ADVISORY AGREEMENT
CityFund Advisory, Inc.
000 X. Xxxx Xxxx Xxx, Xxx. #000
Xxxxxxxxxx, XX 00000
Gentlemen:
Dunhill Investment Trust (the "Trust") is a diversified open-end
management investment company registered under the Investment Company Act of
1940, as amended (the "Act"), and subject to the rules and regulations
promulgated thereunder. The Trust's shares of beneficial interest are divided
into separate series or funds. Each such share of a fund represents an undivided
interest in the assets, subject to the liabilities, allocated to that fund. Each
fund has separate investment objectives and policies. The Regional Opportunity
Fund: Ohio Indiana Kentucky (the "Fund") has been established as a series of the
Trust.
1. APPOINTMENT AS ADVISER. The Trust being duly authorized hereby appoints
and employs CityFund Advisory, Inc. (the "Adviser") as the discretionary
portfolio manager of the Fund, on the terms and conditions set forth herein.
2. ACCEPTANCE OF APPOINTMENT; STANDARD OF PERFORMANCE. The Adviser accepts
the appointment as the discretionary portfolio manager and agrees to use its
best professional judgment to make timely investment decisions for the Fund in
accordance with the provisions of this Agreement.
3. PORTFOLIO MANAGEMENT SERVICES OF ADVISER. The Adviser is hereby employed
and authorized to select portfolio securities for investment by the Fund, to
purchase and sell securities of the Fund, and upon making any purchase or sale
decision, to place orders for the execution of such portfolio transactions in
accordance with paragraphs 6 and 7 hereof. In
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providing portfolio management services to the Fund, the Adviser shall be
subject to such investment restrictions as are set forth in the Act and the
rules thereunder, the Internal Revenue Code, applicable state securities laws,
the supervision and control of the Board of Trustees of the Trust, such specific
instructions as the Board of Trustees may adopt and communicate to the Adviser,
the investment objectives, policies and restrictions of the Fund furnished
pursuant to paragraph 5, and the provisions of Schedule A hereto. The Adviser is
not authorized by the Fund to take any action, including the purchase or sale of
securities for the Fund, in contravention of any restriction, limitation,
objective, policy or instruction described in the previous sentence. The Adviser
shall maintain on behalf of the Fund the records listed in Schedule A hereto (as
amended from time to time).
4. OTHER SERVICES TO BE PROVIDED BY THE ADVISER. The Adviser undertakes to
provide the services hereinafter set forth and to assume the following
obligations:
A. Investment Management Services.
(a) The Adviser shall have overall supervisory responsibility for the
general management and investment of the assets and portfolio
securities of the Fund subject to and in accordance with the
investment objectives and policies of the Fund, and any
directions which the Trust's Board of Trustees may issue to the
Manager from time to time.
(b) The Adviser shall provide overall investment programs and
strategies for the Fund, shall revise such programs as necessary
and shall monitor and report periodically to the Board of
Trustees concerning the implementation of the programs.
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(c) The Adviser shall render regular reports to the Trust, at regular
meetings of the Board of Trustees, of, among other things, the
portfolio investments of the Fund and measurement and analysis of
the results achieved by the Fund.
(d) The Adviser shall employ or provide and compensate the executive,
administrative, secretarial and clerical personnel necessary to
provide the services set forth in this Agreement, and shall bear
the expense thereof, except as may otherwise be provided in
paragraph 11 of this Agreement. The Adviser shall also compensate
all officers and employees of the Trust who are officers or
employees of the Adviser.
(e) The Adviser shall pay all advertising and promotion expenses
incurred in connection with the sale or distribution of the
Fund's shares to the extent such expenses are not assumed by the
Fund under its Plans of Distribution.
B. Provision of Information Necessary for Preparation of Securities
Registration Statement, Amendments and Other Materials.
The Adviser will make available and provide financial, accounting and
statistical information required by the Trust in the preparation of
the Registration Statement, reports and other documents required by
federal and state securities laws, and such information as the Trust
may reasonably request for use in the preparation of the Registration
Statement, reports and other documents required by federal and state
securities laws.
