As filed with the Securities and Exchange Commission on October 29, 1997
File No. 33-79742
811-8546
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 5 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
AMENDMENT NO. 6 [X]
THE BRAMWELL FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
745 Fifth Avenue, New York, New York 10151
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 308-0505
Elizabeth R. Bramwell
The Bramwell Funds, Inc.
745 Fifth Avenue, New York, New York 10151
(Name and address of agent for service of process)
It is proposed that this filing will become effective (check appropriate box)
___ immediately upon filing pursuant to paragraph (b)
x on November 1, 1997 pursuant to paragraph (b)
___ 60 days after filing pursuant to paragraph (a)
___ on (date) pursuant to paragraph (a) of Rule 485
___ 75 days after filing pursuant to paragraph (a)(2)of Rule 485
___ on (date) pursuant to paragraph (a)(2) of Rule 485.
Pursuant to the provisions of Rule 24f-2 under the Investment Company Act of
1940, Registrant has registered an indefinite number of shares under the
Securities Act of 1933, and Registrant's Rule 24f-2 Notice for the fiscal year
ended June 30, 1997 was filed on August 27, 1997.
<PAGE>
THE BRAMWELL FUNDS, INC.
CROSS REFERENCE SHEET
(as required by 495(a))
N-1A Item Caption in Prospectus
PART A: INFORMATION REQUIRED IN A PROSPECTUS
Item 1. Cover Page Cover Page
Item 2. Synopsis Expense Summary
Item 3. Condensed Financial Information Financial Highlights
Item 4. General Description of Registrant General Description of the Fund;
Investment Objectives;
Investment Policies; Risks;
Investment Techniques
Item 5 Management of the Fund Disbursing Management of the Fund; Custodian
Agent and Transfer and Dividend
Item 5A. Management's Discussion of Fund Not included
Performance
Item 6. Capital Stock and Other Capital Structure; Dividends and
Securities Distributions; Taxes; Information
for Shareholders
Item 7. Purchase of Securities Being Investing in The Bramwell Growth
Offered Fund; How to Purchase The Bramwell
Growth Fund Shares; Shareholder
Services; Service and Distribution
Plan; Share Price and
Determination of Value
Item 8. Redemption or Repurchase How to Sell (Redeem) The Bramwell
Growth Fund Shares
Item 9. Pending Legal Proceedings Not Applicable
PART B: INFORMATION REQUIRED IN A
STATEMENT OF ADDITIONAL INFORMATION
Item 10. Cover Page Cover Page**
Item 11. Table of Contents Table of Contents**
Item 12. General Information and History Not Applicable
Item 13. Investment Objectives and Investment Objectives and
Policies Policies**
Item 14. Management of the Fund Directors and Officers**
Item 15. Control Persons and Principal Directors and Officers**
Holders of Securities
Item 16. Investment Advisory and Other Management of the Fund*; Service
and Distribution Plan*; Custodian
and Transfer and Dividend
Disbursing Agent*; Counsel and
Independent Auditors*; Investment
Advisory and Other Services**;
Distribution Plan
Item 17. Brokerage Allocation and Other Portfolio Turnover**; Portfolio
Practices Transactions and Brokerage**
<PAGE>
Item 18. Capital Stock and Other Securities Capital Structure**
Item 19. Purchase, Redemption and Pricing Investing in The Bramwell Growth
of Securities Being Offered Fund*; How to Purchase The
Bramwell Growth Fund Shares*;
Shareholder Services*; Share Price
and Determination of Net Value*;
Net Asset Value**
Item 20. Tax Status Tax Status**
Item 21. Underwriters Not Applicable
Item 22. Calculation of Performance Data Performance Information**
Item 23. Financial Statements Financial Statements
- 2 -
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The Bramwell Growth Fund PROSPECTUS
---------------------------- November 1, 1997
Investment Adviser
Bramwell Capital Management, Inc.
Administrator
Sunstone Financial Group, Inc.
Counsel
Dechert Price & Rhoads
Independent Certified Public Accountants
Coopers & Lybrand L.L.P.
Custodian and Transfer and
Dividend Disbursing Agent
Firstar Trust Company
The Bramwell Growth Fund
-------------------------------------------
ELIZABETH R. BRAMWELL, CFA
President and Chief Investment Officer
The Bramwell Funds, Inc.
745 Fifth Avenue
New York, New York 10151
1-800-272-6227
1-800-BRAMCAP
<PAGE>
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Table of Contents
---------------------------------------------
Expense Summary 3
Financial Highlights 3
General Description of the Fund 5
Investment Objectives 5
Investment Policies 5
Risks 8
Investment Techniques 9
Management of the Fund 10
Investing in The Bramwell Growth Fund 13
How to Purchase
The Bramwell Growth Fund Shares 14
How to Sell (Redeem)
The Bramwell Growth Fund Shares 16
Shareholder Services 17
Service and Distribution Plan 19
Dividends and Distributions 19
Taxes 19
Fund Performance 20
Share Price and Determination
of Net Asset Value 21
Capital Structure 22
Counsel and Independent Certified
Public Accountants 22
Custodian and Transfer
and Dividend Disbursing Agent 22
Information for Shareholders 22
<PAGE>
The Bramwell Growth Fund
745 Fifth Avenue
New York, New York 10151
November 1, 1997
PROSPECTUS
The Bramwell Growth Fund (the "Fund") is a no-load, diversified mutual
fund. Long-term capital growth is the Fund's primary investment objective.
Current income is a secondary objective.
Bramwell Capital Management, Inc. ("BramCap") serves as the Fund's
Investment Adviser. The Fund is offered by The Bramwell Funds, Inc., an
open-end, series management investment company. Elizabeth R. Bramwell, CFA,
founder and President of BramCap, manages the investment program of the Fund.
In selecting securities for the Fund's portfolio, BramCap seeks to identify
companies which, based on such factors as company research, product development
and opportunity for plant or market expansion, are positioned to realize
long-term unit and earnings growth. Companies are analyzed within the context of
a broad macroeconomic and political framework.
Under normal circumstances, the Fund's assets are invested primarily in
common stock and high-grade securities convertible into common stock, but the
Fund may hold cash or cash equivalents and invest without limit in U.S.
Government obligations if BramCap determines that a temporary defensive position
is advisable.
The Fund invests primarily in securities of companies domiciled in the
United States, but may invest up to 25% of its assets, measured at the time of
investment, in securities of foreign issuers.
This Prospectus describes concisely the information about the Fund that you
ought to know before investing. Please read it carefully and retain it for
future reference.
More information about the Fund is contained in a Statement of Additional
Information that has been filed with the Securities and Exchange Commission. To
obtain a free copy, call 1-800-BRAMCAP (1-800-272-6227). The Statement of
Additional Information, which may be revised from time-to-time, is dated
Nov-ember 1, 1997 and is hereby incorporated by reference into this Prospectus.
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by any bank and are not federally insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board or any other governmental
agency.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS IS PART OF A REGISTRATION STATEMENT THAT HAS BEEN FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IN WASHINGTON, DC UNDER THE
SECURITIES ACT OF 1933 AND THE INVESTMENT COMPANY ACT OF 1940.
<PAGE>
Expense Summary
Shareholder Transaction Expenses are charges that you pay when buying or
selling shares of the Fund. Annual Fund Operating Expenses are paid out of the
Fund's assets and include fees for portfolio management, maintenance of
shareholder accounts, general Fund administration, shareholder servicing,
accounting and other services.
Below is a summary of the shareholder transaction expenses imposed by the
Fund and its operating expenses incurred during the fiscal period ended June 30,
1997. Future total operating expenses may be higher or lower than those
indicated. An example based on the summary is also shown.
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases None
Maximum Sales Load Imposed on
Reinvested Dividends None
Deferred Sales Load None
Redemption Fees (a) None
Exchange Fees (a) None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees 1.00%
12b-1 Fees (b) 0.25%
Other Expenses (after reimbursement) (c) 0.50%
Total Fund Operating Expenses
(after expense reimbursement) (d) 1.75%
(a) A fee of $12.00 is charged for each wire redemption, and a fee of $5.00
is charged for each ex-change requested by telephone.
(b) The maximum level of distribution expenses is 0.25% per annum of the
Fund's average net assets. See "Service and Distribution Plan" for further
details. The distribution expenses for long-term shareholders may total more
than the maximum sales charge that would have been permissible if imposed
entirely as an initial sales charge.
(c) Such expenses include custodian, transfer agency and administration
fees and other customary Fund expenses.
(d) The Fund's investment adviser has voluntarily agreed to limit the total
expenses of the Fund (excluding interest, taxes, brokerage and extraordinary
expenses) to an annual rate of 1.75% of the Fund's average net assets until June
30, 1999. After such date, the expense limitation may be terminated or revised
at any time. With respect to the fiscal period ended June 30, 1997, the Fund's
investment adviser waived advisory fees amounting to 0.02% (annualized) of
average net assets. Without such waiver, "Total Fund Opera-ting Expenses" would
have been 1.77% (annualized).
Example
An investor would pay the following expenses on a $1,000 investment,
assuming a 5% annual return and redemption at the end of each period:
One Year Three Years Five Years Ten Years
$18 $56 $96 $209
The purpose of the preceding table is to assist investors in understanding
the various costs and expenses that an investor in the Fund will bear, directly
or indirectly. The preceding example should not be considered representative of
past or future investment returns and operating expenses which may be more or
less than those shown.
Financial Highlights
The "Financial Highlights" in the following table have been derived from
the financial records of the Fund which have been audited for the period ended
June 30, 1997 by Coopers & Lybrand L.L.P., independent accountants, whose report
thereon was unqualified and is included in the Statement of Additional
Information. The table should be read in conjunction with the financial
statements and related notes included in the Statement of Additional
Information. Further informa-tion about the performance of the Fund is contained
in the Fund's Annual Report to shareholders, copies of which may be obtained
without charge upon request by calling 1-800-BRAMCAP (1-800-272-6227).
3
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<TABLE>
<CAPTION>
For the period
Year Year Aug. 1, 1994(2)
Ended Ended to
Selected Per-Share Data(1) June 30, 1997 June 30, 1996 June 30, 1995
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $14.60 $12.30 $10.00
Income from investment operations:
Net investment loss (0.15) (0.08) ---(3)
Net realized and unrealized gains
on securities 3.35 2.42 2.31
Total from investment operations 3.20 2.34 2.31
Less distributions:
Dividends from net investment income -- -- .--
Distributions from capital gains (0.27) (0.04) (0.01)
Total distributions (0.27) (0.04) (0.01)
Net asset value, end of period $17.53 $14.60 $12.30
Total return 22.2% 19.0% 23.1%(4)
Supplemental data and ratios:
Net assets, end of period (in 000s) 125,924 $141,455 $62,241
Ratio of expenses to average net assets(5) 1.75% 1.75% 1.75%(6)
Ratio of net investment loss to average
net assets5 (0.85)% (0.66)% (0.11)%(4)
Portfolio turnover rate 82% 118% 80%(4)
Average commission rate paid on
portfolio investment transactions(7) $0.0600 $0.0600 NA
</TABLE>
1 Information presented relates to a share of capital stock of the Fund
outstanding for the entire period.
2 Commencement of operations
3 Less than $(0.01)
4 Not annualized
5 Net of reimbursements and waivers. Absent reimbursements and waivers of
expenses by the adviser, the ratios of expenses and net investment loss to
average net assets for the years ended June 30, 1997 and June 30, 1996 and
the period August 1, 1994 to June 30, 1995, would be 1.77%, and (0.87)%;
1.79% and (0.70)%; and 2.68% and (1.04)%, respectively.
6 Annualized
7 Disclosure required, effective for reporting periods beginning after
September 1, 1995.
4
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General Description of the Fund
The Bramwell Growth Fund (the "Fund") is a no-load, diversified mutual
fund. Shares in the Fund are offered by The Bramwell Funds, Inc. (the
"Company"), a Mary-land corporation organized on June 3, 1994, which is
registered as an open-end management investment company under the Investment
Company Act of 1940 (the "1940 Act").
The Company is organized as a series fund which permits it to issue one or
more series of common stock, each representing an investment portfolio with its
own investment objectives. The first of these series is the Fund. Prior to the
sale of Fund shares hereunder, the Company had no operations other than matters
relating to its organization and the creation of the Fund.
Bramwell Capital Management, Inc. ("BramCap") serves as the Fund's
Investment Adviser. Elizabeth R. Bramwell, founder and President of BramCap,
manages the investment program of the Fund and is primarily responsible for the
day-to-day management of the Fund's portfolio. Ms. Bramwell, a Chartered
Financial Analyst, has had more than twenty-five years of experience as a
securities analyst/portfolio manager and was previously President, Chief
Investment Officer, Portfolio Manager and a Trustee of The Gabelli Growth Fund.
See "Management of the Fund."
The Fund combines the resources of many investors, with each individual
investor having an interest in every one of the securities owned by the Fund,
thereby providing diversification in a variety of industries and issuers. The
Fund's Investment Adviser furnishes continuous professional portfolio management
to select and watch over the Fund's investments. The Fund's ability to buy and
sell larger blocks of securities generally reduces transaction costs. As an
open-end fund, the Fund will redeem any of its outstanding shares on demand of
the owner at the next determined net asset value. Registration of the Company
under the 1940 Act does not involve supervision of the Fund's management or
policies by the Securities and Exchange Commission.
Investment Objectives
Long-term capital growth is the Fund's primary investment objective.
Current income is a secondary objective. Given the Fund's objective to achieve
long-term growth of capital, investment in the Fund may be best suited to
investors who are not concerned with current income. The Fund is not intended by
itself to constitute a balanced investment program.
The Fund seeks to invest in companies that are expected to benefit from the
long-term payoff from investment in research, development, capital spending and
market expansion, which may not be reflected in a one-year period in the equity
market, and seeks to invest in companies that are perceived to be attractively
valued relative to their future growth prospects. The Investment Adviser's most
recent outlook is available in the latest report to shareholders which is
available upon request.
Investment Policies
General
Investments may be in equity securities of well-known, established
companies as well as smaller, less wellknown companies. In selecting securities
for the Fund's portfolio, BramCap seeks to identify companies which, based on
such factors as company research, product development and opportunity for plant
or market expansion, are positioned to realize long-term unit and earnings
growth. The Fund may invest an amount not in excess of 5% of its net assets in
securities of issuers with a record of less than three years of continuous
operation, including the operation of any predecessor business. Companies are
analyzed within the context of a broad macroeconomic and political framework.
The Investment Adviser utilizes a blended "top-down" and "bottom-up"
approach. In top-down analysis, focus is on such macroeconomic factors as
inflation, interest, currency, and tax rates; in bottom-up analysis, focus is on
company-specific variables such as competitive industry dynamics, market
leadership, proprietary products and services, and management expertise, as
5
<PAGE>
well as on financial characteristics such as returns on sales and equity,
debt/equity ratios, and earnings and cash flow growth. Primary fundamental
research largely determines investments. Information sources include periodic
corporate financial reports and press releases, corporate financial
presentations and meetings with managements, general economic and industry data
as supplied by government agencies and trade associations, and research reports
by broker/dealers.
Under normal circumstances, the Fund's assets are invested primarily in
common stock and high grade securities convertible into common stock, but the
Fund may also hold cash or cash equivalents and invest without limit in U.S.
Government obligations if BramCap determines that a temporary defensive position
is advisable when, for example, economic or market conditions are believed to be
adverse, company or industry conditions are deteriorating or valuations appear
excessive relative to future growth rates.
Cash and Cash Equivalents
The cash equivalents in which the Fund may invest include fixed-income
securities, such as certificates of deposit of U.S. banks, commercial paper and
commercial paper master notes if the bank or commercial paper issuer has been
rated within the two highest grades assigned by Standard & Poor's Corporation
("S&P") or Moody's Investors Service, Inc. ("Moody's") or has been determined by
the Investment Adviser to be of equivalent quality or, in the case of banks,
provided the bank has capital, surplus and undivided profits, as of the date of
its most recently published annual financial statements, with a value in excess
of $100,000,000 at the date of investment. Commercial paper master notes are
unsecured promissory notes issued by corporations to finance short-term credit
needs. They permit a series of short-term borrowings under a single note.
Borrowings under commercial paper master notes are payable in whole or in part
at any time, may be prepared in whole or in part at any time, and bear interest
at rates which are fixed to known lending rates and automatically adjusted when
such known lending rates change. There is no secondary market for commercial
paper master notes. BramCap will monitor the creditworthiness of the issuer of
the commercial paper master notes while any borrowings are outstanding.
U.S. Government Obligations
Examples of the types of U.S. Government obligations that may be held by
the Fund include, in addition to U.S. Treasury bonds, notes and bills, the
obligations of Federal Home Loan Banks, Federal Farm Credit Banks, Federal Land
Banks, the Federal Housing Administration, Farmers Home Administration,
Export-Import Bank of the United States, Small Business Administration,
Government National Mortgage Association, Federal National Mortgage Association,
General Services Administration, Student Loan Marketing Association, Central
Bank for Cooperatives, Federal Home Loan Mortgage Corporation, Federal
Intermediate Credit Banks, Tennessee Valley Authority, Resolution Funding
Corporation and Maritime Administration. Obligations of certain agencies and
instrumentalities of the U.S. Government, such as those of the Government
National Mortgage Association, are supported by the full faith and credit of the
U.S. Treasury; others, such as the Export-Import Bank of the United States, are
supported by the right of the issuer to borrow from the Treasury; others, such
as those of the Federal National Mortgage Association, are supported by the
discretionary authority of the U.S. Government to purchase the agency's
obligations; still others, such as those of the Student Loan Marketing
Association, are supported only by the credit of the instrumentality. No
assurance can be given that the U.S. Government would provide financial support
to U.S. Government-sponsored instrumentalities if it is not obligated to do so
by law.
Investments in Foreign Issuers
The Fund invests primarily in securities of companies domiciled in the
United States, but the Fund may also invest up to 25% of its assets, measured at
the time of investment, in securities of foreign issuers. Such investments may
be made either directly in such issuers or indirectly through American
Depository Receipts ("ADRs") or closed-end investment companies. It is possible
that some
6
<PAGE>
material information about unsponsored ADRs will be unavailable. Investments in
investment companies will not make up more than 10% of the Fund's net assets.
See "Other Investment Companies."
Foreign securities involve certain inherent risks that are different from
those of domestic issuers, including political or economic instability of the
issuer or the country of issue, changes in foreign currency and exchange rates
and the possibility of adverse changes in investment or exchange control
regulations. Currency fluctuations will affect the net asset value of the Fund
irrespective of the performance of the underlying investments in foreign
issuers. Typically, there is less publicly available information about a foreign
company than about a U.S. company, and foreign companies may be subject to less
stringent reserve, auditing and reporting requirements. Most foreign stock
markets are not as large or liquid as in the United States; fixed commissions on
foreign stock exchanges are generally higher than the negotiated commissions on
U.S. exchanges; and there is generally less government supervision and
regulation of foreign stock exchanges, brokers and companies than in the United
States. Foreign governments can also levy confiscatory taxes, expropriate
assets, and limit repatriations of assets. As a result of these and other
factors, foreign securities purchased by the Fund may be subject to greater
price fluctuation than securities of U.S. companies.
Illiquid or Restricted Securities
The Fund may invest up to 15% of its net assets in illiquid securities, for
which there is a limited trading market and for which a low trading volume of a
particular security may result in abrupt and erratic price movements. The Fund
may be unable to dispose of its holdings in illiquid securities at acceptable
prices and may have to dispose of such securities over extended periods of time.
The Fund may invest in (i) securities that are sold in private placement
transactions between their issuers and their purchasers and that are neither
listed on an exchange nor traded over-the-counter, and (ii) securities that are
sold in transactions between qualified institutional buyers pursuant to Rule
144A under the Securities Act of 1933, as amended. Such securities are subject
to contractual or legal restrictions on subsequent transfer. As a result of the
absence of a public trading market, such restricted securities may in turn be
less liquid and more difficult to value than publicly traded securities.
Although these securities may be resold in privately negotiated transactions,
the prices realized from the sales could, due to illiquidity, be less than those
originally paid by the Fund or less than their fair value and in some instances,
it may be difficult to locate any purchaser. In addition, issuers whose
securities are not publicly traded may not be subject to the disclosure and
other investor protection requirements that may be applicable if their
securities were publicly traded. If any privately placed or Rule 144A securities
held by the Fund are required to be registered under the securities laws of one
or more jurisdictions before being resold, the Fund may be required to bear the
expenses of registration. Securities which are freely tradable under Rule 144A
may be treated as liquid if the Board of Directors of the Fund is satisfied that
there is sufficient trading activity and reliable price information. Investing
in Rule 144A securities could have the effect of increasing the level of
illiquidity of the Fund's portfolio to the extent that qualified institutional
buyers become, for a time, uninterested in purchasing such 144A securities.
Other Investment Companies
In seeking to attain its investment objectives, the Fund may invest in
securities issued by other investment companies within the limits prescribed by
the 1940 Act. The Fund intends to limit its investments so that, as determined
immediately after a securities purchase is made: (i) not more than 5% of the
value of its net assets will be invested in the securities of any one investment
company; (ii) not more than 10% of the value of its net assets will be invested
in the aggregate in securities of investment companies as a group; and (iii) not
more than 3% in the aggregate of the outstanding voting stock of any one
investment company will be owned by the Fund and/or by any series of The
Bramwell Funds, Inc. As a shareholder of another investment company, the Fund
would
7
<PAGE>
bear, along with other shareholders, its pro rata portion of the other
investment company's expenses, including advisory fees. These expenses would be
in addition to the advisory and other expenses that a Fund bears in connection
with its own operations.
Warrants and Rights
The Fund may invest up to 5% of its net assets in warrants or rights,
valued at the lower of cost or market, which entitle the holder to buy equity
securities during a specific period of time. The Fund will make such investments
only if the underlying equity securities are deemed appropriate by BramCap for
inclusion in the Fund's portfolio. Included in the 5% amount, but not to exceed
2% of net assets, are warrants and rights whose underlying securities are not
traded on principal domestic or foreign exchanges. Warrants and rights acquired
by the Fund in units or attached to securities are not subject to these
restrictions.
Fundamental Investment Restrictions and Policies
The Fund has adopted certain investment restrictions that are characterized
as fundamental policies which cannot be changed without a shareholder vote.
To maintain portfolio diversification and reduce investment risk, as a
matter of fundamental policy, the Fund may not:
o invest 25% or more of its net assets in issuers conducting their
principal business in the same industry;
o borrow money except for temporary purposes in amounts up to 10% of its
net assets;
o make loans, other than by way of lending portfolio securities, buying
debt securities for its portfolio or entering into repurchase
agreements; or
o invest more than 15% of its net assets in illiquid securities.
A list of the Fund's objectives, policies and restrictions, both
fundamental and nonfundamental, is set forth in the Statement of Additional
Information. In order to provide a degree of flexibility, the Fund's investment
objectives, as well as other policies which are not deemed fundamental, may be
modified by the Board of Directors without shareholder approval. Any change in
the Fund's investment objectives may result in the Fund having investment
objectives different from the objectives which the shareholder considered
appropriate at the time of investment in the Fund. However, the Fund will not
change any of its investment objectives, policies or investment restrictions
without written notice to shareholders sent at least 30 days in advance of any
such change.
Risks
Investment in any mutual fund has inherent risks. There can be no assurance
that the investment objectives of the Fund will be realized or that the Fund's
portfolio will not decline in value. Economic conditions change and stock
markets are volatile. If BramCap judges market conditions incorrectly, the
Fund's portfolio may decline in value. Moreover, investors should be aware that
certain investment policies of the Fund, such as investing in illiquid and
foreign securities, and certain investment techniques of the Fund, such as
investments in options, futures and foreign currency contracts or engaging in
short sales or securities lending as described below, can entail greater than
average risk to the extent such policies and techniques are implemented. These
policies and techniques are described under the headings "Investment Policies"
above and "Investment Techniques" below.
Options and futures may fail as hedging techniques in cases where the price
movements of the securities underlying the options and futures do not follow the
price movements of the portfolio securities subject to the hedge and the loss
from investing in futures transactions is theoretically potentially unlimited.
Moreover, gains and losses on investments in options and futures depend on the
Investment Adviser's ability to predict correctly the direction of stock prices,
interest rates and other economic factors.
Securities lending involves risks of delay in receiving additional
collateral or in recovering the loaned securities, and possibly a loss of rights
in the collateral if the borrower of the securities becomes insolvent.
8
<PAGE>
Investment Techniques
Although not normally anticipated to be widely employed, the Fund may use
various techniques to increase or decrease its exposure to the effects of
possible changes in security prices, currency exchange rates or other factors
that affect the value of the Fund's portfolio. These techniques are used by the
Fund for risk or portfolio management purposes or, in the case of securities
lending and repurchase agreements, for incidental income and not for
speculation. See "Risks" for a discussion of risks relating to these techniques.
Options on Securities or Indices
The Fund may write (i.e., sell) covered put and call options and purchase
put and call options on securities or securities indices that are traded on
United States and foreign exchanges or in the over-the-counter markets. Such
options can include long-term options with durations of up to three years. The
value of the underlying securities on which options may be written at any one
time will not exceed 15% of the net assets of the Fund. The Fund will not
purchase put or call options if the aggregate premium paid for such options
would exceed 5% of its net assets at the time of purchase.
Futures
The Fund may enter into financial futures contracts or purchase or sell put
and call options on such futures. Futures are generally bought and sold on
commodities exchanges. The sale of a futures contract creates a firm obligation
by the Fund, as seller, to deliver to the buyer the specific type of financial
instrument called for in the contract at a specific future time for a specified
price (or the net cash amount). Options on futures contracts are similar to
options on securities except that an option on a futures contract gives the
purchaser the right in return for the premium paid to assume a position in a
futures contract and obligates the seller to deliver such position.
Forward Foreign Currency Exchange Contracts and Options on Foreign Currencies
When the Fund holds portfolio securities denominated in a foreign currency,
the Fund may enter into forward foreign currency exchange contracts to attempt
to minimize the risk to the Fund from adverse changes in the relationship
between the U.S. dollar and those foreign currencies. The Fund has no specific
limitation on the percentage of assets it may commit to forward foreign currency
exchange contracts, subject to its stated investment objective and policies,
except that the Fund will not enter into such contracts if the amount of assets
set aside to cover such contracts would impede portfolio management or the
Fund's ability to meet redemption requests. Although forward foreign currency
exchange contracts will be used to protect the Fund from adverse currency
movements, they also involve the risk that anticipated currency movements will
not be accurately predicted.
When the Fund enters into a forward foreign currency exchange contract, it
relies on the other party to consummate the trade. Failure of such party to do
so may result in the Fund's incurring a loss or missing an opportunity to obtain
a price considered to be advantageous.
The Fund may also purchase put and call options and write covered put and
call options on foreign currencies for the purpose of protecting against
declines in the U.S. dollar value of foreign currency denominated portfolio
securities and against increases in the U.S. dollar cost of such securities to
be acquired. As in the case of other kinds of options, however, the writing of
an option on a foreign currency constitutes only a partial hedge, up to the
amount of the premium received, and the Fund could be required to purchase or
sell foreign currencies at disadvantageous exchange rates, thereby incurring
losses.
The Fund may cross-hedge currencies by entering into transactions to
purchase or sell one or more currencies that are expected to decline in value
relative to other currencies to which the Fund has or in which the Fund expects
to have portfolio exposure.
Short Sales
The Fund may make limited short sales of securities. A short sale is a
transaction in which the Fund sells a security it does not own in anticipation
that the market price of that security will decline. The market value of the
securities sold short will not exceed either 5% of the
9
<PAGE>
Fund's net assets or 5% of each issuer's voting securities. The Fund may also
make short sales "against the box" without respect to such limitations. In this
type of short sale, at the time of the sale, the Fund owns or has the immediate
and unconditional right to acquire at no additional cost the identical security.
Securities Lending
For incremental income purposes, the Fund may lend its portfolio securities
constituting up to 30% of its net assets to U.S. or foreign banks or
broker/dealers which have been rated within the two highest grades assigned by
S&P or Moody's, or which have been determined by BramCap to be of equivalent
quality. BramCap is responsible for monitoring compliance with this rating
standard during the term of any securities lending agreement. With any loan of
portfolio securities, there is a risk that the borrowing institution will fail
to redeliver the securities when due. However, loans of securities by the Fund
will be fully collateralized at all times by at least 100% of the current market
value of the lent securities.
Repurchase Agreements
Repurchase agreements may also be entered into by the Fund for incremental
income purposes.
The Fund may enter into repurchase agreements with any foreign or domestic
bank or broker/dealer if the bank or broker/dealer has been rated within the two
highest grades assigned by S&P or Moody's or has been determined by the
Investment Adviser to be of equivalent quality. BramCap is responsible for
monitoring compliance with this rating standard during the term of any
repurchase agreement. The Fund will not enter into repurchase agreements with
entities other than banks or broker/dealers or invest over 5% of its assets in
repurchase agreements with maturities of more than seven days.
A repurchase agreement provides a means for the Fund to earn income on
funds for periods as short as overnight. It is an arrangement under which the
Fund acquires a security and the seller agrees, at the time of sale, to
repurchase the security at a specified time and price. Securities subject to a
repurchase agreement are held in a segregated account and the value of such
securities is kept at least equal to the repurchase price on a daily basis. The
repurchase price may be higher than the purchase price, the difference being
income to the Fund, or the purchase and repurchase price may be the same, with
interest at a stated rate. In either case, the income to the Fund is unrelated
to the interest rate on the security itself.
Management of the Fund
The business and affairs of the Fund are managed under the direction of the
Board of Directors.
Background of Investment Adviser
Elizabeth R. Bramwell, founder and Chief Executive Officer of BramCap, as
well as President and Chief Investment Officer of the Fund, manages the
investment program of the Fund and is primarily responsible for the day-to-day
management of the Fund's portfolio. Ms. Bramwell, a Chartered Financial Analyst,
has had more than twenty-five years of experience as a securities
analyst/portfolio manager. She was President, Chief Investment Officer,
Portfolio Manager, and a Trustee of The Gabelli Growth Fund from its inception
on April 10, 1987 through February 9, 1994. The cumulative total return for The
Gabelli Growth Fund from its inception through December 31, 1993 was 184%. At
December 31, 1993, that fund had $695 million in net assets. As President and
Chief Investment Officer of The Gabelli Growth Fund, Ms. Bramwell had full
discretionary authority over the selection of investments for that fund. Average
annual returns for the one-year, three-year and five-year periods ended December
31, 1993 and for the entire period during which Ms. Bramwell managed that fund
compared with the performance of the Standard & Poor's 500 Composite Stock Total
Return Index were:
The Gabelli S&P 500
Growth Fund (a,b) Index (c)
One Year 11.3% 10.1%
Three Years 16.0% 15.6%
Five Years 16.5% 14.6%
Inception through
February 9, 1994 16.6% 10.8%
(Footnotes on the following page)
10
<PAGE>
(a) Average annual total return reflects changes in share prices and
reinvestment of dividends and distributions and is net of fund expenses.
(b) The expense ratio of The Gabelli Growth Fund was capped at 2.00% for the
period April 10, 1987 to Dec-ember 31, 1987 (reflecting annualized
reimbursement of expenses of 4.45%) and was capped at 2.30% for the 1988
calendar year, reflecting reimbursement of expenses of 2.08%. Thereafter,
the expense ratio de-clined from 1.85% to 1.41%, reflecting, in general,
economies of scale associated with an increase in assets under management.
(c) The Standard & Poor's 500 Composite Stock Total Return Index is an
unmanaged index of common stocks that is considered to be generally
representative of the United States stock market. The Index is adjusted to
reflect reinvestment of dividends.
Historical performance is not indicative of future performance. The Gabelli
Growth Fund is a separate fund and its historical performance is not indicative
of the potential performance of the Fund. Share prices and investment returns
will fluctuate reflecting market conditions, as well as changes in
company-specific fundamentals of portfolio securities.
Ms. Bramwell is a graduate of Bryn Mawr College and Columbia University
Graduate School of Business. She began her career as an analyst with Morgan
Guaranty Trust Company from 1967 through 1973 (Assistant Vice President
1972-1973), was a securities analyst and Vice President of William D. Witter,
Inc. from 1974 to 1976 and a Vice President and group head in the Investment
Research Department of Bankers Trust Company from 1976 to 1978. Ms. Bramwell was
a Limited Partner of and/or securities analyst with Kenneth S. Davidson
Partners, a private investment partnership from 1979 to 1985, Director of
Research of Gabelli & Company from 1985 through 1989, and President, Chief
Investment Officer, Portfolio Manager, and a Trustee of The Gabelli Growth Fund
from inception on April 10, 1987 through February 9, 1994. Ms. Bramwell founded
Bramwell Capital Management, Inc. on February 23, 1994.
Directors
In addition to Ms. Bramwell, the Fund's Directors are:
J. Sinclair Armstrong
444 Madison Avenue
New York, NY 10022
Director and Secretary, The Reed Foundation (1986-present) (philanthropy);
Partner (1980-1984) and Counsel (1984-1995), Whitman Breed Abbott & Morgan
(formerly Whitman Ransom) (law firm); Executive Vice President, U.S. Trust Co.
of New York (1959-1980); Assistant Secretary of the Navy for Financial
Manage-ment and Comptroller, Department of the Navy (1957-1959); Chairman
(1955-1957) and Commissioner, Securities and Exchange Commission (1953-1957).
Isabel H. Benham
745 Fifth Avenue
New York, NY 10151
Director and former President (1992-1995), Board of Trustees of the John W.
Barringer III National Railroad Library; Director, St. Louis Mercantile Library
(1993-1995); President, Printon Kane Research, Inc. (1978-1991) (railroad
analysis and valuations); Senior Vice President, Shearson Haydon Stone Corp.
(1968-1978).
George F. Keane
745 Fifth Avenue
New York, NY 10151
Chairman of the Board, Trigen Energy Corporation (1994-present); President
Emeritus and founding Chief Executive Officer (1971-1992), The Common Fund
(investment management); Director and Chairman of Investment Committee, United
Negro College Fund (1982-present); Trustee, Nicholas-Applegate Investment Trust
(1993-present); Member, Investment Advisory Committee, New York State Common
Retirement Fund (1982-present); Director, RCB Trust Company (1991-present);
Director, Universal Stainless & Alloy Products (1994-present) and Global
Pharmaceutical Corporation (1995-present).
11
<PAGE>
James C. Sargent
745 Fifth Avenue
New York, NY 10151
Counsel, Opton, Handler, Gottlieb, Feiler &Katz (1995-present) (law firm);
Director, Scan-Graphics (1992-present); Director, Austin's International
(1992-present); Former Partner, Whitman Breed Abbot & Morgan (formerly Whitman
Ransom) (1964-1994) (law firm); Assistant General Counsel, CIT Finance
Corporation (1960-1964); Regional Administrator, New York City (1955-1956) and
Commissioner (1956-1960), Securities and Exchange Commission.
Martha R. Seger, Ph.D.
220 Park Avenue
Birmingham, MI 40889
Chairman, Martha Seger & Associates (1992-present); Current Director, Amerisure,
Amoco, Fluor, Johnson Controls, Kroger, Tucson Electric Power and Xerox;
Governor, Federal Reserve Board (1984-1991); Com-missioner of Financial
Institutions, State of Michigan (1981-1982); Chief Economist, Detroit Bank &
Trust (Comerica) (1967-1974).
Additional information about the Fund's Officers and Directors is contained
in the Statement of Additional Information.
Investment Adviser
Bramwell Capital Management, Inc. ("BramCap"), located at 745 Fifth Avenue,
New York, NY 10151, serves as the Investment Adviser pursuant to an Investment
Advisory Agreement (the "Agreement"), which provides that the Investment Adviser
will furnish continuous investment advisory services and management to the Fund.
In addition to the Fund, BramCap is the adviser to individual and institutional
accounts. Prior to forming BramCap in February 1994, Ms. Bramwell, who owns all
of the outstanding capital stock of BramCap, and who is the founder and Chief
Executive Officer of BramCap, had twenty-five years of experience as a
securities analyst/portfolio manager, including seven years in which she served
as President, Chief Investment Officer, Portfolio Manager, and a Trustee of The
Gabelli Growth Fund.
The Investment Adviser supervises and manages the investment portfolio of
the Fund, and subject to such policies as the Board of Directors of the Fund may
determine, directs the purchase or sale of investment securities in the
day-to-day management of the Fund's investment portfolio. Under the Agreement,
the Investment Adviser, at its own expense and without reimbursement from the
Fund, furnishes office space and all necessary office facilities, equipment and
executive personnel for making the investment decisions necessary for managing
the Fund and maintaining its organization, and will pay the salaries and fees of
all officers and directors of the Fund (except the fees paid to disinterested
directors). For the foregoing, BramCap receives a monthly fee of 1/12 of 1% (1%
per annum) on the average daily net assets of the Fund. The rate of the advisory
fee is higher than that paid by most mutual funds. For the fiscal period ended
June 30, 1997, BramCap voluntarily waived $25,071 of its advisory fee under the
Agreement.
