Form 485BPOS USAA MUTUAL FUNDS TRUST

As filed with the Securities and Exchange Commission on July 23, 2018. 

1933 Act File No. File No. 333-223565 

  

 

SECURITIES AND EXCHANGE COMMISSION 

Washington, D.C. 20549 

 

  

FORM N-14 

REGISTRATION STATEMENT 

UNDER 

THE SECURITIES ACT OF 1933 

Pre-Effective Amendment No. 

Post-Effective Amendment No. 2 

 

  

USAA MUTUAL FUNDS TRUST 

(Exact Name of Registrant as Specified in Charter) 

 

  

9800 Fredericksburg Road, San Antonio, TX  78288 

(Address of Principal Executive Offices) (Zip Code) Registrant’s Telephone Number, including Area Code 

(210) 498-0226 

Jon K. Hadfield, Secretary
USAA MUTUAL FUNDS TRUST 

9800 Fredericksburg Road San Antonio, TX 78288-0227 

(Name and Address of Agent for Service) 

 

  

It is proposed that this filing will become effective 

immediately upon filing pursuant to Rule 485(b) under 

the Securities Act of 1933, as amended. 

  

The title of securities being registered is shares of beneficial 

interest. No filing fee is required because an indefinite number of 

shares have previously been registered pursuant to Section 24(f) of the 

Investment Company Act of 1940, as amended. 

  

  

  

  

 

  

  

  

EXPLANATORY NOTE 

This Registration Statement consists of the following papers and documents: 

  

Cover Sheet 

  

Contents of Registration Statement on Form N-14 

  

Part A - Prospectus/Information Statement* 

Part B - Statement of Additional Information* 

Part C - Other Information 

  

Signature Pages 

  

Exhibits 

  

*Previously filed in Registrant’s Registration Statement on Form N-14, file No. 333-223565 on March 9, 2018, and subsequently filed in definitive form pursuant to Rule 497 on April 18, 2018. 

  

The sole purpose of this filing is to include in the Registration Statement the Definitive Plan of Reorganization and Termination (Exhibit 4) and the Opinion and Consent of Counsel as to Tax Matters (Exhibit 12) for the reorganization of USAA First Start Growth Fund and USAA Cornerstone Moderately Aggressive Fund, series of the Registrant. 

 

  

PART C 

OTHER INFORMATION 

  

Item 15.Indemnification  

  

Protection for the liability of the adviser and underwriter and for the officers and trustees of the Registrant is provided by two methods: 

  

(a) The Trustee and Officer Liability Policy. This policy covers all losses incurred by the Registrant, its adviser, and its underwriter from any claim made against those entities or persons during the policy period by any shareholder or former shareholder of any Fund by reason of any alleged negligent act, error, or omission committed in connection with the administration of the investments of said Registrant or in connection with the sale or redemption of shares issued by said Registrant. The Trust will not pay for such insurance to the extent that payment therefor is in violation of the Investment Company Act of 1940, as amended (the “1940 Act”) or the Securities Act of 1933, as amended (the “Securities Act”). 

  

(b) Indemnification Provisions under Agreement and Declaration of Trust. Under Article VI of the Registrant’s Agreement and Declaration of Trust, each of its Trustees and officers or any person serving at the Registrant’s request as directors, officers, or trustees of another organization in which the Registrant has any interest as a shareholder, creditor, or otherwise (“Covered Person”) shall be indemnified against all liabilities, including but not limited to amounts paid in satisfaction of judgments, in compromise or as fines and penalties, and expenses, including reasonable accountants’ and counsel fees, incurred by any Covered Person in connection with the defense or disposition of any action, suit or other proceeding, whether civil or criminal, before any court or administrative or legislative body, in which such Covered Person may be or may have been involved as a party or otherwise or with which such person may be or may have been threatened, while in office or thereafter, by reason of being or having been such an officer, director or trustee, except with respect to any matter as to which it has been determined that such Covered Person had acted with willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such Covered Person’s office (such conduct referred to hereafter as “Disabling Conduct”). A determination that the Covered Person is entitled to indemnification may be made by (i) a final decision on the merits by a court or other body before whom the proceeding was brought that the person to be indemnified was not liable by reason of Disabling Conduct, (ii) dismissal of a court action or an administrative proceeding against a Covered Person for insufficiency of evidence of Disabling Conduct, or (iii) a reasonable determination, based upon a review of the facts, that the Covered Person was not liable by reason of Disabling Conduct by (a) a vote of a majority of a quorum of Trustees who are neither “interested persons” of the Registrant as defined in section 2(a)(19) of the 1940 Act nor parties to the proceeding, or (b) an independent legal counsel in a written opinion. 

  

Expenses, including accountants and counsel fees so incurred by any such Covered Person (but excluding amounts paid in satisfaction of judgments, in compromise or as fines or penalties), may be paid from time to time from funds attributable to the Fund of the Registrant in question in advance of the final disposition of any such action, suit or proceeding, provided that the Covered Person shall have undertaken to repay the amounts so paid to the Fund of the Registrant in question if it is ultimately determined that indemnification of such expenses is not authorized under this Article  VI and (i) the Covered Person shall have provided security for such undertaking, (ii) the Registrant shall be insured against losses arising by reason of any lawful advances, or (iii) a majority of a quorum of the disinterested Trustees who are not a party to the proceeding, or an independent legal counsel in a written opinion, shall have determined, based on a review of readily available facts (as opposed to full trial-type inquiry), that there is reason to believe that the Covered Person ultimately will be found entitled to indemnification. 

  

As to any matter disposed of by a compromise payment by any such Covered Person pursuant to a consent decree or otherwise, no such indemnification either for said payment or for any other expenses shall be provided unless such indemnification shall be approved (a) by a majority of the disinterested Trustees who are not parties to the proceeding or (b) by an independent legal counsel in a written opinion. Approval by the Trustees pursuant to clause (a) or by independent legal counsel pursuant to clause (b) shall not prevent the recovery from any Covered Person of any amount paid to such Covered Person in accordance with any of such clauses as indemnification if such Covered Person is subsequently adjudicated by a court of competent jurisdiction to have been liable to the Registrant or its shareholders by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of such Covered Person’s office. 

  

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to trustees, officers, and controlling persons of the Registrant pursuant to the Registrant’s Agreement and Declaration of the Trust or otherwise, the Registrant has been advised that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a trustee, officer, or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such trustee, officer, or controlling person in connection with the securities being registered, then the Registrant will, unless in the opinion of its counsel the matter has been settled by a controlling precedent, submit to a court of appropriate jurisdiction the question of whether indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. 

