<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
REGISTRATION NO. 33-87494
POST-EFFECTIVE AMENDMENT NO. 2
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
REGISTRATION NO. 811-8906
AMENDMENT NO. 3
THE LAKE FOREST FUNDS
One Westminster Place
Lake Forest, IL 60045-1821
847-295-5700
Agent for Service:
Sheldon Stein
D'Ancona & Pflaum
30 North LaSalle Street
Chicago, Illinois 60602
(312) 580-2014
It is proposed that this filing will become effective:
___ Immediately upon filing pursuant to paragraph (b)
___ on (date), pursuant to paragraph (b)
___ 60 days after filing pursuant to paragraph (a)
_X_ on June 16, 1996 pursuant to paragraph (a) of Rule 485
In accordance with Section 24(f) of the Investment Company Act of 1940 and
Rule 24f-2 thereunder, Registrant has previously elected to register an
indefinite number of shares of beneficial interest. Registrant anticipates
that it will file, pursuant to paragraph b(1) of Rule 24f-2, a 24f-2 Notice for
the fiscal year ended February 29, 1996 on or before April 30, 1996.
<PAGE> 2
THE LAKE FOREST FUNDS (formerly Lake Forest Trust)
CROSS REFERENCE SHEET
FORM N-1A
<TABLE>
<CAPTION>
ITEM SECTION IN PROSPECTUS
- ---- ---------------------
<S> <C>
1................. Cover Page
2................. Summary of Fund Expenses
3................. Financial Highlights
4................. The Funds, Investment Objectives and Strategies, Management of the Funds, Investment Policies and
Techniques and Risk Considerations, General Information
5................. Management of the Funds
5A................ None
6................. Cover Page, Dividends and Distributions, Taxes, Management of the Funds, General Information
7................. Cover Page, How to Invest in Each Fund, Exchange Privilege, Share Price Calculation, Management
of the Funds
8................. How to Redeem Shares
9................. None
15................. General Information
SECTION IN STATEMENT OF
ITEM ADDITIONAL INFORMATION
- ---- -----------------------
10................. Cover Page
11................. Table of Contents
12................. None
13................. Additional Information About Fund Investments and Risk Considerations, Investment Limitations
14................. The Management Agreement, Trustees and Officers, Trustee Compensation
15................. Description of the Trust
16................. The Management Agreement, Custodian, Transfer Agent, Accountants
17................. Portfolio Transactions and Brokerage
18................. Description of the Trust
19................. Determination of Share Price
20................. None
21................. Not Applicable
22................. Investment Performance
23................. **
</TABLE>
** Financial Statements appearing in the February 29, 1996 Annual Report are
incorporated by reference.
<PAGE> 3
PROSPECTUS JUNE 16, 1996
THE LAKE FOREST FUNDS
The Lake Forest Funds is a family of two no-load mutual funds that offers you
different investment opportunities. The Funds and their specific investment
objectives are listed below.
NO-LOAD MUTUAL FUNDS
The Lake Forest Funds are true "no-load" investments which means that
shareholders pay no sales charges or commissions. In addition, the Funds pay
no Rule 12b-1 fees. The minimum initial investment for each fund is $2,500
($1,000 for tax sheltered retirement plans).
LAKE FOREST CORE EQUITY FUND
The investment objective of the Lake Forest Core Equity Fund is to provide
long term capital appreciation together with current income. The Fund seeks to
achieve its objective by investing primarily in a broad range of equity
securities of large, established companies believed by its Adviser, Boberski &
Company, to have above average prospects for appreciation.
LAKE FOREST MONEY MARKET FUND
The investment objective of the Lake Forest Money Market Fund is to
provide the highest level of current income consistent with liquidity and
security of principal. The Fund is a U.S. government money market fund
designed for the short term cash balances of corporations, institutions and
individuals. It invests exclusively in U.S. government obligations and
repurchase agreements fully collateralized by U.S. government obligations.
An investment in the Lake Forest Money Market Fund is neither insured nor
guaranteed by the U.S. Government, and there can be no assurance that the Fund
will be able to maintain a stable net asset value of $1.00 per share. Shares
of the Funds are not deposits or obligations of any bank, are not endorsed or
guaranteed by any bank, and are not insured by the Federal Deposit Insurance
Corporation (FDIC), the Federal Reserve Board or any other government agency,
entity, or person. The purchase of Fund shares involves investment risks,
including the possible loss of principal.
This Prospectus concisely sets forth the information a prospective
investor ought to know before investing and should be retained for future
reference. A Statement of Additional Information dated June 16, 1996 has been
filed with the Securities and Exchange Commission, and is incorporated herein
by reference. The Statement of Additional Information can be obtained upon
request without charge by contacting the Transfer Agent's office listed below.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
THE LAKE FOREST FUNDS
c/o American Data Services, Inc.
24 W. Carver Street
Huntington, New York 11743
(800) 592-7722
<PAGE> 4
SUMMARY OF FUND EXPENSES
The tables below are provided to assist an investor in understanding the
direct and indirect expenses that an investor may incur as a shareholder in the
Funds. The expense information has been restated to reflect current fees. The
expenses are expressed as a percentage of average net assets. The Example
should not be considered a representation of future Fund performance or
expenses, both of which may vary.
The Funds are true no-load funds and, accordingly, shareholders do not
pay any sales charge or commission upon purchase or redemption of shares of the
Funds. In addition, the Funds do not pay any distribution fees under a Rule
12b-1 Plan. Unlike most other mutual funds, the Funds do not pay directly for
transfer agency, pricing, custodial, auditing or legal services, nor do they
pay directly any general administrative or other operating expenses. The
Adviser pays all of the expenses of each Fund except brokerage, taxes, interest
and extraordinary expenses.
SHAREHOLDER TRANSACTION EXPENSE
<TABLE>
<CAPTION>
CORE MONEY
EQUITY MARKET
FUND FUND
------ ------
<S> <C> <C>
Maximum Sales Load Imposed on Purchases NONE NONE
Maximum Sales Load Imposed on Reinvested Dividends NONE NONE
Deferred Sales Load NONE NONE
Redemption Fees NONE NONE
Exchange Fees NONE NONE
ANNUAL FUND OPERATING EXPENSES(as a percentage of average net assets)(1)
Management Fees(2) 1.00% 0.125%
12b-1 Charges NONE NONE
------ ------
Total Fund Operating Expenses 1.00% 0.125%
</TABLE>
(1) Each Fund's total operating expenses are equal to the management fee paid
to the Adviser because the Adviser pays all of each Fund's operating
expenses.
(2) The Adviser has agreed to cap the fees at 0.125% for the Money Market
Fund at least through the fiscal year ending February 28, 1996. Without
such a cap, the Management Fees would have been 0.50% and Total Fund
Operating Expenses would have been 0.50%.
Example
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Core Equity Fund $10 $32 $55 $122
Money Market Fund $1 $4 $7 $16
</TABLE>
Note: Expenses for both funds have been restated to reflect current fees.
2
<PAGE> 5
THE FUNDS
Lake Forest Core Equity Fund and Lake Forest Money Market Fund (the
"Funds") are series of The Lake Forest Funds (the "Trust") organized as an Ohio
business trust on November 23, 1994. The Trust is an open-end investment
company which commenced operations on March 1, 1995. The investment adviser to
the Funds is Boberski & Company (the "Adviser").
INVESTMENT OBJECTIVES AND STRATEGIES
The descriptions that follow are designed to help you choose the Fund that
best fits your investment objectives. You may want to pursue more than one
objective by investing in more than one Fund.
LAKE FOREST CORE EQUITY FUND
The investment objective of the Lake Forest Core Equity Fund (the "Equity
Fund") is to provide long term capital appreciation together with current
income. The Fund seeks to achieve this objective by investing primarily in a
broad range of equity securities of large, established companies (those with a
market capitalization above $1 billion) which the Adviser believes have above
average prospects for appreciation, based on certain fundamental and technical
standards of selection. However, the Fund will also invest in dividend paying
stocks, and it is expected that the Fund will generate a combination of current
income and long term capital appreciation.
The Fund is intended to be a core equity portfolio designed for investors
with a long term wealth building horizon and is particularly suitable for
retirement and educational funds. The Adviser seeks to limit investment risk
by diversifying the Fund's investments across a broad range of industries and
companies, and by investing primarily in larger companies with a history of
attractive dividend yields, low price-earnings ratios and strong cash flows.
The Adviser will particularly seek large, well capitalized multi-national
companies which can provide technology and infrastructure to emerging market
economies including those in Eastern Europe, Asia and South America. While the
Fund ordinarily will invest in common stocks of established U.S. companies, it
may invest in foreign companies through the purchase of American Depository
Receipts.
Under normal circumstances, at least 65% of the total assets of the Fund
will be invested in equity securities. The Adviser generally intends to stay
fully invested (subject to liquidity requirements and defensive purposes) in
common stock and common stock equivalents (such as rights, warrants and
securities convertible into common stocks) regardless of the movement of stock
prices. However, the Fund may invest in preferred stocks, bonds, corporate
debt and U.S. government obligations when the Adviser believes that these
securities offer opportunities to further the Fund's investment objective. The
Fund normally will invest primarily in common stocks of established companies
that have a record of at least three years continuous operation, and whose
securities, in the opinion of the Adviser, enjoy a fair degree of
marketability. Most equity securities in the Fund's portfolio are listed on
major stock exchanges or traded over-the-counter.
For temporary defensive purposes, the Fund may hold all or a portion of
its assets in money market instruments, securities of money market registered
investment companies or repurchase agreements collateralized by U.S. government
obligations. The Fund may also make such investments at any time to maintain
liquidity or pending selection of investments in accordance with its policies.
3
<PAGE> 6
LAKE FOREST MONEY MARKET FUND
The investment objective of the Lake Forest Money Market Fund is to
provide the highest level of current income consistent with liquidity and
security of principal. The Fund is a U.S. government money market fund
designed for the investment of short-term cash reserves, and the Adviser
believes it is appropriate for corporations, pension and profit sharing plans,
and other institutional and individual investors.
In seeking its objective, the Fund will invest exclusively in obligations
issued or guaranteed as to principal and interest by the United States
government, its agencies or instrumentalities ("U.S. government obligations")
as well as repurchase agreements involving these securities. To the extent
that it is feasible to do so, the Adviser intends to invest in U.S. government
obligations which are, by federal statute, exempt from state and local taxes.
However, the Fund will not be fully invested in such tax-exempt securities.
The Fund seeks to maintain a stable net asset value of $1.00 per share pursuant
to a rule of the Securities and Exchange Commission, which requires that the
Fund's portfolio meet certain maturity, quality and diversification standards
(see "Share Price Calculation").
GENERAL
As all investment securities are subject to inherent market risks and
fluctuations in value due to earnings, economic and political conditions and
other factors, neither Fund can give any assurance that its investment
objective will be achieved. Current yields or rates of total return quoted by
a Fund may be higher or lower than past quotations, and there can be no
assurance that any current yield or rate of total return will be maintained.
See "Investment Policies and Techniques and Risk Considerations" for a more
detailed discussion of each Fund's investment practices.
4
<PAGE> 7
FINANCIAL HIGHLIGHTS
The following table provides you with information about the history of the
Funds' shares. The table is included as supplementary information to the
Funds' financial statements which are included in the February 29, 1996 Annual
Report which may be obtained by writing or calling the Fund. The Funds'
financial statements have been audited by the Funds' independent certified
accountants, whose unqualified opinion therein is contained in the Annual
Report.
LAKE FOREST FUNDS
FINANCIAL HIGHLIGHTS
FOR THE YEAR ENDED FEBRUARY 29, 1996
<TABLE>
<CAPTION>
CORE MONEY
EQUITY MARKET
------------- ---------------
<S> <C> <C>
Net asset value - beginning of period.................................. $15.00 $ 1.00
Income from investment operations
Net investment income.................................................. .56 .06
Net realized gain on investments...................................... 2.13 .00
-------- ---------
Total from investment operations....................................... 2.69 .06
Less distributions
Dividends from net investment income................................... (.15) (.06)
Dividends from capital gains........................................... (.20) .00
-------- ---------
Net asset value - end of period........................................ $17.34 $ 1.00
======= =========
Total Return........................................................... 18.59% 5.50%
Ratios/supplemental data
Net assets, end of period (in 000's)................................... 1,016 1,787
Ratio of expenses to average net assets (1)............................ .45% .08%
Ratio of net investment income to average net assets................... 3.89% 5.50%
Portfolio turnover rate................................................ 129.77% .00%
</TABLE>
(1) If the expense reimbursement from the investment adviser had not been in
effect the ratio of expenses to average net assets would have been
2.00%** and 1.00%**, respectively.
5
<PAGE> 8
HOW TO INVEST IN EACH FUND
Subject to a minimum initial investment of $2,500 for each Fund ($1,000
for retirement accounts) and minimum subsequent investments of $500, you may
invest any amount you choose, as often as you want, in either Fund. You may
diversify your investments by choosing a combination of the Funds for your
investment program.
INITIAL PURCHASE
BY MAIL--You may purchase shares of each Fund by completing and signing
the investment application form which accompanies this Prospectus and mailing
it, in proper form, together with a check (subject to the above minimum
amounts) made payable to The Lake Forest Funds, and sent to the Custodian at:
The Lake Forest Funds
c/o Star Bank, N.A.
P.O. Box 640244
Cincinnati, Ohio 45264-0244
Please identify the Fund(s) in which you wish to invest.
Your purchase of shares of the Lake Forest Core Equity Fund will be
effected at the next share price calculated after receipt of your investment.
Your order for shares of the Lake Forest Money Market Fund will not be complete
until the Fund has received federal funds. If a check for purchase of shares
is not drawn on federal funds, shares will be purchased at the next share price
calculated after the check is converted into federal funds (normally two days
or less).
BY WIRE--You may also purchase shares of each Fund by wiring federal funds
from your bank, which may charge you a fee for doing so. If money is to be
wired, you must call American Data Services, Inc., the Funds' Transfer Agent,
at (800) 592-7722 and provide the following information:
<TABLE>
<CAPTION>
FOR THE LAKE FOREST CORE EQUITY FUND: FOR THE LAKE FOREST MONEY MARKET FUND:
<S> <C>
Star Bank, N.A., CINTI/TRUST Star Bank, N.A. CINTI/TRUST
ABA #0420-0001-3 ABA #0420-0001-3
Attn: Lake Forest Core Equity Fund Attn: Lake Forest Money Market Fund
DDA # 483609095 DDA # 483609129
Account Name Account Name
(write in shareholder name) (write in shareholder name)
Shareholder Account # Shareholder Account #
(write in account #) (write in account #)
</TABLE>
You are required to mail a signed application to the Transfer Agent at the
above address in order to complete your initial wire purchase. Wire orders
will be accepted only on a day on which the Funds and the Custodian and
Transfer Agent are open for business. A wire purchase will not be considered
made until the wired money is received and the purchase is accepted by the
Funds. Any delays which may occur in wiring money, including delays which may
occur in processing by the banks, are not the responsibility of the Funds or
6
<PAGE> 9
the Transfer Agent. The Funds currently do not charge a fee for use of the
wire privilege, but the Funds reserve the right to charge shareholders for this
service in the future. Your bank may charge you a fee for this service.
ADDITIONAL INVESTMENTS
You may purchase additional shares of either Fund at any time (minimum of
$500) by mail or wire. Each additional purchase request must contain your
name, the name of your account(s), your account number(s), and the Fund(s) in
which you wish to invest. Checks should be made payable to The Lake Forest
Funds and should be sent to the Custodian's address. A bank wire should be
sent as outlined above.
AUTOMATIC INVESTMENT OPTION
You may arrange to make additional investments ($100 minimum)
automatically on a monthly or bi-monthly basis by transfers from your checking
account. You must complete the Optional Automatic Investment Plan section of
the investment application and provide the Trust with a voided check to
institute this option. You may terminate this automatic investment program at
any time, and the Fund may modify or terminate the plan at any time.
TAX SHELTERED RETIREMENT PLAN
Since the Funds are oriented to longer term investments, shares of the
Funds may be an appropriate investment medium for tax sheltered retirement
plans, including: individual retirement plans (IRAs); simplified employee
pensions (SEPs); 401(k) plans; qualified corporate pension and profit sharing
plans (for employees); tax deferred investment plans (for employees of public
school systems and certain types of charitable organizations); and other
qualified retirement plans. You should contact the Transfer Agent for the
procedure to open an IRA or SEP plan, as well as more specific information
regarding these retirement plan options. Consultation with an attorney or tax
adviser regarding these plans is advisable. Custodial fees for an IRA will be
paid by the shareholder by redemption of sufficient shares of the Fund from the
IRA unless the fees are paid directly to the IRA custodian. You can obtain
information about the IRA custodial fees from the Transfer Agent.
OTHER PURCHASE INFORMATION
Dividends begin to accrue after you become a shareholder. The Funds do
not issue share certificates. All shares are held in non-certificate form
registered on the books of the Fund and the Fund's Transfer Agent for the
account of the shareholder. The rights to limit the amount of purchases and to
refuse to sell to any person are reserved by each Fund. If your check or wire
does not clear, you will be responsible for any loss incurred. If you are
already a shareholder, the Fund can redeem shares from any identically
registered account in either Fund as reimbursement for any loss incurred. You
may be prohibited or restricted from making future purchases in either Fund.
EXCHANGE PRIVILEGE
As a shareholder in any Fund, you may exchange shares valued at $1,000 or
more for shares of any other Fund in the Trust. An exchange may be made by
written request signed by all registered owners of the account mailed to the
Transfer Agent. Exchanges may also be requested by calling the Transfer Agent
if you
7
<PAGE> 10
have completed the Optional Telephone Redemption and Exchange section of
the investment application (see "How to Redeem Shares -- By Telephone" for
information about liability for losses due to unauthorized or fraudulent
instructions). Requests for exchanges received prior to close of trading on
the New York Stock Exchange (currently 4:00 p.m. New York Time) will be
processed at the next determined net asset value as of the close of business on
the same day.
An exchange is made by redeeming shares of one Fund and using the proceeds
to buy shares of another Fund, with the net asset value for the redemption and
the purchase calculated on the same day. See "How To Redeem Shares". There is
no charge for this service, but the Funds reserve the right to charge a fee
in the future. An exchange results in a sale of shares for federal income tax
purposes. If you make use of the exchange privilege, you may realize either a
long term or short term capital gain or loss on the shares redeemed.
Before making an exchange, you should consider the investment objective of
the Fund to be purchased. If your exchange creates a new account, you must
satisfy the requirements of the Fund in which shares are being purchased. You
may make an exchange to a new account or an existing account; however, the
account ownerships must be identical. Exchanges may be made only in states
where an exchange may legally be made. The Funds reserve the right to
terminate or modify the exchange privilege in the future upon 60 days prior
notice to the shareholders.
HOW TO REDEEM SHARES
BY MAIL--You may redeem any part of your account in either Fund at no
charge by mail. All redemptions will be made at the net asset value determined
after the redemption request has been received by the Transfer Agent in proper
order. The proceeds of the redemption may be more or less than the purchase
price of your shares, depending on the market value of the Fund's securities at
the time of your redemption. Your request should be addressed to:
The Lake Forest Funds
c/o American Data Services, Inc.
24 W. Carver Street
Huntington, New York 11743
"Proper order" means your request for a redemption must include your
letter of instruction, including the Fund name, account number, account
name(s), the address and the dollar amount or number of shares you wish to
redeem. This request must be signed by all registered share owner(s) in the
exact name(s) and any special capacity in which they are registered. For all
redemptions, the Funds require that signatures be guaranteed by a bank or
member firm of a national securities exchange. Signature guarantees are for
the protection of shareholders. At the discretion of a Fund or the Transfer
Agent, a shareholder, prior to redemption, may be required to furnish
additional legal documents to insure proper authorization.
BY TELEPHONE--You may request a redemption of your shares in either Fund
by calling the Transfer Agent and requesting that proceeds be mailed to you or
wired to your bank or brokerage firm. You must first complete the Optional
Telephone Redemption and Exchange section of the investment application to
institute this option. The redemption will be effected at the next determined
share price. The proceeds will then be made payable to the registered
shareholder and mailed to the address registered on the account, or wired to
your bank or brokerage
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<PAGE> 11
firm, as authorized by you on your application. The Funds and the Transfer
Agent will employ reasonable procedures to confirm that redemption or exchange
instructions communicated by telephone are genuine. There is no charge for wire
redemptions; however, the Fund reserves the right to charge for this service.
Any charges for wire redemptions will be deducted from the shareholder's
Fund account by redemption of shares.
The Funds, the Adviser, the Transfer Agent and the Custodian are not
liable for following redemption or exchange instructions communicated by
telephone that they reasonably believe to be genuine. However, if they do not
employ reasonable procedures to confirm that telephone instructions are
genuine, they may be liable for any losses due to unauthorized or fraudulent
instructions. Procedures employed will include recording telephone
instructions and requiring a form of personal identification from the caller.
The telephone redemption and exchange procedures may be terminated at any time
by the Funds or the Transfer Agent. During periods of extreme market activity
it is possible that shareholders may encounter some difficulty in telephoning
the Funds, although neither the Funds nor the Transfer Agent has ever
experienced difficulties in receiving and in a timely fashion responding to
telephone requests for redemptions or exchanges. If you are unable to reach
the Funds by telephone, you may request a redemption or exchange by mail or
facsimile.
BY SYSTEMATIC WITHDRAWAL PLAN--As another convenience, the Funds offer a
Systematic Withdrawal Program whereby shareholders may request that a check
drawn in a predetermined amount be sent to them each month or calendar quarter.
A shareholder's account must have Fund shares with a value of at least $10,000
in order to start a Systematic Withdrawal Program, and the minimum amount that
may be withdrawn each month or quarter under the Systematic Withdrawal Program
is $100. This Program may be terminated by a shareholder or the Funds at any
time without charge or penalty and will become effective five business days
following receipt of your instructions. Shares will be sold within 3 business
days before month-end. A withdrawal under the Systematic Withdrawal Program
involves a redemption of shares, and may result in a gain or loss for federal
income tax purposes. In addition, if the amount withdrawn exceeds the
dividends credited to the shareholder's account, the account ultimately may be
depleted.
ADDITIONAL INFORMATION--If you are not certain of the requirements for a
redemption please call the Transfer Agent at (800) 592-7722. Redemptions
specifying a certain date or share price cannot be accepted and will be
returned. We will mail or wire you the proceeds on or before the fifth
business day following the redemption. However, payment for redemption made
against shares purchased by check (other than exchanges into the other Fund)
will be made only after the check has been collected, which normally may take
up to fifteen days. Also, when the New York Stock Exchange is closed (or when
trading is restricted) for any reason other than its customary weekend or
holiday closing or under any emergency circumstances, as determined by the
Securities and Exchange Commission, we may suspend redemptions or postpone
payment dates.
Because the Funds incur certain fixed costs in maintaining shareholder
accounts, each Fund reserves the right to require any shareholder to redeem all
of his or her shares in the Fund on 30 days' written notice from the date the
value of his or her shares in the Fund is less than $2,500 due to redemption, or
such other minimum amount as the Fund may determine from time to time. An
involuntary redemption constitutes a sale. You should consult your tax adviser
concerning the tax consequences of involuntary redemptions. A shareholder may
increase the value of his or her shares in the Fund to the minimum amount within
the 30 day period. Each share of each Fund is subject to redemption at any time
if the Board of Trustees determines in its sole discretion that failure to so
redeem may have materially adverse consequences to all or any of the
shareholders of the Trust or any Fund of the Trust.
9
<PAGE> 12
SHARE PRICE CALCULATION
The share price (net asset value) of the Equity Fund is caculated once
daily, as of the close of trading on the New York Stock Exchange (4:00 p.m.,
New York Time), on any day when the New York Stock Exchange and the Custodian
are open for business. The net asset value of shares of the Money Market Fund
is calculated twice daily as of 12:00 p.m. and 4:00 p.m., New York Time, on
any day when the New York Stock Exchange and the Custodian are open for
business. The price of the shares of a Fund will also be calculated on other
days if there is sufficient trading in the Fund's portfolio securities that its
net asset value might be materially affected. The net asset value per share of
each Fund is computed by dividing the sum of the value of the securiteis held
by the Fund plus any cash or otehr assets minus all liabilities (including
estimated accrued expenses) by the total number of share outstanding at such
time, rounded to the nearest cent. For the Money Market Fund, this is known as
the penny-rounding method of pricing.
Securities which are traded on any exchange or on the NASDAQ
over-the-counter market are valued at the last quoted sale price. Lacking a
last sale price, a security is valued at its last bid price except when, in the
Adviser's opinion, the last bid price does not accurately reflect the current
value of the security. All other securities for which over-the-counter market
quotations are readily available are valued at their last bid price. When
market quotations are not readily available, when the Adviser determines the
last bid price does not accurately reflect the current value or when restricted
securities are being valued, such securities are valued as determined in good
faith by the Adviser, in conformity with guidelines adopted by and subject to
review of the Board of Trustees of the Trust.
Fixed income securities generally are valued by using market quotations,
but may be valued on the basis of prices furnished by a pricing service when
the Adviser believes such prices accurately reflect the fair market value of
such securities. A pricing service utilizes electronic data processing
techniques based on yield spreads relating to securities with similar
characteristics to determine prices for normal institutional-size trading units
of debt securities without regard to sale or bid prices. When prices are not
readily available from a pricing service, or when restricted or illiquid
securities are being valued, securities are valued at fair value as determined
in good faith by the Adviser, subject to review of the Board of Trustees.
Short term investments in fixed income securities with maturities of less than
60 days when acquired, or which subsequently are within 60 days of maturity,
are valued (except for the Money Market Fund) by using the amortized cost
method of valuation, which the Board has determined will represent fair value.
The Money Market Fund seeks to maintain a stable net asset value of $1.00
per share pursuant to Rule 2a-7 under the Investment Company Act of 1940. In
accordance with Rule 2a-7, the Fund will maintain a dollar-weighted average
portfolio of 90 days or less, purchase only instruments having remaining
maturities of 397 days or less (except for U.S. Government obligations, which
will have remaining maturities of 762 days or less) and invest only in U.S.
dollar denominated securities determined in accordance with procedures
established by the Board of Trustees to present minimal credit risks.
DIVIDENDS AND DISTIBUTIONS
Each Fund intends to distribute substantially all of its net investment
income as dividends to its shareholders. The Equity Fund intends to declare
and pay dividends on a quarterly basis, and the Money Market Fund intends to
declare dividends daily and pay them monthly. Each Fund intends to distribute
its net long term capital gains at least once a year and its net short term
capital gains at least once a year.
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<PAGE> 13
Income dividends and capital gain distributions are automatically
reinvested in additional shares at the net asset value per share on the
distribution date. An election to receive a cash payment of dividends and/or
capital gain distributions may be made in the application to purchase shares or
by separate written notice to the Transfer Agent. Shareholders will receive a
confirmation statement reflecting the payment and reinvestment of dividends and
summarizing all other transactions. If cash payment is requested, a check
normally will be mailed within five business days after the payable date. If
you withdraw your entire account, all dividends accrued to the time of
withdrawal, including the day of withdrawal, will be paid at that time. You
may elect to have distributions on shares held in IRAs and 403(b) plans paid in
cash only if you are 59 1/2 years old or permanently and totally disabled or if
you otherwise qualify under the applicable plan.
TAXES
This section is not intended to be a full discussion of all the aspects of
the federal income tax law and its effects on shareholders. Shareholders are
urged to consult their own tax advisers regarding specific questions as to
federal, state or local taxes, the tax effect of distributions and withdrawals
from the Fund and the use of the Exchange Privilege.
Each Fund intends to qualify each year as a "regulated investment company"
under the Internal Revenue Code of 1986, as amended. By so qualifying, a Fund
will not be subject to federal income taxes to the extent that it distributes
substantially all of its net investment income and any realized capital gains.
For federal income tax purposes, each Fund is treated as a separate entity
for the purpose of computing taxable net income and net realized capital gains
and losses. Dividends paid by each Fund from ordinary income and short-term
capital gains are taxable to shareholders as ordinary income, but may be
eligible in part for the dividends received deduction for corporations. Any
distributions designated as being made from net realized long term capital
gains are taxable to shareholders as long term capital gains regardless of the
holding period of the shareholder. Distributions are taxable whether received
in cash or reinvested in additional shares.
A dividend received shortly after the purchase of shares reduces the net
asset value of the shares by the amount of the dividend, and although in effect
a return of capital, such dividend will be taxable to the shareholder. If a
shareholder realizes a loss on the sale or exchange of any shares held for six
months or less and if the shareholder received a capital gain distribution
during such six-month period, then the loss is treated as a long-term capital
loss to the extent of the capital gain distribution.
Each Fund will mail to each shareholder after the close of the calendar
year a statement setting forth the federal income tax status of distributions
made during the year. Dividends and capital gains distributions may also be
subject to state and local taxes.
If for any reason you don't provide the Funds with your correct Social
Security or Tax I.D. number (or certify that you are not subject to backup
withholding), the Funds are required by the Code to withhold 31% of taxable
dividends and proceeds of certain exchanges and redemptions.
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MANAGEMENT OF THE FUNDS
Each Fund is a diversified series of The Lake Forest Funds, an open-end
management investment company organized as an Ohio business trust on November
23, 1994. The Board of Trustees supervises the business activities of the
Trust. Like other mutual funds, the Trust retains various organizations to
perform specialized services. It retains Boberski & Company, One Westminster
Place, Lake Forest, Illinois 60045 (the "Adviser") to manage the Trust's
investments and its business affairs. The Adviser is an Illinois-based company
of which Irving V. Boberski is the controlling shareholder. Mr. Boberski is
responsible for the day-to-day management of the portfolio of each Fund. He is
the President, Chief Financial Officer, Treasurer and a Trustee of the Trust,
and President, Treasurer, and a Director of the Adviser. The Adviser, founded
by Mr. Boberski in 1966, also provides investment advice to individuals and
institutions.
The Adviser is paid a monthly fee for its services to the Equity Fund
equal to an annual average rate of 1.00% of the Equity Fund's average daily net
assets. For its services to the Money Market Fund, the Adviser is authorized
to receive a monthly fee equal to 0.50% of the Money Market Fund's average
daily net assets. The Adviser has agreed to cap the fee for the Money Market
Fund at 0.125% at least through the fiscal year ending February 28, 1996. The
Adviser pays all of the expenses of each Fund except brokerage, taxes, interest
and extraordinary expenses. The Adviser may waive all or a part of its fee, at
any time, at its sole discretion, but such action shall not obligate the
Adviser to waive fees at any time. Subject to its obligation to seek the best
qualitative execution, the Adviser may give consideration to sales of shares of
the Trust as a factor in the selection of brokers and dealers to execute
portfolio transactions. The Adviser (not the Funds) may pay fees to certain
persons based on investments made and maintained by investors such persons have
referred to the Funds. The Adviser (not the Funds) also may pay certain
financial institutions (which may include banks, securities dealers and other
industry professionals) a "servicing fee" for performing certain administrative
servicing functions for Fund shareholders to the extent these institutions are
allowed to do so by applicable statute, rule or regulation.
American Data Services, Inc., 24 West Carver Street, Huntington, New York,
serves as the Funds' Administrator. The Administrator provides for preparation
and maintenance of accounting and financial data, coordination with third
parties furnishing services to the Funds, state regulatory filings, and other
management services. American Data Services also serves as Transfer Agent for
the Funds. As discussed above, American Data Services is paid by the Adviser
and not by the Trust.
INVESTMENT POLICIES AND TECHNIQUES AND RISK CONSIDERATIONS
This section contains general information about various types of
securities and investment techniques. Each Fund may invest in any security or
employ any investment technique described in this section unless specifically
noted otherwise.
EQUITY SECURITIES
Under normal conditions, the Equity Fund will invest at least 65% of its
total assets in equity securities. Equity securities consist of common stock,
preferred stock and common stock equivalents (such as convertible preferred
stock, convertible debentures, rights and warrants) and investment companies
which invest primarily in the above.
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<PAGE> 15
Convertible preferred stock is preferred stock that can be converted into
common stock pursuant to its terms. Convertible debentures are debt
instruments that can be converted into common stock pursuant to their terms.