Administration
Pursuant to an Administration and Fund Accounting Agreement (the
"Administration Agreement"), Sunstone Financial Group, Inc. (the
"Administrator"), 207 East Buffalo Street, Suite 400, Milwaukee, WI 53202,
prepares and files all federal income and excise tax returns and state income
tax returns (other than those required to be made by the Fund's Custodian or
Transfer Agent), oversees the Fund's insurance relationships, reviews drafts of
the Fund's registration statement and proxy statements, prepares securities
registration compliance filings pursuant to state securities laws, compiles data
for and prepares required notices and reports to the Securities and Exchange
Commission, prepares financial statements for annual and semiannual reports to
investors, monitors compliance with the Fund's investment policies and
restrictions, performs securities valuations, calculates
12
<PAGE>
daily net asset values of the Fund, maintains all general ledger accounts and
related subledgers, prepares and monitors the Fund's expense accruals and causes
all appropriate expenses to be paid from Fund assets, monitors the Fund's status
as a regulated investment company under Subchapter M of the Internal Revenue
Code of 1986, maintains and/or coordinates with the other service providers the
maintenance of the accounts, books and other documents required pursuant to Rule
31a-1 under the 1940 Act, and generally assists in the Fund's administrative
operations. The Administrator, at its own expense and without reimbursement from
the Fund, furnishes office space and all necessary office facilities, equipment,
supplies and clerical and executive personnel for performing the services
required to be performed by it under the Administration Agreement. For the
foregoing, the Administrator receives from the Fund a fee, computed daily and
payable monthly, based on the Fund's average net assets at the annual rate of
0.15 of 1% on the first $50,000,000 of average net assets; at the rate of 0.125
of 1% on average net assets in excess of $50,000,000 and up to $100,000,000; at
the rate of 0.075 of 1% on average net assets in excess of $100,000,000 and up
to $200,000,000; and at the rate of 0.05 of 1% on average net assets in excess
of $200,000,000, plus out-of-pocket expenses. These fees are subject to an
annual minimum of $60,000 per year.
The Fund pays all of its own expenses, including, without limitation, the
cost of preparing and printing its registration statements required under the
Securities Act of 1933 and the 1940 Act and any amendments thereto, the expense
of registering its shares with the Securities and Exchange Commission and in the
various states, advisory and administration fees, costs of organization and
maintenance of corporate existence, the printing and distribution costs of
prospectuses mailed to existing investors, reports to investors, reports to
government authorities and proxy statements, costs of meetings of shareholders,
fees paid to directors who are not interested persons of the Investment Adviser,
interest charges, taxes, legal expenses, association membership dues, auditing
services, insurance premiums, brokerage commissions and expenses in connection
with portfolio transactions, fees and expenses of the custodian of the Fund's
assets, charges of securities pricing services, printing and mailing expenses
and charges and expenses of dividend disbursing agents, accounting services
agents, registrars and stock transfer agents. For the fiscal period ended June
30, 1997, the Fund's expenses, including the advisory fee, equaled 1.75%
(annualized) of the Fund's average net assets. This amount is net of the
advisory fee waived which was equivalent to 0.02% (annualized)of average net
assets.
Investing in The Bramwell Growth Fund
Shares of the Fund may be purchased directly from The Bramwell Funds, Inc.
They may also be purchased through an account that you maintain with a
securities broker or other financial institution ("Financial Service Agents").
See "How to Purchase The Bramwell Growth Fund Shares -- Purchases Through
Financial Service Agents."
If you wish to purchase shares of The Bramwell Growth Fund directly, please
refer to the purchase instructions described under "How to Purchase The Bramwell
Growth Fund Shares."
All purchases must be made in U.S. dollars and checks must be drawn on U.S.
banks. No cash will be accepted. A $20 fee will be charged against an investor's
account for any payment check returned to the Transfer Agent for insufficient
funds, stop payment, closed account or other reasons. The investor will also be
responsible for any losses suffered by the Fund as a result. The Fund management
reserves the right to reject any purchase order for Fund shares.
If you have any questions, a Fund telephone representative will be pleased
to provide the information that you need. Please call the following toll-free
number: 1-800-BRAMCAP (1-800-272-6227).
13
<PAGE>
How to Purchase The Bramwell Growth Fund Shares
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
By Mail or Courier To Open an Account To Add to an Account
Complete and sign the Purchase Make your check to the Bramwell
Application. Make your check Growth Fund and mail it to the
payable to The Bramwell Growth address at the left. Put your
Fund. account name, address and Bramwell
By Mail, send to: account number on your check.
The Bramwell Funds, Inc. Subsequent investment forms will
Mutual Fund Services be included with each shareholder
P.O. Box 701 statement. A shareholder wishing
Milwaukee, WI 53201-0701 add to an account should complete
this form and include it with the
By Overnight Courier, send to: check. Alternatively, include with
The Bramwell Funds, Inc. your check a note indicating your
Mutual Fund Services, Third Floor Bramwell account number, your name
615 East Michigan Street and your address.
Milwaukee, WI 53202
By Telephone Telephone transactions may not be used Call 1-800-BRAMCAP to make your
for initial purchases. If you want to purchase from a bank checking or
make subsequent telephone transactions, money market account by electronic
please select this service on your funds transfer. Specify account
Purchase Application or call name, address and Bramwell account
1-800-BRAMCAP (1-800-272-6227) to set number. This service must be
up the account. established by you in advance by
by following the instructions at
the left.
By Wire First, call Mutual Fund Services at Follow instructions at the left.
1-800-BRAMCAP (1-800-272-6227) to Please note that wires may be
notify them that you intend to rejected if they do not contain
purchase shares by wire and to verify complete account information.
wire instructions.
Then, wire funds care of Firstar Bank,
Milwaukee, WI
ABA #: 075000022
Credit: Firstar Trust Company
Account #: 112-952-137
Further credit: Bramwell Growth Fund
Shareholder Account #:______________
Shareholder Name/
Registration:_______________________
Include your name, address and
taxpayer identification number.
</TABLE>
14
<PAGE>
The minimum purchase requirements, which may be altered in certain
circumstances, are:
Initial Additional
Investment Investment
-----------------------------------------
Regular Accounts $1,000 $100
IRAs and IRA Rollovers 500 100
Non-Earning Spousal IRAs 250 100
SEP/IRAs 500 100
Gifts to Minors 500 50
Automatic Investment Plans 50 50
Purchases by Mail
Your Purchase Application, if properly filled out and accompanied by
payment in the form of a check made payable to The Bramwell Growth Fund, will be
processed upon receipt by the Transfer Agent. If the Transfer Agent receives
your order and payment by the close of regular trading (currently 4:00 p.m. New
York City time) on the New York Stock Exchange, your shares will be purchased at
the net asset value calculated at the close of regular trading on that day. If
received after that time, your shares will be purchased at the net asset value
determined as of the close of regular trading on the next business day.
Purchases Through Financial Service Agents
If you are investing through a Financial Service Agent, please refer to
their program materials for any additional special provisions or conditions that
may be different from those described in this Prospectus. Financial Ser-vice
Agents have the responsibility of transmitting purchase orders and funds, and of
crediting their custo-mers' accounts following redemptions, in a timely manner
in accordance with their customer agreements and this Prospectus.
If you place an order for Fund shares through a Financial Service Agent, in
accordance with such Financial Service Agent's procedures and such Financial
Service Agent then transmits your order to the Transfer Agent before 4:00 p.m.,
New York City time on that day, then your purchase will be processed at the net
asset value calculated at 4:00 p.m. New York City time on that day. The
Financial Service Agent must promise to send to the Transfer Agent immediately
available funds in the amount of the purchase price within five business days
for the order.
Purchases by Telephone
Only bank accounts held at domestic financial institutions that are
Automated Clearing House ("ACH") members can be used for telephone transactions.
Telephone transactions may not be used for initial purchases. Your account must
already be established prior to initiating telephone purchases. Your shares will
be purchased at the net asset value determined as of the close of regular
trading on the date that the Transfer Agent receives payment for shares
purchased by electronic funds transfer through the ACH system. Most transfers
are completed within three business days after your call to place the order. To
preserve flexibility, the Fund may revise or remove the ability to purchase
shares by phone, or may charge a fee for such service, although currently, the
Fund does not expect to charge a fee. Investors in the Fund may also request by
telephone a change of address, a change in investments made through an Automatic
Investment Plan (see page 18), and a change in the manner in which dividends are
received (see page 19).
The Fund will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine. Such procedures may include, among
others, requiring some form of personal identification prior to acting upon
telephone instructions, providing written confirmations of all such
transactions, and/or tape recording all telephone instructions. Assuming
procedures such as the above have been followed, the Fund will not be liable for
any loss, cost, or expense for acting upon an investor's telephone instructions
or for any unauthorized telephone redemption. As a result of this policy, the
investor will bear the risk of any loss unless the Fund has failed to follow
such procedure(s).
Purchases by Wire
If you purchase your initial shares by wire, you must prepare and file a
Purchase Application, marked "follow-up," with the Transfer Agent. The Transfer
Agent must receive the Purchase Application before any of the
15
<PAGE>
shares purchased can be redeemed. You should contact your bank (which will need
to be a commercial bank that is a member of the Federal Reserve System) for
information on sending funds by wire, including any charges that your bank may
make for these services. Wiring instructions are listed on page 14 of this
Prospectus.
Miscellaneous Purchase Information
Federal regulations require that you provide a certified taxpayer
identification number whenever you open or reopen an account. Congress has
mandated that if any shareholder fails to provide and certify to the accuracy of
the shareholder's Social Security number or other taxpayer identification
number, the Fund will be required to withhold 31% of all dividends,
distributions and payments, including redemption proceeds, from such shareholder
as a backup withholding procedure.
For reasons of economy and convenience, the Fund will not issue
certificates for shares purchased.
The Fund understands that some Financial Service Agents may impose certain
conditions on their clients which are in addition to or different from those
described in this Prospectus, and, to the extent permitted by applicable
regulatory authorities, may charge their clients direct fees. Certain Financial
Service Agents may receive compensation from the Fund. Certain Financial Service
Agents may enter into agreements with the Fund which permit them to confirm
purchase orders on behalf of customers by phone, with payment to follow no later
than the Fund's pricing on the following business day. If payment is not
received by such time, the Financial Service Agent could be held liable for
resulting fees or losses.
How To Sell (Redeem) The Bramwell Growth Fund Shares
- --------------------------------------------------------------------------------
You may sell (redeem) your shares at any time. Ordinarily, the Fund makes
payment by check for the shares redeemed within three business days after it
receives your properly completed request. However, the right of redemption may
be suspended or payment may be postponed under unusual circumstances such as
when trading on the New York Stock Exchange is restricted or when it is not
reasonably practical for the Fund to determine the fair market value of its net
assets. Payment of redemption proceeds with respect to shares purchased by check
will not be made until the check or payment received for investment has cleared,
which may take up to 15 calendar days from the purchase date.
Payment of the redemption proceeds for shares of the Fund where an investor
requests wire payment will normally be made in federal funds on the next
business day. The Transfer Agent will wire redemption proceeds only to the bank
and account designated on the Purchase Application or in written instructions
subsequently received by the Transfer Agent, and only if the bank is a
commercial bank that is a member of the Federal Reserve System. The Transfer
Agent currently charges a $12.00 fee for each payment made by wire of redemption
proceeds, which fee will be deducted from the investor's account.
Procedure for Requesting Redemption
You may request the sale of your shares either by mail or courier or by
telephone as described below.
By Mail:
Sale requests should be mailed to:
The Bramwell Funds, Inc.
Mutual Fund Services
P.O. Box 701
Milwaukee, WI 53201-0701
By Overnight Courier:
The requests should be sent to:
The Bramwell Funds, Inc.
Mutual Fund Services, Third Floor
615 East Michigan Street
Milwaukee, WI 53202
The selling price of each share being redeemed will be the Fund's per share
net asset value next calculated after receipt of all required documents in good
order.
Good order means that the request must include:
o Your Bramwell account number
16
<PAGE>
o The number of shares or dollar amount to be sold (redeemed) o The
signatures of all account owners exactly as they are registered on the
account
o Any required signature guarantees
o Any supporting legal documentation that is required in the case of
estates, trusts, corporations or partnerships
o In the case of shares being redeemed from an IRA or SEP/IRA Plan, a
statement of whether or not federal income tax should be withheld (in
the absence of any statement, federal tax will be withheld)
A signature guarantee of each owner is required to redeem shares in the
following situations: (i) if you change ownership on your account; (ii) when you
want the redemption proceeds sent to a different address from that registered on
the account; (iii) if the proceeds are to be made payable to someone other than
the account's owner(s); (iv) any redemption transmitted by federal wire transfer
to your bank; and (v) if a change of address request has been received by the
Fund or the Transfer Agent within the last 15 days. In addition, signature
guarantees are required for all redemptions of $25,000 or more from any
shareholder account.
Signature guarantees are designed to protect both you and the Fund from
fraud. Signature guarantees can be obtained from most banks, credit unions or
savings associations, or from broker/dealers, municipal securities
broker/dealers, government securities broker/dealers, national securities
exchanges, registered securities associations or clearing agencies deemed
eligible by the Securities and Exchange Commission. Notaries public cannot
provide signature guarantees.
By Telephone:
Shares of the Fund may also be sold by calling the Transfer Agent at
1-800-BRAMCAP. In order to utilize this procedure for telephone redemption, a
shareholder must have previously elected this procedure in writing, which
election will be reflected in the records of the Transfer Agent, and the
redemption proceeds must be mailed directly to the investor or transmitted to
the investor's predesignated account at a domestic bank. To change the
designated account, send a written request with signature(s) guaranteed to the
Transfer Agent. To change the address, call the Transfer Agent at 1-800-BRAMCAP
or send a written request with signature(s) guaranteed to the Transfer Agent.
Any written redemption requests received within 15 days after an address change
must be accompanied by a signature guarantee and no telephone redemptions will
be allowed within 15 days of such a change. The Fund reserves the right to limit
the number of telephone redemptions by an investor. Once made, telephone
redemption requests may not be modified or canceled. The selling price of each
share being redeemed will be the Fund's per share net asset value next
calculated after receipt by the Transfer Agent of the telephone redemption
request.
The Fund will not be liable for following instructions communicated by
telephone that it reasonably believes to be genuine. See "Purchases by
Telephone" for discussion of liability for telephone errors.
During periods of substantial economic or market changes, telephone
redemptions may be difficult to implement. If an investor is unable to contact
the Transfer Agent by telephone, shares may also be redeemed by delivering the
redemption request to the Transfer Agent by mail as previously described.
Redemption at the Option of the Fund
The Fund reserves the right to redeem shares held in any account if the net
asset value remains below $500 in order to relieve the Fund of the cost of
maintaining very small accounts. Before such involuntary redemption, the Fund
will give the shareholder 30 days' written notice to bring the account up to
$500 before any action is taken. This minimum balance requirement does not apply
to IRAs and other tax-sheltered investment accounts. The right of redemption
shall not apply if the value of a shareholder's account drops below $500 as the
result of market action.
Shareholder Services
- --------------------------------------------------------------------------------
Money Market Exchange Privilege
Shareholders of The Bramwell Growth Fund may exchange shares (having a
value of $1,000 or more) for
17
<PAGE>
shares of the Portico Money Market Fund ("Portico"). Portico is described in a
separate prospectus which contains more complete information about such fund.
Investors may obtain a copy of the prospectus for the Portico Money Market Fund
by calling 1-800-BRAMCAP (1-800-272-6227) and are advised to read it carefully
before authorizing any investment in shares of such fund. Investors may
subsequently exchange such shares and shares purchased with reinvested dividends
for shares of the Fund. Firstar Investment Research & Management Company
("FIRMCO"), an affiliate of Firstar Trust Company, serves as the investment
adviser to Portico. To make a telephone exchange, the Telephone Exchange option
must have been selected on the Purchase Application when the account was opened.
Otherwise, a written request, including signature guarantees, must be completed
and sent to the Transfer Agent prior to making telephone exchanges. Currently, a
$5.00 fee is charged to the investor's account for each telephone exchange
transacted by the investor. The fee will be charged to the account from which
the funds are being withdrawn prior to effecting the exchange. There is no fee
for a written exchange request. To make a telephone exchange, call the Transfer
Agent at 1-800-BRAMCAP or to make a written exchange, write to The Bramwell
Funds, Inc., Mutual Fund Services, P.O. Box 701, Milwaukee, WI 53201-0701, or
for overnight delivery, The Bramwell Funds, Inc., Mutual Fund Services, 615 East
Michigan Street, Third Floor, Milwaukee, WI 53202. The exchange will be made at
the per share net asset value of the shares to be redeemed, and the per share
net asset value of the shares to be purchased, in both cases as next determined
after the exchange request is received. Once an exchange request is made, either
by telephone or in writing, it may not be modified or canceled. Although there
are currently no such limitations, both the Fund and Portico reserve the right
to limit the frequency of exchanges or to otherwise restrict exchanges in order
to ensure that exchanges do not disadvantage the Fund or its investors (or in
the case of Portico, Portico and its investors). Investors will be notified at
least 60 days in advance of any changes in such limitations. The exchange
privilege is only available in states where the shares to be purchased may
legally be sold.
For federal income tax purposes, an exchange of Fund shares is a taxable
event and accordingly, the investor may realize a capital gain or loss. Before
making an exchange request, the investor should determine the tax consequences
of a particular exchange.
Automatic Investment Plan
The Fund offers an Automatic Investment Plan whereby an investor may
automatically purchase shares of the Fund on a regular basis ($50 minimum per
transaction). Under the Automatic Investment Plan, an investor's designated bank
or other financial institution debits a preauthorized amount on the investor's
account each month or quarter and applies the amount to the purchase of Fund
shares. The Automatic Investment Plan must be implemented with a financial
institution that is a member of the ACH. Also, the Fund must have a currently
effective registration in those states in which it is required. Applications to
establish the Automatic Investment Plan are available from the Fund. Using an
Automatic Investment Plan facilitates dollar-cost averaging whereby investing
equal dollar amounts periodically in a fluctuating market leads to buying more
shares at lows and fewer shares at highs. Of course, dollar-cost averaging
cannot assure a profit or protect the investor against losses in a declining
market.
Retirement Plans
The Fund offers a variety of retirement plans including IRAs and SEP/IRAs
that may allow investors to shelter a portion of their income from taxes.
Complete information including application forms, descriptions of applicable
service fees and certain limitations on contributions and withdrawals, are
available from the Transfer Agent or the Fund upon request by calling
1-800-BRAMCAP (1-800-272-6227).
18
<PAGE>
Service and Distribution Plan
- --------------------------------------------------------------------------------
The Fund has adopted a Service and Distribution Plan (the "Plan") pursuant
to Rule 12b-1 under the 1940 Act. The Plan authorizes payments by the Fund in
connection with the distribution of its shares at an annual rate, as determined
from time-to-time by the Board of Directors, of up to 0.25% of the Fund's
average daily net assets.
Payments may be made by the Fund under the Plan for the purpose of
financing any activity primarily intended to result in the sales of shares of
the Fund as determined by the Board of Directors. Such activities typically
include advertising; compensation for sales and sales marketing activities of
Financial Service Agents and others, such as dealers or distributors;
shareholder account servicing; production and dissemination of prospectuses and
sales and marketing materials; and capital or other expenses of associated
equipment, rent, salaries, bonuses, interest and other overhead. To the extent
any activity is one which the Fund may finance without a Plan, the Fund may also
make payments to finance such activity outside of the Plan and not subject to
its limitations. Payments under the Plan are not tied exclusively to actual
distribution and service expenses, and the payments may exceed distribution and
service expenses actually incurred.
Administration of the Plan is regulated by Rule 12b-1 under the 1940 Act,
which includes requirements that the Board of Directors receive and review at
least quarterly reports concerning the nature and qualification of expenses
which are made, that the Board of Directors approve all agreements implementing
the Plan and that the Plan may be continued from year-to-year only if the Board
of Directors concludes at least annually that continuation of the Plan is likely
to benefit shareholders.
In approving the Plan, the Directors determined, in the exercise of their
business judgment and in light of their fiduciary duties, that there is a
reasonable likelihood that the Plan will benefit the Fund and its shareholders.
Dividends and Distributions
- --------------------------------------------------------------------------------
The Fund intends to pay dividends from net investment income and net
realized capital gains (not offset by capital loss carryovers) on an annual
basis in December. Investors may elect to reinvest all income dividends and
capital gains distributions in shares of the Fund or in cash as designated on
the Purchase Application. If the investor does not specify an election, all
income dividends and capital gains distributions will automatically be
reinvested in full and fractional shares of the Fund calculated to the nearest
1,000th of a share. Shares will be purchased at the net asset value in effect on
the business day after the dividend record date and will be credited to the
investor's account on such date. Reinvested dividends and distributions receive
the same tax treatment as those paid in cash.
An investor may change his or her election at any time by calling the
Transfer Agent at 1-800-BRAMCAP or by sending written notification to The
Bramwell Funds, Inc., Mutual Fund Services, P.O. Box 701, Milwaukee, WI
53201-0701. The election is effective for distributions with a dividend record
date on or after the date that the Transfer Agent receives notice of the
election.
Taxes
- --------------------------------------------------------------------------------
Federal Taxes
The following is a brief summary of certain U.S. federal tax and foreign
income tax issues. Please see the Statement of Additional Information for a more
detailed discussion of these topics. Prospective shareholders should consult
their own tax advisors with regard to the federal tax consequences of the
purchase, ownership or disposition of shares of the Fund, as well as the tax
consequences arising under the laws of any state, foreign country, or other
taxing jurisdiction.
The Fund intends to elect to be treated and to qualify each year as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986. Please see the Statement of Additional Information for
19
<PAGE>
a summary of requirements that must be satisfied to so qualify. A regulated
investment company generally is not subject to federal income tax on income and
gains distributed in a timely manner to its shareholders.
Dividends out of net ordinary income and distributions of net short-term
capital gains are taxable to the recipient U.S. shareholders as ordinary income.
Dividends from net ordinary income may be eligible for the corporate
dividends-received deduction.
The excess of net long-term capital gains over net short-term capital
losses realized and distributed by the Fund to its U.S. shareholders as capital
gains distributions is taxable to the shareholders as gain from the sale of a
capital asset held for more than one year, regardless of the length of time a
shareholder has held his or her Fund stock. The Fund expects that such dividends
will be taxable to shareholders as mid-term or long-term gains.
Under current federal tax law the amount of an income dividend or capital
gains distribution declared by the Fund during October, November or December of
a year to shareholders of record as of a specified date in such a month that is
paid during January of the following year is includable in the prior year's
taxable income of shareholders that are calendar year taxpayers.
Any dividend or distribution received by a shareholder on shares of the
Fund shortly after the purchase of such shares by him or her will have the
effect of reducing the net asset value of such shares by the amount of such
dividend or distribution. Furthermore, such dividend or distribution, although
in effect a return of capital, is subject to applicable taxes to the extent that
the investor is subject to such taxes regardless of the length of time he or she
may have held his or her shares. If a shareholder held shares for six months or
less and during that period received a distribution taxable to such shareholder
as long-term capital gain, any loss realized on the sale of such shares during
such six-month period would be a long-term loss to the extent of such
distribution. A dividend or capital gains distribution with respect to shares of
the Fund held by a tax-deferred or qualified plan, such as an IRA, retirement
plan or corporate pension or profit sharing plan, will not be taxable to the
plan. Distributions from such plans will be taxable to individual participants
under applicable tax rules without regard to the character of the income earned
by the qualified plan. Shareholders will be advised annually as to the federal
tax status of dividends and capital gains distributions made by the Fund for the
preceding year. Distributions by the Fund generally will be subject to state and
local taxes.
Foreign Income Taxes
Investment income received by the Fund from sources within foreign
countries may be subject to foreign income taxes withheld at the source. It is
not expected that the Fund will be able to "pass through" these taxes to
shareholders but such taxes generally will be deductible by the Fund.
Fund Performance
- --------------------------------------------------------------------------------
From time-to-time, the Fund may advertise its "average annual total return"
over various periods of time. This total return figure shows the average
percentage change in value of an investment in the Fund from the beginning date
of the measuring period to the ending date of the measuring period. The figure
reflects changes in the price of the Fund's shares and assumes that any income
dividends and/or capital gains distributions made by the Fund during the period
are reinvested in shares of the Fund. Figures will be given for recent one-,
five- and ten-year periods (when applicable), and may be given for other periods
as well (such as from commencement of the Fund's operations, or on a
year-by-year basis). When considering "average" total return figures for periods
longer than one year, investors should note that the Fund's annual total return
for any one year in the period might have been greater or less than the average
for the entire period. The Fund also may use "aggregate" total return figures
for various periods, representing the cumulative change in value of an
investment in the Fund for the specific period (again reflecting changes in the
20
<PAGE>
Fund's share price and assuming reinvestment of dividends and distributions).
Aggregate total returns may be shown by means of schedules, charts or graphs,
and may indicate subtotals of the various components of total return (that is,
the change in value of initial investment, income dividends and capital gains
distributions).
The Fund may quote the Fund's average annual total and/or aggregate total
return for various time periods in advertisements or communications to
shareholders. The Fund may also compare its performance to that of other mutual
funds with similar investment objectives and to stock and other relevant indices
or to rankings prepared by independent services or industry publications. For
example, the Fund's total return may be compared to data prepared by Lipper
Analytical Services, Inc., Morningstar, Value Line Mutual Fund Survey and CDA
Investment Technologies, Inc. Total return data as reported in such national
financial publications as The Wall Street Journal, The New York Times,
Investor's Business Daily, USA Today, Barron's, Money, and Forbes as well as in
publications of a local or regional nature, may be used in comparing Fund
performance.
The Fund's total return may also be compared to such indices as the:
o Dow Jones Industrial Average
o Standard & Poor's 500 Composite Stock Total Return Index
o Nasdaq Composite OTC Index or Nasdaq Indus-tries Index
o Consumer Price Index
o Russell 2000 Index
Further information on performance measurement may be found in the
Statement of Additional Information.
Share Price and Determination of Net Asset Value
- --------------------------------------------------------------------------------
Shares are purchased at their net asset value per share. The Fund
calculates its net asset value (NAV) as follows:
Value of Fund Assets) - (Fund Liabilities)
NAV = ------------------------------------------
Number of Outstanding Shares
Net asset value is determined as of the end of regular trading hours on the
New York Stock Exchange (currently 4:00 p.m. New York City time) on days that
the New York Stock Exchange is open.
A security listed or traded on a recognized stock exchange or quoted on
Nasdaq is valued at its last sale price prior to the time when assets are valued
on the principal exchange on which the security is traded or on Nasdaq. If no
sale is reported at that time, the most current bid price will be used. All
other securities for which over-the-counter market quotations are readily
available are valued at the most current bid price. Where quotations are not
readily available, the Fund's investments are valued at fair value as determined
by management and approved in good faith by the Board of Directors. Debt
securities which will mature in more than 60 days are valued at prices furnished
by Muller Data Corporation, a pricing service, or by a comparable pricing
service approved by the Board of Directors subject to review and determination
of the appropriate price by BramCap, whenever a furnished price is significantly
different from the previous day's furnished price. Securities which will mature
in 60 days or less are valued at amortized cost, which approximates market
value.
Generally, trading in foreign securities, as well as United States
Government securities and certain cash equivalents, repurchase agreements and
securities lending agreements, is substantially completed each day at various
times prior to the close of the New York Stock Exchange. The values of such
securities used in computing the net asset value of the shares of the Fund are
determined as of such times. Foreign currency exchange rates
21
<PAGE>
are also generally determined prior to the close of the New York Stock Exchange.
Occasionally, events affecting the value of such securities and such exchange
rates may occur between the times at which they are determined and the close of
the New York Stock Exchange, which will not be reflected in the computation of
net asset value. If during such periods, events occur which materially affect
the value of such securities, the securities will be valued at their fair market
value as determined by management and approved in good faith by the Board of
Directors.
For purposes of determining the net asset value per share of the Fund, all
assets and liabilities initially expressed in foreign currencies will be
converted into United States dollars at the mean between the bid and offer
prices of such currencies against United States dollars furnished by a pricing
service approved by the Board of Directors.
Capital Structure
- --------------------------------------------------------------------------------
Description of Shares
The Company is organized as a series fund which permits it to issue its
authorized capital stock in one or more series, each such series representing a
separate investment portfolio.
The Company's authorized capital stock consists of 500 million shares of
common stock, $.0001 par value per share, of which there have been initially
allocated 200 million shares to the Fund. The Board of Directors may, at its
discretion, classify and allocate shares to additional series within the Company
or classify and allocate additional shares to the Fund without further action by
the shareholders. Each share outstanding entitles the holder to one vote.
Generally, shares of all series will be voted together as one class, except
where voting by a series is required by law. There will normally be no meetings
of the shareholders for the purpose of electing Directors unless and until such
time as less than a majority of the Directors holding office have been elected
by shareholders.
Counsel and Independent Certified Public Accountants
- --------------------------------------------------------------------------------
Dechert Price & Rhoads, 30 Rockefeller Plaza, New York, NY 10112, has
passed upon the validity of the shares offered by this Prospectus and also acts
as outside counsel to the Fund. Margaret A. Bancroft, a member of Dechert Price
& Rhoads, serves as Assistant Secretary of the Fund.
Coopers & Lybrand L.L.P., 411 East Wisconsin Avenue, Milwaukee, WI 53202,
has been selected to serve as independent certified public accountants of the
Company for the fiscal year ending June 30, 1998.
Custodian and Transfer and Dividend Disbursing Agent
- --------------------------------------------------------------------------------
Firstar Trust Company, which has its principal business address at 615 East
Michigan Street, Third Floor, Milwaukee, WI 53202, has been retained to act as
Custodian of the Fund's investments, and also serves as the Fund's Transfer and
Dividend Disbursing Agent. Neither the Custodian nor the Transfer and Dividend
Disbursing Agent has any part in deciding the Fund's investment policies or
which securities are to be purchased or sold for the Fund's portfolio.
Information for Shareholders
- --------------------------------------------------------------------------------
The Fund will provide the following statements and reports to keep the
investor current regarding the status of his or her investment account:
Confirmation After each transaction that affects Statements the
account balance or account registration.
Account Statements Quarterly.
Financial Reports At least semiannually. Annual reports will include
audited financial statements. To reduce Fund
expenses, one copy of each report will be mailed to
each taxpayer identification number even though the
investor may have more than one account in the Fund.
22
<PAGE>
Investors who have questions about their specific accounts, have general
questions or wish to have additional information should call the Fund at:
1-800-BRAMCAP (1-800-272-6227). In addition, investors who wish to make a change
in their address of record, a change in investments made through an Automatic
Investment Plan or a change in the manner in which dividends are received may
also do so by calling the Fund at that number. This Prospectus, including the
Statement of Additional Information which has been incorporated by reference
herein, does not contain all the information set forth in the Registration
Statement filed by the Fund with the SEC under the Securities Act of 1933.
Copies of the Registration Statement may be obtained at a reasonable charge at
the offices of the SEC in Washington, DC (http://www.sec.gov).
<PAGE>
The Bramwell Growth Fund
A No-Load Diversified Mutual Fund Whose Primary
Investment Objective is to Achieve
Long-Term Capital Growth.
________________________________________________________________________________
STATEMENT OF ADDITIONAL INFORMATION
November 1, 1997
________________________________________________________________________________
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the prospectus for The Bramwell Growth Fund (the "Fund")
dated November 1, 1997, as amended from time to time, a copy of which may be
obtained without charge by calling 1-800-BRAMCAP or writing to Sunstone
Financial Group, Inc., 207 East Buffalo Street, Suite 400, Milwaukee, Wisconsin
53202.
<PAGE>
Table of Contents
________________________________________________________________________________
INVESTMENT OBJECTIVES AND POLICIES.............................................1
FURTHER INFORMATION ON THE NATURE OF THE FUND'S INVESTMENTS....................2
DIRECTORS AND OFFICERS.........................................................9
INVESTMENT ADVISORY AND OTHER SERVICES........................................12
DISTRIBUTION PLAN.............................................................12
PORTFOLIO TURNOVER............................................................13
PORTFOLIO TRANSACTIONS AND BROKERAGE..........................................13
PERFORMANCE INFORMATION.......................................................15
TAX STATUS....................................................................16
NET ASSET VALUE...............................................................21
CAPITAL STRUCTURE.............................................................22
HOW TO REDEEM SHARES..........................................................23
EXPERTS.......................................................................23
FINANCIAL STATEMENTS..........................................................23
APPENDIX......................................................................24
<PAGE>
Investment Objectives and Policies
________________________________________________________________________________
Investment Objectives and Policies
Long-term capital growth is the Fund's primary investment objective. Current
income is a secondary objective. Under normal circumstances the Fund's assets
are primarily invested in common stock and high grade securities convertible
into common stock, but the Fund may also hold cash or cash equivalents and
invest without limit in U.S. government obligations if its investment adviser,
Bramwell Capital Management, Inc. ("BramCap") determines that a temporary
defensive position is advisable. The Fund may not purchase or retain the
securities of any issuer if those officers or directors of the Fund or its
investment adviser owning individually more than 1/2 of 1% of the securities of
such issuer together own more than 5% of the securities of such issuer.
Fundamental Investment Restrictions
The following restrictions are deemed to be fundamental policies and may not be
changed without the approval of a majority of the Fund's outstanding voting
securities. Except with respect to investment restriction 4, the percentage
limitations set forth below, as well as those described elsewhere in the
Prospectus and this Statement of Additional Information, apply only at the time
an investment is made or other relevant action is taken by the Fund.
1. The Fund may not invest 25% or more of its net assets in one or more
issuers conducting their principal business in the same industry.
2. With respect to 75% of its assets, the Fund may not invest more than 5% of
the market value of its total assets in the securities of any single issuer
(other than obligations issued or guaranteed as to principal and interest
by the U.S. Government or any agency or instrumentality thereof).
3. With respect to 75% of its assets, the Fund may not purchase more than 10%
of the outstanding voting securities of any issuer (other than obligations
of the U.S. Government).
4. The Fund may not issue senior securities or borrow money except for
temporary purposes in amounts up to 10% of its net assets (including the
amount borrowed) less liabilities (not including the amount borrowed) at
the time of such borrowing, provided that collateral arrangements with
respect to currency exchange contracts, futures contracts and other
permitted investments shall not be deemed to entail the issuance of senior
securities if appropriately covered. The Fund will not make any investments
while outstanding borrowings exceed 5% of the value of its total assets.
5. The Fund may not make loans, although it may invest in debt securities,
enter into repurchase agreements and lend its portfolio securities.
<PAGE>
6. The Fund may not invest in securities or other assets that the Board of
Directors determines to be illiquid if more than 15% of the Fund's net
assets would be invested in such securities.
7. The Fund may not (a) purchase or sell commodities or commodity contracts
(other than financial futures and related options), (b) invest in oil, gas,
or mineral exploration or development programs or leases, or (c) purchase
securities on margin, except for such short-term credit as may be necessary
for the clearance of transactions and except for borrowings in amounts not
exceeding 10% of its net assets.
8. The Fund may not purchase or sell real estate or make real estate mortgage
loans or invest in real estate limited partnerships, except that the Fund
may purchase or sell securities issued by entities engaged in the real
estate industry or instruments backed by real estate.
9. The Fund may not act as an underwriter of securities issued by others,
except to the extent it may be deemed to be an underwriter in connection
with the disposition of portfolio securities of the Fund.
The foregoing restrictions are fundamental policies that may not be changed
without the approval of a majority of the Fund's outstanding voting securities.
As used in this Statement of Additional Information, a majority of the Fund's
outstanding voting securities means the lesser of (a) more than 50% of its
outstanding voting securities or (b) 67% or more of the voting securities
present at a meeting at which more than 50% of the outstanding voting securities
are present or represented by proxy. The Fund's investment objectives, as well
as those policies and restrictions which are not fundamental, may be modified by
the Board of Directors without shareholder approval if, in the reasonable
exercise of its business judgment, modification is determined to be necessary or
appropriate to carry out the Fund's objective. However, the Fund will not change
its investment policies or restrictions without written notice to shareholders.
Except as otherwise noted herein and in the Fund's prospectus, the Fund's
investment objectives and policies may be changed by a vote of the Directors
without a vote of shareholders. In order to permit the sale of the Fund's shares
in certain states, the Fund may make commitments with respect to the Fund more
restrictive than the investment policies listed above and in the Prospectus.
Should the Fund determine that any commitment made to permit the sale of the
Fund's shares in any state is no longer in the best interests of the Fund, it
will revoke the commitment by terminating sales of the Fund's shares in the
state involved.
Further Information on the Nature of the Fund's Investments
________________________________________________________________________________
General Characteristics of Convertible Securities
The Fund may invest only in high grade convertible securities; that is, bonds,
notes, debentures, preferred stocks and other securities which are convertible
into common stocks. "High grade" securities are those rated within the three
highest ratings categories of Standard & Poor's
2
<PAGE>
Corporation ("S&P") or Moody's Investors Service, Inc. ("Moody's") or that are
determined by the investment adviser to be of equivalent quality. Investments in
convertible securities may provide incidental income through interest and
dividend payments and/or an opportunity for capital appreciation by virtue of
their conversion or exchange features.
Convertible debt securities and convertible preferred stocks, until converted,
have general characteristics similar to both debt and equity securities.
Although to a lesser extent than with debt securities generally, the market
value of convertible securities tends to decline as interest rates increase and,
conversely, tends to increase as interest rates decline. In addition, because of
the conversion or exchange feature, the market value of convertible securities
typically changes as the market value of the underlying common stocks changes,
and, therefore, also tends to follow movements in the general market for equity
securities. As the market price of the underlying common stock declines,
convertible securities tend to trade increasingly on a yield basis, and so may
not experience market value declines to the same extent as the underlying common
stock. When the market price of the underlying common stock increases, the
prices of the convertible securities tend to rise as a reflection of the value
of the underlying common stock, although typically not as much as the underlying
common stock. While no securities investments are without risk, investments in
convertible securities generally entail less risk than investments in common
stock of the same issuer.
