Registration No. 811-8800
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 5 /X/
(Check appropriate box or boxes)
S&P STARS FUND
(Exact Name of Registrant as Specified in Charter)
80 Harcourt Street
Dublin 2, Ireland
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (353) 1 790 3500
Stephen A. Bornstein, Esq.
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
(Name and Address of Agent for Service)
copy to:
Stuart H. Coleman, Esq.
Stroock & Stroock & Lavan
7 Hanover Square
New York, New York 10004-2696
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EXPLANATORY NOTE
This Registration Statement has been filed by the Registrant
pursuant to Section 8(b) of the Investment Company Act of 1940, as amended.
However, beneficial interests in the Registrant are not being registered under
the Securities Act of 1933, as amended (the "1933 Act"), since such interests
will be issued solely in private placement transactions which do not involve any
"public offering" within the meaning of Section 4(2) of the 1933 Act.
Investments in the Registrant may only be made by investment companies or
certain other entities which are "accredited investors" within the meaning of
Regulation D under the 1933 Act. This Registration Statement does not constitute
an offer to sell, or the solicitation of an offer to buy, any beneficial
interests in the Registrant.
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S&P STARS FUND
S&P STARS MASTER SERIES
PART A
JUNE 18, 1996
RESPONSES TO ITEMS 1 THROUGH 3 HAVE BEEN OMITTED PURSUANT TO
PARAGRAPH 4 OF INSTRUCTION F OF THE GENERAL INSTRUCTIONS TO
FORM N-1A.
ITEM 4. GENERAL DESCRIPTION OF REGISTRANT.
GENERAL
S&P STARS Fund (the "Master Fund") is an open-end, management investment
company, organized on October 5, 1994 as a trust under the laws of the State of
Delaware. The Master Fund is a "series fund," which is a mutual fund divided
into separate portfolios. By this offering document, the Master Fund is offering
one non-diversified portfolio, the S&P STARS Master Series (the "Master
Series"). The Master Series is treated as a separate entity for certain matters
under the Investment Company Act of 1940, as amended (the "1940 Act"), and for
other purposes, and a shareholder of the Master Series is not deemed to be a
shareholder of any other series. As described below, for certain matters Master
Fund shareholders vote together as a group; as to others they vote separately by
series. To date, the Master Fund has established only the Master Series. From
time to time, other series may be established and sold pursuant to other
offering documents.
Bear Stearns Funds Management Inc. ("BSFM"), a wholly- owned
subsidiary of The Bear Stearns Companies Inc., serves as the
Master Series' investment adviser.
Beneficial interests in the Master Series are issued solely in private
placement transactions which do not involve any "public offering" within the
meaning of Regulation D under the Securities Act of 1933, as amended (the "1933
Act"). Investments in the Master Series may be made only by investment companies
or certain other entities which are "accredited investors" within the meaning of
Regulation D under the 1933 Act. This registration statement does not constitute
an offer to sell, or the solicitation of an offer to buy, any "security" within
the meaning of the 1933 Act.
INVESTMENT OBJECTIVE
The Master Series' investment objective is to provide investment results
that exceed the total return of publicly traded common stocks, in the aggregate,
as represented by the Standard & Poor's 500 Stock Index (the "S&P 500").
As its investment strategy, BSFM principally uses Standard & Poor's
("S&P") STock Appreciation Ranking System (or STARS) to identify a universe of
securities in the highest category (which is five stars) to evaluate for
purchase and in the lowest category (which is one star) to evaluate for short
selling. BSFM believes that this approach will provide opportunities to achieve
performance that exceeds the S&P 500's total return.
The Master Series' investment objective cannot be changed without
approval by the holders of a majority (as defined in the 1940 Act) of the Master
Series' outstanding voting securities.
There can be no assurance that the Master Series' investment objective
will be achieved.
STARS
STARS ranks on a scale from five stars (highest) to one star (lowest)
the stocks of approximately 1,100 issuers analyzed by S&P's research staff of
securities analysts. STARS represents the evaluation of S&P's analysts of the
short-term (up to 12 months) appreciation potential of the evaluated stocks. The
rankings are as follows:
***** Buy--Expected to be among the best
performers over the next 12 months and
to rise in price.
**** Accumulate--Expected to be an above-
average performer.
*** Hold--Expected to be an average
performer.
** Avoid--Expected to be a below-average
performer.
* Sell--Expected to be a well-below-
average performer and to fall in price.
STARS was introduced by S&P in January 1987. Since 1993, on average, the
five star category has consisted of approximately 95 stocks, the four star
category has consisted of approximately 375 stocks, the three star category has
consisted of approximately 525 stocks, the two star category has consisted of
approximately 100 stocks, and the one star category has consisted of between
approximately 14 and 23 stocks. Rankings may change frequently as developments
affecting individual securities and the markets are considered by the S&P
analysts.
For purposes of evaluating the performance of stocks in the various
categories--and thus of the performance of its analysts--S&P has created a model
which initially equally weights by dollar amount the stocks in the various
categories, does not rebalance the portfolio based on changes in values or
rankings and does not take into account dividends or transaction costs. STARS is
only a model; it does not reflect actual investment performance. While its
performance CANNOT be used to predict actual results, S&P believes it is useful
in evaluating the capability of its analysts. Investors should recognize that
the pool of S&P analysts changes and their past performance is not necessarily
predictive of future results either of the model or of the Master Series.
From January 1, 1987 through March 31, 1996:
o The S&P 500 (measured on a total return basis,
without dividend reinvestment)* increased by
166.55%.
o The ranked stocks, measured as described
above, changed in value as follows:
o Five stars - +353.64%
o Four stars - +219.37%
o Three stars - +147.98%
o Two stars - +113.53%
o One star - -36.83%
The Master Series believes that this information should be used by
investors only in their consideration that, historically, the five star stocks,
measured as described above, have significantly outperformed lower ranked stocks
and the one star stocks, similarly measured, have significantly underperformed
the higher ranked stocks. THIS INFORMATION SHOULD NOT BE USED TO PREDICT WHETHER
THE RESULTS WILL OCCUR IN THE FUTURE OR THE ACTUAL PERFORMANCE OF A PARTICULAR
CATEGORY. STARS performance has been more volatile than that of conventional
indices such as the Dow Jones Industrial Average and the S&P 500. In addition,
at times, lower ranked STARS categories have out-performed higher ranked STARS
categories and higher ranked STARS categories have under-performed the S&P 500.
Specifically, the performance of five star and one star stocks has not
consistently exceeded or fallen below the performance of the S&P 500. In some
years, one star stocks have outperformed the S&P 500 as well as five star
stocks; in other years, both one and five star stocks have outperformed the S&P
500. In 1994, one star stocks outperformed the S&P 500, which in turn
outperformed five star stocks. In 1995, the S&P 500 outperformed five star
stocks, which in turn outperformed one star stocks. Investors also should
consider that the Master Series is managed actively--and, thus, its performance
will depend materially on BSFM's investment determinations--and will incur
transaction and other costs, including management fees, which are not reflected
in the foregoing information.
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* During this period, the average dividend yields on securities
included in the S&P 500 and the securities ranked five STARS were
approximately 3.1% and 1.9%, respectively.
STARS is available to the public through various S&P publications. BSFM
has access to STARS through S&P's MarketScope, a computer-accessed subscription
service available for an annual fee, currently with more than 72,000
subscribers.
MANAGEMENT POLICIES
GENERAL--As its investment strategy, BSFM uses STARS to identify a universe of
securities in the five star category to evaluate for purchase and in the one
star category to evaluate for short selling. BSFM anticipates that at least 85%
of the value of the Master Series' total assets (except when maintaining a
temporary defensive position) will be invested in common stocks that, at their
time of purchase, were ranked as five stars in STARS or, at their time of short
sale, were ranked as one star in STARS. The Master Series may invest up to 15%
of its assets in common stocks without regard to STARS ranking, if BSFM believes
that such securities offer opportunities for capital appreciation. BSFM will not
seek to replicate STARS performance and will not necessarily sell a security
once it has been downgraded from five stars or cover a short position once it
has been upgraded from one star. From time to time, certain closed-end
investment companies are ranked by STARS and will be eligible for purchase by
the Master Series. The Master Series may invest, in anticipation of investing
cash positions and, without limitation, for temporary defensive purposes, in
money market instruments consisting of U.S. Government securities, certificates
of deposit, time deposits, bankers' acceptances, short-term investment grade
corporate bonds and other short-term debt instruments, and repurchase
agreements, as set forth in the Appendix.
The Master Series may engage in various investment techniques, such as
short selling, lending portfolio securities, and options transactions each of
which involves risk. Options transactions involve "derivative securities." For a
discussion of these investment techniques and their related risks, see
"Appendix--Investment Techniques" and "Risk Factors" below.
CERTAIN FUNDAMENTAL POLICIES
The Master Series may (i) borrow money to the extent permitted under the
1940 Act; and (ii) invest up to 25% of the value of its total assets in the
securities of issuers in a single industry, provided that there is no such
limitation on investments in securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities. This paragraph describes
fundamental policies that cannot be changed as to the Master Series without
approval by the holders of a majority (as defined in the 1940 Act) of the
outstanding voting securities of the Master Series. See Item 13, "Investment
Objective and Policies--Investment Restrictions" in Part B.
CERTAIN ADDITIONAL NON-FUNDAMENTAL POLICIES
The Master Series may (i) purchase securities of any company having less
than three years' continuous operation (including operations of any
predecessors) if such purchase does not cause the value of its investments in
all such companies to exceed 5% of the value of its total assets; (ii) pledge,
hypothecate, mortgage or otherwise encumber its assets, but only to secure
permitted borrowings; and (iii) invest up to 15% of the value of its net assets
in repurchase agreements providing for settlement in more than seven days after
notice and in other illiquid securities. See Item 13, "Investment Objective and
Policies--Investment Restrictions" in Part B.
RISK FACTORS
NET ASSET VALUE FLUCTUATIONS--The Master Series' net asset value is not fixed
and should be expected to fluctuate. Investors should purchase Master Series
shares only as a supplement to an overall investment program and only if
investors are willing to undertake the risks involved, including the potential
loss of a significant portion of their investment.
EQUITY SECURITIES--Investors should be aware that equity securities fluctuate in
value, often based on factors unrelated to the value of the issuer of the
securities, and that fluctuations can be pronounced. Changes in the value of the
common stocks in the Master Series' portfolio will result in
changes in the value of its shares and thus its yield and total
return to investors.
STARS PERFORMANCE--STARS rankings are the subjective determination of S&P's
analysts. The pool of these analysts changes. Past performance of securities and
issuers included in STARS cannot be used to predict future results of the Master
Series, which is managed actively by BSFM and the results of which should be
expected to vary from the performance of STARS.
None of the Master Series, Bear, Stearns & Co. Inc. ("Bear Stearns") or BSFM
have any ongoing relationship with S&P regarding the Master Series other than
the right for a fee to use the S&P, Standard & Poor's and STARS trademarks in
connection with the management of mutual funds and access to STARS through S&P's
publicly available subscription service.
CERTAIN INVESTMENT TECHNIQUES--The use of investment techniques, such as short
selling, lending portfolio securities and engaging in options transactions,
involves greater risk than that incurred by many other funds with a similar
objective.
See "Appendix--Investment Techniques."
Management believes that the Master Series has been managed during the
fiscal year ended March 31, 1996 so that any investment company that invested
all of its assets in the Master Series during such period qualified as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended (the "Code"). The Master Series' ability to engage in certain short-term
transactions may be limited by the requirement that, for certain of its holders
of beneficial interests to qualify as a regulated investment company, it must
earn less than 30% of its gross income from the disposition of securities held
for less than three months. This 30% test limits the extent to which the Master
Series may sell securities held for less than three months, effect short sales
of securities held for less than three months, and write options expiring in
less than three months, among other strategies. Except for this requirement, the
amount of portfolio activity will not be a limiting factor when making portfolio
decisions. Under normal market conditions, the Master Series' portfolio turnover
rate generally will not exceed 150%. However, the portfolio turnover rate may
exceed this rate when BSFM believes the anticipated benefits of short-term
investments outweigh any increase in transaction costs or increase in short-term
gains. Higher portfolio turnover rates are likely to result in comparatively
greater brokerage commissions or transaction costs. See Item 17, "Brokerage
Allocation and Other Practices" in Part B.
NON-DIVERSIFIED STATUS--The Master Series' classification as a "non-diversified"
investment company means that the proportion of its assets that may be invested
in the securities of a single issuer is not limited by the 1940 Act. A
"diversified" investment company is required by the 1940 Act generally, with
respect to 75% of its total assets, to invest not more than 5% of such assets in
the securities of a single issuer and to hold not more than 10% of the
outstanding voting securities of a single issuer. However, the Master Series
intends to conduct its operations so as to satisfy the requirements for
qualification as a "regulated investment company" for purposes of the Code,
which requires that, at the end of each quarter of its taxable year, (i) at
least 50% of the market value of the Master Series' total assets be invested in
cash, U.S. Government securities, the securities of other regulated investment
companies and other securities, with such other securities of any one issuer
limited for the purposes of this calculation to an amount not greater than 5% of
the value of the Master Series' 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 be invested in the securities of any one issuer (other than U.S.
Government securities or the securities of other regulated investment
companies). Since a relatively high percentage of the Master Series' assets may
be invested in the securities of a limited number of issuers, some of which may
be within the same industry or economic sector, the Master Series' portfolio
securities may be more susceptible to any single economic, political or
regulatory occurrence than the portfolio securities of a diversified investment
company.
SIMULTANEOUS INVESTMENTS--Investment decisions for the Master Series are made
independently from those of other investment companies or accounts advised by
BSFM. However, if such other investment companies or accounts are prepared to
invest in, or desire to dispose of, securities of the type in which the Master
Series invests at the same time as the Master Series, available investments or
opportunities for sales will be allocated equitably to each. In some cases, this
procedure may adversely affect the size of the position obtained for or disposed
of by the Master Series or the price paid or received by the Master Series.
ITEM 5. MANAGEMENT OF THE MASTER FUND.
INVESTMENT ADVISER--The Master Series' investment adviser is BSFM, a
wholly-owned subsidiary of The Bear Stearns Companies Inc., which is located at
245 Park Avenue, New York, New York 10167. The Bear Stearns Companies Inc. is a
holding company which, through its subsidiaries including its principal
subsidiary, Bear Stearns, an affiliate of BSFM, is a leading United States
investment banking, securities trading and brokerage firm serving United States
and foreign corporations, governments and institutional and individual
investors. BSFM is a registered investment adviser and offers, either directly
or through affiliates, investment advisory and administrative services to
open-end and closed-end investment funds and other managed pooled investment
vehicles with assets at March 31, 1996 of over $1.9 billion.
BSFM acts as investment adviser of the Master Series' under
an Investment Advisory Agreement between BSFM and the Master
Fund, subject to the overall authority of the Master Fund's
Board of Trustees in accordance with Delaware law. The Master
Series' principal portfolio manager is Robert S. Reitzes. Mr.
Reitzes joined Bear Stearns Asset Management in 1994 as
Director of Mutual Funds--Bear Stearns Asset Management and
Senior Managing Director of Bear Stearns. From 1991 until
1994, he was Co-Director of Research and Senior Chemical Analyst at
C.J. Lawrence/Deutsche Bank Securities Corp. For six years
prior thereto, Mr. Reitzes was employed by Mabon, Nugent & Co.
as Chief Investment Officer and Chemical Analyst.
Under the terms of the Investment Advisory Agreement, the Master Fund
has agreed to pay BSFM a monthly fee at the annual rate of .75 of 1% of the
Master Series' average daily net assets. For the period from April 3, 1995
(commencement of operations) through March 31, 1996, no fees were paid by the
Master Fund pursuant to an undertaking by BSFM. The investment advisory fee
payable by the Master Series is higher than that paid by most other investment
companies. From time to time, BSFM may waive receipt of its fees and/or
voluntarily assume certain Master Series expenses, which would have the effect
of lowering the Master Series' expense ratio and increasing yield to investors
at the time such amounts are waived or assumed, as the case may be. The Master
Fund will not pay BSFM at a later time for any amounts it may waive, nor will
the Master Fund reimburse BSFM for any amounts it may assume.
Under the terms of an Administrative Services Agreement
with the Master Fund, PFPC International Ltd. provides certain
administrative services to the Master Series. For providing
these services, the Master Fund has agreed to pay PFPC
International Ltd. an annual fee, as set forth below:
Master Series' Annual Fee as a Percentage of
AVERAGE NET ASSETS AVERAGE DAILY NET ASSETS
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First $200 million . . . . . . . . .12 of 1%
Next $200 up to $400 million. . . . .09 of 1%
Next $200 up to $600 million. . . . .075 of 1%
Assets in excess of $600 million. . .05 of 1%
The above-referenced fee is subject to a monthly minimum fee of $8,500.
From April 3, 1995 (commencement of operations) through March 31, 1996, the
Master Fund paid PFPC International Ltd. a monthly fee at the effective annual
rate of .12 of 1% of the Master Series' average daily net assets.
PLACEMENT AGENT--Bear, Stearns International Limited ("BSIL"), which is located
at 1 Canada Square, London E14 58D, England, and which is an affiliate of Bear
Stearns, serves as placement agent for the Master Series' shares.
CUSTODIAN AND TRANSFER AGENT--Custodial Trust Company, 101 Carnegie Center,
Princeton, New Jersey 08540, an affiliate of Bear Stearns, is the Master Series'
custodian. PFPC International Ltd., 80 Harcourt Street, Dublin 2, Ireland, is
the Master Series' transfer agent, dividend disbursing agent and registrar (the
"Transfer Agent"). The Transfer Agent also provides accounting services to the
Master Series.
EXPENSES--All expenses incurred in the operation of the Master Fund (and thus
the Master Series) are borne by the Master Fund (and thus the Master Series),
except to the extent specifically assumed by BSFM. The expenses borne by the
Master Fund include: organizational costs, taxes, interest, loan commitment
fees, interest and distributions paid on securities sold short, brokerage fees
and commissions, if any, fees of Trustees who are not officers, directors,
employees or holders of 5% or more of the outstanding voting securities of BSFM
or its affiliates, Securities and Exchange Commission fees, advisory fees,
charges of custodians, transfer and dividend disbursing agents' fees, certain
insurance premiums, industry association fees, outside auditing and legal
expenses, costs of independent pricing services, costs of maintaining the Master
Fund's existence, costs attributable to investor services (including, without
limitation, telephone and personnel expenses), costs of shareholders' reports
and meetings, and any extraordinary expenses.
ITEM 6. CAPITAL STOCK AND OTHER SECURITIES.
The Master Fund is organized as a trust under the laws of the State of
Delaware. Investors in the Master Fund will each be liable for all obligations
of the Master Fund. However, the risk of an investor incurring financial loss on
account of such liability is limited to circumstances in which both inadequate
insurance existed and the Master Fund itself was unable to meet its obligations.
To date, the Board of Trustees has authorized the creation of one
series. All consideration received by the Master Fund for shares of one of the
series and all assets in which such consideration is invested will belong to
that series (subject only to the rights of creditors of the Master Fund) and
will be subject to the liabilities related thereto. The income attributable to,
and the expenses of, one series are treated separately from those of any other
series. The Master Fund has the ability to create, from time to time, new series
without shareholder approval.
At the date of this Part A, the S&P STARS Portfolio of The Bear Stearns
Funds owned 99.9% of the Master Series' outstanding shares, and therefore, may
be deemed to control the Master Series.
Mutual fund shares 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 agency. The net
asset
value of funds of this type will fluctuate.
Unless otherwise required by the 1940 Act, ordinarily it will not be
necessary for the Master Fund to hold annual meetings of shareholders. As a
result, shareholders may not consider each year the election of Trustees or the
appointment of auditors. However, the holders of at least 10% of the shares
outstanding and entitled to vote may require the Master Fund to hold a special
meeting of shareholders for purposes of removing a Trustee from office. Master
Fund shareholders may remove a Trustee by the affirmative vote of a majority of
the Master Fund's outstanding voting shares. In addition, the Board of Trustees
will call a meeting of shareholders for the purpose of electing Trustees if, at
any time, less than a majority of the Trustees then holding office have been
elected by shareholders.
Investments in the Master Series may not be transferred, but an investor may
withdraw all or any portion of its investment at any time at net asset value.
Under the Master Fund's anticipated method of operation as a
partnership, the Master Series will not be subject to any income tax. However,
each investor in the Master Series will be taxable on its share (as determined
in accordance with the governing instruments of the Master Fund) of the Master
Series' ordinary income and capital gain in determining its income tax
liability. The determination of such share will be made in accordance with the
Code and regulations promulgated thereunder.
The Master Series is not sponsored, endorsed, sold or promoted by S&P.
S&P makes no representation or warranty, express or implied, to shareholders of
the Master Series or any member of the public regarding the advisability of
investing in the Master Series. S&P's only ongoing relationship with Bear
Stearns and its affiliates is the licensing for a fee of certain S&P trademarks
and trade names and the provision of access to the STARS ranking system through
a publicly available subscription service of S&P. This license is terminable
under circumstances generally described in Item 18, "Capital Stock and Other
Securities" in Part B of the Master Series. BSFM will have no greater access to
STARS than any other subscriber to MarketScope. S&P has no obligation to take
the needs of Bear Stearns and its affiliates or shareholders of the Master
Series into consideration in operating the STARS system. S&P is not responsible
for and has not participated in the determination of the securities to be
purchased by the Master Series. S&P has advised that its Equity Services Group,
which publishes STARS, operates independently of, and has no access to
information obtained by, Standard & Poor's Ratings Services, which may in its
regular operations obtain information of a confidential nature.
Shareholder inquiries may be made by writing to the Fund at PFPC
International Ltd., Attention: S&P STARS Master Series, 80 Harcourt Street,
Dublin 2, Ireland or by calling (353) 1 790 3500.
ITEM 7. PURCHASE OF SECURITIES.
Beneficial interests in the Master Series are issued solely in private
placement transactions which do not involve any "public offering" within the
meaning of Section 4(2) of the 1933 Act. Investments in the Master Series may be
made only by investment companies or certain other entities which are
"accredited investors" within the meaning of Regulation D under the 1933 Act.
This registration statement does not constitute an offer to sell, or the
solicitation of an offer to buy, any "security" within the meaning of the 1933
Act.
Shares of the Master Series are sold on a continuous basis at the net
asset value per share next determined after an order in proper form is received
by the Transfer Agent. Net asset value per share is determined as of the close
of trading on the floor of the New York Stock Exchange (currently 4:00 p.m., New
York time), on each business day. Net asset value per share is computed by
dividing the value of the Master Series' net assets (I.E., the value of its
assets less liabilities) by the total number of its shares outstanding. The
Master Series' investments are valued based on market value or, where market
quotations are not readily available, based on fair value as determined in good
faith by, or in accordance with procedures established by, the Master Fund's
Board of Trustees. For further information regarding the methods employed in
valuing the Master Series' investments, see Item 19, "Purchase, Redemption and
Pricing of Securities," in Part B.
ITEM 8. REDEMPTION OR REPURCHASE.
An investor in the Master Fund may withdraw all or any portion of its
investment on any business day at the net asset value next determined after a
withdrawal request in proper form is furnished by the investor to the Transfer
Agent. When a request is received in proper form, the Master Fund will redeem
the shares at the next determined net asset value.
The Master Fund will make payment for all shares redeemed within five
days after receipt by the Transfer Agent of a redemption request in proper form,
except as provided by the rules of the Securities and Exchange Commission.
Investments in the Master Series may not be transferred.
The right of any investor to receive payment with respect to any
withdrawal may be suspended or the payment of the withdrawal proceeds postponed
during any period in which the New York Stock Exchange is closed (other than
weekends or holidays) or trading on such Exchange is restricted, or, to the
extent otherwise permitted by the 1940 Act, if an emergency exists.
ITEM 9. PENDING LEGAL PROCEEDINGS.
Not applicable.
APPENDIX
The following is a discussion of the investment techniques used, and
certain securities purchased, by the Master Series.
INVESTMENT TECHNIQUES--In connection with its investment objective and policies,
the Master Series may employ, among others, the following investment techniques
which may involve certain risks. Options transactions involve "derivative
securities."
SHORT SELLING--Short sales are transactions in which the Master Series sells a
security it does not own in anticipation of a decline in the market value of
that security. To complete such a transaction, the Master Series must borrow the
security to make delivery to the buyer. The Master Series then is obligated to
replace the security borrowed by purchasing it at the market price at the time
of replacement. The price at such time may be more or less than the price at
which the security was sold by the Master Series. Until the security is
replaced, the Master Series is required to pay to the lender amounts equal to
any dividend which accrues during the period of the loan. To borrow the
security, the Master Series also may be required to pay a premium, which would
increase the cost of the security sold. The proceeds of the short sale will be
retained by the broker, to the extent necessary to meet margin requirements,
until the short position is closed out.
Until the Master Series replaces a borrowed security in connection with
a short sale, the Master Series will: (a) maintain daily a segregated account,
containing cash, cash equivalents or U.S. Government securities, at such a level
that the amount deposited in the account plus the amount deposited with the
broker as collateral always equals the current value of the security sold short;
or (b) otherwise cover its short position in accordance with positions taken by
the Staff of the Securities and Exchange Commission.
The Master Series will incur a loss as a result of the short sale if the
price of the security increases between the date of the short sale and the date
on which the Master Series replaces the borrowed security. The Master Series
will realize a gain if the security declines in price between those dates. This
result is the opposite of what one would expect from a cash purchase of a long
position in a security. The amount of any gain will be decreased, and the amount
of any loss increased, by the amount of any premium or amounts in lieu of
interest the Master Series may be required to pay in connection with a short
sale. The Master Series may purchase call options to provide a hedge against an
increase in the price of a security sold short by the Master Series. See
"Options Transactions" below.
The Master Series anticipates that the frequency of short sales will
vary substantially in different periods, and it does not intend that any
specified portion of its assets, as a matter of practice, will be invested in
short sales. However, no securities will be sold short if, after effect is given
to any such short sale, the total market value of all securities sold short
would exceed 25% of the value of the Master Series' net assets. The Master
Series may not sell short the securities of any single issuer listed on a
national securities exchange to the extent of more than 5% of the value of its
net assets. The Master Series may not sell short the securities of any class of
an issuer to the extent, at the time of the transaction, of more than 2% of the
outstanding securities of that class.
In addition to the short sales discussed above, the Master Series may
make short sales "against the box," a transaction in which the Master Series
enters into a short sale of a security which the Master Series owns. The
proceeds of the short sale will be held by a broker until the settlement date at
which time the Master Series delivers the security to close the short position.
The Master Series receives the net proceeds from the short sale. The Master
Series at no time will have more than 15% of the value of its net assets in
deposits on short sales against the box. It currently is anticipated that the
Master Series will make short sales against the box for purposes of protecting
the value of the Master Series' net assets.
OPTIONS TRANSACTIONS--The Master Series may write and sell covered call option
contracts to the extent of 20% of the value of its net assets at the time such
option contracts are written and may purchase call options to close such
positions. A call option gives the purchaser of the option the right to buy, and
obligates the writer to sell, the underlying security at the exercise price at
any time during the option period.
The Master Series may purchase call and put options on stock indexes
listed on U.S. securities exchanges. A stock index fluctuates with changes in
the market values of the stocks included in the index. Because the value of an
index option depends upon movements in the level of the index rather than the
price of a particular stock, whether the Master Series will realize a gain or
loss from purchasing options on an index depends upon movements in the level of
stock prices in the stock market generally or, in the case of certain indexes,
in an industry or market segment, rather than movements in the price of a
particular stock.
The Master Series is permitted to invest in put options in respect of
specific securities (or groups or "baskets" of specific securities) in which the
Master Series may invest. A put option gives the purchaser of the option the
right to sell, and obligates the writer to buy, the underlying security at the
exercise price at any time during the option period.
The Master Series may not invest more than 5% of its assets, represented
by the premium paid, in the purchase of options at any one time.
Successful use by the Master Series of options will be subject to BSFM's
ability to predict correctly movement in the direction of individual stocks or
the stock market generally. To the extent BSFM's predictions are incorrect, the
Master Series may incur losses which could adversely affect the value of a
shareholder's investment.
LENDING PORTFOLIO SECURITIES--From time to time, the Master Series may lend
securities from its portfolio to brokers, dealers and other financial
institutions needing to borrow securities to complete certain transactions. Such
loans may not exceed 33-1/3% of the value of its total assets. In connection
with such loans, the Master Series will receive collateral consisting of cash,
U.S. Government securities or irrevocable letters of credit which will be
maintained at all times in an amount equal to at least 100% of the current
market value of the loaned securities. The Master Series can increase its income
through the investment of such collateral. The Master Series continues to be
entitled to payments in amounts equal to the interest, dividends and other
distributions payable on the loaned security and receives interest on the amount
of the loan. Such loans will be terminable at any time upon specified notice.
The Master Series might experience risk of loss if the institution with which it
has engaged in a portfolio loan transaction breaches its agreement with the
Master Series.
BORROWING MONEY--As a fundamental policy, the Master Series is permitted to
borrow to the extent permitted under the 1940 Act.
The 1940 Act permits an investment company to borrow in an amount up to 33-1/3%
of the value of such company's total assets. However, the Master Series
currently intends to borrow money only for temporary or emergency (not
leveraging) purposes, in an amount up to 15% of the value of its total assets
(including the amount borrowed) valued at the lesser of cost or market, less
liabilities (not including the amount borrowed) at the time the borrowing is
made. While borrowings exceed 5% of its total assets, the Master Series will not
make any additional investments.
CERTAIN PORTFOLIO SECURITIES
AMERICAN, EUROPEAN AND CONTINENTAL DEPOSITARY RECEIPTS--The Master Series'
assets may be invested in the securities of foreign issuers in the form of
American Depositary Receipts ("ADRs"). These securities may not necessarily be
denominated in the same currency as the securities into which they may be
converted. ADRs are receipts typically issued by a United States bank or trust
company which evidence ownership of underlying securities issued by a foreign
corporation. The Master Series may invest in ADRs through "sponsored" or
"unsponsored" facilities. A sponsored facility is established jointly by the
issuer of the underlying security and a depositary, whereas a depositary may
establish an unsponsored facility without participation by the issuer of the
deposited security. Holders of unsponsored depositary receipts generally bear
all the costs of such facilities and the depositary of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited security or to pass through voting
rights to the holders of such receipts in respect of the deposited securities.
MONEY MARKET INSTRUMENTS
The Master Series may invest, in the circumstances described under
"General Description of Registrant--Management Policies," in the following types
of money market instruments, each of which at the time of purchase must have or
be deemed to have under rules of the Securities and Exchange Commission
remaining maturities of 13 months or less.
U.S. GOVERNMENT SECURITIES--The Master Series may purchase securities issued or
guaranteed by the U.S. Government or its agencies or instrumentalities, which
include U.S. Treasury securities that differ in their interest rates, maturities
and times of issuance. Treasury Bills have initial maturities of one year or
less; Treasury Notes have initial maturities of one to ten years; and Treasury
Bonds generally have initial maturities of greater than ten years. Some
obligations issued or guaranteed by U.S. Government agencies and
instrumentalities, for example, Government National Mortgage Association
pass-through certificates, are supported by the full faith and credit of the
U.S. Treasury; others, such as those of the Federal Home Loan Banks, by the
right of the issuer to borrow from the U.S. Treasury; others, such as those
issued by the Federal National Mortgage Association, by discretionary authority
of the U.S. Government to purchase certain obligations of the agency or
instrumentality; and others, such as those issued by the Student Loan Marketing
Association, only by the credit of the agency or instrumentality. These
securities bear fixed, floating or variable rates of interest. Principal and
interest may fluctuate based on generally recognized reference rates or the
relationship of rates. While the U.S. Government provides financial support to
such U.S. Government-sponsored agencies or instrumentalities, no assurance can
be given that it will always do so, because it is not so obligated by law.
BANK OBLIGATIONS--The Master Series may purchase certificates of deposit, time
deposits, bankers' acceptances and other short-term obligations of domestic
banks, foreign subsidiaries of domestic banks, foreign branches of domestic
banks, and domestic and foreign branches of foreign banks, domestic savings and
loan associations and other banking institutions. With respect to such
securities issued by foreign branches of domestic banks, foreign subsidiaries of
domestic banks, and domestic and foreign branches of foreign banks, the Master
Series may be subject to additional investment risks that are different in some
respects from those incurred by a fund which invests only in debt obligations of
U.S. domestic issuers. Such risks include possible future political and economic
developments, the possible imposition of foreign withholding taxes on interest
income payable on the securities, the possible establishment of exchange
controls or the adoption of other foreign governmental restrictions which might
adversely affect the payment of principal and interest on these securities and
the possible seizure or nationalization of foreign deposits.
Certificates of deposit are negotiable certificates evidencing the
obligation of a bank to repay funds deposited with it for a specified period of
time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time at a stated interest rate. Time
deposits which may be held by the Master Series will not benefit from insurance
from the Bank Insurance Fund or the Savings Association Insurance Fund
administered by the Federal Deposit Insurance Corporation. The Master Series
will not invest more than 15% of the value of its net assets in time deposits
maturing in more than seven days and in other securities that are illiquid.
Bankers' acceptances are credit instruments evidencing the obligation of
a bank to pay a draft drawn on it by a customer. These instruments reflect the
obligation both of the bank and of the drawer to pay the face amount of the
instrument upon maturity. The other short-term obligations may include
uninsured, direct obligations bearing fixed, floating or variable interest
rates.
REPURCHASE AGREEMENTS--Repurchase agreements involve the acquisition by the
Master Series of an underlying debt instrument, subject to an obligation of the
seller to repurchase, and the Master Series to resell, the instrument at a fixed
price usually not more than one week after its purchase.
Certain costs may be incurred by the Master Series in connection with the sale
of the securities if the seller does not repurchase them in accordance with the
repurchase agreement. In addition, if bankruptcy proceedings are commenced with
respect to the seller of the securities, realization on the securities by the
Master Series may be delayed or limited.
COMMERCIAL PAPER AND OTHER SHORT-TERM CORPORATE OBLIGATIONS-- Commercial paper
consists of short-term, unsecured promissory notes issued to finance short-term
credit needs. The commercial paper purchased by the Master Series will consist
only of direct obligations which, at the time of their purchase, are (a) rated
not lower than Prime-1 by Moody's Investors Service Inc. ("Moody's"), A-1 by the
S&P Ratings Group (which operates separately from and independently of S&P's
Equity Services Group, which publishes STARS), F-1 by Fitch Investors Service,
L.P. ("Fitch") or Duff-1 by Duff & Phelps Credit Rating Co. ("Duff"), (b) issued
by companies having an outstanding unsecured debt issue currently rated not
lower than Aa3 by Moody's or AA- by S&P, Fitch or Duff, or (c) if unrated,
determined by BSFM to be of comparable quality to those rated obligations which
may be purchased by the Master Series. The Master Series may purchase floating
and variable rate demand notes and bonds, which are obligations ordinarily
having stated maturities in excess of one year, but which permit the holder to
demand payment of principal at any time or at specified intervals.
INVESTMENT COMPANY SECURITIES--The Master Series may invest in securities issued
by other investment companies which are ranked by STARS. Under the 1940 Act, the
Master Series' investment in such securities currently is limited to, subject to
certain exceptions, (i) 3% of the total voting stock of any one investment
company, (ii) 5% of the Master Series' total assets with respect to any one
investment company and (iii) 10% of the Master Series' total assets in the
aggregate. Investments in the securities of other investment companies will
involve duplication of advisory fees and certain other expenses.
ILLIQUID SECURITIES--The Master Series may invest up to 15% of the value of its
net assets in securities as to which a liquid trading market does not exist,
provided such investments are consistent with its investment objective. Such
securities may include securities that are not readily marketable, such as
certain securities that are subject to legal or contractual restrictions on
resale and repurchase agreements providing for settlement in more than seven
days after notice. As to these securities, the Master Series is subject to a
risk that should it desire to sell them when a ready buyer is not available at a
price it deems representative of their value, the value of its net assets could
be adversely affected.
<PAGE>
S&P STARS FUND
S&P STARS Master Series
PART B
June 18, 1996
ITEM 10. COVER PAGE.
This Part B, which is not a prospectus, supplements and should be read
in conjunction with the current Part A of S&P STARS Master Series (the "Master
Series"), a portfolio of S&P STARS Fund (the "Master Fund"), dated June 18,
1996, as it may be revised from time to time. To obtain a copy of Part A of the
Master Series, please write to the Master Fund at PFPC International Ltd.,
Attention: S&P STARS Master Series, 80 Harcourt Street, Dublin 2, Ireland or
call (353) 1 790 3500.
ITEM 11. TABLE OF CONTENTS.
