRUST
WHEREAS, THIS AGREEMENT AND DECLARATION OF TRUST is made and entered into
as of the date set forth below by the Trustees named hereunder for the purpose
of forming a Delaware business trust in accordance with the provisions
hereinafter set forth,
NOW, THEREFORE, the Trustees hereby direct that a Certificate of Trust be
filed with Office of the Secretary of State of the State of Delaware and do
hereby declare that the Trustees will hold IN TRUST all cash, securities and
other assets which the Trust now possesses or may hereafter acquire from time to
time in any manner and manage and dispose of the same upon the following terms
and conditions for the pro rata benefit of the holders of Shares in this Trust.
ARTICLE I
Name and Definitions
Section 1. Name. The Trust shall be known as the TIP Institutional Funds,
and the Trustees shall conduct the business of the Trust under that name or any
other name as they shall from time to time determine.
Section 2. Definitions. Whenever used herein, unless otherwise required by
the context or specifically provided:
(a) The "Trust" refers to the Delaware business trust established by
this Agreement and Declaration of Trust, as amended from time to time;
(b) The "Trust Property" means any and all property, real or
personal, tangible or intangible, which is owned or held by or for the account
of the Trust, including without limitation the rights referenced in Article
VIII, Section 9 hereof;
(c) "Trustees" refers to the persons who have signed this Agreement
and Declaration of Trust, so long as they continue in office in accordance with
the terms hereof, and all other persons who may from time to time be duly
elected or appointed to serve on the Board of Trustees in accordance with the
provisions hereof, and reference herein to a Trustee or the Trustees shall refer
to such person or persons in their capacity as trustees hereunder;
(d) "Shares" means the shares of beneficial interest into which the
beneficial interest in the Trust shall be divided from time to time and includes
fractions of Shares as well as whole Shares;
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<PAGE>
(e) "Shareholder" means a record owner of outstanding Shares;
(f) "Person" means and includes individuals, corporations,
partnerships, trusts, associations, joint ventures, estates and other entities,
whether or not legal entities, and governments and agencies and political
subdivisions thereof, whether domestic or foreign;
(g) The "Investment Company Act" refers to the Investment Company
Act of 1940 and the Rules and Regulations thereunder, all as amended from time
to time;
(h) The terms "Commission" and "Principal Underwriter" shall have
the meanings given them in the Investment Company Act;
(i) "Declaration of trust" shall mean this Agreement and Declaration
of Trust, as amended or restated from time to time;
(j) "By-Laws" shall mean the By-Laws of the Trust as amended from
time to time and incorporated herein by reference;
(k) The term "Interested Person" has the meaning given it in Section
2(a)(19) of the Investment Company Act;
(l) "Investment Adviser" or "Manager" means a party furnishing
services to the Trust pursuant to any contract described in Article IV, Section
7(a) hereof; and
(m) "Series" refers to each Series of Shares established and
designated under or in accordance with the provisions of Article III.
ARTICLE II
Purpose of Trust
The purpose of the Trust is to conduct, operate and carry on the business
of a management investment company registered under the Investment Company Act
through one or more Series investing primarily in securities.
ARTICLE III
Shares
Section 1. Division of Beneficial Interest. The beneficial interest in the
Trust shall at all times be divided into an unlimited number of Shares, with a
par value of $.01 per Share. The Trustees may authorize the division of Shares
into separate Series and the division of Series into separate classes of Shares.
The different Series shall be established and designated, and the variations in
the relative rights and preferences as between the different Series shall be
fixed and determined, by the Trustees. If only one or no Series (or classes)
3
<PAGE>
shall be established, the Shares shall have the rights and preferences provided
for herein and in Article III, Section 6 hereof to the extent relevant and not
otherwise provided for herein, and all references to Series (and classes) shall
be construed (as the context may require) to refer to the Trust.
Subject to the provisions of Section 6 of this Article III, each Share
shall have voting rights as provided in Article V hereof, and holders of the
Shares of any Series shall be entitled to receive dividends when, if and as
declared with respect thereto in the manner provided in Article VI, Section 1
hereof. No Shares shall have any priority or preference over any other Share of
the same Series with respect to dividends or distributions upon termination of
the Trust or of such Series made pursuant to Article VIII, Section 4 hereof. All
dividends and distributions shall be made ratably among all Shareholders of a
particular class of a particular Series and, if no classes, of a particular
Series from the assets held with respect to such Series according to the number
of Shares of such class of such Series or of such Series held of record by such
Shareholder on the record date for any dividend or distribution or on the date
of termination, as the case may be. Shareholders shall have no preemptive or
other right to subscribe to any additional Shares or other securities issued by
the Trust or any Series. The Trustees may from time to time divide or combine
the Shares of any particular Series into a greater or lesser number of Shares of
that Series without thereby materially changing the proportionate beneficial
interest of the Shares of that Series in the assets held with respect to that
Series or materially affecting the rights of Shares of any other Series.
Section 2. Ownership of Shares. The ownership of Shares shall be recorded
on the books of the Trust or a transfer or similar agent for the Trust, which
books shall be maintained separately for the Shares of each Series (or class of
each Series). No certificates certifying the ownership of Shares shall be issued
except as the Board of Trustees may otherwise determine from time to time. The
Trustees may make such rules as they consider appropriate for the transfer of
Shares of each Series (or class of each Series) and similar matters. The record
books of the Trust as kept by the Trust or any transfer or similar agent, as the
case may be, shall be conclusive as to the identity of the Shareholders of each
Series (or class of each Series) and as to the number of Shares of each Series
(or class) held from time to time by each.
Section 3. Investments in the Trust. Investments may be accepted by the
Trust from such Persons, at such times, on such terms, and for such
consideration as the Trustees from time to time may authorize.
Section 4. Status of Shares and Limitation of Personal Liability. Shares
shall be deemed to be personal property giving only the rights provided in this
instrument. Every Shareholder, by virtue of having become a Shareholder, shall
be held to have expressly assented and agreed to the terms hereof and to have
become a party hereto. The death of a Shareholder during the existence of the
Trust shall not operate to terminate the Trust, nor entitle the representative
of any deceased Shareholder to an accounting or to take any action in court or
elsewhere against the Trust or the Trustees, but entitles such representative
only to the rights of said deceased Shareholder under this Trust. Ownership of
Shares shall not entitle the Shareholder to any title in or to the whole or any
part of the Trust Property or right to call for a partition or division of the
same or for an accounting, nor shall the ownership of Shares constitute the
4
<PAGE>
Shareholders as partners. Neither the Trust nor the Trustees, nor any officer,
employee or agent of the Trust shall have any power to bind personally any
Shareholder, nor, except as specifically provided herein, to call upon any
Shareholder for the payment of any sum of money or assessment whatsoever other
than such as the Shareholder may at any time personally agree to pay.
Section 5. Power of Board of Trustees to Change Provisions Relating to
Shares. Notwithstanding any other provision of this Declaration of Trust and
without limiting the power of the Board of Trustees to amend the Declaration of
Trust as provided elsewhere herein, the Board of Trustees shall have the power
to amend this Declaration of Trust, at any time and from time to time, in such
manner as the Board of Trustees may determine in their sole discretion, without
the need for Shareholder action, so as to add to, delete, replace or otherwise
modify any provisions relating to the Shares contained in this Declaration of
Trust, provided that before adopting any such amendment without Shareholder
approval the Board of Trustees shall determine that it is consistent with the
fair and equitable treatment of all Shareholders or that Shareholder approval is
not otherwise required by the Investment Company Act or other applicable law. If
Shares have been issued, Shareholder approval shall be required to adopt any
amendments to this Declaration of Trust that would adversely affect to a
material degree the rights and preferences of the Shares of any Series (or class
of any Series) or to increase or decrease the par value of the Shares of any
Series (or class of any Series).
Subject to the foregoing Paragraph, the Board of Trustees may amend the
Declaration of Trust to amend any of the provisions set forth in paragraphs (a)
through (i) of Section 6 of this Article III.
Section 6. Establishment and Designation of Series. The establishment and
designation of any Series (or class) of Shares shall be effective upon the
resolution by a majority of the then Trustees, adopting a resolution that sets
forth such establishment and designation and the relative rights and preferences
of such Series (or class). Each such resolution shall be incorporated herein by
reference upon adoption.
Shares of each Series (or class) established pursuant to this Section 6,
unless otherwise provided in the resolution establishing such Series, shall have
the following relative rights and preferences:
(a) Assets Held with Respect to a Particular Series. All
consideration received by the Trust for the issue or sale of Shares of a
particular Series, together with all assets in which such consideration is
invested or reinvested, all income, earnings, profits, and proceeds thereof from
whatever source derived, including, without limitation, any proceeds derived
from the sale, exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds in whatever form the same may be,
shall irrevocably be held with respect to that Series for all purposes, subject
only to the rights of creditors, and shall be so recorded upon the books of
account of the Trust. Such consideration, assets, income, earnings, profits and
proceeds thereof, from whatever source derived, including, without limitation,
any proceeds derived from the sale, exchange or liquidation of such assets, and
5
<PAGE>
any funds or payments derived from any reinvestment of such proceeds, in
whatever form the same may be, are herein referred to as "assets held with
respect to" that Series. In the event that there are any assets, income,
earnings, profits and proceeds thereof, funds or payments which are not readily
identifiable as assets held with respect to any particular Series (collectively
"General Assets"), the Trustees shall allocate such General Assets to, between
or among any one or more of the Series in such manner and on such basis as the
Trustees, in their sole discretion, deem fair and equitable, and any General
Asset so allocated to a particular Series shall be held with respect to that
Series. Each such allocation by the Trustees shall be conclusive and binding
upon the Shareholders of all Series for all purposes.
(b) Liabilities Held With Respect to a Particular Series. The assets
of the Trust held with respect to each particular Series shall be charged
against the liabilities of the Trust held with respect to that Series and all
expenses, costs, charges and reserves attributable to that Series, and any
general liabilities of the Trust which are not readily identifiable as being
held with respect to any particular Series shall be allocated and charged by the
Trustees to and among any one or more of the Series in such a manner and on such
a basis as the Trustees in their sole discretion deem fair and equitable. The
liabilities, expenses, costs, charges, and reserves so charged to a Series are
herein referred to as "liabilities held with respect to" that Series. Each
allocation of liabilities, expenses, costs, charges and reserves by the Trustees
shall be conclusive and binding upon the holders of all Series for all purposes.
All Persons who have extended credit which has been allocated to a particular
Series, or who have a claim or contract which has been allocated to any
particular Series, shall look, and shall be required by contract to look
exclusively, to the assets of that particular Series for payment of such credit,
claim, or contract. In the absence of an express contractual agreement so
limiting the claims of such creditors, claimants and contract providers, each
creditor, claimant and contract provider will be deemed nevertheless to have
impliedly agreed to such limitation unless an express provision to the contrary
has been incorporated in the written contract or other document establishing the
claimant relationship.
(c) Dividends, Distributions, Redemptions and Repurchases.
Notwithstanding any other provisions of this Declaration of Trust, including,
without limitation, Article VI, no dividend or distribution including, without
limitation, any distribution paid upon termination of the Trust or of any Series
(or class) with respect to, nor any redemption or repurchase of, the Shares of
any Series (or class) shall be effected by the Trust other than from the assets
held with respect to such Series, nor, except as specifically provided in
Section 7 of this Article III, shall any Shareholder of any particular Series
otherwise have any right or claim against the assets held with respect to any
other Series except to the extent that such Shareholder has such a right or
claim hereunder as a Shareholder of such other Series. The Trustees shall have
full discretion, to the extent not inconsistent with the Investment Company Act,
to determine which items shall be treated as income and which items as capital;
and each such determination and allocation shall be conclusive and binding upon
the Shareholders.
(d) Voting. All Shares of the Trust entitled to vote on a matter
shall vote separately by Series (and, if applicable, by class): that is, the
Shareholders of each Series (or class) shall have the right to approve or
disapprove matters affecting the Trust and each respective Series (or class) as
6
<PAGE>
if the Series (or classes) were separate companies. There are, however, two
exceptions to voting by separate Series (or classes). First, if the Investment
Company Act requires all Shares of the Trust to be voted in the aggregate
without differentiation between the separate Series (or classes), then all the
Trust's Shares shall be entitled to vote on a one-vote-per-Share basis. Second,
if any matter affects only the interests of some but not all Series (or
classes), then only the Shareholders of such affected Series (or classes) shall
be entitled to vote on the matter.
(e) Equality. All the Shares of each particular Series shall
represent an equal proportionate interest in the assets held with respect to
that Series (subject to the liabilities held with respect to that Series and
such rights and preferences as may have been established and designated with
respect to classes of Shares within such Series), and each Share of any
particular Series shall be qual to each other Share of that Series.
(f) Fractions. Any fractional Share of a Series shall carry
proportionately all the rights and obligations of a whole share of that Series,
including rights with respect to voting, receipt of dividends and distributions,
redemption of Shares and termination of the Trust.
(g) Exchange Privilege. The Trustees shall have the authority to
provide that the holders of Shares of any Series shall have the right to
exchange said Shares for Shares of one or more other Series of Shares in
accordance with such requirements and procedures as may be established by the
Trustees.
(h) Combination of Series. The Trustees shall have the authority,
without the approval of the Shareholders of any Series unless otherwise required
by applicable law, to combine the assets and liabilities held with respect to
any two or more Series into assets and liabilities held with respect to a single
Series.
(i) Elimination of Series. At any time that there are no Shares
outstanding of any particular Series (or class) previously established and
designated, the Trustees may by resolution of a majority of the then Trustees
abolish that Series (or class) and rescind the establishment and designation
thereof.
Section 7. Indemnification of Shareholders. If any Shareholder or former
Shareholder shall be exposed to liability by reason of a claim or demand
relating to his or her being or having been a Shareholder, and not because of
his or her acts or omissions, the Shareholder or former Shareholder (or his or
her heirs, executors, administrators, or other legal representatives or in the
case of a corporation or other entity, its corporate or other general successor)
shall be entitled to be held harmless from and indemnified out of the assets of
the applicable Series of the Trust against all loss and expense arising from
such claim or demand.
7
<PAGE>
ARTICLE IV
The Board of Trustees
Section 1. Number, Election and Tenure. The number of Trustees constituting
the Board of Trustees shall be fixed from time to time by a written instrument
signed, or by resolution approved at a duly constituted meeting, by a majority
of the Board of Trustees, provided, however, that the number of Trustees shall
in no event be less than one (1) nor more than fifteen (15). The Board of
Trustees, by action of a majority of the then Trustees at a duly constituted
meeting, may fill vacancies in the Board of Trustees or remove Trustees with or
without cause. Each Trustee shall serve during the continued lifetime of the
Trust until he or she dies, resigns, is declared bankrupt or incompetent by a
court of appropriate jurisdiction, or is removed, or, if sooner, until the next
meeting of Shareholders called for the purpose of electing Trustees and until
the election and qualification of his or her successor. Any Trustee may resign
at any time by written instrument signed by him or her and delivered to any
officer of the Trust or to a meeting of the Trustees. Such resignation shall be
effective upon receipt unless specified to be effective at some other time.
Except to the extent expressly provided in a written agreement with the Trust,
no Trustee resigning and no Trustee removed shall have any right to any
compensation for any period following his or her resignation or removal, or any
right to damages on account of such removal. The Shareholders may fix the number
of Trustees and elect Trustees at any meeting of Shareholders called by the
Trustees for that purpose. Any Trustee may be removed at any meeting of
Shareholders by a vote of two-thirds of the outstanding Shares of the Trust. A
meeting of Shareholders for the purpose of electing or removing one or more
Trustees may be called (i) by the Trustees upon their own vote, or (ii) upon the
demand of Shareholders owning 10% or more of the Shares of the Trust in the
aggregate.
Section 2. Effect of Death, Resignation, etc. of a Trustee. The death,
declination, resignation, retirement, removal, or incapacity of one or more
Trustees, or all of them, shall not operate to annul the Trust or to revoke any
existing agency created pursuant to the terms of this Declaration of Trust.
Whenever a vacancy in the Board of Trustees shall occur, until such vacancy is
filled as provided in Article IV, Section 1, the Trustees in office, regardless
of their number, shall have all the powers granted to the Trustees and shall
discharge all the duties imposed upon the Trustees by this Declaration of Trust.
As conclusive evidence of such vacancy, a written instrument certifying the
existence of such vacancy may be executed by an officer of the Trust or by a
majority of the Board of Trustees. In the event of the death, declination,
resignation, retirement, removal, or incapacity of all the then Trustees within
a short period of time and without the opportunity for at least one Trustee
being able to appoint additional Trustees to fill vacancies, the Trust's
Investment Adviser(s) are empowered to appoint new Trustees subject to the
provisions of Section 16(a) of the Investment Company Act.
Section 3. Powers. Subject to the provisions of this Declaration of Trust,
the business of the Trust shall be managed by the Board of Trustees, and such
Board shall have all powers necessary or convenient to carry out that
responsibility, including the power to engage in securities transactions of all
kinds on behalf of the Trust. Without limiting the foregoing, the Trustees may:
8
<PAGE>
adopt By-Laws not inconsistent with this Declaration of Trust providing for the
regulation and management of the affairs of the Trust and may amend and repeal
them to the extent that such By-Laws do not reserve that right to the
Shareholders; fill vacancies in or remove from their number, and may elect and
remove such officers and appoint and terminate such agents as they consider
appropriate; appoint from their own number and establish and terminate one or
more committees consisting of two or more Trustees, which may exercise the
powers and authority of the Board of Trustees, which may exercise the powers and
authority of the Board of Trustees to the extent that the Trustees determine;
employ one or more custodians of the assets of the Trust and may authorize such
custodians to employ subcustodians and to deposit all or any part of such assets
in a system or systems for the central handling of securities or with a Federal
Reserve Bank; retain a transfer agent or a shareholder servicing agent, or both;
provide for the issuance and distribution of Shares by the Trust directly or
through one or more Principal Underwriters or otherwise; redeem, repurchase and
transfer Shares pursuant to applicable law; set record dates for the
determination of Shareholders with respect to various Shareholders of each
Series from the assets of such Series; and in general, delegate such authority
as they consider desirable to any officer of the Trust, to any committee of the
Trustees and to any agent or employee of the Trust or to any such custodian,
transfer or shareholder servicing agent, or Principal Underwriter. Any
determination as to what is in the interests of the Trust made by the Trustees
in good faith shall be conclusive. In construing the provisions of this
Declaration of Trust, the presumption shall be in favor of a grant of power to
the Trustees. Unless otherwise specified or required by law, any action by the
Board of Trustees shall be deemed effective if approved or taken by a majority
of the Trustees then in office.
Without limiting the foregoing, the Trust shall have power and authority:
(a) To invest and reinvest cash, to hold cash uninvested, and to
subscribe for, invest in, reinvest in, purchase or otherwise acquire, own, hold,
pledge, sell, assign, transfer, exchange, distribute, write options on, lend or
otherwise deal in or dispose of contracts for the future acquisition or delivery
of fixed income or other securities, and securities of every nature and kind,
including, without limitation, all types of bonds, debentures, stocks,
negotiable or non-negotiable instruments, obligations, evidences of
indebtedness, certificates of deposit or indebtedness, commercial paper,
repurchase agreements, bankers' acceptances, and other securities of any kind,
issued, created, guaranteed, or sponsored by any and all Persons, including,
without limitation, states, territories, and possessions of the United States
and the District or Columbia and any political subdivision, agency, or
instrumentality thereof, any foreign government or any political subdivision of
the U.S. Government or any foreign government, or any international
instrumentality, or by any bank or savings institution, or by any corporation or
organization organized under the laws of the United States or of any state,
territory, or possession thereof, or by any corporation or organization
organized under any foreign law, or in "when issued" contracts for any such
securities, to change the investments of the assets of the Trust; and to
exercise any and all rights, powers, and privileges of ownership of interest in
respect of any and all such investments of every kind and description,
including, without limitation, the right to consent and otherwise act with
respect thereto, with power to designate one or more Persons, to exercise any of
said rights, powers, and privileges in respect of any of said instruments;
9
<PAGE>
(b) To sell, exchange, lend, pledge, mortgage, hypothecate, lease,
or write options with respect to or otherwise deal in any property rights
relating to any or all of the assets of the Trust or any Series;
(c) To vote or give assent, or exercise any rights of ownership,
with respect to stock or other securities or property; and to execute and
deliver proxies or powers of attorney to such person or persons as the Trustees
shall deem proper, granting to such person or persons such power and discretion
with relation to securities or property as the Trustees shall deem proper;
(d) To exercise powers and right of subscription or otherwise which
in any manner arise out of ownership of securities;
(e) To hold any security or property in a form not indicating any
trust, whether in bearer, unregistered or other negotiable form, or in its own
name or in the name of a custodian or subcustodian or a nominee or nominees or
otherwise;
(f) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or issuer of any security which is
held in the Trust; to consent to any contract, lease, mortgage, purchase or sale
of property by such corporation or issuer; and to pay calls or subscriptions
with respect to any security held in the Trust;
(g) To join with other security holders in acting through a
committee, depositary, voting trustee or otherwise, and in that connection to
deposit any security with, or transfer any security to, any such committee,
depositary or trustee, and to delegate to them such power and authority with
relation to any security (whether or not so deposited or transferred) as the
Trustees shall deem proper, and to agree to pay, and to pay, such portion of the
expenses and compensation of such committee, depositary or trustee as the
Trustees shall deem proper;
(h) To compromise, arbitrate or otherwise adjust claims in favor of
or against the Trust or any matter in controversy, including but not limited to
claims for taxes;
(i) To enter into joint ventures, general or limited partnerships
and any other combinations or associations;
(j) To borrow funds or other property in the name of the trust
exclusively for Trust purposes;
(k) To endorse or guarantee the payment of any notes or other
obligations of any Person; to make contracts or guaranty or suretyship, or
otherwise assume liability for payment thereof;
(l) To purchase and pay for entirely out of Trust Property such
insurance as the Trustees may deem necessary or appropriate for the conduct of
the business, including, without limitation, insurance policies insuring the
assets of the Trust or payment of distributions and principal on its portfolio
10
<PAGE>
investments, and insurance policies insuring the Shareholders, Trustees,
officers, employees, agents, investment advisers, principal underwriters, or
independent contractors of the Trust, individually against all claims and
liabilities of every nature arising by reason of holding Shares, holding, being
or having held any such office or position, or by reason of any action alleged
to have been taken or omitted by any such Person or Trustee, officer, employee,
agent, investment adviser, principal underwriter, or independent contractor,
including any action taken or omitted that may be determined to constitute
negligence, whether or not the Trust would have the power to indemnify such
Person against liability; and
(m) To adopt, establish and carry out pension, profit sharing, share
bonus, share purchase, savings, thrift and other retirement, incentive and
benefit plans, trusts and provisions, including the purchasing of life insurance
and annuity contracts as a means of providing such retirement and other
benefits, for any or all of the Trustees, officers, employees and agents of the
Trust.