  

Item 16.Exhibits 

  

(1) USAA Mutual Funds Trust Fourth Amended and Restated Master Trust Agreement dated February 25, 2016 (1) 

  

(2) Second Amended and Restated By-Laws, dated September 22, 2015 (1) 

  

(3) None 

  

(4) Plan of Reorganization and Termination (filed herewith) 

  

(5) Provisions of instruments defining the rights of holders of the securities being registered are contained in the Registrant’s Amended and Restated Agreement and Declaration of Trust and By-laws (Exhibits 1 and 2) 

  

(6)(a)Advisory Agreement dated August 1, 2006 (2) 

(b)Amendment No. 1 to the Investment Advisory Agreement (15) 

(c)Amendment No. 2 to Investment Advisory Agreement dated October 1, 2015 (3) 

(d)Amendment No. 3 to Investment Advisory Agreement dated October 1, 2016 (4) 

(e)Amendment No. 4 to Investment Advisory Agreement dated April 1, 2017 (5) 

(f)Amendment No. 5 to Investment Advisory Agreement dated July 26, 2017 (6) 

(g)Amendment No. 6 to Investment Advisory Agreement dated October 1, 2017 (7) 

  

(7) Amended and Restated Underwriting Agreement dated April 30, 2010 (9) 

  

(8) None 

  

  

  

(11)Legal Opinion of K&L Gates LLP regarding the legality of the securities being registered (18) 

  

(12)Opinion and Consent of Counsel as to tax matters (filed herewith) 

  

(13)(a)Amended and Restated Transfer Agency Agreement dated May 1, 2012 (15) 

(b)Administration and Servicing Agreement dated August 1, 2006 (2) 

(d)Amendment to Administration and Servicing Agreement adding Institutional Share Classes dated September 1, 2011 (13) 

(e)Amendment No. 1 to Amended and Restated Transfer Agency Agreement dated June 1, 2015 (12) 

(g)Amendment No. 2 to Amended and Restated Transfer Agency Agreement dated December 2, 2015 (1) 

(i)Amendment No. 3 to Administration and Servicing Agreement dated July 26, 2017 (6) 

(j)Amendment No. 4 to Amended and Restated Transfer Agency Agreement dated July 26, 2017 (6) 

  

(14)Consent of Independent Registered Public Accounting Firm (18)  

  

(15)None 

  

(16)Powers of attorney (16) 

  

(b)Code of Ethics of USAA Investment Management Company dated October 1, 2017 (7) 

________________________ 

 

Item 17.Undertakings  

  

1.The undersigned Registrant agrees that prior to any public reoffering of the securities registered through the use of a prospectus which is a part of this Registration Statement by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c) under the Securities Act, the reoffering prospectus will contain the information called for by the applicable registration form for reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form. 

  

2.The undersigned Registrant agrees that every prospectus that is filed under paragraph (1) above will be filed as a part of an amendment to the Registration Statement and will not be used until the amendment is effective, and that, in determining any liability under the Securities Act, each post-effective amendment shall be deemed to be a new registration statement for the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering of them. 

  

3.The Registrant agrees to file an executed copy of the opinion of counsel supporting the tax consequences of the proposed reorganization as an amendment to this Registration Statement within a reasonable time after receipt of such opinion. 

  

  

SIGNATURES 

Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it meets all of the requirements for effectiveness of this registration statement under Rule 485(b) under the Securities Act and has duly caused this registration statement to be signed on its behalf by the undersigned, duly authorized, in the city of San Antonio, and state of Texas, on the 23^rd day of July, 2018. 

  

USAA MUTUAL FUNDS TRUST 

      By:     * Daniel S. McNamara 

Daniel S. McNamara  

President 

Pursuant to the requirements of the Securities Act of 1933, this amendment to the registration statement has been signed below by the following persons in the capacities and on the date indicated. 

  

  

  

*By: /s/ Kristen Millan
 

Kristen Millan, under the Powers of Attorney dated April 18, 2018, incorporated herein by reference to Post-Effective Amendment No. 151 to the Registration Statement on Form N-1A, File No. 33-65572, as filed with the Securities and Exchange Commission on April 26, 2018. 

EXHIBIT INDEX 

  

  

  

PLAN OF REORGANIZATION AND TERMINATION 

  

THIS PLAN OF REORGANIZATION AND TERMINATION (“Plan”) is adopted as of March 1, 2018, by USAA MUTUAL FUNDS TRUST, a Delaware statutory trust (“Trust”), on behalf of the USAA First Start Growth Fund (“First Start Fund”), and the USAA Cornerstone Moderately Aggressive Fund (“Cornerstone Fund”), each a segregated portfolio of assets (“series”) thereof (each, a “Fund”). All agreements, covenants, actions, and obligations of a Fund contained herein shall be deemed to be agreements, covenants, actions, and obligations of, and all rights and benefits created hereunder in favor of a Fund shall inure to and be enforceable by, the Trust acting on the Fund’s behalf. 

  

The Trust (1) is a statutory trust that is duly organized, validly existing, and in good standing under the laws of the state of Delaware, (2) is duly registered under the Investment Company Act of 1940, as amended (“1940 Act”), as an open-end management investment company, (3) has the power to own all its properties and assets and to carry on its business as described in its current registration statement on Form N-1A, and (4) before January 1, 1997, “claimed” classification for federal tax purposes as an association taxable as a corporation and has never elected otherwise. Each Fund is a duly established and designated series thereof. 

  

The Trust wishes to effect a reorganization described in section 368(a)(1)(C) of the Internal Revenue Code of 1986, as amended (“Code”), and intends this Plan to be, and adopts it as, a “plan of reorganization” within the meaning of the regulations under the Code (“Regulations”). The reorganization will consist of (1) the transfer of all of First Start Fund’s assets to Cornerstone Fund in exchange solely for shares in Cornerstone Fund (“Cornerstone Fund Shares”), which have rights, powers, privileges, obligations, and other characteristics identical to shares in First Start Fund (“First Start Fund Shares”), and Cornerstone Fund’s assumption of all of First Start Fund’s liabilities, (2) the distribution of those shares pro rata to First Start Fund’s shareholders in exchange for their First Start Fund Shares and in complete liquidation thereof (for federal tax purposes), and (3) First Start Fund’s termination (collectively, “Reorganization”), all on the terms and conditions set forth herein. 