PAGE
General Information and History................... B-1
Investment Objective and Policies................. B-1
Management of the Master Fund..................... B-10
Control Persons and Principal Holders of
Securities...................................... B-11
Investment Advisory and Other Services............ B-12
Brokerage Allocation and Other Practices.......... B-13
Capital Stock and Other Securities................ B-14
Purchase, Redemption and Pricing of
Securities...................................... B-16
Tax Status........................................ B-17
Underwriters...................................... B-18
Calculations of Performance Data.................. B-18
Financial Statements.............................. B-18
Report of Independent Auditors.................... B-28
ITEM 12. GENERAL INFORMATION AND HISTORY.
Not applicable.
ITEM 13. INVESTMENT OBJECTIVE AND POLICIES.
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN CONJUNCTION
WITH ITEM 4 IN PART A.
INVESTMENT OBJECTIVE. The Master Fund is an open-end, management
investment company known as a mutual fund. By this offering document, the Master
Fund is offering the Master Series, a non-diversified fund.
The Master Series' investment objective is set forth in Item 4,
"General Description of Registrant--Investment Objective," of Part A. There can
be no assurance that the investment objective of the Master Series will be
achieved. The Master Series' investment objective cannot be changed without
approval by the holders of a majority (as defined in the Investment Company Act
of 1940, as amended (the "1940 Act")) of such Master Series' outstanding voting
shares.
Bear Stearns Funds Management Inc. ("BSFM"), a wholly-owned subsidiary
of The Bear Stearns Companies Inc., serves as the Master Series' investment
adviser. Bear, Stearns International Limited ("BSIL") serves as the Master
Series' placement agent.
PORTFOLIO SECURITIES
BANK OBLIGATIONS. Domestic commercial banks organized under Federal law
are supervised and examined by the Comptroller of the Currency and are required
to be members of the Federal Reserve System and to have their deposits insured
by the Federal Deposit Insurance Corporation (the "FDIC"). Domestic banks
organized under state law are supervised and examined by state banking
authorities but are members of the Federal Reserve System only if they elect to
join. In addition, state banks whose certificates of deposit ("CDs") may be
purchased by the Master Series are insured by the FDIC (although such insurance
may not be of material benefit to the Master Series, depending on the principal
amount of the CDs of each bank held by the Master Series) and are subject to
Federal examination and to a substantial body of Federal law and regulation. As
a result of Federal or state laws and regulations, domestic branches of domestic
banks whose CDs may be purchased by the Master Series generally are required,
among other things, to maintain specified levels of reserves, are limited in the
amounts which they can loan to a single borrower and are subject to other
regulation designed to promote financial soundness. However, not all of such
laws and regulations apply to the foreign branches of domestic banks.
Obligations of foreign branches of domestic banks, foreign subsidiaries
of domestic banks and domestic and foreign branches of foreign banks, such as
CDs and time deposits ("TDs"), may be general obligations of the parent banks in
addition to the issuing branch, or may be limited by the terms of a specific
obligation and governmental regulation. Such obligations are subject to
different risks than are those of domestic banks. These risks include foreign
economic and political developments, foreign governmental restrictions that may
adversely affect payment of principal and interest on the obligations, foreign
exchange controls and foreign withholding and other taxes on interest income.
These foreign branches and subsidiaries are not necessarily subject to the same
or similar regulatory requirements that apply to domestic banks, such as
mandatory reserve requirements, loan limitations, and accounting, auditing and
financial record keeping requirements. In addition, less information may be
publicly available about a foreign branch of a domestic bank or about a foreign
bank than about a domestic bank.
Obligations of United States branches of foreign banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation or by Federal or state regulation
as well as governmental action in the country in which the foreign bank has its
head office. A domestic branch of a foreign bank with assets in excess of $1
billion may be subject to reserve requirements imposed by the Federal Reserve
System or by the state in which the branch is located if the branch is licensed
in that state.
In addition, Federal branches licensed by the Comptroller of the
Currency and branches licensed by certain states ("State Branches") may be
required to: (1) pledge to the regulator, by depositing assets with a designated
bank within the state, a certain percentage of their assets as fixed from time
to time by the appropriate regulatory authority; and (2) maintain assets within
the state in an amount equal to a specified percentage of the aggregate amount
of liabilities of the foreign bank payable at or through all of its agencies or
branches within the state. The deposits of Federal and State Branches generally
must be insured by the FDIC if such branches take deposits of less than
$100,000.
In view of the foregoing factors associated with the purchase of CDs
and TDs issued by foreign branches of domestic banks, by foreign subsidiaries of
domestic banks, by foreign branches of foreign banks or by domestic branches of
foreign banks, BSFM carefully evaluates such investments on a case-by-case
basis.
REPURCHASE AGREEMENTS. The Master Series' custodian or sub-custodian
will have custody of, and will hold in a segregated account, securities acquired
by the Master Series under a repurchase agreement. Repurchase agreements are
considered by the staff of the Securities and Exchange Commission to be loans by
the Master Series. In an attempt to reduce the risk of incurring a loss on a
repurchase agreement, the Master Series will enter into repurchase agreements
only with domestic banks with total assets in excess of one billion dollars, or
primary government securities dealers reporting to the Federal Reserve Bank of
New York, with respect to securities of the type in which the Master Series may
invest, and will require that additional securities be deposited with it if the
value of the securities purchased should decrease below the resale price. BSFM
will monitor on an ongoing basis the value of the collateral to assure that it
always equals or exceeds the repurchase price. The Master Series will consider
on an ongoing basis the creditworthiness of the institutions with which it
enters into repurchase agreements.
COMMERCIAL PAPER AND OTHER SHORT-TERM CORPORATE Obligations. Variable
rate demand notes include variable amount master demand notes, which are
obligations that permit the Master Series to invest fluctuating amounts at
varying rates of interest pursuant to direct arrangements between the Master
Series, as lender, and the borrower. These notes permit daily changes in the
amounts borrowed. As mutually agreed between the parties, the Master Series may
increase the amount under the notes at any time up to the full amount provided
by the note agreement, or decrease the amount, and the borrower may repay up to
the full amount of the note without penalty. Because these obligations are
direct lending arrangements between the lender and borrower, it is not
contemplated that such instruments generally will be traded, and there generally
is no established secondary market for these obligations, although they are
redeemable at face value, plus accrued interest, at any time. Accordingly, where
these obligations are not secured by letters of credit or other credit support
arrangements, the Master Series' right to redeem is dependent on the ability of
the borrower to pay principal and interest on demand. In connection with
floating and variable rate demand obligations, BSFM will consider, on an ongoing
basis, earning power, cash flow and other liquidity ratios of the borrower, and
the borrower's ability to pay principal and interest on demand. Such obligations
frequently are not rated by credit rating agencies, and the Master Series may
invest in them only if at the time of an investment the borrower meets the
criteria set forth in the Prospectus for other commercial paper issuers.
ILLIQUID SECURITIES. When purchasing securities that have not been
registered under the Securities Act of 1933, as amended (the "1933 Act"), and
are not readily marketable, the Master Series will endeavor to obtain the right
to registration at the expense of the issuer. Generally, there will be a lapse
of time between the Master Series' decision to sell any such security and the
registration of the security permitting sale. During any such period, the price
of the securities will be subject to market fluctuations. However, if a
substantial market of qualified institutional buyers develops for certain
unregistered securities purchased by the Master Series pursuant to Rule 144A
under the 1933 Act, as amended, it intends to treat them as liquid securities in
accordance with procedures approved by the Master Fund's Board of Trustees.
Because it is not possible to predict with assurance how the market for
restricted securities pursuant to Rule 144A will develop, the Master Fund's
Board of Trustees has directed BSFM to monitor carefully the Master Series'
investments in such securities with particular regard to trading activity,
availability of reliable price information and other relevant information. To
the extent that, for a period of time, qualified institutional buyers cease
purchasing restricted securities pursuant to Rule 144A, the Master Series'
investing in such securities may have the effect of increasing the level of
illiquidity in the Master Series during such period.
MANAGEMENT POLICIES
OPTIONS TRANSACTIONS. The Master Series may engage in options
transactions of the type described in the Appendix, "Investment
Techniques--Options Transactions" in Part A of the Master Series.
The principal reason for writing covered call options, which are call
options with respect to which the Master Series owns the underlying security or
securities, is to realize, through the receipt of premiums, a greater return
than would be realized on the Master Series' securities alone. Similarly, the
principal reason for writing covered put options is to realize income in the
form of premiums. In return for a premium, the writer of a covered call option
forfeits the right to any appreciation in the value of the underlying security
above the strike price for the life of the option (or until a closing purchase
transaction can be effected). Nevertheless, the call writer retains the risk of
a decline in the price of the underlying security. The size of the premiums that
the Master Series may receive may be adversely affected as new or existing
institutions, including other investment companies, engage in or increase their
option-writing activities.
Options written ordinarily will have expiration dates between one and
nine months from the date written. The exercise price of the options may be
below, equal to or above the market values of the underlying securities at the
time the options are written. In the case of call options, these exercise prices
are referred to as "in-the-money," "at-the-money" and "out-of-the- money,"
respectively. The Master Series may write (a) in-the- money call options when
BSFM expects that the price of the underlying security will remain stable or
decline moderately during the option period, (b) at-the-money call options when
BSFM expects that the price of the underlying security will remain stable or
advance moderately during the option period and (c) out-of-the-money call
options when BSFM expects that the premiums received from writing the call
option plus the appreciation in market price of the underlying security up to
the exercise price will be greater than the appreciation in the price of the
underlying security alone. In these circumstances, if the market price of the
underlying security declines and the security is sold at this lower price, the
amount of any realized loss will be offset wholly or in part by the premium
received. Out-of-the-money, at-the-money and in-the-money put options (the
reverse of call options as to the relation of exercise price to market price)
may be utilized in the same market environments that such call options are used
in equivalent transactions.
So long as the Master Series' obligation as the writer of an option
continues, it may be assigned an exercise notice by the broker-dealer through
which the option was sold, requiring the Master Series to deliver, in the case
of a call, or take delivery of, in the case of a put, the underlying security
against payment of the exercise price. This obligation terminates when the
option expires or the Master Series effects a closing purchase transaction. The
Master Series can no longer effect a closing purchase transaction with respect
to an option once it has been assigned an exercise notice.
While it may choose to do otherwise, the Master Series generally will
purchase or write only those options for which BSFM believes there is an active
secondary market so as to facilitate closing transactions. There is no assurance
that sufficient trading interest to create a liquid secondary market on a
securities exchange will exist for any particular option or at any particular
time, and for some options no such secondary market may exist. A liquid
secondary market in an option may cease to exist for a variety of reasons. In
the past, for example, higher than anticipated trading activity or order flow,
or other unforeseen events, at times have rendered certain clearing facilities
inadequate and resulted in the institution of special procedures, such as
trading rotations, restrictions on certain types of orders or trading halts or
suspensions in one or more options. There can be no assurance that similar
events, or events that otherwise may interfere with the timely execution of
customers' orders, will not recur. In such event, it might not be possible to
effect closing transactions in particular options. If as a covered call option
writer the Master Series is unable to effect a closing purchase transaction in a
secondary market, it will not be able to sell the underlying security until the
option expires or it delivers the underlying security upon exercise or it
otherwise covers its position.
STOCK INDEX OPTIONS. The Master Series may engage in stock index option
transactions of the type described in the Appendix, "Investment
Techniques--Options Transactions" in Part A of the Master Series. A stock index
fluctuates with changes in the market values of the stocks included in the
index.
Options on stock indexes are similar to options on stock except that
(a) the expiration cycles of stock index options are generally monthly, while
those of stock options are currently quarterly, and (b) the delivery
requirements are different. Instead of giving the right to take or make delivery
of a stock at a specified price, an option on a stock index gives the holder the
right to receive a cash "exercise settlement amount" equal to (i) the amount, if
any, by which the fixed exercise price of the option exceeds (in the case of a
put) or is less than (in the case of a call) the closing value of the underlying
index on the date of exercise, multiplied by (ii) a fixed "index multiplier."
Receipt of this cash amount will depend upon the closing level of the stock
index upon which the option is based being greater than, in the case of a call,
or less than, in the case of a put, the exercise price of the option. The amount
of cash received will be equal to such difference between the closing price of
the index and the exercise price of the option expressed in dollars times a
specified multiple. The writer of the option is obligated, in return for the
premium received, to make delivery of this amount. The writer may offset its
position in stock index options prior to expiration by entering into a closing
transaction on an exchange or it may let the option expire unexercised.
LENDING PORTFOLIO SECURITIES. To a limited extent, the Master Series
may lend its portfolio securities to brokers, dealers and other financial
institutions, provided it receives cash collateral which at all times is
maintained in an amount equal to at least 100% of the current market value of
the securities loaned. By lending its portfolio securities, the Master Series
can increase its income through the investment of the cash collateral. For
purposes of this policy, the Master Series considers collateral consisting of
U.S. Government securities or irrevocable letters of credit issued by banks
whose securities meet the standards for investment by the Master Series to be
the equivalent of cash. From time to time, the Master Series may return to the
borrower or a third party which is unaffiliated with the Master Series, and
which is acting as a "placing broker," a part of the interest earned from the
investment of collateral received for securities loaned.
The Securities and Exchange Commission currently requires that the
following conditions must be met whenever portfolio securities are loaned: (1)
the Master Series must receive at least 100% cash collateral from the borrower;
(2) the borrower must increase such collateral whenever the market value of the
securities rises above the level of such collateral; (3) the Master Series must
be able to terminate the loan at any time; (4) the Master Series must receive
reasonable interest on the loan, as well as any dividends, interest or other
distributions payable on the loaned securities, and any increase in market
value; (5) the Master Series may pay only reasonable custodian fees in
connection with the loan; and (6) while voting rights on the loaned securities
may pass to the borrower, the Master Fund's Board of Trustees must terminate the
loan and regain the right to vote the securities if a material event adversely
affecting the investment occurs. These conditions may be subject to future
modification.
INVESTMENTS IN WARRANTS. The Master Series does not presently intend to
invest in warrants. However, any future investment in warrants will be limited
to 5% of its net assets, except that this limitation does not apply to warrants
acquired in units or attached to securities. Included in such amount, but not to
exceed 2% of the value of its net assets, may be warrants which are not listed
on the New York or American Stock Exchange.
INVESTMENT RESTRICTIONS. The Master Series has adopted investment
restrictions numbered 1 through 10 as fundamental policies. These restrictions
cannot be changed, as to the Master Series, without approval by the holders of a
majority (as defined in the 1940 Act) of the Master Series' outstanding voting
securities. Investment restrictions numbered 11 through 14 are not fundamental
policies and may be changed by vote of a majority of the Trustees of the Master
Fund at any time. The Master Series may not:
1. Invest more than 25% of the value of its total assets in the
securities of issuers in any single industry, provided that there shall be no
limitation on the purchase of obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
2. Invest in commodities, except that each may purchase and sell
options, forward contracts, futures contracts, including those relating to
indexes, and options on futures contracts or indexes.
3. Purchase, hold or deal in real estate, real estate limited
partnership interests, or oil, gas or other mineral leases or exploration or
development programs, but each may purchase and sell securities that are secured
by real estate or issued by companies that invest or deal in real estate or real
estate investment trusts.
4. Borrow money, except to the extent permitted under the 1940 Act. The
1940 Act permits an investment company to borrow in an amount up to 33-1/3% of
the value of such company's total assets. For purposes of this Investment
Restriction, the entry into options, forward contracts, futures contracts,
including those relating to indexes, and options on futures contracts or indexes
shall not constitute borrowing.
5. Make loans to others, except through the purchase of debt
obligations and the entry into repurchase agreements. However, each may lend its
portfolio securities in an amount not to exceed 33-1/3% of the value of its
total assets. Any loans of portfolio securities will be made according to
guidelines established by the Securities and Exchange Commission and the Master
Fund's Board of Trustees.
6. Act as an underwriter of securities of other issuers, except to the
extent each may be deemed an underwriter under the 1933 Act, as amended, by
virtue of disposing of portfolio securities.
7. Issue any senior security (as such term is defined in
Section 18(f) of the 1940 Act).
8. Purchase securities on margin, but each may make margin deposits in
connection with transactions in options, forward contracts, futures contracts,
including those relating to indexes, and options on futures contracts or
indexes.
9. Purchase securities of any company having less than three years'
continuous operations (including operations of any predecessor) if such purchase
would cause the value of the Master Series' investments in all such companies to
exceed 5% of the value of its total assets.
10. Invest in the securities of a company for the purpose of exercising
management or control, but each will vote the securities it owns in its
portfolio as a shareholder in accordance with its views.
11. Pledge, mortgage or hypothecate its assets, except to the extent
necessary to secure permitted borrowings and to the extent related to the
purchase of securities on a when-issued or forward commitment basis and the
deposit of assets in escrow in connection with writing covered put and call
options and collateral and initial or variation margin arrangements with respect
to options, forward contracts, futures contracts, including those relating to
indexes, and options on futures contracts or indexes.
12. Purchase, sell or write puts, calls or combinations thereof, except
as described in the Master Fund's offering documents.
13. Enter into repurchase agreements providing for settlement in more
than seven days after notice or purchase securities which are illiquid, if, in
the aggregate, more than 15% of the value of its net assets would be so
invested.
14. Purchase securities of other investment companies,
except to the extent permitted under the 1940 Act.
If a percentage restriction is adhered to at the time of investment, a
later change in percentage resulting from a change in values or assets will not
constitute a violation of such restriction.
The Master Fund may make commitments more restrictive than the
restrictions listed above so as to permit the sale of Master Series' shares in
certain states. Should the Master Fund determine that a commitment is no longer
in the best interest of the Master Series and its shareholders, the Master Fund
reserves the right to revoke the commitment by terminating the sale of Master
Series shares in the state involved.
ITEM 14. MANAGEMENT OF THE MASTER FUND.
Trustees and officers of the Master Fund, together with information as
to their principal business occupations during at least the last five years, are
shown below. Each Trustee who is an "interested person" of the Master Fund, as
defined in the 1940 Act, is indicated by an asterisk.
NAME AND ADDRESS POSITION PRINCIPAL OCCUPATION
(AND AGE) WITH FUND DURING PAST FIVE YEARS
John J. Danilovich (45) Trustee Chairman and Principal of
32 Blomfield Road Danilovich & Company,
London, W9 1AA merchants bankers.
England
Robert S. Reitzes* (51) Chairman of Described above.
245 Park Avenue the Board
New York, NY 10167
Vincent Anthony Walsh (69) Trustee Consultant of Arthur Cox,
41-45 St. Stephen's a law firm in Dublin,
Green since 1993, Senior Partner
Dublin 2 of Arthur Cox prior thereto.
Ireland
Barry Nix (36) President Senior Managing Director of
1 Canada Square Fixed Income Sales of
London E14 58D BSIL since 1991; Managing
England Director of BSIL prior
thereto.
James Fergus McKeon (36) Treasurer General Manager of PFPC
Jordanstown and Secretary International Ltd. since
Oldtown September 1993; Chief
Dublin Accountant of Swiss
Ireland Bank Corporation Ireland from
1990 to 1993.
The Master Fund pays its non-affiliated Board members an annual retainer
of $5,000 and a per meeting fee of $500 and reimburses them for their expenses.
The Master Fund does not compensate its officers. The aggregate amount of
compensation paid to each Board member by the Master Fund and by all other funds
in the Bear Stearns Family of Funds for which such person is a Board member (the
number of which is set forth in the parenthesis next to each Board member's
total compensation) for the fiscal year ended March 31, 1996 is as follows:
<TABLE>
<CAPTION>
(3) (5)
Pension or Total
(2) Retirement Benefits (4) Compensation from
(1) Aggregate Accrued as Part of Estimated Annual Master Fund and Fund
Name of Board Compensation Master Fund's Benefits Upon Complex Paid to
MEMBER from Master FUND* EXPENSES RETIREMENT BOARD MEMBERS
<S> <C> <C> <C> <C>
John J. Danilovich $7,000 None None $7,000 (1)
Vincent Anthony Walsh $7,000 None None $7,000 (1)
Robert S. Reitzes None None None None (2)
- ---------------------
* Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $2,113 for Board members of the Master Fund,
as a group.
</TABLE>
No meetings of shareholders of the Master Fund ordinarily will be held
for the purpose of electing Trustees unless and until such time as less than a
majority of the Trustees holding office have been elected by shareholders, at
which time the Trustees then in office will call a shareholders' meeting for the
election of Trustees. Under the 1940 Act, shareholders of record of not less
than two-thirds of the outstanding shares of the Master Fund may remove a
Trustee through a declaration in writing or by vote cast in person or by proxy
at a meeting called for that purpose. Under the Master Fund's Declaration of
Trust, the Trustees are required to call a meeting of shareholders for the
purpose of voting upon the question of removal of any such Trustee when
requested in writing to do so by the shareholders of record of not less than 10%
of the Master Fund's outstanding shares.
ITEM 15. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.
No Board member or officer of the Master Fund owned any of the Master
Series' shares outstanding on May 31, 1996.
As of May 31, 1996, the following shareholders beneficially owned,
directly or indirectly, 5% or more of the Master Series' outstanding shares:
Percent of Master
Series Shares
NAME AND ADDRESS OUTSTANDING
S&P STARS Portfolio 99.9%
c/o PFPC Inc.
P.O. Box 8960
Wilmington, Delaware 19899-8960
ITEM 16. INVESTMENT ADVISORY AND OTHER SERVICES.
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN CONJUNCTION
WITH ITEM 5 IN PART A.
INVESTMENT ADVISORY AGREEMENT. BSFM provides investment advisory
services to the Master Series pursuant to the Investment Advisory Agreement (the
"Agreement") dated February 23, 1995, with the Master Fund. The Agreement is
subject to annual approval by (i) the Master Fund's Board of Trustees or (ii)
vote of a majority (as defined in the 1940 Act) of the outstanding voting
securities of the Master Series, provided that in either event the continuance
also is approved by a majority of the Master Fund's Board of Trustees who are
not "interested persons" (as defined in the 1940 Act) of the Master Fund or
BSFM, by vote cast in person at a meeting called for the purpose of voting on
such approval. The Master Fund's Board of Trustees, including a majority of the
Trustees who are not "interested persons" of any party to the Agreement, last
approved the Agreement at a meeting held on February 23, 1995. The Agreement is
terminable on 60 days' notice, by the Master Fund's Board of Trustees or by vote
of the holders of a majority of the Master Series' shares, or, on not less than
90 days' notice, by BSFM. The Agreement will terminate automatically in the
event of its assignment (as defined in the 1940 Act).
Under the terms of the Investment Advisory Agreement, the Master Fund
has agreed to pay BSFM a monthly fee at the annual rate of .75 of 1% of the
Master Series' average daily net assets. For the period from April 3, 1995
(commencement of operations) through March 31, 1996, the investment advisory fee
payable amounted to $384,779. This amount was waived pursuant to an undertaking
by BSFM, resulting in no fees being paid by the Master Series.
ADMINISTRATIVE SERVICES AGREEMENT. PFPC International Ltd. provides
certain administrative services to the Master Series pursuant to the
Administrative Services Agreement dated February 23, 1995, with the Master Fund.
PFPC International Ltd. may delegate any of its functions and duties under the
terms of the Administrative Services Agreement to any person, provided that such
appointment shall first be approved in writing by the Master Fund. For the
period from April 3, 1995 (commencement of operations) through March 31, 1996,
the administrative fee payable amounted to $102,000. This amount was reduced to
$61,620 as a result of a waiver of fees by PFPC International Ltd.
ITEM 17. BROKERAGE ALLOCATION AND OTHER PRACTICES.
BSFM assumes general supervision over placing orders on behalf of the
Master Series for the purchase or sale of investment securities. Allocation of
brokerage transactions, including their frequency, is made in BSFM's best
judgment and in a manner deemed fair and reasonable to shareholders. The primary
consideration is prompt execution of orders at the most favorable net price.
Subject to this consideration, the brokers selected will include those that
supplement BSFM's research facilities with statistical data, investment
information, economic facts and opinions. Information so received is in addition
to and not in lieu of services required to be performed by BSFM and BSFM's fees
are not reduced as a consequence of the receipt of such supplemental
information.
Such information may be useful to BSFM in serving both the Master Series
and other funds which it advises and, conversely, supplemental information
obtained by the placement of business of other clients may be useful to BSFM in
carrying out their obliga- tions to the Master Series. Sales of Master Series
shares by a broker may be taken into consideration, and brokers also will be
selected because of their ability to handle special executions such as are
involved in large block trades or broad distributions, provided the primary
consideration is met. Large block trades may, in certain cases, result from two
or more funds advised or administered by BSFM being engaged simultaneously in
the purchase or sale of the same security. When transactions are executed in the
over-the-counter market, the Master Series will deal with the primary market
makers unless a more favorable price or execution otherwise is obtainable.
Portfolio turnover may vary from year to year as well as within a year.
The turnover rate for the Master Series for the period April 3, 1995
(commencement of operations) through March 31, 1996 was 296%. The portfolio
turnover rate differed from the anticipated portfolio turnover rate because of
market volatility in the last quarter of 1995 and first month of 1996. BSFM
repositioned the Master Series' portfolio by selling some of its technology
stocks and purchasing stocks that were believed to be more defensive in nature,
such as healthcare, consumer non- durables, and growth stocks. In periods in
which extraordinary market conditions prevail, BSFM will not be deterred from
changing investment strategy as rapidly as needed, in which case higher turnover
rates can be anticipated which would result in greater brokerage expenses. The
overall reasonableness of brokerage commissions paid is evaluated by BSFM based
upon its knowledge of available information as to the general level of
commissions paid by other institutional investors for comparable services.
To the extent consistent with applicable provisions of the 1940 Act and
the rules and exemptions adopted by the Securities and Exchange Commission
thereunder, the Board of Trustees has determined that transactions for the
Master Series may be executed through Bear, Stearns & Co. Inc. ("Bear Stearns")
if, in the judgment of BSFM, the use of Bear Stearns is likely to result in
price and execution at least as favorable as those of other qualified
broker-dealers, and if, in the transaction, Bear Stearns charges the Master
Series a rate consistent with that charged to comparable unaffiliated customers
in similar transactions. In addition, under rules recently adopted by the
Securities and Exchange Commission, Bear Stearns may directly execute such
transactions for the Master Series on the floor of any national securities
exchange, provided (i) the Board of Trustees has expressly authorized Bear
Stearns to effect such transactions, and (ii) Bear Stearns annually advises the
Board of Trustees of the aggregate compensation it earned on such transactions.
Over-the-counter purchases and sales are transacted directly with principal
market makers except in those cases in which better prices and executions may be
obtained elsewhere.
For the period April 3, 1995 (commencement of operations) through March
31, 1996, the Master Series paid total brokerage commissions of $415,246, of
which $378,353 was paid to Bear Stearns. The Master Series paid 91.10% of its
commissions to Bear Stearns, and, with respect to all the securities
transactions for the Master Series, 90.60% of the transactions involved
commissions being paid to Bear Stearns.
ITEM 18. CAPITAL STOCK AND OTHER SECURITIES.
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN CONJUNCTION
WITH ITEM 6 IN PART A.
Bear Stearns and S&P entered into a License Agreement dated October 1,
1994 that provides for, among other matters: (i) the grant by S&P to Bear
Stearns of the exclusive right until March 31, 2001, and the non-exclusive right
thereafter, to use certain of S&P's proprietary trade names and trademarks for
investment companies based, in whole or in part, on the STARS System, (ii) such
right to become non-exclusive at an earlier date, if the Master Series and
certain other investment companies which, in the future, may be sponsored by
Bear Stearns fail to reach certain aggregate asset sizes, measured annually
commencing on April 1, 1996, (iii) such right to terminate at S&P's option upon
certain events, such as breach by Bear Stearns of the material terms of the
License Agreement, S&P ceasing to publish STARS, the adoption of adverse
legislation or regulation (none of which currently is foreseen) affecting S&P's
ability to license its trade names or trademarks as contemplated by the License
Agreement, or the existence of certain litigation (none of which is known to
exist or to be threatened), (iv) the payment by Bear Stearns of annual license
fees in amounts equal to a range of .30% to .375% of the net assets of the
Master Series and other investment companies subject to the License Agreement
and (v) a partial reduction of the license fees to offset certain marketing
expenses incurred by Bear Stearns in connection with the Master Series.
STARS is the centerpiece of the OUTLOOK, S&P's flagship investment
newsletter that has a high net worth readership of 25,000 weekly subscribers.
STARS reaches more than 72,000 brokers and investment professionals on their
desktop computers through MARKETSCOPE, S&P's on-line, real-time equity
evaluation service, which is accessed more than one million times daily.
S&P has more than 130 years' experience in providing financial
information and analysis, offers more than 60 products and employs more than 50
experienced equity analysts. These analysts consider fundamental factors that
are expected to impact growth. These factors include company operations and
industry and macroeconomic conditions. Among the fundamental factors are the
company's balance sheet, ability to finance growth, competitive market
advantages, earnings per share growth and strength of management.
Under the Declaration of Trust, the Trustees are authorized to issue
shares of beneficial interests in the Master Series. Investors in the Master
Series are entitled to participate pro rata in distributions of income, loss,
gain and credit of the Master Series. Upon liquidation or dissolution of the
Master Series, investors are entitled to share pro rata in the Master Series'
net assets available for distribution to its investors. Investments in the
Master Series have no preference, pre- exemptive, conversion or similar rights
and are fully paid and non-assessable, except as set forth below. Investments in
the Master Series may not be transferred. No certificates are issued.
Each investor is entitled to a vote, with respect to matters effecting
each of the Master Fund's series, in proportion to the amount of its investment
in the Master Fund. Investors in the Master Fund do not have cumulative voting
rights, and investors holding more than 50% of the aggregate beneficial interest
in the Master Fund may elect all of the Trustees of the Master Fund if they
choose to do so and in such event the other investors in the Master Fund would
not be able to elect any Trustee. The Master Fund is not required to hold annual
meetings of investors but the Master Fund will hold special meetings of
investors when in the judgment of the Master Fund's Trustees it is necessary or
desirable to submit matters for an investor vote.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted under the provisions of the 1940 Act or applicable state law or
otherwise to the holders of the outstanding voting securities of an investment
company, such as the Master Fund, will not be deemed to have been effectively
acted upon unless approved by the holders of a majority of the outstanding
shares of the Master Series affected by such matter.
Rule 18f-2 further provides that the Master Series shall be deemed to be
affected by a matter unless it is clear that the interests of the Master Series
in the matter are identical or that the matter does not affect any interest of
the Master Series. However, the Rule exempts the selection of independent
accountants and the election of Trustees from the separate voting requirements
of the Rule.
ITEM 19. PURCHASE, REDEMPTION AND PRICING OF SECURITIES.
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN CONJUNCTION
WITH ITEMS 7 AND 8 IN PART A.
PURCHASE OF SECURITIES. Beneficial interests in the Master Series are
issued solely in private placement transactions which do not involve any "public
offering" within the meaning of Section 4(2) of the 1933 Act. Investments in the
Master Series may only be made by investment companies or certain other entities
which are "accredited investors" within the meaning of Regulation D under the
1933 Act. This registration statement does not constitute an offer to sell, or
the solicitation of an offer to buy, any "security" within the meaning of the
1933 Act.
SUSPENSION OF REDEMPTIONS. The right of redemption of Master Series
shares may be suspended or the date of payment postponed (a) during any period
when the New York Stock Exchange is closed (other than customary weekend and
holiday closings), (b) when trading in the markets the Master Series ordinarily
utilizes is restricted, or when an emergency exists as determined by the
Securities and Exchange Commission so that disposal of the Master Series'
investments or determination of its net asset value is not reasonably
practicable, or (c) for such other periods as the Securities and Exchange
Commission by order may permit to protect the Master Series' shareholders.
PRICING OF SECURITIES. Portfolio securities, including covered call options
written by the Master Series, are valued at the last sale price on the
securities exchange or national securities market on which such securities
primarily are traded. Securities not listed on an exchange or national
securities market, or securities in which there were no transactions, are valued
at the average of the most recent bid and asked prices, except in the case of
open short positions where the asked price is used for valuation purposes. Bid
price is used when no asked price is available. Short-term investments are
carried at amortized cost, which approximates value. Any securities or other
assets for which recent market quotations are not readily available are valued
at fair value as determined in good faith by the Master Fund's Board of
Trustees. Expenses and fees, including the management fee, are accrued daily and
taken into account for the purpose of determining the net asset value of Master
Series' shares.
Restricted securities, as well as securities or other assets for which
market quotations are not readily available, or are not valued by a pricing
service approved by the Board of Trustees, are valued at fair value as
determined in good faith by the Board of Trustees. The Board of Trustees will
review the method of valuation on a current basis. In making their good faith
valuation of restricted securities, the Trustees generally will take the
following factors into consideration: restricted securities which are, or are
convertible into, securities of the same class of securities for which a public
market exists usually will be valued at market value less the same percentage
discount at which purchased. This discount will be revised periodically by the
Board of Trustees if the Trustees believe that it no longer reflects the value
of the restricted securities. Restricted securities not of the same class as
securities for which a public market exists usually will be valued initially at
cost. Any subsequent adjustment from cost will be based upon considerations
deemed relevant by the Board of Trustees.
NEW YORK STOCK EXCHANGE CLOSINGS. The holidays (as
observed) on which the New York Stock Exchange is closed
currently are: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas.
ITEM 20. TAX STATUS.
The Master Fund is organized as a trust under Delaware law. Management
of the Master Fund believes that the Master Series has qualified for the fiscal
year ended March 31, 1996 as a partnership for Federal income tax purposes. As
such, the Master Series will not be subject to any income tax. However, each
investor in the Master Series will be taxable on its share (as determined in
accordance with the governing instruments of the Master Fund) of the Master
Series' ordinary income and capital gain in determining its income tax
liability. The determination of such share will be made in accordance with the
Internal Revenue Code of 1986, as amended (the "Code"), and regulations
promulgated thereunder.
The Master Fund's taxable year-end is December 31. Although the Master
Fund will not be subject to Federal income tax, it will file appropriate Federal
income tax returns.
It is intended that the Master Series' assets, income and distributions
will be managed in such a way that an investor in the Master Series will be able
to satisfy the requirements of Subchapter M of the Code for qualification as a
regulated investment company, assuming that the investor invested all of its
investable assets in the Master Series.
Investors are advised to consult their own tax advisers as to the tax
consequences of an investment in the Master Series.
ITEM 21. UNDERWRITERS.
The exclusive placement agent for the Master Fund is BSIL, which
receives no compensation for serving in this capacity.
ITEM 22. CALCULATIONS OF PERFORMANCE DATA.
Not applicable.
ITEM 23. FINANCIAL STATEMENTS.
<PAGE>
S&P STARS MASTER SERIES
PORTFOLIO OF INVESTMENTS
MARCH 31, 1996
- --------------------------------------------------------------------------
MARKET
SHARES+ VALUE
- --------------------------------------------------------------------------
COMMON STOCKS--93.48%
AEROSPACE - 2.83%
39,500 Rockwell International Corp....................... $2,325,562
----------
AIR TRANSPORT - 3.28%
35,000 Delta Air Lines Inc............................... 2,690,625
---------
AUTOMOTIVE EQUIPMENT - 4.97%
80,000 Goodyear Tire & Rubber Co........................ 4,080,000
----------
BANKS - 7.86%
25,000 Bank of New York Co., Inc........................ 1,287,500
43,000 Citicorp......................................... 3,440,000
50,000 Green Tree Financial Corp.++*.................... 1,718,250
----------
6,446,250
BROADCASTING - 1.06%
20,000 Infinity Broadcasting Co......................... 867,500
----------
CHEMICALS & FERTILIZERS - 5.45%
10,000 The Dow Chemical Co.............................. 868,750
46,000 Grace (W.R.) & Co.+++............................ 3,599,500
----------
4,468,250
COAL - 0.53%
30,000 Zeigler Coal Holding Co.......................... 435,000
----------
COMPUTERS & OFFICE EQUIPMENT - 2.41%
45,000 Cheyenne Software Inc.++*........................ 708,750
27,000 Oracle Systems Corp.............................. 1,272,375
----------
1,981,125
COMPUTER NETWORKS - 3.00%
80,000 Bay Networks Inc................................. 2,460,000
----------
COMPUTER SERVICES - 11.06%
31,000 Automatic Data Processing, Inc.++................ 1,220,625
51,500 Computer Associates.............................. 3,688,688
59,000 Sterling Software, Inc.*......................... 4,159,500
----------
9,068,813
CREDIT & FINANCE - 4.12%
39,000 American Express Co.............................. 1,925,625
----------
45,500 Federal National Mortgage Association............ 1,450,312
----------
3,375,937
DRUGS & HOSPITAL SUPPLIES - 9.95%
40,000 Amgen, Inc....................................... 2,325,000
35,000 Bio-Technology General Corp.*.................... 229,688
36,000 Foundation Health Corp.++*....................... 1,372,500
35,000 Johnson & Johnson................................. 3,228,750
15,000 Pfizer Inc. ...................................... 1,005,000
----------
8,160,938
ELECTRICAL EQUIPMENT - 6.65%
70,000 General Electric Co.............................. 5,451,250
----------
The accompanying notes are an integral part of the financial statements.