As debt securities, convertible securities are investments which provide for a
stream of income (or in the case of zero coupon securities, accretion of income)
with generally higher yields than common stocks. Convertible securities
generally offer lower yields than nonconvertible securities of similar quality
because of their conversion or exchange features.
Convertible securities are generally subordinated to other similar but
non-convertible securities of the same issuer, although convertible bonds, as
corporate debt obligations, enjoy seniority in right of payment to all equity
securities, and convertible preferred stock is senior to common stock, of the
same issuer. However, because of the subordination feature, convertible bonds
and convertible preferred stock typically have lower ratings than similar
nonconvertible securities.
General Characteristics of Foreign Securities
Foreign securities involve certain inherent risks that are different from those
of domestic issuers, including political or economic instability of the issuer
or the country of issue, diplomatic developments which could affect U.S.
investments in those countries, changes in foreign currency and exchange rates
and the possibility of adverse changes in investment or exchange control
regulations. As a result of these and other factors, foreign securities
purchased by the Fund may be subject to greater price fluctuation than
securities of U.S. companies.
Most foreign stock markets are not as large or liquid as in the United States,
fixed commissions on foreign stock exchanges are generally higher than the
negotiated commissions on U.S. exchanges, and there is generally less government
supervision and regulation of foreign stock exchanges, brokers and companies
than in the United States. Investors should recognize that
3
<PAGE>
foreign markets have different clearance and settlement procedures and in
certain markets there have been times when settlements have been unable to keep
pace with the volume of securities transactions, making it difficult to conduct
such transactions. Delays in settlement could result in temporary periods when
assets of the Fund are uninvested and no return is earned thereon. The inability
of the Fund to make intended security purchases due to settlement problems could
cause the Fund to miss attractive investment opportunities. Inability to dispose
of portfolio securities due to settlement problems either could result in losses
to the Fund due to subsequent declines in value of the portfolio security or, if
the Fund has entered into a contract to sell the security, could result in a
possible liability to the purchaser. Payment for securities without delivery may
be required in certain foreign markets. Further, the Fund may encounter
difficulties or be unable to pursue legal remedies and obtain judgments in
foreign courts. Foreign governments can also levy confiscatory taxes,
expropriate assets, and limit repatriations of assets. Typically, there is less
publicly available information about a foreign company than about a U.S.
company, and foreign companies may be subject to less stringent reserve,
auditing and reporting requirements. It may be more difficult for the Fund's
agents to keep currently informed about corporate actions such as stock
dividends or other matters which may affect the prices of portfolio securities.
Communications between the United States and foreign countries may be less
reliable than within the United States, thus increasing the risk of delayed
settlements of portfolio transactions or loss of certificates for portfolio
securities. Individual foreign economies may differ favorably or unfavorably
from the U.S. economy in such respects as growth of gross national product, rate
of inflation, capital reinvestment, resource self-sufficiency and balance of
payments position.
Because investments in foreign securities will usually involve currencies of
foreign countries, and because the Fund may hold foreign currencies, the value
of the assets of the Fund as measured in U.S. dollars may be affected favorably
or unfavorably by changes in foreign currency exchange rates and exchange
control regulations, and the Fund may incur costs in connection with conversions
between various currencies. Although the Fund values its assets daily in terms
of U.S. dollars, it does not intend to convert its holdings of foreign
currencies into U.S. dollars on a daily basis. It will do so from time to time,
and investors should be aware of the costs of currency conversion. Although
foreign exchange dealers do not charge a fee for conversion, they do realize a
profit based on the difference (the "spread") between the prices at which they
are buying and selling various currencies. Thus, a dealer may offer to sell a
foreign currency to the Fund at one rate, while offering a lesser rate of
exchange should the Fund desire to resell that currency to the dealer. The Fund
will conduct its foreign currency exchange transactions either on a spot (i.e.,
cash) basis at the spot rate prevailing in the foreign currency exchange market,
or through entering into forward foreign currency exchange contracts or purchase
or writing put or call options on foreign currencies.
General Characteristics of Securities Lending
In compliance with Securities and Exchange Commission guidelines, any loans by
the Fund of securities in its portfolio would be required to be secured with
collateral (consisting of any combination of U.S. currency, securities issued or
guaranteed by the United States Government
4
<PAGE>
or any agency thereof, or irrevocable letters of credit or other debt securities
issued by entities rated within the two highest grades assigned by S&P or
Moody's or has been determined by the investment adviser to be of equivalent
quality).
The borrower must agree to add to such collateral to cover increases in the
market value of the loaned securities and the Fund must be entitled to terminate
any loan at any time, with the borrower obligated to redeliver borrowed
securities within five trading days. The borrower must agree that the Fund will
receive all dividends, interest or other distributions on loaned securities and
the Fund must be able to vote loaned securities whenever the right to vote is
material to the Fund's performance.
General Characteristics of Options
An option on a security is a contract that permits the purchaser of the option,
in return for the premium paid, the right to buy a specified security, index or
currency (in the case of a call option) or to sell a specified security, index
or currency (in the case of a put option) from or to the writer of the option at
a designated price during the term of the option. An option on a securities
index permits the purchaser of the option, in return for the premium paid, the
right to receive from the seller cash equal to the difference between the
closing price of the index and the exercise price of the option. The gain or
loss on an option on an index depends on price movements in the instruments
making up the market, market segment, industry or other composite on which the
underlying index is based, rather than price movements in individual securities,
as is the case with respect to options on securities. The Fund may write a call
or put option only if the option is "covered." This means that so long as the
Fund is obligated as the writer of a call option, it will own the underlying
securities subject to the call, or hold a call at the same or lower exercise
price, for the same exercise period, and on the same securities as the written
call. A put is covered if the Fund maintains liquid assets with a value equal to
the exercise price in a segregated account, or holds a put on the same
underlying securities at an equal or greater exercise price. Put options and
call options typically have similar structural characteristics and operational
mechanics regardless of the underlying instrument on which they are purchased or
sold.
The Fund may invest in both conventional options which generally have a maximum
life of nine months or less as well as longer term options which may be
exercised for longer periods of up to two or three years. Premiums paid (or
received) upon the purchase (or sale) of these long term options may be two to
three times the price of a short-term option.
The Fund's purchase of a put option on a security might be designed to protect
its holdings in the underlying instrument (or, in some cases, a similar
instrument) against a substantial decline in the market value by giving the Fund
the right to sell such instrument at the option exercise price. The Fund's
purchase of a call option on a security, index or currency might be intended to
protect the Fund against an increase in the price of the underlying instrument
that it intends to purchase in the future by fixing the price at which it may
purchase such instrument. If the Fund sells a call option, the premium that it
receives may serve as a partial hedge, to the extent of the option premium,
5
<PAGE>
against a decrease in the value of the underlying securities or instruments in
its portfolio or will increase the Fund's income. The sale of put options can
also provide income.
Even though the Fund will receive the option premium to help protect it against
loss, a call sold by the Fund exposes the Fund during the term of the option to
possible loss of opportunity to realize appreciation in the market price of the
underlying security or instrument and may require the Fund to hold a security or
instrument which it might otherwise have sold.
The Fund's ability to close out its position as a purchaser or seller of a put
or call option is dependent, in part, upon the liquidity of the option market.
Among the possible reasons for the absence of a liquid option market on an
exchange are: (i) insufficient trading interest in certain options; (ii)
restrictions on transactions imposed by an exchange; (iii) trading halts,
suspensions or other restrictions imposed with respect to particular classes or
series of options or underlying securities including reaching daily price
limits; (iv) interruption of the normal operations of an exchange; (v)
inadequacy of the facilities of an exchange to handle current trading volume; or
(vi) a decision by one or more exchanges to discontinue the trading of options
(or a particular class or series of options), in which event the relevant market
for that option on that exchange would cease to exist, although outstanding
options on that exchange would generally continue to be exercisable in
accordance with their terms.
The hours of trading for listed options may not coincide with the hours during
which the underlying financial instruments are traded. To the extent that the
option markets close before the markets for the underlying financial
instruments, significant price and rate movements can take place in the
underlying markets that cannot be reflected in the option markets.
General Characteristics of Futures
The Fund's use of financial futures and options thereon will in all cases be
consistent with applicable regulatory requirements and in particular the rules
and regulations of the Commodity Futures Trading Commission and will be entered
into only for bona fide hedging, risk management (including duration management)
or other portfolio management purposes. Typically, maintaining a futures
contract or selling an option thereon requires the Fund to deposit with a
financial intermediary as security for its obligations an amount of cash or
other specified assets (initial margin) which initially is typically 1% to 10%
of the face amount of the contract (but may be higher in some circumstances).
Additional cash or assets (variation margin) may be required to be deposited
thereafter on a daily basis as the mark to market value of the contract
fluctuates. The purchase of an option on financial futures involves payment of a
premium for the option without any further obligation on the part of the Fund.
If the Fund exercises an option on a futures contract it will be obligated to
post initial margin (and potential subsequent variation margin) for the
resulting futures position just as it would for any position. Futures contracts
and options thereon are generally settled by entering into an offsetting
transaction but there can be no assurance that the position can be offset prior
to settlement at an advantageous price, nor that delivery will occur.
6
<PAGE>
The Fund will not enter into a futures contract or related option (except for
closing transactions) if, immediately thereafter, the sum of the amount of its
initial margin and premiums on open futures contracts and options thereon would
exceed 5% of the Fund's total assets (taken at current value); however, in the
case of an option that is in-the-money at the time of the purchase, the
in-the-money amount may be excluded in calculating the 5% limitation.
There can be no assurance that a liquid market will exist at a time when the
Fund seeks to close out a futures or futures option position. The Fund would be
exposed to possible loss on the position during the interval of inability to
close, and would continue to be required to meet margin requirements until the
position is closed, which could result in a decrease in the Fund's net asset
value. The liquidity of a secondary market in a futures contract may be
adversely affected by "daily price fluctuation limits" established by commodity
exchanges which limit the amount of fluctuation in a futures contract price
during a single trading day. Once the daily limit has been reached in the
contract, no trades may be entered into at a price beyond the limit, thus
preventing the liquidation of open futures positions. The trading of futures
contracts is also subject to the risk of trading halts, suspensions, exchange or
clearing house equipment failures, government intervention, insolvency of a
brokerage firm or clearing house or other disruptions of normal trading
activity, which could at times make it difficult or impossible to liquidate
existing positions or to recover excess variation margin payments.
General Characteristics of Currency Transactions
A forward foreign currency exchange contract involves a privately negotiated
obligation to purchase or sell (with delivery generally required) a specific
currency at a future date, which may be any fixed number of days from the date
of the contract agreed upon by the parties, at a price set at the time of the
contract. A currency swap is an agreement to exchange cash flows based on the
notional difference among two or more currencies. The Fund may enter into
currency transactions with counterparties which have received (or the guarantors
of the obligations which have received) a rating within the two highest grades
assigned by S&P or Moody's or that are determined by the investment adviser to
be of equivalent quality.
The Fund's dealings in currency transactions will be limited to hedging
involving either specific transactions or portfolio positions. Transaction
hedging is entering into a currency transaction with respect to specific assets
or liabilities of the Fund, which will generally arise in connection with the
purchase or sale of its portfolio securities or the receipt of income therefrom.
Position hedging is entering into a currency transaction with respect to
portfolio security positions denominated or generally quoted in that currency.
The Fund will not enter into a transaction to hedge currency exposure to an
extent greater, after netting all transactions intended wholly or partially to
offset other transactions, than the aggregate market value (at the time of
entering into the transaction) of the securities held in its portfolio that are
denominated or generally quoted in or currently convertible into such currency,
other than with respect to cross hedging as described below.
7
<PAGE>
The Fund may cross-hedge currencies by entering into transactions to purchase or
sell one or more currencies that are expected to decline in value relative to
other currencies to which the Fund has or in which the Fund expects to have
portfolio exposure.
Currency transactions can result in losses to the Fund if the currency being
hedged fluctuates in value to a degree or in a direction that is not
anticipated. Further, there is the risk that the perceived correlation between
various currencies may not be present or may not be present during the
particular time that the Fund is engaging in proxy hedging.
Currency transactions are subject to risks different from those of other
portfolio transactions. Because currency control is of great importance to the
issuing governments and influences economic planning and policy, purchases and
sales of currency and related instruments can be negatively affected by
government exchange controls, blockages, and manipulations or exchange
restrictions imposed by governments. These can result in losses to the Fund if
it is unable to deliver or receive currency or funds in settlement of
obligations and could also cause hedges it has entered into to be rendered
useless, resulting in full currency exposure as well as incurring transaction
costs. Currency exchange rates may fluctuate based on factors extrinsic to that
country's economy.
Use of Segregated Accounts
Futures contracts, options, options on futures contracts, foreign forward
currency contracts and foreign currency contracts require the Fund to segregate
liquid high grade assets with its custodian to the extent Fund obligations are
not otherwise "covered" through ownership of the underlying security, financial
instrument or currency. In general, either the full amount of any obligation by
the Fund to pay or deliver securities or assets must be covered at all times by
the securities, instruments or currency required to be delivered, or, subject to
any regulatory restrictions, an amount of cash or liquid high grade securities
at least equal to the current amount of the obligation must be segregated with
the custodian. The segregated assets cannot be sold or transferred unless
equivalent assets are substituted in their place or it is no longer necessary to
segregate them.
Investment in Unseasoned Issuers
The Fund may invest in securities of issuers which have a record of less than
three years of continuous operation, including the operation of any predecessor
business of a company which came into existence as a result of a merger,
consolidation, reorganization or purchase of substantially all of the assets of
such predecessor business, if such purchase would not cause the value of the
Fund's investments in all such companies to exceed 5% of the value of its net
assets.
8
<PAGE>
Directors and Officers
________________________________________________________________________________
The Directors and Officers of the Fund and their principal occupations during
the past five years are set forth below.
<TABLE>
<CAPTION>
Positions held Principal Occupations
Name, Address and Age with the Fund During the Past Five Years
- --------------------- -------------- --------------------------
<S> <C> <C>
Elizabeth R. Bramwell* Director, President President and Chief Executive Officer, Bramwell
745 Fifth Avenue and Chief Executive Capital Management (February 1994-present);
New York, NY 10151 Age: 57 Officer, Chief President, Chief Investment Officer, Portfolio
Financial Officer and Manager and Trustee, The Gabelli Growth Fund
Chief Investment (April 1987-February 1994).
Officer
J. Sinclair Armstrong Director Partner (1980-1984) and Counsel (1984-1995),
444 Madison Avenue Whitman Breed Abbott & Morgan (formerly Whitman
New York, NY 10022 Ransom) (law firm); Director and Secretary, The
Age: 82 Reed Foundation, (1986-present) (philanthropy);
Executive Vice President, U.S. Trust Co. of New
York (1959-1980); Assistant Secretary of the
Navy for Financial Management and Comptroller,
Department of the Navy (1957-1959); Chairman
(1955-1957) and Commissioner (1953-1957) of the
Securities and Exchange Commission.
Isabel H. Benham Director Treasurer (1995-present) and former President
745 Fifth Avenue (1992-1995), Board of Trustees of the John W.
New York, NY 10151 Age: 88 Barringer III National Railroad Library;
Director, Executive Committee, Finance
Committee, St. Louis Mercantile Library
(1993-1995); President, Printon Kane Research
Inc. (1978-1991) (railroad analysis and
valuations); Senior Vice President, Shearson
Haydon Stone Corp. (1968-1978).
George F. Keane Director President Emeritus and Senior Investment Advisor
745 Fifth Avenue (1993-present) and founding Chief Executive
New York, NY 10151 Officer (1971-1992), The Common Fund (investment
Age: 68 management); Director and Chairman of
9
<PAGE>
Investment Committee, United Negro College Fund
(1982-present); Trustee, Nicholas-Applegate
Investment Trust (1993-present); Member,
Investment Advisory Committee, New York State
Common Retirement Fund (1982-present); Director,
School, College and University Underwriters Ltd.,
Bermuda (1986-present); Director, United
Educators Risk Retention Group (1989-present);
Director, RCB Trust Company (1991-present);
Chairman of the Board, Trigen Energy Corporation
(1994-present); Director, Universal Stainless &
Alloy Products (1994-present).
James C. Sargent Director Counsel, Opton, Handler, Gottlieb, Feiler & Katz
745 Fifth Avenue (1995-present) (law firm); Director,
New York, NY 10151 Scan-Graphics (1992-present); Director, Austin's
Age: 81 International (1992-present); Partner, Whitman
Breed Abbott & Morgan (formerly Whitman Ransom)
(1964-1994) (law firm); Assistant General
Counsel, CIT Finance Corporation (1960-1964);
Regional Administrator, New York City (1955-1956)
and Commissioner (1956-1960), Securities and
Exchange Commission.
Martha R. Seger, Ph.D. Director Chairman, Martha Seger & Associates
220 Park Avenue (1992-present); Current Director, Amerisure,
Birmingham, MI 40889 Amoco, Fluor, Johnson Controls, Kroger, Tucson
Age: 65 Electric Power and Xerox; Governor, Federal
Reserve Board (1984-1991); Commissioner of
Financial Institutions, State of Michigan
(1981-1982); Chief Economist, Detroit Bank &
Trust (Comerica)(1967-1974).
10
<PAGE>
Mary F. McCollum Secretary and Executive Vice President, Bramwell Capital
745 Fifth Avenue Treasurer Management (May 1994-present); Vice President,
New York, NY 10151 Operations and Corporate Secretary (1985-1993),
Age: 51 Assistant Treasurer/ Assistant Secretary
(1983-1985) and Financial Administrator
(1982-1983), The Common Fund (investment
management).
Margaret A. Bancroft Assistant Secretary Partner, Dechert Price & Rhoads (law firm
30 Rockefeller Plaza and counsel to the Fund).
New York, NY 10112
Age: 59
</TABLE>
- ---------------------
* Directors who are "interested persons" of the Fund, as defined in the
Investment Company Act of 1940 (the "1940 Act"). The Directors of the
Fund who are officers or employees of the investment adviser receive no
remuneration from the Fund. Each of the other Directors is paid an
annual retainer of $3,000 and a fee of $500 for each meeting attended
and is reimbursed for the expenses of attending meetings.
The following table sets forth information regarding compensation of the
Directors by the Fund for the fiscal year ended June 30, 1997. Officers of the
Fund and Directors who are interested persons of the Fund do not receive any
compensation from the Fund.
<TABLE>
COMPENSATION TABLE*
(FISCAL PERIOD ENDED JUNE 30, 1997)
<CAPTION>
Total
Pension or Compensation
Retirement From
Aggregate Benefits Estimated Registrant
Compensation Accrued Annual Benefits and Fund
From as Part of Upon Complex Paid**
Name of Director Registrant Fund Expenses Retirement to Directors
---------------- ---------- -------------- ---------- ------------
<S> <C> <C> <C> <C>
Elizabeth R. Bramwell $0 None N/A $0
J. Sinclair Armstrong $5,000 None N/A $5,000
Isabel H. Benham $5,000 None N/A $5,000
George F. Keane $5,000 None N/A $5,000
James C. Sargent $5,000 None N/A $5,000
Martha R. Seger $5,000 None N/A $5,000
(footnotes on following page)
</TABLE>
11
<PAGE>
- --------------------------
* Compensation is for the fiscal year ended June 30, 1997.
** The Fund is not part of any fund complex because it is not related to
any registered investment company and its investment adviser does not
act as investment adviser to any other registered investment company
(although it does act as subadviser with respect to the assets of such
a company); accordingly, the compensation reported in column (5)
includes only compensation paid by the Fund.
As of September 30, 1997, the officers and Directors of the Fund owned 2.0% of
the outstanding shares of capital stock of the Fund. The Fund knows of no person
who owns beneficially more than 5% of the capital stock of the Fund.
Investment Advisory and Other Services
________________________________________________________________________________
For the Fund's first fiscal period (the period from August 1, 1994 through June
30, 1995), the Fund paid the investment adviser an investment advisory fee of
$15,615. During that period, the investment adviser earned an investment
advisory fee of $211,052 pursuant to its investment advisory agreement with the
Fund, but voluntarily waived $195,437 of such fee in order to limit the Fund's
expenses to an annual rate of 1.75% of its average net assets during such
period.
For the fiscal periods ended June 30, 1997 and June 30, 1996, the Fund paid the
investment adviser investment advisory fees of $1,249,859 and $1,195,114,
respectively. During those periods, the investment adviser earned investment
advisory fees of $1,274,930 and $1,238,851, respectively, pursuant to its
investment advisory agreement with the Fund, but voluntarily waived $25,071 and
$43,737, respectively, of such fee in order to limit the Fund's expenses to an
annual rate of 1.75% of its average net assets during such periods. The
investment adviser has voluntarily agreed to so limit the Fund's total expenses
(excluding interest, taxes, brokerage and extraordinary expenses) until June 30,
1999. After such date, the expense limitation may be terminated or revised at
any time.
For the Fund's fiscal period from August 1, 1994 through June 30, 1995, the Fund
paid the administrator a fee of $58,607. For the fiscal years ended June 30,
1997 and June 30, 1996, the Fund paid the administrator fees of $158,120 and
$155,413, respectively.
Distribution Plan
________________________________________________________________________________
The Fund has adopted a Service and Distribution Plan (the "Plan") pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended (the "1940
Act"). The Plan authorizes payments by the Fund in connection with the
distribution of its shares at an annual rate, as determined from time-to-time by
the Board of Directors, or up to 0.25% of the Fund's average daily net assets.
Payments may be made by the Fund under the Plan for the purpose of financing any
activity primarily intended to result in the sales of shares of the Fund as
determined by the Board of Directors. Such activities typically include
advertising; compensation for sales and sales marketing
12
<PAGE>
activities of Financial Service Agents and others, such as dealers or
distributors; shareholder account servicing; production and dissemination of
prospectuses and sales and marketing materials; and capital or other expenses of
associated equipment, rent, salaries, bonuses, interest and other overhead. To
the extent any activity is one which the Fund may finance without a Plan, the
Fund may also make payments to finance such activity outside of the Plan and not
subject to its limitations. Payments under the Plan are not tied exclusively to
actual distribution and service expenses, and the payments may exceed
distribution and service expenses actually incurred.
For the fiscal year ended June 30, 1997, the distribution expenses related to
the Fund were $20,899 for Fund literature and materials, $78,024 for
advertising, $163,836 for broker fees, $61,601 for Fund reports and materials
for current shareholders and administration of current accounts, and $12,753 for
conferences and seminars. The Fund paid BramCap $318,732 of the total $337,113
as reimbursement for these costs under the Plan, with the balance being borne by
BramCap.
Administration of the Plan is regulated by Rule 12b-1 under the 1940 Act, which
includes requirements that the Board of Directors receive and review at least
quarterly reports concerning the nature and qualification of expenses which are
made, that the Board of Directors approve all agreements implementing the Plan
and that the Plan may be continued from year-to-year only if the Board of
Directors concludes at least annually that continuation of the Plan is likely to
benefit shareholders.
Portfolio Turnover
________________________________________________________________________________
While it is difficult to predict, the investment adviser expects that the annual
portfolio turnover rate of the Fund will not exceed 100%. A greater rate may be
experienced during periods of marketplace volatility which may necessitate more
active trading. A higher portfolio turnover rate involves greater transaction
costs to the Fund and may result in the realization of net capital gains which
would be taxable to shareholders when distributed. The Fund's annualized
portfolio turnover rate for the fiscal period ended June 30, 1997 was 82%.
Portfolio Transactions and Brokerage
________________________________________________________________________________
Subject to the supervision of the Directors, decisions to buy and sell
securities for the Fund and negotiation of its brokerage commission rates are
made by the investment adviser. Transactions on United States stock exchanges
involve the payment by the Fund of negotiated brokerage commissions. There is
generally no stated commission in the case of securities traded in the
over-the-counter market but the price paid by the Fund usually includes an
undisclosed dealer commission or mark-up. In certain instances, the Fund may
make purchases of underwritten issues at prices which include underwriting fees.
In selecting a broker to execute each particular transaction, the investment
adviser takes the following into consideration: the best net price available;
the reliability, integrity and financial condition of the broker; the size and
difficulty in executing the order; and the value of the
13
<PAGE>
expected contribution of the broker to the investment performance of the Fund on
a continuing basis. Accordingly, the cost of the brokerage commissions to the
Fund in any transaction may be greater than that available from other brokers if
the difference is reasonably justified by other aspects of the portfolio
execution services offered. For example, the investment adviser will consider
the research and investment services provided by brokers or dealers who effect
or are parties to portfolio transactions of the Fund or the investment adviser's
other clients. Such research and investment services include statistical and
economic data and research reports on particular companies and industries as
well as research software. Subject to such policies and procedures as the
Directors may determine, the investment adviser shall not be deemed to have
acted unlawfully or to have breached any duty solely by reason of its having
caused the Fund to pay a broker that provides research services to the
investment adviser an amount of commission for effecting a portfolio investment
transaction in excess of the amount another broker would have charged for
effecting that transaction, if the investment adviser determines in good faith
that such amount of commission was reasonable in relation to the value of the
research service provided by such broker viewed in terms of either that
particular transaction or the investment adviser's ongoing responsibilities with
respect to the Fund.
Research and investment information is provided by these and other brokers at no
cost to the investment adviser and is available for the benefit of other
accounts advised by the investment adviser and its affiliates, and not all of
the information will be used in connection with the Fund. While this information
may be useful in varying degrees and may tend to reduce the investment adviser's
expenses, it is not possible to estimate its value and in the opinion of the
investment adviser it does not reduce the investment adviser's expenses in a
determinable amount. The extent to which the investment adviser makes use of
statistical, research and other services furnished by brokers is considered by
the investment adviser in the allocation of brokerage business but there is no
formula by which such business is allocated. The investment adviser does so in
accordance with its judgment of the best interests of the Fund and its
shareholders.
For the Fund's fiscal years ended June 30, 1997 and June 30, 1996, the Fund paid
a total of $218,193 and $332,163, respectively, in brokerage commissions with
respect to portfolio transactions aggregating $168,611,661 and $334,485,691,
respectively. Of such amount for the fiscal year ended June 30, 1997, $195,951
in brokerage commissions with respect to portfolio transactions aggregating
$153,588,147 was placed with brokers or dealers who provide research and
investment information.
From commencement of the Fund's business activities on August 1, 1994 through
the end of its first fiscal period on June 30, 1995, the Fund paid a total of
$95,724 in brokerage commissions with respect to portfolio transactions
aggregating $58,653,636.
During the fiscal year ended June 30, 1997, the Fund purchased securities issued
by Merrill Lynch & Co., Inc. ("Merrill"). Merrill was one of the ten brokers
that received the greatest dollar amount of brokerage commissions for portfolio
transactions for the Fund during the fiscal year
14
<PAGE>
ended June 30, 1997. The Fund held $1,192,500 of Merrill's stock on June 30,
1997 as an investment.
Performance Information
________________________________________________________________________________
From time to time, quotations of the Fund's performance may be included in
advertisements, sales literature or reports to shareholders or prospective
investors. These performance figures are calculated in the following manner.
Average Annual Total Return
Average annual total return is the average annual compound rate of return for
periods of one year, five years and ten years, all ended on the last day of a
recent calendar quarter. Average annual total return quotations reflect changes
in the price of the Fund's shares and assume that all dividends and capital
gains distributions during the respective periods were reinvested in Fund
shares. Average annual total return is calculated by computing the average
annual compound rates of return of a hypothetical investment over such periods,
according to the following formula (average annual total return is then
expressed as a percentage):
T = (ERV/P)1/n - 1
Where:
T = average annual total return
P = a hypothetical initial investment of $1,000
n = number of years
ERV = ending redeemable value: ERV is the value, at the end of the
applicable period, of a hypothetical $1,000 investment made
at the beginning of the applicable period.
It should be noted that average annual total return is based on historical
earnings and is not intended to indicate future performance. Average annual
total return for the Fund will vary based on changes in market conditions and
the level of the Fund's expenses. The average annual returns for the fiscal
years ended June 30, 1997 and June 30, 1996, and since inception (August 1,
1994) through June 30, 1997 were 22.2%, 19.0% and 22.1%, respectively.
In connection with communicating its average annual total return to current or
prospective shareholders, the Fund also may compare these figures to the
performance of other mutual funds tracked by mutual fund rating services or to
unmanaged indices which may assume reinvestment of dividends but generally do
not reflect deductions for administrative and management costs.
Comparison of Portfolio Performance
Comparison of the quoted non-standardized performance of various investments is
valid only if performance is calculated in the same manner. Since there are
different methods of calculating performance, investors should consider the
effect of the methods used to calculate performance
15
<PAGE>
when comparing performance of the Fund with performance quoted with respect to
other investment companies or types of investments.
In connection with communicating its performance to current or prospective
shareholders, the Fund also may compare these figures to the performance of
unmanaged indices which may assume reinvestment of dividends or interest but
generally do not reflect deductions for administrative and management costs.
Examples include, but are not limited to the Dow Jones Industrial Average, the
Consumer Price Index, Standard & Poor's 500 Composite Stock Total Return Index
("S&P 500"), the NASDAQ OTC Composite Index, the NASDAQ Industrials Index, and
the Russell 2000 Index.
From time to time, in advertising, marketing and other Fund literature, the
performance of the Fund may be compared to the performance of broad groups of
mutual funds with similar investment goals, as tracked by independent
organizations such as Investment Company Data, Inc., Lipper Analytical Services,
Inc., CDA Investment Technologies, Inc., Morningstar, Inc., Value Line Mutual
Fund Survey and other independent organizations. When these organizations'
tracking results are used, the Fund will be compared to the appropriate fund
category, that is, by fund objective and portfolio holdings or the appropriate
volatility grouping, where volatility is a measure of a Fund's risk. From time
to time, the average price-earnings ratio and other attributes of the Fund's or
the model portfolio's securities, may be compared to the average price-earnings
ratio and other attributes of the securities that comprise the S&P 500.
Statistical and other information, as provided by the Social Security
Administration, may be used in marketing materials pertaining to retirement
planning in order to estimate future payouts of social security benefits.
Estimates may be used on demographic and economic data.
Marketing and other Fund literature may include a description of the potential
risks and rewards associated with an investment in the Fund. The description may
include a "risk/return spectrum" which compares the Fund to other Bramwell
Capital funds or broad categories of funds, such as money market, bond or equity
funds, in terms of potential risks and returns. Money market funds are designed
to maintain a constant $1.00 share price and have a fluctuating yield. Share
price, yield and total return of a bond fund will fluctuate. The share price and
return of an equity fund also will fluctuate. The description may also compare
the Fund to bank products, such as certificates of deposit. Unlike mutual funds,
certificates of deposit are insured up to $100,000 by the U.S.
government and offer a fixed rate of return.
Risk/return spectrums also may depict funds that invest in both domestic and
foreign securities or a combination of bond and equity securities.
Tax Status
________________________________________________________________________________
Set forth below is a discussion of certain U.S. federal income tax issues
concerning the Fund and the purchase, ownership, and disposition of Fund shares.
This discussion does not purport to be complete or to deal with all aspects of
federal income taxation that may be relevant to
16
<PAGE>
shareholders in light of their particular circumstances, nor to certain types of
shareholders subject to special treatment under the federal income tax laws (for
example, banks and life insurance companies). This discussion is based upon
present provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), the regulations promulgated thereunder, and judicial and administrative
ruling authorities, all of which are subject to change, which change may be
retroactive. Prospective investors should consult their own tax advisors with
regard to the federal tax consequences of the purchase, ownership, or
disposition of Fund shares, as well as the tax consequences arising under the
laws of any state, foreign country, or other taxing jurisdiction.
The Fund intends to be taxed as a regulated investment company under Subchapter
M of the Code. Accordingly, the Fund generally must, among other things, (a)
derive in each taxable year at least 90% of its gross income from dividends,
interest, payments with respect to certain securities loans, and gains from the
sale or other disposition of stock, securities or foreign currencies, or other
income derived with respect to its business of investing in such stock,
securities or currencies; (b) in each taxable year beginning before August 6,
1997, derive less than 30% of its gross income from the sale or other
disposition of certain assets held less than three months, namely: (i) stock or
securities; (ii) options, futures, or forward contracts (other than those on
foreign currencies); or (iii) foreign currencies (or options, futures, or
forward contracts on foreign currencies) that are not directly related to the
Fund's principal business of investing in stock or securities (or options and
futures with respect to stock or securities) (the "30% Limitation"); and (c)
diversify its holdings so that, at the end of each fiscal quarter, (i) at least
50% of the value of the Fund's total assets is represented by cash and cash
items, U.S. Government securities, the securities of other regulated investment
companies and other securities, with such other securities limited, in respect
of any one issuer, to an amount not greater than 5% of the value of the Fund's
total assets and 10% of the outstanding voting securities of such issuer, and
(ii) not more than 25% of the value of its total assets is invested in the
securities of any one issuer (other than U.S. Government securities and the
securities of other regulated investment companies).
As a regulated investment company, the Fund generally will not be subject to
U.S. federal income tax on income and gains that it distributes to shareholders,
if at least 90% of the Fund's investment company taxable income (which includes,
among other items, dividends, interest and the excess of any net short-term
capital gains over net long-term capital losses) for the taxable year is
distributed. The Fund intends to distribute substantially all of such income.
Amounts not distributed on a timely basis in accordance with a calendar year
distribution requirement are subject to a nondeductible 4% excise tax at the
Fund level. To avoid the tax, the Fund must distribute during each calendar year
an amount equal to the sum of (1) at least 98% of its ordinary income (not
taking into account any capital gains or losses) for the calendar year, (2) at
least 98% of its capital gains in excess of its capital losses (adjusted for
certain ordinary losses) for a one-year period generally ending on October 31 of
the calendar year, and (3) all ordinary income and capital gains for previous
years that were not distributed during such years. To avoid application of the
excise tax, the Fund intends to make distributions in accordance with the
17
<PAGE>
calendar year distribution requirement. A distribution will be treated as paid
on December 31 of a calendar year if it is declared by the Fund in October,
November or December of that year with a record date in such a month and paid by
the Fund during January of the following year. Such distributions will be
taxable to shareholders in the calendar year in which the distributions are
declared, rather than the calendar year in which the distributions are received.
Options, Futures and Foreign Currency Forward Contracts
Any regulated futures contracts, any foreign currency contracts, and certain
options (namely, nonequity options and dealer equity options) in which the Fund
may invest may be "section 1256 contracts." Gains (or losses) on these contracts
generally are considered to be 60% long-term and 40% short-term capital gains or
losses. Also, section 1256 contracts held by the Fund at the end of each taxable
year (and on certain other dates prescribed in the Code) are "marked to market"
with the result that unrealized gains or losses are treated as though they were
realized.
The transactions in options, futures and forward contracts undertaken by the
Fund may result in "straddles" for federal income tax purposes. The straddle
rules may affect the character of gains or losses realized by the Fund. In
addition, losses realized by the Fund on positions that are part of a straddle
may be deferred under the straddle rules, rather than being taken into account
in calculating the taxable income for the taxable year in which such losses are
realized. Because only a few regulations implementing the straddle rules have
been promulgated, the consequences of such transactions to the Fund are not
entirely clear. The straddle rules may increase the amount of short-term capital
gain realized by the Fund, which is taxed as ordinary income when distributed to
shareholders.
The Fund may make one or more of the elections available under the Code which
are applicable to straddles. If the Fund makes any of the elections, the amount,
character and timing of the recognition of gains or losses from the affected
straddle positions will be determined under rules that vary according to the
election(s) made. The rules applicable under certain of the elections may
operate to accelerate the recognition of gains or losses from the affected
straddle positions.
Because application of the straddle rules may affect the character of gains or
losses, defer losses and/or accelerate the recognition of gains or losses from
the affected straddle positions, the amount which must be distributed to
shareholders as ordinary income or long-term capital gain may be increased or
decreased substantially as compared to a fund that did not engage in such
transactions.
The 30% Limitation (for taxable years beginning before August 6, 1997) and the
diversification requirements applicable to the Fund's assets may limit the
extent to which the Fund will be able to engage in transactions in options,
futures and forward contracts.
18
<PAGE>
Constructive Sales
Recently enacted rules will affect the timing and character of gain if the Fund
engages in certain transactions that reduce or eliminate the Fund's risk of loss
with respect to appreciated financial positions, including stock and securities.
For example, if the Fund enters into a short sale of property while holding
property substantially identical to that sold short, the entry into the contract
will generally constitute a constructive sale and the Fund will recognize gain
(but not loss) as if the property it held had been sold. The character of gain
from a constructive sale will depend upon the Fund's holding period in the
property. If a short sale results in loss, the loss will be recognized at the
time of the closing of the short sale, and its character may be affected by the
straddle rules described above.
Passive Foreign Investment Companies
The Fund may invest in shares of foreign corporations that may be classified
under the Code as passive foreign investment companies ("PFICs"). In general, a
foreign corporation is classified as a PFIC if at least one-half of its assets
constitute investment-type assets, or 75% or more of its gross income is
investment-type income. If the Fund receives a so-called "excess distribution"
with respect to PFIC stock, the Fund itself may be subject to a tax on a portion
of the excess distribution, whether or not the corresponding income is
distributed by the Fund to shareholders. In general, under the PFIC rules, an
excess distribution is treated as having been realized ratably over the period
during which the Fund held the PFIC shares. The Fund itself will be subject to
tax on the portion, if any, of an excess distribution that is so allocated to
prior Fund taxable years and an interest factor will be added to the tax, as if
the tax had been payable in such prior taxable years. Certain distributions from
a PFIC as well as gain from the sale of PFIC shares are treated as excess
distributions. Excess distributions are characterized as ordinary income even
though, absent application of the PFIC rules, certain excess distributions might
have been classified as capital gain.
