SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
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or 240.14a-12
Penn Street Fund, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other
than the Registrant)
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Penn Street Fund, Inc.
30 Valley Stream Parkway
Malvern, PA 19355
(610)578-9944
[May 21, 1999]
Dear Stockholder,
You are being asked to vote on two very important proposals
affecting the Global Equity Portfolio of Penn Street Fund, Inc.
The first proposal involves a change in the Portfolio's
investment objective in connection with a plan to convert
the Portfolio from a global equity fund to a domestic
balanced fund. Due to global economic and market conditions
during the past five years, the Portfolio's investments have
been structured very much like a domestic balanced fund during
that period. As a result, while this plan involves substantial
changes in the Portfolio's investment policies, the general
nature of the Portfolio's investments will not change dramatically.
The second proposal is to approve a new investment management
agreement for the Portfolio with McGlinn Capital Management, Inc.,
an investment advisory firm located in Wyomissing, Pennsylvania
that was established in 1971 and currently manages approximately
$4 billion in client assets. The proposed investment management
agreement also reflects a reduction in management fees that will
be paid by the Portfolio.
The two proposals are presented for your consideration at this
time, in part, due to the untimely passing of Dr. Richard T. Coghlan,
the founder of both Penn Street Advisors, Inc. and Penn Street
Fund, Inc. In view of the loss of Dr. Coghlan, and the current
economic and financial environment, the Board of Directors of
Penn Street Fund, Inc. concluded that the proposed changes
would be in the best interests of the Portfolio's current and
future stockholders. If the proposals are approved, the
Portfolio will be renamed the McGlinn Balanced Portfolio.
The details of each proposal are included in the attached
proxy statement. The Board of Directors has unanimously
approved each of the proposals and recommends that you
approve both the change in objective and new investment
management agreement for the Portfolio. Please vote your
shares promptly by completing and signing the enclosed Proxy
Card and returning it in the enclosed self-addressed
postage-paid envelope. Thank you for your attention to
this matter.
Sincerely,
David E. Sparks
President
Global Equity Portfolio
of
The Penn Street Fund, Inc.
30 Valley Stream Parkway
Malvern, Pa 19355
(610) 578-9944
COMBINED PROXY STATEMENT AND
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
OF
THE PENN STREET FUND, INC.
To be held on June 8, 1999
To the Stockholders of the Global Equity Portfolio of
Penn Street Fund, Inc.:
NOTICE IS HEREBY GIVEN that a Special Meeting of
Stockholders (the "Meeting") of the Global Equity
Portfolio (the "Portfolio") of Penn Street Fund, Inc.
(the "Penn Street Fund") will be held on [June 8, 1999]
at 9:00 a.m. at the offices of Millennium Bank, 30
Valley Stream Parkway, Malvern, Pennsylvania, for the
purpose of considering and acting on the following
proposals:
Proposal One: To Approve a Change in the Portfolio's
Fundamental Investment Objective.
Proposal Two: To Approve a New Investment Management
Agreement for the Portfolio between the Penn Street
Fund and McGlinn Capital Management, Inc.
The Board of Directors has fixed the close of business
on May 7, 1999 as the record date for the determination of
those stockholders who will be entitled to vote at the Meeting.
The Fund's Annual Report to Stockholders for the fiscal
year ended October 31, 1998 was previously mailed to
stockholders. Copies of this report are available upon
request, without charge, by writing or calling the Penn
Street Fund at the address and telephone number shown above.
Whether or not you plan on attending the Meeting, it is
important that you mark your instructions on the enclosed
Proxy Card, date and sign it and return it promptly in the
enclosed self-addressed, stamped envelope. The enclosed
Proxy Card is solicited on behalf of the Board of Directors,
is revocable, and will not affect your right to vote in
person if you attend the Meeting.
[May 21, 1999] By Order of the Board of Directors
David E. Sparks
President
PROXY STATEMENT
GLOBAL EQUITY PORTFOLIO
OF
THE PENN STREET FUND, INC.
