As filed with the Securities and Exchange Commission on October 29, 2012
Securities Act File No. 33-20827
Investment Company Act File No. 811-5518
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |
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Pre-Effective Amendment No. |
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Post-Effective Amendment No. 149 |
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |
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Amendment No. 151 |
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THE RBB FUND, INC.
(Exact Name of Registrant as Specified in Charter)
Bellevue Park Corporate Center
103 Bellevue Parkway
Wilmington, DE 19809
(Address of Principal Executive Offices)
Registrants Telephone Number: (302) 791-1851
Copies to:
SALVATORE FAIA BNY Mellon Investment Servicing (US) Inc. 103 Bellevue Parkway Wilmington, DE 19809 (Name and Address of Agent for Service) |
MICHAEL P. MALLOY, ESQUIRE Drinker Biddle & Reath LLP One Logan Square, Ste. 2000 Philadelphia, PA 19103-6996 |
It is proposed that this filing will become effective (check appropriate box)
o immediately upon filing pursuant to paragraph (b)
o on [date] pursuant to paragraph (b)
o 60 days after filing pursuant to paragraph (a)(1)
x on December 31, 2012 pursuant to paragraph (a)(1)
o 75 days after filing pursuant to paragraph (a)(2)
o on [date] pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
o This post-effective amendment designates a new effective date for a previously filed post-effective amendment.
Title of Securities Being Registered Shares of Common Stock
S1 Fund
of The RBB Fund, Inc.
Ticker Symbol: SONEX
I Shares
Prospectus
December 31, 2012
Investment Adviser:
Simple Alternatives, LLC
THE SECURITIES DESCRIBED IN THIS PROSPECTUS HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE SEC). THE SEC, HOWEVER, HAS NOT JUDGED THESE SECURITIES FOR THEIR INVESTMENT MERIT AND HAS NOT DETERMINED THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANYONE WHO TELLS YOU OTHERWISE IS COMMITTING A CRIMINAL OFFENSE.
TABLE OF CONTENTS
SUMMARY SECTION |
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S1 Fund |
1 |
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ADDITIONAL INFORMATION ABOUT THE FUNDS INVESTMENTS AND RISKS |
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MANAGEMENT OF THE FUNDS |
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Investment Adviser |
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Sub-Advisers |
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SHAREHOLDER INFORMATION |
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Pricing of Fund Shares |
19 |
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Market Timing |
19 |
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Purchase of Fund Shares |
20 |
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Redemption of Fund Shares |
22 |
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Dividends and Distributions |
24 |
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More Information About Taxes |
24 |
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Multi-Class Structure |
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FINANCIAL HIGHLIGHTS |
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FOR MORE INFORMATION |
Back Cover |
SUMMARY SECTION
Investment Objective
The S1 Fund (the Fund) seeks to provide long-term capital appreciation with an emphasis on absolute (positive) returns and low correlation to traditional financial market indices such as the S&P 500 ® Index.
Expenses and Fees
This table describes the fees and expenses that you may pay if you buy and hold I Shares of the Fund.
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I Shares |
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Shareholder Fees (fees paid directly from your investment) |
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Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) |
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None |
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Maximum Deferred Sales Charge (Load) |
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None |
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Maximum Sales Charge (Load) Imposed on Reinvested Dividends |
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None |
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Redemption Fee (as a percentage of amount redeemed, if applicable) |
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None |
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Exchange Fee |
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None |
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Annual Fund Operating Expenses (expenses that that you pay each year as a percentage of the value of your investment) |
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Management Fees |
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Distribution (12b-1) Fees |
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None |
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Other Expenses: |
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Dividend Expense on Short Sales(1) |
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Interest Expense on Borrowings |
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Other Operating Expenses |
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Total Other Expenses |
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Acquired Fund Fees and Expenses(2) |
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Total Annual Fund Operating Expenses |
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Fee Waiver and Expense Reimbursements(3) |
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Net Expenses (includes dividend and interest expenses on short sales) |
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(1) Short-sale dividends generally reduce the market value of the securities by the amount of the dividend declared; thus increasing the Funds unrealized gain or reducing the Funds unrealized loss on the securities sold short.
(2) Acquired Fund means any investment company in which the Fund expects to invest during the current fiscal year. Net Operating Expenses will not correlate to the Funds ratio of expenses to average net assets, which reflects the operating expenses of the Fund and does not include Acquired Fund Fees and Expenses. The Fund calculates the Acquired Funds expenses using the net expense ratios reported in the Acquired Funds most recent shareholder reports.
(3) The Funds investment adviser, Simple Alternatives, LLC (the Adviser), has contractually agreed to forgo all or a portion of its advisory fee and/or reimburse expenses in an aggregate amount equal to the amount by which the Total Annual Fund Operating Expenses (other than acquired fund fees and expenses, short sale dividend expenses, brokerage commissions, litigation, extraordinary items, interest or taxes) exceeds 2.95% of the average daily net assets attributable to the Funds I Shares. This contractual limitation is in effect until at least December 31, 2014 and may not be terminated without Board approval. Because dividend expenses on short sales, acquired fund fees and expenses, brokerage commissions, litigation, extraordinary items, interest and taxes are excluded from the expense limitation, Total Annual Fund Operating Expenses (after fees forgone and expense reimbursements) are expected to exceed the applicable expense limitation. If at any time
during the first three years the Funds Advisory Agreement with the Adviser is in effect, the Funds I Shares Total Annual Fund Operating Expenses for that year are less than 2.95%, the Adviser is entitled to reimbursement by the Fund of the advisory fees forgone and other payments remitted by the Adviser to the Fund during such three-year period if such reimbursement by the Fund does not cause the Fund to exceed existing expense limitations.
Example
This Example 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 you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Funds operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
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3 Years |
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5 Years |
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10 Years |
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I Shares |
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Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or turns over its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in Total Annual Fund Operating Expenses or in the Example, affect the Funds performance. During the most recent fiscal year, the Funds portfolio turnover rate was [ ]%.
Summary of Principal Investment Strategies
The Fund utilizes a multi-manager approach whereby the Funds assets are allocated to one or more sub-advisers (Sub-Advisers) in percentages determined at the discretion of the Funds investment adviser, Simple Alternatives, LLC (the Adviser). The Adviser also manages a portion of the Funds assets and monitors Sub-Adviser trading with the dual objectives of maximizing each Sub-Advisers investment flexibility and assuring that the Fund as a whole complies with investment restrictions. Otherwise, each Sub-Adviser acts independently from the others and utilizes its own distinct investment style in selecting securities. However, each Sub-Adviser must operate within the constraints of the Funds investment objective and strategies and the particular investment restrictions applicable to that Sub-Adviser.
The strategies utilized by the Fund are hedge fund-type strategies and include absolute return strategies as well as strategies aimed at enhanced risk-adjusted returns. The strategies and investment techniques employed by the Sub-Advisers aim to produce absolute returns over a full market cycle while managing risk exposure. These strategies and techniques may attempt to exploit disparities or inefficiencies in particular markets or geographical regions; take advantage of security mispricings or anticipated price movements; and/or benefit from cyclical themes and relationships or special situations and events (such as spin-offs or reorganizations). Such strategies may have low correlation to traditional markets because they seek asymmetric investment opportunities that may present risks unrelated to traditional markets.
The Sub-Advisers may invest and trade in a wide range of instruments, markets and asset classes in U.S. and non-U.S., developed and emerging markets. Investments include equities and equity-related instruments, fixed-income and other debt-related instruments, currencies, financial futures, options and swaps, commodity-linked instruments and private placements. Equities and equity-related instruments include common stocks, preferred stocks, convertible securities, depositary receipts, exchange traded funds (ETFs), Rule 144A securities, warrants, rights, and equity derivatives such as call and put options, forward currency exchange contracts, swaps and futures. Debt-related instruments include corporate bonds, defaulted debt securities, distressed debt securities, mezzanine investments, bank loans, asset-backed securities, mortgage-backed securities, unrated securities and securities of companies in bankruptcy. Commodity-linked instruments include commodity-linked structured notes, commodity index-linked securities and other derivative instruments that provide exposure to the investment returns of the commodities markets. The Sub-Advisers may invest in asset-backed securities, which represent participations in, or are secured by and payable from, pools of assets such as motor vehicle installment sale contracts, installment loan contracts, leases of various types of real and personal property, receivables from revolving credit (credit card) agreements and other categories of receivables. Asset-backed securities acquired by the Fund may also include collateralized debt obligations (CDOs). CDOs include collateralized bond obligations (CBOs) and collateralized loan obligations (CLOs) and other similarly structured securities. The Sub-Advisers may invest in equity and debt securities of companies of all sizes and without limit on the
credit quality or maturity of debt securities. These securities can be rated investment grade, rated below investment grade, or high yield securities (also known as junk bonds), which are below Baa3 by Moodys, BBB- by S&P or BBB- by Fitch or unrated. The Fund may invest in securities of the lowest rating category, including securities in default. There is no limit to the amount the Fund may invest in junk bonds. The Sub-Advisers may make margin purchases of securities and, in connection with the purchases, borrow money from banks and other financial institutions for investment purposes. The Sub-Advisers may also sell securities short, which is a form of leverage.
The Adviser has primary responsibility for allocating Fund assets in a manner that attempts to diversify the Funds portfolio across multiple strategies and investment styles that the Adviser believes are complementary and, when combined, will produce enhanced risk-adjusted returns. The Adviser reviews a range of qualitative and quantitative factors when determining the allocations and reallocations to Sub-Advisers, including, but not limited to, the Sub-Advisers style, historical performance and the characteristics of each Sub-Advisers allocated assets (including investment process and statistical analysis). The Adviser will allocate Fund assets among strategies of the Sub-Advisers that it believes offer the potential for attractive long-term investment returns individually and are expected to blend within the Funds portfolio so that it will have low correlation and low volatility relative to the broader stock and bond markets. The Adviser may direct a Sub-Adviser to reduce or limit its investment in certain assets or asset classes in order to achieve the desired composition of the Funds overall portfolio. The Adviser retains the discretion to invest the Funds assets in securities and other instruments directly and may do so in certain circumstances including pending allocation to a Sub-Adviser, to hedge against overall Fund exposure created by the Sub-Advisers, or to increase or reduce the Funds exposure to a particular issuer, sector, industry or general market risk, including interest rate risk.
Summary of Principal Risks
As with all mutual funds, a shareholder is subject to the risk that his or her investment could lose money. The Fund is only a suitable investment for investors who can bear leverage and derivatives securities risks. The principal risk factors affecting shareholders investments in the Fund are set forth below.
· Multi-Manager Dependence. The success of the Funds investment strategy depends both on the Advisers ability to select Sub-Advisers and to allocate assets to those Sub-Advisers and on each Sub-Advisers ability to execute the relevant strategy and select investments for the Fund. The Sub-Advisers investment styles may not always be complementary, which could affect the performance of the Fund.
· Absolute Return Focus. The Funds returns may deviate from overall market returns to a greater degree than other funds that do not employ an absolute return focus. In addition, if the Fund or a Sub-Adviser takes a defensive posture by hedging its portfolio and stock prices subsequently advance, the Funds returns may be lower than expected and lower than if the Funds portfolio had not been hedged.
· Equity Securities. The Fund is designed for investors who can accept the risks of investing in a portfolio with significant holdings of equity securities. Equity securities tend to be more volatile than other investment choices, such as debt and money market instruments. The value of your investment may decrease in response to overall stock market movements or the value of individual securities held by the Fund.
· Mid Cap Company Investments. Securities of companies with mid cap capitalizations tend to be riskier than securities of companies with large capitalizations. This is because mid cap companies typically have smaller product lines and less access to liquidity than large cap companies, and are therefore more sensitive to economic downturns. In addition, growth prospects of mid cap companies tend to be less certain than large cap companies, and the dividends paid by mid cap stocks are frequently negligible. Moreover, mid cap stocks have, on occasion, fluctuated in the opposite direction of large cap stocks or the general stock market. Consequently, securities of mid cap companies tend to be more volatile than those of large cap companies.
· Small Cap Company Investments. Securities of companies with small capitalizations tend to be riskier than securities of companies with mid cap and large capitalizations. Smaller companies may have limited product lines, markets and financial resources. The prices of small capitalization stocks tend to be more volatile than those of other stocks. Small capitalization stocks are not priced as efficiently as stocks of larger companies. In addition, it may be harder to sell these stocks, especially during a down market or upon the occurrence of adverse company-specific events, which can reduce their selling prices.
· Fixed Income Securities. Fixed income securities in which the Fund may invest are subject to certain risks, including: interest rate risk, prepayment risk and credit/default risk. Interest rate risk involves the risk that prices of fixed income securities will rise and fall in response to interest rate changes. Prepayment risk involves the risk that in declining interest rate environments prepayments of principal could increase and require the Fund to reinvest proceeds of the prepayments at lower interest rates. Credit risk involves the risk that the credit rating of a security may be lowered.
· Asset-Backed Securities. The risks of investing in asset-backed securities include interest rate risk, prepayment risk and the risk that the Fund could lose money if there are defaults on the loans underlying these securities.
· Mortgaged-Backed Securities. The risks of investing in mortgaged-backed securities include interest rate risk, prepayment risk and the risk that the Fund could lose money if there are defaults on the mortgage loans underlying these securities.
· High Yield Debt Obligations. The Fund may invest in high yield debt obligations, such as bonds and debentures, issued by corporations and other business organizations. An issuer of debt obligations may default on its obligation to pay interest and repay principal. Also, changes in the financial strength of an issuer or changes in the credit rating of a security may affect its value. Such high yield debt obligations are referred to as junk bonds and are not considered to be investment grade.
· Foreign Investments. International investing is subject to special risks, including currency exchange rate volatility, political, social or economic instability, and differences in taxation, auditing and other financial practices.
· Emerging Markets. Investment in emerging market securities involves greater risk than that associated with investment in foreign securities of developed foreign countries. These risks include volatile currency exchange rates, periods of high inflation, increased risk of default, greater social, economic and political uncertainty and instability, less governmental supervision and regulation of securities markets, weaker auditing and financial reporting standards, lack of liquidity in the markets, and the significantly smaller market capitalizations of emerging market issuers.
· Leverage. The Fund may make margin purchases of securities and, in connection with the purchases, borrow money from banks and other financial institutions for investment purposes. The Fund may also engage in selling securities short, which is a form of leverage. Although the use of leverage by the Fund may create an opportunity for increased return, it also results in additional risks and can magnify the effect of any losses. There is no assurance that the use of leverage as an investment strategy will be successful.
· Derivatives. The Funds investments in derivative instruments such as options, forward currency exchange contracts, swaps and futures, which may be leveraged, may result in losses. Investments in derivative instruments may result in losses exceeding the amounts invested.
· Commodity Sector Risk. Exposure to the commodities markets may subject the Fund to greater volatility than investments in traditional securities. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates, or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. The prices of energy, industrial metals, precious metals, agriculture and livestock sector commodities may fluctuate widely due to factors such as changes in value, supply and demand and governmental regulatory policies. The commodity-linked securities in which the Fund invests may be issued by companies in the financial services sector, and events affecting the financial services sector may cause the Funds share value to fluctuate.
· Convertible Securities. Securities that can be converted into common stock, such as certain securities and preferred stock, are subject to the usual risks associated with fixed income investments, such as interest rate risk and credit risk. In addition, because they react to changes in the value of the equity securities into which they will convert, convertible securities are also subject to the risks associated with equity securities.
· Valuation. Portfolio securities that have been valued using techniques other than market quotations may have valuations that are different from those produced using market quotations, and the security may be sold at a discount to the value established by the Fund.
· Redemptions. The Fund could experience a loss when selling securities to meet redemption requests by shareholders if the redemption requests are unusually large or frequent, occur in times of overall market turmoil or declining prices for the securities sold, or when the securities the Fund wishes to or is required to sell are illiquid.
· Portfolio Turnover. The Fund frequently trades its portfolio securities. High portfolio turnover will cause the Fund to incur higher brokerage commissions and transaction costs, which could lower the Funds performance. In addition to lower performance, high portfolio turnover could result in taxable capital gains.
· Exchange Traded Funds. ETFs are a type of investment company bought and sold on a securities exchange. An ETF represents a fixed portfolio of securities designed to track a particular market index. The risks of owning an ETF generally reflect
the risks of owning the underlying securities that the ETF is designed to track, although lack of liquidity in an ETF could result in its being more volatile. The Fund may incur brokerage fees in connection with its purchase of ETF shares.
Fund Performance
The chart below illustrates the performance of the Funds I Shares. The information provides some indication of the risks of investing in the Fund. The chart assumes reinvestment of dividends and distributions. As with all such investments, past performance (before and after taxes) is not an indication of future results. Performance reflects fee waivers in effect. If fee waivers were not in place, the Funds performance would be reduced. Updated performance information may be obtained at www.S1Fund.com or 1-866-882-1226.
TOTAL RETURNS FOR THE CALENDAR YEARS ENDED DECEMBER 31
I Shares
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Best and Worst Quarterly Performance (for the periods reflected in the chart above):
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Year-to-date total return for the nine months ended September 30, 2012: [ ]%
AVERAGE ANNUAL TOTAL RETURNS
The table below compares the Funds total returns for the calendar year ended December 31, 2011 to the average annual total returns of a broad-based securities market index for the same period. Past performance (before and after taxes) is not necessarily an indicator of how the Fund will perform in the future.
AVERAGE ANNUAL TOTAL RETURNS FOR THE CALENDAR YEAR ENDED DECEMBER 31, 2011
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I Shares Before Taxes |
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I Shares After Taxes on Distributions(2) |
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I Shares After Taxes on Distributions and Sale of Fund Shares |
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S&P 500 ® Index(3) |
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(1) |
Commenced investment operations on September 30, 2010. |
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(2) |
After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investors tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts (IRA). After-tax returns are shown for only the Investor Class and may vary for the Institutional Class. |
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The S&P 500® Index is an unmanaged index composed of 500 common stocks, classified in eleven industry sectors, which represent approximately 75% of the U.S. equities market. The S&P 500® Index assigns relative values to the stocks included in the index, weighted according to each stocks total market value relative to the total market value of the other stocks included in the index. |
Management of the Fund
Investment Advisers and Sub-Advisers
Simple Alternatives, LLC, 90 Grove Street, Suite 205, Ridgefield, Connecticut 06877, serves as investment adviser to the Fund. Roaring Blue Lion Capital Management, LLC, Courage Capital Management, LLC, Lauren Templeton Capital Management, LLC, Maerisland Capital, LLC, Starwood Real Estate Securities, LLC, and Trellus Management Co., LLC each serves as a Sub-Adviser to the Fund.
Portfolio Managers
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Portfolio Manager
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Simple Alternatives, LLC |
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James Dilworth |
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Chief Executive Officer |
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Inception |
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Bruce MacDonald |
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Chief Investment Officer |
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Inception |
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Roaring Blue Lion Capital Management, LLC |
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Charles W. Griege, Jr. |
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Managing Partner, Chief Investment Officer |
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Inception |
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Courage Capital Management, LLC |
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Richard C. Patton |
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Chief Investment Officer |
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Inception |
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Lauren Templeton Capital Management, LLC |
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Lauren C. Templeton |
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Founder, Managing Member, Chief Compliance Officer |
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Inception |
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Scott Phillips |
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Portfolio Manager, Head of Research |
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Inception |
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Maerisland Capital, LLC |
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Mark Beder |
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Founder, Chief Executive Officer, Chief Investment Officer |
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January 1, 2012 |
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Starwood Real Estate Securities, LLC |
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Matthew C. Gilman |
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Chief Executive Officer, Portfolio Manager |
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Inception |
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Trellus Management Co., LLC |
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Adam Usdan |
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President, Portfolio Manager |
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Inception |
Purchase and Sale of Fund Shares
Minimum Initial Investment: $1,000,000
You can only purchase and redeem Shares of the Fund on days the New York Stock Exchange is open. Shares of the Fund may be available through certain brokerage firms, financial institutions and other industry professions (collectively, Service Organizations). Shares of the Fund may also be purchased and redeemed directly through The RBB Fund, Inc. by the means described below.
Purchase and Redemption By Mail:
S1 Fund
c/o BNY Mellon Investment Servicing (US) Inc.
P.O. Box 9869
Providence, RI 02940-8042
Purchase By Wire:
Before sending any wire, call the Transfer Agent at 1-866-882-1226 to confirm the current wire instructions for the S1 Fund.
Redemption By Telephone:
Call the Transfer Agent at 1-866-882-1226
Taxes
The Fund intends to make distributions that may be taxed as ordinary income or capital gains. The Fund contemplates declaring as dividends each year all or substantially all of its taxable income.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund may pay the intermediary for the sale of Fund shares and other related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediarys website for more information.
ADDITIONAL INFORMATION ABOUT THE FUNDS INVESTMENTS AND RISKS
This section provides some additional information about the Funds investments and certain portfolio management techniques that the Fund may use. More information about the Funds investments and portfolio management techniques, and related risks, is included in the Statement of Additional Information (SAI).
The Funds investment objective is non-fundamental and may be changed by the Board of Directors of The RBB Fund, Inc. (the Company) without the approval of the Funds shareholders. However, as a matter of policy, the Fund would not materially change its investment objective without informing shareholders at least 60 days in advance of any such change.
Additional Information About the Funds Principal Investments and Risks
Sub-Adviser Investment Strategies. The Sub-Advisers will use a combination of the following investment strategies:
Relative Value
This strategy is designed to take advantage of perceived discrepancies in the market prices of certain convertible bond, common stock, fixed income and derivative securities. Such discrepancies are often created by imbalances in supply and demand of different types of issues (for example, agency securities relative to U.S. Treasury securities).
Event Driven
This strategy is designed to invest in securities whose prices are or will be impacted by a corporate event. Such events include corporate events, such as restructurings, spin-offs and significant litigation (e.g., tobacco litigation). Opportunities in this area are created by the reluctance of traditional investors to assume the risk associated with certain corporate events.
Long/Short Equity
This strategy employs long and short trading in common stock, and preferred stock of U.S. and foreign issuers. This strategy attempts to neutralize exposure to general market risk by primarily investing in stocks that are undervalued and short selling those stocks that are considered to be undervalued.
Market Neutral Equity
This strategy is designed to exploit equity market inefficiencies, which involves being simultaneously invested in long and short matched equity portfolios generally of the same size, usually in the same market. These strategies are typically constructed to attempt to be beta neutral and attempt to control the industry, sector, market capitalization and other potential market bias exposures.
Global Macro
This strategy seeks to generate income and/or capital appreciation through a portfolio of investments focused on macro-economic opportunities across numerous markets and instruments. These strategies may include positions in the cash, currency, futures and forward markets. Trading positions are generally held both long and/or short in both U.S. and non-U.S. markets. With a broader global scope, returns to the Global Macro strategy generally exhibit little to no correlation with the broader domestic equity and bond markets.
Convertible Arbitrage
This strategy seeks to take advantage of pricing inefficiencies of the embedded option in a convertible bond. The strategy typically involves the purchase of a convertible debt or preferred equity instrument (an instrument that is effectively a bond or has a fixed obligation of repayment with an embedded equity option, non-detachable warrants or an equity-linked or equity-indexed note) concurrent with the short sale of, or a short over-the-counter derivative position in, the common stock of the issuer of such debt instrument.
Credit Biased
These strategies invest primarily in the following sectors: secured leveraged loans, high yield bonds, distressed debt, structured credit, and global debt (typically less efficient areas of the global fixed income markets than traditional fixed income strategies). Generally these sectors may include wide credit rating ranges (including leveraged buyouts), may include distressed debt strategies and may include restricted securities and securities that may not be registered for which a market may not be readily available.
Mortgage Backed Securities
This strategy is designed to exploit perceived mispricings in mortgage back securities. Such mispricings can result from periods of market illiquidity and distress or from analytical anomalies. The strategy will invest in both conventional and complex mortgage backed securities.
Opportunistic Equities
This strategy is designed to capitalize on underpriced equity securities or on positive market trends and may focus in certain securities markets, industries, company sizes, or geographical areas. Strategies are primarily managed for absolute return and Sub-Advisers assess risk and opportunity on an absolute, not an index-relative basis, by focusing on relatively few investments that the manager believes are undervalued and either offer a margin-of-safety, or offer high growth opportunities. Selective hedging through the use of short sales or options may be utilized to manage risk exposure. Strategies may also focus on special situations or events, including distressed equities.
Other Investment Strategies
The Fund also has the ability to employ strategies including borrowing money from banks or other financial institutions to purchase securities and investing in warrants, options and futures, reverse repurchase agreements, initial public offerings, restricted securities, and other investment companies.
Derivative Contracts. The Fund may, but need not, use derivative contracts for any of the following purposes:
· To seek to hedge against the possible adverse impact of changes in stock market prices, currency exchange rates or interest rates in the market value of its securities or securities to be purchased;
· As a substitute for buying or selling currencies or securities; or
· To seek to enhance the Funds return in non-hedging situations (which is considered a speculative activity).
Examples of derivative contracts include: futures and options on securities, securities indices or currencies; options on these futures; forward foreign currency contracts; and interest rate or currency swaps. The Fund may use derivative contracts involving foreign currencies. A derivative contract will obligate or entitle the Fund to deliver or receive an asset or cash payment that is based on the change in value of one or more securities, currencies or indices. Even a small investment in derivative contracts can have a big impact on the Funds stock market, currency and interest rate exposure. Therefore, using derivatives can disproportionately increase losses and reduce opportunities for gains when stock prices, currency rates or interest rates are changing. The Fund may not fully benefit from or may lose money on derivatives if changes in their value do not correspond accurately to changes in the value of the Funds holdings. The other parties to certain derivative contracts present the same types of default risk as issuers of fixed income securities in that the counterparty may default on its payment obligations or become insolvent. Derivatives can also make the Fund less liquid and harder to value, especially in declining markets.
Short Sales. The Fund engages in short sales including those that are not against the box, which means that the Fund may make short sales where the Fund does not currently own or have the right to acquire, at no added cost, securities identical to those sold short in accordance with the provisions of the Investment Company Act of 1940, as amended (the 1940 Act). In a typical short sale, the Fund borrows from a broker a security in order to sell the security to a third party. The Fund is then obligated to return a security of the same issuer and quantity at some future date. The Fund realizes a loss to the extent the security increases in value or a profit to the extent the security declines in value (after taking into account any associated costs). Short sales against the box may protect the Fund against the risk of losses in the value of a portfolio security because any decline in value of the security should be wholly or partially offset by a corresponding gain in the short position. Any potential gains in the security, however, would be wholly or partially offset by a corresponding loss in the short position. Short sales that
are not against the box involve a form of investment leverage, and the amount of the Funds loss on a short sale is potentially unlimited.
Equity and Equity-Related Securities. The Fund invests in all types of equity securities. Equity securities include exchange-traded and over-the-counter common and preferred stocks, warrants, rights, convertible securities, depositary receipts and shares, trust certificates, limited partnership interests, shares of other investment companies and real estate investment trusts (REITs), and equity participations. The number of issuers in the Funds portfolio will vary over time.
Fixed Income Investments. The Fund invests a portion of its assets in fixed income securities. Fixed income investments include bonds, notes (including structured notes), mortgage-backed securities, asset-backed securities, convertible securities, Eurodollar and Yankee dollar instruments, preferred stocks and money market instruments. Fixed income securities may be issued by corporate and governmental issuers and may have all types of interest rate payment and reset terms, including (without limitation) fixed rate, adjustable rate, zero coupon, contingent, deferred, payment-in-kind and auction rate features. The principal debt investments of the Fund will be fixed and floating rate securities with no reset terms.
The credit quality of securities held in the Funds portfolio is determined at the time of investment. If a security is rated differently by multiple ratings organizations, the Fund treats the security as being rated in the higher rating category.
Mortgage-Backed Securities. Mortgage-backed securities may be issued by private companies or by agencies of the U.S. government. Mortgage-backed securities represent direct or indirect participation in, or are collateralized by and payable from, mortgage loans secured by real property.
Certain debt instruments may only pay principal at maturity or may only represent the right to receive payments of principal or payments of interest on underlying pools of mortgage or government securities, but not both. The value of these types of instruments may change more drastically than debt securities that pay both principal and interest during periods of changing interest rates. Principal only mortgage-backed securities are particularly subject to prepayment risk. The Fund may obtain a below market yield or incur a loss on such instruments during periods of declining interest rates. Interest only instruments are particularly subject to extension risk, i.e. the risk that an issuer will exercise its right to pay later than expected. This may occur when there is a rise in interest rates. Mortgage derivatives and structured securities often employ features that have the effect of leverage. As a result, small changes in interest or prepayment rates may cause large and sudden price movements, especially compared to an investment in a security that is not leveraged. Mortgage derivatives can also become illiquid and hard to value in declining markets.
Mortgage-backed securities that are collateralized by a portfolio of mortgages or mortgage-related securities depend on the payments of principal and interest made by or through the underlying assets, which may not be sufficient to meet the payment obligations of the mortgage-backed securities. Prepayments of principal, which occur more frequently in falling interest rate conditions, may shorten the term and reduce the value of these securities. The quality and value of the underlying collateral may decline, or default, which has become a significant risk for collateral related to sub-prime mortgage loans, especially in a declining residential real estate market. Further, these securities generally are privately sold and may not be readily marketable, particularly after a rapid decrease in value. Investments in mortgage-backed securities may also be subject to valuation risk.
The Fund may also use mortgage dollar rolls to finance the purchase of additional investments. Dollar rolls expose the Fund to the risk that it will lose money if the additional investments do not produce enough income to cover the Funds dollar roll obligations. In addition, if the Advisers or Sub-Advisers prepayment assumptions are incorrect, the Fund may have performed better had the Fund not entered into the mortgage dollar roll. Unless covered, investing in dollar rolls creates leverage and dollar rolls are subject to the general risks involved in leveraging.
Foreign Securities. The Fund may invest in securities of foreign issuers that are traded or denominated in U.S. dollars (including equity securities of foreign issuers trading in U.S. markets) through American Depositary Receipts (ADRs), Global Depositary Receipts (GDRs), European Depositary Receipts (EDRs) or International Depositary Receipts (IDRs). In addition, the Fund may invest in securities traded or denominated in foreign currencies and in multinational currencies such as the Euro. The Fund will value its securities and other assets in U.S. dollars. Investments in securities of foreign entities and securities denominated or traded in foreign currencies involve special risks. These include possible political and economic instability and the possible imposition of exchange controls or other restrictions on investments. Changes in foreign currency rates relative to the U.S. dollar will affect the U.S. dollar value of the Funds assets denominated or quoted in currencies other than the U.S. dollar. Emerging market investments offer the potential for significant gains but also involve greater risks than investing in more developed countries. Political or economic instability, lack of market liquidity and government actions such as currency controls or seizure of private business or property may be more likely in emerging markets.
Valuation. Portfolio securities may be valued using techniques other than market quotations. The value established for a portfolio security may be different than what would be produced through the use of another methodology or if it had been priced using market quotations. Portfolio securities that are valued using techniques other than market quotations, including fair valued securities, may be subject to greater fluctuation in their value from one day to the next than would be the case if market quotations were used. In addition, there is no assurance that the Fund could sell a portfolio security for the value established for it at any time and it is possible that the Fund would incur a loss because a portfolio security is sold at a discount to its established value.
Interest Rate Risk. During periods of rising interest rates, the market value of the Funds fixed-income securities will tend to be lower than prevailing market interest rates. In periods of falling interest rates, the market value of the Funds fixed-income securities generally will tend to be higher than prevailing market interest rates. Prices of longer-term fixed income securities are typically more sensitive to changes in interest rates than prices of shorter-term fixed-income securities.
Credit/Default Risk. The credit rating of an issuer or guarantor of a security in which the Fund invests may be lowered or an issuer or guarantor of a security or the counterparty to a derivatives contract or a repurchase agreement may default on its payment obligations.
Liquidity Risk. Liquidity risk exists when particular investments are difficult to purchase or sell. The Funds investments in illiquid securities may reduce the returns of the Fund because it may be unable to sell the illiquid securities at an advantageous time or price. Liquid securities may also become illiquid because of market events or uncertainties. Illiquidity can be caused by a drop in overall market trading volume, an inability to find a ready buyer, or legal restrictions on the securities resale. Certain securities that were liquid when purchased may later become illiquid, particularly in times of overall economic distress.
Leveraging Risks. The use of leverage by the Adviser and Sub-Advisers may increase the volatility of the Fund. These leveraged instruments may result in losses to the Fund or may adversely affect the Funds net asset value or total return, because instruments that contain leverage are more sensitive to changes in interest rates. The Fund may also use borrowed funds to create leverage. Although the use of leverage by the Fund may create an opportunity for increased return, it also results in additional risks and can magnify the effect of any losses. If the income and gains earned on the securities and instruments purchased with leverage proceeds are greater than the cost of the leverage, the Funds return will be greater than if leverage had not been used. Conversely, if the income and gains from the securities and instruments purchased with such proceeds does not cover the cost of leverage, the Funds return will be less than if leverage had not been used. In the event of a sudden, precipitous drop in value of the Funds assets, the Fund may not be able to liquidate assets quickly enough to pay off its borrowing. Short sales of securities also involve the use of leverage. Using this investment technique may adversely affect the Funds net asset value or total return.
To limit leverage risk, the Fund will segregate assets determined by the Adviser to be liquid in accordance with procedures established by the Board of Directors, or, when permissible, enter into offsetting transactions, to cover its obligations resulting from its use of derivative instruments. Securities held in a segregated account cannot be sold while the futures contract, option or other derivative is outstanding, unless they are replaced with other suitable assets. As a result, it is possible that segregating a large percentage of the Funds assets could impede portfolio management or its ability to meet redemption requests or other current obligations.
Interest Rate Swaps, Total Return Swaps, Credit Default Swaps, Options on Swaps and Interest Rate Caps, Floors and Collars.
· Interest rate swaps involve the exchange by the Fund with another party of their respective commitments to pay or receive interest, such as an exchange of fixed-rate payments for floating rate payments.
· Total return swaps are contracts that obligate a party to pay or receive interest in exchange for payment by the other party of the total return generated by a security, a basket of securities, an index, or an index component.
· Credit default swaps are contracts whereby one party makes periodic payments to a counterparty in exchange for the right to receive from the counterparty a payment equal to the par (or other agreed-upon) value of a referenced debt obligation in the event of a default by the issuer of the debt obligation.
· Options on swaps (swaptions) are options to enter into a swap agreement. The Fund may also purchase and write (sell) swaptions. Like other types of options, the buyer of a swaption pays a non-refundable premium for the option and obtains the right, but not the obligation, to enter into an underlying swap on agreed-upon terms. The seller of a swaption, in exchange for the premium, becomes obligated (if the option is exercised) to enter into an underlying swap on agreed-upon terms.
· Interest rate caps entitle the purchaser, to the extent that a specified index exceeds a predetermined interest rate, to receive payment of interest on a notional principal amount from the party selling such interest rate cap.
· Interest rate floors entitle the purchaser, to the extent that a specified index falls below a predetermined interest rate, to receive payments of interest on a notional principal amount from the party selling the interest rate floor.
· Interest rate collars combine a cap and a floor that are designed to preserve a certain return within a predetermined range of interest rates.
The Fund may enter into the transactions described above for hedging purposes or to seek to increase total return (which is considered a speculative activity). The use of swaps, swaptions, and interest rate caps, floors and collars is a highly specialized activity which involves investment techniques and risks different from those associated with ordinary portfolio securities transactions. If the Adviser or a Sub-Adviser is incorrect in its forecasts of market values and interest rates, the investment performance of the Fund would be less favorable than it would have been if these investment techniques were not used.
Counterparties. To the extent the Fund invests in loans or securities traded over-the-counter, swaps, synthetic or derivative instruments, repurchase agreements, certain types of options or other customized financial instruments, the Fund takes the risk of non-performance by the other party to the contract. This risk may include credit risk of the counterparty and the risk of settlement default. This risk may differ materially from those entailed in exchange-traded transactions that generally are supported by guarantees of clearing organizations, daily marking-to-market and settlement, and segregation and minimum capital requirements applicable to intermediaries. Transactions entered directly between two counterparties generally do not benefit from such protections and expose the parties to the risk of counterparty default.
Convertible Securities Risk. Convertible securities have characteristics of both equity and fixed-income securities. The value of a convertible security tends to move with the market value of the underlying stock, but may also be affected by interest rates, credit quality of the issuer and any call provisions. In particular, when interest rates rise, fixed-income securities will decline in value. Convertible securities frequently have speculative characteristics and may be acquired without regard to minimum quality ratings. Lower quality convertible securities, also known as junk bonds, involve greater risk of default or price changes due to the issuers creditworthiness. The market prices of these securities may fluctuate more than those of higher quality securities and may decline significantly in periods of general economic difficulty, which may follow periods of rising interest rates. Securities in the lowest quality category may present the risk of default, or may be in default.
Tax Risk. The Fund may seek to gain exposure to the commodity markets through investments in commodity-linked notes. The Fund has not requested or received a ruling from the Internal Revenue Service (IRS) regarding their treatment for purposes of the Funds qualification as a regulated investment company under the Internal Revenue Code (Code). Additionally, the tax treatment of commodity-linked notes and other commodity-linked derivatives may be adversely affected by future legislation, U.S. Treasury Regulations and/or guidance issued by the IRS that could affect the character, timing and/or amount of the Funds taxable income or any gains and distributions made by the Fund.
Exchange-Traded Funds (ETFs). The Fund may invest up to 25% of its assets in ETFs. ETFs are registered investment companies whose shares are listed and traded on U.S. stock exchanges or otherwise traded in the over-the-counter market. In general, ETFs seek to track a specified securities index or a basket of securities that an index provider, such as Standard & Poors, selects as representative of a market, market segment or industry sector. An ETF portfolio generally holds the same stocks or bonds as the index it tracks or it may hold a representative sample of such securities. Thus, an ETF is designed so that its performance will correspond closely with that of the index it tracks. As a shareholder in an ETF, the Fund will bear its pro rata portion of an ETFs expenses, including advisory fees, in addition to its own expenses.
Other Investment Companies. The Fund may invest up to 10% of its total assets in the securities of other investment companies, but may not invest more than 5% of its total assets in the securities of any one investment company or acquire more than 3% of the voting securities of any other investment company. Among other things, the Fund may invest in money market mutual funds for cash management purposes by sweeping excess cash balances into such funds until the cash is invested or otherwise utilized. The Fund will indirectly bear its proportionate share of any management fees and other expenses paid by investment companies in which it invests in addition to the advisory and administration fees paid by the Fund.
Redemptions. The Fund may need to sell its holdings in order to meet shareholder redemption requests. The Fund could experience a loss when selling securities to meet redemption requests if the redemption requests are unusually large or frequent, occur in times of overall market turmoil or declining prices for the securities sold, or when the securities the Fund wishes to or is required to sell are illiquid. The Fund may be unable to sell illiquid securities at its desired time or price. Illiquidity can be caused by a drop in overall market trading volume, an inability to find a ready buyer, or legal restrictions on the securities
resale. Certain securities that were liquid when purchased may later become illiquid, particularly in times of overall economic distress.
Portfolio Turnover. The Fund may engage in active and frequent trading, resulting in high portfolio turnover. This may lead to the realization and distribution to shareholders of higher capital gains, increasing their tax liability. Frequent trading may also increase transaction costs, which could detract from the Funds performance.
Temporary Investments. The Fund may depart from its principal investment strategy in response to adverse market, economic, political or other conditions by taking temporary defensive positions (up to 100% of its assets) in all types of money market and short-term debt securities. If the Fund were to take a temporary defensive position, it may be unable for a time to achieve its investment objective.
Disclosure of Portfolio Holdings
A description of the Companys policies and procedures with respect to the disclosure of the Funds portfolio securities is available in the SAI. The SAI is incorporated herein.
MANAGEMENT OF THE FUNDS
Investment Adviser
Simple Alternatives, LLC, a registered investment adviser located at 90 Grove Street, Suite 205, Ridgefield, Connecticut 06877, provides investment advisory services to the Fund subject to the general supervision of the Companys Board of Directors. The Adviser was founded in October 2009 by James Dilworth.
Pursuant to an investment advisory agreement with the Company, the Adviser is entitled to an advisory fee at the annual rate of 2.75% of the Funds average daily net assets, computed daily and payable monthly. The Adviser has contractually agreed to forgo all or a portion of its advisory fee and/or reimburse expenses in an aggregate amount equal to the amount by which the Total Annual Fund Operating Expenses (other than acquired fund fees and expenses, short sale dividend expenses, brokerage commissions, litigation, extraordinary items, interest or taxes) exceeds 2.95% of the average daily net assets attributable to the Funds I Shares. This contractual limitation is in effect until at least December 31, 2014 and may not be terminated without Board approval. Because dividend expenses on short sales, acquired fund fees and expenses, brokerage commissions, litigation, extraordinary items, interest and taxes are excluded from the expense limitation, Total Annual Fund Operating Expenses (after fees forgone and expense reimbursements) are expected to exceed the applicable expense limitation. If at any time during the first three years the Funds Advisory Agreement with the Adviser is in effect, the Funds Total Annual Fund Operating Expenses for that year are less than 2.95%, the Adviser is entitled to reimbursement by the Fund of the advisory fees forgone and other payments remitted by the Adviser to the Fund during such three-year period if such reimbursement by the Fund does not cause the Fund to exceed existing expense limitations.
The Fund is managed by the Adviser and one or more Sub-Advisers unaffiliated with the Adviser. The Adviser also has the ultimate responsibility to oversee the Sub-Advisers, and to recommend their hiring, termination, and replacement, subject to approval by the Board of Directors. James Dilworth and Bruce MacDonald are the portfolio managers primarily responsible for the day-to-day management of the Fund. Prior to founding Simple Alternatives, LLC, Mr. Dilworth worked with Common Sense Investment Management, LLC. Common Sense Investment Management is an institutional hedge fund of funds. Mr. Dilworth founded Dilworth Securities, Inc. and Dilworth Capital Management, LLC in 2003. Prior to establishing Dilworth Capital, Mr. Dilworth served as the CEO and Managing Director of London-based Middlebury Capital Partners International, a holding company partially owned by and managing investments for the Charles R. Schwab family. In 1998, Mr. Dilworth joined Clark Winter in developing Winter Capital International, a fund of funds based in New York City, which was sold to Citigroup Private Bank in late 2000. Mr. Dilworth received his MBA from Northwestern Universitys Kellogg Graduate School of Business. Mr. MacDonald currently serves as Chief Investment Officer of the Adviser. From 2005 to 2009 he was Director of Asset Allocation and Risk Management for the University of Virginia Investment Management Company (UVIMCO). Before joining UVIMCO Mr. MacDonald was the Senior Investment Strategist for Putnam Investments Global Asset Allocation team. Mr. MacDonald holds an MBA from Columbia University and a BA in religion from Wesleyan University.
Sub-Advisers
The Fund has received an exemptive order from the SEC that permits the Adviser to engage or terminate a Sub-Adviser, and to enter into and materially amend an existing sub-advisory agreement, upon the approval of the Board of Directors, without obtaining shareholder approval. The Sub-Advisers provide investment advisory services to the portion of the Funds portfolio allocated to them by the Adviser. The Adviser compensates each Sub-Adviser at a rate negotiated by the Adviser and the Sub-Adviser. The Adviser selects Sub-Advisers based upon the Sub-Advisers skills in managing assets pursuant to particular investment styles and strategies. The Adviser monitors existing Sub-Advisers based on their investment styles, strategies, and results in managing assets for specific asset classes. Each Sub-Adviser will have discretion to select portfolio securities for its portion of the Fund, but must select those securities according to the Funds investment objectives and restrictions. The Fund is not required to invest with any minimum number of Sub-Advisers, and does not have minimum or maximum limitations with respect to allocations of assets to any Sub-Adviser. The Adviser may change the allocation of the Funds assets among the available Sub-Advisers, and may add or remove Sub-Advisers, at any time.
Roaring Blue Lion Capital Management, LLC (Blue Lion) , a registered investment adviser located at 8115 Preston Road, Suite 550, Dallas, TX 75225, has served as a Sub-Adviser to the Fund since its inception. Charles W. Griege, Jr. is the portfolio manager primarily responsible for the day-to-day management of the portion of the Fund sub-advised by Blue Lion. Mr. Griege has been Managing Partner and Chief Investment Officer of Blue Lion since 2005. Prior to starting Blue Lion, Mr. Griege joined Atlas Capital Management, a long/short equity fund, as a partner in May 2001. Prior to Atlas, Mr. Griege spent six years in investment banking, most recently as a Managing Director at SoundView Technology Group. Prior to joining SoundView, Mr. Griege was a Vice President in the research sales division of Sanford Bernstein. Mr. Griege received an MBA with honors from Columbia Business School in 1990 and a BA degree from Vanderbilt University in 1985. Blue Lion employs a long/short equity
strategy with a value-oriented bias in managing its portion of the Fund. The Fund is the only mutual fund for which the Sub-Adviser provides advisory services.
Courage Capital Management, LLC (Courage Capital) , a registered investment adviser located at 4400 Harding Road, Ste. 503, Nashville, Tennessee 37205, has served as a Sub-Adviser to the Fund since its inception. Courage Capital was founded in 1998 by Richard C. Patton, who is also the portfolio manager primarily responsible for the day-to-day management of the portion of the Fund sub-advised by Courage Capital. Mr. Patton is also Chief Investment Adviser of Courage Capital. Prior to founding Courage Capital, Mr. Patton co-founded and operated Woodmont Capital, LLC. Mr. Patton serves on the American Red Cross Board of Governors. Mr. Patton earned a B.S. in Economics from Vanderbilt University and an M.B.A. from Harvard Business School. Courage Capital employs an event driven investment strategy, including investments in special situations companies and distressed securities, in managing its portion of the Fund. The Fund is the only mutual fund for which the Sub-Adviser provides advisory services.
Lauren Templeton Capital Management, LLC (LT) , a registered investment adviser located at 633 Chestnut Street, Suite 820, Chattanooga, TN 37450, has served as a Sub-Adviser to the Fund since its inception. LT was founded in 2001 by Lauren C. Templeton. Ms. Templeton and Scott Phillips have responsibility for the day-to-day management of the portion of the Fund sub-advised by LT. Ms. Templeton is managing member and Chief Compliance Officer of LT. Ms. Templeton is also founder and director of the Southeastern Hedge Fund Association. In addition to these responsibilities Ms. Templeton also serves the following organizations; The Atlanta Hedge Fund Roundtable (President), the Board of Trustees at the Baylor School, the Pre-Business Advisory Council at the University of the South, Sewanee (Board Member), and the Finance Advisory Board of the University of Tennessee Chattanooga. Ms. Templeton is a published book author having written Investing the Templeton Way released by McGraw Hill in 2008. Investing the Templeton Way is a value investors guide to the successful methods employed by her mentor, Sir John Templeton. Ms. Templeton received a B.A. in Economics from the University of the South. Mr. Phillips joined LT in 2007 and serves as Portfolio Manager and Head of Research. Prior to joining LT, Mr. Phillips founded Cumberland Capital Corp, located in Chattanooga, Tennessee in 2004, where he provided equity research services to Green Cay Asset Management, a hedge fund management company located in Nassau, Bahamas. Mr. Phillips received his B.A. in English from the University of the South. Mr. Phillips co-authored Investing the Templeton Way. LT uses a global value investment strategy in managing its portion of the Fund. The Fund is the only mutual fund for which the Sub-Adviser provides advisory services.
Maerisland Capital, LLC (Maerisland) , a registered investment adviser located at 500 Newport Center Drive, Suite 600, Newport Beach, CA 92660, has served as a Sub-Adviser to the Fund since January 1, 2012. Maerisland was formed in September of 2011 by Mark Beder, who is also the portfolio manager primarily responsible for the day-to-day management of the portion of the Fund sub-advised by Maerisland. Mr. Beder has over 18 years of investment experience as a fundamental, bottoms-up investor and has managed global equity portfolios with long-only, market-neutral and long/short hedged strategies. Prior to forming Maerisland, Mr. Beder was a partner with the Tremblant Capital Group (Tremblant) from September 1, 2005 through 2010. Mr. Beder was the founding member and sole portfolio manager of the Tremblant-Trident Funds. Following Tremblants restructuring in late 2008, Mr. Beder was named a partner at Tremblant, managed a generalist book within Tremblants main fund, and served on the Investment and the Risk Management Committees. Prior to his work at Tremblant, Mr. Beder was a co-founder and co-portfolio manager of KiCap Management Funds (KiCap), series market neutral hedge funds. Mr. Beder and his co-portfolio manager at KiCap began their work together while co-heading the global telecom and media team at Tiger Management, LLC. Mr. Beder and his partner managed a book of over $300 million of assets within Tiger Managements main fund. Prior to joining Tiger Management in 1999, Mr. Beder spent 6 years with The Capital Group Companies where he managed a $1.4 billion global telecom portfolio and was the lead manager to an additional $6 billion in global telecom assets. Prior to entering the investment industry, Mr. Beder was a Lieutenant Commander and Assault Team Leader with the United States Navy SEAL Team. Mr. Beder holds a Masters of Business Administration degree from the Harvard Business School and a Bachelor of Science degree in Mechanical Engineering from the Massachusetts Institute of Technology. Mr. Beder serves as a Trustee for Harbor Day School and is a Board Member for Second Harvest Food Bank of Orange County. Maerisland uses a long/short global investment strategy that focuses on proprietary research in managing its portion of the Fund.
Starwood Real Estate Securities, LLC (SRES) , a registered investment adviser located at 591 West Putnam Avenue, Greenwich, Connecticut 06830, has served as a Sub-Adviser to the Fund since its inception. SRES was launched in 2004. SRES is jointly owned by Barry Sternlicht, Chairman and Advisor, and Matthew C. Gilman, Chief Executive Officer and Portfolio Manager. Over the past 19 years, Mr. Sternlicht has structured more than 400 investment transactions with an asset value of more than $40 billion. From 1995 through 2005, Mr. Sternlicht was Chairman and CEO of Starwood Hotels & Resorts Worldwide, Inc., a company he founded in 1995. Mr. Gilman is the portfolio manager primarily responsible for the day-to-day management of the portion of the Fund sub-advised by SRES. Mr. Gilman joined Starwood Real Estate Securities LLC at its founding in 2004. From 1999 to 2004, Mr. Gilman was Senior Portfolio Manager at ABP Investments US, Inc., the US subsidiary
of the Dutch Civil Service Pension Fund, regarded as one of the largest in the world. Mr. Gilman covered real estate securities at JP Morgan Investment Management from 1995 to 1999 and for one year at Genesis Realty Advisors from 1994 to 1995. Mr. Gilman began his career at Wellsford Residential Properties in 1992, a multi-family real estate investment trust. Mr. Gilman is a graduate of Dartmouth College and is a member of the National Association of Real Estate Investment Trusts. SRES employs a long/short equity investment strategy, with a focus on public real estate securities, in managing its portion of the Fund. The Fund is the only mutual fund for which the Sub-Adviser provides advisory services.
Trellus Management Co., LLC (Trellus) , a registered investment adviser located at 350 Madison Avenue, New York, New York 10017 has served as a Sub-Adviser to the Fund since its inception. Trellus was founded in 1994 by Adam Usdan, the sole owner of Trellus. Mr. Usdan is the portfolio manager primarily responsible for the day-to-day management of the portion of the Fund sub-advised by Trellus. Mr. Usdan is the President, Chief Investment Officer and Portfolio Manager of Trellus. Mr. Usdan earned an MBA in Finance, Accounting & Marketing from the Kellogg Graduate School of Management, Northwestern University and a BA in English, from Wesleyan University. Trellus employs a long/short equity investment strategy in managing its portion of the Fund. The Fund is the only mutual fund for which the Sub-Adviser provides advisory services.
The SAI provides additional information about the portfolio managers compensation, other accounts managed by the portfolio managers and the portfolio managers ownership of securities in the Fund.
A discussion regarding the basis for the Companys Board of Directors approval of the Funds investment advisory agreement with the Adviser and sub-advisory agreements with the Sub-Advisers is available in the Funds semi-annual report for the period ended August 31, 2012 (except for Maerisland). The discussion regarding the basis for the Companys Board of Directors approval of the Funds sub-advisory agreement with Maerisland is in the Funds semi-annual report for the period ended February 29, 2012.
Marketing Arrangement
The Adviser or its affiliates may pay additional compensation, out of profits derived from the Advisers management fee and not as an additional charge to the Fund, to certain financial institutions (which may include banks, securities dealers and other industry professionals) for the sale and/or distribution of Fund shares or the retention and/or servicing of Fund investors and Fund shares (revenue sharing). These payments are in addition to any record keeping or sub-transfer agency fees payable by the Fund, or other fees described in the fee table or elsewhere in the Prospectus or SAI. Examples of revenue sharing payments include, but are not limited to, payment to financial institutions for shelf space or access to a third party platform or fund offering list or other marketing programs, including, but not limited to, inclusion of the Fund on preferred or recommended sales lists, mutual fund supermarket platforms and other formal sales programs; granting the Adviser access to the financial institutions sales force; granting the Adviser access to the financial institutions conferences and meetings; assistance in training and educating the financial institutions personnel; and obtaining other forms of marketing support. The level of revenue sharing payments made to financial institutions may be a fixed fee or based upon one or more of the following factors: gross sales, current assets and/or number of accounts of the Fund attributable to the financial institution, or other factors as agreed to by the Adviser and the financial institution or any combination thereof. The amount of these revenue sharing payments is determined at the discretion of the Adviser from time to time, may be substantial, and may be different for different financial institutions depending upon the services provided by the financial institution. Such payments may provide an incentive for the financial institution to make shares of the Fund available to its customers and may allow the Fund greater access to the financial institutions customers.
SHAREHOLDER INFORMATION
Pricing of Fund Shares
I Shares of the Fund (Shares) are priced at their net asset value (NAV). The NAV per share of the Fund is calculated as follows:
The Funds NAV is calculated once daily at the close of regular trading hours on the New York Stock Exchange (NYSE) (generally 4:00 p.m. Eastern time) on each day the NYSE is open. The NYSE is generally open Monday through Friday, except national holidays. The Fund will effect purchases of Fund shares at the NAV next determined after receipt by the Funds Transfer Agent of your purchase order in good order. The Fund will effect redemptions of Fund shares at the NAV next calculated after receipt by the Funds Transfer Agent of your redemption request in good order.
The Funds equity securities listed on any national or foreign exchange market system will be valued at the last sale price, except for the National Association of Securities Dealers Automatic Quotation System (NASDAQ). Equity securities listed on NASDAQ will be valued at the official closing price. Equity securities traded in the over-the-counter market are valued at their closing prices. If there were no transactions on that day, securities traded principally on an exchange or on NASDAQ will be valued at the mean of the last bid and ask prices prior to the market close. Fixed income securities having a remaining maturity of 60 days or less are valued at amortized cost, which approximates market value. Fixed income securities having a remaining maturity of greater than 60 days are valued using an independent pricing service. When prices are not available from such services or are deemed to be unreliable, securities may be valued by dealers who make markets in such securities. Foreign securities, currencies and other securities denominated in foreign currencies are translated into U.S. dollars at the exchange rate of such currencies against the U.S. dollar provided by a pricing service. All assets denominated in foreign currencies will be converted into U.S. dollars at the exchange rates in effect at the time of valuation. If the Fund holds foreign equity securities, the calculation of the Funds NAV will not occur at the same time as the determination of the value of the foreign equities securities in the Funds portfolio, since these securities are traded on foreign exchanges.
If market quotations are unavailable or deemed unreliable by the Funds administrator, in consultation with the Adviser and Sub-Advisers, securities will be valued by the Adviser and Sub-Advisers in accordance with procedures adopted by the Companys Board of Directors and under the Board of Directors ultimate supervision. In addition, the prices of foreign securities may be affected by events that occur after the close of a foreign market but before the Fund prices its shares. In such instances, a foreign security may be fair valued in accordance with procedures adopted by the Companys Board of Directors. Relying on prices supplied by pricing services or dealers or using fair valuation involves the risk that the values used by the Fund to price its investments may be higher or lower than the values used by other investment companies and investors to price the same investments.
Investments in other open-end investment companies are valued based on the NAV of those investment companies (which may use fair value pricing as discussed in their prospectuses). Investments in ETFs, REITs and closed-end funds will be valued at their market price.
Market Timing
In accordance with the policy adopted by the Companys Board of Directors, the Company discourages and does not accommodate market timing and other excessive trading practices. Purchases should be made with a view to longer-term investment only. Excessive short-term (market timing) trading practices may disrupt portfolio management strategies, increase brokerage and administrative costs, harm Fund performance and result in dilution in the value of Fund Shares held by long-term shareholders. The Company and the Adviser reserve the right to (i) reject a purchase or exchange order, (ii) delay payment of immediate cash redemption proceeds for up to seven calendar days, (iii) revoke a shareholders privilege to purchase Fund Shares (including exchanges), or (iv) limit the amount of any exchange involving the purchase of Fund Shares. An investor may receive notice that their purchase order or exchange has been rejected after the day the order is placed or after acceptance by a financial intermediary. It is currently expected that a shareholder would receive notice that its purchase order or exchange has been rejected within 48 hours after such purchase order or exchange has been received by the Company in good order. The Company and the Adviser will not be liable for any loss resulting from rejected purchase orders. To minimize harm to the Company and its shareholders (or the Adviser), the Company (or the Adviser) will exercise its right if, in the Companys (or the
Advisers) judgment, an investor has a history of excessive trading or if an investors trading, in the judgment of the Company or the Adviser, has been or may be disruptive to the Fund. No waivers of the provisions of the policy established to detect and deter market timing and other excessive trading activity are permitted that would harm the Fund and its shareholders or would subordinate the interests of the Fund and its shareholders to those of the Adviser or any affiliated person or associated person of the Adviser.
Pursuant to the policy adopted by the Board of Directors, the Adviser has developed criteria that it uses to identify trading activity that may be excessive. The Adviser reviews on a regular, periodic basis available information related to the trading activity in the Fund in order to assess the likelihood that the Fund may be the target of excessive trading. As part of its excessive trading surveillance process, the Adviser, on a periodic basis, examines transactions that exceed certain monetary thresholds or numerical limits within a period of time. If, in its judgment, the Adviser detects excessive, short-term trading, it may reject or restrict a purchase request and may further seek to close an investors account with the Fund. The Adviser may modify its surveillance procedures and criteria from time to time without prior notice regarding the detection of excessive trading or to address specific circumstances. The Adviser will apply the criteria in a manner that, in its judgment, will be uniform.
If necessary, the Company may prohibit additional purchases of Fund shares by a financial intermediary or by certain customers of the financial intermediary. Financial intermediaries may also monitor their customers trading activities in the Fund. The criteria used by intermediaries to monitor for excessive trading may differ from the criteria used by the Company. If a financial intermediary fails to enforce the Companys excessive trading policies, the Company may take certain actions, including terminating the relationship.
There is no assurance that the Fund will be able to identify market timers, particularly if they are investing through intermediaries.
Purchase of Fund Shares
Shares representing interests in the Fund are offered continuously for sale by Foreside Funds Distributors, LLC, formerly known as BNY Mellon Distributors Inc. (the Distributor).
General. You may purchase Shares of the Fund at the NAV per Share next calculated after your order is received by the Transfer Agent in good order as described below. The Funds NAV is calculated once daily at the close of regular trading hours on the NYSE (generally 4:00 p.m. Eastern time) on each day the NYSE is open. After an initial purchase is made, the Transfer Agent will set up an account for you on the Company records. The minimum initial investment in the Fund is $1,000,000. There is no minimum for subsequent investments. The Fund may accept initial investments of smaller amounts in its sole discretion. You can only purchase Shares of the Fund on days the NYSE is open and through the means described below.
Purchases Through Intermediaries. Shares of the Fund may also be available through certain brokerage firms, financial institutions and other industry professionals (collectively, Service Organizations). Certain features of the Shares, such as the initial and subsequent investment minimums and certain trading restrictions, may be modified or waived by Service Organizations. Service Organizations may impose transaction or administrative charges or other direct fees, which charges and fees would not be imposed if Shares are purchased directly from the Company. Therefore, you should contact the Service Organization acting on your behalf concerning the fees (if any) charged in connection with a purchase or redemption of Shares and should read this Prospectus in light of the terms governing your accounts with the Service Organization. Service Organizations will be responsible for promptly transmitting client or customer purchase and redemption orders to the Company in accordance with their agreements with the Company or its agent and with clients or customers. Service Organizations or, if applicable, their designees that have entered into agreements with the Company or its agent may enter confirmed purchase orders on behalf of clients and customers, with payment to follow no later than the Companys pricing on the following Business Day. If payment is not received by such time, the Service Organization could be held liable for resulting fees or losses. The Company will be deemed to have received a purchase or redemption order when a Service Organization, or, if applicable, its authorized designee, accepts a purchase or redemption order in good order if the order is actually received by the Company in good order not later than the next business morning. If a purchase order is not received by the Fund in good order, BNY Mellon Investment Servicing (US) Inc. (the Transfer Agent) will contact the financial intermediary to determine the status of the purchase order. Orders received by the Company in good order will be priced at the Funds NAV next computed after they are deemed to have been received by the Service Organization or its authorized designee.
For administration, subaccounting, transfer agency and/or other services, the Adviser may pay Service Organizations and certain recordkeeping organizations a fee (the Service Fee) of the average annual net asset value of accounts with the Company maintained by such Service Organization or recordkeepers. The Service Fee payable to any one Service Organization
is determined based upon a number of factors, including the nature and quality of services provided, the operations processing requirements of the relationship and the standardized fee schedule of the Service Organization or recordkeeper.
Initial Investment By Mail. An account may be opened by completing and signing the application included with this Prospectus and mailing it to the Transfer Agent at the address noted below, together with a check ($1,000,000 minimum) payable to the Fund. Third party checks will not be accepted.
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S1 Fund
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The name of the Fund should be designated on the application and should appear on the check. Payment for the purchase of Shares received by mail will be credited to a shareholders account at the NAV per share of the Fund next determined after receipt of payment in good order.
Initial Investment By Wire. Shares of the Fund may be purchased by wiring federal funds to The Bank of New York Mellon. A completed application must be forwarded to the Transfer Agent at the address noted above under Initial Investment by Mail in advance of the wire. For the Fund, notification must be given to the Transfer Agent at 1-866-882-1226 prior to 4:00 p.m., Eastern time, on the wire date. (Prior notification must also be received from investors with existing accounts.) Request account information and routing instructions by calling the Transfer Agent at 1-866-882-1226.
Federal funds wire purchases will be accepted only on days when the NYSE and The Bank of New York Mellon are open for business.
Additional Investments. Additional investments may be made at any time by purchasing Shares of the Fund at the NAV per Share of the Fund by mailing a check to the Transfer Agent at the address noted under Initial Investment by Mail (payable to S1 Fund) or by wiring monies to The Bank of New York Mellon as outlined under Initial Investment by Wire. Notification must be given to the Transfer Agent at 1-866-882-1226 prior to 4:00 p.m., Eastern time, on the wire date. Initial and additional purchases made by check cannot be redeemed until payment of the purchase has been collected. This may take up to 15 calendar days from the date of purchase.
Automatic Investment Plan. Additional investments in Shares of the Fund may be made automatically by authorizing the Transfer Agent to withdraw funds from your bank account through an Automatic Investment Plan ($250 minimum). Investors desiring to participate in an Automatic Investment Plan should call the Transfer Agent at 1-866-882-1226.
Retirement Plans/IRA Accounts. Shares may be purchased in conjunction with individual retirement accounts (IRAs) and rollover IRAs. A $15.00 custodial maintenance fee is charged per IRA account per year. For further information as to applications and annual fees, contact the Transfer Agent at 1-866-882-1226. To determine whether the benefits of an IRA are available and/or appropriate, you should consult with a tax advisor.
Purchases in Kind. In certain circumstances, Shares of the Fund may be purchased in kind (i.e. in exchange for securities, rather than cash). The securities rendered in connection with an in-kind purchase must be liquid securities that are not restricted as to transfer and have a value that is readily ascertainable in accordance with the Companys valuation procedures. Securities accepted by the Fund will be valued, as set forth in this Prospectus, as of the time of the next determination of net asset value after such acceptance. The Shares of the Fund that are issued to the investor in exchange for the securities will be determined as of the same time. All dividend, subscription, or other rights that are reflected in the market price of accepted securities at the time of valuation become the property of the Fund and must be delivered to the Fund by the investor upon receipt from the issuer. The Fund will not accept securities in exchange for its Shares unless such securities are, at the time of the exchange, eligible to be held by the Fund and satisfy such other conditions as may be imposed by the Adviser or the Company. Purchases in-kind may result in the recognition of gain or loss for federal income tax purposes on the securities transferred to the Fund.
Other Purchase Information. The Company reserves the right, in its sole discretion, to suspend the offering of shares or to reject purchase orders when, in the judgment of management, such suspension or rejection is in the best interest of the Fund. The Adviser will monitor the Funds total assets and may, subject to Board approval, decide to close the Fund at any time to new investments or to new accounts due to concerns that a significant increase in the size of the Fund may adversely affect the implementation of the Funds strategy. The Adviser, subject to Board approval, may also choose to reopen the Fund to new investments at any time, and may subsequently close the Fund again should concerns regarding the Funds size recur. If the Fund closes to new investments, the Fund may be offered only to certain existing shareholders of the Fund and certain other persons who may be subject to cumulative, maximum purchase amounts, as follows:
a. Persons who already hold Shares of the closed Fund directly or through accounts maintained by brokers by arrangement with the Company,
b. Existing and future clients of financial advisers and planners whose clients already hold Shares of the closed Fund,
c. Employees of the Adviser and their spouses, parents and children, and
d. Directors of the Company.
Distributions to all shareholders of the closed Fund will continue to be reinvested unless a shareholder elects otherwise. The Adviser, subject to the Board of Directors discretion, reserves the right to implement other purchase limitations at the time of closing, including limitations on current shareholders.
Purchases of the Funds Shares will be made in full and fractional shares of the Fund calculated to three decimal places.
The Companys officers are authorized to waive the minimum initial and subsequent investment requirements.
Good Order. A purchase request is considered to be in good order when all necessary information is provided and all required documents are properly completed, signed and delivered. Purchase requests not in good order may be rejected.
Customer Identification Program. Federal law requires the Company to obtain, verify and record identifying information, which may include the name, residential or business street address, date of birth (for an individual), social security or taxpayer identification number or other identifying information for each investor who opens or reopens an account with the Company. Applications without the required information, or without any indication that a social security or taxpayer identification number has been applied for, may not be accepted. After acceptance, to the extent permitted by applicable law or its customer identification program, the Company reserves the right (a) to place limits on transactions in any account until the identity of the investor is verified; or (b) to refuse an investment in a Company portfolio or to involuntarily redeem an investors Shares and close an account in the event that an investors identity is not verified. The Company and its agents will not be responsible for any loss in an investors account resulting from the investors delay in providing all required identifying information or from closing an account and redeeming an investors Shares when an investors identity cannot be verified.
Redemption of Fund Shares
You may redeem Fund Shares at the next NAV calculated after a redemption request is received by the Transfer Agent in good order. The Funds NAV is calculated once daily at the close of regular trading hours on the NYSE (generally 4:00 p.m. Eastern time) on each day the NYSE is open. You can only redeem Shares of the Fund on days the NYSE is open and through the means described below. You may redeem Fund Shares by mail, or, if you are authorized, by telephone. The value of Shares redeemed may be more or less than the purchase price, depending on the market value of the investment securities held by the Fund.
Redemption By Mail. Your redemption requests should be addressed to S1 Fund, c/o BNY Mellon Investment Servicing (US) Inc., P.O. Box 9869, Providence, RI 02940; for overnight delivery, requests should be addressed to S1 Fund, c/o BNY Mellon Investment Servicing (US) Inc., 4400 Computer Drive, Westborough, MA 01581 and must include:
a. Name of the Fund;
b. Account number;
c. Your Share certificates, if any, properly endorsed or with proper powers of attorney;
d. A letter of instruction specifying the number of Shares or dollar amount to be redeemed, signed by all registered owners of the Shares in the exact names in which they are registered;
e. Medallion signature guarantees are required when (i) the redemption proceeds are to be sent to someone other than the registered shareholder(s) or (ii) the redemption request is for $50,000 or more. A signature guarantee may be obtained from a domestic bank or trust company, broker, dealer, clearing agency or savings association who are participants in a Medallion Program recognized by the Securities Transfer Association. The three recognized Medallion Programs are Securities Transfer Agent Medallion Program (STAMP), Stock Exchanges Medallion Program (SEMP) and New York Stock Exchange, Inc. Medallion Program (MSP). Signature guarantees which are not a part of these programs will not be accepted. Please note that a notary public stamp or seal is not acceptable; and
f. Other supporting legal documents, if required, in the case of estates, trusts, guardianships, custodianships, corporations, pension and profit sharing plans and other organizations.
Redemption By Telephone. In order to utilize the telephone redemption option, you must indicate that option on your Account Application. Please note that the telephone redemption option is not available for retirement accounts. You may then initiate a redemption of Shares by calling the Transfer Agent at 1-866-882-1226 and requesting that the redemption proceeds be mailed to the primary registration address or wired per the authorized instructions. A wire charge of $7.50 is assessed and charged to the shareholder. If the telephone redemption option is authorized, the Transfer Agent may act on telephone instructions from any person representing himself or herself to be a shareholder and believed by the Transfer Agent to be genuine. The Transfer Agents records of such instructions are binding and shareholders, not the Fund or its Transfer Agent, bear the risk of loss in the event of unauthorized instructions reasonably believed by the Fund or its Transfer Agent to be genuine. The Fund and the Transfer Agent will employ reasonable procedures to confirm that instructions communicated are genuine and, if it does not, it may be liable for any losses due to unauthorized or fraudulent instructions. The procedures employed by the Fund and the Transfer Agent in connection with transactions initiated by telephone include tape recording of telephone instructions and requiring some form of personal identification prior to acting upon instructions received by telephone.
Involuntary Redemption. The Fund reserves the right to redeem a shareholders account in the Fund at any time the value of the account in the Fund falls below $5,000 as the result of a redemption or an exchange request. Shareholders will be notified in writing that the value of their account in the Fund is less than $5,000 and will be allowed 30 days to make additional investments before the redemption is processed. The transaction fee applicable to the Fund will not be charged when Shares are involuntarily redeemed.
The Fund may assert the right to redeem your shares at current NAV at any time and without prior notice if, and to the extent that, such redemption is necessary to reimburse the Fund for any loss sustained by reason of your failure to make full payment for shares of the Fund you previously purchased or subscribed for.
Other Redemption Information. Redemption proceeds for Shares of the Fund recently purchased by check may not be distributed until payment for the purchase has been collected, which may take up to fifteen days from the purchase date. Shareholders can avoid this delay by utilizing the wire purchase option.
Other than as described above, payment of the redemption proceeds will be made within seven days after receipt of an order for a redemption. The Company may suspend the right of redemption or postpone the date at times when the NYSE is closed or under any emergency circumstances as determined by the SEC.
If the Board of Directors determines that it would be detrimental to the best interests of the remaining shareholders of the Fund to make payment wholly or partly in cash, redemption proceeds may be paid in whole or in part by an in-kind distribution of readily marketable securities held by the Fund instead of cash in conformity with applicable rules of the SEC. If a shareholder receives redemption proceeds in-kind, the shareholder will bear the market risk of the securities received in the redemption until their disposition and should expect to incur transaction costs upon the disposition of the securities. The Company has elected, however, to be governed by Rule 18f-1 under the 1940 Act, so that the Fund is obligated to redeem its Shares solely in cash up to the lesser of $250,000 or 1% of its NAV during any 90-day period for any one shareholder of the Fund.
Good Order. A redemption request is considered to be in good order when all necessary information is provided and all required documents are properly completed, signed and delivered. Redemption requests not in good order may be delayed.
Dividends and Distributions
The Fund will distribute substantially all of its net investment income and net realized capital gains, if any, to its shareholders. All distributions are reinvested in the form of additional full and fractional Shares of the Fund unless a shareholder elects otherwise.
The Fund will declare and pay dividends from net investment income annually. Net realized capital gains (including net short-term capital gains), if any, will be distributed by the Fund at least annually. The estimated amount of any annual distribution will be posted to the Advisers password-protected website at www.S1Fund.com or a free copy may be obtained by calling 1-866-882-1226.
The Fund may pay additional distributions and dividends at other times if necessary for the Fund to avoid U.S. federal tax. The Funds distributions and dividends, whether received in cash or reinvested in additional Fund Shares, are subject to U.S. federal income tax.
More Information About Taxes
The following is a summary of certain United States tax considerations relevant under current law, which may be subject to change in the future. Except where otherwise indicated, the discussion relates to investors who are individual United States citizens or residents. You should consult your tax adviser for further information regarding federal, state, local and/or foreign tax consequences relevant to your specific situation.
Federal Taxes. The Fund contemplates distributing as dividends each year all or substantially all of its taxable income, including its net capital gain (the excess of net long-term capital gain over net short-term capital loss). Except as otherwise discussed below, you will be subject to federal income tax on Fund distributions regardless of whether they are paid in cash or reinvested in additional shares. Fund distributions attributable to short-term capital gains and net investment income will generally be taxable to you as ordinary income, except as discussed below.
Distributions attributable to the net capital gain of the Fund will be taxable to you as long-term capital gain, no matter how long you have owned your Fund shares. The maximum long-term capital gain rate applicable to individuals, estates, and trusts is currently 15%. You will be notified annually of the tax status of distributions to you.
Distributions of qualifying dividends will also generally be taxable to you at long-term capital gain rates as long as certain requirements are met. In general, if 95% or more of the gross income of the Fund (other than net capital gain) consists of dividends received from domestic corporations or qualified foreign corporations (qualifying dividends), then all distributions paid by the Fund to individual shareholders will be taxed at long-term capital gains rates. But if less than 95% of the gross income of the Fund (other than net capital gain) consists of qualifying dividends, then distributions paid by the Fund to individual shareholders will be qualifying dividends only to the extent they are derived from qualifying dividends earned by the Fund. For the lower rates to apply, you must have owned your Fund shares for at least 61 days during the 121-day period beginning on the date that is 60 days before the Funds ex-dividend date (and the Fund will need to have met a similar holding period requirement with respect to the shares of the corporation paying the qualifying dividend). The amount of the Funds distributions that qualify for this favorable treatment may be reduced as a result of the Funds securities lending activities (if any), a high portfolio turnover rate or investments in debt securities or non-qualified foreign corporations.
Distributions from the Fund will generally be taxable to you in the taxable year in which they are paid, with one exception. Distributions declared by the Fund in October, November or December and paid in January of the following year are taxed as though they were paid on December 31.
A portion of distributions paid by the Fund to shareholders that are corporations may also qualify for the dividends-received deduction for corporations, subject to certain holding period requirements and debt financing limitations.
If you purchase shares just before a distribution, the purchase price will reflect the amount of the upcoming distribution, but you will be taxed on the entire amount of the distribution received, even though, as an economic matter, the distribution simply constitutes a return of capital. This is known as buying into a dividend.
Sales and Exchanges. You will generally recognize taxable gain or loss for federal income tax purposes on a sale, exchange or redemption of your shares, including an exchange for shares of another Simple Alternatives Fund, based on the difference between your tax basis in the shares and the amount you receive for them. Generally, you will recognize long-term capital gain or loss if you have held your Fund shares for over twelve months at the time you dispose of them. (To aid in computing your tax basis, you should retain your account statements for the periods during which you held shares.)
Any loss realized on shares held for six months or less will be treated as a long-term capital loss to the extent of any capital gain dividends that were received on the shares. Additionally, any loss realized on a disposition of shares of the Fund may be disallowed under wash sale rules to the extent the shares disposed of are replaced with other shares of the Fund within a period of 61 days beginning 30 days before and ending 30 days after the shares are disposed of, such as pursuant to a dividend reinvestment in shares of the Fund. If disallowed, the loss will be reflected in an upward adjustment to the basis of the shares acquired.
IRAs and Other Tax-Qualified Plans. The one major exception to the preceding tax principles is that distributions on, and sales, exchanges and redemptions of, shares held in an IRA (or other tax-qualified plan) will not be currently taxable.
Backup Withholding. The Fund may be required in certain cases to withhold and remit to the Internal Revenue Service a percentage of taxable dividends or gross proceeds realized upon sale payable to shareholders who have failed to provide a correct tax identification number in the manner required, or who are subject to withholding by the Internal Revenue Service for failure to properly include on their return payments of taxable interest or dividends, or who have failed to certify to the Fund that they are not subject to backup withholding when required to do so or that they are exempt recipients. The current withholding rate is 28%.
U.S. Tax Treatment of Foreign Shareholders. Generally, nonresident aliens, foreign corporations and other foreign investors are subject to a 30% withholding tax on dividends paid by a U.S. corporation, although the rate may be reduced for an investor that is a qualified resident of a foreign country with an applicable tax treaty with the United States. In the case of a regulated investment company such as the Fund, however, certain categories of dividends are exempt from the 30% withholding tax. These generally include dividends attributable to the Funds net capital gains (the excess of net long-term capital gains over net short-term capital loss) and, for taxable years of the Fund beginning before January 1, 2012, dividends attributable to the Funds interest income from U.S. obligors and dividends attributable to net short-term capital gains of the Fund.
In contrast, if a foreign investor conducts a trade or business in the United States and the investment in the Fund is effectively connected with that trade or business, or a foreign individual investor is present in the United States for 183 days or more in a calendar year, then the foreign investors income from the Fund will generally be subject to U.S. federal income tax at graduated rates in a manner similar to the income of a U.S. citizen or resident.
In addition, beginning January 1, 2014, the Fund will be required to withhold 30% tax on payments to foreign entities that do not meet specified information reporting requirements under the Foreign Account Tax Compliance Act.
Foreign shareholders will generally not be subject to U.S. tax on gains realized on sale, exchange or redemption of shares in the Fund.
All foreign investors should consult their own tax advisors regarding the tax consequences in their country of residence of an investment in the Fund.
State and Local Taxes. You may also be subject to state and local taxes on income and gain from Fund shares. State income taxes may not apply, however, to the portions of the Funds distributions, if any, that are attributable to interest on U.S. government securities. You should consult your tax adviser regarding the tax status of distributions in your state and locality.
Future Tax Treatment. Some of the tax provisions described above are subject to sunset provisions. Specifically, a sunset provision provides that the 15% long-term capital gain rate, the taxation of dividends at the long-term capital gain rate and the backup withholding rate will change after 2012.
More information about taxes is contained in the SAI.
Multi-Class Structure
The Fund also offers R Shares, which are offered directly to individual investors in a separate prospectus. Shares of each class of the Fund represent equal pro rata interests in the Fund and accrue dividends and calculate NAV and performance quotations in the same manner. The performance of each class is quoted separately due to different actual expenses. The total return on I Shares of the Fund can be expected to differ from the total return on R Shares of the Fund. Information concerning other classes of the Fund can be requested by calling the Fund at 1-866-882-1226.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR IN THE FUNDS SAI INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE COMPANY OR BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
FINANCIAL HIGHLIGHTS
The table below sets forth certain financial information for the periods indicated, including per share information results for a single I Share of the Fund. The term Total investment return indicates how much your investment would have increased or decreased during this period of time and assumes that you have reinvested all dividends and distributions. This information has been derived from the Funds financial statements audited by [ ], the Funds independent registered public accounting firm. This information should be read in conjunction with the Funds financial statements which, together with the report of the independent registered public accounting firm, are included in the Funds annual report, which is available upon request (see back cover for ordering instructions).
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I Shares for the
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I Shares
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Per Share Operating Performance |
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Net asset value, beginning of period |
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$ |
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$ |
10.00 |
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Net investment loss |
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(0.29 |
)(2) |
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Net realized and unrealized gain from investments(3) |
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0.25 |
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||
Net decrease in net assets resulting from operations |
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|
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(0.04 |
) |
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Net asset value, end of period |
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$ |
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$ |
9.96 |
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Total investment return(4) |
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(0.40 |
)%(6) |
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Ratios/Supplemental Data |
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Net assets, end of period (000s omitted) |
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$ |
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$ |
51,234 |
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Ratio of expenses to average net assets with waivers and reimbursements
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4.06 |
%(5) |
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Ratio of expenses to average net assets with waivers and reimbursements
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2.95 |
%(5) |
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Ratio of expenses to average net assets without waivers and reimbursements
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6.39 |
%(5) |
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Ratio of net investment loss to average net assets |
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(3.16 |
)%(5) |
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Portfolio turnover rate |
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440.88 |
%(6) |
(1) The Fund commenced investment operations on September 30, 2010.
(2) Calculated based on average shares outstanding for the period.
(3) The amount shown may not correlate with the change in the aggregate gains and losses presented on the Statement of Operations due to the timing of sales and purchases of the Funds shares in relation to fluctuating market values for the Funds portfolio.
(4) Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestments of dividends and distributions, if any.
(5) Annualized.
(6) Not Annualized
S1 Fund
of
The RBB Fund, Inc.
(1-866-882-1226)
www.S1Fund.com
For More Information:
This Prospectus contains important information you should know before you invest. Read it carefully and keep it for future reference. More information about the S1 Fund is available free of charge, upon request, including:
Annual/Semi-Annual Reports
These reports contain additional information about the Funds investments, describe the Funds performance, list portfolio holdings, and discuss recent market conditions and economic trends. The annual report includes fund strategies that significantly affected the Funds performance during its last fiscal year.
When available, the annual and semi-annual reports to shareholders may be obtained by visiting www.S1Fund.com
Statement of Additional Information
An SAI, dated December 31, 2012 has been filed with the SEC. The SAI, which includes additional information about the Fund, may be obtained free of charge, along with the annual and semi-annual reports, by calling 1-866-882-1226. The SAI, as supplemented from time to time, is incorporated by reference into this prospectus (and is legally part of the prospectus). The SAI is available on the Advisers password-protected website at www.S1Fund.com.
Shareholder Inquiries
Representatives are available to discuss account balance information, mutual fund prospectuses, literature, programs and services available. Hours: 8 a.m. to 6 p.m. (Eastern time) Monday-Friday. Call: 1-866-882-1226 or visit the website of the Adviser at www.S1Fund.com.
Purchases and Redemptions
Call 1-866-882-1226.
Written Correspondence
Street Address:
S1 Fund,
c/o BNY Mellon Investment Servicing (US) Inc., 4400 Computer Drive, Westborough, MA 01581
P.O. Box Address:
S1 Fund,
c/o BNY Mellon Investment Servicing (US) Inc., P.O. Box 9869, Providence, RI 02940
Securities and Exchange Commission
You may also view and copy information about the Company and the Fund, including the SAI, by visiting the SECs Public Reference Room in Washington, DC or the EDGAR Database on the SECs Internet site at www.sec.gov. You may also obtain copies of Fund documents by paying a duplicating fee and sending an electronic request to the following e-mail address: publicinfo@sec.gov, or by sending your written request and a duplicating fee to the SECs Public Reference Section, Washington, DC 20549-1520. You may obtain information on the operation of the public reference room by calling the SEC at (202) 551-8090.
INVESTMENT COMPANY ACT FILE NO.811-05518
S1 Fund
of The RBB Fund, Inc.
Ticker Symbol: SONRX
R Shares
Prospectus
December 31, 2012
Investment Adviser:
Simple Alternatives, LLC
THE SECURITIES DESCRIBED IN THIS PROSPECTUS HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE SEC). THE SEC, HOWEVER, HAS NOT JUDGED THESE SECURITIES FOR THEIR INVESTMENT MERIT AND HAS NOT DETERMINED THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANYONE WHO TELLS YOU OTHERWISE IS COMMITTING A CRIMINAL OFFENSE.
TABLE OF CONTENTS
SUMMARY SECTION |
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S1 Fund |
1 |
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ADDITIONAL INFORMATION ABOUT THE FUNDS INVESTMENTS AND RISKS |
11 |
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MANAGEMENT OF THE FUNDS |
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Investment Adviser |
17 |
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Sub-Advisers |
17 |
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SHAREHOLDER INFORMATION |
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Pricing of Fund Shares |
20 |
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Market Timing |
20 |
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Purchase of Fund Shares |
21 |
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Redemption of Fund Shares |
24 |
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Dividends and Distributions |
25 |
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More Information About Taxes |
26 |
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Multi-Class Structure |
27 |
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FOR MORE INFORMATION |
Back Cover |
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SUMMARY SECTION
Investment Objective
The S1 Fund (the Fund) seeks to provide long-term capital appreciation with an emphasis on absolute (positive) returns and low correlation to traditional financial market indices such as the S&P 500 ® Index.
Expenses and Fees
This table describes the fees and expenses that you may pay if you buy and hold R Shares of the Fund.
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R Shares |
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Shareholder Fees (fees paid directly from your investment) |
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Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) |
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None |
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Maximum Deferred Sales Charge (Load) |
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None |
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Maximum Sales Charge (Load) Imposed on Reinvested Dividends |
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None |
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Redemption Fee (as a percentage of amount redeemed, if applicable) |
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None |
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Exchange Fee |
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None |
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Annual Fund Operating Expenses (expenses that that you pay each year as a percentage of the value of your investment) |
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Management Fees |
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[ ] |
% |
Distribution (12b-1) Fees |
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[ ] |
% |
Other Expenses: |
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Dividend Expense on Short Sales (1) |
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[ ] |
% |
Interest Expense on Borrowings |
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[ ] |
% |
Other Operating Expenses |
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[ ] |
% |
Total Other Expenses |
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[ ] |
% |
Acquired Fund Fees and Expenses (2) |
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[ ] |
% |
Total Annual Fund Operating Expenses |
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[ ] |
% |
Fee Waiver and Expense Reimbursements (3) |
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[ ] |
% |
Net Expenses (includes dividend and interest expenses on short sales) |
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[ ] |
% |
(1) Short-sale dividends generally reduce the market value of the securities by the amount of the dividend declared; thus increasing the Funds unrealized gain or reducing the Funds unrealized loss on the securities sold short.
(2) Acquired Fund means any investment company in which the Fund expects to invest during the current fiscal year. Net Operating Expenses will not correlate to the Funds ratio of expenses to average net assets, which reflects the operating expenses of the Fund and does not include Acquired Fund Fees and Expenses. The Fund calculates the Acquired Funds expenses using the net expense ratios reported in the Acquired Funds most recent shareholder reports.
(3) The Funds investment adviser, Simple Alternatives, LLC (the Adviser), has contractually agreed to forgo all or a portion of its advisory fee and/or reimburse expenses in an aggregate amount equal to the amount by which the Total Annual Fund Operating Expenses (other than acquired fund fees and expenses, short sale dividend expenses, brokerage commissions, litigation, extraordinary items, interest or taxes) exceeds 3.20% of the average daily net assets attributable to the Funds R Shares. This contractual limitation is in effect until at least December 31, 2014 and may not be terminated without Board approval. Because dividend expenses on short sales, acquired fund fees and expenses, brokerage commissions, litigation, extraordinary items, interest and taxes are excluded from the expense limitation, Total R Shares Annual Fund Operating Expenses (after fees forgone and expense reimbursements) are expected to exceed the applicable expense limitation.
If at any time during the first three years the Funds Advisory Agreement with the Adviser is in effect, the Funds Total Annual Fund Operating Expenses for that year are less than 3.20%, the Adviser is entitled to reimbursement by the Fund of the advisory fees forgone and other payments remitted by the Adviser to the Fund during such three-year period if such reimbursement by the Fund does not cause the Fund to exceed existing expense limitations.
Example
This Example 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 you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Funds operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
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1 Year |
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3 Years |
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5 Years |
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10 Years |
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R Shares |
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$ |
[ ] |
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$ |
[ ] |
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$ |
[ ] |
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$ |
[ ] |
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Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or turns over its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in Total Annual Fund Operating Expenses or in the Example, affect the Funds performance. During the most recent fiscal year, the Funds portfolio turnover rate was [ ]%.
Summary of Principal Investment Strategies
The Fund utilizes a multi-manager approach whereby the Funds assets are allocated to one or more sub-advisers (Sub-Advisers) in percentages determined at the discretion of the Funds investment adviser, Simple Alternatives, LLC (the Adviser). The Adviser also manages a portion of the Funds assets and monitors Sub-Adviser trading with the dual objectives of maximizing each Sub-Advisers investment flexibility and assuring that the Fund as a whole complies with investment restrictions. Otherwise, each Sub-Adviser acts independently from the others and utilizes its own distinct investment style in selecting securities. However, each Sub-Adviser must operate within the constraints of the Funds investment objective and strategies and the particular investment restrictions applicable to that Sub-Adviser.
The strategies utilized by the Fund are hedge fund-type strategies and include absolute return strategies as well as strategies aimed at enhanced risk-adjusted returns. The strategies and investment techniques employed by the Sub-Advisers aim to produce absolute returns over a full market cycle while managing risk exposure. These strategies and techniques may attempt to exploit disparities or inefficiencies in particular markets or geographical regions; take advantage of security mispricings or anticipated price movements; and/or benefit from cyclical themes and relationships or special situations and events (such as spin-offs or reorganizations). Such strategies may have low correlation to traditional markets because they seek asymmetric investment opportunities that may present risks unrelated to traditional markets.
The Sub-Advisers may invest and trade in a wide range of instruments, markets and asset classes in U.S. and non-U.S., developed and emerging markets. Investments include equities and equity-related instruments, fixed-income and other debt-related instruments, currencies, financial futures, options and swaps, commodity-linked instruments and private placements. Equities and equity-related instruments include common stocks, preferred stocks, convertible securities, depositary receipts, exchange traded funds (ETFs), Rule 144A securities, warrants, rights, and equity derivatives such as call and put options, forward currency exchange contracts, swaps and futures. Debt-related instruments include corporate bonds, defaulted debt securities, distressed debt securities, mezzanine investments, bank loans, asset-backed securities, mortgage-backed securities, unrated securities and securities of companies in bankruptcy. Commodity-linked instruments include commodity-linked structured notes, commodity index-linked securities and other derivative instruments that provide exposure to the investment returns of the commodities markets. The Sub-Advisers may invest in asset-backed securities, which represent participations in, or are secured by and payable from, pools of assets such as motor vehicle installment sale contracts, installment loan contracts, leases of various types of real and personal property, receivables from revolving credit (credit card) agreements and other categories of receivables. Asset-backed securities acquired by the Fund may also include collateralized debt obligations (CDOs). CDOs include collateralized bond obligations (CBOs) and collateralized loan obligations (CLOs) and other similarly structured securities. The Sub-Advisers may invest in equity and debt securities of companies of all sizes and without limit on the
credit quality or maturity of debt securities. These securities can be rated investment grade, rated below investment grade, or high yield securities (also known as junk bonds), which are below Baa3 by Moodys, BBB- by S&P or BBB- by Fitch or unrated. The Fund may invest in securities of the lowest rating category, including securities in default. There is no limit to the amount the Fund may invest in junk bonds. The Sub-Advisers may make margin purchases of securities and, in connection with the purchases, borrow money from banks and other financial institutions for investment purposes. The Sub-Advisers may also sell securities short, which is a form of leverage.
The Adviser has primary responsibility for allocating Fund assets in a manner that attempts to diversify the Funds portfolio across multiple strategies and investment styles that the Adviser believes are complementary and, when combined, will produce enhanced risk-adjusted returns. The Adviser reviews a range of qualitative and quantitative factors when determining the allocations and reallocations to Sub-Advisers, including, but not limited to, the Sub-Advisers style, historical performance and the characteristics of each Sub-Advisers allocated assets (including investment process and statistical analysis). The Adviser will allocate Fund assets among strategies of the Sub-Advisers that it believes offer the potential for attractive long-term investment returns individually and are expected to blend within the Funds portfolio so that it will have low correlation and low volatility relative to the broader stock and bond markets. The Adviser may direct a Sub-Adviser to reduce or limit its investment in certain assets or asset classes in order to achieve the desired composition of the Funds overall portfolio. The Adviser retains the discretion to invest the Funds assets in securities and other instruments directly and may do so in certain circumstances including pending allocation to a Sub-Adviser, to hedge against overall Fund exposure created by the Sub-Advisers, or to increase or reduce the Funds exposure to a particular issuer, sector, industry or general market risk, including interest rate risk.
Summary of Principal Risks
As with all mutual funds, a shareholder is subject to the risk that his or her investment could lose money. The Fund is only a suitable investment for investors who can bear leverage and derivatives securities risks. The principal risk factors affecting shareholders investments in the Fund are set forth below.
· Multi-Manager Dependence. The success of the Funds investment strategy depends both on the Advisers ability to select Sub-Advisers and to allocate assets to those Sub-Advisers and on each Sub-Advisers ability to execute the relevant strategy and select investments for the Fund. The Sub-Advisers investment styles may not always be complementary, which could affect the performance of the Fund.
· Absolute Return Focus. The Funds returns may deviate from overall market returns to a greater degree than other funds that do not employ an absolute return focus. In addition, if the Fund or a Sub-Adviser takes a defensive posture by hedging its portfolio and stock prices subsequently advance, the Funds returns may be lower than expected and lower than if the Funds portfolio had not been hedged.
· Equity Securities. The Fund is designed for investors who can accept the risks of investing in a portfolio with significant holdings of equity securities. Equity securities tend to be more volatile than other investment choices, such as debt and money market instruments. The value of your investment may decrease in response to overall stock market movements or the value of individual securities held by the Fund.
· Mid Cap Company Investments. Securities of companies with mid cap capitalizations tend to be riskier than securities of companies with large capitalizations. This is because mid cap companies typically have smaller product lines and less access to liquidity than large cap companies, and are therefore more sensitive to economic downturns. In addition, growth prospects of mid cap companies tend to be less certain than large cap companies, and the dividends paid by mid cap stocks are frequently negligible. Moreover, mid cap stocks have, on occasion, fluctuated in the opposite direction of large cap stocks or the general stock market. Consequently, securities of mid cap companies tend to be more volatile than those of large cap companies.
· Small Cap Company Investments. Securities of companies with small capitalizations tend to be riskier than securities of companies with mid cap and large capitalizations. Smaller companies may have limited product lines, markets and financial resources. The prices of small capitalization stocks tend to be more volatile than those of other stocks. Small capitalization stocks are not priced as efficiently as stocks of larger companies. In addition, it may be harder to sell these stocks, especially during a down market or upon the occurrence of adverse company-specific events, which can reduce their selling prices.
· Fixed Income Securities. Fixed income securities in which the Fund may invest are subject to certain risks, including: interest rate risk, prepayment risk and credit/default risk. Interest rate risk involves the risk that prices of fixed income securities will rise and fall in response to interest rate changes. Prepayment risk involves the risk that in declining interest rate environments prepayments of principal could increase and require the Fund to reinvest proceeds of the prepayments at lower interest rates. Credit risk involves the risk that the credit rating of a security may be lowered.
· Asset-Backed Securities. The risks of investing in asset-backed securities include interest rate risk, prepayment risk and the risk that the Fund could lose money if there are defaults on the loans underlying these securities.
· Mortgaged-Backed Securities. The risks of investing in mortgaged-backed securities include interest rate risk, prepayment risk and the risk that the Fund could lose money if there are defaults on the mortgage loans underlying these securities.
· High Yield Debt Obligations. The Fund may invest in high yield debt obligations, such as bonds and debentures, issued by corporations and other business organizations. An issuer of debt obligations may default on its obligation to pay interest and repay principal. Also, changes in the financial strength of an issuer or changes in the credit rating of a security may affect its value. Such high yield debt obligations are referred to as junk bonds and are not considered to be investment grade.
· Foreign Investments. International investing is subject to special risks, including currency exchange rate volatility, political, social or economic instability, and differences in taxation, auditing and other financial practices.
· Emerging Markets. Investment in emerging market securities involves greater risk than that associated with investment in foreign securities of developed foreign countries. These risks include volatile currency exchange rates, periods of high inflation, increased risk of default, greater social, economic and political uncertainty and instability, less governmental supervision and regulation of securities markets, weaker auditing and financial reporting standards, lack of liquidity in the markets, and the significantly smaller market capitalizations of emerging market issuers.
· Leverage. The Fund may make margin purchases of securities and, in connection with the purchases, borrow money from banks and other financial institutions for investment purposes. The Fund may also engage in selling securities short, which is a form of leverage. Although the use of leverage by the Fund may create an opportunity for increased return, it also results in additional risks and can magnify the effect of any losses. There is no assurance that the use of leverage as an investment strategy will be successful.
· Derivatives. The Funds investments in derivative instruments such as options, forward currency exchange contracts, swaps and futures, which may be leveraged, may result in losses. Investments in derivative instruments may result in losses exceeding the amounts invested.
· Commodity Sector Risk. Exposure to the commodities markets may subject the Fund to greater volatility than investments in traditional securities. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates, or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. The prices of energy, industrial metals, precious metals, agriculture and livestock sector commodities may fluctuate widely due to factors such as changes in value, supply and demand and governmental regulatory policies. The commodity-linked securities in which the Fund invests may be issued by companies in the financial services sector, and events affecting the financial services sector may cause the Funds share value to fluctuate.
· Convertible Securities. Securities that can be converted into common stock, such as certain securities and preferred stock, are subject to the usual risks associated with fixed income investments, such as interest rate risk and credit risk. In addition, because they react to changes in the value of the equity securities into which they will convert, convertible securities are also subject to the risks associated with equity securities.
· Valuation. Portfolio securities that have been valued using techniques other than market quotations may have valuations that are different from those produced using market quotations, and the security may be sold at a discount to the value established by the Fund.
· Redemptions. The Fund could experience a loss when selling securities to meet redemption requests by shareholders if the redemption requests are unusually large or frequent, occur in times of overall market turmoil or declining prices for the securities sold, or when the securities the Fund wishes to or is required to sell are illiquid.
· Portfolio Turnover. The Fund frequently trades its portfolio securities. High portfolio turnover will cause the Fund to incur higher brokerage commissions and transaction costs, which could lower the Funds performance. In addition to lower performance, high portfolio turnover could result in taxable capital gains.
· Exchange Traded Funds. ETFs are a type of investment company bought and sold on a securities exchange. An ETF represents a fixed portfolio of securities designed to track a particular market index. The risks of owning an ETF generally reflect
the risks of owning the underlying securities that the ETF is designed to track, although lack of liquidity in an ETF could result in its being more volatile. The Fund may incur brokerage fees in connection with its purchase of ETF shares.
Fund Performance
As of the date of this Prospectus, the Funds R Shares have not yet commenced operations. The chart below illustrates the performance of the Funds I Shares, which are offered in a separate Prospectus. Had R Shares been operational during the periods in the chart and table below, they would have had substantially similar annual returns as the I Shares because R Shares are invested in the same portfolio of securities. Annual returns would differ only to the extent that R Shares and I Shares do not have the same expenses. The information provides some indication of the risks of investing in the Fund. The chart assumes reinvestment of dividends and distributions. As with all such investments, past performance (before and after taxes) is not an indication of future results. Performance reflects fee waivers in effect. If fee waivers were not in place, the Funds performance would be reduced. Updated performance information may be obtained at www.S1Fund.com or 1-866-882-1226.
TOTAL RETURNS FOR THE CALENDAR YEARS ENDED DECEMBER 31
I Shares
[INSERT CHART]
Best and Worst Quarterly Performance (for the periods reflected in the chart above):
Best Quarter: |
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[ ]% (quarter ended [ ]) |
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Worst Quarter: |
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[ ]% (quarter ended [ ]) |
Year-to-date total return for the nine months ended September 30, 2012: [ ]%
AVERAGE ANNUAL TOTAL RETURNS
The table below compares the Funds total returns for the calendar year ended December 31, 2011 to the average annual total returns of a broad-based securities market index for the same period. Past performance (before and after taxes) is not necessarily an indicator of how the Fund will perform in the future.
AVERAGE ANNUAL TOTAL RETURNS FOR THE CALENDAR YEAR ENDED DECEMBER 31, 2011
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Calendar Year
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Since Inception(1) |
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I Shares Before Taxes |
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% |
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I Shares After Taxes on Distributions(2) |
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% |
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I Shares After Taxes on Distributions and Sale of Fund Shares |
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% |
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S&P 500 ® Index(3) |
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% |
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(1) |
I Shares of the Fund commenced investment operations on September 30, 2010. |
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(2) |
After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investors tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts (IRA). After-tax returns are shown for only the Investor Class and may vary for the Institutional Class. |
(3) |
The S&P 500 ® Index is an unmanaged index composed of 500 common stocks, classified in eleven industry sectors, which represent approximately 75% of the U.S. equities market. The S&P 500 ® Index assigns relative values to the stocks included in the index, weighted according to each stock s total market value relative to the total market value of the other stocks included in the index. |
Management of the Fund
Investment Advisers and Sub-Advisers
Simple Alternatives, LLC, 90 Grove Street, Suite 205, Ridgefield, Connecticut 06877, serves as investment adviser to the Fund. Roaring Blue Lion Capital Management, LLC, Courage Capital Management, LLC, Lauren Templeton Capital Management, LLC, Maerisland Capital, LLC, Starwood Real Estate Securities, LLC, and Trellus Management Co., LLC each serves as a Sub-Adviser to the Fund.
Portfolio Managers
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Portfolio
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Simple Alternatives, LLC |
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James Dilworth |
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Chief Executive Officer |
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Inception |
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Bruce MacDonald |
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Chief Investment Officer |
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Inception |
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Roaring Blue Lion Capital Management, LLC |
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Charles W. Griege, Jr. |
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Managing Partner, Chief Investment Officer |
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Inception |
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Courage Capital Management, LLC |
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Richard C. Patton |
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Chief Investment Officer |
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Inception |
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Lauren Templeton Capital Management, LLC |
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Lauren C. Templeton |
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Founder, Managing Member, Chief Compliance Officer |
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Inception |
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Scott Phillips |
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Portfolio Manager, Head of Research |
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Inception |
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Maerisland Capital, LLC |
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Mark Beder |
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Founder, Chief Executive Officer, Chief Investment Officer |
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January 1, 2012 |
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Starwood Real Estate Securities, LLC |
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Matthew C. Gilman |
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Chief Executive Officer, Portfolio Manager |
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Inception |
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Trellus Management Co., LLC |
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Adam Usdan |
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President, Portfolio Manager |
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Inception |
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Purchase and Sale of Fund Shares
Minimum Initial Investment: $250,000
You can only purchase and redeem Shares of the Fund on days the New York Stock Exchange is open. Shares of the Fund may be available through certain brokerage firms, financial institutions and other industry professions (collectively, Service Organizations). Shares of the Fund may also be purchased and redeemed directly through The RBB Fund, Inc. by the means described below.
Purchase and Redemption By Mail:
S1 Fund
c/o BNY Mellon Investment Servicing (US) Inc.
P.O. Box 9869
Providence, RI 02940-8042
Purchase By Wire:
Before sending any wire, call the Transfer Agent at 1-866-882-1226 to confirm the current wire instructions for the S1 Fund.
Redemption By Telephone:
Call the Transfer Agent at 1-866-882-1226
Taxes
The Fund intends to make distributions that may be taxed as ordinary income or capital gains. The Fund contemplates declaring as dividends each year all or substantially all of its taxable income.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund may pay the intermediary for the sale of Fund shares and other related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediarys website for more information.
ADDITIONAL INFORMATION ABOUT THE FUNDS INVESTMENTS AND RISKS
This section provides some additional information about the Funds investments and certain portfolio management techniques that the Fund may use. More information about the Funds investments and portfolio management techniques, and related risks, is included in the Statement of Additional Information (SAI).
The Funds investment objective is non-fundamental and may be changed by the Board of Directors of The RBB Fund, Inc. (the Company) without the approval of the Funds shareholders. However, as a matter of policy, the Fund would not materially change its investment objective without informing shareholders at least 60 days in advance of any such change.
Additional Information About the Funds Principal Investments and Risks
Sub-Adviser Investment Strategies. The Sub-Advisers will use a combination of the following investment strategies:
Relative Value
This strategy is designed to take advantage of perceived discrepancies in the market prices of certain convertible bond, common stock, fixed income and derivative securities. Such discrepancies are often created by imbalances in supply and demand of different types of issues (for example, agency securities relative to U.S. Treasury securities).
Event Driven
This strategy is designed to invest in securities whose prices are or will be impacted by a corporate event. Such events include corporate events, such as restructurings, spin-offs and significant litigation (e.g., tobacco litigation). Opportunities in this area are created by the reluctance of traditional investors to assume the risk associated with certain corporate events.
Long/Short Equity
This strategy employs long and short trading in common stock, and preferred stock of U.S. and foreign issuers. This strategy attempts to neutralize exposure to general market risk by primarily investing in stocks that are undervalued and short selling those stocks that are considered to be undervalued.
Market Neutral Equity
This strategy is designed to exploit equity market inefficiencies, which involves being simultaneously invested in long and short matched equity portfolios generally of the same size, usually in the same market. These strategies are typically constructed to attempt to be beta neutral and attempt to control the industry, sector, market capitalization and other potential market bias exposures.