The Fund may be eligible to elect alternative tax treatment with respect to PFIC
shares. Under an election that currently is available in some circumstances, the
Fund generally would be required to include in its gross income its share of the
earnings of a PFIC on a current basis, regardless of whether distributions were
received from the PFIC in a given year. If this election were made, the special
rules, discussed above, relating to the taxation of excess distributions, would
not apply. In addition, another election would involve marking to market the
Fund's PFIC shares at the end of each taxable year, with the result that
unrealized gains would be treated as though they were realized and reported as
ordinary income. Any mark-to-market losses and any loss from an actual
disposition of Fund shares would be deductible as ordinary losses to the extent
of any net mark-to-market gains included in income in prior years.
19
<PAGE>
Currency Fluctuations -- "Section 988" Gains or Losses
Gains or losses attributable to fluctuations in exchange rates which occur
between the time the Fund accrues income or other receivables or accrues
expenses or other liabilities denominated in a foreign currency and the time the
Fund actually collects such receivables or pays such liabilities generally are
treated as ordinary income or ordinary loss. Similarly, on disposition of some
investments, including debt securities and certain forward contracts denominated
in a foreign currency, gains or losses attributable to fluctuations in the value
of the foreign currency between the acquisition and disposition of the position
also are treated as ordinary gain or loss. These gains and losses, referred to
under the Code as "Section 988" gains or losses, increase or decrease the amount
of the Fund's investment company taxable income available to be distributed to
its shareholders as ordinary income. If Section 988 losses exceed other
investment company taxable income during a taxable year, the Fund would not be
able to make any ordinary dividend distributions, or distributions made before
the losses were realized would be recharacterized as a return of capital to
shareholders, rather than as an ordinary dividend, reducing each shareholder's
basis in his or her Fund shares.
Distributions
Distributions of investment company taxable income are taxable to a U.S.
shareholder as ordinary income, whether paid in cash or shares. Dividends paid
by the Fund to a corporate shareholder, to the extent such dividends are
attributable to dividends received from U.S. corporations by the Fund, may
qualify for the dividends received deduction. However, the revised alternative
minimum tax applicable to corporations may reduce the value of the dividends
received deduction. The excess of net long-term capital gains over the
short-term capital losses realized and distributed by the Fund to its U.S.
shareholders as capital gains distributions, whether paid in cash or in shares,
is taxable to the shareholders as gain from the sale of a capital asset held for
more than one year, regardless of the length of time a shareholder has held his
or her Fund stock. The Fund expects that such dividends will be taxable to
shareholders as mid-term or long-term gains. Capital gain distributions are not
eligible for the dividends received deduction.
Shareholders will be notified annually as to the U.S. federal tax status of
distributions and shareholders receiving distributions in the form of newly
issued shares will receive a report as to the net asset value of the shares
received.
If the net asset value of shares is reduced below a shareholder's cost as a
result of a distribution by the Fund, such distribution generally will be
taxable even though it represents a return of invested capital. Investors should
be careful to consider the tax implications of buying shares of the Fund just
prior to a distribution. The price of shares purchased at this time may reflect
the amount of the forthcoming distribution. Those purchasing just prior to a
distribution will receive a distribution which generally will be taxable to
them.
20
<PAGE>
Disposition of Shares
Upon a redemption, sale or exchange of his or her shares of the Fund, a
shareholder will realize a taxable gain or loss depending upon his or her basis
in the shares. A gain or loss will be treated as capital gain or loss if the
shares are capital assets in the shareholder's hands and generally will be
long-term, mid-term or short-term, depending upon the shareholder's holding
period for the shares. Any loss realized on a redemption, sale or exchange will
be disallowed to the extent the shares disposed of are replaced (including
through reinvestment of dividends) within a period of 61 days beginning 30 days
before and ending 30 days after the shares are disposed of. In such a case, the
basis of the shares acquired will be adjusted to reflect the disallowed loss. If
a shareholder held shares for six months or less and during that period received
a distribution taxable to the shareholder as long-term capital gain, any loss
realized on the sale of such shares during such six-month period would be a
long-term loss to the extent of such distribution.
Backup Withholding
The Fund will be required to report to the Internal Revenue Service (the "IRS")
all distributions and gross proceeds from the redemption of the Fund's shares,
except in the case of certain exempt shareholders. All distributions and
proceeds from the redemption of Fund shares will be subject to withholding of
federal income tax at a rate of 31% ("backup withholding") in the case of
non-exempt shareholders if (1) the shareholder fails to furnish the Fund with
and to certify the shareholder's correct taxpayer identification number or
social security number, (2) the IRS notifies the shareholder or the Fund that
the shareholder has failed to report properly certain interest and dividend
income to the IRS and to respond to notices to that effect, or (3) when required
to do so, the shareholder fails to certify that he or she is not subject to
backup withholding. If the withholding provisions are applicable, any such
distributions or proceeds, whether reinvested in additional shares or taken in
cash, will be reduced by the amounts required to be withheld.
Other Taxation
Distributions may also be subject to additional state, local and foreign taxes
depending on each shareholder's particular situation. Non-U.S. shareholders and
certain types of U.S. shareholders subject to special treatment under the U.S.
federal income tax law (e.g., banks and life insurance companies) may be subject
to U.S. tax rules that differ significantly from those summarized above.
Net Asset Value
________________________________________________________________________________
The Fund's net asset value per share will be calculated separately from the per
share net asset value of any other fund of the Company. "Assets belonging to" a
fund consist of the consideration received upon the issuance of shares of the
particular fund together with all net investment income, earnings, profits,
realized gains/losses and proceeds derived from the investment thereof,
including any proceeds from the sale of such investments, any funds or
21
<PAGE>
payments derived from any reinvestment of such proceeds, and a portion of any
general assets of the Company not belonging to a particular series. Each fund
will be charged with the direct liabilities of that fund and with a share of the
general liabilities of the Company's funds. Subject to the provisions of the
Charter, determinations by the Directors as to the direct and allocable
expenses, and the allocable portion of any general assets, with respect to a
particular fund are conclusive.
Capital Structure
________________________________________________________________________________
Description of Shares
The Company is an open-end management investment company organized as a Maryland
corporation on June 3, 1994. The Company's Charter authorizes the Board of
Directors to issue up to 500 million shares of common stock, par value $.0001
per share. Two hundred million shares of the Company's authorized common stock
have been initially allocated to the Fund. Each share of the Fund has equal
voting, dividend, distribution and liquidation rights.
Shares of the Company have no preemptive rights and only such conversion or
exchange rights as the Board may grant in its discretion. When issued for
payment as described in the Prospectus, the Company's shares will be fully paid
and non-assessable.
Shareholders are entitled to one vote for each full share held, and fractional
votes for fractional shares held, and will vote in the aggregate and not by
class or series except as otherwise required by the 1940 Act or the Maryland
General Corporation Law.
Rule 18f-2 under the 1940 Act provides that any matter required to be submitted
to the holders of the outstanding voting securities of an investment company
such as the Company shall not be deemed to have been effectively acted upon
unless approved by a majority of the outstanding shares of each fund affected by
the matter. A fund is affected by a matter unless it is clear that the interests
of each Fund in the matter are substantially identical or that the matter does
not affect any interest of the Fund. Under Rule 18f-2 the approval of an
investment advisory agreement or 12b-1 distribution plan or any change in a
fundamental investment policy would be effectively acted upon with respect to a
fund only if approved by a majority of the outstanding shares of such Fund.
However, the rule also provides that the ratification of independent public
accountants, the approval of principal underwriting contracts and the election
of directors may be effectively acted upon by shareholders of the Company voting
without regard to particular funds.
Notwithstanding any provision of the Maryland General Corporation Law requiring
for any purpose the concurrence of a proportion greater than a majority of all
votes entitled to be cast at a meeting at which a quorum is present, the
affirmative vote of the holders of a majority of the total number of shares of
the Company outstanding (or of a class or series of the Company, as applicable)
will be effective, except to the extent otherwise required by the 1940 Act and
rules thereunder. In addition, the Charter provides that, to the extent
consistent with the General Corporation Law of Maryland and other applicable
law, the By-Laws may provide for
22
<PAGE>
authorization to be given by the affirmative vote of the holders of less than a
majority of the total number of shares of the Company outstanding (or of a class
or series).
How to Redeem Shares
________________________________________________________________________________
The right of redemption may be suspended, or the date of payment postponed
beyond the normal seven-day period by the Fund, under the following conditions
authorized by the 1940 Act: (1) for any period (a) during which the New York
Stock Exchange is closed, other than customary weekend or holiday closing, or
(b) during which trading on the New York Stock Exchange is restricted; (2) for
any period during which an emergency exists as a result of which (a) disposal by
the Fund of securities owned by it is not reasonably practical, or (b) it is not
reasonably practical for the Fund to determine the fair value of its net assets;
and (3) for such other periods as the Securities and Exchange Commission may by
order permit for the protection of the Fund's shareholders.
The value of shares of the Fund on redemption may be more or less than the
shareholder's cost, depending upon the market value of the Fund's assets at the
time. Shareholders should note that if a loss has been realized on the sale of
shares of the Fund, the loss may be disallowed for tax purposes if shares of the
same Fund are purchased within (before or after) 30 days of the sale.
It is possible that conditions may exist in the future which would, in the
opinion of the Board of Directors, make it undesirable for the Fund to pay for
redemptions in cash. In such cases the Board may authorize payment to be made in
portfolio securities of the Fund. However, the Fund has obligated itself under
the 1940 Act to redeem for cash all shares presented for redemption by any one
shareholder up to $250,000 (or 1% of the Fund's net assets if that is less) in
any 90-day period. Securities delivered in payment of redemptions are valued at
the same value assigned to them in computing the net asset value per share.
Shareholders receiving such securities generally will incur brokerage costs on
their sales.
Experts
________________________________________________________________________________
The Financial Statements of the Fund as of June 30, 1997, incorporated by
reference into this Statement of Additional Information have been so
incorporated by reference in reliance on the report of Coopers & Lybrand L.L.P.,
independent certified public accountants, given on the authority of said firm as
experts in accounting and auditing.
Financial Statements
________________________________________________________________________________
The Fund's financial statements and notes thereto appearing in the June 30, 1997
Annual Report to Shareholders and the report thereon of Coopers and & Lybrand
L.L.P., independent certified public accountants, appearing therein, are
incorporated by reference in this Statement of Additional Information. The Fund
will furnish, without charge, a copy of such Annual Report to Shareholders on
request. Requests should be made by calling 1-800-BRAMCAP or writing to Sunstone
Financial Group, Inc., 207 East Buffalo Street, Suite 400, Milwaukee, Wisconsin
53202.
23
<PAGE>
APPENDIX
Ratings of Investment Securities
________________________________________________________________________________
A rating of a rating service represents the service's opinion as to the credit
quality of the security being rated. However, the ratings are general and are
not absolute standards of quality or guarantees as to the creditworthiness of an
issuer. Consequently, the Fund's investment adviser believes that the quality of
debt securities in which the Fund invests should be continuously reviewed. A
rating is not a recommendation to purchase, sell or hold a security, because it
does not take into account market value or suitability for a particular
investor. When a security has received a rating from more than one service, each
rating should be evaluated independently. Ratings are based on current
information furnished by the issuer or obtained by the ratings services from
other sources which they consider reliable. Ratings may be changed, suspended or
withdrawn as a result of changes in or unavailability of such information, or
for other reasons.
The following is a description of the characteristics of ratings used by Moody's
Investors Service, Inc. and Standard & Poor's Corporation.
Moody's Investors Service, Inc. Ratings
Aaa--Bonds rated Aaa are judged to be the best quality. They carry the smallest
degree of investment risk and are generally referred to as "gilt-edge". Interest
payments are protected by a large or by an exceptionally stable margin and
principal is secure. Although 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 bonds.
Aa--Bonds rated Aa are judged to be 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 bonds 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 in Aaa bonds.
A--Bonds 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 sometime in the future.
Baa--Bonds 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.
<PAGE>
Ba--Bonds 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 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 rated Caa are of poor standing. Such bonds may be in default or there
may be present elements of danger with respect to principal or interest.
Ca--Bonds rated Ca represent obligations which are speculative in a high degree.
Such bonds are often in default or have other marked shortcomings.
Standard & Poor's Corporation Rating
AAA--Bonds rated AAA have the highest rating. Capacity to pay principal and
interest is extremely strong.
AA--Bonds rated AA have a very strong capacity to pay principal and interest and
differ from AAA bonds only in small degree.
A--Bonds rated A have a strong capacity to pay principal and interest, although
they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay principal and interest for bonds in this capacity
than for bonds in higher rated categories.
BB--B--CCC--CC--Bonds rated BB, B, CCC and CC are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB indicates
the lowest degree of speculation among such bonds and CC the highest degree of
speculation. Although such bonds will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements
Included in Part A of the Registration Statement:
Financial Highlights.
Included in Part B of the Registration Statement:
Financial Statements for the year ended June 30, 1997,
including notes thereto, are incorporated by reference in the
Statement of Additional Information from the Registrant's
Annual Report dated as of June 30, 1997 filed with the
Securities and Exchange Commission on August 11, 1997.
(b) Exhibits+
1. Articles of Incorporation*
2. By-Laws*
3. Not Applicable
4. Not Applicable
5. Form of Investment Advisory Agreement**
6. Not Applicable
7. Not Applicable
8. Form of Custodian Agreement**
9. (a) Form of Administrative and Fund Accounting Agreement
(b) Form of Transfer Agent Agreement**
10. Opinion and Consent of Dechert Price & Rhoads**
11. Consent of Independent Certified Public Accountants
12. Not Applicable
13. Investment Representation Letters**
_______________________
+ All exhibits filed electronically herewith.
* Filed with initial Registration Statement on June 3, 1994.
** Filed with Pre-Effective Amendment No. 1 on August 1, 1994.
<PAGE>
14. Form of Individual Retirement Account Disclosure Statement,
Individual Retirement Custodial Account and Application
Forms**
15. Service and Distribution Plan**
16. Schedule for computation of performance quotation provided in
response to Item 22
17. Financial Data Schedule
18. Not Applicable
19. Powers of Attorney of Mesdames Bramwell, Benham and Seger and
Messrs. Armstrong, Keane and Sargent**
Item 25. Persons Controlled by or under Common Control with
Registrant.
Not applicable.
Item 26. Number of Holders of Securities.
As of September 30, 1997, there were 7,187 record holders of
shares of The Bramwell Growth Fund, the only series of the
Registrant's common stock.
Item 27. Indemnification.
The Registrant is incorporated under the laws of the State of
Maryland and is subject to Section 2-418 of the Corporation
and Associations Article of the General Corporation Law of the
State of Maryland (Maryland Law) controlling the
indemnification of directors and officers. Since the
Registrant has its executive offices in the State of New York,
and is qualified as a foreign corporation doing business in
such State, the persons covered by the foregoing statute may
also be entitled to and subject to the limitations of the
indemnification provisions of Section 721-726 of the New York
Business Corporation Law.
The general effect of these statutes is to protect directors,
officers, employees and agents of the Registrant against legal
liability and expenses incurred by reason of their positions
with the Registrant. The statutes provide for indemnification
for liability for proceedings not brought on behalf of the
corporation and for those brought on behalf of the
corporation, and in each case place conditions under which
indemnification will be permitted, including requirements that
the indemnified person acted in good faith. Under certain
conditions, payment of expenses in advance of final
disposition may be permitted. The Articles of Incorporation of
the Registrant make the indemnification if its directors,
officers, employees and agents mandatory subject only to the
conditions and limitations imposed by the applicable
provisions of the Maryland Law and by the provisions of
Section 17(h) of the Investment Company Act of 1940 (the 1940
Act) as
<PAGE>
interpreted and required to be implemented by SEC Release No.
IC-11330 of September 4, 1980.
In referring in its Articles of Incorporation to, and making
indemnification of directors subject the conditions and
limitations of, both the applicable provisions of the Maryland
Law and Section 17(h) of the 1940 Act, the Registrant intends
that conditions and limitations on the extent of the
indemnification of directors and officers imposed by the
provisions of either the Maryland Law or Section 17(h) shall
apply and that any inconsistency between the two will be
resolved by applying the provisions of said Section 17(h) if
the condition or limitation imposed by Section 17(h) is the
more stringent. In referring in its Articles of Incorporation
to SEC Release No. IC-11330 as the source for interpretation
and implementation of said Section 17(h), the Registrant
understands that it would be required under its Articles of
Incorporation to use reasonable and fair means in determining
whether indemnification of a director or officer should be
made and undertakes to use either (1) a final decision on the
merits by a court or other body before whom the proceeding was
brought that the person to be indemnified (indemnitee) was not
liable to the Registrant or to its security holders by reason
of willful malfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of
his or her office (disabling conduct) or (2) in the absence of
such a decision, a reasonable determination, based upon a
review of the facts, that the indemnitee was not liable by
reason of such disabling conduct, by (a) the vote of a
majority of a quorum of directors who are neither "interested
persons" (as defined in the 1940 Act) of the Registrant nor
parties to the proceeding, or (b) an independent legal counsel
in a written opinion. Also, the Registrant will make advances
of attorney's fees or other expenses incurred by a director or
officer in his or her defense only if (in addition to his or
her undertaking to repay the advance if he or she is not
ultimately entitled to indemnification) (1) the indemnitee
provides a security for his or her undertaking, (2) the
Registrant shall be insured against losses arising by reason
of any lawful advances, or (3) a majority of a quorum of the
non-interested, non-party directors of the Registrant, or an
independent legal counsel in a written opinion, shall
determine, based on a review of readily available facts, that
there is reason to believe that the indemnitee ultimately will
be found entitled to indemnification. In addition, the
Registrant will maintain a directors' and officers' errors and
omissions liability insurance policy protecting directors and
officers against liability for claims made by reason of any
acts, errors or omissions committed in their capacity as
directors or officers. The policy will contain certain
exclusions, among which is exclusion from coverage for active
or deliberate dishonest or fraudulent acts and exclusion for
fines or penalties imposed by law or other matters deemed
uninsurable.
Insofar as indemnification for liability arising under the
Securities Act of 1933 (the 1933 Act) may be permitted to
directors, officers and controlling persons of the
<PAGE>
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 1933 Act 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
director, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is
asserted by such director, 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 1933 Act and will be governed by the final adjudication of
such issue.
Item 28. Business and Other Connections of Investment Advisor
The descriptions of the Investment Adviser under the caption
"Management of the Fund" in the Prospectus and in the
Statement of Additional Information constituting Parts A and
B, respectively, of this Registration Statement are
incorporated by reference herein.
Bramwell Capital Management, Inc. also acts as investment
adviser to entities and individuals which are not registered
investment companies and as a subadviser to a registered
investment company.
Item 29. Principal Underwriters
Not Applicable.
Item 30. Location of Accounts and Records.
The accounts, books and other documents required to be
maintained by Registrant pursuant to Section 31(a) of the 1940
Act and the rules promulgated thereunder are in the physical
possession of Registrant, Registrant's Custodian and
Registrant's Administrator as follows: the documents required
to be maintained by paragraphs (4), (5), (6), (7), (9), (10)
and (11) of Rule 31a-1(b) will be maintained by the
Registrant; the documents required to be maintained by
paragraphs (1), (2)(i-iii), (8) and (12) of Rule 31a-1(b) will
be maintained by Registrant's Administrator; and all other
records will be maintained by the Registrant's Custodian.
Item 31. Management Services
Not Applicable.
<PAGE>
Item 32. Undertakings
The Registrant undertakes to call a meeting of shareholders
for the purpose of voting upon the question of removal of a
director, if requested to do so by the holders of at least 10%
of the Fund's outstanding shares, and that it will assist
communication with other shareholders as required by Section
16(c) of the Investment Company Act of 1940.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, Registrant certifies that it meets
all of the requirements for effectiveness of this Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York and State of New York on the
29th day of October, 1997.
THE BRAMWELL FUNDS, INC.
By: *
----------------------------------------
Elizabeth R. Bramwell
President
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
Signatures Title Date
- ---------- ----- ----
* Director and President 10/29/97
- -----------------------------
Elizabeth R. Bramwell (principal executive, financial
and accounting officer)
* Director 10/29/97
- -----------------------------
J. Sinclair Armstrong
* Director 10/29/97
- -----------------------------
Isabel H. Benham
* Director 10/29/97
- -----------------------------
George F. Keane
* Director 10/29/97
- -----------------------------
James C. Sargent
* Director 10/29/97
- -----------------------------
Martha R. Seger
* By: /s/ Margaret A. Bancroft
------------------------
Margaret A. Bancroft
as Attorney-in-Fact
<PAGE>
Exhibits
99-1 Articles of Incorporation
99-2 By-Laws
99.5 Form of Investment Advisory Agreement
99.8 Form of Custodian Agreement
99.9(a) Form of Administration and Fund Accounting Agreement
99.9(b) Form of Transfer Agent Agreement
99.10 Opinion and Consent of Dechert Price & Rhoads
99.11 Consent of Independent Certified Public Accountants
99.13 Investment Representation Letters
99.14 Form of Individual Retirement Account Disclosure
Statement, Individual Retirement Custodial Account and
Application Forms
99.15 Service and Distribution Plan
99.16 Schedule for computation of performance quotation provided
in response to Item 22
99.17 Financial Data Schedule
99.18 Powers of Attorney of Mesdames Bramwell, Benham and Seger
and Messrs. Armstrong, Keane and Sargent
<PAGE>
ARTICLES OF INCORPORATION
OF
THE BRAMWELL FUNDS, INC.
ARTICLE I
INCORPORATOR
THE UNDERSIGNED, Margaret A. Bancroft, whose post office address is 477
Madison Avenue, New York, New York, 10022, being at least eighteen (18) years of
age, does hereby act as incorporator to form a corporation under and by virtue
of the Maryland General Corporation Law.
ARTICLE II
NAME
2.1 Name. The name of the corporation is The Bramwell Funds, Inc. (the
"Corporation").
2.2 Name Reservation. The Corporation acknowledges that it uses the word
"Bramwell" in its corporate name and in the name of any series designated
pursuant to Article V hereof only with the permission of Bramwell Capital
Management, Inc., a Delaware corporation ("BramCap"), the Corporation's
Investment Adviser, and agrees that BramCap shall control the use of the word
"Bramwell" by the Corporation. The Corporation further agrees that if BramCap,
its successors or assigns should at any time cease to be Investment Adviser to
the Corporation, the Corporation shall, at the written request of BramCap or its
successors or assigns, eliminate the word "Bramwell" from its corporate name and
any materials or documents referring to the Corporation, and will not henceforth
use the word "Bramwell" in the conduct of the Corporation's business, except to
any extent specifically agreed to by BramCap. The Corporation further
acknowledges that BramCap reserves the right to grant the non-exclusive right to
use the word "Bramwell" to any other persons or entities, including other
investment companies, whether now in existence or hereafter created. The
provisions of this paragraph are binding on the Corporation, its successors and
assigns and on its directors, officers, stockholders, creditors and all other
persons claiming under or through it.
ARTICLE III
CORPORATE PURPOSES AND POWERS
The purpose or purposes for which the Corporation is formed is to act as an
investment company under the federal Investment Company Act of 1940, and to
exercise and enjoy all the powers, rights and privileges granted to, or
conferred upon, corporations by the Laws of the State
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of Maryland. The Corporation shall exercise and enjoy all such powers, rights
and privileges to the extent not inconsistent with these Articles of
Incorporation.
ARTICLE IV
PRINCIPAL OFFICE AND RESIDENT AGENT
The post office address of the principal office of the Corporation in the
State of Maryland is c/o The Corporation Trust Incorporated, 32 South Street,
Baltimore, Maryland 21202. The name of the Corporation's resident agent in the
State of Maryland is The Corporation Trust Incorporated, a corporation of the
State of Maryland, and the post office address of the resident agent is 32 South
Street, Baltimore, Maryland 21202.
ARTICLE V
CAPITAL STOCK
5.1 Authorized Shares. The total number of shares of capital stock which
the Corporation shall initially have authority to issue is five hundred million
(500,000,000) shares of the par value of $0.0001 per share and of the aggregate
par value of fifty thousand Dollars ($50,000), all of which shares are
designated Common Stock. Unless otherwise prohibited by law, the total number of
shares which the Corporation is authorized to issue may be increased or
decreased by the Board of Directors in accordance with the applicable provisions
of the Maryland General Corporation Law.
5.2 Authorization of Stock Issuance. The Board of Directors may authorize
the issuance and sale of shares of its capital stock of the Corporation,
including stock of any class or series, from time to time in such amounts and on
such terms and conditions, for such purposes and for such amount or kind of
consideration as the Board of Directors shall determine, subject to any limits
required by then applicable law. All shares shall be issued on a fully paid and
non-assessable basis.
5.3 Fractional Shares. The Corporation may issue fractional shares. Any
fractional share shall carry proportionately the rights of a whole share,
excepting the right to receive a certificate evidencing such fractional share,
but including, without limitation, the right to vote and the right to receive
dividends and other distributions.
5.4 Power to Classify. The Corporation is authorized to issue shares of its
capital stock in one or more series or classes and the Board of Directors of the
Corporation may classify and reclassify any unissued shares of capital stock
into one or more classes or series as may be established from time to time by
setting or changing in any one or more respects the designations, preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends, qualifications or terms of such shares of stock and pursuant to such
classification or reclassification to increase or decrease the number of
authorized shares of stock, or shares of any existing class or series of stock.
Except as otherwise provided herein, all references herein to capital stock
shall apply without discrimination to the shares of each class or series of
stock.
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There is hereby designated a series of capital stock of the Corporation named
The Bramwell Growth Fund, of which 200,000,000 shares of the Corporation's
capital stock is initially allocated to such series.
5.5 Classes and Series - General. The relative preferences, conversion and
other rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption of each class or series
of stock of the Corporation shall be as follows, unless otherwise provided in
Articles Supplementary hereto:
(a) Assets Belonging to Class or Series. All consideration received by
the Corporation for the issue or sale of stock of a particular series, together
with all assets in which such consideration is invested or reinvested, all
income, earnings, profits and proceeds thereof, including 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 belong to that series for all purposes, subject only to the
rights of creditors and to the terms and conditions of each class (if any) of
that series, and shall be so recorded on the books of account of the
Corporation. Any assets, income, earnings, profits or proceeds thereof, funds or
payments which are not readily attributable to a particular series shall be
allocated to and among any one or more series in such manner and on such basis
as the Board of Directors, in its sole discretion, shall deem fair and
equitable, and items so allocated to a particular series shall belong to that
series. Each such allocation shall be conclusive and binding upon the
stockholders of all series for all purposes.
(b) Liabilities Belonging to Class or Series. The assets belonging to
each series shall be charged with the liabilities of the Corporation in respect
of that series and with all expenses, costs, charges and reserves attributable
to that series and shall be so recorded on the books of account of the
Corporation; provided, however, that identified costs, expenses, charges,
reserves and liabilities properly allocable to a particular class of a series
shall be charged to and borne solely by such class. Any general liabilities,
expenses, costs, charges or reserves of the Corporation which are not readily
identifiable as belonging to any particular class or series shall be allocated
and charged to and among any one or more of the classes or series in such manner
and on such basis as the Board of Directors in its sole discretion deems fair
and equitable, and any items so allocated to a particular class or series shall
be charged to, and shall be a liability belonging to, that class or series. Each
such allocation shall be conclusive and binding upon the stockholders of all
classes and series for all purposes.
(c) Income. The Board of Directors shall have full discretion, to the
extent not inconsistent with the General Laws of the State of Maryland and the
Investment Company Act of 1940, to determine which items shall be treated as
income and which items shall be treated as capital. Each such determination
shall be conclusive and binding.
(d) Dividends and Distributions. The holders of each class or series of
capital stock of record as of a date determined by the Board of Directors from
time to time shall be entitled, from funds or other assets legally available
therefor, to dividends and distributions, including distributions of capital
gains, in such amounts and at such times as may be determined
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by the Board of Directors. The Board of Directors may determine that no dividend
or distribution shall be payable on shares as to which the purchase order,
payment or both have not been received by a specified date. Any such dividends
or distributions may be declared payable in cash, property or shares of the
class or series, as determined by the Board of Directors or pursuant to a
standing resolution or program adopted or approved by the Board of Directors.
Dividends and distributions may be declared with such frequency, including
daily, as the Board of Directors may determine and in any reasonable manner,
including by standing resolution, by resolutions adopted only once or with such
frequency as the Board of Directors may determine, or by formula or other
similar method of determination, whether or not the amount of the dividend or
distribution so declared can be calculated at the time of such declaration. The
Board of Directors may establish payment dates for such dividends and
distributions on any basis, including payment that is less frequent than the
effectiveness of such declarations. The Board of Directors shall have the
discretion to designate for such dividends and distributions amounts sufficient
to enable the Corporation or any class or series thereof to qualify as a
"regulated investment company" under the Internal Revenue Code of 1986 or any
successor or comparable statute, and regulations promulgated thereunder
(collectively, the "IRC"), and to avoid liability of the Corporation or any
class or series for Federal income tax in respect of a given year and to make
other appropriate adjustments in connection therewith. Nothing in the foregoing
sentence shall limit the authority of the Board of Directors to designate
greater or lesser amounts for such dividends or distributions. The amounts of
dividends and distributions declared and paid with respect to the various
classes or series of capital stock and the timing of declaration and payment of
such dividends and distributions may vary among such classes and series.
(e) Tax Elections. The Board of Directors shall have the power, in its
discretion, to make such elections as to the tax status of the Corporation or
any series or class of the Corporation as may be permitted or required by the
IRC without the vote of stockholders of the Corporation or any series or class.
(f) Liquidation. At any time there are no shares outstanding for a
particular class or series, the Board of Directors may liquidate such class or
series in accordance with applicable law. In the event of the liquidation or
dissolution of the Corporation, or of a class or series thereof when there are
shares outstanding of the Corporation or of such class or series, as applicable,
the stockholders of such, or of each, class or series, as applicable, shall be
entitled to receive, when and as declared by the Board of Directors, the excess
of the assets attributable to that class or series over the liabilities of that
class or series, determined as provided herein and including assets and
liabilities allocated pursuant to sections (a) and (b) of this Article 5.5. Any
such excess amounts will be distributed to each stockholder of the applicable
class or series in proportion to the number of outstanding shares of that class
or series held by that stockholder and recorded on the books of the Corporation.
Subject to the requirements of applicable law, dissolution of a class or series
may be accomplished by distribution of assets to stockholders of that class or
series as provided herein, by the transfer of assets attributable to that class
or series to another class or series of the Corporation, by the exchange of
shares of that class or series for shares of another class or series of the
Corporation, or in any other legal manner.
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(g) Voting Rights. On each matter submitted to a vote of stockholders,
each holder of a share of capital stock of the Corporation shall be entitled to
one vote for each full share, and a fractional vote for each fractional share of
stock standing in such holder's name on the books of the Corporation,
irrespective of the class or series thereof, and all shares of all classes and
series shall vote together as a single class, provided that (a) when the
Maryland General Corporation Law or the Investment Company Act of 1940 requires
that a class or series vote separately with respect to a given matter, the
separate voting requirements of the applicable law shall govern with respect to
the affected class(es) and/or series and other classes and series shall vote as
a single class and (b) unless otherwise required by those laws, no class or
series shall vote on any matter which does not affect the interest of that class
or series.
(h) Quorum. The presence in person or by proxy of the holders of
one-third of the shares of stock of the Corporation entitled to vote thereat,
without regard to class or series, shall constitute a quorum at any meeting of
the stockholders, except with respect to any matter which, under applicable
statutes or regulatory requirements, requires approval by a separate vote of one
or more classes or series of stock, in which case the presence in person or by
proxy of the holders of one-third of the shares of stock of each class or series
required to vote as a class on the matter shall constitute a quorum. If at any
meeting of the stockholders there shall be less than a quorum present, the
stockholders present at such meeting may, as provided in the By-Laws, adjourn
the same from time to time until a quorum shall be present.
5.6 Authorizing Vote. Notwithstanding any provision of the Maryland General
Corporation Law requiring for any purpose the affirmative vote of more than a
majority of all votes entitled to be cast on a matter, the affirmative vote of
the holders of a majority of the total number of shares of capital stock of the
Corporation, or of a class or series, as applicable, entitled to vote under such
circumstances shall be effective for such purpose, except to the extent
otherwise required by the Investment Company Act of 1940 and rules thereunder.
5.7 Preemptive Rights. No stockholder of the Corporation shall be entitled
as of right to subscribe for, purchase, or otherwise acquire any shares of any
classes or series, or any other securities of the Corporation which the
Corporation proposes to issue or sell; and any or all of such shares or
securities of the Corporation, whether now or hereafter authorized or created,
may be issued, or may be reissued or transferred if the same have been
reacquired, and sold to such persons, firms, corporations and associations, and
for such lawful consideration, and on such terms as the Board of Directors in
its discretion may determine, without first offering the same, or any thereof,
to any said stockholder.
5.8 Redemption.
(a) The Board of Directors shall authorize the Corporation, to the
extent it has funds or other property legally available therefor and subject to
such reasonable conditions as the directors may determine, to permit each holder
of shares of capital stock of the Corporation, or of any class or series, to
require the Corporation to redeem all or any part of the shares standing in the
name of such holder on the books of the Corporation, at the applicable
redemption price of such shares (which may reflect the deduction of such fees
and charges as the Board of Directors
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may establish from time to time) determined in accordance with procedures
established by the Board of Directors of the Corporation from time to time in
accordance with applicable law.
(b) Without limiting the generality of the foregoing, the Board of
Directors may authorize the Corporation, at its option and to the extent
permitted by and in accordance with the conditions of applicable law, to redeem
stock of the Corporation, or of any class or series, owned by any stockholder
under circumstances deemed appropriate by the Board of Directors in its sole
discretion from time to time, such circumstances including but not limited to
(1) failure to provide the Corporation with a tax identification number and (2)
failure to maintain ownership of a specified minimum number or value of shares
of any class or series of stock of the Corporation, such redemption to be
effected at such price, at such time and subject to such conditions as may be
required or permitted by applicable law.
(c) Payment for redeemed stock shall be made in cash unless, in the
opinion of the Board of Directors, which shall be conclusive, conditions exist
which make it advisable for the Corporation to make payment wholly or partially
in securities or other property or assets of the class or series of the shares
being redeemed. Payment made wholly or partially in securities or other property
or assets may be delayed to such reasonable extent, not inconsistent with
applicable law, as is reasonably necessary under the circumstances. No
stockholder shall have the right, except as determined by the Board of
Directors, to have his shares redeemed in such securities, property or other
assets.
(d) All rights of a stockholder with respect to a share redeemed,
including the right to receive dividends and distributions with respect to such
share, shall cease and determine as of the time as of which the redemption price
to be paid for such shares shall be fixed, in accordance with applicable law,
except the right of such stockholder to receive payment for such shares as
provided herein.
(e) Notwithstanding any other provision of this Article 5.8, the Board
of Directors may suspend the right of stockholders of any or all classes or
series of shares to require the Corporation to redeem shares held by them for
such periods and to the extent permitted by, or in accordance with, the
Investment Company Act of 1940. The Board of Directors may, in the absence of a
ruling by a responsible regulatory official, terminate such suspension at such
time as the Board of Directors, in its discretion, shall deem reasonable, such
determination to be conclusive.
(f) Shares of any class or series which have been redeemed shall
constitute authorized but unissued shares subject to classification and
reclassification as provided in these Articles of Incorporation.
5.9 Repurchase of Shares. The Board of Directors may by resolution from
time to time authorize the Corporation to purchase or otherwise acquire,
directly or through an agent, shares of any class or series of its outstanding
stock upon such terms and conditions and for such consideration as permitted by
applicable law and determined to be reasonable by the Board of
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Directors and to take all other steps deemed necessary in connection therewith.
Shares so purchased or acquired shall have the status of authorized but unissued
shares.
5.10 Valuation. Subject to the requirements of applicable law, the Board of
Directors may, in its absolute discretion, establish the basis or method, timing
and frequency for determining the value of assets belonging to each class or
series and for determining the net asset value of each share of each class or
series for purposes of sales, redemptions, repurchases or otherwise. Without
limiting the foregoing, the Board of Directors may determine that the net asset
value per share of any class or series should be maintained at a designated
constant value and may establish procedures, not inconsistent with applicable
law, to accomplish that result. Such procedures may include a requirement, in
the event of a net loss with respect to the particular class or series from time
to time, for automatic pro rata capital contributions from each stockholder of
that class or series in amounts sufficient to maintain the designated constant
share value.
5.11 Certificates. Subject to the requirements of the Maryland General
Corporation Law, the Board of Directors may authorize the issuance of some or
all of the shares of any or all classes or series without certificates and may
establish such conditions as it may determine in connection with the issuance of
certificates.
5.12 Shares Subject to Articles and Bylaws. All persons who shall acquire
shares of capital stock in the Corporation shall acquire the same subject to the
provisions of these Articles of Incorporation and the By-Laws of the
Corporation, as each may be amended, supplemented and/or restated from time to
time.