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C. Other Obligations and Services.
The Adviser shall make available its officers and employees to the
Board of Trustees and officers of the Trust for consultation and
discussions regarding the administration and management of the Fund
and its investment activities.
5. INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS. The Trust will provide
the Adviser with the statement of investment objectives, policies and
restrictions applicable to the Fund as contained in the Trust's registration
statement under the Act and the Securities Act of 1933, and any instructions
adopted by the Board of Trustees supplemental thereto. The Trust will provide
the Adviser with such further information concerning the investment objectives,
policies and restrictions applicable thereto as the Adviser may from time to
time reasonably request. The Trust retains the right, on written notice to the
Adviser from the Trust, to modify any such objectives, policies or restrictions
in any manner at any time.
6. TRANSACTION PROCEDURES. All transactions will be consummated by payment
to or delivery by Firstar Bank or any successor custodian (the "Custodian"), or
such depositories or agents as may be designated by the Custodian in writing, as
custodian for the Fund, of all cash and/or securities due to or from the Fund,
and the Adviser shall not have possession or custody thereof. The Adviser shall
advise the Custodian and confirm in writing to the Trust all investment orders
for the Fund placed by it with brokers and dealers. The Adviser shall issue to
the Custodian such instructions as may be appropriate in connection with the
settlement of any transaction initiated by the Adviser. It shall be the
responsibility of the Adviser to take appropriate action if the Custodian fails
to confirm in writing proper execution of the instructions.
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7. ALLOCATION OF BROKERAGE. The Adviser shall have the authority and
discretion to select brokers and dealers to execute portfolio transactions
initiated by the Adviser, and for the selection of the markets on or in which
the transactions will be executed. The Adviser is not authorized by the Fund to
take any action, including the purchase or sale of securities for the Fund's
account, (a) in contravention of (i) any investment restrictions set forth in
the Act and the rules thereunder, (ii) specific instructions adopted by the
Board of Trustees and communicated to the Adviser, or (iii) the investment
objectives, policies and restrictions of the Fund as set forth in the
Registration Statement, or (b) which would have the effect of causing the Fund
to fail to qualify or to cease to qualify as a regulated investment company
under the Internal Revenue Code of 1986, as amended, or any succeeding statute.
A. In fulfilling its responsibilities, the Adviser will give primary
consideration to securing the best qualitative execution, taking into account
such factors as price (including the applicable brokerage commission or dealer
spread), the execution capability, financial responsibility and responsiveness
of the broker or dealer and the brokerage and research services provided by the
broker or dealer. Consistent with this policy, the Adviser may select brokers or
dealers who also provide brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934) to the other
accounts over which it exercises investment discretion. It is understood that
neither the Trust nor the Adviser have adopted a formula for allocation of the
Fund's investment transaction business. It is also understood that it is
desirable for the Fund that the Adviser have access to supplemental investment
and market research and security and economic analyses provided by certain
brokers who may execute brokerage transactions at a higher commission to the
Fund than may result when allocating brokerage to other brokers on the basis of
seeking the lowest commission. Therefore, the
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Adviser is authorized to place orders for the purchase and sale of securities
for the Fund with such certain brokers, subject to review by the Trust's Board
of Trustees from time to time with respect to the extent and continuation of
this practice, provided that the Adviser determines in good faith that the
amount of the commission is reasonable in relation to the value of the brokerage
and research services provided by the executing broker or dealer. The
determination may be viewed in terms of either a particular transaction or the
Adviser's overall responsibilities with respect to the Fund and to the other
accounts over which it exercises investment discretion. It is understood that
although the information may be useful to the Trust and the Adviser, it is not
possible to place a dollar value on such information. Consistent with the Rules
of Fair Practice of the National Association of Securities Dealers, Inc., and
subject to seeking best qualitative execution, the Adviser may give
consideration to sales of shares of the Fund as a factor in the selection of
brokers and dealers to execute portfolio transactions of the Fund.
