The Coventry Funds Trust PRE 14A
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant þ
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Preliminary proxy statement |
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Confidential, for use of the Commission only (as permitted by Rule 14a-6(e)(2)). |
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Definitive proxy statement. |
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Definitive additional materials. |
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Soliciting material under Rule 14a-12. |
The Coventry Funds Trust
(Name of Registrant as Specified in Its Charter)
(Names of Person(s) Filing Proxy Statement, if other than the Registrant)
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. |
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Date Filed: |
August [__], 2008
Dear Shareholder:
I am writing to inform you of the upcoming special meeting of the shareholders of the EM Capital
India Gateway Fund (the Fund), a series of The Coventry Funds Trust.
The
meeting is scheduled to be held at 4:00 p.m. Eastern time on
September , 2008, at the offices of
Citi Fund Services Ohio, Inc., 100 Summer Street, Suite 1500, Boston, Massachusetts 02110. Please
take the time to carefully read the Proxy Statement and cast your vote.
The purpose of the meeting is to seek your approval for a proposed reorganization of the Fund. The
Fund is currently organized as a series of The Coventry Funds Trust, an investment company with its
principal offices at 3435 Stelzer Road, Columbus, Ohio 43219. After completion of the proposed
tax-free reorganization, the Fund would be a series of Northern Lights Fund Trust, an investment
company with its principal offices at 450 Wireless Blvd., Hauppauge, New York 11788. This proposed
reorganization of the Fund will not result in a change in adviser to the Fund, or any change to the
Funds investment objective, strategies or investment policies.
We think that this proposal is in the best interest of the shareholders of the Fund. The Board of
Trustees has unanimously recommended that shareholders of the Fund vote FOR the proposal.
Should you have any questions, please feel free to call us at 1-866-611-4967. We will be happy to
answer any questions you may have. For voting instructions, including a toll-free number and
website for voting, please refer to the enclosed ballot.
Your vote is important regardless of the number of shares you own. To assure your representation
at the meeting, please complete the enclosed proxy and return it promptly whether or not you expect
to be present at the meeting. If you attend the meeting, you may revoke your proxy and vote your
shares in person.
Sincerely,
C. David Bunstine
President
The Coventry Funds Trust
TABLE OF CONTENTS
EM Capital India Gateway Fund
A series of The Coventry Funds Trust
3435 Stelzer Road
Columbus, OH 43219
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held September , 2008
Dear Shareholders:
The Board of Trustees of The Coventry Funds Trust (the Trust), an open-end investment company
organized as a Massachusetts business trust, has called a special meeting of the shareholders of
the EM Capital India Gateway Fund, a series of the Trust, to be held at the offices of Citi Fund
Services Ohio, Inc., 100 Summer Street, Suite 1500, on
September , 2008 at 4:00 p.m., Eastern time,
for the following purpose:
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To approve a proposed Agreement and Plan of Reorganization
under which the EM Capital India Gateway Fund, a series of the Trust, would
merge with and into the EM Capital India Gateway Fund, a series of Northern
Lights Fund Trust, in a tax-free reorganization. |
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Transaction of such other business as may properly come before
the meeting or any adjournments thereof. |
Shareholders of record at the close of business on July 18, 2008 are entitled to notice of, and to
vote at, the special meeting and any adjournment(s) or postponement(s) thereof.
By Order of the Board of Trustees
Curtis Barnes, Secretary
August[__], 2008
YOUR VOTE IS IMPORTANT
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE COMPLETE THE ENCLOSED PROXY AND RETURN IT
PROMPTLY IN THE ACCOMPANYING ENVELOPE WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING. IF
YOU ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE YOUR SHARES IN PERSON.
EM Capital India Gateway Fund
A Series of The Coventry Funds Trust
PROXY STATEMENT
MEETING OF SHAREHOLDERS
This Proxy Statement is being furnished in connection with the solicitation of proxies by the Board
of Trustees of The Coventry Funds Trust (the Trust), an open-end investment company registered
with the United States Securities and Exchange Commission (the SEC) with its principal office
located at 3435 Stelzer Road, Columbus, Ohio 43219. The proxies are to be used at a meeting of the
shareholders of the EM Capital India Gateway Fund (the Fund) at the offices of Citi Fund Services
Ohio, Inc., 100 Summer Street, Suite 1500, on September , 2008 at 4:00 p.m., Eastern time, and any
adjournment of the meeting. The primary purpose of the meeting is for shareholders of the Fund to
consider and approve the following proposals:
(1) To approve a proposed Agreement and Plan of Reorganization, pursuant to which the
Fund would merge with and into the EM Capital India Gateway Fund (the New Fund and collectively
with the Fund, the Funds), a series of Northern Lights Fund Trust (Northern Lights Trust), in a
tax-free reorganization.
(2) To consider and act upon any other business that may properly come before the
meeting and any adjournments thereof.
The date of the first mailing of this Proxy Statement will be on or about August[___], 2008.
SUMMARY OF PROPOSAL
APPROVAL OF AN AGREEMENT AND PLAN OF REORGANIZATION UNDER WHICH THE EM CAPITAL INDIA GATEWAY FUND,
A SERIES OF THE TRUST, WOULD MERGE WITH AND INTO THE EM CAPITAL INDIA GATEWAY FUND, A SERIES OF
NORTHERN LIGHTS TRUST, IN A TAX-FREE REORGANIZATION.
At meetings held on March 27, 2008 and May 14, 2008, 2008, the Board of Trustees of the Trust,
including a majority of the Trustees who are not interested persons of the Trust (the
Independent Trustees) as that term is defined in Section 2(a)(19) of the Investment Company
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Act of 1940, as amended (the 1940 Act), considered and unanimously approved an Agreement and Plan
of Reorganization dated July [ ], 2008 (the Plan of Reorganization or Reorganization Plan), a
copy of which is attached to this Proxy Statement as Exhibit A. Under the Plan of Reorganization,
the Fund, a series of the Trust, will assign all of its assets and liabilities to the New Fund, a
newly organized series of Northern Lights Trust, in exchange for a number of New Fund shares
equivalent in class, number and value to shares of the Fund outstanding immediately prior to the
Closing Date (as defined below), followed by a distribution of those shares to Fund shareholders so
that each Fund shareholder would receive shares of the New Fund equivalent to the number of Fund
shares held by such shareholder on September , 2008 (the Closing Date) (this transaction is
referred to as the Reorganization). Such exchange and distribution shall be accomplished on a
class equivalent basis, i.e., Class A shares of the Fund shall be exchanged for Class A (or similar
type) shares of the New Fund, Class C shares of the Fund shall be exchanged for Class C (or similar
type) shares of the New Fund and Class I shares of the Fund shall be exchanged for Class I (or
similar type) shares of the New Fund. Like the Trust, Northern Lights Trust is an open-end
investment company registered with the SEC.
If the Reorganization is approved and implemented, shareholders of the Fund will become
shareholders of the New Fund. The New Funds investment objective and principal investment
strategies are identical to that of the Fund. In addition, the current investment adviser to the
Fund, EM Capital Management, LLC (EM Capital), will continue to serve as the investment adviser
to the New Fund. However, there are some differences between the Funds. The New Fund will employ
an administrator, transfer agent, custodian and distributor that are different than the
administrator, transfer agent, custodian and distributor utilized by the Fund. In addition, none
of the members of the Board of Trustees of the Trust will serve on the Board of Trustees of
Northern Lights Trust. If approved, the Reorganization is expected to take effect on or about
September , 2008, although the date may be adjusted in accordance with the Reorganization Plan.
The most recent annual report of the Fund, including financial statements, for the fiscal year
ended December 31, 2007, has been mailed previously to shareholders. If you have not received
these reports or would like to receive additional copies free of charge, please contact the Fund at
the address set forth on the first page of this Proxy Statement or by calling 1-866-611-4967, and
they will be sent to you within three (3) business days by first class mail.
COMPARISON OF THE FUND AND THE NEW FUND
The Funds Investment Objectives, Principal Investment Strategies and Risks, and Limitations and
Restrictions
The investment objective, principal investment strategies and risks, as well as the limitations and
restrictions of the Fund and the New Fund (each a Fund and collectively, the Funds) will be
identical. The New Fund is newly organized and will commence operation on the Closing Date. Each
Funds investment objective, principal investment strategies and risks, as well as each Funds
investment limitations and restrictions, are discussed in more detail below.
Investment Objectives
The investment objective of both Funds is to seek long-term capital growth and income by investing
primarily in a diversified portfolio of securities issued by Indian and India-related
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companies. The investment objectives are a non-fundamental policy and may be changed without
shareholder approval.
Principal Investment Strategies
Each Fund invests, under normal circumstances, at least 80% of its net assets, plus the amount of
any borrowings for investment purposes, in publicly-traded common stocks, preferred stocks and
convertible stocks of Indian companies listed on Indian stock exchanges, as well as in
India-related companies listed on global stock exchanges. India-related companies are those
companies that derive 50% or more of their revenues or profits from operations in India. Each Fund
invests in companies with a broad range of market capitalizations which may include small- and
mid-cap Indian companies.
Each Fund expects to invest at least 50% of its assets in the securities of small- and mid-cap
companies. The investment adviser believes that by investing a significant portion of each Funds
assets in Indian mid- and small-cap companies each Fund will benefit by investing early in
lesser-known, high-growth companies that may provide higher long-term returns to the Funds. Small-
and mid-cap companies for these purposes are companies with market capitalizations at the time of
investment of less than $1.5 billion.
EM Capital Management, LLC (the Adviser) selects securities using its proprietary Quantitative +
Qualitative(TM) investment methodology. This methodology combines quantitative fundamental company
valuation and portfolio risk management models with rigorous qualitative in-country research and
due diligence, including as appropriate, company visits and management interviews. The Advisers
quantitative methodology allows it to efficiently and pro-actively find Indian companies that are
attractively priced, providing the Funds with an early investment entry-point for achieving
long-term growth and income in the Indian market. The Advisers proprietary quantitative valuation
models systematically analyze both fundamental and investor sentiment indicators for over 3,000
individual Indian companies to identify a small subset of promising investment candidates. The
promising candidates are selected from a range of industries, and consist of some larger,
well-established firms and some smaller, less well-known firms, that the Adviser forecasts to have
higher earnings growth and liquidity than their peers. The Adviser believes that firms deemed
attractive by the Advisers models are likely to demonstrate stronger price growth based on solid
fundamentals that will attract attention from both sell-side analysts and other investors.
The Adviser then subjects attractive candidates to an in-country qualitative assessment and due
diligence process prior to recommendation for inclusion in the Funds. The due diligence process
considers information such as the quality of management, analysis of key drivers of the Indian
economy and sector growth trends, and other unique aspects of the target company that the Adviser
believes may be overlooked in its valuation. The Adviser also looks at the relationship of any
prospective sale or purchase in terms of the overall contribution to both risk and return of the
Funds, based on both quantitative and qualitative factors. Based upon all of these factors the
decision to invest is made by the Adviser.
The Adviser believes that deep local-market knowledge is important for long-term success in
emerging markets, particularly in a large and complex country such as India. In-country
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qualitative research is performed by the Advisers New Delhi-based Portfolio Manager and research
analysts. The Adviser also believes its location in Indias capital provides greater insights into
national policy and regulatory changes that impact investing in India. In addition, the Adviser
may consult with its panel of senior advisors comprising leading corporate senior executives,
academics and policy-makers.
The Indian equity market currently comprises approximately 6,000 companies listed on the Indian
stock exchanges. By allocating a portion of its assets to mid-cap and small-cap stocks, each Fund
will invest in Indian companies that may experience higher growth rates than larger Indian
companies and may provide each Fund with the opportunity to experience greater capital appreciation
over time.
Each Fund intends to make its investments in Indian companies by investing through EM Capital
Gateway (Mauritius), Ltd., a special purpose limited liability corporation, registered in Mauritius
and regulated by the Mauritius Financial Services Commission. EM Capital Gateway (Mauritius), Ltd.
was formed solely for the purpose of facilitating each Funds investment in Indian securities and
is regulated by the Securities and Exchange Board of India (SEBI). Investing through EM Capital
Gateway (Mauritius) Ltd. allows each Fund to take advantage of an India Mauritius tax treaty,
thereby achieving increased tax efficiency for investors. Investing through EM Capital Gateway
(Mauritius) Ltd. also provides each Fund with a method of investing indirectly in the Indian stock
market through local Indian brokers. Investing directly through Indian brokers provides each Fund
access to a wide selection of small- and mid-cap Indian companies consistent with each Funds
investment strategies.
Consistent with each Funds investment objective, the Funds may:
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invest in the following types of equity securities: common stocks, preferred stocks,
securities convertible into or exchangeable for common stocks, warrants and any rights to
purchase common stocks |
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invest in fixed income securities consisting of corporate notes, bonds and debentures |
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invest in initial public offerings and shares offered prior to the commencement of public
offerings |
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invest in sponsored and unsponsored American Depositary Receipts (ADRs), Global Depositary
Receipts (GDRs) and European Depositary Receipts (EDRs) |
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invest in private investment in public entity investments (PIPES) |
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invest in foreign currency transactions including forward contracts, options and swaps |
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invest in futures contracts and options thereon |
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invest in foreign government obligations and supranational obligations |
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invest in call options and put options |
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invest in restricted and illiquid securities |
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invest in commercial paper |
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engage in repurchase transactions and reverse repurchase transactions |
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invest in securities of other investment companies including exchange traded funds |
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invest in short-term money market instruments and bank obligations |
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invest in U.S. Treasury securities including Treasury bills, Treasury notes and Treasury
bonds |
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invest in obligations issued or guaranteed by agencies or instrumentalities of the U.S.
Government |
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lend securities to qualified brokers, dealers, banks and other financial institutions for
the purpose of realizing additional income |
Temporary Defensive Positions
To respond to adverse market, economic, political or other conditions, each Fund may temporarily
invest 100% of its total assets, without limitation, in money market instruments and repurchase
agreements. These money market instruments include shares of other mutual funds, commercial paper,
certificates of deposit, bankers acceptances, U.S. Government securities and repurchase
agreements. While a Fund is in a defensive position, the opportunity to achieve its investment
objective will be limited. Furthermore, to the extent that a Fund invests in money market mutual
funds for its cash position, there will be some duplication of expenses because the Fund would bear
its pro- rata portion of such money market funds advisory fees and operational expenses. Each
Fund also may invest a substantial portion of its assets in such instruments at any time to
maintain liquidity or pending selection of investments in accordance with its policies.
Investment Risks
Many factors affect performance and neither Fund can guarantee that it will achieve its investment
objective. When you redeem your shares of a Fund, the shares could be worth more or less than what
you paid for them. As a result, an investor could lose money on an investment in either Fund. An
investment in the Funds is not insured or guaranteed by the Federal Deposit Insurance Corporation
or any government agency. The Funds are subject to the following principal risks.
Market Risk
Market risk refers to the risk related to investments in securities in general and the daily
fluctuations in the securities markets. A Funds performance will change daily based on many
factors, including fluctuation in interest rates, the quality of the instruments in the Funds
investment portfolio, national (i.e., Indian) and international economic conditions and general
market conditions.
Small- and Mid-Sized Company Risk
Generally, the smaller the market capitalization of a company, the fewer the number of shares
traded daily, the less liquid its stock and the more volatile its price. Mid-sized company risk is
the possibility that the securities of medium-sized companies may under certain market
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conditions be more volatile and more speculative than the securities of larger companies. Market
capitalization of a company is determined by multiplying the number of its outstanding shares by
the current market price per share. Companies with smaller market capitalizations also tend to have
unproven track records, a limited product or service base, limited access to capital and may lack
management experience.. Those factors also increase risks and make those companies more likely to
fail than companies with larger market capitalizations.