The Adviser intends to invest only in convertible debentures rated A or higher
by Standard & Poor's Corporation ("S&P") or by Moody's Investors Services, Inc.
("Moody's"). Warrants are options to purchase equity securities at a specified
price valid for a specific time period. Rights are similar to warrants, but
normally have a short duration and are distributed by the issuer to its
shareholders. A Fund may not invest more than 5% of its net assets at the time
of purchase in rights and warrants.
Equity securities include common stocks and common stock equivalents of
domestic real estate investment trusts and other companies which operate as
real estate corporations or which have a significant portion of their assets in
real estate. Neither Fund will acquire any direct ownership of real estate.
The Equity Fund may invest in foreign equity securities through the
purchase of American Depository Receipts. American Depository Receipts are
certificates of ownership issued by a U.S. bank as a convenience to the
investors in lieu of the underlying shares which it holds in custody. To the
extent that the Equity Fund does invest in foreign securities, such investments
may be subject to special risks, such as changes in restrictions on foreign
currency transactions and rates of exchange, and changes in the administrations
or economic and monetary policies of foreign governments.
FIXED-INCOME SECURITIES
Each Fund may invest in fixed-income securities. Fixed-income securities
include corporate debt securities, U.S. government securities, mortgage-related
securities, repurchase agreements and participation interests in such
securities. The Money Market Fund will not invest in corporate debt
securities, and the Equity Fund will only invest in corporate debt securities
rated A or higher by S&P or Moody's.
Fixed-income securities are generally considered to be interest rate
sensitive, which means that their value will generally decrease when interest
rates rise and increase when interest rates fall. Securities with shorter
maturities, while offering lower yields, generally provide greater price
stability than longer term securities and are less affected by changes in
interest rates.
U.S. GOVERNMENT OBLIGATIONS--Each Fund may invest in U.S. government
obligations. U.S. government obligations may be backed by the credit of the
government as a whole or only by the issuing agency. U.S. Treasury bonds,
notes, and bills and some agency securities, such as those issued by the
Federal Housing Administration and the Government National Mortgage Association
(GNMA), are backed by the full faith and credit of the U.S. government as to
payment of principal and interest and are the highest quality government
securities. Other securities issued by U.S. government agencies or
instrumentalities, such as securities issued by the Federal Home Loan Banks and
the Federal Home Loan Mortgage Corporation, are supported only by the credit of
the agency that issued them, and not by the U.S. government. Securities issued
by the Federal Farm Credit System, the Federal Land Banks, and the Federal
National Mortgage Association (FNMA) are supported by the agency's right to
borrow money from the U.S. Treasury under certain circumstances, but are not
backed by the full faith and credit of the U.S. government.
MORTGAGE-RELATED SECURITIES--One form of U.S. government obligations in
which each Fund may invest is mortgage-related securities. Mortgage-related
securities include securities representing interests in a pool of mortgages.
These securities, including securities issued by FNMA, GNMA and the Federal
Home Loan Mortgage
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<PAGE> 16
Corporation, provide investors with payments consisting of
both interest and principal as the mortgages in the underlying mortgage pools
are repaid. The Funds will only invest in pools of mortgage loans assembled
for sale to investors by agencies or instrumentalities of the U.S. government.
Unscheduled or early payments on the underlying mortgages may shorten the
securities' effective maturities.
Other types of securities representing interests in a pool of mortgage
loans are known as collateralized mortgage obligations (CMOs) and real estate
mortgage investment conduits (REMICs) and multi-class pass-throughs. CMOs and
REMICs are debt instruments collateralized by pools of mortgage loans or other
mortgage-backed securities. Multiclass pass-through securities are equity
interests in a trust composed of mortgage loans or other mortgage-backed
securities. Payments of principal and interest on underlying collateral
provides the funds to pay debt service on the CMO or REMIC or make scheduled
distributions on the multi-class pass-through securities. The Funds will only
invest in CMOs, REMICs and multi-class pass-through securities (collectively
"CMOs" unless the context indicates otherwise) issued by agencies or
instrumentalities of the U.S. government (such as the Federal Home Loan
Mortgage Corporation). Neither Fund will invest in "stripped" CMOs, which
represent only the income portion or the principal portion of the CMO.
CMOs are issued with a variety of classes or "tranches," which have
different maturities and are often retired in sequence. One or more tranches
of a CMO may have coupon rates which reset periodically at a specified
increment over an index such as the London Interbank Offered Rate ("LIBOR").
These "floating rate CMOs," typically are issued with lifetime "caps" on their
coupon rate, which means that there is a ceiling beyond which the coupon rate
may not be increased. The yield of some floating rate CMOs varies in excess of
the change in the index, which would cause the value of such CMOs to fluctuate
significantly once rates reach the cap.
REMICs, which have elected to be treated as such under the Internal
Revenue Code, are private entities formed for the purpose of holding a fixed
pool of mortgages secured by an interest in real property. REMICs are similar
to CMOs in that they issue multiple classes of securities. As with other CMOs,
the mortgages which collateralize the REMICs in which a Fund may invest include
mortgages backed by GNMA certificates or other mortgage pass-throughs issued or
guaranteed by the U.S. government, its agencies or instrumentalities.
The average life of securities representing interests in pools of mortgage
loans is likely to be substantially less than the original maturity of the
mortgage pools as a result of prepayments or foreclosures of such mortgages.
Prepayments are passed through to the registered holder with the regular
monthly payments of principal and interest, and have the effect of reducing
future payments. To the extent the mortgages underlying a security
representing an interest in a pool of mortgages are prepaid, a Fund may
experience a loss (if the price at which the respective security was acquired
by the Fund was at a premium over par, which represents the price at which the
security will be redeemed upon prepayment). In addition, prepayments of such
securities held by a Fund will reduce the share price of the Fund to the extent
the market value of the securities at the time of prepayment exceeds their par
value. Furthermore, the prices of mortgage-related securities can be
significantly affected by changes in interest rates. Prepayments may occur
with greater frequency in periods of declining mortgage rates because, among
other reasons, it may be possible for mortgagors to refinance their outstanding
mortgages at lower interest rates. In such periods, it is likely that any
prepayment proceeds would be reinvested by a Fund at lower rates of return.
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<PAGE> 17
INVESTMENT TECHNIQUES
REPURCHASE AGREEMENTS--A repurchase agreement is a short-term investment
in which the purchaser (i.e., a Fund) acquires ownership of a U.S. Government
obligation (which may be of any maturity) and the seller agrees to repurchase
the obligation at a future time at a set price, thereby determining the yield
during the purchaser's holding period (usually not more than seven days from
the date of purchase). Any repurchase transaction in which a Fund engages will
require full collateralization of the seller's obligation during the entire
term of the repurchase agreement. In the event of a bankruptcy or other
default of the seller, a Fund could experience both delays in liquidating the
underlying security and losses in value. However, both Funds intend to enter
into repurchase agreements only with Star Bank, N.A. (the Trust's Custodian),
other banks with assets of $1 billion or more and registered securities dealers
determined by the Adviser (subject to review by the Board of Trustees) to be
creditworthy. The Adviser monitors the creditworthiness of the banks and
securities dealers with which a Fund engages in repurchase transactions, and a
Fund will not invest more than 5% of its net assets in illiquid securities,
including repurchase agreements maturing in more than seven days.
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS--Each Fund may buy and sell
securities on a when-issued or delayed delivery basis, with payment and
delivery taking place at a future date. The price and interest rate that will
be received on the securities are each fixed at the time the buyer enters into
the commitment. A Fund may enter into such forward commitments if it holds,
and maintains until the settlement date in a separate account at the Fund's
Custodian, cash or U.S. government securities in an amount sufficient to meet
the purchase price. Forward commitments involve a risk of loss if the value of
the security to be purchased declines prior to the settlement date. Any change
in value could increase fluctuations in a Fund's share price and yield.
Although a Fund will generally enter into forward commitments with the
intention of acquiring securities for its portfolio, a Fund may dispose of a
commitment prior to the settlement if the Adviser deems it appropriate to do
so.
FLOATING AND VARIABLE RATE OBLIGATIONS--Each Fund may invest in floating
and variable rate obligations. Floating rate obligations have an interest rate
which is fixed to a specified interest rate, such as a bank prime rate, and is
automatically adjusted when the specified interest rate changes. Variable rate
obligations have an interest rate which is adjusted at specified intervals to a
specified interest rate. Periodic interest rate adjustments help stabilize the
obligations' market values.
A Fund may purchase these obligations from the issuers or may purchase
participation interests in pools of these obligations from banks or other
financial institutions. Variable and floating rate obligations may carry
demand features that permit a Fund to sell the obligations back to the issuers
or to financial intermediaries at par value plus accrued interest upon short
notice at any time or prior to specific dates. The inability of the issuer or
financial intermediary to repurchase an obligation on demand could affect the
liquidity of the Fund's portfolio. Frequently, obligations with demand
features are secured by letters of credit or comparable guarantees.
BORROWING--A Fund may borrow money for temporary or emergency purposes in
an amount not exceeding 33 1/3 of the value of the Fund's total assets
(calculated after such borrowing). Borrowings other than from banks are
limited to 5% of total assets (calculated before such borrowing).
LOANS OF PORTFOLIO SECURITIES--Each Fund may make short and long term
loans of its portfolio securities. Under the lending policy authorized by the
Board of Trustees and implemented by the Adviser in response to requests of
broker-dealers or institutional investors which the Adviser deems qualified, the
borrower must agree to maintain collateral, in the form of cash or U.S.
government obligations, with
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<PAGE> 18
the Fund on a daily mark-to-market basis in an amount at least equal to 100% of
the value of the loaned securities. The Fund will continue to receive dividends
or interest on the loaned securities and may terminate such loans at any time or
reacquire such securities in time to vote on any matter which the Board of
Trustees determines to be serious. With respect to loans of securities, there
is the risk that the borrower may fail to return the loaned securities or that
the borrower may not be able to provide additional collateral.
OPTIONS TRANSACTIONS
The Equity Fund may write covered put and call options on individual
securities, write covered put and call options on stock indices traded on a
securities exchange and engage in related closing transactions. A put (call)
option on a security is an agreement to buy (sell) a particular portfolio
security if the option is exercised at a specified price, or before a set date.
An option on a stock index gives the holder the right to receive, upon
exercising the option, a cash settlement amount based on the difference between
the exercise price and the value of the underlying stock index. To cover the
potential obligations involved in these option transactions, the Fund will own
the underlying equity security (for a call option); will segregate with the
Custodian high grade liquid debt obligations equal to the option exercise price
(for a put option); or (for an option on a stock index) will either hold a
portfolio of stocks substantially replicating the movement of the index or, to
the extent the Fund does not hold such a portfolio, will segregate with the
Custodian high grade liquid debt obligations equal to the market value of the
stock index option, marked to market daily. Risks associated with writing
options include the possible inability to effect closing transactions at
favorable prices and an appreciation limit on the securities set aside for
settlement, as well as (in the case of an option on a stock index) exposure to
an indeterminate liability. There is no assurance of liquidity in the
secondary market for purposes of closing out option positions. Also, the Equity
Fund may purchase put and call options on individual securities and on stock
indices for the purpose of hedging against the risk of unfavorable price
movements adversely affecting the value of the Fund's portfolio securities or
securities the Fund intends to buy. The Fund may also sell put and call
options in closing transactions.
OTHER INVESTMENTS
Subject to applicable restrictions under the Investment Company Act of
1940, (i) each Fund is permitted to invest in other no-load investment
companies at any time, but neither Fund will invest in the other Fund, and (ii)
each Fund may engage in short sales if, at the time of the short sale, the Fund
owns or has the right to obtain an equal amount of the security being sold
short at no additional cost. If a Fund acquires securities of another
investment company, the shareholders of the Fund may be subject to duplicative
management fees on the assets invested in such other investment company.
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<PAGE> 19
GENERAL INFORMATION
FUNDAMENTAL POLICIES. The investment limitations set forth in the
Statement of Additional Information as fundamental policies may not be changed
without the affirmative vote of the majority of the outstanding shares of the
applicable Fund. The investment objective of each Fund and all policies not
specified as fundamental may be changed by the Board of Trustees without the
affirmative vote of a majority of the outstanding shares of the Fund. Any
change in objective may result in the Fund having an investment objective
different from the objective which the shareholders considered appropriate at
the time of investment in the Fund. Except for the limitations on borrowing,
percentage restrictions apply as of the time of an investment and without regard
to later increases or decreases in the value of securities or total net assets.
PORTFOLIO TURNOVER. Each of the Funds does not intend to purchase or
sell securities for short term trading purposes. Each Fund will, however, sell
any portfolio security (without regard to the length of time it has been held)
when the Adviser believes that market conditions, creditworthiness factors or
general economic conditions warrant such action.
SHAREHOLDER RIGHTS. Any Trustee of the Trust may be removed by vote of
the shareholders holding not less than two-thirds of the outstanding shares of
the Trust. The Trust does not hold an annual meeting of shareholders. When
matters are submitted to shareholders for a vote, each shareholder is entitled
to one vote for each whole share he owns and fractional votes for fractional
shares he owns. All shares of a Fund have equal voting rights and liquidation
rights.
MAJOR SHAREHOLDERS. As of April 10, 1996, Schellgell Food Service, Inc.
(a company controlled by George M. Schellgell, former trustee of the Trust)
may be deemed to control the Equity Fund as a result of its beneficial
ownership of more than 25% of the shares of the Fund.
PERFORMANCE INFORMATION
Each Fund may periodically advertise "average annual total return." The
"average annual total return" of a Fund refers to the average annual compounded
rate of return over the stated period that would equate an initial amount
invested at the beginning of a stated period to the ending redeemable value of
the investment. The calculation of "average annual total return" assumes the
reinvestment of all dividends and distributions.
Each Fund may also periodically advertise its total return over various
periods in addition to the value of a $10,000 investment (made on the date of
the initial public offering of the Fund's shares) as of the end of a specified
period. The "total return" for a Fund refers to the percentage change in the
value of an account between the beginning and end of the stated period,
assuming no activity in the account other than reinvestment of dividends and
capital gains distributions.
The Money Market Fund may periodically advertise its "yield" and
"effective yield." The "yield" of the Fund refers to the income generated by an
investment in the Fund over a seven-day period (which period will be stated in
the advertisement). This income is then "annualized." That is, the amount of
income generated by the investment during that week is assumed to be generated
each week over a 52-week period and is shown as a percentage of the investment.
The "effective yield" is calculated similarly but, when annualized, the income
earned by an investment in the Fund is assumed to be reinvested. The
"effective yield" will be slightly higher than the "yield" because of the
compounding effect of this assumed reinvestment.
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The Funds may also include in advertisements data comparing performance
with other mutual funds as reported in non-related investment media, published
editorial comments and performance rankings compiled by independent
organizations and publications that monitor the performance of mutual funds
(such as Lipper Analytical Services, Inc., Morningstar, Inc. or the Donoghue
Organization, Inc.). Performance information may be quoted numerically or may
be presented in a table, graph or other illustration. In addition, Fund
performance may be compared to well-known indices of market performance
including the Standard & Poor's (S&P) 500 Index or the Dow Jones Industrial
Average. The Funds' Annual Report contains additional performance information.
The Report is available upon request and without charge from the Funds'
Transfer Agent.
The advertised performance data of each Fund is based on historical
performance and is not intended to indicate future performance. Yields and
rates of total return quoted by a Fund may be higher or lower than past
quotations, and there can be no assurance that any yield or rate of total
return will be maintained. The principal value of an investment in the Equity
Fund will fluctuate so that a shareholder's shares, when redeemed, may be worth
more or less than the shareholder's original investment.
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INVESTMENT ADVISER
Boberski & Company
One Westminster Place
Lake Forest, Illinois 60045
CUSTODIAN (ALL INITIAL AND SUBSEQUENT PURCHASES)
The Lake Forest Funds
c/o Star Bank, N.A.
P.O. Box 640244
Cincinnati, Ohio 45264-0244
TRANSFER AGENT (ALL REDEMPTION AND EXCHANGE REQUESTS AND SHAREHOLDER INQUIRIES)
American Data Services, Inc.
24 W. Carver Street
Huntington, New York 11743
(800) 592-7722
AUDITORS
McCurdy & Associates CPA's, Inc.
27955 Clemens Road
Westlake, Ohio 44145
LEGAL COUNSEL
D'Ancona & Pflaum
30 N. LaSalle Street
Chicago, Illinois 60602
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
either Fund. This Prospectus does not constitute an offer by either Fund to
sell its shares in any state to any person to whom it is unlawful to make such
offer in such state.
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TABLE OF CONTENTS
<TABLE>
<S> <C>
SUMMARY OF FUND EXPENSES.............................................2
THE FUNDS............................................................3
INVESTMENT OBJECTIVES AND STRATEGIES.................................3
FINANCIAL HIGHLIGHTS.................................................5
HOW TO INVEST IN EACH FUND...........................................6
EXCHANGE PRIVILEGE...................................................7
HOW TO REDEEM SHARES.................................................8
SHARE PRICE CALCULATION.............................................10
DIVIDENDS AND DISTRIBUTIONS.........................................10
TAXES...............................................................11
MANAGEMENT OF THE FUNDS.............................................12
INVESTMENT POLICIES AND TECHNIQUES AND RISK CONSIDERATIONS..........12
GENERAL INFORMATION.................................................17
PERFORMANCE INFORMATION.............................................17
</TABLE>
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THE LAKE FOREST FUNDS
STATEMENT OF ADDITIONAL INFORMATION
JUNE 16, 1996
LAKE FOREST CORE EQUITY FUND
LAKE FOREST MONEY MARKET FUND
This Statement of Additional Information is not a prospectus. It should be
read in conjunction with the Prospectus of The Lake Forest Funds dated June 16,
1996. The Funds' February 29, 1996 Annual Report accompanies this Statement of
Additional Information. The financial statements appearing in the Annual
Report are incorporated herein by reference. A copy of the Prospectus can be
obtained by writing the Transfer Agent at 24 W. Carver Street, Huntington, New
York 11743, or by calling 1-800-592-7722.
<PAGE> 24
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
DESCRIPTION OF THE TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . 1
INVESTMENT LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
THE MANAGEMENT AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
TRUSTEES AND OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
TRUSTEE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
PORTFOLIO TRANSACTIONS AND BROKERAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
DETERMINATION OF SHARE PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
INVESTMENT PERFORMANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
CUSTODIAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
TRANSFER AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
</TABLE>
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<PAGE> 25
DESCRIPTION OF THE TRUST
The Lake Forest Funds (the "Trust") is an open-end investment company
established under the laws of Ohio by an Agreement and Declaration of Trust
dated November 23, 1994 (the "Trust Agreement"). The Trust Agreement permits
the Trustees to issue an unlimited number of shares of beneficial interest of
separate series without par value. Shares of two series have been authorized,
which shares constitute the interests in Lake Forest Core Equity Fund (the
"Equity Fund") and Lake Forest Money Market Fund (the "Money Market Fund").
Each share of a series represents an equal proportionate interest in the
assets and liabilities belonging to that series with each other share of that
series and is entitled to such dividends and distributions out of income
belonging to the series as are declared by the Trustees. The shares do not
have cumulative voting rights or any preemptive or conversion rights, and the
Trustees have the authority from time to time to divide or combine the shares
of any series into a greater or lesser number of shares of that series so long
as the proportionate beneficial interest in the assets belonging to that series
and the rights of shares of any other series are in no way affected. In case
of any liquidation of a series, the holders of shares of the series being
liquidated will be entitled to receive as a class a distribution out of the
assets, net of the liabilities, belonging to that series. Expenses
attributable to any series are borne by that series. Any general expenses of
the Trust not readily identifiable as belonging to a particular series are
allocated by or under the direction of the Trustees in such manner as the
Trustees determine to be fair and equitable. No shareholder is liable to
further calls or to assessment by the Trust without his or her express consent.
Upon sixty days prior written notice to shareholders, a Fund may make
redemption payments in whole or in part in securities or other property if the
Trustees determine that existing conditions make cash payments undesirable.
For other information concerning the purchase and redemption of shares of the
Funds, see "How to Invest in Each Fund," "How to Redeem Shares" and "Exchange
Privilege" in the Prospectus. For a description of the methods used to
determine the share price and value of each Fund's assets, see "Share Price
Calculation" in the Prospectus.
As of April 10, 1996, the following persons owned five percent (5%) or more
of the Equity Fund: Lynn A. Boberski, One Westminster Place, Lake Forest,
Illinois 60045 -- 16.36%; Schellgell Food Service, Inc. (a Wisconsin
corporation), 1200 S. 43rd Street, Milwaukee, Wisconsin 53214 -- 38.53%;
Clarence W. Payne, Living Trust, Virginia and Richard C. Payne, Trustees, 104
Rutgers Court, Glenview, Illinois 60025 -- 7.86%; Irving V. Boberski IRA, One
Westminster Place, Lake Forest, Illinois 60045 -- 7.83%.
As of April 10, 1996, the following persons owned five percent (5%) or more
of the Money Market Fund: Lynn A. Boberski --21.16%; Stephen W. Bolander,
trustee, 625 W. Winchester Road, Libertyville, Illinois 60048 -- 15.91%;
Phillip M. Hackbarth IRA, Star Bank, N.A. Custodian, 3 West Onwentsia Road,
Lake Forest, Illinois 60045 -- 7.07%; Lake Forest Knights of Columbus
Charities, Inc., P.O. Box 507, Lake Forest, Illinois 60045 -- 5.47%; Robert L.
Pasquesi, trustee, 585 Bank Lane, Lake Forest, Illinois 60045 - 13.04%;
Frances B. Hansen, 262 N. Ahwahnee Lane, Lake Forest, Illinois 60045 -- 8.04%;
Eugene Potente IRA, Star Bank N.A. Custodian, 914 60th Street, Kenosha,
Wisconsin 53140 -- 8.02%.
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK CONSIDERATIONS
This section contains a more detailed discussion of some of the investments a
Fund may make and some of the techniques it may use, as described in the
Prospectus (see "Investment Objectives and Strategies" and "Investment Policies
and Techniques and Risk Considerations").
A. Mortgage-Related Securities. Government-related organizations which issue
mortgage-related securities include the Government National Mortgage
Association ("GNMA"), Federal National Mortgage Association ("FNMA") and
Federal Home Loan Mortgage Corporation ("FHLMC"). Securities issued by GNMA
and FNMA are fully modified pass through securities, i.e., the timely payment
of principal and interest is guaranteed by the issuer. FHLMC securities are
modified pass through securities, i.e., the timely payment of interest is
guaranteed by FHLMC, principal is passed through as collected but payment
thereof is guaranteed not later than one year after it becomes payable.
B. Corporate Debt Securities. Corporate debt securities are long and short
term debt obligations issued by companies (such as publicly issued and
privately placed bonds, notes and commercial paper). The Adviser intends to
invest Equity Fund assets only in corporate debt securities rated A or higher
by Standard & Poor's Corporation ("S&P") or Moody's Investors Services, Inc.
("Moody's"), or if unrated, determined by the Adviser to be of comparable
quality. Debt securities rated A or higher are in the three highest ratings
categories and generally have adequate to strong protection of principal and
interest payments.
- 1 -
<PAGE> 26
C. Forward Commitments. Each Fund will direct its Custodian to place cash,
U.S. government obligations or other liquid high grade debt obligations in a
separate account of the Trust in an amount equal to the commitments of the Fund
to purchase securities as a result of its forward commitment agreement
obligations. With respect to forward commitments to sell securities, the Trust
will direct its Custodian to place the securities in a separate account. When
a separate account is maintained in connection with forward commitment
transactions to purchase securities, the securities deposited in the separate
account will be valued daily at market for the purpose of determining the
adequacy of the securities in the account. If the market value of such
securities declines, additional cash, U.S. government obligations or liquid
high grade debt obligations will be placed in the account on a daily basis so
that the market value of the account will equal the amount of the Fund's
commitments to purchase securities. To the extent funds are in a separate
account, they will not be available for new investment or to meet redemptions.
Securities purchased on a forward commitment basis and the securities held
in each Fund's portfolio are subject to changes in market value based upon the
public's perception of the creditworthiness of the issuer and changes in the
level of interest rates (which will generally result in all of those securities
changing in value in the same way, i.e., all those securities experiencing
appreciation when interest rates decline and depreciation when interest rates
rise). Therefore, if in order to achieve a higher level of income, the Fund
remains substantially fully invested at the same time that it has purchased
securities on a forward commitment basis, there will be a possibility that the
market value of the Fund's assets will have greater fluctuation.
With respect to 75% of the total assets of each Fund, the value of the
Fund's commitments to purchase the securities of any one issuer, together with
the value of all securities of such issuer owned by the Fund, may not exceed 5%
of the value of the Fund's total assets at the time the commitment to purchase
such securities is made; provided, however, that this restriction does not
apply to U.S. government obligations or repurchase agreements with respect
thereto. In addition, each Fund will maintain an asset coverage of 300% for
all of its borrowings. Subject to the foregoing restrictions, there is no
limit on the percentage of the Fund's total assets which may be committed to
such purchases.
D. Option Transactions. The Equity Fund may engage in option transactions
involving individual securities and market indices. An option involves either
(a) the right or the obligation to buy or sell a specific instrument at a
specific price until the expiration date of the option, or (b) the right to
receive payments or the obligation to make payments representing the difference
between the closing price of a market index and the exercise price of the
option expressed in dollars times a specified multiple until the expiration
date of the option. Options are sold (written) on securities and market
indices. The purchaser of an option on a security pays the seller (the writer)
a premium for the right granted but is not obligated to buy or sell the
underlying security. The purchaser of an option on a market index pays the
seller a premium for the right granted, and in return the seller of such an
option is obligated to make the payment. A writer of an option may terminate
the obligation prior to expiration of the option by making an offsetting
purchase of an identical option. Options are traded on organized exchanges and
in the over-the-counter market. Options on securities which the Fund sells
(writes) will be covered or secured, which means that it will own the
underlying security (for a call option); will segregate with the Custodian high
quality liquid debt obligations equal to the option exercise price (for a put
option); or (for an option on a stock index) will hold a portfolio of
securities substantially replicating the movement of the index (or, to the
extent it does not hold such a portfolio, will maintain a segregated account
with the Custodian of high quality liquid debt obligations equal to the market
value of the option, marked to market daily). When the Fund writes options, it
may be required to maintain a margin account, to pledge the underlying
securities or U.S. government obligations or to deposit liquid high quality
debt obligations in a separate account with the Custodian.
The purchase and writing of options involves certain risks. The purchase of
options limits the Fund's potential loss to the amount of the premium paid and
can afford the Fund the opportunity to profit from favorable movements in the
price of an underlying security to a greater extent than if transactions were
effected in the security directly. However, the purchase of an option could
result in the Fund losing a greater percentage of its investment than if the
transaction were effected directly. When the Fund writes a covered call
option, it will receive a premium, but it will give up the opportunity to
profit from a price increase in the underlying security above the exercise
price as long as its obligation as a writer continues, and it will retain the
risk of loss should the price of the security decline. When the Fund writes a
covered put option, it will receive a premium, but it will assume the risk of
loss should the price of the underlying security fall below the exercise price.
When the Fund writes a covered put option on a stock index, it will assume the
risk that the price of the index will fall below the exercise price, in which
case the Fund may be required to enter into a closing transaction at a loss.
An analogous risk would apply if the Fund writes a call option on a stock index
and the price of the index rises above the exercise price.
E. Illiquid Securities. The portfolio of each Fund may contain illiquid
securities. Illiquid securities generally include securities which cannot be
disposed of promptly and in the ordinary course of business without taking a
reduced price. Securities may be illiquid due to contractual or legal
restrictions on resale or lack of a ready market. The following securities are
considered to be
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<PAGE> 27
illiquid: repurchase agreements and time deposits maturing in more than seven
days, options traded in the over-the-counter market, nonpublicly offered
securities, CMOs for which there is no established market, restricted
securities, and mortgage-related securities which cannot be disposed of within
seven days in the usual course of business without taking a reduced price. The
Adviser and the Trustees will continually monitor the secondary markets for
mortgage-related securities and are responsible for making the determination of
which securities are considered to be illiquid. Neither Fund will invest more
than 5% of its net assets in illiquid securities.
F. Other Investment Companies. Each Fund is permitted to invest in other
investment companies at any time so long as such investment meets the
requirements under the Investment Company Act of 1940. Currently, these are
that such investment does not cause a Fund to (a) have more than 5% of the
value of its total assets invested in any one such company, (b) have more than
10% of the Fund's total assets invested in such companies, or (c) own more than
3% of the total outstanding voting stock of any such company.
INVESTMENT LIMITATIONS
Fundamental Investment Restrictions. The investment restrictions described
below are fundamental and may not be changed without the affirmative vote of a
majority of the outstanding shares of the applicable Fund. As used in the
Prospectus and this Statement of Additional Information, the term "majority" of
the outstanding shares of the Trust (or of any series) means the lesser of (1)
67% or more of the outstanding shares of the Trust (or the applicable series)
present at a meeting, if the holders of more than 50% of the outstanding shares
of the Trust (or applicable series) are present or represented at such meeting;
or (2) more than 50% of the outstanding shares of the Trust (or the applicable
series).
1. Borrowing Money. The Funds will not borrow money, except (a) from a bank,
provided that immediately after such borrowing there is an asset coverage of
300% for all borrowings of the Fund; or (b) from a bank or other persons for
temporary purposes only, provided that such temporary borrowings are in an
amount not exceeding 5% of the Fund's total assets at the time when the
borrowing is made. This limitation does not preclude a Fund from entering into
reverse repurchase transactions, provided that the Fund has an asset coverage
of 300% for all borrowings and repurchase commitments of the Fund pursuant to
reverse repurchase transactions.
2. Senior Securities. The Funds will not issue senior securities. This
limitation is not applicable to activities that may be deemed to involve the
issuance or sale of a senior security by the Fund, provided that the Fund's
engagement in such activities is (a) consistent with or permitted by the
Investment Company Act of 1940, as amended, the rules and regulations
promulgated thereunder or interpretations of the Securities and Exchange
Commission or its staff and (b) as described in the Prospectus and this
Statement of Additional Information.
3. Underwriting. The Funds will not act as underwriter of securities issued
by other persons. This limitation is not applicable to the extent that, in
connection with the disposition of portfolio securities (including restricted
securities), the Fund may be deemed an underwriter under certain federal
securities laws.
4. Real Estate. The Funds will not purchase or sell real estate. This
limitation is not applicable to investments in marketable securities which are
secured by or represent interests in real estate. This limitation does not
preclude the Fund from investing in mortgage-related securities or investing in
companies engaged in the real estate business or have a significant portion of
their assets in real estate (including real estate investment trusts).
5. Commodities. The Funds will not purchase or sell commodities unless
acquired as a result of ownership of securities or other investments. This
limitation does not preclude a Fund from purchasing or selling options or
futures contracts, from investing in securities or other instruments backed by
commodities or from investing in companies which are engaged in a commodities
business or have a significant portion of their assets in commodities.
6. Loans. The Funds will not make loans to other persons, except (a) by
loaning portfolio securities, (b) by engaging in repurchase agreements, or (c)
by purchasing nonpublicly offered debt securities. For purposes of this
limitation, the term "loans" shall not include the purchase of a portion of an
issue of publicly distributed bonds, debentures or other securities.
7. Concentration. The Funds will not invest 25% or more of its total assets
in a particular industry. This limitation is not applicable to investments in
obligations issued or guaranteed by the U.S. government, its agencies and
instrumentalities or repurchase agreements with respect thereto.
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<PAGE> 28
Non-Fundamental Investment Restrictions. The following policies have been
adopted by the Trust with respect to each Fund and may be changed at any time
by the Board of Trustees without shareholder approval.
1. Pledging. A Fund will not mortgage, pledge, hypothecate or in any manner
transfer, as security for indebtedness, any assets of the Fund except as may be
necessary in connection with borrowings described in limitation (1) above.
Margin deposits, security interests, liens and collateral arrangements with
respect to transactions involving options, futures contracts, short sales and
other permitted investments and techniques are not deemed to be a mortgage,
pledge or hypothecation of assets for purposes of this limitation.
