As filed with the Securities and Exchange Commission on February 18, 2000
Securities Act Registration No. 33-94668
Investment Company Registration No. 811-9070
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
Post-Effective Amendment No. 8 x |X|
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
Amendment No. 10 |X|
(Check appropriate box or boxes) x
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DEVCAP TRUST
(a Massachusetts Business Trust)
(Exact Name of Registrant as Specified in Charter)
209 West Fayette Street
Baltimore, Maryland 21201-3443
(Address of principal executive offices)
(800) 371-2655
Registrant's telephone number, including area code
Joseph N. St. Clair
209 West Fayette St.
Baltimore, Maryland 21201-3443
(Name and Address of Agent for Service)
------------------------
Copy to:
Beth R. Kramer, Esq.
Mayer, Brown & Platt
1675 Broadway
New York, N.Y. 10019-5820
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It is proposed that this filing will become effective: (check appropriate box)
____ immediately upon filing pursuant to paragraph (b)
_X__ on February 22, 2000 pursuant to paragraph (b)
____ 60 days after filing pursuant to paragraph (a) (i)
____ on (date) pursuant to paragraph (a)(i)
____ 75 days after filing pursuant to paragraph (a)(ii)
____ on (date) pursuant to paragraph (a)(ii) of Rule 485
If appropriate, check the following box:
_X__ this post-effective amendment designates a new effective
date for a previously filed post-effective amendment,
Post-Effective Amendment No. 7, filed with the SEC
on December 20, 1999.
DECLARATION PURSUANT TO RULE 24f-2
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, as amended, the
Registrant has registered an indefinite number or amount of securities under the
Securities Act of 1933, as amended. Registrant has filed the Rule 24f-2 Notice
for its fiscal year ended July 31, 1999 on October 29, 1999.
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<PAGE>
[DEVCAP LOGO]
DEVCAP Shared Return Fund
A mutual fund that has two primary objectives: an investment objective and a
charitable objective. The Fund's investment objective is to achieve long-term
total return by attempting to match the total return of the Standard &
Poor's(R) Composite Stock Price Index in accordance with socially
responsible investment practices. The Fund's charitable objective
is to enable shareholders to donate a portion of their total
annual returns to help finance micro-enterprise programs in
developing countries.
Prospectus
February 22, 2000
As with all mutual funds, the Securities and Exchange Commission
has not approved or disapproved of these securities or passed
on the adequacy of this prospectus.
Anyone who tells you otherwise is committing a crime.
<PAGE>
Table of Contents
Page
----
Overview......................................................................3
Fund Summary..................................................................3
Performance...................................................................5
Fees and Expenses.............................................................6
Fund Details..................................................................7
Fund Objectives..........................................................7
Principal Investment Strategies..........................................7
Principal Risks of Investing in the Fund.................................9
Fund Management..............................................................10
The Investment Manager and Sub-Adviser..................................10
Fund Distribution.......................................................10
Shareholder Information......................................................11
Pricing of Fund Shares..................................................11
Buying and Selling Shares...............................................11
Charitable Contributions Program........................................14
Dividends and Capital Gains Distributions...............................15
Tax Consequences........................................................15
Financial Highlights.........................................................16
DEVCAP Non-Profit............................................................17
Account Registration Information.............................................18
This prospectus describes the objectives and strategies of the Fund, the
potential risks of investing, the Fund's management, and other information
necessary to make an informed investment decision. Please read it carefully
before you invest and then retain it for future reference.
The Fund is a separate series of DEVCAP Trust.
2
<PAGE>
OVERVIEW
Fund Summary
- ------------
What are the Fund's investment objectives?
The Fund has two primary objectives: an investment objective and a charitable
objective. The Fund's investment objective is to achieve long-term total return
by attempting to match the total return of the Standard & Poor's(R) Composite
Stock Price Index (the "S&P 500 Index") in accordance with socially responsible
investment practices. The Fund's charitable objective is to enable shareholders
to donate a portion of their total annual returns to help finance micro-
enterprise programs in developing countries.
What are the Fund's principal investment strategies?
In pursuing the Fund's investment objective, the Investment Manager and
Sub-Adviser will follow a two-step process. First, the Sub-Adviser will identify
the investment universe by attempting, to the extent practicable, to allocate
the Fund's portfolio among common stocks in approximately the same proportion as
they are represented in the S&P 500 Index. Second, the Sub-Adviser applies
certain socially responsible screens to eliminate stocks that otherwise would be
included in a truly indexed approach to investing.
The Sub-Adviser expects to invest at least 95% of the Fund's net assets in
common stocks of companies included in the S&P 500 Index. The Sub-Adviser will
select the Fund's investments in accordance with the Socially Responsible
Investment Guidelines (the "SRI Guidelines"), which establish criteria that
prohibit the Fund from investing in the following companies:
o Companies that manufacture abortion and/or contraception
products and hospitals that perform elective abortions.
o Companies involved in the production of tobacco products.
o Companies that contribute to the spread of global violence
and militarism.
o Companies that have demonstrated a pattern of behavior
indicating a threat to the environment.
o Companies whose main line of business is pornography.
Securities of companies that are restricted by the SRI Guidelines will be
replaced with other S&P 500 Index companies of comparable size and market
position in the same industry. If, however, all companies in a particular
industry are restricted, such companies will be replaced with securities of all
remaining non-restricted S&P 500 Index companies, to the extent possible,
according to their weighting in the S&P 500 Index.
What are the principal risks of investing in the Fund?
All investments involve some degree of risk. Loss of money is a risk of
investing in the Fund. There is never any assurance that a fund will perform as
it has in the past.
3
<PAGE>
The principal risk of investing in the Fund is associated with its common stock
investments. Common stock prices may fluctuate based on changes in a company's
financial condition and on overall market, economic and political conditions.
The value of a company's stock, and of the Fund, may also be affected by a
decline in financial markets in general.
The Fund's investments in the common stocks of foreign companies (including
American Depository receipts) can involve risks in addition to risks associated
with domestic securities. These risks include withholding or other taxes, less
stringent regulatory requirements of some foreign markets and general risks
relating to political and economic conditions in foreign countries.
The Fund's securities will ordinarily not be sold except to add or remove stocks
that comprise the S&P 500 Index, or as may be necessary to raise cash to pay
shareholders who wish to sell their shares. As such, the adverse performance of
a particular stock ordinarily will not result in the removal or substitution of
the stock from the Fund and the Fund will remain invested in stocks even when
stock prices are generally falling.
There can be no assurance that the Investment Manager's and Sub-Adviser's
application of the Fund's investment strategies will be successful and the Fund
may underperform the stock market or other funds.
An investment in the Fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
4
<PAGE>
PERFORMANCE
The information in the chart below shows the Fund's calendar year annual total
returns over the past four years. The performance information below shows total
annual returns achieved under a previous investment manager. The Fund's previous
investment manager sought to achieve the Fund's investment objective by matching
the performance of the Domini 400 Social Index(sm), an index consisting of 400
stocks (approximately 60% of which are included in the S&P 500 Index) chosen for
their corporate and social responsibility.
Results based on the past performance of a fund are not an indication of how the
fund will perform in the future. However, a review of the Fund's past
performance can help illustrate the variability of Fund returns and the risks of
investing in the Fund over time. The calculation of total return in the chart
and table below assumes reinvestment of all capital gains and dividends.
Annual Total Returns (calendar years)
40.00% |
| 34.65%
30.00% | 31.89%
| 19.96% 21.31%
20.00% |
|
10.00% |
|
0.00% |
|
-10.00% |
----------------------------------------------------------
1996 1997 1998 1999
During the periods shown in the bar chart, the highest return for the Fund for a
quarter was 24.31% (quarter ending December 31, 1998) and the lowest return for
the Fund for a quarter was -9.90% (quarter ending September 30, 1998).
The table below compares the Fund's average annual returns to the annual returns
of the S&P 500 Index. It provides an indication of the risks of investing in the
Fund by comparing the Fund's performance with a broad measure of market
performance.
5
<PAGE>
Average Annual Total Returns
For periods ended December 31, 1999 Past 1 year Past 5 years Life of Fund(1)
- ----------------------------------- ----------- ------------ ------------
DEVCAP Shared Return Fund 21.31% n/a 26.44%
S&P 500 Index(2) 21.04% n/a 26.52%
(1) The Fund commenced operations on October 19, 1995.
(2) The S&P 500 Index is the Standard and Poor's Composite Stock Price
Index, a widely recognized, unmanaged index of common stock prices.
FEES AND EXPENSES
Fee Table
The table below describes the fees and expenses that you may pay if you buy,
hold or sell shares of the Fund.
Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price).................................... None
Maximum Deferred Sales Charge (Load)..................................... None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends
and Other Distributions................................................ None
Redemption Fee........................................................... (1)
Exchange Fee............................................................. None
Annual Fund Operating Expenses (expenses that are deducted from Fund
assets)
Management Fees......................................................... 0.25%
Distribution and/or Service (12b-1) Fees................................ 0.25%
Other Expenses.......................................................... 1.61%
Total Annual Fund Operating Expenses.................................... 2.11%
Less Reimbursed Expenses (2)............................................ 0.36%
Net Fund Operating Expenses............................................. 1.75%
(1) The transfer agent charges $10 for each wire redemption and $16
for each IRA redemption.
(2) Under the terms of an agreement, dated November 29, 1999, the
Fund's sponsor, Development Capital Fund ("DEVCAP Non-Profit"),
has agreed to reimburse the Fund for all expenses (excluding
brokerage fees and commissions, interest, taxes and other
extraordinary expenses) in excess of 1.75% of the Fund's average
daily net assets until November 29, 2000.
Example
This example illustrates the cost of investing in the Fund over various time
periods. It is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The example assumes that:
6
<PAGE>
o you invest $10,000 in the Fund and sell all of your shares
at the end of the time periods indicated
o your investment returns 5% each year
o the Fund's operating expenses remain the same for the
time periods indicated
Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$178 $626 $1,101 $2,413
7
<PAGE>
FUND DETAILS
Fund Objectives
- ---------------
The Fund has two primary objectives: an investment objective and a charitable
objective. The Fund's investment objective is to achieve long-term total return
by attempting to match the total return of the S&P 500 Index in accordance with
socially responsible investment practices. The Fund's charitable objective is to
enable shareholders to donate a portion of their total annual returns to help
finance micro-enterprise programs in developing countries.
Principal Investment Strategies
- -------------------------------
In pursuing the Fund's investment objective, the Investment Manager and
Sub-Adviser will follow a two-step process. First, the Sub-Adviser will identify
the investment universe by attempting, to the extent practicable, to allocate
the Fund's portfolio among common stocks in approximately the same proportion as
they are represented in the S&P 500 Index. Second, the Sub-Adviser applies
certain socially responsible screens to eliminate stocks that otherwise would be
included in a truly indexed approach to investing.
Identifying the investment universe
- -----------------------------------
The Fund is managed by Christian Brothers Investment Services, Inc. (the
"Investment Manager" or "CBIS"), and RhumbLine Advisers (the "Sub-Adviser" or
"RhumbLine") serves as Sub-Adviser to the Fund.
The Sub-Adviser expects to invest at least 95% of the Fund's net assets in
common stocks of companies included in the S&P 500 Index. The S&P 500 Index is a
widely recognized, unmanaged index composed of 500 selected common stocks, most
of which are large-capitalization companies listed on the New York Stock
Exchange, and all of which are traded in the U.S. The composition of the S&P 500
Index is determined by Standard & Poor's Corporation ("S&P") and is based on
factors such as a stock's market capitalization, trading activity and
representation in a particular industry group. S&P chooses the companies to be
included on the S&P 500 Index solely on a statistical basis and may change the
composition of the S&P 500 Index from time to time. The inclusion of a company
in the S&P 500 Index in no way implies an opinion by S&P as to its
attractiveness as an investment, nor is S&P a sponsor of or in any way
affiliated with the Fund.
The Sub-Adviser seeks a correlation between the performance of the Fund and that
of the S&P 500 Index of 0.95 or better. A figure of 1.0 would indicate perfect
correlation. The Sub-Adviser monitors the correlation between the performance of
the Fund and the S&P 500 Index on a regular basis, subject to supervision by the
Investment Manager. The Sub-Adviser's ability to correlate the Fund's
performance to the S&P 500 Index may be affected by the restrictions on
investing in certain S&P 500 Index companies imposed by the SRI Guidelines
described below.
The Sub-Adviser will ordinarily buy and sell securities for the Fund to reflect
certain administrative changes in the S&P 500 Index (e.g., mergers or changes in
the composition of the S&P 500 Index), to accommodate cash flows into and out of
the Fund and to maintain the similarity of the Fund to the S&P 500 Index. The
Fund may omit or remove an S&P 500 Index company from its portfolio if the
Sub-Adviser judges the company's stock to be insufficiently liquid or believes
the investment has been substantially impaired by extraordinary events or
financial conditions. In addition, because of the difficulty and expense of
executing relatively small stock transactions, the Fund may not always be
invested in the less heavily weighted S&P 500 Index companies and may at times
have its portfolio weighted differently from the S&P 500 Index.
Applying socially responsible investment screens to limit the investment
universe
- ------------------------------------------------------------------------
The Sub-Adviser will select the Fund's investments in accordance with the SRI
Guidelines, which establish criteria that prohibit the Fund from investing in
certain companies. The SRI Guidelines, which were developed by the Investment
Manager and Fund management and endorsed by the Fund's Board of Trustees,
prohibit the Fund from investing in the following companies:
8
<PAGE>
o Companies that manufacture abortion and/or contraception
products and hospitals that perform elective abortions.
o Companies involved in the production of tobacco products,
including companies that produce cigarettes, pipe tobacco, or
smokeless tobacco products, and companies which process or
trade tobacco or distribute wholesale raw tobacco to producers
of tobacco products. This policy does not include tobacco
retailers, tobacco suppliers or companies with ties to the
tobacco industry.
o Companies that contribute to the spread of global violence and
militarism. The criterion restricts all producers of land
mines and hand guns for commercial sale. This criterion also
restricts companies that are "major producers" of military
weapons. Recognizing the legitimate need for national defense,
the Fund will only avoid those companies whose activities
support excessive offensive military capability. "Major
producers" are defined by CBIS as the companies with the
greatest dollar value government contracts in six areas of
concern which, in order of importance, are: nuclear weapons,
Star Wars (previously officially known as the Strategic
Defense Initiative, now officially known as the Ballistic
Missile Defense Program), military weapons exports, military
weapons manufacture, dependence on military contracts, and
overall defense contracts.
o Companies that have demonstrated a pattern of behavior
indicating a threat to the environment in certain areas,
including toxic emissions, superfund sites, oil and chemical
spills, and fines related to environmental violations of
federal, state and local laws.
o Companies whose main line of business is pornography, i.e.,
companies that derive 50% of their revenues from products or
services intended exclusively to appeal to the prurient
interest or to incite sexual excitement, including, but not
limited to, sexually explicit (X-rated) films, videos,
publications, and software; topless bars and strip clubs; and
sexually oriented telephone and Internet services.
Securities of companies that are restricted by the SRI Guidelines will be
replaced with other S&P 500 Index companies of comparable size and market
position in the same industry. If, however, all companies in a particular
industry are restricted, such companies will be replaced with securities of all
remaining non-restricted S&P 500 Index companies, to the extent possible,
according to their weighting in the S&P 500 Index.
As of February 7, 2000, 47 companies listed on the S&P 500 Index would have been
restricted from investment by the Fund because they are ineligible under the SRI
Guidelines. These companies together constituted 9% of the market capitalization
of the S&P 500 Index.
Types of Investments
- --------------------
The Fund will invest principally in common stocks. Common stock represents a
share of ownership interest in a company. The Fund may invest in common stocks
of foreign companies that are included in the S&P 500 Index. The Fund may also
invest, to a lesser degree, in certain other types of securities, including
money market securities and investment grade short-term debt securities.
Because the Sub-Adviser expects to hold securities as long-term investments, the
Fund does not expect to engage in active and frequent trading of securities to
achieve its principal investment strategies. See the Statement of Additional
Information for more detailed information about the Fund's investment strategies
and the types of securities in which the Fund may invest.
9
<PAGE>
PRINCIPAL RISKS AND INVESTING IN THE FUND
- -----------------------------------------
All investments involve some degree of risk. Loss of money is a risk of
investing in the Fund. There is never any assurance that a fund will perform as
it has in the past. It is important that you understand that the Fund's
performance may be affected by the risks described below.
o Common Stocks. The principal risk of investing in the Fund is
associated with its common stock investments. Common stock
prices may fluctuate based on changes in a company's financial
condition and on overall market, economic and political
conditions. The value of a company's stock, and of the Fund,
may also be affected by a decline in financial markets in
general.
o Foreign Companies. The Fund's investments in the common stocks
of foreign companies (including American Depository Receipts)
can involve risks in addition to risks associated with
domestic securities. These risks include withholding or other
taxes, less stringent regulatory requirements of some foreign
markets and general risks relating to political and economic
conditions in foreign countries.
o Investment Manager and Sub-Adviser risk. There can be no
assurance that the Investment Manager's and Sub-Adviser's
application of the Fund's investment strategies will be
successful and the Fund may underperform the stock market or
other funds. The ability of the Fund to seek its investment
objective will be affected by, among other things, the ability
of the Sub-Adviser to manage cash flows into and out of the
Fund.
o Additional Risks. The Fund's securities will ordinarily not be
sold except to add or remove companies that comprise the S&P
500 Index, or as may be necessary to raise cash to pay
shareholders who wish to sell their shares. As such, the
adverse performance of a particular stock ordinarily will not
result in the removal or substitution of the stock from the
Fund and the Fund may remain invested in stocks even when
stock prices are generally falling. In addition, the
performance of the S&P 500 Index is a hypothetical number that
does not take into account brokerage and other transaction
costs which will be borne by the Fund (e.g., management fee,
transfer agency and accounting costs).
An investment in the Fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
10
<PAGE>
FUND MANAGEMENT
The discussion below provides information about the Fund's management and
distribution arrangements. See the Statement of Additional Information for more
detailed information about the Fund's management and for additional information
about the Fund's other service providers.
The Investment Manager and Sub-Adviser
- --------------------------------------
Christian Brothers Investment Services, Inc. serves as the Fund's Investment
Manager pursuant to an investment management agreement dated February 22, 2000.
CBIS provides the Fund with investment management and certain other
administrative services. CBIS, a corporation organized under the laws of the
State of Illinois, is owned by the Districts of the U.S. Region of the Brothers
of the Christian Schools. CBIS has been a registered investment adviser under
the Investment Advisers Act of 1940 ("Advisers Act") since 1981. As of October
31, 1999, CBIS had approximately $2.27 billion in assets under management. Its
principal business office is located at 675 Third Avenue, 31st Floor, New York,
N.Y. 10017-5704.
The Fund pays CBIS an annual management fee of 0.25% of the Fund's average daily
net assets for the services furnished to the Fund. Out of this fee CBIS pays the
Fund's custodial fees. The Fund's investment management agreement describes the
management fee, which is computed daily and paid monthly, and other expenses
that the Fund must pay. Under the terms of an agreement, dated November 29,
1999, the Fund's sponsor, DEVCAP Non-Profit, has agreed to reimburse the Fund
for all expenses (excluding brokerage fees and commissions, interest, taxes and
other extraordinary expenses) in excess of 1.75% of the Fund's average daily net
assets until November 29, 2000.
RhumbLine Advisers is the Fund's Sub-Adviser. RhumbLine provides investment
sub-advisory services to the Fund on a day-to-day basis pursuant to a
sub-advisory agreement between RhumbLine and CBIS. As Sub-Adviser, RhumbLine
will perform investment management services for the Fund, including the
selection of investments, subject to supervision of CBIS. RhumbLine was
established as a partnership on October 12, 1990 and has been registered as an
investment adviser under the Advisers Act since 1990. Its principal business
office is located at 30 Rowes Wharf, Boston, MA 02110.
As compensation for its sub-advisory services, CBIS pays RhumbLine a
sub-advisory fee of 0.07% of the aggregate amount of assets managed by RhumbLine
as sub-adviser for CBIS clients (including the Fund).
Edwin C.H. Ek is the portfolio manager of the Fund, which he has managed since
February 22, 2000. Mr. Ek, the Chief Investment Officer of RhumbLine, also
manages other private funds and institutional pension fund accounts. He has been
a portfolio manager with RhumbLine since 1994.
Prior to February 22, 2000, the Fund invested all of its assets in a portfolio
which was managed by Domini Social Investments, LLC ("Domini"). Domini had
managed the Fund's assets since October 1997 and received an annual management
fee of 0.20% of the portfolio's average daily net assets for its investment
management and administrative services. Domini had retained a sub-adviser to
which it paid an annual sub-advisory fee of 0.07% of the portfolio's average
daily net assets.
Fund Distribution
- -----------------
CBIS Financial Services, Inc. (the "Distributor") is the distributor of the
Fund's shares.
The Board of Trustees ("Trustees") of DEVCAP Trust (the "Trust") has adopted a
distribution plan on behalf of the Fund pursuant to Rule 12b-1 under the
Investment Company Act of 1940, to allow the Fund to pay distribution fees
related to the sale and distribution of Fund shares and other fees for services
provided to shareholders. The distribution plan authorizes the Fund to reimburse
11
<PAGE>
the Distributor up to 0.25% of the Fund's average daily net assets for expenses
incurred in connection with the sale and distribution of Fund shares and other
fees for services provided to shareholders. These fees and expenses may include
payments to employees of the Distributor, payments to broker-dealers who advise
shareholders regarding the purchase, sale or retention of shares of the Fund,
expenses related to advertising, printing and distributing prospectuses and
reports, expenses related to preparing and printing sales literature and other
distribution-related expenses. Because these fees are paid out of the Fund's
assets on an on-going basis, over time these fees would increase the cost of
your investment and could cost you more than paying other types of sales
charges.
SHAREHOLDER INFORMATION
Pricing of Fund Shares
- ----------------------
All purchases and sales of Fund shares will be processed at the net asset value
("NAV") per share next calculated after your request is received by the Fund.
The Fund's NAV is calculated by deducting the amount of the Fund's liabilities
from the value of its assets and dividing the difference by the number of
outstanding shares of the Fund.
NAV = Total Assets - Liabilities
Number of Shares Outstanding
The Fund's NAV is determined at the close of the regular trading session of the
New York Stock Exchange ("NYSE") (normally 4:00 p.m. Eastern time) each day that
the NYSE is open. The NAV of Fund shares is not determined on days the NYSE is
closed. In order to receive a day's price, your purchase or redemption request
must be received by the Fund in good order by the close of the regular trading
session of the NYSE. (Please see page 12 for a definition of "good order.")
Securities are valued at market value or, if a market quotation is not readily
available, at their fair value as determined by the Trustees. Short-term
obligations maturing within 60 days are valued at amortized cost, which
approximates market value.
You can request the Fund's current NAV by calling (800) 371-2655. See the
Statement of Additional Information for more detailed information about the
pricing of Fund shares.
Buying and Selling Shares
General Information
- -------------------
You may buy or sell shares of the Fund directly from the Fund in the manner
described below. The Fund does not impose a sales charge to buy or sell shares.
For general account, product or service information or shareholder questions
concerning the procedures outlined below contact:
DEVCAP Shared Return Fund
P.O. Box 2152
Milwaukee, WI 53201-2152
Telephone: (800) 371-2655
You may also buy or sell shares of the Fund through a retirement account or an
investment professional. If you invest through a retirement account or an
investment professional, the procedures for buying and selling shares of the
Fund may differ. Additional fees may also apply to your investment in the Fund,
including a transaction fee if you buy or sell shares of the Fund through a
broker-dealer or other investment professional.
If you are investing in the Fund for the first time you will need to establish
an account by completing an account application. Please note that the
12
<PAGE>
application(s) which you will need may vary depending on the type of account you
desire. To request an account application call (800) 371-2655. The different
types of accounts you may establish are the following:
o Individual or Joint Account. Individual accounts are owned by one
person. Joint accounts have two or more owners. You can use a
regular account application to open these types of accounts.
o Individual Retirement Plan Accounts. You can purchase shares
through an Individual Retirement Account (IRA). Retirement plan
accounts require a special account application.
o Gifts or Transfers to a Minor (UGMA or UTMA) Accounts. A
UGMA/UTMA account is a custodial account managed for the benefit
of a minor. This type of account requires a regular account
application and may require additional information.
o Trust Accounts. An established trust can open an account. This
type of account requires a regular account application and may
require additional documentation.
o Business Accounts. Corporations and partnerships may also open an
account. This type of account requires a regular account
application and may require additional documentation.
Please note that the following investment minimums apply when buying shares of
the Fund:
Investment Minimums
- -------------------
To open a regular account....................................... $ 1,000
To add to a regular account...................................... None
To open a regular account with an
Automatic Investment Plan..................................... $ 500
To add to a regular account with an
Automatic Investment Plan..................................... $ 25
To open an IRA account........................................... $ 250
To add to an IRA account......................................... None
These minimums may be waived or lowered by the Fund.
Buying Shares
- -------------
The price to buy one share of the Fund is the Fund's NAV. There is no sales
charge imposed when buying Fund shares. When you buy shares, your request will
be processed at the next NAV calculated after your order is received.
When you place an order to buy shares please note the following:
o All of your purchases must be made in U.S. dollars and checks
must be drawn on U.S. banks.
o Cash, credit cards, third party checks and credit card checks
will not be accepted.
o Checks must be made payable to "DEVCAP Shared Return Fund."
o If a purchase does not clear your bank, the Fund reserves the
right to cancel the purchase. The Fund will charge a $20 service
fee against your account for any check or electronic funds
transfer returned unpaid. Your purchase will be canceled, and you
will be responsible for any resulting loss to the Fund.
Short-term or excessive trading into and out of the Fund may harm performance by
disrupting the Fund's investment strategies and increasing the Fund's expenses.
Accordingly, the Fund reserves the right to reject any purchase orders,
particularly from market timers or investors who, in the Fund management's
opinion, are likely to engage in short-term or excessive trading that has been
or may be disruptive to the Fund. If your purchase order is canceled, you will
be responsible for any losses or fees imposed by your bank and losses that may
be incurred as a result of any decline in the value of the canceled purchase.
13
<PAGE>
The Fund may stop offering shares completely or may offer shares only on a
limited basis, for a period of time or permanently.
You may buy shares of the Fund through the following options:
o By Mail. Complete and sign the appropriate account application.
Make your check payable to "DEVCAP Shared Return Fund." Mail the
account application and check to the following address:
DEVCAP Shared Return Fund
P.O. Box 2152
Milwaukee, WI 53201-2152
o by Wire. Call (800) 371-2655 to arrange to establish an account
number and receive wire instructions. An investor desiring to
purchase shares by a wire transfer of funds should request its
bank to immediately transmit available funds. Bank wires for the
purchase of shares should be sent to:
UMB Bank NA
ABA# 101000695
For Credit to: DEVCAP Trust
A/C# 987-096-4139
For further credit to:
Include Shareholder Name, Address, and Account Number
You may also buy shares of the Fund through an Automatic Investment Plan which
allows you to invest, through your bank, specified dollar amounts at regular
intervals (minimum of $25 in monthly, quarterly, semi-annual or annual
intervals). For more information call (800) 371-2655.
Shares of the Fund may also be purchased by exchanging securities for shares of
the Fund. The Fund will not accept a security in exchange for Fund shares
unless: (i) the security is consistent with the investment objectives and
policies of the Fund; and (ii) the security is deemed acceptable by the
Investment Manager and the Sub-Adviser.
Selling Shares
- --------------
The price to sell or redeem one share of the Fund is the Fund's NAV. You may
sell all or a portion of your shares on any business day and there is no
redemption charge imposed on sales of Fund shares. Your shares will be sold at
the next NAV calculated after your redemption request has been received in good
order. (Please see page 12 for a definition of "good order.") The value of the
shares that you sold may be more or less than your original purchase price.
When you place a redemption request please note the following:
o It may take up to seven days to process your redemption request.
o Redemption proceeds may be delayed until money from prior purchases
sufficient to cover your redemption has been received and collected.
This can take up to 15 days after a purchase.
o Redemptions may be suspended or payment dates postponed when the
NYSE, the Fund or the Fund's transfer agent are closed (other than
weekends or holidays), when trading on the NYSE is restricted, or as
permitted by the Securities and Exchange Commission.
o Redemption proceeds may be paid in securities or other assets rather
than in cash if the Trustees determine it is in the best interests of
the Fund.
o The Fund reserves the right to modify its redemption procedures.
o You will not receive interest on amounts represented by uncashed
redemption checks.
o The Fund reserves the right to refuse wire or telephone redemptions.
14
<PAGE>
o Signature guarantees are required for the following: (i) redemption
requests over $10,000; (ii) redemptions made within 30 days of a
change of address; (iii) if the proceeds of redemption (regardless of
amount) are to be sent to a person other than the registered holder
and/or to an address other than the address of record; and (iv)
transfers of shares. Signature guarantees may be obtained from a
commercial bank or trust company in the United States, a member of
the NYSE and some savings and loan associations. A notary public is
not acceptable.
o The Fund reserves the right to redeem involuntarily on at least 30
days' notice the balance in a shareholder's account having a current
value of less than $250, but not if an account falls below $250 due
to a change in the market value of the Fund's shares.
You may request to sell your shares by mail or by telephone, subject to certain
procedures. You may sell shares of the Fund through the following options:
o By Mail. Send a written redemption request, including your name,
the Fund's name, your account number, and the dollar amount or
number of shares to be sold to the following address:
DEVCAP Shared Return Fund
P.O. Box 2152
Milwaukee, WI 53201-2152
For overnight deliveries, please use the following address:
DEVCAP Shared Return Fund
c/o Sunstone Financial Group, Inc.
207 East Buffalo St.
Suite 315
Milwaukee, WI 53202
Your redemption request must be in "good order" to be accepted.
Requests in "good order" must include the following:
1. A letter of instruction, if required, signed by all
registered owners of the shares in the exact names in which
they are registered (if the shares are in street name, you
must sell the shares through your investment professional);
2. Any required signature guarantees. To protect shareholder
accounts, the Fund and the Fund's transfer agent from fraud,
signature guarantees may be required in certain instances,
including redemptions in excess of $10,000, to enable the
transfer agent to verify the identity of the person who has
authorized a redemption request from an account.
3. Any additional information or supporting legal documents
which the Fund may require.
o By Telephone. If you did not waive the telephone redemption privilege
on your new account application you may sell shares over the
telephone by calling the Fund's transfer agent at (800) 371-2655. In
order to sell shares over the telephone you must provide your account
number and your social security number. For your protection,
telephone redemption requests will be recorded in order to verify
their accuracy. If the Fund follows reasonable procedures to confirm
that redemption instructions are genuine it shall not be liable for
unauthorized or fraudulent redemption requests.
Redemption proceeds can be sent by mail, wire or electronic funds transfer.
Redemptions will be sent to pre-authorized addresses. There is a $10.00 fee for
wire redemption which will be deducted from your proceeds. Payment may be
delayed for up to 15 days on redemption requests for recent purchases made by
check or electronic funds transfer in order to ensure that the purchase has
cleared.
Any time you sell shares of the Fund in a taxable account, it is
considered a taxable event on which you may recognize a gain or a loss.
15
<PAGE>
CHARITABLE CONTRIBUTIONS PROGRAM
The Fund is designed to enable you to share the total return of your investment
in the Fund with DEVCAP Non-Profit, a non-profit organization that promotes
micro-enterprise development programs in developing countries. You may indicate
your desire to make an annual contribution to DEVCAP Non-Profit when you
initially purchase shares of the Fund. You may elect to contribute a percentage
of your total returns in any one of the following increments: 10%, 25%, 50%, 75%
or 100%. You may subsequently change the amount of your total returns that you
wish to contribute. Additionally, you may elect not to contribute any portion of
your returns.