On occasions when the Adviser deems the purchase or sale of a security to
be in the best interest of the Fund as well as other clients, the Adviser, to
the extent permitted by applicable laws and regulations, may, but shall be under
no obligation to, aggregate the securities to be sold or purchased in order to
obtain the most favorable price or lower brokerage commissions and efficient
execution. In such event, allocation of the securities so purchased or sold, as
well as expenses incurred in the transaction, will be made by the Adviser in the
manner it considers to be the most equitable and consistent with its fiduciary
obligations to the Fund with respect to the Fund and to such other clients.
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For each fiscal quarter of the Fund, the Adviser shall prepare and render
reports to the Trust's Board of Trustees of the total brokerage business placed
by the Adviser and the manner in which the allocation has been accomplished.
Such reports shall set forth at a minimum the information required to be
maintained by Rule 31a-1(b)(9) under the Act.
B. Adviser agrees that it will not execute any portfolio transactions for
the Fund's account with a broker or dealer which is an "affiliated person" (as
defined in the Act) of the Trust or the Adviser without the prior approval of
the Trust. The Trust agrees that it will provide the Adviser with a list of
brokers and dealers which are "affiliated persons" of the Trust or the Adviser.
C. Adviser shall render regular reports to the Trust of the total brokerage
business placed by the Fund and the manner in which the allocation has been
accomplished.
8. PROXIES. The Trust will vote all proxies solicited by or with respect to
the issuers of securities in which assets of the Fund may be invested from time
to time. At the Trust's request, the Adviser shall provide the Trust with its
recommendations as to the voting of such proxies.
9. REPORTS TO THE ADVISER. The Trust will provide the Adviser with such
periodic reports concerning the status of the Fund as the Adviser may reasonably
request.
10. FEES FOR SERVICES. For the services provided to the Fund, the Fund
shall pay the Adviser a daily fee equal to the annual rate of 1.2% of the
average value of the daily net assets of the Fund. The Adviser's fees shall be
payable monthly within ten days following the end of each month.
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11. EXPENSES OF THE FUND. It is understood that the Fund will pay, or that
the Fund will enter into arrangements that require third parties to pay, all its
expenses other than those expressly assumed by the Adviser herein, which
expenses payable by the Fund shall include:
A. Expenses of all audits by independent public accountants;
B. Expenses of transfer agent, dividend disbursing agent, accounting
and pricing agent and shareholder recordkeeping services;
C. Expenses of custodial services including recordkeeping services
provided by the custodian;
D. Expenses of obtaining security valuation quotations for
calculating the value of the Fund's net assets;
E. Salaries and other compensation of any of its executive officers
and employees, if any, who are not officers, directors,
stockholders or employees of the Adviser;
F. Taxes or governmental fees levied against the Fund;
G. Brokerage fees and commissions in connection with the purchase
and sale of the Fund's portfolio securities;
H. Costs, including the interest expenses, of borrowing money;
I. Costs and/or fees incident to Board of Trustee and shareholder
meetings, the preparation and mailings of prospectuses, reports
and notices to the existing shareholders of the Fund, the filing
of reports with regulatory bodies, the maintenance of the Trust's
existence as a business trust, membership in investment company
organizations, and the registration of shares with federal and
state securities authorities;
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J. Legal fees, including the legal fees related to the registration
and continued qualification of the Fund's shares for sale and
legal fees arising from litigation to which the Trust may be a
party and indemnification of the Trust's officers and Trustees
with respect thereto;
K. Costs of printing share certificates (in the event such
certificates are issued) representing shares of the Fund;
L. Trustees' fees and expenses of Trustees who are not directors,
officers, employees or stockholders of the Adviser or any of its
affiliates; and
M. The Fund's pro rata portion of the fidelity bond required by
Section 17(g) of the Act and other insurance premiums.