ARTICLE VI
BOARD OF DIRECTORS
6.1 Number of Directors. Prior to the issuance of stock, the number of
directors of the Corporation shall be at least one and after the issuance of
stock the number shall be as specified in, or fixed in the manner prescribed by,
the By-Laws of the Corporation. Unless otherwise provided by the By-Laws, the
directors of the Corporation need not be stockholders of the Corporation. The
name of the director who will serve until the first annual meeting and until her
successor is elected and qualify is:
Elizabeth R. Bramwell
6.2 Removal of Directors. Subject to the limits of the Investment Company
Act of 1940 and unless otherwise provided by the By-Laws, a director may be
removed, with or without cause, by the affirmative vote of a majority of (a) the
Board of Directors, (b) a committee of the Board of Directors appointed for such
purpose, or (c) the stockholders by vote of two-thirds of the shares of capital
stock of the Corporation outstanding.
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6.3 Liability of Directors and Officers.
(a) To the fullest extent permitted by the Maryland General Corporation
Law and the Investment Company Act of 1940, no director or officer of the
Corporation shall be liable to the Corporation or to its stockholders for money
damages. No amendment to these Articles of Incorporation or repeal of any of its
provisions shall limit or eliminate the benefits provided to directors and
officers under this provision with respect to any act or omission which occurred
prior to such amendment or repeal.
(b) In the performance of a Director's duties, a director is entitled
to rely on any information, opinion, report, or statement, including any
financial statement or other financial data, prepared by others, to the extent
not inconsistent with the Maryland General Corporation Law. A Director whose
performance is in accordance with the standards of Article 2-405.1 of the
Maryland General Corporation Law or otherwise in accordance with applicable law
shall have no liability by reason of being or having been a director of the
Corporation.
6.4 Powers of Directors. In addition to any powers conferred herein or in
the By-Laws, the Board of Directors may, subject to any express limitations
contained in these Articles of Incorporation or in the By-Laws, exercise the
full extent of powers conferred by the Maryland General Corporation Law or other
applicable law upon corporations or directors thereof and the enumeration and
definition of particular powers herein or in the By-Laws shall in no way be
deemed to restrict or otherwise limit those lawfully conferred powers. In
furtherance and without limitation of the foregoing, the Board of Directors
shall have power:
(a) to make, alter, amend or repeal from time to time the By-Laws of
the Corporation except as otherwise provided by the By-Laws;
(b) subject to requirements of the Investment Company Act of 1940 and
the Maryland General Corporation Law, to authorize the Corporation to enter into
contracts with any person, including any firm, corporation, trust or association
in which a director, officer, employee or stockholder of the Corporation may be
interested. Such contracts may be for any lawful purpose, whether or not such
purpose involves delegating functions normally performed by the board of
directors or officers of a corporation, including, but not limited to, the
provision of investment management for the Corporation's investment portfolio,
the distribution of securities issued by the Corporation, the administration of
the Corporation's affairs, the provision of transfer agent services with respect
to the Corporation's shares of capital stock, and the custody of the
Corporation's assets. Any person (including its affiliates) may be retained in
multiple capacities pursuant to one or more contracts and may also perform
services, including similar or identical services, for others, including other
investment companies. Subject to the requirements of applicable law, such
contracts may provide for compensation to be paid by the Corporation in such
amounts, including payments of multiple amounts for persons (including their
affiliates) acting in multiple capacities, as the Board of Directors shall
determine in its discretion to be proper and reasonable; and
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(c) to authorize from time to time the payment of compensation to the
Directors for services to the Corporation, including fees for attendance at
meetings of the Board of Directors and committees thereof.
6.5 Determinations by Board of Directors. Any determination made by or
pursuant to the direction of the Board of Directors and in accordance with the
standards set by the Maryland General Corporation Law shall be final and
conclusive and shall be binding upon the Corporation and upon all stockholders,
past, present and future, of each class and series.
ARTICLE VII
PROVISIONS FOR DEFINING, LIMITING AND REGULATING
THE POWERS OF THE CORPORATION AND THE DIRECTORS
AND STOCKHOLDERS
7.1 Location of Meetings, Offices and Books. Both directors and
stockholders may hold meetings within or without the State of Maryland and
abroad, and the Corporation may have one or more offices and may keep its books
within or without the State of Maryland and abroad at such places as the
directors shall determine.
7.2 Meetings of Shareholders. Except as otherwise provided in the By-Laws,
in accordance with applicable law, the Corporation shall not be required to hold
an annual meeting of shareholders in any year unless required by applicable law.
Election of directors, whether by the directors or by stockholders, need not be
by ballot unless the By-Laws so provide.
7.3 Inspection of Records. Stockholders of the Corporation shall have only
such rights to inspect and copy the records, documents, accounts and books of
the Corporation and to request statements regarding its affairs as are provided
by the Maryland General Corporation Law, subject to such reasonable regulations,
not contrary to the General Laws of the State of Maryland, as the Board of
Directors may from time to time adopt regarding the conditions and limits of
such rights.
7.4 Indemnification. The Corporation shall indemnify each person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative ("Proceeding"), by reason of the fact that he is or was a
Director, officer, employee or agent of the Corporation or is or was serving at
the request of the Corporation as a Director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against all judgments, penalties, fines, settlements and reasonable expenses,
including attorneys' fees, actually incurred by him in connection with such
Proceeding and the amount of every such judgment, penalty, fine, settlement and
reasonable expense so incurred by such person shall be paid by the Corporation
or, if paid by such person, reimbursed to such person by the Corporation to the
fullest extent permitted by law, subject only to the conditions and limitations
imposed by the applicable provisions of the Maryland General Corporation Law as
amended from time to time and by the applicable provisions of Section 17(h) of
the Investment Company Act of 1940 as amended from
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time to time and as interpreted and as required to be implemented by the
Securities and Exchange Commission in Release No. IC-11330 of September 4, 1980
or any subsequent interpretation of such Commission. Subject to such conditions
and limitations, the Corporation shall pay or reimburse, in advance of the final
disposition of a proceeding, the reasonable expenses incurred by each Director,
officer, employee or agent who is a party to a Proceeding upon receipt by the
Corporation of (a) a written affirmation by such person of such person's good
faith belief that the standard of conduct necessary for indemnification by the
Corporation has been met, and (b) a written undertaking by or on behalf of such
person to repay the amount if it shall ultimately be determined that such
standard of conduct has not been met. Such indemnification shall be in addition
to any other right or claim to which any director, officer, employee or agent
may otherwise be entitled. The Corporation may purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of
the Corporation or is or was serving at the request of the Corporation as a
director, officer, partner, trustee, employee or agent of another foreign or
domestic corporation, partnership, joint venture, trust or other enterprise or
employee benefit plan, against any liability (including, with respect to
employee benefit plans, excise taxes) asserted against and incurred by such
person in any such capacity or arising out of such person's position, whether or
not the Corporation would have had the power to indemnify against such
liability. The rights provided to any person by this Article 7.4 shall be
enforceable against the Corporation by such person who shall be presumed to have
relied upon such rights in serving or continuing to serve in the capacities
indicated herein. No amendment of these Articles of Incorporation shall impair
the rights of any person arising at any time with respect to events occurring
prior to such amendment.
7.5 Amendments. The Corporation reserves the right to amend, alter, change
or repeal any provision of its Articles of Incorporation, including any
amendment which alters the contract rights expressly set forth in the Articles
of Incorporation, of any outstanding stock, and all rights conferred upon
stockholders herein are granted subject to this reservation.
7.6 References to Statutes, Articles and By-Laws. All references herein to
statutes, to these Articles of Incorporation or to the By-Laws shall be deemed
to refer to those statutes, Articles or By-Laws as they are amended and in
effect from time to time.
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IN WITNESS WHEREOF, the undersigned incorporator of The Bramwell Funds,
Inc. hereby executes the foregoing Articles of Incorporation and acknowledges
the same to be her act.
Dated this _____ day of _______, 1994.
------------------------------
Sole Incorporator
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BY-LAWS
FOR
THE BRAMWELL FUNDS, INC.
ARTICLE I
Offices
Section 1. Principal Office. The principal office of the Corporation in the
State of Maryland shall be in the City of Baltimore.
Section 2. Other Offices. The Corporation may have such other offices in
such places as the Board of Directors may from time to time determine.
ARTICLE II
Meetings of Stockholders
Section 1. Annual Meeting. Subject to this Article II, an annual meeting of
stockholders for the election of Directors and the transaction of such other
business as may properly come before the meeting shall be held at such time and
place as the Board of Directors shall select. The Corporation shall not be
required to hold an annual meeting of its stockholders in any year in which the
election of directors is not required to be acted upon under the Investment
Company Act of 1940.
Section 2. Special Meetings. Special meetings of stockholders may be called
at any time by the President, the Secretary or by a majority of the Board of
Directors and shall be held at such time and place as may be stated in the
notice of the meeting.
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Special meetings of the stockholders shall be called by the Secretary upon
receipt of written request of the holders of shares entitled to cast not less
than 10% of the votes entitled to be cast at such meeting, provided that (1)
such request shall state the purposes of such meeting and the matters proposed
to be acted on, and (2) the stockholders requesting such meeting shall have paid
to the Corporation the reasonably estimated cost of preparing and mailing the
notice thereof, which the Secretary shall determine and specify to such
shareholders. No special meeting shall be called upon the request of
stockholders to consider any matter which is substantially the same as a matter
voted upon at any special meeting of the stockholders held during the preceding
12 months, unless requested by the holders of a majority of all shares entitled
to be cast at such meeting.
Section 3. Place of Meetings. Meetings of stockholders shall be held at
such place within the United States as the Board of Directors may from time to
time determine.
Section 4. Notice of Meetings; Waiver of Notice. Notice of the place, date
and time of the holding of each stockholders' meeting and, if the meeting is a
special meeting, the purpose or purposes of the meeting, shall be given
personally or by mail, not less than ten nor more than ninety days before the
date of such meeting, to each stockholder entitled to vote at such meeting and
to each other stockholder entitled to notice of the meeting. Notice by mail
shall be deemed to be duly given when deposited in the United States mail
addressed to the stockholder at his or her address as it appears on the records
of the Corporation, with postage thereon prepaid or by any other method
permitted under the Maryland General Corporation Law.
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Notice of any meeting of stockholders shall be deemed waived by any
stockholder who shall attend such meeting in person or by proxy, or who shall,
either before or after the meeting, submit a signed waiver of notice which is
filed with the records of the meeting.
Section 5. Quorum. The presence in person or by proxy of the holders of
one-third of the shares of stock of the Corporation entitled to vote thereat,
without regard to class or series, shall constitute a quorum at any meeting of
the stockholders, except with respect to any matter which, under applicable
statues or regulatory requirements, requires approval by a separate vote of one
or more classes or series of stock, in which case the presence in person or by
proxy of the holders of one-third of the shares of stock of each class or series
required to vote as a class on the matter shall constitute a quorum. The holders
of a majority of shares entitled to vote at the meeting and present in person or
by proxy, whether or not sufficient to constitute a quorum, or, any officer
present entitled to preside or act as Secretary of such meeting may adjourn the
meeting without determining the date of the new meeting or from time to time
without further notice to a date not more than 120 days after the original
record date. Any business that might have been transacted at the meeting
originally called may be transacted at any such adjourned meeting at which a
quorum is present.
Section 6. Organization. At each meeting of the stockholders, the Chairman
of the Board (if one has been designated by the Board), or in his or her absence
or inability to act, the President, or in the absence or inability to act of the
Chairman of the Board and the President, a Senior Vice President or a Vice
President, shall act as chairman of the meeting; provided, however, that if no
such officer is present or able to act, a chairman of the meeting shall be
elected at the meeting. The Secretary or the Assistant Secretary, or in his or
her absence or inability to
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act, any person appointed by the chairman of the meeting, shall act as secretary
of the meeting and keep the minutes thereof.
Section 7. Order of Business. The order of business at all meetings of the
stockholders shall be as determined by the chairman of the meeting.
Section 8. Voting. Except as otherwise provided by statute or the Articles
of Incorporation, each holder of record of shares of stock of the Corporation
having voting power shall be entitled at each meeting of the stockholders to one
vote for every full share of such stock, with a fractional vote for any
fractional shares, standing in his or her name on the record of stockholders of
the Corporation as of the record date determined pursuant to Section 9 of this
Article or if such record date shall not have been so fixed, then at the later
of (i) the close of business on the day on which notice of the meeting is mailed
or (ii) the thirtieth day before the meeting.
Each stockholder entitled to vote at any meeting of stockholders may
authorize another person or persons to act for him or her by a proxy signed by
such stockholder or his or her duly authorized attorney-in-fact. No proxy shall
be valid after the expiration of eleven months from the date thereof, unless
otherwise provided in the proxy. Every proxy shall be revocable at the pleasure
of the stockholder executing it, except in those cases where such proxy states
that it is irrevocable and where an irrevocable proxy is permitted by law.
Except as otherwise provided by statute, the Articles of Incorporation or these
By-Laws, any corporate action to be taken by vote of the stockholders shall be
authorized by a majority of the total votes validly cast at a meeting of
stockholders at which a quorum is present.
If a vote shall be taken on any question other than the election of
directors, which shall be by written ballot, then unless required by statute or
these By-Laws, or determined by the chairman of the meeting to be advisable, any
such vote need not be by ballot. On a vote by ballot, each ballot shall be
signed by the stockholder voting, or by his or her proxy, if there be such
proxy, and shall state the number of shares voted.
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Section 9. Fixing of Record Date. The Board of Directors or any duly
constituted Committee of the Board may fix a time not less than 10 nor more than
90 days prior to the date of any meeting of stockholders or prior to the last
day on which the consent or dissent of stockholders may be effectively expressed
for any purpose without a meeting, as the time as of which stockholders entitled
to notice of and to vote at such a meeting or whose consent or dissent is
required or may be expressed for any purpose, as the case may be, shall be
determined; and all persons who were holders of record of voting stock at such
time and no other shall be entitled to notice of and to vote at such meeting or
to express their consent or dissent, as the case may be. If no record date has
been fixed, the record date for the determination of stockholders entitled to
notice of or to vote at a meeting of stockholders shall be the later of the
close of business on the day on which notice of the meeting is mailed or the
thirtieth day before the meeting, or, if notice is waived by all stockholders,
at the close of business on the tenth day next preceding the day on which the
meeting is held. The Board of Directors or a duly authorized Committee of the
Board may fix a record date for determining stockholders entitled to receive
payment of a dividend or distribution, but such date shall be not more than 90
days before the date on which such payment is made. If no record date has been
fixed, the record date for determinating stockholders entitled to receive
dividends or distributions shall be the close of business on the day on which
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the resolution of the Board of Directors declaring the dividend or distribution
is adopted, but the payment shall not be made more than 60 days after the date
on which the resolution is adopted.
Section 10. Consent of Stockholders in Lieu of Meeting. Except as otherwise
provided by statute or the Articles of Incorporation, any action required to be
taken at any meeting of stockholders, or any action which may be taken at any
meeting of such stockholders, may be taken without a meeting, without prior
notice and without a vote, if the following are filed with the records of
stockholders meetings: (i) a unanimous written consent which sets forth the
action and is signed by each stockholder entitled to vote on the matter and (ii)
a written waiver of any right to dissent signed by each stockholder entitled to
notice of the meeting but not entitled to vote thereat.
ARTICLE III
Board of Directors
Section 1. General Powers. The business and affairs of the Corporation
shall be managed under the direction of the Board of Directors and all powers of
the Corporation may be exercised by or under authority of the Board of
Directors.
Section 2. Number of Directors. The number of directors shall be fixed from
time to time by resolution of the Board of Directors adopted by a majority of
the Directors then in office; provided, however, that the number of Directors
shall in no event be less than three (3) nor more than fifteen (15) except that
the Corporation may have less than three (3) but no less than one (1) Director
if there is no stock outstanding, and may have a number of Directors no fewer
than the number of stockholders so long as there are fewer than three (3)
stockholders. Any vacancy created by an increase in Directors may be filled in
accordance with Section 6 of this Article III.
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No reduction in the number of Directors shall have the effect of removing any
Director from office prior to the expiration of his or her term unless such
Director is specifically removed pursuant to Section 5 of this Article III at
the time of such decrease. Directors need not be stockholders.
Section 3. Election and Term of Directors. Directors shall be elected
annually, by written ballot at the annual meeting of stockholders or a special
meeting held for that purpose; provided, however, that if no annual meeting of
the stockholders of the Corporation is required to be held in a particular year
pursuant to Section 1 of Article II of these By-Laws, Directors shall be elected
at the next annual meeting held. Directors shall be elected by a plurality of
all the votes cast at a meeting at which a quorum is present in person or by
proxy. The term of office of each Director shall be from the time of his or her
election and qualification until the election of Directors next succeeding his
or her election and until his or her successor shall have been elected and shall
have qualified.
Section 4. Resignation. A Director of the Corporation may resign at any
time by giving written notice of his or her resignation to the Board or the
Chairman of the Board or the President or the Secretary. Any such resignation
shall take effect at the time specified therein or, if the time when it shall
become effective shall not be specified therein, immediately upon its receipt;
and, unless otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
Section 5. Removal of Directors. Any Director of the Corporation may be
removed by the stockholders as provided in the Articles of Incorporation.
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Section 6. Vacancies. If any vacancies shall occur in the Board of
Directors (i) by reason of death, resignation, removal or otherwise, the
remaining Directors shall continue to act, and, subject to the provisions of the
Investment Company Act of 1940, such vacancies (if not previously filled by the
stockholders) may be filled by a majority of the remaining Directors, although
less than a quorum, and (ii) by reason of an increase in the authorized number
of Directors, such vacancies (if not previously filled by the stockholders) may
be filled only by a majority vote of the entire Board of Directors.
Section 7. Place of Meeting. The Directors may hold their meetings, have
one or more offices, and keep the books of the Corporation, outside the State of
Maryland, and within or without the United States of America, at any office or
offices of the Corporation or at any other place as they may from time to time
by resolution determine, or in the case of meetings, as they may from time to
time by resolution determine or as shall be specified or fixed in the respective
notices or waivers of notice thereof.
Section 8. Regular Meetings. The Board of Directors from time to time may
provide by resolution for the holding of regular meetings and fix their time and
place as the Board of Directors may determine. Notice of such regular meetings
need not be in writing, provided that notice of any change in the time or place
or such fixed regular meetings shall be communicated promptly to each Director
not present at the meeting at which such change was made in the manner provided
in Section 9 of this Article III for notice of special meetings. Members of the
Board of Directors or any committee designated thereby may participate in a
meeting of such Board or committee by means of a conference telephone or similar
communications equipment by
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means of which all persons participating in the meeting can hear each other at
the same time, and participation by such means shall constitute presence in
person at a meeting.
Section 9. Special Meetings. Special meetings of the Board of Directors may
be held at any time or place and for any purpose when called by the President,
the Secretary or two or more of the Directors. Notice of special meetings,
stating the time and place, shall be communicated to each Director personally by
telephone or transmitted to him or her by telegraph, telefax, telex, cable or
wireless at least one day before the meeting.
Section 10. Waiver of Notice. No notice of any meeting of the Board of
Directors or a committee of the Board need be given to any Director who is
present at the meeting or who waives notice of such meeting in writing (which
waiver shall be filed with the records of such meeting), either before or after
the time of the meeting.
Section 11. Quorum and Voting. At all meetings of the Board of Directors,
the presence of one third of the entire Board of Directors shall constitute a
quorum unless there are only two or three Directors, in which case two Directors
shall constitute a quorum. If there is only one Director, the sole Director
shall constitute a quorum. At any adjourned meeting at which a quorum is
present, any business may be transacted which might have been transacted at the
meeting as originally called.
Section 12. Organization. The Board may, by resolution adopted by a
majority of the entire Board, designate a Chairman of the Board, who shall
preside at each meeting of the Board. In the absence or inability of the
Chairman of the Board to preside at a meeting, the President, or, in his or her
absence or inability to act, another Director chosen by a majority of the
Directors present, shall act as chairman of the meeting and preside thereat. The
Secretary (or, in his or her
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absence or inability to act, any person appointed by the Chairman) shall act as
secretary of the meeting and keep the minutes thereof.
Section 13. Written Consent of Directors in Lieu of a Meeting. Subject to
the provisions of the Investment Company Act of 1940, as amended, any action
required or permitted to be taken at any meeting of the Board of Directors or of
any committee thereof may be taken without a meeting if all members of the Board
or committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of the proceedings of the Board or
committee.
Section 14. Compensation. Directors may receive compensation for services
to the Corporation in their capacities as directors or otherwise in such manner
and in such amounts as may be fixed from time to time by the Board.
ARTICLE IV
Committees
Section 1. Organization. By resolution adopted by the Board of Directors,
the Board may designate one or more committees, including an Executive
Committee, composed of two or more Directors. The Board of Directors shall have
the power at any time to change the members of such committees and to fill
vacancies in the committees. The Board may delegate to these committees any of
its powers, except the power to authorize the issuance of stock, declare a
dividend or distribution on stock, recommend to stockholders any action
requiring stockholder approval, amend these By-Laws, or approve any merger or
share exchange which does not require stockholder approval. If the Board of
Directors has given general authorization for the issuance of stock, a committee
of the Board, in accordance with a general formula or method
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specified by the Board by resolution or by adoption of a stock option or other
plan, may fix the terms of stock subject to classification or reclassification
and the terms on which any stock may be issued, including all terms and
conditions required or permitted to be established or authorized by the Board of
Directors.
Section 2. Proceedings and Quorum. In the absence of an appropriate
resolution of the Board of Directors, each committee may adopt such rules and
regulations governing its proceedings, quorum and manner of acting as it shall
deem proper and desirable. In the event any member of any committee is absent
from any meeting, the members thereof present at the meeting, whether or not
they constitute a quorum, may appoint a member of the Board of Directors to act
in the place of such absent member.
ARTICLE V
Officers, Agents and Employees
Section 1. General. The officers of the Corporation shall be a President, a
Secretary and a Treasurer, and may include one or more Senior Vice Presidents,
Vice Presidents, Assistant Secretaries or Assistant Treasurers, and such other
officers as may be appointed in accordance with the provisions of Section 8 of
this Article.
Section 2. Election, Tenure and Qualifications. The officers of the
Corporation, except those appointed as provided in Section 8 of this Article V,
shall be elected by the Board of Directors at its first meeting and thereafter
annually at an annual meeting. If any officers are not chosen at any annual
meeting, such officers may be chosen at any subsequent regular or special
meeting of the Board. Except as otherwise provided in this Article V, each
officer chosen by the Board of Directors shall hold office until the next annual
meeting of the Board of Directors and
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until his or her successor shall have been elected and qualified. Any person may
hold one or more offices of the Corporation except the offices of President and
Vice President.
Section 3. Removal and Resignation. Whenever in the judgment of the Board
of Directors the best interest of the Corporation will be served thereby, any
officer may be removed from office by the vote of a majority of the members of
the Board of Directors at any regular meeting or at a special meeting called for
such purpose. Any officer may resign his office at any time by delivering a
written resignation to the Board of Directors, the President, the Secretary, or
any Assistant Secretary. Unless otherwise specified therein, such resignation
shall take effect upon delivery.
Section 4. President. The President shall be the chief executive officer of
the Corporation. Subject to the supervision of the Board of Directors, the
President shall have general charge of the business, affairs and property of the
Corporation and general supervision over its officers, employees and agents. The
President may sign in the name and on behalf of the Corporation all deeds,
bonds, contracts, or agreements. The President shall exercise such other powers
and perform such other duties as from time to time may be assigned by the Board
of Directors.
Section 5. Senior Vice Presidents and Vice Presidents. The Board of
Directors may from time to time elect one or more Senior Vice Presidents or Vice
Presidents who shall have such powers and perform such duties as from time to
time may be assigned to them by the Board of Directors or the President. At the
request or in the absence or disability of the President, the Senior Vice
President (or, if there are two or more Senior Vice Presidents, then the more
senior
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of such officers present and able to act) may perform all the duties of the
President and, when so acting, shall have all the powers of and be subject to
all the restrictions upon the President.
Section 6. Treasurer and Assistant Treasurer. Unless otherwise determined
by the Board of Directors, the Treasurer shall be the principal financial and
accounting officer of the Corporation and shall have general charge of the
finances and books of account of the Corporation. Except as otherwise provided
by the Board of Directors, the Treasurer shall have general supervision of the
funds and property of the Corporation and of the performance by the Custodian of
its duties with respect thereto. The Treasurer shall render to the Board of
Directors, whenever directed by the Board, an account of the financial condition
of the Corporation. The Treasurer shall perform all acts incidental to the
Office of Treasurer, subject to the control of the Board of Directors.
Any Assistant Treasurer may perform such duties of the Treasurer as the
Treasurer or the Board of Directors may assign, and, in the absence of the
Treasurer, the Assistant Treasurer (or if there are two or more Assistant
Treasurers, then the more senior of such officers present and able to act) may
perform all of the duties of the Treasurer.
Section 7. Secretary and Assistant Secretaries. The Secretary shall attend
to the giving and serving of all notices of the Corporation and shall record all
proceedings of the meetings of the stockholders and Directors in books to be
kept for that purpose. The Secretary shall keep in safe custody the seal of the
Corporation, and shall have charge of the records of the Corporation, including
the stock books and such other books and papers as the Board of Directors may
direct and such books, reports, certificates and other documents required by law
to be kept, all of which shall at all reasonable times be open to inspection by
any Director. The
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Secretary shall perform such other duties incidental to the office of Secretary
or as may be required by the Board of Directors.
Any Assistant Secretary may perform such duties of the Secretary as the
Secretary of the Board of Directors may assign, and, in the absence of the
Secretary, he or she may perform all the duties of the Secretary.
Section 8. Subordinate Officers. The Board of Directors from time to time
may appoint such other officers or agents as it may deem advisable, each of whom
shall have such title, hold office for such period, have such authority and
perform such duties as the Board of Directors may determine. The Board of
Directors from time to time may delegate to one or more officers or agents the
power to appoint any such subordinate officers or agents and to prescribe their
rights, terms of office, authorities and duties.
Section 9. Remuneration. The salaries or other compensation of the officers
of the Corporation shall be fixed from time to time by resolution of the Board
of Directors, except that the Board of Directors may be resolution delegate to
any person or group of persons the power to fix the salaries or other
compensation of any subordinate officers or agents appointed in accordance with
the provisions of Section 8 of this Article V.
Section 10. Surety Bonds. The Board of Directors may require any officer or
agent of the Corporation to execute a bond (including, without limitation, any
bond required by the Investment Company Act of 1940, as amended, and the rules
and regulations of the Securities and Exchange Commission) to the Corporation in
such sum and with such surety or sureties as the Board of Directors may
determine, conditioned upon the faithful performance of his or her duties
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to the Corporation, including responsibility for negligence and for the
accounting of any of the Corporation's property, funds or securities that may
come into his or her hands.
ARTICLE VI
Indemnification
The Corporation shall indemnify its Directors and officers, agents and
employees to the full extent contemplated by the Articles of Incorporation. The
foregoing rights of indemnification shall not be exclusive of any other rights
to which those seeking indemnification may be entitled. The Board of Directors
may take such action as is necessary to carry out these indemnification
provisions and is expressly empowered to adopt, approve and amend from time to
time such resolutions or contracts implementing such provisions or such further
indemnification arrangements as may be permitted by law.
ARTICLE VII
Capital Stock
Section 1. Stock Certificates. The interest of each stockholder of the
Corporation may be evidenced by certificates for shares of stock in such form as
the Board of Directors may from time to time prescribe. The certificates
representing shares of stock shall be signed by or in the name of the
Corporation by the President, a Senior Vice President or a Vice President and
countersigned by the Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer. Certificates need not bear the corporate seal, but if
sealed, they may be sealed with the actual corporate seal or a facsimile of it
or in any other form. Any or all of the signatures may be manual or facsimile
signature. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate shall be
issued, it may be issued by the Corporation with the same effect as if such
officer,
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transfer agent or registrar were still in office at the date of issue unless
written instructions of the Corporation to the contrary are delivered to such
officer, transfer agent or registrar.
Section 2. Stock Ledgers. The stock ledgers of the Corporation, containing
the names and addresses of the stockholders and the number of shares held by
them respectively, shall be kept at the principal offices of the Corporation or,
if the Corporation employs a transfer agent, at the offices of the transfer
agent of the Corporation.
Section 3. Transfers of Shares. Transfers of shares of stock of the
Corporation shall be made on the stock records of the Corporation only by the
registered holder thereof, or by his or her attorney thereunto authorized by
power of attorney duly executed and filed with the Secretary or with a transfer
agent or transfer clerk, and on surrender of the certificate or certificates, if
issued, for such shares properly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, with such proof of the
authenticity of the signature as the Corporation or its agents may reasonably
require and the payment of all taxes thereon. Except as otherwise provided by
law, the Corporation shall be entitled to recognize the exclusive right of a
person in whose name any share or shares stand on the record of stockholders as
the owner of such share or shares for all purposes, including, without
limitation, the rights to receive dividends or other distributions, and to vote
as such owner, and the Corporation shall not be bound to recognize any equitable
or legal claim to or interest in any such share or shares on the part of any
other person. The Board may make such additional rules and regulations, not
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inconsistent with these By-Laws, as it may deem expedient concerning the issue,
transfer and registration of certificates for shares of stock of the
Corporation.
Section 4. Transfer Agents and Registrars. The Board of Directors may from
time to time appoint or remove transfer agents and/or registrars of transfers of
shares of stock of the Corporation, and it may appoint the same person as both
transfer agent and registrar.
Section 5. Lost, Destroyed or Mutilated Certificates. The holder of any
certificates representing shares of stock of the Corporation shall immediately
notify the Corporation of any loss, destruction or mutilation of such
certificate, and the Corporation may issue a new certificate of stock in the
place of any certificate theretofore issued by it which the owner thereof shall
allege to have been lost or destroyed or which shall have been mutilated, and
the Board may, in its discretion, require such owner or his or her legal
representatives to give to the Corporation a bond in such sum, limited or
unlimited, and in such form and with such surety or sureties, as the Board in
its absolute discretion shall determine, to indemnify the Corporation against
any claim that may be made against it arising out of the issuance of a new
certificate. Anything herein to the contrary notwithstanding, the Board, in its
absolute discretion, may refuse to issue any such new certificate, except
pursuant to legal proceedings under the laws of the State of Maryland.
ARTICLE VIII
Seal
The seal of the Corporation shall be circular in form and shall bear, in
addition to any other emblem or device approved by the Board of Directors, the
name of the Corporation, the year of its incorporation and the words "Corporate
Seal" and "Maryland." The form of the seal may be altered by the Board of
Directors. Said seal may be used by causing it or a facsimile
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thereof to be impressed or affixed or in any other manner reproduced. Any
Officer or Director of the Corporation shall have the authority to affix the
corporate seal of the Corporation to any document requiring the same or, in lieu
thereof, to affix a facsimile seal or affix the corporate seal in the manner
contemplated by Section 1-304 of the Maryland General Corporation Law.
ARTICLE IX
Fiscal Year
The fiscal year of the Company shall be determined by resolution of the
Board of Directors.
ARTICLE X
Depositories and Custodians
Section 1. Depositories. The funds of the Corporation shall be deposited
with such banks or other depositories as the Board of Directors of the
Corporation may from time to time determine.
Section 2. Custodians. All securities and other investments shall be
deposited in the safe keeping of such banks or other companies as the Board of
Directors of the Corporation may from time to time determine. Every arrangement
entered into with any bank or other company for the safe keeping of the
securities and investments of the Corporation shall contain provisions complying
with the Investment Company Act of 1940, as amended, and the general rules and
regulations thereunder.
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ARTICLE XI
Execution of Instruments
Section 1. Checks, Notes, Drafts, etc. Checks, notes, drafts, acceptances,
bills of exchange and other orders obligations for the payment of money shall be
signed by such officer or officers or person or persons as the Board of
Directors by resolution shall from time to time designate or as these By-Laws
provide.
Section 2. Sale or Transfer of Securities. Stock certificates, bonds or
other securities at any time owned by the Corporation may be held on behalf of
the Corporation or so, transferred or otherwise disposed of subject to any
limits imposed by these By-Laws and pursuant to authorization by the Board and,
when so authorized to be held on behalf of the Corporation or sold, transferred
or otherwise disposed of, may be transferred from the name of the Corporation by
the signature of the President, any Senior Vice President, any Vice President or
the Treasurer or pursuant to any procedure approved by the Board of Directors,
subject to applicable law.
ARTICLE XII
Independent Public Accountants
The Corporation shall employ an independent public accountant or a firm of
independent public accountants as its accountants to examine the accounts of the
Corporation and to sign and certify financial statements filed by the
Corporation.
ARTICLE XIII
Amendments
These By-Laws or any of them may be amended, altered or repealed at any
regular meeting of the stockholders or at any special meeting of the
stockholders at which a quorum is
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present or represented, provided that notice of the proposed amendment,
alteration or repeal be contained in the notice of such special meeting. These
By-Laws may also be amended, altered or repealed by the affirmative vote of a
majority of the Board of Directors at any regular or special meeting of the
Board of Directors, except any particular By-Law which is specified as not
subject to alteration or repeal by the Board of Directors, subject to the
requirements of the Investment Company Act of 1940, as amended.
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BRAMWELL FUNDS, INC.
INVESTMENT ADVISORY AGREEMENT
AGREEMENT executed as of the 1st day of August, 1994, between The Bramwell
Funds, Inc. (the "Company"), a Maryland corporation registered under the
Investment Company Act of 1940 (the "1940 Act"), and Bramwell Capital
Management, Inc., a Delaware corporation (the "Investment Adviser").
WHEREAS, the Company is an open-end management investment company organized
as a series fund; and
WHEREAS, the Company has initially allocated 200 million shares of its
authorized common stock to a series named The Bramwell Growth Fund (the "Fund");
and
WHEREAS, the Fund engages in the business of investing its assets in the
manner and in accordance with its stated current investment objective and
restrictions;
NOW THEREFORE, in consideration of the premises and mutual covenants herein
contained, the parties agree as follows:
1. Obligations.
1.1. The Investment Adviser will supervise and manage the investment
portfolio of the Fund in accordance with the Fund's stated investment objective,
policies and limitations and, subject to such other policies as the Board of
Directors of the Company may determine, direct the purchase or sale of
investment securities in the day-to-day management of the Fund's investment
portfolio. The Investment Adviser shall give the Fund the benefit of the
Investment Adviser's best judgment and efforts in rendering services under this
Agreement.
1.2. The Company will pay the Investment Adviser a fee at the annual
rate of 1.00% of the Fund's average daily net assets payable at the monthly rate
of 1/12 of 1% on the first business day of each calendar month. For the purpose
of determining the fees payable to the Investment Adviser hereunder, the value
of the Fund's net assets shall be computed initially at the times and in the
manner specified in the Fund's registration statement on Form N-1A, as such
times and manner may be amended from time to time by action of the Company's
Board.
1.3. In rendering the services required under this Agreement, the
Investment Adviser may, at its expense, employ, consult or associate with itself
such person or persons as it believes necessary to assist it in carrying out its
obligations under this Agreement. However, the Investment Adviser may not retain
any person or company that would be an "investment adviser," as that term is
defined in the 1940 Act, to the Fund unless (i) the Company is a party to the
contract with such person or company and (ii) such contract is approved by a
<PAGE>
majority of the Company's Board of Directors and a majority of Directors who are
not parties to any agreement or contract with such company and who are not
"interested persons," as defined in the 1940 Act, of the Company, the Investment
Adviser, or any such person or company retained by the Investment Adviser, and
is approved by the vote of a majority of the outstanding voting securities of
the Fund to the extent required by the 1940 Act.
2. Expenses. The Investment Adviser shall bear all expenses of its
employees and overhead, including office space, office facilities and equipment
incurred in connection with its duties under this Agreement and shall pay all
salaries and fees of the Company's Directors and officers who are interested
persons (as defined in the 1940 Act) of the Investment Adviser. The Company will
bear all of its own expenses, including: expenses of organizing the Fund; fees
of the Company's Directors who are not interested persons (as defined in the
1940 Act) of any other party; out-of-pocket travel expenses for all Officers and
Directors and other expenses incurred by the Fund in connection with meetings of
directors; interest expense; taxes and governmental fees including any original
issue taxes or transfer taxes applicable to the sale or delivery of shares or
certificates therefor; brokerage commissions and other expenses incurred in
acquiring or disposing of the Fund's portfolio securities; expenses in
connection with the issuance, offering, distribution, sale or underwriting of
securities issued by the Fund; expenses of registering and qualifying the Fund's
shares for sale with the Securities and Exchange Commission and in various
states and foreign jurisdictions; auditing, accounting, insurance and legal
costs; custodian, dividend disbursing and transfer agent expenses; and the
expenses of shareholders' meetings and of the preparation and distribution of
proxies and reports to shareholders.
3. Liability. The Investment Adviser shall not be liable for any error of
judgment or for any loss suffered by the Fund or the Company in connection with
the matters to which this Agreement relates, except a loss resulting from a
breach of fiduciary duty with respect to receipt of compensation for services
(in which case any award of damages shall be limited to the period and the
amount set forth in Section 36(b)(3) of the 1940 Act) or a loss resulting from
willful misfeasance, bad faith or gross negligence on its part in the
performance of, or from reckless disregard by it of its obligations and duties
under, this Agreement.
4. Services Not Exclusive. It is understood that the services of the
Investment Adviser are not deemed to be exclusive, and nothing in this Agreement
shall prevent the Investment Adviser or any affiliate, from providing similar
services to other investment companies and other clients (whether or not their
investment objectives and policies are similar to those of the Fund) or from
engaging in other activities. When other clients of the Investment Adviser
desire to purchase or sell a security at the same time such security is
purchased or sold for the Fund, such purchases and sales will be allocated among
the Investment Adviser's clients, including the Fund, in a manner that is fair
and equitable in the judgment of the Investment Adviser in the exercise of its
fiduciary obligations to the Fund and to such other clients.