On or about the third week of November, the Fund will mail a notice of record
indicating the dollar amount of your estimated contribution for that year, based
on your contribution election and your estimated year-to-date total return. In
order to change your contribution election, you must notify the Fund on or
before the second Friday of December by calling (800) 371-2655 (option 3) or by
writing to the following address:
DEVCAP Shared Return Fund
P.O. Box 2152
Milwaukee, WI 53201-2152
By January of the following year, the Fund will mail you a notice of record
indicating the dollar amount of your actual contribution for the previous year.
This contribution will be made by deducting the appropriate number of your
shares (valued at their fair market price) in the Fund equaling your annual
contribution election. The fair market value of your Fund share donation will
generally be tax deductible. See the "Tax Consequences" section below.
The value of your annual contribution will be determined according to the change
in value of your account between January 1 (or the date of the your initial
investment) and the second Friday in December of the same year, adjusted for
redemptions, distributions and purchases.
For IRA accounts only, shareholders will be requested to remit their charitable
constribution from a source other than their IRA account. By January 31 of each
year, the Fund will mail a notice to each IRA shareholder indicating the
shareholder's charitable contribution amount for the previous year. Each
shareholder will then be requested to make a contribution to DEVCAP Non-Profit
equal in value to his or her charitable contribution amount payable by check.
See the Statement of Additional Information for more detailed information about
the Fund's Charitable Contribution Program.
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
The Fund earns dividends, interest and other income from its investments, and
distributes this income (less expenses) to you as dividends. The Fund also
realizes capital gains from its investments, and distributes these gains (less
any losses) to you as capital gains distributions. The Fund usually pays
dividends and capital gains distributions in December. You may elect to have
your dividends and capital gains distributions paid in cash or reinvested in
additional shares of the Fund.
TAX CONSEQUENCES
As with any investment, your investment in the Fund will have tax consequences
which you should consider.
Dividends and distributions you receive from the Fund, whether received in cash
or reinvested in additional shares of the Fund, are subject to federal income
tax, and may also be subject to state or local taxes. Distributions may be
taxable at different rates depending on the type of income earned by the Fund
and the length of time the Fund held a security when it was sold. For federal
income tax purposes, the Fund's distributions of dividends and short-term
capital gains are taxable to you as ordinary income. The Fund's distributions of
long-term capital gains are taxable to you generally as long-term capital gain.
16
<PAGE>
In addition, the Fund has been structured in order to enable you to make tax
deductible donations of your Fund shares through the Fund's Charitable
Contribution Program. Under this Program shareholders who donate to DEVCAP
NonProfit may be able to deduct the fair market value of the Fund shares donated
on their annual income tax returns, provided the shares were held for at least
one year. If you held shares for one year or less you may be able to deduct the
cost of your Fund shares.
If you buy shares when the Fund has realized but not yet distributed income or
capital gains, you will be "buying a dividend" by paying the full price for the
shares and then receiving a portion of the price back in the form of a taxable
distribution.
Shortly after the end of each calendar year, you will receive information for
tax purposes on the dividends and distributions received during that calendar
year, including a breakdown of the portions taxable as ordinary income and as
capital gains.
The previous discussion of tax consequences is intended for general information
only. You may wish to consult with your own tax adviser as to the tax
consequences of an investment in the Fund or participation in the Fund's
Charitable Contribution Program. See the Statement of Additional Information for
more detailed information.
17
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Fund's
financial performance since its inception. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned (or lost) on an investment
in the Fund (assuming reinvestment of all dividends and distributions). This
information has been audited by KPMG LLP, the Fund's independent auditors, whose
report, along with the Fund's financial statements, are included in the annual
report, which is available by calling the Fund at (800) 371-2655.
<TABLE>
<CAPTION>
Period from
October 19, 1995(1)
Year ended Year ended Year ended to
July 31, 1999 July 31, 1998 July 31, 1997 July 31, 1996
------------- ------------- ------------- ----------------
<S> <C> <C> <C> <C>
For a share outstanding for the period:
Net Asset Value, beginning
of period................................. $19.58 $ 16.22 $10.71 $10.00
------ ------
Income from investment
operations:
Net investment loss....................... (0.18) (0.06) (0.03) (0.02)
Net realized and unrealized
gain (or losses) on investments......... 4.28 3.44 5.55 0.73
---- ---- ---- ----
Total income from
investment operations..................... 4.10 3.38 5.52 0.71
Less distributions from
net realized gain......................... (0.20) (0.02) (0.01)
---- ----- ----- -----
Net Asset Value, end of
period.................................... $23.48 $ 19.58 $16.22 $10.71
Ratios/supplemental data
Total return.............................. 21.03% 20.84% 51.57% 7.10%(3)
Net Assets, end of period
(in 000's).............................. $15,046 $ 10,697 $5,326 $643
Ratio of expenses to average net assets
before reimbursements..................... 1.97% 2.76% 5.93% 26.30%(2)
Ratio of expenses to average net assets
after reimbursements...................... 1.97% 1.75% 1.75% 2.50%(2)
Ratio of net investment income to average
net assets before reimbursements.......... (0.92)% (1.52)% (4.39)% (24.34)%(2)
Ratio of net investment income to average
net assets after reimbursements........... (0.92)% (0.51)% (0.21)% (0.54)%(2)
Portfolio turnover(4).......................... 8% 5% 1% 5%
- -----------
(1) Commencement of Fund operations.
(2) Annualized.
(3) Not annualized.
(4) Turnover rate of the portfolio that the Fund invested in prior to
February 22, 2000.
</TABLE>
18
<PAGE>
DEVCAP NON-PROFIT
DEVCAP Non-Profit is a non-profit corporation that is wholly owned by another
non-profit organization, Catholic Relief Services ("CRS"). DEVCAP Non-Profit was
created in 1992 to provide fund-raising and other support to non-profit
organizations dedicated to supporting micro-enterprise and other economic
development programs in developing countries. Micro-enterprise development
programs assist underprivileged people by providing direct financing and
technical support, otherwise unavailable through normal business channels, for
business enterprises in developing countries.
Each year, DEVCAP Non-Profit will direct shareholder contributions made pursuant
to the Fund's Charitable Contributions Program to CRS and other non-profit
organizations working to improve the welfare of underprivileged persons in
developing countries through grants or loans for micro-enterprises and other
economic development programs. Shareholder contributions are generally allocated
by agreement between DEVCAP Non-Profit and CRS. CRS was founded by the Catholic
Bishops of the United States and funds a "village banking" program which
provides financial services to approximately 150,000 underprivileged people in
24 countries throughout the world. CRS provides the operational funding for
DEVCAP Non-Profit and generally receives all the donations generated by the
Fund's Charitable Contribution Program. At their discretion, DEVCAP Non-Profit's
Board of Directors may also use shareholder contributions to support programs of
other non-profit organizations.
In addition to its primary fund-raising activities, DEVCAP Non-Profit seeks to
promote cooperation among micro-enterprise development agencies and
organizations, and to provide information and support for micro-enterprise
development around the world. These activities include educational campaigns,
research programs, and implementation of other financial programs to aid in the
development of micro-enterprises.
DEVCAP Non-Profit operates independently of the Investment Manager, Sub-Adviser,
Distributor, Administrator and all other service providers of the Fund. DEVCAP
Non-Profit and its personnel receive no compensation from the Fund. DEVCAP
Non-Profit does not provide any investment advisory, management or other
investment support services to the Fund. As the Fund's sponsor, DEVCAP
Non-Profit provides marketing, administrative and shareholder support services
to the Fund.
For more information regarding DEVCAP Non-Profit, please contact DEVCAP
Non-Profit directly at (800) 371-2655.
Shareholders who have elected not to participate in the Fund's Charitable
Contribution Program may still make a contribution to DEVCAP Non-Profit by
calling (800) 371-2655.
19
<PAGE>
<TABLE>
<CAPTION>
ACCOUNT REGISTRATION INFORMATION
<S> <C>
1. Individual
- ------------------------------------------------------- --------------------------------------------
First M.I. Last
- ------------------------------------------------------- --------------------------------------------
Social Security Number Date of Birth
2. Joint Tenant
- ------------------------------------------------------- --------------------------------------------
First M.I. Last
- ------------------------------------------------------- --------------------------------------------
Social Security Number Date of Birth
3. Gift/Transfer to a Minor (UGMA/UTMA)
Minor
---------------------------------------------------------------------------------------------------
Last First M.I.
- ------------------------------------------------------
Minor's Social Security Number
Custodian
---------------------------------------------- -----------------------------------------------------
First M.I. Last Minor State of Residence Date of Birth
4. Trust Name
----------------------------------------- -----------------------------------------------------
Date of Trust
5. Organization
--------------------------------------- -----------------------------------------------------
Tax identification No.
Type of Organization [ ] Corporation [ ] Association [ ] Partnership [ ] Other
--------
- ------------------------------------------------ ----------------------------------------------------
Signature of Joint Owner/Trustee If Any Print Name (and title if applicable) Date
Trusts: Please include date of trust and attach copies of first and last pages
of the trust agreement as well as any pages indicating which signatures are
required to execute transactions.
Corporations: Please attach a certified copy of your corporate resolution or
call 800-371-2655 for alternative form.
</TABLE>
20
<PAGE>
ADDRESS
- -------------------------------------------------------------------------------
Number and Street
- -------------------------------------------------------------------------------
City State Zip
- ------------------------- ---------------------- ----------------------
Country of Citizenship Business Telephone Home Telephone
Citizenship of Owner, Minor or Trust Beneficiary:
[ ] U.S. Citizen [ ] Resident Alien [ ] Non-Resident
[ ] Alien - Country of Residence_________
Citizenship of Joint Owner:
[ ] U.S. Citizen [ ] Resident Alien [ ] Non-Resident
[ ] Alien - Country of Residence
INITIAL INVESTMENT (Minimum initial investment - $1,000)
Please establish an account with the enclosed check payable to DEVCAP Shared
Return Fund, in the amount of $_____________________
DIVIDEND & CAPITAL GAIN DISTRIBUTION
Check one box: (If no box is checked, we will reinvest all distributions.)
[ ] Reinvest all dividends and capital gains in my account
[ ] Pay all dividends and capital gains to me by check
CHARITABLE CONTRIBUTION
to Development Capital Fund, a non-profit charitable corporation, or its member
organizations.
Please specify percentage of total annual return to be contributed:
(If no box is checked, 50% will be assumed)
[ ] 0% [ ] 10% [ ] 25% [ ] 50% [ ] 75% [ ] 100%
AUTOMATIC INVESTMENT PLAN (Minimum Initial Investment $500)
1. This service lets you invest automatically from your bank account.
2. Please be sure to allow three weeks for the plan to begin.
3. To establish this feature, complete the information below and staple a
voided check from your bank account to the application. One common
name must appear on your DEVCAP and bank accounts.
I have read the terms and conditions of the Automatic Investment Plan set forth
in the Prospectus.
21
<PAGE>
Dollar Amount: (Minimum $25)__________________________
Frequency (deductions made on or about the 15th of the month)
[ ] Monthly [ ] Quarterly [ ] Semi-annually [ ] Annually
REDEMPTION SERVICE
You automatically have the ability to make redemptions by telephone.
I (we) hereby authorize Sunstone Financial Group, Inc. ("Sunstone") to act upon
instructions received by telephone to have amounts withdrawn from my (our)
account in the DEVCAP Shared Return Fund and wired/electronic funds transferred
to my (our) account below.
I (we) hereby ratify any such instructions and agree that neither the DEVCAP
Shared Return Fund or Sunstone will be liable for any loss, liability, cost or
expense for acting upon instructions in accordance with procedures set forth in
the Prospectus.
YES [ ] NO [ ] "YES" will be assumed if neither box is checked
Please attach a voided check.
- -------------------------------------------------------------------------------
Bank Name Account Name
- -------------------------------------------------------------------------------
Account Number Bank ABA Number
- -------------------------------------------------------------------------------
Street Address
- -------------------------------------------------------------------------------
City State Zip
SIGNATURE
Each owner must sign this section.
By signing this application, I certify that
* I have received and read the prospectus for the fund in which I am investing
and I agree to the terms of the prospectus. I have the authority and legal
capacity to purchase mutual fund shares, am of legal age and believe each
investment is suitable for me.
* I understand the fund is not a bank, and fund shares are not backed or
guaranteed by any bank or insured by the FDIC.
* I understand that, for joint accounts, "I" refers to all account owners, and
each of the account owners agrees that any account owner has authority to act
on the account without notice to the other account owners. Sunstone in
its sole discretion, and for its protection, may require the written consent
of all account owners prior to acting upon the instructions of any account
owner.
* If I am a U.S. Citizen or Resident Alien, as I have indicated above, I
certify under penalties of perjury that (1) the Social Security (taxpayer
identification number) provided above is correct, and (2) I am not subject to
IRS backup withholding because (a) I am exempt from backup withholding, or (b)
I have not been notified by the IRS that I am subject to backup withholding, or
(c) I have been notified by the IRS that I am no longer subject to backup
withholding.
22
<PAGE>
(Please cross out item 2 if it does not apply to you).
* If I am a Non-Resident Alien, as I have indicated above, I certify under
penalties of perjury that I am not a U.S. Citizen or Resident Alien, and that I
am an "exempt foreign person" as defined under IRS regulations.
- -------------------------------------------------------------------------------
Signature of Owner/Trustee/Custodian Date (month, day, year)
- -------------------------------------------------------------------------------
Signature of Joint Owner/Trustee if any Date (month, day, year)
MAIL COMPLETED APPLICATION TO:
DEVCAP Shared Return Fund
P.O. Box 2152
Milwaukee, WI 53201-2152
23
<PAGE>
You can obtain additional information about the Fund, including the Fund's
Statement of Additional Information ("SAI") and annual or semi-annual
shareholders reports, free of charge. The Fund's SAI includes more detailed
information about the Fund and its investments. The SAI has been filed with the
Securities and Exchange Commission ("SEC") and is incorporated by reference into
this Prospectus. In the Fund's annual report, you will find a discussion of the
market conditions and investment strategies that significantly affected the
Fund's performance during its last fiscal year.
To request a free copy of any of these documents, or to request other
information or ask questions about the Fund, call (800) 371-2655.
The Fund's SAI and annual and semi-annual shareholder reports are available on
the SEC's Internet Web site at http://www.sec.gov. You can obtain copies of this
information upon paying a duplicating fee by sending an electronic request to
the following E-mail address: [email protected], or by writing to the Public
Reference Section of the SEC, Washington, D.C. 20549-6009. You can also review
and copy information about the Fund, including the Fund's SAI, at the SEC's
Public Reference Room in Washington, D.C. Information on the operation of the
SEC's Public Reference Room can be obtained by calling 1-202-942-8090.
DEVCAP Trust
DEVCAP Shared Return Fund
209 West Fayette Street
Baltimore, Maryland 21201
(800) 371-2655
www.DEVCAP.org
<TABLE>
<CAPTION>
Investment Manager Distributor
- ------------------ -----------
<S> <C>
Christian Brothers Investment Services, Inc. CBIS Financial Services, Inc.
675 Third Avenue, 31st Floor 915 Harger Road
New York, NY 10017-5704 Oak Brook, Illinois 60521-1476
Sub-Adviser Custodian
- ----------- ---------
RhumbLine Advisers
30 Rowes Wharf Mellon Bank, N.A.
Boston, MA 02110-3326 One Mellon Bank Center
Pittsburgh, PA 15258
Independent Auditors
- --------------------
KPMG LLP
99 High Street Legal Counsel
Boston, MA 02110 -------------
Mayer, Brown & Platt
Administrator and Transfer Agent 1675 Broadway
- -------------------------------- New York, NY 10019
Sunstone Financial Group, Inc.
207 East Buffalo Street, Suite 400
Milwaukee, WI 53202-2152
</TABLE>
Investment Company Act of 1940, File No. 811-9070
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
February 22, 2000
DEVCAP Shared Return Fund
A separate series of DEVCAP TRUST
209 West Fayette Street
Baltimore, Maryland 21201
(800) 371-2655
This Statement of Additional Information sets forth information which may be of
interest to investors but which is not necessarily included in the Prospectus,
dated February 22, 2000, as amended from time to time, for DEVCAP Shared Return
Fund. This Statement of Additional Information should be read in conjunction
with the Prospectus, a copy of which may be obtained by an investor without
charge by contacting the Fund at (800) 371-2655.
This Statement of Additional Information is NOT a prospectus and is
authorized for distribution to prospective investors only if preceded or
accompanied by an effective prospectus and should be read only in conjunction
with such prospectus.
<PAGE>
TABLE OF CONTENTS
Page
1. THE TRUST................................................................1
2. FUND OBJECTIVES, STRATEGIES AND RISKS....................................1
Fund Objectives.........................................................1
Investment Strategies and Risks.........................................1
3. FUND POLICIES/INVESTMENT RESTRICTIONS....................................5
Fundamental Investment Restrictions.....................................5
Non-Fundamental Restrictions............................................6
Percentage Restrictions.................................................6
4. PERFORMANCE INFORMATION..................................................6
5. DETERMINATION OF NET ASSET VALUE;
VALUATION OF PORTFOLIO SECURITIES.......................................7
6. MANAGEMENT OF THE TRUST..................................................8
Trustees of the Trust...................................................8
Officers of the Trust...................................................9
Trustee Compensation....................................................9
Investment Manager and Sub-Adviser......................................9
Administrator..........................................................13
Fund Sponsor...........................................................14
Distribution Plan......................................................14
Distributor............................................................15
Transfer Agent and Custodian...........................................15
7. INDEPENDENT AUDITORS....................................................16
8. CHARITABLE CONTRIBUTION PROGRAM.........................................16
9. TAXATION................................................................17
Tax Deductibility of Charitable Contributions..........................18
10. FUND TRANSACTIONS AND BROKERAGE COMMISSIONS.............................19
11. DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES....................21
12. FINANCIAL STATEMENTS....................................................22
<PAGE>
1. THE TRUST
DEVCAP Trust (the "Trust") was organized as a business trust under the laws
of the Commonwealth of Massachusetts, with DEVCAP Shared Return Fund (the
"Fund") established as a separate series of the Trust, on June 29, 1995. The
Fund is a no-load diversified open-end management investment company. The Trust
offers to buy back (redeem) shares of the Fund from its shareholders at any time
at net asset value. References in this Statement of Additional Information to
the "Prospectus" are to the current Prospectus of the Fund, as amended or
supplemented from time to time.
Christian Brothers Investment Services, Inc. is the Fund's Investment Manager
("CBIS" or the "Investment Manager"). The sponsor of the Fund is Development
Capital Fund ("DEVCAP Non-Profit" or the "Sponsor"). RhumbLine Advisers is the
Fund's Sub-Adviser ("RhumbLine" or the "Sub-Adviser"). The Sub-Adviser manages
the investments of the Fund from day to day in accordance with the Fund's
investment objective and policies, subject to the supervision of CBIS. Sunstone
Financial Group, Inc., serves as the Fund's administrator, transfer agent and
fund accountant ("Sunstone" or the "Administrator"), and supervises the overall
administration of the Fund. Mellon Bank, N.A. acts as the Fund's custodian
("Mellon Bank" or the "Custodian"). The Board of Trustees of the Trust provides
broad supervision over the affairs of the Trust.
Shares of the Fund are continuously sold by the Fund's distributor, CBIS
Financial Services, Inc., ("the "Distributor"), a subsidiary of CBIS. The
minimum initial investment in the Fund is $1,000. The minimum initial investment
when investing through the Automatic Investment Plan or an Individual Retirement
Account is $500 and $250, respectively. A description of the procedures by which
Fund shares may be purchased and redeemed can be found in the Prospectus.
2. FUND OBJECTIVES, STRATEGIES AND RISKS
Fund Objectives
The Fund has two primary objectives: an investment objective and a
charitable objective. The Fund's investment objective is to achieve long-term
total return by attempting to match the total return of the Standard & Poor's(R)
Composite Stock Price Index (the "S&P 500 Index") in accordance with socially
responsible investment practices. The Fund's charitable objective is to enable
shareholders to donate a portion of their total annual returns to help finance
micro-enterprise programs in developing countries.
Investment Strategies and Risks
The following discussion supplements the information relating to the Fund's
investment strategies and risks in the Prospectus and should be read in
conjunction with the Prospectus.
Additional Information Concerning the S&P 500 Index. The Fund is not sponsored,
endorsed, sold or promoted by Standard & Poor's, a division of The McGraw-Hill
Companies Inc. ("S&P"). S&P makes no representation of warranty, express or
implied, to the owners of shares of the Fund or any member of the public
regarding the advisability of investing in securities generally or in the Fund
particularly or the ability of the S&P 500 Index to track general stock market
performance. S&P's only relationship to the Fund is the licensing of certain
trademarks and trade names of S&P and of the S&P 500 Index which is determined,
composed and calculated by S&P without regard to the Fund. S&P has no obligation
to take the needs of the Fund or the owners of shares of the Fund into
consideration in determining, composing or calculating the S&P 500 Index. S&P is
not responsible for and has not participated in the determination of the prices
and amount of the Fund or the timing of the issuance of sale of shares of the
Fund. S&P has no obligation or liability in connection with the administration,
marketing or trading of the Fund.
-1-
<PAGE>
S&P does not guarantee the accuracy and/or the completeness of the S&P 500
Index or any data included therein and S&P shall have no liability for any
errors, omissions, or interruptions therein. S&P makes no warranty, express or
implied, as to results to be obtained by the Fund, owners of shares of the Fund,
or any other person or entity from the use of the S&P 500 Index or any data
included therein. S&P makes no express or implied warranties, and expressly
disclaims all warranties of merchantability or fitness for a particular purpose
or use with respect to the S&P 500 Index or any data included therein. Without
limiting any of the foregoing, in no event shall S&P have any liability for any
special, punitive, indirect, or consequential damages (including lost profits),
even if notified of the possibility of such damages.
Money Market Securities. The Fund may invest in various money market securities
for cash management purposes, which among others may include commercial paper,
bank obligations, corporate debt securities, certificates of deposit, U.S.
Government securities and repurchase agreements. Such securities include:
U.S. Government Securities. Obligations issued or guaranteed as to
principal and interest by the United States or its agencies or its
instrumentalities, including Treasury bills, notes and bonds;
Bank Obligations. Obligations (including certificates of deposit, time
deposits and bankers' acceptances) of banks subject to regulation by the U.S.
Government and instruments secured by such obligations;
Fully Insured Certificates of Deposit. Certificates of deposit of banks and
savings institutions, having total assets of less than $1 billion, if the
principal amount of the obligation is federally insured by the Bank Insurance
Fund or the Savings Association Insurance Fund (each of which is administered by
the FDIC), limited to $100,000 principal amount per certificate and to 15% or
less of the Fund's total assets in all such obligations and in all illiquid
assets, in the aggregate;
Commercial Paper. Commercial paper rated within the two highest grades by
Standard and Poor's Corporation ("S&P") or the highest grade by Moody's
Investors Service, Inc. ("Moody's"), or if not rated, issued by a company having
an outstanding debt issue rated at least AAA by S&P or Aaa by Moody's; and
Repurchase Agreements. When cash may be available for only a few days, it
may be invested by the Fund in repurchase agreements until such time as it may
otherwise be invested or used for payments of obligations of the Fund. These
agreements, which may be viewed as a type of secured lending by the Fund,
typically involve the acquisition by the Fund of debt securities from a selling
financial institution such as a bank, savings and loan association or
broker-dealer. The agreement provides that the Fund will sell back to the
institution, and that the institution will repurchase, the underlying security
serving as collateral at a specific price and at a fixed time in the future,
usually not more than seven days form the date of purchase. The collateral will
be marked-to-market daily to determine that the value of the collateral, as
specified in the agreement, does not decrease below the purchase price plus
accrued interest. If such decrease occurs, additional collateral will be
requested and, when received, added to the account to maintain full
collateralization. The Fund will accrue interest from the institution until the
time when the repurchase is to occur. Although this date is deemed by the Fund
to be the maturity date of a repurchase agreement, the maturities of securities
subject to repurchase agreements are not subject to any limits.
Repurchase agreements involve certain risks not associated with direct
investments in debt securities. As described above, the value of the collateral
underlying the repurchase agreement will be at least equal to the repurchase
price, including any accrued interest earned in the repurchase agreement. In the
event of a default or bankruptcy by a selling financial institution, the fund
will seek to liquidate such collateral. However, the exercising of the Fund's
right to liquidate such collateral could involve certain costs or delays and, to
the extent that proceeds from any sale upon a default of the obligation to
-2-
<PAGE>
repurchase were less than the repurchase agreements that do not mature within
seven days if any such investment, together with any other illiquid assets held
by the Fund, amounts to more than 15% of its total assets.
Zero Coupon Treasury Securities. A portion of the U.S. Government securities
purchased by the Fund may be "zero coupon" Treasury securities. These are U.S.
Treasury bills, notes and bonds which have been stripped of their unmatured
interest coupons and receipts or which are certificates representing interests
in such stripped debt obligations and coupons. Such securities are purchased at
a discount from their face amount, giving the purchaser the right to receive
their full value at maturity. A zero coupon security pays no interest to its
holder during its life. Its value to an investor consists of the difference
between its face value at the time of maturity and the price for which it was
acquired, which is generally an amount significantly less than its face value.
The interest earned on such securities is, implicitly, automatically
compounded and paid out at maturity. While such compounding at a constant rate
eliminates the risk of receiving lower yields upon reinvestment of interest if
prevailing interest rates decline, the owner of a zero coupon security will be
unable to participate in higher yields upon reinvestment of interest received if
prevailing interest rates rise. For this reason, zero coupon securities are
subject to substantially greater market price fluctuations during periods of
changing prevailing interest rates than are comparable debt securities which
make current distributions of interest. Current federal tax law requires that a
holder (such as the Fund) of a zero coupon security accrue a portion of the
discount at which the security was purchased as income each year even though the
Fund receives no interest payments in cash on the security during the year.
Lending Portfolio Securities. The Fund may lend its portfolio securities to
brokers, dealers and other financial institutions, provided that the loans are
callable at any time by the Fund, and are at all times secured by cash or cash
equivalents, which are maintained in a segregated account pursuant to applicable
regulations and that are equal to at least 100% of the market value, determined
daily, of the loaned securities. The advantage of these loans is that the Fund
continues to receive the income on the loaned securities while at the same time
earning interest on the cash amounts deposited as collateral, which will be
invested in short-term obligations. The Fund will not lend more than 20% of the
value of its total assets.
A loan may be terminated by the Fund on five business days' notice. If the
borrower fails to deliver the loaned securities after receipt of notice, the
Fund could use the collateral to replace the securities while holding the
borrower liable for any excess of replacement cost over collateral. As with any
extensions of credit, there are risks of delay in recovery and, in some cases,
even loss of rights in the collateral should be borrower of the securities fail
financially. However, these loans of portfolio securities will only be made to
firms deemed by the Fund's management to be creditworthy and when the income
which can be earned from such loans justified the attendant risks. Upon
termination of the loan, the borrower is required to return the securities to
the Fund. Any gain or loss in the market price during the loan period would
inure to the Fund.
In connection with lending securities, the Fund may pay reasonable finders,
administrative and custodial fees. No such fees will be paid to any person if it
or any of its affiliates is affiliated with the Fund, the Investment Manager or
the Sub-Adviser.
Standard & Poor's Depositary Receipts. The Fund may invest in Standard &
Poor's Depository Receipts ("SPDRs") which are securities that are designed to
track the S&P 500 Index. SPDRs represent ownership interest in the SPDR Trust,
which holds a portfolio of common stocks that closely tracks the price
performance and dividend yield of the S&P 500 Index. SPDRs trade on the American
Stock Exchange like shares of common stock. SPDRs have many of the same risks as
direct investments in common stocks.
The market value of SPDRs is expected to rise and fall as the S&P 500 Index
rises and falls. If the Fund invests in SPDRs, it would, in addition to its own
expenses, indirectly bear its ratable share of the SPDR's expenses.
Investment in Real Estate Investment Trusts. The Fund may invest in real estate
investment trusts, which pool investors' funds for investments primarily in
commercial real estate properties. Investment in real estate investment trusts
may be the most practical available means for the Fund to invest in the real
estate industry (the Fund is prohibited from investing in real estate directly).
As a shareholder in a real estate investment Trust, the Fund would bear its
ratable share of the real estate investment trust's expenses, including its
advisory and administration fees. At the same time the Fund would continue to
pay its own investment management fees and other expenses, as a result of which
the Fund and its shareholders in effect will be absorbing duplicate levels of
fees with respect to investments in real estate investment trusts.
-3-
<PAGE>
When-Issued and Delayed Delivery Securities and Forward Commitments. From
time to time the Fund may purchase securities on a when-issued or delayed
delivery basis or may purchase or sell securities on a forward commitment basis.
When these transactions are negotiated, the price is fixed at the time of the
commitment, but delivery and payment can take place a month or more after the
date of commitment. While the Fund will only purchase securities on a
when-issued, delayed delivery or forward commitment basis with the intention of
acquiring the securities, the Fund may sell the securities before the settlement
date, if it is deemed advisable. The securities so purchased or sold are subject
to market fluctuation and no interest or dividends accrue to the purchaser prior
to the settlement date.
At the time the Fund makes the commitment to purchase or sell securities on
a when-issued, delayed delivery or forward commitment basis, it will record the
transaction and thereafter reflect the value, each day, of such security
purchased, or if a sale, the proceeds to be received, in determining its net
value asset. At the time of delivery of the securities, their value may be more
or less than the purchase or sale price. An increase in the percentage of the
Fund's assets committed to the purchase of securities on a when-issued, delayed
delivery or forward commitment basis may increase the volatility of its net
asset value. The Fund will also establish a segregated account on the Fund's
books in which it will continually maintain cash or cash equivalents or other
liquid portfolio securities equal in value to commitments to purchase securities
on a when-issued, delayed delivery or forward commitment basis.
When, As and If Issued Securities. The Fund may purchase securities on a "when,
as and if issued" basis under which the issuance of the security depends upon
the occurrence of a subsequent event, such as approval of a merger, corporate
reorganization or debt restructuring. The commitment for the purchase of any
such security will not be recognized in the portfolio of the Fund until the
Investment Manager determines that issuance of the security is probable. At that
time, the Fund will record the transaction and, in determining its net asset
value, will reflect the value of the security daily. At that time, the Fund will
also establish a segregated account on the Fund's books in which it will
maintain cash or cash equivalents or other liquid portfolio securities equal in
value to recognized commitments for such securities.
The value of the Fund's commitments to purchase the securities of any one
issuer, together with the value of all securities of such issuer owned by the
Fund, may not exceed 5% of the value of the Fund's total assets at the time the
initial commitment to purchase such securities is made. An increase in the
percentage of the Fund's assets committed to the purchase of securities on a
"when, as and if issued" basis may increase the volatility of its net asset
value. The Fund may also sell securities on a "when, as and if issued" basis
provided that the issuance of the security will result automatically from the
exchange or conversion of a security owned by the Fund at the time of sale.
The Year 2000 Problem. Many of the services provided to the Fund depend on
the smooth functioning of computer systems. Many systems in use today cannot
distinguish between the year 1900 and the year 2000 unless their hardware and
software have been properly remediated. Should any of the computer systems of
the Fund's material service providers fail to process information properly, this
could have an adverse impact on the Fund's operations and services provided to
shareholders. The Fund's sponsor, DEVCAP Non-Profit, has taken measures it
believes are reasonably designed to address the Year 2000 Problem. However,
there can be no assurance that the problem has been corrected in all respects
and that the Fund's operations and services provided to shareholders will not be
adversely affected, nor can there be any assurance that the Year 2000 Problem
will not have an adverse effect on the entities whose securities are held by the
Fund or on domestic or global equity markets or economies, generally.