2. Borrowing. A Fund will not purchase any security while borrowings
(including reverse repurchase agreements) representing more than 5% of its
total assets are outstanding.
3. Margin Purchases. A Fund will not purchase securities or evidences of
interest thereon on "margin." This limitation is not applicable to short term
credit obtained by the Fund for the clearance of purchases and sales or
redemption of securities, or to arrangements with respect to transactions
involving options, futures contracts, short sales and other permitted
investments and techniques.
4. Short Sales. A Fund will not effect short sales of securities unless it
owns or has the right to obtain securities equivalent in kind and amount to the
securities sold short.
5. Options. A Fund will not purchase or sell puts, calls, options or
straddles except as described in the Prospectus and this Statement of
Additional Information.
6. Illiquid Investments. A Fund will not invest more than 5% of its net
assets in securities for which there are legal or contractual restrictions on
resale and other illiquid securities.
Except for the limitations on borrowing set forth above, all percentage
restrictions, whether fundamental or non-fundamental, apply as of the time of
an investment without regard to any later fluctuations in the value of
portfolio securities or other assets.
Notwithstanding any of the foregoing limitations, any investment company,
whether organized as a trust, association or corporation, or a personal holding
company, may be merged or consolidated with or acquired by the Trust, provided
that if such merger, consolidation or acquisition results in an investment in
the securities of any issuer prohibited by said paragraphs, the Trust shall,
within ninety days after the consummation of such merger, consolidation or
acquisition, dispose of all of the securities of such issuer so acquired or
such portion thereof as shall bring the total investment therein within the
limitations imposed by said paragraphs above as of the date of consummation.
THE MANAGEMENT AGREEMENT
Under the terms of the management agreement (the "Agreement"), the Adviser,
Boberski & Company, One Westminster Place, Lake Forest, Illinois, manages the
Funds' investments subject to approval of the Board of Trustees and pays all of
the operating expenses of the Funds except brokerage, taxes, interest and
extraordinary expenses. The Funds are responsible for payment of expenses
incurred in connection with the organization and initial registration of their
shares. As compensation for its management services and agreement to pay the
Funds' expenses, the Funds are obligated to pay the Adviser a fee computed and
accrued daily and paid monthly at an annual rate of 1.00% of the average daily
net assets of the Equity Fund and 0.50% of the average daily net assets of the
Money Market Fund. The Adviser has agreed to cap the fee paid by the Money
Market Fund at 0.125% for an indefinite period of time.
The Adviser may waive all or part of its fee, at any time, and at its sole
discretion, but such action shall not obligate the Adviser to waive any fees in
the future.
The Adviser retains the right to use the name "Lake Forest" in connection
with another investment company or business enterprise with which the Adviser
is or may become associated. The Trust's right to use the name "Lake Forest"
automatically ceases thirty days after termination of the Agreement and may be
withdrawn by the Adviser on thirty days written notice.
The Adviser may make payments to banks or other financial institutions that
provide shareholder services and administer shareholder accounts. The
Glass-Steagall Act prohibits banks from engaging in the business of
underwriting, selling or distributing securities. Although the scope of this
prohibition under the Glass-Steagall Act has not been clearly defined by the
courts or appropriate regulatory agencies, management of the Funds believes
that the Glass-Steagall Act should not preclude a bank from providing such
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<PAGE> 29
services. However, state securities laws on this issue may differ from the
interpretations of federal law expressed herein and banks and financial
institutions may be required to register as dealers pursuant to state law. If
a bank were prohibited from continuing to perform all or a part of such
services, the Adviser believes that there would be no material impact on the
Funds or their shareholders. Banks may charge their customers fees for
offering these services to the extent permitted by applicable regulatory
authorities, and the overall return to those shareholders availing themselves
of the bank services will be lower than to those shareholders who do not. The
Funds may from time to time purchase securities issued by banks which provide
such services; however, in selecting investments for the Funds, no preference
will be shown for such securities.
TRUSTEES AND OFFICERS
The names of the Trustees and executive officers of the Trust are shown
below. Each Trustee who is an "interested person" of the Trust, as defined in
the Investment Company Act of 1940, is indicated by an asterisk.
<TABLE>
<CAPTION>
NAME POSITION
---- --------
<S> <C>
*Irving V. Boberski President, Treasurer, Secretary and Trustee
Robert E. Alfe Trustee
Philip M. Hackbarth Trustee
Gary M. Patyk Trustee
</TABLE>
The ages as of April 16, 1996, the addresses and the principal occupations
of the executive officers and Trustees of the Trust during the past five years
are set forth below:
Irving V. Boberski, Ph.D., 57, One Westminster Place, Lake Forest, Illinois,
is the founder and president of Boberski & Company, the Fund's Investment
Adviser, an investment counseling firm organized in 1966. He is also the
founder and president of Boberski Capital Markets, Inc., a commodity trading
adviser engaged in institutional hedging and arbitrage, that was organized in
1981. From 1964 to 1992 he was, successively: director, chairman of the
management committee, president and CEO, and chairman of the board of
directors of Avondale Federal Savings Bank. He has also served as a
professional economist and adviser to a number of business organizations,
industry trade groups, government agencies and philanthropic organizations.
In July, 1992, Mr. Boberski entered into a settlement agreement with the
Office of Thrift Supervision ("OTS") settling an administrative proceeding
alleging violations of banking regulations and breaches of fiduciary duty in
connection with the operations of Avondale Federal Savings Bank ("Avondale"),
of which Mr. Boberski was a director and former chief executive officer. In
the settlement, Mr. Boberski agreed to pay a civil money penalty, to make
restitution to Avondale and to be removed from his position as a director of
Avondale and be prohibited from participating in the conduct of affairs of
Avondale. He also agreed not to participate in the affairs of a federally
insured banking institution without prior approval of the OTS. Mr. Boberski
was advised to settle the proceeding in order to avoid the time and expense of
litigation, and he did so, expressly denying every allegation. The Adviser was
not a party to the above described proceeding.
Robert E. Alfe, 57, 582 Oakwood Avenue, Lake Forest, Illinois, is an
architect and builder, and the President of Alfe Development Corporation, a
real estate development company.
Philip M. Hackbarth, 61, 140 South Dearborn Street, Suite 404, Chicago,
Illinois, is an attorney in private practice.
Gary M. Patyk, 57, 777 West Glencoe Place, Suite 111, Milwaukee,
Wisconsin 53127, has been a consultant with Transworld Systems, Inc., an
accounts receivable recovery firm, since 1995. From 1990 to 1995, he was a
consultant with Trend Consulting, a general business consulting firm.
- 5 -
<PAGE> 30
TRUSTEE COMPENSATION
The compensation paid to the Trustees of the Trust during the last fiscal
year is set forth in the following table:
<TABLE>
<CAPTION>
Pension or
Retirement Total Compensation
Aggregate Benefits Accrued Estimated Annual From Trust (the
Compensation As Part of Trust Benefits Upon Trust is not in a
Name From Trust(1) Expenses Retirement Fund Complex)(1)
---- ------------ ---------------- ---------------- ------------------
<S> <C> <C> <C> <C>
Robert E. Alfe $1,500 0 0 $1,500
Irving V. Boberski 0 0 0 0
Philip M. Hackbarth $1,500 0 0 $1,500
Gary M. Patyk(2) 0 0 0 0
George M. Schellgell(2) $1,500 0 0 $1,500
</TABLE>
(1) Under the Management Agreement the Adviser pays these fees.
(2) Mr. Schellgell resigned, effective April 15, 1996. Mr. Patyk was appointed
as a Trustee effective April 16, 1996.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Trustees of the Trust, the
Adviser is responsible for the Trust's portfolio decisions and the placing
of the Trust's portfolio transactions. In placing portfolio transactions, the
Adviser seeks the best qualitative execution for the Trust, taking into account
such factors as price (including the applicable brokerage commission or dealer
spread), the execution capability, financial responsibility and responsiveness
of the broker or dealer and the brokerage and research services provided by the
broker or dealer. The Adviser generally seeks favorable prices and commission
rates that are reasonable in relation to the benefits received.
The Adviser is specifically authorized to select brokers or dealers who also
provide brokerage and research services to the Trust and/or the other accounts
over which the Adviser exercises investment discretion and to pay such brokers
or dealers a commission in excess of the commission another broker or dealer
would charge if the Adviser determines in good faith that the commission is
reasonable in relation to the value of the brokerage and research services
provided. The determination may be viewed in terms of a particular
transaction or the Adviser's overall responsibilities with respect to the Trust
and to other accounts over which it exercises investment discretion.
Research services include supplemental research, securities and
economic analyses, statistical services and information with respect to the
availability of securities or purchasers or sellers of securities and analyses
of reports concerning performance of accounts. The research services and other
information furnished by brokers through whom the Trust effects securities
transactions may also be used by the Adviser in servicing all of its accounts.
Similarly, research and information provided by brokers or dealers serving
other clients may be useful to the Adviser in connection with its services to
the Trust. Although research services and other information are useful to the
Trust and the Adviser, it is not possible to place a dollar value on the
research and other information received. It is the opinion of the Board of
Trustees and the Adviser that the review and study of the research and other
information will not reduce the overall cost to the Adviser of performing its
duties to the Trust under the Agreement.
Over-the-counter transactions will be placed either directly with
principal market makers or with broker-dealers, if the same or a better price,
including commissions and executions, is available. Fixed income securities
are normally purchased directly from the issuer, an underwriter or a market
maker. Purchases include a concession paid by the issuer to the underwriter
and the purchase price paid to market makers may include the spread between the
bid and asked prices.
To the extent that the Trust and another of the Adviser's clients seek
to acquire the same security at about the same time, the Trust may not be able
to acquire as large a position in such security as it desires or it may have to
pay a higher price for the security. Similarly, the Trust may not be able to
obtain as large an execution of an order to sell or as high a price for any
particular
- 6 -
<PAGE> 31
portfolio security if the other client desires to sell the same portfolio
security at the same time. On the other hand, if the same securities are
bought or sold at the same time by more than one client, the resulting
participation in volume transactions could produce better executions for the
Trust. In the event that more than one client wants to purchase or sell the
same security on a given date, the purchases and sales will normally be made by
random client selection.
During the fiscal year ended February 29, 1996, the Core Equity Fund paid
brokerage commissions in the aggregate amount of $11,436. Since money market
transactions are usually principal transactions with issuers or dealers the
Money Market Fund ordinarily pays no brokerage commissions. The Fund paid
no commissions during the fiscal year ended February 29, 1996.
DETERMINATION OF SHARE PRICE
The prices (net asset values) of the shares of each Fund are
determined as of 4:00 p.m., New York Time (and the price of the Money Market
Fund is also determined as of 12:00 p.m., New York Time) on each day the Trust
is open for business and on any other day on which there is sufficient trading
in the Fund's securities to materially affect the net asset value. The Trust
is open for business on every day except Saturdays, Sundays and the following
holidays: New Year's Day, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas. For a description of
the methods used to determine the net asset value (share price), see "Share
Price Calculation" in the Prospectus.
INVESTMENT PERFORMANCE
The Core Equity Funds' total return for the fiscal year ended February
29, 1996 was 18.59%.
The Money Market Fund's current and effective yields for the seven day
period ended February 29, 1996 were 5.05% and 5.18% respectively.
"Average annual total return," as defined by the Securities and
Exchange Commission, is computed by finding the average annual compounded rates
of return (over the one and five year periods and the period from initial
public offering through the end of a Fund's most recent fiscal year) that would
equate the initial amount invested to the ending redeemable value, according to
the following formula:
n
P(1+T) =ERV
Where: P = a hypothetical $1,000 initial investment
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the
applicable period of the hypothetical $1,000
investment made at the beginning of the
applicable period.
The computation assumes that all dividends and distributions are reinvested
at the net asset value on the reinvestment dates and that a complete
redemption occurs at the end of the applicable period.
Current yield for the Money Market Fund is computed by determining the net
change in the value of a hypothetical pre-existing account with a balance of
one share at the beginning of a seven calendar day period (the "Base Period")
and dividing the net change by the value of the account at the beginning of
the Base Period to obtain the base period return, and then multiplying the
base period return by (365/7) with the resulting yield figure carried to at
least the nearest hundredth of one percent. Effective yield is computed by
compounding the base period return, according to the following formula:
365/7
effective yield = [(base period return + 1) ] - 1.
A Fund's investment performance will vary depending upon market conditions,
the composition of the Fund's portfolio and operating expenses of the Fund.
These factors and possible differences in the methods and time periods used in
calculating non-standardized investment performance should be considered when
comparing the Fund's performance to those of other investment companies or
investment vehicles. The risks associated with the Fund's investment
objective, policies and techniques should also be considered. At any time in
the future, investment performance may be higher or lower than past
performance, and there can be no assurance that any performance will continue.
- 7 -
<PAGE> 32
From time to time, in advertisements, sales literature and information
furnished to present or prospective shareholders, the performance of the Funds
may be compared to indices of broad groups of unmanaged securities considered
to be representative of or similar to the portfolio holdings of the appropriate
Fund or considered to be representative of the stock market in general. The
Funds may use the Standard & Poor's 500 Stock Index or the Dow Jones Industrial
Average.
In addition, the performance of either Fund may be compared to other groups
of mutual funds tracked by any widely used independent research firm which
ranks mutual funds by overall performance, investment objectives and assets,
such as Lipper Analytical Services, Inc., Morningstar, Inc. or the Donoghue
Organization, Inc. The objectives, policies, limitations and expenses of
other mutual funds in a group may not be the same as those of the applicable
Fund. Performance rankings and ratings reported periodically in national
financial publications such as Barron's and Fortune also may be used.
CUSTODIAN
Star Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45202, is Custodian of
each Fund's investments. The Custodian acts as each Fund's depository,
safekeeps its portfolio securities, collects all income and other payments
with respect thereto, disburses funds at the Fund's request and maintains
records in connection with its duties.
TRANSFER AGENT
American Data Services, Inc., 24 W. Carver Street, Huntington, New York
11743, acts as each Fund's transfer agent and, in such capacity, maintains
the records of each shareholder's account, answers shareholders' inquiries
concerning their accounts, processes purchases and redemptions of the Fund's
shares, acts as dividend and distribution disbursing agent and performs other
accounting and shareholder service functions. In addition, American Data
Services, Inc. provides each Fund with certain monthly reports, record-keeping
and other management-related services.
ACCOUNTANTS
The firm of McCurdy & Associates CPA's, Inc., 27955 Clemens Road, Westlake,
Ohio 44145, has been selected as independent public accountants for the Trust.
McCurdy & Associates performs an annual audit of the Funds' financial
statements and provides financial, tax and accounting consulting services as
requested.
LEGAL COUNSEL
The firm of D'Ancona & Pflaum, 30 N. LaSalle Street, Chicago, Illinois 60602
acts as legal counsel to the Funds.
- 8 -
<PAGE> 33
THE LAKE FOREST FUNDS
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
Included in Part B:
(1) Statement of Assets and Liabilities for the
Core Equity Fund as of February 29, 1996.
(2) Report of Independent Public Accountant.
(3) Statement of Assets and Liabilities for the
Money Market Fund as of February 29, 1996.
(4) Statement of Operations for the Core Equity
Fund for the period ended February 29, 1996.
(5) Statement of Operations for the Money Market
Fund for the period ended February 29, 1996.
(6) Notes to Financial Statements.
(b) Exhibits
(1) Conformed copy of the Declaration of Trust.
(2) By-Laws, as amended.
(3) Not Applicable.
(4) Not Applicable.
(5)(a) Investment Management Agreement.
(5)(b) Amendment to Investment Management Agreement.
(5)(c) Administrative Agreement.
(6) Not Applicable.
(7) Not Applicable.
(8) Custodian Agreement.
(9) Transfer Agency Agreement.
(10) Opinion and Consent of Counsel.
(11)(a) Consent of McCurdy & Associates C.P.A.'s, Inc.
(11)(b) Report of McCurdy & Associates C.P.A.'s, Inc.
<PAGE> 34
(12) Financial Statements, included in Statement
of Additional Information.
(13) Letter from initial shareholder.
(14) Model Plan used in Establishment of IRA/SEP.
(15) Not Applicable.
(16) Schedule for Computation of Each Performance
Quotation.
(17) Powers of Attorney.
Item 25. Persons Controlled by or Under Common Control with the
Registrant
None
Item 26. Number of Holders of Securities (as of April 10 , 1996):
<TABLE>
<CAPTION>
Title of Class Number of Record Holders
-------------- ------------------------
<S> <C>
Lake Forest Core Equity Fund 39
Lake Forest Money Market Fund 30
</TABLE>
Item 27. Indemnification
(a) Article VI of the Registrant's Declaration of Trust
provides for indemnification of officers and Trustees as
follows:
Section 6.4 Indemnification of Trustees, Officers,
etc. Subject to and except as otherwise provided in the
Securities Act of 1933, as amended, and the 1940 Act, 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 organization in
which the Trust has any interest as a shareholder, creditor or
otherwise (hereinafter referred to as a "Covered Person")
against all liabilities, including but not limited to amounts
paid in satisfaction of judgments, in compromise or as fines
and penalties, and expenses, including reasonable accountants'
and counsel fees, incurred by any Covered Person in connection
with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, 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, by reason of being
or having been such a Trustee or officer, director or trustee,
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 willful
misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of such Covered Person's
office.
Section 6.5 Advances of Expenses. The Trust shall
advance attorneys' fees or other expenses incurred by a
Covered Person in defending a proceeding to the full extent
permitted by the Securities Act of 1933, as amended, the 1940
Act, and Ohio Revised Code Chapter 1707, as amended. In the
event any of these laws conflict with Ohio Revised Code
Section 1701.13(E), as amended, these laws, and not Ohio
Revised Code Section 1701.13(E), shall govern.
- 2 -
<PAGE> 35
Section 6.6 Indemnification Not Exclusive, etc. The
right of indemnification provided by this Article VI shall not
be exclusive of or affect any other rights to which any such
Covered Person may be entitled. As used in this Article VI,
"Covered Person" shall include such person's heirs, executors
and administrators. 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 any such person.
The Registrant may not pay for insurance which protects the
Trustees and officers against liabilities rising from action
involving willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of
their offices.
(c) 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 provisions of Ohio law and the Agreement and Declaration
of the Registrant or the By-Laws of the Registrant, or
otherwise, the Registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the 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 Trust in the
successful defense of any action, suit or proceeding) is
asserted by such trustee, officer or controlling person in
connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
Item 28. Business and Other Connections of Investment Adviser
A. Boberski & Company (the "Adviser") is a registered investment
adviser. It has engaged in no other business during the past
two fiscal years of the Trust.
B. The Directors and officers of the Adviser have had no other
business connections during the past two years except that
Irving V. Boberski is also President and a Director of
Boberski Capital Markets, One Westminster Place, Lake Forest,
Illinois 60045-1821.
Item 29. Principal Underwriters
None.
Item 30. Location of Accounts and Records
Accounts, books and other documents required to be maintained
by Section 31(a) of the Investment Company Act of 1940 and the
Rules promulgated thereunder will be maintained by the
Registrant at One Westminster Place, Lake Forest, Illinois
60045-1821 and/or by the Registrant's Custodian, Star Bank,
N.A., 425 Walnut Street, Cincinnati, Ohio 45202 or transfer
and shareholder service agent, American Data Services, Inc.,
24 W. Carver Street, Huntington, New York 11743.
Item 31. Management Services Not Discussed in Parts A or B
None.
Item 32. Undertakings
The Registrant hereby undertakes to furnish each person to
whom a prospectus is delivered with a copy of the Registrant's
latest annual report to shareholders, upon request and
without charge.
- 3 -
<PAGE> 36
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Chicago, State of Illinois, on the
16th day of April, 1996.
THE LAKE FOREST FUNDS
By: /s/Sheldon R. Stein
------------------------
Sheldon R. Stein,
Attorney-in-Fact
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Irving V. Boberski* President, Chief Financial April 16, 1996
- ------------------ Officer and Trustee
Irving V. Boberski
Robert E. Alfe* Trustee April 16, 1996
- --------------
Robert E. Alfe
Philip M. Hackbarth* Trustee April 16, 1996
- -------------------
Philip M. Hackbarth
Gary M. Patyk* Trustee April 16, 1996
- --------------
Gary M. Patyk
*By: /s/Sheldon R. Stein
-------------------------
Sheldon R. Stein,
Attorney-in-Fact
*Sheldon R. Stein signs this document on behalf of the Registrant and the
foregoing Officers and Trustees pursuant to the power of attorney filed as
Exhibit 17 to this Registration Statement.
- 4 -
<PAGE> 1
EXHIBIT 1
LAKE FOREST TRUST
AGREEMENT AND DECLARATION OF TRUST
AGREEMENT AND DECLARATION OF TRUST made at Lake Forest, Illinois, this
______ day of November, 1994, by the Trustees hereunder, and by the holders of
Shares of beneficial interest to be issued hereunder as hereinafter provided.
WITNESSETH:
WHEREAS, this Trust is being formed to carry on the business of an
investment company; and
WHEREAS, the Trustees have agreed to manage all property coming into their
hands as trustees of an Ohio 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 benefit of the holders from time to
time of shares of beneficial interest in this Trust as hereinafter set forth.
ARTICLE I
NAME AND DEFINITIONS
Section 1.1 Name. This Trust shall be known as "LAKE FOREST TRUST"
and the Trustees shall conduct the business of the Trust under that name or any
other name as they may from time to time determine.
Section 1.2 Definitions. Whenever used herein, unless otherwise
required by the context or specifically provided:
(a) The "Trust" refers to the Ohio business trust established by this
Agreement and Declaration of Trust, as amended from time to
time;
(b) "Trustees" refers to the Trustees of the Trust named herein or
elected in accordance with Article III;
(c) "Shares" refers to the transferable units of interest into which
the beneficial interest in the Trust or any Series of the
Trust (as the context may require) shall be divided from time
to time;
(d) "Series" refers to Series of Shares established and designated
under or in accordance with the provisions of Article IV;
(e) "Shareholder" means a record owner of Shares;
(f) The "1940 Act" refers to the Investment Company Act of 1940 and
the Rules and Regulations thereunder, all as amended from time
to time;
(g) "Commission" shall have the meaning given it in the 1940 Act;
(h) "Declaration of Trust" shall mean this Agreement and Declaration
of Trust as amended or restated from time to time; and
(i) "By-Laws" shall mean the By-Laws of the Trust as amended from time
to time.
ARTICLE II
PURPOSE OF TRUST
The purpose of the Trust is to operate as an investment company, to offer
Shareholders one or more investment programs primarily in securities and debt
instruments and to engage in any and all lawful acts or activities for which
business trusts may be formed under Chapter 1746 of the Ohio Revised Code.
<PAGE> 2
ARTICLE III
THE TRUSTEES
Section 3.1 Number, Designation, Election, Term, etc.
(a) Initial Trustees. Upon his execution of this Declaration of
Trust or a counterpart hereof or some other writing in which
he accepts such Trusteeship and agrees to the provisions
hereof, Irving V. Boberski shall become a Trustee hereof.
(b) Number. The Trustees serving as such, whether named above or
hereafter becoming a Trustee, may increase or decrease the
number of Trustees to a number other than the number
theretofore determined. No decrease in the number of Trustees
shall have the effect of removing any Trustee from office
prior to the expiration of his term, but the number of
Trustees may be decreased in conjunction with the removal of a
Trustee pursuant to subsection (e) of this Section 3.1.
(c) Term. Each Trustee shall serve as a Trustee during the
lifetime of the Trust and until its termination as hereinafter
provided or until such Trustee sooner dies, resigns, retires
or is removed. The Trustees may elect their own successors
and may, pursuant to Section 3.1(f) hereof, appoint Trustees
to fill vacancies; provided that, immediately after filling a
vacancy, at least two-thirds of the Trustees then holding
office shall have been elected to such office by the
Shareholders at an annual or special meeting. If at any time
less than a majority of the Trustees then holding office were
so elected, the Trustees shall forthwith cause to be held as
promptly as possible, and in any event within 60 days, a
meeting of Shareholders for the purpose of electing Trustees
to fill any existing vacancies.
(d) Resignation and Retirement. Any Trustee may resign his trust
or retire as a Trustee, by written instrument signed by him
and delivered to the other Trustees or to any officer of the
Trust, and such resignation or retirement shall take effect
upon such delivery or upon such later date as is specified in
such instrument.
(e) Removal. Any Trustee may be removed with or without cause at
any time: (i) by written instrument, signed by at least
two-thirds of the number of Trustees prior to such removal,
specifying the date upon which such removal shall become
effective, (ii) by vote of the Shareholders holding not less
than two-thirds of the Shares then outstanding, cast in person
or by proxy at any meeting called for the purpose, or (iii) by
a declaration in writing signed by Shareholders holding not
less than two-thirds of the Shares then outstanding and filed
with the Trust's Custodian.
(f) Vacancies. Any vacancy or anticipated vacancy resulting from
any reason, including without limitation the death,
resignation, retirement, removal or incapacity of any of the
Trustees, or resulting from an increase in the number of
Trustees by the Trustees may (but so long as there are at
least three remaining Trustees, need not unless required by
the 1940 Act) be filled either by a majority of the remaining
Trustees through the appointment in writing of such other
person as such remaining Trustees in their discretion shall
determine (unless a shareholder election is required by the
1940 Act) or by the election by the Shareholders, at a meeting
called for the purpose, of a person to fill such vacancy, and
such appointment or election shall be effective upon the
written acceptance of the person named therein to serve as a
Trustee and agreement by such person to be bound by the
provisions of this Declaration of Trust, except that any such
appointment or election in anticipation of a vacancy to occur
by reason of retirement, resignation, or increase in number of
Trustees to be effective at a later date shall become
effective only at or after the effective date of said
retirement, resignation, or increase in number of Trustees.
As soon as any Trustee so appointed or elected shall have
accepted such appointment or election and shall have agreed in
writing to be bound by this Declaration of Trust and the
appointment or election is effective, the Trust estate shall
vest in the new Trustee, together with the continuing
Trustees, without any further act or conveyance.
(g) Effect of Death, Resignation, etc. The death, resignation,
retirement, removal, or incapacity of the Trustees, or any one
of them, shall not operate to annul or terminate the Trust or
to revoke or terminate any existing agency or contract created
or entered into pursuant to the terms of this Declaration of
Trust.
-2-
<PAGE> 3
(h) No Accounting. Except to the extent required by the 1940 Act
or under circumstances which would justify his removal for
cause, no person ceasing to be a Trustee as a result of his
death, resignation, retirement, removal or incapacity (nor the
estate of any such person) shall be required to make an
accounting to the Shareholders or remaining Trustees upon such
cessation.
Section 3.2 Powers of Trustees. Subject to the provisions of this
Declaration of Trust, the business of the Trust shall be managed by the
Trustees, and they shall have all powers necessary or convenient to carry out
that responsibility and the purpose of the Trust. Without limiting the
foregoing, the Trustees may adopt By-Laws not inconsistent with this
Declaration of Trust providing for the conduct of the business and affairs of
the Trust and may amend and repeal them to the extent that such By-Laws do not
reserve that right to the Shareholders; they may as they consider appropriate
elect and remove officers and appoint and terminate agents and consultants and
hire and terminate employees, any one or more of the foregoing of whom may be a
Trustee, and may provide for the compensation of all of the foregoing; they may
appoint from their own number, and terminate, any one or more committees
consisting of two or more Trustees, including without implied limitation an
executive committee, which may, when the Trustees are not in session and
subject to the 1940 Act, exercise some or all of the power and authority of the
Trustees as the Trustees may determine; in accordance with Section 3.3 they may
employ one or more Advisers, Administrators, Depositories and Custodians and
may authorize any Depository or Custodian to employ subcustodians or agents and
to deposit all or any part of such assets in a system or systems for the
central handling of securities and debt instruments, retain transfer, dividend,
accounting or Shareholder servicing agents or any of the foregoing, provide for
the distribution of Shares by the Trust through one or more distributors,
principal underwriters or otherwise, set record dates or times for the
determination of Shareholders or number of them with respect to various
matters; they may compensate or provide for the compensation of the Trustees,
officers, advisers, administrators, custodians, other agents, consultants and
employees of the Trust or the Trustees on such terms as they deem appropriate;
and in general they may delegate to any officer of the Trust, to any committee
of the Trustees and to any employee, adviser, administrator, distributor,
principal underwriter, depository, custodian, transfer and dividend disbursing
agent, or any other agent or consultant of the Trust such authority, powers,
functions and duties as they consider desirable or appropriate for the conduct
of the business and affairs of the Trust, including without implied limitation
the power and authority to act in the name of the Trust and of the Trustees, to
sign documents and to act as attorney-in-fact for the Trustees.
Without limiting the foregoing and to the extent not inconsistent with the
1940 Act or other applicable law, the Trustees shall have power and authority:
(a) Investments. To invest and reinvest cash and other property, and
to hold cash or other property uninvested without in any event
being bound or limited by any present or future law or custom in
regard to investments by trustees;
(b) Disposition of Assets. To sell, exchange, lend, pledge, mortgage,
hypothecate, write options on and lease any or all of the assets
of the Trust;
(c) Ownership Powers. To vote or give assent, or exercise any rights
of ownership, with respect to stock or other securities, debt
instruments 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, debt instruments or
property as the Trustees shall deem proper;
(d) Subscription. To exercise powers and rights of subscription or
otherwise which in any manner arise out of ownership of securities
or debt instruments;
(e) Form of Holding. To hold any security, debt instrument or
property in a form not indicating any trust, whether in bearer,
unregistered or other negotiable form, or in the name of the
Trustees or of the Trust or in the name of a custodian,
subcustodian or other depository or a nominee or nominees or
otherwise;
(f) Reorganization, etc. To consent to or participate in any plan for
the reorganization, consolidation or merger of any corporation or
issuer, any security or debt instrument of which is or was held in
the Trust; to consent to any contract, lease, mortgage, purchase
or sale of property by such corporation or issuer, and to pay
calls or subscriptions with respect to any security or debt
instrument held in the Trust;
-3-
<PAGE> 4
(g) Voting Trusts, etc. To join with other holders of any securities
or debt instruments in acting through a committee, depository,
voting trustee or otherwise, and in that connection to deposit any
security or debt instrument with, or transfer any security or debt
instrument to, any such committee, depository or trustee, and to
delegate to them such power and authority with relation to any
security or debt instrument (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, depository or trustee as the Trustees shall deem
proper;
(h) Compromise. To compromise, arbitrate or otherwise adjust claims
in favor of or against the Trust or any matter in controversy,
including but not limited to claims for taxes;
(i) Partnerships, etc. To enter into joint ventures, general or
limited partnerships and any other combinations or associations;
(j) Borrowing and Security. To borrow funds and to mortgage and
pledge the assets of the Trust or any part thereof to secure
obligations arising in connection with such borrowing;
(k) Guarantees, etc. To endorse or guarantee the payment of any notes
or other obligations of any person; to make contracts of guaranty
or suretyship, or otherwise assume liability for payment thereof;
and to mortgage and pledge the Trust property or any part thereof
to secure any of or all such obligations;
(l) Insurance. 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 Shareholders, Trustees, officers,
employees, agents, consultants, investment advisers, managers,
administrators, distributors, principal underwriters, or
independent contractors, or any thereof (or any person connected
therewith), 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 in
any such capacity, including any action taken or omitted that may
be determined to constitute negligence; provided, however, that
insurance which protects the Trustees and officers against
liabilities rising from action involving willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties
involved in the conduct of their offices may not be purchased; and
(m) Pensions, etc. 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.
Except as otherwise provided by the 1940 Act or other applicable law, this
Declaration of Trust or the By-Laws, any action to be taken by the Trustees may
be taken by a majority of the Trustees present at a meeting of Trustees (a
quorum, consisting of at least a majority of the Trustees then in office, being
present), within or without Ohio, including any meeting held by means of a
conference telephone or other communications equipment by means of which all
persons participating in the meeting can hear each other at the same time and
participation by such means shall constitute presence in person at a meeting,
or by written consents of a majority of the Trustees then in office (or such
larger or different number as may be required by the 1940 Act or other
applicable law).
