Filed with the Securities and Exchange Commission on March 29, 1996.
1933 Act Registration File No. 33-91770
1940 Act File No. 811-9038
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. _____ __
Post-Effective Amendment No. 1 x
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 2 x
THE OLSTEIN FUNDS
(Exact Name of Registrant as Specified in Charter)
105 CORPORATE PARK DRIVE, WHITE PLAINS, NY 10604
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (914) 397-7565
Robert A. Olstein, President Copy to:
The Olstein Funds Joseph V. Del Raso, Esq.
105 Corporate Park Drive Stradley, Ronan, Stevens &
White Plains, NY 10604 Young, LLP
(Name and Address of Agent for Service) 2600 One Commerce Square
Philadelphia, PA 19103-7098
It is proposed that this filing will become effective
_____ immediately upon filing pursuant to paragraph (b)
X on MARCH 29, 1996 pursuant to paragraph (b)
_____ 60 days after filing pursuant to paragraph (a)(1)
_____ on___________________pursuant to paragraph (a)(1)
_____ 75 days after filing pursuant to paragraph (a)(2)
_____ on___________________pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
_____ This post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
Registrant has filed a declaration registering an indefinite amount of
securities pursuant to Rule 24f-2 under the Investment Company Act of 1940, as
amended. Registrant will file the notice required by Rule 24f-2 for its
fiscal year ended August 31, 1996 on or about October 30, 1996.
TOTAL NUMBER OF PAGES: _____ EXHIBIT INDEX ON PAGE: _____
<PAGE>
CROSS-REFERENCE SHEET
Pursuant to Rule 481(a)
THE OLSTEIN FUNDS
Items Required By Form N-1A
PART A - PROSPECTUS
N-1A
ITEM NO. ITEM CAPTION PROSPECTUS CAPTION
- -------- ------------ ------------------
1. Cover Page Cover Page
2. Synopsis Fund Expenses
3. Condensed Financial Financial Highlights
Information
4. General Description of Investment Objective and
Registrant Policies; Risks and Special
Considerations
5. Management of the Fund Board of Trustees; Investment
Manager; Distribution of Shares;
Administrator, Transfer Agent
and Fund Accounting/Pricing
Agent; Custodian; Expenses
6. Capital Stock and Other Shares of Beneficial Interest;
Securities Dividends, Capital Gains
Distributions and Taxes
7. Purchase of Securities Determination of Net Asset Value;
Being Offered How to Purchase Shares
8. Redemption or Repurchase How to Redeem Shares
9. Pending Legal Proceedings Not Applicable
-i-
<PAGE>
CROSS-REFERENCE SHEET
Pursuant to Rule 481(a)
THE OLSTEIN FUNDS
Items Required By Form N-1A (continued)
PART B - STATEMENT OF ADDITIONAL INFORMATION
CAPTION IN STATEMENT OF
ITEM NO. ITEM CAPTION ADDITIONAL INFORMATION
- -------- ------------ -----------------------
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information Not Applicable
and History
13. Investment Objectives Cover; Investments; Portfolio
and Policies Turnover; Investment Restrictions
14. Management of the Fund Officers and Trustees of the
Trust
15. Control Persons and Principal Control Persons and Principal
Holders of Securities Holders of Securities
16. Investment Advisory and Investment Manager; Distributors;
Other Services Administrator
17. Brokerage Allocation Allocation of Portfolio Brokerage
18. Capital Stock and Other Not Applicable
Securities
19. Purchase, Redemption and Purchase of Shares; Redemptions
Pricing of Securities
Being Offered
20. Tax Status Taxation
21. Underwriters Distributors; Distribution Plan;
Purchase of Shares
22. Calculation of Performance Performance
Data
23. Financial Statements Financial Statements
-ii-
<PAGE>
THE OLSTEIN FINANCIAL ALERT FUND
A SERIES OF
THE OLSTEIN FUNDS
FINANCIAL HIGHLIGHTS
THE FOLLOWING TABLE INCLUDES SELECTED DATA FOR A SHARE OUTSTANDING OF THE FUND
THROUGHOUT THE PERIOD FROM SEPTEMBER 21, 1995 (COMMENCEMENT OF OPERATIONS)
THROUGH FEBRUARY 29, 1996. THE FIGURES IN THIS TABLE ARE UNAUDITED AND SHOULD
BE READ IN CONJUNCTION WITH THE FUND'S FINANCIAL STATEMENTS AND NOTES THERETO,
ALL OF WHICH ARE INCLUDED IN THE FUND'S STATEMENT OF ADDITIONAL INFORMATION.
NET ASSET VALUE - BEGINNING OF PERIOD................. $ 10.00
--------
INVESTMENT OPERATIONS:
Net investment loss................................. (0.02)
Net realized and unrealized gain
on investments.................................... 0.82
--------
Total from investment operations................. 0.80
--------
DISTRIBUTIONS:
From net investment income.......................... 0.00
From net realized gain on investments............... (0.01)
--------
Total distributions.............................. (0.01)
--------
NET ASSET VALUE - END OF PERIOD....................... $ 10.79
========
TOTAL RETURN*......................................... 8.02%
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses............................................ 2.51 %**
Net investment loss................................. (0.65)%**
Portfolio turnover rate............................... 138.33 %**
Average commission rate paid.......................... $ 0.0594
Net assets at end of period ($000 omitted)............ $102,108
* The total return for the period has not been annualized.
** Annualized.
Supplement dated March 29, 1996
to Prospectus dated August 18, 1995 following page 5
<PAGE>
THE OLSTEIN FINANCIAL ALERT FUND
A SERIES OF
THE OLSTEIN FUNDS
105 CORPORATE PARK DRIVE
WHITE PLAINS, NY 10604
(914) 397-7565
PROSPECTUS DATED AUGUST 18, 1995
This prospectus offers shares of The Olstein Financial Alert Fund (the
"Fund"), the first series of The Olstein Funds (the "Trust"), an open-end
diversified management investment company which was organized as a Delaware
business trust on March 31, 1995. The primary investment objective of the
Fund is long-term capital appreciation with a secondary objective of income.
The Fund was created to provide a mutual fund format by which the public
could invest according to the value-oriented philosophy developed and utilized
over the past twenty-seven years by Robert A. Olstein, the president of the
Fund's investment manager, Olstein & Associates, L.P. ("Olstein & Associates"
or the "Investment Manager"). This investment philosophy involves a detailed
inferential analysis of company financial statements, to alert the Investment
Manager to positive or negative factors affecting a company's future earnings
power and value of a company's stock, which may not have been recognized by
the financial markets. The philosophy was originated in the 1970s when Robert
A. Olstein co-authored the "Quality of Earnings Report" service, a financial
statement "alert" service for institutional investors.
The Fund seeks to achieve its objective by investing primarily in equity
securities which the Investment Manager determines to be under-valued after an
intensive analysis of a company's financial statements. The Fund may also
engage in short-selling of equity securities which the Investment Manager
determines to be over-valued. Consistent with the secondary objective of
income, in the event that suitable undervalued securities are not available,
the Fund may invest in fixed-income securities until such time as desirable
equity securities are identified. There can be no assurance that the Fund's
investment objective will be achieved. See "Investment Objectives and
Policies" and "Risks and Special Considerations."
Fund shares may be purchased or redeemed at any time. Purchases will be
effected at the net asset value next determined following receipt and
acceptance of an investor's purchase order. Redemptions will be effected at
the net asset value next determined following receipt of a proper redemption
request, subject to a contingent deferred sales charge which may be imposed on
redemptions made within two years of purchase. See "Determination of Net Asset
Value," "Expenses of the Fund," and "How to Redeem Shares."
This Prospectus sets forth information about the Fund that prospective
investors should know before investing. The Prospectus should be read
carefully and retained for future reference. More information about the Fund
has been filed with the Securities and Exchange Commission, and is contained
in the "Statement of Additional Information," dated August 18, 1995 which is
available at no charge upon written request to the Fund. The Fund's Statement
of Additional Information is incorporated herein by reference.
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.
TABLE OF CONTENTS
SYNOPSIS.............................................................
Investment Objective..............................................
Investment Manager................................................
Distributor and Transfer Agent....................................
How to Purchase Shares............................................
Minimum Investment................................................
Redemption and Exchanges..........................................
Investment Management Fees........................................
Risks and Special Considerations..................................
FUND EXPENSES........................................................
INVESTMENT OBJECTIVE AND POLICIES....................................
RISKS AND SPECIAL CONSIDERATIONS.....................................
Investment Manager................................................
Portfolio Turnover................................................
Repurchase Agreements.............................................
Illiquid Securities...............................................
Short-Selling.....................................................
Purchasing Options................................................
American Depository Receipts......................................
Small Capitalization Stocks.......................................
MANAGEMENT OF THE FUND...............................................
Board of Trustees.................................................
Investment Manager................................................
Distribution of Shares............................................
Administrator, Transfer Agent and Fund Accounting/Pricing Agent...
Custodian.........................................................
Expenses..........................................................
SHARES OF BENEFICIAL INTEREST........................................
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES.....................
DETERMINATION OF NET ASSET VALUE.....................................
HOW TO PURCHASE SHARES...............................................
Purchase by Mail..................................................
Purchase by Wire..................................................
Automatic Investment Plan.........................................
HOW TO REDEEM SHARES.................................................
Redemption by Mail................................................
Redemption by Telephone...........................................
RETIREMENT PLANS.....................................................
Individual Retirement Accounts ("IRAs")...........................
401(k) Plans and other Defined Contribution Plans.................
403(b)(7) Retirement Plans........................................
PERFORMANCE..........................................................
SYNOPSIS
INVESTMENT OBJECTIVE
The objective of the Fund is long-term capital appreciation with a
secondary objective of income. The Fund seeks to achieve its objective by
investing in a diversified portfolio of under-valued equity securities as
determined by the Investment Manager for the Fund. The Fund may also engage
in short sales of securities that the Investment Manager believes are over-
valued. The Fund may also invest in fixed-income securities during periods in
which suitable undervalued equity securities are not available.
When evaluating stocks for the Fund's portfolio, the Investment Manager
emphasizes an inferential analysis of financial statements, rather than more
conventional analytical methodology such as macro-economic analysis,
management contact and market timing techniques. The Fund's stock selection
process emphasizes a company's financial conservatism and considers the
possibility of downside risk before evaluating a stock's upside potential in
its effort to achieve capital appreciation. When screening investments for
the Fund's portfolio, the Investment Manager believes that the quality of a
company is associated with its financial strength as opposed to
characteristics such as size, number of years in business, sensitivity to
economic cycles, or industry categorization, etc. The Investment Manager
similarly believes that the search for undervalued securities should not be
restricted by such characteristics. As a result, the Fund will invest in
securities without regard to whether they are characterized as small-
capitalization, large-capitalization, growth stock, cyclical stock, technology
stock, or otherwise. With this approach, the Fund intends to capitalize on
opportunities that develop anywhere in the equity markets. There can be no
assurance that the Fund's investment objective will be achieved. See
"Investment Objective and Policies."
INVESTMENT MANAGER
Olstein & Associates is the investment manager of the Fund. Robert A.
Olstein, the president of Olstein & Associates, has been engaged for the past
twenty-seven years as a securities analyst and portfolio manager, and for the
past fifteen years as a senior portfolio manager for private employee benefit
plans and individual clients. In 1971, Mr. Olstein co-founded the "Quality of
Earnings Report" service which pioneered the concept of using inferential
financial screening techniques to analyze balance sheets and income statements
to alert portfolio managers to positive and negative factors affecting a
company's future earnings power and value of a company's stock, which may not
yet have been recognized by the financial markets.
DISTRIBUTOR AND TRANSFER AGENT
Olstein & Associates also serves with Rodney Square Distributors, Inc.
("RSD") as co-underwriters and distributors for the Fund's shares (together
the "Distributors"). Rodney Square Management Corporation ("Rodney Square")
is the administrator, transfer agent and dividend disbursing agent for the
Fund. Rodney Square and RSD are wholly owned subsidiaries of Wilmington Trust
Company. See "Management of the Fund."
HOW TO PURCHASE SHARES
Shares of the Fund are offered continuously by the Distributors directly
and through certain brokers, dealers, financial institutions or other such
entities. To obtain information about purchasing shares of the Fund,
investors and dealers should contact Rodney Square at (800) 799-2113.
Brokerage or investment advisory clients of Olstein & Associates who maintain
private accounts with Olstein & Associates, may contact Olstein & Associates
directly.
The Fund does not impose front-end sales charges. Certain redemptions of
Fund shares may be subject to a contingent deferred sales charge ("CDSC") if
redeemed within the first two years after purchase, and investments are
subject to 12b-1 Plan fees. The public offering price of shares of the Fund
is the net asset value per share next determined after the receipt and
acceptance of the purchase order. See "Expenses of the Fund" and "How to
Purchase Shares."
Selected brokers, dealers, financial institutions or other entities
("Selling Dealers") may enter into agreements to sell shares of the Fund.
Selling Dealers may be eligible to receive an up-front commission of up to
1.5%, which is financed solely by Olstein & Associates, and is not charged to
the Fund or its shareholders. In addition, Selling Dealers may receive up to
90% of the total 12b-1 Plan fees payable by the Fund with respect to assets in
the Fund attributable to investments by clients of such Selling Dealer. Such
fees currently total 1.00%.
MINIMUM INVESTMENT
The minimum initial investment is $1,000 and subsequent investments must
total at least $100. The minimum initial investment requirement for qualified
tax sheltered retirement plans is $250 with no minimum for subsequent
investments. See "How to Purchase Shares."
REDEMPTION AND EXCHANGES
Shares of the Fund are redeemed at the net asset value next calculated
after receipt of the redemption request in proper form, subject to any
applicable CDSC.
INVESTMENT MANAGEMENT FEES
The Investment Manager selects investments for and supervises the assets
of the Fund in accordance with the investment objective, policies and
restrictions of the Fund, subject to the supervision and direction of the
Board of Trustees. For its services, the Investment Manager is paid a monthly
fee at the annual rate of 1.00% of the Fund's average daily net assets. This
fee is higher than that paid by most mutual funds. See "Management of the
Fund."
RISKS AND SPECIAL CONSIDERATIONS
The Fund may engage in short sales of equity securities when the
Investment Manager believes that the price of a security is over-valued and
may decline. At no time will the Fund make short sales in excess of 25% of
its net assets. Short-selling is a technique that may be considered
speculative and involves risk beyond the initial capital necessary to secure
each transaction. For defensive or hedging purposes, the Fund may seek to
lower some of the risk associated with short sales by purchasing call options
on securities sold short by the Fund, which would lock in a purchase price for
the underlying security. Short-selling by the Fund, as well as the purchase
of options on securities to hedge short positions, may be considered
investments in derivative securities. In addition, the Fund may enter into
repurchase agreements which carry risks of loss if the parties to such
agreements default or enter into bankruptcy proceedings. See "Risks and
Special Considerations."
Olstein & Associates is a newly formed company. While Robert A. Olstein
has extensive investment management experience, he has not previously served
as the investment manager for an investment company.
FUND EXPENSES
SHAREHOLDER TRANSACTION EXPENSES: The following table illustrates estimated
expenses and fees that a shareholder of the Fund will incur.
Maximum Sales Load Imposed on Purchases None
Maximum Sales Load Imposed on Reinvested Dividends None
Maximum Contingent Deferred Sales Charge 2.50% 1
Redemption Fees None
Exchange Fee None
ESTIMATED ANNUAL OPERATING EXPENSES: These expenses, which cover the cost of
investment management, administration, distribution, marketing and shareholder
communication, are quoted as a percentage of average daily net assets of the
Fund. The expenses are factored into the Fund's share price and are not
billed directly to shareholders.
Investment Advisory Fees 1.00%
Rule 12b-1 Fees 1.00% 2
Other Expenses .46%
----
TOTAL OPERATING COSTS 2.46% 3
The purpose of these tables is to assist the investor in understanding
the various expenses that an investor in the Fund will bear directly or
indirectly. The amount of "Other Expenses" is based on estimated amounts for
the current fiscal year.
1 There is no contingent deferred sales charge if an investor redeems Fund
shares more than two years after such shares are purchased. Shares may
be subject to a CDSC of: (i) 2.50% if shares are redeemed within one
year of purchase; and (ii) 1.25% if shares are redeemed during the second
year following purchase. Investments made by clients of Olstein &
Associates are not subject to any CDSC. See "How To Redeem Shares."
2 The Board of Trustees has adopted a Plan of Distribution for the Fund
pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the
"1940 Act"). A portion of the fees payable under this plan will be used
to pay distribution expenses (0.75%) and a portion will be used for
shareholder servicing costs (0.25%). Over an extended period of time,
the aggregate distribution payments made by the Fund under the plan could
cause long-term shareholders to bear distribution costs that exceed the
amount of the maximum front-end sales charge permitted under the rules of
the National Association of Securities Dealers, Inc. (the "NASD"). See
"Distribution of Shares."
3 The Investment Manager will voluntarily waive up to all of its investment
management fee to the extent necessary to keep the total operating costs
of the Fund (exclusive of 12b-1 fees) within any applicable expense
limitations established by a state securities commission.
The following example illustrates the expenses that an investor would pay
on a $1,000 investment over various time periods assuming (1) a 5% annual rate
of return and (2) redemption at the end of each time period. As noted in the
table above, redemptions of shares of the Fund are subject to a CDSC if the
shares are redeemed during the first or second year following purchase.
1 year 3 years
------ -------
$50 $77
An investor would pay the following expenses on the same $1,000
investment assuming no redemption at the end of the period (and therefore no
CDSC):
1 year 3 years
------ -------
$25 $77
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR PERFORMANCE. ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE
SHOWN.
INVESTMENT OBJECTIVE AND POLICIES
The primary investment objective of the Fund is a fundamental policy and
may not be changed without the approval of the holders of a majority of the
Fund's outstanding voting securities. There can be no assurance that the Fund
will achieve its objective.
The investment objective of the Fund is long-term capital appreciation
with a secondary objective of income. The Fund seeks to achieve its objective
by investing in common stocks of companies that are determined to be under-
valued when comparing the "private market value" as determined by the
Investment Manager with the value of the securities as established in the
public trading markets. The Fund believes that, in order to achieve long-term
capital appreciation, downside risk should be emphasized before considering
the upside potential in the stock selection process. Accordingly, the Fund
will not purchase equity securities unless they meet the Fund's value
criteria. To the extent that suitable undervalued securities are not
available, the Fund will invest its assets in fixed-income or money market
securities. In addition to purchasing under-valued equity securities, if the
Investment Manager determines that a security is over-valued, the Fund may
engage in short sales of the security.
The Fund will select equity securities based on a value-oriented
philosophy developed and employed by the Investment Manager which emphasizes
the use of information contained in financial statements to alert investors to
items that may positively or negatively affect prices of securities. That
philosophy identifies investments in securities of companies that, in the
opinion of the Investment Manager: (i) generate more cash flow than is
necessary to sustain the operations of the business (including capital
expenditures); (ii) avoid aggressive accounting practices; (iii) demonstrate
balance sheet fundamentals consistent with the Investment Manager's philosophy
of emphasizing downside risk before upside potential in the stock selection
process; and (iv) are selling at a discount to the "private market value" as
estimated by the Investment Manager. Rather than relying on information
obtained through management contact, market timing techniques, or macro-
economic analysis, the Investment Manager identifies such companies by
engaging in an intensive analysis of a company's balance sheet, income
statement, cash flow statement and related footnotes. The Investment Manager
believes that a historical and investigative analysis of information disclosed
in a company's publicly disclosed financial statements and accompanying
footnotes, shareholder reports and filings made with the U.S. Securities and
Exchange Commission (the "SEC") is the best indicator of the capabilities of
the management of a company.
The "private market value" of a company's common stock is determined by
the Investment Manager under an inferential investigative analysis of the
company's financial statements, shareholder reports and SEC filings. Instead
of relying on conventional price/earnings ratio analysis, the Investment
Manager calculates an internal rate of return for each company which is then
compared to available rates of return on three to five year U.S. Treasury
Notes to calculate "private market value." The Investment Manager seeks to
identify deviations between private market valuations and stock market
valuations in securities that the Investment Manager believes are temporarily
unpopular with investors. The Investment Manager believes that such
securities offer the potential for above average appreciation when the
deviations in value are corrected by market forces. The possibility of such
appreciation may not be realized immediately, therefore the Fund should only
be purchased by investors with a three to five year investment time horizon.
Although the Fund's primary objective is long-term appreciation, the Fund
would recognize short-term gains and avoid short-term losses by trading
securities in its portfolio when price fluctuations in the underlying security
warrant such trading to reduce the risk of loss or in accordance with the
Fund's secondary objective of income.
The Fund will invest in a diversified portfolio of equity securities of
companies chosen solely because they meet the financial characteristics
determined under the value-oriented philosophy utilized by the Investment
Manager. The Investment Manager believes that the quality of a company is
associated with its financial strength as opposed to characteristics such as
size, number of years in business, sensitivity to economic cycles, or industry
categorization, etc. The Investment Manager similarly believes that the
search for undervalued securities should not be restricted by such
characteristics. As a result, the Fund will invest in securities without
regard to whether the securities are characterized as small-capitalization,
large-capitalization, growth stock, cyclical stock, technology stock, or
otherwise. With this approach, the Fund intends to capitalize on
opportunities that develop anywhere in the equity markets. Securities will be
sold when they reach a price objective based on a computation of private
market value or when circumstances change such that the security no longer
meets the value criteria of the Fund.
In situations where the Investment Manager determines that a company
engages in aggressive accounting practices, is over-leveraged, or investors
have unrealistic expectations of future earnings potential which results in
the company's stock being over-valued in comparison to the Investment
Manager's calculation of its private market value, the Fund may engage in
short sales of the company's stock. This process allows the Fund to realize
profits if the value of the company's stock is reduced to a level that was
anticipated by the Investment Manager. The Investment Manager considers
aggressive accounting practices to include (i) "front end" accounting methods
that immediately flow non-recurring revenues such as up-front franchise fees
through the company's income statement; (ii) capitalization of research and
development, advertising, or promotional payments which contribute materially
to year to year earnings growth; and (iii) reversing previously established
reserves which result in material increments to income. In addition, the
Investment Manager seeks to identify companies using accounting practices for
shareholder reporting that are more aggressive than the company's tax
reporting practices. For example, the use of percentage of completion
accounting methods for shareholder reporting purposes, and completed contract
accounting methods for tax reporting purposes can result in substantially
increased earnings figures reported to shareholders, which may not accurately
reflect the company's earnings potential, and therefore, its value. At no
time will the Fund make short sales in excess of 25% of its total net assets
and the value of any securities of any one issuer in which the Fund is short
may not exceed the lessor of 2% of the Fund's net assets or 2% of the
securities of any class of any issuer's securities. In addition, short sales
will only be made in those securities that are listed on a national exchange.
The Fund is also authorized to purchase call options on securities as a
hedging technique as more fully described in the Statement of Additional
Information. Generally, the Fund may seek to offset positions that are sold
short by the Fund. The purchase of call options gives the Fund the right, but
not the obligation, to buy (call) a security at a fixed price during a
specified period. When purchasing options in securities, the Fund pays a non-
refundable premium to the party who sells (writes) the option. Premiums paid
by the Fund in connection with option purchases will not exceed 5% of the
Fund's net assets. When engaging in short sales, the Fund may hedge a short
position by purchasing a call option to purchase the underlying security at a
given price in the future. This practice allows the Fund to protect itself in
the event of an unexpected increase in the price of a security sold short.
The Fund's activities relating to short sales and any purchase of options on
securities for hedging purposes may be considered investments in derivative
securities. "Derivative" securities include instruments whose value is based
upon, or derived from, some underlying security. See "Risks and Special
Considerations."
If the Investment Manager determines that suitable undervalued equity
securities are not available, the Fund may seek income by investing a
substantial portion of its assets in other types of securities, such as
securities convertible into common stocks and common stock equivalents
(including rights and warrants), preferred stocks, debt securities issued or
guaranteed as to principal by the U.S. government, its agencies or
instrumentalities ("U.S. Government Securities"), and/or other high-quality,
short-term debt securities (commercial paper, repurchase agreements, bankers'
acceptances, certificates of deposit and other fixed-income securities
including, non-convertible and convertible bonds, debentures and notes issued
by U.S. corporations and certain bank obligations and participation). High-
quality, investment grade debt securities are those that are rated A or better
by Moody's Investors Services, Inc. ("Moody's"), or A or better by Standard &
Poor's Ratings group ("S&P"), or that are of comparable quality. The Fund's
investment in repurchase agreements that do not mature in seven days and other
securities for which there is no readily available market for resale, or that
are subject to legal or contractual restrictions on resale, may be considered
illiquid securities under federal or state law. The Fund will restrict its
investment in illiquid securities to not more than 10% of its net assets. See
"Risks and Special Considerations." In accordance with the Fund's secondary
objective of income, the Fund may also invest in non-equity securities pending
the investment of proceeds of sales of Fund shares, or of the proceeds of
certain sales of portfolio securities, but such investments will only be
maintained for the periods during which suitable undervalued equity securities
are unavailable.
The Fund may also purchase and sell American Depository Receipts ("ADRs")
as more fully described in the Statement of Additional Information. ADRs are
receipts typically issued by a U.S. bank or trust company which evidence
ownership of underlying securities issued by a foreign corporation.
Generally, ADRs in registered form are designed for use in the U.S. securities
markets. The Fund may invest in ADRs through "sponsored" or "unsponsored"
facilities. A sponsored facility is established jointly by the issuer of the
underlying security and a depository, whereas a depository may establish an
unsponsored facility without participation of the issuer of the deposited
security. Holders of unsponsored ADRs generally bear all the costs of such
facilities and the depository of an unsponsored facility frequently is under
no obligation to distribute shareholder communications received from the
issuer of the deposited security or to pass through voting rights to the
holders of such receipts in respect of the deposited securities. Therefore,
there may not be a correlation between information concerning the issuer of
the security and the market value of an unsponsored ADR. The Fund generally
does not expect to invest more than 5% of its assets in ADRs.
The Fund will select money market securities for investment when such
securities offer a current market rate of return which the Fund considers
reasonable in relation to the risk of the investment, and the issuer can
satisfy suitable standards of credit-worthiness set by the Fund. The money
market securities in which the Fund may invest are repurchase agreements,
certificates of deposit, U.S. Government Securities, commercial paper and
securities of money market mutual funds. Other than its investments in money
market mutual funds, the Fund will not invest in other investment companies.
The Fund's investments in money market mutual funds may be made only in
accordance with the limitations imposed by the 1940 Act and the rules
thereunder.
U.S. Government Securities include a variety of Treasury securities,
which differ in their interest rates, maturities and dates of issuance.
Treasury bills have a maturity of one year or less; Treasury notes have
maturities of one to ten years; Treasury bonds generally have a maturity of
greater than five years. The Fund will only acquire U.S. Government
Securities which are supported by the "full faith and credit" of the United
States. Securities which are backed by the full faith and credit of the
United States include Treasury bills, Treasury notes, Treasury bonds, and
obligations of the Government National Mortgage Association, the Farmers Home
Administration, and the Export-Import Bank. The Fund's direct investments in
money market securities will generally favor securities with shorter
maturities (maturities of less than 60 days) which are less affected by price
fluctuations than are those with longer maturities.
Certificates of deposit are certificates issued against funds deposited
in a commercial bank or a savings and loan association for a definite period
of time and earning a specified return. Bankers' acceptances are negotiable
drafts or bills of exchange, normally drawn by an importer or exporter to pay
for specific merchandise, which are "accepted" by a bank, meaning, in effect,
that the bank unconditionally agrees to pay the face value of the instrument
on maturity. Investments in bank certificates of deposit and bankers'
acceptances are generally limited to domestic banks and savings and loan
associations that are members of the Federal Deposit Insurance Corporation or
Federal Savings and Loan Insurance Corporation having a net worth of at least
$100 million dollars ("Domestic Banks") and domestic branches of foreign banks
(limited to institutions having total assets not less than $1 billion or its
equivalent).
Investments in prime commercial paper may be made in notes, drafts, or
similar instruments payable on demand or having a maturity at the time of
issuance not exceeding nine months, exclusive of days of grace, or any renewal
thereof payable on demand or having a maturity likewise limited.
As a matter of fundamental policy, the Fund will generally not borrow
money. However, the Fund may borrow from banks (i) for temporary or emergency
purposes in an amount not exceeding 5% of the fund's assets; or (ii) to meet
redemption requests that might otherwise require the untimely disposition of
portfolio securities, in an amount up to 33 1/3% of the value of the Fund's
total assets (including the amount borrowed) valued at market less liabilities
(not including the amount borrowed) at the time the borrowing was made.
While borrowings exceed 5% of the value of the Fund's total assets, the Fund
will not make additional investments. Interest paid on borrowings will reduce
net income.
RISKS AND SPECIAL CONSIDERATIONS
INVESTMENT MANAGER
The Investment Manager and its president, Robert A. Olstein, have not
previously served as the investment manager for a mutual fund. Accordingly,
historical information about the performance of the Investment Manager is not
available.
PORTFOLIO TURNOVER
It is estimated that the annualized portfolio turnover rate for the Fund
will be in the range of 75%-100% during most periods. The Fund intends to
follow a very strict "sell discipline," under which it will purchase or sell
securities whenever the Fund's value criteria are met, which may result in
portfolio restructuring, and a portfolio turnover rate higher than that
otherwise reached by capital appreciation funds. Portfolio transactions
relating to the Fund's secondary objective of income may contribute to this
portfolio turnover rate. High portfolio turnover involves additional
transaction costs (such as brokerage commissions), which are borne by the
Fund, and might involve adverse tax effects. See "Dividends, Distributions
and Taxes."
REPURCHASE AGREEMENTS
Under a repurchase agreement the Fund acquires a debt instrument subject
to the obligation of the seller to repurchase and the Fund to resell such debt
instrument at a fixed price. The Fund will enter into repurchase agreements
only with banks that are members of the Federal Reserve System, or securities
dealers who are members of a national securities exchange or are market makers
in government securities and report to the Market Reports Division of the
Federal Reserve Bank of New York and, in either case, only where the debt
instrument collateralizing the repurchase agreement is a U.S. Treasury or
agency obligation supported by the full faith and credit of the United States.
A repurchase agreement may also be viewed as the loan of money by the Fund to
the seller. The resale price specified is normally in excess of the purchase
price, reflecting an agreed upon interest rate. The rate is effective for the
period of time the Fund is invested in the agreement and may not be related to
the coupon rate on the underlying security. The term of these repurchase
agreements will usually be short (from overnight to one week), and at no time
will the Fund invest in repurchase agreements of more than sixty days. The
securities which are collateral for the repurchase agreements, however, may
have maturity dates in excess of sixty days from the effective date of the
repurchase agreement. The Fund will always receive, as collateral, securities
whose market value, including accrued interest, will at least equal 102% of
the dollar amount to be paid to the Fund under each agreement at its maturity,
and the Fund will make payment for such securities only upon physical delivery
or evidence of book entry transfer to the account of the Custodian. If the
seller defaults, the Fund might incur a loss if the value of the collateral
securing the repurchase agreement declines, and might incur disposition costs
in connection with liquidation of the collateral. In addition, if bankruptcy
proceedings are commenced with respect to the seller of the security,
collection of the collateral by the Fund may be delayed or limited. The Fund
also may not be able to substantiate its interests in the underlying
securities. While management of the Fund acknowledges these risks, it is
expected that such risks can be controlled through stringent security
selection and careful monitoring procedures. The Fund may not enter into a
repurchase agreement with more than seven days to maturity if, as a result,
more than 10% of the market value of the Fund's net assets would be invested
in such repurchase agreements. For purposes of the diversification test for
qualification as a regulated investment company under the Internal Revenue
Code, repurchase agreements are not counted as cash, cash items or
receivables, but rather as securities issued by the counter-party to the
Repurchase Agreements.
ILLIQUID SECURITIES
The Fund may invest up to 10% of its total assets in securities which may
be considered illiquid, which include securities with contractual restrictions
on resale, repurchase agreements maturing in greater than seven days, and
other securities which may not be readily marketable. Liquidity relates to
the ability of the Fund to sell a security in a timely manner at a price which
reflects the value of that security. The relative illiquidity of some of the
Fund's securities may adversely affect the ability of the Fund to dispose of
such securities in a timely manner and at a fair price at times when it may be
necessary or advantageous for the Fund to liquidate portfolio securities.
Certain securities in which the Fund may invest are subject to legal or
contractual restrictions as to resale and therefore may be illiquid by their
terms.
SHORT-SELLING
If the Fund anticipates that the price of a security will decline, it may
sell the security short and borrow the same security from a broker or other
institution to complete the sale. The Fund may realize a profit or loss
depending upon whether the market price of a security decreases or increases
between the date of the short sale and the date on which the Fund must replace
the borrowed security. As a hedging technique, the Fund may purchase options
to buy securities sold short by the Fund. Such options would lock in a future
purchase price and protect the Fund in case of an unanticipated increase in
the price of a security sold short by the Fund. Short-selling is a technique
that may be considered speculative and involves risk beyond the initial
capital necessary to secure each transaction. In addition, the technique
could result in higher operating costs for the Fund and have adverse tax
effects for the investor. Investors should consider the risks of such
investments before investing in the Fund. See "Synopsis_Risks and Special
Considerations."
Whenever the Fund effects a short sale, it will set aside in segregated
accounts cash, U.S. Government Securities or other high grade debt instruments
equal to the difference between (i) the market value of the securities sold
short; and (ii) any cash or U.S. Government Securities required to be
deposited as collateral with the broker in connection with the short sale (but
not including the proceeds of the short sale). Until the Fund replaces the
security it borrowed to make the short sale, it must maintain daily the
segregated account at such a level that (i) the amount deposited in it plus
the amount deposited with the broker as collateral will equal the current
market value of the securities sold short, and (ii) the amount deposited in it
plus the amount deposited with the broker will not be less than the market
value of the securities at the time they were sold short. No more than 25% of
the value of the Fund's total net assets will be, when added together, (i)
deposited as collateral for the obligation to replace securities borrowed to
effect short sales; and (ii) allocated to segregated accounts in connection
with short sales. The Fund's ability to make short sales may be limited by a
requirement applicable to "regulated investment companies" under Subchapter M
of the Internal Revenue Code that no more than 30% of the Fund's gross income
in any year may be the result of gains from the sale of property held for the
less than three months.
PURCHASING OPTIONS
The success of purchasing call options for hedging purposes depends on
the Investment Manager's judgment and ability to predict the movement of stock
prices. There is generally an imperfect correlation between options and the
securities being hedged. If the Investment Manager correctly anticipates the
direction of the price of the underlying security that is the subject of the
hedge, the option will not be exercised, and any premium paid for the option
may lower the Fund's return. If an option position is no longer needed for
hedging purposes, it may be closed out by selling an option of the same series
previously purchased. There is a risk that a liquid secondary market may not
exist and the Fund may not be able to close out an option position, and
therefore would not be able to offset any portion of the premium paid for that
option. The risk that the Fund will not be able to close out an options
contract will be minimized because the Fund will only enter into options
transactions on a national exchange and for which there appears to be a liquid
secondary market.
AMERICAN DEPOSITORY RECEIPTS
The Fund may purchase and sell ADRs. Since ADRs are receipts which
evidence ownership of underlying securities issued by foreign corporations,
investments in ADRs may involve greater risks than investments in domestic
securities. Foreign issuers are not generally subject to uniform accounting,
auditing and financial reporting standards comparable to those of U.S. public
companies and there is generally less information available to the public
about non-U.S. companies. In addition, foreign investments may include risks
related to legal, political and or diplomatic actions of foreign governments,
such as imposition of withholding taxes on interest and dividend income
payable on the securities held, possible seizure or nationalization of foreign
deposits, establishment of exchange controls as the adoption of other foreign
governmental restrictions which might adversely affect to value of foreign
issuer's stock. The Fund generally does not expect to invest more than 5% of
its assets in ADRs.
SMALL-CAPITALIZATION STOCKS
To the extent that the Fund invests in securities of companies with
market capitalizations less than the median market capitalization of the
listed companies on the New York Stock Exchange ("NYSE"), such securities
could be considered small-capitalization stocks. Typically, securities of
small companies are less liquid than securities of large companies.
Recognizing this factor, the Fund will endeavor to effect securities
transactions in a manner to avoid causing significant price fluctuations in
the market for such securities.
MANAGEMENT OF THE FUND
BOARD OF TRUSTEES
The Board of Trustees of the Fund consists of five individuals, two of
whom are not "interested" persons of the Fund as defined in the Investment
Company Act of 1940 (the "1940 Act"). The Trustees are fiduciaries for the
Fund's shareholders and are governed by the laws of the State of Delaware in
this regard. They establish policy for the operation of the Fund and appoint
the officers who conduct the daily business of the Fund. The Statement of
Additional Information contains more information regarding the Officers and
Trustees of the Fund.
INVESTMENT MANAGER
Olstein & Associates, L.P. serves as the investment manager for the Fund
pursuant to an investment management contract (the "Management Contract").
Subject to the supervision of the Trustees and officers of the Trust, the
Investment Manager selects investments and supervises the assets of the Fund,
and places portfolio transactions for the Fund. The Investment Manager is
governed by the policies set forth under "Investment Objectives and Policies."
For its services, the Investment Manager is paid an annual fee equal to 1.00%
of the Fund's average daily net assets, which is higher than that paid by most
mutual funds.
Robert A. Olstein is the president of the Investment Manager and will be
principally responsible for the management of the Fund's portfolio of
securities. Mr. Olstein has been engaged in various aspects of securities
research and portfolio management for both institutional and retail clients
since 1968. In 1971, he co-founded the "Quality of Earnings Report" service,
which pioneered the concept of using inferential financial screening
techniques to analyze balance sheets and income statements to alert
institutional portfolio managers to positive or negative factors affecting a
company's future earnings power and value of a company's stock. For the past
thirteen years, Mr. Olstein has managed portfolios for individuals,
corporations and employee benefit plans at Smith Barney, Inc. ("Smith Barney")
and its predecessor companies. Prior to forming the Investment Manager, Mr.
Olstein was a Senior Vice President/Senior Portfolio Manager at Smith Barney
and managed approximately $158 million of individual and employee benefit
accounts at Smith Barney, $73 million of which were managed under the auspices
of the Smith Barney Equity Portfolio Management Program. Mr. Olstein is a
senior member of the New York Society of Securities Analysts and a fellow of
the Financial Analysts Federation. He is a past recipient of the Graham &
Dodd and Gerald M. Loeb Research Awards, has testified before the Senate
Banking Committee on bank accounting, and is the author of numerous articles
on corporate reporting and disclosure practices.
The Investment Manager is a New York limited partnership established in
June of 1994, with offices located at 105 Corporate Park Drive, White Plains,
New York 10604. The corporate general partner of the Investment Manager is
Olstein, Inc., which was formed for the primary purpose of acting as the
Investment Manager's general partner, and whose sole shareholder, officer and
director is Robert A. Olstein. The Investment Manager has twenty-two limited
partners, who will receive a portion of the income derived from the advisory
fee received by the Investment Manager. In addition, some of the limited
partners are brokers or dealers who may receive up-front commissions from the
Investment Manager for sales of Fund shares, distribution fees for ongoing
marketing of Fund shares under a Plan of Distribution adopted pursuant to Rule
12b-1 under the 1940 Act (the "12b-1 Plan"), or compensation as broker-dealer
employees of companies who execute portfolio transactions for the Fund.
Pursuant to the Management Contract with the Fund, the Investment Manager
will also provide, on a reimbursable basis, administrative and clerical
services, office space and other facilities for the Fund, and keep certain
books and records for the Fund to the extent that such services are not
provided by the Administrator or other persons.
The Investment Manager is responsible for selecting brokers and dealers
to execute portfolio transactions for the Fund. The Board of Trustees has
authorized the Investment Manager, which is itself a broker-dealer registered
under the Securities Exchange Act of 1934 and a member of the NASD, to place
Fund securities transactions through itself or certain affiliates, and has
authorized the Investment Manager and the Fund's officers to consider sales of
the Fund's shares when allocating brokerage, in either case subject to the
policy of obtaining best price and execution on such transactions. Any
portfolio transactions which are effected by brokers or dealers who are
considered to be affiliated persons of the Fund will be subject to SEC Rules
designed to ensure that the commissions for such transactions are fair to the
Fund's shareholders.
The Investment Manager also serves as the Fund's co-underwriter and co-
distributor, along with Rodney Square Distributors, Inc., a wholly owned
subsidiary of Wilmington Trust Company. For these services the Investment
Manager is compensated pursuant to the 12b-1 Plan adopted by the Board of
Trustees of the Fund. See "Distribution of Shares."
DISTRIBUTION OF SHARES
Rodney Square Distributors, Inc., a subsidiary of Wilmington Trust
Company ("RSD") and Olstein & Associates (together the "Distributors") have
entered into a distribution and underwriting agreement with the Fund (the
"Distribution Agreement") dated August 18, 1995, under which the Distributors
will act as co-underwriters to engage in activities designed to assist the
Fund in securing purchasers for its shares. The fee for RSD's services as co-
underwriter is borne solely by Olstein & Associates, and Olstein & Associates
will receive compensation for its services under the 12b-1 Plan described
below. Either directly or through affiliates, the Distributors will provide
services under the Distribution Agreement including underwriting, coordination
and approval of selling dealers, investor support services, administrative
services and 12b-1 Plan administration.
The Fund has adopted a Shareholder Servicing and Distribution Plan
adopted pursuant to Rule 12b-1 under the 1940 Act (the "12b-1 Plan"). Amounts
paid under the 12b-1 Plan may compensate the Distributors or others for their
activities in the promotion and distribution of the Fund's shares and for
shareholder servicing. The total amount which the Fund will pay under the 12b-
1 Plan is 1.00% per annum of the Fund's average daily net assets payable on a
monthly basis. This total amount includes a monthly distribution fee,
calculated at the annual rate of 0.75% of the average daily net assets of the
Fund. This fee may be used to compensate the Distributors or others for
distribution activities, including but not limited to, the preparation,
printing and distribution of prospectuses, sales materials, reports,
advertising and other distribution-related materials, as well as payments to
Selling Dealers with respect to the sales of Fund shares. Also included
within the total amount payable under the 12b-1 Plan is a monthly shareholder
servicing fee, calculated at the annual rate of 0.25% of the average daily net
assets of the Fund, which will be used to compensate the Distributors or
others for ongoing servicing and maintenance of shareholder accounts with the
Fund. Such shareholder servicing activities include responding to inquiries
of shareholders of the Fund regarding their ownership of shares of the Fund or
providing other similar services not otherwise required to be provided by the
Investment Manager or the Administrator. Payments under the 12b-1 Plan are
not tied exclusively to distribution or shareholder servicing expenses
actually incurred by the Distributors or others, and the payments may exceed
the amount of expenses actually incurred.
To promote the sale of the Fund's shares, Olstein & Associates may enter
into agreements with Selling Dealers under which the Selling Dealers may be
compensated for their distribution and shareholder servicing activities. It
is presently contemplated that certain Selling Dealer agreements, subject to
Olstein & Associates' discretion, will provide for Olstein & Associates to pay
the Selling Dealer, from its own resources, an up-front commission of up to
1.5% of the amount invested. No portion of such up-front commissions will be
borne by the Fund or its shareholders. While Olstein & Associates has advised
the Fund it hopes to recover such up-front commissions payments by receipt of
12b-1 fees paid by the Fund, the Fund is not legally obligated to repay such
excess amounts or to continue the 12b-1 Plan for such purpose. The Selling
Dealer Agreements which provide for a 1.5% up-front commission will also
provide for Selling Dealers to receive up to 90% of the total 12b-1 fees
attributable to the amount originally invested that remains invested in the
Fund during the second through fifth years at current market value. In
subsequent years, the Selling Dealers will receive up to 75% of the total 12b-
1 fees for assets that remain invested in the Fund at current market values.
In the event that a Selling Dealer Agreement does not provide for an up-front
commission payment by Olstein & Associates to the Selling Dealer, the Selling
Dealer may be paid up to 90% of the total 12b-1 fee beginning in the first
year. The 12b-1 fees payable to Selling Dealers will consist in part of a
shareholder servicing fee and, in part, a distribution fee.
If investors elect to redeem their shares of the Fund within the first
two years of purchase, thereby incurring a CDSC, the CDSC will be paid to
Olstein & Associates. Any CDSC payments received by Olstein Associates will
not reduce the payments Olstein & Associates may receive under the 12b-1 Plan
during a particular year. By receiving the CDSC upon early redemptions,
Olstein & Associates will recapture some of the up-front commissions it may
have paid to Selling Dealers when the original purchase was made, as opposed
to receiving ongoing fees under the 12b-1 Plan with respect to those assets if
the shareholder had retained the investment in the Fund.
RSD is located at 1100 North Market Street, Wilmington, Delaware 19890
and is an affiliate of Wilmington Trust Company ("WTC"), the Fund's custodian
bank for its securities and cash. Banking laws limit deposit-taking
institutions and certain of their affiliates from underwriting or distributing
securities. RSD believes that it may perform the services contemplated under
the co-underwriting agreement without violation of applicable banking laws or
regulations. If RSD were prohibited from performing these services, it is
expected that RSD would resign as co-underwriter. It is not expected that
shareholders would suffer any adverse financial consequences as a result of
such an occurrence, as the Investment Manager would continue to serve as the
Distributor of the Fund's shares, and the Fund and the Board of Trustees would
consider whether to enter into any additional agreements with other parties.
ADMINISTRATOR, TRANSFER AGENT AND FUND ACCOUNTING/PRICING AGENT
Rodney Square Management Corporation ("Rodney Square") serves as the
Fund's Administrator pursuant to an Administration Services Agreement with the
Fund dated August 18, 1995. As Administrator, Rodney Square supplies office
facilities, non-investment related statistical and research data, stationary
and office supplies, executive and administrative services, internal auditing
budgeting and financial reporting services. Rodney Square also prepares and
maintains information for meetings of the Board of Trustees, assists in the
preparation of reports to shareholders, prepares proxy statements, updates and
supervises the preparation of prospectuses and makes filings with the SEC and
state securities authorities. Rodney Square also monitors the Fund's
compliance with federal and state securities laws, and assists the Fund's
Distributors in the review of advertising literature, and the submission of
such advertising to the NASD for review and approval in accordance with NASD
rules. For its services as Administrator, Rodney Square receives a monthly
fee from the Fund, based on the Fund's average daily net assets, of 0.15% on
the first $50 million of assets (subject to a minimum annual fee of $50,000),
0.10% on the next $50 million of assets, 0.07% on the next $100 million in
assets and 0.05% on assets in excess of $200 million. Rodney Square also
receives reimbursement from the Fund for out-of-pocket expenses.
Rodney Square also serves as the Fund's transfer agent pursuant to a
Transfer Agency Agreement dated August 18, 1995. As transfer agent, Rodney
Square maintains the records of each shareholder's account, answers
shareholder inquiries concerning accounts, processes purchases and redemptions
of the Fund's shares in association with the Distributors, acts as dividend
and distribution disbursing agent, and performs other shareholder service
functions. Rodney Square will also administer the payment of any up-front
commission payments paid by Olstein & Associates and ongoing 12b-1 fees paid
by the Fund to Selling Dealers and assist the Distributors in the preparation
of the quarterly 12b-1 reports to the Board of Trustees. See "Distribution of
Shares." Shareholder inquiries should be directed to Rodney Square at (800)
799-2113.
Rodney Square also performs certain accounting and pricing services for
the Fund, including the daily calculation of the Fund's net asset value.
These services are provided pursuant to an Accounting Services Agreement with
the Fund dated August 18, 1995.
CUSTODIAN
The custodian for the securities and cash of the Fund is Wilmington Trust
Company, Rodney Square North, 1100 N. Market Street, Wilmington, DE 19890-
0001.
EXPENSES
Except as indicated above, the Fund is responsible for the payment of its
expenses, other than those borne by the Investment Manager and such expenses
may include, but are not limited to: (i) management fees; (ii) the charges
and expenses of the Fund's legal counsel and independent auditors; (iii)
brokers' commissions, mark-ups and mark-downs and any issue or transfer taxes
chargeable to the Fund in connection with its securities transactions; (iv)
all taxes and corporate fees payable by the Fund to governmental agencies; (v)
the fees of any trade association of which the Fund is a member; (vi) the cost
of certificates, if any, representing shares of the Fund; (vii) amortization
and reimbursements of the organization expenses of the Fund and the fees and
expenses involved in registering and maintaining registration of the Fund and
its shares with the SEC, and the preparation and printing of the Fund's
registration statements and prospectuses for such purposes; (viii) allocable
communications expenses with respect to investor services and all expenses of
shareholders and directors meetings and of preparing, printing and mailing
prospectuses and reports to shareholders; (ix) certain rent or office expenses
not assumed by others, (x) premiums for fidelity bond and liability insurance
covering Fund trustees and officers; (xi) litigation and indemnification
expenses and other extraordinary expenses not incurred in the ordinary course
of the Fund's business; and (xii) compensation for employees of the Fund.
SHARES OF BENEFICIAL INTEREST
The Trust is a series business trust that currently offers one series of
shares. The beneficial interest of each Series of the Trust is divided into
an unlimited number of shares ("Shares"), with a par value of $.001 each.
Each Share has equal dividend, voting, liquidation and redemption rights.
There are no conversion or preemptive rights. Shares, when issued, will be
fully paid and nonassessable. Fractional shares have proportional voting
rights. Shares of the Fund do not have cumulative voting rights, which means
that the holders of more than 50% of the shares voting for the election of
trustees can elect all of the trustees if they choose to do so and, in such
event, the holders of the remaining shares will not be able to elect any
person to the Board of Trustees. Shares will be maintained in open accounts
on the books of the Transfer Agent, and certificates for shares will generally
not be issued.
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES
The Fund intends to declare and pay annual dividends to its shareholders
of substantially all of its net investment income, if any, earned during the
year from its investments, and the Fund will distribute net realized capital
gains, if any, once with respect to each year. Expenses of the Fund,
including the advisory fee, are accrued daily. Reinvestments of dividends and
distributions in additional shares of the Fund will be made at the net asset
value determined on the date of the dividend or distribution unless the
shareholder has elected in writing to receive dividends or distributions in
cash. An election may be changed by notifying Rodney Square in writing thirty
days prior to the record date. Shareholders may call Rodney Square at (800)
799-2113 for more information.
The Fund intends to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code (the "Code"). As such, the Fund
will not be subject to federal income tax, or to any excise tax, to the extent
its earnings are distributed and by meeting certain other requirements
relating to the sources of its income and diversification of its assets as
provided in the Code. Dividends from net investment income or net short-term
capital gains will be taxable to shareholders as ordinary income, whether
received in cash or in additional shares. For corporate investors, dividends
from net investment income will generally qualify in part for the 70%
corporate dividends received deduction, subject to certain holding period and
debt financing restrictions. The portion of the dividends so qualified
depends on the aggregate qualifying dividend income received by the Fund from
domestic (U.S.) sources.
Distributions paid by the Fund from net long-term capital gains, whether
received in cash or in additional shares, are taxable to those investors who
are subject to income taxes as long-term capital gains, regardless of the
length of time an investor has owned shares in the Fund. The Fund does not
seek to realize any particular amount of capital gains during a year; rather,
realized gains are a by-product of Fund management activities. Consequently,
capital gains distributions may be expected to vary considerably from year to
year. Also, for those investors subject to tax, if purchases of shares in the
Fund are made shortly before the record date for a dividend or capital gains
distribution, a portion of the investment will be returned as a taxable
distribution.
Dividends which are declared in October, November or December to
shareholders of record in such a month, but which, for operational reasons,
may not be paid to the shareholder until the following January, will be
treated for tax purposes as if paid by the Fund and received by the
shareholder on December 31 of the calendar year in which they are declared.
The sale of shares of the Fund is a taxable event and may result in a
capital gain or loss to shareholders subject to tax. Capital gain or loss may
be realized from an ordinary redemption of shares or an exchange of shares
between two mutual funds (or two portfolios of a mutual fund). Any loss
incurred on a sale or exchange of the Fund's shares, held for six months or
less, will be treated as a long-term capital loss to the extent of capital
gain dividends received with respect to such shares.
In addition to federal taxes, shareholders may be subject to state and
local taxes on distributions. Distributions of interest income and capital
gains realized from certain types of U.S. Government Securities may be exempt
from state personal income taxes. Each year, the Fund will mail information
on the tax status of the Fund's dividends and distributions to shareholders.
Of course, shareholders who are not subject to tax on their income would not
be required to pay tax on amounts distributed to them by the Fund. The Fund
is required to withhold 31% of taxable dividends, capital gains distributions,
and redemptions paid to shareholders who have not complied with IRS taxpayer
identification regulations. Shareholders may avoid this withholding
requirement by certifying on the Shareholder Application the proper Taxpayer
Identification Number and by certifying that they are not subject to backup
withholding.
The tax discussion set forth above is included for general information
only. Prospective investors should consult their own tax advisers concerning
the federal, state, local or foreign tax consequences of an investment in the
Fund.
DETERMINATION OF NET ASSET VALUE
The Fund's net asset value per share ("net asset value") is determined by
the Fund as of the close of regular trading on each day that the NYSE is open
for unrestricted trading from Monday through Friday (generally 4:00 p.m.).
The net asset value is determined by the Fund by dividing the value of the
Fund's securities, plus any cash and other assets, less all liabilities, by
the number of shares outstanding. Expenses and fees of the Fund, including
management, distribution and shareholder servicing fees, are accrued daily and
taken into account for the purpose of determining the net asset value.
Fund securities listed or traded on a securities exchange for which
representative market quotations are available will be valued at the last
quoted sales price on the security's principal exchange on that day. Listed
securities not traded on an exchange that day, and other securities which are
traded in the over-the-counter market, will be valued at the mean between the
last bid and ask price in the market on that day, if any. Securities for
which market quotations are not readily available and all other assets will be
valued at their respective fair market value as determined in good faith by,
or under procedures established by, the Board of Trustees. In determining
fair value, the Trustees may employ an independent pricing service.
Short-term investments with less than sixty days remaining to maturity
when acquired by the Fund will be valued on an amortized cost basis by the
Fund, excluding unrealized gains or losses thereon from the valuation. This
is accomplished by valuing the security at cost and then assuming a constant
amortization to maturity of any premium or discount. If the Fund acquires a
short-term security with more than sixty days remaining to its maturity, it
will be valued at current market value until the 60th day prior to maturity,
and will then be valued on an amortized cost basis based upon the value on
such date unless the Trustees determine during such 60 day period that this
amortized cost value does not represent fair market value.
HOW TO PURCHASE SHARES
Shares of the Fund are offered on a continuous basis by the Distributors
and through Selling Dealers who have entered into Selling Dealer Agreements
with the Distributors. Brokerage or investment advisory clients of Olstein &
Associates who maintain private brokerage or advisory accounts with Olstein &
Associates, may contact Olstein & Associates directly. Selling Dealers may
receive compensation for their marketing and shareholder servicing activities
in the form of up-front commission payments funded by Olstein & Associates
from its own resources, or by receiving a portion of the 12b-1 fees payable by
the Fund under the 12b-1 Plan. See "Distribution of Shares."
Shares are sold to investors at the net asset value next determined after
receipt and acceptance of an investor's purchase order in proper form as
described below. Shares of the Fund are subject to annual 12b-1 Plan expenses
and, if shares are redeemed within two years of purchase, may be subject to a
CDSC. See "Expenses of the Fund" and "How to Redeem Shares." The Fund
reserves the right to reject any purchase order and to suspend the offering of
shares of the Fund. The minimum initial investment is $1,000, and subsequent
investments must total at least $100. The minimum initial investment
requirement for qualified tax sheltered retirement plans is $250 with no
minimum for subsequent investments. The Fund reserves the right to vary the
initial investment minimum and minimums for additional investments at any
time.
At the discretion of the Fund, investors may be permitted to purchase
Fund shares by transferring securities to the Fund that: (i) meet the Fund's
investment objective and policies; (ii) are acquired by the Fund for
investment and not for retail purposes; (iii) are liquid securities which are
not restricted as to transfer either by law or liquidity of market; (iv) have
a value which is readily ascertainable (and not established only by evaluation
procedures) as evidenced by a listing on the American Stock Exchange, the
NYSE, or NASDAQ; and (v) at the discretion of the Fund, the value of any such
security (except U.S. Government securities) being exchanged together with
other securities of the same issuer owned by the Fund will not exceed 5% of
the net assets of the Fund immediately after the transactions.
Securities transferred to the Fund will be valued in accordance with the
same procedures used to determine the Fund's net asset value. All dividends,
interests, subscription, or other rights pertaining to such securities shall
become the property of the Fund and must be delivered to the Fund by the
investor upon receipt from the issuer. Investors who are permitted to
transfer such securities will be required to recognize all gains or losses on
such transfers, and pay taxes thereon, if applicable, measured by the
difference between the fair market value of the securities and the investors'
bases therein.
Purchase orders for shares of the Fund which are received by Rodney
Square and accepted by the Distributors prior to the close of regular trading
hours on the NYSE on any day that the Fund calculates its net asset value, are
priced according to the net asset value determined on that day. Purchase
orders for shares of the Fund received after the close of the NYSE on a
particular day are priced as of the time the net asset value per share is next
determined.
Purchases may be made in one of the following ways:
PURCHASES BY MAIL
Investors may purchase shares by sending a check drawn on a U.S. bank
payable to The Olstein Financial Alert Fund along with a completed Shareholder
Application, to The Olstein Financial Alert Fund, c/o Rodney Square Management
Corporation, P.O. Box 8987, Wilmington, DE 19899-9752. A purchase order sent
by overnight mail should be sent to The Olstein Financial Alert Fund, c/o
Rodney Square Management Corporation, Rodney Square North, 1105 North Market
Street, 3rd Floor, Wilmington, DE 19890-0001. If a subsequent investment is
being made, the check should also indicate the investor's Fund account number.
When purchases are made by check, the Fund may withhold payment on redemptions
of shares purchased by such check until it is reasonably satisfied that the
funds are collected (which can take up to 10 days). Redemption proceeds will
be mailed upon clearance of the check. Purchases made with a check that does
not clear, will be canceled and the investor will be responsible for any
losses or fees incurred in that transaction.
PURCHASES BY WIRE
To order shares for purchase by wiring federal funds, the transfer agent
must first be notified by calling (800) 799-2113 to request an account number
and furnish the Fund with a tax identification number. Following notification
to Rodney Square, federal funds and registration instructions should be wired
through the Federal Reserve System to:
RODNEY SQUARE MANAGEMENT CORPORATION
C/O WILMINGTON TRUST COMPANY, WILMINGTON DELAWARE
ABA #0311 0009 2
ATTENTION: THE OLSTEIN FINANCIAL ALERT FUND
DDA # 34809-0
[FURTHER CREDIT SHAREHOLDER NAME AND ACCOUNT NUMBER]
For initial purchases by wire, a completed application with signature(s)
of investor(s) must be filed with the transfer agent at the address stated
above under "Purchases by Mail." Investors should be aware that some banks
may impose a wire service fee.