-4-
<PAGE>
3. FUND POLICIES/INVESTMENT RESTRICTIONS
Fundamental Investment Restrictions
The Trust (on behalf of the Fund) has adopted the following policies which
may not be changed without approval by holders of a "majority of the outstanding
shares" of the Fund which, as used in this Statement of Additional Information,
means the vote of the lesser of (i) 67% or more of the outstanding "voting
securities" of the Fund, respectively, present at a meeting, if the holders of
more than 50% of the outstanding "voting securities" of the Fund are present or
represented by proxy, or (ii) more than 50% of the outstanding "voting
securities" of the Fund. The term "voting securities" as used in this paragraph
has the same meaning as in the Investment Company Act of 1940, as amended (the
"1940 Act").
The Fund may not:
(1) borrow money, except that as a temporary measure for extraordinary
or emergency purposes the Fund may borrow an amount not to exceed 1/3 of the
current value of the net assets of the Fund, including the amount borrowed
(moreover, the Fund may not purchase any securities at any time at which
borrowings exceed 5% of the total assets of the Fund, taken at market value) (it
is intended that the Fund would borrow money only from banks and only to
accommodate requests for the withdrawal of all or a portion of a beneficial
interest in the Fund while effecting an orderly liquidation of securities);
(2) purchase any security on margin except for short-term loans as may
be necessary for the clearance of purchases and sales of portfolio securities;
(3) write, purchase, or sell puts, calls, warrants or options or any
combination thereof, provided that this shall not prevent the Fund from
investing in debt or other securities which have warrants attached (not to
exceed 10% of the value of the Fund's total assets);
(4) underwrite securities issued by other persons, except insofar as
the Fund may technically be deemed an underwriter under the Securities Act of
1933 in selling a security;
(5) make loans to other persons except (a) through the lending of
securities held by the Fund and provided that any such loans not exceed 30% of
its total assets (taken at market value), or (b) through the use of repurchase
agreements or the purchase of short-term obligations;
-5-
<PAGE>
(6) invest more than 15% of its net assets in "illiquid
securities" (securities for which market quotations are not readily available,
restricted securities and repurchase agreements which have a maturity of longer
than seven days;
(7) purchase or sell real estate (including limited partnership
interests but excluding securities secured by real estate or interests therein),
interests in oil, gas or mineral leases, commodities or commodity contracts in
the ordinary course of business (the Fund reserves the freedom of action to hold
and to sell real estate acquired as a result of the ownership of securities by
the Fund);
(8) make short sales of securities or maintain a short position unless
at all times when a short position is open the Fund owns an equal amount of such
securities or securities convertible into or exchangeable, without payment of
any further consideration, for securities of the same issue as, and equal in
amount to, the securities sold short, and unless not more than 5% of the Fund's
net assets (taken at market value) is held as collateral for such sales at any
one time;
(9) issue any senior security (as that term is defined in the 1940
Act) if such issuance is specifically prohibited by the 1940 Act or the rules
and regulations promulgated thereunder, except as appropriate to evidence a debt
incurred without violating paragraph (1) above;
(10) as to 75% of its total assets, purchase securities of any issuer
if such purchase at the time thereof would cause more than 5% of the Fund's
total assets (taken at market value) to be invested in the securities of such
issuer (other than securities or obligations issued or guaranteed by the United
States or any agency or instrumentality of the United States);
(11) invest more than 25% of its total assets in securities of issuers
in any one industry.
Non-Fundamental Restrictions
In order to comply with certain federal statutes and regulatory
policies, the Fund will not as a matter of operating policy:
purchase puts, calls, straddles, spreads and any combination
thereof if the value of its aggregate investment in such
securities will exceed 5% of the Fund's total assets at the
time of such purchase.
This restriction is not fundamental and may be changed by the Fund
without approval of the Fund's shareholders. The Fund will comply with state
securities laws and regulations of all states in which it is registered.
Percentage Restrictions
If a percentage restriction or rating restriction on investment or
utilization of assets set forth above or referred to in the Prospectus is
adhered to at the time an investment is made or assets are so utilized, a later
change in percentage resulting from changes in the value of the securities held
by the Fund or a later change in the rating of a security held by the Fund will
not be considered a violation of policy; provided that if at any time the ratio
of borrowings of the Fund to the net asset value of the Fund exceeds the ratio
permitted by Section 18(f) of the 1940 Act, the Fund will take the corrective
action required by Section 18(f).
-6-
<PAGE>
4. PERFORMANCE INFORMATION
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Performance."
For purposes of quoting and comparing the performance of the Fund to
that of other mutual funds and to stock or other relevant indices in
advertisements or in reports to shareholders, performance may be stated in terms
of total return. Under the rules of the Securities and Exchange Commission, a
fund's advertising performance must include total return quotes calculated
according to the following formula:
P(1 + T)n = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years (1, 5 or 10)
ERV = ending redeemable value at the end of
the 1, 5 or 10 year periods (or
fractional portion thereof) of a
hypothetical $1,000 payment made at the
beginning of the 1, 5 or 10 year periods.
Under the foregoing formula, the time periods used in advertising will
be based on rolling calendar quarters, updated to the last day of the most
recent quarter prior to submission of the advertisement for publication, and
will cover one, five and ten year periods or a shorter period dating from the
effectiveness of the Fund's registration statement. Total return, or "T" in the
formula above, is computed by finding the average annual compounded rates of
return over the one, five and ten year periods (or fractional portion thereof)
that would equate the initial amount invested to the ending redeemable value.
The Fund may also from time to time include in such advertising an aggregate
total return figure or a total return figure that is not calculated according to
the formula set forth above in order to compare more accurately the Fund's
performance with other measures of investment return. For example, in comparing
the Fund's total return with data published by Lipper, Inc., CDA Investment
Technologies, Inc. or Weisenberger Investment Company Service, or with the
performance of the Standard & Poor's 500 Stock Index or the Dow Jones Industrial
Average, as appropriate, the Fund may calculate its aggregate and/or average
annual total return for the specified periods of time by assuming the investment
of $1,000 in Fund shares and assuming the reinvestment of each dividend or other
distribution at net asset value on the reinvestment date. Such alternative total
return information will be given no greater prominence in such advertising than
the information prescribed under the rules of the Securities and Exchange
Commission, and all advertisements containing performance data will include a
legend disclosing that such performance data represent past performance and that
the investment return and principal value of an investment will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than their
original cost.
The table that follows sets forth the Fund's historical average annual
total return information for the periods indicated:
-7-
<PAGE>
Average Annual Total Returns
For periods ending July 31, 1999 Past 1 year Past 5 years Life of Fund(1)
- -------------------------------- ----------- ------------ ------------
DEVCAP Shared Return Fund 21.03% n/a 25.67%
(1) The Fund commenced operations on October 19, 1995.
5. DETERMINATION OF NET ASSET VALUE;
VALUATION OF PORTFOLIO SECURITIES
The net asset value of each share of the Fund is determined each day on
which the NYSE is open for trading ("Fund Business Day"). (As of the date of
this Statement of Additional Information, the NYSE is open for trading every
weekday except for the following holidays: New Year's Day, Martin Luther King,
Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day). This determination of net asset value
of shares of the Fund is made once during each such day as of the close of the
NYSE by dividing the value of the Fund's net assets (i.e., the value of its
securities and other assets less its liabilities, including expenses payable or
accrued) by the number of shares outstanding at the time the determination is
made. Purchases and redemptions will be effected at the time of determination of
net asset value next following the receipt of any purchase or redemption order
deemed to be in good order. See the "Buying and Selling Shares" section in the
Prospectus.
Equity securities held by the Fund are valued at the last quoted sales
price on the exchange on which they are primarily traded or on the NASDAQ system
for unlisted national market issues, or at the mean of the bid and asked prices
for securities in which there were no sales during the day or for unlisted
securities not reported on the NASDAQ system. Short-term obligations with
remaining maturities of less than sixty days are valued at amortized cost, which
constitutes fair value as determined by the Board of Trustees. Fund securities
(other than short-term obligations with remaining maturities of less than sixty
days) for which there are no such quotations or valuations are valued at fair
value as determined in good faith by or at the direction of the Fund's Board of
Trustees.
A determination of value used in calculating net asset value must be a fair
value determination made in good faith utilizing procedures approved by the
Fund's Board of Trustees. While no single standard for determining fair value
exists, as a general rule, the current fair value of a security would appear to
be the amount which the Fund could expect to receive upon its current sale.
Some, but not necessarily all, of the general factors which may be considered in
determining fair value include: (i) the fundamental analytical data relating to
the investment; (ii) the nature and duration of restrictions on disposition of
the securities; and (iii) an evaluation of the forces which influence the market
in which these securities are purchased and sold. Without limiting or including
all of the specific factors which may be considered in determining fair value,
some of the specific factors include: type of security, financial statements of
the issuer, cost at date of purchase, size of holding, discount from market
value, value of unrestricted securities of the same class at the time of
purchase, special reports prepared by analysts, information as to any
transactions or offers with respect to the security, existence of merger
proposals or tender offers affecting the security, price and extent of public
trading in similar securities of the issuer or comparable companies, and other
relevant matters.
Interest income on short-term obligations held by the Fund is determined on
the basis of interest accrued less amortization of premium.
-8-
<PAGE>
6. MANAGEMENT OF THE TRUST
The Trustees and officers of the Trust and their principal occupations
during the past five years are set forth below. Their titles may have varied
during that period. Asterisks indicate those Trustees and officers who are
"interested persons" (as defined in the 1940 Act) of the Trust. Unless otherwise
indicated below, the address of the Trust is DEVCAP Shared Return Fund, 209 West
Fayette Street, Baltimore, Maryland 21201.
Trustees of the Trust
STEPHEN D. CASHIN (42) -- Trustee of the Trust; Currently Managing Director
of Modern Africa Fund Managers LLC, Vice President (Corporate Finance), Equator
Bank (from 1993 to March, 1997); Vice President (East Africa Representative),
Equator Bank (prior to 1993).
GILBERT H. CRAWFORD* (42) -- Trustee of the Trust; Executive Director,
Microcap, LLC (since October 1999); Treasurer, Joseph House (since September
1997) Alternate Director, PROFUND (since September, 1995); President of
Development Capital Fund (November, 1992 to June 1997); Executive Director, Seed
Capital Development Fund, Ltd. (since September, 1991);
DONALD CARCIERI (58) -- Trustee of the Trust; President and Chief Executive
Officer, Cookson America, Inc. (1983-1997); Director, Catholic Relief Services
Corporate Leadership Council (since 1996).
EDWARD J. VEILLEUX (56) - Trustee of the Trust; Principal, BT Alex Brown;
Executive Vice President and Chief Administrative Officer, Investment Company
Capital Corp. (Registered Investment Adviser and Registered Transfer Agent
subsidiary of Alex Brown) (1984 to present).
TIMOTHY J. JOYCE (52) - Trustee of the Trust; Counsel, Bleakley Platt &
Schmidt (1994 to present); Director of Special Programs, Catholic Relief
Services (1985-1992); Director, Vice President, Associate General Counsel, Joyce
Beverages, Inc. (1979-1984).
DONALD S. HOUSTON (45) - Trustee of the Trust; Vice President, Sales,
Plantronics, Inc. (manufacturer of telephony headsets) (1996 to present); Vice
President, Sales, Proxima Corporation (manufacturer of desktop projection
products for personal computers) (1995-1996); Vice President, Sales, Service and
Marketing, Director of Sales, Sales Manager, CalComp Inc. (1985-1995).
Officers of the Trust
JOSEPH ST. CLAIR (54) -- President of the Trust (since September 1997);
President of Development Capital Fund (since June 1997); Director of Development
Capital Fund (since December 1994); Director of Internal Audit, Catholic Relief
Services (since May 1993); Departmental Vice-President, Alex. Brown Incorporated
(prior to 1993).
JAMES R. ARNOLD (42) -- Assistant Secretary of the Trust (since December
1997); Senior Administration Services Manager, Sunstone Financial Group, Inc.
(since January, 1997); Secretary and Treasurer, The Primary Trend Fund, Inc.
(since September, 1986) and The Primary Income Funds, Inc. (since September,
1989); Vice President, Arnold Investment Counsel, Inc. (prior to January, 1997).
As of Feburary 1, 2000, the following shareholders of record owned 5% or
more of the outstanding shares of the Fund: Catholic Relief Services -- 60.07%.
As of the same date, the officers and Trustees of the Trust as a group owned
less than 1% of the Fund's outstanding shares.
-9-
<PAGE>
Trustee Compensation
The Trustees of the Trust receive no compensation for serving as trustees
of the Trust. The Trustees of the Trust are reimbursed for expenses incurred in
connection with service as a trustee. The following tables provide information
related to compensation and benefits paid to the Trustees for the fiscal year
ended July 31, 1999.
<TABLE>
<CAPTION>
Estimated Compensation
Aggregate Pension or
Compensation Estimated Total Retirement
from the Trust For from the Trust Benefits Estimated
the Fiscal Year for the Fiscal Accrued as Part Annual Benefits
Ended July 31, Year Ended of upon
1999 July 31, 1999 Fund Expenses Retirement
------------------ -------------- --------------- ----------------
<S> <C> <C> <C> <C>
Stephen D. Cashin None None None None
Gilbert H. Crawford None None None None
Donald Carcieri None None None None
Edward Veilleux** None None None None
Timothy J. Joyce** None None None None
Donald S. Houston** None None None None
**Elected by shareholders of the Fund on February 17, 2000.
</TABLE>
Investment Manager and Sub-Adviser
The Investment Manager -- Christian Brothers Investment Services, Inc.
("CBIS") -- provides investment advice to the Fund pursuant to a management
agreement (the "Management Agreement"), dated February 22, 2000. Pursuant to the
Management Agreement, CBIS shall assist the officers of the Trust in the
performance of the following services: (1) prepare reports relating to the
business and affairs of the Fund as may be mutually agreed upon and not
otherwise appropriately prepared by the Fund's custodian, legal counsel or
auditors; (2) make such reports and recommendations to the Board of Trustees
concerning the performance of the independent auditors as the Board may
reasonably request or deem appropriate; (3) make such reports and
recommendations to the Board concerning the performance and fees of the Fund's
custodian and transfer and disbursing agent as the Board may reasonably request
or deem appropriate; (4) provide such assistance to the custodian and the
Trust's legal counsel and auditors as generally may be required to properly
carry on the business and operations of the Fund; (5) refer to the Trust's
officers or transfer agent, shareholder inquiries relating to the Fund; (6)
employ or provide and compensate the CBIS executive, administrative, secretarial
and clerical personnel necessary to supervise the provision of the services set
forth in the Management Agreement, and bear the expense of providing such
services, except as may otherwise be provided in the Agreement; and (7)
supervise the general management and investment of the Fund's assets and
securities portfolios subject to and in accordance with the investment
objectives and policies of the Fund and any directions which the Trustees may
issue to the Investment Manager from time to time. The Investment Manager
furnishes at its own expense all facilities and personnel necessary in
connection with providing these services.
In addition, pursuant to the Management Agreement, CBIS shall make
available its officers and employees to the Trustees and officers of the Fund
for consultation and discussions regarding the administration and management of
the Fund and its investment activities and adopt written code of ethics
complying with the requirements of Rule 17j-l under the 1940 Act.
-10-
<PAGE>
For the services provided to the Fund, the Fund will pay CBIS a fee
computed daily and payable monthly equal on an annual basis to 0.25% of the
Fund's average daily net assets. In addition to the annual management fee, the
Fund shall reimburse the CBIS for all out-of-pocket expenses incurred by CBIS
for attendance at any meeting outside of the New York metropolitan area in
connection with its activities as Investment Manager to the Fund.
The Investment Manager may from time to time agree not to impose all or a
portion of its fee otherwise payable hereunder (in advance of the time such fee
or portion thereof would otherwise accrue) and/or undertake to pay or reimburse
the Fund for all or a portion of its expenses not otherwise required to be borne
or reimbursed by the Investment Manager. Any such fee reduction or undertaking
may be discontinued or modified by CBIS at any time.
It is understood that the Fund will pay all its expenses other than those
expressly assumed by the Investment Manager in the Management Agreement. The
expenses payable by the Fund shall include: (1) fees and expenses of the
Investment Manager; (2) auditing and accounting fees and expenses; (3) fees and
expenses for transfer agent, registrar, dividend disbursing agent and
shareholder record keeping services (including reasonable fees and expenses
payable to the Investment Manager for such services); (4) fees and expenses of
the custodian of the Trust's assets, including expenses incurred in performing
fund accounting and record keeping services provided by the custodian; (5)
expenses of obtaining quotations for calculating the value of the Fund's net
assets; (6) salaries and other compensation of any of its executive officers and
employees who are not officers, directors, stockholders or employees of the
Investment Manager or any of its affiliates; (7) faxes and governmental fees
levied against the Fund and the expenses of preparing tax returns and reports;
(8) brokerage fees and commissions in connection with the purchase and sale of
portfolio securities for the Fund; (9) organizational expenses; (10) costs,
including the interest expense, of borrowing money; (11) costs and/or fees
incident to Trustee and shareholder meetings of the Fund, the preparation and
mailings of proxy material, prospectuses and reports of the Fund to its
shareholders, the filing of reports with regulatory bodies, the maintenance of
the Fund's legal existence, membership dues and fees of investment company
industry trade associations, and the registration of shares with federal and
state securities authorities; (12) legal fees and expenses (including reasonable
fees for legal services rendered by the Investment Manager or its affiliates),
including the legal fees related to the registration and continued qualification
of the Fund's shares for sale (and of maintaining the registration of the fund);
(13) costs of printing stock certificates, if any, representing shares of the
Fund or any other expenses, including clerical expenses of issue, redemption, or
repurchase of shares of the Fund; (14) trustees' fees and expenses of Trustees
who are not directors, officers, employees or stockholders of the Investment
Manager of any of its affiliates; (15) its pro rata portion of the fidelity bond
required by Section 17(g) of the 1940 Act, or other insurance premiums; (16)
fees payable to federal and state authorities in connection with the
registration of the Fund's Shares; and (17) litigation and indemnification
expenses and other extraordinary expenses not incurred in the ordinary course of
the business of the Fund or the Trust.
Under the terms of an agreement, dated November 29, 1999, the Fund's
sponsor, DEVCAP NonProfit, has agreed to reimburse the Fund for all expenses
(excluding brokerage fees and commissions, interest, taxes and other
extraordinary expenses) in excess of 1.75% of the Fund's average daily net
assets until November 29, 2000.
Prior to February 22, 2000, the Fund's assets were invested in a portfolio
that was managed by Domini Social Investments, LLC ("DSIL"). DSIL had managed
the portfolio's assets since October, 1997. DSIL received an annual management
fee of 0.20% of the portfolio's average daily net assets for the services and
facilities furnished to the portfolio. The portfolio's investment management
agreement describes the management fee, which is accrued daily and paid monthly,
and other expenses that the portfolio must pay. For the fiscal year ended July
31, 1999, DSIL received management fees under the management agreement in the
amount of $1,901,529 ($1,791,617 net of waivers). For the fiscal period October
22, 1997 to July 31, 1998, DSIL received management fees under a management
agreement in the amount of $701,774.
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Prior to October 22, 1997, Kinder, Lydenberg, Domini & Co. ("KLD") served
as investment adviser to the portfolio in which the Fund invested its assets.
KLD furnished at its own expense all facilities and personnel necessary in
connection with providing these services. For its services under its investment
advisory agreement with the portfolio, KLD was entitled to receive from the
portfolio a fee accrued daily and paid monthly at an annual rate equal to 0.025%
of the portfolio's average daily net assets. For the fiscal year ended July 31,
1997, KLD received advisory fees of $46,528. For the fiscal period July 31, 1997
to October 22, 1997 KLD received advisory fees of $17,385.
The Management Agreement provides that the Investment Manager may render
services to others. CBIS may employ, at its own expense or may request that the
Fund employ (subject to the requirements of the 1940 Act) one or more
sub-advisors, subject to CBIS's supervision. The Management Agreement shall
remain in effect, provided its continuance is specifically approved at least
annually (i) by the vote of a majority of the Trustees of the Fund who are not "
interested persons" of the Fund or of CBIS at a meeting specifically called for
the purpose of voting on such approval, and (ii) by the Board of Trustees of the
Fund or by vote of a majority of the outstanding voting securities of the Fund.
The Management Agreement also provides that it may be terminated without penalty
on not more than 60 days' nor less than 30 days' written notice by the Fund when
authorized either by majority vote of the Fund or by a vote of a majority of its
Board of Trustees, or by the Investment Manager, and will automatically
terminate in the event of its assignment. The Management Agreement provides that
neither the Investment Manager nor its personnel shall be liable for any error
of judgment or mistake of law or for any loss arising out of any investment or
for any act or omission in its services to the Fund, except for willful
misfeasance, bad faith or gross negligence or reckless disregard of its or their
obligations and duties under the Management Agreement.
CBIS is a corporation organized under the laws of the State of Illinois
that is owned by the Districts of the U.S. Region of the Brothers of the
Christian Schools. The principal executive officer and directors of CBIS and
their principal occupations are respectively as follows: Michael W. O'Hern,
President and Chief Executive Officer and Director; Neal J. Berkowitz, Vice
President and Chief Financial Officer, David L. Skelding, Vice President and
General Counsel, Francis G. Coleman, Vice President - Socially Responsible
Investing, Peter F. Clifford, Clarence Fioke, Joseph M. Saurbier, John P.
Gilhooly, David E. Brennan, Timothy J. Froehlich, Damian Steger, Robert Evans,
Raoul L. Carroll and Karen L. Maguire, Directors of CBIS. The business address
of the foregoing directors and officers is 675 Third Avenue, 31st Fl., New York,
NY 10017-5704.
RhumbLine serves as Sub-Adviser to the Fund pursuant to the Investment
Sub-Advisory Agreement (the "Sub-Advisory Agreement"). The Sub-Adviser furnishes
at its own expense all services, facilities and personnel necessary in
connection with managing the Fund's investments and effecting securities
transactions for the Fund. The Sub-Advisory Agreement will continue in effect if
such continuance is specifically approved at least annually by the Trust's Board
of Trustees or by a majority of the outstanding voting securities in the Fund at
a meeting called for the purpose of voting on the Sub-Advisory Agreement, and,
in either case, by a majority of the Trust's Trustees who are not parties to the
Sub-Advisory Agreement or interested persons of any such party at a meeting
called for the purpose of voting on the Sub-Advisory Agreement.
The Sub-Advisory Agreement uses fee "breakpoints" so that the sub-advisory
fee decreases over time as RhumbLine's assets under management on behalf of CBIS
clients (including the Fund) increase. The sub-advisory fee under the
Sub-Advisory Agreement is calculated as a percentage of the aggregate amount of
assets managed by RhumbLine as sub-adviser to CBIS clients (including the Fund)
pursuant to any agreement between CBIS and RhumbLine. For the services provided
to CBIS under the Sub-Advisory Agreement, CBIS will pay to the Sub-Adviser an
annual fee computed quarterly as follows.
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Aggregate amount of assets managed by
RhumbLine, as sub-adviser for all CBIS
clients (including the Fund) under any
agreement between CBIS and RhumbLine Sub-Advisory Fee
-------------------------------------- ----------------
First $25 million .07%
Next $25 million .06%
Next $50 million .05%
Next $50 million .04%
Over $150 million .0375%
The Sub-Adviser shall furnish to CBIS a statement for the aggregate fee
payable under the Sub-Advisory Agreement and any other sub-advisory agreement by
and between CBIS and the Sub-Adviser for each quarter during which services are
performed by the Sub-Adviser prior to the end of such quarter. Such statement
shall include the value of the aggregate assets that determines the applicable
rate at which such fee is payable and show the calculation by which such fee is
determined.
The sub-advisory fee under the Sub-Advisory Agreement will equal 0.07% of
the aggregate amount of assets managed by RhumbLine as sub-adviser for CBIS
clients (including the Fund) pursuant to any agreement between CBIS and
RhumbLine.
The Sub-Advisory Agreement provides that the Sub-Adviser may render
services to others. The Sub-Advisory Agreement is terminable without penalty
upon 60 days' written notice by the Fund when authorized either by majority of
the outstanding voting securities in the Fund or by a vote of the majority of
its Board of Trustees, or by the Investment Manager, with the consent of the
Trustees and may be terminated by the Sub-Adviser on not less than 90 days'
written notice to the Investment Manager and the Trustees, and will
automatically terminate in the event of its assignment.
The Sub-Advisory Agreement provides that the Sub-Adviser shall not be
liable for any action taken by it in good faith, and believed by it in its
reasonable judgment to be authorized by the Sub-Advisory Agreement, except for
willful misfeasance, bad faith or gross negligence or reckless disregard of its
obligations and duties under the Sub-Advisory Agreement.
Prior to February 22, 2000, Mellon Equity Associates ("Mellon Equity")
provided investment sub-advisory services to the portfolio in which the Fund
invested its assets pursuant to a sub-advisory agreement with DSIL. For the
fiscal year ended July 31, 1999, Mellon Equity received sub-advisory fees in the
amount of $950,708. Prior to October 22, 1997, Mellon Equity served as
investment manager and managed the assets of the portfolio on a daily basis. For
the fiscal year ended July 31, 1998, Mellon Equity received $86,354 in
management fees. For the fiscal year ended July 31,1997, Mellon Equity received
$182,885 in management fees.
Administrator
Sunstone Financial Group, Inc., -- 207 East Buffalo Street, Suite 400,
Milwaukee, Wisconsin 53202-5712, serves as the Administrator to the Trust
pursuant to an Administration and Fund Accounting Agreement, dated February 22,
2000. The Administrator provides administration and fund accounting services,
including the provision of office space, the preparation of tax returns and
financial statements, calculations of the Fund's net asset value, the
maintenance of the Fund's general ledger accounts and other clerical,
compliance, regulatory and administrative services. The Administrator may also
provide persons satisfactory to the Board of Trustees of the Trust to serve as
officers of the Trust. Such officers, may be directors, officers or employees of
the Administrator or its affiliates. For administrative and fund accounting
services, the Fund pays the Administrator a fee, computed daily and payable
monthly, based on the Fund's average daily net assets at the annual rate of
0.20% of the first $50,000,000 of average daily net assets, 0.10% on the next
$50,000,000 of average daily net assets, 0.07% on the next $150,000,000 of
average daily net assets, 0.05% on the next $250,000,000 of average daily net
assets and 0.03% on average daily net assets in excess of $500,000,000, subject
to a current minimum annual fee of $65,000.
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The Administration and Fund Accounting Agreement provides that Sunstone
may render administrative and fund accounting services to others. The
Administration and Fund Accounting Agreement also provides that neither the
Administrator nor its personnel shall be liable for any error of judgment or
mistake of law or for any act or omission in the administration or management of
the Trust, except for willful misfeasance, bad faith or gross negligence in the
performance of its or their duties or by reason of reckless disregard of its or
their obligations and duties under the Administration and Fund Accounting
Agreement.
Prior to February 22, 2000, Sunstone provided administrative services, but
not fund accounting services, to the Trust pursuant to an administrative
services agreement.
For the fiscal period November 4, 1997 through July 31, 1998 and the fiscal
year ended July 31, 1999 Sunstone received $17,192 and $27,807, respectively, in
administrative fees from the Trust. Prior to November 4, 1997, Signature
Broker-Dealer Services, Inc. ("Signature") served as the Trust's Administrator.
For the fiscal year ended July 31, 1997 and the fiscal period August 1, 1997 to
November 4, 1997 Signature received $156,868 and $17,385, respectively, in
administrative fees from the Trust.
In addition to services provided to the Trust, Sunstone and its affiliates
provide administration, transfer agent and/or distribution services to 26 fund
families representing over $29 billion in assets. The Fund may from time to time
enter into agreements with various banks, trust companies, broker-dealers or
other financial organizations to provide administrative services for the Fund,
such as maintaining shareholder accounts and records.
Fund Sponsor
The sponsor of the Fund is DEVCAP Non-Profit. DEVCAP Non-Profit is a
non-profit, tax-exempt 501(c)(3) corporation that functions as a joint venture
with another non-profit organization, Catholic Relief Services, Inc. ("CRS").
DEVCAP Non-Profit was created in 1992 in order to provide fund-raising and other
support to non-profit organizations dedicated to supporting micro-enterprise and
other economic development programs in developing countries. Micro-enterprise
development programs assist underprivileged people by providing direct financing
and technical support, which would otherwise be unavailable through normal
business channels, for their business enterprises.
Each year, DEVCAP Non-Profit will direct the shareholder contributions
made pursuant to the Fund's Charitable Contribution Program to CRS and other
non-profit organizations. Shareholder contributions are generally allocated by
agreement between DEVCAP Non-Profit and CRS. CRS was founded by the Catholic
Bishops of the United States and funds a "village banking" program which
provides financial services to approximately 150,000 underprivileged people in
24 countries throughout the world. CRS provides the operational funding for
DEVCAP Non-Profit and generally receives all the donations generated by the
Fund's Charitable Contribution Program. At their discretion, DEVCAP Non-
Profit's Board of Directors may also use shareholder contributions to support
programs of other non-profit organizations.
In addition to its primary fund-raising activities, DEVCAP Non-Profit
also plans to promote cooperation among micro-enterprise development agencies
and organizations, and to provide information and support for micro-enterprise
development around the world. These activities could include educational
campaigns, research programs, and implementation of other financial programs to
aid in the development of micro-enterprises.
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<PAGE>
DEVCAP Non-Profit is independent of the Investment Manager, Sub-Adviser,
Distributor, Administrator and all other service providers of the Fund. While
DEVCAP Non-Profit personnel will encourage donations through the Fund and DEVCAP
Non-Profit itself incurs costs in these efforts, DEVCAP Non-Profit and DEVCAP
Non-Profit personnel receive no compensation from the Fund. DEVCAP Non-Profit
does not provide any investment advisory, management or other investment support
services to the Fund. DEVCAP Non-Profit does provide marketing, administrative
and shareholder support services to the Fund.
Distribution Plan
The Trustees of the Trust have adopted a Distribution Plan (the
"Distribution Plan") with respect to the Fund in accordance with Rule 12b-1
under the 1940 Act after having concluded that there is a reasonable likelihood
that the Distribution Plan will benefit the Fund and its shareholders. As
contemplated by the Distribution Plan, the Distributor acts as agent of the Fund
in connection with the offering of shares of the Fund pursuant to a Distribution
Agreement. The Distributor acts as the principal underwriter of shares of the
Fund and bears the compensation of personnel necessary to provide such services
and all costs of travel, office expenses (including rent and overhead) and
equipment.
Under the Distribution Plan, the Distributor may receive a fee from the
Trust at an annual rate not to exceed 0.25% of the Fund's average daily net
assets in anticipation of, or as reimbursement for, costs and expenses incurred
in connection with the sale of shares of the Fund, such as payments to
broker-dealers who advise shareholders regarding the purchase, sale or retention
of shares of the Fund, payments to employees of the Distributor, advertising
expenses and the expenses of printing and distributing prospectuses and reports
used for sales purposes, expenses of preparing and printing sales literature and
other distribution-related expenses.
The Distribution Plan will continue in effect indefinitely if such
continuance is specifically approved at least annually by a vote of both a
majority of the Trust's Trustees and a majority of the Trust's Trustees who are
not "interested persons of the Trust" and who have no direct or indirect
financial interest in the operation of the Distribution Plan or in any agreement
related to such Plan ("Independent Trustees"). The Distributor will provide to
the Trustees of the Trust a quarterly written report of amounts expended by it
under the Distribution Plan and the purposes for which such expenditures were
made. The Distribution Plan further provides that the selection and nomination
of the Trust's Independent Trustees shall be committed to the discretion of the
Independent Trustees. The Distribution Plan may be terminated at any time by a
vote of a majority of the Trust's Independent Trustees or by a vote of the
shareholders of the Fund. The Distribution Plan may not be amended to increase
materially the amount of permitted expenses thereunder without the approval of
shareholders and may not be materially amended in any case without a vote of the
majority of both the Trust's Trustees and the Trust's Independent Trustees. The
Distributor will preserve copies of any plan, agreement or report made pursuant
to the Distribution Plan for a period of not less than six years from the date
of the Distribution Plan, and for the first two years the Distributor will
preserve such copies in an easily accessible place.