Risks of Investing in Foreign Securities Generally
Foreign investing involves risks not typically associated with U.S. investments. These risks
include, among others, Foreign investments may be riskier than U.S. investments for many reasons,
including adverse fluctuations changes in currency exchange rates, and unstable or adverse
political, social and economic developments affecting a foreign country. In addition, foreign
investing may involve less publicly available or accurate company information, more volatile or
less liquid securities markets. conditions, possible security illiquidity, a lack of adequate or
accurate company information, differences in the way securities markets operate, and less secure
foreign banks or securities depositories than those in the U.S., and foreign controls on
investment. Investments in foreign countries could be affected by factors not present in the U.S.,
such as restrictions on receiving the investment proceeds from a foreign country, foreign tax laws,
and potential difficulties in enforcing contractual obligations. Foreign accounting may be less
transparent than U.S. accounting practices and foreign regulation may be inadequate or irregular.
In addition, individual foreign economies may differ favorably or unfavorably from the U.S. economy
in such respects as growth of gross domestic product, rates of inflation, capital reinvestment,
resources, self-sufficiency, and balance of payments position. Also, certain investments in foreign
securities also may be subject to foreign withholding taxes.
Risks of Investing Primarily in India
Each Fund will invest primarily in Indian and India-related securities. The value of a Funds
investments may therefore be adversely affected by political and social instability in India and by
changes in economic or taxation policies in the country. Investments in Indian securities will
expose a Fund to the direct or indirect consequences of political, social or economic changes in
India. India is considered to still be an emerging market nation and, as a result, has historically
experienced, and may continue to experience, high rates of inflation, high interest rates, exchange
rate fluctuations, large amounts of external debt, balance of payments and trade difficulties and
extreme poverty and unemployment. Emerging market nations may be characterized by political
uncertainty and instability. In addition, there may be a risk of the possibility of expropriation
of assets, confiscatory taxation, difficulty in obtaining or enforcing a court judgment, economic,
political or social instability, and diplomatic developments that could affect investments in
India.
Other Risks of Foreign Investment
Overseas Exchange Risk Each Fund will engage in transactions on a number of overseas stock
exchanges. It is possible that market practices relating to clearance and settlement of securities
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transactions and custody of assets can pose increased risk to the Fund and may involve delays in
obtaining accurate information on the value of securities (which may, as a result affect the
calculation of the Funds net asset value per share (NAV)).
Foreign Currency Risk Although each Fund will report its net asset value and pay dividends
in U.S. dollars, foreign securities often are purchased with and make interest payments in foreign
currencies. Therefore, when the Funds invest in foreign securities, they will be subject to
foreign currency risk, which means that a Funds net asset value could decline as a result of
changes in the exchange rates between foreign currencies and the U.S. dollar. Certain foreign
countries may impose restrictions on the ability of issuers of foreign securities to make payment
of principal and interest to investors located outside the country, due to blockage of foreign
currency exchanges or otherwise.
Currency Hedging Risk Each Fund may engage in various investments that are designed to
hedge the Funds foreign currency risks. While these transactions will be entered into to seek to
manage these risks, these investments may not prove to be successful or may have the effect of
limiting the gains from favorable market movements.
Investment Adviser Risk
The Adviser has limited experience managing a mutual fund. Mutual funds and their advisers are
subject to restrictions and limitations imposed by the Investment Company Act of 1940, as amended,
and the Internal Revenue Code that do not apply to the advisers management of individual and
institutional accounts. As a result, investors cannot judge the Adviser by its track record
managing a mutual fund and the Adviser may not achieve its intended result in managing the Fund.
Limitations and Restrictions
The following investment restrictions are fundamental and may be changed with respect to each Fund
only by a vote of a majority of the outstanding shares of that Fund.
Each Fund will not:
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Purchase any securities which would cause more than 25% of the value of the Funds total
assets at the time of purchase to be invested in 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 obligations issued or guaranteed by the U.S. Government or its
agencies or instrumentalities and repurchase agreements secured by obligations of the U.S.
Government or its agencies or instrumentalities; (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 their 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; |
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Borrow money or issue senior securities, except as permitted under the 1940 Act, and as
interpreted, modified or otherwise permitted by regulatory authority having jurisdiction from
time to time; |
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Make loans, except as permitted under the 1940 Act, and as interpreted, modified or otherwise
permitted by regulatory authority having jurisdiction from time to time; |
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Purchase securities on margin, except for use of short-term credit necessary for clearance of
purchases of portfolio securities and except as may be necessary to make margin payments in
connection with derivative securities transactions; |
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Underwrite securities issued by other persons, except to the extent that a Fund may be deemed
to be an underwriter under certain securities laws in the disposition of restricted
securities; |
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Purchase or sell commodities or commodities contracts, except to the extent disclosed in the
current Prospectus and/or SAI of the Funds; and |
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Purchase or sell real estate (although investments in marketable securities of companies
engaged in such activities and securities secured by real estate or interests therein are not
prohibited by this restriction). |
The following additional investment restriction is a non-fundamental policy and, therefore, may be
changed without the vote of a majority of the outstanding shares of each Fund.
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Except as provided in the fundamental polices described above, both Funds may not purchase or
otherwise acquire any securities if, as a result, more than 15% of the Funds net assets would
be invested in securities that are illiquid. |
If any percentage restriction described above is satisfied at the time of purchase, a later
increase or decrease in such percentage resulting from a change in net asset value will not
constitute a violation of such restriction. However, should a change in net asset value or other
external events cause a Funds investments in illiquid securities to exceed the limitation set
forth in the Funds prospectus, the Fund will act to cause the aggregate amount of illiquid
securities to come within such limit as soon as reasonably practicable. In such an event, however,
the Fund would not be required to liquidate any portfolio securities where the Fund would suffer a
loss on the sale of such securities.
Fees and Expenses
The Table of Fees and Expenses and the Examples shown below are based on fees and expenses
disclosed in the prospectus for the Fund and on estimates for the New Fund. The Reorganization is
not expected to result in an increase in shareholder fees and expenses. However, the fees charged
by the various individual service providers are changing. The following table is designed to help
you understand the fees and expenses that you may pay, both directly and indirectly, by investing
in the New Fund as compared to the Fund.
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Table of Fees and Expenses
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SHAREHOLDER FEES |
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New |
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New |
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New |
(Fees Paid Directly From Your |
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Fund |
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Investment) |
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Class A |
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Class A |
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Class C |
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Class C |
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Class I |
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Class I |
Maximum Sales Charge (Load) |
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5.00 |
%(1) |
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5.00 |
%(1) |
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None |
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None |
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None |
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None |
Maximum Deferred Sales Charge
(Load) |
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1.00 |
%(2) |
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1.00 |
% 2) |
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None |
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None |
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None |
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None |
Maximum Sales Charge (Load)
Imposed on Reinvested Dividends
and Distributions |
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None |
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None |
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None |
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None |
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None |
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None |
Redemption Fees(3) |
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2.00 |
% |
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2.00 |
% |
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2.00 |
% |
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2.00 |
% |
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2.00 |
% |
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2.00 |
% |
Exchange Fees |
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None |
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None |
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None |
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None |
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None |
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None |
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ANNUAL FUND OPERATING EXPENSES
(Expenses that are deducted from
fund assets as a percentage of
average net assets) |
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Management Fee(4) |
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1.20 |
% |
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1.20 |
% |
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1.20 |
% |
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1.20 |
% |
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1.20 |
% |
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1.20 |
% |
Distribution (12b-1) Fees |
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0.50 |
% |
|
|
0.50 |
% |
|
|
1.00 |
% |
|
|
1.00 |
% |
|
|
0.00 |
% |
|
|
0.00 |
% |
Other Expenses (5) (6) |
|
|
1.74 |
% |
|
|
1.48 |
% |
|
|
1.74 |
% |
|
|
1.48 |
% |
|
|
1.74 |
% |
|
|
1.48 |
% |
Total Annual Fund Operating
Expenses(7) |
|
|
3.44 |
% |
|
|
3.18 |
% |
|
|
3.94 |
% |
|
|
3.68 |
% |
|
|
2.94 |
% |
|
|
2.68 |
% |
Fee Waiver and/or Expense
Reimbursement (7) |
|
|
1.14 |
% |
|
|
0.88 |
% |
|
|
1.14 |
% |
|
|
0.88 |
% |
|
|
1.14 |
% |
|
|
0.88 |
% |
Net Annual Fund Operating Expenses |
|
|
2.30 |
% |
|
|
2.30 |
% |
|
|
2.80 |
% |
|
|
2.80 |
% |
|
|
1.80 |
% |
|
|
1.80 |
% |
|
|
|
(1) |
|
The sales charge is reduced or eliminated in certain circumstances. See Distribution
Arrangements/Sales Charges. |
|
(2) |
|
A contingent deferred sales charge of 1.00% applies to redemptions made within 12 months
following certain purchases made without a sales charge. |
|
(3) |
|
Charged to shares redeemed within 90 days of purchase. Certain exemptions may apply. Please
see Redemption Fee for more information. Each Fund assesses a $15 wire transaction fee for
redemptions made by wire. |
|
(4) |
|
Each Funds investment management fee is reduced as net assets in the Fund increase, as
follows: 1.20% of the first $500 million in net assets; 0.90% of the next $500 million; 0.80%
of the next $500 million; 0.70% of the next $500 million; 0.65% of the next $1 billion; and
0.60% of net assets over $3 billion. |
|
(5) |
|
These expenses, such as custodian, transfer agency, shareholder servicing, and other direct
expenses, as well as the dividend expenses on securities sold short, are based on estimated
amounts for the New Funds current fiscal year. |
|
(6) |
|
Because the Fund has less than six months of operating history, Other Expenses are based on
estimated amounts for the current fiscal year. The New Fund has not yet commenced operations.
Therefore, Other Expenses are based on estimated amounts for the current fiscal year. The
estimated amounts are based on an estimate by the Funds investment adviser of average net
assets for the current fiscal year. Each Fund has the same fiscal year end. |
|
(7) |
|
The Adviser has contractually agreed until April 30, 2009 to waive fees and/or reimburse the
Fund and the New Fund certain expenses (excluding extraordinary expenses, brokerage costs,
interest, taxes and dividends) to the extent necessary to maintain the Net Expenses for Class
A, Class C and Class I shares at 2.30%, 2.80% and 1.80%, respectively. Each Fund has agreed to
repay the Adviser for amounts waived or reimbursed by the Adviser pursuant to the expense
limitation agreement provided that such repayment does not cause the Total Fund Operating
Expenses for a class of shares to exceed the above limits and the repayment is made within
three years after the year in which the Adviser incurred the expense. Accordingly, the New
Fund has agreed to re-pay such amounts incurred by the Fund. |
9
EXAMPLE
This example is intended to help you compare the costs of investing in either Fund with the costs
of investing in other mutual funds.
The Example assumes that you invest $10,000 in each 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, that each Funds operating expenses remain the same and that
each Funds expense limitation agreement remains in force through July 31, 2009 for the New Fund
and July 31, 2008 for the Fund. Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund |
|
Fund |
|
Fund |
|
New Fund |
|
New Fund |
|
New Fund |
Holding Period |
|
Class A |
|
Class C |
|
Class I |
|
Class A |
|
Class C |
|
Class I |
1 Year |
|
$ |
721 |
|
|
$ |
283 |
|
|
$ |
183 |
|
|
$ |
721 |
|
|
$ |
283 |
|
|
$ |
183 |
|
3 Years |
|
$ |
1,403 |
|
|
$ |
1,097 |
|
|
$ |
802 |
|
|
$ |
1,353 |
|
|
$ |
1,045 |
|
|
$ |
749 |
|
The Funds Performance
The Fund commenced operations on July 23, 2007 and, as a result, has less then a full calendar year
of performance. Therefore, no performance information is shown. The New Fund has not yet
commenced operations. If the Reorganization is approved by shareholders, the New Fund will assume
the performance history of the Fund on class equivalent basis.
Comparison of Share Classes, Sales Charges and Rule 12b-1 Fees
Share Classes
The Fund currently offers, and the New Fund will offer, Class A, Class C and Class I shares. The
different classes of shares represent investments in the same portfolio of securities, but the
classes are subject to different sales charges and expenses and will likely have different share
prices due to differences in class expenses.
The following table compares sales charges, distribution and service fees (12b-1) and total Fund
expenses of each Funds Class A, Class C and Class I shares.
|
|
|
|
|
|
|
|
|
Class A |
|
Class C |
|
Class I |
Sales Charge (Load)
|
|
Front-end sales
charge; reduced
sales charges
available. A
contingent deferred
sales charge of 1%
applies to
redemptions made
within 12 months
following certain
purchases made
without a sales
charge.
|
|
No front-end sales
charge or
contingent sales
charge.
|
|
No front-end sales
charge or
contingent sales
charge. |
10
|
|
|
|
|
|
|
|
|
Class A |
|
Class C |
|
Class I |
Distribution and
Service (12b-1) Fee
|
|
Subject to annual
distribution and
shareholder
servicing fees of
up to 0.50% of the
Funds total net
assets applicable
to Class A shares.
|
|
Subject to annual
distribution and
shareholder
servicing fees of
up to 1.00% of the
funds total assets
applicable to Class
C shares.
|
|
No distribution and
shareholder
servicing fees. |
|
|
|
|
|
|
|
Fund Expenses
|
|
Lower annual
expenses than Class
C shares; higher
annual expenses
than Class I
shares.
|
|
Higher annual
expenses than Class
A and Class I
shares.
|
|
Lower annual
expenses than Class
A and Class C
shares. |
Sales Charges
Class A shares of each Fund are offered at their public offering price, which is net asset
value per share plus the applicable sales charge. The sales charge varies, depending on the amount
invested. No sales charges are imposed on reinvested dividends and distributions. The following
sales charges apply to the purchases of Class A shares of both Funds, based on the amount of
purchase:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales Charge as a % |
|
Sales Charge as a % of |
|
Dealer |
Amount Invested |
|
of Offering Price |
|
Amount Invested |
|
Reallowance |
Less than $50,000 |
|
|
5.00 |
% |
|
|
5.26 |
% |
|
|
4.50 |
% |
$50,000 but less $100,000 |
|
|
4.00 |
% |
|
|
4.17 |
% |
|
|
3.65 |
% |
$100,000 but less than $250,000 |
|
|
3.75 |
% |
|
|
3.90 |
% |
|
|
3.40 |
% |
$250,000 but less than $500,000 |
|
|
3.00 |
% |
|
|
3.09 |
% |
|
|
2.75 |
% |
$500,000 but less than $1,000,000 |
|
|
2.00 |
% |
|
|
2.04 |
% |
|
|
1.75 |
% |
$1,000,000 or more |
|
None |
|
None |
|
None |
As shown, investors that purchase $1,000,000 or more of Class A share of either Fund will not pay
any initial sales charge on the purchase. However, purchases of $1,000,000 or more of Class A
shares may be subject to a 1.00% contingent deferred sales charge if such shares are redeemed
within 12 months of purchase. This charge will be based on the lower of the investors cost for the
shares or their NAV at the time of redemption. A CDSC is not assessed on reinvested distributions.
Sales Charge Reductions and Waivers
Class A shares
Reduced sales charges for Class A shares of both Funds are available to shareholders with
investments of $50,000 or more. In addition, you may qualify for reduced sales charges under the
following circumstances:
11
Letter of Intent You inform either Fund in writing that you intend to purchase
enough shares over a 13-month period to qualify for a reduced sales charge. Shares
purchased under the non-binding Letter of Intent will be held in escrow until the total
investment has been completed. In the event the Letter of Intent is not completed,
sufficient escrowed shares will be redeemed to pay any applicable front-end sales charges.