The Trust shall not be limited to investing in obligations maturing before
the possible termination of the trust or one or more of its Series. The Trust
shall not in any way be bound or limited by any present or future law or custom
in regard to investment by fiduciaries. The Trust shall not be required to
obtain any court order to deal with any assets of the trust or take any other
action hereunder.
Section 4. Payment of Expenses by the Trust. The Trustees are authorized to
pay or cause to be paid out of the principal or income of the Trust, or partly
out of the principal and partly out of income, as they deem fair, all expenses,
fees, charges, taxes and liabilities incurred or arising in connection with the
Trust, or in connection with the management thereof, including, but not limited
to, the Trustees' compensation and such expenses and charges for the services of
the Trust's officers, employees, investment adviser or manager, principal
underwriter, auditors, counsel, custodian, transfer agent, Shareholder servicing
agent, and such other agents or independent contractors and such other expenses
and charges as the Trustees may deem necessary or proper to incur.
Section 5. Payment of Expenses by Shareholders. The Trustees shall have
the power, as frequently as they may determine, to cause each Shareholder, or
each Shareholder of any particular Series, to pay directly, in advance of
arrears, for charges of the Trust's custodian or transfer, Shareholder servicing
or similar agent, an amount fixed from time to time by the Trustees, by setting
off such charges due from such Shareholder from declared but unpaid dividends
owed such Shareholder and/or by reducing the number of shares in the account of
such Shareholder by that number of full and/or fractional Shares which
represents the outstanding amount of such charges due from such Shareholder.
Section 6. Ownership of Assets of the Trust. Title to all of the assets of
the Trust shall at all times be considered as vested in the Trust, except that
the Trustees shall have power to cause legal title to any Trust Property to be
held by or in the name of one or more of the Trustees, or in the name of the
Trust, or in the name of any other Person as nominee, on such terms as the
Trustees may determine. The right, title and interest of the Trustees in the
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Trust Property shall vest automatically in each Person who may hereafter become
a Trustee. Upon the resignation, removal or death of a Trustee, he or she shall
automatically cease to have any right, title or interest in any of the Trust
Property, and the right, title and interest of such Trustee in the Trust
Property shall vest automatically in the remaining Trustees. Such vesting and
cessation of title shall be effective whether or not conveyancing documents has
been executed and delivered.
Section 7. Service Contracts.
(a) Subject to such requirements and restrictions as may be set
forth in the By-Laws, the Trustee may, at any time and from time to time,
contract for exclusive or non-exclusive advisory, management and/or
administrative services for the Trust or for any Series with any corporation,
trust, association or other organization; and any such contract may contain such
other terms as the Trustees may determine, including without limitation,
authority for the Investment Adviser or administrator to determine from time to
time without prior consultation with the Trustees what investments shall be
purchased, held, sold or exchanged and what portion, if any, of the assets of
the Trust shall be held uninvested and to make changes in the Trust's
investments, or such other activities as may specifically be delegated to such
party.
(b) The Trustees may also, at any time and from time to time,
contract with any corporation, trust, association or other organization,
appointing it exclusive or non-exclusive distributor or Principal Underwriter
for the Shares of one or more of the Series (or classes) or other securities to
be issued by the Trust. Every such contract shall comply with such requirements
and restrictions as may be set forth in the By-Laws; and any such contract may
contain such other terms as the Trustees may determine.
(c) The Trustees are also empowered, at any time and from time to
time, to contract with any corporations, trusts, associations or other
organizations, appointing it or them the custodian, transfer agent and/or
shareholder servicing agent for the Trust or one or more of its Series. Every
such contract shall comply with such requirements and restrictions as may be set
forth in the By-Laws or stipulated by resolution of the Trustees.
(d) The Trustees are further empowered, at any time and from time to
time, to contract with any entity to provide such other services to the Trust or
one or more of the Series, as the Trustees determine to be in the best interests
of the Trust and the applicable Series.
(e) The fact that:
(i) any of the Shareholders, Trustees, or officers of the Trust
is a shareholder, director, officer, partner, trustee, employee,
investment adviser, manager, principal underwriter, distributor or
affiliate or agent of or for any corporation, trust, association, or
other organization, or for any parent or affiliate of any organization
with which an advisory, management or administration contract, or
principal underwriter's or distributor's contract, or transfer,
shareholder servicing or other type of service contract may have been
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or may hereafter be made, or that any such organization, or any parent
or affiliate thereof, is a Shareholder or has an interest in the
Trust, or
(ii) any corporation, trust, association or other organization
with which an advisory, management or administration contract or
principal underwriter's or distributor's contract, or transfer,
shareholder servicing or other type of service contract may have been
or may hereafter be made also has an advisory, management or
administration contract, or principal underwriter's or distributor's
contract, or transfer, shareholder servicing or other service contract
with one or more other corporations, trusts, associations, or other
organizations or has other business or interests,
shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or executing the
same, or create any liability or accountability to the Trust or its
Shareholders, provided approval of each such contract is made pursuant to the
requirements of the Investment Company Act.
ARTICLE V
Shareholders' Voting Powers and Meetings
Section 1. Voting Powers. Subject to the provisions of Article III, Section
6(d), the Shareholders shall have power to vote only (i) for the election or
removal of Trustees as provided in Article IV, Section 1, and (ii) with respect
to such additional matters relating to the Trust as may be required by this
Declaration of Trust, the By-Laws or any registration of the Trust with the
Commission (or any successor agency) or any state, or as the Trustees may
consider necessary or desirable. As appropriate, voting may be by Series (or
class). Each whole Share shall be entitled to one vote as to any matter on which
it is entitled to vote and each fractional Share shall be entitled to a
proportionate fractional vote. There shall be no cumulative voting in the
election of Trustees. Shares may be voted in person or by proxy. A proxy with
respect to Shares held in the name of two or more persons shall be valid if
executed by any one of them unless at or prior to exercise of the proxy the
Trust receives a specific written notice to the contrary from any one of them. A
proxy purporting to be executed by or on behalf of a Shareholder shall be deemed
valid unless challenged at or prior to its exercise and the burden of proving
invalidity shall rest on the challenger.
Section 2. Voting Power and Meetings. Meetings of the Shareholders may be
called by the Trustees for the purpose of electing Trustees as provided in
Article IV, Section 1 and for such other purposes as may be prescribed by law,
by this Declaration of Trust or by the By-Laws. Meetings of the Shareholders may
also be called by the Trustees from time to time for the purpose of taking
action upon any other matter deemed by the Trustees to be necessary or
desirable. A meeting of Shareholders may be held at any place designated by the
Trustees. Written notice of any meeting of Shareholders shall be given or caused
to be given by the Trustees by mailing such notice at least seven (7) days
before such meeting, postage prepaid, stating the time and place of the meeting,
to each Shareholder at the Shareholder's address as it appears on the records of
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the Trust. Whenever notice of a meeting is required to be given to a Shareholder
under this Declaration of Trust or the By-Laws, a written waiver thereof,
executed before or after the meeting by such Shareholder or his or her attorney
thereunto authorized and filed with the records of the meeting, shall be deemed
equivalent to such notice.
Section 3. Quorum and Required Vote. Except when a larger quorum is
required by applicable law, by the By-Laws or by this Declaration of trust,
forty percent (40%) of the Shares entitled to vote shall constitute a quorum at
a Shareholders' meeting. When any one or more Series (or classes) is to vote as
a single class separate from any other Shares, forty percent (40%) of the Shares
of each such Series (or classes) entitled to vote shall constitute a quorum at a
Shareholder's meeting of that Series. Any meeting of Shareholders may be
adjourned from time to time by a majority of the votes properly cast upon the
question of adjourning a meeting to another date and time, whether or not a
quorum is present, and the meeting may be held as adjourned within a reasonable
time after the date set for the original meeting without further notice. Subject
to the provisions of Article III, Section 6(d), when a quorum is present at any
meeting, a majority of the Shares voted shall decide any questions and a
plurality shall elect a Trustee, except when a larger vote is required by any
provision of this Declaration of Trust or the By-Laws or by applicable law.
Section 4. Action by Written Consent. Any action taken by shareholders may
be taken without a meeting if Shareholders holding a majority of the Shares
entitled to vote on the matter (or such larger proportion thereof as shall be
required by any express provision of this Declaration of Trust or by the By-Laws
or by applicable law) and holding a majority (or such larger proportion as
aforesaid) of the Shares of any Series (or class) entitled to vote separately on
the matter consent to the action in writing and such written consents are filed
with the records of the meetings of Shareholders. Such consent shall be treated
for all purposes as a vote taken at a meeting of Shareholders.
Section 5. Record Dates. For the purpose of determining the Shareholders of
any Series (or class) who are entitled to vote or act at any meeting or any
adjournment thereof, the Trustees may from time to time fix a time, which shall
be not more than ninety (90) days before the date of any meeting of
Shareholders, as the record date for determining the Shareholders of such Series
(or class) having the right to notice of and to vote at such meeting and any
adjournment thereof, and in such case only Shareholders of record on such record
date shall have such right, notwithstanding any transfer of shares on the books
of the Trust after the record date. For the purpose of determining the
Shareholders of any Series (or class) who are entitled to receive payment of any
dividend or of any other distribution, the Trustees may from time to time fix a
date, which shall be before the date for the payment of such dividend or such
other payment, as the record date for determining the Shareholders of such
Series (or class) having the right to receive such dividend or distribution.
Without fixing a record date the Trustees may for voting and/or distribution
purposes close the register or transfer books for one or more Series for all or
any part of the period between a record date and a meeting of Shareholders or
the payment of a distribution. Nothing in this Section shall be construed as
precluding the Trustees from setting different record dates for different Series
(or classes).
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Section 6. Additional Provisions. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters.
ARTICLE VI
Net Asset Value, Distributions and Redemptions
Section 1. Determination of Net Asset Value, Net Income and Distributions.
Subject to Article III, Section 6 hereof, the Trustees, in their absolute
discretion, may prescribe and shall set forth in the By-Laws or in a duly
adopted vote of the Trustees such bases and time for determining the per-Share
net asset value of the Shares of any Series or net income attributable to the
Shares of any Series, or the declaration and payment of dividends and
distributions on the Shares of any Series, as they may deem necessary or
desirable.
Section 2. Redemptions and Repurchases. The Trust shall purchase such
Shares as are offered by any Shareholder for redemption, upon the presentation
of a proper instrument of transfer together with a request directed to the Trust
or a Person designated by the Trust that the Trust purchase such Shares or in
accordance with such other procedures for redemption as the Trustees may from
time to time authorize; and the Trust will pay therefor the net asset value
thereof, in accordance with the By-Laws and applicable law. Payment for said
Shares shall be made by the Trust to the Shareholder within seven days after the
date on which the request is made in proper form. The obligation set forth in
this Section 2 is subject to the provision that in the event that any time the
New York Stock Exchange (the "Exchange") is closed for other than weekends or
holidays, or if permitted by the Rules of the Commission during periods when
trading on the Exchange is restricted or during any emergency which makes it
impracticable for the Trust to dispose of the investments of the applicable
Series or to determine fairly the value of the net assets held with respect to
such Series or during any other period permitted by order of the Commission for
the protection of investors, such obligations may be suspended or postponed by
the Trustees.
The redemption price may in any case or cases be paid wholly or partly in
kind if the Trustees determine that such payment is advisable in the interest of
the remaining Shareholders of the Series for which the Shares are being
redeemed. Subject to the foregoing, the fair value, selection and quantity of
securities or other property so paid or delivered as all or part of the
redemption price may be determined by or under authority of the Trustees. In no
case shall the Trust be liable for any delay or any corporation or other Person
in transferring securities selected for delivery as all or part of any payment
in kind.
Section 3. Redemptions at the Option of the Trust. The Trust shall have the
right, at its option and at any time, to redeem Shares of any Shareholder at the
net asset value thereof as described in Section 1 of this Article VI: (i) if at
such time such Shareholder owns Shares of any Series having an aggregate net
asset value of less than an amount determined from time to time by the Trustees
prior to the acquisition of said Shares; or (ii) to the extent that such
Shareholder owns Shares of a particular Series equal to or in excess of a
percentage of the outstanding Shares of that Series determined from time to time
by the Trustees; or (iii) to the extent that such Shareholder owns Shares equal
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to or in excess of a percentage, determined from time to time by the Trustees,
of the outstanding Shares of the Trust or of any Series.
ARTICLE VII
Compensation and Limitation of Liability of Trustees
Section 1. Compensation. The Trustees as such shall be entitled to
reasonable compensation from the Trust, and they may fix the amount of such
compensation. Nothing herein shall in any way prevent the employment of any
Trustee for advisory, management, legal, accounting, investment banking or other
services and payment for the same by the Trust.
Section 2. Indemnification and Limitation of Liability. The Trustees shall
not be responsible or liable in any event for any neglect or wrong-doing of any
officer, agent, employee, Investment Adviser or principal underwriter of the
Trust, nor shall any Trustee be responsible for the act or omission of any other
Trustee, and the Trust out of its assets shall indemnify and hold harmless each
and every Trustee from and against any and all claims and demands whatsoever
arising out of or related to each Trustee's performance of his or her duties as
a Trustee of the Trust; provided that nothing herein contained shall indemnify,
hold harmless, or protect any Trustee from or against any liability to the Trust
or any Shareholder to which he or she would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office.
Every note, bond, contract, instrument, certificate or undertaking and
every other act or thing whatsoever issued, executed or done by or on behalf of
the Trust or the Trustees or any of them in connection with the Trust shall be
conclusively deemed to have been issued, executed or done only in or with
respect to their or his or her capacity as Trustees or Trustee, and such
Trustees or Trustee shall not be personally liable thereon.
Section 3. Trustee's Good Faith Action, Expert Advice, No Bond or Surety.
The exercise by the Trustees of their powers and discretion hereunder shall be
binding upon everyone interested. A Trustee shall be liable to the Trust and to
any Shareholder solely for his or her own willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
office of Trustee, and shall not be liable for errors of judgment or mistakes of
fact or law. The Trustees may take advice of counsel or other experts with
respect to the meaning and operation of this Declaration of trust, and shall be
under no liability for any act or omission in accordance with such advice nor
for failing to follow such advice. The Trustees shall not be required to give
any bond as such, nor any surety if a bond is required.
Section 4. Insurance. The Trustees shall be entitled and empowered to the
fullest extent permitted by law to purchase with Trust assets insurance for
liability and for all expenses reasonably incurred or paid or expected to be
paid by a Trustee or officer in connection with any claim, action, suit or
proceeding in which he or she becomes involved by virtue of his or her capacity
or former capacity with the Trust.
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ARTICLE VIII
Miscellaneous
Section 1. Liability of Third Persons Dealing With Trustees. No Person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the Trust or upon
its order.
Section 2. Termination of Trust or Series. Unless terminated as provided
herein, the Trust shall continue without limitation of time. The Trust may be
terminated at any time by vote of a majority of the Shares of each Series
entitled to vote, voting separately by Series, or by the Trustees by written
notice to the Shareholders. Any Series may be terminated at any time by vote of
a majority of the Shares of that Series or by the Trustees by written notice to
the Shareholders of that Series.
Upon termination of the Trust (or any Series, as the case may be), after
paying or otherwise providing for all charges, taxes, expenses and liabilities
held, severally, with respect to each Series (or the applicable Series, as the
case may be), whether due or accrued or anticipated as may be determined by the
Trustees, the Trust shall, in accordance with such procedures as the Trustees
consider appropriate, reduce the remaining assets held, severally, with respect
to each Series (or the applicable Series, as the case may be), to distributable
form in cash or shares or other securities, or any combination thereof, and
distribute the proceeds held with respect to each Series (or the applicable
Series, as the case may be), to the Shareholders of that Series, as a Series,
ratably according to the number of Shares of that Series held by the several
Shareholders on the date of termination.
Section 3A. Merger and Consolidation. The Trustees may cause (i) the Trust
or one or more of its Series to the extent consistent with applicable law to be
merged into or consolidated with another trust or company, (ii) the Shares of
the Trust or any Series to be converted into beneficial interests in another
business trust (or series thereof) created pursuant to this Section 3 of Article
VIII, or (iii) the Shares to be exchanged under or pursuant to any state or
federal statute to the extent permitted by law. Such merger or consolidation,
Share conversion or Share exchange must be authorized by vote of a majority of
the outstanding Shares of the Trust, as a whole, or any affected Series, as may
be applicable; provided that in all respects not governed by statute or
applicable law, the Trustees shall have the power to prescribe the procedure
necessary or appropriate to accomplish a sale of assets, merger or consolidation
including the power to create one or more separate business trusts to which all
or any part of the assets, liabilities, profits or losses of the Trust may be
transferred and to provide for the conversion of the Shares of the Trust or any
Series into beneficial interests in such separate business trust or trusts (or
series thereof).
Section 3B. Notwithstanding Section 3A above, any one or more Series
created on or after August 14, 1998 may, either as the successor, survivor or
non-survivor, (1) consolidate or merge with one or more other trusts,
partnerships, associations or corporations, including any series or class
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thereof, organized under the laws of the State of Delaware or any other state of
the United States; or (2) transfer a substantial portion of its assets to one or
more other trusts, partnerships, associations or corporations, including any
series or class thereof, organized under the laws of the State of Delaware or
any other state of the United States, any such consolidation, merger or transfer
to be upon such terms and conditions as are specified in an agreement and plan
of reorganization authorized and approved by the Trustees and entered into by
the relevant series in connection therewith. Any such consolidation, merger or
transfer may be authorized by vote of a majority of the Trustees then in office
without the approval of Shareholders of any Series.
Section 4. Amendments. This Declaration of Trust may be restated and/or
amended at any time by an instrument in writing signed by a majority of the then
Trustees and, if required, by approval of such amendment by Shareholders in
accordance with Article V, Section 3 hereof. Any such restatement and/or
amendment hereto shall be effective immediately upon execution and approval. The
Certificate of Trust of the Trust may be restated and/or amended by a similar
procedure, and any such restatement and/or amendment shall be effective
immediately upon filing with the Office of the Secretary of State of the State
of Delaware or upon such future date as may be stated therein. Notwithstanding
any other provision of this Declaration of Trust, the Trust's By-Laws or the
Certificate of Trust of the Trust, no approval of any restatement and/or
amendment of this Declaration of Trust's By-Laws or the Certificate of Trust by
Shareholders shall be required for any restatement and/or amendment made by a
majority of the then Trustees to effect ministerial or correcting changes to
this Declaration of Trust, the By-Laws or the Certificate of Trust.
Section 5. Filing of Copies, References, Headings. The original or a copy
of this instrument and of each restatement and/or amendment hereto shall be kept
at the office of the Trust where it may be inspected by any Shareholder. Anyone
dealing with the Trust may rely on a certificate by an officer of the Trust as
to whether or not any such restatements and/or amendments have been made and as
to any matters in connection with the Trust hereunder; and, with the same effect
as if it were the original, may rely on a copy certified by an officer of the
Trust to be a copy of this instrument or of any such restatements and/or
amendments. In this instrument and in any such restatements and/or amendment,
references to this instrument, and all expressions like "herein," "hereof" and
"hereunder," shall be deemed to refer to this instrument as amended or affected
by any such restatements and/or amendments. Headings are placed herein for
convenience of reference only and shall not be taken as a part hereof or control
or affect the meaning, construction or effect of this instrument. Whenever the
singular number is used herein, the same shall include the plural; and the
neuter, masculine and feminine genders shall include each other, as applicable.