Meeting Information. The Board of Directors of
Penn Street Fund, Inc. (the "Penn Street Fund") is
soliciting your proxy to be voted at the Special
Meeting of Stockholders (the "Meeting") to be held
on June 8, 1999 at 9:00 a.m. at the offices of
Millennium Bank, 30 Valley Stream Parkway, Malvern,
Pennsylvania and at any adjournment of the Meeting.
The purpose of the Meeting is to act on the proposals
listed in the accompanying Notice.
The Penn Street Fund is an open-end, management
investment company registered under the Investment
Company Act of 1940 (as amended, the "1940 Act"),
which issues shares of its common stock in separate
series, each representing interests in a separate
portfolio of investments. Stockholders of the
Global Equity Portfolio series (the "Portfolio")
of the Penn Street Fund are being asked to vote by
proxy at the Meeting.
General Voting Information. Stockholders of the
Portfolio are entitled to cast one vote for each
full share and a partial vote for each partial
share of the Portfolio that they own at the close
of business on May 7, 1999, which is the record date.
Approval of either proposal by stockholders of the
Portfolio requires the affirmative vote of a
"majority of the outstanding voting securities"
of the Portfolio, which is defined in the 1940 Act
as the vote of: (i) more than 50% of the outstanding
voting securities of the Portfolio; or (ii) 67% or
more of the voting securities of the Portfolio present
at a meeting, if the holders of more than 50% of the
outstanding voting securities are present or represented
by proxy, whichever is less.
The Board of Directors urges you to complete, sign and
return the Proxy Card included with this Proxy Statement,
whether or not you intend to be present at the Meeting.
It is important that you return the signed Proxy Card
promptly to help assure a quorum for the Meeting.
The persons designated as proxies will vote your shares
as you instruct on the Proxy Card and, if your signed
Proxy Card is returned without any voting instructions,
your shares will be voted "FOR" any Proposal. If you
sign and return a Proxy Card, you may still attend the
Meeting to vote your shares in person. You may also
revoke your proxy at any time before the Meeting:
(i) by notifying the Penn Street Fund in writing;
(ii) by submitting a later signed Proxy; or
(iii) by voting your shares in person at the Meeting.
If a sufficient number of shares are not present at the
Meeting in person or by proxy so as to constitute a
stockholder quorum of the Portfolio (which is a majority
of the shares of the Portfolio), or to approve any proposal
set forth in the Notice, the persons named as proxies may
adjourn the Meeting to a later date to permit further
solicitation of proxies with respect to either proposal.
Abstentions will be counted for purposes of determining
whether a quorum is present at the Meeting, but will not
be counted for purposes of determining whether matters to
be acted upon at the Meeting have been approved.
This solicitation is being made largely by mail, but may
also be made by officers or employees of the Penn Street
Fund, Penn Street Advisors, Inc. ("Penn Street") or Penn
Street's parent company, Millennium Bank, through telephonic,
internet, facsimile or oral communications. This Proxy
Statement was first mailed to stockholders on or about
[May 21, 1999]. [The Penn Street Fund] will bear the costs
of this solicitation.
As of the record date, there were 119,188 shares outstanding
of the Portfolio. In addition, the following persons owned
beneficially more than 5% of the shares of the Portfolio:
Name and Address Number Percentage
of Beneficial Owner of Shares
James W. Hovey
1325 Morris Drive, Suite 200
Wayne, PA 19087 31,387 26.334%
Marilyn B. Day
947 Rock Creek Road
Bryn Mawr, PA 19010 24,315 20.401%
Millennium Trust Accounts
Millennium Bank
30 Valley Stream Parkway
Malvern, PA 19355 22,069 18.516%
Wynrhys E. Coghlan
746 Mt. Moro Road
Villanova, PA 19085 21,124 17.723%
Martin Braun
1095 Baron Drive
Bryn Mawr, PA 19010 9,774 8.200%
Fred D. Fox
76 Militia Hill Drive
Wayne, PA 19087 8,536 7.162%
General Overview and Background of the Proposals
The two proposals described in this Proxy Statement are
designed as part of the planned conversion of the Portfolio
from a global equity fund managed by Penn Street to a
domestic balanced fund managed by McGlinn Capital
Management, Inc. ("McGlinn Capital"). The Portfolio
will remain as part of the Penn Street Fund and Penn
Street (now a wholly-owned subsidiary of Millennium Bank)
will continue to provide administrative services to the
Portfolio.