Rights of Accumulation While both Funds offer Rights of Accumulation, terms of the
plans differ. Under the Funds Right of Accumulation, when the value of shares of the Fund
you already own in all share classes plus the amount you intend to invest reaches the amount
needed to qualify for reduced sales charges, your added investment will qualify for the
reduced sales charge.
In the New Fund, you may combine the value of your new purchases of Class A shares with the
value of any other Class A shares of the New Fund that you already own. In addition, New
Fund shares held in the following manner cannot be combined with a shareholder new purchase
for purposes of reducing the sales charge:
|
|
|
Shares held indirectly through financial intermediaries other than your
current purchase broker-dealer (for example, shares held in a different
broker-dealers brokerage account or with a bank, an insurance company separate
account or an investment advisor); and |
|
|
|
|
Shares held through an administrator or trustee/custodian of an Employer
Sponsored Retirement Plan (for example a 401(k) plan) but not including
employer sponsored IRAs; |
Reinstatement Privilege If you have sold Class A shares of either Fund and decide
to reinvest in same Fund within a 120 day period, you will not be charged the applicable
sales load on amounts up to the value of the shares you sold. You must provide a written
reinstatement request and payment within 120 days of the date your instructions to sell were
processed.
Both Funds waive Class A sales charges under certain circumstances. Sales charges are waived on
purchases of Class A shares by:
|
(1) |
|
The Funds distributor or any of its affiliates; |
|
|
(2) |
|
Trustees or officers of the Fund; |
|
|
(3) |
|
Officers, directors and employees of the Adviser and their immediate families; |
|
|
(4) |
|
Employees of investment dealers and registered investment advisers authorized
to sell the Funds; |
|
|
(5) |
|
Institutional investors (such as qualified retirement plans, wrap fee plans and
other programs charging asset-based fees) that have received authorization from the
distributor. |
12
|
(6) |
|
Accounts that are held with certain selected financial intermediaries that have
entered into service agreements that have received authorization from the distributor. |
Class C shares
Class C Shares of both Funds are sold without any initial sales charge or contingent deferred sales
charge.
Class I shares
Class I Shares of both Funds are sold without any initial sales charge, with a minimum initial
investment of $100,000 to the following:
|
(1) |
|
Accounts for which the Adviser or any of its affiliates act as fiduciary,
agent, investment adviser or custodian. |
|
|
(2) |
|
Institutional investors (such as qualified retirement plans, wrap fee plans and
other programs charging asset-based fees) that have received authorization from the
distributor. |
|
|
(3) |
|
Advisory clients of EM Capital with a fee-based asset management account. |
The New Fund also permits the purchases of Class I shares by accounts established on behalf of
registered investment advisers or their clients by broker-dealers that charge a transaction fee and
that have entered into agreements with the Adviser.
For purposes of the above mentioned initial sales charge waivers, immediate family is defined to
include a persons spouse, parents and children. The initial investment minimum may be waived for
persons affiliated with EM Capital and its affiliated entities.
Distribution and Service (Rule 12b-1) Fee Comparison
The New Fund will assess the same 12b-1 fees as the Fund. Rule 12b-1 fees compensate dealers and
investment representatives for services and expenses relating to the sale and distribution of a
Funds shares and/or for providing shareholder services. 12b-1 fees are paid from Fund assets on
an ongoing basis, and will increase the cost of your investment.
The 12b-1 fees vary by share class as follows:
|
|
|
Class A shares pay a 12b-1 fee of up to 0.50% of the average daily net assets of each
Fund attributable to Class A shares. This will cause expenses for Class A shares to be
higher and dividends to be lower than for Class I shares. |
|
|
|
|
Class C shares pay a 12b-1 fee of up to 1.00% of the average daily net assets of each
Fund attributable to Class C shares. This will cause expenses for Class C shares to be
higher and dividends to be lower than for Class A and Class I shares. The higher 12b-1 |
13
|
|
|
fee on Class C shares helps the distributor sell Class C shares without an up-front sales
charge. |
|
|
|
Class I shares are not subject to any 12b-1 distribution or service fees. |
The distributor may use up to 0.25% of the 12b-1 fee for shareholder servicing and up to 0.75% for
distribution, as applicable.
Long-term shareholders of Class A shares and Class C shares may pay indirectly more than the
equivalent of the maximum permitted front-end sales charge due to the recurring nature of 12b-1
distribution and service fees.
The Adviser, at its expense, also may provide compensation to dealers in connection with sales of
shares of the Funds.
Comparison of Shareholder Services
Purchase and Redemption Procedures
The New Fund will offer the same or substantially similar shareholder purchase and redemption
services as the Fund, including telephone purchases and redemptions. Shares of the New Fund may be
purchased and redeemed at the net asset value of the shares (plus applicable sales charges or less
applicable contingent deferred sales charges for Class A shares) as next determined following
receipt of a purchase or redemption order, provided the order is received in proper form. Payment
of redemption proceeds from the New Fund generally will be sent by mail or wire within three
business days after processing by the Funds transfer agent after receipt of a redemption request
in proper form. Payment of redemption proceeds from the Fund generally will be received within a
week after processing by the Funds transfer agent after receipt of a redemption request in proper
form.
Minimum Initial and Subsequent Investment Amounts
The New Fund will offer the same account minimums and automatic investment plan as the Fund. The
initial minimum and subsequent investments applicable to both Funds are summarized below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A and Class C Shares* |
|
|
|
|
|
|
Minimum |
|
Minimum Dividend |
|
|
Minimum Initial |
|
Subsequent |
|
and Distribution |
Type of Account |
|
Investment |
|
Investment |
|
Reinvestment |
Regular |
|
$ |
1,000 |
|
|
$ |
100 |
|
|
None |
Retirement |
|
$ |
500 |
|
|
$ |
100 |
|
|
None |
Automatic Investment Plan-Regular |
|
$ |
1,000 |
|
|
$ |
100 |
|
|
None |
Automatic
Investment Plan-Retirement |
|
$ |
500 |
|
|
$ |
100 |
|
|
None |
|
|
|
* |
|
The minimum initial investment for all account types in Class I shares is $100,000. |
14
Both Funds reserve the right to waive or reduce the minimum investment amount under certain
circumstances. Both Funds offer an automatic investment plan, which automatically deducts money
from your bank account and invests it in a Fund through the use of electronic funds transfers or
automatic bank drafts. The Funds permit subsequent investments of $100 under their respective
automatic investment plans.
Redemptions
You may redeem any or all of your shares in the Fund or the New Fund by writing or telephoning the
Fund or New Fund, as well as by participating in either Funds systematic withdrawal plan.
Shareholders with a current account value of at least $5,000 in either Fund may adopt a systematic
withdrawal plan to provide for monthly or quarterly checks of $100 or more. The New Fund also
provides for systematic withdrawals on a periodic basis.
Each Fund reserves the right to make payment in securities rather than cash, known as redemption
in kind. This could occur under extraordinary circumstances, such as a very large redemption that
could affect the Funds operations (for example, more than 1% of the Funds net assets). If the
Fund deems it advisable for the benefit of all shareholders, redemption in kind will consist of
securities equal in market value to your shares. When you convert these securities to cash, you
will pay brokerage charges.
Low Balance Accounts
Both Funds reserve the right to close accounts that fall below $500. If the balance in your
account falls below $500, the Fund may ask you to increase your balance. If it is still below $500
after 60 days, the Fund may close your account and send you the proceeds at the current NAV.
For regular accounts in the New Fund, if at any time your account balance falls below $500 and
there has been no shareholder activity in the account for the past 12 months, the New Fund may
notify you that your account could be closed, unless it is brought up to at least $500 or you
initiate activity in the account. The New Fund may, within 60 days, redeem all of your shares at
the current NAV and close your account by sending you a check to the address of record. This
policy does not apply to any account balances that drop below $500 due to a decline in NAV.
Redemption Fee
Each Fund charges a redemption fee of 2.00% of the total redemption amount if you sell your shares
within 90 days of purchase, subject to certain exceptions and limitations as described below. The
redemption fee is paid directly to the Funds and is designed to offset brokerage commissions,
market impact and other costs associated with short-term trading of Fund shares. For purposes of
determining whether the redemption fee applies, the shares that were held the longest will be
redeemed first. This redemption fee is in addition to any contingent deferred sales charges that
may be applicable at the time of sale.
Both the Fund and the New Fund waive the redemption fee in certain circumstances. The Fund does
not assess a redemption fee on shares representing the reinvestment of dividends and capital gains
distributions. The Fund also does not assess a redemption fee in certain circumstances such as
redemptions of shares through systematic withdrawal plans, redemptions of shares
15
purchased via an automatic investment plan, redemptions requested within 90 days following the
death or disability of the shareholders (or, if a trust, its beneficiary), and redemptions
requested pursuant to minimum required distributions from retirement plans or redemptions initiated
by the Fund. The Fund reserves the right to modify or eliminate the redemption fee or waivers at
any time and will give 60 days prior written notice of any material changes, unless otherwise
provided by law. The redemption fee policy may be modified or amended in the future.
In addition to the circumstances noted above, the Fund reserves the right to grant additional
exceptions based on such factors as system limitations, operational limitations, contractual
limitations and further guidance from the SEC or other regulators.
The New Fund does not charge the redemption fee on involuntary redemptions.
If your shares are held through an investment representative in an omnibus or other group account,
both the Fund and the New Fund rely on the investment representative to assess the redemption fee
on underlying shareholder accounts. The application of redemption fees and exemptions may vary and
certain intermediaries may not apply the exceptions listed above. If you invest through a financial
intermediary, please contact your intermediary for more information regarding when redemption fees
will be applied to the redemption of your shares.
Frequent Trading Policies
Both Funds have adopted frequent trading policies. Frequent trading into and out of a fund can
have adverse consequences for a fund and for long-term shareholders in the fund. The Funds believe
that frequent or excessive short-term trading activity by shareholders of the Fund may be
detrimental to long-term shareholders because those activities may, among other things: (a) dilute
the value of shares held by long-term shareholders; (b) cause the Funds to maintain larger cash
positions than would otherwise be necessary; (c) increase brokerage commissions and related costs
and expenses, and (d) incur additional tax liability. Each Fund therefore discourages frequent
purchases and redemptions by shareholders and it does not make any effort to accommodate this
practice. To protect against such activity, the Board of Trustees of each Fund has adopted
policies and procedures that are intended to permit the Fund to curtail frequent or excessive
short-term trading by shareholders. As described immediately above, the Fund changes a redemption
fee of 2.00% of the total redemption amount on the sale of shares held for less than 90 days. At
the present time the Funds do not impose limits on the frequency of purchases and redemptions. The
Funds reserve the right, however, to impose certain limitations at any time with respect to trading
in shares of the Funds, including suspending or terminating trading privileges in Fund shares, for
any investor whom the Funds believe has a history of abusive trading or whose trading, in the
judgment of the Funds, has been or may be disruptive to the Funds.
Dividends and Distributions
The New Fund will have the same dividend and distribution policy as the Fund. Any income the Funds
receive in the form of interest and dividends is paid out, less expenses, to its shareholders.
Income dividends and capital gains for the Fund are distributed at least annually. Shareholders
16
who have elected to have dividends and capital gains reinvested in the Fund will continue to have
dividends and capital gains reinvested in the New Fund following the Reorganization.
Fiscal Year
The Fund currently operates on a fiscal year ending December 31. Following the Reorganization, the
New Fund will assume the financial history of the Fund and continue to operate on a fiscal year
ending December 31 of each year.
Certain Comparative Information about the Trust and Northern Lights Trust
The Trust is organized as a Massachusetts business trust under a Declaration of Trust and By-Laws
(the Governing Documents) and Northern Lights Trust is organized as a Delaware statutory trust
under an Agreement and Declaration of Trust and By-Laws (also Governing Documents). There are no
material differences in shareholder rights between the Governing Documents of the Trust and
Northern Lights Trust.
THE ADVISER
EM Capital serves as the investment adviser to the Fund and will continue to serve as investment
adviser to the New Fund. Subject to the authority of the Board of Trustees, EM Capital is
responsible or will be responsible for the day-to-day investment decisions of the Funds. Located
at 920 Country Club Drive, Suite 1-E, Moraga, California 94556. EM Capital Management, LLC also
has offices in New Delhi, India, located at 15 Birbal Road, Jangpura Extension, New Delhi, 110014,
India, through its domestic affiliate, EM Capital India Advisory Private, Limited.
Mr. G. W. Bajpai, former Chairman of the Securities Exchange Board of India, serves as Senior
Advisor to EM Capital Management, LLC. Mr. Bajpai also is a former Chairman of Life Insurance
Corporation of India, Indias largest insurance company. The Senior Officers of EM Capital
Management, LLC, Dhruba Gupta and Seth R. Freeman, serve as Co-Portfolio Managers. Their titles and
brief biographies appear in the Portfolio Managers section below.
Pursuant to the Investment Advisory Agreements, each Fund pays or will pay EM Capital, on a monthly
basis, an annual advisory fee that is computed and accrued daily and payable monthly. The
investment advisory fee paid by the Fund on an annual basis based on the net assets of the Fund is
as follows: 1.20% of the first $500 million; 0.90% of the next $500 million; 0.80% of the next $500
million; 0.70% of the next $500 million; 0.65% of the next $1 billion; and 0.60% of the net assets
over $3 billion. The investment adviser may, from time to time, waive some or all of the investment
advisory fee payable to it. The Investment Advisory Agreements provide that EM Capital will
furnish continuous investment advisory and other management and administrative services to each
Fund. Information regarding the factors considered by the Board of Trustees of the Fund in
connection with their approval of the Investment Advisory Agreement with respect to the Fund is
provided in the Funds Annual Report to Shareholders for the fiscal period ended December 31, 2007.
A discussion regarding the basis for the Boards approval of the Investment Advisory Agreement for
the New Fund will be available in the New Funds first shareholder report dated December 31, 2008.
17
EM Capital has agreed contractually to waive its investment advisory fee and to reimburse
expenses, other than dividends on securities sold short, extraordinary or non-recurring expenses
and underlying fund fees and expenses, through April 30, 2009, such that the total annual fund
operating expenses do not exceed 2.30% of average daily net assets for Class A shares, 2.80% of
average daily net assets for Class C shares and 1.80% of average daily net assets for Class I
shares, subject to possible recoupment from the Fund in future years on a rolling three year basis
(within three years after the fees have been waived or reimbursed) if such recoupment can be
achieved within the foregoing expense limits.
Portfolio Managers
EM Capital uses a team approach to investment management. The Portfolio Manager is primarily
responsible for the day-to-day management of the Fund, while the Research Analysts provide
portfolio research and analysis. The members of the team are:
Dhruba Gupta, CA. Mr. Gupta has served as Co-Portfolio Manager for the Fund since July 2007. Mr.
Gupta is the Chief Executive Officer of EM Capital India Advisory Private, Limited located in New
Delhi, India and he is a co-founder of EM Capital Management, LLC. Mr. Gupta provides local market
research and analysis and is responsible for managing the Advisers day-to-day operations in India.
Prior to becoming one of the founders of the Adviser, Mr. Gupta served as Special Advisor to the
Chairman of IFCI Bank, a large Indian economic development bank, from April 2002_to April 2004. Mr.