AUTOMATIC INVESTMENT PLAN
Shares of the Fund may be purchased through an Automatic Investment Plan.
The Plan provides a convenient method by which investors may have monies
deducted directly from their checking, savings or bank money market accounts
for investment in the Fund on a monthly, bi-monthly, quarterly, semi-annual or
annual basis. The minimum investment pursuant to this Plan is $100 per month
(subsequent to the $1000 initial investment). The account designated will be
debited in the specified amount, on or about the 20th of the month, and Fund
shares will be purchased. Only an account maintained at a domestic financial
institution which is an ACH member may be so designated. The Fund may alter,
modify or terminate this Plan at any time. For information about
participating in the Automatic Investment Plan, call Rodney Square at (800)
799-2113.
HOW TO REDEEM SHARES
Shareholders may redeem their shares of the Fund on any business day that
the Fund calculates its net asset value. See "Determination of Net Asset
Value." Redemption requests are generally made to the Fund's transfer agent
(see below), however, brokerage or investment advisory clients of Olstein &
Associates who maintain private brokerage or advisory accounts with Olstein &
Associates may contact Olstein & Associates directly. Redemptions will be
effected at the net asset value per share next determined after the receipt by
the transfer agent of a redemption request meeting the requirements described
below, subject to any applicable CDSC. The Fund normally sends redemption
proceeds on the next business day, but in any event redemption proceeds are
sent within seven calendar days of receipt of a redemption request in proper
form, or sooner if required under applicable law. Payment may also be made by
wire directly to any bank previously designated by the shareholder in a
shareholder account application. The Fund's custodian or the shareholder's
bank may impose a fee for wire service. The Fund will honor redemption
requests of shareholders who recently purchased shares by check, but will not
mail the proceeds attributable to such purchase until it is reasonably
satisfied that the purchase check has cleared, which may take up to ten days
from the purchase date, at which time the redemption proceeds will be sent to
the shareholder.
Except as noted below, redemption requests received in proper form by
Rodney Square prior to the close of regular trading hours on the NYSE on any
business day that the Fund calculates its per share net asset value are
effective that day. Redemption requests received after the close of the NYSE
are effective as of the time the net asset value per share is next determined.
If a shareholder submits a redemption request for a specific dollar
amount, and the redemption request is subject to a CDSC, the Fund will redeem
that number of shares necessary to deduct the applicable CDSC and tender to
the shareholder the requested amount to the extent shares are still held in
the account. Shares redeemed within the first two years of their purchase
will be assessed the applicable CDSC on the lesser of the then-current net
asset value or the original purchase price of such shares. If a shareholder
decides to repurchase the same amount of shares within 90 days of a redemption
which was subject to a CDSC, the shareholder will receive an amount of shares
equal to the repurchase plus the number of shares necessary to reimburse the
amount of the CDSC. The following table sets forth the rates of the CDSC for
the shares of the Fund:
CONTINGENT DEFERRED
SALES CHARGE
(AS A PERCENTAGE
YEAR AFTER OF DOLLAR AMOUNT
PURCHASE MADE SUBJECT TO CHARGE)
------------- -------------------
Up to 1 year 2.50%
Up to 2 years 1.25%
After 2 full years None
Investments made by brokerage or investment advisory clients of Olstein &
Associates who maintain private brokerage or advisory accounts with Olstein &
Associates will not be subject to the CDSC described in this prospectus.
The Fund will satisfy redemption requests in cash to the fullest extent
feasible, so long as such payments would not, in the opinion of the Investment
Manager or the Board of Trustees, result in the necessity of the Fund selling
assets under disadvantageous conditions and to the detriment of the remaining
shareholders of the Fund. Pursuant to the Fund's Agreement and Declaration of
Trust, payment for shares redeemed may be made either in cash or in kind, or
partly in cash and partly in kind. However, the Fund has elected, pursuant to
Rule 18f-1 under the Act, to redeem its shares solely in cash up to the lesser
of $250,000 or 1% of the net asset value of the Fund, during any 90 day period
for any one shareholder. Payments in excess of this limit will also be made
wholly in cash unless the Board of Trustees believes that economic conditions
exist which would make such a practice detrimental to the best interests of
the Fund. Any portfolio securities paid or distributed in kind would be
valued as described under "Net Asset Value." In the event that an in-kind
distribution is made, a shareholder may incur additional expenses, such as the
payment of brokerage commissions, on the sale or other disposition of the
securities received from the Fund. In-kind payments need not constitute a
cross section of the Fund's portfolio. Where a shareholder has requested
redemption of all or a part of the shareholder's investment, and where the
Fund completes such redemption in kind, the Fund will not recognize gain or
loss for federal tax purposes, on the securities used to complete the
redemption but the shareholder will recognize gain or loss equal to the
difference between the fair market value of the securities received and the
shareholder's basis in the Fund shares redeemed.
Shares may be redeemed in one of the following ways:
REDEMPTION BY MAIL
Shares may be redeemed by submitting a written request for redemption to
the transfer agent at Olstein Financial Alert Fund, c/o Rodney Square
Management Corporation, P.O. Box 8987, Wilmington, Delaware 19899-9752. A
redemption order sent by over-night mail should be sent to Olstein Financial
Alert Fund, c/o Rodney Square Management Corporation, 1105 N Market Street,
3rd Floor, Wilmington, Delaware 19890-0001.
A written redemption request to the transfer agent must: (i) identify the
shareholder's account number; (ii) state the number of shares or dollar
amounts to be redeemed; and (iii) the name of the persons in whose name the
account is registered. Each registered owner must sign the redemption request
exactly as the shares in the account as registered. A signature may be
guaranteed by an eligible institution acceptable to the funds transfer agent,
such as a bank, broker, dealer, municipal security's dealer, government
security's dealer, credit union, national securities exchange, registered
securities association, clearing agency, or savings association. A redemption
request for amounts above $25,000, or redemption requests for which proceeds
are to be mailed somewhere other than the address of record, must be
accompanied by signature guarantees. Signatures must be guaranteed by an
"eligible guarantor institution" as defined in Rule 17Ad-15 under the
Securities Exchange Act of 1934. Eligible guarantor institutions include
banks, brokers, dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings
associations. Broker-dealers guaranteeing signatures must be a member of a
clearing corporation or maintain net capital of at least $100,000. Credit
unions must be authorized to issue signature guarantees. Signature guarantees
will be accepted from any eligible guarantor institution which participates in
a signature guarantee program. The transfer agent may require additional
supporting documents for redemptions made by corporations, executors,
administrators, trustees and guardians.
A redemption request will not be deemed to be properly received until the
transfer agent receives all required documents in proper form. Questions with
respect to the proper form for redemption requests should be directed to the
transfer agent at (800) 799-2113.
REDEMPTION BY TELEPHONE
Shareholders who have so indicated on the application, or have
subsequently arranged in writing to do so, may redeem shares in any amount up
to $50,000 by instructing the transfer agent by telephone at (800) 799-2113.
Redemption requests for amounts exceeding $50,000 must be made in writing. In
order to arrange for redemption by wire or telephone after an account has been
opened, or to change the bank or account designated to receive redemption
proceeds, a written request must be sent to the transfer agent at the address
listed above. A signature guarantee is required of all shareholders in order
to qualify for or to change telephone redemption privileges. The application
contains appropriate information and instructions and a form on which to make
the signature guarantee.
Neither the Fund nor any of its service contractors will be liable for
any loss or expense in acting upon any telephone instructions that are
reasonably believed to be genuine. In attempting to confirm that telephone
instructions are genuine, the Fund will use such procedures as are considered
reasonable, including requesting a shareholder to correctly state his or her
Fund account number, the name in which his or her account is registered, his
or her banking institution, bank account number and the name in which his or
her bank account is registered. To the extent that the Fund fails to use
reasonable procedures to verify the genuineness of telephone instructions, it
and/or its service contractors may be liable for any such instructions that
prove to be fraudulent or unauthorized.
During times of drastic economic or market changes, the telephone
redemption privilege may be difficult to implement. In the event that you are
unable to reach Rodney Square by telephone, you may make a redemption request
by mail. The Fund and Rodney Square each reserve the right to refuse a wire
or telephone redemption if it is believed advisable to do so. Procedures for
redeeming Fund shares by wire or telephone may be modified or terminated at
any time by the Fund.
The Fund also reserves the right to involuntarily redeem an investor's
account where the account is worth less than the minimum initial investment
required when the account is established, presently $1,000. The shares will
not be involuntarily redeemed solely due to market fluctuations and the effect
such fluctuations may have on an investor's account balance. (Any redemption
of shares from an inactive account established with a minimum investment may
reduce the account below the minimum initial investment, and could subject the
account to redemption initiated by the Fund.) The Fund will advise the
shareholder of such intention in writing at least sixty (60) days prior to
effecting such redemption, during which time the shareholder may purchase
additional shares in any amount necessary to bring the account back to the
minimum.
If the Trustees determine that it would be detrimental to the best
interest of the remaining shareholders of the Fund to make payment in cash,
the Fund may pay the redemption price in whole or in part by distribution in
kind of readily marketable securities, from the Fund, within certain limits
prescribed by the SEC. Such securities will be valued on the basis of the
procedures used to determine the net asset value at the time of the
redemption. If shares are redeemed in kind, the redeeming shareholder will
incur brokerage costs in converting the assets into cash.
RETIREMENT PLANS
Shares of the Fund are available for use in all types of tax-deferred
retirement plans such as IRA's, employer-sponsored defined contribution plans
(including 401(k) plans) and tax-sheltered custodial accounts described in
Section 403(b)(7) of the Internal Revenue Code. Qualified investors benefit
from the tax-free compounding of income dividends and capital gains
distributions. Application forms and brochures describing investments in the
Fund for retirement plans can be obtained from the Fund by calling Rodney
Square at (800) 799-2113. The following is a description of the types of
retirement plans for which the Fund's shares may be used for investment:
INDIVIDUAL RETIREMENT ACCOUNTS ("IRAS")
Individuals, who are not active participants (and, when a joint return is
filed, who do not have a spouse who is an active participant) in an employer
maintained retirement plan are eligible to contribute on a deductible basis to
an IRA account. The IRA deduction is also retained for individual taxpayers
and married couples with adjusted gross incomes not in excess of certain
specified limits. All individuals who have earned income may make
nondeductible IRA contributions to the extent that they are not eligible for a
deductible contribution. Income earned by an IRA account will continue to be
tax deferred. A special IRA program is available for employers under which
the employers may establish IRA accounts for their employees in lieu of
establishing tax qualified retirement plans. Known as SEP-IRA's (Simplified
Employee Pension-IRA), they free the employer of many of the recordkeeping
requirements of establishing and maintaining a tax qualified retirement plan
trust.
If you are entitled to receive a distribution from a qualified retirement
plan, you may rollover all or part of that distribution into the Fund's IRA.
Your rollover contribution is not subject to the limits on annual IRA
contributions. You can continue to defer Federal income taxes on your
contribution and on any income that is earned on that contribution.
WTC makes available its services as an IRA Custodian for each shareholder
account that is established as an IRA. For these services, WTC receives an
annual fee of $10.00 per account, which fee is paid directly to WTC by the IRA
shareholder. If the fee is not paid by the date due, shares of the Fund owned
by the shareholder in the IRA account will be redeemed automatically for
purposes of making the payment.
401(K) PLANS AND OTHER DEFINED CONTRIBUTION PLANS
The Fund's shares may be used for investment in defined contribution
plans by both self-employed individuals (sole proprietorships and
partnerships) and corporations who wish to use shares of the Fund as a funding
medium for a retirement plan qualified under the Internal Revenue Code. Such
plans typically allow investors to make annual deductible contributions, which
may be matched by their employers up to certain percentages based on the
investor's pre-contribution earned income.
403(B)(7) RETIREMENT PLANS
The Fund's shares are also available for use by schools, hospitals, and
certain other tax-exempt organizations or associations who wish to use shares
of the Fund as a funding medium for a retirement plan for their employees.
Contributions are made to the 403(b)(7) Plan as a reduction to the employee's
regular compensation. Such contributions, to the extent they do not exceed
applicable limitations (including a generally applicable limitation of $9,500
per year), are excludable from the gross income of the employee for Federal
Income tax purposes.
PERFORMANCE
Total return data may from time to time be included in advertisements
about the Fund. The Fund's total return may be calculated on an annualized
and aggregate basis for various periods (which periods will be stated in the
advertisement). Average annual return reflects the average percentage change
per year in value of an investment in the Fund. Aggregate total return
reflects the total percentage change over the stated period.
To help investors better evaluate how an investment in the Fund might
satisfy their investment objective, advertisements regarding the Fund may
compare the Fund's investment performance to appropriate market indexes such
as the Standard & Poor's 500 Composite Stock Price Index, the Standard &
Poor's 400 MidCap Index or the unweighted Value Line Index, which is composed
of over 1,600 stocks in the Value Line Investment survey. The Fund may also
compare its investment performance to appropriate mutual fund indexes; and the
Fund may advertise its ranking compared to other similar mutual funds as
reported by industry analysts such as Lipper Analytical Services, Inc.
All data will be based on the Fund's past investment results and does not
predict future performance. Investment performance, which will vary, is based
on many factors, including market conditions, the composition of the
investments in the Fund, and the Fund's operating expenses. Investment
performance also often reflects the risk associated with the Fund's investment
objective and policies. These factors should be considered when comparing the
Fund to other mutual funds and other investment vehicles.
INVESTMENT MANAGER THE
------------------ OLSTEIN
Olstein & Associates, L.P. FUNDS
105 Corporate Park Drive
White Plains, New York 10604
DISTRIBUTORS
------------
Rodney Square Distributors, Inc.
(Subsidiary of Wilmington Trust Company)
1100 N. Market Street
Wilmington, Delaware 19890-0001
Olstein & Associates, L.P.
105 Corporate Park Drive
White Plains, New York 10604
SHAREHOLDER SERVICES THE
-------------------- OLSTEIN
Rodney Square Management Corporation FINANCIAL
(Subsidiary of Wilmington Trust Company) ALERT
1100 N. Market Street FUND
Wilmington, Delaware 19890-0001
CUSTODIAN
---------
Wilmington Trust Company
1100 N. Market Street
Wilmington, Delaware 19890-0001
LEGAL COUNSEL
-------------
Stradley, Ronon, Stevens & Young
2600 One Commerce Square
Philadelphia, PA 19103-7098
INDEPENDENT AUDITORS PROSPECTUS
-------------------- AUGUST 18, 1995
Ernst & Young LLP
One North Charles Street
Baltimore, MD 21201
THE OLSTEIN FUNDS
THE OLSTEIN FINANCIAL ALERT FUND
- ------------------------------------------------------------------------------
SHAREHOLDER APPLICATION
- ------------------------------------------------------------------------------
Send Completed Application to:
THE OLSTEIN FINANCIAL ALERT FUND
C/O RODNEY SQUARE MANAGEMENT CORPORATION
P.O. BOX 8987
WILMINGTON, DE 19899-9752
- ------------------------------------------------------------------------------
1. ACCOUNT REGISTRATION - PLEASE PRINT
__ INDIVIDUAL OR JOINT ACCOUNT
- ------------------------------------------------------------------------------
First name Middle initial Last name Social security number (SSN)
- ------------------------------------------------------------------------------
Joint owner(s) (Joint ownership means "joint tenants with rights of
survivorship" unless otherwise specified.)
- ------------------------------------------------------------------------------
__ GIFT/TRANSFER TO A MINOR
- ------------------------------------------------------------------------------
Name of custodian (one only) Serving as Custodian for Minor's name (one only)
- -------------------------------------------------
State (minor's or custodian's state of residence)
- -------------------------------------------------
Uniform Gift/Transfer to Minors Act
- -------------------------------------------------
Minor's social security number
__ TRUST, CORPORATION, PARTNERSHIP OR OTHER ENTITY
- -------------------------------------------------
If corporation, resolution required from Board of Directors
- -------------------------------------------------
Taxpayer identification number (TIN)
- -------------------------------------------------
Name of each trustee (if any)
- -------------------------------------------------
Date of trust document (must be completed for trust registration)
- ------------------------------------------------------------------------------
2. ADDRESS
- ------------------------------------------------------------------------------
Street Address Daytime Phone (including Area Code)
(P.O. Box acceptable if street address is given)
- ------------------------------------------------------------------------------
City State Zip code Evening Phone (including Area Code)
I am a citizen of: __ U.S. __ __________________________________________
- ------------------------------------------------------------------------------
3. INITIAL INVESTMENT - MINIMUM $1,000
Enclosed is a check payable to The Olstein Financial Alert Fund for $_________
__ By Federal Funds wire:
- ------------------------------------------------------------------------------
Name of Bank Wire Amount ($) Wire Date
- ------------------------------------------------------------------------------
4. AUTOMATIC INVESTMENT PLAN
For information regarding the AUTOMATIC INVESTMENT PLAN see "Automatic
Investment Plan" (page 18) of the prospectus.
__ Check if you would like the Automatic Investment Plan application sent to
you.
- ------------------------------------------------------------------------------
5. DISTRIBUTIONS
All dividends and distributions will be automatically reinvested in additional
shares at net asset value unless otherwise indicated by checking the
appropriate box(es) under Optional Shareholder Privileges - Reinvestment
Options (Section 7 B).
- ------------------------------------------------------------------------------
6. SIGNATURE AND TAX CERTIFICATIONS
I have received and read the Prospectus for The Olstein Financial Alert Fund
and agree to its terms; I am of legal age. I understand that investment in
these shares involves investment risks, including possible loss of principal.
If a corporate customer, I certify that appropriate corporate resolutions
authorizing investment in The Olstein Financial Alert Fund have been duly
adopted.
I certify under penalties of perjury that the Social Security number or
taxpayer identification number shown above is correct. Unless the box below
is checked, I certify under penalties of perjury that I am not subject to
backup withholding because the Internal Revenue Service (a) has not notified
me that I am as a result of failure to report all interest or dividends, or
(b) has notified me that I am no longer subject to backup withholding. The
certifications in this paragraph are required from all nonexempt persons to
prevent backup withholding of 31% of all taxable distributions and gross
redemption proceeds under the federal income tax law.
__ Check here if you are subject to backup withholding.
- ------------------------------------------------------------------------------
Signature Date
- ------------------------------------------------------------------------------
Signature Date
Check one: __ Owner __ Trustee __ Custodian __ Other________
- ------------------------------------------------------------------------------
7. OPTIONAL SHAREHOLDER PRIVILEGES
A. TELEPHONE REDEMPTION AUTHORIZATION
I/We hereby authorize the use of cash transfers to effect redemptions of
shares from my/our account according to telephone instructions from any one of
the authorized signers listed in Section 7 C and to send the proceeds to
(CHECK ONE OR MORE OF THE FOLLOWING):
__ My address of record as indicated in Section 2 (must be $50,000 or less
and address must be established for a minimum of 60 days)
__ My bank as designated below
__ Wire proceeds to my bank via the Federal Funds Wire System (minimum
$1,000) as designated below
__ All of the above
- ------------------------------------------------------------------------------
Bank Name Bank Routing Transit #
- ------------------------------------------------------------------------------
Bank Account # (Checking/Savings) Account Holder
- ------------------------------------------------------------------------------
Bank Address: Street City State Zip
PLEASE ATTACH A VOIDED CHECK OF THE BANK ACCOUNT DESIGNATED ABOVE.
- ------------------------------------------------------------------
Telephone redemption by wire can be used only with financial institutions that
are participants in the Federal Reserve Bank Wire System. If the financial
institution you designate is not a Federal Reserve participant, telephone
redemption proceeds will be mailed to the named financial institution. In
either case, it may take a day or two, upon receipt for your financial
institution to credit your bank account with the proceeds, depending on its
internal crediting procedures.
- ------------------------------------------------------------------------------
B. OTHER REINVESTMENT OPTIONS - CHECK ONLY IF APPLICABLE
__ Do NOT reinvest my dividends __ Do NOT reinvest my capital gains
- ------------------------------------------------------------------------------
C. AUTHORIZATIONS
By electing the telephone redemption option, I appoint Rodney Square
Management Corporation ("RSMC"), my agent to redeem shares of any series of
The Olstein Funds when so instructed by telephone. This power will continue
if I am disabled or incapacitated. I understand that a request for telephone
redemption may be made by anyone, but the proceeds will be sent only to the
account address of record or to the bank listed above. Redemption requests
for proceeds in excess of $50,000 must be made in writing. By signing below,
I agree on behalf of myself, my assigns, and successors, not to hold RSMC and
any of its affiliates, or any series of The Olstein Funds responsible for
acting under the powers I have given RSMC. I also agree that all account and
registration information I have given will remain the same unless I instruct
RSMC otherwise in a written form, including a signature guarantee. If I want
to terminate this agreement, I will give RSMC at least ten days notice in
writing. If RSMC or The Olstein Funds want to terminate this agreement, they
will give me at least ten days notice in writing.
ALL OWNERS ON THE ACCOUNT MUST SIGN BELOW AND OBTAIN SIGNATURE GUARANTEE(S).
- ------------------------------------------------------------------------------
Signature of Invidual Owner Signature of Joint Owner
- ------------------------------------------------------------------------------
Signature of Corporate Officer, Trustee or Other - PLEASE INCLUDE TITLE
You must have your signature(s) guaranteed by an eligible institution
acceptable to the Fund's transfer agent, such as a bank, broker/dealer,
government securities dealer, credit union, national securities exchange,
registered securities association, clearing agency or savings association. A
Notary Public is not an acceptable guarantor.
SIGNATURE GUARANTEE(S) (stamp)
8. BROKER/DEALER USE ONLY - PLEASE PRINT
We hereby submit this application for the purchase of shares of the Fund
indicated in accordance with the terms of our selling agreement with Olstein &
Associates L.P., and with the prospectus for the Fund.
- ------------------------------------------------------------------------------
Broker/Dealer Name
- ------------------------------------------------------------------------------
Main Office Address
- ------------------------------------------------------------------------------
Branch # Rep# Representative Name
- ------------------------------------------------------------------------------
Branch Address Telephone Number (Including Area Code)
- ------------------------------------------------------------------------------
Authorized Signature, Securities Dealer Title
- ------------------------------------------------------------------------------
ACCEPTED: By Date
<PAGE>
THE OLSTEIN FINANCIAL ALERT FUND
a series of THE OLSTEIN FUNDS
105 Corporate Park Drive
White Plains, NY 10604
(914) 397-7565
STATEMENT OF ADDITIONAL INFORMATION DATED MARCH 29, 1996
The Olstein Funds (the "Trust") is an open-end management investment
company that currently offers one series of shares called The Olstein
Financial Alert Fund (the "Fund"). The Fund maintains a diversified portfolio
of investments selected in accordance with its investment objective and
policies.
Information about the Fund is included in a prospectus dated August 18,
1995, as supplemented on March 29, 1996 which may be obtained without charge
from the Fund by writing to the addresses or calling the telephone numbers
listed below. No investment in shares of the Fund should be made without
first reading the prospectus.
INVESTMENT MANAGER
AND DISTRIBUTOR DISTRIBUTOR
-------------------------- ---------------------------------------
Olstein & Associates, L.P. Rodney Square Distributors, Inc.
105 Corporate Park Drive (subsidiary of Wilmington Trust Company)
White Plains, NY 10604 1100 N. Market Street
(914) 397-7565 Wilmington, DE 19890-0001
(800) 799-2113
- ------------------------------------------------------------------------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND SHOULD BE
READ IN CONJUNCTION WITH THE TRUST'S PROSPECTUS DATED AUGUST 18, 1995, AS
SUPPLEMENTED ON MARCH 29, 1996. RETAIN THIS STATEMENT OF ADDITIONAL
INFORMATION FOR FUTURE REFERENCE.
- ------------------------------------------------------------------------------
TABLE OF CONTENTS
-----------------
PAGE
----
THE OLSTEIN FINANCIAL ALERT FUND-INVESTMENTS 1
PORTFOLIO TURNOVER 3
INVESTMENT RESTRICTIONS 3
INVESTMENT MANAGER 5
DISTRIBUTORS 6
ADMINISTRATOR 8
ALLOCATION OF PORTFOLIO BROKERAGE 8
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES 10
PURCHASE OF SHARES 10
REDEMPTIONS 10
OFFICERS AND TRUSTEES OF THE FUND 11
TAXATION 14
GENERAL INFORMATION 15
PERFORMANCE 16
FINANCIAL STATEMENTS 20
(i)
THE OLSTEIN FINANCIAL ALERT FUND - INVESTMENTS
The Fund seeks to achieve its objective by making investments selected in
accordance with the Fund's investment restrictions and policies. The Fund
will vary its investment strategy as described in the Fund's prospectus to
achieve its objective. This Statement of Additional Information contains
further information concerning the techniques and operations of the Fund, the
securities in which it will invest, and the policies it will follow.
COMMON STOCK
Common stock is defined as shares of a corporation that entitle the
holder to a pro rata share of the profits of the corporation, if any, without
a preference over any other shareholder or class of shareholders, including
holders of the corporation's preferred stock and other senior equity. Common
stock usually carries with it the right to vote and frequently an exclusive
right to do so. Holders of common stock also have the right to participate in
the remaining assets of the corporation after all other claims are paid,
including those of debt securities and preferred stock.
PREFERRED STOCK
Generally, preferred stock receives dividends prior to distributions on
common stock and usually has a priority of claim over common stockholders if
the issuer of the stock is liquidated. Unlike common stock, preferred stock
does not usually have voting rights; preferred stock, in some instances, is
convertible into common stock. In order to be payable, dividends on preferred
stock must be declared by the issuer's board of directors. Dividends on the
typical preferred stock are cumulative, causing dividends to accrue even if
not declared by the board of directors. There is, however, no assurance that
dividends will be declared by the boards of directors of issuers of the
preferred stocks in which the Fund invests.
CONVERTIBLE SECURITIES
Traditional convertible securities include corporate bonds, notes and
preferred stocks that may be converted into or exchanged for common stock, and
other securities that also provide an opportunity for equity participation.
These securities are generally convertible either at a stated price or a
stated rate (that is, for a specific number of shares of common stock or other
security). As with other fixed income securities, the price of a convertible
security to some extent varies inversely with interest rates. While providing
a fixed-income stream (generally higher in yield than the income derivable
from a common stock but lower than that afforded by a non-convertible debt
security), a convertible security also affords the investor an opportunity,
through its conversion feature, to participate in the capital appreciation of
the common stock into which it is convertible. As the market price of the
underlying common stock declines, convertible securities tend to trade
increasingly on a yield basis and so may not experience market value declines
to the same extent as the underlying common stock. When the market price of
the underlying common stock increases, the price of a convertible security
tends to rise as a reflection of the value of the underlying common stock. To
obtain such a higher yield, the Fund may be required to pay for a convertible
security an amount in excess of the value of the underlying common stock.
Common stock acquired by the Fund upon conversion of a convertible security
will generally be held for so long as the Investment Manager anticipates such
stock will provide the Fund with opportunities which are consistent with the
Fund's investment objectives and policies.
WARRANTS
The Fund may invest in warrants, in addition to warrants acquired in
units or attached to securities. A warrant is an instrument issued by a
corporation which gives the holder the right to subscribe to a specified
amount of the issuer's capital stock at a set price for a specified period of
time.
OPTIONS
The Fund will only purchase options for hedging purposes and not for
speculation. In this regard, the Fund will only purchase call options on
securities which are sold short by the Fund. Purchasing call options allows
the Fund to hedge against an increase in the price of securities that are sold
short by the Fund, by locking in a future purchase price. Such options on
securities will generally be held no longer than the Fund maintains a short
position in the underlying security. Call options on securities give the Fund
the right, but not the obligation, to buy (call) a security at a fixed price
during a specified period. When purchasing call options, the Fund pays a non-
refundable premium to the party who sells (writes) the option. Following the
purchase of a call option, the Fund may liquidate its position by entering
into a closing transaction in which the Fund sells an option of the same
series as previously purchased.
AMERICAN DEPOSITORY RECEIPTS
The Fund may make foreign investments through the purchase and sale of
sponsored or unsponsored American Depository Receipts ("ADRs"). ADRs are
receipts typically issued by a U.S. bank or trust company which evidence
ownership of underlying securities issued by a foreign corporation. The Fund
may purchase ADRs whether they are "sponsored" or "unsponsored." "Sponsored"
ADRs are issued jointly by the issuer of the underlying security and a
depository, whereas "unsponsored" ADRs are issued without participation of the
issuer of the deposited security. Holders of unsponsored ADRs generally bear
all the costs of such facilities and the depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited security or to pass through voting
rights to the holders of such receipts in respect of the deposited securities.
Therefore, there may not be a correlation between information concerning the
issuer of the security and the market value of an unsponsored ADR. ADRs may
result in a withholding tax by the foreign country of source which will have
the effect of reducing the income distributable to shareholders.
PORTFOLIO TURNOVER
Although the primary objective of the Fund is long term capital
appreciation, the Fund may sell securities to recognize gains or avoid
potential for loss. The Fund will sell any portfolio security (without regard
to the time it has been held) when the Investment Manager believes that market
conditions, credit-worthiness factors or general economic conditions warrant
such a step. The Fund presently estimates that the annualized portfolio
turnover rate generally will remain in the range of 75% to 100% during most
periods. High portfolio turnover involves additional transaction costs (such
as brokerage commissions) which are borne by the Fund, or adverse tax effects.
See "Dividends, Capital Gains Distributions and Taxes" in the prospectus.
INVESTMENT RESTRICTIONS
The Fund has adopted the Investment Restrictions set forth below in
addition to those discussed in the prospectus. Some of these restrictions are
fundamental policies of the Fund, and cannot be changed without the approval
of a majority of the outstanding voting securities. As provided in the
Investment Company Act of 1940 (the "1940 Act") a "vote of a majority of the
outstanding voting securities" means the affirmative vote of the lesser of
(i) more than 50% of the outstanding shares, or (ii) 67% or more of the shares
present at a meeting if more than 50% of the outstanding shares are
represented at the meeting in person or by proxy.
As a matter of fundamental policy, the Fund will not:
(a) as to 75% of the Fund's total assets, invest more than 5% of its
total assets in the securities of any one issuer (this limitation
does not apply to cash and cash items, or obligations issued or
guaranteed by the United States Government, its agencies or
instrumentalities, or securities of other investment companies.);
(b) purchase more than 10% of the voting securities, or more than 10% of
any class of securities, of any one issuer; for purposes of this
restriction, all outstanding fixed income securities of an issuer
are considered as one class;
(c) make short sales of securities in excess of 25% of the Fund's total
assets or purchase securities on margin except for such short-term
credits as are necessary for the clearance of transactions;
(d) purchase or sell commodities or commodity contracts;
(e) make loans of money or securities, except (i) by the purchase of
fixed income obligations in which the Fund may invest consistent
with its investment objective and policies; or (ii) by investment in
repurchase agreements (see "Investment Objectives and Policies");
(f) borrow money, except the Fund may borrow from banks (i) for
temporary or emergency purposes not in excess of 5% of the Fund's
net assets, or (ii) to meet redemption requests that might otherwise
require the untimely disposition of portfolio securities, in an
amount up to 33 1/3% of the value of the Fund's net assets at the
time the borrowing was made;
(g) pledge, hypothecate, mortgage or otherwise encumber its assets,
except in an amount up to 33 1/3% of the value of its net assets,but
only to secure borrowings authorized in the preceding restriction;
this restriction does not limit the authority of the Fund to
maintain accounts for short sales of securities;
(h) purchase the securities of any issuer, if, as a result, more than
10% of the value of a Fund's net assets would be invested in
securities that are subject to legal or contractual restrictions on
resale ("restricted securities"), in any combination of securities
for which there are no readily available market quotations, or in
repurchase agreements maturing in more than seven days;
(i) engage in the underwriting of securities except insofar as the Fund
may be deemed an underwriter under the Securities Act of 1933 in
disposing of a portfolio security;
(j) purchase or sell real estate or interests therein, although it may
purchase securities of issuers which engage in real estate
operations and may purchase and sell securities which are secured by
interests in real estate; therefore, the Fund may invest in publicly-
held real estate investment trusts or marketable securities of
companies which may represent indirect interests in real estate such
as real estate limited partnerships which are listed on a national
exchange, however, the Fund will not invest more than 10% of its
assets in any one or more real estate investment trusts; and
(k) invest more than 25% of the value of the Fund's total assets in one
particular industry, except for temporary defensive purposes; for
purposes of this limitation, utility companies will be divided
according to their services (e.g. gas, electric, water and
telephone) and each will be considered a separate industry; this
restriction does not apply to investments in U.S. Government
securities, and investments in certificates of deposit and bankers'
acceptances are not considered to the investments in the banking
industry.
Non-fundamental policies may be changed by the Board of Trustees, without
shareholder approval. As a matter of non-fundamental policy, the Fund will
not:
(a) invest in securities of any company if, to the knowledge of the
Fund, any officer or director of the Fund or the Investment Manager
owns more than 0.5% of the outstanding securities of such company
and such officers and directors (who own more than 0.5%) in the
aggregate own more than 5% of the outstanding securities of such
company;
(b) purchase oil, gas or other mineral leases, rights or royalty
contracts or exploration or development programs, except that the
Fund may invest in the securities of companies which invest in or
sponsor such programs;
(c) invest for the purpose of exercising control or management of
another company;
(d) invest in securities of any open-end investment company, except in
connection with a merger, reorganization or acquisition of assets
and except that the Fund may purchase securities of money market
mutual funds, but such investments in money market mutual funds may
be made only in accordance with the limitations imposed by the 1940
Act and the rules thereunder, as amended;
(e) invest more than 5% of its total assets in securities of companies
having a record, together with predecessors, of less than three
years of continuous operation; this limitation shall not apply to
U.S. Government securities; and
(f) invest more than 5% of its total assets in warrants, valued at the
lower of cost or market. No more than 2% of the Fund's net assets
may be invested in warrants which are not listed on the New York or
American Stock Exchanges.
So long as percentage restrictions are observed by the Fund at the time
it purchases any security, changes in values of particular Fund assets or the
assets of the Fund as a whole will not cause a violation of any of the
foregoing fundamental or non-fundamental restrictions.
INVESTMENT MANAGER
The Fund has entered into an investment management agreement with Olstein
& Associates, L.P. (the "Investment Manager"), effective as of August 18, 1995
(the "Investment Management Agreement"), for the provision of investment
advisory services, subject to the supervision and direction of the Fund's
Board of Trustees. Pursuant to the Investment Management Agreement, the Fund
is obligated to pay the Investment Manager a monthly fee equal to an annual
rate of 1% of the Fund's average daily net assets. This fee is higher than
that normally charged by funds with similar investment objectives. The
Investment Manager will voluntarily waive all or a portion of its management
fees if necessary, in an attempt to keep the total operating costs of the Fund
(excluding the items described below) within the most stringent limits
prescribed by any state in which the Fund's shares are offered for sale. The
most stringent current state restriction limits a fund's allowable aggregate
operating expenses (excluding interest, taxes, brokerage commissions,
extraordinary expenses such as litigation costs and distribution plan expenses
of up to 1% of average annual net assets) in any fiscal year to 2.5% of the
first $30 million of average annual net assets of the Fund, 2% of the next $70
million of average annual net assets of the Fund, and 1.5% of average annual
net assets of the Fund in excess of $100 million. The advisory fee payable to
the Investment Manager in connection with the services provided to the Fund
for the period September 21, 1995 (commencement of operations) through
February 29, 1996 amounted to $341,246.
The Investment Management Agreement is initially effective for two years.
The Agreement may be renewed after its initial term only so long as such
renewal and continuance are specifically approved at least annually by the
Board of Trustees or by vote of a majority of the outstanding voting
securities of the Fund, and only if the terms of the renewal thereof have been
approved by the vote of a majority of the Trustees of the Fund who are not
parties thereto or interested persons of any such party (the "Independent
Trustees"), cast in person at a meeting called for the purpose of voting on
such approval. The Agreement will terminate automatically in the event of its
assignment.
DISTRIBUTORS
Rodney Square Distributors, Inc., a wholly owned subsidiary of Wilmington
Trust Company ("RSD"), and Olstein & Associates, L.P. ("Olstein & Associates")
act as distributors of the Fund's shares under a distribution agreement (the
"Distribution Agreement") approved by the Board of Trustees of the Fund. RSD
and Olstein & Associates (together the "Distributors") will assist in the sale
and distribution of the Fund's shares as well as assisting with the servicing
of shareholder accounts.
Olstein & Associates has sole authority to enter into agreements with
Selling Dealers, and is responsible for the payment of any up-front
commissions and 12b-1 fees payable to Selling Dealers under selling dealer
agreements. RSD is responsible for evaluating and recommending prospective
selling dealers, maintaining its broker-dealer registration in all 50 states,
and assisting Rodney Square Management Corporation ("Rodney Square") and
Olstein & Associates in the preparation of reports relating to payments made
under the 12b-1 plan. The Distribution Agreement also provides that the
Distributors, in the absence of willful misfeasance, bad faith or gross
negligence in the performance of their duties or by reason of reckless
disregard of their obligations and duties under the agreement, will not be
liable to the Trust or its shareholders for losses arising in connection with
the sale of Fund shares.
The Distribution Agreement became effective as of August 18, 1995, and
will remain in effect for a period of two years. Thereafter, the Distribution
Agreement continues in effect from year to year as long as its continuance is
approved at least annually by a majority of the Trustees, including a majority
of the Independent Trustees or, by a vote of a majority of the outstanding
voting securities of the Fund. The Distribution Agreement terminates
automatically in the event of its assignment. The Distribution Agreement is
also terminable without payment of a penalty (i) as to the Distributors,
either together or individually, by the Fund (by vote of a majority of the
Independent Trustees or by a vote of the outstanding voting securities of the
Fund) on not less than sixty (60) days' written notice to the affected party;
or (ii) as to RSD, by Olstein & Associates upon sixty (60) days' written
notice to RSD and the Fund; or (iii) as to either Distributor's own
participation, by such Distributor upon sixty (60) days' written notice to the
affected parties.
DISTRIBUTION PLAN
As noted in the Fund's prospectus, the Fund has adopted a plan pursuant
to Rule 12b-1 under the 1940 Act (the "Plan") whereby the Fund may pay up to a
maximum of 1.00% per annum of its average daily net assets to compensate the
Distributors or other persons for expenses incurred in connection with the
distribution of the Fund's shares and the servicing of shareholder accounts.
The fees are paid on a monthly basis, based on the Fund's average daily net
assets. Included within the 1.00% maximum amount payable under the Plan is a
0.75% fee that may be paid to persons in compensation for expenses incurred in
the distribution and promotion of the Fund's shares, including but not limited
to, the printing of prospectuses and reports used for sales purposes, expenses
of preparation and printing of sales literature and related expenses,
advertisements, and other distribution-related expenses as well as any
distribution or service fees paid to securities dealers or others who have
executed a dealer agreement with the Underwriter. In addition, the Plan
includes a payment of 0.25% per annum of average daily net assets of the Fund
for shareholder servicing costs. Any expense of distribution in excess of
1.00% per annum will be borne by the Investment Manager without any
reimbursement or payment by the Fund. During the period September 21, 1995
(commencement of operations) through February 29, 1996, the Fund paid Olstein
& Associates a total of $341,246 for expenses incurred in connection with the
distribution of the Fund's shares and the servicing of shareholder accounts.
The Plan has been approved by the Fund's Board of Trustees, including all
of the Independent Trustees as defined in the 1940 Act. The Board of Trustees
has determined that a consistent cash flow resulting from the sale of new
shares is necessary and appropriate to meet redemptions and to take advantage
of buying opportunities without having to make unwarranted liquidations of
portfolio securities. The Board therefore believes that it will likely
benefit the Fund to have monies available for the direct distribution
activities of the Distributors in promoting the sale of the Fund's shares, and
to avoid any uncertainties as to whether other payments constitute
distribution expenses on behalf of the Fund. The Board of Trustees, including
the Independent Trustees, has concluded that in the exercise of their
reasonable business judgment and in light of their fiduciary duties, there is
a reasonable likelihood that the Plan will benefit the Fund and its
shareholders. The Plan must be renewed annually by the Fund's Board of
Trustees, including a majority of the Independent Trustees of the Fund and who
have no direct or indirect financial interest in the operation of the Plan,
cast in person at a meeting called for that purpose. It is also required that
the selection and nomination of such Trustees be done by the Independent
Trustees.
The Plan and any related agreement may not be amended to increase
materially the amounts to be spent for distribution expenses without approval
by a majority of the Fund's outstanding shares, and all material amendments to
the Plan or any related agreements shall be approved by a vote of the
Independent Trustees, cast in person at a meeting called for the purpose of
voting on any such amendment.
The Distributors are required to report in writing to the Board of
Trustees of the Fund, at least quarterly, on the amounts and purpose of any
payment made under the Plan, as well as to furnish the Board with such other
information as may reasonably be requested in order to enable the Board to
make an informed determination of whether the Plan should be continued.
ADMINISTRATOR
Rodney Square Management Corporation, 1100 North Market Street,
Wilmington, DE 19890-0001, provides certain administrative services to the
Fund pursuant to an Administrative Services Agreement.
Under the Administrative Services Agreement, the administrator: (1)
coordinates with the Custodian and monitors the custodial, transfer agency and
accounting services provided to the Fund; (2) coordinates with and monitors
any other third parties furnishing services to the Fund; (3) provides the Fund
with necessary office space, telephones and other communications facilities
and personnel competent to perform administrative and clerical functions; (4)
maintains such books and records of the Fund as may be required by applicable
federal or state law and supervises the maintenance of such books and records
if maintained by third parties; (5) prepares or supervises the preparation by
third parties of all federal, state and local tax returns and reports of the
Fund required by applicable law; (6) prepares and, after approval by the Fund,
files and arranges for the distribution of proxy materials and periodic
reports to shareholders of the Fund as required by applicable law; (7)
prepares and after approval by the Fund, arranges for the filing of such
registration statements and other documents with the Securities and Exchange
Commission (the "SEC") and other federal and state regulatory authorities as
may be required by applicable law; (8) reviews and submits to the officers of
the Fund for their approval invoices or other requests for payment of the
Funds expenses and instructs the Custodian to issue checks in payment thereof;
(9)assists the Fund in the preparation of documents and information needed for
meetings of the Board of Trustees of the Fund and prepares the minutes of
Board meetings; (10) monitors the Fund's compliance with applicable state
securities laws; (11) assists the Distributors with the review of advertising
literature and the submission of such advertising literature to the National
Association of Securities Dealers (the "NASD") for review and approval under
applicable NASD rules; (12) assists the Distributors with the preparation of
quarterly reports to the Board of Trustees relating to the distribution plan
adopted by the Fund pursuant to Rule 12b-1; and (13) takes such other action
with respect to the Fund as may be necessary in the opinion of the
Administrator to perform its duties under the agreement.
ALLOCATION OF PORTFOLIO BROKERAGE
The Fund's portfolio securities transactions are placed by the Investment
Manager. The objective of the Fund is to obtain the best available prices in
its portfolio transactions, taking into account the costs, promptness of
executions and other qualitative considerations. There is no pre-existing
commitment to place orders with any broker, dealer or member of an exchange.
The Investment Manager evaluates a wide range of criteria in seeking the most
favorable price and market for the execution of transactions, including the
broker's commission rate, execution capability, positioning and distribution
capabilities, back office efficiency, ability to handle difficult trades,
financial stability, and prior performance in serving the Investment Manager
and its clients. In transactions on equity securities and U.S. Government
securities executed in the over-the-counter market, purchases and sales are
transacted directly with principal market-makers except in those circumstances
where, in the opinion of the Investment Manager, better prices and executions
are available elsewhere.
The Investment Manager, when effecting purchases and sales of portfolio
securities for the account of the Fund, will seek execution of trades either
(i) at the most favorable and competitive rate of commission charged by any
broker, dealer or member of an exchange, or (ii) at a higher rate of
commission charges, if reasonable, in relation to brokerage and research
services provided to the Fund or the Investment Manager by such member,
broker, or dealer. Such services may include, but are not limited to, any one
or more of the following: information as to the availability of securities
for purchase or sale, statistical or factual information, or opinions
pertaining to investments. The Investment Manager may use research and
services provided to it by brokers and dealers in servicing all its clients,
including the Fund, and not all such services will be used by the Investment
Manager in connection with the Fund. Brokerage may also be allocated to
dealers in consideration of the Fund's share distribution but only when
execution and price are comparable to that offered by other brokers. During
the period September 21, 1995 (commencement of operations) through February
29, 1996, the Fund paid $156,717 in brokerage commissions.
The Board of Trustees has authorized the Investment Manager, which is a
member of the NASD and a broker-dealer registered under the Securities
Exchange Act of 1934, and certain other Fund affiliates, to act as brokers
which execute transactions for the Fund subject to procedures set forth in
Rule 17e-1 under the 1940 Act which include making quarterly reports to the
Board of Trustees regarding such brokerage transactions. As a result, in
order for such persons to effect any portfolio transactions for the Fund on an
exchange, the commissions, fees or other remuneration received must be
reasonable and fair compared to the commissions, fees or other remuneration
paid to other brokers in connection with comparable transactions involving
similar securities being purchased or sold on an exchange during a comparable
period of time. This standard would allow the Investment Manager or other
affiliated brokers to receive no more than the remuneration which would be
expected to be received by an unaffiliated broker in an arm's-length
transaction of a like size and nature.
The Investment Manager may from time to time provide investment
management services to individuals and other institutional clients, including
corporate pension plans, profit-sharing and other employee benefit trusts, and
other investment pools. There may be occasions on which other investment
advisory clients advised by the Investment Manager may also invest in the same
securities as the Fund. When these clients buy or sell the same securities at
substantially the same time, the Investment Manager may average the
transactions as to price and allocate the amount of available investments in a
manner which it believes to be equitable to each client, including the Fund.
On the other hand, to the extent permitted by law, the Investment Manager may
aggregate the securities to be sold or purchased for the Fund with those to be
sold or purchased for other clients managed by it in order to obtain lower
brokerage commissions, if any.
The Investment Manager is responsible for making the Fund's portfolio
decisions subject to instructions described in the prospectus. The Board of
Trustees may however impose limitations on the allocation of portfolio
brokerage.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of March 8, 1996, the following shareholders were known to own of
record more than 5% of the outstanding shares of the Fund:
NAME AND ADDRESS PERCENTAGE OWNERSHIP
---------------- --------------------
Albert Fried Jr. 6.64
40 Exchange Place
New York, NY 10005
PURCHASE OF SHARES
The shares of the Fund are continuously offered by the Distributors.
Orders will not be considered complete until receipt by Rodney Square and
acceptance by the Distributors of a completed account application form, and
receipt of payment for the shares purchased. Once the completed account
application and payment are received, orders will be confirmed at the next
determined net asset value (based upon valuation procedures described in the
prospectus) as of the close of business of the business day on which the
completed order is received. Completed orders received by the Fund after the
close of the business day will be confirmed at the next day's price.
REDEMPTIONS
Under normal circumstances you may redeem your shares at any time,
subject to any applicable contingent deferred sales charge ("CDSC").
Telephone redemption privileges are available, upon written request, for
amounts up to $50,000. The redemption price will be based upon the net asset
value per share next determined after receipt of the redemption request, less
the amount of any applicable CDSC, provided the redemption has been submitted
in the manner described below. The redemption price may be more or less than
your cost, depending upon the net asset value per share at the time of
redemption.
Payment for shares tendered for redemption is made by check within seven
days after tender in proper form, except that the Fund reserves the right to
suspend the right of redemption, or to postpone the date of payment upon
redemption beyond seven days, (i) for any period during which the New York
Stock Exchange (the "NYSE") is closed, or trading on the NYSE is restricted by
the SEC, (ii) for any period during which an emergency exists as determined by
the SEC as a result of which disposal of securities owned by the Fund is not
reasonably predictable or it is not reasonably practicable for the Fund to
fairly determine the value of its net assets, or (iii) for such other periods
as the SEC may by order permit for the protection of shareholders of the Fund.
Pursuant to the Fund's Agreement and Declaration of Trust, payment for
shares redeemed may be made either in cash or in-kind, or partly in cash and
partly in-kind. However, the Fund has elected, pursuant to Rule 18f-1 under
the 40 Act, to redeem its shares solely in cash up to the lesser of $250,000
or 1% of the net assets of the Fund, during any 90-day period for any one
shareholder. Payments in excess of this limit will also be made wholly in
cash unless the Board of Trustees believes that economic conditions exist
which would make such a practice detrimental to the best interests of the
Fund. Any portfolio securities paid or distributed in-kind would be valued as
described under "Net Asset Value." In the event that an in-kind distribution
is made, a shareholder may incur additional expenses, such as the payment of
brokerage commissions, on the sale or other disposition of the securities
received from the Fund. In-kind payments need not constitute a cross-section
of the Fund's portfolio. Where a shareholder has requested redemption of all
or a part of the shareholder's investment, and where the Fund completes such
redemption in-kind, the Fund will not recognize gain or loss for federal tax
purposes, on the securities used to complete the redemption but the
shareholder will recognize gain or loss equal to the difference between the
fair market value of the securities received and the shareholder's basis in
the Fund shares redeemed.
OFFICERS AND TRUSTEES OF THE FUND
The Trustees and principal executive officers and their principal
occupations for the past five years are listed below.
<TABLE>
<CAPTION>
Position and Office Principal Occupation
Name and Address Age with the Trust during the Past Five Years
- ---------------- --- ------------------- --------------------------
<S> <C> <C> <C>
Robert A. Olstein* 54 Chairman, President, Olstein & Associates,
105 Corporate Park Drive President and L.P., since 1994; President,
White Plains, NY 10604 Treasurer Olstein, Inc. since June, 1994;
Senior Vice President/Senior
Portfolio Manager, Smith Barney
Inc. from 1982 until 1994.
Neil C. Klarfeld* 50 Trustee Executive Vice President, Park
499 Park Avenue Tower Realty Corp, since 1979.
New York, NY 10022
Fred W. Lange 62 Trustee President and Portfolio Manager,
199 Stanley Avenue Lange Financial Services since
Staten Island, NY 10301 1972. Member of the Board of
Trustees of Wagner College.
John Lohr 50 Trustee Principal, Lockwood Financial
10 Valley Stream Parkway Group Ltd., since January 1996;
Malvern, PA 19355 Attorney, sole practitioner, from
1995 until 1996; Senior Vice
President, Smith Barney Inc.,
from 1987 until 1995.
D. Michael Murray 55 Trustee President, Murray, Sheer &
2715 M Street, NW, #300 Montgomery, since 1968.
Washington, DC 20007
Lawrence K. Wein 53 Trustee Managing Director of Global
55 Corporate Park Drive Transit Services, AT&T, Inc.,
Room 23D50 since 1990.
Bridgewater, NJ 08807
Erik K. Olstein* 28 Trustee, Secretary Vice President of Sales, Olstein
105 Corporate Park Drive and Assistant & Associates, L.P. since 1994;
White Plains, NY 10604 Treasurer Client Liaison, Smith Barney Inc.
from 1994 until 1995; Assistant
OTC Trader, Lehman Brothers Inc.
from 1993 until 1994; Officer and
Pilot, U.S. Navy from 1990 until
1993.
Louis C. Schwartz 28 Assistant Secretary Senior Fund Administrator, Rodney
1100 North Market Street Square Management Corporation
Wilmington, DE 19890 since 1995; Attorney, Mason,
Briody, Gallagher & Taylor from
1993 until 1995.
John J. Kelley 36 Assistant Treasurer Vice President, Rodney Square
1100 North Market Street Management Corporation since
Wilmington, DE 19890 1995; Assistant Vice President,
Rodney Square Management Corp.
from 1989 until 1995.
</TABLE>
- -----------------------
* Trustees who are "interested persons" as defined in the Investment
Company Act of 1940.
The officers conduct and supervise the daily business operations of the
Trust, while the Trustees, in addition to the functions set forth under
"Investment Manager," and "Distribution of Shares" review such actions and
decide on general policy. Compensation to officers and Trustees of the Trust
who are affiliated with the Investment Manager is paid by the Investment
Manager and not by the Trust. Information relating to the compensation to be
paid to the Trustees of the Trust is set forth below:
ESTIMATED AGGREGATE TOTAL COMPENSATION FROM
COMPENSATION FROM TRUST TRUST AND FUND COMPLEX
NAME AND POSITION FOR CURRENT FISCAL YEAR 1 PAID TO TRUSTEES
- ----------------- -------------------------- -----------------------
Robert A. Olstein*
Chairman, President
and Treasurer None None
Erik K. Olstein*
Secretary, Assistant
Treasurer, and Trustee None None
Neil C. Klarfeld*
Trustee None None
Fred W. Lange
Trustee $3500 $3500
John Lohr
Trustee $1750 $1750
D. Michael Murray
Trustee $1750 $1750
Lawrence K. Wein
Trustee $3500 $3500
- -----------------------
1 The interested Trustees of the Trust receive no compensation for their
service as Trustees. For their service as Trustees, the Independent
Trustees receive a $2,500 annual fee and $250 per meeting attended, as
well as reimbursement for expenses incurred in connection with attendance
at such meetings. The Trust has not completed a full fiscal year and, as
of the date of this statement of additional information, two (2) meetings
of the Board of Trustees were held at which all of the Trustees were
present. The amount in column 2 represents the estimated aggregate
compensation to be paid to each Trustee from the Trust for the current
fiscal year. It is expected that the Trust will hold four Trustee
meetings per year. On February 23, 1996 the Board of Trustees created
two (2) additional Trustee position on the Board and further appointed
John Lohr and D. Michael Murray to fill these newly created positions.
Both Mr. Lohr and Mr. Murray are considered to be Independent Trustees.
Their estimated average compensation is based on a fee of $1,250 for the
remainder of the year and on expected attendance at two (2) meetings for
the current fiscal year.
* Trustees who are "interested persons" as defined in the Investment
Company Act of 1940.
TAXATION
The Fund intends to qualify each year as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code").
In order to so qualify, a fund must, among other things (i) derive at
least 90% of its gross income from dividends, interest, payments with respect
to certain securities loans, gains from the sale of securities or foreign
currencies, or other income (including but not limited to gains from options,
futures or forward contracts) derived with respect to its business of
investing in such stock, securities or currencies; (ii) derive less than 30%
of its gross income from the sale or other disposition of stock or securities
or certain futures and options thereon held for less than three months ("short-
short gains"); (iii) distribute at least 90% of its dividends, interest and
certain other taxable income each year; and (iv) at the end of each fiscal
quarter maintain at least 50% of the value of its total assets in cash,
government securities, securities of other regulated investment companies, and
other securities of issuers which represent, with respect to each issuer, no
more than 5% of the value of a fund's total assets and 10% of the outstanding
voting securities of such issuer, and with no more than 25% of its assets
invested in the securities (other than those of the government or other
regulated investment companies) of any one issuer or of two or more issuers
which the Fund controls and which are engaged in the same, similar or related
trades and businesses.
To the extent the Fund qualifies for treatment as a regulated investment
company, it will not be subject to federal income tax on income and net
capital gains paid to shareholders in the form of dividends or capital gains
distributions.
An excise tax at the rate of 4% will be imposed on the excess, if any, of
the Fund's "required distributions" over actual distributions in any calendar
year. Generally, the "required distribution" is 98% of a fund's ordinary
income for the calendar year plus 98% of its capital gain net income
recognized during the one-year period ending on October 31 plus undistributed
amounts from prior years. The Fund intends to make distributions sufficient
to avoid imposition of the excise tax. Distributions declared by the Fund
during October, November or December to shareholders of record during such
month and paid by January 31 of the following year will be taxable to
shareholders in the calendar year in which they are declared, rather than the
calendar year in which they are received.
Shareholders will be subject to federal income taxes on distributions
made by the Fund whether received in cash or additional shares of the Fund.
Distributions of net investment income and net short-term capital gains, if
any, will be taxable to shareholders as ordinary income. Distributions of net
long-term capital gains, if any, will be taxable to shareholders as long-term
capital gains, without regard to how long a shareholder has held shares of the
Fund. A loss on the sale of shares held for six months or less will be
treated as a long-term capital loss to the extent of any long-term capital
gain dividend paid to the shareholder with respect to such shares. Dividends
eligible for designation under the dividends received deduction and paid by
the Fund may qualify in part for the 70% dividends received deduction for
corporations provided, however, that those shares have been held for at least
45 days.
The Fund will notify shareholders each year of the amount of dividends
and distributions, including the amount of any distribution of long-term
capital gains, and the portion of its dividends which may qualify for the 70%
deduction.
The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and Treasury regulations currently in effect. For the
complete provisions, reference should be made to the pertinent Code sections
and regulations. The Code and regulations are subject to change by
legislative or administrative action at any time, and retroactively.
Dividends and distributions also may be subject to state and local taxes.
Shareholders are urged to consult their tax advisers regarding specific
questions as to federal, state and local taxes.
The Fund intends to use the defensive technique of engaging in short
sales of stock owned by the Fund. (See "Investment Objectives and Policies"
and "Special Considerations and Risks" in the prospectus.) In the case of a
short sale, the taxable event occurs only when the stock is delivered to close
the short sale. If on the date of a short sale, substantially identical
property has been held by the Fund for not more than one year, or if
substantially identical property is acquired by the Fund after such short sale
and on or before the date of the closing thereof, then (i) any gain on the
closing of the short sale is considered short-term gain; and (ii) the holding
period of such substantially identical property is considered to begin on the
date of the closing of the short sale or the date of a sale or other
disposition of the property, if earlier. If on the date of such short sale
substantially identical property has been held by the Fund for more than one
year, any loss on the closing of such short sale is considered a long-term
loss even if the property delivered to close the short sale was held for not
more than one year. These rules may result in the elimination of the Fund's
holding period of stock or securities for purposes of the requirement that the
Fund must derive less than 30% of its gross income from the sale or
disposition of stock or securities held for less than three months. The
ability of the Fund to engage in short sales may be limited by application of
this 30% gross income requirement.
GENERAL INFORMATION
AUDITS AND REPORTS
The accounts of the Fund are audited each year by Ernst & Young LLP of
Baltimore, MD, independent auditors. Shareholders receive semi-annual and
annual reports of the Fund including the annual audited financial statements
and a list of securities owned.
CODE OF ETHICS
The Fund has adopted a Code of Ethics for certain access persons of
the Trust, which includes its Trustees and certain officers and employees of
the Trust and the Investment Manager. The Code of Ethics is designed to ensure
that Fund insiders act in the interest of the Fund and its shareholders with
respect to any personal trading of securities. Under the Code of Ethics,
access persons are prohibited from knowingly buying or selling securities
which are being purchased,sold or considered for purchase or sale by the Fund.
