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UNITED STATES File No. 33-_______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 File No. 811-______
FORM N-1A
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REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
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Pre-Effective Amendment No.____________ | |
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Post Effective Amendment No._____________ | |
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
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Amendment No______________ | |
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Sage/Tso Trust
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(Exact name of Registrant as Specified in Charter)
7799 Leesburg Pike, Suite 900
Falls Church, Virginia 22043
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code (703) 255-1233
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James C. Tso, President
Sage/Tso Investment Management L.P.
7799 Leesburg Pike, Suite 900
Falls Church, Virginia 22043
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(Name and Address of Agent for Service)
COPIES TO:
Clifford J. Alexander, Esq. Joseph M. O'Donnell, Esq.
Kirkpatrick & Lockhart LLP Fund/Plan Services, Inc.
1800 Massachusetts Avenue, N.W. 2 West Elm Street
Washington, DC 20036-1800 Conshohocken, Pennsylvania 19428
Approximate date of proposed public
offering: As soon as practicable after the effective date
of this Registration Statement.
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Registrant hereby elects to register an indefinite number of shares of its
securities under this Registration Statement pursuant to Rule 24f-2 of the
Investment Company Act of 1940, as amended. Registrant will file a Notice
pursuant to Rule 24f-2 within two months after the fiscal year end. A filing fee
of $1,500 pursuant to registration under the Investment Company Act of 1940 has
been wired to the lockbox.
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Registrant hereby amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
As filed with the U.S. Securities and Exchange TOTAL PAGES:_____
Commission on March 26, 1996 INDEX TO EXHIBITS, PAGE:_____
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TABLE OF CONTENTS
Registration Statement of Sage/Tso Trust
Page
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1. Cross-Reference Sheet...................................................................................3
2. America Asia Allocation Growth Fund - Part A - Prospectus...............................................5
3. America Asia Allocation Growth Fund - Part B - Statement of Additional Information.....................27
4. America Asia Allocation Growth Fund - Part C - Other Information.......................................40
5. Signature Page.........................................................................................44
6. Index to Exhibits......................................................................................45
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<TABLE>
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SAGE/TSO TRUST
CROSS REFERENCE SHEET PURSUANT TO RULE 481a
Form N-1A Item Caption in Prospectus
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<S> <C> <C>
Part A INFORMATION REQUIRED IN A PROSPECTUS
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1. Cover Page Cover Page of Prospectus
2. Synopsis Prospectus Summary; Expense Summary
3. Condensed Financial Information *
4. General Description of Registrant Investment Objective and Policies; Risk Factors;
Prospectus Summary; The Trust and the Fund;
Investment Limitations; Description of Permitted
Investments and Risk Factors; General Information
5. Management of the Fund Prospectus Summary; Management of the Fund;
Distribution Plan
5A. Management's Discussion of Fund Performance *
6. Capital Stock and Other Securities Prospectus Summary; General Information;
Dividends and Taxes; Net Asset Value
7. Purchase of Securities Being Offered Prospectus Summary; How to Purchase Shares;
Shareholder Services
8. Redemption or Repurchase Prospectus Summary; How to Redeem Shares
9. Pending Legal Proceedings *
Part B INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
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10. Cover Page Cover Page of the Statement of Additional
Information
11. Table of Contents Table of Contents
12. General Information and History *
13. Investment Objectives and Policies Investment Policies and Techniques; Investment
Restrictions; Portfolio Transactions
14. Management of the Fund The Trust; Investment Advisory and Other Services;
Trustees and Officers
15. Control Persons and Principal Holders of
Securities *
16. Investment Advisory and Other Services Investment Advisory and Other Services
17. Brokerage Allocation and Other Practices Portfolio Transactions
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Part B INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
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(continued)
18. Capital Stock and Other Securities Other Information
19. Purchase, Redemption and Pricing of
Securities Being Offered Purchases; Redemptions
20. Tax Status Taxes
21. Underwriters Underwriter
22. Calculation of Performance Data Performance Information
23. Financial Statements *
Part C OTHER INFORMATION
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Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C of this Registration Statement.
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* Item is inapplicable at this time or answer is negative.
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
Subject to Completion
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Preliminary Prospectus Dated March , 1996
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AMERICA ASIA ALLOCATION GROWTH FUND
7799 Leesburg Pike, Suite 900
Falls Church, Virginia 22043
PROSPECTUS March 26, 1996
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America Asia Allocation Growth Fund (the "Fund") seeks maximum long-term capital
growth by investing in the equity securities of companies, both American and
Asian, that are expected to benefit from the development and growth of the
economies of the countries located in the "Greater Asia Region", as well as U.S.
companies that are benefitting from an effective employment of Asian American
talent in management, science or technology. Under normal circumstances, the
Fund will invest at least 65% of its total assets in such securities. See
"Investment Objective and Policies."
The Fund is a separate series of Sage/Tso Trust (the "Trust"), an open-end,
diversified management investment company commonly known as a mutual fund.
Sage/Tso Investment Management L.P. (the "Adviser") serves as the investment
adviser of the Fund managing its assets in accordance with its investment
objectives.
The Fund offers its shares through two separate classes of shares: Class A
Shares and Class D Shares. Both classes of shares are identical except as to the
expenses borne by each class. These alternative classes permit investors to
choose the method of purchasing shares most beneficial to them.
The Fund is designed for long-term investors and not as a trading vehicle, and
is not intended to present a complete investment program.
This Prospectus sets forth concisely the information regarding the Fund that an
investor should know before investing in the Fund. Investors should read this
Prospectus and retain it for future reference. A Statement of Additional
Information dated March 26, 1996, which may be revised from time to time,
provides a further discussion of certain areas which may be of interest to some
investors. It has been filed with the Securities and Exchange Commission and is
incorporated herein by reference. To request a copy, write to the Fund at the
address above or call (800) .
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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TABLE OF CONTENTS
Page
Prospectus Summary.............................................................7
Expense Summary................................................................8
The Trust and the Fund........................................................10
Investment Objective and Policies.............................................10
Risk Factors..................................................................11
Investment Limitations........................................................13
Management of the Fund........................................................13
The Distribution Plans........................................................15
How to Purchase Shares........................................................15
Purchase of Class D Shares...............................................17
Purchase of Class A Shares...............................................17
How to Redeem Shares..........................................................18
Shareholder Services..........................................................20
Net Asset Value...............................................................20
Dividends and Taxes...........................................................21
Performance Information.......................................................23
General Information...........................................................24
Description of Permitted Investments and Risk Factors.........................25
Underwriter: Adviser:
Fund/Plan Broker Services, Inc. Sage/Tso Investment Management L.P.
2 W. Elm Street 7799 Leesburg Pike, Suite 900
Conshohocken, Pennsylvania 19428 Falls Church, Virginia 22043
(800) (800)_________
(610) (703) 255-1233
THIS PROSPECTUS IS NOT AN OFFERING OF THE SECURITIES HEREIN DESCRIBED IN ANY
JURISDICTION OR TO ANY PERSON TO WHOM IT IS UNLAWFUL FOR THE FUND TO MAKE
SUCH AN OFFER OR SOLICITATION. NO SALES REPRESENTATIVE, DEALER, OR OTHER
PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE
ANY REPRESENTATION OTHER THAN THOSE CONTAINED
IN THIS PROSPECTUS.
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PROSPECTUS SUMMARY
What is the Fund's Investment Objective? America Asia Allocation Growth Fund
(the "Fund") seeks to achieve long-term capital growth. There can be no
assurance that the Fund will be able to achieve its investment objective.
See "Investment Objective and Policies".
What are the Permitted Investments? The Fund intends to invest substantially all
its assets in equity securities of companies located in, or companies expected
to benefit from, the growth of the economies located in the "Greater Asia
Region." The Adviser defines the Greater Asia Region to include Australia,
China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, Pakistan, The
Philippines, Singapore, South Korea, Taiwan and Thailand. In addition, any
company in which the Fund invests must, in the opinion of the Adviser, conduct
business in accordance with the stated philosophy of the Fund. The Fund
initially intends to invest most of its assets in common stocks and sponsored or
unsponsored American Depository Receipts. See "Investment Objective and
Policies" and "Description of Permitted Investments and Risk Factors".
What are the Risks Involved with an Investment in the Fund? The investment
policies of the Fund have certain risks and considerations of which investors
should be aware. The Fund invests in securities that fluctuate in value, and
investors should expect the Fund's net asset value per share to fluctuate.
Investing in the equity securities of foreign companies involves special risks
and considerations not typically associated with investing in the equity
securities of U.S. companies. The securities markets in the Greater Asia Region
(with the exception of Japan) and other emerging markets are substantially
smaller, less liquid and more volatile than the major securities markets in the
United States. There may be different accounting standards, differences in
securities regulation, higher brokerage costs, currency exchange rate
fluctuations and conversion costs, and less publicly available information about
foreign companies and securities issued thereby. See "Investment Objective and
Policies", "Risk Factors" and "Description of Permitted Investments and Risk
Factors".
Who is the Investment Adviser? Sage/Tso Investment Management L.P. serves as the
investment adviser of the Fund. See "Expense Summary" and "Management of the
Fund".
Who is the Administrator, Transfer Agent and Fund Accounting Agent? Fund/Plan
Services, Inc. serves as the administrator, transfer agent and fund accounting
agent for the Fund. See "Management of the Fund".
Who is the Distributor? Fund/Plan Broker Services, Inc. serves as the
distributor of the Fund's shares. See "Management of the Fund".
Is There a Sales Load? Purchases of Class A Shares are subject to a maximum
sales charge of 5.00%. Class D Shares are not subject to a sales charge. Both
classes of shares are subject to annual 12b-1 Plan expenses. See "The
Distribution Plans" and "How to Purchase Shares".
Is There a Minimum Investment? The minimum initial investment for Class A Shares
is $5,000 ($2,000 for IRA and SEP accounts) and $200 for subsequent investments.
The minimum initial investment for Class D Shares is $10,000 ($2,000 for IRA and
SEP accounts) and $200 for subsequent investments.
How do I Purchase Shares? Class D Shares are offered at net asset value per
share to registered investment advisers on behalf of their clients. Class A
Shares are offered at the net asset value per share plus a maximum initial sales
charge of 5.00% of the offering price. See "How to Purchase Shares".
How do I Redeem Shares? Shares of the Fund may be redeemed at the current net
asset value per share next determined after receipt by the transfer agent of a
redemption request in proper form. Signature guarantees may be required for
certain redemption requests. See "How to Redeem Shares".
How are Distributions Paid? Substantially all of the net investment income
(exclusive of capital gains) of the Fund is distributed in the form of annual
dividends. If any capital gains are realized, substantially all of them will be
distributed by the Fund at least annually. All dividends and distributions are
paid in additional shares (without sales charge) unless payment in cash is
requested. See "Dividends and Taxes".
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EXPENSE SUMMARY
Shareholder Transaction Expenses:
Class A Class D
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Maximum sales charge imposed on purchases
(as a percentage of offering price)................................................. 5.00%(1) None
Maximum sales charge imposed on reinvested
dividends (as a percentage of offering price)....................................... None None
Deferred sales charge (as a percentage of
original purchase price)........................................................... None None
Redemption fees (as a percentage of
amount redeemed) (2)................................................................ None None
<FN>
(1) Reduced for purchases of $100,000 and over. See "How to Purchase Shares".
(2) If you want to redeem shares by wire transfer, the Fund's transfer agent
charges a fee (currently $9.00) for each wire redemption. Purchases and
redemptions may also be made through broker-dealers and others who may
charge a commission or other transaction fee for their services.
</FN>
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<TABLE>
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Annual Fund Operating Expenses:
(as a percentage of average net assets) Class A Class D
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Advisory Fees (after fee waivers)(3)............................................... 0.71% 0.71%
12b-1 Fees......................................................................... 0.35% 0.35%
Other Expenses (4)................................................................. 1.69% 1.69%
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Total Fund Operating Expenses (after fee waivers)(3).............................. 2.75% 2.75%
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<FN>
(3) The Adviser has, on a voluntary basis, agreed to waive all or a portion of
its fees and to reimburse certain expenses of the Fund necessary to limit
the total operating expenses for the first year of operations to 2.75% of
the Fund's average net assets. The Adviser reserves the right to terminate
this waiver or any reimbursement at any time, in its sole discretion.
Absent such waivers, advisory fees for the Fund would be 2.00% and
estimated total operating expenses would be 4.04% of the Fund's average
daily net assets on an annualized basis.
(4) For purposes of this table, "Other Expenses" is based on estimated amounts
for the current fiscal year.
</FN>
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Example
Based on the level of expenses listed above, and (i) imposition of the maximum
sales charge for Class A Shares, (ii) 5% annual return and (iii) redemption at
the end of each time period, the total expenses relating to an investment of
$1,000 would be as follows:
Class A Class D
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1 Year $ 76 $ 28
3 Years $131 $ 85
The foregoing example should not be considered a representation of past or
future expenses. Actual expenses may be more or less than those shown. The
purpose of the expense tables and example is to assist the investor in
understanding the various costs and expenses that may be directly or indirectly
borne by shareholders of the Fund. Additional information may be found under
"Management of the Fund". The rules of the Securities and Exchange Commission
require that the maximum sales charge be reflected in the above table with
respect to Class A Shares. However, certain investors may qualify for a reduced
sales charge. See "How to Purchase Shares".
Long-term holders of Class A Shares may eventually pay more than the economic
equivalent of the maximum front-end sales charges otherwise permitted by the
Rules of Fair Practice of the National Association of Securities Dealers, Inc.
(the "NASD").
8
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THE TRUST AND THE FUND
Sage/Tso Trust (the "Trust") is an open-end, diversified management investment
company organized as a business trust under the laws of the State of Delaware.
The Trust is organized to offer separate series of shares and is currently
comprised of one series called America Asia Allocation Growth Fund (the "Fund").
The Fund currently offers two separate classes of shares and additional classes
of shares may be added without shareholder approval. Class A Shares and Class D
Shares differ with respect to sales charges and minimum initial investment.
Except for these differences, each share of the Fund represents an undivided
proportionate interest in the Fund.
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund is long-term capital growth. This objective
is fundamental and may not be changed without a vote of the holders of the
majority of the outstanding voting securities of the Fund. The Fund's investment
policies described below are not fundamental and may be changed without
shareholder approval. Additional investment policies and restrictions are
described in the Statement of Additional Information.
The Fund seeks maximum long-term capital growth by investing in the equity
securities of companies, both American and Asian, that are expected to benefit
from the development and growth of the economies of the countries located in the
"Greater Asia Region". The following countries comprise the Greater Asia Region:
Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand,
Pakistan, The Philippines, Singapore, South Korea, Taiwan and Thailand. The
countries constituting the Greater Asia Region may be changed by the Board of
Trustees without shareholder approval.
The Adviser has also established standards for stock selection which include the
following guidelines. The Fund will not invest in companies whose: (i) products
or services are harmful to humans; (ii) labor practices violate human rights; or
(iii) products or services are used exclusively for military purposes. The Fund
will also seek to invest in U.S. companies that are benefitting from an
effective employment of Asian American talent in management, science or
technology.
Asian Americans, whether they were born in the U.S. or immigrated to America for
educational or business reasons, are a rapidly increasing component of the U.S.
population and are therefore playing more significant roles in the companies for
which they work. The Fund may invest in companies where Asian American talent
contributes to a company's profitability, development of new technology or
discovery of scientific advances. Some of these companies may be founded or are
led by entrepreneurial management of Asian American heritage. Others rely on
Asian American talent for a critical aspect of their operations. In addition,
Asian Americans present a natural business connection to the emerging economies
of Asia. The Adviser believes that investments in these companies offer special
opportunities due to their effective use of Asian American talent and, in some
cases, special risks because of the early stage of their business development.
Under normal market conditions, the Fund will invest at least 65% of its assets
in equity securities described above. Equity securities include common and
preferred stocks, convertible securities, rights and warrants to purchase common
stocks and sponsored and unsponsored American Depository Receipts ("ADRs"),
European Depository Receipts ("EDRs"), or Global Depository Receipts
("GDRs")(collectively "Depository Receipts"). Initially, the Fund intends to
invest primarily in Depository Receipts or other similar securities representing
an interest in securities of foreign issuers rather than directly in the stock
of those companies. The Fund also intends to initially limit its purchase of
non-U.S. stocks to those that may be purchased on U.S. stock markets.
The Fund may also invest up to 35% of its total assets in other equity
securities, U.S. government securities, short-term money market instruments
(such as U.S. Treasury bills, commercial paper, certificates of deposit and
bankers' acceptances) and repurchase agreements. Debt securities convertible
into common stocks will be investment grade or, if unrated, will be comparable
quality as determined by the Adviser under the supervision of the Board of
Trustees.
The Fund will not limit its investments to any particular type of company. The
Fund may invest in companies, large or small, whose earnings are believed to be
in a relatively strong growth trend, or in companies in which significant
further growth is not anticipated and whose market value per share is thought to
be undervalued. The Fund may invest
9
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in small relatively less well-known companies. These companies may present
greater opportunities for capital appreciation, but may also involve greater
risk. See "Risk Factors".
The Adviser will consider an issuer of securities to be located in the Greater
Asia Region if it meets one of the following criteria: (i) it is organized under
the laws of a country in the Greater Asia Region; (ii) it derives a significant
proportion of its revenues from business in the Greater Asia Region, or (iii)
its equity securities are traded principally on a securities exchange in the
Greater Asia Region.
There is no requirement that the Fund, at any given time, invest in any one
particular country or in all of the countries listed above or in any other Asian
countries. The Fund has no set policy for allocating investments between
American and Asian companies, nor among the various countries in the Greater
Asia Region. Allocation of investments among the various countries will depend
on the relative attractiveness of the stocks of issuers in the respective
countries. Government regulation and restrictions in many of the countries of
interest may limit the amount, mode and extent of investment in companies in
such countries.
The Fund may engage in foreign currency exchange contracts to protect the value
of its assets against future changes in the level of currency exchange rates.
Although the Fund has no present intentions to engage in transactions involving
the use of options and futures contracts, the Fund may engage in such
transactions for purposes of increasing its investment return or hedging against
market changes. The Fund may also buy and sell stock index futures contracts for
hedging purposes. See "Risk Factors" and "Description of Permitted Investments
and Risk Factors".
For temporary defensive purposes, the Fund may invest up to 100% of its total
assets in short-term U.S. investments, such as cash or cash equivalents,
commercial paper, short-term bank obligations, government and agency securities,
and repurchase agreements. To the extent that the Fund is invested in temporary
defensive instruments, it will not be pursuing its investment objective. See
"Description of Permitted Investments and Risk Factors" and the Statement of
Additional Information.
Although the Fund cannot accurately predict its portfolio turnover rate, under
normal circumstances the portfolio turnover rate is not expected to exceed 100%
per year. A portfolio turnover rate in excess of 100% may result in higher
transaction costs to the Fund and may increase the amount of taxes payable by
the Fund's shareholders.
For a further discussion of the Fund's permitted investments, see "Description
of Permitted Investments and Risk Factors" and the Statement of Additional
Information.
Investment Process
The Adviser employs a "top-down" assessment approach of countries, regions and
economies and a "bottom up" assessment approach of stocks within selected
sectors. The Adviser's approach in selecting investments for the Fund is value
driven. The best growth companies in both America and Asia will be considered
for investment by applying sound fundamental and technical analysis. The best
Asian American companies will also be considered for investment by the Adviser.
The Adviser considers some of the best growth companies to be those with
promising profit synergies, particularly those in America and Asia that have
mutually beneficial business connections.
RISK FACTORS
Investments in securities of the Greater Asia Region may be subject to certain
risks not typically associated with securities of U.S. issuers. Because of its
emphasis on the Greater Asia Region, the Fund should be considered as a vehicle
for diversification of investments and not as a balanced investment program. See
"Description of Permitted Investments and Risk Factors".