Section 3.3 Certain Contracts. Subject to compliance with the
provisions of the 1940 Act, but notwithstanding any limitations of present and
future law or custom in regard to delegation of powers by trustees generally,
the Trustees may, at any time and from time to time and without limiting the
generality of their powers and authority otherwise set forth herein, enter into
one or more contracts with any one or more corporations, trusts, associations,
partnerships, limited partnerships, other type of organizations, or individuals
("Contracting Party") to provide for the performance and assumption of some or
all of the following services, duties and responsibilities to, for or of the
Trust and/or the Trustees, and to provide for the performance and assumption of
such other services, duties and responsibilities in addition to those set forth
below as the Trustees may determine appropriate:
-4-
<PAGE> 5
(a) Advisory. Subject to the general supervision of the Trustees and
in conformity with the stated policy of the Trustees with respect
to the investments of the Trust or of the assets belonging to any
Series of Shares of the Trust (as that phrase is defined in
subsection (a) of Section 4.2), to manage such investments and
assets, make investment decisions with respect thereto, and to
place purchase and sale orders for portfolio transactions relating
to such investments and assets;
(b) Administration. Subject to the general supervision of the
Trustees and in conformity with any policies of the Trustees with
respect to the operations of the Trust, to supervise all or any
part of the operations of the Trust, and to provide all or any
part of the administrative and clerical personnel, office space
and office equipment and services appropriate for the efficient
administration and operations of the Trust;
(c) Distribution. To distribute the Shares of the Trust, to be
principal underwriter of such Shares, and/or to act as agent of
the Trust in the sale of Shares and the acceptance or rejection of
orders for the purchase of Shares;
(d) Custodian and Depository. To act as depository for and to
maintain custody of the property of the Trust and accounting
records in connection therewith;
(e) Transfer and Dividend Disbursing Agency. To maintain records of
the ownership of outstanding Shares, the issuance and redemption
and the transfer thereof, and to disburse any dividends declared
by the Trustees and in accordance with the policies of the
Trustees and/or the instructions of any particular Shareholder to
reinvest any such dividends;
(f) Shareholder Servicing. To provide service with respect to the
relationship of the Trust and its Shareholders, records with
respect to Shareholders and their Shares, and similar matters; and
(g) Accounting. To handle all or any part of the accounting
responsibilities, whether with respect to the Trust's properties,
Shareholders or otherwise.
The same person may be the Contracting Party for some or all of the services,
duties and responsibilities to, for and of the Trust and/or the Trustees, and
the contracts with respect thereto may contain such terms interpretive of or in
addition to the delineation of the services, duties and responsibilities
provided for, including provisions that are not inconsistent with the 1940 Act
relating to the standard of duty of and the rights to indemnification of the
Contracting Party and others, as the Trustees may determine. Nothing herein
shall preclude, prevent or limit the Trust or a Contracting Party from entering
into subcontractual arrangements relative to any of the matters referred to in
Sections 3.3(a) through (g) hereof.
Subject to the provisions of the 1940 Act, the fact that:
(i) any of the Shareholders, Trustees or officers of the Trust is
a shareholder, director, officer, partner, trustee, employee, manager,
adviser, principal underwriter or distributor or agent of or for any
Contracting Party, or of or for any parent or affiliate of any Contracting
Party or that the Contracting Party or any parent or affiliate thereof is a
Shareholder or has an interest in the Trust, or that
(ii) any Contracting Party may have a contract providing for the
rendering of any similar services to one or more other corporations,
trusts, associations, partnerships, limited partnerships or other
organizations, or has other business or interests,
shall not affect the validity of any contract for the performance and
assumption of services, duties and responsibilities to, for or of the Trust
and/or the Trustees or disqualify any Shareholder, Trustee or officer of the
Trust from voting upon or executing the same or create any liability or
accountability to the Trust or its Shareholders, provided that in the case of
any relationship or interest referred to in the preceding clause (i) on the
part of any Trustee or officer of the Trust either (l) the material facts as to
such relationship or interest have been disclosed to or are known by the
Trustees not having any such relationship or interest and the contract involved
is approved in good faith reasonably justified by such facts by a majority of
such Trustees not having any such relationship or interest (even though such
unrelated or disinterested Trustees are less than a quorum of all of the
Trustees), (2) the material facts as to such relationship or interest and as to
the contract have been disclosed to or are known by the Shareholders not
-5-
<PAGE> 6
having such relationship or interest and who are entitled to vote thereon and
the contract involved is specifically approved in good faith by majority vote
of such Shareholders, or (3) the specific contract involved is fair to the
Trust as of the time it is authorized, approved or ratified by the Trustees or
by the Shareholders.
Section 3.4 Payment of Trust Expenses and Compensation of Trustees.
The Trustees are authorized to pay or to cause to be paid out of the principal
or income of the Trust, or partly out of principal and partly out of income,
and to charge or allocate the same to, between or among such one or more of the
Series and Sub-Series that may be established and designated pursuant to
Article IV, as the Trustees deem fair, all expenses, fees, charges, taxes and
liabilities incurred or arising in connection with the Trust, or in connection
with the management thereof, including, but not limited to, the Trustees'
compensation and such expenses and charges for the services of the Trust's
officers, employees, investment adviser, administrator, distributor, principal
underwriter, auditor, counsel, depository, custodian, transfer agent, dividend
disbursing agent, accounting agent, Shareholder servicing agent, and such other
agents, consultants, and independent contractors and such other expenses and
charges as the Trustees may deem necessary or proper to incur. Without
limiting the generality of any other provision hereof, the Trustees shall be
entitled to reasonable compensation from the Trust for their services as
Trustees and may fix the amount of such compensation.
Section 3.5 Ownership of Assets of the Trust. Title to all of the
assets of the Trust shall at all times be considered as vested in the Trustees.
ARTICLE IV
SHARES
Section 4.1 Description of Shares. The beneficial interest in the
Trust shall be divided into Shares, all without par value and of one class, but
the Trustees shall have the authority from time to time to divide the class of
Shares into two or more Series of Shares (including without limitation those
Series specifically established and designated in Section 4.2), as they deem
necessary or desirable, to establish and designate such Series, and to fix and
determine the relative rights and preferences as between the different Series
of Shares as to right of redemption and the price, terms and manner of
redemption, special and relative rights as to dividends and other distributions
and on liquidation, sinking or purchase fund provisions, conversion rights, and
conditions under which the several Series shall have separate voting rights or
no voting rights. Except as aforesaid all Shares of the different Series shall
be identical.
The Shares of each Series may be issued or reissued from time to time in
one or more sub-series ("Sub-Series"), as determined by the Board of Trustees
pursuant to resolution. Each Sub-Series shall be appropriately designated,
prior to the issuance of any shares thereof, by some distinguishing letter,
number or title. All Shares within a Sub-Series shall be alike in every
particular. All Shares of each Series shall be of equal rank and have the same
powers, preferences and rights, and shall be subject to the same
qualifications, limitations and restrictions without distinction between the
shares of different Sub-Series thereof, except with respect to such differences
among such Sub-Series, as the Board of Trustees shall from time to time
determine to be necessary or desirable, including differences in the rate or
rates of dividends or distributions. The Board of Trustees may from time to
time increase the number of Shares allocated to any Sub-Series already created
by providing that any unissued Shares of the applicable Series shall constitute
part of such Sub-Series, or may decrease the number of Shares allocated to any
Sub-Series already created by providing that any unissued Shares previously
assigned to such Sub-Series shall no longer constitute part thereof. The Board
of Trustees is hereby empowered to classify or reclassify from time to time any
unissued Shares of each Series by fixing or altering the terms thereof and by
assigning such unissued shares to an existing or newly created Sub-Series.
Notwithstanding anything to the contrary in this paragraph the Board of
Trustees is hereby empowered (i) to redesignate any issued Shares of any Series
by assigning a distinguishing letter, number or title to such shares and (ii)
to reclassify all or any part of the issued Shares of any Series to make them
part of an existing or newly created Sub-Series.
The number of authorized Shares and the number of Shares of each Series
that may be issued is unlimited, and the Trustees may issue Shares of any
Series for such consideration and on such terms as they may determine (or for
no consideration if pursuant to a Share dividend or split-up), all without
action or approval of the Shareholders. All Shares when so issued on the terms
determined by the Trustees shall be fully paid and non-assessable (but may be
subject to mandatory contribution back to the Trust as provided in subsection
(h) of Section 4.2). The Trustees may classify or reclassify any unissued
Shares or any Shares previously issued and reacquired of any Series into one or
more Series that may be established and designated from time to time.
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The Trustees may hold as treasury Shares (of the same or some other Series),
reissue for such consideration and on such terms as they may determine, or
cancel, at their discretion from time to time, any Shares of any Series
reacquired by the Trust.
The Trustees may from time to time close the transfer books or establish
record dates and times for the purposes of determining the holders of Shares
entitled to be treated as such, to the extent provided or referred to in
Section 5.3.
The establishment and designation of any Series of Shares in addition to
those established and designated in Section 4.2, or of any Sub-Series of
Shares, shall be effective upon the execution by a majority of the then
Trustees of an instrument setting forth such establishment and designation and
the relative rights and preferences of such Series or Sub-Series, or as
otherwise provided in such instrument. At any time that there are no Shares
outstanding of any particular Series or Sub-Series previously established and
designated the Trustees may by an instrument executed by a majority of their
number abolish that Series or Sub-Series and the establishment and designation
thereof. Each instrument referred to in this paragraph shall have the status
of an amendment to this Declaration of Trust.
Any Trustee, officer or other agent of the Trust, and any organization in
which any such person is interested may acquire, own, hold and dispose of
Shares of any Series of the Trust to the same extent as if such person were not
a Trustee, officer or other agent of the Trust; and the Trust may issue and
sell or cause to be issued and sold and may purchase Shares of any Series from
any such person or any such organization subject only to the general
limitations, restrictions or other provisions applicable to the sale or
purchase of Shares of such Series generally.
Section 4.2 Establishment and Designation of Series. Without limiting
the authority of the Trustees set forth in Section 4.1 to establish and
designate any further Series, the Trustees hereby establish and designate one
Series of Shares: the "Lake Forest Growth and Income Fund" Series and the "Lake
Forest Money Market Fund" Series. The Shares of these Series and any Shares of
any further Series that may from time to time be established and designated by
the Trustees shall (unless the Trustees otherwise determine with respect to
some further Series or Sub-Series at the time of establishing and designating
the same) have the following relative rights and preferences:
(a) Assets Belonging to Series. All consideration received by the
Trust for the issuance or sale of Shares of a particular Series,
together with all assets in which such consideration is invested
or reinvested, all income, earnings, profits, and proceeds
thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from
any reinvestment of such proceeds in whatever form the same may
be, shall irrevocably belong to that Series for all purposes,
subject only to the rights of creditors, and shall be so recorded
upon the books of account of the Trust. Such consideration,
assets, 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,
together with any General Items allocated to that Series as
provided in the following sentence, are herein referred to as
"assets belonging to" that Series. In the event that there are
any assets, income, earnings, profits, and proceeds thereof,
funds, or payments which are not readily identifiable as belonging
to any particular Series (collectively "General Items"), the
Trustees shall allocate such General Items to and among any one or
more of the Series established and designated from time to time in
such manner and on such basis as they, in their sole discretion,
deem fair and equitable; and any General Items so allocated to a
particular Series shall belong to that Series. Each such
allocation by the Trustees shall be conclusive and binding upon
the Shareholders of all Series for all purposes.
The Trustees shall have full discretion, to the extent not
inconsistent with the 1940 Act, to determine which items shall be
treated as income and which items as capital; and each such
determination and allocation shall be conclusive and binding upon
the Shareholders.
(b) Liabilities Belonging to Series. The assets belonging to each
particular Series and Sub-Series thereof shall be charged with the
liabilities of the Trust in respect of that Series or Sub-Series
and all expenses, costs, charges and reserves attributable to that
Series or Sub-Series, and 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 to and among any one or more
of the Series and Sub-Series established and designated from time
to time in such manner and on such basis as the Trustees in their
sole discretion deem fair
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and equitable. The liabilities, expenses, costs, charges and
reserves allocated and so charged to a Series or Sub-Series are
herein referred to as "liabilities belonging to" that Series or
Sub-Series. Each allocation of liabilities, expenses, costs,
charges and reserves by the Trustees shall be conclusive and
binding upon the Shareholders of all Series for all purposes.
(c) Dividends. Dividends and distributions on Shares of a particular
Series may be paid with such frequency as the Trustees may
determine, which may be daily or otherwise pursuant to a standing
resolution or resolutions adopted only once or with such frequency
as the Trustees may determine, to the holders of Shares of that
Series, from such of the estimated income and capital gains,
accrued or realized, from the assets belonging to that Series, as
the Trustees may determine, after providing for actual and accrued
liabilities belonging to that Series. All dividends and
distributions on Shares of a particular Series shall be
distributed pro rata to the holders of that Series in proportion
to the number of Shares of that Series held by such holders at the
date and time of record established for the payment of such
dividends or distributions, except that in connection with any
dividend or distribution program or procedure the Trustees may
determine that no dividend or distribution shall be payable on
Shares as to which the Shareholder's purchase order and/or payment
have not been received by the time or times established by the
Trustees under such program or procedure, and except that if
Sub-Series have been established for any Series, the rate of
dividends or distributions may vary among such Sub-Series pursuant
to resolution, which may be a standing resolution, of the Board of
Trustees. Such dividends and distributions may be made in cash or
Shares or a combination thereof as determined by the Trustees or
pursuant to any program that the Trustees may have in effect at
the time for the election by each Shareholder of the mode of the
making of such dividend or distribution to that Shareholder. Any
such dividend or distribution paid in Shares will be paid at the
net asset value thereof as determined in accordance with
subsection (h) of Section 4.2.
The Trust intends to qualify each Series as a "regulated
investment company" under the Internal Revenue Code of 1954, as
amended, or any successor or comparable statute thereto, and
regulations promulgated thereunder. Inasmuch as the computation
of net income and gains for federal income tax purposes may vary
from the computation thereof on the books of the Trust, the Board
of Trustees shall have the power, in its sole discretion, to
distribute in any fiscal year as dividends, including dividends
designated in whole or in part as capital gains distributions,
amounts sufficient, in the opinion of the Board of Trustees, to
enable each Series to qualify as a regulated investment company
and to avoid liability of the Series for federal income tax in
respect of that year. However, nothing in the foregoing shall
limit the authority of the Board of Trustees to make distributions
greater than or less than the amount necessary to qualify as a
regulated investment company and to avoid liability of each Series
for such tax.
(d) Liquidation. In event of the liquidation or dissolution of the
Trust, the Shareholders of each Series or Sub- Series that has
been established and designated shall be entitled to receive, as a
Series or Sub-Series, when and as declared by the Trustees, the
excess of the assets belonging to that Series or Sub-Series over
the liabilities belonging to that Series or Sub-Series. The
assets so distributable to the Shareholders of any particular
Series or Sub-Series shall be distributed among such Shareholders
in proportion to the number of Shares of that Series or Sub-Series
held by them and recorded on the books of the Trust. The
liquidation of any particular Series or Sub-Series may be
authorized by vote of a majority of the Trustees then in office
subject to the approval of a majority of the outstanding voting
Shares of that Series or Sub-Series, as defined in the 1940 Act.
(e) Voting. All shares of all Series shall have "equal voting rights"
as such term is defined in the Investment Company Act of 1940 and
except as otherwise provided by that Act or rules, regulations or
orders promulgated thereunder. On each matter submitted to a vote
of the Shareholders, each Series shall vote as a separate series
except as to any matter with respect to which a vote of all Series
voting as a single series is required by the 1940 Act or rules and
regulations promulgated thereunder, or would be required under the
Ohio General Corporation Law if the Trust were an Ohio
corporation. As to any matter which does not affect the interest
of a particular Series or Sub-Series, only the holders of Shares
of the one or more affected Series or Sub-Series shall be entitled
to vote.
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(f) Redemption by Shareholder. Each holder of Shares of a particular
Series shall have the right at such times as may be permitted by
the Trust, but no less frequently than once each week, to require
the Trust to redeem all or any part of his Shares of that Series
at a redemption price equal to the net asset value per Share of
that Series next determined in accordance with subsection (h) of
this Section 4.2 after the Shares are properly tendered for
redemption. Payment of the redemption price shall be in cash;
provided, however, that if the Trustees determine, which
determination shall be conclusive, that conditions exist which
make payment wholly in cash unwise or undesirable, the Trust may
make payment wholly or partly in securities or other assets
belonging to the Series of which the Shares being redeemed are
part at the value of such securities or assets used in such
determination of net asset value.
Notwithstanding the foregoing, the Trust may postpone payment of
the redemption price and may suspend the right of the holders of
Shares of any Series to require the Trust to redeem Shares of that
Series during any period or at any time when and to the extent
permissible under the 1940 Act, and such redemption is conditioned
upon the Trust having funds or property legally available
therefor.
(g) Redemption by Trust. Each Share of each Series that has been
established and designated is subject to redemption by the Trust
at the redemption price which would be applicable if such Share
was then being redeemed by the Shareholder pursuant to subsection
(f) of this Section 4.2:(a) at any time, if the Trustees determine
in their sole discretion that failure to so redeem may have
materially adverse consequences to all or any of the holders of
the Shares, or any Series thereof, of the Trust, or (b) upon such
other conditions as may from time to time be determined by the
Trustees and set forth in the then current Prospectus of the Trust
with respect to maintenance of Shareholder accounts of a minimum
amount. Upon such redemption the holders of the Shares so
redeemed shall have no further right with respect thereto other
than to receive payment of such redemption price.
(h) Net Asset Value. The net asset value per Share of any Series or
Sub-Series shall be the quotient obtained by dividing the value of
the net assets of that Series or Sub-Series (being the value of
the assets belonging to that Series or Sub-Series less the
liabilities belonging to that Series or Sub-Series) by the total
number of Shares of that Series or Sub-Series outstanding, all
determined in accordance with the methods and procedures,
including without limitation those with respect to rounding,
established by the Trustees from time to time.
The Trustees may determine to maintain the net asset value per
Share of any Series at a designated constant dollar amount and in
connection therewith may adopt procedures not inconsistent with
the 1940 Act for the continuing declarations of income
attributable to that Series as dividends payable in additional
Shares of that Series at the designated constant dollar amount and
for the handling of any losses attributable to that Series. Such
procedures may provide that in the event of any loss each
Shareholder shall be deemed to have contributed to the capital of
the Trust attributable to that Series his pro rata portion of the
total number of Shares required to be canceled in order to permit
the net asset value per Share of that Series to be maintained,
after reflecting such loss, at the designated constant dollar
amount. Each Shareholder of the Trust shall be deemed to have
agreed, by his investment in any Series with respect to which the
Trustees shall have adopted any such procedure, to make the
contribution referred to in the preceding sentence in the event of
any such loss.
(i) Transfer. All Shares of each particular Series shall be
transferable, but transfers of Shares of a particular Series will
be recorded on the Share transfer records of the Trust applicable
to that Series only at such times as Shareholders shall have the
right to require the Trust to redeem Shares of that Series and at
such other times as may be permitted by the Trustees.
(j) Equality. All Shares of each particular Series shall represent an
equal proportionate interest in the assets belonging to that
Series (subject to the liabilities belonging to that Series), and
each Share of any particular Series shall be equal to each other
Share of that Series; but the provisions of this sentence shall
not restrict any distinctions permissible under this Section 4.2
that may exist with respect to Sub-Series of the same Series. The
Trustees may from time to time divide or combine the Shares of any
particular Series into a greater or lesser number of Shares of
that Series without thereby changing the proportionate beneficial
interest in the assets belonging to that Series or in any way
affecting the rights of Shares of any other Series.
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(k) Fractions. Any fractional Share of any Series or Sub-Series, if
any such fractional Share is outstanding, shall carry
proportionately all the rights and obligations of a whole Share of
that Series or Sub-Series, including with respect to voting,
receipt of dividends and distributions, redemption of Shares, and
liquidation of the Trust.
(l) Conversion Rights. Subject to compliance with the requirements of
the 1940 Act, the Trustees shall have the authority to provide
that holders of Shares of any Series shall have the right to
convert said Shares into Shares of one or more other Series of
Shares in accordance with such requirements and procedures as may
be established by the Trustees.
Section 4.3 Ownership of Shares. The ownership of Shares shall be
recorded on the books of the Trust or of a transfer or similar agent for the
Trust, which books shall be maintained separately for the Shares of each Series
that has been established and designated. No certificates certifying the
ownership of Shares need be issued except as the Trustees may otherwise
determine from time to time. The Trustees may make such rules as they consider
appropriate for the issuance of Share certificates, the use of facsimile
signatures, the transfer of Shares and similar matters. The record books of
the Trust as kept by the Trust or any transfer or similar agent, as the case
may be, shall be conclusive as to who are the Shareholders and as to the number
of Shares of each Series and Sub-Series held from time to time by each such
Shareholder.
Section 4.4 Investments in the Trust. The Trustees may accept
investments in the Trust from such persons and on such terms and for such
consideration, not inconsistent with the provisions of the 1940 Act, as they
from time to time authorize. The Trustees may authorize any distributor,
principal underwriter, custodian, transfer agent or other person to accept
orders for the purchase of Shares that conform to such authorized terms and to
reject any purchase orders for Shares whether or not conforming to such
authorized terms.
Section 4.5 No Preemptive Rights. Shareholders shall have no
preemptive or other right to subscribe to any additional Shares or other
securities issued by the Trust.
Section 4.6 Status of Shares and Limitation of Personal Liability.
Shares shall be deemed to be personal property giving only the rights provided
in this instrument. Every Shareholder by virtue of having become a Shareholder
shall be held to have expressly assented and agreed to the terms hereof and to
have become a party hereto. The death of a Shareholder during the continuance
of the Trust shall not operate to terminate the Trust nor entitle the
representative of any deceased Shareholder to an accounting or to take any
action in court or elsewhere against the Trust or the Trustees, but only to the
rights of said decedent under this Trust. Ownership of Shares shall not
entitle the Shareholder to any title in or to the whole or any part of the
Trust property or right to call for a partition or division of the same or for
an accounting, nor shall the ownership of Shares constitute the Shareholders
partners. Neither the Trust nor the Trustees, nor any officer, employee or
agent of the Trust shall have any power to bind personally any Shareholder, nor
except as specifically provided herein to call upon any Shareholder for the
payment of any sum of money or assessment whatsoever other than such as the
Shareholder may at any time personally agree to pay.
ARTICLE V
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 5.1 Voting Powers. The Shareholders shall have power to vote
only (i) for the election or removal of Trustees as provided in Section 3.1,
(ii) with respect to any contract with a Contracting Party as provided in
Section 3.3 as to which Shareholder approval is required by the 1940 Act, (iii)
with respect to any termination or reorganization of the Trust or any Series to
the extent and as provided in Sections 7.1 and 7.2, (iv) with respect to any
amendment of this Declaration of Trust to the extent and as provided in Section
7.3, (v) to the same extent as the stockholders of an Ohio business corporation
as to whether or not a court action, proceeding or claim should or should not
be brought or maintained derivatively or as a class action on behalf of the
Trust or the Shareholders, and (vi) with respect to such additional matters
relating to the Trust as may be required by the 1940 Act, this Declaration of
Trust, the By-Laws or any registration of the Trust with the Commission (or any
successor agency) or any state, or as the Trustees may consider necessary or
desirable. There shall be no cumulative voting in the election of any Trustee
or Trustees. Shares may be voted in person or by proxy. A proxy with respect
to Shares held in the name of two or more persons shall be valid if executed by
any one of them unless at or prior to exercise of the proxy the Trust receives
a specific written notice to the contrary from any one of them. A proxy
purporting to be executed by or on behalf of a Shareholder shall be deemed
valid unless challenged at or prior to its exercise and the burden of proving
invalidity shall rest on the challenger. Until Shares are
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issued, the Trustees may exercise all rights of Shareholders and may take any
action required by law, this Declaration of Trust or the By-Laws to be taken by
Shareholders.
Section 5.2 Meetings. Meetings (including meetings involving only the
holders of Shares of one or more but less than all Series or Sub-Series) of
Shareholders may be called by the Trustees from time to time for the purpose of
taking action upon any matter requiring the vote or authority of the
Shareholders as herein provided or upon any other matter deemed by the Trustees
to be necessary or desirable. Written notice of any meeting of Shareholders
shall be given or caused to be given by the Trustees by mailing such notice at
least seven days before such meeting, postage prepaid, stating the time, place
and purpose of the meeting, to each Shareholder at the Shareholder's address as
it appears on the records of the Trust. If the Trustees shall fail to call or
give notice of any meeting of Shareholders (including a meeting involving only
the holders of Shares of one or more but less than all Series or Sub-Series)
for a period of 30 days after written application by Shareholders holding at
least 25% of the Shares then outstanding requesting a meeting be called for any
other purpose requiring action by the Shareholders as provided herein or in the
By-Laws, then Shareholders holding at least 25% of the Shares then outstanding
may call and give notice of such meeting, and thereupon the meeting shall be
held in the manner provided for herein in case of call thereof by the Trustees.
Section 5.3 Record Dates. For the purpose of determining the
Shareholders who are entitled to vote or act at any meeting or any adjournment
thereof, or who are entitled to participate in any dividend or distribution, or
for the purpose of any other action, the Trustees may from time to time close
the transfer books for such period, not exceeding 30 days (except at or in
connection with the termination of the Trust), as the Trustees may determine;
or without closing the transfer books the Trustees may fix a date and time not
more than 60 days prior to the date of any meeting of Shareholders or other
action as the date and time of record for the determination of Shareholders
entitled to vote at such meeting or any adjournment thereof or to be treated as
Shareholders of record for purposes of such other action, and any Shareholder
who was a Shareholder at the date and time so fixed shall be entitled to vote
at such meeting or any adjournment thereof or (subject to any provisions
permissible under subsection (c) of Section 4.2 with respect to dividends or
distributions on Shares that have not been ordered and/or paid for by the time
or times established by the Trustees under the applicable dividend or
distribution program or procedure then in effect) to be treated as a
Shareholder of record for purposes of such other action, even though he has
since that date and time disposed of his Shares, and no Shareholder becoming
such after that date and time shall be so entitled to vote at such meeting or
any adjournment thereof or to be treated as a Shareholder of record for
purposes of such other action.
Section 5.4 Quorum and Required Vote. A majority of the Shares of
each Series, or of all Series if voting as a single series is required, which
are entitled to vote shall be a quorum for the transaction of business at a
Shareholders' meeting, but any lesser number shall be sufficient for
adjournments. Any adjourned session or sessions may be held, within a
reasonable time after the date set for the original meeting without the
necessity of further notice. A majority of the Shares voted, at a meeting of
which a quorum is present, shall decide any questions and a plurality shall
elect a Trustee, except when a different vote is required or permitted by any
provision of the 1940 Act or other applicable law or by this Declaration of
Trust or the By-Laws.
Section 5.5 Action by Written Consent. Subject to the provisions of
the 1940 Act and other applicable law, any action taken by Shareholders may be
taken without a meeting if a majority of Shareholders entitled to vote on the
matter (or such other proportion thereof as shall be required by the 1940 Act
or by any express provision of this Declaration of Trust or the By-Laws)
consent to the action in writing and such written consents are filed with the
records of the meetings of Shareholders. Such consent shall be treated for all
purposes as a vote taken at a meeting of Shareholders.
Section 5.6 Inspection of Records. The records of the Trust shall be
open to inspection by Shareholders to the same extent as is permitted
stockholders of an Ohio corporation under the Ohio General Corporation Law.
Section 5.7 Additional Provisions. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters not
inconsistent with the provisions hereof.
ARTICLE VI
LIMITATION OF LIABILITY; INDEMNIFICATION
Section 6.1 Trustees, Shareholders, etc. Not Personally Liable;
Notice. All persons extending credit to, contracting with or having any claim
against the Trust shall look only to the assets of the Trust for payment under
such credit, contract or claim; and neither the Shareholders nor the Trustees,
nor any of the Trust's officers, employees or agents, whether
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past, present or future, shall be personally liable therefor. Every note,
bond, contract, instrument, certificate 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 conclusively deemed to
have been executed or done only by or for the Trust or the Trustees and not
personally. Nothing in this Declaration of Trust shall protect any Trustee or
officer against any liability to the Trust or the Shareholders to which such
Trustee or officer would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of Trustee or of such officer.
Every note, bond, contract, instrument, certificate or undertaking made or
issued by the Trustees or by any officers or officer shall give notice that
this Declaration of Trust is on file with the Secretary of the State of Ohio
and shall recite to the effect that the same was executed or made by or on
behalf of the Trust or by them as Trustees or Trustee or as officers or officer
and not individually and that the obligations of such instrument are not
binding upon any of them or the Shareholders individually but are binding only
upon the assets and property of the Trust, but the omission thereof shall not
operate to bind any Trustees or Trustee or officers or officer or Shareholders
or Shareholder individually.
Section 6.2 Trustee's Good Faith Action; Expert Advice; No Bond or
Surety. The exercise by the Trustees of their powers and discretions hereunder
shall be binding upon everyone interested. A Trustee shall be liable for his
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. Subject to the foregoing, (a) the Trustees shall not be responsible or
liable in any event for any neglect or wrongdoing of any officer, agent,
employee, consultant, adviser, administrator, distributor or principal
underwriter, custodian or transfer, dividend disbursing, Shareholder servicing
or accounting agent of the Trust, nor shall any Trustee be responsible for the
act or omission of any other Trustee; (b) the Trustees may take advice of
counsel or other experts with respect to the meaning and operation of this
Declaration of Trust and their duties as Trustees, and shall be under no
liability for any act or omission in accordance with such advice or for failing
to follow such advice; and (c) in discharging their duties, the Trustees, when
acting in good faith, shall be entitled to rely upon the books of account of
the Trust and upon written reports made to the Trustees by any officer
appointed by them, any independent public accountant, and (with respect to the
subject matter of the contract involved) any officer, partner or responsible
employee of a Contracting Party appointed by the Trustees pursuant to Section
3.3. The Trustees as such shall not be required to give any bond or surety or
any other security for the performance of their duties. Nothing stated herein
is intended to detract from the protection accorded to Trustees by Ohio Revised
Code Sections 1746.08 and 1701.59, as amended from time to time.
Section 6.3 Indemnification of Shareholders. In case any Shareholder
or former Shareholder shall be charged or held to be personally liable for any
obligation or liability of the Trust solely by reason of being or having been a
Shareholder and not because of such Shareholder's acts or omissions or for some
other reason, the Trust (upon proper and timely request by the Shareholder)
shall assume the defense against such charge and satisfy any judgment thereon,
and the Shareholder or former Shareholder (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 Trust estate to be held harmless from and indemnified
against all loss and expense arising from such liability.
Section 6.4 Indemnification of Trustees, Officers, etc. Subject to
and except as otherwise provided in the Securities Act of 1933, as amended, and
the 1940 Act, 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 organization in which the Trust has any interest as a
shareholder, creditor or otherwise (hereinafter referred to as a "Covered
Person") against all liabilities, including but not limited to amounts paid in
satisfaction of judgments, in compromise or as fines and penalties, and
expenses, including reasonable accountants' and counsel fees, incurred by any
Covered Person in connection with the defense or disposition of any action,
suit or other proceeding, whether civil or criminal, 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, by reason of being or
having been such a Trustee or officer, director or trustee, 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 willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of such Covered Person's office.
Section 6.5 Advances of Expenses. The Trust shall advance attorneys'
fees or other expenses incurred by a Covered Person in defending a proceeding
to the full extent permitted by the Securities Act of 1933, as amended, the
1940 Act,
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and Ohio Revised Code Chapter 1707, as amended. In the event any of these laws
conflict with Ohio Revised Code Section 1701.13(E), as amended, these laws, and
not Ohio Revised Code Section 1701.13(E), shall govern.
Section 6.6 Indemnification Not Exclusive, etc. The right of
indemnification provided by this Article VI shall not be exclusive of or affect
any other rights to which any such Covered Person may be entitled. As used in
this Article VI, "Covered Person" shall include such person's heirs, executors
and administrators. 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 any such person.