The Code of Ethics contains even more stringent investment restrictions and
prohibitions for insiders who participate in the Fund's investment decisions.
The Code of Ethics also contains certain reporting requirements and securities
trading clearance procedures.
PERFORMANCE
Current yield and total return may be quoted in advertisements,
shareholder reports or other communications to shareholders. Yield is the
ratio of income per share derived from the Fund's investments to a current
maximum offering price expressed in terms of percent. The yield is quoted on
the basis of earnings after expenses have been deducted. Total return is the
total of all income and capital gains paid to shareholders, assuming
reinvestment of all distributions, plus (or minus) the change in the value of
the original investment, expressed as a percentage of the purchase price.
Occasionally, the Fund may include its distribution rate in advertisements.
The distribution rate is the amount of distributions per share made by the
Fund over a 12-month period divided by the current maximum offering price.
The SEC rules require the use of standardized performance quotations or,
alternatively, that every non-standardized performance quotation furnished by
the Fund be accompanied by certain standardized performance information
computed as required by the SEC. Current yield and total return quotations
used by the Fund are based on the standardized methods of computing
performance mandated by the SEC. An explanation of those and other methods
used by the Fund to compute or express performance follows.
As indicated below, current yield is determined by dividing the net
investment income per share earned during the period by the maximum offering
price per share on the last day of the period and annualizing the result.
Expenses accrued for the period include any fees charged to all shareholders
during the 30-day base period. According to the SEC formula:
6
Yield = 2[(a-b +1) - 1]
---
cd
where:
a = dividends and interest earned during the period;
b = expenses accrued for the period (net of reimbursements);
c = the average daily number of shares outstanding during the period
that were entitled to receive dividends; and
d = the maximum offering price per share on the last day of the period.
As the following formula indicates, the average annual total return is
determined by multiplying a hypothetical initial purchase order of $1,000 by
the average annual compound rate of return (including capital
appreciation/depreciation and dividends and distributions paid and reinvested)
for the stated period less any fees charged to all shareholder accounts and
annualizing the result. The calculation assumes the maximum sales load is
deducted from the initial $1,000 purchase order and that all dividends and
distributions are reinvested at the public offering price on the reinvestment
dates during the period. The quotation assumes the account was completely
redeemed at the end of each one, five or ten-year periods and assumes the
deduction of all applicable charges and fees. According to the SEC formula:
n
P(1+T) = ERV
where:
P = a hypothetical initial payment of $1,000;
T = average annual total return;
n = number of years; and
ERV = ending redeemable value of a hypothetical $1,000 payment made at
the beginning of the one, five or ten-year periods, determined at
the end of the one, five or ten-year periods (or a fractional
portion thereof).
The Fund's total return for the period from September 21, 1995
(commencement of operations) through February 29, 1996 was 8.02%.
Regardless of the method used, past performance is not necessarily
indicative of future results, but is an indication of the return to
shareholders only for the limited historical period used.
COMPARISONS AND ADVERTISEMENTS
To help investors better evaluate how an investment in the Fund might
satisfy their investment objective, advertisements regarding the Fund may
discuss yield or total return for the Fund as reported by various financial
publications. Advertisements may also compare yield or total return to yield
or total return as reported by other investments, indices, and averages. The
following publications, indices, and averages may be used:
LIPPER MUTUAL FUND PERFORMANCE ANALYSIS
Lipper Mutual Fund Indices
CDA WIESENBERGER
MORNINGSTAR, INC.
NASDAQ Industrial Index
Standard & Poor's 500 Composite Stock Price Index
Standard & Poor's 400 Midcap Index
The Fund may also from time to time along with performance
advertisements, present its investments, as of a current date, in the form of
the "Schedule of Investments" included in the Semi-Annual and Annual Reports
to the shareholders of the Funds.
FINANCIAL STATEMENTS
Contents
JULY 3, 1995 FINANCIAL STATEMENTS
Statement of Assets and Liabilities
Notes to Statement of Assets and Liabilities
Report of Independent Auditors
CURRENT FINANCIAL STATEMENTS
Schedule of Investments
Statement of Assets and Liabilities
Statement of Operations
Statements of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
<PAGE>
THE OLSTEIN FUNDS
Statement of Assets and Liabilities
as of July 3, 1995
The Olstein Financial
Alert Fund
------------
Assets:
Cash $100,000
Deferred Organizational Costs 125,396
----------
Total Assets 225,396
Liabilities:
Payable to Investment Manager 125,396
---------
Net Assets $100,000
=========
Net Asset Value and Offering
Price Per share: ($100,000/10,000 outstanding
shares of beneficial interest, $0.001 par value
per share, unlimited authorization) $10.00
========
The accompanying notes are an integral part of the statement
of assets and liabilities.
<PAGE>
THE OLSTEIN FUNDS
Notes to Statement of Assets and Liabilities
July 3, 1995
1. ORGANIZATION:
The Olstein Funds (the "Trust") was organized on March 31, 1995 as a
Series Business Trust under the laws of the state of Delaware. The Trust
is registered under the Investment Company Act of 1940, as amended, as an
open-end, management investment company consisting of shares of one series
- The Olstein Financial Alert Fund (the "Fund"). The Trust has not
commenced operations except those related to organizational matters and
sale of an aggregate of 10,000 Olstein Financial Alert Fund shares
("initial shares") of beneficial interest to Olstein & Associates, L.P.,
(the "Investment Manager") on July 3, 1995.
2. ORGANIZATIONAL COSTS AND TRANSACTIONS WITH AFFILITES:
Organizational costs have been capitalized by the Trust and are being
amortized over sixty months commencing with operations. In the event any
of the initial shares of the Trust are redeemed by any holder thereof
during the period that the Trust is amortizing its organizational costs,
the redemption proceeds payable to the holder thereof by the Trust will be
reduced by the unamortized organizational costs in the same ratio as the
number of initial shares being redeemed bears to the number of initial
shares outstanding at the time of the redemption.
Certain trustees and officers of the Trust are also officers of the
Trust's Investment Manager. Such trustees and officers are paid no fees
by the Trust for serving as trustees or officers of the Trust.
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Trustees of The Olstein Funds
We have audited the accompanying statement of assets and liabilities of The
Olstein Funds (comprising The Olstein Financial Alert Fund) as of July 3,
1995. This statement of assets and liabilities is the responsibility of the
Fund's management. Our responsibility is to express an opinion on this
statement of assets and liabilities based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statement of assets and
liabilities is free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the statement
of assets and liabilities. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall statement of assets and liabilities presentation. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of The
Olstein Financial Alert Fund constituting The Olstein Funds at July 3, 1995,
in conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
Baltimore, Maryland
July 21, 1995
<PAGE>
THE OLSTEIN FINANCIAL ALERT FUND
- --------------------------------
SCHEDULE OF INVESTMENTS (UNAUDITED) -- FEBRUARY 29, 1996
- --------------------------------------------------------------------
VALUE
SHARES (NOTE 2)
------ --------
COMMON STOCK - 82.9%
FINANCE, INSURANCE & REAL ESTATE - 4.9%
INSURANCE CARRIERS - 1.3%
Vesta Insurance Group, Inc. ........ 40,000 $1,320,000
------------
STATE & NATIONAL BANKS - 3.6%
First Virginia Banks, Inc. ......... 25,800 1,028,775
JSB Financial, Inc. ................ 83,320 2,666,240
-----------
3,695,015
-----------
TOTAL FINANCE, INSURANCE
& REAL ESTATE ........................... 5,015,015
-----------
MANUFACTURING - 46.5%
CHEMICALS & ALLIED PRODUCTS - 3.6%
Learonal, Inc. .................... 97,300 2,602,775
RPM, Inc. ......................... 72,000 1,062,000
-----------
3,664,775
-----------
COMPUTER & OFFICE EQUIPMENT - 11.1%
Caere Corp. ....................... 35,140 289,905
Hewlett-Packard Co. ............... 15,500 1,561,625
Intel Corp. ....................... 39,400 2,317,213
International Business Machines
Corp. .......................... 14,000 1,716,750
Kulicke & Soffa Industries, Inc.*.. 80,000 1,660,000
LSI Logic Corp.* .................. 85,000 2,348,125
Lexmark International Group, Inc. . 17,200 389,150
Xerox Corp. ....................... 8,000 1,042,000
-----------
11,324,768
-----------
FURNITURE & FIXTURES - 2.6%
Ethan Allen Interiors, Inc. ....... 85,855 1,963,933
Juno Lighting, Inc. ............... 37,150 654,769
-----------
2,618,702
-----------
GLASS, CONCRETE & OTHER PRODUCTS - 0.3%
Medusa Corp. ...................... 10,400 304,200
-----------
IRON & STEEL - 1.0%
Kentucky Electric Steel, Inc. ..... 143,900 1,025,287
-----------
See notes to Financial Statements
<PAGE>
THE OLSTEIN FINANCIAL ALERT FUND
- --------------------------------
SCHEDULE OF INVESTMENTS (UNAUDITED) - CONTINUED -- FEBRUARY 29, 1996
- --------------------------------------------------------------------
MISC. ELECTRICAL MACHINERY, EQUIP. & SUPPLIES - 7.8%
Continental Circuits Corp.* ....... 30,000 $ 465,000
Park Electrochemical Corp. ........ 40,800 1,305,600
Silicon Valley Group, Inc. ........ 70,500 1,692,000
Teradyne, Inc.* ................... 90,000 1,833,750
Texas Instruments, Inc. ........... 54,500 2,718,187
-----------
8,014,537
-----------
MISC. INDUSTRIAL MACHINERY & EQUIP. - 2.3%
Augat, Inc. ....................... 125,600 2,213,700
Varco International, Inc.* ........ 10,000 118,750
-----------
2,332,450
-----------
MISCELLANEOUS MANUFACTURING INDUSTRIES - 3.2%
Anthony Industries, Inc. .......... 7,500 165,000
Brunswick Corp. ................... 81,005 1,852,989
Columbus McKinnon Corp. ........... 1,000 15,500
Redman Industries, Inc.* .......... 32,500 1,178,125
Revlon, Inc. (A Shares)* .......... 1,000 27,625
-----------
3,239,239
-----------
PAPER & PAPER PRODUCTS - 1.0%
Boise Cascade Corp. ............... 30,000 1,057,500
-----------
PHARMACEUTICAL PREPARATIONS - 1.8%
Merck & Co., Inc. ................. 20,115 1,332,619
Warner-Lambert Co. ................ 5,000 494,375
-----------
1,826,994
-----------
PRINTING & PUBLISHING - 1.3%
Bowne & Co., Inc. ................. 25,700 481,875
Washington Post Co. (B Shares) .... 3,108 895,104
-----------
1,376,979
-----------
TELECOMMUNICATIONS EQUIPMENT - 0.9%
Rogers Corp. ...................... 42,610 900,136
-----------
TEXTILES & APPAREL - 1.6%
Barry (R.G.) Corp.* ............... 47,600 749,700
Garan, Inc. ....................... 25,000 381,250
Liz Claiborne, Inc. ............... 16,445 515,962
-----------
1,646,912
-----------
See notes to Financial Statements
<PAGE>
THE OLSTEIN FINANCIAL ALERT FUND
- --------------------------------
SCHEDULE OF INVESTMENTS (UNAUDITED) - CONTINUED -- FEBRUARY 29, 1996
- --------------------------------------------------------------------
TRANSPORTATION EQUIPMENT - 8.0%
Coachmen Industries, Inc. ......... 30,000 $ 821,250
Echlin, Inc. ...................... 34,500 1,168,688
Fleetwood Enterprises, Inc. ....... 91,275 2,453,016
General Motors Corp. .............. 59,605 3,054,756
Harley-Davidson, Inc. ............. 18,505 663,867
-----------
8,161,577
-----------
TOTAL MANUFACTURING ...................... 47,494,056
------------
MINING - 2.4%
CRUDE PETROLEUM & NATURAL GAS - 2.4%
Giant Industries Inc. ............ 28,700 333,638
Helmerich & Payne, Inc. .......... 40,345 1,351,557
Wiser Oil Co. .................... 62,370 756,236
-----------
TOTAL MINING ............................. 2,441,431
-----------
SERVICES - 11.3%
AMUSEMENT & RECREATION SERVICES - 1.2%
Walt Disney Co. .................. 18,145 1,188,497
-----------
BUSINESS SERVICES - 6.6%
Catalina Marketing Corp. ......... 8,895 666,013
The Olsten Corp. ................. 35,510 1,624,583
Sotheby's Holdings, Inc. (A Shares) 298,995 4,447,551
-----------
6,738,147
-----------
COMPUTER SERVICES - 2.6%
Santa Cruz Operation, Inc.* ...... 77,500 552,188
Sun Microsystems, Inc. ........... 40,000 2,100,000
-----------
2,652,188
-----------
MEDICAL & HEALTH SERVICES - 0.9%
Healthcare Compare Corp. ......... 20,000 975,000
-----------
TOTAL SERVICES ........................... 11,553,832
-----------
TRANSPORTATION, COMMUNICATION, ELECTRIC &
SANITATION - 8.6%
COMMUNICATION & BROADCASTING - 0.3%
BET Holdings, Inc. (A Shares)*.... 11,000 339,625
-----------
See notes to Financial Statements
<PAGE>
THE OLSTEIN FINANCIAL ALERT FUND
- --------------------------------
SCHEDULE OF INVESTMENTS (UNAUDITED) - CONTINUED -- FEBRUARY 29, 1996
- --------------------------------------------------------------------
TRANSPORTATION - 8.3%
AMR Corp.* ....................... 12,000 $1,053,000
Continental Airlines, Inc.
(B Shares)* .................... 32,000 1,536,000
Delta Air Lines, Inc. ............ 30,285 2,362,230
Florida East Coast Industries, Inc. 13,305 1,160,861
Tidewater, Inc. .................. 20,000 682,500
UAL Corp. ........................ 9,000 1,607,625
-----------
8,402,216
-----------
TOTAL TRANSPORTATION, COMMUNICATION,
ELECTRIC & SANITATION ................... 8,741,841
-----------
WHOLESALE & RETAIL TRADE - 9.2%
MISCELLANEOUS RETAIL STORES - 3.1%
Home Shopping Network, Inc. ...... 300,300 3,153,150
-----------
RETAIL DEPARTMENT STORES - 5.2%
Strawbridge & Clothier (A Shares). 55,200 1,462,800
Urban Outfitters, Inc. ........... 80,120 2,003,000
Wet Seal, Inc. ................... 209,335 1,857,848
-----------
5,323,648
-----------
WHOLESALE FOOTWEAR - 0.9%
Nike, Inc. (B Shares) ............ 13,880 900,465
-----------
TOTAL WHOLESALE & RETAIL TRADE ........... 9,377,263
-----------
TOTAL COMMON STOCK
(COST $80,269,139) ........................ 84,623,438
-----------
MUTUAL FUNDS - 0.2%
Scudder Managed Cash Fund
(COST $231,151).................. 231,151 231,151
-----------
PAR VALUE
(000) (NOTE 2)
----- --------
U.S. GOVERNMENT AGENCY
OBLIGATIONS - 14.0%
Federal Farm Credit Banks,
5.13%, 03/07/96 ................. 3,760 $3,756,785
Federal Home Loan Banks,
5.12%, 03/04/96 ................. 3,595 3,593,466
Federal National Mortgage Assoc.,
5.13%, 03/01/96 ................. 2,450 2,450,000
Federal National Mortgage Assoc.,
5.12%, 03/06/96 ................. 1,345 1,344,044
Federal National Mortgage Assoc.,
5.14%, 03/12/96 ................. 3,200 3,194,974
-----------
See notes to Financial Statements
<PAGE>
THE OLSTEIN FINANCIAL ALERT FUND
- --------------------------------
SCHEDULE OF INVESTMENTS (UNAUDITED) - CONTINUED -- FEBRUARY 29, 1996
- --------------------------------------------------------------------
TOTAL U.S. GOVERNMENT
AGENCY OBLIGATIONS
(COST $14,339,269) ................. $14,339,269
-----------
COMMERCIAL PAPER - 3.4%
American Express Co., 5.25%,
03/05/96 ........................ 1,000 1,000,000
Exxon Corp., 5.25%, 03/05/96 ..... 1,000 1,000,000
Ford Motor Credit Co., 5.25%,
03/05/96 ........................ 1,441 1,440,817
-----------
TOTAL COMMERCIAL PAPER
(COST $3,440,817) .................. 3,440,817
-----------
TOTAL INVESTMENTS
(COST $98,280,376) - 100.5% ....... 102,634,675
DEPOSITS WITH BROKERS & CUSTODIAN BANK FOR SECURITIES
SOLD SHORT - 0.8%
General Motors Corp. ............. 16,265 833,581
RECEIVABLES FROM BROKERS FOR
SECURITIES SOLD SHORT - 0.7% ....... 763,104
SECURITIES SOLD SHORT
(PROCEEDS $763,104) - (0.7)% ....... (762,998)
OTHER ASSETS AND LIABILITIES,
NET - (1.3)% ....................... (1,360,509)
-----------
NET ASSETS - 100.0% .......................... $102,107,853
============
SCHEDULE OF SECURITIES
SOLD SHORT - (0.7)%
MANUFACTURING - (0.1)%
Carrington Laboratories, Inc. .... 2,000 $57,250
Hondo Oil and Gas Co. ............ 8,000 90,000
-----------
TOTAL MANUFACTURING ...................... 147,250
-----------
SERVICES - (0.2)%
Discovery Zone, Inc. ............. 40,000 38,748
Netcom On-Line Communication
Services, Inc.* ................. 1,000 23,250
Organogenesis, Inc. .............. 4,000 61,500
Psinet, Inc.* .................... 1,000 10,125
Spyglass, Inc.* .................. 1,000 23,125
Uunet Technoloies, Inc. .......... 1,500 45,000
-----------
TOTAL SERVICES ........................... 201,748
-----------
See notes to Financial Statements
<PAGE>
THE OLSTEIN FINANCIAL ALERT FUND
- --------------------------------
SCHEDULE OF INVESTMENTS (UNAUDITED) - CONTINUED -- FEBRUARY 29, 1996
- --------------------------------------------------------------------
WHOLESALE & RETAIL TRADE - (0.4)%
BABY SUPERSTORE INC.* ............ 2,000 $ 84,250
Boston Chicken, Inc. ............. 6,000 215,250
Reebok International Ltd. ........ 1,000 26,375
Starbucks Corp. .................. 5,000 88,125
-----------
TOTAL WHOLESALE & RETAIL TRADE ........... 414,000
-----------
TOTAL SECURITIES SOLD SHORT
(PROCEEDS $763,104).................. $ 762,998
===========
*Non-income producing security.
See notes to Financial Statements
<PAGE>
THE OLSTEIN FINANCIAL ALERT FUND
- --------------------------------
STATEMENT OF ASSETS AND LIABILITIES -- FEBRUARY 29, 1996
- ------------------------------------------------------------------------------
ASSETS:
Investments in securities (identified cost $98,280,376 )
(Note 2).................................................. $102,634,675
Deposits with brokers and custodian bank for securities sold
short (identified cost $729,892) (Note 3)................. 833,581
Receivable from brokers for securities sold short........... 763,104
Receivable for investments sold............................. 497,873
Receivable for Fund shares sold............................. 58,922
Dividends and interest receivable........................... 105,844
Prepaid insurance expenses.................................. 12,791
Unamortized organization costs.............................. 114,334
-----------
Total assets............................................ 105,021,124
-----------
LIABILITIES:
Securities sold short (proceeds: $763,104) (Note 3)......... 762,998
Payable for investments purchased........................... 1,654,941
Due to Investment Manager (Note 4).......................... 80,103
Other accrued expenses (Note 4)............................. 415,229
------------
Total liabilities....................................... 2,913,271
------------
NET ASSETS.................................................. $102,107,853
============
NET ASSETS CONSIST OF:
Accumulated net investment loss............................. $(220,901)
Net unrealized appreciation of investments (Note 3)......... 4,457,988
Net unrealized appreciation on securities sold short
(Note 3).................................................. 106
Accumulated net realized gain from investments.............. 2,714,245
Accumulated net realized loss from securities sold short.... (41,318)
Shares of beneficial interest............................... 9,462
Additional paid-in capital.................................. 95,188,271
------------
NET ASSETS, for 9,462,204 shares outstanding................ $102,107,853
============
NET ASSET VALUE and offering price per share
($102,107,853/9,462,204 outstanding shares
of beneficial interest, $0.001 par value per share)....... $10.79
======
See notes to Financial Statements
<PAGE>
THE OLSTEIN FINANCIAL ALERT FUND
- --------------------------------
STATEMENT OF OPERATIONS -- FEBRUARY 29, 1996
- ------------------------------------------------------------------------------
FOR THE PERIOD
SEPTEMBER 21, 1995 (dagger)
THROUGH
FEBRUARY 29, 1996
(UNAUDITED)
---------
INVESTMENT INCOME:
Income:
Dividends............................................... $373,214
Interest................................................ 261,252
----------
634,466
----------
EXPENSES:
Management fee (Note 4).................................. 341,246
Distribution expenses (Note 4)........................... 341,246
Custodian fee (Note 4)................................... 13,477
Transfer Agent fee (Note 4).............................. 16,709
Administration fee (Note 4).............................. 43,477
Accounting fee (Note 4).................................. 19,084
Trustees' fees and expenses (Note 4)..................... 3,671
Amortization of organizational expenses (Note 2)......... 11,062
Legal.................................................... 15,057
Audit.................................................... 5,828
Shareholders reports..................................... 7,272
Registration and filing fees............................. 18,121
Dividend expense for securities sold short............... 135
Miscellaneous............................................ 18,982
----------
Total expenses........................................... 855,367
----------
Net investment loss...................................... (220,901)
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investment transactions............. 2,815,966
Net realized loss on securities sold short............... (41,318)
Net unrealized appreciation of investments during
the period............................................. 4,457,988
Net unrealized appreciation on securities sold short
during the period...................................... 106
----------
Net gain on investments.................................. 7,232,742
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..... $7,011,841
==========
(dagger) Commencement of Operations.
See notes to Financial Statements
<PAGE>
THE OLSTEIN FINANCIAL ALERT FUND
- --------------------------------
STATEMENT OF CHANGES IN NET ASSETS -- FEBRUARY 29, 1996
- ------------------------------------------------------------------------------
FOR THE PERIOD
SEPTEMBER 21, 1995 (dagger)
THROUGH
FEBRUARY 29, 1996
(UNAUDITED)
----------
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment loss..................................... $(220,901)
Net realized gain on investment transactions............ 2,815,966
Net realized loss on securities sold short.............. (41,318)
Net unrealized appreciation of investments during
the period............................................. 4,457,988
Net unrealized appreciation on securities sold short
during the period...................................... 106
------------
Net increase in net assets resulting from operations..... 7,011,841
------------
Distributions to shareholders from:
Net realized gains ($0.011 per share)................... (101,721)
------------
Increase in net assets from Fund share transactions
(Note 5)............................................... 95,097,733
------------
Increase in net assets................................... 102,007,853
NET ASSETS:
Beginning of period..................................... 100,000
------------
End of period........................................... $102,107,853
============
(dagger) Commencement of Operations.
See notes to Financial Statements
<PAGE>
THE OLSTEIN FINANCIAL ALERT FUND
- --------------------------------
STATEMENT OF FINANCIAL HIGHLIGHTS -- FEBRUARY 29, 1996
- ------------------------------------------------------------------------------
The following table includes selected data for a share outstanding of the Fund
throughout the period and other performance information derived from the
financial statements. It should be read in conjunction with the financial
statements and notes thereto.
FOR THE PERIOD
SEPTEMBER 21, 1995 (dagger)
THROUGH
FEBRUARY 29, 1996
(UNAUDITED)
----------
NET ASSET VALUE - BEGINNING OF PERIOD... $10.00
----------
Investment Operations:
Net investment loss.................... (0.02)
Net realized and unrealized gain
on investments........................ 0.82
Total from investment operations.... 0.80
DISTRIBUTIONS:
From net investment income............. --
From net realized gain on investments.. (0.01)
----------
Total distributions............. (0.01)
----------
NET ASSET VALUE - END OF PERIOD........ $10.79
==========
TOTAL RETURN (double dagger)........... 8.02%
Ratios (to average net assets)/Supplemental Data:
Expenses.............................. 2.51%*
Net investment loss................... (0.65)%*
Portfolio turnover rate................ 138.33%*
Average commision rate paid............ $0.0594
Net assets at end of period
(000 omitted)......................... $102,108
* Annualized.
(dagger) Commencement of Operations.
(double dagger) The total return for the period has not been annualized.
See notes to Financial Statements
<PAGE>
THE OLSTEIN FINANCIAL ALERT FUND
- --------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- -----------------------------------------------------------------
1. DESCRIPTION OF FUND. The Olstein Financial Alert Fund
(the "Fund") is the first series of The Olstein Funds
(the "Trust"), a Delaware business trust organized on
March 31, 1995. The Fund is registered under the
Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end diversified management investment
company. The primary investment objective of the Fund is
long-term capital appreciation with a secondary objective
of income. The Fund commenced investment operations on
September 21, 1995.
2. SIGNIFICANT ACCOUNTING POLICIES. The following is a
summary of the significant accounting policies of the
Fund:
SECURITY VALUATION. The Fund's securities, except short-
term investments with remaining maturities of 60 days or
less, are valued at their market value as determined by
their last sale price in the principal market in which
these securities are normally traded. Lacking any sales,
securities will be valued at the mean between the closing
bid and ask price. Short-term investments with remaining
maturities of 60 days or less are valued at amortized
cost, which approximates market value, unless the Fund's
Board of Trustees determines that this does not represent
fair value. The value of all other securities is
determined in good faith under the direction of the Board
of Trustees.
FEDERAL INCOME TAXES. The Fund intends to qualify for
treatment as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986 and to
distribute all of its taxable income to its shareholders.
Therefore, no federal income tax provision is required.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions of net
investment income and net realized gains will be made
annually in December. An additional distribution may be
made to the extent necessary to avoid the payment of a 4%
excise tax.
DEFERRED ORGANIZATION COSTS. Costs incurred by the Fund
in connection with its organization have been deferred
and are being amortized using the straight-line method
over a five-year period beginning on the date that the
Fund commenced operations. In the event that any of the
initial shares of the Fund are redeemed during the
amortization period by any holder thereof, the redemption
proceeds will be reduced by any unamortized organization
expenses in the same proportion as the number of initial
shares being redeemed bears to the number of initial
shares outstanding at the time of such redemption.
<PAGE>
THE OLSTEIN FINANCIAL ALERT FUND
- --------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED
- -----------------------------------------------------------------
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL
STATEMENTS. The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions
that effect the reported amounts of assets and
liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those
estimates.
OTHER. Investment security transactions are accounted
for on a trade date basis. The Fund uses the specific
identification method for determining realized gain or
loss on investments for both financial and federal income
tax reporting purposes.
3. PURCHASES AND SALES OF INVESTMENT SECURITIES. During the
period ended February 29, 1996, purchases and sales of
investment securities (excluding securities sold short
and short-term investments) aggregated as follows:
Purchases $60,292,756
Sales 40,963,953
The following balances for the Fund are as of February 29, 1996:
COST FOR NET TAX BASIS TAX BASIS GROSS TAX BASIS GROSS
FEDERAL INCOME UNREALIZED UNREALIZED UNREALIZED
TAX PURPOSES APPRECIATION APPRECIATION DEPRECIATION
-------------- ------------- -------------- ---------------
$99,425,074 $4,043,182 $7,712,856 $3,669,674
SHORT SALES. Short sales are transactions in which the
Fund sells a security it does not own, in anticipation of
a decline in the market value of that security. To
complete such a transaction, the Fund must borrow the
security to deliver to the buyer upon the short sale; the
Fund then is obligated to replace the security borrowed
by purchasing it in the open market at some later date.
The Fund will incur a loss if the market price of the
security increases between the date of the short sale and
the date on which the Fund replaces the borrowed
security. The Fund will realize a gain if the security
declines in value between those dates. All short sales
must be fully collateralized. The Fund maintains the
collateral in a segregated account consisting of cash,
equity securities and/or U.S. Government securities
sufficient to collateralize the sales proceeds of its
short positions. The Fund limits the value of short
positions to 25% of the Fund's net assets. At February
29,1996, the Fund had 0.07% of its net assets in short
<PAGE>
THE OLSTEIN FINANCIAL ALERT FUND
- --------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED
- -----------------------------------------------------------------
positions. For the period ended February 29,1996, the
cost of investments purchased to cover short sales and
the proceeds from investments sold short were $562,253
and $520,935, respectively.
4. INVESTMENT MANAGEMENT FEE AND OTHER TRANSACTIONS WITH
AFFILIATES. The Fund employs Olstein & Associates, L.P.
("Olstein & Associates" or the "Investment Manager") as
the investment manager. Pursuant to an investment
management agreement with the Fund, the Investment
Manager selects investments and supervises the assets of
the Fund in accordance with the investment objective,
policies and restrictions of the Fund, subject to the
supervision and direction of the Board of Trustees. For
its services, the Investment Manager is paid a monthly
fee at the annual rate of 1.00% of the Fund's average
daily net assets. For the period ended February 29,
1996, the Fund incurred investment management fees of
$341,246.
Rodney Square Management Corp. ("Rodney Square"), a
wholly owned subsidiary of Wilmington Trust Company
("WTC"), which is wholly owned by Wilmington Trust
Corporation, a publicly held bank holding company, serves
as Administrator to the Fund pursuant to an
Administration Agreement with the Trust on behalf of the
Fund. As Administrator, Rodney Square is responsible for
services such as budgeting, maintaining federal and state
registration for the Fund's shares, financial reporting,
compliance monitoring and corporate management. For the
services provided, Rodney Square receives a monthly
administration fee at an annual rate based upon the
average daily net assets of the Fund as follows: 0.15%
of average daily net assets up to $50 million (subject to
a minimum annual fee of $50,000); 0.10% of average daily
net assets over $50 million up to $100 million; 0.07% of
average daily net assets over $100 million up to $200
million; and 0.05% of average daily net assets over $200
million. The administration fee paid to Rodney Square
for the period ended February 29, 1996 amounted to
$43,477.
Rodney Square also serves as Transfer and Dividend Paying
Agent for the Fund pursuant to a Transfer Agent Agreement
with the Trust dated August 18,1995. WTC serves as
Custodian of the assets of the Trust.
Rodney Square Distributors, Inc. ("RSD"), a wholly owned
subsidiary of WTC, and Olstein & Associates (together the
"Distributors") have entered into a distribution and
underwriting agreement with the Fund dated August
18,1995, under which the Distributors act as co-
underwriters to engage in activities designed to assist
<PAGE>
THE OLSTEIN FINANCIAL ALERT FUND
- --------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED
- -----------------------------------------------------------------
the Fund in securing purchasers for its shares. The Fund
has adopted a Shareholder Servicing and Distribution Plan
pursuant to Rule 12b-1 under the 1940 Act (the "12b-1
Plan"). Amounts paid under the 12b-1 Plan may compensate
the Distributors or others for the activities in the
promotion and distribution of the Fund's shares and for
shareholder servicing. The total amount which the Fund
will pay under the 12b-1 Plan is 1.00% per annum of the
Fund's average daily net assets. For the period ended
February 29, 1996, fees paid by the Fund pursuant to the
12b-1 Plan amounted to $341,246.
Rodney Square determines the net asset value per share of
the Fund and provides accounting services to the Fund
pursuant to an Accounting Services Agreement with the
Fund. For the accounting services provided, Rodney
Square receives an annual fee of $40,000, plus an amount
based on the average daily net assets of the Fund as
follows: 0.03% of average daily net assets over $50
million up to $100 million; 0.02% of average daily net
assets over $100 million up to $250 million; and 0.01% of
average daily net assets of the Fund over $250 million.
Certain trustees and officers of the Trust are also
officers of the Trust's Investment Manager. Such
trustees and officers are paid no fees by the Trust for
serving as trustees or officers of the Trust.
5. FUND SHARES. At February 29, 1996, there was an
unlimited number of shares of beneficial interest, $0.001
par value, authorized. The following table summarizes
the activity in shares of the Fund:
<PAGE>
THE OLSTEIN FINANCIAL ALERT FUND
- --------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED
- -----------------------------------------------------------------
FOR THE PERIOD
SEPTEMBER 21,1995 (dagger)
THROUGH
FEBRUARY 29, 1996
(UNAUDITED)
-----------
SHARES AMOUNT
------ ------
Shares sold......................... 9,552,849 $96,117,666
Shares issued to shareholder
in reinvestment of dividends..... 9,956 101,256
Shares redeemed..................... (110,601) (1,121,189)
--------- -----------
Net increase........................ 9,452,204 $95,097,733
===========
Shares outstanding:
Beginning of period................. 10,000
End of period....................... 9,462,204
=========
(dagger) Commencement of Operations.
<PAGE>
INVESTMENT MANAGER
Olstein & Associates, L.P.
105 Corporate Park Drive
White Plains, NY 10604
DISTRIBUTORS
Rodney Square Distributors, Inc.
(subsidiary of Wilmington Trust Company)
1105 N. Market Street
Wilmington, DE 19890-0001
Olstein & Associates, L.P.
105 Corporate Park Drive
White Plains, NY 10604
SHAREHOLDER SERVICES
Rodney Square Management Corporation
(subsidiary of Wilmington Trust Company)
1100 N. Market Street
Wilmington, DE 19890-0001
CUSTODIAN
Wilmington Trust Company
Rodney Square North
1100 N. Market Street
Wilmington, DE 19890-0001
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103-7098
INDEPENDENT AUDITORS
Ernst & Young LLP
One North Charles Street
Baltimore, MD 21201
<PAGE>
THE OLSTEIN FUNDS
PART C
OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS:
(a) Financial Statements
SEE "FINANCIAL STATEMENTS" IN
PART B OF THIS REGISTRATION STATEMENT.
(b) Exhibits:
(1) Agreement and Declaration of Trust.
(2) By-laws.
(3) Voting Trust Agreement:
Not Applicable.
(4) Specimen copy of each security to be issued by
the registrant.
Not Applicable.
(5) Investment Management Agreement between Registrant
and Olstein & Associates, L.P. dated August 18, 1995.
(6) (a) Distribution Agreement between the Registrant
and the Distributors (Rodney Square
Distributors,Inc. and Olstein &
Associates, L.P.) dated August 18, 1995.
(b) Mutual Fund Dealer Agreement between Olstein
& Associates, L.P. and Smith Barney Inc. dated
September 21, 1995.
(c) Form of Selling Dealer Agreement between
Olstein & Associates, L.P. and Selected Dealers.
(d) Selling Dealer Agreement between Olstein &
Associates, L.P. and Bear, Stearns Securities
Corp. dated November 30, 1995.
(7) Bonus, Profit Sharing and Pension Contracts:
Not Applicable.
(8) Custody Agreements:
(a) Custody Agreement between the Registrant and
Wilmington Trust Company dated August 18, 1995.
(b) Special Custody Account Agreement between the
Registrant and Bear, Stearns Securities Corp.
dated August 18, 1995.
<PAGE>
(9) Other Material Contracts:
(a) Administration Agreement between the Registrant
and Rodney Square Management Corporation
dated August 18, 1995.
(b) Accounting Services Agreement between the
Registrant and Rodney Square Management Corporation
dated August 18, 1995.
(c) Transfer Agency Agreement between the Registrant
and Rodney Square Management Corporation
dated August 18, 1995.
(10) Opinion and Consent of Counsel as to the Legality of
the Securities to be Issued.
TO BE FILED BY THE TRUST ON A YEARLY BASIS ALONG WITH
ITS RULE 24f-2 NOTICE.
(11) Consent of Independent Auditors.
(12) All Financial Statements Omitted from Item 23.
Not Applicable.
(13) Letter of Understanding Relating to Initial Capital.
(14) Model Plans.
Not Applicable.
(15) Plan of Distribution Pursuant to Rule 12b-1 under the
Investment Company Act of 1940 for The Olstein
Financial Alert Fund effective as of August 18, 1995.
(16) Schedule for Computation of Performance Quotations.
(17) Financial Data Schedule.
(18) Plan Pursuant to Rule 18f-3.
Not Applicable.
(19) Trustees Power of Attorney.
ITEM 25. PERSONS CONTROLLED OR UNDER COMMON CONTROL WITH THE REGISTRANT:
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES:
The number of record holders of securities of the
Registrant as of March 8, 1996 is as follows:
(1) (2)
TITLE OF CLASS NUMBER OF RECORD HOLDERS
The Olstein Financial Alert Fund 457
<PAGE>
ITEM 27. INDEMNIFICATION:
Under the terms of the Delaware Business Trust Act and
the Registrant's Agreement and Declaration of Trust and By-Laws,
no officer or trustee of the Fund shall have any liability to the
Fund or its shareholders for damages, except to the extent such
limitation of liability is precluded by Delaware law, the
Agreement and Declaration of Trust, or the By-Laws.
Subject to the standards and restrictions set forth in
the Fund's Agreement and Declaration of Trust, the Delaware
Business Trust Act, Section 3817, permits a business trust to
indemnify any trustee, beneficial owner, or other person from and
against any claims and demands whatsoever. Section 3803 protects
a Trustee, when acting in such capacity, from liability to any
person other than the business trust or beneficial owner for any
act, omission, or obligation of the business trust or any trustee
thereof, except as otherwise provided in the Agreement and
Declaration of Trust.
The Agreement and Declaration of Trust provides that
the Trustees shall not be liable for any neglect or wrong-doing
of any officer, agent, employee, manager or underwriter of the
Fund, nor shall any Trustee be responsible for the act or
omission of any other Trustee. Subject to the provisions of the
By-Laws, the Fund may indemnify to the fullest extent each
Trustee and officer of the Fund acting in such capacity, except
that no provision in the Agreement and Declaration of Trust shall
be effective to protect or purport to protect and indemnify any
Trustee or officer of the Fund from or against any liability to
the Fund or any shareholder to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of his office.
The By-Laws provide indemnification for each Trustee
and officer who is a party or is threatened to be made a party to
any proceeding, by reason of service in such capacity, to the
fullest extent, if it is determined that the Trustee or officer
acted in good faith and reasonably believed: (a) in the case of
conduct in his official capacity as an agent of the Fund, that
his conduct was in the Fund's best interests and (b) in all other
cases, that his conduct was at least not opposed to the Fund's
best interests and (c) in the case of a criminal proceeding, that
he had no reasonable cause to believe the conduct of that person
was unlawful. However, there shall be no indemnification for any
liability arising by reason of willful misfeasance, bad faith,
gross negligence, or the reckless disregard of the duties
involved in the conduct of the Trustee's or officer's office.
Further, no indemnification shall be made:
(a) In respect of any proceeding as to which any
Trustee or officer of the Fund shall have been
adjudged to be liable on the basis that personal
benefit was improperly received by him, whether or
not the benefit resulted from an action taken in
the person's official capacity; or
<PAGE>
(b) In respect of any proceeding as to which any
Trustee or officer of the Fund shall have been
adjudged to be liable in the performance of that
person's duty to the Fund, unless and only to the
extent that the court in which that action was
brought shall determine upon application that in
view of all the relevant circumstances of the
case, that person is fairly and reasonably
entitled to indemnity for the expenses which the
court shall determine; however, in such case,
indemnification with respect to any proceeding by
or in the right of the Fund or in which liability
shall have been adjudged by reason of the
disabling conduct set forth in the preceding
paragraph shall be limited to expenses; or
(c) Of amounts paid in settling or otherwise disposing
of a proceeding, with or without court approval,
or of expenses incurred in defending a proceeding
which is settled or otherwise disposed of without
court approval, unless the required court approval
set forth in the By-Laws is obtained.
In any event, the Fund shall indemnify each officer and
Trustee against reasonable expenses incurred in connection with
the successful defense of any proceeding to which each such
officer or Trustee is a party by reason of service in such
capacity, provided that the Board of Trustees, including a
majority who are disinterested, non-party trustees, also
determines that such officer or Trustee was not liable by reason
of willful misfeasance, bad faith, gross negligence, or reckless
disregard of his or her duties of office. The Fund shall advance
to each officer and Trustee who is made a party to a proceeding
by reason of service in such capacity the expenses incurred by
such person in connection therewith, if (a) the officer or
Trustee affirms in writing that his good faith belief that he has
met the standard of conduct necessary for indemnification, and
gives a written undertaking to repay the amount of advance if it
is ultimately determined that he has not met those requirements,
and (b) a determination that the facts then known to those making
the determination would not preclude indemnification.
The Trustees and officers of the Fund are entitled and
empowered under the Declaration of Trust and By-Laws, to the
fullest extent permitted by law, to purchase errors and omissions
liability insurance with assets of the Fund, whether or not the
Fund would have the power to indemnify him against such liability
under the Declaration of Trust or By-Laws.
Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to Trustees,
officers, the underwriter or control persons of the Registrant
pursuant to the foregoing provisions, the Registrant has been
informed that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as
expressed in that Act and is, therefore, unenforceable.
See also Item 32.
<PAGE>
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT MANAGER:
In addition to acting as the investment manager for the
Fund, Olstein & Associates, L.P. provides investment counsel,
advice and brokerage services to institutional and individual
investors. Prior to the formation of the Fund and Olstein &
Associates, L.P., Robert A. Olstein provided similar services to
clients in association with Smith Barney, where he was a Senior
Vice President/Senior Portfolio Manager.
Item 29. PRINCIPAL UNDERWRITERS:
(a) (i) Rodney Square Distributors, Inc. ("RSD"), the
co-underwriter and co-distributor for the Registrant's
securities, currently acts as principal underwriter for
the following entities:
The Rodney Square Fund
The Rodney Square International Securities Fund, Inc.
The Rodney Square Multi-Manager Fund
The Rodney Square Tax-Exempt Fund
The Rodney Square Strategic Fixed-Income Fund
Heitman Real Estate Fund-Heitman/PRA Institutional Class
Kiewit Mutual Fund
The Dracena Funds, Inc.
1838 Investment Advisors Funds
The Homestate Group
(ii) Olstein & Associates, L.P. ("Olstein"), the
co-underwriter for the Registrant's securities, does
not act as principal underwriter for any other
investment companies, but acts as the investment
adviser for the Fund.
(b) The tables below set forth certain information as to the
Distributors' Directors, Officers, Partners and Control Persons:
(i) RSD Table
POSITIONS AND POSITIONS AND
NAME AND OFFICES WITH OFFICES WITH
BUSINESS ADDRESS UNDERWRITER THE REGISTRANT
- ---------------- ----------- --------------
Jeffrey O. Stroble President, Secretary None
1105 North Market St. Treasurer & Director
Wilmington, DE 19890
Martin L. Klopping Director None
1100 North Market St.
Wilmington, DE 19890
Cornelius G. Curran Vice President None
1105 North Market St.
Wilmington, DE 19890
<PAGE>
(ii) Olstein, Inc. is the General Partner of the Underwriter
(Olstein & Associates, LP). The following is a list of
the individuals who hold positions with Olstein, Inc. or
are limited partners of Olstein.
POSITIONS AND POSITIONS AND
NAME AND OFFICES WITH OFFICES WITH
BUSINESS ADDRESS UNDERWRITER THE REGISTRANT
- ---------------- ----------- --------------
Robert A. Olstein Olstein, Inc., Chairman and
105 Corporate Park Drive President President
White Plains, New York 10604
Erik K. Olstein Olstein, Inc., Trustee,
105 Corporate Park Drive Vice President- Secretary and
White Plains, New York 10604 Sales Assistant Treasurer
Michael Luper Olstein, Inc., None
105 Corporate Park Drive Vice President-
White Plains, New York 10604 Finance
Olstein, Inc. General Partner None
105 Corporate Park Drive
White Plains, New York 10604
Cash Asmussen Limited Partner None
P.O. Box 1861
Laredo, TX 78044-1861
Nick Awad Limited Partner None
144 East 44th Street
New York, NY 10017
Dr. Lewis Bobroff Limited Partner None
4 Catherine Court
Suffern, NY 10901-3104
Harry & Roberta Boltin Limited Partner None
6 Laveta Place
Nyack, NY 10960-1604
<PAGE>
POSITIONS AND POSITIONS AND
NAME AND OFFICES WITH OFFICES WITH
BUSINESS ADDRESS UNDERWRITER THE REGISTRANT
- ---------------- ----------- --------------
James Calabrese Limited Partner None
13 Hendrie Lane
Riverside, CT 06878-1810
Catherine Corless Limited Partner None
44 Halley Drive
Pomona, NY 10970-2003
Patrick Donaghy Limited Partner None
15 East 26th Street
New York, NY 10010-1501
Anita Fleishman Limited Partner None
11 West 69th Street
New York, NY 10023
Albert Fried & Co. Limited Partner None
40 Exchange Place
New York, NY 10005-2701
David Holzer Limited Partner None
633 Third Avenue
New York, NY 10017
Neil Klarfeld Limited Partner Trustee
29 Tamarack Lane
Pomona, NY 10970-2006
Dr. David Langerman Limited Partner None
2 Perth Court
West Nyack, NY 10994-1307
Douglas & Diane LeGrande Limited Partner None
97 Birch Hill Road
Weston, CT 06883-1735
<PAGE>
POSITIONS AND POSITIONS AND
NAME AND OFFICES WITH OFFICES WITH
BUSINESS ADDRESS UNDERWRITER THE REGISTRANT
- ---------------- ----------- --------------
Rochelle Nechin Limited Partner None
128 Prospect Avenue
Douglaston, NY 11363-1338
Joan Olstein Limited Partner None
115-7 Hilltop Road
Kinnelon, NJ 07405
Judith Pomerantz Limited Partner None
2 White Pine Drive
Sterlington, NY 10974
Marilyn Portnoy Limited Partner None
7 White Birch Drive
Pomona, NY 10970-3403
Dr. Gary Roebuck Limited Partner None
43 Halley Drive
Pomona, NY 10970-2001
Marie Romano Limited Partner None
447 Windham Court North
Wyckoff, NJ 07481-3472
John Vazzana Limited Partner None
40 Exchange Place
New York, NY 10005-2701
Ronald Weiss Limited Partner None
950 Park Avenue
New York, NY 10028
Edwin & Harilyn Zimmerman Limited Partner None
13652 Rivoli Drive
Palm Beach Gardens, FL 33410
(c) Not applicable.
Item 30. LOCATION OF ACCOUNTS AND RECORDS:
Each account, book or other document required
to be maintained by Section 31(a) of the Investment
Company Act of 1940 (the "40 Act") and Rules (17 CFR
270-31a-1 to 31a-3) promulgated thereunder, is
maintained by the Registrant at 105 Corporate Park
Drive, White Plains, NY 10604, except for those
maintained by the Registrant's custodian Wilmington
Trust Company, 1100 North Market Street, Wilmington, DE
19890 and the Registrant's Administrator, Transfer,
Redemption, Dividend Disbursing and Accounting Agent,
Rodney Square Management Corporation, Rodney Square
North, 1100 North Market Street, Wilmington, DE 19890.
<PAGE>
Item 31. MANAGEMENT SERVICES:
There are no management related service
contracts not discussed in Part A or Part B.
Item 32. UNDERTAKINGS
(a) Not Applicable.
(b) Not Applicable.
(c) The Registrant hereby undertakes to furnish
each person to whom a prospectus is delivered
with a copy of the Registrant's latest annual
report for the fiscal year ended August 31, upon
request and without charge.
(d) Registrant hereby undertakes, if requested to do
so by the holders of at least 10% of the
Registrant's outstanding shares, to call a meeting
of shareholders for the purpose of voting upon
the question of removal of a trustee or trustees
and to assist in communication with other share-
holders, as directed by Section 16(c) of the 1940
Act.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940 the Registrant certifies that
it meets all of the requirements for effectiveness of this
Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and the Investment Company Act of 1940 has
duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereto duly authorized, in the City
of White Plains, and State of New York, on the 22nd day of March,
1996.
THE OLSTEIN FUNDS
By: /s/ Robert A. Olstein
Robert A. Olstein, Chairman
and President
Pursuant to the requirement of the Securities Act of 1933, this
Registration Statement has been signed below on by the following
persons in the capacities and on the date indicated:
SIGNATURE TITLE DATE
/s/ Robert A. Olstein Chairman, President March 22, 1996
Robert A. Olstein and Treasurer
/s/ Erik K. Olstein Trustee, Secretary March 22, 1996
Erik K. Olstein and Assistant Treasurer
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Neil C. Klarfeld* Trustee March 22, 1996
Fred W. Lange* Trustee March 22, 1996
John Lohr* Trustee March 22, 1996
D. Michael Murray* Trustee March 22, 1996
Lawrence K. Wein* Trustee March 22, 1996
* By: /s/ Robert A. Olstein
Robert A. Olstein, Attorney-in-Fact
(Pursuant to Power of Attorney filed herewith)
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File No. 33-91770
File No.811-9038
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM N-1A
POST-EFFECTIVE AMENDMENT NO. 1
TO REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
AND
AMENDMENT NO. 2
TO REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
THE OLSTEIN FUNDS
<PAGE>
EXHIBIT INDEX
Item 24(b) EXHIBIT PAGE NO.
EXHIBIT NO. [EDGAR Exhibit]
1 Agreement and Declaration of Trust EX-1
2 By-laws EX-2
5 Investment Management Agreement between EX-5
Registrant and Olstein & Associates, L.P.
dated August 18, 1995.
6(a) Distribution Agreement between the EX-6.A
Registrant and the Distributors (Rodney
Square Distributors, Inc. and Olstein &
Associates, L.P.) dated August 18, 1995.
6(b) Mutual Fund Dealer Agreement between EX-6.B
Olstein & Associates, L.P. and Smith
Barney Inc. dated September 21, 1995.
6(c) Form of Selling Dealer Agreement between EX-6.C
Olstein & Associates, L.P. and Selected
Dealers.
6(d) Selling Dealer Agreement between Olstein & EX-6.D
Associates, L.P. and Bear, Stearns
Securities Corp. dated November 30, 1995.
8(a) Custody Agreement between the Registrant EX-8.A
and Wilmington Trust Company dated
August 18, 1995.
8(b) Special Custody Account Agreement between EX-8.B
the Registrant and Bear, Stearns
Securities Corp. dated August 18, 1995.
9(a) Administration Agreement between the EX-9.A
Registrant and Rodney Square Management
Corporation dated August 18, 1995.
9(b) Accounting Services Agreement between the EX-9.B
Registrant and Rodney Square Management
Corporation dated August 18, 1995.
9(c) Transfer Agency Agreement between the EX-9.C
Registrant and Rodney Square Management
Corporation dated August 18, 1995.
11 Consent of Indepent Auditors. EX-11
13 Letter of Understanding Relating to EX-13
Initial Capital.
15 Plan of Distribution Pursuant to Rule EX-15
12b-1 under the Investment Company Act
of 1940 for the Olstein Financial Alert
Fund effective as of August 18, 1995.
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16 Schedule for Computation of Performance EX-16
Quotations.
17 Financial Data Schedule. EX-17
19 Trustees Power of Attorney. EX-19
Exhibit 1
Effective as of
March 31, 1995
AGREEMENT AND DECLARATION OF TRUST
of
The Olstein Funds
a Delaware Business Trust
Principal Place of Business:
105 Corporate Park Drive
White Plains, NY 10604
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I.................................................. 1
Name and Definitions.................................. 1
Section 1. Name................................. 1
Section 2. Definitions.......................... 1
(a) Trust.................................. 1
(b) Trust Property......................... 1
(c) Trustees............................... 1
(d) Shares................................. 1
(e) Shareholder............................ 1
(f) Person................................. 2
(g) 1940 Act............................... 2
(h) Commission and Principal Underwriter... 2
(I) Declaration of Trust................... 2
(j) By-Laws................................ 2
(k) Interested Person...................... 2
(l) Investment Manager..................... 2
(m) Series................................. 2
ARTICLE II................................................. 2
Purpose of Trust...................................... 2
ARTICLE III................................................ 2
Shares................................................ 2
Section 1. Division of Beneficial Interest...... 2
Section 2. Ownership of Shares.................. 3
Section 3. Investments in the Trust............. 3
Section 4. Status of Shares and Limitation
of Personal Liability.......................... 3
Section 5. Power of Board of Trustees
to Change Provisions Relating to Shares........ 4
Section 6. Establishment and Designation
of Shares...................................... 4
(a) Assets Held with Respect to a
Particular Series.................... 4
(b) Liabilities Held with Respect to a
Particular Series.................... 5
(c) Dividends, Distributions, Redemptions,
and Repurchases...................... 5
(d) Voting................................. 5
(e) Equality............................... 6
(f) Fractions.............................. 6
(g) Exchange Privilege..................... 6
(h) Combination of Series.................. 6
(i) Elimination of Series.................. 6
ARTICLE IV................................................. 6
The Board of Trustees................................. 6
(i)
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PAGE
Section 1. Number, Election and Tenure.......... 6
Section 2. Effect of Death, Resignation, etc.
of a Trustee................................... 7
Section 3. Powers............................... 7
Section 4. Payment of Expenses by the Trust..... 10
Section 5. Ownership of Assets of the Trust..... 10
Section 6. Service Contracts.................... 10
ARTICLE V.................................................. 11
Shareholders' Voting Powers and Meetings.............. 11
Section 1. Voting Powers........................ 11
Section 2. Voting Power and Meetings............ 12
Section 3. Quorum and Required Vote............. 12
Section 4. Action by Written Consent............ 12
Section 5. Record Dates......................... 12
ARTICLE VI................................................. 13
Net Asset Value, Distributions, and Redemptions....... 13
Section 1. Determination of Net Asset Value,
Net Income, and Distributions.................. 13
Section 2. Redemptions and Repurchases.......... 13
Section 3. Redemptions at the Option of the
Trust.......................................... 13
Section 4. Transfer of Shares................... 14
ARTICLE VII................................................ 14
Compensation and Limitation of Liability.............. 14
Section 1. Compensation of Trustees............. 14
Section 2. Indemnification and Limitation of
Liability...................................... 14
Section 3. Trustee's Good Faith Action, Expert
Advice, No Bond or Surety...................... 14
Section 4. Insurance............................ 15
ARTICLE VIII............................................... 15
Miscellaneous......................................... 15
Section 1. Liability of Third Persons Dealing
with Trustees.................................. 15
Section 2. Termination of Trust or Series....... 15
Section 3. Merger and Consolidation............. 15
Section 4. Amendments........................... 16
Section 5. Filing of Copies, References,
Headings....................................... 16
Section 6. Applicable Law....................... 16
Section 7. Provisions in Conflict with Law or
Regulations.................................... 16
Section 8. Business Trust Only.................. 17
Section 9. Use of the Name "Olstein"............ 17
(ii)
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AGREEMENT AND DECLARATION OF TRUST
OF
THE OLSTEIN FUNDS
WHEREAS, this AGREEMENT AND DECLARATION OF TRUST is made and entered into
as of the date set forth below by the Trustees named hereunder for the purpose
of forming a Delaware business trust in accordance with the provisions
hereinafter set forth,
NOW, THEREFORE, the Trustees hereby direct that a Certificate of Trust be
filed with the Office of the Secretary of State of the State of Delaware and
do hereby declare that the Trustees will hold IN TRUST all cash, securities
and other assets which the Trust now possesses or may hereafter acquire from
time to time in any manner and manage and dispose of the same upon the
following terms and conditions for the pro rata benefit of the holders of
Shares in this Trust.
ARTICLE I.
Name and Definitions
SECTION 1. NAME. This trust shall be known as "The Olstein Funds" 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 2. DEFINITIONS. Whenever used herein, unless otherwise required
by the context or specifically provided:
(a) The "Trust" refers to the Delaware business trust established by
this Agreement and Declaration of Trust, as amended from time to
time;
(b) The "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account
of the Trust;
(c) "Trustees" refers to the persons who have signed this Agreement and
Declaration of Trust, so long as they continue in office in
accordance with the terms hereof, and all other persons who may from
time to time be duly elected or appointed to serve on the Board of
Trustees in accordance with the provisions hereof, and reference
herein to a Trustee or the Trustees shall refer to such person or
persons in their capacity as trustees hereunder;
(d) "Shares" means the shares of beneficial interest into which the
beneficial interest in the Trust shall be divided from time to time
and includes fractions of Shares as well as whole Shares;
(e) "Shareholder" means a record owner of outstanding Shares;
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(f) "Person" means and includes individuals, corporations, partnerships,
trusts, foundations, plans, associations, joint ventures, estates
and other entities, whether or not legal entities, and governments
and agencies and political subdivisions thereof, whether domestic or
foreign;
(g) The "1940 Act" refers to the Investment Company Act of 1940 and the
Rules and Regulations thereunder, all as amended from time to time.
References herein to specific sections of the 1940 Act shall be
deemed to include such Rules and Regulations as are applicable to
such sections as determined by the Trustees or their designees;
(h) The terms "Commission" and "Principal Underwriter" shall have the
respective meanings given them in Section 2(a)(7) and Section
(2)(a)(29) of the 1940 Act;
(i) "Declaration of Trust" shall mean this Agreement and Declaration of
Trust, as amended or restated from time to time;
(j) "By-Laws" shall mean the By-Laws of the Trust as amended from time
to time;
(k) The term "Interested Person" has the meaning given it in Section
2(a)(19) of the 1940 Act;
(l) "Investment Manager" or "Manager" means a party furnishing services
to the Trust pursuant to any contract described in Article IV,
Section 7(a) hereof;
(m) "Series" refers to each Series of Shares established and designated
under or in accordance with the provisions of Article III.
ARTICLE II.
Purpose of Trust
The purpose of the Trust is to conduct, operate and carry on the business
of a management investment company registered under the 1940 Act through one
or more Series investing primarily in securities.
ARTICLE III.
Shares
SECTION 1. DIVISION OF BENEFICIAL INTEREST. The beneficial interest in
the Trust shall at all times be divided into an unlimited number of Shares,
with a par value of $ .001 per Share. The Trustees may authorize the division
of Shares into separate Series and the division of Series into separate
classes of Shares. The different Series shall be established and designated,
and the variations in the relative rights and preferences as between the
different Series shall be fixed and determined, by the Trustees. If only one
Series shall be established, the Shares shall have the rights and preferences
provided for herein and in Article III, Section 6 hereof to the extent
relevant and not otherwise provided for herein.
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Subject to the provisions of Section 6 of this Article III, each Share
shall have voting rights as provided in Article V hereof, and holders of the
Shares of any Series shall be entitled to receive dividends, when, if and as
declared with respect thereto in the manner provided in Article VI, Section 1
hereof. No Share shall have any priority or preference over any other Share
of the same Series with respect to dividends or distributions of the Trust or
otherwise. All dividends and distributions shall be made ratably among all
Shareholders of a Series (or class) from the assets held with respect to such
Series according to the number of Shares of such Series (or class) held of
record by such Shareholders on the record date for any dividend or
distribution or on the date of termination of the Trust, as the case may be.