Greater Asia Region's Economy
In the past five years, the newly emerging securities markets in the Greater
Asia Region have had strong economic growth which has been reflected in stronger
market returns than those of Western Europe and the United States on average and
have demonstrated significant growth in market capitalization, in numbers of
listed securities and in volume of transactions. Over this same period, the
underlying economies of the region have grown against a background of high
savings rates and generally moderate inflation. There can be no assurance that
this strong economic growth will continue over the long term.
10
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Greater Asia Region Opportunity
The Adviser believes that in contrast to more developed economies, the newly
industrialized countries of the Greater Asian Region are in an earlier, more
dynamic growth state of their development. This growth has been characterized
by, among other factors, low labor costs, strong demand from export markets for
consumer products, high productivity, long work weeks, pro-business governments
and a strong work ethic. Historically, South Korea, Hong Kong, Singapore and
Taiwan have been examples of these traits. Today, however, the economies of
Malaysia, Indonesia, Thailand, India, Australia, New Zealand, China and others
are starting to exhibit many of these same characteristics and appear to be
accelerating.
Many of the stock markets of the Greater Asia Region are either fully open for
foreign investors or are in the process of opening. The Adviser believes that
the opening of these markets offers particular opportunities for investment.
Foreign Securities
Investing in foreign securities generally involves somewhat different investment
risks from those affecting securities of U.S. issuers. There may be limited
publicly available information with respect to foreign issuers, and foreign
issuers are not generally subject to uniform accounting, auditing, and financial
and other reporting standards and requirements comparable to those applicable to
domestic companies. Therefore, disclosure of certain material information may
not be made and less information may be available to investors investing in
foreign companies than in the U.S. There may also be less government supervision
and regulation of foreign securities exchanges, brokers and listed companies
than in the U.S. Many foreign securities markets have substantially less volume
than U.S. national securities exchanges, and securities of some foreign issuers
are less liquid and subject to greater price volatility. Brokerage commissions
and other transaction costs on foreign securities exchanges are generally higher
than in the U.S. Dividends and interest paid by foreign issuers may be subject
to withholding and other foreign taxes, which may decrease the net return on
foreign investments. Additional risks include future adverse political and
economic developments, the possibility that a foreign jurisdiction might impose
or change withholding taxes, possible seizure, nationalization or expropriation
of the foreign issuer, and the possible adoption of restrictions and exchange
controls. Certain costs attributable to foreign investing, such as custody
charges, are higher than those attributable to domestic investing.
Smaller Companies
The Fund may invest in securities of all types of issuers, large or small, whose
earnings are believed by the Adviser to be in a relatively strong growth trend
or whose assets are substantially undervalued. Smaller companies often have
limited product lines, markets or financial resources, or may depend on a
limited management group. The securities of such companies may trade less
frequently and in limited volume, and only in the over-the-counter market or on
a regional securities exchange. As a result, these securities may fluctuate in
value more than those of larger, more established companies.
Emerging Markets
The risks of investing in foreign markets generally may be intensified in the
case of investments in emerging markets or countries with limited or developing
capital markets. Investing in securities of issuers in the Greater Asia Region
involves special risks. The Fund's investment focus in that region makes the
Fund particularly subject to political, social, or economic conditions
experienced in that region. Many of the countries in the Greater Asia Region
constitute "developing" or "emerging" economies and markets. Risks of investing
in such markets include: (i) less social, political, and economic stability;
(ii) smaller securities markets and lower trading volume, which may result in a
lack of liquidity and in greater price volatility; (iii) certain national
policies that may restrict the Fund's investment opportunities, including
restrictions on investments in issuers or industries deemed sensitive to
national interests, or expropriation or confiscation of assets or property,
which could result in a Fund's loss of its entire investment in that market; and
(iv) less developed legal structures governing private or foreign investment or
allowing for judicial redress for injury to private property.
The economies of many of the countries in which the Fund may invest may differ
favorably or unfavorably from the U.S. economy in such respects as growth of
gross domestic product, rates of inflation, currency depreciation, capital
reinvestment, resource self-sufficiency, and balance of payments positions.
Economies in emerging markets generally are heavily dependent upon international
trade and, accordingly, have been and may continue to be affected adversely by
trade barriers, exchange controls, managed adjustments in relative currency
values, and other protectionist
11
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measures negotiated or imposed by the countries with which they trade.
The securities markets in the Greater Asia Region (with the exception of Japan)
are substantially smaller, less liquid and more volatile than the major
securities markets in the United States. A high proportion of the shares of many
issuers may be held by a limited number of persons and financial institutions. A
limited number of issuers may represent a disproportionately large percentage of
market capitalization and trading value and the securities markets are
susceptible to being influenced by large investors trading significant blocks of
securities.
Options and Futures Transactions
The use of futures and related options involves certain special risks. Futures
and options transactions involve costs and may result in losses. Certain risks
arise because of the possibility of imperfect correlations between movements in
the prices of index futures and options and movements in the prices of the
underlying stock index or of the securities in the Fund's portfolio that are the
subject of a hedge. Similarly, there may be imperfect correlations between
movements in the prices of foreign currency futures contracts and options and
movements in the prices of the underlying currency. The successful use of
options and futures further depends on the Adviser's ability to forecast market
movements correctly. Other risks arise from the Fund's potential inability to
close out its futures or options positions, and there can be no assurance that a
liquid secondary market will exist for any future or option at any particular
time. The Fund generally expects that its options and futures transactions will
be conducted on recognized exchanges. In certain instances, however, the Fund
may purchase and sell options in the over-the-counter markets. The Fund's
ability to terminate options in the over-the-counter markets may be more limited
than for exchange-traded options and may also involve the risk that securities
dealers participating in such transactions would be unable to meet their
obligations to the Fund.
Currency Factors
In the event that the Fund invests a significant portion of its assets in
foreign securities directly, the Fund's investment performance could be
significantly affected by changes in foreign currency exchange rates. The value
of the Fund's assets denominated in foreign currencies would increase or
decrease in response to fluctuations in the value of these foreign currencies
relative to the U.S. dollar. Currency exchange rates can be volatile at times in
response to supply and demand in the currency exchange markets, international
balances of payments, governmental intervention, speculation and other political
and economic conditions.
MANAGEMENT OF THE FUND
The Board of Trustees
The Trust has a Board of Trustees that establishes the Fund's policies and
supervises and reviews the management of the Fund. The day-to-day operations of
the Fund are administered by the officers of the Trust and by the Adviser
pursuant to the terms of the Investment Advisory Agreement with the Fund. The
Trustees review the various services provided by the Adviser to ensure that the
Fund's general investment policies and programs are being properly carried out
and that administrative services are being provided to the Fund in a
satisfactory manner. Information pertaining to the Trustees and executive
officers is set forth in the Statement of Additional Information.
The Investment Adviser
Sage/Tso Investment Management L.P. serves as the Fund's investment adviser and
manager, and is an investment adviser registered as such under the Investment
Advisers Act of 1940, as amended. The Adviser is a successor to Strategic
Investment Advisors, an SEC registered investment advisory firm owned solely by
James C. Tso. Since 1992, Mr. Tso has provided investment advisory services to
individuals and institutional clients and currently manages $10 million in
assets. Mr. Tso serves as President and Chief Investment Officer of the Fund.
The principal business address of the Adviser is 7799 Leesburg Pike, Suite 900,
Falls Church, Virginia 22043.
As the Fund's investment adviser, the Adviser makes the investment decisions
concerning the assets of the Fund and continuously reviews, supervises and
administers the Fund's investment programs, subject to the supervision of, and
policies established by the Trustees of the Fund.
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For providing investment advisory services, the Fund pays the Adviser a monthly
fee which is calculated daily by applying an annual rate of 2.00% of the average
daily net assets of the Fund. The investment advisory fee is higher than that
paid by most investment companies, although the Adviser believes the fee to be
comparable to that paid by investment companies with similar investment
objectives and policies. From time to time, the Adviser may voluntarily waive
all or a portion of its management fee and/or absorb certain expenses of the
Fund without further notification of the commencement or termination of any such
waiver or absorption. Any such waiver or absorption will have the effect of
lowering the overall expense ratio of the Fund and increasing the Fund's overall
return to investors at the time any such amounts are waived and/or absorbed. The
Adviser has voluntarily agreed to waive all or a portion of its fee, and/or to
reimburse expenses of the Fund to the extent necessary in order to limit net
operating expenses for the first year of operations to an annual rate of not
more than 2.75% of the Fund's average daily net assets. The Adviser reserves the
right to terminate its voluntary fee waiver and reimbursement at any time, in
its sole discretion. Any reductions in its fee that are made by the Adviser are
subject to reimbursement by the Fund within the following three years, provided
that the Fund is able to effect such reimbursement and remain in compliance with
applicable expense limitations.
Portfolio Management
James C. Tso is primarily responsible for the day-to-day management of the
Fund's investment portfolio. Since 1992 Mr. Tso has managed investment
portfolios for clients and developed model portfolios consistent with the
investment objectives of the Fund. Mr. Tso's thirty years of experience includes
mergers and acquisitions and international banking and marketing investments. In
addition, Mr. Tso has provided financial and estate planning to clients. He has
a B.A. in Finance from New York University, an M.A. from Occidental College, and
a J.D. from George Mason University. Since 1975, Mr. Tso has held leadership
positions with various national Asian American organizations and was national
president of the Organization of Chinese Americans in 1987.
The Underwriter and Distributor
Fund/Plan Broker Services, Inc. ("FPBS"), 2 W. Elm Street, Conshohocken,
Pennsylvania 19428, was engaged pursuant to an agreement for the limited purpose
of acting as underwriter to facilitate the registration of shares of the Fund
under state securities laws and to assist in the sale of shares.
The Administrator
Fund/Plan Services, Inc. ("Fund/Plan"), which has its principal business address
at 2 W. Elm Street, Conshohocken, Pennsylvania 19428, serves as administrator of
the Fund pursuant to an Administrative Services Agreement. The services that
Fund/Plan provides to the Fund include: coordinating and monitoring of any third
parties furnishing services to the Fund; providing the necessary office space,
equipment and personnel to perform administrative and clerical functions for the
Fund; preparing, filing and distributing proxy materials, periodic reports to
shareholders, registration statements and other documents; and responding to
shareholder inquiries.
The Custodian, Transfer Agent and Fund Accounting/Pricing Agent
The Bank of New York, 90 Washington Street, New York, New York 10286 is
custodian for the securities and cash of the Fund.
Fund/Plan serves as the Fund's transfer agent. As a transfer agent, it maintains
the records of each shareholder's account, answers shareholder inquiries
concerning accounts, processes purchases and redemptions of the Fund's shares,
acts as dividend and distribution disbursing agent and performs other
shareholder service functions. Shareholder inquiries should be addressed to the
transfer agent at (800) ________.
Fund/Plan also performs certain accounting and pricing services for the Fund,
including the daily calculation of the Fund's net asset value per share.
Fund Expenses
The Fund is responsible for all of its own expenses. Such expenses may include,
but are not limited to: management fees; legal expenses; audit fees; printing
costs (e.g. costs of printing annual reports, semi-annual reports and
prospectuses which are distributed to existing shareholders); brokerage
commissions; the expenses of registering and qualifying shares of the Fund for
sale with the Securities and Exchange Commission and with various state
securities commissions; expenses of the organization of the Fund; transfer
agent, custodian and administrator fees; the expenses of obtaining quotations of
portfolio securities and pricing the Fund's shares; trade association dues; all
costs associated
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<PAGE>
with shareholder meetings and the preparation and dissemination of proxy
materials; costs of liability insurance and fidelity bonds; fees for Trustees
who are not officers, directors or employees of the Adviser; and any
extraordinary and nonrecurring expenses which are not expressly assumed by the
Adviser.
THE DISTRIBUTION PLANS
The Board of Trustees of the Fund has adopted separate distribution plans for
each class of shares pursuant to Rule 12b-1 under the Investment Company Act of
1940, as amended (the "Distribution Plans", or each a "Plan"). As provided in
each Plan, each class of shares will pay an annual fee up to 0.35% of the
respective classes' average daily net assets to Fund/Plan Broker Services, Inc.
("FPBS"), the Fund's distributor, as compensation for its services. From this
amount, FPBS may make payments to financial institutions and intermediaries such
as banks, savings and loan associations, insurance companies, investment
counselors, and broker-dealers who assist in the distribution of the respective
class of shares of the Fund or provide services with respect to both classes of
shares of the Fund, pursuant to service agreements with the Fund. In addition,
payments will be made to the Fund's Adviser. Each Plan is characterized as a
compensation plan because the distribution fee will be paid to FPBS as
distributor without regard to the distribution or shareholder service expenses
incurred by FPBS or the amount of payments made to financial institutions and
intermediaries. The Fund intends to operate the Distribution Plans, in
accordance with its terms and within NASD rules concerning sales charges.
The Fund may also execute brokerage or other agency transactions through an
affiliate of the Adviser or through FPBS for which the affiliate or FPBS may
receive "usual and customary" compensation. The Adviser will use its best
efforts to obtain the best available price and most favorable execution with
respect to all transactions of the Fund. However, subject to policies
established by the Board of Trustees, the Fund may pay a broker-dealer a
commission for effecting a portfolio transaction for the Fund in excess of the
amount of commission another broker-dealer would have charged if the Adviser
determines in good faith that the commission paid was reasonable in relation to
the brokerage or research services provided by such broker-dealer. In selecting
and monitoring broker-dealers and negotiating commissions, consideration will be
given to a broker-dealer's reliability, the quality of its execution services on
a continuing basis and its financial condition.
The fees paid to FPBS under the Distribution Plans are subject to the review and
approval by the Trust's unaffiliated trustees who may reduce the fees or
terminate the Distribution Plans at any time. All such payments made pursuant to
the Distribution Plans shall be made for the purpose of selling shares issued by
each respective class of shares. The distribution fee of one class will not be
used to subsidize the sale of the other class of shares.
HOW TO PURCHASE SHARES
General
The Fund offers two classes of shares to the general public on a continuous
basis through the Fund's distributor, Fund/Plan Broker Services, Inc. ("FPBS"),
either by mail or by telephone. Class A Shares are sold with an initial sales
charge; Class D Shares are sold without an initial sales charge. Both classes of
shares are subject to annual distribution expenses pursuant to Rule 12b-1. See
"The Distribution Plans". Shares of the Fund are offered only to residents of
states in which the shares are eligible for purchase.
Purchase orders for shares of the Fund that are received by Fund/Plan in proper
form by the close of regular trading on the New York Stock Exchange
("NYSE")(currently 4:00 p.m. Eastern time), on any day that the NYSE is open for
trading, will be purchased at the Fund's next determined public offering price.
Orders for Fund shares received after 4:00 p.m. Eastern time will be purchased
at the public offering price determined on the following business day. When
market conditions are extremely busy, it is possible that investors may
experience difficulties placing orders by telephone, and investors may wish to
place orders by mail.
The Fund reserves the right to reject any purchase order and to suspend the
offering of shares of the Fund. The Fund reserves the right to vary the initial
investment minimum and minimums for additional investments at any time. In
addition, the Adviser may waive the minimum initial investment requirement for
any investor.
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<PAGE>
Shareholders may purchase Class A Shares and Class D Shares of the Fund in one
of the ways explained below.
Purchases By Mail
Both classes of the Fund may be purchased initially by completing the
application accompanying this Prospectus and mailing it to the transfer agent,
together with a check payable to "America Asia Allocation Growth Fund". The
check or money order and application should be mailed to Fund/Plan Services,
Inc, 2 W. Elm Street, P.O. Box 874, Conshohocken, Pennsylvania 19428-0874. If
this is an initial purchase for Class A Shares, please send a minimum of $5,000
(or $2,000 for IRA and SEP accounts). If this is an initial purchase for Class D
Shares, please send a minimum of $10,000 (or $2,000 for IRA and SEP accounts).
Subsequent investments in an existing account in the Fund may be made at any
time by sending a check payable to "America Asia Allocation Growth Fund", c/o
Fund/Plan Services, Inc., P.O. Box 412797, Kansas City, Missouri 64141-2797.
Please enclose the stub of your account statement, and indicate the amount of
the investment.
Purchases By Wire Transfer
Before making an initial investment by wire, an investor must first telephone
the transfer agent at (800) or (610) in order to be assigned an account number.
The investor's name, account number, taxpayer identification number or Social
Security number and address must be specified in the wire. In addition, an
account application should be promptly forwarded to: Fund/Plan Services, Inc., 2
W. Elm Street, P.O. Box 874, Conshohocken, Pennsylvania 19428-0874. Shareholders
having an account with a commercial bank that is a member of the Federal Reserve
System may purchase shares of the Fund by requesting their bank to transmit
funds by wire to:
United Missouri Bank KC NA
ABA #10-10-00695
For: Fund/Plan Services, Inc.
A/C 98-7037-071-9
FBO "America Asia Allocation Growth Fund"
Shareholder Name and Account Number
Additional investments may be made at any time through the wire procedures
described above, which must include a shareholder's name and account number. The
shareholder's bank may impose a fee for investments by wire. The Fund will not
be responsible for the consequence of delays, including delays in the banking or
Federal Reserve wire systems.
Purchases Through Broker-Dealers
The Fund may accept telephone orders from brokers, financial institutions or
service organizations which have been previously approved by the Fund. It is the
responsibility of such brokers, financial institutions or service organizations
to promptly forward purchase orders and payments for the same to the Fund.
Shares of the Fund purchased through brokers, financial institutions, service
organizations, banks and bank trust departments, may charge the shareholder a
transaction fee or other fee for its services at the time of purchase.
Wire orders for shares of the Fund received by dealers prior to 4:00 p.m.
Eastern time, and received by Fund/Plan before 5:00 p.m. Eastern time on the
same day, are confirmed at that day's public offering price. Orders received by
dealers after 4:00 p.m. Eastern time are confirmed at the public offering price
on the following business day. It is the dealer's obligation to place the order
with Fund/Plan before 5:00 p.m. Eastern time.
Subsequent Investments
Once an account has been opened, subsequent purchases may be made by mail, bank
wire, automatic investing or direct deposit. The minimum for subsequent
investments for Class A Shares is $200 for all accounts. The minimum for
subsequent investments for Class D Shares is $200 for all accounts. When making
additional investments by mail, simply return the remittance portion of a
previous confirmation with your investment in the envelope that is provided with
each confirmation statement. Your check should be made payable to "America Asia
Allocation Growth Fund" and mailed to Fund/Plan Services, Inc., P.O. Box 412797,
Kansas City, Missouri 64141-2797. Orders to purchase shares are effective on the
day Fund/Plan receives your check or money order.
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<PAGE>
All investments must be made in U.S. dollars, and, to avoid fees and delays,
checks must be drawn only on banks located in the United States. A charge
(minimum of $20) will be imposed if any check used for the purchase of shares is
returned. The Fund and Fund/Plan each reserve the right to reject any purchase
order in whole or in part.
PURCHASE OF CLASS D SHARES
Class D Shares of the Fund may be purchased by registered investment advisers on
behalf of their clients at the net asset value next determined after receipt of
a purchase order in proper form by the transfer agent. Shares may also be bought
and sold through any securities dealer having a dealer agreement with FPBS, the
Fund's principal underwriter.
The minimum initial investment for Class D Shares is $10,000 ($2,000 for IRA and
SEP accounts) and subsequent purchases must be at least $200.
PURCHASE OF CLASS A SHARES
Class A Shares of the Fund are offered at the public offering price which is the
current net asset value per share next determined after receipt of a purchase
order in proper form by the transfer agent, plus any applicable sales charge.
The sales charge is a variable percentage of the offering price, depending upon
the amount of the sale. No sales charge will be assessed on the reinvestment of
distributions. See "Reduced Sales Charges". Shares may also be bought and sold
through any securities dealer having a dealer agreement with FPBS, the Fund's
principal underwriter.
The minimum initial investment for Class A Shares is $5,000 ($2,000 for IRA and
SEP accounts) and subsequent purchases must be at least $200.