Distributor
The Trust has entered into a Distribution Agreement, dated November 25,
1997 with the Fund's Distributor, CBIS Financial Services, Inc. For the fiscal
period November 25, 1997 to July 31, 1998, the Trust reimbursed the Distributor
in the amount of $0. For the fiscal year ended July 31, 1999 the Trust
reimbursed the Distributor in the amount of $0. For the fiscal year ended July
31, 1999, no
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<PAGE>
payments were made by the Trust under the Distribution Plan for any of the
following: (i) advertising; (ii) the printing and mailing of prospectuses to
other than current shareholders; (iii) compensation to underwriters; (iv)
compensation to broker-dealers; (v) compensation to sales personnel; and (vi)
interest, carrying, or other finance charges.
CBIS Financial Services, Inc. replaced Signature as the Trust's
Distributor, effective November 26, 1997. For the fiscal year ended July 31,
1997 and the period July 31, 1997 to November 26, 1997, the Trust did not accrue
or pay any distribution fees to Signature.
Transfer Agent and Custodian
The Trust has entered into a Transfer Agency and Service Agreement, dated
August 3, 1998, with Sunstone pursuant to which Sunstone acts as the Transfer
Agent for the Fund. For its services, Sunstone will receive such compensation as
may from time to time be agreed upon by Sunstone and the Fund, subject to an
annual minimum fee of $20,000. The Transfer Agent maintains an account for each
shareholder of the Fund, performs other transfer agency functions and acts as
dividend disbursing agent for the Fund.
Mellon Bank, N.A. acts as custodian of the Fund's assets pursuant to a
Custodian Agreement, dated February 22, 2000, between the Fund and Mellon Bank.
The Custodian's responsibilities include safekeeping and controlling the Fund's
cash and securities, and handling the receipt and delivery of securities and
determining income and collecting interest on the Fund's investments. Securities
held by the Fund may be deposited into certain securities depositories and
sub-custodians employed by the Custodian. The Custodian does not determine the
investment policies of the Fund or decide which securities the Fund will buy or
sell. The Fund may, however, invest in securities of the Custodian or its
affiliates and may deal with the Custodian or its affiliates as principal in
securities transactions. Previously, Investors Bank & Trust Company acted as
custodian of the Fund's assets pursuant to a custodian agreement dated September
15, 1995.
7. INDEPENDENT AUDITORS
KPMG LLP are the independent auditors for the Trust, providing audit
services, tax return preparation, and assistance with the review of filings with
the Securities and Exchange Commission.
8. CHARITABLE CONTRIBUTION PROGRAM
The Fund is designed to enable an investor to share with charity,
specifically with DEVCAP NonProfit, on an annual basis the return on his or her
investment in the Fund. When a shareholder makes an initial purchase of shares
of the Fund, the shareholder may declare an intention to make an annual donation
to DEVCAP Non-Profit on his or her account application. Each year, DEVCAP
Non-Profit will direct the shareholder's donation to Catholic Relief Services,
Inc. and other non-profit organizations working to improve the welfare of
underprivileged people in developing countries through grants or loans for
micro-enterprises and other economic development programs.
After the initial purchase of shares and contribution election, a
shareholder may elect to contribute to DEVCAP Non-Profit a different portion of
the shareholder's annual contribution basis, so long as the shareholder elects
to contribute 10%, 25%, 50%, 75% or 100% of the shareholder's annual
contribution basis. Alternatively, a shareholder may elect not to contribute any
portion of the shareholder's annual contribution basis. On or about the third
week of November, the Fund will mail a notice to each shareholder of record
indicating the dollar amount of the shareholder's estimated contribution for
that year, based on
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<PAGE>
the shareholder's then-current contribution election and the shareholder's
estimated annual contribution basis on that date. To change a shareholder's
contribution election, the shareholder must notify the Fund in writing or by
telephone on or before the second Friday of that December, at the Fund's address
for these purposes: DEVCAP Shared Return Fund, P.O. Box 2152, Milwaukee, WI
53201-2152. The telephone number for these purposes is (800) 371-2655, Option 3.
By the end of the following January, the Fund will mail a notice to each
shareholder of record indicating the dollar amount of the shareholder's actual
contribution for the previous year. This contribution will be made by deducting
shares in the Fund whose fair market value is equal to the shareholder's annual
contribution. The fair market value of the Fund share donation will generally be
tax deductible, as explained in more detail under the "Taxation" Section of this
Statement of Additional Information.
A shareholder's annual contribution basis is the change in value of that
particular shareholder's account between (a) January 1 or the date of the
shareholder's initial investment and (b) the second Friday of each December,
adjusted for redemptions, distributions and purchases. The shareholder's annual
contribution will be calculated by the Fund's transfer agent on or about the
second Friday of each December with the following formula:
Account value at Year-End Calculation Date (including reinvested
distributions, if any)
PLUS
Shareholder redemptions during the year, if any
PLUS
Cash distributions from the Fund during the year, if any
MINUS
Shareholder purchases during the year, if any
MINUS
Account value at (a) beginning of year or (b) date of initial investment
EQUALS SHAREHOLDER'S ANNUAL CONTRIBUTION BASIS
The shareholder's annual contribution is calculated by multiplying the
shareholder's annual contribution basis by the shareholder's contribution
election.
On or before the second Friday of each December, a shareholder's annual
contribution basis will be finalized using the above formula. If a shareholder's
annual contribution basis has been zero, or if a shareholder's account has been
closed before the end of the year, or if the specified percentage has been
reduced to zero after proper notice to the Fund, no contribution will result. A
shareholder may still make a contribution by using the convenient donation form
provided by DEVCAP Non-Profit for that purpose.
Note that, notwithstanding the above formula, if a shareholder liquidates
his or her total investment in the Fund before the year-end calculation date,
the shareholder's annual contribution will be deemed to be zero. The method of
calculation of the shareholder's annual contribution combined with the
shareholder's contribution election could result in a complete redemption of the
shareholder's end of year account.
In general, shareholders participating in the Charitable Contribution
Program will not incur a net tax liability from their charitable contribution to
DEVCAP Non-Profit. The Board of Trustees believes no
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tax liability arises due to donation of shares in the Fund to DEVCAP Non-Profit
and that an investor will be permitted to take an itemized tax deduction for the
fair market value of the donation so long as the investor has held the shares
for more than 12 months on the date of the donation. However, certain taxpayers
may be subject to limits on itemized deductions or charitable deductions on
their U.S. or state tax returns. Shareholders are advised to consult with their
tax advisers with respect to the particular tax consequences to them of an
investment in the Fund and participation in the Charitable Contribution Program.
Shareholders that do not itemize deductions on their Federal tax returns will
not receive a Federal deduction for donations to DEVCAP Non-Profit.
Shareholders desiring to make a contribution to DEVCAP Non-Profit outside
the Charitable Contribution Program, either in cash or in kind (i.e., by
donating shares of the Fund or other non-cash assets), should contact DEVCAP
Non-Profit directly at 800-371-2655.
9. TAXATION
Each year the Fund intends to qualify and elect to be treated as a
"regulated investment company" under Subchapter M of the Internal Revenue Code
of 1986, as amended (the "Code"). Provided the Fund qualifies as a "regulated
investment company" under the Code, and distributes all of its net investment
income and net realized capital gains to shareholders in accordance with the
timing requirements imposed by the Code, the Fund will not be required to pay
any federal income or excise taxes and will not be required to pay Massachusetts
income or excise taxes. If the Fund should fail to qualify as a "regulated
investment company" in any year, the Fund would incur a regular corporate
federal income tax upon its taxable income and would be required to pay
Massachusetts income and excise taxes. Additionally, Fund distributions would
generally be taxable as ordinary dividend income to the shareholders.
Shareholders of the Fund normally will be required to pay federal income
taxes, and any state or local taxes, on distributions of net investment income
and net realized capital gains from the Fund. Dividends from ordinary income and
any distributions from net short-term capital gains are taxable to shareholders
as ordinary income for federal income tax purposes, whether the distributions
are made in cash or in additional shares. A portion of the Fund's distributions
from net investment income is normally eligible for the corporate dividends
received deduction if the recipient otherwise qualifies for that deduction with
respect to its holding of Fund shares. Availability of the deduction for a
particular corporate shareholder is subject to certain limitations, and deducted
amounts may be subject to the alternative minimum tax and result in certain
basis adjustments. Distributions of net capital gains (i.e., the excess of net
long-term capital gains over net short-term capital losses), whether made in
cash or in additional shares, are taxable to shareholders as long-term capital
gains for federal income tax purposes without regard to the length of time the
shareholders have held their shares.
Amounts not distributed on a timely basis in accordance with the calendar
year distribution requirement are subject to a nondeductible 4% excise tax. To
prevent imposition of the excise tax, the Fund must, and intends to, distribute
during each calendar year substantially all of its ordinary income for that year
and substantially all of its capital gain in excess of its capital losses for
that year, plus any undistributed ordinary income and capital gains from
previous years. Any Fund dividend that is declared in October, November, or
December of any calendar year, that is payable to shareholders of record in such
a month, and that is paid the following January will be treated as if received
by the shareholders on December 31 of the year in which the divided is declared.
The Fund will notify shareholders regarding the federal tax status of its
distributions after the end of each calendar year.
Any Fund distribution will have the effect of reducing the per share net
asset value of shares in the Fund by the amount of the distribution.
Shareholders purchasing shares shortly before the record date of any
distribution may thus pay the full price for the shares and then effectively
receive a portion of the purchase price back as a taxable distribution.
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<PAGE>
In general, any gain or loss realized upon a taxable disposition of shares
of the Fund by a shareholder that holds such shares as a capital asset will be
treated as long-term capital gain or loss if the shares have been held for more
than twelve months. Any gain or loss realized upon shares held for less than 12
months will be treated as a short-term capital gain or loss. However, any loss
realized upon a disposition of shares in the Fund held for six months or less
will be treated as a long-term capital loss to the extent of any distributions
of net capital gain made with respect to those shares. Any loss realized upon a
disposition of shares may also be disallowed under rules relating to wash sales.
The maximum tax rate for individual taxpayers on net long-term capital
gains (i.e., the excess of net long-term capital gain over net short-term
capital loss) is 20% for most assets held for more than 12 months at the time of
disposition. A lower rate of 18% will apply after December 31, 2000 for assets
held for more than 5 years. However, the 18% rate applies only to assets
acquired after December 31, 2000 unless the taxpayer elects to treat an asset
held prior to such date as sold for fair market value on January 1, 2001. In the
case of individuals whose ordinary income is taxed at a 15% rate, the 20% rate
for assets held for more than 12 months is reduced to 10% and the 18% rate for
assets held for more than 5 years is reduced to 8%.
Fund shareholders may be subject to state and local taxes on Fund
distributions to them. Shareholders are advised to consult with their tax
advisers with respect to the particular tax consequences.
Tax Deductibility of Charitable Contributions
The Charitable Contribution Program of the Fund (the "Program") has been
designed so that individual investors utilizing the cash method of accounting
who donate to DEVCAP Non-Profit through the Program will be entitled to a tax
deduction equal to the fair market value of the Fund shares donated in the
taxable year in which the donation is made provided the investor held such
shares for more than one year on the date of the donation. If shares are held
for one year or less, the investor may be able to deduct the cost of the Fund
shares donated. Under the Program, the charitable donation will be made on or
about the second Friday of each December, thus tracking the taxable year for
most individual investors in the Fund. The Fund will provide investors with the
documentation needed to substantiate this tax deduction. For more information
see the "Charitable Contribution Program" section in this Statement of
Additional Information.
The tax effect of the donation for a particular investor of the Fund may
vary according to the individual circumstances of that investor. For example,
the Code sets an upper limit on the dollar amount of tax deductions that can be
taken by individual taxpayers for charitable donations in a given year. In view
of the foregoing, as well as the possibility of other tax consequences of the
donation to particular investors, potential purchasers of the Fund should
consult their own tax advisors in determining the federal, state, local and
other tax consequences of purchasing shares of the Fund and participating in the
Program.
DEVCAP Non-Profit's owner, CRS, is recognized by the United States Internal
Revenue Service (the "IRS") as a tax-exempt, section 501(c)(3) organization
under the Code. CRS is not a "private foundation" within the meaning of the
Code. In addition, on October 18, 1995, DEVCAP Non-Profit received from the IRS
recognition as a tax-exempt "supporting organization," a category of exemption
available under sections 501(c)(3) and 509(a)(3) of the Code for organizations
that are engaged solely in activities designed to support other tax-exempt
charitable organizations.
The Program has been structured so that investors are provided an
opportunity to donate to DEVCAP Non-Profit each year. The Fund has been
structured this way in order to allow the contributions made through the Program
to be tax deductible donations made to non-profit organizations under existing
interpretations of section 170(c) of the Code. Investors should recognize,
however, that neither the Fund nor DEVCAP Non-Profit are tax advisers, that
existing law and interpretations thereof may be modified, and that no ruling has
been sought from the IRS confirming the tax deductible nature of Program
contributions. Nevertheless, the IRS has been informed of the details of the
Program in DEVCAP Non-Profit's filing for
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recognition as a section 501(c)(3) organization, and the Fund believes that the
granting of tax-exempt status to DEVCAP Non-Profit represents approval of DEVCAP
Non-Profit's activities, including the Program, and confirmation that the
donations are tax deductible.
10. FUND TRANSACTIONS AND BROKERAGE COMMISSIONS
Specific decisions to purchase or sell securities for the Fund are made by
a portfolio manager who is an employee of the Sub-Adviser and who is appointed
and supervised by its senior officers. The portfolio manager of the Fund may
serve other clients of the Sub-Adviser in a similar capacity.
The Fund's primary consideration in placing securities transactions with
broker-dealers for execution is to obtain and maintain the availability of
execution at the most favorable prices and in the most effective manner
possible. The Sub-Adviser attempts to achieve this result by selecting
broker-dealers to execute transactions on behalf of the Fund and other clients
of the Sub-Adviser on the basis of their professional capability, the value and
quality of their brokerage services, and the level of their brokerage
commissions. In the case of securities traded in the over-the-counter market
(where no stated commissions are paid but the prices include a dealer's markup
or markdown), the Sub-Adviser normally seeks to deal directly with the primary
market makers, unless in its opinion, best execution is available elsewhere.
From time to time, soliciting dealer fees are available to the Sub-Adviser on
the tender of the Fund's securities in so-called tender or exchange offers. Such
soliciting dealer fees are in effect recaptured for the Fund by the Sub-Adviser.
At present no other recapture arrangements are in effect. Consistent with the
foregoing primary consideration, the Conduct Rules of the National Association
of Securities Dealers, Inc. and such other policies as the Trustees of the Trust
may determine, the Sub-Adviser may consider sales of shares of the Fund as a
factor in the selection of broker-dealers to execute the Fund's securities
transactions.
Under the Sub-Advisory Agreement and as permitted by Section 28(e) of the
Securities Exchange Act of 1934, the Sub-Adviser may cause the Fund to pay a
broker-dealer acting on an agency basis which provides brokerage and research
services to the Sub-Adviser an amount of commission for effecting a securities
transaction for the Fund in excess of the amount other broker- dealers would
have charged for the transaction if the Sub-Adviser determines in good faith
that the greater commission is reasonable in relation to the value of the
brokerage and research services provided by the executing broker-dealer viewed
in terms of either a particular transaction or the Sub-Adviser's overall
responsibilities to the Fund or to its other clients. Not all of such services
are useful or of value in advising the Fund.
The term "brokerage and research services" includes advice as to the value
of securities, the advisability of investing in, purchasing, or selling
securities, and the availability of securities or of purchasers or sellers of
securities; furnishing analyses and reports concerning issues, industries,
securities, economic factors and trends, portfolio strategy and the performance
of accounts; and effecting securities transactions and performing functions
incidental thereto such as clearance and settlement. However, because of the
Fund's policy of investing in accordance with the S&P 500 Index, the Sub-Adviser
currently intend to make only a limited use of such brokerage and research
services.
Although commissions paid on every transaction will, in the judgment of the
Sub-Adviser, be reasonable in relation to the value of the brokerage services
provided, commissions exceeding those which another broker might charge may be
paid to broker-dealers who were selected to execute transactions on behalf of
the Fund and the Sub-Adviser's other clients, in part for providing advice as to
the availability of securities or of purchasers or sellers of securities and
services in effecting securities transactions and performing functions
incidental thereto such as clearance
-20-
<PAGE>
and settlement. Certain broker-dealers may be willing to furnish statistical,
research and other factual information or services to the Sub-Adviser for no
consideration other than brokerage or underwriting commissions.
The Sub-Adviser attempts to evaluate the quality of research provided by
brokers. The Sub-Adviser sometimes use evaluations resulting from this effort as
a consideration in the selection of brokers to execute portfolio transactions.
However, the Sub-Adviser is unable to quantify the amount of commissions which
are paid as a result of such research because a substantial number of
transactions are effected through brokers which provide research but which are
selected principally because of their execution capabilities.
The fees that the Fund pays to the Sub-Adviser will not be reduced as a
consequence of the Fund's receipt of brokerage and research services. To the
extent the Fund's securities transactions are used to obtain brokerage and
research services, the brokerage commissions paid by the Fund will exceed those
that might otherwise be paid for such portfolio transactions and research, by an
amount which cannot be presently determined. Such services may be useful and of
value to the Sub-Adviser in serving both the Fund and other clients and,
conversely, such services obtained by the placement of brokerage business of
other clients may be useful to the Sub-Adviser in carrying out its obligations
to the Fund. While such services are not expected to reduce the expenses of the
Sub-Adviser, the Sub-Adviser would, through the use of the services, avoid the
additional expenses which would be incurred if it should attempt to develop
comparable information through its own staff.
For the fiscal years ended July 31, 1997, 1998 and 1999, respectively, the
Fund invested all of its assets in a portfolio which paid brokerage commissions
of $101,337, $175,344 and $327,338, respectively. For the fiscal years ended
July 31, 1997, 1998 and 1999, respectively, the Fund itself did not pay any
brokerage commissions. The Fund itself did not pay brokerage commissions to any
affiliated brokers or dealers during the fiscal years ended July 31, 1997, 1998
and 1999. For the fiscal year ended July 31, 1999, the Fund did not pay any
brokerage commissions for brokerage transactions directed to a broker because of
research services provided.
In certain instances there may be securities which are suitable for the
Fund as well as for one or more of the Sub-Adviser's or the Investment Manager's
other clients. Investment decisions for the Fund and for the Sub-Adviser's or
the Investment Manager's other clients are made with a view to achieving their
respective investment objectives. It may develop that a particular security is
bought or sold for only one client even though it might be held by, or bought or
sold for, other clients. Likewise, a particular security may be bought for one
or more clients when one or more clients are selling that same security. Some
simultaneous transactions are inevitable when several clients receive investment
advice from the same investment adviser, particularly when the same security is
suitable for the investment objectives of more than one client. When two or more
clients are simultaneously engaged in the purchase or sale of the same security,
the securities are allocated among clients in a manner believed to be equitable
to each. It is recognized that in some cases this system could have a
detrimental effect on the price or volume of the security as far as the Fund is
concerned. However, it is believed that the ability of the Fund to participate
in volume transactions will produce better executions for the Fund.
11. DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES
The Fund's Declaration of Trust permits the Trust's Board of Trustees
to issue an unlimited number of full and fractional shares of beneficial
interest (without par value) and to divide or combine the shares into a greater
or lesser number of shares without thereby changing the proportionate beneficial
interests in the Fund. Each share represents an equal proportionate interest in
the Fund with
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<PAGE>
each other share. Upon liquidation or dissolution of the Fund, the Fund's
shareholders are entitled to share pro rata in the Fund's net assets available
for distribution to its shareholders. The Fund reserves the right to create and
issue a number of series of shares, in which case the shares of each series
would participate equally in the earnings, dividends and assets of the
particular series (except for any differences among classes of shares of a
series). Shares of each series would be entitled to vote separately to approve
advisory agreements or changes in investment policy, but shares of all series
may vote together in the election or selection of Trustees, principal
underwriters and independent auditors for the Fund. Upon liquidation or
dissolution of the Fund, the shareholders of each series would be entitled to
share pro rata in the net assets of their respective series available for
distribution to shareholders.
Shareholders are entitled to one vote for each share held. Shareholders in
the Fund do not have cumulative voting rights, and shareholders owning more than
50% of the outstanding shares of the Fund may elect all of the Trustees of the
Fund if they choose to do so; in such event the other shareholders in the Fund
would not be able to elect any Trustee. The Fund is not required to hold annual
meetings of shareholders but the Fund will hold special meetings of shareholders
when in the judgment of the Fund's Trustees it is necessary or desirable to
submit matters for a shareholder vote. No material amendment may be made to the
Fund's Declaration of Trust without the affirmative vote of the holders of a
majority of its outstanding shares. Shares have no preference, preemptive,
conversion or similar rights. Shares, when issued, are fully paid and
non-assessable, except as set forth below. The Fund may enter into a merger or
consolidation, or sell all or substantially all of its assets, if approved by
the vote of the holders of two-thirds of its outstanding shares, except that if
the Trustees of the Fund recommend such sale of assets, the approval by vote of
the holders of a majority of the Fund's outstanding shares will be sufficient.
The Fund may also be terminated upon liquidation and distribution of its assets,
if approved by the vote of the holders of two-thirds of its outstanding shares.
If not so terminated, the Fund will continue indefinitely. Stock certificates
are issued only upon the written request of a shareholder.
The Fund is an entity of the type commonly known as a "Massachusetts
business trust". Under Massachusetts law, shareholders of such a business trust
may, under certain circumstances, be held personally liable as partners for its
obligations and liabilities. However, the Declaration of Trust contains an
express disclaimer of shareholder liability for acts or obligations of the Fund
and provides for indemnification and reimbursement of expenses out of Fund
property for any shareholder held personally liable for the obligations of the
Fund. The Declaration of Trust also provides that the Fund shall maintain
appropriate insurance (for example, fidelity bonding and errors and omissions
insurance) for the protection of the Fund, its shareholders, Trustees, officers,
employees and agents covering possible tort and other liabilities. Thus, the
risk of a shareholder incurring financial loss on account of shareholder
liability is limited to circumstances in which both inadequate insurance existed
and the Fund itself was unable to meet its obligations.
The Declaration of Trust further provides that obligations of the Fund are
not binding upon the Trustees individually but only upon the property of the
Fund and that the Trustees will not be liable for any action or failure to act,
but nothing in the Declaration of Fund protects a Trustee against any liability
to which he or she would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence, or reckless disregard of the duties involved in the
conduct of his or her office.
Each investor in the Fund, may add to or reduce its investment in the Fund
on each day the Fund does business. At the close of each such business day, the
value of each shareholders interest in the Fund will be determined by
multiplying the net asset value of the Fund by the percentage representing that
investor's share of the aggregate beneficial interests in the Fund effective for
that day. Any additions or withdrawals, which are to be effected as of the close
of business on that day, will then be effected. The investor's percentage of the
aggregate beneficial interests in the Fund will then be re-computed as the
percentage equal to the fraction (i) the numerator of which is the value of such
investor's investment in the Fund as of the close of business on such day plus
or minus, as the case may be, the amount of any additions to or withdrawals from
the investor's investment in the Fund effected as
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<PAGE>
of the close of business on such day, and (ii) the denominator of which is the
aggregate net asset value of the Fund as of the close of business on such day
plus or minus, as the case may be, the amount of the net additions to or
withdrawals from the aggregate investments in the Fund by all investors in the
Fund. The percentage so determined will then be applied to determine the value
of the investor's interest in the Fund as of the close of business on the
following Fund Business Day.
12. FINANCIAL STATEMENTS
The financial statements of the Fund for the fiscal year ended July 31,
1999 have been filed as part of the Fund's annual report with the Securities and
Exchange Commission pursuant to Section 30b of the 1940 Act and Rule 30b2-1
thereunder, and are incorporated herein by reference. A copy of such the annual
report will be provided, without charge, to shareholders of the Fund.
-23-
<PAGE>
PART C
OTHER INFORMATION
DEVCAP TRUST
Item 23. Exhibits
Exhibit
Number Description of Exhibit
------- ----------------------
(a) Amended and Restated Declaration of Trust,
dated September 15, 1995.(3)
(b) By-Laws.
(c) Specimen of certificate representing
ownership of Registrant's shares of
beneficial interest.(1)
(d)(1) Investment Management Agreement, dated
February 22, 2000, between Registrant and
Christian Brothers Investment Services, Inc.
("CBIS").(8)(9)
(d)(2) Investment Sub-Advisory Agreement, dated
February 22, 2000, between CBIS and
RhumbLine Advisers.(8)(9)
(e)(1) Distribution Agreement, dated October 5,
1995, between Registrant and Signature
Broker-Dealer Services, Inc. ("SBDS").(1)
(e)(2) Distribution Agreement, dated November 25,
1997, between Registrant and CBIS Financial
Services, Inc. (the "Distributor").(5)
(f) Not Applicable.
(g)(1) Custodian Agreement, dated September 15,
1995, between Registrant and Investors Bank
& Trust Company ("IBT").(1)
(g)(2) Form of Custody and Information Services
Agreement, dated February 22, 2000, between
Registrant and Mellon Bank, N.A.
(the "Custodian").(9)
(h)(1) Administrative Services Agreement, dated
October 5, 1995, between Registrant and
SBDS.(4)
(h)(2) Administration Agreement, dated November 4,
1997, between Registrant and Sunstone
Financial Group, Inc. ("Sunstone").(5)
<PAGE>
(h)(3) Form of Transfer Agency and Services
Agreement, between Registrant and
Fundamental Shareholder Services, Inc.(2)
(h)(4) Transfer Agency Agreement, dated August 3,
1998, between Registrant and Sunstone
Investor Services, LLC ("SIS").(5)
(h)(5) Form of Administration and Fund Accounting
Agreement, dated February 22, 2000,
between Registrant and Sunstone.(9)
(i) Opinion and Consent of Counsel.(2)
(j)(1) Consent of Independent Auditors.(6)(9)
(j)(2) Consent of Independent Auditors with respect
to Domini Social Index Portfolio.(5)
(k) None.
(l) Investment representation letters of initial
shareholders.(2)
(m) Distribution and Services Plan of the
Registrant adopted on October 5, 1995.(1)
(n) Financial Data Schedule.(6)
(o) Not applicable.
(p)(1) Power of Attorney.(4)
(p)(2) Powers of Attorney of Domini Social Index
Portfolio.(6)
(p)(3) Power of Attorney for Karen Paul of Domini
Social Index Portfolio.(7)
(p)(4) Revised Powers of Attorney of DEVCAP
Trust.(8)
(p)(5) Additional Powers of Attorney of DEVCAP
Trust.(9)
- --------------
(1) Incorporated herein by reference from Pre-Effective Amendment No. 1 to
Registrant's registration statement on Form N-1A (File Nos. 33-94668 and
811-9070) (the "Registration Statement"), as filed with the Securities and
Exchange Commission (the "SEC") on September 8, 1995.
(2) Incorporated herein by reference from Pre-Effective Amendment No. 2 to the
Registration Statement, as filed with the SEC on October 11, 1995.
(3) Incorporated herein by reference from Post-Effective Amendment
("Post-Effective Amendment") No. 1 to the Registration Statement, as filed
with the SEC on March 28, 1996.
(4) Incorporated herein by reference from Post-Effective Amendment No. 3, as
filed with the SEC on October 16, 1997.
(5) Incorporated herein by reference from Post-Effective Amendment No. 4, as
filed with the SEC on November 25, 1998.
(6) Incorporated herein by reference from Post-Effective Amendment No. 5, as
filed with the SEC on September 30, 1999.
(7) Incorporated herein by reference from Post-Effective Amendment No. 6, as
filed with the SEC on November 29, 1999.
(8) Incorporated herein by reference from Post-Effective Amendment No. 7, as
filed with SEC on December 20, 1999.
(9) Filed herewith.
2
<PAGE>
Item 24. Persons Controlled by or Under Common Control with Registrant.
Not applicable.
Item 25. Indemnification.
Reference is made to Section 5.3 of Registrant's Declaration of Trust and
Article 4 of Registrant's Distribution Agreement.
Registrant, its Trustees and officers are insured against certain expenses in
connection with the defense of claims, demands, actions, suits, or proceedings,
and certain liabilities that might be imposed as a result of such actions, suits
or proceedings.
Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended (the "Securities Act"), may be permitted to directors,
trustees, officers and controlling persons of the Registrant and the principal
underwriter pursuant to the foregoing provisions or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, trustee, officer, or controlling person of the
Registrant and the principal underwriter in connection with the successful
defense of any action, suite or proceeding) is asserted against the Registrant
by such director, trustee, officer or controlling person or principal
underwriter in connection with the shares being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
Item 26. Business and Other Connections of Investment Adviser.
See "Investment Manager and Sub-Adviser" in the Prospectus and Statement of
Additional Information regarding the business of the investment adviser. For
information as to the business, profession, vocation or employment of a
substantial nature engaged in by CBIS and RhumbLine or any of its respective
officers and directors during the past two years, reference is made to Forms
ADV, filed with the Securities and Exchange Commission under the Investment
Advisers Act of 1940 by CBIS and RhumbLine, herein incorporated by reference
(SEC File Nos. 801-16639 and 801-40535, respectively).
Item 27. Principal Underwriters.
(a) CBIS Financial Services, Inc. is the distributor (the
"Distributor") for the shares of the Registrant. The Distributor does not also
serve as the principal underwriter or placement agent for other registered
investment companies.
(b) The following are the directors and officers of the Distributor.
The principal business address of these individuals is 915 Harger Road, Oak
Brook, Illinois 60521-1476, unless otherwise noted.
3
<PAGE>
Brother Michael W. O'Hern, President, Secretary, Treasurer and sole
director.
Neal J. Berkowitz, Finance and Operations Principal.
(c) Not applicable.
Item 28. Location of Accounts and Records.
All accounts, books and other documents required to be maintained by Section
31(a) of the Investment Company Act of 1940, as amended (the "Investment Company
Act"), and the Rules thereunder will be maintained at the offices of:
Sunstone Financial Group, Inc., 207 East Buffalo Street, Suite 400, Milwaukee,
Wisconsin 53202 (records relating to its functions as principal underwriter and
administrator.)
Mellon Bank, N.A., One Mellon Bank Center, Pittsburgh, Pennsylvania 15258
(records relating to its functions as custodian).
Sunstone Investor Services, LLC, 207 East Buffalo Street, Suite 400, Milwaukee,
Wisconsin 53202 (records relating to its functions as transfer agent).
Item 29. Management Services.
Not applicable.
Item 30. Undertakings.
Not applicable.
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, the Registrant certifies that it
meets all the requirements for effectiveness of this Registration Statement
under Rule 485(b) under the Securities Act and has duly caused this
Post-Effective Amendment No. 8 to Registration Statement on Form N-1A to be
signed on its behalf by the undersigned, thereto duly authorized, in the City of
Baltimore, State of Maryland, on February 22, 2000.
DEVCAP TRUST
By: /s/ Joseph N. St. Clair
-----------------------
Name: Joseph N. St. Clair
Title: President
5
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Post-Effective Amendment No. 8 to Registration Statement on Form N-1A has been
signed below by the following persons in the capacities indicated on February
22, 2000.