Gupta has also previously consulted on India policy, infrastructure and investment strategies to
both foreign and India corporations as well as the Organization for Economic Co-Operation and
Development (the OECD). Prior to returning to India, Mr. Gupta served as Deputy Treasurer of the
International Monetary Fund (the IMF) for the last seven years of his 29-year career with the
IMF. Mr. Gupta is a Chartered Accountant and holds a BS in Economics for the London School of
Economics and an M. Phil. in Economics from George Washington University. Mr. Gupta resides in New
Delhi and Virginia.
Seth R. Freeman. Mr. Freeman has served as Co-Portfolio Manager of the Fund since July 2007. Mr.
Freeman is the Chief Executive Officer and a co-founder of EM Capital Management, LLC and he is
based in the Advisers California office. Mr. Freeman is also the Chief Executive Officer and
founder of EM Capital, Inc., an international financial and investment advisory firm specializing
in emerging markets focused on India and Latin America, a position he has held since 2003. From
1996 to 1997, Mr. Freeman served as Senior Emerging Markets consultant to Barr Rosenberg Investment
Management. Mr. Freeman holds an MBA in International Management from Thunderbird, the American
Graduate School of International Management and a BA in Management from St. Marys College of
California. Mr. Freeman is a Certified Insolvency and Restructuring Advisor (CIRA).
Other Information About the Portfolio Managers
Mr. Gupta and Mr. Freeman also manage other accounts for institutional investors and make
investment decisions for each account based on the investment objectives and policies and other
relevant investment considerations applicable to those accounts. The management of multiple
accounts may result in a portfolio manager devoting unequal time and attention to the management of
each account. Even where multiple accounts are managed by the same portfolio
18
manager within the same investment discipline, however, the Adviser may take action with respect to
one account that may differ from the timing or nature of action taken, with respect to another
account. Accordingly, the performance of each account managed by a portfolio manager will vary.
The following table lists the number and types of other accounts managed by the portfolio managers
and assets under management in those accounts as of December 31, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER |
|
|
|
|
|
OTHER |
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL |
|
|
REGISTERED |
|
ASSETS |
|
POOLED |
|
ASSETS |
|
|
|
|
|
ASSETS |
|
ASSETS |
|
|
INVESTMENT |
|
MANAGED |
|
INVESTMENT |
|
MANAGED |
|
|
|
|
|
MANAGED |
|
MANAGED |
PORTFOLIO |
|
COMPANY |
|
($ |
|
VEHICLE |
|
($ |
|
OTHER |
|
($ |
|
($ |
MANAGER |
|
ACCOUNTS |
|
MILLIONS) |
|
ACCOUNTS(1) |
|
MILLIONS) |
|
ACCOUNTS |
|
MILLIONS) |
|
MILLIONS) |
DHRUBA GUPTA |
|
|
0 |
|
|
$ |
0 |
|
|
|
0 |
|
|
$ |
0 |
|
|
|
6 |
|
|
$ |
1.5 |
|
|
$ |
1.5 |
|
SETH R. FREEMAN |
|
|
0 |
|
|
$ |
0 |
|
|
|
0 |
|
|
$ |
0 |
|
|
|
7 |
|
|
$ |
3.0 |
|
|
$ |
3.0 |
|
|
|
|
(1) |
|
Three feeder funds in an offshore master/feed arrangement pay advisory fees based
on the performance of the fund. |
The compensation of the portfolio managers varies with the general success of the Adviser as a
firm. Each portfolio managers compensation consists of a fixed annual salary, plus additional
remuneration based on the overall performance of the Adviser for the given time period. The
portfolio managers compensation is not linked to any specific factors, such as the Funds
performance or asset level.
The Adviser has adopted and implemented policies and procedures, including brokerage and trade
allocation policies and procedures, which it believes address the potential conflicts associated
with managing multiple accounts for multiple clients.
The dollar range of equity securities beneficially owned by the Funds portfolio managers in the
Fund as of June 30, 2007, was as follows:
|
|
|
Portfolio Manager |
|
Dollar Range of Shares |
Dhruba Gupta |
|
None |
Seth R. Freeman |
|
$0 to $100,000 |
It is anticipated that following the Reorganization, the Mr. Freeman will maintain his investment
in the New Fund.
The Statement of Additional Information for the Fund has more detailed information about the
Adviser and the other service providers as well as additional information about the portfolio
managers compensation arrangements, other accounts managed, as applicable, and ownership of
securities of the Fund.
REASONS FOR THE REORGANIZATION
The Reorganization is proposed primarily to provide shareholders with lower annual fund operating
expenses while providing substantially similar or increased shareholder services.
19
At meetings of the Board of Trustees of the Trust held on March 27, 2008 and May 14, 2008, the
Trustees including, the Independent Trustees, considered the Reorganization Plan substantially in
the form attached to this Proxy Statement, and unanimously determined that the Reorganization is in
the best interests of the shareholders of the Fund and that the interests of those shareholders
will not be diluted as a result of the Reorganization. Based on information requested by the Board
and provided by EM Capital, the Trustees compared the investment objectives and principal
strategies of the Fund and the New Fund and concluded that the investment objective and principal
investment strategies of the Fund and the New Fund are identical.
Additionally, the Board noted that EM Capital will continue as investment advisor to the New Fund
and that the management agreement between Northern Lights Trust and EM Capital is not materially
different from the agreement currently in place between the Trust and EM Capital. The Board also
noted that operating expenses, such as administration, accounting and transfer agent fees, are
expected to decline. This decline in fees is expected to reduce total annual fund operating
expenses before fee waivers and/or reimbursements by EM Capital. EM Capital has agreed to waive
fees and/or reimburse expenses to the extent necessary to maintain the New Funds net operating
expenses (excluding brokerage costs; borrowing costs, such as (a) interest and (b) dividends on
securities sold short; taxes; acquired fund fees and expenses; and extraordinary expenses) at 2.30%
of average daily net assets for Class A shares, 2.80% of average daily net assets for Class C
shares and 1.80% of average daily net assets Class I shares, respectively, through April 30, 2009.
However, in the near-term, because total annual fund operating expenses are expected to remain
above the amount set in the expense limitation agreement between the New Fund and EM Capital, net
annual operating expenses are expected to remain unchanged until the New Fund is widely distributed
and assets increase. Finally, the Board considered the increased distribution opportunities
available through the Northern Lights Trust.
The Board also considered the cost and tax consequences of the Reorganization. The Board noted
that EM Capital has agreed to bear the expenses associated with the Reorganization and it is
anticipated that the Fund and its shareholders will not bear any material direct or indirect
expenses. In addition, the Board considered the fact that the Reorganization is intended to be a
tax-free reorganization for federal income tax purposes, that there will be no direct or indirect
federal income tax consequences of the Reorganization to the Fund or its shareholders.
Based on the factors discussed above, the Board of Trustees of the Trust, including a majority of
the Independent Trustees, unanimously determined that the Reorganization is in the best interests
of the Fund, that the terms of the Agreement and Plan of Reorganization are fair and reasonable,
and that the interests of shareholders of the Fund will not be diluted as a result of the
Reorganization.
SUMMARY OF THE REORGANIZATION PLAN AND AGREEMENT
Below is a summary of the important terms of the Reorganization Plan. This summary is qualified in
its entirety by reference to the Reorganization Plan itself, which is set forth in Exhibit A to
this Proxy Statement, and which we encourage you to read in its entirety.
20
General Plan of Reorganization
The Reorganization Plan outlines several steps that will occur on the Closing Date, provided the
Reorganization is approved by shareholders. First, the Fund will transfer all of its assets to the
New Fund in exchange solely for shares of the New Fund and an assumption by the New Fund of all of
the liabilities of the Fund. Immediately thereafter, the Fund will liquidate and distribute the
shares received from the New Fund to its shareholders in exchange for their shares of the Fund.
This will be accomplished by opening an account on the books of the New Fund in the name of each
shareholder of record of the Fund and by crediting to each such account with the shares due to the
shareholder in the Reorganization. Such exchange shall be accomplished on a class equivalent
basis, i.e., Class A shares of the Fund shall be exchanged for Class A (or similar type) shares of
the New Fund and Class I shares of the Fund shall be exchanged for Class I (or similar type) shares
of the New Fund. Every shareholder will own the same number of shares of the New Fund as the
number of Fund shares held by the shareholder immediately before the Reorganization. For example,
if you held 100 Class A shares of the Fund immediately prior to the Closing Date, those shares
would be canceled and you would receive 100 Class A shares of the New Fund. The value of your
investment immediately after the Reorganization will be the same as it was immediately prior to the
Reorganization. All of these transactions would occur as of the Closing Date.
Other Provisions
The Reorganization is subject to a number of conditions set forth in the Reorganization Plan.
Certain of these conditions may be waived by the Board of Trustees of each of the Trust and
Northern Lights Trust. The significant conditions include approval of the Reorganization Plan by shareholders of the Fund (which
may not be waived). The Reorganization Plan may be terminated and the Reorganization abandoned at
any time prior to the Closing Date, before or after approval by the shareholders of the Funds, by
the Board of Trustees of the Trust or the Board of Trustees of Northern Lights Trust. In addition,
the Reorganization Plan may be amended upon mutual agreement. However, shareholder approval would
be required in order to amend the Reorganization Plan subsequent to the shareholders meeting in a
manner that would change the method for determining the number of shares to be issued to
shareholders of the Fund.
OTHER SERVICE PROVIDERS
Upon reorganization, the New Fund will have a different distributor, administrator and fund
accountant than the Fund. Below is information on the new service providers, as well as
information on service providers who will continue to provide substantially similar services to the
New Fund as they currently provide to the Fund. A vote in favor of the proposed Reorganization
will, in effect, constitute an approval by shareholders of the new service providers as governed by
written service agreements and other agreements entered into by Northern Lights Trust.
21
Independent Registered Public Accounting Firm
Briggs, Bunting & Dougherty, LLP, located at Two Penn Center Plaza, Suite 820, Philadelphia, PA
19102-1732 serves as the Funds independent registered public accounting firm and will continue to
serve as the independent registered public accounting firm for the New Fund. Briggs, Bunting &
Dougherty performs an annual audit of each Funds financial statements and provides other services
related to filings with respect to securities regulations.
Distributor
Upon reorganization, Northern Lights Distributors, LLC, 4020 South 147th Street, Suite 2, Omaha,
Nebraska 68137 (the Distributor), will be the exclusive agent for distribution of shares of the
New Fund. The Distributor is obligated to sell the shares of the New Fund on a best efforts basis
only against purchase orders for the shares. Shares of the Funds are offered to the public on a
continuous basis. Foreside Distribution Services, LP, 3435 Stelzer Road, Columbus, Ohio 43219,
currently provides similar services for the Fund.
Administrator, Fund Accounting and Transfer Agency Services
Upon reorganization, Gemini Fund Services, LLC (GFS), will become the New Funds administrator,
fund accountant, transfer agent and dividend disbursing agent. GFS is located at 4020 South 147th
Street, Suite 2, Omaha, NE 68137. GFS will maintain the records of each shareholders account,
answers shareholders inquiries concerning their accounts, processes purchases and redemptions of
the New Funds shares, act as dividend and distribution disbursing agent and perform other transfer
agent and shareholder service functions. In addition, GFS will provide the New Fund with fund
accounting services, which include the maintenance of accounting books and records, daily
accounting, the provision of certain monthly reports, record-keeping and other management-related
services. Finally, GFS also will provide the New Fund with administrative services, including all
regulatory reporting and necessary office equipment, personnel and facilities. Citi Fund Services
Ohio, Inc., 3425 Stelzer Road, Columbus, Ohio 43219 currently provides similar services to the
Fund.
Custodian
Upon reorganization, Bank of New York, located at One Wall Street, 25th Floor, New York, NY 10286
(the Custodian), will become the New Funds custodian. The Custodian will act as the New Funds
depository, safe keep its portfolio securities, collect all income and other payments with respect
thereto, disburse funds at the New Funds request and maintain records in connection with its
duties. Union Bank of California, NA, 350 California Street, San Francisco, California 94104,
currently provides similar services to the Fund.
CERTAIN INFORMATION REGARDING
THE TRUSTEES AND OFFICERS
Trustees and Officers
In connection with the Reorganization, the operations of the New Fund will be overseen by North
Lights Trusts Board of Trustees in a substantially similar manner as the Fund is overseen by the
Trusts Board of Trustees. The business of Northern Lights Trust is managed under the
22
direction of the Board in accordance with Governing Documents, which have been filed with the SEC.
The Board consists of five (5) individuals, four (4) of whom are Independent Trustees. The Trusts
Board of Trustees consists of five (5) Trustees all of whom are Independent Trustees. Pursuant to
the Governing Documents of Northern Lights Trust, the Trustees shall elect officers including a
President, a Secretary, a Treasurer, a Principal Executive Officer and a Principal Accounting
Officer. The Trustees also retain the power to conduct, operate and carry on the business of
Northern Lights Trust and have the power to incur and pay any expenses, which, in the opinion of
the Trustees, are necessary or incidental to carry out any of Northern Lights Trusts purposes.
The Trustees of the Trust possess similar powers to elect officers and conduct, operate and carry
on the business of the Trust. The Trustees, officers, employees and agents of Northern Lights
Trust, when acting in such capacities, shall not be subject to any personal liability except for
his or her own bad faith, willful misfeasance, gross negligence or reckless disregard of his or her
duties. The Trust offers the same limitation of liability to its Trustees, officers, employees and
agents. Following is a list of the Trustees and executive officers of Northern Lights Trust and
their principal occupation over the last five years. Unless otherwise noted, the address of each
Trustee and officer is 4020 South 147th Street, Suite 2, Omaha, Nebraska 68137.
Independent Trustees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
|
|
Portfolios in |
|
|
|
|
|
|
|
|
Fund |
|
|
|
|
|
|
|
|
Complex(2) |
|
Other |
Name, Address and |
|
Position/Term |
|
Principal Occupation |
|
Overseen by |
|
Directorships held |
Age |
|
of Office(1) |
|
During the Past Five Years |
|
Trustee |
|
by Trustee |
L. Merill Bryan(3)
Age: 64
|
|
Trustee
Since 2005
|
|
Retired. Formerly,
Senior Vice President and
Chief Information Officer
of Union Pacific
Corporation
|
|
|
31 |
|
|
AdvisorOne Funds (5
portfolios) |
|
|
|
|
|
|
|
|
|
|
|
Anthony J. Hertl
Age: 58
|
|
Trustee
Since 2005
|
|
Consultant to small and
emerging businesses since
2000; Retired in 2000 as
Vice President of Finance
and Administration of
Marymount College,
Tarrytown, New York where
he served in this
capacity for four years.
Prior thereto, he spent
thirteen years at
Prudential Securities in
various management
capacities including
Chief Financial Officer -
Specialty Finance Group,
Director of Global
Taxation and Capital
Markets Controller. Mr.