Global Macro
This strategy seeks to generate income and/or capital appreciation through a portfolio of investments focused on macro-economic opportunities across numerous markets and instruments. These strategies may include positions in the cash, currency, futures and forward markets. Trading positions are generally held both long and/or short in both U.S. and non-U.S. markets. With a broader global scope, returns to the Global Macro strategy generally exhibit little to no correlation with the broader domestic equity and bond markets.
Convertible Arbitrage
This strategy seeks to take advantage of pricing inefficiencies of the embedded option in a convertible bond. The strategy typically involves the purchase of a convertible debt or preferred equity instrument (an instrument that is effectively a bond or has a fixed obligation of repayment with an embedded equity option, non-detachable warrants or an equity-linked or equity-indexed note) concurrent with the short sale of, or a short over-the-counter derivative position in, the common stock of the issuer of such debt instrument.
Credit Biased
These strategies invest primarily in the following sectors: secured leveraged loans, high yield bonds, distressed debt, structured credit, and global debt (typically less efficient areas of the global fixed income markets than traditional fixed income strategies). Generally these sectors may include wide credit rating ranges (including leveraged buyouts), may include distressed debt strategies and may include restricted securities and securities that may not be registered for which a market may not be readily available.
Mortgage Backed Securities
This strategy is designed to exploit perceived mispricings in mortgage back securities. Such mispricings can result from periods of market illiquidity and distress or from analytical anomalies. The strategy will invest in both conventional and complex mortgage backed securities.
Opportunistic Equities
This strategy is designed to capitalize on underpriced equity securities or on positive market trends and may focus in certain securities markets, industries, company sizes, or geographical areas. Strategies are primarily managed for absolute return and Sub-Advisers assess risk and opportunity on an absolute, not an index-relative basis, by focusing on relatively few investments that the manager believes are undervalued and either offer a margin-of-safety, or offer high growth opportunities. Selective hedging through the use of short sales or options may be utilized to manage risk exposure. Strategies may also focus on special situations or events, including distressed equities.
Other Investment Strategies
The Fund also has the ability to employ strategies including borrowing money from banks or other financial institutions to purchase securities and investing in warrants, options and futures, reverse repurchase agreements, initial public offerings, restricted securities, and other investment companies.
Derivative Contracts. The Fund may, but need not, use derivative contracts for any of the following purposes:
· To seek to hedge against the possible adverse impact of changes in stock market prices, currency exchange rates or interest rates in the market value of its securities or securities to be purchased;
· As a substitute for buying or selling currencies or securities; or
· To seek to enhance the Funds return in non-hedging situations (which is considered a speculative activity).
Examples of derivative contracts include: futures and options on securities, securities indices or currencies; options on these futures; forward foreign currency contracts; and interest rate or currency swaps. The Fund may use derivative contracts involving foreign currencies. A derivative contract will obligate or entitle the Fund to deliver or receive an asset or cash payment that is based on the change in value of one or more securities, currencies or indices. Even a small investment in derivative contracts can have a big impact on the Funds stock market, currency and interest rate exposure. Therefore, using derivatives can disproportionately increase losses and reduce opportunities for gains when stock prices, currency rates or interest rates are changing. The Fund may not fully benefit from or may lose money on derivatives if changes in their value do not correspond accurately to changes in the value of the Funds holdings. The other parties to certain derivative contracts present the same types of default risk as issuers of fixed income securities in that the counterparty may default on its payment obligations or become insolvent. Derivatives can also make the Fund less liquid and harder to value, especially in declining markets.
Short Sales. The Fund engages in short sales including those that are not against the box, which means that the Fund may make short sales where the Fund does not currently own or have the right to acquire, at no added cost, securities identical to those sold short in accordance with the provisions of the Investment Company Act of 1940, as amended (the 1940 Act). In a typical short sale, the Fund borrows from a broker a security in order to sell the security to a third party. The Fund is then obligated to return a security of the same issuer and quantity at some future date. The Fund realizes a loss to the extent the security increases in value or a profit to the extent the security declines in value (after taking into account any associated costs). Short sales against the box may protect the Fund against the risk of losses in the value of a portfolio security because any
decline in value of the security should be wholly or partially offset by a corresponding gain in the short position. Any potential gains in the security, however, would be wholly or partially offset by a corresponding loss in the short position. Short sales that are not against the box involve a form of investment leverage, and the amount of the Funds loss on a short sale is potentially unlimited.
Equity and Equity-Related Securities. The Fund invests in all types of equity securities. Equity securities include exchange-traded and over-the-counter common and preferred stocks, warrants, rights, convertible securities, depositary receipts and shares, trust certificates, limited partnership interests, shares of other investment companies and real estate investment trusts (REITs), and equity participations. The number of issuers in the Funds portfolio will vary over time.
Fixed Income Investments. The Fund invests a portion of its assets in fixed income securities. Fixed income investments include bonds, notes (including structured notes), mortgage-backed securities, asset-backed securities, convertible securities, Eurodollar and Yankee dollar instruments, preferred stocks and money market instruments. Fixed income securities may be issued by corporate and governmental issuers and may have all types of interest rate payment and reset terms, including (without limitation) fixed rate, adjustable rate, zero coupon, contingent, deferred, payment-in-kind and auction rate features. The principal debt investments of the Fund will be fixed and floating rate securities with no reset terms.
The credit quality of securities held in the Funds portfolio is determined at the time of investment. If a security is rated differently by multiple ratings organizations, the Fund treats the security as being rated in the higher rating category.
Mortgage-Backed Securities. Mortgage-backed securities may be issued by private companies or by agencies of the U.S. government. Mortgage-backed securities represent direct or indirect participation in, or are collateralized by and payable from, mortgage loans secured by real property.
Certain debt instruments may only pay principal at maturity or may only represent the right to receive payments of principal or payments of interest on underlying pools of mortgage or government securities, but not both. The value of these types of instruments may change more drastically than debt securities that pay both principal and interest during periods of changing interest rates. Principal only mortgage-backed securities are particularly subject to prepayment risk. The Fund may obtain a below market yield or incur a loss on such instruments during periods of declining interest rates. Interest only instruments are particularly subject to extension risk, i.e. the risk that an issuer will exercise its right to pay later than expected. This may occur when there is a rise in interest rates. Mortgage derivatives and structured securities often employ features that have the effect of leverage. As a result, small changes in interest or prepayment rates may cause large and sudden price movements, especially compared to an investment in a security that is not leveraged. Mortgage derivatives can also become illiquid and hard to value in declining markets.
Mortgage-backed securities that are collateralized by a portfolio of mortgages or mortgage-related securities depend on the payments of principal and interest made by or through the underlying assets, which may not be sufficient to meet the payment obligations of the mortgage-backed securities. Prepayments of principal, which occur more frequently in falling interest rate conditions, may shorten the term and reduce the value of these securities. The quality and value of the underlying collateral may decline, or default, which has become a significant risk for collateral related to sub-prime mortgage loans, especially in a declining residential real estate market. Further, these securities generally are privately sold and may not be readily marketable, particularly after a rapid decrease in value. Investments in mortgage-backed securities may also be subject to valuation risk.
The Fund may also use mortgage dollar rolls to finance the purchase of additional investments. Dollar rolls expose the Fund to the risk that it will lose money if the additional investments do not produce enough income to cover the Funds dollar roll obligations. In addition, if the Advisers or Sub-Advisers prepayment assumptions are incorrect, the Fund may have performed better had the Fund not entered into the mortgage dollar roll. Unless covered, investing in dollar rolls creates leverage and dollar rolls are subject to the general risks involved in leveraging.
Foreign Securities. The Fund may invest in securities of foreign issuers that are traded or denominated in U.S. dollars (including equity securities of foreign issuers trading in U.S. markets) through American Depositary Receipts (ADRs), Global Depositary Receipts (GDRs), European Depositary Receipts (EDRs) or International Depositary Receipts (IDRs). In addition, the Fund may invest in securities traded or denominated in foreign currencies and in multinational currencies such as the Euro. The Fund will value its securities and other assets in U.S. dollars. Investments in securities of foreign entities and securities denominated or traded in foreign currencies involve special risks. These include possible political and economic instability and the possible imposition of exchange controls or other restrictions on investments. Changes in foreign currency rates relative to the U.S. dollar will affect the U.S. dollar value of the Funds assets denominated or quoted in currencies other than the U.S. dollar. Emerging market investments offer the potential for significant gains but also involve greater risks than
investing in more developed countries. Political or economic instability, lack of market liquidity and government actions such as currency controls or seizure of private business or property may be more likely in emerging markets.
Valuation. Portfolio securities may be valued using techniques other than market quotations. The value established for a portfolio security may be different than what would be produced through the use of another methodology or if it had been priced using market quotations. Portfolio securities that are valued using techniques other than market quotations, including fair valued securities, may be subject to greater fluctuation in their value from one day to the next than would be the case if market quotations were used. In addition, there is no assurance that the Fund could sell a portfolio security for the value established for it at any time and it is possible that the Fund would incur a loss because a portfolio security is sold at a discount to its established value.
Interest Rate Risk. During periods of rising interest rates, the market value of the Funds fixed-income securities will tend to be lower than prevailing market interest rates. In periods of falling interest rates, the market value of the Funds fixed-income securities generally will tend to be higher than prevailing market interest rates. Prices of longer-term fixed income securities are typically more sensitive to changes in interest rates than prices of shorter-term fixed-income securities.
Credit/Default Risk. The credit rating of an issuer or guarantor of a security in which the Fund invests may be lowered or an issuer or guarantor of a security or the counterparty to a derivatives contract or a repurchase agreement may default on its payment obligations.
Liquidity Risk. Liquidity risk exists when particular investments are difficult to purchase or sell. The Funds investments in illiquid securities may reduce the returns of the Fund because it may be unable to sell the illiquid securities at an advantageous time or price. Liquid securities may also become illiquid because of market events or uncertainties. Illiquidity can be caused by a drop in overall market trading volume, an inability to find a ready buyer, or legal restrictions on the securities resale. Certain securities that were liquid when purchased may later become illiquid, particularly in times of overall economic distress.
Leveraging Risks. The use of leverage by the Adviser and Sub-Advisers may increase the volatility of the Fund. These leveraged instruments may result in losses to the Fund or may adversely affect the Funds net asset value or total return, because instruments that contain leverage are more sensitive to changes in interest rates. The Fund may also use borrowed funds to create leverage. Although the use of leverage by the Fund may create an opportunity for increased return, it also results in additional risks and can magnify the effect of any losses. If the income and gains earned on the securities and instruments purchased with leverage proceeds are greater than the cost of the leverage, the Funds return will be greater than if leverage had not been used. Conversely, if the income and gains from the securities and instruments purchased with such proceeds does not cover the cost of leverage, the Funds return will be less than if leverage had not been used. In the event of a sudden, precipitous drop in value of the Funds assets, the Fund may not be able to liquidate assets quickly enough to pay off its borrowing. Short sales of securities also involve the use of leverage. Using this investment technique may adversely affect the Funds net asset value or total return.
To limit leverage risk, the Fund will segregate assets determined by the Adviser to be liquid in accordance with procedures established by the Board of Directors, or, when permissible, enter into offsetting transactions, to cover its obligations resulting from its use of derivative instruments. Securities held in a segregated account cannot be sold while the futures contract, option or other derivative is outstanding, unless they are replaced with other suitable assets. As a result, it is possible that segregating a large percentage of the Funds assets could impede portfolio management or its ability to meet redemption requests or other current obligations.
Interest Rate Swaps, Total Return Swaps, Credit Default Swaps, Options on Swaps and Interest Rate Caps, Floors and Collars.
· Interest rate swaps involve the exchange by the Fund with another party of their respective commitments to pay or receive interest, such as an exchange of fixed-rate payments for floating rate payments.
· Total return swaps are contracts that obligate a party to pay or receive interest in exchange for payment by the other party of the total return generated by a security, a basket of securities, an index, or an index component.
· Credit default swaps are contracts whereby one party makes periodic payments to a counterparty in exchange for the right to receive from the counterparty a payment equal to the par (or other agreed-upon) value of a referenced debt obligation in the event of a default by the issuer of the debt obligation.
· Options on swaps (swaptions) are options to enter into a swap agreement. The Fund may also purchase and write (sell) swaptions. Like other types of options, the buyer of a swaption pays a non-refundable premium for the option and obtains the right, but not the obligation, to enter into an underlying swap on agreed-upon terms. The seller of a swaption, in exchange for the premium, becomes obligated (if the option is exercised) to enter into an underlying swap on agreed-upon terms.
· Interest rate caps entitle the purchaser, to the extent that a specified index exceeds a predetermined interest rate, to receive payment of interest on a notional principal amount from the party selling such interest rate cap.
· Interest rate floors entitle the purchaser, to the extent that a specified index falls below a predetermined interest rate, to receive payments of interest on a notional principal amount from the party selling the interest rate floor.
· Interest rate collars combine a cap and a floor that are designed to preserve a certain return within a predetermined range of interest rates.
The Fund may enter into the transactions described above for hedging purposes or to seek to increase total return (which is considered a speculative activity). The use of swaps, swaptions, and interest rate caps, floors and collars is a highly specialized activity which involves investment techniques and risks different from those associated with ordinary portfolio securities transactions. If the Adviser or a Sub-Adviser is incorrect in its forecasts of market values and interest rates, the investment performance of the Fund would be less favorable than it would have been if these investment techniques were not used.
Counterparties. To the extent the Fund invests in loans or securities traded over-the-counter, swaps, synthetic or derivative instruments, repurchase agreements, certain types of options or other customized financial instruments, the Fund takes the risk of non-performance by the other party to the contract. This risk may include credit risk of the counterparty and the risk of settlement default. This risk may differ materially from those entailed in exchange-traded transactions that generally are supported by guarantees of clearing organizations, daily marking-to-market and settlement, and segregation and minimum capital requirements applicable to intermediaries. Transactions entered directly between two counterparties generally do not benefit from such protections and expose the parties to the risk of counterparty default.
Convertible Securities Risk. Convertible securities have characteristics of both equity and fixed-income securities. The value of a convertible security tends to move with the market value of the underlying stock, but may also be affected by interest rates, credit quality of the issuer and any call provisions. In particular, when interest rates rise, fixed-income securities will decline in value. Convertible securities frequently have speculative characteristics and may be acquired without regard to minimum quality ratings. Lower quality convertible securities, also known as junk bonds, involve greater risk of default or price changes due to the issuers creditworthiness. The market prices of these securities may fluctuate more than those of higher quality securities and may decline significantly in periods of general economic difficulty, which may follow periods of rising interest rates. Securities in the lowest quality category may present the risk of default, or may be in default.
Tax Risk. The Fund may seek to gain exposure to the commodity markets through investments in commodity-linked notes. The Fund has not requested or received a ruling from the Internal Revenue Service (IRS) regarding their treatment for purposes of the Funds qualification as a regulated investment company under the Internal Revenue Code (Code). Additionally, the tax treatment of commodity-linked notes and other commodity-linked derivatives may be adversely affected by future legislation, U.S. Treasury Regulations and/or guidance issued by the IRS that could affect the character, timing and/or amount of the Funds taxable income or any gains and distributions made by the Fund.
Exchange-Traded Funds (ETFs). The Fund may invest up to 25% of its assets in ETFs. ETFs are registered investment companies whose shares are listed and traded on U.S. stock exchanges or otherwise traded in the over-the-counter market. In general, ETFs seek to track a specified securities index or a basket of securities that an index provider, such as Standard & Poors, selects as representative of a market, market segment or industry sector. An ETF portfolio generally holds the same stocks or bonds as the index it tracks or it may hold a representative sample of such securities. Thus, an ETF is designed so that its performance will correspond closely with that of the index it tracks. As a shareholder in an ETF, the Fund will bear its pro rata portion of an ETFs expenses, including advisory fees, in addition to its own expenses.
Other Investment Companies. The Fund may invest up to 10% of its total assets in the securities of other investment companies, but may not invest more than 5% of its total assets in the securities of any one investment company or acquire more than 3% of the voting securities of any other investment company. Among other things, the Fund may invest in money market mutual funds for cash management purposes by sweeping excess cash balances into such funds until the cash is invested or otherwise utilized. The Fund will indirectly bear its proportionate share of any management fees and other expenses paid by investment companies in which it invests in addition to the advisory and administration fees paid by the Fund.
Redemptions. The Fund may need to sell its holdings in order to meet shareholder redemption requests. The Fund could experience a loss when selling securities to meet redemption requests if the redemption requests are unusually large or frequent, occur in times of overall market turmoil or declining prices for the securities sold, or when the securities the Fund wishes to or is required to sell are illiquid. The Fund may be unable to sell illiquid securities at its desired time or price. Illiquidity can be caused by a drop in overall market trading volume, an inability to find a ready buyer, or legal restrictions on the securities resale. Certain securities that were liquid when purchased may later become illiquid, particularly in times of overall economic distress.
Portfolio Turnover. The Fund may engage in active and frequent trading, resulting in high portfolio turnover. This may lead to the realization and distribution to shareholders of higher capital gains, increasing their tax liability. Frequent trading may also increase transaction costs, which could detract from the Funds performance.
Temporary Investments. The Fund may depart from its principal investment strategy in response to adverse market, economic, political or other conditions by taking temporary defensive positions (up to 100% of its assets) in all types of money market and short-term debt securities. If the Fund were to take a temporary defensive position, it may be unable for a time to achieve its investment objective.
Disclosure of Portfolio Holdings
A description of the Companys policies and procedures with respect to the disclosure of the Funds portfolio securities is available in the SAI. The SAI is incorporated herein.
MANAGEMENT OF THE FUNDS
Investment Adviser
Simple Alternatives, LLC, a registered investment adviser located at 90 Grove Street, Suite 205, Ridgefield, Connecticut 06877, provides investment advisory services to the Fund subject to the general supervision of the Companys Board of Directors. The Adviser was founded in October 2009 by James Dilworth.
Pursuant to an investment advisory agreement with the Company, the Adviser is entitled to an advisory fee at the annual rate of 2.75% of the Funds average daily net assets, computed daily and payable monthly. The Adviser has contractually agreed to forgo all or a portion of its advisory fee and/or reimburse expenses in an aggregate amount equal to the amount by which the Total Annual Fund Operating Expenses (other than acquired fund fees and expenses, short sale dividend expenses, brokerage commissions, litigation, extraordinary items, interest or taxes) exceeds 3.20% of the average daily net assets attributable to the Funds R Shares. This contractual limitation is in effect until at least December 31, 2014 and may not be terminated without Board approval. Because dividend expenses on short sales, acquired fund fees and expenses, brokerage commissions, litigation, extraordinary items, interest and taxes are excluded from the expense limitation, Total R Shares Annual Fund Operating Expenses (after fees forgone and expense reimbursements) are expected to exceed the applicable expense limitation. If at any time during the first three years the Funds Advisory Agreement with the Adviser is in effect, the Funds Total Annual Fund Operating Expenses for that year are less than 3.20%, the Adviser is entitled to reimbursement by the Fund of the advisory fees forgone and other payments remitted by the Adviser to the Fund during such three-year period if such reimbursement by the Fund does not cause the Fund to exceed existing expense limitations.
The Fund is managed by the Adviser and one or more Sub-Advisers unaffiliated with the Adviser. The Adviser also has the ultimate responsibility to oversee the Sub-Advisers, and to recommend their hiring, termination, and replacement, subject to approval by the Board of Directors. James Dilworth and Bruce MacDonald are the portfolio managers primarily responsible for the day-to-day management of the Fund. Prior to founding Simple Alternatives, LLC, Mr. Dilworth worked with Common Sense Investment Management, LLC. Common Sense Investment Management is an institutional hedge fund of funds. Mr. Dilworth founded Dilworth Securities, Inc. and Dilworth Capital Management, LLC in 2003. Prior to establishing Dilworth Capital, Mr. Dilworth served as the CEO and Managing Director of London-based Middlebury Capital Partners International, a holding company partially owned by and managing investments for the Charles R. Schwab family. In 1998, Mr. Dilworth joined Clark Winter in developing Winter Capital International, a fund of funds based in New York City, which was sold to Citigroup Private Bank in late 2000. Mr. Dilworth received his MBA from Northwestern Universitys Kellogg Graduate School of Business. Mr. MacDonald currently serves as Chief Investment Officer of the Adviser. From 2005 to 2009 he was Director of Asset Allocation and Risk Management for the University of Virginia Investment Management Company (UVIMCO). Before joining UVIMCO Mr. MacDonald was the Senior Investment Strategist for Putnam Investments Global Asset Allocation team. Mr. MacDonald holds an MBA from Columbia University and a BA in religion from Wesleyan University.
Sub-Advisers
The Fund has received an exemptive order from the SEC that permits the Adviser to engage or terminate a Sub-Adviser, and to enter into and materially amend an existing sub-advisory agreement, upon the approval of the Board of Directors, without obtaining shareholder approval. The Sub-Advisers provide investment advisory services to the portion of the Funds portfolio allocated to them by the Adviser. The Adviser compensates each Sub-Adviser at a rate negotiated by the Adviser and the Sub-Adviser. The Adviser selects Sub-Advisers based upon the Sub-Advisers skills in managing assets pursuant to particular investment styles and strategies. The Adviser monitors existing Sub-Advisers based on their investment styles, strategies, and results in managing assets for specific asset classes. Each Sub-Adviser will have discretion to select portfolio securities for its portion of the Fund, but must select those securities according to the Funds investment objectives and restrictions. The Fund is not required to invest with any minimum number of Sub-Advisers, and does not have minimum or maximum limitations with respect to allocations of assets to any Sub-Adviser. The Adviser may change the allocation of the Funds assets among the available Sub-Advisers, and may add or remove Sub-Advisers, at any time.
Roaring Blue Lion Capital Management, LLC (Blue Lion) , a registered investment adviser located at 8115 Preston Road, Suite 550, Dallas, TX 75225, has served as a Sub-Adviser to the Fund since its inception. Charles W. Griege, Jr. is the portfolio manager primarily responsible for the day-to-day management of the portion of the Fund sub-advised by Blue Lion. Mr. Griege has been Managing Partner and Chief Investment Officer of Blue Lion since 2005. Prior to starting Blue Lion, Mr. Griege joined Atlas Capital Management, a long/short equity fund, as a partner in May 2001. Prior to Atlas, Mr. Griege spent six years in investment banking, most recently as a Managing Director at SoundView Technology Group. Prior to joining SoundView, Mr. Griege was a Vice President in the research sales division of Sanford Bernstein. Mr. Griege received an MBA with honors from
Columbia Business School in 1990 and a BA degree from Vanderbilt University in 1985. Blue Lion employs a long/short equity strategy with a value-oriented bias in managing its portion of the Fund. The Fund is the only mutual fund for which the Sub-Adviser provides advisory services.
Courage Capital Management, LLC (Courage Capital) , a registered investment adviser located at 4400 Harding Road, Ste. 503, Nashville, Tennessee 37205, has served as a Sub-Adviser to the Fund since its inception. Courage Capital was founded in 1998 by Richard C. Patton, who is also the portfolio manager primarily responsible for the day-to-day management of the portion of the Fund sub-advised by Courage Capital. Mr. Patton is also Chief Investment Adviser of Courage Capital. Prior to founding Courage Capital, Mr. Patton co-founded and operated Woodmont Capital, LLC. Mr. Patton serves on the American Red Cross Board of Governors. Mr. Patton earned a B.S. in Economics from Vanderbilt University and an M.B.A. from Harvard Business School. Courage Capital employs an event driven investment strategy, including investments in special situations companies and distressed securities, in managing its portion of the Fund. The Fund is the only mutual fund for which the Sub-Adviser provides advisory services.
Lauren Templeton Capital Management, LLC (LT) , a registered investment adviser located at 633 Chestnut Street, Suite 820, Chattanooga, TN 37450, has served as a Sub-Adviser to the Fund since its inception. LT was founded in 2001 by Lauren C. Templeton. Ms. Templeton and Scott Phillips have responsibility for the day-to-day management of the portion of the Fund sub-advised by LT. Ms. Templeton is managing member and Chief Compliance Officer of LT. Ms. Templeton is also founder and director of the Southeastern Hedge Fund Association. In addition to these responsibilities Ms. Templeton also serves the following organizations; The Atlanta Hedge Fund Roundtable (President), the Board of Trustees at the Baylor School, the Pre-Business Advisory Council at the University of the South, Sewanee (Board Member), and the Finance Advisory Board of the University of Tennessee Chattanooga. Ms. Templeton is a published book author having written Investing the Templeton Way released by McGraw Hill in 2008. Investing the Templeton Way is a value investors guide to the successful methods employed by her mentor, Sir John Templeton. Ms. Templeton received a B.A. in Economics from the University of the South. Mr. Phillips joined LT in 2007 and serves as Portfolio Manager and Head of Research. Prior to joining LT, Mr. Phillips founded Cumberland Capital Corp, located in Chattanooga, Tennessee in 2004, where he provided equity research services to Green Cay Asset Management, a hedge fund management company located in Nassau, Bahamas. Mr. Phillips received his B.A. in English from the University of the South. Mr. Phillips co-authored Investing the Templeton Way. LT uses a global value investment strategy in managing its portion of the Fund. The Fund is the only mutual fund for which the Sub-Adviser provides advisory services.
Maerisland Capital, LLC (Maerisland) , a registered investment adviser located at 500 Newport Center Drive, Suite 600, Newport Beach, CA 92660, has served as a Sub-Adviser to the Fund since January 1, 2012. Maerisland was formed in September of 2011 by Mark Beder, who is also the portfolio manager primarily responsible for the day-to-day management of the portion of the Fund sub-advised by Maerisland. Mr. Beder has over 18 years of investment experience as a fundamental, bottoms-up investor and has managed global equity portfolios with long-only, market-neutral and long/short hedged strategies. Prior to forming Maerisland, Mr. Beder was a partner with the Tremblant Capital Group (Tremblant) from September 1, 2005 through 2010. Mr. Beder was the founding member and sole portfolio manager of the Tremblant-Trident Funds. Following Tremblants restructuring in late 2008, Mr. Beder was named a partner at Tremblant, managed a generalist book within Tremblants main fund, and served on the Investment and the Risk Management Committees. Prior to his work at Tremblant, Mr. Beder was a co-founder and co-portfolio manager of KiCap Management Funds (KiCap), series market neutral hedge funds. Mr. Beder and his co-portfolio manager at KiCap began their work together while co-heading the global telecom and media team at Tiger Management, LLC. Mr. Beder and his partner managed a book of over $300 million of assets within Tiger Managements main fund. Prior to joining Tiger Management in 1999, Mr. Beder spent 6 years with The Capital Group Companies where he managed a $1.4 billion global telecom portfolio and was the lead manager to an additional $6 billion in global telecom assets. Prior to entering the investment industry, Mr. Beder was a Lieutenant Commander and Assault Team Leader with the United States Navy SEAL Team. Mr. Beder holds a Masters of Business Administration degree from the Harvard Business School and a Bachelor of Science degree in Mechanical Engineering from the Massachusetts Institute of Technology. Mr. Beder serves as a Trustee for Harbor Day School and is a Board Member for Second Harvest Food Bank of Orange County. Maerisland uses a long/short global investment strategy that focuses on proprietary research in managing its portion of the Fund.
Starwood Real Estate Securities, LLC (SRES) , a registered investment adviser located at 591 West Putnam Avenue, Greenwich, Connecticut 06830, has served as a Sub-Adviser to the Fund since its inception. SRES was launched in 2004. SRES is jointly owned by Barry Sternlicht, Chairman and Advisor, and Matthew C. Gilman, Chief Executive Officer and Portfolio Manager. Over the past 19 years, Mr. Sternlicht has structured more than 400 investment transactions with an asset value of more than $40 billion. From 1995 through 2005, Mr. Sternlicht was Chairman and CEO of Starwood Hotels & Resorts Worldwide, Inc., a company he founded in 1995. Mr. Gilman is the portfolio manager primarily responsible for the day-to-day management of the portion of the Fund sub-advised by SRES. Mr. Gilman joined Starwood Real Estate Securities LLC at its founding in 2004. From 1999 to 2004, Mr. Gilman was Senior Portfolio Manager at ABP Investments US, Inc., the US subsidiary of the Dutch Civil Service Pension Fund, regarded as one of the largest in the world. Mr. Gilman covered real estate securities at
JP Morgan Investment Management from 1995 to 1999 and for one year at Genesis Realty Advisors from 1994 to 1995. Mr. Gilman began his career at Wellsford Residential Properties in 1992, a multi-family real estate investment trust. Mr. Gilman is a graduate of Dartmouth College and is a member of the National Association of Real Estate Investment Trusts. SRES employs a long/short equity investment strategy, with a focus on public real estate securities, in managing its portion of the Fund. The Fund is the only mutual fund for which the Sub-Adviser provides advisory services.
Trellus Management Co., LLC (Trellus) , a registered investment adviser located at 350 Madison Avenue, New York, New York 10017 has served as a Sub-Adviser to the Fund since its inception. Trellus was founded in 1994 by Adam Usdan, the sole owner of Trellus. Mr. Usdan is the portfolio manager primarily responsible for the day-to-day management of the portion of the Fund sub-advised by Trellus. Mr. Usdan is the President, Chief Investment Officer and Portfolio Manager of Trellus. Mr. Usdan earned an MBA in Finance, Accounting & Marketing from the Kellogg Graduate School of Management, Northwestern University and a BA in English, from Wesleyan University. Trellus employs a long/short equity investment strategy in managing its portion of the Fund. The Fund is the only mutual fund for which the Sub-Adviser provides advisory services.
The SAI provides additional information about the portfolio managers compensation, other accounts managed by the portfolio managers and the portfolio managers ownership of securities in the Fund.
A discussion regarding the basis for the Companys Board of Directors approval of the Funds investment advisory agreement with the Adviser and sub-advisory agreements with the Sub-Advisers is available in the Funds annual report for the year ended August 31, 2012 (except for Maerisland). The discussion regarding the basis for the Companys Board of Directors approval of the Funds sub-advisory agreement with Maerisland is in the Funds semi-annual report for the period ended February 29, 2012.
Marketing Arrangement
The Adviser or its affiliates may pay additional compensation, out of profits derived from the Advisers management fee and not as an additional charge to the Fund, to certain financial institutions (which may include banks, securities dealers and other industry professionals) for the sale and/or distribution of Fund shares or the retention and/or servicing of Fund investors and Fund shares (revenue sharing). These payments are in addition to any distribution or servicing fees payable under a 12b-1 distribution and/or service plan of the Fund, any record keeping or sub-transfer agency fees payable by the Fund, or other fees described in the fee table or elsewhere in the Prospectus or SAI. Examples of revenue sharing payments include, but are not limited to, payment to financial institutions for shelf space or access to a third party platform or fund offering list or other marketing programs, including, but not limited to, inclusion of the Fund on preferred or recommended sales lists, mutual fund supermarket platforms and other formal sales programs; granting the Adviser access to the financial institutions sales force; granting the Adviser access to the financial institutions conferences and meetings; assistance in training and educating the financial institutions personnel; and obtaining other forms of marketing support. The level of revenue sharing payments made to financial institutions may be a fixed fee or based upon one or more of the following factors: gross sales, current assets and/or number of accounts of the Fund attributable to the financial institution, or other factors as agreed to by the Adviser and the financial institution or any combination thereof. The amount of these revenue sharing payments is determined at the discretion of the Adviser from time to time, may be substantial, and may be different for different financial institutions depending upon the services provided by the financial institution. Such payments may provide an incentive for the financial institution to make shares of the Fund available to its customers and may allow the Fund greater access to the financial institutions customers.
SHAREHOLDER INFORMATION
Pricing of Fund Shares
R Shares of the Fund (Shares) are priced at their net asset value (NAV). The NAV per share of the Fund is calculated as follows:
The Funds NAV is calculated once daily at the close of regular trading hours on the New York Stock Exchange (NYSE) (generally 4:00 p.m. Eastern time) on each day the NYSE is open. The NYSE is generally open Monday through Friday, except national holidays. The Fund will effect purchases of Fund shares at the NAV next determined after receipt by the Funds Transfer Agent of your purchase order in good order. The Fund will effect redemptions of Fund shares at the NAV next calculated after receipt by the Funds Transfer Agent of your redemption request in good order.
The Funds equity securities listed on any national or foreign exchange market system will be valued at the last sale price, except for the National Association of Securities Dealers Automatic Quotation System (NASDAQ). Equity securities listed on NASDAQ will be valued at the official closing price. Equity securities traded in the over-the-counter market are valued at their closing prices. If there were no transactions on that day, securities traded principally on an exchange or on NASDAQ will be valued at the mean of the last bid and ask prices prior to the market close. Fixed income securities having a remaining maturity of 60 days or less are valued at amortized cost, which approximates market value. Fixed income securities having a remaining maturity of greater than 60 days are valued using an independent pricing service. When prices are not available from such services or are deemed to be unreliable, securities may be valued by dealers who make markets in such securities. Foreign securities, currencies and other securities denominated in foreign currencies are translated into U.S. dollars at the exchange rate of such currencies against the U.S. dollar provided by a pricing service. All assets denominated in foreign currencies will be converted into U.S. dollars at the exchange rates in effect at the time of valuation. If the Fund holds foreign equity securities, the calculation of the Funds NAV will not occur at the same time as the determination of the value of the foreign equities securities in the Funds portfolio, since these securities are traded on foreign exchanges.
If market quotations are unavailable or deemed unreliable by the Funds administrator, in consultation with the Adviser and Sub-Advisers, securities will be valued by the Adviser and Sub-Advisers in accordance with procedures adopted by the Companys Board of Directors and under the Board of Directors ultimate supervision. In addition, the prices of foreign securities may be affected by events that occur after the close of a foreign market but before the Fund prices its shares. In such instances, a foreign security may be fair valued in accordance with procedures adopted by the Companys Board of Directors. Relying on prices supplied by pricing services or dealers or using fair valuation involves the risk that the values used by the Fund to price its investments may be higher or lower than the values used by other investment companies and investors to price the same investments.
Investments in other open-end investment companies are valued based on the NAV of those investment companies (which may use fair value pricing as discussed in their prospectuses). Investments in ETFs, REITs and closed-end funds will be valued at their market price.
Market Timing
In accordance with the policy adopted by the Companys Board of Directors, the Company discourages and does not accommodate market timing and other excessive trading practices. Purchases should be made with a view to longer-term investment only. Excessive short-term (market timing) trading practices may disrupt portfolio management strategies, increase brokerage and administrative costs, harm Fund performance and result in dilution in the value of Fund Shares held by long-term shareholders. The Company and the Adviser reserve the right to (i) reject a purchase or exchange order, (ii) delay payment of immediate cash redemption proceeds for up to seven calendar days, (iii) revoke a shareholders privilege to purchase Fund Shares (including exchanges), or (iv) limit the amount of any exchange involving the purchase of Fund Shares. An investor may receive notice that their purchase order or exchange has been rejected after the day the order is placed or after acceptance by a
financial intermediary. It is currently expected that a shareholder would receive notice that its purchase order or exchange has been rejected within 48 hours after such purchase order or exchange has been received by the Company in good order. The Company and the Adviser will not be liable for any loss resulting from rejected purchase orders. To minimize harm to the Company and its shareholders (or the Adviser), the Company (or the Adviser) will exercise its right if, in the Companys (or the Advisers) judgment, an investor has a history of excessive trading or if an investors trading, in the judgment of the Company or the Adviser, has been or may be disruptive to the Fund. No waivers of the provisions of the policy established to detect and deter market timing and other excessive trading activity are permitted that would harm the Fund and its shareholders or would subordinate the interests of the Fund and its shareholders to those of the Adviser or any affiliated person or associated person of the Adviser.
Pursuant to the policy adopted by the Board of Directors, the Adviser has developed criteria that it uses to identify trading activity that may be excessive. The Adviser reviews on a regular, periodic basis available information related to the trading activity in the Fund in order to assess the likelihood that the Fund may be the target of excessive trading. As part of its excessive trading surveillance process, the Adviser, on a periodic basis, examines transactions that exceed certain monetary thresholds or numerical limits within a period of time. If, in its judgment, the Adviser detects excessive, short-term trading, it may reject or restrict a purchase request and may further seek to close an investors account with the Fund. The Adviser may modify its surveillance procedures and criteria from time to time without prior notice regarding the detection of excessive trading or to address specific circumstances. The Adviser will apply the criteria in a manner that, in its judgment, will be uniform.
If necessary, the Company may prohibit additional purchases of Fund shares by a financial intermediary or by certain customers of the financial intermediary. Financial intermediaries may also monitor their customers trading activities in the Fund. The criteria used by intermediaries to monitor for excessive trading may differ from the criteria used by the Company. If a financial intermediary fails to enforce the Companys excessive trading policies, the Company may take certain actions, including terminating the relationship.
There is no assurance that the Fund will be able to identify market timers, particularly if they are investing through intermediaries.
Purchase of Fund Shares
Shares representing interests in the Fund are offered continuously for sale by Foreside Funds Distributors, LLC, formerly known as BNY Mellon Distributors Inc. (the Distributor). R Shares of the Fund have not commenced operations as of the date of this Prospectus.
General. You may purchase Shares of the Fund at the NAV per Share next calculated after your order is received by the Transfer Agent in good order as described below. The Funds NAV is calculated once daily at the close of regular trading hours on the NYSE (generally 4:00 p.m. Eastern time) on each day the NYSE is open. After an initial purchase is made, the Transfer Agent will set up an account for you on the Company records. The minimum initial investment in the Fund is $250,000. There is no minimum for subsequent investments. The Fund may accept initial investments of smaller amounts in its sole discretion. You can only purchase Shares of the Fund on days the NYSE is open and through the means described below.
Purchases Through Intermediaries. Shares of the Fund may also be available through certain brokerage firms, financial institutions and other industry professionals (collectively, Service Organizations). Certain features of the Shares, such as the initial and subsequent investment minimums and certain trading restrictions, may be modified or waived by Service Organizations. Service Organizations may impose transaction or administrative charges or other direct fees, which charges and fees would not be imposed if Shares are purchased directly from the Company. Therefore, you should contact the Service Organization acting on your behalf concerning the fees (if any) charged in connection with a purchase or redemption of Shares and should read this Prospectus in light of the terms governing your accounts with the Service Organization. Service Organizations will be responsible for promptly transmitting client or customer purchase and redemption orders to the Company in accordance with their agreements with the Company or its agent and with clients or customers. Service Organizations or, if applicable, their designees that have entered into agreements with the Company or its agent may enter confirmed purchase orders on behalf of clients and customers, with payment to follow no later than the Companys pricing on the following Business Day. If payment is not received by such time, the Service Organization could be held liable for resulting fees or losses. The Company will be deemed to have received a purchase or redemption order when a Service Organization, or, if applicable, its authorized designee, accepts a purchase or redemption order in good order if the order is actually received by the Company in good order not later than the next business morning. If a purchase order is not received by the Fund in good order, BNY Mellon Investment Servicing (US) Inc. (the Transfer Agent) will contact the financial intermediary to determine the status of the purchase order. Orders received by the Company in good order will be priced at the Funds NAV next computed after they are deemed to have been received by the Service Organization or its authorized designee.
For administration, subaccounting, transfer agency and/or other services, the Adviser may pay Service Organizations and certain recordkeeping organizations a fee (the Service Fee) of the average annual net asset value of accounts with the Company maintained by such Service Organization or recordkeepers. The Service Fee payable to any one Service Organization is determined based upon a number of factors, including the nature and quality of services provided, the operations processing requirements of the relationship and the standardized fee schedule of the Service Organization or recordkeeper.
Initial Investment By Mail. An account may be opened by completing and signing the application included with this Prospectus and mailing it to the Transfer Agent at the address noted below, together with a check ($250,000 minimum) payable to the Fund. Third party checks will not be accepted.
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S1 Fund
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The name of the Fund should be designated on the application and should appear on the check. Payment for the purchase of Shares received by mail will be credited to a shareholders account at the NAV per share of the Fund next determined after receipt of payment in good order.
Initial Investment By Wire. Shares of the Fund may be purchased by wiring federal funds to The Bank of New York Mellon. A completed application must be forwarded to the Transfer Agent at the address noted above under Initial Investment by Mail in advance of the wire. For the Fund, notification must be given to the Transfer Agent at 1-866-882-1226 prior to 4:00 p.m., Eastern time, on the wire date. (Prior notification must also be received from investors with existing accounts.) Request account information and routing instructions by calling the Transfer Agent at 1-866-882-1226.
Federal funds wire purchases will be accepted only on days when the NYSE and The Bank of New York Mellon are open for business.
Additional Investments. Additional investments may be made at any time by purchasing Shares of the Fund at the NAV per Share of the Fund by mailing a check to the Transfer Agent at the address noted under Initial Investment by Mail (payable to S1 Fund) or by wiring monies to The Bank of New York Mellon as outlined under Initial Investment by Wire. Notification must be given to the Transfer Agent at 1-866-882-1226 prior to 4:00 p.m., Eastern time, on the wire date. Initial and additional purchases made by check cannot be redeemed until payment of the purchase has been collected. This may take up to 15 calendar days from the date of purchase.
Automatic Investment Plan. Additional investments in Shares of the Fund may be made automatically by authorizing the Transfer Agent to withdraw funds from your bank account through an Automatic Investment Plan ($250 minimum). Investors desiring to participate in an Automatic Investment Plan should call the Transfer Agent at 1-866-882-1226.
Retirement Plans/IRA Accounts. Shares may be purchased in conjunction with individual retirement accounts (IRAs) and rollover IRAs. A $15.00 custodial maintenance fee is charged per IRA account per year. For further information as to applications and annual fees, contact the Transfer Agent at 1-866-882-1226. To determine whether the benefits of an IRA are available and/or appropriate, you should consult with a tax advisor.
Purchases in Kind. In certain circumstances, Shares of the Fund may be purchased in kind (i.e. in exchange for securities, rather than cash). The securities rendered in connection with an in-kind purchase must be liquid securities that are not restricted as to transfer and have a value that is readily ascertainable in accordance with the Companys valuation procedures. Securities accepted by the Fund will be valued, as set forth in this Prospectus, as of the time of the next determination of net asset value after such acceptance. The Shares of the Fund that are issued to the investor in exchange for the securities will be determined as of the same time. All dividend, subscription, or other rights that are reflected in the market price of accepted securities at the time of valuation become the property of the Fund and must be delivered to the Fund by the investor upon receipt from the issuer. The Fund will not accept securities in exchange for its Shares unless such securities are, at the time of the exchange,
eligible to be held by the Fund and satisfy such other conditions as may be imposed by the Adviser or the Company. Purchases in-kind may result in the recognition of gain or loss for federal income tax purposes on the securities transferred to the Fund.
Other Purchase Information. The Company reserves the right, in its sole discretion, to suspend the offering of shares or to reject purchase orders when, in the judgment of management, such suspension or rejection is in the best interest of the Fund. The Adviser will monitor the Funds total assets and may, subject to Board approval, decide to close the Fund at any time to new investments or to new accounts due to concerns that a significant increase in the size of the Fund may adversely affect the implementation of the Funds strategy. The Adviser, subject to Board approval, may also choose to reopen the Fund to new investments at any time, and may subsequently close the Fund again should concerns regarding the Funds size recur. If the Fund closes to new investments, the Fund may be offered only to certain existing shareholders of the Fund and certain other persons who may be subject to cumulative, maximum purchase amounts, as follows:
a. Persons who already hold Shares of the closed Fund directly or through accounts maintained by brokers by arrangement with the Company,
b. Existing and future clients of financial advisers and planners whose clients already hold Shares of the closed Fund,
c. Employees of the Adviser and their spouses, parents and children, and
d. Directors of the Company.
Distributions to all shareholders of the closed Fund will continue to be reinvested unless a shareholder elects otherwise. The Adviser, subject to the Board of Directors discretion, reserves the right to implement other purchase limitations at the time of closing, including limitations on current shareholders.
Purchases of the Funds Shares will be made in full and fractional shares of the Fund calculated to three decimal places.
The Companys officers are authorized to waive the minimum initial and subsequent investment requirements.
Good Order. A purchase request is considered to be in good order when all necessary information is provided and all required documents are properly completed, signed and delivered. Purchase requests not in good order may be rejected.
Customer Identification Program. Federal law requires the Company to obtain, verify and record identifying information, which may include the name, residential or business street address, date of birth (for an individual), social security or taxpayer identification number or other identifying information for each investor who opens or reopens an account with the Company. Applications without the required information, or without any indication that a social security or taxpayer identification number has been applied for, may not be accepted. After acceptance, to the extent permitted by applicable law or its customer identification program, the Company reserves the right (a) to place limits on transactions in any account until the identity of the investor is verified; or (b) to refuse an investment in a Company portfolio or to involuntarily redeem an investors Shares and close an account in the event that an investors identity is not verified. The Company and its agents will not be responsible for any loss in an investors account resulting from the investors delay in providing all required identifying information or from closing an account and redeeming an investors Shares when an investors identity cannot be verified.
Redemption of Fund Shares
You may redeem Fund Shares at the next NAV calculated after a redemption request is received by the Transfer Agent in good order. The Funds NAV is calculated once daily at the close of regular trading hours on the NYSE (generally 4:00 p.m. Eastern time) on each day the NYSE is open. You can only redeem Shares of the Fund on days the NYSE is open and through the means described below. You may redeem Fund Shares by mail, or, if you are authorized, by telephone. The value of Shares redeemed may be more or less than the purchase price, depending on the market value of the investment securities held by the Fund.
Redemption By Mail. Your redemption requests should be addressed to S1 Fund, c/o BNY Mellon Investment Servicing (US) Inc., P.O. Box 9869, Providence, RI 02940; for overnight delivery, requests should be addressed to S1 Fund, c/o BNY Mellon Investment Servicing (US) Inc., 4400 Computer Drive, Westborough, MA 01581 and must include:
a. Name of the Fund;
b. Account number;
c. Your Share certificates, if any, properly endorsed or with proper powers of attorney;
d. A letter of instruction specifying the number of Shares or dollar amount to be redeemed, signed by all registered owners of the Shares in the exact names in which they are registered;
e. Medallion signature guarantees are required when (i) the redemption proceeds are to be sent to someone other than the registered shareholder(s) or (ii) the redemption request is for $50,000 or more. A signature guarantee may be obtained from a domestic bank or trust company, broker, dealer, clearing agency or savings association who are participants in a Medallion Program recognized by the Securities Transfer Association. The three recognized Medallion Programs are Securities Transfer Agent Medallion Program (STAMP), Stock Exchanges Medallion Program (SEMP) and New York Stock Exchange, Inc. Medallion Program (MSP). Signature guarantees which are not a part of these programs will not be accepted. Please note that a notary public stamp or seal is not acceptable; and
f. Other supporting legal documents, if required, in the case of estates, trusts, guardianships, custodianships, corporations, pension and profit sharing plans and other organizations.
Redemption By Telephone. In order to utilize the telephone redemption option, you must indicate that option on your Account Application. Please note that the telephone redemption option is not available for retirement accounts. You may then initiate a redemption of Shares by calling the Transfer Agent at 1-866-882-1226 and requesting that the redemption proceeds be mailed to the primary registration address or wired per the authorized instructions. A wire charge of $7.50 is assessed and charged to the shareholder. If the telephone redemption option is authorized, the Transfer Agent may act on telephone instructions from any person representing himself or herself to be a shareholder and believed by the Transfer Agent to be genuine. The Transfer Agents records of such instructions are binding and shareholders, not the Fund or its Transfer Agent, bear the risk of loss in the event of unauthorized instructions reasonably believed by the Fund or its Transfer Agent to be genuine. The Fund and the Transfer Agent will employ reasonable procedures to confirm that instructions communicated are genuine and, if it does not, it may be liable for any losses due to unauthorized or fraudulent instructions. The procedures employed by the Fund and the Transfer Agent in connection with transactions initiated by telephone include tape recording of telephone instructions and requiring some form of personal identification prior to acting upon instructions received by telephone.
Involuntary Redemption. The Fund reserves the right to redeem a shareholders account in the Fund at any time the value of the account in the Fund falls below $5,000 as the result of a redemption or an exchange request. Shareholders will be notified in writing that the value of their account in the Fund is less than $5,000 and will be allowed 30 days to make additional investments before the redemption is processed. The transaction fee applicable to the Fund will not be charged when Shares are involuntarily redeemed.
The Fund may assert the right to redeem your shares at current NAV at any time and without prior notice if, and to the extent that, such redemption is necessary to reimburse the Fund for any loss sustained by reason of your failure to make full payment for shares of the Fund you previously purchased or subscribed for.
Other Redemption Information. Redemption proceeds for Shares of the Fund recently purchased by check may not be distributed until payment for the purchase has been collected, which may take up to fifteen days from the purchase date. Shareholders can avoid this delay by utilizing the wire purchase option.
Other than as described above, payment of the redemption proceeds will be made within seven days after receipt of an order for a redemption. The Company may suspend the right of redemption or postpone the date at times when the NYSE is closed or under any emergency circumstances as determined by the SEC.
If the Board of Directors determines that it would be detrimental to the best interests of the remaining shareholders of the Fund to make payment wholly or partly in cash, redemption proceeds may be paid in whole or in part by an in-kind distribution of readily marketable securities held by the Fund instead of cash in conformity with applicable rules of the SEC. If a shareholder receives redemption proceeds in-kind, the shareholder will bear the market risk of the securities received in the redemption until their disposition and should expect to incur transaction costs upon the disposition of the securities. The Company has elected, however, to be governed by Rule 18f-1 under the 1940 Act, so that the Fund is obligated to redeem its Shares solely in cash up to the lesser of $250,000 or 1% of its NAV during any 90-day period for any one shareholder of the Fund.
Good Order. A redemption request is considered to be in good order when all necessary information is provided and all required documents are properly completed, signed and delivered. Redemption requests not in good order may be delayed.
Distribution Fees
The Board of Directors of the Company has adopted a plan pursuant to Rule 12b-1 under the 1940 Act (the Plan) that allows the Fund to pay fees from its R Shares assets for selling and distributing R Shares. Pursuant to the Plan, R Shares of the Fund can pay distribution fees at an annual rate of up to 0.25% of the Funds R Shares assets. Because distribution fees are paid on an ongoing basis, over time they increase the cost of your investment and may cost more than paying other sales charges.
Dividends and Distributions
The Fund will distribute substantially all of its net investment income and net realized capital gains, if any, to its shareholders. All distributions are reinvested in the form of additional full and fractional Shares of the Fund unless a shareholder elects otherwise.
The Fund will declare and pay dividends from net investment income annually. Net realized capital gains (including net short-term capital gains), if any, will be distributed by the Fund at least annually. The estimated amount of any annual distribution will be posted to the Advisers password-protected website at www.S1Fund.com or a free copy may be obtained by calling 1-866-882-1226.
The Fund may pay additional distributions and dividends at other times if necessary for the Fund to avoid U.S. federal tax. The Funds distributions and dividends, whether received in cash or reinvested in additional Fund Shares, are subject to U.S. federal income tax.
More Information About Taxes
The following is a summary of certain United States tax considerations relevant under current law, which may be subject to change in the future. Except where otherwise indicated, the discussion relates to investors who are individual United States citizens or residents. You should consult your tax adviser for further information regarding federal, state, local and/or foreign tax consequences relevant to your specific situation.
Federal Taxes. The Fund contemplates distributing as dividends each year all or substantially all of its taxable income, including its net capital gain (the excess of net long-term capital gain over net short-term capital loss). Except as otherwise discussed below, you will be subject to federal income tax on Fund distributions regardless of whether they are paid in cash or reinvested in additional shares. Fund distributions attributable to short-term capital gains and net investment income will generally be taxable to you as ordinary income, except as discussed below.
Distributions attributable to the net capital gain of the Fund will be taxable to you as long-term capital gain, no matter how long you have owned your Fund shares. The maximum long-term capital gain rate applicable to individuals, estates, and trusts is currently 15%. You will be notified annually of the tax status of distributions to you.
Distributions of qualifying dividends will also generally be taxable to you at long-term capital gain rates as long as certain requirements are met. In general, if 95% or more of the gross income of the Fund (other than net capital gain) consists of dividends received from domestic corporations or qualified foreign corporations (qualifying dividends), then all distributions paid by the Fund to individual shareholders will be taxed at long-term capital gains rates. But if less than 95% of the gross income of the Fund (other than net capital gain) consists of qualifying dividends, then distributions paid by the Fund to individual shareholders will be qualifying dividends only to the extent they are derived from qualifying dividends earned by the Fund. For the lower rates to apply, you must have owned your Fund shares for at least 61 days during the 121-day period beginning on the date that is 60 days before the Funds ex-dividend date (and the Fund will need to have met a similar holding period requirement with respect to the shares of the corporation paying the qualifying dividend). The amount of the Funds distributions that qualify for this favorable treatment may be reduced as a result of the Funds securities lending activities (if any), a high portfolio turnover rate or investments in debt securities or non-qualified foreign corporations.
Distributions from the Fund will generally be taxable to you in the taxable year in which they are paid, with one exception. Distributions declared by the Fund in October, November or December and paid in January of the following year are taxed as though they were paid on December 31.
A portion of distributions paid by the Fund to shareholders that are corporations may also qualify for the dividends-received deduction for corporations, subject to certain holding period requirements and debt financing limitations.
If you purchase shares just before a distribution, the purchase price will reflect the amount of the upcoming distribution, but you will be taxed on the entire amount of the distribution received, even though, as an economic matter, the distribution simply constitutes a return of capital. This is known as buying into a dividend.
Sales and Exchanges. You will generally recognize taxable gain or loss for federal income tax purposes on a sale, exchange or redemption of your shares, including an exchange for shares of another Simple Alternatives Fund, based on the difference between your tax basis in the shares and the amount you receive for them. Generally, you will recognize long-term capital gain or loss if you have held your Fund shares for over twelve months at the time you dispose of them. (To aid in computing your tax basis, you should retain your account statements for the periods during which you held shares.)
Any loss realized on shares held for six months or less will be treated as a long-term capital loss to the extent of any capital gain dividends that were received on the shares. Additionally, any loss realized on a disposition of shares of the Fund may be disallowed under wash sale rules to the extent the shares disposed of are replaced with other shares of the Fund within a period of 61 days beginning 30 days before and ending 30 days after the shares are disposed of, such as pursuant to a dividend reinvestment in shares of the Fund. If disallowed, the loss will be reflected in an upward adjustment to the basis of the shares acquired.
IRAs and Other Tax-Qualified Plans. The one major exception to the preceding tax principles is that distributions on, and sales, exchanges and redemptions of, shares held in an IRA (or other tax-qualified plan) will not be currently taxable.
Backup Withholding. The Fund may be required in certain cases to withhold and remit to the Internal Revenue Service a percentage of taxable dividends or gross proceeds realized upon sale payable to shareholders who have failed to provide a correct tax identification number in the manner required, or who are subject to withholding by the Internal Revenue Service for failure to properly include on their return payments of taxable interest or dividends, or who have failed to certify to the Fund that they are not subject to backup withholding when required to do so or that they are exempt recipients. The current withholding rate is 28%.
U.S. Tax Treatment of Foreign Shareholders. Generally, nonresident aliens, foreign corporations and other foreign investors are subject to a 30% withholding tax on dividends paid by a U.S. corporation, although the rate may be reduced for an investor that is a qualified resident of a foreign country with an applicable tax treaty with the United States. In the case of a regulated investment company such as the Fund, however, certain categories of dividends are exempt from the 30% withholding tax. These generally include dividends attributable to the Funds net capital gains (the excess of net long-term capital gains over net short-term capital loss) and, for taxable years of the Fund beginning before January 1, 2012, dividends attributable to the Funds interest income from U.S. obligors and dividends attributable to net short-term capital gains of the Fund.
In contrast, if a foreign investor conducts a trade or business in the United States and the investment in the Fund is effectively connected with that trade or business, or a foreign individual investor is present in the United States for 183 days or more in a calendar year, then the foreign investors income from the Fund will generally be subject to U.S. federal income tax at graduated rates in a manner similar to the income of a U.S. citizen or resident.
In addition, beginning January 1, 2014, the Fund will be required to withhold 30% tax on payments to foreign entities that do not meet specified information reporting requirements under the Foreign Account Tax Compliance Act.
Foreign shareholders will generally not be subject to U.S. tax on gains realized on sale, exchange or redemption of shares in the Fund.
All foreign investors should consult their own tax advisors regarding the tax consequences in their country of residence of an investment in the Fund.
State and Local Taxes. You may also be subject to state and local taxes on income and gain from Fund shares. State income taxes may not apply, however, to the portions of the Funds distributions, if any, that are attributable to interest on U.S. government securities. You should consult your tax adviser regarding the tax status of distributions in your state and locality.
Future Tax Treatment. Some of the tax provisions described above are subject to sunset provisions. Specifically, a sunset provision provides that the 15% long-term capital gain rate, the taxation of dividends at the long-term capital gain rate and the backup withholding rate will change after 2012.
More information about taxes is contained in the SAI.
Multi-Class Structure
The Fund also offers I Shares, which are offered directly to institutional investors without distribution fees in a separate prospectus. Shares of each class of the Fund represent equal pro rata interests in the Fund and accrue dividends and calculate NAV and performance quotations in the same manner. The performance of each class is quoted separately due to different actual expenses. The total return on R Shares of the Fund can be expected to differ from the total return on I Shares of the Fund. Information concerning other classes of the Fund can be requested by calling the Fund at 1-866-882-1226 .
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR IN THE FUNDS SAI INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE COMPANY OR BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
S1 Fund
of
The RBB Fund, Inc.
(1-866-882-1226)
www.S1Fund.com
For More Information:
This Prospectus contains important information you should know before you invest. Read it carefully and keep it for future reference. More information about the S1 Fund is available free of charge, upon request, including:
Annual/Semi-Annual Reports
These reports contain additional information about the Funds investments, describe the Funds performance, list portfolio holdings, and discuss recent market conditions and economic trends. The annual report includes fund strategies that significantly affected the Funds performance during its last fiscal year.
When available, the annual and semi-annual reports to shareholders may be obtained by visiting www.S1Fund.com.
Statement of Additional Information
An SAI, dated December 31, 2012 has been filed with the SEC. The SAI, which includes additional information about the Fund, may be obtained free of charge, along with the annual and semi-annual reports, by calling 1-866-882-1226. The SAI, as supplemented from time to time, is incorporated by reference into this prospectus (and is legally part of the prospectus). The SAI is available on the Advisers password-protected website at www.S1Fund.com.
Shareholder Inquiries
Representatives are available to discuss account balance information, mutual fund prospectuses, literature, programs and services available. Hours: 8 a.m. to 6 p.m. (Eastern time) Monday-Friday. Call: 1-866-882-1226 or visit the website of the Adviser at www.S1Fund.com.
Purchases and Redemptions
Call 1-866-882-1226.
Written Correspondence
Street Address:
S1 Fund,
c/o BNY Mellon Investment Servicing (US) Inc., 4400 Computer Drive, Westborough, MA 01581
P.O. Box Address:
S1 Fund,
c/o BNY Mellon Investment Servicing (US) Inc., P.O. Box 9869, Providence, RI 02940
Securities and Exchange Commission
You may also view and copy information about the Company and the Fund, including the SAI, by visiting the SECs Public Reference Room in Washington, DC or the EDGAR Database on the SECs Internet site at www.sec.gov. You may also obtain copies of Fund documents by paying a duplicating fee and sending an electronic request to the following e-mail address: publicinfo@sec.gov, or by sending your written request and a duplicating fee to the SECs Public Reference Section, Washington, DC 20549-1520. You may obtain information on the operation of the public reference room by calling the SEC at (202) 551-8090.
INVESTMENT COMPANY ACT FILE NO.811-05518
STATEMENT OF ADDITIONAL INFORMATION
S1 FUND
a series of THE RBB FUND, INC.
I Shares Ticker Symbol: SONEX
R Shares Ticker Symbol: SONRX
December 31, 2012
Investment Adviser:
SIMPLE ALTERNATIVES, LLC
This Statement of Additional Information (SAI) provides supplementary information pertaining to shares of two classes, I Shares and R Shares (collectively, the Shares), representing interests in the S1 Fund (the Fund) of The RBB Fund, Inc. (the Company). This SAI is not a prospectus and should be read only in conjunction with the Funds I Shares and R Shares Prospectuses dated December 31, 2012 (the Prospectuses). Copies of the Prospectuses and Annual Report may be obtained free of charge by calling toll-free (877) 264-5346. The financial statements and notes contained in the Annual Report are incorporated by reference into this SAI. No other part of the Annual Report is incorporated by reference herein.
TABLE OF CONTENTS
GENERAL INFORMATION |
S-2 |
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INVESTMENT OBJECTIVE AND POLICIES |
S-2 |
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INVESTMENT LIMITATIONS |
S-29 |
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DISCLOSURE OF PORTFOLIO HOLDINGS |
S-30 |
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MANAGEMENT OF THE COMPANY |
S-31 |
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CODE OF ETHICS |
S-38 |
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PROXY VOTING |
S-38 |
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CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES |
S-39 |
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INVESTMENT ADVISORY AND OTHER SERVICES |
S-39 |
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INVESTMENT ADVISER |
S-39 |
|
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INVESTMENT SUB-ADVISERS |
S-40 |
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THE PORTFOLIO MANAGERS |
S-42 |
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ADMINISTRATION AND ACCOUNTING AGREEMENT |
S-49 |
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CUSTODIAN AGREEMENT |
S-50 |
|
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TRANSFER AGENCY AGREEMENT |
S-50 |
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DISTRIBUTION AGREEMENT AND PLAN OF DISTRIBUTION |
S-50 |
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FUND TRANSACTIONS |
S-52 |
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PURCHASE AND REDEMPTION INFORMATION |
S-54 |
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TELEPHONE TRANSACTION PROCEDURES |
S-55 |
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VALUATION OF SHARES |
S-55 |
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TAXES |
S-55 |
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ADDITIONAL INFORMATION CONCERNING COMPANY SHARES |
S-57 |
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MISCELLANEOUS |
S-57 |
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APPENDIX A - DESCRIPTION OF SECURITIES RATINGS |
A-1 |
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APPENDIX B - PROXY VOTING POLICY OF ADVISER |
B-1 |
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APPENDIX C - PROXY VOTING POLICY OF ROARING BLUE LION CAPITAL MANAGEMENT, LLC |
C-1 |
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APPENDIX D - PROXY VOTING POLICY OF COURAGE CAPITAL MANAGEMENT, LLC |
D-1 |
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APPENDIX E - PROXY VOTING POLICY OF LAUREN TEMPLETON CAPITAL MANAGEMENT, LLC |
E-1 |
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APPENDIX F - PROXY VOTING POLICY OF MAERISLAND CAPITAL, LLC |
F-1 |
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APPENDIX G- PROXY VOTING POLICY OF STARWOOD REAL ESTATE SECURITIES, LLC |
G-1 |
GENERAL INFORMATION
The Company is an open-end management investment company currently operating 17 separate portfolios. The Company is registered under the Investment Company Act of 1940, as amended, (the 1940 Act) and was organized as a Maryland corporation on February 29, 1988. This SAI pertains to the I Shares and R Shares of the S1 Fund. Simple Alternatives, LLC (SA or the Adviser), serves as the investment adviser to the Fund.
INVESTMENT OBJECTIVE AND POLICIES
The following supplements the information contained in the Prospectuses concerning the investment objective and policies of the Fund.
The Fund seeks to provide long-term capital appreciation with an emphasis on absolute (positive) returns and low beta to traditional financial market indices such as the S&P 500 ® Index. The Fund may not necessarily invest in all of the instruments or use all of the investment techniques permitted by the Funds Prospectuses and this SAI, or invest in such instruments or engage in such techniques to the full extent permitted by the Funds investment policies and limitations.
Principal Investment Policies and Risks.
Multi-Manager Structure. The Fund is managed by the Adviser and one or more asset managers who are unaffiliated with the Adviser (each a Sub-Adviser and together, the Sub-Advisers). Subject to review by the Funds Board of Directors, the Adviser is responsible for selecting the Funds investment strategies and for allocating and reallocating assets among the Sub-Advisers consistent with the Funds investment objective and strategies. The Adviser is also responsible for recommending to the Board whether an agreement with a Sub-Adviser should be approved, renewed, modified or terminated and for monitoring and evaluating the Sub-Advisers. The Adviser is also responsible for implementing procedures to ensure that each Sub-Adviser complies with the Funds investment objective, strategies and restrictions.
Portfolio Turnover Rate. Portfolio turnover rate is defined under U.S. Securities and Exchange Commission (the SEC) rules as the greater of the value of the securities purchased or securities sold, excluding all securities whose maturities at the time of acquisition were one-year or less, divided by the average monthly value of such securities owned during the year. Based on this definition, instruments with remaining maturities of less than one-year are excluded from the calculation of the portfolio turnover rate. Instruments excluded from the calculation of portfolio turnover generally would include the futures contracts in which the Fund may invest since such contracts generally have remaining maturities of less than one-year. The Fund may at times hold investments in other short-term instruments, such as repurchase agreements, which are excluded for purposes of computing portfolio turnover.
Asset-Backed Securities. The Fund may invest in asset-backed securities, which represent participations in, or are secured by and payable from, pools of assets such as motor vehicle installment sale contracts, installment loan contracts, leases of various types of real and personal property, receivables from revolving credit (credit card) agreements and other categories of receivables. Asset-backed securities may also be collateralized by a portfolio of U.S. government securities but are not direct obligations of the U.S. government, its agencies or instrumentalities. Such asset pools are securitized through the use of privately-formed trusts or special purpose corporations. Payments or distributions of principal and interest on asset-backed securities may be guaranteed up to certain amounts and for a certain time period by a letter of credit or a pool insurance policy issued by a financial institution unaffiliated with the trust or corporation, or other credit enhancements may be present, although privately issued obligations collateralized by a portfolio of privately issued asset-backed securities do not involve any government-related guarantee or insurance. In addition to the risks that are presented by mortgage-backed securities, asset-backed securities generally do not have the benefit of a security interest in collateral that is comparable to mortgage assets. See Mortgage-Backed Securities below for additional information.
Asset-backed securities acquired by the Fund may also include collateralized debt obligations (CDOs). CDOs
include collateralized bond obligations (CBOs) and collateralized loan obligations (CLOs) and other similarly structured securities.
A CBO is a trust or other special purpose entity (SPE) that is typically backed by a diversified pool of fixed-income securities (which may include high risk, below investment grade securities). A CLO is a trust or other SPE that is typically collateralized by a pool of loans, which may include, among others, domestic and non-U.S. senior secured loans, senior unsecured loans, and subordinate corporate loans, including loans that may be rated below investment grade or equivalent unrated loans. Although certain CDOs may receive credit enhancement in the form of a senior-subordinate structure, over-collateralization or bond insurance, such enhancement may not always be present and may fail to protect a Fund against the risk of loss on default of the collateral. Certain CDOs may use derivatives contracts to create synthetic exposure to assets rather than holding such assets directly, which entails the risks of derivative instruments described elsewhere in this SAI. CDOs may charge management fees and administrative expenses, which are in addition to those of the Fund.
For both CBOs and CLOs, the cashflows from the SPE are split into two or more portions, called tranches, varying in risk and yield. The riskiest portion is the equity tranche, which bears the first loss from defaults from the bonds or loans in the SPE and serves to protect the other, more senior tranches from default (though such protection is not complete). Since it is partially protected from defaults, a senior tranche from a CBO or CLO typically has higher ratings and lower yields than its underlying securities, and may be rated investment grade. Despite the protection from the equity tranche, CBO or CLO tranches can experience substantial losses due to actual defaults, increased sensitivity to defaults due to collateral default and disappearance of protecting tranches, market anticipation of defaults, as well as investor aversion to CBO or CLO securities as a class. Interest on certain tranches of a CDO may be paid in kind (paid in the form of obligations of the same type rather than cash), which involves continued exposure to default risk with respect to such payments.
The risks of an investment in a CDO depend largely on the type of the collateral securities and the class of the CDO in which the Fund invests. Normally, CBOs, CLOs and other CDOs are privately offered and sold, and thus are not registered under the securities laws. As a result, investments in CDOs may be characterized by the Fund as illiquid securities. However, an active dealer market may exist for CDOs, allowing a CDO to qualify for Rule 144A transactions. In addition to the normal risks associated with fixed-income securities and asset-backed securities generally discussed elsewhere in this SAI, CDOs carry additional risks including, but not limited to: (i) the possibility that distributions from collateral securities will not be adequate to make interest or other payments; (ii) the quality of the collateral may decline in value or default; (iii) a Fund may invest in tranches of CDOs that are subordinate to other tranches; (iv) the complex structure of the security may not be fully understood at the time of investment and may produce disputes with the issuer or unexpected investment results; and (v) the CDOs manager may perform poorly or default.
Commodity-Linked Investments. The Fund may attempt to provide exposure to the returns of real assets that trade in the commodity markets without direct investment in physical commodities. Real assets include oil, gas, industrial and precious metals, livestock, and agricultural or meat products, or other items that have tangible properties. Commodity-linked derivative instruments include commodity index-linked securities and other derivative instruments that provide exposure to the investment returns of the commodities markets. Commodity-linked investments may be more volatile and less liquid than the underlying instruments and their value may be affected by the performance of commodities as well as weather, tax, and other regulatory or political developments, overall market movements and other factors affecting the value of particular industries or commodities, such as disease, embargoes, acts of war or terrorism.
The Fund may invest in commodity-linked derivative instruments such as commodity-linked structured notes. The Fund may invest in commodity-linked notes that pay a return linked to the performance of a commodities index or basket of futures contracts with respect to all of the commodities in an index. In some cases, the return will be based on some multiple of the performance of the index, and this embedded leverage will magnify the positive and negative return the Fund earns from these notes as compared to the index. The principal and/or interest payments of commodity-linked derivatives are tied to the value of a real asset or commodity index. Structured notes may be structured by the issuer and the purchaser of the note. The notes are derivative debt instruments with principal
payments generally linked to the value of commodities, commodity futures contracts or the performance of commodity indices and interest and coupon payments pegged to a market-based interest rate, such as LIBOR or a banks prime rate. The value of these notes will rise or fall in response to changes in the underlying commodity or related index or investment. These notes expose the Fund economically to movements in commodity prices.
Corporate Obligations. The Fund may invest in debt obligations, such as bonds and debentures, issued by corporations and other business organizations without limit on credit quality or maturity of debt securities. See Appendix A to this SAI for a description of corporate debt ratings. An issuer of debt obligations may default on its obligation to pay interest and repay principal. Also, changes in the financial strength of an issuer or changes in the credit rating of a security may affect its value.
Equity Securities. Equity securities represent ownership interests in a company and consist of common stocks, preferred stocks, warrants to acquire common stock, and securities convertible into common stock. Investments in equity securities in general are subject to market risks that may cause their prices to fluctuate over time. Fluctuations in the value of equity securities in which the Fund invests will cause the net asset value of the Fund to fluctuate. The Fund purchases equity securities traded in the U.S. on registered exchanges or the over-the-counter market. Equity securities are described in more detail below:
· Common Stock. Common stock represents an equity or ownership interest in an issuer. In the event an issuer is liquidated or declares bankruptcy, the claims of owners of bonds and preferred stock take precedence over the claims of those who own common stock.
· Preferred Stock. Preferred stock represents an equity or ownership interest in an issuer that pays dividends at a specified rate and that has precedence over common stock in the payment of dividends. In the event an issuer is liquidated or declares bankruptcy, the claims of owners of bonds take precedence over the claims of those who own preferred and common stock.
· Warrants. Warrants are instruments that entitle the holder to buy an equity security at a specific price for a specific period of time. Changes in the value of a warrant do not necessarily correspond to changes in the value of its underlying security. The price of a warrant may be more volatile than the price of its underlying security, and a warrant may offer greater potential for capital appreciation as well as capital loss. Warrants do not entitle a holder to dividends or voting rights with respect to the underlying security and do not represent any rights in the assets of the issuing company. A warrant ceases to have value if it is not exercised prior to its expiration date. These factors can make warrants more speculative than other types of investments.
· Convertible Securities. Convertible securities are bonds, debentures, notes, preferred stocks or other securities that may be converted or exchanged (by the holder or by the issuer) into shares of the underlying common stock (or cash or securities of equivalent value) at a stated exchange ratio. A convertible security may also be called for redemption or conversion by the issuer after a particular date and under certain circumstances (including a specified price) established upon issue. If a convertible security held by the Fund is called for redemption or conversion, the Fund could be required to tender it for redemption, convert it into the underlying common stock, or sell it to a third party.
Convertible securities generally have less potential for gain or loss than common stocks. Convertible securities generally provide yields higher than the underlying common stocks, but generally lower than comparable non-convertible securities. Because of this higher yield, convertible securities generally sell at a price above their conversion value, which is the current market value of the stock to be received upon conversion. The difference between this conversion value and the price of convertible securities will vary over time depending on changes in the value of the underlying common stocks and interest rates. When the underlying common stocks decline in value, convertible securities will tend not to decline to the same extent because of the interest or dividend payments and the repayment of principal at maturity for certain types of convertible securities. However, securities that are convertible other than at the option of the holder generally do not limit the potential for loss to the same extent as securities convertible at the option of the holder. When the underlying common stocks rise in value, the value of convertible securities may also be expected to increase. At the same time, however, the
difference between the market value of convertible securities and their conversion value will narrow, which means that the value of convertible securities will generally not increase to the same extent as the value of the underlying common stocks. Because convertible securities may also be interest-rate sensitive, their value may increase as interest rates fall and decrease as interest rates rise. Convertible securities are also subject to credit risk, and are often lower-quality securities.
· Small and Medium Capitalization Issuers. Investing in equity securities of small and medium capitalization companies often involves greater risk than is customarily associated with investments in larger capitalization companies. This increased risk may be due to the greater business risks of smaller size, limited markets and financial resources, narrow product lines and frequent lack of depth of management. The securities of smaller companies are often traded in the over-the-counter market and even if listed on a national securities exchange may not be traded in volumes typical for that exchange. Consequently, the securities of smaller companies are less likely to be liquid, may have limited market stability, and may be subject to more abrupt or erratic market movements than securities of larger, more established growth companies or the market averages in general.
Foreign Securities. The Fund may invest in securities of foreign issuers that are denominated or traded in foreign currencies. The Fund may also invest in securities of foreign issuers that are traded or denominated in U.S. dollars (including equity securities of foreign issuers trading in U.S. markets) through American Depositary Receipts (ADRs), Global Depositary Receipts (GDRs), European Depositary Receipts (EDRs) or International Depositary Receipts (IDRs). ADRs are securities, typically issued by a U.S. financial institution (a depository), that evidence ownership interests in a security or pool of securities issued by a foreign issuer and deposited with the depository. ADRs may be listed on a national securities exchange or may trade in the over-the-counter market. ADR prices are denominated in U.S. dollars; the underlying security may be denominated in a foreign currency. GDRs, EDRs and IDRs are securities that represent ownership interests in a security or pool of securities issued by a non-U.S. or U.S. corporation. Depositary receipts may be available through sponsored or unsponsored facilities. A sponsored facility is established jointly by the issuer of the security underlying the receipt and the depository, whereas an unsponsored facility is established by the depository without participation by the issuer of the underlying security. Holders of unsponsored depositary receipts generally bear all of the costs of the unsponsored facility. The depository of an unsponsored facility is frequently under no obligation to distribute shareholder communications received from the issuer of the deposited security or to pass through, to the holders of the receipts, voting rights with respect to the deposited securities. The depository of unsponsored depositary receipts may provide less information to receipt holders. Investments in depositary receipts do not eliminate the risks in investing in foreign issuers. The underlying security may be subject to foreign government taxes, which would reduce the yield on such securities.
Investments in foreign securities involve higher costs than investments in U.S. securities, including higher transaction costs as well as the imposition of additional taxes by foreign governments. In addition, foreign investments may include additional risks associated with currency exchange rates, less complete financial information about the issuers, less market liquidity and political stability. Volume and liquidity in most foreign bond markets are less than in the United States and, at times, volatility or price can be greater than in the United States. Future political and economic information, the possible imposition of withholding taxes on interest income, the possible seizure or nationalization of foreign holdings, the possible establishment of exchange controls, or the adoption of other governmental restrictions, might adversely affect the payment of principal and interest on foreign obligations. Inability to dispose of Fund securities due to settlement problems could result either in losses to the Fund due to subsequent declines in value of the securities, or, if the Fund has entered into a contract to sell the securities, could result in possible liability to the purchaser. Individual foreign economies may differ favorably or unfavorably from the U.S. economy in such respects as growth or gross national product, rate of inflation, capital reinvestment, resource self-sufficiency and balance of payments position.
Fixed commissions on foreign securities exchanges are generally higher than negotiated commissions on U.S. exchanges, although the Fund endeavors to achieve the most favorable net results on their portfolio transactions. There is generally less government supervision and regulation of securities exchanges, brokers, dealers and listed companies than in the United States.
Settlement mechanics ( e.g. , mail service between the United States and foreign countries) may be slower or less
reliable than within the United States, thus increasing the risk of delayed settlements of portfolio transactions or loss of certificates for portfolio securities. Foreign markets also have different clearance and settlement procedures, and in certain markets there have been times when settlements have been unable to keep pace with the volume of securities transactions, making it difficult to conduct such transactions. Such delays in settlement could result in temporary periods when a portion of the assets of the Fund is uninvested and no return is earned thereon. The inability of the Fund to make intended security purchases due to settlement problems could cause the Fund to miss attractive investment opportunities.
Although the Fund may invest in securities denominated in foreign currencies, the Fund values its securities and other assets in U.S. dollars. As a result, the NAV of the Funds shares may fluctuate with U.S. dollar exchange rates as well as the price changes of the Funds securities in the various local markets and currencies. Thus, an increase in the value of the U.S. dollar compared to the currencies in which the Fund makes its investments could reduce the effect of increases and magnify the effect of decreases in the price of the Funds securities in their local markets. Conversely, a decrease in the value of the U.S. dollar may have the opposite effect of magnifying the effect of increases and reducing the effect of decreases in the prices of the Funds securities in its foreign markets. In addition to favorable and unfavorable currency exchange rate developments, the Fund is subject to the possible imposition of exchange control regulations or freezes on convertibility of currency. The Fund may invest in obligations of foreign branches of U.S. banks (Eurodollars) and U.S. branches of foreign banks (Yankee dollars) as well as foreign branches of foreign banks. These investments involve risks that are different from investments in securities of U.S. banks, including potential unfavorable political and economic developments, different tax provisions, seizure of foreign deposits, currency controls, interest limitations or other governmental restrictions which might affect payment of principal or interest. The Fund may also invest in Yankee bonds, which are issued by foreign governments and their agencies and foreign corporations but pay interest in U.S. dollars and are typically issued in the United States.
Forward Foreign Currency Transactions. The Fund may, to the extent that it invests in foreign securities, enter into forward foreign currency exchange contracts in order to protect against uncertainty in the level of future foreign currency exchange rates. The Fund will conduct its foreign currency exchange transactions either on a spot ( i.e. , cash) basis at the spot rate prevailing in the foreign currency exchange market, or through entering into forward contracts to purchase or sell foreign currencies. A forward foreign currency exchange contract involves an obligation to purchase or sell a specific currency at a future date, which may be any fixed number of days (usually less than one year) from the date of the contract agreed upon by the parties, at a price set at the time of the contract. These contracts are traded in the interbank market conducted directly between traders (usually large commercial banks) and their customers. A forward contract generally has no deposit requirement, and no commissions are charged at any stage for trades. Although foreign exchange dealers do not charge a fee for conversion, they do realize a profit based on the difference (the spread) between the price at which they are buying and selling various currencies.
The Fund is permitted to enter into forward contracts under two circumstances. First, when the Fund enters into a contract for the purchase or sale of a security quoted or denominated in a foreign currency, it may desire to lock in the U.S. dollar price of the security. By entering into a forward contract for the purchase or sale, for a fixed number of U.S. dollars, of the amount of foreign currency involved in the underlying security transactions, the Fund will be able to insulate itself from a possible loss resulting from a change in the relationship between the U.S. dollar and the subject foreign currency during the period between the date on which the security is purchased or sold and the date on which payment is made or received.
Second, when the Adviser or Sub-Adviser, as applicable, believes that the currency of a particular foreign country may suffer a substantial decline against the U.S. dollar, it may cause the Fund to enter a forward contract to sell, for a fixed U.S. dollar amount, the amount of foreign currency approximating the value of some or all of the Funds portfolio securities quoted or denominated in such foreign currency. The precise matching of the forward contract amounts and the value of the securities involved will not generally be possible since the future value of such securities in foreign currencies will change as a consequence of market movements in the value of those securities between the date the forward contract is entered into and the date it matures.
Although the Fund has no current intention to do so, it may engage in cross-hedging by using forward contracts in one currency to hedge against fluctuations in the value in securities denominated or quoted in a different currency if the
Adviser or Sub-Adviser, as applicable, determines that there is a pattern of correlation between the two currencies. Cross-hedging may also include entering into a forward transaction involving two foreign currencies, using one foreign currency as a proxy for the U.S. dollar to hedge against variations in the other U.S. foreign currency, if the Adviser or Sub-Adviser, as applicable, determines that there is a pattern of correlation between the proxy currency and the U.S. dollar.
The Fund will not enter into forward contracts to sell currency or maintain a net exposure to such contracts if the consummation of such contracts would obligate the Fund to deliver an amount of foreign currency in excess of the value of the Funds respective portfolio securities or other assets quoted or denominated in that currency. At the consummation of the forward contract, the Fund may either make delivery of the foreign currency or terminate its contractual obligation by purchasing an offsetting contract obligating it to purchase at the same maturity date, the same amount of such foreign currency. If the Fund chooses to make delivery of foreign currency, it may be required to obtain such delivery through the sale of portfolio securities quoted or denominated in such currency or through conversion of other assets of the Fund into such currency. If the Fund engages in an offsetting transaction, the Fund will realize a gain or a loss to the extent that there has been a change in forward contract prices. Closing purchase transactions with respect to forward contracts are usually effected with the currency trader who is a party to the original forward contract.
The Funds transactions in forward contracts will be limited to those described above. Of course, the Fund is not required to enter into such transactions with regard to its foreign currency quoted or denominated securities, and the Fund will not do so unless deemed appropriate by the Adviser or Sub-Adviser, as applicable.
When entering into a forward contract, the Fund will segregate either cash or liquid securities quoted or denominated in any currency in an amount equal to the value of the Funds total assets committed to the consummation of forward currency exchange contracts which require the Fund to purchase a foreign currency. If the value of the segregated securities declines, additional cash or securities will be segregated by the Fund on a daily basis so that the value of the segregated securities will equal the amount of the Funds commitments with respect to such contracts.
This method of protecting the value of the Funds portfolio securities against a decline in the value of a currency does not eliminate fluctuations in the underlying prices of the securities. It simply establishes a rate of exchange which can be achieved at some future point in time. The precise projection of short-term currency market movements is not possible, and short-term hedging provides a means of fixing the U.S. dollar value of only a portion of the Funds foreign assets. It also reduces any potential gain which may have otherwise occurred had the currency value increased above the settlement price of the contract.
While the Fund may enter into forward contracts to seek to reduce currency exchange rate risks, transactions in such contracts involve certain other risks. Thus, while the Fund may benefit from such transactions, unanticipated changes in currency prices may result in a poorer overall performance for the Fund than if it had not engaged in any such transactions. Moreover, there may be imperfect correlation between the Funds portfolio holdings or securities quoted or denominated in a particular currency and forward contracts entered into by the Fund. Such imperfect correlation may cause the Fund to sustain losses, which will prevent the Fund from achieving a complete hedge, or expose the Fund to the risk of foreign exchange loss.
Forward contracts are subject to the risks that the counterparty to such contract will default on its obligations. Since a forward foreign currency exchange contract is not guaranteed by an exchange or clearing house, a default on the contract would deprive the Fund of unrealized profits, transaction costs or the benefits of a currency hedge or force the Fund to cover its purchase or sale commitments, if any, at the current market price.
The Funds foreign currency transactions (including related options, futures and forward contracts) may be limited by the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the Code), for qualification as a regulated investment company.
Futures And Options On Futures. Futures contracts provide for the future sale by one party and purchase by another party of a specified amount of a specific security at a specified future time and at a specified price. An option
on a futures contract gives the purchaser the right, in exchange for a premium, to assume a position in a futures contract at a specified exercise price during the term of the option. The Fund will reduce the risk that it will be unable to close out a futures contract by only entering into futures contracts that are traded on a national futures exchange regulated by the Commodities Futures Trading Commission (CFTC). The Fund may use futures contracts and related options for: bona fide hedging; attempting to offset changes in the value of securities held or expected to be acquired or be disposed of; attempting to minimize fluctuations in foreign currencies; attempting to gain exposure to a particular market, index or instrument; or other risk management purposes. To the extent futures and/or options on futures are employed by the Fund, such use will be in accordance with Rule 4.5 of the Commodity Exchange Act (CEA). The Company, on behalf of the Fund, has filed a notice of eligibility for exclusion from the definition of the term commodity pool operator in accordance with Rule 4.5 and therefore, the Fund is not subject to registration or regulation as a commodity pool operator under the CEA. The CFTC has proposed rulemaking which, if enacted, could limit or eliminate exclusions relied on by the Fund.
An index futures contract is a bilateral agreement pursuant to which two parties agree to take or make delivery of an amount of cash equal to a specified dollar amount times the difference between the index value at the close of trading of the contract and the price at which the futures contract is originally struck. No physical delivery of the securities comprising the index is made; generally contracts are closed out prior to the expiration date of the contract.
When the Fund purchases or sells a futures contract, or sells an option thereon, the Fund is required to cover its position in order to limit leveraging and related risks. To cover its position, the Fund may segregate (and mark-to-market on a daily basis) cash or liquid securities that, when added to any amounts deposited with a futures commission merchant as margin, are equal to the market value of the futures contract or otherwise cover its position in a manner consistent with the 1940 Act or the rules and SEC interpretations thereunder. The segregated account functions as a practical limit on the amount of leverage which the Fund may undertake and on the potential increase in the speculative character of the Funds outstanding portfolio securities. Additionally, such segregated accounts will generally assure the availability of adequate funds to meet the obligations of the Fund arising from such investment activities.
The Fund may also cover its long position in a futures contract by purchasing a put option on the same futures contract with a strike price (i.e., an exercise price) as high or higher than the price of the futures contract. In the alternative, if the strike price of the put is less than the price of the futures contract, the Fund will segregate cash or liquid securities equal in value to the difference between the strike price of the put and the price of the futures contract. The Fund may also cover its long position in a futures contract by taking a short position in the instruments underlying the futures contract, or by taking positions in instruments with prices which are expected to move relatively consistently with the futures contract. The Fund may cover its short position in a futures contract by taking a long position in the instruments underlying the futures contracts, or by taking positions in instruments with prices which are expected to move relatively consistently with the futures contract.
The Fund may cover its sale of a call option on a futures contract by taking a long position in the underlying futures contract at a price less than or equal to the strike price of the call option. In the alternative, if the long position in the underlying futures contract is established at a price greater than the strike price of the written (sold) call, the Fund will maintain in a segregated account cash or liquid securities equal in value to the difference between the strike price of the call and the price of the futures contract. The Fund may also cover its sale of a call option by taking positions in instruments with prices which are expected to move relatively consistently with the call option. The Fund may cover its sale of a put option on a futures contract by taking a short position in the underlying futures contract at a price greater than or equal to the strike price of the put option, or, if the short position in the underlying futures contract is established at a price less than the strike price of the written put, the Fund will maintain in a segregated account cash or liquid securities equal in value to the difference between the strike price of the put and the price of the futures contract. The Fund may also cover its sale of a put option by taking positions in instruments with prices which are expected to move relatively consistently with the put option.
There are significant risks associated with the Funds use of futures contracts and related options, including the following: (1) the success of a hedging strategy may depend on the Advisers or Sub-Advisers ability to predict movements in the prices of individual securities, fluctuations in markets and movements in interest rates; (2) there
may be an imperfect or no correlation between the changes in market value of the securities held by the Fund and the prices of futures and options on futures; (3) there may not be a liquid secondary market for a futures contract or option; (4) trading restrictions or limitations may be imposed by an exchange; and (5) government regulations may restrict trading in futures contracts and options on futures. In addition, some strategies reduce the Funds exposure to price fluctuations, while others tend to increase its market exposure.
Credit Default Swaps, Interest Rate Swaps, Mortgage Swaps, Currency Swaps, Total Return Swaps, Options on Swaps and Interest Rate Caps, Floors and Collars. The Fund may enter into credit default, interest rate and total return swaps. The Fund may also enter into interest rate caps, floors and collars. In addition, the Fund may enter into mortgage swaps and currency swaps.
The Fund may enter into swap transactions for hedging purposes or to seek to increase total return. As examples, the Fund may enter into swap transactions for the purpose of attempting to obtain or preserve a particular return or spread at a lower cost than obtaining a return or spread through purchases and/or sales of instruments in other markets, to protect against currency fluctuations, as a duration management technique, to protect against any increase in the price of securities the Fund anticipates purchasing at a later date, or to gain exposure to certain markets in an economical way.
Swap agreements are two party contracts entered into primarily by institutional investors. In a standard swap transaction, two parties agree to exchange the returns (or differentials in rates of return) earned or realized on particular predetermined investments or instruments, which may be adjusted for an interest factor. The gross returns to be exchanged or swapped between the parties are generally calculated with respect to a notional amount, i.e., the return on or increase in value of a particular dollar amount invested at a particular interest rate, in a particular foreign currency or security, or in a basket of securities representing a particular index. As examples, credit default swaps involve the receipt of floating or fixed rate payments in exchange for assuming potential credit losses of an underlying security. Credit default swaps give one party to a transaction the right to dispose of or acquire an asset (or group of assets), or the right to receive from or make a payment to the other party, upon the occurrence of specified credit events. Interest rate swaps involve the exchange by the Fund with another party of their respective commitments to pay or receive interest, such as an exchange of fixed-rate payments for floating rate payments. Mortgage swaps are similar to interest rate swaps in that they represent commitments to pay and receive interest. The notional principal amount, however, is tied to a reference pool or pools of mortgages. Currency swaps involve the exchange of the parties respective rights to make or receive payments in specified currencies. Total return swaps are contracts that obligate a party to pay or receive interest in exchange for payment by the other party of the total return generated by a security, a basket of securities, an index, or an index component.
The purchase of an interest rate cap entitles the purchaser, to the extent that a specified index exceeds a predetermined interest rate, to receive payment of interest on a notional principal amount from the party selling such interest rate cap. The purchase of an interest rate floor entitles the purchaser, to the extent that a specified index falls below a predetermined interest rate, to receive payments of interest on a notional principal amount from the party selling the interest rate floor. An interest rate collar is the combination of a cap and a floor that preserves a certain return within a predetermined range of interest rates.
A great deal of flexibility is possible in the way swap transactions are structured. However, generally the Fund will enter into credit default, interest rate, total return and mortgage swaps on a net basis, which means that the two payment streams are netted out, with the Fund receiving or paying, as the case may be, only the net amount of the two payments. Credit default, interest rate, total return and mortgage swaps do not normally involve the delivery of securities, other underlying assets or principal. Accordingly, the risk of loss with respect to credit default, interest rate, total return and mortgage swaps is normally limited to the net amount of payments that the Fund is contractually obligated to make. If the other party to a credit default, interest rate, total return or mortgage swap defaults, the Funds risk of loss consists of the net amount of payments that the Fund is contractually entitled to receive, if any. In contrast, currency swaps may involve the delivery of the entire principal amount of one designated currency in exchange for the other designated currency. Therefore, the entire principal value of a currency swap is subject to the risk that the other party to the swap will default on its contractual delivery obligations.
A credit default swap may have as reference obligations one or more securities that may, or may not, be currently held by the Fund. The protection buyer in a credit default swap is generally obligated to pay the protection seller an upfront or a periodic stream of payments over the term of the swap provided that no credit event, such as a default, on a reference obligation has occurred. If a credit event occurs, the seller generally must pay the buyer the par value (full notional value) of the swap in exchange for an equal face amount of deliverable obligations of the reference entity described in the swap, or the seller may be required to deliver the related net cash amount, if the swap is cash settled. The Fund may be either the buyer or seller in the transaction. If the Fund is a buyer and no credit event occurs, the Fund may recover nothing if the swap is held through its termination date. However, if a credit event occurs, the buyer generally may elect to receive the full notional value of the swap in exchange for an equal face amount of deliverable obligations of the reference entity whose value may have significantly decreased. As a seller, the Fund generally receives an upfront payment or a rate of income throughout the term of the swap provided that there is no credit event. As the seller, a Fund would effectively add leverage to its portfolio because, in addition to its total net assets, the Fund would be subject to investment exposure on the notional amount of the swap. If a credit event occurs, the value of any deliverable obligation received by the Fund as seller, coupled with the upfront or periodic payments previously received, may be less than the full notional value it pays to the buyer, resulting in a loss of value to the Fund.
To the extent that the Funds exposure in a transaction involving a swap or an interest rate floor, cap or collar is covered by the segregation of cash or liquid assets, or is covered by other means in accordance with SEC guidance, the Fund and the Adviser believe that the transactions do not constitute senior securities under the Act and, accordingly, will not treat them as being subject to the Funds borrowing restrictions.
The Fund will not enter into any credit default, interest rate, total return or mortgage swap transactions unless the unsecured commercial paper, senior debt or claims-paying ability of the other party thereto is rated investment grade by S&Ps or Moodys, or, if unrated by such rating organization, determined to be of comparable quality by the Adviser or applicable Sub-Adviser. If there is a default by the other party to such a transaction, the Fund will have contractual remedies pursuant to the agreements related to the transaction.
The use of credit default, interest rate, mortgage, total return and currency swaps, as well as interest rate caps, floors and collars, is a highly specialized activity which involves investment techniques and risks different from those associated with ordinary portfolio securities transactions. The use of a swap requires an understanding not only of the referenced asset, reference rate, or index but also of the swap itself, without the benefit of observing the performance of the swap under all possible market conditions. If the Adviser or applicable Sub-Adviser is incorrect in its forecasts of market values, credit quality, interest rates and currency exchange rates, the investment performance of the Fund would be less favorable than it would have been if these investment instruments were not used.
Investing in Emerging Countries, including Asia and Eastern Europe. The Fund may invest in securities of issuers located in emerging countries. The securities markets of emerging countries are less liquid and subject to greater price volatility, and have a smaller market capitalization, than the U.S. securities markets. In certain countries, there may be fewer publicly traded securities and the market may be dominated by a few issues or sectors. Issuers and securities markets in such countries are not subject to as extensive and frequent accounting, financial and other reporting requirements or as comprehensive government regulations as are issuers and securities markets in the U.S. In particular, the assets and profits appearing on the financial statements of emerging country issuers may not reflect their financial position or results of operations in the same manner as financial statements for U.S. issuers. Substantially less information may be publicly available about emerging country issuers than is available about issuers in the United States.
Emerging country securities markets are typically marked by a high concentration of market capitalization and trading volume in a small number of issuers representing a limited number of industries, as well as a high concentration of ownership of such securities by a limited number of investors. The markets for securities in certain emerging countries are in the earliest stages of their development. Even the markets for relatively widely traded securities in emerging countries may not be able to absorb, without price disruptions, a significant increase in trading volume or trades of a size customarily undertaken by institutional investors in the securities markets of developed countries. The limited size of many of these securities markets can cause prices to be erratic for reasons apart from factors that affect the soundness and competitiveness of the securities issuers. For example, prices may be unduly influenced by traders
who control large positions in these markets. Additionally, market making and arbitrage activities are generally less extensive in such markets, which may contribute to increased volatility and reduced liquidity of such markets. The limited liquidity of emerging country securities may also affect the Funds ability to accurately value its portfolio securities or to acquire or dispose of securities at the price and time it wishes to do so or in order to meet redemption requests.
With respect to investments in certain emerging market countries, antiquated legal systems may have an adverse impact on the Fund. For example, while the potential liability of a shareholder in a U.S. corporation with respect to acts of the corporation is generally limited to the amount of the shareholders investment, the notion of limited liability is less clear in certain emerging market countries. Similarly, the rights of investors in emerging market companies may be more limited than those of shareholders in U.S. corporations.
Transaction costs, including brokerage commissions or dealer mark-ups, in emerging countries may be higher than in the United States and other developed securities markets. In addition, existing laws and regulations are often inconsistently applied. As legal systems in emerging countries develop, foreign investors may be adversely affected by new or amended laws and regulations. In circumstances where adequate laws exist, it may not be possible to obtain swift and equitable enforcement of the law.
Foreign investment in the securities markets of certain emerging countries is restricted or controlled to varying degrees. These restrictions may limit the Funds investment in certain emerging countries and may increase the expenses of the Fund. Certain emerging countries require governmental approval prior to investments by foreign persons or limit investment by foreign persons to only a specified percentage of an issuers outstanding securities or a specific class of securities which may have less advantageous terms (including price) than securities of the company available for purchase by nationals. In addition, the repatriation of both investment income and capital from emerging countries may be subject to restrictions which require governmental consents or prohibit repatriation entirely for a period of time. Even where there is no outright restriction on repatriation of capital, the mechanics of repatriation may affect certain aspects of the operation of the Fund. The Fund may be required to establish special custodial or other arrangements before investing in certain emerging countries.
Emerging countries may be subject to a substantially greater degree of economic, political and social instability and disruption than is the case in the United States, Japan and most Western European countries. This instability may result from, among other things, the following: (i) authoritarian governments or military involvement in political and economic decision making, including changes or attempted changes in governments through extra-constitutional means; (ii) popular unrest associated with demands for improved political, economic or social conditions; (iii) internal insurgencies; (iv) hostile relations with neighboring countries; (v) ethnic, religious and racial disaffection or conflict; and (vi) the absence of developed legal structures governing foreign private investments and private property. Such economic, political and social instability could disrupt the principal financial markets in which the Fund may invest and adversely affect the value of the Funds assets. The Funds investments can also be adversely affected by any increase in taxes or by political, economic or diplomatic developments.
The Fund may seek investment opportunities within former east bloc countries in Eastern Europe. Most Eastern European countries had a centrally planned, socialist economy for a substantial period of time. The governments of many Eastern European countries have more recently been implementing reforms directed at political and economic liberalization, including efforts to decentralize the economic decision-making process and move towards a market economy. However, business entities in many Eastern European countries do not have an extended history of operating in a market-oriented economy, and the ultimate impact of Eastern European countries attempts to move toward more market-oriented economies is currently unclear. In addition, any change in the leadership or policies of Eastern European countries may halt the expansion of or reverse the liberalization of foreign investment policies now occurring and adversely affect existing investment opportunities.
The economies of emerging countries may differ unfavorably from the U.S. economy in such respects as growth of gross domestic product, rate of inflation, capital reinvestment, resources, self-sufficiency and balance of payments. Many emerging countries have experienced in the past, and continue to experience, high rates of inflation. In certain countries inflation has at times accelerated rapidly to hyperinflationary levels, creating a negative interest rate
environment and sharply eroding the value of outstanding financial assets in those countries. Other emerging countries, on the other hand, have recently experienced deflationary pressures and are in economic recessions. The economies of many emerging countries are heavily dependent upon international trade and are accordingly affected by protective trade barriers and the economic conditions of their trading partners. In addition, the economies of some emerging countries are vulnerable to weakness in world prices for their commodity exports. The Funds income and, in some cases, capital gains from foreign stocks and securities will be subject to applicable taxation in certain of the countries in which it invests, and treaties between the U.S. and such countries may not be available in some cases to reduce the otherwise applicable tax rates. See Taxes.
Foreign markets also have different clearance and settlement procedures, and in certain markets there have been times when settlements have been unable to keep pace with the volume of securities transactions, making it difficult to conduct such transactions. Such delays in settlement could result in temporary periods when a portion of the assets of the Fund remain uninvested and no return is earned on such assets. The inability of the Fund to make intended security purchases or sales due to settlement problems could result either in losses to the Fund due to subsequent declines in value of the portfolio securities or, if the Fund has entered into a contract to sell the securities, could result in possible liability to the purchaser.
Investment Company Shares. The Fund may invest in shares of other investment companies to the extent permitted by applicable law and subject to certain restrictions. These investment companies typically incur fees that are separate from those fees incurred directly by the Fund. The Funds purchase of such investment company securities results in the layering of expenses, such that shareholders would indirectly bear a proportionate share of the operating expenses of such investment companies, including advisory fees, in addition to paying the Funds expenses. Unless an exception is available, Section 12(d)(1)(A) of the 1940 Act prohibits a fund from (i) acquiring more than 3% of the voting shares of any one investment company, (ii) investing more than 5% of its total assets in any one investment company, and (iii) investing more than 10% of its total assets in all investment companies combined, including its ETF investments.
For hedging or other purposes, the Fund may invest in investment companies that seek to track the composition and/or performance of specific indexes or portions of specific indexes. Certain of these investment companies, known as exchange-traded funds, are traded on a securities exchange. The market prices of index-based investments will fluctuate in accordance with changes in the underlying portfolio securities of the investment company and also due to supply and demand of the investment companys shares on the exchange upon which the shares are traded. Index-based investments may not replicate or otherwise match the composition or performance of their specified index due to transaction costs, among other things.
Pursuant to orders issued by the SEC to each of certain exchange-traded funds (collectively, the ETFs) and procedures approved by the Board, the Fund may invest in the ETFs in excess of the limits described above, provided that the Fund has described the ETF investments in its prospectus and otherwise complies with the conditions of the SEC, as it may be amended, and any other applicable investment limitations. Neither the ETFs nor their investment advisers make any representations regarding the advisability of investing in the ETFs.
Mortgage-Backed Securities. The Fund may invest in mortgage pass-through certificates and multiple-class pass-through securities, such as real estate mortgage investment conduits (REMIC), pass-through certificates and collateralized mortgage obligations (CMOs).
Guaranteed mortgage pass-through securities represent participation interests in pools of residential mortgage loans and are issued by U.S. governmental or private lenders and guaranteed by the U.S. government or one of its agencies or instrumentalities, including but not limited to the Government National Mortgage Association (Ginnie Mae), the Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (Freddie Mac). Ginnie Mae certificates are guaranteed by the full faith and credit of the U.S. government for timely payment of principal and interest on the certificates. Fannie Mae and Freddie Mac certificates are not backed by the full faith and credit of the U.S. government. Fannie Mae certificates are guaranteed by Fannie Mae, a federally chartered and privately owned corporation, for full and timely payment of principal and interest on the certificates. Fannie Mae is authorized to borrow from the U.S. Treasury to meet its obligations. Freddie Mac certificates are guaranteed by
Freddie Mac, a corporate instrumentality of the U.S. government, for timely payment of interest and the ultimate collection of all principal of the related mortgage loans.
In September 2008, the U.S. Treasury Department and the Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac would be placed in conservatorship under the FHFA. On June 16, 2010, FHFA ordered Fannie Maes and Freddie Macs stock de-listed from the New York Stock Exchange after the price of common stock in Fannie Mae fell below the New York Stock Exchanges minimum average closing price of $1 for more than 30 days. The effect that this conservatorship will have on Fannie Mae and Freddie Macs debt and equity and on securities guaranteed by Fannie Mae and Freddie Mac is unclear.
There is risk that the U.S. Government will not provide financial support to its agencies, authorities, instrumentalities or sponsored enterprises. A Fund may purchase U.S. Government securities that are not backed by the full faith and credit of the United States, such as those issued by Fannie Mae and Freddie Mac. The maximum potential liability of the issuers of some U.S. Government securities held by a Fund may greatly exceed their current resources, including their legal right to support from the U.S. Treasury. It is possible that these issuers will not have the funds to meet their payment obligations in the future.
CMOs and REMIC pass-through or participation certificates may be issued by, among others, U.S. government agencies and instrumentalities as well as private lenders. CMOs and REMIC certificates are issued in multiple classes and the principal of and interest on the mortgage assets may be allocated among the several classes of CMOs or REMIC certificates in various ways. Each class of CMOs or REMIC certificates, often referred to as a tranche, is issued at a specific adjustable or fixed interest rate and must be fully retired no later than its final distribution date. Generally, interest is paid or accrues on all classes of CMOs or REMIC certificates on a monthly basis.
Typically, CMOs are collateralized by Ginnie Mae, Fannie Mae or Freddie Mac certificates but also may be collateralized by other mortgage assets such as whole loans or private mortgage pass-through securities. Debt service on CMOs is provided from payments of principal and interest on collateral of mortgaged assets and any reinvestment income thereon.
A REMIC is a CMO that qualifies for special tax treatment under the Code and invests in certain mortgages primarily secured by interests in real property and other permitted investments. Investors may purchase regular and residual interest shares of beneficial interest in REMIC trusts, although the Fund does not intend to invest in residual interests.
The Fund may invest in mortgage-backed securities issued by trusts or other entities formed or sponsored by private originators of and institutional investors in mortgage loans and other non-governmental entities (or representing custodial arrangements administered by such institutions). These private originators and institutions include savings and loan associations, mortgage bankers, commercial banks, insurance companies, investment banks and special purpose subsidiaries of the foregoing.