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ Joseph N. St. Clair President, Treasurer February 22, 2000
- -------------------------- and Secretary
Joseph N. St. Clair (Principal Executive
and Accounting
and Financial Officer)
/s/ James R. Arnold*
- -------------------------- Assistant Secretary February 22, 2000
James R. Arnold
/s/ Gilbert H. Crawford* Trustee February 22, 2000
- --------------------------
Gilbert H. Crawford
/s/ Stephen D. Cashin* Trustee February 22, 2000
- --------------------------
Stephen D. Cashin
/s/ Donald Carcieri* Trustee February 22, 2000
- --------------------------
Donald Carcieri
/s/ Edward Veilleux* Trustee February 22, 2000
- --------------------------
Edward Veilleux
/s/ Timothy J. Joyce* Trustee February 22, 2000
- --------------------------
Timothy J. Joyce
/s/ Donald S. Houston* Trustee February 22, 2000
- --------------------------
Donald S. Houston
* Pursuant to the Powers of Attorney filed herewith and in Post-Effective
Amendment No. 7, filed with the SEC on December 20, 1999.
6
<PAGE>
DEVCAP TRUST
Devcap Shared Return Fund
EXHIBIT INDEX
TO
POST-EFFECTIVE AMENDMENT NO. 8
TO
REGISTRATION STATEMENT
ON FORM N-1A
Exhibit No. Description of Document
----------- -----------------------
(d)(1). Investment Management Agreement
(d)(2). Investment Sub-Advisory Agreement
(g)(2). Form of Custody and Information Services Agreement
(h)(5). Form of Administration and Fund Accounting Agreement
(j)(1) Consent of Independent Auditors
(p)(5). Additional Powers of Attorney of DEVCAP Trust
<PAGE>
Exhibit (d)(1)
Investment Management Agreement
<PAGE>
Exhibit (d)(1)
INVESTMENT MANAGEMENT AGREEMENT
-------------------------------
INVESTMENT MANAGEMENT AGREEMENT, dated as of February 22, 2000 between
DEVCAP Trust (the "Trust") on behalf of the DEVCAP Shared Return Fund (the
"Portfolio"), a separate, diversified portfolio of the Trust, a business trust
organized under the laws of the Commonwealth of Massachusetts, and Christian
Brothers Investment Services, Inc., a corporation organized under the laws of
the State of Illinois (the "Investment Manager").
WHEREAS, the Trust has been organized as a Massachusetts business trust
under the laws of the Commonwealth of Massachusetts to engage in the business of
an open-end management investment company under the Investment Company Act of
1940, as amended (the "Investment Company Act"), and the shares (the "Shares")
of beneficial interest of the Trust are divided into multiple series ("Series"),
including the Portfolio as a separate, non-diversified portfolio of the Trust;
WHEREAS, the Trust, on behalf of the Portfolio, seeks to retain the
Investment Manager for the purpose of making investment decisions for the
Portfolio;
WHEREAS, the Investment Manager is registered as an investment adviser
under the Investment Advisers Act of 1940, as amended (the "Investment Advisers
Act"), and desires to provide services to the Portfolio in consideration of and
on the terms and conditions hereinafter set forth;
NOW, THEREFORE, the Portfolio and the Investment Manager agree as
follows:
SECTION 1. Employment as an Investment Manager. The Portfolio being
duly authorized hereby employs the Investment Manager as the Portfolio's
investment manager, on the terms and conditions set forth herein. The Investment
Manager shall for all purposes herein be deemed to be an independent contractor
and shall, except as expressly provided or authorized (whether herein or
otherwise), have no authority to act for or represent the Portfolio in any way
or otherwise be deemed an agent of the Portfolio.
SECTION 2. Acceptance of Employment; Standard of Performance. The
Investment Manager accepts its employment as the Portfolio's investment manager
to manage the investment and reinvestment of the Portfolio's assets and agrees
to use its best professional judgment to make timely investment decisions for
the Portfolio in accordance with the provisions of this Agreement and to provide
the other services set forth in Section 3 of this Agreement, subject to the
direction of the Board of Trustees (the "Trustees" or the "Board") and officers
of the Trust, for the period, in the manner and on the terms hereinafter set
forth.
SECTION 3. Obligation of and Services to be Provided by the Investment
Manager. The Investment Manager undertakes to provide the services hereinafter
set forth and to assume the obligations set forth below in this Section 3. The
Investment Manager may, with the approval of the Trustees, delegate any of its
obligations under this Agreement, to a sub-adviser. To the extent such
delegation occurs, all references to "Investment Manager" herein shall be deemed
to include any such sub-adviser.
A. Portfolio Management Services. In providing portfolio management
services to the Portfolio, the Investment Manager shall be subject to the
investment objectives, policies and restrictions of the Portfolio as set forth
in its current prospectus and statement of additional information (as the same
may be modified from time to time), the Trust's charter and bylaws and the
investment restrictions set
<PAGE>
forth in the Investment Company Act and the Rules thereunder (as and to the
extent set forth in such registration statement or in other documentation
furnished to the Investment Manager by the Portfolio), to the provisions of the
Internal Revenue Code applicable to the Trust as a regulated investment company
and to the supervision and control of the Trustees. The Portfolio understands,
and directs, that the Portfolio's assets be invested in a accordance with the
written socially responsible investing policies of the Investment Manager, as
the same may be amended from time to time. The Investment Manager shall not,
without the prior approval of the Portfolio, effect any transactions that would
cause the Portfolio to be out of compliance with any of such objectives,
restrictions or policies.
B. Corporate Management Services. Subject to the supervision of the
Trustees and officers of the Trust and as reasonably requested by the officers
of the Trust or the Trustees, the Investment Manager shall assist the officers
of the Trust in the performance of the following services:
(1) Prepare reports relating to the business and affairs of
the Portfolio as may be mutually agreed upon and not
otherwise appropriately prepared by the Portfolio's
custodian, legal counsel or auditors;
(2) Make such reports and recommendations to the Board
concerning the performance of the independent
accountants as the Board may reasonably request or deem
appropriate;
(3) Make such reports and recommendations to the Board
concerning the performance and fees of the Portfolio's
custodian and transfer and disbursing agent as the
Board may reasonably request or deem appropriate;
(4) Provide such assistance to the custodian and the
Trust's legal counsel and auditors as generally may be
required to properly carry on the business and
operations of the Portfolio;
(5) Refer to the Trust's officers or transfer agent,
shareholder inquiries relating to the Portfolio;
(6) Employ or provide and compensate the CBIS executive,
administrative, secretarial and clerical personnel
necessary to supervise the provision of the services
set forth in subparagraph 3(B), and shall bear the
expense of providing such services, except as may
otherwise be provided in Section 8 of this Agreement.
The Investment Manager shall also compensate all
officers and employees of the Portfolio who are
officers or employees of the Investment Manager;
(7) Supervise the general management and investment of the
Portfolio's assets and securities portfolio subject to
and in accordance with the investment objectives and
policies of the Portfolio and any directions which the
Trustees may issue to the Investment Manager from time
to time.
C. Provision of Information Necessary for Preparation of
Securities Registration Statements, Amendments and Other
Materials.
2
<PAGE>
The Investment Manager will make available and provide
financial, accounting and statistical information
concerning the Investment Manager required by the
Portfolio in the preparation of registration
statements, reports and other documents required by
federal and state securities laws, and such other
information as the Portfolio may reasonably request for
use in the preparation of such documents or of other
materials necessary or helpful for the distribution of
the Portfolio's Shares.
D. Other Obligations and Services.
(1) The Investment Manager shall make available its
officers and employees to the Trustees and officers of
the Portfolio for consultation and discussions
regarding the administration and management of the
Portfolio and its investment activities.
(2) The Investment Manager will adopt a written code of
ethics complying with the requirements of Rule 17j-1
under the Investment Company Act (which may be the
Portfolio's code of ethics) and will provide the
Portfolio with evidence of its adoption. Within
forty-five (45) days of the end of the last calendar
quarter of each year while this Agreement is in effect,
the President or a Vice President of the Investment
Manager shall certify to the Portfolio that the
Investment Manager has complied with the requirements
of Rule 17j-1 during the previous year and that there
has been no violation of the Investment Manager's code
of ethics or, if such a violation has occurred, that
appropriate action was taken in response to such
violation. Upon the written request of the Portfolio,
the Investment Manager shall permit the Portfolio, its
employees or its agents to examine the reports required
to be made by the Investment Manager by Rule
17j-1(c)(1).
SECTION 4. Transaction Procedures. All portfolio transactions for the
Portfolio will be consummated by payment to or delivery by the custodian of the
Portfolio, Mellon Trust (the "Custodian"), or such depositories or agents as may
be designated by the Custodian in writing, as custodian for the Portfolio, of
all cash and/or securities due to or from the Portfolio, and the Investment
Manager shall not have possession or custody thereof or any responsibility or
liability with respect to such custody. The Investment Manager shall advise and
confirm in writing to the Custodian all investment orders for the Portfolio
placed by it with brokers and dealers at the time and in the manner set forth in
Schedule A hereto (as amended from time to time). The Portfolio shall issue to
the Custodian such instructions as may be appropriate in connection with the
settlement of any transaction initiated by the Investment Manager.
SECTION 5. Allocation of Brokerage. The Investment Manager shall have
authority and discretion to select brokers and dealers to execute portfolio
transactions initiated by the Investment Manager, and to select the markets on
or in which the transactions will be executed. The Investment Manager will
render regular reports to the Portfolio of the total brokerage business placed
on behalf of the Portfolio by the Investment Manager and the manner in which
such brokerage business has been allocated.
A. In doing so, the Investment Manager's primary
responsibility shall be to seek to obtain best net price and execution
for the Portfolio. However, this responsibility shall not obligate the
Investment Manager to solicit competitive bids for each transaction or
to seek the
3
<PAGE>
lowest available commission cost to the Portfolio, so long as the
Investment Manager reasonably believes that the broker or dealer
selected by it can be expected to obtain a "best execution" market
price on the particular transaction and determines in good faith that
the commission cost is reasonable in relation to the value of the
brokerage and research services (as defined in Section 28(e)(3) of the
Securities Exchange Act of 1934, as amended), provided by such broker
or dealer to the Investment Manager viewed in terms of either that
particular transaction or of the Investment Manager's overall
responsibilities with respect to its clients, including the Portfolio,
as to which the Investment Manager exercises investment discretion,
notwithstanding that the Portfolio may not be the direct or exclusive
beneficiary of any such services or that another broker may be willing
to charge the Portfolio a lower commission on the particular
transaction.
B. The Investment Manager shall not execute any portfolio
transactions for the Portfolio with a broker or dealer which is an
"affiliated person" (as defined in the Investment Company Act) of the
Portfolio or the Investment Manager of the Portfolio without the prior
written approval of the Portfolio. The Portfolio will provide the
Investment Manager with a list of brokers and dealers which are
"affiliated persons" of the Portfolio.
SECTION 6. Proxies. The Investment Manager will vote all proxies
solicited by or with respect to the issuers of securities in which assets of the
Portfolio may be invested from time to time. Proxies will be voted in accordance
with the proxy voting standards from time to time published by the Investment
Manager.
SECTION 7. Fees for Service
A. The compensation of the Investment Manager for its services
under this Agreement shall be calculated and paid by the Portfolio in
accordance with the attached Schedule B. In addition to the fees set
forth in Schedule B, the Portfolio shall reimburse the Investment
Manager for all out-of-pocket expenses incurred by the Investment
Manager for attendance at any meeting outside of the New York
metropolitan area in connection with its activities as Investment
Manager to the Portfolio.
B. In addition to the foregoing, the Investment Manager may
from time to time agree not to impose all or a portion of its fee
otherwise payable hereunder (in advance of the time such fee or portion
thereof would otherwise accrue) and/or undertake to pay or reimburse
the Portfolio for all or a portion of its expenses not otherwise
required to be borne or reimbursed by the Investment Manager. Any such
fee reduction or undertaking may be discontinued or modified by the
Investment Manager at any time.
SECTION 8. Expenses of the Portfolio. It is understood that the
Portfolio will pay all its expenses other than those expressly assumed by the
Investment Manager herein, which expenses payable by the Portfolio shall
include:
A. Fees and expenses of the Investment Manager;
B. Auditing and accounting fees and expenses;
C. Fees and expenses for transfer agent, registrar,
dividend disbursing agent and
4
<PAGE>
shareholder recordkeeping services (including
reasonable fees and expenses payable to the
Investment Manager for such services);
D. Fees and expenses of the custodian of the Trust's
assets, including expenses incurred in performing
fund accounting and recordkeeping services provided
by the custodian;
E. Expenses of obtaining quotations for calculating the
value of the Portfolio's net assets;
F. Salaries and other compensation of any of its
executive officers and employees who are not
officers, directors, stockholders or employees of the
Investment Manager or any of its affiliates;
G. Taxes and governmental fees levied against the
Portfolio and the expenses of preparing tax returns
and reports;
H. Brokerage fees and commissions in connection with the
purchase and sale of portfolio securities for the
Portfolio;
I. Organizational expenses;
J. Costs, including the interest expense, of borrowing
money;
K. Costs and/or fees incident to Trustee and shareholder
meetings of the Portfolio, the preparation and
mailings of proxy material, prospectuses and reports
of the Portfolio to its shareholders, the filing of
reports with regulatory bodies, the maintenance of
the Portfolio's legal existence, membership dues and
fees of investment company industry trade
associations, and the registration of Shares with
federal and state securities authorities;
L. Legal fees and expenses (including reasonable fees
for legal services rendered by the Investment Manager
or its affiliates), including the legal fees related
to the registration and continued qualification of
the Portfolio's Shares for sale (and of maintaining
the registration of the fund);
M. Costs of printing stock certificates, if any,
representing Shares of the Portfolio or any other
expenses, including clerical expenses of issue,
redemption, or repurchase of Shares of the Portfolio;
N. Trustees' fees and expenses of Trustees who are not
directors, officers, employees or stockholders of the
Investment Manager or any of its affiliates;
O. Its pro rata portion of the fidelity bond required by
Section 17(g) of the Investment Company Act, or other
insurance premiums;
P. Fees payable to federal and state authorities in
connection with the registration of the Portfolio's
Shares.
5
<PAGE>
Q. Litigation and indemnification expenses and other
extraordinary expenses not incurred in the ordinary
course of the business of the Portfolio or the Trust.
SECTION 9. Other Investment Activities of Investment Manager and
Affiliates of Investment Manager.
A. The Portfolio acknowledges that the Investment
Manager or one or more of its affiliates has
investment responsibilities, renders investment
advice to and performs other investment advisory
services for other clients ("Client Accounts"), and
that the Investment Manager, its affiliates or any of
its or their directors, officers, agents or employees
may buy, sell or trade in any securities for its or
their respective accounts ("Affiliated Accounts").
Subject to the provisions of Sections 2 and 3 hereof,
the Portfolio agrees that the Investment Manager or
its affiliates may give advice or execute investment
responsibility and take such other action with
respect to other Client Accounts and Affiliated
Accounts which may differ from the advice given or
the timing or nature of action taken with respect to
the Portfolio; provided that the Investment Manager
acts in good faith; provided, further, that it is the
Investment Manager's policy to allocate, within its
reasonable discretion, investment opportunities to
the Portfolio over a period of time on a fair and
equitable basis relative to the Client Accounts and
the Affiliated Accounts, taking into account the cash
position and the investment objectives and policies
of the Portfolio and any specific investment
restrictions applicable thereto. The Portfolio
acknowledges that one or more Client Accounts and
Affiliated Accounts may at any time hold, acquire,
increase, decrease, dispose of or otherwise deal with
positions in investments in which the Portfolio may
have an interest from time to time, whether in
transactions which involve the Portfolio or
otherwise. The Investment Manager shall have no
obligation to acquire for the Portfolio a position in
any investment which any Client Account or Affiliated
Account may acquire, and the Portfolio shall have no
first refusal, coinvestment or other rights in
respect of any such investment, either for the
Portfolio or otherwise.
B. Subject to and in accordance with the Agreement and
Declaration of Trust and ByLaws of the Trust and to
Section 10(a) of the Investment Company Act, it is
understood that Trustees, officers, agents and
shareholders of the Portfolio are or may be
interested in the Investment Manager or its
affiliates as directors, officers, agents or
stockholders of the Investment Manager or its
affiliates; that directors, officers, agents and
stockholders of the Investment Manager or its
affiliates are or may be interested in the Portfolio
as trustees, officers, agents, shareholders or
otherwise; that the Investment Manager or its
affiliates may be interested in the Portfolio as
shareholders or otherwise; and that the effect of any
such interests shall be governed by said Agreement
and Declaration of Trust, By-Laws and the Investment
Company Act.
C. The services of the Investment Manager to the
Portfolio hereunder are not to be deemed exclusive,
and the Investment Manager and any of its affiliates
shall be free
6
<PAGE>
to render similar services to others. The Investment
Manager shall not be obligated to give the Portfolio
more favorable or preferential treatment vis-a-vis
its other clients.
SECTION 10. No Personal Liability. Reference is hereby made to the
Agreement and Declaration of Trust dated June 25, 1995 establishing the Trust,
as amended September 15, 1995 (the "Agreement and Declaration of Trust"), a copy
of which has been filed with the Secretary of the Commonwealth of Massachusetts
and elsewhere as required by law, and to any and all amendments thereto so filed
or hereafter filed. No Trustee, shareholder, officer, agent or employee of the
Trust or the Portfolio shall be held to any personal liability hereunder or in
connection with the affairs of the Portfolio or the Trust. Only the trust estate
under said Agreement and Declaration of Trust is liable under this Agreement.
Without limiting the generality of the foregoing, neither the Investment Manager
nor any of its officers, directors, shareholders or employees shall, under any
circumstances, have recourse or cause or willingly permit recourse to be had
directly or indirectly to any personal, statutory, or other liability of any
shareholder, Trustee, officer, agent or employee of the Trust or the Portfolio
or of any successor of the Trust or the Portfolio, whether such liability now
exists or is hereafter incurred for claims against the trust estate, but shall
look for payment solely to said trust estate, or the assets of such successor of
the Portfolio.
SECTION 11. Limitation of Liability.
A. The Investment Manager shall not be liable for any action
taken, omitted or suffered to be taken by it in its reasonable
judgment, in good faith and believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this Agreement,
or in accordance with (or in the absence of) specific directions or
instructions from the Portfolio or the Investment Manager; provided,
however, that such acts or omissions shall not have resulted from the
Investment Manager's willful misfeasance, bad faith, gross negligence,
a violation of the standard of care established by and applicable to
the Investment Manager in its actions under this Agreement or reckless
disregard of its obligations and duties hereunder.
B. No provision of this agreement shall be construed to
protect the Investment Manager from liability in violation of Section
17(i) of the Investment Company Act.
SECTION 12. Confidentiality. Subject to the duty of the Investment
Manager and the Portfolio to comply with applicable law, including any demand of
any regulatory or taxing authority having jurisdiction, the parties hereto shall
treat as confidential all information pertaining to the Portfolio and the
actions of the Investment Manager and the Portfolio in respect thereof.
SECTION 13. Assignment. This Agreement shall terminate automatically in
the event of its assignment, as that term is defined in Section 2(a)(4) of the
Investment Company Act. The Investment Manager shall notify the Portfolio in
writing sufficiently in advance of any proposed change of control, as defined in
Section 2(a)(9) of the Investment Company Act, as will enable the Portfolio to
consider whether an assignment as defined in Section 2(a)(4) of the Investment
Company Act will occur, and whether to take the steps necessary to enter into a
new contract with the Investment Manager. The Investment Manager shall notify
the Portfolio of any change in the membership of the Investment Manager within a
reasonable time after such change.
7
<PAGE>
SECTION 14. Representations, Warranties and Agreements of the
Portfolio. The Portfolio represents, warrants and agrees that:
A. The Investment Manager has been duly appointed to provide
investment services to the Portfolio as contemplated hereby.
B. The Portfolio will deliver to the Investment Manager a true
and complete copy of its then current prospectus and statement of
additional information as effective from time to time and such other
documents governing the investment of the Portfolio's assets and such
other information as is necessary for the Investment Manager to carry
out its obligations under this Agreement.
SECTION 15. Representations, Warranties and Agreements of the
Investment Manager. The Investment Manager represents, warrants and agrees that:
A. It is registered as an "Investment Adviser" under the
Investment Advisers Act.
B. It will maintain, keep current and preserve on behalf of
the Portfolio, in the manner required or permitted by the Act and the
Rules promulgated thereunder, the records identified in Schedule C (as
Schedule C may be amended from time to time). The Investment Manager
agrees that such records are the property of the Portfolio, and will be
surrendered to the Portfolio promptly upon request.
C. Upon request, the Investment Manager will promptly supply
the Portfolio with any information concerning the Investment Manager
and its stockholders, employees and affiliates which the Portfolio may
reasonably require in connection with their preparation of the
registration statement, proxy material, reports, responses to
shareholder inquiries or other documents required to be filed under the
Investment Company Act, the Securities Act of 1933, as amended, or
other applicable securities laws.
D. Reference is hereby made to the Agreement and Declaration
of Trust, a copy of which has been filed with the Secretary of the
Commonwealth of Massachusetts and elsewhere as required by law, and to
any and all amendments thereto so filed or hereafter filed. The name
refers to the Trustees under said Agreement and Declaration of Trust,
as Trustees and not personally, and no Trustee, shareholder, officer,
agent or employee of the Portfolio shall be held to any personal
liability hereunder or in connection with the affairs of the Portfolio,
but only the trust estate under said Agreement and Declaration of Trust
is liable under this Agreement. Without limiting the generality of the
foregoing, neither the Investment Manager nor any of its officers,
trustees, partners, shareholders or employees shall, under any
circumstances, have recourse or cause or willingly permit recourse to
be had directly or indirectly to any personal, statutory, or other
liability of any shareholder, Trustee, officer, agent or employee of
the Portfolio or of any successor of the Portfolio, whether such
liability now exists or is hereafter incurred for claims against the
trust estate, but shall look for payment solely to said trust estate,
or the assets of such successor of the Portfolio.
SECTION 16. Amendment. This Agreement may be amended at any time, but
only by written agreement among the Investment Manager and the Portfolio, which
amendment, other than amendments
8
<PAGE>
to Schedules A and C, is subject to the approval of the Trustees and the
shareholders of the Portfolio as and to the extent required by the Investment
Company Act.
SECTION 17. Effective Date; Term.
A. Unless sooner terminated as provided herein, this Agreement
shall continue in effect until February 22, 2001 and shall continue
automatically for successive periods of twelve months each, provided
such continuance is specifically approved at least annually by (i) the
Portfolio's Board of Trustees or (ii) a vote of a "majority" (as
defined in the Investment Company Act) of the Portfolio's outstanding
voting securities; provided, that in either event the continuance is
also approved by a majority of the Board of Trustees who are not
"interested persons" (as defined in the Investment Company Act) of any
party to this Agreement, by vote cast in person at a meeting called for
the purpose of voting on such approval. The aforesaid requirement that
continuance of this Agreement be "specifically approved at least
annually" shall be construed in a manner consistent with the Investment
Company Act and the Rules and Regulations thereunder.
B. Notwithstanding the foregoing, this Agreement may be
terminated at any time, without the payment of any penalty, by vote of
the Board or by vote of a majority of the outstanding voting securities
of the Portfolio on sixty (60) days' written notice to the Investment
Manager. The Investment Manager may terminate this Agreement at any
time, without the payment of any penalty, on sixty (60) days' notice to
the Investment Manager. This Agreement will terminate automatically in
the event of its assignment as defined in the Investment Company Act.
SECTION 18. Applicable Law. To the extent that state law is not
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 Illinois.
SECTION 19. Arbitration. Any disputes between the parties to this
Agreement involving the construction or application of any of the terms,
provisions, or conditions of this Agreement shall be submitted to arbitration;
provided, however, that any disputes involving the termination of this Agreement
be referred first to the Board of Trustees. The arbitration shall be conducted
in accordance with the Rules of the American Arbitration Association. The
Portfolio on the one hand, and the Investment Manager, on the other, shall each
appoint one person to hear and determine the dispute, and the two persons so
chosen shall select a third impartial arbitrator, unless the parties shall
otherwise mutually agree with respect to the selection of arbitrators. The
decision of the majority of the arbitrators so chosen (or, in the event the
parties shall agree to submit the dispute to a single arbitrator, the decision
of that arbitrator) shall be final and conclusive upon all parties.
SECTION 20. Severability. If any term or condition of this Agreement
shall be invalid or unenforceable to any extent or in any application, then the
remainder of this Agreement, and such term or condition except to such extent or
in such application, shall not be affected thereby, and each and every term and
condition of this Agreement shall be valid and enforced to the fullest extent
and in the broadest application permitted by law.
SECTION 21. Consultants. The Investment Manager may, in its discretion
in connection with the rendering of the management services required under this
Agreement, retain such consultants or other parties as it may deem appropriate
to furnish information, clerical and other services and assistance for the
benefit of the Portfolio, but any fee, compensation or expenses to be paid to
any such parties shall be paid by the Investment Manager, and no obligation
shall be incurred on the Portfolio's behalf in any such respects.
9
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
DEVCAP TRUST
(On behalf of the DEVCAP Shared Return Fund)
By: /s/ Joseph N. St. Clair
------------------------------------------
As Trustee pursuant to an Agreement and
Declaration of Trust on file with the
Secretary of The Commonwealth of
Massachusetts and not individually.
CHRISTIAN BROTHERS INVESTMENT
SERVICES, INC.
By: /s/ Brother Michael W. O'Hern
------------------------------------------
Title: President
---------------------------------------
SCHEDULES: A. Operational Procedures
B. Fee Schedule
C. Record Keeping Requirements
10
<PAGE>
DEVCAP SHARED RETURN FUND
Investment Management Agreement
SCHEDULE A
----------
OPERATIONAL PROCEDURES
----------------------
In order to minimize operational problems, it will be necessary for a
flow of information to be supplied to the custodian of the Portfolio, Mellon
Trust (the "Custodian").
The Investment Manager must furnish the Custodian and the Fund
Accountant, Sunstone Financial Group, Inc., with daily information as to
executed trades, or, if no trades are executed, a report to that effect, no
later than 5:00 P.M. (New York Time) on the day of the trade. The necessary
information can be transmitted via facsimile machine to the Custodian. Upon
receipt of brokers' confirmations, the Investment Manager or the Custodian must
notify the other party if any differences exist. The reporting of trades by the
Investment Manager to the Custodian shall include the following information:
1. Purchase or sale;
2. Security name and description (see trade ticket);
3. CUSIP Number, NYSE ticker, if applicable or widely recognized
security identifier;
4. Number of shares or units and currency in which the securities
are denominated;
5. Sales price per share or unit;
6. Commission rate per share and aggregate commission or if a net
trade;
7. Executing broker and clearing bank, if any;
8. Trade date;
9. Settlement date;
10. If security is not eligible for DTC;
11. Interest purchased or sold from interest bearing security;
12. Total net amount of the transaction;
13. Exchange where sale was executed;
14. Identified tax lot;
15. Name of Portfolio and Investment Manager;
11
<PAGE>
16. Location of where security is being held if other than DTC.
When opening accounts with brokers for the Portfolio, the account must
be a cash account. No margin accounts in the name of the Portfolio are to be
maintained. The broker should be advised to use the Custodian's DTC ID system
number (No.) to facilitate the receipt of information by the Custodian.
II. ALL DTC ELIGIBLE SECURITIES:
---------------------------
Boston Safe Deposit & Trust Co.
DTC #954
For: DEVCAP Shared Return Fund
CXDF0000012
Agent Bank Number: 26017
III. ALL GOVERNMENT ISSUES DELIVERED THROUGH BOOK ENTRY:
--------------------------------------------------
Deliver through your area Federal Reserve Bank to:
ABA#: 011001234 BOS SAFE DEP/CUST
For: DEVCAP Shared Return Fund
CXDF0000012
IV. WIRE INSTRUCTIONS:
-----------------
Federal Reserve Bank of Boston
011001234/BOS SAFE DEP
DDA # 048771
For: DEVCAP Shared Return Fund
CXDF0000012
Attn: Inst Trust Division Cash Unit
12
<PAGE>
Telephone instructions shall be provided by separate arrangement with
the Custodian.
V. DELIVERY INSTRUCTIONS FOR TRANSACTIONS TO BE SETTLED IN NEW YORK:
----------------------------------------------------------------
Mellon Securities Trust Company
120 Broadway, 13th Floor
New York, New York 10271
Reference: DEVCAP Shared Return Fund
CXDF0000012
Each security transfer, regardless of transfer method used, must be
accompanied by a transmittal letter, in duplicate, if you require.
---------------------------------
The Custodian will supply the Investment Manager daily with a cash availability
report. This will normally be done by telephone so that the Investment Manager
may know the amount available for investment purposes.
Delivery Instructions in this Schedule A may change from time to time. Such
changes will be communicated by the Custodian to the Fund, the Investment
Manager and the Sub-Adviser.
13
<PAGE>
DEVCAP SHARED RETURN FUND
Investment Management Agreement
SCHEDULE B
----------
INVESTMENT MANAGER FEE
----------------------
For the services provided to the Portfolio, the Portfolio will pay to
the Investment Manager a fee computed daily and payable monthly equal on an
annual basis to .25% of the Portfolio's average daily net assets. The foregoing
fee shall be pro-rated for any month during which this Agreement is in effect
for only a portion of the month.
15
<PAGE>
DEVCAP SHARED RETURN FUND
Investment Management Agreement
SCHEDULE C
----------
RECORDS TO BE MAINTAINED BY THE INVESTMENT MANAGER
--------------------------------------------------
2. (Rule 31a-1(b)(5) and (6)) A record of each brokerage order, and all
other portfolio purchases and sales, given by the Investment Manager on
behalf of the Portfolio for, or in connection with, the purchase or
sale of securities, whether executed or unexecuted. Such records shall
include:
A. The name of the broker;
B. The terms and conditions of the order and of any modifications
or cancellation thereof;
C. The time of entry or cancellation;
D. The price at which executed;
E. The time of receipt of a report of execution; and
F. The name of the persons who placed the order on behalf of the
Portfolio.
3. (Rule 31a-1(b)(9)) A record for each fiscal quarter, completed within
ten (10) days after the end of the quarter, showing specifically the
basis or bases upon which the allocation of orders for the purchase and
sale of portfolio securities to named brokers or dealers was effected,
and the division of brokerage commissions or other compensation on such
purchase and sale orders. Such record:
A. Shall include the consideration given to:
(i) The sale of shares of the Portfolio by brokers or
dealers.
(ii) The supplying of services or benefits by brokers or
dealers to:
(a) The Portfolio,
(b) The Investment Manager (Christian Brothers
Investment Service, Inc.), and
(c) Any person other than the foregoing.
(ii) Any other consideration other than the technical
qualifications of the brokers and dealers as such.
B. Shall show the nature of the services or benefits made
available.
C. Shall describe in detail the application of any general or
specific formula or other determinant used in arriving at such
allocation of purchase and sale orders and such division of
brokerage commissions or other compensation.
D. The name of the person responsible for making the
determination of such allocation and such division of
brokerage commissions or other compensation.
16
<PAGE>
4. (Rule 31a-1(b)(10)) A record in the form of an appropriate memorandum
identifying the person or persons, committees or groups authorizing the
purchase or sale of portfolio securities. Where an authorization is
made by a committee or group, a record shall be kept of the names of
its members who participate in the authorization. There shall be
retained as part of this record any memorandum, recommendation or
instruction supporting or authorizing the purchase or sale of portfolio
securities and such other information as is appropriate to support the
authorization.*
5. (Rule 31a-1(f)) Such accounts, books and other documents as are
required to be maintained by registered investment managers by rule
adopted under Section 204 of the Investment Advisers Act, to the extent
such records are necessary or appropriate to record the Investment
Adviser's transactions with the Portfolio.
