SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
STEWARD FUNDS, INC.
(“SFI”)
on behalf of theits series
Steward Large Cap Enhanced Index Fund
Steward Global Equity Income Fund
Steward International Enhanced Index Fund
Steward Select Bond Fund
(each, a “Fund”)
Securities Exchange Act of 1934Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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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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(X )
| Definitive Proxy Statement
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| Definitive Additional Materials
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( )
| Soliciting Material Pursuant to Rule 14a-12
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Capstone Christian Values Fund, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Payment of filing fee (Check the appropriate box):
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| No fee required.
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| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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| 1) Title of each class of securities to which transaction applies: N/A
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| 2) Aggregate number of securities to which transaction applies:N/A
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| 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):N/A
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| 4) Proposed maximum aggregate value of transaction: N/A
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| 5) Total fee paid: N/A
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| Fee paid previously with preliminary materials.
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| Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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PROXY STATEMENT
and
CAPSTONE SERIES FUND, INC.
for
(“CSFI”)
on behalf of its series
CAPSTONE GROWTH FUNDCAPSTONE CHRISTIAN VALUES FUND, INC.
Steward Small-Mid Cap Enhanced Index Fund
(a”Fund”)
for its series CHRISTIAN STEWARDSHIP LARGE CAP EQUITY INDEX FUNDCAPSTONE SOCIAL ETHICS AND RELIGIOUS VALUES FUND
for its series SHORT-TERM BOND FUND, BOND FUND, LARGE CAP EQUITY FUND, SMALL CAP EQUITY FUND, INTERNATIONAL FUND
5847 San Felipe,
3700 West Sam Houston Parkway South
Suite 4100250Houston, TX 77042
Houston, Texas 77057July 10, 2003
October 21, 2011
Dear Shareholder:
An annual meeting
We cordially invite you to attend a Special Meeting of Shareholders of the shareholders of: Funds on November 18, 2011 to consider two proposals that are described in greater detail in the enclosed proxy statement. Please read the enclosed information carefully and then submit your vote promptly.
Capstone Series Fund,Asset Management Company (“CAMCO”) is a wholly-owned subsidiary of Capstone Financial Services, Inc. (“CFS”). Edward L. Jaroski and Dan Watson, the two founders of CFS, currently own Class A shares of CFS that confer on each of them over 30% of the voting power over CFS. (Messrs. Jaroski and Watson currently have equity interests in CFS totaling 17.69% and 17.13%, respectively, of the outstanding shares of CFS.) Under applicable law, a person who owns beneficially, either directly or through one or more controlled companies, more than 25% of the voting securities of a company shall be presumed to control such company. Thus, Mr. Jaroski and Mr. Watson may each be deemed to have a controlling interest in CFS by reason of voting power. No other person has a controlling interest in CFS.
On or after November 1, 2011:
| a. | Mr. Watson will sell all his shares of CFS to Steward Financial Holdings, Inc. so that he will retain no shares or voting power in CFS. |
| b. | Mr. Jaroski will reduce his voting power over CFS from 30.95% to 21.10% by converting his current holdings to a share class with lesser voting rights. Mr. Jaroski’s equity ownership of CFS will remain at 17.69% of the outstanding CFS shares. |
| c. | Steward Financial Holdings, Inc. (which currently has 20.46% of the voting power and 42.18% of the equity ownership of CFS) will, after the transfer, have 51.46% of the voting power over CFS and own 59.31% of the outstanding shares of CFS. |
| d. | No other person will have a controlling interest in CFS. |
The terms of sale of Mr. Watson’s shares are as follows. Mr. Watson sold an option to SFH for its sole series Capstone Growth Fund; Capstone Christian Values Fund, Inc.,$100,000 to acquire all of his shares for its sole series, Christian Stewardship Large Cap Equity Index Fund;the exercise price of $1,724,294 payable as set forth below, at any time during the period beginning May 12, 2011 with an exercise period ending on January 13, 2012. The
closing date is anticipated to be on or about November 1, 2011 with an initial payment of $324,294 and Capstone Social Ethicsa promissory note issued by SFH for the amount of $1,400,000 with interest at a rate per annum of three and Religious Values Fund,one-half percent (3.5%).
Mr. Jaroski’s share transaction is a conversion of his Class A shares for its series Short-Term Bond Fund, Bond Fund, Large Cap Equity Fund, Small Cap Equity Fund and International Fund (each, a "Fund")Class B shares, which have lesser voting rights.
The Transaction will be
held on July 31, 2003 atdeemed to change the
Funds' offices at 5847 San Felipe, Suite 4100, Houston, Texas 77057 at 10:00 a.m. Central Standard Time. A Proxy Statement regarding the meeting,control of CAMCO, as defined under applicable law, which will cause each Fund’s investment advisory agreement with CAMCO to terminate. Applicable law also provides that a
proxy cardnew advisory agreement to provide for
your vote at the meeting, and an envelope, postage pre-paid, in which to return your executed proxy card are enclosed. At the meeting, shareholdersongoing management of each Fund must be approved by each Fund’s shareholders. The Funds’ Boards of Directors (“Boards”) recommend that shareholders approve a new advisory agreement with CAMCO. For all the Funds except Steward Small-Mid Cap Enhanced Index Fund, the new agreement is substantially similar to the Funds’ current agreements except for the date and term of the new agreement and the fact that one investment advisory agreement will be used for all the Funds instead of the current three separate, substantially identical, agreements. The Funds’ fee schedules will not change.
For Steward Small-Mid Cap Enhanced Index Fund, the new investment advisory agreement will eliminate provisions for administration services. Administration services will, instead, be provided under the administration agreement that is used for the other Funds. The administrator will be CAMCO affiliate, CFS Consulting Services, LLC. Thus, the investment advisory agreement, which will be the same agreement used for the other Funds, will provide only for investment advisory services. The services and fee schedule provided under the new advisory agreement will be unchanged from those under the current advisory agreement. There will be no material differences in the administration services provided by CFS Consulting Services, LLC under the new administration agreement compared with those provided under the current agreement, and the fee schedule under the new administration agreement will be identical to the administration fee schedule in the current advisory agreement.
The Boards are being askedalso taking this opportunity to ask shareholders to elect directors or trustees for their Fund(s)an additional independent Director and to ratifyre-elect the selectionFund’s current Directors. Each Board currently consists of Briggs, Buntingone insider Director and Dougherty, LLP asfour independent Directors. Each Board believes it is desirable to maintain a heavy weighting of independent Directors and that the Funds'election of an additional independent auditors. Director will help preserve this weighting in the event a current independent Director should resign or retire. Election of an additional Director, plus re-election of the Fund’s current Directors, will also preserve the ability of the Board to appoint new or replacement Directors in the future without incurring the costs of soliciting shareholder approval at that time.
The directors/trustees of each FundFunds’ Directors unanimously recommend that you voteFORthe
proposednew investment advisory agreement and to elect the nominees for
each Fund andFORratification of the auditors. Shareholders of Capstone Growth Fund are additionally being asked to vote on (1) a revision of the Fund's fundamental investment restrictions to update them in accordance with current legal requirements, and (2) a change in the form of the Fund's Service and Distribution Plan that would have the effect of reducing related administrative costs while not materially changing the rate of fees payable pursuant to the Plan. The directors of Capstone Growth Fund recommend that you voteFOR each of these proposals.
Director.
Detailed information concerning each of thethese proposals is contained in the enclosed Proxy Statement. We strongly urge you to participate in the meetingMeeting by reviewing the Proxy Statement and completing, signing and returning the proxy cardpromptly in the enclosed postage-paid envelope.
It is important that your vote be received no later than November 17, 2011. If you have questions regarding these materials please call 1-800-262-6631.
Chairman
STEWARD FUNDS, INC.
(“SFI”)
on behalf of its series
Steward Large Cap Enhanced Index Fund
Steward Global Equity Income Fund
Steward International Enhanced Index Fund
Steward Select Bond Fund
and
CAPSTONE SERIES FUND, INC.
for
(“CSFI”)
on behalf of its series
CAPSTONE GROWTH FUNDCAPSTONE CHRISTIAN VALUES FUND, INC.
Steward Small-Mid Cap Enhanced Index Fund
for its series CHRISTIAN STEWARDSHIP LARGE CAP EQUITY INDEX FUNDCAPSTONE SOCIAL ETHICS AND RELIGIOUS VALUES FUNDfor its series SHORT-TERM BOND FUND, BOND FUND, LARGE CAP EQUITY FUND, SMALL CAP EQUITY FUND, INTERNATIONAL FUND5847 San Felipe,
3700 West Sam Houston Parkway South
Suite 4100
250
Houston, Texas
77057NOTICE OF ANNUAL MEETING OF SHAREHOLDERS77042
Notice of Meeting of Shareholders
To be held on November 18, 2011
Notice is hereby giventhat an Annualgiven that a Special Meeting of Shareholders ("Meeting"(“Meeting”) of: Capstone Series Fund, Inc., for its sole series, Capstone Growth Fund; Capstone Christian Values Fund, Inc., for its sole series, Capstone Christian Stewardshipof the Steward Large Cap Enhanced Index Fund, Steward Small-Mid Cap Enhanced Index Fund, Steward Global Equity Income Fund, Steward International Enhanced Index Fund;Fund and Capstone Social Ethics and Religious Values Fund, for its series, Short-TermSteward Select Bond Fund Bond Fund, Large Cap Equity Fund, Small Cap Equity Fund and International Fund (each, a "Fund"(“Funds”) will be held on July 31, 2003November 18, 2011 at the Funds'Fund’s offices at 5847 San Felipe,3700 West Sam Houston Parkway South, Suite 4100,250, Houston, Texas 7705777042 at 10:9:00 a.m. Central Standard TimeforTime for the following purposes, which are more fully described in the Proxy Statement:
Proposal 1
| All Funds --to elect Directors/Trustees for the Funds;
To approve a new investment advisory contract with Capstone Asset Management Company Steward Large Cap Enhanced Index Fund, Steward Global Equity Income Fund, Steward International Enhanced Index Fund, Steward Select Bond Fund |
Proposal 2
| All Funds -- to ratify the selection of Briggs, Bunting & Dougherty, LLP as the Funds' independent auditors;
To approve a new investment advisory contract with Capstone Asset Management Company and a new administration agreement with CFS Consulting Services, LLC Steward Small-Mid Cap Enhanced Index Fund |
Proposal 3
| Capstone Growth Fund -- to approve revisions to the Fund's investment restrictions;
To elect Directors, including a new independent Director all Funds |
Proposal 4
Other | Capstone Growth Fund -- to approve a change in the Fund's Service and Distribution Plan from a reimbursement-type to a compensation-type plan; and
|
Other
| To transact any other business that may properly come before the Meeting or any adjournments or postponements thereof.thereof all Funds |
The Boards of Directors/TrusteesDirectors of the Funds have fixed the close of business on June 24, 2003August 22, 2011 as the record date for the determination of shareholders entitled to notice of, and to vote at, the Meeting or any adjournment or postponement thereof.
The Funds’ Directors unanimously recommend that you vote FOR Proposals 1 and 2 and FOR each of the nominees for Director.
Your vote is important, regardless of the number of shares you own of a Fund. You can vote easily by completing the enclosed proxy card and by signing, dating and returning it in the enclosed self-addressed, postage-paid envelope. Or you may vote in person at the Meeting.* Please help the Funds avoid the expense of additional mailings by submitting your proxy today.
We will be happy to answer your questions or provide additional information on request. Please call 1-800-262-6631.
Important Notice Regarding the Availability of Proxy Materials for the Special Meeting to be Held on November 18, 2011.
The notice of meeting, proxy statement and form of proxy card are available on the Internet at www.stewardmutualfunds.com. Additional information about the Funds is available in their prospectus, statement of additional information and semi-annual and annual reports to shareholders. The most recent annual report for the Funds for the fiscal year ended April 30, 2011 and the semi-annual report for the period ended October 31, 2010, respectively, have been mailed previously to shareholders. If you would like to receive additional copies of any of these reports for the Funds free of charge, please contact the Funds at the address indicated on the front page of this Proxy Statement or call the Funds toll-free at 1-800-468-6337. Any such reports requested will be sent by first class mail within three business days of receipt of the request.
By Order of the Boards of
Directors/TrusteesJuly 10, 2003 Linda G. Giuffre,Directors,
Steward Funds, Inc. and Capstone Series Fund, Inc.
Richard A. Nunn, Secretary
October 21, 2011
* To attend the Meeting in person, you will need to show proof of ownership of shares of the Funds, such as your proxy card (or a copy thereof) or, if your shares are held of record by a financial intermediary, such as a broker, or nominee, a proxy card from the record holder or other proof of beneficial ownership, such as a brokerage statement showing your holdings of shares of the Funds.
PROXY STATEMENT
STEWARD FUNDS, INC.
(“SFI”)
on behalf of its series
Steward Large Cap Enhanced Index Fund
Steward Global Equity Income Fund
Steward International Enhanced Index Fund
Steward Select Bond Fund
(each, a “Fund”)
and
CAPSTONE SERIES FUND, INC.
for
(“CSFI”)
on behalf of its series
CAPSTONE GROWTH FUNDCAPSTONE CHRISTIAN VALUES FUND, INC.
Steward Small-Mid Cap Enhanced Index Fund
(a “Fund”)
for its series CHRISTIAN STEWARDSHIP LARGE CAP EQUITY INDEX FUNDCAPSTONE SOCIAL ETHICS AND RELIGIOUS VALUES FUND
for its series SHORT-TERM BOND FUND, BOND FUND, LARGE CAP EQUITY FUND, SMALL CAP EQUITY FUND, INTERNATIONAL FUND5847 San Felipe,
3700 West Sam Houston Parkway South
Suite 4100
250
Houston, Texas
77057ANNUAL77042
SPECIAL MEETING OF SHAREHOLDERS
November 18, 2011
This Proxy Statement is being furnished to you in connection with the solicitation of proxies by the Boards of Directors/Trustees ("Boards"Directors (“Boards”) of:of Steward Funds, Inc. and Capstone Series Fund, Inc. ("CSFI"), for its sole series, Capstone Growth Fund ("Growth Fund); Capstone Christian Values Fund, Inc. ("CCVF") for its sole series, Christian Stewardship Large Cap Equity Index Fund ("CCVF Large Cap Fund"); and Capstone Social Ethics and Religious Values Fund ("SERV") for its series, Short-Term Bond Fund, Bond Fund, Large Cap Equity Fund, Small Cap Equity Fund and International Fund (each such entity, including each series, a "Fund"), to be voted at an annuala special meeting of shareholders ("Meeting"(“Meeting”) to be held July 31, 2003November 18, 2011 at 5487 San Felipe,3700 West Sam Houston Parkway South, Suite 4100,250, Houston, Texas 77057,77042., at 10:9:00 a.m. Central Standard Time, for the following purposes, which are described in greater detail in thisthe Proxy Statement.
Proposal 1 | | Fund(s) Affected
|
1.
| To elect Directors/Trustees
| | All Funds
|
2.
| To ratify the selection of Briggs, Bunting
& Dougherty, LLP as the Funds' independent
auditors
| | All Funds
|
3.
| To approve revisions to the Fund's fundamental investment restrictions.
| | Capstone Growth Fund
|
4.
| To approve a change innew investment advisory contract with Capstone Asset Management Company Steward Large Cap Enhanced Index Fund, Steward Global Equity Income Fund, Steward International Enhanced Index Fund, Steward Select Bond Fund |
| Proposal 2 | To approve a new investment advisory contract with Capstone Asset Management Company and a new administration agreement with CFS Consulting Services, LLC Steward Small-Mid Cap Enhanced Index Fund |
| Proposal 3 | To elect Directors, including a new independent Director all Funds |
| Other | To transact any other business that may properly come before the Fund's Service and Distribution Plan from a reimbursement-type to a compensation-type plan | | Capstone Growth Fund
Meeting or any adjournments or postponements thereof. |
The Boards have fixed the close of business on June 24, 2003,August 22, 2011 as the record date ("(“Record Date"Date”) for the determination of shareholders entitled to notice of, and to vote at, the Meeting and at any adjournment or postponement of the Meeting on proposals affecting a Fund in which such a shareholder owned shares as of the Record Date.Meeting. Shareholders of record as of the record dateRecord Date will be entitled to one vote for each share held, and to a fractional vote in proportion to each fractional share held. As of the Record Date, the following numbersnumber of shares were outstanding for each Fund:Fund were:
FUND NAME
Name of Fund | SHARES OUTSTANDING
AS OF June 24, 2003
Shares Outstanding on Record Date |
CSFI GrowthSteward Large Cap Enhanced Index Fund
| 4,212,829
6,150,574 |
CCVF LargeSteward Small-Mid Cap Enhanced Index Fund
| 424,297
7,727,075 |
SERV Short-TermSteward Global Equity Income Fund
| 4,596,370 |
| Steward International Enhanced Index Fund | 4,115,621 |
| Steward Select Bond Fund | 1,460,598
|
SERV Bond Fund
| 2,529,582
|
SERV Large Cap Equity Fund
| 3,274,164
|
SERV Small Cap Equity Fund
| 839,241
|
SERV International Fund
| 730,983
5,776,268 |
The approximate mailing date for this Proxy Statement is
July 10, 2003,October 24, 2011 or as soon as practicable thereafter.
Only shareholders of record at the close of business on the Record Date will be entitled to notice of, and to vote at, the Meeting. Shares represented by properly executed proxies received prior to the Meeting, unless revoked prior to the Meeting, will be voted at the Meeting in accordance with instructions indicated thereon. If no instructions are given, properly executed proxies will be voted in favor of each applicable proposal.Proposal. The persons named as proxy holders on the proxy card will vote in their discretion on any other business that may properly come before the Meeting or any adjournment or postponement thereof. A valid proxy may bewhich does not state that it is irrevocable shall continue in full force and effect unless (i) the person executing the proxy revokes it before the vote pursuant to that proxy is taken, (a) by a writing delivered to the Funds stating that the proxy is revoked,at or (b) by executing a subsequent proxy, or (c) by attending the Meeting in person and voting, or (d) using any time priorelectronic, telephonic, computerized or other alternative means of revocation authorized by the Boards for authorizing the proxy to its exercise by (a) submitting a properly executed, subsequently dated proxy, (2) otherwise givingact; or (ii) the Funds receive written notice of revocation to the Secretarydeath or incapacity of the applicable Fund(s),person executing that proxy before the vote
pursuant to that proxy is counted. Unless otherwise specifically limited by their terms, proxies shall entitle the shareholder to vote at any adjournment or
(3) attendingpostponement of the
Meeting and voting in person.TheMeeting.
For Steward Small-Mid Cap Fund, the presence in person or by proxy of holders of record of
a majorityone third of the
outstanding shares of
SERVthe Fund shall constitute a quorum at the Meeting for
transacting business. Theacting on proposals with respect to that Fund. For the other Funds, the presence in person or by proxy of holders of record of
one-thirdone third of the
outstanding shares of
CCVF Large Capeach Fund
and of Growth Fund, respectively, shall constitute a quorum
atfor purposes of approving the
Meetingproposed investment advisory agreement for
transacting business.that Fund. With respect to election of Directors and any other business that may be brought before the meeting, the presence in person or by proxy of holders of record of one third of the shares of SFI shall constitute a quorum. For purposes of determining the presence of a quorum at the Meeting, abstentions and broker non-votes (that is, proxies from brokers or nominees indicating that such persons have not received instructions from the beneficial owner or other persons entitled to vote shares on a particular
proposalProposal with respect to which the brokers or nominees do not have discretionary power) will be treated as shares that are present. In the event that the necessary quorum to transact business or the vote required to approve or reject
any proposal for a
FundProposal is not obtained by the date of the Meeting, holders of a majority of shares of
th atthe applicable Fund
or Funds entitled to vote at the Meeting and present in person or by proxy, or any officer of
the Fundsuch Funds present and entitled to preside or act as Secretary of the Meeting, may adjourn the Meeting
as to such Fund and proposal. In the case of adjournment by the Secretary, the persons named as proxies will vote in favor of adjournment with respect to
a proposal those proxies that such persons are entitled to vote in favor of that proposal and will vote against any such
adjournment with respect to a proposal those proxiesbusiness or Proposal. Broker non-votes will be excluded from the denominator of the calculation of the number of votes required to
be voted against that proposal.Electionapprove any Proposal to adjourn the Meeting. If you plan to attend the Meeting in person, you will need to bring proof of ownership and amount of Fund shares. Such proof includes the nominees for Directors/Trustees (Proposal 1) will beproxy card (or a copy) or, if your shares are held of record by a pluralityfinancial intermediary, such as a broker-dealer, or nominee, a proxy card from the record holder or other proof of the sharesbeneficial ownership, such as a brokerage statement showing your Fund holdings.
Required vote. Approval of each of SERV, CSFIProposals 1 and CCVF voted at the Meeting. Ratification of auditors (Proposal 2) as to each of: CSFI, on behalf of Growth Fund; CCVF, on behalf of Large Cap Fund; and SERV (as a whole, and not on a per series basis), respectively,2 requires the affirmative vote of a majority of shares of each of CSFI, CCVF and SERV present at the Meeting, provided a quorum is present. Approval of Proposal 3 (proposed change in Growth Fund's fundamental investment restrictions) and approval of Proposal 4 (approval of change in Growth Fund's Service and Distribution Plan) each requires the vote of "a“a majority of the outstanding voting securities"securities” of Growtheach applicable Fund. The term "a“a majority of the outstanding voting securities,"” as used in this proxy statement,Proxy Statement, is defined by the Investment Company Act of 1940, as amended, ("1940 Act"Act") as the affirmative vote of the lesser of (a) 67 percent or more of the voting securities present at the Meeting, if the holders of more than 50 percent of the Fund'sFund’s outstanding voting securities are present or represented by proxy, or (b) more than 50 percent of the Fund'sFund’s outstanding voting securities ("(“1940 Act Majority"Majority”). The affirmative vote of a plurality of the voting securities of SFI and of CSFI, respectively, voted at the Meeting is required to approve the election of each nominee as Director with respect to SFI and CSFI, respectively. An abstention or a broker non-vote will be treated as present, but not as a vote cast with respect to, in favor of, or against, a proposal.Proposal. Thus, abstentions will not affect Proposal 1. Anan abstention will have the effect of a negative vote for Proposals 2, 3 and 4. Proxies from brokers or nominees indicating that such persons have not received voting instructions from the beneficial owner or other person entitled to vote the particular shares on the proposal will be voted in favor of Proposal 1 butbroker non-vote will have the effect of a vote against an adjournmentProposal 1 and against Proposals 2, 3 and 4.2.
Shareholders do not have appraisal rights in connection with these Proposals.
The Boards know of no other business that will be presented to the Meeting. If any other matter is properly presented, it is the intention of the persons named on the enclosed proxy card(s) to vote in accordance with their discretion.
Background for Proposals 1 and 2
Capstone Asset Management Company (“CAMCO”), the Funds’ investment adviser, is a wholly-owned subsidiary of Capstone Financial Services, Inc. (“CFS”). Edward L. Jaroski and Dan Watson, the two founders of CFS, currently own Class A shares of CFS that confer on each of them over 30% of the voting power over CFS. (Messrs. Jaroski and Watson currently have equity interests in CFS totaling 17.69% and 17.13% of the outstanding shares of CFS, respectively.) Under applicable law, a person who owns beneficially, either directly or through one or more controlled companies, more than 25% of the voting securities of a company shall be presumed to control such company. Thus, Mr. Jaroski and Mr. Watson
may each be deemed to have a controlling interest in CFS. No other person has a controlling interest in CFS.
On or after November 1, 2011:
| a. | Mr. Watson will sell all his shares of CFS to Steward Financial Holdings, Inc. so that he will retain no shares or voting power in CFS. |
| b. | Mr. Jaroski will reduce his voting power over CFS from 30.95% to 21.10% by converting his current holdings to a share class with lesser voting rights. Mr. Jaroski’s equity ownership of CFS will remain at 17.69% of CFS’s outstanding shares. |
| c. | Steward Financial Holdings, Inc. (which currently has 20.46% of the voting power and 42.18% of the equity ownership of CFS) will, after the transfer, have 51.46% of the voting power over CFS and own 59.31% of the outstanding shares of CFS. |
| d. | No other person will have a controlling interest in CFS. |
The terms of sale of Mr. Watson’s shares are as follows. Mr. Watson sold an option to SFH for $100,000 to acquire all of his shares for the exercise price of $1,724,294 payable as set forth below, at any time during the period beginning May 12, 2011 with an exercise period ending on January 13, 2012. The closing date is anticipated to be on or after November 1, 2011 with an initial payment of $324,294 and a promissory note issued by SFH for the amount of $1,400,000 with interest at a rate per annum of three and one-half percent (3.5%).
Mr. Jaroksi’s share transaction is a conversion of his Class A shares for Class B shares, which have lesser voting rights.
As a result of these transactions, after the closing date of the transaction, neither Mr. Jaroski nor Mr. Watson will be deemed to control CFS, while Steward Financial Holdings, Inc. will be deemed to have control, as defined by applicable law. Under applicable law and the terms of the Funds’ current investment advisory agreements, this change of control terminates each advisory agreement. Thus, each Fund must adopt a new investment advisory agreement. Each such contract must be approved by a majority of the applicable Fund’s Board and by a majority of that Fund’s independent directors, as well as by a 1940 Act Majority of the Fund’s outstanding shares.
Applicable law also provides that, following a change of control of this type, for at least three years following the change of control, at least 75% of the Funds’ directors must consist of persons who are independent of the adviser, both as the adviser was controlled prior to, and after, the change of control. Additionally, no “unfair burden” may be placed on a Fund as a consequence of the change of control. “Unfair burden” includes receipt of compensation, during the two-year period following the change of control, by specified related persons other than for bona fide services. The Funds will comply with these requirements.
Steward Financial Holdings, Inc.
Steward Financial Holdings, Inc. (“SFH”), 1661 N. Boonville Avenue, Springfield, MO 65803-2751, is a holding company. SFH is a current shareholder of CFS and is a wholly owned, for profit subsidiary, of AG Financial Services Group (AGFSG). AGFSG was organized by the Assemblies of God Church in 1998.
PROPOSAL 1: TO APPROVE A NEW INVESTMENT ADVISORY AGREEMENT (Steward Large Cap Enhanced Index Fund, Steward Global Equity Income Fund, Steward International Enhanced Index Fund, Steward Select Bond Fund)
The new investment advisory agreement (”New Advisory Agreement”) which the Board of Steward Funds, Inc. is recommending for approval by Fund shareholders has terms that are substantially the same
as the current investment advisory agreements (“Current Advisory Agreement; each, an “Agreement”), except for (1) its date of commencement and term, (2) the fact that there will be a single Agreement for all the Funds, rather than the current three separate, substantially identical Agreements and (3) the clarification that share redemption expenses are borne by the Funds.
The Current Advisory Agreements were effective upon commencement of each Fund’s operations. Each was approved by the Fund’s initial shareholder prior to such commencement of operations. Each Current Advisory Agreement was last reviewed and renewed by the Board and by all the Funds’ independent Directors at a meeting held February 25, 2011. The New Advisory Agreement was reviewed and approved by the Board and by all the Fund’s independent Directors at a meeting held August 9, 2011.
The following general description of the material terms of the Agreements is qualified in its entirety by reference to Exhibit A, which contains the form of New Advisory Agreement, and to Exhibit B, which contains each Current Advisory Agreement.