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<PAGE>
5. Duration and Termination. This Agreement shall become effective upon
shareholder approval thereof as required under the 1940 Act and shall continue
in effect for two (2) years from the date of its execution. If not sooner
terminated, this Agreement shall continue in effect with respect to the Company
and the Fund for successive periods of twelve months thereafter, provided that
each such continuance shall be specifically approved annually by the vote of a
majority of the Company's Board of Directors who are not parties to this
Agreement or interested persons (as defined in the 1940 Act) of any such party,
cast in person at a meeting called for the purpose of voting on such approval
and either (a) the vote of a majority of the outstanding voting securities of
the Fund, or (b) the vote of a majority of the Company's entire Board of
Directors. Notwithstanding the foregoing, this Agreement may be terminated with
respect to the Company at any time, without the payment of any penalty, by a
vote of a majority of the Company's Board of Directors or a majority of the
outstanding voting securities of the Fund upon at least sixty (60) days' written
notice to the Investment Adviser or by the Investment Adviser upon at least
ninety (90) days' written notice to the Company. This Agreement shall
automatically terminate in the event of its assignment (as defined in the 1940
Act).
6. Miscellaneous.
6.1. This Agreement shall be construed in accordance with the laws of
the State of New York, provided that nothing herein shall be construed as being
inconsistent with the 1940 Act and any rules, regulations and orders thereunder.
6.2. The captions in this Agreement are included for convenience only
and in no way define or delimit any of the provisions hereof or otherwise affect
their construction or effect.
6.3. 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 and, to that extent, the provisions of this
Agreement shall be deemed to be severable.
6.4. Nothing herein shall be construed as constituting the Investment
Adviser an agent of the Company.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
THE BRAMWELL FUNDS, INC.
By:
--------------------------------------
Elizabeth R. Bramwell
President
BRAMWELL CAPITAL MANAGEMENT, INC.
By:
-------------------------------------
Elizabeth R. Bramwell
President
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<PAGE>
CUSTODIAN AGREEMENT
AGREEMENT made as of this 1st day of August, 1994, between THE
BRAMWELL FUNDS, INC., a Maryland corporation (the "Company") and FIRSTAR TRUST
COMPANY (the "Custodian").
The Company, an open-end management investment company, desires to
place and maintain all of its portfolio securities and cash in the custody of
the Custodian. The Custodian has at least the minimum qualifications required by
Section 17(f)(1) of the Investment Company Act of 1940 (the "1940 Act") to act
as custodian of the portfolio securities and cash of the Company, and has
indicated its willingness to so act, subject to the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto agree as follows:
1. Appointment as Custodian. The Company hereby appoints the Custodian
as custodian of its portfolio securities and cash delivered to the Custodian as
hereinafter described and the Custodian agrees to act as such upon the terms and
conditions hereinafter set forth.
2. Definitions. Whenever used herein, the terms below will have the
following meaning:
2.1. Authorized Person. Authorized Person will mean any of the
persons duly authorized to give Proper Instructions or otherwise act on behalf
of the Company by appropriate resolution of its Board of Directors (the
"Board"), and set forth in a certificate as required by Section 4 hereof.
2.2. Security. The term security as used herein will have the
same meaning as when such term is used in the Securities Act of 1933, as
amended, including, without limitation, any note, stock, treasury stock, bond,
debenture, evidence of indebtedness, certificate of interest or participation in
any profit sharing agreement, collateral-trust certificate, preorganization
certificate or subscription, transferable share, investment contract,
voting-trust certificate, certificate of deposit for a security, fractional
undivided interest in oil, gas, or other mineral rights, any put, call,
straddle, option, or privilege on any security, certificate of deposit, or group
or index of securities (including any interest therein or based on the value
thereof), or any put, call, straddle, option, or privilege entered into on a
national securities exchange relating to a foreign currency, or, in general, any
interest or instrument commonly known as a "security", or any certificate of
interest or participation in, temporary or interim certificate for, receipt for,
guarantee of, or warrant or right to subscribe to, or option contract to
purchase or sell any of the foregoing, and futures, forward contracts and
options thereon.
2.3. Portfolio Security. Portfolio Security will mean any
security owned by the Company.
<PAGE>
2.4. Officers' Certificate. Officers' Certificate will mean,
unless otherwise indicated, any request, direction, instruction, or
certification in writing signed by any one Authorized Person of the Company.
2.5. Book-Entry System. Book-Entry System shall mean the Federal
Reserve-Treasury Department Book Entry System for United States government,
instrumentality and agency securities operated by the Federal Reserve Bank, its
successor or successors and its nominee or nominees.
2.6. Depository. Depository shall mean The Depository Trust
Company ("DTC"), a clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Securities Exchange Act of 1934 ("Exchange
Act"), its successor or successors and its nominee or nominees. The term
"Depository" shall further mean and include Participants Trust Company and any
other person authorized to act as a depository under the 1940 Act, its successor
or successors and its nominee or nominees, specifically identified in a
certified copy of a resolution of the Board.
2.7. Proper Instructions. Proper Instructions shall mean (i)
instructions regarding the purchase or sale of Portfolio Securities, and
payments and deliveries in connection therewith, given by an Authorized Person
as shall have been designated in an Officers' Certificate, such instructions to
be given in such form and manner as the Custodian and the Company shall agree
upon from time to time, and (ii) instructions (which may be continuing
instructions) regarding other matters signed or initialed by such one or more
persons from time to time designated in an Officers' Certificate as having been
authorized by the Board. Oral instructions will be considered Proper
Instructions if the Custodian reasonably believes them to have been given by a
person authorized to give such instructions with respect to the transaction
involved. The Company shall cause all oral instructions to be promptly confirmed
in writing. The Custodian shall act upon and comply with any subsequent Proper
Instruction which modifies a prior instruction and the sole obligation of the
Custodian with respect to any follow-up or confirmatory instruction shall be to
make reasonable efforts to detect any discrepancy between the original
instruction and such confirmation and to report such discrepancy to the Company.
Upon receipt of an Officers' Certificate as to the authorization by the Board
accompanied by a detailed description of procedures approved by the Company,
Proper Instructions may include communication that effected directly between
electro-mechanical or electronic devices provided that the Board and the
Custodian are satisfied that such procedures afford adequate safeguards for the
Company's assets.
3. Separate Accounts. If the Company has more than one series or
portfolio, the Custodian will segregate the assets of each series or portfolio
to which this Agreement relates into a separate account for each such series or
portfolio containing the assets of such series or portfolio (and all investment
earnings thereon).
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<PAGE>
4. Certification as to Authorized Persons. The Secretary or Assistant
Secretary of the Company will at all times maintain on file with the Custodian
his or her certification to the Custodian, in such form as may be acceptable to
the Custodian, of (i) the names and signatures of the Authorized Persons and
(ii) the names of the Board, it being understood that upon the occurrence of any
change in the information set forth in the most recent certification on file
(including without limitation any person named in the most recent certification
who is no longer an Authorized Person as designated therein), the Secretary or
Assistant Secretary of the Company, will sign a new or amended certification
setting forth the change and the new, additional or omitted names or signatures.
The Custodian will be entitled to rely and act upon any Officers' Certificate
given to it by the Company which has been signed by Authorized Persons named in
the most recent certification.
5. Custody of Cash. As custodian for the Company, the Custodian will
open and maintain a separate account or accounts in the name of the Company or
in the name of the Custodian, as Custodian of the Company, and will deposit to
the account of the Company all of the cash of the Company, except for cash held
by a subcustodian appointed pursuant to Section 13.2 hereof, including borrowed
funds, delivered to the Custodian, subject only to draft or order by the
Custodian acting pursuant to the terms of this Agreement. Upon receipt by the
Custodian of Proper Instructions (which may be continuing instructions) or in
the case of payments for redemptions and repurchases of outstanding shares of
common stock of the Company, notification from the Company's transfer agent as
provided in Section 7, requesting such payment, designating the payee or the
account or accounts to which the Custodian will release funds for deposit, and
stating that it is for a purpose permitted under the terms of this Section 5,
specifying the applicable subsection, the Custodian will make payments of cash
held for the accounts of the Company, insofar as funds are available for that
purpose, only as permitted in subsections 5.1-5.9 below.
5.1. Purchase of Securities. Upon the purchase of securities for
the Company, against contemporaneous receipt of such securities by the Custodian
registered in the name of the Company or in the name of, or properly endorsed
and in form for transfer to, the Custodian, or a nominee of the Custodian, or
receipt for the account of the Custodian pursuant to the provisions of Section 6
below, each such payment to be made at the purchase price shown on a broker's
confirmation (or transaction report in the case of Book Entry Paper) of purchase
of the securities received by the Custodian before such payment is made, as
confirmed in the Proper Instructions received by the Custodian before such
payment is made.
5.2. Redemptions. In such amount as may be necessary for the
repurchase or redemption of common shares of the Company offered for repurchase
or redemption in accordance with Section 7 of the Agreement.
5.3. Distributions and Expenses of Company. For the payment on
the account of the Company of dividends or other distributions to shareholders
as may from time to time be declared by the Board, interest, taxes, management
or supervisory fees, distribution fees,
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<PAGE>
fees of the Custodian or its services hereunder and reimbursement of the
expenses and liabilities of the Custodian as provided hereunder, fees of any
transfer agent, fees for legal, accounting, and auditing services, or other
operating expenses of the Company.
5.4. Payment in Respect of Securities. For payments in connection
with the conversion, exchange or surrender of Portfolio Securities or securities
subscribed to by the Company held by or to be delivered to the Custodian.
5.5. Repayment of Loans. To repay loans of money made to the
Company, but, in the case of final payment, only upon redelivery to the
Custodian of any Portfolio Securities pledged or hypothecated therefor and upon
surrender of documents evidencing the loan.
5.6. Repayment of Cash. To repay the cash delivered to the
Company for the purpose of collateralizing the obligation to return to the
Company certificates borrowed from the Company representing Portfolio
Securities, but only upon redelivery to the Custodian of such borrowed
certificates.
5.7. Foreign Exchange Transactions. For payments in connection
with foreign exchange contracts or options to purchase and sell foreign
currencies for spot and future delivery which may be entered into by the
Custodian on behalf of the Company upon the receipt of Proper Instructions, such
Proper Instructions to specify the currency broker or banking institution (which
may be the Custodian, or any other subcustodian or agent hereunder, acting as
principal) with which the contract or option is made, and the Custodian shall
have no duty with respect to the selection of such currency brokers or banking
institutions with which the Company deals or for their failure to comply with
the terms of any contract or option.
5.8. Other Authorized Payments. For other authorized transactions
of the Company, or other obligations of the Company incurred for proper Company
purposes; provided that before making any such payment the Custodian will also
receive a certified copy of a resolution of the Board signed by an Authorized
Person (other than the Person certifying such resolution) and certified by its
Secretary or Assistant Secretary, naming the person or persons to whom such
payment is to be made, and either describing the transaction for which payment
is to be made and declaring it to be an authorized transaction of the Company,
or specifying the amount of the obligation for which payment is to be made,
setting forth the purpose for which such obligation was incurred and declaring
such purpose to be a proper corporate purpose.
5.9. Termination. Upon the termination of this Agreement as
hereinafter set forth pursuant to Section 8 and Section 14 of this Agreement.
6. Securities.
6.1. Segregation and Registration. Except as otherwise provided
herein, and except for securities to be delivered to any subcustodian appointed
pursuant to
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<PAGE>
Section 13.2 hereof, the Custodian will receive and hold pursuant to the
provisions hereof, in a separate account or accounts and physically segregated
at all times from those of other persons, any and all Portfolio Securities which
may now or hereafter be delivered to it by or for the account of the Company.
All such Portfolio Securities will be held or disposed of by the Custodian for,
and subject at all times to, the instructions of the Company pursuant to the
terms of this Agreement. Subject to the specific provisions herein relating to
Portfolio Securities that are not physically held by the Custodian, the
Custodian will register all Portfolio Securities (unless otherwise directed by
Proper Instructions or an Officers' Certificate), in the name of a registered
nominee of the Custodian as defined in the Internal Revenue Code and any
Regulations of the Treasury Department issued thereunder, and will execute and
deliver all such certificates in connection therewith as may be required by such
laws or regulations or under the laws of any state.
The Company will from time to time furnish to the Custodian
appropriate instruments to enable it to hold or deliver in proper form for
transfer, or to register in the name of its registered nominee, any Portfolio
Securities which may from time to time be registered in the name of the Company.
6.2. Voting and Proxies. Neither the Custodian nor any nominee of
the Custodian will vote any of the Portfolio Securities held hereunder, except
in accordance with Proper Instructions or an Officers' Certificate. The
Custodian will execute and deliver, or cause to be executed and delivered, to
the Company all notices, proxies and proxy soliciting materials with respect to
such Securities, such proxies to be executed by the registered holder of such
Securities (if registered otherwise than in the name of the Company), but
without indicating the manner in which such proxies are to be voted.
6.3. Book-Entry System. Provided (i) the Custodian has received a
certified copy of a resolution of the Board specifically approving deposits of
Company assets in the Book-Entry System and (ii) for any subsequent changes to
such arrangements following such approval, the Board has reviewed and approved
the arrangement and has not delivered and Officer's Certificate to the Custodian
indicating that the Board has withdrawn its approval:
(a) The Custodian may keep Portfolio Securities in the
Book-Entry System provided that such Portfolio Securities are represented in an
account ("Account") of the Custodian (or its agent) in such System which will
not include any assets of the Custodian (or such agent) other than assets held
as a fiduciary, custodian, or otherwise for customers;
(b) The records of the Custodian (and any such agent) with
respect to the Company's participation in the Book-Entry System through the
Custodian (or any such agent) will identify by book entry Portfolio Securities
which are included with other securities deposited in the Account and shall at
all times during the regular business hours of the Custodian (or such agent) be
open for inspection by duly authorized officers, employees or agents of the
Company. Where securities are transferred to the Company's account, the
Custodian shall
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<PAGE>
also, by book entry or otherwise, identify as belonging to the Company a
quantity of securities in fungible bulk of securities (i) registered in the name
of the Custodian or its nominee, or (ii) shown on the Custodian's account on the
books of the Federal Reserve Bank;
(c) The Custodian (or its agent) shall pay for securities
purchased for the account of the Company or shall pay cash collateral against
the return of Portfolio Securities loaned by the Company upon (i) receipt of
advice from the Book-Entry System that such Securities have been transferred to
the Account, and (ii) the making of an entry on the records of the Custodian (or
its agent) to reflect such payment and transfer for the account of the Company.
The Custodian (or its agent) shall transfer securities sold or loaned for the
account of the company upon
(i) receipt of advice from the Book-Entry System that
payment for securities sold or payment of the initial cash collateral against
the delivery of securities loaned by the Company has been transferred to the
Account; and
(ii) the making of an entry on the records of the
Custodian (or its agent) to reflect such transfer and payment for the account of
the Company. Copies of all advices from the Book-Entry System of transfers of
securities for the account of the Company shall identify the Company, be
maintained for the Company by the Custodian and shall be provided to the Company
at its request or, in the alternative the Custodian shall provide to the Company
written confirmation of all securities movements authorized by the Company or
provide the Company access to the Custodian's Securities Accounting System to
enable verification of securities transactions by the Company. The Custodian
shall send the Company a confirmation, as defined by Rule 17f-4 of the 1940 Act,
of any transfers to or from the account of the company;
(d) The Custodian will promptly provide the Company with any
report obtained by the Custodian or its agent on the Book-Entry System's
accounting system, internal accounting control and procedures for safeguarding
securities deposited in the Book-Entry System;
(e) The Custodian shall be liable to the Company for any
loss or damage to the Company resulting from use of the Book-Entry System by
reason of any gross negligence, willful misfeasance or bad faith of the
Custodian or any of its agents or of any of its or their employees or from any
reckless disregard by the Custodian or any such agent of its duty to use its
best efforts to enforce such rights as it may have against the Book-Entry
System; at the election of the Company, it shall be entitled to be subrogated
for the Custodian in any claim against the Book-Entry System or any other person
which the Bank or its agent may have as a consequence of any such loss or damage
if and to the extent that the Company has not been made whole for any loss or
damage.
6.4. Use of a Depository. Provided (i) the Custodian has received
a certified copy of a resolution of the Board specifically approving deposits in
DTC or other such Depository and (ii) for any subsequent changes to such
arrangements following such approval, the
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<PAGE>
Board has reviewed and approved the arrangement and has not delivered an
Officer's Certificate to the Custodian indicating that the Board has withdrawn
its approval:
(a) The Custodian may use a Depository to hold, receive,
exchange, release, lend, deliver and otherwise deal with Portfolio Securities
including stock dividends, rights and other items of like nature, and to receive
and remit to the Custodian on behalf of the Company all income and other
payments thereon and to take all steps necessary and proper in connection with
the collection thereof;
(b) Registration of Portfolio Securities may be made in the
name of any nominee or nominees used by such Depository.
(c) Payment for securities purchased and sold may be made
through the clearing medium employed by such Depository for transactions of
participants acting through it. Upon any purchase of Portfolio Securities,
payment will be made only upon delivery of the securities to or for the account
of the Company and the Company shall pay cash collateral against the return of
Portfolio Securities loaned by the Company only upon delivery of the Securities
to or for the account of the Company; and upon any sale of Portfolio Securities,
delivery of the Securities will be made only against payment thereof or, in the
event Portfolio Securities are loaned, delivery of Securities will be made only
against receipt of the initial cash collateral to or for the account of the
Company; and
(d) The Custodian shall be liable to the Company for any
loss or damage to the Company resulting from the use of a Depository by reason
of any gross negligence, willful misfeasance or bad faith of the Custodian or
its employees or from any reckless disregard by the Custodian of its duty to use
its best efforts to enforce such rights as it may have against a Depository; at
the election of the Company, it shall be entitled to be subrogated for the
Custodian in any claim against the Depository or any other person which the
Custodian or its agent may have as a consequence of any such loss or damage if
and to the extent that the Company has not been made whole for any loss or
damage;
In this connection, the Custodian shall use its best efforts to
ensure that:
(i) The Depository obtains replacement of any
certificated Portfolio Security deposited with it in the event such Security is
lost, destroyed, wrongfully taken or otherwise not available to be returned to
the Custodian upon its request;
(ii) Any proxy materials received by a Depository with
respect to Portfolio Securities deposited with such Depository are forwarded
immediately to the Custodian for prompt transmittal to the Company;
(iii) Such Depository immediately forwards to the
Custodian confirmation of any purchase or sale of Portfolio Securities and of
the appropriate book entry made by such Depository to the Custodian's account;
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(iv) Such Depository prepares and delivers to the
Custodian such records with respect to the performance of the Custodian's
obligations and duties hereunder as may be necessary for the Company to comply
with the recordkeeping requirements of Section 31(a) of the 1940 Act and Rule
31(a) thereunder; and
(v) Such Depository delivers to the Custodian and the
Company all internal accounting control reports, whether or not audited by an
independent public accountant, as well as such other reports as the Company may
reasonably request in order to verify the Portfolio Securities held by such
Depository.
6.5. Use of Book-Entry System for Commercial Paper. Provided (i)
the Custodian has received a certified copy of a resolution of the Board
specifically approving participation in a system maintained by the Custodian for
the holding of commercial paper in electronic book-entry form ("Electronic
Book-Entry System") and (ii) for each year following such approval the Board has
received and approved the arrangements, upon receipt of Proper Instructions and
upon receipt of confirmation from an Issuer (as defined below) that the Company
has purchased such Issuer's commercial paper, the Custodian shall issue and hold
in its Electronic Book-Entry System, on behalf of the Company, commercial paper
issued by issuers (the "Issuers"). In maintaining its Electronic Book-Entry
System, the Custodian agrees that:
(a) the Custodian will maintain all book-entry commercial
paper held by the Company in an account of the Custodian that includes only
assets held by it for customers;
(b) the electronic records of the Custodian with respect to
the Company's purchase of book-entry commercial paper through the Custodian will
identify commercial paper belonging to the Company which is included in the
Electronic Book-Entry System which system shall at all times during the regular
business hours of the Custodian be available for inspection by duly authorized
officers, employees or agents of the Company;
(c) the Custodian shall pay for book-entry commercial paper
purchased for the account of the Company upon contemporaneous (i) receipt of
advice from the Issuer that such sale of book-entry commercial paper has been
effected, and (ii) the making of an entry on the records of the Custodian to
reflect such payment and transfer for the account of the Company;
(d) the Custodian shall cancel such book-entry commercial
paper obligation upon the maturity thereof upon contemporaneous (i) receipt of
advice that payment for such book-entry commercial paper has been transferred to
the Company, and (ii) the making of an entry on the records of the Custodian to
reflect such payment for the account of the Company;
(e) the Custodian shall transmit to the Company a
transaction journal confirming each transaction in book-entry commercial paper
for the account of the
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Company on the next business day following the transaction or provide equivalent
information by giving the Company access to Custodian's Electronic Book-Entry
System; and
(f) the Custodian will send to the Company such reports on
its system of internal accounting control with respect to the Electronic
Book-Entry System as the Company may reasonably request from time to time.
6.6. Options and Futures Transactions.
(a) Puts and Calls Traded on Securities Exchanges, NASDAQ
or Over-the-Counter.
1. The Custodian shall take action as to put options
("puts") and call options ("calls") purchased or sold (written) by the Company
regarding escrow or other arrangements (i) in accordance with the provisions of
any agreement entered into upon receipt of Proper Instructions between the
Custodian, any broker-dealer registered under the Exchange Act and a member of
the National Association of Securities Dealers, Inc. (the "NASD"), and, if
necessary, the Company relating to the compliance with the rules of the Options
Clearing Corporation and of any registered national securities exchange, or of
any similar organization or organizations.
2. Unless another agreement requires it to do so, the
Custodian shall be under no duty or obligation to see that the Company has
deposited or is maintaining adequate margin, if required, with any broker in
connection with any option, nor shall the Custodian be under duty or obligation
to present such option to the broker for exercise unless it receives Proper
Instructions from the Company. The Custodian shall have no responsibility for
the legality of any put or call purchased or sold on behalf of the Company, the
propriety of any such purchase or sale, or the adequacy of any collateral
delivered to a broker in connection with an option or deposited to or withdrawn
from a Segregated Account (as defined in subsection 6.7 below).
(b) Puts, Calls and Futures Traded on Commodities
Exchanges.
1. The Custodian shall take action as to puts, calls and
futures contracts ("Future") purchased or sold by the Company in accordance with
the provisions of any agreement among the Company, the Custodian and a Futures
Commission Merchant registered under the Commodity Exchange Act, relating to
compliance with the rules of the Commodity Futures Trading Commission and/or any
Contract Market, or any similar organization or organizations, regarding account
deposits in connection with transactions by the Company.
2. The responsibilities and liabilities of the Custodian as
to futures, puts and calls traded on commodities exchanges, any Futures
Commission Merchant account and the Segregated Account shall be limited as set
forth in subparagraph (a)(2) of this
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Section 6.6 as if such subparagraph referred to Futures Commission Merchants
rather than brokers, and Futures and puts and calls thereon instead of options.
6.7. Segregated Account. The Custodian shall upon receipt of
Proper Instructions establish and maintain a Segregated Account or Accounts for
and on behalf of the Company, into which Account or Accounts may be transferred
upon receipt of Proper Instructions cash and/or Portfolio Securities:
(a) in accordance with the provisions of any agreement among
the Company, the Custodian and a broker-dealer registered under the Exchange Act
and a member of the NASD or any Futures Commission Merchant registered under the
Commodity Exchange Act, relating to compliance with the rules of the Options
Clearing Corporation and of any registered national securities exchange or the
Commodity Futures Trading Commission or any registered Contract Market, or of
any similar organizations regarding escrow or other arrangements in connection
with transactions by the Company;
(b) for the purpose of segregating cash or securities in
connection with options purchased or written by the Company or commodity futures
purchased or written by the Company;
(c) for the deposit of liquid assets, such as cash, U.S.
Government securities or other high grade debt obligations, having a market
value (marked to market on a daily basis) at all times equal to not less than
the aggregate purchase price due on the settlement dates of all the Company's
then outstanding forward commitment or "when-issued" agreements relating to the
purchase of Portfolio Securities and all the Company's then outstanding
commitments under reverse repurchase agreements entered into with broker-dealer
firms;
(d) for the deposit of any Portfolio Securities which the
Company has agreed to sell on a forward commitment basis, all in accordance with
Investment Company Act Release No. 10666;
(e) for the purposes of compliance by the Company with the
procedures required by Investment Company Act Release No. 10666, or any
subsequent release or releases of the Securities and Exchange Commission
relating to the maintenance of Segregated Accounts by registered investment
companies;
(f) for other proper corporate purposes, but only, in the
case of this clause (f), upon receipt of, in addition to Proper Instructions, a
certified copy of a resolution of the Board, or of the Executive Committee
signed by an officer of the Company and certified by the Secretary or an
Assistant Secretary, setting forth the purpose or purposes of such Segregated
Account and declaring such purposes to be proper corporate purposes.
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(g) Assets may be withdrawn from the Segregated Account
pursuant to Proper Instructions only
(i) in accordance with the provisions of any agreements
referenced in (a) or (b) above;
(ii) for sale or delivery to meet the Company's
obligations under outstanding firm commitment or when-issued
agreements for the purchase of Portfolio Securities and
under reverse repurchase agreements;
(iii) for exchange for other liquid assets of equal or
greater value deposited in the Segregated Account;
(iv) to the extent that the Company's outstanding
forward commitment or when-issued agreements for the
purchase of portfolio securities or reverse repurchase
agreements are sold to other parties or the Company's
obligations thereunder are met from assets of the Company
other than those in the Segregated Account; or
(v) for delivery upon settlement of a forward
commitment agreement for the sale of Portfolio Securities.
6.8. Interest Bearing Call or Time Deposits. The Custodian shall,
upon receipt of Proper Instructions relating to the purchase by the Company of
interest-bearing fixed-term and call deposits, transfer cash, by wire or
otherwise, in such amounts and to such bank or banks as shall be indicated in
such Proper Instructions. The Custodian shall include in its records with
respect to the assets of the Company appropriate notation as to the amount of
each such deposit, and the banking institution with which such deposit is made
(the "Deposit Bank"), and shall retain such forms of advice or receipt
evidencing the deposit, if any, as may be forwarded to the Custodian by the
Deposit Bank. Such deposits shall be deemed Portfolio Securities of the Company
and the responsibility of the Custodian therefore shall be the same as and no
greater than the Custodian's responsibility in respect of other Portfolio
Securities of the Company.
6.9. Transfer of Securities. The Custodian will transfer,
exchange, deliver or release Portfolio Securities held by it hereunder, insofar
as such Securities are available for such purpose, provided that before making
any transfer, exchange, delivery or release under this Section the Custodian
will receive Proper Instructions requesting such transfer, exchange or delivery
stating that it is for a purpose permitted under the terms of this Section 6.9,
specifying the applicable subsection, or describing the purpose of the
transaction with sufficient particularity to permit the Custodian to ascertain
the applicable subsection, only
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(a) upon sales of Portfolio Securities for the account of
the Company, against contemporaneous receipt by the Custodian of payment
therefor in full, each such payment to be in the amount of the sale price shown
in a broker's confirmation of sale of the Portfolio Securities received by the
Custodian before such payment is made, as confirmed in the Proper Instructions
received by the Custodian before such payment is made;
(b) in exchange for or upon conversion into other securities
alone or other securities and cash pursuant to any plan of merger,
consolidation, reorganization, share split-up, change in par value,
recapitalization or readjustment or otherwise, upon exercise of subscription,
purchase or sale or other similar rights represented by such Portfolio
Securities, or for the purpose of tendering shares in the event of a tender
offer therefor, provided however that in the event of an offer of exchange,
tender offer, or other exercise of rights requiring the physical tender or
delivery of Portfolio Securities, the Custodian shall have to liability for
failure to so tender in a timely manner unless such Proper Instructions are
received by the Custodian at least two business days prior to the date required
for tender, and unless the Custodian (or its agent or subcustodian hereunder)
has actual possession of such Security at least two business days prior to the
date of tender;
(c) upon conversion of Portfolio Securities pursuant to
their terms into other securities;
(d) for the purpose of redeeming in kind shares of the
Company upon authorization from the Company;
(e) in the case of option contracts owned by the Company,
for presentation to the endorsing broker;
(f) when such Portfolio Securities are called, redeemed or
retired or otherwise become payable;
(g) for the purpose of effectuating the pledge of Portfolio
Securities held by the Custodian in order to collateralize loans made to the
Company by any bank, including the Custodian; provided, however, that such
Portfolio Securities will be released only upon payment to the Custodian for the
account of the Company of the moneys borrowed, except that in cases where
additional collateral is required to secure a borrowing already made, and such
fact is made to appear in the Proper Instructions, further Portfolio Securities
may be released for that purpose without any such payment. In the event that any
such pledged Portfolio Securities are held by the Custodian, they will be so
held for the account of the lender, and after notice to the Company from the
lender in accordance with the normal procedures of the lender, that an event of
deficiency or default on the loan has occurred, the Custodian may deliver such
pledged Portfolio Securities to or for the account of the lender;
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(h) for the purpose of releasing certificates representing
Portfolio Securities, against contemporaneous receipt by the Custodian of the
fair market value of such security, as set forth in the Proper Instructions
received by the Custodian before such payment is made;
(i) for the purpose of delivering securities lent by the
Company to a bank or broker dealer, but only against receipt in accordance with
street delivery custom except as otherwise provided herein, of adequate
collateral as agreed upon from time to time by the Company and the Custodian,
and upon receipt of payment in connection with any repurchase agreement relating
to such securities entered into by the Company;
(j) for other authorized transactions of the Company or for
other proper corporate purposes; provided that before making such transfer, the
Custodian will also receive a certified copy of resolutions of the Board, signed
by an authorized officer of the Company (other than the officer certifying such
resolution) and certified by its Secretary or Assistant Secretary, specifying
the Portfolio Securities to be delivered, setting forth the transaction in or
purpose for which such delivery is to be made, declaring such transaction to be
an authorized transaction of the Company or such purpose to be a proper
corporate purpose, and naming the person or persons to whom delivery of such
securities shall be made; and
(k) upon termination of this Agreement as hereinafter set
forth pursuant to Section 8 and Section 14 of this Agreement.
As to any deliveries made by the Custodian pursuant to
subsections (a), (b), (c), (e), (f), (g), (h) and (i) securities or cash
receivable in exchange therefor shall be delivered to the Custodian.
7. Redemptions. In the case of payment of assets of the Company
held by the Custodian in connection with redemptions and repurchases by the
Company of outstanding common shares, the Custodian will rely on notification by
the Company's transfer agent of receipt of a request for redemption and
certificates, if issued, in proper form for redemption before such payment is
made. Payment shall be made in accordance with the Articles and By-laws of the
Company, from assets available for said purpose.
8. Merger, Dissolution, etc. of Company. In the case of the
following transactions, not in the ordinary course of business, namely, the
merger of the Company into or the consolidation of the Company with another
investment company, the sale by the Company of all, or substantially all, of its
assets to another investment company, or the liquidation or dissolution of the
Company and distribution of its assets, the Custodian will deliver the Portfolio
Securities held by it under this Agreement and disburse cash only upon the order
of the Company set forth in an Officers' Certificate, accompanied by a certified
copy of a resolution of the Board authorizing any of the foregoing transactions.
Upon completion of such delivery and disbursement and the payment of the fees,
disbursements and expenses of the Custodian, this Agreement will terminate.
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9. Actions of Custodian Without Prior Authorization.
Notwithstanding anything herein to the contrary, unless and until the Custodian
receives an Officers' Certificate to the contrary, it will without prior
authorization or instruction of the Company or the transfer agent:
9.1. Endorse for collection and collect on behalf of and in
the name of the Company all checks, drafts, or other negotiable or transferable
instruments or other orders for the payment of money received by it for the
account of the Company and hold for the account of the Company all income,
dividends, interest and other payments or distribution of cash with respect to
the Portfolio Securities held thereunder;
9.2. Present for payment all coupons and other income items
held by it for the account of the Company which call for payment upon
presentation and hold the cash received by it upon such payment for the account
of the Company;
9.3. Receive and hold for the account of the Company all
securities received as a distribution on Portfolio Securities as a result of a
stock dividend, share split-up, reorganization, recapitalization, merger,
consolidation, readjustment, distribution of rights and similar securities
issued with respect to any Portfolio Securities held by it hereunder.
9.4. Execute as agent on behalf of the Company all necessary
ownership and other certificates and affidavits required by the Internal Revenue
Code or the regulations of the Treasury Department issued thereunder, or by the
laws of any state, now or hereafter in effect, inserting the Company's name on
such certificates as the owner of the securities covered thereby, to the extent
it may lawfully do so and as may be required to obtain payment in respect
thereof. The Custodian will execute and deliver such certificates in connection
with Portfolio Securities delivered to it or by it under this Agreement as may
be required under the provisions of the Internal Revenue Code and any
Regulations of the Treasury Department issued thereunder, or under the laws of
any State;
9.5. Present for payment all Portfolio Securities which are
called, redeemed, retired or otherwise become payable, and hold cash received by
it upon payment for the account of the Company; and
9.6. Exchange interim receipts or temporary securities for
definitive securities.
10. Collections and Defaults. The Custodian will use all
reasonable efforts to collect any funds which may to its knowledge become
collectible arising from Portfolio Securities, including dividends, interest and
other income, and to transmit to the Company notice actually received by it of
any call for redemption, offer of exchange, right of subscription,
reorganization or other proceedings affecting such Securities. If Portfolio
Securities upon which such income is payable are in default or payment is
refused after due demand or presentation, the Custodian will notify the Company
in writing of any default or refusal to pay within two business days from the
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<PAGE>
day on which it receives knowledge of such default or refusal. In addition, the
Custodian will send the Company a written report once each month showing any
income on any Portfolio Security held by it which is more than ten days overdue
on the date of such report and which has not previously been reported.
11. Maintenance of Records and Accounting Services. The Custodian
will maintain records with respect to transactions for which the Custodian is
responsible pursuant to the terms and conditions of this Agreement, and in
compliance with the applicable rules and regulations of the 1940 Act and such
other rules and regulations as shall be mutually agreed upon in writing from
time to time, and will furnish the Company daily with a statement of condition
of the Company. The Custodian will furnish to the Company at the end of every
month, and at the close of each quarter of the Company's fiscal year, a list of
the Portfolio Securities and the aggregate amount of cash held by it for the
Company. The books and records of the Custodian pertaining to its actions under
this Agreement and reports by the Custodian or its independent accountants
concerning its accounting system, procedures for safeguarding securities and
internal accounting controls will be open to inspection and audit at reasonable
times by officers of or auditors employed by the Company and will be preserved
by the Custodian in the manner and in accordance with the applicable rules and
regulations under the 1940 Act.
The Custodian shall keep the books of account and render
statements or copies from time to time as reasonably requested by the Treasurer
or any executive officer of the Company.
The Custodian shall assist generally in the preparation of
reports to shareholders and others, audits of accounts, and other ministerial
matters of like nature.
12. Concerning the Custodian.
12.1. Performance of Duties and Standard of Care.
In the performance of its duties hereunder, the Custodian
will be protected and not be liable, and will be indemnified and held harmless
for any action taken or omitted to be taken by it in good faith reliance upon
the terms of this Agreement, any Officers' Certificate, Proper Instructions,
resolution of the Board, telegram, notice, request, certificate or other
instrument reasonably believed by the Custodian to be genuine and for any other
loss to the Company except in the case of its negligence, willful misfeasance or
bad faith in the performance of its duties or reckless disregard of its
obligations and duties hereunder.
12.2. Agents and Subcustodians. The Custodian may employ
agents in the performance of its duties hereunder and shall be responsible for
the acts and omissions of such agents as if performed by the Custodian
hereunder.
Upon receipt of Proper Instructions, the Custodian may
employ subcustodians, provided that any such subcustodian meets at least the
minimum qualifications required by Section
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17(f)(1) of the 1940 Act to act as a custodian of the Company's assets with
respect to property of the Company held in the United States, or Rule 17f-5 of
the 1940 Act with respect to property of the Company held outside of the United
States, as more fully set forth on Schedule A hereto relating to the custody of
foreign securities. The Custodian shall have the same liability to the Company
on account of any act or omission of any sub-custodian so employed as any such
sub-custodian has to the Custodian.
12.3. Insurance. The Custodian shall use the same care with
respect to the safekeeping of Portfolio Securities and cash of the Company held
by it as it uses in respect of its own similar property but it need not maintain
any special insurance for the benefit of the Company.
12.4. Fees and Expenses of Custodian. The Company will pay
or reimburse the Custodian from time to time for any transfer taxes payable upon
transfer of Portfolio Securities made hereunder, and for all necessary proper
disbursements, expenses and charges made or incurred by the Custodian in the
performance of this Agreement (including any duties listed on any Schedule
hereto, if any) including any indemnities for any loss, liabilities or expense
to the Custodian as provided above. For the services rendered by the Custodian
hereunder, the Company will pay to the Custodian such compensation or fees at
such rate and at such times as shall be agreed upon in writing by the parties
from time to time. The Custodian will also be entitled to reimbursement by the
Company for all reasonable expenses incurred in conjunction with termination of
this Agreement by the Company.