This instrument may be executed in any number of counterparts each of which
shall be deemed an original.
Section 6. Applicable Law. This Agreement and Declaration of Trust is
created under and is to be governed by and construed and administered according
to the laws of the State of Delaware and the Delaware Business Trust Act, as
amended form time to time (the "Act"). The Trust shall be a Delaware business
trust pursuant to such Act, and without limiting the provisions hereof, the
Trust may exercise all powers which are ordinarily exercised by such a business
trust.
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Section 7. Provisions in Conflict With Law or Regulations.
(a) The provisions of the Declaration of trust are severable, and if
the Trustees shall determine, with the advice of counsel, that any of such
provisions is in conflict with the Investment Company Act, the regulated
investment company provisions of the Internal Revenue Code or with other
applicable laws and regulations, the conflicting provision shall be deemed never
to have constituted a part of the Declaration of Trust; provided, however, that
such determination shall not affect any of the remaining provisions of the
Declaration of Trust or render invalid or improper any action taken or omitted
prior to such determination.
(b) If any provision of the Declaration of Trust shall be held
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision in such jurisdiction and
shall not in any manner affect such provision in any other jurisdiction or any
other provision of the Declaration of Trust in any jurisdiction.
Section 8. Business Trust Only. It is the intention of the Trustees to
create a business trust pursuant to the Delaware Business Trust Act, as amended
from time to time (the "Act"), and thereby to create only the relationship of
trustee and beneficial owners within the meaning of such Act between the
Trustees and each Shareholder. It is not the intention of the Trustees to create
a general partnership, limited partnership, joint stock association,
corporation, bailment, or any form of legal relationship other than a business
trust pursuant to such Act. Nothing in this Declaration of trust shall be
construed to make the Shareholders, either by themselves or with the Trustees,
partners or members of a joint stock association.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the trustees named below do hereby make and enter into
this Declaration of Trust as of the ___ day of September, 1998.
/s/ Robert E. Turner
- --------------------
/s/ Alfred C. Salvato
- ---------------------
/s/ Ronald W. Filante
- ---------------------
/s/ Katherine R. Griswold
- -------------------------
THE PRINCIPAL PLACE OF BUSINESS OF THE TRUST IS 237 PARK AVENUE, SUITE 2100,
NEW YORK, NEW YORK 10017.
20
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 5th day of January, 1998, by and between TIP
Institutional Funds, a Delaware business trust (the "Trust"), and Turner
Investment Partners, Inc. (the "Adviser").
WHEREAS, the Trust is an open-end management investment company registered
under the Investment Company Act of 1940, as amended, consisting of several
series of units of beneficial interest ("shares"), each having its own
investment policies; and
WHEREAS, the Trust has retained SEI Fund Resources (the "Administrator") to
provide administration of the Trust's operations, subject to the control of the
Board of Trustees;
WHEREAS, the Trust desires to retain the Adviser to render investment
management services with respect to the series set forth in the attached
schedule and such other series as the Trust and the Adviser may agree upon (the
"Portfolios"), and the Adviser is willing to render such services:
NOW, THEREFORE, in consideration of mutual covenants herein contained, the
parties hereto agree as follows:
1. DUTIES OF ADVISER. The Trust employs the Adviser to manage the
investment and reinvestment of the assets, and to continuously review,
supervise, and administer the investment program of each of the
Portfolios, to determine in its discretion the securities to be
purchased or sold, to provide the Administrator and the Trust with
records concerning the Adviser's activities which the Trust is
required to maintain, and to render regular reports to the
Administrator and to the Trust's Officers and Trustees concerning the
Adviser's discharge of the foregoing responsibilities.
The Adviser shall discharge the foregoing responsibilities subject to
the control of the Board of Trustees of the Trust and in compliance
with such policies as the Trustees may from time to time establish,
and in compliance with the objectives, policies, and limitations for
each such Portfolio set forth in the Portfolio's prospectus and
statement of additional information as amended from time to time, and
applicable laws and regulations.
The Adviser accepts such employment and agrees, at its own expense, to
render the services and to provide the office space, furnishings and
equipment and the personnel required by it to perform the services on
the terms and for the compensation provided herein.
2. PORTFOLIO TRANSACTIONS. The Adviser is authorized to select the
brokers or dealers that will execute the purchases and sales of
portfolio securities for the
<PAGE>
Portfolios and is directed to use its best efforts to obtain the best
net results as described from time to time in the Portfolios'
Prospectuses and Statement of Additional Information. The Adviser will
promptly communicate to the Administrator and to the officers and the
Trustees of the Trust such information relating to portfolio
transactions as they may reasonably request.
It is understood that the Adviser will not be deemed to have acted
unlawfully, or to have breached a fiduciary duty to the Trust or be in
breach of any obligation owing to the Trust under this Agreement, or
otherwise, by reason of its having directed a securities transaction
on behalf of the Trust to a broker-dealer in compliance with the
provisions of Section 28(e) of the Securities Exchange Act of 1934 or
as described from time to time by the Portfolios' Prospectuses and
Statement of Additional Information.
3. COMPENSATION OF THE ADVISER. For the services to be rendered by the
Adviser as provided in Sections 1 and 2 of this Agreement, the Trust
shall pay to the Adviser compensation at the rate specified in the
Schedule(s) which are attached hereto and made a part of this
Agreement. Such compensation shall be paid to the Adviser at the end
of each month, and calculated by applying a daily rate, based on the
annual percentage rates as specified in the attached Schedule(s), to
the assets. The fee shall be based on the average daily net assets for
the month involved (less any assets of such Portfolios held in
non-interest bearing special deposits with a Federal Reserve Bank).
All rights of compensation under this Agreement for services performed
as of the termination date shall survive the termination of this
Agreement.
4. OTHER EXPENSES. The Adviser shall pay all expenses of printing and
mailing reports, prospectuses, statements of additional information,
and sales literature relating to the solicitation of prospective
clients. The Trust shall pay all expenses relating to mailing to
existing shareholders prospectuses, statements of additional
information, proxy solicitation material and shareholder reports.
5. EXCESS EXPENSES. If the expenses for any Portfolio for any fiscal year
(including fees and other amounts payable to the Adviser, but
excluding interest, taxes, brokerage costs, litigation, and other
extraordinary costs) as calculated every business day would exceed the
expense limitations imposed on investment companies by any applicable
statute or regulatory authority of any jurisdiction in which shares of
a Portfolio are qualified for offer and sale, the Adviser shall bear
such excess cost. However, the Adviser will not bear expenses of any
Portfolio which would result in the Portfolio's inability to qualify
as a regulated investment company under provisions of the Internal
Revenue Code. Payment of expenses
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by the Adviser pursuant to this Section 5 shall be settled on a
monthly basis (subject to fiscal year end reconciliation) by a
reduction in the fee payable to the Adviser for such month pursuant to
Section 3 and, if such reduction shall be insufficient to offset such
expenses, by reimbursing the Trust.
6. REPORTS. The Trust and the Adviser agree to furnish to each other, if
applicable, current prospectuses, proxy statements, reports to
shareholders, certified copies of their financial statements, and such
other information with regard to their affairs as each may reasonably
request.
7. STATUS OF ADVISER. The services of the Adviser to the Trust are not to
be deemed exclusive, and the Adviser shall be free to render similar
services to others so long as its services to the Trust are not
impaired thereby. The Adviser shall be deemed to be an independent
contractor and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent the Trust in any
way or otherwise be deemed an agent of the Trust.
8. CERTAIN RECORDS. Any records required to be maintained and preserved
pursuant to the provisions of Rule 31a-1 and Rule 31a-2 promulgated
under the Investment Company Act of 1940 which are prepared or
maintained by the Adviser on behalf of the Trust are the property of
the Trust and will be surrendered promptly to the Trust on request.
9. LIMITATION OF LIABILITY OF ADVISER. The duties of the Adviser shall be
confined to those expressly set forth herein, and no implied duties
are assumed by or may be asserted against the Adviser hereunder. The
Adviser shall not be liable for any error of judgment or mistake of
law or for any loss arising out of any investment or for any act or
omission in carrying out its duties hereunder, except a loss resulting
from willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of reckless disregard of its
obligations and duties hereunder, except as may otherwise be provided
under provisions of applicable state law or Federal securities law
which cannot be waived or modified hereby. (As used in this Paragraph
9, the term "Adviser" shall include directors, officers, employees and
other corporate agents of the Adviser as well as that corporation
itself).
10. PERMISSIBLE INTERESTS. Trustees, agents, and shareholders of the Trust
are or may be interested in the Adviser (or any successor thereof) as
directors, partners, officers, or shareholders, or otherwise;
directors, partners, officers, agents, and shareholders of the Adviser
are or may be interested in the Trust as Trustees, shareholders or
otherwise; and the Adviser (or any successor) is or may be interested
in the Trust as a shareholder or otherwise. The Adviser agrees that
neither it nor any of its directors, partners, officers or employees
will take any
3
<PAGE>
short position in the shares of the Funds. This prohibition shall not
prevent the purchase of such shares by any of the directors, officers
and partners or bona fide employees of the Adviser or any trust,
pension, profit-sharing or other benefit plan for such persons or
affiliates thereof, at a price not less than the net asset value
thereof at the time of purchase, as allowed pursuant to rules
promulgated under the 1940 Act. In addition, brokerage transactions
for the Trust may be effected through affiliates of the Adviser if
approved by the Board of Trustees, subject to the rules and
regulations of the Securities and Exchange Commission.
11. LICENSE OF ADVISER'S NAME. The Adviser hereby agrees to grant a
license to the Trust for use of its name in the names of the
Portfolios for the term of this Agreement and such license shall
terminate upon termination of this Agreement.
12. DURATION AND TERMINATION. This Agreement, unless sooner terminated as
provided herein, shall remain in effect until two years from date of
execution, and thereafter, for periods of one year so long as such
continuance thereafter is specifically approved at least annually (a)
by the vote of a majority of those Trustees of the Trust who are not
parties to this Agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the Trustees of the Trust or by vote of a
majority of the outstanding voting securities of each Portfolio;
provided, however, that if the shareholders of any Portfolio fail to
approve the Agreement as provided herein, the Adviser may continue to
serve hereunder in the manner and to the extent permitted by the
Investment Company Act of 1940 and rules and regulations thereunder.
The foregoing requirement that continuance of this Agreement be
"specifically approved at least annually" shall be construed in a
manner consistent with the Investment Company Act of 1940 and the
rules and regulations thereunder.
This Agreement may be terminated as to any Portfolio at any time,
without the payment of any penalty by vote of a majority of the
Trustees of the Trust or by vote of a majority of the outstanding
voting securities of the Portfolio on not less than 30 days' nor more
than 60 days' written notice to the Adviser, or by the Adviser at any
time without the payment of any penalty, on 90 days' written notice to
the Trust. This Agreement will automatically and immediately terminate
in the event of its assignment. Any notice under this Agreement shall
be given in writing, addressed and delivered, or mailed postpaid, to
the other party at any office of such party.
As used in this Section 11, the terms "assignment", "interested
persons", and a "vote of a majority of the outstanding voting
securities" shall have the respective
4
<PAGE>
meanings set forth in the Investment Company Act of 1940 and the rules
and regulations thereunder; subject to such exemptions as may be
granted by the Securities and Exchange Commission under said Act.
13. NOTICE. Any notice required or permitted to be given by either party
to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice
to the other party at the last address furnished by the other party to
the party giving notice: if to the Trust, at Oaks, PA 19456, and if to
the Adviser, at 1235 Westlakes Drive, Suite 350, Berwyn, PA 19312.
14. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder
of this Agreement shall not be affected thereby.
15. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Delaware and the applicable provisions of the
1940 Act. To the extent that the applicable laws of the State of
Delaware, or any of the provisions herein, conflict with the
applicable provisions of the 1940 Act, the latter shall control.
A copy of the Declaration of Trust of the Trust is on file with the Secretary of
the State of Delaware, and notice is hereby given that this instrument is
executed on behalf of the Trustees of the Trust as Trustees, and are not binding
upon any of the Trustees, officers, or shareholders of the Trust individually
but binding only upon the assets and property of the Trust. Further, the
obligations of the Trust with respect to any one Portfolio shall not be binding
upon any other Portfolio.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
as of the day and year first written above.
TIP INSTITUTIONAL FUNDS
By: /s/ Stephen Kneeley
-------------------
Attest: /s/ Brian Ferko
---------------
TURNER INVESTMENT PARTNERS, INC.
By: /s/ Stephen Kneeley
-------------------
Attest: /s/ Brian Ferko
---------------
5
<PAGE>
SCHEDULE A DATED JANUARY 5, 1998
TO THE
INVESTMENT ADVISORY AGREEMENT
DATED JANUARY 5, 1998
BETWEEN
TIP INSTITUTIONAL FUNDS
AND
TURNER INVESTMENT PARTNERS, INC.
Pursuant to Article 3, the Trust shall pay the Adviser compensation at an annual
rate as follows:
Portfolio Fee (in basis points)
--------- ---------------------
Solon Short Duration Government Funds .25% of the average daily net assets
-One Year Portfolio
Solon Short Duration Government Funds .25% of the average daily net assets
-Three Year Portfolio
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 1st day of March, 1998, by and between TIP
Institutional Funds, a Delaware business trust (the "Trust"), and Turner
Investment Partners, Inc. (the "Adviser").
WHEREAS, the Trust is an open-end management investment company registered
under the Investment Company Act of 1940, as amended, consisting of several
series of units of beneficial interest ("shares"), each having its own
investment policies; and
WHEREAS, the Trust has retained SEI Fund Resources (the "Administrator") to
provide administration of the Trust's operations, subject to the control of the
Board of Trustees;
WHEREAS, the Trust desires to retain the Adviser to render investment
management services with respect to the series set forth in the attached
schedule and such other series as the Trust and the Adviser may agree upon (the
"Portfolios"), and the Adviser is willing to render such services:
NOW, THEREFORE, in consideration of mutual covenants herein contained, the
parties hereto agree as follows:
1. DUTIES OF ADVISER. The Trust employs the Adviser to manage the
investment and reinvestment of the assets, and to continuously review,
supervise, and administer the investment program of each of the
Portfolios, to determine in its discretion the securities to be
purchased or sold, to provide the Administrator and the Trust with
records concerning the Adviser's activities which the Trust is
required to maintain, and to render regular reports to the
Administrator and to the Trust's Officers and Trustees concerning the
Adviser's discharge of the foregoing responsibilities.
The Adviser shall discharge the foregoing responsibilities subject to
the control of the Board of Trustees of the Trust and in compliance
with such policies as the Trustees may from time to time establish,
and in compliance with the objectives, policies, and limitations for
each such Portfolio set forth in the Portfolio's prospectus and
statement of additional information as amended from time to time, and
applicable laws and regulations.
The Adviser accepts such employment and agrees, at its own expense, to
render the services and to provide the office space, furnishings and
equipment and the personnel required by it to perform the services on
the terms and for the compensation provided herein.
2. PORTFOLIO TRANSACTIONS. The Adviser is authorized to select the
brokers or dealers that will execute the purchases and sales of
portfolio securities for the Portfolios and is directed to use its
best efforts to obtain the best net results as described from time
1
<PAGE>
to time in the Portfolios' Prospectuses and Statement of Additional
Information. The Adviser will promptly communicate to the
Administrator and to the officers and the Trustees of the Trust such
information relating to portfolio transactions as they may reasonably
request.
It is understood that the Adviser will not be deemed to have acted
unlawfully, or to have breached a fiduciary duty to the Trust or be in
breach of any obligation owing to the Trust under this Agreement, or
otherwise, by reason of its having directed a securities transaction
on behalf of the Trust to a broker-dealer in compliance with the
provisions of Section 28(e) of the Securities Exchange Act of 1934 or
as described from time to time by the Portfolios' Prospectuses and
Statement of Additional Information.
3. COMPENSATION OF THE ADVISER. For the services to be rendered by the
Adviser as provided in Sections 1 and 2 of this Agreement, the Trust
shall pay to the Adviser compensation at the rate specified in the
Schedule(s) which are attached hereto and made a part of this
Agreement. Such compensation shall be paid to the Adviser at the end
of each month, and calculated by applying a daily rate, based on the
annual percentage rates as specified in the attached Schedule(s), to
the assets. The fee shall be based on the average daily net assets for
the month involved (less any assets of such Portfolios held in
non-interest bearing special deposits with a Federal Reserve Bank).
All rights of compensation under this Agreement for services performed
as of the termination date shall survive the termination of this
Agreement.
4. OTHER EXPENSES. The Adviser shall pay all expenses of printing and
mailing reports, prospectuses, statements of additional information,
and sales literature relating to the solicitation of prospective
clients. The Trust shall pay all expenses relating to mailing to
existing shareholders prospectuses, statements of additional
information, proxy solicitation material and shareholder reports.
5. EXCESS EXPENSES. If the expenses for any Portfolio for any fiscal year
(including fees and other amounts payable to the Adviser, but
excluding interest, taxes, brokerage costs, litigation, and other
extraordinary costs) as calculated every business day would exceed the
expense limitations imposed on investment companies by any applicable
statute or regulatory authority of any jurisdiction in which shares of
a Portfolio are qualified for offer and sale, the Adviser shall bear
such excess cost. However, the Adviser will not bear expenses of any
Portfolio which would result in the Portfolio's inability to qualify
as a regulated investment company under provisions of the Internal
Revenue Code. Payment of expenses by the Adviser pursuant to this
Section 5 shall be settled on a monthly basis (subject to fiscal year
end reconciliation) by a reduction in the fee payable to the Adviser
for such month
2
<PAGE>
pursuant to Section 3 and, if such reduction shall be insufficient to
offset such expenses, by reimbursing the Trust.
6. REPORTS. The Trust and the Adviser agree to furnish to each other, if
applicable, current prospectuses, proxy statements, reports to
shareholders, certified copies of their financial statements, and such
other information with regard to their affairs as each may reasonably
request.
7. STATUS OF ADVISER. The services of the Adviser to the Trust are not to
be deemed exclusive, and the Adviser shall be free to render similar
services to others so long as its services to the Trust are not
impaired thereby. The Adviser shall be deemed to be an independent
contractor and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent the Trust in any
way or otherwise be deemed an agent of the Trust.
8. CERTAIN RECORDS. Any records required to be maintained and preserved
pursuant to the provisions of Rule 31a-1 and Rule 31a-2 promulgated
under the Investment Company Act of 1940 which are prepared or
maintained by the Adviser on behalf of the Trust are the property of
the Trust and will be surrendered promptly to the Trust on request.
9. LIMITATION OF LIABILITY OF ADVISER. The duties of the Adviser shall be
confined to those expressly set forth herein, and no implied duties
are assumed by or may be asserted against the Adviser hereunder. The
Adviser shall not be liable for any error of judgment or mistake of
law or for any loss arising out of any investment or for any act or
omission in carrying out its duties hereunder, except a loss resulting
from willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of reckless disregard of its
obligations and duties hereunder, except as may otherwise be provided
under provisions of applicable state law or Federal securities law
which cannot be waived or modified hereby. (As used in this Paragraph
9, the term "Adviser" shall include directors, officers, employees and
other corporate agents of the Adviser as well as that corporation
itself).
10. PERMISSIBLE INTERESTS. Trustees, agents, and shareholders of the Trust
are or may be interested in the Adviser (or any successor thereof) as
directors, partners, officers, or shareholders, or otherwise;
directors, partners, officers, agents, and shareholders of the Adviser
are or may be interested in the Trust as Trustees, shareholders or
otherwise; and the Adviser (or any successor) is or may be interested
in the Trust as a shareholder or otherwise. In addition, brokerage
transactions for the Trust may be effected through affiliates of the
Adviser if approved by the Board of Trustees, subject to the rules and
regulations of the Securities and Exchange Commission.
3
<PAGE>
11. LICENSE OF ADVISER'S NAME. The Adviser hereby agrees to grant a
license to the Trust for use of its name in the names of the
Portfolios for the term of this Agreement and such license shall
terminate upon termination of this Agreement.
12. DURATION AND TERMINATION. This Agreement, unless sooner terminated as
provided herein, shall remain in effect until two years from date of
execution, and thereafter, for periods of one year so long as such
continuance thereafter is specifically approved at least annually (a)
by the vote of a majority of those Trustees of the Trust who are not
parties to this Agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the Trustees of the Trust or by vote of a
majority of the outstanding voting securities of each Portfolio;
provided, however, that if the shareholders of any Portfolio fail to
approve the Agreement as provided herein, the Adviser may continue to
serve hereunder in the manner and to the extent permitted by the
Investment Company Act of 1940 and rules and regulations thereunder.
The foregoing requirement that continuance of this Agreement be
"specifically approved at least annually" shall be construed in a
manner consistent with the Investment Company Act of 1940 and the
rules and regulations thereunder.
This Agreement may be terminated as to any Portfolio at any time,
without the payment of any penalty by vote of a majority of the
Trustees of the Trust or by vote of a majority of the outstanding
voting securities of the Portfolio on not less than 30 days' nor more
than 60 days' written notice to the Adviser, or by the Adviser at any
time without the payment of any penalty, on 90 days' written notice to
the Trust. This Agreement will automatically and immediately terminate
in the event of its assignment. Any notice under this Agreement shall
be given in writing, addressed and delivered, or mailed postpaid, to
the other party at any office of such party.