Shareholders shall have no preemptive or other right to subscribe to any
additional Shares or other securities issued by the Trust or any Series. The
Trustees may from time to time divide or combine the Shares of a Series into a
greater or lesser number of Shares of such Series without thereby materially
changing the proportionate beneficial interest of such Shares in the assets
held with respect to that Series or materially affecting the rights of Shares
of any other Series.
SECTION 2. OWNERSHIP OF SHARES. The ownership of Shares shall be
recorded on the books of the Trust or a transfer or similar agent for the
Trust, which books shall be maintained separately for the Shares of each
Series. No certificates evidencing the ownership of Shares shall be issued
except as the Board of Trustees may otherwise determine from time to time.
The Trustees may make such rules as they consider appropriate for the transfer
of Shares of each Series (or class) and similar matters. The record books of
the Trust as kept by the Trust or any transfer or similar agent, as the case
may be, shall be conclusive as to the identity of the Shareholders of each
Series and as to the number of Shares of each Series held from time to time by
each Shareholder.
SECTION 3. INVESTMENTS IN THE TRUST. Investments may be accepted by the
Trust from such Persons, at such times, on such terms, and for such
consideration as the Trustees from time to time may authorize. Each
investment shall be credited to the Shareholder's account in the form of full
and fractional Shares of the Trust, in such Series (or class) as the purchaser
shall select, at the net asset value per Share next determined for such Series
(or class) after receipt of the investment; provided, however, that the
Trustees may, in their sole discretion, impose a sales charge or reimbursement
fee upon investments in the Trust.
SECTION 4. STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY.
Shares shall be deemed to be personal property giving only the rights provided
in this instrument and the By-Laws of the Trust. Every Shareholder by virtue
of having become a Shareholder shall be held to have expressly assented and
agreed to the terms hereof. The death of a Shareholder during the existence
of the Trust shall not operate to terminate the Trust, nor entitle the
representative of any deceased Shareholder to an accounting or to take any
action in court or elsewhere against the Trust or the Trustees, but shall
entitle such representative only to the rights of said deceased Shareholder
under this Declaration of Trust. Ownership of Shares shall not entitle a
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 as partners or
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<PAGE>
joint venturers. Neither the Trust nor the Trustees, nor any officer,
employee or agent of the Trust shall have any power to bind personally any
Shareholder, or 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 agree to pay.
SECTION 5. POWER OF BOARD OF TRUSTEES TO CHANGE PROVISIONS RELATING TO
SHARES. Notwithstanding any other provision of this Declaration of Trust to
the contrary, and without limiting the power of the Board of Trustees to amend
the Declaration of Trust as provided elsewhere herein, the Board of Trustees
shall have the power to amend this Declaration of Trust, at any time and from
time to time, in such manner as the Board of Trustees may determine in their
sole discretion, without the need for Shareholder action, so as to add to,
delete, replace or otherwise modify any provisions relating to the Shares
contained in this Declaration of Trust, provided that before adopting any such
amendment without Shareholder approval the Board of Trustees shall determine
that it is consistent with the fair and equitable treatment of all
Shareholders and that Shareholder approval is not required by the 1940 Act or
other applicable law. If Shares have been issued, Shareholder approval shall
be required to adopt any amendments to this Declaration of Trust which would
adversely affect to a material degree the rights and preferences of the Shares
of any Series (or class) or to increase or decrease the par value of the
Shares of any Series (or class).
SECTION 6. ESTABLISHMENT AND DESIGNATION OF SHARES. The establishment
and designation of any Series (or class) of Shares shall be effective upon the
adoption by a majority of the Trustees, of a resolution which sets forth such
establishment and designation and the relative rights and preferences of such
Series (or class). Each such resolution shall be incorporated herein by
reference upon adoption.
Shares of each Series (or class) established pursuant to this Section 6,
unless otherwise provided in the resolution establishing such Series, shall
have the following relative rights and preferences:
(a) ASSETS HELD WITH RESPECT TO A PARTICULAR SERIES. All consideration
received by the Trust for the issue or sale of Shares of a Series,
including dividends and distributions paid by, and reinvested in,
such Series, together with all assets in which such consideration is
invested or reinvested, all income, earnings, profits, and proceeds
thereof from whatever source derived, including, without limitation,
any proceeds derived from the sale, exchange or liquidation of such
assets, and any funds or payments derived from any reinvestment of
such proceeds in whatever form the same may be, shall irrevocably be
held with respect to that Series for all purposes, subject only to
the rights of creditors, and shall be so recorded upon the books of
account of the Trust. Such consideration, assets, income, earnings,
profits and proceeds thereof, from whatever source derived,
including, without limitation, any proceeds derived from the sale,
exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds, in whatever form the
same may be, are herein referred to as "assets held with respect to"
that Series. In the event that there are any assets, income,
earnings, profits and proceeds thereof, funds or payments which are
not readily identifiable as assets held with respect to any
particular Series (collectively "General Assets"), the Trustees
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<PAGE>
shall allocate such General Assets to, between or among any one or
more of the Series in such manner and on such basis as the Trustees,
in their sole discretion, deem fair and equitable, and any General
Asset so allocated to a particular Series shall be held with respect
to that Series. Each such allocation by the Trustees shall be
conclusive and binding upon the Shareholders of all Series for all
purposes in absence of manifest error.
(b) LIABILITIES HELD WITH RESPECT TO A PARTICULAR SERIES. The assets of
the Trust held with respect to each Series shall be charged with the
liabilities of the Trust with respect to such Series and all
expenses, costs, charges and reserves attributable to such Series,
and any general liabilities of the Trust which are not readily
identifiable as being held in respect of a Series shall be allocated
and charged by the Trustees to and among any one or more Series in
such manner and on such basis as the Trustees in their sole
discretion deem fair and equitable. The liabilities, expenses,
costs, charges, and reserves so charged to a Series are herein
referred to as "liabilities held with respect to" that Series. Each
allocation of liabilities, expenses, costs, charges and reserves by
the Trustees shall be conclusive and binding upon the holders of all
Series for all purposes in absence of manifest error. All Persons
who have extended credit which has been allocated to a particular
Series, or who have a claim or contract which has been allocated to
a Series, shall look exclusively to the assets held with respect to
such Series for payment of such credit, claim, or contract. In the
absence of an express agreement so limiting the claims of such
creditors, claimants and contracting parties, each creditor,
claimant and contracting party shall be deemed nevertheless to have
agreed to such limitation unless an express provision to the
contrary has been incorporated in the written contract or other
document establishing the contractual relationship.
(c) DIVIDENDS, DISTRIBUTIONS, REDEMPTIONS, AND REPURCHASES. No dividend
or distribution including, without limitation, any distribution paid
upon termination of the Trust or of any Series (or class) with
respect to, or any redemption or repurchase of, the Shares of any
Series (or class) shall be effected by the Trust other than from the
assets held with respect to such Series, nor shall any Shareholder
of any Series otherwise have any right or claim against the assets
held with respect to any other Series except to the extent that such
Shareholder has such a right or claim hereunder as a Shareholder of
such other Series. The Trustees shall have full discretion to
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 in absence of manifest
error.
(d) VOTING. All Shares of the Trust entitled to vote on a matter shall
vote without differentiation between the separate Series on a one-
vote-per-Share basis; provided however, if a matter to be voted on
affects only the interests of not all Series (or class of a Series),
then only the Shareholders of such affected Series (or class) shall
be entitled to vote on the matter.
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(e) EQUALITY. All the Shares of each Series shall represent an equal
proportionate undivided interest in the assets held with respect to
such Series (subject to the liabilities of such Series and such
rights and preferences as may have been established and designated
with respect to classes of Shares within such Series), and each
Share of a Series shall be equal to each other Share of such Series.
(f) FRACTIONS. Any fractional Share of a Series shall have
proportionately all the rights and obligations of a whole share of
such Series, including rights with respect to voting, receipt of
dividends and distributions and redemption of Shares.
(g) EXCHANGE PRIVILEGE. The Trustees shall have the authority to
provide that the holders of Shares of any Series shall have the
right to exchange such Shares for Shares of one or more other Series
in accordance with such requirements and procedures as may be
established by the Trustees.
(h) COMBINATION OF SERIES. The Trustees shall have the authority,
without the approval of the Shareholders of any Series unless
otherwise required by applicable law, to combine the assets and
liabilities held with respect to any two or more Series into assets
and liabilities held with respect to a single Series.
(i) ELIMINATION OF SERIES. At any time that there are no Shares
outstanding of a Series (or class), the Trustees may abolish such
Series (or class).
ARTICLE IV.
The Board of Trustees
SECTION 1. NUMBER, ELECTION AND TENURE. The number of Trustees
constituting the Board of Trustees shall be fixed from time to time by a
written instrument signed, or by resolution approved at a duly constituted
meeting, by a majority of the Board of Trustees, provided, however, that the
number of Trustees shall in no event be less than one (1) nor more than
fifteen (15). Subject to the requirements of Section 16(a) of the 1940 Act,
the Board of Trustees, by action of a majority of the then Trustees at a duly
constituted meeting, may fill vacancies in the Board of Trustees and remove
Trustees with or without cause. Each Trustee shall serve during the continued
lifetime of the Trust until he or she dies, resigns, is declared bankrupt or
incompetent by a court of competent jurisdiction, or is removed. Any Trustee
may resign at any time by written instrument signed by him and delivered to
any officer of the Trust or to a meeting of the Trustees. Such resignation
shall be effective upon receipt unless specified to be effective at some other
time. Except to the extent expressly provided in a written agreement with the
Trust, no Trustee resigning and no Trustee removed shall have any right to any
compensation for any period following his or her resignation or removal, or
any right to damages or other payment on account of such removal. Any Trustee
may be removed at any meeting of Shareholders by a vote of two-thirds of the
outstanding Shares of the Trust. A meeting of Shareholders for the purpose of
electing or removing one or more Trustees may be called (i) by the Trustees
upon their own vote, or (ii) upon the demand of Shareholders owning 10% or
more of the Shares of the Trust in the aggregate.
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SECTION 2. EFFECT OF DEATH, RESIGNATION, ETC. OF A TRUSTEE. The death,
declination, resignation, retirement, removal, or incapacity of one or more
Trustees, or all of them, shall not operate to annul the Trust or to revoke
any existing agency created pursuant to the terms of this Declaration of
Trust. Whenever a vacancy in the Board of Trustees shall occur, until such
vacancy is filled as provided in Article IV, Section 1, the Trustees in
office, regardless of their number, shall have all the powers granted to the
Trustees and shall discharge all the duties imposed upon the Trustees by this
Declaration of Trust.
SECTION 3. POWERS. Subject to the provisions of this Declaration of
Trust, the business of the Trust shall be managed by the Board of Trustees,
and such Board shall have all powers necessary or convenient to carry out that
responsibility including the power to engage in transactions of all kinds on
behalf of the Trust. Trustees, in all instances, shall act as principals and
are and shall be free from the control of the Shareholders. The Trustees
shall have full power and authority to do any and all acts and to make and
execute any and all contracts, documents and instruments that they may
consider desirable, necessary or appropriate in connection with the
administration of the Trust. Without limiting the foregoing, the Trustees
may: adopt, amend and repeal By-Laws not inconsistent with this Declaration
of Trust providing for the regulation and management of the affairs of the
Trust; elect and remove such officers and appoint and terminate such agents as
they consider appropriate; appoint from their own number and establish and
terminate one or more committees consisting of two or more Trustees who may
exercise the powers and authority of the Board of Trustees to the extent that
the Trustees determine; employ one or more custodians of the assets of the
Trust and may authorize such custodians to employ subcustodians and to deposit
all or any part of such assets in a system or systems for the central handling
of securities or with a Federal Reserve Bank, retain a transfer agent or a
shareholder servicing agent, or both; provide for the issuance and
distribution of Shares by the Trust directly or through one or more Principal
Underwriters or otherwise; redeem, repurchase and transfer Shares pursuant to
applicable law; set record dates for the determination of Shareholders with
respect to various matters; declare and pay dividends and distributions to
Shareholders of each Series from the assets of such Series; establish from
time to time, in accordance with the provisions of Article III, Section 6
hereof, any Series of Shares, each such Series to operate as a separate and
distinct investment medium and with separately defined investment objectives
and policies and distinct investment purpose; and in general delegate such
authority as they consider desirable to any officer of the Trust, to any
committee of the Trustees and to any agent or employee of the Trust or to any
such custodian, transfer or shareholder servicing agent, Investment Manager or
Principal Underwriter. Any determination as to what is in the interests of
the Trust made by the Trustees in good faith shall be conclusive. In
construing the provisions of this Declaration of Trust, the presumption shall
be in favor of a grant of power to the Trustees and unless otherwise specified
herein or required by the 1940 Act or other applicable law, any action by the
Board of Trustees shall be deemed effective if approved or taken by a majority
of the Trustees then in office or a majority of any duly constituted committee
of Trustees. Any action required or permitted to be taken at any meeting of
the Board of Trustees, or any committee thereof, may be taken without a
meeting if all members of the Board of Trustees or committee (as the case may
be) consent thereto in writing, and the writing or writings are filed with the
minutes of the proceedings of the Board of Trustees, or committee, except as
otherwise provided in the 1940 Act.
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Without limiting the foregoing, the Trust shall have power and authority:
(a) To invest and reinvest cash and cash items, to hold cash uninvested,
and to subscribe for, invest in, reinvest in, purchase or otherwise
acquire, own, hold, pledge, sell, assign, transfer, exchange,
distribute, write options on, lend or otherwise deal in or dispose
of contracts for the future acquisition or delivery of all types of
securities, futures contracts and options thereon, and forward
currency contracts of every nature and kind, including, without
limitation, all types of bonds, debentures, stocks, preferred
stocks, negotiable or non-negotiable instruments, obligations,
evidences of indebtedness, certificates of deposit or indebtedness,
commercial paper, repurchase agreements, bankers' acceptances, and
other securities of any kind, issued, created, guaranteed, or
sponsored by any and all Persons, including, without limitation,
states, territories, and possessions of the United States and the
District of Columbia and any political subdivision, agency, or
instrumentality thereof, any foreign government or any political
subdivision of the U.S. Government or any foreign government, or any
international instrumentality or organization, or by any bank or
savings institution, or by any corporation or organization organized
under the laws of the United States or of any state, territory, or
possession thereof, or by any corporation or organization organized
under any foreign law, or in "when issued" contracts for any such
securities, futures contracts and options thereon, and forward
currency contracts, to change the investments of the assets of the
Trust; and to exercise any and all rights, powers, and privileges of
ownership or interest in respect of any and all such investments of
every kind and description, including, without limitation, the right
to consent and otherwise act with respect thereto, with power to
designate one or more Persons, to exercise any of said rights,
powers, and privileges in respect of any of said instruments;
(b) To sell, exchange, lend, pledge, mortgage, hypothecate, lease, or
write options with respect to or otherwise deal in any property
rights relating to any or all of the assets of the Trust or any
Series;
(c) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and
deliver proxies or powers of attorney to such person or persons as
the Trustees shall deem proper, granting to such person or persons
such power and discretion with relation to securities or property as
the Trustees shall deem proper;
(d) To exercise powers and right of subscription or otherwise which in
any manner arise out of ownership of securities;
(e) To hold any security or property in a form not indicating that it is
trust property, whether in bearer, unregistered or other negotiable
form, or in its own name or in the name of a custodian or
subcustodian or a nominee or nominees or otherwise or to authorize
the custodian or a subcustodian or a nominee or nominees to deposit
the same in a securities depository, subject in each case to the
applicable provisions of the 1940 Act;
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(f) To consent to, or participate in, any plan for the reorganization,
consolidation or merger of any corporation or issuer of any security
which is held in the Trust; to consent to any contract, lease,
mortgage, purchase or sale of property by such corporation or
issuer; and to pay calls or subscriptions with respect to any
security held in the Trust;
(g) To join with other security holders in acting through a committee,
depositary, voting trustee or otherwise, and in that connection to
deposit any security with, or transfer any security to, any such
committee, depositary or trustee, and to delegate to them such power
and authority with relation to any security (whether or not so
deposited or transferred) as the Trustees shall deem proper, and to
agree to pay, and to pay, such portion of the expenses and
compensation of such committee, depositary or trustee as the
Trustees shall deem proper;
(h) To litigate, compromise, arbitrate, settle or otherwise adjust
claims in favor of or against the Trust or a Series, or any matter
in controversy, including but not limited to claims for taxes;
(i) To enter into joint ventures, general or limited partnerships and
any other combinations or associations;
(j) To borrow funds or other property in the name of the Trust or Series
exclusively for Trust purposes;
(k) 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;
(l) To purchase and pay for entirely out of Trust Property such
insurance as the Trustees may deem necessary, desirable or
appropriate for the conduct of the business, including, without
limitation, insurance policies insuring the assets of the Trust or
payment of distributions and principal on its portfolio investments,
and insurance policies insuring the Shareholders, Trustees,
officers, employees, agents, Investment Manager, principal
underwriters, or independent contractors of the Trust, individually
against all claims and liabilities of every nature arising by reason
of holding Shares, holding, being or having held any such office or
position, or by reason of any action alleged to have been taken or
omitted by any such Person as Trustee, officer, employee, agent,
Investment Manager, Principal Underwriter, or independent
contractor, including any action taken or omitted that may be
determined to constitute negligence, whether or not the Trust would
have the power to indemnify such Person against liability; and
(m) To adopt, establish and carry out pension, profit-sharing, share
bonus, share purchase, savings, thrift and other retirement,
incentive and benefit plans, trusts and provisions, including the
purchasing of life insurance and annuity contracts as a means of
providing such retirement and other benefits, for any or all of the
Trustees, officers, employees and agents of the Trust.
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The Trust shall not be limited to investing in obligations maturing
before the possible termination of the Trust or one or more of its
Series. The Trust shall not in any way be bound or limited by any
present or future law or custom in regard to investment by
fiduciaries. The Trust shall not be required to obtain any court
order to deal with any assets of the Trust or take any other action
hereunder.
SECTION 4. PAYMENT OF EXPENSES BY THE TRUST. Subject to the provisions
of Article III, Section 6(b), the Trustees are authorized to pay or cause to
be paid out of the principal or income of the Trust or Series, or partly out
of the principal and partly out of income, and to charge or allocate the same
to, between or among such one or more of the Series that may be established or
designated pursuant to Article III, Section 6, all expenses, fees, charges,
taxes and liabilities incurred or arising in connection with the Trust or
Series, 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 Manager^, Principal
Underwriter, auditors, counsel, custodian, transfer agent, Shareholder
servicing agent, and such other agents or independent contractors and such
other expenses and charges as the Trustees may deem necessary or proper to
incur.
SECTION 5. OWNERSHIP OF ASSETS OF THE TRUST. Title to all of the assets
of the Trust shall at all times be considered as vested in the Trust, except
that the Trustees shall have power to cause legal title to any Trust Property
to be held by or in the name of one or more of the Trustees, or in the name of
the Trust, or in the name of any other Person as nominee, on such terms as the
Trustees may determine. Upon the resignation, incompetency, bankruptcy,
removal, or death of a Trustee he or she shall automatically cease to have any
such title in any of the Trust Property, and the title of such Trustee in the
Trust Property shall vest automatically in the remaining Trustees. Such
vesting and cessation of title shall be effective whether or not conveyancing
documents have been executed and delivered. The Trustees may determine that
the Trust or the Trustees, acting for and on behalf of the Trust, shall be
deemed to hold beneficial ownership of any income earned on the securities
owned by the Trust, whether domestic or foreign.
SECTION 6. SERVICE CONTRACTS.
(a) The Trustees may, at any time and from time to time, contract for
exclusive or nonexclusive advisory, management and/or administrative
services for the Trust or for any Series with any Person; and any
such contract may contain such other terms as the Trustees may
determine, including without limitation, authority for the
Investment Manager to determine from time to time without prior
consultation with the Trustees what investments shall be purchased,
held, sold or exchanged and what portion, if any, of the assets of
the Trust shall be held uninvested and to make changes in the
Trust's investments, and such other responsibilities as may
specifically be delegated to such Person.
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(b) The Trustees may also, at any time and from time to time, contract
with any Persons, appointing such Persons exclusive or nonexclusive
distributor or Principal Underwriter for the Shares of one or more
of the Series or other securities to be issued by the Trust. Every
such contract may contain such other terms as the Trustees may
determine.
(c) The Trustees are also empowered, at any time and from time to time,
to contract with any Persons, appointing such Person(s) to serve as
custodian(s), transfer agent and/or shareholder servicing agent for
the Trust or one or more of its Series. Every such contract shall
comply with such terms as may be required by the Trustees.
(d) The Trustees are further empowered, at any time and from time to
time, to contract with any Persons to provide such other services to
the Trust or one or more of the Series, as the Trustees determine to
be in the best interests of the Trust and the applicable Series.
(e) The fact that:
(i) any of the Shareholders, Trustees, or officers of the Trust is
a shareholder, director, officer, partner, trustee, employee,
Manager, adviser, Principal Underwriter, distributor, or
affiliate or agent of or for any Person with which an
advisory, management or administration contract, or Principal
Underwriter's or distributor's contract, or transfer,
shareholder servicing or other type of service contract may be
made, or that
(ii) any Person with which an advisory, management or
administration contract or Principal Underwriter's or
distributor's contract, or transfer, shareholder servicing or
other type of service contract may be made also has an
advisory, management or administration contract, or principal
underwriter's or distributor's contract, or transfer,
shareholder servicing or other service contract, or has other
business or interests with any other Person, shall not affect
the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon
or executing the same, or create any liability or
accountability to the Trust or its Shareholders, provided
approval of each such contract is made pursuant to the
applicable requirements of the 1940 Act.
ARTICLE V.
Shareholders' Voting Powers and Meetings
SECTION 1. VOTING POWERS. Subject to the provisions of Article III,
Sections 5 and 6(d), the Shareholders shall have right to vote only (i) for
the election or removal of Trustees as provided in Article IV, Section 1, and
(ii) with respect to such additional matters relating to the Trust as may be
required by the applicable provisions of the 1940 Act, including Section 16(a)
thereof, and (iii) on such other matters as the Trustees may consider
necessary or desirable. Each whole Share shall be entitled to one vote as to
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any matter on which it is entitled to vote and each fractional Share shall be
entitled to a proportionate fractional vote. There shall be no cumulative
voting in the election of Trustees. Shares may be voted in person or by
proxy. A proxy purporting to be executed by or on behalf of a Shareholder
shall be deemed valid unless challenged at or prior to its exercise and the
burden of proving invalidity shall rest on the challenger.
SECTION 2. VOTING POWER AND MEETINGS. Meetings of the Shareholders may
be called by the Trustees for the purposes described in Section 1 of this
Article V. A meeting of Shareholders may be held at any place designated by
the Trustees. Written notice of any meeting of Shareholders shall be given or
caused to be given by the Trustees by delivering personally or mailing such
notice not more than ninety (90), nor less than ten (10) days before such
meeting, postage prepaid, stating the time and place of the meeting, to each
Shareholder at the Shareholder's address as it appears on the records of the
Trust. Whenever notice of a meeting is required to be given to a Shareholder
under this Declaration of Trust, a written waiver thereof, executed before or
after the meeting by such Shareholder or his or her attorney thereunto
authorized and filed with the records of the meeting, or actual attendance at
the meeting of Shareholders in person or by proxy, shall be deemed equivalent
to such notice.
SECTION 3. QUORUM AND REQUIRED VOTE. Except when a larger quorum is
required by the applicable provisions of the 1940 Act, the presence in person
or by proxy of a majority of the Shares entitled to vote on a matter shall
constitute a quorum at a Shareholders' meeting. Any meeting of Shareholders
may be adjourned from time to time by a majority of the votes properly cast
upon the question of adjourning a meeting to another date and time, whether or
not a quorum is present, and the meeting may be held as adjourned within a
reasonable time after the date set for the original meeting without further
notice. Subject to the provisions of Article III, Section 6(d) and the
applicable provisions of the 1940 Act, when a quorum is present at any
meeting, a majority of the Shares voted shall decide any questions except only
a plurality vote shall be necessary to elect Trustees.
SECTION 4. ACTION BY WRITTEN CONSENT. Any action taken by Shareholders
may be taken without a meeting if all the holders of Shares entitled to vote
on the matter are provided with not less than 7 days written notice thereof
and written consent to the action is filed with the records of the meetings of
Shareholders by the holders of the number of shares that would be required to
approve the matter as provided in Article V, Section 3. Such consent shall be
treated for all purposes as a vote taken at a meeting of Shareholders.
SECTION 5. RECORD DATES. For the purpose of determining the
Shareholders who are entitled to vote or act at any meeting or any adjournment
thereof, the Trustees may fix a time, which shall be not more than ninety (90)
nor less than ten (10) days before the date of any meeting of Shareholders, as
the record date for determining the Shareholders having the right to notice of
and to vote at such meeting and any adjournment thereof, and in such case only
Shareholders of record on such record date shall have such right,
notwithstanding any transfer of shares on the books of the Trust after the
record date. For the purpose of determining the Shareholders who are entitled
to receive payment of any dividend or of any other distribution, the Trustees
may fix a date, which shall be before the date for the payment of such
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dividend or distribution, as the record date for determining the Shareholders
having the right to receive such dividend or distribution. Nothing in this
Section shall be construed as precluding the Trustees from setting different
record dates for different Series.
ARTICLE VI.
Net Asset Value, Distributions, and Redemptions
SECTION 1. DETERMINATION OF NET ASSET VALUE, NET INCOME, AND
DISTRIBUTIONS. Subject to Article III, Section 6 hereof, the Trustees, in
their absolute discretion, may prescribe and shall set forth in the By-Laws or
in a duly adopted resolution of the Trustees such bases and time for
determining the per Share net asset value of the Shares of any Series and the
declaration and payment of dividends and distributions on the Shares of any
Series, as they may deem necessary or desirable.
SECTION 2. REDEMPTIONS AND REPURCHASES. The Trust shall purchase such
Shares as are offered by any Shareholder for redemption, upon receipt by the
Trust or a Person designated by the Trust that the Trust redeem such Shares or
in accordance with such procedures for redemption as the Trustees may from
time to time authorize; and the Trust will pay therefor the net asset value
thereof, in accordance with the By-Laws and the applicable provisions of the
1940 Act. Payment for said Shares shall be made by the Trust to the
Shareholder within seven days after the date on which the request for
redemption is received in proper form. The obligation set forth in this
Section 2 is subject to the provision that in the event that any time the New
York Stock Exchange (the "Exchange") is closed for other than weekends or
holidays, or if permitted by the Rules of the Commission during periods when
trading on the Exchange is restricted or during any emergency which makes it
impracticable for the Trust to dispose of the investments of the applicable
Series or to determine fairly the value of the net assets held with respect to
such Series or during any other period permitted by order of the Commission
for the protection of investors, such obligations may be suspended or
postponed by the Trustees.
The redemption price may in any case or cases be paid in cash or wholly
or partly in kind in accordance with Rule 18f-1 under the 1940 Act if the
Trustees determine that such payment is advisable in the interest of the
remaining Shareholders of the Series of which the Shares are being redeemed.
Subject to the foregoing, the selection and quantity of securities or other
property so paid or delivered as all or part of the redemption price shall be
determined by or under authority of the Trustees. In no case shall the Trust
be liable for any delay of any corporation or other Person in transferring
securities selected for delivery as all or part of any payment in kind.
SECTION 3. REDEMPTIONS AT THE OPTION OF THE TRUST. The Trust shall have
the right, at its option, upon 60 days notice to the affected Shareholder at
any time to redeem Shares of any Shareholder at the net asset value thereof as
described in Section 1 of this Article VI: (i) if at such time such
Shareholder owns Shares of any Series having an aggregate net asset value of
less than a minimum value determined from time to time by the Trustees; or
(ii) to the extent that such Shareholder owns Shares of a Series equal to or
in excess of a maximum percentage of the outstanding Shares of such Series
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determined from time to time by the Trustees; or (iii) to the extent that such
Shareholder owns Shares equal to or in excess of a maximum percentage,
determined from time to time by the Trustees, of the outstanding Shares of the
Trust.
SECTION 4. TRANSFER OF SHARES. The Trust shall transfer shares held of
record by any Person to any other Person upon receipt by the Trust or a Person
designated by the Trust of a written request therefore in such form and
pursuant to such procedures as may be approved by the Trustees.
ARTICLE VII.
Compensation and Limitation of Liability
SECTION 1. COMPENSATION OF TRUSTEES. The Trustees as such shall be
entitled to reasonable compensation from the Trust, and they may fix the
amount of such compensation from time to time. Nothing herein shall in any
way prevent the employment of any Trustee to provide advisory, management,
legal, accounting, investment banking or other services to the Trust and to be
specially compensated for such services by the Trust.
SECTION 2. INDEMNIFICATION AND LIMITATION OF LIABILITY. The Trustees
shall not be responsible or liable in any event for any neglect or wrong-doing
of any officer, agent, employee, Manager or Principal Underwriter of the
Trust, nor shall any Trustee be responsible for the act or omission of any
other Trustee, and, subject to the provisions of the Bylaws, the Trust out of
its assets may indemnify and hold harmless each and every Trustee and officer
of the Trust from and against any and all claims, demands, costs, losses,
expenses, and damages whatsoever arising out of or related to such Trustee's
performance of his or her duties as a Trustee or officer of the Trust;
provided that nothing herein contained shall indemnify, hold harmless or
protect any Trustee or officer from or against any liability to the Trust or
any Shareholder to which he or she would otherwise be subject by reason of
wilful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office.
Every note, bond, contract, instrument, certificate or undertaking and
every other act or thing whatsoever issued, executed or done by or on behalf
of the Trust or the Trustees or any of them in connection with the Trust shall
be conclusively deemed to have been issued, executed or done only in or with
respect to their or his or her capacity as Trustees or Trustee, and such
Trustees or Trustee shall not be personally liable thereon.
SECTION 3. TRUSTEE'S GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR
SURETY. The exercise by the Trustees of their powers hereunder shall be
binding upon everyone interested in or dealing with the Trust. A Trustee
shall be liable to the Trust and to any Shareholder solely for his or her own
wilful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office of Trustee, and shall not be
liable for errors of judgment or mistakes of fact or law. The Trustees may
take advice of counsel or other experts with respect to the meaning and
operation of this Declaration of Trust, and shall be under no liability for
any act or omission in accordance with such advice nor for failing to follow
such advice. The Trustees shall not be required to give any bond as such, nor
any surety if a bond is required.
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SECTION 4. INSURANCE. The Trustees shall be entitled and empowered to
the fullest extent permitted by law to purchase with Trust assets insurance
for liability and for all expenses reasonably incurred or paid or expected to
be paid by a Trustee or officer in connection with any claim, action, suit or
proceeding in which he or she becomes involved by virtue of his or her
capacity or former capacity with the Trust, whether or not the Trust would
have the power to indemnify him or her against such liability under the
provisions of this Article.
ARTICLE VIII.
Miscellaneous
SECTION 1. LIABILITY OF THIRD PERSONS DEALING WITH TRUSTEES. No Person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to
the application of any payments made or property transferred to the Trust or
upon its order.
SECTION 2. TERMINATION OF TRUST OR SERIES. Unless terminated as
provided herein, the Trust shall continue without limitation of time. The
Trust may be terminated at any time by the Trustees upon 60 days prior
written notice to the Shareholders. Any Series may be terminated at any time
by the Trustees upon 60 days prior written notice to the Shareholders of that
Series.
Upon termination of the Trust (or any Series, as the case may be), after
paying or otherwise providing for all charges, taxes, expenses and liabilities
held, severally, with respect to each Series (or the applicable Series, as the
case may be), whether due or accrued or anticipated as may be determined by
the Trustees, the Trust shall, in accordance with such procedures as the
Trustees consider appropriate, reduce the remaining assets held, severally,
with respect to each Series (or the applicable Series, as the case may be), to
distributable form in cash or shares or other securities, and any combination
thereof, and distribute the proceeds held with respect to each Series (or the
applicable Series, as the case may be), to the Shareholders of that Series, as
a Series, ratably according to the number of Shares of that Series held by the
several Shareholders on the date of termination.
SECTION 3. MERGER AND CONSOLIDATION. The Trustees may cause (i) the
Trust or one or more of its Series to the extent consistent with applicable
law to be merged into or consolidated with another Trust, series or Person,
(ii) the Shares of the Trust or any Series to be converted into beneficial
interests in another business trust (or series thereof), (iii) the Shares to
be exchanged for assets or property under or pursuant to any state or federal
statute to the extent permitted by law or (iv) a sale of assets of the Trust
or one or more of its Series. Such merger or consolidation, Share conversion,
Share exchange or sale of assets must be authorized by vote as provided in
Article V, Section 3 herein; provided that in all respects not governed by
statute or applicable law, the Trustees shall have power to prescribe the
procedure necessary or appropriate to accomplish a sale of assets, Share
exchange, merger or consolidation including the power to create one or more
separate business trusts to which all or any part of the assets, liabilities,
profits or losses of the Trust may be transferred and to provide for the
conversion of Shares of the Trust or any Series into beneficial interests in
such separate business trust or trusts (or series thereof).
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<PAGE>
SECTION 4. AMENDMENTS. This Declaration of Trust may be restated and/or
amended at any time by an instrument in writing signed by a majority of the
Trustees then holding office. Any such restatement and/or amendment hereto
shall be effective immediately upon execution and approval. The Certificate
of Trust of the Trust may be restated and/or amended by a similar procedure,
and any such restatement and/or amendment shall be effective immediately upon
filing with the Office of the Secretary of State of the State of Delaware or
upon such future date as may be stated therein.
SECTION 5. FILING OF COPIES, REFERENCES, HEADINGS. The original or a
copy of this instrument and of each restatement and/or amendment hereto shall
be kept at the office of the Trust where it may be inspected by any
Shareholder. Anyone dealing with the Trust may rely on a certificate by an
officer of the Trust as to whether or not any such restatements and/or
amendments have been made and as to any matters in connection with the Trust
hereunder; and, with the same effect as if it were the original, may rely on a
copy certified by an officer of the Trust to be a copy of this instrument or
of any such restatements and/or amendments. In this instrument and in any
such restatements and/or amendment, references to this instrument, and all
expressions like "herein," "hereof" and "hereunder," shall be deemed to refer
to this instrument as amended or affected by any such restatements and/or
amendments. Headings are placed herein for convenience of reference only and
shall not be taken as a part hereof or control or affect the meaning,
construction or effect of this instrument. Whenever the singular number is
used herein, the same shall include the plural; and the neuter, masculine and
feminine genders shall include each other, as applicable. This instrument may
be executed in any number of counterparts each of which shall be deemed an
original.
SECTION 6. APPLICABLE LAW. This Agreement and Declaration of Trust is
created under and is to be governed by and construed and administered
according to the laws of the State of Delaware and the Delaware Business Trust
Act, as amended from time to time (the "Act"). The Trust shall be a Delaware
business trust pursuant to such Act, and without limiting the provisions
hereof, the Trust may exercise all powers which are ordinarily exercised by
such a business trust.
SECTION 7. PROVISIONS IN CONFLICT WITH LAW OR REGULATIONS.
(a) The provisions of the Declaration of Trust are severable, and if the
Trustees shall determine, with the advice of counsel, that any of
such provisions is in conflict with the 1940 Act, the regulated
investment company provisions of the Internal Revenue Code or with
other applicable laws and regulations, the conflicting provision
shall be deemed never to have constituted a part of the Declaration
of Trust; provided, however, that such determination shall not
affect any of the remaining provisions of the Declaration of Trust
or render invalid or improper any action taken or omitted prior to
such determination.
(b) If any provision of the Declaration of Trust shall be held invalid
or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision in such
jurisdiction and shall not in any manner affect such provision in
any other jurisdiction or any other provision of the Declaration of
Trust in any jurisdiction.
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SECTION 8. BUSINESS TRUST ONLY. It is the intention of the Trustees to
create a business trust pursuant to the Act, and thereby to create only the
relationship of trustee and beneficial owners within the meaning of such Act
between the Trustees and each Shareholder. It is not the intention of the
Trustees to create a general partnership, limited partnership, joint stock
association, corporation, bailment, joint venture, or any form of legal
relationship other than a business trust pursuant to such Act. Nothing in
this Declaration of Trust shall be construed to make the Shareholders, either
by themselves or with the Trustees, partners or members of a joint stock
association.
SECTION 9. USE OF THE NAME "OLSTEIN" AND " FINANCIAL ALERT". The names
"Olstein" and "Financial Alert" and all rights to the use of the names
"Olstein" and "Financial Alert" belong to Olstein & Associates, L.P. ("Olstein
& Associates"), the Manager of the Trust. Olstein & Associates has consented
to the use by the Trust of the identifying words "Olstein" and "Financial
Alert" and has granted to the Trust a non-exclusive license to use the names
"Olstein" and "Financial Alert" as part of the name of the Trust and the name
of any Series of Shares. In the event Olstein & Associates or an affiliate of
Olstein & Associates is not appointed as Manager or ceases to be the Manager
of the Trust or of any Series using such names, the non-exclusive license
granted herein may be revoked by Olstein & Associates. Upon receipt of such a
written revocation from Olstein & Associates or any successor to its interests
in such name, the Trustees agreed to execute such amendment to the Trust's
Certificate of Trust and this Declaration of Trust as may be required to
effect a change in the name of Trust or any Series of Shares of the Trust, and
the Trust promptly shall cease using the names "Olstein" and "Financial Alert"
as part of its name or the name of any Series of Shares.
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IN WITNESS WHEREOF, the Trustees named below do hereby make and enter
into this Declaration of Trust as of the 31st day of March, 1995.
/s/ Robert A. Olstein
Robert A. Olstein
105 Corporate Park Drive
White Plains, NY 10604
/s/ Neil Klarfeld
Neil Klarfeld
499 Park Avenue
New York, NY 10022
/s/ Fred W. Lange
Fred W. Lange
199 Stanley Avenue
Staten Island, NY 10301
/s/ Lawrence K. Wein
Lawrence K. Wein
55 Corporate Park Drive
Room 23D50
Bridgewater, NJ 08807
/s/ Erik K. Olstein
Erik K. Olstein
105 Corporate Park Drive
White Plains, NY 10604
THE PRINCIPAL PLACE OF BUSINESS OF THE TRUST IS
105 Corporate Drive
White Plains, NY 10604
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Exhibit 2
AMENDED BY-LAWS
OF
THE OLSTEIN FUNDS
I
FISCAL YEAR AND OFFICES
1. FISCAL YEAR. Unless otherwise provided by resolution of the Board of
Trustees, the fiscal year of the Trust shall begin on the first day of
September and end on the last day of August.
2. DELAWARE OFFICE. The Board of Trustees shall establish a registered
office in the State of Delaware and shall appoint as the Trust's
registered agent for service of process in the State of Delaware an
individual resident of the State of Delaware or a Delaware corporation or
a foreign corporation authorized to transact business in the State of
Delaware; in each case the business office of such registered agent for
service of process shall be identical with the registered Delaware office
of the Trust.
3. OTHER OFFICES. The Board of Trustees may at any time establish branch or
subordinate offices at any place or places where the Trust intends to do
business.
II
MEETINGS OF SHAREHOLDERS
1. PLACE OF MEETING. Meetings of the shareholders for the election of
trustees shall be held in such place as shall be fixed by resolution of
the Board of Trustees and stated in the notice of the meeting.
2. ANNUAL MEETINGS. An Annual Meeting of shareholders will not be held
unless the Investment Company Act of 1940 requires the election of
trustees to be acted upon.
3. SPECIAL MEETINGS. Special Meetings of the shareholders may be called at
any time by the President, or by a majority of the Board of Trustees, and
shall be called by the Secretary upon written request of the holders of
shares entitled to cast not less than ten percent of all the votes
entitled to be cast at such meeting provided that (a) such request shall
state the purposes of such meeting and the matters proposed to be acted
on and (b) the shareholders requesting such meeting shall have paid to
the Trust the reasonable estimated cost of preparing and mailing the
notice thereof, which the Secretary shall determine and specify to such
shareholders. No special meeting need be called upon the request of
shareholders entitled to cast less than a majority of all votes entitled
to be cast at such meeting to consider any matter which is substantially
the same as a matter voted on at any meeting of the shareholders held
during the preceding twelve months. The foregoing provisions of this
<PAGE>
section 3 notwithstanding a special meeting of shareholders shall be
called upon the request of the holders of at least ten percent of the
shares entitled to vote for the purpose of consideration removal of a
director from office as provided in section 16(c) of the Investment
Company Act of 1940.
4. NOTICE. Not less than ten, nor more than ninety days before the date of
every Annual or Special Shareholders Meeting, the Secretary shall cause
to be mailed to each shareholder entitled to vote at such meeting at his
(her) address (as it appears on the records of the Trust at the time of
mailing) written notice stating the time and place of the meeting and, in
the case of a Special Meeting of Shareholders, shall be limited to the
purposes stated in the notice. Notice of adjournment of a shareholders
meeting to another time or place need not be given, if such time and
place are announced at the meeting.
5. RECORD DATE FOR MEETINGS. Subject to the provisions of the Declaration
of Trust, the Board of Trustees may fix in advance a date not more than
ninety, nor less than ten days, prior to the date of any annual or
special meeting of the shareholders as a record date for the
determination of the shareholders entitled to receive notice of, and to
vote at any meeting and any adjournment thereof; and in such case such
shareholders and only such shareholders as shall be shareholders of
record on the date so fixed shall be entitled to receive notice of and to
vote at such meeting and any adjournment thereof as the case may be,
notwithstanding any transfer of any stock on the books of the Trust after
any such record date fixed as aforesaid.
6. QUORUM. At any meeting of shareholders, the presence in person or by
proxy of the holders of record of a majority of the shares issued and
outstanding and entitled to vote there shall constitute a quorum for the
transaction of any business at the meeting, except as otherwise provided
by the Investment Company Act of 1940 or in the Trust's Declaration of
Trust. If, however, such quorum shall not be present or represented at
any meeting of the shareholders, the holders of a majority of the shares
present or in person or by proxy shall have the power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented to a date not
more than 120 days after the original record date. At such adjourned
meeting at which a quorum shall be present or represented, any business
may be transacted which might have been transacted at the meeting as
originally notified.
7. VOTING. Each shareholder shall have one vote for each full share and a
fractional vote for each fractional share of stock having voting power
held by such shareholder on the record date set pursuant to Section 5 on
each matter submitted to a vote at a meeting of shareholders. Such vote
may be made in person or by proxy. At all meetings of the shareholders,
a quorum being present, all matters shall be decided by majority vote of
the shares of beneficial interest entitled to vote held by shareholders
present in person or by proxy, unless the question is one for which by
express provision of the laws of the State of Delaware, the Investment
Company Act of 1940, as from time to time amended, or the Declaration of
Trust, a different vote is required, in which case such express provision
shall control the decision of such question. At all meetings of
shareholders, unless the voting is conducted by inspectors, all questions
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relating to the qualification of voters and the validity of proxies and
the acceptance or rejection of votes shall be decided by the Chairman of
the meeting.
8. INSPECTORS. At any election of trustees, the Board of Trustees prior
thereto may, or, if they have not so acted, the Chairman of the meeting
may appoint one or more inspectors of election who shall first subscribe
an oath of affirmation to execute faithfully the duties of inspectors at
such election with strict impartiality and according to the best of their
ability, and shall after the election make a certificate of the result of
the vote taken.
9. STOCK LEDGER AND LIST OF SHAREHOLDERS. It shall be the duty of the
Secretary or Assistant Secretary of the Trust to cause an original or
duplicate share ledger to be maintained at the office of the Trust's
transfer agent. Such share ledger may be in written form or any other
form capable of being converted into written form within a reasonable
time for visual inspection.
10. ACTION WITHOUT MEETING. Any action to be taken by shareholders may be
taken without a meeting if (a) all shareholders entitled to vote on the
matter consent to the action in writing, and (b) all shareholders
entitled to notice of the meeting but not entitled to vote at it sign a
written waiver of any right to dissent, and (c) the written consents are
filed with the records of the meetings of shareholders. Such consent
shall be treated for all purposes as a vote at a meeting.
III
TRUSTEES
1. GENERAL POWERS. The business of the Trust shall be managed under the
direction of its Board of Trustees, which may exercise all powers of the
Trust, except such as are by statute, or the Declaration of Trust, or by
these Bylaws conferred upon or reserved to the shareholders.
2. NUMBER AND TERM OF OFFICE. The number of trustees which shall constitute
the whole Board shall be determined from time to time by the Board of
Trustees, but shall not be fewer than the minimum number permitted by
applicable laws, nor more than fifteen. Each trustee elected shall hold
office until his successor is elected and qualified. Trustees need not
be shareholders.
3. ELECTIONS. Provided a quorum is present, the directors shall be elected
by the vote of a plurality of the shares present in person or by proxy,
except that any vacancy on the Board of Trustees may be filled by a
majority vote of the Board of Trustees, although less than a quorum,
subject to the requirements of Section 16(a) of the Investment Company
Act of 1940.
4. PLACE OF MEETING. Meetings of the Board of Trustees, regular or special,
may be held at any place as the Board may from time to time determine.
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5. QUORUM. At all meetings of the Board of Trustees, one-third of the
entire Board of Trustees shall constitute a quorum for the transaction of
business provided that in no case may a quorum be less than two persons.
The action of a majority of the trustees present at any meeting at which
a quorum is present shall be the action of the Board of Trustees unless
the concurrence of a greater proportion is required for such action by
the Investment Company Act of 1940, these Bylaws or the Declaration of
Trust. If a quorum shall not be present at any meeting of trustees, the
trustees present thereat may by a majority vote adjourn the meeting from
time to time without notice other than announcement at the meeting, until
a quorum shall be present.
6. REGULAR MEETINGS. Regular meetings of the Board of Trustees may be held
without additional notice at such time and place as shall from time to
time be determined by the Board of Trustees provided that notice of any
change in the time or place of such meetings shall be sent promptly to
each trustee not present at the meeting at which such change was made in
the manner provided for notice of special meetings.
7. SPECIAL MEETINGS. Special meetings of the Board of Trustees may be
called by the President on one day's notice to each trustee; Special
meetings shall be called by the President or Secretary in like manner and
on like notice on the written request of two trustees.
8. TELEPHONE MEETING. Members of the Board of Trustees or a committee of
the Board of Trustees may participate in a meeting by means of a
conference telephone or similar communications equipment if all persons
participating in the meeting can hear each other at the same time.
9. INFORMAL ACTIONS. Any action required or permitted to be taken at any
meeting of the Board of Trustees or of any committee thereof may be taken
without a meeting, if a written consent to such action is signed by all
members of the Board or of such committee, as the case may be, and such
written consent is filed with the minutes of proceedings of the Board or
committee.
10. COMMITTEES. The Board of Directors may by resolution passed by a
majority of the entire Board appoint from among its members an Executive
Committee and other committees composed of two or more directors, and may
delegate to such committees, in the intervals between meetings of the
Board of Trustees, any or all of the powers of the Board of Trustees in
the management of the business and affairs of the Trust.
11. ACTION OF COMMITTEES. In the absence of an appropriate resolution of the
Board of Trustees, each committee may adopt such rules and regulations
governing its proceedings, quorum and manner of acting as it shall deem
proper and desirable, provided that the quorum shall not be less than two
trustees. The committees shall keep minutes of their proceedings and
shall report the same to the Board of Trustees at the meeting next
succeeding, and any action by the committee shall be subject to revision
and alteration by the Board of Trustees, provided that no rights of third
persons shall be affected by any such revision or alteration. In the
absence of any member of such committee, the members thereof present at
any meeting, whether or not they constitute a quorum, may appoint a
member of the Board of Trustees to act in the place of such absent
member.
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12. COMPENSATION. Any trustee, whether or not he is a salaried officer or
employee of the Trust, may be compensated for his services as trustee or
as a member of a committee of trustees, or as Chairman of the Board or
chairman of a committee by fixed periodic payments or by fees for
attendance at meetings or by both, and in addition may be reimbursed for
transportation and other expenses, all in such manner and amounts as the
Board of Trustees may from time to time determine.
IV
NOTICES
1. FORM. Notices to shareholders shall be in writing and delivered
personally or mailed to the shareholders at their addresses appearing on
the books of the Trust. Notices to trustees shall be oral or by
telephone or telegram or in writing delivered personally or mailed to the
trustees at their addresses appearing on the books of the Trust. Notice
by mail shall be deemed to be given at the time when the same shall be
mailed. Subject to the provisions of the Investment Company Act of 1940,
notice to trustees need not state the purpose of a regular or special
meeting.
2. WAIVER. Whenever any notice of the time, place or purpose of any meeting
of shareholders, trustees or a committee is required to be given under
the provisions of the Declaration of Trust or these Bylaws, a waiver
thereof in writing, signed by the person or persons entitled to such
notice and filed with the records of the meeting, whether before or after
the holding thereof, or actual attendance at the meeting of shareholders
in person or by proxy, or at the meeting of Trustees or a committee in
person, shall be deemed equivalent to the giving of such notice to such
persons.
V
OFFICERS
1. EXECUTIVE OFFICERS. The officers of the Trust shall be chosen by the
Board of Trustees and shall include a President, a Secretary and a
Treasurer. The Board of Trustees may, from time to time, elect or
appoint a Controller, one or more Vice Presidents, Assistant Secretaries
and Assistant Treasurers. The Board of Trustees, at its discretion, may
also appoint a director as Chairman of the Board who shall perform and
execute such executive and administrative duties and powers as the Board
of Trustees shall from time to time prescribe. The same person may hold
two or more offices, except that no person shall be both President and
Vice-President and no officer shall execute, acknowledge or verify any
instrument in more than one capacity, if such instrument is required by
law, the Declaration of Trust or these Bylaws to be executed,
acknowledged or verified by two or more officers.
2. ELECTION. The Board of Trustees shall choose a President, a Secretary
and a Treasurer.
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3. OTHER OFFICERS. The Board of Trustees from time to time may appoint such
other officers and agents as it shall deem advisable, who shall hold
their offices for such terms and shall exercise powers and perform such
duties as shall be determined from time to time by the Board. The Board
of Trustees from time to time may delegate to one or more officers or
agents the power to appoint any such subordinate officers or agents and
to prescribe their respective rights, terms of office, authorities and
duties.
4. COMPENSATION. The salaries or other compensation of all officers and
agents of the Trust shall be fixed by the Board of Trustees, except that
the Board of Trustees may delegate to any person or group of persons the
power to fix the salary or other compensation of any subordinate officers
or agents appointed pursuant to Section 3 of this Article V.
5. TENURE. The officers of the Trust shall serve at the pleasure of the
Board of Trustees. Any officer or agent may be removed by the
affirmative vote of a majority of the Board of Trustees whenever, in its
judgment, the best interests of the Trust will be served thereby. In
addition, any officer or agent appointed pursuant to Section 3 may be
removed, either with or without cause, by any officer upon whom such
power of removal shall have been conferred by the Board of Trustees. Any
vacancy occurring in any office of the Trust by death, resignation,
removal or otherwise shall be filled by the Board of Trustees, unless
pursuant to Section 3 the power of appointment has been conferred by the
Board of Trustees on any other officer.
6. PRESIDENT. The President shall be the Chief Executive Officer of the
Trust and shall see that all orders and resolutions of the Board are
carried into effect. The President shall also be the Chief
Administrative Officer of the Trust and shall perform such other duties
and have such other powers as the Board of Trustees may from time to time
prescribe.
7. CHAIRMAN OF THE BOARD. The Chairman of the Board, if one shall be
chosen, shall perform and execute such executive duties and
administrative powers as the Board of Trustees shall from time to time
prescribe.
8. VICE-PRESIDENT. The Vice-Presidents, in order of their seniority, shall,
in the absence or disability of the President, perform the duties and
exercise the powers of the President and shall perform such other duties
as the Board of Trustees or the President may from time to time
prescribe.
9. SECRETARY. The Secretary shall attend all meetings of the Board of
Trustees and all meetings of the shareholders and record all the
proceedings thereof and shall perform like duties for any committee when
required. He shall give, or cause to be given, notice of meetings of the
shareholders and of the Board of Trustees, shall have charge of the
records of the Trust, including the stock books, and shall perform such
other duties as may be prescribed by the Board of Trustees or Chief
Executive Officer, under whose supervision he shall be. He shall keep in
safe custody the seal of the Trust and, when authorized by the Board of
Trustees, shall affix and attest the same to any instrument requiring it.
The Board of Trustees may give general authority to any other officer to
affix the seal of the Trust and to attest the affixing by his signature.
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10. ASSISTANT SECRETARIES. The Assistant Secretaries in order of their
seniority, shall, in the absence or disability of the Secretary, perform
the duties and exercise the powers of the Secretary and shall perform
such other duties as the Board of Trustees shall prescribe.
11. TREASURER. The Treasurer, unless another officer has been so designated,
shall be the Chief Financial Officer of the Trust. He shall have general
charge of the finances and books of account of the Trust. Except as
otherwise provided by the Board of Trustees, he shall have general
supervision of the funds and property of the Trust and of the performance
by the custodian of its duties with respect thereto. He shall render to
the Board of Trustees, whenever directed by the Board, an account of the
financial condition of the Trust and of all his transactions as
Treasurer. He shall cause to be prepared annually a full and correct
statement of the affairs of the Trust, including a balance sheet and a
statement of operations for the preceding fiscal year. He shall perform
all the acts incidental to the office of Treasurer, subject to the
control of the Board of Trustees.
12. ASSISTANT TREASURER. The Assistant Treasurer shall in the absence or
disability of the Treasurer, perform the duties and exercise the powers
of the Treasurer and shall perform such other duties as the Board of
Trustees may from time to time prescribe.
VI
INDEMNIFICATION AND INSURANCE
1. AGENTS, PROCEEDINGS AND EXPENSES. For the purpose of this Article,
"agent" means any person who is or was a Trustee or officer of this Trust
and any person who, while a trustee or officer of this Trust, is or was
serving at the request of this Trust as a Trustee, director, officer,
partner, employee, or agent of another foreign or domestic corporation,
partnership, joint venture, trust or other enterprise; "Trust" includes
any domestic or foreign predecessor entity of this Trust in a merger,
consolidation, or other transaction in which the predecessor's existence
ceased upon consummation of the transaction; "proceeding" means any
threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative, or investigative; and "expenses"
includes without limitation attorney's fees and any expenses of
establishing a right to indemnification under this Article.
2. ACTIONS OTHER THAN BY TRUST. This Trust shall indemnify any person who
was or is a party or is threatened to be made a party to any proceeding
(other than an action by or in the right of this Trust) by reason of the
fact that such person is or was an agent of this Trust, against expenses,
judgments, fines, settlements and other amounts actually and reasonably
incurred in connection with such proceeding, if it is determined that
person acted in good faith and reasonably believed: (a) in the case of
conduct in his official capacity as an agent of the Trust, that his
conduct was in the Trust's best interests and (b) in all other cases,
that his conduct was at least not opposed to the Trust's best interests
and (c) in the case of a criminal proceeding, that he had no reasonable
cause to believe the conduct of that person was unlawful. The
termination of any proceeding by judgment, order or settlement shall not
of itself create a presumption that the person did not meet the requisite
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standard of conduct set forth in this Section. The termination of any
proceeding by conviction, or a plea of nolo contendere or its equivalent,
or an entry of an order of probation prior to judgment, creates a
rebuttable presumption that the person did not meet the requisite
standard of conduct set forth in this Section.
3. ACTIONS BY THE TRUST. This Trust shall indemnify any person who was or
is a party or is threatened to be made a party to any proceeding by or in
the right of this Trust to procure a judgment in its favor by reason of
the fact that that person is or was an agent of this Trust, against
expenses actually and reasonably incurred by that person in connection
with the defense or settlement of that action if that person acted in
good faith, in a manner that person believed to be in the best interests
of this Trust and with such care, including reasonable inquiry, as an
ordinarily prudent person in a like position would use under similar
circumstances.
4. EXCLUSION OF INDEMNIFICATION. Notwithstanding any provision to the
contrary contained herein, there shall be no right to indemnification for
any liability arising by reason of willful misfeasance, bad faith, gross
negligence, or the reckless disregard of the duties involved in the
conduct of the agent's office with this Trust.
No indemnification shall be made under Sections 2 or 3 of this Article:
(a) In respect of any proceeding as to which that person shall have been
adjudged to be liable on the basis that personal benefit was
improperly received by him, whether or not the benefit resulted from
an action taken in the person's official capacity; or
(b) In respect of any proceeding as to which that person shall have been
adjudged to be liable in the performance of that person's duty to
this Trust, unless and only to the extent that the court in which
that action was brought shall determine upon application that in
view of all the relevant circumstances of the case, that person is
fairly and reasonably entitled to indemnity for the expenses which
the court shall determine; however, in such case, indemnification
with respect to any proceeding by or in the right of the Trust or in
which liability shall have been adjudged by reason of the disabling
conduct set forth in the preceding paragraph shall be limited to
expenses; or
(c) Of amounts paid in settling or otherwise disposing of a proceeding,
with or without court approval, or of expenses incurred in defending
a proceeding which is settled or otherwise disposed of without court
approval, unless the required approval set forth in Section 6 of
this Article is obtained.
5. SUCCESSFUL DEFENSE BY AGENT. To the extent that an agent of this Trust
has been successful, on the merits or otherwise, in the defense of any
proceeding referred to in Sections 2 or 3 of this Article before the
court or other body before whom the proceeding was brought, the agent
shall be indemnified against expenses actually and reasonably incurred by
the agent in connection therewith, provided that the Board of Trustees,
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including a majority who are disinterested, non-party Trustees, also
determines that based upon a review of the facts, the agent was not
liable by reason of the disabling conduct referred to in Section 4 of
this Article.
6. REQUIRED APPROVAL. Except as provided in Section 5 of this Article, any
indemnification under this Article shall be made by this Trust only if
authorized in the specific case on a determination that indemnification
of the agent is proper in the circumstances because the agent has met the
applicable standard of conduct set forth in Sections 2 or 3 of this
Article and is not prohibited from indemnification because of the
disabling conduct set forth in Section 4 of this Article, by:
(a) A majority vote of a quorum consisting of Trustees who are not
parties to the proceeding and are not interested persons of the
Trust (as defined in the Investment Company Act of 1940);
(b) A written opinion by an independent legal counsel; or
(c) The shareholders; however, shares held by agents who are parties to
the proceeding may not be voted on the subject matter under this Sub-
Section.