Hertl is also a Certified
Public Accountant.
|
|
|
31 |
|
|
AdvisorOne Funds (5
portfolios); Satuit
Capital Management
Trust; The Z-Seven
Fund, Inc. and
Greenwich Advisors
Trust |
|
|
|
|
|
|
|
|
|
|
|
Gary W. Lanzen
Age: 54
|
|
Trustee
Since 2005
|
|
Chief Investment Officer
(2006 present),
formerly President,
Orizon Investment
Counsel, LLC; Partner,
Orizon Group, Inc. (a
financial services
company)
|
|
|
31 |
|
|
AdvisorOne Funds (5
portfolios) |
23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
|
|
Portfolios in |
|
|
|
|
|
|
|
|
Fund |
|
|
|
|
|
|
|
|
Complex(2) |
|
Other |
Name, Address and |
|
Position/Term |
|
Principal Occupation |
|
Overseen by |
|
Directorships held |
Age |
|
of Office(1) |
|
During the Past Five Years |
|
Trustee |
|
by Trustee |
Mark Taylor
Age: 44
|
|
Trustee Since 2007
|
|
Professor (John P. Begley
Endowed Chair in
Accounting), Creighton
University since 2002)
|
|
|
31 |
|
|
Lifetime
Achievement Mutual
Fund (LFTAX)
(Director and Audit
Committee Chairman) |
24
Interested Trustees and Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
|
|
Portfolios in Fund |
|
|
|
|
|
|
Principal Occupation |
|
Complex(2) |
|
Other |
Name, Address and |
|
Position/Term |
|
During the Past Five |
|
Overseen by |
|
Directorships |
Age |
|
of Office(1) |
|
Years |
|
Trustee |
|
held by Trustee |
Michael Miola(4)
Age: 55
|
|
Trustee
Since 2005
|
|
Chief Executive
Officer and Manager
of Gemini Fund
Services, LLC;
Co-Owner and
Co-Managing Member
of NorthStar
Financial Services
Group, LLC; Manager
of Orion Advisor
Services, LLC, CLS
Investment Firm,
LLC, GemCom, LLC
and Fund Compliance
Services, LLC;
Director of
Constellation Trust
Company.
|
|
|
31 |
|
|
AdvisorOne Funds (5
portfolios);
Constellation Trust
Co. |
|
|
|
|
|
|
|
|
|
|
|
Andrew Rogers
450 Wireless Blvd.
Hauppauge, NY 11788
Age: 39
|
|
President
Since June 2006
|
|
President and
Manager, Gemini
Fund Services, LLC
(since 3/2006),
formerly Senior
Vice President and
Director of
Administration
(2001 - 2005);
Manager, Fund
Compliance
Services, LLC
(since 3/2006);
Manager (since
3/2006) and
President (since
2004), GemCom LLC.
|
|
|
N/A |
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
Emile R. Molineaux
450 Wireless Blvd.
Hauppauge, NY 11788
Age: 46
|
|
Secretary
Since 2005
|
|
General Counsel,
CCO and Senior Vice
President, Gemini
Fund Services, LLC;
Secretary and CCO,
Fund Compliance
Services, LLC;
(2003 - Present);
In-house Counsel,
The Dreyfus Funds
(1999 - 2003)
|
|
|
N/A |
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
Kevin E. Wolf
450 Wireless Blvd.
Hauppauge, NY 11788
Age: 38
|
|
Treasurer
Since June 2006
|
|
Director of Fund
Administration,
Gemini Fund
Services, LLC (2006
- Present); Vice
President, Fund
Administration,
Gemini Fund
Services, LLC (2004
- 2006);
Vice-President,
GemCom, LLC (2004 -
Present); Senior
Fund Administrator,
Gemini Fund
Services, LLC
(2001-2004).
|
|
|
N/A |
|
|
N/A |
25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
|
|
Portfolios in Fund |
|
|
|
|
|
|
Principal Occupation |
|
Complex(2) |
|
Other |
Name, Address and |
|
Position/Term |
|
During the Past Five |
|
Overseen by |
|
Directorships |
Age |
|
of Office(1) |
|
Years |
|
Trustee |
|
held by Trustee |
Lynn Bowley
4020 So. 147th Street
Omaha, NE 68137
Age: 49
|
|
Chief Compliance
Officer
Since June 2007
|
|
Compliance Officer
of Fund Compliance
Services, LLC
(01/07 - present);
Vice President of
Investment Support
Services for Mutual
of Omaha Companies
(2002 - 2006);
First Vice
President of
Variable L&A
Product Accounting
and Reporting for
Mutual of Omaha
Companies (1998 -
2002).
|
|
|
N/A |
|
|
N/A |
|
|
|
(1) |
|
The term of office for each Trustee and Officer listed above will continue
indefinitely. |
|
(2) |
|
The term Fund Complex refers to Northern Lights Fund Trust and Northern Lights
Variable Trust. |
|
(3) |
|
From December 2006 through April 2007, L. Merill Bryan, a non-interested trustee
of the Trust, invested $143,080 in a limited liability company (LLC). This investment is
required to be disclosed because one of the other members of the LLC is under common control
with the Funds distributor. As of May 2007, Mr. Bryan is no longer a member of the LLC. |
|
(4) |
|
Michael Miola is an interested person of the Trust as that term is defined
under the 1940 Act, because of his affiliation with Gemini Fund Services, LLC, (the Trusts
Administrator, Fund Accountant, Transfer Agent) and Aquarius Fund Distributors, LLC (the Trusts
Distributor). |
Board Committees
Audit Committee
The Board of Trustees of both the Fund and the New Fund have Audit Committees that consists of all
the Trustees who are not interested persons of the Trust within the meaning of the 1940 Act whose
function is to oversee the financial reporting and internal controls of the Trust. The Audit
Committees responsibilities primarily include, among other duties,: (i) recommending to the Board
of Trustees the selection of an independent registered public accounting firm; (ii) annually
reviewing the scope of the proposed audit, the audit procedures to be utilized and the proposed
audit fees; (iii) reviewing the annual audit with the independent registered public accounting
firm; and (iv) reviewing the adequacy and effectiveness of internal controls and procedures. The
Audit committees operate pursuant to Audit Committee Charters.
Nominating Committee
Each Board of Trustees has a Nominating Committee that consists of all the Trustees who are not
interested persons of the Trust within the meaning of the 1940 Act. The Nominating Committee is
responsible for seeking and reviewing nominee candidates for consideration as Independent Trustees
as is from time to time considered necessary or appropriate. The Nominating Committee generally
will not consider shareholder nominees.
Compensation
Trustees of the Fund not affiliated with Citi or the Adviser receive a quarterly fee of $2,000; a
regular meeting fee of $3,000 per meeting; a fee of $1,000 for special in-person meetings (meetings
that are not regularly scheduled meetings); a telephonic meeting fee of $500 and a $500 per meeting
fee for all other committee meetings. Trustees are also reimbursed for all out-of-pocket expenses
relating to attendance at such meetings
26
Each Trustee of the New Fund who is not affiliated with the Northern Lights or Adviser receives a
quarterly fee of $7,500, as well as reimbursement for any reasonable expenses incurred attending
the meetings. The interested persons who serve as Trustees of the Northern Lights receive no
compensation for their services as Trustees. None of the executive officers receive compensation
from the Northern Lights.
EXPENSES OF THE REORGANIZATION
EM Capital has agreed to bear all expenses associated with the transactions contemplated by the
Reorganization Plan, including expenses associated with the solicitation of proxies, currently
estimated to equal approximately $15,000.
FEDERAL INCOME TAX CONSEQUENCES
The Reorganization is intended to qualify for Federal income tax purposes as a tax-free
reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the Code). No gain or loss will be recognized as a consequences of the Reorganization
by either Fund (except to the extent that such assets consist of contracts described in Section
1256 of the Code), nor will a gain or loss will be recognized by the shareholders of the Fund as a
result of the New Funds distribution of its corresponding New Fund shares to such shareholders in
exchange for such shareholders Fund shares. In addition, a shareholders tax basis for shares
held in the Fund will carryover to the shares of the corresponding New Fund acquired in the
Reorganization, and the holding period for shares held as a capital asset also will carryover to
the corresponding New Fund shares received in the Reorganization.
Immediately prior to the Reorganization, each Fund shall have declared and paid a distribution or
distributions that, together with all previous distributions, shall have the effect of distributing
to its shareholders: (i) all of its investment company taxable income and all of its net realized
capital gains, if any, for the period from the close of its last fiscal year to a specified time
prior to the Reorganization on the Closing Date, and (ii) any undistributed investment company
taxable income and net realized capital gains from any period to the extent not otherwise already
distributed.
The forgoing relates only to the Federal income tax consequences of the Reorganization. You should
consult your tax adviser regarding the effect, if any, of the proposed Reorganization in light of
your individual circumstances, including any state and local tax consequences.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
A principal shareholder is any person who owns (either of record or beneficially) 5% or more of the
outstanding shares of a fund. A control person is one who owns, either directly or indirectly,
27
more than 25% of the voting securities of a fund or acknowledges the existence of such control. As
a controlling shareholder, each of these persons could control the outcome of any proposal
submitted to the shareholders for approval, including approval of the Reorganization. As of the
July 18, 2008, the following shareholders were considered to be either a control person or
principal shareholder of the Fund:
Class A Shares
|
|
|
|
|
|
|
|
|
Percent of |
|
|
Name and Address |
|
Ownership |
|
Nature of Ownership |
Seth R. Freeman and M. Maureen Freeman
|
|
|
42.66 |
% |
|
Beneficial |
21 Broadmoor Street
Moraga, CA 94556 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert V. Trask and Mary L. Trask
|
|
|
19.69 |
% |
|
Beneficial |
3212 Falcon Point
Springfield, IL 62711 |
|
|
|
|
|
|
|
|
|
|
|
|
|
TD Ameritrade Clearing, Inc.
|
|
|
11.72 |
% |
|
Record |
1005 North Ameritrade Place
Bellevue, NE 68005 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Francis W. Jump, Jr. and Joan Marie Jump
|
|
|
6.67 |
% |
|
Beneficial |
2007 Jump Family Trust
3615 Powell Drive
Lafayette, CA 94549 |
|
|
|
|
|
|
|
|
|
|
|
|
|
E*Trade Clearing LLC
|
|
|
7.63 |
% |
|
Record |
34 Exchange Place
Jersey City, NJ 07311 |
|
|
|
|
|
|
Class I Shares
|
|
|
|
|
|
|
|
|
Percent of |
|
|
Name and Address |
|
Ownership |
|
Nature of Ownership |
Seth R. Freeman and M. Maureen Freeman
|
|
|
100.00 |
% |
|
Beneficial |
21 Broadmoor Street
Moraga, CA 94556 |
|
|
|
|
|
|
SECURITY OWNERSHIP OF MANAGEMENT
As of the close of business July 18, 2008 (Record Date), the Trustees and officers of the Trust,
as a group, beneficially owned no shares of the Fund.
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VOTING SECURITIES AND VOTING INFORMATION
General Information
The close of business on July 18, 2008 is the Record Date for determining the shareholders entitled
to notice of and to vote at the meeting or any adjournment(s) thereof. There were 27,670.569
shares of beneficial interest of the Fund issued and outstanding as of the Record Date. Only
shareholders of record on the Record Date are entitled to vote at the meeting. Each shareholder is
entitled to one (1) vote per share held, and fractional votes for fractional shares held, on any
matter submitted to a vote at the meeting. The presence, in person or by proxy, of the holders of
at least a majority of the aggregate number of shares of the Fund entitled to vote is necessary to
constitute a quorum for the Fund at the meeting. The Trusts Governing Documents require a vote of
more than 50% of the outstanding voting shares of the Fund to approve a reorganization.
Voting Rights
Abstentions and broker non-votes (i.e. shares held by brokers or nominees, typically in street
name, as to which (i) instructions have not been received from the beneficial owners or persons
entitled to vote and (ii) the broker or nominee does not have discretionary voting power on a
particular matter) will be treated as present for purposes of determining a quorum. In addition,
under the rules of the New York Stock Exchange, if a broker has not received instructions from
beneficial owners or persons entitled to vote and the proposal to be voted upon may affect
substantially a shareholders rights or privileges, the broker may not vote the shares as to that
proposal even if it has discretionary voting power. As a result, these shares also will be treated
as broker non-votes for purposes of proposals that may affect substantially a shareholders
rights or privileges (but will not be treated as broker non-votes for other proposals, including
adjournment of the special meeting).
Abstentions and broker non-votes will be treated as shares voted against a proposal. Treating
broker non-votes as votes against a proposal can have the effect of causing shareholders who choose
not to participate in the proxy vote to prevail over shareholders who cast votes or provide voting
instructions to their brokers or nominees. In order to prevent this result, the Trust may request
that selected brokers or nominees refrain from returning proxies on behalf of shares for which
voting instructions have not been received from beneficial owners or persons entitled to vote. The
Trust also may request that selected brokers or nominees return proxies on behalf of shares for
which voting instructions have not been received if doing so is necessary to obtain a quorum.
If (a) a quorum is not present at the meeting, or (b) a quorum is present but sufficient votes in
favor of the proposal have not been obtained, then the persons named as proxies may propose one or
more adjournments of the meeting with respect to the Fund, without further notice to the
shareholders of the Fund, to permit further solicitation of proxies, provided such persons
determine, after consideration of all relevant factors, including the nature of the proposal, the
percentage of votes then cast, the percentage of negative votes then cast, the nature of the
proposed solicitation activities and the nature of the reasons for such further solicitation, that
an adjournment and additional solicitation is reasonable and in the interests of shareholders. The
persons named as proxies will vote those proxies that such persons are required to vote FOR the
proposal, as well as proxies for which no vote has been directed, in favor of such an adjournment
and will vote those proxies required to be voted AGAINST such proposal against such adjournment.
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A shareholder of the Fund who objects to the proposed Reorganization will not be entitled under
either Massachusetts law or the Declaration of Trust of the Trust to demand payment for, or an
appraisal of, his or her shares. However, shareholders should be aware that the Reorganization as
proposed is not expected to result in recognition of gain or loss to shareholders for federal
income tax purposes. If the Reorganization is consummated, shareholders will be free to redeem the
shares of the New Fund that they receive in the transaction at their then-current net asset value.
Shares of the Fund may be redeemed at any time prior to the consummation of the Reorganization.
Shareholders of the Fund may wish to consult their tax advisors as to any different consequences of
redeeming their shares prior to the Reorganization or exchanging such shares in the Reorganization.
The meeting may be adjourned from time to time by the vote of a majority of the shares represented
at the meeting, whether or not a quorum is present. If the meeting is adjourned to another time or
place, notice need not be given of the adjourned meeting at which the adjournment is taken, unless
a new record date of the adjourned meeting is fixed. At any adjourned meeting, the Trust may
transact any business which might have been transacted at the original meeting.
The individuals named as proxies on the enclosed proxy card will vote in accordance with the
shareholders direction, as indicated thereon, if the proxy card is received and is properly
executed. If a shareholder properly executes a proxy and gives no voting instructions with respect
to a proposal, the shares will be voted in favor of such proposal. The proxies, in their
discretion, may vote upon such other matters as may properly come before the meeting. The Board of
Trustees of the Trust is not aware of any other matters to come before the meeting.
REVOCATION OF PROXIES
If you return a properly executed proxy card, but later wish to revoke it, you may do so at
any time before it is voted by doing any of the following:
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§ |
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delivering written notice of the proxys revocation to the President of the Trust at the
above address prior to the meeting; |
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§ |
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submitting a properly-executed proxy bearing a later date, but dated prior to the
meeting; |
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§ |
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submitting a subsequent telephone vote; or |
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§ |
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attending and voting in person at the meeting and giving oral notice of revocation to
the Chairman of the meeting. |
SOLICITATION OF PROXIES
We are soliciting these proxies by U.S. mail, and may also solicit them in person, by
telephone, by facsimile, or by any other electronic means. EM Capital, the investment adviser
30
for
the Fund and proposed investment adviser for the New Fund, is paying for the costs of this proposed
reorganization, and is paying for the expense of preparing, printing, and mailing of this Proxy
Statement, the enclosed proxy card, and other expenses relating to the shareholder meeting.
Employees of the EM Capital and GFS may make solicitations to obtain the necessary shareholder
representation at the meeting, but will receive no additional compensation for doing so. We, or
our appointed agent, will count proxies that are properly authorized by telephone or
electronically-transmitted instruments, to the extent that we are able to verify your identity when
you authorize your proxy in that manner.