As used in this Section 11, the terms "assignment", "interested
persons", and a "vote of a majority of the outstanding voting
securities" shall have the respective meanings set forth in the
Investment Company Act of 1940 and the rules and regulations
thereunder; subject to such exemptions as may be granted by the
Securities and Exchange Commission under said Act.
13. NOTICE. Any notice required or permitted to be given by either party
to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice
to the other party at the last address furnished by the other party to
the party giving notice: if to the Trust, at Oaks, PA 19456, and if to
the Adviser, at 1235 Westlakes Drive, Suite 350, Berwyn, PA 19312.
14. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder
of this Agreement shall not be affected thereby.
4
<PAGE>
15. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Delaware and the applicable provisions of the
1940 Act. To the extent that the applicable laws of the State of
Delaware, or any of the provisions herein, conflict with the
applicable provisions of the 1940 Act, the latter shall control.
A copy of the Declaration of Trust of the Trust is on file with the Secretary of
the State of Delaware, and notice is hereby given that this instrument is
executed on behalf of the Trustees of the Trust as Trustees, and are not binding
upon any of the Trustees, officers, or shareholders of the Trust individually
but binding only upon the assets and property of the Trust. Further, the
obligations of the Trust with respect to any one Portfolio shall not be binding
upon any other Portfolio.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
as of the day and year first written above.
TIP INSTITUTIONAL FUNDS
By: /s/ Stephen Kneeley
-------------------
Attest: /s/ Brian Ferko
---------------
TURNER INVESTMENT PARTNERS, INC.
By: /s/ Stephen Kneeley
-------------------
Attest: /s/ Brian Ferko
---------------
5
<PAGE>
SCHEDULE A DATED MARCH 1, 1998
TO THE
INVESTMENT ADVISORY AGREEMENT
DATED MARCH 1, 1998
BETWEEN
TIP INSTITUTIONAL FUNDS
AND
TURNER INVESTMENT PARTNERS, INC.
Pursuant to Article 3, the Trust shall pay the Adviser compensation at an annual
rate as follows:
Portfolio Fee (in basis points)
--------- ---------------------
Micro Cap Growth Fund 1.00% of the average daily net assets
6
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 1st day of March, 1998, by and between TIP
Institutional Funds, a Delaware business trust (the "Trust"), and Penn Capital
Management Company, Inc. (the "Adviser").
WHEREAS, the Trust is an open-end management investment company registered
under the Investment Company Act of 1940, as amended, consisting of several
series of units of beneficial interest ("shares"), each having its own
investment policies; and
WHEREAS, the Trust has retained SEI Fund Resources (the "Administrator") to
provide administration of the Trust's operations, subject to the control of the
Board of Trustees;
WHEREAS, the Trust desires to retain the Adviser to render investment
management services with respect to the series set forth in the attached
schedule and such other series as the Trust and the Adviser may agree upon (the
"Portfolios"), and the Adviser is willing to render such services:
NOW, THEREFORE, in consideration of mutual covenants herein contained, the
parties hereto agree as follows:
1. DUTIES OF ADVISER. The Trust employs the Adviser to manage the
investment and reinvestment of the assets, and to continuously review,
supervise, and administer the investment program of each of the
Portfolios, to determine in its discretion the securities to be
purchased or sold, to provide the Administrator and the Trust with
records concerning the Adviser's activities which the Trust is
required to maintain, and to render regular reports to the
Administrator and to the Trust's Officers and Trustees concerning the
Adviser's discharge of the foregoing responsibilities.
The Adviser shall discharge the foregoing responsibilities subject to
the control of the Board of Trustees of the Trust and in compliance
with such policies as the Trustees may from time to time establish,
and in compliance with the objectives, policies, and limitations for
each such Portfolio set forth in the Portfolio's prospectus and
statement of additional information as amended from time to time, and
applicable laws and regulations.
The Adviser accepts such employment and agrees, at its own expense, to
render the services and to provide the office space, furnishings and
equipment and the personnel required by it to perform the services on
the terms and for the compensation provided herein.
2. PORTFOLIO TRANSACTIONS. The Adviser is authorized to select the
brokers or dealers that will execute the purchases and sales of
portfolio securities for the Portfolios and
1
<PAGE>
is directed to use its best efforts to obtain the best net results as
described from time to time in the Portfolios' Prospectuses and
Statement of Additional Information. The Adviser will promptly
communicate to the Administrator and to the officers and the Trustees
of the Trust such information relating to portfolio transactions as
they may reasonably request.
It is understood that the Adviser will not be deemed to have acted
unlawfully, or to have breached a fiduciary duty to the Trust or be in
breach of any obligation owing to the Trust under this Agreement, or
otherwise, by reason of its having directed a securities transaction
on behalf of the Trust to a broker-dealer in compliance with the
provisions of Section 28(e) of the Securities Exchange Act of 1934 or
as described from time to time by the Portfolios' Prospectuses and
Statement of Additional Information.
3. COMPENSATION OF THE ADVISER. For the services to be rendered by the
Adviser as provided in Sections 1 and 2 of this Agreement, the Trust
shall pay to the Adviser compensation at the rate specified in the
Schedule(s) which are attached hereto and made a part of this
Agreement. Such compensation shall be paid to the Adviser at the end
of each month, and calculated by applying a daily rate, based on the
annual percentage rates as specified in the attached Schedule(s), to
the assets. The fee shall be based on the average daily net assets for
the month involved (less any assets of such Portfolios held in
non-interest bearing special deposits with a Federal Reserve Bank).
All rights of compensation under this Agreement for services performed
as of the termination date shall survive the termination of this
Agreement.
4. OTHER EXPENSES. The Adviser shall pay all expenses of printing and
mailing reports, prospectuses, statements of additional information,
and sales literature relating to the solicitation of prospective
clients. The Trust shall pay all expenses relating to mailing to
existing shareholders prospectuses, statements of additional
information, proxy solicitation material and shareholder reports.
5. EXCESS EXPENSES. If the expenses for any Portfolio for any fiscal year
(including fees and other amounts payable to the Adviser, but
excluding interest, taxes, brokerage costs, litigation, and other
extraordinary costs) as calculated every business day would exceed the
expense limitations imposed on investment companies by any applicable
statute or regulatory authority of any jurisdiction in which shares of
a Portfolio are qualified for offer and sale, the Adviser shall bear
such excess cost. However, the Adviser will not bear expenses of any
Portfolio which would result in the Portfolio's inability to qualify
as a regulated investment company under provisions of the Internal
Revenue Code. Payment of expenses by the Adviser pursuant to this
Section 5 shall be settled on a monthly basis (subject to fiscal year
2
<PAGE>
end reconciliation) by a reduction in the fee payable to the Adviser
for such month pursuant to Section 3 and, if such reduction shall be
insufficient to offset such expenses, by reimbursing the Trust.
6. REPORTS. The Trust and the Adviser agree to furnish to each other, if
applicable, current prospectuses, proxy statements, reports to
shareholders, certified copies of their financial statements, and such
other information with regard to their affairs as each may reasonably
request.
7. STATUS OF ADVISER. The services of the Adviser to the Trust are not to
be deemed exclusive, and the Adviser shall be free to render similar
services to others so long as its services to the Trust are not
impaired thereby. The Adviser shall be deemed to be an independent
contractor and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent the Trust in any
way or otherwise be deemed an agent of the Trust.
8. CERTAIN RECORDS. Any records required to be maintained and preserved
pursuant to the provisions of Rule 31a-1 and Rule 31a-2 promulgated
under the Investment Company Act of 1940 which are prepared or
maintained by the Adviser on behalf of the Trust are the property of
the Trust and will be surrendered promptly to the Trust on request.
9. LIMITATION OF LIABILITY OF ADVISER. The duties of the Adviser shall be
confined to those expressly set forth herein, and no implied duties
are assumed by or may be asserted against the Adviser hereunder. The
Adviser shall not be liable for any error of judgment or mistake of
law or for any loss arising out of any investment or for any act or
omission in carrying out its duties hereunder, except a loss resulting
from willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of reckless disregard of its
obligations and duties hereunder, except as may otherwise be provided
under provisions of applicable state law or Federal securities law
which cannot be waived or modified hereby. (As used in this Paragraph
9, the term "Adviser" shall include directors, officers, employees and
other corporate agents of the Adviser as well as that corporation
itself).
10. PERMISSIBLE INTERESTS. Trustees, agents, and shareholders of the Trust
are or may be interested in the Adviser (or any successor thereof) as
directors, partners, officers, or shareholders, or otherwise;
directors, partners, officers, agents, and shareholders of the Adviser
are or may be interested in the Trust as Trustees, shareholders or
otherwise; and the Adviser (or any successor) is or may be interested
in the Trust as a shareholder or otherwise. In addition, brokerage
transactions for the Trust may be effected through affiliates of the
Adviser if approved by the Board of Trustees, subject to the rules and
regulations of the Securities and Exchange Commission.
3
<PAGE>
11. LICENSE OF ADVISER'S NAME. The Adviser hereby agrees to grant a
license to the Trust for use of its name in the names of the
Portfolios for the term of this Agreement and such license shall
terminate upon termination of this Agreement.
12. DURATION AND TERMINATION. This Agreement, unless sooner terminated as
provided herein, shall remain in effect until two years from date of
execution, and thereafter, for periods of one year so long as such
continuance thereafter is specifically approved at least annually (a)
by the vote of a majority of those Trustees of the Trust who are not
parties to this Agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the Trustees of the Trust or by vote of a
majority of the outstanding voting securities of each Portfolio;
provided, however, that if the shareholders of any Portfolio fail to
approve the Agreement as provided herein, the Adviser may continue to
serve hereunder in the manner and to the extent permitted by the
Investment Company Act of 1940 and rules and regulations thereunder.
The foregoing requirement that continuance of this Agreement be
"specifically approved at least annually" shall be construed in a
manner consistent with the Investment Company Act of 1940 and the
rules and regulations thereunder.
This Agreement may be terminated as to any Portfolio at any time,
without the payment of any penalty by vote of a majority of the
Trustees of the Trust or by vote of a majority of the outstanding
voting securities of the Portfolio on not less than 30 days' nor more
than 60 days' written notice to the Adviser, or by the Adviser at any
time without the payment of any penalty, on 90 days' written notice to
the Trust. This Agreement will automatically and immediately terminate
in the event of its assignment. Any notice under this Agreement shall
be given in writing, addressed and delivered, or mailed postpaid, to
the other party at any office of such party.
As used in this Section 11, the terms "assignment", "interested
persons", and a "vote of a majority of the outstanding voting
securities" shall have the respective meanings set forth in the
Investment Company Act of 1940 and the rules and regulations
thereunder; subject to such exemptions as may be granted by the
Securities and Exchange Commission under said Act.
13. NOTICE. Any notice required or permitted to be given by either party
to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice
to the other party at the last address furnished by the other party to
the party giving notice: if to the Trust, at One Freedom Valley Road,
Oaks, Pennsylvania 19456, and if to the Adviser, at 52
Haddonfield-Berlin Road, Suite 1000, Cherry Hill, NJ 08034.
14. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by
4
<PAGE>
a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
15. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Delaware and the applicable provisions of the
1940 Act. To the extent that the applicable laws of the State of
Delaware, or any of the provisions herein, conflict with the
applicable provisions of the 1940 Act, the latter shall control.
A copy of the Declaration of Trust of the Trust is on file with the Secretary of
the State of Delaware, and notice is hereby given that this instrument is
executed on behalf of the Trustees of the Trust as Trustees, and are not binding
upon any of the Trustees, officers, or shareholders of the Trust individually
but binding only upon the assets and property of the Trust. Further, the
obligations of the Trust with respect to any one Portfolio shall not be binding
upon any other Portfolio.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
as of the day and year first written above.
TIP INSTITUTIONAL FUNDS
By: /s/ Stephen Kneeley
-------------------
Attest: /s/ Brian Ferko
---------------
PENN CAPITAL MANAGEMENT COMPANY, INC.
By: /s/ Chuck E. Sessa, Jr.
-----------------------
Attest:
-------------------
5
<PAGE>
SCHEDULE A DATED MARCH 1, 1998
TO THE
INVESTMENT ADVISORY AGREEMENT
DATED MARCH 1, 1998
BETWEEN
TIP INSTITUTIONAL FUNDS
AND
PENN CAPITAL MANAGEMENT COMPANY, INC.
Pursuant to Article 3, the Trust shall pay the Adviser compensation at an annual
rate as follows:
<TABLE>
<CAPTION>
Portfolio Fee (in basis points)
--------- ---------------------
<S> <C>
Penn Capital Strategic High Yield Bond Fund .55% of the average daily net assets
</TABLE>
6
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made as of the 1st day of January, 1998 by and between
TIP Institutional Funds (the "Trust"), a Delaware business trust, and SEI
Investments Distribution Co. (the "Distributor"), a Pennsylvania corporation.
WHEREAS, the Trust is registered as an investment company with the
Securities and Exchange Commission (the "SEC") under the Investment Company Act
of 1940, as amended ("1940 Act"), and its shares are registered with the SEC
under the Securities Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Distributor is registered as a broker-dealer with the SEC
under the Securities Exchange Act of 1934, as amended;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, the Trust and Distributor hereby agree as follows:
ARTICLE 1. Sale of Shares. The Trust grants to the Distributor the
exclusive right to sell units (the "Shares") of the portfolios (the
"Portfolios") of the Trust at the net asset value per Share, plus any applicable
sales charges in accordance with the current prospectuses, as agent and on
behalf of the Trust, during the term of this Agreement and subject to the
registration requirements of the 1933 Act, the rules and regulations of the SEC
and the laws governing the sale of securities in the various states (the "Blue
Sky Laws").
ARTICLE 2. Solicitation of Sales. In consideration of these rights granted
to the Distributor, the Distributor agrees to use all reasonable efforts,
consistent with its other business, in connection with the distribution of
Shares of the Trust; provided, however, that the Distributor shall not be
prevented from entering into like arrangements with other issuers. The
provisions of this paragraph do not obligate the Distributor to register as a
broker or dealer under the Blue Sky Laws of any jurisdiction when it determines
it would be uneconomical for it to do so or to maintain its registration in any
jurisdiction in which it is now registered nor obligate the Distributor to sell
any particular number of Shares.
ARTICLE 3. Compensation. As compensation for providing the services under
this Agreement:
(a) The Distributor shall receive from the Trust:
(1) all distribution and service fees, as applicable, at the rate and
under the terms and conditions set forth in each Distribution and
Shareholder Services Plan adopted by the appropriate class of shares
of each of the Portfolios, as such Plans may be amended from time to
time, and subject to any further limitations on such fees as the
<PAGE>
Board of Trustees of the Trust may impose;
(2) all contingent deferred sales charges ("CDSC") applied on
redemptions of any CDSC class shares of each Portfolio on the terms
and subject to such waivers as are described in the Trust's
Registration Statement and current prospectuses, as amended from time
to time, or as otherwise required pursuant to applicable law; and
(3) all front-end sales charges, if any, on purchases of Class A
Shares of each Portfolio sold subject to such charges as described in
the Trust's Registration Statement and current prospectuses, as
amended from time to time. The Distributor, or brokers, dealers and
other financial institutions and intermediaries that have entered into
sub-distribution agreements with the Distributor, may collect the
gross proceeds derived from the sale of such shares, remit the net
asset value thereof to the Trust upon receipt of the proceeds and
retain the applicable sales charge.
(b) The Distributor may reallow any or all of the distribution or service
fees, contingent deferred sales charges and front-end sales charges which
it is paid by the Trust to such brokers, dealers and other financial
institutions and intermediaries as the Distributor may from time to time
determine.
ARTICLE 4. Authorized Representations. The Distributor is not authorized by
the Trust to give any information or to make any representations other than
those contained in the current registration statements and prospectuses of the
Trust filed with the SEC or contained in Shareholder reports or other material
that may be prepared by or on behalf of the Trust for the Distributor's use. The
Distributor may prepare and distribute sales literature and other material as it
may deem appropriate, provided that such literature and materials have been
prepared in accordance with applicable rules and regulations.
ARTICLE 5. Registration of Shares. The Trust agrees that it will take all
action necessary to register Shares under the federal and state securities laws
so that there will be available for sale the number of Shares the Distributor
may reasonably be expected to sell and to pay all fees associated with said
registration. The Trust shall make available to the Distributor such number of
copies of its currently effective prospectuses and statements of additional
information as the Distributor may reasonably request. The Trust shall furnish
to the Distributor copies of all information, financial statements and other
papers which the Distributor may reasonably request for use in connection with
the distribution of Shares of the Trust.
ARTICLE 6. Indemnification of Distributor. The Trust agrees to indemnify
and hold harmless the Distributor and each of its directors and officers and
each person, if any, who controls the Distributor within the meaning of Section
15 of the 1933 Act against any loss, liability, claim, damages or expense
(including the reasonable cost of investigating or defending any alleged loss,
liability, claim, damages, or expense and reasonable counsel fees and
disbursements incurred in connection therewith), arising by reason of any person
acquiring any Shares, based upon the ground
2
<PAGE>
that the registration statement, prospectus, Shareholder reports or other
information filed or made public by the Trust (as from time to time amended)
included an untrue statement of a material fact or omitted to state a material
fact required to be stated or necessary in order to make the statements made not
misleading. However, the Trust does not agree to indemnify the Distributor or
hold it harmless to the extent that the statements or omission was made in
reliance upon, and in conformity with, information furnished to the Trust by or
on behalf of the Distributor.
In no case (i) is the indemnity of the Trust to be deemed to protect the
Distributor against any liability to the Trust or its Shareholders to which the
Distributor or such person otherwise would be subject by reason of 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 under this
Agreement, or (ii) is the Trust to be liable to the Distributor under the
indemnity agreement contained in this paragraph with respect to any claim made
against the Distributor or any person indemnified unless the Distributor or
other person shall have notified the Trust in writing of the claim within a
reasonable time after the summons or other first written notification giving
information of the nature of the claim shall have been served upon the
Distributor or such other person (or after the Distributor or the person shall
have received notice of service on any designated agent). However, failure to
notify the Trust of any claim shall not relieve the Trust from any liability
which it may have to the Distributor or any person against whom such action is
brought otherwise than on account of its indemnity agreement contained in this
paragraph.
The Trust shall be entitled to participate at its own expense in the
defense or, if it so elects, to assume the defense of any suit brought to
enforce any claims subject to this indemnity provision. If the Trust elects to
assume the defense of any such claim, the defense shall be conducted by counsel
chosen by the Trust and satisfactory to the indemnified defendants in the suit
whose approval shall not be unreasonably withheld. In the event that the Trust
elects to assume the defense of any suit and retain counsel, the indemnified
defendants shall bear the fees and expenses of any additional counsel retained
by them. If the Trust does not elect to assume the defense of a suit, it will
reimburse the indemnified defendants for the reasonable fees and expenses of any
counsel retained by the indemnified defendants.
The Trust agrees to notify the Distributor promptly of the commencement of
any litigation or proceedings against it or any of its officers or Trustees in
connection with the issuance or sale of any of its Shares.
ARTICLE 7. Indemnification of Trust. The Distributor covenants and agrees
that it will indemnify and hold harmless the Trust and each of its Trustees and
officers and each person, if any, who controls the Trust within the meaning of
Section 15 of the Act, against any loss, liability, damages, claim or expense
(including the reasonable cost of investigating or defending any alleged loss,
liability, damages, claim or expense and reasonable counsel fees incurred in
connection therewith) based upon the 1933 Act or any other statute or common law
and arising by reason of any person acquiring any Shares, and alleging a
wrongful act of the Distributor or any of its employees or alleging that the
registration statement, prospectus, Shareholder reports or other information
filed
3
<PAGE>
or made public by the Trust (as from time to time amended) included an untrue
statement of a material fact or omitted to state a material fact required to be
stated or necessary in order to make the statements not misleading, insofar as
the statement or omission was made in reliance upon and in conformity with
information furnished to the Trust by or on behalf of the Distributor.
In no case (i) is the indemnity of the Distributor in favor of the Trust or
any other person indemnified to be deemed to protect the Trust or any other
person against any liability to which the Trust or such other person would
otherwise be subject by reason of 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 under this Agreement, or (ii) is the
Distributor to be liable under its indemnity agreement contained in this
paragraph with respect to any claim made against the Trust or any person
indemnified unless the Trust or person, as the case may be, shall have notified
the Distributor in writing of the claim within a reasonable time after the
summons or other first written notification giving information of the nature of
the claim shall have been served upon the Trust or upon any person (or after the
Trust or such person shall have received notice of service on any designated
agent). However, failure to notify the Distributor of any claim shall not
relieve the Distributor from any liability which it may have to the Trust or any
person against whom the action is brought otherwise than on account of its
indemnity agreement contained in this paragraph.
The Distributor shall be entitled to participate, at its own expense, in
the defense or, if it so elects, to assume the defense of any suit brought to
enforce the claim, but if the Distributor elects to assume the defense, the
defense shall be conducted by counsel chosen by the Distributor and satisfactory
to the indemnified defendants whose approval shall not be unreasonably withheld.