7. ADVANCE OF EXPENSES. Expenses incurred in defending any proceeding may
be advanced by this Trust before the final disposition of the proceeding
if (a) receipt of a written affirmation by the agent of his good faith
belief that he has met the standard of conduct necessary for
indemnification under this Article and a written undertaking by or on
behalf of the agent, such undertaking being an unlimited general
obligation to repay the amount of the advance if it is ultimately
determined that he has not met those requirements, and (b) a
determination that the facts then known to those making the determination
would not preclude indemnification under this Article. Determinations
and authorizations of payments under this Section must be made in the
manner specified in Section 6 of this Article for determining that the
indemnification is permissible.
8. OTHER CONTRACTUAL RIGHTS. Nothing contained in this Article shall affect
any right to indemnification to which persons other than Trustees and
officers of this Trust or any subsidiary hereof may be entitled by
contract or otherwise.
9. LIMITATIONS. No indemnification or advance shall be made under this
Article, except as provided in Sections 5 or 6 in any circumstances where
it appears:
(a) That it would be inconsistent with a provision of the Agreement and
Declaration of Trust of the Trust, a resolution of the shareholders,
or an agreement in effect at the time of accrual of the alleged
cause of action asserted in the proceeding in which the expenses
were incurred or other amounts were paid which prohibits or
otherwise limits indemnification; or
(b) That it would be inconsistent with any condition expressly imposed
by a court in approving a settlement.
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10. INSURANCE. Upon and in the event of a determination by the Board of
Trustees of this Trust to purchase such insurance, this Trust shall
purchase and maintain insurance on behalf of any agent or employee of
this Trust against any liability asserted against or incurred by the
agent or employee in such capacity or arising out of the agent's or
employee's status as such to the fullest extent permitted by law.
11. FIDUCIARIES OF EMPLOYEE BENEFIT PLAN. This Article does not apply to any
proceeding against any Trustee, investment manager or other fiduciary of
an employee benefit plan in that person's capacity as such, even though
that person may also be an agent of this Trust as defined in Section 1 of
this Article. Nothing contained in this Article shall limit any right to
indemnification to which such a Trustee, investment manager, or other
fiduciary may be entitled by contract or otherwise which shall be
enforceable to the extent permitted by applicable law other than this
Article.
VII
SHARES OF BENEFICIAL INTEREST
1. CERTIFICATES. A certificate or certificates representing and certifying
the class and the full, but not fractional, number of shares of
beneficial interest owned by each shareholder in the Trust shall not be
issued except as the Board of Trustees may otherwise determine from time
to time. Any such certificate issued shall be signed by facsimile
signature or otherwise by the President or a Vice-President and counter-
signed by the Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer.
2. SIGNATURE. In case any officer who has signed any certificate ceases to
be an officer of the Trust before the certificate is issued, the
certificate may nevertheless be issued by the Trust with the same effect
as if the officer had not ceased to be such officer as of the date of its
issue.
3. RECORDING AND TRANSFER WITHOUT CERTIFICATES. The Trust shall have the
full power to participate in any program approved by the Board of
Trustees providing for the recording and transfer of ownership of the
Trust's shares by electronic or other means without the issuance of
certificates.
4. LOST CERTIFICATES. The Board of Trustees may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the Trust alleged to have been stolen, lost or
destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to have been stolen, lost or destroyed,
or upon other satisfactory evidence of such theft, loss or destruction
and may in its discretion and as a condition precedent to the issuance
thereof, require the owner of such stolen, lost or destroyed certificate
or certificates, or his legal representative, to give the Trust a bond
with sufficient surety, to the Trust to indemnify it against any loss or
claim that may be made by reason of the issuance of a new certificate.
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5. TRANSFER OF SHARES. Transfers of shares of beneficial interest of the
Trust shall be made on the books of the Trust by the holder of record
thereof (in person or by his attorney thereunto duly authorized by a
power of attorney duly executed in writing and filed with the Secretary
of the Trust) (i) if a certificate or certificates have been issued, upon
the surrender of the certificate or certificates, properly endorsed or
accompanied by proper instruments of transfer, representing such shares,
or (ii) as otherwise prescribed by the Board of Trustees. Every
certificate exchanged, surrendered for redemption or otherwise returned
to the Trust shall be marked "Canceled" with the date of cancellation.
6. REGISTERED SHAREHOLDERS. The Trust shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of
shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the
owner of shares, and shall not be bound to recognize any equitable or
other claim to or interest in such share or shares on the part of any
other person, whether or not it shall have express or other notice
thereof, except as otherwise provided by applicable law or the
Declaration of Trust.
7. TRANSFER AGENTS AND REGISTRARS. The Board of Trustees may, from time to
time, appoint or remove transfer agents and or registrars of the Trust,
and they may appoint the same person as both transfer agent and
registrar. Upon any such appointment being made, all certificates
representing shares of beneficial interest thereafter issued shall be
countersigned by such transfer agent and shall not be valid unless so
countersigned.
8. STOCK LEDGER. The Trust shall maintain an original stock ledger
containing the names and addresses of all shareholders and the number and
class of shares held by each shareholder. Such stock ledger may be in
written form or any other form capable of being converted into written
form within reasonable time for visual inspection.
VIII
GENERAL PROVISIONS
1. CUSTODIANSHIP. Except as otherwise provided by resolution of the Board
of Trustees, the Trust shall place and at all times maintain in the
custody of a custodian (including any sub-custodian for the custodian)
all funds, securities and similar investments owned by the Trust.
Subject to the approval of the Board of Trustees, the custodian may enter
into arrangements with securities depositories, provided such
arrangements comply with the provisions of the Investment Company Act of
1940 and the rules and regulations promulgated thereunder.
2. EXECUTION OF INSTRUMENTS. All deeds, documents, transfers, contracts,
agreements and other instruments requiring execution by the Trust shall
be signed by the President or a Vice President.
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3. NET ASSET VALUE. The net asset value per share shall be determined
separately as to each class of the Trust's shares, by dividing the sum of
the total market value of the class's investments and other assets, less
any liabilities, by the total outstanding shares of such class, subject
to the Investment Company Act of 1940 and any other applicable Federal
securities law or rule or regulation currently in effect.
IX
AMENDMENTS
The Board of Trustees shall have the power to make, alter and repeal the
Bylaws of the Trust.
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Exhibit 5
THE OLSTEIN FUNDS
THE OLSTEIN FINANCIAL ALERT FUND
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT, made by and between THE OLSTEIN FUNDS, a Delaware business
trust (the "Trust"), on behalf of THE OLSTEIN FINANCIAL ALERT FUND (the
"Fund"), and OLSTEIN & ASSOCIATES, L.P., a New York limited partnership (the
"Investment Manager").
W I T N E S S E T H:
WHEREAS, the Trust has been organized and operates as an investment
company registered under the Investment Company Act of 1940 (the "1940 Act")
and engages in the business of investing and reinvesting its assets in
securities; and
WHEREAS, the Investment Manager is a registered Investment Adviser under
the Investment Advisers Act of 1940 (the "Advisers Act") and engages in the
business of providing investment management services; and
WHEREAS, the Trust has selected the Investment Manager to serve as the
investment adviser for the Fund effective as of the date of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and each of the parties hereto intending to be legally bound, it is
agreed as follows:
1. The Trust on behalf of the Fund hereby employs the Investment
Manager to manage the investment and reinvestment of the Fund's
assets and to administer its affairs, subject to the direction of
the Board of Trustees and officers of the Trust, for the period and
on the terms hereinafter set forth. The Investment Manager hereby
accepts such employment and agrees during such period to render the
services and assume the obligations herein set forth for the
compensation herein provided. The Investment Manager shall for all
purposes herein, be deemed to be an independent contractor, and
shall, unless otherwise expressly provided and authorized, have no
authority to act for or to represent the Trust or the Fund in any
way, or in any way be deemed an agent of the Trust or the Fund. The
Investment Manager shall regularly make decisions as to what
securities to purchase and sell on behalf of the Fund and shall
record and implement such decisions and shall furnish the Board of
Trustees of the Trust with such information and reports regarding
the Fund's investments as the Investment Manager deems appropriate
or as the Trustees of the Trust may reasonably request. Subject to
compliance with the requirements of the 1940 Act, the Investment
Manager may retain as a sub-adviser to the Fund, at the Investment
Manager's own expense, any investment adviser registered under the
Advisers Act.
<PAGE>
2. The Fund shall conduct its own business and affairs and shall bear
the expenses and salaries necessary and incidental thereto
including, but not in limitation of the foregoing, the costs
incurred in: the maintenance of its corporate existence; the
maintenance of its own books, records and procedures; dealing with
its own shareholders; the payment of dividends; transfer of stock,
including issuance, redemption and repurchase of shares; preparation
of share certificates; reports and notices to shareholders; calling
and holding of shareholders' meetings; miscellaneous office
expenses; brokerage commissions; custodian fees; legal and
accounting fees; and taxes. Partners and employees of the
Investment Manager may be trustees, directors, officers and
employees of the funds of which the Investment manager serves as
investment adviser. Partners and employees of the Investment
Manager who are trustees, officers and/or employees of the Trust
shall not receive any compensation from the Trust for acting in such
dual capacity.
In the conduct of the respective businesses of the parties hereto
and in the performance of this Agreement, the Trust may obtain
office space and facilities from the Investment Manager and will
reimburse the Investment Manager for its rent or other expenses
thereby incurred.
3. (a) The Investment Manager shall place and execute Fund orders
for the purchase and sale of portfolio securities with broker-
dealers. Subject to the obtaining the best available prices
and execution, the Investment Manager is authorized to place
orders for the purchase and sale of portfolio securities for
the Fund with such broker-dealers as it may select from time to
time. Subject to subparagraph (b) below, the Investment
Manager is also authorized to place transactions with brokers
who provide research or statistical information or analyses to
the Fund, to the Investment Manager, or to any other client for
which the Investment Manager provides investment advisory
services. Subject to obtaining the best available prices and
execution, the Investment Manager may also place brokerage
transactions with broker-dealers who sell shares of the Fund.
Broker-dealers who sell shares of the Fund shall only receive
orders for the purchase or sale of portfolio securities to the
extent that the placing of such orders is in compliance with
the Rules of the U.S. Securities and Exchange Commission and
the National Association of Securities Dealers, Inc. The
Investment Manager also agrees that it will cooperate with the
Trust to execute instructions that brokerage transactions be
allocated to brokers or dealers who provide benefits directly
to the Fund.
(b) Notwithstanding the provisions of subparagraph (a) above
and subject to such policies and procedures as may be adopted
by the Board of Trustees and officers of the Trust, the
Investment Manager is authorized to pay a member of an
exchange, broker or dealer an amount of commission for
effecting a securities transaction in excess of the amount of
commission another member of an exchange, broker or dealer
would have charged for effecting that transaction, in such
<PAGE>
instances where the Investment Manager has determined in good
faith that such amount of commission was reasonable in relation
to the value of the brokerage and research services provided
by such member, broker or dealer, viewed in terms of either
that particular transaction or the Investment Manager's
overall responsibilities with respect to the Fund and to other
funds for which the Investment Manager exercises investment
discretion.
(c) The Investment Manager is authorized to direct portfolio
transactions to a broker which is an affiliated person of the
Investment Manager or the Fund in accordance with such -4-
standards and procedures as may be approved by the Board in
accordance with 1940 Act Rule 17e-1, or other rules promulgated
by the Securities and Exchange Commission. Any transaction
placed with an affiliated broker must (i) be placed at best
price and execution, and (ii) may not be a principal
transaction.
4. As compensation for the services to be rendered to the Fund by the
Investment Manager under the provisions of this Agreement, the Trust
on behalf of the Fund shall pay to the Investment Manager from the
Fund's assets an annual fee equal to 1.00% of the daily average net
assets of the Fund, payable on a monthly basis, subject to reduction
to the extent necessary to comply with the most stringent limits
prescribed by any state in which the Fund's shares are offered for
sale.
If this Agreement is terminated prior to the end of any calendar
month, the management fee shall be prorated for the portion of any
month in which this Agreement is in effect according to the
proportion which the number of calendar days, during which the
Agreement is in effect, bears to the number of calendar days in the
month, and shall be payable within 10 days after the date of
termination.
5. The services to be rendered by the Investment Manager to the Trust
on behalf of the Fund under the provisions of this Agreement are not
to be deemed to be exclusive, and the Investment Manager shall be
free to render similar or different services to others so long as
its ability to render the services provided for in this Agreement
shall not be impaired thereby.
6. The Investment Manager, its partners, employees, and agents may
engage in other businesses, may render investment advisory services
to other investment companies, or to any other corporation,
association, firm or individual, and may render underwriting
services to the Trust on behalf of the Fund or to any other
investment company, corporation, association, firm or individual.
In accordance with the Investment Advisers Act of 1940, if there is
a change in the membership of the Investment Manager, which is a
partnership, the Investment Manager shall, within a reasonable time
after such change, notify the Trust of the change.
<PAGE>
7. In the absence of willful misfeasance, bad faith, gross negligence,
or a reckless disregard of the performance of duties of the
Investment Manager to the Fund, the Investment Manager shall not be
subject to liabilities to the Fund or to any shareholder of the Fund
for any action or omission in the course of, or connected with,
rendering services hereunder or for any: losses that may be
sustained in the purchase, holding or sale of any security, or
otherwise.
8. In accordance with the Agreement and Declaration of Trust of the
Trust, in the event that the Investment Manager ceases to be the
Fund's investment adviser for any reason, the Trust will (unless the
Investment Manager otherwise agrees in writing) promptly take all
necessary steps to propose to the Fund's shareholders at the next
regular meeting that the Fund change to a name not including the
words "Olstein" or "Olstein Financial Alert."
9. This Agreement shall be executed and become effective as of the date
written below if approved by the vote of a majority of the
outstanding voting securities of the Fund. It shall continue in
effect for a period of two years and may be renewed thereafter only
so long as such renewal and continuance is specifically approved at
least annually by the Board of Trustees or by vote of a majority of
the outstanding voting securities of the Fund and only if the terms
and the renewal hereof have been approved by the vote of a majority
of the Trustees of the Trust who are not parties hereto or
interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval. No amendment to
this Agreement shall be effective unless the terms thereof have been
approved by the vote of a majority of the outstanding voting
securities of the Fund and by the vote of a majority of Trustees of
the Trust who are not parties to the Agreement or interested persons
of any such party, cast in person at a meeting called for the
purpose of voting on such approval. Notwithstanding the foregoing,
this Agreement may be terminated by the Trust at any time, without
the payment of a penalty, on sixty days' written notice to the
Investment Manager of the Trust's intention to do so, pursuant to
action by the Board of Trustees of the Trust or pursuant to a vote
of a majority of the outstanding voting securities of the Fund. The
Investment Manager may terminate this Agreement at any time, without
the payment, of penalty on sixty days' written notice to the Trust
of its intention to do so. Upon termination of this Agreement, the
obligations of all the parties hereunder shall cease and terminate
as of the date of such termination, except for any obligation to
respond for a breach of this Agreement committed prior to such
termination, and except for the obligation of the Trust to pay to
the Investment Manager the fee provided in Paragraph 4 hereof,
prorated to the date of termination. This Agreement shall
automatically terminate in the event of its assignment.
10. This Agreement shall extend to and bind the heirs, executors,
administrators and successors of the parties hereto.
11. For the purposes of this Agreement, the terms "vote of a majority of
the outstanding voting securities"; "interested persons"; and
"assignment" shall have the meaning defined in the 1940 Act.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their corporate seals
to be affixed and duly attested and their presents to be signed by their duly
authorized officers this 18th day of August, 1995.
Attest: THE OLSTEIN FUNDS
By: /s/ Robert A. Olstein
Robert A. Olstein, President
Attest: Olstein & Associates, L.P.
By: /s/ Olstein, Inc.
General Partner
____________________ By: /s/ Robert A. Olstein
Robert A. Olstein, President
Exhibit 6(a)
THE OLSTEIN FUNDS
RODNEY SQUARE DISTRIBUTORS, INC.
OLSTEIN & ASSOCIATES, L.P.
DISTRIBUTION AGREEMENT
THIS DISTRIBUTION AGREEMENT is made as of the 18th day of August, 1995,
among The Olstein Funds (the "Trust"), a Delaware business trust, Rodney
Square Distributors, Inc. ("Rodney Square"), a corporation organized under the
laws of the State of Delaware, having its principal place of business in
Wilmington, Delaware, and Olstein & Associates, L.P. ("Olstein"), a limited
partnership organized under the laws of the State of New York. Rodney Square
and Olstein together may be referred to herein as the "National Distributors."
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment
company;
WHEREAS, the National Distributors are engaged in the business of
promoting the distribution of the securities of investment companies, and are
members of the National Association of Securities Dealers (the "NASD") and are
registered as broker-dealers under the Securities Exchange Act of 1934 (the
"1934 Act");
WHEREAS, the Trust is authorized to issue an unlimited number of shares
of beneficial interest, par value $0.001 per share ("Shares") in one or more
classes or series, and has registered such Shares for public offering and
distribution under the Securities Act of 1933 (the "1933 Act") and any
applicable state securities laws;
WHEREAS, the Trust is authorized to offer for public sale one or more
distinct series of Shares of beneficial interest ("Series"), representing an
undivided interest in the assets, subject to the liabilities, allocated to
that Series and each Series having a separate investment objective and
policies;
WHEREAS, the Trust anticipates that it will establish multiple Series
(each a "Fund");
WHEREAS, the Trust wishes to employ the services of the National
Distributors to assist in the distribution of the Shares in accordance with
applicable laws and such Plan of Distribution as the Trust may adopt; and
WHEREAS, the National Distributors wish to provide distribution services
to the Trust as set forth below;
NOW, THEREFORE, in consideration of the mutual premises and undertakings
herein contained, the parties agree as follows:
DIST.RTF
<PAGE>
1. SALE OF SHARES. During the term of this Agreement the Trust grants
to the National Distributors the right to sell on its behalf Shares of all
Series of the Trust, now or hereafter created, subject to the registration
requirements of the 1933 Act, and of the laws governing the sale of securities
in various states (the "Blue Sky Laws") under the terms and conditions set
forth herein. In connection therewith, the National Distributors (i) shall
have the right to sell, as agent on behalf of the Trust, Shares authorized for
issue and registered under the 1933 Act and applicable Blue Sky Laws; (ii)
shall sell such Shares only in compliance with applicable law, the terms set
forth in the Trust's currently effective registration statement, and in
accordance with any Plan of Distribution of the Trust for any Series, as may
be in effect from time to time, and further in compliance with any limitations
which may be imposed by the Trustees of the Trust, and (iii) shall, subject to
approval by the Trustees of the Trust, agree to the delegation of
responsibilities among themselves under this Agreement as provided in Schedule
A to this Agreement, which may be amended from time to time. The National
Distributors are not obligated to sell any specific number of Shares.
2. SELLING DEALER AGREEMENTS. Subject to the supervisory authority of
the Trustees of the and on such terms as are authorized by the Trust, Olstein
may enter into selling dealer agreements with selected dealers and others
("Selling Dealers") for the provision of distribution services related to the
sale of Trust Shares as well as other shareholder services as agreed by
affected parties. Olstein only will act as principal in entering into such
selling dealer agreements.
3. SALE OF SHARES BY THE TRUST. The rights granted to the National
Distributors shall be non-exclusive in that the Trust reserves the right to
sell its Shares to investors on applications received and accepted by the
Trust. Further, the Trust reserves the right to issue Shares in connection
with (a) the merger or consolidation of the assets of, or acquisition by the
Trust through purchase or otherwise, with any other investment company, trust
or personal holding company; (b) the payment or reinvestment of dividends or
distributions; or (c) any offer of exchange permitted by Section 11 of the
1940 Act.
4. SHARES COVERED BY THIS AGREEMENT. This Agreement shall apply to
Shares of all Series of the Trust, Shares of all Series of the Trust held in
its treasury in the event that in the discretion of the Trust treasury Shares
shall be sold, and Shares of all Series of the Trust repurchased for resale.
5. PUBLIC OFFERING PRICE. Except as otherwise noted in the Trust's
current Prospectus (the "Prospectus") or Statement of Additional Information
(the "SAI") with respect to each Series, all Shares sold to investors by the
National Distributors or the Trust will be sold at the public offering price.
The public offering price for all accepted subscriptions will be the net asset
value per share, plus any applicable sales charge on such Shares, determined
in the manner described in the Trust's current Prospectus or SAI with respect
to the applicable Series. The Trust shall in all cases receive not less than
the net asset value per share on all sales.
2
<PAGE>
6. SUSPENSION OF SALES. If and whenever the determination of net asset
value is suspended and until such suspension is terminated, no further orders
for Shares shall be processed by the National Distributors except such
unconditional orders placed with the National Distributors before it had
knowledge of the suspension. In addition, the Trust reserves the right to
suspend sales and the National Distributors's authority to process orders for
Shares on behalf of the Trust if, in the judgment of the Trust, it is in the
best interests of the Trust to do so. Suspension will continue for such period
as may be determined by the Trust. In addition, the Trust and the National
Distributors reserve the right to reject any purchase order.
7. SOLICITATION OF SALES. In consideration of these rights granted to
the National Distributors, the National Distributors agree to use all
reasonable efforts, consistent with their other business, to secure purchasers
for Shares of the Trust. This shall not prevent the National Distributors
from entering into like arrangements (including arrangements involving the
payment of underwriting commissions) with other issuers. The National
Distributors agree to use all reasonable efforts to ensure that taxpayer
identification numbers provided for shareholders of the Trust are correct.
8. AUTHORIZED REPRESENTATIONS. The National Distributors are not
authorized by the Trust to give any information or to make any representations
other than those contained in the appropriate registration statements,
Prospectuses or SAI's filed with the Securities and Exchange Commission (the
"SEC") under the 1933 Act or with the states under applicable Blue Sky Laws
(as those registration statements, Prospectuses and SAI's may be amended from
time to time), or contained in shareholder reports or other material that may
be prepared by or on behalf of the Trust for the National Distributors' use.
This shall not be construed to prevent the National Distributors from
preparing and distributing, in compliance with applicable laws and
regulations, sales literature or other material as it may deem appropriate.
The National Distributors will furnish or cause to be furnished copies of such
sales literature or other material to the President of the Trust or his or her
designee and will provide that designee with a reasonable opportunity to
comment on it. The National Distributors agree to take appropriate action to
cease using such sales literature or other material to which the Trust
reasonably objects as promptly as practicable after receipt of the objection.
9. REGISTRATION OF SHARES. The Trust agrees that it will take all
action necessary to register under the 1933 Act and applicable state Blue Sky
Laws all shares which are to be made subject to any public offering or sale
(subject to the necessary approval, if any, of its shareholders) so that there
will be available for sale the number of Shares the National Distributors may
reasonably be expected to sell. The Trust shall furnish to the National
Distributors copies of all information, financial statements and other papers
which the National Distributors may reasonably request for use in connection
with the distribution of Shares of each Series of the Trust.
10. REPURCHASE OF SHARES. The National Distributors as agent and for the
account of the Trust may repurchase Shares offered for resale to either of
them, and redeem such Shares at their net asset value.
3
<PAGE>
11. EXPENSES, COMPENSATION AND REIMBURSEMENT.
(a) The Trust shall pay all fees and expenses:
(i) in connection with the preparation, setting in type and
filing of any registration statement, Prospectus and SAI
under the 1933 Act, and any amendments thereto, for the
registration of its Shares;
(ii) in connection with the registration and qualification of
Shares for sale in the various states in which the Board
of Trustees (the "Trustees") of the Trust shall determine
it advisable to qualify such Shares for sale (including
registering the Trust or Series as a broker or dealer or
any officer of the Trust as agent or salesperson in any
state);
(iii) of preparing, setting in type, printing and mailing
any report or other communication to shareholders of the
Trust in their capacity as such; and
(iv) of preparing, setting in type, printing and mailing
Prospectuses, SAI's, and any supplements thereto, sent to
existing shareholders.
(b) The National Distributors shall pay costs of:
(i) printing and distributing Prospectuses, SAI's and reports
prepared for its use in connection with the offering of
Shares for sale to the public;
(ii) any other literature used in connection with such
offering;
(iii) advertising in connection with such offering
including, but not limited to public relations services,
sales presentations, media charges, and preparation,
printing and mailing of advertising and sales literature;
data processing necessary to support a distribution
effort; printing and mailing prospectuses to prospective
investors; sales commissions; and distribution and
shareholder servicing activities of broker-dealers and
other financial institutions; and
(iv) filing fees required by regulatory authorities for sales
literature and advertising materials and any additional
out-of-pocket expenses incurred in connection with these
and any other costs of distribution.
(c) In addition to the services described above, the National
Distributors will provide services, including assistance in the
production of marketing and advertising materials for the sale
of Shares of the Trust, and Rodney Square will review them for
compliance with applicable regulatory requirements and submit
them for required regulatory review.
4
<PAGE>
(d) In connection with the services to be provided by the National
Distributors under this Agreement:
(i) Olstein shall pay to Rodney Square an annual fee as
provided in Schedule A, and shall advance to, or reimburse
Rodney Square for, disbursements and expenses which Rodney
Square may incur pursuant to this Agreement; and
(ii) Olstein shall receive from the Trust such underwriting
discounts as shall be authorized from time to time with
respect to the sale of Shares, such payments as shall be
authorized to be paid by the Trust pursuant to any Plan of
Distribution adopted by the Trust in accordance with Rule
12b-1 under the 1940 Act, and reimbursement of such
expenses of the Trust as may be paid by Olstein from time
to time.
(e) In connection with the services to be provided by the National
Distributors under this Agreement, and payments to be made and
expenses to be incurred by the parties under this Agreement,
each National Distributor agrees to provide to the Board of
Trustees of the Trust such information as may be required to be
reviewed by the Trustees under Rule 12b-1 of the 1940 Act,
including such financial information as may be required in
connection with the adoption, supervision, or continuation of
any Plan of Distribution of the Trust under such rule, or the
adoption of any budget thereunder.
(f) For purposes of Shares purchased via Fund/SERV:
(i) Rodney Square agrees to enter into a certain Additional
Number Agreement with the National Securities Clearing
Corporation ("NSCC"), until such time as the Trust has
become a Fund Member itself,to obtain additional clearing
number from NSCC, to be used by Rodney Square/Olstein
which number may be used for settlement of Fund/SERV
transactions;
(ii) The Trust agrees to guarantee payment to NSCC of any and
all charges imposed by NSCC from time to time relating to
the Rodney Square/Olstein clearing number;
(iii) Rodney Square shall forward all fees and charges to
the Rodney Square/Olstein clearing number to the Fund for
payment by the Fund to NSCC;
(iv) The Trust shall accept full liability for any fees or
charges regarding transactions clearing through the
Rodney Square/Olstein clearing number;
(v) Rodney Square shall have the right to terminate the
Additional Number Agreement at any time following the
acceptance of the Trust as Fund Member and being issued
its own clearing number in accordance with transition
procedures.
5
<PAGE>
12. INDEMNIFICATION.
(a) The Trust agrees to indemnify and hold harmless each National
Distributor and each of its trustees and officers and each
person, if any, who controls such National Distributor within
the meaning of Section 15 of the 1933 Act against any loss,
liability, claim, damages or expense (including the reasonable
cost of investigating or defending any alleged loss, liability,
claim, damages, or expense and reasonable counsel fees incurred
in connection therewith) arising by reason of any person
acquiring any Shares of beneficial interest of the Trust, based
upon the 1933 Act or any other statute or common law, alleging
any wrongful act of the Trust or any of its employees or
representatives, or based upon the grounds that the
registration statements, Prospectuses, SAI's, shareholder
reports or other information filed or made public by the Trust
(as from time to time amended) included an untrue statement of
a material fact or omitted to state a material fact required to
be stated or necessary in order to make the statements not
misleading. However, the Trust does not agree to indemnify a
National Distributor or hold it harmless to the extent that the
statement or omission was made in reliance upon, and in
conformity with, information furnished to the Trust in writing
by or on behalf of such National Distributor. In no case (i)
is the indemnity of the Trust in favor of a National
Distributor or any person indemnified to be deemed to protect
the National Distributors or any person against any liability
to the Trust or its security holders to which the National
Distributor or such person would otherwise be subject by reason
of willful misfeasance, bad faith or ordinary negligence in the
performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement,
or (ii) is the Trust to be liable under its indemnity agreement
contained in this section with respect to any claim made
against the National Distributors or any person indemnified
unless the National Distributor or person, as the case may be,
shall have notified the Trust in writing of the claim within a
reasonable time after the summons or other first written
notification giving information of the nature of the claim
shall have been served upon the National Distributor or any
such person or after the National Distributor or such person
shall have received notice of service on any designated agent.
However, except to the extent the Trust is harmed thereby,
failure to notify the Trust of any claim shall not relieve the
Trust from any liability which it may have to the National
Distributors or any person against whom such action is brought
other than on account of its indemnity agreement contained in
this section. The Trust shall be entitled to participate at
its own expense in the defense, or, if it so elects, to assume
the defense of any suit brought to enforce any claims, but if
the Trust elects to assume the defense, the defense shall be
conducted by counsel chosen by it and satisfactory to the
National Distributors, or person or persons, defendant or
defendants in the suit. In the event the Trust elects to
assume the defense of any suit and retain counsel, the National
Distributors, officers or trustees or controlling person(s) or
defendant(s) in the suit, shall bear the fees and expenses of
6
<PAGE>
any additional counsel retained by them. If the Trust does not
elect to assume the defense of any suit, it will reimburse the
National Distributors, officers or trustee or controlling
person(s) or defendant(s) in the suit, for the reasonable fees
and expenses of any counsel retained by them. The Trust agrees
to notify the National Distributors promptly of the
commencement of any litigation or proceedings against it or any
of its officers or Trustees in connection with the issuance or
sale of any of the Shares.
(b) Each National Distributor also covenants and agrees that it
will indemnify and hold harmless the Trust and each of its
trustees and officers and each person, if any, who controls the
Trust within the meaning of Section 15 of the 1933 Act, against
any loss, liability, damages, claim or expense (including the
reasonable cost of investigating or defending any alleged loss,
liability, damages, claim or expense and reasonable counsel
fees incurred in connection therewith) arising by reason of any
person acquiring any Shares, based upon the 1933 Act or any
other statute or common law, alleging any wrongful act of the
National Distributor from which such indemnification is sought,
or any of its employees or representatives, or alleging that
the registration statements, Prospectuses, SAI's, shareholder
reports or other information filed or made public by the Trust
(as from time to time amended) included an untrue statement of
a material fact or omitted to state a material fact required to
be stated or necessary in order to make the statements not
misleading, insofar as the statement or omission was made in
reliance upon, and in conformity with, information furnished in
writing to the Trust by or on behalf of the National
Distributor from which such indemnification is sought. In no
case (i) is the indemnity of a National Distributor in favor of
the Trust or any person indemnified to be deemed to protect the
Trust or any person against any liability to which the Trust or
such person would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance
of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement, or (ii) is a
National Distributor to be liable under its indemnity agreement
contained in this section with respect to any claim made
against the Trust or any person indemnified unless the Trust or
person, as the case may be, shall have notified the National
Distributor in writing of the claim within a reasonable time
after the summons or other first written notification giving
information of the nature of the claim shall have been served
upon the Trust or any such person or after the Trust or such
person shall have received notice of service on any designated
agent. However, failure to notify a National Distributor of
any claim shall not relieve that National Distributor from any
liability which it may have to the Trust or any person against
whom the action is brought other than on account of its
indemnity agreement contained in this section. In the case of
any notice to a National Distributor, it shall be entitled to
participate, at its own expense, in the defense or, if it so
elects, to assume the defense of any suit brought to enforce
any claims, but if the National Distributor elects to assume
7
<PAGE>
the defense, the defense shall be conducted by counsel chosen
by it and satisfactory to the Trust, to its officers and
trustees and to any controlling person(s) or any defendants(s)
in the suit. In the event the National Distributor elects to
assume the defense of any suit and retain counsel, the Trust or
controlling person(s) or defendant(s) in the suit, shall bear
the fees and expenses of any additional counsel retained by
them. If the National Distributor does not elect to assume the
defense of any suit, it will reimburse the Trust, its officers
or Trustees, controlling person(s) or defendant(s) in the suit,
for the reasonable fees and expenses of any counsel retained by
them. Each National Distributor agrees to notify the Trust
promptly of the commencement of any litigation or proceedings
against it in connection with the issue and sale of any of the
Shares.
13. LIABILITY OF THE NATIONAL DISTRIBUTORS. Neither National
Distributor shall be liable for any damages or loss suffered by the Trust in
connection with the matters to which this Agreement relates, except for damage
or loss resulting from willful misfeasance, bad faith or gross negligence on
the National Distributor's part in the performance, or reckless disregard, of
its duties under this Agreement. Any person, even though also an officer,
partner, employee or agent of a National Distributor, or any of its
affiliates, who may be or become an officer of the Trust, shall be deemed,
when rendering services to or acting on any business of the Trust in any such
capacity (other than services or business in connection with the National
Distributors's duties under this Agreement), to be rendering such services to
or acting solely for the Trust and not as an officer, partner, employee or
agent or one under the control or direction of a National Distributor or any
of its affiliates, even if paid by a National Distributor or an affiliate
thereof.
14. ACTS OF GOD, EQUIPMENT FAILURE. Neither National Distributor shall
be liable for any delays or errors occurring by reason of circumstances not
reasonably foreseeable and beyond its control, including but not limited to
acts of civil or military authority, national emergencies, work stoppages,
fire, flood, catastrophe, acts of God, insurrection, war, riot or failure of
communication or power supply. In addition, in the event of equipment
breakdowns which are (i) beyond the reasonable control of a National
Distributor and (ii) not primarily attributable to the failure of the National
Distributor to reasonably maintain or provide for the maintenance of such
equipment, the respective National Distributor shall, at no additional expense
to the Trust, take reasonable steps in good faith to minimize service
interruptions but shall have no liability with respect thereto.
15. EFFECTIVENESS, TERMINATION.
(a) This Agreement shall become effective as of the date first
written above, and unless terminated as provided, shall
continue in force for two (2) years from the date of its
execution and thereafter from year to year, provided
continuance is approved at least annually by either (i) the
vote of a majority of the Trustees of the Trust, or by the vote
of a majority of the outstanding voting securities of the
Trust, and (ii) the vote of a majority of those Trustees of the
Trust who are not interested persons of the Trust and who are
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<PAGE>
not parties to this Agreement or interested persons of any
party, cast in person at a meeting called for the purpose of
voting on the approval.
(b) This Agreement shall automatically terminate in the event of
its assignment. As used in this Section, the terms "vote of a
majority of the outstanding voting securities," "assignment"
and "interested person" shall have the respective meanings
specified in the 1940 Act and the rules enacted thereunder as
now in effect or as hereafter amended.
(c) In addition to termination by failure to approve continuance or
by assignment, this Agreement may at any time be terminated
without the payment of any penalty: (i) as to a National
Distributor, by the Trust (by the vote of a majority of the
Trustees of the Trust who are not interested persons of the
Trust, or by vote of a majority of the outstanding voting
securities of the Trust or an affected series of the Trust)
upon not less than sixty (60) days written notice to the
affected party; or (ii) as to Rodney Square, by Olstein upon
not less than sixty (60) days written notice to Rodney Square
and the Trust; or (iii) as to either National Distributor's own
participation, by such party upon not less than sixty (60) days
written notice to the other affected parties.
16. AMENDMENTS. The National Distributors and the Trust shall regularly
consult with each other regarding National Distributors' performance of their
obligations and their compensation under the foregoing provisions. In
connection therewith, the Trust shall submit to National Distributors at a
reasonable time in advance of filing with the SEC copies of any amended or
supplemented registration statement of the Trust (including exhibits) under
the 1933 Act, and the 1940 Act, and, a reasonable time in advance of their
proposed use, copies of any amended or supplemented forms relating to any
plan, program or service offered by the Trust. Any change in such materials
that would require any change in the National Distributors' obligations under
the foregoing provisions shall be subject to the burdened party's approval,
which shall not be unreasonably withheld. In the event that a change in such
documents or in the procedures contained therein increases the cost or
potential liability to the National Distributors in performing their
obligations hereunder by more than an insubstantial amount, the National
Distributors shall be entitled to receive reasonable compensation therefor.
This Agreement may be amended at any time by mutual consent of the
parties, provided that such consent on the part of the Trust shall have been
approved (i) by the Trustees of the Trust, or by a vote of a majority of the
outstanding voting securities of the Trust, and (ii) by vote of a majority of
the Trustees of the Trust who are not interested persons of the National
Distributors or of the Trust cast in person at a meeting called for the
purpose of voting on such amendment.
17. NOTICE. Any notice under this Agreement shall be given in writing
addressed to the party intended to receive such notice. Any notice may be
hand delivered, or may be sent by registered or certified mail, postage
prepaid, to the receiving party, at its principal place of business.
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<PAGE>
18. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
19. GOVERNING LAW. To the extent that state law has not been preempted
by the provisions of any law of the United States heretofore or hereafter
enacted, as the same may be amended from time to time, this Agreement shall be
administered, construed and enforced according to the laws of the State of
Delaware.
20. SHAREHOLDER LIABILITY. The National Distributors acknowledge that
they have received notice of and accept the limitations of liability set forth
in the Trust's Agreement and Declaration of Trust. The National Distributors
agree that the Trust's obligations hereunder shall be limited to the assets of
the Trust, and that the National Distributors shall have recourse solely
against the assets of the Series with respect to which the Trust's obligations
hereunder relate and shall have no recourse against the assets of any other
Series or against any shareholder, Trustee, officer, employee, or agent of the
Trust.
21. MISCELLANEOUS. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof. 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. This Agreement may be executed
in two counterparts, each of which taken together shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above written.
THE OLSTEIN FUNDS
By: /s/ Robert A. Olstein
Robert A. Olstein, President
RODNEY SQUARE DISTRIBUTORS, INC.
By: /s/ Jeffrey O. Stroble
Jeffrey O. Stroble, President
OLSTEIN & ASSOCIATES, L.P.
By: /s/ Robert A. Olstein
Robert A. Olstein, President
10
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SCHEDULE A
In accordance with Section 1 of the Distribution Agreement between the
Trust and the National Distributors, and subject to approval by the Trustees
of the Trust, the National Distributors agree to provide for the performance
of certain obligations and responsibilities under the Distribution Agreement
as follows:
I. OLSTEIN
Olstein, as co-underwriter and co-distributor, shall be responsible for
the following items under this Agreement:
1. Olstein shall establish and maintain a money market fund or money
market account with Wilmington Trust Company (the "Olstein Account"), and will
keep such account funded to the extent necessary to provide for: (a) the
payment of any up-front commissions due to Selling Dealers for sales of Trust
shares, (b) the payment of any distribution or servicing fees payable to
Selling Dealers or other servicing agents, and (c) the payment to a Fund of
the balance of the purchase price of its shares when, in connection with such
purchase order the Selling Dealer has retained from the investment by the
purchaser the amounts properly due to such Selling Dealer for such sale; all
in accordance with the then-effective prospectus and SAI for the particular
Series of the Trust.
2. Olstein shall have the sole authority to enter into agreements with
Selling Dealers, under which such Selling Dealers will provide shareholder
servicing and distribution services for the Trust. Olstein shall provide
Rodney Square with advance notice of the identity of any dealer with which
Olstein proposes to enter into a Selling Dealer Agreement, and shall not
execute any such agreement until Rodney Square has completed a suitable due
diligence evaluation of such dealer firm.
3. Olstein shall continue to be a member in good standing of the NASD,
and maintain its registration as a broker-dealer with the SEC and any other
state or jurisdiction in which it conducts business requiring such
registration in connection with sales of the Trust's shares.
4. Olstein shall pay to Rodney Square, for Rodney Square's services
under this Agreement, the sum of $12,000 per annum payable monthly, which
shall represent Rodney Square's total remuneration under this Agreement, as
Rodney Square will not receive 12b-1 Fees. In addition, Olstein shall
reimburse Rodney Square for any out-of-pocket expenses incurred including, but
not limited to Section 11(b) hereof.
II. RODNEY SQUARE
Rodney Square, as co-underwriter and co-distributor, shall be responsible
for the following items under this Agreement:
A-1
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1. Rodney Square shall continue to be a member in good standing of the
NASD, and maintain its registration as a broker-dealer with the SEC, the 50
states, and the District of Columbia, so that Rodney Square may lawfully be
listed as the broker of record in connection with sales of the Trusts shares,
and lawfully communicate with customers in the various jurisdictions with
respect to sales of the Trusts shares. Rodney Square reserves the right to
hire a registered broker dealer acceptable to Olstein in any state where
Rodney Square either becomes unqualified or is restricted from registration in
any such state at Rodney Square's expense.
2. Rodney Square shall inform Olstein of all inquiries from prospective
Selling Dealers who would consider entering into Selling Dealer Agreements
with Olstein. Rodney Square shall perform on behalf of the National
Distributors a due diligence review with respect to the qualifications of
prospective Selling Dealers, and will prepare a report and recommendation with
respect to each prospective Selling Dealer's qualifications. Rodney Square
shall, when it deems appropriate, advise Olstein not to enter into an
agreement with a prospective Selling Dealer, setting forth reasons therefor.
3. Rodney Square shall review all fund-related advertising and sales
literature ("Advertising") for compliance with applicable regulations,
including the federal securities laws, and the NASD advertising rules. Rodney
Square will also submit all Advertising to the NASD for pre-clearance or
approval, as appropriate, and shall provide Olstein with information about
such activities.
A-2
Exhibit 6(b)
SMITH BARNEY
A Member of TRAVELERS Group
SMITH BARNEY INC.
MUTUAL FUND DEALER AGREEMENT
TO OLSTEIN & ASSOCIATES L.P.:
Ladies and Gentlemen:
We understand that you are principal distributor of shares ("Shares") of
Olstein Financial Alert Fund ("Fund") which is registered with the Securities
and Exchange Commission under the Investment Company Act of 1940 ("1940 Act").
You desire that Smith Barney Inc. ("Smith Barney") act as a dealer with
respect to the sale of Shares to its customers. In consideration of the
mutual covenants stated below, you and Smith Barney agree as follows:
1. PURCHASE OF SHARES AT PUBLIC OFFERING - Price. Smith Barney will use
such efforts to sell Shares as it in its sole discretion determines, and
will not be required to sell any specified or minimum number of Shares.
You understand that Smith Barney in its sole discretion may limit the
sale of Shares to certain geographic territories. Sales of Shares
through Smith Barney will be at the public offering price of such Shares
(the net asset value of the Shares plus any applicable sales charge), as
determined in accordance with the then effective prospectus(es) and
statement(s) of additional information used in connection with the offer
and sale of the Shares (collectively, the "Prospectus"). The public
offering price will reflect scheduled variations in or the elimination of
sales charges on sales of Shares either generally to the public or in
connection with special purchase plans, as described in the Prospectus.
Smith Barney agrees to apply any scheduled variation in or waivers of
sales charges uniformly to all customers meeting the qualifications
therefor as specified in the Prospectus.
2. HANDLING AND RECEIPT OF ORDERS. The handling and settlement of purchase
and redemption orders will be subject to the provisions of the Prospectus
and such further procedures you and Smith Barney determine to be
appropriate from time-to time, consistent with this Agreement. Orders
which Smith Barney receives prior to the close of business as defined in
the Prospectus and placed with you within the time frame set forth in or
consistent with the Prospectus shall be executed at the public offering
price next computed after they are received by Smith Barney. You will
provide such assistance to Smith Barney in processing orders as Smith
Barney reasonably requests. Smith Barney will be responsible for the
accuracy, timeliness and completeness of purchase, redemption or exchange
orders it transmits to you by wire or telephone. Redemptions and
repurchases will be subject to any applicable contingent deferred sales
charges, redemption fees or other charges as are provided for in the
Prospectus. Any order placed by Smith Barney for the repurchase or
redemption of Shares is subject to the timely receipt by you or the
pertinent Fund's transfer agent of all required documents in good order.
<PAGE>
3. SHAREHOLDER SERVICING. If you and Smith Barney agree, on an ongoing
basis Smith Barney will provide shareholder servicing to its customers
who maintain investments in Shares. In so doing, Smith Barney and its
employees and representatives may provide the following services, among
others: answer customer inquiries regarding the Fund and customer
investments therein; assist customers in changing dividend options;
answer questions about special investment and withdrawal plans, and
assist customers in enrolling in such plans; distribute reports and
materials relating to the Funds to customers; assist in the establishment
and maintenance of accurate customer accounts and records, including
assisting in processing changes in addresses and other customer
information; and assist in processing purchase and redemption orders.
4. COMPENSATION AND EXPENSES
A. You will pay commissions to Smith Barney in connection with the
sales of Shares at such rates as are specified in Schedule A to this
Agreement. Consistent with the Prospectus and applicable law and
regulation, from time-to-time you and Smith Barney may determine
that you will pay Smith Barney additional compensation in connection
with Smith Barney's sale of Shares.
B. You will pay Smith Barney ongoing service fees at such rates as are
specified in Schedule A to this Agreement. Such payments shall be
consistent with applicable law and regulation. Your obligation to
make payments to Smith Barney under this Subparagraph B shall
survive any termination of this Agreement and shall continue so long
as Smith Barney's customers maintain their investments is shares.
C. You will pay Smith Barney ongoing trail commission compensation with
respect to holdings by Smith Barney of Shares of Funds at such rates
as are specified in Schedule A to this Agreement. Payments under
this Subparagraph C will be in addition to the payment of service
fees as described in Subparagraph B of this Paragraph, and are
subject to applicable law and regulation. Your obligation to make
payments to Smith Barney under this Subparagraph C shall survive any
termination of this Agreement, and shall continue so long as Smith
Barney's customers maintain their investments in Shares, subject to
such other time limits as determined by you and Smith Barney.
D. With respect to expenses not specifically addressed elsewhere in
this Agreement, each party hereto will be responsible for the
expenses it incurs in acting hereunder. Consistent with the
Prospectus and applicable law and regulation, from time-to-time you
and Smith Barney may deter-mine that you will pay or reimburse Smith
Barney for expenses it incurs in connection with selling Shares.
5. State Registration of Fund Shares. You agree to advise Smith Barney in
writing on a continuous and current basis of the identity of those states
and jurisdictions in which the Shares are registered or qualified for
sale to the public.
2
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6. NASD Regulation. Each party to this Agreement represents that it is a
member of the National Association of Securities Dealers, Inc. ("NASD")
and each party agrees to notify the other should it cease to be such a
member. With respect to the sale of Shares hereunder, you and Smith
Barney agree to abide by the Rules of the Fair Practice of the NASD,
including but not limited to the following:
A. Smith Barney shall not withhold placing customers orders for Shares
so as to profit itself as a result of such withholding. Smith
Barney shall not purchase any Shares from you other than for its own
investment or to cover purchase orders already received by it from
its customers.
B. If any Shares purchased by Smith Barney are repurchased by the Fund
or by you for the account of the Fund, or are tendered for
redemption, within seven (7) business days after confirmation by you
of the original purchase order for such Shares, no compensation as
set forth in Paragraph 4 above will be payable to Smith Barney with
respect to such Shares, and Smith Barney will refund to you the full
amount of any such compensation paid or allowed to it on the
original sale. You agree to notify Smith Barney in writing of any
such repurchase or redemption within ten (10) business days of the
date on which the redemption is requested or Share certificates are
tendered to you, the Fund or its transfer agent. Termination or
cancellation of this Agreement will not relieve the parties from the
requirements of this subparagraph.
C. Neither party to this Agreement will, as principal, purchase any
Shares from a customer at a price lower than the net asset value
next determined by or for the Fund that issued such Shares. Nothing
in this subparagraph shall prevent Smith Barney from selling Shares
for a customer to you or to the Fund at the net asset value then
quoted by or for the Fund (less any applicable contingent deferred
sales charge or other charges) and charging a fair commission or
service fee for handling the transaction.
7. Suspension or Withdrawal of Offering. You reserve the right to suspend
sales of Shares of the Fund or withdraw any offering of Shares entirely.
8. Provision of Materials. At your expense, you will furnish Smith Barney
with current prospectuses and statements of additional information of the
Fund (including any supplements thereto), periodic reports to Fund
shareholders and marketing and other materials you have prepared relating
to the Fund in such quantities as Smith Barney reasonably requests.
9. Prospectus Delivery. Smith Barney will provide each of its customers
purchasing Shares with the pertinent prospectus prior to or at the time
of purchase. Smith Barney will provide any customer who so requests with
the pertinent statement(s) of additional information.
10. Liability and Indemnification
A. You agree to be liable for, to hold Smith Barney, its officers,
directors and employees harmless from and to indemnify each of them
for any losses and costs arising from: (i) any of your actions, and
the actions of your employees and affiliates, relating to the sale
3
<PAGE>
of Shares, including but not limited to any statements or
representations contained in any sales or other material relating to
the Fund you or your affiliates provide to Smith Barney or any other
statements or representations, written or oral, concerning the Fund
that you, your employees and your affiliates make to Smith Barney;
(ii) any material misstatement in or omission of a material fact
from the Fund's current prospectus or statement of additional
information; (iii) any failure of the Fund or its Shares to be
properly registered and available for sale under any applicable
federal law and regulation or the laws and regulations of any state,
any U.S. territory or the District of Columbia when you have
represented to Smith Barney that the Fund and its Shares are so
registered and qualified; and (iv) any of your actions, or the
actions of your affiliates, relating to the processing of purchase,
exchange and redemption orders and the servicing of shareholder
accounts.
B. Smith Barney agrees to be liable for, to hold you, your officers,
directors and employees harmless from and to indemnify them from any
losses and costs arising from: (i) any statements or representations
that Smith Barney or its employees make concerning the Fund that are
inconsistent with either the Fund's current prospectus and statement
of additional information or any other material you have provided or
any other statements or representations, written or oral, you have
made to Smith Barney relating to the Fund; (ii) any sale of Shares
of the Fund when the Fund or its Shares were not properly registered
or qualified for sale in any state, any U.S. territory or the
District of Columbia, when you have indicated to Smith Barney that
the Fund and its Shares were not properly registered and qualified;
and (iii) any of Smith Barney's actions relating to the processing
of purchase and redemption orders and the servicing of shareholder
accounts.
C. The provisions of this Paragraph shall survive the termination of
this Agreement.
11. Arbitration. If a dispute arises between you and Smith Barney with
respect to this Agreement which the parties are unable to resolve
themselves, it shall be settled by arbitration in accordance with the
then-existing NASD Code of Arbitration Procedure ("NASD Code"). The
parties agree, that to the extent permitted by the NASD Code, the
arbitrator(s) shall be selected from the securities industry.
12. Miscellaneous. This Agreement shall be governed by the laws of New York
State. This Agreement may be amended only upon the written agreement of
both parties hereto, and may be terminated by either party on ten days'
written notice to the other. If your payments to Smith Barney under
Subparagraphs 4B and 4C hereunder in whole or in part are financed by the
Fund in accordance with the Fund's plan of distribution adopted pursuant
to rule 12b-1 under the 1940 Act ("Plan"), then this Agreement will be
subject to the approval and termination requirements set forth in that
rule applicable to agreements related to plans of distribution. However,
if the Fund's board of directors or trustees or shareholders terminates
the Plan, you and Smith Barney agree to negotiate in good faith with
respect to whether and to what extent you will continue to make payments
4
<PAGE>
to Smith Barney under Subparagraphs 4B and/or 4C under this Agreement.
The determination of this question will depend on, among other things,
the degree of shareholder servicing Smith Barney and its Financial
Consultants provide to clients who remain invested in the Fund and the
degree to which Smith Barney and its Financial Consultants have or have
not in fact received initial and trail commissions for selling Shares.
This Agreement constitutes the entire agreement between you and Smith
Barney and supersedes all prior oral or written agreements between you
and Smith Barney and its predecessors relating to the sale of Shares.
Sincerely, AGREED AND ACCEPTED:
SMITH BARNEY INC. OLSTEIN & ASSOCIATES L.P.
By: /s/ Stephen C. Roussin By: /s/ Robert A. Olstein
Dated: September 21, 1995 Dated: September 21, 1995
5
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MUTUAL FUND DEALER AGREEMENT
SCHEDULE A
OLSTEIN FINANCIAL ALERT FUND
SMITH BARNEY COMPENSATION SCHEDULE
As compensation for Smith Barney's sales of shares of Olstein Financial Alert
Fund ("Fund") and Smith Barney's ongoing shareholder servicing and
distribution function, Olstein & Associates, L.P. ("Olstein") will make
payments to Smith Barney as follows:
1.5% of the dollar amount of Fund shares sold by Smith Barney (excluding
shares sold to customers through reinvestment of dividends and/or capital
gains), provided that such shares are not redeemed or repurchased by the
Fund within seven (7) business days after confirmation of the original
purchase order for such shares.
With respect to outstanding shares of the Fund held in accounts for which
Smith Barney continues to be named as the broker of record during the
period from one year following original purchase to five years following
original purchase, Smith Barney will receive, payable quarterly, from the
end of the first year until the end of the fifth year following the
original purchase, 90% of the total annual 12b-1 fees paid by the Fund in
relation to such shares. Smith Barney will receive one hundred percent
(100%) of the administrative 12b-1 fee (currently 0.25% of assets per
annum), and eighty-six and two-thirds percent (86 - 2/3% of assets per
annum) of the distribution 12b-1 fee (currently 0.75% per annum).
For outstanding shares of the Fund held in accounts for which Smith
Barney continues to be named as the broker of record five (5) years
following the original purchase, Smith Barney will receive, payable
quarterly, 75% of the total 12b-I fees paid by the Fund in relation to
such shares.
A-1
Exhibit 6(c)
OLSTEIN & ASSOCIATES, L.P.
SELLING DEALER AGREEMENT
FOR SHARES OF THE OLSTEIN FUNDS
THIS SELLING DEALER AGREEMENT is made as of the ____ day of
_____________, 1995, between Olstein & Associates, L.P. (the "Distributor")
and the broker-dealer executing this Agreement (the "Selling Dealer").
WHEREAS, The Olstein Funds (the "Trust") is registered under the
Investment Company Act of 1940 (the "1940 Act"), as amended, as an open-end
management investment company and each series of the Trust (each a "Fund" and
collectively, the "Funds") is authorized to issue one or more series or
classes of shares of common stock or beneficial interest, as the case may be
("Shares");
WHEREAS, Olstein & Associates, L.P. and Rodney Square Distributors, Inc.
are the exclusive national distributors (the "National Distributors") of the
Shares pursuant to an agreement with the Trust; and
WHEREAS, the Selling Dealer desires to serve as a selling dealer for
Shares;
NOW THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed among the parties as follows:
1. PURCHASE OF SHARES. The Selling Dealer may, from time to time
purchase Shares from the National Distributors in accordance with
the terms of this Agreement. In connection with each such purchase,
the Selling Dealer shall act as principal for its own account; the
Selling Dealer shall have no authority to act as agent for the
National Distributors or any of the Funds. The Selling Dealer
agrees that it shall purchase Shares only from the National
Distributors, either directly or through a securities dealer, such
as Fund/SERV (any such entity being referred to as a "Clearing
Broker") with which the Selling Dealer and the National Distributors
have established clearing arrangements. the Selling Dealer agrees
to purchase Shares of the Funds only in transactions contemplating
the simultaneous resale of such Shares to investors and in no event
shall the Selling Dealer place orders for Shares unless it has
already received customer orders to purchase Shares at the
applicable Public Offering Price.
2. ACCEPTANCE OF PURCHASE ORDERS. Orders received from the Selling
Dealer for the purchase of Shares ("Purchase Orders") shall be
accepted by the National Distributors only at the price ("Public
Offering Price") set forth in the then effective prospectus used in
connection with the sale of such shares (the "Prospectus").
Purchase Orders shall be handled in accordance with such oral or
written instructions as the National Distributors may forward to the
Selling Dealer from time to time and shall be subject to procedures
relating to the purchase of Shares disclosed in the Prospectus.
Purchase Orders for Shares of any money market fund listed in
Schedule A must be accompanied by full payment in Federal Funds for
such Order to be effective. Payment for Shares of any funds listed
<PAGE>
in Schedule A which are subject to a front-end sales load, or for
which Selling Dealers receive commissions advanced by the
Distributor ("Load Funds") must be received by the National
Distributors within five business days after receipt of the Purchase
Order. The National Distributors reserve the right,from time to time
and in their sole discretion, to limit the aggregate orders for
Shares of Load Funds placed by a Selling Dealer, for which payment
has not yet been received. In addition, all orders are subject to
acceptance or rejection by the National Distributors or the relevant
Fund in the sole discretion of either. Purchase Orders shall be
subject to receipt by the Trust's Transfer Agent of all required
documents in proper form and to the minimum initial and subsequent
purchase requirements set forth in the Prospectus.
3. DEALER COMPENSATION. The Selling Dealer shall receive compensation
in connection with the sale of Shares of Load Funds in the form of
commissions or dealer reallowances, all of which are calculated as a
percentage of the Public Offering Price applicable to Shares
purchased by the Selling Dealer, as specified in the Prospectus, as
indicated in Schedule C of this Agreement.
(a) Advanced Commissions
The Selling Dealer shall receive compensation in connection
with the sale of Shares of the Trust which are not subject to a
front-end sales load in accordance with the provisions of
Schedule C of this Agreement. Such compensation may include
sales commissions advanced by the Distributor in accordance
with the prospectus and Schedule C. Selling Dealers and other
shareholder servicing agents may also receive compensation for
shareholder services as set forth in the prospectus and
Schedule C.
(b) Front End Sales Loads
It is understood that for Shares subject to a sales charge the
Public Offering Price may reflect variations in sales charges,
if any, applicable to the sales of such Shares in accordance
with certain purchase plans set forth in such Prospectus and
Schedule C of this Agreement. The Selling Dealer agrees that
it will apply any such variations uniformly to all offerees in
accordance with the provisions of the Prospectus and will not
combine customer orders to reach "breakpoints" established in
the Prospectus or withhold any customer order so as to profit
therefrom. The Selling Dealer agrees and understands that
dealer reallowances will be paid based upon the schedule set
forth in the Prospectus and that, in accordance with such
schedule, dealer reallowances will be lower in the case of
purchases to which reduced sales charges apply. However, where
the reduced sales charge is in connection with a letter of
intent, adjustment to a higher dealer reallowance will be made
to reflect actual purchases by the investor if investor should
fail to fulfill the letter of intent. No dealer reallowances
shall be payable in respect of Load Fund Shares purchased
through reinvestment of dividends or distributions or with
respect to Load Fund Shares purchased in exchange for other
Shares. If any Load Fund Shares sold to the Selling Dealer
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under the terms of this Agreement are tendered for redemption
or repurchase within thirty business days after the date of
confirmation to the Selling Dealer of its purchase order
therefor, the Selling Dealer agrees to pay forthwith to the
Distributor the full amount of the dealer reallowance on the
original sale.