The conversion of the Portfolio to a domestic balanced
fund was not anticipated at the time Millennium Bank
acquired Penn Street last November. However, Millennium
Bank, Penn Street and McGlinn Capital had, at that time,
begun the preparation of additional portfolios of the Penn
Street Fund that would be managed by McGlinn Capital. The
changes proposed for the Portfolio, therefore, are
consistent with management's plans to offer additional
Investment options within the Penn Street Fund that are
managed by McGlinn Capital.
The proposed changes to the Portfolio's investment objective
and the new investment management agreement with McGlinn
Capital each require the approval of the Portfolio's
stockholders. The Board of Directors met with McGlinn
Capital concerning the proposed changes and the Board of
Directors approved the new investment objective and
Investment management agreement with McGlinn Capital,
and the Board has also approved a change in the Portfolio's
name to the "McGlinn Balanced Portfolio." The investment
strategy that McGlinn Capital will utilize in the portfolio
is described below in connection with the proposed
investment objective so that you can see how McGlinn
Capital will seek to achieve the new objective of the Portfolio.
If stockholders fail to approve both proposals at the
Meeting or any adjournments thereof, neither proposal
will be effected and the Board of Directors will
consider other possible alternatives, including the
liquidation of the Portfolio.
Proposal One: To Approve a Change in the Portfolio's
Fundamental Investment Objective
The current and proposed investment objectives of the Portfolio
are set forth below. The investment objective is fundamental,
which means that it may not be changed without first obtaining
stockholder approval.
Current Investment Objective: To achieve a high rate of
total return, with emphasis on capital appreciation
Proposed Investment Objective: To provide long-term growth
with moderate income
Although the language of the two investment objectives shown
above differs, the objectives are similar in many respects.
The phrase "total return" in the Portfolio's current investment
objective refers to a combination of capital appreciation and
income The proposed investment objective seeks growth (which
is analogous to capital appreciation) and moderate income.
Thus, each objective contemplates a balanced approach, with
an emphasis toward capital appreciation.
If the proposals are approved, the primary differences in
the way that the Portfolio will be managed are reflected in
the current and proposed principal investment strategies
and related investment policies described below.
Summary of Current Investment Strategies and Policies of the
Portfolio
The Portfolio's current investment strategies call for a global
approach to investing primarily in common or preferred stocks
(although investment in fixed-income securities is permitted).
Individual securities are selected under a value-driven approach.
The Portfolio's investments are allocated among various countries
and geographic regions based on an analysis of the economic,
political and financial conditions in various areas of the world.
During the past five years, the Portfolio has been managed, in
effect, as a global "balanced" fund with an asset allocation of
approximately 65% equity securities and 35% fixed income
securities. In addition, the Portfolio has consistently
held a large percentage of its assets in securities of U.S.
issuers or American Depository Receipts issued by U.S. banks.
Summary of Proposed Investment Strategies and Policies of
the McGlinn Balanced Portfolio
If approved as advisor, McGlinn Capital will use a flexible
asset allocation approach that emphasizes the selection of
securities that provide sufficient current return to reduce
downside risk. Using this approach, the advisor will seek
to position the Portfolio to participate in advancing
markets while avoiding significant loss of capital in
declining markets. The McGlinn Capital investment philosophy
is conservative and risk averse, built around the concept of
capital preservation
In attempting to meet its objective, the McGlinn Balanced
Portfolio will invest in a combination of equity, debt, and
money market securities. Under normal conditions, the
Portfolio will be invested approximately 60% in equities
and 40% in fixed income securities. The investment mix
may vary from time to time depending on the advisor's
view of economic and market conditions. The advisor
utilizes a top down approach based on fundamental
analysis, to provide a framework for its asset allocation
and security selection decisions.