In the event that the Distributor elects to assume the defense of any suit and
retain counsel, the defendants in the suit shall bear the fees and expenses of
any additional counsel retained by them. If the Distributor does not elect to
assume the defense of any suit, it will reimburse the indemnified defendants in
the suit for the reasonable fees and expenses of any counsel retained by them.
The Distributor agrees to notify the Trust promptly of the commencement of
any litigation or proceedings against it in connection with the issue and sale
of any of the Trusts' Shares.
ARTICLE 8. Effective Date. This Agreement shall be effective upon its
execution, and unless terminated as provided, shall continue in force for two
years from the effective date and thereafter from year to year, provided that
such annual continuance is approved by (i) either the vote of a majority of the
Trustees of the Trust, or the vote of a majority of the outstanding voting
securities of the Trust, and (ii) the vote of a majority of those Trustees of
the Trust who are not parties to this Agreement or the Trust's Distribution Plan
or interested persons of any such party ("Qualified Trustees"), cast in person
at a meeting called for the purpose of voting on the approval. This Agreement
shall automatically terminate in the event of its assignment. As used in this
paragraph the terms "vote of a majority of the outstanding voting securities",
"assignment" and "interested person" shall have the respective meanings
specified in the 1940 Act. In addition, this Agreement may at any time be
terminated without penalty by the Distributor, by a vote of a majority of
Qualified Trustees or by vote of a majority of the outstanding voting securities
of the Trust upon
4
<PAGE>
not less than 60 days prior written notice to the other party.
ARTICLE 9. Notices. Any notice required or permitted to be given by either
party to the other shall be deemed sufficient if sent by registered or certified
mail, postage prepaid, addressed by the party giving notice to the other party
at the last address furnished by the other party to the party giving notice: if
to the Trust, at One Freedom Valley Road, Oaks, Pennsylvania, 19456, and if to
the Distributor, at One Freedom Valley Road, Oaks, Pennsylvania 19456.
ARTICLE 10. Limitation of Liability. A copy of the Declaration of Trust of
the Trust is on file with the Secretary of State of the State of Delaware, and
notice is hereby given that this Agreement is executed on behalf of the Trustees
of the Trust as Trustees and not individually and that the obligations of this
instrument are not binding upon any of the Trustees, officers or unitholders of
the Trust individually but binding only upon the assets and property of the
Trust. Further, obligations of the Trust with respect to any one Portfolio shall
not be binding upon any other Portfolio.
ARTICLE 11. Governing Law. This Agreement shall be construed in accordance
with the laws of the State of Delaware and the applicable provisions of the 1940
Act. To the extent that the applicable laws of the State of Delaware, or any of
the provisions herein, conflict with the applicable provisions of the 1940 Act,
the latter shall control.
ARTICLE 12. Multiple Originals. This Agreement may be executed in two or
more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.
IN WITNESS, the Trust and Distributor have each duly executed this
Agreement, as of the day and year above written.
TIP INSTITUTIONAL FUNDS
By: /s/ Stephen Kneeley
-------------------
Attest: /s/ Brian Ferko
---------------
SEI INVESTMENTS DISTRIBUTION CO.
By: /s/ Barbara Nugent
------------------
Attest: /s/ Donna Rafa
--------------
5
ADMINISTRATION AGREEMENT
THIS AGREEMENT is made as of this 1st day of January, 1998, by and between
TIP Institutional Funds, a Delaware business trust, (the "Trust"), and SEI Fund
Resources (the "Administrator"), a Delaware business trust.
WHEREAS, the Trust is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"),
consisting of several series of units of beneficial interest (herein, "shares");
and
WHEREAS, the Trust desires the Administrator to provide, and the
Administrator is willing to provide, management and administrative services to
such series of the Trust as the Trust and the Administrator may agree on
("Portfolios") and as listed on the schedules attached hereto ("Schedules") and
made a part of this Agreement, on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Trust and the Administrator hereby agree as follows:
ARTICLE 1. Retention of the Administrator. The Trust hereby retains the
Administrator to act as the administrator of the Portfolios and to furnish the
Portfolios with the management and administrative services as set forth in
Article 2 below. The Administrator hereby accepts such employment to perform the
duties set forth below.
The Administrator shall, for all purposes herein, be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Trust in any way and shall
not be deemed an agent of the Trust.
ARTICLE 2. Administrative and Accounting Services. The Administrator shall
perform or supervise the performance by others of other administrative services
in connection with the operations of the Portfolios, and, on behalf of the
Trust, will investigate, assist in the selection of and conduct relations with
custodians, depositories, accountants, legal counsel, underwriters, brokers and
dealers, corporate fiduciaries, insurers, banks and persons in any other
capacity deemed to be necessary or desirable for the Portfolios' operations. The
Administrator shall provide the Trustees of the Trust with such reports
regarding investment performance and compliance with investment policies and
applicable laws, rules and regulations as they may reasonably request but shall
have no responsibility for supervising the performance by any investment adviser
or sub-adviser of its responsibilities. The Administrator may appoint a
sub-administrator to perform certain of the services to be performed by the
Administrator hereunder.
The Administrator shall provide the Trust with administrative services,
regulatory reporting, fund accounting and related portfolio accounting services,
all necessary office space, equipment, personnel, compensation and facilities
(including facilities for Shareholders' and Trustees' meetings) for handling the
affairs of the Portfolios and such other services as the Trustees may, from time
to time,
<PAGE>
reasonably request and the Administrator shall, from time to time, reasonably
determine to be necessary to perform its obligations under this Agreement. In
addition, at the request of the Trust's Board of Trustees (the "Trustees"), the
Administrator shall make reports to the Trustees concerning the performance of
its obligations hereunder.
Without limiting the generality of the foregoing, the Administrator shall:
(A) calculate contractual Trust expenses and control all disbursements
for the Trust, and as appropriate compute the Trust's yields, total
return, expense ratios, portfolio turnover rate and, if required,
portfolio average dollar-weighed maturity;
(B) assist Fund counsel with the preparation of prospectuses,
statements of additional information, registration statements, and
proxy materials;
(C) prepare such reports, applications and documents (including
reports regarding the sale and redemption of Shares as may be required
in order to comply with Federal and state securities law) as may be
necessary or desirable to register the Trust's shares with state
securities authorities, monitor sale of Trust shares for compliance
with state securities laws, and file with the appropriate state
securities authorities the registration statements and reports for the
Trust and the Trust's shares and all amendments thereto, as may be
necessary or convenient to register and keep effective the Trust and
the Trust's shares with state securities authorities to enable the
Trust to make a continuous offering of its shares;
(D) develop and prepare communications to shareholders, including the
annual report to shareholders, coordinate mailing prospectuses,
notices, proxy statements, proxies and other reports to Trust
shareholders, and supervise and facilitate the solicitation of proxies
solicited by the Trust for all shareholder meetings, including
tabulation process for shareholder meetings;
(E) coordinate with Fund counsel the preparation and negotiation of,
and administer contracts on behalf of the Trust with, among others,
the Trust's investment adviser, distributor, custodian, and transfer
agent;
(F) maintain the Trust's general ledger and prepare the Trust's
financial statements, including expense accruals and payments,
determine the net asset value of the Trust's assets and of the Trust's
shares, and supervise the Trust's transfer agent with respect to the
payment of dividends and other distributions to shareholders;
(G) calculate performance data of the Trust and its portfolios for
dissemination to information services covering the investment company
industry;
(H) coordinate and supervise the preparation and filing of the Trust's
tax returns;
2
<PAGE>
(I) examine and review the operations and performance of the various
organizations providing services to the Trust or any Portfolio of the
Trust, including, without limitation, the Trust's investment adviser,
distributor, custodian, transfer agent, outside legal counsel and
independent public accountants, and at the request of the Trustees,
report to the Trustees on the performance of organizations;
(J) assist with the layout and printing of publicly disseminated
prospectuses and assist with and coordinate layout and printing of the
Trust's semi-annual and annual reports to shareholders;
(K) provide internal legal and administrative services as requested by
the Trust from time to time;
(L) assist with the design, development, and operation of the Trust,
including new portfolio and class investment objectives, policies and
structure;
(M) provide individuals acceptable to the Trustees for nomination,
appointment, or election as officers of the Trust, who will be
responsible for the management of certain of the Trust's affairs as
determined by the Trustees;
(N) advise the Trust and its Trustees on matters concerning the Trust
and its affairs;
(O) obtain and keep in effect fidelity bonds and directors and
officers/errors and omissions insurance policies for the Trust in
accordance with the requirements of Rules 17g-1 and 17d-1(7) under the
1940 Act as such bonds and policies are approved by the Trust's Board
of Trustees;
(P) monitor and advise the Trust and its Portfolios on their
registered investment company status under the Internal Revenue Code
of 1986, as amended;
(Q) perform all administrative services and functions of the Trust and
each Portfolio to the extent administrative services and functions are
not provided to the Trust or such Portfolio pursuant to the Trust's or
such Portfolio's investment advisory agreement, distribution
agreement, custodian agreement and transfer agent agreement;
(R) furnish advice and recommendations with respect to other aspects
of the business and affairs of the Portfolios as the Trust and the
Administrator shall determine desirable; and
(S) prepare and file with the SEC the semi-annual report for the Trust
on Form N- SAR and all required notices pursuant to Rule 24f-2.
Also, the Administrator will perform other services for the Trust as agreed from
time to time, including, but not limited to performing internal audit
examinations; mailing the annual reports of the Portfolios;
3
<PAGE>
preparing an annual list of shareholders; and mailing notices of shareholders'
meetings, proxies and proxy statements, for all of which the Trust will pay the
Administrator's out-of-pocket expenses.
ARTICLE 3. Allocation of Charges and Expenses.
(A) The Administrator. The Administrator shall furnish at its own expense
the executive, supervisory and clerical personnel necessary to perform its
obligations under this Agreement. The Administrator shall also provide the items
which it is obligated to provide under this Agreement, and shall pay all
compensation, if any, of officers of the Trust as well as all Trustees of the
Trust who are affiliated persons of the Administrator or any affiliated
corporation of the Administrator; provided, however, that unless otherwise
specifically provided, the Administrator shall not be obligated to pay the
compensation of any employee of the Trust retained by the Trustees of the Trust
to perform services on behalf of the Trust.
(B) The Trust. The Trust assumes and shall pay or cause to be paid all
other expenses of the Trust not otherwise allocated herein, including, without
limitation, organizational costs, taxes, expenses for legal and auditing
services, the expenses of preparing (including typesetting), printing and
mailing reports, prospectuses, statements of additional information, proxy
solicitation material and notices to existing Shareholders, all expenses
incurred in connection with issuing and redeeming Shares, the costs of pricing
services, the costs of custodial services, the cost of initial and ongoing
registration of the Shares under Federal and state securities laws, fees and
out-of-pocket expenses of Trustees who are not affiliated persons of the
Administrator or the investment adviser to the Trust or any affiliated
corporation of the Administrator or the investment Adviser, the costs of
Trustees' meetings, insurance, interest, brokerage costs, litigation and other
extraordinary or nonrecurring expenses, and all fees and charges of investment
advisers to the Trust.
ARTICLE 4. Compensation of the Administrator.
(A) Administration Fee. For the services to be rendered, the facilities
furnished and the expenses assumed by the Administrator pursuant to this
Agreement, the Trust shall pay to the Administrator compensation at an annual
rate specified in the Schedules. Such compensation shall be calculated and
accrued daily, and paid to the Administrator monthly. The Trust shall also
reimburse the Administrator for its reasonable out-of-pocket expenses, including
the travel and lodging expenses incurred by its officers and employees in
connection with attendance at meetings of the Trust's Board of Trustees.
If this Agreement becomes effective subsequent to the first day of a month
or terminates before the last day of a month, the Administrator's compensation
for that part of the month in which this Agreement is in effect shall be
prorated in a manner consistent with the calculation of the fees as set forth
above. Payment of the Administrator's compensation for the preceding month shall
be made promptly.
(B) Compensation from Transactions. The Trust hereby authorizes any entity
or person associated with the Administrator which is a member of a national
securities exchange to effect any
4
<PAGE>
transaction on the exchange for the account of the Trust which is permitted by
Section 11(a) of the Securities Exchange Act of 1934 and Rule 11a2-2(T)
thereunder, and the Trust hereby consents to the retention of compensation for
such transactions in accordance with Rule 11a2-2(T)(a)(2)(iv).
(C) Survival of Compensation Rates. All rights of compensation under this
Agreement for services performed as of the termination date shall survive the
termination of this Agreement.
ARTICLE 5. Limitation of Liability of the Administrator. The duties of the
Administrator shall be confined to those expressly set forth herein, and no
implied duties are assumed by or may be asserted against the Administrator
hereunder. The Administrator shall not be liable for any error of judgment or
mistake of law or for any loss arising out of any investment or for any act or
omission in carrying out its duties hereunder, except a loss resulting from
willful misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of reckless disregard of its obligations and duties
hereunder, except as may otherwise be provided under provisions of applicable
law which cannot be waived or modified hereby. (As used in this Article 5, the
term "Administrator" shall include directors, officers, employees and other
agents of the Administrator as well as that corporation itself.)
So long as the Administrator, or its agents, acts in good faith and with
due diligence the Trust assumes full responsibility and shall indemnify the
Administrator and hold it harmless from and against any and all actions, suits
and claims, whether groundless or otherwise, and from and against any and all
losses, damages, costs, charges, reasonable counsel fees and disbursements,
payments, expenses and liabilities (including reasonable investigation expenses)
arising directly or indirectly out of said administration, transfer agency, and
dividend disbursing relationships to the Trust or any other service rendered to
the Trust hereunder. The indemnity and defense provisions set forth herein shall
indefinitely survive the termination of this Agreement.
The rights hereunder shall include the right to reasonable advances of
defense expenses in the event of any pending or threatened litigation with
respect to which indemnification hereunder may ultimately be merited. In order
that the indemnification provision contained herein shall apply, however, it is
understood that if in any case the Trust may be asked to indemnify or hold the
Administrator harmless, the Trust shall be fully and promptly advised of all
pertinent facts concerning the situation in question, and it is further
understood that the Administrator will use all reasonable care to identify and
notify the Trust promptly concerning any situation which presents or appears
likely to present the probability of such a claim for indemnification against
the Trust, but failure to do so in good faith shall not affect the rights
hereunder.
The Trust shall be entitled to participate at its own expense or, if it so
elects, to assume the defense of any suit brought to enforce any claims subject
to this indemnity provision. If the Trust elects to assume the defense of any
such claim, the defense shall be conducted by counsel chosen by the Trust and
satisfactory to the Administrator, whose approval shall not be unreasonably
withheld. In the event that the Trust elects to assume the defense of any suit
and retain counsel, the Administrator shall bear the fees and expenses of any
additional counsel retained by it. If the Trust does not elect to assume the
defense of a suit, it will reimburse the Administrator for the reasonable fees
and expenses of any counsel retained by the Administrator.
5
<PAGE>
The Administrator may apply to the Trust at any time for instructions and
may consult counsel for the Trust or its own counsel and with accountants and
other experts with respect to any matter arising in connection with the
Administrator's duties, and the Administrator shall not be liable or accountable
for any action taken or omitted by it in good faith in accordance with such
instruction or with the opinion of such counsel, accountants or other experts.
Also, the Administrator shall be protected in acting upon any document
which it reasonably believes to be genuine and to have been signed or presented
by the proper person or persons. Nor shall the Administrator be held to have
notice of any change of authority of any officers, employee or agent of the
Trust until receipt of written notice thereof from the Trust.
ARTICLE 6. Activities of the Administrator. The services of the
Administrator rendered to the Trust are not to be deemed to be exclusive. The
Administrator is free to render such services to others and to have other
businesses and interests. It is understood that Trustees, officers, employees
and Shareholders of the Trust are or may be or become interested in the
Administrator, as directors, officers, employees and shareholders or otherwise
and that directors, officers, employees and shareholders of the Administrator
and its counsel are or may be or become similarly interested in the Trust, and
that the Administrator may be or become interested in the Trust as a Shareholder
or otherwise.
ARTICLE 7. Confidentiality. The Administrator agrees on behalf of itself
and its employees to treat confidentially all records and other information
relative to the Trust and its prior, present or potential Shareholders and
relative to the Adviser and its prior, present or potential customers, except,
after prior notification to and approval in writing by the Trust, which approval
shall not be unreasonably withheld and may not be withheld where the
Administrator may be exposed to civil or criminal contempt proceedings for
failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Trust.
ARTICLE 8. Equipment Failures. In the event of equipment failures beyond
the Administrator's control, the Administrator shall, at no additional expense
to the Trust, take reasonable steps to minimize service interruptions but shall
have no liability with respect thereto. The Administrator shall develop and
maintain a plan for recovery from equipment failures which may include
contractual arrangements with appropriate parties making reasonable provision
for emergency use of electronic data processing equipment to the extent
appropriate equipment is available.
ARTICLE 9. Compliance With Governmental Rules and Regulations. The
Administrator undertakes to comply with all applicable requirements of the 1933
Act, the 1934 Act, the 1940 Act and any laws, rules and regulations of
governmental authorities having jurisdiction with respect to the duties to be
performed by the Administrator hereunder.
ARTICLE 10. Duration and Termination of this Agreement. This Agreement
shall become effective on the date set forth in the Schedules and shall remain
in effect for the initial term of the Agreement (the "Initial Term") and each
renewal term thereof (each, a "Renewal Term"), each as set forth in the
Schedules, unless terminated in accordance with the provisions of this Article
10. This Agreement may be terminated only: (a) by the mutual written agreement
of the parties; (b) by either
6
<PAGE>
party hereto on 90 days' written notice, as of the end of the Initial Term or
the end of any Renewal Term; (c) by either party hereto on such date as is
specified in written notice given by the terminating party, in the event of a
material breach of this Agreement by the other party, provided the terminating
party has notified the other party of such breach at least 45 days prior to the
specified date of termination and the breaching party has not remedied such
breach by the specified date; (d) effective upon the liquidation of the
Administrator; or (e) as to any Portfolio or the Trust, effective upon the
liquidation of such Portfolio or the Trust, as the case may be. For purposes of
this Article 10, the term "liquidation" shall mean a transaction in which the
assets of the Administrator, the Trust or a Portfolio are sold or otherwise
disposed of and proceeds therefrom are distributed in cash to the shareholders
in complete liquidation of the interests of such shareholders in the entity.
This Agreement shall not be assignable by the Administrator, without the
prior written consent of the Trust, except to an entity that is controlled by,
or under common control, with, the Administrator.
ARTICLE 11. Amendments. This Agreement or any part hereof may be changed or
waived only by an instrument in writing signed by the party against which
enforcement of such change or waiver is sought.
ARTICLE 12. Certain Records. The Administrator shall maintain customary
records in connection with its duties as specified in this Agreement. Any
records required to be maintained and preserved pursuant to Rules 31a-1 and
31a-2 under the 1940 Act which are prepared or maintained by the Administrator
on behalf of the Trust shall be prepared and maintained at the expense of the
Administrator, but shall be the property of the Trust and will be made available
to or surrendered promptly to the Trust on request.
In case of any request or demand for the inspection of such records by
another party, the Administrator shall notify the Trust and follow the Trust's
instructions as to permitting or refusing such inspection; provided that the
Administrator may exhibit such records to any person in any case where it is
advised by its counsel that it may be held liable for failure to do so, unless
(in cases involving potential exposure only to civil liability) the Trust has
agreed to indemnify the Administrator against such liability.
ARTICLE 13. Definitions of Certain Terms. The terms "interested person" and
"affiliated person," when used in this Agreement, shall have the respective
meanings specified in the 1940 Act and the rules and regulations thereunder,
subject to such exemptions as may be granted by the Securities and Exchange
Commission.
ARTICLE 14. Notice. Any notice required or permitted to be given by either
party to the other shall be deemed sufficient if sent by registered or certified
mail, postage prepaid, addressed by the party giving notice to the other party
at the last address furnished by the other party to the party giving notice: if
to the Trust, at c/o Kevin P. Robins, General Counsel, SEI Fund Resources, Oaks,
Pennsylvania, 19456, and if to the Administrator at Oaks, Pennsylvania, 19456.
ARTICLE 15. Governing Law. This Agreement shall be construed in accordance
with the laws
7
<PAGE>
of the State of Delaware and the applicable provisions of the 1940 Act. To the
extent that the applicable laws of the State of Delaware, or any of the
provisions herein, conflict with the applicable provisions of the 1940 Act, the
latter shall control.
ARTICLE 16. Multiple Originals. This Agreement may be executed in two or
more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.
ARTICLE 17. Limitation of Liability. The Administrator is hereby expressly
put on notice of the limitation of liability as set forth in Article XI of the
Trust's Declaration of Trust and agrees that the obligations pursuant to this
Agreement of a particular Portfolio and of the Trust with respect to that
Portfolio shall be limited solely to the assets of that Portfolio, and the
Administrator shall not seek satisfaction of any such obligation from any other
Portfolio, the shareholders of any Portfolio, the Trustees, officers, employees
or agents of the Trust, or any of them.