Both the Current Advisory Agreements and the New Advisory Agreement provide that CAMCO shall provide a program of continuous investment management for each Fund in accordance with the Fund’s investment objectives, policies and limitations as stated in the Fund’s prospectus and Statement of Additional Information, as amended from time to time. CAMCO shall also make investment decisions for each Fund and place orders to purchase and sell securities for the Fund. Each Agreement provides that CAMCO may delegate its rights, duties and obligations under the Agreement to one or more sub-advisers, subject to approval by the Directors and to satisfaction of requirements of applicable law. Each Agreement provides that CAMCO shall pay the compensation and expenses of all its directors, officers and employees who serve as officers and executive employees of the Fund and of all Directors of each Fund who are interested persons of CAMCO, and CAMCO shall make available, without expense to the Fund, the service of its directors, officers and employees who may be duly elected Directors or officers of the Fund, subject to their individual consent to serve and to any limitations imposed by law. Each Agreement has substantially identical provisions regarding expenses that are to be borne by the Fund, except for the clarification noted above that the Funds bear expenses of share redemption. Each Agreement provides that the adviser shall not be required to bear expenses of distribution and sale of Fund shares to the extent that such expenses are assumed by the applicable Fund’s principal underwriter or some other party, or to the extent that such expenses are paid pursuant to a plan adopted pursuant to Rule 12b-1 under the 1940 Act. The adviser will be required to pay such of the foregoing sales expenses as are not assumed or required to be paid by the principal underwriter or some other party or are not permitted to be paid by the Fund (or some other party) pursuant to such a plan. Each Agreement provides that it shall continue with respect to a Fund for an initial two-year period, and thereafter for successive annual periods provided such continuance is approved at least annually by (i) the Directors or (ii) a 1940 Act Majority vote of the Fund’s shareholders and, in either case, also by a majority of the Fund’s independent Directors by vote cast in person at a meeting called for such purpose. Each Agreement may be terminated with respect to a Fund (a) at any time without penalty upon vote of a majority of the Directors or by a 1940 Act Majority vote of the Fund’s shareholders upon 60 days’ written notice to the adviser or by the adviser upon 90 days’ written notice to the Fund. Each Agreement will also terminate automatically in the event of its assignment with respect to any Fund for which it is assigned (as defined in the 1940 Act).
Each Agreement contains identical fee schedules for the applicable Fund. Each Agreement provides that, as compensation for the services provided and expenses assumed by CAMCO under the Agreement, the Fund will pay CAMCO at the end of each calendar month an advisory fee computed daily at the following annual rates based on the Fund’s average daily net assets:
| Steward Large Cap Enhanced Index Fund | Steward Select Bond Fund |
| |
| 0.15%of the first $500 million | 0.25% of the first $500 million |
| 0.125% of the next $500 million | 0.20% of the next $500 million |
| 0.10% of assets over $1 billion | 0.175% of assets over $1 billion |
| Steward International Enhanced Index Fund | Steward Global Equity Income Fund |
| |
| 0.30% of the first $500 million | 0.30% of the first $500 million |
| 0.25% of the next $500 million | 0.25% of the next $500 million |
| 0.20% of assets over $1 billion | 0.20% of assets over $1 billion |
Each Agreement provides that, following an initial two-year term, it will continue with respect to each applicable Fund for annual periods, subject to approval by the Board or by a 1940 Act Majority vote of the Fund’s shareholders, as well as by a majority of the Fund’s independent Directors. Amendments are also subject to Board or shareholder, and independent Director, approval, as required by applicable law.
The Boards of the Funds unanimously recommend that you vote FOR approval of the New Advisory Agreement.
PROPOSAL 2: TO APPROVE A NEW INVESTMENT ADVISORY AGREEMENT AND A NEW ADMINISTRATION AGREEMENT (Steward Small-Mid Cap Enhanced Index Fund)
The new investment advisory agreement (”New Advisory Agreement”) which the Board of Capstone Series Fund, Inc. is recommending for approval by Fund shareholders contains substantially similar provisions for investment advisory services as are provided in the current investment advisory agreement (“Current Advisory Agreement”) (each, an “Advisory Agreement”). However, there are three principal differences between the New Advisory Agreement and the Current Advisory Agreement, besides their commencement date and term.
First, the New Advisory Agreement for the Fund will also cover the series of Steward Funds, Inc. (see Proposal 1). The Fund, although currently a series of Capstone Series Fund, Inc., has since February 28, 2006, been offered though a common prospectus with the series of Steward Funds, Inc. The term “Steward” in the Fund’s name identifies it with the series of Steward Funds, Inc. and it is operated as one of the Steward Funds, having an exchange privilege with the series of Steward Funds, Inc. and similar socially responsible investment policies. The Fund will shortly be reorganized as a series of Steward Funds, Inc., through a tax-free reorganization that will not require approval by Fund shareholders. The reorganization of the Fund, from one Maryland corporation to another Maryland corporation, will not affect the operations of the Fund, but will simplify the Fund’s administration. Having a common investment advisory agreement for all the Steward Funds, as is proposed, is one of the administrative simplifications.
Second, the New Advisory Agreement will not include administration provisions and fees. Administration for the Fund will be provided under a separate, new Administration Agreement which will be the same agreement that covers the series of Steward Funds, Inc. The Administration Agreement will be with CFS Consulting Services, LLC, an affiliate of CAMCO and will have more detailed terms than those relating to administration in the Current Advisory Agreement. However, the services to be provided under the new Administration Agreement will be of the same nature and quality as the administration services provided to the Fund under the Current Advisory Agreement and the fee schedule will be identical to the fee schedule for administration services contained in the Current Advisory Agreement.
Third, the New Advisory Agreement provides that the adviser shall not be required to bear expenses of distribution and sale of Fund shares to the extent that such expenses are assumed by the Fund’s principal underwriter or some other party, or to the extent that such expenses are paid under a plan adopted pursuant to Rule 12b-1 under the 1940 Act. The adviser will be required to pay such of the foregoing sales expenses as are not assumed or required to be paid by the principal underwriter or some other party or are not permitted to be paid by the Fund (or some other party) pursuant to such a plan.
Other less significant differences eliminate provisions that are no longer relevant or that have no material implications, so that it is preferable to use the wording contained in the Steward Funds, Inc. form of advisory agreement. For example, the New Advisory Agreement eliminates a provision in the Current Advisory Agreement permitting the Fund to request additional services from the adviser for additional fees. The New Advisory Agreement clarifies that the adviser shall pay the compensation and expenses of all Fund Directors who are interested persons of the adviser. The New Advisory Agreement requires the adviser to give the Fund 90 (instead of the current 60) days’ notice of an intent to terminate the Agreement.
Except for the differences described above, the terms of the Current Advisory Agreement and the New Advisory Agreement, are generally as follows. (This description of the material terms of the Agreements is qualified in its entirety by reference to Exhibit A, which contains the form of New Advisory Agreement, and to Exhibit C, which contains the Current Advisory Agreement. The new Administration Agreement is contained in Exhibit D.)
Both the Current Advisory Agreement and the New Advisory Agreement provide that CAMCO shall provide a program of continuous investment management for the Fund in accordance with the Fund’s investment objectives, policies and limitations as stated in the Fund’s prospectus and Statement of Additional Information, as amended from time to time. CAMCO shall also make investment decisions for the Fund and place orders to purchase and sell securities for the Fund. Each Agreement provides that CAMCO may delegate its rights, duties and obligations under the Agreement to one or more sub-advisers, subject to approval by the Directors and to satisfaction of requirements of applicable law. Each Agreement provides that CAMCO shall pay the compensation and expenses of all its directors, officers and employees who serve as officers and executive employees of the Fund and of all Directors of the Fund who are interested persons of CAMCO, and CAMCO shall make available, without expense to the Fund, the services of its directors, officers and employees who may be duly elected Directors or officers of the Fund, subject to their individual consent to serve and to any limitations imposed by law. Except as indicated above, each Agreement has substantially similar provisions regarding expenses that are to be borne by the Fund. Each Agreement provides that it shall continue with respect to the Fund for an initial two-year period, and thereafter for successive annual periods provided such continuance is approved at least annually by (i) the Directors or (ii) a 1940 Act Majority vote of the Fund’s shareholders and, in either case, also by a majority of the Fund’s independent Directors by vote cast in person at a meeting called for such purpose. Each Agreement may be terminated with respect to the Fund (a) at any time without penalty upon vote of a majority of the Directors or by a 1940 Act Majority vote of the Fund’s shareholders upon 60 days’ written notice to the adviser. As noted above, the Current Advisory Agreement provides that the Agreement may be terminated by the adviser upon 60 days’ written notice to the Fund, while the New Advisory Agreement requires 90 day’s written notice to the Fund. Each Agreement will also terminate automatically in the event of its assignment (as defined in the 1940 Act) with respect to the Fund.
The Current Advisory Agreement and New Advisory Agreements contain identical fee schedules for the Fund. Each Agreement provides that, as compensation for the services provided and expenses assumed by CAMCO under the Agreement, the Fund will pay CAMCO at the end of each calendar month an advisory fee computed daily at the following annual rates based on the Fund’s average daily net assets:
| Steward Small-Mid Cap Enhanced Index Fund* |
|
| 0.15% on assets up to $500 million |
| 0.125% - $500,000,001 - $1 billion |
| 0.10% on assets over $1 billion- |
Each Agreement provides that, following an initial two-year term, it will continue with respect to the Fund for annual periods, subject to approval by the Board or by a 1940 Act Majority vote of the Fund’s shareholders, as well as by a majority of the Fund’s independent Directors. Amendments are also subject to Board or shareholder, and independent Director, approval.
The Current Advisory Agreement was approved by shareholders effective May 11, 1992. After its initial two-year term, it has been reviewed and renewed for subsequent annual terms by the Fund’s Board and by its independent Directors. The Current Advisory Agreement was last reviewed and renewed by the Fund’s Directors and by all the Fund’s independent Directors at a meeting held February 25, 2011. The New Advisory Agreement was reviewed and approved by the Fund’s Directors and by all the Fund’s independent Directors at a meeting held August 9, 2011.
The Boards of the Funds unanimously recommend that you vote FOR approval of the New Advisory Agreement and the Administration Agreement.
INFORMATION RELEVANT TO PROPOSALS 1 AND 2
Advisory and other fees paid to CAMCO and its affiliates, Capstone Asset Planning Company (“CAPCO”), the Fund’s distributor, and CFS Consulting Services, LLC during the Funds’ fiscal year ended April 30, 2011 are as follows:
Payments to CAMCO
Steward Large Cap Enhanced Index Fund
| Investment advisory fees | | $237,554 |
| Administration fees | | $ 107,632 |
| Compliance Services fees | | $ 39,591 |
| Class Action/Fair Fund fees | | $ 1,603 |
| Total fees to CAMCO | | $386,380 |
Steward Small-Mid Cap Enhanced Index Fund
| Investment advisory fees | | $149,913 |
| Administration fees | | $ 67,925 |
| Compliance Services fees | | $ 24,983 |
| Class Action/Fair Fund fees | | $517 |
| Total fees to CAMCO | | $243,338 |
Steward Global Equity Income Fund
| Investment advisory fees | | $271,447 |
| Administration fees | | $ 61,442 |
| Compliance Services fees | | $ 22,620 |
| Class Action/Fair Fund fees | | $0.00 |
| Total fees to CAMCO | | $355,509 |
Steward International Enhanced Index Fund
| Investment advisory fees | | $305,653 |
| Administration fees | | $ 69,433 |
| Compliance Services fees | | $ 25,471 |
| Class Action/Fair Fund fees | | $0.00 |
| Total fees to CAMCO | | $400,557 |
Steward Select Bond Fund
| Investment advisory fees | | $343,855 |
| Administration fees | | $ 93,599 |
| Compliance Services fees | | $ 34,384 |
| Class Action/Fair Fund fees | | $0.00 |
| Total fees to CAMCO | | $471,838 |
After the change of control, CAMCO will continue to provide substantially identical investment advisory services to the Funds, at the same fee rates. The Funds’ administration services will be provided by a CAMCO affiliate, CFS Consulting Services, LLC under a new administration agreement. (For Steward Small-Mid Cap Fund, this administration agreement is described under Proposal 2.) Administration fee schedules will be the same as they are currently for each of the Funds and the administration services to be
provided will be substantially similar to those presently provided to the Funds. Effective August 17, 2011, the Funds’ compliance services are being provided by CFS Consulting Services, LLC under a new agreement that continues the services provided under the previous compliance services agreement, but that also covers services of the Funds’ Chief Compliance Officer. Fees under the new compliance services agreement were increased to cover compensation of the Chief Compliance Officer, as well as certain
expenses related to travel outside the Houston, Texas area in connection with matters covered by the agreement.
Payments to CAPCO
During the year ended April 30, 2011, CAPCO received fees under the Funds’ Service Plan and under an Administrative Services Plan. All fees under the Administrative Services Plan were paid out: none were retained by CAPCO. The fees paid by each Fund under each Plan are as follows:
| Plan | Steward Large Cap Enhanced Index Fund | Steward Small-Mid Cap Enhanced Index Fund | Steward Global Equity Income Fund | Steward International Enhanced Index Fund | Steward Select Bond Fund |
| Service and Distribution Plan | $45,060 | $103,764 | $23,845 | $24,684 | $36,303 |
| Administrative Services Plan | $18,024 | $4,535 | $9,538 | $9,873 | $14,521 |
The amounts retained by CAPCO under each Plan during the Funds’ fiscal year ended April 30, 2011 were as follows:
| Plan | Steward Large Cap Enhanced Index Fund | Steward Small-Mid Cap Enhanced Index Fund | Steward Global Equity Income Fund | Steward International Enhanced Index Fund | Steward Select Bond Fund |
| Service and Distribution Plan | $3,764 | $78,034 | ($152) | $493 | $5,469 |
| Administrative Services Plan | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 |
Each Plan will continue following the change of control.
The Funds also pay fees to CAMCO affiliate, CFS Consulting Services, LLC, for portfolio screening services. During the Funds’ fiscal year ended April 30, 2011, such fees were as follows: Steward Large Cap Enhanced Index Fund, $124,227; Steward Small-Mid Cap Enhanced Index Fund, $78,398 ; Steward Global Equity Income Fund, $70,939; Steward International Enhanced Index Fund, $80,025; Steward Select Bond Fund, $107,954.
CAMCO is a wholly-owned subsidiary of Capstone Financial Services, Inc. For information regarding the principal executive officers and directors of CAMCO, as well as information regarding Directors and officers who are also officers, employees or directors of CAMCO, or shareholders of CFS, see Exhibit E.
Review of the Proposed Agreement by the Boards of Directors
At its meeting held August 9, 2011, the Boards considered the proposed new Agreement. For all the Funds except Steward Small-Mid Cap Enhanced Index Fund, they noted that the new Agreement was substantially the same as the current Agreements, except for its date of commencement and term and the fact that all Funds would be covered under one Agreement, rather than three agreements with substantially identical terms. There would be no change to the fee schedule applicable to each Fund. For Steward Small-Mid Cap Enhanced Index Fund, the Boards noted that, although the new Agreement would not contain provisions for fund administration, which would be provided under a separate administration agreement covering all the Funds, there would be no difference in the nature of the investment advisory or administration services to be provided to that Fund and there would be no changes in the fee schedules for those services. The Boards had last previously reviewed and approved the current Agreements at its meeting held February 25, 2011 (“February meeting”). Because the proposed new Agreement would not involve changes in services or fees, the Boards believed their review at the February meeting was relevant to their review of the proposed new Agreement, subject to the updates provided by CAMCO. As at the February meeting, the Boards considered the nature and quality of services that CAMCO had provided, and would continue to provide to the Funds under the new Agreement, information concerning CAMCO’s profitability and the various sources of fees and ancillary benefits to CAMCO due to its relationships with the Funds. They noted that, in addition to advisory and administration fees, CAMCO, since May 1, 2010, was also receiving fees for compliance services and for work in preparing Fair Fund and class action claims. They noted that the Funds’ compliance expenses would rise due to the Boards’ approval at the August 9, 2011 meeting of a revised compliance services agreement under which the Funds would pay, in addition to the current compliance services fee, amounts for compensation of their Chief Compliance Officer, plus expenses related to attendance at meetings outside Houston, related to providing services under the agreement. The Boards noted that their decision to approve these changes had been based on a determination that, in view of the nature of the regulatory relationship of the Chief Compliance Officer to the Funds’ Boards, it was appropriate for the Funds to bear this expense. The Boards determined that fees under the Compliance Services Agreement and for preparation of Fair Fund and class action claims were, and going forward, would be, fair and reasonable as a separate matter and in relation to CAMCO’s overall profitability from the Funds.
The Boards also reviewed fees that had been, and would continue to be, paid to CAMCO’s affiliate, Capstone Asset Planning Company (“CAPCO”), pursuant to the Funds’ Service and Distribution Plan. They also reviewed fees that had been, and would continue to be, paid to CAPCO under the Funds’ Administrative Services Plan, noting that these fees were not retained by CAPCO but were entirely paid out to third party service providers. They noted that fees under the Service and Distribution Plan and Administrative Services Plan were reviewed quarterly by the independent Directors. They also noted that the Plans and their fees were reviewed annually and determined to be fair and reasonable both as a separate matter and, in connection with review of the Funds’ advisory agreements, relative to the profitability of CAMCO and its affiliates from their relationships to the Funds. The independent Directors also noted that another affiliate of CAMCO, CFS Consulting Services, LLC (CCS), had been, and would continue to be, receiving fees from the Funds for portfolio screening services. They noted that these fees to CCS had originally been the result of arms’ length negotiations prior to Capstone’s acquisition of CCS, and were not being changed. Although the independent Directors would continue to review the contribution of these fees to the overall profitability of the Capstone entities, it did not appear that these fees were unreasonable or that the relationship was unduly profitable for Capstone. Finally, they considered the benefits received by CAMCO pursuant to “soft dollar” arrangements based on Fund brokerage. These arrangements, which would not change, were reviewed regularly by the Boards and were determined to be reasonable and fair to the Funds. With respect to each Fund’s investment advisory fees and fees for administrative services, which would not change going forward, the Directors reviewed information concerning fees paid by other investment companies deemed comparable and determined that the Funds’ fees were fair and reasonable relative to those paid by other funds. They also considered the fees charged by CAMCO and to its non-Fund clients, which were not proposed to be changed, and
determined that those fees did not suggest any unreasonableness in fees charged to the Funds. The independent Directors noted favorably that the Funds’ advisory and administration fees contained breakpoints designed to give the Funds
shall bearadvantages of potential economies of scale at higher asset levels and that fees for administrative services were assessed on the
costsaggregate assets of the
Meeting.Funds, providing further benefits from economies of scale. The mostDirectors considered the Funds’ expense ratios and determined them to be within satisfactory limits. The independent Directors noted that CAMCO’s overall performance of its services to the Funds and the Funds’ investment performance, relative to their respective benchmarks over recent annual report for SERVyears, which had included difficult market conditions, had been satisfactory and that Fund expenses were being well-controlled. The independent Directors also particularly noted that the overall health of CAMCO and the other Capstone entities appeared to be good.
In considering the new Agreement, the Board and, separately, the independent Directors, also reviewed information regarding the change of control transactions, the new controlling shareholder, and the implications of these changes on the ongoing operations of CAMCO with respect to its services to the Funds. They noted that no personnel changes affecting the Funds, including their portfolio managers, were anticipated. They extensively questioned CAMCO’s management regarding their experience with Steward Financial Holdings, Inc. (“SFH”), the new controlling shareholder. SFH had been a shareholder of CFS since October 1, 2008, owning 21.89% of the voting shares and 44% of the equity interest in CFS prior to the change of control. SFH had also had representatives on the CFS Board of Directors. CAMCO management personnel indicated to the Directors at the meeting they were not aware that SFH intended making any material changes to CAMCO or to its operations. They also stated their belief that SFH did not intend to institute material changes in CAMCO or its operations in the immediately foreseeable future. They noted that SFH’s interest was primarily in encouraging growth of the Capstone organization. Thus, it was CAMCO’s opinion that SFH would strengthen the financial support for the fiscal year ended September 30, 2002Capstone organization without having other material effects on the operations of CAMCO and its affiliates or on the Funds, other than in the area of strategic planning. The Directors also took note that SFH’s religious affiliations were compatible with the values-based investment policies of the Funds. Based on the information they reviewed, the Directors, including all the independent Directors, were satisfied that SFH, as controlling shareholder, would not change the operations of CAMCO or the Funds in any material or negative way. They therefore determined that the change of control should not alter their previous determinations to retain CAMCO as the Funds’ investment adviser and that CAMCO should continue to be retained as investment adviser on the same terms as under the Current Advisory Agreements. The Directors, and separately the independent Directors, unanimously approved the proposed New Advisory Agreement.
Because Proposals 1 and 2 are not likely to be approved by the time the Current Advisory Agreements terminate due to the change of control of CAMCO, CAMCO will continue to provide investment advisory services to the Funds under interim investment advisory agreements for up to 150 days. The form of each of these agreements, which was approved by the Boards, including a majority of the independent Directors, at their August 9, 2011 meeting, contains substantially the same terms as the relevant Current Advisory Agreement, except for its date, compensation and termination provisions. Each interim agreement provides that the compensation to be received by CAMCO may be no greater than what it would have received under the Current Advisory Agreement and requires that compensation paid under the interim agreement be held in an interest-bearing escrow account with the Fund’s custodian or a bank. In the event a new advisory agreement with CAMCO for a particular Fund is approved by a 1940 Act Majority of the Fund’s outstanding voting securities by the end of the 150-day period, CAMCO will receive the amount in the escrow account, including interest. If a new advisory agreement with CAMCO is not so approved, CAMCO will be paid, out of the escrow account, the lesser of (a) costs incurred in performing the interim agreement (plus interest earned on that amount while in escrow) or (b) the total amount in the escrow account (plus interest earned). The Boards and independent Directors determined that the scope and quality of services that would be provided under each interim agreement, if it takes effect, will be at least equivalent to the scope and quality of services provided under the applicable Current Advisory Agreement. Each interim agreement provides that it may be terminated at any time by the
applicable Board or by a 1940 Act Majority of the Fund’s outstanding voting securities at any time, upon 10 days’ notice to CAMCO.
PROPOSAL 3 – Election of Directors (all Funds)
The Boards and their Nominating Committee have approved the nomination of each of the Funds’ current Directors and one additional independent Director. The names of the nominees are as follows:
Edward L, Jaroski - current Director
John M. Briggs – current independent Director
William H. Herrmann, Jr. – new nominee as independent Director
James F. Leary – current independent Director
Leonard B. Melley, Jr. – current independent Director
John R. Parker – current independent Director
The Boards recommend that you vote FOR each of the nominees.
The Board currently consists of five Directors, including one interested Director and four independent Directors. The Board and its Nominating Committee believe it is in the Funds’ best interests to add an additional independent Director to the Funds’ Board so that, in the event an independent Director resigns or retires, the Funds will continue to have a high proportion of independent Directors. The Board also believes it is in the best interests of the Funds and their shareholders to have all Directors elected at this meeting. Because applicable law sets requirements for the proportion of a fund’s board that must consist of directors that have been elected by shareholders (as opposed to being appointed by the Board to fill vacancies), the election of all Directors at this meeting will reduce the need for the Funds to incur the expense of holding shareholders meetings in the future to elect Directors. The nominees named above and in the table below are all current Directors of the Fund, except William H. Herrmann, Jr., who, if elected, would be a new independent Director and bring to the Board his 38 years of experience in the financial services industry. Each of the nominees has indicated that he will serve, if elected and has consented to be named in this proxy statement.
Qualifications of Directors. The Funds’ Directors, in addition to meeting high regulatory standards related to integrity, offer to the Funds a variety of experience relevant to oversight of the Funds, including, in the aggregate, responsible leadership experience in accounting, business operations, strategic planning, investment and service on boards of other entities. Candidates for nomination as independent Directors must also satisfy regulatory requirements relevant to their independence. Beyond these requirements, the Nominating Committee has not set specific minimum qualifications, but it considers whether candidates meet high standards of personal and relevant professional experience and can bring diverse points of view to the Boards. The Boards believe that the nominees’ backgrounds bring to the Boards a combination of skills that permits them to objectively review, question and evaluate information provided to them by Fund management and to exercise effective business judgment in overseeing the Funds. All nominees who are current Directors also serve as Trustees for Capstone Church Capital Fund. Mr. Herrmann is being newly nominated to the Board of Capstone Church Capital Fund as well as to the Boards of the Funds. The particular types of experience of each nominee are as follows:
Edward L. Jaroski: Mr. Jaroski is one of the founders of Capstone Financial Services. He serves as President and Director of CFS, CAMCO and CAPCO and is President, CEO and director of each of the other subsidiaries of CFS. He previously helped form, and served as Executive Vice President of, Tenneco Financial Services, the predecessor to CFS. His earlier experience was with Philadelphia Life Insurance Company, where he was Manager of Investments and later Vice President of Finance. His designations include Chartered Life Underwriter, Chartered Financial Consultant and Fellow Life Management Institute. His extensive successful background in investment management and investment company management, his leadership of the CFS organization and his detailed knowledge of the Funds led the Boards to conclude that he should serve as a Director of the Funds.
John M. Briggs: Mr. Briggs was a certified public accountant for 32 years. As an accounting firm partner, he has specialized in auditing registered investment companies. His extensive financial and accounting background and broad experience with investment companies led the Boards to conclude that he should serve as a Director of the Funds.
William H. Herrmann, Jr.: Mr. Herrmann has extensive background in financial planning and insurance. He founded Herrmann & Associates Financial Planners in 1973, specializing in life insurance and investment products. He has a Chartered Life Underwriter designation and holds several broker-dealer qualifications as well as life, health, variable annuity and property and casualty qualifications. This background in a broad range of financial and insurance products led the Boards to conclude that he should serve as a Director of the Funds.
James F. Leary: Mr. Leary has a broad background in banking, business and financial management. He founded Sunwestern Management, Inc. in 1981 to manage venture capital limited partnerships and their wholly-owned Small Business Investment Corporations. In 1989, he founded Sunwestern Advisory, L.P., a registered investment adviser. He subsequently served as Vice Chairman of Finance and Director for Search Financial Services and is now Managing Director of Benefit Capital South West, Inc. and serves on the boards of several investment firms. This broad business and financial background led the Boards to conclude that he should serve as a Director of the Funds.
Leonard B. Melley, Jr.: Mr. Melley is the co-founder of Freedom Stores, a chain of stores that markets furniture and electronics to U.S. military markets thoughout the United States. He serves as Chief Executive Officer and President of Freedom Stores. His extensive business experience and unique retail background bring a special perspective to the Boards and led the Boards to conclude that he should serve as a Director of the Funds.
John R. Parker: Mr. Parker has a banking and investment banking background. He served as a Vice President of European American Banking Corporation from 1975 to 1983. He later served as a Partner – Investment Banking and Partnership Projects for Printon, Kane Government Securities & Co. and subsequently was an Executive Vice President for McRae Capital Management, Inc. His broad banking and securities background give him experience that led the Boards to conclude that he should serve as a Director of the Funds
As noted earlier, applicable legal requirements provide that, for three years following the change of control, at least 75% of the Funds’ Boards must consist of persons who satisfy legal standards of independence with respect to the Capstone organization both before and after the change of control. Each of the persons proposed for election as an independent Director satisfies these standards.
Leadership structure. The Funds’ Boards provides overall supervision of the affairs of the Funds. The Chairman of the Boards, Edward L. Jaroski, is an “interested person” of the Fund. The other four Directors are independent Directors. If William Herrmann, nominee, is elected, the Boards will each have five independent Directors. James F. Leary, an independent Director, acts as “lead Director” of the Board, with responsibility for coordinating the work of the independent Directors, leading meetings of independent Directors and assuring that the concerns of the independent Directors are brought to the attention of the full Board and Fund management. The Boards believe that this leadership structure provides appropriate balance, capturing for the Boards the skills and expertise of Fund management and the semi-annual report fordiversity and independence of views of the period ended March 31, 2003, respectively, have been mailed previouslyindependent Directors.