ELECTRONICS - 5.54%
55,000 Adaptec Inc.++*.................................... $2,653,750
80,500 Dynatech Corp..................................... 1,891,750
----------
4,545,500
ENTERTAINMENT & LEISURE - 1.29%
60,000 Comcast Corp. Class A............................. 1,061,250
-----------
FOOD & BEVERAGES - 2.72%
27,000 The Coca-Cola Co.................................. 2,230,875
-----------
FOREST PRODUCTS & PAPER - 4.09%
45,000 Kimberly-Clark Corp.+++........................... 3,352,500
-----------
INSURANCE - 2.29%
20,000 Chubb Corp. ...................................... 1,877,500
-----------
MISCELLANEOUS MANUFACTURING - 2.75%
96,000 Whittaker Corp.*.................................. 2,256,000
-----------
OIL AND NATURAL GAS - 5.12%
25,000 Baker Hughes, Inc.................................. 731,250
20,000 Dresser Industries, Inc............................ 610,000
16,000 Mobil Corp......................................... 1,854,000
20,000 Williams Cos., Inc............................... 1,007,500
-----------
4,202,750
OIL-OFFSHORE DRILLING - 1.22%
100,000 Global Marine, Inc.*.............................. 1,000,000
-----------
RAILROADS - 1.74%
50,000 Illinois Central Corp.++.......................... 1,425,000
-----------
TELECOMMUNICATIONS - 3.55%
42,500 ECI Telecom Ltd.................................... 950,938
65,000 MCI Communications Corp.++........................ 1,966,250
-----------
2,917,188
Total Common Stocks
(cost - $70,673,439)............................ 76,679,813
SHORT-TERM INVESTMENTS - 7.18%
INVESTMENT COMPANY - 1.08%
886,080 The Milestone Funds Treasury Obligations
Portfolio, Institutional Shares**................. 886,080
-----------
PRINCIPAL
AMOUNT
(000'S)
U.S. GOVERNMENT AGENCY OBLIGATION - 6.10%
$5,000 Federal Home Loan Bank Discount
Note, 5.25%, 04/01/96.............................$ 5,000,000
Total Short Term Investments
(cost - $5,886,080)............................... 5,886,080
-----------
Total Investments
(cost $76,559,519) - 100.66%...................... 82,565,893
Liabilities in excess of other
assets - (0.66)%................................... (538,185)
-----------
Net Assets - 100.00%..............................$82,027,708
- ----------------
+ Unless otherwise indicated all common stocks are ranked five stars.
++ Currently ranked four stars; ranked five stars when purchased.
+++ Currently ranked three stars; ranked five stars when purchased.
* Non-income producing security.
** Money market fund
S&P STARS RANKINGS:
Five stars - Buy - Expected to be among the best performers over the
next twelve months and to rise in price.
Four stars - Accumulate - Expected to be an above-average performer.
Three stars- Hold - Expected to be an average performer.
Two stars - Avoid - Expected to be a below average performer.
One star - Sell - Expected to be a well-below-average performer and
to fall in price.
The accompanying notes are an integral part of the financial statements.
S&P STARS Master Series
Statement of Assets and Liabilities
MARCH 31, 1996
ASSETS
Investments, at value (cost - $76,559,519).............. $82,565,893
Receivable for investments sold......................... 2,444,131
Receivable for beneficial interests sold................ 1,023,063
Dividends and interest receivable....................... 140,998
Receivable from investment adviser...................... 79,750
Prepaid insurance....................................... 15,768
Deferred organization expenses.......................... 80,156
------------
Total assets................................... 86,349,759
-----------
LIABILITIES
Payable for investments purchased....................... 4,042,156
Payable for beneficial interests repurchased............ 241,862
Administration and accounting fee payable............... 5,901
Custodian fee payable................................... 2,800
Accrued expenses........................................ 29,339
------------
Total liabilities.............................. 4,322,051
-----------
NET ASSETS
Net proceeds from capital contributions and withdrawals. 76,021,334
Net unrealized appreciation on investments.............. 6,006,374
-----------
Net assets applicable to investors'
beneficial interests........................... $82,027,708
===========
The accompanying notes are an integral part of the financial statements.
S&P STARS Master Series
Statement of Operations
FOR THE PERIOD APRIL 5, 1995* THROUGH MARCH 31, 1996
INVESTMENT INCOME
Dividends............................................... $ 667,421
Interest................................................ 127,898
------------
795,319
EXPENSES
Advisory fees........................................... 384,778
Administration and accounting fees...................... 61,620
Custodian fees and expenses............................. 37,542
Legal and auditing fees................................. 22,783
Amortization of organizational expenses................. 19,844
Insurance expenses...................................... 17,302
Trustees' fees and expenses............................. 16,870
Other................................................... 3,521
-----------
Total expenses before waivers and reimbursements..... 564,260
Less: waivers and reimbursements..................... (464,529)
----------
Total expenses after waivers and reimbursements...... 99,731
-------------
Net investment income..................................... 695,588
------------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS,
SECURITIES SOLD SHORT AND OPTION TRANSACTIONS
Net realized gain/(loss) from:
Investments...................................... 4,059,481
Option transactions.............................. (65,149)
Securities sold short............................ (224,962)
Net change in unrealized appreciation on investments...... 6,006,374
------------
Net realized and unrealized gain on investments,
securities sold short and option transactions............... 9,775,744
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS...............$10,471,332
===========
*Commencement of investment operations.
The accompanying notes are an integral part of the financial statements.
S&P STARS Master Series
Statement of Changes in Net Assets
FOR THE PERIOD APRIL 5, 1995* THROUGH MARCH 31, 1996
INCREASE IN NET ASSETS FROM
OPERATIONS
Net investment income......................................... $ 695,588
Net realized gain from investments, securities sold short
and option transactions...................................... 3,769,370
Net change in unrealized appreciation on investments ......... 6,006,374
------------
Net increase in net assets resulting from operations.......... 10,471,332
------------
CAPITAL TRANSACTIONS
Contributions......................................... 86,999,990
Withdrawals........................................... (15,568,630)
------------
Net increase in net assets derived from capital transactions.. 431,360
---------
Total increase in net assets................................ 902,692
NET ASSETS
Beginning of period................................... . 125,016
------------
End of period....................................... $82,027,708
===========
*Commencement of investment operations.
The accompanying notes are an integral part of the financial statements.
S&P STARS Master Series
Financial Highlights
FOR THE PERIOD APRIL 5, 1995* THROUGH MARCH 31, 1996
Contained below are ratios to average net assets and other supplemental data for
the period. This information has been derived from information provided in the
financial statements.
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted).................... $82,028
Ratio of expenses to average net assets (1)(2)............... 0.19%
Ratio of net investment income to average net assets (1)(2).. 1.36%
Decrease reflected in above expense ratios and net
investment income due to waivers and reimbursements (2).... 0.91%
Portfolio turnover rate (3).................................. 295.97%
Average commission rate per share............................ $ 0.06
* Commencement of investment operations.
(1) Reflects waivers and reimbursements.
(2) Annualized.
(3) Not annualized.
The accompanying notes are an integral part of the financial statements.
S&P STARS Fund
S&P STARS Master Series
Notes to Financial Statements
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
S&P STARS Fund (the "Master Fund") was organized as a Delaware business trust on
October 5, 1994 and is registered with the Securities and Exchange Commission
(the "Commission") under the Investment Company Act of 1940, as amended (the
"Investment Company Act"), as an open-end management investment company. The
Master Fund is a "series fund" which is a mutual fund divided into separate
portfolios. Each portfolio is treated as a separate entity for certain matters
under the Investment Company Act, and for other purposes, and a shareholder of
one portfolio is not deemed to be a shareholder of any other portfolio. The
Master Fund currently has one portfolio in operation, S&P STARS Master Series
(the "Master Series"), a non-diversified portfolio.
ORGANIZATIONAL MATTERS--Prior to commencing investment operations on April 5,
1995, the Master Fund had not had any transactions other than those relating to
organizational matters and the sale of 10,418 shares of beneficial interest of
the Master Series to S&P STARS Portfolio (the "Portfolio") of The Bear Stearns
Funds. Costs of $100,000 incurred by the Master Fund in connection with the
organization and its registration with the Commission have been deferred and are
being amortized, using the straight-line method over the period of benefit not
exceeding sixty months, beginning with the commencement of investment operations
of the Master Series. The Master Series commenced investment operations on April
5, 1995. In the event that the Portfolio or any transferee of the Portfolio
redeems any of its original shares prior to the end of the sixty month period,
the proceeds of the redemption payable in respect of such shares shall be
reduced by the pro rata share (based on the proportionate share of the original
shares redeemed to the total number of original shares outstanding at the time
of the redemption) of the unamortized deferred organization expenses as of the
date of such redemption. In the event that the Master Series is liquidated prior
to the end of the sixty month period, the Portfolio or the transferee of the
Portfolio shall bear the unamortized deferred organization expenses.
PORTFOLIO VALUATION--Securities, including covered call options written by the
Master Series, are valued at the last sale price on the securities exchange or
national securities market on which such securities primarily are traded.
Securities not listed on an exchange or national securities market, or
securities in which there were no transactions, are valued at the average of the
most recent bid and asked prices, except in the case of open short positions
where the asked price is used for valuation purposes. Bid price is used when no
asked price is available. Securities which mature in 60 days or less are valued
at amortized cost which approximates market value, unless this method does not
represent fair value. Expenses and fees, including the investment advisory and
administration fees, are accrued daily and taken into account for the purposes
of determining the net asset value of the Master Series shares.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME-- Master Series' investment
transactions are recorded on the trade date (the date on which the order to buy
or sell is executed). Realized gains and losses from securities are calculated
on the identified cost basis. Dividend income is recorded on the ex-divided
date. Interest income is recorded on an accrual basis.
OPTIONS WRITING--When the Master Series writes an option, an amount equal to the
premium received by the Master Series is recorded as a liability and is
subsequently adjusted to the current market value of the option written.
Premiums received from writing options which expire unexercised are recovered by
the Master Series on the expiration date as realized gains from option
transactions. The difference between the premium and the amount paid on
effecting a closing purchase transaction, including brokerage commissions, is
also treated as a realized gain, or if the premium is less than the amount paid
for the closing purchase transaction, as a realized loss. If a call option is
exercised, the premium is added to the proceeds from the sale of the underlying
securities in determining whether the Master Series has a realized gain or loss.
If a put option is exercised, the premium reduces the cost basis of the
securities purchased by the Master Series. The Master Series' use of written
options involves, to varying degrees, elements of market risk in excess of the
amount recognized in the statement of assets and liabilities. The contract or
notional amounts reflect the extent of the Master Series' involvement in these
financial instruments. In writing an option, the Master Series bears the market
risk of an unfavorable change in the price of the security underlying the
written option. Exercise of an option written by the Master Series could result
in the Master Series selling or buying a security at a price different from the
current market value. The Master Series' activities in written options are
conducted through regulated exchanges which do not result in counterparty credit
risks.
Option activity for the period ended March 31, 1996 was as follows:
<TABLE>
<CAPTION>
CALL OPTIONS PUT OPTIONS
----------------------------- -------------------------
CONTRACTS PREMIUMS CONTRACTS PREMIUMS
--------- -------- --------- --------
<S> <C> <C> <C> <C>
Outstanding at beginning of period................... -- -- -- --
Options written...................................... 88,665 $4,008,132 75 $ 18,975
Options closed or expired (88,665) (4,008,132) (75) (18,975)
------- ---------- --- -------
Outstanding at end of period......................... -- -- -- --
------- ---------- -- -------
</TABLE>
SHORT SELLING--When the Master Series makes a short sale, an amount equal to the
proceeds received by the Master Series is recorded as a liability and is
subsequently adjusted to the current market value of the short sale. Short sales
represent obligations of the Master Series to make future delivery of specific
securities and, correspondingly, create an obligation to purchase the security
at market prices prevailing at the later delivery date (or to deliver the
security if already owned by the Master Series). Upon the termination of a short
sale, the Master Series will recognize a gain, limited to the price at which the
Master Series sold the security short, if the market price is less than the
proceeds originally received. The Master Series will recognize a loss, unlimited
in magnitude, if the market price at termination is greater than the proceeds
originally received. As a result, short sales create the risk that the Master
Series' ultimate obligation to satisfy the delivery requirements may exceed the
amount of the proceeds initially received or the liability recorded in the
financial statements.
U.S. FEDERAL TAX STATUS--The Master Series is treated as a partnership for
U.S. federal tax purposes. No provision is made by the Master Series for U.S.
federal taxes; each investor in the Master Series is ultimately responsible for
the payment of any taxes. Since one of the Master Series' investors is a
regulated investment company that invests all of its assets in the Master Series
(S&P STARS Portfolio or the "Portfolio"), the Master Series normally must
satisfy the applicable source of income and diversification requirements (under
the Internal Revenue Code) in order for the Portfolio to satisfy them. The
Master Series intends to comply with the requirements of the Internal Revenue
Code of 1986, as amended, applicable to regulated investment companies.
TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
During the period ended March 31, 1996, Bear Stearns Funds Management Inc.
("BSFM" or the "Adviser"), a wholly-owned subsidiary of The Bear Stearns
Companies Inc., served as the investment adviser of the Master Series pursuant
to an Investment Advisory Agreement. The Adviser is entitled to receive from the
Master Series a monthly fee equal to an annual rate of 0.75% of the Master
Series' average daily net assets.
Under the terms of an Administrative Services Agreement with the Portfolio, PFPC
International Ltd. provides certain administrative services to the Master
Series. For providing these services, PFPC International Ltd. is entitled to
receive from the Master Series a monthly fee equal to an annual rate of 0.12% of
the Master Series' net assets up to $200 million, 0.09% of the next $200
million, 0.075% of the next $200 million, and 0.05% of net assets above $600
million, subject to a minimum annual fee of $8,500 for the Master Series,
payable monthly. During the period ended March 31, 1996, PFPC International Ltd.
has voluntarily waived a portion of its fee.
During the period ended March 31, 1996, the Adviser has voluntarily undertaken
to limit the Portfolio's total operating expenses (other than brokerage
commissions, interest, taxes and extraordinary items) to the extent that total
Portfolio operating expenses exceeded 1.50% of the average daily net assets of
the Portfolio's class A shares, 2.00% of the average daily net assets of the
Portfolio's class C shares and 1.00% of the average daily net assets of the
Portfolio's class Y shares. As necessary, this limitation is effected by waivers
by the Adviser of its advisory fees and reimbursements of expenses exceeding the
advisory fee. For the period ended March 31, 1996, the Adviser waived $384,779
of its advisory fee and reimbursed $79,750 of the Master Series expenses in
order to maintain the voluntary expense limitation. The Master Series will not
pay the Adviser at a later time for any amounts it may waive, nor will the
Master Series reimburse the Adviser for any amounts it may assume.
For the period ended March 31, 1996, Bear, Stearns & Co. Inc., an affiliate of
the Adviser, earned $378,353 in brokerage commissions from portfolio
transactions executed on behalf of the Master Series.
Custodial Trust Company, a wholly-owned subsidiary of The Bear Stearns
Companies Inc. and an affiliate of the Adviser, serves as custodian to the
Master Series.
INVESTMENTS IN SECURITIES
For U.S. federal income tax purposes, the cost of securities owned at March 31,
1996 was $76,887,585. Accordingly, the net unrealized appreciation of
investments of $5,678,308 was composed of gross appreciation of $6,807,564 for
those investments having an excess of value over cost and gross depreciation of
$1,129,256 for those investments having an excess of cost over value.
For the period April 5, 1995 (commencement of investment operations) through
March 31, 1996, aggregate purchases and sales of investment securities
(excluding short-term securities) were $209,191,856 and $142,577,898,
respectively.
CREDIT AGREEMENT
The S&P STARS Fund, on behalf of the Master Series, has entered into a credit
agreement with The First National Bank of Boston. Bear Stearns Investment Trust,
which consists of the Emerging Markets Debt Portfolio and The Bear Stearns Funds
consisting of S&P STARS Portfolio, Large Cap Value Portfolio, Small Cap Value
Portfolio, Total Return Bond Portfolio and The Insiders Select Fund are also
parties to the credit agreement. The agreement provides that each fund as a
party to the credit agreement is permitted to borrow in an amount up to 15% of
the value of its total assets. Subject to Board approval and upon making
necessary disclosure in its prospectus, each fund may, in accordance with the
provisions of the credit agreement, borrow up to 25% of the value of its total
assets, less all liabilities other than liabilities for borrowed money
outstanding at the time. However, at no time shall the aggregate outstanding
principal amount of all loans to any of the funds exceed $25,000,000. The line
of credit will bear interest at the greater of: (i) the annual rate of interest
announced from time to time from the bank at its head office as its Base Rate,
or (ii) the Federal Funds Effective Rate plus 0.50%, or, at the borrower's
option, the rate quoted by The First National Bank of Boston.
Each loan is payable on demand or upon termination of this credit agreement or,
for money market loans, on the last day of the interest period and, in any
event, not later than 14 days from the date the loan was advanced.
The Master Series uses this facility to borrow money only for temporary or
emergency (not leveraging) purposes. The Master Series had no amount outstanding
under the line of credit agreement at March 31, 1996.
<PAGE>
S&P STARS MASTER SERIES
REPORT OF INDEPENDENT AUDITORS
The Board of Trustees and Investors S&P STARS Master Series (A series of the S&P
STARS Fund):
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of S&P STARS Master Series (the "Master Series"),
as of March 31, 1996, and the related statements of operations, changes in net
assets and the financial highlights for the period April 5, 1995 (commencement
of investment operations) to March 31, 1996. These financial statements and
financial highlights are the responsibility of the Master Series' management.
Our responsibility is to express an opinion on these financial statements and
the financial highlights based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at March
31, 1996 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of S&P STARS Master
Series at March 31, 1996, the results of its operations, the changes in its net
assets and the financial highlights for the period presented in conformity with
generally accepted accounting principles.
Deloitte & Touche
Dublin, Ireland
May 9, 1996
<PAGE>
S&P STARS FUND
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
(1) Portfolio of Investments as of March 31, 1996.
(2) Statement of Assets and Liabilities as of March 31, 1996.
(3) Statement of Operations for the period ended March 31, 1996.
(4) Statement of Changes in Net Assets for the period ended March 31,
1996.
(5) Financial Highlights as of March 31, 1996.
(6) Report of Deloitte & Touche, Independent Auditors, dated May
9, 1996.
(b) Exhibits:
(1)(a) Certificate of Trust.
(1)(b) Agreement and Declaration of Trust.
(1)(c) Restated Certificate of Trust.
(1)(d) Instrument of Amendment to the Agreement and Declaration
of Trust.
(2) By-Laws.
(5)(a) Investment Advisory Agreement.
(5)(b) Administration Services Agreement.
(6) Placement Agency Agreement.
(8) Custody Agreement.
(10) Opinion (including consent) of Stroock & Stroock & Lavan.
(11) Consent of Independent Auditors.
(17) Financial Data Schedule.
Other Exhibit: Certificate.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Not applicable.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
(1) (2)
Number of Record
TITLE OF CLASS HOLDERS
--------------------- ---------------
Shares of beneficial interest,
$.001 per share, of
the following portfolios:
S&P STARS Master Series 2
ITEM 27. INDEMNIFICATION
Reference is made to Article IX of the Registrant's
Declaration of Trust filed as Exhibit 1(b) hereto. The application of these
provisions is limited by Article 10 of the Registrant's By-Laws filed as Exhibit
2 hereto and by the following undertaking set forth in the rules promulgated by
the Securities and Exchange Commission:
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in such 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 trustee,
officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
trustee, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in such Act and will be governed by the final
adjudication of such issue.
Reference also is made to the Placement Agency Agreement filed
as Exhibit 6 hereto.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
See Item 5, "Management of the Master Fund" in Part A and Item 16,
"Investment Advisory and Other Services" in Part B regarding the business of the
investment adviser. For information as to the business, profession, vocation or
employment of a substantial nature engaged in by BSFM or any of its respective
officers and directors during the past two years, reference is made to Form ADV,
filed with the Securities and Exchange Commission under the Investment Advisers
Act of 1940 by BSFM, incorporated by reference herein (SEC File No. 801-29862).
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Not applicable.
(b) Set forth below is a list of each executive
officer and director of BSIL. The principal business address of each such
person is 245 Park Avenue, New York, New York 10167, except for those persons
whose name is followed by "(London)." As to those persons, their principal
business address is 1 Canada Square, E14 5AD, England.
Positions and Positions and
Offices with Offices with
NAME BSIL REGISTRANT
DIRECTORS
Nicolo Brandolini d'Adda Director
Peter D. Cherasia Director
Wendy L. de Monchaux Director
Paul M. Friedman Director
John L. Knight Director
(London)
William J. Montgoris Director-Finance
Hans Rudolf Kunz Director
Barry Nix (London) Director President
Antony Liberatore Director
MANAGERS (OFFICERS)
William J. Montgoris Secretary
Susan Paton Assistant Treasurer
Jeffrey C. Bernstein Assistant Treasurer
Frederick B. Casey Assistant Treasurer
Bruce E. Geismar Assistant Treasurer
Michael Minikes Treasurer
Patrick Mahon Compliance Officer
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
PFPC International Ltd.
80 Harcourt Street
Dublin 2, Ireland
ITEM 31. MANAGEMENT SERVICES
Not Applicable
ITEM 32. UNDERTAKINGS
Registrant hereby undertakes to call a meeting of shareholders
for the purpose of voting upon the question of removal of a trustee or trustees
when requested in writing to do so by the holders of at least 10% of the
Registrant's outstanding shares of beneficial interest and in connection with
such meeting to comply with the provisions of Section 16(c) of the Investment
Company Act of 1940 relating to shareholder communications.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of
1940, the Registrant has duly caused this Amendment to 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 18th day of June, 1996.
S&P STARS FUND
(Registrant)
By: /s/ BARRY NIX*
----------------------
Barry Nix, President
* By: /s/ FRANK J. MARESCA
----------------------
Frank J. Maresca,
Attorney-in-Fact
S&P STARS FUND
Amendment No. 5 to
Registration Statement on Form N-1A under
the Investment Company Act of 1940
EXHIBITS
<PAGE>
INDEX TO EXHIBITS
(1)(a) Certificate of Trust
(1)(b) Agreement and Declaration of Trust
(1)(c) Restated Certificate of Trust
(1)(d) Instrument of Amendment to the Agreement and Declaration
of Trust
(2) By-Laws
(5)(a) Investment Advisory Agreement
(5)(b) Administrative Services Agreement
(6) Placement Agency Agreement
(8) Custody Agreement
(10) Opinion (including consent) of Stroock & Stroock & Lavan
(11) Consent of Independent Auditors
(17) Financial Data Schedule
Other Exhibit: Certificate
<PAGE>
Exhibit (1)(a)
CERTIFICATE OF TRUST OF
S&P STARS PORTFOLIO
THIS Certificate of Trust of S&P STARS Portfolio (the "Trust"), dated
October 5, l994, is being duly executed and filed by the undersigned, as
trustees, to form a business trust under the Delaware Business Trust Act (12
Del. C. ss. 3801, et seq.).
l. Name. The name of the business trust formed hereby is S&P STARS
Portfolio.
2. Registered Agent. The business address of the registered office of the
Trust in the State of Delaware is One Rodney Square, 10th Floor, 10th and King
Streets in the City of Wilmington, County of New Castle, Delaware l980l. The
name of the Trust's registered agent at such address is RL&F Service Corp.
3. Effective Date. This Certificate of Trust shall be effective upon the
date and time of filing.
4. Series Trust. Notice is hereby given that, pursuant to Section 3804 of
the Delaware Business Trust Act, the debts, liabilities, obligations and
expenses incurred, contracted for or otherwise existing with respect to a
particular series of the Trust shall be enforceable against the assets of such
series only and not against the assets of the Trust generally. The Trust will be
a registered investment company under the Investment Company Act of 1940, as
amended.
IN WITNESS WHEREOF, each of the undersigned trustees of the Trust, have
executed this Certificate of Trust as of the date first above-written.
/s/ Robert S. Reitzes
Robert S. Reitzes, Trustee
/s/ John C. Sites, Jr.
John C. Sites, Jr., Trustee
/s/ Michael Minikes
Michael Minikes, Trustee
<PAGE>
Exhibit (1)(b)
S&P STARS PORTFOLIO
Agreement and Declaration of Trust
THIS AGREEMENT AND DECLARATION OF TRUST, made this 5th day of October,
1994, by the Trustees hereunder (hereinafter with any additional and successor
trustees referred to as the "Trustees") and by the holders of Interests to be
issued hereunder as hereinafter provided.
W I T N E S S E T H :
WHEREAS, the Trustees have agreed to manage all property coming into their
hands as trustees of a Delaware business trust in accordance with the provisions
hereinafter set forth.
NOW, THEREFORE, the Trustees hereby declare that they will hold all cash,
securities and other assets, which they may from time to time acquire in any
manner as Trustees hereunder IN TRUST to manage and dispose of the same upon the
following terms and conditions for the pro rata benefit of the holders from time
to time of Interests, whether or not certificated, in this Trust as hereinafter
set forth.
ARTICLE I
Name and Definitions
Section 1. Name. This Trust shall be known as S&P STARS Portfolio.
Section 2. Definitions. Whenever used herein, unless otherwise required by
the context or specifically provided:
(a) The term "Commission" shall have the meaning provided in the 1940 Act;
(b) The "Trust" refers to the Delaware business trust established by this
Agreement and Declaration of Trust, as amended from time to time;
(c) The term "Interestholder" shall mean a record owner of Interests of the
Trust;
(d) The term "Interests" shall mean the equal proportionate
non-transferable units of interest into which the beneficial interest in the
Trust shall be divided from time to time or, if more than one series or class of
Interests is authorized by the Trustees, the equal proportionate
non-transferable units into which each series or class of Interests shall be
divided from time to time, and includes a fraction of an Interest as well as a
whole Interest;
(e) The "1940 Act" refers to the Investment Company Act of 1940, and the
Rules and Regulations thereunder, all as amended from time to time;
(f) The term "Manager" is defined in Article IV, Section 5;
(g) The term "Person" shall mean an individual or any corporation,
partnership, joint venture, trust or other enterprise;
(h) "Declaration of Trust" shall mean this Agreement and Declaration of
Trust as amended or restated from time to time;
(i) "Bylaws" shall mean the Bylaws of the Trust as amended from time to
time;
(j) The term "series" or "series of Interests" refers to the one or more
separate investment portfolios of the Trust into which the assets and
liabilities of the Trust may be divided and the Interests of the Trust
representing the beneficial interest of Interestholders in such respective
portfolios;
(k) The term "class" or "class of Interests" refers to the division of
Interests representing any series into two or more classes as provided in
Article III, Section 1 hereof;
(l) The term "Delaware Act" shall mean the Delaware Business Trust Act, 12
Del.C. ss. 3801, et seq.; and
(m) The term "Bankruptcy" shall mean, with respect to any Interestholder,
any of the following:
(i) filing a voluntary petition in bankruptcy or for reorganization or for
the adoption of an arrangement under the Bankruptcy Code (as now or in the
future amended) or an admission seeking the relief therein provided;
(ii) making a general assignment for the benefit of creditors;
(iii) consenting to the appointment of a receiver for all or a substantial
part of such Interestholder's property;
(iv) in the case of the filing of an involuntary petition in bankruptcy, an
entry of an order for relief;
(v) the entry of a court order appointing a receiver or trustee for all or
a substantial part of such Interestholder's property without its consent; or
(vi) the assumption of custody or sequestration by a court of competent
jurisdiction of all or substantially all of such Interestholder's property.
(n) The term "Adjusted Basis" shall mean, with respect to any Security, its
adjusted basis for federal income tax purposes.
(o) The term "Adjusted Gross Asset Value" shall mean, with respect to a
Built-in Gain Security, the lesser of (i) the Gross Asset Value of such Security
on the day such Security is contributed to the Trust and (ii) the lowest Gross
Asset Value of such Security on any day thereafter, and, with respect to a
Built- in Loss Security, the higher of (i) the Gross Asset Value of such
Security on the day such Security is contributed to the Trust and (ii) the
highest Gross Asset Value of such Security on any day thereafter.
(p) The term "Appreciated Security" shall mean any Security held by the
Trust immediately before but on the same day as a new Interestholder is admitted
to the Trust if on such day the Gross Asset Value of such Security exceeds its
Adjusted Basis or if such Security is a Built-in Gain Security its Adjusted
Gross Asset Value.
(q) The term "Book Capital Account" shall mean, with respect to any
Interestholder, the Capital Account maintained for such Interestholder on a
daily basis in accordance with the following provisions:
(i) To each Interestholder's Book Capital Account there shall be credited
(a) the amount of money and the Gross Asset Value of any property contributed by
such Interestholder to the Trust, (b) such Interestholder's distributive share
of Net Income, (c) such Interestholder's distributive share of Book Sales Gain,
and (d) the amount of any Trust liabilities assumed by such Interestholder or
which are secured by any property distributed to such Interestholder.
(ii) To each Interestholder's Book Capital Account there shall be debited
(a) the amount of money and the Gross Asset Value of any property distributed to
such Interestholder pursuant to any provision of this Agreement, (b) such
Interestholder's distributive share of Net Loss, (c) such Interestholder's
distributive share of Book Sales Loss, and (d) and the amount of any liabilities
of such Interestholder assumed by the Trust or which are secured by any property
contributed by such Interestholder to the Trust.
Any decisions relating to the maintenance of Book Capital Accounts shall be
made by the Trustees in any manner that reasonably reflects the purpose and
intention of this Agreement. In the event the Trustees shall determine that it
is prudent to modify the manner in which the Book Capital Accounts, or any
debits or credits thereto, are computed in order to reflect the purpose and
intention of this Agreement, the Trustee may make such modification.
(r) The terms "Book Sales Gain" or "Book Sales Loss" shall mean, for any
day, the difference, positive or negative, as the case may be, between (x) the
aggregate gross asset value of all Securities held by the Trust at any time
during such day other than Securities acquired by the Trust on such day and (y)
the aggregate gross asset value of all such Securities as determined for the
preceding day.
(s) The term "Built-in Gain Security" shall mean any Security contributed
by an Interestholder to the Trust if on the day such Security is contributed to
the Trust, its Gross Asset Value exceeds its Adjusted Basis.
(t) The term "Built-in Loss Security" shall mean any Security contributed
by an Interestholder to the Trust if on the day such Security is contributed to
the Trust, its Gross Asset Value is less than its Adjusted Basis.
(v) The term "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time (or any corresponding provisions of succeeding law).
(u) The term "Depreciated Security" shall mean any Security held by the
Trust immediately before but on the same day as a new Interestholder is admitted
to the Trust if on such day such Security's Gross Asset Value is less than its
Adjusted Basis or if such Security is a Built-in Loss Security its Adjusted
Gross Asset Value.
(w) The term "Gross Asset Value" shall mean, with respect to any Security,
the value of such Security determined as follows:
Securities are valued at the last sale price on the securities exchange on
which such securities are primarily traded or at the last sale price on the
national securities market. Securities not listed on an exchange or
national securities market, or securities in which there were no
transactions, are valued at the average of the most recent bid and asked
prices, except in the case of open short positions where the asked price is
used for valuation purposes. Bid price is used when no asked price is
available. Short-term investments are carried at amortized cost, which
approximates value. Bid price is used when no asked price is available.
Market quotations for foreign securities in foreign currencies are
translated into U.S. dollars at the prevailing rates of exchange. Any
securities or other assets for which recent market quotations are not
readily available are valued at fair market as determined in good faith by
the Trustees. Securities sold are valued for the day of sale at their net
sales price.
(x) The term "Modified Gross Asset Value" shall mean, with respect to an
Appreciated Security, the lesser of (i) the Gross Asset Value of such Security
on the day such Security became an Appreciated Security and (ii) the lowest
Gross Asset Value of such Security on any day thereafter, and, with respect to a
Depreciated Security, the higher of (i) the Gross Asset Value of such Security
on the day such Security became a Depreciated Security and (ii) the highest
Gross Asset Value of such Security on any day thereafter.
(y) The terms "Net Income" or "Net Loss" shall mean, for any day, the sum,
if positive, or if negative, as the case may be, of all items of income, gain,
deduction and loss (other than items included in computing Tax Sales Gain, Tax
Sales Loss, Remaining Built-in Gain, Remaining Built-in Loss, Remaining
Appreciated Gain or Remaining Depreciated Loss) recognized by the Trust on such
day for federal income tax purposes and determined in accordance with the
provisions of this Agreement.
(z) The term "Percentage Interest" shall mean, with respect to any
Interestholder, as of any day, the ratio (expressed as a percentage) of such
Interestholder's Book Capital Account as of the close of business on the
preceding day to the aggregate Book Capital Accounts of all Interestholders as
of the close of business on such preceding day, such Book Capital Accounts to be
determined after giving effect to all contributions, distributions, and
allocations through such preceding day.
(aa) The term "Positive Book/Tax Disparity" shall mean, with respect to any
Interestholder, the excess (if any) of such Interestholder's Book Capital
Account over the sum of such Interestholder's (i) Tax Capital Account, (ii)
Remaining Built-in Gain with respect to each Built-in Gain Security contributed
by such Interestholder to the Trust and (iii) share of Remaining Appreciated
Gain.
(bb) The term "Positive Tax/Book Disparity" shall mean, with respect to any
Interestholder, the excess (if any) of such Interestholder's Tax Capital Account
over the sum of such Interestholder's (i) Book Capital Account, (ii) Remaining
Built-in Loss with respect to each Built-in Loss Security contributed by such
Interestholder to the Trust and (iii) share of Remaining Depreciated Gain.
(cc) The term "Regulations" shall mean the Income Tax Regulations,
including Temporary Regulations, promulgated under the Code, as such regulations
may be amended from time to time (including corresponding provisions of
succeeding regulations).
(dd) The term "Remaining Appreciated Gain" shall mean, with respect to each
Appreciated Security, the excess (if any) of such Security's Modified Gross
Asset Value over such Security's Adjusted Basis, or if such Security is a
Built-in Gain Security its Adjusted Gross Asset Value, on the day such Security
became an Appreciated Security.
(ee) The term "Remaining Built-in Gain" shall mean, with respect to each
Built-in Gain Security, the excess (if any) of such Security's Adjusted Gross
Asset Value over such Security's Adjusted Basis on the day such Security is
contributed to the Trust.
(ff) The term "Remaining Built-in Loss" shall mean, with respect to each
Built-in Loss Security, the excess (if any) of such Security's Adjusted Basis on
the day such Security is contributed to the Trust over such Security's Adjusted
Gross Asset Value.
(gg) The term "Remaining Depreciated Loss" shall mean, with respect to each
Depreciated Security, the excess (if any) of such Security's Adjusted Basis, or
if such Security is a Built-in Loss Security its Adjusted Gross Asset Value, on
the day such Security became a Depreciated Security over such Security's
Modified Gross Asset Value.
(hh) The term "Tax Capital Account" shall mean, with respect to any
Interestholder, the Capital Account maintained for such Interestholder on a
daily basis in accordance with the following provisions:
(i) To each Interestholder's Tax Capital Account there shall be credited
(a) the amount of money and the Adjusted Basis of any property contributed by
such Interestholder to the Trust, (b) such Interestholder's distributive share
of Net Income, (c) such Interestholder's distributive share of Tax Sales Gain,
and (d) the amount of any Trust liabilities assumed by such Interestholder or
which are secured by any property distributed to such Interestholder.
(ii) To each Interestholder's Tax Capital Account there shall be debited
(a) the amount of money and the Gross Asset Value of any property distributed to
such Interestholder pursuant to any provision of this Agreement, (b) such
Interestholder's distributive share of Net Loss, (c) such Interestholder's
distributive share of Tax Sales Loss, and (d) the amount of any liabilities of
such Interestholder assumed by the Trust or which are secured by any property
contributed by such Interestholder to the Trust.
Any decisions relating to the maintenance of Tax Capital Accounts shall be
made by the Trustees in any manner that reasonably reflects the purpose and
intention of this Agreement. In the event the Trustees shall determine that it
is prudent to modify the manner in which the Tax Capital Accounts, or any debits
or credits thereto, are computed in order to reflect the purpose and intention
of this Agreement, the Trustee may make such modification.
(ii) The terms "Tax Sales Gain" or "Tax Sales Loss" shall mean, for any
day, the sum, if positive, or if negative, as the case may be, of all items of
gain or loss recognized by the Trust on such day for federal income tax purposes
from the sale or other disposition of Securities (other than items of gain or
loss included in Remaining Built-in Gain, Remaining Built-in Loss, Remaining
Appreciated Gain or Remaining Depreciated Loss with respect to such Securities).