The following table shows the regular sales charge on Class A Shares of the Fund
together with the reallowance paid to dealers and the agency commission paid to
brokers, collectively the "commission":
<TABLE>
<CAPTION>
Sales Charge as Reallowance and Bro-
Sales Charge as Percentage kerage Commission
Percentage of of Net Amount as Percentage of
Offering Price Invested Offering Price
Class A Shares Amount of Purchase
<S> <C> <C> <C>
Less than $100,000.............................. 5.00% 5.25% 4.75%
$ 100,000 or more but less than $200,000....... 4.50% 5.24% 4.25%
$ 200,000 or more but less than $300,000....... 4.00% 4.17% 3.85%
$ 300,000 or more but less than $500,000....... 3.50% 3.63% 3.35%
$ 500,000 or more but less than $1,000,000..... 2.50% 2.56% 2.40%
$1,000,000 and over............................. 1.50% 1.52% 1.45%
</TABLE>
The commissions shown in the table apply to sales through financial institutions
and intermediaries. Under certain circumstances, the Distributor or a
sub-distributor may use its own funds to compensate financial institutions and
intermediaries in amounts that are in addition to the commissions shown above.
The Distributor or a sub-distributor may, from time to time and at its own
expense, provide promotional incentives, in the form of cash or other
compensation, to certain financial institutions and intermediaries whose
registered representatives have sold or are expected to sell significant amounts
of shares of the Fund. Such other compensation may take the form of payments for
travel expenses, including lodging, incurred in connection with trips taken by
qualifying registered representatives to places within or outside of the United
States. Under certain circumstances, commissions up to the amount of the entire
sales charge may be reallowed to certain financial institutions and
intermediaries, who might then be deemed to be "underwriters" under the
Securities Act of 1933, as amended.
Reduced Sales Charges
The sales charge for purchases of Class A Shares of the Fund may be reduced
through Rights of Accumulation or Letter of Intent. To qualify for a reduced
sales charge, an investor must so notify his or her distributor at the time of
each purchase of shares which qualifies for the reduction.
Rights of Accumulation
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<PAGE>
A shareholder may qualify for a reduced sales charge by aggregating the net
asset values of shares requiring the payment of an initial sales charge,
previously purchased and currently owned, with the dollar amount of shares to be
purchased.
Letter of Intent
An investor of Class A Shares may qualify for a reduced sales charge immediately
by signing a non-binding Letter of Intent stating the investor's intention to
invest during the next 13 months a specified amount which, if made at one time,
would qualify for a reduced sales charge. The first investment cannot be made
more than 90 days prior to the date of the Letter of Intent. Any redemptions
made during the 13-month period will be subtracted from the amount of purchases
in determining whether the Letter of Intent has been completed. During the term
of the Letter of Intent, the transfer agent will hold shares representing 5.00%
of the indicated amount in escrow for payment of a higher sales load if the full
amount indicated in the Letter of Intent is not purchased. The escrowed shares
will be released when the full amount indicated has been purchased. If the full
amount indicated is not purchased within the 13-month period, a shareholder's
escrowed shares will be redeemed in an amount equal to the difference in the
dollar amount of sales charge actually paid and the amount of sales charge the
shareholder would have had to pay on his or her aggregate purchases if the total
of such purchases had been made at a single time. It is the shareholder's
responsibility to notify the transfer agent at the time the Letter of Intent is
submitted that there are prior purchases that may apply.
The term "single purchaser" refers to (i) an individual, (ii) an individual and
spouse purchasing shares of the Fund for their own account or for trust or
custodial accounts of their minor children, or (iii) a fiduciary purchasing for
any one trust, estate or fiduciary account, including employee benefit plans
created under Sections 401 and 457 of the Internal Revenue Code of 1986, as
amended, including related plans of the same employer.
Sales Charge Waiver
The sales charge may be waived for purchases of Class A Shares by the following
types of investors: (1) any financial institution or adviser regulated by
federal or state governmental authority when the institution or adviser is
purchasing shares for its own account or for an account for which the
institution or adviser is authorized to make investment decisions (i.e., a
discretionary account); (2) Trustees, Officers and employees of the Fund, the
Adviser, and the distributor (including members of their immediate families and
their retirement accounts or plans); (3) Trustees, officers and employees of the
Fund's service providers; (4) customers, clients or accounts of the Adviser or
other investment advisers or financial planners who charge a fee for their
services; (5) retirement accounts or plans, or deferred compensation plans and
trusts funding such plans for which a depository institution, trust company or
other fiduciary holds shares purchased through the omnibus accounts for the
Fund; (6) qualified employee benefits plans created under Sections 401, 43(b)(7)
or 457 of the Internal Revenue Code (but not IRA's or SEP's); (7) and any
non-profit institution investing $1 million or more. The sales charge is also
waived for any registered representatives, employees or principals of securities
dealers (including members of their immediate families) having a sales agreement
with the distributor.
HOW TO REDEEM SHARES
Shareholders of both classes of shares may redeem their shares of the Fund
without being subject to a sales charge on any business day that the NYSE is
open for business. Redemptions will be effective at the current net asset value
per share next determined after the receipt by the transfer agent of a
redemption request meeting the requirements described below.
Redemption By Mail
Shareholders may redeem their shares by submitting a written request for
redemption to Fund/Plan Services, Inc., 2 W. Elm Street, P.O. Box 874,
Conshohocken, Pennsylvania 19428-0874.
A written request must be in good order which means that it must: (i) identify
the shareholder's account name and account number; (ii) state the number of
shares or dollar amount to be redeemed and (iii) be signed by each registered
owner exactly as the shares are registered. To prevent fraudulent redemptions, a
signature guarantee for the signature
17
<PAGE>
of each person in whose name an account is registered is required for all
written redemption requests exceeding $10,000. A guarantee may be obtained from
any commercial bank, credit union, member firm of a national securities
exchange, registered securities association, clearing agency and savings and
loan association. A credit union must be authorized to issue signature
guarantees; notary public endorsement will not be accepted. Signature guarantees
will be accepted from any eligible guarantor institution that participates in a
signature guarantee program. The transfer agent may require additional
supporting documents for redemptions made by corporations, executors,
administrators, trustees or guardians and retirement plans.
Redemption By Telephone
Shareholders who have so indicated on the application, or have subsequently
arranged in writing to do so, may redeem shares by calling the transfer agent at
(800) or (610) during normal business hours. In order to arrange for redemption
by wire or telephone after an account has been opened, or to change the bank or
account designated to receive redemption proceeds, a written request with a
signature guarantee must be sent to the transfer agent at the address listed
above, under the caption "Redemption By Mail".
The Fund reserves the right to refuse a wire or telephone redemption if it is
believed advisable to do so. Procedures for redeeming Fund shares by wire or
telephone may be modified or terminated at any time.
During periods of unusual economic or market changes, telephone redemptions may
be difficult to implement. In such event, shareholders should follow the
procedures for redemption by mail.
General Redemption Information
A redemption request will not be deemed to be properly received until the
transfer agent receives all required documents in proper form. If you have any
questions with respect to the proper form for redemption requests you should
contact the transfer agent at (800) or (610) .
Redemptions will be processed only on a business day during which the NYSE is
open for business. Redemptions will be effective at the current net asset value
per share next determined after the receipt by the transfer agent of a
redemption request meeting the requirements described above. The Fund normally
sends redemption proceeds on the next business day, but, in any event,
redemption proceeds are sent within seven calendar days of receipt of a
redemption request in proper form. Payment may also be made by wire directly to
any bank previously designated by an investor on his or her new account
application. There is a $9.00 charge for redemptions made by wire to domestic
banks. Wires to foreign or overseas banks may be charged at higher rates. It
should also be noted that banks may impose a fee for wire services. In addition,
there may be fees for redemptions made through brokers, financial institutions
and service organizations.
Except as noted below, redemption requests received in proper form by the
transfer agent prior to the close of regular trading hours on the NYSE on any
business day on which the Fund calculates its net asset value are effective as
of that day. Redemption requests received after the close of the NYSE will be
effected at the net asset value per share determined on the next business day
following receipt. No redemption will be processed until the transfer agent has
received a completed application with respect to the account.
The Fund will satisfy redemption requests for cash to the fullest extent
feasible, as long as such payments would not, in the opinion of the Board of
Trustees, result in the necessity of the Fund to sell assets under
disadvantageous conditions or to the detriment of the remaining shareholders of
the Fund.
Pursuant to the Fund's Trust Instrument, however, payment for shares redeemed
may also be made in kind, or partly in cash and partly in-kind. The Fund has
elected, pursuant to Rule 18f-1 under the 1940 Act to redeem its shares solely
in cash up to the lesser of $250,000 or 1% of the net asset value of the Fund,
during any 90 day period for any one shareholder. Any portfolio securities paid
or distributed in-kind would be in readily marketable securities and valued in
the manner described below. See "Net Asset Value." In the event that an in-kind
distribution is made, a shareholder may incur additional expenses, such as
brokerage commissions, on the sale or other disposition of the securities
received from the Fund. In-kind payments need not constitute a cross-section of
the Fund's portfolio.
The Fund may suspend the right of redemption or postpone the date of payment for
more than seven days during any period when (1) trading on the NYSE is
restricted or the NYSE is closed, other than customary weekend and holiday
18
<PAGE>
closings; (2) the Securities and Exchange Commission has, by order, permitted
such suspension; (3) an emergency, as defined by rules of the Securities and
Exchange Commission, exists making disposal of portfolio investments or
determination of the value of the net assets of the Fund not reasonably
practicable.
Shares of the Fund may be redeemed through certain brokers, financial
institutions, service organizations, banks, and bank trust departments who may
charge the investor a transaction or other fee for their services at the time of
redemption. Such additional transaction fees would not otherwise be charged if
the shares were redeemed directly from the Fund.
Telephone Transactions
Shareholders who wish to initiate redemption transactions by telephone must
first elect the option, as described above. Neither the Fund nor any of its
service contractors will be liable for any loss or expense in acting upon
telephone instructions that are reasonably believed to be genuine. In this
regard, the Fund and its transfer agent require personal identification
information before accepting a telephone redemption. To the extent that the Fund
or its transfer agent fail to use reasonable procedures to verify the
genuineness of telephone instructions, the Fund may be liable for losses due to
fraudulent or unauthorized instructions. The Fund reserves the right to refuse a
telephone redemption if it is believed advisable to do so. Written confirmation
will be provided for all redemption transactions initiated by telephone.
Minimum Balances
Due to the relatively high cost of maintaining smaller accounts, the Fund
reserves the right to involuntarily redeem shares in any account at its then
current net asset value (which will be promptly paid to the shareholder) if at
any time the total investment does not have a value of at least $500 as a result
of redemptions, but not market fluctuations. A shareholder will be notified that
the value of his or her account is less than the required minimum and such
shareholder will be allowed at least 60 days to bring the value of his or her
account up to the minimum before the redemption is processed.
SHAREHOLDER SERVICES
The following special services are available to shareholders of the Fund. There
are no charges for the programs noted below and a shareholder may change or stop
these plans at any time by written notice to the Fund.
Automatic Investment Plan
Once an account has been opened, a shareholder can make additional monthly
purchases of shares of the Fund through an automatic investment plan. An
investor may authorize the automatic withdrawal of funds from his or her bank
account by opening his or her account with a minimum of $5,000 for Class A
Shares or $10,000 for Class D Shares, and completing the appropriate section on
the new account application enclosed with this Prospectus. Subsequent monthly
investments are subject to a minimum required amount of $100.
Retirement Plans
The Fund is available for investment by pension and profit sharing plans
including Individual Retirement Accounts, SEP, Keogh, 401(k) and 403(b) plans
through which an investor may purchase Fund shares. For details concerning any
of the retirement plans, please call the Fund at (800) or (610) .
NET ASSET VALUE
The net asset value per share is calculated separately for each class of the
Fund and is computed once daily as of the close of regular trading on the NYSE,
currently 4:00 p.m. Eastern time. Currently, the NYSE is closed on the following
holidays or days on which the following holidays are observed: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas.
The net asset value per share is computed by adding the value of all securities
and other assets in the portfolio, deducting any liabilities, and dividing by
the total number of outstanding shares. Expenses are accrued daily and applied
when determining the net asset value. The Fund's equity securities are valued
based on market quotations
19
<PAGE>
or, when no market quotations are available, at fair value as determined in good
faith by, or under direction, of the Board of Trustees.
Foreign securities are valued as of the close of trading on the primary exchange
on which they trade. The value is then converted to U.S. dollars using current
exchange rates. Securities listed on any national securities exchange are valued
at their last sale price on the exchange where the securities are principally
traded or, if there has been no sale on that date, at the mean between the last
reported bid and asked prices. Securities traded over-the-counter are priced at
the mean of the last bid and asked prices. Listed securities which are traded by
foreign investors in the Greater Asia Region in over-the-counter transactions
are valued at prices at which it is expected that such securities may be sold,
as determined in good faith by, or under the direction of, the Board of
Trustees.
Securities are valued through valuations obtained from a commercial pricing
service or at the most recent mean of the bid and asked prices provided by
investment dealers in accordance with procedures established by the Board of
Trustees.
Short-term investments having a maturity of 60 days or less are valued at
amortized cost, which the Board of Trustees believes represents fair value. When
a security is valued at amortized cost, it is valued at its cost when purchased,
and thereafter by assuming a constant amortization to maturity of any discount
or premium, regardless of the impact of fluctuating interest rates on the market
value of the instrument. All other securities and other assets are valued at
their fair value as determined in good faith under procedures established by and
under the supervision of the Board of Trustees.
Foreign currency exchange rates are generally determined prior to the close of
trading on the NYSE. Occasionally, events affecting the value of foreign
investments and such exchange rates occur between the time at which they are
determined and the close of trading on the NYSE. Such events would not normally
be reflected in a calculation of the Fund's net asset value on that day. If
events that materially affect the value of the Fund's foreign investments or the
foreign currency exchange rates occur during such period, the investments will
be valued at their fair value as determined in good faith by, or under the
direction of, the Board of Trustees. Foreign securities held by the Fund may be
traded on days and at times when the NYSE is closed. Accordingly, the net asset
value of the Fund may be significantly affected on days when shareholders have
no access to the Fund.
For valuation purposes, quotations of foreign portfolio securities, other assets
and liabilities and forward contracts stated in foreign currency are translated
into U.S. dollar equivalents at the prevailing market rates.
Net asset value is calculated separately for each class of the Fund based on
expenses applicable to the particular class. Although the methodology and
procedures for determining net asset value are identical for the Fund's classes,
the net asset value of the classes may differ because of the different fees and
expenses charged to each class.
DIVIDENDS AND TAXES
Dividends
The Fund will distribute its net investment income annually in December. Any net
gain realized from the sale of portfolio securities and net gains realized from
foreign currency transactions are distributed at least once each year unless
they are used to offset losses carried forward from prior years, in which case
no such gain will be distributed. Such income dividends and capital gain
distributions are reinvested automatically in additional shares at net asset
value, unless a shareholder elects to receive them in cash. Distribution options
may be changed at any time by requesting a change in writing.
Any check tendered in payment of dividends or other distributions which cannot
be delivered by the post office or which remains uncashed for a period of more
than one year may be reinvested in the shareholder's account at the then current
net asset value, and the dividend option may be changed from cash to reinvest.
Dividends are reinvested on the ex-dividend date (the "ex-date") at the net
asset value determined at the close of business on that date. Dividends and
distributions are treated the same for tax purposes whether received in cash or
reinvested in additional shares. Please note that shares purchased shortly
before the record date for a dividend or distribution may have the effect of
returning capital although such dividends and distributions are subject to
taxes.
20
<PAGE>
Taxes
The Fund intends to conduct its operations so as to qualify as a "regulated
investment company" for purposes of the Internal Revenue Code of 1986, as
amended (the "Code"), which will relieve the Fund of any liability for federal
income tax to the extent that its earnings and net realized capital gains are
distributed to shareholders. To so qualify, the Fund will, among other things,
limit its investments so that, at the close of each quarter of its taxable year,
(i) not more than 25% of the market value of the Fund's total assets will be
invested in the securities of any single issuer and (ii) with respect to 50% of
the market value of its total assets, not more than 5% of the market value of
its total assets will be invested in the securities of any single issuer, and
the Fund will not own more than 10% of the outstanding voting securities of any
single issuer.
An investment in the Fund has certain tax consequences, depending on the type of
account. The Fund will distribute all of its net investment income to
shareholders. Distributions are subject to federal income tax and may also be
subject to state and local income taxes. Distributions are generally taxable
when they are paid, whether in cash or by reinvestment in additional shares,
except that distributions declared in October, November or December and paid in
the following January are taxable as if they were paid on December 31. If you
have a qualified retirement account, taxes are generally deferred until
distributions are made from the retirement account.
For federal income tax purposes, income dividends and short-term capital gain
distributions are taxed as ordinary income. Distributions of net capital gains
(the excess of net long-term capital gain over net short-term capital loss) are
usually taxed as long-term capital gains, regardless of how long a shareholder
has held the Fund's shares. The tax treatment of distributions of ordinary
income or capital gains will be the same whether the shareholder reinvests the
distributions or elects to receive them in cash.
Shareholders may be subject to a 31 percent back-up withholding on reportable
dividend and redemption payments ("back-up withholding") if a certified taxpayer
identification number is not on file with the Fund, or if to the Fund's
knowledge, an incorrect number has been furnished. An individual's taxpayer
identification number is his/her social security number.
Shareholders will be advised annually of the source and tax status of all
distributions for federal income tax purposes. Information accompanying a
shareholder's statement will show the portion of those distributions that are
not taxable in certain states. Further information regarding the tax
consequences of investing in the Fund is included in the Statement of Additional
Information. The above discussion is intended for general information only.
Investors should consult their own tax advisers for more specific information on
the tax consequences of particular types of distributions.
The Fund intends to make sufficient distributions prior to the end of each
calendar year in order to avoid liability for federal excise tax.
Dividends and interest received by the Fund from sources within foreign
countries may be subject to foreign income taxes withheld at the source. To the
extent that the Fund is liable for foreign income taxes so withheld, the Fund
intends to operate so as to meet the requirements of the Code to pass through to
the shareholders credit for foreign income taxes paid. Although the Fund intends
to meet Code requirements, in order to pass through credit for such taxes, there
can be no assurance that the Fund will be able to do so.
Sale, exchange or redemption of the Fund's shares is a taxable event to the
shareholder.
PERFORMANCE INFORMATION
Performance information such as total return for the Fund may be quoted in
advertisements or in communications to shareholders. Such performance
information may be useful in reviewing the performance of the Fund and for
providing a basis for comparison with other investment alternatives. However,
because the net investment return of the Fund changes in response to
fluctuations in market conditions, interest rates and Fund expenses, any given
performance quotation should not be considered representative of the Fund's
performance for any future period. The value of an investment in the Fund will
fluctuate and an investor's shares, when redeemed, may be worth more or
21
<PAGE>
less than their original cost. Total return and yield are calculated separately
for Class A Shares and Class D Shares.
The Fund's total return is the change in value of an investment in the Fund over
a particular period, assuming that all distributions have been reinvested. Thus,
total return reflects not only income earned, but also variations in share
prices at the beginning and end of the period. Average annual return reflects
the average percentage change per year in the value of an investment in the
Fund. Aggregate total return reflects the total percentage change over the
stated period. Please refer to the Statement of Additional Information for more
information on performance.
The performance of Class D Shares will normally be higher than for Class A
Shares because of the sales charge which may be applicable to Class A Shares.
Shareholders may obtain current performance information about the Fund by
calling (800) or (610) .
GENERAL INFORMATION
Trustees and Officers of the Fund
The Trustees of the Fund have overall responsibility for the operation of the
Fund. The officers of the Fund who are employees or officers of the Adviser
serve without compensation from the Fund.