McGlinn Capital will make asset allocation decisions by
attempting to balance the potential for capital
appreciation within the equity market with the ability
to earn income in the more stable and less volatile
fixed income market. In determining the appropriate
balance, the advisor will assess the changing nature of
the business cycle, including the potential for corporate
profitability and changing interest rates, the
risk/opportunity inherent in the current valuation of
the fixed income and equity markets and the changing
political environment as it might impact one market
versus the other. For example, improving corporate
profitability and an undervalued equity market
relative to the fixed income market, may indicate
less risk and more opportunity for equity securities
and consequently, an above normal allocation to
equities versus fixed income securities.
Equity Investments. The equity portion of the Portfolio
will generally be invested in the stocks of large and
medium size U.S. companies that the advisor believes are
undervalued and offer above average potential for capital
appreciation. In general, undervalued equities will
exhibit valuation parameters such as price/earnings,
price/sales and price/book value ratios below normal
for the particular security, as well as a long-term
record of earnings, dividends and reasonable
profitability. From time to time, the Portfolio
will invest in securities that do not pay dividends.
The Portfolio will invest primarily in common stocks
of U.S. issuers, and may also purchase securities
convertible into common stocks, or warrants or rights
to purchase common stocks. The Portfolio may invest a
small portion of its assets in foreign companies
(less than 10%), and normally only invests in foreign
companies with global operations whose shares are
traded on U.S. exchanges or through depository receipts
issued by U.S. banks.
Fixed Income Investments. The fixed income portion
of the Portfolio will normally be invested in U.S.
Government securities and corporate bonds. While
the Portfolio is authorized to invest in short,
Intermediate, or long-term fixed income securities,
the Portfolio primarily invests in intermediate-term
issues, and the average weighted maturity of the
Portfolio's fixed income investments is typically
5 1/2 years.
The Portfolio generally invests in corporate bonds
that have bond ratings in the top four grades
according to a nationally recognized statistical
rating organization such as Moody's Investor
Services, Inc. or Standard & Poor's Ratings Group
at the time of purchase. The securities in the
fixed income portion of the Portfolio are expected
to have an average rating of "A," which is the third
highest rating by Moody's or S&P. The Portfolio may,
however, invest a portion (not to exceed 20% of the
fixed-income portion of the Portfolio) of its assets
in bonds rated below investment grade, which are
known as high yield securities (commonly called
"junk bonds").
The Portfolio normally intends to remain substantially
fully invested in equity or fixed income securities.
The Portfolio will also hold a portion of its assets
in high quality money market instruments in order to
satisfy redemption requests, or during times when
excess cash is generated or when cash is held pending
the purchase of suitable investments. Money market
instruments include short-term obligations of the U.S.
government, its agencies or instrumentalities, bank
obligations, commercial paper, repurchase agreements
or money market mutual funds. The Portfolio also has
authority to invest up to 100% of its assets in such
short-term money market instruments for temporary or
defensive purposes in response to extreme or adverse
market, economic or other conditions. Under these
circumstances, the Portfolio may be unable to pursue
its investment objective and instead, will focus on
preserving investors' capital.
The Board of Directors of the Penn Street Fund has
unanimously approved the change in the Portfolio's
investment objective and recommends that you vote
"FOR" the new investment objective.
Proposal Two: To Approve a New Investment
Management Agreement for the Portfolio Between
the Penn Street Fund and McGlinn Capital
Management, Inc.
Stockholders are being asked to approve a new
Investment Management Agreement for the Portfolio
between the Penn Street Fund and McGlinn Capital
("New Agreement"), which will replace the current
Investment Management Agreement between the Penn
Street Fund and Penn Street ("Current Agreement").
The New Agreement reflects a reduction in the
annual investment management fee rate from 0.75%
of average daily net assets to 0.60% of average
daily net assets and is presented to stockholders
for approval at this time because the 1940 Act
requires stockholder approval of new investment
management agreements for mutual funds.
The Penn Street Fund's Board of Directors met on
April 5, 1999 to initially consider the proposed
conversion of the Portfolio from a global equity
fund to a domestic balanced fund called the
McGlinn Balanced Portfolio and the selection of
McGlinn Capital to replace Penn Street as investment
advisor.