ARTICLE II
Purposes of Trust
This Trust is formed for the following purpose or purposes:
(a) to conduct, operate and carry on the business of an investment company;
(b) to subscribe for, invest in, reinvest in, purchase or otherwise
acquire, hold, pledge, sell, assign, transfer, lend, write options on, exchange,
distribute or otherwise dispose of and deal in and with securities of every
nature, kind, character, type and form, including, without limitation of the
generality of the foregoing, all types of stocks, shares, futures contracts,
bonds, debentures, notes, bills and other negotiable or non-negotiable
instruments, obligations, evidences of interest, certificates of interest,
certificates of participation, certificates, interests, evidences of ownership,
guarantees, warrants, options or evidences of indebtedness issued or created by
or guaranteed as to principal and interest by any state or local government or
any agency or instrumentality thereof, by the United States Government or any
agency, instrumentality, territory, district or possession thereof, by any
foreign government or any agency, instrumentality, territory, district or
possession thereof, by any corporation organized under the laws of any state,
the United States or any territory or possession thereof or under the laws of
any foreign country, bank certificates of deposit, bank time deposits, bankers'
acceptances and commercial paper; to pay for the same in cash or by the issue of
stock, including treasury stock, bonds or notes of the Trust or otherwise; and
to exercise any and all rights, powers and privileges of ownership or interest
in respect of any and all such investments of every kind and description,
including, without limitation, the right to consent and otherwise act with
respect thereto, with power to designate one or more persons, firms,
associations or corporations to exercise any of said rights, powers and
privileges in respect of any said instruments;
(c) to borrow money or otherwise obtain credit and to secure the same by
mortgaging, pledging or otherwise subjecting as security the assets of the
Trust;
(d) to issue, sell, repurchase, redeem, retire, cancel, acquire, hold,
resell, reissue, dispose of, and otherwise deal in, Interests including
Interests in fractional denominations, and to apply to any such repurchase,
redemption, retirement, cancellation or acquisition of Interests any funds or
other assets of the appropriate series or class of Interests, whether capital or
surplus or otherwise, to the full extent now or hereafter permitted by the laws
of the State of Delaware;
(e) to conduct its business, promote its purposes, and carry on its
operations in any and all of its branches and maintain offices both within and
without the State of Delaware, in any and all States of the United States of
America, in the District of Columbia, and in any other parts of the world; and
(f) to do all and everything necessary, suitable, convenient, or proper for
the conduct, promotion, and attainment of any of the businesses and purposes
herein specified or which at any time may be incidental thereto or may appear
conducive to or expedient for the accomplishment of any of such businesses and
purposes and which might be engaged in or carried on by a Trust organized under
the Delaware Act, and to have and exercise all of the powers conferred by the
laws of the State of Delaware upon a Delaware business trust.
The foregoing provisions of this Article II shall be construed both as
purposes and powers and each as an independent purpose and power.
ARTICLE III
Beneficial Interest
Section 1. Interests. The Interests of the Trust are non-transferable and
shall be issued in one or more series as the Trustees may, without
Interestholder approval, authorize. Each series shall be separate from all other
series in respect of the assets and liabilities allocated to that series and
shall represent a separate investment portfolio of the Trust. The beneficial
interest in each series at all times shall be divided into Interests, with or
without par value as the Trustees may from time to time determine, each of which
shall, except as provided in the following sentence, represent an equal
proportionate interest in the series with each other Interest of the same
series, none having priority or preference over another. The Trustees may,
without Interestholder approval, divide Interests of any series into two or more
classes, Interests of each such class having such preferences and special or
relative rights and privileges (including conversion rights, if any) as the
Trustees may determine. The number of Interests authorized shall be unlimited,
and the Interests so authorized may be represented in part by fractional
Interests. From time to time, the Trustees may divide or combine the Interests
of any series or class into a greater or lesser number without thereby changing
the proportionate beneficial interests in the series or class.
All consideration received by the Trust for the issue or sale of Interests
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 be held and accounted for separately
from the other assets of the Trust and of every other series and may be referred
to herein as "assets of" that series. The assets of a particular series shall
belong to that series for all purposes, and to no other series, subject only to
the rights of creditors of that series. In addition, any assets, income,
earnings, profits or funds, or payments and proceeds with respect thereto, which
are not readily identifiable as belonging to any particular series shall be
allocated by the Trustees between and among one or more of the series in such
manner as the Trustees, in their sole discretion, deem fair and equitable. Each
such allocation shall be conclusive and binding upon the Interestholders of all
series for all purposes, and such assets, income, earnings, profits or funds, or
payments and proceeds with respect thereto shall be assets of that series. The
assets of a particular series shall be so recorded upon the books of the Trust,
and shall be held by the Trustees in trust for the benefit of the holders of
Interests of that series. The assets of each particular series shall be charged
with the liabilities of that series and all expenses, costs, charges and
reserves attributable to that series. Any general liabilities, expenses, costs,
charges or reserves of the Trust which are not readily identifiable as belonging
to any particular series shall be allocated and charged by the Trustees between
or among any one or more of the series in such manner as the Trustees in their
sole discretion deem fair and equitable. Each such allocation shall be
conclusive and binding upon the Interestholders of all series for all purposes.
Without limitation of the foregoing provisions of this Section, but subject to
the right of the Trustees in their discretion to allocate general liabilities,
expenses, costs, charges or reserves as herein provided, the debts, liabilities,
obligations and expenses incurred, contracted for or otherwise existing with
respect to a particular series shall be enforceable against the assets of such
series only, and not against the assets of any other series. Notice of this
limitation on inter-series liabilities may, in the Trustees' sole discretion, be
set forth in the certificate of trust of the Trust (whether originally or by
amendment) as filed or to be filed in the Office of the Secretary of State of
the State of Delaware pursuant to the Delaware Act, and upon the giving of such
notice in the certificate of trust, the statutory provisions of Section 3804 of
the Delaware Act relating to limitations on inter-series liabilities (and the
statutory effect under Section 3804 of setting forth such notice in the
certificate of trust) shall become applicable to the Trust and each series.
Every note, bond, contract or other undertaking issued by or on behalf of a
particular series shall include a recitation limiting the obligation represented
thereby to that series and its assets. No shareholder or former Interestholder
of any series shall have a claim on or any right to any assets allocated or
belonging to any other series.
The establishment and designation of any series or of any class of
Interests of any series shall be effective (i) upon the execution by a majority
of the Trustees of an instrument or the adoption in accordance with the terms
hereof of a resolution setting forth such establishment and designation of the
relative rights and preferences of the Interests of such series or class, (ii)
upon the execution of an instrument in writing by an officer of the Trust
pursuant to the vote of a majority of the Trustees, or (iii) as otherwise
provided in either such instrument. At any time that there are no Interests
outstanding of any particular series or class previously established and
designated, the Trustees may by an instrument executed by a majority of the
Trustees or the adoption in accordance with the terms hereof of a resolution (or
by an instrument executed by an officer of the Trust pursuant to the vote of a
majority of the Trustees) abolish that series or class and the establishment and
designation thereof. Each instrument or Trustees' resolution establishing and
designating any series or class shall have the status of an amendment to this
Declaration of Trust.
Section 2. Non-Transferability. An Interestholder may not transfer, sell or
exchange Interests of the Trust, except to the Trust. Notwithstanding the
foregoing, an Interestholder may assign its right to receive dividends,
distributions or other allocations of income or property from the Trust, but
such assignment will not result in a change of ownership of the Interestholder's
Interests of the Trust.
Section 3. Ownership of Interests. The ownership of Interests will be
recorded in the books of the Trust or a transfer agent. The record books of the
Trust or any transfer agent, as the case may be, shall be conclusive as to who
are the holders of Interests of each series and class and as to the number of
Interests of each series and class held from time to time by each. No
certificates certifying the ownership of Interests need be issued except as the
Trustees may otherwise determine from time to time. Section 4. Issuance of
Interests. The Trustees are authorized, from time to time, to issue or authorize
the issuance of Interests at not less than the par value thereof, if any, and to
fix the price or the minimum price or the consideration (in cash and/or such
other property, real or personal, tangible or intangible, as from time to time
they may determine) or minimum consideration for such Interests, all without
action or approval of the Interestholders. Interests so issued shall be validly
issued, fully paid and, subject to the obligation of an Interestholder set forth
in Section 6, nonassessable. Anything herein to the contrary notwithstanding,
the Trustees may issue Interests pro rata to the Interestholders of a series at
any time for no consideration as a stock dividend, except to the extent
otherwise required or permitted by the preferences and special or relative
rights and privileges of any classes of Interests of that series, and any stock
dividend to the Interestholders of a particular class of Interests shall be made
to such Interestholders pro rata in proportion to the number of Interests of
such class held by each of them.
Interests may be issued in fractional denominations to the same extent as
whole Interests, and Interests in fractional denominations shall be Interests
having proportionately to the respective fractions represented thereby all the
rights of whole Interests, including, without limitation, the right to vote, the
right to receive dividends and distributions, and the right to participate upon
liquidation of the Trust or of a particular series of Interests.
The Trustees may classify or re-classify any unissued Interests or
Interests previously issued and reacquired of any series or class thereof into
one or more series or classes thereof that may be established and designated
from time to time. The Trustees may hold as treasury Interests, re-issue for
such consideration and on such terms as they may determine, or cancel, in their
discretion from time to time, any Interests of any series or class thereof
reacquired by the Trust.
Section 5. No Preemptive or Appraisal Rights; Derivative Suits.
Interestholders shall have no preemptive or appraisal or other right to
subscribe for any additional Interests or other securities issued by the Trust.
Interestholders shall have no right to demand payment for their Interests or any
other rights of dissenting shareholders in the event the Trust participates in
any transaction which would give rise to appraisal or dissenters' rights by a
shareholder of a corporation organized under the General Corporation Law of the
State of Delaware, or otherwise. No action may be brought by a Interestholder on
behalf of the Trust or a series unless Interestholders owning not less than 10
percent of the then outstanding Interests or series join in the bringing of such
action.
Section 6. Status of Interests and Limitation of Personal Liability.
Interests shall be deemed to be personal property giving only the rights
provided in this instrument. Every Person by virtue of having become registered
as an Interestholder on the books of the Trust pursuant to Section 3 shall be
held to have expressly assented and agreed to the terms hereof and to be bound
by this Declaration of Trust. The death of an Interestholder during the
continuance of the Trust shall not operate to terminate the same nor entitle the
representative of any deceased Interestholder to an accounting or to take any
action in court or elsewhere against the Trust or the Trustees, but only to the
rights of said decedent under this Trust. Ownership of Interests shall not
entitle the Interestholder to any title in or to the whole or any part of the
Trust property or right to call for a partition or division of the same or for
an accounting, nor shall the ownership of Interests constitute the
Interestholders partners. Interestholders of a series of the Trust shall be
jointly and severally liable (with rights of contribution inter se in proportion
to their respective interests in that series) for the liabilities and
obligations of such series in the event the Trust fails to satisfy such
liabilities and obligations. Neither the Trust nor the Trustees, nor any
officer, employee or agent of the Trust shall have any power to bind any
Interestholder or Trustee personally or, subject to the preceding sentence, to
call upon any Interestholder for the payment of any sum of money or assessment
whatsoever other than such as the Interestholder at any time personally may
agree to pay by way of subscription for any Interests or otherwise. Every note,
bond, contract or other undertaking issued by or on behalf of a particular
series shall include a recitation limiting the obligation represented thereby to
that series and its assets.
ARTICLE IV
Trustees
Section 1. Election. A Trustee may be elected either by the Trustees or the
Interestholders. The Trustees named herein shall serve until the first meeting
of the Interestholders or until the election and qualification of their
successors. Prior to the first meeting of Interestholders the initial Trustees
hereunder may elect additional Trustees to serve until such meeting and until
their successors are elected and qualified. The Trustees also at any time may
elect Trustees to fill vacancies in the number of Trustees. The number of
Trustees shall be fixed from time to time by the Trustees and, at or after the
commencement of the business of the Trust, shall be not less than three. Each
Trustee, whether named above or hereafter becoming a Trustee, shall serve as a
Trustee during the lifetime of this Trust, until such Trustee dies, resigns,
retires, or is removed, or, if sooner, until the next meeting of Interestholders
called for the purpose of electing Trustees and the election and qualification
of his successor. Subject to Section 16(a) of the 1940 Act, the Trustees may
elect their own successors and, pursuant to this Section, may appoint Trustees
to fill vacancies.
Section 2. Powers. The Trustees shall have all powers necessary or
desirable to carry out the purposes of the Trust, including, without limitation,
the powers referred to in Article II hereof. Without limiting the generality of
the foregoing, the Trustees may adopt By-Laws not inconsistent with this
Declaration of Trust providing for the conduct of the business of the Trust and
may amend and repeal them to the extent that they do not reserve that right to
the Interestholders and such By-Laws are deemed to be incorporated and included
in this Declaration of Trust; they may fill vacancies in their number, including
vacancies resulting from increases in their own number, and may elect and remove
such officers and employ, appoint and terminate such employees or agents as they
consider appropriate; they may appoint from their own number and terminate any
one or more committees; they may employ one or more custodians of the assets of
the Trust and may authorize such custodians to employ subcustodians and to
deposit all or any part of such assets in a system or systems for the central
handling of securities, retain a transfer agent and an Interestholder servicing
agent, or both, provide for the distribution of Interests through a principal
placement agent or otherwise, set record dates, and in general delegate such
authority as they consider desirable (including, without limitation, the
authority to purchase and sell securities and to invest funds, to determine the
net income of the Trust for any period, the value of the total assets of the
Trust and the net asset value of each Interest, and to execute such deeds,
agreements or other instruments either in the name of the Trust or the names of
the Trustees or as their attorney or attorneys or otherwise as the Trustees from
time to time may deem expedient) to any officer of the Trust, committee of the
Trustees, any such employee, agent, custodian or underwriter or to any Manager.
Without limiting the generality of the foregoing, the Trustees shall have
full power and authority:
(a) To invest and reinvest cash and to hold cash uninvested;
(b) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and deliver
proxies or powers of attorney to such person or persons as the Trustees shall
deem proper, granting to such person or persons such power and discretion with
relation to securities or property as the Trustees shall deem proper;
(c) To hold any security or property in a form not indicating any trust
whether in bearer, unregistered or other negotiable form or in the name of the
Trust or a custodian, subcustodian or other depository or a nominee or nominees
or otherwise;
(d) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or concern, any security of which is
held in the Trust; to consent to any contract, lease, mortgage, purchase or sale
of property by such corporation or concern, and to pay calls or subscriptions
with respect to any security held in the Trust;
(e) To join with other security holders in acting through a committee,
depositary, voting trustee or otherwise, and in that connection to deposit any
security with, or transfer any security to, any such committee, depositary or
trustee, and to delegate to them such power and authority with relation to any
security (whether or not so deposited or transferred) as the Trustees shall deem
proper, and to agree to pay, and to pay, such portion of the expenses and
compensation of such committee, depositary or trustee as the Trustees shall deem
proper;
(f) To compromise, arbitrate, or otherwise adjust claims in favor of or
against the Trust or any matter in controversy, including, but not limited to,
claims for taxes;
(g) Subject to the provisions of Article III, Section 1, to allocate
assets, liabilities, income and expenses of the Trust to a particular series of
Interests or to apportion the same among two or more series, provided that any
liabilities or expenses incurred by a particular series of Interests shall be
payable solely out of the assets and by the Interestholders of that series; and
to the extent necessary or appropriate to give effect to the preferences and
special or relative rights and privileges of any classes of Interests, to
allocate assets, liabilities, income and expenses of a series to a particular
class of Interests of that series or to apportion the same among two or more
classes of Interests of that series;
(h) To enter into joint ventures, general or limited partnerships and any
other combinations or associations;
(i) To purchase and pay for entirely out of Trust property such insurance
as they may deem necessary or appropriate for the conduct of the business,
including, without limitation, insurance policies insuring the assets of the
Trust and payment of distributions and principal on its portfolio investments,
and insurance policies insuring the Interestholders, Trustees, officers,
employees, agents, investment advisers or Managers, principal underwriters, or
independent contractors of the Trust individually against all claims and
liabilities of every nature arising by reason of holding, being or having held
any such office or position, or by reason of any action alleged to have been
taken or omitted by any such person as Interestholder, Trustee, officer,
employee, agent, investment adviser or Manager, principal underwriter, or
independent contractor, including any action taken or omitted that may be
determined to constitute negligence, whether or not the Trust would have the
power to indemnify such person against such liability;
(j) To pay pensions for faithful service, as deemed appropriate by the
Trustees, and to adopt, establish and carry out pension, profit-sharing, share
bonus, share purchase, savings, thrift and other retirement, incentive and
benefit plans, trusts and provisions, including the purchasing of life insurance
and annuity contracts as a means of providing such retirement and other
benefits, for any or all of the Trustees, officers, employees and agents of the
Trust;
(k) To establish a registered office and have a registered agent in the
State of Delaware;
(l) To establish separate and distinct series with separately defined
investment objectives and policies and separately defined investment purposes in
accordance with the provisions of Article III hereof and to establish classes of
such series having relative rights, powers and duties as they may provide
consistent with applicable law;
(m) Subject to Article X, Section 9 hereof, to reorganize the Trust; and
(n) Subject to Article X, Section 10 hereof, to sell all or substantially
all of the assets of the Trust or any series.
Further, without limiting the generality of the foregoing, the Trustees
shall have full power and authority to incur and pay out of the principal or
income of the Trust such expenses and liabilities as may be deemed by the
Trustees to be necessary or proper for the purposes of the Trust; provided,
however, that all expenses and liabilities incurred by or arising in connection
with a particular series of Interests, as determined by the Trustees, shall be
payable solely out of the assets and by the Interestholders of that series.
Any determination made in good faith and, so far as accounting matters are
involved, in accordance with generally accepted accounting principles by or
pursuant to the authority granted by the Trustees, as to the amount of the
assets, debts, obligations or liabilities of the Trust, its Interestholders or a
particular series or class of Interests; the amount of any reserves or charges
set up and the propriety thereof; the time of or purpose for creating such
reserves or charges; the use, alteration or cancellation of any reserves or
charges (whether or not any debt, obligation or liability for which such
reserves or charges shall have been created shall have been paid or discharged
or shall be then or thereafter required to be paid or discharged); the price or
closing bid or asked price of any investment owned or held by the Trust or a
particular series; the market value of any investment or fair value of any other
asset of the Trust or a particular series; the number of Interests outstanding;
the estimated expense to the Trust or a particular series in connection with
purchases of its Interests; the ability to liquidate investments in an orderly
fashion; and the extent to which it is practicable to deliver a cross-section of
the portfolio of the Trust or a particular series in payment for any such
Interests, or as to any other matters relating to the issue, sale, purchase
and/or other acquisition or disposition of investments or Interests of the Trust
or a particular series, shall be final and conclusive, and shall be binding upon
the Trust or such series and its Interestholders, past, present and future, and
Interests are issued and sold on the condition and understanding that any and
all such determinations shall be binding as aforesaid.
Section 3. Meetings. At any meeting of the Trustees, a majority of the
Trustees then in office shall constitute a quorum. Any meeting may be adjourned
from time to time by a majority of the votes cast upon the question, whether or
not a quorum is present, and the meeting may be held as adjourned without
further notice.
When a quorum is present at any meeting, a majority of the Trustees present
may take any action, except when a larger vote is required by this Declaration
of Trust, the By-Laws or the 1940 Act.
Any action required or permitted to be taken at any meeting of the Trustees
or of any committee thereof may be taken without a meeting, if a written consent
to such action is signed by a majority of the Trustees or members of any such
committee then in office, as the case may be, and such written consent is filed
with the minutes of proceedings of the Trustees or any such committee.
The Trustees or any committee designated by the Trustees may participate in
a meeting of the Trustees or such committee by means of a conference telephone
or similar communications equipment by means of which all persons participating
in the meeting can hear each other at the same time. Participation by such means
shall constitute presence in person at a meeting.
Notwithstanding anything to the contrary stated in this Section 3, unless
otherwise permitted under the 1940 Act, meetings of the Trustees to approve
advisory agreements or distribution arrangements shall be held in person.
Section 4. Ownership of Assets of the Trust. Title to all of the assets of
each series of Interests of the Trust at all times shall be vested in the Trust
as a separate legal entity under the Delaware Act.
Section 5. Investment Advice and Management Services. The Trustees shall
not in any way be bound or limited by any present or future law or custom in
regard to investments by trustees. The Trustees from time to time may enter into
a written contract or contracts with any person or persons (herein called the
"Manager"), including any firm, corporation, trust or association in which any
Trustee or Interestholder may be interested, to act as investment advisers
and/or managers of the Trust and to provide such investment advice and/or
management as the Trustees from time to time may consider necessary for the
proper management of the assets of the Trust, including, without limitation,
authority to determine from time to time what investments shall be purchased,
held, sold or exchanged and what portion, if any, of the assets of the Trust
shall be held uninvested and to make changes in the Trust's investments. Any
such contract shall be subject to the requirements of the 1940 Act with respect
to its continuance in effect, its termination and the method of authorization
and approval of such contract, or any amendment thereto or renewal thereof.
Any Trustee or any organization with which any Trustee may be associated
also may act as broker for the Trust in making purchases and sales of securities
for or to the Trust for its investment portfolio, and may charge and receive
from the Trust the usual and customary commission for such service. Any
organization with which a Trustee may be associated in acting as broker for the
Trust shall be responsible only for the proper execution of transactions in
accordance with the instructions of the Trust and shall be subject to no further
liability of any sort whatever.
The Manager, or any affiliate thereof, also may be a distributor for the
sale of Interests by separate contract or may be a person controlled by or
affiliated with any Trustee or any distributor or a person in which any Trustee
or any distributor is interested financially, subject only to applicable
provisions of law. Nothing herein contained shall operate to prevent any
Manager, who also acts as such a distributor, from also receiving compensation
for services rendered as such distributor.
Section 6. Removal and Resignation of Trustees. The Trustees or the
Interestholders (by vote of 66-2/3% of the outstanding Interests entitled to
vote thereon) may remove at any time any Trustee with or without cause, and any
Trustee may resign at any time as Trustee, without penalty by written notice to
the Trust; provided that sixty days' advance written notice shall be given in
the event that there are only three or fewer Trustees at the time a notice of
resignation is submitted.
Section 7. Additional Provisions. The By-Laws may include further
provisions for Trustees' votes and meetings and related matters not inconsistent
with the provisions hereof.
ARTICLE V
Interestholders' Voting Powers and Meetings
Section 1. Voting Powers. The Interestholders shall have power to vote only
(i) for the election of Trustees as provided in Article IV, Section 1, of this
Declaration of Trust; provided, however, that no meeting of Interestholders is
required to be called for the purpose of electing Trustees unless and until such
time as less than a majority of the Trustees have been elected by the
Interestholders, (ii) for the removal of Trustees as provided in Article IV,
Section 6, (iii) with respect to any Manager as provided in Article IV, Section
5, (iv) with respect to any amendment of this Declaration of Trust as provided
in Article X, Section 8, (v) with respect to the termination of the Trust or a
series of Interests as provided in Article X, Section 4, and (vi) with respect
to such additional matters relating to the Trust as may be required by law, by
this Declaration of Trust, or the By-Laws of the Trust or any registration of
the Trust with the Commission or any state, or as the Trustees may consider
desirable. Each whole Interest shall be entitled to one vote as to any matter on
which it is entitled to vote (except that in the election of Trustees said vote
may be cast for as many persons as there are Trustees to be elected), and each
fractional Interest shall be entitled to a proportionate fractional vote.
Notwithstanding any other provision of this Declaration of Trust, on any matter
submitted to a vote of Interestholders, all Interests of the Trust then entitled
to vote shall be voted in the aggregate as a single class without regard to
series or classes of Interests, except (i) when required by the 1940 Act or when
the Trustees shall have determined that the matter affects one or more series or
classes differently Interests shall be voted by individual series or class and
(ii) when the Trustees have determined that the matter affects only the
interests of one or more series or classes then only Interestholders of such
series or classes shall be entitled to vote thereon. There shall be no
cumulative voting in the election of Trustees. Interests may be voted in person
or by proxy. A proxy with respect to Interests held in the name of two or more
persons shall be valid if executed by any one of them, unless at or prior to
exercise of the proxy the Trust receives a specific written notice to the
contrary from any one of them. A proxy purporting to be executed by or on behalf
of a Interestholder shall be deemed valid unless challenged at or prior to its
exercise and the burden of proving invalidity shall rest on the challenger.
Whenever no Interests of any series or class are issued and outstanding, the
Trustees may exercise with respect to such series or class all rights of
Interestholders and may take any action required by law, this Declaration of
Trust or any By-Laws of the Trust to be taken by Interestholders.
Section 2. Meetings. No annual or regular meeting of Interestholders is
required. Meetings of the Interestholders may be called by the Trustees or such
other person or persons as may be specified in the By-Laws and shall be called
by the Trustees upon the written request of Interestholders owning at least 10%
of the outstanding Interests entitled to vote. Interestholders shall be entitled
to at least ten days' prior notice of any meeting.
Section 3. Quorum and Required Vote. Thirty percent (30%) of the
outstanding Interests shall be a quorum for the transaction of business at an
Interestholders' meeting, except that where any provision of law or of this
Declaration of Trust permits or requires that holders of any series or class
shall vote as a series or class, then thirty percent (30%) of the aggregate
number of Interests of that series or class entitled to vote shall be necessary
to constitute a quorum for the transaction of business by that series or class.
Any lesser number, however, shall be sufficient for adjournment and any
adjourned session or sessions may be held within 90 days after the date set for
the original meeting without the necessity of further notice. Except when a
larger vote is required by any provision of this Declaration of Trust or the
By-Laws of the Trust and subject to any applicable requirements of law, a
majority of the Interests voted shall decide any question, provided that where
any provision of law or of this Declaration of Trust permits or requires that
the holders of any series or class shall vote as a series or class, then a
majority of the Interests of that series or class voted on the matter shall
decide that matter insofar as that series or class is concerned.
Section 4. Action by Written Consent. Any action required or permitted to
be taken at any meeting may be taken without a meeting if a consent in writing,
setting forth such action, is signed by a majority of Interestholders entitled
to vote on the subject matter thereof (or such larger proportion thereof as
shall be required by any express provision of this Declaration of Trust) and
such consent is filed with the records of the Trust.
Section 5. Additional Provisions. The By-Laws may include further
provisions for Interestholders' votes and meetings and related matters.
ARTICLE VI
Allocations
Section 1. Net Income and Net Loss. For each day, Net Income or Net Loss of
the Trust, if any, will be allocated among the Interestholders, and credited or
charged, as the case may be, to their Book Capital Accounts and Tax Capital
Accounts, in accordance with their Percentage Interests on such day.
Section 2. Book Sales Gain and Book Sales Loss. For each day, Book Sales
Gain or Book Sales Loss of the Trust, if any, will be allocated among the
Interestholders, and credited or charged, as the case may be, to their Book
Capital Accounts, in accordance with their Percentage Interests on such day.
Section 3. Tax Sales Gain and Tax Sales Loss. For each day, Tax Sales Gain
or Tax Sales Loss of the Trust, if any, will be allocated among the
Interestholders, and credited or charged, as the case may be, to their Tax
Capital Accounts, as follows:
(a) Tax Sales Gain will be allocated, first, to those Interestholders with
Positive Book/Tax Disparities in proportion to and to the extent thereof,
second, to the Interestholders in such manner so as to eliminate as quickly as
possible any difference between the ratio (expressed as a percentage) of each
Interestholder's Positive Tax/Book Disparity to the aggregate Positive Tax/Book
Disparities of all Interestholders and such Interestholder's Percentage
Interest, and, thereafter, to all Interestholders in accordance with their
Percentage Interests.
(b) Tax Sales Loss will be allocated, first, to those Interestholders with
Positive Tax/Book Disparities in proportion to and to the extent thereof,
second, to the Interestholders in such manner so as to eliminate as quickly as
possible any difference between the ratio (expressed as a percentage) of each
Interestholder's Positive Book/Tax Disparity to the aggregate Positive Book/Tax
Disparities of all Interestholders and such Interestholder's Percentage
Interest, and, thereafter, to all Interestholders in accordance with their
Percentage Interests.
Section 4. Remaining Built-in Gain and Remaining Built- in Loss. Whenever
the Trust recognizes gain or loss for federal income tax purposes from the sale
or other disposition of a Security, any Remaining Built-in Gain or Remaining
Built-in Loss with respect to such Security shall be allocated to the
Interestholder who contributed such Security to the Trust.
Section 5. Remaining Appreciated Gain and Remaining Appreciated Loss.
(a) For purposes of computing an Interestholder's Positive Book/Tax
Disparity or Positive Tax/Book Disparity, such Interestholder's share of
Remaining Appreciated Gain or Remaining Appreciated Loss with respect to an
Appreciated Security or a Depreciated Security shall be determined by such
Interestholder's Percentage Interest on the day such Security became an
Appreciated Security or a Depreciated Security.
(b) Whenever the Trust recognizes gain or loss for federal income tax
purposes from the sale or other disposition of a Security, any Remaining
Appreciated Gain or Remaining Depreciated Loss with respect to such Security
shall be allocated to the Interestholders in accordance with their Percentage
Interests on the day such Security became an Appreciated Security or a
Depreciated Security.
Section 6. Distribution In-kind. Whenever the Trust makes an in-kind
distribution of a Security to any Interestholder, such Security shall be treated
for all purposes of this Agreement as sold for an amount equal to the Gross
Asset Value of such Security on the day of distribution.
Section 7. Code Section 754 Adjustment. Whenever an adjustment to the
Adjusted Basis of any Trust Security pursuant to Code Section 734(b) or Code
Section 743(b) is required pursuant to Regulations Section 1.704-1(b)(iv)(m) to
be taken into account in determining capital accounts as the result of a
distribution to an Interestholder in complete liquidation of its interest in the
Trust, appropriate adjustments shall be Tax Capital Accounts (and related items)
of Interestholders to reflect such adjustment. Any elections or other decisions
relating to allocations under this Article VI shall be made by the Trustees in
any manner that reasonably reflects the purpose and intention of this Agreement.
Allocations of Tax Sales Gain, Tax Sales Loss, Remaining Built-in Gain,
Remaining Built-in Loss, Remaining Appreciated Gain and Remaining Depreciated
Loss are solely for purposes of federal, state and local taxes and shall not
affect, or any way to be taken into account, in computing any Interestholder's
Book Capital Account or share of Book Sales Gain and Book Sales Loss, other
related items, or distributions pursuant to any provisions of this Agreement.
ARTICLE VII
Distributions and Redemptions
Section 1. Distributions. The Trustees shall distribute periodically to the
Interestholders of each series of Interests an amount approximately equal to the
net income of that series, determined by the Trustees or as they may authorize
and as herein provided. Distributions of income may be made in one or more
payments, which shall be in Interests, cash or otherwise, and on a date or dates
and as of a record date or dates determined by the Trustees. At any time and
from time to time in their discretion, the Trustees also may cause to be
distributed to the Interestholders of any one or more series as of a record date
or dates determined by the Trustees, in Interests, cash or otherwise, all or
part of any gains realized on the sale or disposition of the assets of the
series or all or part of any other principal of the Trust attributable to the
series. Each distribution pursuant to this Section 1 shall be made ratably
according to the number of Interests of the series held by the several
Interestholders on the record date for such distribution, except to the extent
otherwise required or permitted by the preferences and special or relative
rights and privileges of any classes of Interests of that series, and any
distribution to the Interestholders of a particular class of Interests shall be
made to such Interestholders pro rata in proportion to the number of Interests
of such class held by each of them. No distribution need be made on Interests
purchased pursuant to orders received, or for which payment is made, after such
time or times as the Trustees may determine.
Section 2. Determination of Net Income. In determining the net income of
each series or class of Interests for any period, there shall be deducted from
income for that period (a) such portion of all charges, taxes, expenses and
liabilities due or accrued as the Trustees shall consider properly chargeable
and fairly applicable to income for that period or any earlier period and (b)
whatever reasonable reserves the Trustees shall consider advisable for possible
future charges, taxes, expenses and liabilities which the Trustees shall
consider properly chargeable and fairly applicable to income for that period or
any earlier period. The net income of each series or class for any period may be
adjusted for amounts included on account of net income in the net asset value of
Interests issued or redeemed or repurchased during that period. In determining
the net income of a series or class for a period ending on a date other than the
end of its fiscal year, income may be estimated as the Trustees shall deem fair.
Gains on the sale or disposition of assets shall not be treated as income, and
losses shall not be charged against income unless appropriate under applicable
accounting principles, except in the exercise of the discretionary powers of the
Trustees. Any amount contributed to the Trust which is received as income
pursuant to a decree of any court of competent jurisdiction shall be applied as
required by the said decree.
Section 3. Redemptions. Any Interestholder shall be entitled to require the
Trust to redeem and the Trust shall be obligated to redeem at the option of such
Interestholder all or any part of the Interests owned by said Interestholder, at
the redemption price, pursuant to the method, upon the terms and subject to the
conditions hereinafter set forth:
(a) Certificates for Interests, if issued, shall be presented for
redemption in proper form for transfer to the Trust or the agent of the Trust
appointed for such purpose, and these shall be presented with a written request
that the Trust redeem all or any part of the Interests represented thereby.
(b) The redemption price per Interest shall be the net asset value per
Interest when next determined by the Trust at such time or times as the Trustees
shall designate, following the time of presentation of certificates for
Interests, if issued, and an appropriate request for redemption, or such other
time as the Trustees may designate in accordance with any provision of the 1940
Act, or any rule or regulation made or adopted by any securities association
registered under the Securities Exchange Act of 1934, as determined by the
Trustees, less any applicable charge or fee imposed from time to time as
determined by the Trustees.
(c) Net asset value of each series or class of Interests (for the purpose
of issuance of Interests as well as redemptions thereof) shall be determined by
dividing:
(i) the total value of the assets of such series or class determined as
provided in paragraph (d) below less, to the extent determined by or
pursuant to the direction of the Trustees in accordance with generally
accepted accounting principles, all debts, obligations and liabilities of
such series or class (which debts, obligations and liabilities shall
include, without limitation of the generality of the foregoing, any and all
debts, obligations, liabilities, or claims, of any and every kind and
nature, fixed, accrued and otherwise, including the estimated accrued
expenses of management and supervision, administration and distribution and
any reserves or charges for any or all of the foregoing, whether for taxes,
expenses, or otherwise, and the price of Interests redeemed but not paid
for) but excluding the Trust's liability upon its Interests and its
surplus, by
(ii) the total number of Interests of such series or class outstanding.
The Trustees are empowered, in their absolute discretion, to establish
other methods for determining such net asset value whenever such other methods
are deemed by them to be necessary to enable the Trust to comply with applicable
law, or are deemed by them to be desirable, provided they are not inconsistent
with any provision of the 1940 Act.
(d) In determining for the purposes of this Declaration of Trust the total
value of the assets of each series or class of Interests at any time,
investments and any other assets of such series or class shall be valued in such
manner as may be determined from time to time by or pursuant to the order of the
Trustees.
(e) Payment of the redemption price by the Trust may be made either in cash
or in securities or other assets at the time owned by the Trust or partly in
cash and partly in securities or other assets at the time owned by the Trust.
The value of any part of such payment to be made in securities or other assets
of the Trust shall be the value employed in determining the redemption price.
Payment of the redemption price shall be made on or before the seventh day
following the day on which the Interests are properly presented for redemption
hereunder, except that delivery of any securities included in any such payment
shall be made as promptly as any necessary transfers on the books of the issuers
whose securities are to be delivered may be made and, except as postponement of
the date of payment may be permissible under the 1940 Act.
Pursuant to resolution of the Trustees, the Trust may deduct from the
payment made for any Interests redeemed a liquidating charge not in excess of an
amount determined by the Trustees from time to time.
(f) The right of any holder of Interests redeemed by the Trust as provided
in this Article VII to receive dividends or distributions thereon and all other
rights of such Interestholder with respect to such Interests shall terminate at
the time as of which the redemption price of such Interests is determined,
except the right of such Interestholder to receive (i) the redemption price of
such Interests from the Trust in accordance with the provisions hereof, and (ii)
any dividend or distribution to which such Interestholder previously had become
entitled as the record holder of such Interests on the record date for such
dividend or distribution.
(g) Redemption of Interests by the Trust is conditional upon the Trust
having funds or other assets legally available therefor.
(h) The Trust, either directly or through an agent, may repurchase its
Interests, out of funds legally available therefor, upon such terms and
conditions and for such consideration as the Trustees shall deem advisable, by
agreement with the owner at a price not exceeding the net asset value per
Interest as determined by or pursuant to the order of the Trustees at such time
or times as the Trustees shall designate, less any applicable charge, if and as
fixed by the Trustees from time to time, and to take all other steps deemed
necessary or advisable in connection therewith.
(i) Interests purchased or redeemed by the Trust shall be cancelled or held
by the Trust for reissue, as the Trustees from time to time may determine.