Privately issued mortgage-backed securities are generally backed by pools of conventional ( i.e. , non-government guaranteed or insured) mortgage loans. Since such mortgage-backed securities normally are not guaranteed by an entity having the credit standing of Ginnie Mae, Fannie Mae or Freddie Mac, in order to receive a high quality rating from the rating organizations ( e.g. , S&Ps or Moodys), they often are structured with one or more types of credit enhancement. Such credit enhancement falls into two categories: (1) liquidity protection and (2) protection against losses resulting after default by a borrower and liquidation of the collateral ( e.g. , sale of a house after foreclosure). Liquidity protection refers to the payment of cash advances to holders of mortgage-backed securities when a borrower on an underlying mortgage fails to make its monthly payment on time. Protection against losses resulting after default and liquidation is designed to cover losses resulting when, for example, the proceeds of a foreclosure sale are insufficient to cover the outstanding amount on the mortgage. Such protection may be provided through guarantees, insurance policies or letters of credit, through various means of structuring the securities or through a combination of such approaches.
Examples of credit enhancement arising out of the structure of the transaction include senior-subordinated securities (multiple class securities with one or more classes entitled to receive payment before other classes, with the result that
defaults on the underlying mortgages are borne first by the holders of the subordinated class), creation of spread accounts or reserve funds (where cash or investments are held in reserve against future losses) and over-collateralization (where the scheduled payments on the underlying mortgages in a pool exceed the amount required to be paid on the mortgage-backed securities). The degree of credit enhancement for a particular issue of mortgage-backed securities is based on the level of credit risk associated with the particular mortgages in the related pool. Losses on a pool in excess of anticipated levels could nevertheless result in losses to security holders since credit enhancement rarely covers every dollar owed on a pool.
Investing in mortgage-backed securities (such as those described above) involves certain risks, including the failure of a counter-party to meet its commitments, adverse interest rate changes and the effects of prepayments on mortgage cash flows. Further, the yield characteristics of mortgage-backed securities differ from those of traditional fixed income securities. The major differences typically include more frequent interest and principal payments (usually monthly), the adjustability of interest rates, and the possibility that prepayments of principal may be made substantially earlier than their final distribution dates.
Prepayment rates are influenced by changes in current interest rates and a variety of economic, geographic, social and other factors and cannot be predicted with certainty. Both adjustable rate mortgage loans and fixed rate mortgage loans may be subject to a greater rate of principal prepayments in a declining interest rate environment and to a lesser rate of principal prepayments in an increasing interest rate environment. Under certain interest rate and prepayment rate scenarios, the Fund may fail to recoup fully its investment in mortgage-backed securities notwithstanding any direct or indirect governmental or agency guarantee. When the Fund reinvests amounts representing payments and unscheduled prepayments of principal, it may receive a rate of interest that is lower than the rate on existing adjustable rate mortgage pass-through securities. Thus, mortgage-backed securities, and adjustable rate mortgage pass-through securities in particular, may be less effective than other types of U.S. government securities as a means of locking in interest rates.
Conversely, in a rising interest rate environment, a declining prepayment rate will extend the average life of many mortgage-backed securities. This possibility is often referred to as extension risk. Extending the average life of a mortgage-backed security increases the risk of depreciation due to future increases in market interest rates. The market for certain types of mortgage-backed securities ( i.e. , certain CMOs) may not be liquid under all interest rate scenarios, which may prevent the Fund from selling such securities held in its portfolio at times or prices that it desires.
Different types of derivative debt securities are subject to different combinations of prepayment, extension and/or interest rate risk. Conventional mortgage pass-through securities and sequential pay CMOs are subject to all of these risks, but are typically not leveraged. Thus, the magnitude of exposure may be less than for more leveraged mortgage-backed securities.
Planned amortization class (PAC) and target amortization class (TAC) CMO bonds involve less exposure to prepayment, extension and interest rate risk than other mortgage-backed securities, provided that prepayment rates remain within expected prepayment ranges or collars. To the extent that prepayment rates remain within these prepayment ranges, the residual or support tranches of PAC and TAC CMOs assume the extra prepayment extension and interest rate risk associated with the underlying mortgage assets.
The Fund may invest in floating rate securities based on the Cost of Funds Index (COFI floaters), other lagging rate floating rate securities, floating rate securities that are subject to a maximum interest rate (capped floaters), and mortgage-backed securities purchased at a discount. The primary risks associated with these derivative debt securities are the potential extension of average life and/or depreciation due to rising interest rates.
Recently, rating agencies have placed on credit watch or downgraded the ratings previously assigned to a large number of mortgage-related securities (which may include certain of the mortgage-related securities in which the Fund may have invested or may in the future be invested), and may continue to do so in the future. In the event that any mortgage-related security held by the Fund is placed on credit watch or downgraded, the value of such mortgage-related security may decline and the Fund may consequently experience losses in respect of such mortgage-related security.
Options. The Fund may purchase and write put and call options on indices and enter into related closing transactions. A put option on a security gives the purchaser of the option the right to sell, and the writer of the option the obligation to buy, the underlying security at any time during the option period. A call option on a security gives the purchaser of the option the right to buy, and the writer of the option the obligation to sell, the underlying security at any time during the option period. The premium paid to the writer is the consideration for undertaking the obligations under the option contract.
The Fund may purchase and write put and call options on foreign currencies (traded on U.S. and foreign exchanges or over-the-counter markets) to manage its exposure to exchange rates. Call options on foreign currency written by the Fund will be covered, which means that the Fund will own an equal amount of the underlying foreign currency.
Put and call options on indices are similar to options on securities except that options on an index give the holder the right to receive, upon exercise of the option, an amount of cash if the closing level of the underlying index is greater than (or less than, in the case of puts) the exercise price of the option. This amount of cash is equal to the difference between the closing price of the index and the exercise price of the option, expressed in dollars multiplied by a specified number. Thus, unlike options on individual securities, all settlements are in cash, and gain or loss depends on price movements in the particular market represented by the index generally, rather than the price movements in individual securities.
All options written on indices or securities must be covered. When the Fund writes an option on a security, an index or a foreign currency, it will establish a segregated account containing cash or liquid securities in an amount at least equal to the market value of the option and will maintain the account while the option is open or will otherwise cover the transaction.
The Fund may trade put and call options on securities, securities indices and currencies, as the Adviser or applicable Sub-Adviser determines is appropriate in seeking the Funds investment objective, and except as restricted by the Funds investment limitations. See Investment Limitations.
The initial purchase (sale) of an option contract is an opening transaction. In order to close out an option position, the Fund may enter into a closing transaction, which is simply the sale (purchase) of an option contract on the same security with the same exercise price and expiration date as the option contract originally opened. If the Fund is unable to effect a closing purchase transaction with respect to an option it has written, it will not be able to sell the underlying security until the option expires or the Fund delivers the security upon exercise.
The Fund may purchase put and call options on securities to protect against a decline in the market value of the securities in its portfolio or to anticipate an increase in the market value of securities that the Fund may seek to purchase in the future. The Fund purchasing put and call options pays a premium therefor. If price movements in the underlying securities are such that exercise of the options would not be profitable for the Fund, loss of the premium paid may be offset by an increase in the value of the Funds securities or by a decrease in the cost of acquisition of securities by the Fund.
The Fund may write covered call options on securities as a means of increasing the yield on its assets and as a means of providing limited protection against decreases in its market value. When the Fund writes an option, if the underlying securities do not increase or decrease to a price level that would make the exercise of the option profitable to the holder thereof, the option generally will expire without being exercised and the Fund will realize as profit the premium received for such option. When a call option of which the Fund is the writer is exercised, the Fund will be required to sell the underlying securities to the option holder at the strike price, and will not participate in any increase in the price of such securities above the strike price. When a put option of which the Fund is the writer is exercised, the Fund will be required to purchase the underlying securities at a price in excess of the market value of such securities.
The Fund may purchase and write options on an exchange or over-the-counter. Over-the-counter options (OTC options) differ from exchange-traded options in several respects. They are transacted directly with dealers and not
with a clearing corporation, and therefore entail the risk of non-performance by the dealer. OTC options are available for a greater variety of securities and for a wider range of expiration dates and exercise prices than are available for exchange-traded options. Because OTC options are not traded on an exchange, pricing is done normally by reference to information from a market maker. It is the SECs position that OTC options are generally illiquid.
The market value of an option generally reflects the market price of an underlying security. Other principal factors affecting market value include supply and demand, interest rates, the pricing volatility of the underlying security and the time remaining until the expiration date.
Risks associated with options transactions include: (1) the success of a hedging strategy may depend on an ability to predict movements in the prices of individual securities, fluctuations in markets and movements in interest rates; (2) there may be an imperfect correlation between the movement in prices of options and the securities underlying them; (3) there may not be a liquid secondary market for options; and (4) while the Fund will receive a premium when it writes covered call options, it may not participate fully in a rise in the market value of the underlying security.
Restricted and Illiquid Securities. The Fund may not invest more than 15% of its net assets in illiquid securities, including securities that are illiquid by virtue of the absence of a readily available market or legal or contractual restrictions on resale. Illiquid securities include: repurchase agreements and time deposits with a notice or demand period of more than seven days; interest rate; currency and mortgage swaps; interest rate caps; floors and collars; municipal leases; certain restricted securities, such as those purchased in a private placement of securities, unless it is determined, based upon a review of the trading markets for a specific restricted security, that such restricted security is liquid; and certain over-the-counter options. Securities that have legal or contractual restrictions on resale but have a readily available market are not considered illiquid for purposes of this limitation.
Mutual funds do not typically hold a significant amount of restricted or other illiquid securities because of the potential for delays on resale and uncertainty in valuation. Limitations on resale may have an adverse effect on the marketability of portfolio securities and a mutual fund might be unable to dispose of restricted or other illiquid securities promptly or at reasonable prices and might thereby experience difficulty in satisfying redemptions within seven days. A mutual fund might also have to register such restricted securities in order to dispose of them resulting in additional expense and delay. Adverse market conditions could impede such a public offering of securities.
The Fund may purchase securities which are not registered under the Securities Act but which may be sold to qualified institutional buyers in accordance with Rule 144A under the Securities Act (Restricted Securities). These securities will not be considered illiquid so long as it is determined by the Adviser or applicable Sub-Adviser that an adequate trading market exists for the securities. This investment practice could have the effect of increasing the level of illiquidity in an underlying investment company during any period that qualified institutional buyers become uninterested in purchasing restricted securities.
The Adviser or applicable Sub-Adviser will monitor the liquidity of Restricted Securities held by the portion of the assets of the Fund it manages. In reaching liquidity decisions, the Adviser or Sub-Adviser may consider, among others, the following factors: (1) the unregistered nature of the security; (2) the frequency of trades and quotes for the security; (3) the number of dealers wishing to purchase or sell the security and the number of other potential purchasers; (4) dealer undertakings to make a market in the security; and (5) the nature of the security and the nature of the marketplace trades (e.g., the time needed to dispose of the security, the method of soliciting offers and the mechanics of the transfer).
The purchase price and subsequent valuation of Restricted Securities normally reflect a discount from the price at which such securities trade when they are not restricted, since the restriction makes them less liquid. The amount of the discount from the prevailing market price is expected to vary depending upon the type of security, the character of the issuer, the party who will bear the expenses of registering the Restricted Securities and prevailing supply and demand conditions.
As consistent with the Funds investment objectives, the Fund may also invest in Section 4(2) commercial paper.
Section 4(2) commercial paper is issued in reliance on an exemption from registration under Section 4(2) of the Act and is generally sold to institutional investors who purchase for investment. Any resale of such commercial paper must be in an exempt transaction, usually to an institutional investor through the issuer or investment dealers who make a market in such commercial paper. The Company believes that Section 4(2) commercial paper is liquid to the extent it meets the criteria established by the Companys Board of Directors. The Company intends to treat such commercial paper as liquid and not subject to the investment limitations applicable to illiquid securities or restricted securities.
Rights Offerings and Purchase Warrants. Rights offerings and purchase warrants are privileges issued by a corporation which enable the owner to subscribe to and purchase a specified number of shares of the corporation at a specified price during a specified period of time. Subscription rights normally have a short lifespan to expiration. The purchase of rights or warrants involves the risk that the Fund could lose the purchase value of a right or warrant if the right to subscribe to additional shares is not executed prior to the rights or warrants expiration. Also, the purchase of rights and/or warrants involves the risk that the effective price paid for the right and/or warrant added to the subscription price of the related security may exceed the value of the subscribed securitys market price such as when there is no movement in the level of the underlying security.
Risk Considerations of Medium Grade Securities. Obligations in the lowest investment grade ( i.e. , BBB or Baa), referred to as medium grade obligations, have speculative characteristics, and changes in economic conditions and other factors are more likely to lead to weakened capacity to make interest payments and repay principal on these obligations than is the case for higher rated securities. In the event that a security purchased by the Fund is subsequently downgraded below investment grade, the Adviser and Sub-Advisers will consider such event in its determination of whether the Fund should continue to hold the security.
Risk Considerations of Lower Rated Securities. The Fund may invest in fixed income securities that are not investment grade but are rated as low as B by Moodys or B by S&P ® (or their equivalents or, if unrated, determined by the Adviser or applicable Sub-Adviser to be of comparable credit quality). In the case of a security that is rated differently by two or more rating services, the higher rating is used in connection with the foregoing limitation. In the event that the rating on a security held in the Funds portfolio is downgraded by a rating service, such action will be considered by the Adviser or applicable Sub-Adviser in its evaluation of the overall investment merits of that security, but will not necessarily result in the sale of the security. The widespread expansion of government, consumer and corporate debt within the U.S. economy has made the corporate sector, especially cyclically sensitive industries, more vulnerable to economic downturns or increased interest rates. An economic downturn could severely disrupt the market for high yield fixed income securities and adversely affect the value of outstanding fixed income securities and the ability of the issuers to repay principal and interest.
The Fund may invest in high yield debt obligations, such as bonds and debentures, issued by corporations and other business organizations. The Fund will invest in high yield debt instruments when the Fund believes that such instruments offer a better risk/reward profile than comparable equity opportunities. High yield fixed income securities (commonly known as junk bonds) are considered speculative investments while generally providing greater income than investments in higher rated securities, involve greater risk of loss of principal and income (including the possibility of default or bankruptcy of the issuers of such securities) and may involve greater volatility of price (especially during periods of economic uncertainty or change) than securities in the higher rating categories. Since yields vary over time, no specific level of income can ever be assured.
The prices of high yield fixed income securities have been found to be less sensitive to interest rate changes than higher-rated investments but more sensitive to adverse economic changes or individual corporate developments. Also, during an economic downturn or substantial period of rising interest rates, highly leveraged issuers may experience financial stress, which would adversely affect their ability to service their principal and interest payment obligations, to meet projected business goals and to obtain additional financing. If the issuer of a fixed income security owned by the Fund defaulted, the Fund could incur additional expenses in attempting to obtain a recovery. In addition, periods of economic uncertainty and changes can be expected to result in increased volatility of market prices of high yield fixed income securities and the Funds NAV to the extent it holds such securities.
High yield fixed income securities also present risks based on payment expectations. For example, high yield fixed income securities may contain redemption or call provisions. If an issuer exercises these provisions in a declining interest rate market, the Fund may, to the extent it holds such fixed income securities, have to replace the securities with a lower yielding security, which may result in a decreased return for investors. Conversely, a high yield fixed income securitys value will decrease in a rising interest rate market, as will the value of the Funds assets, to the extent it holds such fixed income securities. In addition, to the extent that there is no established retail secondary market, there may be thin trading of high yield fixed income securities, and this may have an impact on the Advisers and Sub-Advisers ability to accurately value such securities and the Funds assets and on the Funds ability to dispose of such securities. Adverse publicity and investor perceptions, whether or not based on fundamental analysis, may decrease the values and liquidity of high yield fixed income securities, especially in a thinly traded market.
New laws proposed or adopted from time to time may have an impact on the market for high yield securities.
Finally, there are risks involved in applying credit or dividend ratings as a method for evaluating high yield securities. For example, ratings evaluate the safety of principal and interest or dividend payments, not market value risk of high yield securities. Also, since rating agencies may fail to timely change the credit ratings to reflect subsequent events, the Fund will continuously monitor the issuers of high yield securities in its portfolio, if any, to determine if the issuers will have sufficient cash flow and profits to meet required principal and interest payments, and to assure the securitys liquidity so the Fund can meet redemption requests.
Short Sales. As consistent with the Funds investment objectives, the Fund may engage in short sales that are either uncovered or against the box. A short sale is against the box if at all times during which the short position is open, the Fund owns at least an equal amount of the securities or securities convertible into, or exchangeable without further consideration for, securities of the same issue as the securities that are sold short. A short sale against the box is a taxable transaction to the Fund with respect to the securities that are sold short.
Uncovered short sales are transactions under which the Fund sells a security it does not own. To complete such a transaction, the Fund must borrow the security to make delivery to the buyer. The Fund then is obligated to replace the security borrowed by purchasing the security at the market price at the time of the replacement. The price at such time may be more or less than the price at which the security was sold by the Fund. Until the security is replaced, the Fund is required to pay the lender amounts equal to any dividends or interest that accrue during the period of the loan. To borrow the security, the Fund also may be required to pay a premium, which would increase the cost of the security sold. The proceeds of the short sale will be retained by the broker, to the extent necessary to meet margin requirements, until the short position is closed out.
Until the Fund closes its short position or replaces the borrowed security, the Fund will: (a) maintain a segregated account containing cash or liquid securities at such a level that (i) the amount deposited in the account plus the amount deposited with the broker as collateral will equal the current value of the security sold short; and (ii) the amount deposited in the segregated account plus the amount deposited with the broker as collateral will not be less than the market value of the security at the time the security was sold short; or (b) otherwise cover the Funds short position.
Special Note Regarding Market Events. Events in the financial sector over the past several years have resulted in reduced liquidity in credit and fixed income markets and in an unusually high degree of volatility in the financial markets, both domestically and internationally. While entire markets have been impacted, issuers that have exposure to the real estate, mortgage and credit markets have been particularly affected. These events and the potential for continuing market turbulence may have an adverse effect on the underlying investment companies investments. It is uncertain how long these conditions will continue.
The instability in the financial markets has led the U.S. government to take a number of unprecedented actions designed to support certain financial institutions and certain segments of the financial markets. Federal, state and foreign governments, regulatory agencies, and self-regulatory organizations may take actions that affect the regulation of the instruments in which the Fund invests, or the issuers of such instruments, in ways that are unforeseeable. Such legislation or regulation could limit or preclude an underlying investment companys, and thus a Funds, ability to
achieve its investment objective.
Governments or their agencies may also acquire distressed assets from financial institutions and acquire ownership interests in those institutions. The implications of government ownership and disposition of these assets are unclear, and such ownership or disposition may have positive or negative effects on the liquidity, valuation and performance of the underlying investment companies holdings.
Structured Securities. The Fund may invest in structured securities to the extent consistent with its investment objective. The value of the principal of and/or interest on structured securities is determined by reference to changes in the value of specific currencies, commodities, securities, indices or other financial indicators (the Reference) or the relative change in two or more References. The interest rate or the principal amount payable upon maturity or redemption may be increased or decreased depending upon changes in the applicable Reference. Examples of structured securities include, but are not limited to, notes where the principal repayment at maturity is determined by the value of the relative change in two or more specified securities or securities indices.
The terms of some structured securities may provide that in certain circumstances no principal is due at maturity and, therefore, the Fund could suffer a total loss of its investment. Structured securities may be positively or negatively indexed, so that appreciation of the Reference may produce an increase or decrease in the interest rate or value of the security at maturity. In addition, changes in the interest rate or the value of the security at maturity may be a multiple of the changes in the value of the Reference. Consequently, structured securities may entail a greater degree of market risk than other types of securities. Structured securities may also be more volatile, less liquid and more difficult to accurately price than less complex securities due to their derivative nature.
Swap Agreements. The Fund may enter into equity index or interest rate swap agreements for purposes of attempting to gain exposure to the stocks making up an index of securities in a market without actually purchasing those stocks, or to hedge a position. Swap agreements are two-party contracts entered into primarily by institutional investors for periods ranging from a day to more than one-year. In a standard swap transaction, two parties agree to exchange the returns (or differentials in rates of return) earned or realized on particular predetermined investments or instruments. The gross returns to be exchanged or swapped between the parties are calculated with respect to a notional amount, i.e. , the return on or increase in value of a particular dollar amount invested in a basket of securities representing a particular index. Forms of swap agreements include interest rate caps, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates exceed a specified rate, or cap, interest rate floors, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates fall below a specified level, or floor, and interest rate dollars, under which a party sells a cap and purchases a floor or vice versa in an attempt to protect itself against interest rate movements exceeding given minimum or maximum levels.
Most swap agreements entered into by the Fund calculate the obligations of the parties to the agreement on a net basis. Consequently, the Funds current obligations (or rights) under a swap agreement will generally be equal only to the net amount to be paid or received under the agreement based on the relative values of the positions held by each party to the agreement (the net amount). The Funds current obligations under a swap agreement will be accrued daily (offset against any amounts owing to the Fund) and any accrued but unpaid net amounts owed to a swap counterparty will be covered by segregating assets determined to be liquid. Obligations under swap agreements so covered will not be construed to be senior securities for purposes of the Funds investment restriction concerning senior securities. Because they are two party contracts and because they may have terms of greater than seven days, swap agreements may be considered to be illiquid for the Funds illiquid investment limitation. The Fund will not enter into any swap agreement unless the Adviser or applicable Sub-Adviser believes that the other party to the transaction is creditworthy. The Fund bears the risk of loss of the amount expected to be received under a swap agreement in the event of the default or bankruptcy of a swap agreement counterparty.
The Fund may enter into swap agreements to invest in a market without owning or taking physical custody of securities in circumstances in which direct investment is restricted for legal reasons or is otherwise impracticable. The counterparty to any swap agreement will typically be a bank, investment banking firm or broker/dealer. The counter-party will generally agree to pay the Fund the amount, if any, by which the notional amount of the swap
agreement would have increased in value had it been invested in the particular stocks, plus the dividends that would have been received on those stocks. The Fund will agree to pay to the counter-party a floating rate of interest on the notional amount of the swap agreement plus the amount, if any, by which the notional amount would have decreased in value had it been invested in such stocks. Therefore, the return to the Fund on any swap agreement should be the gain or loss on the notional amount plus dividends on the stocks less the interest paid by the Fund on the notional amount.
Swap agreements typically are settled on a net basis, which means that the two payment streams are netted out, with the Fund receiving or paying, as the case may be, only the net amount of the two payments. Payments may be made at the conclusion of a swap agreement or periodically during its term. Swap agreements do not involve the delivery of securities or other underlying assets. Accordingly, the risk of loss with respect to swap agreements is limited to the net amount of payments that the Fund is contractually obligated to make. If the other party to a swap agreement defaults, the Funds risk of loss consists of the net amount of payments that the Fund is contractually entitled to receive, if any. The net amount of the excess, if any, of the Funds obligations over its entitlements with respect to each equity swap will be accrued on a daily basis and an amount of cash or liquid assets, having an aggregate net asset value at least equal to such accrued excess will be maintained in a segregated account by the Funds custodian. Inasmuch as these transactions are entered into for hedging purposes or are offset by segregated cash of liquid assets, as permitted by applicable law, the Fund and the Adviser believe that these transactions do not constitute senior securities under the 1940 Act and, accordingly, will not treat them as being subject to a Funds borrowing restrictions.
The Adviser and Sub-Advisers, under the supervision of the Board, are responsible for determining and monitoring the liquidity of Fund transactions in swap agreements. The use of equity swaps is a highly specialized activity, which involves investment techniques and risks different from those associated with ordinary portfolio securities transactions.
U.S. Government Securities. The Fund may invest in U.S. government securities. Securities issued or guaranteed by the U.S. government or its agencies or instrumentalities include U.S. Treasury securities, which are backed by the full faith and credit of the U.S. Treasury and which differ only in their interest rates, maturities, and times of issuance. U.S. Treasury bills have initial maturities of one-year or less; U.S. Treasury notes have initial maturities of one to ten years; and U.S. Treasury bonds generally have initial maturities of greater than ten years. Certain U.S. government securities are issued or guaranteed by agencies or instrumentalities of the U.S. government including, but not limited to, obligations of U.S. government agencies or instrumentalities such as the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), the Government National Mortgage Association (Ginnie Mae), the Small Business Administration, the Federal Farm Credit Administration, the Federal Home Loan Banks, Banks for Cooperatives (including the Central Bank for Cooperatives), the Federal Land Banks, the Federal Intermediate Credit Banks, the Tennessee Valley Authority, the Export-Import Bank of the United States, the Commodity Credit Corporation, the Federal Financing Bank, the Student Loan Marketing Association, the National Credit Union Administration and the Federal Agricultural Mortgage Corporation (Farmer Mac).
Some obligations issued or guaranteed by U.S. government agencies and instrumentalities, including, for example, Ginnie Mae pass-through certificates, are supported by the full faith and credit of the U.S. Treasury. Other obligations issued by or guaranteed by federal agencies, such as those securities issued by Fannie Mae, are supported by the discretionary authority of the U.S. government to purchase certain obligations of the federal agency, while other obligations issued by or guaranteed by federal agencies, such as those of the Federal Home Loan Banks, are supported by the right of the issuer to borrow from the U.S. Treasury, while the U.S. government provides financial support to such U.S. government-sponsored federal agencies, no assurance can be given that the U.S. government will always do so, since the U.S. government is not so obligated by law. U.S. Treasury notes and bonds typically pay coupon interest semi-annually and repay the principal at maturity.
See Mortgage-Backed Securities above for additional information about the September 7, 2008 federal takeover of Fannie Mae and Freddie Mac.
· U.S. Treasury Obligations. U.S. Treasury obligations consist of bills, notes and bonds issued by the U.S. Treasury and separately traded interest and principal component parts of such obligations that are transferable
through the federal book-entry system known as Separately Traded Registered Interest and Principal Securities (STRIPS) and Treasury Receipts (TRs).
· Receipts. Interests in separately traded interest and principal component parts of U.S. government obligations that are issued by banks or brokerage firms and are created by depositing U.S. government obligations into a special account at a custodian bank. The custodian holds the interest and principal payments for the benefit of the registered owners of the certificates or receipts. The custodian arranges for the issuance of the certificates or receipts evidencing ownership and maintains the register. TRs and STRIPS are interests in accounts sponsored by the U.S. Treasury. Receipts are sold as zero coupon securities.
· U.S. Government Zero Coupon Securities. STRIPS and receipts are sold as zero coupon securities, that is, fixed income securities that have been stripped of their unmatured interest coupons. Zero coupon securities are sold at a (usually substantial) discount and redeemed at face value at their maturity date without interim cash payments of interest or principal. The amount of this discount is accreted over the life of the security, and the accretion constitutes the income earned on the security for both accounting and tax purposes. Because of these features, the market prices of zero coupon securities are generally more volatile than the market prices of securities that have similar maturity but that pay interest periodically. Zero coupon securities are likely to respond to a greater degree to interest rate changes than are non-zero coupon securities with similar maturity and credit qualities.
· U.S. Government Agencies. Some obligations issued or guaranteed by agencies of the U.S. government are supported by the full faith and credit of the U.S. Treasury, others are supported by the right of the issuer to borrow from the Treasury, while still others are supported only by the credit of the instrumentality. Guarantees of principal by agencies or instrumentalities of the U.S. government may be a guarantee of payment at the maturity of the obligation so that in the event of a default prior to maturity there might not be a market and thus no means of realizing on the obligation prior to maturity. Guarantees as to the timely payment of principal and interest do not extend to the value or yield of these securities nor to the value of the Funds shares.
Non-Principal Investment Policies and Risks.
Commercial Paper. Commercial paper is the term used to designate unsecured short-term promissory notes issued by corporations and other entities. Maturities on these issues vary from a few to 270 days.
Dollar Rolls. The Fund may enter into dollar rolls in which the Fund sells fixed income securities for delivery in the current month and simultaneously contracts to repurchase substantially similar (same type, coupon and maturity) securities on a specified future date. During the roll period, the Fund would forgo principal and interest paid on such securities. However, the Fund would be compensated by the difference between the current sales price and the forward price for the future purchase, as well as by the interest earned on the cash proceeds of the initial sale. The return on dollar rolls may be negatively impacted by fluctuations in interest rates. The Fund does not presently intend to engage in dollar roll transactions involving more than 5% of its net assets. For additional information on dollar roll transactions, see the section entitled Mortgage Dollar Roll Transactions in this SAI.
Forward Commitment and When-Issued Transactions. The Fund may purchase or sell securities on a when-issued or forward commitment basis (subject to its investment policies and restrictions). These transactions involve a commitment by a fund to purchase or sell securities at a future date (ordinarily one or two months later). The price of the underlying securities (usually expressed in terms of yield) and the date when the securities will be delivered and paid for (the settlement date) are fixed at the time the transaction is negotiated. When-issued purchases and forward commitments are negotiated directly with the other party, and such commitments are not traded on exchanges. The Fund will not enter into such transactions for the purpose of leverage.
When-issued purchases and forward commitments enable the Fund to lock in what is believed by the Adviser or Sub-Adviser, as applicable, to be an attractive price or yield on a particular security for a period of time, regardless of future changes in interest rates. For instance, in periods of rising interest rates and falling prices, the Fund might sell securities it owns on a forward commitment basis to limit its exposure to falling prices. In periods of falling interest
rates and rising prices, the Fund might sell securities it owns and purchase the same or a similar security on a when-issued or forward commitment basis, thereby obtaining the benefit of currently higher yields. When-issued securities or forward commitments involve a risk of loss if the value of the security to be purchased declines prior to the settlement date.
The value of securities purchased on a when-issued or forward commitment basis and any subsequent fluctuations in their value are reflected in the computation of the Funds NAV starting on the date of the agreement to purchase the securities, and the Fund is subject to the rights and risks of ownership of the securities on that date. The Fund does not earn interest on the securities it has committed to purchase until they are paid for and delivered on the settlement date. When the Fund makes a forward commitment to sell securities it owns, the proceeds to be received upon settlement are included in the Funds assets. Fluctuations in the market value of the underlying securities are not reflected in the Funds NAV as long as the commitment to sell remains in effect. Settlement of when-issued purchases and forward commitment transactions generally takes place within two months after the date of the transaction, but the Fund may agree to a longer settlement period.
The Fund will make commitments to purchase securities on a when-issued basis or to purchase or sell securities on a forward commitment basis only with the intention of completing the transaction and actually purchasing or selling the securities. If deemed advisable as a matter of investment strategy, however, the Fund may dispose of or renegotiate a commitment after it is entered into. The Fund also may sell securities it has committed to purchase before those securities are delivered to the Fund on the settlement date. The Fund may realize a capital gain or loss in connection with these transactions, and its distributions from any net realized capital gains will be taxable to shareholders. When the Fund purchases securities on a when-issued or forward commitment basis, the Fund or the Custodian will maintain in a segregated account cash or liquid securities having a value (determined daily) at least equal to the amount of the Funds purchase commitments. These procedures are designed to ensure that the Fund will maintain sufficient assets at all times to cover its obligations under when-issued purchases and forward commitments.
Illiquid Securities. Illiquid securities are securities that cannot be sold or disposed of in the ordinary course of business (within seven days) at approximately the prices at which they are valued. Because of their illiquid nature, illiquid securities must be priced at fair value as determined in good faith pursuant to procedures approved by the Companys Board of Directors. Despite such good faith efforts to determine fair value prices, the Funds illiquid securities are subject to the risk that the securitys fair value price may differ from the actual price which the Fund may ultimately realize upon its sale or disposition. Difficulty in selling illiquid securities may result in a loss or may be costly to the Fund. Under the supervision of the Companys Board of Directors, the Adviser and the Sub-Advisers determine the liquidity of the Funds investments. In determining the liquidity of the Funds investments, the Adviser and Sub-Advisers may consider various factors, including: (1) the frequency and volume of trades and quotations; (2) the number of dealers and prospective purchasers in the marketplace; (3) dealer undertakings to make a market; and (4) the nature of the security and the market in which it trades (including any demand, put or tender features, the mechanics and other requirements for transfer, any letters of credit or other credit enhancement features, any ratings, the number of holders, the method of soliciting offers, the time required to dispose of the security, and the ability to assign or offset the rights and obligations of the security). The Fund will not hold more than 15% of its net assets in illiquid securities.
Inflation-Protected Securities. The Fund may invest in inflation-protected securities issued by the U.S. Treasury, known as TIPs or Treasury Inflation-Protected Securities, which are debt securities whose principal and interest payments are adjusted for inflation and interest is paid on the adjusted amount. The inflation adjustment, which is typically applied monthly to the principal of the bond, follows a designated inflation index, such as the consumer price index (CPI). A fixed coupon rate is applied to the inflation-adjusted principal so that as inflation rises, both the principal value and the interest payments increase. This can provide investors with a hedge against inflation, as it helps preserve the purchasing power of your investment. Inflation-protected securities normally will decline in price when real interest rates rise. (A real interest rate is calculated by subtracting the inflation rate from a nominal interest rate. For example, if a 10-year Treasury note is yielding 5% and inflation is 2%, the real interest rate is 3%.) If inflation is negative, the principal and income of an inflation-protected security will decline and could result in losses for the Fund.
Any increase in principal for an inflation-protected security resulting from inflation adjustments is considered by IRS regulations to be taxable income in the year it occurs. For direct holders of an inflation-protected security, this means that taxes must be paid on principal adjustments even though these amounts are not received until the bond matures. By contrast, the Fund holding these securities distributes both interest income and the income attributable to principal adjustments in the form of cash or reinvested shares, which are taxable to shareholders.
Initial Public Offerings. To the extent consistent with its investment policies and limitations, the Fund may purchase stock in an initial public offering (IPO). An IPO is a companys first offering of stock to the public. Risks associated with IPOs may include considerable fluctuation in the market value of IPO shares due to certain factors, such as the absence of a prior public market, unseasoned trading, a limited number of shares available for trading, lack of information about the issuer and limited operating history. The purchase of IPO shares may involve high transaction costs. When the Funds asset base is small, a significant portion of the Funds performance could be attributable to investments in IPOs, because such investments would have a magnified impact on the underlying investment company. As the Funds assets grow, the effect of the Funds investments in IPOs on the Funds performance probably will decline, which could reduce the Funds performance. Because of the price volatility of IPO shares, the Fund may choose to hold IPO shares for a very short period of time. This may increase the turnover of the Funds portfolio and may lead to increased expenses to the Fund, such as commissions and transaction costs. In addition, the Fund cannot guarantee continued access to IPOs.
Mortgage Dollar Roll Transactions. The Fund may enter into mortgage dollar roll transactions in which the Fund sells securities for delivery in the current month and simultaneously contracts with the same counterparty to repurchase similar (same type, coupon and maturity), but not identical securities, on a specified future date. For financial reporting and tax purposes, the Fund treats mortgage dollar rolls as two separate transactions; one involving the purchase of a security and a separate transaction involving a sale. The Fund does not currently intend to enter into mortgage dollar rolls for financing and does not treat them as borrowings.
During the roll period, the Fund would forgo principal and interest paid on such securities. The Fund would benefit to the extent of any difference between the price received for the securities sold and the lower forward price for the future purchase (often referred to as the drop) or fee income plus the interest on the cash proceeds of the securities sold until the settlement date of the forward purchase. Unless such benefits exceed the income, capital appreciation and gain or loss due to mortgage prepayments that would have been realized on the securities sold as part of the mortgage dollar roll, the use of this technique will diminish the investment performance of the Fund compared with what such performance would have been without the use of mortgage dollar rolls. The Fund will hold and maintain in a segregated account until the settlement date cash or liquid, high-grade debt securities in an amount equal to the forward purchase price. Any benefits derived from the use of mortgage dollar rolls may depend upon mortgage prepayment assumptions, which will be affected by changes in interest rates. There is no assurance that mortgage dollar rolls can be successfully employed. For additional information on dollar rolls, please refer to the section entitled Dollar Rolls in this SAI.
Municipal Obligations. The Fund may invest in municipal obligations. Municipal obligations are issued by or on behalf of states, territories and possessions of the United States and their political subdivisions, agencies and instrumentalities to obtain funds for various public purposes. The interest on most of these obligations is generally exempt from regular federal income tax in the hands of most individual investors, although it may be subject to the individual and corporate alternative minimum tax. The two principal classifications of municipal obligations are notes and bonds.
Municipal notes are generally used to provide for short-term capital needs and generally have maturities of one year or less. Municipal notes include tax anticipation notes, revenue anticipation notes, bond anticipation notes, and construction loan notes. Tax anticipation notes are sold to finance working capital needs of municipalities. They are generally payable from specific tax revenues expected to be received at a future date. Revenue anticipation notes are issued in expectation of receipt of other types of revenue such as federal revenues available under the Federal Revenue Sharing Program. Tax anticipation notes and revenue anticipation notes are generally issued in anticipation of various seasonal revenues such as income, sales, use, and business taxes. Bond anticipation notes are sold to provide interim financing.
These notes are generally issued in anticipation of long-term financing in the market. In most cases, these monies provide for the repayment of the notes. Construction loan notes are sold to provide construction financing. After the projects are successfully completed and accepted, many projects receive permanent financing through the Federal Housing Administration under Fannie Mae or Ginnie Mae. There are, of course, a number of other types of notes issued for different purposes and secured differently from those described above.
Municipal bonds, which meet longer term capital needs and generally have maturities of more than one year when issued, have two principal classifications, general obligation bonds and revenue bonds. Issuers of general obligation bonds include states, counties, cities, towns and regional districts. The proceeds of these obligations are used to fund a wide range of public projects including the construction or improvement of schools, highways and roads, water and sewer systems and a variety of other public purposes. The basic security of general obligation bonds is the issuers pledge of its faith, credit, and taxing power for the payment of principal and interest. The taxes that can be levied for the payment of debt service may be limited or unlimited as to rate or amount or special assessments.
The principal security for a revenue bond is generally the net revenues derived from a particular facility or group of facilities or, in some cases, from the proceeds of a special excise or other specific revenue source. Revenue bonds have been issued to fund a wide variety of capital projects including: electric, gas, water and sewer systems; highways, bridges and tunnels; port and airport facilities; colleges and universities; and hospitals. Revenue obligations are not backed by the credit and taxing authority of the issuer but are payable solely from the revenues derived from a particular facility or class of facilities or, in some cases, from the proceeds of a special excise tax or other specific revenue source. In addition, revenue obligations may be backed by a letter of credit, guarantee or insurance. Revenue obligations include private activity bonds, resource recovery bonds, certificates of participation and certain municipal notes. Although the principal security behind these bonds varies widely, many provide additional security in the form of a debt service reserve fund whose monies may also be used to make principal and interest payments on the issuers obligations. Housing finance authorities have a wide range of security including partially or fully insured, rent subsidized and/or collateralized mortgages, and/or the net revenues from housing or other public projects. In addition to a debt service reserve fund, some authorities provide further security in the form of a states ability (without obligation) to make up deficiencies in the debt service reserve fund. Lease rental revenue bonds issued by a state or local authority for capital projects are secured by annual lease rental payments from the state or locality to the authority sufficient to cover debt service on the authoritys obligations.
Industrial development bonds (now a subset of a class of bonds known as private activity bonds), although nominally issued by municipal authorities, are generally not secured by the taxing power of the municipality but are secured by the revenues of the authority derived from payments by the industrial user.
There is, in addition, a variety of hybrid and special types of municipal obligations as well as numerous differences in the security of municipal obligations both within and between the two principal classifications above. An entire issue of municipal obligations may be purchased by one or a small number of institutional investors such as the Fund. Thus, the issue may not be said to be publicly offered. Unlike securities which must be registered under the Securities Act of 1993, as amended (the Securities Act), prior to offer and sale unless an exemption from such registration is available, municipal obligations which are not publicly offered may nevertheless be readily marketable. A secondary market exists for municipal obligations that were not publicly offered initially.
The Adviser or Sub-Adviser, as applicable, determines whether a municipal obligation is readily marketable based on whether it may be sold in a reasonable time consistent with the customs of the municipal markets (usually seven days) at a price (or interest rate), which accurately reflects its value. In addition, stand-by commitments and demand obligations also enhance marketability.
For the purpose of the Funds investment restrictions, the identification of the issuer of municipal obligations that are not general obligation bonds is made by the Adviser or Sub-Adviser, as applicable, on the basis of the characteristics of the obligation as described above, the most significant of which is the source of funds for the payment of principal of and interest on such obligations.
Yields on municipal obligations depend on a variety of factors, including money market conditions, municipal bond market conditions, the size of a particular offering, the maturity of the obligation and the quality of the issue. High grade municipal obligations tend to have a lower yield than lower rated obligations. Municipal obligations are subject to the provisions of bankruptcy, insolvency and other laws affecting the rights and remedies of creditors, such as the Federal Bankruptcy Code and laws, if any, that may be enacted by Congress or state legislatures extending the time for payment of principal or interest, or both, or imposing other constraints upon enforcement of such obligations or municipalities to levy taxes. There is also the possibility that as a result of litigation or other conditions the power or ability of any one or more issuers to pay when due principal of and interest on its or their municipal obligations may be materially affected.
Economic, business or political developments might affect all municipal obligations of a similar type. The Fund believes that the most important consideration affecting risk is the quality of particular issues of municipal obligations rather than factors affecting all, or broad classes of, municipal obligations.
The Fund may invest in variable, floating rate and other municipal securities on which the interest may fluctuate based on changes in market rates. The interest rates payable on variable rate securities are adjusted at designated intervals ( e.g. , daily, monthly, semi-annually), and the interest rates payable on, floating rate securities are adjusted whenever there is a change in the market rate of interest on which the interest payable is based. The interest rate on variable and floating rate securities is ordinarily determined by reference to or is a percentage of a banks prime rate, the 90-day U.S. Treasury bill rate, the rate of return on commercial paper or bank certificates of deposit, an index of short-term interest rates, or some other objective measure. The value of floating and variable rate securities generally is more stable than that of fixed rate securities in response to changes in interest rate levels. The Fund may consider the maturity of a variable or floating rate municipal security to be shorter than its ultimate maturity if the Fund has the right to demand prepayment of its principal at specified intervals prior to the securitys ultimate maturity.
The Fund may invest in municipal leases and certificates of participation in municipal leases. A municipal lease is an obligation in the form of a lease or installment purchase which is issued by a state or local government to acquire equipment and facilities. Certificates of participation represent undivided interests in municipal leases, installment purchase agreements or other instruments. The certificates are typically issued by a trust or other entity, which has received an assignment of the payments to be made by the state or political subdivision under such leases or installment purchase agreements. The primary risk associated with municipal lease obligations and certificates of participation is that the governmental lessee will fail to appropriate funds to enable it to meet its payment obligations under the lease. Although the obligations may be secured by the leased equipment or facilities, the disposition of the property in the event of non-appropriation or foreclosure might prove difficult, time consuming and costly and may result in a delay in recovering, or the failure to fully recover, the Funds original investment. To the extent that the Fund invests in unrated municipal leases or participates in such leases, the Adviser or applicable Sub-Adviser will monitor on an ongoing basis the credit quality rating and risk of cancellation of such unrated leases. Certain municipal lease obligations and certificates of participation may be deemed illiquid for the purposes of the limitation on investments in illiquid securities.
The Fund may invest in pre-refunded municipal securities. The principal of and interest on pre-refunded municipal securities are no longer paid from the original revenue source for the securities. Instead, the source of such payments is typically an escrow fund consisting of U.S. government securities. The assets in the escrow fund are derived from the proceeds of refunding bonds issued by the same issuer as the pre-refunded municipal securities. Issuers of municipal securities use this advance refunding technique to obtain more favorable terms with respect to securities that are not yet subject to call or redemption by the issuer. For example, advance refunding enables an issuer to refinance debt at lower market interest rates, restructure debt to improve cash flow or eliminate restrictive covenants in the indenture or other governing instrument for the pre-refunded municipal securities. Except for a change in the revenue source from which principal and interest payments are made, the pre-refunded municipal securities remain outstanding on their original terms until they mature or are redeemed by the issuer. Pre-refunded municipal securities are usually purchased at a price, which represents a premium over their face value.
Obligations of Domestic Banks, Foreign Banks and Foreign Branches of U.S. Banks. The Fund may invest in obligations issued by banks and other savings institutions. Investments in bank obligations include obligations of
domestic branches of foreign banks and foreign branches of domestic banks. Such investments in domestic branches of foreign banks and foreign branches of domestic banks may involve risks that are different from investments in securities of domestic branches of U.S. banks. These risks may include future unfavorable political and economic developments, possible withholding taxes on interest income, seizure or nationalization of foreign deposits, currency controls, interest limitations, or other governmental restrictions which might affect the payment of principal or interest on the securities held by the Fund. Additionally, these institutions may be subject to less stringent reserve requirements and to different accounting, auditing, reporting and recordkeeping requirements than those applicable to domestic branches of U.S. banks. Bank obligations include the following:
· Bankers Acceptances . Bankers acceptances are bills of exchange or time drafts drawn on and accepted by a commercial bank. Corporations use bankers acceptances to finance the shipment and storage of goods and to furnish dollar exchange. Maturities are generally six months or less.
· Certificates of Deposit . Certificates of deposit are interest-bearing instruments with a specific maturity. They are issued by banks and savings and loan institutions in exchange for the deposit of funds and normally can be traded in the secondary market prior to maturity. Certificates of deposit with penalties for early withdrawal will be considered illiquid.
· Time Deposits. Time deposits are non-negotiable receipts issued by a bank in exchange for the deposit of funds. Like a certificate of deposit, it earns a specified rate of interest over a definite period of time; however, it cannot be traded in the secondary market. Time deposits with a withdrawal penalty or that mature in more than seven days are considered to be illiquid securities.
Pay-in-Kind Securities, Zero Coupon and Capital Appreciation Bonds. To the extent consistent with its investment objective, the Fund may invest in pay-in-kind (PIK) securities. PIK securities may be debt obligations or preferred shares that provide the issuer with the option of paying interest or dividends on such obligations in cash or in the form of additional securities rather than cash. Similarly, zero coupon and capital appreciation bonds are debt securities issued or sold at a discount from their face value and do not entitle the holder to any periodic payment of interest prior to maturity or a specified date. The amount of the discount varies depending on the time remaining until maturity or cash payment date, prevailing interest rates, the liquidity of the security and the perceived credit quality of the issuer. These securities also may take the form of debt securities that have been stripped of their unmatured interest coupons, the coupons themselves or receipts or certificates representing interests in such stripped debt obligations or coupons. A portion of the discount with respect to stripped tax-exempt securities or their coupons may be taxable. Such securities are designed to give an issuer flexibility in managing cash flow. PIK securities that are debt securities can either be senior or subordinated debt and generally trade flat ( i.e. , without accrued interest). The trading price of PIK debt securities generally reflects the market value of the underlying debt plus an amount representing accrued interest since the last interest payment.
PIK securities, zero coupon bonds and capital appreciation bonds do not pay interest periodically to maturity, and, therefore, they involve the additional risk that the Fund will not realize any cash until a specified future payment date unless a portion of such securities is sold, and, if the issuer of such securities defaults, the Fund may not obtain any return at all on its investment. In addition, even though such securities may not provide for the payment of current interest in cash, the Fund is nonetheless required to accrue income on such investments for each taxable year and generally is required to distribute such accrued amounts (net of deductible expenses, if any) to avoid being subject to tax. Because cash generally is not received at the time of the accrual, the Fund may be required to liquidate other portfolio securities to obtain sufficient cash to satisfy federal tax distribution requirements applicable to the Fund. Additionally, the market prices of PIK securities, zero coupon bonds and capital appreciation bonds generally are more volatile than the market prices of interest bearing securities and are likely to respond to a greater degree to changes in interest rates than interest bearing securities having similar maturities and credit quality.
Real Estate Investment Trust Securities. The Fund may invest in real estate investment trusts (REITs). REITs generally invest directly in real estate, in mortgages or in some combination of the two. Individual REITs may own a limited number of properties and may concentrate in a particular region or property type. A REIT is a corporation, or
a business trust that would otherwise be taxed as a corporation, which meets the definitional requirements of the Code. The Code permits a qualifying REIT to deduct dividends paid, thereby effectively eliminating corporate level federal income tax and making the REIT a pass-through vehicle for federal income tax purposes. To meet the definitional requirements of the Code, a REIT must, among other things, invest substantially all of its assets in interests in real estate (including mortgages and other REITs) or cash and government securities, derive most of its income from rents from real property or interest on loans secured by mortgages on real property and distribute to shareholders annually a substantial portion of its otherwise taxable income.
Generally, REITs can be classified as equity REITs, mortgage REITs and hybrid REITs. Equity REITs invest the majority of their assets directly in real property and derive their income primarily from rents and capital gains from appreciation realized through property sales. Mortgage REITs invest the majority of their assets in real estate mortgages and derive their income primarily from interest payments. Hybrid REITs combine the characteristics of both equity and mortgage REITs. The values of securities issued by REITs are affected by tax and regulatory requirements and by perceptions of management skill. They also are subject to heavy cash flow dependency, defaults by borrowers or tenants, self-liquidation and the possibility of failing to qualify for tax-free status under the Code or to maintain exemption from the 1940 Act.
REITs may be affected by economic forces and other factors related to the real estate industry. REITs are sensitive to factors such as changes in real estate values, property taxes, interest rates, cash flow of underlying real estate assets, occupancy rates, government regulations affecting zoning, land use and rents, and management skill and creditworthiness of the issuer. Companies in the real estate industry may also be subject to liabilities under environmental and hazardous waste laws. REITS whose underlying assets include long-term health care properties, such as nursing, retirement and assisted living homes, may be affected by federal regulations concerning the health care industry. The Fund will indirectly bear its proportionate share of expenses, including management fees, paid by each REIT in which it invests in addition to the expenses of the Fund. The Fund is also subject to the risk that the REITs in which it invests will fail to qualify for tax-free pass-through of income under the Code and/or fail to qualify for an exemption from registration as an investment company under the 1940 Act. Mortgage REITs may be affected by the quality of the credit extended. A REITs return may be adversely affected when interest rates are high or rising.
Investing in REITs may involve risks similar to those associated with investing in small capitalization companies. REITs may have limited financial resources, may trade less frequently and in a limited volume and may be subject to more abrupt or erratic price movements than larger company securities. Historically, small capitalization stocks, such as REITs, have been more volatile in price than the larger capitalization stocks included in the S&P 500 ® .
Repurchase Agreements. The Fund may enter into repurchase agreements with financial institutions. A repurchase agreement is an agreement under which the Fund acquires a fixed income security (generally a security issued by the U.S. government or an agency thereof, a bankers acceptance, or a certificate of deposit) from a commercial bank, broker, or dealer, and simultaneously agrees to resell such security to the seller at an agreed upon price and date (normally, the next business day). Because the security purchased constitutes collateral for the repurchase obligation, a repurchase agreement may be considered a loan that is collateralized by the security purchased. The acquisition of a repurchase agreement may be deemed to be an acquisition of the underlying securities as long as the obligation of the seller to repurchase the securities is collateralized fully. The Fund follows certain procedures designed to minimize the risks inherent in such agreements. These procedures include effecting repurchase transactions only with creditworthy financial institutions whose condition will be continually monitored by the Adviser or applicable Sub-Adviser. The repurchase agreements entered into by the Fund will provide that the underlying collateral at all times shall have a value at least equal to 102% of the resale price stated in the agreement and consist only of securities permissible under Section 101(47)(A)(i) of the Bankruptcy Code (the Adviser or Sub-Adviser, as applicable, monitors compliance with this requirement). Under all repurchase agreements entered into by the Fund, the custodian or its agent must take possession of the underlying collateral. 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 Funds 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 repurchase were less than the repurchase price, the Fund could suffer a loss. It is the current policy of the Fund, not to invest in repurchase agreements that do not mature within seven days if any such investment, together with any other illiquid assets held by that Fund, amounts to more than 15% of the Funds total assets. The investments
of the Fund in repurchase agreements, at times, may be substantial when, in the view of the Adviser or applicable Sub-Advisers, liquidity or other considerations so warrant.
Reverse Repurchase Agreements. The Fund may enter into reverse repurchase agreements with respect to portfolio securities for temporary purposes (such as to obtain cash to meet redemption requests) when the liquidation of portfolio securities is deemed disadvantageous or inconvenient by the Adviser or applicable Sub-Adviser. Reverse repurchase agreements involve the sale of securities held by the Fund subject to the Funds agreement to repurchase the securities at an agreed-upon price, date and rate of interest. Such agreements are considered to be borrowings under the 1940 Act and will be limited, together with other borrowings, to 33 1/3% of the Funds total assets (including the amount borrowed) less all liabilities other than borrowings. While reverse repurchase transactions are outstanding, the Fund will maintain in a segregated account with the Funds custodian or a qualified sub-custodian, cash or liquid securities of an amount at least equal to the market value of the securities, plus accrued interest, subject to the agreement and will monitor the account to ensure that such value is maintained. Reverse repurchase agreements involve the risk that the market value of the securities sold by the Fund may decline below the price of the securities the Fund is obligated to repurchase and the interest received on the cash exchanged for the securities.
Securities Lending. The Fund may lend portfolio securities to brokers, dealers and other financial organizations that meet capital and other credit requirements or other criteria established by the Companys Board of Directors. These loans, if and when made, may not exceed 33 1/3% of the total asset value of the Fund (including the loan collateral). The Fund will not lend portfolio securities to the Adviser, any Sub-Adviser or their affiliates unless permissible under the 1940 Act and the rules and promulgations thereunder. Loans of portfolio securities will be fully collateralized by cash, letters of credit or U.S. government securities, and the collateral will be maintained in an amount equal to at least 102% of the current market value of the loaned domestic securities (105% of loaned foreign securities) by marking to market daily. Any gain or loss in the market price of the securities loaned that might occur during the term of the loan would be for the account of the Fund.
The Fund may pay a part of the interest earned from the investment of collateral, or other fee, to an unaffiliated or, to the extent consistent with the 1940 Act or the rules and SEC interpretations thereunder, affiliated third party for acting as the Funds securities lending agent.
By lending its securities, the Fund may increase its income by receiving payments from the borrower that reflect the amount of any interest or any dividends payable on the loaned securities as well as by either investing cash collateral received from the borrower in short-term instruments or obtaining a fee from the borrower when U.S. government securities or letters of credit are used as collateral. The Fund does not have the right to vote loaned securities. The Fund will attempt to call all loaned securities back to permit the exercise of voting rights on material matters, if time and jurisdictional restrictions permit. There is no guarantee that all loans can be recalled.
Securities of Unseasoned Issuers. The Fund may invest in securities of unseasoned issuers, including equity securities of unseasoned issuers which are not readily marketable. The term unseasoned refers to issuers which, together with their predecessors, have been in operation for less than three years.
Special Situation Companies. The Fund may invest in Special Situations. The term Special Situation shall be deemed to refer to a security of a company in which an unusual and possibly non-repetitive development is taking place which, in the opinion of the Adviser, may cause the security to attain a higher market value independently, to a degree, of the trend in the securities market in general. The particular development (actual or prospective), which may qualify a security as a Special Situation, may be one of many different types.
Such developments may include, among others, a technological improvement or important discovery or acquisition which, if the expectation for it materialized, would effect a substantial change in the companys business; a reorganization; a recapitalization or other development involving a security exchange or conversion; a merger, liquidation or distribution of cash, securities or other assets; a breakup or workout of a holding company; litigation which, if resolved favorably, would improve the value of the companys stock; a new or changed management; or material changes in management policies. A Special Situation may often involve a comparatively small company, which is not well known, and which has not been closely watched by investors generally, but it may also involve a
large company. The fact, if it exists, that an increase in the companys earnings, dividends or business is expected, or that a given security is considered to be undervalued, would not in itself be sufficient to qualify as a Special Situation. The Fund may invest in securities (even if not Special Situations) which, in the opinion of the Adviser, are appropriate investments for the Fund, including securities which the Adviser believes are undervalued by the market.
INVESTMENT LIMITATIONS
The Fund has adopted the following fundamental investment limitations which may not be changed with respect to the Fund without the affirmative vote of the holders of a majority of the Funds outstanding shares (as defined in Section 2(a) (42) of the 1940 Act). As used in this SAI and in the Prospectuses, shareholder approval and a majority of the outstanding shares of the Fund means, with respect to the approval of an investment advisory agreement, a distribution plan or a change in a fundamental investment limitation, the lesser of (1) 67% of the shares of the Fund represented at a meeting at which the holders of more than 50% of the outstanding shares of the Fund are present in person or by proxy, or (2) more than 50% of the outstanding shares of the Fund. The Funds investment goals and strategies described in the Prospectuses may be changed by the Companys Board of Directors without the approval of the Funds shareholders.
The Fund may not:
1. Borrow money except that (a) the Fund may borrow from banks or through reverse repurchase agreements in amounts up to 33 1 / 3 % of the value of its total assets (including the amount borrowed); and (b) the Fund may engage in transactions in mortgage dollar rolls which are accounted for as financings. For purposes of this limitation, investment strategies which either obligate the Fund to purchase securities or require the Fund to segregate assets are not considered to be borrowings. Asset coverage of at least 300% is required for all borrowings, except where the Fund has borrowed money for temporary purposes in amounts not exceeding 5% of its total assets;
2. Issue senior securities as defined in the 1940 Act, except as permitted by rule, regulation or order of the SEC;
3. Act as an underwriter of securities within the meaning of the Securities Act, except insofar as it might be deemed to be an underwriter upon disposition of certain portfolio securities acquired within the limitation on purchases of restricted securities;
4. Purchase or sell real estate (including real estate limited partnership interests), provided that the Fund may invest: (a) in securities secured by real estate or interests therein or issued by companies that invest in real estate or interests therein; or (b) in real estate investment trusts;
5. Purchase or sell commodities, except as permitted by the 1940 Act, as amended, and as interpreted or modified by the regulatory authority having jurisdiction from time to time;
6. Make loans, except through loans of portfolio securities and repurchase agreements, provided that for purposes of this restriction the acquisition of bonds, debentures or other debt instruments or interests therein and investment in government obligations, loan participations and assignments, short-term commercial paper, certificates of deposit and bankers acceptances shall not be deemed to be the making of a loan;
7. Invest 25% or more of its total assets, taken at market value at the time of each investment, in the securities of one or more issuers conducting their principal business activities in the same industry, provided that (a) there is no limitation with respect to (i) instruments issued or guaranteed by the United States, any state, territory or possession of the United States, the District of Columbia or any of their authorities, agencies, instrumentalities or political subdivisions, and (ii) repurchase agreements secured by the instruments described in clause (i); (b) wholly-owned finance companies will be considered to be in the industries of their parents if their activities are primarily related to financing the activities of the parents; and (c) utilities will be divided according to their services, for example, gas, gas transmission, electric and gas, electric and telephone will each be considered a separate industry; or
8. Purchase the securities of any one issuer, other than securities issued or guaranteed by the U.S. government
or its agencies or instrumentalities, if immediately after and as a result of such purchase, more than 5% of the value of the Funds total assets would be invested in the securities of such issuer, or more than 10% of the outstanding voting securities of such issuer would be owned by the Fund, except that up to 25% of the value of the Funds total assets may be invested without regard to such limitations.
In addition to the fundamental investment limitations specified above, the Fund is subject to the following non-fundamental limitations. These non-fundamental restrictions may be changed without shareholder approval, in compliance with applicable law and regulatory policy. The Fund may not:
1. Make investments for the purpose of exercising control or management, but investments by the Fund in wholly-owned investment entities created under the laws of certain countries will not be deemed the making of investments for the purpose of exercising control or management;
2. Purchase securities on margin, except that the Fund may use margin to the extent necessary to engage in short sales and may obtain such short-term credits as are necessary for the clearance of portfolio transactions; and provided that margin deposits in connection with options, futures contracts, options on futures contracts, transactions in currencies or other derivative instruments shall not constitute purchasing securities on margin; or
3. Pledge, mortgage or hypothecate assets, except as permitted by the 1940 Act.
The Fund may invest in securities issued by other investment companies within the limits prescribed by the 1940 Act. Pursuant to orders issued by the SEC to ETFs and procedures approved by the Board, the Fund may invest in ETFs in excess of the limits of the 1940 Act. As a shareholder of another investment company, the Fund would bear, along with other shareholders, its pro rata portion of the other investment companys expenses, including advisory fees. These expenses would be in addition to the advisory and other expenses that the Fund bears directly in connection with its own operations.
Securities held by the Fund generally may not be purchased from, sold or loaned to the Adviser, any Sub-Adviser or their affiliates or any of their directors, officers or employees, acting as principal, unless pursuant to a rule or exemptive order under the 1940 Act.
Under the 1940 Act, the Fund will be required to maintain asset coverage of at least 300% for borrowings from a bank. In the event that such asset coverage is below 300%, the Fund will be required to reduce the amount of its borrowings to obtain 300% asset coverage within three business days.
The 1940 Act does not directly restrict an investment companys ability to invest in commodities, but does require that every investment company have a fundamental investment policy governing such investments. The Fund has adopted fundamental policies that would permit direct investment in commodities.
Any collateral arrangements with respect to, if applicable, the writing of options and futures contracts, options on futures contracts, short sales and other similar instruments, and collateral arrangements with respect to initial and variation margin are not deemed to be a pledge of assets.
Senior securities may include any obligation or instrument issued by a fund evidencing indebtedness. The 1940 Act generally prohibits funds from issuing senior securities, although it does not treat certain transactions as senior securities, such as certain borrowings, short sales, reverse repurchase agreements, firm commitment agreements and standby commitments, with appropriate earmarking or segregation of assets to cover such obligation.
If a percentage restriction under one of the Funds investment policies or limitations or the use of assets is adhered to at the time a transaction is effected, later changes in percentages resulting from changing values will not be considered a violation (except with respect to any restrictions that may apply to borrowings or senior securities issued by the Fund).
DISCLOSURE OF PORTFOLIO HOLDINGS
The Company has adopted, on behalf of the Fund, a policy relating to the disclosure of the Funds portfolio holdings
to ensure that disclosure of information about portfolio holdings is in the best interests of Fund shareholders. The policies relating to the disclosure of the Funds portfolio holdings are designed to allow disclosure of portfolio holdings information where necessary to the Funds operation without compromising the integrity or performance of the Fund. It is the policy of the Company that disclosure of the Funds portfolio holdings to a select person or persons prior to the release of such holdings to the public (selective disclosure) is prohibited, unless there are legitimate business purposes for selective disclosure.
The Company discloses portfolio holdings information as required in regulatory filings and shareholder reports, discloses portfolio holdings information as required by federal and state securities laws and may disclose portfolio holdings information in response to requests by governmental authorities. As required by the federal securities laws, including the 1940 Act, the Company will disclose the Funds portfolio holdings in applicable regulatory filings, including shareholder reports, reports on Form N-CSR and Form N-Q or such other filings, reports or disclosure documents as the applicable regulatory authorities may require.
The Company may distribute or authorize the distribution of information about the Funds portfolio holdings that is not publicly available to its third-party service providers, which include The Bank of New York Mellon, the custodian; BNY Mellon Investment Servicing (US) Inc. (BNY), the administrator, accounting agent and transfer agent;[ ], the Funds independent registered public accounting firm; Drinker Biddle & Reath LLP, legal counsel; Merrill Corporation, the financial printer; and Glass Lewis & Co. and RiskMetrics Group , proxy voting services. These service providers are required to keep such information confidential, and are prohibited from trading based on the information or otherwise using the information except as necessary in providing services to the Fund. Such holdings are released on conditions of confidentiality, which include appropriate trading prohibitions. Conditions of confidentiality include confidentiality terms included in written agreements, implied by the nature of the relationship (e.g. attorney-client relationship), or required by fiduciary or regulatory principles (e.g., custody services provided by financial institutions).
Portfolio holdings may also be disclosed, upon authorization by a designated officer of the Adviser, to certain independent reporting agencies recognized by the SEC as acceptable agencies for the reporting of industry statistical information. Disclosures to financial consultants are also subject to a confidentiality agreement and/or trading restrictions as well as a 15 - day time lag. The foregoing disclosures are made pursuant to the Companys policy on selective disclosure of portfolio holdings. The Board of Directors of the Company or a committee thereof may, in limited circumstances, permit other selective disclosure of portfolio holdings subject to a confidentiality agreement and/or trading restrictions. Portfolio holdings may also be provided earlier to shareholders and their agents who receive redemptions in kind that reflect a pro rata allocation of all securities held in the Funds portfolio.
The Adviser reserves the right to refuse to fulfill any request for portfolio holdings information from a shareholder or non-shareholder if it believes that providing such information will be contrary to the best interests of the Fund.
Any violations of the policy set forth above as well as any corrective action undertaken to address such violations must be reported by the Adviser, director, officer or third party service provider to the Companys Chief Compliance Officer, who will determine whether the violation should be reported immediately to the Board of Directors of the Company or at its next quarterly Board meeting.
MANAGEMENT OF THE COMPANY
The Companys Leadership Structure
The business and affairs of the Company are managed under the oversight of the Board of Directors (the Board), subject to the laws of the State of Maryland and the Companys Charter. The Directors are responsible for deciding matters of overall policy and overseeing the actions of the Companys service providers. The officers of the Company conduct and supervise the Companys daily business operations.
Directors who are not deemed to be interested persons of the Company as defined in the 1940 Act, are referred to as Independent Directors. Directors who are deemed to be interested persons of the Company are referred to as Interested Directors. The Board is currently composed of six Independent Directors and two Interested Directors. The Board has selected Arnold M. Reichman, an Independent Director, to act as Chairman. Mr. Reichmans duties include presiding at meetings of the Board and interfacing with management to address significant issues that may arise between regularly scheduled Board and Committee meetings. In the performance of his duties, Mr. Reichman will consult with the other Independent Directors and the Companys officers and legal counsel, as appropriate. The Chairman may perform other functions as requested by the Board from time to time.
The Board meets as often as necessary to discharge its responsibilities. Currently, the Board conducts regular, in-person meetings at least four times a year, and holds special in-person or telephonic meetings as necessary to address specific issues that require attention prior to the next regularly scheduled meeting. The Board also relies on professionals, such as the Companys independent registered public accounting firms and legal counsel, to assist the Directors in performing their oversight responsibilities.
The Board has established four standing committees Audit, Executive, Nominating and Governance, and Regulatory Oversight Committees. The Board may establish other committees, or nominate one or more Directors to examine particular issues related to the Boards oversight responsibilities, from time to time. Each Committee meets periodically to perform its delegated oversight functions and reports its findings and recommendations to the Board. For more information on the Committees, see the section Standing Board Committees, below.
The Board has determined that the Companys leadership structure is appropriate because it allows the Board to effectively perform its oversight responsibilities.
Directors and Executive Officers
The Directors and executive officers of the Company, their dates of birth, business addresses and principal occupations during the past five years are set forth below.
Name, Address, and
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Position(s)
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Term of Office
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Principal Occupation(s)
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Number of
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Other Directorships
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Robert Sablowsky
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Director |
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1991 to present |
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Since July 2002, Senior Vice President and prior thereto, Executive Vice President, of Oppenheimer & Co., Inc. (a registered broker-dealer). |
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17 |
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Kensington Funds (registered investment company) (until 2009) |
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OFFICERS |
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Salvatore Faia, JD,
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President and Chief Compliance Officer |
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President 2009 to present and Chief Compliance Officer 2004 to present |
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President, Vigilant Compliance Services since 2004; and Director of Energy Income Partnership since 2005. |
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N/A |
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N/A |
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Joel Weiss
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Treasurer |
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2009 to present |
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Since 1993 Vice President and Managing Director, BNY Mellon Investment Servicing (US) Inc. (financial services company) |
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N/A |
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N/A |
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Jennifer Rogers
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Secretary |
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2007 to present |
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Since 2005, Managing Director and Senior Counsel, BNY Mellon Investment Servicing (US) Inc. (financial services company). |
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N/A |
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N/A |
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James G. Shaw
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Assistant Treasurer |
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2005 to present |
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Since 1995, Vice President of BNY Mellon Investment Servicing (US) Inc. (financial services company) |
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N/A |
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N/A |
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Michael P. Malloy
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Assistant Secretary |
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1999 to present |
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Since 1993, Partner, Drinker Biddle & Reath LLP (law firm) |
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N/A |
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N/A |
* Each Director oversees seventeen portfolios of the Company that are currently offered for sale.
(1) Subject to the Companys Retirement Policy, each Director may continue to serve as a Director until the last day of the calendar year in which the applicable Director attains age 75 or until his successor is elected and qualified or his death, resignation or removal. The Board reserves the right to waive the requirements of the Policy with respect to an individual Director. The Board has approved a waiver of the policy with respect to Mr. Brodsky. Each officer holds office at the pleasure of the Board of Directors until the next special meeting of the Company or until his or her successor is duly elected and qualified, or until he or she dies, resigns or is removed.
(2) Messrs. Sablowsky and Nusblatt are considered interested persons of the Company as that term is defined in the 1940 Act and are referred to as Interested Directors. Mr. Sablowsky is considered an Interested Director of the Company by virtue of his position as a senior officer of Oppenheimer & Co., Inc., a registered broker-dealer. Mr. Nusblatt is considered an Interested Director of the Company by virtue of his position as the Head of U.S. Fund Accounting and Administration at BNY Mellon Asset Servicing, administrator and accounting agent and transfer agent to the Company.
Director Experience, Qualifications, Attributes and/or Skills
The information above includes each Directors principal occupations during the last five years. Each Director possesses extensive additional experience, skills and attributes relevant to his qualifications to serve as a Director. The cumulative background of each Director led to the conclusion that each Director should serve as a Director of the Company. Mr. Giordano has years of experience as a consultant to financial services organizations and also serves on the boards of other registered investment companies. Mr. Reichman brings decades of investment management experience to the Board, in addition to senior executive-level management experience. Mr. Straniere has been a practicing attorney for over 30 years and also serves on the boards of an asset management company and another registered investment company. Mr. Brodsky has over 40 years of senior executive level management experience in the cable television and communications industry. Mr. Sablowsky has demonstrated leadership and management abilities as evidenced by his senior executive level positions in the financial services industry. Mr. Nusblatt has demonstrated leadership and management abilities as evidenced by his senior executive level positions in the financial services industry. Mr. Carnall has decades of senior executive-level management experience in the banking and financial services industry and also serves on the boards of various corporations and a bank. Mr. Chandler has demonstrated leadership and management abilities as evidenced by his senior executive level positions in the investment technology consulting/services and investment banking/brokerage industries, and also serves on various boards.
Standing Committees
The responsibilities of each Committee of the Board and its members are described below.
Audit Committee. The Board has an Audit Committee comprised of three Independent Directors. The current members of the Audit Committee are Messrs. Brodsky, Giordano and Reichman. The Audit Committee, among other things, reviews results of the annual audit and approves the firm(s) to serve as independent auditors. The Audit Committee convened four times during the fiscal year ended August 31, 2012.
Executive Committee. The Board has an Executive Committee comprised of one Interested Director and two Independent Directors. The current members of the Executive Committee are Messrs. Giordano, Reichman and Sablowsky. The Executive Committee may generally carry on and manage the business of the Company when the Board of Directors is not in session. The Executive Committee did not meet during the fiscal year ended August 31, 2012.
Nominating and Governance Committee. The Board has a Nominating and Governance Committee comprised only of Independent Directors. The current members of the Nominating and Governance Committee are Messrs. Carnall, Giordano, and Reichman. The Nominating and Governance Committee recommends to the Board of Directors all persons to be nominated as Directors of the Company. The Nominating and Governance Committee will consider nominees recommended by shareholders. Recommendations should be submitted to the Committee care of
the Companys Secretary. The Nominating and Governance Committee convened three times during the fiscal year ended August 31, 2012.
Regulatory Oversight Committee . The Board has a Regulatory Oversight Committee comprised of one Interested Director and three Independent Directors. The current members of the Regulatory Oversight Committee are Messrs. Carnall, Reichman, Sablowsky and Straniere. The Regulatory Oversight Committee monitors regulatory developments in the mutual fund industry and focuses on various regulatory aspects of the operation of the Company. The Regulatory Oversight Committee convened four times during the fiscal year ended August 31, 2012.
Risk Oversight
The Board of Directors performs its risk oversight function for the Company through a combination of (1) direct oversight by the Board as a whole and Board committees and (2) indirect oversight through the Companys investment advisers and other service providers, Company officers and the Companys Chief Compliance Officer. The Company is subject to a number of risks, including but not limited to investment risk, compliance risk, operational risk, reputational risk, credit risk and counterparty risk. Day-to-day risk management with respect to the Company is the responsibility of the Companys investment advisers or other service providers (depending on the nature of the risk) that carry out the Companys investment management and business affairs. Each of the investment advisers and the other service providers have their own independent interest in risk management and their policies and methods of risk management will depend on their functions and business models and may differ from the Companys and each others in the setting of priorities, the resources available or the effectiveness of relevant controls.
The Board provides risk oversight by receiving and reviewing on a regular basis reports from the Companys investment advisers or other service providers, receiving and approving compliance policies and procedures, periodic meetings with the Companys portfolio managers to review investment policies, strategies and risks, and meeting regularly with the Companys Chief Compliance Officer to discuss compliance reports, findings and issues. The Board also relies on the Companys investment advisers and other service providers, with respect to the day-to-day activities of the Company, to create and maintain procedures and controls to minimize risk and the likelihood of adverse effects on the Companys business and reputation.
Board oversight of risk management is also provided by various Board Committees. For example, the Audit Committee meets with the Companys independent registered public accounting firms to ensure that the Companys respective audit scopes include risk-based considerations as to the Companys financial position and operations.
The Board may, at any time and in its discretion, change the manner in which it conducts risk oversight. The Boards oversight role does not make the Board a guarantor of the Companys investments or activities.
Director Ownership of Shares of the Company
The following table sets forth the dollar range of equity securities beneficially owned by each Director in the Fund and in all of the portfolios (which for each Director comprise all registered investment companies within the Companys family of investment companies overseen by him), as of December 31, 2011.
Name of Director |
|
Dollar Range of
|
|
Aggregate Dollar Range of
|
|
INDEPENDENT DIRECTORS |
|||||
Julian A. Brodsky |
|
[ ] |
|
$[ ] |
|
J. Richard Carnall |
|
[ ] |
|
$[ ]-$[ ] |
|
Name of Director |
|
Dollar Range of
|
|
Aggregate Dollar Range of
|
|
Gregory P. Chandler |
|
[ ] |
|
$[ ]-$[ ] |
|
Nicholas A. Giordano |
|
[ ] |
|
$[ ]-$[ ] |
|
Arnold M. Reichman |
|
[ ] |
|
$[ ] |
|
Robert A. Straniere |
|
[ ] |
|
$[ ]-$[ ] |
|
INTERESTED DIRECTORS |
|||||
Jay F. Nusblatt |
|
[ ] |
|
$[ ]-$[ ] |
|
Robert Sablowsky |
|
[ ] |
|
[ ] $[ ] |
|
Directors and Officers Compensation
Effective January 1, 2012, the Company pays each Director a retainer at the rate of $27,500 annually, $3,500 for each regular meeting of the Board of Directors, $2,000 for each committee meeting or special meeting of the Board of Directors attended in-person and $1,000 for each committee meeting or special meeting of the Board of Directors and Committee meeting attended telephonically. From February 1, 2010 to December 31, 2011, the Company paid each Director a retainer of at the rate of $17,500 annually, $3,500 for each regular meeting of the Board of Directors, $1,500 for each special meeting of the Board of Directors and Committee meeting attended in person and $1,000 for each special meeting of the Board of Directors and Committee meeting attended telephonically. The Chairman of the Board receives an additional fee of $17,500 per year for his services in this capacity, and each Chairman of the Audit Committee, Nominating and Governance Committee and Regulatory Oversight Committee receives an additional fee of $4,000 per year for his services. From February 2, 2010 to December 31, 2011, the Chairman of the Board received an additional fee of $12,000 per year for his services in this capacity.
Directors are reimbursed for any reasonable out-of-pocket expenses incurred in attending meetings of the Board of Directors or any committee thereof. The Company also compensates its President and Chief Compliance Officer for his services to the Company. For the fiscal year ended August 31, 2012, each of the following members of the Board of Directors and the President, Treasurer and Chief Compliance Officer received compensation from the Company in the following amounts:
Name of Director/Officer |
|
Aggregate
|
|
Pension or
|
|
Estimated
|
|
Total
|
|
||
|
|
|
|
|
|
|
|
|
|
||
Independent Directors: |
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
||
Julian A. Brodsky, Director |
|
$ |
[ ] |
|
N/A |
|
N/A |
|
$ |
[ ] |
|
|
|
|
|
|
|
|
|
|
|
||
J. Richard Carnall, Director |
|
$ |
[ ] |
|
N/A |
|
N/A |
|
$ |
[ ] |
|
Gregory P. Chandler* |
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
||
Nicholas A. Giordano, Director |
|
$ |
[ ] |
|
N/A |
|
N/A |
|
$ |
[ ] |
|
Name of Director/Officer |
|
Aggregate
|
|
Pension or
|
|
Estimated
|
|
Total
|
|
||
|
|
|
|
|
|
|
|
|
|
||
Francis J. McKay, Director** |
|
$ |
[ ] |
|
N/A |
|
N/A |
|
$ |
[ ] |
|
|
|
|
|
|
|
|
|
|
|
||
Arnold M. Reichman, Director and Chairman |
|
$ |
[ ] |
|
N/A |
|
N/A |
|
$ |
[ ] |
|
Marvin E. Sternberg, Director*** |
|
$ |
[ ] |
|
|
|
|
|
$ |
[ ] |
|
|
|
|
|
|
|
|
|
|
|
||
Robert A. Straniere, Director |
|
$ |
[ ] |
|
N/A |
|
N/A |
|
$ |
[ ] |
|
Interested Directors: |
|
|
|
|
|
|
|
|
|
||
Jay F. Nusblatt* |
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
||
Robert Sablowsky, Director |
|
$ |
755.90 |
|
N/A |
|
N/A |
|
$ |
40,908.99 |
|
|
|
|
|
|
|
|
|
|
|
||
Officers: |
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
||
Salvatore Faia, Esquire, CPA Chief Compliance Officer and President |
|
$ |
[ ] |
|
N/A |
|
N/A |
|
$ |
[ ] |
|
*Messrs. Chandler and Nusblatt were elected to the Board on June 19, 2012 and, therefore, the compensation reflected is for the period June 19, 2012 through August 31, 2012.
**Mr. McKay died on December 17, 2011.
***Mr. Sternberg died on October 29, 2011.
As of December 31, 2011, the Independent Directors and their respective immediate family members (spouse or dependent children) did not own beneficially or of record any securities of the Companys investment advisers or distributor, or of any person directly or indirectly controlling, controlled by, or under common control with the investment advisers or distributor.
On October 24, 1990, the Company adopted, as a participating employer, the Fund Office Retirement Profit-Sharing Plan and Trust Agreement, a retirement plan for employees, pursuant to which the Company will contribute on a quarterly basis amounts equal to 10% of the quarterly compensation of each eligible employee. Edward J. Roach, who served as President and Treasurer until June 1, 2009, has been the only employee who has participated in the Fund Office Retirement Profit-Sharing Plan and Trust Agreement. No officer, Director or employee of the Adviser, any Sub-Adviser or the distributor currently receives any compensation from the Company.
CODE OF ETHICS
The Company, the Adviser, certain Sub-Advisers and Foreside Funds Distributors, LLC (formerly, BNY Mellon Distributors Inc.) (Foreside Distributors) have each adopted a code of ethics under Rule 17j-1 of the 1940 Act that permits personnel subject to the codes to invest in securities, including securities that may be purchased or held by the Company. Roaring Blue Lion Capital Management, LLC and Starwood Real Estate Securities, LLC have each adopted a code of ethics under Rule 17j-1 of the 1940 Act that does not permit personnel subject to the codes to invest in securities that may be purchased or held by the Fund through each sub-adviser, respectively.
PROXY VOTING
The Board of Directors has delegated the responsibility of voting proxies with respect to the portfolio securities purchased and/or held by the Fund to the Funds Adviser and Sub-Advisers, subject to the Boards continuing oversight. In exercising its voting obligations, the Adviser and each Sub-Adviser is guided by its general fiduciary duty to act prudently and in the interest of the Fund. The Adviser and each Sub-Adviser will consider factors affecting the value of the Funds investments and the rights of shareholders in its determination on voting portfolio
securities.
The Adviser and each Sub-Adviser will vote proxies in connection with securities in which the portion of the Funds assets allocated to the Adviser and each Sub-Adviser are invested, respectively, in accordance with its proxy policies and procedures, which, except for Trellus Management Co., LLC (Trellus), are included in Appendix B-H to this SAI. To assist Trellus and Maerisland Capital, LLC (Maerisland) in their responsibility for voting proxies and the overall proxy voting process, Trellus and Maerisland have retained Glass Lewis & Co. (Glass Lewis) and Risk Metrics Group Inc. (Risk Metrics) respectively, as an expert in the proxy voting and corporate governance area. The services provided by Risk Metrics and Glass Lewis include in-depth research, global issuer analysis, and voting recommendations as well as vote execution, reporting and record keeping. The proxy policies of the Adviser and each Sub-Adviser differ. If the Adviser and/or one or more Sub-Advisers each has responsibility for voting a particular proxy, it is possible that the Adviser and/or the Sub-Advisers will disagree on how to vote the proxy.
The Company is required to disclose annually the Funds complete proxy voting record on Form N-PX. The Funds proxy voting record for the most recent 12 month period ended June 30th is available upon request by calling 1-866-882-1226. The Funds Form N-PX is also available on the SECs website at www.sec.gov.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of [ ], 2012 to the Companys knowledge, the following named persons at the addresses shown below were owners of record of approximately 5% or more of the total outstanding shares of the Fund as indicated below. See Additional Information Concerning Company Shares below. Any shareholder that owns 25% or more of the outstanding shares of a portfolio or class may be presumed to control (as that term is defined in the 1940 Act) the portfolio or class. Shareholders controlling a portfolio or class could have the ability to vote a majority of the shares of the portfolio or class on any matter requiring approval of the shareholders of the portfolio or class.
Name of Fund |
|
Shareholder Name and Address |
|
Number and Percentage of
|
|
||
S1 Fund Class I |
|
|
|
[ ] |
|
[ ] |
% |
[As of [ ], the Directors and officers as a group owned [less than 1% of the outstanding shares of each portfolio or class within the Company.]
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISER
Simple Alternatives, LLC (SA or the Adviser) is a professional investment management firm registered with the SEC under the Investment Advisers Act of 1940. The Adviser was established in October 2009. James Dilworth owns 100% of the voting securities of the Adviser.
Advisory Agreement with the Company. The Adviser renders advisory services to the Fund pursuant to an Investment Advisory Agreement (Advisory Agreement) dated as of September 30, 2010.
Subject to the supervision of the Companys Board of Directors, the Adviser will provide for the overall management of the Fund including (i) the provision of a continuous investment program for the Fund, including investment research and management with respect to all securities, investments, cash and cash equivalents, (ii) the determination from time to time of what securities and other investments will be purchased, retained, or sold by the Fund, and (iii) the placement from time to time of orders for all purchases and sales made for the Fund. The Adviser will provide the services rendered by it in accordance with the Funds investment objective, restrictions and policies as stated in the Prospectuses and in this SAI. The Adviser will not be liable for any error of judgment, mistake of law, or for any loss suffered by the Fund in connection with the performance of the Advisory Agreement, except a loss resulting from a breach of fiduciary duty with respect to the receipt of compensation for services or a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of the Adviser in the performance of its duties, or from reckless disregard of its obligations and duties under the Advisory Agreement.
For its services to the Fund, the Adviser is entitled to receive a monthly advisory fee at an annual rate of 2.75% of the Funds average daily net assets. The Adviser has contractually agreed to forgo all or a portion of its advisory fee and/or reimburse expenses in an aggregate amount equal to the amount by which the Total Annual Fund Operating Expenses (other than acquired fund fees and expenses, short sale dividend expenses, brokerage commissions, litigation, extraordinary items, interest or taxes) exceeds 2.95% and 3.20% of the average daily net assets attributable to the Funds I Shares and R Shares, respectively. This contractual limitation is in effect until at least December 31, 2014 and may not be terminated without Board approval. Because dividend expenses on short sales, acquired fund fees and expenses, brokerage commissions, litigation, extraordinary items, interest and taxes are excluded from the expense limitation, Total Annual Fund Operating Expenses (after fees forgone and expense reimbursements) are expected to exceed the applicable expense limitation. If at any time during the first three years the Funds Advisory Agreement with the Adviser is in effect, the Funds Total Annual Fund Operating Expenses for that year are less than 2.95% or 3.20%, as applicable, the Adviser is entitled to reimbursement by the Fund of the advisory fees forgone and other payments remitted by the Adviser to the Fund during such three-year period if such reimbursement by the Fund does not cause the Fund to exceed existing expense limitations.
The Adviser will pay all expenses incurred by it in connection with its activities under the Advisory Agreement. The Fund bears all of its own expenses not specifically assumed by the Adviser. General expenses of the Company not readily identifiable as belonging to a portfolio of the Company are allocated among all investment portfolios by or under the direction of the Companys Board of Directors in such manner as it deems to be fair and equitable. Expenses borne by the Fund include, but are not limited to the following (or the Funds share of the following): (a) the cost (including brokerage commissions) of securities purchased or sold by the Fund and any losses incurred in connection therewith; (b) fees payable to and expenses incurred on behalf of the Fund by the Adviser; (c) filing fees and expenses relating to the registration and qualification of the Company and the Funds shares under federal and/or state securities laws and maintaining such registrations and qualifications; (d) fees and salaries payable to the Companys Directors and officers; (e) taxes (including any income or franchise taxes) and governmental fees; (f) costs of any liability and other insurance or fidelity bonds; (g) any costs, expenses or losses arising out of a liability of or claim for damages or other relief asserted against the Company or the Fund for violation of any law; (h) legal, accounting and auditing expenses, including legal fees of special counsel for the independent Directors; (i) charges of custodians and other agents; (j) expenses of setting in type and printing prospectuses, statements of additional information and supplements thereto for existing shareholders, reports, statements, and confirmations to shareholders and proxy material that are not attributable to a class; (k) costs of mailing prospectuses, statements of additional information and supplements thereto to existing shareholders, as well as reports to shareholders and proxy materials that are not attributable to a class; (1) any extraordinary expenses; (m) fees, voluntary assessments and other expenses incurred in connection with membership in investment company organizations; (n) costs of mailing and tabulating proxies and costs of shareholders and Directors meetings; (o) costs of independent pricing services to value a portfolios securities; and (p) the costs of investment company literature and other publications provided by the Company to its Directors and officers. Distribution expenses, transfer agency expenses, expenses of preparation, printing and mailing prospectuses, statements of additional information, proxy statements and reports to shareholders, and organizational expenses and registration fees, identified as belonging to a particular class of the Company, are allocated to such class.
For the past two fiscal years, the Fund paid Simple Alternatives advisory fees and Simple Alternatives waived advisory fees as follows:
|
|
Advisory Fees Paid
|
|
Waivers |
|
Reimbursements |
|
|||
For the fiscal period September 30, 2010 through August 31, 2011* |
|
$ |
[ ] |
|
$ |
[ ] |
|
$ |
[ ] |
|
|
|
|
|
|
|
|
|
|||
For the fiscal year ended August 31, 2012 |
|
$ |
[ ] |
|
$ |
[ ] |
|
$ |
[ ] |
|
*Commencement of operations September 30, 2010.
Disclosure relating to the material factors and the conclusions with respect to those factors that formed the basis for the Board of Directors approval of the Funds Advisory Agreement is available in the Funds annual report to shareholders dated August 31, 2012, with the exception of Maerisland, which is available in the Funds semi-annual report dated February 29, 2012, which may be obtained by calling 1-866-882-1226 or visiting the SECs website at www.sec.gov.
The Advisory Agreement provides that the Adviser shall at all times have all rights in and to the Funds name and all investment models used by or on behalf of the Fund. The Adviser may use the Funds name or any portion thereof in connection with any other mutual fund or business activity without the consent of any shareholder, and the Company has agreed to execute and deliver any and all documents required to indicate its consent to such use.
INVESTMENT SUB-ADVISERS
Each Sub-Adviser shall, subject to the supervision and oversight of the Adviser, manage the investment and reinvestment of such portion of the assets of the Fund, as the Adviser may from time to time allocate to such Sub-Adviser for management. The Adviser pays the Sub-Advisers out of its advisory fees.
The Fund has received an exemptive order from the SEC that permits the Adviser to engage or terminate a Sub-Adviser, and to enter into and materially amend an existing Sub-Advisory Agreement, upon the approval of the Board of Directors, without obtaining shareholder approval. Shareholders will be notified of any changes in Sub-Advisers. The Adviser selects Sub-Advisers based upon the Sub-Advisers skills in managing assets pursuant to particular investment styles and strategies. The Adviser monitors existing Sub-Advisers based on their investment styles, strategies, and results in managing assets for specific asset classes. Each Sub-Adviser has discretion to select portfolio securities for its portion of the Fund, but must select those securities according to the Funds investment objectives and restrictions.
The Adviser does not determine what investments will be purchased or sold for the Fund with respect to the portions of the Fund managed by the Sub-Advisers. Because each Sub-Adviser manages its portion of the Fund independently from the others, the same security may be held in two or more different portions of the Fund or may be acquired for one portion at a time when a Sub-Adviser of another portion deems it appropriate to dispose of the security from that other portion. Similarly, under some market conditions, one or more of the Sub-Advisers may believe that temporary, defensive investments in short-term instruments or cash are appropriate when another Sub-Adviser or Sub-Advisers believe continued exposure to the broader securities market is appropriate. Because each Sub-Adviser directs the trading for its portion of the Fund and does not aggregate its transactions with those of the other Sub-Advisers, the Fund may incur higher brokerage costs than would be the case if a single adviser or Sub-Adviser were managing the Fund.
The current Sub-Advisers to the Fund are set forth below.
Sub-Advisers |
|
Roaring Blue Lion Capital Management, LLC (Blue Lion) 8115 Preston Road, Suite 550 Dallas, TX 75225 |
Charles W. Griege, Jr. is the Managing Partner of Blue Lion. Blue Lion employs a long/short strategy with a value oriented bias in managing its portion of the Fund. |
Courage Capital Management, LLC (Courage Capital) 4400 Harding Road Ste. 503 Nashville, Tennessee 37205 |
Courage Capital is controlled by its founder, Richard C. Patton. Courage Capital employs an event driven investment strategy, including investments in special situations companies and distressed securities, in managing its portion of the Fund. |
Lauren Templeton Capital Management, LLC (LT) 633 Chestnut Street, Suite 820 Chattanooga, Tennessee 37450 |
Lauren C. Templeton is managing member of LT. LT uses a global value investment strategy in managing its portion of the Fund. |
Maerisland Capital, LLC (Maerisland) 500 Newport Center Drive, Suite 600 Newport Beach, CA 92660 |
Mark Beder is the principal owner of Maerisland. Maerisland uses a long/short global investment strategy that focuses on proprietary research in managing its portion of the Fund. |
Starwood Real Estate Securities, LLC (SRES) 591 West Putnam Avenue Greenwich, Connecticut 06830 |
SRES is jointly owned by Matthew C. Gilman and Barry Sternlich. SRES employs a long/short equity investment strategy, with a focus on public real estate securities, in managing its portion of the Fund. |
Trellus Management Co., LLC (Trellus) 350 Madison Avenue New York, New York 10017 |
Adam Usdan is the sole owner of Trellus. Trellus employs a long/short equity investment strategy in managing its portion of the Fund. |
Sub-Advisory Agreements with the Adviser. Each of the Sub-Advisory Agreements provides that the Sub-Adviser will manage the investment and reinvestment of such portion of the assets of the Fund as the Adviser may from time to time allocate to the Sub-Adviser in accordance with the Funds objective, policies and restrictions and any investment guidelines established by the Adviser. Each Sub-Adviser will, subject to the supervision and control of the Adviser, determine in its discretion which issuers and securities will be purchased, held, sold or exchanged by the Fund, and will place orders with and give instruction to brokers and dealers to cause the execution of such transactions. The Sub-Advisers are required to furnish at their own expense all investment facilities necessary to perform its obligations under the Sub-Advisory Agreements.
Generally, each Sub-Advisory Agreement may be terminated without penalty by vote of the Companys Board of Directors or by vote of a majority of the outstanding voting securities of the Fund, upon 60 days written notice, or by the Adviser immediately upon notice to the Sub-Adviser, and each such agreement terminates automatically in the event of an assignment (as defined in the 1940 Act). Each Sub-Advisory Agreement also may be terminated by a Sub-Adviser upon 30 days written notice and automatically terminates upon termination of the Advisory Agreement.
Disclosure relating to the material factors and conclusions with respect to those factors that formed the basis for the Board of Directors approval of each Sub-Advisory Agreement is available in the Funds annual report to shareholders dated August 31, 2012, except for the Sub-Advisory Agreement related to Maerisland, which is available in the Funds semi-annual report dated February 29, 2012 . These reports may be obtained by calling 1-866-882-1226 or visiting the SECs website at www.sec.gov.
THE PORTFOLIO MANAGERS
This section includes information about the Funds portfolio managers, including information about other accounts
they manage, the dollar range of Fund shares they own and how they are compensated.
Other Accounts. In addition to the Fund, the portfolio managers are responsible for the day-to-day management of certain other accounts, as listed below. The information below is provided as of August 31, 2012.
Name of Portfolio Manager
|
|
Type of Accounts |
|
Total
|
|
Total
|
|
# of Accounts
|
|
Total Assets
|
|
||
1. James Dilworth |
|
Other Registered Investment Companies: |
|
0 |
|
$ |
0 |
|
0 |
|
$ |
0 |
|
|
|
Other Pooled Investment Vehicles: |
|
0 |
|
$ |
0 |
|
0 |
|
$ |
0 |
|
|
|
Other Accounts: |
|
0 |
|
$ |
0 |
|
0 |
|
$ |
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||
2 Bruce MacDonald |
|
Other Registered Investment Companies: |
|
0 |
|
$ |
0 |
|
0 |
|
$ |
0 |
|
|
|
Other Pooled Investment Vehicles: |
|
0 |
|
$ |
0 |
|
0 |
|
$ |
0 |
|
|
|
Other Accounts: |
|
0 |
|
$ |
0 |
|
0 |
|
$ |
0 |
|
Compensation. The Adviser compensates the Funds portfolio managers for their management of the Fund. Each of the portfolio managers compensation consists of a cash base salary and a discretionary performance bonus paid in cash that is based on overall profitability of the Adviser and performance of the Fund, and therefore in part based on the value of the Funds net assets and other client accounts they are managing.
Conflicts of Interests. The portfolio managers management of other accounts may give rise to potential conflicts of interest in connection with their management of the Funds investments, on the one hand, and the investments of the other accounts, on the other. The other accounts may have the same investment objective as the Fund. Therefore, a potential conflict of interest may arise as a result of the identical investment objectives, whereby a portfolio manager could favor one account over another. Another potential conflict could include the portfolio managers knowledge about the size, timing and possible market impact of Fund trades, whereby a portfolio manager could use this information to the advantage of other accounts and to the disadvantage of the Fund. However, the Adviser has established policies and procedures to ensure that the purchase and sale of securities among all accounts it manages are fairly and equitably allocated, and they will generally be allocated pro rata in proportion to the size of the orders or redemptions placed.
Blue Lion
Other Accounts. In addition to the Fund, the portfolio manager is responsible for the day-to-day management of certain other accounts, as listed below. The information below is provided as of August 31, 2012.
Name of Portfolio Manager
|
|
Type of Accounts |
|
Total
|
|
Total
|
|
# of Accounts
|
|
Total Assets
|
|
||
1. Charles W. Griege, Jr. |
|
Other Registered Investment Companies: |
|
0 |
|
$ |
0 |
|
0 |
|
$ |
0 |
|
|
|
Other Pooled Investment Vehicles: |
|
2 |
|
$ |
100 |
M |
2 |
|
$ |
100 |
M |
|
|
Other Accounts: |
|
0 |
|
$ |
0 |
|
0 |
|
$ |
0 |
|
* [Total assets under management for Blue Lion were approximately $[ ] million as of [November 30], 2012 .]
Compensation. Blue Lion compensates the Funds portfolio manager for his management of the Fund. The portfolio managers compensation consists of a cash base salary and a bonus paid in cash that is based on overall profitability of Blue Lion and the performance of the Fund, and therefore in part based on the value of the Funds net assets and other client accounts they are managing.
Conflicts of Interests. The portfolio managers management of other accounts may give rise to potential conflicts of interest in connection with his management of the Funds investments, on the one hand, and the investments of the other accounts, on the other. The other accounts may have the same investment objective as the Fund. Therefore, a potential conflict of interest may arise as a result of the identical investment objectives, whereby the portfolio manager could favor one account over another. Another potential conflict could include the portfolio managers knowledge about the size, timing and possible market impact of Fund trades, whereby a portfolio manager could use this information to the advantage of other accounts and to the disadvantage of the Fund. However, Blue Lion has established policies and procedures to ensure that the purchase and sale of securities among all accounts it manages are fairly and equitably allocated.
Courage Capital
Other Accounts. In addition to the Fund, the portfolio manager is responsible for the day-to-day management of certain other accounts, as listed below. The information below is provided as of August 31, 2012.
Name of Portfolio Manager
|
|
Type of Accounts |
|
Total
|
|
Total
|
|
# of Accounts
|
|
Total Assets
|
|
||
1. Richard C. Patton |
|
Other Registered Investment Companies: |
|
0 |
|
$ |
0 |
|
0 |
|
$ |
0 |
|
|
|
Other Pooled Investment Vehicles: |
|
5 |
|
$ |
394 |
M |
5 |
|
$ |
286 |
M |
|
|
Other Accounts: |
|
2 |
|
$ |
9 |
M |
2 |
|
$ |
0 |
|
* [Total assets under management for Courage Capital were approximately $[ ] million as of [ ], 2012]
Compensation. Courage Capital compensates the Funds portfolio manager for his management of the Fund. Courage Capital pays the portfolio manager out of its total revenues and other resources including the advisory fee earned with respect to the Fund. The portfolio managers compensation includes a fixed base salary and incentive components. It is expected that the portfolio manager will receive an incentive payment based on the revenues earned by Courage Capital from the Fund and from any other client accounts. It is expected that the incentive compensation component with respect to all portfolios managed by the portfolio manager can, and typically will, represent a significant portion of the portfolio managers overall compensation and can vary significantly from year to year.
Conflicts of Interests. The portfolio manager manages multiple portfolios for multiple clients. These accounts presently include private pooled investment vehicles and other separately managed accounts. The portfolio manager may have responsibility for managing multiple accounts with a common investment strategy or several investment strategies. Accordingly, client portfolios may have investment objectives, strategies, time horizons, tax considerations, and risk profiles that differ from those of the Fund. The portfolio manager makes investment decisions for the Fund based on its investment objective, policies, practices, cash flows, and other relevant investment considerations. Consequently, the portfolio manager may purchase or sell securities for one client portfolio and not another client portfolio, and the performance of securities purchased for one portfolio may vary from the performance of securities purchased for other portfolios. The portfolio manager may place transactions on behalf of other clients that are directly or indirectly contrary to investment decisions made on behalf of the Fund, which has the potential to adversely impact the Fund, depending on market conditions. In addition, some of these other client account structures may have fee structures, such as performance based fees, that differ (and may be higher than) the Fund. Accordingly
conflicts of interest may arise when Courage Capital has a particular financial incentive, such as a performance-based fee relating an account. In recognition of the fact that conflicts of interest are inherent in the investment management business, Courage Capital has adopted policies and procedures reasonably designed to identify and manage the effects of actual or potential conflicts of interest in the areas of employee personal trading, managing multiple accounts for multiple clients, and allocation of investment opportunities. All employees of Courage Capital are subject to these policies.
LT
Other Accounts. In addition to the Fund, the portfolio managers are responsible for the day-to-day management of certain other accounts, as listed below. The information below is provided as of August 31, 2012.
Name of Portfolio Manager
|
|
Type of Accounts |
|
Total
|
|
Total
|
|
# of Accounts
|
|
Total Assets
|
|
||
1. Lauren C. Templeton |
|
Other Registered Investment Companies: |
|
0 |
|
$ |
0 |
|
0 |
|
$ |
0 |
|
|
|
Other Pooled Investment Vehicles: |
|
3 |
|
$ |
54.2 |
M |
3 |
|
$ |
54.2 |
M |
|
|
Other Accounts: |
|
18 |
|
$ |
74.8 |
M |
1 |
|
$ |
59.0 |
M |
2 Scott Phillips |
|
Other Registered Investment Companies: |
|
0 |
|
$ |
0 |
|
0 |
|
$ |
0 |
|
|
|
Other Pooled Investment Vehicles: |
|
3 |
|
$ |
54.2 |
M |
3 |
|
$ |
54.2 |
M |
|
|
Other Accounts: |
|
18 |
|
$ |
74.8 |
M |
1 |
|
$ |
59.0 |
M |
* [Total assets under management for LT were approximately $[ ] million as of [ ] 2012.]
Compensation. LT compensates the Funds portfolio managers for their management of the Fund. As members of the firm, each portfolio manager shares in the profits of the business and is not compensated with any fixed compensation, such as a salary.
Conflicts of Interests. The portfolio managers management of other accounts may give rise to potential conflicts of interest in connection with their management of the Funds investments, on the one hand, and the investments of the other accounts, on the other. The other accounts may have the same investment objective as the Fund. Therefore, a potential conflict of interest may arise as a result of the identical investment objectives, whereby a portfolio manager could favor one account over another. Another potential conflict could include the portfolio managers knowledge about the size, timing and possible market impact of Fund trades, whereby a portfolio manager could use this information to the advantage of other accounts and to the disadvantage of the Fund. However, LT has established policies and procedures designed to address such conflicts, including, among others, policies and procedures relating to allocation of investment opportunities, soft dollars and aggregation of trades.
Maerisland
Other Accounts. In addition to the Fund, the portfolio manager is responsible for the day-to-day management of certain other accounts, as listed below. The information below is provided as of November 30, 2012.
Name of Portfolio Manager
|
|
Type of Accounts |
|
Total
|
|
Total
|
|
# of Accounts
|
|
Total Assets
|
|
||
1. Mark Beder |
|
Other Registered Investment Companies: |
|
0 |
|
$ |
0 |
|
0 |
|
$ |
0 |
|
|
|
Other Pooled Investment Vehicles: |
|
1 |
|
$ |
4 |
M |
1 |
|
$ |
4 |
M |
|
|
Other Accounts: |
|
0 |
|
$ |
0 |
|
0 |
|
$ |
0 |
|
Compensation. Maerisland compensates the Funds portfolio manager for his management of the Fund. As a member of senior management of the firm, the portfolio manager has ownership of the business and has compensation tied directly to the performance of the business. He is not compensated with any fixed compensation, such as a salary.
Conflicts of Interests. Maerisland will be subject to a variety of conflicts of interest in managing the Funds assets and affairs. For example, Maerisland will manage other U.S. investment partnerships as well as offshore investment funds and other investment accounts, including an offshore investment fund with substantially the same investment objectives as the Fund. These investment partnerships, funds and accounts may afford investors or accountholders more advantageous information, or other rights than those afforded to the Fund and may have different compensation arrangements. Maerisland may in the future manage additional investment funds and/or client accounts, and serve as investment manager or general partner of those entities. Some of those other investment funds and client accounts may have investment objectives similar in some respects or substantially identical to the Funds. Maerisland and its members and affiliates may invest or have an interest in those other investment funds or accounts and may themselves invest or trade in securities and other instruments, including positions in which the Fund invests. Neither Maerisland nor any of its affiliates is obligated to make any particular investment opportunity available to the Fund or to refrain from taking advantage of any opportunity, either for such other accounts or for themselves.
Incentive Allocation. The structure and payment of an incentive allocation to an affiliate of Maerisland by one or more other funds may involve a conflict of interest. The incentive allocation could encourage Maerisland to make riskier or more speculative investments than it otherwise would. The aggregate amounts the General Partner receives from other funds may be greater than amounts received by some investment advisers for similar services, although they may be lower than amounts received by other investment advisers.
Other Business Relationships and Activities. Maerisland and their respective members and employees devote as much of their resources and time to the Funds activities as Maerisland deem necessary and appropriate. Maerisland will serve as investment manager to at least one domestic fund and one offshore investment fund with substantially the same investment objectives as the Fund. Maerisland may in the future serve as investment manager of other investment funds and/or pooled investment vehicles, as well as of separate client accounts. Those other funds, vehicles or accounts may have investment objectives substantially the same as, or that overlap with, those of the Fund, or may have investment objectives that are substantially different from the Funds. These activities could be viewed as creating a conflict of interest in that the time, effort and resources of Maerisland and their personnel must be allocated between managing the Fund and their other activities. Differences in investment objectives and compensation arrangements between the Fund and other accounts managed by Maerisland may also create conflicts with respect to trading activities, investment opportunities and particular portfolio positions.