- --------
* Such information might include: the current Form 10-K, annual and
quarterly reports, press releases, reports by analysts and from
brokerage firms (including their recommendation: i.e., buy, sell, hold)
or any internal reports or Investment Manager reviews.
17
<PAGE>
Exhibit (d)(2)
Investment Sub-Advisory Agreement
<PAGE>
Exhibit (d)(2)
INVESTMENT SUB-ADVISORY AGREEMENT
---------------------------------
INVESTMENT SUB-ADVISORY AGREEMENT, dated as of February 22, 2000 between
Christian Brothers Investment Services, Inc., a corporation organized under the
laws of the State of Illinois ("CBIS") and RhumbLine Advisers (the
"Sub-Adviser") with respect to the DEVCAP Shared Return Fund (the "Portfolio"),
a separate, diversified portfolio of the DEVCAP Trust, a business trust
organized under the laws of the Commonwealth of Massachusetts (the "Trust").
WHEREAS, the Trust has been organized as a Massachusetts business trust
under the laws of the Commonwealth of Massachusetts to engage in the business of
an open-end management investment company under the Investment Company Act of
1940, as amended (the "Investment Company Act"), and the shares (the "Shares")
of beneficial interest of the Trust may be divided into multiple series
("Series"), including the Portfolio as a separate, non-diversified portfolio of
the Trust;
WHEREAS, the Trust, on behalf of the Portfolio, has retained CBIS for
the purpose of making investment decisions for the Portfolio;
WHEREAS, CBIS wishes to retain the Sub-Adviser to act as investment
sub-adviser with respect to the Portfolio and to delegate to the Sub-Adviser
certain duties of CBIS under the Investment Management Agreement by and between
the Trust and CBIS;
WHEREAS, the Sub-Adviser is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended (the "Investment Advisers Act"),
and desires to provide services to the Portfolio in consideration of and on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, CBIS and the Sub-Adviser agree as follows:
SECTION 1. Employment as Sub-Adviser. CBIS being duly authorized hereby
employs the Sub-Adviser as Sub-Adviser of the assets of the Portfolio, on the
terms and conditions set forth herein. The Sub-Adviser shall for all purposes
herein be deemed to be an independent contractor and shall, except as expressly
provided or authorized (whether herein or otherwise), have no authority to act
for or represent CBIS in any way or otherwise be deemed an agent of CBIS.
SECTION 2. Acceptance of Employment; Standard of Performance. The
Sub-Adviser accepts its employment as Sub-Adviser of the Portfolio's assets to
manage the investment and reinvestment of the Portfolio's assets and agrees to
use its best professional judgment to make timely investment decisions for the
Portfolio in accordance with the provisions of this Agreement and to provide the
other services set forth in Section 3 of this Agreement, subject to the general
direction of CBIS and the Board of Trustees (the "Trustees" or the "Board") and
officers of the Trust, for the period, in the manner and on the terms
hereinafter set forth.
SECTION 3. Obligation of and Services to be Provided by the
Sub-Adviser. The Sub-Adviser undertakes to provide the services hereinafter set
forth and to assume the obligations set forth below in this Section 3.
A. Portfolio Management Services. In providing portfolio management
services to the Portfolio, the Sub-Adviser shall be subject to the investment
objectives, policies and restrictions of the
<PAGE>
Portfolio (including the socially responsible investing criteria communicated in
writing to the Sub-Adviser by CBIS from time to time) as set forth in its
current prospectus and statement of additional information (as the same may be
modified from time to time), the Trust's charter and bylaws and the investment
restrictions set forth in the Investment Company Act and the Rules thereunder
(as and to the extent set forth in such registration statement or in other
documentation furnished to the Sub-Adviser by the Portfolio or CBIS), to the
provisions of the Internal Revenue Code applicable to the Trust as a regulated
investment company and to the supervision and control of the Trustees. The
Sub-Adviser shall not, without the prior approval of the Portfolio, effect any
transactions that would cause the Portfolio to be out of compliance with any of
such objectives, restrictions or policies.
B. Corporate Management Services. Subject to the supervision of the
Trustees and officers of the Trust and as reasonably requested by the officers
of the Trust or the Trustees, the Sub-Adviser shall assist the officers of the
Trust in the performance of the following services:
(1) Prepare reports relating to the business and affairs of
the Portfolio as may be mutually agreed upon and not
otherwise appropriately prepared by the Portfolio's
custodian, legal counsel or auditors;
(2) Provide such assistance to the custodian and the
Trust's legal counsel and auditors as generally may be
required to properly carry on the business and
operations of the Portfolio;
(3) Refer to the Trust's officers or transfer agent,
shareholder inquiries relating to the Portfolio;
(4) Employ or provide and compensate the executive,
administrative, secretarial and clerical personnel
necessary to supervise the provision of the services
set forth in subparagraph 3(B), and shall bear the
expense of providing such services, except as may
otherwise be provided in Section 8 of this Agreement.
(5) Supervise the general management and investment of the
Portfolio's assets and securities portfolio subject to
and in accordance with the investment objectives and
policies of the Portfolio and any directions which the
Trustees may issue to CBIS or the Sub-Adviser from time
to time; and
C. Provision of Information Necessary for Preparation of
Securities Registration Statements, Amendments and Other
Materials.
The Sub-Adviser will make available and provide
financial, accounting and statistical information
concerning the Sub-Adviser required by the Portfolio in
the preparation of registration statements, reports and
other documents required by federal and state
securities laws, and such other information as the
Portfolio may reasonably request for use in the
preparation of such documents or of other materials
necessary or helpful for the distribution of the
Portfolio's Shares.
D. Other Obligations and Services.
2
<PAGE>
(1) The Sub-Adviser shall make available its officers and
employees to the Trustees and officers of the Portfolio
and to the employees of the Investment Manager for
consultation and discussions regarding the
administration and management of the Portfolio and its
investment activities.
(2) The Sub-Adviser will adopt a written code of ethics
complying with the requirements of Rule 17j-1 under the
Investment Company Act (which may be the Portfolio's
code of ethics) and will provide the Portfolio with
evidence of its adoption. Within forty-five (45) days
of the end of the last calendar quarter of each year
while this Agreement is in effect, the President or a
Vice President of the Sub-Adviser shall certify to the
Portfolio that the Sub-Adviser has complied with the
requirements of Rule 17j-1 during the previous year and
that there has been no violation of the code of ethics
or, if such a violation has occurred, that appropriate
action was taken in response to such violation. Upon
the written request of the Portfolio, the Sub-Adviser
shall permit the Portfolio, its employees or its agents
to examine the reports required to be made by the
Sub-Adviser by Rule 17j-1(c)(1).
(3) Not later than the 10th day of each month, the
Sub-Adviser shall deliver a written report to CBIS
relating to compliance and other matters affecting the
Portfolio and the Sub-Adviser during the immediately
preceding month (the "Monthly Report"). The Monthly
Report shall be in such form reasonably prescribed from
time to time by CBIS. The Monthly Report shall include
without limitation the following: a statement
indicating whether or not the investment policies or
limitations applicable to the Portfolio were violated;
a statement indicating whether or not the Sub-Adviser
caused or has knowledge of any violation of law or
regulation applicable to the Portfolio; a statement
describing fully the facts and circumstances relating
to any violations described in the preceding sentences;
a statement of the steps taken by the Sub-Adviser to
cure any such violations; a statement of the steps
taken by the Sub-Adviser to reasonably assure that any
such violation shall not occur in the future; a
statement indicating whether or not the sub-adviser or
any of its employees is the subject of, or aware of,
any investigation or other preceding related to the
Sub-Adviser or any of its employees by any federal or
state entity or self regulatory organization having
jurisdiction over the Sub-Adviser; and a statement
indicating whether or not the sub-adviser is in
compliance with all laws and regulations material to
the conduct of its business. The Monthly Report shall
also include a description of the Sub-Adviser's
policies and practices relating to best execution,
trade allocation, bunched or batch trading, soft
dollars, payment for order flow, personal trading and
principle trading.
SECTION 4. Transaction Procedures. All portfolio transactions for the
Portfolio will be consummated by payment to or delivery by the custodian of the
Portfolio, Mellon Trust (the "Custodian"), or such depositories or agents as may
be designated by the Custodian in writing, as custodian for the Portfolio, of
all cash and/or securities due to or from the Portfolio, and the Sub-Adviser
shall not have possession or custody thereof or any responsibility or liability
with respect to such custody. The Sub-Adviser shall advise and confirm in
writing to the Custodian all investment orders for the Portfolio placed by it
with brokers and dealers at the time and in the manner set forth in Schedule A
hereto (as
3
<PAGE>
amended from time to time). The Portfolio shall issue to the Custodian such
instructions as may be appropriate in connection with the settlement of any
transaction initiated by the Sub-Adviser.
SECTION 5. Allocation of Brokerage. The Sub-Adviser shall have
authority and discretion to select brokers and dealers to execute portfolio
transactions initiated by the Sub-Adviser, and to select the markets on or in
which the transactions will be executed. The Sub-Adviser will render regular
reports to the Portfolio of the total brokerage business placed on behalf of the
Portfolio by the Sub-Adviser and the manner in which such brokerage business has
been allocated.
A. In doing so, the Sub-Adviser's primary responsibility shall
be to seek to obtain best net price and execution for the Portfolio.
However, this responsibility shall not obligate the Sub-Adviser to
solicit competitive bids for each transaction or to seek the lowest
available commission cost to the Portfolio, so long as the Sub-Adviser
reasonably believes that the broker or dealer selected by it can be
expected to obtain a "best execution" market price on the particular
transaction and determines in good faith that the commission cost is
reasonable in relation to the value of the brokerage and research
services (as defined in Section 28(e)(3) of the Securities Exchange Act
of 1934, as amended), provided by such broker or dealer to the
Sub-Adviser viewed in terms of either that particular transaction or of
the Sub-Adviser's overall responsibilities with respect to its clients,
including the Portfolio, as to which the Sub-Adviser exercises
investment discretion, notwithstanding that the Portfolio may not be
the direct or exclusive beneficiary of any such services or that
another broker may be willing to charge the Portfolio a lower
commission on the particular transaction.
B. The Sub-Adviser shall not execute any portfolio
transactions for the Portfolio with a broker or dealer which is an
"affiliated person" (as defined in the Investment Company Act) of the
Portfolio or the Sub-Adviser of the Portfolio without the prior written
approval of the Portfolio. The Portfolio will provide the Sub-Adviser
with a list of brokers and dealers which are "affiliated persons" of
the Portfolio.
SECTION 6. Proxies. The Sub-Adviser shall not vote any proxies
solicited by or with respect to the issuers of securities in which assets of the
Portfolio may be invested from time to time.
SECTION 7. Fees for Services.
The compensation of the Sub-Adviser for its services under this
Agreement shall be calculated and paid by CBIS in accordance with the attached
Schedule B.
SECTION 8. Expenses of the Portfolio. It is understood that the
Portfolio will pay all its expenses other than those expressly assumed by the
Sub-Adviser herein, which expenses payable by the Portfolio shall include:
A. Auditing and accounting fees and expenses;
B. Fees and expenses for transfer agent, registrar,
dividend disbursing agent and shareholder
recordkeeping services (including reasonable fees and
expenses payable to the Sub-Adviser for such
services);
4
<PAGE>
C. Fees and expenses of the custodian of the Trust's
assets, including expenses incurred in performing
fund accounting and recordkeeping services provided
by the custodian;
D. Expenses of obtaining quotations for calculating the
value of the Portfolio's net assets;
E. Salaries and other compensation of any of its
executive officers and employees who are not
officers, directors, stockholders or employees of the
Sub-Adviser or any of its affiliates;
F. Taxes and governmental fees levied against the
Portfolio and the expenses of preparing tax returns
and reports;
G. Brokerage fees and commissions in connection with the
purchase and sale of portfolio securities for the
Portfolio;
H. Organizational expenses of the Portfolio;
I. Costs, including the interest expense, of borrowing
money;
J. Costs and/or fees incident to Trustee and shareholder
meetings of the Portfolio, the preparation and
mailings of proxy material, prospectuses and reports
of the Portfolio to its shareholders, the filing of
reports with regulatory bodies, the maintenance of
the Portfolio's legal existence, membership dues and
fees of investment company industry trade
associations, and the registration of Shares with
federal and state securities authorities;
K. Legal fees and expenses (including reasonable fees
for legal services rendered by the Sub-Adviser or its
affiliates), including the legal fees related to the
registration and continued qualification of the
Portfolio's Shares for sale (and of maintaining the
registration of the fund);
L. Costs of printing stock certificates, if any,
representing Shares of the Portfolio or any other
expenses, including clerical expenses of issue,
redemption, or repurchase of Shares of the Portfolio;
M. Trustees' fees and expenses of Trustees who are not
directors, officers, employees or stockholders of the
Sub-Adviser or any of its affiliates;
N. Its pro rata portion of the fidelity bond required by
Section 17(g) of the Investment Company Act, or other
insurance premiums;
O. Fees payable to federal and state authorities in
connection with the registration of the Portfolio's
Shares.
5
<PAGE>
P. Litigation and indemnification expenses and other
extraordinary expenses not incurred in the ordinary
course of the business of the Portfolio or the Trust.
SECTION 9. Other Investment Activities of Sub-Adviser and Affiliates of
Sub-Adviser.
A. The Sub-Adviser or one or more of its affiliates has
investment responsibilities, renders investment
advice to and performs other investment advisory
services for other clients ("Client Accounts"), and
the Sub-Adviser, its affiliates or any of its or
their directors, officers, agents or employees may
buy, sell or trade in any securities for its or their
respective accounts ("Affiliated Accounts"). Subject
to the provisions of Sections 2 and 3 hereof, the
Sub-Adviser or its affiliates may give advice or
execute investment responsibility and take such other
action with respect to other Client Accounts and
Affiliated Accounts which may differ from the advice
given or the timing or nature of action taken with
respect to the Portfolio; provided that the
Sub-Adviser acts in good faith; provided, further,
that it is the Sub-Adviser's policy to allocate,
within its reasonable discretion, investment
opportunities to the Portfolio over a period of time
on a fair and equitable basis relative to the Client
Accounts and the Affiliated Accounts, taking into
account the cash position and the investment
objectives and policies of the Portfolio and any
specific investment restrictions applicable thereto.
One or more Client Accounts and Affiliated Accounts
may at any time hold, acquire, increase, decrease,
dispose of or otherwise deal with positions in
investments in which the Portfolio may have an
interest from time to time, whether in transactions
which involve the Portfolio or otherwise. The
Sub-Adviser shall have no obligation to acquire for
the Portfolio a position in any investment which any
Client Account or Affiliated Account may acquire, and
the Portfolio shall have no first refusal,
coinvestment or other rights in respect of any such
investment, either for the Portfolio or otherwise.
B. Subject to and in accordance with the Agreement and
Declaration of Trust and ByLaws of the Trust and to
Section 10(a) of the Investment Company Act, it is
understood that Trustees, officers, agents and
shareholders of the Portfolio are or may be
interested in the Sub-Adviser or its affiliates as
directors, officers, agents or stockholders of the
Sub-Adviser or its affiliates; that directors,
officers, agents and stockholders of the Sub-Adviser
or its affiliates are or may be interested in the
Portfolio as trustees, officers, agents, shareholders
or otherwise; that the Sub-Adviser or its affiliates
may be interested in the Portfolio as shareholders or
otherwise; and that the effect of any such interests
shall be governed by said Agreement and Declaration
of Trust, By-Laws and the Investment Company Act.
C. The services of the Sub-Adviser to the Portfolio
hereunder are not to be deemed exclusive, and the
Sub-Adviser and any of its affiliates shall be free
to render similar services to others. The Sub-Adviser
shall not be obligated to give the Portfolio more
favorable or preferential treatment vis-a-vis its
other clients.
SECTION 10. No Personal Liability. Reference is hereby made to the
Agreement and Declaration of Trust dated June 29, 1995 establishing the Trust,
as amended September 15, 1995, a copy of which has been filed with the Secretary
of the Commonwealth of Massachusetts and elsewhere as
6
<PAGE>
required by law, and to any and all amendments thereto so filed or hereafter
filed. No Trustee, shareholder, officer, agent or employee of the Trust or the
Portfolio shall be held to any personal liability hereunder or in connection
with the affairs of the Portfolio or the Trust. Only the trust estate under said
Agreement and Declaration of Trust is liable under this Agreement. Without
limiting the generality of the foregoing, neither the Sub-Adviser nor any of its
officers, directors, shareholders or employees shall, under any circumstances,
have recourse or cause or willingly permit recourse to be had directly or
indirectly to any personal, statutory, or other liability of any shareholder,
Trustee, officer, agent or employee of the Trust or the Portfolio or of any
successor of the Trust or the Portfolio, whether such liability now exists or is
hereafter incurred for claims against the trust estate, but shall look for
payment solely to said trust estate, or the assets of such successor of the
Portfolio.
SECTION 11. Limitation of Liability.
A. The Sub-Adviser shall not be liable for any action taken,
omitted or suffered to be taken by it in its reasonable judgment, in
good faith and believed by it to be authorized or within the discretion
or rights or powers conferred upon it by this Agreement, or in
accordance with (or in the absence of) specific directions or
instructions from the Portfolio or the Sub-Adviser; provided, however,
that such acts or omissions shall not have resulted from the
Sub-Adviser's willful misfeasance, bad faith, gross negligence, a
violation of the standard of care established by and applicable to the
Sub-Adviser in its actions under this Agreement or reckless disregard
of its obligations and duties hereunder.
B. No provision of this agreement shall be construed to
protect the Sub-Adviser from liability in violation of Section 17(i) of
the Investment Company Act.
SECTION 12. Confidentiality. Subject to the duty of CBIS, the
Sub-Adviser and the Portfolio to comply with applicable law, including any
demand of any regulatory or taxing authority having jurisdiction, the parties
hereto shall treat as confidential all information pertaining to the Portfolio
and the actions of CBIS, the Sub-Adviser and the Portfolio in respect thereof.
SECTION 13. Assignment. This Agreement shall terminate automatically in
the event of its assignment, as that term is defined in Section 2(a)(4) of the
Investment Company Act. The Sub-Adviser shall notify the Portfolio in writing
sufficiently in advance of any proposed change of control, as defined in Section
2(a)(9) of the Investment Company Act, as will enable the Portfolio to consider
whether an assignment as defined in Section 2(a)(4) of the Investment Company
Act will occur, and whether to take the steps necessary to enter into a new
contract with the Sub-Adviser. The Sub-Adviser shall notify the Portfolio of any
change in the membership of the Sub-Adviser within a reasonable time after such
change.
SECTION 14. Representations, Warranties and Agreements of CBIS. CBIS
represents, warrants and agrees that:
A. CBIS has been duly appointed to provide investment services
to the Portfolio as contemplated hereby.
B. CBIS will deliver to the Sub-Adviser a true and complete
copy of the then current prospectus and statement of additional
information of the Portfolio as effective from time to time
7
<PAGE>
and such other documents governing the investment of the Portfolio's
assets and such other information as is necessary for the Sub-Adviser
to carry out its obligations under this Agreement.
SECTION 15. Representations, Warranties and Agreements of the
Sub-Adviser. The Sub-Adviser represents, warrants and agrees that:
A. It is registered as an "Investment Adviser" under the
Investment Advisers Act.
B. It will maintain, keep current and preserve on behalf of
the Investment Manager and the Portfolio, in the manner required or
permitted by the Act and the Rules promulgated thereunder, the records
identified in Schedule C (as Schedule C may be amended from time to
time). The Sub-Adviser agrees that such records are the property of the
Investment Manager and the Portfolio, and will be surrendered to the
Investment Manager or the Portfolio promptly upon request.
C. Upon request, the Sub-Adviser will promptly supply the
Investment Manager and the Portfolio with any information concerning
the Sub-Adviser and its stockholders, employees and affiliates which
the Investment Manager or the Portfolio may reasonably require in
connection with their preparation of the registration statement, proxy
material, reports, responses to shareholder inquiries or other
documents required to be filed under the Investment Company Act, the
Securities Act of 1933, as amended, or other applicable securities
laws.
D. Reference is hereby made to the Agreement and Declaration
of Trust, a copy of which has been filed with the Secretary of the
Commonwealth of Massachusetts and elsewhere as required by law, and to
any and all amendments thereto so filed or hereafter filed. The name
refers to the Trustees under said Agreement and Declaration of Trust,
as Trustees and not personally, and no Trustee, shareholder, officer,
agent or employee of the Portfolio shall be held to any personal
liability hereunder or in connection with the affairs of the Portfolio,
but only the trust estate under said Agreement and Declaration of Trust
is liable under this Agreement. Without limiting the generality of the
foregoing, neither the Sub-Adviser nor any of its officers, trustees,
partners, shareholders or employees shall, under any circumstances,
have recourse or cause or willingly permit recourse to be had directly
or indirectly to any personal, statutory, or other liability of any
shareholder, Trustee, officer, agent or employee of the Portfolio or of
any successor of the Portfolio, whether such liability now exists or is
hereafter incurred for claims against the trust estate, but shall look
for payment solely to said trust estate, or the assets of such
successor of the Portfolio.
SECTION 16. Amendment. This Agreement may be amended at any time, but
only by written agreement between CBIS and the Sub-Adviser, which amendment,
other than amendments to Schedules A and C, is subject to the approval of the
Trustees and the shareholders of the Portfolio as and to the extent required by
the Investment Company Act.
SECTION 17. Effective Date; Term.
A. Unless sooner terminated as provided herein, this Agreement
shall continue in effect until February 22, 2001 and shall
continue automatically for successive periods of twelve months each,
provided such continuance is specifically approved at least annually by
(i) the
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<PAGE>
Portfolio's Board of Trustees or (ii) a vote of a "majority" (as
defined in the Investment Company Act) of the Portfolio's outstanding
voting securities; provided, that in either event the continuance is
also approved by a majority of the Board of Trustees who are not
"interested persons" (as defined in the Investment Company Act) of any
party to this Agreement, by vote cast in person at a meeting called for
the purpose of voting on such approval. The aforesaid requirement that
continuance of this Agreement be "specifically approved at least
annually" shall be construed in a manner consistent with the Investment
Company Act and the Rules and Regulations thereunder.
B. Notwithstanding the foregoing, this Agreement may be
terminated at any time, without the payment of any penalty, by vote of
the Board or by vote of a majority of the outstanding voting securities
of the Portfolio on sixty (60) days' written notice to the Sub-Adviser.
CBIS may terminate this Agreement at any time, without the payment of
any penalty, on sixty (60) days' written notice to the Trustees and the
Sub-Advisers. The Sub-Adviser may terminate this Agreement at any time,
without the payment of any penalty, on ninety (90) days' notice to
CBIS. This Agreement will terminate automatically in the event of its
assignment as defined in the Investment Company Act.
SECTION 18. Applicable Law. To the extent that state law is not
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 Illinois.
SECTION 19. Arbitration. Any disputes between CBIS and the Sub-Adviser
involving the construction or application of any of the terms, provisions, or
conditions of this Agreement shall be submitted to arbitration; provided,
however, that any disputes involving the termination of this Agreement be
referred first to the Board of Trustees. The arbitration shall be conducted in
accordance with the Rules of the American Arbitration Association. CBIS, on the
one hand, and the Sub-Adviser, on the other, shall each appoint one person to
hear and determine the dispute, and the two persons so chosen shall select a
third impartial arbitrator, unless the parties shall otherwise mutually agree
with respect to the selection of arbitrators. The decision of the majority of
the arbitrators so chosen (or, in the event the parties shall agree to submit
the dispute to a single arbitrator, the decision of that arbitrator) shall be
final and conclusive upon all parties.
SECTION 20. Severability. If any term or condition of this Agreement
shall be invalid or unenforceable to any extent or in any application, then the
remainder of this Agreement, and such term or condition except to such extent or
in such application, shall not be affected thereby, and each and every term and
condition of this Agreement shall be valid and enforced to the fullest extent
and in the broadest application permitted by law.
SECTION 21. Consultants. The Sub-Adviser may, in its discretion in
connection with the rendering of the management services required under this
Agreement, retain such consultants or other parties as it may deem appropriate
to furnish information, clerical and other services and assistance for the
benefit of the Portfolio, but any fee, compensation or expenses to be paid to
any such parties shall be paid by the Sub-Adviser, and no obligation shall be
incurred on the Portfolio's behalf in any such respects.
9
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
RHUMBLINE ADVISERS
By: /s/ John D. Nelson
--------------------------------------------
Title: President
CHRISTIAN BROTHERS INVESTMENT
SERVICES, INC.
By: /s/ Brother Michael W. O'Hern
--------------------------------------------
Title: President
SCHEDULES: A. Operational Procedures
B. Fee Schedule
C. Record Keeping Requirements
10
<PAGE>
DEVCAP SHARED RETURN FUND
Investment Sub-Advisory Agreement
SCHEDULE A
----------
OPERATIONAL PROCEDURES
----------------------
In order to minimize operational problems, it will be necessary for a
flow of information to be supplied to the custodian of the Portfolio, Mellon
Trust (the "Custodian").
The Sub-Adviser must furnish the Custodian and the Fund Accountant,
Sunstone Financial Group, Inc., with daily information as to executed trades,
or, if no trades are executed, a report to that effect, no later than 5:00 P.M.
(New York Time) on the day of the trade. The necessary information can be
transmitted via facsimile machine to the Custodian. Upon receipt of brokers'
confirmations, the Sub-Adviser or the Custodian must notify the other party if
any differences exist. The reporting of trades by the Sub-Adviser to the
Custodian shall include the following information:
1. Purchase or sale;
2. Security name and description (see trade ticket);
3. CUSIP Number, NYSE ticker, if applicable or widely recognized
security identifier;
4. Number of shares or units and currency in which the securities
are denominated;
5. Sales price per share or unit;
6. Commission rate per share and aggregate commission or if a net
trade;
7. Executing broker and clearing bank, if any;
8. Trade date;
9. Settlement date;
10. If security is not eligible for DTC;
11. Interest purchased or sold from interest bearing security;
12. Total net amount of the transaction;
13. Exchange where sale was executed;
14. Identified tax lot;
11
<PAGE>
15. Name of Portfolio and Sub-Adviser;
16. Location of where security is being held if other than DTC.
When opening accounts with brokers for the Portfolio, the account must
be a cash account. No margin accounts in the name of the Portfolio are to be
maintained. The broker should be advised to use the Custodian's DTC ID system
number (No.) to facilitate the receipt of information by the Custodian.
II. ALL DTC ELIGIBLE SECURITIES:
---------------------------
Boston Safe Deposit & Trust Co.
DTC #954
For: DEVCAP Shared Return Fund
CXDF0000012
Agent Bank Number: 26017
III. ALL GOVERNMENT ISSUES DELIVERED THROUGH BOOK ENTRY:
--------------------------------------------------
Deliver through your area Federal Reserve Bank to:
ABA#: 011001234 BOS SAFE DEP/CUST
For: DEVCAP Shared Return Fund
CXDF0000012
12
<PAGE>
IV. WIRE INSTRUCTIONS:
------------------
Federal Reserve Bank of Boston
011001234/BOS SAFE DEP
DDA#048771
For: DEVCAP Shared Return Fund
CXDF0000012
Attn: Inst Trust Division Cash Unit
Telephone instructions shall be provided by separate arrangement with
the Custodian.
V. DELIVERY INSTRUCTIONS FOR TRANSACTIONS TO BE SETTLED IN NEW YORK:
----------------------------------------------------------------
Mellon Securities Trust Company
120 Broadway, 13th Floor
New York, New York 10271
Reference: DEVCAP Shared Return Fund
CXDF0000012
Each security transfer, regardless of transfer method used, must be accompanied
by a transmittal letter, in duplicate, if you require.
----------------------
The Custodian will supply the Sub-Adviser daily with a cash availability report.
This will normally be done by telephone so that the Sub-Adviser may know the
amount available for investment purposes.
Delivery instructions in this Schedule A may change from time to time. Such
changes will be communicated by the Custodian to the Fund, the Investment
Manager and the Sub-Advisor.
13
<PAGE>
DEVCAP SHARED RETURN FUND
Investment Sub-Advisory Agreement
SCHEDULE B
----------
SUB-ADVISER FEE
---------------
For the services provided to CBIS under this Agreement, CBIS will pay
to the Sub-Adviser a quarterly fee computed as follows.
Aggregate amount of
assets managed by RhumbLine
as sub-adviser for all CBIS
clients (including the Portfolio)
under any Agreement between
CBIS and RhumbLine Fee
- ------------------------------------------------- -----------------
First $25 million .07%
Next $25 million .06%
Next $50 million .05%
Next $50 million .04%
Excess .0375%
The Sub-Adviser shall furnish to CBIS a statement for the aggregate fee
payable under this Agreement and any other sub-advisory agreement by and between
CBIS and the Sub-Adviser for each quarter during which services are performed by
the Sub-Adviser prior to the end of such quarter. Such statement shall include
the value of the aggregate assets that determines the applicable rate at which
such fee is payable and show the calculation by which such fee is determined.
CBIS shall pay to the Sub-Adviser the amount payable pursuant to any such
statement not later than the last day of the quarter following the quarter
during which the services for the payment of which the fee is payable were
rendered.
14
<PAGE>
DEVCAP SHARED RETURN FUND
Investment Sub-Advisory Agreement
SCHEDULE C
----------
RECORDS TO BE MAINTAINED BY THE SUB-ADVISER
-------------------------------------------
1. (Rule 31a-1(b)(5) and (6)) A record of each brokerage order, and all
other portfolio purchases and sales, given by the Sub-Adviser on behalf
of the Portfolio for, or in connection with, the purchase or sale of
securities, whether executed or unexecuted. Such records shall include:
A. The name of the broker;
B. The terms and conditions of the order and of any modifications
or cancellation thereof;
C. The time of entry or cancellation;
D. The price at which executed;
E. The time of receipt of a report of execution; and
F. The name of the persons who placed the order on behalf of the
Portfolio.
2. (Rule 31a-1(b)(9)) A record for each fiscal quarter, completed within
ten (10) days after the end of the quarter, showing specifically the
basis or bases upon which the allocation of orders for the purchase and
sale of portfolio securities to named brokers or dealers was effected,
and the division of brokerage commissions or other compensation on such
purchase and sale orders. Such record:
A. Shall include the consideration given to:
(i) The sale of shares of the Portfolio by brokers or
dealers.
(ii) The supplying of services or benefits by brokers or
dealers to:
(a) The Portfolio,
(b) The Sub-Adviser (RhumbLine Advisers), and
(c) Any person other than the foregoing.
(iii) Any other consideration other than the technical
qualifications of the brokers and dealers as such.
B. Shall show the nature of the services or benefits made
available.
15
<PAGE>
C. Shall describe in detail the application of any general or
specific formula or other determinant used in arriving at such
allocation of purchase and sale orders and such division of
brokerage commissions or other compensation.
D. The name of the person responsible for making the
determination of such allocation and such division of
brokerage commissions or other compensation.
3. (Rule 31a-1(b)(10)) A record in the form of an appropriate memorandum
identifying the person or persons, committees or groups authorizing the
purchase or sale of portfolio securities. Where an authorization is
made by a committee or group, a record shall be kept of the names of
its members who participate in the authorization. There shall be
retained as part of this record any memorandum, recommendation or
instruction supporting or authorizing the purchase or sale of portfolio
securities and such other information as is appropriate to support the
authorization.*
4. (Rule 31a-1(f)) Such accounts, books and other documents as are
required to be maintained by registered Sub-Advisers by rule adopted
under Section 204 of the Investment Advisers Act, to the extent such
records are necessary or appropriate to record the Investment Adviser's
transactions with the Portfolio.