At the meeting, the Board, including the Directors who
are not parties to the Current or New Agreement, or
interested persons of any such party, unanimously
voted to approve the New Agreement with McGlinn
Capital for the Portfolio. In addition, in view
of the untimely passing of Dr. Richard Coghlan,
and in order to assure the best results for stockholders
of the Portfolio, the Board authorized McGlinn Capital
to begin immediately managing the assets of the
Portfolio during the interim period leading up to
the Meeting, at which time stockholders will approve
or disapprove the New Agreement with McGlinn Capital.
Consistent with current federal regulatory requirements,
the Board also authorized the Portfolio to compensate
McGlinn Capital for its services during the interim
period at the management fee rates set forth in the
New Agreement, but only if and after stockholders
approve the New Agreement.
In evaluating the New Agreement, the Board
considered a number of factors, including
McGlinn Capital's experienced research and
portfolio management team, the firm's substantial
client list and business reputation and the
firm's historical performance record for its
balanced investment style. The Board also
considered the fact that the New Agreement
would not result in any reduction in the quality
of services to be provided to the Portfolio, and
that the management fees would be reduced from
0.75% to 0.60% per year.
The Board of Directors of the Penn Street Fund
has unanimously approved the New Agreement, and
recommends that you vote "FOR" the New Agreement
for the Portfolio.
Information Concerning McGlinn Capital Management, Inc.
McGlinn Capital Management, Inc. 850 North
Wyomissing Blvd., P.O. Box 6158 Wyomissing,
PA 19610-0158 was established in 1971 and
currently manages approximately $4 billion in
assets for clients such as corporate pension,
profit-sharing and 401(k) accounts, multi-employer
(union) pension funds, endowment funds, and
accounts for foundations, religious organizations
and substantial individual investors. The firm
is an independent, wholly-owned subsidiary of
First Union Corp., located at One First Union
Center, 301 South College Street, Charlotte,
NC 28288-0570.
The management team that would be responsible
for managing the assets of the Portfolio, along
with their positions at McGlinn Capital are as
follows:
Michael J. McGlinn, Chairman and CEO
Mr. McGlinn, age 42, earned his undergraduate
business degree from the University of Notre Dame,
and his MBA from the New York University Graduate
School of Business Administration. Prior to joining
the McGlinn Capital Management team in 1980, he was
employed by Ernst & Whinney as a Senior Accountant and CPA.
Jackson D. Breaks, II, President
Mr. Breaks, age 58, holds a BA in English and an MAT in
English/Philosophy from Purdue University. Before
joining the team in March, 1990, he was a Senior
Account Executive at Merrill Lynch Capital Markets
for seven years. He specialized in bond arbitrage,
making regular presentations and publishing numerous
articles in this area. Prior to his association with
Merrill Lynch, he was employed at First Boston
Corporation for 12 years as the co-manager of the
Government Securities Department.
Daniel M. Szente, CFA, Executive Vice President and
Director of Research
Mr. Szente, age 51, holds a BS in Education and his MBA
in Finance from Ohio State University. For 16 years he
held various senior investment positions with the State
Teachers Retirement System in Columbus, Ohio, including
Director of Financial Assets. Prior to joining McGlinn,
he served three years as the Managing Director of Equity
Investments for the $9 billion Howard Hughs Medical
Institute in Chevy Chase, Maryland.
Timothy J. Timura, CFA, Vice President
Mr. Timura, age 37, earned his BA in Liberal
Arts/Economics at Dickinson College and his MBA
in Finance from the University of Wisconsin. Tim
has served as Senior Manager of Equities for the
$35 billion State Teachers Retirement System of
Ohio. He has also held various portfolio management
positions with Federated Investors, Inc., Pilgrim
Baxter & Associates, and Invista Capital Management
before joining McGlinn.