Transaction and Investment Opportunities. Conflicts of interest may arise in connection with transactions for the Funds account with transactions for other investment vehicles in which Maerisland and/or its affiliates
are involved, any other advisory clients Maerisland may have and Maerisland or its members, employees and affiliates. Notwithstanding these conflicts, Maerisland will allocate transactions and opportunities among the various accounts it manages in a manner it believes to be as equitable as possible, considering each accounts objectives, programs, limitations and capital available for investment, but even accounts with similar objectives will often have different investment portfolios. In addition, Maerisland has adopted a Code of Ethics and conduct that describes the standards of business conduct that it requires of employees and accounts owned predominantly by persons associated with Maerisland, and establishes procedures intended to prevent Maerisland and its personnel, and certain of their relatives, from inappropriately benefiting from Maerisland or relationships with its clients.
SRES
Other Accounts. In addition to the Fund, the portfolio manager is responsible for the day-to-day management of certain other accounts, as listed below. The information below is provided as of August 31, 2012.
Name of Portfolio Manager
|
|
Type of Accounts |
|
Total
|
|
Total
|
|
# of Accounts
|
|
Total Assets
|
|
||
1. Matthew C. Gilman |
|
Other Registered Investment Companies: |
|
0 |
|
$ |
0 |
|
0 |
|
$ |
0 |
|
|
|
Other Pooled Investment Vehicles: |
|
8 |
|
$ |
618.4 |
M |
8 |
|
$ |
618.4 |
M |
|
|
Other Accounts: |
|
0 |
|
$ |
0 |
|
0 |
|
$ |
0 |
|
* [Total assets under management for SRES were approximately $[ ] million, as of [ ], 2012.]
Compensation. SRES compensates the Funds portfolio manager for its management of the Fund. The portfolio managers compensation consists of a cash base salary, a discretionary performance bonus paid in cash that is based on overall profitability of SRES and performance of the Fund, an allocation as a general partner in the firm and profit participation in the firm.
Conflicts of Interests. The portfolio managers management of other accounts may give rise to potential conflicts of interest in connection with his management of the Funds investments, on the one hand, and the investments of the other accounts, on the other. The other accounts may have the same investment objective as the Fund. Therefore, a potential conflict of interest may arise as a result of the identical investment objectives, whereby the portfolio manager could favor one account over another. Another potential conflict could include the portfolio managers knowledge about the size, timing and possible market impact of Fund trades, whereby a portfolio manager could use this information to the advantage of other accounts and to the disadvantage of the Fund. However, SRES has established policies and procedures designed to address such conflicts, including, among others, policies and procedures relating to allocation of investment opportunities, soft dollars and aggregation of trades.
Trellus
Other Accounts. In addition to the Fund, the portfolio managers are responsible for the day-to-day management of certain other accounts, as listed below. The information below is provided as of August 31, 2012.
Name of Portfolio Manager
|
|
Type of Accounts |
|
Total
|
|
Total
|
|
# of Accounts
|
|
Total Assets
|
|
||
1. Adam Usdan |
|
Other Registered Investment Companies: |
|
[ ] |
|
[ ] |
|
[ ] |
|
[ ] |
|
||
|
|
Other Pooled Investment Vehicles: |
|
[ ] |
|
$ |
[ ] |
|
[ ] |
|
$ |
[ ] |
|
|
|
Other Accounts: |
|
[ ] |
|
[ ] |
|
[ ] |
|
[ ] |
|
||
* [Total assets under management for Trellus were approximately $[ ] million as of [ ], 2012]
Compensation. Trellus compensates the Funds portfolio managers for their management of the Fund. As partners, each portfolio manager shares in the profits of the business and is not compensated with any fixed compensation, such as a salary.
Conflicts of Interests. The portfolio managers management of other accounts may give rise to potential conflicts of interest in connection with their management of the Funds investments, on the one hand, and the investments of the other accounts, on the other. The other accounts may have the same investment objective as the Fund. Therefore, a potential conflict of interest may arise as a result of the identical investment objectives, whereby a portfolio manager could favor one account over another. Another potential conflict could include the portfolio managers knowledge about the size, timing and possible market impact of Fund trades, whereby a portfolio manager could use this information to the advantage of other accounts and to the disadvantage of the Fund. However, Trellus has established policies and procedures designed to address such conflicts, including, among others, policies and procedures relating to allocation of investment opportunities, soft dollars and aggregation of trades.
Fund Shares Owned by Portfolio Managers. The Fund is required to show the dollar amount range of the portfolio managers beneficial ownership of shares of the Fund as of the end of the most recently completed fiscal year. Dollar amount ranges disclosed are established by the SEC. Beneficial ownership is determined in accordance with Rule 16a-1(a)(2) under the Securities Exchange Act of 1934, as amended (the 1934 Act). As of the fiscal year ended August 31, 2012, the portfolio managers owned the following amounts of Fund shares:
Name |
|
Dollar Range of Fund Shares |
Simple Alternatives, LLC |
|
|
James Dilworth |
|
$100,001-$500,000 |
Bruce MacDonald |
|
$100,001-$500,000 |
Blue Lion Capital Management, LLC |
|
|
Charles W. Griege, Jr. |
|
None |
Courage Capital Management, LLC |
|
|
Richard C. Patton |
|
None |
Lauren Templeton Capital Management, LLC |
|
|
Lauren C. Templeton |
|
None |
Scott Phillips |
|
None |
Maerisland Capital, LLC |
|
|
Mark Beder |
|
None |
Starwood Real Estate Securities, LLC |
|
|
Matthew C. Gilman |
|
None |
Trellus Management Co., LLC |
|
|
Adam Usdan |
|
$[ ] |
ADMINISTRATION AND ACCOUNTING AGREEMENT
BNY serves as administrator to the Fund pursuant to administration and accounting services agreements dated September 30, 2010 with respect to the Fund (the Administration Agreements). BNY has agreed to furnish to the Fund statistical and research data, clerical, accounting and bookkeeping services, and certain other services required by the Fund. In addition, BNY has agreed to prepare and file various reports with the appropriate regulatory agencies and prepare materials required by the SEC or any state securities commission having jurisdiction over the Fund. The Administration Agreement provides that BNY shall be obligated to exercise care and diligence in the performance of its duties, to act in good faith and to use its best efforts, within reasonable limits, in performing services thereunder. BNY shall be responsible for failure to perform its duties under the Administration Agreement arising out of its willful misfeasance, bad faith, gross negligence or reckless disregard. For its services to the Fund, BNY is entitled to receive a fee calculated at an annual rate of 0.08% of the Funds first $250 million of average net assets; 0.065% of the Funds next $250 million of average net assets; 0.055 of the Funds next $250 million of average net assets; 0.040% of the Funds next $750 million of average net assets; and 0.03% of the Funds average net assets in excess of $1.5 billion.
The minimum monthly fee will be $5,833 per month, exclusive of financial typesetting fees, costs of obtaining independent security market quotes, data repository and analytics suite access fees, sub-advisor fees, bank loan processing fees and out-of-pocket expenses.
The Administration Agreement provides that BNY shall not be liable for any error of judgment or mistake of law or any loss suffered by the Company or the Fund in connection with the performance of the agreement, except a loss resulting from willful misfeasance, gross negligence or reckless disregard by it of its duties and obligations thereunder.
On June 1, 2003, the Company entered into a regulatory administration services agreement with BNY. Under this agreement, BNY has agreed to provide regulatory administration services to the Company. These services include the preparation and coordination of the Companys annual post-effective amendment filing and supplements to the Funds registration statement, the preparation and assembly of board meeting materials, and certain other services necessary to the Companys regulatory administration. BNY receives an annual fee based on the average daily net assets of the portfolios of the Company.
For the past two fiscal years, the S1 Fund paid BNY administration, accounting and regulatory administration fees and related out of pocket expenses as follows:
|
|
Administration,
|
|
Waivers |
|
Reimbursements |
|
|||
For the fiscal period September 30, 2010 through August 31, 2011 * |
|
$ |
[ ] |
|
$ |
[ ] |
|
$ |
[ ] |
|
For the fiscal year ended August 31, 2012 |
|
$ |
[ ] |
|
$ |
[ ] |
|
$ |
[ ] |
|
*Commencement of operations September 30, 2010.
CUSTODIAN AGREEMENT
The Bank of New York Mellon (BNY Mellon), One Wall Street, New York, New York 10286, is custodian of the Funds assets pursuant to a Custodian Agreement dated July 18, 2011. Under the Custodian Agreement, BNY Mellon: (a) maintains a separate account or accounts in the name of the Fund; (b) holds and transfers portfolio securities on account of the Fund; (c) accepts receipts and makes disbursements of money on behalf of the Fund; (d) collects and receives all income and other payments and distributions on account of the Funds portfolio securities; and (e) makes periodic reports to the Companys Board of Directors concerning the Funds operations. BNY Mellon is authorized to select one or more banks or trust companies to serve as sub-custodian on behalf of the Fund, provided that BNY Mellon remains responsible for the performance of all of its duties under the Custodian Agreement and holds the Fund harmless from the acts and omissions of any sub-custodian. The Fund has made arrangements with BNY Mellon Investment Servicing Trust Company to serve as custodian for Individual Retirement Accounts (IRAs). For its services to the Fund under the Custodian Agreement, BNY Mellon receives a fee, calculated daily and payable monthly, of 0.01% of the Funds first $250 million of average gross assets; 0.0075% of the Funds next $250 million of average gross assets; and 0.005% of the Funds average gross assets in excess of $500 million, exclusive of transaction charges and out-of-pocket expenses, which are also charged to the Fund.
TRANSFER AGENCY AGREEMENT
BNY, 301 Bellevue Parkway, Wilmington, Delaware 19809 serves as the transfer and dividend disbursing agent for the Fund pursuant to a transfer agency agreement dated November 5, 1991, as supplemented (the Transfer Agency Agreement), under which BNY: (a) issues and redeems shares of the Fund; (b) addresses and mails all communications by the Fund to record owners of the shares, including reports to shareholders, dividend and distribution notices and proxy materials for its meetings of shareholders; (c) maintains shareholder accounts and, if requested, sub-accounts; and (d) makes periodic reports to the Companys Board of Directors concerning the operations of the Fund. BNY may, on 30 days notice to the Company, assign its duties as transfer and dividend disbursing agent to any affiliate. For its services to the Fund under the Transfer Agency Agreement, BNY receives a fee at the annual rate of $20.00 per direct account, $8.00 per network level 3 account and $3.60 per inactive account in the Fund, with a minimum monthly fee of $4,166 per class payable monthly on a pro rata basis, exclusive of out-of-pocket expenses, and also receives reimbursement of its out-of-pocket expenses.
BNY also provides services relating to the implementation of the Companys Anti-Money Laundering Program. The Company pays an annual fee, ranging from $3,000 - $50,000, based on the number of open accounts in each portfolio of the Company. In addition, BNY provides services relating to the implementation of the Funds Customer Identification Program, including verification of required customer information and the maintenance of records with respect to such verification. The Fund will pay BNY $2.25 per customer verification and $0.02 per month per record result maintained.
DISTRIBUTION AGREEMENT AND PLAN OF DISTRIBUTION
Foreside Distributors, whose principal business address is 400 Berwyn Park, 899 Cassatt Road, Berwyn, PA 19312, serves as the underwriter to the Fund pursuant to the terms of a distribution agreement, effective as of April 1, 2012, as supplemented (the Distribution Agreement). Pursuant to the Distribution Agreement and the related Plan of Distribution for R Shares (the Plan), which was adopted by the Company in the manner prescribed by Rule 12b-1 under the 1940 Act, Foreside Distributors will use appropriate efforts to solicit orders for the sale of the Funds shares. Payments to Foreside Distributors under the Plan are to compensate it for distribution assistance and expenses assumed and activities intended to result in the sale of R Shares including advertising, printing and mailing of prospectuses to others than current shareholders, compensation to underwriters, compensation to broker-dealers, compensation to sales personnel, and interest, carrying or other financing changes. Foreside Distributors engages in a continuous offering of shares of the Fund. As compensation for its distribution services, Foreside Distributors receives, pursuant to the terms of the Distribution Agreement, a distribution fee under the Plan, to be calculated daily and paid monthly by the R Shares of the Fund, at the annual rate set forth in the R Shares Prospectus. The Adviser pays an annual fee to Foreside Distributors as compensation for underwriting services rendered to the Fund pursuant
to the Distribution Agreement.
For the last two fiscal years the Fund paid fees to broker-dealers and Foreside Distributors retained fees as follows:
|
|
Fees Paid to Broker
|
|
Fees Retained by the
|
|
||
For the fiscal period September 30, 2010 through August 31, 2011 * |
|
$ |
[ ] |
|
$ |
[ ] |
|
For the fiscal year ended August 31, 2012 |
|
$ |
[ ] |
|
$ |
[ ] |
|
*Commencement of operations September 30, 2010.
Among other things, the Plan provides that: (1) Foreside Distributors shall be required to submit quarterly reports to the Directors of the Company regarding all amounts expended under the Plan and the purposes for which such expenditures were made, including commissions, advertising, printing, interest, carrying charges and any allocated overhead expenses; (2) the Plan will continue in effect only so long as it is approved at least annually, and any material amendment thereto is approved, by the Companys Directors, including a majority of those Directors who are not interested persons (as defined in the 1940 Act) and who have no direct or indirect financial interest in the operation of the Plan or any agreements related to the Plan, acting in person at a meeting called for said purpose; (3) the aggregate amount to be spent by the Fund on the distribution of the Funds shares of a Class under the Plan shall not be materially increased without shareholder approval; and (4) while the Plan remains in effect, the selection and nomination of the Companys Directors who are not interested persons of the Company (as defined in the 1940 Act) shall be committed to the discretion of such Directors who are not interested persons of the Company. The Fund did not have Plan expenses for the fiscal year ended August 31, 2012 because Class R shares were not yet operational.
PAYMENTS TO FINANCIAL INTERMEDIARIES
The Adviser and/or its affiliates, at their discretion, may make payments from their own resources and not from Fund assets to affiliated or unaffiliated brokers, dealers, banks (including bank trust departments), trust companies, registered investment advisers, financial planners, retirement plan administrators, insurance companies, and any other institution having a service, administration, or any similar arrangement with the Fund, its service providers or their respective affiliates, as incentives to help market and promote the Fund and/or in recognition of their distribution, marketing, administrative services, and/or processing support.
These additional payments may be made to financial intermediaries that sell Fund shares or provide services to the Fund, the Distributor or shareholders of the Fund through the financial intermediarys retail distribution channel and/or fund supermarkets. Payments may also be made through the financial intermediarys retirement, qualified tuition, fee-based advisory, wrap fee bank trust, or insurance (e.g., individual or group annuity) programs. These payments may include, but are not limited to, placing the Fund in a financial intermediarys retail distribution channel or on a preferred or recommended fund list; providing business or shareholder financial planning assistance; educating financial intermediary personnel about the Fund; providing access to sales and management representatives of the financial intermediary; promoting sales of Fund shares; providing marketing and educational support; maintaining share balances and/or for sub-accounting, administrative or shareholder transaction processing services. A financial intermediary may perform the services itself or may arrange with a third party to perform the services.
The Adviser and/or its affiliates may also make payments from their own resources to financial intermediaries for costs associated with the purchase of products or services used in connection with sales and marketing, participation in and/or presentation at conferences or seminars, sales or training programs, client and investor entertainment and other sponsored events. The costs and expenses associated with these efforts may include travel, lodging, sponsorship at educational seminars and conferences, entertainment and meals to the extent permitted by law.
Revenue sharing payments may be negotiated based on a variety of factors, including the level of sales, the amount of Fund assets attributable to investments in the Fund by financial intermediaries customers, a flat fee or other measures
as determined from time to time by the Adviser and/or its affiliates. A significant purpose of these payments is to increase the sales of Fund shares, which in turn may benefit the Adviser through increased fees as Fund assets grow.
FUND TRANSACTIONS
Subject to policies established by the Board and applicable rules, the Adviser and Sub-Advisers are responsible for the execution of portfolio transactions and the allocation of brokerage transactions for the Fund. In executing portfolio transactions, the Adviser and Sub-Advisers seek to obtain the best price and most favorable execution for the Fund, taking into account such factors as the price (including the applicable brokerage commission or dealer spread), size of the order, difficulty of execution and operational facilities of the firm involved. While the Adviser and Sub-Advisers generally seek reasonably competitive commission rates, payment of the lowest commission or spread is not necessarily consistent with obtaining the best price and execution in particular transactions.
Brokerage Transactions
Generally, equity securities, both listed and over-the-counter, are bought and sold through brokerage transactions for which commissions are payable. Purchases from underwriters will include the underwriting commission or concession, and purchases from dealers serving as market makers will include a dealers mark-up or reflect a dealers mark-down. Money market securities and other debt securities are usually bought and sold directly from the issuer or an underwriter or market maker for the securities. Generally, the Fund will not pay brokerage commissions for such purchases. When a debt security is bought from an underwriter, the purchase price will usually include an underwriting commission or concession. The purchase price for securities bought from dealers serving as market makers will similarly include the dealers mark up or reflect a dealers mark down. When the Fund executes transactions in the over-the-counter market, it will generally deal with primary market makers unless prices that are more favorable are otherwise obtainable.
In addition, the Adviser and Sub-Advisers may place a combined order for two or more accounts they manage, including the Fund, engaged in the purchase or sale of the same security if, in its judgment, joint execution is in the best interest of each participant and will result in best price and execution. Transactions involving commingled orders are allocated in a manner deemed equitable to each account or fund. Although it is recognized that, in some cases, the joint execution of orders could adversely affect the price or volume of the security that a particular account or the Fund may obtain, it is the opinion of the Adviser, the Sub-Advisers and the Companys Board of Directors that the advantages of combined orders outweigh the possible disadvantages of separate transactions. Nonetheless, the Adviser and Sub-Advisers believe that the ability of the Fund to participate in higher volume transactions will generally be beneficial to the Fund.
For the past two fiscal years, the Fund paid the following commissions to brokers on account of research services:
S1 Fund |
|
|
|
|
For the fiscal period September 30, 2010 through August 31, 2011 * |
|
$ |
[ ] |
|
For the fiscal year ended August 31, 2012 |
|
$ |
[ ] |
|
*Commencement of operations September 30, 2010.
The following chart shows the aggregate brokerage commissions paid by S1 Fund for the past two fiscal years:
S1 Fund |
|
|
|
|
For the fiscal period September 30, 2010 through August 31, 2011 * |
|
$ |
[ ] |
|
For the fiscal year ended August 31, 2012 |
|
$ |
[ ] |
|
*Commencement of operations September 30, 2010.
The Fund is required to identify any securities of the Companys regular broker-dealers (as defined in Rule 10b-1 under the 1940 Act) or their parents held by the Fund as of the end of the most recent fiscal year. As of August 31, 2012, there were no securities held by the Fund of its regular broker-dealers.
Brokerage Selection
The Company does not expect to use one particular broker or dealer, and when one or more brokers is believed capable of providing the best combination of price and execution, the Funds Adviser and Sub-Advisers may select a broker based upon brokerage or research services provided to the Adviser or applicable Sub-Adviser. The Adviser and Sub-Advisers may pay a higher commission than otherwise obtainable from other brokers in return for such services only if a good faith determination is made that the commission is reasonable in relation to the services provided.
Section 28(e) of the 1934 Act permits an investment adviser or sub-adviser, under certain circumstances, to cause a fund to pay a broker or dealer a commission for effecting a transaction in excess of the amount of commission another broker or dealer would have charged for effecting the transaction in recognition of the value of brokerage and research services provided by the broker or dealer. In addition to agency transactions, certain Sub-Advisers may receive brokerage and research services in connection with certain riskless principal transactions, in accordance with applicable SEC guidance. Brokerage and research services include: (1) furnishing advice as to the value of securities, the advisability of investing in, purchasing or selling securities, and the availability of securities or purchasers or sellers of securities; (2) furnishing analyses and reports concerning issuers, industries, securities, economic factors and trends, portfolio strategy, and the performance of accounts; and (3) effecting securities transactions and performing functions incidental thereto (such as clearance, settlement, and custody). In the case of research services, the applicable Sub-Advisers believe that access to independent investment research is beneficial to their investment decision-making processes and, therefore, to the Fund.
To the extent research services may be a factor in selecting brokers, such services may be in written form or through direct contact with individuals and may include information as to particular companies and securities as well as market, economic, or institutional areas and information which assists in the valuation and pricing of investments. Examples of research-oriented services for which the applicable Sub-Advisers might utilize Fund commissions include research reports and other information on the economy, industries, sectors, groups of securities, individual companies, statistical information, political developments, technical market action, pricing and appraisal services, credit analysis, risk measurement analysis, performance and other analysis. The Sub-Advisers may use research services furnished by brokers in servicing all client accounts and not all services may necessarily be used in connection with the account that paid commissions to the broker providing such services. Information so received by the Sub-Advisers will be in addition to and not in lieu of the services required to be performed by the Sub-Adviser under its Sub-Advisory Agreement. Any advisory or other fees paid to the Sub-Advisers are not reduced as a result of the receipt of research services.
In some cases a Sub-Adviser may receive a service from a broker that has both a research and a non-research use. When this occurs, the applicable Sub-Adviser makes a good faith allocation, under all the circumstances, between the research and non-research uses of the service. The percentage of the service that is used for research purposes may be paid for with client commissions, while the applicable Sub-Adviser will use its own funds to pay for the percentage of the service that is used for non-research purposes. In making this good faith allocation, the Sub-Adviser faces a potential conflict of interest, but each applicable Sub-Adviser believes that its allocation procedures are reasonably designed to ensure that it appropriately allocates the anticipated use of such services to their research and non-research uses.
From time to time, the Fund may purchase new issues of securities for clients in a fixed price offering. In these situations, the seller may be a member of the selling group that will, in addition to selling securities, provide the Adviser and Sub-Advisers with research services. The Financial Industry Regulatory Authority (FINRA) has adopted rules expressly permitting these types of arrangements under certain circumstances. Generally, the seller will provide research credits in these situations at a rate that is higher than that which is available for typical secondary market transactions. These arrangements may not fall within the safe harbor of Section 28(e).
PURCHASE AND REDEMPTION INFORMATION
You may purchase shares through an account maintained by your brokerage firm and you may also purchase shares directly by mail or wire. The Company reserves the right, if conditions exist which make cash payments undesirable, to honor any request for redemption or repurchase of a Funds shares by making payment in whole or in part in securities chosen by the Company and valued in the same way as they would be valued for purposes of computing the Funds NAV. If payment is made in securities, a shareholder may incur transaction costs in converting these securities into cash. A shareholder will also bear any market risk or tax consequences as a result of a payment in securities. The Company has elected, however, to be governed by Rule 18f-1 under the 1940 Act so that the Fund is obligated to redeem its shares solely in cash up to the lesser of $250,000 or 1% of its NAV during any 90-day period for any one shareholder of the Fund. A shareholder will bear the risk of a decline in market value and any tax consequences associated with a redemption in securities.
Under the 1940 Act, the Company may suspend the right to redemption or postpone the date of payment upon redemption for any period during which the New York Stock Exchange, Inc. (the NYSE) is closed (other than customary weekend and holiday closings), or during which the SEC restricts trading on the NYSE or determines an emergency exists as a result of which disposal or valuation of portfolio securities is not reasonably practicable, or for such other periods as the SEC may permit. (The Company may also suspend or postpone the recordation of the transfer of its shares upon the occurrence of any of the foregoing conditions).
Shares of the Company are subject to redemption by the Company, at the redemption price of such shares as in effect from time to time, including, without limitation: (1) to reimburse a Fund for any loss sustained by reason of the failure of a shareholder to make full payment for shares purchased by the shareholder or to collect any charge relating to a transaction effected for the benefit of a shareholder as provided in the Prospectuses from time to time; (2) if such redemption is, in the opinion of the Companys Board of Directors, desirable in order to prevent the Company or any Fund from being deemed a personal holding company within the meaning of the Code; (3) or if the net income with respect to any particular class of common stock should be negative or it should otherwise be appropriate to carry out the Companys responsibilities under the 1940 Act.
The Fund has the right to redeem your shares at current NAV at any time and without prior notice if, and to the extent that, such redemption is necessary to reimburse the Fund for any loss sustained by reason of your failure to make full payment for shares of the Fund you previously purchased or subscribed for.
Other Purchase Information
If shares of the Fund are held in a street name account with an Authorized Dealer, all recordkeeping, transaction processing and payments of distributions relating to the beneficial owners account will be performed by the Authorized Dealer, and not by the Fund and its Transfer Agent. Since the Fund will have no record of the beneficial owners transactions, a beneficial owner should contact the Authorized Dealer to purchase, redeem or exchange shares, to make changes in or give instructions concerning the account or to obtain information about the account. The transfer of shares in a street name account to an account with another dealer or to an account directly with the Fund involves special procedures and will require the beneficial owner to obtain historical purchase information about the shares in the account from the Authorized Dealer.
TELEPHONE TRANSACTION PROCEDURES
The Companys telephone transaction procedures include the following measures: (1) requiring the appropriate telephone transaction privilege forms; (2) requiring the caller to provide the names of the account owners, the account social security number and name of the Fund, all of which must match the Companys records; (3) requiring the Companys service representative to complete a telephone transaction form, listing all of the above caller identification information; (4) permitting exchanges (if applicable) only if the two account registrations are identical; (5) requiring that redemption proceeds be sent only by check to the account owners of record at the address of record, or by wire only to the owners of record at the bank account of record; (6) sending a written confirmation for each telephone transaction to the owners of record at the address of record within five (5) business days of the call; and (7) maintaining tapes of telephone transactions for six months, if the Company elects to record shareholder telephone transactions. For accounts held of record by broker-dealers (other than Foreside Distributors), financial institutions, securities dealers, financial planners and other industry professionals, additional documentation or information regarding the scope of a callers authority is required. Finally, for telephone transactions in accounts held jointly, additional information regarding other account holders is required. Telephone transactions will not be permitted in connection with IRA or other retirement plan accounts or by an attorney-in-fact under a power of attorney.
VALUATION OF SHARES
Subject to the approval of the Companys Board of Directors, the Fund may employ outside organizations, which may use a matrix or formula method that takes into consideration market indices, matrices, yield curves and other specific adjustments in determining the approximate market value of portfolio investments. This may result in the securities being valued at a price that differs from the price that would have been determined had the matrix or formula method not been used. All cash, receivables, and current payables are carried on the Funds books at their face value. Other assets, if any, are valued at fair value as determined in good faith by the Funds Valuation Committee under the direction of the Companys Board of Directors.
TAXES
General
The following summarizes certain additional tax considerations generally affecting the Fund and its shareholders that are not described in the Prospectuses. No attempt is made to present a detailed explanation of the tax treatment of the Fund or its shareholders, and the discussions here and in the Prospectuses are not intended as a substitute for careful tax planning. Potential investors should consult their tax advisers with specific reference to their own tax situations.
The discussions of the federal tax consequences in the Prospectuses and this SAI are based on the Code and the regulations issued under it, and court decisions and administrative interpretations, as in effect on the date of this SAI. Future legislative or administrative changes or court decisions may significantly change the statements included herein, and such changes may be retroactive.
The Fund qualified during its last taxable year and intends to continue to qualify as a regulated investment company under Subchapter M of Subtitle A, Chapter 1, of the Code. As such, the Fund generally will be exempt from federal income tax on its net investment income and realized capital gains that it distributes to shareholders. To qualify for treatment as a regulated investment company, it must meet three important tests each year.
First, the Fund must derive with respect to each taxable year at least 90% of its gross income from dividends, interest, certain payments with respect to securities loans, gains from the sale or other disposition of stock or securities or foreign currencies, other income derived with respect to the Funds business of investing in stock, securities or currencies, or net income derived from interests in qualified publicly traded partnerships.
Second, generally, at the close of each quarter of the Funds taxable year, at least 50% of the value of the Funds assets must consist of cash and cash items, U.S. government securities, securities of other regulated investment
companies, and securities of other issuers as to which the Fund has not invested more than 5% of the value of its total assets in securities of the issuer and as to which the Fund does not hold more than 10% of the outstanding voting securities of the issuer, and no more than 25% of the value of the Funds total assets may be invested in the securities of (1) any one issuer (other than U.S. government securities and securities of other regulated investment companies), (2) two or more issuers that the Fund controls and which are engaged in the same or similar trades or businesses or (3) one or more qualified publicly traded partnerships.
Third, the Fund must distribute an amount equal to at least the sum of 90% of its investment company taxable income (net investment income and the excess of net short-term capital gain over net long-term capital loss) and 90% of its tax-exempt income, if any, for the year.
The Fund intends to comply with these requirements. If the Fund were to fail to make sufficient distributions, it could be liable for corporate income tax or, if the shortfall is large enough, the Fund could be disqualified as a regulated investment company. If for any taxable year the Fund were not to qualify as a regulated investment company, all its taxable income would be subject to tax at regular corporate rates without any deduction for distributions to shareholders. In that event, shareholders would recognize dividend income on distributions to the extent of the Funds current and accumulated earnings and profits, and corporate shareholders could be eligible for the dividends-received deduction.
The Fund may invest in commodity-linked derivative instruments, such as commodity-linked structured notes, commodity-linked securities and other derivative instruments that provide exposure to commodity markets. The Fund has not obtained a ruling from the IRS that these investments will be treated as securities for purposes of the income and diversification tests described above. The Fund intends to limit its investment in these instruments so that they give rise to less than 10% of its income each year and comprise less than 50% of its assets at the close of each quarter of its taxable year. If the Fund were to fail to limit these investments, and if the investments were determined not to be securities for purposes of the income and diversification tests, the Fund could fail to qualify as a regulated investment company.
The Code imposes a nondeductible 4% excise tax on regulated investment companies that fail to distribute each calendar year an amount equal to specified percentages of their ordinary taxable income and capital gain net income (excess of capital gains over capital losses). The Fund intends to make sufficient distributions or deemed distributions each year to avoid liability for this excise tax.
State and Local Taxes
Although the Fund expects to qualify as a regulated investment company and to be relieved of all or substantially all federal income taxes, depending upon the extent of its activities in states and localities in which its offices are maintained, in which its agents or independent contractors are located or in which it is otherwise deemed to be conducting business, the Fund may be subject to the tax laws of such states or localities.
Taxation of Certain Investments
The tax principles applicable to transactions in financial instruments, such as futures contracts and options, that may be engaged in by the Fund, and investments in passive foreign investment companies (PFICs), are complex and, in some cases, uncertain. Such transactions and investments may cause the Fund to recognize taxable income prior to the receipt of cash, thereby requiring the Fund to liquidate other positions, or to borrow money, so as to make sufficient distributions to shareholders to avoid corporate-level tax. Moreover, some or all of the taxable income recognized may be ordinary income or short-term capital gain, so that the distributions may be taxable to shareholders as ordinary income.
In addition, in the case of any shares of a PFIC in which the Fund invests, the Fund may be liable for corporate-level tax on any ultimate gain or distributions on the shares if the Fund fails to make an election to recognize income annually during the period of its ownership of the shares.
ADDITIONAL INFORMATION CONCERNING COMPANY SHARES
The Company has authorized capital of 100 billion shares of common stock at a par value of $0.001 per share. Currently, 80.373 billion shares have been classified into 140 classes, however, the Company only has 26 active share classes that have begun investment operations. Under the Companys charter, the Board of Directors has the power to classify and reclassify any unissued shares of common stock from time to time.
Each share that represents an interest in the Fund has an equal proportionate interest in the assets belonging to such Fund with each other share that represents an interest in such Fund, even where a share has a different class designation than another share representing an interest in that Fund. Shares of the Company do not have preemptive or conversion rights. When issued for payment as described in the Prospectuses, shares of the Company will be fully paid and non-assessable.
The Company does not currently intend to hold annual meetings of shareholders except as required by the 1940 Act or other applicable law. The Companys amended By-Laws provide that shareholders owning at least ten percent of the outstanding shares of all classes of Common Stock of the Company have the right to call for a meeting of shareholders to consider the removal of one or more directors. To the extent required by law, the Company will assist in shareholder communication in such matters.
Holders of shares of each class of the Company will vote in the aggregate and not by class on all matters, except where otherwise required by law. Further, shareholders of the Company will vote in the aggregate and not by portfolio except as otherwise required by law or when the Board of Directors determines that the matter to be voted upon affects only the interests of the shareholders of a particular portfolio or class of shares. Rule 18f-2 under the 1940 Act provides that any matter required to be submitted by the provisions of such Act or applicable state law, or otherwise, to the holders of the outstanding voting securities of an investment company such as the Company shall not be deemed to have been effectively acted upon unless approved by the holders of a majority of the outstanding voting securities of each portfolio affected by the matter. Rule 18f-2 further provides that a portfolio shall be deemed to be affected by a matter unless it is clear that the interests of each portfolio in the matter are identical or that the matter does not affect any interest of the portfolio. Under Rule 18f-2 the approval of an investment advisory agreement or distribution agreement or any change in a fundamental investment objective or fundamental investment policy would be effectively acted upon with respect to a portfolio only if approved by the holders of a majority of the outstanding voting securities of such portfolio. However, the Rule also provides that the ratification of the selection of independent public accountants and the election of directors are not subject to the separate voting requirements and may be effectively acted upon by shareholders of an investment company voting without regard to a portfolio. Shareholders of the Company are entitled to one vote for each full share held (irrespective of class or portfolio) and fractional votes for fractional shares held. Voting rights are not cumulative and, accordingly, the holders of more than 50% of the aggregate shares of common stock of the Company may elect all of the Directors.
Notwithstanding any provision of Maryland law requiring a greater vote of shares of the Companys common stock (or of any class voting as a class) in connection with any corporate action, unless otherwise provided by law (for example by Rule 18f-2 discussed above), or by the Companys Articles of Incorporation and By-Laws, the Company may take or authorize such action upon the favorable vote of the holders of more than 50% of all of the outstanding shares of Common Stock voting without regard to class (or portfolio).
MISCELLANEOUS
Counsel
The law firm of Drinker Biddle & Reath LLP, One Logan Square, Ste. 2000, Philadelphia, Pennsylvania 19103-6996, serves as independent counsel to the Company and the Independent Directors.
Independent Registered Public Accounting Firm
[ ], serves as the Funds independent registered public accounting firm.
Financial Statements
The audited financial statements, financial highlights, and notes thereto for the fiscal year ended August 31, 2012 in the Funds Annual Report to shareholders (the Annual Report) have been audited by [ ], whose report thereon also appears in the Annual Report, which is incorporated by reference into this SAI. No other parts of the Annual Report are incorporated by reference herein. Copies of the Annual Report may obtained at no charge by telephoning BNY Mellon at the phone number appearing on the front page of this SAI.
APPENDIX A
DESCRIPTION OF SECURITIES RATINGS
Short-Term Credit Ratings
A Standard & Poors short-term issue credit rating is a forward-looking opinion of the creditworthiness of an obligor with respect to a specific financial obligation having an original maturity of no more than 365 days. The following summarizes the rating categories used by Standard & Poors for short-term issues:
A-1 A short-term obligation rated A-1 is rated in the highest category and indicates that the obligors capacity to meet its financial commitment on the obligation is strong. Within this category, certain obligations are designated with a plus sign (+). This indicates that the obligors capacity to meet its financial commitment on these obligations is extremely strong.
A-2 A short-term obligation rated A-2 is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in the highest rating category. The obligors capacity to meet its financial commitment on the obligation is satisfactory.
A-3 A short-term obligation rated A-3 exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation.
B A short-term obligation rated B is regarded as having significant speculative characteristics. The obligor currently has the capacity to meet its financial commitment on the obligation; however, it faces major ongoing uncertainties which could lead to the obligors inadequate capacity to meet its financial commitment on the obligation.
C A short-term obligation rated C is currently vulnerable to nonpayment and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitment on the obligation.
D A short-term obligation rated D is in payment default. The D rating category is used when payments on an obligation are not made on the date due, unless Standard & Poors believes that such payments will be made within any stated grace period. However, any stated grace period longer than five business days will be treated as five business days. The D rating also will be used upon the filing of a bankruptcy petition or the taking of a similar action if payments on an obligation are jeopardized.
Local Currency and Foreign Currency Risks Standard & Poors issuer credit ratings make a distinction between foreign currency ratings and local currency ratings. An issuers foreign currency rating will differ from its local currency rating when the obligor has a different capacity to meet its obligations denominated in its local currency, vs. obligations denominated in a foreign currency.
Moodys Investors Service (Moodys) short-term ratings reflect the likelihood of a default on contractually required payments. Ratings may be assigned to issuers, short-term programs or to individual short-term debt instruments. Such obligations generally have an original maturity not exceeding thirteen months, unless explicitly noted.
Moodys employs the following designations to indicate the relative repayment ability of rated issuers:
P-1 Issuers (or supporting institutions) rated Prime-1 have a superior ability to repay short-term debt obligations.
P-2 Issuers (or supporting institutions) rated Prime-2 have a strong ability to repay short-term debt obligations.
P-3 Issuers (or supporting institutions) rated Prime-3 have an acceptable ability to repay short-term obligations.
NP Issuers (or supporting institutions) rated Not Prime do not fall within any of the Prime rating categories.
Fitch, Inc. / Fitch Ratings Ltd. (Fitch) short-term issuer or obligation ratings are based in all cases on the short-term vulnerability to default of the rated entity or security stream and relates to the capacity to meet financial obligations in accordance with the documentation governing the relevant obligation. Short-term ratings are assigned to obligations whose initial maturity is viewed as short-term based on market convention. Typically, this means up to 13 months for corporate, sovereign and structured obligations, and up to 36 months for obligations in U.S. public finance markets. The following summarizes the rating categories used by Fitch for short-term obligations:
F1 Securities possess the highest short-term credit quality. This designation indicates the strongest intrinsic capacity for timely payment of financial commitments; may have an added + to denote any exceptionally strong credit feature.
F2 Securities possess good short-term credit quality. This designation indicates good intrinsic capacity for timely payment of financial commitments.
F3 Securities possess fair short-term credit quality. This designation indicates that the intrinsic capacity for timely payment of financial commitments is adequate.
B Securities possess speculative short-term credit quality. This designation indicates minimal capacity for timely payment of financial commitments, plus heightened vulnerability to near term adverse changes in financial and economic conditions.
C Securities possess high short-term default risk. Default is a real possibility.
RD Restricted default. Indicates an entity that has defaulted on one or more of its financial commitments, although it continues to meet other financial obligations. Applicable to entity ratings only.
D Default. Indicates a broad-based default event for an entity, or the default of a short-term obligation.
The DBRS® Ratings Limited (DBRS) short-term debt rating scale provides an opinion on the risk that an issuer will not meet its short-term financial obligations in a timely manner. Ratings are based on quantitative and qualitative considerations relevant to the issuer and the relative ranking of claims. The R-1 and R-2 rating categories are further denoted by the sub-categories (high), (middle), and (low).
The following summarizes the ratings used by DBRS for commercial paper and short-term debt:
R-1 (high) - Short-term debt rated R-1 (high) is of the highest credit quality. The capacity for the payment of short-term financial obligations as they fall due is exceptionally high. Unlikely to be adversely affected by future events.
R-1 (middle) Short-term debt rated R-1 (middle) is of superior credit quality. The capacity for the payment of short-term financial obligations as they fall due is very high. Differs from R-1 (high) by a relatively modest degree. Unlikely to be significantly vulnerable to future events.
R-1 (low) Short-term debt rated R-1 (low) is of good credit quality. The capacity for the payment of short-term financial obligations as they fall due is substantial. Overall strength is not as favorable as higher rating categories. May be vulnerable to future events, but qualifying negative factors are considered manageable.
R-2 (high) Short-term debt rated R-2 (high) is considered to be at the upper end of adequate credit quality. The capacity for the payment of short-term financial obligations as they fall due is acceptable. May be vulnerable to future events.
R-2 (middle) Short-term debt rated R-2 (middle) is considered to be of adequate credit quality. The capacity for the payment of short-term financial obligations as they fall due is acceptable. May be vulnerable to future events or may be exposed to other factors that could reduce credit quality.
R-2 (low) Short-term debt rated R-2 (low) is considered to be at the lower end of adequate credit quality. The capacity for the payment of short-term financial obligations as they fall due is acceptable. May be vulnerable to future events. A number of challenges are present that could affect the issuers ability to meet such obligations.
R-3 Short-term debt rated R-3 is considered to be at the lowest end of adequate credit quality. There is a capacity for the payment of short-term financial obligations as they fall due. May be vulnerable to future events and the certainty of meeting such obligations could be impacted by a variety of developments.
R-4 Short-term debt rated R-4 is considered to be of speculative credit quality. The capacity for the payment of short-term financial obligations as they fall due is uncertain.
R-5 Short-term debt rated R-5 is considered to be of highly speculative credit quality. There is a high level of uncertainty as to the capacity to meet short-term financial obligations as they fall due.
D Short-term debt rated D implies a financial obligation has not been met or it is clear that a financial obligation will not be met in the near future, or a debt instrument has been subject to a distressed exchange. A downgrade to D may not immediately follow an insolvency or restructuring filing as grace periods, other procedural considerations, or extenuating circumstance may exist.
Long-Term Credit Ratings
The following summarizes the ratings used by Standard & Poors for long-term issues:
AAA An obligation rated AAA has the highest rating assigned by Standard & Poors. The obligors capacity to meet its financial commitment on the obligation is extremely strong.
AA An obligation rated AA differs from the highest-rated obligations only to a small degree. The obligors capacity to meet its financial commitment on the obligation is very strong.
A An obligation rated A is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher-rated categories. However, the obligors capacity to meet its financial commitment on the obligation is still strong.
BBB An obligation rated BBB exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation.
BB, B, CCC, CC and C Obligations rated BB, B, CCC, CC and C are regarded as having significant speculative characteristics. BB indicates the least degree of speculation and C the highest. While such obligations will likely have some quality and protective characteristics, these may be outweighed by large uncertainties or major exposures to adverse conditions.
BB An obligation rated BB is less vulnerable to nonpayment than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions which could lead to the obligors inadequate capacity to meet its financial commitment on the obligation.
B An obligation rated B is more vulnerable to nonpayment than obligations rated BB, but the obligor currently has the capacity to meet its financial commitment on the obligation. Adverse business, financial, or economic conditions will likely impair the obligors capacity or willingness to meet its financial commitment on the obligation.
CCC An obligation rated CCC is currently vulnerable to nonpayment, and is dependent upon favorable business, financial and economic conditions for the obligor to meet its financial commitment on the obligation. In the event of adverse business, financial, or economic conditions, the obligor is not likely to have the capacity to meet its financial commitment on the obligation.
CC An obligation rated CC is currently highly vulnerable to nonpayment.
C A C rating is assigned to obligations that are currently highly vulnerable to nonpayment, obligations that have payment arrearages allowed by the terms of the documents, or obligations of an issuer that is the subject of a bankruptcy petition or similar action which have not experienced a payment default. Among others, the C rating may be assigned to subordinated debt, preferred stock or other obligations on which cash payments have been suspended in accordance with the instruments terms or when preferred stock is the subject of a distressed exchange offer, whereby some or all of the issue is either repurchased for an amount of cash or replaced by other instruments having a total value that is less than par.
D An obligation rated D is in payment default. The D rating category is used when payments on an obligation are not made on the date due, unless Standard & Poors believes that such payments will be made within five business days, irrespective of any grace period. The D rating also will be used upon the filing of a bankruptcy petition or the taking of similar action if payments on an obligation are jeopardized. An obligations rating is lowered to D upon completion of a distressed exchange offer, whereby some or all of the issue is either repurchased for an amount of cash or replaced by other instruments having a total value that is less than par.
Plus (+) or minus (-) The ratings from AA to CCC may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories.
NR This indicates that no rating has been requested, that there is insufficient information on which to base a rating, or that Standard & Poors does not rate a particular obligation as a matter of policy.
Local Currency and Foreign Currency Risks - Standard & Poors issuer credit ratings make a distinction between foreign currency ratings and local currency ratings. An issuers foreign currency rating will differ from its local currency rating when the obligor has a different capacity to meet its obligations denominated in its local currency, vs. obligations denominated in a foreign currency.
Moodys long-term ratings are opinions of the relative credit risk of financial obligations with an original maturity of one year or more. They address the possibility that a financial obligation will not be honored as promised. Such ratings reflect both the likelihood of default on contractually promised payments and the expected financial loss suffered in the event of default. The following summarizes the ratings used by Moodys for long-term debt:
Aaa Obligations rated Aaa are judged to be of the highest quality, subject to the lowest level of credit risk.
Aa Obligations rated Aa are judged to be of high quality and are subject to very low credit risk.
A Obligations rated A are judged to be upper-medium grade and are subject to low credit risk.
Baa Obligations rated Baa are judged to be medium-grade and subject to moderate credit risk and as such may possess certain speculative characteristics.
Ba Obligations rated Ba are judged to be speculative and are subject to substantial credit risk.
B Obligations rated B are considered speculative and are subject to high credit risk.
Caa Obligations rated Caa are judged to be speculative of poor standing and are subject to very high credit risk.
Ca Obligations rated Ca are highly speculative and are likely in, or very near, default, with some prospect of recovery of principal and interest.
C Obligations rated C are the lowest rated and are typically in default, with little prospect for recovery of principal or interest.
Note: Moodys appends numerical modifiers 1, 2, and 3 to each generic rating classification from Aaa through Caa. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category.
The following summarizes long-term ratings used by Fitch :
AAA Securities considered to be of the highest credit quality. AAA ratings denote the lowest expectation of credit risk. They are assigned only in cases of exceptionally strong capacity for payment of financial commitments. This capacity is highly unlikely to be adversely affected by foreseeable events.
AA Securities considered to be of very high credit quality. AA ratings denote expectations of very low credit risk. They indicate very strong capacity for payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events.
A Securities considered to be of high credit quality. A ratings denote expectations of low credit risk. The capacity for payment of financial commitments is considered strong. This capacity may, nevertheless, be more vulnerable to adverse business or economic conditions than is the case for higher ratings.
BBB Securities considered to be of good credit quality. BBB ratings indicate that expectations of credit risk are currently low. The capacity for payment of financial commitments is considered adequate but adverse business or economic conditions are more likely to impair this capacity.
BB Securities considered to be speculative. BB ratings indicate that there is an elevated vulnerability to credit risk, particularly in the event of adverse changes in business or economic conditions over time; however, business or financial alternatives may be available to allow financial commitments to be met.
B Securities considered to be highly speculative. B ratings indicate that material credit risk is present.
CCC A CCC rating indicates that substantial credit risk is present.
CC A CC rating indicates very high levels of credit risk.
C A C rating indicates exceptionally high levels of credit risk.
Defaulted obligations typically are not assigned D ratings, but are instead rated in the B to C rating categories, depending upon their recovery prospects and other relevant characteristics. Fitch believes that this approach better aligns obligations that have comparable expected loss but varying vulnerability to default and loss.
Plus (+) or minus (-) may be appended to a rating to denote relative status within major rating categories. Such suffixes are not added to the AAA obligation rating category, or to corporate finance obligation ratings in the categories below CCC.
The DBRS long-term rating scale provides an opinion on the risk of default. That is, the risk that an issuer will fail to satisfy its financial obligations in accordance with the terms under which an obligation has been issued. Ratings are based on quantitative and qualitative considerations relevant to the issuer, and the relative ranking of claims. All rating categories other than AAA and D also contain subcategories (high) and (low). The absence of either a (high) or (low) designation indicates the rating is in the middle of the category. The following summarizes the ratings used by DBRS for long-term debt:
AAA - Long-term debt rated AAA is of the highest credit quality. The capacity for the payment of financial obligations is exceptionally high and unlikely to be adversely affected by future events.
AA Long-term debt rated AA is of superior credit quality. The capacity for the payment of financial obligations is considered high. Credit quality differs from AAA only to a small degree. Unlikely to be significantly vulnerable to future events.
A Long-term debt rated A is of good credit quality. The capacity for the payment of financial obligations is substantial, but of lesser credit quality than AA. May be vulnerable to future events, but qualifying negative factors are considered manageable.
BBB Long-term debt rated BBB is of adequate credit quality. The capacity for the payment of financial obligations is considered acceptable. May be vulnerable to future events.
BB Long-term debt rated BB is of speculative, non-investment grade credit quality. The capacity for the payment of financial obligations is uncertain. Vulnerable to future events.
B Long-term debt rated B is of highly speculative credit quality. There is a high level of uncertainty as to the capacity to meet financial obligations.
CCC, CC and C Long-term debt rated in any of these categories is of very highly speculative credit quality. In danger of defaulting on financial obligations. There is little difference between these three categories, although CC and C ratings are normally applied to obligations that are seen as highly likely to default, or subordinated to obligations rated in the CCC to B range. Obligations in respect of which default has not technically taken place but is considered inevitable may be rated in the C category.
D A security rated D implies that a financial obligation has not been met or it is clear that a financial obligation will not be met in the near future or a debt instrument has been subject to a distressed exchange. A downgrade to D may not immediately follow an insolvency or restructuring filing as grace periods or extenuating circumstances may exist.
(high, low) All rating categories other than AAA and D are denoted by the subcategories high and low. The absence of either a high or low designation indicates the rating is in the middle of the category.
Municipal Note Ratings
A Standard & Poors U.S. municipal note rating reflects Standard & Poors opinion about the liquidity factors and market access risks unique to the notes. Notes due in three years or less will likely receive a note rating. Notes with an original maturity of more than three years will most likely receive a long-term debt rating. In determining which type of rating, if any, to assign, Standard & Poors analysis will review the following considerations:
· Amortization schedule - the larger the final maturity relative to other maturities, the more likely it will be treated as a note; and
· Source of payment - the more dependent the issue is on the market for its refinancing, the more likely it will be treated as a note.
Note rating symbols are as follows:
SP-1 A municipal note rated SP-1 exhibits a strong capacity to pay principal and interest. An issue determined to possess a very strong capacity to pay debt service is given a plus (+) designation.
SP-2 A municipal note rated SP-2 exhibits a satisfactory capacity to pay principal and interest, with some vulnerability to adverse financial and economic changes over the term of the notes.
SP-3 A municipal note rated SP-3 exhibits a speculative capacity to pay principal and interest.
Moodys uses three rating categories for short-term municipal obligations that are considered investment grade. These ratings are designated as Municipal Investment Grade (MIG) and are divided into three levels MIG-1 through MIG-3. In addition, those short-term obligations that are of speculative quality are designated SG, or speculative grade. MIG ratings expire at the maturity of the obligation. The following summarizes the ratings used by Moodys for short-term municipal obligations:
MIG-1 This designation denotes superior credit quality. Excellent protection is afforded by established cash flows, highly reliable liquidity support, or demonstrated broad-based access to the market for refinancing.
MIG-2 This designation denotes strong credit quality. Margins of protection are ample, although not as large as in the preceding group.
MIG-3 This designation denotes acceptable credit quality. Liquidity and cash-flow protection may be narrow, and market access for refinancing is likely to be less well-established.
SG This designation denotes speculative-grade credit quality. Debt instruments in this category may lack sufficient margins of protection.
In the case of variable rate demand obligations (VRDOs), a two-component rating is assigned, a long or short-term debt rating and a demand obligation rating. The first element represents Moodys evaluation of risk associated with scheduled principal and interest payments. The second element represents Moodys evaluation of risk associated with the ability to receive purchase price upon demand (demand feature), using a variation of the MIG rating scale, the Variable Municipal Investment Grade or VMIG rating.
When either the long- or short-term aspect of a VRDO is not rated, that piece is designated NR, e.g., Aaa/NR or NR/VMIG-1.
VMIG rating expirations are a function of each issues specific structural or credit features.
VMIG-1 This designation denotes superior credit quality. Excellent protection is afforded by the superior short-term credit strength of the liquidity provider and structural and legal protections that ensure the timely payment of purchase price upon demand.
VMIG-2 This designation denotes strong credit quality. Good protection is afforded by the strong short-term credit strength of the liquidity provider and structural and legal protections that ensure the timely payment of purchase price upon demand.
VMIG-3 This designation denotes acceptable credit quality. Adequate protection is afforded by the satisfactory short-term credit strength of the liquidity provider and structural and legal protections that ensure the timely payment of purchase price upon demand.
SG This designation denotes speculative-grade credit quality. Demand features rated in this category may be supported by a liquidity provider that does not have an investment grade short-term rating or may lack the structural and/or legal protections necessary to ensure the timely payment of purchase price upon demand.
About Credit Ratings
A Standard & Poors issue credit rating is a forward-looking opinion about the creditworthiness of an obligor with respect to a specific financial obligation, a specific class of financial obligations, or a specific financial program (including ratings on medium-term note programs and commercial paper programs). It takes into consideration the creditworthiness of guarantors, insurers, or other forms of credit enhancement on the obligation and takes into account the currency in which the obligation is denominated. The opinion reflects Standard & Poors view of the obligors capacity and willingness to meet its financial commitments as they come due, and may assess terms, such as collateral security and subordination, which could affect ultimate payment in the event of default.
Moodys credit ratings must be construed solely as statements of opinion and not statements of fact or recommendations to purchase, sell or hold any securities.
Fitchs credit ratings provide an opinion on the relative ability of an entity to meet financial commitments, such as interest, preferred dividends, repayment of principal, insurance claims or counterparty obligations. Fitch credit ratings are used by investors as indications of the likelihood of receiving the money owed to them in accordance with the terms on which they invested. Fitchs credit ratings cover the global spectrum of corporate, sovereign (including supranational and sub-national), financial, bank, insurance, municipal and other public finance entities and the securities or other obligations they issue, as well as structured finance securities backed by receivables or other financial assets.
DBRS credit ratings are opinions based on the quantitative and qualitative analysis of information sourced and received by DBRS, which information is not audited or verified by DBRS. Ratings are not buy, hold or sell recommendations and they do not address the market price of a security. Ratings may be upgraded, downgraded, placed under review, confirmed and discontinued.
Appendix B
SIMPLE ALTERNATIVES, LLC
(the Adviser)
PROXY VOTING POLICIES AND PROCEDURES
The Proxy Voting Policies and Procedures of the Adviser are set forth below. (The guidelines are reviewed periodically by the Adviser, and, accordingly, are subject to change. For purposes of these Proxy Voting Policies and Procedures described below, we our and us refers to the Adviser). The Adviser will delegate the voting of proxies to the underlying sub-advisers, who will vote in accordance with this policy.
Introduction
As an investment adviser registered under the Investment Advisers Act of 1940 (the Advisers Act ), we have a fiduciary duty to act solely in the best interests of our clients. As part of this duty, we recognize that we must vote client securities in a timely manner free of conflicts of interest and in the best interests of our clients.
These policies and procedures for voting proxies for our investment advisory clients are intended to comply with Section 206 of, and Rule 206(4)-6 under, the Advisers Act.
Proxy Policies
We vote proxies relating to our portfolio securities in the best interest of our clients. We review on a case-by-case basis each proposal submitted to a shareholder vote to determine its impact on the portfolio securities held by our clients. Although we generally vote against proposals that may have a negative impact on our clients portfolio securities, we may vote for such a proposal if there exists compelling long-term reasons to do so.
Our proxy voting decisions are made by the senior officers who are responsible for monitoring each of our clients investments. To ensure that our vote is not the product of a conflict of interest, we require that: (i) anyone involved in the decision making process disclose to our Chief Compliance Officer any potential conflict that he or she is aware of and any contact that he or she has had with any interested party regarding a proxy vote; and (ii) employees involved in the decision making process or vote administration are prohibited from revealing how we intend to vote on a proposal in order to reduce any attempted influence from interested parties.
Proxy Voting Records
You may obtain information about how we voted proxies by making a written request for proxy voting information to: Chief Compliance Officer, Simple Alternatives, LLC, 90 Grove Street, Suite 205, Ridgefield, CT 06877.
Adopted: September, 2010
Appendix C
PROXY VOTING POLICY OF BLUE LION CAPITAL MANAGEMENT, LLC
This statement sets forth the current policies and procedures of the Firm with regard to the voting of proxies over which the Firm has investment responsibility. These policies and procedures are available to the Firms Clients upon request.
The Firm acts in a fiduciary capacity with respect to each of its Clients (including private funds) and, therefore, the Firm must act to maximize the value of the accounts it manages. Each proxy proposal is reviewed on a case-by-case basis by a member of the Firms portfolio management team. It is Firm policy generally to vote against any management proposals that the Firm believes could prevent companies from realizing their maximum market value, or would insulate companies and/or management, from accountability to shareholders or prudent regulatory compliance. For example, the Firm will generally vote against any proposal that attempts to limit shareholder democracy, such as increased indemnification protections for directors or officers, or unequal voting rights, in a way that could restrict the ability of the shareholders to realize the value of their investment. The Firm will generally support proposals aimed at effectuating standard and necessary aspects of business operations, which will not typically have a significant effect on the value of the investment, such as name changes, elections of directors and employee stock purchase or ownership plans.
A record of all proxy decisions and the rationale for voting will be retained and available for inspection by Clients at any time in accordance with the procedures listed below.
Conflicts of Interest . The Firm must act as a fiduciary when voting proxies on behalf of its Clients. In that regard, the Firm will seek to avoid possible conflict of interest in connection with proxy voting as follows:
Where the Firm identifies a potential conflict of interest (such as if the Firm or an Employee is affiliated or associated with the issuer or the Firm holds the issuers securities on a proprietary basis), the Firm will initially determine whether such potential conflict is material. Where the Firm determines there is a potential for a material conflict of interest regarding a proxy, the Firm will take one or some of the following steps: (i) inform the Client of the material conflict and the Firms voting decision; (ii) discuss the proxy vote with the Client; (iii) fully disclose the material facts regarding the conflict and seek the Clients consent to vote the proxy as intended; and/or (iv) seek the recommendations of an independent third party. The Firm will document the steps it took to evidence that the proxy vote or abstention was in the best interest of the Client and not the product of any material conflict. Such documentation will be maintained in accordance with required recordkeeping procedures. See Recordkeeping above.
Disclosure of Policies and Procedures. The Firm will provide a summary of these policies and procedures in its Form ADV, Part II (or in a separate disclosure) to be furnished to Clients. The Firm will further provide a copy of these policies and procedures to any Client upon request. In addition, the Firm will inform its Clients how they can obtain further proxy voting information about their own proxies.
Disclosure of Voting Record . Upon a request from a Client, the Firm will furnish to such Client its proxy voting record with respect to such Clients securities.
ERISA Considerations. ERISA prohibits fiduciaries from acting on behalf of a plan in situations in which the fiduciary is subject to a conflict of interest. Thus, if the Firm determines that it has a conflict of interest with respect to the voting of proxies, the Firm must either seek the Clients informed direction or retain an independent person to direct the Firm how to vote the proxy in the best interests of the ERISA account.
Procedures
Receipt of Proxy Materials. The Firm receives proxy materials from issuers, custodians or broker-dealers through the mail in hard copy form with respect to any securities held in Client accounts.
Voting Decisions. The portfolio manager(s) has (have) responsibility for reviewing proxy materials and deciding how to vote on each issue or initiative for the securities he or she trades.
Recusal from Voting. Any Employee who has a direct or indirect pecuniary interest in any issue presented for voting, or any relationship with the issuer, must so inform the Chief Compliance Officer and recuse him or herself from decisions on how proxies with respect to that issuer are voted.
Record of Votes Cast. Each year a member of each responsible portfolio management team creates a spreadsheet showing each security with respect to which votes were cast, the number of shares voted and how they were voted on each issue. The spreadsheet is maintained and updated to show such information for each proxy received throughout the year.
Client Requests for Votes. If a Client requests that their proxies be voted in a specific way on a specific issue, the portfolio manager or a member of the portfolio management team will advise the Client that it cannot accommodate the request
Client Requests for Voting Record . Clients may request information concerning how their proxies were voted. The portfolio manager or a member of the portfolio management team will notify the Chief Compliance Officer if he or she receives such request and will respond to such requests showing how Client shares were voted on particular issues. The Chief Compliance Officer will maintain a copy of all such requests and responses.
APPENDIX D
COURAGE CAPITAL MANAGEMENT, LLC
PROXY VOTING POLICY AND PROCEDURES
I. Statement of Policy
Proxy voting is an important right of shareholders and reasonable care and diligence must be undertaken to ensure that such rights are properly and timely exercised. When the Adviser has discretion to vote the proxies of its clients, it will vote those proxies in the best interest of its clients and in accordance with these policies and procedures.
II. Proxy Voting Procedures
All proxies received by the Adviser will be sent to the Compliance Officer. The Compliance Officer will:
· Keep a record of each proxy received;
· Forward the proxy to the Chief Manager;
· Determine which accounts managed by the Adviser hold the security to which the proxy relates;
· Provide the Chief Manager with a list of accounts that hold the security, together with the number of votes each account controls (reconciling any duplications), and the date by which the Adviser must vote the proxy in order to allow enough time for the completed proxy to be returned to the issuer prior to the vote taking place.
· Absent material conflicts (see Section IV below), the Chief Manager will determine how the Adviser should vote the proxy. The Chief Manager will send its decision on how the Adviser will vote a proxy to the Compliance Officer. The Compliance Officer is responsible for completing the proxy and mailing the proxy in a timely and appropriate manner.
· The Adviser may retain a third party to assist it in coordinating and voting proxies with respect to client securities. If so, the Compliance Officer will monitor the third party to assure that all proxies are being properly voted and appropriate records are being retained.
III. Voting Guidelines
In the absence of specific voting guidelines from the client, the Adviser will vote proxies in the best interests of each particular client, which may result in different voting results for proxies for the same issuer. The Adviser believes that voting proxies in accordance with the following guidelines is in the best interests of its clients.
· Generally, the Adviser will vote in favor of routine corporate housekeeping proposals, including election of directors (where no corporate governance issues are implicated), selection of auditors, and increases in or reclassification of common stock.
· Generally, the Adviser will vote against proposals that make it more difficult to
replace members of the issuers board of directors, including proposals to stagger the board, cause management to be overrepresented on the board, introduce cumulative voting, introduce unequal voting rights, and create supermajority voting.
For other proposals, the Adviser shall determine whether a proposal is in the best interests of its clients and may take into account the following factors, among others:
· whether the proposal was recommended by management and the Advisers opinion of management;
· whether the proposal acts to entrench existing management; and
· whether, in the Advisers opinion, the proposal fairly or overly compensates management for past and future performance.
IV. Conflicts of Interest
1. The Chief Manager shall disclose all known conflicts to the Compliance Officer.
2. The Compliance Officer will identify any additional conflicts that exist between the interests of the Adviser and its clients. This examination will include a review of the relationship of the Adviser and its affiliates with the issuer of each security and any of the issuers affiliates to determine if the issuer is a client of the Adviser or an affiliate of the Adviser or has some other relationship with the Adviser or a client of the Adviser.
If a material conflict exists, the Adviser will determine whether voting in accordance with the voting guidelines and factors described above is in the best interests of the client. The Adviser will also determine whether it is appropriate to disclose the conflict to the affected clients and, except in the case of clients that are subject to the Employee Retirement Income Security Act of 1974, as amended (ERISA), give the clients the opportunity to vote their proxies themselves. In the case of ERISA clients, if the Investment Management Agreement reserves to the ERISA client the authority to vote proxies when the Adviser determines it has a material conflict that affects its best judgment as an ERISA fiduciary, the Adviser will give the ERISA client the opportunity to vote the proxies themselves. Absent the client reserving voting rights, the Adviser will vote the proxies solely in accordance with the policies outlined in Section III. Voting Guidelines above.
V. Disclosure
1. The Adviser will disclose in its Form ADV Part II that clients may contact the Compliance Officer, via e-mail or telephone, in order to obtain information on how the Adviser voted such clients proxies, and to request a copy of these policies and procedures. If a client requests this information, the Compliance Officer will prepare a written response to the client that lists, with respect to each voted proxy about which the client has inquired, (a) the name of the issuer; (b) the proposal voted upon, and (c) how the Adviser voted the clients proxy.
2. A concise summary of this Proxy Voting Policy and Procedures will be included in the Advisers Form ADV Part II, and will be updated whenever these policies and procedures are updated. The Compliance Officer will arrange for a copy of this summary to be sent to all existing clients (who will already have been sent Advisers Form ADV Part II, which is required to be offered to clients annually) either as a separate mailing or along with a periodic account statement or other correspondence sent to clients.
VI. Recordkeeping
The Compliance Officer will maintain files relating to the Advisers proxy voting procedures in an easily
accessible place. Records will be maintained and preserved for five years from the end of the fiscal year during which the last entry was made on a record, with records for the first two years kept in the offices of the Adviser. Records of the following will be included in the files:
· Copies of this proxy voting policy and procedures, and any amendments thereto.
· A copy of each proxy statement that the Adviser receives.
· A record of each vote that the Adviser casts.
· A copy of each written client request for information on how the Adviser voted such clients proxies, and a copy of any written response to any (written or oral) client request for information on how the Adviser voted its proxies.
Appendix E
Lauren Templeton Capital Management, LLC
PROXY VOTING POLICIES AND PROCEDURES
A. Introduction
Lauren Templeton Capital Management, LLC (LTCM) generally does not vote proxies on behalf of clients unless directed by the client to do so. In the event that a client directs LTCM to vote its proxies, LTCM has adopted and implemented policies and procedures for voting proxies in the best interest of clients. While decisions about how to vote must be determined on a case-by-case basis, LTCMs general policies and procedures for voting proxies are set forth below.
B. Specific Proxy Voting Policies and Procedures
If LTCM is requested by a client to vote its proxies, LTCM will vote such proxies in the manner that serves the best interests of their clients in accordance with this policy. The following details LTCMs philosophy and practice regarding the voting of proxies.
1. General
Proxy proposals should be individually reviewed to determine whether the proposal is in the best interests of its clients. As a result, similar proposals for different companies may receive different votes because of different corporate circumstances.
2. Procedures
To implement LTCMs proxy voting policies, LTCM has developed the following procedures for voting proxies.
a. Upon receipt of a corporate proxy by LTCM, the special or annual report and the proxy are submitted to LTCMs proxy voting manager or designee (the Proxy Manager). LTCM may enlist the assistance of a third party, with final votes approved by the Portfolio Manager, to assist with voting and recordkeeping according to these guidelines and procedures.
b. The Proxy Manager will then vote the proxies yes, no, abstention or determine not to vote based on this policy.
c. The Proxy Manager will maintain records related to its proxy votes which may include copies of each annual report, proposal, proposal summary, actual vote, and any other information required to be maintained for a proxy vote under Rule 204-2 of the Advisers Act (see discussion in Section E below). With respect to proxy votes on topics deemed, in the opinion of the Proxy Manager, to be controversial or particularly sensitive, the Proxy Manager may provide a written explanation for the proxy vote which will be maintained with the record of the actual vote in LTCMs files.
Lauren Templeton Capital Management, LLC
PROXY VOTING POLICIES AND PROCEDURES
C. Voting Guidelines
While LTCMs policy is to review each proxy proposal on its individual merits, LTCM has adopted guidelines for certain types of matters to assist the Proxy Manager in the review and voting of proxies. These guidelines are set forth below:
1. Corporate Governance
a . Election of Directors and Similar Matters
In an uncontested election, LTCM will generally vote in favor of managements proposed directors. In a contested election, LTCM will evaluate proposed directors on a case-by-case basis. With respect to proposals regarding the structure of a companys Board of Directors, LTCM will review any contested proposal on its merits.
Notwithstanding the foregoing, LTCM expects to support proposals to:
· Limit directors liability and broaden directors indemnification rights;
And expects to generally vote against proposals to:
· Adopt or continue the use of a classified Board structure; and
· Add special interest directors to the board of directors (e.g., efforts to expand the board of directors to control the outcome of a particular
b. Audit Committee Approvals
LTCM generally supports proposals that help ensure that a companys auditors are independent and capable of delivering a fair and accurate opinion of a companys finances. LTCM will generally vote to ratify managements recommendation and selection of auditors.
c. Shareholder Rights
LTCM may consider all proposals that will have a material effect on shareholder rights on a case-by-case basis. Notwithstanding the foregoing, LTCM expects to generally support proposals to:
· Adopt confidential voting and independent tabulation of voting results; and
· Require shareholder approval of poison pills;
·
And expects to generally vote against proposals to:
· Adopt super-majority voting requirements; and
· Restrict the rights of shareholders to call special meetings, amend the bylaws or act by written consent.
Lauren Templeton Capital Management, LLC
PROXY VOTING POLICIES AND PROCEDURES
2. Anti-Takeover Measures, Corporate Restructurings and Similar Matters
LTCM may review any proposal to adopt an anti-takeover measure, to undergo a corporate restructuring (e.g., change of entity form or state of incorporation, mergers or acquisitions) or to take similar action by reviewing the potential short and long-term effects of the proposal on the company. These effects may include, without limitation, the economic and financial impact the proposal may have on the company, and the market impact that the proposal may have on the companys stock.
Notwithstanding the foregoing, LTCM expects to generally support proposals to:
· Prohibit the payment of greenmail (i.e., the purchase by the company of its own
· shares to prevent a hostile takeover);
· Adopt fair price requirements (i.e., requirements that all shareholders be paid the
· same price in a tender offer or takeover context), unless the Proxy Manager
· deems them sufficiently limited in scope; and
· Require shareholder approval of poison pills.
·
And expects to generally vote against proposals to:
· Adopt classified boards of directors;
· Reincorporate a company where the primary purpose appears to the Proxy Manager to be the creation of takeover defenses; and
· Require a company to consider the non-financial effects of mergers or acquisitions.
3. Capital Structure Proposals
LTCM will seek to evaluate capital structure proposals on their own merits on a case-bycase basis.
Notwithstanding the foregoing, LTCM expects to generally support proposals to:
· Eliminate preemptive rights.
4. Compensation
a. General
LTCM generally supports proposals that encourage the disclosure of a companys compensation policies. In addition, LTCM generally supports proposals that fairly compensate executives, particularly those proposals that link executive compensation to performance. LTCM may consider any contested proposal related to a companys compensation policies on a case-by-case basis.
Notwithstanding the foregoing, LTCM expects to generally support proposals to:
· Require shareholders approval of golden parachutes; and
· Adopt golden parachutes that do not exceed 1 to 3 times the base
· compensation of the applicable executives.
Lauren Templeton Capital Management, LLC
PROXY VOTING POLICIES AND PROCEDURES
And expects to generally vote against proposals to:
· Adopt measures that appear to the Proxy Manager to arbitrarily limit executive or employee benefits.
5. Stock Option Plans and Share Issuances
LTCM evaluates proposed stock option plans and share issuances on a case-by-case basis. In reviewing proposals regarding stock option plans and issuances, LTCM may consider, without limitation, the potential dilutive effect on shareholders and the potential short and long-term economic effects on the company. We believe that stock option plans do not necessarily align the interest of executives and outside directors with those of shareholders. We believe that well thought out cash compensation plans can achieve these objectives without diluting shareholders ownership. Therefore, we generally will vote against stock option plans. However, we will review these proposals on a case-bycase basis to determine that shareholders interests are being represented. We certainly are in favor of management, directors and employees owning stock, but prefer that the shares are purchased in the open market.
Notwithstanding the foregoing, LTCM expects to generally vote against proposals to:
· Establish or continue stock option plans and share issuances that are not in the best interest of the shareholders.
6. Corporate Responsibility and Social Issues
LTCM generally believes that ordinary business matters (including, without limitation, positions on corporate responsibility and social issues) are primarily the responsibility of a companys management that should be addressed solely by the companys management. These types of proposals, often initiated by shareholders, may request that the company disclose or amend certain business practices.
LTCM will generally vote against proposals involving corporate responsibility and social issues, although LTCM may vote for corporate responsibility and social issue proposals that LTCM believes will have substantial positive economic or other effects on a company or the companys stock.
7. Foreign Securities
LTCM will generally not vote foreign proxies due to the limited amount of information provided and because shares may of these securities may be blocked and trading may be restricted until completion of the meeting.
Lauren Templeton Capital Management, LLC
PROXY VOTING POLICIES AND PROCEDURES
D. Conflicts
In cases where LTCM is aware of a conflict between the interests of a client(s) and the interests of LTCM or an affiliated person of LTCM (e.g., a portfolio holding is a client or an affiliate of a client of LTCM), the LTCM will take the following steps:
(a) vote matters that are specifically covered by this Proxy Voting Policy (e.g., matters where the LTCMs vote is strictly in accordance with this Policy and not in its discretion) in accordance with this Policy; and
(b) for other matters, contact the client for instructions with respect to how to vote the proxy.
E. Disclosure of Proxy Voting Policy
Upon receiving a written request from a client, LTCM will provide a copy of this policy within a reasonable amount of time. If approved by the client, this policy and any requested records may be provided electronically.
F. Recordkeeping
LTCM shall keep the following records for a period of at least five years, the first two in an easily accessible place:
(i) A copy of this Policy;
(ii) Proxy Statements received regarding client securities;
(iii) Records of votes cast on behalf of clients;
(iv) Any documents prepared by LTCM that were material to making a decision how to vote, or that memorialized the basis for the decision; and
(v) Records of client requests for proxy voting information.
LTCM may rely on proxy statements filed on the SEC EDGAR system instead of keeping its own copies, and may rely on proxy statements and records of proxy votes cast by LTCM that are maintained with a third party such as a proxy voting service, provided that LTCM has obtained an undertaking from the third party to provide a copy of the documents promptly upon request.
G. Class Action Suits/Litigation
LTCM follows certain steps and procedures to ensure that LTCM has acted responsibly and made its decision to include or exclude portfolios from class action suits and litigation based on the best information available. When LTCM is an investment manager or trustee for all or a portion of the assets of an ERISA plan, it will follow ERISA fiduciary duty rules in determining whether to include or exclude the particular portfolio from the class action suit or litigation.
Lauren Templeton Capital Management, LLC
PROXY VOTING POLICIES AND PROCEDURES
When LTCM management becomes aware of a class action lawsuit potentially applicable to a Fund, LTCM management will review information about the litigation and its details, and the eligibility requirements to join the class action. LTCM may then determine whether it is advisable for the Fund to participate in the class action. In making its determination, LTCM may consider, among other things, whether the potential recovery from the class action would be material for the Fund and whether investigating eligibility would be prohibitively time-consuming or expensive.
Where LTCM determines that participation in the class action is advisable and recommended, LTCM may contact applicable custodian banks or other applicable persons on the Funds behalf to instruct them to include or exclude eligible portfolios in the action.
Appendix F
MAERISLAND CAPITAL, LLC
PROXY AND CORPORATE ACTION VOTING
POLICIES AND PROCEDURES
1. Proxy Guidelines
Generally, Maerisland Capital, LLC (Maerisland) will vote based upon the recommendations of Institutional Shareholder Services ( will vote based upon the recommendations of Institutional Shareholder Services initys,tin anen consent. from the end for the fi agendas, vote recommendations, recordkeeping and vote disclosure services .
The Supplement to Appendix C of this Compliance Manual contains a summary of the Proxy Voting Guidelines employed by ISS and adopted by Maerisland for voting proxies. Although ISS analyses are reviewed and considered in making a final voting decision, Maerisland will make the ultimate decision. As a matter of policy, the employees, officers, or principals of Maerisland will not be influenced by outside sources whose interests conflict with the interests of its Clients.
In addition, unless prior approval is obtained from Maerisland, COO, the following must be adhered to:
Maerisland shall not engage in conduct that involves an attempt to change or influence the control of a public company. In addition, all communications regarding proxy issues or corporate actions between companies or their agents, or with fellow shareholders shall be for the sole purpose of expressing and discussing Maerislands concerns for its advisory clients interests and not for an attempt to influence or control management.
Maerisland will not announce its voting intentions and the reasons therefore.
Maerisland shall not participate in a proxy solicitation or otherwise seek proxy-voting authority from any other public company shareholder.
Maerisland has the responsibility to process proxies and maintain proxy records pursuant to SEC rules and regulations. Therefore, Maerisland will attempt to process every vote it receives for all domestic and foreign proxies. However, there may be situations in which Maerisland cannot vote proxies. For example:
If the cost of voting a proxy outweighs the benefit of voting, Maerisland may refrain from processing that vote.
If Maerisland has outstanding sell orders or intends to sell, the proxies for those meetings may not be voted in order to facilitate the sale of those securities. Although Maerisland may hold shares on a companyxies for those, should it sell them prior to the companys meeting date, Maerisland ultimately may decide not to vote those shares.
Maerisland will generally refrain from voting proxies on foreign securities that are subject to share blocking restrictions.
Maerisland may vote against an agenda item where no further information is provided, particularly in non- U.S. markets. Maerisland may also enter an e against an agenda item where no further information is provided, particularly in non- U.S. markets. Maerislandte there Maerisland is not in favor of electing a director and there is no provision for voting against such director.
If a Maerisland portfolio manager determines that the interests of clients are best served to vote differently from the ISS recommended vote, approval must be obtained from the COO or designee. Maerisland will G-1 adhere to the Conflict of Interest (below) section of this policy in all instances where the recommended vote is not taken.
Maerisland will periodically review the outside partys voting standards and guidelines to make certain that proxy issues are voted in accordance with the adopted proxy voting guidelines and the avoidance of conflicts of interest.
2. Proxy Procedures
Maerisland intends to engage ISS to assist in the administrative aspects for the voting of proxies. ISS is responsible for coordinating with Clientsntends to engage ISS to assist in the administrative aspects for the voting of proxies. ISS is responsible for coordinatinge processed in a timely fashion. To the extent applicable, ISS votes all proxies in accordance with its own proxy voting guidelines (please see Proxy Guidelines above), which have been reviewed and adopted by Maerisland.
Upon request, Maerisland will furnish a copy of the policies and procedures to the requesting client and information on how the clientequest, Maerisland wil
3. Conflicts of Interest
Occasions may arise where a person or organization involved in the proxy voting process may have a conflict of interest. A conflict of interest may exist, for example, if Maerisland has a business relationship with (or is actively soliciting business from) either the company soliciting the proxy or a third party that has a material interest in the outcome of a proxy vote or that is actively lobbying for a particular outcome of a proxy vote. Any individual with knowledge of a personal conflict of interest (e.g., familial relationship with company management) relating to a particular referral item shall disclose that conflict to the Chief Operating Officer and otherwise remove him or herself from the proxy voting process. The COO will review each item referred to by Maerislandom investment professionals to determine if a conflict of interest exists and will draft a Conflicts Report for each referral item that (1) describes any conflict of interest; (2) discusses the procedures used to address such conflict of interest; and (3) discloses any contacts from parties outside Maerisland (other than routine communications from proxy solicitors) with respect to the referral item not otherwise reported in an investment professionals recommendation. The Conflicts Report will also include written confirmation that any recommendation from an investment professional provided under circumstances where a conflict of interest exists was made solely on the investment merits and without regard to any other consideration.
Procedures use to address the conflict address are as follows:
(a) Vote in Accordance with the Guidelines . To the extent that Adviser has little or no discretion to deviate from the Guidelines with respect to the proposal in question, Adviser shall vote in accordance with such pre-determined voting policy.
(b) Obtain Consent of Clients . To the extent that Adviser has discretion to deviate from the Guidelines with respect to the proposal in question, Adviser will disclose the conflict to the relevant clients and obtain their consent to the proposed vote prior to voting the securities. The disclosure to the client will include sufficient detail regarding the matter to be voted on and the nature of Adviserurities. The disclosure to the client will include sufficient detail regarding the matter to be voted on and th respond to such a conflict disclosure request or denies the request, Adviser will abstain from voting the securities held by that clientd account.
(c) Client Directive to Use an Independent Third Party . Alternatively, a client may, in writing, specifically direct Adviser to forward all proxy matters in which Adviser has a conflict of interest
regarding the client matters in which Adviser has independent third party for review and recommendation or to consult with an identified independent third partyen recommendations. Where such independent third partyme recommendations are received on a timely basis or are otherwise publicly available, Adviser will vote all such proxies in accordance with such third partyependent third partyrities held partycly available, Adviser will vote all such proxies in ill abstain from voting the securities held by that clients account.
The Chief Operating Officer will review the proxy proposal for conflicts of interest as part of the overall vote review process.
Appendix G
STARWOOD REAL ESTATE SECURITIES, LLC
PROXY VOTING POLICY AND PROCEDURES
In voting proxies, Starwood is guided by general fiduciary principles. Starwoods goal is to act prudently and solely in the best interest of the Fund. Starwood attempts to consider all aspects of its vote that could affect the value of the investment and where it votes proxies, will do so in the manner that it believes will be consistent with efforts to maximize the value of Investors positions.
Proxy material is promptly reviewed to evaluate the issues presented. Regularly recurring matters are usually voted as recommended by the issuers board of directors or management, but there are many circumstances that might cause Starwood to vote against such proposals. These would include, among others, excessive compensation, unusual management stock options, preferential voting, poison pills, etc. Starwood decides these issues on a case-by-case basis.
Starwood may, on occasion, determine to abstain from voting a proxy or a specific proxy item when it concludes that the potential benefit of voting is outweighed by the cost, when it is not in the Funds best interest to vote.
In furtherance of Starwoods goal to vote proxies in the best interests of the Fund, Starwood follows procedures designed to identify and address material conflicts that may arise between Starwoods interests and those of the Fund before voting proxies on behalf of the Fund. Starwood monitors the potential for conflicts of interest on the part of Starwood with respect to voting proxies on behalf of the Fund both as a result of personal relationships, significant client relationships (those accounting for greater than 5% of annual revenues) or special circumstances that may arise during the conduct of Starwoods business.
Starwood maintains an up to date list of issuers with respect to which Starwood has a conflict of interest in voting proxies on behalf of the Fund. Starwood will not vote proxies relating to issuers on such list on behalf of the Fund until it has been determined that the conflict of interest is not material or a method for resolving such conflict of interest has been agreed upon and implemented.
THE RBB FUND, INC.