13. Termination.
13.1. This Agreement may be terminated at any time without
penalty upon sixty days written notice delivered by either party to the other by
means of registered mail, and upon the expiration of such sixty days this
Agreement will terminate; provided, however, that the effective date of such
termination may be postponed to a date not more than ninety days from the date
of delivery of such notice (i) by the Custodian in order to prepare for the
transfer by the Custodian of all of the assets of the Company held hereunder,
and (ii) by the Company in order to give the Company an opportunity to make
suitable arrangements for a successor custodian. At any time after the
termination of this Agreement, the Company will, at its request, have access to
the records of the Custodian relating to the performance of its duties as
custodian.
13.2. In the event of the termination of this Agreement, the
Custodian will immediately upon receipt or transmittal, as the case may be, of
notice of termination, commence and prosecute diligently to completion the
transfer of all cash and the delivery of all Portfolio Securities duly endorsed
and all records maintained under Section 11 to the successor custodian when
appointed by the Company. The obligation of the Custodian to deliver and
transfer over the assets of the Company held by it directly to such successor
custodian will commence as soon as such successor is appointed and will continue
until completed as aforesaid. If the Company does not select a successor
custodian within ninety (90) days from the date of
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<PAGE>
delivery of notice of termination the Custodian may, subject to the provisions
of subsection (14.3), deliver the Portfolio Securities and cash of the Company
held by the Custodian to a bank or trust company of its own selection which
meets the requirements of Section 17(f)(1) of the 1940 Act and has a reported
capital, surplus and undivided profits aggregating not less than $2,000,000, to
be held as the property of the Company under terms similar to those on which
they were held by the Custodian, whereupon such bank or trust company so
selected by the Custodian will become the successor custodian of such assets of
the Company with the same effect as though selected by the Board.
13.3. Prior to the expiration of ninety (90) days after
notice of termination has been given, the Company may furnish the Custodian with
an order of the Company advising that a successor custodian cannot be found
willing and able to act upon reasonable and customary terms and that there has
been submitted to the shareholders of the Company the question of whether the
Company will be liquidated or will function without a custodian for the assets
of the Company held by the Custodian. In that event the Custodian will deliver
the Portfolio Securities and cash of the Company held by it, subject as
aforesaid, in accordance with one of such alternatives which may be approved by
the requisite vote of shareholders, upon receipt by the Custodian of a copy of
the minutes of the meeting of shareholders at which action was taken, certified
by the Company's Secretary and an opinion of counsel to the Company in form and
content satisfactory to the Custodian.
14. Confidentiality. Both parties hereto agree that any
non-public information obtained hereunder concerning the other party is
confidential and may not be disclosed to any other person without the consent of
the other party, except as may be required by applicable law or at the request
of a governmental agency. The parties further agree that a breach of this
provision would irreparably damage the other party and accordingly agree that
each of them is entitled, without bond or other surety, to an injunction or
injunctions to prevent breaches of this provision.
15. Notices. Any notice or other instrument in writing authorized
or required by this Agreement to be given to either party hereto will be
sufficiently given if addressed to such party and mailed or delivered to it at
its office at the address set forth below; namely:
(a) In the case of notices sent to the Company to:
The Bramwell Funds, Inc.
745 Fifth Avenue
New York, New York 10151
Attention: Elizabeth R. Bramwell, President
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(b) In the case of notices sent to the Custodian to:
Firstar Trust Company
Securities Division
P.O. Box 2054
Milwaukee, Wisconsin 53201
Attention: Floyd Nalencz
or at such other place as such party may from time to time
designate in writing
16. Amendments. This Agreement may not be altered or amended,
except by an instrument in writing, executed by both parties, and in the case of
the Company, such alteration or amendment will be authorized and approved by its
Board.
17. Parties. This Agreement will be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
assigns; provided, however, that this Agreement will not be assignable by the
Company without the written consent of the Custodian or by the Custodian without
the written consent of the Company, authorized and approved by its Board; and
provided further that termination proceedings pursuant to Section 14 hereof will
not be deemed to be an assignment within the meaning of this provision.
18. Governing Law. This Agreement and all performance hereunder
will be governed by the laws of New York.
19. Counterparts. This Agreement may be executed in any number of
counterparties, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly authorized as of the
day and year first written above.
The Bramwell Funds, Inc.
By:
--------------------------------
ATTEST:
- -----------------------------
Firstar Trust Company
By:
--------------------------------
ATTEST:
- -----------------------------
DATE:________________________
AMENDED AND RESTATED
ADMINISTRATION AND FUND ACCOUNTING AGREEMENT
THIS AGREEMENT is made as of May 14, 1997, by and between The Bramwell
Funds, Inc., a Maryland corporation ("Bramwell Funds"), and Sunstone Financial
Group, Inc., a Wisconsin Corporation (the "Administrator").
WHEREAS, Bramwell Funds is registered under the Investment Company Act of
1940, as amended (the "Act") as an open-end management investment company and is
authorized to issue shares of common stock (the "Shares") in separate classes
with each such class representing the interests in a separate portfolio of
securities and other assets; and
WHEREAS, Bramwell Funds and the Administrator desire to enter into an
agreement pursuant to which the Administrator shall provide administration and
fund accounting services to such investment portfolios of Bramwell Funds as are
listed on Schedule A hereto commencing with The Bramwell Growth Fund and any
additional investment portfolios Bramwell Funds and Administrator may agree upon
and include on Schedule A as such Schedule may be amended from time to time
(such investment portfolios and any additional investment portfolios are
individually referred to as a "Fund" and collectively the "Funds").
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto, intending to be legally bound, do
hereby agree as follows:
1. Appointment
Bramwell Funds hereby appoints the Administrator as administrator and fund
accountant of the Funds for the period and on the terms set forth in this
Agreement. The Administrator accepts such appointment and agrees to render the
services herein set forth, for the compensation herein provided.
2. Services as Administrator
(a) Subject to the direction and control of Bramwell Fund's Board of
Directors and utilizing information provided by Bramwell Funds and its agents,
the Administrator will: (1) provide office space, facilities, equipment and
personnel to carry out its services hereunder; (2) compile data for and prepare
with respect to the Funds timely Notices to the Securities and Exchange
Commission (the "Commission") required pursuant to Rule 24f-2 under the Act and
Semi-Annual Reports on Form N-SAR; (3) prepare for execution by Bramwell Funds
and file all federal income and excise tax returns and state income tax returns
(and such other required tax filings as may be agreed to by the parties) other
than those required to be made by Bramwell
<PAGE>
Fund's custodian or transfer agent; (4) prepare compliance filings relating to
the registration of the securities of the Funds pursuant to state securities
laws with the advice of Bramwell Funds' counsel; (5) perform securities
valuations; (6) determine the income and expense accruals of the Funds; (7)
calculate daily net asset values and income factors of the Funds; (8) maintain
all general ledger accounts and related subledgers; (9) prepare financial
statements for the Annual and Semi-Annual Reports required pursuant to Section
30(d) under the Act; (10) review to the extent requested by Bramwell Funds
drafts of the Registration Statement for the Funds (on Form N-1A or any
replacement therefor) and any amendments thereto, and proxy materials; (11)
prepare and monitor each Fund's expense accruals and cause all appropriate
expenses to be paid from Fund assets on proper authorization from Bramwell
Funds; (12) assist in the acquisition of Bramwell Fund's fidelity bond required
by the Act, monitor the amount of the bond and make the necessary Commission
filings related thereto; (13) from time to time as the Administrator deems
appropriate, check each Fund's compliance with the policies and limitations
relating to portfolio investments as set forth in the Prospectus, Statement of
Additional Information, and Articles of Incorporation and monitor each Fund's
status as a regulated investment company under Subchapter M of the Internal
Revenue Code, as amended (but this function shall not relieve each Fund's
investment adviser of its primary day-to-day responsibility for assuring such
compliance); (14) maintain, and/or coordinate with the other service providers
the maintenance of, the accounts, books and other documents required pursuant to
Rule 31a-1(a) and (b) under the Act; and (15) generally assist in each Fund's
administrative operations. In addition, the Administrator will monitor Bramwell
Funds' arrangements with respect to services provided pursuant to any plan of
distribution including reporting to the Board of Directors with respect to the
amounts paid or payable by the Funds from time to time under the plan and the
nature of the services provided, and maintaining appropriate records in
connection with its monitoring duties. 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.
(b) The Directors of Bramwell Funds shall cause the officers and employees
of Bramwell Funds, the adviser, legal counsel, independent accountants,
custodian and transfer agent and other agents and representatives of the Funds
to cooperate with the Administrator and to provide the Administrator, upon
request, with such information, documents and advice relating to the Funds as is
within the possession or knowledge of such persons, in order to enable the
Administrator to perform its duties hereunder. In connection with its duties
hereunder, the Administrator shall be entitled to rely, shall not be liable or
responsible for any losses from its reliance, and shall be held harmless by the
Funds when acting in reliance, upon the instruction, advice, information or any
documents relating to the Funds provided to the Administrator by any of the
aforementioned persons or their representatives. Fees charged by such persons
shall be an expense of the Funds. The Administrator shall be entitled to rely on
any document which it reasonably believes to be genuine and to have been signed
or presented by the proper party. The Administrator shall not be held to have
notice of any change of authority of any officer, agent or employee of Bramwell
Funds until receipt of written notice thereof from Bramwell Funds.
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<PAGE>
(c) In compliance with the requirements of Rule 31a-3 under the Act, the
Administrator hereby agrees that all records which it maintains for the Funds
are the property of the Funds and further agrees to surrender promptly to each
Fund any of such records upon the Fund's request. The Administrator further
agrees to preserve for the periods prescribed by Rule 31a-2 under the Act the
records described in (a) above which are maintained by the Administrator for the
Fund.
(d) The Fund's Board of Directors and the Fund's investment adviser have
and retain responsibility for all compliance matters relating to the Fund
including but not limited to compliance with the Investment Company Act of 1940,
as amended, the Internal Revenue Code of 1986, as amended, and the policies and
limitations of each Fund relating to the portfolio investments as set forth in
the Prospectus and Statement of Additional Information. Sunstone's monitoring
and other functions hereunder shall not relieve the Board and the investment
adviser of their duty to act in good faith, in a manner reasonably believed to
be in the best interests of the Fund and with the care that an ordinary prudent
person in a like position would use under similar circumstances.
3. Fees; Delegation; Expenses
(a) In consideration of the services rendered pursuant to this Agreement,
Bramwell Funds will pay the Administrator a fee, computed daily and payable
monthly, at the annual rate specified in Schedule B plus reasonable
out-of-pocket expenses. Fees shall be paid at a rate that would aggregate at
least the applicable minimum fee. Out-of-pocket expenses include, but are not
limited to, travel, lodging and meals in connection with travel on behalf of
Bramwell Funds, security pricing and corporate action services utilized by the
Administrator, programming and related expenses (previously incurred or to be
incurred by Administrator) in connection with providing electronic transmission
of data between the Administrator and the Funds' other service providers,
brokers, dealers and depositories, and photocopying and overnight delivery
expenses.
(b) For the purpose of determining fees payable to the Administrator, net
asset value shall be computed in accordance with the Fund's Prospectuses and
resolutions of Bramwell Funds' Board of Directors. The fee for the period from
the day of the month this Agreement is entered into until the end of that month
shall be pro-rated according to the proportion which such period bears to the
full monthly period. Upon any termination of this Agreement before the end of
any month, the fee for such part of a month shall be pro-rated according to the
proportion which such period bears to the full monthly period and shall be
payable upon the date of termination of this Agreement. Such fee as is
attributable to each Fund shall be a separate charge to such Fund and shall be
the several (and not joint or joint and several) obligation of each such Fund.
(c) The Administrator will bear all expenses in connection with the
performance of its services under this Agreement except as otherwise provided
herein. Costs and expenses to be
3
<PAGE>
incurred in the operation of the Funds, including, but not limited to: taxes;
interest; brokerage fees and commissions, if any; salaries, fees and expenses of
officers and Directors; Commission fees and state Blue Sky fees; advisory and
administration fees; charges of custodians, transfer agents and dividend
disbursing agents; insurance premiums; outside auditing and legal expenses;
costs of organization and maintenance of corporate existence; typesetting,
proofing, printing and mailing of prospectuses, statements of additional
information, supplements, notices and proxy materials for regulatory purposes
and for distribution to current shareholders; typesetting, proofing, printing,
mailing and other costs of shareholder reports; expenses incidental to holding
meetings of shareholders and Directors; and any extraordinary expenses; will be
borne by the Funds. Expenses incurred for distribution of securities of the
Funds, including the typesetting, proofing, printing and mailing of prospectuses
for persons who are not shareholders of the Funds, will be borne by the Fund's
investment adviser.
4. Proprietary and Confidential Information
The Administrator agrees on behalf of itself and its employees to treat
confidentially and as proprietary information of Bramwell Funds all records and
other information relative to the Funds and prior, present or potential
shareholders of the Funds (and clients of said shareholders), and not to use
such records and information for any purpose other than the performance of its
responsibilities and duties hereunder, except after prior notification to and
approval in writing by Bramwell Funds, which approval shall not be unreasonably
withheld and may not be withheld where the Administrator may be exposed to civil
or criminal proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, or when so requested by Bramwell
Funds.
5. Limitation of Liability
The Administrator shall not be liable for any error of judgment or mistake
of law or for any loss suffered by Bramwell Funds in connection with the matters
to which this Agreement relates, except for a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the performance of its
duties or from reckless disregard by it of its obligations and duties under this
Agreement. Notwithstanding any other provision of this Agreement, and so long as
the Administrator acts in good faith and without gross negligence, Bramwell
Funds assumes full responsibility and shall indemnify and hold harmless the
Administrator from and against any and all actions, suits, claims, demands,
losses, expenses and liabilities whether with or without basis in fact or law
(including the costs of investigating or defending any alleged actions, suits,
claims, demands, losses, expenses and liabilities) of any and every nature which
the Administrator may sustain or incur or which may be asserted against the
Administrator by any person arising directly or indirectly out of any action
taken or omitted to be taken by it in performing the services hereunder, or in
reliance upon the instruction, advice, information or documents provided to the
Administrator by any party described in Section 2(b). (As used in this Section
5(a), the term
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"Administrator" shall include past and present directors, officers, employees
and other corporate agents of the Administrator as well as the corporation
itself.) The indemnity and defense provisions set forth herein indefinitely
survive the termination of this Agreement.
6. Term
(a) This Agreement shall become effective with respect to each Fund listed
on Schedule A hereof as of the date hereof and, with respect to each Fund not in
existence on that date, on the date an amendment to Schedule A to this Agreement
relating to that Fund is executed. Unless sooner terminated as provided herein,
this Agreement shall continue in effect with respect to each Fund until August
1, 1998. Thereafter, if not terminated, this Agreement shall continue
automatically in effect as to each Fund for successive annual periods unless
terminated as provided herein.
(b) This Agreement may be terminated with respect to any one or more
particular Funds without penalty by either party upon not less than ninety (90)
days written notice to the other party. The terms of this Agreement shall not be
waived, altered, modified, amended or supplemented in any manner whatsoever
except by a written instrument signed by the Administrator and Bramwell Funds.
7. Non-Exclusivity
The services of the Administrator rendered hereunder are not deemed to be
exclusive. The Administrator may render such services and any other services to
others, including other investment companies. Bramwell Funds recognizes that
from time to time directors, officers and employees of the Administrator may
serve as directors, trustees, officers and employees of other corporations or
trusts (including other investment companies), that such other entities may
include the name of the Administrator as part of their name and that the
Administrator or its affiliates may enter into administration, distribution,
fund accounting or other agreements with such other corporations or trusts.
8. Governing Law; Invalidity
This Agreement shall be governed by New York law. To the extent that the
applicable laws of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the Act, the latter shall control,
and nothing herein shall be construed in a manner inconsistent with the Act or
any rule or order of the Commission thereunder. Any provision of this Agreement
which may be determined by competent authority to be prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such
5
<PAGE>
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
9. Notices
Any notice required or to be permitted to be given by either party to
the other shall be in writing and shall be deemed to have been given when sent
by registered or certified mail, postage prepaid, return receipt requested, as
follows: Notice to the Administrator shall be sent to Sunstone Financial Group,
Inc., 207 East Buffalo Street, Suite 400, Milwaukee, WI, 53202, Attention:
Miriam M. Allison, and notice to Bramwell Funds shall be sent to Bramwell Funds,
Inc., 745 Fifth Avenue, New York, New York, 10151, Attention: Elizabeth R.
Bramwell.
6
<PAGE>
10. Counterparts
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original agreement but such counterparts shall together
constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer as of the day and year first above
written.
THE BRAMWELL FUNDS, INC.
("Bramwell Funds")
By:
--------------------------------------------
Elizabeth R. Bramwell
President
SUNSTONE FINANCIAL GROUP, INC.
("Administrator")
By:
--------------------------------------------
Miriam M. Allison
President
7
1<PAGE>
Schedule A
to the
Administration and Fund Accounting Agreement
by and between
The Bramwell Funds, Inc.
and
Sunstone Financial Group, Inc.
Name of Fund Effective Date
The Bramwell Growth Fund August 1, 1994
<PAGE>
Schedule B
to the
Administration and Fund Accounting Agreement
by and between
the Bramwell Funds, Inc.
and
Sunstone Financial Group, Inc.
The Bramwell Growth Fund
Fee Schedule
Pursuant to Section 3, Bramwell Funds shall pay Administrator a fee, computed
daily and payable monthly, based on the aggregate average net assets of Bramwell
Growth Fund at the annual rate of 0.150 of 1% on the first $50 million of
average net assets, 0.125 of 1% on the next $50 million of average net assets,
0.075 of 1% on the next $100 million of average net assets, and 0.050 of 1% on
average net assets in excess of $200 million, subject to an annual minimum fee
of $60,000, plus out of pocket expenses. The parties understand that this fee
schedule assumes only one investment portfolio of the Bramwell Funds. The fee
schedule for multiple investment portfolios will be such schedule as the parties
may agree, as reflected in an amended Schedule B.
<PAGE>
TRANSFER AGENT AGREEMENT
THIS AGREEMENT is made and entered into on this A~ day of B~, 19C~, by and
between D~ (hereinafter referred to as the "I~") and Firstar Trust Company, a
corporation organized under the laws of the State of Wisconsin (hereinafter
referred to as the "Agent").
W I T N E S S E T H:
WHEREAS, the I~ is an/are open-ended management investment
company/companies which is/are registered under the Investment Company Act of
1940; and
WHEREAS, the Agent is a trust company and, among other things, is in the
business of administering transfer and dividend disbursing agent functions for
the benefit of its customers;
NOW, THEREFORE, the I~ and the Agent do mutually promise and agree as
follows:
1. Terms of Appointment; Duties of the Agent
Subject to the terms and conditions set forth in this Agreement, the I~
hereby employ/s and appoint/s the Agent to act as transfer agent and dividend
disbursing agent.
The Agent shall perform all of the customary services of a transfer agent
and dividend disbursing agent, and as relevant, agent in connection with
accumulation, open account or similar plans (including without limitation any
periodic investment plan or periodic withdrawal program), including but not
limited to:
A. Receive orders for the purchase of shares, with prompt delivery, where
appropriate, of payment and supporting documentation to the I~'s
custodian;
B. Process purchase orders and issue the appropriate number of
certificated or uncertificated shares with such uncertificated shares
being held in the appropriate shareholder account;
C. Process redemption requests received in good order and, where
relevant, deliver appropriate documentation to the I~'s custodian;
D. Pay monies (upon receipt from the I~'s custodian, where relevant) in
accordance with the instructions of redeeming shareholders;
E. Process transfers of shares in accordance with the shareowner's
instructions;
F. Process exchanges between funds within the same family of funds;
<PAGE>
G. Issue and/or cancel certificates as instructed; replace lost, stolen
or destroyed certificates upon receipt of satisfactory indemnification
or surety bond;
H. Prepare and transmit payments for dividends and distributions declared
by the I~.
I. Make changes to shareholder records, including, but not limited to,
address changes in plans (i.e., systematic withdrawal, automatic
investment, dividend reinvestment, etc.);
J. Record the issuance of shares of the I~ and maintain, pursuant to
Section Rule 17ad- 10(e), a record of the total number of shares of
the I~ which are authorized, issued and outstanding;
K. Prepare shareholder meeting lists and, if applicable, mail, receive
and tabulate proxies;
L. Mail shareholder reports and prospectuses to current shareholders;
M. Prepare and file U.S. Treasury Department forms 1099 and other
appropriate information returns required with respect to dividends and
distributions for all shareholders;
N. Provide shareholder account information upon request and prepare and
mail confirmations and statements of account to shareholders for all
purchases, redemptions and other confirmable transactions as agreed
upon with the I~; and
O. Provide a Blue Sky System which will enable the I~ to monitor the
total number of shares sold in each state. In addition, the I~ shall
identify to the Agent in writing those transactions and assets to be
treated as exempt from the Blue Sky reporting to the I~ for each
state. The responsibility of the Agent for the I~'s Blue Sky state
registration status is solely limited to the initial compliance by the
I~ and the reporting of such transactions to the I~.
2. Compensation
The I~ agree/s to pay the Agent for performance of the duties listed in
this Agreement; the fees and out-of-pocket expenses include, but are not limited
to the following: printing, postage, forms, stationery, record retention,
mailing, insertion, programming, labels, shareholder lists and proxy expenses.
These fees and reimbursable expenses may be changed from time to time
subject to mutual written agreement between the I~ and the Agent.
The I~ agree/s to pay all fees and reimbursable expenses within ten (10)
business days following the mailing of the billing notice.
- 2 -
<PAGE>
3. Representations of Agent
The Agent represents and warrants to the I~ that:
A. it is a trust company duly organized, existing and in good standing
under the laws of Wisconsin;
B. it is duly qualified to carry on its business in the state of
Wisconsin;
C. it is empowered under applicable laws and by its charter and bylaws to
enter into and perform this Agreement;
D. All requisite corporate proceedings have been taken to authorize it to
enter and perform this Agreement; and
E. It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under
this Agreement.
4. Representations of the I~
The I~ represent/s and warrant/s to the Agent that:
A. The I~ is an/are open-ended diversified investment company/companies
under the Investment Company Act of 1940;
B. The I~ is/are corporation/s or business trust/s organized, existing,
and in good standing under the laws of F~;
C. The I~ is/are empowered under applicable laws and by its/their G~
Corporate Charter/Declaration of Trust and bylaws to enter into and
perform this Agreement;
D. All necessary proceedings required by the G~ Corporate
Charter/Declaration of Trust have been taken to authorize it/them to
enter into and perform this Agreement;
E. The I~ will comply with all applicable requirements of the Securities
and Exchange Acts of 1933 and 1934, as amended, the Investment Company
Act of 1940, as amended, and any laws, rules and regulations of
governmental authorities having jurisdiction; and
F. A registration statement under the Securities Act of 1933 is currently
effective and will remain effective, and appropriate state securities
law filings have been made and will continue to be made, with respect
to all shares of the F~ being offered for sale.
- 3 -
<PAGE>
5. Covenants of I~ and Agent
The I~ shall furnish the Agent a certified copy of the resolution of the
Board of E~ of the I~ authorizing the appointment of the Agent and the execution
of this Agreement. The I~ shall provide to the Agent a copy of the G~ Corporate
Charter/Declaration of Trust, bylaws of the J~, and all amendments.
The Agent shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the Investment Company Act of 1940, as amended, and
the rules thereunder, the Agent agrees that all such records prepared or
maintained by the Agent relating to the services to be performed by the Agent
hereunder are the property of the I~ and will be preserved, maintained and made
available in accordance with such section and rules and will be surrendered to
the I~ on and in accordance with its/their request.
6. Indemnification; Remedies Upon Breach
The Agent agrees to use reasonable care and act in good faith in performing
its duties hereunder.
Notwithstanding the foregoing, the Agent shall not be liable or responsible
for delays or errors occurring by reason of circumstances beyond its control,
including acts of civil or military authority, national or state emergencies,
fire, mechanical or equipment failure, flood or catastrophe, acts of God,
insurrection or war. In the event of a mechanical breakdown beyond its control,
the Agent shall take all reasonable steps to minimize service interruptions for
any period that such interruption continues beyond the Agent's control. The
Agent will make every reasonable effort to restore any lost or damaged data, and
the correcting of any errors resulting from such a breakdown will be at the
Agent's expense. The Agent agrees that it shall, at all times, have reasonable
contingency plans with appropriate parties, making reasonable provision for
emergency use of electrical data processing equipment to the extent appropriate
equipment is available. Representatives of D~ shall be entitled to inspect the
Agent's premises and operating capabilities at any time during regular business
hours of the Agent, upon reasonable notice to the Agent.
The I~ will indemnify and hold the Agent harmless against any and all
losses, claims, damages, liabilities or expenses (including reasonable counsel
fees and expenses) resulting from any claim, demand, action or suit not
resulting from the Agent's bad faith or negligence, and arising out of or in
connection with the Agent's duties on behalf of the I~ hereunder.
Further, the I~ will indemnify and hold the Agent harmless against any and
all losses, claims, damages, liabilities or expenses (including reasonable
counsel fees and expenses) resulting from any claim, demand, action or suit as a
result of the negligence of the I~ or the principal underwriter (unless
contributed to by the Agent's own negligence or bad faith); or as a result of
the Agent acting upon telephone instructions relating to the exchange or
redemption of shares
- 4 -
<PAGE>
received by the Agent and reasonably believed by the Agent to have originated
from the record owner of the subject shares; or as a result of the Agent acting
upon any instructions executed or orally communicated by a duly authorized
officer or employee of the I~, according to such lists of authorized officers
and employees furnished to the Agent and as amended from time to time in writing
by a resolution of the Board of E~ of the I~; or as a result of acting in
reliance upon any genuine instrument or stock certificate signed, countersigned
or executed by any person or person's authorized to sign, countersign or execute
the same.
In order for this section to apply, it is understood that if in any case
the I~ may be asked to indemnify or hold harmless the Agent, the I~ shall be
advised of all pertinent facts concerning the situation in question, and it is
further understood that the Agent will use reasonable care to notify the I~
promptly concerning any situation which presents or appears likely to present a
claim for indemnification against the I~. The I~ shall have the option to defend
the Agent against any claim which may be the subject of this indemnification
and, in the event that the I~ so elect/s the Agent will so notify the I~, and
thereupon the I~ shall take over complete defense of the claim and the Agent
shall sustain no further legal or other expenses in such situation for which the
Agent shall seek indemnification under this section. The Agent will in no case
confess any claim or make any compromise in any case in which the I~ will be
asked to indemnify the Agent, except with the I~'s prior written consent.
7. Confidentiality
The Agent agrees on behalf of itself and its employees to treat
confidentially all records and other information relative to the I~ and
its/their shareholders and shall not be disclosed to any other party, except
after prior notification to and approval in writing by the I~, which approval
shall not be unreasonably withheld and may not be withheld where the Agent may
be exposed to civil or criminal contempt proceedings for failure to comply after
being requested to divulge such information by duly constituted authorities.
H~ Additional Series. The _______________ Investment Trust is authorized to
issue separate classes of shares of beneficial interest representing interests
in separate investment portfolios. The parties intend that each portfolio
established by the trust, now or in the future, be covered by the terms and
conditions of this agreement.
8. Wisconsin Law to Apply
This Agreement shall be construed and the provisions thereof interpreted
under and in accordance with the laws of the state of Wisconsin.
9. Amendment, Assignment, Termination and Notice
A. This Agreement may be amended by the mutual written consent of the
parties.
- 5 -
<PAGE>
B. After the first full year, this Agreement may be terminated upon
ninety (90) day's written notice given by one party to the other.
C. This Agreement and any right or obligation hereunder may not be
assigned by either party without the signed, written consent of the
other party.
D. Any notice required to be given by the parties to each other under the
terms of this Agreement shall be in writing, addressed and delivered,
or mailed to the principal place of business of the other party.
E. In the event that the I~ give/s to the Agent its/their written
intention to terminate and appoint a successor transfer agent, the
Agent agrees to cooperate in the transfer of its duties and
responsibilities to the successor, including any and all relevant
books, records and other data established or maintained by the Agent
under this Agreement.
F. Should the I~ exercise its/their right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be
paid by the I~.
D~ Firstar Trust Company
By: By:
----------------------- ------------------------------
Attest: Attest:
------------------------ -------------------------
Assistant Secretary
- 6 -
<PAGE>
DECHERT PRICE & RHOADS
477 MADISON AVENUE
NEW YORK, NEW YORK 10022
July 28, 1994
The Bramwell Funds, Inc.
745 Fifth Avenue
New York, New York 10151
Dear Sirs:
We have acted as counsel for The Bramwell Funds, Inc., a Maryland
corporation (the "Company"), in connection with the organization of the Company,
the registration of the Company under the Investment Company Act of 1940 and the
registration under the Securities Act of 1933 of an indefinite number of shares
of common stock, $.0001 par value each, of the Company.
As counsel for the Company, we have participated in the preparation of
the registration statement on Form N-1A relating to such shares and have
examined and relied upon such records of the Company and such other documents we
have deemed to be necessary to render the opinion expressed herein. Based on
such examination, we are of the opinion that:
(i) The Company is a corporation duly organized and existing
under the laws of the State of Maryland;
(ii) The Company is authorized to issue five hundred million
(500,000,000) shares of common stock, par value $.0001 per
share, of which 200,000,000 shares have been initially
allocated to The Bramwell Growth Fund, a series of the
Company's common stock, and that such shares have been duly
and validly authorized by all requisite action of the
Directors of the Company, and no action of the shareholders
is required in such connection; and
(iii)Assuming that the Company or its agent receives
consideration for such shares in accordance with the terms
of the prospectus forming a part of the Company's
registration statement and the provisions of its Articles of
Incorporation, the shares will be legally and validly issued
and will be fully paid and non-assessable by the Company.
We hereby consent to the use of this opinion as an exhibit to the
Company's registration Statement on Form N-1A filed with the Securities and
Exchange Commission (File No. 33-79742) for the registration under the
Securities Act of 1933 of an indefinite number of shares of
<PAGE>
The Bramwell Funds, Inc.
July 28, 1994
Page 2
the Company, and to the use of our name in the prospectus and statement of
additional information contained therein, and any amendments thereto. In giving
such consent, we do not hereby admit that we are within the category of persons
whose consent is required by Section 7 of the Securities Act of 1933, as
amended, and the rules and regulations thereunder.
Very truly yours,
\s\ DECHERT PRICE AND RHOADS
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
The Bramwell Funds, Inc.
We consent to the inclusion in Post-Effective Amendment No. 5 to the
Registration Statement on Form N-1A of The Bramwell Funds, Inc. of our report
dated July 18, 1997, on our audit of the financial statements and financial
highlights of The Bramwell Growth Fund, which constitutes The Bramwell Funds,
Inc., which report is included in the Annual Report for the year ended June 30,
1997 which is also included in the Registration Statement. We also consent to
the reference to our Firm under the caption, "EXPERTS" in the Statement of
Additional Information and under the caption "Financial Highlights" in the
Prospectus.
\s\ Coopers & Lybrand LLP
Milwaukee, Wisconsin
October 31, 1997
<PAGE>
July __, 1994
The Board of Directors
The Bramwell Funds, Inc.
745 Fifth Avenue, 16th Floor
New York, New York 10151
To the Board of Directors:
As President of Bramwell Capital Management, Inc.("BramCap"), I hereby
confirm the offer of BramCap to purchase 10,000 shares of the capital stock of
The Bramwell Funds, Inc.(the "Company"), par value $.0001 per share, at a price
of $10.00 per share for an aggregate price of $100,000. I understand that
BramCap will receive upon delivery of the aggregate purchase price of $100,000
to the Company 10,000 shares of the capital stock which has initially been
allocated to a series of the Company's capital stock denominated as The Bramwell
Growth Fund("Fund Shares").
I hereby acknowledge that BramCap is purchasing the Fund Shares for
investment and not for distribution, that BramCap has no present intention of
selling or transferring the Fund Shares and that the Fund Shares BramCap is
purchasing are restricted shares which cannot be transferred except pursuant to
an opinion of counsel that the Fund Shares can be sold in compliance with the
Securities Act of 1933, as amended, which opinion is acceptable to the Company
and its counsel. BramCap agrees that any share certificate which is to be issued
shall bear a legend indicating that the Fund Shares cannot be sold except as
indicated above and that the Company will issue stop transfer instructions to
its transfer agent against the free transfer of the Fund Shares.
BramCap further confirms that payment of the proceeds of any redemption by
the Company of the Fund Shares will bereduced by a pro rata portion of any
then-unamortized organizational expenses of the Fund. This proration will be
calculated by dividing the number of Fund Shares to be realized by the aggregate
number of Fund Shares held which represent the initial capital of The Bramwell
Growth Fund.
Very sincerely,
BRAMWELL CAPITAL MANAGEMENT, INC.
By:
--------------------------------
Elizabeth R. Bramwell
President
<PAGE>
July __, 1994
Elizabeth R. Bramwell
President
Bramwell Capital Management, Inc.
745 Fifth Avenue, 16th Floor
New York, New York 10151
Dear Mrs. Bramwell:
The Bramwell Funds, Inc. (the "Company") hereby accepts the offer of
Bramwell Capital Management, Inc. ("BramCap") to purchase 10,000 shares of the
Company's capital stock upon the terms and conditions set forth in BramCap's
letter dated July XX, 1994 and in reliance upon the understandings and
acknowledgements made in that letter.
The Company hereby acknowledges receipt of a check in the amount of $100,000
made payable to the Company in full payment of the purchase price for such
shares.
Very truly yours,
THE BRAMWELL FUNDS, INC.
By: Elizabeth R. Bramwell
J. Sinclair Armstrong
Isabel H. Benham
George F. Keane
James C. Sargent
Directors
<PAGE>
INDIVIDUAL RETIREMENT ACCOUNT
DISCLOSURE STATEMENT
Please read the following information together with the Individual
Retirement Account Custodial Agreement and the Prospectus(es) for the fund(s)
you select for investment of your IRA contributions.
You may revoke this account any time within seven calendar days after
it is established by mailing or delivering a written request for revocation to:
__________________, c/o Firstar Trust Company, 615 East Michigan Avenue, 3rd
Floor, Milwaukee, Wisconsin 53202, Attention: Mutual Fund Department. If your
revocation is mailed, the date of the postmark (or the date of certification if
sent by certified or registered mail) will be considered your revocation date.
Upon proper revocation, you will receive a full refund of your initial
contribution, without any adjustments for items such as administrative fees or
fluctuations in market value.
1. General. Your IRA is a custodial account created for your exclusive
benefit, and Firstar Trust Company serves as custodian. Your interest in the
account is nonforfeitable.
2. Investments. Contributions made to your IRA will be invested in one
or more of the regulated investment companies for which _______________ serves
as investment advisor or any other regulated investment company designated by
______________________.
3. Eligibility. Employees and self-employed individuals are eligible to
contribute to an IRA. Employers may also contribute to employer-sponsored IRAs
established for the benefit of their employees. You may also establish an IRA to
receive rollover contributions and transfers from another IRA custodian or
trustee or from certain other retirement plans.
4. Time of Contribution. You may make annual regular contributions to
your IRA any time up to and including the due date for filing your tax return
for the year, not including extensions. You may continue to make regular
contributions to your IRA up to (but not including) the calendar year in which
you reach 70 1/2. Employer contributions to a SEP - IRA plan may be continued
after you attain age 70 1/2. Rollover contributions and transfers may be made at
any time, including after you reach age 70 1/2.
5. Amount of Contribution. You may make annual regular contributions to
an IRA in any amount up to 100% of your compensation for the year or $2,000,
whichever is less. Qualifying rollover contributions and transfers are not
subject to this limitation.
6. Spousal IRA. If you are married and your spouse is not employed (or
if your employed spouse elects to be treated as having no compensation), you may
make contributions to a spousal IRA in addition to your own IRA. The maximum
amount contributed to both your own and to your spouse's IRA may not exceed 100%
of your compensation or $2,250, whichever is less. In no event, however, may the
annual contribution to either your account or your spouse's account exceed
$2,000.
7. Rollovers and Transfers. You are allowed to "rollover" a
distribution or transfer your assets from one individual retirement account to
another without any tax liability. Rollovers between IRAs may be made once per
year and must be accomplished within 60 days after the distribution. Also, under
certain conditions, you may roll over (tax free) all or a portion of a
distribution received from a qualified plan or tax-sheltered annuity. However,
strict limitations apply to such rollovers, and you should seek competent advice
in order to comply with all of the rules governing rollovers.
<PAGE>
Effective January 1, 1993, most distributions from qualified retirement
plans will be subject to a 20% withholding requirement. The 20% withholding can
be avoided by directly transferring the amount of the distribution to an
individual retirement account or to certain other types of retirement plans. You
should receive more information regarding these new withholding rules and
whether your distribution can be transferred to an IRA from the plan
administrator prior to receiving your distribution.
8. Excess Contributions. Contributions which exceed the allowable
maximum for federal income tax purposes are treated as excess contributions. A
nondeductible penalty tax of 6% of the excess amount contributed will be added
to your income tax for each year in which the excess contribution remains in
your account.
9. Correction of Excess Contribution. If you make a contribution in
excess of your allowable maximum, you may correct the excess contribution and
avoid the 6% penalty tax for that year by withdrawing the excess contribution
and its earnings on or before the date, including extensions, for filing your
tax return. Any earnings on the withdrawn excess contribution will be taxable in
the year the excess contribution was made and may be subject to a 10% penalty
tax. In addition, in certain cases an excess contribution may be withdrawn after
the time for filing your tax return. Finally, excess contributions for one year
may be carried forward and applied against the contribution limitation in
succeeding years.