OTHER BUSINESS
The Board of Trustees of the Trust knows of no business to be brought before the meeting other than
the matters set forth in this Proxy Statement. Should any other matter requiring a vote of the
shareholders of the Fund arise, however, the proxies will vote thereon according to their best
judgment in the interests of the Fund and the shareholders of the Fund.
The Trust and Northern Lights Trust do not hold annual meetings of shareholders. There normally
will be no meeting of shareholders for the purpose of electing Trustees of Northern Lights Trust
unless and until such time as less than a majority of the Trustees holding office have been elected
by the shareholders, at which time the Trustees then in office will call a shareholders meeting
for the election of Trustees. After the Reorganization is approved, shareholders wishing to submit
proposals for inclusion in the Proxy Statement for any subsequent shareholder meeting should send
their written submissions to the principal executive offices of Northern Lights Fund Trust at 450
Wireless Blvd., Hauppauge, New York 11788. Shareholder proposals must meet certain requirements
and there is no guarantee that any proposal will be presented at a shareholders meeting.
31
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the Agreement) is made as of this 21th day of July
2008, by and between EM Capital India Gateway Fund (the Transferring Fund), a series of The
Coventry Funds Trust (the Coventry Trust), EM Capital Management, LLC and EM Capital India
Gateway Fund (the Acquiring Fund), a series of Northern Lights Fund Trust (the Northern Trust).
The Coventry Trust is a Massachusetts business trust, with its principal place of business at 3435
Stelzer Road, Columbus, OH 43219. The Northern Trust is a Delaware statutory trust, with its
principal place of business at 450 Wireless Blvd., Hauppauge, NY 11788.
The reorganization will consist of (i) the transfer of all of the assets net of liabilities of
the Transferring Fund in exchange solely for shares of beneficial interest, without par value per
share, of the Acquiring Fund (the Acquiring Fund Shares); (ii) the assumption by the Acquiring
Fund of all of the liabilities of the Transferring Fund; and (iii) the distribution, after the
Closing Date, as that term is define in paragraph 3.1, of the Acquiring Fund Shares to the
shareholders of the Transferring Fund in liquidation of the Transferring Fund as provided herein,
all upon the terms and conditions hereinafter set forth in this Agreement (the Reorganization).
WHEREAS, the Transferring Fund and the Acquiring Fund are each a separate investment series of
an open-end, registered investment company of the management type and the Transferring Fund owns
securities that generally are assets of the character in which the Acquiring Fund is permitted to
invest;
WHEREAS, the Transferring Fund and the Acquiring Fund are authorized to issue their shares of
beneficial interest;
WHEREAS, the parties desire to change the place and form of organization of the Transferring
Fund from a series of a Massachusetts business trust to a series of a Delaware statutory trust;
WHEREAS, the Board of Trustees of the Coventry Trust, including a majority of the Trustees who
are not interested persons as that term is defined in Section 2(a)(19) of the Investment Company
Act of 1940, as amended (the 1940 Act) (Independent Trustees), has determined that the
transactions contemplated herein will be in the best interests of the Transferring Fund and has
further determined that the interests of the existing shareholders of the Transferring Fund will
not be diluted as a result of the transactions contemplated herein;
WHEREAS, the Board of Trustees of the Northern Trust, including a majority of the
Independent Trustees, has determined that the transactions contemplated herein will be in the
best interests of the Acquiring Fund and has further determined that the interests of the
existing shareholders of the Acquiring Fund will not be diluted as a result of the
transactions contemplated herein;
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NOW, THEREFORE, in consideration of the representations, warranties and agreements hereinafter
set forth, the parties hereto agree as follows:
ARTICLE I
TRANSFER OF ASSETS OF THE TRANSFERRING FUND IN EXCHANGE FOR THE ACQUIRING FUND SHARES AND
ASSUMPTION OF TRANSFERRING FUND LIABILITIES AND LIQUIDATION OF THE TRANSFERRING FUND
1.1 THE EXCHANGE. Subject to the terms and conditions herein set forth and on the basis of
the representations and warranties contained herein, the Transferring Fund agrees to transfer all
of the Transferring Funds assets as set forth in paragraph 1.2 to the Acquiring Fund. The
Acquiring Fund agrees in exchange for the Transferring Funds assets (i) to deliver to the
Transferring Fund the number of Acquiring Fund Shares, including fractional Acquiring Fund Shares,
computed in the manner and as of the time and date set forth in paragraphs 2.2 and 2.3; and (ii) to
assume all of the liabilities of the Transferring Fund, as set forth in paragraph 1.3. Such
transactions shall take place on the Closing Date provided for in paragraph 3.1.
1.2 ASSETS TO BE ACQUIRED. The assets of the Transferring Fund to be acquired by the
Acquiring Fund shall consist of all property, including, without limitation, all cash, securities,
commodities, interests in futures and dividends or interest receivables, that is owned by the
Transferring Fund and any deferred or prepaid expenses shown as an asset on the books of the
Transferring Fund on the Closing Date.
The Transferring Fund has provided the Acquiring Fund with its most recent unaudited statement
of investments, statement of assets and liabilities, statement of operations and statement of
changes in net assets, which contain a list of all of the Transferring Funds assets as of the date
thereof. The Transferring Fund hereby represents that as of the date of the execution of this
Agreement there have been no material changes in its financial position as reflected in said
financial statements other than those occurring in the ordinary course of its business in
connection with the purchase and sale of securities and the payment of its normal operating
expenses and the payment of dividends, capital gains distributions and redemption proceeds to
shareholders. The Transferring Fund reserves the right to sell any of such securities, but will
not, without the prior written approval of the Acquiring Fund, acquire any additional securities
other than securities of the type in which the Acquiring Fund is permitted to invest.
The Acquiring Fund will, within a reasonable time prior to the Closing Date, furnish the
Transferring Fund with a list of the securities, if any, on the Transferring Funds list referred
to in the second sentence of this paragraph that do not conform to the Acquiring Funds investment
objective, policies, and restrictions. The Transferring Fund will, within a reasonable period of
time (not less than 30 days) prior to the Closing Date, furnish the Acquiring Fund with a list of
its portfolio securities and other investments. In the event that the Transferring Fund holds any
investments that the Acquiring Fund may not hold, the Transferring Fund, if requested by the
Acquiring Fund, will dispose of such securities prior to the Closing Date. In addition, if it is
determined that the Transferring Fund and the Acquiring Fund portfolios, when aggregated, would
contain investments exceeding certain percentage limitations imposed upon the Acquiring
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Fund with respect to such investments, the Transferring Fund if requested by the Acquiring
Fund will dispose of a sufficient amount of such investments as may be necessary to avoid exceeding
such limitations as of the Closing Date. Notwithstanding the foregoing, nothing herein will
require the Transferring Fund to dispose of any investments or securities if, in the reasonable
judgment of the Transferring Fund, such disposition would violate the Transferring Funds fiduciary
duty to its shareholders.
1.3 LIABILITIES TO BE ASSUMED. The Transferring Fund will endeavor to discharge all of its
known liabilities and obligations prior to the Closing Date. The Acquiring Fund shall assume all
of the Transferring Funds liabilities and obligations of any kind whatsoever, whether absolute,
accrued, contingent or otherwise in existence on the Closing Date.
1.4 LIQUIDATION AND DISTRIBUTION. On or as soon after the Closing Date as is conveniently
practicable, (a) the Transferring Fund will liquidate and distribute pro rata to the Transferring
Funds shareholders (the Transferring Fund Shareholders) of record, determined as of the close of
business on the New York Stock Exchange on the business day next preceding the Closing Date (such
time and date being hereinafter called the Valuation Date), the Acquiring Fund Shares received by
the Transferring Fund pursuant to paragraph 1.1; and (b) the Transferring Fund will thereupon
proceed to termination as set forth in paragraph 1.8 below. Such liquidation and distribution will
be accomplished by the transfer of the Acquiring Fund Shares then credited to the account of the
Transferring Fund on the books of the Acquiring Fund to open accounts on the share records of the
Acquiring Fund in the names of the Transferring Fund Shareholders and representing the respective
pro rata number of the Acquiring Fund Shares due such shareholders. Such liquidation and
distribution shall be accomplished on a class equivalent basis, i.e., Class A shares of the
Transferring Fund shall be exchanged for Class A (or similar type) shares of the Acquiring Fund,
Class C shares of the Transferring Fund shall be exchanged for Class C (or similar type) shares of
the Acquiring Fund and Class I shares of the Transferring Fund shall be exchanged for Class I (or
similar type) shares of the Acquiring Fund. All issued and outstanding shares of the Transferring
Fund will simultaneously be canceled on the books of the Transferring Fund. The Acquiring Fund
shall not issue certificates representing the Acquiring Fund Shares in connection with such
exchange.
1.5 OWNERSHIP OF SHARES. Ownership of Acquiring Fund Shares will be shown on the books of the
Acquiring Funds transfer agent. Shares of the Acquiring Fund will be issued in the manner
described in the proxy statement (the Proxy Statement) which will have been distributed to
shareholders of the Transferring Fund as described in paragraph 4.1(o).
1.6 TRANSFER TAXES. Transferring Fund Shareholders shall pay any transfer taxes payable upon
the issuance of Acquiring Fund Shares. Any transfer taxes payable upon issuance of the Acquiring
Fund Shares in a name other than the registered holder of the Transferring Fund shares on the books
of the Transferring Fund as of that time shall, as a condition of such issuance and transfer, be
paid by the person to whom such Acquiring Fund Shares are to be issued and transferred.
1.7 REPORTING RESPONSIBILITY. Any regulatory reporting responsibility of the Transferring
Fund is and shall remain the responsibility of the Transferring Fund up to and including the
Closing Date and such later date on which the Transferring Fund is terminated.
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1.8 TERMINATION. The Coventry Trust shall take all necessary and appropriate steps under
applicable law to make all distributions pursuant to paragraph 1.4 and terminate the Transferring
Fund promptly following the Closing Date.
ARTICLE II
VALUATION
2.1 VALUATION OF ASSETS. The value of the Transferring Funds assets to be acquired by the
Acquiring Fund hereunder shall be the value of such assets computed as of the close of business on
the Valuation Date (as defined in paragraph 1.4), using the valuation procedures set forth in the
Coventry Trusts Declaration of Trust and the Transferring Funds then current prospectus and
statement of additional information or such other valuation procedures as may be mutually agreed
upon by the parties.
2.2 VALUATION OF SHARES. For purposes of the Reorganization, the net asset value per share of
the Acquiring Fund Shares shall be equal to the Transferring Funds net asset value per share
computed as of the close of business on the New York Stock Exchange on the Valuation Date.
2.3 SHARES TO BE ISSUED. The number of full and fractional Acquiring Fund Shares to be issued
in exchange for the Transferring Funds assets shall be equal to the number of full and fractional
Transferring Fund Shares issued and outstanding on the Valuation Date. Such issuance shall be
accomplished on a class equivalent basis, i.e., Class A (or similar type) shares of the Acquiring
Fund shall be issued in exchange for Class A shares of the Transferring Fund, Class C (or similar
type) shares of the Acquiring Fund shall be issued in exchange for Class C shares of the
Transferring Fund and Class I (or similar type) shares of the Acquiring Fund shall be issued in
exchange for Class I shares of the Transferring Fund.
2.4 DETERMINATION OF VALUE. All computations of value shall be made by Citi Fund Services
Ohio, Inc., the Transferring Funds accounting agent, in accordance with its regular practice in
pricing the shares and assets of the Transferring Fund and confirmed by Gemini Fund Services, LLC,
the Acquiring Funds accounting agent.
ARTICLE III
CLOSING AND CLOSING DATE
3.1 CLOSING DATE. The Parties shall make respective best efforts to close the Reorganization
(the Closing) on or before September , 2008 (the Closing Date), unless the parties agree in
writing otherwise. All acts taking place at the Closing shall be deemed to take place
simultaneously immediately prior to the opening of business on the Closing Date unless otherwise
provided. The Closing shall be held as of 8:00 a.m. Eastern time at the offices of the Northern
Trust, or at such other time and/or place as the parties may agree.
3.2 EFFECT OF SUSPENSION IN TRADING. In the event that on the Valuation Date (a) the New York
Stock Exchange or another primary trading market for portfolio securities of the Acquiring Fund or
the Transferring Fund shall be closed to trading or trading thereon shall
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be restricted; or (b) trading or the reporting of trading on said Exchange or elsewhere shall
be disrupted so that accurate appraisal of the value of the net assets of the Acquiring Fund or the
Transferring Fund is impracticable as mutually determined by the parties, the Valuation Date (and
the Closing Date) shall be postponed until the first business day after the day when trading shall
have been fully resumed and reporting shall have been restored.
3.3 TRANSFER AGENTS CERTIFICATE. The Transferring Fund shall deliver at the Closing a
certificate of an authorized officer stating that its records contain the names and addresses of
the Transferring Fund Shareholders and the number and percentage ownership of outstanding shares
owned by each such shareholder immediately prior to the Closing. The Acquiring Fund shall issue and
deliver, or cause its transfer agent, to issue and deliver, to the Secretary of the Coventry Trust
a confirmation evidencing the Acquiring Fund Shares to be credited on the Closing Date or provide
evidence satisfactory to the Transferring Fund that such Acquiring Fund Shares have been credited
to the Transferring Funds account on the books of the Acquiring Fund. At the Closing, each party
shall deliver to the other such bills of sale, checks, assignments, share certificates, if any,
receipts and other documents as such other party or its counsel may reasonably request.
3.4 CUSTODIANS CERTIFICATE. The Transferring Funds Treasurer shall deliver at the Closing a
certificate of an authorized officer stating that: (a) the Transferring Funds portfolio
securities, cash, and any other assets shall have been delivered in proper form to the Acquiring
Fund on the Closing Date; and (b) all necessary taxes including all applicable federal and state
stock transfer stamps, if any, shall have been paid, or provision for payment shall have been made,
in conjunction with the delivery of portfolio securities by the Transferring Fund.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS OF THE TRANSFERRING FUND. The Transferring Fund represents and warrants
to the Northern Trust and the Acquiring Fund as follows:
(a) The Transferring Fund is a separate investment series of the Coventry Trust, a business
trust duly organized, validly existing and in good standing under the laws of the Commonwealth of
Massachusetts.
(b) The Transferring Fund is a separate investment series of the Coventry Trust, which is
registered as an investment company classified as a management company of the open-end type, and
its registration with the Securities and Exchange Commission (the Commission) as an investment
company under the 1940 Act, is in full force and effect.
(c) The current prospectus and statement of additional information of the Transferring Fund
conform in all material respects to the applicable requirements of the Securities Act of 1933, as
amended (the 1933 Act), and the 1940 Act and the rules and regulations of the Commission
thereunder and do not include any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
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(d) The Transferring Fund is not, and the execution, delivery, and performance of this
Agreement (subject to shareholder approval) will not result, in violation of any provision of the
Coventry Trusts Declaration of Trust or By-Laws or of any material agreement, indenture,
instrument, contract, lease, or other undertaking to which the Transferring Fund is a party or by
which it is bound.
(e) The Transferring Fund has no material contracts or other commitments (other than this
Agreement) that will be terminated with liability to it prior to the Closing Date, except for
liabilities, if any, to be discharged as provided in paragraph 1.3 hereof.
(f) Except as otherwise disclosed in writing to and accepted by the Acquiring Fund, no
litigation, administrative proceeding, or investigation of or before any court or governmental body
is presently pending or to its knowledge threatened against the Transferring Fund or any of its
properties or assets, which, if adversely determined, would materially and adversely affect its
financial condition, the conduct of its business, or the ability of the Transferring Fund to carry
out the transactions contemplated by this Agreement. The Transferring Fund knows of no facts that
might form the basis for the institution of such proceedings and is not a party to or subject to
the provisions of any order, decree, or judgment of any court or governmental body that materially
and adversely affects its business or its ability to consummate the transactions herein
contemplated.