Description of Shares
The Trust is authorized to issue an unlimited number of shares of beneficial
interest with no par value. Shares of the Fund represent equal proportionate
interests in the assets of the Fund only, and have identical voting, dividend,
redemption, liquidation and other rights. All shares issued are fully paid and
non-assessable, and shareholders have no preemptive or other right to subscribe
to any additional shares. Currently, there are two classes of shares issued by
the Fund. The validity of shares of beneficial interest offered by this
prospectus will be passed on by Kirkpatrick & Lockhart LLP, 1800 Massachusetts
Avenue, N.W., Washington, D.C. 20036-1800. All accounts will be maintained in
book entry form and no share certificates will be issued.
Voting Rights
A shareholder is entitled to one vote for each full share held (and a fractional
vote for each fractional share held). All shares of the Fund participate equally
in regard to dividends, distributions, and liquidations with respect to the
Fund. Shareholders do not have preemptive, conversion or cumulative voting
rights.
Shareholder Meetings
The Trustees are not required, and do not intend, to hold annual meetings of
shareholders. The Trustees have undertaken to the SEC, however, that they will
promptly call a meeting of shareholders for the purpose of voting upon the
question of removal of any Trustee when requested to do so by holders of not
less than 10% of the outstanding shares of the Fund. In addition, subject to
certain conditions, shareholders of the Fund may apply to the Fund to
communicate with other shareholders to request a shareholders' meeting to vote
upon the removal of a Trustee or Trustees.
Shareholder Reports and Inquiries
The Trust issues unaudited financial information semiannually and audited
financial statements annually. Shareholder inquiries should be addressed to the
Fund c/o Sage/Tso Investment Management L.P., 7799 Leesburg Pike, Suite 900,
Falls Church, Virginia 22043, (800) or (703)255-1233. Purchase and redemption
transactions should be made through the transfer agent by calling (800) or
(610).
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<PAGE>
DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS
The following is a description of permitted investments for the Fund, and the
associated risk factors:
ADRs and EDRs - For many foreign securities, there are United States dollar
denominated American Depositary Receipts ("ADRs"), which are bought and sold in
the Unites States and are issued by domestic banks. ADRs represent the right to
receive securities of foreign issuers deposited in the domestic bank or a
correspondent bank. ADRs do not eliminate all the risk inherent in investing in
the securities of foreign issuers. By investing in ADRs rather than directly in
foreign issuer's stock however, the Fund will avoid currency risks during the
settlement period for either purchases or sales. In general, there is a large,
liquid market in the United States for most ADRs. ADRs may be available through
"sponsored" or "unsponsored" facilities. A sponsored facility is established
jointly by the issuer of the security underlying the receipt and a depositary;
whereas, an unsponsored facility may be established by a depositary without
participation by the issuer of the underlying security. Holders of the
unsponsored depositary receipts generally bear all the costs of the unsponsored
facility. The depositary of an unsponsored facility frequently is under no
obligation to distribute shareholder communications received from the issuer of
the deposited security or to pass through, to the holders of the receipts,
voting rights with respect to the deposited securities. The Fund may also invest
in European Depositary Receipts ("EDRs") which are receipts evidencing an
arrangement with a European bank similar to that for ADRs and are designed for
use in the European securities markets. EDRs are not necessarily denominated in
the currency of the underlying security.
Bankers' Acceptances - Bankers' acceptances are bills of exchange or time drafts
drawn on and accepted by a commercial bank or trust company. Bankers'
acceptances are used by manufacturers and exporters to finance the shipment and
storage of goods. Maturities are generally six months or less.
Certificates of Deposit - Certificates of deposit are interest bearing
instruments with a specific maturity. They are issued by banks and savings and
loan institutions in exchange for the deposit of funds and normally can be
traded in the secondary market prior to maturity. Certificates of deposit with
penalties for early withdrawal will be considered illiquid.
Commercial Paper - Commercial paper is a term used to describe unsecured
short-term promissory notes issued by banks, municipalities, corporations and
other entities. Maturities on these issues vary from a few to 270 days.
Convertible Securities - Convertible securities are corporate securities that
are exchangeable for a set number of another security at a prestated price.
Convertible securities typically have characteristics similar to both fixed
income and equity securities. Because of the conversion feature, the market
value of a convertible security tends to move with the market value of the
underlying stock. The value of a convertible security is also affected by
prevailing interest rates, the credit quality of the issuer, and any call
provisions.
Fixed Income Securities - Fixed income securities are debt obligations issued by
corporations, municipalities and other borrowers. The market value of fixed
income investments will change in response to interest rate changes and other
factors. During periods of falling interest rates, the values of outstanding
fixed income securities generally rise. Conversely, during periods of rising
interest rates, the values of such securities generally decline. Moreover, while
securities with longer maturities tend to produce higher yields, the prices of
longer maturity securities are also subject to greater market fluctuations as a
result of changes in interest rates. Changes by recognized agencies in the
rating of any fixed income security and in the ability of an issuer to make
payments of interest and principal will also affect the value of these
investments. Changes in the value of portfolio securities will not affect cash
income derived from these securities but will affect the Fund's net asset value.
Investment Companies
The Fund may invest in shares of other investment companies including foreign
investment companies. Some of the countries in which the Fund invests may not
permit direct investment. Investments in such countries may only be permitted
through foreign government approved or authorized investment vehicles, which may
include investment companies. Investing through such vehicles may involve
frequent or layered fees or expenses and may, as well, be subject to limitations
under the Investment Company Act of 1940 (the "1940 Act"). Under the 1940 Act,
the Fund may invest up to 10% of its assets in shares of investment companies
and up to 5% of its assets in any one investment
23
<PAGE>
company as long as the investment does not represent more than 3% of the voting
stock of the acquired investment company.
Forward Foreign Currency Contracts, Currency Options, and Currency Futures
Contracts
In order to hedge against possible changes in the exchange rates of foreign
currencies in relation to the U.S. dollar, the Fund may enter into forward
currency exchange contracts and use options on foreign currencies, but only for
the purpose of hedging. Forward foreign currency contracts involve obligations
to purchase or sell a specified currency at a future date, which may be any
fixed number of days from the date of the contract agreed upon by the parties,
at a price set at the time of the contract. The Fund may enter into forward
contracts to sell foreign currency provided that no more than 15% of the Fund's
total assets would be required to purchase offsetting contracts.
Hedging
The Fund may engage in various portfolio strategies to reduce certain risks of
its investments and to attempt to enhance income. The Fund may invest up to 5%
of its total assets, taken at market value at the time of investment, in
premiums on such hedging strategies. These strategies currently include the use
of options, forward currency exchange contracts and futures contracts and
options thereon. The Fund's ability to use these strategies may be limited by
market conditions, regulatory limits and tax considerations and there can be no
assurance that any of these strategies will succeed.
IDRs
IDRs (International Depositary Receipts, also known as GDRs or Global Depositary
Receipts) are similar to ADRs except that they are bearer securities for
investors or traders outside the U.S., and for companies wishing to raise equity
capital in securities markets outside the U.S. Most IDRs have been used to
represent shares although it is possible to use them for bonds, commercial paper
and certificates of deposit. IDRs can be convertible to ADRs in New York making
them particularly useful for arbitrage between the markets. The Fund has no
current intention to invest in unsponsored IDRs.
Options and Futures
Although the Fund has no present intentions to engage in transactions involving
the use of options and futures contracts, the Fund may engage in such
transactions for purposes of increasing its investment return or hedging against
market changes. The Fund may buy and sell stock index futures contracts for
hedging purposes. An "index future" is a contract to buy or sell units of a
particular stock index at an agreed price on a specified future date. Depending
on the change in value of the index between the time when the Fund enters into
and terminates an index future transaction, the Fund realizes a gain or loss.
The Fund may buy and sell call and put options and index futures or on stock
indices in addition to or as an alternative to purchasing or selling index
futures or, to the extent permitted by applicable law, to earn additional
income. The Fund may seek to increase its current return by writing covered call
and put options on securities it owns or in which it may invest. The Fund
receives a premium for writing a call or put option, which increases the Fund's
return if the option expires unexercised or is closed out at a net profit. When
the Fund writes a call option, it gives up the opportunity to profit from any
increase in the price of a security above the exercise price of the option.
Repurchase Agreements
Repurchase agreements are agreements by which the Fund obtains a security and
simultaneously commits to return the security to the seller at an agreed upon
price on an agreed upon date within a number of days from the date of purchase.
The custodian will hold the security as collateral for the repurchase agreement.
The Fund bears a risk of loss in the event the other party defaults on its
obligations and the Fund is delayed or prevented from exercising its right to
dispose of the collateral, or if the Fund realizes a loss on the sale of the
collateral. The Fund will enter into repurchase agreements only with financial
institutions deemed to present minimal risk of bankruptcy during the term of the
agreement based on established guidelines. Repurchase agreements are considered
loans under the 1940 Act.
Restricted Securities - Restricted securities are securities that may not be
sold to the public without registration under the Securities Act of 1933, as
amended, absent an exemption from registration.
U.S. Government Securities - U.S. Government Securities include obligations
issued by agencies or instrumentalities of the U.S. Government including, among
others, Export Import Bank of the United States, Farmers Home Administration,
Federal Farm Credit System, Federal Housing Administration, Maritime
Administration, Small
24
<PAGE>
Business Administration, and The Tennessee Valley Authority. Obligations of
instrumentalities of the U.S. Government include securities issued by, among
others, Federal Home Loan Banks, Federal Home Loan Mortgage Corporation, Federal
Intermediate Credit Banks, Federal Land Banks, Federal National Mortgage
Association and the U.S. Postal Service. Some of these securities are supported
by the full faith and credit of the U.S. Treasury (e.g., Government National
Mortgage Association), others are supported by the right of the issuer to borrow
from the Treasury (e.g., Federal Farm Credit Bank) and still others are
supported only by the credit of the instrumentality (e.g., Federal National
Mortgage Association). Guarantees of principal by agencies or instrumentalities
of the U.S. Government may be a guarantee of payment at the maturity of the
obligation so that in the event of a default prior to maturity there might not
be a market and thus no means of realizing on the obligation prior to maturity.
Guarantees as to the timely payment principal and interest do not extend to the
value or yield of these securities nor to the value of the Fund's shares.
Warrants - Warrants are instruments that give holders the right, but not the
obligation, to buy shares of a company at a given price during a specified
period.
25
<PAGE>
INVESTMENT ADVISER
Sage/Tso Investment Management L.P.
7799 Leesburg Pike, Suite 900
Falls Church, Virginia 22043
(703)-255-1233
UNDERWRITER
Fund/Plan Broker Services, Inc.
2 W. Elm Street
Conshohocken, Pennsylvania 19428
(800)
(610)
SHAREHOLDER SERVICES
Fund/Plan Services, Inc.
2 W. Elm Street
Conshohocken, Pennsylvania 19428
(800)
(610)
CUSTODIAN
The Bank of New York
90 Washington Street
New York, New York 10286
LEGAL COUNSEL
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, DC 20036-1800
AUDITORS
[ To Be Determined ]
For Additional Information about America Asia Allocation Growth Fund call:
(800)
(610)
26
<PAGE>
Subject to Completion - March 26, 1996
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the
registration statement becomes effective. This
Statement of Additional Information does not
constitute a prospectus.
AMERICA ASIA ALLOCATION GROWTH FUND
STATEMENT OF ADDITIONAL INFORMATION
March 26, 1996
- --------------------------------------------------------------------------------
This Statement of Additional Information dated March 26, 1996 is not a
prospectus but should be read in conjunction with the Prospectus describing
Class A Shares and Class D Shares of the America Asia Allocation Growth Fund
(the "Fund") dated March 26, 1996. The Prospectus may be amended or supplemented
from time to time. No investment in shares should be made without first reading
the Prospectus. This Statement of Additional Information is intended to provide
additional information regarding the activities and operations of the Fund, and
should be read in conjunction with the Prospectus. A copy of the Prospectus may
be obtained without charge from Sage/Tso Investment Management L.P. (the
"Adviser") at the addresses and telephone numbers below.
Underwriter: Adviser:
Fund/Plan Broker Services, Inc. Sage/Tso Investment Management L.P.
2 W. Elm Street 7799 Leesburg Pike, Suite 900
Conshohocken, Pennsylvania 19428 Falls Church, Virginia 22043
(610) (703) 255-1233
No person has been authorized to give any information or to make any
representations not contained in this Statement of Additional Information
or in the Prospectus in connection with the offering made by the
Prospectus and, if given or made, such information or representations must
not be relied upon as having been authorized by the Trust or its distributor.
The Prospectus does not constitute an offering by the Trust or by the
distributor in any jurisdiction in which such offering may not lawfully be made.
27
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
The Trust and the Fund...........................................................................................29
The Greater Asia Region..........................................................................................29
Investment Policies and Techniques...............................................................................29
American Depository Receipts..................................................................................29
Convertible Securities........................................................................................30
Foreign Securities............................................................................................30
Repurchase Agreements.........................................................................................30
Loans of Portfolio Securities.................................................................................30
Securities of Other Investment Companies......................................................................31
Illiquid Securities...........................................................................................31
Rule 144A Securities..........................................................................................31
Other Investments.............................................................................................31
Investment Restrictions..........................................................................................31
Investment Advisory and Other Services
Investment Advisory Agreement.................................................................................33
Administrator.................................................................................................33
Underwriter...................................................................................................34
Distributor...................................................................................................34
Trustees and Officers............................................................................................34
Net Asset Value..................................................................................................35
Taxes............................................................................................................35
Federal Income Tax............................................................................................35
Foreign Taxes.................................................................................................36
Portfolio Transactions...........................................................................................36
Performance Information
In General....................................................................................................36
Total Return Calculation......................................................................................37
Yield Calculation.............................................................................................37
Performance and Advertisements ...............................................................................38
Other Information................................................................................................39
Shareholder Liability.........................................................................................39
Limitations on Trustees' Liability............................................................................39
</TABLE>
28
<PAGE>
THE TRUST AND THE FUND
This Statement of Additional Information relates to America Asia Allocation
Growth Fund (the "Fund"), a separate series of Sage/Tso Trust (the "Trust"), a
diversified, open-end management company established on February 9, 1996 under
Delaware law as a Delaware business trust. The Trust Instrument permits the
Trust to offer separate series of shares of beneficial interest. The Trust
currently is comprised of one series, which offers its shares through two
separate classes: Class A Shares and Class D Shares. To the extent that the
Trust is a newly formed entity, it has no prior history.
THE GREATER ASIA REGION
The Adviser believes that the rapidly growing economies in the Greater Asia
Region offer attractive opportunities for investment. The newly industrialized
nations of this region are in an earlier, more dynamic growth stage of their
development. The Adviser believes that the continued growth opportunities exist
due to structural changes taking place throughout the region. The relaxation of
trade barriers and the freer movement of capital are increasing the flow of
commerce within the region and fostering economic independence. As capital
investment increases, many of the Greater Asian Region countries are developing
more efficient capital markets for investment.
The following countries in the Greater Asia Region are designated as emerging or
less developed countries: India, The Philippines, Indonesia, Singapore,
Malaysia, Taiwan, Thailand and China. Although there is no universally accepted
definition, a developing country is generally considered to be a country which
is in the initial stages of industrialization. In these countries, the Fund
effectively may invest through investment funds subject to the provisions of the
Investment Company Act of 1940 relating to the purchase of securities of
investment companies.
The Chinese, Hong Kong and Taiwanese stock markets are undergoing a period of
growth and change which may result in trading volatility and difficulties in the
settlement and recording of transactions, and in interpreting and applying the
relevant law and regulations. In particular, the securities industry in China is
not well developed. China has no securities laws of nationwide applicability.
China governmental actions can have a significant effect on the economic
conditions in the Greater Asia Region, which could adversely affect the value
and liquidity of the Fund's investments. Although the Chinese Government has
recently begun to institute economic reform policies, there can be no assurances
that it will continue to pursue such policies or, if it does, that such policies
will succeed.
China and certain of the other Greater Asia Region countries do not have
comprehensive systems of laws, although substantial changes have occurred in
China in this regard in recent years. The bankruptcy laws pertaining to state
enterprises have rarely been used and are untried in regard to an enterprise
with foreign shareholders. The uncertainties faced by foreign investors in China
are exacerbated by the fact that many laws, regulations and decrees of China are
not publicly available, but merely circulated internally. Similar risks exist in
other Greater Asia Region countries.
INVESTMENT POLICIES AND TECHNIQUES
The following supplements the information contained in the Prospectus for the
Fund regarding the permitted investments and risk factors and the investment
objective and policies of the Fund.
American Depository Receipts
The Fund may invest in foreign securities by purchasing American Depository
Receipts ("ADRs"). These securities may not necessarily be denominated in the
same currency as the securities into which they may be converted. Generally,
ADRs, in registered form, are denominated in U.S. dollars and are designed for
use in the U.S. securities markets. ADRs are receipts typically issued by a U.S.
bank or trust company evidencing ownership of the underlying securities. For
purposes of the Fund's investment policies, ADRs are deemed to have the same
classification as the underlying securities they represent. Thus, an ADR
representing ownership of common stock will be treated as common stock. ADR
facilities may be established as either "unsponsored" or "sponsored". While ADRs
issued under these two types of facilities are similar in some respects, there
are distinctions between them relating to the
29
<PAGE>
rights and obligations of ADR holders and the practices of market participants.
Convertible Securities
The Fund may invest in convertible securities. Common stock occupies the most
junior position in a company's capital structure. Convertible securities entitle
the holder to exchange such securities for a specified number of shares of
common stock, usually of the same company, at specified prices within a certain
period of time, and to receive interest or dividends until the holder elects to
convert. The provisions of any convertible security determine its ranking in a
company's capital structure. In the case of subordinated convertible debentures,
the holder's claims on assets and earnings are subordinated to the claims of
other creditors, and are senior to the claims of preferred and common
shareholders. In the case of preferred stock and convertible preferred stock,
the holder's claims on assets and earnings are subordinated to the claims of all
creditors but are senior to the claims of common shareholders.
To the extent that a convertible security's investment value is greater than its
conversion value, its price will be primarily a reflection of such investment
value, and its price will be likely to increase when interest rates fall and
decrease when interest rates rise, as is the case with a fixed-income security.
If the conversion value exceeds the investment value, the price of the
convertible security will rise above its investment value and, in addition, may
sell at some premium over its conversion value. At such times, the price of the
convertible security will tend to fluctuate directly with the price of the
underlying equity security.
Foreign Securities
Investments in securities of foreign issuers may subject the Fund to investment
risks that differ in some respects from those related to investments in
obligations of U.S. domestic issuers. Such risks include future adverse
political and economic developments, the possible imposition of withholding
taxes on interest or other income, possible seizure, nationalization or
expropriation of foreign deposits, the possible establishment of exchange
controls or taxation at the source, greater fluctuations in value due to changes
in currency exchange rates, or the adoption of other foreign governmental
restrictions which might adversely affect the payment of principal and interest
on such obligations. Such investments may also have higher custodial fees and
sales commission than domestic investments. Foreign issuers of securities or
obligations are often subject to accounting treatment and engage in business
practices different from those regarding domestic issuers of similar securities
or obligations. Foreign branches of U.S. banks and foreign banks may be subject
to less stringent reserve requirements than those applicable to domestic
branches of U.S. banks. In addition, foreign markets may be characterized by
lower liquidity, greater price volatility, less regulation and higher
transaction costs than U.S. markets.
Repurchase Agreements
The repurchase price under the repurchase agreements described in the
Prospectuses generally equals the price paid by the Fund plus interest
negotiated on the basis of current short-term rates (which may be more or less
than the rate on the securities underlying the repurchase agreement). Repurchase
agreements may be considered to be loans by the Fund under the Investment
Company Act of 1940, as amended (the "1940 Act").