Section 6.7 Liability of Third Persons Dealing with Trustees. No
person dealing with the Trustees shall be bound to make any inquiry concerning
the validity of any transaction made or to be made by the Trustees or to see to
the application of any payments made or property transferred to the Trust or
upon its order.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Duration and 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 a majority of the Trustees then in
office subject to a favorable vote of a majority of the outstanding voting
Shares, as defined in the 1940 Act, of each Series voting separately by Series.
Upon termination, 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 in accordance with such
procedures as the Trustees consider appropriate reduce the remaining assets to
distributable form in cash, securities or other property, or any combination
thereof, and distribute the proceeds to the Shareholders, in conformity with
the provisions of subsection (d) of Section 4.2.
Section 7.2 Reorganization. The Trustees may sell, convey and
transfer the assets of the Trust, or the assets belonging to any one or more
Series, to another trust, partnership, association or corporation organized
under the laws of any state of the United States, or to the Trust to be held as
assets belonging to another Series of the Trust, in exchange for cash, shares
or other securities (including, in the case of a transfer to another Series of
the Trust, Shares of such other Series) with such transfer being made subject
to, or with the assumption by the transferee of, the liabilities belonging to
each Series the assets of which are so transferred; provided, however, that if
shareholder approval is required by the 1940 Act, no assets belonging to any
particular Series shall be so transferred unless the terms of such transfer
shall have first been approved at a meeting called for the purpose by the
affirmative vote of the holders of a majority of the outstanding voting Shares,
as defined in the 1940 Act, of that Series. Following such transfer, the
Trustees shall distribute such cash, shares or other securities (giving due
effect to the assets and liabilities belonging to and any other differences
among the various Series the assets belonging to which have so been
transferred) among the Shareholders of the Series the assets belonging to which
have been so transferred; and if all of the assets of the Trust have been so
transferred, the Trust shall be terminated.
Section 7.3 Amendments. All rights granted to the Shareholders under
this Declaration of Trust are granted subject to the reservation of the right
to amend this Declaration of Trust as herein provided, except that no amendment
shall repeal the limitations on personal liability of any Shareholder or
Trustee or repeal the prohibition of assessment upon the Shareholders without
the express consent of each Shareholder or Trustee involved. Subject to the
foregoing, the provisions of this Declaration of Trust (whether or not related
to the rights of Shareholders) may be amended at any time by an instrument in
writing signed by a majority of the then Trustees (or by an officer of the
Trust pursuant to the vote of a majority of such Trustees), when authorized so
to do by the vote in accordance with subsection (e) of Section 4.2 of
Shareholders holding a majority of the Shares entitled to vote, except that
amendments either (a) establishing and designating any new Series of Shares not
established and designated in Section 4.2, or any Sub-Series or (b) having the
purpose of changing the name of the Trust or the name of any Shares theretofore
established and designated or of supplying any omission, curing any ambiguity
or curing, correcting or supplementing any provision hereof which is internally
inconsistent with any other provision hereof or which is defective or
inconsistent with the 1940 Act or with the requirements of the Internal Revenue
Code and applicable regulations for the Trust's obtaining the most favorable
treatment thereunder available to regulated investment companies, shall not
require authorization by Shareholder vote. Subject to the foregoing, any such
amendment shall be effective as provided in the instrument containing the terms
of such amendment or, if there is no provision therein with respect to
effectiveness, upon the execution of such instrument
-13-
<PAGE> 14
and of a certificate (which may be a part of such instrument) executed by a
Trustee or officer of the Trust to the effect that such amendment has been duly
adopted.
Section 7.4 Filing of Copies; References; Headings. The original or a
copy of this instrument and of each amendment hereto shall be kept at the
office of the Trust where it may be inspected by any Shareholder. A copy of
this instrument and of each amendment hereto shall be filed by the Trust with
the Secretary of the State of Ohio, as well as any other governmental office
where such filing may from time to time be required, but the failure to make
any such filing shall not impair the effectiveness of this instrument or any
such amendment. Anyone dealing with the Trust may rely on a certificate by an
officer of the Trust as to whether or not any such amendments have been made,
as to the identities of the Trustees and officers, and as to any matters in
connection with the Trust hereunder; and, with the same effect as if it were
the original, may rely on a copy certified by an officer of the Trust to be a
copy of this instrument or of any such amendments. In this instrument and in
any such amendment, references to this instrument, and all expressions like
"herein", "hereof" and "hereunder" shall be deemed to refer to this instrument
as a whole as the same may be amended or affected by any such amendments. The
masculine gender shall include the feminine and neuter genders. Headings are
placed herein for convenience of reference only and shall not be taken as a
part hereof or control or affect the meaning, construction or effect of this
instrument. This instrument may be executed in any number of counterparts each
of which shall be deemed an original.
Section 7.5 Applicable Law. This Declaration of Trust is made in the
State of Ohio, and it is created under and is to be governed by and construed
and administered according to the laws of said State, including the Ohio
General Corporation Law as the same may be amended from time to time, but the
reference to said Corporation Law is not intended to give the Trust, the
Trustees, the Shareholders or any other person any right, power, authority or
responsibility available only to or in connection with an entity organized in
corporate form. The Trust shall be of the type referred to in Section 1746.01
of the Ohio Revised Code, and without limiting the provisions hereof, the Trust
may exercise all powers which are ordinarily exercised by such a trust.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands in
Lake Forest Illinois for themselves and their assigns, as of the day and year
first above written.
--------------------------
IRVING V. BOBERSKI
STATE OF ILLINOIS )
) ss:
COUNTY OF LAKE )
Before me, a Notary Public in and for said county and state, personally
appeared the above named IRVING V. BOBERSKI, who acknowledged that he did sign
the foregoing instrument and that the same is his free act and deed.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal on this ____ day of November, 1994.
--------------------------
Notary Public
My Commission Expires:
----------------------------
-14-
<PAGE> 15
ACCEPTANCE OF TRUST
As contemplated in Section 3.1 of the Agreement and Declaration of Trust of
LAKE FOREST TRUST, the undersigned accepts his designation as a Trustee of said
Trust and agrees to the provisions of said Agreement and Declaration of Trust.
IN WITNESS WHEREOF, the undersigned has set his hand on the date set
opposite his signature.
November ___, 1994
--------------------------
IRVING V. BOBERSKI
STATE OF ILLINOIS )
) ss:
COUNTY OF LAKE )
Before me, a Notary Public in and for said county and state, personally
appeared the above named IRVING V. BOBERSKI, who acknowledged that he did sign
the foregoing instrument and that the same is his free act and deed.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal on this ____ day of November, 1994.
--------------------------
Notary Public
My Commission Expires:
----------------------------
-15-
<PAGE> 1
EXHIBIT 2
BY-LAWS
OF
THE LAKE FOREST FUNDS
ARTICLE 1
Agreement and Declaration of Trust and Offices
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 Lake Forest Funds, the Ohio business trust
established by the Declaration of Trust (the "Trust").
1.2 Offices. The Trust may maintain one or more other offices,
including its principal office, in or outside of Ohio, in such cities as the
Trustees may determine from time to time. Unless the Trustees otherwise
determine, the principal office of the Trust shall be located in Lake Forest,
Illinois.
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 may from
time to time determine, provided that notice of the first regular meeting
following any such determination shall be given to absent Trustees. A regular
meeting of the Trustees may be held without call or notice immediately after and
at the same place as any meeting of the shareholders.
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. 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 Quorum. 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.
2.5 Participation by Telephone. One or more of the Trustees or of any
committee of the Trustees may participate in a meeting thereof by means of a
conference telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time. Participation
by such means shall constitute presence in person at a meeting except as
otherwise provided by the Investment Company Act of 1940.
2.6 Action by Consent. Any action required or permitted to be taken at
any meeting of the Trustees or any committee thereof may be taken without a
meeting, if a written consent of such action is signed by a majority of the
Trustees then in office or a majority of the members of such committee, as the
case may be, and such written consent is filed with the minutes of the
proceedings of the Trustees or such committee.
ARTICLE 3
Officers
3.1 Enumeration and Qualification. The officers of the Trust shall be a
President, a Treasurer, a Secretary and such other officers, including Vice
Presidents, if any, as the Trustees from time to time may in their discretion
elect. The Trust may also have such agents as the Trustees from time to time
may in their discretion appoint. Any officer may be but none need be a Trustee
or shareholder. Any two or more offices may be held by the same person.
<PAGE> 2
3.2 Election. The President, the Treasurer and the Secretary shall be
elected annually by the Trustees. Other officers, if any, may be elected or
appointed by the Trustees at any time. Vacancies in any office may be filled at
any time.
3.3 Tenure. The President, the Treasurer and the Secretary shall hold
office for one year and until their respective successors are chosen and
qualified, or 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 are commonly incident
to the office occupied by him or her as if the Trust were organized as an Ohio
business corporation and such other duties and powers as the Trustees may from
time to time designate.
3.5 President. Unless the Trustees otherwise provide, the President, or
in the absence of the President, any Trustee chosen by the Trustees, shall
preside at all meetings of the shareholders and of the Trustees. 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 shall, 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, 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 the 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 General. The Trustees, by vote of a majority of the Trustees then
in office, may elect from their number an Executive Committee or other
committees and may delegate thereto some or all of their powers except those
which by law, by the Declaration of Trust, or by these By-Laws may not be
delegated. Except as the Trustees may otherwise determine, any such committee
may make rules for the conduct of its business, but unless otherwise provided by
the Trustees or in such rules, its business shall be conducted so far as
possible in the same manner as is provided by these By-Laws for the Trustees
themselves. All members of such committees shall hold such offices at the
pleasure of the Trustees. The Trustees may abolish any such committee at any
time. Any committee to which the Trustees delegate any of their powers or
duties shall keep records of its meetings and shall report its action to the
Trustees. The Trustees shall have power to rescind any action of any committee,
but no such rescission shall have retroactive effect.
ARTICLE 5
Reports
5.1 General. 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.
<PAGE> 3
ARTICLE 6
Fiscal Year
6.1 General. The fiscal year of the Trust shall be fixed, and shall be
subject to change by, the Trustees.
ARTICLE 7
Seal
7.1 General. If required by applicable law, the seal of the Trust shall
consist of a flat-faced die with the word "Ohio", 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 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
8.1 General. Except as the Trustees may generally or in particular
cases 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, but shall state the substance of or make reference to the
provisions of Section 6.l of the Declaration of Trust.
ARTICLE 9
Issuance of Share Certificates
9.1 Share Certificates. In lieu of issuing certificates for shares, the
Trustees or the transfer agent may either 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 be deemed, for all purposes hereunder, 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 may at any time 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 a Vice-President and by the Treasurer or Assistant Treasurer. Such
signatures may be facsimiles 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 were such
officer at the time of its issue.
9.2 Loss of Certificates. In case of the alleged loss or destruction or
the mutilation of a share certificate, a duplicate certificate may be issued in
place thereof, upon such terms as the Trustees shall prescribe.
9.3 Issuance of New Certificate to Pledgee. In the event certificates
have been issued, a pledgee of shares transferred as collateral security shall
be entitled to a new certificate if the instrument of transfer substantially
describes the debt or duty that is intended to be secured thereby. Such new
certificate shall express on its face that it is held as collateral security,
and the name of the pledgor shall be stated thereon, who alone shall be liable
as a shareholder, and entitled to vote thereon.
9.4 Discontinuance of Issuance of Certificates. The Trustees may at any
time discontinue the issuance of share certificates and may, by written notice
to each shareholder, 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
Custodian
10.1 General. The Trust shall at all times employ a bank or trust
company having a capital, surplus and undivided profits of at least Five Hundred
Thousand ($500,000) Dollars as Custodian of the capital assets of the Trust. The
Custodian shall be compensated for its services by the Trust and upon such basis
as shall be agreed upon from time to time between the Trust and the Custodian.
<PAGE> 4
ARTICLE 11
Dealings with Trustees and Officers
11.1 General. Any Trustee, officer or other agent of the Trust may
acquire, own and dispose of shares of the Trust to the same extent as if he
were not a Trustee, officer or agent; and the Trustees may accept subscriptions
to shares or repurchase shares from any firm or company in which he is
interested.
ARTICLE 12
Shareholders
12.1 Meetings. A meeting of the shareholders of the Trust shall be held
whenever called by the Trustees, whenever election of a Trustee or Trustees by
shareholders is required by the provisions of Section 16(a) of the Investment
Company Act of 1940 for that purpose or whenever otherwise required pursuant to
the Declaration of Trust. Any meeting shall be held on such day and at such
time as the President or the Trustees may fix in the notice of the meeting.
12.2 Record Dates. For the purpose of determining the shareholders 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 may from time to time fix a time, which shall be not more than 60
days before the date of any meeting of shareholders or the date for the payment
of any dividend or of any other distribution, as the record date for
determining the shareholders 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 any part of such period.
ARTICLE 13
Amendments to the By-Laws
13.1 General. 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.
<PAGE> 1
EXHIBIT 5a
MANAGEMENT AGREEMENT
TO: Boberski & Company
One Westminster Place
Lake Forest, Illinois 60045-1821
Dear Sirs:
The Lake Forest Funds (the "Trust") herewith confirms our agreement with
you.
The Trust has been organized to engage in the business of an investment
company. The Trust currently offers two series of shares to investors: the
Lake Forest Core Equity Fund series and the Lake Forest Money Market Fund
series (the "Funds"). The Trust's Board of Trustees (the "Board") is
authorized from time to time, as it deems necessary or desirable, to establish
and designate additional series of shares.
You have been selected to act as the sole investment adviser of the Trust
and to provide certain other services, as more fully set forth below, and you
are willing to act as such investment adviser and to perform such services
under the terms and conditions hereinafter set forth. Accordingly, the Trust
agrees with you as follows upon the date of the execution of this Agreement.
1. ADVISORY SERVICES
You will regularly provide the Trust with such investment advice as you in
your discretion deem advisable and will furnish a continuous investment program
for each of the Trust's series consistent with the respective series'
investment objectives and policies. You will determine the securities to be
purchased for each series of the Trust, the portfolio securities to be held or
sold by each series of the Trust and the portion of each series' assets to be
held uninvested, subject always to the Fund's investment objectives, policies
and restrictions, as each of the same shall be from time to time in effect, and
subject further to such policies and instructions as the Board may from time to
time establish. You will advise and assist the officers of the Trust in taking
such steps as are necessary or appropriate to carry out the decisions of the
Board and the appropriate committees of the Board regarding the conduct of the
business of the Trust.
2. ALLOCATION OF CHARGES AND EXPENSES
You will pay all operating expenses of the Trust, including the
compensation and expenses of any trustees, officers and employees of the Trust
and of any other persons rendering any services to the Trust; clerical and
shareholder service staff salaries; office space and other office expenses;
fees and expenses incurred by the Trust in connection with membership in
investment company organizations; legal, auditing and accounting expenses;
non-organizational expenses of registering shares under federal and state
securities laws; insurance expenses; fees and expenses of the custodian,
transfer agent, dividend disbursing agent, shareholder service agent, plan
agent, administrator, accounting and pricing services agent and underwriter of
the Trust; expenses, including clerical expenses, of issue, sale, redemption or
repurchase of shares of the Trust; the cost of preparing and distributing
reports and notices to shareholders, the cost of printing or preparing
prospectuses and statements of additional information for delivery to the
Trust's current and prospective shareholders; the cost of printing or preparing
stock certificates or any other documents, statements or reports to
shareholders; expenses of shareholders' meetings and proxy solicitations;
advertising, promotion and other expenses incurred directly or indirectly in
connection with the sale or distribution of the Trust's shares; and all other
operating expenses not specifically assumed by the Trust.
The Trust will pay all brokerage fees and commissions, taxes, interest,
expenses incurred by the Trust in connection with the organization and initial
registration of shares of any series of the Trust, and such extraordinary or
non-recurring expenses as may arise, including litigation to which the Trust
may be a party and indemnification of the Trust's trustees and officers with
respect thereto. You may obtain reimbursement from the Trust, at such time or
times as you may determine in your sole discretion, for any of the expenses
advanced by you,
<PAGE> 2
which the Trust is obligated to pay, and such reimbursement shall not be
considered to be part of your compensation pursuant to this Agreement.
3. COMPENSATION OF THE ADVISER
For all of the services to be rendered and payments to be made as provided
in this Agreement, as of the last business day of each month, the Lake Forest
Money Market Fund will pay you a fee at the annual rate of 1.00% of the average
value of its daily net assets and the Lake Forest Core Equity Fund will pay you
a fee at the annual rate of 2.00% of the average value of its daily net assets.
Your compensation with respect to each additional series of the Trust
established after the date of this Agreement shall be one of the fees described
above unless the Board of Trustees, including a majority of the Trustees who
are not interested persons as defined in the Investment Company Act of 1940 of
you or the Trust, determines otherwise. If the Board of Trustees adopts a
different fee arrangement for an additional series, the fee arrangement shall
be approved pursuant to the provisions of Section 15 of the Investment Company
Act of 1940.
The average value of the daily net assets of a series shall be determined
pursuant to the applicable provisions of the Declaration of Trust of the Trust
or a resolution of the Board, if required. If, pursuant to such provisions,
the determination of net asset value of a series is suspended for any
particular business day, then for the purposes of this paragraph, the value of
the net assets of the series as last determined shall be deemed to be the value
of the net assets as of the close of the business day, or as of such other time
as the value of the series' net assets may lawfully be determined, on that day.
If the determination of the net asset value of a series has been suspended for
a period including such month, your compensation payable at the end of such
month shall be computed on the basis of the value of the net assets of the
series as last determined (whether during or prior to such month).
4. EXECUTION OF PURCHASE AND SALE ORDERS
In connection with purchases or sales of portfolio securities for the
account of each series of the Trust, it is understood that you will arrange for
the placing of all orders for the purchase and sale of portfolio securities for
the account with brokers or dealers selected by you, subject to review of this
selection by the Board from time to time. You will be responsible for the
negotiation and the allocation of principal business and portfolio brokerage.
In the selection of such brokers or dealers and the placing of such orders, you
are directed at all times to seek for the series the best qualitative
execution, taking into account such factors as price (including the applicable
brokerage commission or dealer spread), the execution capability, financial
responsibility and responsiveness of the broker or dealer and the brokerage and
research services provided by the broker or dealer.
You should generally seek favorable prices and commission rates that are
reasonable in relation to the benefits received. In seeking best qualitative
execution, you are authorized to select brokers or dealers who also provide
brokerage and research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934) to the Trust and/or the other accounts
over which you exercise investment discretion. You are authorized to pay a
broker or dealer who provides such brokerage and research services a commission
for executing a Trust portfolio transaction which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if you determine in good faith that the amount of the commission is
reasonable in relation to the value of the brokerage and research services
provided by the executing broker or dealer. The determination may be viewed in
terms of either a particular transaction or your overall responsibilities with
respect to the Trust and to accounts over which you exercise investment
discretion. The Trust and you understand and acknowledge that, although the
information may be useful to the Trust and you, it is not possible to place a
dollar value on such information. The Board shall periodically review the
commissions paid by the Trust to determine if the commissions paid over
representative periods of time were reasonable in relation to the benefits to
the Trust.
-2-
<PAGE> 3
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., and subject to seeking best qualitative execution as
described above, you may give consideration to sales of shares of the Trust as
a factor in the selection of brokers and dealers to execute Trust portfolio
transactions.
Subject to the provisions of the Investment Company Act of 1940, as
amended, and other applicable law, you or any of your affiliates may retain
compensation in connection with effecting the Trust's portfolio transactions,
including transactions effected through others. If any occasion should arise
in which you give any advice to clients of yours concerning the shares of the
Trust, you will act solely as investment counsel for such client and not in any
way on behalf of the Trust. Your services to the Trust pursuant to this
Agreement are not to be deemed to be exclusive and it is understood that you
may render investment advice, management and other services to others,
including other registered investment companies.
5. LIMITATION OF LIABILITY OF ADVISER
You may rely on information reasonably believed by you to be accurate and
reliable. Except as may otherwise be required by the Investment Company Act of
1940 or the rules thereunder, neither you nor your shareholders, officers,
directors, employees, agents, control persons or affiliates of any thereof
shall be subject to any liability for, or any damages, expenses or losses
incurred by the Trust in connection with, any error of judgment, mistake of
law, any act or omission connected with or arising out of any services rendered
under, or payments made pursuant to, this Agreement or any other matter to
which this Agreement relates, except by reason of willful misfeasance, bad
faith or gross negligence on the part of any such persons in the performance of
your duties under this Agreement, or by reason of reckless disregard by any of
such persons of your obligations and duties under this Agreement.
Any person, even though also a director, officer, employee, shareholder or
agent of you, who may be or become an officer, director, trustee, employee or
agent of the Trust, shall be deemed, when rendering services to the Trust or
acting on any business of the Trust (other than services or business in
connection with your duties hereunder), to be rendering such services to or
acting solely for the Trust and not as a director, officer, employee,
shareholder or agent of you, or one under your control or direction, even
though paid by you.
6. DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall take effect on the date of its execution and shall
remain in force for a period of two (2) years from the date of its execution
with respect to each of the Trust's series established on the date of such
execution, and, with respect to any additional series registered after the date
of execution, until the next anniversary date of the Agreement following the
date on which such series becomes effectively registered for sale in a public
offering, and from year to year thereafter as to each series of the Trust's
shares, subject to annual approval by (i) the Board or (ii) a vote of a
majority (as defined in the Investment Company Act of 1940) of the outstanding
voting securities of such series, provided that in either event continuance is
also approved by a majority of the trustees who are not "interested persons,"
as defined in the Investment Company Act of 1940, of you or the Trust, by a
vote cast in person at a meeting called for the purpose of voting such
approval.
If the shareholders of any series of the Trust's shares fail to approve
the Agreement in the manner set forth above, upon request of the Board, you
will continue to serve or act in such capacity for the series for the period of
time pending required approval of the Agreement, of a new agreement with you or
a different adviser or other definitive action; provided that the compensation
to be paid by the Trust to you for your services to and payments on behalf of
the series will be equal to the lesser of your actual costs incurred in
furnishing such services and payments or the amount you would have received
under this Agreement for furnishing such services and payments.
-3-
<PAGE> 4
This Agreement may, on sixty days written notice, be terminated with
respect to a series at any time without the payment of any penalty, by the
Board, by a vote of a majority of the outstanding voting securities of the
series or by you. This Agreement shall automatically terminate in the event of
its assignment.
7. USE OF NAME
The Trust and you acknowledge that all rights to the name "Lake Forest"
belong to you, and that the Trust is being granted a limited license to use
such words in its Trust name or in any series name. In the event you cease to
be the adviser to the Trust, the Trust's right to the use of the name "Lake
Forest" shall automatically cease on the thirtieth day following the
termination of this Agreement. The right to the name may also be withdrawn by
you during the term of this Agreement upon thirty (30) days' written notice by
you to the Trust. Nothing contained herein shall impair or diminish in any
respect, your right to use the name "Lake Forest" in the name of, or in
connection with, any other business enterprises with which you are or may
become associated. There is no charge to the Trust for the right to use these
names.
8. AMENDMENT OF THIS AGREEMENT
No provision of this Agreement may be changed, waived, discharged or
terminated orally, and no amendment of this Agreement shall be effective until
approved by the Board, including a majority of the trustees who are not
interested persons of you or of the Trust, cast in person at a meeting called
for the purpose of voting on such approval, and (if required under current
interpretations of the Act by the Securities and Exchange Commission) by vote
of the holders of a majority of the outstanding voting securities of the series
to which the amendment relates.
9. LIMITATION OF LIABILITY TO TRUST PROPERTY
The term "The Lake Forest Funds" means and refers to the Trustees from
time to time serving under the Trust's Declaration of Trust as the same may
subsequently thereto have been, or subsequently hereto be, amended. It is
expressly agreed that the obligations of the Trust hereunder shall not be
binding upon any of the trustees, shareholders, nominees, officers, agents or
employees of the Trust, personally, but bind only the trust property of the
Trust, as provided in the Declaration of Trust of the Trust. The execution and
delivery of this Agreement have been authorized by the trustees and
shareholders of the Trust and signed by officers of the Trust, acting as such,
and neither such authorization by such trustees and shareholders nor such
execution and delivery by such officers shall be deemed to have been made by
any of them individually or to impose any liability on any of them personally,
but shall bind only the trust property of the Trust as provided in its
Declaration of Trust. A copy of the Agreement and Declaration of Trust of the
Trust is on file with the Secretary of the State of Ohio.
10. SEVERABILITY
In the event any provision of this Agreement is determined to be void or
unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.
11. QUESTIONS OF INTERPRETATION
(a) This Agreement shall be governed by the laws of the State of Ohio.
(b) Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or provision
of the Investment Company Act of 1940, as amended (the "Act") shall be resolved
by reference to such term or provision of the Act and to interpretation
thereof, if any, by the United States courts or in the absence of any
controlling decision of any such court, by rules, regulations or orders of the
Securities and Exchange Commission issued pursuant to said Act. In addition,
where the effect of a requirement of
-4-
<PAGE> 5
the Act, reflected in any provision of this Agreement is revised by rule,
regulation or order of the Securities and Exchange Commission, such provision
shall be deemed to incorporate the effect of such rule, regulation or order.
12. NOTICES
Any notices under this Agreement shall be in writing, addressed and
delivered or mailed postage paid to the other party at such address as such
other party may designate for the receipt of such notice. Until further notice
to the other party, it is agreed that the address of the Trust and your address
for this purpose shall be One Westminster Place, Lake Forest, Illinois
60045-1821.
13. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
14. BINDING EFFECT
Each of the undersigned expressly warrants and represents that he has the
full power and authority to sign this Agreement on behalf of the party
indicated, and that his signature will operate to bind the party indicated to
the foregoing terms.
15. 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.
If you are in agreement with the foregoing, please sign the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Trust, whereupon this letter shall become a binding contract
upon the date thereof.
Yours very truly,
THE LAKE FOREST FUNDS
By: /s/Irving V. Boberski
-----------------------------
Irving V. Boberski, President
ACCEPTANCE
The foregoing Agreement is hereby accepted.
BOBERSKI & COMPANY
By: /s/Irving V. Boberski
-----------------------------
Irving V. Boberski, President
<PAGE> 1
EXHIBIT 5b
THE LAKE FOREST FUNDS
AMENDMENT OF MANAGEMENT AGREEMENT
March 1, 1996
Boberski & Company
One Westminster Place
Lake Forest, IL 60045-1821
Dear Sirs:
The Lake Forest Funds (the "Trust") herewith confirms that effective March 1,
1996, the first paragraph of section 3 ("COMPENSATION OF THE ADVISER") of our
Management Agreement dated February 16, 1995 is amended in its entirety to read
as follows:
"For all of the services to be rendered and payments to be
made as provided in this Agreement, as of the last business day of
each month, the Lake Forest Money Market Fund will pay you a fee
at the annual rate of 0.50%, and the Lake Forest Core Equity Fund
will pay you a fee at the annual rate of 1.00% of the value of the
average daily net assets of the Fund. You may waive any of your
fees or reduce your fees in whole or part for any period, and such
waiver or reduction shall be effective only for the period for
which you specify it is effective."
In all other respects, the Management Agreement remains in full force and
effect.
If the foregoing is in accordance with your understanding, please indicate by
signing and returning to us the enclosed copy hereof.
Very truly yours,
THE LAKE FOREST FUNDS
By:_____________________________
Irving V. Boberski, President
Accepted as of the day and year first above written.
BOBERSKI & COMPANY
By:_________________________________
Irving V. Boberski, President
<PAGE> 1
EXHIBIT 5c
ADMINISTRATIVE SERVICES AGREEMENT
AGREEMENT made the ____ day of ____________ 1995 by and between THE LAKE FOREST
FUNDS (the "Fund") and AMERICAN DATA SERVICES, INC. a New York corporation
(the "Administrator").
BACKGROUND
WHEREAS, the Fund is a diversified open-end management investment company
registered with the United States Securities and Exchange Commission under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Administrator is a corporation experienced in providing
administrative services to mutual funds and possesses facilities sufficient to
provide such services; and
WHEREAS, the Fund desires to avail itself of the experience, assistance
and facilities of the Administrator and to have the Administrator perform for
the Fund certain services appropriate to the operations of the Fund and the
Administrator is willing to furnish such services in accordance with the terms
hereinafter set forth.
TERMS
NOW, THEREFORE, in consideration of the promises and mutual covenants
hereinafter contained, the Fund and the Administrator hereby agree to the
following:
1. DUTIES OF THE ADMINISTRATOR.
The Administrator will provide the Fund with the necessary office space,
communication facilities and personnel to perform the following services for
the Fund:
(a) Monitor all regulatory (1940 Act and IRS) and prospectus restrictions
for compliance;
(b) Prepare and coordinate the printing of semi-annual and annual
financial statements;
(c) Prepare selected management reports for performance and compliance
analyses as agreed upon by the Fund and Administrator from time to time;
(d) Prepare selected financial data required for Trustees' meetings as
agreed upon by the Fund and the Administrator from time to time and coordinate
Trustees meeting agendas with outside legal counsel to the Fund;
(e) Determine income and capital gains available for distribution and
calculate distributions required to meet regulatory, income, and excise tax
requirements, to be reviewed by the Fund's independent public accountants;
(f) Prepare the Fund's federal, state, and local tax returns to be
reviewed by the Fund's independent public accountants;
(g) Prepare and maintain the Fund's operating expense budget to determine
proper expense accruals to be charged to the Fund in order to calculate it's
daily net asset value;
(h) 1940 ACT filings -
In conjunction with the Fund's outside legal counsel the Administrator
will:
Prepare the Fund's Form N-SAR reports;
Update all financial sections of the Fund's Statement of
Additional Information and coordinate its completion;
Update all financial sections of the Fund's prospectus and
coordinate its completion;
Update all financial sections of the Fund's proxy statement and
coordinate its completion;
Prepare an annual update to Fund's 24f-2 filing (if applicable);
(i) Monitor services provided by the Fund's custodian bank as well as any
other service providers to the Fund;
(j) Provide appropriate financial schedules (as requested by the Fund's
independent public accountants or SEC examiners), coordinate the Fund's annual
or SEC audit, and provide office facilities as may be required;
(k) Attend management and board of Trustees meetings as requested;
<PAGE> 2
(l) The preparation and filing (filing fee to be paid by the Fund) of
applications and reports as necessary to register or maintain the Funds
registration under the securities or "Blue Sky" laws of the various states
selected by the Fund's Distributor.
The Administrator shall, for all purposes herein, be deemed to be an
independent contractor and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent the Fund in any way or
otherwise be deemed an agent of the Fund.
2. COMPENSATION OF THE ADMINISTRATOR.
In consideration of the services to be performed by ADS as set forth
herein for each portfolio listed in Schedule B, ADS shall be entitled to
receive compensation and reimbursement for all reasonable out-of-pocket
expenses. The Fund agrees to pay ADS the fees and reimbursement of
out-of-pocket expenses as set forth in the fee schedule attached hereto as
Schedule A.
3. RESPONSIBILITY AND INDEMNIFICATION.
(a) The Administrator shall be held to the exercise of reasonable care in
carrying out the provisions of the Agreement, but shall be without liability to
the Fund for any action taken or omitted by it in good faith without gross
negligence, bad faith, willful misconduct or reckless disregard of its duties
hereunder. It shall be entitled to rely upon and may act upon the accounting
records and reports generated by the Fund, advice of the Fund, or of counsel
for the Fund and upon statements of the Fund's independent accountants, and
shall be without liability for any action reasonably taken or omitted pursuant
to such records and reports or advice, provided that such action is not, to the
knowledge of the Administrator, in violation of applicable federal or state
laws or regulations, and provided further that such action is taken without
gross negligence, bad faith, willful misconduct or reckless disregard of its
duties.
(b) The Administrator shall not be liable to the Fund for any error of
judgment or mistake of law or for any loss arising out of any act or omission
by the Administrator in the performance of its duties hereunder except as
hereinafter set forth. Nothing herein contained shall be construed to protect
the Administrator against any liability to the Fund or its security holders to
which the Administrator shall otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence in the performance of its duties on
behalf of the Fund, reckless disregard of the Administrator's obligations and
duties under this Agreement or the willful violation of any applicable law.