12. OTHER INVESTMENT ACTIVITIES OF THE ADVISER. The Trust acknowledges that
the Adviser or one or more of its affiliates may have investment
responsibilities or render investment advice to or perform other investment
advisory services for other individuals or entities and that the Adviser, its
affiliates or any of its or their directors, officers, agents or employees may
buy, sell or trade in any securities for its or their respective accounts
("Affiliated Accounts"). Subject to the provisions of paragraph 2 hereof, the
Trust agrees that the Adviser or its affiliates may give advice or exercise
investment responsibility and take such other action with respect to other
Affiliated Accounts which may differ from the advice given or the timing or
nature of action taken with respect to the Fund, provided that the Adviser acts
in good faith, and provided further, that it is the Adviser's policy to
allocate, within its reasonable discretion, investment opportunities to the Fund
over a period of time on a fair and equitable basis relative to the Affiliated
Accounts, taking into account the investment objectives and policies of the Fund
and any specific investment restrictions applicable thereto. The Trust
acknowledges that one or more
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of the Affiliated Accounts may at any time hold, acquire, increase, decrease,
dispose of or otherwise deal with positions in investments in which the Fund may
have an interest from time to time, whether in transactions which involve the
Fund or otherwise. The Adviser shall have no obligation to acquire for the Fund
a position in any investment which any Affiliated Account may acquire, and the
Trust shall have no first refusal, co-investment or other rights in respect of
any such investment, either for the Fund or otherwise.
13. CERTIFICATE OF AUTHORITY. The Trust and the Adviser shall furnish to
each other from time to time certified copies of the resolutions of their Board
of Trustees or Board of Directors or executive committees, as the case may be,
evidencing the authority of officers and employees who are authorized to act on
behalf of the Trust, the Fund and/or the Adviser.
14. LIMITATION OF LIABILITY. The Adviser (including its directors,
officers, shareholders, employees, control persons and affiliates of any
thereof) shall not be liable for any error of judgment or mistake of law or for
any loss suffered by the Fund in connection with the matters to which this
Agreement relates, except a loss resulting from willful misfeasance, bad faith
or gross negligence on the part of the Adviser in the performance of its duties
or from the reckless disregard by the Adviser of its obligations and duties
under this Agreement ("disabling conduct"). However, the Adviser will not be
indemnified for any liability unless (1) a final decision is made on the merits
by a court or other body before whom the proceeding was brought that the Adviser
was not liable by reason of disabling conduct, or (2) in the absence of such a
decision, a reasonable determination is made, based upon a review of the facts,
that the Adviser was not liable by reason of disabling conduct, by (a) the vote
of a majority of a quorum of trustees who are neither "interested persons" of
the Trust as defined in the Act nor parties to the proceeding ("disinterested,
non-party trustees"), or (b) an independent legal counsel in a written
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opinion. The Fund will advance attorneys' fees or other expenses incurred by the
Adviser in defending a proceeding, upon the undertaking by or on behalf of the
Adviser to repay the advance unless it is ultimately determined that the Adviser
is entitled to indemnification, so long as the Adviser meets at least one of the
following as a condition to the advance: (1) the Adviser shall provide a
security for its undertaking, (2) the Fund shall be insured against losses
arising by reason of any lawful advances, or (3) a majority of a quorum of the
disinterested, non-party trustees of the Trust, or an independent legal counsel
in a written opinion, shall determine, based on a review of readily available
facts (as opposed to a full trial-type inquiry), that there is reason to believe
that the Adviser ultimately will be found entitled to indemnification. Any
person employed by the Adviser who may also be or become an employee of the
Trust shall be deemed, when acting within the scope of his employment by the
Trust, to be acting in such employment solely for the Trust and not as the
Adviser's employee or agent.
15. CONFIDENTIALITY. Subject to the duty of the Adviser and the Trust to
comply with applicable law, including any demand of any regulatory or taxing
authority having jurisdiction, the parties hereto shall treat as confidential
all information pertaining to the Fund and the actions of the Adviser and the
Trust in respect thereof.