(j) The obligations set forth in this Article VII may be suspended or
postponed, (1) for any period (i) during which the New York Stock Exchange is
closed other than for customary weekend and holiday closings, or (ii) 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 (i) the disposal by the
Trust of investments owned by it is not reasonably practicable, or (ii) it is
not reasonably practicable for the Trust fairly to determine the value of its
net assets, or (3) for such other periods as the Commission or any successor
governmental authority by order may permit.
(k) Interestholders of a series of the Trust shall not be liable for
obligations of such series arising from conduct on a date or dates after the
date on which they have redeemed their shares of that series of the Trust.
Notwithstanding any other provision of this Section 3 of Article VII, if
certificates representing such Interests have been issued, the redemption or
repurchase price need not be paid by the Trust until such certificates are
presented in proper form for transfer to the Trust or the agent of the Trust
appointed for such purpose; however, the redemption or repurchase shall be
effective, in accordance with the resolution of the Trustees, regardless of
whether or not such presentation has been made.
Section 4. Redemptions at the Option of the Trust. The Trust shall have the
right at its option and at any time to redeem Interests of any Interestholder at
the net asset value thereof as determined in accordance with Section 3 of
Article VII of this Declaration of Trust: (i) if at such time such
Interestholder owns fewer Interests than, or Interests having an aggregate net
asset value of less than, an amount determined from time to time by the
Trustees; or (ii) to the extent that such Interestholder owns Interests of a
particular series or class of Interests equal to or in excess of a percentage of
the outstanding Interests of that series or class determined from time to time
by the Trustees; or (iii) to the extent that such Interestholder owns Interests
of the Trust representing a percentage equal to or in excess of such percentage
of the aggregate number of outstanding Interests of the Trust or the aggregate
net asset value of the Trust determined from time to time by the Trustees.
Section 5. Dividends, Distributions, Redemptions and Repurchases. No
dividend or distribution (including, without limitation, any distribution paid
upon termination of the Trust or of any series) with respect to, nor any
redemption or repurchase of, the Interests of any series shall be effected by
the Trust other than from the assets of such series.
ARTICLE VIII
Compensation and Limitation of
Liability of Trustees
Section 1. Compensation. The Trustees shall be entitled to reasonable
compensation from the Trust and may fix the amount of their compensation.
Section 2. Limitation of Liability. A Trustee, when acting in such
capacity, shall not be personally liable to any person other than the Trust or
an Interestholder for any act, omission or obligation of the Trust or any
Trustee. The Trustees shall not be responsible or liable to the Trust or an
Interestholder in any event for any neglect or wrongdoing of any officer, agent,
employee or Manager of the Trust, nor shall any Trustee be responsible for the
act or omission of any other Trustee, but nothing herein contained shall protect
any Trustee against any liability to the Trust or an Interestholder to which he
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office.
ARTICLE IX
Indemnification
Section 1. Indemnification of Trustees, Officers, Employees and Agents.
Each person who is or was a Trustee, officer, employee or agent of the Trust or
who serves or has served at the Trust's request as a director, officer or
trustee of another person in which the Trust has or had any interest as a
shareholder, creditor or otherwise shall be entitled to indemnification out of
the assets of the Trust to the extent provided in, and subject to the provisions
of, the By-Laws, provided that no indemnification shall be granted by the Trust
in contravention of the 1940 Act.
Section 2. Merged Persons. For the purposes of this Article IX references
to "the Trust" include any constituent person (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, trustees, officers, employees or agents as well as the resulting or
surviving person; so that any person who is or was a director, trustee, officer,
employee or agent of such a constituent person or is or was serving at the
request of such a constituent person as a trustee, director, officer, employee
or agent of another person shall stand in the same position under the provisions
of this Article IX with respect to the resulting or surviving person as he would
have with respect to such a constituent person if its separate existence had
continued.
Section 3. Interestholders. In case any Interestholder or former
Interestholder shall be held to be personally liable solely by reason of his
being or having been an Interestholder and not because of his acts or omissions
or for some other reason, the Interestholder or former Interestholder (or his
heirs, executors, administrators or other legal representatives or in the case
of a corporation or other entity, its corporate or other general successor)
shall be entitled out of the assets of the particular series of Interests of
which he is or was an Interestholder to be held harmless from and indemnified
against all losses and expenses arising from such liability. Upon request, the
Trust shall cause its counsel to assume the defense of any claim which, if
successful, would result in an obligation of the Trust to indemnify the
Interestholder as aforesaid.
ARTICLE X
Other General Provisions
Section 1. Trustee's Good Faith Action, Expert Advice, No Bond or Surety.
The exercise by the Trustees of their powers and discretion hereunder under the
circumstances then prevailing, shall be binding upon everyone interested.
Subject to Article VIII, Section 2 hereof, a Trustee shall be liable for his or
her own willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of the office of Trustee, and for nothing
else, and shall not be liable for errors of judgment or mistakes of fact or law.
The Trustees may take advice of counsel or other experts with respect to the
meaning and operation of this Declaration of Trust or otherwise with respect to
the management of the Trust, and subject to the provisions of Section 2 of
Article VIII shall be under no liability for any act or omission in accordance
with such advice or for failing to follow such advice. The Trustees shall not be
required to give any bond as such, nor any surety if a bond is required.
Section 2. Liability of Third Persons Dealing with Trustees. No person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees pursuant hereto
or to see to the application of any payments made or property transferred to the
Trust or upon its order.
Section 3. Trustees, Officers, etc. Not Personally Liable; Notice. All
persons extending credit to, contracting with or having any claim against the
Trust, or a particular series of Interests, shall look only to the assets of the
Trust and the Interestholders to the extent set forth in Article III, Section 6
hereof, or the assets and the Interestholders of that particular series of
Interests, for payment under such credit, contract or claim; and neither the
Trustees nor any of the Trust's officers, employees or agents, whether past,
present or future, shall be personally liable therefor. Every note, bond,
contract, instrument, certificate, share, or undertaking and every other act or
thing whatsoever executed or done by or on behalf of the Trust or the Trustees
or any of them in connection with the Trust, shall be deemed conclusively to
have been executed or done only in their or his capacity as Trustees or Trustee,
and such Trustees or Trustee shall not be personally liable thereon. Every note,
bond, contract or other undertaking issued by or on behalf of a particular
series shall include a recitation limiting the obligation represented thereby to
that series and its assets.
Section 4. Termination of Trust. Unless terminated as provided herein, the
Trust shall continue without limitation of time. The Trust may be terminated at
any time by vote of Interestholders holding at least a majority of the Interests
of each series entitled to vote or by the Trustees by written notice to the
Interestholders. Any series of Interests may be terminated at any time by vote
of Interestholders holding at least a majority of the Interests of such series
entitled to vote or by the Trustees by written notice to the Interestholders of
such series.
Upon termination of the Trust or of any one or more series of Interests,
after paying or otherwise providing for all charges, taxes, expenses and
liabilities, whether due or accrued or anticipated as may be determined by the
Trustees, the Trust shall reduce, in accordance with such procedures as the
Trustees consider appropriate, the remaining assets to distributable form in
cash or shares or other securities, or any combination thereof, and distribute
the proceeds to the Interestholders of the series involved, ratably according to
the number of Interests of such series held by the several Interestholders of
such series on the date of termination, except to the extent otherwise required
or permitted by the preferences and special or relative rights and privileges of
any classes of Interests of that series, provided that any distribution to the
Interestholders of a particular class of Interests shall be made to such
Interestholders pro rata in proportion to the number of Interests of such class
held by each of them.
Upon termination of the Trust, following completion of winding up of its
business, the Trustees shall cause a certificate of cancellation of the Trust's
certificate of trust to be filed in accordance with Section 3810 of the Delaware
Act, which certificate of cancellation may be signed by any one Trustee.
Section 5. Termination Upon Bankruptcy of a Interestholder. Upon the
bankruptcy of any Interestholder of a series of the Trust, such series of the
Trust shall be terminated effective 120 days after the event. However, the
Interestholders of that series of the Trust (other than such bankrupt
Interestholder) may, by a unanimous affirmative vote at any meeting of such
Interestholders or by an instrument in writing without a meeting executed by a
majority of the Trustees and consented to by all such Interestholders, agree to
continue the business of such series of the Trust prior to the expiration of
such 120 day period even if there has been such an event.
Section 6. Filing of Copies, References, Headings. The initial Trustees
shall file a certificate of Trust of the Trust with the Secretary of State of
the State of Delaware in accordance with Section 3810 of the Delaware Act. The
original or a copy of this instrument and of each amendment hereto and of each
Declara- tion of Trust supplemental hereto shall be kept at the office of the
Trust where it may be inspected by any Interestholder. Anyone dealing with the
Trust may rely on a certificate by an officer of the Trust as to whether or not
any such amendments or supplemental Declarations of Trust have been made and as
to matters in connection with the Trust hereunder; and, with the same effect as
if it were the original, may rely on a copy certified by an officer of the Trust
to be a copy of this instrument or of any such amendment or supplemental
Declaration of Trust. In this instrument or in any such amendment or
supplemental Declaration of Trust, references to this instrument, and all
expressions like "herein," "hereof," and "hereunder," shall be deemed to refer
to this instrument as amended or affected by any such amendment or supplemental
Declaration of Trust. Headings are placed herein for convenience of reference
only and in case of any conflict, the text of this instrument, rather than the
headings, shall control. This instrument may be executed in any number of
counterparts each of which shall be deemed an original.
Section 7. Applicable Law. This Declaration of Trust shall be governed by
and construed in accordance with the laws of the State of Delaware. The trust
created hereby shall be a business trust created under, and subject to the
provisions of, the Delaware Act and may exercise all powers which are ordinarily
exercised by such a trust under the Delaware Act; provided, however, that there
shall not be applicable to the Trust, the Trustees, the Interestholders or this
Declaration of Trust (a) the provisions of Section 3540 of Title 12 of the
Delaware Code or (b) any provisions of the laws (statutory or common) of the
State of Delaware (other than the Delaware Act) pertaining to trusts which are
inconsistent with the rights, duties, powers, limitations or liabilities of the
Trustees set forth or referenced in this Declaration of Trust.
Section 8. Amendments. Except as specifically provided herein, the Trustees
may, without Interestholder vote, amend or to otherwise supplement this
Declaration of Trust by an instrument in writing signed by a majority of the
Trustees; provided, however, the Interestholders shall have the right to vote
(a) on any amendment which would affect their right to vote granted in Section 1
of Article V hereof, (b) on any amendment to this Section, (c) on any amendment
as may be required by the 1940 Act and (d) on any amendment submitted to them by
the Trustees. Any amendment required or permitted to be submitted to the
Interestholders which, as the Trustees determine, shall affect the
Interestholders of one or more series shall be authorized by vote of the
Interestholders of each series affected and no vote of Interestholders of a
series not affected shall be required.
Section 9. Reorganization. Notwithstanding anything else herein, the
Trustees, in order to change the form of organization of the Trust, may, without
Interestholder approval, (a) cause the Trust to merge or consolidate with or
into one or more trusts, partnerships, associations or corporations so long as
the surviving or resulting entity is an investment company under the 1940 Act,
or is a series thereof, or (b) cause the Trust or any series thereof to
incorporate under the laws of the State of Delaware. Any agreement of merger or
consolidation or certificate of merger may be signed by a majority of the
Trustees and facsimile signatures conveyed by electronic or telecommunication
means shall be valid.
Pursuant to and in accordance with the provisions of Section 3815(f) of the
Delaware Act, and notwithstanding anything else herein, an agreement of merger
or consolidation approved by the Trustees in accordance with this Section may
effect any amendment to this Declaration of Trust or effect the adoption of a
new declaration of trust of the Trust if it is the surviving or resulting trust
in the merger or consolidation.
Section 10. Sale of Assets. Notwithstanding anything else herein, the
Trustees may, without Interestholder approval, sell and convey all or
substantially all of the assets of the Trust or any series to one or more
trusts, partnerships, associations or corporations so long as the transferee is
an investment company under the 1940 Act, or is a series thereof. Any sale shall
be for such consideration as the Trustees, in their absolute discretion, deem
adequate and may include the assumption of all outstanding obligations, taxes
and other liabilities, accrued or contingent, of the Trust or any series and may
include shares of beneficial interest, stock or other ownership interest of the
transferee or of a series thereof.
IN WITNESS WHEREOF, each of the undersigned Trustees has hereunto set
his/her hand for himself/herself and his/her assigns as of the day and year
first above written.
/s/ Robert S. Reitzes
Robert S. Reitzes, Trustee
/s/ John C. Sites, Jr.
John C. Sites, Jr., Trustee
/s/ Michael Minikes
Michael Minikes, Trustee
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this 5th day of October, 1994, before me personally came the above-named
Trustees of the Fund, to me known, and known to me to be the persons described
in and who executed the foregoing instrument, and who duly acknowledged to me
that they had executed the same.
/s/ John A. Petrofsky
Notary Public
<PAGE>
Exhibit (1)(c)
RESTATED CERTIFICATE OF TRUST
OF
S&P STARS PORTFOLIO
THIS Restated Certificate of Trust of S&P STARS Portfolio (the "Trust"),
dated December 7, 1994, is being duly executed and filed by the undersigned, as
trustee, under the Delaware Business Trust Act (12 Del. C. Section 3801 et
seq.), to amend and restate the original Certificate of Trust of the Trust,
which was filed on October 5, 1994 (the "Certificate"), with the Secretary of
State of the State of Delaware.
The Certificate is hereby amended and restated in its entirety to read as
follows:
1. NAME. The name of the Trust is S&P STARS Fund.
2. REGISTERED AGENT. The business address of the registered office of the
Trust in the State of Delaware is One Rodney Square, 10th Floor, 10th and King
Streets in the City of Wilmington, County of New Castle, Delaware 19801. The
name of the Trust's registered agent at such address is RL&F Service Corp.
3. EFFECTIVE DATE. This Restated Certificate of Trust shall be effective
upon filing.
4. SERIES TRUST. Notice is hereby given that, pursuant to Section 3804 of
the Delaware Business Trust Act, the debts, liabilities, obligations and
expenses incurred, contracted for or otherwise existing with respect to a
particular series of the Trust shall be enforceable against the assets of such
series only and not against the assets of the Trust generally. The Trust will be
a registered investment company under the Investment Company Act of 1940, as
amended.
IN WITNESS WHEREOF, the undersigned, being one of the trustees of the
Trust, has executed this Restated Certificate of Trust as of the date
first-above written.
/s/ Robert S. Reitzes
Robert S. Reitzes
<PAGE>
Exhibit (1)(d)
S&P STARS PORTFOLIO
INSTRUMENT OF AMENDMENT
THIS INSTRUMENT OF AMENDMENT, dated as of December 7, 1994, amends the
Agreement and Declaration of Trust dated October 5, 1994 (the "Declaration").
WHEREAS, Section 8 of Article X of the Declaration authorizes the Trustees,
without Interestholder vote, to amend the Declaration by an instrument in
writing signed by a majority of the Trustees.
NOW, THEREFORE, the Declaration is amended as follows:
1. By striking out Article I, Section 1 and inserting in lieu thereof the
following:
"Section 1. Name. This Trust shall be known as 'S&P STARS Fund.'"
2. Except as amended hereby, the Declaration shall remain in full force and
effect.
3. This Instrument of Amendment shall be governed by and construed in
accordance with the laws of the State of Delaware.
IN WITNESS WHEREOF, the undersigned, a majority of the Trustees, have
executed this Instrument of Amendment as of the date and year first above
written.
/s/ Robert S. Reitzes
Robert S. Reitzes, Trustee
/s/ Michael Minikes
Michael Minikes, Trustee
<PAGE>
Exhibit (2)
BY-LAWS
OF
S&P STARS PORTFOLIO
ARTICLE 1
Agreement and Declaration of Trust and Principal Office
1.1. Agreement and Declaration of Trust. These By-Laws shall be subject to
the Agreement and Declaration of Trust, as from time to time in effect (the
"Declaration of Trust"), of the above-captioned Delaware business trust
established by the Declaration of Trust (the "Trust").
1.2. Principal Office of the Trust. The principal office of the Trust shall
be located in New York, New York.
ARTICLE 2
Meetings of Trustees
2.1. Regular Meetings. Regular meetings of the Trustees may be held without
call or notice at such places and at such times as the Trustees from time to
time may determine, provided that notice of the first regular meeting following
any such determination shall be given to absent Trustees.
2.2. Special Meetings. Special meetings of the Trustees may be held at any
time and at any place designated in the call of the meeting when called by the
President or the Treasurer or by two or more Trustees, sufficient notice thereof
being given to each Trustee by the Secretary or an Assistant Secretary or by the
officer or the Trustees calling the meeting.
2.3. Notice of Special Meetings. It shall be sufficient notice to a Trustee
of a special meeting to send notice by mail at least forty-eight hours or by
telegram at least twenty-four hours before the meeting addressed to the Trustee
at his or her usual or last known business or residence address or to give
notice to him or her in person or by telephone at least twenty-four hours before
the meeting. Notice of a meeting need not be given to any Trustee if a written
waiver of notice, executed by him or her before or after the meeting, is filed
with the records of the meeting, or to any Trustee who attends the meeting
without protesting prior thereto or at its commencement the lack of notice to
him or her. Neither notice of a meeting nor a waiver of a notice need specify
the purposes of the meeting.
2.4. Notice of Certain Actions by Consent. If in accordance with the
provisions of the Declaration of Trust any action is taken by the Trustees by a
written consent of less than all of the Trustees, then prompt notice of any such
action shall be furnished to each Trustee who did not execute such written
consent, provided that the effectiveness of such action shall not be impaired by
any delay or failure to furnish such notice.
ARTICLE 3
Officers
3.1. Enumeration; Qualification. The officers of the Trust shall be a
President, a Treasurer, a Secretary, and such other officers, if any, as the
Trustees from time to time may in their discretion elect. The Trust also may
have such agents as the Trustees from time to time may in their discretion
appoint. Officers may be but need not be a Trustee or shareholder. Any two or
more offices may be held by the same person.
3.2. Election. The President, the Treasurer and the Secretary shall be
elected by the Trustees upon the occurrence of any vacancy in any such office.
Other officers, if any, may be elected or appointed by the Trustees at any time.
Vacancies in any such other office may be filled at any time.
3.3. Tenure. The President, Treasurer and Secretary shall hold office in
each case until he or she sooner dies, resigns, is removed or becomes
disqualified. Each other officer shall hold office and each agent shall retain
authority at the pleasure of the Trustees.
3.4. Powers. Subject to the other provisions of these By-Laws, each officer
shall have, in addition to the duties and powers herein and in the Declaration
of Trust set forth, such duties and powers as commonly are incident to the
office occupied by him or her as if the Trust were organized as a Delaware
corporation or such other duties and powers as the Trustees may from time to
time designate.
3.5. President. Unless the Trustees otherwise provide, the President shall
preside at all meetings of the shareholders and of the Trustees. Unless the
Trustees otherwise provide, the President shall be the chief executive officer.
3.6. Treasurer. The Treasurer shall be the chief financial and accounting
officer of the Trust, and, subject to the provisions of the Declaration of Trust
and to any arrangement made by the Trustees with a custodian, investment adviser
or manager, or transfer, shareholder servicing or similar agent, shall be in
charge of the valuable papers, books of account and accounting records of the
Trust, and shall have such other duties and powers as may be designated from
time to time by the Trustees or by the President.
3.7. Secretary. The Secretary shall record all proceedings of the
shareholders and the Trustees in books to be kept therefor, which books or a
copy thereof shall be kept at the principal office of the Trust. In the absence
of the Secretary from any meeting of the shareholders or Trustees, an Assistant
Secretary, or if there be none or if he or she is absent, a temporary Secretary
chosen at such meeting shall record the proceedings thereof in the aforesaid
books.
3.8. Resignations and Removals. Any Trustee or officer may resign at any
time by written instrument signed by him or her and delivered to the President
or Secretary or to a meeting of the Trustees. Such resignation shall be
effective upon receipt unless specified to be effective at some other time. The
Trustees may remove any officer elected by them with or without cause. Except to
the extent expressly provided in a written agreement with the Trust, no Trustee
or officer resigning and no officer removed shall have any right to any
compensation for any period following his or her resignation or removal, or any
right to damages on account of such removal.
ARTICLE 4
Committees
4.1. Appointment. The Trustees may appoint from their number an executive
committee and other committees. Except as the Trustees otherwise may determine,
any such committee may make rules for conduct of its business.
4.2. Quorum; Voting. A majority of the members of any Committee of the
Trustees shall constitute a quorum for the transaction of business, and any
action of such a Committee may be taken at a meeting by a vote of a majority of
the members present (a quorum being present).
ARTICLE 5
Reports
The Trustees and officers shall render reports at the time and in the
manner required by the Declaration of Trust or any applicable law. Officers and
Committees shall render such additional reports as they may deem desirable or as
may from time to time be required by the Trustees.
ARTICLE 6
Fiscal Year
The fiscal year of the Trust shall be fixed, and shall be subject to
change, by the Board of Trustees.
ARTICLE 7
Seal
The seal of the Trust shall consist of a flat-faced die with the word
"Delaware," together with the name of the Trust and the year of its organization
cut or engraved thereon but, unless otherwise required by the Trustees, the seal
shall not be necessary to be placed on, and in its absence shall not impair the
validity of, any document, instrument or other paper executed and delivered by
or on behalf of the Trust.
ARTICLE 8
Execution of Papers
Except as the Trustees generally or in particular cases may authorize the
execution thereof in some other manner, all deeds, leases, contracts, notes and
other obligations made by the Trustees shall be signed by the President, any
Vice President, or by the Treasurer and need not bear the seal of the Trust.
ARTICLE 9
Issuance of Share Certificates
9.1. Sale of Shares. Except as otherwise determined by the Trustees, the
Trust will issue and sell for cash or securities from time to time, full and
fractional shares of its shares of beneficial interest, such shares to be issued
and sold at a price of not less than net asset value per share as from time to
time determined in accordance with the Declaration of Trust and these By-Laws
and, in the case of fractional shares, at a proportionate reduction in such
price. In the case of shares sold for securities, such securities shall be
valued in accordance with the provisions for determining value of assets of the
Trust as stated in the Declaration of Trust and these By-Laws. The officers of
the Trust are severally authorized to take all such actions as may be necessary
or desirable to carry out this Section 9.1.
9.2. Share Certificates. In lieu of issuing certificates for shares, the
Trustees or the transfer agent either may issue receipts therefor or may keep
accounts upon the books of the Trust for the record holders of such shares, who
shall in either case, for all purposes hereunder, be deemed to be the holders of
certificates for such shares as if they had accepted such certificates and shall
be held to have expressly assented and agreed to the terms hereof.
The Trustees at any time may authorize the issuance of share certificates.
In that event, each shareholder shall be entitled to a certificate stating the
number of shares owned by him, in such form as shall be prescribed from time to
time by the Trustees. Such certificate shall be signed by the President or Vice
President and by the Treasurer or Assistant Treasurer. Such signatures may be
facsimile if the certificate is signed by a transfer agent, or by a registrar,
other than a Trustee, officer or employee of the Trust. In case any officer who
has signed or whose facsimile signature has been placed on such certificate
shall cease to be such officer before such certificate is issued, it may be
issued by the Trust with the same effect as if he or she were such officer at
the time of its issue.
9.3. Loss of Certificates. The Trust, or if any transfer agent is appointed
for the Trust, the transfer agent with the approval of any two officers of the
Trust, is authorized to issue and countersign replacement certificates for the
shares of the Trust which have been lost, stolen or destroyed subject to the
deposit of a bond or other indemnity in such form and with such security, if
any, as the Trustees may require.
9.4. Discontinuance of Issuance of Certificates. The Trustees at any time
may discontinue the issuance of share certificates and by written notice to each
shareholder, may require the surrender of share certificates to the Trust for
cancellation. Such surrender and cancellation shall not affect the ownership of
shares in the Trust.
ARTICLE 10
Indemnification
10.1. Trustees, Officers, etc. To the fullest extent permitted by law, the
Trust shall indemnify each of its Trustees and officers (including persons who
serve at the Trust's request as directors, officers or trustees of another
person in which the Trust has any interest as a shareholder, creditor or
otherwise) (hereinafter referred to as a "Covered Person") against all
liabilities and expenses, including but not limited to amounts paid in
satisfaction of judgments, in compromise or as fines and penalties, and counsel
fees reasonably incurred by any Covered Person in connection with the defense or
disposition of any action, suit or other proceeding, whether civil, criminal,
administrative or investigative, before any court or administrative or
legislative body, in which such Covered Person may be or may have been involved
as a party or otherwise or with which such person may be or may have been
threatened, while in office or thereafter, in any way relating to the Trust or
by reason of being or having been such a Trustee or officer, except with respect
to any matter as to which such Covered Person shall have been finally
adjudicated in a decision on the merits in any such action, suit or other
proceeding not to have acted in good faith in the reasonable belief that such
Covered Person's action was in the best interests of the Trust and except that
no Covered Person shall be indemnified against any liability to the Trust or its
Shareholders to which such Covered Person would otherwise be subject by reason
of wilful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of such Covered Person's office. Expenses,
including counsel fees so incurred by any such Covered Person (but excluding
amounts paid in satisfaction of judgments, in compromise or as fines or
penalties), shall be paid from time to time by the Trust in advance of the final
disposition of any such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such Covered Person to repay amounts so paid by
the Trust if it is ultimately determined that indemnification of such expenses
is not authorized under this Article, provided that (a) such Covered Person
shall provide security for his undertaking, (b) the Trust shall be insured
against losses arising by reason of such Covered Person's failure to fulfill his
undertaking, or (c) a majority of the Trustees who are disinterested persons and
who are not Interested Persons (as that term is defined in the Investment
Company Act of 1940) (provided that a majority of such Trustees then in office
act on the matter), or independent legal counsel in a written opinion, shall
determine, based on a review of readily available facts (but not a full
trial-type inquiry), that there is reason to believe such Covered Person
ultimately will be entitled to indemnification.
10.2. Compromise Payment. As to any matter disposed of (whether by a
compromise payment, pursuant to a consent decree or otherwise) without an
adjudication in a decision on the merits by a court, or by any other body before
which the proceeding was brought, that such Covered Person either (a) did not
act in good faith in the reasonable belief that such Covered Person's action was
in the best interests of the Trust or (b) is liable to the Trust or its
Shareholders by reason of wilful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of such Covered
Person's office, indemnification shall be provided if (a) approved as in the
best interest of the Trust, after notice that it involves such indemnification,
by at least a majority of the Trustees who are disinterested persons and are not
Interested Persons (provided that a majority of such Trustees then in office act
on the matter), upon a determination, based upon a review of readily available
facts (but not a full trial-type inquiry) that such Covered Person acted in good
faith in the reasonable belief that such Covered Person's action was in the best
interests of the Trust and is not liable to the Trust or its Shareholders by
reason of wilful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of such Covered Person's office, or (b)
there has been obtained an opinion in writing of independent legal counsel,
based upon a review of readily available facts (but not a full trial-type
inquiry) to the effect that such Covered Person appears to have acted in good
faith in the reasonable belief that such Covered Person's action was in the best
interests of the Trust and that such indemnification would not protect such
Covered Person against any liability to the Trust to which such Covered Person
would otherwise be subject by reason of wilful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office. Any approval pursuant to this Section shall not prevent the recovery
from any Covered Person of any amount paid to such Covered Person in accordance
with this Section as indemnification if such Covered Person is subsequently
adjudicated by a court of competent jurisdiction not to have acted in good faith
in the reasonable belief that such Covered Person's action was in the best
interests of the Trust or to have been liable to the Trust or its shareholders
by reason of wilful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such Covered Person's office.
10.3. Indemnification Not Exclusive. The right of indemnification hereby
provided shall not be exclusive of or affect any other rights to which any such
Covered Person may be entitled. As used in this Article 10, the term "Covered
Person" shall include such person's heirs, executors and administrators, and a
"disinterested person" is a person against whom none of the actions, suits or
other proceedings in question or another action, suit, or other proceeding on
the same or similar grounds is then or has been pending. Nothing contained in
this article shall affect any rights to indemnification to which personnel of
the Trust, other than Trustees and officers, and other persons may be entitled
by contract or otherwise under law, nor the power of the Trust to purchase and
maintain liability insurance on behalf of such person.
10.4. Limitation. Notwithstanding any provisions in the Declaration of
Trust and these By-Laws pertaining to indemnification, all such provisions are
limited by the following undertaking set forth in the rules promulgated by the
Securities and Exchange Commission:
In the event that a claim for indemnification is asserted by a
Trustee, officer or controlling person of the Trust in connection with the
registered securities of the Trust, the Trust will not make such
indemnification unless (i) the Trust has submitted, before a court or other
body, the question of whether the person to be indemnified was liable by
reason of wilful misfeasance, bad faith, gross negligence, or reckless
disregard of duties, and has obtained a final decision on the merits that
such person was not liable by reason of such conduct or (ii) in the absence
of such decision, the Trust shall have obtained a reasonable determination,
based upon a review of the facts, that such person was not liable by virtue
of such conduct, by (a) the vote of a majority of Trustees who are neither
interested persons as such term is defined in the Investment Company Act of
1940, nor parties to the proceeding or (b) an independent legal counsel in
a written opinion.
The Trust will not advance attorneys' fees or other expenses incurred
by the person to be indemnified unless the Trust shall have (i) received an
undertaking by or on behalf of such person to repay the advance unless it
is ultimately determined that such person is entitled to indemnification
and one of the following conditions shall have occurred: (x) such person
shall provide security for his undertaking, (y) the Trust shall be insured
against losses arising by reason of any lawful advances or (z) a majority
of the disinterested, non-party Trustees of the Trust, or an independent
legal counsel in a written opinion, shall have determined that based on a
review of readily available facts there is reason to believe that such
person ultimately will be found entitled to indemnification.
ARTICLE 11
Shareholders
11.1. Meetings. A meeting of the shareholders shall be called by the
Secretary whenever ordered by the Trustees, or requested in writing by the
holder or holders of at least 10% of the outstanding shares entitled to vote at
such meeting. If the meeting is a meeting of the shareholders of one or more
series of shares, but not a meeting of all shareholders of the Trust, then only
the shareholders of such one or more series shall be entitled to notice of and
to vote at the meeting. If the Secretary, when so ordered or requested, refuses
or neglects for more than five days to call such meeting, the Trustees, or the
shareholders so requesting may, in the name of the Secretary, call the meeting
by giving notice thereof in the manner required when notice is given by the
Secretary.
11.2. Access to Shareholder List. Shareholders of record may apply to the
Trustees for assistance in communicating with other shareholders for the purpose
of calling a meeting in order to vote upon the question of removal of a Trustee.
When ten or more shareholders of record who have been such for at least six
months preceding the date of application and who hold in the aggregate shares
having a net asset value of at least $25,000 or at least 1% of the outstanding
shares, whichever is less, so apply, the Trustees shall within five business
days either:
(i) afford to such applicants access to a list of names and addresses of
all shareholders as recorded on the books of the Trust; or
(ii) inform such applicants of the approximate number of shareholders of
record and the approximate cost of mailing material to them and, within a
reasonable time thereafter, mail, materials submitted by the applicants, to all
such shareholders of record. The Trustees shall not be obligated to mail
materials which they believe to be misleading or in violation of applicable law.
11.3. Record Dates. For the purpose of determining the shareholders of any
series who are entitled to vote or act at any meeting or any adjournment
thereof, or who are entitled to receive payment of any dividend or of any other
distribution, the Trustees from time to time may fix a time, which shall be not
more than 90 days before the date of any meeting of shareholders or the date of
payment of any dividend or of any other distribution, as the record date for
determining the shareholders of such series having the right to notice of and to
vote at such meeting and any adjournment thereof or the right to receive such
dividend or distribution, and in such case only shareholders of record on such
record date shall have such right notwithstanding any transfer of shares on the
books of the Trust after the record date; or without fixing such record date the
Trustees may for any such purposes close the register or transfer books for all
or part of such period.
11.4. Place of Meetings. All meetings of the shareholders shall be held at
the principal office of the Trust or at such other place within the United
States as shall be designated by the Trustees or the President of the Trust.
11.5. Notice of Meetings. A written notice of each meeting of shareholders,
stating the place, date and hour and the purposes of the meeting, shall be given
at least ten days before the meeting to each shareholder entitled to vote
thereat by leaving such notice with him or at his residence or usual place of
business or by mailing it, postage prepaid, and addressed to such shareholder at
his address as it appears in the records of the Trust. Such notice shall be
given by the Secretary or an Assistant Secretary or by an officer designated by
the Trustees. No notice of any meeting of shareholders need be given to a
shareholder if a written waiver of notice, executed before or after the meeting
by such shareholder or his attorney thereunto duly authorized, is filed with the
records of the meeting.
11.6. Ballots. No ballot shall be required for any election unless
requested by a shareholder present or represented at the meeting and entitled to
vote in the election.
11.7. Proxies. Shareholders entitled to vote may vote either in person or
by proxy in writing dated not more than six months before the meeting named
therein, which proxies shall be filed with the Secretary or other person
responsible to record the proceedings of the meeting before being voted. Unless
otherwise specifically limited by their terms, such proxies shall entitle the
holders thereof to vote at any adjournment of such meeting but shall not be
valid after the final adjournment of such meeting.
ARTICLE 12
Amendments to the By-Laws
These By-Laws may be amended or repealed, in whole or in part, by a
majority of the Trustees then in office at any meeting of the Trustees, or by
one or more writings signed by such a majority.
Dated: October 5, 1994
<PAGE>
Exhibit (5)(a)
INVESTMENT ADVISORY AGREEMENT
S&P STARS FUND
245 Park Avenue
New York, New York 10167
February 23, 1995
Bear Stearns Funds Management Inc.
245 Park Avenue
New York, New York 10167
Dear Sirs:
The above-named investment company (the "Fund"), with respect to the series
named on Schedule 1 hereto, as such Schedule may be revised from time to time
(each, a "Series"), herewith confirms its agreement with you as follows:
The Fund desires to employ its capital by investing and reinvesting the
same in investments of the type and in accordance with the limitations specified
in its charter documents and in its offering documents (Part A and Part B) as
from time to time in effect, copies of which have been or will be submitted to
you, and in such manner and to such extent as from time to time may be approved
by the Fund's Board. The Fund desires to employ you to act as its investment
adviser.
In this connection it is understood that from time to time you will employ
or associate with yourself such person or persons as you may believe to be
particularly fitted to assist you in the performance of this Agreement. Such
person or persons may be officers or employees who are employed by both you and
the Fund. The compensation of such person or persons shall be paid by you and no
obligation may be incurred on the Fund's behalf in any such respect. We have
discussed and concur in your employing on this basis each sub-investment adviser
indicated on Schedule 1 (each, a "Sub-Investment Adviser") for the Series
indicated thereon, as such Schedule may be revised from time to time.
Subject to the supervision and approval of the Fund's Board, you will
provide investment management of each Series' portfolio in accordance with such
Series' investment objectives and policies as stated in the Fund's offering
documents (Part A and Part B) as from time to time in effect. In connection
therewith, you will obtain and provide investment research and will supervise
each Series' investments and conduct a continuous program of investment,
evaluation and, if appropriate, sale and reinvestment of such Series' assets.
You will furnish to the Fund such statistical information, with respect to the
investments which a Series may hold or contemplate purchasing, as the Fund may
reasonably request. The Fund wishes to be informed of important developments
materially affecting any Series' portfolio and shall expect you, on your own
initiative, to furnish to the Fund from time to time such information as you may
believe appropriate for this purpose.
In addition, you will supply office facilities (which may be in your own
offices), data processing services, clerical, accounting and bookkeeping
services, internal auditing and legal services, internal executive and
administrative services, and stationery and office supplies; prepare reports to
each Series' stockholders, tax returns, reports to and filings with the
Securities and Exchange Commission and state Blue Sky authorities; calculate the
net asset value of each Series' shares; and generally assist in all aspects of
the Fund's operations. You shall have the right, at your expense, to engage
other entities to assist you in performing some or all of the obligations set
forth in this paragraph, provided each such entity enters into an agreement with
you in form and substance reasonably satisfactory to the Fund.
You shall exercise your best judgment in rendering the services to be
provided to the Fund hereunder, and the Fund agrees as an inducement to your
undertaking the same that neither you nor the Sub-Investment Adviser shall be
liable hereunder for any error of judgment or mistake of law or for any loss
suffered by one or more Series, provided that nothing herein shall be deemed to
protect or purport to protect you or any Sub-Investment Adviser against any
liability to the Fund or a Series or to its security holders to which you would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence in the performance of your duties hereunder or by reason of your
reckless disregard of your obligations or duties hereunder (hereinafter
"Disabling Conduct") or to which any Sub- Investment Adviser would otherwise be
subject by reason of Disabling Conduct.