(c) Except as may otherwise be provided by applicable law, neither the
Administrator nor its stockholders, officers, Trustees, employees or agents
shall be subject to, and the Fund shall indemnify and hold such persons
harmless from and against, any liability for and any damages, expenses or
losses incurred by reason of the inaccuracy of information furnished to the
Administrator by the Fund or its authorized agents or in connection with any
error in judgment or mistake of law or any act or omission in the course of,
connected with or arising out of any services to be rendered hereunder, except
by reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties, by reason of reckless disregard of the
Administrator's obligations and duties under this Agreement or the willful
violation of any applicable law.
4. REPORTS.
(a) The Fund shall provide to the Administrator on a quarterly basis a
report of a duly authorized officer of the Fund representing that all
information furnished to the Administrator during the preceding quarter was
true, complete and correct to the best of its knowledge. The Administrator
shall not be responsible for the accuracy of any information furnished to
it by the Fund, and the Fund shall hold the Administrator harmless in regard to
any liability incurred by reason of the inaccuracy of such information.
(b) The Administrator shall provide to the Board of Trustees of the Fund,
on a quarterly basis, a report, in such a form as the Administrator and the
Fund shall from time to time agree, representing that, to its knowledge, the
Fund was in compliance with all requirements of applicable federal and state
law, including without limitation, the rules and
<PAGE> 3
regulations of the Securities and Exchange Commission and the Internal Revenue
Service, or specifying any instances in which the Fund was not so in
compliance. Whenever, in the course of performing its duties under this
Agreement, the Administrator determines, on the basis of information
supplied to the Administrator by the Fund, that a violation of applicable law
has occurred, or that, to its knowledge, a possible violation of applicable law
may have occurred or, with the passage of time, could occur, the Administrator
shall promptly notify the Fund and its counsel of such violation.
5. ACTIVITIES OF THE ADMINISTRATOR.
The Administrator shall be free to render similar services to others so
long as its services hereinunder are not impaired thereby.
6. RECORDS.
The records maintained by the Administrator shall be the property of the
Fund, and shall be made available to the Fund promptly upon request by the Fund
in the form in which such records have been maintained or preserved. The
Administrator shall upon approval of the Fund assist the Fund's independent
auditors, or, any regulatory body, in any requested review of the Fund's
accounts and records. The Administrator shall preserve the records in its
possession (at the expense of the Fund) as required by Rule 31a-1 of the 1940
Act.
7. CONFIDENTIALITY.
The Administrator agrees that it will, on behalf of itself and its
officers and employees, treat all transactions contemplated by this Agreement,
and all other information germane thereto, as confidential and such information
shall not be disclosed to any person except as may be authorized by the Fund.
8. DURATION AND TERMINATION OF THE AGREEMENT.
This Agreement shall become effective as of the date hereof and shall
remain in force for a period of three (3) years, provided however, that both
parties to this Agreement have the option to terminate the Agreement, without
penalty, upon ninety (90) days prior written notice.
Should the Fund exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be borne by
the Fund. Additionally, ADS reserves the right to charge for any other
reasonable expenses associated with such termination.
9. ASSIGNMENT.
This Agreement shall extend to and shall be binding upon the parties
hereto and their respective successors and assigns; provided, however, that
this Agreement shall not be assignable by the Fund without the prior written
consent of the Administrator, or by the Administrator without the prior written
consent of the Fund.
10. NEW YORK LAWS TO APPLY.
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the State of New York as at the time in effect and
the applicable provisions of the 1940 Act. To the extent that the
applicable law of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the 1940 Act, the latter shall
control.
11. AMENDMENTS TO THIS AGREEMENT.
This Agreement may be amended by the parties hereto only if such amendment
is in writing and signed by both parties.
<PAGE> 4
12. MERGER OF AGREEMENT.
This Agreement constitutes the entire agreement between the parties hereto
and supersedes any prior agreement with respect to the subject matter hereof
whether oral or written.
13. NOTICES.
All notices and other communications hereunder shall be in writing, shall
be deemed to have been given when delivered in person or by certified mail,
return receipt requested, and shall be given to the following addresses (or
such other addresses as to which notice is given):
To the Fund: To the Administrator:
Irving Boberski Michael Miola
President President
The Lake Forest Funds American Data Services, Inc.
One Westminster Place 24 West Carver Street
Lake Forest, Illinois 60045-1821 Huntington, New York 11743
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
THE LAKE FOREST FUNDS AMERICAN DATA SERVICES, INC.
By:____________________________ By:__________________________
Irving Boberski, President Michael Miola, President
<PAGE> 1
EXHIBIT 8
CUSTODY AGREEMENT
Agreement made as of the ___day of______________, 1995 between The Lake
Forest Funds, (the "Trust"), a business trust organized under the laws of the
State of Ohio and having its office at One Westminster Place, Lake Forest,
Illinois 60045 acting for and on behalf of all mutual fund portfolios as are
currently authorized and issued by the Trust or may be authorized and issued by
the Trust subsequent to the date of this Agreement (the "Fund"), which is
operated and maintained by the Trust for the benefit of the holders of shares
of the Fund, and Star Bank, N.A. (the "Custodian"), a national banking
association having its principal office and place of business at Star Bank
Center, 425 Walnut Street, Cincinnati, Ohio 45202, which Agreement provides
for the furnishing of custodian services to the Fund.
W I T N E S S E T H :
that for and in consideration of the mutual promises hereinafter set forth the
Trust, on behalf of the Fund, and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless the
context otherwise requires, shall have the following meanings:
1. "Authorized Person" shall be deemed to include the President, Secretary,
and the Vice President, or any other person, whether or not any such
person is an officer or employee of the Trust, duly authorized by the
Board of Trustees of the Trust to give Oral Instructions on behalf of the
Fund and listed in the Certificate annexed hereto as Appendix A or such
other Certificate as may be received by the Custodian from time to time,
subject in each case to any limitations on the authority of such person as
set forth in Appendix A or any such Certificate.
2. "Book-Entry System" shall mean the Federal Reserve/Treasury book-entry
system for United States and federal agency securities, its successor or
successors and its nominee or nominees, provided the Custodian has
received a certified copy of a resolution of Board of Trustees of the
Trust specifically approving deposits in the Book-Entry System.
3. "Certificate" shall mean any notice, instruction, or other instrument in
writing, authorized or required by this Agreement to be given to the
Custodian which is signed on behalf of the Fund by an Officer of the Trust
and is actually received by the Custodian.
4. "Depository" shall mean The Depository Trust Company ("DTC"), a clearing
agency registered with the Securities and Exchange Commission, its
successor or successors and its nominee or nominees. The term
"Depository" shall further mean and include any other person or clearing
agency authorized to act as a depository under the Investment Company Act
of 1940, its successor or successors and its nominee or nominees, provided
that the Custodian has received a certified copy of a resolution of the
Board of Trustees of the Trust specifically approving such other person or
clearing agency as a depository.
5. "Dividend and Transfer Agent" shall mean the dividend and transfer agent
active, from time to time, in such capacity pursuant to a written
agreement with the Fund, changes in which the Trust shall immediately
report to the Custodian in writing.
6. "Money Market Security" shall be deemed to include, without limitation,
debt obligations issued or guaranteed as to principal and/or interest by
the government of the United States or agencies or instrumentalities
thereof, commercial paper, obligations (including certificates of deposit,
bankers' acceptances, repurchase and reverse repurchase agreements with
respect to the same) and bank time deposits of domestic banks that are
members of Federal Deposit Insurance Trust, and short-term corporate
obligations where the purchase and sale of such securities normally
require settlement in federal fund or their equivalent on the same day as
such purchase or sale.
7. "Officers" shall be deemed to include the President, the Secretary, and
Vice President of the Trust listed in the Certificate annexed hereto as
Appendix A or such other Certificate as may be received by the Custodian
from time to time.
<PAGE> 2
8. "Oral Instructions" shall mean oral instructions actually received by
the Custodian from an Authorized Person (or from a person which the
Custodian reasonably believes in good faith to be an Authorized Person) and
confirmed by Written Instructions from Authorized Persons in such manner
so that such Written Instructions are received by the Custodian on the
next business day.
9. "Prospectus" or "Prospectuses" shall mean the Fund' currently effective
prospectus and statements of additional information, as filed with and
declared effective by the Securities and Exchange Commission.
10. "Security or Securities" shall mean Money Market Securities, common or
preferred stocks, options, futures, gold, silver, bonds, debentures,
corporate debt securities, notes, mortgages or other obligations, and any
certificates, receipts, warrants or other instruments representing rights
to receive, purchase or subscribe for the same, or evidencing or
representing any other rights or interest therein, or any property or
assets.
11. "Written Instructions" shall mean communication actually received by the
Custodian from one Authorized Person or from one person which the
Custodian reasonably believes in good faith to be an Authorized Person in
writing, telex or any other data transmission system whereby the receiver
of such communication is able to verify by codes or otherwise with a
reasonable degree of certainty the authenticity of the senders of such
communication.
ARTICLE II
APPOINTMENT OF CUSTODIAN
1. The Trust, acting for and on behalf of the Fund, hereby constitutes and
appoints the Custodian as custodian of all the Securities and monies at
any time owned by the Fund during the period of this Agreement ("Fund
Assets").
2. The Custodian hereby accepts appointment as such Custodian and agrees to
perform the duties thereof as hereinafter set forth.
ARTICLE III
DOCUMENTS TO BE FURNISHED BY THE TRUST
The Trust hereby agrees to furnish to the Custodian the following
documents:
1. A copy of its Declaration of Trust (the "Declaration of Trust")
certified by its Secretary.
2. A copy of its By-Laws certified by its Secretary.
3. A copy of the resolution of its Board of Trustees appointing
the Custodian certified by its Secretary.
4. A copy of the most recent Prospectuses of the Trust.
5. A Certificate of the President and Secretary setting forth the
names and signatures of the present Officers of the Trust.
ARTICLE IV
CUSTODY OF CASH AND SECURITIES
1. The Trust will deliver or cause to be delivered to the Custodian all
Fund Assets, including cash received for the issuance of its shares, at any
time during the period of this Agreement. The Custodian will not be
responsible for such Fund Assets until actually received by it. Upon such
receipt, the Custodian shall hold in safekeeping and segregate at all times
from the property of any other persons, firms or corporations all Fund
Assets received by it from or for the account of the Fund. The Custodian
will be entitled to reverse any credits made on the Fund' behalf where such
credits have been previously made and monies are not finally collected
within 90 days of the making of such credits. The Custodian is hereby
authorized by the Trust, acting on behalf of the Fund, to actually deposit
any Fund Assets in the
<PAGE> 3
Book-Entry System or in a Depository, provided, however, that the Custodian
shall always be accountable to the Trust for the Fund Assets so deposited. Fund
Assets deposited in the Book-Entry System or the Depository will be represented
in accounts which include only assets held by the Custodian for customers,
including but not limited to accounts in which the Custodian acts in a fiduciary
or representative capacity.
2. The Custodian shall credit to a separate account or accounts in the name of
each respective Fund all monies received by it for the account of such Fund,
and shall disburse the same only:
(a) In payment for Securities purchased for the account of such Fund, as
provided in Article V;
(b) In payment of dividends or distributions, as provided in Article VI
hereof;
(c) In payment of original issue or other taxes, as provided in Article
VII hereof;
(d) In payment for shares of such Fund redeemed by it, as provided in
Article VII hereof;
(e) Pursuant to Certificates (i) directing payment and setting forth the
name and address of the person to whom the payment is to be made, the amount of
such payment and the purpose for which payment is to be made (the Custodian not
being required to questions such direction) or (ii) if reserve requirements are
established for the Fund by law or by valid regulation, directing the Custodian
to deposit a specified amount of collected funds in the form of U.S. dollars at
a specified Federal Reserve bank and stating the purpose of such deposit; or
(f) In reimbursement of the expenses and liabilities of the Custodian, as
provided in paragraph 10 of Article IX hereof.
3. Promptly after the close of business on each day the fund are open and
valuing their portfolios, the Custodian shall furnish the Trust with a detailed
statement of monies held for the Fund under this Agreement and with
confirmations and a summary of all transfers to or from the account of the Fund
during said day. Where Securities are transferred to the account of the Fund
without physical delivery, the Custodian shall also identify as belonging to
the Fund a quantity of Securities in a fungible bulk of Securities registered
in the name of the Custodian (or its nominee) or shown on the Custodian's
account on the books of the Book-Entry System or the Depository. At least
monthly and from time to time, the Custodian shall furnish the Trust with a
detailed statement of the Securities held for the Fund under this Agreement.
4. All Securities held for the Fund, which are issued or issuable only in
bearer form, except such Securities as are held in the Book-Entry System, shall
be held by the Custodian in that form; all other Securities held for the Fund
may be registered nominee of the Custodian as the Custodian may from time to
time determine, or in the name of the Book-Entry System or the Depository or
their successor or successors, or their nominee or nominees. The Trust agrees
to furnish to the Custodian appropriate instruments to enable the Custodian to
hold or deliver in proper form for transfer, or to register in the name of its
registered nominee or in the name of the Book-Entry System or the Depository,
any Securities which it may hold for the account of the Fund and which may from
time to time be registered in the name of the Fund. The Custodian shall hold
all such Securities which are not held in the Book-Entry System by the
Depository or a Sub-Custodian in a separate account or accounts in the name of
the Fund segregated at all times from those of any other fund maintained and
operated by the Trust and from those of any other person or persons.
5. Unless otherwise instructed to the contrary by a Certificate, the Custodian
shall with respect to all Securities held for the Fund in accordance with this
Agreement:
(a) Collect all income due or payable to the Fund with respect to each
Fund's Assets;
(b) Present for payment and collect the amount payable upon all Securities
which may mature or be called, redeemed, or retired, or otherwise become
payable;
(c) Surrender Securities in temporary form for definitive Securities;
<PAGE> 4
(d) 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, including any foreign taxing authority, now or
hereafter in effect; and
(e) Hold directly, or through the Book-Entry System or the Depository with
respect to Securities therein deposited, for the account of the Fund all rights
and similar securities issued with respect to any Securities held by the
Custodian hereunder.
6. Upon receipt of a Certificate and not otherwise, the Custodian directly
or through the use of the Book-Entry System or the Depository shall:
(a) Execute and deliver to such persons as may be designated in
such Certificate proxies, consents, authorizations, and any other
instruments whereby the authority or the Fund as owner of any
Securities may be exercised;
(b) Deliver any Securities held for the Fund in exchange for other
Securities or cash issued or paid in connection with the liquidation,
reorganization, refinancing, merger, consolidation or recapitalization
of any corporation, or the exercise of any conversion privilege;
(c) Deliver any Securities held for the account of the Fund to any
protective committee, reorganization, refinancing, merger,
consolidation, recapitalization or sale of assets of any corporation,
and received and hold under the terms of this Agreement such
certificates of deposit, interim receipts or other instruments or
documents as may be issued to it to evidence such delivery; and
(d) Make such transfers or exchanges of the assets of the Fund and
take such other steps as shall be stated in said Certificate to be
for the purpose of effectuating any duly authorized plan of
liquidation, reorganization, merger, consolidation or
recapitalization of the Fund.
7. The Custodian shall promptly deliver to the Trust all notices, proxy
material and executed but unvoted proxies pertaining to shareholder
meetings of Securities held by the Fund. The Custodian shall not vote or
authorize the voting of any Securities or give any consent, waiver or
approval with respect thereto unless so directed by a Certificate or
Written Instruction.
8. The Custodian shall promptly deliver to the Trust all material received
by the Custodian and pertaining to Securities held by the Fund with
respect to tender or exchange offers, calls for redemption or purchase,
expiration of rights, name changes, stock splits and stock dividends, or
any other activity involving ownership rights in such Securities, as
described in the custodians Standard of Service Guide and the same may be
updated from time to time.
ARTICLE V
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
1. Promptly after each purchase of Securities by the Fund, the Trust shall
deliver to the Custodian (i) with respect to each purchase of Securities
which are not Money Market Securities, a Certificate or Written
Instructions, and (ii) with respect to each purchase of Money Market
Securities, Written Instructions, a Certificate or Oral Instructions,
specifying with respect to each such purchase: (a) The name of the issuer
and the title of the Securities, (b) the principal amount purchased and
accrued interest, if any, (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 from whom or the broker through whom the
purchase was made. The Custodian shall upon receipt of Securities
purchased by or for the Fund, pay out of the monies held for the account
of the Fund the total amount payable to the person from whom or the broker
through whom the purchase was made, provided that the same conforms to the
total amount payable as set forth in such Certificate, Written
Instructions or Oral Instructions. With respect to any repurchase
agreement transaction for the Funds, the Custodian shall assure that the
collateral reflected on the transaction advice is received by the
Custodian.
<PAGE> 5
2. Promptly after each sale of Securities by the Trust for the account of
the Fund, the Trust shall deliver to the Custodian (i) with respect to
each sale of Securities which are not Money Market Securities, a
Certificate or Written Instructions, and (ii) with respect to each sale of
Money Market Securities, Written Instructions, a Certificate or Oral
Instructions, specifying with respect to each such sale: (a) the name
of the issuer and the title of the Security, (b) the principal amount
sold, and accrued interest, if any, (c) the date of sale, (d) the sale
price per unit, (e) the total amount payable to the Fund upon such sale
and (f) the name of the broker through whom or the person to whom the sale
was made. The Custodian shall deliver the Securities upon receipt of the
total amount payable to the Fund upon such sale, provided that the same
conforms to the total amount payable as set forth in such Certificate,
Written Instructions or Oral Instructions. Subject to the foregoing, the
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.
3. Promptly after the time as of which the Trust, on behalf of a Fund,
either -
(a) writes an option on Securities or writes a covered put option in
respect of a Security, or
(b) notifies the Custodian that its obligations in respect of any put or
call option, as described in the Trust's Prospectus, require that the Fund
deposit Securities or additional Securities with the Custodian, specifying
the type and value of Securities required to be so deposited, or
(c) notifies the Custodian that its obligations in respect of any other
Security, as described in each Fund's respective Prospectus, require that
the Fund deposit Securities or additional Securities with the Custodian,
specifying the type and value of Securities required to be so deposited,
the Custodian will cause to be segregated or identified as deposited,
pursuant to the Fund's obligations as set forth in such Prospectus,
Securities of such kinds and having such aggregate values as are required
to meet the Fund's obligations in respect thereof. The Trust will provide
to the Custodian, as of the end of each trading day, the market value of
each Fund's option liability if any and the market value of its portfolio
of common stocks.
4. On contractual settlement date, the account of each respective Fund will
be charged for all purchases settling on that day, regardless of whether
or not delivery is made. On contractual settlement date, sale proceeds
will likewise be credited to the account of such Fund irrespective of
delivery. In the case of "sale fails", the Custodian may request the
assistance of the Fund in making delivery of the failed Security.
5. Purchases and sales of Securities effected by the Custodian will be made
on a delivery versus payment basis. The Custodian may, in its sole
discretion, upon receipt of a Certificate, elect to settle a purchase or
sale transaction in some other manner, but only upon receipt of acceptable
indemnification from the Fund.
6. Except as otherwise may be agreed upon by the parties hereto, the
Custodian shall not be required to comply with any Written Instructions to
settle the purchase of any Securities on behalf of the Fund unless there
is sufficient cash in the account(s) at the time or to settle the sale of
any Securities from an account(s) unless such Securities are in
deliverable form. Notwithstanding the foregoing, if the purchase price of
such Securities exceeds the amount of cash in the account(s) at the time
of such purchase, the Custodian may, in its sole discretion, advance the
amount of the difference in order to settle the purchase of such
Securities. The amount of any such advance shall be deemed a loan from
the Custodian to the Fund payable on demand and bearing interest accruing
from the date such loan is made up to but not including the date such loan
is repaid at a rate per annum customarily charged by the Custodian on
similar loans.
ARTICLE VI
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
<PAGE> 6
1. The Trust shall furnish to the Custodian a copy of the resolution of the
Board of Trustees, certified by the Secretary, either (i) setting forth
the date of the declaration of any dividend or distribution in respect of
shares of the Fund, the date of payment thereof, the record date as of
which Fund shareholders entitled to payment shall be determined, the
amount payable per share to Fund shareholders of record as of that date
and the total amount to be paid by the Dividend and Transfer Agent of the
Fund on the payment date, or (ii) authorizing the declaration of dividends
and distributions in respect of shares of the Fund on a daily basis and
authorizing the Custodian to rely on Written Instructions or a Certificate
setting forth the date of the declaration of any such dividend or
distribution, the date of payment thereof, the record date as of which
Fund shareholders entitled to payment shall be determined, the amount
payable per share to Fund shareholders of record as of that date and the
total amount to be paid by the Dividend and Transfer Agent on the payment
date.
2. Upon the payment date specified in such resolution, Written Instructions
or Certificate, as the case may be, the Custodian shall arrange for such
payments to be made by the Dividend and Transfer Agent out of monies held
for the account of the Fund.
ARTICLE VII
SALE AND REDEMPTION OF SHARES OF THE FUND
1. The Custodian shall receive and credit to the account of each Fund such
payments for shares of such Fund issued or sold from time to time as are
received from the distributor for the Fund's shares, from the Dividend and
Transfer Agent of the Fund, or from the Trust.
2. Upon receipt of Written Instructions, the Custodian shall arrange for
payment of redemption proceeds to be made by the Dividend and Transfer
Agent out of the monies held for the account of the respective Fund in the
total amount specified in the Written Instructions.
3. Notwithstanding the above provisions regarding the redemption of any
shares of the Fund, whenever shares of the Fund are redeemed pursuant to
any check redemption privilege which may from time to time be offered by
the Fund, the Custodian, unless otherwise subsequently instructed by
Written Instructions shall, upon receipt of any Written Instructions
setting forth that the redemption is in good form for redemption in
accordance with the check redemption procedure, honor the check presented
as part of such check redemption privilege out of the money held in the
account of the Fund for such purposes.
ARTICLE VIII
INDEBTEDNESS
In connection with any borrowings, the Trust, on behalf of the Fund, will
cause to be delivered to the Custodian by a bank or broker (including the
Custodian, if the borrowing is from the Custodian), requiring Securities as
collateral for such borrowings, a notice or undertaking in the form currently
employed by any such bank or broker setting forth the amount which such bank or
broker will loan to the Fund against delivery of a stated amount of collateral.
The Trust shall promptly deliver to the Custodian a Certificate specifying with
respect to each such borrowing: (a) the name of the bank or broker, (b) the
amount and terms of the borrowing, which may be set forth by incorporating by
reference an attached promissory note, duly endorsed by the Trust, acting on
behalf of the Fund, or other loan agreement, (c) the date and time, if known,
on which is to be entered into, (d) the date on which the loan becomes due and
payable, (e) the total amount payable to the Fund on the borrowing date, (f)
the market value of Securities collateralizing the loan, including the name of
the issuer, the title and the number of shares or the principal amount of any
particular Securities and (g) a statement that such loan is in conformance with
the Investment Company Act of 1940 and the Fund's then current Prospectus. The
Custodian shall deliver on the
<PAGE> 7
borrowing date specified in a Certificate the specified collateral and the
executed promissory note, if any, against delivery by the lending bank or
broker of the total amount of the loan payable provided that the same conforms
to the total amount payable as set forth in the Certificate. The Custodian
may, at the option of the lending bank or broker, keep such collateral in its
possession, but such collateral shall be subject to all rights therein given
the lending bank or broker, by virtue of any promissory note or loan agreement.
The Custodian shall deliver in the manner directed by the Trust from time to
time such Securities as additional collateral as may be specified in a
Certificate to collateralized further any transaction described in this
paragraph. The Trust shall cause all Securities released from collateral
status to be returned directly to the Custodian and the Custodian shall receive
from time to time such return of collateral as may be tendered to it. In the
event that the Trust fails to specify in a Certificate or Written Instructions
the name of the issuer, the title and number of shares or the principal amount
of any particular Securities to be delivered as collateral by the Custodian,
the Custodian shall not be under any obligation to deliver any Securities. The
Custodian may require such reasonable conditions with respect to such
collateral and its dealings with third-party lenders as it may deem
appropriate.
The Fund hereby pledges to and grants the Custodian a security interest in
any Fund Assets to secure the payment on account of money borrowed from the
Custodian. This pledge is in addition to any other pledge of collateral by the
Fund to the Custodian.
ARTICLE IX
CONCERNING THE CUSTODIAN
1. Except as otherwise provided herein, the Custodian shall not be liable for
any loss or damage, including counsel fees, resulting from its action or
omission to act or otherwise, except for any such loss or damage arising out of
its negligence or willful misconduct. The Trust, on behalf of the Fund and
only from Fund Assets (or insurance purchased by the Trust with respect to its
liabilities on behalf of the Fund hereunder), shall defend, indemnify and hold
harmless the Custodian and its Trustees, Officers, Employees and Agents with
respect to any loss, claim, liability or cost (including reasonable attorneys'
fees) arising or alleged to arise from or relating to the Trust's duties with
respect to the Fund hereunder or any other action or inaction of the Trust or
its Trustees, Officers, Employees or Agents as to the Fund, except such as may
arise from the negligent action, omission or willful misconduct of the
Custodian, its Trustees, Officers, Employees or Agents. The Custodian shall
defend, indemnify and hold harmless the Trust and its Trustees, Officers,
Employees or Agents with respect to any loss, claim, liability or cost
(including reasonable attorneys' fees) arising or alleged to arise from or
relating to the Custodian's duties as specifically set forth in this agreement
with respect to the Fund hereunder or any other action or inaction of the
Custodian or its Directors, Officers, Employees, Agents, nominees or
Sub-Custodians as to the Fund, except such as may arise from the negligent
action, omission or willful misconduct of the Trust, its Trustees, Officers,
Employees or Agents. The Custodian may, with respect to questions of law apply
for and obtain the advice and opinion of counsel to the Trust at the expense of
the Fund, or of its own counsel at its own expense, and shall be fully
protected with respect to anything done or omitted by it in good faith in
conformity with the advice or opinion of counsel to the Trust, and shall be
similarly protected with respect to anything done or omitted by it in good
faith in conformity with advice or opinion of its counsel, unless counsel to
the Fund shall, within a reasonable time after being notified of legal advice
received by the Custodian, have a differing interpretation of such question of
law. The Custodian shall be liable to the Trust for any proximate loss or
damage resulting from the use of the Book-Entry System or any Depository
arising by reason of any negligence, misfeasance or misconduct on the part of
the Custodian or any of its employees, agents, nominees or Sub-Custodians but
not for any special, incidental, consequential, or punitive damages;
provided, however, that nothing contained herein shall preclude recovery by the
Trust, on behalf of the Fund, of principal and of interest to the date of
recovery on, Securities incorrectly omitted from the Fund's account or
penalties imposed on the Trust, in connection with the Fund, for any failures
to deliver Securities.
<PAGE> 8
In any case in which one party hereto may be asked to indemnify the other
or hold the other harmless, the party from whom indemnification is sought (the
"Indemnifying Party") shall be advised of all pertinent facts concerning the
situation in question, and the party claiming a right to indemnification (the
"Indemnified Party") will use reasonable care to identify and notify the
Indemnifying Party promptly concerning any situation which presents or appears
to present a claim for indemnification against the Indemnifying Party. The
Indemnifying Party shall have the option to defend the Indemnified Party
against any claim which may be the subject of the indemnification, and in the
event the Indemnifying Party so elects, such defense shall be conducted by
counsel chosen by the Indemnifying Party and satisfactory to the Indemnified
Party and the Indemnifying Party will so notify the Indemnified Party and
thereupon such Indemnifying Party shall take over the complete defense of the
claim and the Indemnifying Party shall sustain no further legal or other
expenses in such situation for which indemnification has been sought under this
paragraph, except the expenses of any additional counsel retained by the
Indemnified Party. In no case shall any party claiming the right to
indemnification confess any claim or make any compromise in any case in which
the other party has been asked to indemnify such party (unless such confession
or compromise is made with such other party's prior written consent).
The obligations of the parties hereto under this paragraph shall survive
the termination of this Agreement.
2. Without limiting the generality of the foregoing, the Custodian, acting in
the capacity of Custodian hereunder, shall be under no obligation to inquire
into, and shall not be liable for:
(a) The validity of the issue of any Securities purchased by or for the
account of the Fund, the legality of the purchase thereof, or the propriety of
the amount paid therefor;
(b) The legality of the sale of any Securities by or for the account of
the Fund, or the propriety of the amount for which the same are sold;
(c) The legality of the issue or sale of any shares of the Fund, or the
sufficiency of the amount to be received therefor;
(d) The legality of the redemption of any shares of the Fund, or the
propriety of the amount to be paid therefor;
(e) The legality of the declaration or payment of any dividend by the
Trust in respect of shares of the Fund;
(f) The legality of any borrowing by the Trust, on behalf of the Fund,
using Securities as collateral;
(g) The sufficiency of any deposit made pursuant to a Certificate
described in clause (ii) of paragraph 2(e) of Article IV hereof,
3. The Custodian shall not be liable for any money or collected fund in U.S.
dollars deposited in a Federal Reserve Bank in accordance with a Certificate
described in clause (ii) of paragraph 2(e) of Article IV hereof, nor be liable
for or considered to be the Custodian of any money, whether or not represented
by any check, draft, or other instrument for the payment of money, received by
it on behalf of the Fund until the Custodian actually receives and collects
such money directly or by the final crediting of the account representing the
Fund's interest at the Book-Entry System or Depository.
4. The Custodian shall not be under any duty or obligation to take action to
effect collection of any amount due to the Fund from the Dividend and Transfer
Agent of the Fund nor to take any action to effect payment or distribution by
the Dividend and Transfer Agent of the Fund of any amount paid by the Custodian
to the Dividend and Transfer Agent of the Fund in accordance with this
Agreement.
5. Income due or payable to the Fund will be credited to the account as
described in the Standard of Service Guide.
6. Notwithstanding paragraph 5 of this Article IX, the Custodian shall not be
under any duty or obligation to take action to effect collection of any amount,
if the Securities upon which such amount is payable are in default, or if
payment is refused after due demand or presentation, unless and until (i) it
shall be directed to take such action by a Certificate and (ii) it shall be
assured to its satisfaction of reimbursement of its costs and expenses in
connection with any such action or, at the Custodian's option, prepayment.
<PAGE> 9
7. The Custodian may appoint one or more financial or banking institutions, as
Depository or Depositories or as Sub-Custodian or Sub-Custodians, including,
but not limited to, banking institutions located in foreign countries, of
Securities and monies at any time owned by the Fund, upon terms and conditions
approved in a Certificate. Current Depository(s) and Sub-Custodian(s) are
noted in Appendix B. The Custodian shall not be relieved of any obligation or
liability under this Agreement in connection with the appointment or activities
of such Depositories or Sub-Custodians.
8. The Custodian shall not be under any duty or obligation to ascertain
whether any Securities at any time delivered to or held by it for the account
of the Fund are such as properly may be held by the Fund under the provisions
of the Declarations of Trust and the Trust's By-Laws.
9. The Custodian shall treat all records and other information relating to the
Trust, the Fund and the Fund Assets as confidential and shall not disclose any
such records or information to any other person unless (a) the Trust shall have
consented thereto in writing or (b) such disclosure is compelled by law.
10. The Custodian shall be entitled to receive and the Trust agrees to pay to
the Custodian, for the Fund's account from Fund Assets only, such compensation
as shall be determined pursuant to Appendix C, attached hereto, or as shall be
determined pursuant to amendments to such Appendix approved by the Custodian
and the Trust, on behalf of the Fund. The Custodian shall be entitled to
charge against any money held by it for the accounts of the Fund the amount of
any loss, damage, liability or expense, including counsel fees, for which it
shall be entitled to reimbursement under the provisions of this Agreement as
determined by agreement of the Custodian and the Trust or by the final order of
any court or arbitrator having jurisdiction and as to which all rights of
appeal shall have expired. The expenses which the Custodian may charge against
the accounts of the Fund include, but are not limited to, the expenses of
Sub-Custodians incurred in settling transactions involving the purchase and
sale of Securities of the Fund.