Risk oversight. The Funds’ service providers, including the investment adviser, principal underwriter, administrator, compliance services provider, custodian and transfer agent, provide day-to-day risk management of the Funds in their areas of responsibility. The Boards, with the assistance of the Funds’ Chief Compliance Officer, oversee the performance of these service providers, including their management of risks. This oversight will continue after the change in control. The Boards and their Committees (see “Board Committees,” below) meet at least quarterly to shareholders. The most recent annual report for Growth Fund forreview information concerning the fiscal year ended October 31, 2002Funds’ operations and performance, the semi-annual report forbroader securities markets, and other information relevant to their oversight responsibilities that, among other things, helps them to identify and monitor general and particular risks to the period ended April 30, 2003, respectively, have been mailed previously to shareholders. The most recent semi-annual report and annual report for CCVF Large Cap Fund for the semi-annual period ended October 31, 2002 andFunds. During the fiscal year ended April 30, 2003, respectively, have previously been mailed2011, the Board met four times. The Board’s Committees focus on particular types of risks in their areas of responsibility. It should be noted that not all risks to shareholders. If you would like to receive additional copies of any of these reports for your Fund(s) free of charge, please contact the Funds atcan be identified or controlled. Moreover, certain risks are inherent in the address indicated onFunds’ operations. See, for example, investment risks described in the front page of this Proxy Statement or call the Funds toll-free at 1-800-468-6337. Any such reports requested will be sent by first class mail within three business days of receipt of the request.Proposal 1 -- ELECTION OF DIRECTORS/TRUSTEES
(all Funds)
Each of the current Directors/Trustees of the Funds has been nominated for re-election. Additionally, Leonard B. Melley, Jr., currently a Director of CCVF and a Trustee of SERV, is nominated for election as a Director of CSFI. InformationFunds’ Prospectus.
The following table contains information concerning each current Director, the new nominee is presented in the following table. A nominee is considered to be "independent" with respect to a Fund if he is not an "interested person" of that Fund as defined in the 1940 Act. For purposes of this Proxy Statement, "Fund Complex" includes CSFI, CCVF and SERV. "Portfolios" include Growth Fund, CCVF Large Cap Fundfor Director, and each series of SERV.Fund officer.
Name, Address and Age
|
Position(s)Positions Heldwith Fund
| Term of Office and Length of Time Served |
Principal Occupation(s) During Past 5 Years |
Number of Portfolios in Fund Complex Overseen by Director/Trustee
Director or Nominee |
Other Directorships/TrusteeshipsDirectorships Held by Director/Trustee
Director or Nominee |
| Interested Director | | | | | |
Edward L. Jaroski* 3700 West Sam Houston Parkway South, Suite 250, Houston, Texas 77042 Age: 64 | Director, President & Chairman of the Board | From 2004 | President and Director of Capstone Asset Management Company, Capstone Asset Planning Company and Capstone Financial Services, Inc.; President, CEO and Director of Capstone Financial Solutions, LLC and CFS Consulting Services, LLC from November 2008-Present; President, CEO and Director of Roger H. Jenswold & Company, Inc. from March 2010-Presenrt. | 6 | Theater Under the Stars |
| Independent Directors | | | | | |
John M. Briggs 435 Williams Road Wynnewoood, PA 19096-1632 Age: 61 | Director | From 2005 | CPA for 32 years; semi retired since 2005; formerly Treasurer of the Susan G. Komen Breast Cancer Foundation from 2005 -2011. | 6 | Director-Healthcare Services Group, Inc. Since 1992 |
| | | | | | |
Interested Director
James F. Leary 10000 N. Central Expressway Suite 400 Dallas, TX 75231 Age: 81 | Director | From 2004 | Financial Consultant; Managing Director of Benefit Capital Southwest | 6 | Director-Highland Funds Group; Director-Pacesetter Capital Group; Director-Homeowners of America Insurance Company since 2006. |
| Name, Address and Age | Positions Held with Fund | Term of Office and Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of Portfolios in Fund Complex Overseen by Director or Nominee | Other Directorships Held by Director or Nominee |
Leonard B. Melley, Jr. ** 6216 Yadkin Road Fayetteville, NC 28303 Age: 52 | Director | From 2004 | CEO/President of Freedom Stores, Inc. | 6 | None |
| | | | | | |
Edward L. Jaroski* **
5847 San Felipe, Suite 4100
Houston, TX 77057
John R. Parker 541 Shaw Hill Stowe, VT 05672 Age: 5665 | Director President & Chairman of the Board | CSFI Since 1989
SERV Since1998
CCVF Since 2000
From 2004 | President and Director of Capstone Asset Management; President and Director of Capstone Asset Planning Company and Capstone Financial Services, Inc.
Self-employed Investor Consultant | 7
6 | None |
| | | | | | |
Nominee for Independent DirectorsDirector | | | | | |
William H. Herrmann, Jr. P.O. Box 6 Bryn Athyn, PA 19009 Age: 65 | Nominee for Director | N/A | Herrmann & Associates, Financial Services | 6 (if elected) | None |
| | | | | | |
John R. Parker
5847 San Felipe, Suite 4100
Houston, TX 77057
Age: 57
| Director/Trustee
| CSFI Since 1991
SERV Since 1998
CCVF Since 2000
| Self-employed Investor Consultant
| 7
| None
|
| Executive Officers | | | | | |
Bernard J. Vaughan
200 N. Wynnewood Avenue
#A-112
Wynnewood, PA 19096
John R. Wolf 3700 West Sam Houston Parkway South, Suite 250, Houston, Texas 77042 Age: 7450 | Director/Trustee
Sr. Vice President | CSFI Since 1982
SERV Since 1998
CCVF Since 2000
From 2004 | Retired
Sr. Vice President/Portfolio Manager of Capstone Asset Management Company. | 7
N/A | None |
| Name, Address and Age | Positions Held with Fund | Term of Office and Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of Portfolios in Fund Complex Overseen by Director or Nominee | Other Directorships Held by Director or Nominee |
Claude C. Cody, IV 3700 West Sam Houston Parkway South, Suite 250, Houston, Texas 77042 Age: 59 | Sr. Vice President | From 2010 | Sr. Vice President of Capstone Asset Management Company (2009- present); Co-Chairman, CCO, CFO & Portfolio Manager/Analyst of Roger H. Jenswold & Company, Inc. (2005 – present). Officer of other Capstone Funds. | N/A | None |
| | | | | |
James F. Leary
15851 N. Dallas
Scott Wynant 3700 West Sam Houston Parkway #500Addison, TX 75001
South, Suite 250, Houston, Texas 77042 Age: 7356 | Director/Trustee
Executive Vice President | CSFI Since 1991
SERV Since 1998
CCVF Since 2000
From 2008 | Executive Vice President of Capstone Financial Consultant; Managing DirectorSolutions, LLC and CFS Consulting Services, LLC from November 2008-present; Senior Vice President of Benefit Capital Southwest Roger H. Jenswold & Company, Inc. from March 2010-Presenrt; Executive Vice President of AG Financial Wealth Management Solutions, LLC from April 1997 – August 2008. Officer of other Capstone Funds | 7
N/A | Director-Prospect Street High Income Fund and Prospect Street Income Fund; Director-Associate Materials, Inc. (1988-2001); Director-Pacesetter Capital Group
None |
| | | | | |
Leonard B. Melley, Jr. **
6216 Yadkin Road
Fayetteville, NC 28303
Richard A. Nunn 3700 West Sam Houston Parkway South, Suite 250, Houston, Texas 77042 Age: 4365 | Director/Trustee
Sr. Vice President, Secretary, and Chief Compliance Officer | SERV Since 2001
CCVF Since 2001
From 2004 | CEO/Senior Vice President, Chief Compliance Officer of Freedom Stores,Capstone Asset Management Company; Senior Vice President, Chief Compliance Officer of Capstone Financial Solutions, LLC from November 2008 – Present; Secretary of CFS Consulting Services, LLC from November 2008-Present; Senior Vice President, Chief Compliance officer of Roger H. Jenswold & Company, Inc.
from March 2010-Present; Officer of other Capstone Funds; MGL Consulting Corporation, independent consultants, Vice President Regulatory Affairs, 2000-present. | 6
N/A | None |
| Name, Address and Age | Positions Held with Fund | Term of Office and Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of Portfolios in Fund Complex Overseen by Director or Nominee | Other Directorships Held by Director or Nominee |
Kimberly Wallis McLaney 3700 West Sam Houston Parkway South,, Suite 250, Houston, Texas 77042 Age: 44 | Asst. Vice President Compliance and Asst. Secretary | From 2004 | Asst. Vice President Compliance and Assistant Secretary of Capstone Asset Management Company and Capstone Financial Services, Inc.; Senior Vice President Compliance, Chief Compliance Officer and Secretary of Capstone Asset Planning Company, Asst. Vice President Compliance and Asst. Secretary of Capstone Financial Solutions, LLC from November 2008 - Present; Assistant Secretary of CFS Consulting Services, LLC from November 2008 – Present; Asst. Vice President Compliance and Asst. Secretary of Roger H. Jenswold & Company, Inc. from March 2010-Present; Officer of other Capstone Funds. | N/A | None |
| | | | | | |
Executive Officers
Carla Homer 3700 West Sam Houston Parkway South, Suite 250, Houston, Texas 77042Age: 52 | Treasurer and Principal Financial Accounting Officer | From 2004 | | | |
| | | | | |
Dan E. Watson
5847 San Felipe, Suite 4100
Houston, TX 77057
Age 54
| Executive Vice President
| CSFI Since 1982
SERV Since 1998
CCVF Since 2000
| Executive Vice President/CIOTreasurer of Capstone Asset Management Company;Company, Capstone Asset Planning Company and Capstone Financial Services, Inc.; Treasurer of Capstone Financial Solutions, LLC and CFS Consulting Services, LLC from November 2008 – Present; Treasurer of Roger H. Jenswold & Company, Inc. from March 2010-Present; Officer of other Capstone Funds
Funds. | N/A | None |
| | | | | |
Donald R. McFadden
5847 San Felipe, Suite 4100
Houston, TX 77057
Age: 47
* | Sr. Vice President
| CSFI Since 2002
SERV Since 1998
CCVF Since 2000
| Sr. Vice PresidentMr. Jaroski is an “interested person” of Capstone Asset Managementthe Fund, as defined in the Investment Company and Capstone Asset Planning Company; OfficerAct of Capstone Funds
| N/A
| None
|
| | | | | |
Howard S. Potter
5847 San Felipe, Suite 4100
Houston, TX 77057
Age: 51
| Sr. Vice President
| CSFI Since 2002
SERV Since 1998
CCVF Since 2000
| Managing Director/Portfolio Manager1940, as amended, because of Capstone Asset Management Company; Managing Director ofhis positions with CAMCO, Capstone Asset Planning Company and their parent, Capstone Financial Services, Inc.; Officer of Capstone Funds
| N/A
| None
Inc.. |
| ** | Mr. Melley is married to the sister of Mr. Jaroski’s wife. | | |
| | |
John R. Wolf
5847 San Felipe, Suite 4100
Houston, TX 77057
Age: 41
| Sr. Vice President
| CSFI Since 2002
SERV Since 1998
CCVF Since 2000
| Sr. Vice President/Portfolio Manager of Capstone Asset Management Company; Sr. Vice President of Capstone Asset Planning Company; Officer of Capstone Funds
| N/A
| |
Security Ownership
None
| | | | | |
Robert A. Karisch
5847 San Felipe, Suite 4100
Houston, TX 77057
Age: 37
| Assistant Vice President
| CSFI Since 2002
SERV Since 1998
CCVF Since 2000
| Assistant Vice President, Sales of Capstone Asset Management Company; Assistant Vice President of Capstone Asset Planning Company; Officer of Capstone Funds
| N/A
| None
|
| | | | | |
Linda G. Giuffre
5847 San Felipe, Suite 4100
Houston, TX 77057
Age 41
| Secretary/Treasurer
| CSFI Since 1990
SERV Since 1998
CCVF Since 2000
| Vice President, Compliance of Capstone Asset Management Company, and Capstone Asset Planning Company; Officer of Capstone Funds
| N/A
| None
|
| | | | | |
David F. Ganley
630 Fitzwatertown Road
Willow Grove, PA 19090
Age: 56
| Assistant Secretary
| CSFI Since 2002
SERV Since 2002
CCVF Since 2002
| Managing Director of InCap Group, Inc.; Chief Administrative Officer of InCap Service Company; President and Treasurer of InCap Securities, Inc.; Officer of Capstone Funds
| N/A
| None
|
*Mr. Jaroski is an "interested person" of CSFI, SERV & CCVF as defined in the Investment Company Act of 1940, because of his position with the Adviser and Distributor.
** These individuals are brothers-in-law.
Share Ownership
As of the Record Date,independent Directors or the Nominees, Directors, Trustees and officersnominee for independent Director, or members of the Funds ownedtheir immediate families, owns beneficially as a group less than 1%or of the outstandingrecord any shares of Growth Fund, CCVF Large Cap Fund and of each series of SERV, respectively.
in CAMCO, Capstone Asset Planning Company (“CAPCO”) or any person directly or indirectly controlling, controlled by, or under common control with CAMCO or CAPCO.
The following table
sets forthprovides information about the
aggregate dollar rangeDirectors’ ownership of
equity securities
owned beneficially by each nominee in
each of the
Funds and in the total Capstone
FundsFund Complex (which includes Capstone Church Capital Fund, in addition to the Funds) as of
JuneAugust 23,
2003. The information on beneficial ownership was provided directly by each nominee.2011.
Nominees
Directors |
Dollar Range of Equity Securities
in each Fundthe Funds | Aggregate Dollar Range of
Equity Securities in all Funds Overseen by the Director/Trustee in Capstone Family of Funds |
Interested Nominees Trustee/Director |
Edward L. Jaroski | (SERV Bond Fund) $10,001
Steward Small-Mid Cap Enhanced Index Fund - $50,000(Growth Fund) over $100,000 | Steward Large Cap Enhanced Index Fund - over $100,000 |
Independent Nominees
|
Bernard J. Vaughan
| (SERV International) $1 - $10,000
(SERV Small Cap) $1- $10,000
(Growth Fund)
Steward Select Bond Fund $50,001 - $100,000
| $50,001 -over $100,000
|
James F. Leary
| (Growth Fund) $1
| |
| Independent Trustees/Directors: |
| John M. Briggs | Steward Large Cap Enhanced Index Fund$1 - $10,000 | $1 - $10,000 |
James F. Leary | None | $10,001-$50,000 |
| Leonard B. Melley, Jr. | (Growth Fund) $50,001 - $100,000
Steward Small-Mid Cap Enhanced Index Fund $10,001 – 50,000 | $10,001-$50,000 - $100,000 |
John R. Parker | (SERV International)Steward Large Cap Enhanced Index Fund $1 - $10,000
(SERV Small Cap) $1- $10,000
| $1 - $10,000 |
| William H. Herrmann | None | None |
| | | |
Board
Meetings and Committees
During
The Fund’s Board has four committees that report to the
fiscal year ended September 30, 2002 SERV's Board, consistingBoard. Two of
four independent Trustees and one interested Trustee, met six times. During the fiscal year ended October 31, 2002, the Board of CSFI, consisting of three independent Directors and one interested Director, met five times. During the fiscal year ended April 30, 2003, the Board of CCVF, consisting of four independent Directors and one interested Director, met five times. It is expected that each Board will hold at least four regularly scheduled meetings during each fiscal year.Each Fund has the following four standing committees: Audit Committee, Compliance Committee, Valuation and Investment Review Committee, and Nominating/Corporate Governance Committee. Boththese committees, the Audit Committee and the Nominating/Corporate Governance Committee, consist entirelyare comprised exclusively of independent Directors/Trustees.
Messrs. Leary, Parker, MelleyDirectors. In determining whether a Director is independent, the Fund follows the definition of independence contained in NASDAQ Rule 5605(a)(2). Each of the Valuation and Vaughan, allInvestment Review Committee and the Compliance Committee is comprised exclusively of whom are independent Directors/Trustees, are members of the Audit CommitteesBoard. Following is a description of SERV and CCVF. Messrs. Leary, Parker and Vaughan, all of whom are independent Directors, are memberseach of the committees:
Audit Committee – As provided in its charter, the purpose of CSFI. The principal functions of each Auditthis Committee are to pre-approve the appointment and compensation of the Funds' independent auditors; to pre-approve non-audit services provided to the Funds and certain non-audit services provided to Fund service providers by the independent auditors;is to oversee the accounting and financial reporting policies and practices and internal controls of eachthe Fund, and, certainas appropriate, the internal controls of the Funds'certain service providers to the Fund; to oversee the quality and objectivity of the Funds'Fund’s financial statements and of the independent audit thereof,thereof; and to act as a liaison between the Funds'Fund’s independent auditors and the full Boards.Board. The SERV Audit Committee met five times duringapproves the fiscal year ended September 30, 2002.appointment and compensation of the Fund’s auditors and evaluates their independence. It also pre-approves audit and
non-audit services provided to the Fund and non-audit services provided to certain service providers by the auditor. The
CCVF Audit Committee
met f our times during the fiscal year ended April 30, 2003. The CSFI Audit Committee met four times during the fiscal year ended October 31, 2002.Theis composed entirely of independent members of the Board. Current Committee members are: John M. Briggs, Chairman; Leonard B. Melley, James F. Leary and John R. Parker. A copy of the Committee’s charter is available on the Fund’s website, at www.stewardmutualfunds.com.
Compliance Committee - The purpose of this Committee is to oversee management’s implementation of internal controls and procedures relating to investment management and trading, sales and service, administration and pricing and regulatory procedures. Current Committee members are: Leonard B. Melley, Jr., Chairman; James F. Leary, Edward L. Jaroski, John R. Parker and John M. Briggs.
Nominating/Corporate Governance – In accordance with the provisions of its charter, the purpose of this Committee is to select and nominate independent Directors to the Boards, to nominate members for other Board Committees, for SERV and CCVF are Messrs. Jaroski, Leary, Parker, Melleyto evaluate and Vaughan.enhance the effectiveness of the Boards in its role in governing the Funds and overseeing the management of the Funds. The Committee is composed entirely of independent members of the CSFI Compliance Committee are Messrs. Jaroski, Leary, Parker and Vaughan. The Compliance Committee of each Fund oversees general regulatory and operations compliance matters affecting the Funds. The SERV Compliance Committee met five times during the fiscal year ended September 30, 2002. The CCVF Compliance Committee met four times during the fiscal year ended April 30, 2003. The CSFI Compliance Committee met four times during the fiscal year ended October 31, 2002.Members of the SERV and CCVF Valuation and Investment Review Committees are Messrs. Jaroski, Leary, Parker, Melley and Vaughan. Valuation and Investment ReviewBoards. Current Committee members for CSFI are Messrs. Jaroski,are: James F. Leary, Chairman; John R. Parker, Leonard B. Melley, Jr. and Vaughan.John M. Briggs. The Valuation and Investment Review Committee of each Fund is responsible for dealing with securities valuation and other investment issues related to the Fund. The SERV Valuation and Investment Review Committee met five times during the fiscal year ended September 30, 2002. The CCVF Valuation and Investment Review Committee met four times during the fiscal year ended April 30, 2003. The CSFI Valuation and Investment Review Committee met four times during the fiscal year ended October 31, 2002.
The Nominating/Corporate Governance Committees of SERV and CCVF consist of Messrs. Leary, Parker, Melley and Vaughan. CSFI's Nominating/Corporate Governance Committee members are Messrs. Leary, Parker and Vaughan. These Committees are responsible for selecting nominees to act as independent Directors/Trustees of the Funds, for determining Director/Trustee compensation, and for generally overseeing matters related to the general operation of the Funds' Boards and Committees. The Nominating/Corporate Governance Committees will not consider nominees recommended by shareholders. In evaluating candidates for nomination as Director, the Committee will consider a variety of factors, although it has not established specific minimum qualifications or diversity criteria to supplement the requirements of applicable law. Mr. Herrmann was recommended as a nominee by Mr. Jaroski, the Fund’s chairman and a Director. The SERV Nominating/Corporate Governance Committee met six times during the fiscal year ended September 30, 2002. The CCVF Nominating/Corporate Governance Committee met four times during the fiscal year ended April 30, 2003. The CSFI Nominating/Corporate Governance Committee met five times during the fiscal year ended October 31, 2002.
Compensationalso oversees compensation of Directors
The Funds compensate independent Directors/Trustees for their service on the Boards and on committees of the Boards. Their periodic review of compensation is based on information developed by Fund management. The Directors and officers of the Funds own less than one percent of the outstanding shares of the Funds. Each independent Director also serves as membersa Trustee on the board of various Board committees, as indicatedthe other registered investment company, Capstone Church Capital Fund, included in the Capstone Fund Complex and for such service the independent Directors/Trustees are entitled to $2,500 per Board meeting attended and are paid an annual retainer of $13,500. The Lead Director is paid additional $4,000 for such service for the Fund Complex. All fees received by the Directors/Trustees are allocated among the portfolios in the Fund Complex based on net assets. The Directors/Trustees and officers of the registered investment companies comprising the Fund Complex are also reimbursed for expenses incurred in attending meetings of the Boards of Directors/Trustees.
The following
table. Thetable represents the compensation received by the Funds’ current independent Directors during the Funds’ fiscal year ended April 30, 2011 from the Funds
pay no compensation to their officers or toand, as independent Directors/Trustees, from the funds in the Fund Complex. Mr. Jaroski,
who is not an independentthe sole non-independent Director/
Trustee. The table below provides compensation information asTrustee of the
fiscal years ending September 30, 2002, April 30, 2003Funds and
October 31, 2002 for SERV, CCVFof the other fund in the Fund Complex, and
CSFI, respectfully.Name of Person, Position | Aggregate Compensation from Funds(3) | Pension or Retirement Benefits Accrued as Part of Fund Expenses | Estimated Annual Benefits Upon Retirement | Total Compensation From Fund Complex
Paid to Directors/ Trustees(3) |
| | | | | |
James F. Leary, Director/Trustee(1)(2) | SERV $14,495 CCVF $437 CSFI $1,818 | $0 | $0 | $16,750 |
John R. Parker, Director/Trustee(1)(2) | SERV $14,495 CCVF $437 CSFI $1,818 | $0 | $0 | $16,750 |
Bernard J. Vaughan, Director/Trustee(1)(2) | SERV $16,201 CCVF $491 CSFI $2,031 | $0 | $0 | $18,723 |
Leonard B. Melley, Director/Trustee(1) | SERV $14,116 CCVF $490 | $0 | $0 | $14,606 |
_______________
officers of the Funds and that fund, do not receive compensation from the Funds or the other fund in the Fund Complex.
| Name of Person, Position | Aggregate Compensation from Funds(3) | Pension or Retirement Benefits Accrued as Part of Fund Expenses | Estimated Annual Benefits Upon Retirement | Total Compensation From Fund Complex Paid to Directors/Trustees(4) |
James F. Leary, Director/Trustee(1)(2) | $21,840 | $0 | $0 | $27,500 |
John R. Parker, Director/Trustee(1)(2) | $19,110 | $0 | $0 | $24,500 |
Leonard B. Melley, Director/Trustee(1)(2) | $19,110 | $0 | $0 | $24,500 |
John M. Briggs, Director/Trustee(1)(2) | $19,110 | $0 | $0 | $24,500 |
(1) | Trustee of Capstone Social Ethics and Religious Values Fund Inc. and Director of Capstone Christian Values Fund, Inc.
SFI. |
(2) | Director of Capstone Series Fund, Inc. CSFI. |
(3) | Compensation received by Independent Directors/Trusteesindependent directors from SFI and CSFI is allocated among the Capstone complex of Mutual Funds on whichportfolios in the Director/Trustee servesFund Complex based on net assets. |
| (4) | The Capstone complex of Mutual FundsFund Complex consists of SERV, CCVF,SFI, CSFI and CSFI. CCVFCapstone Church Capital Fund (“CCCF”). SFI has 4 portfolios, CSFI has 1 portfolio and CSFI each have only oneCCCF has 1 portfolio. SERV has five portfolios. |
| |
THE BOARD OF DIRECTORS/TRUSTEES OF EACH FUND RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION OF EACH OF THE PROPOSED DIRECTOR/TRUSTEE NOMINEES.
Proposal 2 -- RATIFICATION OF INDEPENDENT AUDITORS
(all Funds)The Boards of Directors/Trustees, including all
A copy of the Funds' independent Directors/Trustees, have selected Briggs, Bunting & Dougherty, LLP ("BB&D")Committee’s charter is available on the Funds’ website, at www.stewardmutualfunds.com.
Valuation and Investment Review Committee - The purpose of this Committee is to act asoversee management’s implementation of internal controls and procedures relating to the Funds' independent auditorsvaluations placed on the securities of the Funds, to examinereview and confirm the implementation of changes intended to improve performance, and to evaluate Fund performance. Current Committee members are: John R. Parker, Chairman; Edward L. Jaroski, Leonard B. Melley, Jr., James F. Leary and John M. Briggs.
Number of Meetings
During the Funds’ fiscal year ended April 30, 2011, there were four regularly scheduled, and no special, meetings of the Boards. During the fiscal year ended April 30, 2011, the Audit Committee met five times and each of the other Committees met four times. No Director attended less than 75% of meetings of the Board and of Committees of which he was a member during the Funds’ fiscal year ended April 30, 2011.
Communications with the Boards
Shareholders wishing to communicate with the Boards, or with individual Directors, regarding Fund matters may send their correspondence addressed to the applicable Board or to an individual Director c/o Steward Funds, at 3700 West Sam Houston Parkway South, Suite 250, Houston, Texas 77042.
Report of the Audit Committee
The Audit Committee reviewed and discussed the Funds’ audited financial statements for SERV, CSFI and CCVF for theirthe fiscal years ending September 20, 2003, October 31, 2003 andyear ended April 30, 2004, respectively.2011 with Fund management. The Audit Committee also discussed with the Funds’ independent public registered accounting firm, Cohen Fund Audit Services, Ltd. (“Cohen”), the matters required to be discussed by the statement on Auditing Standards No. 61, as amended. The Audit Committee has received the written disclosures and the letter from Cohen required by applicable requirements of the Public Company Accounting Oversight Board regarding Cohen’s communications with the Audit Committee concerning independence, and has discussed with Cohen its independence. Based on information provided by BB&Dthe foregoing review and discussions, the Audit Committee recommended to the Boards each Board has determined that BB&D is well qualified to serve as independent auditors to the Fund and that BB&D satisfies applicable standards regarding independence. The Boards are requesting that shareholders of each Fund ratify the selection of BB&D as independent auditors.BB&D have served as independent auditors of SERV and CCVF since their respective inceptions, and of CSFI since November 21, 1997. Audit services provided by BB&D to the Funds during their most recent fiscal years included examination of theaudited financial statements of each Fund and, services relatedbe included in the Funds’ annual report to Fund filingsshareholders for its fiscal year ended April 30, 2011 for filing with the Securities and Exchange Commission. BB&D has provided tax return preparation servicesIt is not expected that representatives of Cohen will make a statement or be available to answer questions at the meeting.
The Fund’s Independent Public Accountant
Cohen currently serves as independent auditor for
each of the
funds during the same period..Funds.
The following table
contains information on auditshows the aggregate fees paid to
BB&D byCohen for professional audit and other services to the Funds for
theirthe Funds’ most recent two fiscal
years.Fund
| Current Year
| Prior Year
|
| Audit
| Tax
| Audit
| Tax
|
| Growth Fund (CSFI) | $23,000 | $1,000 | 23,000 | $1,000 |
| Christian Values Fund (CCVF) | $8,000 | $1,000 | $19,000 | $2,000 |
| SERV | $44,000 | $6,000 | $49,000 | $6,000 |
All Other Fees. BB&D also performed audityears, all of which services were pre-approved by the Audit Committee.
Fiscal years ended April 30, 2010 and tax work for April 30, 2011:
| Service | FY ended 4/30/2010 | FY ended 4/30/2011 |
| Audit Fees | $58,750 | $58,750 |
| Audit-Related Fees | $0.00 | $0.00 |
| Tax Fees | $10,000 | $12,500 |
| All Other Fees | $0.00 | $0.00 |
| | | |
The Boards unanimously recommends that you vote FOR each of the nominees as Director.
OTHER INFORMATION
The Funds’ Investment Adviser, Administrator and Principal Underwriter
Capstone Asset Management Company (“CAMCO”) is the Funds’ investment adviser and is currently the Funds’ administrator. The Funds’ principal underwriter is Capstone Asset Planning Company (“CAPCO”). CAMCO and their parent,CAPCO are located at 3700 West Sam Houston Parkway South, Suite 250, Houston, Texas 77042.