4. REDEMPTIONS, REPURCHASES AND EXCHANGES. Orders for the redemption
or repurchase of Shares ("Redemption Orders") as well as exchange
requests shall be handled in accordance with procedures set forth in
the Prospectus and, to the extent consistent with the Prospectus,
oral or written instruction forwarded to the Selling Dealer by the
National Distributors from time to time. The National Distributors
will, upon request assist the Selling Dealer in processing
Redemption Orders and exchange requests. All such orders and
requests are subject to the timely receipt by the Trust's Transfer
Agent of all required documents in good order. If such documents
are not received within a reasonable time after the order or request
is placed, it will be subject to cancellation, in which case the
Selling Dealer agrees to be responsible for any resulting loss
incurred by the National Distributors or the Funds.
5. COMPLIANCE WITH SECURITIES LAWS. The Selling Dealer shall not offer
or sell any Shares except under circumstances that will result in
compliance with the applicable federal and state securities laws.
In connection with sales and offers to sell Shares, the Selling
Dealer will furnish or cause to be furnished to each person to whom
any such sale or offer is made, at or prior to the time of offering
or sale, a copy of the Prospectus and, if requested, the related
statement of additional information (the "SAI"). The National
Distributors shall, upon request, supply the Selling Dealer with
reasonable quantities of Prospectuses and SAIs for its use in
connection with the offer and sale of the Shares. The Selling
Dealer shall will not furnish to any person any information in
connection with the sale of Shares that is inconsistent in any
respect with the information contained in such Prospectus or SAI.
The National Distributors shall, from time to time, inform the
Selling Dealer as to the states and jurisdictions in which the
Distributor believes the Shares have been qualified for sale under,
or are exempt from the requirements of, the respective securities
laws of such states and jurisdictions. The Selling Dealer agrees
that it will not offer or sell Shares in any state or jurisdiction
in which such Shares are not registered, unless any such offer or
sale is made in a transaction that qualifies for an exemption from
such registration. The Selling Dealer agrees to indemnify the
National Distributors and the Trust against any claim, liability,
expense or loss in any way arising out of any sale or exchange of
Shares by the Selling Dealer in any state or jurisdiction in which
Shares are not so registered or qualified.
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The Selling Dealer hereby agrees to maintain all records required by
law relating to transactions on the Shares, and upon the request of
the National Distributors, or of the Trust, promptly make such of
these records available to the National Distributors or the Trust's
Administrator as are requested. In addition the Selling Dealer
hereby agrees to establish appropriate procedures and reporting
forms and/or mechanisms and schedules in conjunction with the
National Distributors and the Trust's Administrator, to enable the
Trust to identify the location, type of, and sales to all accounts
opened and maintained by the Selling Dealer's customers or by the
Selling Dealer on behalf of the Selling Dealer's customers.
The Selling Dealer hereby agrees to abide by the Rules of Fair
Practice of the National Association of Securities Dealers, Inc.
(the "NASD") and all applicable federal and state laws. Reference
is specifically made to Section 26 of Article III of such Rules,
which Section is incorporated herein by reference. The National
Distributors assumes no responsibility in connection with the
registration of the Selling Dealer under the laws of the various
states or under federal law or the Selling Dealer's qualification
under any such law to offer or sell Shares. The Selling Dealer
agrees to indemnify the National Distributors and the Funds against
any claim, liability, expense or loss in any way arising out of any
sale or exchange of Shares by the Selling Dealer in any state or
jurisdiction in which the Selling Dealer is not so registered or
qualified.
The signing of this Agreement and the purchase of Shares pursuant
hereto is a representation to the National Distributors that the
Selling Dealer is a member in good standing of the NASD and a
properly registered broker-dealer under the Securities Exchange Act
of 1934 (the "1934 Act"), as amended. This Agreement shall terminate
automatically in the event of the Selling Dealer ceases to be a
member in good standing of the NASD or upon the occurrence of any
event adversely affecting the Selling Dealer's registration as a
broker-dealer under the 1934 Act.
The Selling Dealer represents and warrants that it is a member of
the Securities Investor Protection Corporation ("SIPC") in good
standing and agrees to notify the Selling Dealer of any changes in
the Selling Dealer's status with the SIPC. Notwithstanding the
aforementioned, the Selling Dealer agrees to make a notation on all
confirmations for transactions stating, when appropriate, that it is
a not a member of the SIPC as required by Rule 10b-10 of the 1934
Act.
6. USE OF SALES MATERIALS. The Selling Dealer shall not use any
advertising or sales materials of any kind relating to the Funds or
using the name of the Trust, the Funds or the National Distributors,
or any affiliate thereof, unless such material is provided to the
Selling Dealer by the National Distributors or unless the Selling
Dealer has obtained the prior written consent of the National
Distributors. Neither the Selling Dealer nor any other person is
authorized to make any representation in connection with the offer
and sale of the Shares except those contained in the Prospectus and
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SAI or as expressly authorized in writing by the National
Distributors.If the Selling Dealer should make any such unauthorized
representation, or use, or cause others to use, advertising or sales
material not provided to the Selling Dealer by the National
Distributors or without the National Distributors's prior approval,
the Selling Dealer shall indemnify the National Distributors and the
relevant Fund from and against any and all claims, liability,
expense or losses in any way arising out of or in any way connected
with such representation.
7. CONFIRMATIONS. The Selling Dealer agrees to send confirmations of
orders to its customers as required by Rule 10b-10 of the 1934 Act
and agrees to pay any costs in connection therewith. The Selling
Dealer agrees to use all reasonable efforts to ensure that taxpayer
identification numbers provided by it on behalf of investors are
correct.
8. SUSPENSION OF SALES; AMENDMENTS. The Distributor shall have full
authority to take such action as it may deem advisable in respect of
all matters pertaining to the continuous offering of Shares; in
particular and without limitation, the right in its discretion and
without notice to the Selling Dealer to suspend sales or withdraw
the offering of Shares. Upon notice to the Selling Dealer, the
Distributor may amend this Agreement and the Selling Dealer agrees
that any Purchase Order placed by it after notice of any amendment
to this Agreement has been sent to the Selling Dealer shall
constitute its agreement to such amendment.
9. FEES PURSUANT TO RULE 12B-1 PLAN. The Selling Dealer shall be
entitled to receive certain fees in connection with its sales,
promotional and shareholder servicing efforts hereunder in
accordance with the Plan of Distribution adopted by the Fund. Such
fees shall be payable in the amounts and in the manner set forth in
Schedule C to this agreement, which Schedule C is expressly
incorporated herein.
10. NO AGENCY CREATED. Nothing in this Agreement shall be deemed or
construed to make the Selling Dealer an employee, agent,
representative or partner of the Trust or of any of the Funds or of
the National Distributors, and the Selling Dealer is not authorized
to act for the National Distributors or for the Trust or any Fund or
to make any representations on their behalf. The Selling Dealer
acknowledges that this Agreement is not exclusive and that the
National Distributors may enter into similar arrangement with
others. The Selling Dealer and the National Distributors agree that
each will be responsible for its own expenses in connection with its
activities hereunder and each will be responsible for complying with
the federal and state laws governing the operation of their
respective business and the NASD Rules.
11. TERMINATION AND ASSIGNMENT. This Agreement shall also be terminable
without penalty upon thirty (30) days' written notice to the
Distributor by the Selling Dealer and upon ten (10) days' written
notice to the Selling Dealer by the Distributor; provided, however,
that any termination of this Agreement by operation of this Section
11 shall not affect any unpaid obligations under Sections 2, 3 or 9
of this Agreement. This Agreement shall not be assignable by any of
-5-
<PAGE>
the parties hereto. Nothing in this Agreement is intended to confer
upon any person other than the parties hereto and their successors,
any rights or remedies under or by reason of this Agreement, other
than those expressly set forth herein.
12. LEGAL FEES. If any claims are asserted against the National
Distributors or the Trust regarding claims as to which the Selling
Dealer has indemnified such parties herein, the parties shall have
the right to engage in their own defense, including the selection
and engagement of counsel of their choosing and all costs of such
defense shall be borne by the Selling Dealer.
13. NOTICE. Any notice required or permitted to be given by either
party to the other shall be deemed sufficient if sent by registered
or certified mail, postage prepaid, addressed by the party giving
notice to the other party at the last address furnished by the other
party to the party giving notice: if to the National Distributors,
at 1100 N. Market Street, Wilmington, Delaware, 19890, with a copy
to ; if to the Selling
Dealer at the address listed on Schedule B.
14. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby. This
Agreement constitutes the entire agreement between the parties and
supersedes all prior agreements.
15. GOVERNING LAW. To the extent that state law has not been preempted
by the provisions of any law of the United States heretofore or
hereafter enacted, as the same may be amended from time to time,
this Agreement shall be administered, construed and enforced
according to the laws of the State of New York without regard to the
conflict of law rules.
16. MISCELLANEOUS. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the
purposes hereof. 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.
17. CLEARING BROKERS. The National Distributors acknowledge that the
Selling Dealer may utilize the services of one or more Clearing
Brokers with respect to purchases of Shares by the Selling Dealer's
customers. The Selling Dealer acknowledges that this agreement
authorizes only it, and not any Clearing Broker employed by the
Selling Dealer, to offer or sell Shares under this Agreement. The
National Distributors agrees to accept Purchase Orders from any
Clearing Broker that the Selling Dealer identifies to the National
Distributors in writing as authorized to place orders on the Selling
Dealer's behalf, provided that the Selling Dealer agrees that the
National Distributors and the Funds shall be entitled to treat such
orders as though they had been placed by the Selling Dealer
directly. In addition, except where the context otherwise requires,
references in this Agreement to the Selling Dealer shall be deemed
-6-
<PAGE>
to include references to any Clearing Broker employed by the Selling
Dealer. The Selling Dealer agrees to cause any such Clearing Broker
to abide by the Selling Dealer's obligations and agreements under
this Agreement,and that the Selling Dealer's agreement with any such
Clearing Broker will reflect the Clearing Broker's obligation to
abide by such obligations and agreements. Neither the National
Distributors nor the Trust shall be liable hereunder to the Selling
Dealer or to any Clearing Broker for any claim, liability, expense
or loss in any way arising from the Selling Dealer's arrangements
with such Clearing Broker, and the Selling Dealer agrees to hold the
National Distributors and the Trust harmless from and against any
claim, liability, expense or loss in any way arising from the
activities of the Clearing Broker in connection with Purchase
Orders, Redemption Orders or exchange requests initiated by the
Selling Dealer.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
OLSTEIN & ASSOCIATES, L.P.
By: /s/ Robert Olstein
Robert Olstein, President
SELLING DEALER:
/s/ __________________
[Print firm name]
By: /s/ __________________
[Print Name: ]
[Print Title: ]
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<PAGE>
OLSTEIN & ASSOCIATES, L.P.
SELLING DEALER AGREEMENT
SCHEDULE A
LOAD FUNDS
THE OLSTEIN FUNDS
THE OLSTEIN FINANCIAL ALERT FUND
A-1
<PAGE>
OLSTEIN & ASSOCIATES, L.P.
SELLING DEALER AGREEMENT
SCHEDULE B
BROKER/DEALER NAME:
ADDRESSS:
B-1
<PAGE>
OLSTEIN & ASSOCIATES, L.P.
SELLING DEALER AGREEMENT
DEALER COMPENSATION SCHEDULE
SCHEDULE C
AS COMPENSATION FOR SALES OF SHARES OF THE OLSTEIN FINANCIAL ALERT FUND
(THE "FUND") BY THE SELLING DEALER, AND AS COMPENSATION FOR SUCH SELLING
DEALER'S ONGOING SHAREHOLDER SERVICING AND DISTRIBUTION FUNCTIONS, THE SELLING
DEALER WILL RECEIVE THE FOLLOWING FEES:
* 1.5% OF THE DOLLAR AMOUNT OF SHARES SOLD (EXCLUDING ANY SHARES SOLD TO
CUSTOMERS THROUGH REINVESTMENT OF DIVIDENDS AND/OR CAPITAL GAINS), TO BE
PAID BY OLSTEIN & ASSOCIATES, L.P., PROVIDED THAT THE SHARES ARE NOT
REDEEMED OR REPURCHASED BY THE FUND WITHIN SEVEN (7) BUSINESS DAYS AFTER
CONFIRMATION OF THE ORIGINAL PURCHASE ORDER FOR SUCH SHARES. IN THE
EVENT THE FULL PURCHASE PRICE OF THE SHARES IS TRANSMITTED TO THE FUND
FOR INVESTMENT, THIS PAYMENT SHALL BE MADE BY OLSTEIN & ASSOCIATES, L.P.
IF THE SELLING DEALER REMITS PAYMENT TO THE FUND NET OF THIS AMOUNT,
OLSTEIN & ASSOCIATES, L.P. WILL PAY TO THE FUND THE AMOUNT REQUIRED TO
FULFILL THE INVESTMENT. SELLING DEALER AGREES THAT IT WILL BE OBLIGATED
FOR ANY AMOUNT RETAINED IF THE SHARES ARE REDEEMED WITHIN SEVEN (7)
BUSINESS DAYS.
* FOR OUTSTANDING SHARES OF THE FUND HELD IN ACCOUNTS FOR WHICH THE SELLING
DEALER CONTINUES TO BE NAMED AS THE BROKER OF RECORD ONE (1) YEAR
FOLLOWING THE ORIGINAL PURCHASE, THE SELLING DEALER WILL RECEIVE, PAYABLE
QUARTERLY, FROM THE END OF THE FIRST YEAR UNTIL THE END OF THE FIFTH YEAR
FOLLOWING THE ORIGINAL PURCHASE, 90% OF THE TOTAL ANNUAL 12B-1 FEES PAID
BY THE FUND IN RELATION TO SUCH SHARES. THE SELLING DEALER'S PAYMENT
WILL CONSIST OF ONE-HUNDRED PERCENT (100%) OF THE ADMINISTRATIVE 12B-1
FEE (CURRENTLY 0.25% PER ANNUM), AND EIGHTY-SIX AND TWO-THIRDS PERCENT
(86 2/3%) OF THE DISTRIBUTION 12B-1 FEE (CURRENTLY 0.75% PER ANNUM).
* FOR OUTSTANDING SHARES OF THE FUND HELD IN ACCOUNTS FOR WHICH THE SELLING
DEALER CONTINUES TO BE NAMED AS THE BROKER OF RECORD FIVE (5) YEARS
FOLLOWING THE ORIGINAL PURCHASE, FROM SUCH FIFTH YEAR AND UNTIL SUCH
SHARES ARE REDEEMED, THE SELLING DEALER WILL RECEIVE, PAYABLE QUARTERLY,
75% OF THE TOTAL 12B-1 FEES PAID BY THE FUND IN RELATION TO SUCH SHARES.
IT IS UNDERSTOOD THAT THE ABOVE COMPENSATION ARRANGEMENT MAY BE AMENDED
AT ANY TIME, SUBJECT TO WRITTEN APPROVAL BY ALL INTERESTED PARTIES. ANY
INTERESTED PARTY.
C-1
Exhibit 6(d)
OLSTEIN & ASSOCIATES, L.P.
SELLING DEALER AGREEMENT
FOR SHARES OF THE OLSTEIN FUNDS
THIS SELLING DEALER AGREEMENT is made as of the 30th day of November,
1995, between Olstein & Associates, L.P. (the "Distributor") and the broker-
dealer executing this Agreement (the "Selling Dealer") who may be acting on
behalf of a correspondent broker/dealer for whom it performs clearing
services.
WHEREAS, The Olstein Funds (the "Trust") is registered under the
Investment Company Act of 1940 (the "1940 Act"), as amended, as an open-end
management investment company and each series of the Trust (each a "Fund" and
collectively, the "Funds") is authorized to issue one or more series or
classes of shares of common stock or beneficial interest, as the case may be
("Shares");
WHEREAS, Olstein & Associates, L.P. and Rodney Square Distributors, Inc.
(a wholly owned subsidiary of Wilmington Trust Company) are the exclusive
national distributors (the "National Distributors") of the Shares pursuant to
an agreement with the Trust; and
WHEREAS, the Selling Dealer desires to serve as a selling dealer for
Shares,
NOW THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed among the parties as follows:
1. PURCHASE OF SHARES. The Selling Dealer- may, from time to time purchase
Shares from the National Distributors in accordance with the terms of
this Agreement. In connection with each such purchase, the Selling
Dealer shall act as principal for its own account; the Selling Dealer
shall have no authority to act as agent for the National Distributors or
any of the Funds. The Selling Dealer agrees that it shall purchase
Shares only from the National Distributors, either directly or through a
securities dealer, such as Fund/SERV (any such entity being referred to
as a "Clearing Broker") with which the Selling Dealer and the National
Distributors have established clearing arrangements. The Selling Dealer
agrees to purchase Shares of the Funds only in transactions contemplating
the simultaneous resale of such Shares to investors, or for its own
investment account, and in no event shall the Selling Dealer place orders
for Shares unless it has already received customer orders (including
orders for its correspondents) to purchase Shares at the applicable
Public Offering Price.
<PAGE>
2. ACCEPTANCE OF PURCHASE ORDERS. Orders received from the Selling Dealer
for the purchase of Shares ("Purchase Orders") shall be accepted by the
National Distributors only at the price ("Public Offering Price") set
forth in the then effective prospectus used in connection with the sale
of such shares (the "Prospectus"). Purchase Orders shall be handled in
accordance with such oral or written instructions as the National
Distributors may forward to the Selling Dealer from time to time and
shall be subject to procedures relating to the purchase of Shares
disclosed in the Prospectus. Purchase Orders for Shares of any money
market fund listed in Schedule A must be accompanied by full payment in
Federal Funds for such Order to be effective. Payment for Shares of any
funds listed in Schedule A which are subject to a front-end sales load,
or for which Selling Dealers receive commissions advanced by the
Distributor ("Load Funds") must be received by the National Distributors
within five business days after receipt of the Purchase Order. The
National Distributors reserve the right, from time to time and in their
commercially reasonable discretion, to limit the aggregate orders for
Shares of Load Funds placed by a Selling Dealer, for which payment has
not yet been received. In addition, all orders are subject to acceptance
or rejection by the National Distributors or the relevant Fund in the
commercially reasonable discretion of either. Purchase Orders shall be
subject to receipt by the Trust's Transfer Agent of all required
documents in proper form and to the minimum initial and subsequent
purchase requirements set forth in the Prospectus.
3. DEALER COMPENSATION. The Selling Dealer shall receive compensation in
connection with the sale of Shares of Load Funds in the form of
commissions or dealer reallowances, all of which are calculated as a
percentage of the Public Offering Price applicable to Shares purchased by
the Selling Dealer, as specified in the Prospectus, as indicated in
Schedule C of this Agreement.
(a) Advanced Commissions
The Selling Dealer shall receive compensation in connection with the sale
of Shares of the Trust which are not subject to a front-end sales load in
accordance with the provisions of Schedule C of this agreement. Such
compensation may include sales commissions advanced by the Distributor in
accordance with the prospectus and Schedule C. Selling Dealers and other
shareholder servicing agents may also receive compensation for
shareholder services as set forth in the prospectus and Schedule C.
(b) Front End Sales Loads
It is understood that for Shares subject to a sales charge the Public
Offering Price may reflect variations in sales charges, if any,
applicable to the sales of such Shares in accordance with certain
purchase plans set forth in such Prospectus and Schedule C of this
Agreement. The Selling Dealer agrees that it will make reasonable
efforts to apply any such variations uniformly to all offerees in
accordance with the provisions of the Prospectus and will not combine
customer orders to reach "breakpoints" established in the Prospectus or
withhold any customer order so as to profit therefrom. The Selling
Dealer agrees and understands that dealer reallowances will be paid based
upon the schedule set forth in the Prospectus and that, in accordance
2
<PAGE>
with such schedule, dealer reallowances will be lower in the case of
purchases to which reduced sales charges apply. However, where the
reduced sales charge is in connection with a letter of intent, adjustment
to a higher dealer reallowance will be made to reflect actual purchases
by the investor if investor should fail to fulfill the letter of intent.
No dealer reallowances shall be payable in respect of Load Fund Shares
purchased through reinvestment of dividends or distributions or with
respect to Load Fund Shares purchased in exchange for other Shares. If
any Load Fund Shares sold to the Selling Dealer under the terms of this
Agreement are tendered for redemption or repurchase within thirty
business days after the date of confirmation to the Selling Dealer of its
purchase order therefor, the Selling Dealer agrees to pay forthwith to
the Distributor the full amount of the dealer reallowance on the original
sale.
4. REDEMPTIONS, REPURCHASES AND EXCHANGES. Orders for the redemption or
repurchase of Shares ("Redemption Orders") as well as exchange requests
shall be handled in accordance with procedures set forth in the
Prospectus and, to the extent consistent with the Prospectus, oral or
written instruction forwarded to the Selling Dealer by the National
Distributors from time to time. The National Distributors will, upon
request, assist the Selling Dealer in processing Redemption Orders and
exchange requests. All such orders and requests are subject to the
timely receipt by the Trust's Transfer Agent of all required documents in
good order. If such documents are not received within a reasonable time
after the order or request is placed, it will be subject to cancellation,
in which case the Selling Dealer agrees to be responsible for any
resulting loss incurred by the National Distributors or the Funds.
5. COMPLIANCE WITH SECURITIES LAWS. The Selling Dealer shall not offer or
sell any Shares except under circumstances that will result in compliance
with the applicable federal and state securities laws. In connection
with sales and offers to sell Shares, the Selling Dealer will make
reasonable efforts to furnish or cause to be furnished to each person to
whom any such sale or offer is made, at or prior to the time of offering
or sale, a copy of the Prospectus and, if requested, the related
statement of additional information (the "SAI"). The National
Distributors shall, upon request, supply the SeIIing Dealer with
sufficient quantities of Prospectuses and SAls for its use in connection
with the offer and sale of the Shares. The Selling Dealer will not
furnish to any person any information in connection with the sale of
Shares that is inconsistent in any respect with the information contained
in such Prospectus or SAI.
The National Distributors shall, from time to time, inform the Selling
Dealer as to the states and jurisdictions in which the Distributor
believes the Shares have been qualified for sale under, or are exempt
from the requirements of, the respective securities laws of such states
and jurisdictions. The Selling Dealer agrees that it will not offer or
sell Shares in any state or Jurisdiction in which such Shares are not
registered, unless any such offer or sale is made in a transaction that
it believes in good faith qualifies for an exemption from such
registration. The Selling Dealer agrees to indemnify the National
Distributors and the Trust against any claim, liability, expense or loss
3
<PAGE>
in any way arising out of any sale or exchange of Shares by the Selling
Dealer in any state or jurisdiction in which Shares are not so registered
or qualified, provided Selling Dealer has not been previously advised by
National Distributors that such state or jurisdiction was a qualified or
exempt state or jurisdiction.
The Selling Dealer hereby agrees to maintain all records required by law
relating to transactions on the Shares, and upon the reasonable request
of the National Distributors, or of the Trust, promptly make such of
these records available to the National Distributors or the Trust's
Administrator as are reasonably requested. In addition the Selling
Dealer hereby agrees to establish reasonably appropriate procedures and
reporting forms and/or mechanisms and schedules in conjunction with the
National Distributors and the Trust's Administrator, to enable the Trust
to identify the location, type of, and sales to all accounts opened and
maintained by the Selling Dealer's customers or by the Selling Dealer on
behalf of the Selling Dealer's customers.
The Selling Dealer hereby agrees to abide by the Rules of Fair Practice
of the National Association of Securities Dealers, Inc. (the "NASD") and
all applicable federal and state laws. Reference is specifically made to
Section 26 of Article III of such Rules, which Section is incorporated
herein by reference. The National Distributors assumes no responsibility
in connection with the registration of the Selling Dealer under the laws
of the various states or under federal law or the Selling Dealer's
qualification under any such law to offer or sell Shares. The Selling
Dealer agrees to indemnify the National Distributors and the Funds
against any claim, liability, expense or loss arising solely out of any
sale or exchange of Shares by the Selling Dealer in any state or
jurisdiction in which the Selling Dealer is not so registered or
qualified.
The signing of this Agreement and the purchase of Shares pursuant hereto
is a representation to the National Distributors that the Selling Dealer
is a member in good standing of the NASD and a properly registered broker-
dealer under the Securities Exchange Act of 1934 (the "1934 Act"), as
amended. This Agreement shall terminate automatically in the event of
the Selling Dealer ceases to be a member in good standing of the NASD or
upon the occurrence of any event adversely affecting the Selling Dealers
registration as a broker-dealer under the 1934 Act.
The Selling Dealer represents and warrants that it is a member of the
Securities Investor Protection Corporation ("SIPC") in good standing and
agrees to notify the Selling Dealer of any changes in the Selling Dealers
status with the SIPC. Notwithstanding the aforementioned, the Selling
Dealer agrees to make a notation on all confirmations for transactions
stating, when appropriate, that it is a not a member of the SIPC as
required by Rule 10b-10 of the 1934 Act.
4
<PAGE>
6. USE OF SALES MATERIALS. The Selling Dealer shall not use any advertising
or sales materials of any kind relating to the Funds or using the name of
the Trust, the Funds or the National Distributors, or any affiliate
thereof, unless such material is provided to the Selling Dealer by the
National Distributors or unless the Selling Dealer has obtained the prior
written consent of the National Distributors. Neither the Selling Dealer
nor any other person is authorized to make any representation in
connection with the offer and sale of the Shares except those contained
in the Prospectus and SAI or as expressly authorized in writing by the
National Distributors. If the Selling Dealer should make any such
unauthorized representation, or use, or cause others to use, advertising
or sales material not provided to the Selling Dealer by the National
Distributors or without the National Distributors' prior approval, the
Selling Dealer shall indemnify the National Distributors and the relevant
Fund from and against any and all claims, liability, expense or losses
arising solely out of such representation.
7. CONFIRMATIONS. The Selling Dealer agrees to send confirmations of orders
to its customers as required by Rule 10b-10 of the 1934 Act and agrees to
pay any costs in connection therewith. The Selling Dealer agrees to use
all reasonable efforts to ensure that taxpayer identification numbers
provided by it on behalf of investors are correct.
8. SUSPENSION OF SALES; AMENDMENTS. The Distributor shall have full
authority to take such commercially reasonable action as it may deem
advisable in respect of all matters pertaining to the continuous offering
of Shares, in particular and without limitation, the right in its
reasonable discretion and without notice to the Selling Dealer to suspend
sales or withdraw the offering of Shares. Upon notice to the Selling
Dealer, the Distributor may amend this Agreement and the Selling Dealer
agrees that any Purchase Order placed by it after notice and acceptance
of any amendment to this Agreement has been sent to the Selling Dealer
shall constitute its agreement to such amendment.
9. FEES PURSUANT TO RULE 12B-I PLAN. The Selling Dealer shall be entitled
to receive certain fees in connection with its sales, promotional and
shareholder servicing efforts hereunder in accordance with the Plan of
Distribution adopted by the Fund. Such fees shall be payable in the
amounts and in the manner set forth in Schedule C to this agreement,
which Schedule C is expressly incorporated herein.
10. NO AGENCY CREATED. Nothing in this Agreement shall be deemed or
construed to make the Selling Dealer an employee, agent, representative
or partner of the Trust or of any of the Funds or of the National
Distributors, and the Selling Dealer is not authorized to act for the
National Distributors or for the Trust or any Fund or to make any
representations on their behalf. The Selling Dealer acknowledges that
this Agreement is not exclusive and that the National Distributors may
enter into similar arrangement with others. The Selling Dealer and the
National Distributors agree that each will be responsible for its own
expenses in connection with its activities hereunder and each will be
responsible for complying with the federal and state laws governing the
operation of their respective business and the NASD Rules.
5
<PAGE>
11. TERMINATION AND ASSIGNMENT. This Agreement shall also be terminable
without penalty upon thirty (30) days' written notice to the Distributor
by the Selling Dealer and upon thirty (30) days' written notice to the
Selling Dealer by the Distributor; provided, however, that any
termination of this Agreement by operation of this Section 11 shall not
affect any unpaid obligations under Sections 2, 3 or 9 of this Agreement.
This Agreement shall not be assignable by any of the parties hereto.
Nothing in this agreement is intended to confer upon any person other
than the parties hereto and their successors, any rights or remedies
under or by reason of this Agreement, other than those expressly set
forth herein.
12. LEGAL FEES. If any claims are asserted against the National Distributors
or the Trust solely regarding claims as to which the Selling Dealer has
indemnified such parties herein, the parties shall have the right to
engage in their own defense, including the selection and engagement of
counsel of their choosing and all costs of such defense shall be borne by
the Selling Dealer, provided shall have the right to approve such counsel
after written application by such National Distributors or trust has been
made. Such consent shall not be unreasonably withheld.
13. NOTICE. Any notice required or permitted to be given by either party to
the other shall be deemed sufficient if sent by registered or certified
mail, postage prepaid, addressed by the party giving notice to the other
party at the last address furnished by the other party to the party
giving notice: if to the National Distributors, at 1100 N. Market Street,
Wilmington, Delaware, 19890; if to the Selling Dealer at the address
listed on Schedule B.
14. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby. This Agreement constitutes
the entire agreement between the parties and supersedes all prior
agreements.
15. GOVERNING LAW. To the extent that state law has not been preempted by
the provisions of any law of the United States heretofore or hereafter
enacted, as the same may be amended from time to time, this Agreement
shall be administered, construed and enforced according to the laws of
the State of New York without regard to the conflict of law rules.
Any controversy relating to the rights and obligations of the parties,
the terms of this agreement or the interpretation thereof shall be
decided by arbitration in accordance with the arbitration rules then in
effect and before a panel of arbitrators appointed by the NASD.
16. MISCELLANEOUS. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the
purposes hereof. 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.
6
<PAGE>
17. CLEARING BROKERS. The National Distributors acknowledge that the Selling
Dealer may act as a clearing broker, or may utilize the services of one
or more Clearing Brokers with respect to purchases of Shares by the
Selling Dealers customers. The Selling Dealer acknowledges that this
agreement authorizes only it, and not any correspondent for which Selling
Dealer clears, to offer or sell Shares under this Agreement. The
National Distributors agrees to accept Purchase Orders from any
correspondent that the Selling Dealer identifies to the National
Distributors in writing as authorized to place orders on the Selling
Dealer's behalf, provided that the Selling Dealer agrees that the
National Distributors and the Funds shall be entitled to treat such
orders as though they had been placed by the Selling Dealer directly. In
addition, except where the context otherwise requires, references in this
Agreement to the Selling Dealer shall be deemed to include references to
the Selling Dealer or any correspondent for which it clears. The Selling
Dealer agrees to make reasonable efforts to make any such correspondent
aware of the Selling Dealers obligations and agreements under this
Agreement. Neither the National Distributors nor the Trust shall be
liable hereunder to the Selling Dealer or to any Clearing Broker for any
claim, liability, expense or loss arising solely from the Selling Dealers
arrangements with such Clearing Broker, and the Selling Dealer agrees to
hold the National Distributors and the Trust harmless from and against
any claim, liability, expense or loss arising solely from the activities
of the Clearing Broker in connection with Purchase Orders, Redemption
Orders or exchange requests actually initiated by the Selling Dealer.
18. INDEMNIFICATION. Olstein & Associates, L.P. and the funds for which
Rodney Square Distributors, Inc. acts as distributor ("Olstein") agree to
indemnify Bear, Stearns & Co., Inc. and Bear Steams Securities Corp.
("Bear Steams"), its officers, directors, employees and any person who is
or may be deemed a controlling person of Bear Steams, harmless from and
against any losses, claims, damages, liabilities or expenses (including
reasonable fees of counsel) to which Bear Steams or any such person or
entity may become subject insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) arise out of or
are based on a) any untrue statement or alleged untrue statement of
material fact or any omission or alleged omission to state a material
fact made or omitted by Olstein any offering, sales or other document
supplied to or utilized by Bear Steams, or b) any misfeasance, misconduct
or negligence on the part of Olstein, its employees, officers, directors,
agents or assigns in the performance of its duties or obligations
hereunder.
7
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
OLSTEIN & ASSOCIATES, L.P. SELLING DEALER:
By: /s/ Robert A. Olstein BEAR STEARNS SECURITIES CORP.
Robert A. Olstein, President
By: /s/ William C. Steinberg
William C. Steinberg
Vice President
8
<PAGE>
OLSTEIN & ASSOCIATES, L.P.
SELLING DEALER AGREEMENT
SCHEDULE A
LOAD FUNDS
THE OLSTEIN FUNDS
THE OLSTEIN FINANCIAL ALERT FUND
A-1
<PAGE>
OLSTEIN & ASSOCIATES, L.P.
SELLING DEALER AGREEMENT
SCHEDULE B
Broker/Dealer Name: Bear Stearns & Co., Inc.
Address: 245 Park Avenue
New York, NY 10167
B-1
<PAGE>
OLSTEIN & ASSOCIATES, L.P.
SELLING DEALER AGREEMENT
DEALER COMPENSATION SCHEDULE
As compensation for sales of shares of the Olstein Financial Alert Fund
(the "Fund") by the Selling Dealer, and as compensation for such Selling
Dealer's ongoing shareholder servicing and distribution functions, the Selling
Dealer will receive the following fees:
* 1.5% of the dollar amount of shares sold (excluding any shares sold
to customers through reinvestment of dividends and/or capital
gains), to be paid by Olstein & Associates, L.P., provided that the
shares are not redeemed or repurchased by the Fund within seven (7)
business days after confirmation of the original purchase order for
such shares. In the event the full purchase price of the Shares is
transmitted to the Fund for investment, this payment shall be made
by Olstein & Associates, L.P. If the Selling Dealer remits payment
to the Fund net of this amount, Olstein & Associates, L.P. will pay
to the Fund the amount required to fulfill the investment. Selling
Dealer agrees that it will be obligated for any amount retained if
the Shares are redeemed within seven (7) business days.
* For outstanding shares of the Fund held in accounts for which the
Selling Dealer continues to be named as the broker of record one (1)
year following the original purchase, the Selling Dealer will
receive, payable quarterly, from the end of the first year until the
end of the fifth year following the original purchase, 90% of the
total annual 12b-I fees paid by the Fund in relation to such shares.
The Selling Dealer's payment will consist of one-hundred percent
(100%) of the administrative 12b-1 fee (currently 0.25% per annum),
and eighty-six and two-thirds percent (86 2/3%) of the distribution
12b-1 fee (currently 0.75% per annum).
* For outstanding shares of the Fund held in accounts for which the
Selling Dealer continues to be named as the broker of record five
(5) years following the original purchase, from such fifth year and
until such shares are redeemed, the Selling Dealer will receive,
payable quarterly, 75 % of the total 12b-1 fees paid by the Fund in
relation to such shares.
It is understood that the above compensation arrangement may be amended at any
time, subject to written approval by all interested parties.
Exhibit 8(a)
THE OLSTEIN FUNDS
WILMINGTON TRUST COMPANY
CUSTODY AGREEMENT
This Agreement is made as of the 18th day of August, 1995 between The
Olstein Funds, a Delaware business trust (the "Trust"), having its principal
place of business in White Plains, New York, and Wilmington Trust Company, a
Delaware corporation (the "Custodian"), having its principal place of business
in Wilmington, Delaware.
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment
company and offers for public sale one or more distinct series of shares of
beneficial interest ("Series"), par value $0.001 per share, each corresponding
to a distinct portfolio;
WHEREAS, each share of a Series represents an undivided interest in the
assets, subject to the liabilities allocated to that Series, and each Series
has a separate investment objective and policies;
WHEREAS, at the present time, the Trust anticipates that it will
establish multiple Series;
WHEREAS, the Trust desires to employ the Custodian to provide custody
services; and
WHEREAS, the Custodian is willing to furnish custody services to the
Trust with respect to the Fund(s) listed on Schedule A to this Agreement on
the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound, the parties agree as
follows:
I. EMPLOYMENT OF CUSTODIAN; PROPERTY OF THE TRUST TO BE HELD BY THE
CUSTODIAN
The Trust hereby employs the Custodian as the custodian of its assets
pursuant to the provisions of the Agreement and Declaration of Trust. The
Trust agrees to deliver to the Custodian substantially all securities and cash
owned by it on behalf of each Series, and substantially all income, principal,
capital distributions or other payments received by it with respect to such
securities, and the cash consideration received for the issuance and sale of
shares of beneficial interest ("Shares") from time to time. The Custodian
will not be responsible for any property of the Trust not delivered to the
Custodian.
CUSTODYK.RTF
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II. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE TRUST HELD BY THE
CUSTODIAN
A. HOLDING SECURITIES
The Custodian will hold, earmark and physically segregate for the
account of each Series all non-cash property, including all securities
owned by the Trust on behalf of the Series, other than securities
maintained pursuant to Article II, Section J hereof, in a clearing agency
which acts as a securities depository or in an authorized book-entry
system authorized by the U.S. Department of the Treasury, collectively
referred to herein as a "Securities System."
B. DELIVERY OF SECURITIES
The Custodian will deliver securities held by the Custodian or in a
Securities System account only upon receipt of proper instructions, which
may be continuing instructions, and only in the following cases:
1. Upon sale of such securities for the account of each Series and
receipt of payment therefor;
2. Upon receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Trust
with respect to any Series;
3. In the case of a sale effected through a Securities System, in
accordance with the provisions of Article II, Section J hereof;
4. To the depository agent in connection with tenders or other
similar offers for securities of each Series;
5. To the issuer thereof, or its agent, when such securities are
called, redeemed, retired or otherwise become payable; provided
that, in any such case, the cash or other consideration is to
be delivered to the Custodian;
6. To the issuer thereof, or its agent for registration or re-
registration pursuant to the provisions of Article II, Section
C hereof; or for exchange for a different number of
certificates or other evidence representing the same aggregate
face amount or number of units; provided that, in any such
case, the new securities are to be delivered to the Custodian;
7. To the broker selling such securities for examination in
accordance with the "street delivery" custom; provided that the
Custodian will maintain procedures to ensure prompt return to
the Custodian by the broker elects not to accept such
securities;
8. For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment
of the securities of the issuer or pursuant to provisions for
conversion contained in such securities, or pursuant to any
deposit agreement; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the
Custodian;
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9. In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities; provided that,
in any such case, the new securities and cash, if any, are to
be delivered to the Custodian;
10. For delivery in connection with any loans of securities made by
the Trust on behalf of any Series, but only against receipt of
adequate collateral, as agreed upon from time to time by the
Custodian and the Trust, which may be in the form of cash or
obligations issued by the United States government, its
agencies or instrumentalities;
11. For delivery as security in connection with any borrowing by
the Trust on behalf of any Series requiring a pledge of assets
by the Trust on behalf of that Series against receipt of
amounts borrowed;
12. Upon receipt of instructions from the transfer agent for the
Trust (the "Transfer Agent") for delivery to such Transfer
Agent or to holders of Shares in connection with distributions
in-kind in satisfaction of requests by holders of Shares for
repurchase or redemption; and
13. For any other proper business purposes, but only upon receipt
of, in addition to proper instructions, a certified copy of a
resolution of the Board of Directors or Board of Trustees
signed by an officer of the Trust and certified by the
Secretary or an Assistant Secretary, specifying the securities
to be delivered, setting forth the purpose for which such
delivery is to be made, declaring such purposes to be proper
corporate purposes, and naming the persons to whom delivery of
such securities will be made.
C. REGISTRATION OF SECURITIES
Securities held by the Custodian (other than bearer securities) will
be registered in the name of the Trust on behalf of each Series, or in
the name of any nominee of the Trust, the Custodian or any Securities
System, or in the name or nominee name of any agent or sub-custodian
appointed pursuant to Article II, Section I hereof, provided that the
Custodian will maintain a mechanism for identifying all securities
belonging to each Series, wherever held or registered. All securities
accepted by the Custodian on behalf of the Trust for each Series
hereunder will be in "street name" or other good delivery form.
D. BANK ACCOUNTS
If requested by the Trust, the Custodian will open and maintain a
separate bank account or accounts in the name of the Trust, subject only
to draft or order by the Custodian acting pursuant to the terms of the
Agreement, and will hold in such account or accounts, subject to the
provisions hereof, all cash received by it from or for the account of
each Series, other than cash maintained by the Trust in a bank account
established and used in accordance with Rule 17f-3 under the 1940 Act.
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E. PAYMENT FOR SHARES
The Custodian will receive from the distributor of the Shares of
each Series or from the Transfer Agent and deposited into each Series
custody account, payments received for Shares of such Series issued or
sold from time to time. The Custodian will provide timely notification
to the Trust and the Transfer Agent of any receipt by it of cash payments
for Shares of each Series.
F. COLLECTION OF INCOME AND OTHER PAYMENTS
The Custodian will collect on a timely basis all income and other
payments with respect to securities held hereunder to which the Trust and
each Series will be entitled by law or pursuant to custom in the
securities business, and will credit such income and other payments, as
collected, to each Series custody account.
G. PAYMENT OF TRUST MONEYS
Upon receipt of proper instructions, which may be continuing
instructions, the Custodian will pay out moneys of the Trust on behalf of
each Series in the following cases only:
1. Upon the purchase of securities for the account of each Series,
but only (a) against the delivery of such securities to the
Custodian (or any bank, banking firm or trust company doing
business in the United States or abroad which is qualified
under the 1940 Act to act as a custodian and has been
designated by the Trust or by the Custodian as its agent for
this purpose); (b) in the case of a purchase effected through a
Securities System, in accordance with the conditions set forth
in Article II, Section J hereof or; (c) in the case of
repurchase agreements entered into between the Trust on behalf
of each Series and the Custodian, or another bank, (i) against
delivery of securities either in certificate form or through an
entry crediting the Custodian's account at the Federal Reserve
Bank with such securities and with an indication on the books
of the Custodian that such securities are held for the benefit
of each Series, and (ii) against delivery of the receipt
evidencing purchase by the Trust on behalf of each Series of
securities owned by the Custodian or other bank along with
written evidence of the agreement by the Custodian or other
bank to repurchase such securities from the Trust;
2. In connection with conversion, exchange or surrender of
securities owned by the Trust on behalf of any Fund as set
forth in Article II, Section B hereof;
3. For the redemption or repurchase of Shares as set forth in
Article II, Section H hereof.
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4. For the payment of any expense or liability incurred by the
Trust with respect to each Series, including, but not limited
to, the following payments; interest, dividend disbursements,
taxes, trade association dues, advisory, administration,
accounting, transfer agent and legal fees, and operating
expenses allocated to the Trust or each Series whether or not
such expenses are to be in whole or part capitalized or treated
as deferred expenses;
5. For the payment of any dividend declared on behalf of each
Series pursuant to the governing documents of the Trust; and
6. For any other proper corporate or business purposes, but only
upon receipt of, in addition to proper instructions, a
certified copy of a resolution of the Board of Directors or
Board of Trustees of the Trust signed by an officer of the
Trust and certified by its Secretary or an Assistant Secretary,
specifying the amount of such payment, setting forth the
purpose for which such payment is to be made, declaring such
purpose to be a proper corporate purpose, and naming the person
or persons to whom such payment is to be made.
H. PAYMENTS FOR REPURCHASE OR REDEMPTIONS OF SHARES OF EACH SERIES
From such funds as may be available, the Custodian will, upon
receipt of instructions from the Transfer Agent, make funds available for
payment to holders of Shares of each Series who have delivered to the
Transfer Agent a request for redemption repurchase of their Shares. In
connection with the redemption or repurchase of Shares, the Custodian is
authorized upon receipt of instructions from the Transfer Agent to wire
funds to a commercial bank designated by the redeeming shareholders.
I. APPOINTMENT OF AGENTS
The Custodian may at any time in its discretion appoint, but only in
accordance with an applicable vote by the Board of Directors or Board of
Trustees of the Trust, any bank or trust company, which is qualified
under the 1940 Act to act as a custodian, as its agent or sub-custodian
to carry out such of the provisions of this Article II as the Custodian
may from time to time direct; provided that the appointment of any such
agent or sub-custodian will not relieve the Custodian of any of its
responsibilities or liabilities hereunder.
J. DEPOSIT OF TRUST ASSETS IN SECURITIES SYSTEMS
The Custodian may deposit and/or maintain securities owned by the
Trust on behalf of each Series in a clearing agency registered with the
Securities and Exchange Commission (the "SEC") under Section 17A of the
Securities Exchange Act of 1934, which acts as a securities depository,
or in the book-entry system authorized by the U.S. Department of the
Treasury and certain federal agencies (collectively referred to herein as
a "Securities System") in accordance with applicable Federal Reserve
Board and SEC rules and regulations, if any, and subject to the following
provisions:
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1. The Custodian may keep securities owned by the Trust on behalf
of each Series in a Securities System provided that such
securities are represented in an account ("Account") of the
Custodian in the Securities System which will not include any
assets of the Custodian other than assets held as a fiduciary,
custodian, or otherwise for customers;
2. The records of the Custodian with respect to securities owned
by the Trust on behalf of each Series which are maintained in a
Securities System will identify by book entry those securities
belonging to each Series;
3. The Custodian will pay for securities purchased for the account
of each Series upon (i) receipt of advice from the Securities
System that such securities have been transferred to the
Account, and (ii) the making of an entry on the records of the
Custodian to reflect such payment and transfer for the account
of each Series. The Custodian will transfer securities sold
for the account of each Series upon (i) receipt of advice from
the Securities System that payment for such securities has been
transferred to the Account, and (ii) the making of an entry on
the records of the Custodian to reflect such transfer and
payment for the account of each Series. The Custodian will
furnish the Trust a monthly account statement showing
confirmation of each transfer to or from the account of each
Series and each day's transactions in the Securities System for
the account of each Series;
4. The Custodian will have received the certificate required by
Article IX hereof;
5. The Custodian will provide the Trust with any report obtained
by the Custodian on the Securities System's accounting system,
internal accounting control and procedures for safeguarding
securities deposited in the Securities System; and
6. The Custodian will be liable to the Trust on behalf of any
Series for any direct loss or damage to the Trust on behalf of
any Series resulting from use of the Securities System to the
extent caused by the negligence, misfeasance or misconduct of
the Custodian or any of its agents or of any of its or their
employees. In no event will the Custodian be liable for any
indirect, special, consequential or punitive damages.
K. SEGREGATED ACCOUNTS FOR FUTURES COMMISSION MERCHANTS
The Custodian may enter into separate custodial agreement with
various Futures Commission Merchants ("FCM's") which the Trust uses (each
an "FCM agreement"), pursuant to which the Trust's margin deposits made
on behalf of each Series in certain transactions involving futures
contracts and options on futures contracts will be held by the Custodian
in accounts (each an "FCM account") subject to the disposition by the FCM
involved in such contracts in accordance with the customer contract
between FCM and the Trust ("FCM contract"), SEC rules governing such
segregated accounts, Commodities Futures Trading Commission ("CFTC")
rules and the rules of applicable securities or
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commodities exchanges. Such custodian agreements will only be entered
into upon receipt of written instructions from the Trust which state that
(a) an agreement between the FCM and the Trust has been entered into, and
(b) the Trust is in compliance with all the rules and regulations of the
CFTC. Transfers of initial margin will be made into an FCM account only
upon written instructions; transfers of premium and variation margin may
be made into an FCM account pursuant to oral instructions. Transfers of
funds from an FCM account to the FCM for which the Custodian holds such
an account may only occur upon certification by the FCM to the Custodian
that pursuant to the FCM agreement and the FCM contract, all conditions
precedent to its right to give the Custodian such instructions have been
satisfied.
L. OWNERSHIP CERTIFICATE FOR TAX PURPOSES
The Custodian will execute ownership and other certificates and
affidavits for all federal and state tax purposes in connection with
receipt of income or other payments with respect to securities of each
Series held by it and in connection with transfers of securities of each
Series.
M. PROXIES
The Custodian will cause to be promptly executed by the registered
holder of such securities, if the securities are registered otherwise
than in the name of the Trust on behalf of each Series or a nominee of
the Trust, all proxies, without indication of the manner in which such
proxies are to be voted, and will promptly deliver to the Trust's
investment advisor for each Series (the "Advisor") such proxies, all
proxy soliciting materials and all notices relating to such securities.
N. COMMUNICATIONS RELATING TO TRUST SERIES SECURITIES
The Custodian will transmit promptly to the Advisor of that Fund all
written information (including, without limitation, pendency of calls and
maturities of securities and expirations of rights in connection
therewith) received by the Custodian from issuers of the securities being
held for each Series. With respect to tender or exchange offers, the
Custodian will transmit promptly to the Advisor all written information
received by the Custodian from issuers of the securities whose tender or
exchange is sought and from the party (or its agents) making the tender
or exchange offer. If the Advisor desires to take action with respect to
any tender offer, exchange offer or any other similar transactions, the
Advisor will notify the Custodian at least five business days prior to
the date on which the Custodian is to take such action.
O. PROPER INSTRUCTIONS
"Proper Instructions" as used herein mean a writing signed or
initialed by one or more person or persons in such manner as the Board of
Directors or Board of Trustees will have authorized from time to time.
Each writing will set forth the transaction involved, including a
specific statement of the purpose for which such action is requested.
Oral instructions will be considered proper instructions if the Custodian
reasonably believes them to have been given by a person authorized to
give such instructions with respect to the transaction involved. The
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Trust will cause all oral instructions to be confirmed promptly in
writing. Upon receipt of a certificate of the Secretary or an Assistant
Secretary as to the authorization by the Board of Directors or Board of
Trustees of the Trust accompanied by a detailed description of procedures
approved by the Board of Trustees or Board of Directors, proper
instructions may include communications effected directly between electro-
mechanical or electronic devices provided that the Board of Trustees or
Board of Directors and the Custodian are satisfied that such procedures
afford adequate safeguards for the assets of the Trust.
P. ACTIONS PERMITTED WITH EXPRESS AUTHORITY
The Custodian may, in its discretion, without express authority from
the Trust:
1. make payments to itself or others for minor expenses of
handling securities or other similar items relating to its
duties under this Agreement, provided that all such payments
will be accounted for to the Trust;
2. surrender securities in temporary form for securities in
definitive form;
3. endorse for collection, in the name of the Trust on behalf of
each Series, checks, drafts and other negotiable instruments;
and
4. in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with the securities and property of
the Trust, except as otherwise directed by the Trust or the
Board of Directors or Board of Trustees of the Trust.
Q. EVIDENCE OF AUTHORITY
The Custodian will be protected in acting upon any instruction,
notice, request, consent, certificate or other instrument or paper
reasonably believed by it to be genuine and to have been properly
executed by or on behalf of the Trust. The Custodian may receive and
accept a certified copy of a vote of the Board of Directors or Board of
Trustees of the Trust as conclusive evidence (a) of the authority of any
person to act in accordance with such vote, or (b) of any determination
or of any action by the Board of Directors or Board of Trustees as
described in such vote, and such vote may be considered as in full force
and effect until receipt by the Custodian of written notice to the
contrary.
III. DUTIES OF CUSTODIAN WITH RESPECT TO BOOKS OF ACCOUNT
The Custodian will cooperate with and supply to the entity or entities
appointed to keep the books of account of the Trust such information in the
possession of the Custodian as is reasonably necessary to the maintenance of
the books of account of the Trust.
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IV. RECORDS
The Custodian will create and maintain all records relating to its
activities and obligations under this Agreement in such manner as will meet
the obligations of the Trust under the 1940 Act, including, without
limitation, Section 31 thereof and Rules 31a-1 and 31a-2 thereunder. All such
records will be property of the Trust and will at all times during the regular
business hours of the Custodian be open for inspection by duly authorized
officers, employees or agents of the Trust and employees and agents of the
SEC. The Custodian will, upon request, provide the Trust with a tabulation of
securities held by the Custodian on behalf of each Series, and will, upon
request, and for such compensation as will be agreed upon between the Trust
and the Custodian, include certificate numbers in such tabulations.
V. OPINION OF TRUST'S INDEPENDENT AUDITORS
The Custodian will take all reasonable action, as the Trust may from
time to time request, to obtain from year to year favorable opinions from the
Trust's independent accountants with respect to its activities hereunder in
connection with the preparation of the Trust's Form N-1A, Form N-SAR or other
annual or semiannual reports to the SEC and with respect to any other
requirements of the SEC.
VI. REPORTS TO TRUSTS BY AUDITORS
The Custodian will provide the Trust, at such time as the Trust may
reasonably request, with reports by its internal or independent auditors on
the accounting system, internal accounting controls and procedures for
safeguarding securities, including reports available on securities deposited
and/or maintained in a Securities System, relating to the services provided by
the Custodian under this Agreement. Such reports will be of sufficient scope
and in sufficient detail as may reasonably be required by the Trust to provide
reasonable assurance that any material inadequacies would be disclosed, will
state in detail material inadequacies disclosed by such examination, and if
there are no such inadequacies, will so state.
VII. COMPENSATION OF CUSTODIAN
For the normal services the Custodian provides under this Custody
Agreement, the Custodian will be entitled to reasonable compensation as agreed
to between the Trust and the Custodian from time to time. Until agreed
otherwise, the compensation will be as set forth on Schedule A attached hereto
and made part hereof, as such Schedule may be amended from time to time. The
fee set forth in Schedule A hereto is subject to an annual review and
adjustment process. In the event the Custodian provides any extraordinary
services hereunder, it will be entitled to additional reasonable compensation.
VIII. RESPONSIBILITY OF CUSTODIAN/INDEMNIFICATION
So long as and to the extent that it has exercised reasonable care, the
Custodian will not be responsible for the title, validity or genuineness of
any property or evidence of title thereto received by it or delivered by it
pursuant to this Agreement and will be held harmless in acting upon any
notice, request, consent, certificate or other instrument reasonably believed
by it to be genuine and to be signed by the proper party or parties.
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The Custodian will be entitled to rely on and may act upon advice of
counsel (who may be counsel for the Trust) on all matters, and will be without
liability for any action reasonably taken or omitted pursuant to such advice.
The Custodian will be held to the exercise of reasonable care in
carrying out the provisions of this Agreement but will be liable only for its
own negligent or bad faith acts or failures to act. The Trust will indemnify
the Custodian and hold it harmless from and against all claims, liabilities,
and expenses (including attorneys' fees) which the Custodian may suffer or
incur on account of being Custodian hereunder, except to the extent such
claims, liabilities and expenses are caused by the Custodian's own negligence
or bad faith. Notwithstanding the foregoing, nothing contained in this
paragraph is intended to nor will it be constructed to modify the standards of
care and responsibility set forth in Article II, Section I hereof with respect
to sub-custodians and in Article II, Section J(6) hereof with respect to the
Securities System.
If the Trust requires the Custodian to take any action, which involves
the payment of money or which may, in the reasonable opinion of the Custodian,
result in liability or expense to the Custodian or its nominee, the Trustee as
a prerequisite to requiring the Custodian to take such action, will provide
indemnity to the Custodian in an amount and form satisfactory to it.
IX. EFFECTIVE PERIOD; TERMINATION; AMENDMENT
This Agreement will become effective as of the date hereof, and unless
terminated as provided, will continue in force for one (1) year from the date
hereof and thereafter from year to year, provided continuance after the one
(1) year period is approved at least annually by either the vote of a majority
of the Board of Directors or Board of Trustees of the Trust or by the vote of
a majority of the outstanding voting securities of the Trust. As used in this
Article IX, the term "vote of a majority of the outstanding voting securities"
will have the meaning specified in the 1940 Act and the rules enacted
thereunder as now in effect or as hereafter amended. This Agreement may be
amended at any time only by written instrument signed by both parties. This
Agreement may be terminated at any time upon ninety (90) days' written notice
by either party; provided that the Trust will not amend or terminate the
Agreement in contravention of any applicable federal or state regulations, or
any provisions of the governing documents of the Trust, and further provided,
that the Trust may at any time by action of its Board of Directors or Board of
Trustees immediately terminate this Agreement in the event of the appointment
of a conservator or receiver for the Custodian by the applicable federal
regulator or upon the happening of a like event at the direction of an
appropriate regulatory agency or court of competent jurisdiction. Upon
termination of this Agreement, the Trust will pay to the Custodian any fees
incurred as a result of the termination transfer of assets, and reimburse the
Custodian for all costs, expenses and disbursements that are due as of the
date of such termination.
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X. SUCCESSOR CUSTODIAN
If a successor custodian is appointed by the Board of Directors or Board
of Trustees of the trust, the Custodian will, upon termination, deliver to
such successor custodian at the office of the Custodian, duly endorsed and in
the form for transfer, all securities and other assets of the Trust held by it
hereunder. The Custodian will also deliver to such successor custodian copies
of such books and records relating to the Trust as the Trust and custodian may
mutually agree.
In the event that no written order designating a successor custodian or
certified copy of a vote for the Board of Directors will have been delivered
to the Custodian or on before the date when such termination will become
effective, then the Custodian will have the right to deliver to a bank or
trust company of its own selection, doing business in the state in which
either the principal place of business of the Trust or the Custodian is
located and having an aggregate capital, surplus, and undivided profits of not
less than $25,000,000, all securities, funds and other properties held by the
Custodian under this Agreement. Thereafter, such bank or trust company will
be the successor of the Custodian under this Agreement.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Trust to procure the certified copy of vote referred to, or the
Board of Directors or Board of Trustees to appoint a successor custodian, the
Custodian will be entitled to fair compensation for its services during such
period as the Custodian and retain possession of such securities, funds and
other properties and the provisions of this Agreement relating to the duties
and obligations of the Custodian will remain in full force and effect.
XI. INTERPRETIVE AND ADDITIONAL PROVISIONS
In connection with the operation of this Agreement, the Custodian and
the Trust may from time to time agree on such provisions interpretive of, or
in addition to, the provisions of this Agreement as may in their joint opinion
be consistent with the general tenor of this Agreement. Any such interpretive
or additional provisions will be in writing signed by both parties, provided
that no such interpretive or additional provisions will contravene any
applicable federal or state regulations or any provision of the governing
documents of the Trust. No interpretive or additional provisions made as
provided in the preceding sentence will be deemed to be an amendment of this
Agreement.
XII. CUSTODY ISSUES RELATING TO SHORT SALES
In connection with any Fund's activities relating to short sales of
securities, the parties to this Agreement may enter into agreements between
themselves and other parties, under which procedures and policies relating to
short-selling, and custody of the Funds' assets related to short-selling will
be determined.
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<PAGE>
XIII. DELAWARE LAW TO APPLY
This Agreement will be deemed to be a contract made in Delaware and
governed by Delaware law. If any provision of this Agreement will be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement will not be affected thereby. This Agreement will be binding
and will inure to the benefits of the parties hereto and their respective
successors.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and on behalf of its duly authorized representative and
its seal to be hereunder affixed as of the date first written above.