  

The Trust’s Trust Instrument (“Instrument”) permits it to vary its shareholders’ investment. The Trust does not have a fixed pool of assets—each series thereof (including each Fund) is a managed portfolio of securities, and USAA Asset Management Company, each Fund’s investment manager (“Adviser”), has the authority to buy and sell securities for it. The Trust believes based on its review of each Fund’s investment portfolio, that First Start Fund’s portfolio holdings are compatible with Cornerstone Fund’s investment objectives, policies, and strategies and that, as a result, all or substantially all of First Start Fund’s assets can be transferred to and held by Cornerstone Fund. 

  

The Trust’s Board of Trustees (“Board”), including a majority of its members who are not “interested persons” (as that term is defined in the 1940 Act) thereof, (1) has duly adopted and approved this Plan and the transactions contemplated hereby and has duly authorized performance thereof on each Fund’s behalf by all necessary Board action and (2) has determined that participation in the Reorganization is in the best interests of each Fund and that the interests of the existing shareholders thereof will not be diluted as a result of the Reorganization. 

  

Subject to the requisite approval of First Start Fund’s shareholders and the terms and conditions set forth herein, First Start Fund shall assign, sell, convey, transfer, and deliver all of its assets described in paragraph 1.2 (“Assets”) to Cornerstone Fund. In exchange therefor, Cornerstone Fund shall— 

issue and deliver to First Start Fund the number of full and fractional (rounded to the third decimal place) Cornerstone Fund Shares determined by dividing the net value of First Start Fund (computed as set forth in paragraph 2.1) by the net asset value (“NAV”) of a Cornerstone Fund Share (computed as set forth in paragraph 2.2), and 

assume all of First Start Fund’s liabilities described in paragraph 1.3 (“Liabilities”). Such transactions shall take place at the Closing (as defined in paragraph 3.1). 

The Assets shall include all cash, cash equivalents, securities, receivables (including interest and dividends receivable), claims and rights of action, rights to register shares under applicable securities laws, books and records, deferred and prepaid expenses shown as assets on First Start Fund’s books, and other property owned by First Start Fund at the Valuation Time (as defined in paragraph 2.1). 

The Liabilities shall include all of First Start Fund’s liabilities, debts, obligations, and duties of whatever kind or nature, whether absolute, accrued, contingent, or otherwise, whether or not arising in the ordinary course of business, whether or not determinable at the Valuation Time (as defined in paragraph 2.1), and whether or not specifically referred to in this Plan, except Reorganization Expenses (as defined in paragraph 4.3.10), if any, borne by the Adviser pursuant to paragraph 5. Notwithstanding the foregoing, First Start Fund shall endeavor to discharge or make provision for the discharge of all its known Liabilities before the Effective Time. 

If the dividends and/or other distributions First Start Fund has paid through the Effective Time for its current taxable year do not equal or exceed the sum of its (a) “investment company taxable income” (within the meaning of section 852(b)(2) of the Code), computed without regard to any deduction for dividends paid, plus (b) “net capital gain” (as defined in section 1222(11) of the Code), after reduction by any capital loss carryovers, for that year through that time, then at or as soon as practicable before that time, First Start Fund shall declare and pay to its shareholders of record one or more dividends and/or other distributions so that it will have distributed substantially all of that income and gain – and in no event less than the sum of 98% of its “ordinary income” plus 98.2% of its “capital gain net income,” as those terms are defined in section 4982(e)(1) and (2) of the Code, respectively – for all federal income tax periods ending at or before the Effective Time, and treating its current taxable year as ending at that time, such that First Start Fund will have no tax liability under sections 852 or 4982 of the Code for the current and any prior tax periods. 

At the Effective Time (or as soon thereafter as is reasonably practicable), First Start Fund shall distribute the Cornerstone Fund Shares it receives pursuant to paragraph 1.1(a) to its shareholders of record, determined as of the Effective Time (each a “Shareholder” and collectively “Shareholders”), in proportion to their First Start Fund Shares then held of record and in constructive exchange for those shares, and shall completely liquidate (which shall be treated as a complete liquidation of First Start Fund for federal tax purposes, within the meaning of section 1.368-2(m)(1)(iv) of the Regulations). That distribution shall be accomplished by the Trust’s transfer agent opening accounts on Cornerstone Fund’s shareholder records in the names of the Shareholders (except Shareholders in whose names accounts thereon already exist) and transferring those Cornerstone Fund Shares to those newly opened and existing accounts. Each Shareholder’s newly opened or existing account shall be credited with the respective pro rata number of full and fractional (rounded to the third decimal place) Cornerstone Fund Shares due that Shareholder. The aggregate NAV of Cornerstone Fund Shares to be so credited to each Shareholder’s account shall equal the aggregate NAV of the First Start Fund Shares that Shareholder owned at the Effective Time. All outstanding First Start Fund Shares shall simultaneously be canceled on First Start Fund’s share transfer books. Cornerstone Fund shall not issue certificates representing the Cornerstone Fund Shares issued in connection with the Reorganization. 

After the Effective Time, First Start Fund will not conduct any business except in connection with its dissolution. As soon as reasonably practicable after distribution of the Cornerstone Fund Shares pursuant to paragraph 1.5 (as provided in paragraph 1.5, on making that distribution First Start Fund's liquidation shall be complete for federal tax purposes), but in all events within six months after the Effective Time, First Start Fund shall be terminated as a series of Trust and any further actions shall be taken in connection therewith as required by applicable law. 

Any reporting responsibility of First Start Fund to a public authority, including the responsibility for filing regulatory reports, tax returns, and other documents with the U.S. Securities and Exchange Commission (“SEC”), any state securities commission, any federal, state, and local tax authorities, and any other relevant regulatory authority, is and shall remain its responsibility up to and including the date on which it is terminated. 

Any transfer taxes payable on issuance of Cornerstone Fund Shares in a name other than that of the registered holder on First Start Fund’s books of the First Start Fund Shares constructively exchanged therefor shall be paid by the person to whom such Cornerstone Fund Shares are to be issued, as a condition of such transfer. 

For purposes of paragraph 1.1(a), First Start Fund’s net value shall be (a) the value of the Assets computed as of the close of regular trading on the New York Stock Exchange (“NYSE”) on the Business Day (i.e., a day on which the NYSE is open for regular trading) next preceding the Closing (“Valuation Time”), using the valuation procedures set forth in the Trust’s then-current prospectus and statement of additional information (“SAI”) and valuation procedures established by the Board, less (b) the amount of the Liabilities as of the Valuation Time. 

For purposes of paragraph 1.1.1, the NAV of a Cornerstone Fund Share shall be computed as of the Valuation Time, using the valuation procedures referred to in paragraph 2.1. 