Shareholder Proposals
The Funds do not hold regular annual meetings of shareholders. However, they may schedule annual or special shareholder meetings when advisable. To be considered for inclusion in a proxy statement, submissions from shareholders must be received by the Funds a reasonable time before the Funds print and mail the proxy statement. Shareholder proposals are subject to certain limitations under federal securities laws. The submission of a proposal does not guarantee that it will be included in a proxy statement. Shareholder proposals may be submitted in writing to Secretary, Steward Funds, Inc (or Capstone Financial Services,Series Fund, Inc. Fees for this work totaled $25,500), 3700 West Sam Houston Parkway South, Suite 250, Houston, Texas 77042.
Control Persons and $25,500, for the fiscal years ended September 30, 2002 and September 30, 2001, respectively. BB&D also provided performance verification services for Capstone Asset Management Company. Fees for these services totaled $6,300 and $6,000 for the 2002 and 2001 calendar years, respectively. Principal Holders of Securities
The
Boards have determined that BB&D's independence with respectfollowing table sets forth information concerning each person who, to the
Funds was not affected by its performance of these services or the receipt of these fees.Representatives of BB&D are not expected to be present at the Meeting.
THE BOARD OF DIRECTORS/TRUSTEES OF EACH FUND, INCLUDING THE INDEPENDENT DIRECTORS/TRUSTEES OF EACH FUND, RECOMMEND THAT YOU VOTE "FOR" THE RATIFICATION OF THE SELECTION OF AUDITORS
Proposal 3 -- PROPOSED REVISED INVESTMENT RESTRICTIONS
(Growth Fund only)
Growth Fund's current investment restrictions were originally adopted to comply with requirements of both applicable federal and state law. Under a federal law enacted in 1996, state requirements are no longer applicable to federally registered investment companies such as Growth Fund. Therefore, the Board has determined that it is advisable to revise Growth Fund's fundamental investment restrictions to eliminate restrictions that are no longer required by applicable law. The restrictions that would be eliminated include those regarding: engaging in margin transactions or short sales; investment for control purposes; investing in unseasoned issuers; investing in companies in which officers and directorsknowledge of the FundFunds, owned beneficially or its investment adviser have a material interest; issuing warrants or options; pledging Fund assets; investing in oil, gas or mineral exploration programs, and investing in securities of other investment companies. The Fund's remaining current investment restrictions deal only with matter s on which applicable federal law requires the Fund to have a "fundamental policy" --i.e., a policy that can be changed only by voterecord more than five percent of a 1940 Act Majority. It is proposed that each of these restrictions would be revised to provide the Fund with the maximum flexibility on these matters that is available under applicable law, from time to time. The proposed revisions are designed to minimize the necessity for the Fund to obtain shareholder approval in order to take advantage of changes in applicable law and regulatory policy or to employ new types of investment opportunities and investment practices that are consistent with the Fund's investment objectives and policies and with applicable law and regulatory policy. The Fund does not currently contemplate making material changes to its investment practices if this proposal is approved, although the Fund may consider entering into arrangements to earn additional income by lending its portfolio securities.The Fund's investment objective, to provi de long-term capital appreciation, is also a fundamental policyFund’s common stock as of the FundRecord date, August 22, 2011:
| | | | Percent of the Class Total Assets
Held by the Shareholder |
| Fund/Class | No. of Shares |
| STEWARD LRG CAP ENHANCED INDEX FD IND |
| NATIONAL FINANCIAL SERVICES CORP | | |
| THE EXCLUSIVE BENEFIT OF OUR CUSTOMERS | | |
| ATTN MUTUAL FUNDS DEPARTMENT 5TH FLOOR | | |
| 504,419.400 | 73.02% |
| 200 LIBERTY STREET |
| ONE WORLD FINANCIAL CENTER | | |
| NEW YORK, NY 10281 | | |
| STEWARD LRG CAP ENHANCED INDEX FD INST |
| NATIONAL FINANCIAL SERVICES CORP | | |
| THE EXCLUSIVE BENEFIT OF OUR CUSTOMERS | | |
| ATTN MUTUAL FUNDS DEPARTMENT 5TH FLOOR | | |
| 2,770,952.390 | 50.75% |
| 200 LIBERTY STREET |
| ONE WORLD FINANCIAL CENTER | | |
| NEW YORK, NY 10281 | | |
| TD AMERITRADE TRUST COMPANY | | |
| 00TLE | | |
| PO BOX 919094 | | |
| 2,388,940.846 | 43.76% |
| SAN DIEGO, CA 921919094 |
| | | |
| | | |
| STEWARD SELECT BOND FUND IND |
| NATIONAL FINANCIAL SERVICES CORP | | |
| F0R EXCLUSIVE BENEFIT 0F 0UR CUSTOMERS | | |
| 200 LIBERTY ST | | |
| 413,836.646 | 75.05% |
| NEW YORK, NY 102811003 |
| | | |
| | | |
| STEWARD SELECT BOND FUND INST |
| NATIONAL FINANCIAL SERVICES CORP | | |
| THE EXCLUSIVE BENEFIT OF OUR CUSTOMERS | | |
| ATTN MUTUAL FUNDS DEPARTMENT 5TH FLOOR | | |
| 2,935,258.167 | 56.18% |
| 200 LIBERTY STREET |
| ONE WORLD FINANCIAL CENTER | | |
| NEW YORK, NY 10281 | | |
| TD AMERITRADE TRUST COMPANY | | |
| 00TLE | | |
| PO BOX 919094 | | |
| 2,132,025.404 | 40.81% |
| SAN DIEGO, CA 921919094 |
| | | |
| | | |
| STEWARD INTL ENHANCED INDEX FUND IND |
| NATIONAL FINANCIAL SERVICES CORP | | |
| THE EXCLUSIVE BENEFIT OF OUR CUSTOMERS | | |
| ATTN MUTUAL FUNDS DEPARTMENT 5TH FLOOR | | |
| 404,737.783 | 88.83% |
| 200 LIBERTY STREET |
| ONE WORLD FINANCIAL CENTER | | |
| NEW YORK, NY 10281 | | |
| STEWARD INTL ENHANCED INDEX FUND INST |
| TD AMERITRADE TRUST COMPANY | | |
| 00TLE | | |
| PO BOX 919094 | | |
| 1,769,099.107 | 48.34% |
| SAN DIEGO, CA 921919094 |
| | | |
| | | |
| NATIONAL FINANCIAL SERVICES CORP | | |
| THE EXCLUSIVE BENEFIT OF OUR CUSTOMERS | | |
| ATTN MUTUAL FUNDS DEPARTMENT 5TH FLOOR | | |
| 1,583,366.037 | 43.26% |
| 200 LIBERTY STREET |
| ONE WORLD FINANCIAL CENTER | | |
| NEW YORK, NY 10281 | | |
| STEWARD GLOBAL EQUITY INCOME FUND IND |
| NATIONAL FINANCIAL SERVICES CORP | | |
| THE EXCLUSIVE BENEFIT OF OUR CUSTOMERS | | |
| ATTN MUTUAL FUNDS DEPARTMENT 5TH FLOOR | | |
| 394,218.103 | 94.22% |
| 200 LIBERTY STREET |
| ONE WORLD FINANCIAL CENTER | | |
| NEW YORK, NY 10281 | | |
| STEWARD GLOBAL EQUITY INCOME FUND INST |
| NATIONAL FINANCIAL SERVICES CORP | | |
| THE EXCLUSIVE BENEFIT OF OUR CUSTOMERS | | |
| ATTN MUTUAL FUNDS DEPARTMENT 5TH FLOOR | | |
| 2,314,109.749 | 55.39% |
| 200 LIBERTY STREET |
| ONE WORLD FINANCIAL CENTER | | |
| NEW YORK, NY 10281 | | |
| TD AMERITRADE TRUST COMPANY | | |
| 00TLE | | |
| PO BOX 919094 | | |
| 1,833,410.356 | 43.88% |
| SAN DIEGO, CA 921919094 |
| | | |
| | | |
| STEWARD SM-MID CAP ENHANCED INDX FD IND |
| NATIONAL FINANCIAL SERVICES CORP | | |
| F0R EXCLUSIVE BENEFIT 0F 0UR CUSTOMERS | | |
| 200 LIBERTY ST | | |
| 683,886.917 | 22.94% |
| NEW YORK, NY 102811003 |
| | | |
| | | |
| STEWARD SM-MID CAP ENHANCED INDX FD INST |
| TD AMERITRADE TRUST COMPANY | | |
| 00TLE | | |
| PO BOX 919094 | | |
| 2,412,192.285 | 55.95% |
| SAN DIEGO, CA 921919094 |
| | | |
| | | |
| NATIONAL FINANCIAL SERVICES CORP | | |
| THE EXCLUSIVE BENEFIT OF OUR CUSTOMERS | | |
| ATTN MUTUAL FUNDS DEPARTMENT 5TH FLOOR | | |
| 1,832,537.547 | 42.51% |
| 200 LIBERTY STREET |
| ONE WORLD FINANCIAL CENTER | | |
| NEW YORK, NY 10281 | | |
The Directors and
will not change. The Fund's current investment restrictions are contained in Exhibit A to this proxy statement. The Fund's proposed investment restrictions, which will be fundamental policiesofficers of the
Fund if approved by shareholders, are as follows:The Fund has elected to be classified as a diversified open-end series of [Capstone Series Fund, Inc.]The Fund may not:
1. | Borrow money, except as permitted under, or to the extent not prohibited by, the Investment Company Act of 1940, as amended, and as interpreted or modified by regulatory authority having jurisdiction, from time to time;
|
2. | Issue senior securities, except as permitted under the Investment Company Act of 1940, as amended, and as interpreted or modified by regulatory authority having jurisdiction, from time to time;
|
3. | Concentrate its investments in a particular industry, as those terms are used in the Investment Company Act of 1940, as amended, and as interpreted or modified by regulatory authority having jurisdiction, from time to time;
|
4. | Engage in the business of underwriting securities issued by others, except to the extent that the Fund may be deemed to be an underwriter in connection with the disposition of portfolio securities;
|
5. | Purchase or sell real estate, which term does not include securities of companies that deal in real estate or mortgages or investments secured by real estate or interests therein, except that the Fund reserves freedom of action to hold and to sell real estate acquired as a result of the Fund's ownership of securities;
|
6.
| Purchase physical commodities or contracts relating to physical commodities;
|
7. | Make loans to other persons, except (i) loans of portfolio securities, and (ii) to the extent that entry into repurchase agreements and the purchase of debt instruments or interests in indebtedness in accordance with the Fund's investment objective and policies may be deemed to be loans.
|
With respect to proposed restrictions B1, B2 and B3, the 1940 Act currently establishes the following limits.
| Borrowing. A registered open-end investment company ("fund"), such as the Fund, is permitted to borrow from a bank provided that immediately after any such borrowing there is asset coverage of at least 300 percent for all borrowings by the fund. A fund may also borrow for temporary purposes only in an amount not exceeding 5% of the value of the total assets of the fund at the time the loan is made. (A loan will be presumed to be for temporary purposes if it is repaid within 60 days and is not extended or renewed.) The Securities and Exchange Commission ("SEC") has indicated, however, that certain types of transactions, which could be deemed "borrowings" (such as firm commitment agreements and reverse repurchase agreements), are permissible if the fund "covers" the agreements by establishing and maintaining segregated accounts. |
| Senior Securities. A fund is not permitted to issue any class of senior security, except for permitted borrowings (see "Borrowing," above) or to sell any senior security of which it is the issuer. A fund is, however, permitted to issue separate series of shares and to divide those series into separate classes. |
| Concentration. The SEC staff takes the position that investment of 25% or more of a fund's assets in any one industry represents concentration. |
THE BOARD OF DIRECTORS OF GROWTH FUND RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSED REVISIONS TO THE FUND'S INVESTMENT RESTRICTIONS
Proposal 4 -- TO APPROVE A CHANGE IN THE FORM OF THE FUND'S SERVICE AND DISTRIBUTION PLAN
(Growth Fund only)
Growth Fund's Board of Directors has determined that it is advisable to convert the form of the Fund's Service and Distribution Plan ("Plan") to a "compensation-type" plan. The Plan is currently formulated as a "reimbursement-type" plan. The Board has determined that this change is unlikely to affect materially the amount of fees paid by the Fund pursuant to the Plan, but it will simplify the Plan's administration and coordinate it with the form of service and distribution plan used by the other Funds, in the Capstone Group. The Plan provides for the Fund to pay up to an annual rateaggregate, owned less than 1% of 0.25% of its average daily net assets to reimburse the Distributor for certain distribution-related expenses. As can be seen from the table below, the Distributor has been incurring covered expenses in excess of those reimbursed pursuant to the Plan for at least the past five years, so the Fund has been paying the maximum fee per year. Fund management believes this will continue to be the case. Thus, there is little li kelihood that the amount paid by the Fund under the proposed amended Plan, under which the Distributor would be compensated at an annual rate of 0.25%a Fund’s outstanding shares as of the Fund's average daily net assets, would result in any material change in the rate of payments by the Fund.
Plan Fees Paid/Distribution-RelatedRecord Date.
Special Meeting Expenses
Incurred1998-2002 Calendar Years| | 2002 | 2001 | 2000 | 1999 | 1998 |
Fees Paid under the Plan | $132,154 | $169,354 | $214,779 | $209,955 | $181,667 |
Reimbursable Expenses Incurred | $338,776 | $271,488 | $324, 204 | $396,540 | $209,441 |
Current Service and Distribution Plan
The Fund's current Service and Distribution Plan ("Current Plan"), which is attached as Exhibit B to this Proxy Statement, was originally adopted on March 1, 1992 and was last amended May 3, 1993. The following summary description is qualified in its entirety by reference to Exhibit B. The Current Plan provides that the Fund will reimburse Capstone Asset Planning Company ("CAPCO"), the Fund's distributor, for costs and expenses incurred in connection with the distributionpreparation, filing, printing and marketingmailing of the Proxy Statement, as well as expenses of soliciting proxies for the Meeting, which are estimated to total $15,558, are being paid 50% by CFS and 50% by the Funds. In addition to use of the mails, proxies may be solicited personally or by facsimile, telephone or the Internet by officers and employees of CAMCO, CAPCO and their affiliates, and financial intermediaries may be reimbursed for their expenses of sending solicitation material to beneficial owners of Fund shares
PLEASE EXECUTE THE ENCLOSED PROXY CARD PROMPTLY AND RETURN IT IN THE PRE-ADDRESSED, POSTAGE-PAID ENCLOSED ENVELOPE. If you plan to attend the Meeting in person, you will need to bring proof of ownership and servicingamount of Fund shareholders.shares. Such costsproof includes the proxy card (or a copy) or, if your shares are held of record by a financial intermediary, such as a broker-dealer, or nominee, a proxy card from the record holder or other proof of beneficial ownership, such as a brokerage statement showing your Fund holdings.
Exhibit A
New Advisory Agreement
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, effective commencing on _______________ between CAPSTONE ASSET MANAGEMENT COMPANY (the "Adviser") and expenses may include printing and advertising expenses, compensation to CAPCO's employees or agents engaged in Fund distribution activities, printing and distributing Fund prospectuses to prospective investors and payments to broker-dealers for services to Fund shareholders, as well as other distribution and service expenses and costs. The fees payable under the Current Plan may not exceed an annual rateSTEWARD FUNDS INC. ("Fund") on behalf of 0.25% of the Fund's average daily net assets its series listed on Appendix A hereto ("Series"). These payments may include payments to service organizations, which may include CAPCO. Payments to a service organization must be pursuant to a written agreement and may not exceed an annual rate of 0.25% of the average net asset value of
WHEREAS, the Fund is a Maryland corporation organized under Articles of Incorporation dated May 11, 1992, (the "Articles") and is authorized to divide and classify its shares owned by shareholders for whom the particular service organization is providing services and may not aggregate to more than an annual rate of 0.25% of the Fund's average daily net assets. Expenses payable under the Current Plan may be carried forward for reimbursement for up to twelve months beyond the date the expense was incurred. The Fund incurs nobeneficial interest or carrying charges for expenses carried forward. Payments under the Current Plan may not exceed 0.25% of average daily net assets in any month. After its initial approval, the Current Plan continues in effect from year to year, unless earlier terminated, provided such continuance is approved by a majority of the Fund's Board and by a majority of the Fund's Directors who are not "interested per sons," as defined in the 1940 Act, and who have no direct or indirect financial interest in the operation of the Current Plan or in any agreements entered into in connection with the Current Plan ("Plan Directors"). Continuation of the Current Plan was last approved by the Board and by Plan Directors at a meeting held February 28, 2003. The Current Plan may be amended at any time with approval of majorities of the Fund's Board and Plan Directors, respectively. Amendments that would materially increase Current Plan costs to the Fund require shareholder approval. The Current Plan may be terminated at any time, without penalty, by a majority of the Plan Directors or by vote of a 1940 Act Majority. Upon termination, the Fund shall have no liability for expenses that were not reimbursed as of the date of termination. While the Current Plan is in effect, the Board reviews reports quarterly regarding expenditures under the Current Plan, and of the purposes of those expenditures. The Current Plan could be mad e applicable to additionalseparate series of CSFI, subject to compliance with applicable legal approval requirements.The total fees paid by the Fund under the Current Plan during its fiscal year ended October 31, 2002, were $139,432 or 0.25% of the Fund's average net assets for that year. Of that amount, $133,060 or approximately 95% of total payments under the Current Plan were retained by CAPCO.
The Proposed Amended Service and Distribution Plan
The proposed Amended Service and Distribution Plan ("Amended Plan") is attached as Exhibit C. The following description is qualified in its entirety by reference to Exhibit C. The Amended Plan would compensate CAPCO for services provided and expenses incurred in connection with the distribution and marketing of shares of the Fund and for the servicing of shareholders. Covered expenses are generally comparable to those under the Current Plan. Such compensation to CAPCO would be at an annual rate of 0.25% of the Fund's average daily net assets and could include service fee payments to service organizations pursuant to a written agreement and subject to applicable legal limits and other requirements. Applicable rules currently limit service fees to 0.25% of the Fund's average net assets per year and a service organization can receive no more than an amount totaling 0.25% of the average net asset value of shares sold by that organization. As with the Current Plan, the Amended Plan, if approved by sh areholders, would continue in effect from year to year if such continuation is approved at least annually by majorities of the Board and of the Plan Directors. The Amended Plan could also be made applicable to additional series of CSFI, subject to applicable legal approval requirements. The amendment, termination and reporting provisions of the Amended Plan are generally comparable to those of the Current Plan.
Comparison of the Current Plan and the Amended Plan
As indicated by the table above, experience with the Current Plan indicates that CAPCO regularly incurs distribution and service expenses in excess of those for which it is reimbursed under the Current Plan. Thus, the Fund each year pays fees up to the limit provided by the Current Plan -- i.e., 0.25% annually of the Fund average daily net assets. However, CAPCO has greater recordkeeping responsibilities under the "reimbursement-type" form of the Current Plan. If the Amended Plan is adopted, the Board expects that expenses and costs chargeable to the Fund under the Amended Plan will continue to exceed the amounts payable under the Plan, but the reporting burden on CAPCO will be simplified. The Board therefore expects that there will be no material change in the amount payable by the Fund if the Amended Plan is approved by shareholders. The Board also believes it is desirable for the Fund's service and distribution plan to be in a form that is similar to the service and distribution plans for the other Capstone Funds. Thus, the Board and all the Plan Directors have approved the Amended Plan at a telephonic meeting held June 9, 2003, subject to approval by vote of a 1940 Act Majority. If shareholders approve the Amended Plan, it will not be implemented until it has been approved at an in-person meeting by a majority of the Board and of the Plan Directors, in separate votes. The next in-person meeting of the Board is expected to be held in November, 2003.
THE BOARD OF DIRECTORS OF THE GROWTH FUND RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL OF THE AMENDED PLAN
OTHER INFORMATION
Investment Adviser, Principal Underwriter and Administrator
Capstone Asset Management Company, 5847 San Felipe, Suite 4100, Houston, Texas 77057, acts as the Funds' investment adviser and administrator. CAPCO, of the same address, is the Funds' principal underwriter.
Certain Beneficial Owners of Fund Shares
A list of persons or entities that owned beneficially or of record 5% or more of the outstanding shares of CCVF Large Cap Fund and of each series of SERV as of June 24, 2003 is provided below. No one shareholder owns 5% or more of the Growth Fund.
Title of Class | Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership |
Percentage of Class
|
CCVF Large Cap (Individual Class) | National Investors Service Corp for the Benefit of Our Customers 55 Water Street, 32nd Floor New York, NY 10041
| 31,527.133 | 69.6% |
Large Cap (Institutional Class) | Assemblies of God Foundation 1661 North Boonville Ave Suite D Springfield, MO. 65803
| 121,825.385 | 32.1% |
| Assemblies of God Foundation 1661 North Boonville Ave Suite D Springfield, MO. 65803
| 97,240.870 | 25.7% |
| General Council of the Assemblies of God 1661 North Boonville Ave Suite D Springfield, MO. 65803
| 81,216.923 | 21.4% |
| SCOTTRADE INC FBO 19036104 PO BOX 31759 St Louis, MO. 63131-0759
| 29,850.746 | 7.9% |
| Saxon & Co FBO 21-80-001-3940281 PO BOX 7780-1888 Philadelphia, PA. 19182
| 27,738.237 | 7.3% |
| | | |
SERV | | | |
Short-Term Bond (Class A) | John W & Jane B. Perkinson 1806 Gleneagles Lane Wilmington, NC. 28405
| 3,906.215 | 22.0% |
| National Investors Service Corp for the Benefit of our Customers 55 Water Street, 32nd Floor New York, NY 10041 | 3,455.819 | 19.5% |
| Alton L. Richards IRA 9333 Whaleys Lake Lane Jonesboro, GA. 30238-4889
| 2,866.468 | 16.1% |
| Gulf State Conference of SDA Endowment 6450 Atlanta Highway PO BOX 24029 Montgomery, AL. 36124-0249
| 2,269.485 | 12.8% |
| Charles H Chase IRA 13 Orchard Drive Corning, NY 14830-3733
| 1,639.321 | 9.2% |
Short Term Bond (Class C) | General Conference of SDA 8100 SW 117th Avenue Miami, FL 33183-4827
| 294,482.903 | 15.8% |
| General Conference of SDA 8100 SW 117th Avenue Miami, FL. 33183-4827
| 261,952.056 | 14.0% |
| General Conference of SDA 12501 Old Columbia Pike Silver Spring, MD. 20904
| 247,124.583 | 13.2% |
| Adventist Health 2100 Douglas Blvd Roseville, CA. 95661
| 146,448.595 | 7.9% |
Bond Fund (Class A) | VALIC Trust Company FBO Adventist Retirement Plan 2929 Allen Parkway L3-00 Houston, TX. 77019
| 1,310,299.251 | 74.4% |
| MAC & CO Mutual Fund Ops PO Box 3198 Pittsburgh, PA. 15230-3198
| 314,778.880 | 17.9% |
Bond Fund (Class C) | General Conference of SDA 12501 Old Columbia Pike Silver Spring, MD.
| 257,388.543 | 33.5% |
Large Cap Equity Fund (Class A) | VALIC Trust Company 2929 Allen Parkway L3-00 Houston, TX 77019
| 1,812,947.800 | 92.0% |
| MAC & CO P.O. Box 3198 Pittsburgh, PA 15230
| 124,138.227 | 6.3% |
Large Cap Equity Fund (Class C) | Adventist Health System Shawnee Operating Acct 111 North Orlando Ave Winter Park, FL. 32789
| 166,582.796 | 12.8% |
| Pacific Union College 1 Angwin Avenue Angwin, CA. 94508-9650
| 145,363.486 | 11.1% |
| Adventist Health System Shawnee Depreciation Acct Winter Park, FL.
| 143,665.974 | 11.0% |
| NAD General Conf of SDA 12501 Old Columbia Pike Silver Spring, MD. 20904-6600
| 128,597.599 | 9.9% |
| Reading Institute for Better Living Inc 11 Tranquility Lane Reading , Pa. 19607
| 111,091.514 | 8.5% |
| Pacific Press Publishing Assoc 1350 N Kings Road PO BOX 5353 Nampa, ID. 83653
| 85,849.991 | 6.6% |
| Castle Medical Center 640 Ulukahiki Street Kailua, HI 96734
| 74,195.474 | 5.7% |
| Southern NE Conf of SDA Secondary Education Trust Fund 34 Sawyer Street PO BOX 1169 So. Lancaster, MA. 01561
| 66,631.501 | 5.1% |
Small Cap Equity Fund (Class A) | VALIC Trust Company 2929 Allen Parkway L3-00 Houston, TX 77019 | 428,589.982 | 79.2% |
| MAC & CO P.O. Box 3198 Pittsburgh, PA 15230
| 91,145.042 | 16.9% |
Small Cap Equity Fund (Class C) | Adventist Health System
Shawnee Depreciation Acct 111 North Orlando Ave. Winter Park, FL 32789 | 49,491.776 | 16.6% |
| Firnbank & CO FBO 1051335500 1620 Dodge St Omaha, NE 68102
| 47,800.454 | 16.0% |
| Adventist Health System Shawnee Operating Acct 111 North Orlando Ave. Winter Park, FL 32789
| 44,264.137 | 14.8% |
| Pacific Press Publishing Assoc 1350 N Kings Road P.O. Box 5353 Nampa, ID 83653
| 34,946.453 | 11.7% |
| Capstone Financial Services 401(k) 5847 San Felipe, Suite 4100 Houston, TX 77057
| 26,577.969 | 8.9% |
| Southern NE Conf of SDA Secondary Education Trust Fund 34 Sawyer Street P.O. Box 1169 So. Lancaster, MA 01561
| 16,667.142 | 5.6% |
International Fund (Class A) | VALIC Trust Company 2929 Allen Parkway L3-00 Houston, TX 77019 | 429,711.407 | 94.1% |
International Fund (Class C) | Firnbank & CO FBO 1051335500 1620 Dodge St. Omaha, NE 68102 | 103,643.173 | 16.7% |
| NAD General Conf of SDA 12501 Old Columbia Pike Silver Spring, MD 20904-6600
| 40,422.166 | 6.5% |
| Wexford Clearing Services Huntrise Global Partners LTD 48 Par-La-Ville Road Hamilton HM11 Bermuda
| 34,884.940 | 5.6% |
| Banc of America Securities 799-00033-16 200 North College ST 3rd Floor Charlotte, NC. 28255
| 34,332.829 | 5.5% |
| Wexford Clearing Services Peconic Offshore Fund Corp. No 2 Montague Sterling Centre East Bay Street The Bahamas | 33,012.324 | 5.3% |
| | | |
OTHER BUSINESS
The Boards know of no other business to be presented to the Meeting. If, however, other matters are properly brought before the Meeting, the persons named in the accompanying form of proxy will vote thereon in accordance with their judgment.
SUBMISSION OF SHAREHOLDER PROPOSALS
None of the Funds holds regular annual meetings. Any shareholder proposal intended to be presented at any future meeting of shareholders of a Fund must be received by the Fund at its principal office a reasonable time before the solicitation of proxies for such meeting in order for such proposal to be considered for inclusion in the proxy statement for that meeting. Shareholders of a Fund wishing to submit proposals for inclusion in a proxy statement for a subsequent meeting of shareholders of that Fund should send their written proposals to the Secretary of the Funds, 5847 San Felipe, Suite 4100, Houston, Texas 77057.