11. The Custodian shall be entitled to rely upon any Certificate if such
reliance is made in good faith. The Custodian shall be entitled to rely upon
any Oral Instructions and any Written Instructions actually received by the
Custodian pursuant to Article IV or V hereof. The Trust agrees to forward to
the Custodian Written Instructions from Authorized Persons confirming Oral
Instructions in such manner so that such Written Instructions are received by
the Custodian, whether by hand delivery, telex or otherwise, on the first
business day following the day on which such Oral Instructions are given to the
Custodian. The Trust agrees that the fact that such confirming instructions
are not received by the Custodian shall in no way affect the validity of the
transactions or enforceability of the transactions hereby authorized by the
Trust. The Trust agrees that the Custodian shall incur no liability to the
Fund in acting upon Oral Instructions given to the Custodian hereunder
concerning such transactions.
12. The Custodian will (a) set up and maintain proper books of account and
complete records of all transactions in the accounts maintained by the
Custodian hereunder in such manner as will meet the obligations of the Fund
under the Investment Company Act of 1940, with particular attention to Section
31 thereof and Rules 31 a-1 and 31 a-2 thereunder, and (b) preserve for the
periods prescribed by applicable Federal statute or regulation all records
required to be so preserved. The books and records of the Custodian shall be
open to inspection and audit at reasonable times and with prior notice by
Officers and auditors employed by the Trust.
13. The Custodian and its Sub-Custodians shall promptly send to the Trust, for
the account of the Fund, any report received on the systems of internal
accounting control of the Book-Entry System or the Depository and with such
reports on their own systems of internal accounting control as the Trust may
reasonably request from time to time.
14. The Custodian performs only the services of a custodian and shall have no
responsibility for the management, investment or reinvestment of the Securities
from time to time owned by the Fund. The Custodian is not a selling agent for
shares of the Fund and performance of its duties as a custodial agent shall not
be deemed to be a recommendation to the Custodian's depositors or others of
shares of the Fund as an investment.
<PAGE> 10
ARTICLE X
TERMINATION
1. Either of the parties hereto may terminate this Agreement for any reason by
giving to the other party a notice in writing specifying the date of such
termination, which shall be not less than ninety (90) days after the date of
giving of such notice. If such notice is given by the Trust, on behalf of the
Fund, it shall be accompanied by a copy of a resolution of the Board of
Trustees of the Trust, certified by the Secretary or any Assistant Secretary,
electing to terminate this Agreement and designating a successor custodian or
custodians, each of which shall be a bank or trust company having not less than
$2,000,000 aggregate capital, surplus and undivided profits. In the event such
notice is given by the Custodian, the Trust shall, on or before the termination
date, deliver to the Custodian a copy of a resolution of its Board of Trustees,
certified by the Secretary, designating a successor custodian or custodians to
act on behalf of the Fund. In the absence of such designation by the Trust,
the Custodian may designate a successor custodian which shall be a bank or
trust company having not less than $2,000,000 aggregate capital, surplus, and
undivided profits. Upon the date set forth in such notice this Agreement shall
terminate, and the Custodian, provided that it has received a notice of
acceptance by the successor custodian, shall deliver, on that date, directly to
the successor custodian all Securities and monies then owned by the Fund and
held by it as Custodian. Upon termination of this agreement, the Trust shall
pay to the Custodian on behalf of the Fund such compensation as may be due as
of the date of such termination. The Trust agrees on behalf of the Fund that
the Custodian shall be reimbursed for its reasonable costs in connection with
the termination of this Agreement.
2. If a successor custodian is not designated by the Trust, on behalf of the
Fund, or by the Custodian in accordance with the preceding paragraph, or the
designated successor cannot or will not serve, the Trust shall upon the
delivery by the Custodian to the Trust of all Securities (other than Securities
held in the Book-Entry System which cannot be delivered to the Trust) and
monies then owned by the Fund, other than monies deposited with a Federal
Reserve Bank pursuant to a Certificate described in clause (ii) of paragraph
2(e) of Article IV, be deemed to be the custodian for the Fund, and the
Custodian shall thereby be relieved of all duties and responsibilities pursuant
to this Agreement, other than the duty with respect to Securities held in the
Book-Entry System which cannot be delivered to the Trust to hold such
Securities hereunder in accordance with this Agreement.
ARTICLE XI
MISCELLANEOUS
1. Appendix A sets forth the names and the signatures of all Authorized
Persons. The Trust agrees to furnish to the Custodian, on behalf of the Fund,
a new Appendix A in form similar to the attached Appendix A, if any present
Authorized Person ceases to be an Authorized Person or if any other or
additional Authorized Persons are elected or appointed. Until such new
Appendix A shall be received, the Custodian shall be fully protected in acting
under the provisions of this Agreement upon Oral Instructions or signatures of
the present Authorized Persons as set forth in the last delivered Appendix A.
2. No recourse under any obligation of this Agreement or for any claim based
thereon shall be had against any organizer, shareholder, Officer, Trustee,
past, present or future as such, of the Trust or of any such predecessor or
successor, whether by virtue of any constitution, statute or rule of law or
equity, or by the enforcement of any assessment or penalty or otherwise; it
being expressly agreed and understood that this Agreement and the obligations
thereunder are enforceable solely against Fund Assets, and that no such
personal liability whatever shall attach to, or is or shall be incurred by, the
organizers, shareholders, Officers, Trustees of the Trust or of any predecessor
or successor, or any of them as such, because of the obligations contained in
this Agreement or implied therefrom and that any and all such liability is
hereby expressly waived and released by the Custodian as a condition of, and
as a consideration for, the execution of this Agreement.
<PAGE> 11
3. The obligations set forth in this Agreement as having been made by the
Trust have been made by the Trustees of the Trust, acting as such Trustees for
and on behalf of the Fund, pursuant to the authority vested in them under the
laws of the State of Ohio, the Declaration of Trust and the By-Laws of the
Trust. This Agreement has been executed by Officers of the Trust as Officers,
and not individually, and the obligations contained herein are not binding upon
any of the Trustees, Officers, Agents or holders of shares, personally, but
bind only the Trust and then only to the extent of Fund Assets.
4. Such provisions of the Prospectuses of the Fund and any other documents
(including advertising material) specifically mentioning the Custodian (other
than merely by name and address) shall be approved by the Custodian.
5. Any notice or other instrument in writing, authorized or required by this
Agreement to be given to the Custodian, shall be sufficiently given if
addressed to the Custodian and mailed or delivered to it at its offices at Star
Bank Center, 425 Walnut Street, M.L. 6118, Cincinnati, Ohio 45202, attention:
Mutual Fund Custody Department, or at such other place as the Custodian may
from time to time designate in writing.
6. Any notice or other instrument in writing, authorized or required by this
Agreement to be given to the Trust shall be sufficiently given when delivered
to the Trust or on the second business day following the time such notice is
deposited in the U.S. mail postage prepaid and addressed to the Trust at its
office at 1807 S. Washington, Suite 107, Naperville, Illinois 60565 or at such
other place as the Trust may from time to time designate in writing.
7. This Agreement with the exception of Appendices A & B may not be amended or
modified in any manner except by a written agreement executed by both parties
with the same formality as this Agreement, and authorized and approved by a
resolution of the Board of Trustees of the Trust.
8. This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided, however, that
this Agreement shall not be assignable by the Trust or by the Custodian, and no
attempted assignment by the Trust or the Custodian shall be effective without
the written consent of the other party hereto.
9. This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective Officers, thereunto duly authorized as of the day
and year first above written.
ATTEST: The Lake Forest Funds
____________________________ BY:__________________________________
ATTEST: Star Bank, N.A.
____________________________ BY:__________________________________
<PAGE> 1
EXHIBIT 9
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made the ______ day of _________ 1995 by and between THE LAKE FOREST
FUNDS having its principal office and place of business at One Westminster
Place, Lake Forest, Illinois 60045-1821 (the "Fund"), and AMERICAN DATA
SERVICES, INC., a New York corporation having its principal office and place of
business at 24 West Carver Street, Huntington, New York 11743 ("ADS").
WHEREAS, the Fund desires to appoint ADS as its transfer agent, dividend
disbursing agent and agent in connection with certain other activities, and ADS
desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
1. TERMS OF APPOINTMENT; DUTIES OF ADS
1.01 Subject to the terms and conditions set forth in this agreement, the
Fund hereby employs and appoints ADS to act as, and ADS agrees to act as its
transfer agent for the Fund's authorized and issued shares of its common stock,
no par value, ("Shares"), dividend disbursing agent and agent in connection
with any accumulation, open-account or similar plans provided to the
shareholders of the fund ("Shareholders") set out in the currently effective
prospectus and statement of additional information ("prospectus") of the Fund.
1.02 ADS agrees that it will perform the following services:
(a) In accordance with procedures established from time to time by
agreement between the Fund and ADS, ADS shall:
(i) Receive for acceptance, orders for the purchase of
Shares, and promptly deliver payment and appropriate
documentation therefore to the Custodian of the Fund
authorized by the Board of Trustees of the Fund (the
"Custodian");
(ii) Pursuant to purchase orders, issue the appropriate
number of Shares and hold such Shares in the appropriate
Shareholder account;
(iii) Receive for acceptance redemption requests and
redemption directions and deliver the appropriate
documentation therefore to the Custodian;
(iv) At the appropriate time as and when it receives monies
paid to it by the Custodian with respect to any redemption,
pay over or cause to be paid over in the appropriate manner
such monies as instructed by the redeeming Shareholders;
(v) Effect transfers of Shares by the registered owners
thereof upon receipt of appropriate instructions;
(vi) Prepare and transmit payments for dividends and
distributions declared by the Fund;
(vii) Maintain records of account for and advise the Fund
and its Shareholders as to the foregoing; and
(viii) Record the issuance of shares of the Fund and
maintain pursuant to SEC Rule 17Ad-10(e) a record of the
total number of shares of the Fund which are authorized,
based upon data provided to it by the Fund, and issued and
outstanding. ADS shall also provide the Fund on a regular
basis with the total number of shares which are authorized
and issued and outstanding and shall have no obligation, when
recording the issuance of shares, to monitor the issuance of
such shares or to take cognizance of any laws relating to the
issue or sale of such shares, which functions shall be the
sole responsibility of the Fund.
(b) In addition to and not in lieu of the services set forth in the above
paragraph (a), ADS shall:
(i) Perform all of the customary services of a transfer agent,
dividend disbursing agent, including but not limited to:
maintaining all Shareholder accounts, preparing Shareholder meeting
lists, mailing proxies, receiving and tabulating proxies, mailing
Shareholder reports and prospectuses to current Shareholders,
withholding taxes on U.S. resident and non-resident alien accounts,
preparing and filing U.S. Treasury Department Forms 1099 and other
appropriate forms required with respect to
<PAGE> 2
dividends and distributions by federal authorities for all
Shareholders, preparing and mailing confirmation forms and
statements of account to Shareholders for all purchases redemptions
of Shares and other confirmable transactions in Shareholder
accounts, preparing and mailing activity statements for
Shareholders, and providing Shareholder account information and (ii)
provide a system and reports which will enable the Fund to monitor
the total number of Shares sold in each State.
(c) In addition, the Fund shall (i) identify to ADS in writing those
transactions and shares to be treated as exempt from blue sky reporting for
each State and (ii) verify the establishment of such transactions for each
state on the system prior to activation and thereafter monitor the daily
activity for each State as provided by ADS. The responsibility of ADS for the
Fund's blue sky State registration status is solely limited to the initial
establishment of transactions subject to blue sky compliance by the Fund and
the reporting of such transactions to the Fund as provided above.
Procedures applicable to certain of these services may be established from
time to time by agreement between the Fund and ADS.
2. FEES AND EXPENSES
2.01 For performance by ADS pursuant to this Agreement, the Fund agrees to
pay ADS an annual maintenance fee for each Shareholder account and transaction
fees for each portfolio or class of shares serviced under this Agreement (See
Secheule A) as set out in the fee schedule attached hereto. Such fees and
out-of pocket expenses and advances identified under Section 2.02 below may be
changed from time to time subject to mutual written agreement between the Fund
and ADS.
2.02 In addition to the fee paid under Section 2.01 above, the Fund agrees
to reimburse ADS for out-of-pocket expenses or advances incurred by ADS for the
items set out in the fee schedule attached hereto. In addition, any other
expenses incurred by ADS at the request or with the consent of the Fund, will
be reimbursed by the Fund.
2.03 The Fund agrees to pay all fees and reimbursable expenses within five
days following the receipt of the respective billing notice. Postage for
mailing of dividends, proxies, Fund reports and other mailings to all
shareholder accounts shall be advanced to ADS by the Fund at least seven (7)
days prior to the mailing date of such materials.
3. REPRESENTATIONS AND WARRANTIES OF ADS
ADS represents and warrants to the Fund that:
3.01 It is a corporation duly organized and existing and in good standing
under the laws of The State of New York.
3.02 It is duly qualified to carry on its business in The State of New
York.
3.03 It is empowered under applicable laws and by its charter and by-laws
to enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been taken to authorize it
to enter into and perform this Agreement.
3.05 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
3.06 ADS is duly registered as a transfer agent under the Securities Act
of 1934 and shall continue to be registered throughout the remainder of this
Agreement.
4. REPRESENTATIONS AND WARRANTIES OF THE FUND
The Fund represents and warrants to ADS that;
4.01 It is a trust duly organized and existing and in good standing under
the laws of Ohio.
4.02 It is empowered under applicable laws and by its Agreement and
Declaration of Trust and By-Laws to enter into and perform this Agreement.
4.03 All proceedings required by said Agreement and Declaration of Trust
and By-Laws have been taken to authorize it to enter into and perform this
Agreement.
4.04 It is an open-end and diversified management investment company
registered under the Investment Company Act of 1940.
<PAGE> 3
4.05 A registration statement under the Securities Act of 1933 is
currently or will become effective and will remain effective, and appropriate
state securities law filings as required, have been or will be made and will
continue to be made, with respect to all Shares of the Fund being offered for
sale.
5. INDEMNIFICATION
5.01 ADS shall not be responsible for, and the Fund shall indemnify and
hold ADS harmless from and against, any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liability arising out of or
attributable to:
(a) All actions of ADS or its agents or subcontractors required to
be taken pursuant to this Agreement, provided that such actions are taken
in good faith and without gross negligence or willful misconduct.
(b) The Fund's refusal or failure to comply with the terms of this
Agreement, or which arise out of the Fund's lack good faith, gross
negligence or willful misconduct or which arise out of the breach of any
representation or warranty of the Fund hereunder.
(c) The reliance on or use by ADS or its agents or subcontractors of
information, records and documents which (i) are received by ADS or its
agents or subcontractors and furnished to it by or on behalf of the Fund,
and (ii) have been prepared and/or maintained by the Fund or any other
person or firm on behalf of the Fund.
(d) The reliance on, or the carrying out by ADS or its agents or
subcontractors of any instructions or requests of the Fund.
(e) The offer or sale of Shares in violation of any requirement
under the federal securities laws or regulations or the securities laws
or regulations of any state that such Shares be registered in such state
or in violation of any stop order or other determination or ruling by any
federal agency or any state with respect to the offer or sale of such
Shares in such state.
5.02 ADS shall indemnify and hold the Fund harmless from and against any
and all losses, damages, costs, charges, counsel fees, payments, expenses and
liability arising out of or attributable to any action or failure or omission
to act by ADS as a result of ADS's lack of good faith, gross negligence or
willful misconduct.
5.03 At any time ADS may apply to any officer of the Fund for
instructions, and may consult with legal counsel with respect to any matter
arising in connection with the services to be performed by ADS under this
Agreement, and ADS and its agents or subcontractors shall not be liable and
shall be indemnified by the Fund for any action taken or omitted by it in
reliance upon such instructions or upon the opinion of such counsel. ADS, its
agents and subcontractors shall be protected and indemnified in acting upon any
paper or document furnished by or on behalf of the Fund, reasonably believed to
be genuine and to have been signed by the proper person or persons, or upon any
instruction, information, data, records or documents provided ADS or its agents
or subcontractors by machine readable input, telex, CRT data entry or other
similar means authorized by the Fund, and shall not be held to have notice of
any change of authority of any person, until receipt of written notice thereof
from the Fund. ADS, its agents and subcontractors shall also be protected and
indemnified in recognizing stock certificates which are reasonably believed to
bear the proper manual or facsimile signatures of the officers of the Fund,
and the proper countersignature of any former transfer agent or registrar, or
of a co-transfer agent or co-registrar.
5.04 In the event either party is unable to perform its obligations under
the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable for damages to
the other for any damages resulting from such failure to perform or otherwise
from such causes.
5.05 Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement or for any act
or failure to act hereunder.
5.06 In order that the indemnification provisions contained in this
Article 5 shall apply, upon the assertion of a claim for which either party may
be required to indemnify the other, the party of seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in
any case in which the other party may be required to indemnify it except with
the other party's prior written consent.
<PAGE> 4
6. COVENANTS OF THE FUND AND ADS
6.01 The Fund Shall promptly furnish to ADS a certified copy of the
resolution of the Board of Trustees of the Fund authorizing the appointment of
ADS and the execution and delivery of this Agreement.
6.02 ADS hereby agrees to establish and maintain facilities and procedures
reasonably acceptable to the Fund for safekeeping of stock certificates, check
forms and facsimile signature imprinting devices, if any; and for the
preparation or use, and for keeping account of, such certificates, forms and
devices.
6.03 ADS shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the Investment Company Act of 1940, as amended, and
the Rules thereunder, ADS agrees that all such records prepared or maintained
by ADS relating to the services to be performed by ADS hereunder are the
property of the Fund and will be preserved, maintained and made available in
accordance with such Section and Rules, and will be surrendered promptly to the
Fund on and in accordance with its request.
6.04 ADS and the Fund agree that all books, records, information and data
pertaining to the business of the other party which are exchanged or received
pursuant to the negotiation or the carrying out of this Agreement shall remain
confidential, and shall not be voluntarily disclosed to any other person,
except as may be required by law.
6.05 In case of any requests or demands for the inspection of the
Shareholder records of the Fund, ADS will endeavor to notify the Fund and to
secure instructions from an authorized officer of the Fund as to such
inspection. ADS reserves the right, however, to exhibit the Shareholder
records to any person whenever it is advised by its counsel that it may be held
liable for the failure to exhibit the Shareholder records to such person, and
shall promptly notify the Fund of any unusual request to inspect or copy the
shareholder records of the Fund or the receipt of any other unusual request to
inspect, copy or produce the records of the Fund.
7. TERMINATION OF AGREEMENT
7.01 This Agreement shall become effective as of the date hereof and shall
remain in force for a period of three (3) years, provided however, that both
parties to this Agreement have the option to terminate the Agreement, without
penalty, upon ninety (90) days prior written notice.
7.02 Should the Fund exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be borne by
the Fund. Additionally, ADS reserves the right to charge for any other
reasonable expenses associated with such termination.
8. ASSIGNMENT
8.01 Neither this Agreement nor any rights or obligations hereunder may be
assigned by either party without the written consent of the other party.
8.02 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
9. AMENDMENT
9.01 This Agreement may be amended or modified by a written agreement
executed by both parties and authorized or approved by a resolution of the
Board of Trustees of the Fund.
10. NEW YORK LAWS TO APPLY
10.01 The provisions of this Agreement shall be construed and interpreted
in accordance with the laws of the State of New York as at the time in effect
and the applicable provisions of the 1940 Act. To the extent that the
applicable law of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the 1940 Act, the latter shall
control.
11. MERGER OF AGREEMENT
11.01 This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof whether oral or written.
<PAGE> 5
12. NOTICES.
All notices and other communications hereunder shall be in writing, shall
be deemed to have been given when received or when sent by telex or facsimile,
and shall be given to the following addresses (or such other addresses as to
which notice is given):
To the Fund: To the Administrator:
Irving Boberski Michael Miola
President President
The Lake Forest Funds American Data Services, Inc.
One Westminster Place 24 West Carver Street
Lake Forest, Illinois 60045-1821 Huntington, New York 11743
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
THE LAKE FOREST FUNDS AMERICAN DATA SERVICES, INC.
By:____________________________ By:__________________________
Irving Boberski, President Michael Miola, President
<PAGE> 1
EXHIBIT 10
December 14, 1994
Lake Forest Trust
One Westminster Place
Lake Forest, Illinois 60045-1821
Gentlemen:
This letter is in response to your request for our opinion in connection
with the filing of the Registration Statement of Lake Forest Trust (the
"Trust").
We have examined a copy of the Trust's Agreement and Declaration of Trust,
the Trust's By-Laws, the Trust's record of the various actions by the Trustees
thereof, and all such agreements, certificates of public officials,
certificates of officers and representatives of the Trust and others, and such
other documents, papers, statutes and authorities as we deem necessary to form
the basis of the opinion hereafter expressed. We have assumed the genuineness
of the signatures and the conformity to original documents of the copies of
such documents supplied to us as original or photostat copies.
Based upon the foregoing, we are of the opinion that, after registration
is effective for purposes of federal and applicable state securities laws, the
shares of each series of the Trust, if issued in accordance with the then
current Prospectus and Statement of Additional Information of the Trust, will
be legally issued, fully paid and non-assessable.
We herewith give you our permission to file this opinion with the
Securities and Exchange Commission as an exhibit to the Registration Statement
referred to above.
Very truly yours,
/s/BROWN, CUMMINS & BROWN CO., L.P.A.
<PAGE> 1
EXHIBIT 11a
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the reference to our firm in the Registration Statement (Form
N-1A), and related Statement of Additional Information of The Lake Forest Funds
and to the inclusion of our report dated March 20, 1996 to the Shareholders and
Board of Trustees of The Lake Forest Funds.
/s/McCurdy & Associates CPA's, Inc.
McCurdy & Associates CPA's, Inc.
Westlake, Ohio
April 8, 1996
<PAGE> 1
EXHIBIT 11b
INDEPENDENT AUDITOR'S REPORT
To The Shareholders and
Board of Trustees
The Lake Forest Funds:
We have audited the accompanying statement of assets and liabilities of The
Lake Forest Funds (comprising, respectively, the Core Equity Fund and the Money
Market Fund), including the schedule of portfolio investments, as of February
29, 1996, and the related statement of operations for the year then ended, the
statement of changes in net assets for the year in the period then ended, and
financial highlights for the year in the period then ended. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights 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 investments
and cash held by the custodian as of February 29, 1996, by correspondence with
the custodian and brokers. An audit also included assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective portfolios constituting the Lake Forest Funds as of February
29, 1996, the results of its operations for the year then ended, the changes in
its net assets for the year in the period then ended, and the financial
highlights for the year in the period then ended, in conformity with generally
accepted accounting principles.
/s/McCurdy & Associates CPA's, Inc.
McCurdy & Associates CPA's, Inc.
Westlake, Ohio 44145
March 20, 1996
<PAGE> 1
EXHIBIT 13
February 16, 1995
The Lake Forest Funds
One Westminster Place
Lake Forest, Illinois 60045-1821
Gentlemen:
The undersigned hereby purchases 50,000 shares of the Lake Forest Money
Market Fund at $1.00 per share and 3,333.3333 shares of the Lake Forest Core
Equity Fund at $15.00 per share, representing a total investment of $100,000.00
in the shares of the series of The Lake Forest Funds. The undersigned hereby
represents that (i) such purchase is for investment purposes, and (ii) the
undersigned has no present intention of redeeming or selling said shares.
/s/Irving V. Boberski
-----------------------
Irving V. Boberski
<PAGE> 1
EXHIBIT 14
IRA & SEP CUSTODIAL AGREEMENT
CUSTODY AGREEMENT
Agreement made as of the ___day of______________, 1995 between The Lake
Forest Funds, (the "Trust"), a business trust organized under the laws of the
State of Ohio and having its office at One Westminster Place, Lake Forest,
Illinois 60045 acting for and on behalf of all mutual fund portfolios as are
currently authorized and issued by the Trust or may be authorized and issued by
the Trust subsequent to the date of this Agreement (the "Fund"), which is
operated and maintained by the Trust for the benefit of the holders of shares
of the Fund, and Star Bank, N.A. (the "Custodian"), a national banking
association having its principal office and place of business at Star Bank
Center, 425 Walnut Street, Cincinnati, Ohio 45202, which Agreement provides
for the furnishing of custodian services to the Fund.
W I T N E S S E T H :
that for and in consideration of the mutual promises hereinafter set forth the
Trust, on behalf of the Fund, and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless the
context otherwise requires, shall have the following meanings:
1. "Authorized Person" shall be deemed to include the President,
Secretary, and the Vice President, or any other person, whether or not any
such person is an officer or employee of the Trust, duly authorized by the
Board of Trustees of the Trust to give Oral Instructions on behalf of the
Fund and listed in the Certificate annexed hereto as Appendix A or such
other Certificate as may be received by the Custodian from time to time,
subject in each case to any limitations on the authority of such person as
set forth in Appendix A or any such Certificate.
2. "Book-Entry System" shall mean the Federal Reserve/Treasury book-entry
system for United States and federal agency securities, its successor or
successors and its nominee or nominees, provided the Custodian has received
a certified copy of a resolution of Board of Trustees of the Trust
specifically approving deposits in the Book-Entry System.
3. "Certificate" shall mean any notice, instruction, or other instrument
in writing, authorized or required by this Agreement to be given to the
Custodian which is signed on behalf of the Fund by an Officer of the Trust
and is actually received by the Custodian.
4. "Depository" shall mean The Depository Trust Company ("DTC"), a
clearing agency registered with the Securities and Exchange Commission, its
successor or successors and its nominee or nominees. The term "Depository"
shall further mean and include any other person or clearing agency
authorized to act as a depository under the Investment Company Act of 1940,
its successor or successors and its nominee or
<PAGE> 2
nominees, provided that the Custodian has received a certified copy of a
resolution of the Board of Trustees of the Trust specifically approving
such other person or clearing agency as a depository.
5. "Dividend and Transfer Agent" shall mean the dividend and transfer
agent active, from time to time, in such capacity pursuant to a written
agreement with the Fund, changes in which the Trust shall immediately
report to the Custodian in writing.
6. "Money Market Security" shall be deemed to include, without limitation,
debt obligations issued or guaranteed as to principal and/or interest by
the government of the United States or agencies or instrumentalities
thereof, commercial paper, obligations (including certificates of deposit,
bankers' acceptances, repurchase and reverse repurchase agreements with
respect to the same) and bank time deposits of domestic banks that are
members of Federal Deposit Insurance Trust, and short-term corporate
obligations where the purchase and sale of such securities normally require
settlement in federal fund or their equivalent on the same day as such
purchase or sale.
7. "Officers" shall be deemed to include the President, the Secretary, and
Vice President of the Trust listed in the Certificate annexed hereto as
Appendix A or such other Certificate as may be received by the Custodian
from time to time.
8. "Oral Instructions" shall mean oral instructions actually received by
the Custodian from an Authorized Person (or from a person which the
Custodian reasonably believes in good faith to be an Authorized Person) and
confirmed by Written Instructions from Authorized Persons in such manner so
that such Written Instructions are received by the Custodian on the next
business day.
9. "Prospectus" or "Prospectuses" shall mean the Fund's currently effective
prospectus and statements of additional information, as filed with and
declared effective by the Securities and Exchange Commission.
10. "Security or Securities" shall mean Money Market Securities, common or
preferred stocks, options, futures, gold, silver, bonds, debentures,
corporate debt securities, notes, mortgages or other obligations, and any
certificates, receipts, warrants or other instruments representing rights
to receive, purchase or subscribe for the same, or evidencing or
representing any other rights or interest therein, or any property or
assets.
11. "Written Instructions" shall mean communication actually received by
the Custodian from one Authorized Person or from one person which the
Custodian reasonably believes in good faith to be an Authorized Person in
writing, telex or any other data transmission system whereby the receiver
of such communication is able to verify by codes or otherwise with a
reasonable degree of certainty the authenticity of the senders of such
communication.
ARTICLE II
APPOINTMENT OF CUSTODIAN
1. The Trust, acting for and on behalf of the Fund, hereby constitutes and
appoints the Custodian as custodian of all the Securities and monies at any
time owned by the Fund during the period of this Agreement ("Fund Assets").
<PAGE> 3
2. The Custodian hereby accepts appointment as such Custodian and agrees
to perform the duties thereof as hereinafter set forth.
ARTICLE III
DOCUMENTS TO BE FURNISHED BY THE TRUST
The Trust hereby agrees to furnish to the Custodian the following
documents:
1. A copy of its Declaration of Trust (the "Declaration of Trust")
certified by its Secretary.
2. A copy of its By-Laws certified by its Secretary.
3. A copy of the resolution of its Board of Trustees appointing the
Custodian certified by its Secretary.
4. A copy of the most recent Prospectuses of the Trust.
5. A Certificate of the President and Secretary setting forth the names
and signatures of the present Officers of the Trust.
ARTICLE IV
CUSTODY OF CASH AND SECURITIES
1. The Trust will deliver or cause to be delivered to the Custodian all Fund
Assets, including cash received for the issuance of its shares, at any time
during the period of this Agreement. The Custodian will not be responsible for
such Fund Assets until actually received by it. Upon such receipt, the
Custodian shall hold in safekeeping and segregate at all times from the
property of any other persons, firms or corporations all Fund Assets received
by it from or for the account of the Fund. The Custodian will be entitled to
reverse any credits made on the Fund's behalf where such credits have been
previously made and monies are not finally collected within 90 days of the
making of such credits. The Custodian is hereby authorized by the Trust,
acting on behalf of the Fund, to actually deposit any Fund Assets in the
Book-Entry System or in a Depository, provided, however, that the Custodian
shall always be accountable to the Trust for the Fund Assets so deposited.
Fund Assets deposited in the Book-Entry System or the Depository will be
represented in accounts which include only assets held by the Custodian for
customers, including but not limited to accounts in which the Custodian acts in
a fiduciary or representative capacity.
2. The Custodian shall credit to a separate account or accounts in the name of
each respective Fund all monies received by it for the account of such Fund,
and shall disburse the same only:
(a) In payment for Securities purchased for the account of such Fund, as
provided in Article V;
(b) In payment of dividends or distributions, as provided in Article VI
hereof;
(c) In payment of original issue or other taxes, as provided in Article
VII hereof;
(d) In payment for shares of such Fund redeemed by it, as provided in
Article VII hereof;
(e) Pursuant to Certificates (i) directing payment and setting forth the
name and address of the person to whom the payment is to be made, the amount of
such payment and the purpose for which payment is to be made (the Custodian not
being required to questions such direction) or (ii) if reserve requirements are
established for the Fund by law or by valid regulation, directing the Custodian
to deposit a specified amount of collected funds in the form of U.S. dollars at
a specified Federal Reserve bank and stating the purpose of such deposit; or
<PAGE> 4
(f) In reimbursement of the expenses and liabilities of the Custodian, as
provided in paragraph 10 of Article IX hereof.
3. Promptly after the close of business on each day the fund are open and
valuing their portfolios, the Custodian shall furnish the Trust with a detailed
statement of monies held for the Fund under this Agreement and with
confirmations and a summary of all transfers to or from the account of the Fund
during said day. Where Securities are transferred to the account of the Fund
without physical delivery, the Custodian shall also identify as belonging to
the Fund a quantity of Securities in a fungible bulk of Securities registered
in the name of the Custodian (or its nominee) or shown on the Custodian's
account on the books of the Book-Entry System or the Depository. At least
monthly and from time to time, the Custodian shall furnish the Trust with a
detailed statement of the Securities held for the Fund under this Agreement.
4. All Securities held for the Fund, which are issued or issuable only in
bearer form, except such Securities as are held in the Book-Entry System, shall
be held by the Custodian in that form; all other Securities held for the Fund
may be registered nominee of the Custodian as the Custodian may from time to
time determine, or in the name of the Book-Entry System or the Depository or
their successor or successors, or their nominee or nominees. The Trust agrees
to furnish to the Custodian appropriate instruments to enable the Custodian to
hold or deliver in proper form for transfer, or to register in the name of its
registered nominee or in the name of the Book-Entry System or the Depository,
any Securities which it may hold for the account of the Fund and which may from
time to time be registered in the name of the Fund. The Custodian shall hold
all such Securities which are not held in the Book-Entry System by the
Depository or a Sub-Custodian in a separate account or accounts in the name of
the Fund segregated at all times from those of any other fund maintained and
operated by the Trust and from those of any other person or persons.