All computations pursuant to paragraphs 2.1 and 2.2 shall be made by the Funds' accounting agent, State Street Bank and Trust Company. 

Unless the Trust determines otherwise, all acts necessary to consummate the Reorganization (“Closing”) shall be deemed to take place simultaneously as of the close of business on June 15, 2018, (“Effective Time”). If, immediately before the Valuation Time, (a) the NYSE or another primary trading market for portfolio securities of either Fund (each, an “Exchange”) is closed to trading or trading thereon is restricted or (b) trading or the reporting of trading on an Exchange or elsewhere is disrupted so that, in the Board’s judgment, accurate appraisal of First Start Fund’s net value and/or the NAV of an Cornerstone Fund Share is impracticable, the Valuation Time shall be postponed until the first Business Day when that trading has been fully resumed and that reporting has been restored and the Effective Time shall be postponed until the following Business Day. The Closing shall be held at the Trust’s offices or at such other place as the Trust determines. 

The Trust shall direct its fund accounting and pricing agent to deliver at the Closing a certificate of an authorized officer (a “Certificate”) verifying that the information (including adjusted basis and holding period, by lot) concerning the Assets, including all portfolio securities, as reflected on Cornerstone Fund’s books immediately after the Closing, does or will conform to such information on First Start Fund’s books immediately before the Closing. The Trust shall direct the custodian of the Funds’ Assets to deliver at the Closing a Certificate stating that (a) the Assets it holds will be transferred to Cornerstone Fund at the Effective Time and (b) all necessary taxes in conjunction with the delivery of the Assets, including all applicable federal and state stock transfer stamps, if any, have been paid or provision for payment has been made. 

The Trust shall direct the Trust’s transfer agent to deliver at the Closing a Certificate (a) stating that its records contain the number of full and fractional outstanding First Start Fund Shares each Shareholder owns at the Effective Time and (b) as to the opening of accounts on Cornerstone Fund’s shareholder records in the names of the Shareholders (except Shareholders in whose names accounts thereon already exist) and a confirmation, or other evidence satisfactory to the Trust, that the Cornerstone Fund Shares to be credited to First Start Fund at the Effective Time have been credited to First Start Fund’s account on those records. 

The Trust’s obligation to implement this Plan on Cornerstone Fund’s behalf shall be subject to satisfaction of the following conditions at or before (and continuing through) the Effective Time: 

At the Closing, the Trust, on First Start Fund’s behalf, will have good and marketable title to the Assets and full right, power, and authority to sell, assign, transfer, and deliver the Assets free of any liens or other encumbrances (except securities that are subject to “securities loans” as referred to in section 851(b)(2) of the Code, or that are restricted to resale by their terms); and on delivery and payment for the Assets, the Trust, on Cornerstone Fund’s behalf, will acquire good and marketable title thereto, subject to no restrictions on the full transfer thereof, including restrictions that might arise under the Securities Act of 1933, as amended (“1933 Act”); 

First Start Fund’s current prospectus and SAI conform in all material respects to the applicable requirements of the 1933 Act and the 1940 Act and the rules and regulations thereunder and do not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; 

First Start Fund is not currently engaged in, and the Trust’s adoption and performance of this Plan and consummation of the Reorganization will not result in, (a) a conflict with or material violation of any provision of Delaware law, the Instrument or the Trust’s By-Laws (collectively, “Governing Documents”), or any agreement, indenture, instrument, contract, lease, or other undertaking (each, an “Undertaking”) to which the Trust, on First Start Fund’s behalf, is a party or by which it is bound or (b) the acceleration of any obligation, or the imposition of any penalty, under any Undertaking, judgment, or decree to which the Trust, on First Start Fund’s behalf, is a party or by which it is bound; 

All material contracts and other commitments of or applicable to First Start Fund (other than this Plan and investment contracts, including options, futures, forward contracts, swaps and repurchase agreements) will be terminated, or provision for discharge of any liabilities of First Start Fund thereunder will be made, at or prior to the Effective Time, without either Fund’s incurring any liability or penalty with respect thereto and without diminishing or releasing any rights the Trust, on First Start Fund’s behalf, may have had with respect to actions taken or omitted or to be taken by any other party thereto prior to the Closing; 

No litigation, administrative proceeding, action, or investigation of or before any court, governmental body, or arbitrator is presently pending or, to the Trust’s knowledge, threatened against the Trust, with respect to First Start Fund or any of its properties or assets attributable or allocable to First Start Fund, that, if adversely determined, would materially and adversely affect First Start Fund’s financial condition or the conduct of its business; and the Trust, on First Start Fund’s behalf, knows of no facts that might form the basis for the institution of any such litigation, proceeding, action, or investigation and is not a party to or subject to the provisions of any order, decree, judgment, or award of any court, governmental body, or arbitrator that materially and adversely affects First Start Fund’s business or the Trust’s ability to consummate the transactions contemplated hereby; 

The execution, delivery, and performance of this Plan have been duly authorized as of the date hereof by all necessary action on the part of the Board, which has made the determinations required by Rule 17a-8(a) under the 1940 Act; and this Plan constitutes a valid and legally binding obligation of First Start Fund, enforceable in accordance with its terms, except as the same may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium, and similar laws relating to or affecting creditors’ rights and by general principles of equity; 

First Start Fund incurred the Liabilities, which are associated with the Assets, in the ordinary course of its business; 

First Start Fund is not classified as a partnership, and instead is classified as an association that is taxable as a corporation, for federal tax purposes and has elected the latter classification by filing Form 8832 with the Internal Revenue Service (“IRS”) or is a “publicly traded partnership” (as defined in section 7704(b) of the Code) that is treated as a corporation; First Start Fund is an “investment company” (as defined in section 368(a)(2)(F)(iii) of the Code) and is a “fund” (as defined in section 851(g)(2) of the Code), eligible for treatment under section 851(g)(1) of the Code; for each taxable year of its operation (including the taxable year that will end at the Effective Time), First Start Fund has met (or for that year will meet) the requirements of Part I of Subchapter M of Chapter 1 of Subtitle A of the Code (“Subchapter M”) for qualification and treatment as a regulated investment company (“RIC”) and has been (or for that year will be) eligible to and has computed (and for that year will compute) its federal income tax under section 852; and First Start Fund has no earnings and profits accumulated in any taxable year in which the provisions of Subchapter M did not apply to it; 