Exhibit A
Current Investment Restrictions of Growth Fund
1.
| Engage in margin transactions or short sales, except that the Fund may engage in margin transactions with respect to transactions in stock index futures contracts and options on stock index futures.
|
2.
| Invest more than 5% of the value of its total assets (at time of investment) in the securities of any one issuer except the United States Government and its instrumentalities.
|
3.
| Invest in companies for the purpose of exercising control of management.
|
4.
| Borrow any amount in excess of 5% of the value of its total assets less all liabilities not represented by senior securities at the time the loan is made, or amounts in excess of 10% of the gross assets of the Fund taken at cost, whichever is less, and provided further that any such borrowings shall be undertaken only as a temporary measure for extraordinary or emergency purposes. Normally the Fund will borrow only to permit timely payment for shares liquidated by stockholders for which it does not have ready funds to make payment. While authorized to borrow, the Fund has never done so and has no plans to do so.
|
5.
| Invest in securities of companies having a record of less than three years continuous operation, if such purchase at the time would cause more than 5% of the total assets to be invested in the securities of such company or companies.
|
6.
| Purchase or retain securities of a company, if those officers or directors of the Fund or the Adviser who individually own beneficially more than 1/2 of 1% of the shares or securities of such company together own beneficially more than 5% of the shares or securities of such company.
|
7.
| Invest in commodities or commodity contracts except that the Fund may enter into stock index futures contracts and options on stock index futures contracts to the extent that, (a) immediately thereafter, the sum of its initial margin deposits on such open contracts and premiums paid for options on such futures contracts does not exceed 5% of the market value of the Fund's total assets and (b) its outstanding obligations under such contracts and options does not exceed 20% of the Fund's total assets.
|
8.
| Invest in real estate, or other interests in real estate which are not readily marketable.
|
9.
| Underwrite securities issued by others, or invest in any securities it could not freely sell to the public without registration under the Securities Act of 1933, as amended, except that the Fund may invest up to 10% of its assets in securities which have not been registered under the Securities Act of 1933, as amended.
|
10.
| Purchase the securities of any one issuer if such purchase would cause more that 10% of any class of outstanding securities, including outstanding voting securities, of such issuer to be held by the Fund.
|
11. | Lend any part of its assets apart from the purchase of portions of issues of publicly distributed bonds, debentures, notes and other evidences of indebtedness and privately distributed debt obligations of publicly owned companies.
|
12.
| Issue warrants or options for the acquisition of Fund shares.
|
13.
| Pledge or otherwise encumber any of its assets to an extent greater than 15% of the gross assets of the Fund taken at cost. (In order to comply with Illinois law, management has decided to follow a more restrictive policy for the present time. Accordingly, the Fund will not, as a matter of operating policy, pledge, mortgage or hypothecate its portfolio securities to the extent that at any time the percentage of pledged securities will exceed 10% of the offering price of the Fund's shares, except as permitted in transactions in options and futures.)
|
14.
| Invest 25% or more of the value of its total assets in a particular industry.
|
15.
| The Fund will not invest in oil, gas or other mineral exploration or development programs (although the Fund is not prohibited from investing in issuers that own or invest in such investors).
|
16.
| Invest in securities of other investment companies, except (a) in connection with a merger, consolidation, acquisition, or reorganization, and (b) the Fund may invest up to 10% of its total assets in shares of other investment companies.
|
Exhibit B
Form of Current Service and Distribution Plan for Growth Fund
CAPSTONE SERIES FUND, INC.
(formerly, Capstone U.S. Trend Fund, Inc.)
P.O. Box 3167
Houston, Texas 77253-3167
SERVICE AND DISTRIBUTION PLAN
(as amended May 3, 1993)
Introduction: It has been determined that Capstone Series Fund, Inc. (the "Fund") will pay for certain costs and expenses incurred in connection with the distribution of its shares and servicing of its shareholders and adopt the Service and Distribution Plan (the "Plan") set forth herein pursuant to Rule 12b-1is registered under the Investment Company Act of 1940, as amended (the "Act""1940 Act").
The Board, as an open-end, diversified management investment company;
WHEREAS, the Series are separate series of Directors, in considering whetherthe Fund's shares of beneficial interest;
WHEREAS, the Adviser is registered as an investment adviser under the Investment Advisers Act of 1940 ("Advisers Act");
WHEREAS, the Fund should implementwishes to retain the Plan, has requestedAdviser to render investment advisory services to the Series and evaluatedthe Adviser is willing to furnish such informationservices to the Series;
NOW THEREFORE, in consideration of the promises and mutual covenants herein contained, it is agreed between the Fund and the Adviser as it deemed necessaryfollows:
1. Appointment. The Fund hereby appoints the Adviser to make an informed determinationact as investment adviser to whether the Plan should be implementedSeries for the periods and has consideredon the terms set forth in this Agreement. The Adviser accepts such pertinent factors as it deemed necessaryappointment and agrees to formfurnish the basisservices herein set forth, for a decisionthe compensation herein provided.
2. Investment Advisory Duties. Subject to use assetsthe supervision of the Directors of the Fund, the Adviser will (a) provide a program of continuous investment management for such purposes. In voting to approveeach Series in accordance with the implementationinvestment objectives, policies and limitations of that Series as stated in the Fund's combined prospectus and Statement of Additional Information included as part of the Plan,Fund's Registration Statement filed with the Directors have concluded,Securities and Exchange Commission, as they may be amended from time to time, copies of which shall be provided to the Adviser by the Fund; (b) make investment decisions for the Series; and (c) place orders to purchase and sell securities for the Series.
In performing its investment management services to the Series hereunder, the Adviser will provide the Series with ongoing investment guidance and policy direction, including oral and written research, analysis, advice, statistical and economic data and judgments regarding individual investments, general economic conditions and trends and long-range investment policy. The Adviser will determine the securities, instruments, currencies, repurchase agreements, futures, options and other investments and techniques that each Series will purchase, sell, enter into or use, and will provide an ongoing evaluation of the portfolio of each Series. The Adviser will determine what portion of the portfolio of each Series shall be invested in securities and other assets and what portion, if any, should be held uninvested.
The Adviser further agrees that it will:
| (a) | comply with the 1940 Act and all rules and regulations thereunder, the Advisers Act, the Internal Revenue Code (the "Code") and all other applicable federal and state laws and regulations, and with any applicable procedures adopted by the Directors; |
| (b) | use reasonable efforts to manage each Series so that it will qualify, and continue to qualify, as a regulated investment company under Subchapter M of the Code and regulations issued thereunder; |
| (c) | place orders pursuant to its investment determinations for each Series directly with the issuer, or with any broker or dealer, in accordance with applicable policies expressed in the Fund's prospectus and/or Statement of Additional Information with respect to that Series and in accordance with applicable legal requirements; |
| (d) | furnish to each Series whatever statistical information the Series may reasonably request with respect to the Series' assets or contemplated investments. In addition, the Adviser will keep each Series and the Directors informed of developments materially affecting the Series' portfolio and shall, on the Adviser's own initiative, furnish to the Series and the Fund from time to time whatever information the Adviser believes appropriate for this purpose; |
| (e) | make available to the Series' administrator ("Administrator"), and the Series, promptly upon their request, copies of all its investment records and ledgers with respect to the Series to assist the Administrator and the Series in their compliance with applicable laws and regulations. The Adviser will furnish the Directors with such periodic and special reports regarding the Series as they may reasonably request; |
| (f) | immediately notify the Fund in the event that the Adviser or any of its affiliates: (1) becomes subject to a statutory disqualification that prevents the Adviser from serving as investment adviser pursuant to this Agreement; or (2) has been the subject of an administrative proceeding or enforcement action by the Securities and Exchange Commission ("SEC") or other regulatory authority. The Adviser further agrees to notify the Fund immediately of any material fact known to the Adviser respecting or relating to the Adviser that is not contained in the Fund's Registration Statement with respect to a Series, or any amendment or supplement thereto, and of any statement contained therein that becomes untrue in any material request. |
3. Allocation of Charges and Expenses. Except as otherwise specifically provided in this section 3, the exerciseAdviser shall pay the compensation and expenses of their reasonable business judgmentall its directors, officers and in lightemployees who serve as officers and executive employees of their respective fiduciary duties, that there is a reasonable likelihood that the Plan will benefit the Fund (including the Fund's share of payroll taxes) and its existing and future shareholders.The Plan: The material aspectsof all Directors of the financing byFund who are interested persons of the Adviser, and the Adviser shall make available, without expense to the Fund or the Series, the service of distributionits directors, officers and employees who may be duly elected officers of the Fund, subject to their individual consent to serve and to any limitations imposed by law.
The Adviser shall not be required to pay any expenses of the Fund or the Series other than those specifically allocated to the Adviser in this section 3. In particular, but without limiting the generality of the foregoing, the Adviser shall not be responsible, except to the extent of the reasonable compensation of such of the Fund's employees as are directors, officers or employees of the Adviser whose services may be involved, for the following expenses of the Fund or the Series: organization and certain offering expenses of the Series (including out-of-pocket expenses, but not including the Adviser's overhead and employee costs); fees payable to the Adviser and to any other advisers or consultants to the Fund or a Series; legal expenses; auditing and accounting expenses; interest expenses; telephone, telex, facsimile, postage and other communications expenses; taxes and governmental fees; fees, dues and expenses incurred by or with respect to the Series in connection with securitiesmembership in investment company trade organizations; cost of which it isinsurance relating to fidelity coverage for the issuer are as follows: 1. The Fund will reimburse Capstone Asset Planning Company ("CAPCO") for costsFund's officers and employees, fees and expenses incurredof the Series' Administrator or of any custodian, subcustodian, transfer agent, registrar, or dividend disbursing agent of the Fund on behalf of the Series; payments for portfolio pricing or valuation services to pricing agents, accountants, bankers and other specialists; expenses in connection with the issuance, offering, distribution, sale or redemption of securities issued by the Series; expenses relating to investor and marketingpublic relations; expenses of registering and qualifying shares of the Series for sale; freight, insurance and other charges in connection with the shipment of the Series' portfolio securities; brokerage commissions or other costs of acquiring or disposing of any portfolio securities or other assets of the Series, or of entering into other transactions or engaging in any investment practices with respect to the Fund; expenses of printing and distributing prospectuses, Statements of Additional Information, reports, notices and dividends to shareholders; costs of stationery; any litigation expenses; costs of shareholders' and other meetings; the compensation and all expenses (specifically including travel expenses relating to the business of the Fund or a Series) of Directors, officers and employees of the Fund who are not interested persons of the Adviser or Administrator; and travel expenses (or an appropriate portion thereof) of Directors and officers of the Fund who are directors, officers or employees of the Adviser or the Administrator to the extent that such expenses relate to attendance at meetings of the Board of Directors of the Fund or any committees thereof or advisers thereto.
The Adviser shall not be required to pay expenses of any activity which is primarily intended to result in sales of shares of the FundSeries if and servicing of Fund shareholders. Such distribution and servicing costs and expenses may include (1) printing and advertising expenses; (2) payments to employees or agents of CAPCO who engage in or support distribution of the Fund's shares, including salary, commissions, travel and related expenses; (3) the costs of preparing, printing and distributing prospectuses and reports to prospective investors; (4) expenses of organizing and conducting sales seminars; (5) expenses related to selling and servicing efforts, including processing new account applications, transmitting customer transaction information to the Fund's transfer agent and answering questions of shareholders; (6) payments of fees to oneextent that (i) such expenses are assumed or more broker-dealers (which may include CAPCO itself), fi nancial institutions or other industry professionals, such as investment advisers, accountants and estate planning firms (severally, a "Service Organization''), in respect of the average daily value of the Fund's shares owned by shareholders for whom the Service Organization is the dealer of record or holder of record, or owned by shareholders with whom the Service Organization has a servicing relationship; (7) costs and expenses incurred in implementing and operating the Plan; and (8) such other similar services as the Fund's Board of Directors determinesrequired to be reasonably calculated to result inborne by the sale of Fund shares. Subject to the limitations of applicable law and regulation, including rules of the National Association of Securities Dealers ("NASD"), CAPCO will be reimbursed monthly for such costs, expensesSeries' principal underwriter or payments at an annual rate of up to but not more than 0.25% of the average daily net assets of the Fund. Any expense payable hereunder may be carried forward for reimbursement for up to twelve months beyond the date on which it is incurred, subject always to the limit that not more than 0.25% of the Fund's average daily net assets may be used in any month to pay expenses pursuant to the Plan. The Fund shall incur no interestsome other party, or carrying charges for expenses carried forward. In the event the Plan is terminated as herein provided,(ii) the Fund on behalf of a Series shall have no liability for expenses that were not reimbursed as of the date of termination.
2. Subject to the limits herein and the requirements of applicable law and regulations, including rules of the NASD, CAPCO may designate as "Service Fees", as that term is defined by applicable rules and regulatory interpretations applicable to payments underadopted a plan such asin conformity with Rule 12b-1 under the Plan,1940 Act providing that the Series (or some other party) shall assume some or all of any payments madesuch expenses. The Adviser shall be required to Service Organizations (including CAPCO itself)pay such of the foregoing sales expenses as are not assumed or required to be paid by the principal underwriter of a Series or some other party or are not permitted to be paid by a Series (or some other party) pursuant to such a plan.
4. Compensation. As compensation for the services that may be coveredprovided and expenses assumed by "Service Fees," as so defined. Such feesthe Adviser under this Agreement, each Series will bepay the Adviser at the end of each calendar month an advisory fee computed daily in accordance with the schedule provided in Appendix B hereto.
5. Books and paid quarterly by CAPCO at an annual rate not exceeding 0.25%Records. The Adviser agrees to maintain such books and records with respect to its services to the Fund on behalf of the average net asset value ofSeries as are required by Section 31 under the Fund's shares owned1940 Act, and rules adopted thereunder, and by shareholdersother applicable legal provisions, and to preserve such records for whom the Service Organizationsperiods and in the manner required by that Section, and those rules and legal provisions. The Adviser also agrees that records it maintains and preserves pursuant to Rules 31a-1 and Rule 31a-2 under the 1940 Act and otherwise in connection with its services hereunder are the dealers of record or holders of record, or owned by shareholders with whom the Service Organizations have servicing relationships. The payment to a Service Organization is subject to compliance by the Service Organization with the terms of a Selling Group Agreement between the Service Organization and CAPCO (the "Agreement"), a form of which is attached hereto as Exhibit A.1 If a shareholderproperty of the Fund ceasesand will be surrendered promptly to the Fund upon its request. And the Adviser further agrees that it will furnish to regulatory authorities having the requisite authority any information or reports in connection with its services hereunder which may be a client of a Service Organization that has entered into an Agreement with CAPCO, but continuesrequested in order to hold sharesdetermine whether the operations of the Fund CAPCOor the Series are being conducted in accordance with applicable laws and regulations.
6. Standard of Care and Limitation of Liability. The Adviser shall exercise its best judgment in rendering the services provided by it under this Agreement. The Adviser shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Fund or a Series in connection with the matters to which this Agreement relates, provided that nothing in this Agreement shall be deemed to protect or purport to protect the Adviser against any liability to the Fund, a Series or to holders of shares of a Series to which the Adviser would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence on its part in the performance of its duties or by reason of the Adviser's reckless disregard of its obligations and duties under this Agreement.
7. Services Not Exclusive. It is understood that the services of the Adviser are not exclusive, and nothing in this Agreement shall prevent the Adviser from providing similar services to other investment companies (whether or not their investment objectives and policies are similar to those of a Series) or from engaging in other activities, provided such other services and activities do not, during the term of this Agreement, interfere in a material manner with the Adviser's ability to meet its obligations to a Series and to the Fund hereunder. When the Adviser recommends the purchase or sale of a security for other investment companies and other clients, and at the same time the Adviser recommends the purchase or sale of the same security for a Series, it is understood that in light of its fiduciary duty to the Fund on behalf of the Series, such transactions will be entitledexecuted on a basis that is fair and equitable to receive a similar payment in respectthe Series. In connection with purchases or sales of the servicing provided to such investors. For the purposes of determining the fees payable under the Plan, the average daily net asset value of the Fund's shares shall be computed in the same manner specified in the Fund's Articles of Incorporation and current prospectusportfolio securities for the computationaccount of a Series, neither the valueAdviser nor any of its directors, officers or employees shall act as a principal or agent or receive any commission. If the Fund's net asset value per share.-----------------------
1 Not included.
3. The BoardAdviser provides any advice to its clients concerning the shares of Directorsa Series, the Adviser shall beact solely as investment counsel for such clients and not in any way on behalf of that Series.
8. Duration and Termination. This Agreement shall continue with respect to each Series until , 2013, and thereafter shall continue automatically with respect to each Series for successive annual periods, provided such continuance is specifically approved at least quarterly, withannually by (i) the Directors or (ii) a written reportvote of all amounts expended pursuant to the Plan. The report shall state the purposes for which the amounts were expended. 4. The Plan will become effective immediately upon approval by (a) a majority of the outstanding voting securities of that Series (as defined in the Fund, and (b) a majority of1940 Act), provided that in either event the Board of Directors, includingcontinuance is also approved by a majority of the Directors who are not "interested persons" (as defined in the 1940 Act) of the Fund and have no direct or indirect financial interest in the operation of the Plan or in any agreements entered into in connection with the Plan (the "Plan Directors"), pursuantparty to athis Agreement, by vote cast in person at a meeting called for the purpose of voting on such approval. Notwithstanding the approvalforegoing, this Agreement may be terminated with respect to one or more Series: (a) at any time without penalty by the Fund or such Series upon the vote of a majority of the Plan. If additional series are addedDirectors or by vote of the majority of the outstanding voting securities of each applicable Series, upon sixty (60) days' written notice to the Fund,Adviser or (b) by the PlanAdviser at any time without penalty, upon ninety (90) days' written notice to the Fund. This Agreement will becomealso
terminate automatically in the event of its assignment, with respect to any Series for which it is assigned (as defined in the 1940 Act).
9. Amendments. No provision of this Agreement may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought, and no amendment of this Agreement shall be effective as to each such series upon approvaluntil approved by (a)an affirmative vote of (i) a majority of the outstanding voting securities of such series,each affected Series, (ii) the Directors and (b)(iii) a majority of the BoardDirectors who are not interested persons of Directors, including a majority of the Plan Directors, pursuantany party to a votethis Agreement, cast in person at a meeting called for the purpose of voting on such purpose. 5.approval, if such approval is required by applicable law.
10. Limitation of Liability for Claim. The PlanArticles of the Fund, a copy of which, together with all amendments thereto, is on file with the State of Maryland provides that the name of the Fund, as amended from time to time, refers to the Directors under the Articles collectively as Directors and not as individuals or personally, and that no shareholder of a Series, or Director, officer, employee or agent of the Fund, shall continuebe subject to claims against or obligations of the Fund or of a Series to any extent whatsoever, but that the Fund estate only shall be liable.
The Adviser is hereby expressly put on notice of the limitation of liability as set forth in the Articles and hereby agrees that the obligations assumed by the Fund on behalf of each Series pursuant to this Agreement shall be limited in all cases to the Series and its assets, and the Adviser shall not seek satisfaction of any such obligation from shareholders or any shareholder of a Series or any other series of the Fund or their shareholders, or from any Director, officer, employee or agent of the Fund. The Adviser understands that the rights and obligations of each Series, under the Declaration are separate and distinct from those of any and all other series.
11. Miscellaneous.
| (a) | This Agreement shall be governed by the laws of the State of Maryland except as to Steward Small-Mid Cap Enhanced Index Fund, which shall be governed by the law of the State of Texas, provided that nothing herein shall be construed in a manner inconsistent with the 1940 Act, the Advisers Act, or rules or orders of the SEC thereunder. |
| (b) | The captions of this Agreement are included for convenience only and in no way define or limit any of the provisions hereof or otherwise affect their construction or effect. |
| (c) | If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected hereby and, to this extent, the provisions of this Agreement shall be deemed to be severable. |
| (d) | Nothing herein shall be construed as constituting the Adviser as an agent of the Fund or a Series. |
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by their officers designated below as of _________________, 2011.
STEWARD FUNDS, INC.
Edward L. Jaroski, President
CAPSTONE ASSET MANAGEMENT COMPANY
Edward L. Jaroski, President
APPENDIX A
The following Series are covered by this Agreement:
Steward Large Cap Enhanced Index Fund
Steward Global Equity Income Fund
Steward International Enhanced Index Fund
Steward Select Bond Fund
APPENDIX B
As compensation for the services provided and expenses assumed by the Adviser under this Agreement, each Series will pay the Adviser at the end of each calendar month an advisory fee computed daily for the applicable Series at the following rates for that Series based on the average net assets of that Series:
| Steward Large Cap Enhanced Index Fund | Steward Select Bond Fund |
| 0.15%of the first $500 million | 0.25% of the first $500 million |
| 0.125% of the next $500 million | 0.20% of the next $500 million |
| 0.10% of assets over $1 billion | 0.175% of assets over $1 billion |
| Steward International Enhanced Index Fund | Steward Global Equity Income Fund |
| 0.30% of the first $500 million | 0.30% of the first $500 million |
| 0.25% of the next $500 million | 0.25% of the next $500 million |
| 0.20% of assets over $1 billion | 0.20% of assets over $1 billion |
The "average daily net assets" of a Series shall mean the average of the values placed on the net assets of that Series as of 4:00 p.m. (New York time) on each day on which the net asset value of the Series is determined consistent with the provisions of Rule 22c-1 under the 1940 Act or, if the Series lawfully determines the value of its net assets as of some other time on each business day, as of such other time. The value of net assets of a Series shall always be determined pursuant to the applicable provisions of the Articles and the Registration Statement. If, pursuant to such provisions, the determination of net asset value of a Series is suspended for any particular business day, then for the purposes of this Appendix B, the value of the net assets of that Series as last determined shall be deemed to be the value of its net assets as of the close of the New York Stock Exchange, or as of such other time as the value of the net assets of that Series may lawfully be determined, on that day. If the determination of the net asset value of the shares of a Series has been so suspended for a period including any month end when the Adviser's compensation is payable pursuant to this section, then the Adviser's compensation payable at the end of one year fromsuch month shall be computed on the basis of the value of the net assets of that Series as last determined (whether during or prior to such month). If a Series determines the value of the net assets of its effective date, unless earlier terminatedportfolio more than once on any day, then the last such determination thereof on that day shall be deemed to be the sole determination thereof on that day for the purposes of this Appendix B.
Supplement to
Investment Advisory Agreement
Between
Capstone Asset Management Company
And
Steward Funds, Inc.
Dated _________, 2011
(“Agreement”)
_____________, 2011
Until such time as Steward Small-Mid Cap Enhanced Index Fund (“Fund”), a series of Capstone Series Fund, Inc., is reorganized as a series of Steward Funds, Inc., the Agreement shall be applicable to the Fund as its investment advisory agreement, with the following fee schedule applied in accordance with the provisions of Appendix B of the Agreement:
| Steward Small-Mid Cap Enhanced Index Fund |
|
| 0.15% on assets up to $500 million |
| 0.125% - $500,000,001 - $1 billion |
| 0.10% on assets over $1 billion- |
Effective upon the reorganization of the Fund as a series of Steward Funds, Inc., the Fund shall be added as a series on Appendix A of the Agreement and the above fee schedule shall be added to Appendix B of the Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by their officers designated below as of _________________, 2011.
CAPSTONE SERIES FUND, INC.
Edward L. Jaroski, President
CAPSTONE ASSET MANAGEMENT COMPANY
Edward L. Jaroski, President
Exhibit B
Current Investment Advisory Agreements
for
Steward Large Cap Enhanced Index Fund
Steward Select Bond Fund
Steward Global Equity Income Fund
Steward International Enhanced Index Fund
AMENDMENT TO INVESTMENT ADVISORY AGREEMENT
The Investment Advisory Agreement dated October 1, 2004 between Capstone Asset Management Company and Steward Funds, Inc. on behalf of Steward Domestic All-Cap Equity Fund and Steward Select Bond Fund is hereby amended as follows:
| 1. | Effective March 31, 2008, the name of Steward Domestic All-Cap Equity Fund is changed to Steward Large Cap Enhanced Index Fund. |
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by their officers designated below as of March 31, 2008.
| STEWARD FUNDS, INC. | | |
| By | | |
| Edward L. Jaroski, President | |
| | |
| | |
| CAPSTONE ASSET MANAGEMENT COMPANY | | |
| | |
| By | | |
| Edward L. Jaroski, President | |
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, effective commencing on _______________ between CAPSTONE ASSET MANAGEMENT COMPANY (the "Adviser") and STEWARD FUNDS INC. ("Fund") on behalf of Steward Select Bond Fund and Steward Domestic All-Cap Equity Fund ("Series").
WHEREAS, the Fund is a Maryland corporation organized under Articles of Incorporation dated May 11, 1992, (the "Articles") and is authorized to divide and classify its shares of beneficial interest into separate series of shares and is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end, diversified management investment company;
WHEREAS, the Series are separate series of the Fund's shares of beneficial interest;
WHEREAS, the Adviser is registered as an investment adviser under the Investment Advisers Act of 1940 ("Advisers Act");
WHEREAS, the Fund wishes to retain the Adviser to render investment advisory services to the Series and the Adviser is willing to furnish such services to the Series;
NOW THEREFORE, in consideration of the promises and mutual covenants herein contained, it is agreed between the Fund and the Adviser as follows:
1. Appointment. The Fund hereby appoints the Adviser to act as investment adviser to the Series for the periods and on the terms set forth in this Agreement. The Adviser accepts such appointment and agrees to furnish the services herein set forth, for the compensation herein provided.
2. Investment Advisory Duties. Subject to the supervision of the Directors of the Fund, the Adviser will (a) provide a program of continuous investment management for each Series in accordance with the investment objectives, policies and limitations of that Series as stated in the Fund's combined prospectus and Statement of Additional Information included as part of the Fund's Registration Statement filed with the Securities and Exchange Commission, as they may be amended from time to time, copies of which shall be provided to the Adviser by the Fund; (b) make investment decisions for the Series; and (c) place orders to purchase and sell securities for the Series.
In performing its investment management services to the Series hereunder, the Adviser will provide the Series with ongoing investment guidance and policy direction, including oral and written research, analysis, advice, statistical and economic data and judgments regarding individual investments, general economic conditions and trends and long-range investment policy. The Adviser will determine the securities, instruments, currencies, repurchase agreements, futures, options and other investments and techniques that each Series will purchase, sell, enter into or use, and will provide an ongoing evaluation of the portfolio of each Series. The Adviser will determine what portion of the portfolio of each Series shall be invested in securities and other assets and what portion, if any, should be held uninvested.
The Adviser further agrees that it will:
| (a) | comply with the 1940 Act and all rules and regulations thereunder, the Advisers Act, the Internal Revenue Code (the "Code") and all other applicable federal and state laws and regulations, and with any applicable procedures adopted by the Directors; |
| (b) | use reasonable efforts to manage each Series so that it will qualify, and continue to qualify, as a regulated investment company under Subchapter M of the Code and regulations issued thereunder; |
| (c) | place orders pursuant to its investment determinations for each Series directly with the issuer, or with any broker or dealer, in accordance with applicable policies expressed in the Fund's prospectus and/or Statement of Additional Information with respect to that Series and in accordance with applicable legal requirements; |
| (d) | furnish to each Series whatever statistical information the Series may reasonably request with respect to the Series' assets or contemplated investments. In addition, the |
Adviser will keep each Series and the Directors informed of developments materially affecting the Series' portfolio and shall, on the Adviser's own initiative, furnish to the Series and the Fund from time to time whatever information the Adviser believes appropriate for this purpose;
| (e) | make available to the Series' administrator, Capstone Asset Management Company (the "Administrator"), and the Series, promptly upon their request, copies of all its investment records and ledgers with respect to the Series to assist the Administrator and the Series in their compliance with applicable laws and regulations. The Adviser will furnish the Directors with such periodic and special reports regarding the Series as they may reasonably request; |
| (f) | immediately notify the Fund in the event that the Adviser or any of its affiliates: (1) becomes subject to a statutory disqualification that prevents the Adviser from serving as investment adviser pursuant to this Agreement; or (2) has been the subject of an administrative proceeding or enforcement action by the Securities and Exchange Commission ("SEC") or other regulatory authority. The Adviser further agrees to notify the Fund immediately of any material fact known to the Adviser respecting or relating to the Adviser that is not contained in the Fund's Registration Statement with respect to a Series, or any amendment or supplement thereto, and of any statement contained therein that becomes untrue in any material request. |
3. Allocation of Charges and Expenses. Except as otherwise specifically provided in this section 3, the Adviser shall pay the compensation and expenses of all its directors, officers and employees who serve as officers and executive employees of the Fund (including the Fund's share of payroll taxes) and of all Directors of the Fund who are interested persons of the Adviser, and the Adviser shall make available, without expense to the Fund or the Series, the service of its directors, officers and employees who may be duly elected officers of the Fund, subject to their individual consent to serve and to any limitations imposed by law.