5. Unless otherwise instructed to the contrary by a Certificate, the Custodian
shall with respect to all Securities held for the Fund in accordance with this
Agreement:
(a) Collect all income due or payable to the Fund with respect to each
Fund's Assets;
(b) Present for payment and collect the amount payable upon all
Securities which may mature or be called, redeemed, or retired, or otherwise
become payable;
(c) Surrender Securities in temporary form for definitive Securities;
(d) 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, including any foreign taxing authority, now or
hereafter in effect; and
(e) Hold directly, or through the Book-Entry System or the Depository
with respect to Securities therein deposited, for the account of the Fund all
rights and similar securities issued with respect to any Securities held by the
Custodian hereunder.
6. Upon receipt of a Certificate and not otherwise, the Custodian directly or
through the use of the Book-Entry System or the Depository shall:
<PAGE> 5
(a) Execute and deliver to such persons as may be designated in such
Certificate proxies, consents, authorizations, and any other instruments
whereby the authority or the Fund as owner of any Securities may be exercised;
(b) Deliver any Securities held for the Fund in exchange for other
Securities or cash issued or paid in connection with the liquidation,
reorganization, refinancing, merger, consolidation or recapitalization of any
corporation, or the exercise of any conversion privilege;
(c) Deliver any Securities held for the account of the Fund to any
protective committee, reorganization, refinancing, merger, consolidation,
recapitalization or sale of assets of any corporation, and received and hold
under the terms of this Agreement such certificates of deposit, interim
receipts or other instruments or documents as may be issued to it to evidence
such delivery; and
(d) Make such transfers or exchanges of the assets of the Fund and take
such other steps as shall be stated in said Certificate to be for the purpose
of effectuating any duly authorized plan of liquidation, reorganization,
merger, consolidation or recapitalization of the Fund.
7. The Custodian shall promptly deliver to the Trust all notices, proxy
material and executed but unvoted proxies pertaining to shareholder meetings of
Securities held by the Fund. The Custodian shall not vote or authorize the
voting of any Securities or give any consent, waiver or approval with respect
thereto unless so directed by a Certificate or Written Instruction.
8. The Custodian shall promptly deliver to the Trust all material received by
the Custodian and pertaining to Securities held by the Fund with respect to
tender or exchange offers, calls for redemption or purchase, expiration of
rights, name changes, stock splits and stock dividends, or any other activity
involving ownership rights in such Securities, as described in the custodians
Standard of Service Guide and the same may be updated from time to time.
ARTICLE V
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
1. Promptly after each purchase of Securities by the Fund, the Trust shall
deliver to the Custodian (i) with respect to each purchase of Securities which
are not Money Market Securities, a Certificate or Written Instructions, and
(ii) with respect to each purchase of Money Market Securities, Written
Instructions, a Certificate or Oral Instructions, specifying with respect to
each such purchase: (a) The name of the issuer and the title of the
Securities, (b) the principal amount purchased and accrued interest, if any,
(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 from whom or the broker through whom the purchase was made. The
Custodian shall upon receipt of Securities purchased by or for the Fund, pay
out of the monies held for the account of the Fund the total amount payable to
the person from whom or the broker through whom the purchase was made, provided
that the same conforms to the total amount payable as set forth in such
Certificate, Written Instructions or Oral Instructions. With respect to any
repurchase agreement transaction for the Funds, the Custodian shall assure that
the collateral reflected on the transaction advice is received by the Custodian.
<PAGE> 6
2. Promptly after each sale of Securities by the Trust for the account of the
Fund, the Trust shall deliver to the Custodian (i) with respect to each sale of
Securities which are not Money Market Securities, a Certificate or Written
Instructions, and (ii) with respect to each sale of Money Market Securities,
Written Instructions, a Certificate or Oral Instructions, specifying with
respect to each such sale: (a) the name of the issuer and the title of the
Security, (b) the principal amount sold, and accrued interest, if any, (c) the
date of sale, (d) the sale price per unit, (e) the total amount payable to the
Fund upon such sale and (f) the name of the broker through whom or the person
to whom the sale was made. The Custodian shall deliver the Securities upon
receipt of the total amount payable to the Fund upon such sale, provided that
the same conforms to the total amount payable as set forth in such Certificate,
Written Instructions or Oral Instructions. Subject to the foregoing, the
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.
3. Promptly after the time as of which the Trust, on behalf of a Fund,
either -
(a) writes an option on Securities or writes a covered put option in
respect of a Security, or
(b) notifies the Custodian that its obligations in respect of any put or
call option, as described in the Trust's Prospectus, require that the Fund
deposit Securities or additional Securities with the Custodian, specifying the
type and value of Securities required to be so deposited, or
(c) notifies the Custodian that its obligations in respect of any other
Security, as described in each Fund's respective Prospectus, require that the
Fund deposit Securities or additional Securities with the Custodian, specifying
the type and value of Securities required to be so deposited, the Custodian
will cause to be segregated or identified as deposited, pursuant to the Fund's
obligations as set forth in such Prospectus, Securities of such kinds and
having such aggregate values as are required to meet the Fund's obligations in
respect thereof. The Trust will provide to the Custodian, as of the end of
each trading day, the market value of each Fund's option liability if any and
the market value of its portfolio of common stocks.
4. On contractual settlement date, the account of each respective Fund will be
charged for all purchases settling on that day, regardless of whether or not
delivery is made. On contractual settlement date, sale proceeds will likewise
be credited to the account of such Fund irrespective of delivery. In the case
of "sale fails", the Custodian may request the assistance of the Fund in
making delivery of the failed Security.
5. Purchases and sales of Securities effected by the Custodian will be made on
a delivery versus payment basis. The Custodian may, in its sole discretion,
upon receipt of a Certificate, elect to settle a purchase or sale transaction
in some other manner, but only upon receipt of acceptable indemnification from
the Fund.
6. Except as otherwise may be agreed upon by the parties hereto, the Custodian
shall not be required to comply with any Written Instructions to settle the
purchase of any Securities on behalf of the Fund unless there is sufficient
cash in the account(s) at the time or to settle the sale of any Securities from
an account(s) unless such Securities are in deliverable form. Notwithstanding
the foregoing, if the purchase price of such Securities exceeds the amount of
cash in the account(s) at the time of such purchase, the Custodian may, in its
sole discretion, advance the amount of the difference in order to settle the
purchase of such Securities. The amount of any such advance shall be deemed a
loan from the Custodian to the Fund payable on demand and bearing interest
accruing from the date such loan is made up to but not including the date such
loan is repaid at a rate per annum customarily charged by the Custodian on
similar loans.
<PAGE> 7
ARTICLE VI
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. The Trust shall furnish to the Custodian a copy of the resolution of the
Board of Trustees, certified by the Secretary, either (i) setting forth the
date of the declaration of any dividend or distribution in respect of shares of
the Fund, the date of payment thereof, the record date as of which Fund
shareholders entitled to payment shall be determined, the amount payable per
share to Fund shareholders of record as of that date and the total amount to be
paid by the Dividend and Transfer Agent of the Fund on the payment date, or
(ii) authorizing the declaration of dividends and distributions in respect of
shares of the Fund on a daily basis and authorizing the Custodian to rely on
Written Instructions or a Certificate setting forth the date of the declaration
of any such dividend or distribution, the date of payment thereof, the record
date as of which Fund shareholders entitled to payment shall be determined, the
amount payable per share to Fund shareholders of record as of that date and the
total amount to be paid by the Dividend and Transfer Agent on the payment date.
2. Upon the payment date specified in such resolution, Written Instructions or
Certificate, as the case may be, the Custodian shall arrange for such payments
to be made by the Dividend and Transfer Agent out of monies held for the
account of the Fund.
ARTICLE VII
SALE AND REDEMPTION OF SHARES OF THE FUND
1. The Custodian shall receive and credit to the account of each Fund such
payments for shares of such Fund issued or sold from time to time as are
received from the distributor for the Fund's shares, from the Dividend and
Transfer Agent of the Fund, or from the Trust.
2. Upon receipt of Written Instructions, the Custodian shall arrange for
payment of redemption proceeds to be made by the Dividend and Transfer Agent
out of the monies held for the account of the respective Fund in the total
amount specified in the Written Instructions.
3. Notwithstanding the above provisions regarding the redemption of any shares
of the Fund, whenever shares of the Fund are redeemed pursuant to any check
redemption privilege which may from time to time be offered by the Fund, the
Custodian, unless otherwise subsequently instructed by Written Instructions
shall, upon receipt of any Written Instructions setting forth that the
redemption is in good form for redemption in accordance with the check
redemption procedure, honor the check presented as part of such check
redemption privilege out of the money held in the account of the Fund for such
purposes.
ARTICLE VIII
INDEBTEDNESS
<PAGE> 8
In connection with any borrowings, the Trust, on behalf of the Fund, will
cause to be delivered to the Custodian by a bank or broker (including the
Custodian, if the borrowing is from the Custodian), requiring Securities as
collateral for such borrowings, a notice or undertaking in the form currently
employed by any such bank or broker setting forth the amount which such bank or
broker will loan to the Fund against delivery of a stated amount of collateral.
The Trust shall promptly deliver to the Custodian a Certificate specifying
with respect to each such borrowing: (a) the name of the bank or broker, (b)
the amount and terms of the borrowing, which may be set forth by incorporating
by reference an attached promissory note, duly endorsed by the Trust, acting on
behalf of the Fund, or other loan agreement, (c) the date and time, if known,
on which is to be entered into, (d) the date on which the loan becomes due and
payable, (e) the total amount payable to the Fund on the borrowing date, (f)
the market value of Securities collateralizing the loan, including the name of
the issuer, the title and the number of shares or the principal amount of any
particular Securities and (g) a statement that such loan is in conformance with
the Investment Company Act of 1940 and the Fund's then current Prospectus. The
Custodian shall deliver on the borrowing date specified in a Certificate the
specified collateral and the executed promissory note, if any, against delivery
by the lending bank or broker of the total amount of the loan payable provided
that the same conforms to the total amount payable as set forth in the
Certificate. The Custodian may, at the option of the lending bank or broker,
keep such collateral in its possession, but such collateral shall be subject to
all rights therein given the lending bank or broker, by virtue of any
promissory note or loan agreement. The Custodian shall deliver in the manner
directed by the Trust from time to time such Securities as additional
collateral as may be specified in a Certificate to collateralized further any
transaction described in this paragraph. The Trust shall cause all Securities
released from collateral status to be returned directly to the Custodian and
the Custodian shall receive from time to time such return of collateral as may
be tendered to it. In the event that the Trust fails to specify in a
Certificate or Written Instructions the name of the issuer, the title and
number of shares or the prin cipal amount of any particular Securities to be
delivered as collateral by the Custodian, the Custodian shall not be under any
obligation to deliver any Securities. The Custodian may require such
reasonable conditions with respect to such collateral and its dealings with
third-party lenders as it may deem appropriate.
The Fund hereby pledges to and grants the Custodian a security interest in
any Fund Assets to secure the payment on account of money borrowed from the
Custodian. This pledge is in addition to any other pledge of collateral by the
Fund to the Custodian.
ARTICLE IX
CONCERNING THE CUSTODIAN
1. Except as otherwise provided herein, the Custodian shall not be liable for
any loss or damage, including counsel fees, resulting from its action or
omission to act or otherwise, except for any such loss or damage arising out of
its negligence or willful misconduct. The Trust, on behalf of the Fund and
only from Fund Assets (or insurance purchased by the Trust with respect to its
liabilities on behalf of the Fund hereunder), shall defend, indemnify and hold
harmless the Custodian and its Trustees, Officers, Employees and Agents with
respect to any loss, claim, liability or cost (including reasonable attorneys'
fees) arising or alleged to arise from or relating to the Trust's duties with
respect to the Fund hereunder or any other action or inaction of the Trust or
its Trustees, Officers, Employees or Agents as to the Fund,
<PAGE> 9
except such as may arise from the negligent action, omission or willful
misconduct of the Custodian, its Trustees, Officers, Employees or Agents. The
Custodian shall defend, indemnify and hold harmless the Trust and its Trustees,
Officers, Employees or Agents with respect to any loss, claim, liability or cost
(including reasonable attorneys' fees) arising or alleged to arise from or
relating to the Custodian's duties as specifically set forth in this agreement
with respect to the Fund hereunder or any other action or inaction of the
Custodian or its Directors, Officers, Employees, Agents, nominees or
Sub-Custodians as to the Fund, except such as may arise from the negligent
action, omission or willful misconduct of the Trust, its Trustees, Officers,
Employees or Agents. The Custodian may, with respect to questions of law apply
for and obtain the advice and opinion of counsel to the Trust at the expense of
the Fund, or of its own counsel at its own expense, and shall be fully
protected with respect to anything done or omitted by it in good faith in
conformity with the advice or opinion of counsel to the Trust, and shall be
similarly protected with respect to anything done or omitted by it in good
faith in conformity with advice or opinion of its counsel, unless counsel to
the Fund shall, within a reasonable time after being notified of legal advice
received by the Custodian, have a differing interpretation of such question of
law. The Custodian shall be liable to the Trust for any proximate loss or
damage resulting from the use of the Book-Entry System or any Depository
arising by reason of any negligence, misfeasance or misconduct on the part of
the Custodian or any of its employees, agents, nominees or Sub-Custodians but
not for any special, incidental, consequential, or punitive damages; provided,
however, that nothing contained herein shall preclude recovery by the Trust, on
behalf of the Fund, of principal and of interest to the date of recovery on,
Securities incorrectly omitted from the Fund's account or penalties imposed on
the Trust, in connection with the Fund, for any failures to deliver Securities.
In any case in which one party hereto may be asked to indemnify the other
or hold the other harmless, the party from whom indemnification is sought (the
"Indemnifying Party") shall be advised of all pertinent facts concerning the
situation in question, and the party claiming a right to indemnification (the
"Indemnified Party") will use reasonable care to identify and notify the
Indemnifying Party promptly concerning any situation which presents or appears
to present a claim for indemnification against the Indemnifying Party. The
Indemnifying Party shall have the option to defend the Indemnified Party
against any claim which may be the subject of the indemnification, and in the
event the Indemnifying Party so elects, such defense shall be conducted by
counsel chosen by the Indemnifying Party and satisfactory to the Indemnified
Party and the Indemnifying Party will so notify the Indemnified Party and
thereupon such Indemnifying Party shall take over the complete defense of the
claim and the Indemnifying Party shall sustain no further legal or other
expenses in such situation for which indemnification has been sought under this
paragraph, except the expenses of any additional counsel retained by the
Indemnified Party. In no case shall any party claiming the right to
indemnification confess any claim or make any compromise in any case in which
the other party has been asked to indemnify such party (unless such confession
or compromise is made with such other party's prior written consent).
The obligations of the parties hereto under this paragraph shall survive
the termination of this Agreement.
2. Without limiting the generality of the foregoing, the Custodian, acting in
the capacity of Custodian hereunder, shall be under no obligation to inquire
into, and shall not be liable for:
(a) The validity of the issue of any Securities purchased by or for the
account of the Fund, the legality of the purchase thereof, or the propriety of
the amount paid therefor;
<PAGE> 10
(b) The legality of the sale of any Securities by or for the account of
the Fund, or the propriety of the amount for which the same are sold;
(c) The legality of the issue or sale of any shares of the Fund, or the
sufficiency of the amount to be received therefor;
(d) The legality of the redemption of any shares of the Fund, or the
propriety of the amount to be paid therefor;
(e) The legality of the declaration or payment of any dividend by the
Trust in respect of shares of the Fund;
(f) The legality of any borrowing by the Trust, on behalf of the Fund,
using Securities as collateral;
(g) The sufficiency of any deposit made pursuant to a Certificate
described in clause (ii) of paragraph 2(e) of Article IV hereof,
3. The Custodian shall not be liable for any money or collected fund in
U.S. dollars deposited in a Federal Reserve Bank in accordance with a
Certificate described in clause (ii) of paragraph 2(e) of Article IV
hereof, nor be liable for or considered to be the Custodian of any money,
whether or not represented by any check, draft, or other instrument for the
payment of money, received by it on behalf of the Fund until the Custodian
actually receives and collects such money directly or by the final
crediting of the account representing the Fund's interest at the Book-Entry
System or Depository.
4. The Custodian shall not be under any duty or obligation to take action
to effect collection of any amount due to the Fund from the Dividend and
Transfer Agent of the Fund nor to take any action to effect payment or
distribution by the Dividend and Transfer Agent of the Fund of any amount
paid by the Custodian to the Dividend and Transfer Agent of the Fund in
accordance with this Agreement.
5. Income due or payable to the Fund will be credited to the account as
described in the Standard of Service Guide.
6. Notwithstanding paragraph 5 of this Article IX, the Custodian shall not
be under any duty or obligation to take action to effect collection of any
amount, if the Securities upon which such amount is payable are in default,
or if payment is refused after due demand or presentation, unless and until
(i) it shall be directed to take such action by a Certificate and (ii) it
shall be assured to its satisfaction of reimbursement of its costs and
expenses in connection with any such action or, at the Custodian's option,
prepayment
7. The Custodian may appoint one or more financial or banking
institutions, as Depository or Depositories or as Sub-Custodian or
Sub-Custodians, including, but not limited to, banking institutions located
in foreign countries, of Securities and monies at any time owned by the
Fund, upon terms and conditions approved in a Certificate. Current
Depository (s) and Sub-Custodian(s) are noted in Appendix B. The Custodian
shall not be relieved of any obligation or liability under this Agreement
in connection with the appointment or activities of such Depositories or
Sub-Custodians.
<PAGE> 11
8. The Custodian shall not be under any duty or obligation to ascertain
whether any Securities at any time delivered to or held by it for the
account of the Fund are such as properly may be held by the Fund under the
provisions of the Declarations of Trust and the Trust's By-Laws.
9. The Custodian shall treat all records and other information relating to
the Trust, the Fund and the Fund' Assets as confidential and shall not
disclose any such records or information to any other person unless (a) the
Trust shall have consented thereto in writing or (b) such disclosure is
compelled by law.
10. The Custodian shall be entitled to receive and the Trust agrees to pay
to the Custodian, for the Fund's account from Fund Assets only, such
compensation as shall be determined pursuant to Appendix C, attached
hereto, or as shall be determined pursuant to amendments to such Appendix
approved by the Custodian and the Trust, on behalf of the Fund. The
Custodian shall be entitled to charge against any money held by it for the
accounts of the Fund the amount of any loss, damage, liability or expense,
including counsel fees, for which it shall be entitled to reimbursement
under the provisions of this Agreement as determined by agreement of the
Custodian and the Trust or by the final order of any court or arbitrator
having jurisdiction and as to which all rights of appeal shall have
expired. The expenses which the Custodian may charge against the accounts
of the Fund include, but are not limited to, the expenses of Sub-Custodians
incurred in settling transactions involving the purchase and sale of
Securities of the Fund.
11. The Custodian shall be entitled to rely upon any Certificate if such
reliance is made in good faith. The Custodian shall be entitled to rely
upon any Oral Instructions and any Written Instructions actually received
by the Custodian pursuant to Article IV or V hereof. The Trust agrees to
forward to the Custodian Written Instructions from Authorized Persons
confirming Oral Instructions in such manner so that such Written
Instructions are received by the Custodian, whether by hand delivery, telex
or otherwise, on the first business day following the day on which such
Oral Instructions are given to the Custodian. The Trust agrees that the
fact that such confirming instructions are not received by the Custodian
shall in no way affect the validity of the transactions or enforceability
of the transactions hereby authorized by the Trust. The Trust agrees that
the Custodian shall incur no liability to the Fund in acting upon Oral
Instructions given to the Custodian hereunder concerning such transactions.
12. The Custodian will (a) set up and maintain proper books of account and
complete records of all transactions in the accounts maintained by the
Custodian hereunder in such manner as will meet the obligations of the Fund
under the Investment Company Act of 1940, with particular attention to
Section 31 thereof and Rules 31 a-1 and 31 a-2 thereunder, and (b) preserve
for the periods prescribed by applicable Federal statute or regulation all
records required to be so preserved. The books and records of the
Custodian shall be open to inspection and audit at reasonable times and
with prior notice by Officers and auditors employed by the Trust.
13. The Custodian and its Sub-Custodians shall promptly send to the Trust,
for the account of the Fund, any report received on the systems of internal
accounting control of the Book-Entry System or the Depository and with such
reports on their own systems of internal accounting control as the Trust
may reasonably request from time to time.
<PAGE> 12
14. The Custodian performs only the services of a custodian and shall have
no responsibility for the management, investment or reinvestment of the
Securities from time to time owned by the Fund. The Custodian is not a
selling agent for shares of the Fund and performance of its duties as a
custodial agent shall not be deemed to be a recommendation to the
Custodian's depositors or others of shares of the Fund as an investment.
ARTICLE X
TERMINATION
1. Either of the parties hereto may terminate this Agreement for any
reason by giving to the other party a notice in writing specifying the date
of such termination, which shall be not less than ninety (90) days after
the date of giving of such notice. If such notice is given by the Trust,
on behalf of the Fund, it shall be accompanied by a copy of a resolution of
the Board of Trustees of the Trust, certified by the Secretary or any
Assistant Secretary, electing to terminate this Agreement and designating a
successor custodian or custodians, each of which shall be a bank or trust
company having not less than $2,000,000 aggregate capital, surplus and
undivided profits. In the event such notice is given by the Custodian, the
Trust shall, on or before the termination date, deliver to the Custodian a
copy of a resolution of its Board of Trustees, certified by the Secretary,
designating a successor custodian or custodians to act on behalf of the
Fund. In the absence of such designation by the Trust, the Custodian may
designate a successor custodian which shall be a bank or trust company
having not less than $2,000,000 aggregate capital, surplus, and undivided
profits. Upon the date set forth in such notice this Agreement shall
terminate, and the Custodian, provided that it has received a notice of
acceptance by the successor custodian, shall deliver, on that date,
directly to the successor custodian all Securities and monies then owned by
the Fund and held by it as Custodian. Upon termination of this agreement,
the Trust shall pay to the Custodian on behalf of the Fund such
compensation as may be due as of the date of such termination. The Trust
agrees on behalf of the Fund that the Custodian shall be reimbursed for its
reasonable costs in connection with the termination of this Agreement.
2. If a successor custodian is not designated by the Trust, on behalf of
the Fund, or by the Custodian in accordance with the preceding paragraph,
or the designated successor cannot or will not serve, the Trust shall upon
the delivery by the Custodian to the Trust of all Securities (other than
Securities held in the Book-Entry System which cannot be delivered to the
Trust) and monies then owned by the Fund, other than monies deposited with
a Federal Reserve Bank pursuant to a Certificate described in clause (ii)
of paragraph 2(e) of Article IV, be deemed to be the custodian for the
Fund, and the Custodian shall thereby be relieved of all duties and
responsibilities pursuant to this Agreement, other than the duty with
respect to Securities held in the Book-Entry System which cannot be
delivered to the Trust to hold such Securities hereunder in accordance with
this Agreement.
ARTICLE XI
MISCELLANEOUS
<PAGE> 13
1. Appendix A sets forth the names and the signatures of all Authorized
Persons. The Trust agrees to furnish to the Custodian, on behalf of the
Fund, a new Appendix A in form similar to the attached Appendix A, if any
present Authorized Person ceases to be an Authorized Person or if any other
or additional Authorized Persons are elected or appointed. Until such new
Appendix A shall be received, the Custodian shall be fully protected in
acting under the provisions of this Agreement upon Oral Instructions or
signatures of the present Authorized Persons as set forth in the last
delivered Appendix A.
2. No recourse under any obligation of this Agreement or for any claim
based thereon shall be had against any organizer, shareholder, Officer,
Trustee, past, present or future as such, of the Trust or of any such
predecessor or successor, whether by virtue of any constitution, statute or
rule of law or equity, or by the enforcement of any assessment or penalty
or otherwise; it being expressly agreed and understood that this Agreement
and the obligations thereunder are enforceable solely against Fund Assets,
and that no such personal liability whatever shall attach to, or is or
shall be incurred by, the organizers, shareholders, Officers, Trustees of
the Trust or of any predecessor or successor, or any of them as such,
because of the obligations contained in this Agreement or implied therefrom
and that any and all such liability is hereby expressly waived and released
by the Custodian as a condition of, and as a consideration for, the
execution of this Agreement.
3. The obligations set forth in this Agreement as having been made by the
Trust have been made by the Trustees of the Trust, acting as such Trustees
for and on behalf of the Fund, pursuant to the authority vested in them
under the laws of the State of Ohio, the Declaration of Trust and the
By-Laws of the Trust. This Agreement has been executed by Officers of the
Trust as Officers, and not individually, and the obligations contained
herein are not binding upon any of the Trustees, Officers, Agents or
holders of shares, personally, but bind only the Trust and then only to
the extent of Fund Assets.
4. Such provisions of the Prospectuses of the Fund and any other documents
(including advertising material) specifically mentioning the Custodian
(other than merely by name and address) shall be approved by the Custodian.
5. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Custodian, shall be sufficiently given if
addressed to the Custodian and mailed or delivered to it at its offices at
Star Bank Center, 425 Walnut Street, M.L. 6118, Cincinnati, Ohio 45202,
attention: Mutual Fund Custody Department, or at such other place as the
Custodian may from time to time designate in writing.
6. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Trust shall be sufficiently given when
delivered to the Trust or on the second business day following the time
such notice is deposited in the U.S. mail postage prepaid and addressed to
the Trust at its office at 1807 S. Washington, Suite 107, Naperville,
Illinois 60565 or at such other place as the Trust may from time to time
designate in writing.
7. This Agreement with the exception of Appendices A & B may not be
amended or modified in any manner except by a written agreement executed by
both parties with the same formality as this Agreement, and authorized and
approved by a resolution of the Board of Trustees of the Trust.
<PAGE> 14
8. This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided, however,
that this Agreement shall not be assignable by the Trust or by the
Custodian, and no attempted assignment by the Trust or the Custodian shall
be effective without the written consent of the other party hereto.
9. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective Officers, thereunto duly authorized as of
the day and year first above written.
ATTEST: The Lake Forest Funds
BY:
- ----------------------------- ----------------------------------
ATTEST: Star Bank, N.A.
BY:
- ---------------------------- ----------------------------------
This Agreement is made and entered this 1st day of February, 1995 by and
between American Data Services, Inc..("ADS") and Star Bank, N.A. ("Star"), 425
Walnut Street, Cincinnati, Ohio 45202.
Whereas, ADS has requested STAR to arrange for a custodial service on behalf
of depositors ("Depositors") to the Lake Forest Core Equity Fund and the Lake
Forest Money Market Fund Individual Retirement Custodial Accounts (the
"Accounts") of the Lake Forest Trust, which are administered by ADS and to
furnish reports of such activity on a periodic basis, and,
Whereas, ADS will perform all other functions required by Internal Revenue
Service regulations relative to the Lake Forest Trust (the "Funds") Accounts,
Now, therefore, the parties agree as follows:
1. ADS will deliver to STAR fully completed copies of all Internal Revenue
Service Forms 5305-A and 5305-SEP which are to be maintained by STAR under the
terms of this Agreement. Said Forms will have attached thereto all appropriate
exhibits and any other collateral documents as may be necessary.
2. The sole function of STAR will be to retain said Forms 5305-A and
5305-SEP for safekeeping on behalf of Depositors. STAR will prepare and
deliver to ADS quarterly reports in such form as is mutually agreed.
<PAGE> 15
3. Except for the safekeeping and reporting functions of STAR identified
in paragraph 2 of this Agreement, ADS will perform all other responsibilities
required of a custodian in connection with the Accounts, including, but not
limited to, investing and reinvesting the assets of the Accounts, giving
Depositors disclosure statements required by the Internal Revenue Service
Regulations under Section 408(i) of the Internal Revenue Code, reports to the
Internal Revenue Service and Depositors as prescribed by the Internal Revenue
Service and the delivery to Depositors of all shareholder notices and reports,
together with voting on behalf of Depositors and in accordance with Depositors'
written instructions at all shareholder meetings of the Fund.
4. STAR will be paid its reasonable and customary fees for providing the
services herein specified.
5. ADS will indemnify, defend and hold STAR harmless from any and all
claims, actions, damages, liabilities, costs, and expenses, including
reasonable attorneys' fees, arising out of or in any way connected with the
Accounts or out of any default by under this Agreement.
6. STAR will indemnify, defend and hold ADS harmless from any and all
claims, actions, damages, liabilities, costs and expenses, including reasonable
attorneys' fees, arising out of or in any way connected with the Accounts or
out of any default by STAR under this Agreement.
7. This Agreement may be terminated by either party upon sixty (60) days
advance written notice of intention to terminate.
8. This Agreement will be governed, construed and in accordance with the
laws of the State of Ohio.
9. Star Bank and American Data Services, Inc. agree that a copy of this
agreement has been sent to the Lake Forest Trust.
In witness whereof, the undersigned, by their respective duly authorized
officers, hereby execute this Agreement, effective on the day and year first
above written.
AMERICAN DATA SERVICES, INC. STAR BANK, N.A.
BY: BY:
-------------------------------- --------------------------------
TITLE: TITLE:
----------------------------- -----------------------------
DATE: DATE:
------------------------------ ------------------------------
<PAGE> 16
ACKNOWLEDGED BY:
LAKE FOREST TRUST
BY:
--------------------------------
TITLE:
-----------------------------
DATE:
------------------------------
<PAGE> 1
EXHIBIT 18
THE LAKE FOREST FUNDS
POWER OF ATTORNEY
KNOW ALL PEOPLE BY THESE PRESENTS, that each of the undersigned
constitutes and appoints Irving V. Boberski, Sheldon R. Stein, Arthur Don and
Jessica R. Droeger, and each of them, his attorneys-in fact, each with the
power of substitution, for him in any and all capacities, to sign any
post-effective amendments to the Company's registration statement on Form N-1A
under the Securities Act of 1933 (Registration No. 33-87494) and/or the
Investment Company Act of 1940 (Registration No. 811-8906) on Form N-1A, and to
file the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission and all appropriate
state or federal regulatory authorities. Each of the undersigned hereby
ratifies and confirms all that each of the aforenamed attorneys-in-fact, or his
or her substitute or substitutes, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney as
of the __ day of April, 1996.
/s/Irving V. Boberski /s/Rober E. Alfe
- ---------------------------- -----------------------
Irving V. Boberski, Robert E. Alfe, Trustee
Trustee, President and
Chief Financial Officer
/s/Philip M. Hackbarth /s/Gary M. Patyk
- ---------------------------- -----------------------
Philip M. Hackbarth, Trustee Gary M. Patyk, Trustee
<PAGE> 2
POWER OF ATTORNEY
Know All People by These presents, that the undersigned, acting on behalf
of The Lake Forest Funds, Ohio business trust (the "Company") constitutes and
appoints Irving V. Boberski, Sheldon R. Stein, Arthur Don and Jessica R.
Droeger jointly and severally, the Company's attorneys-in-fact, each with power
of substitution, for it in any and all capacities, to sign any post-effective
amendments to the Corporation's registration statement on Form N-1A under the
Securities Act of 1933 (Registration No. 33-87494) and/or the Investment
Company Act of 1940 (Registration No. 811-8906) on Form N-1A under the
Securities Act of 1933 and/or the Investment Company Act of 1940, and to file
the same, including exhibits and other documents in connection therewith, with
the Securities and Exchange Commission, and all applicable state or federal
regulatory authorities, hereby ratifying and confirming all that each of said
attorneys-in-fact, or his or her substitute or substitutes, may do or cause to
be done by virtue hereof.
Dated this 11th day of April, 1996.
THE LAKE FOREST FUNDS
By: /s/Irving V. Boberski
---------------------------------
Irving V. Boberski, President
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<NAME> LAKE FOREST MONEY MARKET FUND
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