16. ASSIGNMENT. No assignment of this Agreement shall be made by the
Adviser, and this Agreement shall terminate automatically in the event of such
assignment. The Adviser shall notify the Trust in writing sufficiently in
advance of any proposed change of control, as defined in Section 2(a)(9) of the
Act, as will enable the Trust to consider whether an assignment will occur, and
to take the steps necessary to enter into a new contract with the Adviser.
17. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE TRUST. The Trust
represents, warrants and agrees that:
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A. The Adviser has been duly appointed by the Board of Trustees of
the Trust to provide investment services to the Fund as contemplated hereby.
B. The Trust will deliver to the Adviser a true and complete copy of
its then current prospectus and statement of additional information as effective
from time to time and such other documents or instruments governing the
investments of the Fund and such other information as is necessary for the
Adviser to carry out its obligations under this Agreement.
C. The Trust is currently in compliance and shall at all times comply
with the requirements imposed upon the Fund by applicable laws and regulations.
18. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE ADVISER. The Adviser
represents, warrants and agrees that:
A. The Adviser is registered as an "investment adviser" under
the Investment Advisers Act of 1940.
B. The Adviser will maintain, keep current and preserve on behalf of
the Fund, in the manner and for the time periods required or permitted by the
Act, the records identified in Schedule A. The Adviser agrees that such
records (unless otherwise indicated on Schedule A) are the property of the
Trust, and will be surrendered to the Trust promptly upon request.
C. The Adviser will complete such reports concerning purchases or sales
of securities on behalf of the Fund as the Trust may from time to time require
to ensure compliance with the Act, the Internal Revenue Code and applicable
state securities laws.
D. The Adviser has adopted a written code of ethics complying with
the requirements of Rule 17j-1 under the Act and will provide the Trust with a
copy of the code of ethics and evidence of its adoption. Within forty-five (45)
days of the end of the last calendar
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quarter of each year while this Agreement is in effect, the president or a vice
president of the Adviser shall certify to the Trust that the Adviser has
complied with the requirements of Rule 17j-1 during the previous year and that
there have been no violations of the Adviser's code of ethics or, if such a
violation has occurred, that appropriate action was taken in response to such
violation. Upon the written request of the Trust, the Adviser shall submit to
the Trust the reports required to be made to the Adviser by Rule 17j-1(d)(1).
E. The Adviser will promptly after filing with the Securities and
Exchange Commission an amendment to its Form ADV furnish a copy of such
amendment to the Trust.
F. Upon request of the Trust, the Adviser will provide assistance to
the Custodian in the collection of income due or payable to the Fund.
G. The Adviser will immediately notify the Trust of the occurrence of
any event which would disqualify the Adviser from serving as an investment
adviser of an investment company pursuant to Section 9(a) of the Act or
otherwise.
19. AMENDMENT. This Agreement may be amended at any time, but only by
written agreement between the Adviser and the Trust, which amendment, other than
amendments to Schedule A, is subject to the approval of the Board of Trustees
and the shareholders of the Fund in the manner required by the Act and the rules
thereunder, subject to any applicable exemptive order of the Securities and
Exchange Commission modifying the provisions of the Act with respect to approval
of amendments to this Agreement.
20. EFFECTIVE DATE; TERM. This Agreement shall become effective on the date
of its execution and shall remain in force for an initial term of two (2) years
from such date, and from year to year thereafter but only so long as such
continuance is specifically approved at least annually by the vote of a majority
of the Trustees who are not interested persons of the Trust or
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the Adviser, cast in person at a meeting called for the purpose of voting on
such approval, and by a vote of the Board of Trustees or of a majority of the
outstanding voting securities of the Fund. The aforesaid requirement that this
Agreement may be continued "annually" shall be construed in a manner consistent
with the Act and the rules and regulations thereunder.
21. TERMINATION. This Agreement may be terminated by either party hereto,
without the payment of any penalty, immediately upon written notice to the other
in the event of a breach of any provision thereof by the party so notified, or
otherwise upon sixty (60) days' written notice to the other, but any such
termination shall not affect the status, obligations or liabilities of any party
hereto to the other.