ARTICLE 18. Binding Agreement. This Agreement, and the rights and
obligations of the parties and the Portfolios hereunder, shall be binding on,
and inure to the benefit of, the parties and the Portfolios and the respective
successors and assigns of each of them.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
TIP INSTITUTIONAL FUNDS
By: /s/ Stephen Kneeley
-------------------
Attest:
---------------
SEI FUND RESOURCES
By: /s/ Kevin P. Robins
-------------------
Attest: /s/ Donna Rafa
--------------
8
<PAGE>
SCHEDULE
TO THE ADMINISTRATION AGREEMENT
DATED AS OF JANUARY 1, 1998
BETWEEN
TIP INSTITUTIONAL FUNDS
AND
SEI FUND RESOURCES
Portfolios: This Agreement shall apply to all Portfolios of the TIP
Institutional Funds, either now in existence or in the future
created. The following is a listing of the current portfolios of the
Trust; Solon Short Duration Government Funds One Year Portfolio and
Solon Short Duration Government Funds Three Year Portfolio,
(collectively, the "Existing Portfolios").
Fees: Pursuant to Article 4, Section A, for the first year of the
Agreement the Trust shall pay the Administrator compensation for
services rendered to the Existing Portfolios at an annual rate,
which is calculated daily and paid monthly, at a maximum
administrative fee equal to .08% of each Portfolios' average daily
net assets. The Trust shall pay the Administrator compensation for
services rendered to newly created Portfolios and to the Existing
Portfolios after the first year of this Agreement at an annual rate,
which is calculated daily and paid monthly according to the
following schedule:
FEE (ON AVERAGE ANNUAL ASSETS) ASSETS IN TRUST
------------------------------ ---------------
.10% to $250 million
.08% Next $250 Million
.07% Over $500 Million
The annual minimum fee will be waived for the first year with
respect to the Existing Portfolios and for all newly created
Portfolios and subsequent to the first year for the Existing
Portfolios the annual minimum fee for each Portfolio will be
$75,000, and each additional class per Portfolio will be $15,000,
payable monthly.
Term: This Agreement shall become effective on January 1, 1998, and shall
remain in effect for an Initial Term of three (3) years from such
date and, thereafter, for successive Renewal Terms of three (3)
years each, unless and until this Agreement is terminated in
accordance with the provisions of Article 10 hereof.
9
AGENCY AGREEMENT
THIS AGREEMENT made the 1st day of January, 1998, by and between the TIP
INSTITUTIONAL FUNDS, a Delaware business trust existing under the laws of the
Commonwealth of Delaware, having its principal place of business at One Freedom
Valley Road, Oaks, Pennsylvania 19456 (the "Fund"), and DST SYSTEMS, INC., a
corporation existing under the laws of the State of Delaware, having its
principal place of business at 333 W. 11th St., 5th Fl., Kansas City, Missouri
64105 ("DST").
WITNESSETH:
WHEREAS, the Fund desires to appoint DST as Transfer Agent and Dividend
Disbursing Agent, and DST desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
1. Documents to be Filed with Appointment.
In connection with the appointment of DST as Transfer Agent and Dividend
Disbursing Agent for the Fund, there will be filed with DST the following
documents:
A. A certified copy of the resolutions of the Board of Directors of the Fund
(which term when used herein shall include any Board of Trustees, or
other governing body of the Fund, however styled) appointing DST as
Transfer Agent and Dividend Disbursing Agent, approving the form of this
Agreement, and designating certain persons to sign stock certificates, if
any, and give written instructions and requests on behalf of the Fund;
<PAGE>
B. A certified copy of the Articles of Incorporation (which term as used
herein shall include, where relevant, the Declaration of Trust, or other
basic instrument establishing the existence and nature of the Fund) of
the Fund and all amendments thereto;
C. A certified copy of the Bylaws of the Fund;
D. Copies of Registration Statements and amendments thereto, filed with the
Securities and Exchange Commission;
E. Specimens of all forms of outstanding stock certificates, in the forms
approved by the Board of Directors of the Fund, with a certificate of the
Secretary of the Fund, as to such approval;
F. Specimens of the signatures of the officers of the Fund authorized to
sign stock certificates and individuals authorized to sign written
instructions and requests;
G. An opinion of counsel for the Fund, as such opinion(s) have been filed
with the Fund's Registration Statement or notices required under Rule
24f-2 under the Investment Company Act of 1940 (the "1940 Act"), with
respect to:
(1) The Fund's organization and existence under the laws of its state of
organization, and
(2) That all issued shares are validly issued, fully paid and
nonassessable.
2. Certain Representations and Warranties of DST.
DST represents and warrants to the Fund that:
A. It is a corporation duly organized and existing and in good standing
under the laws of Delaware.
2
<PAGE>
B. It is duly qualified to carry on its business in the State of Missouri.
C. It is empowered under applicable laws and by its Articles of
Incorporation and Bylaws to enter into and perform the services
contemplated in this Agreement.
D. It is registered as a transfer agent to the extent required under the
Securities Exchange Act of 1934 (the "1934 Act").
E. All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
F. It has and will continue to have and maintain the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
G. It is in compliance with Securities and Exchange Commission ("SEC")
regulations and is not subject to restrictions under Rule 17Ad.
H. Copies of DST's Rule 17Ad-13 reports will be provided to the Fund annual
as and to the extent required under Rule 17Ad-13 under the 1934 Act.
I. Its fidelity bonding and minimum capital meet the transfer agency
requirements of the New York Stock Exchange and the American Stock
Exchange.
3. Certain Representations and Warranties of the Fund.
The Fund represents and warrants to DST that:
A. It is a trust duly organized and existing and in good standing under the
laws of the Commonwealth of Delaware.
B. It is an open-end management investment company registered under the 1940
Act, as amended, the portfolios of which may be diversified or
non-diversified.
3
<PAGE>
C. A registration statement under the Securities Act of 1933 has been filed
and will be effective with respect to all shares of the Fund being
offered for sale.
D. All requisite steps have been and will continue to be taken to register
the Fund's shares for sale in all applicable states and such registration
will be effective at all times shares are offered for sale in such state.
E. The Fund is empowered under applicable laws and by its charter and Bylaws
to enter into and perform this Agreement.
4. Scope of Appointment.
A. Subject to the conditions set forth in this Agreement, the Fund hereby
appoints DST as Transfer Agent and Dividend Disbursing Agent.
B. DST hereby accepts such appointment and agrees that it will act as the
Fund's Transfer Agent and Dividend Disbursing Agent. DST agrees that it
will also act as agent in connection with the Fund's periodic withdrawal
payment accounts and other open accounts or similar plans for
shareholders, if any.
C. The Fund agrees to use its reasonable efforts to deliver to DST in Kansas
City, Missouri, as soon as they are available, all of its shareholder
account records.
D. DST, utilizing TA2000(TM), DST's computerized data processing system for
security holder accounting (the "TA2000(TM) System"), will perform the
following services as transfer and dividend disbursing agent for the
Fund, and as agent of the Fund for shareholder accounts thereof, in a
timely manner: issuing (including countersigning), transferring and
canceling share certificates, if any; maintaining all shareholder
accounts; providing transaction journals; as requested by the Fund and
subject to
4
<PAGE>
payment by the Fund of an additional fee, preparing shareholder meeting
lists for use in connection with any annual or special meeting and
arrange for an affiliate to print, mail and receive back proxies and to
certify the shareholder votes of the Fund or any portfolios thereof;
mailing shareholder reports and prospectuses; withholding, as required by
federal law, taxes on shareholder accounts, disbursing income dividends
and capital gains distributions to shareholders, preparing, filing and
mailing U.S. Treasury Department Forms 1099, 1042, and 1042S and
performing and paying backup withholding as required for all
shareholders; preparing and mailing confirmation forms to shareholders
and dealers, as instructed, for all purchases and liquidations of shares
of the Fund and other confirmable transactions in shareholders' accounts;
recording reinvestment of dividends and distributions in shares of the
Fund; providing or making available on-line daily and monthly reports as
provided by the TA2000(TM) System and as requested by the Fund or its
management company; maintaining those records necessary to carry out
DST's duties hereunder, including all information reasonably required by
the Fund to account for all transactions in the Fund shares, calculating
the appropriate sales charge with respect to each purchase of the Fund
shares as set forth in the prospectus for the Fund, determining the
portion of each sales charge payable to the dealer participating in a
sale in accordance with schedules delivered to DST by the Fund's
principal underwriter or distributor (hereinafter "principal
underwriter") from time to time, disbursing dealer commissions collected
to such dealers, determining the portion of each sales charge payable to
such principal underwriter and disbursing such commissions to the
5
<PAGE>
principal underwriter; receiving correspondence pertaining to any former,
existing or new shareholder account, processing such correspondence for
proper recordkeeping, and responding promptly to shareholder
correspondence; mailing to dealers confirmations of wire order trades;
mailing copies of shareholder statements to shareholders and registered
representatives of dealers in accordance with the Fund's instructions;
interfacing with, accepting and effectuating orders for transactions and
registration and maintenance information, all on an automated basis,
from, and providing advices to the Fund's custodian bank and to the
Fund's settlement bank in connection with the settling of such
transactions, with, the National Securities Clearing Corporation ("NSCC")
pertaining to NSCC's Fund/SERV and Networking programs; and processing,
generally on the date of receipt, purchases or redemptions or
instructions to settle any mail or wire order purchases or redemptions
received in proper order as set forth in the prospectus, rejecting
promptly any requests not received in proper order (as defined by the
Fund or its agents), and causing exchanges of shares to be executed in
accordance with the Fund's instructions and prospectus and the general
exchange privilege applicable.
E. DST shall use reasonable efforts to provide, reasonably promptly under
the circumstances, the same transfer agent services with respect to any
new, additional functions or features or any changes or improvements to
existing functions or features as provided for in the Fund's
instructions, prospectus or application as amended from time to time, for
the Fund provided (i) DST is advised in advance by the Fund of any
changes therein and (ii) the TA2000(TM) System and the mode of
6
<PAGE>
operations utilized by DST as then constituted supports such additional
functions and features. If any addition to, improvement of or change in
the features and functions currently provided by the TA2000(TM) System or
the operations as requested by the Fund requires an enhancement or
modification to the TA2000(TM) System or to operations as then conducted
by DST, DST shall not be liable therefore until such modification or
enhancement is installed on the TA2000(TM) System or new mode of
operation is instituted. If any new, additional function or feature or
change or improvement to existing functions or features or new service or
mode of operation measurably increases DST's cost of performing the
services required hereunder at the current level of service, DST shall
advise the Fund of the amount of such increase and if the Fund elects to
utilize such function, feature or service, DST shall be entitled to
increase its fees by the amount of the increase in costs. In no event
shall DST be responsible for or liable to provide any additional
function, feature, improvement or change in method of operation until it
has consented thereto in writing.
F. The Fund shall have the right to add new series to the TA2000(TM) System
upon at least thirty (30) days' prior written notice to DST provided that
the requirements of the new series are generally consistent with services
then being provided by DST under this Agreement. Rates or charges for
additional series shall be as set forth in Exhibit A, as hereinafter
defined, for the remainder of the contract term except as such series use
functions, features or characteristics for which DST has imposed an
7
<PAGE>
additional charge as part of its standard pricing schedule. In the latter
event, rates and charges shall be in accordance with DST's then-standard
pricing schedule.
5. Limit of Authority.
Unless otherwise expressly limited by the resolution of appointment or by
subsequent action by the Fund, the appointment of DST as Transfer Agent
will be construed to cover the full amount of authorized stock of the
class or classes for which DST is appointed as the same will, from time
to time, be constituted, and any subsequent increases in such authorized
amount.
In case of such increase the Fund will file with DST:
A. If the appointment of DST was theretofore expressly limited, a certified
copy of a resolution of the Board of Directors of the Fund increasing the
authority of DST;
B. A certified copy of the amendment to the Articles of Incorporation of the
Fund authorizing the increase of stock;
C. A certified copy of the order or consent of each governmental or
regulatory authority required by law to consent to the issuance of the
increased stock, and an opinion of counsel that the order or consent of
no other governmental or regulatory authority is required;
D. Opinion of counsel for the Fund, as such opinion(s) have been filed with
the Fund's Registration Statement or notices required under Rule 24f-2
under the 1940 Act, stating:
8
<PAGE>
(1) The status of the additional shares of stock of the Fund under the
Securities Act of 1933, as amended, and any other applicable federal
or state statute; and
(2) That the additional shares are validly issued, fully paid and
nonassessable.
6. Compensation and Expenses.
A. In consideration for its services hereunder as Transfer Agent and
Dividend Disbursing Agent, the Fund will pay to DST from time to time a
reasonable compensation for all services rendered as Agent, and also, all
its reasonable billable expenses, charges, counsel fees, and other
disbursements ("Compensation and Expenses") incurred in connection with
the agency. Such compensation is set forth in a separate schedule to be
agreed to by the Fund and DST, a copy of which is attached hereto as
Exhibit A. If the Fund has not paid such Compensation and Expenses to DST
within a reasonable time, DST may charge against any monies held under
this Agreement, the amount of any Compensation and/or Expenses for which
it shall be entitled to reimbursement under this Agreement.
B. The Fund also agrees promptly to reimburse DST for all reasonable
billable expenses or disbursements incurred by DST in connection with the
performance of services under this Agreement including, but not limited
to, expenses for postage, express delivery services, freight charges,
envelopes, checks, drafts, forms (continuous or otherwise), specially
requested reports and statements, telephone calls, telegraphs, stationery
supplies, counsel fees, outside printing and mailing firms (including
Output Technology, Inc. and Support Resources, Inc.), magnetic tapes,
reels or
9
<PAGE>
cartridges (if sent to the Fund or to a third party at the Fund's
request) and magnetic tape handling charges, off-site record storage,
media for storage of records (e.g., microfilm, microfiche, optical
platters, computer tapes), computer equipment installed at the Fund's
request at the Fund's or a third party's premises, telecommunications
equipment, telephone/telecommunication lines between the Fund and its
agents, on one hand, and DST on the other, proxy soliciting, processing
and/or tabulating costs, second-site backup computer facility,
transmission of statement data for remote printing or processing, and
National Securities Clearing Corporation ("NSCC") transaction fees to the
extent any of the foregoing are paid by DST. The Fund agrees to pay
postage expenses at least one day in advance if so requested. In
addition, any other expenses incurred by DST at the request or with the
consent of the Fund will be promptly reimbursed by the Fund.
C. Amounts due hereunder shall be due and paid on or before the thirtieth
(30th) business day after receipt of the statement therefor by the Fund
(the "Due Date"). The Fund is aware that its failure to pay all amounts
in a timely fashion so that they will be received by DST on or before the
Due Date will give rise to costs to DST not contemplated by this
Agreement, including but not limited to carrying, processing and
accounting charges. Accordingly, subject to Section 6.D. hereof, in the
event that any amounts due hereunder are not received by DST by the Due
Date, the Fund shall pay a late charge equal to the lesser of the maximum
amount permitted by applicable law or the product of that rate announced
from time to time by State Street Bank and Trust Company as its "Prime
Rate" plus three (3) percentage points times
10
<PAGE>
the amount overdue, times the number of days from the Due Date up to and
including the day on which payment is received by DST divided by 365. The
parties hereby agree that such late charge represents a fair and
reasonable computation of the costs incurred by reason of late payment or
payment of amounts not properly due. Acceptance of such late charge shall
in no event constitute a waiver of the Fund's or DST's default or prevent
the non-defaulting party from exercising any other rights and remedies
available to it.
D. In the event that any charges are disputed, the Fund shall, on or before
the Due Date, pay all undisputed amounts due hereunder and notify DST in
writing of any disputed charges for billable expenses which it is
disputing in good faith. Payment for such disputed charges shall be due
on or before the close of the fifth (5th) business day after the day on
which DST provides to the Fund documentation which an objective observer
would agree reasonably supports the disputed charges (the "Revised Due
Date"). Late charges shall not begin to accrue as to charges disputed in
good faith until the first business day after the Revised Due Date.
E. The fees and charges set forth on Exhibit A shall increase or may be
increased as follows:
(1) On the first day of each new term, but only in accordance with the
"Fee Increases" provision in Exhibit A;
(2) DST may increase the fees and charges set forth on Exhibit A upon at
least ninety (90) days prior written notice, if changes in existing
laws, rules or
11
<PAGE>
regulations: (i) require substantial system modifications or (ii)
materially increase cost of performance hereunder; and
(3) Upon at least ninety (90) days prior written notice, DST may impose a
reasonable charge for additional features of TA2000 used by the Fund
which features are not consistent with the Fund's current processing
requirements.
If DST notifies the Fund of an increase in fees or charges pursuant to
subparagraph (2) of this Section 6.E., the parties shall confer, diligently and
in good faith and agree upon a new fee to cover the amount necessary, but not
more than such amount, to reimburse DST for the Fund's aliquot portion of the
cost of developing the new software to comply with regulatory charges and for
the increased cost of operation.
If DST notifies the Fund of an increase in fees or charges under
subparagraph (3) of this Section 6.E., the parties shall confer, diligently and
in good faith, and agree upon a new fee to cover such new fund feature.
7. Operation of DST System.
In connection with the performance of its services under this Agreement, DST
is responsible for such items as:
A. That entries in DST's records, and in the Fund's records on the
TA2000(TM) System created by DST, accurately reflect the orders,
instructions, and other information received by DST from the Fund, the
Fund's distributor, manager or principal underwriter, the Fund's
investment adviser, or the Fund's administrator (each an "Authorized
Person"), broker-dealers and/or shareholders;
12
<PAGE>
B. That shareholder lists, shareholder account verifications, confirmations
and other shareholder account information to be produced from its records
or data be available and accurately reflect the data in the Fund's
records on the TA2000(TM) System.
C. The accurate and timely issuance of dividend and distribution checks in
accordance with instructions received from the Fund and the data in the
Fund's records on the TA2000(TM) System;
D. That redemption transactions and payments be effected timely, under
normal circumstances on the day of receipt, and accurately in accordance
with redemption instructions received by DST from Authorized Persons,
broker-dealers or shareholders and the data in the Fund's records on the
TA2000(TM) System;
E. The deposition daily in the Fund's appropriate bank account of all checks
and payments received by DST from NSCC, broker-dealers or shareholders
for investment in shares;
F. Notwithstanding anything herein to the contrary, with respect to "as of"
adjustments, DST will not assume one hundred percent (100%)
responsibility for losses resulting from "as ofs" due to clerical errors
or misinterpretations of shareholder instructions, but DST will discuss
with the Fund DST's accepting liability for an "as of" on a case-by-case
basis and may accept financial responsibility for a particular situation
resulting in a financial loss to the Fund where DST in its discretion
deems that to be appropriate;
13
<PAGE>
G. The requiring of proper forms of instructions, signatures and signature
guarantees(1) and any necessary documents supporting the opening of
shareholder accounts, transfers, redemptions and other shareholder
account transactions, all in conformance with DST's present procedures as
set forth in its Legal Manual, Third Party Check Procedures, Checkwriting
Draft Procedures, and Signature Guarantee Procedures (collectively the
"Procedures") with such changes or deviations therefrom as may be from
time to time required or approved by the Fund, its investment adviser or
principal underwriter, or its or DST's counsel and the rejection of
orders or instructions not in good order in accordance with the
applicable prospectus or the Procedures;
H. The maintenance of customary records in connection with its agency, and
particularly those records required to be maintained pursuant to
subparagraph (2)(iv) of paragraph (b) of Rule 31a-1 under the Investment
Company Act of 1940, if any; and
I. The maintenance of a current, duplicate set of the Fund's essential
records at a secure separate location, in a form available and usable
forthwith in the event of any breakdown or disaster disrupting its main
operation.
8. Indemnification.
A. DST shall not be responsible for, and the Fund shall on behalf of the
applicable Portfolio indemnify and hold DST harmless from and against,
any and all losses,
- --------
(1) DST shall ascertain that what reasonably purports to be an appropriate
signature guarantee is present if a signature guarantee is required, but DST
shall have no responsibility for verifying the authenticity thereof or the
authority of the person executing the signature guarantee.
14
<PAGE>
damages, costs, charges, counsel fees, payments, expenses and liability
("Adverse Consequences") arising out of or attributable to:
(1) All actions of DST or its agents or subcontractors required to be
taken pursuant to this Agreement, provided that such actions are
taken in good faith and without negligence or willful misconduct.
(2) The Fund's lack of good faith, negligence or willful misconduct which
arise out of the breach of any representation or warranty of the Fund
hereunder.
(3) The reliance on or use by DST or its agents or subcontractors of
information, records, documents or services which (i) are received by
DST or its agents or subcontractors, and (ii) have been prepared,
maintained or performed by the Fund or any other person or firm on
behalf of the Fund including but not limited to any previous transfer
agent or registrar.
(4) The reliance on, or the carrying out by DST or its agents or
subcontractors of any instructions or requests of the Fund on behalf
of the applicable Portfolio.
(5) The offer or sale of shares of the Fund or any applicable Portfolio
in violation of any requirement under the federal securities laws or
regulations or the securities laws or regulations of any state
relating to the registration, the sale or the manner of sale of such
shares or in violation of any stop order or other determination or
ruling by any federal agency or any state with respect to the offer,
the sale or the manner of sale of such shares.