In consideration of services rendered pursuant to this Agreement, the Fund
will pay you on the first business day of each month a fee at the rate set forth
opposite each Series' name on Schedule 1 hereto or will pay you in accordance
with the methodology described on additional Schedules hereto. Net asset value
shall be computed on such days and at such time or times as described in the
Fund's then-current Part A and Part B. The fee for the period from the date of
the commencement of sales of a Series' shares (after any sales are made to you)
to the end of the month during which such sales shall have been commenced shall
be pro-rated according to the proportion which such period bears to the full
monthly period, and upon any termination of this Agreement before the end of any
month, the fee for such part of a month shall be pro-rated according to the
proportion which such period bears to the full monthly period and shall be
payable upon the date of termination of this Agreement.
For the purpose of determining fees payable to you, the value of each
Series' net assets shall be computed in the manner specified in the Fund's
charter documents for the computation of the value of each Series' net assets.
You will bear all expenses in connection with the performance of your
services under this Agreement and will pay all fees of each Sub-Investment
Adviser in connection with its duties in respect of the Series. All other
expenses to be incurred in the operation of the Fund (other than those borne by
a Sub-Investment Adviser) will be borne by the Fund, except to the extent
specifically assumed by you. The expenses to be borne by the Fund include,
without limitation, the following: organizational costs, taxes, interest, loan
commitment fees, interest and distributions paid on securities sold short,
brokerage fees and commissions, if any, fees of Board members, Securities and
Exchange Commission fees, state Blue Sky qualification fees, advisory,
administration and fund accounting fees, charges of custodians, transfer and
dividend disbursing agents' fees, certain insurance premiums, industry
association fees, outside auditing and legal expenses, costs of independent
pricing services, costs of maintaining the Series' existence, costs attributable
to investor services (including, without limitation, telephone and personnel
expenses), costs of preparing and printing prospectuses and statements of
additional information for regulatory purposes and for distribution to existing
stockholders, costs of stockholders' reports and meetings, and any extraordinary
expenses.
As to each Series, if in any fiscal year the aggregate expenses of a Series
(including fees pursuant to this Agreement, but excluding interest, taxes,
brokerage and, with the prior written consent of the necessary state securities
commissions, extraordinary expenses) exceed the expense limitation of any state
having jurisdiction over such Series, the Fund may deduct from the fees to be
paid hereunder, or you will bear, such excess expense to the extent required by
state law. Your obligation pursuant hereto will be limited to the amount of your
fees hereunder. Such deduction or payment, if any, will be estimated daily, and
reconciled and effected or paid, as the case may be, on a monthly basis.
The Fund understands that you now act, and that from time to time hereafter
you may act, as investment adviser to one or more other investment companies and
fiduciary or other managed accounts, and the Fund has no objection to your so
acting, provided that when the purchase or sale of securities of the same issuer
is suitable for the investment objectives of two or more companies or accounts
managed by you which have available funds for investment, the available
securities will be allocated in a manner believed by you to be equitable to each
company or account. It is recognized that in some cases this procedure may
adversely affect the price paid or received by one or more Series or the size of
the position obtainable for or disposed of by one or more Series.
In addition, it is understood that the persons employed by you to assist in
the performance of your duties hereunder will not devote their full time to such
service and nothing contained herein shall be deemed to limit or restrict your
right or the right of any of your affiliates to engage in and devote time and
attention to other businesses or to render services of whatever kind or nature.
Any person, even though also your officer, director, partner, employee or
agent, who may be or become an officer, Board member, employee or agent of the
Fund, shall be deemed, when rendering services to the Fund or acting on any
business of the Fund, to be rendering such services to or acting solely for the
Fund and not as your officer, director, partner, employee, or agent or one under
your control or direction even though paid by you.
The Fund will indemnify you and each Sub-Investment Adviser (each, an
"indemnitee") against, and hold each indemnitee harmless from, any and all
losses, claims, damages, liabilities or expenses (including reasonable counsel
fees and expenses) not resulting from Disabling Conduct by the indemnitee.
Indemnification shall be made only following: (i) a final decision on the merits
by a court or other body before whom the proceeding was brought that the
indemnitee was not liable by reason of Disabling Conduct or (ii) 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 Disabling Conduct by (a)
the vote of a majority of a quorum of Board members who are neither "interested
persons" of the Fund nor parties to the proceeding ("disinterested non-party
Board members") or (b) an independent legal counsel in a written opinion. Each
indemnitee shall be entitled to advances from the Fund for payment of the
reasonable expenses incurred by it in connection with the matter as to which it
is seeking indemnification in the manner and to the fullest extent permissible
under the New York Business Corporation Law. Each indemnitee shall provide to
the Fund a written affirmation of its good faith belief that the standard of
conduct necessary for indemnification by the Fund has been met and a written
undertaking to repay any such advance if it should ultimately be determined that
the standard of conduct has not been met. In addition, at least one of the
following additional conditions shall be met: (a) the indemnitee shall provide
security in form and amount acceptable to the Fund for its undertaking; (b) the
Fund is insured against losses arising by reason of the advance; or (c) a
majority of a quorum of disinterested non-party Board members, or independent
legal counsel, in a written opinion, shall have determined, based on a review of
facts readily available to the Fund at the time the advance is proposed to be
made, that there is reason to believe that the indemnitee will ultimately be
found to be entitled to indemnification. No provision of this Agreement shall be
construed to protect any Board member or officer of the Fund, or any indemnitee,
from liability in violation of Sections 17(h) and (i) of the Investment Company
Act of 1940, as amended (the "1940 Act").
As to each Series, this Agreement shall continue until the date set forth
opposite such Series' name on Schedule 1 hereto (the "Reapproval Date") and
thereafter shall continue automatically for successive annual periods ending on
the day of each year set forth opposite the Series' name on Schedule 1 hereto
(the "Reapproval Day"), provided such continuance is specifically approved at
least annually by (i) the Fund's Board or (ii) vote of a majority (as defined in
the 1940 Act) of such Series' outstanding voting securities, provided that in
either event its continuance also is approved by a majority of the Fund's Board
members who are not "interested persons" (as defined in the 1940 Act) of any
party to this Agreement, by vote cast in person at a meeting called for the
purpose of voting on such approval. As to each Series, this Agreement is
terminable without penalty, on 60 days' notice, by the Fund's Board or by vote
of holders of a majority of such Series' shares or, upon not less than 90 days'
notice, by you. This Agreement also will terminate automatically, as to the
relevant Series, in the event of its assignment (as defined in the 1940 Act).
The Fund is agreeing to the provisions of this Agreement that limit a
Sub-Investment Adviser's liability and other provisions relating to the
Sub-Investment Adviser so as to induce the Sub-Investment Adviser to enter into
its Sub- Investment Advisory Agreement with you and to perform its obligations
thereunder. Each Sub-Investment Adviser is expressly made a third party
beneficiary of this Agreement with rights as respects the Fund to the same
extent as if it had been a party hereto.
This Agreement has been executed on behalf of the Fund by the undersigned
officer of the Fund in his capacity as an officer of the Fund. The obligations
of this Agreement shall only be binding upon the assets and property of the
relevant Series and shall not be binding upon any Board member, officer or
shareholder of the Fund individually.
If the foregoing is in accordance with your understanding, will you kindly
so indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
S&P STARS FUND
By: /s/ Robert S. Reitzes
Accepted:
BEAR STEARNS FUNDS MANAGEMENT INC.
By: /s/ Frank J. Maresca
<PAGE>
SCHEDULE 1
Annual Fee as
a Percentage
of Average
Daily Net
Name of Series Assets Reapproval Date Reapproval Day
S&P STARS Master
Series .75 of 1% February 23, 1997 February 23rd
<PAGE>
Exhibit (5)(b)
ADMINISTRATIVE SERVICES AGREEMENT
This Agreement is made as of February 23, 1995 by and between PFPC
INTERNATIONAL LTD. ("PFPC"), a company incorporated under the laws of Ireland,
which is an indirect wholly-owned subsidiary of PNC Bank Corp., and the S&P
STARS FUND (the "Fund"), a Delaware business trust.
The Fund is registered as an open-end investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"). The Fund wishes to
appoint PFPC as administrator for the series of the Fund listed on Exhibit A
attached hereto, as amended from time to time (each a "Series"), and PFPC wishes
to furnish such services.
In consideration of the promises and mutual covenants herein contained, the
parties agree as follows:
1. Definitions.
(a) "Authorized Person". The term "Authorized Person" shall mean any
person, who is duly authorized by the Fund's Governing Board, to give Oral and
Written Instructions on behalf of the Fund. Such persons are listed in the
Certificate attached hereto as the Authorized Persons Appendix. If PFPC provides
more than one service hereunder, the Fund's designation of Authorized Persons
may vary by service.
(b) "Central Bank". The term "Central Bank" shall mean the Central Bank of
Ireland.
(c) "Governing Board". The term "Governing Board" shall mean the Fund's
Board of Directors if the Fund is a company or corporation or the Fund's Board
of Trustees if the Fund is a trust, or, where duly authorized, a competent
committee thereof.
(d) "Oral Instructions". The term "Oral Instructions" shall mean oral
instructions received by PFPC from an Authorized Person or from a person
reasonably believed by PFPC to be an Authorized Person.
(e) "Organizational Documents". The term "Organizational Documents" shall
mean, in the case of the Fund, the by-laws, the memorandum of association,
articles of association, trust deed, partnership or other documents constituting
the Fund.
(f) "Shares". The term "Shares" shall mean the shares of any series or
class of the Fund, or, where appropriate, units of beneficial interest in a
trust where the Fund is organized as a trust.
(g) "Written Instructions". The term "Written Instructions" shall mean
written instructions signed by one Authorized Person and received by PFPC. The
instructions may be delivered by hand, post, tested telegram, cable, telex or
facsimile sending device.
2. Appointment. The Fund hereby appoints PFPC as administrator, in
accordance with the terms set forth in this Agreement, and PFPC accepts such
appointment and agrees to furnish such services.
3. Delivery of Documents. The Fund has provided or, where applicable, will
provide PFPC with the following:
(a) Copies of the resolutions of the Fund's Governing Board, certified a
true copy by an Officer of the Fund, approving the appointment of PFPC or its
affiliates to provide services;
(b) A copy of the Fund's most recent effective registration statement or
prospectus;
(c) A copy of the Fund's advisory agreement or agreements;
(d) A copy of the Fund's distribution agreement or agreements;
(e) A copy of the Fund's administration agreement with any other party
other than PFPC;
(f) Copies of any shareholder servicing agreements made in respect of the
Fund;
(g) Copies, certified a true copy by an Officer of the Fund, of all of the
Fund's Organizational Documents; and
(h) Copies, certified a true copy by an Officer of the Fund, of any and all
amendments or supplements to the foregoing.
4. Instructions. Unless otherwise provided in this Agreement, PFPC shall
act only upon Oral and Written Instructions.
PFPC shall be entitled to rely upon any Oral and Written Instruction it
receives from an Authorized Person (or from a person reasonably believed by PFPC
to be an Authorized Person) pursuant to this Agreement. PFPC may assume that any
Oral or Written Instruction received hereunder is not in any way inconsistent
with the provisions of Organizational Documents or this Agreement or of any
vote, resolution or proceeding of the Fund's Governing Board or of the Fund's
shareholders.
The Fund agrees to forward to PFPC Written Instructions confirming Oral
Instructions so that PFPC receives the Written Instructions by the close of
business on the same day that such Oral Instructions are received. The fact that
such confirming Written Instructions are not received by PFPC shall in no way
invalidate the transactions or enforceability of the transactions authorized by
the Oral Instructions. The Fund further agrees that PFPC shall incur no
liability to the Fund in acting upon Oral or Written Instructions provided such
instructions reasonably appear to have been received from an Authorized Person.
5. Right to Receive Advice.
(a) Advice of the Fund. If PFPC is in doubt as to any action it should or
should not take, PFPC may request directions or advice, including Oral or
Written Instructions, from the Fund.
(b) Advice of Counsel. If PFPC shall be in doubt as to any question of law
pertaining to any action it should or should not take, PFPC may request advice
at its own cost from such legal advisers of its own choosing (who may be legal
advisers for the Fund, the Fund's adviser or PFPC, at the option of PFPC).
(c) Conflicting Advice. In the event of a conflict between directions,
advice or Oral or Written Instructions PFPC receives from the Fund, and the
advice it receives from such legal advisers, PFPC shall be entitled to rely upon
and follow the advice of such legal advisers.
(d) Protection of PFPC. PFPC shall be protected in any action it takes or
does not take in reliance upon directions, advice or Oral or Written
Instructions it receives from the Fund or from legal advisers and which PFPC
believes, in good faith, to be consistent with those directions, advice or Oral
or Written Instructions.
Nothing in this paragraph shall be construed so as to impose an obligation
upon PFPC (i) to seek such directions, advice or Oral or Written Instructions,
or (ii) to act in accordance with such directions, advice or Oral or Written
Instructions unless, under the terms of other provisions of this Agreement, the
same is a condition of PFPC's properly taking or not taking such action.
6. Records. The books and records pertaining to the Fund, which are in the
possession of PFPC, shall be the property of the Fund. The Fund, or the Fund's
Authorized Persons, shall have access to such books and records at all times
during PFPC's normal business hours. Upon the reasonable request of the Fund,
copies of any such books and records shall be provided by PFPC to the Fund or to
an Authorized Person of the Fund, at the Fund's expense.
PFPC shall keep the following records:
(a) all books and records with respect to the Fund's books of account; (b)
records of the Fund's securities transaction.
7. Confidentiality. PFPC agrees to keep confidential all records of the
Fund and information relative to the Fund and its shareholders (past, present
and potential), unless the release of such records or information is otherwise
consented to, in writing, by the Fund. The Fund agrees that such consent shall
not be unreasonably withheld. The Fund further agrees that, should PFPC be
required to provide such information or records to the Central Bank or to any
other duly constituted regulatory authority (who may institute civil or criminal
contempt proceedings for failure to comply), PFPC shall not be required to seek
the Fund's consent prior to disclosing such information.
8. Liaison with Auditors and Accountants. PFPC shall act as liaison with
the Fund's independent public auditors and accountants and shall provide account
analyses, fiscal year summaries, and other audit-related schedules. PFPC shall
take all reasonable action in the performance of its obligations under this
Agreement to ensure that the necessary information is made available to such
auditors and accountants for the expression of their opinion, as such may be
required by the Fund from time to time.
9. Disaster Recovery. PFPC shall enter into and shall maintain in effect
with appropriate parties one or more agreements making reasonable provision for
emergency use of electronic data processing equipment to the extent appropriate
equipment is available. In the event of equipment failures, PFPC shall, at no
additional expense to the Fund, take reasonable steps to minimize service
interruptions but shall have no liability with respect thereto.
10. Compensation. As compensation for services rendered by PFPC during the
term of this Agreement, the Fund will pay to PFPC a fee or fees as may be agreed
to from time to time in writing by the Fund and PFPC.
11. Indemnification. The Fund agrees to indemnify and hold harmless PFPC
and its nominees from all taxes, charges, expenses, assessments, claims and
liabilities, and expenses, including (without limitation) attorneys' fees and
disbursements, arising directly or indirectly from any action which PFPC takes
or does not take (i) at the request or on the direction of or in reliance on the
advice of the Fund or (ii) upon Oral or Written Instructions. Neither PFPC, nor
any of its nominees, shall be indemnified against any liability to the Fund or
to its shareholders (or any expenses incident to such liability) arising out of
PFPC's own willful misfeasance, gross negligence or reckless disregard of its
duties and obligations under this Agreement.
12. Responsibility of PFPC. PFPC shall not be liable for any loss suffered
by the Fund or its agents in connection with the performance by PFPC of its
obligations under this Agreement, except a loss resulting from gross negligence,
willful misfeasance or bad faith on the part of PFPC in the performance of, or
from reckless disregard by PFPC of, its obligations and duties under this
Agreement.
Without limiting the generality of the foregoing or of any other provision
of this Agreement, PFPC, in connection with its duties under this Agreement,
shall not be liable for (a) the validity or invalidity or authority or lack
thereof of any Oral or Written Instruction, notice or other instrument which
conforms to the applicable requirements of this Agreement, and which PFPC
reasonably believes to be genuine; or (b) delays or errors or loss of data
occurring by reason of circumstances beyond PFPC's control, including acts of
civil or military authority, national emergencies, labor difficulties, fire,
flood or catastrophe, acts of God, insurrection, war, riots or failure of
postage, transportation, communication or power supply.
Notwithstanding anything in this Agreement to the contrary, PFPC shall have
no liability to the Fund for any consequential, special or indirect losses or
damages which the Fund may incur or suffer by or as a consequence of PFPC's
performance of the services provided hereunder, whether or not the likelihood of
such losses or damages was known by PFPC.
13. Description of Services. Services on a Continuing Basis. PFPC will
perform the following administrative functions, if required:
(a) arranging for the calculation of the net asset value of the Fund and
the issue and repurchase prices of shares in the Fund in accordance with the
provisions of the Articles of Association and the Prospectus;
(b) making daily partnership income allocations and perform daily
partnership accounting as necessitated by the master/feeder structure of the
Funds and Series;
(c) transmitting to the custodian (hereinafter called the "Custodian") of
the Fund for the account of the Fund all monies received by it on behalf of the
Fund;
(d) maintaining all books and records as may be required by law, by the
auditors to the Fund or by custom and practice with respect to the Fund's books
of accounts and with respect to the Fund's investment transactions and rendering
to the Fund such periodic and special reports as the Fund may reasonably
request. Any such books or records may be maintained in the form of electronic
media and stored on any magnetic disk or tape or similar recording method;
(e) arranging with the auditors to the Fund for the annual audit of the
Fund and assisting the Fund in procuring compliance with all relevant
requirements of the Irish and other regulatory authorities to which the Fund is
subject and arranging for the preparation and forwarding to the shareholders in
the Fund such notices, reports, financial statements and other written material
as may be required by law, or by the Prospectus or by the Articles of
Association;
(f) assisting the Fund in arranging general meetings of the Fund from time
to time;
(g) assisting the Custodian in performing its duties under the Custodian
Agreement with the Fund;
(h) Supply various normal and customary Series and Fund statistical data as
requested on an ongoing basis; and
(i) Coordinate contractual relationships and communications between the
Fund and its contractual service providers.
14. Duration and Termination. This Agreement shall continue until
terminated by the Fund or by PFPC on sixty (60) days' prior written notice to
the other party.
15. Notices. All notices and other communications, including Written
Instructions, shall be in writing or by confirming telegram, cable, telex or
facsimile sending device. If notice is sent by confirming telegram, cable, telex
or facsimile sending device, it shall be deemed to have been given immediately.
If notice is sent by first-class mail, it shall be deemed to have been given
seven (7) days after it has been mailed. If notice is sent by messenger, it
shall be deemed to have been given on the day it is delivered. Notices shall be
addressed (a) if to PFPC, at 80 Harcourt Street, Dublin 2, Ireland; (b) if to
the Fund, at 245 Park Avenue, New York, New York 10167, Attn: Frank J. Maresca;
or (c) if to neither of the foregoing, at such other address as shall have been
notified to the sender of any such notice or other communication.
16. Amendments. This Agreement, or any term thereof, may be changed or
waived only by a written amendment, signed by the party against whom enforcement
of such change or waiver is sought.
17. Delegation. PFPC may delegate any of its functions and duties to any
person or persons, provided that such appointment or appointments shall first be
approved in writing by the Fund, which approval shall not be unreasonably
withheld or delayed.
18. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
19. Facsimile Signatures. The facsimile signature of any party to this
Agreement shall constitute the valid and binding execution hereof by such party.
20. Further Actions. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
21. Miscellaneous.
(a) Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties and supersedes all prior agreements and
understandings relating to the subject matter hereof, provided that the parties
may embody in one or more separate documents their agreement, if any, with
respect to delegation and/or Oral Instructions.
(b) Captions. The captions in this Agreement are included for convenience
of reference only and in no way define or delimit any of the provisions hereof
or otherwise affect their construction or effect.
(c) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of Ireland.
(d) Partial Invalidity. 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.
(e) Successors and Assigns. This Agreement shall be binding and shall inure
to the benefit of the parties hereto and their respective successors.
(f) Capacity. This Agreement has been executed on behalf of the Fund by the
undersigned officer of the Fund in his capacity as an officer of the Fund. The
obligations of this Agreement shall only be binding upon the assets and property
of the relevant Series and shall not be binding upon any Board member, officer
or shareholder of the Fund individually.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the day and year first above
written.
PFPC INTERNATIONAL LTD.
By:/s/ James F. McKeon
Title: General Manager
S&P STARS FUNDS
By:/s/ Robert S. Reitzes
Title: Chairman of the Board
<PAGE>
EXHIBIT A
S&P STARS MASTER SERIES
<PAGE>
AUTHORIZED PERSONS APPENDIX
Set forth below are the names of the persons, whose specimen signature are
on file with PFPC, that are authorized to give Oral and Written Instructions on
behalf of the Fund.
Name
Frank J. Maresca
Vincent L. Pereira
Eileen M. Coyle
<PAGE>
Exhibit (6)
PLACEMENT AGENCY AGREEMENT
S&P STARS FUND
80 Harcourt Street
Dublin 2, Ireland
February 23, 1995
Bear, Stearns International Limited
1 Canada Square
London E14 58D
England
Dear Sirs:
This is to confirm that, in consideration of the agreements hereinafter
contained, the undersigned, S&P STARS Fund, a Delaware business trust (the
"Fund") consisting of the series named on Schedule 1 hereto, as such Schedule
may be revised from time to time (each, a "Series"), has agreed that you shall
be, for the period of this Agreement, the exclusive placement agent for shares
of beneficial interest of each Series.
1. You will act as agent for the private placement of shares of each Series
covered by, and in accordance with, the registration statement and prospectus
then in effect under the Investment Company Act of 1940, as amended, and will
transmit promptly any orders received by you for purchase or redemption of
shares of a Series to the Transfer and Dividend Disbursing Agent for the Fund of
which the Fund has notified you in writing. All orders from you shall be subject
to acceptance and confirmation by the Fund.
2. You shall act as exclusive placement agent for each Series' shares in
compliance with all applicable laws, rules and regulations, including, without
limitation, all rules and regulations made or adopted pursuant to the Investment
Company Act of 1940, as amended, by the Securities and Exchange Commission or
any securities association registered under the Securities Exchange Act of 1934,
as amended.
3. Whenever in their judgment such action is warranted by market, economic
or political conditions, or by abnormal circumstances of any kind, the Fund's
officers may decline to accept any orders for, or make any sales of, any of the
Series' shares until such time as they deem it advisable to accept such orders
and to make such sales and the Fund shall advise you promptly of such
determination.
4. Ownership of Series shares sold hereunder shall be registered in such
names and denominations as are specified in writing to the Fund or to its agent
designated for the purpose. No certificates for shares of the Series will be
issued.
5. The Fund agrees to pay all expenses in connection with maintaining
facilities for the issue and transfer of the Series' shares and for supplying
information, prices and other data to be furnished by the Fund hereunder, and
all expenses in connection with preparing and printing the Fund's prospectuses
and statements of additional information for regulatory purposes and for
distribution to shareholders; provided, however, that nothing contained herein
shall be deemed to require the Fund to pay any of the costs of advertising the
sale of the Series' shares. You shall pay all other expenses incurred by you in
connection with the sale of the Series' shares as contemplated in this
agreement.
6. All shares offered for sale and sold by you shall be offered for sale
and sold by you to investors at the price per share (the "offering price," which
is the net asset value per share) specified and determined as provided in the
prospectus relating to the offering of relevant Series' shares for sale. If the
offering price is not an exact multiple of one cent, it shall be adjusted to the
nearest full cent. The Fund shall determine and furnish promptly to you a
statement of the offering price at least once on each day on which the
prospectus states the Fund is required to determine the relevant Series' net
asset value for the purpose of pricing purchase orders. Each offering price
shall become effective at the time and shall remain in effect during the period
specified in the statement. Each such statement shall show the basis of its
computation. For purposes of establishing the offering price, the Fund shall
consider a purchase order to have been presented to it at the time it was
originally entered by you for transmission to it, provided the original purchase
order and your fulfilling order to the Fund are appropriately time stamped or
evidenced to show the time of original entry and that your fulfilling order to
the Fund is received by the Fund within a time deemed by it to be reasonable
after the purchase order was originally entered. Purchases of shares shall be
made for full and fractional shares, carried to the third decimal place.
7. The Fund shall furnish you from time to time, for use in connection with
the sale of the Series' shares, such information with respect to the Fund and
the Series' shares as you may reasonably request, all of which shall be signed
by one or more of the Fund's duly authorized officers; and the Fund warrants
that the statements contained in any such information, when so signed by the
Fund's officers, shall be true and correct. The Fund also shall furnish you with
copies of its reports to shareholders and such additional information regarding
a Series' financial condition as you may reasonably request from time to time.
8. The Fund represents to you that all registration statements and
prospectuses filed by the Fund with the Securities and Exchange Commission under
the Investment Company Act of 1940, as amended, with respect to the Series'
shares have been carefully prepared in conformity with the requirements of said
Act and rules and regulations of the Securities and Exchange Commission
thereunder. As used in this agreement the terms "registration statement" and
"prospectus" shall mean any registration statement and prospectus, including the
statement of additional information incorporated by reference therein, filed
with the Securities and Exchange Commission and any amendments and supplements
thereto which at any time shall have been filed with said Commission. The Fund
represents and warrants to you that any registration statement and prospectus,
when such registration statement becomes effective, will contain all statements
required to be stated therein in conformity with said Act and the rules and
regulations of said Commission; that all statements of fact contained in any
such registration statement and prospectus will be true and correct when such
registration statement becomes effective; and that neither any registration
statement nor any prospectus when such registration statement becomes effective
will include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading. The Fund may but shall not be obligated to propose from time to
time such amendment or amendments to any registration statement and such
supplement or supplements to any prospectus as, in the light of future
developments, may, in the opinion of the Fund's counsel, be necessary or
advisable. If the Fund shall not propose such amendment or amendments and/or
supplement or supplements within fifteen days after receipt by the Fund of a
written request from you to do so, you may, at your option, terminate this
agreement or decline to make offers of the Series' securities until such
amendments are made. The Fund shall not file any amendment to any registration
statement or supplement to any prospectus without giving you reasonable notice
thereof in advance; provided, however, that nothing contained in this agreement
shall in any way limit the Fund's right to file at any time such amendments to
any registration statement and/or supplements to any prospectus, of whatever
character, as the Fund may deem advisable, such right being in all respects
absolute and unconditional.
9. The Fund authorizes you to use any prospectus in the form furnished to
you from time to time, in connection with the sale of the Series' shares. The
Fund agrees to indemnify, defend and hold you, your several officers and
directors, and any person who controls you within the meaning of Section 15 of
the Securities Act of 1933, as amended, free and harmless from and against any
and all claims, demands, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities and any counsel
fees incurred in connection therewith) which you, your officers and directors,
or any such controlling person, may incur under the Securities Act of 1933, as
amended, or under common law or otherwise, arising out of or based upon any
untrue statement, or alleged untrue statement, of a material fact contained in
any registration statement or any prospectus or arising out of or based upon any
omission, or alleged omission, to state a material fact required to be stated in
either any registration statement or any prospectus or necessary to make the
statements in either thereof not misleading; provided, however, that the Fund's
agreement to indemnify you, your officers or directors, and any such controlling
person shall not be deemed to cover any claims, demands, liabilities or expenses
arising out of any untrue statement or alleged untrue statement or omission or
alleged omission made in any registration statement or prospectus in reliance
upon and in conformity with written information furnished to the Fund by you
specifically for use in the preparation thereof. The Fund's agreement to
indemnify you, your officers and directors, and any such controlling person, as
aforesaid, is expressly conditioned upon the Fund's being notified of any action
brought against you, your officers or directors, or any such controlling person,
such notification to be given by letter or by telegram addressed to the Fund at
its address set forth above within ten days after the summons or other first
legal process shall have been served. The failure so to notify the Fund of any
such action shall not relieve the Fund from any liability which the Fund may
have to the person against whom such action is brought by reason of any such
untrue, or alleged untrue, statement or omission, or alleged omission, otherwise
than on account of the Fund's indemnity agreement contained in this paragraph 9.
The Fund will be entitled to assume the defense of any suit brought to enforce
any such claim, demand or liability, but, in such case, such defense shall be
conducted by counsel of good standing chosen by the Fund and approved by you. In
the event the Fund elects to assume the defense of any such suit and retain
counsel of good standing approved by you, the defendant or defendants in such
suit shall bear the fees and expenses of any additional counsel retained by any
of them; but in case the Fund does not elect to assume the defense of any such
suit, or in case you do not approve of counsel chosen by the Fund, the Fund will
reimburse you, your officers and directors, or the controlling person or persons
named as defendant or defendants in such suit, for the fees and expenses of any
counsel retained by you or them. The Fund's indemnification agreement contained
in this paragraph 9 and the Fund's representations and warranties in this
agreement shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of you, your officers and directors, or any
controlling person, and shall survive the delivery of any of the Series' shares.
This agreement of indemnity will inure exclusively to your benefit, to the
benefit of your several officers and directors, and their respective estates,
and to the benefit of any controlling persons and their successors. The Fund
agrees promptly to notify you of the commencement of any litigation or
proceedings against the Fund or any of its officers or Board members in
connection with the issue and sale of any of the Series' shares.
10. You agree to indemnify, defend and hold the Fund, its several officers
and Board members, and any person who controls the Fund within the meaning of
Section 15 of the Securities Act of 1933, as amended, free and harmless from and
against any and all claims, demands, liabilities and expenses (including the
cost of investigating or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which the Fund, its officers or
Board members, or any such controlling person, may incur under the Securities
Act of 1933, as amended, or under common law or otherwise, but only to the
extent that such liability or expense incurred by the Fund, its officers or
Board members, or such controlling person resulting from such claims or demands,
shall arise out of or be based upon any untrue, or alleged untrue, statement of
a material fact contained in information furnished in writing by you to the Fund
specifically for use in the Fund's registration statement and used in the
answers to any of the items of the registration statement or in the
corresponding statements made in the prospectus, or shall arise out of or be
based upon any omission, or alleged omission, to state a material fact in
connection with such information furnished in writing by you to the Fund and
required to be stated in such answers or necessary to make such information not
misleading. Your agreement to indemnify the Fund, its officers and Board
members, and any such controlling person, as aforesaid, is expressly conditioned
upon your being notified of any action brought against the Fund, its officers or
Board members, or any such controlling person, such notification to be given by
letter or telegram addressed to you at your address set forth above within ten
days after the summons or other first legal process shall have been served. You
shall have the right to control the defense of such action, with counsel of your
own choosing, satisfactory to the Fund, if such action is based solely upon such
alleged misstatement or omission on your part, and in any other event the Fund,
its officers or Board members or such controlling person shall each have the
right to participate in the defense or preparation of the defense of any such
action. The failure so to notify you of any such action shall not relieve you
from any liability which you may have to the Fund, its officers or Board
members, or to such controlling person by reason of any such untrue, or alleged
untrue, statement or omission, or alleged omission, otherwise than on account of
your indemnity agreement contained in this paragraph 10. This agreement of
indemnity will inure exclusively to the Fund's benefit, to the benefit of the
Fund's officers and Board members, and their respective estates, and to the
benefit of any controlling persons and their successors. You agree promptly to
notify the Fund of the commencement of any litigation or proceedings against you
or any of your officers or directors in connection with the issue and sale of
any of the Series' shares.
11. None of the Series' shares shall be offered by either you or the Fund
under any of the provisions of this agreement and no orders for the purchase or
sale of such shares hereunder shall be accepted by the Fund if and so long as
the effectiveness of the registration statement then in effect or any necessary
amendments thereto shall be suspended under any of the provisions of the
Investment Company Act of 1940, as amended; provided, however, that nothing
contained in this paragraph 11 shall in any way restrict or have an application
to or bearing upon the Fund's obligation to repurchase any of the Series' shares
from any shareholder in accordance with the provisions of the Fund's prospectus
or charter documents.
12. The Fund agrees to advise you immediately in writing:
(a) of any request by the Securities and Exchange Commission for
amendments to the registration statement or prospectus then in effect or
for additional infor- mation;
(b) in the event of the issuance by the Securities and Exchange
Commission of any stop order suspending the effectiveness of the
registration statement or prospectus then in effect or the initiation of
any proceeding for that purpose;
(c) of the happening of any event which makes untrue any statement of
a material fact made in the registration statement or prospectus then in
effect or which requires the making of a change in such registration
statement or prospectus in order to make the statements therein not
misleading; and
(d) of all actions of the Securities and Exchange Commission with
respect to any amendments to any registration statement or prospectus which
may from time to time be filed with the Securities and Exchange Commission.
13. Insofar as they concern the Fund, the Fund shall comply with all
applicable laws, rules and regulations, including, without limiting the
generality of the foregoing, all rules or regulations made or adopted pursuant
to the Securities Act of 1933, as amended, the Investment Company Act of 1940,
as amended, or by any securities association registered under the Securities
Exchange Act of 1934, as amended.
14. You may, if you desire and at your own cost and expense, appoint or
employ agents to assist you in carrying out your obligations under this
agreement, but no such appointment or employment shall relieve you of any of
your responsibilities or obligations to the Fund under this agreement.
15. As to each Series, subject to the provisions of paragraph 8, this
agreement shall continue until the date set forth opposite such Series' name on
Schedule 1 hereto (the "Reapproval Date"), and thereafter shall continue
automatically for successive annual periods ending on the day of each year set
forth opposite such Series' name on Schedule 1 hereto (the "Reapproval Day"),
provided such continuance is specifically approved at least annually by (i) the
Fund's Board or (ii) vote of a majority (as defined in the Investment Company
Act of 1940, as amended) of the Fund's outstanding voting securities, provided
that in either event its continuance also is approved by a majority of the
Fund's Board members who are not "interested persons" (as defined in said Act)
of any party to this agreement, by vote cast in person at a meeting called for
the purpose of voting on such approval. As to each Series, this agreement is
terminable without penalty, on 60 days' notice, by the Fund's Board or by vote
of holders of a majority of such Series' shares or, upon not less than 90 days'
notice, by you. This agreement also will terminate automatically, as to the
relevant Series, in the event of its assignment (as defined in said Act).
16. This agreement has been executed on behalf of the Fund by the
undersigned officer of the Fund in his capacity as an officer of the Fund. The
obligations of this agreement shall only be binding upon the assets and property
of the relevant Series, as provided for in the Fund's charter documents, and
shall not be binding upon any Board member, officer or shareholder of the Fund
or Series individually.
Please confirm that the foregoing is in accordance with your understanding
and indicate your acceptance hereof by signing below, whereupon it shall become
a binding agreement between us.
Very truly yours,
S&P STARS FUND
By: /s/ Robert S. Reitzes
ACCEPTED:
BEAR, STEARNS INTERNATIONAL LIMITED
By: /s/ Barry Nix
<PAGE>
SCHEDULE 1
Name of Series Reapproval Date Reapproval Day
S&P STARS Master Series February 23, 1997 February 23rd
<PAGE>
Exhibit (8)
CUSTODY AGREEMENT
This AGREEMENT, dated as of February 23, 1995, by and between S&P STARS
FUND (the "Fund"), a trust organized under the laws of the State of Delaware,
and CUSTODIAL TRUST COMPANY, a bank organized and existing under the laws of the
State of New Jersey (the "Custodian").
W I T N E S S E T H:
WHEREAS, the Fund desires that its Securities, cash and other assets be
held and administered by Custodian pursuant to this Agreement;
WHEREAS, the Fund is an open-end management investment company registered
under the 1940 Act (as hereinafter defined);
WHEREAS, Custodian represents that it is a bank having the qualifications
prescribed in Section 26(a)(i) of the 1940 Act;
NOW, THEREFORE, in consideration of the mutual agreements herein made, the
Fund and Custodian hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following terms, unless the context
otherwise requires, shall mean:
1.1 "Authorized Person" means any Officer or other person duly authorized
by resolution of the Board of Directors to give Oral Instructions and Written
Instructions on behalf of the Fund and identified, by name or by office, in
Exhibit A hereto or any person duly designated to do so by an investment adviser
of the Fund specified by the Fund in Exhibit B hereto.
1.2 "Board of Directors" means the Board of Trustees of the Fund or, when
permitted under the 1940 Act, the Executive Committee thereof, if any.
1.3 "Book-Entry System" means a book-entry system maintained by a Federal
Reserve bank as provided for in Subpart O of Treasury Circular No. 300, 31 CFR
306, in Subpart B of 31 CFR Part 350, or in such other book-entry regulations of
federal agencies as are substantially in the form of such Subpart O.
1.4 "Business Day" means any day recognized as a settlement day by The New
York Stock Exchange, Inc. and on which banks in the State of New Jersey are open
for business.
1.5 "Custody Account" means the account in the name of the Fund, which is
provided for in Section 3.2 below.