The Adviser shall not be required to pay any expenses of the Fund or the Series other than those specifically allocated to the Adviser in this section 3. In particular, but without limiting the generality of the foregoing, the Adviser shall not be responsible, except to the extent of the reasonable compensation of such of the Fund's employees as are directors, officers or employees of the Adviser whose services may be involved, for the following expenses of the Fund or the Series: organization and certain offering expenses of the Series (including out-of-pocket expenses, but not including the Adviser's overhead and employee costs); fees payable to the Adviser and to any other advisers or consultants to the Fund or a Series; legal expenses; auditing and accounting expenses; interest expenses; telephone, telex, facsimile, postage and other communications expenses; taxes and governmental fees; fees, dues and expenses incurred by or with respect to the Series in connection with membership in investment company trade organizations; cost of insurance relating to fidelity coverage for the Fund's officers and employees, fees and expenses of the Series' Administrator or of any custodian, subcustodian, transfer agent, registrar, or dividend disbursing agent of the Fund on behalf of the Series; payments for portfolio pricing or valuation services to pricing agents, accountants, bankers and other specialists; expenses in connection with the issuance, offering, distribution or sale of securities issued by the Series; expenses relating to investor and public relations; expenses of registering and qualifying shares of the Series for sale; freight, insurance and other charges in connection with the shipment of the Series' portfolio securities; brokerage commissions or other costs of acquiring or disposing of any portfolio securities or other assets of the Series, or of entering into other transactions or engaging in any investment practices with respect to the Fund; expenses of printing and distributing prospectuses, Statements of Additional Information, reports, notices and dividends to shareholders; costs of stationery; any litigation expenses; costs of shareholders' and other meetings; the compensation and all expenses (specifically including travel expenses relating to the business of the Fund or a Series) of Directors, officers and employees of the Fund who are not interested persons of the Adviser or Administrator; and travel expenses (or an appropriate portion thereof) of Directors and officers of the Fund who are directors, officers or employees of the Adviser or the Administrator to the extent that such expenses relate to attendance at meetings of the Board of Directors of the Fund or any committees thereof or advisers thereto.
The Adviser shall not be required to pay expenses of any activity which is primarily intended to result in sales of shares of the Series if and to the extent that (i) such expenses are assumed or required to be borne by the Series' principal underwriter or some other party, or (ii) the Fund on behalf of a
Series shall have adopted a plan in conformity with Rule 12b-1 under the 1940 Act providing that the Series (or some other party) shall assume some or all of such expenses. The Adviser shall be required to pay such of the foregoing sales expenses as are not assumed or required to be paid by the principal underwriter of a Series or some other party or are not permitted to be paid by a Series (or some other party) pursuant to such a plan.
4. Compensation. As compensation for the services provided and expenses assumed by the Adviser under this Agreement, each Series will pay the Adviser at the end of each calendar month an advisory fee computed daily at the following rates based on the average net assets of that Series:
| Name of Series | Fee |
| |
| Steward Select Bond Fund | 0.25% of the first $500 million 0.20% of the next $500 million 0.175% of assets over $1 billion |
| |
| Steward Domestic All-Cap Equity Fund | 0.15% of the first $500 million 0.125% of the next $500 million 0.10% of assets over $1 billion |
The "average daily net assets" of a Series shall mean the average of the values placed on the net assets of that Series as of 4:00 p.m. (New York time) on each day on which the net asset value of the Series is determined consistent with the provisions of Rule 22c-1 under the 1940 Act or, if the Series lawfully determines the value of its net assets as of some other time on each business day, as of such other time. The value of net assets of a Series shall always be determined pursuant to the applicable provisions of the Articles and the Registration Statement. If, pursuant to such provisions, the determination of net asset value of a Series is suspended for any particular business day, then for the purposes of this section 4, the value of the net assets of that Series as last determined shall be deemed to be the value of its net assets as of the close of the New York Stock Exchange, or as of such other time as the value of the net assets of that Series may lawfully be determined, on that day. If the determination of the net asset value of the shares of a Series has been so suspended for a period including any month end when the Adviser's compensation is payable pursuant to this section, then the Adviser's compensation payable at the end of such month shall be computed on the basis of the value of the net assets of that Series as last determined (whether during or prior to such month). If a Series determines the value of the net assets of its portfolio more than once on any day, then the last such determination thereof on that day shall be deemed to be the sole determination thereof on that day for the purposes of this section 4.
5. Books and Records. The Adviser agrees to maintain such books and records with respect to its services to the Fund on behalf of the Series as are required by Section 31 under the 1940 Act, and rules adopted thereunder, and by other applicable legal provisions, and to preserve such records for the periods and in the manner required by that Section, and those rules and legal provisions. The Adviser also agrees that records it maintains and preserves pursuant to Rules 31a-1 and Rule 31a-2 under the 1940 Act and otherwise in connection with its services hereunder are the property of the Fund and will be surrendered promptly to the Fund upon its request. And the Adviser further agrees that it will furnish to regulatory authorities having the requisite authority any information or reports in connection with its services hereunder which may be requested in order to determine whether the operations of the Fund or the Series are being conducted in accordance with applicable laws and regulations.
6. Standard of Care and Limitation of Liability. The Adviser shall exercise its best judgment in rendering the services provided by it under this Agreement. The Adviser shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Fund or a Series in connection with the matters to which this Agreement relates, provided that nothing in this Agreement shall be deemed to protect or purport to protect the Adviser against any liability to the Fund, a Series or to holders of shares of a Series to which the Adviser would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence on its part in the performance of its duties or by reason of the Adviser's reckless disregard of its obligations and duties under this Agreement.
7. Services Not Exclusive. It is understood that the services of the Adviser are not exclusive, and nothing in this Agreement shall prevent the Adviser from providing similar services to other investment companies (whether or not their investment objectives and policies are similar to those of a Series) or from engaging in other activities, provided such other services and activities do not, during the term of this Agreement, interfere in a material manner with the Adviser's ability to meet its obligations to a Series and to the Fund hereunder. When the Adviser recommends the purchase or sale of a security for other investment companies and other clients, and at the same time the Adviser recommends the purchase or sale of the same security for a Series, it is understood that in light of its fiduciary duty to the Fund on behalf of the Series, such transactions will be executed on a basis that is fair and equitable to the Series. In connection with purchases or sales of portfolio securities for the account of a Series, neither the Adviser nor any of its directors, officers or employees shall act as a principal or agent or receive any commission.
If the Adviser provides any advice to its clients concerning the shares of a Series, the Adviser shall act solely as investment counsel for such clients and not in any way on behalf of that Series.
8. Duration and Termination. This Agreement shall continue with respect to each Series until , 2006, and thereafter shall continue automatically with respect to each Series for successive annual periods, provided such continuance is specifically approved at least annually by (i) the Directors or (ii) a vote of a majority of the outstanding voting securities of that Series (as defined in the 1940 Act), provided that in either event the continuance is also approved by a majority of the BoardDirectors who are not "interested persons" (as defined in the 1940 Act) of Directors, including a majority of the Plan Directors, pursuantany party to athis Agreement, by vote cast in person at a meeting called for the purpose of voting on such approval. Notwithstanding the continuance of the Plan. 6. The Planforegoing, this Agreement may be amendedterminated with respect to one or more Series: (a) at any time without penalty by the Fund or such Series upon the vote of a majority of the Directors or by vote of the majority of the outstanding voting securities of each applicable Series, upon sixty (60) days' written notice to the Adviser or (b) by the Adviser at any time without penalty, upon ninety (90) days' written notice to the Fund. This Agreement will also terminate automatically in the event of its assignment, with respect to any Series for which it is assigned (as defined in the 1940 Act).
9. Amendments. No provision of this Agreement may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought, and no amendment of this Agreement shall be effective until approved by an affirmative vote of (i) a majority of the outstanding voting securities of each affected Series, (ii) the Directors and (iii) a majority of the Directors who are not interested persons of any party to this Agreement, cast in person at a meeting called for the purpose of voting on such approval, if such approval is required by applicable law.
10. Miscellaneous.
| (a) | This Agreement shall be governed by the laws of the State of Maryland, provided that nothing herein shall be construed in a manner inconsistent with the 1940 Act, the Advisers Act, or rules or orders of the SEC thereunder. |
| (b) | The captions of this Agreement are included for convenience only and in no way define or limit any of the provisions hereof or otherwise affect their construction or effect. |
| (c) | If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected hereby and, to this extent, the provisions of this Agreement shall be deemed to be severable. |
| (d) | Nothing herein shall be construed as constituting the Adviser as an agent of the Fund or a Series. |
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by their officers designated below as of _________________, 2004.
STEWARD FUNDS, INC.
Edward L. Jaroski, President
CAPSTONE ASSET MANAGEMENT COMPANY
Edward L. Jaroski, President
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, effective commencing on April 1, 2008 between CAPSTONE ASSET MANAGEMENT COMPANY ("Adviser") and STEWARD FUNDS INC. ("Fund") on behalf of Steward Global Equity Income Fund ("Series").
WHEREAS, the Fund is a Maryland corporation organized under Articles of Incorporation dated May 11, 1992, ("Articles"), is authorized to divide and classify its shares of beneficial interest into separate series of shares and is registered under the Investment Company Act of
1940, as amended ("1940 Act"), as an open-end, diversified management investment company;
WHEREAS, the Series is a separate series of the Fund's shares of beneficial interest; WHEREAS, the Adviser is registered as an investment adviser under the Investment Advisers
Act of 1940 ("Advisers Act");
WHEREAS, the Fund wishes to retain the Adviser to render investment advisory services to the Series and the Adviser is willing to furnish such services to the Series;
NOW THEREFORE, in consideration of the promises and mutual covenants herein contained, it is agreed between the Fund and the Adviser as follows:
| 1. | Appointment. The Fund hereby appoints the Adviser to act as investment adviser to the Series for the period and on the terms set forth in this Agreement. The Adviser accepts such appointment and agrees to furnish the services herein set forth, for the compensation herein provided. |
| 2. | Investment Advisory Duties. Subject to the supervision of the Directors of the Fund, the Adviser will (a) provide a program of continuous investment management for the Series in accordance with the investment objectives, policies and limitations of the Series as stated in the Fund's prospectus and Statement of Additional Information included as part of the Fund's Registration Statement filed with the Securities and Exchange Commission, as they may be amended from time to time, copies of which shall be provided to the Adviser by the Fund; (b) make investment decisions for the Series; and (c) place orders to purchase and sell securities for the Series. |
In performing its investment management services to the Series hereunder, the Adviser will provide the Series with ongoing investment guidance and policy direction, including oral and written research, analysis, advice, statistical and economic data and judgments regarding individual investments, general economic conditions and trends and long-range investment policy. The Adviser will determine the securities, instruments, currencies, repurchase agreements, futures, options and other investments and techniques that the Series will purchase, sell, enter into or use, and will provide an ongoing evaluation of the portfolio of the Series. The Adviser will determine what portion of the portfolio of the Series shall be invested in securities and other assets and what portion, if any, should be held uninvested.
The Adviser further agrees that it will:
| (a) | comply with the 1940 Act and all rules and regulations thereunder, the Advisers Act, the Internal Revenue Code, as amended, ("Code") and all other applicable federal and state laws and regulations, and with any applicable procedures adopted by the Directors; |
| (b) | use reasonable efforts to manage the Series so that it will qualify, and continue to qualify, as a regulated investment company under Subchapter M of the Code and regulations issued thereunder; |
| (c) | place orders pursuant to its investment determinations for the Series directly with the issuer, or with any broker or dealer, in accordance with applicable policies expressed in the Fund's prospectus and/or Statement of Additional Information with respect to the Series and in accordance with applicable legal requirements; |
| (d) | furnish to the Series whatever statistical information the Series may reasonably request with respect to the Series's assets or contemplated investments. In addition, the Adviser will keep the Series and the Directors informed of developments materially affecting the Series's portfolio and shall, on the Adviser's own initiative, furnish to the Series and the Fund from time to time whatever information the Adviser believes appropriate for this purpose; |
| (e) | make available to the Series's administrator, Capstone Asset Management Company ("Administrator"), and the Series, promptly upon their request, copies of all its investment records and ledgers with respect to the Series to assist the Administrator and the Series in their compliance with applicable laws and regulations. The Adviser will furnish the Directors with such periodic and special reports regarding the Series as they may reasonably request; |
| (f) | immediately notify the Fund in the event that the Adviser or any of its affiliates: (1) becomes subject to a statutory disqualification that prevents the Adviser from serving as investment adviser pursuant to this Agreement; or (2) has been the subject of an administrative proceeding or enforcement action by the Securities and Exchange Commission ("SEC") or other regulatory authority. The Adviser further agrees to notify the Fund immediately of any material fact known to the Adviser respecting or relating to the Adviser that is not contained in the Fund's |
Registration Statement with respect to the Series, or any amendment or supplement thereto, and of any statement contained therein that becomes untrue in any material request.
| 3. | Allocation of Charges and Expenses. Except as otherwise specifically provided in this section 3, the Adviser shall pay the compensation and expenses of all its directors, officers and employees who serve as officers and executive employees of |
the Fund (including the Fund's share of payroll taxes) and of all Directors of the Fund who are interested persons of the Adviser, and the Adviser shall make available, without expense to the Fund or the Series, the service of its directors, officers and employees who may be duly elected officers of the Fund, subject to their individual consent to serve and to any limitations imposed by law.
The Adviser shall not be required to pay any expenses of the Fund or the Series other than those specifically allocated to the Adviser in this section 3. In particular, but without limiting the generality of the foregoing, the Adviser shall not be responsible, except to the extent of the reasonable compensation of such of the Fund's employees as are directors, officers or employees of the Adviser whose services may be involved, for the following expenses of the Fund or the Series: organization and certain offering expenses of the Series (including out-of-pocket expenses, but not including the Adviser's overhead and employee costs); fees payable to the Adviser and to any other advisers or consultants to the Fund or the Series; legal expenses; auditing and accounting expenses; interest expenses; telephone, telex, facsimile, postage and other communications expenses; taxes and governmental fees; fees, dues
and expenses incurred by or with respect to the Series in connection with membership in investment company trade organizations; cost of insurance relating to fidelity coverage for the Fund's officers and employees, fees and expenses of the Series's Administrator or of any custodian, subcustodian, transfer agent, registrar, or dividend disbursing agent of the Fund on behalf of the Series; payments for portfolio pricing or valuation services to pricing agents, accountants, bankers and other specialists; expenses in connection with the issuance, offering, distribution or sale of securities issued by the Series; expenses relating to investor and public relations; expenses of registering and qualifying shares of the Series for sale; freight, insurance and other charges in connection with the shipment of the Series's portfolio securities; brokerage commissions or other costs of acquiring or disposing of any portfolio securities or other assets of the Series, or of entering into other transactions or engaging in any investment practices with respect to the Series; expenses of printing and distributing prospectuses, Statements of Additional Information, reports, notices and dividends to shareholders; costs of stationery; any litigation expenses; costs of shareholders' and other meetings; the compensation and all expenses (specifically including travel expenses relating to the business of the Fund or the Series) of Directors, officers and employees of the Fund who are not interested persons of the Adviser or
Administrator; and travel expenses (or an appropriate portion thereof) of Directors and officers of the Fund who are directors, officers or employees of the Adviser or the Administrator to the extent that such expenses relate to attendance at meetings of the Board of Directors of the Fund or any committees thereof or advisers thereto.
The Adviser shall not be required to pay expenses of any activity which is primarily intended to result in sales of shares of the Series if and to the extent that (i) such expenses are assumed or required to be borne by the Series's principal underwriter or
some other party, or (ii) the Fund on behalf of the Series shall have adopted a plan in conformity with Rule 12b-1 under the 1940 Act providing that the Series (or some other party) shall assume some or all of such expenses. The Adviser shall be required to pay such of the foregoing sales expenses as are not assumed or required to be paid by the principal underwriter of the Series or some other party or are not permitted to be paid by the Series (or some other party) pursuant to such a plan.
| 4. | Compensation. As compensation for the services provided and expenses assumed by the Adviser under this Agreement, the Series will pay the Adviser at the end of each calendar month an advisory fee computed daily at the following rates based on the average daily net assets of the Series: |
0.30% of the first $500 million
0.25% of the next $500 million
0.20% of assets over $1 billion
The "average daily net assets" of the Series shall mean the average of the values placed on the net assets of the Series as of 4:00 p.m. (New York time) on each day on which the net asset value of the Series is determined consistent with the provisions of Rule 22c-1 under the 1940 Act or, if the Series lawfully determines the value of its
net assets as of some other time on each business day, as of such other time. The value of net assets of the Series shall always be determined pursuant to the applicable provisions of the Articles and the Registration Statement. If, pursuant to such provisions, the determination of net asset value of the Series is suspended for any particular business day, then for the purposes of this section 4, the value of the net assets of the Series as last determined shall be deemed to be the value of its net assets as of the close of the New York Stock Exchange, or as of such other time as the value of the net assets of the Series may lawfully be determined, on that day. If the determination of the net asset value of the shares of the Series has been so suspended for a period including any month end when the Adviser's compensation is payable pursuant to this section, then the Adviser's compensation payable at the end of such month shall be computed on the basis of the value of the net assets of the Series as
last determined (whether during or prior to such month). If the Series determines the value of the net assets of its portfolio more than once on any day, then the last such determination thereof on that day shall be deemed to be the sole determination thereof on that day for the purposes of this section 4.
| 5. | Books and Records. The Adviser agrees to maintain such books and records with respect to its services to the Fund on behalf of the Series as are required by Section 31 under the 1940 Act, and rules adopted thereunder, and by other applicable legal provisions, and to preserve such records for the periods and in the manner required by that Section, and those rules and legal provisions. The Adviser also agrees that records it maintains and preserves pursuant to Rules 31a-1 and Rule 31a-2 under the 1940 Act and otherwise in connection with its services hereunder are the property of the Fund and will be surrendered promptly to the Fund upon its request. And the Adviser further agrees that it will furnish to regulatory authorities having the requisite authority any information or reports in connection with its services hereunder that may be requested in order to determine whether the operations of the Fund or the Series are being conducted in accordance with applicable laws and regulations. |
6. Standard of Care and Limitation of Liability. The Adviser shall exercise its best
judgment in rendering the services provided by it under this Agreement. The Adviser shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Fund or the Series in connection with the matters to which this Agreement relates, provided that nothing in this Agreement shall be deemed to protect or purport to protect the Adviser against any liability to the Fund, the Series or to holders of shares of the Series to which the Adviser would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence on its part in the performance of its duties or by reason of the Adviser's reckless disregard of its obligations and duties under this Agreement.
| 7. | Services Not Exclusive. It is understood that the services of the Adviser are not exclusive, and nothing in this Agreement shall prevent the Adviser from providing similar services to other investment companies (whether or not their investment objectives and policies are similar to those of the Series) or from engaging in other activities, provided such other services and activities do not, during the term of this Agreement, interfere in a material manner with the Adviser's ability to meet its obligations to the Series and to the Fund hereunder. When the Adviser recommends the purchase or sale of a security for other investment companies and other clients, and at the same time the Adviser recommends the purchase or sale of the same security for the Series, it is understood that in light of its fiduciary duty to the Fund on behalf of the Series, such transactions will be executed on a basis that is fair and equitable to the Series. In connection with purchases or sales of portfolio securities for the account of the Series, neither the Adviser nor any of its directors, officers or employees shall act as a principal or agent or receive any commission. If the Adviser provides any advice to its clients concerning the shares of the Series, the Adviser shall act solely as investment counsel for such clients and not in any way on behalf of the Series. |
| 8. | Duration and Termination. This Agreement shall continue with respect to the Series until April 1, 2010, and thereafter shall continue automatically with respect to the Series for successive annual periods, provided such continuance is specifically approved at least annually by (i) the Directors or (ii) a vote of a majority of the outstanding voting securities of the Series (as defined in the 1940 Act), provided that in either event the continuance is also approved by a majority of the Directors who are not "interested persons" (as defined in the 1940 Act) of any party to this Agreement, by vote cast in person at a meeting called for the purpose of voting on such approval. Notwithstanding the foregoing, this Agreement may be terminated with respect to the Series: (a) at any time without penalty by the Fund or the Series upon the vote of a majority of the Directors or by vote of the majority of the outstanding voting securities of the Series, upon sixty (60) days' written notice to the Adviser or (b) by the Adviser at any time without penalty, upon ninety (90) days' written notice to the Fund. This Agreement will also terminate automatically in the event of its assignment (as defined in the 1940 Act). |
| 9. | Amendments. No provision of this Agreement may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought, and no amendment of this Agreement shall be effective until approved by an affirmative vote of (i) a majority of the outstanding voting securities of the Series, (ii) the Directors and (iii) a majority of the Directors who are not interested persons of any party to this Agreement, cast in person at a meeting called for the purpose of voting on such approval, if such approval is required by applicable law.
|
10. Miscellaneous.
| (a) | This Agreement shall be governed by the laws of the State of Maryland, provided that nothing herein shall be construed in a manner inconsistent with the 1940 Act, the Advisers Act, or rules or orders of the SEC thereunder. |
| (b) | The captions of this Agreement are included for convenience only and in no way define or limit any of the provisions hereof or otherwise affect their construction or effect. |
| (c) | If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected hereby and, to this extent, the provisions of this Agreement shall be deemed to be severable. |
| (d) | Nothing herein shall be construed as constituting the Adviser as an agent of the Fund or the Series. |
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by their officers designated below as of _________________, 2008.
STEWARD FUNDS, INC., on behalf of Steward Global Equity Income Fund
By___________________________________
Edward L. Jaroski, President
CAPSTONE ASSET MANAGEMENT COMPANY
By___________________________________
Edward L. Jaroski, President
AMENDMENT TO INVESTMENT ADVISORY AGREEMENT
The Investment Advisory Agreement dated February 28, 2006 between Capstone Asset Management Company and Steward Funds, Inc. on behalf of Steward International Equity Fund and Steward Short-Term Select Bond Fund is hereby amended as follows:
| 1. | Effective March 31, 2008, the name of Steward International Equity Fund is changed to Steward International Enhanced Index Fund. |
| 2. | Effective March 31, 2008 or as soon thereafter as the Funds operations cease, references to Steward Short-Term Bond Fund are no longer applicable. |
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by their officers designated below as of March 31, 2008.
STEWARD FUNDS, INC.
| By__________________________________ |
| Edward L. Jaroski, President |
CAPSTONE ASSET MANAGEMENT COMPANY
By___________________________________
Edward L. Jaroski, President
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, effective commencing on ________________________ between CAPSTONE ASSET MANAGEMENT COMPANY (the "Adviser") and STEWARD FUNDS INC. ("Fund") on behalf of
Steward Short-Term Select Bond Fund and Steward International Equity Fund ("Series").
WHEREAS, the Fund is a Maryland corporation organized under Articles of Incorporation dated May 11, 1992, (the "Articles") and is authorized to divide and classify its shares of beneficial interest into separate series of shares and is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end, diversified management investment company;
WHEREAS, the Series are separate series of the Fund's shares of beneficial interest;
WHEREAS, the Adviser is registered as an investment adviser under the Investment Advisers Act of
1940 ("Advisers Act");
WHEREAS, the Fund wishes to retain the Adviser to render investment advisory services to the Series and the Adviser is willing to furnish such services to the Series;
NOW THEREFORE, in consideration of the promises and mutual covenants herein contained, it is agreed between the Fund and the Adviser as follows:
1. Appointment. The Fund hereby appoints the Adviser to act as investment adviser to the Series for the periods and on the terms set forth in this Agreement. The Adviser accepts such appointment and agrees to furnish the services herein set forth, for the compensation herein provided.
2. Investment Advisory Duties. Subject to the supervision of the Directors of the Fund, the Adviser will (a) provide a program of continuous investment management for each Series in accordance with the investment objectives, policies and limitations of that Series as stated in the Fund's prospectus and Statement of Additional Information included as part of the Fund's Registration Statement filed with the Securities and Exchange Commission, as they may be amended from time to time, copies of which shall be provided to the Adviser by the Fund; (b) make investment decisions for the Series; and (c) place orders to purchase and sell securities for the Series.
In performing its investment management services to the Series hereunder, the Adviser will provide the Series with ongoing investment guidance and policy direction, including oral and written research, analysis, advice, statistical and economic data and judgments regarding individual investments, general economic conditions and trends and long-range investment policy. The Adviser will determine the securities, instruments, currencies, repurchase agreements, futures, options and other investments and techniques that each Series will purchase, sell, enter into or use, and will provide an ongoing evaluation of the portfolio of each Series. The Adviser will determine what portion of the portfolio of each Series shall be invested in securities and other assets and what portion, if any, should be held uninvested.
The Adviser further agrees that it will:
(a) comply with the 1940 Act and all rules and regulations thereunder, the Advisers Act, the Internal Revenue Code (the "Code") and all other applicable federal and state laws and regulations, and with any applicable procedures adopted by the Directors;
(b) use reasonable efforts to manage each Series so that it will qualify, and continue to qualify, as a regulated investment company under Subchapter M of the Code and regulations issued thereunder;
(c) place orders pursuant to its investment determinations for each Series directly with the issuer, or with any broker or dealer, in accordance with applicable policies expressed in the Fund's prospectus and/or Statement of Additional Information with respect to that Series and in accordance with applicable legal requirements;
(d) furnish to each Series whatever statistical information the Series may reasonably request with respect to the Series' assets or contemplated investments. In addition, the Adviser will keep each Series and the Directors informed of developments materially affecting the Series' portfolio and shall, on the Adviser's own initiative, furnish to the Series and the Fund from time to time whatever information the Adviser believes appropriate for this purpose;
(e) make available to the Series' administrator, Capstone Asset Management Company (the "Administrator"), and the Series, promptly upon their request, copies of all its investment records and ledgers with respect to the Series to assist the Administrator and the Series in their compliance with applicable laws and regulations. The Adviser will furnish the Directors with such periodic and special reports regarding the Series as they may reasonably request;
(f) immediately notify the Fund in the event that the Adviser or any of its affiliates: (1) becomes subject to a statutory disqualification that prevents the Adviser from serving as investment adviser pursuant to this Agreement; or (2) has been the subject of an administrative proceeding or enforcement action by the Securities and Exchange Commission ("SEC") or other regulatory authority. The Adviser further agrees to notify the Fund immediately of any material fact known to the Adviser respecting or relating to the Adviser that is not contained in the Fund's Registration Statement with respect to a Series, or any amendment or supplement thereto, and of any statement contained therein that becomes untrue in any material request.
3. Allocation of Charges and Expenses. Except as otherwise specifically provided in this section 3, the Adviser shall pay the compensation and expenses of all its directors, officers and employees who serve as officers and executive employees of the Fund (including the Fund's share of payroll taxes) and of all Directors of the Fund who are interested persons of the Adviser, and the Adviser shall make available, without expense to increase materially the costs whichFund or the Series, the service of its directors, officers and employees who may be duly elected officers of the Fund, subject to their individual consent to serve and to any limitations imposed by law.
The Adviser shall not be required to pay any expenses of the Fund or the Series other than those specifically allocated to the Adviser in this section 3. In particular, but without limiting the generality of the foregoing, the Adviser shall not be responsible, except to the extent of the reasonable compensation of such of the Fund's employees as are directors, officers or employees of the Adviser whose services may be involved, for the following expenses of the Fund or the Series: organization and certain offering expenses of the Series (including out-of-pocket expenses, but not including the Adviser's overhead and employee costs); fees payable to the Adviser and to any other advisers or consultants to the Fund or a series may bearSeries; legal expenses; auditing and accounting expenses; interest expenses; telephone, telex, facsimile, postage and other communications expenses; taxes and governmental fees; fees, dues and expenses incurred by or with respect to the Series in connection with membership in investment company trade organizations; cost of insurance relating to fidelity coverage for the Fund's officers and employees, fees and expenses of the Series' Administrator or of any custodian, subcustodian, transfer agent, registrar, or dividend disbursing agent of the Fund on behalf of the Series; payments for portfolio pricing or valuation services to pricing agents, accountants, bankers and other specialists; expenses in connection with the issuance, offering, distribution or sale of securities issued by the Series; expenses relating to investor and public relations; expenses of registering and qualifying shares of the Series for sale; freight, insurance and other charges in connection with the shipment of the Series' portfolio securities; brokerage commissions or other costs of acquiring or disposing of any portfolio securities or other assets of the Series, or of entering into other transactions or engaging in any investment practices with respect to the Fund; expenses of printing and distributing prospectuses, Statements of Additional Information, reports, notices and dividends to shareholders; costs of stationery; any litigation expenses; costs of shareholders' and other meetings; the compensation and all expenses (specifically including travel expenses relating to the business of the Fund or a Series) of Directors, officers and employees of the Fund who are not interested persons of the Adviser or Administrator; and travel expenses (or an appropriate portion thereof) of Directors and officers of the Fund who are directors, officers or employees of the Adviser or the Administrator to the extent that such expenses relate to attendance at meetings of the Board of Directors of the Fund or any committees thereof or advisers thereto.