The financial institutions with whom the Fund may enter into repurchase
agreements are banks and non-bank dealers of U.S. Government securities that are
listed on the Federal Reserve Bank of New York's list of reporting dealers and
banks, if such banks and non-bank dealers are deemed creditworthy by the
Adviser. The Adviser will continue to monitor the creditworthiness of the seller
under a repurchase agreement, and will require the seller to maintain during the
term of the agreement the value of the securities subject to the agreement at
not less than the repurchase price. The Fund will only enter into a repurchase
agreement where the market value of the underlying security, including interest
accrued, will at all times be equal to or exceed the value of the repurchase
agreement.
The Fund may invest in repurchase agreements with foreign parties or a
repurchase agreement based on securities denominated in foreign currencies.
Legal structures in foreign countries, including bankruptcy laws, may offer less
protection to investors such as the Fund. Furthermore, foreign repurchase
agreements generally involve greater risks than repurchase agreements made in
the United States.
Loans of Portfolio Securities
The Fund may lend portfolio securities to broker-dealers and financial
institutions provided that (1) the loan is secured continuously by collateral
marked-to-market daily, and maintained in an amount at least equal to the
current market
30
<PAGE>
value of the securities loaned; (2) the Fund may call the loan at any time and
receive the securities loaned; (3) the Fund will receive any interest or
dividends paid on the loaned securities and (4) the aggregate market value of
securities loaned by the Fund will not at any time exceed 33% of the total
assets of the Fund.
Collateral will consist of U.S. government securities, cash equivalents or
irrevocable letters of credit. Loans of securities involve a risk that the
borrower may fail to return the securities or may fail to maintain the proper
amount of collateral. Therefore, the Fund will only enter into portfolio loans
after a review by the Adviser, under the supervision of the Board of Trustees,
including a review of the creditworthiness of the borrower. Such reviews will be
monitored on an ongoing basis.
Illiquid Securities
The Board of Trustees has delegated the function of making day-to-day
determinations of liquidity to the Adviser pursuant to guidelines reviewed by
the Board of Trustees. The Adviser will monitor the liquidity of securities held
by the Fund, and report periodically on such determinations to the Board of
Trustees.
Rule 144A Securities
The Fund may invest in securities that are exempt from the registration
requirements of the Securities Act of 1933 pursuant to Securities Exchange
Commission ("SEC") Rule 144A. Those securities, purchased pursuant to Rule 144A,
are traded among qualified institutional buyers, and are subject to the Fund's
limitation on illiquid investment.
Investing in securities under Rule 144A could have the effect of increasing the
levels of the Fund's illiquidity to the extent that qualified institutional
buyers become, for a time, uninterested in purchasing these securities. The Fund
will limit its investments in securities of issuers which the Fund is restricted
from selling to the public without registration under the Securities Act of 1933
to no more than 10% of the Fund's net assets, excluding restricted securities
eligible for resale pursuant to Rule 144A that have been determined to be liquid
by the Fund's Board of Trustees.
Other Investments
Subject to prior disclosure to shareholders, the Board of Trustees may, in the
future, authorize the Fund to invest in securities other than those listed here
and in the prospectus, provided that such investment would be consistent with
the Fund's investment objective, and that it would not violate any fundamental
investment policies or restrictions applicable to the Fund.
INVESTMENT RESTRICTIONS
The investment restrictions set forth below are fundamental restrictions and may
not be changed without the approval of a majority of the outstanding voting
shares (as defined in the 1940 Act) of the Fund. Unless otherwise indicated, all
percentage limitations listed below apply only at the time of the transaction.
Accordingly, if a percentage restriction is adhered to at the time of
investment, a later increase or decrease in the percentage which results from a
relative change in values or from a change in the Fund's total assets will not
be considered a violation.
Except as set forth under "INVESTMENT OBJECTIVE AND POLICIES" and "DESCRIPTION
OF PERMITTED INVESTMENTS AND RISK FACTORS" in the Prospectus, the Fund may not:
1. purchase securities of any one issuer if, as a result,
more than 5% of the Fund's total assets would be
invested in securities of that issuer or the Fund would
own or hold more than 10% of the outstanding voting
securities of that issuer, except that up to 25% of the
Fund's total assets may be invested without regard to
this limitation, and except that this limit does not
apply to securities issued or guaranteed by the U.S.
government, its agencies and instrumentalities or to
securities issued by other investment companies;
2. purchase any security if, as a result of that purchase,
25% or more of the Fund's total assets would be
invested in securities of issuers having their
principal business activities in the same industry,
except that this limitation does not apply to
securities issued or guaranteed by the U.S. government,
its agencies or instrumentalities;
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3. issue senior securities or borrow money, except as
permitted under the 1940 Act and then not in excess of
331/3 of the Fund's total assets (including the amount
of the senior securities issued but reduced by any
liabilities not constituting senior securities) at the
time of the issuance or borrowing, except that the Fund
may borrow up to an additional 5% of its total assets
(not including the amount borrowed) for temporary or
emergency purposes. The Fund will not purchase
securities when borrowings exceed 5% of its total
assets;
4. make loans, except through loans of securities or
through repurchase agreements, provided that, for
purposes of this restriction, the acquisition of bonds,
debentures, other debt securities or instruments, or
participations or other interest therein and
investments in government obligations, commercial
paper, certificates of deposit, bankers' acceptances or
similar instruments will not be considered the making
of a loan;
5. engage in the business of underwriting the securities
of others, except to the extent that the Fund might be
considered an underwriter under the Federal securities
laws in connection with its disposition of securities;
6. purchase or sell real estate, except that investments
in securities of issuers that invest in real estate or
other instruments supported by interests in real estate
are not subject to this limitation, and except that the
Fund may exercise rights under agreements relating to
such securities, including the right to enforce
security interests to hold real estate acquired by
reason of such enforcement until that real estate can
be liquidated in an orderly manner; or
7. purchase or sell physical commodities unless acquired
as a result of owning securities or other instruments,
but the Fund may purchase, sell or enter into financial
options and futures, forward and spot currency
contracts, other financial contracts or derivative
instruments;
The following investment limitations are not fundamental and may be changed
without shareholder approval:
(i) The Fund does not currently intend to engage in short
sales of securities or maintain a short position,
except that the Fund may (a) sell short ("against the
box") and (b) maintain short positions in connection
with its use of financial options and futures, forward
and spot currency contracts, swap transactions and
other financial contracts or derivative instruments.
(ii) The Fund does not currently intend to purchase
securities on margin, except for short-term credit
necessary for clearance of portfolio transactions and
except that the Fund may make margin deposits in
connection with its use of financial options and
futures, forward and spot currency contracts, swap
transactions and other financial contracts or
derivative instruments.
(iii) The Fund does not currently intend to purchase
securities of other investment companies except as
permitted by the 1940 Act and the rules and regulations
thereunder.
(iv) The Fund does not currently intend to invest in
companies for the purpose of exercising control or
management.
(v) The Fund does not currently intend to invest in oil,
gas or mineral exploration or development programs or
leases, except that investment in securities of issuers
that invest in such programs or leases and investments
in asset-backed securities supported by receivables
generated by such programs or leases are not subject to
this prohibition.
(vi) The Fund does not currently intend to invest more than
5% of its net assets in warrants, including within that
amount no more than 2% in warrants which are not listed
on the New York or American Stock Exchanges, except
warrants acquired as a result of its holdings of common
stocks.
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(vii) The Fund does not currently intend to purchase or
retain the securities of any issuer if, to the
knowledge of the Fund, any officer or director of the
Fund or of its investment manager owns beneficially
more than 1/2 of 1% of the outstanding securities of
such issuer, and such officers and directors of the
Fund or of its investment manager who own more than 1/2
of 1%, own in the aggregate more than 5% of the
outstanding securities of such issuer.
(viii) The Fund does not currently intend to invest more than
10% of its total assets in securities of companies less
than three years old. Such three-year period shall
include the operation of any predecessor company or
companies. To comply with certain state securities
restrictions, the Fund will not invest more than 5% of
its total assets in securities of such issuers;
however, if these restrictions are loosened, the Fund
reserves the right to invest up to 10% of its total
assets in securities of such issuers without advance
notice to shareholders.
INVESTMENT ADVISORY AND OTHER SERVICES
Investment Advisory Agreement
The Fund and the Adviser have entered into an investment advisory agreement (the
"Investment Advisory Agreement"). The Investment Advisory Agreement provides
that the Adviser shall not be protected against any liability to the Fund or its
shareholders by reason of willful misfeasance, bad faith or gross negligence on
its part in the performance of its duties or from reckless disregard of its
obligations or duties thereunder.
The Investment Advisory Agreement provides that if, for any fiscal year, any
ratio of expenses of the Fund (including amounts payable to the Adviser but
excluding interest, taxes, brokerage, litigation and other extraordinary
expenses) exceeds limitations established by any state in which the shares of
the Fund are registered, the Adviser will bear the amount of such excess.
If the Fund is registered in California, and to the extent that the Fund
purchases securities of open-end investment companies, the Adviser will waive
its advisory fee on that portion of the Fund's assets invested in such
securities.
The continuance of the Investment Advisory Agreement, after the first two years,
must be specifically approved at least annually (i) by the vote of the Trustees
or by a vote of the shareholders of Fund, and (ii) by the vote of a majority of
the Trustees who are not parties to the Investment Advisory Agreement or
"interested persons" of any party thereto, cast in person at a meeting called
for the purpose of voting on such approval. The Investment Advisory Agreement
will terminate automatically in the event of its assignment, and is terminable
at any time without penalty by the Trustees of the Fund, or by a majority of the
outstanding shares of the Fund on not less than 30 days' nor more than 60 days'
written notice to the Adviser, or by the Adviser on 90 days' written notice to
the Fund.
Administrator
Fund/Plan Services, Inc., 2 W. Elm Street, Conshohocken, Pennsylvania 19428 (the
"Administrator") provides certain administrative services to the Fund pursuant
to an Administrative Services Agreement.
Under the Administrative Services Agreement, the Administrator: (1) coordinates
with the Custodian and Transfer Agent and monitors the services they provide to
the Fund; (2) coordinates with and monitors any other third parties furnishing
services to the Fund; (3) provides the Fund with necessary office space,
telephones and other communications facilities and personnel competent to
perform administrative and clerical functions; (4) supervises the maintenance by
third parties of such books and records of the Fund as may be required by
applicable federal or state law; (5) supervises the preparation by third parties
of all federal, state and local tax returns and reports of the Fund required by
applicable law; (6) prepares and, after approval by the Fund, files and arranges
for the distribution of proxy materials and periodic reports to shareholders of
the Fund as required by applicable law; (7) prepares and, after approval by the
Fund, arranges for the filing of such registration statements and other
documents with the SEC and other federal and state regulatory authorities as may
be required by applicable law; (8) reviews and submits to the officers of the
Fund for their approval invoices or other requests for payment of the Fund's
expenses and instructs the Custodian to issue checks in payment thereof and (9)
takes such other action with respect to the Fund as may be necessary in the
opinion of the Administrator to perform its duties under the agreement.
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<PAGE>
Pursuant to this Administrative Services Agreement, Fund/Plan receives a fee
computed at the annual rate of 0.15% of the first $50 million of total average
net assets, 0.10% of the next $50 million of total average net assets and 0.05%
of total net assets in excess of $100 million. Pursuant to the Administrative
Services Agreement, aggregate administration fees shall not be less than $67,000
for both Class A Shares and Class D Shares of the Fund.
Underwriter
Fund/Plan Broker Services, Inc. ("FPBS"), 2 W. Elm Street, Conshohocken,
Pennsylvania 19428-0874, has been engaged pursuant to an agreement for the
limited purpose of acting as underwriter to facilitate the registration of
shares of the Fund under state securities laws and to assist in the sale of
shares.
Distributor
Fund/Plan Broker Services, Inc. ("FPBS") also serves as the distributor pursuant
to a Distribution Agreement (the "Distribution Agreement") which applies to
Class A and Class D shares of the Fund.
Class A Shares and Class D Shares of the Fund are subject to separate
distribution plans (the "Distribution Plans") pursuant to Rule 12b-1 under the
1940 Act. As provided in the Distribution Plan for Class A Shares, the Fund will
pay an annual fee of 0.35% of the Fund's average daily net assets attributable
to Class A Shares, to FPBS as compensation for its services. As provided in the
Distribution Plan for Class D Shares, the Fund will pay an annual fee of 0.35%
of the Fund's average daily net assets attributable to Class D Shares, to FPBS
as compensation for its services. From this amount, FPBS may make payments to
financial institutions and intermediaries such as banks, savings and loan
associations, insurance companies, investment counselors and broker-dealers as
compensation for services, reimbursement of expenses incurred in connection with
distribution assistance or provision of shareholder services. The Distribution
Plans are characterized as compensation plans because the distribution fee will
be paid to FPBS as distributor without regard to the distribution or shareholder
service expenses incurred by FPBS or the amount of payments made to financial
institutions and intermediaries. The Fund intends to operate the Distribution
Plans in accordance with their terms and within the rules of the National
Association of Securities Dealers, Inc. concerning sales charges. Pursuant to
such rules, the Distributor is required to limit aggregate initial sales charges
and asset-based sales charges to 6.25% of total gross sales of each class of
shares.
The Distribution Plans will continue in effect from year to year, provided that
each such continuance is approved at least annually by a vote of the Board of
Trustees, including a majority vote of the Rule 12b-1 trustees, cast in person
at a meeting called for the purpose of voting on such continuance. The
Distribution Plans may be terminated at any time, without penalty, by vote of a
majority of the Rule 12b-1 trustees or by vote of the holders of a majority of
the outstanding shares of the applicable class on not more than 60 days', nor
less than 30 days' written notice to any other party to the Plans. The Plans may
not be amended to increase materially the amounts to be spent for the services
described herein without approval by the shareholders of the applicable class,
and all material amendments are required to be approved by the Board of
Trustees. Each Plan will automatically terminate in the event of its assignment.
Pursuant to each Plan, the Board of Trustees will review at least quarterly a
written report of the distribution expenses incurred on behalf of each class of
shares of the Fund. The report will include an itemization of the distribution
expenses and the purpose of such expenditures.
TRUSTEES AND OFFICERS
Information pertaining to the Trustees and executive officers of the Fund is set
forth below.
James C. Tso, President and Director, 7799 Leesburg Pike, Suite 900, Falls
Church, Virginia 22043.
William L. Fang, Director, Address . Mr. Fang has been an Attorney with Edison
Electric Institute since 1982. Mr. Fang has a B.S. from Northwestern University
and a J.D. from the University of Virginia and he has held leadership positions
with the Organization of Chinese Americans since 1982.
[ Additional Trustee information to be added]
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<PAGE>
NET ASSET VALUE
The net asset value per share is calculated separately for Class A Shares and
Class D Shares of the Fund. The net asset value per share is computed by
dividing the value of the assets of the Fund, less its liabilities, by the
number of shares of the respective class of shares outstanding.
Each class of the Fund will bear, pro-rata, all of the common expenses of the
Fund. The net asset value of all outstanding shares of each class will be
computed on a pro-rata basis for each outstanding share based on the
proportionate participation in the Fund represented by the value of shares of
the class. All income earned and expenses incurred by the Fund will be borne on
a pro-rata basis by each outstanding share of a class, based on each class'
percentage in the Fund represented by the value of such shares of such classes.
Portfolio securities are valued and net asset value per share is determined as
of the close of regular trading on the New York Stock Exchange ("NYSE") which
currently is 4:00 p.m. (Eastern Time), on each day the NYSE is open for trading.
The NYSE is open for trading every day except Saturdays, Sundays and the
following holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas.
The calculation of the Fund's net asset values may not take place
contemporaneously with the determination of the prices of portfolio securities
held by the Fund. Events affecting the values of portfolio securities that occur
between the time their prices are determined and the close of the NYSE will not
be reflected in the Fund's calculation of net asset value unless the Board of
Trustees deems that the particular event would materially affect the net asset
value, in which case an adjustment will be made. Assets or liabilities initially
expressed in terms of foreign currencies are translated prior to the next
determination of the net asset value of the Fund's shares into U.S. dollars at
the prevailing market rates. The fair value of all other assets is added to the
value of securities to arrive at the total assets.
TAXES
The following is only a summary of certain federal tax considerations generally
affecting the Fund and its shareholders that are not described in the
Prospectus, and is not intended as a substitute for careful tax planning.
Shareholders are urged to consult their tax advisors with specific reference to
their own tax situations, including their state and local tax liabilities.
Non-U.S. investors should consult their tax advisors concerning the tax
consequences of ownership of shares of the Fund, including the possibility that
distributions may be subject to a 30% United States withholding tax.
Federal Income Tax
The following discussion of federal income tax consequences is based on the Code
and the regulations issued thereunder as in effect on the date of this Statement
of Additional Information. New legislation, as well as administrative changes or
court decisions, may significantly change the conclusions expressed herein, and
may have a retroactive effect with respect to the transactions contemplated
herein.
The Fund intends to qualify as a "regulated investment company" ("RIC") as
defined under Subchapter M of the Code. By following such a policy, the Fund
expects to eliminate or reduce to a nominal amount the federal income taxes to
which it may be subject. In order to qualify for treatment as a RIC under the
Code, the Fund generally must distribute annually to its shareholders at least
90% of its investment company taxable income (generally, net investment income
plus net short-term capital gain) (the "Distribution Requirement") and also must
meet several additional requirements. Among these requirements are the
following: (i) at least 90% of the Fund's gross income each taxable year must be
derived from dividends, interest, payments with respect to securities loans, and
gains from the sale or other disposition of stock or securities, or certain
other income; (ii) the Fund must derive less than 30% of its gross income each
taxable year from the sale or other disposition of stocks or securities held for
less than three months; (iii) at the close of each quarter of the Fund's taxable
year, at least 50% of the value of its total assets must be represented by cash
and cash items, U.S. Government securities, securities of other RlCs and other
securities, with such other securities limited, in respect to any one issuer, to
an amount that does not exceed 5% of the value of the Fund's assets and that
does not represent more than 10% of the outstanding voting securities of such
issuer and (iv) at the close of each quarter of the Fund's taxable year, not
more than 25% of the value of its assets may be invested in securities (other
than U.S. Government securities or the securities of other RlCs) of any one
issuer or of two or more issuers which the Fund controls and which are engaged
in the same, similar or related trades or businesses.
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Notwithstanding the Distribution Requirement described above, which requires
only that the Fund distribute at least 90% of its annual investment company
taxable income and does not require any minimum distribution of net capital gain
(the excess of net long-term capital gain over net short-term capital loss), the
Fund will be subject to a nondeductible 4% federal excise tax to the extent that
it fails to distribute by the end of any calendar year 98% of its ordinary
income for that year and 98% of its capital gain net income (the excess of
short- and long-term capital gains over short- and long-term capital losses) for
the one-year period ending on October 31 of that year, plus certain other
amounts. The Fund intends to make sufficient distributions of its ordinary
income and capital gain net income prior to the end of each calendar year to
avoid liability for federal excise tax.
Any gain or loss recognized on a sale, redemption or exchange of shares of the
Fund by a non-exempt shareholder who is not a dealer in securities generally
will be treated as a long-term capital gain or loss if the shares have been held
for more than twelve months and otherwise generally will be treated as a
short-term capital gain or loss. If shares of the Fund on which a net capital
gain distribution has been received are subsequently sold, redeemed or exchanged
and such shares have been held for six months or less, any loss recognized will
be treated as a long-term capital loss to the extent of the long-term capital
gain distribution.
In certain cases, the Fund will be required to withhold, and remit to the United
States Treasury, 31% of any distributions paid to a shareholder who (1) has
failed to provide a correct taxpayer identification number, (2) is subject to
backup withholding by the Internal Revenue Service or (3) has not certified to
the Fund that such shareholder is not subject to backup withholding.
If the Fund fails to qualify as a RIC for any taxable year, it will be subject
to tax on its taxable income at regular corporate rates. In such an event, all
distributions from the Fund generally would be eligible for the corporate
dividend received deduction for corporate shareholders.