First Start Fund is in the same line of business as Cornerstone Fund is in, for purposes of section 1.368-1(d)(2) of the Regulations, and did not enter into that line of business as part of the plan of reorganization; from the time the Board approved the transactions contemplated hereby (“Approval Time”) through the Effective Time, First Start Fund has invested and will invest its assets in a manner that ensures its compliance with the foregoing and paragraph 4.1.8; from the time it commenced operations through the Effective Time, First Start Fund has conducted and will conduct its “historic business” (within the meaning of that section of the Code) in a substantially unchanged manner; and from the Approval Time through the Effective Time, First Start Fund (1) has not disposed of and/or acquired, and will not dispose of and/or acquire, any assets (a) for the purpose of satisfying Cornerstone Fund's investment objective or policies, or (b) for any other reason except in the ordinary course of its business as a RIC, and (2) has not changed, and will not change, its historic investment policies in connection with the Reorganization;  

At the Effective Time, (a) at least 33 1/3% of First Start Fund’s portfolio assets will meet Cornerstone Fund’s investment objective, strategies, policies, risks, and restrictions, (b) First Start Fund will not have altered its portfolio in connection with the Reorganization to meet that 33 1/3% threshold, and (c) First Start Fund will not have modified its investment objective or any of its investment strategies, policies, risks, and restrictions in connection with the Reorganization, for purposes of section 1.368-1(d)(2) of the Regulations; 

To the best of the Trust’s management’s knowledge, at the record date for First Start Fund’s shareholders entitled to vote on approval of this Plan, there was no plan or intention by its shareholders to redeem, sell, exchange, or otherwise dispose of a number of First Start Fund Shares (or Cornerstone Fund Shares to be received in the Reorganization), in connection with the Reorganization, that would reduce their ownership of the First Start Fund Shares (or the equivalent Cornerstone Fund Shares) to a number of shares that was less than 50% of the number of the First Start Fund Shares at that date; 

All issued and outstanding First Start Fund Shares are, and at the Effective Time will be, duly and validly issued and outstanding, fully paid, and non-assessable by the Trust and have been offered and sold in every state and the District of Columbia in compliance in all material respects with applicable registration requirements of the 1933 Act and state securities laws; all issued and outstanding First Start Fund Shares will, at the Effective Time, be held by the persons and in the amounts set forth on First Start Fund’s shareholder records, as provided in paragraph 3.3; and First Start Fund does not have outstanding any options, warrants, or other rights to subscribe for or purchase any First Start Fund Shares, nor are there outstanding any securities convertible into any First Start Fund Shares; 

At the Effective Time, First Start Fund will not be under the jurisdiction of a court in a “title 11 or similar case” (within the meaning of section 368(a)(3)(A) of the Code); 

Not more than 25% of the value of First Start Fund’s total assets (excluding cash, cash items, and U.S. government securities) is invested in the stock and securities of any one issuer, and not more than 50% of the value of such assets is invested in the stock and securities of five or fewer issuers; provided that a proportionate share of the assets of any RIC in which First Start Fund invests (and not the securities issued by the RIC itself) shall be taken into account for this purpose; 

During the five-year period ending at the Effective Time, (a) neither First Start Fund nor any person “related” (within the meaning of section 1.368-1(e)(4) of the Regulations (“Related”), without regard to section 1.368-1(e)(4)(i)(A) thereof) to First Start Fund will have acquired First Start Fund Shares, either directly or through any transaction, plan, or arrangement with any other person, with consideration other than Cornerstone Fund Shares or First Start Fund Shares, except for shares redeemed in the ordinary course of First Start Fund’s business as a series of an open-end management investment company as required by section 22(e) of the 1940 Act, and (b) no distributions will have been made with respect to First Start Fund Shares, other than (i) normal, regular dividend distributions made pursuant to First Start Fund’s historic dividend-paying practice that qualify for the deduction for dividends paid (as defined in section 561 of the Code) referred to in sections 852(a)(1) and 4982(c)(1)(A) of the Code and (ii) other dividends and other distributions declared and paid to ensure First Start Fund’s continuing qualification as a RIC and to avoid the imposition of fund-level tax; 

All federal and other tax returns, dividend reporting forms, and other tax-related reports (collectively, “Returns”) of First Start Fund required by law to have been filed by the Effective Time (including any properly and timely filed extensions of time to file) shall have been filed and are or will be correct in all material respects, and all federal and other taxes shown as due or required to be shown as due on those Returns shall have been paid or provision shall have been made for the payment thereof except for amounts that alone or in the aggregate would not reasonably be expected to have a material adverse effect; to the best of the Trust’s knowledge, no such Return is currently under audit and no assessment has been asserted with respect to those Returns; and First Start Fund is in compliance in all material respects with applicable Regulations pertaining to the reporting of dividends and other distributions on and redemptions of its shares and to withholding in respect thereof and is not liable for any material penalties that could be imposed thereunder; 

First Start Fund’s Statement of Assets and Liabilities (including Schedule of Investments), Statement of Operations, and Statement of Changes in Net Assets (collectively, “Statements”) at and for the fiscal year (in the case of the last Statement, for the two fiscal years) ended July 31, 2017, have been audited by Ernst & Young LLP (“Auditors”) and are in accordance with generally accepted accounting principles consistently applied in the United States (“GAAP”); and those Statements present fairly, in all material respects, First Start Fund’s financial condition at their respective dates in accordance with GAAP, and there are no known contingent liabilities of First Start Fund required to be reflected on a balance sheet (including the notes thereto) in accordance with GAAP at such date that is not disclosed therein; and 

Since January 31, 2018, there has not been any material adverse change in First Start Fund’s financial condition, assets, liabilities, or business, other than changes occurring in the ordinary course of business, or any incurrence by First Start Fund of indebtedness maturing more than one year from the date that indebtedness was incurred; for purposes of this subparagraph, a decline in NAV per First Start Fund Share due to declines in market values of securities First Start Fund holds, the discharge of Target liabilities, or the redemption of First Start Fund Shares by its shareholders shall not constitute a material adverse change. 