The Adviser shall not be required to pay expenses of any activity which is primarily intended to result in sales of shares of the Series if and to the extent that (i) such expenses are assumed or required to be borne by the Series' principal underwriter or some other party, or (ii) the Fund on behalf of a Series shall have adopted a plan in conformity with Rule 12b-1 under the 1940 Act providing that the Series (or some other party) shall assume some or all of such expenses. The Adviser shall be required to pay such of the foregoing sales expenses as are not assumed or required to be paid by the principal underwriter of a Series or some other party or are not permitted to be paid by a Series (or some other party) pursuant to such a plan.
4. Compensation. As compensation for the services provided and expenses assumed by the Adviser under this Agreement, each Series will pay the Adviser at the end of each calendar month an advisory fee computed daily at the following rates based on the average net assets of that Series:
| Name of Series | | Fee |
| Steward Short-Term Select Bond Fund | | 0.25% of the first $500 million |
| | |
| | 0.20% of the next $500 million |
| | |
| | 0.175% of assets over $1 billion |
| | |
| Steward International Equity Fund | | 0.30% of the first $500 million |
| | |
| | 0.25% of the next $500 million |
| | |
| | 0.20% of assets over $1 billion |
The "average daily net assets" of a Series shall mean the average of the values placed on the net assets of that Series as of 4:00 p.m. (New York time) on each day on which the net asset value of the Series is determined consistent with the provisions of Rule 22c-1 under the 1940 Act or, if the Series lawfully determines the value of its net assets as of some other time on each business day, as of such other time. The value of net assets of a Series shall always be determined pursuant to the Planapplicable provisions of the Articles and the Registration Statement. If, pursuant to such provisions, the determination of net asset value of a Series is suspended for any particular business day, then for the purposes of this section
4, the value of the net assets of that Series as last determined shall be effective onlydeemed to be the value of its net assets as of the close of the New York Stock Exchange, or as of such other time as the value of the net assets of that Series may lawfully be determined, on that day. If the determination of the net asset value of the shares of a Series has been so suspended for a period including any month end when the Adviser's compensation is payable pursuant to this section, then the Adviser's compensation payable at the end of such month shall be computed on the basis of the value of the net assets of that Series as last determined (whether during or prior to such month). If a Series determines the value of the net assets of its portfolio more than once on any day, then the last such determination thereof on that day shall be deemed to be the sole determination thereof on that day for the purposes of this section 4.
5. Books and Records. The Adviser agrees to maintain such books and records with respect to its services to the Fund on behalf of the Series as are required by Section 31 under the 1940 Act, and rules adopted thereunder, and by other applicable legal provisions, and to preserve such records for the periods and in the manner required by that Section, and those rules and legal provisions. The Adviser also agrees that records it maintains and preserves pursuant to Rules 31a-1 and Rule 31a-2 under the
1940 Act and otherwise in connection with its services hereunder are the property of the Fund and will be surrendered promptly to the Fund upon approvalits request. And the Adviser further agrees that it will furnish to regulatory authorities having the requisite authority any information or reports in connection with its services hereunder which may be requested in order to determine whether the operations of the Fund or the Series are being conducted in accordance with applicable laws and regulations.
6. Standard of Care and Limitation of Liability. The Adviser shall exercise its best judgment in rendering the services provided by it under this Agreement. The Adviser shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Fund or a Series in connection with the matters to which this Agreement relates, provided that nothing in this Agreement shall be deemed to protect or purport to protect the Adviser against any liability to the Fund, a Series or to holders of shares of a Series to which the Adviser would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence on its part in the performance of its duties or by reason of the Adviser's reckless disregard of its obligations and duties under this Agreement.
7. Services Not Exclusive. It is understood that the services of the Adviser are not exclusive, and nothing in this Agreement shall prevent the Adviser from providing similar services to other investment companies (whether or not their investment objectives and policies are similar to those of a Series) or from engaging in other activities, provided such other services and activities do not, during the term of this Agreement, interfere in a material manner with the Adviser's ability to meet its obligations to a Series and to the Fund hereunder. When the Adviser recommends the purchase or sale of a security for other investment companies and other clients, and at the same time the Adviser recommends the purchase or sale of the same security for a Series, it is understood that in light of its fiduciary duty to the Fund on behalf of the Series, such transactions will be executed on a basis that is fair and equitable to the Series. In connection with purchases or sales of portfolio securities for the account of a Series, neither the Adviser nor any of its directors, officers or employees shall act as a principal or agent or receive any commission. If the Adviser provides any advice to its clients concerning the shares of a Series, the Adviser shall act solely as investment counsel for such clients and not in any way on behalf of that Series.
8. Duration and Termination. This Agreement shall continue with respect to each Series until __________________, 200_, and thereafter shall continue automatically with respect to each Series for successive annual periods, provided such continuance is specifically approved at least annually by (i) the Directors or (ii) a vote of a majority of the outstanding voting securities of the respective series or the Fund and (b) any material amendments of the terms of the Plan shall become effective only upon approval as provided in paragraph 4(b) hereof. 7. The Plan is terminable without penalty at any time with respect to any series or the Fund by (a) vote of a majority of the Plan Directors, or (b) vote of a majority of the outstanding voting securities of the respective series or the Fund.
8. Any person authorized to direct the disposition of monies paid or payable by the Fund pursuant to the Plan or any agreement entered into in connection with the Plan shall provide to the Board of Directors, and the Board of Directors shall review, at lest quarterly, a written report of the amounts expended pursuant to the Plan and the purposes for which such expenditures were made.
9. While the Plan is in effect, the selection and nomination of Directors who are not "interested persons"that Series (as defined in the 1940 Act) of, provided that in either event the Fund shall be committed to the discretion of the Directors who are not "interested persons".
10. The Fund shall preserve copies of the Plan, any agreement in connection with the Plan, and any report made pursuant to paragraph 8 hereof, for a period of not less than six years from the date of the Plan, such agreement or report, the first two years in an easily accessible place.
| CAPSTONE SERIES FUND, INC.
|
| (formerly, Capstone U.S. Trend Fund, Inc.)
|
Date: May 3, 1993
| By:_________________
Dan E. Watson
President
|
Attest:
_______________________
Sherry M. Cowperthwaite
Secretary
Exhibit C
Form of Proposed Amended Service and Distribution Plan for Growth Fund
CAPSTONE SERIES FUND, INC.
SERVICE AND DISTRIBUTION PLAN
Introduction: It has been determined that series and classes indicated on Schedule A hereto (each a "Fund" and "Class," respectively), which are series and classes of Capstone Series Fund, Inc. ("CSFI"), will pay specified amounts to Capstone Asset Planning Company ("Distributor") as compensation for providing certain distribution-related and shareholder-servicing services with respect to shares and shareholders of each such Fund and Class. The Board of Directors of CSFI therefore adopts the Service and Distribution Plan (the "Plan") for the Funds and Classes, as set forth herein, pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the "Act").
The Board of Directors, in considering whether CSFI should implement the Plan, has requested and evaluated such information as it deemed necessary to make an informed determination as to whether the Plan should be implemented and has considered such pertinent factors as it deemed necessary to form the basis for a decision to use assets of the Funds and Classes for such purposes.
In voting to approve the implementation of the Plan, the Directors have concluded, in the exercise of their reasonable business judgment and in light of their respective fiduciary duties, that therecontinuance is a reasonable likelihood that the Plan will benefit the Funds, Classes and their shareholders.
The Plan: The material aspects of the financing by the Funds and Classes of distribution and shareholder servicing activities to be performed for the Funds and Classes are as follows:
1. Each Fund or Class, as applicable, will compensate Capstone Asset Planning Company ("Distributor") for services provided and expenses incurred in connection with the distribution and marketing of shares of the particular Fund or Class and for the servicing of shareholders of that Fund or Class. Such distribution, marketing and shareholder servicing activities to be provided by the Distributor may include (1) printing and advertising expenses; (2) payments to employees or agents of the Distributor who engage in or support distribution of the Funds' shares, including salary, commissions, travel and related expenses; (3) the costs of preparing, printing and distributing prospectuses and reports to prospective investors; (4) expenses of organizing and conducting sales seminars; (5) expenses related to selling and servicing efforts, including processing new account applications, transmitting customer transaction information to the Funds' transfer agent and answering questions of shareholders; (6) payments of fees to one or more broker-dealers (which may include the Distributor itself), financial institutions or other industry professionals, such as investment advisers, accountants and estate planning firms (severally, a "Service Organization"), in respect of the a verage daily value of shares of a Fund or Class owned by shareholders for whom the Service Organization is the dealer of record or holder of record, or owned by shareholders with whom the Service Organization has a servicing relationship; (7) costs and expenses incurred in implementing and operating the Plan; and (8) such other similar services as the Funds' Board of Directors determines to be reasonably calculated to result in the sale of the shares of the Funds and Classes.
Subject to the limitations of applicable law and regulation, including rules of the National Association of Securities Dealers ("NASD"), the Distributor will be compensated monthly for such services at the annual rate indicated in Schedule A based on the average daily net assets of the Funds or Classes.
2. Out of the amounts provided in Schedule A, the Distributor may periodically pay to one or more Service Organizations (which may include the Distributor itself) a fee in respect of the shares of a Fund or Class owned by shareholders for whom the Service Organizations are the dealers of record or holders of record, or owned by shareholders with whom the Service Organizations have servicing relationships. Such fees will be computed daily and paid quarterly by the Distributor at such annual rates as may be determined from time to time by the Board of Directors, consistent with applicable law, regulation and regulatory interpretation, and disclosed in the Funds' prospectus, such rates to be based on the average daily net asset value of the shares of the Funds or Classes owned by shareholders for whom the Service Organizations are the dealers of record or holders of record, or owned by shareholders with whom the Service Organizations have servicing relationships, provided however, that the Distributor will not pay to a particular Service Organization any such quarterly amount that is less than $25. Subject to the limits herein and the requirements of applicable law and regulations, including rules of the NASD, the Distributor may designate as "Service Fees," as that term is defined by applicable rules and regulatory interpretations applicable to payments under a plan such as the Plan, some or all of any payments made to Service Organizations (including the Distributor itself) for services that may be covered by "Service Fees," as so defined.
The payment to a Service Organization is subject to compliance by the Service Organization with the terms of a written agreement between the Service Organization and the Distributor (the "Agreement"), in such form(s) as may bealso approved by the Directors from time to time. If a shareholder of a Fund or Class ceases to be a client of a Service Organization that has entered into an agreement with the Distributor, but continues to hold shares of the Fund or Class, the Distributor will be entitled to receive a similar payment in respect of the servicing provided to such shareholder. For the purposes of determining the fees payable under the Plan, the average daily net asset value of the shares of a Fund or Class, as applicable, shall be computed in the manner specified in CSFI's registration statement, as then effective with the Securities and Exchange Commission, for the computation of the net asset value of the Fund or Class.
3. The Plan will become effective with respect to CSFI's then existing Fund(s) and Class(es) immediately upon approval, by (a) a majority of the Board of Directors, including a majority of the Directors who are not "interested persons" (as defined in the 1940 Act) of CSFI and who have no direct or indirect financial interest in the operation of the Plan or in any agreements entered into in connection with the Plan (the "Plan Directors"), pursuantparty to athis Agreement, by vote cast in person at a meeting called for the purpose of voting on such approval. Notwithstanding the approvalforegoing, this Agreement may be terminated with respect to one or more Series: (a) at any time without penalty by the Fund or such Series upon the vote of a majority of the Plan, and (b)Directors or by vote of at least athe majority of the outstanding voting securities of each applicable Series, upon sixty (60) days' written notice to the Adviser or (b) by the Adviser at any time without penalty, upon ninety (90) days' written notice to the Fund. This Agreement will also terminate automatically in the event of its assignment, with respect to
any Series for which it is assigned (as defined in the 1940 Act).
9. Amendments. No provision of each such Fund and Class. Additional series or classes of sharesthis Agreement may be added tochanged, waived, discharged or terminated orally, but only by an instrument in writing signed by the Planparty against which enforcement of the change, waiver, discharge or termination is sought, and no amendment of this Agreement shall be effective as to each such series and class upon approvaluntil approved by (a)an affirmative vote of (i) a majority of the outstanding voting securities of such series or class, as applicable, if shares ofeach affected Series, (ii) the series or class have been sold to persons who are not "affiliated persons" (as defined in the Act) of CSFI, promoters of CSFI, or affiliated persons of either of the foregoing, and (b) majorities of both the Board of Directors and the Plan Directors, pursuant to votes cast in person at a meeting called for such purpose. Each such series or class added to the Plan shall become a "Fund" or "Class" hereunder. 4. The Plan shall continue for a period of one year from its effective date, unless earlier terminated in accordance with its terms, and thereafter shall continue automatically for successive annual periods, provided such continuance is approved by a majority of the Board of Directors, including a majority of the Plan Directors pursuant to a vote cast in person at a meeting called for the purpose of voting on the continuance of the Plan.
5. The Plan may be amended at any time by the Board of Directors provided that (a) any amendment to increase materially the amounts which a Fund or Class may pay for distribution pursuant to the Plan shall be effective only upon approval by a vote of a majority of the outstanding voting securities of the respective Fund or Class, as applicable and (b) any material amendments of the terms of the Plan shall become effective only upon approval by vote of(iii) a majority of the Directors and by votewho are not interested persons of a majority of the Plan Directors,any party to this Agreement, cast in person at a meeting called for the purpose of voting on such amendment.
6.approval, if such approval is required by applicable law.
10. Miscellaneous.
(a) This Agreement shall be governed by the laws of the State of Maryland, provided that nothing herein shall be construed in a manner inconsistent with the 1940 Act, the Advisers Act, or rules or orders of the SEC thereunder.
(b) The Plan is terminable without penalty atcaptions of this Agreement are included for convenience only and in no way define or limit any time with respectof the provisions hereof or otherwise affect their construction or effect.
(c) If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected hereby and, to anythis extent, the provisions
of this Agreement shall be deemed to be severable.
(d) Nothing herein shall be construed as constituting the Adviser as an agent of the Fund or Classa Series.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by (a) votetheir officers designated below as of , 2006.
STEWARD FUNDS, INC., on behalf of Steward International
Equity Fund and Steward Short-Term Select Bond Fund
By________________________
Edward L. Jaroski, President
CAPSTONE ASSET MANAGEMENT COMPANY
By_________________________
Edward L. Jaroski, President
Exhibit C
Current Investment Advisory Agreement
For Steward Small-Mid Cap Enhanced Index Fund
| AMENDMENT AND RESTATEMENT OF |
| INVESTMENT ADVISORY AGREEMENT ("AGREEMENT") |
| between |
| CAPSTONE U.S. TREND FUND, INC. ("COMPANY") |
| and |
| CAPSTONE ASSET MANAGEMENT COMPANY ("ADVISER") |
| April 1, 2008 |
|
| WHEREAS, (a) the name of the Company was changed to Capstone Growth Fund, Inc. on September 6, 1994 and (b) the name was further changed to Capstone Series Fund, Inc. on January 22, 2002, (c) the name of the Company's original series of shares ("Fund") was changed to Capstone Growth Fund also on January 22, 2002, (d) the name of the Fund was changed to Steward Small-Cap Equity Fund on December 20, 2005 and (d) the name of the Fund was changed to Steward Small-Mid Cap Enhanced Index Fund on March 31, 2008; and |
|
| WHEREAS, the Company's Board of Directors, and its independent directors, each voting unanimously and separately at an in-person meeting held February 15, 2008, approved an amended, reduced schedule of fees for investment advisory services for the Fund, such fees for investment advisory services to be, in all cases, less, and in no event greater, than the fees payable under the Agreement as in effect prior to this amendment, with no decrease in the nature or quality of the investment advisory services to be received by the Fund, and |
|
| WHEREAS, the Company's Board of Directors, and its independent directors, each voting unanimously and separately at an in-person meeting held February 15, 2008, approved an amended schedule of fees for administrative services for the Fund that (a) reduced such fees at higher asset levels and (b) provided for fees to be based on the aggregate assets of the Fund plus the assets of series of the Steward Funds, Inc., such fees for administrative services to be, in all cases no greater, and in some cases less, than the fees payable under the Agreement as in effect prior to this amendment, with no decrease in the nature or quality of the administrative services to be received by the Fund, and |
|
| WHEREAS, the Company's Board of Directors, and its independent directors, each voting unanimously and separately at an in-person meeting held February 15, 2008, approved the form of this amended and restated agreement; |
|
| NOW THEREFORE, effective April 1, 2008, the Investment Advisory Agreement between the Adviser and the Company with respect to the Fund ("Agreement") is amended and restated as follows to reflect the foregoing changes: |
|
|
| CAPSTONE SERIES FUND, INC. |
|
| INVESTMENT ADVISORY AGREEMENT |
|
| AGREEMENT, originally effective commencing on May 11, 1992, between Capstone Asset Management Company ("Adviser") and Capstone Series Fund, Inc. ("Company") with respect to Steward Small-Mid Cap Enhanced Index Fund ("Fund"), and amended and restated as of April 1, 2008. |
|
| WHEREAS, the Company is a Maryland corporation organized under Articles of Incorporation dated May 11, 1992, ("Articles") and is registered under the Investment Company Act of 1940, as amended ("1940 Act"), as an open-end, diversified management investment company, and the Fund is a series of the Company registered under the 1940 Act as an open-end, diversified management investment company. |
|
| WHEREAS, the Company wishes to retain the Adviser to render investment advisory and administrative services to the Fund, and the Adviser is willing to furnish such services to the Fund; |
|
| WHEREAS, the Adviser is registered as an investment adviser under the Investment Advisers Act of 1940, as amended ("Advisers Act"); |
|
| NOW THEREFORE, in consideration of the promises and mutual covenants herein contained, it is agreed between the Company and the Adviser as follows: |
|
1. Appointment. The Company hereby appoints the Adviser to act as investment adviser and administrator to the Fund for the periods and on the terms set forth in this Agreement. The Adviser accepts such appointment and agrees to furnish the services herein set forth, for the compensation herein provided. |
|
2. Investment Advisory and Administrative Duties. Subject to the supervision of the Directors of the Company, the Adviser will (a) provide a program of continuous investment management for the Fund in accordance with the Fund's investment objectives, policies and limitations as stated in the Fund's prospectus and Statement of Additional Information included as part of the Company's Registration Statement filed with the Securities and Exchange Commission, as they may be amended from time to time, copies of which shall be provided to the Adviser by the Company; (b) make investment decisions for the Fund; and (c) place orders to purchase and sell securities for the Fund. |
|
| In performing its investment management services to the Fund hereunder, the Adviser will provide the Fund with ongoing investment guidance and policy direction, including oral and written research, analysis, advice, statistical and economic data and judgments regarding individual investments, general economic conditions and trends and long-range investment policy. The Adviser will determine the securities, instruments, repurchase agreements, options, futures and other investments and techniques that the Fund will purchase, sell, enter into or use, and will provide an ongoing evaluation of the Fund's portfolio. The Adviser will determine what portion of the Fund's portfolio shall be invested, in securities and other assets, and what portion if any, should be held uninvested. |
|
|
|
| The Adviser shall furnish to the Fund adequate (i) office space, which may be space within the offices of the Adviser or in such other places as may be agreed upon from time to time and (ii) office furnishings, facilities and equipment as may be reasonably required for managing the corporate affairs and conducting the business of the Fund, including complying with the corporate reporting requirements of the various states in which the Fund does business, and conducting correspondence and other communications with the shareholders of the Fund. The Adviser shall employ or provide and compensate the executive, secretarial and clerical personnel necessary to provide such services. |
|
| The Adviser further agrees that, in performing its duties hereunder, it will: |
|
| �� (a) comply with the 1940 Act and all rules and regulations thereunder, the Advisers Act, the Internal Revenue Code (the "Code") and all other applicable federal and state laws and regulations, and with any applicable procedures adopted by the Directors; |
|
| (b) use reasonable efforts to manage the Fund so that it will qualify, and continue to qualify, as a regulated investment company under Subchapter M of the Code and regulations issued thereunder; |
|
| (c) place orders pursuant to its investment determinations for the Fund directly with the issuer, or with any broker or dealer, in accordance with applicable policies expressed in the Fund's prospectus and/or Statement of Additional Information and in accordance with applicable legal requirements: |
|
| (d) furnish to the Company whatever statistical information the Company may reasonably request with respect to the Fund's assets or contemplated investments. In addition, the Adviser will keep the Company and the Directors informed of developments materially affecting the Fund's portfolio and shall, on the Adviser's own initiative, furnish to the Company from time to time whatever information the Adviser believes appropriate for this purpose; |
|
| (e) make available to the Company, promptly upon its request, such copies of the Adviser's investment records and ledgers with respect to the Fund as may be required to assist the Fund in its compliance with applicable laws and regulations. The Adviser will furnish the Directors with such periodic and special reports regarding the Fund as they may reasonably request; |
|
| (f) immediately notify the Company in the event that the Adviser or any of its affiliates: (1) becomes aware that it is subject to a statutory disqualification that prevents the Adviser from serving as investment adviser pursuant to this Agreement; or (2) becomes aware that it is the subject of an administrative proceeding or enforcement action by the Securities and Exchange Commission ("SEC") or other regulatory authority. The Adviser further agrees to notify the Company immediately of any material fact known to the Adviser respecting or relating to the Adviser that is not contained in the Fund's Registration Statement, or any amendment or supplement thereto, but that is required to be disclosed therein, and of any statement contained therein that becomes untrue in any material respect. |
|
|
|
3. Additional Services. If the Company so requests, the Adviser shall also maintain all internal bookkeeping, accounting and auditing services and records in connection with maintaining the Fund's financial books and records, and shall calculate the Fund's daily net asset value. For these services, the Fund shall pay to the Adviser a monthly fee, which shall be in addition to the fees payable pursuant to Section 5 hereof, to reimburse the Adviser for its costs, without profit, for performing such services. |
|
4. Allocation of Charges and Expenses. Except as otherwise specifically provided in this Section 4, the Adviser shall pay the compensation and expenses of all its directors, officers and employees who serve as officers and executive employees of the Company or the Fund (including the Company's or Fund's share of payroll taxes for such persons), and the Adviser shall make available, without expense to the Company or the Fund, the service of its directors, officers and employees who may be duly elected officers of the Company or the Fund, subject to their individual consent to serve and to any limitations imposed by law. |
|
| The Adviser shall not be required to pay any expenses of the Company or the Fund other than those specifically allocated to the Adviser in this Section 4. In particular, but without limiting the generality of the foregoing, the Adviser shall not be responsible, except to the extent of the reasonable compensation of such of the Company's or Fund's employees as are officers or employees of the Adviser whose services may be involved, for the following expenses of the Company or the Fund: organization and certain offering expenses of the Company or the Fund (including out-of-pocket expenses, but not including the Adviser's overhead and employee costs); fees payable to the Adviser and to any other Company or Fund advisers or consultants; legal expenses; auditing and accounting expenses; interest expenses; telephone, telex, facsimile, postage and other communications expenses; taxes and governmental fees; fees, dues and expenses incurred by or with respect to the Fund in connection with membership in investment company trade organizations; costs of insurance relating to fidelity coverage for the Company's or Fund's officers and employees; fees and expenses of Fund's custodian, any subcustodian, transfer agent, registrar, or dividend disbursing agent; payments to the Adviser for maintaining the Fund's financial books and records and calculating its daily net asset value pursuant to Section 3 hereof; other payments for portfolio pricing or valuation services to pricing agents, accountants, bankers and other specialists, if any; expenses of preparing share certificates; other expenses in connection with the issuance, offering, distribution, sale or redemption of securities issued by the Fund; expenses relating to investor and public relations; expenses of registering and qualifying shares of the Fund for sale; freight, insurance and other charges in connection with the shipment of the Fund's portfolio securities; brokerage commissions or other costs of acquiring or disposing of any portfolio securities or other assets of the Fund, or of entering into other transactions or engaging in any investment practices with respect to the Fund; expenses of printing and distributing prospectuses, Statements of Additional Information, reports, notices and dividends to stockholders; costs of stationery; any litigation expenses; costs of stockholders' meetings; the compensation and all expenses (specifically including travel expenses relating to the Fund's business) of officers, directors and employees of the Company or the Fund who are not interested persons of the Adviser; and travel expenses (or an appropriate portion thereof) of officers or directors of the Company or the Fund who are officers, directors or employees of the Adviser to the extent that such expenses relate to attendance at meetings of the Board of Directors of the Company with respect to matters concerning the Fund, or any committees thereof or advisers thereto. |
|
5. Compensation. As compensation for the services provided and expenses assumed by the Adviser under this Agreement, except for any additional services provided by the Adviser pursuant to Section 3 hereof, the Fund will pay the Adviser at the end of each calendar month an investment advisory fee and an administration fee each computed daily based on the Fund's average daily net assets at the following annual rates: |
| |
| Investment Advisory Fee |
| |
| 0.150% on assets up to $500,000,000 |
| 0.125% on assets from $500,000,001 to $1,000,000,000 |
| 0.100% on assets in excess of $1,000,000 |
|
| As compensation for administrative services provided and expenses assumed by the Adviser under this Agreement, except for any additional services provided by the Adviser pursuant to Section 3 hereof, the Fund will pay the Adviser at the end of each calendar month an administration fee computed daily, based on the aggregate of the average daily net assets of the Fund plus the average daily net assets of the series of Steward Funds, Inc. (together "Total Aggregate Assets"), at the following annual rates, the Fund to pay the portion of such administration fee that is proportional to the ratio of its average daily net assets to such Total Aggregate Assets: |
| |
| Administration Fee |
| |
| 0.075% on Total Aggregate Assets up to $500,000,000 |
| 0.030% on Total Aggregate assets in excess of $500,000,000 |
|
| The "average daily net assets" of the Fund shall mean the average of the values placed on the net assets of the Fund as of 4:00 p.m. (New York time) on each day on which the net asset value of the Fund is determined consistent with the provisions of Rule 22c-1 under the 1940 Act or, if the Fund lawfully determines the value of its net assets as of some other time on each business day, as of such other time. The value of net assets of the Fund shall always be determined pursuant to the applicable provisions of the Articles and the Registration Statement. If, pursuant to such provisions, the determination of net asset value is suspended for any particular business day, then for the purposes of this Section 5, the value of the net assets of the Fund as last determined shall be deemed to be the value of its net assets as of the close of regular trading on the New York Stock Exchange, or as of such other time as the value of the net assets of the Fund's portfolio may lawfully be determined, on that day. If the determination of the net asset value of the shares of the Fund has been so suspended for a period including any month end when the Adviser's compensation is payable at the end of such month, then such value shall be computed on the basis of the value of net assets of the Fund as last determined (whether during or prior to such month). If the Fund determines the value of its net assets more than once on any day, then the last such determination thereof on that day shall be deemed to be the sole determination thereof on that day for the purposes of this Section 5. |
|
| In the event that the Adviser's gross compensation hereunder shall, when added to the other expenses of the Fund, cause the aggregate expenses of the Fund to exceed the maximum expenses permitted under the lowest applicable expense limitation established pursuant to the statutes or regulations of any jurisdiction in which the shares of the Fund may be qualified for offer or sale, the total compensation paid or payable to the Adviser shall be reduced (but not below zero) to the extent necessary to cause the Fund not to exceed such expense limitation. Except to the extent that such reduction has been reflected in lowered monthly payments to the Adviser, the Adviser shall refund to the Fund the amount by which the total payments received by the Adviser are in excess of such expense limitation as promptly as practicable after the end of such fiscal year, provided that the Adviser shall not be required to pay the Fund an amount greater than the fee otherwise payable to the Adviser in respect of such year. As used in this Section 5, "expenses" shall mean those expenses included in the applicable expense limitation having the broadest specifications thereof , and "expense limitation " shall mean a limitation on the maximum annual expenses which may be incurred by an investment company as determined by applicable law. The words "lowest applicable expense limitation " shall be deemed to be that which results in the largest reduction of the Adviser's compensation for any fiscal year of the Fund; provided, however, that nothing in this Agreement shall limit the Adviser's fees if not required by an applicable statute or regulation referred to above in this Section 5. |
|
6. Books and Records. The Adviser agrees to maintain such books and records with respect to its services to the Fund as are required by Section 31 under the 1940 Act , and rules adopted thereunder, and by other applicable legal provisions, and to preserve such records for the periods and in the manner required by that Section, and those rules and legal provisions. The Adviser also agrees that records it maintains and preserves pursuant to Rule 31a-1 and Rule 31a-2 under the 1940 Act and otherwise in connection with its services hereunder are the property of the Fund and will be surrendered promptly to the Fund upon its request. And the Adviser further agrees that it will furnish to regulatory authorities having the requisite authority any information or reports in connection with its services hereunder which may be requested in order to determine whether the operations of the Fund are being conducted in accordance with applicable laws and regulations. |
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7. Standard of Care and Limitation of Liability. The Adviser shall exercise its best judgment in rendering the services provided by it under this Agreement. The Adviser shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Fund or the holders of the Fund's shares in connection with the matters to which this Agreement relates, provided that nothing in this Agreement shall be deemed to protect or purport to protect the Adviser against any liability to the Fund, or to holders of the Fund's shares to which the Adviser would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence on its part in the performance of its duties or by reason of the Adviser's reckless disregard of its obligations and duties under this Agreement. As used in this Section 7, the term "Adviser" shall include any officers, directors, employees or other affiliates of the Adviser performing services with respect to the Fund. |
|
8. Services Not Exclusive. It is understood that the services of the Adviser are not exclusive, and that nothing in this Agreement shall prevent the Adviser from providing similar services to other investment companies or to other series of investment companies, or from engaging in other activities, provided such other services and activities do not, during the term of this Agreement, interfere in a material manner with the Adviser's ability to meet its obligations to the Fund hereunder. When the Adviser recommends the purchase or sale of a security for other investment companies and other clients, and at the same time the Adviser recommends the purchase or sale of the same security for the Fund, it is understood that in light of its fiduciary duty to the Fund, such transactions will be executed on a basis that is fair and equitable to the Fund. In connection with purchases or sales of portfolio securities for the account of the Fund, neither the Adviser nor any of its directors, officers or employees shall act as a principal or agent or receive any commission, provided that portfolio transactions for the Fund may be executed through firms affiliated with the Adviser, in accordance with applicable legal requirements. If the Adviser provides any advice to its clients concerning the shares of the Fund, the Adviser shall act solely as investment counsel for such clients and not in any way on behalf of the Fund. |
|
9. Duration and Termination. This Agreement shall continue until April 1, 2009, and thereafter shall continue automatically for successive annual periods, provided such continuance is specifically approved at least annually by (i) the Directors or (ii) a vote of a "majority" (as defined in the 1940 Act) of the Fund's outstanding voting securities (as defined in the 1940 Act), provided that in either event the continuance is also approved by a majority of the Directors who are not "interested persons" (as defined in the 1940 Act) of any party to this Agreement, by vote cast in person at a meeting called for the purpose of voting on such approval. Notwithstanding the foregoing, this Agreement may be terminated (a) at any time without penalty by the Fund upon the vote of a majority of the Directors or by vote of the majority of the Fund's outstanding voting securities, upon sixty (60) days' written notice to the Adviser or (b) by the Adviser at any time without penalty, upon sixty (60) days' written notice to the Fund. This Agreement will also terminate automatically in the event of its assignment (as defined in the 1940 Act). |
|
10. Amendments. No provision of this Agreement may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought, and no amendment of this Agreement shall be effective until approved by an affirmative vote of (i) a majority of the outstanding voting securities of the Fund, and (ii) a majority of the Directors, including a majority of Directors who are not interested persons of any party to this Agreement, cast in person at a meeting called for the purpose of voting on such approval, if such approval is required by applicable law. |
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11. Miscellaneous. |
| |
| a. | This Agreement shall be governed by the laws of the State of Texas, provided that nothing herein shall be construed in a manner inconsistent with the 1940 Act, the Advisers Act, or rules or orders of the SEC thereunder. |
| |
| b. | The captions of this Agreement are included for convenience only and in no way define or limit any of the provisions hereof or otherwise affect their construction or effect. |
| |
| c. | If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected hereby and, to this extent, the provisions of this Agreement shall be deemed to be severable. |
| |
| d. | Nothing herein shall be construed as constituting the Adviser as an agent of the Fund. |
|
|
| IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by their officers designated below as of April 1, 2008. |
| |
| CAPSTONE SERIES FUND, INC. |
| On behalf of Steward Small-Mid Cap Enhanced Index Fund |
| |
| |
| By: _____________________________________ |
| President |
| |
| |
| CAPSTONE ASSET MANAGEMENT COMPANY |
| |
| |
| By: _____________________________________ |
| President |
Exhibit D
New Administration Agreement
STEWARD FUNDS, INC.