Foreign Taxes
Foreign governments may withhold taxes from dividends or interest paid with
respect to foreign securities typically at a rate between 10% and 35%. Tax
conversions between certain countries and the United States may reduce or
eliminate such taxes. The Fund intends to elect to pass-through foreign taxes
paid in order for a shareholder to take a credit or deduction if, at the close
of its fiscal year, more than 50% of the Fund's total assets are invested in
securities of foreign issuers.
PORTFOLIO TRANSACTIONS
The Fund does not have an obligation to deal with any broker/dealer or group of
broker/dealers in the execution of transactions in portfolio securities. Subject
to policies established by the Trustees, the Adviser is responsible for placing
the orders to execute transactions for the Fund. In placing orders, it is the
policy of the Fund to seek to obtain the best net results taking into account
such factors as price (including the applicable dealer spread), the size, type
and difficulty of the transaction involved, the firm's general execution and
operational facilities, and the firm's risk in positioning the securities
involved. While the Adviser generally seeks reasonably competitive spreads, the
Fund will not necessarily be paying the lowest spread available.
It is not the Fund's practice to allocate brokerage or principal business on the
basis of sales of its shares which may be made through brokers or dealers.
However, the Adviser may place portfolio orders with qualified broker/dealers
who recommend the Fund to clients, and may, when a number of brokers and dealers
can provide best net results on a particular transaction, consider such
recommendations by a broker or dealer in selecting among broker/dealers.
PERFORMANCE INFORMATION
In General
From time to time, the Fund may include general comparative information, such as
statistical data regarding inflation, securities indices or the features or
performance of alternative investments, in advertisements, sales literature and
reports to shareholders. The Fund may also include calculations, such as
hypothetical compounding examples or tax-free compounding examples, which
describe hypothetical investment results in such communications. Such
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<PAGE>
performance examples will be based on an express set of assumptions and are not
indicative of the performance of the Fund.
From time to time, the yield and total return of the Fund may be quoted in
advertisements, shareholder reports or other communications to shareholders.
Performance information will be calculated for Class A Shares and Class D Shares
of the Fund and will vary due to the effect of expense ratios on the performance
calculations.
Total Return Calculation
The Fund computes average annual total return by determining the average annual
compounded rate of return during specified periods that equate the initial
amount invested to the ending redeemable value of such investment. This is done
by dividing the ending redeemable value of a hypothetical $1,000 initial payment
by $1,000 and raising the quotient to a power equal to one divided by the number
of years (or fractional portion thereof) covered by the computation and
subtracting one from the result. This calculation can be expressed as follows:
ERV = P (1 + T)n
Where: ERV = ending redeemable value at the end of the period
covered by the computation of a hypothetical $1,000
payment made at the beginning of the period.
P = hypothetical initial payment of $1,000.
n = period covered by the computation, expressed in terms
of years.
T = average annual total return.
The Fund computes the aggregate total return by determining the aggregate
compounded rate of return during specified period that likewise equate the
initial amount invested to the ending redeemable value of such investment. The
formula for calculating aggregate total return is as follows:
Aggregate Total Return = [ ERV - 1 ]
---
P
Where: ERV = ending redeemable value at the end of the period
covered by the computation of a hypothetical $1,000
payment made at the beginning of the period.
P = hypothetical initial payment of $1,000.
The calculations of average annual total return and aggregate total return
assume the reinvestment of all dividends and capital gain distributions on the
reinvestment dates during the period. The ending redeemable value (variable
"ERV" in each formula) is determined by assuming complete redemption of the
hypothetical investment and the deduction of all nonrecurring charges at the end
of the period covered by the computations.
Since performance will fluctuate, performance data for the Fund should not be
used to compare an investment in the Fund's shares with bank deposits, savings
accounts and similar investment alternatives which often provide an agreed-upon
or guaranteed fixed yield for a stated period of time. Shareholders should
remember that performance is generally a function of the kind and quality of the
instruments held in a portfolio, portfolio maturity, operating expenses and
market conditions.
Yield Calculation
Yield, in its simplest form, is the ratio of income per share derived from the
Fund's investments to a current maximum offering price expressed in terms of a
percentage. The yield is quoted on the basis of earnings after expenses have
been deducted. The yield of the Fund is calculated by dividing the net
investment income per share
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earned during a 30-day (or one month) period by the maximum offering price per
share on the last day of the period and annualizing the result. The Fund's net
investment income per share earned during the period is based on the average
daily number of shares outstanding during the period entitled to receive
dividends and includes dividends and interest earned during the period minus
expenses accrued for the period, net of reimbursements. This calculation can be
expressed as follows:
6
YIELD = 2 [ ( a - b + 1) - 1 ]
-------
cd
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends.
d = maximum offering price per share on the last day of the
period.
For the purpose of determining net investment income earned during the period
(variable "a" in the formula), dividend income on equity securities held by the
Fund is recognized by accruing 1/360 of the stated dividend rate of the security
each day that the security is in the Fund. Except as noted below, interest
earned on any debt obligations held by the Fund is calculated by computing the
yield to maturity of each obligation held by the Fund based on the market value
of the obligation (including actual accrued interest) at the close of business
on the last business day of the month, the purchase price (plus actual accrued
interest) and dividing the result by 360 and multiplying the quotient by the
market value of the obligation (including actual accrued interest) in order to
determine the interest income on the obligation for each day of the subsequent
month that the obligation is held by the Fund. For purposes of this calculation,
it is assumed that each month contains 30 days. The date on which the obligation
reasonably may be expected to be called or, if none, the maturity date. With
respect to debt obligations purchased at a discount or premium, the formula
generally calls for amortization of the discount or premium. The amortization
schedule will be adjusted monthly to reflect changes in the market values of
such debt obligations.
Expenses accrued for the period (variable "b" in the formula) include all
recurring fees charged by the Fund to all shareholder accounts in proportion to
the length of the base period and the Fund's mean (or median) account size.
Undeclared earned income will be subtracted from the offering price per capital
share (variable "d" in the formula).
Performance and Advertisements
From time to time, in marketing and other fund literature, the Fund's
performance may be compared to the performance of other mutual funds in general
or to the performance of particular types of mutual funds with similar
investment goals, as tracked by independent organizations. Among these
organizations, Lipper Analytical Services, Inc. ("Lipper"), a widely used
independent research firm which ranks mutual funds by overall performance,
investment objectives and assets, may be cited. Lipper performance figures are
based on changes in net asset value, with all income and capital gains dividends
reinvested. Such calculations do not include the effect of any sales charges
imposed by other funds. The Fund will be compared to Lipper's appropriate fund
category, that is, by fund objective and portfolio holdings. The Fund's
performance may also be compared to the average performance of its Lipper
category.
The Fund's performance may also be compared to the performance of other mutual
funds by Morningstar, Inc. ("Morningstar") which ranks funds on the basis of
historical risk and total return. Morningstar's rankings range from five stars
(highest) to one star (lowest) and represent Morningstar's assessment of the
historical risk level and total return of a fund as a weighted average for
three, five and ten year periods. Ranks are not absolute or necessarily
predictive of future performance.
The Fund may compare its performance to a wide variety of indices including the
Japan, East Asia and Standard &
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Poor's 500 Indices.
In assessing such comparisons of yield, return or volatility, an investor should
keep in mind that the composition of the investments in the reported indices and
averages is not identical to those of the Fund, that the averages are generally
unmanaged, and that the items included in the calculations of such averages may
not be identical to the formula used by the Fund to calculate its figures.
Because certain of the Fund's investments are denominated in foreign currencies,
the strength or weakness of the U.S. dollar as against these currencies may
account for part of the Fund's investment performance. Historical information
regarding the value of the dollar versus foreign currencies may be used from
time to time in advertisements concerning the Fund.
OTHER INFORMATION
Shareholder Liability
The Trust is an entity of the type commonly known as a "Delaware business
trust". Under Delaware law, shareholders of such a trust could, under certain
circumstances, be held personally liable as partners for the obligations of the
trust. Even if, however, the Fund were held to be a partnership, the possibility
of the shareholders incurring financial loss for that reason appears remote
because the Trust Instrument contains an express disclaimer of shareholder
liability for obligations of the Trust and requires that notice of such
disclaimer be given in each agreement, obligation or instrument entered into or
executed by or on behalf of the Trust or the Trustees, and because the Trust
Instrument provides for indemnification out of the Trust property for any
shareholder held personally liable for the obligations of the Trust.
Limitation of Trustees' Liability
The Trust Instrument provides that a Trustee shall be liable only for his own
willful defaults and, if reasonable care has been exercised in the selection of
officers, agents, employees or investment advisers, shall not be liable for any
neglect or wrongdoing of any such person. The Trust Instrument also provides
that the Trust will indemnify its Trustees and officers against liabilities and
expenses incurred in connection with actual or threatened litigation in which
they may be involved because of their offices with the Trust unless it is
determined in the manner provided in the Trust Instrument that they have not
acted in good faith in the reasonable belief that their actions were in the best
interests of the Trust. However, nothing in the Trust Instrument shall protect
or indemnify a Trustee against any liability for his willful misfeasance, bad
faith, gross negligence or reckless disregard of his duties.
39
<PAGE>
SAGE/TSO TRUST
FORM N-1A
PART C -- OTHER INFORMATION
<TABLE>
<CAPTION>
Part C. Other Information
<S> <C>
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements.
(To be filed by Amendment)
(b) Exhibits:
Exhibits filed pursuant to Form N-1A:
(1) Trust Instrument (filed herewith)
(2) By-Laws (filed herewith)
(3) Voting Trust Agreement -- None
(4) All Instruments Defining the Rights of Holders -- None
(5) Investment Advisory Contracts -- (To be filed by Amendment)
(6) Underwriting Agreement -- (To be filed by Amendment)
(7) Bonus, Profit Sharing, Pension or Other Similar Contracts -- None
(8) Custodian Agreements -- (To be filed by Amendment)
(9) (a) Transfer Agent Services Agreement -- (To be filed by Amendment)
(b) Administration Agreement -- (To be filed by Amendment)
(c) Accounting Services Agreement -- (To be filed by Amendment)
(10) (a) Opinion and Consent of Kirkpatrick & Lockhart LLP
regarding the legality of the securities being
registered -- (To be filed by Amendment)
40
<PAGE>
(11) Consent of Independent Auditors - (To be filed by Amendment)
(12) Financial Statements Omitted from Item 23. -- None
(13) Agreements or Understandings Made in
Consideration for Providing the Initial Capital -- None
(14) Model Plan -- None
(15) (a) Plan of Distribution pursuant to Rule 12b-1 with respect to Class A
Shares -- (To be filed by Amendment)
(b) Plan of Distribution pursuant to Rule 12b-1 with respect to Class D
Shares -- (To be filed by Amendment)
(16) Schedule for Computation of Performance Quotations -- None
(17) Financial Data Schedule -- None
(18) Plan of Distribution pursuant to Rule 18f-3 with respect to Multiple
Class Shares (To be filed by Amendment)
(19) Trustees Powers of Attorney -- (To be filed by Amendment)
</TABLE>
Item 25. Persons Controlled by or Under Common Control with Registrant.
--------------------------------------------------------------
None.
Item 26. Number of Holders of Securities.
--------------------------------
None.
Item 27. Indemnification.
----------------
Reference is made to Article X of the Registrant's Trust Instrument
(filed herewith as Exhibit 1).
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers and
controlling persons of the Registrant by the Registrant pursuant to
the Trust's Trust Instrument, its By-Laws or otherwise, the
Registrant is aware that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy
as expressed in the Act and, therefore, is 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 trustees, officers or controlling persons of the Registrant
in connection with the successful defense of any act, suit or
proceeding) is asserted by such trustees, officers or controlling
persons in connection with shares being registered, the Registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed
by the final adjudication of such issues.
Item 28. Business and Other Connections of Investment Adviser.
----------------------------------------------------
Sage/Tso Investment Management L.P., 7799 Leesburg Pike, Falls
Church, Virginia 22043 provides investment advisory services to
individual and institutional investors, and as of December 31, 1995
had approximately $10 million in assets under management.
For information as to any other business, vocation or employment of
a substantial nature in which each trustee or officer of the
Registrant's investment adviser has been engaged for his own account
or in the capacity of trustee, officer, employee, partner or
trustee, reference is made to Form ADV (File #801-40902) filed by it
under the Investment Advisers Act of 1940.
41
<PAGE>
Item 29. Principal Underwriter.
----------------------
(a) Fund/Plan Broker Services, Inc. ("FPBS"), the principal
underwriter for the Registrant's securities, currently acts as
principal underwriter for the following entities:
The Brinson Funds, Inc.
Chicago Trust Funds
Fairport Funds
First Mutual Funds
Focus Trust, Inc.
IAA Trust Mutual Funds
Matthews International Funds
McM Funds
Smith Breeden Series Fund
Smith Breeden Short Duration U.S. Government Fund
Smith Breeden Trust
The Stratton Funds, Inc.
The Japan Alpha Fund
Stratton Growth Fund, Inc.
Stratton Monthly Dividend Shares, Inc.
The Timothy Plan
(b) The table below sets forth certain information as to the
Underwriter's Directors, Officers and Control Persons:
<TABLE>
<CAPTION>
Position Position and
Name and Principal and Offices Offices with
Business Address with Underwriter Registrant
---------------- ---------------- -----------
<S> <C> <C>
Kenneth J. Kempf Director and President None
2 W. Elm Street
Conshohocken, PA 19428-0874
Lynne M. Cannon Vice President and None
2 W. Elm Street Principal
Conshohocken, PA 19428-0874
Rocco C. Cavalieri Director and None
2 W. Elm Street Vice President
Conshohocken, PA 19428-0874
Gerald J. Holland Director, None
2 W. Elm Street Vice President
Conshohocken, PA 19428-0874 and Principal
Joseph M. O'Donnell, Esq. Director and None
2 W. Elm Street Vice President
Conshohocken, PA 19428-0874
Sandra L. Adams Assistant Vice President None
2 W. Elm Street and Principal
Conshohocken, PA 19428-0874
Mary P. Efstration Secretary None
2 W. Elm Street
Conshohocken, PA 19428-0874
42
<PAGE>
John H. Leven Treasurer None
2 W. Elm Street
Conshohocken, PA 19428-0874
</TABLE>
James W. Stratton may be considered a control person of the Underwriter due to
his direct or indirect ownership of Fund/Plan Services, Inc., the parent of the
Underwriter.
(c) Not Applicable.
Item 30. Location of Accounts and Records.
---------------------------------
All records described in Section 31(a) of the 1940 Act and the Rules
17 CFR 270.31a-1 to 31a-3 promulgated thereunder, are maintained by
the Trust's Investment Adviser, Sage/Tso Investment Management L.P.,
7799 Leesburg Pike, Suite 900, Falls Church, Virginia 22043, except
for those maintained by the Fund's Custodian, The Bank of New York,
277 Park Avenue, New York, New York 10172 and the Trust's
Administrator, Transfer Agent and Fund Accounting Services Agent,
Fund/Plan Services Inc., 2 W. Elm Street, Conshohocken, PA 19428.
Item 31. Management Services.
--------------------
There are no management-related service contracts not discussed in
Part A or Part B.
Item 32. Undertakings.
-------------
(a) Registrant hereby undertakes to file an amendment to this
Registration Statement with certified financial statements
showing the initial capital received before accepting
subscriptions from any persons in excess of 25 if Registrant
proposes to raise its initial capital pursuant to Section
14(a)(3) of The 1940 Act.
(b) Registrant hereby undertakes to file a post-effective
amendment within four to six months from the effective date of
this Registration Statement under the Securities Act of 1933.
Registrant understands that such post-effective amendment will
contain reasonably current financial statements which need not
be certified by independent public accountants.
(c) Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
Annual Report to Shareholders upon request and without charge.
(d) The Registrant hereby undertakes to promptly call a meeting of
shareholders for the purpose of voting upon the question of
removal of any director or directors when requested in writing
to do so by the record holders of not less than 10 percent of
the Registrant's outstanding shares and to assist its
shareholders in accordance with the requirements of Section
16(c) of the Investment Company Act of 1940 relating to
shareholder communications.
43
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940 the Registrant has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Falls Church, and State of Virginia on the 26th day of March, 1996.
Sage/Tso Trust
---------------------------
Registrant
By /s/ James C. Tso
----------------------------
James C. Tso
President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement of Sage/Tso Trust has been signed below by the following persons in
the capacities and on the date indicated.
Signature Capacity Date
- --------- -------- ----
/s/ James C. Tso As Sole Trustee 3/26/96
- -----------------
James C. Tso
/s/ James C. Tso
- ----------------- As President and 3/26/96
James C. Tso Principal Executive Officer
/s/ James C. Tso
- ----------------- As Treasurer and 3/26/96
James C. Tso Principal Accounting and
Financial Officer
44
<PAGE>
SAGE/TSO TRUST
Index to Exhibits to Form N-1A
Exhibit
Number Page
- ------
(3.(i)) Trust Instrument............................................46
(3.(ii)) By-Laws.....................................................79
45
<PAGE>
EXHIBIT 3.(i)
TRUST INSTRUMENT
46
<PAGE>
SAGE/TSO TRUST
TRUST INSTRUMENT
DATED FEBRUARY 9, 1996
Principal Place of Business:
7799 Leesburg Pike, Suite 900
Falls Church, Virginia 22043
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C>
ARTICLE I - NAME AND DEFINITIONS..................................................................................1
Section 1.1 Name..........................................................................1
Section 1.2 Definitions...................................................................1
ARTICLE II - BENEFICIAL INTEREST..................................................................................2
Section 2.1 Shares of Beneficial Interest.................................................2
Section 2.2 Issuance of Shares............................................................2
Section 2.3 Register of Shares and Share Certificates.....................................2
Section 2.4 Transfer of Shares............................................................3
Section 2.5 Treasury Shares...............................................................3
Section 2.6 Establishment of Series.......................................................3
Section 2.7 Investment in the Trust.......................................................4
Section 2.8 Assets and Liabilities of Series..............................................4
Section 2.9 No Preemptive Rights..........................................................5
Section 2.10 Personal Liability of Shareholders............................................5
Section 2.11 Assent to Trust Instrument....................................................5
ARTICLE III - THE TRUSTEES........................................................................................5
Section 3.1 Management of the Trust.......................................................5
Section 3.2 Initial Trustee...............................................................6
Section 3.3 Term of Office of Trustees....................................................6
Section 3.4 Vacancies and Appointment of Trustees.........................................6
Section 3.5 Temporary Absence of Trustee..................................................6
Section 3.6 Number of Trustees............................................................7
Section 3.7 Effect of Death, Resignation, Etc. of a Trustee...............................7
Section 3.8 Ownership of Assets of the Trust..............................................7
ARTICLE IV - POWERS OF THE TRUSTEES...............................................................................7
Section 4.1 Powers........................................................................7
Section 4.2 Issuance and Repurchase of Shares............................................10
Section 4.3 Trustees and Officers as Shareholders........................................10
Section 4.4 Action by the Trustees and Committees........................................10
Section 4.5 Chairman of the Trustees.....................................................11
Section 4.6 Principal Transactions.......................................................11
- -------------------------------------------------------------------------------------------------------------------
i
<PAGE>
ARTICLE V - EXPENSES OF THE TRUST................................................................................11
Section 5.1 General......................................................................11
Section 5.2 Expenses of Series...........................................................11
Section 5.3 Trustee Reimbursement........................................................11
ARTICLE VI - INVESTMENT ADVISER, PRINCIPAL UNDERWRITER,
ADMINISTRATOR AND TRANSFER AGENT.................................................................................12
Section 6.1 Investment Adviser...........................................................12
Section 6.2 Principal Underwriter........................................................12
Section 6.3 Administrator................................................................13
Section 6.4 Transfer Agent...............................................................13
Section 6.5 Parties to Contract..........................................................13
ARTICLE VII - SHAREHOLDERS' VOTING POWERS AND MEETINGS...........................................................13
Section 7.1 Voting Powers................................................................13
Section 7.2 Meetings.....................................................................14
Section 7.3 Quorum and Required Vote.....................................................14
Section 7.4 Action by Written Consent....................................................14
ARTICLE VIII - CUSTODIAN.........................................................................................15
Section 8.1 Appointment and Duties.......................................................15
Section 8.2 Central Certificate System...................................................15
ARTICLE IX - DISTRIBUTIONS AND REDEMPTIONS.......................................................................16
Section 9.1 Distributions................................................................16
Section 9.2 Redemptions..................................................................16
Section 9.3 Determination of Net Asset Value and
Valuation of Portfolio Assets................................................16
Section 9.4 Suspension of the Right of Redemption........................................17
Section 9.5 Redemption of Shares in Order to Qualify as
Regulated Investment Company.................................................17
ARTICLE X - LIMITATION OF LIABILITY AND INDEMNIFICATION..........................................................18
Section 10.1 Limitation of Liability......................................................18
Section 10.2 Indemnification..............................................................18
Section 10.3 Shareholders.................................................................19
ARTICLE XI - MISCELLANEOUS.......................................................................................19
Section 11.1 Trust Not a Partnership......................................................19
- -------------------------------------------------------------------------------------------------------------------
ii
<PAGE>
Section 11.2 Trustees' Good Faith Action, Expert
Advice, No Bond or Surety....................................................19
Section 11.3 Establishment of Record Dates................................................19
Section 11.4 Termination of Trust or Series...............................................20
Section 11.5 Reorganization...............................................................20
Section 11.6 Filing of Copies, References, Headings.......................................21
Section 11.7 Applicable Law...............................................................21
Section 11.8 Amendments...................................................................22
Section 11.9 Fiscal Year..................................................................22
Section 11.10 Use of Name "Sage/Tso Trust".................................................22
Section 11.11 Provisions in Conflict with Law..............................................22
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
iii
<PAGE>
SAGE/TSO TRUST
--------------
TRUST INSTRUMENT, made this 9th day of February, 1996 by James C. Tso,
(the "Trustee").