The Trust’s obligation to implement this Plan on First Start Fund’s behalf shall be subject to satisfaction of the following conditions at or before (and continuing through) the Effective Time: 

No consideration other than Cornerstone Fund Shares (and Cornerstone Fund’s assumption of the Liabilities) will be issued in exchange for the Assets in the Reorganization; 

The Cornerstone Fund Shares to be issued and delivered to First Start Fund, for the Shareholders’ benefit, pursuant to the terms of this Plan, (a) will have been duly authorized by the Trust and duly registered under the federal securities laws (and appropriate notices respecting them will have been duly filed under applicable state securities laws) at the Effective Time and (b) when so issued and delivered, will be duly and validly issued and outstanding Cornerstone Fund Shares and will be fully paid and non-assessable by the Trust; 

Cornerstone Fund’s current prospectus and SAI conform in all material respects to the applicable requirements of the 1933 Act and the 1940 Act and the rules and regulations thereunder and do not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; 

Cornerstone Fund is not currently engaged in, and the Trust’s adoption and performance of this Plan and consummation of the Reorganization will not result in, (1) a conflict with or material violation of any provision of Delaware law, the Governing Documents, or any Undertaking to which the Trust, on Cornerstone Fund’s behalf, is a party or by which it is bound or (2) the acceleration of any obligation, or the imposition of any penalty, under any Undertaking, judgment, or decree to which the Trust, on Cornerstone Fund’s behalf, is a party or by which it is bound; 

No litigation, administrative proceeding, action, or investigation of or before any court, governmental body, or arbitrator is presently pending or, to the Trust’s knowledge, threatened against the Trust, with respect to Cornerstone Fund or any of its properties or assets attributable or allocable to Cornerstone Fund, that, if adversely determined, would materially and adversely affect Cornerstone Fund’s financial condition or the conduct of its business; and the Trust, on Cornerstone Fund’s behalf, knows of no facts that might form the basis for the institution of any such litigation, proceeding, action, or investigation and is not a party to or subject to the provisions of any order, decree, judgment, or award of any court, governmental body, or arbitrator that materially and adversely affects Cornerstone Fund’s business or the Trust’s ability to consummate the transactions contemplated hereby; 

Cornerstone Fund is not classified as a partnership, and instead is classified as an association that is taxable as a corporation, for federal tax purposes, and either has elected the latter classification by filing Form 8832 with the IRS or is a "publicly traded partnership" (as defined in section 7704(b) of the Code) that is treated as a corporation; Cornerstone Fund is an “investment company” (as defined in section 368(a)(2)(F)(iii) of the Code) and is a “fund” (as defined in section 851(g)(2) of the Code), eligible for treatment under section 851(g)(1) of the Code; for each taxable year of its operation (including the taxable year that includes the Effective Time), Cornerstone Fund has met (or for that year will meet) the requirements of Subchapter M for qualification and treatment as a RIC and has been (or for that year will be) eligible to and has computed (or for that year will compute) its federal income tax under section 852; Cornerstone Fund will continue to meet all those requirements for that year and intends to continue to do so, and to continue to be eligible to and to so compute its federal income tax for succeeding tax years; and Cornerstone Fund has no earnings and profits accumulated in any taxable year in which the provisions of Subchapter M did not apply to it; 

Cornerstone Fund is in the same line of business as First Start Fund was in preceding the Reorganization, for purposes of section 1.368-1(d)(2) of the Regulations, and did not enter into that line of business as part of the plan of reorganization; following the Reorganization, Cornerstone Fund will continue, and has no intention to change, that line of business; and at the Effective Time, (a) at least 33 1/3% of First Start Fund’s portfolio assets will meet Cornerstone Fund’s investment objective, strategies, policies, risks, and restrictions; (b) Cornerstone Fund will not have modified its investment objective or any of its investment strategies, policies, risks, and restrictions as part of the plan of reorganization; and
(c) Cornerstone Fund will have no plan or intention to change its investment objective or any of its investment strategies, policies, risks, or restrictions after the Reorganization; 

Following the Reorganization, Cornerstone Fund (a) will continue First Start Fund’s “historic business” (within the meaning of section 1.368-1(d)(2) of the Regulations) and (b) will use a significant portion of First Start Fund’s “historic business assets” (within the meaning of section 1.368-1(d)(3) of the Regulations) in a business; moreover, Cornerstone Fund (c) has no plan or intention to sell or otherwise dispose of any of the Assets, except for

(i) dispositions made in the ordinary course of that business, (ii) dispositions necessary to maintain its status as a RIC, or (iii) dispositions pursuant to the following clause, and (d) expects to retain substantially all the Assets in the same form as it receives them in the Reorganization, unless and until subsequent investment circumstances suggest the desirability of change or it becomes necessary to make dispositions thereof to maintain such status; 

Cornerstone Fund has no plan or intention to issue additional Cornerstone Fund Shares following the Reorganization except for shares issued in the ordinary course of its business as a series of an open-end management investment company; nor does Cornerstone Fund, or any person Related to Cornerstone Fund, have any plan or intention to acquire—during the five-year period beginning at the Effective Time, either directly or through any transaction, plan, or arrangement with any other person—with consideration other than Cornerstone Fund Shares, any Cornerstone Fund Shares issued to the Shareholders pursuant to the Reorganization, except for redemptions in the ordinary course of such business as required by section 22(e) of the 1940 Act; 

All issued and outstanding Cornerstone Fund Shares are, and at the Effective Time will be, duly and validly issued and outstanding, fully paid, and non-assessable by the Trust and have been offered and sold in every state and the District of Columbia in compliance in all material respects with applicable registration requirements of the 1933 Act and state securities laws; and Cornerstone Fund does not have outstanding any options, warrants, or other rights to subscribe for or purchase any Cornerstone Fund Shares, nor are there outstanding any securities convertible into any Cornerstone Fund Shares; 

There is no plan or intention for Cornerstone Fund to be dissolved or merged into another statutory trust or any corporation or a business trust or any “fund” thereof (within the meaning of section 851(g)(2) of the Code) following the Reorganization; 

Assuming satisfaction of the condition in paragraph 4.1.14, immediately after the Reorganization, (a) not more than 25% of the value of Cornerstone Fund’s total assets (excluding cash, cash items, and U.S. government securities) will be invested in the stock and securities of any one issuer and (b) not more than 50% of the value of such assets will be invested in the stock and securities of five or fewer issuers; provided that a proportionate share of the assets of any RIC in which Cornerstone Fund invests (and not the securities issued by the RIC itself) shall be taken into account for this purpose; 

Cornerstone Fund does not directly or indirectly own, nor at the Effective Time will it directly or indirectly own, nor has it directly or indirectly owned at any time during the past five years, any shares of First Start Fund; 

Before or pursuant to the Reorganization, neither Cornerstone Fund nor any person Related to Cornerstone Fund will have acquired First Start Fund Shares, directly or through any transaction, agreement, or arrangement with any other person, with consideration other than Cornerstone Fund Shares; 