(g) At the Closing date, all audited financial statements of the Transferring Fund at December
31, 2007 are in accordance with generally accepted accounting principles consistently applied, and
such statements (copies of which have been furnished to the Acquiring Fund) fairly reflect the
financial condition of the Transferring Fund as of such date, and there are no known contingent
liabilities of the Transferring Fund as of such date not disclosed therein.
(h) Since December 31, 2007, there has not been any material adverse change in the
Transferring Funds financial condition, assets, liabilities, or business other than changes
occurring in the ordinary course of business, or any incurrence by the Transferring Fund of
indebtedness maturing more than one year from the date such indebtedness was incurred, except as
otherwise disclosed to and accepted by the Acquiring Fund. For the purposes of this subparagraph
(h), a decline in the net asset value of the Transferring Fund shall not constitute a material
adverse change.
(i) At the Closing Date, all federal and other tax returns and reports of the Transferring
Fund required by law to have been filed by such date shall have been filed, and all federal and
other taxes shown due on said returns and reports shall have been paid, or provision shall have
been made for the payment thereof. To the best of the Transferring Funds knowledge, no such
return is currently under audit, and no assessment has been asserted with respect to such returns.
(j) For each fiscal year of its operation, the Transferring Fund has met the requirements of
Subchapter M of the Internal Revenue Code of 1986, as amended, (the Code) for qualification and
treatment as a regulated investment company and has distributed in each such year all net
investment income and realized capital gains. The Transferring Fund will
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continue to meet the requirements of Subchapter M of the Code for qualification and treatment
as a regulated investment company for its current fiscal year.
(k) All issued and outstanding shares of the Transferring Fund are, and at the Closing Date
will be, duly and validly issued and outstanding, fully paid and non-assessable by the Transferring
Fund. All of the issued and outstanding shares of the Transferring Fund will, at the time of the
Closing Date, be held by the persons and in the amounts set forth in the records of the transfer
agent as provided in paragraph 3.3. The Transferring Fund does not have outstanding any options,
warrants, or other rights to subscribe for or purchase any of the Transferring Fund shares, nor is
there outstanding any security convertible into any of the Transferring Fund shares.
(l) At the Closing Date, the Transferring Fund or its nominee will have good and marketable
title to the Transferring Funds assets to be transferred to the Acquiring Fund pursuant to
paragraph 1.2 and full right, power, and authority to sell, assign, transfer, and deliver such
assets hereunder, and, upon delivery and payment for such assets, the Acquiring Fund will acquire
good and marketable title thereto, subject to no restrictions on the full transfer thereof,
including such restrictions as might arise under the 1933 Act, other than as disclosed to the
Acquiring Fund and accepted by the Acquiring Fund.
(m) The execution, delivery, and performance of this Agreement have been duly authorized by
all necessary action on the part of the Transferring Fund and, subject to approval by the
Transferring Funds shareholders, this Agreement constitutes a valid and binding obligation of the
Transferring Fund, enforceable in accordance with its terms, subject as to enforcement, to
bankruptcy, insolvency, reorganization, moratorium, and other laws relating to or affecting
creditors rights and to general equity principles.
(n) The information furnished by the Transferring Fund for use in no-action letters,
applications for orders, registration statements, proxy materials, and other documents that may be
necessary in connection with the transactions contemplated hereby is accurate and complete in all
material respects and complies in all material respects with federal securities and other laws and
regulations thereunder applicable thereto.
(o) The Proxy Statement complies in all material respects with the Securities Exchange Act of
1934 (the 1934 Act) and (only as it relates to the Transferring Fund) does not contain any untrue
statement of a material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under which such statements
were made, not misleading.
4.2 REPRESENTATIONS OF THE ACQUIRING FUND. The Acquiring Fund represents and warrants to the
Coventry Trust and the Transferring Fund as follows:
(a) The Acquiring Fund is a separate investment series of the Northern Trust, a statutory
trust duly organized, validly existing and in good standing under the laws of the State of
Delaware.
(b) The Acquiring Fund is a separate investment series of the Northern Trust, which is
registered as an investment company classified as a management company of the
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open-end type, and its registration with the Commission as an investment company under the
1940 Act, is in full force and effect.
(c) The prospectus and statement of additional information, as of the Closing Date, of the
Acquiring Fund will conform in all material respects to the applicable requirements of the 1933 Act
and the 1940 Act and the rules and regulations of the Commission thereunder and will not include
any untrue statement of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the circumstances under which they
were made, not misleading.
(d) The Acquiring Fund is not, and the execution, delivery and performance of this Agreement
will not result, in violation of any provision of the Northern Trusts Agreement and Declaration of
Trust or By-Laws or of any material agreement, indenture, instrument, contract, lease, or other
undertaking to which the Acquiring Fund is a party or by which it is bound.
(e) Except as otherwise disclosed in writing to the Transferring Fund and accepted by the
Transferring Fund, no litigation, administrative proceeding or investigation of or before any court
or governmental body is presently pending or to its knowledge threatened against the Northern Trust
or any of its properties or assets, which, if adversely determined, would materially and adversely
affect its financial condition and the conduct of its business or the ability of the Acquiring Fund
to carry out the transactions contemplated by this Agreement. The Northern Trust knows of no facts
that might form the basis for the institution of such proceedings and is not a party to or subject
to the provisions of any order, decree, or judgment of any court or governmental body that
materially and adversely affects its business or its ability to consummate the transactions
contemplated herein.
(f) At the Closing Date, all federal and other tax returns and reports of the Acquiring Fund
required by law then to be filed by such date, if any, shall have been filed, and all federal and
other taxes shown due on said returns and reports shall have been paid or provision shall have been
made for the payment thereof. To the best of the Acquiring Funds knowledge, no such return is
currently under audit, and no assessment has been asserted with respect to such returns.
(g) The Acquiring Fund has not commenced operation; however, the Acquiring Fund intends to
meet the requirements of Subchapter M of the Code for qualification and treatment as a regulated
investment company for the fiscal year in which the Reorganization occurs and intends to continue
to meet all the requirements for that qualification and intends to distribute in each fiscal year
all net investment income and realized capital gains.
(h) The Acquiring Fund does not have outstanding any options, warrants, or other rights to
subscribe for or purchase any Acquiring Fund Shares, nor is there outstanding any security
convertible into any Acquiring Fund Shares.
(i) The execution, delivery, and performance of this Agreement have been duly authorized by
all necessary action on the part of the Northern Trust, and this Agreement constitutes a valid and
binding obligation of the Northern Trust enforceable in accordance with
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its terms, subject as to enforcement, to bankruptcy, insolvency, reorganization, moratorium,
and other laws relating to or affecting creditors rights and to general equity principles.
(j) The Acquiring Fund Shares to be issued and delivered to the Transferring Fund, for the
account of the Transferring Fund Shareholders, pursuant to the terms of this Agreement will, at the
Closing Date, have been duly authorized and, when so issued and delivered, will be duly and validly
issued Acquiring Fund Shares, and will be fully paid and non-assessable.
(k) The information furnished by the Northern Trust for use in no-action letters, applications
for orders, registration statements, proxy materials, and other documents that may be necessary in
connection with the transactions contemplated hereby is accurate and complete in all material
respects and complies in all material respects with federal securities and other laws and
regulations applicable thereto.
(l) The Acquiring Fund has provided the Transferring Fund with information reasonably
necessary for the preparation of a proxy statement in compliance with the 1934 Act in connection
with the meeting of the shareholders of the Transferring Fund to approve this Agreement and the
transactions contemplated hereby. The Proxy Statement (only insofar as it relates to the Acquiring
Fund) does not contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in light of the
circumstances under which such statements were made, not misleading.
(m) The Acquiring Fund agrees to use all reasonable efforts to obtain the approvals and
authorizations required by the 1933 Act, the 1940 Act, and such of the state Blue Sky or securities
laws as it may deem appropriate in order to continue its operations after the Closing Date.
(n) The Northern Trust has filed a post-effective amendment to its registration statement on
Form N-1 A, with the Commission, for the purpose of registering the Acquiring Fund as a series of
the Northern Trust. The post-effective amendment will be effective on or before the Closing Date.
ARTICLE V
COVENANTS OF THE ACQUIRING FUND AND THE TRANSFERRING FUND
5.1 OPERATION IN ORDINARY COURSE. The Transferring Fund will operate its business in the
ordinary course between the date hereof and the Closing Date, it being understood that such
ordinary course of business will include distribution of customary dividends, distributions, and
redemptions. The Acquiring Fund will not commence operation until the Closing Date.
5.2 APPROVAL BY SHAREHOLDERS. The Coventry Trust will call a meeting of the shareholders of
the Transferring Fund to consider and act upon this Agreement and to take all other action
necessary to obtain approval of the transactions contemplated herein.
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5.3 INVESTMENT REPRESENTATION. The Transferring Fund covenants that the Acquiring Fund Shares
to be issued hereunder are not being acquired for the purpose of making any distribution thereof
other than in accordance with the terms of this Agreement.
5.4 ADDITIONAL INFORMATION. The Transferring Fund will assist the Acquiring Fund in obtaining
such information as the Acquiring Fund reasonably requests concerning the beneficial ownership of
the Transferring Fund shares.
5.5 FURTHER ACTION. Subject to the provisions of this Agreement, the Northern Trust and the
Transferring Fund will each take, or cause to be taken, all action, and do or cause to be done, all
things reasonably necessary, proper or advisable to consummate and make effective the transactions
contemplated by this Agreement, including any actions required to be taken after the Closing Date.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TRANSFERRING FUND
The obligations of the Transferring Fund to complete the transactions provided for herein
shall be subject, at its election, to the performance by the Acquiring Fund of all the obligations
to be performed by it hereunder on or before the Closing Date, and, in addition thereto, the
following further conditions:
6.1 All representations and warranties of the Northern Trust contained in this Agreement shall
be true and correct in all material respects as of the date hereof and as of the Closing Date with
the same force and effect as if made on and as of the Closing Date, and the Acquiring Fund shall
have delivered to the Transferring Fund a certificate executed in its name by the Northern Trusts
President or Vice President, in form and substance reasonably satisfactory to the Transferring Fund
and dated as of the Closing Date, to such effect and as to such other matters as the Transferring
Fund shall reasonably request.
6.2 With respect to the Acquiring Fund, the Coventry Trust shall have received on the Closing
Date an opinion from Thompson Hine LLP, counsel to the Northern Trust and the Acquiring Fund, dated
as of the Closing Date, in a form reasonably satisfactory to the Transferring Fund, covering the
following points:
(a) The Acquiring Fund is an investment series of a statutory trust duly organized, validly
existing and in good standing under the laws of the State of Delaware, and to such counsels
knowledge, has the trust power to own all of its properties and assets and to carry on its business
as presently conducted.
(b) The Acquiring Fund is a series of a Delaware statutory trust registered as an investment
company under the 1940 Act, and, to such counsels knowledge, such registration with the Commission
as an investment company under the 1940 Act is in full force and effect.
(c) This Agreement has been duly authorized, executed, and delivered by the Northern Trust on
behalf of the Acquiring Fund, and, assuming due authorization, execution and delivery of this
Agreement by the Transferring Fund, is a valid and binding obligation of the
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Acquiring Fund enforceable against the Acquiring Fund in accordance with its terms, subject as
to enforcement, to bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium, and
other laws relating to or affecting creditors rights generally and to general equity principles.
(d) Assuming that a consideration of not less than the net asset value of the Acquiring Fund
Shares has been paid, the Acquiring Fund Shares to be issued and delivered to the Transferring Fund
on behalf of the Transferring Fund Shareholders as provided by this Agreement are duly authorized
and upon such delivery will be legally issued and outstanding and fully paid and non-assessable,
and no shareholder of the Acquiring Fund has any statutory preemptive rights in respect thereof.
(e) The execution and delivery of this Agreement did not, and the consummation of the
transactions contemplated hereby will not, result in a violation of the Northern Trusts Agreement
and Declaration of Trust or By-Laws or a material provision of any material agreement, indenture,
instrument, contract, lease or other undertaking (in each case known to such counsel) to which the
Northern Trust is a party or by which it or any of its properties may be bound, or to the knowledge
of its counsel, result in the acceleration of any obligation or the imposition of any penalty under
any agreement, judgment, or decree to which the Northern Trust or the Acquiring Fund is a party or
by which it is bound.
(f) Only in so far as they relate to the Acquiring Fund, the descriptions in the Proxy
Statement of statutes, legal and governmental proceedings and material contracts, if any, are
accurate and fairly present the information required to be shown.
(g) In the ordinary course of such counsels representation of the Northern Trust, and without
having made any investigation, such counsel does not know of any legal or governmental proceedings,
only insofar as they relate to the Acquiring Fund, existing on or before the effective date of the
Proxy Statement or the Closing Date required to be described in the Proxy Statement or to be filed
as exhibits to the Proxy Statement which are not described or filed as required.
(h) In the ordinary course of such counsels representation of Northern Trust, and without
having made any investigation, and except as otherwise disclosed, to the knowledge of such counsel,
no litigation or administrative proceeding or investigation of or before any court or governmental
body is presently pending or threatened as to the Northern Trust or any of its properties or assets
and the Northern Trust is not a party to or subject to the provisions of any order, decree or
judgment of any court or governmental body, which materially and adversely affects its business,
other than as previously disclosed in the Proxy Statement.
(i) To the knowledge of such counsel no consent, approval, authorization or order of any court
or governmental authority of the United States or the State of Delaware is required for
consummation by the Northern Trust and the Acquiring Fund of the transaction contemplated herein,
except as has and as may be obtained under the 1933 Act, the 1934 Act and the 1940 Act, and as may
be required under state securities laws.
Such opinion shall contain such assumptions and limitations as shall be in the opinion of
Thompson Hine LLP appropriate to render the opinions expressed therein.
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6.3 The post-effective amendment on Form N-1A filed by the Northern Trust with the Commission
to register the Acquiring Fund as a series of the Northern Trust is effective and no stop order has
been issued by the Commission.
6.4 Subject to paragraph 6.3, as of the Closing Date with respect to the Reorganization of the
Transferring Fund, there shall have been no material change in the investment objective, policies
and restrictions nor any material change in the investment management fees, fee levels payable
pursuant to the 12b-1 plan of distribution, other fees payable for services provided to the
Acquiring Fund, fee waiver or expense reimbursement undertakings, or sales loads of the Acquiring
Fund from those fee amounts, undertakings and sales load amounts of the Acquiring Fund described in
the Proxy Statement.
6.5 For the period beginning at the Closing Date and ending not less than six years
thereafter, the Northern Trust, its successor or assigns shall provide, or cause to be provided,
liability coverage at least as comparable to the liability coverage currently applicable to both
former and current Trustees and officers of the Coventry Trust, covering the actions of such
Trustees and officers of the Coventry Trust for the period they served as such.