1.6 "Eligible Foreign Custodian" means any banking institution, trust
company or other entity organized under the laws of a country other than the
United States which is eligible under Rule 17f-5 under the 1940 Act to act as a
sub-custodian for Foreign Securities and other assets of the Fund held outside
the United States.
1.7 "Foreign Securities" means Securities as defined in paragraph (c)(1) of
Rule 17f-5 under the 1940 Act.
1.8 "Foreign Securities Depository" means a securities depository or
clearing agency as defined in subparagraphs (c)(2)(iii) or (iv) of Rule 17f-5
under the 1940 Act.
1.9 "1940 Act" means the Investment Company Act of 1940, as amended.
1.10 "Officer" means the President, any Vice President, the Secretary, any
Assistant Secretary, the Treasurer, or any Assistant Treasurer of the Fund.
1.11 "Oral Instructions" means instructions orally transmitted to and
accepted by Custodian which are (a) reasonably believed by Custodian to have
been given by an Authorized Person, (b) recorded and kept among the records of
Custodian made in the ordinary course of business, and (c) orally confirmed by
Custodian.
1.12 "Proper Instructions" means Oral Instructions or Written Instructions.
Proper Instructions may be continuing Written Instructions when deemed
appropriate by both parties.
1.13 "Securities" includes, without limitation, common and preferred
stocks, bonds, call options, put options, debentures, notes, bank certificates
of deposit, forward contracts, futures contracts (including those related to
indexes), options on futures contracts or indexes, bankers' acceptances,
mortgage-backed securities or other obligations, and any certificates, receipts,
warrants or other instruments or documents representing rights to receive,
purchase or subscribe for the same, or evidencing or representing any other
rights or interests therein, or any similar property or assets that Custodian
has the facilities to clear and to service.
1.14 "Securities Depository" means The Depository Trust Company and
(provided that Custodian has received a copy of a resolution of the Board of
Directors of the Fund, certified by an Officer, specifically approving the use
thereof as a depository for the Fund) any other clearing agency registered with
the Securities and Exchange Commission under Section 17A of the Securities
Exchange Act of 1934 (the "1934 Act"), which acts as a system for the central
handling and deposit of Securities where all Securities of any particular class
or series of an issuer deposited within the system are treated as fungible and
may be transferred or pledged by bookkeeping entry without physical delivery of
the Securities.
1.15 "Shares" means the shares into which the capital stock of the Fund is
divided.
1.16 "Written Instructions" means (a) written communications received by
Custodian and signed by two persons reasonably believed by Custodian to be
Authorized Persons, or (b) communications by telex or any other such system from
two persons reasonably believed by Custodian to be Authorized Persons, or (c)
communications between electro-mechanical or electronic devices.
ARTICLE II
APPOINTMENT OF CUSTODIAN
2.1 Appointment. The Fund hereby appoints Custodian as custodian of all
such Securities, cash and other assets as may be acceptable to Custodian and
from time to time delivered to it by the Fund or others for the account of the
Fund.
2.2 Acceptance. Custodian hereby accepts appointment as such custodian and
agrees to perform the duties thereof as hereinafter set forth.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
3.1 Segregation. All Securities and non-cash property of the Fund in the
possession of Custodian (other than Securities maintained by Custodian in a
Securities Depository or Book-Entry System) shall be physically segregated from
other Securities and non-cash property in the possession of Custodian and shall
be identified as belonging to the Fund.
3.2 Custody Account. (a) Custodian shall open and maintain in its trust
department a custody account in the name of the Fund, subject only to draft or
order of Custodian, in which Custodian shall enter and carry all Securities,
cash and other assets of the Fund which are delivered to Custodian and accepted
by it. Custodian shall not be under any duty or obligation to require the Fund
to deliver to it any Securities or funds owned by the Fund and shall have no
responsibility or liability for or on account of Securities or funds not so
delivered.
(b) If Custodian at any time fails to receive any of the documents referred
to in Section 3.5(a) below, then, until such time as it receives such document,
it shall not be obligated to receive any Securities of the Fund into the Custody
Account and shall be entitled to return to the Fund any Securities of the Fund
that it is holding.
(c) Custodian may, but shall not be obligated to, hold Securities that may
be held only in physical form.
(d) Custodian is authorized to disclose the name, address and securities
positions of the Fund to the issuers of such securities when requested by them
to do so.
3.3 Appointment of Agents. (a) Custodian may employ suitable agents, which
may include affiliates of Custodian, such as Bear, Stearns & Co. Inc. or Bear,
Stearns Securities Corp., both of which are registered broker-dealers. The
appointment of any agent pursuant to this Section 3.3(a) shall not relieve
Custodian of any of its obligations or liabilities under this Agreement.
However, no Book-Entry System, Securities Depository, Foreign Securities
Depository or other securities depository or clearing agency (whether foreign or
domestic) which it is or may become standard market practice to use for the
comparison and settlement of trades in securities shall be an agent or
sub-contractor of Custodian for purposes of this Section 3.3(a) or otherwise.
(b) In its discretion, Custodian may appoint, and at any time remove, any
domestic bank or trust company which is qualified to act as a custodian under
the 1940 Act as sub-custodian to hold Securities and cash of the Fund and to
carry out such other provisions of this Agreement as it may determine, and may
also open and maintain one or more banking accounts with such a bank or trust
company (any such accounts to be in the name of Custodian and subject only to
its draft or order), provided, however, that the appointment of any such agent
or opening and maintenance of any such accounts shall be at Custodian's expense
and shall not relieve Custodian of any of its obligations or liabilities under
this Agreement.
(c) Upon receipt of Written Instructions to do so and at the Fund's
expense, Custodian shall appoint as sub-custodian such domestic bank or trust
company as is named therein, provided that (i) such bank or trust company is
qualified to act as a custodian under the 1940 Act, and (ii) notwithstanding
anything to the contrary in Section 7.1 below or elsewhere in this Agreement,
Custodian shall have no greater liability to the Fund for the actions or
omissions of any such sub-custodian than any such sub-custodian has to
Custodian, and Custodian shall not be required to discharge any such liability
which may be imposed on it unless and until such sub-custodian has effectively
indemnified Custodian against it or has otherwise discharged its liability to
Custodian in full.
3.4 Delivery of Assets to Custodian. The Fund shall deliver to Custodian
the Fund's Securities, cash and other assets, which are acceptable to Custodian,
including (a) payments of income, payments of principal and capital
distributions received by the Fund with respect to such Securities, cash or
other assets owned by the Fund at any time during the term of this Agreement,
and (b) cash received by the Fund for the issuance, at any time during such
term, of Shares. Custodian shall not be responsible for such Securities, cash or
other assets until actually received by it.
3.5 Securities Depositories and Book-Entry Systems. Custodian may deposit
and/or maintain Securities of the Fund in a Securities Depository or in a
Book-Entry System, subject to the following provisions:
(a) Prior to a deposit of Securities of the Fund in any Securities
Depository or Book-Entry System, the Fund shall deliver to Custodian a
resolution of the Board of Directors of the Fund, certified by an Officer,
authorizing and instructing Custodian (and any sub-custodian appointed pursuant
to Section 3.3 above) on an on-going basis to deposit in such Securities
Depository or Book-Entry System all Securities eligible for deposit therein and
to make use of such Securities Depository or Book-Entry System to the extent
possible and practical in connection with its performance hereunder (or under
the applicable sub-custody agreement in the case of such sub-custodian),
including, without limitation, in connection with settlements of purchases and
sales of Securities, loans of Securities, and deliveries and returns of
collateral consisting of Securities.
(b) Securities of the Fund kept in a Book-Entry System or Securities
Depository shall be kept in an account ("Depository Account") of Custodian in
such Book-Entry System or Securities Depository which includes only assets held
by Custodian as a fiduciary, custodian or otherwise for customers.
(c) The records of Custodian with respect to Securities of the Fund
maintained in a Book-Entry System or Securities Depository shall at all times
identify such Securities as belonging to the Fund.
(d) If Securities purchased by the Fund are to be held in a Book-Entry
System or Securities Depository, Custodian shall pay for such Securities upon
(i) receipt of advice from the Book-Entry System or Securities Depository that
such Securities have been transferred to the Depository Account, and (ii) the
making of an entry on the records of Custodian to reflect such payment and
transfer for the account of the Fund. If Securities sold by the Fund are held in
a Book-Entry System or Securities Depository, Custodian shall transfer such
Securities upon (i) receipt of advice from the Book-Entry System or Securities
Depository that payment for such Securities has been transferred to the
Depository Account, and (ii) the making of an entry on the records of Custodian
to reflect such transfer and payment for the account of the Fund.
(e) Custodian shall provide the Fund with copies of any report obtained by
Custodian from a Book-Entry System or Securities Depository in which Securities
of the Fund are kept on the internal accounting controls and procedures for
safeguarding Securities deposited in such Book-Entry System or Securities
Depository.
(f) At its election, the Fund shall be subrogated to the rights of
Custodian with respect to any claim against a Book-Entry System or Securities
Depository or any other person for any loss or damage to the Fund arising from
the use of such Book-Entry System or Securities Depository, if and to the extent
that the Fund has not been made whole for any such loss or damage.
3.6 Disbursement of Moneys from the Custody Account. Upon receipt of Proper
Instructions, Custodian shall disburse moneys from the Custody Account, but only
in the following cases:
(a) For the purchase of Securities for the Fund but only (i) in the case of
Securities (other than options on Securities, futures contracts and options on
futures contracts), against the delivery to Custodian (or any sub-custodian
appointed pursuant to Section 3.3 above) of such Securities registered as
provided in Section 3.9 below or in proper form for transfer or, if the purchase
of such Securities is effected through a Book-Entry System or Securities
Depository, in accordance with the conditions set forth in Section 3.5 above;
(ii) in the case of options on Securities, against delivery to Custodian (or
such sub-custodian) of such receipts as are required by the customs prevailing
among dealers in such options; (iii) in the case of futures contracts and
options on futures contracts, against delivery to Custodian (or such
sub-custodian) of evidence of title thereto in favor of the Fund, the Custodian,
any such sub-custodian or any nominee referred to in Section 3.9 below; and (iv)
in the case of repurchase or reverse repurchase agreements entered into by the
Fund, against delivery of the purchased Securities either in certificate form or
through an entry crediting Custodian's account at a Book-Entry System or
Securities Depository with such Securities;
(b) In connection with the conversion, exchange or surrender, as set forth
in Section 3.7(f) below, of Securities owned by the Fund;
(c) For the payment of any dividends or capital gain distributions declared
by the Fund;
(d) In payment of the redemption price of Shares as provided in Article VI
below;
(e) For the payment of any expense or liability incurred by the Fund,
including but not limited to the following payments for the account of the Fund:
interest, taxes, administration, investment management, investment advisory,
accounting, auditing, transfer agent, custodian, trustee and legal fees; and
other operating expenses of the Fund; in all cases, whether or not such expenses
are to be in whole or in part capitalized or treated as deferred expenses;
(f) For transfer in accordance with the provisions of any agreement among
the Fund, Custodian and a broker-dealer, relating to compliance with rules of
The Options Clearing Corporation and of any registered national securities
exchange (or of any similar organization or organizations) regarding escrow or
other arrangements in connection with transactions by the Fund;
(g) For transfer in accordance with the provisions of any agreement among
the Fund, Custodian, and a futures commission merchant, 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 Fund;
(h) For the funding of any uncertificated time deposit or other
interest-bearing account with any banking institution (including Custodian), but
only if the payment instructions to Custodian detail specific Securities to be
acquired;
(i) For the purchase from a bank or other financial institution of loan
participations, but only if Custodian has in its possession a copy of the
agreement between the Fund and such bank or other financial institution with
respect to the purchase of such loan participations and the payment instructions
to Custodian detail specific assets to be acquired;
(j) For the purchase and sale of foreign currencies or options to purchase
and sell foreign currencies for spot and future delivery on behalf and for the
account of the Fund pursuant to contracts with such banks and other financial
institutions, including Custodian, any sub-custodian and any affiliate of
Custodian, as principal, as are approved and authorized by the Fund, but only if
the payment instructions to Custodian detail specific assets to be acquired;
(k) For transfer to a broker-dealer registered under the 1934 Act or in
accordance with the provisions of any agreement among the Fund, Custodian and
such a broker-dealer as margin for a short sale of Securities;
(l) For the payment of the amounts of dividends received with respect to
Securities sold short; and
(m) For any other proper purpose, but only upon receipt, in addition to
Proper Instructions, of a copy of a resolution of the Board of Directors,
certified by an Officer, specifying the amount and purpose of such payment,
declaring such purpose to be a proper purpose of the Fund, and naming the person
or persons to whom such payment is to be made.
3.7 Delivery of Securities from the Custody Account. Upon receipt of Proper
Instructions, Custodian shall release and deliver Securities of the Fund from
the Custody Account but only in the following cases:
(a) Upon the sale of Securities for the account of the Fund but, subject to
Section 5.3 below, only against receipt of payment therefor in cash, by
certified or cashiers' check or bank credit;
(b) In the case of a sale effected through a Book-Entry System or
Securities Depository, in accordance with the provisions of Section 3.5 above;
(c) To an offeror's depository agent in connection with tender or other
similar offers for Securities of the Fund; provided that, in any such case, the
cash or other consideration is to be delivered to Custodian;
(d) To the issuer thereof or its agent (i) for transfer into the name of
the Fund or any of the nominees referred to in Section 3.9 below, or (ii) for
exchange for a different number of certificates or other evidence representing
the same aggregate face amount or number of units; provided that, in any such
case, the new Securities are to be delivered to Custodian;
(e) To the broker selling Securities, for examination in accordance with
the "street delivery" custom;
(f) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the issuer of
such Securities, or pursuant to provisions for conversion contained in such
Securities, or pursuant to any deposit agreement, including surrender or receipt
of underlying Securities in connection with the issuance or cancellation of
depository receipts; provided that, in any such case, the new Securities and
cash, if any, are to be delivered to Custodian;
(g) Upon receipt of payment therefor pursuant to any repurchase agreement
entered into by the Fund;
(h) In the case of warrants, rights or similar Securities, upon the
exercise thereof, provided that, in any such case, the new Securities and cash,
if any, are to be delivered to Custodian;
(i) For delivery in connection with any loans of Securities pursuant to any
securities loan agreement entered into by the Fund, but only against receipt of
such collateral as is required under such securities loan agreement;
(j) For delivery as security in connection with any borrowings by the Fund
requiring a pledge of assets by the Fund, but only against receipt by Custodian
of the amounts borrowed;
(k) Pursuant to any authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of the Fund;
(l) For delivery in accordance with the provisions of any agreement among
the Fund, Custodian and a broker-dealer, relating to compliance with the rules
of The Options Clearing Corporation and of any registered national securities
exchange (or of any similar organization or organizations) regarding escrow or
other arrangements in connection with transactions by the Fund;
(m) For delivery in accordance with the provisions of any agreement among
the Fund, Custodian, and a futures commission merchant, 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 Fund;
(n) For delivery to a broker-dealer registered under the 1934 Act or in
accordance with the provisions of any agreement among the Fund, Custodian and
such a broker-dealer as margin for a short sale of Securities;
(o) For delivery (by a Foreign Sub-custodian or an agent of Custodian) to
the depository used by an issuer of American Depositary Receipts or
International Depositary Receipts (hereinafter collectively referred to as
"ADRs") for such Securities against a written receipt therefor adequately
describing such Securities and written evidence satisfactory to the Foreign
Sub-custodian or agent that the depository has acknowledged receipt of
instructions to issue with respect to such Securities ADRs in the name of the
Custodian, or a nominee of the Custodian, for delivery to the Custodian;
(p) To deliver ADRs to the issuer thereof against a written receipt
therefor adequately describing the ADR's delivered and written evidence
satisfactory to the Custodian that the issuer of the ADRs has acknowledged the
receipt of instructions to cause its depository to deliver the Securities
underlying such ADRs to a Foreign Sub-custodian or agent of Custodian; or
(q) For any other proper purpose, but only upon receipt, in addition to
Proper Instructions, of a copy of a resolution of the Board of Directors,
certified by an Officer, specifying the Securities to be delivered, setting
forth the purpose for which such delivery is to be made, declaring such purpose
to be a proper purpose of the Fund, and naming the person or persons to whom
delivery of such Securities is to be made.
3.8 Actions Not Requiring Proper Instructions. Unless otherwise instructed
by the Fund, Custodian shall with respect to all Securities held for the Fund:
(a) Subject to Section 8.4 below, collect on a timely basis all income and
other payments to which the Fund is entitled either by law or pursuant to custom
in the securities business;
(b) Subject to Section 8.4 below, collect on a timely basis the amount
payable upon or with respect to all Securities and other assets which may mature
or be called, redeemed, retired or otherwise become payable;
(c) Endorse for collection, in the name of the Fund, checks, drafts and
other negotiable instruments;
(d) Surrender interim receipts or Securities in temporary form for
Securities in definitive form;
(e) Execute, as custodian, any necessary declarations or certificates of
ownership under the federal income tax laws or the laws or regulations of any
other taxing authority now or hereafter in effect, and prepare and submit
reports to the Internal Revenue Service ("IRS") and to the Fund at such time, in
such manner and containing such information as is prescribed by the IRS;
(f) Hold for the Fund all rights and similar securities issued with respect
to Securities of the Fund; and
(g) In general, attend to all non-discretionary details in connection with
the sale, exchange, substitution, purchase, transfer and other dealings with
Securities and assets of the Fund.
3.9 Registration and Transfer of Securities. All Securities held for the
Fund that are issuable only in bearer form shall be held by Custodian in that
form, provided that any such Securities shall be held in a Book-Entry System if
eligible therefor. All other Securities held for the Fund may be registered in
the name of Custodian as agent, any sub-custodian appointed pursuant to Section
3.3 above, any Securities Depository, any Foreign Sub-custodian or Foreign
Securities Depository (in the case of Foreign Securities), or any nominee or
agent of any of them. The Fund shall furnish to Custodian appropriate
instruments to enable Custodian to hold or deliver in proper form for transfer,
or to register as in this Section 3.9 provided, any Securities delivered to
Custodian which are registered in the name of the Fund.
3.10 Records. (a) Custodian shall maintain complete and accurate records
with respect to Securities, cash or other property held for the Fund, including
(i) journals or other records of original entry containing an itemized daily
record in detail of all receipts and deliveries of Securities and all receipts
and disbursements of cash; (ii) ledgers (or other records) reflecting (A)
Securities in transfer, if any, (B) Securities in physical possession, (C)
monies and Securities borrowed and monies and Securities loaned (together with a
record of the collateral therefor and substitutions of such collateral), (D)
dividends and interest received, and (E) dividends receivable and interest
accrued; and (iii) cancelled checks and bank records related thereto. Custodian
shall keep such other books and records with respect to Securities, cash and
other property of the Fund which is held hereunder as the Fund may reasonably
request.
(b) All such books and records maintained by Custodian shall (i) be
maintained in a form acceptable to the Fund and in compliance with rules and
regulations of the Securities and Exchange Commission, (ii) be the property of
the Fund and at all times during the regular business hours of Custodian be made
available upon request for inspection by duly authorized officers, employees or
agents of the Fund and employees or agents of the Securities and Exchange
Commission, and (iii) if required to be maintained by Rule 31a-1 under the 1940
Act, be preserved for the periods prescribed in Rule 31a-2 under the 1940 Act.
3.11 Reports by Custodian. Custodian shall furnish the Fund with a daily
activity statement, including a summary of all transfers to or from the Custody
Account, on the day following such transfers. At least monthly and from time to
time, Custodian shall furnish the Fund with a detailed statement of the
Securities and moneys held for the Fund under this Agreement.
3.12 Other Reports by Custodian. Custodian shall provide the Fund with such
reports as the Fund may reasonably request from time to time on the internal
accounting controls and procedures for safeguarding Securities which are
employed by Custodian or any sub-custodian appointed pursuant to Section 3.3
above.
3.13 Proxies and Other Materials. Unless otherwise instructed by the Fund,
Custodian shall promptly deliver to the Fund (at the address set forth in
Article XV below) all notices of meetings, proxies and proxy materials which it
receives regarding Securities held in the Custody Account. Before delivering
them to the Fund, Custodian shall cause all proxies relating to such Securities
which are not registered in the name of the Fund, or a nominee thereof, to be
promptly executed by the registered holder of such Securities, without
indication of the manner in which such proxies are to be voted. Unless otherwise
instructed by the Fund, neither Custodian nor any of its agents shall exercise
any voting rights with respect to Securities held hereunder.
3.14 Information on Corporate Actions. Custodian shall promptly transmit to
the Fund (at the address set forth in Article XV below) all written information
received by Custodian from issuers of Securities held in the Custody Account.
With respect to tender or exchange offers for such Securities, Custodian shall
promptly transmit to the Fund all written information received by it from the
issuers of the Securities whose tender or exchange is sought and by the party
(or its agents) making the tender or exchange offer. If the Fund desires to take
action with respect to any tender offer, exchange offer or other similar
transaction, the Fund shall notify Custodian (a) in the case of Foreign
Securities, such number of Business Days prior to the date on which Custodian is
to take such action (which number of days is in the Custodian's sole discretion)
as will allow Custodian to take such action in the relevant local market in a
timely fashion, and (b) in the case of all other Securities, at least five
Business Days prior to the date on which Custodian is to take such action.
3.15 Co-operation. Custodian shall cooperate with and supply necessary
information to the entity or entities appointed by the Fund to keep the books of
account of the Fund and/or to compute the value of the assets of the Fund.
ARTICLE IV
DUTIES OF CUSTODIAN WITH
RESPECT TO PROPERTY OF
THE FUND HELD OUTSIDE THE UNITED STATES
4.1 Appointment of Foreign Sub-custodians. Custodian may appoint
sub-custodians pursuant to Section 3.3 hereof or Eligible Foreign Custodians in
accordance with Rule 17f-5 under the 1940 Act as Foreign Sub-custodians
hereunder for the Fund's Securities and other assets maintained outside the
United States. Upon receipt of Written Instructions from the Fund to do so, the
Custodian shall cease the employment of any Foreign Sub-custodian for
maintaining custody of the Fund's assets.
4.2 Assets to be Held. The Custodian shall limit the Securities and other
assets maintained in the custody of an Eligible Foreign Custodian to: (a)
Foreign Securities, and (b) cash and cash equivalents in such amounts as the
Fund may determine.
4.3 Foreign Securities Depositories. Custodian or any Foreign Sub-custodian
employed by it may maintain assets of the Fund in Foreign Securities
Depositories in accordance with Rule 17f-5 under the 1940 Act.
4.4 Agreements with Foreign Sub-custodians. Fund shall approve in writing
(a) the appointment of each Foreign Sub-custodian and the agreement pursuant to
which the Custodian employs such Foreign Sub-custodian and (b) for the
appointment of each Eligible Foreign Custodian as a Foreign Sub-custodian, the
country or countries in which such Foreign Sub-custodian is authorized to hold
Securities, cash and other property of the Fund.
4.5 Approved Foreign Sub-custodians. (a) Those Foreign Sub-custodians and
the countries where and the Foreign Securities Depositories through which they
or the Custodian may hold Securities, cash and other property of the Fund which
the Fund has approved to date are set forth on Exhibit D hereto. Exhibit D shall
be amended from time to time as Foreign Sub-custodians, countries and/or Foreign
Securities Depositories are changed, added or deleted. The Fund shall be
responsible for informing the Custodian sufficiently in advance of a proposed
investment which is to be held in a country not listed in Exhibit E in order to
allow the Fund to give the approval required by Section 4.4 hereof and for
Custodian to put the appropriate arrangements in place with a Foreign
Sub-custodian.
(b) If the Fund invests in a Security to be held pursuant to this Article
before the foregoing procedures have been completed, such Security may be held
by such agent as Custodian may select, and Custodian shall bear no liability to
Fund for the actions of such agent, except to the extent Custodian shall have
recovered from such agent for any damages caused to Fund by such agent.
4.6 Reports by Custodian. Custodian shall supply to the Fund from time to
time, as mutually agreed upon, reports in respect of the safekeeping of the
Securities and other assets of the Fund held by Foreign Sub-custodians,
including, but not limited to, advices or notifications of transfers of
Securities to or from the accounts maintained by Foreign Sub-custodians for the
Custodian on behalf of the Fund.
4.7 Transactions in Foreign Custody Account. (a) Upon receipt of Proper
Instructions given in any of the cases specified in Section 3.7 above, Custodian
shall cause the Foreign Sub- custodians to transfer, exchange or deliver Foreign
Securities owned by the Fund, subject to all local laws, regulations, customs,
procedures and practices applicable in the relevant local market; and
(b) Upon receipt of Proper Instructions given in any of the cases specified
in Section 3.6 above, Custodian shall cause the Foreign Sub-custodians to pay
out monies of the Fund, subject to all local laws, regulations, customs,
procedures and practices applicable in the relevant local market.
4.8 Liability of Foreign Sub-custodians. The agreement pursuant to which
the Custodian employs a Foreign Sub-custodian shall require such Foreign
Sub-custodian to exercise reasonable care in the performance of its duties and
shall hold such Foreign sub-custodian responsible for any direct loss or damage
arising out of any willful misfeasance, bad faith or negligence of such Foreign
Sub-custodian in the performance of its obligations under such agreement or out
of its reckless disregard of such obligations. At its election, the Fund shall
be subrogated to the rights of Custodian with respect to any claims against a
Foreign Sub-custodian as a consequence of any such loss or damage if and to the
extent that the Fund has not been made whole for any such loss or damage.
4.9 Liability of Custodian. Notwithstanding anything to the contrary in
Section 8.1 below or elsewhere in this Agreement, Custodian shall have no
greater liability to the Fund for the actions or omissions of any Foreign
Sub-custodian than any such Foreign Sub-custodian has to Custodian, and
Custodian shall not be required to discharge any such liability which may be
imposed on it unless and until such Foreign Sub-custodian has effectively
indemnified Custodian against it or has otherwise discharged its liability to
Custodian in full. Custodian shall have no liability for any loss or damage
resulting from acts or omissions of any Foreign Sub-custodian arising out of or
caused, directly or indirectly, by circumstances beyond such Foreign
Sub-custodian's reasonable control, including, without limitation, sovereign
risk, as described in Section 8.7, or "force majeure", as covered in Article X.
4.10 Monitoring Responsibilities. Upon the request of the Fund, Custodian
shall annually furnish to the Fund information concerning all Foreign
Sub-custodians hereunder which shall be similar in kind and scope to that
furnished to the Fund in connection with the initial approval by the Fund of the
agreements pursuant to which Custodian employs such Foreign Sub-custodians or as
otherwise required by Rule 17f-5 under the 1940 Act.
4.11 Tax Reclaims. Upon the written request of the Fund, Custodian shall
exercise, on behalf of the Fund, tax reclaim rights of Fund which arise in
connection with Foreign Securities in the Custody Account.
ARTICLE V
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
5.1 Purchase of Securities. Promptly upon each purchase of Securities for
the Fund, Written Instructions shall be delivered to Custodian, specifying (a)
the name of the issuer or writer of such Securities, and the title or other
description thereof, (b) the number of shares, principal amount (and accrued
interest, if any), or other units purchased, (c) the date of purchase and
settlement, (d) the purchase price per unit, (e) the total amount payable upon
such purchase, and (f) the name of the person to whom such amount is payable.
Custodian shall upon receipt of such Securities purchased by the Fund (or, if
the Securities are transferred by means of a private placement transaction, upon
the receipt of such Securities or payment instructions to Custodian which detail
specific Securities to be acquired) pay out of the moneys held for the account
of the Fund the total amount specified in such Written Instructions to the
person named therein. Custodian shall not be under any obligation to pay out
moneys to cover the cost of a purchase of Securities or other assets for the
Fund if there is insufficient cash available in the Custody Account.
5.2 Sale of Securities. Promptly upon each sale of Securities by the Fund,
Written Instructions shall be delivered to Custodian, specifying (a) the name of
the issuer or writer of such Securities, and the title or other description
thereof, (b) the number of shares, principal amount (and accrued interest, if
any), or other units sold, (c) the date of sale and settlement, (d) the sale
price per unit, (e) the total amount payable upon such sale, and (f) the person
to whom such Securities are to be delivered. Upon receipt of the total amount
payable to the Fund as specified in such Written Instructions, Custodian shall
deliver such Securities to the person specified in such Written Instructions.
Subject to the foregoing, Custodian may accept payment in such form as shall be
satisfactory to it, and may deliver Securities and arrange for payment in
accordance with the customs prevailing among dealers in Securities.
5.3 Delivery of Securities Sold. Notwithstanding Section 5.2 above or any
other provision of this Agreement and subject, in the case of Foreign
Securities, to all local laws, regulations, customs, procedures and practices
applicable in the relevant local market, Custodian, when instructed to deliver
Securities against payment, shall be entitled, but only if in accordance with
generally accepted market practice, to deliver such Securities prior to actual
receipt of final payment therefor and, exclusively in the case of Securities in
physical form, to deliver such Securities prior to receipt of payment. In any
such case, the Fund shall bear the risk that final payment for such Securities
may not be made or that such Securities may be returned or otherwise held or
disposed of by or through the person to whom they were delivered, and Custodian
shall have no liability for any of the foregoing.
5.4 Payment for Securities Sold, etc. In its sole discretion and from time
to time, Custodian may credit the Custody Account, prior to actual receipt of
final payment thereof, with (a) proceeds from the sale of Securities which it
has been instructed to deliver against payment, (b) proceeds from the redemption
of Securities or other assets of the Fund, and (c) income from cash, Securities
or other assets of the Fund. Any such credit shall be conditional upon actual
receipt by Custodian of final payment and may be reversed if final payment is
not actually received in full. Custodian may, in its sole discretion and from
time to time, permit the Fund to use funds so credited to the Custody Account in
anticipation of actual receipt of final payment. Any such funds shall be
repayable immediately upon demand made by Custodian at any time prior to the
actual receipt of all final payments in anticipation of which funds were
credited to the Custody Account.
5.5 Final Payment. For purposes of this Agreement, "final payment" means
payment in funds which are (or have become) immediately available, under
applicable law are irreversible, and are not subject to any security interest,
levy, lien or other encumbrance.
ARTICLE VI
REDEMPTION OF FUND SHARES
6.1 Transfer of Funds. From such funds as may be available for the purpose
in the Custody Account, and upon receipt of Proper Instructions specifying that
the funds are required to redeem Shares on account of the Fund, Custodian shall
wire each amount specified in such Proper Instructions to or through such bank
as the Fund may designate therein with respect to such amount.
6.2 No Duty Regarding Paying Banks. Custodian shall not be responsible for
the payment or distribution by any bank designated in Proper Instructions given
pursuant to Section 6.1 above of any amount paid by Custodian to such bank in
accordance with such Proper Instructions.
ARTICLE VII
SEGREGATED ACCOUNTS
Upon receipt of Proper Instructions, Custodian shall establish and maintain
a segregated account or accounts for and on behalf of the Fund, into which
account or accounts may be transferred cash and/or Securities, including
Securities maintained in a Depository Account:
(a) in accordance with the provisions of any agreement among the Fund,
Custodian and a broker-dealer (or any futures commission merchant), relating to
compliance with the rules of The Options Clearing Corporation or of any
registered national securities exchange (or the Commodity Futures Trading
Commission or any registered contract market), or of any similar organization or
organizations, regarding escrow or other arrangements in connection with
transactions by the Fund,
(b) for purposes of segregating cash or Securities in connection with
securities options purchased or written by the Fund or in connection with
financial futures contracts (or options thereon) purchased or sold by the Fund,
(c) which constitute collateral for loans of Securities made by the Fund,
(d) for purposes of compliance by the Fund with requirements under the 1940
Act for the maintenance of segregated accounts by registered investment
companies in connection with reverse repurchase agreements, when-issued, delayed
delivery and firm commitment transactions, and short sales of securities, and
(e) for other proper purposes, but only upon receipt of, in addition to
Proper Instructions, a copy of a resolution of the Board of Directors, certified
by an Officer, setting forth the purpose or purposes of such segregated account
and declaring such purposes to be proper purposes of the Fund.
ARTICLE VIII
CONCERNING THE CUSTODIAN
8.1 Standard of Care. Custodian shall be held to the exercise of reasonable
care in carrying out its obligations under this Agreement, and shall be without
liability to the Fund for any loss, damage, cost, expense (including attorneys'
fees and disbursements), liability or claim which does not arise from willful
misfeasance, bad faith or negligence on the part of Custodian or reckless
disregard by Custodian of its obligations under this Agreement. Custodian shall
be entitled to rely on and may act upon advice of counsel on all matters, and
shall be without liability for any action reasonably taken or omitted pursuant
to such advice. In no event shall Custodian be liable for special or
consequential damages or be liable in any manner whatsoever for any action taken
or omitted upon instructions from the Fund or any agent of the Fund. Custodian
shall not be under any obligation at any time to ascertain whether the Fund is
in compliance with the 1940 Act, the regulations thereunder, the provisions of
its charter documents or by-laws, or its investment objectives, policies and
limitations as in effect from time to time.
8.2 Actual Collection Required. Custodian shall not be liable for, or
considered to be the custodian of, any cash belonging to the Fund or any money
represented by a check, draft or other instrument for the payment of money,
until Custodian or its agents actually receive such cash or collect on such
instrument.
8.3 No Responsibility for Title, etc. So long as and to the extent that it
is in the exercise of reasonable care, Custodian shall not be responsible for
the title, validity or genuineness of any property or evidence of title thereto
received or delivered by it or its agents.
8.4 Limitation on Duty to Collect. Custodian shall promptly notify the Fund
whenever any money or property due and payable from or on account of any
Securities held hereunder for the Fund is not timely received by it. Custodian
shall not, however, be required to enforce collection, by legal means or
otherwise, of any such money or other property not paid when due, but shall
receive the proceeds of such collections as may be effected by it or its agents
in the ordinary course of Custodian's custody and safekeeping business or of the
custody and safekeeping business of such agents.
8.5 Express Duties Only. Custodian shall have no duties or obligations
whatsoever except such duties and obligations as are specifically set forth in
this Agreement, and no covenant or obligation shall be implied in this Agreement
against Custodian. Custodian shall have no discretion whatsoever with respect to
the management, disposition or investment of the Custody Account and is not a
fiduciary to the Fund.
8.6 Compliance with Laws. Custodian undertakes to comply with all
applicable requirements of the Securities Act of 1933, the Securities Exchange
Act of 1934, the 1940 Act and the Commodities Exchange Act and any laws, rules
and regulations of governmental authorities having jurisdiction with respect to
the duties to be performed by Custodian hereunder. Except as specifically set
forth herein, Custodian assumes no responsibility for such compliance by the
Fund.
8.7 No Liability for Sovereign Risk. Custodian shall not be liable for any
loss involving any Securities, currencies, deposits or other property of the
Fund, whether maintained by it, a Foreign Sub-custodian, a Foreign Securities
Depository, an agent of Custodian or a Foreign Sub-custodian or a bank, or for
any loss arising from a foreign currency transaction or contract, where the loss
results from a sovereign risk or where the entity maintaining such Securities,
currencies, deposits or other property of the Fund, whether Custodian, a Foreign
Sub-custodian, a Foreign Securities Depository, an agent of Custodian or a
Foreign Sub- custodian or a bank, has exercised reasonable care maintaining such
property or in connection with the transaction involving such property. For
purposes of this Agreement, "sovereign risk" shall mean nationalization,
expropriation, devaluation, revaluation, confiscation, seizure, cancellation,
destruction or similar action by any governmental authority, de facto or de
jure; or enactment, promulgation, imposition or enforcement by any such
governmental authority of currency restrictions, exchange controls, taxes,
levies or other charges affecting the Fund's property; or acts of war,
terrorism, insurrection or revolution; or any other act or event beyond the
control of the Foreign Sub-custodian, the Foreign Securities Depository or the
agent of any of them.
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification. The Fund shall indemnify and hold harmless Custodian,
any sub-custodian and any nominee of Custodian or any sub-custodian, from and
against any loss, damages, cost, expense (including attorneys' fees and
disbursements), liability (including, without limitation, liability arising
under the Securities Act of 1933, the 1934 Act, the 1940 Act, and any federal,
state or foreign securities and/or banking laws) or claim arising directly or
indirectly (a) from the fact that Securities are registered in the name of any
such nominee, or (b) from any action or inaction by Custodian or such
sub-custodian or other agent (i) at the request or direction of or in reliance
on the advice of the Fund or any of its agents, or (ii) upon Proper
Instructions, or (c) generally, from the performance of its obligations under
this Agreement, provided that Custodian, any sub-custodian or any nominee of
either of them shall not be indemnified and held harmless from and against any
such loss, damage, cost, expense, liability or claim arising from Custodian's
willful misfeasance, bad faith, negligence or reckless disregard of its
obligations under this Agreement or, in the case of any sub-custodian or its
nominee, from such sub-custodian's willful misfeasance, bad faith, negligence or
reckless disregard of its obligations under the Agreement under which it is
acting.