All Returns of Cornerstone Fund required by law to have been filed by the Effective Time (including any properly and timely filed extensions of time to file) shall have been filed and are or will be correct in all material respects, and all federal and other taxes shown as due or required to be shown as due on those Returns shall have been paid or provision shall have been made for the payment thereof except for amounts that alone or in the aggregate would not reasonably be expected to have a material adverse effect; to the best of the Trust’s knowledge, no such Return is currently under audit and no assessment has been asserted with respect to those Returns; and Cornerstone Fund is in compliance in all material respects with applicable Regulations pertaining to the reporting of dividends and other distributions on and redemptions of its shares and to withholding in respect thereof and is not liable for any material penalties that could be imposed thereunder; 

Cornerstone Fund’s Statements at and for the fiscal year (in the case of its Statement of Changes in Net Assets, for the two fiscal years) ended May 31, 2017, have been audited by Auditors and are in accordance with GAAP; and those Statements present fairly, in all material respects, Cornerstone Fund’s financial condition at their respective dates in accordance with GAAP, and there are no known contingent liabilities of Cornerstone Fund required to be reflected on a balance sheet (including the notes thereto) in accordance with GAAP at such date that is not disclosed therein; 

Since November 30, 2017, there has not been any material adverse change in Cornerstone Fund’s financial condition, assets, liabilities, or business, other than changes occurring in the ordinary course of business, or any incurrence by Cornerstone Fund of indebtedness maturing more than one year from the date that indebtedness was incurred; for purposes of this subparagraph, a decline in NAV per Cornerstone Fund Share due to declines in market values of securities Cornerstone Fund holds, the discharge of Cornerstone Fund liabilities, or the redemption of Cornerstone Fund Shares by its shareholders shall not constitute a material adverse change; and 

If the Reorganization is consummated, Cornerstone Fund will treat each Shareholder that receives Cornerstone Fund Shares in connection with the Reorganization as having made a minimum initial purchase of such shares for the purpose of making additional investments therein, regardless of the value of the shares so received. 

The Trust’s obligation to implement this Plan on each Fund’s behalf shall be subject to satisfaction of the following conditions at or before (and continuing through) the Effective Time: 

No governmental consents, approvals, authorizations, or filings are required under the 1933 Act, the Securities Exchange Act of 1934, as amended (“1934 Act”), or the 1940 Act for Trust’s execution or performance of this Plan, except for (a) the filing with the SEC of a registration statement on Form N-14 relating to the Cornerstone Fund Shares issuable hereunder, and any supplement or amendment thereto (“Registration Statement”), including therein a prospectus and information statement (“Prospectus/Statement”), and (b) such consents, approvals, authorizations, and filings as have been made or received or as may be required subsequent to the Effective Time; 

The fair market value of the Cornerstone Fund Shares received by each Shareholder will be approximately equal to the fair market value of its First Start Fund Shares constructively surrendered in exchange therefor; 

The Trust’s management (a) is unaware of any plan or intention of Shareholders to redeem, sell, or otherwise dispose of (i) any portion of their First Start Fund Shares before the Reorganization to any person Related to either Fund or (ii) any portion of the Cornerstone Fund Shares they receive in the Reorganization to any person Related to Cornerstone Fund, (b) does not anticipate dispositions of those Cornerstone Fund Shares at the time of or soon after the Reorganization to exceed the usual rate and frequency of dispositions of shares of First Start Fund as a series of an open-end management investment company, (c) expects that the percentage of Shareholder interests, if any, that will be disposed of as a result of or at the time of the Reorganization will be de minimis, and (d) does not anticipate that there will be extraordinary redemptions of Cornerstone Fund Shares immediately following the Reorganization; 

First Start Fund’s shareholders will pay their own expenses (such as fees of personal investment or tax advisers for advice concerning the Reorganization), if any, incurred in connection with the Reorganization; 

The fair market value and "adjusted basis" (within the meaning of section 1011 of the Code) of the Assets will equal or exceed the Liabilities to be assumed by Cornerstone Fund and those to which the Assets are subject; 

At the Effective Time, there will be no intercompany indebtedness between the Funds that was issued or acquired, or will be settled, at a discount; 

Pursuant to the Reorganization, First Start Fund will transfer to Cornerstone Fund, and Cornerstone Fund will acquire, at least 90% of the fair market value of the net assets, and at least 70% of the fair market value of the gross assets, First Start Fund held immediately before the Reorganization; for the purposes of the foregoing, any amounts First Start Fund uses to pay its Reorganization Expenses and to make redemptions and distributions immediately before the Reorganization (except (a) redemptions in the ordinary course of its business required by section 22(e) of the 1940 Act and (b) dividends and other distributions declared and paid to ensure First Start Fund’s continuing qualification as a RIC and to avoid the imposition of fund-level tax) will be included as assets held thereby immediately before the Reorganization; 

Immediately after the Reorganization, the Shareholders will not own shares constituting “control” (within the meaning of section 368(a)(2)(H)(i) of the Code, i.e., as defined in section 304(c) of the Code) of Cornerstone Fund; 

None of the compensation received by any Shareholder who is an employee of or service provider to First Start Fund will be separate consideration for, or allocable to, any of the First Start Fund Shares such Shareholder held; none of the Cornerstone Fund Shares any such Shareholder receives will be separate consideration for, or allocable to, any employment agreement, investment advisory agreement, or other service agreement; and the consideration paid to any such Shareholder will be for services actually rendered and will be commensurate with amounts paid to third parties bargaining at arm’s-length for similar services; 

No expenses incurred by First Start Fund or on its behalf in connection with the Reorganization will be paid or assumed by Cornerstone Fund, the Adviser, or any other third party unless those expenses are solely and directly related to the Reorganization (determined in accordance with the guidelines set forth in Rev. Rul. 73-54, 1973-1 C.B. 187) (“Reorganization Expenses”), and no cash or property other than Cornerstone Fund Shares will be transferred to First Start Fund or any of its Shareholders with the intention that such cash or property be used to pay any expenses (even Reorganization Expenses) thereof; 

All necessary filings shall have been made with the SEC and state securities authorities, and no order or directive shall have been received that any other or further action is required to permit the parties to carry out the transactions contemplated hereby; the Registration Statement shall have become effective under the 1933 Act, no stop orders suspending the effectiveness thereof shall have been issued; the SEC shall not have issued an unfavorable report with respect to the Reorganization under section 25(b) of the 1940 Act nor instituted any proceedings seeking to enjoin consummation of the transactions contemplated hereby under section 25(c) of the 1940 Act; and all consents, orders, and permits of federal, state, and local regulatory authorities (including the SEC and state securities authorities) either Investment Company deems necessary to permit consummation, in all material respects, of the transactions contemplated hereby shall have been obtained, except where failure to obtain same would not involve a risk of a material adverse effect on the assets or properties of either Fund, provided that either Investment Company may for itself waive any of such conditions; 