[SEAL] THE OLSTEIN FUNDS
By: /s/ Robert A. Olstein
Robert A. Olstein,
Chairman and President
[SEAL] WILMINGTON TRUST COMPANY
By: /s/ Lario M. Marini
Vice President
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<PAGE>
SCHEDULE A
THE OLSTEIN FINANCIAL ALERT FUND
FUND LISTING AND FEE SCHEDULE
FUND LISTING: THE OLSTEIN FINANCIAL ALERT FUND
FEE SCHEDULE: For the services Custodian provides under this Custody
Agreement, the Fund listed above agrees to pay to the Custodian, a fee,
payable monthly, expressed as follows:
An annual fee based upon the [daily average/calendar month end] net asset
value as follows:
.02% on the first $50 million
.015% on the assets in excess of $50 million,
subject to a minimum fee of $500 per month,
plus, $12 per purchase, sale or maturity of a
portfolio security, except those requiring physical delivery,
which will be charged at $50 per purchase, sale or maturity,
plus, any out-of-pocket expenses.
The Fund will not be responsible to pay the Custodian for any transfer
fees associated with the Fund's acceptance and transfer of in-kind
securities into the Fund.
A-1
Exhibit 8(b)
SPECIAL CUSTODY ACCOUNT AGREEMENT
(Short Sales)
AGREEMENT (hereinafter "Agreement") dated as of August 18, 1995, by and
among Wilmington Trust Company in its capacity as custodian hereunder (the
"Bank"), each series of The Olstein Funds, each of which shall be considered a
separate party to this Agreement and each of which shall be known as the
"Customer" and Bear, Stearns Securities Corp. (the "Broker").
WHEREAS, Broker is a securities broker-dealer and is a member of several
national securities exchanges; and
WHEREAS , Customer is a registered investment company which desires from
time to time to execute various security transactions, including short sales
(which is permitted by Customer's investment policies), and in connection
therewith has executed Broker's Professional Account Agreement (the "Customer
Agreement") which provides for margin transactions; and
WHEREAS, to facilitate Customer's transactions in short sales of
securities, Customer and Broker desire to establish procedures for the
compliance by Broker with the provisions of Regulation T of the Board of
Governors of the Federal Reserve System and other applicable requirements
("Margin Rules"); and
WHEREAS, to assist Broker and Customer in complying with the Margin
Rules, Bank is prepared to act as custodian to hold Collateral as defined
below.
NOW THEREFORE, be it agreed as follows:
1. DEFINITIONS
As used herein, the following terms have the following meanings:
(a) "Adequate Margin" in respect of short sales shall mean such
collateral as is adequate in Broker's reasonable judgment under
the Margin Rules and the internal policies of Broker.
(b) "Advice from Broker" or "Advice" means a written notice sent to
Customer and Bank or transmitted by a facsimile sending device,
except that Advice for initial or additional Collateral or with
respect to Broker's ability to effect a short sale for the
Customer may be given orally. With respect to any short sale
or Closing Transaction, the Advice from Broker shall mean a
standard confirmation in use by Broker and sent or transmitted
to Customer and Bank. With respect to substitutions or
releases of Collateral, Advice from Broker means a written
notice signed by Broker and sent or transmitted to Customer and
Bank. An authorized agent of Broker will certify to Customer
and Bank the names and signatures of those employees who are
authorized to sign Advice from Broker, which certification may
be amended from time to time. When used herein, the term
"Advise" means the act of sending an Advice from Broker.
<PAGE>
(c) "Closing Transaction" is a transaction in which Customer
purchases securities which have been sold short.
(d) "Collateral" shall mean cash or U.S. Government securities or
other securities acceptable to Broker.
(e) "Custody Agreement" shall mean the agreement for general
custodial services between the Bank and Customer.
(f) "Insolvency" means that (A) an order, judgment or decree has
been entered under the bankruptcy, reorganization, compromise,
arrangement, insolvency, readjustment of debt, dissolution or
liquidation or similar law (herein called the "Bankruptcy law")
of any competent jurisdiction adjudicating the Customer
insolvent; or (B) the Customer has petitioned or applied to any
tribunal for, or consented to the appointment of, or taking
possession by, a trustee, receiver, liquidation or similar
official, of the Customer, or commenced a voluntary case under
the Bankruptcy Law of the United States or any proceedings
relating to the Customer under the Bankruptcy Law of any other
competent jurisdiction, whether now or hereinafter in effect;
or (C) any such petition or application has been filed, or any
such proceedings commenced, against the Customer and the
Customer by any act has indicated its approval thereof, consent
thereto or acquiescence therein, or an order for relief has
been entered in an involuntary case under the Bankruptcy Law of
the United States, as now or hereinafter constituted, or an
order, judgment or decree has been entered appointing any such
trustee, receiver, liquidation or similar official, or
approving the petition in any such proceedings, and such order,
judgment or decree remains unstayed and in effect for more than
60 days.
(g) "Instructions from Customer" or "Instructions" means a request,
direction or certification in writing signed by Customer and
delivered to Bank and Broker or transmitted by a facsimile
sending device. An officer of Customer will certify to Bank
and Broker the names and signatures of those persons authorized
to sign the instructions, which certification may be amended
from time to time. When used herein, the term "Instruct" shall
mean the act of sending an Instruction from Customer.
(h) "Receipt of Payment" means receipt by Bank, of (1) a certified
or official bank check or wire transfer to Bank; (2) a written
or telegraphic advice from a registered clearing agency that
funds have been or will be credited to the account of Bank; or
(3) a transfer of funds from any of Broker's accounts
maintained at Bank.
(i) "Receipt of Securities" means receipt by Bank, of (1)
securities in proper form for transfer; or (2) a written or
telegraphic advice from a registered clearing agency that
securities have been credited to the account of Bank for the
Special Custody Account.
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<PAGE>
(j) "Special Custody Account" shall have the meaning assigned to
that term in Section 2 hereof.
2. SPECIAL CUSTODY ACCOUNT
(a) Opening Custody Account. Bank shall open an account on its
books entitled "Special Custody Account for Bear, Stearns
Securities Corp. as Pledgee of Olstein Financial Alert Fund"
("Special Custody Account") and shall hold therein all
securities and similar property as shall be received and
accepted by it therein pursuant to this Agreement. Customer
agrees to instruct Bank in Instructions from Customer as to
cash and specific securities which Bank is to identify on its
books and records as pledged to Broker as Collateral in the
Special Custody Account. Customer agrees that the value of
such cash and securities shall be at least equal in value to
what Broker shall initially and from time to time advise
Customer in an Advice from Broker as being necessary to
constitute Adequate Margin. Such Collateral (i) will be held
by Bank for Broker as agent of Broker, (ii) may be released
only in accordance with the terms of this Agreement, and (iii)
except as required to be released hereunder to Broker, shall
not be made available to Broker or any other person claiming
through Broker, including the creditors of the Broker. In the
event The Olstein Funds wish to open another Special Custody
Account for another series of The Fund pursuant to this
Agreement, the title of the said account shall be appended
hereto as a schedule to this Agreement.
(b) Security Interest. Customer hereby grants a continuing
security interest to Broker in the Collateral in the Special
Custody Account. To perfect Broker's security interest, Bank
will hold the Collateral in the Special Custody Account,
subject to the interest therein of Broker as the pledgee and
secured party thereof in accordance with the terms of this
Agreement. Such security interest will terminate at such time
as Collateral is released as provided herein. Bank shall have
no responsibility for the validity or enforceability of such
security interest.
(c) Confirmation. Bank will confirm in writing to Broker and
Customer all pledges, releases or substitutions of Collateral
and will supply Broker and Customer with a monthly statement of
Collateral and transactions in the Special Custody Account for
such month. Bank will also advise Broker upon request of the
kind and amount of Collateral pledged to Broker.
(d) Excess Collateral. Upon the request of Customer, Broker shall
advise Bank Customer of any excess of Collateral in the Special
Custody Account. Such exces shall at Customer's request be
transferred therefrom upon Advice from Broker.
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<PAGE>
(e) Accounts and Records. Bank will maintain accounts and records
for the Collateral in the Special Custody Account as more fully
described 'm sub-paragraph 5 below. The Collateral shall at
all times remain the property of the Customer subject only to
the extent of the interest and rights therein of Broker as the
pledgee thereof.
3. ORIGINAL AND VARIATION MARGIN ON SHORT SALES
(a) Short Sales. From time to time, Customer may place orders with
Broker for the short sale of securities. Prior to the
acceptance of such orders Broker will advise Customer of
Broker's ability to borrow such securities or other properties
an acceptance of short sale orders will be contingent upon
same.
(b) Open Short Sales Balance,. Broker shall, based on the closing
market price on first business day of each week, compute the
aggregate net credit or debit balance o Customer's open short
sales and advise Customer and/or Customer's designated agent by
11:00 A.M. New York time on the following business day
"Determination Day") of the amount of the net debit or credit,
as the case may be. a net debit balance exists on the
Determination Day, Customer will cause an amount equal to such
net debit balance to be paid to Broker by the close of business
on Determination Day. If a net credit balance exists on the
Determination Day, Broker shall pay such credit balance to
Customer by the close of business on Determination Day. As
Customer's open short positions are marked-to-market e week,
payments will be made by or to Customer to reflect changes (if
any) in credit or debit balances. Broker will charge interest
on debit balances, and Broker will pay interest on credit
balances. Balances V4'11 be appropriately adjusted w short
sales are closed out. A business day shall be any day on which
Broker is op for regular business. If the Determination Day
shall occur on a holiday, Saturday Sunday, then the
Determination Day shall be the next Dave on which the Broker
4. PLACING ORDERS
It is understood and agreed that Customer. when placing with Broker
any order to sell s for Customer's account. will designate the order
as such and hereby authorizes Broker to mark s order as being
"short", and when placing with Broker any order to sell long for
Customer's account will designate the order as such and hereby
authorizes Broker to mark such order as being "long". Any sell
order which Customer shall designate as being for long account as
above provided is for securities then owned by Customer and, if such
securities are not then deliverable by Broker from any account of
Customer, the placing of such order shall constitute a
representation by Customer that it is impracticable for Customer
then to deliver such securities to Broker but that Customer shall
deliver them by the settlement date or as soon as possible
thereafter.
-4-
<PAGE>
5. RIGHTS AND DUTIES OF THE BANK
(a) Generally. The Bank shall receive and hold in the Special
Custody Account, as custodian upon the terms of this Agreement,
all Collateral deposited and maintained pursuant to the terms
of this Agreement and, except as provided in sub-paragraph 5(b)
below, shall receive and hold all monies and other property
paid, distributed or substituted in respect of such Collateral
or realized on the sale or other disposition of such
Collateral; provided, however, that the Bank shall have no duty
to require any money or securities to be delivered to it or to
determine that the amount and form of assets delivered to it
comply with any applicable requirements. Collateral held in
the Special Custody Account shall be released only in
accordance with this Agreement or as required by applicable
law. The Customer grants its authority to deposit in such
account any money, securities and other property received by
the Bank. The Bank may hold the securities in the Special
Custody Account in bearer, nominee, book entry, or other form
and in a depository or clearing corporation, with or without
indicating that the securities are held hereunder; provided,
however, that all securities held in the Special Custody
Account shall be identified on the Bank's records as subject to
this Agreement and shall be in a form that permits transfer
without additional authorization or consent of the Customer.
The Customer and Broker hereby agree to hold the Bank and its
nominees harmless from any liability as holder of record.
(b) Dividends and Interest. Any dividends or interest paid with
respect to the Collateral held in the Special Custody Account
shall be paid by the Bank to the Customer when collected unless
the Bank has received contrary Instructions from the Customer.
(c) Reports. The Bank shall, as promptly as practical, provide
Broker and the Customer and/or Customer's designated agent with
written confirmation of each transfer into and out of the
Special Custody Account. The Bank also shall render to the
Broker and the Customer and/or Customer's designated agent a
monthly statement of the Collateral held in the Special Custody
Account. In addition, the Bank will advise the Broker and the
Customer and/or Customer's designated agent, upon request of
the Broker or Customer, at any time of the type and amount of
Collateral held in the account; provided, however, that the
Bank shall have no responsibility for making any determination
as to the value of such Collateral.
(d) Limitation of Bank's Liability. The Bank's duties and
responsibilities are set forth in this Agreement. The Bank
shall act only upon receipt of Advice from Broker regarding
release or substitution of Collateral. The Bank shall not be
liable or responsible for anything done, or omitted to be done
by it in good faith and in the absence of negligence and may
rely and shall be protected in acting upon any notice,
instruction or other communication which it reasonably believes
to be genuine and authorized. As between the Bank and Broker,
Broker shall indemnify and hold the Bank harmless with regard
-5-
<PAGE>
to any losses or liabilities of the Bank (including counsel
fees) imposed on or incurred by the Bank arising out of any
action or omission of the Bank in accordance with any Advice,
notice or instruction of Broker under this Agreement. In
matters concerning or relating to this Agreement, the Bank
shall not be responsible for compliance with any statute or
regulation regarding the establishment or maintenance of margin
credit, including but not limited to Regulations T or X of the
Board of Governors of the Federal Reserve System, or with any
rules or regulations of the Office of the Controller of the
Currency (or the Securities and Exchange Commission). The Bank
shall not be liable to any party for any acts or omissions of
the other parties to this Agreement.
(e) Compensation. Bank shall be paid as compensation for its
services pursuant to this Agreement such compensation as may
from time to time be agreed upon in writing between Customer
and Bank.
6. DEFAULT
In the event of a default by Customer of its obligations (i) to
maintain Adequate Margin as herein provided, (ii) to timely comply
with any obligation on Customer's part to be performed or observed
under this Agreement or in the Customer Agreement, (iii) to pay on
demand by Broker any losses sustained by Broker as may occur under
circumstances contemplated in paragraph 3 above; or (iv) in the
event of Customer's Insolvency, Broker has the right to give notice
(which notice may be by telegraph, facsimile transmission or hand
delivery) to Customer specifying such default and Broker may, no
sooner than 2:00 P.M., New York time on the next business day after
giving such notice to Customer, if Customer continues to be in
default or insolvent at the end of such period, effect a Closing
Transaction or buy-in of any securities of which Customer's account
may be short. In the event of a default specified in subparagraphs
(i), (ii) or (iii) above, Broker shall also have the right, upon
like notice and grace period, to sell any and all Collateral in the
Special Custody Account and to give Advice to Bank to deliver such
Collateral free of payment to Broker, which Advice shall state that,
pursuant to this Agreement, the condition precedent to Broker's
right to receive such Collateral free of payment has occurred. The
Bank will provide prompt telephone notice to Customer of any receipt
by Bank of Advice from Broker to deliver collateral free of payment,
and shall promptly effect delivery of Collateral to Broker. Such
sale or purchase may be made according to Broker's judgment and may
be made at Brokers discretion, on the principal exchange or other
market for such securities, or in the event such principal market is
closed, in a manner commercially reasonable for such securities.
-6-
<PAGE>
7. LIMITATION OF BROKER LIABILITY
Broker shall not be liable for any losses, costs, damages,
liabilities or expenses suffered or incurred by Customer as a result
of any transaction executed hereunder, or any other action taken or
not taken by Broker hereunder for Customer's account at Customer's
direction or otherwise, except to the extent that such loss, cost,
damage, liability or expense is the result of Broker's own
recklessness, willful misconduct or bad faith.
8. CUSTOMER REPRESENTATION
Customer represents and warrants that the Collateral will not be
subject to any other liens or encumbrances.
9. TERMINATION
Any of the parties hereto may terminate this Agreement by notice in
writing to the other parties hereto; provided, however, that the
status of any short sales, and of Collateral held at the time of
such notice to margin such short sales shall not be affected by such
termination until the release of such Collateral pursuant to
applicable law or regulations or rules of any self regulatory
organization to which the Broker is subject. In the event of the
release of Collateral, the Collateral shall be transferred to a
proper custody account of the Customer in the Bank.
10. NOTICE
Written communications hereunder shall be telegraphed, sent by
facsimile transmission or hand delivered as required herein, when
another method of delivery is not specified, may be mailed first
class postage prepaid, except that written notice of termination
shall be sent by certified mail, addressed:
(a) if to Bank, to:
Wilmington Trust Company
Rodney Square North
1100 N. Market Street
Wilmington, De 19890
Attn: Corporate Custody
Phone: 302-651-1000
Facsimile: 302-651-8464
(b) if to Customer, to:
The Olstein Funds
105 Corporate Park Drive
White Plains, N.Y. 10604
Attention: Robert Olstein
Telephone No.: 914-397-7565
Facsimile No.: 914-397-7526
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<PAGE>
(c) if to Broker, to:
Bear, Stearns Securities Corp.
245 Park Avenue
New York, New York 10167
Attention: Michael Minikes, Treasurer
Telephone No.: (212) 272-2009
Facsimile No.: (212) 272-3099
11. CONTROLLING LAW
The construction and enforcement of this Agreement shall be subject
to and governed by the laws of the State of New York.
12. THE AGREEMENT CONTROLS/AMENDMENTS
Customer and Bank agree that the terms of this Agreement shall
supplement and amend the Custody Agreement dated as of August 18,
1995 between the Bank and the Customer with respect to the Special
Custody Account identified on page 3 hereof, and to the extent
inconsistent therewith, the terms of this Agreement shall control.
No amendment of this Agreement shall be effective unless in writing
and signed by an authorized officer of each Broker, Customer and
Bank.
IN WITNESS WHEREEOF, the parties hereto have caused this instrument to be
executed by their duly authorized officers as of the day and year first above
written.
The Olstein Funds
By: /s/ Robert A. Olstein
Title: President
Wilmington Trust Company
By: /s/ Lario S. Marini
Title: Vice President
Bear, Stearns Securities Corp.
By: /s/ Michael Minikes
Title: Treasurer
-8-
Exhibit 9(a)
THE OLSTEIN FUNDS
RODNEY SQUARE MANAGEMENT CORPORATION
ADMINISTRATION AGREEMENT
THIS ADMINISTRATION AGREEMENT is made as of the 18th day of August, 1995,
between The Olstein Funds, a Delaware, business trust (the "Trust"), having
its principal place of business in White Plains, New York, and Rodney Square
Management Corporation, a corporation organized under the laws of the State of
Delaware ("Rodney Square"), having its principal place of business in
Wilmington, Delaware.
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment
company and offers for public sale distinct series of shares of beneficial
interest ("Series"), par value $0.001 per share, each corresponding to a
distinct portfolio;
WHEREAS, each share of a Series represents an undivided interest in the
assets, subject to the liabilities, allocated to that Series and each Series
has a separate investment objective and policies;
WHEREAS, at the present time, the Trust anticipates that it will
establish multiple Series;
WHEREAS, the Trust desires to employ Rodney Square to provide certain
administrative services; and
WHEREAS, Rodney Square is willing to furnish such services to the Trust
with respect to each Series listed on Schedule A to this Agreement (each a
"Fund," and two or more together "Funds") on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement, the Trust and Rodney Square agree as follows:
1. APPOINTMENT. The Trust hereby appoints and employs Rodney Square as
agent to perform those services described in this Agreement for the Trust such
appointment to take effect at the close of business on the date first written
above. Rodney Square shall act under such appointment and perform the
obligations thereof upon the terms and conditions hereinafter set forth and in
accordance with the principles of principal and agent enunciated by the common
law.
2. DOCUMENTS. The Trust has furnished Rodney Square with copies
properly certified or authenticated of each of the following:
a. The Trust's Certificate of Trust filed with the Secretary of
the State of Delaware on April 3, 1995;
b. The Trust's Agreement and Declaration of Trust and all
amendments thereto and restatements thereof;
ADMIN.RTF
<PAGE>
c. The Trust's By-laws and all amendments thereto and restatements
thereof (such By-laws, as presently in effect and as they shall from time to
time be amended or restated, are herein called "By-laws");
d. Resolutions of the Trust's Board of Trustees authorizing the
appointment of Rodney Square to provide certain accounting services to the
Trust and approving this Agreement;
e. The Trust's Notification of Registration filed pursuant to
Section 8(a) of the Investment Company Act as filed with the U.S. Securities
and Exchange Commission (the "SEC") on May 1, 1995;
f. The Trust's most recent Registration Statement on Form N-1A
under the Securities Act of 1933 (the "1933 Act") (File No. 33-91770) and
under the 1940 Act (File No. 811-9038), as filed with the SEC relating to
shares of beneficial interest in the Trust, and all amendments thereto;
g. The Trust's most current Prospectus(es) and Statement(s) of
Additional Information relating to the Fund(s);
h. The executed Trust agreements listed on Schedule B hereto; and
i. If required, a copy of either (i) a filed notice of eligibility
to claim the exclusion from the definition of "commodity pool operator"
contained in Section 2(a)(1)(A) of the Commodity Exchange Act ("CEA") that is
provided in Rule 4.5 under the CEA, together with all supplements as are
required by the Commodity Futures Trading Commission ("CFTC"), or (ii) a
letter which has been granted the Trust by the CFTC which states that the
Trust will not be treated as a "pool" as defined in Section 4.10(d) of the
CFTC's General Regulations, or (iii) a letter which has been granted the Trust
by the CFTC which states that CFTC will not take any enforcement action if the
Trust does not register as a "commodity pool operator."
The Trust will furnish Rodney Square from time to time with copies,
properly certified or authenticated, of all additions, amendments or
supplements to the foregoing, if any.
3. FUND ADMINISTRATION. Subject to the direction and control of the
Board of Trustees of the Trust and to the extent not otherwise the
responsibility of, or provided by, the Trust or other supply agents of the
Trust, Rodney Square shall provide the following administrative services:
a. Supply:
(i) office facilities (which may be in Rodney Square's or
its affiliates' own offices);
(ii) non-investment related statistical and research data;
(iii) executive and administrative services;
(iv) stationery and office supplies at Trust expense;
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<PAGE>
(v) corporate secretarial services, such as the preparation
and distribution of materials at Trust expense for
meetings of the Board of Trustees or shareholders and
the preparation of the minutes of such meetings;
(vi) Trustees' and Officers' questionnaires; and
(vii) quarterly reports to the Board of Trustees relating to
payments made pursuant to the 12b-1 plan adopted by the
Trust.
b. Prepare and file, if necessary, reports to shareholders of the
Trust and reports with the SEC, state securities commissions and Blue Sky
authorities including preliminary and definitive proxy materials, post-
effective amendments to the Trust's registration statement, Rule 24f-2
Notices, Form N-SAR filings and prospectus supplements;
c. Monitor the Trust's compliance with the investment restrictions
and limitations imposed by the 1940 Act, and state Blue Sky laws and
applicable regulations thereunder, the fundamental and non-fundamental
investment policies and limitations set forth in the Prospectus and SAI, the
investment restrictions and limitations necessary for each Fund of the Trust
to qualify as a regulated investment company under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"), or any successor
statute, and propose applicable changes to the Trust's compliance manuals when
necessary;
d. Monitor sales of the Trust's shares and ensure that such shares
are properly registered as required with the SEC and applicable state
authorities;
e. Prepare and distribute to appropriate parties notices
announcing the declaration of dividends and other distributions to
shareholders;
f. Prepare financial statements and footnotes and other financial
information with such frequency and in such format as required to be included
in reports to the Board of Trustees, shareholders, and the SEC;
g. Review sales literature and file such with regulatory
authorities, as necessary;
h. Provide information regarding material developments in state
securities regulation; and
i. Provide personnel to serve as officers of the Trust if so
elected by the Board of Trustees.
j. Update and supervise the preparation and printing of
prospectuses.
4. EXPENSES OF THE TRUST. The Trust agrees that it will pay all its
expenses other than those expressly stated to be payable by Rodney Square
hereunder, which expenses payable by the Trust shall include, without
limitation:
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<PAGE>
a. Fees payable for investment advisory services provided by the
Trust's investment manager;
b. Fees payable for services provided by the Trust's independent
auditors;
c. Fees payable for accounting services;
d. The cost of obtaining quotations for calculating the value of
the assets of each Fund;
e. Taxes levied against the Trust or any Fund;
f. Brokerage fees, mark-ups and commissions in connection with the
purchase and sale of Fund securities;
g. Costs, including the interest expense, of borrowing money;
h. Costs and/or fees incident to holding meetings of the Board of
Trustees and shareholders, preparation (including typesetting and printing
charges) and mailing of prospectuses, reports and proxy materials to the
existing shareholders of the Trust, filing of reports with regulatory bodies,
maintenance of the Trust's corporate existence, and registration of shares
with federal and state securities authorities;
i. Legal fees and expenses;
j. Costs of printing share certificates representing shares of the
Trust;
k. Fees payable to, and expenses of, members of the Board of
Trustees who are not "interested persons" of the Trust;
l. Out-of-pocket expenses incurred in connection with the
provision of administration, custodial and transfer agency services;
m. Premiums payable on the fidelity bond required by Section 17(g)
of the 1940 Act, and any other premiums payable on insurance policies related
to the Trust's business and the investment activities of its Funds;
n. Distribution fees, if any;
o. Service fees, if any, payable by each Fund to the Distributors
or others for providing personal services to the shareholders of each Fund and
for maintaining shareholder accounts for those shareholders;
p. Fees, voluntary assessments and other expenses incurred in
connection with the Trust's membership in investment company organizations;
and
q. Such non-recurring expenses as may arise, including actions,
suits or proceedings to which the Trust is a party and the legal obligation
which the Trust may have to indemnify its Trust and officers with respect
thereto.
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<PAGE>
Except as otherwise agreed by Rodney Square, Rodney Square will not
reimburse the Trust for (or have deducted from its fees payable under this
Agreement) any Trust expenses in excess of any expense limitations imposed by
state securities commissions having jurisdiction over the sale of Fund shares.
5. RECORDKEEPING AND OTHER INFORMATION. Rodney Square shall create and
maintain all necessary records in accordance with all applicable laws, rules
and regulations, including, but not limited to, records required by Section
31(a) of the 1940 Act and the rules thereunder, as the same may be amended
from time to time, pertaining to the various functions (described above)
performed by it and not otherwise created and maintained by another party
pursuant to contract with the Trust. All records shall be the property of the
Trust at all times and shall be available for inspection and use by the Trust.
Where applicable, such records shall be maintained by Rodney Square for the
periods and in the places required by Rule 31a-2 under the 1940 Act.
6. AUDIT, INSPECTION AND VISITATION. Rodney Square shall make
available during regular business hours all records and other data created and
maintained pursuant to the foregoing provisions of this Agreement for
reasonable audit and inspection by the Trust, any person retained by the Trust
or any regulatory agency having authority over the Trust.
7. APPOINTMENT OF AGENTS. Rodney Square may at any time or times in
its discretion appoint (and may at any time remove) other parties as its agent
to carry out such of the provisions of this Agreement as Rodney Square may
from time to time direct; provided, however, that the appointment of any such
agent shall not relieve Rodney Square of any of its responsibilities or
liabilities hereunder.
8. RIGHT TO RECEIVE ADVICE.
a. Advice of Trust. If Rodney Square shall be in doubt as to any
action to be taken or omitted by it, it may request, and shall receive, from
the Trust directions or advice, including oral or written instructions where
appropriate.
b. Advice of Counsel. If Rodney Square shall be in doubt as to
any question of law involved in any action to be taken or omitted by Rodney
Square, it may request advice at its own cost from counsel of its own choosing
(who may be the regularly retained counsel for the Trust or Rodney Square or
the in-house counsel for Rodney Square, at the option of Rodney Square).
c. Conflicting Advice. In case of conflict between directions,
advice or oral or written instructions received by Rodney Square, Rodney
Square shall be entitled to rely on and follow the advice received by written
instructions alone.
d. Protection of Rodney Square. Rodney Square shall be protected
in any action or inaction which it takes in reliance on any directions, advice
or oral or written instructions received pursuant to subsections a or b of
this Section which Rodney Square, after receipt of any such directions, advice
or oral or written instructions, in good faith believes to be consistent with
such directions, advice or oral or written instructions, as the case may be.
However, nothing in this Section shall be construed as imposing upon Rodney
Square any obligation (i) to seek such direction, advice or oral or written
instructions, or (ii) to act in accordance with such directions, advice or
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<PAGE>
oral or written instructions when received, unless, under the terms of another
provision of this Agreement, the same is a condition to Rodney Square's
properly taking or omitting to take such action. Nothing in this subsection
shall excuse Rodney Square when an action or omission on the part of Rodney
Square constitutes willful misfeasance, bad faith, negligence or reckless
disregard by Rodney Square of its duties under this Agreement.
9. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS. Except as
otherwise provided herein, the Trust assumes full responsibility for ensuring
that the Trust complies with all applicable requirements of the 1933 Act, the
Securities Exchange Act of 1934 (the "1934 Act"), the 1940 Act, the CEA and
any laws, rules and regulations of governmental authorities having
jurisdiction.
10. COMPENSATION. For the performance of its obligations under this
Agreement, the Trust shall pay Rodney Square an administrative fee with
respect to each Fund in accordance with the fee arrangements described in
Schedule A attached hereto, as such schedule may be amended from time to time.
The Trust shall reimburse Rodney Square for all out-of-pocket expenses
incurred by Rodney Square or its agents in the performance of its obligations
hereunder. Such reimbursement for expenses incurred in any calendar month
shall be made on or before the tenth day of the next succeeding month.
The Trust shall approve the payment of all out-of-pocket expenses in any
calendar month by providing Rodney Square with written instructions signed by
any two of the Trust personnel listed on Schedule C, as such schedule may be
amended from time to time.
11. USE OF RODNEY SQUARE'S NAME. The Trust shall not use the name of
Rodney Square or any of its affiliates in any Prospectus, SAI, sales
literature or other material relating to the Trust in a manner not approved
prior thereto in writing by Rodney Square; provided, however, that Rodney
Square shall approve all uses of its and its affiliates' names that merely
refer in accurate terms to their appointments hereunder or that are required
by the SEC or a state securities commission; and further provided, that in no
event shall such approval be unreasonably withheld.
12. USE OF TRUST'S NAME. Neither Rodney Square nor any of its
affiliates shall use the name of the Trust or any of its Series or material
relating to the Trust or any of its Series on any forms (including any checks,
bank drafts or bank statements) for other than internal use in a manner not
approved prior thereto by the Trust; provided, however, that the Trust shall
approve all uses of its name that merely refer in accurate terms to the
appointment of Rodney Square hereunder or that are required by the SEC or a
state securities commission; and further provided, that in no event shall such
approval be unreasonably withheld.
13. LIABILITY OF RODNEY SQUARE OR AFFILIATES. Rodney Square and its
affiliates shall not be liable for any error of judgment or mistake of law or
for any loss suffered by the Trust in connection with the matters to which
this Agreement relates, except to the extent of a loss resulting from willful
misfeasance, bad faith, negligence or reckless disregard of their obligations
and duties under this Agreement. Any person, even though also an officer,
director, employee or agent of Rodney Square or any of its affiliates who may
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be or become an officer or director of the Trust, shall be deemed, when
rendering services to the Trust as such officer or acting on any business of
the Trust in such capacity (other than services or business in connection with
Rodney Square's duties under this Agreement), to be rendering such services to
or acting solely for the Trust and not as an officer, director, employee or
agent or one under the control or direction of Rodney Square or any of its
affiliates, even though paid by one of those entities. Rodney Square shall
not be liable or responsible for any acts or omissions of any predecessor
administrator or any other persons having responsibility for matters to which
this Agreement relates nor shall Rodney Square be responsible for reviewing
any such act or omissions. Rodney Square shall, however, be liable for its
own acts and omissions subsequent to assuming responsibility under this
Agreement as herein provided.
14. INDEMNIFICATION.
a. The Trust agrees to indemnify and hold harmless Rodney Square,
its directors, officers, employees, agents and representatives from all taxes,
charges, expenses, assessments, claims and liabilities including, without
limitation, liabilities arising under the 1933 Act, the 1934 Act and any
applicable state and foreign laws, and amendments thereto (the "Securities
Laws"), and expenses, including without limitation reasonable attorneys' fees
and disbursements arising directly or indirectly from any action or omission
to act which Rodney Square takes (i) at the request of or on the direction of
or in reliance on the advice of the Trust or (ii) upon oral or written
instructions. Neither Rodney Square nor any of its nominees shall be
indemnified against any liability (or any expenses incident to such liability)
arising out of Rodney Square's or its directors', officers', employees',
agents' and representatives own willful misfeasance, bad faith, negligence or
reckless disregard of its duties and obligations under this Agreement.
b. Rodney Square agrees to indemnify and hold harmless the Trust
from all taxes, charges, expenses, assessments, claims and liabilities arising
from Rodney Square's obligations pursuant to this Agreement (including,
without limitation, liabilities arising under the Securities Laws, and any
state and foreign securities and blue sky laws, and amendments thereto) and
expenses, including (without limitation) reasonable attorneys' fees and
disbursements arising directly or indirectly out of Rodney Square's or its
directors', officers', employees', agents' and representatives own willful
misfeasance, bad faith, negligence or reckless disregard of its duties and
obligations under this Agreement.
c. In order that the indemnification provisions contained in this
Section 14 shall apply, upon the assertion of a claim for which either party
may be required to indemnify the other, the party 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 in 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.
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<PAGE>
15. RESPONSIBILITY OF RODNEY SQUARE. Rodney Square shall be under no
duty to take any action on behalf of the Trust except as specifically set
herein or as may be specifically agreed to by Rodney Square in writing. In
the performance of its duties hereunder, Rodney Square shall be obligated to
exercise care and diligence and to act in good faith and to use its best
efforts within reasonable limits in performing services provided for under
this Agreement. Rodney Square shall be responsible for its own negligent
failure to perform its duties under this Agreement, but to the extent that
duties, obligations and responsibilities are not expressly set forth in this
Agreement, Rodney Square shall not be liable for any act or omission which
does not constitute willful misfeasance, bad faith or negligence on the part
of Rodney Square or reckless disregard by Rodney Square of such duties,
obligations and responsibilities. Without limiting the generality of the
foregoing or of any other provision of this Agreement, Rodney Square in
connection with its duties under this Agreement shall not be under any duty or
obligation to inquire into and shall not be liable for or in respect of (i)
the validity or invalidity or authority or lack thereof of any oral or written
instruction, notice or other instrument which conforms to the applicable
requirements of this Agreement, and which Rodney Square reasonably believes to
be genuine; or (ii) delays or errors or loss of data occurring by reason of
circumstances beyond Rodney Square's control, including acts of civil or
military authority, national emergencies, labor difficulties, fire, mechanical
breakdown, flood or catastrophe, acts of God, insurrection, war, riots or
failure of the mails, transportation, communication or power supply, which
circumstances Rodney Square shall take minimal actions to minimize loss of
data therefor.
16. DURATION, TERMINATION, ETC. The provisions of this Agreement may
not be changed, waived, discharged or terminated orally, but only by written
instrument that shall make specific reference to this Agreement and that shall
be signed by the party against which enforcement of such change, waiver,
discharge or termination is sought.
This Agreement shall become effective as of the date first written
above, and unless terminated as provided, shall continue in force for a three
(3) year period from the date of its execution and thereafter from year to
year, provided continuance after the three (3) year period is approved at
least annually by (i) the vote of a majority of the Trustees of the Trust and
(ii) the vote of a majority of those Trustees of the Trust who are not
interested persons of the Trust, and who are not parties to this Agreement or
interested persons of any party, cast in person at a meeting called for the
purpose of voting on the approval. This Agreement may at any time be
terminated on one hundred and twenty (120) days written notice given to Rodney
Square or by Rodney Square by one hundred and twenty (120) days written notice
given to the Trust; provided, however, that the foregoing provisions of this
Agreement may be terminated immediately at any time for cause either by the
Trust or by Rodney Square in the event that such cause shall have remained
unremedied for sixty (60) days or more after receipt of written specification
of such cause. Any such termination shall not affect the rights and
obligations of the parties under Section 13 hereof.
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Upon the termination of this Agreement, the Trust shall pay to Rodney
Square such compensation as may be payable for the period prior to the
effective date of such termination, including reimbursement for any out-of-
pocket expenses reasonably incurred by Rodney Square to such date. In the
event that the Trust designates a successor to any of Rodney Square's
obligations hereunder, Rodney Square shall, at the expense and direction of
the Trust, transfer to such successor all relevant books, records and other
data established or maintained by Rodney Square under the foregoing
provisions.
Upon the termination of this Agreement within the initial three (3) year
term by the Trust, the Trust's Board of Trustees or Rodney Square, the party
initiating termination shall pay the other party with respect to each Fund in
accordance with the provisions of liquidated damages described in Schedule A
attached hereto, as such schedule may be amended from time to time.
17. INSURANCE. Upon request Rodney Square shall provide the Trust with
details regarding its insurance coverage, and Rodney Square shall notify the
Trust should any of its insurance coverage be materially changed. Such
notification shall include the date of change and the reason or reasons
therefor. Rodney Square shall notify the Trust of any material claims against
it, whether or not they may be covered by insurance and shall notify the Trust
from time to time as may be appropriate of the total outstanding claims made
by Rodney Square under its insurance coverage.
18. AMENDMENTS. This Agreement or any part hereof may be changed or
waived only by an instrument in writing signed by the party against which
enforcement of such change or waiver is sought.
Rodney Square and the Trust shall regularly consult with each other
regarding Rodney Square's performance of its obligations and its compensation
under the foregoing provisions. In connection therewith, the Trust shall
submit to Rodney Square at a reasonable time in advance of filing with the SEC
copies of any amended or supplemented registration statement of the Trust
(including exhibits) under the 1933 Act, as amended, and the 1940 Act, and, a
reasonable time in advance of their proposed use, copies of any amended or
supplemented forms relating to any plan, program or service offered by the
Trust. Any change in such materials that would require any change in Rodney
Square's obligations under the foregoing provisions shall be subject to the
burdened party's approval, which shall not be unreasonably withheld. In the
event that a change in such documents or in the procedures contained therein
increases the cost to Rodney Square of performing its obligations hereunder by
more than an insubstantial amount, Rodney Square shall be entitled to receive
reasonable compensation therefor.
19. NOTICE. Any notice under this Agreement shall be given in writing
addressed and delivered or mailed, postage prepaid, to the other party to this
Agreement at its principal place of business.
20. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
21. FURTHER ACTIONS. Each Party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
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<PAGE>
22. GOVERNING LAW. To the extent that state law has not been preempted
by the provisions of any law of the United States heretofore or hereafter
enacted, as the same may be amended from time to time, this Agreement shall be
administered, construed and enforced according to the laws of the State of
Delaware.
23. SHAREHOLDER LIABILITY. Rodney Square acknowledges that it has
received notice of and accepts the limitations of liability set forth in the
Trust's Declaration of Trust. Rodney Square agrees that the Trust's
obligations hereunder shall be limited to the Trust, and that Rodney Square
shall have recourse solely against the assets of the Fund with respect to
which the Trust's obligations hereunder relate and shall have no recourse
against the assets of any other Fund or against any shareholder, Trustee,
officer, employee, or agent of the Trust.
24. MISCELLANEOUS. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof. 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. This Agreement may be executed
in two counterparts, each of which taken together shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above written.
THE OLSTEIN FUNDS
By: /s/ Robert A. Olstein
Robert A. Olstein,
Chairman and President
RODNEY SQUARE MANAGEMENT CORPORATION
By: /s/ Martin L. Klopping
Martin L. Klopping,
President
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<PAGE>
ADMINISTRATION AGREEMENT
SCHEDULE A
THE OLSTEIN FUNDS
FUND LISTING AND FEE SCHEDULE
FUND LISTING: The Olstein Financial Alert Fund
FEE SCHEDULE:
For the services Rodney Square provides under the Administration Agreement
attached hereto, The Olstein Funds (the "Trust") agrees to pay Rodney Square
an administration fee with respect to each Fund listed below equal to the
following calculation based on each Fund's assets:
0.15% of assets from $0 - $50 million plus
0.10% of assets from $50 million - $100 million plus
0.07% of assets from $100 million - $200 million plus
0.05% of assets in excess of $200 million
The administration fee is subject to a minimum fee of $50,000 for initial Fund
of one Series and a $15,000 minimum for each additional Fund. The higher of
the minimums or the calculated group assets fee will apply.
This administration fee shall be payable monthly as soon as practicable after
the last day of each month based on the average of the daily net assets of
each Fund, as determined at the close of business on each day throughout the
month.
Out of pocket expenses shall be reimbursed by the Trust to Rodney Square or
paid directly by the Trust.
LIQUIDATED DAMAGES:
Upon the termination of this Agreement within the initial three (3) year term
by the Trust or the Trust's Board of Trustees, the Trust shall pay to Rodney
Square liquidated damages with respect to each Fund in an amount equal to
three (3) months of base fees as determined in the manner set forth above.
Upon the termination of this Agreement within the initial three (3) year term
by Rodney Square, Rodney Square shall pay the Trust liquidated damages in an
amount equal to $7,500.00 to compensate the Trust for any damages resulting
from such termination, provided, that Rodney Square shall not be liable for
liquidated damages if it pays or has paid the Trust liquidated damages of
$7,500.00 in connection with the termination of any other Rodney Square
agreement including, but not limited to, the Accounting Services Agreement and
Transfer Agency Agreement (collectively, the "Service Agreements"). In the
event Rodney Square terminates this Agreement within the initial three (3)
year term, the Trust shall have the option, from the date of notice of such
termination, to terminate any of the Service Agreements, without incurring
liquidated damages, by providing one hundred and twenty (120) days written
notice to Rodney Square.
A-1
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ADMINISTRATION AGREEMENT
SCHEDULE B
THE OLSTEIN FUNDS
TRUST AGREEMENTS SCHEDULE
1. The Investment Management Agreement between The Olstein Funds (the
"Trust"), on behalf of The Olstein Financial Alert Fund (the "Fund"), and
Olstein & Associates, L.P. (the "Investment Manager"), dated as of August
18, 1995;
2. The Accounting Services Agreement between the Trust and Rodney Square
Management Corporation, a Delaware Corporation ("Rodney Square"), dated
as of August 18, 1995;
3. The Transfer Agency Agreement between the Trust and Rodney Square, dated
as of August 18, 1995;
4. The Custodian Agreement between the Trust and Wilmington Trust Company,
dated as of August 18, 1995;
5. The Special Custody Account Agreement between the Trust, Wilmington Trust
Company, and Bear, Sterns Securities Corp., dated as of August 18, 1995,
to facilitate the Trusts short-selling activities; and
6. The Distribution Agreement among the Trust, the Investment Manager and
Rodney Square Distributors, Inc., dated as of August 18, 1995.
B-1
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ADMINISTRATION AGREEMENT
SCHEDULE C
THE OLSTEIN FUNDS
AUTHORIZED PERSONS
The following persons have been duly authorized to authorize the payment of
out-of-pocket expenses on behalf of the above-named Trust provided such
payments are approved by at least two of such authorized persons:
Robert A. Olstein /s/ Robert A. Olstein
Erik K. Olstein /s/ Erik K. Olstein
Michael Luper /s/ Michael Luper
C-1
Exhibit 9(b)
THE OLSTEIN FUNDS
RODNEY SQUARE MANAGEMENT CORPORATION
ACCOUNTING SERVICES AGREEMENT
THIS ACCOUNTING SERVICES AGREEMENT is made as of the 18th day of August,
1995, by and between The Olstein Funds, a Delaware business trust (the
"Trust"), having its principal place of business in White Plains, New York,
and Rodney Square Management Corporation, a corporation organized under the
laws of the State of Delaware ("Rodney Square"), having its principal place of
business in Wilmington, Delaware.
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment
company and offers for public sale one or more distinct series of shares of
beneficial interest ("Series"), par value $0.001 per share, each corresponding
to a distinct portfolio;
WHEREAS, each share of a Series represents an undivided interest in the
assets, subject to the liabilities, allocated to that Series and each Series
has a separate investment objective and policies;
WHEREAS, at the present time, the Trust anticipates it will establish
multiple Series;
WHEREAS, the Trust desires to employ Rodney Square to provide certain
accounting services; and
WHEREAS, Rodney Square is willing to furnish such services to the Trust
with respect to each Series listed on Schedule A to this Agreement (each a
"Fund," and two or more together "Funds") on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement, the Trust and Rodney Square agree as follows:
1. APPOINTMENT. The Trust hereby appoints Rodney Square to provide
certain accounting services to the Trust for the period and on the terms set
forth in this Agreement. Rodney Square accepts such appointment and agrees to
furnish the services herein set forth in return for the compensation provided
for in Section 12 of this Agreement. Rodney Square agrees to comply with all
relevant provisions of the Investment Company Act and applicable rules and
regulations thereunder, and to remain open for business on any day on which
the New York Stock Exchange, the Philadelphia branch office of the Federal
Reserve and Wilmington Trust Company are open for business. The Trust may
from time to time issue separate series or classes or classify and reclassify
shares of such series or class. Rodney Square shall identify to each such
series or class property belonging to such series or class and in such
reports, confirmations and notices to the Trust called for under this
Agreement shall identify the series or class to which such report,
confirmation or notice pertains.
2. DOCUMENTS. The Trust has furnished Rodney Square with copies
properly certified or authenticated of each of the following:
ACCTGK2.RTF
<PAGE>
a. The Trust's Certificate of Trust filed with the Secretary of
the State of Delaware on April 3, 1995, and all amendments thereto and
restatements thereof;
b. The Trust's Agreement and Declaration of Trust and all
amendments thereto and restatements thereof;
c. The Trust's By-laws and all amendments thereto and restatements
thereof (such By-laws, as presently in effect and as they shall from time to
time be amended or restated, are herein called "By-laws");
d. Resolutions of the Trust's Board of Trustees authorizing the
appointment of Rodney Square to provide certain accounting services to the
Trust and approving this Agreement;
e. Schedule B identifying and containing the signatures of the
Trust's officers and other persons authorized ("Authorized Persons") to sign
"Written Instructions" (as used in this Agreement to mean written instructions
delivered by hand, mail, telegram, cable, telex or facsimile sending device
and received by Rodney Square, signed by two Authorized Persons) on behalf of
the Trust;
f. The Trust's Notification of Registration filed pursuant to
Section 8(a) of the Investment Company Act as filed with the Securities and
Exchange Commission ("SEC") on May 1, 1995;
g. The Trust's most recent Registration Statement on Form N-1A
under the Securities Act of 1933 (the "1933 Act") (File No. 33-91770) and
under the 1940 Act (File No. 811-9038), as filed with the SEC relating to
shares of beneficial interest in the Trust, and all amendments thereto;
h. The Trust's most current Prospectus(es) and Statement(s) of
Additional Information relating to the Fund(s);
i. The executed Trust agreements listed on Schedule C hereto; and
j. If required, a copy of either (i) a filed notice of eligibility
to claim the exclusion from the definition of "commodity pool operator"
contained in Section 2(a)(1)(A) of the Commodity Exchange Act ("CEA") that is
provided in Rule 4.5 under the CEA, together with all supplements as are
required by the Commodity Futures Trading Commission ("CFTC"), or (ii) a
letter which has been granted the Trust by the CFTC which states that the
Trust will not be treated as a "pool" as defined in Section 4.10(d) of the
CFTC's General Regulations, or (iii) a letter which has been granted the Trust
by the CFTC which states that CFTC will not take any enforcement action if the
Trust does not register as a "commodity pool operator."
The Trust will furnish Rodney Square from time to time with copies,
properly certified or authenticated, of all additions, amendments or
supplements to the foregoing, if any.
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3. INSTRUCTIONS CONSISTENT WITH DECLARATION OF TRUST, ETC.
a. Unless otherwise provided in this Agreement, Rodney Square
shall act only upon Oral and Written Instructions. ("Oral Instructions" used
in this Agreement shall mean oral instructions actually received by Rodney
Square from an Authorized Person or from a person reasonably believed by
Rodney Square to be an Authorized Person. "Written Instructions" used in this
Agreement shall mean written instructions signed by two Authorized Persons
delivered by hand, mail, telegram, cable, telex or facsimile, and received by
Rodney Square. "Authorized Person" used in this Agreement means any officer
of the Trust and any other person, whether or not any such person is an
officer of the Trust, duly authorized by the Board of Trustees of the Trust to
give Oral and Written Instructions on behalf of the Fund(s) and certified by
the Secretary or an Assistant Secretary of the Trust or any amendment thereto
as may be received by Rodney Square from time to time.) Although Rodney Square
may know of the provisions of the Declaration of Trust and By-laws of the
Trust, Rodney Square in its capacity under this Agreement may assume that any
Oral or Written Instructions received hereunder are not in any way
inconsistent with any provisions of such Declaration of Trust or Bylaws or any
vote, resolution or proceeding of the shareholders, or of the Board of
Trustees, or of any committee thereof.
b. Rodney Square shall be entitled to rely upon any Oral
Instructions and any Written Instructions actually received by Rodney Square
pursuant to this Agreement. The Trust agrees to forward to Rodney Square
Written Instructions confirming Oral Instructions in such manner that the
Written Instructions are received by Rodney Square, whether by hand delivery,
telex, facsimile or otherwise, by the close of business of the same day that
such Oral Instructions are given to Rodney Square. The Trust agrees that the
fact that such confirming Written Instructions are not received by Rodney
Square shall in no way affect the validity of the transactions or
enforceability of the transactions authorized by the Trust by giving Oral
Instructions. The Trust agrees that Rodney Square shall incur no liability to
the Trust in acting upon Oral Instructions given to Rodney Square hereunder
concerning such transactions provided such instructions reasonably appear to
have been received from an Authorized Person.
4. FUND ACCOUNTING.
a. Rodney Square shall provide the following accounting functions
on a daily basis:
(1) Journalize each Fund's investment, capital share and
income and expense activities;
(2) Verify investment buy/sell trade tickets when received
from the Investment Manager and transmit trades to the
Trust's Custodian for proper settlement;
(3) Maintain individual ledgers for investment securities;
(4) Maintain historical tax lots for each security;
(5) Reconcile cash and investment balances of each Fund with
the Custodian, and provide the Investment Manager with
the beginning cash balance available for investment
purposes;
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<PAGE>
(6) Update the cash availability throughout the day as
required by the Investment Manager;
(7) Post to and prepare each Fund's Statement of Assets and
Liabilities and Statement of Operations;
(8) Calculate expenses payable pursuant to the Trust's
various contractual obligations;
(9) Control all disbursements from the Trust on behalf of
each Fund and authorize such disbursements upon Written
Instructions;
(10) Calculate capital gains and losses;
(11) Determine each Fund's net income;
(12) At the Fund's expense obtain security market prices or if
such market prices are not readily available, then obtain
such prices from services approved by the Investment
Manager and in either case calculate the market or fair
value of each Fund's investments;
(13) In the case of debt instruments with remaining maturities
of sixty (60) days or less, calculate the amortized cost
value of those instruments;
(14) Transmit or mail a copy of the portfolio valuations of
each Fund to the Investment Manager;
(15) Compute the net asset value of each Fund;
(16) Compute each Fund's yields, total returns, expense ratios
and portfolio turnover rate; and
(17) Prepare and monitor the expense accruals and notify Trust
management of any proposed adjustments.
b. In addition, Rodney Square will:
(1) Prepare monthly financial statements, which will include
without limitation the Schedule of Investments, the
Statement of Assets and Liabilities, the Statement of
Operations, the Statement of Changes in Net Assets, the
Cash Statement, and the Schedule of Capital Gains and
Losses;
(2) Prepare monthly security transactions listings;
(3) Prepare monthly broker security transactions summaries;
(4) Supply various Trust and Fund statistical data as
requested on an ongoing basis;
(5) Assist in the preparation of support schedules necessary
for completion of Federal and state tax returns;
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(6) Assist in the preparation and filing of the Trust's
annual and semiannual reports with the SEC on Form N-SAR;
(7) Assist in the preparation and filing of the Trust's
annual and semiannual reports to shareholders and proxy
statements;
(8) Assist with the preparation of amendments to the Trust's
registration statements on Form N-1A and other filings
relating to the registration of shares;
(9) Monitor each Fund's status as a regulated investment
company under Subchapter M of the Internal Revenue Code
of 1986, as amended from time to time; and
(10) Determine the amount of dividends and other distributions
payable to shareholders as necessary to, among other
things, maintain the qualification as a regulated
investment company of each Fund of the Trust under the
Code.
5. SHORT SELLING. In connection with any Fund's activities relating to
short sales, Rodney Square will provide appropriate accounting services,
transaction reporting and record keeping services as are required under
relevant law and as may be agreed between the parties from time to time, or as
may be designated between a Fund, Rodney Square, and any third party providing
services related to short sales.
6. RECORDKEEPING AND OTHER INFORMATION. Rodney Square shall create and
maintain all necessary records in accordance with all applicable laws, rules
and regulations, including, but not limited to, records required by Section
31(a) of the Investment Company Act and the rules thereunder, as the same may
be amended from time to time, pertaining to the various functions (described
above) performed by it and not otherwise created and maintained by another
party pursuant to contract with the Trust. All records shall be the property
of the Trust at all times and shall be available for inspection and use by the
Trust or the Trust's authorized representatives. Upon reasonable request of
the Trust, copies of such records shall be provided by Rodney Square to the
Trust or the Trust's authorized representatives at the Trust's expense Where
applicable, such records shall be maintained by Rodney Square for the periods
and in the places required by Rule 31a-2 under the Investment Company Act.
7. LIAISON WITH ACCOUNTANTS. Rodney Square shall act as liaison with
the Trust's independent public accountants and shall provide account analysis,
fiscal year summaries and other audit related schedules. Rodney Square shall
take all reasonable action in the performance of its obligations under this
Agreement to assure that the necessary information is made available to such
accountants for the expression of their opinion, as such may be required by
the Trust from time to time.
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8. CONFIDENTIALITY. Rodney Square agrees on behalf of itself and its
employees to treat confidentially and as proprietary information of the Trust
all records and other information relative to the Trust and its prior, present
or potential shareholders, and not to use such records and information for any
purpose other than performance of its responsibilities and duties hereunder,
except, after prior notification to and approval in writing by the Trust,
which approval shall not be unreasonably withheld and may not be withheld
where Rodney Square may be exposed to civil or criminal contempt proceedings
for failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Trust.
9. EQUIPMENT FAILURE. In the event of equipment failures beyond Rodney
Square's control, Rodney Square shall, at no additional expense to the Trust,
take reasonable steps to minimize service interruptions but shall have no
liability with respect thereto. Rodney Square shall enter into and shall
maintain in effect with appropriate parties one or more agreements making
reasonable provision of emergency use of electronic data processing equipment
to the extent appropriate equipment is available.
10. RIGHT TO RECEIVE ADVICE.
a. Advice of Trust. If Rodney Square shall be in doubt as to any
action to be taken or omitted by it, it may request, and shall receive, from
the Trust directions or advice, including Oral or Written Instructions where
appropriate.
b. Advice of Counsel. If Rodney Square shall be in doubt as to
any question of law involved in any action to be taken or omitted by Rodney
Square, it may request advice at its own cost from counsel of its own choosing
(who may be the regularly retained counsel for the Trust or Rodney Square or
the in-house counsel for Rodney Square, at the option of Rodney Square).
c. Conflicting Advice. In case of conflict between directions,
advice or Oral or Written Instructions received by Rodney Square pursuant to
subsection A of this Section and advice received by Rodney Square pursuant to
subsection B of this Section, Rodney Square shall be entitled to rely on and
follow the advice received pursuant to the latter provision alone.
d. Protection of Rodney Square. Rodney Square shall be protected
in any action or inaction which it takes in reliance on any directions, advice
or Oral or Written Instructions received pursuant to subsections A or B of
this Section which Rodney Square, after receipt of any such directions, advice
or Oral or Written Instructions, in good faith believes to be consistent with
such directions, advice or Oral or Written Instructions, as the case may be.
However, nothing in this Section shall be construed as imposing upon Rodney
Square any obligation (i) to seek such direction, advice or Oral or Written
Instructions, or (ii) to act in accordance with such directions, advice or
Oral or Written Instructions when received, unless, under the terms of another
provision of this Agreement, the same is a condition to Rodney Square's
properly taking or omitting to take such action. Nothing in this subsection
shall excuse Rodney Square when an action or omission on the part of Rodney
Square constitutes willful misfeasance, bad faith, negligence or reckless
disregard by Rodney Square of its duties under this Agreement.
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11. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS. Except as
otherwise provided herein in Sections 4 and 5, the Trust assumes full
responsibility for ensuring that the Trust complies with all applicable
requirements of the 1933 Act, the Securities Exchange Act of 1934 (the "1934
Act"), the 1940 Act, the CEA and any laws, rules and regulations of
governmental authorities having jurisdiction.
12. COMPENSATION. For the performance of its obligations under this
Agreement, the Trust shall pay Rodney Square with respect to each Fund in
accordance with the fee arrangements described in Schedule A attached hereto,
as such schedule may be amended from time to time.
The Trust shall reimburse Rodney Square for all reasonable out-of-pocket
expenses incurred by Rodney Square or its agents in the performance of its
obligations hereunder. Such reimbursement for expenses incurred in any
calendar month shall be made on or before the tenth day of the next succeeding
month.
13. INDEMNIFICATION.
a. The Trust agrees to indemnify and hold harmless Rodney Square,
its directors, officers, employees, agents and representatives from all taxes,
charges, expenses, assessments, claims and liabilities including, without
limitation, liabilities arising under the 1933 Act, the 1934 Act and any
applicable state and foreign laws, and amendments thereto (the "Securities
Laws"), and expenses, including without limitation reasonable attorneys' fees
and disbursements arising directly or indirectly from any action or omission
to act which Rodney Square takes (i) at the request of or on the direction of
or in reliance on the advice of the Trust or (ii) upon Oral or Written
Instructions. Neither Rodney Square nor any of its nominees shall be
indemnified against any liability (or any expenses incident to such liability)
arising out of Rodney Square's or its directors', officers', employees',
agents' and representatives own willful misfeasance, bad faith, negligence or
reckless disregard of its duties and obligations under this Agreement.
b. Rodney Square agrees to indemnify and hold harmless the Trust
from all taxes, charges, expenses, assessments, claims and liabilities arising
from Rodney Square's obligations pursuant to this Agreement (including,
without limitation, liabilities arising under the Securities Laws, and any
state and foreign securities and blue sky laws, and amendments thereto) and
expenses, including (without limitation) reasonable attorneys' fees and
disbursements arising directly or indirectly out of Rodney Square's or its
directors', officers', employees', agents' and representatives own willful
misfeasance, bad faith, negligence or reckless disregard of its duties and
obligations under this Agreement.
c. In order that the indemnification provisions contained in this
Section 13 shall apply, upon the assertion of a claim for which either party
may be required to indemnify the other, the party 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 in 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.