WHEREAS, the Trustee desires to establish a business trust under the
Delaware Business Trust Act for the investment and reinvestment of funds
contributed thereto;
NOW, THEREFORE, the Trustee declares that all money and property
contributed to the trust hereunder shall be held and managed in trust under this
Trust Instrument as herein set forth below.
ARTICLE I
NAME AND DEFINITIONS
Section 1.1 Name. The name of the trust created hereby is the "Sage/Tso
Trust". -----
Section 1.2 Definitions. Wherever used herein, unless otherwise
required by the context or specifically provided:
(a) "By-laws" means the by-laws referred to in Article IV,
Section 4.1(e) hereof, as from time to time amended;
(b) The "1940 Act" refers to the Investment Company Act of
1940, as amended from time to time.
(c) The terms "Affiliated Person," "Assignment," "Commission,"
"Interested Person" and "Principal Underwriter" shall have the meanings given
them in the 1940 Act. "Majority Shareholder Vote" shall have the same meaning as
the term "vote of a majority of the outstanding voting securities" is given in
the 1940 Act;
(d) "Net Asset Value" means the net asset value of each Series
of the Trust determined in the manner provided in Article IX, Section 9.3
hereof;
(e) "Outstanding Shares" means those Shares recorded from time
to time in the books of the Trust or its Transfer Agent as then issued and
outstanding, but shall not include Shares which have been redeemed or
repurchased by the Trust and which are at the time held in the treasury of the
Trust;
(f) "Series" means a separate series of Shares of the Trust
established in accordance with the provisions of Article II, Section 2.6 hereof;
(g) "Shareholder" means a record owner of Outstanding Shares
of the Trust;
(h) "Shares" means the equal proportionate transferable units
of beneficial
1
<PAGE>
interest into which the beneficial interest of each Series of the Trust or class
thereof shall be divided and may include fractions of Shares as well as whole
Shares;
(i) The "Trust" refers to Sage/Tso Trust and reference to the
Trust, when applicable to one or more Series of the Trust, shall refer to any
such Series;
(j) The "Trustee" or "Trustees" means the person or persons
who has or have signed this Trust Instrument, so long as such person or persons
shall continue in office in accordance with the terms hereof, and all other
persons who may from time to time be duly qualified and serving as Trustees in
accordance with the provisions of Article III hereof and reference herein to a
Trustee or to the Trustees shall refer to the individual Trustees in their
capacity as Trustees hereunder;
(k) "Trust Property" means any and all property, real or
personal, tangible or intangible, which is owned or held by or for the account
of one or more of the Trust or any Series, or the Trustees on behalf of the
Trust or any Series.
ARTICLE II
----------
BENEFICIAL INTEREST
-------------------
Section 2.1 Shares of Beneficial Interest. The beneficial interest in
the Trust shall be divided into such transferable Shares of one or more separate
and distinct Series or classes of a Series as the Trustees shall from time to
time create and establish. The number of Shares of each Series, and class
thereof, authorized hereunder is unlimited. Each Share shall have no par value.
All Shares issued hereunder, including, without limitation, Shares issued in
connection with a dividend in Shares or a split or reverse split of Shares,
shall be fully paid and nonassessable.
Section 2.2 Issuance of Shares. The Trustees in their discretion may,
from time to time, without vote of the Shareholders, issue Shares to such party
or parties and for such amount and type of consideration, subject to applicable
law, including cash or securities (including Shares of a different Series), at
such time or times and on such terms as the Trustees may deem appropriate, and
may in such manner acquire other assets (including the acquisitions of assets
subject to, and in connection with, the assumption of liabilities). In
connection with any issuance of Shares, the Trustees may issue fractional Shares
and Shares held in the treasury. The Trustees may from time to time divide or
combine the Shares of any Series or class into a greater or lesser number
without thereby changing the proportionate beneficial interests in the Trust.
Section 2.3 Register of Shares and Share Certificates. A register shall
be kept at the principal office of the Trust or an office of the Trust's
transfer agent which shall contain the names and addresses of the Shareholders
of each Series, the number of Shares of that Series (or any class or classes
thereof) held by them respectively and a record of all transfers thereof. As to
Shares for which no certificate has been issued, such register shall be
conclusive as to who are the holders of the Shares and who shall be entitled to
receive dividends or other
2
<PAGE>
distributions or otherwise to exercise or enjoy the rights of Shareholders. No
Shareholder shall be entitled to receive payment of any dividend or other
distribution, nor to have notice given to him as herein or in the By-laws
provided, until he has given his address to the transfer agent or such other
officer or agent of the Trustees as shall keep the said register for entry
thereon. The Trustees, in their discretion, may authorize the issuance of share
certificates and promulgate appropriate rules and regulations as to their use.
In the event that one or more certificates are issued, whether in the name of a
shareholder or a nominee, such certificate or certificates shall constitute
evidence of ownership of Shares for all purposes, including transfer, assignment
or sale of such Shares, subject to such limitations as the Trustees may, in
their discretion, prescribe.
Section 2.4 Transfer of Shares. Except as otherwise provided by the
Trustees, Shares shall be transferable on the records of the Trust only by the
record holder thereof or by his agent thereunto duly authorized in writing, upon
delivery to the Trustees or the Trust's transfer agent of a duly executed
instrument of transfer, together with a Share certificate, if one is
outstanding, and such evidence of the genuineness of each such execution and
authorization and of such other matters as may be required by the Trustees. Upon
such delivery the transfer shall be recorded on the register of the Trust. Until
such record is made, the Shareholder of record shall be deemed to be the holder
of such Shares for all purposes hereunder and neither the Trustees nor the
Trust, nor any transfer agent or registrar nor any officer, employee or agent of
the Trust shall be affected by any notice of the proposed transfer.
Section 2.5 Treasury Shares. Shares held in the treasury shall, until
reissued pursuant to Section 2.2 hereof, not confer any voting rights on the
Trustees, nor shall such Shares be entitled to any dividends or other
distributions declared with respect to the Shares.
Section 2.6 Establishment of Series. The Trust created hereby shall
consist of one or more Series and separate and distinct records shall be
maintained by the Trust for each Series and the assets associated with any such
Series shall be held and accounted for separately from the assets of the Trust
or any other Series. The Trustees shall have full power and authority, in their
sole discretion, and without obtaining any prior authorization or vote of the
Shareholders of any Series of the Trust, to establish and designate and to
change in any manner any such Series of Shares or any classes of initial or
additional Series and to fix such preferences, voting powers, rights and
privileges of such Series or classes thereof as the Trustees may from time to
time determine, to divide or combine the Shares or any Series or classes thereof
into a greater or lesser number, to classify or reclassify any issued Shares or
any Series or classes thereof into one or more Series or classes of Shares, and
to take such other action with respect to the Shares as the Trustees may deem
desirable. The establishment and designation of any Series shall be effective
upon the adoption of a resolution by the Trustees setting forth such
establishment and designation and the relative rights and preferences of the
Shares of such Series. A Series may issue any number of Shares and need not
issue shares.
All references to Shares in this Trust Instrument shall be deemed to be
Shares of any or all Series, or classes thereof, as the context may require. All
provisions herein relating to the Trust shall apply equally to each Series of
the Trust, and each class thereof, except as the context otherwise requires.
3
<PAGE>
Each Share of a Series of the Trust shall represent an equal beneficial
interest in the net assets of such Series. Each holder of Shares of a Series
shall be entitled to receive distributions of income and capital gains, if any,
which are made with respect to such Series and which are attributable to such
Shares. Upon redemption of Shares, such Shareholder shall be paid solely out of
the funds and property of such Series of the Trust.
Section 2.7 Investment in the Trust. The Trustees shall accept
investments in any Series of the Trust from such persons and on such terms as
they may from time to time authorize. At the Trustees' discretion, such
investments, subject to applicable law, may be in the form of cash or securities
in which the affected Series is authorized to invest, valued as provided in
Article IX, Section 9.3 hereof. Investments in a Series shall be credited to
each Shareholder's account in the form of full or fractional Shares at the Net
Asset Value per Share next determined after the investment is received;
provided, however, that the Trustees may, in their sole discretion, (a) fix the
Net Asset Value per Share of the initial capital contribution, or (b) impose
sales or other charges upon investments in the Trust.
Section 2.8 Assets and Liabilities of Series. All consideration
received by the Trust for the issue or sale of Shares of a particular Series,
together with all assets in which such consideration is invested or reinvested,
all income, earnings, profits, and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation of such assets, and any funds or
payments derived from any reinvestment of such proceeds in whatever form the
same may be, shall be held and accounted for separately from the other assets of
the Trust and of every other Series and may be referred to herein as "assets
belonging to" that Series. The assets belonging to a particular Series shall
belong to that Series for all purposes, and to no other Series, subject only to
the rights of creditors of that Series. In addition, any assets, income,
earnings, profits or funds, or payments and proceeds with respect thereto, which
are not readily identifiable as belonging to any particular Series shall be
allocated by the Trustees between and among one or more of the Series in such
manner as the Trustees, in their sole discretion, deem fair and equitable. Each
such allocation shall be conclusive and binding upon the Shareholders of all
Series for all purposes, and such assets, income, earnings, profits or funds, or
payments and proceeds with respect thereto shall be assets belonging to that
Series. The assets belonging to a particular Series shall be so recorded upon
the books of the Trust, and shall be held by the Trustees in trust for the
benefit of the holders of Shares of that Series. The assets belonging to each
particular Series shall be charged with the liabilities of that Series and all
expenses, costs, charges and reserves attributable to that Series. Any general
liabilities, expenses, costs, charges or reserves of the Trust which are not
readily identifiable as belonging to any particular Series shall be allocated
and charged by the Trustees between or among any one or more of the Series in
such manner as the Trustees in their sole discretion deem fair and equitable.
Each such allocation shall be conclusive and binding upon the Shareholders of
all Series for all purposes. Without limitation of the foregoing provisions of
this Section 2.8, but subject to the right of the Trustees in their discretion
to allocate general liabilities, expenses, costs, charges or reserves as herein
provided, the debts, liabilities, obligations and expenses incurred, contracted
for or otherwise existing with respect to a particular Series shall be
enforceable against the assets of such Series only, and not against the assets
of the Trust generally. Notice of this contractual limitation on inter-Series
liabilities shall be set forth in the certificate of trust of the Trust (whether
originally or by amendment) as filed or to be filed in the Office of the
Secretary of State of the State of Delaware pursuant
4
<PAGE>
to the Delaware Business Trust Act (the "Act"), and upon the giving of such
notice in the certificate of trust, the statutory provisions of the Act relating
to limitations on inter-Series liabilities (and the statutory effect under the
Act of setting forth such notice in the certificate of trust) shall become
applicable to the Trust and each Series. Any person extending credit to,
contracting with or having any claim against any Series may satisfy or enforce
any debt, liability, obligation or expense incurred, contracted for or otherwise
existing with respect to that Series from the assets of that Series only. No
Shareholder or former Shareholder of any Series shall have a claim on or any
right to any assets allocated or belonging to any other Series.
Section 2.9 No Preemptive Rights. Shareholders shall have no preemptive
or other right to subscribe to any additional Shares or other securities issued
by the Trust or the Trustees, whether of the same or other Series.
Section 2.10 Personal Liability of Shareholders. Each Shareholder of
the Trust and of each Series shall not be personally liable for the debts,
liabilities, obligations and expenses incurred by, contracted for, or otherwise
existing with respect to, the Trust or by or on behalf of any Series. The
Trustees shall have no power to bind any Shareholder personally or to call upon
any Shareholder for the payment of any sum of money or assessment whatsoever
other than such as the Shareholder may at any time personally agree to pay by
way of subscription for any Shares or otherwise. Every note, bond, contract or
other undertaking issued by or on behalf of the Trust or the Trustees relating
to the Trust or to a Series shall include a recitation limiting the obligation
represented thereby to the Trust or to one or more Series and its or their
assets (but the omission of such a recitation shall not operate to bind any
Shareholder or Trustee of the Trust).
Section 2.11 Assent to Trust Instrument. Every Shareholder, by virtue
of having purchased or otherwise acquired a Share, shall become a Shareholder
and shall be held to have expressly assented and agreed to be bound by the terms
hereof.
ARTICLE III
-----------
THE TRUSTEES
------------
Section 3.1 Management of the Trust. The Trustees shall have exclusive
and absolute control over the Trust Property and over the business of the Trust
to the same extent as if the Trustees were the sole owners of the Trust Property
and business in their own right, but with such powers of delegation as may be
permitted by this Trust Instrument. The Trustees shall have power to conduct the
business of the Trust and carry on its operations in any and all of its branches
and maintain offices both within and without the State of Delaware, in any and
all states of the United States of America, in the District of Columbia, in any
and all commonwealths, territories, dependencies, colonies, or possessions of
the United States of America, and in any foreign jurisdiction and to do all such
other things and execute all such instruments as they deem necessary, proper or
desirable in order to promote the interests of the Trust although such things
are not herein specifically mentioned. Any determination as to what is in the
interests of the Trust made by the Trustees in good faith shall be conclusive.
In
5
<PAGE>
construing the provisions of this Trust Instrument, the presumption shall be in
favor of a grant of power to the Trustees.
The enumeration of any specific power in this Trust Instrument shall
not be construed as limiting the aforesaid power. The powers of the Trustees may
be exercised without order of or resort to any court.
Except for the Trustee named herein or Trustees appointed to fill
vacancies pursuant to Section 3.4 of this Article III, the Trustees shall be
elected by the Shareholders owning of record a plurality of the Shares voting at
a meeting of Shareholders.
Section 3.2 Initial Trustee. The initial Trustee shall be the person
named herein.
Section 3.3 Term of Office of Trustees. The Trustees shall hold office
during the existence of this Trust, and until its termination as herein
provided; except (a) that any Trustee may resign his trust by written instrument
signed by him and delivered to the Chairman, President, Secretary, or other
Trustees of the Trust, which shall take effect upon such delivery or upon such
later date as is specified therein; (b) that any Trustee may be removed at any
time by written instrument, signed by at least two-thirds of the number of
Trustees prior to such removal, specifying the date when such removal shall
become effective; (c) that any Trustee who requests in writing to be retired or
who has died, become physically or mentally incapacitated by reason of disease
or otherwise, or is otherwise unable to serve, may be retired by written
instrument signed by a majority of the other Trustees, specifying the date of
his retirement; and (d) that a Trustee may be removed at any meeting of the
Shareholders of the Trust by a vote of Shareholders owning at least two-thirds
of the outstanding Shares.
Section 3.4 Vacancies and Appointment of Trustees. In case of the
declination to serve, death, resignation, retirement, removal, physical or
mental incapacity by reason of disease or otherwise of a Trustee, or a Trustee
is otherwise unable to serve, or an increase in the number of Trustees, a
vacancy shall occur. Whenever a vacancy in the Board of Trustees shall occur,
until such vacancy is filled, the other Trustees shall have all the powers
hereunder and the certificate of the other Trustees of such vacancy shall be
conclusive. In the case of an existing vacancy, the remaining Trustees shall
fill such vacancy by appointing such other person as they in their discretion
shall see fit consistent with the limitations under the 1940 Act.
An appointment of a Trustee may be made by the Trustees then in office
in anticipation of a vacancy to occur by reason of retirement, resignation or
increase in number of Trustees effective at a later date, provided that said
appointment shall become effective only at or after the effective date of said
retirement, resignation or increase in number of Trustees. As soon as any
Trustee appointed pursuant to this Section 3.4 shall have accepted this trust,
he shall be deemed a Trustee hereunder.
Section 3.5 Temporary Absence of Trustee. Any Trustee may, by power of
attorney, delegate his power for a period not exceeding six months at any one
time to any other Trustee or Trustees, provided that in no case shall less than
two Trustees personally exercise the other powers hereunder except as herein
otherwise expressly provided.
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Section 3.6 Number of Trustees. The number of Trustees shall be one, or
such other number as shall be fixed from time to time by the Trustees.
Section 3.7 Effect of Death, Resignation, Etc. of a Trustee. The
declination to serve, death, resignation, retirement, removal, incapacity, or
inability of the Trustees, or any one of them, shall not operate to terminate
the Trust or to revoke any existing agency created pursuant to the terms of this
Trust Instrument.
Section 3.8 Ownership of Assets of the Trust. Legal title in and
beneficial ownership of all of the assets of the Trust shall at all times be
considered as vested in the Trust, except that the Trustees may cause legal
title in and beneficial ownership of any Trust Property to be held by, or in the
name of one or more of the Trustees acting for and on behalf of the Trust, or in
the name of any person as nominee acting for and on behalf of the Trust. No
Shareholder shall be deemed to have a severable ownership interest in any
individual asset of the Trust or of any Series or any right of partition or
possession thereof, but each Shareholder shall have, except as otherwise
provided for herein, a proportionate undivided beneficial interest in the Trust
or Series. The Shares shall be personal property giving only the rights
specifically set forth in this Trust Instrument. The Trust, or at the
determination of the Trustees one or more of the Trustees or a nominee acting
for and on behalf of the Trust, shall be deemed to hold legal title and
beneficial ownership of any income earned on securities of the Trust issued by
any business entities formed, organized, or existing under the laws of any
jurisdiction, including the laws of any foreign country.