- -------------
* Such information might include: the current Form 10-K, annual and
quarterly reports, press releases, reports by analysts and from
brokerage firms (including their recommendation: i.e., buy, sell, hold)
or any internal reports or Investment Manager reviews.
16
<PAGE>
EXHIBIT (g)(2)
FORM OF CUSTODY AND INFORMATION SERVICES AGREEMENT
<PAGE>
CUSTODY AND INFORMATION SERVICES AGREEMENT
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I - DEFINITIONS........................................................1
ARTICLE II - CUSTODY PROVISIONS................................................3
1. Appointment of Custodian..............................................3
2. Custody of Cash and Securities........................................4
3. Settlement of Fund Transactions.......................................8
4. Lending of Securities.................................................9
5. Payment of Dividends or Distributions.................................9
6. Sale and Redemption of Shares of the Fund.............................9
7. Indebtedness.........................................................10
8. Persons Having Access to Assets of the Fund..........................11
9. Concerning the Custodian.............................................12
ARTICLE III - Information Services Agreement..................................14
1. Provisions of Information............................................15
2. Information to be Provided...........................................15
3. Liability and Warranties.............................................15
ARTICLE IV - ADDITIONAL PROVISIONS............................................16
1. Compensation.........................................................16
2. Liability for Depositories...........................................16
3. Damages..............................................................17
4. Limitation of Liability..............................................17
5. Term and Termination.................................................17
6. Force Majeure........................................................18
7. Inspection of Books and Records......................................18
8. Miscellaneous........................................................18
APPENDIX A - AUTHORIZED PERSONS..............................................A-1
APPENDIX B - OFFICERS OF THE FUND............................................B-1
i
<PAGE>
Exhibit (g)(2)
--------------
CUSTODY AND INFORMATION SERVICES AGREEMENT
AGREEMENT dated as of February 22, 2000, between DEVCAP Shared Return Fund
(the "Fund"), a series of DEVCAP Trust (the "Trust"), a business trust organized
under the laws of the Commonwealth of Massachusetts, having its principal office
and place of business at 209 West Fayette Street, Baltimore, Maryland 21201, and
Mellon Bank, N.A. (the "Custodian"), a National Banking Association having its
principal office at One Mellon Bank Center, Pittsburgh, Pennsylvania 15258.
WITNESSETH:
WHEREAS, The Fund and the Custodian desire to set forth their agreement
with respect to the custody of the Fund's Securities and cash and the processing
of Securities transactions;
WHEREAS, The Custodian agrees to provide, as a vendor, the information
described in Article III if, and when available in accordance with the terms and
conditions of Article III.
NOW THEREFORE, in consideration of the mutual promises hereinafter set
forth, the Fund and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement or in any Appendices to this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings:
(a) "Affiliated Person" shall have the meaning of the term within Section
2(a)3 of the 1940 Act.
(b) "Agreement" shall mean this Custody and Information Services
Agreement.
(c) "Assets" shall mean any of Fund's investments and such cash and cash
equivalents as are reasonably necessary to effect Fund's transactions
in such investments.
(d) "Authorized Person" shall be deemed to include the President, and any
Vice President, the Secretary, the Treasurer or any other person,
whether or not any such person is an officer or employee of the Fund,
duly authorized by the Board of Trustees of the Fund to give Oral
Instructions and Written Instructions on behalf of the Fund and listed
in the certification annexed hereto as Appendix A or such other
certification as may be received by the Custodian from time to time.
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(e) "Board" shall mean the Board of Trustees (or the body authorized to
exercise authority similar to that of the board of directors of a
corporation) of the Fund.
(f) "Book-Entry System" shall mean the Federal Reserve/Treasury book-entry
system for United States and federal agency Securities, its successor
or successors and its nominee or nominees.
(g) "Business Day" shall mean any day on which the Fund, the Custodian, the
Book-Entry System and appropriate clearing corporation(s) are open for
business.
(h) "Certificate" shall mean any notice, instruction or other instrument in
writing, authorized or required by this Agreement to be given to the
Custodian, which is actually received by the Custodian and signed on
behalf of the Fund by any two Authorized Persons or any two officers
thereof.
(g) "Custodian" shall mean Mellon Bank, N.A., in its capacity as custodian
or information services provider as required under the terms of each
Article.
(h) "Custody Agreement" shall mean the provisions of Articles I, II and IV
of this Agreement and any Appendices referenced therein and attached
to this Agreement.
(k) "Information Services Agreement" shall mean the provisions of Articles
I and III and IV of this Agreement and any Appendices referenced
therein and attached to this Agreement.
(1) "Declaration of Trust" shall mean the Declaration of Trust of the Fund
dated September 15, 1995, as the same may be amended from time to time.
(m) "Fund" shall mean DEVCAP Shared Return Fund.
(n) "Money Market Security" shall be deemed to include, without
limitation, debt obligations issued or guaranteed as to interest and
principal by the government of the United States or agencies or
instrumentalities thereof ("U.S. government securities"), commercial
paper, bank certificates of deposit, bankers' acceptances and
short-term corporate obligations, where the purchase or sale of such
securities normally requires settlement in federal funds on the same
day as such purchase or sale, and repurchase and reverse repurchase
agreements with respect to any of the foregoing types of securities.
(o) "Oral Instructions" shall mean verbal instructions actually received
by the Custodian from a person reasonably believed by the Custodian to
be an Authorized Person.
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(p) "Prospectus" shall mean the Fund's current prospectus and statement of
additional information relating to the registration of the Fund's
Shares under the Securities Act of 1933, as amended.
(q) "Shares" refers to shares of beneficial interest $________ par value
per share of the Fund.
(r) "Security" or "Securities" shall be deemed to include bonds,
debentures, notes, stocks, shares, evidences of indebtedness, and
other securities, commodities interests and investments from time to
time owned by the Fund.
(s) "Securities Depository" shall mean any entity described in
subparagraph (a)(1)(ii) or any recognized domestic clearing facility,
book-entry system, centralized custodial depository or similar
organization. For the avoidance of doubt, the term "Securities
Depository" shall include First Chicago Clearing Centre or any other
system for the central handling of securities or equivalent
book-entries regardless of whether or not such entities are acting in
a custodial capacity with respect to Assets, Securities or other
property of the Fund.
(t) "Transfer Agent" shall mean the person which performs the transfer
agent, dividend disbursing agent and shareholder servicing agent
functions for the Fund.
(u) "Written Instructions" shall mean a written communication actually
received by the Custodian from a person reasonably believed by the
Custodian to be an Authorized Person by any system, including, without
limitation, electronic transmissions, facsimile and telex.
(v) The "1940 Act" refers to the Investment Company Act of 1940, and the
Rules and Regulations thereunder, all as amended from time to time.
ARTICLE II
CUSTODY PROVISIONS
1. Appointment of Custodian.
(a) The Board hereby constitutes and appoints the Custodian as custodian
of all the Securities and monies at the time owned by or in the
possession of the Fund during the period of this Agreement.
(b) The Custodian hereby accepts appointment as such custodian and agrees
to
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perform the duties thereof as hereinafter set forth.
2. Custody of Cash and Securities.
(a) Receipt and Holding of Assets. The Fund will deliver or cause to be
delivered to the Custodian all Securities and monies owned by it at
any time during the period of this Custody Agreement. The Custodian
will not be responsible for such Securities and monies until actually
received by it. The Board hereby specifically authorizes the Custodian
to hold Securities, Assets or other property of the Fund with any
domestic subcustodian or Securities Depository. Securities and monies
of the Fund deposited in a Securities Depository will be represented
in accounts which include only assets held by the Custodian for
customers, including but not limited to accounts for which the
Custodian acts in a fiduciary or representative capacity.
Notwithstanding any other provision hereof, under no circumstances
shall Assets or Securities include or consist of any security which is
safe-kept or principally traded outside the United States.
(b) Accounts and Disbursements. The Custodian shall establish and maintain
a separate account for the Fund and shall credit to the separate
account all monies received by it for the account of such Fund and
shall disburse the same only:
1. In payment for Securities purchased for the Fund;
2. In payment of dividends or distributions with respect to the
Shares;
3. In payment of original issue or other taxes with respect to
the Shares;
4. In payment for Shares which have been redeemed by the Fund;
5. Pursuant to Written Instructions setting forth the name and
address of the person to whom the payment is to be made, the
amount to be paid and the purpose for which payment is to be
made, provided that in the event of disbursements pursuant to
this sub-section 2(b), the Fund shall indemnify and hold the
Custodian harmless from any claims or losses arising out of
such disbursements in reliance on such Written Instructions
which it, in good faith, believes to be received from duly
Authorized Persons; or
6. In payment of fees and in reimbursement of the expenses and
liabilities of the Custodian attributable to the Fund, as
provided in Article II, Section 9(i) and Article IV, Section
1.
(c) Confirmation and Statements. Promptly after the close of
business on each day, the Custodian shall furnish the Fund
with confirmations and a summary of all
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transfers to or from the account of the Fund during said day. Where
securities purchased by the Fund are in a fungible bulk of securities
registered in the name of the Custodian (or its nominee) or shown on
the Custodian's account on the books of a Securities Depository, the
Custodian shall by book-entry or otherwise identify the quantity of
those securities belonging to the Fund. At least monthly, the
Custodian shall furnish the Fund with a detailed statement of the
Securities and monies held for the Fund under this Custody Agreement.
(d) Registration of Securities and Physical Separation. The Custodian is
authorized to hold all Securities, Assets, or other property of the
Fund in nominee name, in bearer form or in book-entry form. The
Custodian may register any Securities, Assets or other property of the
Fund in the name of the Fund, in the name of the Custodian, any
domestic subcustodian, in the name of any duly appointed registered
nominee of such entity, or in the name of a Securities Depository or
its successor or successors, or its nominee or nominees. The Custodian
is hereby authorized to deposit with, and hold Securities, Assets or
other property of the Fund with any Securities Depository. The Fund
agrees to furnish to the Custodian appropriate instruments to enable
the Custodian to hold or deliver in proper form for transfer, or to
register in the name of its registered nominee or in the name of a
Securities Depository, any Securities which it may hold for the
account of the Fund and which may from time to time be registered in
the name of the Fund. The Custodian shall hold all such Securities
specifically allocated to the Fund which are not held in a Securities
Depository in a separate account for the Fund in the name of the Fund
physically segregated at all times from those of any other person or
persons.
(e) Segregated Accounts. Upon receipt of a Written Instruction, the
Custodian will establish segregated accounts on behalf of the Fund to
hold liquid or other assets as it shall be directed by a Written
Instruction and shall increase or decrease the assets in such
segregated accounts only as it shall be directed by subsequent Written
Instruction.
(f) Collection of Income and Other Matters Affecting Securities. Unless
otherwise instructed to the contrary by a Written Instruction, the
Custodian by itself, or through the use of a Securities Depository
with respect to Securities therein deposited, shall with respect to
all Securities held for the Fund in accordance with this Agreement:
1. Collect all income due or payable, provided that the Custodian
shall not be responsible for the failure to receive payment of
(or late payment of) distribution with respect to securities or
other property held in the account;
2. Present for payment and collect the amount payable upon all
Securities
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which may mature or be called, redeemed, retired or otherwise
become payable. Notwithstanding the foregoing, the Custodian
shall have no responsibility to the Fund for monitoring or
ascertaining any call, redemption or retirement dates with
respect to put bonds which are owned by the Fund and held by the
Custodian or its nominees. Nor shall the Custodian have any
responsibility or liability to the Fund for any loss by the Fund
for any missed payments or other defaults resulting therefrom,
unless the Custodian received timely notification from the Fund
specifying the time, place and manner for the presentment of any
such put bond owned by the Fund and held by the Custodian or its
nominee. The Custodian shall not be responsible and assumes no
liability for the accuracy or completeness of any notification
the Custodian may furnish to the Fund with respect to put bonds;
3. Surrender Securities in temporary form for definitive Securities;
4. Execute any necessary declarations or certificates of ownership
under the Federal income tax laws or the laws or regulations of
any other taxing authority now or hereafter in effect; and
5. Hold directly, or through a Securities Depository with respect to
Securities therein deposited, for the account of the Fund all
rights and similar Securities issued with respect to any
Securities held by the Custodian hereunder for the Fund.
(g) Delivery of Securities and Evidence of Authority. Upon receipt of a
Written Instruction and not otherwise, except for subparagraphs 5, 6,
7, and 8 of this section 2(g) which may be effected by Oral or Written
Instructions, the Custodian, directly or through the use of a
Securities Depository, shall:
1. Execute and deliver or cause to be executed and delivered to
such persons as may be designated in such Written Instructions,
proxies, consents, authorizations, and any other instruments
whereby the authority of the Fund as owner of any Securities may
be exercised;
2. Deliver or cause to be delivered any Securities held for the Fund
in exchange for other Securities or cash issued or paid in
connection with the liquidation, reorganization, refinancing,
merger, consolidation or recapitalization of any corporation, or
the exercise of any conversion privilege;
3. Deliver or cause to be delivered any Securities held for the Fund
to any protective committee, reorganization committee or other
person in
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connection with the reorganization, refinancing, merger,
consolidation or recapitalization or sale of assets of any
corporation, and receive and hold under the terms of this Custody
Agreement in the separate account for the Fund such certificates
of deposit, interim receipts or other instruments or documents as
may be issued to it to evidence such delivery;
4. Make or cause to be made such transfers or exchanges of the
assets specifically allocated to the separate account of the Fund
and take such other steps as shall be stated in Written
Instructions to be for the purpose of effectuating any duly
authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of the Fund;
5. Deliver Securities upon sale of such Securities for the account
of the Fund pursuant to Section 3;
6. Deliver Securities upon the receipt of payment in connection with
any repurchase agreement related to such Securities entered into
by the Fund;
7. Deliver Securities owned by the Fund to the issuer thereof or its
agent when such Securities are called, redeemed, retired or
otherwise become payable; provided, however, that in any such
case the cash or other consideration is to be delivered to the
Custodian. Notwithstanding the foregoing, the Custodian shall
have no responsibility to the Fund for monitoring or ascertaining
any call, redemption or retirement dates with respect to the put
bonds which are owned by the Fund and held by the Custodian or
its nominee. Nor shall the Custodian have any responsibility or
liability to the Fund for any loss by the Fund for any missed
payment or other default resulting therefrom unless the Custodian
received timely notification from the Fund specifying the time,
place and manner for the presentment of any such put bond owned
by the Fund and held by the Custodian or its nominee. The
Custodian shall not be responsible and assumes no liability to
the Fund for the accuracy or completeness of any notification the
Custodian may furnish to the Fund with respect to put bonds;
8. Deliver Securities for delivery in connection with any loans of
Securities made by the Fund but only against receipt of adequate
collateral as agreed upon from time to time by the Custodian and
the Fund which may be in the form of cash or U.S. government
securities or a letter of credit;
9. Deliver Securities for delivery as security in connection with
any borrowings by the Fund requiring a pledge of Fund assets, but
only against receipt of amounts borrowed;
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10. Deliver Securities upon receipt of Written Instructions from the
Fund for delivery to the Transfer Agent or to the holders of
Shares in connection with distributions in kind, as may be
described from time to time in the Fund's Prospectus, in
satisfaction of requests by holders of Shares for repurchase or
redemption;
11. Deliver Securities as collateral in connection with short sales
by the Fund of common stock for which the Fund owns the stock or
owns preferred stocks or debt securities convertible or
exchangeable, without payment or further consideration, into
shares of the common stock sold short;
12. Deliver Securities for any purpose expressly permitted by and in
accordance with procedures described in the Fund's Prospectus;
and
13. Deliver Securities for any other proper business purpose, but
only upon receipt of, in addition to Written Instructions, a
certified copy of a resolution of the Board of Trustees signed by
an Authorized Person and certified by the Secretary of the Fund,
specifying the Securities to be delivered, setting forth the
purpose for which such delivery is to be made, declaring such
purpose to be a proper business purpose, and naming the person or
persons to whom delivery of such Securities shall be made.
Notwithstanding anything in this Agreement to the contrary, the
Custodian shall not be liable for the acts or omissions of any agent
appointed under paragraph (f) of Section 9 pursuant to Oral or Written
Instructions including, but not limited to, any broker-dealer or other
entity designated by the Fund or its investment advisor to hold any
Securities or other property of the Fund as collateral or otherwise
pursuant to any investment strategy.
(h) Endorsement and Collection of Checks, Etc. The Custodian is hereby
authorized to endorse and collect all checks, drafts or other orders
for the payment of money received by the Custodian for the account of
the Fund.
3. Settlement of Fund Transactions.
(a) Customary Practices. Settlement of transactions may be effected in
trading and processing practices customary in the market where the
transaction occurs. The Fund acknowledges that this may, in certain
circumstances, require the delivery of cash or Securities (or other
property) without the concurrent receipt of Securities (or other
property) or cash. In such circumstances, the Custodian shall have no
responsibility for nonreceipt of payments (or late payment) or
nondelivery of Securities or other property (or late delivery) by the
counterparty.
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(b) Contractual Income. In accordance with the Custodian's standard
operating procedure, the Custodian shall credit the Fund with income
and maturity proceeds on securities on contractual payment date net of
any taxes or upon actual receipt. To the extent the Custodian credits
income on contractual payment date, the Custodian may reverse such
accounting entries to the contractual payment date if the Custodian
reasonably believes that such amount will not be received.
(c) Contractual Settlement. In accordance with the Custodian's standard
operating procedure, the Custodian will attend to the settlement of
securities transactions on the basis of either contractual settlement
date accounting or actual settlement date accounting. To the extent
the Custodian settles certain securities transactions on the basis of
contractual settlement date accounting, the Custodian may reverse to
the contractual settlement date any entry relating to such contractual
settlement if the Custodian reasonably believes that such amount will
not be received.
4. Lending of Securities.
The Custodian may lend the assets of the Fund in accordance with the terms
and conditions of a separate securities lending agreement.
5. Payment of Dividends or Distributions.
(a) The Fund shall furnish to the Custodian the vote of the Board of
Trustees of the Fund certified by the Secretary (i) authorizing the
declaration of distributions on a specified periodic basis and
authorizing the Custodian to rely on Oral or Written Instructions
specifying the date of the declaration of such distribution, the date
of payment thereof, the record date as of which shareholders entitled
to payment shall be determined, the amount payable per share to the
shareholders of record as of the record date and the total amount
payable to the Transfer Agent on the payment date, or (ii) setting
forth the date of declaration of any distribution by the Fund, the
date of payment thereof, the record date as of which shareholders
entitled to payment shall be determined, the amount payable per share
to the shareholders of record as of the record date and the total
amount payable to the Transfer Agent on the payment date.
(b) Upon the payment date specified in such vote, Oral Instructions or
Written Instructions, as the case may be, the Custodian shall pay out
the total amount payable to the Transfer Agent of the Fund.
6. Sale and Redemption of Shares of the Fund.
(a) Whenever the Fund shall sell any Shares, the Fund shall deliver or
cause to be delivered to the Custodian a Written Instruction duly
specifying:
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1. The number of Shares sold, trade date, and price; and
2. The amount of money to be received by the Custodian for the sale
of such Shares.
The Custodian understands and agrees that Written Instructions may be
furnished subsequent to the purchase of Shares and that the
information contained therein will be derived from the sales of Shares
as reported to the Fund by the Transfer Agent.
(b) Upon receipt of money from the Transfer Agent, the Custodian shall
credit such money to the separate account of the Fund.
(c) Upon issuance of any Shares in accordance with the foregoing
provisions of this Section 6, the Custodian shall pay all original
issue or other taxes required to be paid in connection with such
issuance upon the receipt of a Written Instruction specifying the
amount to be paid.
(d) Except as provided hereafter, whenever any Shares are redeemed, the
Fund shall cause the Transfer Agent to promptly furnish to the
Custodian Written Instructions, specifying:
1. The number of Shares redeemed; and
2. The amount to be paid for the Shares redeemed.
The Custodian further understands that the information contained in
such Written Instructions will be derived from the redemption of
Shares as reported to the Fund by the Transfer Agent.
(e) Upon receipt from the Transfer Agent of advice setting forth the
number of Shares received by the Transfer Agent for redemption and
that such Shares are valid and in good form for redemption, the
Custodian shall make payment to the Transfer Agent of the total amount
specified in a Written Instruction issued pursuant to paragraph (d) of
this Section 6.
(f) Notwithstanding the above provisions regarding the redemption of
Shares, whenever such Shares are redeemed pursuant to any check
redemption privilege which may from time to time be offered by the
Fund, the Custodian, unless otherwise instructed by a Written
Instruction shall, upon receipt of advice from the Fund or its agent
stating that the redemption is in good form for redemption in
accordance with the check redemption procedure, honor the check
presented as
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part of such check redemption privilege out of the monies specifically
allocated to the Fund in such advice for such purpose.
7. Indebtedness.
(a) The Fund will cause to be delivered to the Custodian by any bank
(excluding the Custodian) from which the Fund borrows money for
temporary administrative or emergency purposes using Securities as
collateral for such borrowings, a notice or undertaking in the form
currently employed by any such bank setting forth the amount which
such bank will loan to the Fund against delivery of a stated amount of
collateral. The Fund shall promptly deliver to the Custodian Written
Instructions stating with respect to each such borrowing: (1) the name
of the bank; (2) the amount and terms of the borrowing, which may be
set forth by incorporating by reference an attached promissory note,
duly endorsed by the Fund, or other loan agreement; (3) the time and
date, if known, on which the loan is to be entered into (the
"borrowing date"); (4) the date on which the loan becomes due and
payable; (5) the total amount payable to the Fund on the borrowing
date; (6) the market value of Securities to be delivered as collateral
for such loan, including the name of the issuer, the title and the
number of shares or the principal amount of any particular Securities;
(7) whether the Custodian is to deliver such collateral through a
Securities Depository; and (8) a statement that such loan is in
conformance with the 1940 Act and the Fund's Prospectus.
(b) Upon receipt of the Written Instruction referred to in subparagraph
(a) above, the Custodian shall deliver on the borrowing date the
specified collateral and the executed promissory note, if any, against
delivery by the lending bank of the total amount of the loan payable,
provided that the same conforms to the total amount payable as set
forth in the Written Instruction. The Custodian may, at the option of
the lending bank, keep such collateral in its possession, but such
collateral shall be subject to all rights therein given the lending
bank by virtue of any promissory note or loan agreement. The Custodian
shall deliver as additional collateral in the manner directed by the
Fund from time to time such Securities as may be specified in Written
Instruction to collateralize further any transaction described in this
Section 7. The Fund shall cause all Securities released from
collateral status to be returned directly to the Custodian, and the
Custodian shall receive from time to time such return of collateral as
may be tendered to it. In the event that the Fund fails to specify in
Written Instruction all of the information required by this Section 7,
the Custodian shall not be under any obligation to deliver any
Securities. Collateral returned to the Custodian shall be held
hereunder as it was prior to being used as collateral.
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8. Persons Having Access to Assets of the Fund.
(a) No trustee or agent of the Fund, and no officer, director, employee or
agent of the Fund's investment adviser, of any sub-investment adviser
of the Fund, or of the Fund's administrator, shall have physical
access to the assets of the Fund held by the Custodian or be
authorized or permitted to withdraw any investments of the Fund, nor
shall the Custodian deliver any assets of the Fund to any such person.
No officer, director, employee or agent of the Custodian who holds any
similar position with the Fund's investment adviser, with any
sub-investment adviser of the Fund or with the Fund's administrator
shall have access to the assets of the Fund.
(b) Nothing in this Section 8 shall prohibit any duly authorized officer,
employee or agent of the Fund, or any duly authorized officer,
director, employee or agent of the investment adviser, of any
sub-investment adviser of the Fund or of the Fund's administrator,
from giving Oral Instructions or Written Instructions to the Custodian
or executing a Certificate so long as it does not result in delivery
of or access to assets of the Fund prohibited by paragraph (a) of this
Section 8.
9. Concerning the Custodian.
(a) Standard of Conduct. Notwithstanding any other provision of this
Custody Agreement, the Custodian shall not be liable for any loss or
damage, including reasonable counsel fees, resulting from its action
or omission to act or otherwise, except for any such loss or damage
arising out of the negligence or willful misconduct of the Custodian.
The Custodian may, with respect to questions of law, apply for and
obtain the advice and opinion of counsel to the Fund or of its own
counsel, at the reasonable expense of the Fund, and shall be fully
protected with respect to anything done or omitted by it in good faith
without negligence in conformity with such advice or opinion.
(b) Limit of Duties. Without limiting the generality of the foregoing, the
Custodian shall be under no duty or obligation to inquire into, and
shall not be liable for:
1 The validity of the issue of any Securities purchased by the
Fund, the legality of the purchase thereof, or the propriety of
the amount paid therefor;
2. The legality of the sale of any Securities by the Fund or the
propriety of the amount for which the same are sold;
3. The legality of the issue or sale of any Shares, or the
sufficiency of the amount to be received therefor;
4. The legality of the redemption of any Shares, or the propriety of
the amount to be paid therefor;
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5. The legality of the declaration or payment of any distribution of
the Fund; and
6. The legality of any borrowing for temporary administrative or
emergency purposes.
(c) No Liability Until Receipt. The Custodian shall not be liable for, or
considered to be the Custodian of, any money, whether or not
represented by any check, draft, or other instrument for the payment
of money, received by it on behalf of the Fund until the Custodian
actually receives and collects such money.
(d) Amounts Due from Transfer Agent. The Custodian shall not be under any
duty or obligation to take action to effect collection of any amount
due to the Fund from the Transfer Agent nor to take any action to
effect payment or distribution by the Transfer Agent of any amount
paid by the Custodian to the Transfer Agent in accordance with this
Custody Agreement.
(e) Collection Where Payment Refused. The Custodian shall not be under any
duty or obligation to take action to effect collection of any amount,
if the Securities upon which such amount is payable are in default, or
if payment is refused after due demand or presentation, unless and
until (i) it shall be directed to take such action by a Certificate
and (ii) it shall be assured to its satisfaction of reimbursement of
its costs and expenses in connection with any such action.
(f) Appointment of Subcustodians. (i) The Custodian is hereby authorized
to appoint one or more domestic subcustodians (which may be an
affiliate of the Custodian) to hold Securities and monies at any time
owned by the Fund. The Custodian is also hereby authorized to place
Assets with First Chicago Clearing Centre or any other depository.
(g) No Duty to Ascertain Authority. The Custodian shall not be under any
duty or obligation to ascertain whether any Securities at any time
delivered to or held by it for the Fund are such as may properly be
held by the Fund under the provisions of the Declaration of Trust and
the Prospectus.
(h) Reliance on Certificates and Instructions. The Custodian shall be
entitled to rely upon any Certificate, notice or other instrument in
writing received by the Custodian and reasonably believed by the
Custodian to be genuine and to be signed by an officer or Authorized
Person of the Fund. The Custodian shall be entitled to rely upon any
Written Instructions or Oral Instructions actually received by the
Custodian pursuant to the applicable Sections of this Agreement and
reasonably believed by the Custodian to be genuine and to be given by
an Authorized Person. The Fund agrees to forward to the Custodian
Written
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Instructions from an Authorized Person confirming such Oral
Instructions in such manner so that such Written Instructions are
received by the Custodian, whether by hand delivery, telex or
otherwise, by the close of business on the same day that such Oral
Instructions are given to the Custodian. The Fund agrees that the fact
that such confirming instructions are not received by the Custodian
shall in no way affect the validity of the transactions or
enforceability of the transactions hereby authorized by the Fund. The
Fund agrees that the Custodian shall incur no liability to the Fund in
acting upon Oral Instructions given to the Custodian hereunder
concerning such transactions provided such instructions reasonably
appear to have been received from a duly Authorized Person. The
Custodian shall be under no duty to question any direction of an
Authorized Person with respect to the portion of the account over
which such Authorized Person has authority, to review any property
held in the account, to make any suggestions with respect to the
investment and reinvestment of the assets in the account, or to
evaluate or question the performance of any Authorized Person. The
Custodian shall not be responsible or liable for any diminution of
value of any securities or other property held by the Custodian.
(i) Overdraft Facility and Security for Payment. In the event that the
Custodian is directed by Written Instruction (or Oral Instructions
confirmed in writing in accordance with Section 9(h) hereof) to make
any payment or transfer of monies on behalf of the Fund for which
there would be, at the close of business on the date of such payment
or transfer, insufficient monies held by the Custodian on behalf of
the Fund, the Custodian may, in its sole discretion, provide an
overdraft (an "Overdraft") to the Fund in an amount sufficient to
allow the completion of such payment or transfer. Any Overdraft
provided hereunder: (a) shall be payable on the next Business Day,
unless otherwise agreed by the Fund and the Custodian; and (b) shall
accrue interest from the date of the Overdraft to the date of payment
in full by the Fund at a rate agreed upon from time to time, by the
Custodian and the Fund. The Custodian and the Fund acknowledge that
the purpose of such Overdraft is to temporarily finance the purchase
of Securities for prompt delivery in accordance with the terms hereof,
to meet unanticipated or unusual redemptions or to meet other
emergency expenses not reasonably foreseeable by the Fund. The
Custodian shall promptly notify the Fund (an "Overdraft Notice") of
any Overdraft by facsimile transmission or in such other manner as the
Fund and the Custodian may agree. To secure payment of any Overdraft,
the Fund hereby grants to the Custodian a continuing security interest
in and right of setoff against the Securities and cash in the Fund's
account from time to time in the full amount of such Overdraft. Should
the Fund fail to pay promptly any amounts owed hereunder, the
Custodian shall be entitled to use available cash in the Fund's
account and to liquidate Securities in the account as is necessary to
meet the Fund's obligations under the Overdraft. In any such case, and
without limiting the foregoing, the Custodian shall be entitled to
take such other actions(s) or
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<PAGE>
exercise such other options, powers and rights as the Custodian now or
hereafter has as a secured creditor under the Pennsylvania Uniform
Commercial Code or any other applicable law.
ARTICLE III
INFORMATION SERVICES AGREEMENT
The following sets forth our agreement with respect to the delivery of certain
information to the Board or its agents as requested by the Board from time to
time.
1. Provisions of Information.
In accordance with the provisions of this Information Services Agreement,
the Custodian agrees to provide to the Board, or at the direction of the
Board, to the Fund's investment advisors, the information set forth in
Article III, Section 2 with respect to Securities Depositories or
subcustodians which hold Securities, Assets, or other property of the Fund
and the systems and environment for securities processing. The Custodian
shall provide only that portion of such information as is reasonably
available to it.
2. Information to be Provided.
Depository Information
o Name
o Information relative to Determining Compulsory or Voluntary Status of
the Facility
o Type of Entity
o Ownership Structure
o Operating History
o Eligible Instruments
o Security Form
o Financial Data
o Regulator
o External Auditor
Suhcustodian Information
o Financial Information
o Regulator
o External Auditor
o How Securities are Held
o Operational Capabilities
o Insurance Coverage
15
<PAGE>
3. Liability and Warranties.
The Custodian will take all reasonable precautions to ensure that the
information provided is accurate. However, due to the nature and source of
this information, and the necessity of relying on various information
sources, most of which are external to the Custodian, the Custodian shall
have no liability for direct or indirect use of such information. The
Custodian makes no other warranty or condition, either express or implied,
as to the merchantability or fitness for any particular purpose of the
information provided under this Article III.