Information Concerning the Current and New Investment
Management Agreements
The Current and New Agreements are virtually identical,
except for the change in investment advisor from Penn
Street to McGlinn Capital and the reduction in the annual
management fee rate, as well as changes in the effective
and termination dates. In addition, the New Agreement
contains language recognizing McGlinn Capital's right
to recoup management fee amounts for services provided
during the interim period prior to the Meeting if
stockholders approve the New Agreement. Pursuant to
the Current Agreement, the Portfolio pays a monthly
investment management fee to Penn Street, at the
annual rate of 0.75% of the Portfolio's average net
asset value. Prior to [November 11, 1999] when
Millennium Bank acquired Penn Street, the annual
management fee rate was 0.90% of average annual net
assets. For the fiscal year ended October 31, 1998,
the Portfolio paid investment management fees to Penn
Street of $75,745 (the amount would have been $[63,000]
if the 0.75% rate had been in effect). The Current
Agreement was approved by stockholders on October 20,
1998 in connection with the Millennium transaction.
The New agreement reflects a proposed reduction in
management fees from 0.75% to 0.60%. Under the proposed
fee rate of 0.60%, the amount of management fees paid
to McGlinn Capital by the Portfolio during a fiscal year,
assuming the same asset levels as the fiscal year ended
October 31, 1998, would be $50,000, which would represent
a 20% decrease compared to the dollar amounts that would
have been paid during the past fiscal year at the 0.75%
level and the 33% decrease compared to the dollar amounts
that were paid during the past fiscal year at the 0.90% level.
Under the Current and New Investment Management
Agreement, subject to the supervision of the Board
of Directors of the Penn Street Fund, the Advisor
provides portfolio management, research and analysis
for the Fund, and is responsible for directing the
investments of the Portfolio in accordance with its
stated investment objective, policies and restrictions.
The Advisor also maintains a trading department for
the Fund, and keeps certain books and records in connection
with its services to the Fund. The Agreements provide
that the Advisor will bear the costs of the office space,
furnishings, equipment and personnel required to perform
its duties under the Agreements. The Fund bears all
over costs of its operations.
The Advisor, in effecting the purchases and sales of
portfolio securities for the Fund, currently seeks
execution of trades at the most favorable and competitive
rate of commission charged by any broker, dealer or
member of an exchange. However, the Advisor reserves the
right to seek execution of trades at a higher rate of
commission charges if reasonable in relation to brokerage
or research services provided to the Fund or The Advisor
by such member, broker, or dealer. Such research services
may include, but are not limited to, the following:
information as to the availability of securities for
purchase or sale and statistical or factual information;
or opinions pertaining to investments. The Advisor may
use research services provided to it by brokers and dealers
in servicing all its clients and not all such services will
be used by the Advisor in connection with the Fund.
The Current Agreement also provides that the Advisor will
not be liable to the Penn Street Fund or any stockholder of
the Penn Street Fund for errors of judgement in the absence
of negligence in the performance of its duties. Each
Agreement will remain in effect from year-to-year provided
it is continued each year by a vote of the Penn Street
Fund's Board of Directors, including a majority of the
Directors who are not parties to the Agreement or interested
persons of such party, or by a majority of the outstanding
voting securities of the Portfolio.
Each Agreement may be terminated without penalty by the
Penn Street Fund's Board of Directors or by stockholders
upon 60 days written notice to the Advisor, or by the
Advisor, upon 90 days written notice to the Fund. The
New Agreement will terminate automatically in the event
of an assignment (as defined in the 1940 Act).
Once effective, the New Agreement will continue for an
initial term of two years. Thereafter, the New Agreement
may be continued for successive one year periods if
approved by a majority of the outstanding voting
securities of the Portfolio or by the Board of Directors
of the Penn Street Fund and, in either event, by a
majority of the Directors who are not parties to the
New Agreement or interested persons of any such party.
A form of the new investment management agreement for
the Portfolio is attached to this Proxy Statement as Exhibit A.
Tax Issues
The Portfolio presently has approximately $500,000 of
capital loss carryover that it could use to offset
capital gains for tax purposes in future years. Recent
changes in the Portfolio's shareholder base, together
with anticipated inflows of investments by McGlinn
Capital clients if the proposals are approved, are
expected to result in a change in the Portfolio's
ownership that is substantial enough to limit the ability
of the Portfolio to utilize a portion of the capital loss
carryover under the federal tax laws. Because of the
expected changes in the shareholder base, it is anticipated
that the Portfolio's ability to utilize the capital loss
carryover would be limited by approximately 20%.