PEA 149
PART C: OTHER INFORMATION
Item 28 . EXHIBITS
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Articles of Incorporation. |
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(1) |
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Articles of Incorporation of Registrant are incorporated herein by reference to Registrants Registration Statement (No. 33-20827) filed on March 24, 1988, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
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Articles Supplementary of Registrant are incorporated herein by reference to Registrants Registration Statement (No. 33-20827) filed on March 24, 1988, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
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Articles of Amendment to Articles of Incorporation of Registrant are incorporated herein by reference to Pre-Effective Amendment No. 2 to Registrants Registration Statement (No. 33-20827) filed on July 12, 1988, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
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Articles Supplementary of Registrant are incorporated herein by reference to Pre-Effective Amendment No. 2 to Registrants Registration Statement (No. 33-20827) filed on July 12, 1988, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
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(5) |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 3 to the Registrants Registration Statement (No. 33-20827) filed on April 27, 1990, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 4 to the Registrants Registration Statement (No. 33-20827) filed on May 1, 1990, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 7 to the Registrants Registration Statement (No. 33-20827) filed on July 15, 1992, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 8 to the Registrants Registration Statement (No. 33-20827) filed on October 22, 1992, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
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(9) |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 13 to the Registrants Registration Statement (No. 33-20827) filed on October 29, 1993, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
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(10) |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 13 to the Registrants Registration Statement (No. 33-20827) filed on October 29, 1993, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
(11) |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 22 to the Registrants Registration Statement (No. 33-20827) filed on December 19, 1994, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
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(12) |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 22 to the Registrants Registration Statement (No. 33-20827) filed on December 19, 1994, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 22 to the Registrants Registration Statement (No. 33-20827) filed on December 19, 1994, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
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(14) |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 22 to the Registrants Registration Statement (No. 33-20827) filed on December 19, 1994, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
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(15) |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 27 to the Registrants Registration Statement (No. 33-20827) filed on March 31, 1995. |
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(16) |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 34 to the Registrants Registration Statement (No. 33-20827) filed on May 16, 1996. |
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(17) |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 39 to the Registrants Registration Statement (No. 33-20827) filed on October 11, 1996. |
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(18) |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 45 to the Registrants Registration Statement (No. 33-20827) filed on May 9, 1997. |
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(19) |
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Articles of Amendment to Charter of the Registrant are incorporated herein by reference to Post-Effective Amendment No. 46 to the Registrants Registration Statement (No. 33-20827) filed on September 25, 1997. |
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(20) |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 46 to the Registrants Registration Statement (No. 33-20827) filed on September 25, 1997. |
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(21) |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 60 to the Registrants Registration Statement (No. 33-20827) filed on October 29, 1998. |
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(22) |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 60 to the Registrants Registration Statement (No. 33-20827) filed on October 29, 1998. |
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(23) |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 63 to the Registrants Registration Statement (No. 33-20827) filed on December 14, 1998. |
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(24) |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 63 to the Registrants Registration Statement (No. 33-20827) filed on December 14, 1998. |
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(25) |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 67 to the Registrants Registration Statement (No. 33-20827) filed on September 30, 1999. |
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(26) |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 69 to the Registrants Registration Statement (No. 33-20827) filed on November 29, 1999. |
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(27) |
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Articles of Amendment to Charter of the Registrant are incorporated herein by reference to Post-Effective Amendment No. 71 to the Registrants Registration Statement (No. 33-20827) filed on December 29, 2000. |
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(28) |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 71 to the Registrants Registration Statement (No. 33-20827) filed on December 29, 2000. |
(29) |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 71 to the Registrants Registration Statement (No. 33-20827) filed on December 29, 2000. |
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(30) |
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Articles of Amendment to Charter of the Registrant are incorporated herein by reference to Post-Effective Amendment No. 71 to the Registrants Registration Statement (No. 33-20827) filed on December 29, 2000. |
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(31) |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 73 to the Registrants Registration Statement (No. 33-20827) filed on March 15, 2001. |
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(32) |
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Articles of Amendment of Registrant ( Boston Partners Bond Fund - Institutional Class and Boston Partners Bond Fund - Investor Class ) are incorporated herein by reference to Post-Effective Amendment No. 77 to the Registrants Registration Statement (No. 33-20827) filed on May 15, 2002. |
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(33) |
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Articles Supplementary to Charter of the Registrant ( Boston Partners All-Cap Value Fund - Institutional Class and Boston Partners Bond Fund - Institutional Class ) are incorporated herein by reference to Post-Effective Amendment No. 77 to the Registrants Registration Statement (No. 33-20827) filed on May 15, 2002. |
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(34) |
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Articles Supplementary of Registrant ( Schneider Value Fund ) are incorporated herein by reference to Post-Effective Amendment No. 78 to the Registrants Registration Statement (No. 33-20827) filed on May 16, 2002. |
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(35) |
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Articles Supplementary of Registrant ( Institutional Liquidity Fund for Credit Unions and Liquidity Fund for Credit Union Members ) are incorporated herein by reference to Post-Effective Amendment No. 84 to the Registrants Registration Statement (No. 33-20827) filed on December 29, 2003. |
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(36) |
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Articles of Amendment to Charter of the Registrant are incorporated herein by reference to Post-Effective Amendment No. 89 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2004. |
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(37) |
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Articles Supplementary of Registrant ( Robeco WPG Core Bond Fund Investor Class, Robeco WPG Core Bond Fund Institutional Class, Robeco WPG Tudor Fund Institutional Class, Robeco WPG Large Cap Growth Fund Institutional Class ) are incorporated herein by reference to Post-Effective Amendment No. 93 to the Registrants Registration Statement (No. 33-20827) filed on March 4, 2005. |
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(38) |
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Certificate of Correction of Registrant is incorporated herein by reference to Post-Effective Amendment No. 95 to the Registrants Registration Statement (No. 33-20827) filed on March 23, 2005. |
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(39) |
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Articles Supplementary of Registrant ( Robeco WPG Core Bond Fund Investor Class, Robeco WPG Core Bond Fund Institutional Class, Robeco WPG Tudor Fund Institutional Class, Robeco WPG 130/30 Large Cap Core Fund f/k/a Robeco WPG Large Cap Growth Fund Institutional Class ) are incorporated herein by reference to Post-Effective Amendment No. 95 to the Registrants Registration Statement (No. 33-20827) filed on March 23, 2005. |
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(40) |
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Articles Supplementary of Registrant ( Senbanc Fund) are incorporated herein by reference to Post-Effective Amendment No. 96 to the Registrants Registration Statement (No. 33-20827) filed on June 6, 2005. |
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(41) |
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Articles of Amendment of Registrant ( Robeco WPG Core Bond Fund Retirement Class) are incorporated herein by reference to Post-Effective Amendment No. 97 to the Registrants Registration Statement (No. 33-20827) filed on August 19, 2005. |
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(42) |
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Articles Supplementary of Registrant ( Robeco WPG Core Bond Fund Investor Class) are incorporated herein by reference to Post-Effective Amendment No. 99 to the Registrants Registration Statement (No. 33-20827) filed on September 27, 2005. |
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(43) |
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Articles Supplementary of Registrant (Bear Stearns CUFS MLP Mortgage Portfolio) are incorporated herein by reference to Post-Effective Amendment No. 104 to the Registrants Registration Statement (No. 33-20827) filed on July 18, 2006. |
(44) |
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Articles of Amendment of Registrant (Bear Stearns CUFS MLP Mortgage Portfolio) are incorporated herein by reference to Post-Effective Amendment No. 108 to the Registrants Registration Statement (No. 33-20827) filed on December 14, 2006. |
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(45) |
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Articles Supplementary of Registrant (Bear Stearns Ultra Short Income Fund f/k/a Bear Stearns Enhanced Income Fund) are incorporated herein by reference to Post-Effective Amendment No. 109 to Registrants Registration Statement (No. 33-20827) filed on December 15, 2006. |
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(46) |
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Articles Supplementary of Registrant (Marvin & Palmer Large Cap Growth Fund) are incorporated herein by reference to Post-Effective Amendment No. 109 to Registrants Registration Statement (No. 33-20827) filed on December 15, 2006. |
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(47) |
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Articles of Amendment of Registrant (Bear Stearns Ultra Short Income Fund f/k/a Bear Stearns Enhanced Income Fund) are incorporated herein by reference to Post-Effective Amendment No. 111 to the Registrants Registration Statement (No. 33-20827) filed on February 28, 2007. |
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(48) |
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Articles Supplementary of Registrant (Bear Stearns Ultra Short Income Fund f/k/a Bear Stearns Enhanced Income Fund) are incorporated herein by reference to Post-Effective Amendment No. 111 to the Registrants Registration Statement (No. 33-20827) filed on February 28, 2007. |
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(49) |
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Articles Supplementary of Registrant (Free Market U.S. Equity Fund, Free Market International Equity Fund, Free Market Fixed-Income Fund) incorporated herein by reference to Post-Effective Amendment No. 112 to the Registrants Registration Statement (No. 33-20827) filed on June 1, 2007. |
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(50) |
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Articles Supplementary of Registrant (Robeco WPG 130/30 Large Cap Core Fund Investor Class) are incorporated herein by reference to Post-Effective Amendment No.113 to the Registrants Registration Statement (No. 33-20827) filed on July 13, 2007. |
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(51) |
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Articles Supplementary of Registrant ( SAM Sustainable Water Fund, SAM Sustainable Climate Fund ) are incorporated herein by reference to Post-Effective Amendment No.114 to the Registrants Registration Statement (No. 33-20827) filed on July 17, 2007. |
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(52) |
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Articles of Amendment of Registrant (Robeco WPG 130/30 Large Cap Core Fund Institutional Class) are incorporated herein by reference to Post-Effective Amendment No.116 to the Registrants Registration Statement (No. 33-20827) filed on September 4, 2007. |
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(53) |
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Articles Supplementary of Registrant ( Bear Stearns Multifactor 130/30 US Core Equity Fund ) are incorporated herein by reference to Post-Effective Amendment No. 123 to the Registrants Registration Statement (No. 33-20827) filed on December 17, 2007. |
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(54) |
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Articles of Amendment of Registrant (Bear Stearns Ultra Short Income Fund f/k/a Bear Stearns Enhanced Income Fund are incorporated herein by reference to Post-Effective Amendment No. 124 to the Registrants Registration Statement (No. 33-20827) filed on December 28, 2007. |
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(55) |
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Articles Supplementary of Registrant ( SAM Sustainable Global Active Fund, SAM Sustainable Themes Fund ) are incorporated herein by reference to Post-Effective Amendment No. 128 to the Registrants Registration Statement (No. 33-20827) filed on April 23, 2009. |
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(56) |
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Articles Supplementary of Registrant ( Perimeter Small Cap Growth Fund) are incorporated herein by reference to Post-Effective Amendment No. 129 to the Registrants Registration Statement (No. 33-20827) filed on July 2, 2009. |
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(57) |
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Articles Supplementary of Registrant ( S1 Fund) are incorporated herein by reference to Post-Effective Amendment No. 135 to Registrants Registration Statement (No. 33-20827) filed on July 19, 2010. |
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(58) |
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Articles Supplementary of Registrant ( Robeco Boston Partners Long/Short Research Fund ) are incorporated herein by reference to Post-Effective Amendment No. 136 to the Registrants Registration Statement (No. 33-20827) filed on August 4, 2010. |
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(59) |
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Articles of Amendment of Registrant (Robeco WPG Small/Micro Cap Value Fund f/k/a Robeco WPG Small Cap Value Fund) are incorporated herein by reference to Post-Effective Amendment No. 141 to the Registrants Registration Statement (No. 33-20827) filed on December 28, 2010. |
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Articles Supplementary of Registrant ( Robeco Boston Partners Global Equity Fund and Robeco Boston Partners International Equity Fund ) are incorporated herein by reference to Post-Effective Amendment No. 142 to the Registrants Registration Statement (No. 33-20827) filed on October 14, 2011. |
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(61) |
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Articles Supplementary of Registrant ( Summit Global Investments U.S. Low Volatility Equity Fund ) are incorporated herein by reference to Post-Effective Amendment No. 144 to the Registrants Registration Statement (No. 33-20827) filed on December 15, 2011. |
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(62) |
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Articles Supplementary of Registrant (Free Market U.S. Equity Fund, Free Market International Equity Fund, Free Market Fixed-Income Fund) are filed herewith. |
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By-Laws. |
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By-Laws, as amended, are incorporated herein by reference to Post-Effective Amendment No. 143 to the Registrants Registration Statement (No. 33-20827) filed on October 28, 2011. |
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(c) |
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Instruments Defining Rights of Security Holders. |
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See Articles VI, VII, VIII, IX and XI of Registrants Articles of 1 Incorporation dated February 17, 1988 which are incorporated herein by reference to Registrants Registration Statement (No. 33-20827) filed on March 24, 1988, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
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See Articles II, III, VI, XIII, and XIV of Registrants By-Laws as amended through August 25, 2004, which are incorporated herein by reference to Post-Effective Amendment No. 89 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2004. |
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Investment Advisory Contracts. |
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Investment Advisory Agreement (Schneider Small Cap Value Fund) between Registrant and Schneider Capital Management Company is incorporated herein by reference to Post-Effective Amendment No. 60 to the Registrants Registration Statement (No. 33-20827) filed on October 29, 1998. |
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Investment Advisory Agreement (Boston Partners Small Cap Value Fund II (formerly Micro Cap Value)) between Registrant and Boston Partners Asset Management, L.P. is incorporated herein by reference to Post-Effective Amendment No. 83 to the Registrants Registration Statement (No. 33-20827) filed on April 8, 2003. |
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Amendment to Investment Advisory Agreement (Boston Partners Small Cap Value Fund II) is incorporated herein by reference to Post-Effective Amendment No. 126 to the Registrants Registration Statement (No. 33-20827) filed on October 24, 2008. |
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Investment Advisory Agreement (Boston Partners Long/Short Equity Fund (formerly Market Neutral)) between Registrant and Boston Partners Asset Management, L.P. is incorporated herein by reference to Post-Effective Amendment No. 83 to the Registrants Registration Statement (No. 33-20827) filed on April 8, 2003. |
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Investment Advisory Agreement (Bogle Investment Management Small Cap Growth Fund) between Registrant and Bogle Investment Management, L.P. is incorporated herein by reference to Post-Effective Amendment No. 67 to the Registrants Registration Statement (No. 33-20827) filed on September 30, 1999. |
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Amended and Restated Investment Advisory Agreement (Boston Partners All-Cap Value Fund) between Registrant and Boston Partners Asset Management, L.P. is incorporated herein by reference to Post-Effective Amendment No. 105 to the Registrants Registration Statement (No. 33-20827) filed on October 30, 2006. |
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Investment Advisory Agreement (Schneider Value Fund) between Registrant and Schneider Capital Management Company is incorporated herein by reference to Post-Effective Amendment No. 80 to the Registrants Registration Statement (No. 33-20827) filed on November 1, 2002. |
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Investment Advisory Agreement (Robeco WPG Small/Micro Cap Value Fund f/k/a Robeco WPG Tudor Fund) between Registrant and Weiss, Peck & Greer Investments is incorporated herein by reference to Post-Effective Amendment No. 100 to the Registrants Registration Statement (No. 33-20827) filed on November 25, 2005. |
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Investment Advisory and Administration Agreement (Money Market Portfolio ) between Registrant and BlackRock Advisors, LLC. is incorporated herein by reference to Post-Effective Amendment No. 143 to the Registrants Registration Statement (No. 33-20827) filed on October 28, 2011. |
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Investment Advisory Agreement (Marvin & Palmer Large Cap Growth Fund ) is incorporated herein by reference to Post-Effective Amendment No. 124 to the Registrants Registration Statement (No. 33-20827) filed on December 28, 2007. |
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Investment Advisory Agreement (Free Market U.S. Equity Fund, Free Market International Equity Fund, Free Market Fixed Income Fund) is incorporated herein by reference to Post-Effective Amendment No. 125 to the Registrants Registration Statement (No. 33-20827) filed on February 27, 2008. |
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Contractual Fee Waiver Agreement (Schneider Small Cap Value Fund) is incorporated herein by reference to Post-Effective Amendment No. 145 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2011. |
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Contractual Fee Waiver Agreement (Schneider Value Fund) is incorporated herein by reference to Post-Effective Amendment No. 145 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2011. |
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Contractual Fee Waiver Agreement (Bogle Investment Management Small Cap Growth Fund) is incorporated herein by reference to Post-Effective Amendment No. 145 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2011. |
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Contractual Fee Waiver Agreement (Robeco Boston Partners Small Cap Value Fund II, Robeco Boston Partners All Cap Value Fund, Robeco Boston Partners Long/Short Equity Fund, Robeco Boston Partners Long/Short Research Fund and WPG Small/Micro Cap Value Fund (each a Fund and collectively the Funds), of The RBB Fund, Inc) is incorporated herein by reference to Post-Effective Amendment No. 145 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2011. |
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(16) |
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Contractual Fee Waiver Agreement (Marvin & Palmer Large Cap Growth Fund) is incorporated herein by reference to Post-Effective Amendment No. 145 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2011. |
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(17) |
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Assumption Agreement (Robeco Boston Partners Small Cap Value Fund II, Robeco Boston Partners Long/Short Equity Fund, Robeco Boston Partners Large Cap Value Fund, Robeco Boston Partners Mid Cap Value Fund, Robeco Boston Partners All-Cap Value Fund) between Boston Partners Asset Management and Robeco Investment Management, Inc. dated January 1, 2007 is incorporated herein by reference to Post-Effective Amendment No. 111 to the Registrants Registration Statement (No. 33-20827) filed on February 28, 2007. |
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(18) |
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Assumption Agreement (Robeco WPG Core Bond Fund, Robeco WPG Large Cap Growth Fund, and Robeco WPG Small/Micro Cap Value Fund f/k/a Robeco WPG Small Cap Value Fund) between Weiss, Peck, & Greer Investments and Robeco Investment Management, Inc. dated January 1, 2007 is incorporated herein by reference to Post-Effective Amendment No. 111 to the Registrants Registration Statement (No. 33-20827) filed on February 28, 2007. |
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(19) |
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Investment Advisory Agreement (Perimeter Small Cap Growth Fund) between Registrant and Perimeter Capital Management LLC is incorporated herein by reference to Post-Effective Amendment No. 143 to the Registrants Registration Statement (No. 33-20827) filed on October 28, 2011. |
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(20) |
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Contractual Fee Waiver Agreement (Perimeter Small Cap Growth Fund) between Registrant and Perimeter Capital Management is incorporated herein by reference to Post-Effective Amendment No. 145 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2011. |
(21) |
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Investment Advisory Agreement (S1 Fund) between Registrant and Simple Alternatives, LLC is incorporated herein by reference to Post-Effective Amendment No. 138 to the Registration Statement (No. 33-20827) filed on October 29, 2010. |
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(22) |
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Contractual Fee Waiver Agreement (S1 Fund) between Registrant and Simple Alternatives, LLC is incorporated herein by reference to Post-Effective Amendment No. 143 to the Registrants Registration Statement (No. 33-20827) filed on October 28, 2011. |
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(23) |
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Investment Sub-Advisory Agreement (S1 Fund) between Simple Alternatives, LLC and Roaring Blue Lion Capital Management, LLC is incorporated herein by reference to Post-Effective Amendment No. 143 to the Registrants Registration Statement (No. 33-20827) filed on October 28, 2011. |
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(24) |
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Investment Sub-Advisory Agreement (S1 Fund) between Simple Alternatives, LLC and Courage Capital Management, LLC is incorporated herein by reference to Post-Effective Amendment No. 143 to the Registrants Registration Statement (No. 33-20827) filed on October 28, 2011. |
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(25) |
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Investment Sub-Advisory Agreement (S1 Fund) between Simple Alternatives, LLC and Cramer Rosenthal McGlynn LLC is incorporated herein by reference to Post-Effective Amendment No. 143 to the Registrants Registration Statement (No. 33-20827) filed on October 28, 2011. |
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(26) |
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Investment Sub-Advisory Agreement (S1 Fund) between Simple Alternatives, LLC and Lauren Templeton Capital Management, LLC is incorporated herein by reference to Post-Effective Amendment No. 143 to the Registrants Registration Statement (No. 33-20827) filed on October 28, 2011. |
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(27) |
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Investment Sub-Advisory Agreement (S1 Fund) between Simple Alternatives, LLC and Starwood Real Estate Securities, LLC is incorporated herein by reference to Post-Effective Amendment No. 143 to the Registrants Registration Statement (No. 33-20827) filed on October 28, 2011. |
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(28) |
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Investment Sub-Advisory Agreement (S1 Fund) between Simple Alternatives, LLC and Trellus Management Co., LLC is incorporated herein by reference to Post-Effective Amendment No. 143 to the Registrants Registration Statement (No. 33-20827) filed on October 28, 2011. |
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(29) |
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Investment Advisory Agreement ( Robeco Boston Partners Long/Short Research Fund) between Registrant and Robeco Investment Management Inc. is incorporated herein by reference to Post-Effective Amendment No. 141 to the Registrants Registration Statement (No. 33-20827) filed on December 28, 2010. |
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(30) |
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Investment Advisory Agreement ( Robeco Boston Partners Global Equity Fund) between Registrant and Robeco Investment Management Inc. is incorporated herein by reference to Post-Effective Amendment No. 145 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2011. |
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(31) |
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Investment Advisory Agreement ( Robeco Boston Partners International Equity Fund) between Registrant and Robeco Investment Management Inc. is incorporated herein by reference to Post-Effective Amendment No. 145 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2011. |
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(32) |
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Contractual Fee Waiver Agreement (Robeco Boston Partners Global Equity Fund and Robeco Boston Partners International Equity Fund) between Registrant and Robeco Investment Management Inc. is incorporated herein by reference to Post-Effective Amendment No. 145 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2011. |
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(33) |
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Form of Investment Advisory Agreement ( Summit Global Investments U.S. Low Volatility Equity Fund ) between Registrant and Summit Global Investments, LLC is incorporated herein by reference to Post-Effective Amendment No. 144 to the Registrants Registration Statement (No. 33-20827) filed on December 15, 2011. |
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(34) |
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Form of Contractual Fee Waiver Agreement ( Summit Global Investments U.S. Low Volatility Equity Fund ) between Registrant and Summit Global Investments, LLC is incorporated herein by reference to Post-Effective Amendment No. 144 to the Registrants Registration Statement (No. 33-20827) filed on December 15, 2011. |
(35) |
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Contractual Fee Waiver Agreement between Registrant and BlackRock Advisors, LLC ( Money Market Portfolio ) is incorporated herein by reference to Post-Effective Amendment No. 145 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2011. |
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(36) |
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Investment Sub-Advisory Agreement (S1 Fund) between Simple Alternatives, LLC and Maerisland Capital, LLC is filed herewith. |
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(e) |
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Underwriting Contracts. |
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(1) |
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Distribution Agreement between Registrant and Foreside Funds Distributors LLC ( f/k/a PFPC Distributors, Inc.) dated as of January 2, 2001 is incorporated herein by reference to Post-Effective Amendment No. 73 to the Registrants Registration Statement (No. 33-20827) filed on March 15, 2001. |
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(2) |
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Distribution Agreement Supplement (Boston Partners All-Cap Value Fund - Investor Class) between Registrant and Foreside Funds Distributors LLC ( f/k/a PFPC Distributors, Inc.) is incorporated herein by reference to Post-Effective Amendment No. 80 to the Registrants Registration Statement (No. 33-20827) filed on November 1, 2002. |
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(3) |
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Distribution Agreement Supplement (Boston Partners All-Cap Value Fund - Institutional Class ) between Registrant and Foreside Funds Distributors LLC ( f/k/a PFPC Distributors, Inc.) is incorporated herein by reference to Post-Effective Amendment No. 80 to the Registrants Registration Statement (No. 33-20827) filed on November 1, 2002. |
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(4) |
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Distribution Agreement Supplement (Schneider Value Fund) between Registrant and Foreside Funds Distributors LLC ( f/k/a PFPC Distributors, Inc.) is incorporated herein by reference to Post-Effective Amendment No. 80 to the Registrants Registration Statement (No. 33-20827) filed on November 1, 2002. |
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(5) |
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Distribution Agreement Supplement (Robeco WPG Small/Micro Cap Value Fund f/k/a Robeco WPG Small Cap Value Fund - Institutional Class) between Registrant and Foreside Funds Distributors LLC ( f/k/a PFPC Distributors, Inc.) is incorporated herein by reference to Post-Effective Amendment No. 101 to the Registrants Registration Statement (No. 33-20827) filed on December 29, 2005. |
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(6) |
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Distribution Agreement Supplement (Bear Stearns CUFS MLP Mortgage Portfolio) between Registrant and Foreside Funds Distributors LLC ( f/k/a PFPC Distributors, Inc.) is incorporated herein by reference to Post-Effective Amendment No. 108 to the Registrants Registration Statement (No. 33-20827) filed on December 14, 2006. |
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(7) |
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Distribution Agreement Supplement (Marvin & Palmer Large Cap Growth Fund) between Registrant and Foreside Funds Distributors LLC ( f/k/a PFPC Distributors, Inc.) is incorporated herein by reference to Post-Effective Amendment No. 124 to the Registrants Registration Statement (No. 33-20827) filed on December 28, 2007. |
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(8) |
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Distribution Agreement Supplement (Free Market U.S. Equity Fund) between Registrant and Foreside Funds Distributors LLC ( f/k/a PFPC Distributors, Inc.) is incorporated herein by reference to Post-Effective Amendment No. 126 to the Registrants Registration Statement (No. 33-20827) filed on October 24, 2008. |
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(9) |
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Distribution Agreement Supplement ( Free Market International Equity Fund ) between Registrant and Foreside Funds Distributors LLC ( f/k/a PFPC Distributors, Inc.) is incorporated herein by reference to Post-Effective Amendment No. 126 to the Registrants Registration Statement (No. 33-20827) filed on October 24, 2008. |
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(10) |
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Distribution Agreement Supplement ( Free Market Fixed Income Fund ) between Registrant and Foreside Funds Distributors LLC ( f/k/a PFPC Distributors, Inc.) is incorporated herein by reference to Post-Effective Amendment No. 126 to the Registrants Registration Statement (No. 33-20827) filed on October 24, 2008. |
(11) |
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Form of Distribution Agreement Supplement (Perimeter Small Cap Growth Fund) between Registrant and Foreside Funds Distributors LLC ( f/k/a PFPC Distributors, Inc.) is incorporated herein by reference to Post Effective Amendment No. 132 to the Registration Statement (No. 33-20827) filed on October 22, 2009. |
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(12) |
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Distribution Agreement between Registrant and Foreside Funds Distributors LLC ( f/k/a BNY Mellon Distributors, Inc.) is incorporated herein by reference to Post-Effective Amendment No. 136 to the Registrants Registration Statement (No. 33-20827) filed on August 4, 2010. |
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(13) |
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Distribution Agreement Supplement (S1 Fund and Robeco Boston Partners Long/Short Research Fund) between Registrant and Foreside Funds Distributors LLC ( f/k/a BNY Mellon Distributors, Inc.) is incorporated herein by reference to Post-Effective Amendment No. 141 to the Registrants Registration Statement (No. 33-20827) filed on December 28, 2010. |
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(14) |
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Form of Distribution Agreement Supplement (Robeco Boston Partners Global Equity Fund and Robeco Boston Partners International Equity Fund) between Registrant and Foreside Funds Distributors LLC ( f/k/a BNY Mellon Distributors, Inc.) is incorporated herein by reference to Post-Effective Amendment No. 145 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2011. |
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(15) |
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Form of Distribution Agreement Supplement (Summit Global Investments U.S. Low Volatility Equity Fund) between Registrant and Foreside Funds Distributors LLC ( f/k/a BNY Mellon Distributors, Inc.) is incorporated herein by reference to Post-Effective Amendment No. 145 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2011. |
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(16) |
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Distribution Agreement between Registrant and Foreside Funds Distributors LLC dated March 31, 2012 is filed herewith. |
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(f) |
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Bonus or Profit Sharing Contracts. |
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(1) |
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Fund Office Retirement Profit-Sharing and Trust Agreement, dated as of October 24, 1990, as amended is incorporated herein by reference to Post-Effective Amendment No. 49 to the Registrants Registration Statement (No. 33-20827) filed on December 1, 1997. |
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(2) |
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Form of Amendment No. 1 to Fund Office Retirement Profit Sharing Plan and Trust Reflecting EGTRRA is incorporated herein by reference to Post-Effective Amendment No. 80 to the Registrants Registration Statement (No. 33-20827) filed on November 1, 2002. |
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(g) |
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Custodian Agreements. |
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(1) |
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Custody Agreement dated July 18, 2011 between Registrant and The Bank of New York Mellon is incorporated herein by reference to Post-Effective Amendment No. 143 to the Registrants Registration Statement (No. 33-20827) filed on October 28, 2011. |
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(2) |
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Foreign Custody Manager Agreement dated July 18, 2011 between Registrant and The Bank of New York Mellon is incorporated herein by reference to Post-Effective Amendment No. 143 to the Registrants Registration Statement (No. 33-20827) filed on October 28, 2011. |
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(3) |
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Form of Amended and Restated Schedule II to the Custody Agreement ( Robeco Boston Partners Global Equity Fund and Robeco Boston Partners International Equity Fund ) is incorporated herein by reference to Post-Effective Amendment No. 143 to the Registrants Registration Statement (No. 33-20827) filed on October 28, 2011. |
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(4) |
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Form of Amended and Restated Schedule II to the Custody Agreement ( Summit Global Investments U.S. Low Volatility Equity Fund ) is incorporated herein by reference to Post-Effective Amendment No. 145 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2011. |
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(h) |
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Other Material Contracts. |
(1) |
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Transfer Agency Agreement (Sansom Street) between Registrant and Provident Financial Processing Corporation, dated as of August 16, 1988 is incorporated herein by reference to Post-Effective Amendment No. 1 to Registrants Registration Statement (No. 33-20827) filed on March 23, 1989, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
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(2) |
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Shareholder Servicing Agreement (Sansom Street Money Market) is incorporated herein by reference to Post-Effective Amendment No. 1 to Registrants Registration Statement (No. 33-20827) filed on March 23, 1989, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
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(3) |
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Shareholder Servicing Agreement (Sansom Street Government Obligations Money Market) is incorporated herein by reference to Post-Effective Amendment No. 1 to Registrants Registration Statement (No. 33-20827) filed on March 23, 1989, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
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(4) |
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Shareholder Services Plan (Sansom Street Money Market) is incorporated herein by reference to Post-Effective Amendment No. 1 to Registrants Registration Statement (No. 33-20827) filed on March 23, 1989, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
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(5) |
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Transfer Agency Agreement (Bedford Money Market) between Registrant and Provident Financial Processing Corporation, dated as of August 16, 1988 is incorporated herein by reference to Post-Effective Amendment No. 1 to Registrants Registration Statement (No. 33-20827) filed on March 23, 1989, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
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(6) |
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Transfer Agency Agreement and Supplements (Bradford, Beta, Gamma, Delta, Epsilon, Zeta, Eta and Theta) between Registrant and Provident Financial Processing Corporation dated as of November 5, 1991 is incorporated herein by reference to Post-Effective Amendment No. 7 to the Registrants Registration Statement (No. 33-20827) filed on July 15, 1992, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
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(7) |
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Transfer Agency and Service Agreement between Registrant and State Street Bank and Trust Company and PNC Global Investment Servicing (U.S.) Inc. (f/k/a PFPC Inc.) dated February 1, 1995 is incorporated herein by reference to Post-Effective Amendment No. 28 to the Registrants Registration Statement (No. 33-20827) filed on October 6, 1995. |
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(8) |
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Supplement to Transfer Agency and Service Agreement between Registrant, State Street Bank and Trust Company, Inc. and PNC Global Investment Servicing (U.S.) Inc. (f/k/a PFPC Inc.) dated April 10, 1995 is incorporated herein by reference to Post-Effective Amendment No. 28 to the Registrants Registration Statement (No. 33-20827) filed on October 6, 1995. |
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(9) |
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Amended and Restated Credit Agreement dated December 15, 1994 is incorporated herein by reference to Post-Effective Amendment No. 29 to the Registrants Registration Statement (No. 33-20827) filed on October 25, 1995. |
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(10) |
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Transfer Agreement and Service Agreement between Registrant and State Street Bank and Trust Company is incorporated herein by reference to Post-Effective Amendment No. 37 to the Registrants Registration Statement (No. 33-20827) filed on July 30, 1996. |
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(11) |
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Transfer Agency Agreement Supplement (Boston Partners Mid Cap Value Fund - Institutional Class) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 46 to the Registrants Registration Statement (No. 33-20827) filed on September 25, 1997. |
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(12) |
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Transfer Agency Agreement Supplement (Boston Partners Mid Cap Value Fund - Investor Class) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 46 to the Registrants Registration Statement (No. 33-20827) filed on September 25, 1997. |
(13) |
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Administration and Accounting Services Agreement (Boston Partners Mid Cap Value Fund) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) dated, May 30, 1997 is incorporated herein by reference to Post-Effective Amendment No. 46 to the Registrants Registration Statement (No. 33-20827) filed on September 25, 1997. |
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(14) |
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Administration and Accounting Services Agreement (Schneider Small Cap Value Fund) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 60 to the Registrants Registration Statement (No. 33-20827) filed on October 29, 1998. |
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(15) |
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Transfer Agency Agreement Supplement (Schneider Small Cap Value Fund) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 60 to the Registrants Registration Statement (No. 33-20827) filed on October 29, 1998. |
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(16) |
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Transfer Agency Agreement Supplement (Boston Partners Small Cap Value Fund II (formerly Micro Cap Value) - Institutional Class) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 60 to the Registrants Registration Statement (No. 33-20827) filed on October 29, 1998. |
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(17) |
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Transfer Agency Agreement Supplement (Boston Partners Small Cap Value Fund II (formerly Micro Cap Value) - Investor Class) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 60 to the Registrants Registration Statement (No. 33-20827) filed on October 29, 1998. |
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(18) |
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Administration and Accounting Services Agreement (Boston Partners Small Cap Value Fund II (formerly Boston Partners Micro Cap Value Fund)) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 60 to the Registrants Registration Statement (No. 33-20827) filed on October 29, 1998. |
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(19) |
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Administrative and Accounting Services Agreement (Boston Partners Long/Short Equity Fund (formerly Market Neutral) - Institutional and Investor Classes) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 63 to the Registrants Registration Statement (No. 33-20827) filed on December 14, 1998. |
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(20) |
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Transfer Agency Agreement Supplement (Boston Partners Long/Short Equity Fund (formerly Market Neutral) - Institutional and Investor Classes) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 63 to the Registrants Registration Statement (No. 33-20827) filed on December 14, 1998. |
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(21) |
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Form of Transfer Agency Agreement Supplement (Boston Partners Fund (formerly Long-Short Equity)) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 65 to the Registrants Registration Statement (No. 33-20827) filed on May 19, 1999. |
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(22) |
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Form of Administration and Accounting Services Agreement (Boston Partners Fund (formerly Long-Short Equity)) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 65 to the Registrants Registration Statement (No. 33-20827) filed on May 19, 1999. |
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(23) |
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Transfer Agency Agreement Supplement (Bogle Investment Management Small Cap Growth Fund) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 67 to the Registrants Registration Statement (No. 33-20827) filed on September 30, 1999. |
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(24) |
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Non 12b-1 Shareholder Services Plan and Agreement (Bogle Investment Management Small Cap Growth - Investor Shares) is incorporated herein by reference to Post-Effective Amendment No. 67 to the Registrants Registration Statement (No. 33-20827) filed on September 30, 1999. |
(25) |
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Agreement between E*TRADE Group, Inc., Registrant and Registrants principal underwriter is incorporated herein by reference to Post-Effective Amendment No. 69 to the Registrants Registration Statement (No. 33-20827) filed on December 1, 1999. |
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(26) |
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Administration and Accounting Services Agreement (Bogle Investment Management Small Cap Growth Fund) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 69 to the Registrants Registration Statement (No. 33-20827) filed on December 1, 1999. |
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(27) |
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Form of Transfer Agency Supplement (Boston Partners All-Cap Value Fund) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 80 to the Registrants Registration Statement (No. 33-20827) filed on November 1, 2002. |
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(28) |
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Form of Administration and Accounting Services Agreement (Boston Partners All-Cap Value Fund) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 77 to the Registrants Registration Statement (No. 33-20827) filed on May 15, 2002. |
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(29) |
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Transfer Agency Supplement (Schneider Value Fund) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 80 to the Registrants Registration Statement (No. 33-20827) filed on November 1, 2002. |
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(30) |
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Form of Administration and Accounting Services Agreement (Schneider Value Fund) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 78 to the Registrants Registration Statement (No. 33-20827) filed on May 16, 2002. |
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(31) |
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Shareholder Servicing Agreement (Bogle Investment Management Small Cap Growth Fund) is incorporated herein by reference to Post-Effective Amendment No. 80 to the Registrants Registration Statement (No. 33-20827) filed on November 1, 2002. |
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(32) |
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Form of Transfer Agency Agreement Supplement (Customer Identification Program) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 84 to the Registrants Registration Statement (No. 33-20827) filed on December 29, 2003. |
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(33) |
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Regulatory Administration Services Agreement between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 84 to the Registrants Registration Statement (No. 33-20827) filed on December 29, 2003. |
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(34) |
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Administration and Accounting Services Agreement (Robeco WPG Core Bond Fund, Robeco WPG Large Cap Growth Fund, and Robeco WPG Tudor Fund) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 100 to the Registrants Registration Statement (No. 33-20827) filed on November 25, 2005. |
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(35) |
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Transfer Agency Agreement Supplement (Robeco WPG Small/Micro Cap Value Fund f/k/a Robeco WPG Tudor Fund) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 100 to the Registrants Registration Statement (No. 33-20827) filed on November 25, 2005. |
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(36) |
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Non-12b-1 Shareholder Services Plan and Related Form of Shareholder Servicing Agreement (Robeco WPG Small/Micro Cap Value Fund f/k/a Robeco WPG Tudor Fund Institutional Class) is incorporated herein by reference to Post-Effective Amendment No. 100 to the Registrants Registration Statement (No. 33-20827) filed on November 25, 2005. |
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(37) |
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Administration and Accounting Services Agreement (Bear Stearns CUFS MLP Mortgage Portfolio) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 108 to the Registrants Registration Statement (No. 33-20827) filed on December 14, 2006. |
(38) |
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Transfer Agency Agreement Supplement (Bear Stearns CUFS MLP Mortgage Portfolio) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 108 to the Registrants Registration Statement (No. 33-20827) filed on December 14, 2006. |
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(39) |
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Amended Schedule A to Regulatory Administration Services Agreement ( Bear Stearns CUFS MLP Mortgage Portfolio) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 108 to the Registrants Registration Statement (No. 33-20827) filed on December 14, 2006. |
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(40) |
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Delegation Agreement (Money Market Portfolio) among Registrant, BNY Mellon Investment Servicing (US) Inc. (f/k/a PFPC Inc.) , BlackRock Institutional Management Corp. is filed herewith. |
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(41) |
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Administration and Accounting Services Agreement (Marvin & Palmer Large Cap Growth Fund) is incorporated herein by reference to Post-Effective Amendment No. 124 to the Registrants Registration Statement (No. 33-20827) filed on December 28, 2007. |
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(42) |
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Amended Schedule A to Regulatory Administration Services Agreement ( Marvin & Palmer Large Cap Growth Fund ) is incorporated herein by reference to Post-Effective Amendment No. 124 to the Registrants Registration Statement (No. 33-20827) filed on December 28, 2007. |
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(43) |
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Transfer Agency Agreement Supplement (Marvin & Palmer Large Cap Growth Fund) is incorporated herein by reference to Post-Effective Amendment No. 24 to the Registrants Registration Statement (No. 33-20827) filed on December 28, 2007. |
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(44) |
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Transfer Agency Agreement Supplement (Free Market U.S. Equity Fund ) is incorporated herein by reference to Post-Effective Amendment No. 126 to the Registrants Registration Statement (No. 33-20827) filed on October 24, 2008. |
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(45) |
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Transfer Agency Agreement Supplement (Free Market International Equity Fund ) is incorporated herein by reference to Post-Effective Amendment No. 126 to the Registrants Registration Statement (No. 33-20827) filed on October 24, 2008. |
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(46) |
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Transfer Agency Agreement Supplement (Free Market Fixed Income Fund ) is incorporated herein by reference to Post-Effective Amendment No. 126 to the Registrants Registration Statement (No. 33-20827) filed on October 24, 2008. |
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(47) |
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Amended Schedule A to Regulatory Administration Services Agreement (Free Market U.S. Equity Fund, Free Market International Equity Fund, Free Market Fixed-Income Fund ) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 126 to the Registrants Registration Statement (No. 33-20827) filed on October 24, 2008. |
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(48) |
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Form of Transfer Agency Agreement Supplement (Red Flags Amendment) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PNC Global Investment Servicing (U.S.) Inc . ) is incorporated herein by reference to Post-Effective Amendment No. 127 to the Registrants Registration Statement (No. 33-20827) filed on December 29, 2008. |
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(49) |
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Transfer Agency Agreement Supplement (Perimeter Small Cap Growth Fund) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PNC Global Investment Servicing (U.S.) Inc.) is incorporated herein by reference to Post-Effective Amendment No. 145 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2011. |
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(50) |
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Administration and Accounting Services Agreement (Perimeter Small Cap Growth Fund) is incorporated herein by reference to Post-Effective Amendment No. 141 to the Registrants Registration Statement (No. 33-20827) filed on December 28, 2010. |
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(51) |
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Amended Schedule A to the Regulatory Administration Services Agreement ( Perimeter Small Cap Growth Fund ) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PNC Global Investment Servicing (U.S.) Inc.) is incorporated herein by reference to Post-Effective Amendment No. 141 to the Registrants Registration Statement (No. 33-20827) filed on December 28, 2010. |
(52) |
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Administrative and Accounting Services Agreement (S1 Fund) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc. (f/k/a PNC Global Investment Servicing (U.S.) Inc.) is incorporated herein by reference to Post-Effective Amendment No. 145 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2011. |
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(53) |
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Transfer Agency Agreement Supplement (S1 Fund) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc . (f/k/a PNC Global Investment Servicing (U.S.) Inc.) is incorporated herein by reference to Post-Effective Amendment No. 145 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2011. |
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(54) |
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Amended Schedule A to Regulatory Administration Services Agreement (S1 Fund) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc. ( f/k/a PNC Global Investment Servicing (U.S.) Inc.) is incorporated herein by reference to Post-Effective Amendment No. 145 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2011. |
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(55) |
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Administration and Accounting Services Agreement (Robeco Boston Partners Long/Short Research Fund) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc. is incorporated herein by reference to Post-Effective Amendment No. 145 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2011. |
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(56) |
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Transfer Agency Agreement Supplement (Robeco Boston Partners Long/Short Research Fund) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc. is incorporated herein by reference to Post-Effective Amendment No. 145 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2011. |
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(57) |
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Amended Schedule A to Regulatory Administration Services Agreement (Robeco Boston Partners Long/Short Research Fund) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc. is incorporated herein by reference to Post-Effective Amendment No. 145 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2011. |
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(58) |
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Amendment to Delegation Agreement (Money Market Portfolio) between Registrant, BNY Mellon Investment Servicing (US) Inc., and BlackRock Advisors, LLC (f/k/a BlackRock Institutional Management Corp.) is filed herewith. |
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(59) |
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Transfer Agency Agreement Supplement (Robeco Boston Global Equity Fund and Robeco Boston Partners International Equity Fund) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc. is filed herewith. |
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(60) |
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Amended Schedule A to Regulatory Administration Services Agreement (Robeco Boston Global Equity Fund and Robeco Boston Partners International Equity Fund) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc. is filed herewith. |
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(61) |
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Administration and Accounting Services Agreement (Robeco Boston Global Equity Fund and Robeco Boston Partners International Equity Fund) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc. is filed herewith. |
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(62) |
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Administration and Accounting Services Agreement (Robeco Boston Partners International Equity Fund) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc. is filed herewith. |
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(63) |
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Transfer Agency Agreement Supplement (Summit Global Investments U.S. Low Volatility Equity Fund) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc. is filed herewith. |
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(64) |
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Amended Schedule A to Regulatory Administration Services Agreement (Summit Global Investments U.S. Low Volatility Equity Fund) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc. is filed herewith. |
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(65) |
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Administration and Accounting Services Agreement (Summit Global Investments U.S. Low Volatility Equity Fund) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc. is filed herewith. |
(66) |
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Form of Transfer Agency Agreement Supplement ( Robeco Boston Partners Global Equity Fund, Robeco Boston Partners International Equity Fund, Robeco WPG Small/Micro Cap Value Fund, Robeco Boston Partners Long/Short Research Fund, Robeco Boston Partners Long/Short Equity Fund, Robeco Boston Partners All-Cap Value Fund and Robeco Boston Partners Small Cap Value Fund II) between Registrant and BNY Mellon Investment Servicing (US) Inc. is filed herewith. |
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(67) |
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Form of Money Market Fund Services Amendment to Delegation Agreement (Money Market Portfolio) between Registrant, BNY Mellon Investment Servicing (US) Inc., and BlackRock Advisors, LLC (f/k/a BlackRock Institutional Management Corp.) is incorporated herein by reference to Post-Effective Amendment No. 141 to the Registrants Registration Statement (No. 33-20827) filed on December 28, 2010. |
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(68) |
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Amended Schedule A to the Regulatory Administration Services Agreement ( Perimeter SMid Cap Growth Fund ) between Registrant and BNY Mellon Asset Servicing (US) Inc. to be filed by amendment. |
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(i) |
(1) |
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Opinion and Consent of Counsel to be filed by amendment. |
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(2) |
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Consent of Counsel is filed herewith. |
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(j) |
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None. |
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(k) |
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None. |
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(l) |
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Initial Capital Agreements. |
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(1) |
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Subscription Agreement, relating to Classes A through N, is incorporated herein by reference to Pre-Effective Amendment No. 2 to Registrants Registration Statement (No. 33-20827) filed on July 12, 1988, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
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(2) |
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Subscription Agreement between Registrant and Planco Financial Services, Inc., relating to Classes O and P is incorporated herein by reference to Post-Effective Amendment No. 5 to the Registrants Registration Statement (No. 33-20827) filed on December 14, 1990. |
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(3) |
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Subscription Agreement between Registrant and Planco Financial Services, Inc., relating to Class Q is incorporated herein by reference to Post-Effective Amendment No. 5 to the Registrants Registration Statement (No. 33-20827) filed on December 14, 1990. |
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(4) |
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Subscription Agreement between Registrant and Counsellors Securities Inc. relating to Classes R, S, and Alpha 1 through Theta 4 is incorporated herein by reference to Post-Effective Amendment No. 7 to the Registrants Registration Statement (No. 33-20827) filed on July 15, 1992, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
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(5) |
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Purchase Agreement between Registrant and Boston Partners Asset Management, L.P. relating to Classes TT and UU (Boston Partners Mid Cap Value Fund) is incorporated herein by reference to Post-Effective Amendment No. 46 to the Registrants Registration Statement (No. 33-20827) filed on September 25, 1997. |
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(6) |
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Purchase Agreement between Registrant and Schneider Capital Management Company relating to Class YY (Schneider Small Cap Value Fund) is incorporated herein by reference to Post-Effective Amendment No. 60 to the Registrants Registration Statement (No. 33-20827) filed on October 29, 1998. |
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(7) |
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Purchase Agreement between Registrant and Boston Partners Asset Management, L.P. relating to Classes DDD and EEE (Boston Partners Small Cap Value Fund II (formerly Micro Cap Value)) is incorporated herein by reference to Post-Effective Amendment No. 60 to the Registrants Registration Statement (No. 33-20827) filed on October 29, 1998. |
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(8) |
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Purchase Agreement between Registrant and Boston Partners Asset Management relating to Classes III and JJJ (Boston Partners Long/Short Equity Fund (formerly Market Neutral)) is incorporated herein by reference to Post-Effective Amendment No. 63 to the Registrants Registration Statement (No. 33-20827) filed on December 14, 1998. |
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(9) |
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Form of Purchase Agreement between Registrant and Boston Partners Asset Management, L. P. relating to Classes KKK and LLL (Boston Partners Fund (formerly Long-Short Equity)) is incorporated herein by reference to Post-Effective Amendment No. 65 to the Registrants Registration Statement (No. 33-20827) filed on May 19, 1999. |
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(10) |
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Purchase Agreement (Bogle Investment Management Small Cap Growth Fund) between Registrant and Bogle Investment Management, L.P. is incorporated herein by reference to Post-Effective Amendment No. 67 to the Registrants Registration Statement (No. 33-20827) filed on September 30, 1999. |
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(11) |
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Purchase Agreement (Boston Partners All-Cap Value Fund) between Registrant and Boston Partners Asset Management, L.P. is incorporated herein by reference to Post-Effective Amendment No. 80 to the Registrants Registration Statement (No. 33-20827) filed on November 1, 2002. |
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(12) |
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Purchase Agreement (Schneider Value Fund) between Registrant and Schneider Capital Management Company is incorporated herein by reference to Post-Effective Amendment No. 80 to the Registrants Registration Statement (No. 33-20827) filed on November 1, 2002. |
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(13) |
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Purchase Agreement (Robeco WPG Small/Micro Cap Value Fund f/k/a Robeco WPG Tudor Fund) between Registrant and Weiss, Peck & Greer Investments is incorporated herein by reference to Post-Effective Amendment No. 96 to the Registrants Registration Statement (No. 33-20827) filed on June 6, 2005. |
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(14) |
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Purchase Agreement (Bear Stearns CUFS MLP Mortgage Portfolio) between Registrant and Bear Stearns Asset Management Inc. is incorporated herein by reference to Post-Effective Amendment No. 111 to the Registrants Registration Statement (No. 33-20827) filed on February 28, 2007. |
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(15) |
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Purchase Agreement (Marvin & Palmer Large Cap Growth Fund) is incorporated herein by reference to Post-Effective Amendment No. 124 to the Registrants Registration Statement (No. 33-20827) filed on December 28, 2007. |
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(16) |
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Form of Purchase Agreement (Free Market U.S. Equity Fund) between Registrant and Matson Money, Inc. (f/k/a Abundance Technologies, Inc.), is incorporated herein by reference to Post-Effective Amendment No. 112 to the Registrants Registration Statement (No. 33-20827) filed on June 1, 2007. |
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(17) |
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Form of Purchase Agreement (Free Market International Equity Fund) between Registrant and Matson Money, Inc. (f/k/a Abundance Technologies, Inc.) , is incorporated herein by reference to Post-Effective Amendment No. 112 to the Registrants Registration Statement (No. 33-20827) filed on June 1, 2007. |
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(18) |
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Form of Purchase Agreement (Free Market Fixed Income Fund) between Registrant and Matson Money, Inc. (f/k/a Abundance Technologies, Inc.) , is incorporated herein by reference to Post-Effective Amendment No. 112 to the Registrants Registration Statement (No. 33-20827) filed on June 1, 2007. |
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(19) |
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Form of Purchase Agreement ( Perimeter Small Cap Growth Fund ) between Registrant and Perimeter Capital Management, LLC is incorporated herein by reference to Post-Effective Amendment No. 134 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2009. |
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(20) |
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Purchase Agreement (S1 Fund) between Registrant and Simple Alternatives, LLC is incorporated herein by reference to Post-Effective Amendment No. 138 to the Registration Statement (No. 33-20827) filed on October 29, 2010. |
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(21) |
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Purchase Agreement (Robeco Boston Partners Long/Short Research Fund) between Registrant and Robeco Investment Management Inc. is incorporated herein by reference to Post-Effective Amendment No. 136 to the Registrants Registration Statement (No. 33-20827) filed on August 4, 2010. |
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(22) |
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Form of Purchase Agreement (Robeco Boston Partners Global Equity Fund) between Registrant and Robeco Investment Management Inc. is incorporated herein by reference to Post-Effective Amendment No. 142 t the Registrants Registration Statement (No. 33-20827) filed on October 14, 2011. |
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(23) |
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Form of Purchase Agreement (Robeco Boston Partners International Equity Fund) between Registrant and Robeco Investment Management Inc. is incorporated herein by reference to Post-Effective Amendment No. 142 t the Registrants Registration Statement (No. 33-20827) filed on October 14, 2011. |
(24) |
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Form of Purchase Agreement (Summit Global Investments U.S. Low Volatility Equity Fund) between Registrant and Summit Global Investments, LLC is incorporated by reference to Post-Effective Amendment No. 144 to Registrants Registration Statement (No. 33-20827) filed on December 15, 2011. |
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(m) |
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Rule 12b-1 Plan. |
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(1) |
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Plan of Distribution (Bedford Money Market) is incorporated herein by reference to Post-Effective Amendment No. 1 to Registrants Registration Statement (No. 33-20827) filed on March 23, 1989, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
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(2) |
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Plan of Distribution (Boston Partners Mid Cap Value Fund - Investor Class) is incorporated herein by reference to Post-Effective Amendment No. 45 to the Registrants Registration Statement (No. 33-20827) filed on May 9, 1997. |
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(3) |
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Plan of Distribution (Boston Partners Small Cap Value Fund II (formerly Micro Cap Value) - Investor Class) is incorporated herein by reference to Post-Effective Amendment No. 53 to the Registrants Registration Statement (No. 33-20827) filed on April 10, 1998. |
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(4) |
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Amendment to Plans of Distribution pursuant to Rule 12b-1 is incorporated herein by reference to Post-Effective Amendment No. 63 to the Registrants Registration Statement (No. 33-20827) filed on December 14, 1998. |
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(5) |
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Plan of Distribution (Boston Partners Long/Short Equity Fund (formerly Market Neutral) - Investor Class) is incorporated herein by reference to Post-Effective Amendment No. 62 to the Registrants Registration Statement (No. 33-20827) filed on November 12, 1998. |
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(6) |
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Plan of Distribution (Boston Partners Fund (formerly Long Short Equity) - Investor Class) is incorporated herein by reference to Post-Effective Amendment No. 65 to the Registrants Registration Statement (No. 33-20827) filed on May 19, 1999. |
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(7) |
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Plan of Distribution pursuant to Rule 12b-1 (Boston Partners All-Cap Value Fund) is incorporated herein by reference to Post-Effective Amendment No. 80 to the Registrants Registration Statement (No. 33-20827) filed on November 1, 2002. |
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(8) |
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Agreement between Registrant, Bear Stearns Securities Corp. and Foreside Funds Distributors LLC (f/k/a PFPC Distributors, Inc.) dated as of November 17, 2005 is incorporated herein by reference to Post-Effective Amendment No. 101 to the Registrants Registration Statement filed on December 29, 2005. |
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(9) |
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Plan of Distribution pursuant to Rule 12b-1 (Perimeter Small Cap Growth Fund Investor Class) is incorporated herein by reference to Post-Effective Amendment No. 132 to the Registration Statement (No. 33-20827) filed on October 22, 2009. |
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(10) |
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Plan of Distribution pursuant to Rule 12b-1( Robeco Boston Partners Long/Short Research Fund Investor Class ) is incorporated herein by reference to Post-Effective Amendment No. 141 to the Registrants Registration Statement (No. 33-20827) filed on December 28, 2010. |
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(11) |
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Plan of Distribution pursuant to Rule 12b-1 (S1 Fund R Shares) is incorporated herein by reference to Post-Effective Amendment No. 137 to the Registrants Registration Statement (No. 33-20827) filed on October 1, 2010. |
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(12) |
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Plan of Distribution pursuant to Rule 12b-1( Robeco Boston Partners Global Equity Fund Investor Class) is incorporated herein by reference to Post-Effective Amendment No. 142 to the Registrants Registration Statement (No. 33-20827) filed on October 14, 2011. |
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(13) |
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Plan of Distribution pursuant to Rule 12b-1 ( Robeco Boston Partners International Equity Fund Investor Class) is incorporated herein by reference to Post-Effective Amendment No. 142 to the Registrants Registration Statement (No. 33-20827) filed on October 14, 2011. |
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(14) |
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Plan of Distribution pursuant to Rule 12b-1 ( Summit Global Investments U.S. Low Volatility Equity Fund Retail Class) is incorporated by reference to Post-Effective Amendment No. 144 to Registrants Registration Statement (No. 33-20827) filed on December 15, 2011. |
(15) |
|
Plan of Distribution pursuant to Rule 12b-1 ( Summit Global Investments U.S. Low Volatility Equity Fund Class A) is incorporated by reference to Post-Effective Amendment No. 144 to Registrants Registration Statement (No. 33-20827) filed on December 15, 2011. |
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(n) |
|
Rule 18f-3 Plan. |
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(1) |
|
Amended Rule 18f-3 Plan is incorporated herein by reference to Post-Effective Amendment No. 145 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2011. |
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(p) |
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Code of Ethics. |
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(1) |
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Code of Ethics of the Registrant is incorporated herein by reference to Post-Effective Amendment No. 110 to Registrants Registration Statement (No. 33-20827) filed on December 29, 2006. |
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(2) |
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Code of Ethics of Robeco Investment Management is incorporated herein by reference to Post-Effective Amendment No. 145 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2011. |
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(3) |
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Code of Ethics of Schneider Capital Management Company is incorporated herein by reference to Post-Effective Amendment No. 129 to the Registrants Registration Statement (No. 33-20827) filed on July 2, 2009. |
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(4) |
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Code of Ethics of Bogle Investment Management, L.P. is incorporated herein by reference to Post-Effective Amendment No. 129 to the Registrants Registration Statement (No. 33-20827) filed on July 2, 2009. |
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(5) |
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Code of Ethics of J.P Morgan Chase & Co. is incorporated herein by reference to Post-Effective Amendment No. 141 to the Registrants Registration Statement (No. 33-20827) filed on December 28, 2010. |
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(6) |
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Code of Ethics of Marvin & Palmer Associates, Inc., is incorporated herein by reference to Post-Effective Amendment No. 129 to the Registrants Registration Statement (No. 33-20827) filed on July 2, 2009. |
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(7) |
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Code of Ethics of Matson Money, Inc. is incorporated herein by reference to Post-Effective Amendment No. 145 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2011. |
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(8) |
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Code of Ethics of Perimeter Capital Management LLC is filed herewith. |
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(9) |
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Code of Ethics of Simple Alternatives, LLC is filed herewith. |
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(10) |
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Code of Ethics of Blue Lion Capital Management, LLC is incorporated herein by reference to Post-Effective Amendment No. 145 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2011. |
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(11) |
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Code of Ethics of Courage Capital Management, LLC is incorporated herein by reference to Post-Effective Amendment No. 145 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2011. |
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(12) |
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Code of Ethics of Cramer Rosenthal McGlynn LLC is incorporated herein by reference to Post-Effective Amendment No. 145 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2011. |
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(13) |
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Code of Ethics of Lauren Templeton Capital Management, LLC is incorporated herein by reference to Post-Effective Amendment No. 145 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2011. |
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(14) |
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Code of Ethics of Starwood Real Estate Securities, LLC is incorporated herein by reference to Post-Effective Amendment No. 137 to the Registrants Registration Statement (No. 33-20827) filed on October 1, 2010. |
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(15) |
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Code of Ethics of Trellus Management Co., LLC is incorporated herein by reference to Post-Effective Amendment No. 137 to the Registrants Registration Statement (No. 33-20827) filed on October 1, 2010. |
(16) |
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Code of Ethics of Foreside Funds Distributors LLC ( f/k/a BNY Mellon Distributors, Inc.) is incorporated herein by reference to Post-Effective Amendment No. 143 to the Registrants Registration Statement (No. 33-20827) filed on October 28, 2011. |
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(17) |
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Code of Ethics of Summit Global Investments, LLC is incorporated herein by reference to Post-Effective Amendment No. 145 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2011. |
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(18) |
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Code of Ethics of Maerisland Capital, LLC is filed herewith. |
Item 29. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None.
Item 30. INDEMNIFICATION
Sections 1, 2, 3 and 4 of Article VIII of Registrants Articles of Incorporation, as amended, incorporated herein by reference as Exhibits (a)(1) and (a)(3), provide as follows:
Section 1. To the fullest extent that limitations on the liability of directors and officers are permitted by the Maryland General Corporation Law, no director or officer of the Corporation shall have any liability to the Corporation or its shareholders for damages. This limitation on liability applies to events occurring at the time a person serves as a director or officer of the Corporation whether or not such person is a director or officer at the time of any proceeding in which liability is asserted.
Section 2. The Corporation shall indemnify and advance expenses to its currently acting and its former directors to the fullest extent that indemnification of directors is permitted by the Maryland General Corporation Law. The Corporation shall indemnify and advance expenses to its officers to the same extent as its directors and to such further extent as is consistent with law. The Board of Directors may by law, resolution or agreement make further provision for indemnification of directors, officers, employees and agents to the fullest extent permitted by the Maryland General Corporation law.
Section 3. No provision of this Article shall be effective to protect or purport to protect any director or officer of the Corporation against any liability to the Corporation or its security holders to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office.
Section 4. References to the Maryland General Corporation Law in this Article are to the law as from time to time amended. No further amendment to the Articles of Incorporation of the Corporation shall decrease, but may expand, any right of any person under this Article based on any event, omission or proceeding prior to such amendment. Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of Registrant pursuant to the foregoing provisions, or otherwise, Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by Registrant of expenses incurred or paid by a director, officer or controlling person of Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
Section 12 of the Investment Advisory and Administration Agreement Registrant and BlackRock Advisors, LLC (BALLC), dated June 30, 2011 1998 and incorporated herein by reference to exhibit (d)(10), provides for the indemnification of BALLC against certain losses.
Section 12 of each of the Investment Advisory Agreements between Registrant and Robeco Investment Management, Inc. (Robeco) ( f/k/a Boston Partners Asset Management, LLC (Boston Partners) and Weiss, Peck & Greer Investments) , incorporated herein by reference to exhibits (d)(2), (d)(3), (d)(4), (d)(6), (d)(8), (d)(30), (d)(31) and (d)(32), provides for the indemnification of Robeco against certain losses.
Section 12 of the Investment Advisory Agreement between Registrant and Bogle Investment Management, L.P. (Bogle), dated September 15, 1999 and incorporated herein by reference to exhibit (d)(5) provides for the indemnification of Bogle against certain losses.
Section 9 of the Distribution Agreement between Registrant and BNY Mellon Distributors Inc. (f/k/a PFPC Distributors, Inc. ), dated January 2, 2001 and incorporated herein by reference to exhibit (e)(1) provides for the indemnification of BNY Mellon Distributors Inc. against certain losses.
Section 12 of each of the Investment Advisory Agreements between the Registrant and Schneider Capital Management (Schneider) incorporated herein by reference as exhibits (d)(1) and (d)(7) provides for the indemnification of Schneider against certain losses.
Section 12 of the Investment Advisory Agreement between the Registrant and Marvin & Palmer Associates, Inc., (Marvin & Palmer Associates) dated March 5, 2007 and incorporated herein by reference as exhibit (d)(11) provides for the indemnification of Marvin & Palmer Associates against certain losses.
Section 12 of the Investment Advisory Agreement between the Registrant and Matson Money, Inc. ( f/k/a Abundance Technologies, Inc.) , (Matson Money) dated December 31, 2007 and incorporated herein by reference as exhibit (d)(12) provides for the indemnification of Matson Money against certain losses.
Section 12 of each of the Investment Advisory Agreements between the Registrant and Perimeter Capital Management (Perimeter) incorporated herein by reference as exhibits (d)(20) and (d)(37) provide for the indemnification of Perimeter against certain losses.
Section 12 of the Investment Advisory Agreement between the Registrant and Simple Alternatives, LLC (SA) dated September 30, 2010 and incorporated herein by reference as exhibit (d)(22) provides for the indemnification of SA against certain losses.
Section 12 of the Investment Advisory Agreement between the Registrant and Summit Global Investments, LLC (SGI) incorporated herein by reference as exhibit (d)(34) provides for the indemnification of SGI against certain losses.
Item 31. |
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BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISERS. |
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1. |
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BlackRock Advisors, LLC:
BlackRock Advisors, LLC (BA) principal business address is 100 Bellevue Parkway, Wilmington, Delaware 19809. BA is registered under the Investment Advisers Act of 1940, as amended, and serves as an investment adviser for registered investment companies. Information as to the directors and officers of BA for the past two fiscal years is as follows: |
Name and Position with
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Other Company |
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Position with Other Company |
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Ann Marie Petach, Chief Financial Officer and Senior Managing Director |
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BAA Holdings, LLC,
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Chief Financial Officer, Senior Managing Director, and Director |
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BlackRock, Inc.,
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Chief Financial Officer and Senior Managing Director |
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BlackRock Advisors, LLC,
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Chief Financial Officer and Senior Managing Director |
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BlackRock Advisors Holdings, Inc.,
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Chief Financial Officer and Senior Managing Director |
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BlackRock Capital Holdings, Inc.,
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Chief Financial Officer and Senior Managing Director |
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BlackRock Capital Management, Inc.,
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Chief Financial Officer and Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Cayco Limited,
|
|
Director |
|
|
|
|
|
|
|
BlackRock Cayman Finco Limited,
|
|
Director |
|
|
|
|
|
|
|
BlackRock Financial Management, Inc.,
|
|
Chief Financial Officer and Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Delaware Holdings Inc. San Francisco, CA |
|
Chief Financial Officer and Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Corporation US Inc. San Francisco, CA |
|
Chief Financial Officer and Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Finco, LLC,
|
|
Director |
|
|
|
|
|
|
|
BlackRock Funding, Inc.,
|
|
Chief Financial Officer and Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Fund Advisors San Francisco, CA |
|
Chief Financial Officer and Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Funding International, Ltd.,
|
|
Chief Financial Officer, Senior Managing Director and Director |
|
|
|
|
|
|
|
BlackRock Holdco 2, Inc.
|
|
Chief Financial Officer and Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Holdco 4, LLC,
|
|
Director |
|
|
|
|
|
|
|
BlackRock Holdco 6, LLC,
|
|
Director |
|
|
|
|
|
|
|
BlackRock Institutional Trust Company, National Association,
|
|
Director |
|
|
|
|
|
|
|
BlackRock Institutional Trust Company, N.A. - London Branch,
|
|
Director |
|
|
|
|
|
|
|
BlackRock Institutional Trust Company, N.A. - Sydney Branch,
|
|
Director |
|
|
|
|
|
|
|
BlackRock International Holdings, Inc.,
|
|
Chief Financial Officer and Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Investment Management, LLC,
|
|
Chief Financial Officer and Senior Managing Director |
|
|
|
|
|
Robert P. Connolly, General Counsel, Senior Managing Director and Secretary |
|
BAA Holdings, LLC,
|
|
General Counsel, Senior Managing Director and Secretary |
|
|
|
|
|
|
|
BlackRock, Inc.,
|
|
General Counsel, Senior Managing Director and Secretary |
|
|
|
|
|
|
|
BlackRock Advisors, LLC,
|
|
General Counsel, Senior Managing Director and Secretary |
|
|
|
|
|
|
|
BlackRock Advisors Holdings, Inc.,
|
|
General Counsel, Senior Managing Director and Secretary |
|
|
BlackRock Capital Holdings, Inc.,
|
|
General Counsel, Senior Managing Director and Secretary |
|
|
|
|
|
|
|
BlackRock Capital Management, Inc.,
|
|
General Counsel, Senior Managing Director and Secretary |
|
|
|
|
|
|
|
BlackRock Corporation US Inc. San Francisco, CA |
|
General Counsel, Senior Managing Director and Secretary |
|
|
|
|
|
|
|
BlackRock Delaware Holdings Inc. San Francisco, CA |
|
General Counsel, Senior Managing Director and Secretary |
|
|
|
|
|
|
|
BlackRock Execution Services,
|
|
General Counsel and Secretary |
|
|
|
|
|
|
|
BlackRock Financial Management, Inc.,
|
|
General Counsel, Senior Managing Director and Secretary |
|
|
|
|
|
|
|
BlackRock Fund Advisors San Francisco, CA |
|
General Counsel, Senior Managing Director and Secretary |
|
|
|
|
|
|
|
BlackRock Fund Distribution Company
|
|
General Counsel and Secretary |
|
|
|
|
|
|
|
BlackRock Funding, Inc.,
|
|
General Counsel, Senior Managing Director and Secretary |
|
|
|
|
|
|
|
BlackRock Funding International, Ltd.,
|
|
General Counsel, Senior Managing Director and Secretary |
|
|
|
|
|
|
|
BlackRock Holdco 2, Inc.
|
|
General Counsel, Senior Managing Director and Secretary |
|
|
|
|
|
|
|
BlackRock International Holdings, Inc.,
|
|
General Counsel, Senior Managing Director and Secretary |
|
|
|
|
|
|
|
BlackRock Investments, LLC,
|
|
General Counsel, Senior Managing Director and Secretary |
|
|
|
|
|
|
|
BlackRock Investment Management, LLC,
|
|
General Counsel, Senior Managing Director and Secretary |
|
|
|
|
|
Laurence D. Fink, Chief Executive Officer and Director |
|
BAA Holdings, LLC,
|
|
Chief Executive Officer and Director |
|
|
|
|
|
|
|
BlackRock, Inc.,
|
|
Chief Executive Officer and Director |
|
|
|
|
|
|
|
BlackRock Advisors, LLC,
|
|
Chief Executive Officer and Director |
|
|
|
|
|
|
|
BlackRock Advisors Holdings, Inc.,
|
|
Chief Executive Officer and Director |
|
|
|
|
|
|
|
BlackRock AP Investment Holdco, LLC Wilmington, DE |
|
Director |
|
|
|
|
|
|
|
BlackRock Capital Holdings, Inc.,
|
|
Chief Executive Officer and Director |
|
|
|
|
|
|
|
BlackRock Capital Management, Inc.,
|
|
Chief Executive Officer and Director |
|
|
|
|
|
|
|
BlackRock Capital Markets, LLC,
|
|
Chairman and Director |
|
|
|
|
|
|
|
BlackRock Corporation US, Inc.,
|
|
Chairman, Chief Executive Officer, and Director |
|
|
|
|
|
|
|
BlackRock Delaware Holdings, Inc.,
|
|
Chairman, Chief Executive Officer, and Director |
|
|
|
|
|
|
|
BlackRock Execution Services,
|
|
Chairman and Director |
|
|
BlackRock Financial Management, Inc.,
|
|
Chief Executive Officer and Director |
|
|
|
|
|
|
|
BlackRock Fund Advisors,
|
|
Chief Executive Officer and Director |
|
|
|
|
|
|
|
BlackRock Fund Distribution Company,
|
|
Chairman and Director |
|
|
|
|
|
|
|
BlackRock Funding, Inc.,
|
|
Chief Executive Officer and Director |
|
|
|
|
|
|
|
BlackRock Funding International, Ltd.,
|
|
Chief Executive Officer and Director |
|
|
|
|
|
|
|
BlackRock Holdco 2, Inc.,
|
|
Chief Executive Officer |
|
|
|
|
|
|
|
BlackRock International Holdings, Inc.,
|
|
Chief Executive Officer and Director |
|
|
|
|
|
|
|
BlackRock Investments, LLC,
|
|
Chairman - Board of Managers |
|
|
|
|
|
|
|
BlackRock Investment Management, LLC,
|
|
Chief Executive Officer |
|
|
|
|
|
|
|
DSP BlackRock Investment Managers Private Limited,
|
|
Director |
|
|
|
|
|
Robert S. Kapito, President and Director |
|
BAA Holdings, LLC,
|
|
President and Director |
|
|
|
|
|
|
|
BlackRock, Inc.,
|
|
President and Director |
|
|
|
|
|
|
|
BlackRock Advisors, LLC,
|
|
President and Director |
|
|
|
|
|
|
|
BlackRock Advisors Holdings, Inc.,
|
|
President and Director |
|
|
|
|
|
|
|
BlackRock AP Investment Holdco, LLC Wilmington, DE |
|
President and Director |
|
|
|
|
|
|
|
BlackRock Capital Holdings, Inc.,
|
|
President and Director |
|
|
|
|
|
|
|
BlackRock Capital Management, Inc.,
|
|
President and Director |
|
|
|
|
|
|
|
BlackRock Capital Markets, LLC,
|
|
Director |
|
|
|
|
|
|
|
BlackRock Corporation US, Inc.,
|
|
President and Director |
|
|
|
|
|
|
|
BlackRock Delaware Holdings, Inc.,
|
|
President and Director |
|
|
|
|
|
|
|
BlackRock Execution Services,
|
|
Director |
|
|
|
|
|
|
|
BlackRock Financial Management, Inc.,
|
|
President and Director |
|
|
|
|
|
|
|
BlackRock Fund Advisors,
|
|
President and Director |
|
|
|
|
|
|
|
BlackRock Funding, Inc.,
|
|
President and Director |
|
|
|
|
|
|
|
BlackRock Funding International, Ltd.,
|
|
President and Director |
|
|
BlackRock Holdco 2, Inc.
|
|
President |
|
|
|
|
|
|
|
BlackRock International Holdings, Inc.,
|
|
President and Director |
|
|
|
|
|
|
|
BlackRock Investments, LLC,
|
|
Director - Board of Managers |
|
|
|
|
|
|
|
BlackRock Investment Management, LLC,
|
|
President |
|
|
|
|
|
Paul Audet, Senior Managing Director |
|
BAA Holdings, LLC,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock, Inc.,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Advisors, LLC,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Advisors Holdings, Inc.,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Capital Holdings, Inc.,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Capital Management, Inc.,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Corporation US, Inc.,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Delaware Holdings, Inc.,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Financial Management, Inc.,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Fund Advisors,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Funding, Inc.,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Funding International, Ltd.,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Holdco 2, Inc.
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock International Holdings, Inc.,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Investment Management, LLC,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Realty Advisors, Inc. San Francisco, CA |
|
Chief Executive Officer and Senior Managing Director |
|
|
|
|
|
Charles Hallac, Senior Managing Director and Chief Operating Officer |
|
BlackRock, Inc.,
|
|
Senior Managing Director and Chief Operating Officer |
|
|
|
|
|
|
|
BlackRock Advisors, LLC,
|
|
Senior Managing Director and Chief Operating Officer |
|
|
|
|
|
|
|
BlackRock Advisors Holdings, Inc.,
|
|
Senior Managing Director and Chief Operating Officer |
|
|
|
|
|
|
|
BlackRock Capital Holdings, Inc.,
|
|
Senior Managing Director and Chief Operating Officer |
|
|
|
|
|
|
|
BlackRock Capital Management, Inc.,
|
|
Senior Managing Director and Chief Operating Officer |
|
|
BlackRock Corporation US, Inc.,
|
|
Senior Managing Director and Chief Operating Officer |
|
|
|
|
|
|
|
BlackRock Delaware Holdings, Inc.,
|
|
Senior Managing Director and Chief Operating Officer |
|
|
|
|
|
|
|
BlackRock Financial Management, Inc.,
|
|
Senior Managing Director and Chief Operating Officer |
|
|
|
|
|
|
|
BlackRock Fund Advisors,
|
|
Senior Managing Director and Chief Operating Officer |
|
|
|
|
|
|
|
BlackRock Funding, Inc.,
|
|
Senior Managing Director and Chief Operating Officer |
|
|
|
|
|
|
|
BlackRock Funding International, Ltd.
|
|
Senior Managing Director and Chief Operating Officer |
|
|
|
|
|
|
|
BlackRock Holdco 2, Inc.
|
|
Senior Managing Director and Chief Operating Officer |
|
|
|
|
|
|
|
BlackRock India Private Ltd.,
|
|
Director |
|
|
|
|
|
|
|
BlackRock Institutional Trust Company, National Association,
|
|
Chief Executive Officer, President and Director |
|
|
|
|
|
|
|
BlackRock Institutional Trust Company, N.A. - London Branch,
|
|
Director |
|
|
|
|
|
|
|
BlackRock Institutional Trust Company, N.A. - Sydney Branch,
|
|
Director |
|
|
|
|
|
|
|
BlackRock International Holdings, Inc.,
|
|
Senior Managing Director and Chief Operating Officer |
|
|
|
|
|
|
|
BlackRock Investment Management, LLC,
|
|
Senior Managing Director and Chief Operating Officer |
|
|
|
|
|
Barbara Novick, Senior Managing Director |
|
BlackRock, Inc.,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Advisors, LLC,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Advisors Holdings, Inc.,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Capital Holdings, Inc.,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Capital Management, Inc.,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Corporation US, Inc.,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Delaware Holdings, Inc.,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Financial Management, Inc.,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Fund Advisors,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Funding, Inc.,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Funding International, Ltd.,
|
|
Senior Managing Director |
|
|
BlackRock Holdco 2, Inc.,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock International Holdings, Inc.,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Investment Management, LLC,
|
|
Senior Managing Director |
|
|
|
|
|
Peter Fisher, Senior Managing Director |
|
BlackRock, Inc.,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Advisors, LLC,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Advisors Holdings, Inc. New York, NY |
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Capital Holdings, Inc.,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Capital Management, Inc.,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Corporation US, Inc.,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Delaware Holdings, Inc.,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Financial Management, Inc.,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Fund Advisors,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Funding, Inc.,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Funding International, Ltd.
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Holdco 2, Inc.
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock International Holdings, Inc.,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Investment Management, LLC,
|
|
Senior Managing Director |
|
|
|
|
|
Susan Wagner, Vice Chairman |
|
BAA Holdings, LLC,
|
|
Vice Chairman and Director |
|
|
|
|
|
|
|
BlackRock, Inc.,
|
|
Vice Chairman |
|
|
|
|
|
|
|
BlackRock Advisors, LLC,
|
|
Vice Chairman |
|
|
|
|
|
|
|
BlackRock Advisors Holdings, Inc.,
|
|
Vice Chairman |
|
|
|
|
|
|
|
BlackRock Capital Holdings, Inc.,
|
|
Vice Chairman |
|
|
|
|
|
|
|
BlackRock Capital Management, Inc.,
|
|
Vice Chairman |
|
|
|
|
|
|
|
BlackRock Corporation US, Inc.,
|
|
Vice Chairman |
|
|
|
|
|
|
|
BlackRock Delaware Holdings, Inc.,
|
|
Vice Chairman |
|
|
BlackRock Financial Management, Inc.,New York, NY |
|
Vice Chairman |
|
|
|
|
|
|
|
BlackRock Fund Advisors,
|
|
Vice Chairman |
|
|
|
|
|
|
|
BlackRock Funding, Inc.,
|
|
Vice Chairman |
|
|
|
|
|
|
|
BlackRock Funding International, Ltd.
|
|
Vice Chairman |
|
|
|
|
|
|
|
BlackRock Holdco 2, Inc.
|
|
Vice Chairman |
|
|
|
|
|
|
|
BlackRock Institutional Trust Company, N.A. - London Branch,
|
|
Director |
|
|
|
|
|
|
|
BlackRock Institutional Trust Company, N.A. - Sydney Branch,
|
|
Director |
|
|
|
|
|
|
|
BlackRock International Holdings, Inc.,
|
|
Vice Chairman |
|
|
|
|
|
|
|
BlackRock Investment Management, LLC,
|
|
Vice Chairman |
|
|
|
|
|
|
|
DSP BlackRock Investment Managers Private Limited,
|
|
Director |
|
|
|
|
|
Robert Doll, Senior Managing Director |
|
BlackRock, Inc.,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Advisors, LLC,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Advisors Holdings, Inc.,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Capital Holdings, Inc.,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Capital Management, Inc.,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Corporation US, Inc.,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Delaware Holdings, Inc.,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Financial Management, Inc.,New York, NY |
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Fund Advisors,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Funding, Inc.,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Funding International, Ltd.
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Holdco 2, Inc.
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock International Holdings, Inc.,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Investment Management, LLC,
|
|
Senior Managing Director |
|
|
Portfolio Administration & Management Ltd.,
|
|
Director |
|
|
|
|
|
Robert Fairbairn, Senior Managing Director |
|
BlackRock, Inc.,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Advisors, LLC,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Advisors Holdings, Inc.,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Capital Holdings, Inc.,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Capital Management, Inc.,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Corporation US, Inc.,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Delaware Holdings, Inc.,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Financial Management, Inc.,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Fund Advisors,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Funding, Inc.,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Funding International, Ltd.
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock International Holdings, Inc.,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Investment Management, LLC,Plainsboro, NJ |
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Investments, LLC Wilmington, DE |
|
Chief Executive Officer and Senior Managing Director |
|
|
|
|
|
Bennett Golub, Senior Managing Director and Chief Risk Officer |
|
BlackRock, Inc.,
|
|
Senior Managing Director and Chief Risk Officer |
|
|
|
|
|
|
|
BlackRock Advisors, LLC,
|
|
Senior Managing Director and Chief Risk Officer |
|
|
|
|
|
|
|
BlackRock Advisors Holdings, Inc.,
|
|
Senior Managing Director and Chief Risk Officer |
|
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|
|
|
|
|
BlackRock Capital Holdings, Inc.,
|
|
Senior Managing Director and Chief Risk Officer |
|
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BlackRock Capital Management, Inc.,
|
|
Senior Managing Director and Chief Risk Officer |
|
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BlackRock Corporation US, Inc.,
|
|
Senior Managing Director and Chief Risk Officer |
|
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BlackRock Delaware Holdings, Inc.,
|
|
Senior Managing Director and Chief Risk Officer |
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BlackRock Financial Management, Inc.,
|
|
Senior Managing Director and Chief Risk Officer |
|
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|
BlackRock Fund Advisors,
|
|
Senior Managing Director and Chief Risk Officer |
|
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BlackRock Funding, Inc.,
|
|
Senior Managing Director and Chief Risk Officer |
|
|
BlackRock Funding International, Ltd.
|
|
Senior Managing Director and Chief Risk Officer |
|
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BlackRock International Holdings, Inc.,
|
|
Senior Managing Director and Chief Risk Officer |
|
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BlackRock Investment Management, LLC,
|
|
Senior Managing Director and Chief Risk Officer |
|
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|
Richard Kushel, Senior Managing Director |
|
BlackRock, Inc.,
|
|
Senior Managing Director |
|
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BlackRock Advisors, LLC,
|
|
Senior Managing Director |
|
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BlackRock Advisors Holdings, Inc.,
|
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Senior Managing Director |
|
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BlackRock Asset Management Deutschland AG,
|
|
Chairman and Director |
|
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BlackRock Asset Management UK Limited
|
|
Chairman and Director |
|
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BlackRock Capital Holdings, Inc.,
|
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Senior Managing Director |
|
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BlackRock Capital Management, Inc.,
|
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Senior Managing Director |
|
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BlackRock Corporation US, Inc.,
|
|
Senior Managing Director |
|
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BlackRock Delaware Holdings, Inc.,
|
|
Senior Managing Director |
|
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BlackRock Financial Management, Inc.,
|
|
Senior Managing Director |
|
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BlackRock Fund Advisors,
|
|
Senior Managing Director |
|
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BlackRock Funding, Inc.,
|
|
Senior Managing Director |
|
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BlackRock Funding, International, Ltd.
|
|
Senior Managing Director |
|
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BlackRock Holdco 5, LLC,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
BlackRock Holdco 5, LLC,
|
|
Director |
|
|
|
|
|
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|
BlackRock International Holdings, Inc.,
|
|
Senior Managing Director |
|
|
|
|
|
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BlackRock Investment Management, LLC,
|
|
Senior Managing Director |
|
|
|
|
|
|
|
DSP BlackRock Investment Managers Private Limited,
|
|
Director |
|
|
|
|
|
Amy Engel, Treasurer and Managing Director |
|
BlackRock, Inc.,
|
|
Treasurer and Managing Director |
|
|
|
|
|
|
|
BAA Holdings, LLC,
|
|
Treasurer and Managing Director |
|
|
|
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|
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|
BlackRock Advisors, LLC,
|
|
Treasurer and Managing Director |
|
|
BlackRock Advisors Holdings, Inc.,
|
|
Treasurer and Managing Director |
|
|
|
|
|
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|
BlackRock Capital Holdings, Inc.,
|
|
Treasurer and Managing Director |
|
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|
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|
BlackRock Capital Management, Inc.,
|
|
Treasurer and Managing Director |
|
|
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|
BlackRock Corporation US, Inc.,
|
|
Treasurer and Managing Director |
|
|
|
|
|
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|
BlackRock Delaware Holdings, Inc.,
|
|
Treasurer and Managing Director |
|
|
|
|
|
|
|
BlackRock Financial Management, Inc.,
|
|
Treasurer and Managing Director |
|
|
|
|
|
|
|
BlackRock Fund Advisors,
|
|
Treasurer and Managing Director |
|
|
|
|
|
|
|
BlackRock Funding International, Ltd.
|
|
Treasurer and Managing Director |
|
|
|
|
|
|
|
BlackRock Funding, Inc.,
|
|
Treasurer and Managing Director |
|
|
|
|
|
|
|
BlackRock Holdco 2, Inc.,
|
|
Treasurer and Managing Director |
|
|
|
|
|
|
|
BlackRock International Holdings, Inc.,
|
|
Treasurer and Managing Director |
|
|
|
|
|
|
|
BlackRock Investment Management, LLC,
|
|
Treasurer and Managing Director |
|
|
|
|
|
Linda Gosden Robinson, Senior Managing Director and Head of Marketing and Communications |
|
BlackRock, Inc.,
|
|
Senior Managing Director and Head of Marketing and Communications |
|
|
|
|
|
|
|
BlackRock Advisors, LLC,
|
|
Senior Managing Director and Head of Marketing and Communications |
|
|
|
|
|
|
|
BlackRock Advisors Holdings, Inc.,
|
|
Senior Managing Director and Head of Marketing and Communications |
|
|
|
|
|
|
|
BlackRock Capital Holdings, Inc.,
|
|
Senior Managing Director and Head of Marketing and Communications |
|
|
|
|
|
|
|
BlackRock Capital Management, Inc.,
|
|
Senior Managing Director and Head of Marketing and Communications |
|
|
|
|
|
|
|
BlackRock Corporation US, Inc.,
|
|
Senior Managing Director and Head of Marketing and Communications |
|
|
|
|
|
|
|
BlackRock Delaware Holdings, Inc.,
|
|
Senior Managing Director and Head of Marketing and Communications |
|
|
|
|
|
|
|
BlackRock Financial Management, Inc.,
|
|
Senior Managing Director and Head of Marketing and Communications |
|
|
|
|
|
|
|
BlackRock Fund Advisors,
|
|
Senior Managing Director and Head of Marketing and Communications |
|
|
|
|
|
|
|
BlackRock Funding, Inc.,
|
|
Senior Managing Director and Head of Marketing and Communications |
|
|
|
|
|
|
|
BlackRock Funding International, Ltd.
|
|
Senior Managing Director and Head of Marketing and Communications |
|
|
|
|
|
|
|
BlackRock Holdco 2, Inc.,
|
|
Senior Managing Director and Head of Marketing and Communications |
|
|
BlackRock International Holdings, Inc.,
|
|
Senior Managing Director and Head of Marketing and Communications |
|
|
|
|
|
|
|
BlackRock Investment Management, LLC,
|
|
Senior Managing Director and Head of Marketing and Communications |
|
|
|
|
|
Kendrick Wilson, Vice Chairman |
|
BlackRock, Inc.,
|
|
Vice Chairman |
|
|
|
|
|
|
|
BlackRock Advisors, LLC,
|
|
Vice Chairman |
|
|
|
|
|
|
|
BlackRock Advisors Holdings, Inc.,
|
|
Vice Chairman |
|
|
|
|
|
|
|
BlackRock Capital Holdings, Inc.,
|
|
Vice Chairman |
|
|
|
|
|
|
|
BlackRock Capital Management, Inc.,
|
|
Vice Chairman |
|
|
|
|
|
|
|
BlackRock Corporation US, Inc.,
|
|
Vice Chairman |
|
|
|
|
|
|
|
BlackRock Delaware Holdings, Inc.,
|
|
Vice Chairman |
|
|
|
|
|
|
|
BlackRock Financial Management, Inc.,New York, NY |
|
Vice Chairman |
|
|
|
|
|
|
|
BlackRock Fund Advisors,
|
|
Vice Chairman |
|
|
|
|
|
|
|
BlackRock Funding, Inc.,
|
|
Vice Chairman |
|
|
|
|
|
|
|
BlackRock Funding International, Ltd.,
|
|
Vice Chairman |
|
|
|
|
|
|
|
BlackRock Holdco 2, Inc.,
|
|
Vice Chairman |
|
|
|
|
|
|
|
BlackRock International Holdings, Inc.,
|
|
Vice Chairman |
|
|
|
|
|
|
|
BlackRock Investment Management, LLC,
|
|
Vice Chairman |
2. |
|
Bogle Investment Management, LP:
The sole business activity of Bogle Investment Management, LP (Bogle), 2310 Washington Street, Suite 310, Newton Lower Falls, MA 02462, is to serve as an investment adviser. Bogle is registered under the Investment Advisers Act of 1940.
The directors and officers have not held any positions with other companies during the last two fiscal years. |
The sole business activity of Robeco Investment Management, Inc. (RIM), 909 Third Avenue, New York 10022, is to serve as an investment adviser. RIM provides investment advisory services to the Robeco Boston Partners Funds and the Robeco Weiss, Peck, & Greer Funds.
RIM is registered under the Investment Advisers Act of 1940 and serves as an investment adviser to domestic and foreign institutional investors, investment companies, commingled trust funds, private investment partnerships and collective investment vehicles. Information as to the directors and officers of Robeco Investment Management, Inc. is as follows:
Name and Position with RIM |
|
Other Company |
|
Position With Other
|
|
|
|
|
|
Mark E. Donovan Senior Managing Director, Co-Chief Executive Officer |
|
Robeco Institutional Asset Management US Inc.
|
|
Director |
|
|
|
|
|
|
|
Robeco Trust Company |
|
Co-CEO, Director & Chairman of the Board |
|
|
|
|
|
|
|
Saint Sebastian High School
|
|
Trustee |
|
|
|
|
|
Joseph F. Feeney, Jr. Senior Managing Director, Co-Chief Executive Officer |
|
Robeco US Holding, Inc. |
|
Director |
|
|
|
|
|
|
|
Robeco Trust Company |
|
President, Co-CEO, Chief Investment Officer, Director & Vice Chairman of the Board |
William George Butterly, III Senior Managing Director, Chief Operating Officer, General Counsel, Chief Compliance Officer & Secretary |
|
Robeco Institutional Asset Management US Inc.
|
|
Chief Legal Officer, Chief Compliance Officer & Secretary
|
|
|
|
|
|
|
|
Robeco Securities, L.L.C. |
|
Chief Legal Officer |
|
|
|
|
|
|
|
Robeco Trust Company |
|
Chief Operating Officer, Secretary & Director |
|
|
|
|
|
|
|
Sustainable Asset Management USA, Inc. |
|
Chief Legal Officer, Chief Compliance Officer & Secretary |
|
|
|
|
|
Matthew J. Davis Senior Managing Director, Treasurer & Chief Financial Officer |
|
Robeco Institutional Asset Management US Inc.
|
|
President, Treasurer & Director
|
|
|
|
|
|
|
|
Robeco Securities, L.L.C. |
|
Chief Financial Officer |
|
|
|
|
|
|
|
Robeco Trust Company |
|
Chief Financial Officer, Treasurer & Director |
|
|
|
|
|
Paul F. Healey Senior Managing Director & Director of Sales, Marketing & Client Service |
|
Robeco Securities, L.L.C. |
|
Chief Executive Officer |
|
|
|
|
|
|
|
Robeco Trust Company |
|
Director of Sales & Relationship Management, & Director |
|
|
|
|
|
|
|
Investment Committee of the New England Province of Jesuits |
|
Member, Former Chairman |
|
|
|
|
|
Roderick Munsters Director |
|
Robeco Groep N.V. |
|
Chief Executive Officer |
|
|
|
|
|
Leni M. Boeren Director |
|
Robeco Groep N.V. |
|
Chief Operating Officer |
|
|
|
|
|
Martin Mlynár Director |
|
Corestone Investment Managers AG |
|
Chief Executive Officer |
|
|
Source Capital AG |
|
Board Member |
|
|
Source Capital Holding AG |
|
Board Member |
|
|
|
|
|
Michiel Prinsze Director |
|
Robeco Groep N.V. |
|
General Counsel |
|
|
Madelyn B. Smith Director |
|
University of Puget Sound Endowment Committee 1500 North Warner Street Tacoma, Washington 98416 |
|
Committee Member
|
|
|
Kevin Humphrey Chief Compliance Officer |
|
Perimeter Concourse Capital LLC & Perimeter Capital Management LLC |
|
Chief Compliance Officer |
Item 32 . Principal Underwriter
(a) Foreside Funds Distributors LLC (f/k/a BNY Mellon Distributors LLC) (the Distributor) serves as principal underwriter for the following investment companies registered under the Investment Company Act of 1940, as amended:
1. Aston Funds
2. E.I.I. Realty Securities Trust
3. FundVantage Trust
4. GuideStone Funds
5. Pyxis Funds I
6. Pyxis Funds II
7. Kalmar Pooled Investment Trust
8. Matthews International Funds (d/b/a Matthews Asia Funds)
9. Metropolitan West Funds
10. The Motley Fool Funds Trust
11. New Alternatives Fund, Inc.
12. Old Westbury Funds, Inc.
13. The RBB Fund, Inc.
14. Stratton Multi-Cap Fund, Inc.
15. Stratton Real Estate Fund, Inc.
16. The Stratton Funds, Inc.
17. The Torray Fund
18. Versus Global Multi-Manager Real Estate Income Fund LLC
(b) The following are the Officers and Managers of the Distributor. The Distributors main business address is 400 Berwyn Park, Suite 110, 899 Cassatt Road, Berwyn, PA 19312.
Name |
|
Address |
|
Position with
|
|
Position with
|
Mark A. Fairbanks |
|
Three Canal Plaza, Suite 100, Portland, ME 04101 |
|
President and Manager |
|
None |
Richard J. Berthy |
|
Three Canal Plaza, Suite 100, Portland, ME 04101 |
|
Vice President, Treasurer and Manager |
|
None |
Bruno S. DiStefano |
|
899 Cassatt Road, 400 Berwyn Park, Suite 110, Berwyn, PA 19312 |
|
Vice President |
|
None |
Ronald C. Berge |
|
899 Cassatt Road, 400 Berwyn Park, Suite 110, Berwyn, PA 19312 |
|
Vice President |
|
None |
Susan K. Moscaritolo |
|
899 Cassatt Road, 400 Berwyn Park, Suite 110, Berwyn, PA 19312 |
|
Vice President and Chief Compliance Officer |
|
None |
Lisa S. Clifford |
|
Three Canal Plaza, Suite 100, Portland, ME 04101 |
|
Vice President |
|
None |
Jennifer E. Hoopes |
|
Three Canal Plaza, Suite 100, Portland, ME 04101 |
|
Secretary |
|
None |
Nishant Bhatnagar |
|
Three Canal Plaza, Suite 100, Portland, ME 04101 |
|
Assistant Secretary |
|
None |
(c) Not Applicable
Item 33. LOCATION OF ACCOUNTS AND RECORDS
(1) The Bank of New York Mellon, One Wall Street, New York, New York 10286 (records relating to its functions as sub-adviser and custodian).
(2) Foreside Funds Distributors, 400 Berwyn Park, 899 Cassatt Road, Berwyn, Pennsylvania 19312. (records relating to its functions as principal underwriter).
(3) BlackRock Advisors, LLC, Bellevue Corporate Center, 100 Bellevue Parkway, Wilmington, Delaware 19809 (records relating to its functions as investment adviser, sub-adviser and administrator).
(4) BNY Mellon Investment Servicing (US) Inc., Bellevue Corporate Center, 103 Bellevue Parkway, Wilmington, Delaware 19809 (records relating to its functions as transfer agent and dividend disbursing agent).
(5) BNY Mellon Investment Servicing (US) Inc., 301 Bellevue Parkway, Wilmington, Delaware 19809 (records relating to its function as administrator and accounting agent and Registrants Articles of Incorporation, By-Laws and Minute books).
(6) Robeco Investment Management, Inc., 909 Third Avenue, 32 nd floor, New York, New York 10022 (records relating to its function as investment adviser).
(7) Schneider Capital Management Co., 460 East Swedesford Road, Suite 1080, Wayne, Pennsylvania 19087 (records relating to its function as investment adviser).
(8) Bogle Investment Management, L.P., 2310 Washington Street, Suite 310, Newton Lower Falls, Massachusetts 02462 (records relating to its function as investment adviser).
(9) Marvin & Palmer Associates, Inc., 1201 N. Market Street, Suite 2300, Wilmington, Delaware 19801-1165 (records relating to its function as investment adviser).
(10) Matson Money, Inc. (formerly Abundance Technologies, Inc.), 5955 Deerfield Blvd., Mason, OH 45040 (records relating to its function as investment adviser).
(11) Perimeter Capital Management, LLC, Six Concourse Parkway, Suite 3300, Atlanta, Georgia 30328 (records relating to its function as investment adviser).
(12) Simple Alternatives, LLC, 90 Grove Street, Suite 205, Ridgefield, CT 06877 (records relating to its function as investment adviser).
(13) Summit Global Investments, LLC, 189 North, Hwy 89, Suite 144, North Salt Lake, Utah 84054 (records relating to its function as investment adviser).
Item 34. MANAGEMENT SERVICES
None.
Item 35. UNDERTAKINGS
(a) Registrant hereby undertakes to hold a meeting of shareholders for the purpose of considering the removal of directors in the event the requisite number of shareholders so request.
(b) Registrant hereby undertakes to furnish each person to whom a prospectus is delivered a copy of Registrants latest annual report to shareholders upon request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended (the 1933 Act), and the Investment Company Act of 1940, as amended, the Registrant has duly caused this Post-Effective Amendment No. 149 to its Registration Statement to be signed on its behalf by the undersigned, thereto duly authorized, in the City of Wilmington, and State of Delaware on the 29 th day of October, 2012.
|
THE RBB FUND, INC. |
|
|
|
By: /s/Salvatore Faia |
|
Salvatore Faia |
|
President |
Pursuant to the requirements of the 1933 Act, this Post-Effective Amendment to Registrants Registration Statement has been signed below by the following persons in the capacities and on the date indicated.
SIGNATURE |
|
TITLE |
|
DATE |
|
|
|
|
|
/s/Salvatore Faia |
|
President (Principal Executive .Officer) and Chief Compliance Officer |
|
October 29, 2012 |
Salvatore Faia |
|
|
|
|
|
|
|
|
|
/s/Joel L. Weiss |
|
Treasurer (Chief Financial Officer) |
|
October 29, 2012 |
Joel L. Weiss |
|
|
|
|
|
|
|
|
|
*J. Richard Carnall |
|
Director |
|
October 29,2012 |
J. Richard Carnall |
|
|
|
|
|
|
|
|
|
*Julian A. Brodsky |
|
Director |
|
October 29,2012 |
Julian A. Brodsky |
|
|
|
|
|
|
|
|
|
*Arnold M. Reichman |
|
Director |
|
October 29,2012 |
Arnold M. Reichman |
|
|
|
|
|
|
|
|
|
*Robert Sablowsky |
|
Director |
|
October 29,2012 |
Robert Sablowsky |
|
|
|
|
|
|
|
|
|
*Robert Straniere |
|
Director |
|
October 29,2012 |
Robert Straniere |
|
|
|
|
|
|
|
|
|
*Nicholas A. Giordano |
|
Director |
|
October 29,2012 |
Nicholas A. Giordano |
|
|
|
|
|
|
|
|
|
*Gregory P. Chandler |
|
Director |
|
October 29,2012 |
Gregory P. Chandler |
|
|
|
|
|
|
|
|
|
*Jay F. Nusblatt |
|
Director |
|
October 29,2012 |
Jay F. Nusblatt |
|
|
|
|
|
|
|
|
|
*By: /s/Salvatore Faia |
|
|
|
October 29,2012 |
Salvatore Faia |
|
|
|
|
Attorney-in-Fact |
|
|
|
|
THE RBB FUND, INC.
(the Company)
POWER OF ATTORNEY
Know All Men by These Presents, that the undersigned, Julian A. Brodsky, hereby constitutes and appoints Salvatore Faia, Michael P. Malloy, James G. Shaw and Joel L. Weiss, his true and lawful attorneys, to execute in his name, place, and stead, in his capacity as Director or officer, or both, of the Company, the Registration Statement and any amendments thereto and all instruments necessary or incidental in connection therewith, and to file the same with the Securities and Exchange Commission; and said attorneys shall have full power and authority to do and perform in his name and on his behalf, in any and all capacities, every act whatsoever requisite or necessary to be done in the premises, as fully and to all intents and purposes as he might or could do in person, said acts of said attorneys being hereby ratified and approved.
DATED: |
May 7, 2009 |
|
|
|
|
|
|
|
|
|
|
|
/s/ Julian A. Brodsky |
|
|
|
Julian A. Brodsky |
|
|
THE RBB FUND, INC.
(the Company)
POWER OF ATTORNEY
Know All Men by These Presents, that the undersigned, J. Richard Carnall, hereby constitutes and appoints Salvatore Faia, Michael P. Malloy, James G. Shaw and Joel L. Weiss, his true and lawful attorneys, to execute in his name, place, and stead, in his capacity as Director or officer, or both, of the Company, the Registration Statement and any amendments thereto and all instruments necessary or incidental in connection therewith, and to file the same with the Securities and Exchange Commission; and said attorneys shall have full power and authority to do and perform in his name and on his behalf, in any and all capacities, every act whatsoever requisite or necessary to be done in the premises, as fully and to all intents and purposes as he might or could do in person, said acts of said attorneys being hereby ratified and approved.
DATED: |
May 7, 2009 |
|
|
|
|
|
|
|
|
|
|
|
/s/ J. Richard Carnall |
|
|
|
J. Richard Carnall |
|
|
THE RBB FUND, INC.
(the Company)
POWER OF ATTORNEY
Know All Men by These Presents, that the undersigned, Nicholas A. Giordano, hereby constitutes and appoints Salvatore Faia, Michael P. Malloy, James G. Shaw and Joel L. Weiss, his true and lawful attorneys, to execute in his name, place, and stead, in his capacity as Director or officer, or both, of the Company, the Registration Statement and any amendments thereto and all instruments necessary or incidental in connection therewith, and to file the same with the Securities and Exchange Commission; and said attorneys shall have full power and authority to do and perform in his name and on his behalf, in any and all capacities, every act whatsoever requisite or necessary to be done in the premises, as fully and to all intents and purposes as he might or could do in person, said acts of said attorneys being hereby ratified and approved.
DATED: |
May 7, 2009 |
|
|
|
|
|
|
|
|
|
|
|
/s/ Nicholas A. Giordano |
|
|
|
Nicholas A. Giordano |
|
|
THE RBB FUND, INC.
(the Company)
POWER OF ATTORNEY
Know All Men by These Presents, that the undersigned, Arnold M. Reichman, hereby constitutes and appoints Salvatore Faia, Michael P. Malloy, James G. Shaw and Joel L. Weiss, his true and lawful attorneys, to execute in his name, place, and stead, in his capacity as Director or officer, or both, of the Company, the Registration Statement and any amendments thereto and all instruments necessary or incidental in connection therewith, and to file the same with the Securities and Exchange Commission; and said attorneys shall have full power and authority to do and perform in his name and on his behalf, in any and all capacities, every act whatsoever requisite or necessary to be done in the premises, as fully and to all intents and purposes as he might or could do in person, said acts of said attorneys being hereby ratified and approved.
DATED: |
May 7, 2009 |
|
|
|
|
|
|
|
|
|
|
|
/s/ Arnold M. Reichman |
|
|
|
Arnold M. Reichman |
|
|
THE RBB FUND, INC.
(the Company)
POWER OF ATTORNEY
Know All Men by These Presents, that the undersigned, Robert Sablowsky, hereby constitutes and appoints Salvatore Faia, Michael P. Malloy, James G. Shaw and Joel L. Weiss, his true and lawful attorneys, to execute in his name, place, and stead, in his capacity as Director or officer, or both, of the Company, the Registration Statement and any amendments thereto and all instruments necessary or incidental in connection therewith, and to file the same with the Securities and Exchange Commission; and said attorneys shall have full power and authority to do and perform in his name and on his behalf, in any and all capacities, every act whatsoever requisite or necessary to be done in the premises, as fully and to all intents and purposes as he might or could do in person, said acts of said attorneys being hereby ratified and approved.
DATED: |
May 7, 2009 |
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/s/ Robert Sablowsky |
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Robert Sablowsky |
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THE RBB FUND, INC.
(the Company)
POWER OF ATTORNEY
Know All Men by These Presents, that the undersigned, Robert Straniere, hereby constitutes and appoints Salvatore Faia, Michael P. Malloy, James G. Shaw and Joel L. Weiss, his true and lawful attorneys, to execute in his name, place, and stead, in his capacity as Director or officer, or both, of the Company, the Registration Statement and any amendments thereto and all instruments necessary or incidental in connection therewith, and to file the same with the Securities and Exchange Commission; and said attorneys shall have full power and authority to do and perform in his name and on his behalf, in any and all capacities, every act whatsoever requisite or necessary to be done in the premises, as fully and to all intents and purposes as he might or could do in person, said acts of said attorneys being hereby ratified and approved.
DATED: |
May 7, 2009 |
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/s/ Robert Straniere |
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Robert Straniere |
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THE RBB FUND, INC.
(the Company)
POWER OF ATTORNEY
Know All Men by These Presents, that the undersigned, Gregory P. Chandler, hereby constitutes and appoints Salvatore Faia, Michael P. Malloy, James G. Shaw and Joel L. Weiss, his true and lawful attorneys, to execute in his name, place, and stead, in his capacity as Director or officer, or both, of the Company, the Registration Statement and any amendments thereto and all instruments necessary or incidental in connection therewith, and to file the same with the Securities and Exchange Commission; and said attorneys shall have full power and authority to do and perform in his name and on his behalf, in any and all capacities, every act whatsoever requisite or necessary to be done in the premises, as fully and to all intents and purposes as he might or could do in person, said acts of said attorneys being hereby ratified and approved.
DATED: |
October 15, 2012 |
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/s/ Gregory P. Chandler |
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Gregory P. Chandler |
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THE RBB FUND, INC.
(the Company)
POWER OF ATTORNEY
Know All Men by These Presents, that the undersigned, Jay F. Nusblatt, hereby constitutes and appoints Salvatore Faia, Michael P. Malloy, James G. Shaw and Joel L. Weiss, his true and lawful attorneys, to execute in his name, place, and stead, in his capacity as Director or officer, or both, of the Company, the Registration Statement and any amendments thereto and all instruments necessary or incidental in connection therewith, and to file the same with the Securities and Exchange Commission; and said attorneys shall have full power and authority to do and perform in his name and on his behalf, in any and all capacities, every act whatsoever requisite or necessary to be done in the premises, as fully and to all intents and purposes as he might or could do in person, said acts of said attorneys being hereby ratified and approved.
DATED: |
October 16, 2012 |
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/s/ Jay F. Nusblatt |
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Jay F. Nusblatt |
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PEA 149
EXHIBIT INDEX
EXHIBIT |
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DESCRIPTION |
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(a)(62) |
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Articles Supplementary of Registrant (Free Market U.S. Equity Fund, Free Market International Equity Fund, Free Market Fixed-Income Fund) |
(d)(36) |
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Investment Sub-Advisory Agreement (S1 Fund) between Simple Alternatives, LLC and Maerisland Capital, LLC |
(e)(16) |
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Distribution Agreement between Registrant and Foreside Funds Distributors LLC dated March 31, 2012 |
(h)(40) |
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Delegation Agreement (Money Market Portfolio) among Registrant, BNY Mellon Investment Servicing (US) Inc. (f/k/a PFPC Inc.) and BlackRock Institutional Management Corp. |
(h)(58) |
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Amendment to Delegation Agreement (Money Market Portfolio) between Registrant, BNY Mellon Investment Servicing (US) Inc., and BlackRock Advisors, LLC (f/k/a BlackRock Institutional Management Corp.) |
(h)(59) |
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Transfer Agency Agreement Supplement (Robeco Boston Global Equity Fund and Robeco Boston Partners International Equity Fund) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc. |
(h)(60) |
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Amended Schedule A to Regulatory Administration Services Agreement (Robeco Boston Global Equity Fund and Robeco Boston Partners International Equity Fund) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc. |
(h)(61) |
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Administration and Accounting Services Agreement (Robeco Boston Global Equity Fund and Robeco Boston Partners International Equity Fund) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc. |
(h)(62) |
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Administration and Accounting Services Agreement (Robeco Boston Partners International Equity Fund) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc. |
(h)(63) |
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Transfer Agency Agreement Supplement (Summit Global Investments U.S. Low Volatility Equity Fund) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc. |
(h)(64) |
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Amended Schedule A to Regulatory Administration Services Agreement (Summit Global Investments U.S. Low Volatility Equity Fund) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc. |
(h)(65) |
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Administration and Accounting Services Agreement (Summit Global Investments U.S. Low Volatility Equity Fund) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc. |
(h)(66) |
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Form of Transfer Agency Supplement ( Robeco Boston Partners Global Equity Fund, Robeco Boston Partners International Equity Fund, Robeco WPG Small/Micro Cap Value Fund, Robeco Boston Partners Long/Short Research Fund, Robeco Boston Partners Long/Short Equity Fund, Robeco Boston Partners All-Cap Value Fund and Robeco Boston Partners Small Cap Value Fund II) between Registrant and BNY Mellon Investment Servicing (US) Inc. |
(i)(2) |
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Consent of Counsel |
(p)(8) |
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Code of Ethics of Perimeter Capital Management LLC |
(p)(9) |
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Code of Ethics of Simple Alternatives, LLC |
(p)(18) |
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Code of Ethics of Maerisland Capital, LLC |
EXHIBIT (a)(62)
THE RBB FUND, INC.
ARTICLES SUPPLEMENTARY
THE RBB FUND, INC., a Maryland corporation having its principal office in Baltimore, Maryland (hereinafter called the Corporation), hereby certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: In accordance with the requirements of Section 2-208 of the Maryland General Corporation Law, the Board of Directors of the Corporation has adopted a unanimous resolution classifying an additional: 1) One Hundred Million (100,000,000) authorized but unclassified and unissued shares of Common Stock of the Corporation as Class BBBB shares of Common Stock representing interests in the Free Market U.S. Equity Fund; 2) One Hundred Million (100,000,000) authorized but unclassified and unissued shares of Common Stock of the Corporation as Class CCCC shares of Common Stock representing interests in the Free Market International Equity Fund; and 3) One Hundred Million (100,000,000) authorized but unclassified and unissued shares of Common Stock of the Corporation as Class DDDD shares of Common Stock representing interests in the Free Market Fixed-Income Fund.
SECOND: Each Class BBBB, Class CCCC and Class DDDD share of Common Stock of the Corporation classified herein will have the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications and terms and conditions of redemption as previously set forth in the Charter of the Corporation with respect to Class BBBB, Class CCCC and Class DDDD share of Common Stock of the Corporation, respectively.
THIRD: The shares aforesaid have been duly classified by the Board of Directors of the Corporation pursuant to authority and power contained in the Charter of the Corporation.
FOURTH: (1) Immediately before the classification of additional authorized, unissued and unclassified shares of Common Stock as Class BBBB Common Stock, Class CCCC Common Stock and Class DDDD Common Stock:
(a) the Corporation had the authority to issue one hundred billion (100,000,000,000) shares of its Common Stock and the aggregate par value of all the shares of all classes was one hundred million dollars ($100,000,000); and
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(b) |
the number of authorized shares of each class was as follows: |
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Class A |
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one hundred million (100,000,000), par value $.001 per share; |
Class B |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class C |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class D |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class E |
- |
five hundred million (500,000,000), par value $.001 per share; |
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Class F |
- |
five hundred million (500,000,000), par value $.001 per share; |
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Class G |
- |
five hundred million (500,000,000), par value $.001 per share; |
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Class H |
- |
five hundred million (500,000,000), par value $.001 per share; |
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Class I |
- |
one billion five hundred million (1,500,000,000), par value $.001 per share; |
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Class J |
- |
five hundred million (500,000,000), par value $.001 per share; |
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Class K |
- |
five hundred million (500,000,000), par value $.001 per share; |
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Class L |
- |
one billion five hundred million (1,500,000,000), par value $.001 per share; |
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Class M |
- |
five hundred million (500,000,000), par value $.001 per share; |
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Class N |
- |
five hundred million (500,000,000), par value $.001 per share; |
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Class O |
- |
five hundred million (500,000,000), par value $.001 per share; |
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Class P |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class Q |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class R |
- |
five hundred million (500,000,000), par value $.001 per share; |
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Class S |
- |
five hundred million (500,000,000), par value $.001 per share; |
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Class T |
- |
five hundred million (500,000,000), par value $.001 per share; |
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Class U |
- |
five hundred million (500,000,000), par value $.001 per share; |
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Class V |
- |
five hundred million (500,000,000), par value $.001 per share; |
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Class W |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class X |
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fifty million (50,000,000), par value $.001 per share; |
Class Y |
- |
fifty million (50,000,000), par value $.001 per share; |
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Class Z |
- |
fifty million (50,000,000), par value $.001 per share; |
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Class AA |
- |
fifty million (50,000,000), par value $.001 per share; |
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Class BB |
- |
fifty million (50,000,000), par value $.001 per share; |
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Class CC |
- |
fifty million (50,000,000), par value $.001 per share; |
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Class DD |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class EE |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class FF |
- |
fifty million (50,000,000), par value $.001 per share; |
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Class GG |
- |
fifty million (50,000,000), par value $.001 per share; |
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Class HH |
- |
fifty million (50,000,000), par value $.001 per share; |
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Class II |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class JJ |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class KK |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class LL |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class MM |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class NN |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class OO |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class PP |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class QQ |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class RR |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class SS |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class TT |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class UU |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class VV |
- |
one hundred million (100,000,000), par value $.001 per share; |
Class WW |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class YY |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class ZZ |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class AAA |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class BBB |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class CCC |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class DDD |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class EEE |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class FFF |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class GGG |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class HHH |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class III |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class JJJ |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class KKK |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class LLL |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class MMM |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class NNN |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class OOO |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class PPP |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class QQQ |
- |
two billion five hundred million (2,500,000,000), par value $.001 per share; |
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Class RRR |
- |
two billion five hundred million (2,500,000,000), par value $.001 per share; |
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Class SSS |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class TTT |
- |
fifty million (50,000,000), par value $.001 per share; |
Class UUU |
- |
fifty million (50,000,000), par value $.001 per share; |
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Class VVV |
- |
fifty million (50,000,000), par value $.001 per share; |
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Class WWW |
- |
fifty million (50,000,000), par value $.001 per share; |
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Class XXX |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class YYY |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class ZZZ |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class AAAA |
- |
fifty billion (50,000,000,000), par value $.001 per share; |
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Class BBBB |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class CCCC |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class DDDD |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class EEEE |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class FFFF |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class GGGG |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class HHHH |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class IIII |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class JJJJ |
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one hundred million (100,000,000), par value $.001 per share; |
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Class KKKK |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class LLLL |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class MMMM |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class NNNN |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class OOOO |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class PPPP |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class QQQQ |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class RRRR |
- |
one hundred million (100,000,000), par value $.001 per share; |
Class SSSS |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class TTTT |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class UUUU |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class VVVV |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class WWWW |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class XXXX |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class YYYY |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class ZZZZ |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class AAAAA |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class BBBBB |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class CCCCC |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class DDDDD |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class EEEEE |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class FFFFF |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class GGGGG |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class HHHHH |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class IIIII |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class Select |
- |
seven hundred million (700,000,000), par value $.001 per share; |
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Class Beta 2 |
- |
one million (1,000,000), par value $.001 per share; |
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Class Beta 3 |
- |
one million (1,000,000), par value $.001 per share; |
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Class Beta 4 |
- |
one million (1,000,000), par value $.001 per share; |
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Class Principal Money |
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seven hundred million (700,000,000), par value $.001 per share; |
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Class Gamma 2 |
- |
one million (1,000,000), par value $.001 per share; |
Class Gamma 3 |
- |
one million (1,000,000), par value $.001 per share; |
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Class Gamma 4 |
- |
one million (1,000,000), par value $.001 per share; |
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Class Bear Stearns Money |
- |
two billion five hundred million (2,500,000,000), par value $.001 per share; |
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Class Bear Stearns Municipal Money |
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one billion five hundred million (1,500,000,000), par value $.001 per share; |
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Class Bear Stearns Government Money |
- |
one billion (1,000,000,000), par value $.001 per share; |
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Class Delta 4 |
- |
one million (1,000,000), par value $.001 per share; |
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Class Epsilon 1 |
- |
one million (1,000,000), par value $.001 per share; |
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Class Epsilon 2 |
- |
one million (1,000,000), par value $.001 per share; |
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Class Epsilon 3 |
- |
one million (1,000,000), par value $.001 per share; |
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Class Epsilon 4 |
- |
one million (1,000,000), par value $.001 per share; |
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Class Zeta 1 |
- |
one million (1,000,000), par value $.001 per share; |
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Class Zeta 2 |
- |
one million (1,000,000), par value $.001 per share; |
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Class Zeta 3 |
- |
one million (1,000,000), par value $.001 per share; |
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Class Zeta 4 |
- |
one million (1,000,000), par value $.001 per share; |
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Class Eta 1 |
- |
one million (1,000,000), par value $.001 per share; |
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Class Eta 2 |
- |
one million (1,000,000), par value $.001 per share; |
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Class Eta 3 |
- |
one million (1,000,000), par value $.001 per share; |
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Class Eta 4 |
- |
one million (1,000,000), par value $.001 per share; |
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Class Theta 1 |
- |
one million (1,000,000), par value $.001 per share; |
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Class Theta 2 |
- |
one million (1,000,000), par value $.001 per share; |
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Class Theta 3 |
- |
one million (1,000,000), par value $.001 per share; |
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Class Theta 4 |
- |
one million (1,000,000), par value $.001 per share; |
for a total of eighty billion, seventy-three million (80,073,000,000) shares classified into separate classes of Common Stock.
(2) After the classification of additional authorized, unissued and unclassified shares of Common Stock as Class BBBB, Class CCCC and Class DDDD Common Stock:
(a) the Corporation has the authority to issue one hundred billion (100,000,000,000) shares of its Common Stock and the aggregate par value of all the shares of all classes is one hundred million dollars ($100,000,000); and
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(b) |
the number of authorized shares of each class is now as follows: |
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Class A |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class B |
- |
one hundred million (100,000,000), par value $.001 per share; |
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Class C |
- |
one hundred million (100,000,000), par value $.001 per share; |
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|
Class D |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class E |
- |
five hundred million (500,000,000), par value $.001 per share; |
|
|
|
Class F |
- |
five hundred million (500,000,000), par value $.001 per share; |
|
|
|
Class G |
- |
five hundred million (500,000,000), par value $.001 per share; |
|
|
|
Class H |
- |
five hundred million (500,000,000), par value $.001 per share; |
|
|
|
Class I |
- |
one billion five hundred million (1,500,000,000), par value $.001 per share; |
|
|
|
Class J |
- |
five hundred million (500,000,000), par value $.001 per share; |
|
|
|
Class K |
- |
five hundred million (500,000,000), par value $.001 per share; |
|
|
|
Class L |
- |
one billion five hundred million (1,500,000,000), par value $.001 per share; |
|
|
|
Class M |
- |
five hundred million (500,000,000), par value $.001 per share; |
|
|
|
Class N |
- |
five hundred million (500,000,000), par value $.001 per share; |
|
|
|
Class O |
- |
five hundred million (500,000,000), par value $.001 per share; |
|
|
|
Class P |
- |
one hundred million (100,000,000), par value $.001 per share; |
Class Q |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class R |
- |
five hundred million (500,000,000), par value $.001 per share; |
|
|
|
Class S |
- |
five hundred million (500,000,000), par value $.001 per share; |
|
|
|
Class T |
- |
five hundred million (500,000,000), par value $.001 per share; |
|
|
|
Class U |
- |
five hundred million (500,000,000), par value $.001 per share; |
|
|
|
Class V |
- |
five hundred million (500,000,000), par value $.001 per share; |
|
|
|
Class W |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class X |
- |
fifty million (50,000,000), par value $.001 per share; |
|
|
|
Class Y |
- |
fifty million (50,000,000), par value $.001 per share; |
|
|
|
Class Z |
- |
fifty million (50,000,000), par value $.001 per share; |
|
|
|
Class AA |
- |
fifty million (50,000,000), par value $.001 per share; |
|
|
|
Class BB |
- |
fifty million (50,000,000), par value $.001 per share; |
|
|
|
Class CC |
- |
fifty million (50,000,000), par value $.001 per share; |
|
|
|
Class DD |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class EE |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class FF |
- |
fifty million (50,000,000), par value $.001 per share; |
|
|
|
Class GG |
- |
fifty million (50,000,000), par value $.001 per share; |
|
|
|
Class HH |
- |
fifty million (50,000,000), par value $.001 per share; |
|
|
|
Class II |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class JJ |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class KK |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class LL |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class MM |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class NN |
- |
one hundred million (100,000,000), par value $.001 per share; |
Class OO |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class PP |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class QQ |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class RR |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class SS |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class TT |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class UU |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class VV |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class WW |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class YY |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class ZZ |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class AAA |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class BBB |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class CCC |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class DDD |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class EEE |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class FFF |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class GGG |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class HHH |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class III |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class JJJ |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class KKK |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class LLL |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class MMM |
- |
one hundred million (100,000,000), par value $.001 per share; |
Class NNN |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class OOO |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class PPP |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class QQQ |
- |
two billion five hundred million (2,500,000,000), par value $.001 per share; |
|
|
|
Class RRR |
- |
two billion five hundred million (2,500,000,000), par value $.001 per share; |
|
|
|
Class SSS |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class TTT |
- |
fifty million (50,000,000), par value $.001 per share; |
|
|
|
Class UUU |
- |
fifty million (50,000,000), par value $.001 per share; |
|
|
|
Class VVV |
- |
fifty million (50,000,000), par value $.001 per share; |
|
|
|
Class WWW |
- |
fifty million (50,000,000), par value $.001 per share; |
|
|
|
Class XXX |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class YYY |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class ZZZ |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class AAAA |
- |
fifty billion (50,000,000,000), par value $.001 per share; |
|
|
|
Class BBBB |
- |
two hundred million (200,000,000), par value $.001 per share; |
|
|
|
Class CCCC |
- |
two hundred million (200,000,000), par value $.001 per share; |
|
|
|
Class DDDD |
- |
two hundred million (200,000,000), par value $.001 per share; |
|
|
|
Class EEEE |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class FFFF |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class GGGG |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class HHHH |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class IIII |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class JJJJ |
- |
one hundred million (100,000,000), par value $.001 per share; |
Class KKKK |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class LLLL |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class MMMM |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class NNNN |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class OOOO |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class PPPP |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class QQQQ |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class RRRR |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class SSSS |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class TTTT |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class UUUU |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class VVVV |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class WWWW |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class XXXX |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class YYYY |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class ZZZZ |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class AAAAA |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class BBBBB |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class CCCCC |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class DDDDD |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class EEEEE |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class FFFFF |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class GGGGG |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class HHHHH |
- |
one hundred million (100,000,000), par value $.001 per share; |
Class IIIII |
- |
one hundred million (100,000,000), par value $.001 per share; |
|
|
|
Class Select |
- |
seven hundred million (700,000,000), par value $.001 per share; |
|
|
|
Class Beta 2 |
- |
one million (1,000,000), par value $.001 per share; |
|
|
|
Class Beta 3 |
- |
one million (1,000,000), par value $.001 per share; |
|
|
|
Class Beta 4 |
- |
one million (1,000,000), par value $.001 per share; |
|
|
|
Class Principal Money |
|
seven hundred million (700,000,000), par value $.001 per share; |
|
|
|
Class Gamma 2 |
- |
one million (1,000,000), par value $.001 per share; |
|
|
|
Class Gamma 3 |
- |
one million (1,000,000), par value $.001 per share; |
|
|
|
Class Gamma 4 |
- |
one million (1,000,000), par value $.001 per share; |
|
|
|
Class Bear Stearns Money |
- |
two billion five hundred million (2,500,000,000), par value $.001 per share; |
|
|
|
Class Bear Stearns Municipal Money |
- |
one billion five hundred million (1,500,000,000), par value $.001 per share; |
|
|
|
Class Bear Stearns Government Money |
- |
one billion (1,000,000,000), par value $.001 per share; |
|
|
|
Class Delta 4 |
- |
one million (1,000,000), par value $.001 per share; |
|
|
|
Class Epsilon 1 |
- |
one million (1,000,000), par value $.001 per share; |
|
|
|
Class Epsilon 2 |
- |
one million (1,000,000), par value $.001 per share; |
|
|
|
Class Epsilon 3 |
- |
one million (1,000,000), par value $.001 per share; |
|
|
|
Class Epsilon 4 |
- |
one million (1,000,000), par value $.001 per share; |
|
|
|
Class Zeta 1 |
- |
one million (1,000,000), par value $.001 per share; |
|
|
|
Class Zeta 2 |
- |
one million (1,000,000), par value $.001 per share; |
|
|
|
Class Zeta 3 |
- |
one million (1,000,000), par value $.001 per share; |
|
|
|
Class Zeta 4 |
- |
one million (1,000,000), par value $.001 per share; |
for a total of eighty billion, three hundred seventy-three million (80,373,000,000) shares classified into separate classes of Common Stock.
IN WITNESS WHEREOF, The RBB Fund, Inc. has caused these presents to be signed in its name and on its behalf by its President and witnessed by its Secretary on the 27th day of February, 2012.
WITNESS: |
|
|
THE RBB FUND, INC. |
|
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|
|
|
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|
By: |
/s/ Jennifer Rogers |
|
By: |
/s/ Salvatore Faia |
|
Jennifer Rogers |
|
|
Salvatore Faia |
|
Secretary |
|
|
President |
CERTIFICATE
THE UNDERSIGNED, President of The RBB Fund, Inc., who executed on behalf of said Corporation the foregoing Articles Supplementary to the Charter, of which this certificate is made a part, hereby acknowledges that the foregoing Articles Supplementary are the act of the said Corporation and further certifies that, to the best of his knowledge, information and belief, the matters and facts set forth therein with respect to the approval thereof are true in all material respects, under the penalties of perjury.
|
|
/s/ Salvatore Faia |
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Salvatore Faia |
|
|
President |
EXHIBIT (d)(36)
THE RBB FUND, INC.
SUB-ADVISORY AGREEMENT
S1 FUND
Sub-Advisory Agreement (this Agreement) entered into as of the 1th day of January, 2012, by and between Simple Alternatives, LLC, a Delaware limited liability company (the Adviser), and Maerisland Capital, LLC, a Delaware limited liability company (the Sub-Adviser).
WHEREAS, the Adviser has entered into an Investment Advisory Agreement dated September 30, 2010 (the Advisory Agreement) with The RBB Fund, Inc. (the Fund), relating to the provision of investment advisory services to the S1 Fund (the Portfolio);
WHEREAS, the Advisory Agreement provides that the Adviser may delegate any or all of its investment advisory responsibilities under the Advisory Agreement to one or more sub-advisers;
WHEREAS, pursuant to the authority granted to the Adviser in the Advisory Agreement and with the consent of the Board of Directors of the Fund, the Adviser and the Fund desire to retain the Sub-Adviser to render portfolio management services to the Portfolio in the manner and on the terms set forth in this Agreement, and the Sub-Adviser is willing to provide such services.
NOW, THEREFORE, in consideration of the premises and mutual covenants hereinafter set forth, the parties hereto agree as follows:
1. Sub-Advisory Services .
(a) The Adviser hereby appoints the Sub-Adviser to act as a sub-adviser to the Portfolio for the periods and on the terms herein set forth. The Sub-Adviser accepts such appointment and agrees to render the services herein set forth, for the compensation herein provided.