22. SHAREHOLDER LIABILITY. The Adviser is hereby expressly put on notice of
the limitation of shareholder liability as set forth in the Declaration of Trust
of the Trust and agrees that obligations assumed by the Trust pursuant to this
Agreement shall be limited in all cases to the Fund and its assets. The Adviser
agrees that it shall not seek satisfaction of any such obligations from the
shareholders or any individual shareholder of the Fund, nor from the Trustees or
any individual Trustee of the Trust.
23. DEFINITIONS. As used in paragraphs 16 and 20 of this Agreement, the
terms "assignment," interested person" and "vote of a majority of the
outstanding voting securities" shall have the meanings set forth in the Act and
the rules and regulations thereunder.
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24. APPLICABLE LAW. To the extent that state law is not preempted by the
provisions of any law of the United States heretofore or hereafter enacted, as
the same may be amended from time to time, this Agreement shall be administered,
construed and enforced according to the laws of the State of Ohio.
DUNHILL INVESTMENT TRUST
By: /s/ Xxxxx X. Xxxxxxxx
---------------------
Title: President
Date: June 29, 2001
ACCEPTANCE
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The foregoing Agreement is hereby accepted.
CITYFUND ADVISORY, INC.
By: /s/ Xxxxx X. Xxxxxxxx
---------------------
Title: President
Date: June 29, 2001
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SCHEDULE A
RECORDS TO BE MAINTAINED BY THE ADVISER
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1. (Rule 31a-1(b)(5) and (6)) A record of each brokerage order, and all other
portfolio purchases and sales, given by the Adviser on behalf of the Fund
for, or in connection with, the purchase or sale of securities, whether
executed or unexecuted. Such records shall include:
A. The name of the broker;
B. The terms and conditions of the order and of any modification or
cancellation thereof;
C. The time of entry or cancellation;
D. The price at which executed;
E. The time of receipt of a report of execution; and
F. The name of the person who placed the order on behalf of the Fund.
2. (Rule 31a-1(b)(9)) A record for each fiscal quarter, completed within ten
(10) days after the end of the quarter, showing specifically the basis or
bases upon which the allocation of orders for the purchase and sale of
portfolio securities to named brokers or dealers was effected, and the
division of brokerage commissions or other compensation on such purchase
and sale orders. Such record:
A. Shall include the consideration given to:
(i) The sale of shares of the Fund by brokers or dealers.
(ii) The supplying of services or benefits by brokers or dealers to:
(a) The Trust;
(b) the Adviser;
(c) any other portfolio adviser of the Trust; and
(d) any person affiliated with the foregoing persons.
(iii)Any other consideration other than the technical qualifications
of the brokers and dealers as such.
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B. Shall show the nature of the services or benefits made available.
C. Shall describe in detail the application of any general or specific
formula or other determinant used in arriving at such allocation of
purchase and sale orders and such division of brokerage commissions or
other compensation.
D. The name of the person responsible for making the determination of
such allocation and such division of brokerage commissions or other
compensation.
3. (Rule 31a-1(b)(10)) A record in the form of an appropriate memorandum
identifying the person or persons, committees or groups authorizing the
purchase or sale of portfolio securities. Where an authorization is made by
a committee or group, a record shall be kept of the names of its members
who participate in the authorization. There shall be retained as part of
this record: any memorandum, recommendation or instruction supporting or
authorizing the purchase or sale of portfolio securities and such other
information as is appropriate to support the authorization.*
4. (Rule 31a-1(f)) Such accounts, books and other documents as are required to
be maintained by registered investment advisers by rules adopted under
Section 204 of the Investment Advisers Act of 1940, to the extent such
records are necessary or appropriate to record the Adviser's transactions
with respect to the Fund.
______________________________________
*Such information might include: the current Form 10-K, annual and
quarterly reports, press releases, reports by analysts and from brokerage firms
(including their recommendation; i.e., buy, sell, hold) or any internal reports
or portfolio adviser reviews.
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