10. Tax Deductibility of Annual Contributions. Although you may make an
IRA contribution within the limitations described above, all or a portion of
your contribution may be nondeductible. No deduction is allowed for a rollover
contribution or transfer. If you are not married and are not an "active
participant" in an employer-sponsored retirement plan, you may make a fully
deductible IRA contribution in any amount up to $2,000 or 100% of your
compensation for the year, whichever is less. The same limits apply if you are
married and file a joint return with your spouse and neither you nor your spouse
is an "active participant" in an employer-sponsored retirement plan.
An employer-sponsored retirement plan includes any of the following
types of retirement plans:
- a qualified pension, profit-sharing, or stock
bonus plan established in accordance with IRC
401(a) or 401(k),
- a Simplified Employee Pension Plan (SEP) (IRC
408(k),
- a deferred compensation plan maintained by a
governmental unit or agency,
- tax-sheltered annuities and custodial
accounts (IRC 403(b) and 403(b)(7),
- a qualified annuity plan under IRC Section
403(a).
Distributions from the types of plans listed above are eligible to be rolled
over or transferred to your IRA.
Generally, you are considered an "active participant" in a defined
contribution plan if an employer contribution or forfeiture was credited to your
account during the year. You are considered an "active participant" in a defined
benefit plan if you are eligible to participate in a plan, even though you elect
not to participate. You are also treated as an "active participant" if you make
a voluntary or mandatory contribution to any type of plan, even if your employer
makes no contribution to the plan.
If you (or your spouse, if filing a joint tax return) are covered by an
employer-sponsored retirement plan, your IRA contribution is fully deductible if
your adjusted gross income (or combined
<PAGE>
income if you file a joint tax return) does not exceed certain limits. For this
purpose, adjusted gross income is not modified to take into account any
deduction for IRA contributions, but does take into account the passive loss
limitations under Code Section 86 and any taxable benefits under the Social
Security Act and the Railroad Retirement Act.
If you (or your spouse, if filing a joint tax return) are covered by an
employer-sponsored retirement plan, the deduction for your IRA contribution is
reduced proportionately for adjusted gross income which exceeds the applicable
dollar amount. The applicable dollar amount for an individual is $25,000 and
$40,000 for married couples filing a joint tax return. The applicable dollar
limit for married individuals filing separate returns if $0. If your adjusted
gross income exceeds the applicable dollar amount by $10,000 or less, you may
make a deductible IRA contribution. The deductible amount, however, will be less
than $2,000.
To determine the amount of your deductible contribution, use the
following calculations:
1) Subtract the applicable dollar amount from your
adjusted gross income. If the result is $10,000 or
more, you can only make a nondeductible contribution
to your IRA.
2) Divide the above figure by $10,000, and multiply that
percentage by $2,000.
3) Subtract the dollar amount (result from #2 above)
from $2,000 to determine the amount which is
deductible.
If the deduction limit is not a multiple of $10, then it should be
rounded up to the next $10. There is a $200 minimum floor on the deduction limit
if your adjusted gross income does not exceed $35,000 (for a single taxpayer),
$50,000 (for married taxpayers filing jointly) or $10,000 (for a married
taxpayer filing separately).
Even if your income exceeds the limits described above, you may make a
contribution to your IRA up to the contribution limitations described in Section
5 above. To the extent that your contribution exceeds the deductible limits, it
will be nondeductible. However, earnings on all IRA contributions are tax
deferred until distribution.
11. Simplified Employee Pension Plan. Your IRA may be used as part of a
Simplified Employee Pension Plan established by your employer. Your employer may
contribute to your IRA/SEP up to a maximum of 15% of your compensation or
$30,000, whichever is less. If your SEP Plan permits, you may also elect to have
your employer make salary reduction contributions of up to $8,994 for 1993
(adjusted annually for cost of living increases) per year to your IRA. However,
the combination of the employer's contributions and your salary reduction
contributions may not exceed the lesser of 15% of your compensation or $30,000.
It is your responsibility and that of your employer to see that contributions in
excess of normal IRA limits are made under a valid Simplified Employee Pension
Plan and are, therefore, proper.
12. Form of Distributions. Distributions may be made in any one of
three methods:
(a) a lump-sum distribution,
<PAGE>
(b) installments over a period not extending beyond your life
expectancy (as determined by actuarial tables), or
(c) installments over a period not extending beyond the joint life
expectancy of you and your designated beneficiary (as determined by
actuarial tables).
13. Latest Time to Withdraw. You must begin receiving the assets in
your account no later than April 1 following the calendar year in which you
reach age 70 1/2 (your "required beginning date"). In general, the minimum
amount that must be distributed each year is equal to the amount obtained by
dividing the balance in your IRA on the last day of the prior year (or the last
day of the year prior to the year in which you attain age 70 1/2) by your life
expectancy, the joint life expectancy of you and your beneficiary, or the
specified payment term, whichever is applicable. A federal tax penalty may be
imposed against you if the required minimum distribution is not made for the
year you reach age 70 1/2 and for each year thereafter. The penalty is equal to
50% of the amount by which the actual distribution is less than the required
minimum.
Unless you or your spouse elects otherwise, your life expectancy and/or
the life expectancy of your spouse will be recalculated annually. An election
not to recalculate life expectancy(ies) is irrevocable and will apply to all
subsequent years. The life expectancy of a nonspouse beneficiary may not be
recalculated.
If you have two or more IRAs, you may satisfy the minimum distribution
requirements by receiving a distribution from one of your IRAs in an amount
sufficient to satisfy the minimum distribution requirements for your other IRAs.
You must still calculate the required minimum distribution separately for each
IRA, but then such amounts may be totalled and the other distribution taken from
one or more of your individual IRAs.
Distribution from your IRA must satisfy the special "incidental death
benefit" rules of the Internal Revenue Code. These provisions set forth certain
limitations on the joint life expectancy of you and your beneficiary. If your
beneficiary is not your spouse, your beneficiary will be generally considered to
be no more than 10 years younger than you for the purpose of calculating the
minimum amount that must be distributed.
14. Distribution of Account Assets After Death. If you die before
receiving the balance of your account, distribution of your remaining account
balance is subject to several special rules. If you die on or after your
required beginning date, distribution must continue in a method at least as
rapid as under the method of distribution in effect at your death. If you die
before your required beginning date, your remaining interest will, at the
election of your beneficiary or beneficiaries, (i) be distributed by December 31
of the year in which occurs the fifth anniversary of your death, or (ii)
commence to be distributed by December 31 of the year following your death over
a period not exceeding the life or life expectancy of your designated
beneficiary or beneficiaries.
Two additional distribution options are available if your spouse is the
beneficiary: (i) payments to your spouse may commence as late as December 31 of
the year you would have attained age 70 1/2 and be distributed over a period not
exceeding the life or life expectancy of your spouse, or (ii) your spouse can
simply elect to treat your IRA as his or her own, in which case distributions
will be required to commence by April 1 following the calendar year in which
your spouse attains age 70 1/2.
<PAGE>
15. Tax Treatment of Distributions. Amounts distributed to you are
generally includable in your gross income in the taxable year you receive them
and are taxable as ordinary income. To the extent, however, that any part of a
distribution constitutes a return of your nondeductible contributions, it will
not be included in your income. The amount of any distribution excludable from
income is the portion that bears the same ratio as your aggregate nondeductible
contributions bear to the balance of your IRA at the end of the year (calculated
after adding back distributions during the year). For this purpose, all of your
IRAs are treated as single IRAs. Furthermore, all distributions from and IRA
during a taxable year are to be treated as one distribution. The aggregate
amount of distributions excludable from income for all years cannot exceed the
aggregate nondeductible contributions for all calendar years. No distribution to
you or anyone else from your account can qualify for capital gains treatment
under the federal income tax laws. Similarly, you are not entitled to the
special five- or ten-year averaging rule for lump-sum distributions available to
persons receiving distributions from certain other types of retirement plans.
All distributions are taxed to the recipient as ordinary income except the
portion of a distribution which represents a return of nondeductible
contributions.
16. Early Distributions. Distributions from your IRA made before age 59
1/2 will be subject to a 10% nondeductible penalty tax unless the distribution
is a return of nondeductible contributions or is made because of your death,
disability, as part of a series of substantially equal periodic payments over
your life expectancy or the joint life expectancy of you and your beneficiary,
or the distribution is an exempt withdrawal of an excess contribution. The
penalty tax may also be avoided if the distribution is rolled over to another
individual retirement account.
17. Qualification of the Plan. Your Individual Retirement Account Plan
has been approved as to form by the Internal Revenue Service. The Internal
Revenue Service approval is a determination only as to the form of the Plan and
does not represent a determination of the merits of the Plan as adopted by you.
You may obtain further information with respect to your Individual Retirement
Account from any district office of the Internal Revenue Service.
18. Prohibited Transactions. If any of the following events occur
during the existence of your IRA, your account will be disqualified, and the
entire balance in your account will be treated as if distributed to you and will
be taxable to you as ordinary income during the year in which such event occurs:
(a) the sale, exchange, or leasing of any property between you and your
account,
(b) the lending of money or other extensions of credit between you and
your account,
(c) the furnishing of goods, services, or facilities between you and
your account, and/or
If you are under age 59 1/2, you may also be subject to the 10% tax on early
distributions.
19. Penalty for Pledging Account. If you use (pledge) all or part of
your IRA as security for a loan, then the portion so pledged will be treated as
if distributed to you and will be taxable to you as ordinary income during the
year in which you make such pledge. The 10% additional tax on early
distributions may also apply.
<PAGE>
20. Reporting for Tax Purposes. Deductible contributions to your IRA
may be claimed as a deduction on your tax form 1040 for the taxable year
contributed. If any nondeductible contributions are made by you during a tax
year, such amounts must be reported on Form 8606 and attached to your Federal
Income Tax Return for the year contributed. If you report a nondeductible
contribution to your IRA and do not make the contribution, you will be subject
to a $100 penalty for each overstatement unless a reasonable cause is shown for
not contributing. Other reporting will be required by you in the event that
special taxes or penalties described herein are due. You must also file Treasury
Form 5329 with the IRS for each taxable year in which the contribution limits
are exceeded, a premature distribution takes place, or less than the required
minimum amount is distributed from your IRA.
21. Allocation of Earnings. The method of computing and allocating
annual earnings is set forth in Article VIII, Section 1 of the Individual
Retirement Account Custodial Agreement. The growth in value of your IRA is
neither guaranteed or projected.
22. Income Tax Withholding. You must indicate on distribution requests
whether or not federal income taxes should be withheld. Redemption requests not
indicating an election not to have federal income tax withheld will be subject
to withholding.
23. Other Information. Information about the shares of each mutual fund
available for investment by your IRA must be furnished to you in the form of a
prospectus governed by rules of the Securities and Exchange Commission. Please
refer to the prospectus for detailed information concerning your mutual fund.
You may obtain further information concerning IRAs from any District Office of
the Internal Revenue Service.
Fees and other expenses of maintaining your account may be charged to
you or your account. The Custodian's fee schedule is included as part of these
materials.
<PAGE>
INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
The following constitutes an agreement establishing an Individual
Retirement Account (under Section 408(a) of the Internal Revenue Code) between
the Depositor and the Custodian.
ARTICLE I
The Custodian may accept additional cash contributions on behalf of the
Depositor for a tax year of the Depositor. The total cash contributions are
limited to $2,000 for the tax year unless the contribution is a rollover
contribution described in Section 402(c) (but only after December 31, 1992),
403(a)(4), 403(b)(8), 408(d)(3), or an employer contribution to a simplified
employee pension plan as described in Section 408(k). Rollover contributions
before January 1, 1993, include rollovers described in Section 402(a)(5),
402(a)(6), 402(a)(7), 403(a)(4), 403(b)(8), 408(d)(3), or an employer
contribution to a simplified employee pension plan as described in Section
408(k).
ARTICLE II
The Depositor's interest in the balance in the custodial account is
nonforfeitable.
1. No part of the custodial funds may be invested in life insurance
contracts, nor may the assets of the custodial account be commingled with other
property except in a common trust fund or common investment fund (within the
meaning of Section 408(a)(5).
2. No part of the custodial funds may be invested in collectibles
(within the meaning of Section 408(m)(3) which provides an exception for certain
gold and silver coins and coins issued under the laws of any state.
ARTICLE IV
1. Notwithstanding any provision of this agreement to the contrary, the
distribution of the Depositor's interest in the custodial account shall be made
in accordance with the following requirements and shall otherwise comply with
Section 408(a)(6) and Proposed Regulations Section 1.408-8, including the
incidental death benefit provisions of Proposed Regulations Section 1.401
(a)(9)-2, the provisions of which are incorporated by reference.
2. Unless otherwise elected by the time distributions are required to
begin to the Depositor under Paragraph 3, or to the surviving spouse under
Paragraph 4, other than in the case of a life annuity, life expectancies shall
be recalculated annually. Such election shall be irrevocable as to the Depositor
and the surviving spouse shall apply to all subsequent years. The life
expectancy of a nonspouse beneficiary may not be recalculated.
3. The Depositor's entire interest in the custodial account must be, or
begin to be, distributed by the Depositor's required beginning date. (April 1
following the calendar year end in which
<PAGE>
the Depositor reaches age 70 1/2). By that date, the Depositor may elect, in a
manner acceptable to the Custodian, to have the balance in the custodial account
distributed in:
(a) A single sum payment.
(b) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the life of the Depositor.
(c) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the joint and last survivor lives of
the Depositor and his or her designated beneficiary.
(d) Equal or substantially equal annual payments over a specified
period that may not be longer than the Depositor's life expectancy.
(e) Equal or substantially equal annual payments over a specified
period that may not be longer than the joint life and last survivor expectancy
of the Depositor and his or her designated beneficiary.
4. If the Depositor dies before his or her entire interest is
distributed to him or her, the entire remaining interest will be distributed as
follows:
(a) If the Depositor dies on or after distribution of his or her
interest has begun, distribution must continue to be made in accordance with
Paragraph 3.
(b) If the Depositor dies before distribution of his or her interest
has begun, the entire remaining interest will, at the election of the Depositor
or, if the Depositor has not so elected, at the election of the beneficiary or
beneficiaries, either
(i) Be distributed by the December 31 of the year containing the
fifth anniversary of the Depositor's death, or
(ii) Be distributed in equal or substantially equal payments over
the life or life expectancy of the designated beneficiary or
beneficiaries starting by December 31 of the year following the year of
the Depositor's death. If, however, the beneficiary is the Depositor's
surviving spouse, then this distribution is not required to begin
before December 31 of the year in which the Depositor would have turned
age 70 1/2.
(c) Except where distribution in the form of any annuity meeting the
requirements of Section 408(b)(3) and its related regulations has irrevocably
commenced, distributions are treated as having begun on the Depositor's required
beginning date, even though payments may actually have been made before that
date.
(d) If the Depositor dies before his or her entire interest has been
distributed and if the beneficiary is other than the surviving spouse, no
additional cash contributions or rollover contributions may be accepted in the
account.
5. In the case of a distribution over life expectancy in equal or
substantially equal annual payments, to determine the minimum annual payment for
each year, divide the Depositor's entire interest in the custodial account as of
the close of business on December 31 of the preceding year by the life
<PAGE>
expectancy of the Depositor (or the joint life and last survivor expectancy of
the Depositor and the Depositor's designated beneficiary, or the life expectancy
of the designated beneficiary, whichever applies). In the case of distributions
under Paragraph 3, determine the initial life expectancy (or joint life and last
survivor expectancy) using the attained ages of the Depositor and designed
beneficiary as of their birthdays in the year the Depositor reaches age 70 1/2.
In the case of a distribution in accordance with Paragraph 4(b)(ii), determine
life expectancy using the attained age of the designated beneficiary as of the
beneficiary's birthday in the year distributions are required to commence.
6. The owner of two or more individual retirement accounts may use the
"alternative method" described in Notice 88-38, 1988-1 C.B. 524, to satisfy the
minimum distribution requirements described above. This method permits an
individual to satisfy these requirements by taking from one individual
retirement account the amount required to satisfy the requirement for another.
ARTICLE V
1. The Depositor agrees to provide the Custodian with information
necessary for the Custodian to prepay any reports required under Section 408(i)
and Regulations Section 1.408-5 and 1.408-6.
2. The Custodian agrees to submit reports to the Internal Revenue
Service and the Depositor prescribed by the Internal Revenue Service.
ARTICLE VI
Notwithstanding any other articles which may be added or incorporated,
the provisions of Articles I through III and this sentence will be controlling.
Any additional articles that are not consistent with Section 408(a) and related
regulations will be invalid.
ARTICLE VII
This agreement will be amended from time to time to comply with the
provisions of the Code and related regulations. Other amendments may be made
with the consent of the persons whose signatures appear below.
ARTICLE VIII
1. Investment of Account Assets. (a) All contributions to the custodial
account shall be invested in the shares of any regulated investment company
("Investment Company") for which ___________ serves as investment advisor, or
any other regulated investment company designated by the investment advisor.
Shares of stock of an Investment Company shall be referred to as Investment
Company Shares."
(b) Each contribution to the custodial account shall identify the
Depositor's account number and be accompanied by a signed statement directing
the investment of that contribution. The Custodian may return to the Depositor,
without liability for interest thereon, any contribution which is not
accompanied by adequate account identification or an appropriate signed
statement directing investment of that contribution.
<PAGE>
(c) Contributions shall be invested in whole and fractional Investment
Company shares at the price and in the manner such shares are offered to the
public. All distributions received on Investment Company Shares held in the
custodial account shall be reinvested in like shares or in cash or other
property, the Custodian shall elect to receive such distribution in additional
like Investment Company Shares.
(d) All Investment Company Shares acquired by the Custodian shall be
registered in the name of the Custodian or its nominee. The Depositor shall be
the beneficial owner of all Investment Company Shares held in the custodial
account and the Custodian shall not vote any such shares, except upon written
direction of the Depositor. The Custodian agrees to forward to the Depositor
each prospectus, report, notice, proxy and related proxy soliciting materials
applicable to Investment Company Shares held in the custodial account received
by the Custodian.
(e) The Depositor may, at any time, by written notice to the Custodian,
redeem any number of shares held in the custodial account and reinvest the
proceeds in the shares of any other Investment Company. Such redemptions and
reinvestments shall be done at the price and in the manner such shares are then
being redeemed or offered by the respective Investment Companies.
2. Amendment and Termination. (a) The Custodian may amend the Custodial
Account (including retroactive amendments) by delivering to the Depositor
written notice of such amendment setting forth the substance and effective date
of the amendment. The Depositor shall be deemed to have consented to any such
amendment not objected to in writing by the Depositor within thirty (30) days of
receipt of the notice, provided that no amendment shall cause or permit any part
of the assets of the custodial account to be diverted to purposes other than for
the exclusive benefit of the Depositor of his or her beneficiaries.
(b) The Depositor may terminate the custodial account at any time by
delivering to the Custodian a written notice of such termination.
(c) The custodial account shall automatically terminate upon
distribution to the Depositor or his or her beneficiaries of its entire balance.
3. Taxes and Custodial Fees. Any income taxes or other taxes levied or
assessed upon or in respect of the assets or income of the custodial account and
any transfer taxes incurred shall be paid from the custodial account. All
administrative expenses incurred by the Custodian in the performance of its
duties, including fees for legal services rendered to the Custodian, and the
Custodian's compensation shall be paid from the custodial account, unless
otherwise paid by the Depositor or his or her beneficiaries.
The Custodian's fees are set forth in a schedule provided to the
Depositor. Extraordinary charges resulting from unusual administrative
responsibilities not contemplated by the schedule will be subject to such
additional charges as will reasonably compensate the Custodian. Fees for refund
of excess contributions, transferring to a successor trustee or custodian, or
redemption/reinvestment of Investment Company Shares will be deducted from the
refund or redemption proceeds and the remaining balance will be remitted to the
Depositor, or reinvested or transferred in accordance with the Depositor's
instructions.
4. Reports and Notices. (a) The Custodian shall keep adequate records
of transactions it is required to perform hereunder. After the close of each
calendar year, the Custodian shall provide to the Depositor or his or her legal
representative a written re port or reports reflecting the
<PAGE>
transactions effected by it during such year and the assets and liabilities of
the Custodial Account at the close of the year.
(b) All communications or notices shall be deemed to be given upon
receipt by the Custodian at Post Office Box 701, Milwaukee, Wisconsin 53201-0701
or the Depositor at his most recent address shown in the Custodian's records.
The Depositor agrees to advise the Custodian promptly, in writing, of any change
of address.
5. Designation of Beneficiary. The Depositor may designate a
beneficiary or beneficiaries to receive benefits from the custodial account in
the event of the Depositor's death. In the event the Depositor has not
designated a beneficiary, or if all beneficiaries shall predecease the
Depositor, the following persons shall take in the order named.
(a) The spouse of the Depositor;
(b) If the spouse shall predecease the Depositor or if the Depositor
does not have a spouse, then to the personal representative of the Depositor's
estate.
6. Multiple Individual Retirement Account. In the event the Depositor
maintains more than one individual retirement account (as defined in Section
408(a) and elects to satisfy his or her minimum distribution requirements
described in Article IV above by making a distribution for another individual
retirement account in accordance with Paragraph 6 thereof, the Depositor shall
be deemed to have elected to calculate the amount of his or her minimum
distribution under this custodial account in the same manner as under the
individual retirement account from which the distribution is made.
7. Inalienability of Benefits. The benefits provided under this
custodial account shall not be subject to alienation, assignment, garnishment,
attachment, execution or levy of any kind and any attempt to cause such benefits
to be so subjected shall not be recognized except to the extent as may be
required by law.
8. Rollover Contribution and Transfers. The Custodian shall have the
right to receive rollover contributions and to receive direct transfers from
other custodians or trustees. All contributions must be made in cash or check.
9. Conflict in Provisions. To the extent that any provisions of this
Article VIII shall conflict with the provisions of Articles IV, V and/or VII,
the provisions of this Article VIII shall govern.
10. Applicable State Law. This custodial account shall be construed,
administered and enforced according to the laws of the State of Wisconsin.
<PAGE>
Firstar Trust Company
Mutual Fund Services
Mutual Fund Custodial Qualified Plan
Annual Fee Schedule
(Billed to Investors)
<TABLE>
<CAPTION>
Defined
Contribution 403(b)(7) 401 (k)
IRA Plan Plan Plan
Accounts Accounts Accounts Accounts
<S> <C> <C> <C> <C>
Annual maintenance fee per account $12.50 $12.50 $12.50 $12.50
Transfer to successor trustee 15.00 15.00 15.00 15.00
Distribution to a participant
(exclusive of systematic withdrawal
plans) 15.00 15.00 15.00 15.00
Refund of excess contribution 15.00 15.00 15.00 15.00
Any outgoing wire 7.50 7.50 7.50 7.50
Telephone exchange 5.00 5.00 5.00 5.00
</TABLE>
<PAGE>
A-
INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT APPLICATION
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1. Depositor Information 2. Beneficiary Information
--------------------------------- -----------------------------------
Name Date of Birth Name Date of Birth
--------------------------------- -----------------------------------
Address Address
--------------------------------- -----------------------------------
City State Zip City State Zip
--------------------------------- -----------------------------------
Social Security Number Phone Social Security Number Phone
3. Type of IRA
[ ] individual Account. [ ] Rollover Account.
[ ] Spousal IRA for a non-working spouse. [ ] Transfer of Assets.
One application must be completed for Please complete the
each individual. IRA Transfer Form.
[ ] SEP-IRA (Simplified Employee Pension Plan) [ ] Directed Rollover
One application must be completed
for each employee.
4. IRA Contribution
[ ] Regular IRA Contribution $________ contribution for tax year 19___.
[ ] Rollover Contribution or Transfer $________ by rolling over or transferring
assets from the following type of
plan:
[ ] IRA [ ] Corporate [ ] Other (please specify)
[ ] 403(b) [ ] Keogh (HR- 10) __________________
</TABLE>
5. Investment
The contribution shall be invested as follows:
__________________Fund $________________
__________________Fund $________________
__________________Fund $________________
6. Signatures
I adopt the A~ Individual Retirement Account and appoint Firstar Trust
Company to perform custodial and other administrative services
specified in the IRA Custodial Agreement. I have received and read the
prospectus for the Fund and have read and understand the IRA Custodial
Agreement and Disclosure Statement. I certify under penalties of
perjury that my Social Security number (above) is correct, and that I
am of legal age. If I am opening this IRA with a distribution from an
employer-sponsored retirement plan or another individual retirement
account, I certify that the distribution qualifies as a rollover
contribution. I understand that the fees relating to my IRA may be
separately billed or collected by redeeming sufficient shares from my
Fund account balance. I agree to provide the Internal Revenue Service
with information as required. I further agree to follow all of the
terms and conditions of the IRA Custodial Agreement.
Appointment as Custodian Accepted
______________________________ FIRSTAR TRUST COMPANY
Signature Date
BY:______________________________
Date
<PAGE>
A-
INDIVIDUAL RETIREMENT ACCOUNT TRANSFER FORM
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1. Depositor Information 2. IRA Transferred From
--------------------------------- ------------------------------------
Name Date of Birth Name of current custodian (bank,
savings and loan, mutual fund, etc.)
--------------------------------- ------------------------------------
Address Address
--------------------------------- ------------------------------------
City State Zip City State Zip
--------------------------------- ------------------------------------
Social Security Number Phone Social Security Number Phone
------------------------------------
Account Number
3. IRA Transferred To
[ ] My exiting A-IRA, Account No. _____________________.
[ ] Open a new A-IRA. Please complete the IRA application form.
4. Signature(s)
To current Custodian or Trustee:
[ ] all of my assets, approximate value $_______________ (must be $100,000 minimum), or
[ ] $___________________ of my assets
in the above-mentioned account and prepare a check to Firstar Trust Company-A-. It is my intention to
have these assets transferred to the A-IRA for which Firstar Trust Company acts as custodian.
IMPORTANT: Please check with your current
custodian/trustee to determine if a signature guarantee
is required.
_______________________________________ ________________________________________________________
Signature Date Signature guarantee (if required) Date
Custodian Acceptance Agreement
As custodian of the A~ IRA, we will accept the transfer requested above. Please prepare a check representing
liquidation of the investment (or portion thereof). To ensure proper credit, please return a copy of this form
with the check.
Please mail to:
A~ FIRSTAR TRUST COMPANY
c/o Firstar Trust Company
615 East Michigan Avenue
Milwaukee, Wisconsin 53202 ___________________________________________
Date
</TABLE>
<PAGE>
SERVICE AND DISTRIBUTION PLAN
WHEREAS, The Bramwell Funds, Inc. (the "Company") is organized to engage in
the business of an open-end management investment company and is registered as
such under the Investment Company Act of 1940, as amended (the "Act");
WHEREAS, 5,000,000 shares of common stock of the Company are currently
allocated to a series of shares designated as The Bramwell Growth Fund (the
"Fund");
WHEREAS, the Company desires to both act as a distributor of the Fund's
shares and to enter into agreements with dealers and other financial service
organizations to obtain various distribution-related and/or shareholder services
for the Fund, all as permitted and contemplated by Rule 12b-1 adopted under the
Act, it being understood that to the extent any activity is one which the Fund
may finance without a Rule 12b-1 plan, the Fund may also make payments to
finance such activity outside such a plan and not subject to its limitation;
NOW, THEREFORE, the Company hereby adopts on behalf of the Fund with
respect to the Fund's shares a Service and Distribution plan on the following
terms and conditions (the "Plan"):
1. The Fund may charge a distribution expense and service fee on an
annualized basis of 0.25% of the Fund's average daily net assets; provided that,
at any time such payment is made, whether or not this Plan continues in effect,
the making thereof will not cause the limitation upon such payments established
by this Plan to be exceeded. Such fee shall be calculated and accrued daily and
paid at such intervals as the Board of Directors of the Company shall determine,
subject to any applicable restriction imposed by rules of the National
Association of Securities Dealers, Inc.
2. The amount set forth in paragraph 1 of this Plan shall be paid for
services in connection with any activities or expenses primarily intended to
result in the sale of shares of the Fund, including, but not limited to,
compensation for sales and sales marketing activities, including incentive
compensation, to securities dealers and other financial institutions and
organizations (collectively, the "Service Organizations") to obtain various
distribution related and/or administrative services for the Fund. These services
include, among other things, servicing shareholder accounts by processing new
shareholder account applications, preparing and transmitting to the Fund's
Transfer Agent computer processable tapes of all transactions by customers and
serving as the primary source of information to customers in answering questions
concerning the Fund and their transactions with the Fund for which a continuing
fee may accrue immediately after the sale of shares. The Fund itself as well as
Service Organizations are authorized to engage in advertising, the preparation
and distribution of sales literature and other promotional activities on behalf
of the Fund. In addition, this Plan hereby authorizes payment by the Fund of the
cost of preparing, printing and distributing Fund Prospectuses and Statements of
Additional Information to prospective investors and of implementing and
operating the Plan as well as payment of capital or other expenses of associated
equipment, rent, salaries, bonuses,
<PAGE>
interest and other overhead costs. Payments under the Plan are not tied
exclusively to actual distribution and service expenses, and the payments may
exceed distribution and service expenses actually incurred.
3. The Plan shall not take effect with respect to the Fund's shares until
it has been approved by a vote of the then sole shareholder of the shares of the
Fund.
4. This Plan shall not take effect until it, together with any related
agreements, has been approved by votes of a majority of both (a) the Directors
of the Company and (b) those Directors of the Company who are not "interested
persons" of the Company (as defined in the Act) and who have no direct or
indirect financial interest in the operation of this Plan or any agreements
related to it (the "Rule 12b-1 Directors"), cast in person at a meeting (or
meetings) called for the purpose of voting on this Plan and such related
agreements.
5. After approval as set forth in paragraphs 3 and 4, this Plan shall take
effect. The Plan of Distribution shall continue in full force and effect as to
the Fund shares for so long as such continuance is specifically approved at
least annually in the manner provided for approval of this Plan in paragraph 4.
6. All persons authorized to direct the disposition of monies paid or
payable by the Fund pursuant to the Plan or any related agreement shall provide
to the Directors of the Company, and the Directors shall review, at least
quarterly, a written report of the amounts so expended and the purposes for
which such expenditures were made.
7. This Plan may be terminated as to the Fund at any time, without payment
of any penalty, by vote of the Directors of the Company, by a vote of a majority
of the Rule 12b-1 Directors, or by a vote of a majority of the outstanding
shares of the Fund on not more than 30 days' written notice to any other party
to the Plan. However, after termination of the Plan, the Service Organizations
would be entitled to receive payment, at the annual rate of 0.25% of the Fund's
average daily net assets as compensation for services which had been earned at
any time during which the Plan was in effect and not reimbursed.
8. This Plan may not be amended to increase materially the amount of the
fee provided for in paragraph 1 hereof unless such amendment is approved by a
vote of a majority of the outstanding shares of the Fund, and no material
amendment to the Plan shall be made unless approved in the manner provided for
approval and annual renewal in paragraph 4 hereof.
9. While this Plan is in effect, the selection and nomination of
Directors who are not interested persons (as defined in the Act) of the Company
shall be committed to the discretion of the Directors who are not such
interested persons.
10. The Company shall preserve copies of this Plan and any related
agreements and all reports made pursuant to paragraph 6 hereof, for a period of
not less than six years from the date of this Plan, any such agreement or any
such report, as the case may be, in the first two years in an easily accessible
place.
IN WITNESS WHEREOF, the Company, on behalf of the Fund, has adopted this
Service and Distribution Plan as of the 1st day of August, 1994.
THE BRAMWELL FUNDS, INC.
By:
-----------------------------------
Elizabeth R. Bramwell
President
<PAGE>
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATION
FOR THE ONE YEAR PERIOD ENDED JUNE 30, 1997
Total Return = (Ending Redeemable Value/Initial Value) - 1
Total Return =
22.2% = (17,906/14,653) - 1
FOR THE ONE YEAR PERIOD ENDED JUNE 30, 1996
Total Return = (Ending Redeemable Value/Initial Value) -1
Total Return = 19.0%
19.0% = (14,653/12,311) -1
FOR THE PERIOD FROM AUGUST 1, 1994 (COMMENCEMENT OF OPERATIONS) TO JUNE 30, 1997
Cumulative Total Return=(Ending Redeemable Value/Initial Payment) - 1 of $10,000
Cumulative total return = 79.1%
79.1% = (17,906/10,000) - 1
Total Return = (Ending Redeemable Value/Initial Payment)1/n - 1 of $10,000
Total return = 22.1%
22.1% = (17,906/10,000)1/2.9 - 1
<PAGE>
[ARTICLE] 6
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] JUN-30-1997
[PERIOD-START] JUL-01-1996
[PERIOD-END] JUN-30-1997
[INVESTMENTS-AT-COST] 84,875,721
[INVESTMENTS-AT-VALUE] 125,116,577
[RECEIVABLES] 975,045
[ASSETS-OTHER] 97,882
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 126,189,504
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 265,453
[TOTAL-LIABILITIES] 265,453
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 77,776,273
[SHARES-COMMON-STOCK] 7,185,143
[SHARES-COMMON-PRIOR] 9,691,468
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 7,906,922
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 40,240,856
[NET-ASSETS] 125,924,051
[DIVIDEND-INCOME] 939,619
[INTEREST-INCOME] 207,056
[OTHER-INCOME] 0
[EXPENSES-NET] (2,231,142)
[NET-INVESTMENT-INCOME] (1,084,467)
[REALIZED-GAINS-CURRENT] 8,927,153
[APPREC-INCREASE-CURRENT] 16,818,118
[NET-CHANGE-FROM-OPS] 24,660,804
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] (2,319,077)
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 2,379,335
[NUMBER-OF-SHARES-REDEEMED] (5,016,000)
[SHARES-REINVESTED] 130,340
[NET-CHANGE-IN-ASSETS] (15,530,865)
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 1,298,846
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 1,274,930
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 2,256,213
[AVERAGE-NET-ASSETS] 127,676,534
[PER-SHARE-NAV-BEGIN] 14.60
[PER-SHARE-NII] (0.15)
[PER-SHARE-GAIN-APPREC] 3.35
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] (0.27)
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 17.53
[EXPENSE-RATIO] 1.75
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<PAGE>
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints
Margaret A. Bancroft, William Goodwin, Rose M. Burke and Lawrence B. Stoller,
and each of them, as the undersigned's and lawful attorney-in-fact and agent
with full power of substitution and resubstitution for such attorney-in-fact in
such attorney-in-fact's name, place and stead, to sign any and all registration
statements applicable to The Bramwell Funds, Inc. (the "Fund"), and any
amendments or supplement thereto, and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as the undersigned
might or could do in person in the undersigned's capacity as a Director or
Officer of the Fund, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Signature Title Date
- --------- ----- -----
\s\ Elizabeth R. Bramwell Director July 18, 1994
<PAGE>
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints
Margaret A. Bancroft, William Goodwin, Rose M. Burke and Lawrence B. Stoller,
and each of them, as the undersigned's and lawful attorney-in-fact and agent
with full power of substitution and resubstitution for such attorney-in-fact in
such attorney-in-fact's name, place and stead, to sign any and all registration
statements applicable to The Bramwell Funds, Inc. (the "Fund"), and any
amendments or supplement thereto, and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as the undersigned
might or could do in person in the undersigned's capacity as a Director or
Officer of the Fund, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Signature Title Date
- --------- ----- -----
\s\ J. Sinclair Armstrong Director July 18, 1994
- 2 -
<PAGE>
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints
Margaret A. Bancroft, William Goodwin, Rose M. Burke and Lawrence B. Stoller,
and each of them, as the undersigned's and lawful attorney-in-fact and agent
with full power of substitution and resubstitution for such attorney-in-fact in
such attorney-in-fact's name, place and stead, to sign any and all registration
statements applicable to The Bramwell Funds, Inc. (the "Fund"), and any
amendments or supplement thereto, and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as the undersigned
might or could do in person in the undersigned's capacity as a Director or
Officer of the Fund, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Signature Title Date
- --------- ----- -----
\s\ Isabel H. Benham Director July 18, 1994
- 3 -
<PAGE>
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints
Margaret A. Bancroft, William Goodwin, Rose M. Burke and Lawrence B. Stoller,
and each of them, as the undersigned's and lawful attorney-in-fact and agent
with full power of substitution and resubstitution for such attorney-in-fact in
such attorney-in-fact's name, place and stead, to sign any and all registration
statements applicable to The Bramwell Funds, Inc. (the "Fund"), and any
amendments or supplement thereto, and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as the undersigned
might or could do in person in the undersigned's capacity as a Director or
Officer of the Fund, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Signature Title Date
- --------- ----- -----
\s\ George F. Keane Director July 18, 1994
- 4 -
<PAGE>
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints
Margaret A. Bancroft, William Goodwin, Rose M. Burke and Lawrence B. Stoller,
and each of them, as the undersigned's and lawful attorney-in-fact and agent
with full power of substitution and resubstitution for such attorney-in-fact in
such attorney-in-fact's name, place and stead, to sign any and all registration
statements applicable to The Bramwell Funds, Inc. (the "Fund"), and any
amendments or supplement thereto, and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as the undersigned
might or could do in person in the undersigned's capacity as a Director or
Officer of the Fund, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Signature Title Date
- --------- ----- -----
\s\ James C. Sargent Director July 18, 1994
- 5 -
<PAGE>