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14. RESPONSIBILITY OF RODNEY SQUARE. Rodney Square shall be under no
duty to take any action on behalf of the Trust except as specifically set
herein or as may be specifically agreed to by Rodney Square in writing. In
the performance of its duties hereunder, Rodney Square shall be obligated to
exercise care and diligence and to act in good faith and to use its best
efforts within reasonable limits in performing services provided for under
this Agreement. Rodney Square shall be responsible for its own negligent
failure to perform its duties under this Agreement, but to the extent that
duties, obligations and responsibilities are not expressly set forth in this
Agreement, Rodney Square shall not be liable for any act or omission which
does not constitute willful misfeasance, bad faith or negligence on the part
of Rodney Square or reckless disregard by Rodney Square of such duties,
obligations and responsibilities. Without limiting the generality of the
foregoing or of any other provision of this Agreement, Rodney Square in
connection with its duties under this Agreement shall not be under any duty or
obligation to inquire into and shall not be liable for or in respect of (i)
the validity or invalidity or authority or lack thereof of any Oral or Written
Instruction, notice or other instrument which conforms to the applicable
requirements of this Agreement, and which Rodney Square reasonably believes to
be genuine; or (ii) delays or errors or loss of data occurring by reason of
circumstances beyond Rodney Square's control, including acts of civil or
military authority, national emergencies, labor difficulties, fire, mechanical
breakdown (except as provided in Section 9), flood or catastrophe, acts of
God, insurrection, war, riots or failure of the mails, transportation,
communication or power supply, which circumstances Rodney Square shall take
minimal actions to minimize loss of data therefor.
15. DURATION, TERMINATION, ETC. The provisions of this Agreement may
not be changed, waived, discharged or terminated orally, but only by written
instrument that shall make specific reference to this Agreement and that shall
be signed by the party against which enforcement of such change, waiver,
discharge or termination is sought.
This Agreement shall become effective as of the date first written above,
and unless terminated as provided, shall continue in force for three (3) years
from the date of its execution and thereafter from year to year, provided
continuance after the three (3) year period is approved at least annually by
(i) the vote of a majority of the Trustees of the Trust and (ii) the vote of a
majority of those Trustees of the Trust who are not interested persons of the
Trust, and who are not parties to this Agreement or interested persons of any
party, cast in person at a meeting called for the purpose of voting on the
approval. This Agreement may at any time be terminated on one hundred and
twenty (120) days written notice given to Rodney Square or by Rodney Square
by one hundred and twenty (120) days written notice given to the Trust;
provided, however, that the foregoing provisions of this Agreement may be
terminated immediately at any time for cause either by the Trust or by Rodney
Square in the event that such cause shall have remained unremedied for sixty
(60) days or more after receipt of written specification of such cause.
Upon the termination of this Agreement, the Trust shall pay to Rodney
Square such compensation as may be payable for the period prior to the
effective date of such termination, including reimbursement for any out-of-
pocket expenses reasonably incurred by Rodney Square to such date. In the
event that the Trust designates a successor to any of Rodney Square's
obligations hereunder, Rodney Square shall, at the expense and direction of
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the Trust, transfer to such successor all relevant books, records and other
data established or maintained by Rodney Square under the foregoing
provisions.
Upon the termination of this Agreement within the initial three (3) year
term by the Trust, the Trust's Board of Trustees or Rodney Square, the party
initiating termination shall pay the other party with respect to each Fund in
accordance with the provisions of liquidated damages described in Schedule A
attached hereto, as such schedule may be amended from time to time.
16. AMENDMENTS. This Agreement or any part hereof may be changed or
waived only by an instrument in writing signed by the party against which
enforcement of such change or waiver is sought.
17. NOTICE. Any notice under this Agreement shall be given in writing
addressed and delivered or mailed, postage prepaid, to the other party to this
Agreement at its principal place of business.
18. INSURANCE. Upon request Rodney Square shall provide the Trust with
details regarding its insurance coverage, and Rodney Square shall notify the
Trust should any of its insurance coverage be materially changed. Such
notification shall include the date of change and the reason or reasons
therefor. Rodney Square shall notify the Trust of any material claims against
it, whether or not they may be covered by insurance and shall notify the Trust
from time to time as may be appropriate of the total outstanding claims made
by Rodney Square under its insurance coverage.
19. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
20. FURTHER ACTIONS. Each Party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
21. GOVERNING LAW. To the extent that state law has not been preempted
by the provisions of any law of the United States heretofore or hereafter
enacted, as the same may be amended from time to time, this Agreement shall be
administered, construed and enforced according to the laws of the State of
Delaware.
22. DELEGATION. On thirty (30) days' prior written notice to the Trust,
Rodney Square may assign any part or all its rights and delegate its duties
hereunder to any wholly owned direct or indirect subsidiary of Wilmington
Trust Company provided that (i) the delegate agrees with Rodney Square to
comply with all relevant provisions of the 1940 Act and applicable rules and
regulations; (ii) Rodney Square shall remain responsible for the performance
of all of its duties under this Agreement; (iii) Rodney Square and such
delegate shall promptly provide such information as the Trust may request; and
(iv) Rodney Square shall respond to such questions as the Trust may ask,
relative to the delegation, including (without limitation) the capabilities
for the delegate.
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23. SHAREHOLDER LIABILITY. Rodney Square acknowledges that it has
received notice of and accepts the limitations of liability set forth in the
Trust's Declaration of Trust. Rodney Square agrees that the Trust's
obligations hereunder shall be limited to the Trust, and that Rodney Square
shall have recourse solely against the assets of the Fund with respect to
which the Trust's obligations hereunder relate and shall have no recourse
against the assets of any other Fund or against any shareholder, Trustee,
officer, employee, or agent of the Trust.
24. MISCELLANEOUS.
a. Rodney Square acknowledges that it has received notice of and
accepts the limitations of liability set forth in the Trust's Declaration of
Trust. Rodney Square agrees that the Trust's obligations hereunder shall be
limited to the Trust, and that Rodney Square shall have recourse solely
against the assets of the Fund with respect to which the Trust's obligations
hereunder relate and shall have no recourse against the assets of any other
Fund or against any shareholder, Trustee, officer, employee, or agent of the
Trust.
b. This Agreement embodies the entire agreement and understanding
between the parties thereto, and supersedes all matters hereof, provided that
the parties hereto may embody in one or more separate documents their
agreement, if any, with respect to Written and/or Oral Instructions. 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. This Agreement shall be binding and shall inure
to the benefits of the parties hereto and their respective successors.
IN WITNESS WHEREOF the parties have caused this instrument to be signed
on their behalf by their respective officers thereunto duly authorized all as
of the date first written above.
THE OLSTEIN FUNDS
By: /s/ Robert A. Olstein
Robert A. Olstein,
Chairman and President
RODNEY SQUARE MANAGEMENT CORPORATION
By: /s/ Martin L. Klopping
Martin L. Klopping,
President
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<PAGE>
ACCOUNTING SERVICES AGREEMENT
SCHEDULE A
THE OLSTEIN FUNDS
LISTING AND FEE SCHEDULE
FUND LISTING: The Olstein Financial Alert Fund
FEE SCHEDULE:
For the services Rodney Square provides under the Accounting Services
Agreement attached hereto, The Olstein Funds (the "Trust") on behalf of the
Funds listed above agrees to pay Rodney Square an accounting fee equal to
$40,000 minimum to $50 million plus
0.03% of assets from $50 million - $100 million plus
0.02% of assets from $100 million - $250 million plus
0.01% of assets in excess of $250 million
This accounting fee shall be payable monthly as soon as practicable after the
last day of each month based on the average of the daily net assets of each
Fund, as determined at the close of business on each day throughout the month.
Out of pocket expenses shall be reimbursed by the Trust to Rodney Square or
paid directly by the Trust.
LIQUIDATED DAMAGES:
Upon the termination of this Agreement within the initial three (3) year term
by the Trust or the Trust's Board of Trustees, the Trust shall pay to Rodney
Square liquidated damages with respect to each Fund in an amount equal to
three (3) months of base fees as determined in the manner set forth above.
Upon the termination of this Agreement within the initial three (3) year term
by Rodney Square, Rodney Square shall pay the Trust liquidated damages in an
amount equal to $7,500.00 to compensate the Trust for any damages resulting
from such termination, provided, that Rodney Square shall not be liable for
liquidated damages if it pays or has paid the Trust liquidated damages of
$7,500.00 in connection with the termination of any other Rodney Square
agreement including, but not limited to, the Administration Agreement and
Transfer Agency Agreement (collectively, the "Service Agreements"). In the
event Rodney Square terminates this Agreement within the initial three (3)
year term, the Trust shall have the option, from the date of notice of such
termination, to terminate any of the Service Agreements, without incurring
liquidated damages, by providing one hundred and twenty (120) days written
notice to Rodney Square.
A-1
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ACCOUNTING SERVICES AGREEMENT
SCHEDULE B
THE OLSTEIN FUNDS
AUTHORIZED PERSONS
The following persons have been duly authorized by the Board of Trustees
to give Oral and Written Instructions on behalf of the above-named Trust in
connection with this Agreement:
Robert A. Olstein /s/ Robert A. Olstein
Erik K. Olstein /s/ Erik K. Olstein
Michael Luper /s/ Michael Luper
Louis C. Schwartz /s/ Louis C. Schwartz
John J. Kelley /s/ John J. Kelley
B-1
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ACCOUNTING SERVICES AGREEMENT
SCHEDULE C
THE OLSTEIN FUNDS
TRUST AGREEMENTS SCHEDULE
1. The Investment Management Agreement between The Olstein Funds (the
"Trust"), on behalf of The Olstein Financial Alert Fund (the "Fund"), and
Olstein and Associates, L.P. (the "Investment Manager"), dated as of
August 18, 1995;
2. The Administration Services Agreement between the Trust and Rodney Square
Management Corporation, a Delaware Corporation ("Rodney Square"), dated
as of August 18, 1995;
3. The Transfer Agency Agreement between the Trust and Rodney Square, dated
as of August 18, 1995;
4. The Custodian Agreement between the Trust and Wilmington Trust Company,
dated as of August 18, 1995;
5. The Special Custody Account Agreement between the Trust, Wilmington Trust
Company, and Bear Stearns Securities Corp., dated as of August 18, 1995,
to facilitate the Trust's short selling activities; and
6. The Distribution Agreement among the Trust, the Investment Manager and
Rodney Square Distributors, Inc., dated as of August 18, 1995.
C-1
Exhibit 9(c)
THE OLSTEIN FUNDS
RODNEY SQUARE MANAGEMENT CORPORATION
TRANSFER AGENCY AGREEMENT
THIS TRANSFER AGENCY AGREEMENT is made as of the 18th day of August,
1995, between The Olstein Funds, a Delaware, business trust (the "Trust"),
having its principal place of business in White Plains, New York, and Rodney
Square Management Corporation, a corporation organized under the laws of the
State of Delaware ("Rodney Square"), having its principal place of business in
Wilmington, Delaware.
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment
company and offers for public sale one or more distinct, series of shares of
beneficial interest ("Series"), par value $0.001 per share, each corresponding
to a distinct portfolio;
WHEREAS, each share of a Series represents an undivided interest in the
assets, subject to the liabilities, allocated to that Series and each Series
has a separate investment objective and policies;
WHEREAS, at the present time, the Trust anticipates it will establish
multiple Series;
WHEREAS, the Trust desires to avail itself of the services of Rodney
Square to serve as the Trust's transfer agent; and
WHEREAS, Rodney Square is willing to furnish such services to the Trust
with respect to each Series listed in Schedule A to this Agreement (each, a
"Fund," and two or more together "Funds") on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the Trust and Rodney Square agree as follows:
1. APPOINTMENT. The Trust hereby appoints Rodney Square as transfer
agent, registrar and dividend disbursing agent for the shares of beneficial
interest of the Trust (the "Shares") and as servicing agent in connection with
the disbursements of dividends and distributions and as shareholders'
servicing agent for the Trust, each such appointment to take effect as of the
date first written above, and Rodney Square shall act as such and perform its
obligations thereof upon the terms and conditions hereafter set forth and in
accordance with the principles of principal and agent enunciated by the common
law.
2. DOCUMENTS. The Trust has furnished Rodney Square with copies
properly certified or authenticated of each of the following:
a. The Trust's Certificate of Trust filed with the Secretary of
the State of Delaware on April 3, 1995 and all amendments
thereto and restatements thereof;
TRANSFER.RTF
<PAGE>
b. The Trust's Agreement and Declaration of Trust and all
amendments thereto and restatements thereof;
c. The Trust's By-laws and all amendments thereto and restatements
thereof (such By-laws, as presently in effect and as they shall
from time to time be amended or restated, are herein called
"By-laws");
d. Resolutions of the Trust's Board of Trustees authorizing the
appointment of Rodney Square to provide certain accounting
services to the Trust and approving this Agreement;
e. The Trust's Notification of Registration filed pursuant to
Section 8(a) of the Investment Company Act as filed with the
Securities and Exchange Commission ("SEC") on May 1, 1995;
f. The Trust's most recent Registration Statement on Form N-1A
under the Securities Act of 1933 (the "1933 Act") (File No. 33-
91770) and under the 1940 Act (File No. 811-9038), as filed
with the SEC relating to shares of beneficial interest in the
Trust, and all amendments thereto;
g. The Trust's most current Prospectus(es) and Statement(s) of
Additional Information ("SAI") relating to the Fund(s);
h. The Trust's Distribution and Shareholder Service Plan, if any,
under Rule 12b-1;
i. The executed Trust agreements listed on Schedule B hereto; and
j. If required, a copy of either (i) a filed notice of eligibility
to claim the exclusion from the definition of "commodity pool
operator" contained in Section 2(a)(1)(A) of the Commodity
Exchange Act ("CEA") that is provided in Rule 4.5 under the
CEA, together with all supplements as are required by the
Commodity Futures Trading Commission ("CFTC"), or (ii) a letter
which has been granted the Trust by the CFTC which states that
the Trust will not be treated as a "pool" as defined in Section
4.10(d) of the CFTC's General Regulations, or (iii) a letter
which has been granted the Trust by the CFTC which states that
CFTC will not take any enforcement action if the Trust does not
register as a "commodity pool operator."
The Trust will furnish Rodney Square from time to time with
copies, properly certified or authenticated, of all additions,
amendments or supplements to the foregoing, if any.
3. DEFINITIONS.
a. Authorized Person. As used in this Agreement, the term
"Authorized Person" means any officer of the Trust and any
other person, whether or not any such person is an officer or
employee of the Trust, duly authorized by the Trustees of the
Trust to give Oral and Written Instructions on behalf of the
Fund(s) and certified by the Secretary or Assistant Secretary
of the Trust or any amendment thereto as may be received by
Rodney Square from time to time.
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<PAGE>
b. Oral Instructions. As used in this Agreement, the term "Oral
Instructions" means oral instructions actually received by
Rodney Square from an Authorized Person or from a person
reasonably believed by Rodney Square to be an Authorized
Person. The Trust agrees to deliver to Rodney Square, at the
time and in the manner specified in Section 4(b) of this
Agreement, Written Instructions confirming Oral Instructions.
c. Written Instructions. As used in this Agreement, the term
"Written Instructions" means written instructions delivered by
hand, mail, telegram, cable, telex or facsimile, signed by an
Authorized Person and received by Rodney Square.
4. INSTRUCTIONS CONSISTENT WITH DECLARATION OF TRUST, ETC.
a. Unless otherwise provided in this Agreement, Rodney Square
shall act only upon Oral or Written Instructions. Although
Rodney Square may know of the provisions of the Declaration of
Trust and By-laws of the Trust, Rodney Square may assume that
any Oral or Written Instructions received hereunder are not in
any way inconsistent with any provisions of such Declaration of
Trust or By-laws or any vote, resolution or proceeding of the
shareholders, or of the Trustees, or of any committee thereof.
b. Rodney Square shall be entitled to rely upon any Oral
Instructions and any Written Instructions actually received by
Rodney Square pursuant to this Agreement. The Trust agrees to
forward to Rodney Square Written Instructions confirming Oral
Instructions in such manner that the Written Instructions are
received by Rodney Square by the close of business of the same
day that such Oral Instructions are given to Rodney Square.
The Trust agrees that the fact that such confirming Written
Instructions are not received by Rodney Square shall in no way
affect the validity of the transactions or enforceability of
the transactions authorized by such Oral Instructions. The
Trust agrees that Rodney Square shall incur no liability to the
Trust in acting upon Oral Instructions given to Rodney Square
hereunder concerning such transactions, provided such
instructions reasonably appear to have been received from an
Authorized Person.
5. TRANSACTIONS NOT REQUIRING INSTRUCTIONS. In the absence of contrary
Written Instructions, Rodney Square is authorized to take the following
actions:
a. Issuance of Shares. Upon receipt of a purchase order from the
National Distributors, as defined in the Distribution Agreement
between the Trust and the National Distributors or a
prospective shareholder for the purchase of Shares and
sufficient information to enable Rodney Square to establish a
shareholder account or to issue Shares to an existing
shareholder account, and after confirmation of receipt or
crediting of Federal funds for such order from Rodney Square's
designated bank, Rodney Square shall issue and credit the
account of the investor or other record holder with Shares in
the manner described in the Prospectus. Rodney Square shall
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<PAGE>
deposit all checks received from prospective shareholders into
an account on behalf of the Trust, and shall promptly transfer
all Federal funds received from such checks to the Custodian,
as defined in the Custodian Agreement between the Trust and the
Custodian. (References herein to "Custodian" shall also be
construed to refer to a "Sub-Custodian" if such appointment has
been made.) If so directed by the Distributor, the confirmation
supplied to the shareholder to mark such issuance will be
accompanied by a Prospectus.
b. Transfer of Shares; Uncertificated Securities. Where a
shareholder does not hold a certificate representing the number
of Shares in its account and does provide Rodney Square with
instructions for the transfer of such Shares which include a
signature guaranteed by a commercial bank, trust company or
member firm of a national securities exchange and such other
appropriate documentation to permit a transfer, then Rodney
Square shall register such Shares and shall deliver them
pursuant to instructions received from the transferor, pursuant
to the rules and regulations of the SEC, and the laws of the
State of Delaware relating to the transfer of shares of
beneficial interest.
c. Share Certificates. If at any time the Fund issues share
certificates, the following provisions will apply:
(1) The Trust will supply Rodney Square with a sufficient
supply of share certificates representing Shares, in the
form approved from time to time by the Trustees of the
Trust, and, from time to time, shall replenish such supply
upon request of Rodney Square. Such share certificates
shall be properly signed, manually or by facsimile
signature, by the duly authorized officers of the Trust,
and shall bear the corporate seal or facsimile thereof of
the Trust, and notwithstanding the death, resignation or
removal of any officer of the Trust, such executed
certificates bearing the manual or facsimile signature of
such officer shall remain valid and may be issued to
shareholders until Rodney Square is otherwise directed by
Written Instructions.
(2) In the case of the loss or destruction of any certificate
representing Shares, no new certificate shall be issued in
lieu thereof, unless there shall first have been furnished
an appropriate bond of indemnity issued by a surety
company approved by Rodney Square.
(3) Upon receipt of signed share certificates, which shall be
in proper form for transfer, and upon cancellation or
destruction thereof, Rodney Square shall countersign,
register and issue new certificates for the same number of
Shares and shall deliver them pursuant to instructions
received from the transferor, the rules and regulations of
the SEC, and the laws of the State of Delaware relating to
the transfer of shares of beneficial interest.
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(4) Upon receipt of the share certificates, which shall be in
proper form for transfer, together with the shareholder's
instructions to hold such share certificates for
safekeeping, Rodney Square shall reduce such Shares to
uncertificated status, while retaining the appropriate
registration in the name of the shareholder upon the
transfer books.
(5) Upon receipt of written instructions from a shareholder of
uncertificated securities for a certificate in the number
of shares in its account, Rodney Square will issue such
share certificates and deliver them to the shareholder.
d. Redemption of Shares. Upon receipt of a redemption order from
the Distributor or a shareholder, Rodney Square shall redeem
the number of Shares indicated thereon from the redeeming
shareholder's account and receive from the Trust's Custodian
and disburse pursuant to the instructions of a redeeming
shareholder or his or her agent the redemption proceeds
therefor, or arrange for direct payment of redemption proceeds
by the Custodian to the redeeming shareholder or as instructed
by the shareholder or his or her agent, in accordance with such
procedures and controls as are mutually agreed upon from time
to time by and among the Trust, Rodney Square and the Trust's
Custodian.
6. AUTHORIZED ISSUED AND OUTSTANDING SHARES. The Trust agrees to
notify Rodney Square promptly of any change in the number of authorized Shares
and of any change in the number of Shares registered under the 1933 Act, as
amended or termination of the Trust's declaration under Rule 24f-2 of the 1940
Act. The Trust has advised Rodney Square, as of the date hereof, of the
number of Shares (i) held in any redemption or repurchase account, and (ii)
registered under the 1933 Act, as amended, which are unsold. In the event
that the Trust shall declare a stock dividend, a stock split or a reverse
stock split, the Trust shall deliver to Rodney Square a certificate, upon
which Rodney Square shall be entitled to rely for all purposes, certifying (i)
the number of Shares involved, (ii) that all appropriate corporate action has
been taken, and (iii) that any amendment to the Declaration of Trust of the
Trust which may be required has been filed and is effective. Such certificate
shall be accompanied by an opinion of counsel to the Trust relating to the
legal adequacy and effect of the transaction.
7. DIVIDENDS AND DISTRIBUTIONS. The Trust shall furnish Rodney Square
with appropriate evidence of action by the Trust's Trustees authorizing the
declaration and payment of dividends and distributions as described in the
Prospectus. After deducting any amount required to be withheld by any
applicable tax laws, rules and regulations or other applicable laws, rules and
regulations, Rodney Square shall in accordance with the instructions in proper
form from a shareholder and the provisions of the Trust's Declaration of Trust
and Prospectus, issue and credit the account of the shareholder with Shares,
or, if the shareholder so elects, pay such dividends or distributions in cash
to the shareholder in the manner described in the Prospectus. In lieu of
receiving from the Trust's Custodian and paying to shareholders cash dividends
or distributions, Rodney Square may arrange for the direct payment of cash
dividends and distributions to shareholders by the Custodian, in accordance
with such procedures and controls as are mutually agreed upon from time to
time by and among the Trust, Rodney Square and the Trust's Custodian.
5
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Rodney Square shall prepare, file with the Internal Revenue Service and
other appropriate taxing authorities, and address and mail to shareholders
such returns and information relating to dividends and distributions paid by
the Trust as are required to be so prepared, filed and mailed by applicable
laws, rules and regulations, or such substitute form of notice as may from
time to time be permitted or required by the Internal Revenue Service. On
behalf of the Trust, Rodney Square shall mail certain requests for
shareholders' certifications under penalties of perjury and pay on a timely
basis to the appropriate Federal authorities any taxes to be withheld on
dividends and distributions paid by the Trust, all as required by applicable
Federal tax laws and regulation.
In accordance with the Prospectus, resolutions of the Trust's Trustees
that are not inconsistent with this Agreement and are provided to Rodney
Square from time to time, and such procedures and controls as are mutually
agreed upon from time to time by and among the Trust, Rodney Square and the
Trust's Custodian, Rodney Square shall arrange for issuance of Shares obtained
through transfers of funds from shareholders' accounts at financial
institutions.
8. COMMUNICATIONS WITH SHAREHOLDERS.
a. Communications to Shareholders. Rodney Square will address and
mail all communications by the Trust to its shareholders,
including reports to shareholders, confirmations of purchases
and sales of Shares, monthly or quarterly statements as
requested by the Trust, dividend and distribution notices and
proxy material for its meetings of shareholders. Rodney Square
will receive and tabulate the proxy cards for shareholder
meetings.
b. Correspondence. Rodney Square will answer such correspondence
from shareholders, securities brokers and others relating to
its duties hereunder and such other correspondence as may from
time to time be mutually agreed upon between Rodney Square and
the Trust.
9. SERVICES TO BE PERFORMED. Rodney Square shall be responsible for
administering and/or performing transfer agent functions, for acting as
service agent in connection with dividend and distribution functions, for
performing shareholder account functions in connection with the issuance,
transfer and redemption or repurchase (including coordination with the Trust's
custodian bank in connection with shareholder redemption by check) of the
Trust's Shares, and for administering the payment of any commissions, 12b-1
fees or contingent deferred sales charges, as set forth in Schedule C to this
agreement. The details of the operating standards and procedures to be
followed shall be determined from time to time by agreement between Rodney
Square and the Trust and may be expressed in written schedules which shall
constitute attachments to this Agreement.
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10. RECORD KEEPING AND OTHER INFORMATION.
a. Rodney Square shall maintain records of the accounts for each
Shareholder showing the items listed in Schedule D to this
agreement.
b. Rodney Square shall create and maintain all necessary records
in accordance with all applicable laws, rules and regulations,
including but not limited to records required by Section 31(a)
of the 1940 Act and the rules thereunder and any applicable
regulations of the Federal Deposit Insurance Corporation
("FDIC") or any successor regulatory authority, as the same may
be amended from time to time, and those records pertaining to
the various functions performed by it hereunder. All records
shall be the property of the Trust at all times and shall be
available for inspection and use by the Trust. Where
applicable, such records shall be maintained by Rodney Square
for the periods and in the places required by Rule 31a-2 under
the 1940 Act and any applicable regulations of the FDIC or any
successor regulatory authority.
11. AUDIT, INSPECTION AND VISITATION. Rodney Square shall make
available during regular business hours all records and other data created and
maintained pursuant to this Agreement for reasonable audit and inspection by
the Trust or any person retained by the Trust. Upon reasonable notice by the
Trust, Rodney Square shall make available during regular business hours its
facilities and premises employed in connection with its performance of this
Agreement for reasonable visitation by the Trust, or any person retained by
the Trust.
12. RIGHT TO RECEIVE ADVICE.
a. Advice of Trust. If Rodney Square shall be in doubt as to any
action to be taken or omitted by it, it may request, and shall
receive, from the Trust directions or advice, including Oral or
Written Instructions where appropriate.
b. Advice of Counsel. If Rodney Square shall be in doubt as to
any question of law involved in any action to be taken or
omitted by Rodney Square, it may request advice at its own cost
from counsel of its own choosing (who may be the regularly
retained counsel for the Trust or Rodney Square or the in-house
counsel for Rodney Square, at the option of Rodney Square).
c. Conflicting Advice. In case of conflict between directions,
advice or Oral or Written Instructions received by Rodney
Square pursuant to subsection a of this Section and advice
received by Rodney Square pursuant to subsection b of this
Section, Rodney Square shall be entitled to rely on and follow
the advice received pursuant to the latter provision alone.
d. Protection of Rodney Square. Rodney Square shall be protected
in any action or inaction which it takes in reliance on any
directions, advice or Oral or Written Instructions received
pursuant to subsections a or b of this Section which Rodney
Square, after receipt of any such directions, advice or Oral or
Written Instructions, in good faith believes to be consistent
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with such directions, advice or Oral or Written Instructions,
as the case may be. However, nothing in this Section shall be
construed as imposing upon Rodney Square any obligation (i) to
seek such direction, advice or Oral or Written Instructions, or
(ii) to act in accordance with such directions, advice or Oral
or Written Instructions when received, unless, under the terms
of another provision of this Agreement, the same is a condition
to Rodney Square's properly taking or omitting to take such
action. Nothing in this subsection shall excuse Rodney Square
when an action or omission on the part of Rodney Square
constitutes willful misfeasance, bad faith, negligence or
reckless disregard by Rodney Square of its duties under this
Agreement.
13. COMPENSATION. Compensation for services and duties performed
pursuant to this Agreement is provided in Schedule A hereto. Certain other
fees due and expenses incurred pursuant to this Agreement are payable by the
Trust or the shareholder on whose behalf the service is performed and are also
listed in Schedule A.
The Trust shall reimburse Rodney Square for all out-of-pocket expenses
incurred by Rodney Square or its agents in the performance of its obligations
hereunder. Such reimbursement for expenses incurred in any calendar month
shall be made on or before the tenth day of the next succeeding month.
The term "out-of-pocket expenses" shall mean the following expenses
incurred by Rodney Square in the performance of its obligations hereunder: the
cost of stationery and forms (including but not limited to checks, proxy
cards, and envelopes), the cost of postage, the cost of insertion of non-
standard size materials in mailing envelopes and other special mailing
preparation by outside firms, the cost of first-class mailing insurance, the
cost of external electronic communications as approved by the Trustees (to
include telephone and telegraph equipment and an allocable portion of the cost
of personnel responsible for the maintenance of such equipment), toll charges,
data communications equipment and line charges and the cost of microfilming of
shareholder records (including both the cost of storage as well as charges for
access to such records). If Rodney Square shall undertake the responsibility
for microfilming shareholder records, it may be separately compensated
therefor in an amount agreed upon by the principal financial officer of the
Trust and Rodney Square, such amount not to exceed the amount which would be
paid to an outside firm for providing such microfilming services.
The Trust shall approve the payment of all out-of-pocket expenses in any
calendar month by providing Rodney Square with written instructions signed by
any two of the Trust personnel listed on Schedule E, as such schedule may be
amended from time to time.
14. USE OF RODNEY SQUARE'S NAME. The Trust shall not use the name of
Rodney Square in any Prospectus, SAI, sales literature or other material
relating to the Trust in a manner not approved prior thereto, provided,
however, that Rodney Square shall approve all uses of its name which merely
refer in accurate terms to its appointments hereunder or which are required by
the SEC or a state securities commission and, provided further, that in no
event shall such approval be unreasonably withheld.
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15. USE OF TRUST'S NAME. Rodney Square shall not use the name of the
Trust or the Funds of the Trust or material relating to the Trust or the Funds
on any checks, bank drafts, bank statements or forms for other than internal
use in a manner not approved prior thereto, provided, however, that the Trust
shall approve all uses of its name which merely refer in accurate terms to the
appointment of Rodney Square hereunder or which are required by the FDIC, the
SEC or a state securities commission, and, provided, further, that in no event
shall such approval be unreasonably withheld.
16. SECURITY. Rodney Square represents and warrants that the various
procedures and systems which Rodney Square has implemented with regard to
safeguarding from loss or damage attributable to fire, theft or any other
cause (including provision for twenty-four hours a day restricted access) the
Trust's blank checks, records and other data and Rodney Square's records,
data, equipment, facilities and other property used in the performance of its
obligations hereunder are adequate and that it will make such changes therein
from time to time as in its judgment are required for the secure performance
of its obligations hereunder. The parties shall review such systems and
procedures on a periodic basis.
17. INSURANCE. Upon request Rodney Square shall provide the Trust with
details regarding its insurance coverage, and Rodney Square shall notify the
Trust should any of its insurance coverage be materially changed. Such
notification shall include the date of change and the reason or reasons
therefor. Rodney Square shall notify the Trust of any material claims against
it, whether or not they may be covered by insurance and shall notify the Trust
from time to time as may be appropriate of the total outstanding claims made
by Rodney Square under its insurance coverage.
18. ASSIGNMENT OF DUTIES TO OTHERS. Neither this Agreement nor any
rights or obligations hereunder may be assigned by Rodney Square without the
written consent of the Trust. Rodney Square may, however, at any time or
times in its discretion appoint (and may at any time remove) any other bank or
trust company, which is itself qualified under the Securities Exchange Act of
1934 (the "1934 Act") to act as a transfer agent, as its agent to carry out
such of the services to be performed under this agreement as Rodney Square may
from time to time direct; provided, however, that the appointment of any agent
shall not relieve Rodney Square of any of its responsibilities or liabilities
hereunder.
19. INDEMNIFICATION.
a. The Trust agrees to indemnify and hold harmless Rodney Square,
its directors, officers, employees, agents and representatives
from all taxes, charges, expenses, assessments, claims and
liabilities including, without limitation, liabilities arising
under the 1933 Act, the 1934 Act and any applicable state and
foreign laws, and amendments thereto (the "Securities Laws"),
and expenses, including without limitation reasonable
attorneys' fees and disbursements arising directly or
indirectly from any action or omission to act which Rodney
Square takes (i) at the request of or on the direction of or in
reliance on the advice of the Trust or (ii) upon Oral or
Written Instructions. Neither Rodney Square nor any of its
nominees shall be indemnified against any liability (or any
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expenses incident to such liability) arising out of Rodney
Square's or its directors', officers', employees', agents' and
representatives own willful misfeasance, bad faith, negligence
or reckless disregard of its duties and obligations under this
Agreement.
b. Rodney Square agrees to indemnify and hold harmless the Trust
from all taxes, charges, expenses, assessments, claims and
liabilities arising from Rodney Square's obligations pursuant
to this Agreement (including, without limitation, liabilities
arising under the Securities Laws, and any state and foreign
securities and blue sky laws, and amendments thereto) and
expenses, including (without limitation) reasonable attorneys'
fees and disbursements arising directly or indirectly out of
Rodney Square's or its directors', officers', employees',
agents' and representatives own willful misfeasance, bad faith,
negligence or reckless disregard of its duties and obligations
under this Agreement
c. In order that the indemnification provisions contained in this
Section 19 shall apply, upon the assertion of a claim for which
either party may be required to indemnify the other, the party
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 in 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.
20. RESPONSIBILITY OF RODNEY SQUARE. Rodney Square shall be under no
duty to take any action on behalf of the Trust except as specifically set
forth herein or as may be specifically agreed to by Rodney Square in writing.
Rodney Square shall be obligated to exercise due care and diligence in the
performance of its duties hereunder, to act in good faith and to use its best
efforts in performing services provided for under this Agreement. Rodney
Square shall be liable for any damages arising out of or in connection with
Rodney Square's performance of or omission or failure to perform its duties
under this Agreement to the extent such damages arise out of Rodney Square's
negligence, reckless disregard of its duties, bad faith or willful
misfeasance.
Without limiting the generality of the foregoing or of any other
provision of this Agreement, Rodney Square, in connection with its duties
under this Agreement, shall not be under any duty or obligation to inquire
into and shall not be liable for (i) the validity or invalidity or authority
or lack thereof of any Oral or Written Instruction, notice or other instrument
which conforms to the applicable requirements of this Agreement, and which
Rodney Square reasonably believes to be genuine; or (ii) subject to the
provisions of Section 21 hereof, delays or errors or loss of data occurring by
reason of circumstances beyond Rodney Square's control, including acts of
civil or military authority, national emergencies, labor difficulties, fire,
flood or catastrophe, acts of God, insurrection, war, riots or failure of the
mails, transportation, communication or power supply.
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21. ACTS OF GOD, ETC. Rodney Square shall not be liable for delays or
errors occurring by reason of circumstances beyond its control, including but
not limited to acts of civil or military authority, national emergencies,
labor difficulties, fire, flood or catastrophe, acts of God, insurrection,
war, riots, or failure of the mails, transportation, communication or power
supply. In the event of equipment breakdowns beyond its control, Rodney
Square shall, at no additional expense to the Trust, take reasonable steps to
minimize service interruptions but shall have no liability with respect
thereto. Rodney Square shall enter into and shall maintain in effect with
appropriate parties one or more agreements making reasonable provision for
emergency use of electronic data processing equipment to the extent
appropriate equipment is available.
22. AMENDMENTS. This Agreement or any part hereof may be changed or
waived only by an instrument in writing signed by the party against which
enforcement of such change or waiver is sought.
Rodney Square and the Trust shall regularly consult with each other
regarding Rodney Square's performance of its obligations and its compensation
hereunder. In connection therewith, the Trust shall submit to Rodney Square
at a reasonable time in advance of filing with the SEC copies of any amended
or supplemented registration statements (including exhibits) under the 1933
Act and the 1940 Act, and a reasonable time in advance of their proposed use,
copies of any amended or supplemented forms relating to any plan, program or
service offered by the Trust. Any change in such material which would require
any change in Rodney Square's obligations hereunder shall be subject to Rodney
Square's approval, which shall not be unreasonably withheld. In the event
that such change materially increases the cost to Rodney Square of performing
its obligations hereunder, Rodney Square shall be entitled to receive
reasonable compensation therefor.
23. DURATION, TERMINATION, ETC. Neither this Agreement nor any
provisions hereof may be changed, waived, discharged or terminated orally, but
only by written instrument which shall make specific reference to this
Agreement and which shall be signed by the party against which enforcement of
such change, waiver, discharge or termination is sought.
This Agreement shall become effective as of the date first written above,
and shall continue in effect for three (3) years from the date of its
execution and thereafter from year to year, provided continuance after the
three (3) year period is approved at least annually by (i) the vote of a
majority of the Trustees of the Trust and (ii) the vote of a majority of those
Trustees of the Trust who are not interested persons of the Trust, and who are
not parties to this Agreement or interested persons of any party, cast in
person at a meeting called for the purpose of voting on the approval. This
Agreement may be terminated at any time by one hundred and twenty (120) days
written notice given by Rodney Square to the Trust or one hundred and twenty
(120) days written notice given by the Trust to Rodney Square; and provided
further that this Agreement may be terminated immediately at any time for
cause either by the Trust or by Rodney Square in the event that such cause
remains unremedied for a period of time not to exceed sixty (60) days after
receipt of written specification of such cause. Any such termination shall
not affect the rights and obligations of the parties under Section 19 hereof.
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Upon the termination hereof, the Trust shall reimburse Rodney Square any
fees incurred as a result of the termination conversion for any out-of-pocket
expenses reasonably incurred by Rodney Square including or during the period
prior to the date of such termination. In the event that the Trust designates
a successor to any of Rodney Square's obligations hereunder, Rodney Square
shall, at the expense and direction of the Trust, transfer to such successor a
certified list of the shareholders of the Trust (with name, address, and, if
provided, tax identification or Social Security number), a complete record of
the account of each shareholder, and all other relevant books, records and
other data established or maintained by Rodney Square hereunder. Rodney
Square shall be liable for any losses sustained by the Trust as a result of
Rodney Square's failure to accurately and promptly provide these materials.
Upon the termination of this Agreement within the initial three (3) year
term by the Trust, the Trust's Board of Trustees or Rodney Square, the party
initiating termination shall pay the other party with respect to each Fund in
accordance with the provisions of liquidated damages described in Schedule A
attached hereto, as such schedule may be amended from time to time.
24. REGISTRATION AS A TRANSFER AGENT. Rodney Square represents that it
is currently registered with the appropriate Federal agency for the
registration of transfer agents, and that it will remain so registered for the
duration of this Agreement. Rodney Square agrees that it will promptly notify
the Trust in the event of any material change in its status as a registered
transfer agent. Should Rodney Square fail to be registered with the FDIC or
any successor regulatory authority as a transfer agent at any time during this
Agreement, the Trust may, on written notice to Rodney Square, immediately
terminate this Agreement.
25. NOTICE. Any notice under this Agreement shall be given in writing
addressed and delivered or mailed, postage prepaid, to the other party to this
Agreement at its principal place of business.
26. FURTHER ACTIONS. Each Party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
27. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
28. GOVERNING LAW. To the extent that state law has not been preempted
by the provisions of any law of the United States heretofore or hereafter
enacted, as the same may be amended from time to time, this Agreement shall be
administered, construed and enforced according to the laws of the State of
Delaware.
29. SHAREHOLDER LIABILITY. Rodney Square acknowledges that it has
received notice of and accepts the limitations of liability set forth in the
Trust's Declaration of Trust. Rodney Square agrees that the Trust's
obligations hereunder shall be limited to the Trust, and that Rodney Square
shall have recourse solely against the assets of the Fund with respect to
which the Trust's obligations hereunder relate and shall have no recourse
against the assets of any other Fund or against any shareholder, Trustee,
officer, employee, or agent of the Trust.
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30. MISCELLANEOUS. Both parties agree to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof. 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. This Agreement may be executed
simultaneously in two counterparts, each of which taken together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have duly executed this agreement as of
the day and year first above written.
THE OLSTEIN FUNDS
By: /s/ Robert A. Olstein
Robert A. Olstein,
Chairman and President
RODNEY SQUARE MANAGEMENT CORPORATION
By: /s/ Martin L. Klopping
Martin L. Klopping,
President
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TRANSFER AGENCY AGREEMENT
SCHEDULE A
THE OLSTEIN FUNDS
FUND LISTING AND FEE SCHEDULE
For the services Rodney Square provides under the Transfer Agency Agreement
attached hereto, The Olstein Funds (the "Trust") agrees to pay Rodney Square a
fee for transfer agency services equal to $24,000 per Fund, per annum,
beginning at each Fund's commencement of operations, plus out-of-pocket
expenses, all payable monthly.
FEE PER ANNUM
TYPE OF TRUST/ACCOUNT PER ACCOUNT
--------------------- -------------
Annual Dividend $12.00
Semi-Annual Dividend $12.00
Quarterly Dividend $15.00
Monthly Dividend $18.00
FUND LISTING:
The Olstein Financial Alert Fund
OUT-OF-POCKET EXPENSES:
Out-of-pocket expenses shall be reimbursed by the Trust to Rodney Square or
paid directly by the Trust. Such expenses include but are not limited to the
following:
a. Toll-free lines (if required)
b. Forms, envelopes, checks, checkbooks
c. Postage (bulk, pre-sort, first-class at current prevailing rates)
d. Hardware/phone lines for remote terminal(s) (if required)
e. Microfiche/Microfilm
f. Wire fees for receipt or disbursement
g. Mailing fees
h. Cost of proxy solicitation, mailing and tabulation (if required)
i Certificates issuance
j. Record retention storage
k. Development/programming costs/special projects - time and material
l. ACH transaction charges
m. "B" notice mailings
n. Locating lost shareholders in anticipation of escheating
ADDITIONAL EXPENSES (PAID BY SHAREHOLDER):
Direct IRA/Keogh processing annual account fee
transfer out fee
A-1
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PAYMENT
The above will be billed within the first five (5) business days of each month
and will be paid by wire within five (5) business days of receipt.
LIQUIDATED DAMAGES:
Upon the termination of this Agreement within the initial three (3) year term
by the Trust or the Trust's Board of Trustees, the Trust shall pay to Rodney
Square liquidated damages with respect to each Fund in an amount equal to
three (3) months of base fees as determined in the manner set forth above.
Upon the termination of this Agreement within the initial three (3) year term
by Rodney Square, Rodney Square shall pay the Trust liquidated damages in an
amount equal to $7,500.00 to compensate the Trust for any damages resulting
from such termination, provided, that Rodney Square shall not be liable for
liquidated damages if it pays or has paid the Trust liquidated damages of
$7,500.00 in connection with the termination of any other Rodney Square
agreement including, but not limited to, the Administration Agreement and
Accounting Services Agreement (collectively, the "Service Agreements"). In
the event Rodney Square terminates this Agreement within the initial three (3)
year term, the Trust shall have the option, from the date of notice of such
termination, to terminate any of the Service Agreements, without incurring
liquidated damages, by providing one hundred and twenty (120) days written
notice to Rodney Square.
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TRANSFER AGENCY AGREEMENT
SCHEDULE B
THE OLSTEIN FUNDS
TRUST AGREEMENTS SCHEDULE
1. The Investment Management Agreement between The Olstein Funds (the
"Trust"), on behalf of The Olstein Financial Alert Fund (the "Fund"), and
Olstein and Associates, L.P. (the "Investment Manager"), dated as of
August 18, 1995;
2. The Accounting Services Agreement between the Trust and Rodney Square
Management Corporation, a Delaware Corporation ("Rodney Square"), dated
as of August 18, 1995;
3. The Administration Agreement between the Trust and Rodney Square, dated
as of August 18, 1995;
4. The Custodian Agreement between the Trust and Wilmington Trust Company,
dated as of August 18, 1995;
5. The Special Custody Account Agreement between the Trust, Wilmington Trust
Company, and Bear Stearns Securities Corp., dated as of August 18, 1995,
to facilitate the Trust's short selling activities; and
6. The Distribution Agreement among the Trust, the Investment Manager and
Rodney Square Distributors, Inc., dated as of August 18, 1995;
B-1
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TRANSFER AGENCY AGREEMENT
SCHEDULE C
THE OLSTEIN FUNDS
SERVICES TO BE PERFORMED
GENERAL SERVICES
Rodney Square will perform the following functions as transfer agent on an
ongoing basis with respect to each Fund:
a. furnish state-by-state registration reports;
b. provide toll-free lines for direct shareholder use, plus customer
liaison staff with on-line inquiry capacity;
c. mail duplicate confirmations to dealers and other financial
institutions ("Service Organization") of their clients' activity,
whether executed through the Service Organization or directly with
Rodney Square;
d. provide detail for underwriter or Service Organization confirmations
and other Service Organization shareholder accounting, in accordance
with such procedures as may be agreed upon between the Trust and
Rodney Square;
e. provide shareholder lists and statistical information concerning
shareholder accounts to the Trust;
f. provide timely notification of Fund activity and such other
information as may be agreed upon from time to time between Rodney
Square and the Fund or the Custodian, to the Trust or the Custodian;
and
g. with respect to dividends and distributions, prepare and file
required reports with the Internal Revenue Service ("IRS"), prepare
and mail reports to shareholders as required by the IRS and
described in the Prospectus and Statement of Additional Information.
ADMINISTRATION OF COMMISSIONS, 12B-1 FEES, DEFERRED SALES CHARGES
Rodney Square shall, directly or through its affiliates, and subject to the
Investment Manager' supervision, monitor purchases and redemptions of shares
of the Trust, and Rodney Square shall administer the following:
a. the payment of any up-front commissions to Selling Dealers in
accordance with the then-effective prospectus and SAI for the
particular Fund. For purchase orders submitted with up-front
commissions deducted and retained by Selling Dealers, Rodney Square
will arrange for payment to the Fund of the deducted amount from a
segregated account, set-up by the Investment Manager (the "Olstein
Account"), for the purpose of reimbursing any up-front commissions.
For purchase orders submitted along with 100% of the purchase price,
Rodney Square will arrange for payment to the Selling Dealer of the
appropriate commission from the Olstein Account.
C-1
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b. the payment of any 12b-1 fees to Selling Dealers or other
shareholder servicing fees to other agents for ongoing shareholder
servicing activities, as such amounts may be payable by the Fund in
accordance with the then-effective prospectus and SAI for the
particular Fund. Rodney Square shall monitor purchases and
redemptions, and prepare reports outlining the 12b-1 fees payable to
particular Selling Dealers. Rodney Square shall provide for such
payments to be made on a quarterly basis.
c. the collection of any 12b-1 fees due to Olstein for ongoing
shareholder servicing or distribution services, as such amounts may
be payable by the Fund in accordance with the then-effective
prospectus and SAI for the particular Series of the Trust. Rodney
Square shall monitor purchases and redemptions, and prepare reports
outlining the 12b-1 fees payable to Olstein. Rodney Square shall
provide for such payments to be made in accordance with the Trust's
Distribution Plan and the Distribution Agreement entered as of
August 18, 1995, among the Trust, the Investment Manager and Rodney
Square Distributors, Inc.
d. the collection and deposit into the Olstein Account of any
contingent deferred sales charges payable by shareholders for early
redemption in accordance with the then-effective prospectus and SAI
for the particular Series of the Trust.
C-2
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TRANSFER AGENCY AGREEMENT
SCHEDULE D
THE OLSTEIN FUNDS
SHAREHOLDER RECORDS
Rodney Square shall maintain records of the accounts for each shareholder
showing the following information:
a. name, address and United States Tax Identification or Social
Security number;
b. number of Shares held and number of Shares for which certificates,
if any, have been issued, including certificate numbers and
denominations;
c. historical information regarding the account of each shareholder,
including dividends and distributions paid and the date and price
for all transactions on a shareholder's account;
d. any stop or restraining order placed against a shareholder's
account;
e. any correspondence relating to the current maintenance of a
shareholder's account;
f. information with respect to withholding; and,
g. any information required in order for Rodney Square to perform any
calculations contemplated or required by this Agreement.
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TRANSFER AGENCY AGREEMENT
SCHEDULE E
THE OLSTEIN FUNDS
AUTHORIZED PERSONS
The following persons have been duly authorized to authorize the payment of
out-of-pocket expenses on behalf of the above-named Trust provided such
payments are approved by at least two of such authorized persons:
Robert A. Olstein /s/ Robert A. Olstein
Erik K. Olstein /s/ Erik K. Olstein
Michael Luper /s/ Michael Luper
E-1
Exhibit 11
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "General
Information" in the Statement of Additional Information and to the use of our
report dated July 21, 1995, on the statement of assets and liabilities of The
Olstein Funds (comprising The Olstein Financial Alert Fund) as of July 3, 1995
in this Post-Effective Amendment Number 1 to Registration Statement Number
33-91770 (Form N-1A).
/s/ Ernst & Young LLP
Baltimore, Maryland
March 27, 1996
Exhibit 13
OLSTEIN, INC.
105 CORPORATE PARK DRIVE
WHITE PLAINS, NY 10604
July 12, 1995
The Olstein Funds
105 Corporate Park Drive
White Plains, NY 10604
Gentlemen:
We propose to acquire 10,000 shares of beneficial interest (the "Shares")
of The Olstein Financial Alert Fund (the "Fund"), a series of The Olstein
Funds (the "Trust") at a purchase price of $10 per share for a total of
$100,000. We will purchase the Shares in a private offering prior to the
effectiveness of the Form N-1A registration statement filed by the Fund under
the Securities Act of 1933. The Shares are being purchased pursuant to
Section 14 of the Investment Company Act of 1940 to serve as the seed money
for the Fund prior to the commencement of the public offering of its shares.
In connection with such purchase, we understand that: (i) we, the
purchaser, intend to acquire the Shares for our own account as the sole
beneficial owner thereof and have no present intention of redeeming or
reselling the Shares so acquired; and (ii) in the event any of the initial
100,000 Shares are redeemed during the first five years, the Fund may charge
against our redemption proceeds a pro rata portion of any unamortized
organizational expenses which would be borne by such Shares during the balance
of the initial five-year period were they not to be redeemed.
We consent to the filing of this Investment Letter as an exhibit to the
form N-N-1A registration statement of the Fund.
Sincerely,
Olstein, Inc.
By:/s/ Robert A. Olstein
Robert A. Olstein
President and Secretary
Exhibit 15
DISTRIBUTION PLAN OF THE OLSTEIN FUNDS
(relating to THE OLSTEIN FINANCIAL ALERT FUND series)
The following Distribution Plan (the "Plan") has been adopted pursuant to
Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by THE OLSTEIN
FUNDS (the "Trust") for the use of THE OLSTEIN FINANCIAL ALERT FUND series of
the Trust (the "Fund"). The Plan has been approved by the vote of a majority
of the Board of Trustees of the Trust, including a majority of the Trustees
who are not interested persons of the Trust and who have no direct or indirect
financial interest in the operation of the Plan (the "non-interested
trustees"), cast in person at a meeting called for the purpose of voting on
such Plan.
In reviewing the Plan, the Board of Trustees considered the proposed
schedule and nature of payments and terms of the Investment Management
Agreement between the Trust on behalf of the Fund and Olstein & Associates,
L.P. (the "Investment Manager") and the Distribution Agreement between the
Trust on behalf of the Fund and Rodney Square Distributors, Inc. and Olstein &
Associates, L.P. (collectively, the "Distributors"). The Board of Trustees
concluded that the proposed compensation of the Investment Manager, under the
Investment Management Agreement and of the Distributors, under the
Distribution Agreement, is fair and not excessive. Accordingly, the Board
determined that the Plan should provide for the payments described hereunder
and that adoption of the Plan would be prudent and in the best interests of
the Fund and its shareholders. Such approval included a determination that in
the exercise of their reasonable business judgment and in light of their
fiduciary duties, there is a reasonable likelihood that the Plan will benefit
the Fund and its shareholders. The Plan has also been approved by a vote of
the sole initial shareholder of shares of the Fund.
The Provisions of the Plan are:
1. (a) The Trust shall pay to the Distributors or others a monthly
distribution fee of 0.75% per annum of the average daily net assets of the
Fund, to compensate such persons for expenses incurred by such parties in the
promotion and distribution of the shares of the Fund, including but not
limited to, the printing of prospectuses and reports used for sales purposes,
expenses of preparation of sales literature and related expenses,
advertisements, and other distribution-related expenses, as well as any
distribution expenses incurred by others who have executed an agreement with
the Trust or the Distributors relating to distribution of shares of the Fund,
which form of agreement has been approved from time to time by the Board,
including the non-interested Board members.
(b) In addition to the amounts described in (a) above, the Fund
shall pay to the Distributors or others, a monthly shareholder servicing fee
of 0.25% per annum of the average daily net assets of the Fund, to compensate
such persons for, among other things, furnishing personal services and
maintaining shareholder accounts, which services include, among other things,
assisting in establishing and maintaining customer accounts and records,
assisting with purchase and redemption requests, arranging for bank wires,
monitoring dividend payments from the Fund to customers, receiving and
answering correspondence, and aiding in maintaining their respective
<PAGE>
customers. Any amounts paid to others under this paragraph 1(b) shall be
shall be paid pursuant to a servicing or other agreement which form of
agreement has been approved from time to time by Board, including the non-
interested Board members.
2. The aggregate amount paid by the Trust to such parties pursuant to
Paragraph 1 herein shall be 1.00% per annum of the average daily net assets of
the Fund. Said payment shall be made monthly by the Trust to such parties.
In no event, shall the payments made under the Plan, plus any other payments
deemed to be made pursuant to the Plan, exceed the amount permitted to be paid
pursuant to the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., Article III, Section 26(d)(4).
3. The Distributors shall monitor the documentation of payments made
under paragraphs 1 and 2 above, and shall furnish to the Board of Trustees of
the Trust, for their review, on a quarterly basis, a written report of the
monies paid to them and others under the Plan, as well as the purposes for
which such payments were made, and shall furnish the Board of Trustees of the
Trust with such other information as the Board may reasonably request in
connection with the payments made under the Plan as to the Fund in order to
enable the Board to make an informed determination of whether the Plan should
be continued.
4. The Plan shall continue in effect for a period of more than one year
only so long as such continuance is specifically approved at least annually by
vote of the Trust's Board of Trustees, including the non-interested Trustees,
cast in person at a meeting called for the purpose of voting on the Plan.
5. The Plan, or any agreements entered into pursuant to this Plan, may
be terminated at any time, without penalty, on not more than sixty (60) days
written notice by (a) the vote of a majority of the outstanding voting
securities of the Fund, or (b) the vote of a majority of the non-interested
Trustees and shall terminate automatically in the event of any act that
constitutes an assignment of the Investment Management Agreement between the
Trust on behalf of the Fund and the Investment Manager.
6. The Plan and any agreements entered into pursuant to this Plan may
not be amended to increase materially the amount to be spent by the Trust for
distribution without approval by a majority of the Trust's outstanding voting
securities.
7. All material amendments to the Plan, or any agreements entered into
pursuant to this Plan, shall be approved by vote of the non-interested
Trustees cast in person at a meeting called for the purpose of voting on any
such amendment.
8. So long as the Plan is in effect, the selection and nomination of
the non-interested Trustees of the Trust shall be committed to the discretion
of such non-interested Trustees.
9. This Plan shall take effect on the 18th day of August, 1995.
This Plan and the terms and provisions thereof are hereby accepted and
agreed to by the Trust, on behalf of the Fund, the Investment Manager and the
Distributors as evidenced by their execution hereof.
-2-
<PAGE>
THE OLSTEIN FUNDS
By: /s/ Robert A. Olstein
Robert A. Olstein
President
OLSTEIN & ASSOCIATES, L.P.
By: Olstein, Inc.
General Partner
By: /s/ Robert A. Olstein
Robert A. Olstein, President
RODNEY SQUARE DISTRIBUTORS, INC.
By: /s/ Jeffrey O. Stroble,
President
Exhibit 16
FUND NAME: THE OLSTEIN FINANCIAL ALERT FUND
(STANDARDIZED RETURN)
The aggregate total return from September 21, 1995 (commencement of
operations) through February 29,1996 is 8.02%. There is no sales load.
AGGREGATE TOTAL RETURN
----------------------
(ERV/P) -1 = T
($1,080.17/1,000) -1 = T
.0802 = T
8.02% = T
<PAGE>
Exhibit 17
[ARTICLE] 6
[LEGEND]
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE OLSTEIN FINANCIAL ALERT FUND'S SEMIANNUAL
REPORT DATED FEBRUARY 29, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE SEMIANNUAL REPORT DATED
FEBRUARY 29, 1996.
[/LEGEND]
[CIK] 0000944690
[NAME] THE OLSTEIN FINANCIAL ALERT FUND
[SERIES]
[NUMBER] 0
[NAME]
[MULTIPLIER] 1000
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] AUG-31-1996
[PERIOD-START] SEP-01-1995
[PERIOD-END] FEB-29-1996
[INVESTMENTS-AT-COST] 99,010
[INVESTMENTS-AT-VALUE] 103,468
[RECEIVABLES] 1,426
[ASSETS-OTHER] 127
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 105,021
[PAYABLE-FOR-SECURITIES] 1,655
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 1,258
[TOTAL-LIABILITIES] 2,913
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 95,198
[SHARES-COMMON-STOCK] 9,462
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] (221)
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 2,673
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 4,458
[NET-ASSETS] 102,108
[DIVIDEND-INCOME] 373
[INTEREST-INCOME] 261
[OTHER-INCOME] 0
[EXPENSES-NET] 855
[NET-INVESTMENT-INCOME] (221)
[REALIZED-GAINS-CURRENT] 2,775
[APPREC-INCREASE-CURRENT] 4,458
[NET-CHANGE-FROM-OPS] 7,012
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] (102)
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 9,553
[NUMBER-OF-SHARES-REDEEMED] (111)
[SHARES-REINVESTED] 10
[NET-CHANGE-IN-ASSETS] 102,008
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 341
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 0
[AVERAGE-NET-ASSETS] 77,081
[PER-SHARE-NAV-BEGIN] 10.00
[PER-SHARE-NII] (.02)
[PER-SHARE-GAIN-APPREC] .82
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] (.01)
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 10.79
[EXPENSE-RATIO] 2.51
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
Exhibit 19
POWER OF ATTORNEY
-----------------
Each of the undersigned in his capacity as a Trustee or officer, or both,
as the case may be, of the Registrant, does hereby appoint Robert A. Olstein
and Erik K. Olstein, and each of them, or jointly his true and lawful attorney
and agent to execute in his name, place and stead (in such capacity) any and
all post-effective amendments to the Registration Statement and all
instruments necessary or desirable in connection therewith, to attest the seal
of the Registrant thereon and to file the same with the Securities and
Exchange Commission. Each of said attorneys and agents have power and
authority to do and perform in the name and on behalf of each of the
undersigned, in any and all capacities, every act whatsoever necessary or
advisable to be done in the premises as fully and to all intents and purposes
as each of the undersigned might or could do in person, hereby ratifying and
approving the act of said attorneys and agents and each of them.
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ Neil C. Klarfeld Trustee March 15, 1996
Neil C. Klarfeld
/s/ Fred W. Lange Trustee March 15, 1996
Fred W. Lange
/s/ John Lohr Trustee March 15, 1996
John Lohr
/s/ D. Michael Murray Trustee March 15, 1996
D. Michael Murray
/s/ Lawrence K. Wein Trustee March 31, 1995
Lawrence K. Wein