ADMINISTRATION AGREEMENT
THIS ADMINISTRATION AGREEMENT dated ____________, 2011, by and between CFS CONSULTING SERVICES, LLC, ("Administrator"), a majority_________ corporation having its principal place of business in Houston, Texas and STEWARD FUNDS, INC. ("Company") on behalf of its series listed on Attachment A hereto (each, a "Fund"), a Maryland corporation having its principal place of business in Houston, Texas.
W I T N E S S E T H
WHEREAS, the Plan Directors, or (b) voteCompany is engaged in business as a diversified open-end management investment company and is registered as such under the Investment Company Act of a majority1940 (the "Act"); and
WHEREAS, the Administrator is engaged in the business of rendering administrative and supervisory services to investment companies; and
WHEREAS, the
outstanding voting securities ofCompany desires to retain the
respective Fund or Class, as applicable. 7. Any person authorizedAdministrator to direct the disposition of monies paid or payable by a Fund or Class pursuantrender supervisory and administrative services to the Plan or any agreement entered intoCompany in connection with the PlanFunds, in the manner and on the terms hereinafter set forth;
NOW THEREFORE, in consideration of the premises and the terms and provisions hereinafter set forth, the parties hereto agree as follows:
| 1. | Employment of the Administrator. The Company hereby employs the Administrator to perform the duties set forth in Paragraph 2 hereof for the period and on the terms hereinafter set forth. The Administrator hereby accepts such employment and agrees during such period to render the services herein set forth for the compensation herein provided. The Administrator shall for all purposes herein be deemed to be an independent contractor and, except as expressly provided or authorized (whether herein or otherwise), shall have no authority to act for or represent the Company or the Funds in any way or otherwise be deemed an agent of the Company or the Funds. |
| 2. | Duties of the Administrator. The Administrator, subject to the direction of the Board of Directors and officers of the Company, undertakes to provide the following services and to assume the following obligations: |
| (a) | Administrative Services. The Administrator shall conduct and manage the day-to-day operations of the Funds, including (i) the coordination of all matters relating to the functions of the investment adviser, custodian, transfer agent, other shareholder service agents, accountants, attorneys and other parties performing services or operational functions for the Funds, (ii) providing the Funds, at the Administrator's expense, with services of persons competent to perform such administrative and clerical functions as are necessary in order to provide effective administration of the Funds, including duties in connection with shareholder relations, reports, redemption requests and account adjustments and the maintenance of certain books and records of the Funds, (iii) the preparation of registration statements, prospectuses, reports, proxy solicitation materials and amendments thereto and the furnishing of legal services to the Funds except for services provided by outside counsel to be selected by the Board of Directors, and (iv) providing the Funds, at the Administrator's expense, with adequate office space and related services necessary for its operations as contemplated in this Agreement. |
| (b) | Other Obligations and Services. The Administrator shall make its officers and employees available to the Board of Directors and officers of the Company for consultation and discussions regarding the administrative management of the Funds. |
| 3. | Expenses of the Funds. |
| (a) | The Administrator. The Administrator assumes and shall pay for maintaining the staff and personnel and shall at its own expense provide the equipment (other than equipment used in connection with the Funds' custodial system), office space and facilities necessary to perform its obligations under this Agreement, and shall pay all compensation of officers of the Company and the fees of all directors of the Company who are affiliated persons of the Administrator. |
| (b) | The Company and the Funds. The Company and the Funds assume and shall pay or shall arrange for others to pay all other expenses of the Company and the Funds, including (i) interest and taxes; (ii) brokerage commissions and other costs in connection with the purchase and sale of portfolio investments; (iii) the compensation and all expenses (specifically including travel expenses relating to the Fund’s business) of officers, directors and employees of the Company or the Fund who are not interested persons of the Administrator; and travel expenses (or an appropriate portion thereof) of officers or directors of the Company or the Fund who are officers, directors or employees of the Administrator to the extent that such expenses relate to attendance at meetings of the Board of Directors of the Company with respect to matters concerning the Fund, or any committees thereof or advisers thereto; (iv) fees and expenses of outside counsel to and of independent accountants of the Company and/or the Funds selected by the Board of Directors; (v) custodian, registrar and transfer agent fees and expenses; (vi) expenses related to the repurchase or redemption of the Funds' shares including expenses related to a program of periodic repurchases or redemptions; (vii) expenses related to the issuance of the Funds' shares against payment therefor by or on behalf of the subscribers thereto; (viii) fees and related expenses of registering and qualifying the Company, the Funds and their shares for distribution under state and federal securities laws; (ix) expenses of printing and mailing of registration statements, prospectuses, reports, notices and proxy solicitation materials of the Company and the Funds; (x) all other expenses incidental to holding meetings of the shareholders of the Company and the Funds including proxy solicitations therefor; (xi) expenses for servicing shareholder accounts; (xii) insurance premiums for fidelity coverage and errors and omissions insurance; (xiii) dues for membership of the Company and the Funds in trade associations approved by the Board of Directors; and (xiv) such non-recurring expenses as may arise, including those associated with actions, suits or proceedings arising out of the activities of the Company or the Funds to which the Company or the Funds are a party and the legal obligation which the Company or the Funds may have to indemnify the officers and directors with respect thereto. To the extent that any of the foregoing expenses are allocated among the Company, the Funds and any other party, such allocations shall be made pursuant to methods approved by the Board of Directors. |
| 4. | Compensation. As compensation for the services rendered, the facilities furnished and the expenses assumed by the Administrator, each Fund shall pay to the Administrator at the end of each calendar month an administration fee computed daily based on the aggregate of the average daily net assets of each Fund (“Total Aggregate Assets”), at the annual rate of 0.075% of the first $500 million of Total Aggregate Assets and 0.03% on Total Aggregate Assets in excess of $500 million, each Fund to pay the portion of such fee that is proportional to the ratio of its average daily nets assets to such Total Aggregate Assets. The “average daily net assets” of each Fund shall mean the average of the values placed on the net assets of such Fund as of 4:00 p.m. (New York time) on each day on which the net asset value of such Fund is determined consistent with the provisions of Rule 22c-1 under the 1940 Act or, if such Fund lawfully determines the value of its net assets as of some other time on each business day, as of such other time. The value of net assets of each Fund shall always be determined pursuant to the applicable provisions of its Articles of Incorporation, as amended from time to time, and its Registration Statement filed with the Securities and Exchange Commission, as amended from time to time. If, pursuant to such provisions, the determination of net asset value of a Fund is suspended for any particular business day, then for the purposes of this Section 4, the value of the net assets of such Fund as last determined shall be deemed to be the value of its net assets as of the close of regular trading on the New York Stock Exchange, or as of such other time as the value of the net assets of the Fund’s portfolio may lawfully be determined, on that day. If the determination of the net asset value of the shares of a Fund has been so suspended for a period including any month end when the Administrator’s compensation is payable at the end of such month, then such value shall be computed on the basis of the value of net assets of such Fund as last determined (whether during or prior to such month). If a Fund determines the value of its net assets more than once on any day, then the last such determination thereof on that day shall be deemed to be the sole determination thereof on that day for the purposes of this Section 4. |
| 5. | Activities of the Administrator. The services of the Administrator to the Funds hereunder are not to be deemed exclusive and the Administrator shall be free to render similar services to others. |
| 6. | Liabilities of the Administrator. In the absence of willful misfeasance, bad faith, gross negligence or reckless disregard of obligations or duties hereunder on the part of the Administrator, the Administrator shall not be liable to the Company, the Funds, or to any shareholder of a Fund for any act or omission in the course of, or in connection with, rendering services hereunder or for any losses that may be sustained in the purchase, holding or sale of any security. |
| 7. | Renewal. The term of this Agreement shall commence on the date hereof and shall continue in effect until terminated in accordance with Paragraph 8 hereof. |
| 8. | Termination. After April 1, 2009, this Agreement may be terminated with respect to one or more Funds without the payment of any penalty (i) by the Company on 60 days' notice to the Administrator and (ii) by the Administrator on 90 days' written notice to the Company. |
| 9. | Amendments. This Agreement may be amended by written agreement between the parties at any time provided such amendment is authorized or approved by the Board of Directors of the Company, and in accordance with any applicable regulatory requirements. |
| 10. | Notices. Any and all notices or other communications required or permitted under this Agreement shall be in writing and shall be deemed sufficient when mailed by United States certified mail, return receipt requested, or delivered in person against receipt to the party to whom it is to be given, at the address of such party set forth below: |
If to the BoardAdministrator:
Capstone Asset Management Company
3700 West Sam Houston Parkway South, Suite 250
Houston, Texas 77042
If to the Company:
Steward Funds, Inc.
3700 West Sam Houston Parkway South, Suite 250
Houston, Texas 77042
or to such other address as the party shall have furnished in writing in accordance with the provisions of Directors,this Section 10.
| 11. | Severability. If any provision of this Agreement is invalid, illegal or unenforceable, the balance of this Agreement shall remain in full force and effect and this Agreement shall be construed in all respects as if such invalid, illegal or unenforceable provision were omitted. |
| 12. | Headings. Any paragraph headings in this Agreement are for convenience of reference only, and shall be given no effect in the construction or interpretation of this Agreement or any provisions thereof. |
| 13. | Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, and which together shall constitute but one and the same instrument. |
| 14. | Governing Law. This Agreement shall be subject to the laws of the State of Texas, and shall be interpreted and construed to further and promote the operation of the Company, including each Fund, as a diversified open-end management company. |
IN WITNESS WHEREOF, the Boardparties hereto have caused this Agreement to be executed on the date first written above.
STEWARD FUNDS, INC.
By____________________ Date:___________________
Name: Edward L. Jaroski
Title: President
CAPSTONE ASSET MANAGEMENT COMPANY
By____________________ Date:___________________
Name: Edward L. Jaroski
Title: President
ATTACHMENT A
SERIES OF STEWARD FUNDS, INC.
Steward Large Cap Enhanced Index Fund
Steward Global Equity Income Fund
Steward International Enhanced Index Fund
Steward Select Bond Fund
Supplement to
Administration Agreement
Between
CFS Consulting Services, LLC
And
Steward Funds, Inc.
Dated _________, 2011
(“Agreement”)
_____________, 2011
Until such time as Steward Small-Mid Cap Enhanced Index Fund (“Fund”), a series of DirectorsCapstone Series Fund, Inc., is reorganized as a series of Steward Funds, Inc., the Agreement shall review, at least quarterly, a written reportbe applicable to the Fund as its administration agreement.
Effective upon the reorganization of the
amounts expended pursuant toFund as a series of Steward Funds, Inc., the
Plan and the purposes for which such expenditures were made. 8. While the Plan is in effect: (a) a majority of CSFI's Directors must be persons who are not "interested persons" (as defined in the Act); (b) the selection and nomination of Directors who are not "interested persons" (as defined in the Act) of CSFIFund shall be committed to the discretionadded as a series on Appendix A of the Directors who are not "interested persons";Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by their officers designated below as of _________________, 2011.
CAPSTONE SERIES FUND, INC.
Edward L. Jaroski, President
CAPSTONE ASSET MANAGEMENT COMPANY
Edward L. Jaroski, President
Exhibit E
The name, address and
(c) any person who acts as legal counsel for the Directors who are not "interested persons" must be an independent legal counsel, as defined in the Act. 9. CSFI shall preserve copiesprincipal occupation of the Plan, any agreement into connection with the Plan,principal executive officer, and any report made pursuant to paragraph 7 hereof, for a periodeach director of not less than six years from the dateCAMCO are as follows:
Address of
the Plan, such agreement or report, the first two years in an easily accessible place.each: 3700 West Sam Houston Parkway South, Suite 250, Houston, Texas 77042
| | CAPSTONE SERIES FUND, INC.
|
Date:_____________________
| By:___________________
President
|
Attest:
| |
_________________________
Secretary
Directors: | Ed Jaroski |
| Scott Wynant |
| John Wolf |
| |
SERVICE AND DISTRIBUTION PLAN
CAPSTONE SERIES FUND, INC.
SCHEDULE A
The amounts payable to the Distributor pursuant the Service and Distribution Plan are as indicated below for the listed Funds and Classes. The Distributor shall be paid monthly at the following annual rates to be applied to the average daily net asset value of the respective Fund or Class:
Name of Fund
| Class of Shares
| Annual Fee Rate
|
Capstone Growth Fund
| one class
|
| President/CEO: | 0.25%
Ed Jaroski |
| |
| |
| Senior Vice President: | Joel Kennedy/CFO |
| Richard Nunn/ CCO |
| Thom Severson |
| John Wolf |
| Scott Tallman |
| Claude Cody |
| Mel Cody |
| Scott Wynant |
| |
| |
| Vice President: | Pat Garboden |
| Lynnette Bross |
| Paul Townsen |
| Doug Willingham |
| Renee Estridge |
| Kim Spangler |
| Scott Frakes |
| Jason Gantt |
| |
| |
| Secretary: | Joel Kennedy |
| |
| Treasurer: | Carla Homer |
| |
| Assistant Vice President: | Kim Wallis-McLaney |
| Gina Garcia |
| Robert Karisch |
| |
| Assistant Secretary: | Kim Wallis-McLaney |
Following are Fund Directors and officers who are also officers, employees or directors of
Proxy - CCVF Large Cap Equity Index FundCAMCO or shareholders of CFS:
| Name | Role with Funds | Role with CAMCO.CFS | Shares of CFS |
| Edward Jaroski | Trustee, President & Chairman of the Boards | President/CEO | 25,500 (Class A) 3,638 (Class B) |
| Richard Nunn | Sr. V.P./CCO | Sr. V.P./CCO | 2,000 (Class B) |
| Carla Homer | Treasurer | Treasurer | 0 |
| Kimberly McLaney | Asst. V.P./ Asst. Sec | Asst. V.P./ Asst. Sec | 0 |
| Claude Cody | Portfolio Manager/Sr. V.P. | Senior V.P. | 8,293 (Class B) |
| Scott Wynant | Executive V.P. | Executive V.P. | 1,000 (Class B) |
[FRONT OF PROXY CARD]
CAPSTONE CHRISTIAN VALUES FUND, INC
(for its
STEWARD FUNDS, INC.
[name of series
Christian Stewardship Large Cap Equity Index Fund)to be inserted]
3700 West Sam Houston Parkway South, Suite 250, Houston, Texas 77042
PROXY FOR A
ANNUALSPECIAL MEETING OF SHAREHOLDERS ON
JULY 31, 2003THIS PROXY IS SOLICITED ON BEHALF THE BOARD OF DIRECTORSNOVEMBER 18, 2011
The undersigned hereby appoint(s) Dan WatsonEdward Jaroski and Linda GiuffreKimberly McLaney or any one of them, proxies, with full power of substitution, to vote all shares of the Christian Stewardship Large Cap Equity Index Fund (the "Fund")[name of series] which the undersigned is entitled to vote at the AnnualSpecial Meeting of Shareholders of the FundSteward Funds to be held at the offices of the FundSteward Funds at 5847 San Felipe,3700 West Sam Houston Parkway South, Suite 4100,250, Houston, Texas 7705777042 on July 31, 2003November 18, 2011 at 10:9:00 a.m., Central Standard Time, and at any adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF THE BOARD OF DIRECTORS
| This proxy must be signed exactly as your name(s) appears hereon. If as attorney, executor, guardian or in some representative capacity or as an officer of a corporation, please add titles as such. Joint owners must each sign. Signature (and title, if applicable) Date Signature (and title, if applicable) Date |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
YOUR VOTE IS IMPORTANT, NO MATTER HOW MANY SHARES YOU OWN. THE MATTERS WE ARE SUBMITTING FOR YOUR CONSIDERATION ARE SIGNIFICANT TO THE FUND AND TO YOU AS A FUND SHAREHOLDER. PLEASE TAKE THE TIME TO READ THE PROXY STATEMENT AND CAST YOUR VOTE USING EITHER OF THE TWO METHODS DESCRIBED BELOW.
Two simple methods to vote your proxy”
| 1. Mail: | Simply sign, date, and complete the reverse side of this proxy card and return it in the postage paid envelope provided. |
| 2.Phone: | Dial toll-free 1-800-814-4284 to speak with a representative. Please have this proxy card available at the time of the call. |
Important notice regarding the availability of proxy materials for the Special Meeting of Shareholders of Steward Funds, Inc to be held on November 18, 2011. The proxy statement for this meeting is available at: www.proxyonline.us/docs/StewardFunds.pdf
[BACK OF PROXY CARD]
[Name of Fund]
This proxy will be voted as instructed. If no specification is made, the proxy will be voted
"FOR"“FOR” Proposal 1 and for each nominee as Director, and will grant authority to transact such other business that may properly come before the
proposals.Please vote, date and sign this proxy and return it promptly in the enclosed envelope.
(over)
_____________________________________________________________________________________
Please indicate your vote by an "x" in the appropriate box below.Meeting.
[BACK OF PROXY CARD]THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSALS:
PROPOSAL 1 AND FOR EACH NOMINEE AS DIRECTOR
Please indicate your vote by an “x” in the appropriate box below.
1.To elect Directors forapprove the Fund. Anew investment advisory agreement with Capstone Asset Management Company: (Steward Large Cap Enhanced Index Fund, Steward Global Equity Income Fund, Steward International Enhanced Index Fund and Steward Select Bond Fund) For ___ Against ____ Abstain ___ |
3. Election of Directors. The Board recommends that you vote for electionFOR each of the following Nominees |
(1) nominees: (All Funds)
For Withhold John M. Briggs _________ _____________ William H. Herrmann _________ _____________ Edward L. Jaroski (2) _________ _____________ James F. Leary (3) Bernard J. Vaughan (4) _________ _____________ Leonard B. Melley, Jr. _________ _____________ John R. Parker (5) _________ _____________ |
In their discretion, the proxies are authorized to vote upon such other business as may properly come before the Meeting or any adjournment or postponement thereof.
PLEASE EXECUTE THE ENCLOSED PROXY CARD PROMPTLY AND RETURN IT IN THE PRE-ADRESSED, POSTAGE-PAID ENCLOSED ENVELOPE. If you plan to attend the Meeting in person, you will need to bring proof of ownership and amount of Fund shares. Such proof includes the proxy card (or a copy) or, if your shares are held of record by a financial intermediary, such as a broker-dealer, or nominee, a proxy card from the record holder or other proof of beneficial ownership, such as a brokerage statement showing your Fund holdings.
YOUR VOTE IS IMPORTANT. WE URGE YOU TO EXERCISE YOUR RIGHTS TO VOTE PROMPTLY
[FRONT OF PROXY CARD]
CAPSTONE SERIES FUND, INC.
STEWARD SMALL-MID CAP ENHANCED INDEX FUND
3700 West Sam Houston Parkway South, Suite 250, Houston, Texas 77042
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS ON NOVEMBER 18, 2011
The undersigned hereby appoint(s) Edward Jaroski and Kimberly McLaney or any one of them, proxies, with full power of substitution, to vote all shares of Steward Small-Mid Cap Enhanced Index Fund which the undersigned is entitled to vote at the Special Meeting of Shareholders of the Fund to be held at the offices of the Fund at 3700 West Sam Houston Parkway South, Suite 250, Houston, Texas 77042 on November 18, 2011 at 9:00 a.m., Central Standard Time, and at any adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF THE BOARD OF DIRECTORS
| This proxy must be signed exactly as your name(s) appears hereon. If as attorney, executor, guardian or in some representative capacity or as an officer of a corporation, please add titles as such. Joint owners must each sign. Signature (and title, if applicable) Date Signature (and title, if applicable) Date |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
YOUR VOTE IS IMPORTANT, NO MATTER HOW MANY SHARES YOU OWN. THE MATTERS WE ARE SUBMITTING FOR YOUR CONSIDERATION ARE SIGNIFICANT TO THE FUND AND TO YOU AS A FUND SHAREHOLDER. PLEASE TAKE THE TIME TO READ THE PROXY STATEMENT AND CAST YOUR VOTE USING EITHER OF THE TWO METHODS DESCRIBED BELOW.
Two simple methods to vote your proxy”
| 1. Mail: | Simply sign, date, and complete the reverse side of this proxy card and return it in the postage paid envelope provided. |
| 2.Phone: | Dial toll-free 1-800-814-4284 to speak with a representative. Please have this proxy card available at the time of the call. |
Important notice regarding the availability of proxy materials for the Special Meeting of Shareholders of Steward Funds, Inc to be held on November 18, 2011. The proxy statement for this meeting is available at: www.proxyonline.us/docs/StewardFunds.pdf
[BACK OF PROXY CARD]
STEWARD SMALL-MID CAP ENHANCED INDEX FUND
This proxy will be voted as instructed. If no specification is made, the proxy will be voted “FOR” Proposal 2 and for each nominee as Director, and will grant authority to transact such other business that may properly come before the Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 2 AND FOR EACH NOMINEE AS DIRECTOR
Please indicate your vote by an “x” in the appropriate box below.
2.To approve the new investment advisory agreement with Capstone Asset Management Company and the new Administration Agreement with CFS Consulting Services, LLC: (Steward Small-Mid Cap Enhanced Index Fund) For ___ Against ____ Abstain ___ |
3. Election of Directors. The Board recommends that you vote FOR each of the following nominees: (All Funds) For Withhold John M. Briggs _________ _____________ William H. Herrmann _________ _____________ Edward L. Jaroski _________ _____________ James F. Leary _________ _____________ Leonard B. Melley, |
For All Nominees X Withhold All Nominees X Withhold Authority to Vote for any Individual Nominee X
____________
Use Number(s) Only
|
2.To ratify the selection of Briggs, Bunting & Dougherty, LLP as the Fund's independent auditors.
For X Against X Abstain X
|
3.To transact any other business that may properly come before the Meeting or any adjournments or postponements thereof.
Grant X Withhold X
Jr. _________ _____________John R. Parker _________ _____________ |
This
In their discretion, the proxies are authorized to vote upon such other business as may properly come before the Meeting or any adjournment or postponement thereof.
PLEASE EXECUTE THE ENCLOSED PROXY CARD PROMPTLY AND RETURN IT IN THE PRE-ADRESSED, POSTAGE-PAID ENCLOSED ENVELOPE. If you plan to attend the Meeting in person, you will need to bring proof of ownership and amount of Fund shares. Such proof includes the proxy
must be signed exactlycard (or a copy) or, if your shares are held of record by a financial intermediary, such as
a broker-dealer, or nominee, a proxy card from the record holder or other proof of beneficial ownership, such as a brokerage statement showing your
name(s) appears hereon. If as attorney, executor, guardian or in some representative capacity or as an officer of a corporation, please add titles as such. Joint owners must each sign.__________________ _______________Fund holdings.
Signature (and title, if applicable) Date__________________ _______________
YOUR VOTE IS IMPORTANT. WE URGE YOU TO EXERCISE YOUR RIGHTS TO VOTE PROMPTLY
Signature (and title, if applicable) Date