(b) The Sub-Adviser shall, subject to the supervision and oversight of the Adviser, manage the investment and reinvestment of such portion of the assets of the Portfolio, as the Adviser may from time to time allocate to the Sub-Adviser for management (the Sub-Advised Assets). The Sub-Adviser shall manage the Sub-Advised Assets in conformity with (i) the investment objective, policies and restrictions of the Portfolio set forth in the Portfolios prospectus and statement of additional information, as they may be amended from time to time, any additional policies or guidelines, including without limitation compliance policies and procedures, established by the Adviser, the Funds Chief Compliance Officer, or by the Funds Board of Directors (Board) that have been furnished in writing to the Sub-Adviser, (ii) the asset diversification tests applicable to
regulated investment companies pursuant to section 851(b)(3) of the Internal Revenue Code, (iii) the written instructions and directions received from the Adviser or the Fund as delivered; and (iv) the requirements of the Investment Company Act of 1940 (the 1940 Act), the Investment Advisers Act of 1940 (Advisers Act), and all other applicable federal and state laws governing the performance of the Sub-Advisers duties under this Agreement, all as may be in effect from time to time. The foregoing are referred to below together as the Policies.
For purposes of compliance with the Policies, the Sub-Adviser shall be entitled to treat the Sub-Advised Assets as though the Sub-Advised Assets constituted the entire Portfolio, and the Sub-Adviser shall not be responsible in any way for the compliance of any assets of the Portfolio, other than the Sub-Advised Assets, with the Policies. Subject to the foregoing, the Sub-Adviser is authorized, in its discretion and without prior consultation with the Adviser, to buy, sell, lend and otherwise trade in any stocks, bonds and other securities and investment instruments on behalf of the Portfolio, without regard to the length of time the securities have been held and the resulting rate of portfolio turnover or any tax considerations; and the majority or the whole of the Sub-Advised Assets may be invested in such proportions of stocks, bonds, other securities or investment instruments, or cash, as the Sub-Adviser shall determine. Notwithstanding the foregoing provisions of this Section 1(b), however, (i) the Sub-Adviser shall, upon and in accordance with written instructions from the Adviser, effect such portfolio transactions for the Sub-Advised Assets as the Adviser shall determine are necessary in order for the Portfolio to comply with the Policies, and (ii) upon notice to the Sub-Adviser, the Adviser may effect in-kind redemptions with shareholders of the Portfolio with securities included within the Sub-Advised Assets or effect such portfolio transactions for the Sub-Advised Assets as the Adviser shall determine are necessary in order for the Portfolio to comply with the Policies.
(c) Absent instructions from the Adviser or the officers of the Fund to the contrary, the Sub-Adviser shall place orders pursuant to its determinations either directly with the issuer or with any broker and/or dealer or other person who deals in the securities in which the Portfolio is trading. In executing portfolio transactions and selecting brokers, dealers or other persons, the Sub-Adviser shall use its best judgment to obtain the best overall terms available. In assessing the best overall terms available for any transaction, the Sub-Adviser shall consider all factors it deems relevant, including the breadth of the market in the security, the price of the security, the financial condition and execution capability of the broker or dealer, and the reasonableness of the commission, if any, both for the specific transaction and on a continuing basis. In evaluating the best overall terms available and in selecting the broker or dealer to execute a
particular transaction, the Sub-Adviser may also consider the brokerage and research services (as those terms are defined in Section 28(e) of the Securities Exchange Act of 1934) provided to the Portfolio and/or other account over which the Sub-Adviser and/or an affiliate of the Sub-Adviser exercises investment discretion. Brokers or dealers selected by the Sub-Adviser for the purchase and sale of securities or other investment instruments for the Sub-Advised Assets may include brokers or dealers affiliated with the Sub-Adviser, provided such orders comply with Rules 17e-1 and 10f-3 under the 1940 Act and the Funds Rule 17e-1 and Rule 10f-3 Procedures, respectively, in all respects or any other applicable exemptive rules or orders applicable to the Sub-Adviser. Notwithstanding the foregoing, the Sub-Adviser will not effect any transaction with a broker or dealer that is an affiliated person (as defined under the 1940 Act) of the Sub-Adviser or the Adviser without the prior approval of the Adviser. The Adviser shall provide the Sub-Adviser with a list of brokers or dealers that are affiliated persons of the Adviser.
(d) The Sub-Adviser acknowledges that the Adviser and the Fund may rely on Rules 17a-7, 17a-10, 10f-3 and 17e-1 under the 1940 Act, and the Sub-Adviser hereby agrees that it shall not consult with any other investment adviser to the Fund with respect to transactions in securities for the Sub-Advised Assets or any other transactions in the Funds assets, other than for the purposes of complying with the conditions of paragraphs (a) and (b) of Rule 12d3-1 under the 1940 Act.
(e) The Sub-Adviser has provided the Adviser with a true and complete copy of its compliance policies and procedures for compliance with Rule 206(4)-7 of the Advisers Act (the Sub-Adviser Compliance Policies). The Sub-Advisers chief compliance officer (Sub-Adviser CCO) shall provide to the Funds Chief Compliance Officer (Fund CCO) or his or her delegatee promptly (and in no event in more than 10 business days) the following:
(i) a report of any material changes to the Sub-Adviser Compliance Policies;
(ii) a report of any compliance matter about which the Adviser or the Funds Board of Directors would reasonably need to know to oversee Fund compliance, and that involves, without limitation: (A) a violation of the securities laws by the Sub-Adviser or any of its officers, directors, employees or agents; (B) a violation of the Policies or the Sub-Adviser Compliance Policies by the Sub-Adviser or any of its officers, directors, employees or agents; and/or (C) a weakness in the design or implementation of the Policies; and
(iii) an annual (or more frequently as the Fund CCO may request) certification regarding the Sub-Advisers compliance with Rule 206(4)-7 under the Advisers Act, the Policies and this Agreement .
(f) The Sub-Adviser may, on occasions when it deems the purchase or sale of a security to be in the best interests of the Portfolio as well as other fiduciary or agency accounts managed by the Sub-Adviser, aggregate, to the extent permitted by applicable laws and regulations, the securities to be sold or purchased in order to obtain the best overall terms available and execution with respect to common and preferred stocks and the best net price and execution with respect to other securities. In such event, allocation of the securities so purchased or sold, as well as the expenses incurred in the transaction, will be made by the Sub-Adviser in the manner it considers to be most fair and equitable over time to the Portfolio and to its other accounts.
(g) The Sub-Adviser, in connection with its rights and duties with respect to the Portfolio and the Fund shall use the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.
(h) The services of the Sub-Adviser hereunder are not deemed exclusive and the Sub-Adviser shall be free to render similar services to others (including other investment companies) so long as its services under this Agreement are not impaired thereby. The Sub-Adviser will waive enforcement of any non-compete agreement or other agreement or arrangement to which it is currently a party that restricts, limits, or otherwise interferes with the ability of the Adviser to employ or engage any person or entity to provide investment advisory or other services and will transmit to any person or entity notice of such waiver as may be required to give effect to this provision; and the Sub-Adviser will not become a party to any non-compete agreement or any other agreement, arrangement, or understanding that would restrict, limit, or otherwise interfere with the ability of the Adviser and the Fund or any of their affiliates to employ or engage any person or organization, now or in the future, to manage the Portfolio or any other assets managed by the Adviser.
(i) The Sub-Adviser shall furnish the Adviser and the administrator of the Fund (the Administrator) daily reports concerning portfolio transactions and holdings of the Sub-Advised Assets as the Adviser may reasonably determine in such form as may be mutually agreed upon, and agrees to review the Sub-Advised Assets with the Adviser and discuss the management of the Sub-Advised Assets. The Sub-Adviser shall promptly respond to requests by the Adviser, the Administrator, and the Fund CCO
or their delegates for copies of the pertinent books and records maintained by the Sub-Adviser relating directly to the Portfolio. The Sub-Adviser shall also provide the Adviser with such other information and reports, including information and reports related to compliance matters, as may reasonably be requested by it from time to time, including without limitation all material requested by or required to be delivered to the Board.
(j) Unless otherwise agreed, the Sub-Adviser shall have the power, discretion and responsibility to vote any proxies in connection with securities in which the Sub-Advised Assets may be invested.
(k) The Sub-Adviser shall cooperate promptly and fully with the Adviser and/or the Fund in responding to any regulatory or compliance examinations or inspections (including any information requests) relating to the Fund, the Portfolio or the Adviser brought by any governmental or regulatory authorities. The Sub-Adviser shall provide to the Fund CCO or his or her delegate notice of any deficiencies that are identified by the United States Securities and Exchange Commission (SEC) in written correspondence to the Sub-Adviser and that relate to the services provided by the Sub-Adviser to the Portfolio pursuant to this Agreement. The Sub-Adviser shall provide such notification within a reasonable period after receiving the correspondence. The Sub-Adviser shall provide additional information with respect to such deficiencies as is reasonably requested by the Fund CCO or his or her delegatee.
(l) The Sub-Adviser shall be responsible for the preparation and filing of Schedule 13G and Form 13F on behalf of the Sub-Advised Assets. The Sub-Adviser shall not be responsible for the preparation or filing of any other reports required on behalf of the Sub-Advised Assets, except as may be expressly agreed to in writing.
(m) The Sub-Adviser shall maintain all books and records with respect to the Sub-Advised Assets as are required of an investment adviser of a registered investment company pursuant to the 1940 Act and the rules thereunder. Any records required to be maintained and preserved pursuant to the provisions of Rule 31a-1 and Rule 31a-2 promulgated under the 1940 Act that are prepared or maintained by the Sub-Adviser on behalf of the Fund are the property of the Fund and will be surrendered promptly to the Fund upon request. The Sub-Adviser further agrees to preserve for the periods prescribed in Rule 31a-2 under the 1940 Act the records required to be maintained under Rule 31a-1 under the 1940 Act.
(n) The Sub-Adviser shall promptly notify the Adviser of any financial condition that is likely to impair the Sub-Advisers ability to fulfill its commitments under this Agreement.
2. Representations and Warranties of the Parties .
(a) The Sub-Adviser represents and warrants to the Adviser as follows:
(i) The Sub-Adviser is a registered investment adviser under the Advisers Act;
(ii) The Form ADV that the Sub-Adviser has previously provided to the Adviser is a true and complete copy of the form as currently filed with the SEC, and the information contained therein is accurate and complete in all material respects and does not omit to state any material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading. The Sub-Adviser will promptly provide the Adviser and the Fund with a complete copy of all subsequent amendments to its Form ADV;
(iii) The Sub-Adviser will carry at all times professional errors and omissions liability insurance covering services provided hereunder by the Sub-Adviser in an appropriate amount, which insurance shall be primary to any insurance policy carried by the Adviser;
(iv) Upon request, the Sub-Adviser will furnish the Adviser with certificates of insurance in forms and substance reasonably acceptable to the Adviser evidencing the coverages specified in paragraph 2(a)(iii) hereof and will provide notice of termination of such coverages, if any, to the Adviser and the Fund, all as promptly as reasonably possible. The Sub-Adviser will notify the Adviser promptly, and in any event within 10 business days, when the Sub-Adviser receives notice of any termination of the specified coverage; and
(v) This Agreement has been duly authorized and executed by the Sub-Adviser.
(b) The Adviser represents and warrants to the Sub-Adviser as follows:
(i) The Adviser is registered under the Advisers Act;
(ii) The Adviser and the Fund have obtained approval of this Agreement from the shareholders of the Fund or are exempt from the requirement to obtain such approval, and
(iii) Each of the Adviser and the Fund has duly authorized the execution of this Agreement by the Adviser.
3. Obligations of the Adviser .
(a) The Adviser shall provide (or cause the Portfolios Custodian (as defined in Section 3 hereof) to provide) timely information to the Sub-Adviser regarding such matters as the composition of the Sub-Advised Assets, cash requirements and cash available for investment in the Sub-Advised Assets, and all other information as may be reasonably necessary for the Sub-Adviser to perform its responsibilities hereunder.
(b) The Adviser has furnished the Sub-Adviser with a copy of the prospectus and statement of additional information of the Portfolio and the Adviser agrees during the continuance of this Agreement to furnish the Sub-Adviser copies of any revisions or supplements thereto at, or, if practicable, before the time the revisions or supplements become effective. The Adviser agrees to furnish the Sub-Adviser with copies of any financial statements or reports made by the Portfolio to its shareholders, and any further materials or information that the Sub-Adviser may reasonably request to enable it to perform its functions under this Agreement.
4. Custodian . The Adviser shall provide the Sub-Adviser with a copy of the Portfolios agreement with any custodian designated to hold the assets of the Portfolio (the Custodian) and any material modifications thereto (the Custody Agreement) that may affect the Sub-Advisers duties, copies of such modifications to be provided to the Sub-Adviser reasonably in advance of the effectiveness of such modifications. The Sub-Advised Assets shall be maintained in the custody of the Custodian identified in, and in accordance with the terms and conditions of, the Custody Agreement (or any sub-custodian properly appointed as provided in the Custody Agreement). The Sub-Adviser shall have no liability for the acts or omissions of the Custodian, unless such act or omission is taken solely in reliance upon instruction given to the Custodian by a representative of the Sub-Adviser properly authorized to give such instruction under the Custody Agreement. Any assets added to the Portfolio shall be delivered directly to the Custodian.
5. Use of Name . During the term of this Agreement, the Adviser shall have permission to use the Sub-Advisers name in the marketing of the Portfolio, and agrees to furnish the Sub-Adviser, for its prior approval (which approval shall not be unreasonably withheld) at its principal office all prospectuses, proxy statements and reports to shareholders prepared for distribution to shareholders of the Portfolio or the public that refer to the Sub-Adviser in any way. If the Adviser does not receive a response from the Sub-Adviser with respect to such materials within five business days of its submission for approval, such materials shall be deemed accepted by the Sub-Adviser. The Sub-Adviser agrees that Adviser may request that the Sub-Adviser approve use of a certain type, and that Adviser need not provide for approval each additional piece of marketing material that is of substantially the same type.
During the term of this Agreement, the Sub-Adviser shall not use the Funds name without the prior consent of the Fund.
6. Expenses . During the Term of this Agreement, the Sub-Adviser will pay all expenses incurred by it in connection with the performance of its duties under paragraph 1 hereof other than the cost (including taxes, brokerage commissions and other transaction costs, if any) of the securities or other investment instruments purchased or sold for the Portfolio.
7. Compensation of the Sub-Adviser . As full compensation for all services rendered, facilities furnished and expenses borne by the Sub-Adviser hereunder, the Sub-Adviser shall be paid the fees in the amounts and in the manner set forth in Appendix A hereto.
8. Independent Contractor Status . The Sub-Adviser shall for all purposes hereof be deemed to be an independent contractor and shall, unless otherwise provided or authorized, have no authority to act for or represent the Fund or the Adviser in any way or otherwise be deemed an agent of the Portfolio or the Adviser.
9. Liability and Indemnification .
(a) Liability . The duties of the Sub-Adviser shall be confined to those expressly set forth herein with respect to the Sub-Advised Assets. The Sub-Adviser shall not be liable for any loss arising out of any portfolio investment or disposition hereunder, except a loss resulting from willful misfeasance, bad faith or gross negligence in the performance of its duties, or by reason of reckless disregard of its obligations and duties hereunder. Under no circumstances shall the Sub-Adviser be liable for any loss arising out of any act or omission taken by another sub-adviser, or any other third party, in respect of any portion of the Funds assets not managed by the Sub-Adviser pursuant to this Agreement.
(b) Indemnification .
(i) The Sub-Adviser shall indemnify the Adviser, the Fund and the Portfolio, and their respective affiliates and controlling persons, directors, officers and employees (the Adviser Indemnified Persons) for any liability and expenses, including reasonable attorneys fees, which the Adviser Indemnified Persons may sustain as a result of the Sub-Advisers breach of this Agreement or its representations and warranties herein or as a result of the Sub-Advisers willful misfeasance, bad faith, gross negligence, or reckless disregard of its duties hereunder or violation of applicable law; provided, however, that the Adviser Indemnified Persons shall not be indemnified for any liability or expenses that may be sustained as a result of the Advisers willful misfeasance, bad faith, gross negligence, or reckless disregard of its duties hereunder.
(ii) The Adviser shall indemnify the Sub-Adviser, its affiliates and its controlling persons, directors, officers and employees (the Sub-Adviser Indemnified Persons) for any liability and expenses, including reasonable attorneys fees, arising from, or in connection with, the Advisers breach of this Agreement or its representations and warranties herein or as a result of the Advisers willful misfeasance, bad faith, gross negligence, reckless disregard of its duties hereunder or violation of applicable law; provided, however, that the Sub-Adviser Indemnified Persons shall not be indemnified for any liability or expenses that may be sustained as a result of the Sub-Advisers willful misfeasance, bad faith, gross negligence, or reckless disregard of its duties hereunder.
10. Effective Date and Termination . This Agreement shall become effective as of the date of its execution, and:
(a) unless otherwise terminated, this Agreement shall continue in effect until August 16, 2013, and from year to year thereafter so long as such continuance is specifically approved at least annually (i) by the Board or by vote of a majority of the outstanding voting securities of the Portfolio, and (ii) by vote of a majority of the Directors of the Fund who are not interested persons of the Fund, the Adviser or the Sub-Adviser, cast in person at a meeting called for the purpose of voting on such approval;
(b) this Agreement may at any time be terminated on 60 days written notice to the Sub-Adviser either by vote of the Board or by vote of a majority of the outstanding voting securities of the Portfolio;
(c) this Agreement shall automatically terminate in the event of its assignment or upon the termination of the Advisory Agreement; and
(d) this Agreement may be terminated by the Sub-Adviser on 60 days written notice to the Adviser and the Fund, or by the Adviser immediately upon notice to the Sub-Adviser.
Termination of this Agreement pursuant to this Section 10 shall be without the payment of any penalty. All accrued and unpaid management fees shall be due and payable to the Sub-Adviser upon the termination date. As of the termination date, all assets in the Portfolio shall be the sole and exclusive responsibility of the Adviser and the Sub-Adviser shall have no further responsibilities other than to assist in an orderly transition of the management of the Portfolio to the Adviser.
11. Amendment . This Agreement may be amended at any time by mutual consent of the Adviser and the Sub-Adviser, provided that, if required by law, such amendment shall also have been approved by vote of a majority of the outstanding voting securities of the Portfolio and by vote of a majority of the Directors of the Fund who are not interested
persons of the Fund, the Adviser, or the Sub-Adviser, cast in person at a meeting called for the purpose of voting on such approval.
12. Assignment . The Sub-Adviser may not assign this Agreement and this Agreement shall automatically terminate in the event of an assignment, as such term is defined in Section 2(a)(4) of the 1940 Act. The Sub-Adviser shall notify the Adviser in writing sufficiently in advance of any proposed change of control, as defined in Section 2(a)(9) of the 1940 Act, so as to enable the Fund and/or the Adviser to: (a) consider whether an assignment will occur, (b) consider whether to enter into a new Sub-Advisory Agreement with the Sub-Adviser, and (c) prepare, file, and deliver any disclosure document to the Portfolios shareholders as may be required by applicable law.
13. Miscellaneous . The captions in this Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be construed in accordance with applicable federal law and the laws of the State of Delaware and shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors (subject to paragraph 10 (c) hereof) and, to the extent provided in paragraph 9 hereof, each Sub-Adviser Indemnified Person and Adviser Indemnified Person. Anything herein to the contrary notwithstanding, this Agreement shall not be construed to require, or to impose any duty upon, either of the parties to do anything in violation of any applicable laws or regulations. Any provision in this Agreement requiring compliance with any statute or regulation shall mean such statute or regulation as amended and in effect from time to time.
14. Regulation S-P . In accordance with Regulation S-P, if non-public personal information regarding any partys customers or consumers is disclosed to the other party in connection with this Agreement, the other party receiving such information will not disclose or use that information other than as necessary to carry out the purposes of this Agreement.
15. Confidentiality . Any information or recommendations supplied by either the Adviser or the Sub-Adviser, that are not otherwise in the public domain or previously known to the other party in connection with the performance of its obligations and duties hereunder, including without limitation portfolio holdings of the Fund, financial information or other information relating to a party to this Agreement, are to be regarded as confidential (Confidential Information) and held in the strictest confidence. Except as may be required by applicable law or rule as requested by regulatory authorities having jurisdiction over a party to this Agreement, Confidential Information may be used only by the party to which said information has been communicated and such other persons as that party believes are necessary to carry out the purposes of this Agreement, the Custodian, and such persons as the Adviser may designate in connection with the Sub-Advised Assets.
16. Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
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SIMPLE ALTERNATIVES, LLC |
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By: |
/s/ James K. Dilworth |
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Name: James K. Dilworth |
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Title: President & Chief Executive Officer |
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Maerisland Capital, LLC |
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By: |
/s/ Christopher Ainsworth |
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Name: Christopher Ainsworth |
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Title: Chief Operations Officer & Chief Financial Officer |
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Exhibit (e)(16)
The RBB Fund, Inc.
Distribution Agreement
Effective as of the closing of the sale of BNY Mellon Distributors LLC to Foreside Distributors, LLC by The Bank of New York Mellon Corporation, The RBB Fund, Inc. (the Fund Company), on behalf of each series thereof (each a Fund and collectively, the Funds) and Foreside Funds Distributors, LLC (formerly known as BNY Mellon Distributors LLC) (the Distributor) hereby enter into this Distribution Agreement on terms identical to those of the distribution agreement between the parties effective as of July 1, 2010, as amended (the Existing Agreement) except as noted below. Capitalized terms used herein without definition have the meanings given them in the Existing Agreement.
Unless sooner terminated as provided herein, this agreement shall continue for an initial two-year term and thereafter shall be renewed for successive one-year terms, provided such continuance is specifically approved at least annually by (i) the Funds board of trustees or (ii) by a vote of a majority (as defined in the Investment Company Act of 1940 Act, as amended (1940 Act) and Rule 18f-2 thereunder) of the outstanding voting securities of the Funds, provided that in either event the continuance is also approved by a majority of the trustees who are not parties to this agreement and who are not interested persons (as defined in the 1940 Act) of any party to this agreement, by vote cast in person at a meeting called for the purpose of voting on such approval. This agreement is terminable without penalty, on at least sixty (60) days written notice, by the Funds board of trustees, by vote of a majority (as defined in the 1940 Act and Rule 18f-2 thereunder) of the outstanding voting securities of the Funds, or by Distributor. This agreement may be terminated with respect to one or more Funds, or with respect to the entire Fund Company. This agreement will also terminate automatically in the event of its assignment (as defined in the 1940 Act and the rules thereunder).
IN WITNESS WHEREOF, the parties hereto have caused this Distribution Agreement to be executed as of the day and year first above written.
The RBB Fund, Inc. |
Foreside Funds Distributors LLC |
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By: |
/s/ Salvatore Faia |
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By: |
/s/ John Fulgoney |
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Name: |
Salvatore Faia |
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Name: |
John Fulgoney |
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Title: |
President |
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President |
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Date: |
March 30, 2012 |
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Date: |
March 23, 2012 |
Exhibit (h)(40)
DELEGATION AGREEMENT
(Administration and Accounting Services - Money Market Portfolio)
This AGREEMENT is made as of December 15, 2006 between and among THE RBB FUND, INC. (the Company), a Maryland corporation, and PFPC INC. (PFPC), a Massachusetts corporation which is an indirect wholly-owned subsidiary of THE PNC FINANCIAL SERVICES GROUP, INC., and BLACKROCK INSTITUTIONAL MANAGEMENT CORPORATION (BIMC), a Delaware corporation.
W I T N E S S E T H:
WHEREAS, the Company is registered as an open-end investment company under the Investment Company Act of 1940, as amended (the 1940 Act); and
WHEREAS, BIMC and the Company have entered into an Investment Advisory and Administration Agreement (the Advisory Agreement) with respect to the Companys Money Market Portfolio (the Portfolio);
WHEREAS, pursuant to Section 13 of the Advisory Agreement, BIMC is permitted to delegate certain administrative duties set forth in Section 5 of the Advisory Agreement to any wholly-owned direct or indirect subsidiary of The PNC Financial Services Group, Inc.; and
WHEREAS, BIMC and the Company desire that PFPC perform the administrative duties set forth in this Agreement with respect to the Portfolio and PFPC wishes to furnish such services.
NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, and intending to be legally bound hereby, the parties agree as follows:
1. Definitions .
(a) Authorized Person . The term Authorized Person shall mean any officer of the Company and any other person, who is duly authorized by the Companys Governing Board, to give Oral or Written Instructions on behalf of the Company. Such persons are listed in the Certificate attached hereto as the Authorized Persons Appendix or such other document or Board resolution as approved by the Companys Governing Board from time to time. If PFPC provides more than one service hereunder, the Companys designation of Authorized Persons may vary by service.
(b) Book-Entry System . The term Book-Entry System means Federal Reserve Treasury book-entry system for United States and federal agency securities, its successor or successors, and its nominee or nominees and any book-entry system maintained by an exchange registered with the SEC under the 1934 Act.
(c) Governing Board . The term Governing Board shall mean the Companys Board of Directors if the Company is a corporation or the Companys Board of Trustees if the Company is a trust, or, where duly authorized, a competent committee thereof.
(d) Oral Instructions . The term Oral Instructions shall mean oral instructions received by PFPC from an Authorized Person or from a person reasonably believed by PFPC to be an Authorized Person.
(e) SEC . The term SEC shall mean the Securities and Exchange Commission.
(f) Securities and Commodities Laws . The terms the 1933 Act shall mean the Securities Act of 1933, as amended, the 1934 Act shall mean the Securities Exchange Act of 1934, as amended, and the CEA shall mean the Commodities Exchange Act, as amended.
(g) Services . The term Services shall mean the services required to be and provided to the Portfolio by PFPC.
(h) Shares . The terms Shares shall mean the shares of stock of the Portfolio, or, where appropriate, units of beneficial interest in the Portfolio.
(i) Written Instructions . The term Written Instructions shall mean (i) written instructions signed by two Authorized Persons and received by PFPC or (ii) trade instructions transmitted (and received by PFPC) by means of an electronic transaction reporting system access to which requires use of a password or other authorized identifier. The instructions may be delivered electronically (with respect to sub-item (ii) above) or by hand, mail, tested telegram, cable, telex or facsimile sending device.
2. Appointment .
The Company and BIMC hereby appoint PFPC to provide administration and accounting services to the Portfolio, in accordance with the terms set forth in this Agreement. PFPC accepts such appointment and agrees to furnish such services.
3. Compliance with Government Rules and Regulations .
PFPC undertakes to comply with all applicable requirements of the 1933 Act, the 1934 Act, the 1940 Act, and the CEA, and any laws, rules and regulations of governmental authorities having jurisdiction with respect to all duties to be performed by PFPC hereunder. Except as specifically set forth herein, PFPC assumes no responsibility for such compliance by the Company or any other entity.
4. Instructions .
Unless otherwise provided in this Agreement, PFPC shall act only upon Oral or Written Instructions.
PFPC shall be entitled to rely upon any Oral or Written Instructions it receives from an Authorized Person (or from a person reasonably believed by PFPC to be an Authorized Person) pursuant to this Agreement. PFPC may assume that any Oral or Written Instruction received hereunder is not in any way inconsistent with the provisions of organizational documents or this Agreement or of any vote, resolution or proceeding of the Companys Governing Board or of the Companys shareholders.
The Company agrees to forward to PFPC Written Instructions confirming Oral Instructions (except where such Oral Instructions are given by PFPC or its affiliates) so that PFPC receives the Written Instructions by the close of business on the same day that such Oral Instructions are received. The fact that such confirming Written Instructions are not received by PFPC shall in no way invalidate the transactions or enforceability of the transactions authorized by the Oral Instructions. The Company further agrees that PFPC shall incur no liability to the
Company in acting upon Oral or Written Instructions provided such instructions reasonably appear to have been received from an Authorized Person.
5. Right to Receive Advice .
(a) Advice of the Company . If PFPC is in doubt as to any action it should or should not take, PFPC may request directions or advice, including Oral or Written Instructions, from the Company.
(b) Advice of Counsel . If PFPC shall be in doubt as to any questions of law pertaining to any action it should or should not take, PFPC may request advice at its own cost from such counsel of its own choosing (who may be counsel for the Company, the Companys advisor or PFPC, at the option of PFPC).
(c) Conflicting Advice . In the event of a conflict between directions, advice or Oral or Written Instructions PFPC receives from the Company, and the advice it receives from counsel, PFPC shall be entitled to rely upon and follow the advice of counsel.
(d) Protection of PFPC . PFPC shall be protected in any action it takes or does not take in reliance upon directions, advice or Oral or Written Instructions it receives from the Company or from counsel and which PFPC believes, in good faith, to be consistent with those directions, advice and Oral or Written Instructions. Nothing in this paragraph shall excuse PFPC when an action or inaction on its part constitutes willful misfeasance, bad faith, gross negligence or reckless disregard of its duties and obligations under this Agreement.
Nothing in this paragraph shall be construed so as to impose an obligation upon PFPC (i) to seek such directions, advice or Oral or Written Instructions, or (ii) to act in accordance with such directions, advice or Oral or Written Instructions unless, under the terms of other provisions of this Agreement, the same is a condition of PFPCs properly taking or not taking such action.
6. Records .
The books and records pertaining to the Portfolio, which are in the possession of PFPC, shall be the property of the Company. Such books and records shall be prepared and maintained as required by the 1940 Act and other applicable securities laws, rules and regulations. The Company, or Authorized Persons, shall have access to such books and records at all times during PFPCs normal business hours. Upon the reasonable request of the Company, copies of
any such books and records shall be provided by PFPC to the Company or to an Authorized Person at the Portfolios expense.
PFPC shall keep the following records:
(a) all books and records with respect to the Portfolios books of account;
(b) records of the Portfolios securities transactions;
(c) all other books and records required to be maintained by PFPC pursuant to Rule 31a-1 of the 1940 Act in connection with the Services.
7. Confidentiality .
PFPC agrees to keep confidential all records of the Portfolio and information relative to the Portfolio and its shareholders (past, present and potential), unless the release of such records or information is otherwise consented to, in writing, by the Company. The Company agrees that such consent shall not be unreasonably withheld. The Company further agrees that, should PFPC be required to provide such information or records to duly constituted authorities (who may institute civil or criminal contempt proceedings for failure to comply) , PFPC shall not be required to seek the Companys consent prior to disclosing such information.
8. Liaison with Accountants .
PFPC shall act as liaison with the Companys independent registered public accounting firm and shall provide account analyses, fiscal year summaries, and other audit-related schedules. PFPC shall take all reasonable action in the performance of its obligations under this Agreement to assure that the necessary information is made available to such firm for the expression of its opinion, as such may be required by the Company from time to time.
9. Disaster Recovery .
PFPC shall enter into and shall maintain in effect with appropriate parties one or more agreements making reasonable provision of emergency use of electronic data processing equipment to the extent appropriate equipment is available. In the event of equipment failures, PFPC shall, at no additional expense to the Company, take reasonable steps to minimize service interruptions but shall have no liability with respect thereto unless such failures result from PFPCs own willful misfeasance, bad faith, gross negligence or reckless disregard of its duties and obligations under this Agreement.
10. Compensation .
a) As compensation for services rendered by PFPC during the term of this Agreement, BIMC will pay to PFPC a fee or fees as may be agreed to in writing by the Company, BIMC and PFPC.
b) The Company hereby represents and warrants that this Agreement shall be provided to its Governing Board and that, if required by applicable law, such Governing Board has approved or will approve the terms of this Agreement.
11. Indemnification.
The Company, on behalf of the Portfolio, agrees to indemnify and hold harmless PFPC and its nominees from all taxes, charges, expenses, assessments, claims and liabilities (including, without limitation, liabilities arising under the 1933 Act, the 1934 Act, the 1940 Act, the CEA, and any state and foreign securities and blue sky laws, and amendments thereto, and including (without limitation) attorneys fees and disbursements), arising directly or indirectly from any action which PFPC takes or does not take (i) at the request or on the direction of or in reliance on the advice of the Company or (ii) upon Oral or Written Instructions. Neither PFPC, nor any of its nominees, shall be indemnified against any liability (or any expenses incident to such
liability) arising out of PFPCs own willful misfeasance, bad faith, gross negligence or reckless disregard of its duties and obligations under this Agreement. Any amounts payable by the Company hereunder shall be satisfied only against the Portfolios assets and not against the assets of any other investment portfolio of the Company.
12. Responsibility of PFPC .
PFPC shall be under no duty to take any action on behalf of the Company or BIMC except as specifically set forth herein or as may be specifically agreed to by PFPC, in writing. PFPC shall be obligated to exercise care and diligence in the performance of its duties hereunder, to act in good faith and to use its best efforts within reasonable limits in performing services provided for under this Agreement. PFPC shall be responsible for failure to perform its duties under this Agreement arising out of PFPCs willful misfeasance, bad faith, gross negligence or reckless disregard of its duties and obligations under this Agreement. Notwithstanding the foregoing, PFPC shall not be responsible for losses beyond its control, provided that PFPC has acted in accordance with the standard of care set forth above; and PFPC shall only be responsible for that portion of losses or damages suffered by BIMC or the Company that are attributable to PFPCs failure to act in accordance with the standard of care stated in the preceding sentence.
Without limiting the generality of the foregoing or of any other provision of this Agreement, PFPC, in connection with its duties under this Agreement, shall not be liable for (a) the validity or invalidity or authority or lack thereof of any Oral or Written Instruction, notice or other instrument which conforms to the applicable requirements of this Agreement, and which PFPC reasonably believes to be genuine; or (b) delays or errors or loss of data occurring by reason of circumstances beyond PFPCs control, including acts of civil or military authority, national emergencies, labor difficulties, fire, flood or catastrophe, acts of God, insurrection, war, riots or failure of the mails, transportation, communication or power supply.
Notwithstanding anything in this Agreement to the contrary, PFPC shall have no liability to BIMC or the Company for any consequential, special or indirect losses or damages which BIMC or the Company may incur or suffer by or as a consequence of PFPCs performance of the services provided hereunder, whether or not the likelihood of such losses or damages was known by PFPC.
13. Description of Administration and Accounting Services .
(a) Services on a Continuing Basis. PFPC will perform the following accounting functions with respect to the Portfolio:
(i) Journalize the Portfolios investment, capital share and income and expense activities;
(ii) Verify investment buy/sell trade tickets and transmit trades to the Companys custodian for proper settlement;
(iii) Maintain individual ledgers for investment securities;
(iv) Maintain historical tax lots for each security;
(v) Reconcile cash and investment balances of the Portfolio with the custodian, and prepare the beginning cash balance available for investment purposes;
(vi) Update the cash availability throughout the day as required;
(vii) Post to and prepare the Portfolios Statement of Assets and Liabilities and the Statement of Operations;
(viii) Calculate various contractual expenses ( e.g. , advisory/administration and custody fees);
(ix) Monitor the expense accruals and notify management of the Company of any proposed adjustments;
(x) Control all disbursements from the Portfolio and authorize such disbursements upon Written Instructions;
(xi) Calculate capital gains and losses;
(xii) Determine net income;
(xiii) Obtain security market quotes from independent pricing sources approved by the management of the Company, or if such quotes are unavailable, then obtain such prices from the management of the Company, and in either case calculate the market value of the Portfolios investments;
(xiv) Transmit or mail a copy of the daily portfolio valuation to the advisor;
(xv) Compute the net asset value of the Portfolio;
(xvi) As appropriate, compute the yields, total return, expense ratios, portfolio turnover rate, and, if required, portfolio average dollar-weighted maturity; and
(xvii) Provide general ledger information and Portfolio holdings to BIMC upon request.
(b) Services on a Continuing Basis. PFPC will provide the following administration functions with respect to the Portfolio:
(i) Prepare quarterly broker security transactions summaries;
(ii) Supply various normal and customary Portfolio statistical data as requested on an ongoing basis;
(iii) Prepare monthly security transaction listings;
(iv) Prepare for execution and file the Portfolios Federal and state tax returns;
(v) Prepare and file the Companys Semi-Annual Reports with the SEC on Form N-SAR (to the extent the same relates to the Portfolio) and prepare and file the Companys Rule 24F-2 Notice and Form N-PX with the SEC (to the extent the same relates to the Portfolio);
(vi) Prepare and file with the SEC the Companys annual, semi-annual and quarterly Shareholder reports on Form N-CSR and Form N-Q (to the extent the same relates to the Portfolio);
(vii) Assist with the preparation of registration statements on Form N-1A and other filings relating to the federal registration of Shares;
(viii) Monitor the Portfolios status as a regulated investment company under Sub-chapter M of the Internal Revenue Code of 1986, as amended;
(ix) Coordinate contractual relationships and communications between the Portfolio and its contractual service providers;
(x) Qualify the Portfolios Shares for sale in each state in which the Companys Governing Board determines to sell the Portfolios Shares and make all blue sky filings and take all appropriate actions necessary to maintain and renew the blue sky registration of the Portfolios Shares in such states (in connection with blue sky filings, the Company hereby grants PFPC a limited power of
attorney on behalf of the Company to sign all blue sky filings and other related documents in order to effect such filings);
(xi) Monitor the Portfolios compliance with the amounts and conditions of each state blue sky qualification for states referenced in the preceding sub-section (x); and
(xii) Maintain the Companys fidelity bond (to the extent the same relates to the Portfolio) as required by the 1940 Act and obtain a directors and officers liability policy.
14. Duration and Termination .
Subject to the next succeeding sentence, this Agreement shall continue until terminated by the Company, on behalf of the Portfolio, on sixty (60) days prior written notice to the other parties; or by PFPC or BIMC on ninety (90) days prior written notice to the other parties. This Agreement shall automatically terminate upon termination of the Advisory Agreement.
15. Notices .
If notice is sent by confirming telegram, cable, telex or facsimile sending device, it shall be deemed to have been given immediately. If notice is sent by first-class mail, it shall be deemed to have been given three days after it has been mailed. If notice is sent by messenger, it shall be deemed to have been given on the day it is delivered. Notices shall be addressed (a) if to PFPC at PFPCs address, 301 Bellevue Parkway, Wilmington, Delaware 19809; (b) if to the Company, at the address of the Company; (c) if to BIMC to 40 East 52 nd Street, New York,New York 10022,Attn: Robert Connolly, or (d) if to none of the foregoing, at such other address as shall have been notified to the sender of any such notice or other communication.
16. Amendments .
This Agreement, or any term thereof, may be changed or waived only by written amendment, signed by the party against whom enforcement of such change or waiver is sought.
17. Delegation .
PFPC may delegate its duties hereunder to any wholly-owned direct or indirect subsidiary of The PNC Financial Services Group, Inc., provided that (i) PFPC gives the Company and
BIMC thirty (30) days prior written notice; (ii) the delegate agrees with PFPC, the Company and BIMC to comply with all relevant provisions of the 1940 Act; and (iii) PFPC and such delegate promptly provide such information as the Company and BIMC may request, and respond to such questions as the Company and BIMC may ask, relative to the delegation, including (without limitation) the capabilities of the delegate.
Notwithstanding a delegation under this Section, PFPC shall remain responsible for the performance of its duties set forth herein and shall hold the Portfolio harmless from the acts and omissions, under the standards of care provided for herein, of any delegate chosen pursuant to this Section.
18. Counterparts .
This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
19. Further Actions .
Each party agrees to perform such further acts and execute such further documents as are necessary to effectuate the purposes hereof.
20. Miscellaneous .
This Agreement embodies the entire agreement and understanding among the parties and supersedes all prior agreements and understandings relating to the subject matter hereof, provided that the parties may embody in one or more separate documents their agreement, if any, with respect to delegated duties and/or Oral Instructions.
The captions in this Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect.
This Agreement shall be deemed to be a contract made in Delaware and governed by Delaware law. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected
thereby. This Agreement shall be binding and shall inure to the benefit of the parties hereto and their respective successors.
The services of PFPC are not, nor shall they be construed as constituting, legal advice or the provision of legal services for or on behalf of the Company or any other person.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers designated below on the day and year first above written.
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PFPC INC. |
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By: |
/s/ Jay F. Nusblatt |
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Senior Vice President |
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THE RBB FUND, INC. |
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By: |
/s/ Edward J. Roach |
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President |
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BLACKROCK INSTITUTIONAL MANAGEMENT CORPORATION |
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/s/ Paul L. Audet |
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Title: |
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December 15, 2006
The RBB Fund, Inc.
Re: DELEGATION AGREEMENT - ADMINISTRATION AND ACCOUNTING SERVICES FEES - Money Market Portfolio
Madam/Sir:
This letter constitutes our agreement with respect to compensation to be paid to PFPC Inc. (PFPC) under the terms of a Delegation Agreement dated as of December 15, 2006 (the Delegation Agreement) among PFPC, The RBB Fund, Inc. (the Company) and BlackRock Institutional Management Corporation (BIMC), with respect to the Companys Money Market Portfolio (the Portfolio). In consideration of the services to be provided by PFPC, BIMC will pay directly to PFPC from its advisory and administration fee an annual administration and accounting fee as set forth below, to be calculated daily. The Company on behalf of the Portfolio will reimburse PFPC for all out-of-pocket expenses incurred by PFPC on behalf of the Portfolio, including, but not limited to, postage and handling, telephone, telex, Federal Express and outside pricing service charges.
The annual administration and accounting fee shall be 0.10% of the Portfolios average daily net assets, exclusive of out-of-pocket expenses.
The fee for the period from the date hereof until the end of that calendar year shall be pro-rated according to the proportion which such period bears to the full annual period commencing on the date hereof.
If the foregoing accurately sets forth our agreement, and you intend to be legally bound thereby, please execute a copy of this letter and return it to us.
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PFPC INC. |
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/s/ Jay F. Nusblatt |
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Title: Senior Vice President |
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THE RBB FUND, INC. |
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/s/ Edward J. Roach |
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Title: President |
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Accepted: |
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BLACKROCK INSTITUTIONAL MANAGEMENT CORPORATION |
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/s/ Paul L. Audet |
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Title: |
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Exhibit (h)(58)
AMENDMENT TO DELEGATION AGREEMENT
WHEREAS, BlackRock Institutional Management Corporation (BIMC), The RBB Fund, Inc. (the Company) and BNY Mellon Investment Servicing (US) Inc. (formerly PFPC Inc.) (BNYM), are parties to a Delegation Agreement, dated as of December 15, 2006 (the Agreement), pursuant to which BNYM provides certain administration and accounting services with respect to the Money Market Portfolio of the Company (the Portfolio);
WHEREAS, in connection with the liquidation of BIMC, effective July 1, 2011, the management and administrative functions of BIMC with respect to the Portfolio were transferred to BlackRock Advisors, LLC (BlackRock);
NOW, THEREFORE, the Company, BlackRock and BNYM hereby agree that effective July 1, 2011, BlackRock assumed all of the rights, responsibilities, obligations and liabilities of BIMC relating to the Agreement, including all attachments, amendments, addendums, fee letters, exhibits or schedules relating thereto, regardless of when the same accrued or were incurred. For clarity, the transfer of functions referenced above (and items related thereto) shall not be considered a termination of the Advisory Agreement (as defined in the Agreement) for purposes of the last sentence of Section 14 of the Agreement.
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BLACKROCK ADVISORS, LLC |
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/s/ Neal J. Andrews |
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Neal J. Andrews, Managing Director |
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THE RBB FUND, INC. |
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By: |
/s/ Salvatore Faia |
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Salvatore Faia, President |
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BNY MELLON INVESTMENT SERVICING (US) INC. |
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/s/ Jay F. Nusblatt |
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Jay F. Nusblatt, Managing Director |
Exhibit (h)(59)
TRANSFER AGENCY AGREEMENT SUPPLEMENT
(Robeco Boston Partners Global Value Equity Fund of The RBB Fund, Inc.)
(Robeco Boston Partners International Value Equity Fund of The RBB Fund, Inc.)
This supplemental agreement, dated November 18, 2011 by and between THE RBB FUND, INC. (the Fund) and BNY MELLON INVESTMENT SERVICING (US) INC., a Massachusetts corporation (Transfer Agent).
The Fund is a corporation organized under the laws of the State of Maryland and is an open-end management investment company. The Fund and the Transfer Agent have entered into a Transfer Agency Agreement, dated as of November 5, 1991 (as from time to time amended and supplemented, the Transfer Agency Agreement), pursuant to which the Transfer Agent has undertaken to act as transfer agent, registrar and dividend disbursing agent for the Fund with respect to the portfolios of the Fund, as more fully set forth therein. Certain capitalized terms used without definition in this supplemental agreement have the meaning specified in the Transfer Agency Agreement.
The Fund agrees with the Transfer Agent as follows:
1. Adoption of Transfer Agency Agreement . The Transfer Agency Agreement is hereby adopted for Summit Global Investments U.S. Low Volatility Equity Fund (the Portfolio).
2. Compensation . As compensation for the services rendered by the Transfer Agent during the term of the Transfer Agency Agreement, the Fund will pay to the Transfer Agent, with respect to the Portfolio, such fees and expenses as shall be agreed to from time to time by the Fund and the Transfer Agent.
3. Counterparts . This supplemental agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
[Signature page follows.]
IN WITNESS WHEREOF, the undersigned have entered into this supplemental agreement, intending to be legally bound hereby, as of the date and year first above written.
THE RBB FUND, INC. |
BNY MELLON INVESTMENT SERVICING (US) INC. |
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By: |
/s/ Salvatore Faia |
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By: |
/s/ Michael DeNofrio |
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Name: |
Salvatore Faia, JD, CPA, CFE |
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Name: |
Michael DeNofrio |
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Title: |
President |
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Managing Director |
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December 21, 2011 |
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Exhibit (h)(60)
AMENDED AND RESTATED SCHEDULE A
THIS AMENDED AND RESTATED SCHEDULE A effective as of November 18, 2011 is the Schedule A to that certain Regulatory Administration Services Agreement dated as of June 1, 2003 between BNY Mellon Investment Servicing (US) Inc. and The RBB Fund, Inc.
List of Portfolios
Money Market Portfolio
Bogle Investment Management Small Cap Growth Fund
Robeco Boston Partners All-Cap Fund
Robeco Boston Partners Small Cap Value II Fund
Robeco Boston Partners Long/Short Equity Fund
Robeco WPG Small/Micro Cap Value Fund
Schneider Small Cap Value Fund
Schneider Value Fund
Bear Stearns CUFS MLP Mortgage Portfolio
Marvin & Palmer Large Cap Growth Fund
Free Market U.S. Equity Fund
Free Market International Equity Fund
Free Market Fixed Income Fund
Perimeter Small Cap Growth Fund
S1 Fund
Robeco Boston Partners Long/Short Research Fund
Robeco Boston Partners Global Value Equity Fund
Robeco Boston Partners International Value Equity Fund
IN WITNESS WHEREOF, the parties hereto have caused this Amended and Restated Schedule A to be executed by their officers designated below effective as of the date and year first above written.
BNY MELLON INVESTMENT SERVICING (US) INC. |
THE RBB FUND, INC. |
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By: |
/s/ Jay F. Nusblatt |
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By: |
/s/ Salvatore Faia |
Name: |
Jay F. Nusblatt |
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Name: |
Salvatore Faia, JD, CPA, CPE |
Title: |
Managing Director |
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Title: |
President |
Date: |
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Date: |
December 21, 2011 |
Exhibit (h)(61)
ADMINISTRATION AND ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT is dated November 18, 2011 by and between BNY Mellon Investment Servicing (US) Inc., a Massachusetts corporation (the Administrator), and The RBB Fund, Inc., a Maryland corporation (the Fund).
W I T N E S S E T H :
WHEREAS, the Fund is registered as an open-end management investment company under the Investment Company Act of 1940, as amended (the 1940 Act); and
WHEREAS, the Fund wishes to retain the Administrator to provide administration and accounting services to Robeco Boston Partners Global Value Equity Fund (the Portfolio) and the Administrator wishes to furnish such services.
NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, and intending to be legally bound hereby the parties hereto agree as follows:
1. Definitions. As used in this Agreement:
(a) 1933 Act means the Securities Act of 1933, as amended.
(b) 1934 Act means the Securities Exchange Act of 1934, as amended.
(c) Authorized Person means any officer of the Fund and any other person duly authorized by the Funds Board of Directors to give Oral Instructions and Written Instructions on behalf of the Fund. An Authorized Persons scope of authority may be limited by setting forth such limitation in a written document signed by both parties hereto.
(d) CEA means the Commodities Exchange Act, as amended.
(e) Change of Control means a change in ownership or control (not including
transactions between wholly-owned direct or indirect subsidiaries of a common parent) of 25% or more of the beneficial ownership of the shares of common stock or shares of beneficial interest of an entity or its parent(s).
(f) Oral Instructions mean oral instructions received by the Administrator from an Authorized Person or from a person reasonably believed by the Administrator to be an Authorized Person. The Administrator may, in its sole discretion in each separate instance, consider and rely upon instructions it receives from an Authorized Person via electronic mail as Oral Instructions.
(g) SEC means the Securities and Exchange Commission.
(h) Securities Laws means the 1933 Act, the 1934 Act, the 1940 Act and the CEA.
(i) Shares means the shares of beneficial interest of any series or class of the Fund.
(j) Written Instructions mean (i) written instructions signed by an Authorized Person and received by the Administrator or (ii) trade instructions transmitted (and received by the Administrator) by means of an electronic transaction reporting system access to which requires use of a password or other authorized identifier. The instructions may be delivered by hand, mail, tested telegram, cable, telex or facsimile sending device.
2. Appointment . The Fund hereby appoints the Administrator to provide administration and accounting services to the Portfolio, in accordance with the terms set forth in this Agreement. The Administrator accepts such appointment and agrees to furnish such services.
3. Information . The Fund will provide such information and documentation as the Administrator may reasonably request in connection with services provided by the
Administrator to the Fund.
4. Compliance with Rules and Regulations .
The Administrator undertakes to comply with all applicable requirements of the Securities Laws, and any laws, rules and regulations of governmental authorities having jurisdiction with respect to the duties to be performed by the Administrator hereunder. Except as specifically set forth herein, the Administrator assumes no responsibility for such compliance by the Fund or other entity.
5. Instructions .
(a) Unless otherwise provided in this Agreement, the Administrator shall act only upon Oral Instructions or Written Instructions.
(b) The Administrator shall be entitled to rely upon any Oral Instruction or Written Instruction it receives from an Authorized Person (or from a person reasonably believed by the Administrator to be an Authorized Person) pursuant to this Agreement. The Administrator may assume that any Oral Instruction or Written Instruction received hereunder is not in any way inconsistent with the provisions of organizational documents or this Agreement or of any vote, resolution or proceeding of the Funds Board of Directors or of the Funds shareholders, unless and until the Administrator receives Written Instructions to the contrary.
(c) The Fund agrees to forward to the Administrator Written Instructions confirming Oral Instructions (except where such Oral Instructions are given by the Administrator or its affiliates) so that the Administrator receives the Written Instructions by the close of business on the same day that such Oral Instructions are received. The fact that such confirming Written Instructions are not received
by the Administrator or differ from the Oral Instructions shall in no way invalidate the transactions or enforceability of the transactions authorized by the Oral Instructions or the Administrators ability to rely upon such Oral Instructions.
6. Right to Receive Advice .
(a) Advice of the Fund . If the Administrator is in doubt as to any action it should or should not take, the Administrator may request directions or advice, including Oral Instructions or Written Instructions, from the Fund.
(b) Advice of Counsel . If the Administrator shall be in doubt as to any question of law pertaining to any action it should or should not take, the Administrator may request advice from counsel of its own choosing (who may be counsel for the Fund, the Funds investment adviser or the Administrator, at the option of the Administrator).
(c) Conflicting Advice . In the event of a conflict between directions or advice or Oral Instructions or Written Instructions the Administrator receives from the Fund and the advice the Administrator receives from counsel, the Administrator may rely upon and follow the advice of counsel.
(d) Protection of the Administrator . The Administrator shall be indemnified by the Fund and without liability for any action the Administrator takes or does not take in reliance upon directions or advice or Oral Instructions or Written Instructions the Administrator receives from or on behalf of the Fund or from counsel and which the Administrator believes, in good faith, to be consistent with those directions or advice and Oral Instructions or Written Instructions. Nothing in this section shall be construed so as to impose an obligation upon the Administrator (i)
to seek such directions or advice or Oral Instructions or Written Instructions, or (ii) to act in accordance with such directions or advice or Oral Instructions or Written Instructions.
7. Records; Visits .
(a) The books and records pertaining to the Fund and the Portfolio which are in the possession or under the control of the Administrator shall be the property of the Fund. Such books and records shall be prepared and maintained as required by the 1940 Act and other applicable securities laws, rules and regulations. The Fund and Authorized Persons shall have access to such books and records at all times during the Administrators normal business hours. Upon the reasonable request of the Fund, copies of any such books and records shall be provided by the Administrator to the Fund or to an Authorized Person, at the Funds expense.
(b) The Administrator shall keep the following records:
(i) all books and records with respect to the Portfolios books of account;
(ii) records of the Portfolios securities transactions; and
(iii) all other books and records as the Administrator is required to maintain pursuant to Rule 31a-1 of the 1940 Act in connection with the services provided hereunder.
8. Confidentiality . Each party shall keep confidential any information relating to the other partys business (Confidential Information). Confidential Information shall include (a) any data or information that is competitively sensitive material, and not generally known to the public, including, but not limited to, information about product plans, marketing strategies, finances, operations, customer relationships, customer profiles, customer lists, sales estimates, business plans, and internal performance results relating to the past,
present or future business activities of the Fund or the Administrator, their respective subsidiaries and affiliated companies and the customers, clients and suppliers of any of them; (b) any scientific or technical information, design, process, procedure, formula, or improvement that is commercially valuable and secret in the sense that its confidentiality affords the Fund or the Administrator a competitive advantage over its competitors; (c) all confidential or proprietary concepts, documentation, reports, data, specifications, computer software, source code, object code, flow charts, databases, inventions, know-how, and trade secrets, whether or not patentable or copyrightable; and (d) anything designated as confidential. Notwithstanding the foregoing, information shall not be subject to such confidentiality obligations if it: (a) is already known to the receiving party at the time it is obtained; (b) is or becomes publicly known or available through no wrongful act of the receiving party; (c) is rightfully received from a third party who, to the best of the receiving partys knowledge, is not under a duty of confidentiality; (d) is released by the protected party to a third party without restriction; (e) is requested or required to be disclosed by the receiving party pursuant to a court order, subpoena, governmental or regulatory agency or law (provided the receiving party will provide the other party written notice of same, to the extent such notice is permitted); (f) is relevant to the defense of any claim or cause of action asserted against the receiving party; (g) is Fund information provided by the Administrator in connection with an independent third party compliance or other review; (h) is necessary or desirable for the Administrator to release such information in connection with the provision of services under this Agreement; or (i) has been or is independently developed or obtained by the receiving party.
9. Liaison with Accountants . The Administrator shall act as liaison with the Funds independent public accountants and shall provide account analyses, fiscal year summaries, and other audit-related schedules with respect to the Portfolio. The Administrator shall take all reasonable action in the performance of its duties under this Agreement to assure that the necessary information is made available to such accountants for the expression of their opinion, as required by the Fund.
10. BNY Mellon System . The Administrator shall retain title to and ownership of any and all data bases, computer programs, screen formats, report formats, interactive design techniques, derivative works, inventions, discoveries, patentable or copyrightable matters, concepts, expertise, patents, copyrights, trade secrets, and other related legal rights utilized by the Administrator in connection with the services provided by the Administrator to the Fund.
11. Disaster Recovery . The Administrator shall enter into and shall maintain in effect with appropriate parties one or more agreements making reasonable provisions for emergency use of electronic data processing equipment to the extent appropriate equipment is available. In the event of equipment failures, the Administrator shall, at no additional expense to the Fund, take reasonable steps to minimize service interruptions. The Administrator shall have no liability with respect to the loss of data or service interruptions caused by equipment failure, provided such loss or interruption is not caused by the Administrators own willful misfeasance, bad faith, gross negligence or reckless disregard of its duties or obligations under this Agreement.
12. Compensation .
(a) As compensation for services rendered by the Administrator during the term of this Agreement, the Fund, on behalf of the Portfolio, will pay to the Administrator a fee or fees as may be agreed to in writing by the Fund and the Administrator.
(b) The Fund hereby represents and warrants that this Agreement shall be provided to its Board of Directors and that, if required by applicable law, such Board of Directors has approved or will approve the terms of this Agreement.
13. Indemnification . The Fund, on behalf of the Portfolio, agrees to indemnify, defend and hold harmless the Administrator and its affiliates, including their respective officers, directors, agents and employees from all taxes, charges, expenses, assessments, claims and liabilities (including, without limitation, attorneys fees and disbursements and liabilities arising under the Securities Laws and any state and foreign securities and blue sky laws) arising directly or indirectly from any action or omission to act which the Administrator takes in connection with the provision of services to the Fund. Neither the Administrator, nor any of its affiliates, shall be indemnified against any liability (or any expenses incident to such liability) caused by the Administrators or its affiliates own willful misfeasance, bad faith, gross negligence or reckless disregard in the performance of the Administrators activities under this Agreement. Any amounts payable by the Fund hereunder shall be satisfied only against the relevant Portfolios assets and not against the assets of any other investment portfolio of the Fund. The provisions of this Section 13 shall survive termination of this Agreement.
14. Responsibility of the Administrator .
(a) The Administrator shall be under no duty to take any action hereunder on behalf of the Fund or any Portfolio except as specifically set forth herein or as may be
specifically agreed to by the Administrator and the Fund in a written amendment hereto. The Administrator shall be obligated to exercise care and diligence in the performance of its duties hereunder and to act in good faith in performing services provided for under this Agreement. The Administrator shall be liable only for any damages arising out of the Administrators failure to perform its duties under this Agreement to the extent such damages arise out of the Administrators willful misfeasance, bad faith, gross negligence or reckless disregard of such duties.
(b) Notwithstanding anything in this Agreement to the contrary, (i) the Administrator shall not be liable for losses, delays, failure, errors, interruption or loss of data occurring directly or indirectly by reason of circumstances beyond its reasonable control, including without limitation acts of God; action or inaction of civil or military authority; public enemy; war; terrorism; riot; fire; flood; sabotage; epidemics; labor disputes; civil commotion; interruption, loss or malfunction of utilities, transportation, computer or communications capabilities; insurrection; elements of nature; or non-performance by a third party; and (ii) the Administrator shall not be under any duty or obligation to inquire into and shall not be liable for the validity or invalidity, authority or lack thereof, or truthfulness or accuracy or lack thereof, of any instruction, direction, notice, instrument or other information which the Administrator reasonably believes to be genuine.
(c) Notwithstanding anything in this Agreement to the contrary, neither PFPC nor its affiliates shall be liable for any consequential, special or indirect losses or damages, whether or not the likelihood of such losses or damages was known by PFPC or its affiliates.
(d) Any claims (including the filing of suit or, if applicable, commencement of arbitration proceedings) must be asserted by a party against the other party or any of its affiliates within 24 months after it became aware of the claim or such partys Board of Directors is informed of specific facts that should have alerted it that a basis for such a claim might exist.
(e) Each party shall have a duty to mitigate damages for which the other party may become responsible.
(f) The provisions of this Section 14 shall survive termination of this Agreement.
15. Description of Accounting Services on a Continuous Basis .
The Administrator will perform the following accounting services with respect to the Portfolio:
(i) Journalize investment, capital share and income and expense activities;
(ii) Verify investment buy/sell trade tickets when received from the investment adviser for the Portfolio (the Adviser) and transmit trades to the Funds custodian (the Custodian) for proper settlement;
(iii) Maintain individual ledgers for investment securities;
(iv) Maintain historical tax lots for each security;
(v) Reconcile cash and investment balances of the Fund with the Custodian, and provide the Adviser with the beginning cash balance available for investment purposes;
(vi) Update the cash availability throughout the day as required by the Adviser;
(vii) Post to and prepare the Statement of Assets and Liabilities and the Statement of Operations;
(viii) Calculate various contractual expenses ( e.g. , advisory and custody fees);
(ix) Monitor the expense accruals and notify an officer of the Fund of any proposed adjustments;
(x) Control all disbursements and authorize such disbursements upon Written Instructions;
(xi) Calculate capital gains and losses;
(xii) Determine net income;
(xiii) Obtain security market quotes from independent pricing services approved by the Adviser, or if such quotes are unavailable, then obtain such prices from the Adviser, and in either case calculate the market value of the Portfolios Investments;
(xiv) Transmit or mail a copy of the daily portfolio valuation to the Adviser;
(xv) Compute net asset value;
(xvi) As appropriate, compute yields, total return, expense ratios, portfolio turnover rate, and, if required, portfolio average dollar-weighted maturity; and
(xvii) Prepare upon request a monthly financial statement which includes the following items:
Schedule of Investments
Statement of Assets and Liabilities
Statement of Operations
Cash Statement
Schedule of Capital Gains and Losses.
16. Description of Administration Services on a Continuous Basis .
The Administrator will perform the following administration services with respect to the Portfolio:
(i) Prepare quarterly broker security transactions summaries;
(ii) Prepare monthly security transaction listings;
(iii) Supply various normal and customary Portfolio and Fund statistical data as requested on an ongoing basis;
(iv) Prepare for execution and file the Funds Federal and state tax returns;
(v) Prepare and file the Funds Semi-Annual Reports with the SEC on Form N-SAR;
(vi) Prepare and file with the SEC the Funds annual, semi-annual, and quarterly shareholder reports;
(vii) Assist in the preparation of registration statements and other filings relating to the registration of Shares;
(viii) Monitor the Portfolios status as a regulated investment company under Sub-chapter M of the Internal Revenue Code of 1986, as amended;
(ix) Coordinate contractual relationships and communications between the Fund and its contractual service providers; and
(x) Monitor the Funds compliance with the amounts and conditions of each state qualification.
17. Duration and Termination . This Agreement shall continue until terminated by the Fund or by the Administrator on sixty (60) days prior written notice to the other party. In the event the Fund gives notice of termination, all expenses associated with movement (or duplication) of records and materials and conversion thereof to a successor accounting and administration services agent(s) (and any other service provider(s)), and all trailing expenses incurred by the Administrator, will be borne by the Fund.
18. Change of Control . Notwithstanding any other provision of this Agreement, in the event of an agreement to enter into a transaction that would result in a Change of Control of the Funds adviser or sponsor, the Funds ability to terminate the Agreement pursuant to Section 17 will be suspended from the time of such agreement until two years after the Change of Control, provided however; (i) that such ability to terminate will be reinstated if the Change of Control Agreement is abandoned; and (ii) that the Fund may terminate this Agreement for cause on sixty (60) days prior written notice to the other party. For purposes of this Agreement, cause shall mean willful misfeasance, bad faith, gross negligence, or multiple negligent acts by the Administrator which in the aggregate are
determined by the Funds Board of Directors to constitute a serious failure to perform satisfactorily the Administrators obligations and duties set forth herein.
19. Notices . Notices shall be addressed (a) if to the Administrator, at 301 Bellevue Parkway, Wilmington, Delaware 19809, Attention: President; (b) if to the Fund, at 103 Bellevue Parkway, Wilmington, Delaware 19809, Attention: Salvatore R. Faia or (c) if to neither of the foregoing, at such other address as shall have been given by like notice to the sender of any such notice or other communication by the other party. If notice is sent by confirming telegram, cable, telex or facsimile sending device, it shall be deemed to have been given immediately. If notice is sent by first-class mail, it shall be deemed to have been given three days after it has been mailed. If notice is sent by messenger, it shall be deemed to have been given on the day it is delivered.
20. Amendments . This Agreement, or any term thereof, may be changed or waived only by written amendment, signed by the party against whom enforcement of such change or waiver is sought.
21. Assignment . The Administrator may assign its rights hereunder to any affiliate of the Administrator, provided that the Administrator gives the Fund 30 days prior written notice of such assignment.
22. Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
23. Further Actions . Each party agrees to perform such further acts and execute such further documents as are necessary to effectuate the purposes hereof.
24. Miscellaneous .
(a) Notwithstanding anything in this Agreement to the contrary, the Fund agrees not to make any modifications to its registration statement or adopt any policies which would affect materially the obligations or responsibilities of the Administrator hereunder without the prior written approval of the Administrator, which approval shall not be unreasonably withheld or delayed.
(b) Except as expressly provided in this Agreement, the Administrator hereby disclaims all representations and warranties, express or implied, made to the Fund or any other person, including, without limitation, any warranties regarding quality, suitability, merchantability, fitness for a particular purpose or otherwise (irrespective of any course of dealing, custom or usage of trade), of any services or any goods provided incidental to services provided under this Agreement. The Administrator disclaims any warranty of title or non-infringement except as otherwise set forth in this Agreement.
(c) This Agreement embodies the entire agreement and understanding between the parties and supersedes all prior agreements and understandings relating to the subject matter hereof, provided that the parties may embody in one or more separate documents their agreement, if any, with respect to delegated duties. The captions in this Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect. Notwithstanding any provision hereof, the services of the Administrator are not, nor shall they be, construed as constituting legal advice or the provision of legal services for or on behalf of the Fund or any other person.
(d) This Agreement shall be deemed to be a contract made in Delaware and governed
by Delaware law, without regard to principles of conflicts of law.
(e) If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns.
(f) The facsimile signature of any party to this Agreement shall constitute the valid and binding execution hereof by such party.
(g) To help the U.S. government fight the funding of terrorism and money laundering activities, U.S. Federal law requires each financial institution to obtain, verify, and record certain information that identifies each person who initially opens an account with that financial institution on or after October 1, 2003. Certain of the Administrators affiliates are financial institutions, and the Administrator may, as a matter of policy, request (or may have already requested) the Funds name, address and taxpayer identification number or other government-issued identification number, and, if such party is a natural person, that partys date of birth. the Administrator may also ask (and may have already asked) for additional identifying information, and the Administrator may take steps (and may have already taken steps) to verify the authenticity and accuracy of these data elements.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first above written.
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BNY MELLON INVESTMENT SERVICING (US) INC. |
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By: |
/s/ Jay F. Nusblatt |
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Name: |
Jay F. Nusblatt |
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Title: |
Managing Director |
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THE RBB FUND, INC. |
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By: |
/s/ Salvatore Faia |
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Name: |
Salvatore Faia, JD, CPA, CFE |
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Title: |
President |
Exhibit (h)(62)
ADMINISTRATION AND ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT is dated November 18, 2011 by and between BNY Mellon Investment Servicing (US) Inc., a Massachusetts corporation (the Administrator), and The RBB Fund, Inc., a Maryland corporation (the Fund).
W I T N E S S E T H :
WHEREAS, the Fund is registered as an open-end management investment company under the Investment Company Act of 1940, as amended (the 1940 Act); and
WHEREAS, the Fund wishes to retain the Administrator to provide administration and accounting services to Robeco Boston Partners International Value Equity Fund (the Portfolio) and the Administrator wishes to furnish such services.
NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, and intending to be legally bound hereby the parties hereto agree as follows:
1. Definitions. As used in this Agreement:
(a) 1933 Act means the Securities Act of 1933, as amended.
(b) 1934 Act means the Securities Exchange Act of 1934, as amended.
(c) Authorized Person means any officer of the Fund and any other person duly authorized by the Funds Board of Directors to give Oral Instructions and Written Instructions on behalf of the Fund. An Authorized Persons scope of authority may be limited by setting forth such limitation in a written document signed by both parties hereto.
(d) CEA means the Commodities Exchange Act, as amended.
(e) Change of Control means a change in ownership or control (not including
transactions between wholly-owned direct or indirect subsidiaries of a common parent) of 25% or more of the beneficial ownership of the shares of common stock or shares of beneficial interest of an entity or its parent(s).
(f) Oral Instructions mean oral instructions received by the Administrator from an Authorized Person or from a person reasonably believed by the Administrator to be an Authorized Person. The Administrator may, in its sole discretion in each separate instance, consider and rely upon instructions it receives from an Authorized Person via electronic mail as Oral Instructions.
(g) SEC means the Securities and Exchange Commission.
(h) Securities Laws means the 1933 Act, the 1934 Act, the 1940 Act and the CEA.
(i) Shares means the shares of beneficial interest of any series or class of the Fund.
(j) Written Instructions mean (i) written instructions signed by an Authorized Person and received by the Administrator or (ii) trade instructions transmitted (and received by the Administrator) by means of an electronic transaction reporting system access to which requires use of a password or other authorized identifier. The instructions may be delivered by hand, mail, tested telegram, cable, telex or facsimile sending device.
2. Appointment . The Fund hereby appoints the Administrator to provide administration and accounting services to the Portfolio, in accordance with the terms set forth in this Agreement. The Administrator accepts such appointment and agrees to furnish such services.
3. Information . The Fund will provide such information and documentation as the Administrator may reasonably request in connection with services provided by the
Administrator to the Fund.
4. Compliance with Rules and Regulations .
The Administrator undertakes to comply with all applicable requirements of the Securities Laws, and any laws, rules and regulations of governmental authorities having jurisdiction with respect to the duties to be performed by the Administrator hereunder. Except as specifically set forth herein, the Administrator assumes no responsibility for such compliance by the Fund or other entity.
5. Instructions .
(a) Unless otherwise provided in this Agreement, the Administrator shall act only upon Oral Instructions or Written Instructions.
(b) The Administrator shall be entitled to rely upon any Oral Instruction or Written Instruction it receives from an Authorized Person (or from a person reasonably believed by the Administrator to be an Authorized Person) pursuant to this Agreement. The Administrator may assume that any Oral Instruction or Written Instruction received hereunder is not in any way inconsistent with the provisions of organizational documents or this Agreement or of any vote, resolution or proceeding of the Funds Board of Directors or of the Funds shareholders, unless and until the Administrator receives Written Instructions to the contrary.
(c) The Fund agrees to forward to the Administrator Written Instructions confirming Oral Instructions (except where such Oral Instructions are given by the Administrator or its affiliates) so that the Administrator receives the Written Instructions by the close of business on the same day that such Oral Instructions are received. The fact that such confirming Written Instructions are not received
by the Administrator or differ from the Oral Instructions shall in no way invalidate the transactions or enforceability of the transactions authorized by the Oral Instructions or the Administrators ability to rely upon such Oral Instructions.
6. Right to Receive Advice .
(a) Advice of the Fund . If the Administrator is in doubt as to any action it should or should not take, the Administrator may request directions or advice, including Oral Instructions or Written Instructions, from the Fund.
(b) Advice of Counsel . If the Administrator shall be in doubt as to any question of law pertaining to any action it should or should not take, the Administrator may request advice from counsel of its own choosing (who may be counsel for the Fund, the Funds investment adviser or the Administrator, at the option of the Administrator).
(c) Conflicting Advice . In the event of a conflict between directions or advice or Oral Instructions or Written Instructions the Administrator receives from the Fund and the advice the Administrator receives from counsel, the Administrator may rely upon and follow the advice of counsel.
(d) Protection of the Administrator . The Administrator shall be indemnified by the Fund and without liability for any action the Administrator takes or does not take in reliance upon directions or advice or Oral Instructions or Written Instructions the Administrator receives from or on behalf of the Fund or from counsel and which the Administrator believes, in good faith, to be consistent with those directions or advice and Oral Instructions or Written Instructions. Nothing in this section shall be construed so as to impose an obligation upon the Administrator (i)
to seek such directions or advice or Oral Instructions or Written Instructions, or (ii) to act in accordance with such directions or advice or Oral Instructions or Written Instructions.
7. Records; Visits .
(a) The books and records pertaining to the Fund and the Portfolio which are in the possession or under the control of the Administrator shall be the property of the Fund. Such books and records shall be prepared and maintained as required by the 1940 Act and other applicable securities laws, rules and regulations. The Fund and Authorized Persons shall have access to such books and records at all times during the Administrators normal business hours. Upon the reasonable request of the Fund, copies of any such books and records shall be provided by the Administrator to the Fund or to an Authorized Person, at the Funds expense.
(b) The Administrator shall keep the following records:
(i) all books and records with respect to the Portfolios books of account;
(ii) records of the Portfolios securities transactions; and
(iii) all other books and records as the Administrator is required to maintain pursuant to Rule 31a-1 of the 1940 Act in connection with the services provided hereunder.
8. Confidentiality . Each party shall keep confidential any information relating to the other partys business (Confidential Information). Confidential Information shall include (a) any data or information that is competitively sensitive material, and not generally known to the public, including, but not limited to, information about product plans, marketing strategies, finances, operations, customer relationships, customer profiles, customer lists, sales estimates, business plans, and internal performance results relating to the past,
present or future business activities of the Fund or the Administrator, their respective subsidiaries and affiliated companies and the customers, clients and suppliers of any of them; (b) any scientific or technical information, design, process, procedure, formula, or improvement that is commercially valuable and secret in the sense that its confidentiality affords the Fund or the Administrator a competitive advantage over its competitors; (c) all confidential or proprietary concepts, documentation, reports, data, specifications, computer software, source code, object code, flow charts, databases, inventions, know-how, and trade secrets, whether or not patentable or copyrightable; and (d) anything designated as confidential. Notwithstanding the foregoing, information shall not be subject to such confidentiality obligations if it: (a) is already known to the receiving party at the time it is obtained; (b) is or becomes publicly known or available through no wrongful act of the receiving party; (c) is rightfully received from a third party who, to the best of the receiving partys knowledge, is not under a duty of confidentiality; (d) is released by the protected party to a third party without restriction; (e) is requested or required to be disclosed by the receiving party pursuant to a court order, subpoena, governmental or regulatory agency or law (provided the receiving party will provide the other party written notice of same, to the extent such notice is permitted); (f) is relevant to the defense of any claim or cause of action asserted against the receiving party; (g) is Fund information provided by the Administrator in connection with an independent third party compliance or other review; (h) is necessary or desirable for the Administrator to release such information in connection with the provision of services under this Agreement; or (i) has been or is independently developed or obtained by the receiving party.
9. Liaison with Accountants . The Administrator shall act as liaison with the Funds independent public accountants and shall provide account analyses, fiscal year summaries, and other audit-related schedules with respect to the Portfolio. The Administrator shall take all reasonable action in the performance of its duties under this Agreement to assure that the necessary information is made available to such accountants for the expression of their opinion, as required by the Fund.
10. BNY Mellon System . The Administrator shall retain title to and ownership of any and all data bases, computer programs, screen formats, report formats, interactive design techniques, derivative works, inventions, discoveries, patentable or copyrightable matters, concepts, expertise, patents, copyrights, trade secrets, and other related legal rights utilized by the Administrator in connection with the services provided by the Administrator to the Fund.
11. Disaster Recovery . The Administrator shall enter into and shall maintain in effect with appropriate parties one or more agreements making reasonable provisions for emergency use of electronic data processing equipment to the extent appropriate equipment is available. In the event of equipment failures, the Administrator shall, at no additional expense to the Fund, take reasonable steps to minimize service interruptions. The Administrator shall have no liability with respect to the loss of data or service interruptions caused by equipment failure, provided such loss or interruption is not caused by the Administrators own willful misfeasance, bad faith, gross negligence or reckless disregard of its duties or obligations under this Agreement.
12. Compensation .
(a) As compensation for services rendered by the Administrator during the term of this Agreement, the Fund, on behalf of the Portfolio, will pay to the Administrator a fee or fees as may be agreed to in writing by the Fund and the Administrator.
(b) The Fund hereby represents and warrants that this Agreement shall be provided to its Board of Directors and that, if required by applicable law, such Board of Directors has approved or will approve the terms of this Agreement.
13. Indemnification . The Fund, on behalf of the Portfolio, agrees to indemnify, defend and hold harmless the Administrator and its affiliates, including their respective officers, directors, agents and employees from all taxes, charges, expenses, assessments, claims and liabilities (including, without limitation, attorneys fees and disbursements and liabilities arising under the Securities Laws and any state and foreign securities and blue sky laws) arising directly or indirectly from any action or omission to act which the Administrator takes in connection with the provision of services to the Fund. Neither the Administrator, nor any of its affiliates, shall be indemnified against any liability (or any expenses incident to such liability) caused by the Administrators or its affiliates own willful misfeasance, bad faith, gross negligence or reckless disregard in the performance of the Administrators activities under this Agreement. Any amounts payable by the Fund hereunder shall be satisfied only against the relevant Portfolios assets and not against the assets of any other investment portfolio of the Fund. The provisions of this Section 13 shall survive termination of this Agreement.
14. Responsibility of the Administrator .
(a) The Administrator shall be under no duty to take any action hereunder on behalf of the Fund or any Portfolio except as specifically set forth herein or as may be
specifically agreed to by the Administrator and the Fund in a written amendment hereto. The Administrator shall be obligated to exercise care and diligence in the performance of its duties hereunder and to act in good faith in performing services provided for under this Agreement. The Administrator shall be liable only for any damages arising out of the Administrators failure to perform its duties under this Agreement to the extent such damages arise out of the Administrators willful misfeasance, bad faith, gross negligence or reckless disregard of such duties.
(b) Notwithstanding anything in this Agreement to the contrary, (i) the Administrator shall not be liable for losses, delays, failure, errors, interruption or loss of data occurring directly or indirectly by reason of circumstances beyond its reasonable control, including without limitation acts of God; action or inaction of civil or military authority; public enemy; war; terrorism; riot; fire; flood; sabotage; epidemics; labor disputes; civil commotion; interruption, loss or malfunction of utilities, transportation, computer or communications capabilities; insurrection; elements of nature; or non-performance by a third party; and (ii) the Administrator shall not be under any duty or obligation to inquire into and shall not be liable for the validity or invalidity, authority or lack thereof, or truthfulness or accuracy or lack thereof, of any instruction, direction, notice, instrument or other information which the Administrator reasonably believes to be genuine.
(c) Notwithstanding anything in this Agreement to the contrary, neither PFPC nor its affiliates shall be liable for any consequential, special or indirect losses or damages, whether or not the likelihood of such losses or damages was known by PFPC or its affiliates.
(d) Any claims (including the filing of suit or, if applicable, commencement of arbitration proceedings) must be asserted by a party against the other party or any of its affiliates within 24 months after it became aware of the claim or such partys Board of Directors is informed of specific facts that should have alerted it that a basis for such a claim might exist.
(e) Each party shall have a duty to mitigate damages for which the other party may become responsible.
(f) The provisions of this Section 14 shall survive termination of this Agreement.
15. Description of Accounting Services on a Continuous Basis .
The Administrator will perform the following accounting services with respect to the Portfolio:
(i) Journalize investment, capital share and income and expense activities;
(ii) Verify investment buy/sell trade tickets when received from the investment adviser for the Portfolio (the Adviser) and transmit trades to the Funds custodian (the Custodian) for proper settlement;
(iii) Maintain individual ledgers for investment securities;
(iv) Maintain historical tax lots for each security;
(v) Reconcile cash and investment balances of the Fund with the Custodian, and provide the Adviser with the beginning cash balance available for investment purposes;
(vi) Update the cash availability throughout the day as required by the Adviser;
(vii) Post to and prepare the Statement of Assets and Liabilities and the Statement of Operations;
(viii) Calculate various contractual expenses ( e.g. , advisory and custody fees);
(ix) Monitor the expense accruals and notify an officer of the Fund of any proposed adjustments;
(x) |
Control all disbursements and authorize such disbursements upon Written Instructions; |
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(xi) |
Calculate capital gains and losses; |
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(xii) |
Determine net income; |
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(xiii) |
Obtain security market quotes from independent pricing services approved by the Adviser, or if such quotes are unavailable, then obtain such prices from the Adviser, and in either case calculate the market value of the Portfolios Investments; |
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(xiv) |
Transmit or mail a copy of the daily portfolio valuation to the Adviser; |
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(xv) |
Compute net asset value; |
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(xvi) |
As appropriate, compute yields, total return, expense ratios, portfolio turnover rate, and, if required, portfolio average dollar-weighted maturity; and |
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(xvii) |
Prepare upon request a monthly financial statement which includes the following items: |
Schedule of Investments
Statement of Assets and Liabilities
Statement of Operations
Cash Statement
Schedule of Capital Gains and Losses.
16. Description of Administration Services on a Continuous Basis .
The Administrator will perform the following administration services with respect to the Portfolio:
(i) Prepare quarterly broker security transactions summaries;
(ii) Prepare monthly security transaction listings;
(iii) Supply various normal and customary Portfolio and Fund statistical data as requested on an ongoing basis;
(iv) Prepare for execution and file the Funds Federal and state tax returns;
(v) Prepare and file the Funds Semi-Annual Reports with the SEC on Form N-SAR;
(vi) |
Prepare and file with the SEC the Funds annual, semi-annual, and quarterly shareholder reports; |
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(vii) |
Assist in the preparation of registration statements and other filings relating to the registration of Shares; |
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(viii) |
Monitor the Portfolios status as a regulated investment company under Sub-chapter M of the Internal Revenue Code of 1986, as amended; |
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(ix) |
Coordinate contractual relationships and communications between the Fund and its contractual service providers; and |
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(x) |
Monitor the Funds compliance with the amounts and conditions of each state qualification. |
17. Duration and Termination . This Agreement shall continue until terminated by the Fund or by the Administrator on sixty (60) days prior written notice to the other party. In the event the Fund gives notice of termination, all expenses associated with movement (or duplication) of records and materials and conversion thereof to a successor accounting and administration services agent(s) (and any other service provider(s)), and all trailing expenses incurred by the Administrator, will be borne by the Fund.
18. Change of Control . Notwithstanding any other provision of this Agreement, in the event of an agreement to enter into a transaction that would result in a Change of Control of the Funds adviser or sponsor, the Funds ability to terminate the Agreement pursuant to Section 17 will be suspended from the time of such agreement until two years after the Change of Control, provided however; (i) that such ability to terminate will be reinstated if the Change of Control Agreement is abandoned; and (ii) that the Fund may terminate this Agreement for cause on sixty (60) days prior written notice to the other party. For purposes of this Agreement, cause shall mean willful misfeasance, bad faith, gross negligence, or multiple negligent acts by the Administrator which in the aggregate are
determined by the Funds Board of Directors to constitute a serious failure to perform satisfactorily the Administrators obligations and duties set forth herein.
19. Notices . Notices shall be addressed (a) if to the Administrator, at 301 Bellevue Parkway, Wilmington, Delaware 19809, Attention: President; (b) if to the Fund, at 103 Bellevue Parkway, Wilmington, Delaware 19809, Attention: Salvatore R. Faia or (c) if to neither of the foregoing, at such other address as shall have been given by like notice to the sender of any such notice or other communication by the other party. If notice is sent by confirming telegram, cable, telex or facsimile sending device, it shall be deemed to have been given immediately. If notice is sent by first-class mail, it shall be deemed to have been given three days after it has been mailed. If notice is sent by messenger, it shall be deemed to have been given on the day it is delivered.
20. Amendments . This Agreement, or any term thereof, may be changed or waived only by written amendment, signed by the party against whom enforcement of such change or waiver is sought.
21. Assignment . The Administrator may assign its rights hereunder to any affiliate of the Administrator, provided that the Administrator gives the Fund 30 days prior written notice of such assignment.
22. Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
23. Further Actions . Each party agrees to perform such further acts and execute such further documents as are necessary to effectuate the purposes hereof.
24. Miscellaneous .
(a) Notwithstanding anything in this Agreement to the contrary, the Fund agrees not to make any modifications to its registration statement or adopt any policies which would affect materially the obligations or responsibilities of the Administrator hereunder without the prior written approval of the Administrator, which approval shall not be unreasonably withheld or delayed.
(b) Except as expressly provided in this Agreement, the Administrator hereby disclaims all representations and warranties, express or implied, made to the Fund or any other person, including, without limitation, any warranties regarding quality, suitability, merchantability, fitness for a particular purpose or otherwise (irrespective of any course of dealing, custom or usage of trade), of any services or any goods provided incidental to services provided under this Agreement. The Administrator disclaims any warranty of title or non-infringement except as otherwise set forth in this Agreement.
(c) This Agreement embodies the entire agreement and understanding between the parties and supersedes all prior agreements and understandings relating to the subject matter hereof, provided that the parties may embody in one or more separate documents their agreement, if any, with respect to delegated duties. The captions in this Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect. Notwithstanding any provision hereof, the services of the Administrator are not, nor shall they be, construed as constituting legal advice or the provision of legal services for or on behalf of the Fund or any other person.
(d) This Agreement shall be deemed to be a contract made in Delaware and governed
by Delaware law, without regard to principles of conflicts of law.
(e) If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns.
(f) The facsimile signature of any party to this Agreement shall constitute the valid and binding execution hereof by such party.
(g) To help the U.S. government fight the funding of terrorism and money laundering activities, U.S. Federal law requires each financial institution to obtain, verify, and record certain information that identifies each person who initially opens an account with that financial institution on or after October 1, 2003. Certain of the Administrators affiliates are financial institutions, and the Administrator may, as a matter of policy, request (or may have already requested) the Funds name, address and taxpayer identification number or other government-issued identification number, and, if such party is a natural person, that partys date of birth. the Administrator may also ask (and may have already asked) for additional identifying information, and the Administrator may take steps (and may have already taken steps) to verify the authenticity and accuracy of these data elements.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first above written.
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BNY MELLON INVESTMENT SERVICING (US) INC. |
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By: |
/s/ Jay F. Nusblatt |
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Name: |
Jay F. Nusblatt |
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Title: |
Managing Director |
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THE RBB FUND, INC. |
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By: |
/s/ Salvatore Faia |
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Name: |
Salvatore Faia, JD, CPA, CFE |
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Title: |
President |
Exhibit (h)(63)
TRANSFER AGENCY AGREEMENT SUPPLEMENT
(Summit Global Investments Low Volatility Fund of The RBB Fund, Inc.)
This supplemental agreement, dated February 29, 2012 by and between THE RBB FUND, INC. (the Fund) and BNY MELLON INVESTMENT SERVICING (US) INC., a Massachusetts corporation (Transfer Agent).
The Fund is a corporation organized under the laws of the State of Maryland and is an open-end management investment company. The Fund and the Transfer Agent have entered into a Transfer Agency Agreement, dated as of November 5, 1991 (as from time to time amended and supplemented, the Transfer Agency Agreement), pursuant to which the Transfer Agent has undertaken to act as transfer agent, registrar and dividend disbursing agent for the Fund with respect to the portfolios of the Fund, as more fully set forth therein. Certain capitalized terms used without definition in this supplemental agreement have the meaning specified in the Transfer Agency Agreement.
The Fund agrees with the Transfer Agent as follows:
1. Adoption of Transfer Agency Agreement . The Transfer Agency Agreement is hereby adopted for Summit Global Investments U.S. Low Volatility Equity Fund (the Portfolio).
2. Compensation . As compensation for the services rendered by the Transfer Agent during the term of the Transfer Agency Agreement, the Fund will pay to the Transfer Agent, with respect to the Portfolio, such fees and expenses as shall be agreed to from time to time by the Fund and the Transfer Agent.
3. Counterparts . This supplemental agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
[Signature page follows.]
IN WITNESS WHEREOF, the undersigned have entered into this supplemental agreement, intending to be legally bound hereby, as of the date and year first above written.
THE RBB FUND, INC. |
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BNY MELLON INVESTMENT SERVICING (US) INC. |
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By: |
/s/ Salvatore Faia |
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By: |
/s/ Michael DeNofrio |
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Name: |
Salvatore Faia, JD, CPA, CFE |
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Name: |
Michael DeNofrio |
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Title: |
President |
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Title: |
Managing Director |
Exhibit (h)(64)
AMENDED AND RESTATED SCHEDULE A
THIS AMENDED AND RESTATED SCHEDULE A effective as of February 9, 2012 is the Schedule A to that certain Regulatory Administration Services Agreement dated as of June 1, 2003 between BNY Mellon Investment Servicing (US) Inc. and The RBB Fund, Inc.
List of Portfolios
Money Market Portfolio
Bogle Investment Management Small Cap Growth Fund
Robeco Boston Partners All-Cap Fund
Robeco Boston Partners Small Cap Value II Fund
Robeco Boston Partners Long/Short Equity Fund
Robeco WPG Small/Micro Cap Value Fund
Schneider Small Cap Value Fund
Schneider Value Fund
Bear Stearns CUFS MLP Mortgage Portfolio
Marvin & Palmer Large Cap Growth Fund
Free Market U.S. Equity Fund
Free Market International Equity Fund
Free Market Fixed Income Fund
Perimeter Small Cap Growth Fund
S1 Fund
Robeco Boston Partners Long/Short Research Fund
Robeco Boston Partners Global Value Equity Fund
Robeco Boston Partners International Value Equity Fund
Summit Global Investments U.S. Low Volatility Equity Fund
IN WITNESS WHEREOF, the parties hereto have caused this Amended and Restated Schedule A to be executed by their officers designated below effective as of the date and year first above written.
BNY MELLON INVESTMENT SERVICING (US) INC. |
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THE RBB FUND, INC. |
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By: |
/s/ Jay F. Nusblatt |
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By: |
/s/ Salvatore Faia |
Name: |
Jay F. Nusblatt |
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Name: |
Salvatore Faia, JD, CPA, CPE |
Title: |
Managing Director |
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Title: |
President |
Date: |
March 27, 2012 |
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Date: |
March 26, 2012 |
Exhibit (h)(65)
ADMINISTRATION AND ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT is dated February 29, 2012 by and between BNY Mellon Investment Servicing (US) Inc., a Massachusetts corporation (the Administrator), and The RBB Fund, Inc., a Maryland corporation (the Fund).
W I T N E S S E T H :
WHEREAS, the Fund is registered as an open-end management investment company under the Investment Company Act of 1940, as amended (the 1940 Act); and
WHEREAS, the Fund wishes to retain the Administrator to provide administration and accounting services to Summit Global Investments U.S. Low Volatility Equity Fund (the Portfolio) and the Administrator wishes to furnish such services.
NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, and intending to be legally bound hereby the parties hereto agree as follows:
1. Definitions. As used in this Agreement:
(a) 1933 Act means the Securities Act of 1933, as amended.
(b) 1934 Act means the Securities Exchange Act of 1934, as amended.
(c) Authorized Person means any officer of the Fund and any other person duly authorized by the Funds Board of Directors to give Oral Instructions and Written Instructions on behalf of the Fund. An Authorized Persons scope of authority may be limited by setting forth such limitation in a written document signed by both parties hereto.
(d) CEA means the Commodities Exchange Act, as amended.
(e) Change of Control means a change in ownership or control (not including transactions between wholly-owned direct or indirect subsidiaries of a common
parent) of 25% or more of the beneficial ownership of the shares of common stock or shares of beneficial interest of an entity or its parent(s).
(f) Oral Instructions mean oral instructions received by the Administrator from an Authorized Person or from a person reasonably believed by the Administrator to be an Authorized Person. The Administrator may, in its sole discretion in each separate instance, consider and rely upon instructions it receives from an Authorized Person via electronic mail as Oral Instructions.
(g) SEC means the Securities and Exchange Commission.
(h) Securities Laws means the 1933 Act, the 1934 Act, the 1940 Act and the CEA.
(i) Shares means the shares of beneficial interest of any series or class of the Fund.
(j) Written Instructions mean (i) written instructions signed by an Authorized Person and received by the Administrator or (ii) trade instructions transmitted (and received by the Administrator) by means of an electronic transaction reporting system access to which requires use of a password or other authorized identifier. The instructions may be delivered by hand, mail, tested telegram, cable, telex or facsimile sending device.
2. Appointment . The Fund hereby appoints the Administrator to provide administration and accounting services to the Portfolio, in accordance with the terms set forth in this Agreement. The Administrator accepts such appointment and agrees to furnish such services.
3. Information . The Fund will provide such information and documentation as the Administrator may reasonably request in connection with services provided by the Administrator to the Fund.
4. Compliance with Rules and Regulations .
The Administrator undertakes to comply with all applicable requirements of the Securities Laws, and any laws, rules and regulations of governmental authorities having jurisdiction with respect to the duties to be performed by the Administrator hereunder. Except as specifically set forth herein, the Administrator assumes no responsibility for such compliance by the Fund or other entity.
5. Instructions .
(a) Unless otherwise provided in this Agreement, the Administrator shall act only upon Oral Instructions or Written Instructions.
(b) The Administrator shall be entitled to rely upon any Oral Instruction or Written Instruction it receives from an Authorized Person (or from a person reasonably believed by the Administrator to be an Authorized Person) pursuant to this Agreement. The Administrator may assume that any Oral Instruction or Written Instruction received hereunder is not in any way inconsistent with the provisions of organizational documents or this Agreement or of any vote, resolution or proceeding of the Funds Board of Directors or of the Funds shareholders, unless and until the Administrator receives Written Instructions to the contrary.
(c) The Fund agrees to forward to the Administrator Written Instructions confirming Oral Instructions (except where such Oral Instructions are given by the Administrator or its affiliates) so that the Administrator receives the Written Instructions by the close of business on the same day that such Oral Instructions are received. The fact that such confirming Written Instructions are not received by the Administrator or differ from the Oral Instructions shall in no way
invalidate the transactions or enforceability of the transactions authorized by the Oral Instructions or the Administrators ability to rely upon such Oral Instructions.
6. Right to Receive Advice .
(a) Advice of the Fund . If the Administrator is in doubt as to any action it should or should not take, the Administrator may request directions or advice, including Oral Instructions or Written Instructions, from the Fund.
(b) Advice of Counsel . If the Administrator shall be in doubt as to any question of law pertaining to any action it should or should not take, the Administrator may request advice from counsel of its own choosing (who may be counsel for the Fund, the Funds investment adviser or the Administrator, at the option of the Administrator).
(c) Conflicting Advice . In the event of a conflict between directions or advice or Oral Instructions or Written Instructions the Administrator receives from the Fund and the advice the Administrator receives from counsel, the Administrator may rely upon and follow the advice of counsel.
(d) Protection of the Administrator . The Administrator shall be indemnified by the Fund and without liability for any action the Administrator takes or does not take in reliance upon directions or advice or Oral Instructions or Written Instructions the Administrator receives from or on behalf of the Fund or from counsel and which the Administrator believes, in good faith, to be consistent with those directions or advice and Oral Instructions or Written Instructions. Nothing in this section shall be construed so as to impose an obligation upon the Administrator (i) to seek such directions or advice or Oral Instructions or Written Instructions, or
(ii) to act in accordance with such directions or advice or Oral Instructions or Written Instructions.
7. Records; Visits .
(a) The books and records pertaining to the Fund and the Portfolio which are in the possession or under the control of the Administrator shall be the property of the Fund. Such books and records shall be prepared and maintained as required by the 1940 Act and other applicable securities laws, rules and regulations. The Fund and Authorized Persons shall have access to such books and records at all times during the Administrators normal business hours. Upon the reasonable request of the Fund, copies of any such books and records shall be provided by the Administrator to the Fund or to an Authorized Person, at the Funds expense.
(b) The Administrator shall keep the following records:
(i) all books and records with respect to the Portfolios books of account;
(ii) records of the Portfolios securities transactions; and
(iii) all other books and records as the Administrator is required to maintain pursuant to Rule 31a-1 of the 1940 Act in connection with the services provided hereunder.
8. Confidentiality . Each party shall keep confidential any information relating to the other partys business (Confidential Information). Confidential Information shall include (a) any data or information that is competitively sensitive material, and not generally known to the public, including, but not limited to, information about product plans, marketing strategies, finances, operations, customer relationships, customer profiles, customer lists, sales estimates, business plans, and internal performance results relating to the past, present or future business activities of the Fund or the Administrator, their respective
subsidiaries and affiliated companies and the customers, clients and suppliers of any of them; (b) any scientific or technical information, design, process, procedure, formula, or improvement that is commercially valuable and secret in the sense that its confidentiality affords the Fund or the Administrator a competitive advantage over its competitors; (c) all confidential or proprietary concepts, documentation, reports, data, specifications, computer software, source code, object code, flow charts, databases, inventions, know-how, and trade secrets, whether or not patentable or copyrightable; and (d) anything designated as confidential. Notwithstanding the foregoing, information shall not be subject to such confidentiality obligations if it: (a) is already known to the receiving party at the time it is obtained; (b) is or becomes publicly known or available through no wrongful act of the receiving party; (c) is rightfully received from a third party who, to the best of the receiving partys knowledge, is not under a duty of confidentiality; (d) is released by the protected party to a third party without restriction; (e) is requested or required to be disclosed by the receiving party pursuant to a court order, subpoena, governmental or regulatory agency or law (provided the receiving party will provide the other party written notice of same, to the extent such notice is permitted); (f) is relevant to the defense of any claim or cause of action asserted against the receiving party; (g) is Fund information provided by the Administrator in connection with an independent third party compliance or other review; (h) is necessary or desirable for the Administrator to release such information in connection with the provision of services under this Agreement; or (i) has been or is independently developed or obtained by the receiving party.
9. Liaison with Accountants . The Administrator shall act as liaison with the Funds
independent public accountants and shall provide account analyses, fiscal year summaries, and other audit-related schedules with respect to the Portfolio. The Administrator shall take all reasonable action in the performance of its duties under this Agreement to assure that the necessary information is made available to such accountants for the expression of their opinion, as required by the Fund.
10. BNY Mellon System . The Administrator shall retain title to and ownership of any and all data bases, computer programs, screen formats, report formats, interactive design techniques, derivative works, inventions, discoveries, patentable or copyrightable matters, concepts, expertise, patents, copyrights, trade secrets, and other related legal rights utilized by the Administrator in connection with the services provided by the Administrator to the Fund.
11. Disaster Recovery . The Administrator shall enter into and shall maintain in effect with appropriate parties one or more agreements making reasonable provisions for emergency use of electronic data processing equipment to the extent appropriate equipment is available. In the event of equipment failures, the Administrator shall, at no additional expense to the Fund, take reasonable steps to minimize service interruptions. The Administrator shall have no liability with respect to the loss of data or service interruptions caused by equipment failure, provided such loss or interruption is not caused by the Administrators own willful misfeasance, bad faith, gross negligence or reckless disregard of its duties or obligations under this Agreement.
12. Compensation .
(a) As compensation for services rendered by the Administrator during the term of this Agreement, the Fund, on behalf of the Portfolio, will pay to the Administrator a fee or fees as may be agreed to in writing by the Fund and the Administrator.
(b) The Fund hereby represents and warrants that this Agreement shall be provided to its Board of Directors and that, if required by applicable law, such Board of Directors has approved or will approve the terms of this Agreement.
13. Indemnification . The Fund, on behalf of the Portfolio, agrees to indemnify, defend and hold harmless the Administrator and its affiliates, including their respective officers, directors, agents and employees from all taxes, charges, expenses, assessments, claims and liabilities (including, without limitation, attorneys fees and disbursements and liabilities arising under the Securities Laws and any state and foreign securities and blue sky laws) arising directly or indirectly from any action or omission to act which the Administrator takes in connection with the provision of services to the Fund. Neither the Administrator, nor any of its affiliates, shall be indemnified against any liability (or any expenses incident to such liability) caused by the Administrators or its affiliates own willful misfeasance, bad faith, gross negligence or reckless disregard in the performance of the Administrators activities under this Agreement. Any amounts payable by the Fund hereunder shall be satisfied only against the relevant Portfolios assets and not against the assets of any other investment portfolio of the Fund. The provisions of this Section 13 shall survive termination of this Agreement.
14. Responsibility of the Administrator .
(a) The Administrator shall be under no duty to take any action hereunder on behalf of the Fund or any Portfolio except as specifically set forth herein or as may be
specifically agreed to by the Administrator and the Fund in a written amendment hereto. The Administrator shall be obligated to exercise care and diligence in the performance of its duties hereunder and to act in good faith in performing services provided for under this Agreement. The Administrator shall be liable only for any damages arising out of the Administrators failure to perform its duties under this Agreement to the extent such damages arise out of the Administrators willful misfeasance, bad faith, gross negligence or reckless disregard of such duties.
(b) Notwithstanding anything in this Agreement to the contrary, (i) the Administrator shall not be liable for losses, delays, failure, errors, interruption or loss of data occurring directly or indirectly by reason of circumstances beyond its reasonable control, including without limitation acts of God; action or inaction of civil or military authority; public enemy; war; terrorism; riot; fire; flood; sabotage; epidemics; labor disputes; civil commotion; interruption, loss or malfunction of utilities, transportation, computer or communications capabilities; insurrection; elements of nature; or non-performance by a third party; and (ii) the Administrator shall not be under any duty or obligation to inquire into and shall not be liable for the validity or invalidity, authority or lack thereof, or truthfulness or accuracy or lack thereof, of any instruction, direction, notice, instrument or other information which the Administrator reasonably believes to be genuine.
(c) Notwithstanding anything in this Agreement to the contrary, neither PFPC nor its affiliates shall be liable for any consequential, special or indirect losses or damages, whether or not the likelihood of such losses or damages was known by PFPC or its affiliates.
(d) Any claims (including the filing of suit or, if applicable, commencement of arbitration proceedings) must be asserted by a party against the other party or any of its affiliates within 24 months after it became aware of the claim or such partys Board of Directors is informed of specific facts that should have alerted it that a basis for such a claim might exist.
(e) Each party shall have a duty to mitigate damages for which the other party may become responsible.
(f) The provisions of this Section 14 shall survive termination of this Agreement.
15. Description of Accounting Services on a Continuous Basis .
The Administrator will perform the following accounting services with respect to the Portfolio:
(i) |
Journalize investment, capital share and income and expense activities; |
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(ii) |
Verify investment buy/sell trade tickets when received from the investment adviser for the Portfolio (the Adviser) and transmit trades to the Funds custodian (the Custodian) for proper settlement; |
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(iii) |
Maintain individual ledgers for investment securities; |
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(iv) |
Maintain historical tax lots for each security; |
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(v) |
Reconcile cash and investment balances of the Fund with the Custodian, and provide the Adviser with the beginning cash balance available for investment purposes; |
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(vi) |
Update the cash availability throughout the day as required by the Adviser; |
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(vii) |
Post to and prepare the Statement of Assets and Liabilities and the Statement of Operations; |
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(viii) |
Calculate various contractual expenses ( e.g. , advisory and custody fees); |
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(ix) |
Monitor the expense accruals and notify an officer of the Fund of any proposed adjustments; |
(x) |
Control all disbursements and authorize such disbursements upon Written Instructions; |
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(xi) |
Calculate capital gains and losses; |
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(xii) |
Determine net income; |
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(xiii) |
Obtain security market quotes from independent pricing services approved by the Adviser, or if such quotes are unavailable, then obtain such prices from the Adviser, and in either case calculate the market value of the Portfolios Investments; |
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(xiv) |
Transmit or mail a copy of the daily portfolio valuation to the Adviser; |
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(xv) |
Compute net asset value; |
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(xvi) |
As appropriate, compute yields, total return, expense ratios, portfolio turnover rate, and, if required, portfolio average dollar-weighted maturity; and |
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(xvii) |
Prepare upon request a monthly financial statement which includes the following items: |
Schedule of Investments
Statement of Assets and Liabilities
Statement of Operations
Cash Statement
Schedule of Capital Gains and Losses.
16. Description of Administration Services on a Continuous Basis .
The Administrator will perform the following administration services with respect to the Portfolio:
(i) |
Prepare quarterly broker security transactions summaries; |
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(ii) |
Prepare monthly security transaction listings; |
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(iii) |
Supply various normal and customary Portfolio and Fund statistical data as requested on an ongoing basis; |
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(iv) |
Prepare for execution and file the Funds Federal and state tax returns; |
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(v) |
Prepare and file the Funds Semi-Annual Reports with the SEC on Form N-SAR; |
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(vi) |
Prepare and file with the SEC the Funds annual, semi-annual, and quarterly |
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shareholder reports; |
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(vii) |
Assist in the preparation of registration statements and other filings relating to the registration of Shares; |
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(viii) |
Monitor the Portfolios status as a regulated investment company under Sub-chapter M of the Internal Revenue Code of 1986, as amended; |
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(ix) |
Coordinate contractual relationships and communications between the Fund and its contractual service providers; and |
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(x) |
Monitor the Funds compliance with the amounts and conditions of each state qualification. |
17. Duration and Termination . This Agreement shall continue until terminated by the Fund or by the Administrator on sixty (60) days prior written notice to the other party. In the event the Fund gives notice of termination, all expenses associated with movement (or duplication) of records and materials and conversion thereof to a successor accounting and administration services agent(s) (and any other service provider(s)), and all trailing expenses incurred by the Administrator, will be borne by the Fund.
18. Change of Control . Notwithstanding any other provision of this Agreement, in the event of an agreement to enter into a transaction that would result in a Change of Control of the Funds adviser or sponsor, the Funds ability to terminate the Agreement pursuant to Section 17 will be suspended from the time of such agreement until two years after the Change of Control, provided however; (i) that such ability to terminate will be reinstated if the Change of Control Agreement is abandoned; and (ii) that the Fund may terminate this Agreement for cause on sixty (60) days prior written notice to the other party. For purposes of this Agreement, cause shall mean willful misfeasance, bad faith, gross negligence, or multiple negligent acts by the Administrator which in the aggregate are determined by the Funds Board of Directors to constitute a serious failure to perform
satisfactorily the Administrators obligations and duties set forth herein.