(6) The negotiation and processing by DST and the applicable bank on
which such check or draft is drawn of checks not made payable to the
order of DST,
15
<PAGE>
the Fund, the Fund's management company, transfer agent or
distributor or the retirement account custodian or trustee for a plan
account investing in shares, which checks are tendered to DST for the
purchase of shares (i.e., checks made payable to prospective or
existing Shareholders, such checks are commonly known as "third party
checks").
B. At any time DST may apply to any officer of the Fund for instructions,
and may consult with legal counsel with respect to any matter arising in
connection with the services to be performed by DST under this Agreement,
and DST and its agents or subcontractors shall not be liable and shall be
indemnified by the Fund on behalf of the applicable Portfolio for any
action taken or omitted by it in reliance upon such instructions or upon
the opinion of such counsel. DST, its agents and subcontractors shall be
protected and indemnified in acting upon any paper or document furnished
by or on behalf of the Fund, reasonably believed to be genuine and to
have been signed by the proper person or persons, or upon any
instruction, information, data, records or documents provided DST or its
agents or subcontractors by machine readable input, telex, CRT data entry
or other similar means authorized by the Fund, and shall not be held to
have notice of any change of authority of any person, until receipt of
written notice thereof from the Fund. DST, its agents and subcontractors
shall also be protected and indemnified in recognizing stock certificates
which are reasonably believed to bear the proper manual or facsimile
signatures of the officers of the Fund, and the proper countersignature
of any former transfer agent or former registrar, or of a co-transfer
agent or co-registrar.
16
<PAGE>
C. In order that the indemnification provisions contained in this Section 8
shall apply, upon the assertion of a claim for which the Fund may be
required to indemnify DST, DST shall promptly notify the Fund of such
assertion, and shall keep the Fund advised with respect to all
developments concerning such claim. The Fund shall have the option to
participate with DST in the defense of such claim or to defend against
said claim in its own name or in the name of DST. DST shall in no case
confess any claim or make any compromise in any case in which the Fund
may be required to indemnify DST except with the Fund's prior written
consent.
D. Standard of Care: DST shall at all times act in good faith and agrees to
use its best efforts within reasonable limits to insure the accuracy of
all services performed under this Agreement, but assumes no
responsibility and shall not be liable for loss or damage due to errors
unless said errors are caused by its negligence, bad faith, or willful
misconduct or that of its employees.
E. EXCEPT FOR VIOLATIONS OF SECTION 23, IN NO EVENT AND UNDER NO
CIRCUMSTANCES SHALL EITHER PARTY TO THIS AGREEMENT BE LIABLE TO ANYONE,
INCLUDING, WITHOUT LIMITATION TO THE OTHER PARTY, FOR CONSEQUENTIAL
DAMAGES FOR ANY ACT OR FAILURE TO ACT UNDER ANY PROVISION OF THIS
AGREEMENT EVEN IF ADVISED OF THE POSSIBILITY THEREOF.
9. Certain Covenants of DST and the Fund.
A. All requisite steps will be taken by the Fund from time to time when and
as necessary to register the Fund's shares for sale in all states in
which the Fund's shares shall at
17
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the time be offered for sale and require registration. If at any time the
Fund receives notice of any stop order or other proceeding in any such
state affecting such registration or the sale of the Fund's shares, or of
any stop order or other proceeding under the federal securities laws
affecting the sale of the Fund's shares, the Fund will give prompt notice
thereof to DST.
B. DST hereby agrees to perform such transfer agency functions as are set
forth in Section 4.D. above and establish and maintain facilities and
procedures reasonably acceptable to the Fund for safekeeping of stock
certificates, check forms, and facsimile signature imprinting devices, if
any; and for the preparation or use, and for keeping account of, such
certificates, forms and devices, and to carry such insurance as it
considers adequate and reasonably available.
C. To the extent required by Section 31 of the Investment Company Act of
1940 as amended and Rules thereunder, DST agrees that all records
maintained by DST relating to the services to be performed by DST under
this Agreement are the property of the Fund and will be preserved and
will be surrendered promptly to the Fund on request.
D. DST agrees to furnish the Fund annual reports of its financial condition,
consisting of a balance sheet, earnings statement and any other publicly
available financial information reasonably requested by the Fund and a
copy of the report issued by its certified public accountants pursuant to
Rule 17Ad-13 under the 1934 Act as filed with the SEC. The annual
financial statements will be certified by DST's certified
18
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public accountants and may be included in DST's publicly distributed
Annual Report.
E. DST represents and agrees that it will use its reasonable efforts to keep
current on the trends of the investment company industry relating to
shareholder services and will use its reasonable efforts to continue to
modernize and improve.
F. DST will permit the Fund and its authorized representatives to make
periodic inspections of its operations as such would involve the Fund at
reasonable times during business hours.
G. DST will provide in Kansas City at the Fund's request and expense
training for the Fund's personnel in connection with use and operation of
the TA2000(TM) System. All travel and reimbursable expenses incurred by
the Fund's personnel in connection with and during training at DST's
Facility shall be borne by the Fund. At the Fund's option and expense,
DST also agrees to use its reasonable efforts to provide two (2) man
weeks of training at the Fund's facility for the Fund's personnel in
connection with the continued operation of the TA2000(TM) System.
Reasonable travel, per diem and reimbursable expenses incurred by DST
personnel in connection with and during training at the Fund's facility
or in connection with the conversion shall be borne by the Fund.
10. Recapitalization or Readjustment.
In case of any recapitalization, readjustment or other change in the
capital structure of the Fund requiring a change in the form of stock
certificates, DST will issue or register
19
<PAGE>
certificates in the new form in exchange for, or in transfer of, the
outstanding certificates in the old form, upon receiving:
A. Written instructions from an officer of the Fund;
B. Certified copy of the amendment to the Articles of Incorporation or other
document effecting the change;
C. Certified copy of the order or consent of each governmental or regulatory
authority, required by law to the issuance of the stock in the new form,
and an opinion of counsel that the order or consent of no other
government or regulatory authority is required;
D. Specimens of the new certificates in the form approved by the Board of
Directors of the Fund, with a certificate of the Secretary of the Fund as
to such approval;
E. Opinion of counsel for the Fund stating:
(1) The status of the shares of stock of the Fund in the new form under
the Securities Act of 1933, as amended and any other applicable
federal or state statute; and
(2) That the issued shares in the new form are, and all unissued shares
will be, when issued, validly issued, fully paid and nonassessable.
11. Reserved.
12. Death, Resignation or Removal of Signing Officer.
The Fund will file promptly with DST written notice of any change in the
officers authorized to sign written requests or instructions to give
requests or instructions, together with two signature cards bearing the
specimen signature of each newly authorized officer.
20
<PAGE>
13. Future Amendments of Charter and Bylaws.
The Fund will promptly file with DST copies of all material amendments to
its Articles of Incorporation or Bylaws made after the date of this
Agreement.
14. Instructions, Opinion of Counsel and Signatures.
At any time DST may apply to any person authorized by the Fund to give
instructions to DST, and may with the approval of a Fund officer and at the
expense of the Fund, either consult with legal counsel for the Fund or
consult with counsel chosen by DST and acceptable to the Fund, with respect
to any matter arising in connection with the agency and it will not be
liable for any action taken or omitted by it in good faith in reliance upon
such instructions or upon the opinion of such counsel. For purposes hereof,
DST's internal counsel and attorneys employed by Sonnenschein Nath &
Rosenthal, DST's primary outside counsel, are acceptable to the Fund. DST
will be protected in acting upon any paper or document reasonably believed
by it to be genuine and to have been signed by the proper person or persons
and will not be held to have notice of any change of authority of any
person, until receipt of written notice thereof from the Fund. It will also
be protected in recognizing stock certificates which it reasonably believes
to bear the proper manual or facsimile signatures of the officers of the
Fund, and the proper countersignature of any former Transfer Agent or
Registrar, or of a co-Transfer Agent or co-Registrar.
15. Force Majeure and Disaster Recovery Plans.
A. DST shall not be responsible or liable for its failure or delay in
performance of its obligations under this Agreement arising out of or
caused, directly or indirectly, by circumstances beyond its reasonable
control, including, without limitation: any
21
<PAGE>
interruption, loss or malfunction or any utility, transportation,
computer hardware, provided such equipment has been reasonably
maintained, or third party software or communication service; inability
to obtain labor, material, equipment or transportation, or a delay in
mails; governmental or exchange action, statute, ordinance, rulings,
regulations or direction; war, strike, riot, emergency, civil
disturbance, terrorism, vandalism, explosions, labor disputes, freezes,
floods, fires, tornadoes, acts of God or public enemy, revolutions, or
insurrection; or any other cause, contingency, circumstances or delay not
subject to DST's reasonable control which prevents or hinders DST's
performance hereunder.
B. DST currently maintains an agreement with a third party whereby DST is to
be permitted to use on a "shared use" basis a "hot site" (the "Recovery
Facility") maintained by such party in event of a disaster rendering the
DST Facilities inoperable. DST has developed and is continually revising
a business contingency plan (the "Business Contingency Plan") detailing
which, how, when, and by whom data maintained by DST at the DST
Facilities will be installed and operated at the Recovery Facility.
Provided the Fund is paying its pro rata portion of the charge therefor,
DST will, in the event of a disaster rendering the DST Facilities
inoperable, use reasonable efforts to convert the TA2000(TM) System
containing the designated Fund data to the computers at the Recovery
Facility in accordance with the then current Business Contingency Plan.
C. DST also currently maintains, separate from the area in which the
operations which provides the services to the Fund hereunder are located,
a Crisis Management Center
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<PAGE>
consisting of phones, computers and the other equipment necessary to
operate a full service transfer agency business in the event one of its
operations areas is rendered inoperable. The transfer of operations to
other operating areas or to the Crisis Management Center is also covered
in DST's Business Contingency Plan.
16. Certification of Documents.
The required copy of the Articles of Incorporation of the Fund and copies of
all amendments thereto will be certified by the Secretary of State (or other
appropriate official) of the State of Incorporation, and if such Articles of
Incorporation and amendments are required by law to be also filed with a
county, city or other officer of official body, a certificate of such filing
will appear on the certified copy submitted to DST. A copy of the order or
consent of each governmental or regulatory authority required by law to the
issuance of the stock will be certified by the Secretary or Clerk of such
governmental or regulatory authority, under proper seal of such authority.
The copy of the Bylaws and copies of all amendments thereto, and copies of
resolutions of the Board of Directors of the Fund, will be certified by the
Secretary or an Assistant Secretary of the Fund under the Fund's seal.
17. Records.
DST will maintain customary records in connection with its agency, and
particularly will maintain those records required to be maintained pursuant
to subparagraph (2) (iv) of paragraph (b) of Rule 31a-1 under the Investment
Company Act of 1940, if any.
18. Disposition of Books, Records and Canceled Certificates.
DST may send periodically to the Fund, or to where designated by the
Secretary or an Assistant Secretary of the Fund, all books, documents, and
all records no longer deemed
23
<PAGE>
needed for current purposes and stock certificates which have been canceled
in transfer or in exchange, upon the understanding that such books,
documents, records, and stock certificates will be maintained by the Fund
under and in accordance with the requirements of Section 17Ad-7 adopted
under the Securities Exchange Act of 1934. Such materials will not be
destroyed by the Fund without the consent of DST (which consent will not be
unreasonably withheld), but will be safely stored for possible future
reference.
19. Provisions Relating to DST as Transfer Agent.
A. Instructions for the transfer, exchange or redemption of shares of the
Fund will be accepted, the registration, redemption or transfer of the
shares be effected and, where applicable, funds remitted therefor. Upon
surrender of the old certificates in form or receipt by DST of
instructions deemed by DST properly endorsed for transfer, exchange or
redemption, accompanied by such documents as DST may deem necessary to
evidence the authority of the person making the transfer, exchange or
redemption, the transfer, exchange or redemption of the shares reflected
by such certificates be effected and any sums due in connection therewith
be remitted, in accordance with the instructions contained herein. DST
reserves the right to refuse to transfer or redeem shares until it is
satisfied that the endorsement or signature on the instruction or any
other document is valid and genuine, and for that purpose it may require
a guaranty of signature in accordance with the Signature Guarantee
Procedures. DST also reserves the right to refuse to transfer, exchange
or redeem shares until it is satisfied that the requested transfer,
exchange or redemption is legally authorized, and DST will incur no
liability for the refusal in good faith to
24
<PAGE>
make transfers or redemptions which, in its judgment, are improper or
unauthorized. DST may, in effecting transfers, exchanges or redemptions,
rely upon DST's Procedures and Simplification Acts, Uniform Commercial
Code or other statutes which protect it and the Fund in not requiring
complete fiduciary documentation. In cases in which DST is not directed
or otherwise required to maintain the consolidated records of
shareholder's accounts, DST will not be liable for any loss which may
arise by reason of not having such records.
B. DST will, at the expense of the Fund, issue and mail subscription
warrants, effectuate stock dividends, exchanges or split ups, or act as
Conversion Agent upon receiving written instructions from any officer of
the Fund and such other documents as DST deems necessary.
C. DST will, at the expense of the Fund, supply a shareholder's list to the
Fund for its annual meeting upon receiving a request from an officer of
the Fund. It will also, at the expense of the Fund, supply lists at such
other times as may be requested by an officer of the Fund.
D. Upon receipt of written instructions of an officer of the Fund, DST will,
at the expense of the Fund, address and mail notices to shareholders.
E. In case of any request or demand for the inspection of the stock books of
the Fund or any other books in the possession of DST, DST will endeavor
to notify the Fund and to secure instructions as to permitting or
refusing such inspection. DST reserves the right, however, to exhibit the
stock books or other books to any person in case it
25
<PAGE>
is advised by its counsel that it may be held responsible for the failure
to exhibit the stock books or other books to such person.
20. Provisions Relating to Dividend Disbursing Agency.
A. DST will, at the expense of the Fund, provide a special form of check
containing the imprint of any device or other matter desired by the Fund.
Said checks must, however, be of a form and size convenient for use by
DST.
B. If the Fund desires to include additional printed matter, financial
statements, etc., with the dividend checks, the same will be furnished
DST within a reasonable time prior to the date of mailing of the dividend
checks, at the expense of the Fund.
C. If the Fund desires its distributions mailed in any special form of
envelopes, sufficient supply of the same will be furnished to DST but the
size and form of said envelopes will be subject to the approval of DST.
If stamped envelopes are used, they must be furnished by the Fund; or if
postage stamps are to be affixed to the envelopes, the stamps or the cash
necessary for such stamps must be furnished by the Fund.
D. DST shall establish and maintain on behalf of the Fund one or more
deposit accounts as Agent for the Fund, into which DST shall deposit the
funds DST receives for payment of dividends, distributions, redemptions
or other disbursements provided for hereunder and to draw checks against
such accounts.
E. DST is authorized and directed to stop payment of checks theretofore
issued hereunder, but not presented for payment, when the payees thereof
allege either that they have not received the checks or that such checks
have been mislaid, lost, stolen,
26
<PAGE>
destroyed or through no fault of theirs, are otherwise beyond their
control, and cannot be produced by them for presentation and collection,
and, to issue and deliver duplicate checks in replacement thereof.
21. Assumption of Duties By the Fund or Agents Designated By the Fund.
A. The Fund or its designated agents other than DST may assume certain
duties and responsibilities of DST or those services of Transfer Agent
and Dividend Disbursing Agent as those terms are referred to in Section
4.D. of this Agreement including but not limited to answering and
responding to telephone inquiries from shareholders and brokers,
accepting shareholder and broker instructions (either or both oral and
written) and transmitting orders based on such instructions to DST,
preparing and mailing confirmations, obtaining certified TIN numbers,
classifying the status of shareholders and shareholder accounts under
applicable tax law, establishing shareholder accounts on the
TA2000(TM) System and assigning social codes and Taxpayer Identification
Number codes thereof, and disbursing monies of the Fund, said assumption
to be embodied in writing to be signed by both parties.
B. To the extent the Fund or its agent or affiliate assumes such duties and
responsibilities, DST shall be relieved from all responsibility and
liability therefor and is hereby indemnified and held harmless against
any liability therefrom and in the same manner and degree as provided for
in Section 8 hereof.
C. Initially the Fund or its designees shall be responsible for the
following: [LIST RESPONSIBILITIES OR DELETE AS APPROPRIATE.] (i)
answering and responding to phone calls from shareholders and
broker-dealers, (ii) faxing
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<PAGE>
information to DST as such calls or items are received by the Fund, and
(iii) monitoring and following up upon wire order trades which failed to
settle timely, and (iv) notifying and instructing DST as to the
establishment of and maintenance of information pertaining to
broker-dealers on the Broker-Dealer File.
22. Termination of Agreement.
A. This Agreement shall be in effect through March 31, 2000 (an initial
period of two and one-quarter (2 1/4 years) and, thereafter, shall
automatically extend for additional, successive twelve (12) month terms
upon the expiration of any term hereof unless terminated as hereinafter
provided.
B. Each party, in addition to any other rights and remedies, shall have the
right to terminate this Agreement forthwith upon the occurrence at any
time of any of the following events with respect to the other party:
(1) The bankruptcy of the other party or its assigns or the appointment
of a receiver for the other party or its assigns; or
(2) Failure by the other party or its assigns to perform its duties in
accordance with the Agreement, which failure materially adversely
affects the business operations of the first party and which failure
continues for thirty (30) days after receipt of written notice from
the first party.
C. Either party may terminate this Agreement at any time by delivery to the
other party of six (6) months prior written notice of such termination;
provided, however, that the effective date of any termination and
conversion off the TA2000(TM) System (a
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<PAGE>
"deconversion") shall not occur during the period from November 15
through March 15 of any year to avoid adversely impacting year end.
D. In the event of any termination of this Agreement:
(1) The Fund will continue to pay to DST as invoiced all sums due for
DST's services until completion of the deconversion and will pay to
DST, no later than contemporaneously with the dispatch by DST of the
Fund's records, all amounts payable to DST.
(2) If, for any reason, the Fund desires to convert from the TA2000 (TM)
System ("deconvert") other than on the first day after six (6) months
from the receipt by DST of the termination notice (such first day
after the expiration of six (6) months being hereinafter referred to
as the "Termination Date"), and DST is able, through reasonable
efforts, to accomplish such earlier deconversion, the Fund shall pay
to DST on the day of or before the deconversion the fees which DST
would have earned had the Fund not deconverted, and had DST remained
the transfer/shareholder servicing agent, until the Termination Date.
The amount of such fees shall be calculated by: (a) dividing the
aggregate fees charged to the Fund with respect to the six (6) whole
months immediately preceding receipt by DST of the six (6) month
termination notice by (b) the product of the number six (6) times the
number of weeks in such six (6) month period to determine the average
weekly fee and (c) multiplying the average weekly fee times the
number of whole or partial
29
<PAGE>
weeks between the date on which deconversion actually occurs and the
Termination Date.
(3) Subsequent to any deconversion:
(a) The Fund shall continue to pay to DST, subject to and in
accordance with the terms and conditions set forth in Sections
6.A., 6.B., 6C., and 6.D. of this Agreement, for all expenses
incurred on the Fund's behalf and the post-deconversion fees set
forth in Exhibit B to this Agreement until (i) the Fund accounts
are purged from the TA2000(TM) System (no longer being required
for Year End Reporting) with respect to closed account fees and
(ii) so long as DST's services are utilized with respect to all
fees other than those for closed accounts by the Fund, its new
transfer agent and its shareholders, former shareholders,
broker-dealers or other entities with whom the Fund does business
and persons claiming through or on behalf of any of the
foregoing; and
(b) To the extent applicable regulations of the Internal Revenue
Service and tax laws permit, the Fund shall require its new
transfer agent to perform and dispatch or file all required year
end reporting (tax or otherwise and federal and state) to
shareholders, broker-dealers, beneficial owners, federal and
state agencies and any other recipients thereof and DST shall
have no, and the Fund hereby indemnifies DST and holds DST
harmless against any, liability or Adverse
30
<PAGE>
Consequences whatsoever with respect thereto, including by way of
example and not limitation, reports or returns on Forms 1099,
5498, 945, 1042 and 1042S, annual account valuations for
retirement accounts and year end statements for all accounts and
any other reports required to be made by state governments or the
federal government or regulatory or self-regulatory agencies (the
"returns");
(c) If the Fund is unable to obtain a commitment from the new
transfer agent that the new transfer agent will perform year end
reporting (tax or otherwise) for the entire year, (i) DST shall
perform year end reporting as instructed by the Fund for the
portion of the year DST served as transfer agent and (ii) DST
shall be paid therefore a monthly per CUSIP fee through the end
of the last month during which the last return or form is filed.
The Fund will cause the new transfer agent to timely advise DST
of all changes to the shareholder records effecting such
reporting until all DST reporting obligations cease; and DST
shall have no, and the Fund hereby indemnifies DST and holds DST
harmless against any, liability or any Adverse Consequences
arising out of or resulting from the failure of the new transfer
agent to timely advise DST thereof or which could have been
avoided if the new transfer agent had timely advised DST thereof.