Stockholder Proposals
Any stockholder who desires to submit a stockholder
proposal may do so by submitting such proposal in writing,
addressed to the Penn Street Fund, at the address listed
in the Notice. The Penn Street Fund is organized as a
Maryland corporation, and ordinarily does not hold annual
stockholder meetings. Any proposal received a reasonable
time in advance of the preparation of material relating
to a future stockholder meeting will be included in such
material.
BY ORDER OF THE BOARD OF DIRECTORS
David E. Sparks
President
[May 21, 1999]
EXHIBIT A
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made this ____ day of April 1999, by and
between PENN STREET FUND, INC., a Maryland corporation
(the "Fund") and McGlinn Capital Management, Inc., a
Pennsylvania corporation (the "Manager").
1. Duties of Advisor
The Fund hereby employs the manager to manage the
investment and reinvestment of the assets of the
Global Equity Portfolio which, if this Agreement
is approved by the Stockholders of the Portfolio,
as provided in section 7 below, will be renamed the
McGlinn Balanced Portfolio (the "Portfolio"), to
continuously review, supervise and administer the
Portfolio's investment program, to determine in its
discretion the securities to be purchased or sold and
the portion of the Portfolio's assets to be uninvested,
to provide the Fund with records concerning the
Manager's activities which the Fund is required
to maintain, and to render regular reports to the
Fund's officers and the Board of Directors of the
Fund, all in compliance with the objectives, policies
and limitations set forth in the Fund's registration
statement. The Manager accepts such employment and
agrees to provide, at its own expense, the office
space, furnishings and equipment and the personnel
required by it to perform the services described
herein on the terms and for the compensation
provided herein.
2. Portfolio Transactions
The Manager is authorized to select the brokers or
dealers that will execute the purchases and sales
of portfolio securities for the Portfolio and is
directed to use its best efforts to obtain the best
available price and most favorable execution. It
is understood, however, that the Manager shall not
be deemed to have acted unlawfully, or to have
breached a fiduciary duty to the Fund or in respect
of the Portfolio or be in breach of any obligation
owing to the Fund or in respect of the Portfolio
under this Agreement, or otherwise, solely by reason
of its having caused the Portfolio to pay a member of
a securities exchange, a broker or a dealer a
commission for effecting a securities transaction
for the Portfolio in excess of the amount of
commission another member of an exchange, broker
or dealer would have charged if the Manger
determines in good faith that the commission paid
was reasonable in relation to the brokerage or
research services provided by such member, broker
or dealer, viewed in terms of that particular
transaction or the Manager's overall responsibilities
with respect to its accounts, including the Fund, as
to which it exercises investment discretion. The
Manager will promptly communicate to the officers
and directors of the Fund such information relating
to transactions for the Portfolio as they may
reasonably request.
3. Compensation of the Manager
For the services to be rendered by the Manager as
provided in Section 1 of this Agreement, the Fund
shall pay to the Manager, at the end of each month,
a fee equal to one-twelfth of .60 percent of the
average daily net assets of the Portfolio. In the
event that this Agreement is terminated at other
than a month-end, the fee for such month shall be
prorated. The forgoing provisions of this section
3 notwithstanding, the fee provided herein shall be
accrued but not paid until this Agreement is approved
by the stockholders of the Portfolio as required by
section 15 of the Investment Company Act of 1940 ("Act").
4. Reports
The Fund and the Manager agree to furnish to each
other information with regard to their respective
affairs as each may reasonably request.
5. Status of the Manager
The services of the Manager to the Fund or in respect
of the Portfolio, are not to be deemed exclusive, and
the Manager shall be free to render similar services to
others as long as its services to the Fund, or in respect
of the Portfolio, are not impaired thereby. The Manager
shall be deemed to be an independent contractor and shall,
unless otherwise expressly provided or authorized, have
no authority to act for or represent the Fund in any way
or otherwise be deemed an agent of the Fund.
6. Liability of Manager
The Manager shall not be liable to the Fund or any
shareholder thereof for errors of judgment in the
performance of its duties hereunder.