9.2 Indemnity to be Provided. If the Fund requests Custodian to take any
action with respect to Securities, which may, in the opinion of Custodian,
result in Custodian or its nominee becoming liable for the payment of money or
incurring liability of some other form, Custodian shall not be required to take
such action until the Fund shall have provided indemnity therefor to Custodian
in an amount and form satisfactory to Custodian.
9.3 Security. As security for the payment of any present or future
obligation or liability of any kind which the Fund may have to Custodian with
respect to or in connection with the Custody Account or this Agreement, the Fund
hereby pledges to Custodian all cash, Securities and other property of every
kind which is in the Custody Account or otherwise held for the Fund pursuant to
this Agreement, and hereby grants to Custodian a lien, right of set-off and
continuing security interest in such cash, Securities and other property.
ARTICLE X
FORCE MAJEURE
Neither Custodian nor the Fund shall be liable for any failure or delay in
performance of its obligations under this Agreement arising out of or caused,
directly or indirectly, by circumstances beyond its reasonable control,
including, without limitation, acts of God; earthquakes; fires; floods; wars;
civil or military disturbances; sabotage; strikes; epidemics; riots; power
failures; computer failure and any such circumstances beyond its reasonable
control as may cause interruption, loss or malfunction of utility,
transportation, computer (hardware or software) or telephone communication
service; accidents; labor disputes; acts of civil or military authority;
governmental actions; or inability to obtain labor, material, equipment or
transportation.
ARTICLE XI
REPRESENTATIONS AND WARRANTIES
Each of the Fund and Custodian represents and warrants for itself that (a)
it has all necessary power and authority to perform its obligations hereunder,
(b) the execution and delivery by it of this Agreement, and the performance by
it of its obligations under this Agreement, have been duly authorized by all
necessary action and will not violate any law, regulation, charter, by-law, or
other instrument, restriction or provision applicable to it or by which it is
bound, and (c) this Agreement constitutes a legal, valid and binding obligation
of it, enforceable against it in accordance with its terms.
ARTICLE XII
COMPENSATION OF CUSTODIAN
The Fund shall pay Custodian such fees and charges as are set forth in the
fee schedule annexed hereto as Exhibit C, as such fee schedule may from time to
time be revised by Custodian upon 14 days' prior written notice to the Fund. Any
annual fee or other charges payable by the Fund shall be paid monthly by
automatic deduction from the Custody Account. Expenses incurred by Custodian in
the performance of its services hereunder, and all other proper charges and
disbursements of the Custody Account, shall be charged to the Custody Account by
Custodian and paid therefrom.
ARTICLE XIII
TAXES
Any and all taxes, including any interest and penalties with respect
thereto, which may be levied or assessed under present or future laws or in
respect of the Custody Account or any income thereof shall be charged to the
Custody Account by Custodian and paid therefrom.
ARTICLE XIV
AUTHORIZED PERSONS
14.1 Authorized Persons. Custodian may rely upon and act in accordance with
any notice, confirmation, instruction or other communication received by it from
the Fund which is reasonably believed by Custodian to have been given or signed
on behalf of the Fund by one of the Authorized Persons designated by the Fund in
Exhibit A hereto, as it may from time to time be revised. The Fund may revise
Exhibit A hereto at any time by notice in writing to Custodian given in
accordance with Article XV below, but no revision of Exhibit A hereto shall be
effective until Custodian actually receives such notice.
14.2 Investment Advisers. Custodian may also act in accordance with any
Written or Oral Instructions which are reasonably believed by Custodian to have
been given or signed by one of the persons designated from time to time by any
of the investment advisers of the Fund specified in Exhibit B hereto (if any) as
it may from time to time be revised. The Fund may revise Exhibit B hereto at any
time by notice in writing to Custodian given in accordance with Article XV
below, and each investment adviser specified in Exhibit B hereto (if any) may at
any time by like notice designate an Authorized Person or remove an Authorized
Person previously designated by it, but no revision of Exhibit B hereto (if any)
and no designation or removal by such investment adviser shall be effective
until Custodian actually receives such notice.
14.3 Oral Instructions. Custodian may rely upon and act in accordance with
Oral Instructions (as defined in Section 1.11 above). If Written Instructions
confirming Oral Instructions are not received by Custodian prior to a
transaction, it shall in no way affect the validity of the transaction
authorized by such Oral Instructions or the authorization of the Fund to effect
such transaction. Custodian shall incur no liability to the Fund in acting upon
Oral Instructions (as defined in Section 1.11 above). To the extent such Oral
Instructions vary from any confirming Written Instructions, Custodian shall
advise the Fund of such variance but unless confirming Written Instructions are
timely received, such Oral Instructions will govern. Either Custodian or Fund
may electronically record any instructions given by telephone and any other
telephone discussions with respect to the account of the Fund.
ARTICLE XV
NOTICES
Unless otherwise specified herein, all demands, notices, instructions, and
other communications to be given hereunder shall be sent, delivered or given to
the recipient at the address set forth after its name hereinbelow:
If to the Fund:
S&P STARS Fund
245 Park Avenue
New York, New York 10167
Attention: Frank J. Maresca
Telephone: (212) 272-2093
Facsimile: (212) 272-3098
If to Custodian:
Custodial Trust Company
101 Carnegie Center
Princeton, New Jersey 08540-6231
Attention: Vice President - Trust Operations
Telephone: (609) 951-2320
Facsimile: (609) 951-2327
or at such other address as either party shall have provided to the other
by notice given in accordance with this Article XV. Writing shall include
transmissions by or through teletype, facsimile, central processing unit
connection, on-line terminal and magnetic tape.
ARTICLE XVI
TERMINATION
Either party hereto may terminate this Agreement by giving to the other
party a notice in writing specifying the date of such termination, which shall
be not less than sixty (60) days after the date of the giving of such notice.
Upon the date set forth in such notice this Agreement shall terminate, and
Custodian shall, upon receipt of a notice of acceptance by the successor
custodian, on that date (a) deliver directly to the successor custodian or its
agents all Securities (other than Securities held in a Book-Entry System,
Securities Depository or Foreign Securities Depository) and cash then owned by
the Fund and held by Custodian as custodian, and (b) transfer any Securities
held in a Book-Entry System, Securities Depository or Foreign Securities
Depository to an account of or for the benefit of the Fund, provided that the
Fund shall have paid to Custodian all fees, expenses and other amounts to the
payment or reimbursement of which it shall then be entitled.
ARTICLE XVII
MISCELLANEOUS
17.1 Business Days. Nothing contained in this Agreement shall require
Custodian to perform any function or duties on a day other than a Business Day.
17.2 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to the
conflict of law principles thereof.
17.3 References to Custodian. The Fund shall not circulate any printed
matter which contains any reference to Custodian without the prior written
approval of Custodian, excepting printed matter contained in the prospectus or
statement of additional information for the Fund and such other printed matter
as merely identifies Custodian as custodian for the Fund. The Fund shall submit
printed matter requiring approval to Custodian in draft form, allowing
sufficient time for review by Custodian and its counsel prior to any deadline
for printing.
17.4 No Waiver. No failure by either party hereto to exercise, and no delay
by such party in exercising, any right hereunder shall operate as a waiver
thereof. The exercise by either party hereto of any right hereunder shall not
preclude the exercise of any other right, and the remedies provided herein are
cumulative and not exclusive of any remedies provided at law or in equity.
17.5 Amendments. This Agreement cannot be changed orally and no amendment
to this Agreement shall be effective unless evidenced by an instrument in
writing executed by the parties hereto.
17.6 Counterparts. This Agreement may be executed in one or more
counterparts, and by the parties hereto on separate counterparts, each of which
shall be deemed an original but all of which together shall constitute but one
and the same instrument.
17.7 Severability. If any provision of this Agreement shall be invalid,
illegal or unenforceable in any respect under any applicable law, the validity,
legality and enforceability of the remaining provisions shall not be affected or
impaired thereby.
17.8 Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns; provided, however, that this Agreement shall not be assignable by
either party hereto without the written consent of the other party. Any
purported assignment in violation of this Section 17.8 shall be void.
17.9 Headings. The headings of sections in this Agreement are for
convenience of reference only and shall not affect the meaning or construction
of any provision of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and on its behalf by its representative thereunto duly
authorized, all as of the day and year first above written.
S&P STARS FUND CUSTODIAL TRUST COMPANY
By /s/Frank J. Maresca By /s/Ronald D. Watson
Authorized Officer Authorized Officer
<PAGE>
EXHIBIT A
AUTHORIZED PERSONS WITH ACCESS TO INVESTMENTS*
Set forth below are the names of the persons, whose specimen signatures are
on file with the Custodian, authorized by the Board of Trustees of the S&P STARS
Fund to have access to the S&P STARS Master Series' (the "Fund") investments.
Name
Robert S. Reitzes
Gayle M. Sprute
Barry Nix
James Fergus McKeon
- ---------------------
*Nothing herein shall prohibit any person designated as an Authorized Person
from giving Oral Instructions or Written Instructions to the Custodian, so long
as it does not result in delivery of or access to securities and similar
investments of the Fund by such person.
<PAGE>
EXHIBIT B
INVESTMENT ADVISERS
Bear Stearns Funds Management Inc.
<PAGE>
EXHIBIT C
CUSTODY FEES AND TRANSACTION CHARGES
Domestic Fees. The Fund shall pay Custodian the following fees and charges
for assets in the United States ("Domestic Assets") and transactions in the
United States, all such fees and charges to be payable monthly:
(1) an annual fee of the greater of 0.015% (one and one-half basis points)
per annum of the value of the Domestic Assets in the Custody Account or $5,000,
such fee to be payable monthly based upon the total market value of such
Domestic Assets as determined on the last Business Day of the month for which
such fee is charged;
(2) a transaction charge of $18 for each buy, sell or redemption
transaction executed in the Custody Account with respect to such Domestic Assets
as are book-entry Securities (but not for any such buy or sell in a repurchase
transaction representing a cash sweep investment for the Fund's account or the
investment by the Fund of collateral for a loan of Securities);
(3) a transaction charge of $50 for each receipt or delivery into or from
the Custody Account of such Domestic Assets as are Securities in physical form;
(4) a transaction charge for each repurchase transaction in the Custody
Account which represents a cash sweep investment for the Fund's account,
computed at a rate of 0.10% (ten basis points) per annum on the amount of the
purchase price paid or received by the Fund in such repurchase transaction;
(5) a charge of $10 for each funds transfer; and
(6) a service charge for each holding of Domestic Assets consisting of
Securities or other property sold by way of private placement or in such other
manner as to require services by Custodian which in the reasonable judgment of
Custodian are materially in excess of those ordinarily required for the holding
of publicly traded Securities in the United States.
International Fees. The Fund shall pay Custodian fees for assets outside
the United States ("Foreign Assets") and transaction charges and other charges
(including, without limitation, charges for funds transfers, tax reclaims, and
foreign exchange services) outside the United States, all such fees and charges
to be payable monthly, according to a schedule of such fees and charges specific
to each country in which Foreign Assets are held, such schedule to be provided
from time to time upon request.
Fees shall be based upon the total market value of the applicable Foreign
Assets as determined on the last Business Day of the month for which such fees
are charged.
<PAGE>
EXHIBIT D
APPROVED FOREIGN SUB-CUSTODIANS
Foreign Sub-custodian Country(ies) Securities Depositories
(See Attached)
<PAGE>
CITIBANK, N.A.
SEC RULE 17f-5 INFORMATION PACKAGE
August 1994
SECTION 2: OVERVIEW OF FOREIGN SUBCUSTODIANS & DEPOSITORIES
<TABLE>
<CAPTION>
SECTION 2:
OVERVIEW OF CITIBANK'S
FOREIGN SUBCUSTODIAN AND
DEPOSITORY ARRANGEMENTS Colombia: Cititrust Colombia S.A.
Carrera 9A, No. 99-02,
Bogota, Colombia
2-01.0 Subcustodian Network
<S> <C> <C> <C>
Argentina: Citibank, N.A. (Argentina) Denmark: Den Danske Bank
Bartolome Mitre 502/30 2-12 Holmens Kanal
1036 Buenos Aires, Argentina DK-1092 Copenhagen K.
Denmark
Australia: Citicorp Nominees Pty. Ltd. Finland: Kansallis-Osake-Pankki
101 Collins Street Aleksanterinkatu 42
Melbourne, VIC 3000 Australia 00100 Helsinki, Finland
Austria: Citibank (Austria) A.G. France: Citibank S.A. (France)
Postfach 90 Cedex 36
Lothringerstrasse 7 92073 Paris la Defense, France
A-1015 Vienna, Austria
Belgium: Generale Bank Banque Paribas
Montagne du Parc 3 3 Rue D'Antim
1000 Brussels, Belgium 75002 Paris, France
Brazil: Citibank, N.A. (Brazil) Germany: Citibank Aktiengesellschaft
Avenida Paulista 1111 Neue Mainzer Str. 75,
Sao Paulo, Brazil 60311, Frankfurt/Main,
Germany
Canada: Citibank Canada Greece: Citibank, N.A. (Greece)
123 Front Street West Athens Branch
Toronto, Ontario Othonos 8
M5J2M3, Canada Athens 10557, Greece
Chile: Citibank, N.A. (Chile) Hong Kong: Citibank, N.A. (Hong Kong)
Ahumada 40 Citicorp Tower
Santiago, Chile Citicorp Plaza
3 Garden Road
Central, Hong Kong
China: Citibank, N.A. (Hong Kong) Hungary: Citibank Budapest Rt.
c/o Citibank, N.A., 1052 Budapest V19-21.
Hong Kong, Citicorp Tower, Vaci Utca
Citicorp Plaza, 3 Garden Road, Hungary
Central, Hong Kong
India: Citibank, N.A. (India) New Zealand: Citibank Nominees (New
Sakhar Bhavan Zealand) Ltd.
230 Backbay Reclamation 23 Customs Street East
Nariman Point Auckland 1, New Zealand
Bombay 400 021
Indonesia: Citibank, N.A. (Jakarta)
Jalan Jend. Sudirman No. 1 Norway: Christiania Bank
Jakarta 12910, Indonesia P.O. Box 1166 Sentrum
0107 Oslo 1, Norway
Ireland: Citibank, N.A. (Ireland)
IFSC House, Custom House Paskistan: Citibank, N.A. (Pakistan)
Quay, Dublin 2 P.O. Box 4889
Ireland 11 Chundrigar Road
Karachi 74200
Italy: Citibank, N.A. (Italy) Pakistan
Foro Buonaparte N. 16
Casella Postale 10932
20121 Milan, Italy
Japan: Citibank, N.A. (Japan) Peru: Citibank, N.A. (Lima)
Citicorp Center, Av. Camino Real 456,
2-314 Higashi Shinagawa, Torre Real 5t 0 Piso,
Shinagawa - ku, Lima 27
Tokyo, Japan Peru
Jordan: Citibank, N.A. (Jordan) Philippines: Citibank, N.A. (Philippines)
3rd Circle Citibank Center
Jordan Insurance Building 8741 Paseo de Roxas
Prince Mohammad Street Makati Metro
Amman, Jordan Manila, Philippines
Korea: Citibank, N.A. (Korea) Poland: Citibank Poland S.A.
89-29 Shinmun-Ro, Sentorska 12,
Chongro-ku 00-082 Warsaw,
Seoul, Korea Poland
Luxembourg: Cedel S.A. Portugal: Citibank Portugal S.A.
67 Boulevard Rua Barat, Salgueiro 30,
Grande-Duchesse Charlotte 4th floor, 1200 Lisbon,
L-1010, Luxembourg Portugal
Malaysia: Citibank Berhad Puerto Rico: Citibank, N.A.
28-30 Medan Pasar 252 Ponce De Leon Avenue
50050 Kuala Lumpur, Malaysia San Juan, Puerto Rico 00936
Mexico: Citibank, N.A. (Mexico) Singapore: Citibank, N.A. (Singapore)
Paseo de la Reforma 390 UIC Building #01-00
Mexico City DF, 06695 Mexico 5 Shenton Way
Singapore 0106
Netherlands: Citibank, N.A. (Netherlands)
"Europlaza", South Africa: First National Bank
Hoogoorddreef 54 B, Mezzanine floor,
1101 BE Amsterdam z.o., 3 First Place,
The Netherlands Post Box 7713
Johannesburg, 2000
South Africa
</TABLE>
Spain: Citibank, N.A. (Spain)
Jose Ortega Y Gasset 29
28006 Madrid, Spain
Sri Lanka: Citibank, N.A. (Sri Lanka)
67 Dharmapala Mawatha
P.O. Box 888
Colombo 7, Sri Lanka
Sweden: Skandinaviska Enskilda Banken
Sergels Torg 2
Stockholm, Sweden
Switzerland: Citibank (Switzerland)
Bahnhofstrass 63,
Post Office Box 24
8021 Zurich, Switzerland
Taiwan: Citibank, N.A. (Taiwan)
Taipei Branch
No. 52 Ming Sheng East Road
Sec. 4
Taipei, Taiwan
Thailand: Citibank, N.A. (Thailand)
127 South Sathom Road
Bangkok 10120, Thailand
Turkey: Citibank, N.A. (Turkey)
Buyukedere Caddesi,
No. 100, Eseutepe 80280
Istanbul, Turkey
United Kingdom: Citibank, N.A.
25 Molesworth St,
Lewisham, London SE 13 7EX
United Kingdom
The First National Bank of
Chicago
27 Leadenhall Street
London EC3A 1AA, England
Uruguay: Citibank, N.A. (Uruguay)
Cerrito 455
P.O. Box 690
Montevideo
Uruguay
Venezuela: Citibank, N.A. (Caracas)
Carmelitas a Altagracia
Edificio Citibank
Caracas 1010, Venezuela
<TABLE>
<CAPTION>
2-01.1 Status and Shareholders' Equity
Country Subcustodian Status Shareholders'
Equity
<S> <C> <C> <C>
Argentina Citibank, N.A. Branch NA
Australia Citicorp Nominees Pty. Ltd. Subsidiary SEC Exemption
Austria Citibank (Austria) A.G. Subsidiary SEC Exemption
Belgium Generale Bank Correspondent US$ 2,260 MM
Brazil Citibank, N.A. Branch NA
Canada Citibank Canada Subsidiary US$ 299.9 MM
Chile Citibank, N.A. Branch NA
China Citibank, N.A. Branch NA
Colombia Cititrust Colombia S.A. Subsidiary SEC Exemption
Sociedad Fiduciary
Denmark Den Danske Bank Correspondent US$ 2,975 MM
Finland Kansallis-Osake-Pankki Correspondent US$ 1,325 MM
France Citibank S.A. Subsidiary SEC Exemption
France Banque Paribas Correspondent US$ 2,998 MM
Germany Citibank Aktiengesellschaft Subsidiary US$ 298 MM
Greece Citibank, N.A. Branch NA
Hong Kong Citibank, N.A. Branch NA
Hungary Citibank Budapest Rt. Subsidiary SEC Exemption
India Citibank, N.A. Branch NA
Indonesia Citibank, N.A. Branch NA
Ireland Citibank, N.A. Branch NA
Italy Citibank, N.A. Branch NA
Japan Citibank, N.A. Branch NA
Jordan Citibank, N.A. Branch NA
Korea Citibank, N.A. Branch NA
Luxembourg Cedel S.A. Depository NA
Malaysia Citibank Berhad Subsidiary US$ 145MM
Mexico Citibank, N.A. Branch NA
Netherlands Citibank, N.A. Branch NA
New Zealand Citibank Nominees (NZ) Ltd. Subsidiary SEC Exemption
Norway Christiania Bank Correspondent US$ 512MM
Pakistan Citibank, N.A. Branch NA
Peru Citibank, N.A. Branch NA
Philippines Citibank, N.A. Branch NA
Poland Citibank Poland S.A. Subsidiary SEC Exemption
Portugal Citibank Portugal S.A. Subsidiary SEC Exemption
Singapore Citibank, N.A. Branch NA
South Africa First National Bank of Southern Africa Ltd. Correspondent US$ 620MM
Spain Citibank, N.A. Branch NA
Sri Lanka Citibank, N.A. Branch NA
Sweden Skandinaviska Enskilda Banken Correspondent US$ 669MM
Switzerland Citibank (Switzerland) Affiliate US$ 198MM
Taiwan Citibank, N.A. Branch NA
Thailand Citibank, N.A. Branch NA
Turkey Citibank, N.A. Branch NA
U.K. Citibank, N.A. Branch NA
Uruguay Citibank, N.A. Branch NA
Venezuela Citibank, N.A. Branch NA
</TABLE>
<PAGE>
2-02.0 Depositories
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Argentina: Caja de Valores ("CDV") Finland: Central Share Registry
The Helsinki Money Market Center
Australia: The Reserve Bank Information France: Societe Interprofessionnelle
and Transfer System ("RITS") pour la Compensation de
Valeurs Mobilieres
Austraclear ("SICOVAM")
Austria: Wertpapiersammelbank Banque de France
bei der Oesterreichische
Kontrollbank ("OEKB/WSB") Germany: Deutscher Kassenverein A.G.
("DKV")
Belgium: Caisse Interprofessionelle
de Depots et de Virements Greece: Central Securities Depository,
de Titres S.A. ("CIK") S.A. ("CSD")
Banque Nationale Hong Kong: Central Clearing and
de Belgique ("BNB") Settlement System
("CCASS")
Brazil: BOVESPA's Registered
Shares Fungible Custody Hungary: The Central Depository and
("BOVESPA") Clearing House ("CDCH")
Canada: The Canadian Depository for Ireland: Gilt Settlement Office ("GSO")
Securities Limited ("CDS")
Italy: Monte Titoli Instituto per la
China: The Shanghai Securities Custodia e l'Amministrazione
Central Clearing and Accentrata di Valori Mibiliar
Registration Corporation ("Monte Titoli")
("SSCCRC")
The Bank of Italy
The Shenzhen Securities
Registrars Co. Ltd. - registrar Japan: Japan Securities Depository
for three banks forming a Center ("JASDEC")
decentralized depository
structure The Bank of Japan ("BOJ")
Denmark: Vaerdipapircentralen ("VP") Korea: The Korea Securities
Depository ("KSD")
</TABLE>
<PAGE>
Luxembourg: CEDEL, S.A.
Malaysia: Malaysian Central
Depository Sdn. Bhd.
("MCD")
Mexico: Instituto para el Deposito de
Valores ("S.D. Indeval")
Netherlands: Nederlands Centraal Instituut
voor Giraal Effectenverkeer
B.V. ("Necigef")
New Zealand: Austraclear
Norway: The Norwegian Registry of
Securities -
Verdipapirsentralen ("VPS")
Peru: Caja de Valores ("CAVAL")
Poland: The National Depository of Securities
(Krajowy Depozyt Papierow Wartosciowych)
Portugal: Central de Registo e Valores Mobiliarios
Singapore: Central Depository (PTE) Ltd.
South Africa: The Central Depository (Pty) Ltd.
Spain: Servico de Compensacion y
Liquidacion de Valores ("SCLV")
Sri Lanka: Central Depository System (Pvt) Limited
Sweden: Vardepapperscentralen VPC AB ("VPC")
Switzerland: Schwerzerische Effekten-Giro AG ("SEGA")
Taiwan: Taiwan Securities Central
Depository Co., Ltd. ("TSCD")
Thailand: Share Depository Center ("SDC")
Turkey: Istanbul Stock Exchange Settlement
and Custody Company Inc.
United
Kingdom: Central Gilts Office ("CGO")
<PAGE>
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
GLOBAL CUSTODY NETWORK
<TABLE>
<CAPTION>
START DEPOSITORY in addition to the Central Bank,
COUNTRY DATE SUBCUSTODIAN if applicable.
<S> <C> <C> <C>
Argentina 1991 Morgan Guaranty Trust Co. of Caja de Valores
N.Y. - Buenos Aires Office
Australia 1982 ANZ Banking Group Austraclear
Austria 1988 Creditanstalt-Bankverein OeKB-WSB (Wertpapiersammelbank bei der
Oesterreichischen Kontrollbank AG)
Belgium 1977 Morgan Guaranty Trust Co. of CIK (Caisse Interprofessionnelle de
N.Y. - Brussels Office Depots et de Virements de Titres)
Euroclear Clearance System Limited
Brazil 1991 Morgan Guaranty Trust Co. of BOVESPA (Bolsa de Valores de Sao Paolo;
N.Y. - Sao Paulo Office equities)
BVRJ (Bolsa de Valores de Rio de Janeiro,
equities)
CETIP (Central de Custodia e Liquidacao
Financeira de Titulos; corporate bonds)
SELEC (Sistema Especial de Liquidacao e
Custodia; gov't securities)
Canada 1978 Canadian Imperial Bank of CDS (Canadian Depository for Securities)
Commerce
Chile 1993 Citibank, N.A.
People's Republic 1992 Hongkong and Shanghai Banking
of China- Corporation
Shanghai and
Shenzhen
Czech Republic 1994 Ceskoslovenska Obchodni Banka, A.S.
Denmark 1985 Den Danske Bank VP (Vaerdipapircentralen; Danish Securities Centre)
Finland 1985 Union Bank of Finland
France 1977 Morgan Guaranty Trust Co. of SICOVAM (Societe Interprofessionnelle Pour La
N.Y. - Paris Office Compensation des Valeurs Mobilieres)
Germany 1977 Morgan Guaranty Trust Co. of DKV (Deutscher Kassenverein)
N.Y. - Frankfurt Office
Greece 1989 National Bank of Greece S.A.
Hong Kong 1978 Hongkong and Shanghai Banking CCASS (Central Clearing and Settlement System)
Corporation
Hungary 1993 Citibank N.A.
India 1993 Hongkong and Shanghai Banking
Corporation
Indonesia 1990 Hongkong and Shanghai Banking
Corporation
Ireland 1988 Allied Irish Banks PLC
Israel 1994 Bank Leumi LE TASE (Tel Aviv Stock Exchange) Clearing House Ltd.
Italy 1977 Morgan Guaranty Trust Co. of N.Y. Monte Titoli S.p.A.
Milan Office
Japan 1977 The Fuji Bank, Limited JASDEC (Japan Securities Depository Center)
JSA (Japan Securities Agent)
Jordan 1994 Citibank, N.A.
Korea 1991 Bank of Seoul KSSC (Korea Securities Settlement
Corporation)
Luxembourg 1992 Banque Internationale A CEDEL (Centrale de Livraison des Valeurs
Luxembourg, S.A. Mobilieres)
Malaysia 1987 Hongkong and Shanghai Banking SCANS (Securities Clearing Automated
Corporation Network Services)
Mexico 1990 Citibank, N.A. Indeval
Morocco 1994 Banque Commerciale du Maroc
Netherlands 1978 Bank Labouchere nv NECIGEF (Nederlands Centraal Instituut Voor
Giraal Effectenverkeer BV)
New Zealand 1982 ANZ Banking Group Ltd.
Norway 1978 Den Norske Bank VPS (Verdipapirsentralen; Norwegian
Registry of Securities)
Pakistan 1994 Citibank, N.A.
Peru 1994 Citibank, N.A. CAVAL (Caja de Valores)
Philippines 1990 Hongkong and Shanghai Banking
Corporation
Poland 1993 Bank Handlowy
Portugal 1988 Banco Espirito Santo E
Comercial de Lisboa
Singapore 1988 Development Bank of Singapore (CDP) Central Depository Pte
South Africa 1993 First National Bank of Southern
Africa
Spain 1977 Morgan Guaranty Trust Co. of
N.Y. - Madrid Office
Sri Lanka 1992 Hongkong and Shanghai Banking
Corporation
Sweden 1985 Skandinaviska Enskilda Banken VPC (Vaerdepappercentralen; Securities
Register Centre)
Switzerland 1977 Bank Leu SEGA (Schweizerische Effekten - Giro AG)
Taiwan 1992 Hongkong and Shanghai Banking
Corporation
Thailand 1988 Hongkong and Shanghai Banking
Corporation
Turkey 1990 Citibank, N.A. Istanbul Stock Exchange Settlement and
Ottoman Bank Custody Company, Inc. (I.M.K.B. Takas ve Saklama A.S.)
United Kingdom 1977 Morgan Guaranty Trust Co. of N.Y. TALISMAN (Transfer, Accounting and
London Office Lodgement for Investors, Stock Management for Jobbers)
CGO (Central Gilts Office)
CMS (Central Money Market Office)
United States of 1977 Morgan Guaranty Trust Co. of The Federal Reserve Bank of New York
America N.Y. The Depository Trust Co.
The Participants Trust Co.
Venezuela 1991 Citibank, N.A.
</TABLE>
<PAGE>
STROOCK & STROOCK & LAVAN
SEVEN HANOVER SQUARE
NEW YORK, NEW YORK 10004-2696
EXHIBIT 10
February 27, 1995
S&P STARS Fund
80 Harcourt Street
Dublin 2, Ireland
Gentlemen:
We have acted as counsel to S&P STARS Fund (the "Fund") in connection with the
preparation of a Registration Statement on Form N-1A, Registration No. 811-8800
(the "Registration Statement"), covering shares of beneficial interest (the
"Shares") of the Fund.
We have examined copies of the Agreement and Declaration of Trust and By-Laws of
the Fund, the Registration Statement and such other documents, records, papers,
statutes and authorities as we deemed necessary to form a basis for the opinion
hereinafter expressed. In our examination of such material, we have assumed the
genuineness of all signatures and the conformity to original documents of all
copies submitted to us. As to various questions of fact material to such
opinion, we have relied upon statements and certificates of officers and
representatives of the Fund and others.
Attorneys involved in the preparation of this opinion are admitted only to the
bar of the State of New York. As to various questions arising under the laws of
the State of Delaware, we have relied on the opinion of Messrs. Richards, Layton
& Finger, a copy of which is attached hereto. Qualifications set forth in their
opinion are deemed incorporated herein.
Based upon the foregoing, we are of the opinion that:
1. The Fund has been duly formed and is validly existing as a business
trust in good standing under the laws of the State of Delaware, 12 Del. C. ss.
3801 et seq. (the "Act").
2. The 10,418 Shares issued to S&P STARS Portfolio of The Bear Stearns
Funds and presently outstanding have been duly authorized, validly issued, fully
paid and, subject to Article III, Section 6 of the Agreement and Declaration of
Trust, nonassessable.
3. Upon issuance of the Shares by the Fund to the Interestholders in
accordance with the Agreement and Declaration of Trust and the Registration
Statement, the Shares will be duly authorized, validly issued, fully paid and,
subject to Article III, Section 6 of the Agreement and Declaration of Trust,
nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us in the Prospectus included in
the Registration Statement. In giving such permission, we do not admit hereby
that we come within the category of persons whose consent is required under the
rules and regulations of the Securities and Exchange Commission.
Very truly yours,
/s/ Stroock & Stroock & Lavan
STROOCK & STROOCK & LAVAN
<PAGE>
RICHARDS, LAYTON & FINGER
ONE RODNEY SQUARE
WILMINGTON, DELAWARE 19899
February 27, 1995
Stroock & Stroock & Lavan
Seven Hanover Square
New York, New York 10004-2696
Re: S&P STARS FUND
Ladies and Gentlemen:
We have acted as special Delaware counsel to S&P STARS Fund, a Delaware
business trust (the "Fund"), in connection with the transactions contemplated by
the Agreement and Declaration of Trust, dated October 5, 1994 (the "Declaration
of Trust"), between Robert S. Reitzes, John C. Sites, Jr., and Michael Minikes,
as trustees (the "Trustees"), and the holders of Interests to be issued pursuant
to the Declaration of Trust. This opinion is being delivered to you at your
request. Capitalized terms used herein and not otherwise defined are used as
defined in the Declaration of Trust, except that reference herein to any
document shall mean such document as in effect on the date hereof.
We have examined originals or copies of the following documents:
(a) The Declaration of Trust;
(b) The Instrument of Amendment, dated December 7, 1994 (the "Instrument
of Amendment");
(c) The Instrument of Designation of the Fund, dated October 5, 1994 (the
"Instrument of Designation");
(d) The By-laws of the Fund, dated October 5, 1994 (the "By-laws");
(e) A certificate of the Assistant Secretary of the Fund, dated February
24, 1995, as to certain organizational and other matters;
(f) A certified copy of the certificate of trust of the Fund (the
"Certificate of Trust"), which was filed with the Secretary of State
of the State of Delaware (the "Secretary of State") on October 5,
1994;
(g) A certificate of good standing of the Fund obtained from the Secretary
of State, dated December 13, 1994; and
(h) Portions of the Registration Statement on Form N- 1A, Registration
Number 811-8800 (the "Registration Statement"), describing the
issuance of the shares of beneficial interest (the "Shares") of the
Fund.
For purposes of rendering our opinions expressed herein, we have not reviewed
any documents other than the foregoing documents, and we have assumed that there
exists no provision of any such other document that bears upon or is
inconsistent with our opinions as stated herein. We have conducted no
independent factual investigation of our own but have relied solely upon the
foregoing documents, the statements and information set forth therein and the
additional matters recited or assumed herein, all of which we have assumed to be
true, complete and accurate in all material respects.
Based upon and subject to the foregoing and subject to the assumptions,
qualifications and limitations set forth below, it is our opinion that:
1. The Fund has been duly formed and is validly existing as a business
trust in good standing under the laws of the State of Delaware, 12 Del. C. ss.
3801 et seq. (the "Act").
2. The 10,418 shares issued to S&P STARS Portfolio of The Bear Stearns
Funds and presently outstanding have been duly authorized, validly issued, fully
paid and, subject to Article III, Section 6 of the Declaration of Trust, are
nonassessable.
3. Upon issuance of the Shares by the Fund to the Interestholders in
accordance with the Declaration of Trust and the Registration Statement, the
Shares will be duly authorized, validly issued, fully paid and, subject to
Article III, Section 6 of the Declaration of Trust, nonassessable.
The foregoing opinions are subject to the following exceptions,
qualifications and assumptions:
A. We are admitted to practice law in the State of Delaware, and we do not
hold ourselves out as being experts on the law of any other jurisdiction. The
foregoing opinions are limited to the laws of the State of Delaware (excluding
securities laws) currently in effect. We have not considered and express no
opinion on the laws of any other state or jurisdiction, including federal laws
or rules and regulations thereunder.
B. We have assumed (i) the legal capacity of, and due execution and
delivery of the Declaration of Trust, the Instrument of Amendment, the
Instrument of Designation and the Certificate of Trust by, the Trustees of the
Fund and (ii) that the Declaration of Trust, the Instrument of Amendment, the
Instrument of Designation, the By-laws and the Certificate of Trust constitute
the entire agreement among the parties thereto with respect to the subject
matter thereof, including with respect to the issuance of beneficial interests
in the Fund and the formation, operation and termination of the Fund.
C. We have assumed that all documents submitted to us as originals are
authentic, that all documents submitted to us as copies or forms conform with
the originals, that all signatures are genuine, and that all documents, in the
forms submitted to us for our review, have not been and will not be altered or
amended in any respect material to our opinions as stated herein.
D. We have not participated in the preparation of any offering or proxy
materials with respect to the Shares, and we assume no responsibility for their
contents.
This opinion is rendered solely for your benefit in connection with the
matters addressed herein and, without our prior written consent, may not be
relied upon by or furnished to any person or entity for any purpose.
Very truly yours,
/s/ Richards, Layton & Finger
<PAGE>
Exhibit 11
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in Amendment No. 5 to Registration Statement No.
811-8800 of S&P STARS Fund of our report dated May 9, 1996 apearing in the
Statement of Additional Information, which is part of such Registration
Statement.
/s/ Deloitte & Touche
DELOITTE & TOUCHE
Dublin, Ireland
May 29, 1996
<PAGE>
OTHER EXHIBIT
S&P STARS FUND
Certificate
The undersigned, Robert S. Reitzes, Chairman of S&P STARS Fund (the
"Trust"), hereby certifies that set forth below is a copy of the resolution
adopted by the Trust's Board authorizing the signing of the Trust's Registration
Statement and all amendments and supplements thereto on behalf of the proper
officers of the Trust pursuant to a power of attorney.
RESOLVED, that the Registration Statement and any and all amendments
and supplements thereto, may be signed by any one of Robert S. Reitzes,
Stephen A. Bornstein, Frank J. Maresca and Vincent L. Pereira as the
attorney-in-fact for the proper officers of the Trust, with full power of
substitution and resubstitution; and that the appointment of each of such
persons as such attorney-in-fact hereby is authorized and approved; and
that such attorneys-in-fact, and each of them, shall have full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in connection with such Registration Statement and any
and all amendments and supplements thereto, as fully to all intents and
purposes as the officer, for whom he is acting as attorney-in-fact, might
or could do in person.
IN WITNESS WHEREOF, I have hereunto signed my name on February 27, 1995.
/s/Robert S. Reitzes
Robert S. Reitzes, Chairman
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000931351
<NAME> S & P STARS FUND
<SERIES>
<NUMBER> 01
<NAME> S & P STARS MASTER SERIES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1996
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