At the Effective Time, no action, suit, or other proceeding shall be pending (or, to the Trust’s best knowledge, threatened to be commenced) before any court or governmental agency in which it is sought to restrain or prohibit, or to obtain damages or other relief in connection with, the transactions contemplated hereby; 

The aggregate value of the acquisitions, redemptions, and distributions limited by paragraphs 4.1.11, 4.2.9, and 4.2.14 will not exceed 50% of the value (without giving effect to such acquisitions, redemptions, and distributions) of the proprietary interest in First Start Fund at the Effective Time; 

The Trust shall have called a meeting of First Start Fund’s shareholders to consider and act on this Plan and to take all other action necessary to obtain approval of the transactions contemplated hereby (“Shareholders Meeting”);  

The principal purpose of Cornerstone Fund’s assumption of the Liabilities is not avoidance of federal income tax on the transaction; 

The Reorganization is being undertaken for bona fide business purposes and not a purpose to avoid federal income tax; 

There will be no dissenters to the Reorganization under the applicable provisions of Delaware law; and 

The Trust shall have received an opinion of K&L Gates LLP (“Counsel”) as to the federal income tax consequences mentioned below (“Tax Opinion

”). In rendering the Tax Opinion, Counsel may assume satisfaction of all the conditions set forth in this paragraph 4, may treat them as representations and warranties the Trust made to Counsel that shall survive the Closing, and may rely as to factual matters, exclusively and without independent verification, on those representations and warranties and, if Counsel requests, on representations and warranties made in a separate letter addressed to Counsel (collectively, “Representations”). The Tax Opinion shall be substantially to the effect that, based on then-existing law and the facts and assumptions stated therein and conditioned on the Representations’ being true and complete at the Effective Time and consummation of the Reorganization in accordance with this Plan (without the waiver or modification of any terms or conditions hereof and without taking into account any amendment hereof that Counsel has not approved), for federal income tax purposes: 

Cornerstone Fund’s acquisition of the Assets in exchange solely for Cornerstone Fund Shares and Cornerstone Fund’s assumption of the Liabilities, followed by First Start Fund’s distribution of those shares pro rata to the Shareholders actually or constructively in exchange for their First Start Fund Shares, will qualify as a “reorganization” within the meaning of section 368(a)(1)(C) of the Code, and each Fund will be “a party to a reorganization” within the meaning of section 368(b) of the Code; 

First Start Fund will recognize no gain or loss on the transfer of the Assets to Cornerstone Fund in exchange solely for Cornerstone Fund Shares and Cornerstone Fund’s assumption of the Liabilities or on the subsequent distribution of those shares to the Shareholders in exchange for their First Start Fund Shares; 

Cornerstone Fund will recognize no gain or loss on its receipt of the Assets in exchange solely for Cornerstone Fund Shares and its assumption of the Liabilities; 

Cornerstone Fund’s basis in each Asset will be the same as First Start Fund’s basis therein immediately before the Reorganization, and Cornerstone Fund’s holding period for each Asset will include First Start Fund’s holding period therefor (except where Cornerstone Fund's investment activities have the effect of reducing or eliminating an Asset's holding period); 

A Shareholder will recognize no gain or loss on the exchange of all its First Start Fund Shares solely for Cornerstone Fund Shares pursuant to the Reorganization; and 

A Shareholder’s aggregate basis in the Cornerstone Fund Shares it receives in the Reorganization will be the same as the aggregate basis in its First Start Fund Shares it actually or constructively surrenders in exchange for those Cornerstone Fund Shares, and its holding period for those Cornerstone Fund Shares will include its holding period for those First Start Fund Shares, provided the Shareholder held them as capital assets at the Effective Time. 

Notwithstanding subparagraphs (b) and (d), the Tax Opinion may state that Counsel expresses no opinion regarding the effect of the Reorganization on the Funds or any Shareholder with respect to any Asset as to which any unrealized gain or loss is required to be recognized for federal income tax purposes at the end of a taxable year (or on the termination or transfer thereof) under a mark-to-market system of accounting. 

  

First Start Fund shall bear any brokerage and similar expenses incurred in connection with the Reorganization, and Cornerstone Fund shall bear the costs of registering the Cornerstone Fund Shares to be issued to the Shareholders. Subject to satisfaction of the condition contained in paragraph 4.3.10, all costs of the Shareholders Meeting, including the costs of soliciting proxies, legal and accounting fees in connection with the Reorganization and the other costs of the Reorganization shall be borne by the First Start Fund. If First Start Fund’s shareholders do not approve this Plan or the Reorganization does not close for any other reason, the First Start Fund shall bear all the costs of the transactions contemplated hereby. Notwithstanding the foregoing, expenses shall be paid by the Fund directly incurring them if and to the extent that the payment thereof by another person would result in that Fund’s disqualification as a RIC or would prevent the Reorganization from qualifying as a tax-free reorganization. 

  

The Board may terminate this Plan and abandon the transactions contemplated hereby, at any time before the Effective Time, if circumstances develop that, in its opinion, make proceeding with the Reorganization inadvisable for either Fund. 

  

The Board may amend, modify, or supplement this Plan at any time in any manner, notwithstanding First Start Fund’s shareholders’ approval thereof; provided that, following that approval, no such amendment, modification, or supplement shall have a material adverse effect on the Shareholders’ interests. 

  

This Plan shall be governed by and construed in accordance with the internal laws of the state of Delaware, without giving effect to principles of conflicts of laws; provided that, in the case of any conflict between those laws and the federal securities laws, the latter shall govern. 

Nothing expressed or implied herein is intended or shall be construed to confer on or give any person, firm, trust, or corporation other than the Trust (on the Funds’ behalf) and its successors and assigns any rights or remedies under or by reason of this Plan. 

Notice is hereby given that this instrument is adopted on behalf of the Trust’s trustees solely in their capacities as trustees, and not individually, and that the Trust’s obligations under this instrument are not binding on or enforceable against any of its trustees, officers, shareholders, or series other than the Funds but are only binding on and enforceable against the respective Fund’s property. The Trust, in asserting any rights or claims under this Plan on either Fund’s behalf, shall look only to the other Fund’s property in settlement of those rights or claims and not to the property of any other series of the Trust or to those trustees, officers, or shareholders. 

Any term or provision of this Plan that is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of that invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions hereof or affecting the validity or enforceability of any of the terms and provisions hereof in any other jurisdiction. 

  

Adopted: March 1, 2018 

  

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