19. Notices . Notices shall be addressed (a) if to the Administrator, at 301 Bellevue Parkway, Wilmington, Delaware 19809, Attention: President; (b) if to the Fund, at 103 Bellevue Parkway, Wilmington, Delaware 19809, Attention: Salvatore R. Faia or (c) if to neither of the foregoing, at such other address as shall have been given by like notice to the sender of any such notice or other communication by the other party. If notice is sent by confirming telegram, cable, telex or facsimile sending device, it shall be deemed to have been given immediately. If notice is sent by first-class mail, it shall be deemed to have been given three days after it has been mailed. If notice is sent by messenger, it shall be deemed to have been given on the day it is delivered.
20. Amendments . This Agreement, or any term thereof, may be changed or waived only by written amendment, signed by the party against whom enforcement of such change or waiver is sought.
21. Assignment . The Administrator may assign its rights hereunder to any affiliate of the Administrator, provided that the Administrator gives the Fund 30 days prior written notice of such assignment.
22. Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
23. Further Actions . Each party agrees to perform such further acts and execute such further documents as are necessary to effectuate the purposes hereof.
24. Miscellaneous .
(a) Notwithstanding anything in this Agreement to the contrary, the Fund agrees not
to make any modifications to its registration statement or adopt any policies which would affect materially the obligations or responsibilities of the Administrator hereunder without the prior written approval of the Administrator, which approval shall not be unreasonably withheld or delayed.
(b) Except as expressly provided in this Agreement, the Administrator hereby disclaims all representations and warranties, express or implied, made to the Fund or any other person, including, without limitation, any warranties regarding quality, suitability, merchantability, fitness for a particular purpose or otherwise (irrespective of any course of dealing, custom or usage of trade), of any services or any goods provided incidental to services provided under this Agreement. The Administrator disclaims any warranty of title or non-infringement except as otherwise set forth in this Agreement.
(c) This Agreement embodies the entire agreement and understanding between the parties and supersedes all prior agreements and understandings relating to the subject matter hereof, provided that the parties may embody in one or more separate documents their agreement, if any, with respect to delegated duties. The captions in this Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect. Notwithstanding any provision hereof, the services of the Administrator are not, nor shall they be, construed as constituting legal advice or the provision of legal services for or on behalf of the Fund or any other person.
(d) This Agreement shall be deemed to be a contract made in Delaware and governed by Delaware law, without regard to principles of conflicts of law.
(e) If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns.
(f) The facsimile signature of any party to this Agreement shall constitute the valid and binding execution hereof by such party.
(g) To help the U.S. government fight the funding of terrorism and money laundering activities, U.S. Federal law requires each financial institution to obtain, verify, and record certain information that identifies each person who initially opens an account with that financial institution on or after October 1, 2003. Certain of the Administrators affiliates are financial institutions, and the Administrator may, as a matter of policy, request (or may have already requested) the Funds name, address and taxpayer identification number or other government-issued identification number, and, if such party is a natural person, that partys date of birth. the Administrator may also ask (and may have already asked) for additional identifying information, and the Administrator may take steps (and may have already taken steps) to verify the authenticity and accuracy of these data elements.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first above written.
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BNY MELLON INVESTMENT SERVICING (US) INC. |
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By: |
/s/ Jay F. Nusblatt |
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Name: |
Jay F. Nusblatt |
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Title: |
Managing Director |
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THE RBB FUND, INC. |
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By: |
/s/ Salvatore Faia |
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Name: |
Salvatore Faia, JD, CPA, CFE |
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Title: |
President |
Exhibit (h)(66)
AMENDMENT NO. 5
TO
TRANSFER AGENCY AGREEMENT
This Amendment No. 5 To Transfer Agency Agreement, dated as of , 2012 ( Amendment No. 5 ), is being entered into by and between BNY Mellon Investment Servicing (US) Inc. ( BNYM ) and The RBB Fund, Inc. ( Company ).
Background
BNYM (under its former names Provident Financial Processing Corporation or PFPC Inc.) and the Company entered into a Transfer Agency Agreement, dated as of November 5, 1991 and into four amendments thereto dated July 24, 2002 through July 18, 2007 (collectively, the Amended Agreement ). BNYM and the Company wish to amend the Amended Agreement on the terms and conditions provided for in this Amendment No. 5.
Terms
NOW, THEREFORE , in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound. agree to the statements set forth above and as follows:
1. Modifications to Amended Agreement . The Amended Agreement is amended as follows:
(a) The phrases Provident Financial Processing Corporation and PFPC Inc. shall be deleted each place they appear and be replaced with the phrase BNY Mellon Investment Servicing (US) Inc.; the defined terms Transfer Agent and PFPC shall be deleted each place they appear and be replaced with the defined term BNYM; and any reference to The PNC Financial Services Group, Inc or any predecessor in interest thereto shall be replaced by a reference to The Bank Of New York Mellon Corporation.
(b) Section 12 is deleted in its entirety and replaced with the following:
4. Confidentiality .
(a) Each party shall keep the Confidential Information (as defined in subsection (b) below) of the other party in confidence and will not use or disclose or allow access to or use of such Confidential Information except in connection with the activities contemplated by this Agreement or as otherwise expressly agreed in writing. Each party acknowledges that the Confidential Information of the disclosing party will remain the sole property of such party. In complying with the first sentence of this subsection (a), each party will use the same degree of care it uses to protect its own confidential information, but in no event less than a commercially reasonable degree of care.
(b) Subject to subsections (c) and (d) below, Confidential Information means (i) this Agreement and its contents, all compensation agreements, arrangements and understandings (including waivers) respecting this Agreement, disputes pertaining to the Agreement, and information about a partys exercise of rights hereunder, performance of obligations hereunder or other conduct of a party in connection with the Agreement, (ii) information and data of, owned by or about a disclosing party or its affiliates, customers, or subcontractors that may be provided to the other party or become known to the other party in the course of the relationship established by this Agreement, regardless of form or content, including but not limited to (A) competitively sensitive material, and not generally known to the public, including, but not limited to, studies, plans, reports, surveys, summaries, documentation and analyses, regardless of form, information about product plans, marketing strategies, finances, operations, customer relationships, customer profiles, customer
lists, sales estimates, business plans, and internal performance results relating to the past, present or future business activities of the Fund or BNYM, their respective subsidiaries and Affiliates and the customers, clients and suppliers of any of them; (B) scientific, technical or technological information, a design, process, procedure, formula, or improvement that is commercially valuable and secret in the sense that its confidentiality affords the Fund or BNYM a competitive advantage over its competitors; (C) a confidential or proprietary concept, documentation, report, data, specification, computer software, source code, object code, flow chart, database, invention, know how, trade secret, whether or not patentable or copyrightable; (D) information related to security, disaster recovery, business continuity and any other operational plans, procedures, practices and protocols, and (E) anything designated as confidential, and (iii) to any extent not included within clause (i) or clause (ii) above, with respect to BNYM, the Proprietary Items (as defined in Schedule C) and any information provided by BNYM from within the BNYM System that is not Company Data (as defined in Schedule C).
(c) Information or data that would otherwise constitute Confidential Information under subsection (b) above shall not constitute Confidential Information to the extent it:
(i) is already known to the receiving party at the time it is obtained;
(ii) is or becomes publicly known or available through no wrongful act of the receiving party;
(iii) is rightfully received from a third party who, to the receiving partys knowledge, is not under a duty of confidentiality;
(iv) is released by the protected party to a third party without restriction; or
(v) has been or is independently developed or obtained by the receiving party without reference to the Confidential Information provided by the protected party.
(d) Confidential Information of a disclosing party may be used or disclosed by the receiving party in the circumstances set forth below but except for such permitted use or disclosure shall remain Confidential Information subject to all applicable terms of this Agreement:
(i) in connection with activities contemplated by this Agreement;
(ii) as required by law or regulation or pursuant to a court order, subpoena, order of a governmental or regulatory or self-regulatory authority or agency, or binding discovery request in pending litigation (provided the receiving party will provide the other party written notice of such requirement, to the extent such notice is permitted, and subject to proper jurisdiction, if applicable);
(iii) in connection with inquiries, examinations, audits or other reviews by a governmental, regulatory or self-regulatory authority or agency, audits by independent auditors or requests for advice or opinions from counsel; or
(iv) the information or data is relevant and material to any claim or cause of action between the parties or the defense of any claim or cause of action asserted against the receiving party.
(e) Subject to the exceptions in (d), each party agrees not to publicly disseminate Confidential Information of the other party or mutual Confidential Information.
(f) The provisions of this Section 12 shall survive termination of this Agreement for a period of three (3) years after such termination.
(c) New Sections 27, 28 and 29 which read in their entirety as follows are added:
27. Access To And Use Of The BNYM System . The terms of Schedule C to this Agreement shall apply to the Funds access to and use of any component of the BNYM System (as defined in Schedule C).
28. Ownership Rights . Ownership rights with respect to property utilized in connection with the parties use of the BNYM System shall be governed by applicable provisions of Schedule C which are hereby incorporated by reference into this Section 7, and shall apply to the Agreement, as if fully set forth in this Section 7.
29. Certain Definitions .
(a) Original Agreement means the Transfer Agency Agreement, dated as of November 5, 1991, between the Company and BNYM (under its former name Provident Financial Processing Corporation).
(b) Amendments means the amendments to the Original Agreement listed on Appendix C.
(c) Current Amendment means the last Amendment listed on Appendix C.
(d) Prior Amendments means all Amendments with the exception of the Current Amendment.
(e) Amended Agreement means the Original Agreement as amended by the Prior Amendments.
(f) Agreement means the Original Agreement as amended by all Amendments.
(g) Fund means, individually and collectively as required by the context, The RBB Fund, Inc. and each portfolio of The RBB Fund, Inc. referred to in this Agreement as a Class.
(d) The words and parenthetical appearing as (the Fund) in the first sentence of the Agreement are hereby deleted.
(e) A new Schedule B shall be added which reads in its entirety as set forth on the Schedule B attached to the Amendment dated July , 2012.
(f) A new Schedule C shall be added which reads in its entirety as set forth on the Exhibit C attached to the Amendment dated July , 2012.
(h) The following Amendments are hereby rescinded and deleted in their entirety and hereinafter have no further force or effect:
Title of Amendment |
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Amendment To The Transfer Agency Agreement For IMPRESS Net Services |
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11/1/2002 |
Amendment To Transfer Agency Agreement (relating to the PFPC 22c-2 System) |
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7/18/2007 |
2. Remainder of Amended Agreement . Except as explicitly amended by this Amendment No. 5, the terms and provisions of the Amended Agreement are hereby ratified, declared and remain in full force and effect.
3. Governing Law . The governing law of the Amended Agreement shall be the governing law of this Amendment No. 5.
4. Entire Agreement . This Amendment No. 5 constitutes the final, complete, exclusive and fully integrated record of the agreement of the parties with respect to the subject matter herein and the amendment of the Amended Agreement with respect to such subject matter, and supersedes all prior and contemporaneous proposals, agreements, contracts, representations and understandings, whether written, oral or electronic, between the parties with respect to the same subject matter.
5. Facsimile Signatures; Counterparts . This Amendment No. 5 may be executed in one more counterparts; such execution of counterparts may occur by manual signature, facsimile signature, manual signature transmitted by means of facsimile transmission or manual signature contained in an imaged document attached to an email transmission; and each such counterpart executed in accordance with the foregoing shall be deemed an original, with all such counterparts together constituting one and the same instrument. The exchange of executed copies of this Amendment No. 5 or of executed signature pages to this Amendment No. 5 by facsimile transmission or as an imaged document attached to an email transmission shall constitute effective execution and delivery hereof and may be used for all purposes in lieu of a manually executed copy of this Amendment No. 5.
IN WITNESS WHEREOF , the parties hereto have caused this Amendment No. 5 To Transfer Agency Agreement to be executed by their duly authorized officers as of the day and year first written above.
On Behalf of the The RBB Fund, Inc., and each Fund in its individual and separate capacity |
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BNY Mellon Investment Servicing (US) Inc. |
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By: |
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SCHEDULE B
Amendments to the Transfer Agency Agreement
Name |
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Date |
Anti-Money Laundering and Privacy Amendment |
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7/24/2002 |
Amendment To The Transfer Agency Agreement For IMPRESS Net Services |
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11/1/2002 |
Section 312 Foreign Financial Institution Amendment |
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7/5/2006 |
Amendment To Transfer Agency Agreement
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7/18/2007 |
Amendment No. 5 To Transfer Agency Agreement |
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7/ /2012 |
SCHEDULE C
Terms And Conditions Governing Use Of The BNYM System
SECTION 0. GENERAL
0.1 Capitalized Terms. Capitalized terms not defined in this Schedule C shall have the meaning ascribed to them in the Main Agreement. Capitalized terms defined in this Schedule C shall have that meaning solely in this Schedule C and not in any other part of the Agreement unless expressly stated otherwise in a specific instance. References to Section numbers in this Schedule C shall mean Sections of this Schedule C unless expressly stated otherwise in a specific instance. References to the Agreement in this Schedule C means the Main Agreement and this Schedule C.
0.2 Purpose. BNYM utilizes some components of the BNYM System to perform the Core Services. But BNYM does not utilize all components of the BNYM System to provide the Core Services. Some components of the BNYM System are maintained by BNYM and offered to customers solely to permit customers to access the data and information maintained in the BNYM System in connection with the Core Services and put it to additional uses. Consequently, Company is given rights pursuant to this Schedule C (i) to access and use components of the BNYM System, from the Company System (as defined in Section 2.7), to engage in activities that are separate and distinct and apart from the activities engaged in by BNYM to provide the Core Services, and (ii) to authorize third parties, the Permitted Users, to access and use certain Component Systems to engage in activities that are also separate and distinct and apart from the activities engaged in by BNYM to provide the Core Services. Such access and use of the BNYM System by Company from the Company System and by Permitted Users may include the ability to input data and information into the BNYM System that BNYM utilizes in performing the Core Services but which is not required for BNYM to perform the Core Services. This ability of Company and Permitted Users to access and use the BNYM System represents a service offered by BNYM that is supplemental to the Core Services. No access to or use of the BNYM System by Company or Permitted Users is permitted, required or contemplated by the Core Services or the Main Agreement. This Schedule C governs solely those supplemental services offered by BNYM and Companys use of them.
SECTION 1. CERTAIN DEFINITIONS
Authorized Person means the employees of Company and Permitted Users who have been authorized by the Company in accordance with the applicable Documentation and procedures of BNYM to access and use the Licensed System or specific Component Systems and in connection with such access and use to be issued Security Codes (as defined at Section 2.6(b) below).
BNYM Web Application means with respect to a relevant Component System the collection of electronic documents and files, content, text, graphics, processes, functions, and software code, including, but not limited to, HTML and XML files, Java and JavaScript files, graphics files, animation files, data, technology, scripts, programs, interfaces and databases residing on a computer system maintained by or for BNYM, accessible via the Internet at an Internet address furnished by BNYM for use of the particular Component System.
Company means the Fund.
Company Data means (i) data and information regarding each Fund and the shareholders and shareholder accounts of each Fund which is inputted into the Licensed System and the content of records, files and reports generated from such data and information by the Licensed System, and (ii) Company 22c-2 Data (as defined in Section 6.16(a) of this Schedule C).
Company Web Application means the collection of electronic documents and files, content, text, graphics, processes, functions, and software code, including, but not limited to, HTML and XML files, Java and JavaScript files, graphics files, animation files, data, technology, scripts, programs, interfaces and databases residing on a computer system maintained by or for the Company, connected to the Internet and utilized by the Company in connection with its use of a Component System as contemplated by applicable Documentation.
Component System means, as of its relevant License Effective Date, each Listed System and each Support Function that is part of the Licensed System and, subsequent to a relevant License Effective Date, such Listed Systems and Support Functions as they may be changed as provided in subsection (b) of the definition of Licensed System.
Copy , whether or not capitalized, means any paper, disk, tape, film, memory device, or other material or object on or in which any words, object code, source code or other symbols are written, recorded or encoded, whether permanent or transitory.
Core Services means the services described in the Main Agreement that BNYM is obligation to perform for Company (for clarification: excluding the products and services provided pursuant to this Schedule C).
Documentation means any user manuals, reference guides, specifications, documentation, instruction materials and similar recorded data and information, whether in electronic or physical output form, that BNYM makes available to, provides access to or provides to the Company, and that describe how the Licensed System is to be operated by users and set forth the features, functionalities, user responsibilities, procedures, commands, requirements, limitations and capabilities of and similar information about the Licensed System.
Exhibit 1 means Exhibit 1 to this Schedule C.
General Upgrade means (i) an Upgrade that BNYM in its sole and absolute discretion incorporates into the Licensed System at no additional fees or charges to Company, and (ii) an Upgrade that BNYM offers to incorporate into the Licensed System without charge or at such additional fees and charges as the parties shall agree in writing and that Company accepts for incorporation into the Licensed System.
Harmful Code means any computer code intentionally designed to (a) disable, impair, delete, damage or corrupt a computer processing system, computer network, computer service, a deliverable for any of the foregoing, interface, data, files, software, storage media, or computer or electronic hardware or equipment; (b) impair in any way the operation of any of the foregoing based on the elapsing of a period of time, advancement of a particular date or other numeral (sometimes referred to as time bombs, time locks, or drop dead devices); or (c) permit a non-authorized party to access, transmit or utilize, as appropriate, any computer processing system, computer network, computer service, deliverable for any of the foregoing, interface, data, files, software, storage media, or computer or electronic hardware or equipment without proper consent, (sometimes referred to as lockups, traps, access codes, or trap door devices); or (d) any other similar harmful or hidden procedures, routines or mechanisms.
Intellectual Property Rights means the legal rights, interests and protections afforded under applicable patent, copyright, trademark, trade secret and other intellectual property laws.
License Effective Date means, with respect to each Component System of the Licensed System that Company is given the right to access and use, the date as of which the Company is first given such right to access and use.
Licensed Services means all functions performed by the Licensed System.
Licensed System means, collectively:
(a) as of its applicable License Effective Date, any one or more of the of the following: (i) any Listed System to which the Company is given access to and use of by BNYM in its entirety; and (ii) any Support Function , which is hereby defined to mean any system, subsystem, software, program, application, interface, process, subprogram, series of commands or function, regardless of the degree of separability from or integration with a Listed Program, that Company is given access to and use of to support its utilization of a Listed System - items within Support Function and this clause (ii) could be one or more parts of a Listed System or could be items which exist apart from any Listed System but which are provided to support utilization of a Listed System.
(b) Updates, General Upgrades and Company Modifications (as defined at Section 2.16) to the Listed Systems included within clause (a)(i) above and the systems, subsystems, software, programs, applications, interfaces, processes, subprograms, series of commands and functions included within clause (a)(ii) above.
Listed Systems means the computer systems listed on Exhibit 1, whether mainframe systems, surround systems, subsystems or component systems, and in the case of the NSCC and CMS means as well the separate and distinct component systems of NSCC and CMS that BNYM may give Company access to and use of at Companys request in lieu of access to and use of the entire NSCC or CMS.
Main Agreement means the part of this Agreement that commences on the first page and ends with but includes Schedule A, excluding Section 3(d) (which incorporates this Schedule C into the Agreement).
Marks means trademarks, service marks and trade names as those terms are generally understood under applicable intellectual property laws and any other marks, names, words or expressions of a similar character.
Permitted User means a person other than an employee of the Company who is authorized by the Company pursuant to and in accordance with Section 2.1(a)(ii) and all applicable Documentation to access and use one or more specific Component Systems.
Product Assistance means assistance provided by BNYM personnel regarding the Licensed System, including regarding its impact on other software, functionality, usage and integration.
Proprietary Items means:
(a) (i) All contents of the Listed Systems, (ii) all systems, subsystems, software, programs, applications, interfaces, processes, subprograms, series of commands or functions, regardless of the degree of separability from or integration with a Listed Program, and whether or not part of a Listed Program, that BNYM may at any time provide any customer with access to and use of to support the customers s utilization of a Listed System, including the Support Functions, (iii) all systems, subsystems, software, programs, applications, interfaces, processes, subprograms, series of commands or functions which BNYM utilizes in providing any of the services, or engaging in any of the activities, contemplated by this Agreement, (iv) all systems, subsystems, software, programs, applications, interfaces, processes, subprograms, series of commands or functions owned, leased, licensed or sublicensed by BNYM which interface with, provide data to or receive data from any of the foregoing, and (v) all updates, upgrades, revisions, modifications, refinements, releases, versions, instances, translations, enhancements and improvements to and of all or any part of the foregoing, whether in existence on, or occurring prior to or subsequent to, the Effective Date (collectively, the BNYM Software );
(b) all facilities, central processing units, nodes, equipment, storage devices, peripherals and hardware utilized by BNYM in connection with the BNYM Software (the BNYM Equipment );
(c) all documentation materials relating to the BNYM Software, including materials describing functions, capabilities, dependencies and responsibilities for proper operation of the Licensed System, including the Documentation, and all updates, upgrades, revisions, modifications, refinements, releases, versions, translations, enhancements and improvements to or of all or any part of foregoing (the BNYM Documentation , and together with the BNYM Software and the BNYM Equipment, the System or the BNYM System ) and all versions of the BNYM System as they may exist after the Effective Date or may have existed at any time prior to the Effective Date;
(d) all methods, concepts, visual expressions, screen formats, file and report formats, interactivity techniques, engine protocols, models and design features used in the BNYM System;
(e) source code and object code for all of the foregoing, as applicable;
(f) all derivative works, inventions, discoveries, patents, copyrights, patentable or copyrightable items and trade secrets prepared or furnished by or for BNYM in connection with the performance of the services or in connection with any activities of the parties related to this Agreement;
(g) all materials related to the testing, implementation, support and maintenance of all of the foregoing;
(h) all other documentation, manuals, tutorials, guides, instructions, policy and procedure documents and other materials in any recorded medium prepared or furnished by or for BNYM in connection with the performance of the Licensed Services or in connection with any activities of the parties related this Agreement;
(i) the contents of all databases and other data and information of whatsoever nature in the BNYM System, other than Company Data, whether residing in the BNYM System or existing outside the BNYM System in recorded form whether in hardcopy, electronic or other format; and
(j) all copies of any of the foregoing in any form, format or medium.
Terms of Use means any privacy policy, terms of use or other terms and conditions made applicable by BNYM in connection with the Companys or a Permitted Users access to and use of a Component System or a BNYM Web Application or other access site or access method.
Third Party Products means the products or services of parties other than BNYM that constitute part of the Licensed System.
Third Party Provider means licensors, subcontractors and suppliers of BNYM furnishing the Third Party Products.
United States means the states and the District of Columbia of the United States.
Update means a modification to a Component System necessary to maintain the operation of the Component System in compliance with the Documentation in effect as of the Component Systems applicable License Effective Date and includes without limitation modifications correcting any design or operational errors in the Component System and modifications enabling the Component System to be operated in any revised operating environment issued by BNYM and excludes Upgrades.
Upgrade means an enhancement to a Component System as it exists on its applicable License Effective Date, new features and new functionalities added to the Component System as it exists on its applicable License Effective Date, and all revisions, modifications, refinements, releases, enhancements and improvements to a Component System as it exists on its applicable License Effective Date which change the operation of Component System rather than just bring it into compliance with the applicable Documentation.
SECTION 2. LICENSED RIGHTS AND COMPANY OBLIGATIONS
2.1 Licensed Rights .
(a) (i) BNYM hereby grants to Company a limited, nonexclusive, nontransferable license to access and use the Licensed System in the United States through its employees (other than as expressly permitted otherwise by Section 2.1(a)(ii) below), solely in accordance with applicable Documentation, through the interfaces and telecommunication lines designated by BNYM, strictly for the internal business purposes of the Company, solely in support of the Core Services and solely for so long as any applicable fees are paid by Company.
(ii) The license granted by Section 2.1(a)(i) includes, where such access and use is expressly contemplated by the Documentation applicable to a particular Component System to which the Company has been given access and use, the right to authorize persons not employees of the Company to access and use in the United States the specified Component System strictly in compliance with applicable Documentation, through the interfaces and telecommunication lines designated by BNYM, solely in support of the Core Services and solely for so long as any applicable fees are paid by Company. Except with respect to Fund shareholders seeking to access IAM, to exercise the right contained in this Section 2.1(a)(ii) the Company must designate such persons to BNYM and approve them in a writing that conforms to the requirements of applicable Documentation and procedures of BNYM and furnish any information reasonably requested by BNYM. Access to IAM for Fund shareholders shall occur in accordance with the Documentation applicable to IAM. Upon the exercise by Company of the right contained in this Section 2.1(a)(ii), the term Company shall be redefined for all purposes of this Agreement to mean the Company and all Permitted Users, individually and collectively, unless in an individual case the context clearly requires that the definition be restricted solely to the Company. The Company shall be responsible and liable for compliance by Permitted Users with all applicable terms of the Agreement as if the Permitted Users were its own employees.
(iii) Company may not, and shall not under any circumstances grant sublicenses to any right granted by this Section 2.1 or subcontract or delegate any right granted by this Section 2.1 or use the Licensed System to provide
services to third parties, other than shareholders of its Funds, or for any other purpose other than that described in Sections 2.1(a)(i) and (ii).
(b) The grant of rights in this Section 2.1 shall be construed narrowly. No grant of license is made hereunder to Company or any other party, except the license to Company expressly provided in this Section 2.1. The rights granted by this Section 2.1 shall immediately terminate without further action required on anyones part, including without prior notification, upon the termination or expiration of the Agreement. BNYM and its licensors reserve all rights in the BNYM System not expressly granted to Company in this Section 2.1. Nothing in this Section 2.1 shall be construed to give Company rights of any nature in source code. The rights granted to Company by this Section 2.1 are sometimes referred to herein as the Licensed Rights .
(c) For clarification:
Company may be given access to and use of a Listed System which contains integration points or links to one or more Support Functions that are part of a Listed System to which the Company has not been given access and use ( Linked Functions ). The Licensed Rights granted by this Section 2.1 to access and use a particular Listed System containing integration points or links to Linked Functions includes the right to access and use such Linked Functions, does not include the right to use the entire Listed System containing the Linked Functions or other subsystems, software, programs, applications, interfaces, processes, subprograms, series of commands or functions in that Listed System. To the extent exercise of Licensed Rights hereunder inadvertently or otherwise results in access to or use of a Component System or other system, subsystem, software, program, application, interface, process, subprogram, series of commands or function which is not part of the its Licensed System, all terms of this Agreement shall apply to such access and use.
2.2 Documentation . Company shall use the Licensed System solely and strictly in accordance and compliance with the Documentation provided or made available to Company by BNYM from time to time and any specifications contained therein. Company may use only the number of copies of the Documentation that are provided to Company and may not make any additional copies of such Documentation, except that Company may copy the Documentation to the extent reasonably necessary for routine backup and disaster recovery purposes and upon request of an applicable regulatory authority. Company shall pay BNYM such fees as it has established for copies of the Documentation, if any, as listed in the Fee Agreement.
2.3 Third Party Software and Services . Company acknowledges that Third Party Products may constitute part of the Licensed System. Companys use of Third Party Products shall be subject to the terms and conditions of this Agreement; provided , however , access, use, maintenance and support of Third Party Products made available to Company after an applicable License Effective Date may be conditioned upon Companys execution of an agreement with the applicable Third Party Provider ( Third Party Agreement ) which would provide for certain rights and obligations between the Company and the Third Party Provider ( Direct Third Party Product ), in which case the terms of the Third Party Agreement will also apply to Companys use of the particular Third Party Product. Notwithstanding the foregoing sentences of this Section 2.3, Company acknowledges that BNYM is not responsible for, nor does BNYM warrant the performance or other features of, nor can it fix errors or defects in, third party software and services and BNYMs sole obligation with respect to third party software and services is to inform the third party of any errors, defects, deficiencies or other matters regarding the third party software and services of which BNYM is made aware by Company and to request remediation of the errors, defects or deficiencies by the third party to the extent BNYM determines remediation to be reasonably available pursuant to the terms of the agreement with the third party.
2.4 Compliance With Applicable Law . Company shall comply with all laws, regulations, rules and orders of whatsoever nature of governmental bodies and authorities (whether legislative, executive, independent, self-regulatory or otherwise) applicable to the business or activities in connection with which it utilizes the Licensed System.
2.5 Responsibility For Use .
(a) The Company alone will be responsible for furnishing, or arranging for a third party to furnish, all data and information required by the Documentation and the specifications therein for the Licensed System to function and perform in accordance with the Documentation, other than the data and information residing in the Licensed System in connection with BNYMs performance of the Core Services. BNYM shall have no liability or responsibility for any Loss caused in whole or in part by the Companys or a Permitted Users exercise of the Licensed Rights or use of the
Licensed System or by data or information of any nature inputted into the Licensed System by or under the direction or authorization of Company or a Permitted User; provided , however , this Section 2.5 shall not relieve BNYM of its obligation to act in accordance with its obligations under the Main Agreement. Company shall be responsible and solely liable for the cost or expense of regenerating any output or other remedial action if the Company, a Permitted User or an agent of either shall have failed to transmit properly and in the correct format any data or information, shall have transmitted erroneous or incorrect information or data, or shall have failed to timely verify or reconcile any such data or information when it is generated by the System ( Data Faults ).
(c) Company warrants that the data transmitted to the Licensed System by or under the direction or authorization of Company or Permitted Users will not disrupt, disable, harm, or otherwise impede in any manner the operation of the Licensed System or any associated software, firmware, hardware, or BNYM computer system or network.
2.6 Internal Control Obligations .
(a) Company shall adopt and implement commercially reasonable internal control procedures regarding the use of the Licensed System, which internal control procedures shall be reasonably designed to ensure that any use of the Licensed System complies with (i) Sections 2.1, 2.2, 2.6, 2.12, 2.17, 2.20 and 3.4 of this Schedule C, and (ii) applicable Documentation.
(b) Company shall establish and adhere to security policies and procedures intended to (i) safeguard the System from unauthorized or improper access and use from equipment utilized by the Company, (ii) safeguard the integrity and validity of any user identifications, access passwords, mnemonics and other security data elements related to accessing the Licensed System or any Component System ( Security Codes ), and (iii) prevent unauthorized access to and protect electronically stored, processed or transmitted information. Such policies and procedures shall be at least equal to industry standards and any higher standard agreed upon by the Parties.
(c) Unless Company obtains prior written permission from BNYM, Company shall permit only Authorized Persons to use Security Codes assigned to or selected by Company with respect to the Licensed System. The Security Codes shall constitute Confidential Information of both Company and BNYM under the Agreement subject to all obligations thereunder, and Company shall not permit access to Security Codes to any person other than Authorized Persons. Company shall notify BNYM immediately if Company has reason to believe that any person who is not an Authorized Person has obtained access to a Security Code or accessed or used the Licensed System, that an Authorized Person has accessed or used the Licensed System using Security Codes not assigned to that Authorized Person, that any other loss of confidentiality with respect to a Security Code has occurred or the security of the Licensed System has otherwise been breached.
(d) Company shall verify and confirm all information entered on the Licensed System and shall notify BNYM of any error in any information entered on the Licensed System as soon as practicable following Companys knowledge of such error.
(e) Company will not recirculate, redistribute or otherwise retransmit or re-rout the Licensed System to any third party or authorize the use of any information included on the Licensed System on any equipment or display not authorized by BNYM without BNYMs prior express written approval.
2.7 Company Resources .
(a) Company will be solely responsible, at Companys expense, for procuring, maintaining, and supporting all third-party software and all workstations, personal computers, printers, controllers or other hardware or peripheral equipment at Companys sites ( Company System ) required for Company to operate the Licensed System in accordance with the Documentation and specifications provided by BNYM from time to time. BNYM will provide Company with specifications for Company System, including any requirements relating to the connection and operation of Company System with the Licensed System and Third Party Products. Company shall conform its operating system environment to the operating system requirements provided by BNYM for the Licensed System. Company will support and maintain Companys System as necessary to ensure its operation does not impact the Licensed System adversely or otherwise in a manner not contemplated by the Documentation.
(b) Company shall, at its own expense, devote such of the Company System and other equipment, facilities, personnel and resources reasonably necessary to (a) implement the Licensed System, (b) be trained in the use of the Licensed System, (c) perform timely any electrical work and cable installation necessary for Companys use of the Licensed System, and (d) begin using the Licensed System on a timely basis. BNYM shall not be responsible for any delays or fees and costs associated with Companys failure to timely perform its obligations under this Section 2.7.
2.8 Company Telecommunications and Data Transmissions . Company will be solely responsible for complying at all times with telecommunications requirements designated by BNYM for use of the Licensed System. Any data or information electronically transmitted by or on behalf of Company to the Licensed System will be so transmitted solely and exclusively in the format specified by BNYM.
2.9 Notices Of Material Increase In Use. Company shall give advance written notice to BNYM whenever Company intends to increase its scope of use of the Licensed System in any material respect. Upon receipt of such notice, Company and BNYM shall mutually agree in writing on any required changes to the Companys scope of use for the Licensed System and, if applicable, the corresponding fees with respect to such increased scope.
2.10 Certifications and Audits . Company shall promptly complete and return to BNYM any certifications which BNYM in its sole discretion may from time to time send to Company, certifying that Company is using the Licensed System in strict compliance with the terms and conditions set forth in this Agreement. BNYM may, at its expense and after giving reasonable advance written notice to Company, enter Company locations during normal business hours and audit Companys utilization of the Licensed System, the number of copies of the Documentation in Companys possession, and the scope of use and information pertaining to Companys compliance with the provisions of this Agreement. The foregoing right may be exercised directly by BNYM or by delegation to an independent auditor acting on its behalf. If BNYM discovers that there is any unauthorized scope of use or that Company is not in compliance with the aforementioned provisions, Company shall reimburse BNYM for the full costs incurred in conducting the audit.
2.11 Taxes . The amounts payable by Company to BNYM in consideration of the performance of services by BNYM under the Agreement, including providing access to and use of the Licensed System pursuant to this Schedule C, do not include, and Company will timely pay, all federal, state and local taxes (including sales, use, excise and property taxes), if any, assessed or imposed in connection therewith, excluding any taxes imposed upon BNYM based upon BNYMs net income.
2.12 Use Restrictions .
(a) Company will not do or attempt to do, and Company will not permit any other person or entity to do or attempt to do, any of the following, directly or indirectly:
(i) use any Proprietary Item for any purpose, at any location or in any manner not specifically authorized by this Agreement;
(ii) make or retain any copy of any Proprietary Item except as specifically authorized by this Agreement;
(iii) create, recreate or obtain the source code for any Proprietary Item;
(iv) refer to or otherwise use any Proprietary Item as part of any effort to develop other software, programs, applications, interfaces or functionalities or to compete with BNYM or a Third Party Provider;
(v) modify, adapt, translate or create derivative works based upon any Proprietary Item, or combine or merge any Proprietary Item or part thereof with or into any other product or service not provided for in this Agreement and not authorized in writing by BNYM;
(vi) remove, erase or tamper with any copyright or other proprietary notice printed or stamped on, affixed to, or encoded or recorded in any Proprietary Item, or fail to preserve all copyright and other proprietary notices in any copy of any Proprietary Item made by Company;
(vii) sell, transfer, assign or otherwise convey in any manner any ownership interest or Intellectual Property Right of BNYM, or market, license, sublicense, distribute or otherwise grant, or subcontract or delegate to any other person, including outsourcers, vendors, consultants, joint venturers and partners, any right to access or use any Proprietary Item, whether on Companys behalf or otherwise;
(viii) subcontract for or delegate the performance of any act or function involved in accessing or using any Proprietary Item, whether on Companys behalf or otherwise;
(ix) reverse engineer, re-engineer, decrypt, disassemble, decompile, decipher, reconstruct, re-orient or modify the circuit design, algorithms, logic, source code, object code or program code or any other properties, attributes, features or constituent parts of any Proprietary Item;
(x) take any action that would challenge, contest, impair or otherwise adversely effect an ownership interest or Intellectual Property Right of BNYM;
(xi) use any Proprietary Item to provide remote processing, network processing, network communications, a service bureau or time sharing operation, or services similar to any of the foregoing to any person or entity, whether on a fee basis or otherwise;
(xii) allow Harmful Code into any Proprietary Item, as applicable, or into any interface or other software or program provided by it to BNYM, through Companys systems or personnel or Companys use of the Licensed Services or Companys activities in connection with this Agreement.
(b) Company shall, promptly after becoming aware of such, notify BNYM of any facts, circumstances or events regarding its or a Permitted Users use of the Licensed System that are reasonably likely to constitute or result in a breach of this Section 2.12, and take all reasonable steps requested by BNYM to prevent, control, remediate or remedy any such facts, circumstances or events or any future occurrence of such facts, circumstances or events.
2.13 Restricted Party Status . Company warrants at all times that it is not a Restricted Party , which shall be defined to mean any person or entity: (i) located in or a national of Cuba, Iran, Libya, North Korea, Sudan, Syria, or any other countries that may, from time to time, become subject to U.S. export controls for anti-terrorism reasons or with which U.S. persons are generally prohibited from engaging in financial transactions; (ii) on the U.S. Department of Commerce Denied Persons List, Entity List, or Unverified List; U.S. Department of the Treasury list of Specially Designated Nationals and Blocked Persons; or U.S. Department of State List of Debarred Parties; (iii) engaged in activities involving nuclear materials or weapons, missile or rocket technologies, or proliferation of chemical or biological weapons; (iv) affiliated with or a part of any non-U.S. military organization, or (v) designated by the U.S. Government to have a status equivalent to any of the foregoing. If Company becomes a Restricted Party during the term of this Agreement, the Licensed Rights shall terminate immediately without notice and Company shall have no further rights to use the Licensed System.
2.14 Mitigation Measures . Company shall take commercially reasonable measures (except measures causing it to incur out-of-pocket expenses which BNYM does not agree in advance to reimburse) to mitigate losses or potential losses to BNYM, including taking verification, validation and reconciliation measures that are commercially reasonable or standard practice in the Companys business.
2.15 Company Dependencies . To the extent an obligation of BNYM under this Schedule C is dependent and contingent upon Companys or Permitted Users performance of an action or refraining from performing an action that has been specified or described in this Schedule C or the Documentation or that is part of practices and procedures which are commercially reasonable or standard in the users industry ( Company Dependency ), BNYM shall not be liable for Loss to the extent caused by or resulting from, or that could have been avoided but for, a failure to properly perform or a delay in properly performing a Company Dependency and BNYMs obligation to perform an obligation contemplated by this Agreement shall be waived or delayed to the extent the performance of the related Company Dependency is not properly performed or is delayed .
2.16 Software Modifications . Company may request that BNYM, at Companys expense, develop modifications to the software constituting a part of the Licensed System that BNYM generally makes available to customers for modification ( Software ) that are required to adapt the Software for Companys unique business requirements. Such requests, containing the material features and functionalities of all such modifications in reasonable detail, will be submitted by Company in writing to BNYM in accordance with the applicable, commercially reasonable procedures maintained by BNYM at the time of the request. Company shall be solely responsible for preparing, reviewing and verifying the accuracy and completeness of the business specifications and requirements relied upon by BNYM to estimate, design and develop such modifications to the Software. BNYM shall have no obligation to develop modifications to the Licensed System requested by Company, but may in its discretion agree to develop requested modifications which it, in its sole discretion, reasonably determines it can accomplish with existing resources or with readily obtainable resources without disruption of normal business operations provided Company agrees at such time in writing to pay all costs and expenses, including out-of-pocket expenses, associated with the customized modification. BNYM shall be obligated to develop modifications under this Section 2.16 only upon the execution of and in accordance with a writing containing, to BNYMs reasonable satisfaction, all necessary business and technical terms,
specifications and requirements for the modification as determined by BNYM in its sole judgment ( Customization Order ) and Companys agreement to pay all costs and expenses, including out-of-pocket expenses, associated with the customized modification ( Customization Fee Agreement ). All modifications developed and incorporated into the Licensed System pursuant to a Customization Order are referred to herein as Company Modifications . BNYM may make Company Modifications available to all users of the Licensed System, including BNYM, at any time after implementation of the particular Company Modification and any entitlement of Company to reimbursement on account of such action must be contained in the Customization Fee Agreement.
2.17 Export of Software . The Company and Permitted Users are without exception prohibited from (i) accessing or using the BNYM System outside the United States, or (ii) exporting, transmitting, transferring or shipping any Proprietary Item to a country or jurisdiction outside the United States. No provision of the Agreement shall be interpreted to require BNYM to permit access or use outside the United States or to export any Proprietary Item to a country or jurisdiction outside the United States. The Company shall comply with all applicable export and re-export restrictions and regulations of the U.S. Department of Commerce or other U.S. agency or authority and the Company may not transfer a Proprietary Item in violation of any such restrictions and regulations.
2.18 Permitted Users Contemplated By Documentation . Notwithstanding any other provision of the Agreement, to the extent Documentation applicable to a particular Component System contemplates that Company Data will be transmitted or transferred to a Permitted User outside the BNYM System, that Company Data will be made available within the BNYM System for retrieval by a Permitted User for use outside the BNYM System, that the Company Data will be provided or made available to Permitted Users within the BNYM System for use by the Permitted User within the BNYM System or within a system of the Permitted User, or that the Company may authorize Permitted Users to access and use Company Data contained within the Licensed System in any other manner:
(i) The Company hereby grants to BNYM a worldwide, royalty-free, non-exclusive right and license to display the Company Data through any BNYM Web Application contemplated by the Documentation for the applicable Component System and hereby authorizes and directs BNYM, as appropriate, to transmit, transfer, make available and provide the Company Data to Permitted Users, as contemplated by the Documentation applicable to the particular Component System, including without limitation through the Internet or other communication link or method and a BNYM Web Application or other access site or method designated by BNYM for use of the particular Component System;
(ii) The Company hereby authorizes and directs BNYM, (A) to permit Permitted Users to view and use Company Data within the Licensed System as contemplated by applicable Documentation, (B) to act on behalf of a shareholder in any way contemplated by applicable Documentation and authorized by the Company in accordance with applicable Documentation, including to effect purchases, sales, redemptions, distributions, exchanges, transfers and other activities and to change the status, data or information involving a shareholder account or assets in a shareholder account, and (C) to the extent contemplated by applicable Documentation, to permit Permitted Users to download and store, copy in on-line and off-line form, reformat, perform calculations with, and distribute, publish, transmit, and display the Company Data in the systems of the Permitted User and to and through any relevant BNYM Web Application;
(iii) The Company shall have sole responsibility for imposing any desired use restrictions on Permitted Users to the extent use restrictions are contemplated by the applicable Documentation and BNYM shall cooperate in a commercially reasonable manner in imposing such use restrictions to the extent the applicable Documentation contemplates a role for BNYM in imposing such use restrictions;
(iv) The Company acknowledges and agrees that it alone is responsible for entering into agreements with Permitted Users governing the terms and conditions, as between the Company and the Permitted User, of the Permitted Users use of the Company Data; the Company releases BNYM from any and all responsibility and duty for obtaining any such agreements, including agreements relating to confidentiality and privacy of the data and information, and for any monitoring, supervision or inspection of Permitted Users of any nature; the Company releases BNYM from any Loss the Company may incur, and will indemnify and defend BNYM for any Loss it may incur, arising or resulting from or in connection with Company Data after BNYM, as appropriate, transmits, transfers, makes available or provides the Company Data to the Permitted User in accordance with applicable Documentation, whether through a BNYM Web Application or otherwise;
(v) The Company shall be responsible and liable to BNYM for the acts and omissions of Permitted Users while accessing and using a Component System pursuant to authorization from the Company and shall indemnify and defend BNYM for all Loss arising from or related to acts or omissions by a Permitted User that would constitute a breach of this Agreement if committed by the Company, that constitute reckless or intentional misconduct or that constitute a breach of a duty of the Permitted User imposed by this Schedule C; and
(vi) BNYM may immediately terminate access to and use of the Licensed System by a Permitted User if BNYM reasonably believes conduct of the Permitted User would constitute a breach of this Agreement if committed by the Company, constitutes reckless or intentional misconduct, or constitutes a breach of a duty of the Permitted User imposed by this Schedule C, applicable Documentation or applicable Terms of Use.
2.19 Communications with Third Parties regarding Component System Services . The Company shall be solely responsible for communicating with third parties to the extent such is reasonably required for services to be provided in accordance with the Documentation for the particular Component System.
2.20 Compliance with Terms Of Use . The Companys and, to the extent applicable in connection with a particular Component System, each Permitted Users use of a Component System, a BNYM Web Application and any other access site or access method to a particular Component System shall be conducted in full compliance with applicable Terms of Use. In addition, Permitted Users shall be required to comply with requirements set forth in applicable Documentation, including requirements relating to Security Codes, as a condition to use of particular Component Systems.
2.21 Third Party Providers To The Company . The Company shall have sole responsibility to maintain through itself or its agents all agreements with third party providers that may be appropriate for use of a Component System and to pay as they come due all fees and charges associated with such agreements either directly or as passed through on invoices of BNYM.
2.22 Fees . The Company shall be obligated to pay to BNYM such fees and charges for access and use of any part of the Licensed System as may be set forth in the Fee Agreement and such fees and charges shall be paid in accordance with any applicable provisions set forth in the Main Agreement.
SECTION 3. PROVISIONS REGARDING BNYM
3.1 Right to Modify . BNYM may alter, modify or change the Licensed System or any component, code, language, format, design, architecture or element of the Licensed System and present such alterations, modifications and changes to Company as Updates or Upgrades; provided , however , at no time shall this section be interpreted in such a manner as to allow BNYM by such alterations, modifications or changes to fail to comply with any term of this Schedule C.
3.2 Training and Product Assistance . BNYM agrees to use commercially reasonable efforts to provide requested training and Product Assistance for Companys personnel at BNYMs facilities or at Companys facilities in connection with access to and use of the Licensed System and subsequent Updates, as reasonably requested by Company, at BNYMs then-current charges and rates for such services. All reasonable travel and out-of-pocket expenses incurred by BNYM personnel in connection with and during such training or Product Assistance shall be borne by Company upon pre-approval in writing.
3.3 Monitoring . BNYM is not responsible for Companys or Permitted Users use of the Licensed System but shall have the right to monitor such use on BNYMs network solely to verify compliance with the terms and conditions set forth herein and for operational purposes related to the delivery of services by the Licensed System.
3.4 Additional Security Measures . BNYM shall have the right to institute and require additional security measures in connection with Companys and Permitted Users access to and use of the Licensed System that it in its sole discretion determines to be appropriate under the circumstances upon reasonable advance notice, and Company and Permitted Users shall be required to comply with any additional security requirements adopted pursuant to this Section 3.4.
3.5 BNYM Failure to Receive Data . BNYM shall not be liable for data or information which the Company, a Permitted User or an agent of either transmits or attempts to transmit to BNYM in connection with its use of a
Component System and which is not received by BNYM or for any failure of a Component System to perform a function in connection with any such data or information. BNYM shall not be obligated to ascertain the accuracy, actual receipt by it or successful transmission to it of any data or information in connection with the Companys or a Permitted Users use of a Component System or to confirm the performance of any function by a Component System based on the transmission of instructions, data or information to BNYM in connection with such use by the Company or a Permitted User. Sole responsibility for the foregoing shall rest with the party initiating the transmission.
3.6 ACH Activity . To the extent contemplated by the Documentation, and to the extent authorized by the Company and agreed to by BNYM in its sole discretion, BNYM will accept bank account information over the Internet or other communication channel from Permitted Users and take such other actions as may be appropriate to facilitate movement of money to and from shareholder accounts through the Automated Clearing House ( ACH ). The Company shall be solely responsible for all market risk (gain/loss liability) associated with transactions utilizing the ACH process.
SECTION 4. OWNERSHIP AND OTHER RIGHTS
4.1 BNYM Ownership .
(a) BNYM and its licensors, subcontractors and suppliers will continue to own all of their respective right, title, and interest, including Intellectual Property Rights, in and to the BNYM System and the Proprietary Items, regardless of any participation, contributions, collaboration or other participation of the Company in or to the foregoing, and including any part of the foregoing that may be created by or on behalf of, at the direction of or pursuant to business requirements and other specifications provided by the Company, such as, but not limited to, Company Modifications. For purposes of clarification: the BNYM System and any modifications to the BNYM System or a Proprietary Item, whether or not ordered or paid for by the Company as a customization, are not intended to be and are not a works made for hire under Section 101 of the Copyright Act or under any other applicable law, remain proprietary to and the exclusive property of BNYM and accordingly Company hereby transfers, conveys and assigns any ownership interests or intellectual property rights it may have in and to Proprietary Items to BNYM. To the extent requested by BNYM, Company shall cooperate with BNYM, at BNYMs expense, to cause to vest in BNYM any ownership interests or Intellectual Property Rights in any of the forgoing that do not automatically vest in BNYM.
(b) In the event a Company Web Application contains a Proprietary Item or other intellectual property of BNYM, including, but not limited to, rights in copyrighted works, trademarks and trade dress, BNYM shall retain all rights in such Proprietary Item or other intellectual property. To the extent a Proprietary Item or other intellectual property of BNYM is duplicated within a Company Web Application to replicate the look and feel, trade dress or other aspect of the appearance or functionality of a BNYM Web Application or other component of the BNYM System, BNYM grants to the Company a limited, non-exclusive, non-transferable license to such a Proprietary Item or other intellectual property for the duration of its authorized use of the applicable Component System. The license granted by the foregoing sentence is limited to the intellectual property needed to replicate the appearance of the particular BNYM Web Application or other component of the BNYM System and does not extend to any other Proprietary Item or other intellectual property owned by BNYM. Company shall immediately cease using such Proprietary Item or other intellectual property immediately upon termination of the Licensed Rights governing the relevant Component System.
(c) This Agreement is not an agreement of sale, and no title, patent, copyright, trademark, service mark, trade secret, intellectual property or other ownership rights to any Proprietary Items are transferred to Company by virtue of this Agreement. Upon BNYMs request, the Company shall promptly inform BNYM in writing of the quantity and location of any tangible Proprietary Item furnished to Company in connection with this Agreement. Nothing contained in this Agreement, no disclosure of BNYM Confidential Information and no use of Proprietary Items hereunder shall be construed as granting to or conferring on Company any rights, by license or otherwise, for any invention, discovery or improvement made, conceived, or acquired by BNYM prior to or after the date hereof. No patent application that may hereafter be made, and no claim to any trade secret or other protection, shall be prejudiced by any disclosure of Confidential Information or use of Proprietary Items hereunder. Any sale, assignment or transfer of any nature or in any manner, or any attempt to do such, by Company or any party through Company of any ownership interest or Intellectual Property Right of BNYM in the Proprietary Items shall be void. Any subcontracting or delegation of any right to access or use a Proprietary Item and any subcontracting for or delegation of the performance of any activities or functions involved in accessing or using a Proprietary Item shall be void and unenforceable against BNYM.
4.2 Company Ownership . Company will own its respective right, title, and interest, including Intellectual Property Rights, in and to the Company Data. Company hereby grants BNYM a limited, nonexclusive, nontransferable license to access and use the Company Data, and consents to BNYMs permitting access to, transferring and transmitting Company Data, all as appropriate to Companys use of the Licensed Rights or as contemplated by the Documentation.
4.3 Mutual Retention of Certain Rights . Each party acknowledges and agrees that, other than the Licensed Rights provided for by Section 2.1 of this Schedule C, this Agreement does not give a party any right, title or interest in or to any ownership or other rights of the other party to property. Any software, interfaces or other programs a party provides to the other party hereunder (i) shall be used solely by such receiving party and only during the term of the Agreement and only for the purpose it was provided and in accordance with the provisions of this Agreement, and (ii) shall not be used by such party or any affiliate for any other purpose or to connect to or with any other person. To the extent the Intellectual Property Rights of one party are cached to expedite communication, such party grants to the other party a limited, non-exclusive, non-transferable license to such Intellectual Property Rights for a period of time no longer than that reasonably necessary for the communication and a party shall immediately cease using such Intellectual Property Rights immediately upon termination of the Licensed Rights governing the relevant Component System.
4.4 Use of Hyperlinks . To the extent use of hyperlinks is contemplated by the Documentation for a particular Component System: The Company hereby grants to BNYM a royalty-free, nonexclusive, nontransferable and revocable right and license to use the Companys hyperlink in connection with the relevant Licensed Services; BNYM hereby grants to the Company a royalty-free, nonexclusive, nontransferable and revocable right and license to use BNYM s hyperlink in connection with providing the relevant Licensed Services; each party shall reasonably cooperate with the other party concerning the placement, location and destination of such hyperlinks; and a party shall immediately cease using another partys hyperlink immediately upon termination of the Licensed Rights governing the relevant Component System.
4.5 Use of Marks . To the extent one partys Marks must be utilized by the other party in connection with the operation of a particular Component System or the Licensed Services related to the particular Component System: the Company hereby grants to BNYM a non-exclusive, limited license to use its Marks solely in connection with the Licensed Services provided by the Component System; BNYM hereby grants to the Company a non-exclusive, limited license to use its Marks solely in connection with the Licensed Services provided by the Component System; all use of Marks shall be in accordance with the granting partys reasonable policies regarding the advertising and usage of its Marks as established from time to time; the Company hereby grants BNYM the right and license to display the Companys Marks on applicable BNYM Web Applications and in advertising and marketing materials related to the BNYM Web Application and the Licensed Services provided by the relevant Component System; each party shall retain all right, title and interest in and to its Marks worldwide, including any goodwill associated therewith, subject to the limited license granted in this Section 4.5; use of the Marks hereunder by the grantee pursuant to this limited license shall inure to the benefit of the trademark owner and grantees shall take no action that is inconsistent with the trademark owners ownership thereof; each party shall exercise reasonable efforts within commercially reasonable limits, to maintain all on-screen disclaimers and copyright, trademark and service mark notifications, if any, provided to it by the other party in writing from time to time, and all point and click features relating to Authorized Persons acknowledgment and acceptance of such disclaimers and notifications; and a party shall immediately cease using another partys Marks immediately upon termination of the Licensed Rights governing the relevant Component System.
SECTION 5. REPRESENTATIONS, WARRANTIES & COVENANTS; INDEMNIFICATION
5.1 Mutual Representations, Warranties and Covenant . Each party warrants, represents and covenants to the other party that it will use commercially reasonable efforts to avoid engaging in any act, omission or conduct which would result in the introduction into the software or systems of the other party any computer software routines, code or programming devices designed to permit unauthorized persons to access or use the other partys software, systems or Confidential Information or data resident in the other partys systems or to disrupt, interfere, impair, reprogram, recode, disable, modify, destroy or damage the other partys software or systems or the operation thereof, any data resident in the other partys systems, or any partys lawful and valid access to or use of the other partys software or systems, including without limitation any back door, time bomb, Trojan horse, worm, drop dead device, virus, preventative routine, disabling code, or cookie.
5.2 Right to Grant Licensed Rights; No Infringement; BNYM Indemnification .
(a) BNYM warrants to Company that BNYM has the full legal right to grant Company the right to use the Licensed System, as and to the extent permitted under this Agreement, and that the Licensed System when properly used for the purpose and in the manner specifically authorized by this Agreement, does not to BNYMs knowledge infringe in any material respect upon any United States patent or copyright or any trade secret or other proprietary right of any person. BNYM shall defend and indemnify Company against any third party claim to the extent attributable to a violation of the foregoing warranty. BNYM shall have no liability or obligation under this Section 5.2 unless Company gives written notice to BNYM within ten (10) days (provided that later notice shall relieve BNYM of its liability and obligations under this Section 5.2 only to the extent that BNYM is prejudiced by such later notice) after any applicable infringement claim is initiated against Company and allows BNYM to have sole control of the defense or settlement of the claim. The remedies provided in this Section 5.2 are the sole remedies for a breach of the warranty contained in this Section 5.2. If any applicable claim is initiated, or in BNYMs sole opinion is likely to be initiated, then BNYM shall have the option, at its expense, to:
(i) modify or replace the Licensed System or the infringing part of the Licensed System so that the Licensed System is no longer infringing; or
(ii) procure the right to continue using or providing the infringing part of the Licensed System; or
(iii) if neither of the remedies provided for in clauses (i) and (ii) can be accomplished in a commercially reasonable fashion, limit or terminate the Licensed Rights with respect to the infringing part of the Licensed System and refund any fees paid by the Company with respect to future periods affected by such limitation or termination.
(b) Neither BNYM nor any Third Party Provider shall have any liability under any provision of this Agreement with respect to any performance problem, warranty, claim of infringement or other matter to the extent attributable to (i) Companys use of a Proprietary Item in a negligent manner or any manner not consistent with this Schedule C or Companys breach of this Schedule C; (ii) any modification or alteration of a Proprietary Item made by anyone other than BNYM or made by BNYM at the request or direction of the Company, (iii) BNYMs compliance with the instructions or requests of Company relating to a Proprietary Item; (iv) any combination of a Proprietary Item with any item, service, process or data not provided by BNYM, (v) third parties gaining access to a Proprietary Item due to acts or omissions of Company, (vi) third party software not recommended by BNYM or the use of open source software, (vii) Companys failure to license and maintain copies of any third-party software required to operate the any BNYM Software, (viii) Companys failure to operate the BNYM Software in accordance with the Documentation, or (ix) Data Faults. (collectively, Excluded Events ). Company will indemnify, and with respect to third party claims will defend, and hold harmless BNYM and Third Party Providers from and against any and all Loss and claims resulting or arising from any Excluded Events.
5.3 BNYM Warranties . BNYM warrants that:
(i) except for Direct Third Party Products, with respect to which no warranty is made, and subject to the last sentence of Section 2.3, the Licensed System, if used in accordance with applicable Documentation, will operate in material conformity with applicable Documentation, and in the event of a breach of this clause (i) BNYM shall take commercially reasonable actions to restore performance of the Licensed System to the requirements of the foregoing warranty;
(ii) BNYM owns, or has the right to use under valid and enforceable agreements, all Intellectual Property Rights reasonably necessary for and related to the provision of the Licensed Rights and to grant the license granted under Section 2.1;
(iii) BNYMs business is in material compliance with applicable law and regulations the failure to comply with which would have a material adverse effect on BNYMs performance of its obligations under this Schedule C; and
(iv) BNYM has all requisite corporate power and authority to enter into this Agreement and to carry out the transactions contemplated hereby, and the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all requisite corporate action on the part of BNYM.
5.4 Warranty Disclaimer . THE LICENSED SYSTEM AND ALL RELATED SERVICES ARE MADE AVAILABLE TO COMPANY ON AN AS IS, AS AVAILABLE BASIS. UNLESS A SPECIFIC WARRANTY IS EXPRESSLY GIVEN IN THIS SCHEDULE D, NO WARRANTY OF ANY NATURE, EXPRESS OR IMPLIED, IS MADE IN THIS SCHEDULE D, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY AS TO THE AVAILABILITY, CONDITION, MERCHANTABILITY, NON-INFRINGEMENT, DESIGN, OPERATION OR FITNESS FOR OR SATISFACTION IN REGARDS TO A PARTICULAR PURPOSE.
5.5 Limitation of Warranties . The warranties made by BNYM in this Schedule C, and the obligations of BNYM under this Schedule C, run only to Company and not to its affiliates, its customers or any other persons.
SECTION 6 OTHER PROVISIONS
6.1 Scope of Services . The scope of services to be provided by BNYM under this Agreement shall not be increased as a result of new or revised regulatory or other requirements that may become applicable with respect to the Company, unless the parties hereto expressly agree in writing to any such increase. BNYM shall not be obligated to develop or implement Upgrades, but to the extent it elects to do so Section 3.1 shall apply.
6.2 Additional Provision Regarding Governing Law . This Agreement will not be governed by the United Nations Convention on Contracts for the International Sale of Goods. The Uniform Computer Information Transaction Act drafted by the National Conference Of Commissioners On Uniform State Laws, or a version thereof, or any law based on or similar to such Act ( UCITA ), if and as adopted by the jurisdiction whose laws govern with respect to this Agreement in any form, shall not apply to this Agreement or the activities contemplated hereby. To the extent UCITA is applicable notwithstanding the foregoing, the parties agree to opt out of the applicability of UCITA pursuant to the opt out provisions contained therein.
6.3 Third Party Providers . Except for those terms and conditions that specifically apply to Third Party Providers, under no circumstances shall any other person be considered a third party beneficiary of this Agreement or otherwise entitled to any rights or remedies under this Agreement. Except as may be provided in Third Party Agreements, Company shall have no rights or remedies against Third Party Providers, Third Party Providers shall have no liability of any nature to the Company, and the aggregate cumulative liability of all Third Party Providers to the Company shall be $1.
6.4 Liability Provisions .
(a) Notwithstanding any provision of the Main Agreement or this Schedule C, BNYM shall not be liable under this Schedule C under any theory of tort, contract, strict liability or other legal or equitable theory for lost profits, for exemplary, punitive, special, incidental, indirect or consequential damages, or for any other damages which are not direct damages regardless of whether such damages were or should have been foreseeable and regardless of whether any entity has been advised of the possibility of such damages, all and each of which damages is hereby excluded by agreement of the parties.
(b) Notwithstanding any provision of the Main Agreement or this Schedule C, BNYMs cumulative, aggregate liability to the Company for any and all Loss, including Loss arising from Claims for indemnification pursuant to the Main Agreement and this Schedule C, that arises or relates to a term of this Schedule C, the recovery of which is not otherwise excluded or barred by another provision of this Agreement, shall not exceed the fees paid by Company to BNYM for use of the particular Component System with respect to which the claim of Loss was made for the six (6) months immediately prior to the date the last claim of Loss relating to the particular Component System arose.
(c) In the event of a material breach of this Schedule C by BNYM with respect to the operation of a particular Component System, Companys sole and exclusive termination remedy shall be to terminate the Licensed Rights granted by this Schedule C to the particular Component System with respect to which the material breach occurred by complying with the notice and cure period provisions in the Main Agreement applicable to a material breach of the Agreement, but the Company shall not be entitled to terminate any other provision of the Agreement or the Licensed Rights with respect to any other Component System. For purposes of clarification: The foregoing sentence is not intended to restrict, modify or abrogate any remedy available to a Company under another provision of the Agreement for a breach of Schedule C by BNYM other than the termination remedy.
6.5 Assignment . Company may not, and shall not under any circumstances, assign, sublicense or otherwise transfer any Licensed Rights or any part thereof or any obligation under this Schedule C, and any such assignment or transfer or attempted assignment or transfer shall be void.
6.6 Return of Proprietary Items . Upon a termination of this Agreement or a termination of the license to use the Licensed System or a license to use a particular Component System, or at the end of a Continuation Period (as defined in Section 6.16), as applicable, Company shall immediately cease attempts to access and use the relevant Component Systems and related Proprietary Items, and Company shall promptly return to BNYM all copies of the relevant Documentation and any other related Proprietary Items then in Companys possession. Company shall remain liable for any payments due to BNYM with respect to the period ending on the date of termination or any Continuation Period, as applicable, and any charges arising due to the termination.
6.7 Conflicts . Applicable terms of the Main Agreement shall apply to this Schedule C but any conflict between a term of the Main Agreement and this Schedule C shall be resolved to the fullest extent possible in favor of the term in this Schedule C.
6.8 Exclusivity . Company shall solely and exclusively use the Licensed System to perform the computing functions and services made available to the Company by the Licensed System. For clarification: this means the Company will not use any system, subsystem, component or functionality of another service provider to perform functions or services similar to those provided by the Licensed System.
6.9 Term . The term of this Schedule C shall be the same as the term in effect for the Main Agreement, including with respect to any renewal terms. Additionally, with respect to each Component System to which the Company is given access and use, the term applicable to BNYMs obligation to furnish the Component System and the Companys obligation to pay the fees and charges applicable to the Component System ( Component System Obligations ) shall be the same as the term applicable to the Core Services, including with respect to any renewal term. For clarification: this Schedule C and the Component System Obligations may be terminated only in connection with a termination of the Main Agreement in accordance with the termination provisions set forth in the Main Agreement, except where this Schedule specifically sets forth an additional termination right.
6.10 Confidentiality . Company agrees to maintain the confidentiality of and protect the Proprietary Items and to prevent access and use not permitted hereunder with at least the same degree of care that it utilizes with respect to its own proprietary and nonpublic material, including without limitation agreeing:
(i) not to disclose to or otherwise permit any person access to, in any manner, the Proprietary Items, or any part thereof in any form whatsoever, except that such disclosure or access shall be permitted to an employee of Company in the course of his or her employment and who is bound to maintain the confidentiality thereof;
(ii) not to use the Proprietary Items for any purpose other than in connection with the Companys exercise of the Licensed Rights, without the consent of BNYM; and
(iii) to promptly report to BNYM any facts, circumstances or events that are reasonably likely to constitute or result in a breach of this Section 6.10 or a breach of Section 4 of the Main Agreement with respect to the Proprietary Items, and take all reasonable steps requested by BNYM to prevent, control, remediate or remedy any such facts, circumstances or events or any future occurrence of such facts, circumstances or events.
6.11 Use of Internet . Each party acknowledges that the Internet is an unsecured, unstable, unregulated, unorganized and unreliable network, and that to the extent the ability of the other party to provide or perform services or duties hereunder is dependent upon the Internet and equipment, software, systems, data and services provided by various telecommunications carriers, equipment manufacturers, firewall providers, encryption system developers and other vendors and third parties, each party agrees that the other shall not be liable in any respect for the functions or malfunctions of the Internet.
6.12 Provisions Applicable Solely to IAM . In connection with any permitted access and use of IAM, the Company agrees, at its expense, to;
(a) Provide, or retain other persons to provide, all computers, telecommunications equipment, encryption technology and other materials, services, equipment and software reasonably necessary to develop and maintain a Company Web Application as contemplated by IAM Documentation, including the functionality necessary to maintain the hypertext links to IAM ( Company IAM Site );
(b) Promptly provide BNYM written notice of changes in Fund policies or procedures requiring changes to the IAM settings or parameters or services ( Parameter Changes ); provided, however, this provision shall be interpreted to require BNYM to modify only adjustable settings and parameters already provided for in IAM in response to a Parameter Change and not to require BNYM to effect any Upgrade;
(c) Work with BNYM to develop Internet marketing materials for Permitted Users and forward a copy of appropriate marketing materials to BNYM;
(d) Promptly revise and update applicable prospectuses and other pertinent materials, such as user agreements, to include the appropriate consents, notices and disclosures, including disclaimers and information reasonably requested by BNYM;
(e) With respect to the Company IAM Site, maintain all on-screen disclaimers and copyright, trademark and service mark notifications, if any, provided by BNYM in writing from time to time, and all point and click features relating to acknowledgment and acceptance of such disclaimers and notifications; and
(f) Design and develop the Company IAM Site functionality necessary to facilitate, implement and maintain the hypertext links to IAM and the various inquiry and transaction web pages and otherwise make the Company IAM Site available to Permitted Users.
6.13 Termination and Suspension by BNYM .
(a) In the event of a material breach of this Schedule C by Company, BNYM may terminate the Licensed Rights in their entirety and all access to and use of the Licensed System by complying with the notice and cure period provisions in the Main Agreement applicable to a material breach of the Agreement.
(b) In the event BNYM reasonably believes in good faith that activity constituting a material breach of a Use Provision (which is hereby defined to mean each of the following Sections: 2.1, 2.2, 2.6, 2.12, 2.13, 2.15, 2.17, 2.18, 2.20, 3.4, 4.1, 4.3, 4.4, 4.5, 6.5, 6.6, 6.8, 6.10 and 6.16 (c) and 6.16 (d)) is occurring by Company or a Permitted User, BNYM may, upon prior written notice to Company describing in reasonable detail such alleged activity, without incurring any liability, temporarily suspend access to and use of the Licensed System or a Component System solely for the amount of time necessary for the investigation and resolution of the issues. In the event such advance notice is not reasonably practicable, BNYM shall provide such notice as is reasonably practicable under the circumstances. BNYM shall exercise this right with diligence to minimize the impact of any such suspension. The parties agree to promptly cooperate in good faith to address such issues. The Company shall indemnify BNYM for any Loss, and to the extent applicable defend BNYM against Loss, resulting from or arising out of or in connection with a breach of a Use Provision.
6.14 Equitable Relief . Company agrees that BNYM would not have an adequate remedy at law in the event of a breach or threatened breach of a Use Provision by the Company and that BNYM would suffer irreparable injury and damage as a result of any such breach. Accordingly, in the event Company breaches or threatens to breach a Use Provision, in addition to and not in lieu of any legal or other remedies BNYM may pursue hereunder or under applicable law, Company hereby consents to the granting of equitable relief (including the issuance of a temporary restraining order, preliminary injunction or permanent injunction) against it by a court of competent jurisdiction, without the necessity of proving actual damages or posting any bond or other security therefore, prohibiting any such breach or threatened breach. In any proceeding upon a motion for such equitable relief, BNYMs ability to answer in damages shall not be interposed as a defense to the granting of such equitable relief.
6.15 Survival . Sections 2.1(b), 2.3, 2.5, 2.11, 2.12, 2.14, 2.18(iv), 2.18(v), 3.5, 4.1, 4.3, the last clause of Sections 4.4 and 4.5, 4, 5, 6.2, 6.3, 6.4, 6.6, 6.7, 6.10, 6.13(b), 6.14, 6.15, 6.16(i) through (m), 6.16(p) and 6.16(q) shall survive any termination of the Agreement and any termination of Licensed Rights.
6.16 Provisions Applicable Solely to the 22c-2 System . In connection with any permitted access and use of the 22c-2 System, the Company agrees as follows:
(a) Definitions . The following terms have the following meanings solely for purposes of this Section 6.16:
Commercially Reasonable Efforts means taking all such steps and performing in such a manner as a well managed company in the securities processing industry would undertake where such company was acting in a prudent and reasonable manner under the same or similar circumstances.
Company 22c-2 Data means, collectively, the Fund Data, the Shareholder Data and the Supplemental Data.
Company Database means the database maintained within the 22c-2 System by and for Company containing the Fund Data, the Shareholder Data and Supplemental Data.
Financial Intermediary means a financial intermediary as that term is defined in Rule 22c-2.
Front End Data means the transaction data relating to the Funds and the accounts of Shareholders of the Funds (i) specified by applicable Documentation for use within the 22c-2 System to yield reports intended to assist the Company in determining the Financial Intermediaries from which additional transactional details could be requested for purposes of compliance with SEC Rule 22c-2, and (ii) which has been selected by the Company and transmitted to the Company Database.
Fund Data means, collectively, the Front End Data and the Fund Settings.
Fund Settings means the Fund preferences, parameters, rules and settings inputted into the Company Database and 22c-2 System by Company to administer a Funds Rule 22c-2 policies.
Rule 22c-2 means Rule 22c-2 of the SEC promulgated under the 1940 Act.
Shareholder means a shareholder, as that term is defined in Rule 22c-2, of any of the Funds.
Shareholder Data means the transaction data with respect to Shareholders in a Fund requested by Company that a Financial Intermediary, for access and use by Company in the 22c-2 System, (i) delivers to BNYM by a Designated Method, or (ii) delivers to Company and is inputted into the Company Database by Company.
Software , whether capitalized or not, means computer software in human readable form that is not suitable for machine execution without intervening interpretation or compilation.
SRO means any self-regulatory organization, including national securities exchanges and national securities associations.
Supplemental Data means any data or information, other than the Shareholder Data and Fund Data, inputted into the Company Database by Company, or provided to BNYM and inputted into the Company Database by BNYM as an additional service, that Company has reasonably determined is necessary in the operation of the 22c-2 System for purposes of compliance with Rule 22c-2.
(b) Availability . BNYM shall make the 22c-2 System available to Company from 8:00 a.m. to 6:00 p.m., Eastern Time, during days the New York Stock Exchange is open for trading, except for periods therein in which BNYM suspends access for maintenance, backup, updates, upgrades, modifications required due to changes in Applicable Law, or other commercially reasonable purposes as reasonably determined by BNYM. BNYM will use Commercially Reasonable Efforts to limit any periods of nonavailability due to the foregoing activities.
(c) Third Party Provisions . Companys use of the 22c-2 System shall be subject to the terms and conditions contained in BNYMs agreements with Third Party Providers that BNYM is required by such agreements to apply to users of the software or services of the particular Third Party Provider to the extent notified of such terms and conditions by BNYM.
(d) BNYM Modifications . Company hereby accepts all such modifications, revisions and updates, including changes in programming languages, rules of operation and screen or report format, as and when they are implemented by BNYM, and agrees to take no action intended to have or having the effect of canceling, reversing, nullifying or modifying in any fashion the operation or results of such modifications, revisions and updates. BNYM will make Commercially Reasonable Efforts to give Company advance written notice before any such modifications, revisions or updates to the 22c-2 System go into effect.
(e) Shareholder Data .
(1) Company acknowledges that Financial Intermediaries, not BNYM, provide the Shareholder Data, that Companys access to the Shareholder Data through use of the 22c-2 System is dependent upon delivery of the Shareholder Data by the Financial Intermediaries, and that BNYM is not responsible or liable in any manner for any act or omission by a Financial Intermediary with respect to the delivery of Shareholder Data. Company also acknowledges that Financial Intermediaries may deliver Shareholder Data which modifies Shareholder Data previously delivered or may refuse to provide Shareholder Data and that BNYM is not responsible or liable in any manner for any such modification of Shareholder Data or any such refusal to deliver Shareholder Data.
(2) Company has sole responsibility for authorizing and directing a Financial Intermediary to deliver Shareholder Data that Company may require for purposes of Rule 22c-2. BNYM shall be obligated to receive and input into the Company Database only that Shareholder Data which has been delivered by a Financial Intermediary through the facilities maintained for such purpose by the NSCC or through the internal communications links provided in the 22c-2 System ( Designated Methods ). Company shall be solely responsible for inputting into the Company Database and the 22c-2 System any Shareholder Data delivered by a method other than a Designated Method.
(f) Company 22c-2 Data . As between Company and BNYM, Company alone shall be responsible for obtaining all Fund Data, Shareholder Data and Supplemental Data that Company determines is required in connection with its use of the 22c-2 System. Company is exclusively responsible for (i) the accuracy and adequacy of all Company 22c-2 Data; (ii) the review of and the accuracy and adequacy of all output of the 22c-2 System before reliance or use (provided the 22c-2 System is operating in accordance with the Documentation); and (iii) the establishment and maintenance of appropriate control procedures and back up procedures to reduce any loss of information, interruption or delay in processing Company 22c-2 Data. Company shall comply with all Applicable Laws and obtain all necessary consents from any person, including Financial Intermediaries, regarding the collection, use and distribution to BNYM of Company 22c-2 Data as contemplated herein and of any other information or data regarding Company and the Funds that Company provides or causes to be provided for the purposes set forth herein.
(g) Communications Configuration . Company shall be responsible, at its expense, for procuring and maintaining the communications equipment, lines and related hardware and software reasonably specified by BNYM to comprise the communications configuration required for Company to use the 22c-2 System and any Updates and General Upgrades to the communications configuration.
(h) Front End Data . As between Company and BNYM, Company shall be solely responsible for selecting Front End Data, identifying it to BNYM and directing BNYM to transmit the identified Front End Data from the BNYM transfer agent system to the Company 22c-2 Database in the 22c-2 System. Company hereby authorizes BNYM to transmit Front End Data to the 22c-2 System without further action on anyones part upon receiving a communication from Company identifying Front End Data for transmission to the 22c-2 System.
(i) Restricted Use of Company 22c-2 Data . The Company 22c-2 Data constitutes Confidential Data for all purposes of Section 4 and other applicable provisions of the Main Agreement. As between the Company and BNYM, title to all Company 22c-2 Data and all related intellectual property and other ownership rights shall remain exclusively with Company. Company authorizes BNYM to maintain and use Company 22c-2 Data solely in the manner contemplated by applicable Documentation and this Agreement and to aggregate Company 22c-2 Data in the Company Database with data of other users of the 22c-2 System to analyze and enhance the effectiveness of the 22c-2 System and to create broad-based statistical analyses and reports for users and potential users of the 22c-2 System and industry forums.
(j) Application of Results . Except to the extent that the results are inaccurate due to BNYMs gross negligence, willful misconduct or bad faith, neither BNYM nor any Third Party Provider shall have liability for any loss or damage
resulting from any application of the results, or from any unintended or unforeseen results, obtained from the use of the 22c-2 System or any related service provided by BNYM.
(k) Exclusion for Unauthorized Actions . Neither BNYM nor any Third Party Provider shall have any liability with respect to any performance problem, warranty, claim of infringement or other matter to the extent attributable to any unauthorized or improper use, alteration, addition or modification of the 22c-2 System by Company, any combination of the 22c-2 System with software not specified by applicable Documentation and any other use of the 22c-2 System in a manner inconsistent with this Agreement or applicable Documentation.
(l) Disclaimer . BNYM DOES NOT WARRANT THAT USE OF THE 22C-2 SYSTEM BY COMPANY GUARANTEES COMPLIANCE WITH RULE 22C-2 OR ANY OTHER FEDERAL, STATE, LOCAL OR SRO LAW OR REGULATION. BNYM DOES NOT ASSUME ANY RESPONSIBILITY FOR ANY ASPECT OF LEGAL AND REGULATORY COMPLIANCE BY OR ON BEHALF OF COMPANY, NOR SHALL COMPANY REPRESENT OTHERWISE TO ANY PERSON. COMPANYS USE OF THE 22C-2 SYSTEM AND ANY OTHER SERVICES PROVIDED UNDER THIS AGREEMENT SHALL NOT BE DEEMED LEGAL ADVICE.
(m) Hardware Disclaimer . Under no circumstance shall BNYM or a Third Party Provider be liable to Company or any other Person for any loss of profits, loss of use, or for any damage suffered or costs and expenses incurred by Company or any Person, of any nature or from any cause whatsoever, whether direct, special, incidental or consequential, arising out of or related to computer hardware.
(n) Termination by BNYM . BNYM may immediately terminate Companys license to use and Companys access to and use of the 22c-2 System upon the occurrence of any of the following events:
(a) Company engages in conduct which infringes or exceeds the scope of the license granted to Company by Section 2.1 of this Schedule C and does not cure the breach within ten (10) business days after receiving written notice from BNYM; or
(b) A Third Party Provider terminates any relevant agreement the Third Party Provider has with BNYM that is necessary in order for BNYM to be able to license (or continue to license) the 22c-2 System to Company. BNYM agrees to provide Company with as much notice of such termination as BNYM receives from the Third Party Provider.
(o) Continuation Period . In the event the Agreement is terminated and in connection with such a termination the parties agree that Company will continue to have access to and use of the 22c-2 System, then the terms of this Agreement shall apply during any such continuation period. The term of any such continuation period shall be day to day and the continuation period may be terminated immediately by either party at any time by written notice notwithstanding the contents of any notice or other communication the parties may exchange, unless both parties agree in writing to such contents. A continuation period as described in this subsection (o) is referred to herein as a Continuation Period .
(p) Effect of Termination . Following a termination of the Agreement or at the end of a Continuation Period, as applicable, BNYM will (i) dispose of all Company 22c-2 Data in accordance with its applicable backup and data destruction policies, and (ii) use good faith efforts to make electronic copies of Company 22c-2 Data in existing report formats of the 22c-2 System to the extent reasonably requested by Company no less than thirty (30) days in advance of the termination of the Agreement.
(q) This Agreement shall benefit and be enforceable by Third Party Providers of the 22c-2 System.
[Remainder of Page Intentionally Blank]
EXHIBIT 1 TO SCHEDULE D
AdvisorCentral A portal for trusts, financial advisors, broker/dealers and other financial intermediaries to view mutual fund and client account data on the transfer agent mainframe via the Internet if permitted access by the Company and for the Company back offices to view the same data.
ACE (Automated Control Environment) - Windows database and reporting capability which automates accounting functions for mutual fund settlement, gain/loss tracking, dividend/capital gains settlement and tax withholding tracking.
CMS* (Customer Management Suite) - the combination of functionalities, systems and subsystems which together provide the following capabilities: workflow management, electronic document processing, integrated Web-based front-end processing, customer relationship management and automated servicing of brokers and investors. The principal subsystems are Correspondence, Customer Relationship Manager (automates call center activities), Image and Operational Desktop and includes E-Forms.
COLD (Computer Output to Laser Disk) - document management system that provides for the laser disc storage in a PC/server environment of certain data and documents generated on a mainframe and quick retrieval.
DAZL (Data Access Zip Link) - application which extracts broker/dealer data at the representative level, branch level and broker/dealer level and third party administrator data from the transfer agent mainframe and transmits it to the Company designated end users for viewing.
DRAS (Data Repository and Analytics Suite) - a relational data base for management reporting which consists of the management companys entire customer information base as copied nightly from the transfer agent mainframe and includes an integrated reporting tool.
FPT (Fund Pricing Transmission) (formerly known as PRAT) - application that receives fund price and rate information from fund accounting agents on a nightly basis, edits and QCs the information, then uploads the prices and rates to the mainframe recordkeeping system, allows the user the ability to view, enter, upload, download, and print price/rate information.
FSR (Full Service Retail) - principal transfer agent mainframe system which performs comprehensive processing and shareholder recordkeeping functions, including: transaction processing (purchases, redemptions, exchanges, transfers, adjustments, and cancellations), distribution processing (dividends and capital gains), commission processing and shareholder event processing (automatic investment plans, systematic withdrawal plans, systematic exchanges); creating and transmitting standard and custom data feeds to support printed output (statements, confirmations, checks), sales and tax reporting. FSR interfaces and exchanges data with various surround systems and subsystems and includes a functionality providing for direct online access. Also includes a functionality that temporarily stores systems-generated reports electronically before being transferred to COLD.
IAM (Internet Account Management, also known as NextGen) - application permitting account owners via the Internet to view account information and effect certain transactions and account maintenance changes and includes administrator site.
NSCC* (National Securities Clearing Corporation) - application allowing web-based utility at users desktop to support processing linked to NSCC activity, including networking, Fund/SERV, DCC&S, Commission/SERV, mutual fund profile, and transfer of retirement assets, and includes NEWS (NSCC Exception Workflow Processing) which provides for the inputting of reject and exception information to the NSCC system.
OOM (Online Output Management) - functionality permitting user to view within the Document Solutions processing system (performs print mail and tax form production and fulfillment services) the location of a specific output, such as a confirmation or statement, in the Document Solutions work flow.
RECON* (Reconciliation) - application automating bank DDA (Demand Deposit Account) reconciliation.
TRS (Tax Reporting Service) - functionality performing all applicable federal and state tax reporting (tax form processing and corrections), tax-related information reporting, and compliance mailings (including W-9, W-8, RMD, B-Notice, and C-Notice).
22c-2 System The data warehousing, analytic and administrative applications together with the related software, interfaces, functionalities, databases and other components provided by BNYM to assist fund sponsors and their principal underwriters in satisfying requirements imposed by Rule 22c-2.
* For clarification: Company or a Permitted User may be given access to and use of one or more separable components of this rather than the entire system and a license granted by this Schedule C to use separable components is limited to the functionalities of the separable components even if certain of functionalities of the separable components may include integration points with functionalities of the non-licensed components.
[End to Exhibit 1 to Schedule C]
[End to Schedule C]
Exhibit (i)(2)
CONSENT OF COUNSEL
We hereby consent to the use of our name and to the reference to our Firm under the caption Counsel in the Statement of Additional Information that is included in Post-Effective Amendment No. 149 to the Registration Statement (No. 33-20827; 811-5518) on Form N-1A of The RBB Fund, Inc., under the Securities Act of 1933 and the Investment Company Act of 1940, respectively. This consent does not constitute a consent under section 7 of the Securities Act of 1933, and in consenting to the use of our name and the references to our Firm under such caption we have not certified any part of the Registration Statement and do not otherwise come within the categories of persons whose consent is required under said section 7 or the rules and regulations of the Securities and Exchange Commission thereunder.
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/s/ Drinker Biddle & Reath LLP |
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DRINKER BIDDLE & REATH LLP |
Philadelphia, Pennsylvania
October 29, 2012
Exhibit (p)(8)
PERIMETER CAPITAL MANAGEMENT
CODE OF CONDUCT
AND
CODE OF ETHICS
THIS MANUAL IS THE PROPERTY OF PERIMETER CAPITAL MANAGEMENT (PERIMETER OR THE COMPANY) AND MUST BE RETURNED TO THE COMPANY SHOULD AN EMPLOYEES ASSOCIATION WITH THE COMPANY TERMINATE FOR ANY REASON. THE CONTENTS OF THIS MANUAL ARE CONFIDENTIAL, AND SHOULD NOT BE REVEALED TO THIRD PARTIES. THIS MANUAL IS NOT A FULL OPERATIONS PROCEDURES MANUAL. IT IS INTENDED TO GIVE SUFFICIENT INFORMATION AND GUIDANCE SUCH THAT AN EMPLOYEE MAY GAIN A BROAD UNDERSTANDING OF THE REGULATORY RULES AND REQUIREMENTS THAT PERIMETER IS SUBJECT TO. CIRCUMSTANCES VARY AND PRACTICES EVOLVE. TO RETAIN FLEXIBILITY AND RELEVANCE, NEW POLICIES, GUIDANCE AND AMENDMENTS MAY BE PROMULGATED BY EMAIL OR EVEN VERBALLY BEFORE ULTIMATELY BEING INCORPORATED INTO THIS MANUAL. SUCH COMMUNICATIONS SHOULD BE CONSIDERED TO BE AS VALID AND BINDING AS THE FORMAL GUIDANCE CONTAINED IN THIS MANUAL. WHERE THE INFORMATION OR GUIDANCE HEREIN DOES NOT APPEAR TO ADDRESS YOUR PARTICULAR SITUATION YOU SHOULD CONSULT WITH PERIMETERS CHIEF COMPLIANCE OFFICER.
TABLE OF CONTENTS
DEFINITIONS |
2 |
MAINTENANCE OF CODE OF CONDUCT AND REGULATORY COMPLIANCE MANUAL |
5 |
CODE OF CONDUCT |
7 |
CODE OF ETHICS |
9 |
Personal Trading Pre-Clearance Form |
21 |
Limited Offering & IPO Request and Reporting Form |
22 |
Sample Brokerage Letter |
23 |
REQUEST FOR APPROVAL OF OUTSIDE BUSINESS ACTIVITIES |
24 |
POLITICAL AND CHARITABLE CONTRIBUTIONS, AND PUBLIC POSITIONS |
27 |
BACKGROUND |
27 |
Restrictions on the Receipt of Advisory Fees |
27 |
Restrictions on Payments for the Solicitation of Clients or Investors |
28 |
Restrictions on the Coordination or Solicitation of Contributions |
28 |
Applicability of Rule 206(4)-5 to Different Types of Advisory Products and Services Being Offered |
28 |
POLICIES AND PROCEDURES |
29 |
Political Contributions |
29 |
Charitable Donations |
29 |
Public Office |
29 |
ATTACHMENT POLITICAL CONTRIBUTION PRE-CLEARANCE FORM |
30 |
ATTACHMENT POLITICAL CONTRIBUTION LOG |
32 |
Definitions
The following defined terms are used throughout this Code of Conduct and Regulatory Compliance Manual, while other terms are defined within specific policies and procedures:
1. ACA Adviser Compliance Associates, a third-party regulatory compliance consulting firm.
2. Advisers Act Investment Advisers Act of 1940.
3. Automatic Investment Plan A program in which regular periodic purchases (or withdrawals) are made automatically in (or from) investment accounts in accordance with a predetermined schedule and allocation. An automatic investment plan includes a dividend reinvestment plan.
4. Beneficial Interest Employees are considered to have beneficial interest in Securities if they have or share a direct or indirect pecuniary interest in the Securities. Employees have a pecuniary interest in securities if they have the ability to directly or indirectly profit from a securities transaction (e.g., Securities held by members of Employees immediate family sharing the same household. Immediate family means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law. Adoptive relationships are included).
5. CCO Kevin Humphrey, Perimeters Chief Compliance Officer.
6. CEO G. Bradley Ball, Perimeters Chief Executive Officer.
7. CIO Mark D. Garfinkel, Perimeters Chief Investment Officer.
8. Clients Perimeters separate managed accounts and pooled funds.
9. Company Perimeter Capital Management and/or Perimeter Concourse Capital.
10. Director of Investment Research James N. Behre.
11. Director of Marketing & Consultant Relations Christopher J. Paolella.
12. Director of Third-Party Distribution & Client Relations Theresa N. Benson.
13. Director of Trading Adam C. Stewart
14. Employees The Companys officers, Directors, and employees.
15. Exchange Act Securities Exchange Act of 1934.
16. Exempted Security Are types of securities that are exempt from reporting under the Personal Security Transaction Policy, and include: direct obligations of the U.S. Government; money market instruments such as bankers acceptances, bank certificates of deposit, commercial paper, repurchase agreements and other high-quality short-term debt instruments; shares of money market funds; shares issued by open-end funds other than Reportable Funds; and shares issued by unit investment trusts that are invested exclusively in one or more open-end funds, none of which are Reportable Funds.
17. Federal Securities Laws Includes the Securities Act, Exchange Act, the Sarbanes-Oxley Act of 2002, IC Act, Advisers Act, Title V of the Gramm-Leach-Bliley Act, any rules adopted by the Commission under any of these statutes, the Bank Secrecy Act as it applies to funds and investment advisers, and any rules adopted thereunder by the Commission or the Department of the Treasury.
18. Front-Running A practice generally understood to be investment advisory personnel personally trading ahead of client accounts.
19. IAR Investment advisory representative, which is an Employee that must individually register with a state(s).
20. IC Act Investment Company Act of 1940.
21. Insider Trading Although not defined in securities laws, Inside Trading is generally thought to be described as trading either personally or on behalf of others on the basis of Material Non-
Public Information or communicating Material Non-Public Information to others in violation of the law.
22. IPO An Initial public offering is an offering of securities registered under the Securities Act, the issuer of which, immediately before the registration, was not subject to the reporting requirements of section 13 or 15(d) of the Exchange Act.
23. Investor Limited Partners of the Private Fund(s) .
24. Limited Offering An offering that is exempt from registration under the Securities Act pursuant to section 4(2) or section 4(6) or pursuant to Rules 504, 505, or 506 of Regulation D.
25. Manual Perimeters Code of Conduct and Regulatory Compliance Manual.
26. Marketing Manager Steven C. Budde.
27. Material Non-Public Information Information that has not been generally made available to the public that has a substantially likelihood that a reasonable investor would consider important in making an investment decision, or is reasonably certain to have a substantial effect on the price of a companys securities.
28. Natural Person A living, breathing human being, as opposed to a legal entity.
29. Non-Public Client Information Personally identifiable financial information, including any information a client provides to obtain a financial product or service; any information about a client resulting from any transaction involving a financial product or service; or any information otherwise obtained about a client in connection with providing a financial product or service to that client; and any list, description, or other grouping of Clients (and publicly available information pertaining to them) that is derived using any personally identifiable financial information that is not publicly available information. Examples of Non-Public Client Information include: name, address, phone number (if unlisted), social Security and tax identification numbers, financial circumstances and income, and account balances.
30. Perimeter Perimeter Capital Partners, LLC d/b/a Perimeter Capital Management and/or Perimeter Concourse Management, LLC
31. Portfolio Manager Mark Garfinkel and/or Joseph Mathias, as applicable
32. Private Fund(s) Concourse Capital Partners, LP, Concourse Capital Partners II, LP and/or the off-shore unregistered private fund.
33. PTC ACAs Personal Trading Compliance system which is used by Employees to report their personal securities transactions and holdings and gifts and entertainment to Perimeter.
34. Outside Counsel McCausland, Keen & Buckman, Day Edwards Propester & Christensen, P.C., and/or Ropes & Gray LLP, as applicable.
35. QIB Rule 144 under the Securities Act defines a Qualified Institutional Buyer as a specified entity, acting for its own account or the accounts of other QIBs, which in the aggregate owns and invests on a discretionary basis at least $100 million in securities of issuers that are not affiliated with the entity.
36. Reportable Fund Any fund for which Perimeter serves as the investment adviser or sub-adviser as defined in section 2(a)(20) of the IC Act, or any fund whose investment adviser or principal underwriter controls Perimeter, is controlled by Perimeter, or is under common control with Perimeter.
37. RIC An investment company registered under the IC Act.
38. Scalping A practice generally understand to be investment advisory personnel personally benefiting from small gains in short-term personal trades in securities being traded in advisory accounts.
39. Securities Account Any type of account that holds any type of Security.
40. Securities Act Securities Act of 1933.
41. Security Means any note, stock, treasury stock, Security future, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, reorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a Security, fractional undivided interest in oil,
gas, or other mineral rights, any put, call, straddle, option, or privilege on any Security (including a certificate of deposit) or on any group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or, in general, any interest or instrument commonly known as a Security, or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guaranty of, or warrant or right to subscribe to or purchase any of the foregoing.
42. Senior Management Generally Perimeters officers and Directors.
43. SRO Self-Regulatory Organization (such as the New York Stock Exchange and National Association of Securities Dealers).
44. STOCS ACAs Securities Transaction Online Compliance System which is used by Employees to report their personal securities transactions and holdings to Perimeter.
Maintenance of Code of Conduct and
Regulatory Compliance Manual
Issue
Rule 206(4)-7 under the Advisers Act requires advisers to develop an internal compliance program and to maintain a written set of policies and procedures reasonably designed to prevent violations of the Advisers Act and the rules thereunder. The policies and procedures must be reviewed no less frequently than annually to determine their overall adequacy and effectiveness.
Risks
In developing this policy and procedures, Perimeter considered the material risks associated with maintaining the Manual. This analysis includes risks such as:
· Written procedures are outdated and ineffective.
Perimeter has established the following policies and procedures as an attempt to mitigate this risk.
Testing
Perimeter has established multiple parameters by which it intends to test the adequacy and effectiveness of the policies and procedures contained in the Manual. Specifically, Perimeter will consider the following two (2) kinds of tests:
· Quality Control or Transactional Testing Compliance tests that review and analyze information on a contemporaneous transaction-by-transaction basis in order to identify shortcomings. One example of transactional testing is reviewing the quality of execution on a single client trade.
· Forensic or Periodic Testing Compliance tests that review and analyze information over time in order to identify unusual patterns to determine if the outcomes of advisory activities are consistent with expectations. Dissimilar to transactional testing, forensic testing does not just look at single transactions; instead, multiple transactions are reviewed by looking-back to identify patterns. Two examples of forensic testing are: 1. reviewing all of the personal trades submitted by an Employee over the past year to determine the adequacy and effectiveness of the personal trading policy and procedures; and 2. reviewing the quality of execution on a clients trades that were effected over the past year to determine the adequacy and effectiveness of the trading policy and procedures.
The scope and purpose of the testing is dependent on the activity that is addressed in each policy and procedure. Additionally, Perimeter intends on strengthening its compliance program through the analysis and review of the results obtained through its testing processes.
Policy
The Company shall review the Manual no less frequently than annually to ensure the adequacy of the policies and procedures contained herein. As part of these reviews, Perimeter shall test the effectiveness
of its policies and procedures as required by Rule 206(4)-7. The reviews will include, in part, specific consideration of the following:
· Any compliance matters that arose during the previous year;
· Any changes in the business activities of Perimeter (or any affiliated entities); and
· Any changes to applicable laws, rules or regulations that might suggest a need to revise the Manual.
All required changes to the Manual resulting from the reviews and/or other considerations shall be approved and made by the CCO.
Divisions of responsibility have been incorporated into the Manual. Due to the size of Perimeter, the divisions of responsibility shall not be deemed preset and conclusive. An authorized designee of a party assigned a responsibility may generally fulfill any responsibility on behalf of the assigned party. Lack of the use of the or designee term in any policy or procedure incorporated in this Manual shall not be deemed to supersede this qualification.
Procedures
1. The CCO shall be responsible for coordinating the reviews (annually, and on an as-needed basis) of the Manual and Perimeters policies and procedures. Documentation of the reviews shall be kept in written format and made available to individuals as required by law, and other parties that Perimeter deems appropriate.
2. Perimeter has engaged ACA, a regulatory and compliance consulting firm, to assist it and its CCO on a periodic and on-going basis with regard to a variety of matters, including but not limited to: annual review of its compliance program and this Manual, quarterly personal trading reviews, on-going marketing and advertising reviews, assistance with regulatory filings, on-site or telephonic participation during SEC inspections, review of Form ADV, and periodic and as-needed education of Employees with regard to various compliance matters.
3. Any changes to the Manual shall be made by the CCO or a designee appointed by the CCO. All final changes shall be approved by the CCO.
4. The CCO is designated with the full power to enforce the policies and procedures set forth in the Manual. The CCO shall report any known material violations of the Manual to Perimeters CEO.
Responsibility
The CCO is responsible for the successful implementation of the policies and procedures contained in the Manual.
Code of Conduct
As Employees of Perimeter, we are retained by our Clients to manage parts of their financial affairs and to represent their interests in many matters. We are keenly aware that, as fiduciaries, we owe our Clients our undivided loyalty our Clients trust us to act on their behalf, and we hold ourselves to the highest standards of fairness in all such matters.
We expect all Employees to act with integrity, competence, dignity, and in an ethical manner when dealing with the public, Clients, Investors, prospective Clients and Investors, Perimeter, and their fellow Employees.
We expect all Employees to adhere to the highest standards with respect to any potential conflicts of interest with Clients and Investors simply stated, no Employee should ever enjoy a benefit at the detriment of any Client or Investor.
We expect all persons associated with Perimeter to preserve the confidentiality of information that they may obtain in the course of our business and to use such information properly and not in any way adverse to our Clients interests, subject to the legality of such information.
We expect our Employees to conduct their personal financial affairs in a prudent manner, avoiding any action that could compromise their ability to deal objectively with our Clients.
You are encouraged to speak to the CCO or, in his absence, the CEO if you believe that changes or additions to, or deletions from, the Manual may be appropriate. In addition, please do not hesitate to contact either of the individuals listed above if you feel as though any of Perimeters disclosure documents, including its Form ADV, or advisory contracts are inaccurate, incomplete or out-of-date.
PERIMETER IS COMMITTED TO FOSTERING A CULTURE OF COMPLIANCE. PERIMETER THEREFORE URGES YOU TO CONTACT THE CCO ABOUT ANY ACTUAL OR SUSPECTED COMPLIANCE MATTER. YOU WILL NOT BE PENALIZED AND YOUR STATUS AT PERIMETER WILL NOT BE JEOPARDIZED BY COMMUNICATING SUCH MATTERS TO THE CCO OR OTHER SENIOR MANAGERS. RETALIATION AGAINST ANY EMPLOYEE IS CAUSE FOR APPROPRIATE CORRECTIVE ACTION, UP TO AND INCLUDING DISMISSAL.
You are required to complete the Code of Conduct and Regulatory Compliance Manual Acknowledgement Form (attached herein), both initially upon the commencement of your employment with Perimeter and annually thereafter, to acknowledge and certify that you have received, reviewed, understand and shall comply, or have complied with, the policies and procedures as set forth in the Manual. In addition, you are required to report in writing to the CCO any outside business activities, including any instances where you serve as an officer, trustee, or director of an outside organization. Finally, all Employees must be aware of and comply with the following undertakings:
· be thoroughly familiar with the policies and procedures set forth in this Manual;
· notify the CCO promptly in the event you have any reason to believe that you may have failed to comply with (or become aware of another persons failure to comply with) the policies and procedures set forth in this Manual;
· notify the CCO promptly if you become aware of any practice that arguably involves Perimeter in a conflict of interest with any of its Clients or Investors or individuals or entities with which Perimeter does business;
· cooperate to the fullest extent reasonably requested by the CCO so as to enable: (i) the CCO to discharge his respective duties under the Manual and (ii) Perimeter to comply with the Federal Securities Laws to which it is subject; and
· notify the CCO promptly if you become aware of any disclosure document that may be inaccurate, incomplete or out of date in any respect.
Violations of this Code of Conduct may warrant sanctions as appropriate, up to and including suspension or dismissal, at the discretion of Senior Management. In any situation where you are unsure about the application of this Code of Conduct or any of the policies contained in the Manual, you are encouraged to discuss the situation confidentially with the CCO or Senior Management.
This Manual and the policies and procedures set forth herein supersede all manuals, policy statements and procedures and other communications on the subjects discussed herein. In developing the Manual, Perimeter considered the material risks associated with activities engaged in by Perimeter. Accordingly, each policy contains a discussion of the risks considered when developing the policy and procedures. This risk evaluation process is an ongoing one, and the Manual will be periodically reviewed to ensure that Perimeter maintains policies and procedures to address existing or evolving risks.
Perimeter may amend this Manual and/or adopt interpretations of the policies and procedures contained in the Manual as deemed appropriate by the CCO. All material amendments to, and new interpretations of, the Manual shall be conveyed to Employees and require their acknowledgement of receipt and understanding of the amendments/interpretations.
Code of Ethics
General
The Code of Ethics is predicated on the principle that Perimeter and its employees owe a fiduciary duty to its Clients.(1) Accordingly, Employees must avoid activities, interests and relationships that run contrary (or appear to run contrary) to the best interests of Clients. At all times, Perimeter will be mindful to:
· Place client interests ahead of Perimeters As a fiduciary, Perimeter will serve in its Clients best interests. In other words, Employees may not benefit at the expense of Clients.
· Engage in personal investing that is in full compliance with Perimeters Code of Ethics Employees must review and abide by Perimeters Personal Securities Transaction and Insider Trading Policies.
· Avoid taking advantage of its position Employees must not accept investment opportunities, gifts or other gratuities from individuals seeking to conduct business with Perimeter, or on behalf of an advisory client, unless in compliance with the Gift Policy below.
· Maintain full compliance with the Federal Securities Laws Employees must abide by the standards set forth in Rule 204A-1 under the Advisers Act and Rule 17j-1 under the IC Act. In addition, Perimeter Employees who may be officers of a registered investment company must also abide by the Funds Officer Code of Conduct that is established by the investment company.
Any questions with respect to Perimeters Code of Ethics should be directed to the CCO. As discussed in greater detail below, Employees must promptly report any violations of the Code of Ethics to the CCO. All reported Code of Ethics violations will be treated as being made on an anonymous basis.
Risks
In developing this policy and procedures, Perimeter considered the material risks associated with administering the Code of Ethics. This analysis includes risks such as:
· One or more Employees engage in various personal trading practices that wrongly make use of Non-Public Information resulting in harm to Clients or unjust enrichment to the Employee(s). (These practices include trading ahead of Clients and passing Non-Public Information on to spouses and other persons over whose accounts the Employee has control.)
· Employees are not aware of what constitutes insider information.
· One or more Employees engage in an excessive volume of personal trading (as determined by the CCO) that detracts from their ability to perform services for Clients.
· Employees take advantage of their position by accepting excessive gifts or other gratuities (including access to IPO investments) from individuals seeking to do business with Perimeter.
(1) S.E.C. v. Capital Gains Research, Inc., 375 U.S. at 191-192 (1963).
· The personal trading of Employees does not comply with certain provisions of Rule 204A-1 under the Advisers Act and Rule 17j-1 of the IC Act.
· Employees serve as trustees and/or directors of outside organizations. (This could present a conflict in a number of ways, for example, if Perimeter wants to recommend the organization for investment or if the organization is one of Perimeters service providers.)
· Employees use firm property, including research, supplies, and equipment, for personal benefit.
Perimeter has established the following guidelines as an attempt to mitigate these risks.
Guiding Principles & Standards of Conduct
The following set of principles frame the professional and ethical conduct that Perimeter expects from its Employees:
· Act with integrity, competence, diligence, respect, and in an ethical manner with the public, Clients, prospective clients and Employees;
· Place the integrity of the investment profession, the interests of Clients, and the interests of Perimeter above ones own personal interests;
· Adhere to the fundamental standard that you should not take inappropriate advantage of your position;
· Avoid any actual or potential material conflict of interest;
· Conduct all personal securities transactions in a manner consistent with this policy;
· Use reasonable care and exercise independent professional judgment when conducting investment analyses, making investment recommendations, taking investment actions, and engaging in other professional activities;
· Practice and encourage others to practice in a professional and ethical manner that will reflect favorably on you and the profession;
· Promote the integrity of, and uphold the rules governing, capital markets;
· Maintain and improve your professional competence and strive to maintain and improve the competence of other investment professionals; and
· Comply with applicable provisions of the Federal Securities Laws.
Personal Security Transaction Policy
Employees may not purchase or sell any Security in which the Employee has a Beneficial Interest unless the transaction occurs in an exempted Security or the Employee has complied with the Personal Security Transaction Policy set forth below.
No Employee shall, directly or indirectly, execute a personal securities transaction within seven (7) days of the trade date(s) during which Perimeter is transacting in the same security for any Client. If the Client trade order cannot be completed that day and runs the course of several days, Employees will be prohibited from personally trading in that security for that entire period of time plus seven days.
No Employee shall engage in a personal securities transaction with respect to any Security which to his or her actual knowledge at the time of such transaction:
(i) Is being considered for purchase or sale by any investment company advised or sub-advised by Perimeter; or
(ii) Is the subject of a pending buy or sell order by any investment company advised or sub-advised by Perimeter.
Pre-Clearance Procedures
Employees must have written pre-clearance for all transactions in Securities before completing the transactions. Transactions in ETFs are exempt from pre-clearance. Perimeter reserves the right to disapprove any proposed transaction that may have the appearance of improper conduct, and may fail to pre-clear a proposed Employee transaction for a number of reasons, including, but not limited to: conflicting sides of a transaction with Clients; violation of a confidentiality agreement; and the proposed transaction is before an intended Client trade program.