No provision of this Agreement shall be deemed to
protect the Manager against any liability to the
Fund to which it might otherwise be subject by reason
of willful misfeasance, bad faith or gross negligence
in the performance of its duties or the reckless
disregard of its obligations under this Agreement.
7. Duration and Termination
This Agreement shall become effective on April 5, 1999
(the "Effective Date") and shall continue in effect
until April 4, 2001, provided that it is approved in
accordance with Section 15 of the Act by the
stockholders of the Portfolio at the next Special
Meeting of Stockholders held after execution of this
Agreement. Thereafter, this Agreement may be continued
in effect for successive one-year periods provided each
such continuance is approved at least annually by a vote
of the Fund's Board of Directors, including the vote of
a majority of the directors who are not parties to this
Agreement or interested persons of any such party, cast
in person, at a meeting called for the purpose of
voting such approval. In addition, the question of
continuance of this Agreement may be presented to
the shareholders of the Fund; in such event, such
continuance shall be effected only if approved by
the affirmative vote of the holders of a majority
of the outstanding voting securities of the Portfolio.
This Agreement may at any time be terminated without
payment of any penalty either by vote of the Board of
Directors of the Fund or by vote of the holders of a
majority of the outstanding voting securities of the
Portfolio, on sixty days written notice to the Manager.
This Agreement shall automatically terminate in the
event of its assignment.
This Agreement may be terminated by the Manager after
ninety days written notice to the Fund.
Any notice under this Agreement shall be given in
writing, addressed and delivered, or mailed postpaid,
to the other party at any office of such party.
As used in this Section 7, the terms "assignment,"
"interested persons," and a "vote of the holders of
a majority of the outstanding securities" shall have
the respective meanings set forth in Section 2(a)(4),
Section 2(a)(19), Section 2(a)(42) of the Act and
Rule 18f-2 thereunder.
8. Severability
If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule
or otherwise, the remainder of this Agreement
shall not be affected thereby.
IN WITNESS WHEREOF, the parties hereby have caused
this Agreement to be executed this ______ day of __________ 1999.
McGlinn Capital Management, Inc. Penn Street Fund, Inc.
By: By:
President
BY SIGNING AND DATING THIS CARD, YOU AUTHORIZE
THE PROXIES TO VOTE EACH PROPOSAL AS MARKED.
IF A SIGNED CARD IS NOT MARKED, THE PROXIES WILL
VOTE "FOR" THE PROPOSAL. PLEASE COMPLETE AND
MAIL THIS CARD AT ONCE IN THE ENCLOSED ENVELOPE.
PENN STREET FUND, INC.
GLOBAL EQUITY PORTFOLIO
PROXY FOR SPECIAL MEETING OF STOCKHOLDERS - [ ], 1999
The undersigned hereby constitutes and appoints
Jan Gill and Josephine Coghlan, or any of them,
with power of substitution, as proxies to appear
and vote all of the shares of common stock standing
in the name of the undersigned as of the record date
at the special meeting of stockholders of the Global
Equity Portfolio (the "Portfolio") of Penn Street
Fund, Inc. (the "Penn Street Fund") to be held at the
offices of Millennium Bank, 30 Valley Stream Parkway,
Malvern, PA at 9:00 a.m. local time, or at any
postponement or adjournment thereof; and the
undersigned hereby instructs said proxies to vote
as indicated on this proxy card.
The shares represented by this Proxy will be voted
as specified in the following items. If no choice
is specified, they will be voted to approve each
Proposal. Please refer to the Proxy Statement
discussion of these matters. This Proxy is
solicited on behalf of the Penn Street Fund's
Board Of Directors.
1. To Approve a Change in the Portfolio's
Fundamental Investment Objective
FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. To Approve a New Investment Management Agreement
for the Portfolio Between the Penn Street Fund and
McGlinn Capital Management, Inc.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
SIGNATURE DATE
SIGNATURE OF JOINT OWNER DATE
Please date and sign name (or names) to authorize the
voting of your shares as indicated above. Where shares
are registered with joint owners, all joint owners
should sign. Persons signing as an executor,
administrator, trustee or other representative
should give full title as such.