All amendments to, or delivery of duplicate, returns after their
initial dispatch or filing will be effectuated and filed or
dispatched by the
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<PAGE>
new transfer agent regardless of who filed or dispatched the
original return; and
(d) All of the records belonging to the Fund on the TA2000(TM) System
may be purged by DST without liability to the Fund or its agents,
shareholders, and parties with whom the Fund has done or will do
business, at any time on or after the forty-fifth (45th) day
after the Termination Date. The Fund shall and hereby agrees to
indemnify and hold DST harmless against any Adverse Consequences
directly or indirectly arising out of or resulting from any
inability to produce such purged records. The Fund will, and will
cause the new transfer agent to, maintain and preserve the
records converted from the TA2000(TM) System or any hard copy
records transferred by DST to the Fund or the new transfer agent
in accordance with the requirements of 17 C.F.R.ss.240.17Ad-6,
-7, -10 and -11 (including without limitation to make copies
thereof available timely and at no charge to appropriate
regulatory agencies and, as reasonably necessary, DST.
Notwithstanding the foregoing, upon the request and at the
expense (as set forth in Exhibit B) of the Fund, DST shall not
purge, but shall retain as closed accounts on the TA2000(TM)
System, the records belonging to the Fund.
E. In addition, in the event of any termination, DST will, provided the
Fund contemporaneously pays all outstanding charges and fees,
promptly transfer
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<PAGE>
all of the records of the Fund to the designated successor transfer
agent. DST shall also provide reasonable assistance to the Fund and
its designated successor transfer agent and other information
relating to its services provided hereunder (subject to the
recompense of DST for such assistance and information at its standard
rates and fees for personnel then in effect at that time); provided,
however, as used herein "reasonable assistance" and "other
information" shall not include assisting any new service or system
provider to modify, alter, enhance, or improve its system or to
improve, enhance, or alter its current system, or to provide any new,
functionality or to require DST to disclose any DST Confidential
Information, as hereinafter defined, or any information which is
otherwise confidential to DST.
23. Confidentiality.
A. DST agrees that, except as provided in the last sentence of Section 19.J.
hereof, or as otherwise required by law, DST will keep confidential all
records of and information in its possession relating to the Fund or its
shareholders or shareholder accounts and will not disclose the same to
any person except at the request or with the consent of the Fund.
B. The Fund owns all of the data supplied by or on behalf of the Fund to
DST. The Fund has proprietary rights to all such data, records and
reports containing such data, but not including the software programs
upon which such data is installed, and all records containing such data
will be transferred in accordance with Section 22D above in the event of
termination.
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<PAGE>
C. The Fund agrees to keep confidential all non-public financial statements
and other financial records of DST received hereunder, all accountants'
reports relating to DST, the terms and provisions of this Agreement,
including all exhibits and schedules now or in the future attached hereto
and all manuals, systems and other technical information and data, not
publicly disclosed, relating to DST's operations and programs furnished
to it by DST pursuant to this Agreement and will not disclose the same to
any person except at the request or with the consent of DST.
D. (1) The Fund acknowledges that DST has proprietary rights in and to the
TA2000(TM) System used to perform services hereunder including, but
not limited to the maintenance of shareholder accounts and records,
processing of related information and generation of output,
including, without limitation any changes or modifications of the
TA2000(TM) System and any other DST programs, data bases, supporting
documentation, or procedures (collectively "DST Confidential
Information") which the Fund's access to the TA2000(TM) System or
computer hardware or software may permit the Fund or its employees or
agents to become aware of or to access and that the DST Confidential
Information constitutes confidential material and trade secrets of
DST. The Fund agrees to maintain the confidentiality of the DST
Confidential Information.
(2) The Fund acknowledges that any unauthorized use, misuse, disclosure
or taking of DST Confidential Information which is confidential as
provided by law, or which is a trade secret, residing or existing
internal or external to a
34
<PAGE>
computer, computer system, or computer network, or the knowing and
unauthorized accessing or causing to be accessed of any computer,
computer system, or computer network, may be subject to civil
liabilities and criminal penalties under applicable state law. The
Fund will advise all of its employees and agents who have access to
any DST Confidential Information or to any computer equipment capable
of accessing DST or DST hardware or software of the foregoing.
(3) The Fund acknowledges that disclosure of the DST Confidential
Information may give rise to an irreparable injury to DST
inadequately compensable in damages. Accordingly, DST may seek
(without the posting of any bond or other security) injunctive relief
against the breach of the foregoing undertaking of confidentiality
and nondisclosure, in addition to any other legal remedies which may
be available, and the Fund consents to the obtaining of such
injunctive relief. All of the undertakings and obligations relating
to confidentiality and nondisclosure, whether contained in this
Section or elsewhere in this Agreement shall survive the termination
or expiration of this Agreement for a period of ten (10) years.
24. Changes and Modifications.
A. During the term of this Agreement DST will use on behalf of the Fund
without additional cost all modifications, enhancements, or changes which
DST may make to the TA2000(TM) System in the normal course of its
business and which are applicable to functions and features offered by
the Fund, unless substantially all DST
35
<PAGE>
clients are charged separately for such modifications, enhancements or
changes, including, without limitation, substantial system revisions or
modifications necessitated by changes in existing laws, rules or
regulations. The Fund agrees to pay DST promptly for modifications and
improvements which are charged for separately at the rate provided for in
DST's standard pricing schedule which shall be identical for
substantially all clients, if a standard pricing schedule shall exist. If
there is no standard pricing schedule, the parties shall mutually agree
upon the rates to be charged.
B. DST shall have the right, at any time and from time to time, to alter and
modify any systems, programs, procedures or facilities used or employed
in performing its duties and obligations hereunder; provided that the
Fund will be notified as promptly as possible prior to implementation of
such alterations and modifications and that no such alteration or
modification or deletion shall materially adversely change or affect the
operations and procedures of the Fund in using or employing the
TA2000(TM) System or DST Facilities hereunder or the reports to be
generated by such system and facilities hereunder, unless the Fund is
given thirty (30) days prior notice to allow the Fund to change its
procedures and DST provides the Fund with revised operating procedures
and controls at the time such notice is delivered to the Fund.
C. All enhancements, improvements, changes, modifications or new features
added to the TA2000(TM) System however developed or paid for shall be,
and shall remain, the confidential and exclusive property of, and
proprietary to, DST.
25. Subcontractors.
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<PAGE>
Nothing herein shall impose any duty upon DST in connection with or make DST
liable for the actions or omissions to act of unaffiliated third parties
such as, by way of example and not limitation, Airborne Services, the U.S.
mails and telecommunication companies, provided, if DST selected such
company, DST shall have exercised due care in selecting the same.
26. Limitations on Liability.
A. If the Fund is comprised of more than one Portfolio, each Portfolio shall
be regarded for all purposes hereunder as a separate party apart from
each other Portfolio. Unless the context otherwise requires, with respect
to every transaction covered by this Agreement, every reference herein to
the Fund shall be deemed to relate solely to the particular Portfolio to
which such transaction relates. Under no circumstances shall the rights,
obligations or remedies with respect to a particular Portfolio constitute
a right, obligation or remedy applicable to any other Portfolio. The use
of this single document to memorialize the separate agreement of each
Portfolio is understood to be for clerical convenience only and shall not
constitute any basis for joining the Portfolios for any reason.
B. Notice is hereby given that a copy of the Fund's Trust Agreement and all
amendments thereto is on file with the Secretary of State of the state of
its organization; that this Agreement has been executed on behalf of the
Fund by the undersigned duly authorized representative of the Fund in
his/her capacity as such and not individually; and that the obligations
of this Agreement shall only be binding
37
<PAGE>
upon the assets and property of the Fund and shall not be binding upon
any trustee, officer or shareholder of the Fund individually.
38
<PAGE>
27. Miscellaneous.
A. This Agreement shall be construed according to, and the rights and
liabilities of the parties hereto shall be governed by, the laws of the
State of Missouri, excluding that body of law applicable to choice of
law.
B. All terms and provisions of this Agreement shall be binding upon, inure
to the benefit of and be enforceable by the parties hereto and their
respective successors and permitted assigns.
C. The representations and warranties, and the indemnification extended
hereunder, if any, are intended to and shall continue after and survive
the expiration, termination or cancellation of this Agreement.
D. No provisions of this Agreement may be amended or modified in any manner
except by a written agreement properly authorized and executed by each
party hereto.
E. 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.
F. This Agreement may be executed in two or more counterparts, each of which
will be deemed an original but all of which together shall constitute one
and the same instrument.
G. If any part, term or provision of this Agreement is by the courts held to
be illegal, in conflict with any law or otherwise invalid, the remaining
portion or portions shall be considered severable and not be affected,
and the rights and obligations of the parties
39
<PAGE>
shall be construed and enforced as if the Agreement did not contain the
particular part, term or provision held to be illegal or invalid.
H. This Agreement may not be assigned by the Fund or DST without the prior
written consent of the other.
I. Neither the execution nor performance of this Agreement shall be deemed
to create a partnership or joint venture by and between the Fund and DST.
It is understood and agreed that all services performed hereunder by DST
shall be as an independent contractor and not as an employee of the Fund.
This Agreement is between DST and the Fund and neither this Agreement nor
the performance of services under it shall create any rights in any third
parties. There are no third party beneficiaries hereto.
J. Except as specifically provided herein, this Agreement does not in any
way affect any other agreements entered into among the parties hereto and
any actions taken or omitted by any party hereunder shall not affect any
rights or obligations of any other party hereunder.
K. The failure of either party to insist upon the performance of any terms
or conditions of this Agreement or to enforce any rights resulting from
any breach of any of the terms or conditions of this Agreement, including
the payment of damages, shall not be construed as a continuing or
permanent waiver of any such terms, conditions, rights or privileges, but
the same shall continue and remain in full force and effect as if no such
forbearance or waiver had occurred.
L. This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement, draft or agreement or proposal
with respect to the
40
<PAGE>
subject matter hereof, whether oral or written, and this Agreement may
not be modified except by written instrument executed by both parties.
M. All notices to be given hereunder shall be deemed properly given if
delivered in person or if sent by U.S. mail, first class, postage
prepaid, or if sent by facsimile and thereafter, in the case of
non-operational notices only, confirmed by mail as follows:
If to DST:
DST Systems, Inc.
1055 Broadway, 7th Fl.
Kansas City, Missouri 64105
Attn: Senior Vice President-Full Service
Phone No.: 816-435-8200
Facsimile No.: 816-435-3455
With a copy of non-operational notices to:
DST Systems, Inc.
333 W. 11th St, 5th Fl.
Kansas City, Missouri 64105
Attn: Legal Department
Phone No.: 816-435-8688
Facsimile No.: 816-435-8630
If to the Fund:
SEI Investments, Inc.
One Freedom Valley Drive
Oaks, Pennsylvania 19456
Attn: Michael Davisson
Phone No.: 610-676-2329
Facsimile No.: 610-676-4329
or to such other address as shall have been specified in writing by the
party to whom such notice is to be given.
41
<PAGE>
N. The representations and warranties contained herein shall survive the
execution of this Agreement. The representations and warranties contained
herein and the provisions of Section 8 hereof shall survive the
termination of the Agreement and the performance of services hereunder
until any statute of limitations applicable to the matter at issues shall
have expired.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective duly authorized officers, to be effective as of the day and
year first above written.
DST SYSTEMS, INC.
By: /s/ Kevin Hager
-------------------
Date: January 1, 1998
-----------------
TIP INSTITUTIONAL FUNDS
By: /s/ Todd Cipperman
-------------------
Date: Janaury 1, 1998
-----------------
42
<PAGE>
EXHIBIT A
FEE SCHEDULE
PAGE 1 OF 5
DST SYSTEMS, INC.
TIP INSTITUTIONAL FUNDS TRANSFER AGENCY FEES
EFFECTIVE JANUARY 1, 1998 THROUGH JANUARY 31, 2000
A. MINIMUM AND BASE FEE
First Quarter - January 1998 through March 1998
Minimum
CUSIPS in the range 1-10 $11,000/CUSIP/year
CUSIPS in the range 11-20 $10,500/CUSIP/year
CUSIPS in the range >20 $10,000/CUSIP/year
Base Fee
CUSIPS in the range 1-10 $4,000/CUSIP/year
CUSIPS in the range 11-20 $4,000/CUSIP/year
CUSIPS in the range >20 $4,000/CUSIP/year
Year 2 - April 1998 through March 1998
Minimum
CUSIPS in the range 1-10 $12,000/CUSIP/year
CUSIPS in the range 11-20 $11,000/CUSIP/year
CUSIPS in the range >20 $10,400/CUSIP/year
Base Fee
CUSIPS in the range 1-10 $6,000/CUSIP/year
CUSIPS in the range 11-20 $5,500/CUSIP/year
CUSIPS in the range >20 $5,200/CUSIP/year
Year 3 - April 1998 through March 1998
Minimum
CUSIPS in the range 1-10 $13,000/CUSIP/year
CUSIPS in the range 11-20 $11,500/CUSIP/year
CUSIPS in the range >20 $10,800/CUSIP/year
Base Fee
CUSIPS in the range 1-10 $8,000/CUSIP/year
CUSIPS in the range 11-20 $7,000/CUSIP/year
CUSIPS in the range >20 $6,400/CUSIP/year
Note: Minimum applies unless charges included in Section B exceed the minimum.
<PAGE>
EXHIBIT A
FEE SCHEDULE
PAGE 2 OF 5
B. ACCOUNT MAINTENANCE AND PROCESSING FEES
First Quarter - January 1998 through March 1998
Open Accounts
Daily Accrual Portfolio(s) $26.00 per account per year
Monthly Accrual Portfolio(s) $23.00 per account per year
Other Accrual Portfolio(s) $21.00 per account per year
Closed Accounts $2.85 per account per year
Retail Phone Calls $2.00/each
Retail New Accounts $3.50/each
Retail Manual Transactions $1.50/each
Year 2 - April 1998 through March 1999
Open Accounts
Daily Accrual Portfolio(s) $26.00 per account per year
Monthly Accrual Portfolio(s) $23.00 per account per year
Other Accrual Portfolio(s) $21.00 per account per year
Closed Accounts $2.85 per account per year
Retail Phone Calls $2.00/each
Retail New Accounts $3.50/each
Retail Manual Transactions $1.50/each
Year 3 - April 1999 through March 2000
Open Accounts
Daily Accrual Portfolio(s) $26.00 per account per year
Monthly Accrual Portfolio(s) $23.00 per account per year
Other Accrual Portfolio(s) $21.00 per account per year
Closed Accounts $2.85 per account per year
Retail Phone Calls $2.00/each
Retail New Accounts $3.50/each
Retail Manual Transactions $1.50/each
<PAGE>
EXHIBIT A
FEE SCHEDULE
PAGE 3 OF 5
<TABLE>
<CAPTION>
C. OPTIONAL SERVICES
<S> <C>
Financial Intermediary Interfaces (includes generally
Schwab and Schwab-like interfaces, NSCC and transactions
with entities entering more than five transactions a week) (See Exhibit A.1)
12b-1 Processing $.15 per open and closed account per cycle
CDSC/Sharelot Accounting $1.90 per account per year
Ad-Hoc Reporting
Multi File Reports $400 per report
Single File Reports $250 per report
*Audio Response(TM) System - Not Used Currently Charges quoted upon request
*NSCC To Be Determined
Escheatment Costs - as incurred
Conversion/Acquisition Costs - Out of Pocket expenses including but not
limited to travel and accommodations, programming, training, equipment
installation, etc.
*Computer/Technical Personnel:
Business Analyst/Tester:
Dedicated $70,500 per year
On Request:
Senior Staff Support $65 per hour
Staff Support $45 per hour
Clerical Support $35 per hour
Technical/Programming:
Dedicated $150,000 per year
On Request: $120 per hour
Technical/Programming:
Dedicated $175,000 per year
On Request: $140 per hour
</TABLE>
NOTES TO THE ABOVE FEE SCHEDULE
A. The above schedule does not include reimbursable expenses that are
incurred on the Fund's behalf. Examples of reimbursable expenses
include but are not limited to those set forth on page 5 of this
Exhibit A. Reimbursable expenses are billed separately from service
fees on a monthly basis. Postage will be paid in advance if so
requested.
<PAGE>
EXHIBIT A
FEE SCHEDULE
PAGE 4 OF 5
B. Any fees or reimbursable expenses not paid within 30 days of the date
of the original invoice will be charged a late payment fee as described
in the contract.
C. The above fees, except for those indicated by an "*", are guaranteed
for a three year period. All items marked by an "a" are subject to
change with 60 days notice.
D. The monthly fee for an open account shall be charged in the month
during which an account is opened through the month in which such
account is closed. The monthly fee for a closed account shall be
charged in the month following the month during which such account is
closed and shall cease to be charged in the month following the Purge
Date, as hereinafter defined. The "Purge Date" for any year shall be
any day after June 1st of that year, as selected by the Fund, provided
that written notification is presented to DST at least forty-five (45)
days prior to the Purge Date.
E. Fee Increases: DST reserves the right to raise fees by a rate in excess
of the aggregate increase in the Consumer Price Index for All Urban
Consumers ("CPI-U") in the Kansas City, Missouri-Kansas-Standard
Metropolitan Statistical Area, All Items, Base 1982-1984 = 100, as last
reported by the U.S. Bureau of Labor Statistics during the term of this
Fee Schedule upon the expiration of this Fee Schedule at the close of
business on January 31, 2000, unless the parties to this Agreement have
mutually agreed in a writing executed by each to a new Fee Schedule.
F. All Print/Mail, except checks (dividend and redemption), to be
performed at Output Technologies Eastern Region, Inc. (at Braintree,
Massachusetts).
Fee Accepted By:
- ----------------------------- ------------------------------
DST Systems, Inc. TIP Institutional Funds
- ----------------------------- ------------------------------
Date Date
<PAGE>
EXHIBIT A
FEE SCHEDULE
PAGE 5 OF 5
<TABLE>
<CAPTION>
Reimbursable Expenses
<S> <C>
Forms
Postage (to be paid in advance if so requested)
Mailing Services
Computer Hardware and Software - specific to Fund or installed at
remote site at Fund's direction
Telecommunications Equipment and Lines/Long Distance Charges
Magnetic Tapes, Reels or Cartridges
Magnetic Tape Handling Charges
Microfiche/Microfilm
Freight Charges
Printing
Bank Wire and ACH Charges
Proxy Processing - per proxy mailed
not including postage
Includes: Proxy Card
Printing
Outgoing Envelope
Return Envelope
Tabulation and Certification
T.I.N. Certification (W-8 & W-9)
(Postage associated with the return
envelope is included)
N.S.C.C. Communications Charge To Be Determined
(Fund/Serv and Networking)
Off-site Record Storage Currently $.07
Second Site Disaster (guaranteed not to
Backup Fee (per account) exceed $.11 through
12/31/97)
Transmission of Statement Data for Currently $.035/per
Remote Processing record
Travel, Per Diem and other Billables
Incurred by DST personnel traveling to,
at and from the Fund at the request
of the Fund
</TABLE>
<PAGE>
EXHIBIT A.1
PAGE 1 OF 1
<TABLE>
<CAPTION>
TIP INSTITUTIONAL FUNDS
FINANCIAL INTERMEDIARY/THIRD PARTY ADMINISTRATOR FEES
<S> <C>
All Same Day (Trade Date) Processing/Settlement Environments
Base Fee $100/intermediary/mo
Manual Transactions $3.50
Phone Calls (inbound and outbound) $4.00
All Same Day (Trade Date+x) Processing/Settlement Environments
Base Fee $100/intermediary/mo
Manual Transactions $11.00
Phone Calls (inbound and outbound) $4.00
Listbills
Per Roster List:
Received via phone/fax for manual processing $25
Received via electronic data transmission, no manual processing $10
Per Manual Transaction $1.00
All Electronic Data Transmissions
Initial Set-up $40/CUSIP
Data Transmissions/Interfaces:
First 10 CUSIPS $100/CUSIP/mo
Next 15 CUSIPS $ 75/CUSIP/mo
CUSIPS over 25 $ 50/CUSIP/mo
</TABLE>
Fee Cap
The aggregate of all fees set forth on this Exhibit A.1 will not exceed $25,000
per year calculated on a monthly basis.
<PAGE>
EXHIBIT B
POST DECONVERSION FEE SCHEDULE
ALL FEES EFFECTIVE AS OF DECONVERSION:
ACCOUNT MAINTENANCE
Closed Accounts $.20/month/acct
Transaction/Maintenance Processing $2.50/item
Telephone Calls $4.00/call
Research Requests $40/hour (1 hr min)
PROGRAMMING
As required at DST's then current standard rates
REIMBURSABLE EXPENSES
This schedule does not include reimbursable expenses that are incurred on the
Fund's behalf. Examples of reimbursable expenses include but are not limited to
forms, postage, mailing services, telephone line/long distance charges,
transmission of statement data for remote print/mail operations, remote client
hardware, document storage, tax certification mailings, magnetic tapes,
printing, microfiche, Fed wire bank charges, ACH bank charges, NSCC charges, as
required or incurred, etc. Reimbursable expenses are billed separately from
Account Maintenance and Programming fees on a monthly basis and late payments
are subject to late charges in accordance with Section 6.C. of this Agreement.