Once it is determined that Perimeter is not transacting, or intends to transact, in the same security for a Client, then the Employee shall complete Perimeters Personal Trading Pre-Clearance Form (See Attachment A) when requesting a trade in most Securities, or the Private Placement & IPO Request and Reporting Form (See Attachment B) when requesting a trade in a Private Placement or IPO. All pre-clearance requests must be submitted to the CCO or someone so designated by the CCO with the CCOs oversight. Once pre-clearance is granted to an Employee, such Employee may only transact in that Security for the remainder of the day. If the Employee wishes to transact in that Security on the following or any other day, he/she must again obtain pre-clearance for the transaction. Unless otherwise noted, no pre-clearance is required for transactions taking place in the Exempted Securities noted below.
Accounts Covered by the Policies and Procedures
Perimeters Personal Securities Transaction policies and procedures apply to all accounts holding any Securities over which Employees have any beneficial ownership interest, which typically includes accounts held by immediate family members sharing the same household. Immediate family members include children, step-children, grandchildren, parents, step-parents, grandparents, spouses, domestic partners, siblings, parents-in-law, and children-in-law, as well as adoptive relationships that meet the above criteria.
It may be possible for Employees to exclude accounts held personally or by immediate family members sharing the same household if the Employee does not have any direct or indirect influence or control over the accounts. Employees should consult with the CCO before excluding any accounts held by immediate family members sharing the same household.
Reportable Securities
Perimeter requires Employees to provide periodic reports (see the Reporting section) regarding transactions and holdings in any Security, except that Employees are not required to report the following Exempted Securities:
· Direct obligations of the Government of the United States;
· Bankers acceptances, bank certificates of deposit, commercial paper and high-quality short-term debt instruments, including repurchase agreements;
· Shares issued by money market funds;
· Shares issued by open-end registered investment companies, other than funds advised, sub-advised or underwritten by Perimeter or an affiliate; and
· Shares issued by unit investment trusts that are invested exclusively in one or more open-end registered investment companies, none of which are advised or underwritten by Perimeter or an affiliate.
Such exemptions do not apply to shares of open-end mutual funds that are advised by Perimeter (or an affiliate) or are otherwise affiliated with Perimeter (or an affiliate). Employees must pre-clear and report any personal transaction in a Reportable Fund. Exchange-traded funds, or ETFs are somewhat similar to open-end registered investment companies. However, ETFs are Reportable Securities, and are subject to the reporting requirements contained in Perimeters Personal Securities Transactions policy.
Reporting
The Company must collect three (3) reports from Employees that include transaction and holding information regarding the personal trading activities of the Employees. The reports, as described in further detail below, are: (i) Quarterly Transaction Reports; (ii) Initial Holdings Reports; and (iii) Annual Holdings Reports.
These reports will enable Perimeter to maintain compliance with Rule 204A-1 under the Advisers Act, as well as assist Perimeter to determine with reasonable assurance any indications of Scalping, Front-Running or the appearance of a conflict of interest with Client trades. Accordingly, each Employee shall report his/her securities transactions and holdings to ACA via the PTC system located at ACAs website: www.advisercompliance.com. All Employees will receive a username and password in order to access PTC.
Quarterly Transaction Reports
Employees shall be required to report all Securities transactions that they have made in Securities Accounts during the quarter, as well as any new Securities Accounts that they have opened during the quarter. In order to fulfill this reporting requirement, Employees must report this information to ACA no later than thirty (30) days after the end of each calendar quarter.
Initial and Annual Holdings Reports
New Employees are required to report to ACA all of their Reportable Securities and Securities Accounts (whether such Accounts contain Reportable Securities or Non-Reportable Securities) not later than 10 days after an individual becomes an Employee.
Employees are required to verify the accuracy of the list of Securities and Securities Accounts as recorded on the PTC system on an annual basis, by (and including) February 14 th of each year. The report shall be current as of December 31 st .
Duplicate Copies
In order for Perimeter to verify the accuracy of information submitted by Employees to PTC, Employees must arrange for their brokers/custodians to furnish Perimeter with duplicate account statements and/or brokerage confirmations. A Sample Brokerage Letter is included as Attachment C.
Exceptions from Reporting Requirements
There are limited exceptions from certain of the reporting requirements noted above. Specifically, an Employee is not required to:
1) Report on PTC any transactions effected pursuant to an automatic investment plan.
2) Submit any of the three reports (i.e., Quarterly Transaction Report, Initial Holdings Report and Annual Holding Report) with respect to Securities held in Securities Accounts over which the Employee had no direct or indirect influence or control. Note, however, that the CCO may request that an Employee provide documentation to substantiate that the Employee had no direct or indirect influence or control over the Securities Account (e.g., investment advisory agreement, etc.).
The CCO will determine on a case-by-case basis whether an account qualifies for either of the aforementioned exceptions.
Trading and Review
Perimeters Personal Security Transaction Policy is designed to not only ensure its technical compliance with Rule 204A-1, but also to mitigate any potential material conflicts of interest associated with Employees personal trading activities. Accordingly, Perimeter will monitor Employees investment patterns to detect the following abuses:
· Excessive trading;
· Purchases of Securities held by mutual funds advised or sub-advised by Perimeter;
· Trading opposite of Client trades; and
· Front-Running Client accounts, which is a practice generally understood to be Employees personally trading ahead of Clients.
Employees are strictly prohibited from engaging in short-term trades of mutual fund shares, as to avoid even the appearance of market timing activities. In addition to Perimeters internal monitoring, ACA shall also conduct a post-trade review of Employees personal trading activities that focuses on the conflicts of interest noted above.
The CEO will monitor the CCOs personal securities transactions for compliance with the Personal Security Transaction Policy.
If Perimeter discovers that an Employee is personally trading contrary to the policies set forth above, the Employee shall meet with the CCO to review the facts surrounding the transactions.
ACA will also conduct testing of Employee transactions versus transactions completed on behalf on clients for any conflicts. If any conflicts are found, ACA will bring those to the attention of the CCO.
Reporting Violations and Remedial Actions
Perimeter takes the potential for conflicts of interest caused by personal investing very seriously. As such, Perimeter requires its Employees to promptly report any violations of the Code of Ethics to the CCO. Perimeters Senior Management is aware of the potential matters that may arise as a result of this requirement, and shall take action against any Employee that seeks retaliation against another for reporting violations of the Code of Ethics.
If any violation of Perimeters Personal Security Transaction Policy is determined to have occurred, the CCO may impose sanctions and take such other actions, including, without limitation, requiring that the trades in question be reversed, requiring the disgorgement of profits or gifts, issuing a letter of caution or warning, issuing a suspension of personal trading rights or suspension of employment (with or without compensation), imposing a fine, making a civil referral to the SEC, making a criminal referral, and/or terminating employment for cause or any combination of the foregoing. All sanctions and other actions taken shall be in accordance with applicable employment laws and regulations. Any profits or gifts forfeited shall be paid to the applicable Client(s), if any, or given to a charity, as the CCO shall determine is appropriate.
No Employee shall participate in a determination of whether he or she has committed a violation of the Code of Ethics or in the imposition of any sanction against himself or herself.
Insider Trading Policy
Section 204A of the Advisers Act requires every investment adviser to establish, maintain, and enforce written policies and procedures reasonably designed, taking into consideration the nature of such investment advisers business, to prevent the misuse of Material Non-public Information by such investment adviser or any person associated with such investment adviser. In accordance with Section 204A, Perimeter has instituted procedures to prevent the misuse of Material Nonpublic Information.
In the past, securities laws have been interpreted to prohibit the following activities:
· Trading by an insider while in possession of Material Non-Public Information;
· Trading by a non-insider while in possession of Material Non-Public Information, where the information was disclosed to the non-insider in violation of an insiders duty to keep it confidential; or
· Communicating Material Non-Public Information to others in breach of a fiduciary duty.
Who Does the Policy Cover?
This policy covers all of Perimeters Employees as well as any transactions in any securities participated in by family members, trusts or corporations directly or indirectly controlled by such persons. In addition, the policy applies to transactions engaged in by corporations in which the Employee is a 10% or greater stockholder and a partnership of which the Employee is a partner unless the Employee has no direct or indirect control over the partnership.
What Information is Material?
Individuals may not be held liable for trading on inside information unless the information is material. Advance knowledge of the following types of information is generally regarded as material:
· Dividend or earnings announcements
· Write-downs or write-offs of assets
· Additions to reserves for bad debts or contingent liabilities
· Expansion or curtailment of company or major division operations
· Merger, joint venture announcements
· New product/service announcements
· Discovery or research developments
· Criminal, civil and government investigations and indictments
· Pending labor disputes
· Debt service or liquidity problems
· Bankruptcy or insolvency problems
· Tender offers, stock repurchase plans, etc.
· Recapitalization
Information provided by a company could be material because of its expected effect on a particular class of a companys securities, all of the companys securities, the securities of another company, or the securities of several companies. The misuse of Material Non-Public Information applies to all types of securities, including equity, debt, commercial paper, government securities and options.
Material information does not have to relate to a companys business. For example, information about the contents of an upcoming newspaper column may affect the price of a Security, and therefore be considered material.
What Information is Non-Public?
In order for issues concerning Inside Trading to arise, information must not only be material, but also non-public.
Once non-public information has been effectively distributed to the investing public, it can no longer be classified as Material Non-Public Information. However, the distribution of Material Non-Public Information must occur through commonly recognized channels for the classification to change. In addition, the information must not only be publicly disclosed, there must be adequate time for the public to receive and digest the information. Lastly, non-public information does not change to public information solely by selective dissemination.
Employees must be aware that even where there is no expectation of confidentiality, a person may become an insider upon receiving Material Non-Public Information. Whether the tip made to the Employee makes him/her a tippee depends on whether the corporate insider expects to benefit personally, either directly or indirectly, from the disclosure.
The benefit is not limited to a present or future monetary gain; it could be a reputational benefit or an expectation of a quid pro quo from the recipient by a gift of the information.
Selective Disclosure
Employees must never disclose proposed/pending trades to any client or other individual/entity outside of Perimeter. Additionally, Perimeter must be careful when disclosing the composition of Clients portfolios without obtaining consent from the CCO. Federal Securities Laws may specifically prohibit the dissemination of such information and doing so may be construed as a violation of Perimeters fiduciary duty to Clients. Selectively disclosing the portfolio holdings of a Clients portfolio may also be viewed as Perimeter engaging in a practice of favoritism. Including information regarding Clients portfolio
holdings in marketing materials and Perimeters website is subject to the CCOs approval in accordance with Perimeters Marketing policy and procedures. All inquiries that are received by Employees to disclose portfolio holdings must be immediately reported to the CCO and CEO. In determining whether or not to approve the dissemination of holdings information, the CCO will consider, among other things, how current the holdings information is. However, in no case will the CCO approve the dissemination of holdings information that is less than one (1) month old.
Paid Research Providers
Perimeter may compensate third-parties and/or individuals for research specific to certain industries, issuers and markets. The investment team must pay particular attention to the type of information conveyed by such sources. In the event that the investment team suspects its receipt of Non-Public Information, it must not act on the information and immediately inform the CCO of the information to determine the appropriate course of action.
Penalties for Trading on Material Non-Public Information
Severe penalties exist for firms and individuals that engage in the act of Inside Trading, including civil injunctions, treble damages, disgorgement of profits and jail sentences. Further, fines for individuals and firms found guilty of Insider Trading are levied in amounts up to three times the profit gained or loss avoided, and up to the greater of $1,000,000 or three times the profit gained or loss avoided, respectively.
Procedures to Follow when an Employee Believes that They Possess Material Non-Public Information
If an Employee has questions as to whether they are in possession of Material Non-Public Information, they must inform the CCO as soon as possible. From this point, the CCO will conduct research to determine if the information is likely to be considered important to Clients in making investment decisions, and whether the information has been publicly disseminated.
Given the severe penalties imposed on individuals and firms engaging in Inside Trading, Employees:
· Shall not trade the securities of any company in which they are deemed insiders who may possess Material Non-Public Information about the company.
· Shall not engage in securities transactions of any company, except in accordance with Perimeters Personal Security Transaction Policy and the Federal Securities Laws.
· Shall submit various reports in accordance with the Personal Security Transaction Policy.
· Shall not discuss any potentially Material Non-Public Information with colleagues, except as specifically required by their position.
· Shall immediately report the potential receipt of Material Non-Public Information to the CCO.
· Shall not proceed with any research, trading, etc. until the CCO inform the Employee of the appropriate course of action.
Serving as Officers, Trustees and/or Directors of Outside Organizations
Employees may, under certain circumstances, be granted permission to serve as directors, trustees, employees, or officers of outside organizations. These organizations can include public or private corporations, partnerships, charitable foundations and other not-for-profit institutions. Employees may receive compensation for such activities. Employees should report to the CCO all such outside positions and any such positions held by family members that could expose Perimeter or its employees to a
potential conflict of interest (for example, familial relationships with service providers used by Perimeter).
Outside Business Activities
Employees are prohibited from engaging in outside activities without the prior written approval of the CCO. Employees may use the Request for Approval of Outside Business Activities (See Attachment D) to seek approval for outside business activities. Approval will be granted on a case by case basis, subject to proper resolution of potential conflicts of interest. Outside activities will be approved only if any conflict of interest issues can be satisfactorily resolved and all of the necessary disclosures are made on Part II of Form ADV.
Diversion of Firm Business or Investment Opportunity
No Employee may acquire, or receive personal gain or profit from, any business opportunity that comes to his or her attention as a result of his or her association with Perimeter and in which he or she knows Perimeter might be expected to participate or have an interest, without disclosing in writing all necessary facts to the CCO, offering the particular opportunity to Perimeter, and obtaining written authorization to participate from the CCO.
Any personal or family interest of an Employee in any Perimeter business activity or transaction must be immediately disclosed to the CCO. For example, if an Employee becomes aware that a transaction being considered or undertaken by Perimeter may benefit, either directly or indirectly, an Employee or a family member thereof, the Employee must immediately disclose this possibility to the CCO.
Loans
No Employee may borrow from or become indebted to, any person, business or company having business dealings or a relationship with Perimeter, except with respect to customary personal loans (e.g., home mortgage loans, automobile loans, lines of credit, etc.), unless the arrangement is disclosed in writing and receives prior approval from the CCO. No Employee may use Perimeters name, position in a particular market or goodwill to receive any benefit on loan transactions without the prior express written consent of the CCO.
Dealings with Government and Industry Regulators
Perimeter forbids payments of any kind by it, its Employees or any agent or other intermediary to any government official, self-regulatory official, corporation or other similar person or entity, within the United States or abroad, for the purpose of obtaining or retaining business, or for the purpose of influencing favorable consideration of any application for a business activity or other matter. This policy covers all types of payments, even to minor government officials and industry regulators, regardless of whether the payment would be considered legal under the circumstances. This policy encourages Employees to avoid even the appearance of impropriety in their dealings with industry and government regulators and officials.
Political Contributions and Public Office
The following outlines Perimeters policies with respect to political contributions and public office:
· Contributions by Perimeter and/or Employees to politically connected individuals/entities who may have the ability, in some way, to influence Clients to the Company are strictly prohibited.
· All contributions an Employee makes that are political in nature must be reported to the CCO.
· Neither Perimeter nor Employees can hold a public office if it in any way conflicts with Perimeters business.
Improper Use of Perimeter Property
No Employee may utilize property of Perimeter or utilize the services of Perimeter or Employees, for his or her personal benefit or the benefit of another person or entity, without approval of the CCO and CEO. For this purpose, property means both tangible and intangible property, including Perimeter and Employee funds, premises, equipment, supplies, information, business plans, business opportunities, confidential research, intellectual property or proprietary processes, and ideas for new research or services.
Protection of Perimeters Name
Employees should at all times be aware that Perimeters name, reputation and credibility are valuable assets and must be safeguarded from any potential misuse. Care should be exercised to avoid the unauthorized use of Perimeters name in any manner that could be misinterpreted to indicate a relationship between Perimeter and any other entity or activity.
Employee Involvement in Litigation or Proceedings
Employees must advise the CCO immediately if they become involved in or threatened with litigation or an administrative investigation or proceeding of any kind, are subject to any judgment, order or arrest, or are contacted by any regulatory authority.
Gifts and Entertainment
Perimeter tracks the receipt or giving of gifts by requiring that Employees report gifts and entertainment via the Personal Trading Compliance system (PTC), an on-line compliance reporting system. The PTC maintains electronic records of all gifts and entertainment reported, provides information in an easily accessible manner and provides the CCO and management with greater flexibility to gather and analyze information on an individual as well as Company-wide level.
Each employee is provided with a unique user name and password to log into the PTC. Employees are required to log in and report gifts and entertainment in accordance with the policies and procedures set forth below. Employees must ensure that all required details and information regarding the gift or entertainment is disclosed in the PTC. Once the report is submitted the PTC will send a report of the event to the CCO for review.
Entertainment Receipt of Business Meals, Tickets to Sporting & Other Events - Employees may attend business meals, sporting events and other entertainment events at the expense of a giver, provided that the expense is reasonable, not lavish or extravagant in nature. If the estimated cost of the meal, event, etc. is greater than $200 per person, the Employee must report his/her attendance at the event via
the on-line PTC. If the event is highly publicized such that the tickets may be selling in excess of their face value, the Employee must consider the price mark-up for the reporting requirements.
Entertainment Provision of Business Meals, Tickets, & Other Events - Employees must report any entertainment provided to a third party at the expense of Perimeter (or its Employees) if the cost of the meal, event, etc. is greater than $200 per person. Employees should report the entertainment provided via the PTC. Employees must ensure that all required details included in PTC. The PTC will generate and send a report of the event to the CCO.
Employees Receipt of Gifts - Employees must report their intent to accept gifts over $100 (either one single gift, or in aggregate on an annual basis) to the CCO by reporting the gift via the PTC. Reasonable gifts received on behalf of the Company shall not require reporting. Examples of reasonable gifts include holiday gift baskets and lunches brought to Perimeters offices by service providers.
Perimeters Gift Giving Policy Perimeter and its Employees are prohibited from giving gifts that may be deemed as excessive, and must obtain approval to give all gifts in excess of $100 to any Client, prospective client or any individual or entity that Perimeter is seeking to do business with.
Disclosure
Perimeter shall describe its Code of Ethics in Part II of Form ADV and, upon request, furnish Clients with a copy of the Code of Ethics. All client requests for Perimeters Code of Ethics shall be directed to the CCO.
If the CCO determines that a material violation of this Code of Ethics has occurred, he or she shall promptly report the violation, and any enforcement action taken, to Senior Management. If Senior Management determines that the material violation may involve a fraudulent, deceptive or manipulative act, Perimeter must report its findings to the applicable Boards of Directors or Trustees pursuant to Rule 17j-1.
Recordkeeping
Perimeter shall maintain records in the manner and to the extent set forth below.
· A copy of this Code of Ethics and any other code which is, or at any time within the past five years has been, in effect shall be preserved in an easily accessible place;
· A record of any violation of this Code of Ethics and of any action taken as a result of such violation shall be preserved in an easily accessible place for a period of not less than five years following the end of the fiscal year in which the violation occurs;
· A record of all written acknowledgements (annual certifications) as required by the Manual for each person who is currently, or with the past five years was, an Employee of Perimeter.
· A copy of each report made pursuant to this Code of Ethics by an Employee, including any information provided in lieu of reports, shall be preserved by the Company for at least five years after the end of the fiscal year in which the report is made or the information is provided, the first two years in an easily accessible place;
· A list of all persons who are, or within the past five years have been, required to make reports pursuant to this Code of Ethics, or who are or were responsible for reviewing these reports, shall be maintained in an easily accessible place;
· The Company shall preserve a record of any decision, and the reasons supporting the decision, to approve the acquisition of any Limited Offering or IPO by Employees for at least five years after the end of the fiscal year in which the approval is granted, the first two years in an easily accessible place.
· A copy of each finding presented to a mutual fund Board of Directors or Trustees shall be preserved by Perimeter for at least five years after the end of the fiscal year in which the record is made, the first two years in an easily accessible place.
Responsibility
The CCO will be responsible for administering the Code of Ethics. All questions regarding the policy should be directed to the CCO. All Employees must acknowledge their receipt and understanding of the Code of Ethics upon commencement of their employment.
In the event a material change is made to the Personal Security Transaction Policy of the Code of Ethics, the CCO shall, as applicable, inform the CCO of any mutual fund advised by Perimeter of such material change and ensure that such material change is approved by Board(s) of the mutual fund(s) no later than six months after adoption of the material change.
Attachment A
Personal Trading Pre-Clearance Form
The Personal Trading Pre-Clearance Form documents that the proposed transaction is not a conflicting transaction. Pre-clearance must be granted prior to placing a trade, and is only good for the day of the approval.
1. Buy Sell Short Cover Short
2. Security
3. Common Stock Option Debt Other
4. Symbol
5. Number of Shares/Contracts/Principal
6. Broker/Custodian
7. Employee has no inside information or other knowledge pertaining to this proposed transaction that constitutes a violation of Company policy, confidentiality agreements or securities laws.
8. Employee is not an officer, director or principal shareholder of the company and is not required to file any of the reports required by Section 16 of the Securities Exchange Act of 1934.
9. Any transaction described above establishing a position in a Security is undertaken with the intention of holding such position for not less than seven (7) days.
10. Employee confirmed with the Portfolio Managers that Perimeter is not currently transacting, or intends to transact, in the same security on behalf of a Client.
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Signed |
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By signing below, the individual verifies that the proposed transaction described above does not violate Perimeters Personal Security Transaction Policy. Note: One signature is required for pre-clearance.
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Chief Compliance Officer |
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CEO/CIO/Director of Trading |
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Attachment B
Limited Offering & IPO Request and Reporting Form
Name of Issuer:
Type of Security:
Public Offering Date:
(for proposed IPO investments only)
By signing below, I certify and acknowledge the following:
1. I am not investing in this Limited Offering or IPO to profit improperly from my position as an Perimeter Employee;
2. The investment opportunity did not arise by virtue of my activities on behalf of an Perimeter client; and
3. To the best of my knowledge, no Perimeter Clients have any foreseeable interest in purchasing this Security.
Furthermore, by signing below, I certify that I have read Perimeters Code of Ethics and believe that the proposed trade fully complies with the requirements of this policy. I understand Perimeter reserves the right to direct me to rescind a trade even if approval is granted. I also understand that a violation of this policy will be grounds for disciplinary action or dismissal and may also be a violation of federal and/or state securities laws. I have provided all offering materials related to this proposed investment to the CCO upon request.
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Attachment C
Sample Brokerage Letter
<DATE>
<NAME OF CUSTODIAN>
<ADDRESS>
<CITY, STATE ZIP>
Re: Account No.
Account Name
Dear <NAME>,
As of <DATE>, please send to the party named below a duplicate confirmation of each transaction in the above-named account and monthly brokerage account statements for the above-named account:
Perimeter Capital Management
Attn: Adam C. Stewart, Chief Compliance Officer
Five Concourse Parkway, Suite 2725
Atlanta, GA 30328
If you have any questions or concerns, please feel free to give me a call at (800) 970-2725. Thank you for your immediate attention to this matter.
Sincerely,
<Name>
cc:<Name>
Attachment D
Request for Approval of Outside Business Activities
Name and address of organization:
Organizations primary business purpose:
Is the organization a publicly traded company? If yes, list the stock symbol:
Describe your anticipated role with the organization:
Describe any compensation you will receive:
Describe any known relationships between Perimeter and the organization in question, or any conflict(s) of interest you perceive regarding the outside business activity:
List any Employees of Perimeter who you know to be officers or directors of the organization:
If approval is granted, I agree to:
· Notify the CCO of any change in the above information;
· Seek approval to retain my position if a private organization offers Securities to the public or if a not-for-profit organization ceases to maintain its not-for-profit status;
· Adhere to the Insider Trading policies and procedures of Perimeter and the organization, and not transfer any Non-public information between Perimeter and the organization; and
· Avoid involvement in any arrangement between Perimeter and the entity, and recuse myself of voting on such matters.
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Political and Charitable Contributions,
and Public Positions
Background
Individuals may have important personal reasons for seeking public office, supporting candidates for public office, or making charitable contributions. However, such activities could pose risks to an investment adviser. For example, federal and state pay-to-play laws have the potential to significantly limit an advisers ability to manage assets and provide other services to government-related Clients. Rule 206(4)-5 of the Advisers Act encompasses activities of registered as well as unregistered investment advisers.
Rule 206(4)-5 (the Pay-to-Play Rule) limits political contributions to state and local government officials, candidates, and political parties by:
· Registered investment advisers;
· Advisers with fewer than fifteen clients that would be required to register with the SEC but for the private advisor exemption provided by Section 203(b)(3) of the Advisers Act;
· Firms that solicit clients or investors on behalf of the types of advisers described above; and
· Covered associates (as defined below) of the entities listed above.
The Pay-to-Play Rule defines contributions broadly to include gifts, loans, the payment of debts, and the provision of any other thing of value. Rule 206(4)-5 also includes a provision that prohibits any indirect action that would be prohibited if the same action was done directly.
Restrictions on the Receipt of Advisory Fees
The Pay-to-Play Rule prohibits the receipt of compensation from a government entity for advisory services for two years following a contribution to any official of that government entity.(2) This prohibition also applies to covered associates of the adviser.
A covered associate of an adviser is defined to include:
· Any general partner, managing member or executive officer, or other individual with a similar status or function;
· Any employee that solicits a government entity for the adviser, as well as any direct or indirect supervisor of that employee; and
· Any political action committee controlled by the adviser or by any person that meets the definition of a covered associate.
(2) A government entity means any state or political subdivision of a state, including (i) any agency, authority, or instrumentality of the state or political subdivision, (ii) a pool of assets sponsored or established by the state or political subdivision or agency, (iii) a plan or program of a government entity; and (iv) officers, agents or employees of the state or political subdivision or agency.
There is an exception available for contributions from natural persons of $150 per election, or $350 per election if the contributor is eligible to vote in the election. An exception is also available for otherwise prohibited contributions that are returned, so long as the contribution in question is less than $350, is discovered within four months of being given, and is returned within 60 days of being discovered. The exception for returned contributions is available no more than twice per calendar year for advisers with 50 or fewer employees; advisers with more than 50 employees can rely on this exception three times per calendar year. However, an adviser cannot rely on the exception for returned contributions more than once for any particular employee, irrespective of the amount of time that passes between returned contributions.
The restrictions on contributions and payments imposed by Rule 206(4)-5 can apply to the activities of individuals for the two years before they became covered associates of an investment adviser. However, for covered associates who are not involved in soliciting clients or investors, the look-back period is six months instead of two years.
Restrictions on Payments for the Solicitation of Clients or Investors
The Pay-to-Play Rule prohibits the compensation of any person to solicit a government entity unless the solicitor is an officer or employee of the adviser, or unless the recipient of the compensation (i.e., solicitation fee) is another registered investment adviser or a registered broker/dealer.
However, a registered investment adviser will fall outside of the definition of a regulated person, and will be ineligible to receive compensation for soliciting government entities, if the adviser or its covered associates made, coordinated, or solicited contributions or payments to the government entity during the prior two years.(3)
Restrictions on the Coordination or Solicitation of Contributions
The Pay-to-Play Rule prohibits an adviser and its covered associates from coordinating or soliciting any contribution or payment to an official of the government entity, or a related local or state political party.
Applicability of Rule 206(4)-5 to Different Types of Advisory Products and Services Being Offered
The Pay-to-Play Rule applies equally to:
· Advisers that directly manage the assets of a government entity (such as in a separate account);
· Advisers that manage assets of a government entity in a private fund (such as a hedge fund, private equity fund, etc.); and
· Advisers that manage a registered investment company (such as a mutual fund) that is an investment option of a plan or program of a government entity.
(3) Similar prohibitions are expected on broker/dealers pursuant to upcoming FINRA lawmaking.
Policies and Procedures
Political Contributions
Political contributions by Perimeter or Employees to politically connected individuals or entities with the intention of influencing such individuals or entities for business purposes are strictly prohibited.
If an Employee or any affiliated entity is considering making a political contribution to any state or local government entity, official, candidate, political party, or political action committee, the potential contributor must seek pre-clearance from the CCO using the attached Political Contribution Pre-clearance form. The CCO will consider whether the proposed contribution is consistent with restrictions imposed by these policies and procedures, and to the extent practicable, the CCO will seek to protect the confidentiality of all information regarding each proposed contribution.
The CCO will meet with any individuals who are expected to become covered associates to discuss their past political contributions. The review will address the prior six months for potential covered associates who will have no involvement in the solicitation of clients or investors; contributions for all other potential covered associates will be reviewed for the past two years. The CCO will prepare a memorandum documenting the discussions scope and findings, which will be signed by the CCO and by the individual in question. These records will be retained in accordance with Perimeters record retention policies along with Perimeters Political Contribution Pre-clearance forms.
Employees may make contributions to national political candidates, parties, or action committees without seeking pre-clearance. However, Employee must use good judgment in connection with all contributions and should consult with the CCO if there is any actual or apparent question about the propriety of a potential contribution.
Any political contribution by Perimeter, rather than its Employees, must be pre-cleared by the CCO, irrespective of the proposed amount or recipient of the contribution. The CCO will maintain a chronological list of contributions in accordance with the requirements of the Pay-to-Play Rule.
Charitable Donations
Donations by Perimeter or Employees to charities with the intention of influencing such charities to become Clients are strictly prohibited. Notify the CCO if you perceive an actual or apparent conflict of interest in connection with any charitable contribution.
Public Office
Employees must obtain written pre-approval from the CCO prior to running for any public office. Employees may not hold a public office if it presents any actual or apparent conflict of interest with Perimeters business activities.
Attachment Political Contribution Pre-clearance Form
All contributions and payments must comply with applicable federal, state and local laws, rules and regulations.
Employees Name:
Title:
Name of person or entity making the contribution (if other than Employee):
Recipients Name:
Title:
List the office or position for which the recipient is running:
If the recipient currently holds a government office or position, list that office or position:
Proposed contribution amount (dollar value):
If previous contributions have been made to the same candidate in the same election, list the aggregate amount of all previous contributions:
Are you eligible to vote for the candidate? Yes / No If no, explain:
By signing below, I am attesting to the fact that I have not and will not, solicit contributions from others, or coordinate contributions to elected officials, current candidates, or political parties where Perimeter is providing or seeking government business.
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If the contribution is a triggering contribution, how many such contributions have occurred in the past 12 months ? (if Perimeter employs more than 50 people, 3 triggering contributions may occur in a calendar year, otherwise 2 are permissible)
Attachment Political Contribution Log
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Exhibit (p)(9)
CODE OF ETHICS
I. Overview
Rule 204A-1 under the Investment Advisers Act of 1940 (Advisers Act) provides that an adviser must adopt and enforce a code of ethics applicable to its Supervised Persons (as defined below). The rule prohibits certain Supervised Persons from engaging in fraudulent, deceitful, or manipulative practices in connection with the purchase or sale of a security held or to be acquired by clients of an adviser, including mutual funds. The rule also requires reporting of personal securities holdings and transactions, including transactions in investment funds advised by an adviser or an affiliate. The rule is designed to foster the detection and prevention of fraudulent activities and prevent violations of the code of ethics.
Simple Alternatives LLC (the Company) is an investment adviser registered under the Advisers Act. Consistent with Rule 204A-1 of the Advisers Act, the Company has adopted this Code of Ethics (the Code) which contains provisions reasonably necessary to prevent the Companys employees from engaging in any act, practice, or course of business that would defraud or mislead any of its clients, including the funds it advises (Funds), or that would constitute a manipulative practice.
II. Statement of General Principles
The Company holds its employees to a high standard of integrity and business practice. In serving its clients, the Company strives to avoid conflicts of interest or the appearance of conflicts in connection with the securities transactions of the Company and its employees. As an investment adviser and fiduciary to our clients, we have the responsibility to render professional, continuous, and unbiased investment advice. Fiduciaries owe their clients a duty of honesty, good faith and fair dealing. Therefore, we must act at all times in the clients best interests and must avoid or disclose conflicts of interests. This Code is designed to emphasize and implement these fundamental principles within our Company.
III. Applicability
This Code of Ethics applies to all Supervised Persons of the Company, including the Companys directors and officers. Supervised Persons must adhere to the Standards of Conduct set forth in Section V below, including provisions requiring their compliance with laws and regulations. Additionally, Supervised Persons must provide initial and annual certifications of compliance with the Code, as well as acknowledgment of receipt of any amendments to the Code. Access Persons are subject to the personal securities transactions and holdings reporting requirements under this Code.
Terms such as Supervised Person, Access Person and account also include the persons immediate family members (including any relative by blood or marriage living in the employees household), and any account in which he/she has a direct or indirect beneficial interest (such as a trust).
For Internal Use Only
To avoid conflicts of interest and to satisfy the Companys duties towards its clients, this Code of Ethics addresses the personal securities trading of Supervised Persons, and Supervised Persons are required to comply with these provisions, as applicable.
IV. Definitions
A. Supervised Person means:
· Directors, officers and employees of the Company (or other persons occupying a similar status or performing similar functions); and
· persons who, in the course of their regular functions or duties, participate in the process of purchasing or selling instruments or investments, or participate in making recommendations or obtaining information with respect to the purchase or sale of instruments or investments, on behalf of any of the Companys clients, including investment funds, and are subject to the Companys supervision and control.
B. Access Person means:
· a Supervised Person who has access to nonpublic information regarding any clients purchase or sale of securities, or nonpublic information regarding the portfolio holdings of any Reportable Fund the adviser or its control affiliates manage;
· a Supervised Person who is involved in making securities recommendations to clients on behalf of the Company, or has access to such recommendations that are nonpublic; and
· the Companys directors and officers.
C. Affiliated Person of another person means:
· any person directly or indirectly owning, controlling, or holding the power to vote, 5% or more of the outstanding voting securities of such other person;
· any person 5% or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held with power to vote, by such other person;
· any person directly or indirectly controlling, controlled by, or under common control with, such other person; and
· any officer, director, partner, co-partner or employee of such other person.
D. Beneficial Ownership shall be interpreted in the same manner as it would be in determining whether a person is subject to the provisions of Section 16 of the U.S. Securities Exchange Act of 1934. Beneficial Ownership includes accounts of a spouse, minor children and relatives resident in the home of the Access Person, as well as accounts of another person if by reason of any contract, understanding, relationship, agreement or other arrangement the Access Person obtains benefits substantially equivalent to those of ownership.
For Internal Use Only
E . Control means the power to exercise a controlling influence over the management or policies of a company, unless such power is solely the result of an official position with such company. Any person who owns beneficially, either directly or through one or more controlled companies, more than 25% of the voting securities of a company is presumed to control such company.
F. Purchase or Sale of a Security includes, among other acts, the writing or acquisition of an option to purchase or sell a security.
G. Reportable Fund means:
· Any fund for which the Company serves as an investment adviser as defined in section 2(a)(20) of the Investment Company Act of 1940 (the 1940 Act) or
· Any fund whose investment adviser or principal underwriter controls the Company, is controlled by the Company or is under common control with the Company.
V. Standards of Conduct
A. Investment-related information learned by a Supervised Person during the course of carrying out Company-related duties or in communications between Supervised Persons is to be kept confidential until or unless publicly available. Such information may include, but is not limited to, portfolio-related research activity, brokerage orders being placed on behalf of a client, and recommendations to purchase or sell specific securities.
B. Supervised Persons may not take or omit to take an action on behalf of a client or intentionally induce a client to take action for the purpose of achieving a personal benefit.
C. Supervised Persons may not use actual knowledge of a clients transactions to profit by the market effect of the clients transaction.
D. Supervised Persons will not take for themselves (or for accounts in which they have a beneficial interest) unique investment opportunities which should be made available to the Companys clients.
VI. Compliance with Laws; General Restrictions
A. Supervised Persons must comply with all applicable federal securities laws. Each Supervised Person has the duty to know, understand and comply with federal securities laws and other legal obligations applicable to their duties and responsibilities.
B. No Supervised Person may:
· Employ any device, scheme or artifice to defraud a Fund or other client of the Company;
For Internal Use Only
· Make to a Fund or other client of the Company any untrue statement of a material fact or omit to state to such client a material fact necessary in order to make the statements made in light of the circumstances under which they are made, not misleading;
· Engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon a Fund or other client of the Company;
· Engage in any manipulative practice with respect to a Fund or other client of the Company; or
· Engage in any manipulative practice with respect to securities, including price manipulation.
C. Personal Trading Prohibitions. The following rules are intended to prevent any suggestion or implication that Access Persons are using their relationship with the Company to obtain advantageous treatment to the detriment of the interests of clients:
· New Issues. No Access Person may purchase any security in any public offering that may be construed as a new issue under FINRA Rule 5130 without the prior written approval of the Chief Compliance Officer. New issues include, among other things, initial public offerings.
· Dealings With Clients. No Access Person may knowingly sell any security to any client or knowingly purchase any security from any client without the prior written approval of the Chief Compliance Officer.
· Private Placements. Each Access Person who wishes to purchase or sell a security in a private placement, must notify and obtain prior approval from the Chief Compliance Officer or his or her designee prior to effecting the transaction. In considering such pre-clearance, the Chief Compliance Officer or his or her designee will consider whether the opportunity is being offered to the Access Person by virtue of his/her position with the Company. Pre-clearance will be granted at the discretion of the Chief Compliance Officer or his or her designee. Access Persons who have been authorized to acquire securities in a private placement are required to disclose such investment to the client when they participate in any clients subsequent consideration of an investment in the issuer. Additionally, in such circumstances, the decision to purchase securities of the issuer for the client should be made either by another employee of the Company or, at a minimum, should be subject to an independent review by investment personnel of the Company with no personal interest in the issuer.
· Review of Personal Trades. All personal securities transactions will be reviewed to ascertain whether the transaction may have taken advantage of securities transactions affected on behalf of the Companys clients. Such review will include transactions occurring within three days (before and after) of the execution of any personal trades. If, in the opinion of Chief Compliance Officer, the transaction creates any suggestion or implication that
For Internal Use Only
Access Persons are using their relationship with the Company to obtain advantageous treatment to the detriment of the interests of clients, the Access Person will, at the discretion of the Chief Compliance Officer, either (i) unwind the transaction, and/or (ii) disgorge any proceeds of the transaction to the Company for donation to a charitable organization chosen by the Company.
VII. Restrictions on Timing of Personal Securities Transactions
Paragraphs VIII and IX below set out specific restrictions relating to personal securities transactions. As described below, these restrictions are applicable with regard to particular securities and particular transactions based upon transactions or information gained from or on behalf of client accounts. The securities which are subject to these restrictions at any particular time may generally be found in the then current version of the Companys Restricted List, which is maintained by our Chief Compliance Officer or his or her designeeof course, to the extent that you have material nonpublic information regarding a company that arises for reasons other than your work for the Company, such companys securities may not be included on the Restricted List. If you do not have direct access to the Companys Restricted List, you should contact the Chief Compliance Officer or his or her designee to determine whether a particular security is then on the Restricted List.
VIII. Prevention of Misuse of Nonpublic Information
A. Introduction
The Company forbids its Supervised Persons from trading or investing, either personally or on behalf of clients of the Company, on the basis of material nonpublic information or from communicating material nonpublic information to others in violation of the law. This conduct is frequently referred to as insider trading.
While the law concerning insider trading is not static, it is generally understood that the law prohibits:
· Trading or investing by an insider while in possession of material nonpublic information; or
· Trading or investing by a non-insider while in possession of material nonpublic information, where the information was disclosed to the non-insider in violation of an insiders duty to keep it confidential.
In addition, communicating material nonpublic information to others in breach of a fiduciary duty.
This policy applies to every Supervised Person and extends to activities within and outside their duties at the Company.
For Internal Use Only
B. To Whom Does This Policy Apply?
This policy applies to any transactions in any securities or other investments participated in by Supervised Persons, their family members, trusts or corporations controlled by such persons. In particular, this policy applies to transactions by:
· the Supervised Persons spouse or common-law partner;
· the Supervised Persons minor children;
· any other relatives living in the Supervised Persons household;
· a trust in which the Supervised Person has a beneficial interest, unless such person has no direct or indirect control over the trust;
· a trust as to which the Supervised Person is a trustee;
· a revocable trust as to which the Supervised Person is a settlor;
· a corporation of which the Supervised Person is an officer or director, or in which the Supervised Person holds more than 10% of a class of the corporations equity securities; or
· a partnership of which the Supervised Person is a partner (including most investment clubs) unless the Supervised Person has no direct or indirect control over the partnership.
Each Supervised Person is responsible for becoming familiar with these policies and procedures. The obligation to maintain the confidentiality of material nonpublic information continues to apply to individuals who cease to work with the Company, as long as they are in possession of proprietary or inside information.
Failure to observe these policies and procedures may give rise to disciplinary or legal action by the Company against any offending Supervised Person, up to and including termination. In appropriate cases, the Company may report violations to governmental or regulatory authorities.
Any questions concerning the policies and procedures described herein or their implementation should be addressed, and requests for exceptions to these policies and procedures should be referred, to the Chief Compliance Officer or his or her designee. If you have any reason to believe that a violation of these policies and procedures has occurred or is about to occur, you must notify the Chief Compliance Officer or his or her designee immediately.
C. What is Material Information?
Trading or investing based on inside information is not a basis for liability unless the information is material. Material information generally is defined as information for which there is a substantial likelihood that a reasonable investor would consider it important in making his or her investment decisions, or information that is reasonably certain to have a substantial effect on the price of a companys securities.
For Internal Use Only
Although there is no precise generally accepted definition of materiality, information is likely to be material if it relates to significant changes affecting such matters as:
· dividend or earnings expectations;
· write-downs or write-offs of assets;
· additions to reserves for bad debts or contingent liabilities;
· expansion or curtailment of company or major division operations;
· proposals or agreements involving a joint venture, merger, acquisition, divestiture or leveraged buy-out;
· new products or services;
· exploratory, discovery or research developments;
· criminal indictments, civil litigation or government investigations;
· disputes with major suppliers or customers or significant changes in the relationships with such parties;
· labor disputes including strikes or lockouts;
· substantial changes in accounting methods;
· major litigation developments;
· major personnel changes;
· debt service or liquidity problems;
· bankruptcy or insolvency;
· extraordinary management developments;
· public offerings or private sales of debt or equity securities;
· calls, withdrawals or purchases of a companys own stock;
· issuer tender offers; or
· recapitalizations.
Note: The above list of examples is NOT exhaustive.
Information provided by a company could be material because of its expected effect on a particular class of the companys securities, all of the companys securities, the securities of another company, or the securities of several companies. Moreover, the resulting prohibition against the misuses of material information reaches all types of securities (whether stock or other equity interests, corporate debt, government or municipal obligations, or commercial paper) as well as any option related to that security (such as a put, call or index security).
For Internal Use Only
D. What is Nonpublic Information?
1. Generally. In order for issues concerning insider trading to arise, information must not only be material, it must be nonpublic. Nonpublic information is information which has not been made available to investors generally. Information received in circumstances indicating that it is not yet in general circulation or where the recipient knows or should know that the information could only have been provided by an insider is also deemed nonpublic information.
Once nonpublic information has been effectively distributed to the investing public, it is no longer subject to insider trading restrictions. However, for nonpublic information to become public information, it must be disseminated through recognized channels of distribution designed to reach the securities marketplace, such as disclosure in a national business and financial wire service (Dow Jones or Reuters), a national news service (AP or UPI), a national newspaper ( The Wall Street Journal or The New York Times ) or a publicly disseminated disclosure document (a proxy statement or prospectus). The circulation of rumors, even if accurate, widespread and reported in the media, does not constitute the requisite public disclosure. The information must not only be publicly disclosed, there must also be adequate time for the market as a whole to digest the information. Although timing may vary depending upon the circumstances, a good rule of thumb is that information is considered nonpublic until 24 hours after public disclosure.
Material non-public information is not made public by selective dissemination. Material information improperly disclosed only to institutional investors or to a fund analyst or a favored group of analysts retains its status as nonpublic information which must not be disclosed or otherwise misused. So long as any material component of the inside information possessed by a company has yet to be publicly disclosed, the information is deemed nonpublic and may not be misused.
2. Information Provided in Confidence. Occasionally, a Supervised Person may become a temporary insider because of a fiduciary ( i.e ., a person or entity to whom property is entrusted for the benefit of another) or commercial relationship. As an insider, the Company has a fiduciary responsibility not to breach trust of the party that has communicated the material nonpublic information by misusing that information. This fiduciary duty arises because the Company has entered or has been invited to enter into a commercial relationship with the client or prospective client and has been given access to confidential information solely for the corporate purposes of that client or prospective client. This obligation remains whether or not the Company ultimately participates in the transaction.
3. Information Disclosed in Breach of Duty. Analysts and portfolio managers at the Company must be especially wary of material nonpublic
For Internal Use Only
information disclosed in breach of a corporate insiders fiduciary duty. Even where there is no expectation of confidentiality, a person may become an insider upon receiving material nonpublic information in circumstances where a person knows, or should know, that a corporate insider is disclosing information in breach of the fiduciary duty he or she owes the corporation and its shareholders. Whether the disclosure is an improper tip that renders the recipient a tippee depends on whether the corporate insider expects to benefit personally, either directly or indirectly, from the disclosure. In the context of an improper disclosure by a corporate insider, the requisite personal benefit may not be limited to a present or future monetary gain. Rather, a prohibited personal benefit could include a reputational benefit, or an expectation of a quid pro quo from the recipient or the recipients employer by a gift of the inside information.
A person may, depending on the circumstances, also become an insider or tippee when he or she obtains apparently material, nonpublic information by happenstance, including information derived from social institutions, business gatherings, overheard conversations, misplaced documents, and tips from insiders or other third parties.
E. Identifying Material Nonpublic Information
1. Before trading or investing for yourself or others (including clients of the Company) in the securities or other interests of a company about which you may have potential material nonpublic information, ask yourself the following questions:
a. Is this information that an investor could consider important in making his or her investment decision? Is this information that could substantially affect the market price of the securities or assets if generally disclosed?
b. To whom has this information been provided? Has the information been effectively communicated to the marketplace by being published in Reuters, The Wall Street Journal or other publications of general circulation?
2. Given the potentially severe regulatory, civil and criminal sanctions to which the Supervised Person, the Company and its personnel could be subject, any Supervised Person who is uncertain as to whether the information he or she possesses is material nonpublic information should immediately take the following steps:
a. Report the matter immediately to the Chief Compliance Officer;
b. Do not purchase or sell the securities or assets on behalf of yourself or others, including clients of the Company; and
For Internal Use Only
c. Do not communicate the information inside or outside the Company, other than to the Chief Compliance Officer.
F. Penalties for Insider Trading
Penalties for trading on or communicating material nonpublic information are severe, both for individuals involved in such unlawful conduct and their employers. A person can be subject to severe penalties even if he or she does not personally benefit from the violation. Some penalties which may be imposed include:
· civil injunctions;
· treble damages;
· disgorgement of profits;
· prison sentences;
· fines for the persons who committed the violation of up to three times the profit gained or loss avoided, whether or not the person actually benefited; and
· fines for the employer or other controlling person of up to the greater of $1,000,000 or three times the amount of the profit gained or loss avoided.
In addition, any violation of this policy statement can be expected to result in serious sanctions by the Company, including dismissal of the persons involved.
IX. Reporting
A. Covered Accounts
The reporting obligations below apply not only to securities transactions by an Access Person for his or her own account, but also for the account of a member of the Access Persons immediate family, or any account in which an Access Person or a member of his or her immediate family may have a direct or indirect beneficial ownership interest.
B. Initial and Annual Reporting Requirements
Each Access Person must submit to the Chief Compliance Officer or his or her designee:
· An initial report, in the form attached as Exhibit A of this policy, containing a complete list of the Access Persons personal securities holdings, submitted no later than 10 days after the individual became an Access Person and current as of a date not more than 45 days prior to the date the individual became an Access Person, unless such Access Person certifies (in the Initial Certification of Compliance attached as Exhibit D of this policy) that the full extent of its current personal securities holdings are reflected in past brokerage statements that have already been delivered to the Company; and
For Internal Use Only
· An annual report thereafter, in the form attached as Exhibit B of this policy, containing a complete list of the Access Persons personal securities holdings, current as of a date not more than 45 days prior to the date the report is submitted.
The securities holdings reports must contain, at a minimum:
· The type and title of security, and as applicable the exchange ticker symbol or CUSIP number, number of shares, and principal amount of each reportable security in which the Access Person has any direct or indirect beneficial ownership;
· The name of any broker, dealer or bank with which the Access Person maintains an account in which any securities are held for the Access Persons direct or indirect benefit; and
· The date the Access Person submits the report.
Access Persons may be able to instead provide brokerage statements, provided that they include all required information.
C. Quarterly Reporting Requirements
Each Access Person must submit to the Companys Chief Compliance Officer or his or her designee quarterly reports, in the form attached as Exhibit C of this policy, of such Access Persons personal securities transactions during the quarter, submitted no later than 30 days after the end of the calendar quarter. The securities holdings reports must contain, at a minimum:
· The date of the transaction, the title, and as applicable the exchange ticker symbol or CUSIP number, interest rate and maturity date, number of shares, and principal amount of each reportable security involved;
· The nature of the transaction (purchase, sale, or any other type of acquisition or disposition);
· The price of the security at which the transaction was effected;
· The name of the broker, dealer or bank with or through which the transaction was effected; and
· The date the Access Person submits the report.
Access Persons may be able to instead provide brokerage statements, provided that they include all required information.
D. Confidentiality of Reports
Transactions and holdings reports of Access Persons will be maintained in confidence, except to the extent necessary to implement and enforce the provisions of this Code or to comply with requests for information from government agencies.
For Internal Use Only
E. Exemptions from Reporting
An Access Person is not required to submit reports with respect to the following securities or transactions in the following securities:
· Securities traded pursuant to an automatic investment plan;
· Securities issued by the U.S. Government, bankers acceptances, bank certificates of deposit, commercial paper and money market instruments;
· Shares of registered open-end investment companies (other than Reportable Funds);
· Shares issued by unit investment trusts that are invested exclusively in one or more registered open-end investment companies, none of which are Reportable Funds
· Securities held in accounts over which the Access Person had no direct or indirect influence or control; and
· Securities which, if reported, would duplicate information contained in broker trade confirmations or account statements that the Company keeps, so long as the Company receives the confirmations or statements no later than 30 days after the end of the applicable calendar quarter.
X. Monitoring and Review
A. Annual Review
The Chief Compliance Officer or his or her designee will review the adequacy of the Code and the effectiveness of its implementation at least annually and make recommendations for updating as a result of any changes in the regulations or changes in procedures. The Chief Compliance Officer or his/her designee will provide a written report, at least annually, to the Chief Financial Officer summarizing:
· Compliance with the Code for the period under review;
· Violations of the Code for the period under review;
· Sanctions imposed under the Code during the period under review;
· Changes in policies and procedures recommended for the Code; and
· Any other information requested by the Chief Financial Officer.
B. Monitoring of Personal Securities Transactions
Personal securities transactions and holdings reports and trading patterns of Access Persons will be reviewed on a quarterly basis by the Chief Compliance Officer or his/her designee (the Reviewer). The Chief Financial Officer or his designee is responsible for reviewing and monitoring the personal securities transactions of the Reviewer and for taking on the responsibilities of the Reviewer in the Reviewers absence. Such reviews will include the following:
For Internal Use Only
· An assessment of whether the Access Person followed any required internal procedures, such as pre-clearance;
· An assessment of whether the Access Person is trading for his/her own account in the same securities he/she is trading for clients, and if so, whether the clients are receiving terms as favorable as the Access Person takes for himself/herself;
· Periodic analysis of the Access Persons trading for patterns that may indicate abuse, including market timing; and
· An investigation of any substantial disparities between the percentage of transactions that are profitable when the Access Person trades for his/her own account and the percentage that are profitable when he/she enters transactions for clients.
C. Certification of Compliance
Initial Certification
Each newly hired Supervised Person will be provided with a copy of the Code upon commencement of employment. As a condition of employment, each Supervised Person will be required to provide all necessary information regarding investments and directorships and will certify in writing, in the form attached as Exhibit D , that they have: (i) received a copy of the Code; (ii) read and understand all provisions of the Code; and (iii) agreed to comply with the terms of the Code in every respect. Such certification should be delivered to the Chief Compliance Officer or his or her designee.
Acknowledgement of Amendments
Supervised Persons will be provided with any amendments to the Code and should submit a written acknowledgement that they have received, read, and understood the amendments to the Code. Such acknowledgment should be delivered to the Chief Compliance Officer or his or her designee.
Annual Certification
Each Supervised Person will certify annually, in the form attached as Exhibit E of this policy, that they have read, understood, and complied with the Code. Such certification should be delivered to the Chief Compliance Officer or his or her designee. In addition, the certification will include a representation that such Supervised Person has made all of the reports required by the Code and has not engaged in any prohibited conduct. If the Supervised Person is unable to make such a representation, the Company will require such Supervised Person to self-report any violations.
XI. Recordkeeping
A. Location
The Company will maintain the following records in a readily accessible place:
· A copy of each Code that has been in effect at any time during the past five years;
For Internal Use Only
· A record of any violation of this or any other Code and any action taken as a result of such violation for five years from the end of the fiscal year in which the violation occurred;
· A record of all written acknowledgements of receipt of this Code and amendments for each person who is currently, or within the past five years was, a Supervised Person;
· A record of all personal trading by Access Persons, consisting of the names of Access Persons, the holdings and transaction reports, and any decisions approving the acquisition of securities in initial public offerings and limited or private offerings by Access Persons;
· Holdings and transactions reports made pursuant to the Code, including any brokerage confirmation and account statements made in lieu of these reports;
· A list of the names of persons who are currently, or within the past five years were, Access Persons and investment personnel;
· A record of any decision and supporting reasons for approving the acquisition of securities by Access Persons in limited or private offerings for at least five years after the end of the fiscal year in which approval was granted;
· A record of any decisions that grant employees or Access Persons a waiver from or exception to the Code;
· A record of persons responsible for reviewing Access Persons reports currently or during the last five years; and
· A copy of any reports regarding the Code provided to the Boards of Directors of any funds advised by the Company.
B. Maintenance of Records
These records will be kept for five years. For the first two years, the records will be kept in the Companys offices, and in an easily accessible place for at least three years thereafter.
XII. Disclosure of the Code
A description of the Companys Code will be included on of the Companys Form ADV Part 2 brochure. In addition, the Company must provide a copy of this Code to any client or prospective client upon request. Any employee that receives a request for a copy of the Code from a client or prospective client should forward that request to the Chief Compliance Officer or his or her designee as soon as reasonably practicable.
XIII. Administration and Enforcement of the Code
A. Training and Education
The Chief Compliance Officer or his/her designee is responsible for training and educating all Supervised Persons about this Code. Training regarding this Code will occur periodically. All Supervised Persons are required to attend the training sessions and read any applicable materials.
For Internal Use Only
B. Report to Senior Management
The Chief Compliance Officer or his or her designee will report to senior management regarding his or her annual review of this Code and to bring material violations to the attention of senior management.
XIV. Reporting Violations
Supervised Persons must report apparent or suspected violations in addition to actual or known violations of the Code to the Chief Compliance Officer or his or her designee, and must cooperate in any investigation relating to possible breaches of the Code. Supervised Persons are encouraged to seek advice from the Chief Compliance Officer or his or her designee with respect to any action or transaction which may violate this Code and to refrain from any action or transaction which might lead to the appearance of a violation. The types of reporting by Supervised Persons required under this Code includes: (i) noncompliance with applicable laws, rules, and regulations; (ii) fraud or illegal acts involving any aspect of the Companys business; (iii) material misstatements in regulatory filings, internal books and records, clients records or reports; (iv) activity that is harmful to clients, including fund investors; and (v) deviations from required controls and procedures that safeguard clients and the Company.
The Chief Financial Officer is an alternate person to whom employees may report violations in case the Chief Compliance Officer or his or her designee is involved in the violation or is unreachable. Reports will be treated confidentially to the extent permitted by law and investigated promptly and appropriately.
XV. Sanctions
In the event of a failure by a Supervised Person to comply with the provisions of this Code or of applicable securities laws, the Chief Compliance Officer may impose appropriate sanctions, including but not limited to a warning, fines, disgorgement, suspension, demotion or dismissal. In addition to sanctions, violations may result in referral to civil or criminal authorities where appropriate.
For Internal Use Only
Exhibit A
ACCESS PERSON INITIAL SECURITIES HOLDINGS REPORT AND CERTIFICATION
Report of (Please print your full name)
Todays Date:
As of the date appearing above, the following are each and every security and account in which I have a direct or indirect Beneficial Ownership or other Beneficial Interest (not including exempted securities such as bank certificates of deposit, open-end mutual fund shares, Treasury obligations (T-bills notes and bonds), Unit Investment Trusts that hold securities in proportion to a broad base index). For purposes of this report, the term Beneficial Ownership or Beneficial Interest shall mean, ownership of securities or securities accounts by or for the benefit of a person, or such persons family member, including any account in which the employee or family member of that person holds a direct or indirect beneficial interest, retains discretionary investment authority or other investment authority (e.g., a power of attorney). The term family member means any persons spouse, child or other relative, whether related by blood, marriage or otherwise, who either resides with, or is financially dependent upon, or whose investments are controlled by that person and any unrelated individual whose investments are controlled and whose financial support is materially contributed to by the person, such as a significant other.
In lieu of listing every holding, an employee may attach a copy of an account statement covering holdings not listed below .
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Use additional pages if necessary
I certify that the securities and accounts listed above are the only securities and accounts in which I have a direct or indirect Beneficial Ownership or Beneficial Interest.
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For Internal Use Only
Exhibit B
ACCESS PERSON ANNUAL SECURITIES HOLDINGS CERTIFICATION AND QUARTERLY TRANSACTION REPORT
(Must be current as of 45 prior to the date of submission)
Report of (Please print your full name)
Todays Date:
The following are all transactions in personal securities ( not including exempt securities such as bank certificates of deposit, registered open-end mutual fund shares, Treasury obligations (i.e., T-Bills, Notes and Bonds) and Unit Investment Trusts that hold securities in proportion to a broad base index) effected during this quarter. In lieu of listing every required transaction, an employee may attach a copy of the confirmation or account statement covering every reportable transaction for the period. Notwithstanding this accommodation, it remains the employees sole responsibility to ensure that the required information reflected in those documents is accurate and completely discloses all reportable transactions during the period .
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Since the prior quarterly report, I have opened or closed the following accounts (including brokerage accounts and bank accounts used substantially as brokerage accounts):
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For Internal Use Only
In connection with any purchases or sales of securities for Advisory Clients during this year, I have disclosed to the Company any material interests in securities in which I have Beneficial Ownership or some other Beneficial Interest which might reasonably raise the appearance of a conflict with the interests of an Advisory Client. The names and affiliations of family members(1) who are employed in the securities or commodities industries and who might be in a position to benefit directly or indirectly from the activities of the Company personnel in the discharge of their duties are as follows:
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I certify that the following are all securities holdings ( not including bank certificates of deposit, registered open-end mutual fund shares, Treasury obligations (i.e., T-Bills, Notes and Bonds) and Unit Investment Trusts that hold securities in proportion to a broad base index) Beneficially Owned or in which I have Beneficial Interest as of the year end December 31, 20 .*
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*Note: In lieu of you listing on this form each and every security held as of year-end, you may attach as an exhibit to this document your annual statement(s) from every brokerage firm with which you have a Beneficial Ownership or other Beneficial Interest. Notwithstanding this accommodation, it remains your sole responsibility to ensure that the information reflected in that statement(s) is accurate and completely discloses ALL reportable securities holdings as of year-end .
I certify that the information provided in this report is complete and accurate .
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(1) The term family member means any persons spouse, child or other relative, whether related by blood, marriage or otherwise, who either resides with, or is financially dependent upon, or whose investments are controlled by that person and any unrelated individual whose investments are controlled and whose financial support is materially contributed to by the person, such as a significant other.
For Internal Use Only
Exhibit C
ACCESS PERSON QUARTERLY TRANSACTION REPORT
(Must be submitted no later than 30 days after the end of each Calendar Quarter)
Statement to the Company |
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The following are all transactions in personal securities ( not including exempt securities such as bank certificates of deposit, registered open-end mutual fund shares, Treasury obligations (i.e., T-Bills, Notes and Bonds) and Unit Investment Trusts that hold securities in proportion to a broad base index) effected during this quarter. In lieu of listing every required transaction, an employee may attach a copy of the confirmation or account statement covering every reportable transaction for the period. Notwithstanding this accommodation, it remains the employees sole responsibility to ensure that the required information reflected in those documents is accurate and completely discloses all reportable transactions during the period .
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Since the prior quarterly report, I have opened or closed the following accounts (including brokerage accounts and bank accounts used substantially as brokerage accounts):
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For Internal Use Only
In connection with any purchases or sales of securities for the Company clients during this quarter, I have disclosed to the Companys Chief Compliance Officer or his or her designee any material interests in securities in which I have Beneficial Ownership or some other Beneficial Interest which might reasonably raise the appearance of a conflict with the interests of a Company client. The names and affiliations of family members(2) who are employed in the securities or commodities industries and who might be in a position to benefit directly or indirectly from the activities of the Companys personnel in the discharge of their duties are as follows:
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I certify that the information provided in this report is accurate and complete.
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(2) The term family member means any persons spouse, child or other relative, whether related by blood, marriage or otherwise, who either resides with, or is financially dependent upon, or whose investments are controlled by that person and any unrelated individual whose investments are controlled and whose financial support is materially contributed to by the person, such as a significant other.
For Internal Use Only
Exhibit D
Initial Certification of Compliance with
Simple Alternatives LLCs Code of Ethics
I hereby certify that I have received a copy of Code of Ethics of Simple Alternatives LLCs (the Code) and have read the Code and understand its requirements. I further certify that I am subject to the Code, will comply with its requirements in every respect and will not engage in conduct prohibited by the Code.(5)
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(5) For all new Company employees, this certification of compliance shall relate to conduct occurring from the point of hire going forward.
For Internal Use Only
Exhibit E
Annual Certification of Compliance with
Simple Alternatives LLCs Code of Ethics
I hereby certify to the following:
1. I have received a copy of the Code of Ethics (the Code) of Simple Alternatives LLC (the Company), have read the Code and understand its requirements
2. I have complied with the Code at all times during the previous calendar year and will comply with the Code during the current calendar year.
3. I have, during the previous calendar year, disclosed and confirmed all holdings and transactions required to be disclosed or confirmed pursuant to the Code.
4. I have, during the previous calendar year, disclosed and confirmed all accounts in which I have a beneficial interest, including any and all accounts over which I exercise trading discretion, and reported all securities transactions required to be reported under the Code.
5. If any new accounts in which have a beneficial interest were opened during the previous year, I have notified the Company and have authorized duplicate statements, confirms and monthly statements with respect to such account to be sent to the Company.
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For Internal Use Only
Exhibit (p)(18)
CODE OF ETHICS
Maerisland Capital, LLC (Adviser) has adopted the policies and procedures set forth in this Code of Ethics (this Code) which governs the activities of each member, manager, officer and employee of the Adviser (collectively, the Employees).
1. PURPOSE OF CODE OF ETHICS
Rule 204A-1 under the Investment Advisers Act of 1940, as amended (the Advisers Act), requires SEC registered investment advisers to establish, maintain and enforce a written code of ethics that, at a minimum, sets the standard of business conduct that the Adviser requires of its Employees, requires Employees to comply with applicable federal securities laws,(1) and sets forth provisions regarding personal securities transactions by Employees.
In addition, Rule 204A of the Advisers Act requires the Adviser to establish, maintain and enforce written policies and procedures reasonably designed to prevent the misuse of material, non-public information. Furthermore, the Adviser and each of its Employees has a fiduciary obligation to the Advisers clients to protect the confidentiality of all proprietary, sensitive or other confidential information communicated to the Adviser or such Employees by its clients. Finally, because the Adviser and each of its Employees is a fiduciary to the Advisers clients, the Adviser and such Employees must maintain the highest ethical standards and refrain from engaging in activities that may create actual or apparent conflicts of interest between the Adviser or such Employees, on the one hand, and the Advisers clients, on the other.
To ensure that federal securities laws are not violated, that client confidences are maintained, and that conflicts of interest are avoided, the Adviser has adopted the policies and procedures set forth in this Code. The policies and procedures set forth in this Code are intended to articulate the Advisers policies, educate the Employees about the issues and Advisers policies, establish procedures for complying and monitoring compliance with those policies and procedures, and ensure to the extent feasible that the Adviser satisfies its obligations in this area. By doing so, Adviser hopes to ensure that the highest ethical standards are maintained by the Adviser and its Employees and that the reputation of the Adviser is sustained.
2. FIDUCIARY OBLIGATIONS IN GENERAL
As a fiduciary, the Adviser owes its clients more than honesty and good faith alone. The Adviser has an affirmative duty to act in the best interests of its clients and to make full and fair disclosure of all material facts, particularly where the Advisers interests may conflict with those of its clients. Pursuant to this duty, the Adviser must at all times act in its clients best interests, and the Advisers conduct will be measured against a higher standard of conduct than that used for mere commercial transactions. Among the specific obligations that the Securities and Exchange Commission (the SEC) has indicated flow from an advisers fiduciary duty are:
· A duty to have a reasonable, independent basis for its investment advice;
· A duty to obtain best execution for clients securities transactions where the adviser is in a position to direct brokerage transactions;
Appendix A
· A duty to ensure that its investment advice is suitable to the clients objectives, needs and circumstances;
· A duty to be loyal to clients.
Each Employee owes the same fiduciary responsibilities to the Advisers clients as set forth above.
Fraudulent activities by Employees are prohibited. Specifically, any Employee, in connection with the purchase or sale, directly or indirectly, by such Employee of a security held or to be acquired by an Adviser client may not:
· Employ any device, scheme or artifice to defraud the Advisers clients;
· Make any untrue statement of a material fact to the Advisers clients or omit to state a material fact necessary in order to make the statements made to the Advisers clients, in light of the circumstances under which they are made, not misleading;
· Engage in any act, practice or course of business that operates or would operate as a fraud or deceit on the Advisers clients; or
· Engage in any manipulative practice with respect to the Advisers clients.
If you have any questions regarding this Code, please contact Christopher Ainsworth, the Chief Operating Officer.
3. DEFINITIONS
For purposes of this Code:
A. Access Person means any Employee (i) who has access to nonpublic information regarding any clients purchase or sale of securities, or (ii) who is involved in making securities recommendations to clients, or who has access to such recommendations that are nonpublic. All members, managers and officers are presumed to be Access Persons.
B. Automated Investment Plan means a program in which regular periodic purchases (or withdrawals) are made automatically in (or from) investment accounts in accordance with a predetermined schedule and allocation. An automatic investment plan includes a dividend reinvestment plan.
C. Beneficial Ownership is interpreted in the same manner as it would be under Rule 16a-1(a)(2) in determining whether a person has beneficial ownership of a security for purposes of Section 16 of the 1934 Act. In general, beneficial ownership means that a person, directly, or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares a direct or indirect pecuniary interest in the securities. A pecuniary interest means the opportunity, directly or indirectly, to profit or share in any profit derived from a transaction in the securities. An indirect pecuniary interest includes (i) securities held by a member of a persons immediate family sharing the same household, (ii) a persons interest in securities held by a trust, and (iii) a persons right to acquire securities through the exercise of a derivative security. The definition of beneficial ownership is complex, and if you have any questions whether you have a beneficial
interest in a security, please consult with the Chief Operating Officer. Any report filed under this Code may state that the report is not to be construed as an admission that the person making the report has any direct or indirect beneficial ownership in the security to which the report relates.
D. Fund means an investment company registered under the Investment Company Act.
E. Initial Public Offering (IPO) means an offering of securities registered under the 1933 Act, the issuer of which, immediately before the registration, was not subject to the reporting requirements of Sections 13 or 15(d) of the 1934 Act.
F. Inside Information means material, nonpublic information (i.e., information which is not available to investors generally) that a reasonable investor would consider to be important in deciding whether to buy, sell or retain a security, including for example non-public information relating to a pending merger, acquisition, disposition, joint venture, contract award or termination, major lawsuit or claim, earnings announcement or change in dividend policy, significant product development, or the gain or loss of a significant customer or supplier. Any non-public information may be inside information regardless of whether it is developed internally or obtained from others (e.g., the issuer, current or prospective customers, suppliers or business partners). Information is considered non-public until the market has had a reasonable time after public announcement to assimilate and react to the information.
G. Limited Offering means an offering that is exempt from registration under the 1933 Act pursuant to Sections 4(2) or 4(6) or Rule 504, 505 or 506. Limited Offerings are sometimes referred to as private placements of securities.
H. Personal Account means any securities and futures account of an Employee or Managing Partner in which the Employee or Managing Partner has a direct or pecuniary interest or for which such Employee or Managing Partner influences or controls the investment decisions (other than accounts for the Advisers clients, except those clients who fall within the list in the next sentence). An account established for the benefit of the following will be presumed to be a Personal Account: (1) an Employee; (2) the spouse of an Employee; (3) any child of any Employee under the age of 21 of an Employee, whether or not residing with the Employee; (4) any other family member of the Employee residing in the same household with the Employee or to whose financial support the Employee makes a significant contribution; and (5) any other account in which the Employee has a direct or indirect beneficial interest (e.g. joint accounts, trustee accounts, partnerships, investment clubs, estates or closely held corporations in which the Employee has a beneficial interest).
I. Publicly Traded Security means any equity or debt instrument traded on an exchange, through NASDAQ or through the Pink Sheets, any option to purchase or sell such equity or debt instrument, any index stock or bond group option that includes such equity or debt instrument, and futures contract on stock or bond groups that includes such equity or debt instrument, and any option on such futures contract. A Publicly Traded Security also means any security traded on foreign security exchanges, and publicly traded shares of registered closed-end investment companies, unit trusts, partnership and similar interests, notes, warrants, or fixed income instruments, and bonds and debt obligations issued by foreign governments, states, or municipalities. Securities issued by Funds, U.S. treasury bonds, notes and bills, U.S. savings bonds and other instruments issued by the U.S. government, debt instruments issued by a banking institution (such as bankers acceptances, certificates of deposit, commercial paper and other high-quality short-term debt instruments, including repurchase agreements) and U.S. and foreign
currency (collectively, Non-covered Securities) are not considered Publicly Traded Securities for the purpose of this Code.
J. Purchase or sale of a security includes, among other things, the writing of an option to purchase or sell a security.
K. Reportable Security means a Security, except that it does not include: (1) direct obligations of the Government of the United States; (2) bankers acceptances, bank certificates of deposit, commercial paper and high quality short-term debt instruments (including repurchase agreements); (3) shares issued by money market funds; (4) shares issued by open-end funds; and (5) shares issued by unit investment trusts that are invested exclusively in one or more open-end Funds.
L. Security means any note, stock, treasury stock, security future, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, any put, call, straddle, option, or privilege on any security (including a certificate of deposit) or on any group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or, in general, any interest or instrument commonly known as a security, or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guaranty of, or warrant or right to subscribe to or purchase any of the foregoing.
M. Security Held or to be Acquired includes: (1) any Reportable Security which, within the most recent 15 days: (a) is or has been held by any client of the Adviser; or (b) is being or has been considered by the Adviser for purchase by any client of the Adviser; and (2) any option to purchase or sell, and any security convertible into or exchangeable for, a Reportable Security described in clauses (1) or (2) above.
4. INSIDER TRADING
It is unlawful to engage in Insider Trading. This means, in general, that no insider may (1) purchase or sell a security on the basis of material, nonpublic information or (2) communicate material, nonpublic information about a company to another person where the communication leads to, or is intended to lead to, a purchase or sale of securities of such company. Because the Adviser does not have an investment banking division or affiliate, it is anticipated that Employees will not routinely receive inside information. From time to time, however, Employees may receive such information. To educate Employees, more information describing Insider Trading and the penalties for such trading is set forth below. Compliance procedures regarding the use of inside information by Employees are also described.
4.1 Insider Trading Defined
The term Insider Trading is generally used to refer to (1) a persons use of material, nonpublic information in connection with transactions in securities and (2) certain communications of material, nonpublic information.
The laws concerning Insider Trading generally prohibit:
· The purchase or sale of securities by an insider, on the basis of material, nonpublic information;
· The purchase or sale of securities by a non-insider, on the basis of material, nonpublic information where the information was disclosed to the non-insider in violation of an insiders duty to keep the information confidential or was misappropriated; or
· The communication of material, nonpublic information in violation of a confidentiality obligation where the information leads to a purchase or sale of securities.
4.2 Who is an Insider?
The concept of insider is broad. It generally includes officers, directors, partners, employees and controlling shareholders of a company or other entity. In addition, a person can be considered a temporary insider of a company or other entity if he or she enters into a confidential relationship in the conduct of the companys or entitys affairs and, as a result, is given access to information that is intended to be used solely for such companys or entitys purposes. A temporary insider can include, among others, an entitys attorneys, accountants, consultants, investment bankers, commercial bankers and the employees of such organizations. In order for a person to be considered a temporary insider of a particular entity, the entity must expect that the person receiving the information keep the information confidential and the relationship between the entity and the person must at least imply such a duty. Analysts are usually not considered insiders of the entities that they follow, although if an analyst is given confidential information by an entitys representative in a manner which the analyst knows or should know to be a breach of that representatives duties to the entity, the analyst may become a temporary insider.
4.3 What is Material Information?
Trading on the basis of inside information is not a basis for liability unless the information is material. Material information is generally defined as information that a reasonable investor would likely consider important in making his or her investment decision, or information that is reasonably certain to have a substantial effect on the price of a companys securities. Information that should be considered material includes, but is not limited to: dividend changes, earnings estimates, changes in previously released earnings estimates, significant merger or acquisition proposals or agreements, major litigation, liquidity problems and extraordinary management developments. Material information does not have to relate to a companys business; it can be significant market information. For example, a reporter for The Wall Street Journal was found criminally liable for disclosing to others the dates on which reports on various companies would appear in The Wall Street Journal and whether or not those reports would be favorable.
4.4 What is Nonpublic Information?
Information is nonpublic unless it has been effectively communicated to the market place. For information to be considered public, one must be able to point to some fact to show that the information has been generally disseminated to the public. For example, information found in a report filed with the SEC or appearing in Dow Jones, Reuters Economic Services, The Wall Street Journal or another publication of general circulation is considered public. Market rumors are not considered public information.
4.5 What is Trading on the Basis of Material Nonpublic Information?
Generally, a purchase or sale of a security is made on the basis of material nonpublic information about that security or issuer if the person making the purchase or sale was aware of the material nonpublic information when the person made the purchase of sale.
4.6 Penalties for Insider Trading
Penalties for trading on or communicating material, nonpublic information are severe, both for the individuals involved in the unlawful conduct and for their employers. A person can be subject to some or all of the penalties set forth below even if he or she does not personally benefit from the violation. Penalties include:
· civil injunctions;
· disgorgement of profits;
· jail sentences;
· fines for the person who committed the violation of up to three times the profit gained or loss avoided (per violation or illegal trade), whether or not the person actually benefited from the violation; and
· fines for the employer or other controlling person of the person who committed the violation of up to the greater of $1,000,000 or three times the amount of the profit gained or loss avoided (per violation or illegal trade).
In addition, any violation of the procedures set forth in this Code can be expected to result in serious sanctions by the Adviser, including dismissal of the persons involved.
4.7 Policy Statement Regarding Insider Trading
The Adviser expects that each of its Employees will obey the law and not trade on the basis of material, nonpublic information. In addition, the Adviser discourages its Employees from seeking or knowingly obtaining material, nonpublic information.
4.8 Procedures to Prevent Insider Trading
If any Employee receives any information which may constitute material, nonpublic information, the Employee (1) may not buy or sell any securities, including options or other securities convertible into or exchangeable for such securities, for a Personal Account or a client account, (2) may not communicate such information to any other person, including family members and friends (other than the Chief operating Officer) and (3) must discuss promptly such information with the Chief Operating Officer.
It is a good practice for each Employee who routinely contacts issuers or analysts to identify himself or herself as being associated with the Adviser and identify the Adviser as an investment management firm, and, after the conversation, make a memorandum memorializing the conversation with the issuer or analyst (including the beginning of the conversation where such Employee identified himself as associated with the Adviser).
5. OTHER CONFIDENTIAL INFORMATION
Certain information obtained by the Adviser that does not constitute inside information still constitutes confidential information that must be protected by the Adviser and its Employees. Compliance procedures regarding the use and treatment of that confidential information are set forth below.
5.1 Confidential Information Defined
As noted above, even if the Adviser and its Employees do not receive material, nonpublic information (i.e., inside information), such persons may receive other confidential or sensitive information from or about the Advisers clients, and they will also receive confidential or proprietary information about the Advisers affairs.
Confidential Information means any non-public information concerning the Advisers activities or developed by the Adviser or received by the Adviser under an express or implied agreement or understanding the information will be treated in confidence or used only for a limited purpose, regardless of whether or not it would be considered to be important by any other person.
Confidential Information may be in written, audio, video or computer readable form, or may be acquired through conversations in which an Employee is a party or which he or she has overheard. Such Confidential Information may include, among other things, information entrusted to the Adviser by its clients, including his or her name and related financial information, the names of securities the Adviser intends to buy or sell, and new product information or business plans.
Given the breadth of the above, all information that an Employee obtains through the Adviser should be considered confidential unless that information is specifically available to the public.
5.2 Policy Statement Regarding Use and Treatment of Confidential Information
All Confidential Information, whatever the source, may be used only in the performance of the Employees duties with the Adviser. Confidential Information may not be used for any personal purpose, including the purchase or sale of securities for a Personal Account.
5.3 Procedures Regarding Use and Treatment of Confidential Information
Employees have an obligation to be aware of, and sensitive to their treatment of Confidential Information. To safeguard this information:
· Precautions must be taken to avoid storing Confidential Information in plain view in public areas of the Advisers facilities, including the reception areas, conference rooms and kitchens, and Employees must remove Confidential Information from these areas where it may be seen by visitors or other third parties.
· Visitors must be escorted in and out of the office by Employees.
· Particular care must be exercised when Confidential Information must be discussed in public places, such as restaurants, elevators, taxicabs, trains or airplanes.
· Unless required by law, Confidential Information may not be shared with any person, including any spouse or other family member, who is not an Employee (or is not otherwise subject to a confidentiality agreement with the Adviser) and who does not have
a reason relating to such Employees responsibilities within the Adviser to know that information.
6. PERSONAL TRADING
6.1 Fiduciary Duty to Avoid Conflicts of Interest with Client Accounts
Potential conflicts of interest may exist between the Adviser and its advisory clients. To the extent such potential conflicts exist, the employee or managing partner with knowledge of such conflict will disclose the nature of the activity to the Chief Operating Officer prior to engaging such activity.
Sections 206(1) and 206(2) of the Advisers Act address conflicts of interest that may arise in an investment advisory relationship, even though the conflicts may not specifically involve prohibited activities. Potential conflicts of interest and the higher standard of disclosure to which they are subject, include but are not limited to:
· when an adviser receives compensation, directly or indirectly, from a source other than the client for recommending a security, the adviser must disclose the nature and extent of the compensation (e.g., when an adviser receives products and services from a consultant, directly or through an affiliate or subsidiary as a package of bundled services);
· when an adviser or an affiliate will be buying or selling the same securities as a client, the client should be informed of this fact and also whether the adviser (or the affiliate) is or may be taking a position inconsistent with the clients position; and
· when an adviser or related party compensates a third party for referring a client, the material terms of the arrangement must be disclosed to, and acknowledged, by the client.
The Advisers employees are required to report to the Chief Operating Officer any conflict of interest or perceived conflict of interest mentioned above. In addition, Employees must report personal conflicts or perceived conflicts that may exist between them and the Adviser or the Advisers clients. Potential areas of personal conflicts include but are not limited to:
· Outside business activities (see Section 7 of this Appendix)
· Giving and accepting gifts in relation to Advisers business (see Section 8 of this Appendix)
· Personal securities transactions
· A family member that controls or is employed by a broker/dealer, bank, investment advisor, pension plan, or Adviser client.
· A loan to an Adviser client (or their employees) or service provider (or their employees).
6.2 Policy Statement Regarding Personal Trading
The Adviser recognizes that the personal investment transactions of its Employees and members of their immediate families/people in same household demand the application of a strict code of ethics. Consequently, the Adviser requires that all personal investment transactions be carried out in a manner
that will not endanger the interest of any client or create any apparent or actual conflict of interest between the Adviser and its Employees, on the one hand, and the client, on the other hand. Thus, the Adviser has adopted the procedures set forth below.
6.3 Personal Account Exemptions for Publicly Traded Securities
If an Employee certifies in writing that (1) the certifying Employee does not influence the investment decisions for any specified account of a spouse, child or dependent person and (2) the person or persons making the investment decisions for such account do not make such decisions, in whole or in part, upon information that the certifying Employee has provided, the Chief Operating Officer may, in his or her discretion, determine that such an account is not the Employees Personal Account and that purchases and sales of Publicly Traded Securities for such account are not subject to the pre-clearance requirements of this Code set forth below.
Similarly, if an Employee certifies in writing that trading in an account in which he or she has direct or indirect beneficial ownership is managed by someone other than the Employee, such as a third party who exercises complete investment discretion in managing the account, the Chief Operating Officer, may, in his or her discretion, determine that purchases and sales of Publicly Traded Securities for such account are not subject to the pre-clearance requirements of this Code set forth below. In addition, written verification by the third party involved in the management of the account may also be required in certain circumstances. If the Employee has any role in the managing the account, then this exception does not apply.
Securities held or traded in a personal account are nonetheless required to be included in the Employees initial, annual, and quarterly reports. Any actual or appearance of a conflict of interest in the trading in the Employees accounts may render these accounts subject to all of the provisions of this Code.
6.4 Procedures Regarding Personal Trading
A. Pre-Clearance
Once the Adviser manages assets for persons unaffiliated with the Adviser, the Adviser will not allow employees to purchase and sell securities without prior written approval.
All personal trades require written pre-clearance of purchases and sales of (i) all Publicly Traded Securities that are or will be held in an Employees Personal Account and (ii) all Limited Offerings or IPOs that are or will be beneficially owned by its Employees. This pre-clearance is intended to protect both the Adviser and personal transactions.
If you have any doubt as to whether the pre-clearance requirement applies to a particular security, please check with the Chief Operating Officer before entering into that transaction.
The pre-clearance requirement is satisfied by emailing Christopher Ainsworth and receiving email confirmation that the approval is granted to execute a requested transaction. This email is to be used in most cases, with the exception of investments in Limited Offerings or IPOs, which requires completion of the Intention to Participate in a Limited Investment Opportunity form (the Limited Investment Opportunity Form). An example of the information required in pre-clearance email and or the Limited Investment
Opportunity form is attached as Exhibit A. The Adviser will treat the pre-clearance process as Confidential Information and will not disclose this information except as required by law or for appropriate business purposes, and Employees must do the same with respect to approvals or denials of any request for pre-clearance.
As part of the pre-clearance process, each Employee wishing to buy or sell a security for a Personal Account must first confirm that he or she is not in receipt of any material, nonpublic information (i.e., inside information) that would affect the price of that security. Pre-clearance is not automatically granted for every trade. Trades for Personal Accounts generally must be consistent with recommendations and actions that the Adviser has taken on behalf of its clients. Therefore, without the prior approval of the Chief Operating Officer, an Employee may not take a position in a security contrary to the position taken by the Adviser for its clients.
Approval of a trade in a Personal Account means that, to the best of the Chief Operating Officers knowledge.:
· The security is not then being considered for purchase or sale by the Adviser for any client. A security is being considered for purchase or sale when a recommendation to purchase or sell a security has been made and communicated to the portfolio manager.
· The security is not in the process of being purchased or sold for a client of the Adviser, unless (1) such purchases or sales have been substantially completed, or (2) the transaction in the Personal Account will be blocked with the client trades, in accordance with the Advisers Trade Allocation Procedures.
· The security was not purchased by the Adviser within 7 calendar days prior to the purchase by the Employee.
If within the 7 calendar day period following a personal trade, a decision is made to purchase or sell the same security for a client of the Adviser, the trade should be done for the client and an explanation of the circumstances must be reviewed by the Chief Operating Officer.
B. Execution of Trades
The pre-clearance email must be completed on the day the Employee intends to initiate a transaction and the trade must be executed on that day. If for some reason an Employee cannot initiate trade instructions on that date, or the trade cannot be executed on that date, a new email must be completed and the appropriate authorization must be obtained again.
C. Limited Investment Opportunities
When an Employee intends to effect a transaction that is an investment in a Limited Offering (e.g., a private placement, limited partnership (including hedge funds)), an IPO or any thinly traded public security (each, a Limited Investment Opportunity), the Employee must first consider whether or not the planned investment is one that is appropriate for any clients of the Adviser. Generally, the Advisers strategies would not include Limited Investment Opportunities. However, if a clients account restrictions do not prohibit the acquisition of the security, the Limited Investment Opportunity may be
an appropriate investment for the client. Therefore, the Employee must complete the Limited Investment Opportunity Form (attached as Exhibit A) and, through the Form, bring the Limited Investment Opportunity to the attention of the Chief Operating Officer, to allow him or her to determine if the Limited Investment Opportunity should be offered to the clients of the Adviser. Employees should be aware that completion of the Limited Investment Opportunity Form serves as confirmation that the Employee has considered the interests of the clients of the Adviser.
An Employee must complete a Limited Investment Opportunity Form for all transactions in which an Employee may acquire beneficial ownership in the security being offered by the Limited Offering, regardless of whether or not such security will be held in the Employees Personal Account.
The date on which the Limited Investment Opportunity Form is completed will generally be considered to be the trade date. However, in many cases, the trade date may not have been established by the issuer or seller of the Limited Offering or IPO at the time the trade is initiated. The Employee should then indicate that the trade date will be the date on which the seller or issuer finalizes the trade. If the Limited Investment Opportunity Form is completed within 15 days prior to the closing date of the transaction , the Employee will be considered to be in compliance with this Code. This is also the case if an Employee is the seller of a security originally purchased by such Employee in a Limited Investment Opportunity such as a Limited Offering.
D. Exceptions to the Pre-clearance Requirements
The following types of investments are not required to be pre-cleared. However, none of the transactions listed below are exempt from the periodic reporting requirements discussed below.
· Blocked Trades . If a proposed trade (sell/cover) in a security for a Personal Account is blocked with client trades in that security in compliance with the Advisers Trade Allocation Procedures, the trade may be executed without obtaining pre-approval on the standard form and without determining that the proposed trade complies with the requirements above. However, such transactions must be reported on the Employees Quarterly Transaction Report, and any holdings acquired in this manner must also be reported on the Annual Holdings Report.
· Non-Volitional Transactions . The pre-clearance requirements do not apply to transactions as to which an Employee does not exercise investment discretion at the time of the transaction. For example, if a security owned by an Employee is called by the issuer of that security, the transaction does not have to be pre- cleared and the security may be delivered without pre-clearance. Similarly, if a option written by an Employee is exercised, then the stock may be delivered pursuant to that option without pre-clearing the transaction. However, if it is necessary to purchase securities in order to deliver them, the purchase of the securities must be pre-cleared. If the rules of an exchange provide for automatic exercise or liquidation of an in-the-money derivative instrument upon expiration, the exercise or liquidation of that position by the exchange does not require pre-clearance. All non-volitional transactions are required to be reported on the Employees Quarterly Transaction Report and, if necessary, the Annual Holdings
Report.
· Automated Investment Plans . Purchases that are part of an established periodic Automated Investment Plan do not have to be pre-cleared, but participation in the plan should be pre-cleared prior to the first purchase. If an Employees spouse participates in such a plan at his or her place of employment, the Employee must pre-clear participation in the plan upon commencement of employment, or upon the spouses commencement of participation in the plan. Investments made through an automated investment plan must be reported on an Employees Quarterly Transaction Report and on his or her Annual Holdings Report.
· Tender Offers . Tendering shares pursuant to a public tender offer is subject to special rules. If the tender offer is for 100% of the outstanding shares of a particular class, pre-clearance is not required with respect to securities of that class. If the tender offer is for less than 100% of the outstanding shares of a particular class, pre-clearance is required. (Adviser may be participating in the transaction on behalf of client accounts and an employees participation could reduce the number of shares able to be tendered on behalf of a client.) In either case, tender offers must be reported on an Employees Quarterly Transaction Report and, if necessary, the Annual Holdings Report.
6.5 Reports of Personal Transactions (for All Reportable Securities)
Submission of Reports . In order for Adviser to monitor compliance with this Code, each Employee shall submit, or shall cause to be submitted, to the Chief Operating Officer the following reports:
A. Initial Holdings Report . Each Employee shall submit to the Chief Operating Officer a complete and accurate Initial Holdings Report in the form attached hereto as Exhibit B within 10 days of becoming an Employee ( or within 30 days of receipt of the Code of Ethics), with information current as of a date no more than 45 days prior to the date of his or her employment or 45 days following the end of the prior year (whichever is more recent). The Initial Holdings Report includes all Reportable Securities the Employee had any direct or indirect beneficial ownership of upon commencement of employment by Adviser, regardless of whether or not the Reportable Securities are held in the Employees Personal Account. The Initial Holdings Report must contain, at a minimum, the following information:
· The name of each Reportable Security and type of security.
· As applicable, the ticker symbol or CUSIP number.
· As applicable, the number of shares or principal amount of each Reportable Security.
· The name of any broker, dealer or bank with which the Employee maintains an account in which any Reportable Securities.
· The employees signature and the date the Initial Holdings Report is being submitted.
B. Duplicate Confirmations and Account Statements . At the Advisers discretion, each Employee shall authorize the brokerage firm or other firm where such Employees Personal Accounts are maintained to send to the Chief Operating Officer duplicate confirmations of all transactions in Reportable Securities effected for such Employees Personal Accounts. A form letter to be used for this purpose is attached hereto as Exhibit C.
In addition, at the Advisers discretion, each Employee shall cause all of his or her brokers or other custodians to submit at least quarterly account statements for each of his or her Personal Accounts to Adviser. The account statements shall be sent directly by the broker or other custodian to the Chief Operating Officer regardless of whether any trading activity took place in the Personal Account during the quarter.
C. Quarterly Transaction Reports . Each Employee must submit Quarterly Transactions Reports in the form attached as Exhibit D within 30 days of the each calendar quarter end for all transactions during the quarter in Reportable Securities. The Quarterly Transaction Reports must contain, at a minimum, the following information:
· The trade date of the transaction and the name of each Reportable Security.
· As applicable, the ticker symbol or CUSIP number, interest rate and maturity date, number of shares, and principal amount of each Reportable Security.
· The nature of the transaction (i.e., purchase, sale or other type of acquisition or disposition).
· The price of the Reportable Security at which the transaction was effected.
· The name of the broker, dealer, bank or transfer agent with or through which the transaction was effected.
· The signature of the Employee and the date the report is being submitted.
D. Annual Holdings Report . Each Employee shall submit a complete and accurate Annual Holdings Report in the form attached hereto as Exhibit E. The Annual Holdings Report is due by February 1st of each year and the information in the Annual Holdings Report must be current as of a date no more than 45 days prior to the date the Annual Holdings Report is submitted. At a minimum, the Annual Holdings Report must contain the same information as required in the Initial Holdings Report.
6.6 Review and Retention of Reports
The Chief Operating Officer shall review each duplicate confirmation, transaction report and holdings report, and compare the transactions reported against the Pre-approval Forms that were prepared during the month or the quarter, as the case may be, to determine whether any violations of Advisers policies or of the applicable securities laws took place. If there are any discrepancies between trade confirmations and Pre-approval Forms, the Chief Operating Officer shall contact such Employee to resolve the discrepancy. Upon discovering a violation of these procedures, Adviser may impose such sanctions as it deems appropriate. Where a violation of procedures affects a client account, Adviser may require the trade to be unwound and any profits disgorged to the client account.
7. OTHER BUSINESS CONDUCT
7.1 Policy for Outside Activities
From time to time Adviser personnel may be asked to serve as directors, trustees or officers of various groups, including foundations or other charitable organizations or private or public companies. Some of these positions are paid, others unpaid. Often these positions involve work on financial matters, such as investments for the group or other business transactions.
7.2 When Do The Requirements Apply?
The requirements discussed here apply to the following activities:
· A position that provides compensation directly or indirectly.
· A position with any for-profit company, whether public or private.
· An officer of an organization or a position that would be involved in financial matters or giving advice on financial matters whether for a profit company or a non-profit entity.
Volunteer work for a charity is not covered by these requirements unless you are involved in the financial matters.
Requirements:
Prior to engaging in an outside activity, employees must complete the Activities Outside of Adviser form (Appendix G) and submit it to the Chief Operating Officer. All conflicts of interests must be disclosed on the form.
7.3 No Special Favors
No Employee may purchase or sell securities pursuant to any reciprocal arrangement arising from the allocation of brokerage or any other business dealings with a third party. Accepting information on or
access to personal investments as an inducement to doing business with a specific broker on behalf of clients of Adviser regardless of the form the favor takes is strictly prohibited. Personal transactions which create the appearance of special favoritism should be avoided.
8. RESTRICTIONS ON GIFTS
8.1 Policy Statement .
A conflict of interest occurs when the personal interests of Employees interfere or could potentially interfere with their responsibilities to Adviser and its clients. The overriding principle is that Employees should not accept inappropriate gifts, favors, entertainment, special accommodations, or other things of material value that could influence their decision-making or make them feel beholden to a person or firm. Similarly, Employees should not offer gifts, favors, entertainment or other things of value that could be viewed as overly generous or aimed at influencing decision-making or making a client feel beholden to the firm or the supervised person.
8.2 De Minimis Gifts .
From time to time Adviser and/or Employees may receive gifts from third parties. Any gift received that has a value in excess of a de minimis amount should not be accepted. Generally, a gift of more than $100 would not be considered de minimis. Each Employee is responsible for determining the value of gifts received from third parties and whether a particular gift has de minimis value in the circumstances. However, Employees are reminded that the perception of a gifts value by others is as important as the assessment of the gifts value in the Employees judgment.
From time to time, Adviser and/or Employees may give or offer gifts to existing clients, prospective clients, or any entity that does business with or on behalf of Adviser. If the gift has a value in excess of a de minimis amount, such gift must be pre-approved by the Chief Operating Officer.
8.3 Entertainment .
No Employee may provide or accept extravagant or excessive entertainment to or from a client, prospective client, or any person or entity that does or seeks to do business with or on behalf of Adviser. Employees may provide or accept a business entertainment event, such as dinner or a sporting event, of reasonable value, if the person or entity providing the entertainment is present.
9. MISCELLANEOUS
9.1 Importance Of Adherence To Procedures
It is very important that all Employees adhere strictly to this Code. Any violations may result in serious sanctions, including dismissal from Adviser.
9.2 Annual Circulation/Certification of Receipt of Code and Amendments
This Code shall be circulated at least annually to all Employees, and at least annually each Employee shall be asked to certify in writing pursuant to the form attached hereto as Exhibit F that he or she has received and followed this Code. Each Employee will also be asked to certify to the receipt of any amendments to the Code circulated during the year.
9.3 Reporting of Violation of the Code
All Employees should report promptly to the Chief Operating Officer any violation of this Code. All such reports will be treated confidentially to the extent permitted by law and Adviser shall not retaliate against any individual who reports a violation of this Code.
9.4 Retention of Records
Adviser shall retain all documents produced by the Chief Operating Officer as required by this Code and all documents required to be submitted by Employees under this Code, including all duplicate confirmations and any documents referred to or incorporated therein, as part of the books and records required by the Advisers Act and the rules thereunder.
9.5 Questions
Any questions regarding this Code should be referred to the Chief Operating Officer.
List of Exhibits
Exhibit A |
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Request for Pre-approval of Purchase or Sale of Publicly Traded Securities for Personal Account |
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Request for Pre-approval of Purchase or Sale of a Limited Investment Opportunity |
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Exhibit B |
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Initial Holdings Report |
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Exhibit C |
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Broker or other custodian duplicate confirmation request form letter |
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Exhibit D |
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Quarterly Transaction Report |
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Exhibit E |
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Annual Holdings Report |
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Exhibit F |
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Certificate of Receipt of Code of Ethics |
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Exhibit G |
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Activities Outside of Maerisland Capital, LLC |
Exhibit A
Intention to Execute Employee Personal Trades in Publicly Traded Securities
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I confirm that I am not in possession of any Inside Information (as defined in ADVISERs Code of Ethics) concerning this security or its issuer.
Employee Signature: |
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Who should submit this form?
All Employees.
When should this form be submitted?
Before the trade is placed.
Whose trades are covered?
Trades for Personal Accounts, including any account in which an Employee has a beneficial interest and each and every account for which an Employee, an Employees spouse, minor child or other dependent influences or controls investment decisions.
How long is approval valid?
The trade must be executed on the day approval is given.
Who grants the approval?
The Chief Operating Officer.
What trades require approval?
Publicly-Traded Securities, including stocks, bonds, options.
What trades do not require approval?
CDs, commercial paper, open-end mutual funds, banker acceptances and U.S. Government bonds.
Are short-term trades acceptable?
Employees are expected to not trade for short-term profits.
Are contrary positions acceptable?
Contrary positions will not be approved except in special circumstances.
How is approval granted?
If approved, a copy of this form will be delivered to the Employee promptly and may be preceded by electronic confirmation and approval.
The Code of Ethics is designed to avoid the actual or apparent conflicts of interest between the interests of Advisers Employees and the interests of its clients. The guidelines presented above address the most commonly asked questions. Please refer to the Code of Ethics for a complete explanation of these and other issues, or contact the Chief Operating Officer directly.
Approval
Approval has been granted for the above transaction(s) in accordance with the current Code of Ethics as follows: (1) there are no open orders to buy or sell the above security(ies); (2) all transactions for clients in the above security(ies) have been completed for the day; or (3) all transactions have been aggregated according to a pre-approved schedule.
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Date and Time Stamp |
o If you wish to take a position contrary to the Advisers clients (i.e., by requesting approval to sell a security purchased and still held by clients or to purchase a security recently sold by clients), please explain below:
Exhibit A
Intention to Participate in a Limited Investment Opportunity
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I confirm that I am not in possession of any Inside Information (as defined in ADVISERs Code of Ethics) concerning this security or its issuer.
Employee Signature: |
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Who should submit this form?
All Employees.
When should this form be submitted?
Before the trade is placed.
Whose trades are covered?
Trades for Personal Accounts, including any account in which an Employee has a beneficial interest and each and every account for which an Employee, an Employees spouse, minor child or other dependent influences or controls investment decisions.
How long is approval valid?
The trade must be executed on the day approval is given.
Who grants the approval?
The Chief Operating Officer.
What trades require approval?
Private Placements, IPOs and other Limited Investment Opportunities
Are short-term trades acceptable?
Employees are expected to not trade for short-term profits.
Are contrary positions acceptable?
Contrary positions will not be approved except in special circumstances.
How is approval granted?
If approved, a copy of this form will be delivered to the Employee promptly and may be preceded by electronic confirmation and approval.
The Code of Ethics is designed to avoid the actual or apparent conflicts of interest between the interests of Advisers Employees and the interests of its clients. The guidelines presented above address the most commonly asked questions. Please refer to the Code of Ethics for a complete explanation of these and other issues, or contact the Chief Operating Officer directly.
Approval
Approval has been granted for the above transaction(s) in accordance with the current Code of Ethics as follows: (1) there are no open orders to buy or sell the above security(ies); (2) all transactions for clients in the above security(ies) have been completed for the day; or (3) all transactions have been aggregated according to a pre-approved schedule.
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o If you wish to take a position contrary to Advisers clients (i.e., by requesting approval to sell a security purchased and still held by clients or to purchase a security recently sold by clients), please explain below:
Exhibit B
Initial Holdings Report
(complete within 10 days of becoming an Employee or with 30 days of receipt of Code of Ethics)
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Note: In lieu of completing this report, you may attach duplicate copies of your most recent brokerage or custodian statements provided they are current within 45 days of the date of this report and sign below certifying that all required information has been provided.
1. Holdings
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2. Brokerage / Custody Accounts
Name of Institution and Account Holders Name
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Account Number |
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Have you requested
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Reviewed by: |
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Exhibit C
Form of Authorization Letter
[Date]
[Broker name and address]
RE: [Employee]
Dear Sir or Madam:
Please be advised that the above referenced person is an employee of Maerisland Capital, LLC. We request that you send duplicate confirmation of this employees transactions in securities, as well as duplicate statements to the attention of:
Maerisland Capital, LLC
Attention: Christopher Ainsworth
620 Newport Center Drive, Suite 1100
Newport Beach, CA 92660
This request is made pursuant to the personal trading policies of Maerisland Capital, LLC.
Sound you have any questions or need to reach me please feel free to contact me at 949-721-6668 office or via email at cainsworth@maerislandcapital.com. Thank you for your cooperation.
Sincerely,
Christopher Ainsworth
Chief Operating Officer
Authorization by Employee: |
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[name of employee] |
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cc: [Employee]
Exhibit D
Quarterly Transaction Report
(complete within 30 days following the end of each quarter )
Employee: |
Date: |
Note: In lieu of completing this Report, you may attach duplicate copies of all of your brokerage or custodian statements for the quarter and sign below certifying that all required information has been provided.
1. Transactions in Reportable Securities
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Ticker
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Broker |
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Number of
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Interest Rate
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Nature of
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Transaction
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2. Transactions in Limited Offerings (Includes Private Placements, Hedge Funds, IPOs and Other Offerings Not Publicly Available)
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Ticker
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Number of
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Interest Rate
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Nature of
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Transaction
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Date of
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2. Brokerage / Custody Accounts Opened During Quarter
Name of Institution and Account Holders Name (i.e.,
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Have you requested
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Signature: |
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Reviewed by: |
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Print Name: |
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Exhibit E
Annual Holdings Report
(to be accurate within 45 days of submission)
Employee: |
Date: |
Note: In lieu of completing this report, you may attach duplicate copies of your most recent brokerage or custodian statements provided they are current within 45 days of the date of this report and sign below certifying that all required information has been provided.
1. Holdings
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Ticker Symbol or |
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Number of Shares or |
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Name of Reportable Security |
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Type of Security |
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CUSIP |
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Principal Amount |
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2. Brokerage / Custody Accounts
Name of Institution and Account Holders Name
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Account Number |
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Have you requested
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I hereby certify that during the calendar year I have complied with my obligations under the Code of Ethics as in effect during that period, including the obligations not to purchase or sell Publicly Traded Securities on the basis of insider information and to provide Adviser with duplicate confirmations and quarterly report reflecting all purchases and sales of Publicly Traded Securities for my Personal Accounts.
Signature: |
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Reviewed by: |
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Print Name: |
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(the Chief Operating Officer) |
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Signature: |
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Exhibit F
Certificate of Receipt of Code of Ethics
I hereby certify that I have received a copy of the Code of Ethics of Maerisland Capital, LLC and that I have read it and understand it. I have had the opportunity to ask any questions I may have concerning the meaning and interpretation of the provisions of the Code of Ethics and I understand the obligations set forth therein applicable to me. I agree to abide by and comply with all such policies and procedures.
Employee Signature: |
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Print Name: |
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Appendix A
Activities Outside of Maerisland Capital, LLC
In accordance with Maerisland Capital, LLCs Code of Ethics, I wish to advise the Chief Operating Officer of the following outside activity, so as to avoid any possible conflict of interest as it relates to my current position with the firm.
Date:
Name: |
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Name of Outside Organization:
Address:
Business Activity (e.g. advisor, broker/dealer ):
Function or title:
Compensation (direct/indirect/none):
Are you an investor in the organization?
Will you exercise discretion over financial matters?
Organization Type: Public/Non-public/Charitable:
Does Adviser have a business relationship with the organization?
Possible Conflict of Interest:
I understand that my first priority is to Maerisland Capital, LLC. At all times I will continue to abide by the Code of Ethics, especially those elements that may involve ethical behavior, client information, release of material non-public (insider) information, personal trading, company supplied research material, proprietary information/computer systems data or programs and/or the purchase/sale of securities involving Maerisland Capital, LLC clients. Further, I will make it known to all necessary parties that my involvement with any other organization is not meant financially or otherwise to benefit or involve the Adviser. I will not use my position with the Adviser or use the Adviser name or any association with the Adviser as part of my involvement with this outside activity. No contribution or compensation that I may make or receive, whether direct or indirect, is to be construed as a direct or indirect arrangement with the Adviser. Should any of the above information change, I will notify my supervisors and the Chief Operating Officer immediately. In addition, should I become aware of any public offerings by the non-Adviser company, or should I purchase or be granted additional shares of stock in the non-Adviser company, I will immediately advise the Chief Operating Officer and submit any necessary supplemental documentation.
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Approved: |
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Date: |
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