6.6 The Coventry Trust shall have received a letter of indemnification from EM Capital
Management, LLC stating that it agrees to indemnify the Coventry Trust, its employees, agents,
trustees and officers (each, an Indemnified Party) against and from any and all claims, demands,
actions, suits, judgments, liabilities, losses, damages, costs, charges, reasonable counsel fees
and other direct (but not indirect, special or consequential) expenses arising out of any
shareholder litigation, Commission staff inquiries, investigations or Commission disciplinary
action taken with respect to the Transferring Fund, or relating to or resulting from (i) the
Reorganization; (ii) the management of the Transferring Fund by the Adviser or any sub-adviser; or
(iii) the Advisers duties to the Transferring Fund under the Investment Advisory Agreement between
the Trust and the Adviser or any related agreement, or the Investment Advisers Act of 1940, as
amended, except to the extent that such claims, demands, actions, suits, judgments, liabilities,
losses, damages, costs, charges, fees and expenses are a result of breach of the Agreement by an
Indemnified Party or the negligence or willful misfeasance of the Indemnified Party, or such
partys reckless disregard of its obligations.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Acquiring Fund to complete the transactions provided for herein shall
be subject, at its election, to the performance by the Transferring Fund of all the obligations to
be performed by it hereunder on or before the Closing Date and, in addition thereto, the following
conditions:
7.1 All representations and warranties of the Transferring Fund contained in this Agreement
shall be true and correct in all material respects as of the date hereof and as of the Closing Date
with the same force and effect as if made on and as of the Closing Date, and the Transferring Fund
shall have delivered to the Acquiring Fund on the Closing Date a certificate executed in its name
by the Coventry Trusts President or Vice President, in form and substance
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satisfactory to the Acquiring Fund and dated as of the Closing Date, to such effect and as to
such other matters as the Acquiring Fund shall reasonably request.
7.2 The Transferring Fund shall have delivered to the Acquiring Fund a statement of the
Transferring Funds assets and liabilities, together with a list of the Transferring Funds
portfolio securities showing the tax costs of such securities by lot and the holding periods of
such securities, as of the Closing Date, certified by the Treasurer or Assistant Treasurer of the
Coventry Trust.
7.3 With respect to the Transferring Fund, the Northern Trust shall have received on the
Closing Date an opinion of Thompson Hine LLP, counsel to the Coventry Trust and the Transferring
Fund, in a form reasonably satisfactory to the Acquiring Fund, covering the following points:
(a) The Transferring Fund is an investment series of the Coventry Trust, a statutory trust
duly organized, validly existing and in good standing under the laws of the Commonwealth of
Massachusetts, and to such counsels knowledge, has the trust power to own all of its properties
and assets and to carry on its business as presently conducted.
(b) The Transferring Fund is a series of a Massachusetts business trust registered as an
investment company under the 1940 Act, and, to such counsels knowledge, such registration with the
Commission as an investment company under the 1940 Act is in full force and effect.
(c) This Agreement has been duly authorized, executed and delivered by the Coventry Trust on
behalf of the Transferring Fund and, assuming due authorization, execution, and delivery of this
Agreement by the Acquiring Fund, is a valid and binding obligation of the Transferring Fund
enforceable against the Transferring Fund in accordance with its terms, subject as to enforcement,
to bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium and other laws relating
to or affecting creditors rights generally and to general equity principles.
(d) Assuming that a consideration therefore of not less than the net asset value thereof has
been paid, and assuming that such shares were issued in accordance with the terms of the
Transferring Funds registration statement, or any amendment thereto, in effect at the time of such
issuance, all issued and outstanding shares of the Transferring Fund are legally issued and fully
paid and non-assessable, and no shareholder of the Transferring Fund has any statutory preemptive
rights in respect thereof.
(e) The Proxy Statement, to the knowledge of such counsel, is effective and no stop order
under the 1933 Act pertaining thereto has been issued; and to the knowledge of such counsel, no
consent, approval, authorization or order of any court or governmental authority of the United
States or the Commonwealth of Massachusetts is required for consummation by the Coventry Trust of
the transactions contemplated herein, except such as have been obtained under the 1933 Act and the
1940 Act, and as may be required under state securities laws.
(f) The execution and delivery of this Agreement did not, and the consummation of the
transactions contemplated hereby will not, result in a violation of the
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Coventry Trusts Declaration of Trust or By-laws, or a material provision of any material
agreement, indenture, instrument, contract, lease or other undertaking (in each case known to such
counsel) to which the Transferring Fund is a party or by which it or any of its properties may be
bound or, to the knowledge of such counsel, result in the acceleration of any obligation or the
imposition of any penalty, under any agreement, judgment, or decree to which the Coventry Trust or
the Transferring Fund is a party or by which it is bound.
(g) Only insofar as they relate to the Transferring Fund, the descriptions in the Proxy
Statement of statutes, legal and governmental proceedings and material contracts, if any, are
accurate and fairly represent the information required to be shown.
(h) In the ordinary course of such counsels representation of the Transferring Fund and
without having made any investigation, such counsel does not know of any legal or governmental
proceedings, only insofar as they relate to the Transferring Fund existing on or before the
effective date of the Proxy Statement or the Closing Date, required to be described in the Proxy
Statement or to be filed as exhibits to the Proxy Statement which are not described or filed as
required.
(i) In the ordinary course of such counsels representation of the Coventry Trust and without
having made any investigation, and except as otherwise disclosed, to the knowledge of such counsel,
no litigation or administrative proceeding or investigation of or before any court or governmental
body is presently pending or threatened as to the Coventry Trust or any of its respective
properties or assets and the Coventry Trust is not a party to nor subject to the provisions of any
order, decree or judgment of any court or governmental body, which materially and adversely affects
its business other than as previously disclosed in the Proxy Statement.
(j) To the knowledge of such counsel, no consent, approval, authorization or order of any
court or governmental authority of the United States or the Commonwealth of Massachusetts is
required for consummation by the Coventry Trust and the Transferring Fund of the transaction
contemplated herein, except such as have been obtained under the 1933 Act, 1934 Act and the 1940
Act, and as may be required under state securities laws.
Such opinion shall contain such other assumptions and limitations as shall be in the opinion
of Thompson Hine LLP appropriate to render the opinions expressed therein.
ARTICLE VIII
FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF
THE ACQUIRING FUND AND THE TRANSFERRING FUND TO CLOSE
If any of the conditions set forth below do not exist on or before the Closing Date with
respect to the Transferring Fund or the Acquiring Fund, as the case may be, the other party to this
Agreement shall, at its option, not be required to consummate the transactions contemplated by this
Agreement:
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8.1 This Agreement and the transactions contemplated herein shall have been approved by the
requisite vote of the holders of the outstanding shares of the Transferring Fund in accordance with
the provisions of the Coventry Trusts Declaration of Trust and By-Laws and certified copies of the
resolutions evidencing such approval shall have been delivered to the Acquiring Fund.
Notwithstanding anything herein to the contrary, neither the Acquiring Fund nor the Transferring
Fund may waive the conditions set forth in this paragraph 8.1.
8.2 On the Closing Date, the Commission shall not have issued an unfavorable report under
Section 25(b) of the 1940 Act, nor instituted any proceeding seeking to enjoin the consummation of
the transactions contemplated by this Agreement under Section 25(c) of the 1940 Act and no action,
suit or other proceeding shall be threatened or pending before any court or governmental agency in
which it is sought to restrain or prohibit, or obtain damages or other relief in connection with,
this Agreement or the transactions contemplated herein.
8.3 All required consents of other parties and all other consents, orders, and permits of
federal, state and local regulatory authorities (including those of the Commission and of state
Blue Sky securities authorities, including any necessary no-action positions of and exemptive
orders from such federal and state authorities) to permit consummation of the transactions
contemplated hereby shall have been obtained, except where failure to obtain any such consent,
order, or permit would not involve a risk of a material adverse effect on the assets or properties
of the Acquiring Fund or the Transferring Fund, provided that either party hereto may for itself
waive any of such conditions.
8.4 The Proxy Statement shall have become effective under the 1934 Act, and no stop orders
suspending the effectiveness of the Proxy Statement shall have been issued and, to the best
knowledge of the parties hereto, no investigation or proceeding for that purpose shall have been
instituted or be pending, threatened or contemplated under the 1934 Act. In addition, the
registration statement on Form N-1A for the Northern Trust, including the post effective amendment
to register the Acquiring Fund as a series of the Northern Trust, shall be effective.
8.5 The Transferring Fund shall have declared a dividend or dividends which, together with all
previous such dividends shall have the effect of distributing to the Transferring Fund Shareholders
all of the Transferring Funds investment company taxable income for all taxable periods, if any,
ending on the Closing Date (computed without regard to any deduction for dividends paid) and all of
the net capital gains realized in all taxable periods, if any, ending on the Closing Date (after
reduction for any capital loss carryforward).
A-15
ARTICLE IX
EXPENSES
9.1 The Transferring Fund, the Acquiring Fund and the shareholders of the Transferring Fund
and the Acquiring Fund will pay their respective expenses, if any, incurred in connection with the
Reorganization. Notwithstanding the foregoing, EM Capital Management, LLC, the investment advisor
to the Acquiring Fund, will pay or assume those expenses of the Acquiring Fund and the Transferring
Fund that are solely and directly related to the Reorganization, determined in accordance with the
guidelines set forth in Rev. Rul. 73-54, 1973-1 C.B. 187.
ARTICLE X
ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 The Acquiring Fund and the Transferring Fund agree that neither party has made any
representation, warranty or covenant not set forth herein and that this Agreement constitutes the
entire agreement between the parties.
10.2 The representations, warranties, and covenants contained in this Agreement or in any
document delivered pursuant hereto or in connection herewith shall survive the consummation of the
transactions contemplated hereunder.
ARTICLE XI
TERMINATION
11.1 This Agreement may be terminated by the mutual agreement of the Acquiring Fund and the
Transferring Fund. In addition, either the Acquiring Fund or the Transferring Fund may at its
option terminate this Agreement at or prior to the Closing Date because:
(a) of a breach by the other of any representation, warranty, or agreement contained herein to
be performed at or prior to the Closing Date, if not cured within 30 days;
(b) a condition herein expressed to be precedent to the obligations of the terminating party
has not been met and it reasonably appears that it will not or cannot be met; or
(c) a determination by the Coventry Trusts or the Northern Trusts Board of Trustees that the
consummation of the Transaction contemplated herein is not in the best interest of the Transferring
Fund or the Acquiring Fund.
11.2 In the event of any such termination, in the absence of willful default, there shall be
no liability for damages on the part of the Coventry Trust or the Northern Trust, or their
respective Trustees or officers, to the other party, but each shall bear the expenses incurred by
it incidental to the preparation and carrying out of this Agreement.
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ARTICLE XII
AMENDMENTS
12.1 This Agreement may be amended, modified, or supplemented in such manner as may be
mutually agreed upon in writing by the authorized officers of the Trusts; provided, however, that
following the meeting of shareholders of the Transferring Fund pursuant to paragraph 5.2 of this
Agreement, no such amendment may have the effect of changing the provisions for determining the
number of the Acquiring Fund Shares to be issued to the Transferring Fund Shareholders under this
Agreement to the detriment of such Transferring Fund Shareholders without their further approval.
ARTICLE XIII
HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT;
LIMITATION OF LIABILITY
13.1 The Article and paragraph headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this Agreement.
13.2 This Agreement may be executed in any number of counterparts, each of which shall be
deemed an original.
13.3 This Agreement shall be governed by and construed in accordance with the laws of the
Commonwealth of Massachusetts, without giving effect to the conflicts of laws provisions thereof.
13.4 This Agreement shall bind and inure to the benefit of the parties hereto and their
respective successors and assigns, but no assignment or transfer hereof or of any rights or
obligations hereunder shall be made by any party without the written consent of the other party.
Nothing herein expressed or implied is intended or shall be construed to confer upon or give any
person, firm, or corporation, other than the parties hereto and their respective successors and
permitted assigns, any rights or remedies under or by reason of this Agreement.
13.5 With respect to the Coventry Trust and the Northern Trust, the names used herein refer
respectively to the trusts created and, as the case may be, the Trustees, as trustees but not
individually or personally, acting from time to time under organizational documents of each
respective trust filed in Massachusetts and Delaware respectively, which are hereby referred to and
are also on file at the principal offices of each respective Trust. The obligations of each Trust
entered into in the name or on behalf thereof by any of its Trustees, representatives or agents of
the Trusts, are made not individually, but in such capacities, and are not binding upon any of the
Trustees, shareholders or representatives of that respective Trust personally, but bind only the
trust property, and all persons dealing with the Transferring Fund and the Acquiring Fund must look
solely to the trust property belonging to the Transferring Fund and the Acquiring Fund for the
enforcement of any claims against the Transferring Fund and the Acquiring Fund, respectively.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement, all as of the date first
written above.
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NORTHERN LIGHTS FUND TRUST ON BEHALF OF EM
CAPITAL INDIA GATEWAY FUND |
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By: |
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Name:
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Andrew Rogers |
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Title:
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President |
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THE COVENTRY FUNDS TRUST ON BEHALF OF EM
CAPITAL INDIA GATEWAY FUND |
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By: |
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Name:
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C. David Bunstine |
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Title:
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President |
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EM CAPITAL MANAGEMENT, LLC, SOLELY WITH
RESPECT TO SECTIONS 6.6 and 9.1 |
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By: |
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Name:
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Seth Freeman |
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Title:
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Managing Member |
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VOTING OPTIONS
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VOTE ON THE INTERNET |
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VOTE BY PHONE |
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VOTE BY MAIL |
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VOTE IN PERSON |
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1) Read the Proxy
Statement and have
this card at hand
2) Log on to:
www.proxyweb.com
3) Follow the
on-screen
instructions
4) Do not return
this paper ballot
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1) Read the Proxy
Statement and have
this card at hand
2) Call 1-888-221-0697
3) Follow the
recorded instructions
4) Do not return this
paper ballot
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1) Read Proxy Statement and
have this card at hand
2) Check the appropriate box
on the reverse side
3) Sign and date the Proxy Card
4) Return promptly in the
enclosed envelope
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Attend shareholders meeting at
100 Summer Street, Suite 1500,
Boston, MA 02110
on September , 2008 |
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EM CAPITAL INDIA GATEWAY FUND
PROXY BALLOT
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE TRUSTS BOARD OF TRUSTEES.
The undersigned hereby constitutes and appoints John Danko and Jennifer M. Millenbaugh, or any one
of them, with power of substitution and re-substitution, as proxies to appear and vote all of the
shares of beneficial interest in the name of the undersigned on the record date of the special
meeting of shareholders of the Fund, or at any adjournment thereof; and the undersigned hereby
instructs said proxies to vote as indicated on this proxy card. The undersigned hereby revokes any
prior proxy to vote at such Meeting, and hereby ratifies and confirms all that said attorneys and
proxies, or any of them, may lawfully do by virtue thereof.
The proxy, when properly executed, will be voted in the manner you directed with respect to shares
that you own. If no direction is given with respect to a particular item, this proxy will be voted
FOR each of the item or items that relate to the particular Fund shares that you own.
PLEASE SIGN, DATE AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
Dated:
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Signature(s)
(Sign in the Box) |
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NOTE: Please sign exactly as your name(s) appear on this card. Joint owners
should each sign individually. Corporate proxies should be signed in full
corporate name by an authorized officer. Fiduciaries should give full titles. |
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY.
EVERY SHAREHOLDERS VOTE IS IMPORTANT
Please fill in a box as shown using black or blue ink or number 2 pencil. þ
PLEASE DO NOT USE FINE POINT PENS.
The Board of Trustees unanimously recommends a vote FOR all proposals.
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FOR |
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AGAINST |
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ABSTAIN |
Proposal : To approve the Agreement and
Plan of Reorganization for the EM Capital India Gateway Fund |
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WE NEED YOUR PROXY VOTE IMMEDIATELY.
YOUR PROMPT ATTENTION WILL HELP TO AVOID
THE EXPENSE OF FURTHER SOLICITATION.
PLEASE SIGN AND DATE ON REVERSE SIDE.