ARTICLE IV
ADDITIONAL PROVISIONS
1. Compensation.
(a) The Custodian shall be entitled to receive, and Christian Brothers
Investment Services, Inc. ("CBIS") agrees to pay, on behalf of the
Fund, to the Custodian, such compensation as may be agreed upon from
time to time between the Custodian and the Fund. The Custodian may
charge against any monies held on behalf of the Fund pursuant to this
Agreement such compensation and any expenses incurred by the Custodian
in the performance of its duties pursuant to this Agreement. The
Custodian shall also be entitled to charge against any money held on
behalf of the Fund pursuant to this Agreement the amount of any loss,
damage, liability or expense incurred with respect to the Fund,
including reasonable counsel fees, for which it shall be entitled to
reimbursement under the provisions of this Agreement. The expenses
which the Custodian may charge against such account include, but are
not limited to, the expenses of domestic subcustodians incurred in
settling transactions outside of New York City, New York involving the
purchase and sale of Securities.
(b) CBIS will compensate the Custodian for its services rendered under
this Agreement in accordance with the fees set forth in a separate Fee
Schedule which schedule may be modified by the Custodian upon not less
than thirty days prior written notice to the Fund.
(c) Any compensation agreed to hereunder may be adjusted from time to time
by a revised Fee Schedule, dated and signed by an Authorized Person or
authorized representative of each party hereto.
(d) The Custodian will bill CBIS, with a copy to the Fund or its designee,
as soon as practicable after the end of each calendar month. CBIS will
promptly pay to the Custodian the amount of such billing, and confirm
such payment to the Fund or
16
<PAGE>
its designees. In making payments to service providers pursuant to
Written Instructions, the Fund acknowledges that the Custodian is
acting as a paying agent and not as the payor, for tax information
reporting and withholding purposes.
2. Liability for Depositories.
The Custodian shall not be responsible for any losses resulting from the
deposit or maintenance of Securities, Assets or other property of the Fund
with any Securities Depository.
3. Damages.
Under no circumstances shall the Custodian be liable for any indirect,
consequential or special damages with respect to its role as Custodian or
information vendor.
4. Limitation of Liability.
The Fund and the Custodian agree that the obligations of the Fund under
this Agreement shall not be binding upon any of the Trustees, shareholders,
nominees, officers, employees or agents, whether past, present or future,
of the Fund, individually, but are binding only upon the assets and
property of the Fund, as provided in the Declaration of Trust. The
execution and delivery of this Agreement have been authorized by the
Trustees of the Fund, and signed by an authorized officer of the Fund,
acting as such. Neither such authorization by such Trustees nor such
execution and delivery by such officer shall be deemed to have been made by
any of them or any shareholder of the Fund individually or to impose any
liability on any of them or any shareholder of the Fund personally, but
shall bind only the assets and property of the Fund as provided in the
Declaration of Trust.
5. Term and Termination.
(a) This Agreement and any portion thereof shall become effective on the
date first set forth above (the "Effective Date") and shall continue
in effect thereafter until such time as this Agreement may be
terminated in accordance with the provisions hereof.
(b) Either of the parties hereto may terminate this Agreement as a whole
or may terminate the Information Services Agreement by giving to the
other party a notice in writing specifying the date and scope of such
termination, which shall be not less than 60 days after the date of
receipt of such notice. In the event such notice is given by the Fund,
it shall be accompanied by a certified vote of the Board of Trustees
of the Fund, electing to terminate this Agreement or the applicable
portion thereof and designating a successor, which shall be a person
17
<PAGE>
qualified to so act under the 1940 Act if necessary.
In the event such notice is given by the Custodian of any termination
which includes the Custody Agreement, the Fund shall, on or before the
termination date, deliver to the Custodian a certified vote of the
Board of Trustees of the Fund, designating a successor custodian or
custodians. In the absence of such designation by the Fund, the
Custodian may designate a successor custodian, which shall be a person
qualified to so act under the 1940 Act. If the Fund fails to designate
a successor custodian, the Fund shall upon the date specified in the
notice of termination of this Agreement and upon the delivery by the
Custodian of all Securities and monies then owned by the Fund, be
deemed to be its own custodian and the Custodian shall thereby be
relieved of all duties and responsibilities pursuant to this Agreement
or the portion so terminated, other than the duty with respect to
Securities held in the Book-Entry System which cannot be delivered to
the Fund.
(c) Upon the date set forth in such notice under paragraph (b) of this
Section 5, this Agreement or portion thereof shall terminate to the
extent specified in such notice, and if the Custody Agreement is
terminated the Custodian shall upon receipt of a notice of acceptance
by the successor custodian on that date deliver directly to the
successor custodian all Securities and monies then held by the
Custodian on behalf of the Fund, after deducting all fees, expenses
and other amounts for the payment or reimbursement of which it shall
then be entitled.
6. Force Majeure.
Notwithstanding anything in this Agreement to the contrary, the Custodian
shall not be liable for any losses resulting from or caused by events or
circumstances beyond its reasonable control, including, but not limited to,
losses resulting from nationalization, strikes, expropriation, devaluation,
revaluation, confiscation, seizure, cancellation, destruction or similar
action by any governmental authority, de facto or de jure; or enactment,
promulgation, imposition or enforcement by any such governmental authority
of currency restrictions, exchange controls, taxes, levies or other charges
affecting the Fund's property; or the breakdown, failure or malfunction of
any utilities or telecommunications systems; or any order or regulation of
any banking or securities industry including changes in market rules and
market conditions affecting the execution or settlement of transactions; or
acts of war, terrorism, insurrection or revolution; or any other similar
event. This Section shall survive the termination of this Agreement.
7. Inspection of Books and Records.
The books and records of the Custodian shall be open to inspection and
audit at reasonable times by officers and auditors employed by the Fund at
its own expense and
18
<PAGE>
with prior written notice to the Custodian, and by the appropriate
employees of the Securities and Exchange Commission.
8. Miscellaneous.
(a) Annexed hereto as Appendix B is a certification signed by the
Secretary of the Fund setting forth the names and the signatures of
the present Authorized Persons. The Fund agrees to furnish to the
Custodian a new certification in similar form in the event that any
such present Authorized Person ceases to be such an Authorized Person
or in the event that other or additional Authorized Persons are
elected or appointed. Until such new certification shall be received,
the Custodian shall be fully protected in acting under the provisions
of this Agreement upon Oral Instructions or signatures of the present
Authorized Persons as set forth in the last delivered certification.
(b) Annexed hereto as Appendix A is a certification signed by the
Secretary of the Fund setting forth the names and the signatures of
the present officers of the Fund. The Fund agrees to furnish to the
Custodian a new certification in similar form in the event any such
present officer ceases to be an officer of the Fund or in the event
that other or additional officers are elected or appointed. Until such
new certification shall be received, the Custodian shall be fully
protected in acting under the provisions of this Agreement upon the
signature of an officer as set forth in the last delivered
certification.
(c) Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Custodian, shall be sufficiently
given if addressed to the Custodian and mailed or delivered to it at
its offices at One Mellon Bank Center, Pittsburgh, Pennsylvania 15258,
or at such other place as the Custodian may from time to time
designate in writing.
(d) Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Fund, shall be sufficiently given if
addressed to the Fund and mailed or delivered to it at its offices at
209 West Fayette Street, Baltimore, Maryland 21201, or at such other
place as the Fund may from time to time designate in writing.
(e) This Agreement may not be amended or modified in any manner except by
a written agreement executed by both parties with the same formality
as this Agreement (i) authorized, or ratified and approved by a vote
of the Board of Trustees of the Fund, including a majority of the
members of the Board of Trustees of the Fund who are not "interested
persons" of the Fund (as defined in the 1940 Act), or (ii) authorized,
or ratified and approved by such other procedures as may be permitted
or required by the 1940 Act.
19
<PAGE>
(f) This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided,
however, that this Agreement shall not be assignable by the Fund
without the written consent of the Custodian, or by the Custodian
without the written consent of the Fund authorized or approved by a
vote of the Board of Trustees of the Fund provided, however, that the
Custodian may assign the Agreement to an Affiliated Person and any
attempted assignment without such written consent shall be null and
void. Nothing in this Agreement shall give or be construed to give or
confer upon any third party any rights hereunder.
(g) The Fund represents that a copy of the Declaration of Trust is on file
with the Secretary of the Commonwealth of Massachusetts.
(h) This Agreement shall be construed in accordance with the laws of the
Commonwealth of Massachusetts.
(i) The captions of the 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.
(j) This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
20
<PAGE>
APPENDIX A
I, Joseph N. St. Clair, the Secretary of DEVCAP Trust, a business trust
organized under the laws of the Commonwealth of Massachusetts (the "Fund"), do
hereby certify that:
The following individuals have been duly authorized as Authorized Persons
to give Oral Instructions and Written Instructions on behalf of the Fund and the
specimen signatures set forth opposite their respective names are their true and
correct signatures:
Name Signature
Joseph N. St. Clair
James R. Arnold
DEVCAP TRUST
By: Joseph N. St. Clair, Secretary
Dated: February 22, 2000
21
<PAGE>
APPENDIX B
I, Joseph N. St. Clair, the Secretary of DEVCAP Trust, a business trust
organized under the laws of the Commonwealth of Massachusetts (the "Fund"), do
hereby certify that:
The following individuals serve in the following positions with the Fund
and each individual has been duly elected or appointed to each such position and
qualified therefor in conformity with the Fund's Declaration of Trust and the
specimen signatures set forth opposite their respective names are their true and
correct signatures:
Name Position Signature
Joseph N. St. Clair President, Treasurer
and Secretary
James R. Arnold Assistant Secretary
DEVCAP TRUST
By: Joseph N. St. Clair, Secretary
Dated: February 22, 2000
22
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective representatives duly authorized as of the day and year first
above written.
DEVCAP TRUST
By: Joseph N. St. Clair,
President, Treasurer and Secretary
MELLON BANK, N.A.
By: [Name] [Title]
Christian Brothers Investment Services, Inc.
(for the purposes of Article IV, Section 1
only)
---------------------------------
By: [Name] [Title]
23
<PAGE>
EXHIBIT (h)(5)
FORM OF ADMINISTRATION AND FUND ACCOUNTING AGREEMENT
<PAGE>
Exhibit (h)(5)
--------------
ADMINISTRATION AND FUND ACCOUNTING AGREEMENT
THIS AGREEMENT is made as of this 22nd day of February, 2000, by and
between DEVCAP Trust, a Massachusetts business trust (the "Trust"), and Sunstone
Financial Group, Inc., a Wisconsin corporation (the "Administrator").
WHEREAS, the Trust is an open-end investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act") and is authorized to
issue shares of beneficial interests (the "Shares") in separate series with each
such series representing interests in a separate portfolio of securities and
other assets; and
WHEREAS, the Trust and the Administrator desire to enter into an
agreement pursuant to which the Administrator shall provide administration and
fund accounting services to such investment portfolios of the Trust as are
listed on Schedule A attached hereto and any additional investment portfolios
the Trust and Administrator may agree upon and include on Schedule A as such
Schedule may be amended from time to time (such investment portfolios and any
additional investment portfolios are individually referred to as a "Fund" and
collectively the "Funds").
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto, intending to be legally bound, do
hereby agree as follows:
1. Appointment
The Trust hereby appoints the Administrator as administrator and fund
accountant of the Funds for the period and on the terms set forth in this
Agreement. The Administrator accepts such appointment and agrees to render the
services herein set forth, for the compensation herein provided.
2. Services as Administrator
(a) Subject to the direction and control of the Trust's Board of
Trustees and utilizing information provided by the Trust and its agents, the
Administrator will provide the services listed on Schedule B attached hereto.
The duties of the Administrator shall be confined to those expressly set forth
herein, and no implied duties are assumed by or may be asserted against the
Administrator hereunder.
(b) The Trustees of the Trust shall cause the officers, investment
adviser, distributor, legal counsel, independent accountants, transfer agent and
custodian for the Funds to cooperate with the Administrator and to provide the
Administrator, upon request, with such information,
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<PAGE>
documents and advice relating to the Funds and the Trust as is within the
possession or knowledge of such persons, in order to enable the Administrator to
perform its duties hereunder. In connection with its duties hereunder, the
Administrator shall be entitled to rely, and shall be held harmless by the Trust
when acting in reliance upon the instruction, advice, information or any
documents relating to the Funds provided to the Administrator by an Authorized
Person. Authorized Person means any officer of the Funds and any other person
duly authorized by the Funds' Board of Trustees to give oral and written
instructions on behalf of the Fund and listed on the Authorized Persons Appendix
attached hereto and made a part hereof or any amendment thereto as may be
received by Sunstone. An Authorized Person's scope of authority may be limited
by the Fund by setting forth limitations in the Authorized Persons Appendix. The
Administrator shall be entitled to rely on any document that it reasonably
believes to be genuine and to have been signed or presented by the proper party.
Fees charged by such persons shall be an expense of the Trust. The Administrator
shall not be held to have notice of any change of authority of any Authorized
Person until receipt of written notice thereof from the Trust.
(c) In compliance with the requirements of Rule 31a-3 under the 1940
Act, the Administrator hereby agrees that all records which it maintains for the
Trust are the property of the Trust and further agrees to surrender promptly to
the Trust any of such records upon the Trust's request. Subject to the terms of
Section 6, the Administrator further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records described in (a) above
which are maintained by the Administrator for the Trust.
(d) It is understood that in determining security valuations, the
Administrator employs one or more pricing services to determine valuations of
portfolio securities for purposes of calculating net asset values of the Funds.
The Administrator shall identify to the Trust and the Board of Trustees any such
pricing service utilized on behalf of the Trust. The Administrator is authorized
to rely on the prices provided by such service(s) or by the Funds' investment
adviser or other authorized representative of the Funds, and shall not be liable
for losses to the Trust or its securityholders as a result of its reliance on
the valuations provided by the approved pricing service(s) or the
representative, except for a loss resulting from the Administrator's willful
misfeasance, bad faith or gross negligence in the performance of its duties or
from reckless disregard by it of its obligations and duties under this
Agreement.
(e) The Trust's Board of Trustees and the Funds' investment adviser
have and retain primary responsibility for all compliance matters relating to
the Funds including but not limited to compliance with the Investment Company
Act of 1940, as amended, the Internal Revenue Code of 1986, as amended, and the
policies and limitations of each Fund relating to the portfolio investments as
set forth in the Prospectus and Statement of Additional Information. Sunstone's
monitoring and other functions hereunder shall not relieve the Board and the
investment adviser of their primary day-to-day responsibility for assuring such
compliance.
2
<PAGE>
3. Fees; Delegation; Expenses
(a) In consideration of the services rendered pursuant to this
Agreement, the Trust will pay the Administrator a fee, computed daily and
payable monthly, as provided in Schedule C attached hereto, plus out-of-pocket
expenses. Out-of-pocket expenses include, but are not limited to, travel,
lodging and meals in connection with travel on behalf of the Trust, programming
and related expenses (previously incurred or to be incurred by Administrator) in
connection with providing electronic transmission of data between the
Administrator and the Funds' other service providers, brokers, dealers and
depositories, fees and expenses of pricing services, and photocopying, postage,
proofreading and overnight delivery expenses. Fees shall be paid by each Fund at
a rate that would aggregate at least the applicable minimum fee for each Fund.
(b) For the purpose of determining fees payable to the Administrator,
net asset values shall be computed in accordance with the Trust's Prospectuses
and resolutions of the Trust's Board of Trustees. The fee for the period from
the day of the month this Agreement is entered into until the end of that month
shall be pro-rated according to the proportion that such period bears to the
full monthly period. Upon any termination of this Agreement before the end of
any month, the fee for such part of a month shall be pro-rated according to the
proportion which such period bears to the full monthly period and shall be
payable upon the date of termination of this Agreement. Should the Trust be
liquidated, merged with or acquired by another fund or investment company, any
accrued fees shall be immediately payable. Such fee as is attributable to each
Fund shall be a separate charge to each Fund and shall be the several (and not
joint or joint and several) obligation of each such Fund.
(c) The Administrator will bear all expenses in connection with the
performance of its services under this Agreement except as otherwise provided
herein. Other costs and expenses to be incurred in the operation of the Funds,
including, but not limited to: taxes; interest; brokerage fees and commissions,
if any; salaries, fees and expenses of officers and Trustees; Commission fees
and state Blue Sky fees; advisory fees; charges of custodians, transfer agents,
dividend disbursing and accounting services agents; security pricing services;
insurance premiums; outside auditing and legal expenses; costs of organization
and maintenance of corporate existence; typesetting, printing, proofing and
mailing of prospectuses, statements of additional information, supplements,
notices and proxy materials for regulatory purposes and for distribution to
current shareholders; typesetting, printing, proofing and mailing and other
costs of shareholder reports; expenses in connection with the electronic
transmission of documents and information including electronic filings with the
Commission and the states: expenses incidental to holding meetings of the Fund's
shareholders and Trustees; and any extraordinary expenses will be borne by the
Funds or their investment adviser. Expenses incurred for distribution of shares,
including the typesetting, printing, proofing and mailing of prospectuses for
persons who are not shareholders of the Trust, will be borne by the investment
adviser, except for such expenses permitted to be paid by the Trust under a
distribution plan adopted in accordance with applicable laws. Administrator
shall not be required to pay any Blue Sky fees unless and until it has received
the amount of such fees from the Trust.
3
<PAGE>
4. Proprietary and Confidential Information
The Administrator agrees on behalf of itself and its employees to treat
confidentially and as proprietary information of the Trust all records relative
to the Funds 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 the
Administrator may be exposed to civil or criminal proceedings for failure to
comply, when requested to divulge such information by duly constituted
authorities, when subject to governmental or regulatory audit or investigation,
or when so requested by the Trust. Records and information which have become
known to the public through no wrongful act of the Administrator or any of its
employees, agents or representatives shall not be subject to this paragraph.
5. Limitation of Liability
(a) The Administrator shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Funds in connection with the
matters to which this Agreement relates, except for a loss resulting from the
Administrator's willful misfeasance, bad faith or negligence in the performance
of its duties or from reckless disregard by it of its obligations and duties
under this Agreement. Furthermore, the Administrator shall not be liable for any
action taken or omitted to be taken in accordance with written or oral
instructions received by the Administrator from an Authorized Person.
(b) The Administrator assumes no responsibility hereunder, and shall
not be liable, for any damage, loss of data, errors, delay or any other loss
whatsoever caused by events beyond its reasonable control. The Administrator
will, however, take all reasonable steps to minimize service interruptions for
any period that such interruption continues beyond its control.
(c) In no event and under no circumstances shall the Administrator, its
affiliates or any of its or their officers, directors, agents or employees be
liable to anyone, including, without limitation, the other party, under any
theory of tort, contract, strict liability or other legal or equitable theory
for lost profits, exemplary, punitive, special, indirect or consequential
damages for any act or failure to act under any provision of this Agreement
regardless of whether such damages were foreseeable and even if advised of the
possibility thereof.
6. Term
(a) This Agreement shall become effective with respect to each Fund
listed on Schedule A hereof as of the date hereof and, with respect to each Fund
not in existence on that date, on the date an amendment to Schedule A to this
Agreement relating to that Fund is executed. This Agreement shall continue in
effect with respect to each Fund until February 22, 2001 (the "Initial Term").
Thereafter, if not terminated as provided herein, this Agreement shall continue
automatically in effect as to each Fund for successive annual periods.
4
<PAGE>
(b) This Agreement may be terminated with respect to any one or more
particular Funds without penalty after the Initial Term (i) upon mutual consent
of the parties, or (ii) by either party upon not less than sixty (60) days'
written notice to the other party (which notice may be waived by the party
entitled to the notice). The terms of this Agreement shall not be waived,
altered, modified, amended or supplemented in any manner whatsoever except by a
written instrument signed by the Administrator and the Trust.
(c) Notwithstanding anything herein to the contrary, upon the
termination of this Agreement or the liquidation of a Fund or the Trust, the
Administrator shall deliver the records of the Fund(s) and/or Trust as the case
may be to the Trust or person(s) designated by the Trust, at the Trust's cost
and expense, and thereafter the Trust or its designee shall be solely
responsible for preserving the records for the periods required by all
applicable laws, rules and regulations. In addition, in the event of termination
of this Agreement, or the proposed liquidation or merger of the Trust or a
Fund(s), and the Trust requests the Administrator to provide services in
connection therewith, the Administrator shall provide such services and be
entitled to such compensation as the parties may mutually agree.
7. Non-Exclusivity
The services of the Administrator rendered to the Trust are not deemed to
be exclusive. The Administrator may render such services and any other services
to others, including other investment companies. The Trust recognizes that from
time to time directors, officers and employees of the Administrator may serve as
trustees, directors, officers and employees of other entities (including other
investment companies) and that the Administrator or its affiliates may enter
into investment advisory or other agreements with such other entities.
8. Governing Law; Invalidity
This Agreement shall be governed by Wisconsin law, excluding the laws
on conflicts of laws. To the extent that the applicable laws of the State of
Wisconsin, or any of the provisions herein, conflict with the applicable
provisions of the 1940 Act, the latter shall control, and nothing herein shall
be construed in a manner inconsistent with the 1940 Act or any rule or order of
the Commission thereunder. Any provision of this Agreement which may be
determined by competent authority to be prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. In such case, the parties shall in good faith modify or
substitute such provision consistent with the original intent of the parties.
5
<PAGE>
9. Notices
Any notice required or permitted to be given by either party to the
other shall be in writing and shall be deemed to have been given when sent by
registered or certified mail, postage prepaid, return receipt requested, as
follows: Notice to the Administrator shall be sent to Sunstone Financial Group,
Inc., 207 East Buffalo Street, Suite 400, Milwaukee, WI, 53202, Attention:
Miriam M. Allison, and notice to the Trust shall be sent to 209 West Fayette
Street, Baltimore, MD 21201-3403, Attention: President.
10. Entire Agreement
This Agreement constitutes the entire Agreement of the parties hereto.
11. Trust Limitations
This Agreement is executed by the Trust with respect to each of the Funds
and the obligations hereunder are not binding upon any of the trustees, officers
or shareholders of the Trust individually but are binding only upon the Fund to
which such obligations pertain and the assets and property of such Fund. All
obligations of the Trust under this Agreement shall apply only on a Fund-by-Fund
basis, and the assets of one Fund shall not be liable for the obligations of
another Fund. The Fund's Declaration of Trust is on file with the Secretary of
the State of Massachusetts.
12. Backup Facilities
Sunstone shall maintain a disaster recovery plan and procedures including
provisions for emergency use of electronic data processing equipment, which is
reasonable in light of the services to be provided. Sunstone shall, at no
additional expense to the Funds take reasonable steps to minimize service
interruptions. Sunstone shall have no liability with respect to the loss of data
or service interruptions caused by equipment failure, provided it maintains such
plans and procedures.
13. Counterparts
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original agreement but such counterparts shall
together constitute but one and the same instrument.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer as of the day and year first above
written.
DEVCAP TRUST
(the "Trust")
By: /s/ Joseph N. St. Clair
---------------------------
President
SUNSTONE FINANCIAL GROUP, INC.
("Administrator")
By: /s/ Miriam M. Allison
-------------------------
President
7
<PAGE>
Schedule A
to the
Administration and Fund Accounting Agreement
by and between
DEVCAP Trust
and
Sunstone Financial Group, Inc.
Name of Funds
DEVCAP Shared Return Fund
<PAGE>
Schedule B
to the
Administration and Fund Accounting Agreement
by and between
DEVCAP Trust
and
Sunstone Financial Group, Inc.
SERVICES
(1) provide office space, facilities, equipment and personnel to carry out its
services hereunder;
(2) compile data for and prepare with respect to the Funds timely Notices to
the Securities and Exchange Commission (the "Commission") required pursuant
to Rule 24f-2 under the 1940 Act and Semi-Annual Reports on Form N-SAR;
(3) assist in the preparation for execution by the Trust and file all federal
income and excise tax returns and state income tax returns (and such other
required tax filings as may be agreed to by the parties) other than those
required to be made by the Trust's custodian or transfer agent, subject to
review and approval of the Trust and the Trust's independent accountants;
(4) prepare the financial statements for the Annual and Semi-Annual Reports
required pursuant to Section 30(d) under the 1940 Act;
(5) provide financial information for inclusion in the Registration Statement
for the Trust (on Form N-1A or any replacement therefor) and any amendments
thereto;
(6) determine and periodically monitor each Fund's income and expense accruals
and cause all appropriate expenses to be paid from Trust assets on proper
authorization from the Trust;
(7) calculate daily net asset values and income factors of each Fund;
(8) maintain all general ledger accounts and related subledgers;
(9) perform security valuations;
(10) assist in the acquisition of the Trust 's fidelity bond required by the
1940 Act, monitor the amount of the bond and make the necessary Commission
filings related thereto;
9
<PAGE>
(11) from time to time as the Administrator deems appropriate, check each Fund's
compliance with the policies and limitations of each Fund relating to the
portfolio investments as set forth in the Prospectus and Statement of
Additional Information and monitor each Fund's status as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986,
as amended (but these functions shall not relieve the Trust 's investment
adviser and sub-advisers, if any, of their primary day-to-day
responsibility for assuring such compliance);
(12) maintain, and/or coordinate with the other service providers the
maintenance of, the accounts, books and other documents required pursuant
to Rule 31a-1(a) and (b) under the 1940 Act;
(13) prepare and/or file securities registration compliance filings, with the
advice of the Trust's legal counsel, in accordance instructions from the
Trust, which instructions will include the states to qualify in, the
amounts of Shares to qualify and the warning threshold to be maintained;
(14) develop with legal counsel and secretary of the Trust an agenda for each
board meeting and, if requested by the Trustees, attend board meetings and
prepare minutes;
(15) coordinate preparation of other matters required to be reported to the
board, including, without limitation, details of Rule 12b-1 payments, code
of ethics compliance and broker commissions;
(16) prepare Form 1099s for directors and other fund vendors;
(17) calculate dividend and capital gains distributions subject to review and
approval by the Trust and its independent accountants;
(18) generally assist in the Trust's administrative operations as mutually
agreed to by the parties.
10
<PAGE>
Schedule C
to the
Administration and Fund Accounting Agreement
by and between
DEVCAP Trust
and
Sunstone Financial Group, Inc.
FEE SCHEDULE
Asset Based Fees
- ----------------
Minimum
Name of Fund Average Net Assets Basis Points Annual Fee
- ------------ ------------------ ------------ ----------
DEVCAP Shared
Return Fund Up to $50 million 0.20% $65,000
$50 million to $100
million 0.10%
$100 million to $250
million 0.07%
$250 million to $500
million 0.05%
Over $500 million 0.03%
The minimum annual fee is subject to an annual escalation of five percent (5%),
which escalation shall be effective commencing one year from the effective date
of the Fund and the corresponding date each year thereafter. No amendment of
this Schedule C shall be required with each escalation. The foregoing fee
schedule assumes a single class of shares for the Fund. Additional fees shall
apply when adding any additional Fund(s) and/or classes including compensation
for the Administrator's services in connection with the organization of the new
Fund(s) or classes. The Administrator shall provide such services and be
entitled to such compensation as the parties may mutually agree in writing.
Out-of-Pocket and Other Related Expenses
- ----------------------------------------
The Trust shall also pay/reimburse the Administrator's out-of-pocket and other
related expenses. Out-of-pocket expenses include, but are not limited to,
travel, lodging and meals in connection with travel on behalf of the Trust,
programming and related expenses (previously incurred or to be incurred by
Administrator) in connection with providing electronic transmission of data
between the Administrator and the Funds' other service providers, brokers,
dealers and depositories, fees and expenses of pricing services, fees of
research services including Lexis/Nexis, Morningstar and Lipper, NASDAQ and
other service interface fees, EDGAR related fees, long distance telephone
charges, and photocopying, faxes, postage and overnight delivery expenses.
11
<PAGE>
AUTHORIZED PERSONS APPENDIX
Mr. Joseph N. St. Clair
President
DEVCAP Shared Return Fund
209 W. Fayette Street
Baltimore, MD 21201
(410) 234-3176
12
<PAGE>
EXHIBIT (j)(1)
CONSENT OF INDEPENDENT AUDITORS
<PAGE>
Exhibit (j)(1)
--------------
CONSENT OF INDEPENDENT AUDITORS
The Board of Trustees
Devcap Trust
We consent to the use of our report dated September 16, 1999
incorporated herein by reference and to the references to our firm under the
captions "Financial Highlights" in the prospectus and "Independent Auditors" in
the statement of additional information.
/s/ KPMG LLP
Boston, Massachusetts
February 17, 2000
<PAGE>
EXHIBIT (p)(5)
ADDITIONAL POWERS OF ATTORNEY OF DEVCAP TRUST
<PAGE>
DEVCAP TRUST
The undersigned hereby constitutes and appoints Joseph N. St. Clair, James
R. Arnold, Gilbert H. Crawford, Stephen D. Cashin, Donald Carcieri, Timothy J.
Joyce, and Donald S. Houston and each of them, with full powers of substitution
as his true and lawful attorneys and agents to execute in his name and on his
behalf in any and all capacities the Registration Statement on Form N-1A, and
any and all amendments thereto, filed by DEVCAP Trust on behalf of the DEVCAP
Shared Return Fund (the "Trust") with the Securities and Exchange Commission
under the Investment Company Act of 1940 and the Securities Act of 1933 and any
and all instruments which such attorneys and agents, or any of them, deem
necessary or advisable to enable the Trust to comply with such Acts, the rules,
regulations and requirements of the Securities and Exchange Commission, and the
securities or Blue Sky laws of any state or other jurisdiction, and the
undersigned hereby ratifies and confirms as his own act and deed any and all
that such attorneys and agents, or any of them, shall do or cause to be done by
virtue hereof. Any one of such attorneys and agents have, and may exercise, all
of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 22th
day of February, 2000.
/s/ Edward Veilleux
Edward Veilleux
<PAGE>
DEVCAP TRUST
The undersigned hereby constitutes and appoints Joseph N. St. Clair,
James R. Arnold, Gilbert H. Crawford, Stephen D. Cashin, Donald Carcieri, Edward
Veilleux, and Timothy J. Joyce and each of them, with full powers of
substitution as his true and lawful attorneys and agents to execute in his name
and on his behalf in any and all capacities the Registration Statement on Form
N-1A, and any and all amendments thereto, filed by DEVCAP Trust on behalf of the
DEVCAP Shared Return Fund (the "Trust") with the Securities and Exchange
Commission under the Investment Company Act of 1940 and the Securities Act of
1933 and any and all instruments which such attorneys and agents, or any of
them, deem necessary or advisable to enable the Trust to comply with such Acts,
the rules, regulations and requirements of the Securities and Exchange
Commission, and the securities or Blue Sky laws of any state or other
jurisdiction, and the undersigned hereby ratifies and confirms as his own act
and deed any and all that such attorneys and agents, or any of them, shall do or
cause to be done by virtue hereof. Any one of such attorneys and agents have,
and may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 22th
day of February, 2000.
/s/ Donald S. Houston
Donald S. Houston
<PAGE>
DEVCAP TRUST
The undersigned hereby constitutes and appoints Joseph N. St. Clair,
James R. Arnold, Gilbert H. Crawford, Stephen D. Cashin, Donald Carcieri, Edward
Veilleux, and Donald S. Houston and each of them, with full powers of
substitution as his true and lawful attorneys and agents to execute in his name
and on his behalf in any and all capacities the Registration Statement on Form
N-1A, and any and all amendments thereto, filed by DEVCAP Trust on behalf of the
DEVCAP Shared Return Fund (the "Trust") with the Securities and Exchange
Commission under the Investment Company Act of 1940 and the Securities Act of
1933 and any and all instruments which such attorneys and agents, or any of
them, deem necessary or advisable to enable the Trust to comply with such Acts,
the rules, regulations and requirements of the Securities and Exchange
Commission, and the securities or Blue Sky laws of any state or other
jurisdiction, and the undersigned hereby ratifies and confirms as his own act
and deed any and all that such attorneys and agents, or any of them, shall do or
cause to be done by virtue hereof. Any one of such attorneys and agents have,
and may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 22th
day of February, 2000.
/s/ Timothy J. Joyce
Timothy J. Joyce