ARTICLE IV
----------
POWERS OF THE TRUSTEES
----------------------
Section 4.1 Powers. The Trustees in all instances shall act as
principals, and are and shall be free from the control of the Shareholders. The
Trustees shall have full power and authority to do any and all acts and to make
and execute any and all contracts and instruments that they may consider
necessary or appropriate in connection with the management of the Trust. The
Trustees shall have full authority and power to make any and all investments
which they, in their sole discretion, shall deem proper to accomplish the
purpose of this Trust. Subject to any applicable limitation in this Trust
Instrument, the Trustees shall have power and authority:
(a) To invest and reinvest cash and other property, and to
hold cash or other property uninvested, and to sell, exchange, lend, pledge,
mortgage, hypothecate, write options on and lease any or all of the assets of
the Trust;
(b) To operate as and carry on the business of an investment
company, and exercise all the powers necessary and appropriate to the conduct of
such business;
(c) To borrow money and in this connection issue notes or
other evidence of indebtedness; to secure borrowings by mortgaging, pledging or
otherwise subjecting as security the Trust Property; to endorse, guarantee, or
undertake the performance of an
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obligation or engagement of any other person and to lend Trust Property;
(d) To provide for the distribution of interests of the Trust
either through a Principal Underwriter in the manner hereinafter provided for or
by the Trust itself, or both, or otherwise pursuant to a plan of distribution of
any kind;
(e) To adopt By-laws not inconsistent with this Trust
Instrument providing for the conduct of the business of the Trust and to amend
and repeal them to the extent that they do not reserve that right to the
Shareholders, which By-laws shall be deemed a part of this Trust Instrument and
are incorporated herein by reference;
(f) To elect and remove such officers and appoint and
terminate such agents as they consider appropriate;
(g) To appoint custodians of any assets of the Trust, subject
to the 1940 Act and to any conditions set forth in this Trust Instrument;
(h) To retain one or more transfer agents and shareholder
servicing agents, or both;
(i) To set record dates in the manner provided herein or in
the By-laws;
(j) To delegate such authority (which delegation may include
the power to subdelegate) as they consider desirable to any officers of the
Trust and to any investment adviser, manager, administrator, custodian,
underwriter or other agent or independent contractor;
(k) To purchase and pay for entirely out of Trust Property
such insurance as they may deem necessary or appropriate for the conduct of the
business of the Trust, including insurance policies insuring the Trust Property
and payment of distributions and principal on its investments, and insurance
policies insuring the Shareholders, Trustees, officers, representatives,
employees, agents, investment advisers, managers, administrators, custodians,
underwriters, or independent contractors of the Trust individually against all
claims and liabilities of every nature arising by reason of holding, being or
having held any such office or position, or by reason of any action alleged to
have been taken or omitted by any such person in such capacity, including any
action taken or omitted that may be determined to constitute negligence, whether
or not the Trust would have the power to indemnify such person against such
liability.
(l) To sell or exchange any or all of the assets of the Trust,
subject to the provisions of Article XI, Section 11.4(b) hereof;
(m) To vote or give assent, or exercise any rights of
ownership, with respect to stock or other securities or property; and to execute
and deliver powers of attorney to such person or persons as the Trustees shall
deem proper, granting to such person or persons such power and discretion with
relation to securities or property as the Trustees shall deem proper;
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(n) To exercise powers and rights of subscription or otherwise
which in any manner arise out of ownership of securities;
(o) To hold any security or property in a form not indicating
any trust, whether in bearer, book entry, unregistered or other negotiable form;
or either in the name of the Trust or in the name of a custodian or a nominee or
nominees;
(p) To establish separate and distinct Series with separately
defined investment objectives and policies and distinct investment purposes in
accordance with the provisions of Article II hereof and to establish classes of
such Series having relative rights, powers and duties as they may provide
consistent with applicable law;
(q) To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or concern, any
security of which is held in the Trust; to consent to any contract, lease,
mortgage, purchase, or sale of property by such corporation or concern, and to
pay calls or subscriptions with respect to any security held in the Trust;
(r) To compromise, arbitrate, or otherwise adjust claims in
favor of or against the Trust or any matter in controversy including, but not
limited to, claims for taxes;
(s) To make distributions of income and of capital gains to
Shareholders in the manner hereinafter provided;
(t) To establish, from time to time, a minimum investment for
Shareholders in the Trust or in one or more Series or class, and to require the
redemption of the Shares of any Shareholders whose investment is less than such
minimum upon giving notice to such Shareholder;
(u) To establish one or more committees composed of one or
more of the Trustees, and to delegate any of the powers of the Trustees to said
committees, subject to the provisions of the 1940 Act. Notwithstanding the
provisions of this Article IV, and in addition to such provisions or any other
provision of this Trust Instrument or of the Bylaws, the Trustees may by
resolution appoint a committee consisting of less than the whole number of
Trustees then in office, which committee may be empowered to act for and bind
the Trustees and the Trust, as if the acts of such committee were the acts of
all the Trustees then in office, with respect to the institution, prosecution,
dismissal, settlement, review or investigation of any action, suit or proceeding
which shall be pending or threatened to be brought before any court,
administrative agency or other adjudicative body;
(v) To interpret the investment policies, practices or
limitations of any Series;
(w) To establish a registered office and have a registered
agent in the state of Delaware; and
(x) In general to carry on any other business in connection
with or incidental to any of the foregoing powers, to do everything necessary,
suitable or proper for the accomplishment of any purpose or the attainment of
any object or the furtherance of any
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power hereinbefore set forth, either alone or in association with others, and to
do every other act or thing incidental or appurtenant to or growing out of or
connected with the aforesaid business or purposes, objects or powers.
The foregoing clauses shall be construed both as objects and powers,
and the foregoing enumeration of specific powers shall not be held to limit or
restrict in any manner the general powers of the Trustees. Any action by one or
more of the Trustees in their capacity as such hereunder shall be deemed an
action on behalf of the Trust or the applicable Series, and not an action in an
individual capacity.
No one dealing with the Trustees shall be under any obligation to make
any inquiry concerning the authority of the Trustees, or to see to the
application of any payments made or property transferred to the Trustees or upon
their order.
Section 4.2 Issuance and Repurchase of Shares. The Trustees shall have
the power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold,
resell, reissue, dispose of, exchange, and otherwise deal in Shares and, subject
to the provisions set forth in Article II and Article IX, to apply to any such
repurchase, redemption, retirement, cancellation or acquisition of Shares any
funds or property of the Trust, or the particular Series of the Trust, with
respect to which such Shares are issued.
Section 4.3 Trustees and Officers as Shareholders. Any Trustee, officer
or other agent of the Trust may acquire, own and dispose of Shares to the same
extent as if such person were not a Trustee, officer or agent; and the Trustees
may issue and sell or cause to be issued and sold Shares to and buy such Shares
from any such person or any firm or company in which such person is interested,
subject to the general limitations herein contained as to the sale and purchase
of such Shares.
Section 4.4 Action by the Trustees and Committees. The Trustees (and
any committee thereof) may act at a meeting held in person or in whole or in
part by conference telephone equipment or other communications technology.
One-third, but (except at such times as there is only one Trustee) no less than
two, of the Trustees shall constitute a quorum at any meeting. Except as the
Trustees may otherwise determine, one-third of the members of any committee
shall constitute a quorum at any meeting. The vote of a majority of the Trustees
(or committee members) present at a meeting at which a quorum is present shall
be the act of the Trustees (or any committee thereof). The Trustees (and any
committee thereof) may also act by written consent signed by a majority of the
Trustees (or committee members). Regular meetings of the Trustees may be held at
such places and at such times as the Trustees may from time to time determine.
Special meetings of the Trustees (and meetings of any committee thereof) may be
called orally or in writing by the Chairman of the Board of Trustees (or the
chairman of any committee thereof) or by any two other Trustees. Notice of the
time, date and place of all meetings of the Trustees (or any committee thereof)
shall be given by the party calling the meeting to each Trustee (or committee
member) by telephone, telefax, or telegram sent to the person's home or business
address at least twenty-four hours in advance of the meeting or by written
notice mailed to the person's home or business address at least seventy-two
hours in advance of the meeting. Notice of all proposed written consents of
Trustees (or committees thereof) shall be given to each Trustee (or committee
member) by telephone, telefax, telegram,
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or first class mail sent to the person's home or business address. Notice need
not be given to any person who attends a meeting without objecting to the lack
of notice or who executes a written consent or a written waiver of notice with
respect to a meeting. Written consents or waivers may be executed in one or more
counterparts. Execution of a written consent or waiver and delivery thereof may
be accomplished by telefax.
Section 4.5 Chairman of the Trustees. The Trustees shall appoint one of
their number to be Chairman of the Board of Trustees. The Chairman shall preside
at all meetings of the Trustees at which he is present and may be (but is not
required to be) the chief executive officer of the Trust.
Section 4.6 Principal Transactions. Except to the extent prohibited by
applicable law, the Trustees may, on behalf of the Trust, buy any securities
from or sell any securities to, or lend any assets of the Trust to, any Trustee
or officer of the Trust or any firm of which any such Trustee or officer is a
member acting as principal, or have any such dealings with any investment
adviser, distributor or transfer agent for the Trust or with any Interested
Person of such person; and the Trust may employ any such person, or firm or
company in which such person is an Interested Person, as broker, legal counsel,
registrar, investment adviser, distributor, transfer agent, dividend disbursing
agent, custodian or in any other capacity upon customary terms.
ARTICLE V
EXPENSES OF THE TRUST
Section 5.1 General. The Trustees shall have the power to incur and pay
or be reimbursed from the assets of the Trust or the assets of the appropriate
Series any expenses which in the opinion of the Trustees are necessary or
incidental to carry out any of the purposes of the Trust or such Series, and to
pay reasonable compensation from the funds of the Trust to themselves as
Trustees. The Trustees shall fix the compensation of all officers, employees and
Trustees, and shall be reimbursed from the assets of the Trust or the assets of
the appropriate Series for expenses reasonably incurred by themselves on behalf
of the Trust.
Section 5.2 Expenses of Series. The Trustees shall have the power to
allocate and charge all expenses which are not readily identifiable as belonging
to any particular Series between or among any one or more of the Series as set
forth in Article II, Section 2.8 of this Trust Instrument.
Section 5.3 Trustee Reimbursement. Subject to the provisions of Article
II, Section 2.8 hereof, the Trustees shall be reimbursed from the Trust estate
or the assets belonging to the appropriate Series for their expenses and
disbursements, including, without limitation, fees and expenses of Trustees who
are not Interested Persons of the Trust, interest expense, taxes, fees and
commissions of every kind, expenses of pricing Trust portfolio securities,
expenses of issue, repurchase and redemption of shares, including expenses
attributable to a program of periodic repurchases or redemptions, expenses of
registering and qualifying the Trust and its Shares under Federal and State laws
and regulations or under the laws of any foreign
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jurisdiction, charges of third parties, including investment advisers, managers,
custodians, transfer agents, portfolio accounting and/or pricing agents, and
registrars, expenses of preparing and setting up in type prospectuses and
statements of additional information and other related Trust documents, expenses
of printing and distributing prospectuses sent to existing Shareholders,
auditing and legal expenses, reports to Shareholders, expenses of meetings of
Shareholders and proxy solicitations therefor, insurance expenses, association
membership dues and for such non-recurring items as may arise, including
litigation to which the Trust (or a Trustee acting as such) is a party, and for
all losses and liabilities by them incurred in administering the Trust, and for
the payment of such expenses, disbursements, losses and liabilities the Trustees
shall have a lien on the assets belonging to the appropriate Series, or in the
case of and expense allocable to more than one Series, on the assets of each
such Series, prior to any rights or interests of the Shareholders thereto. This
section shall not preclude the Trust from directly paying any of the
aforementioned fees and expenses.
ARTICLE VI
----------
INVESTMENT ADVISER, PRINCIPAL UNDERWRITER, ADMINISTRATOR
--------------------------------------------------------
AND TRANSFER AGENT
------------------
Section 6.1 Investment Adviser. The Trustees may in their discretion,
from time to time, enter into an investment advisory or management contract or
contracts with respect to the Trust or any Series whereby the other party or
parties to such contract or contracts shall undertake to furnish the Trust with
such management, investment advisory, statistical and research facilities and
services and such other facilities and services, if any, and all upon such terms
and conditions, as the Trustees may in their discretion determine; provided,
however, that the initial approval and entering into of such contract or
contracts shall be subject to a Majority Shareholder Vote. Notwithstanding any
other provision of this Trust Instrument, the Trustees may authorize any
investment adviser (subject to such general or specific instructions as the
Trustees may from time to time adopt) to effect purchases, sales or exchanges of
portfolio securities, other investment instruments of the Trust, or other Trust
Property on behalf of the Trustees, or may authorize any officer, agent, or
Trustee to effect such purchases, sales or exchanges pursuant to recommendations
of the investment adviser (and all without further action by the Trustees). Any
such purchases, sales and exchanges shall be deemed to have been authorized by
the Trustees.
The Trustees may authorize, subject to applicable requirements of the
1940 Act, the investment adviser to employ, from time to time, one or more
sub-advisers to perform such of the acts and services of the investment adviser,
and upon such terms and conditions, as may be agreed upon between the investment
adviser and sub-adviser. Any reference in this Trust Instrument to the
investment adviser shall be deemed to include such sub-advisers, unless the
context otherwise requires.
Section 6.2 Principal Underwriter. The Trustees may in their discretion
from time to time enter into an exclusive or non-exclusive underwriting contract
or contracts providing for the sale of Shares, whereby the Trust may either
agree to sell Shares to the other party to the contract or appoint such other
party its sales agent for such Shares. In either case, the contract may also
provide for the repurchase or sale of Shares by such other party as principal or
as
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agent of the Trust.
Section 6.3 Administrator. The Trustees may in their discretion from
time to time enter into one or more contracts whereby the other party or parties
shall undertake to furnish the Trust with administrative services. The contract
or contracts shall be on such terms and conditions as the Trustees may in their
discretion determine.
Section 6.4 Transfer Agent. The Trustees may in their discretion from
time to time enter into one or more transfer agency and Shareholder service
contracts whereby the other party or parties shall undertake to furnish the
Trustees with transfer agency and Shareholder services. The contract or
contracts shall be on such terms and conditions as the Trustees may in their
discretion determine.
Section 6.5 Parties to Contract. Any contract described in this Article
VI or any contract described in Article VIII hereof may be entered into with any
corporation, firm, partnership, trust or association, although one or more of
the Trustees or officers of the Trust may be an officer, director, trustee,
shareholder, or member of such other party to the contract, and no such contract
shall be invalidated or rendered void or voidable by reason of the existence of
any relationship, nor shall any person holding such relationship be disqualified
from voting on or executing the same in his capacity as Shareholder and/or
Trustee, nor shall any person holding such relationship be liable merely by
reason of such relationship for any loss or expense to the Trust under or by
reason of said contract or accountable for any profit realized directly or
indirectly therefrom, provided that the contract when entered into was not
inconsistent with the provisions of this Article VI or Article VIII hereof. The
same person (including a firm, corporation, partnership, trust, or association)
may be the other party to contracts entered into pursuant to this Article VI or
pursuant to Article VIII hereof, and any individual may be financially
interested or otherwise affiliated with persons who are parties to any or all of
the contracts mentioned in this Section 6.5.
ARTICLE VII
-----------
SHAREHOLDERS' VOTING POWERS AND MEETINGS
----------------------------------------
Section 7.1 Voting Powers. The Shareholders shall have power to vote
only (i) for the election of Trustees as provided in Article III, Section 3.1
hereof, (ii) for the removal of Trustees as provided in Article III, Section
3.3(d) hereof, and (iii) with respect to such additional matters relating to the
Trust as may be required by law, by this Trust Instrument, or as the Trustees
may consider desirable. On any matter submitted to a vote of the Shareholders,
all Shares shall be voted separately by individual Series, except (i) when
required by the 1940 Act, Shares shall be voted in the aggregate and not by
individual Series; and (ii) when the Trustees have determined that the matter
affects the interests of more than one Series, then the Shareholders of all such
Series shall be entitled to vote thereon. The Trustees may also determine that a
matter affects only the interests of one or more classes of a Series, in which
case any such matter shall be voted on by such class or classes. Each whole
Share shall be entitled to one vote as to any matter on which it is entitled to
vote, and each fractional Share shall be entitled to a proportionate fractional
vote. There shall be no cumulative voting in the election of Trustees. Shares
may be voted in person or by proxy or in any manner provided
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for in the By-laws. A proxy may be given in writing, by telefax, or in any other
manner provided for in the By-laws. Anything in this Trust Instrument to the
contrary notwithstanding, in the event a proposal by anyone other than the
officers or Trustees of the Trust is submitted to a vote of the Shareholders of
one or more Series or of the Trust, or in the event of any proxy contest or
proxy solicitation or proposal in opposition to any proposal by the officers or
Trustees of the Trust, Shares may be voted only in person or by written proxy.
Until Shares are issued, the Trustees may exercise all rights of Shareholders
and may take any action required or permitted by law, this Trust Instrument or
any of the By-laws of the Trust to be taken by Shareholders.
Section 7.2 Meetings. Meetings of Shareholders may be held within or
without the State of Delaware. Special meetings of the Shareholders of any
Series may be called by the Trustees and shall be called by the Trustees upon
the written request of Shareholders owning at least one-tenth of the Outstanding
Shares entitled to vote. Whenever ten or more Shareholders meeting the
qualifications set forth in Section 16(c) of the 1940 Act seek the opportunity
of furnishing materials to the other Shareholders with a view to obtaining
signatures on such a request for a meeting, the Trustees shall comply with the
provisions of said Section 16(c) with respect to providing such Shareholders
access to the list of the Shareholders of record of the Trust or the mailing of
such materials to such Shareholders of record, subject to any rights provided to
the Trust or any Trustees provided by said Section 16(c). Notice shall be sent,
by mail or such other means determined by the Trustees, at least 15 days prior
to any such meeting.
Section 7.3 Quorum and Required Vote. One-third of Shares entitled to
vote in person or by proxy shall be a quorum for the transaction of business at
a Shareholders' meeting, except that where any provision of law or of this Trust
Instrument permits or requires that holders of any Series shall vote as a Series
(or that holders of a class shall vote as a class), then one-third of the
aggregate number of Shares of that Series (or that class) entitled to vote shall
be necessary to constitute a quorum for the transaction of business by that
Series (or that class). Any lesser number shall be sufficient for adjournments.
Any adjourned session or sessions may be held without the necessity of further
notice. Except when a larger vote is required by law or by any provision of this
Trust Instrument, a majority of the Shares voted in person or by proxy shall
decide any questions and a plurality shall elect a Trustee, provided that where
any provision of law or of this Trust Instrument permits or requires that the
holders of any Series shall vote as a Series (or that the holders of any class
shall vote as a class), then a majority of the Shares present in person or by
proxy of that Series or, if required by law, a Majority Shareholder Vote of that
Series (or class), voted on the matter in person or by proxy shall decide that
matter insofar as that Series (or class) is concerned.
Section 7.4 Action by Written Consent. Any action which may be taken by
the Shareholders of the Trust or of a Series may be taken without a meeting if
Shareholders holding more than a majority of the Shares entitled to vote, except
when a larger vote is required by law or by any provision of this Trust
Instrument, shall consent to the action in writing. If the consents of all
Shareholders entitled to vote have not been solicited in writing and if the
unanimous written consent of all such Shareholders shall not have been received,
the Secretary shall give prompt notice to all Shareholders of actions approved
by the Shareholders without a meeting.
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ARTICLE VIII
------------
CUSTODIAN
---------
Section 8.1 Appointment and Duties. The Trustees shall at all times
employ a bank, a company that is a member of a national securities exchange, or
a trust company, each having capital, surplus and undivided profits of at least
two million dollars ($2,000,000) as custodian with authority as its agent:
(1) to hold the securities owned by the Trust and deliver the same upon
written order or oral order confirmed in writing;
(2) to receive and receipt for any moneys due to the Trust and deposit
the same in its own banking department or elsewhere as the Trustees may direct;
and
(3) to disburse such funds upon orders or vouchers; and the Trust may
also employ such custodian as its agent:
(4) to keep the books and accounts of the Trust or of any Series or
class and furnish clerical and accounting services; and
(5) to compute, if authorized to do so by the Trustees, the Net Asset
Value of any Series, or class thereof, in accordance with the provisions hereof;
all upon such basis of compensation as may be agreed upon between the Trustees
and the custodian.
In accordance with the 1940 Act, the Trustees may also authorize the
custodian to employ one or more sub-custodians from time to time to perform such
of the acts and services of the custodian, and upon such terms and conditions,
as may be agreed upon between the custodian and such sub-custodian and approved
by the Trustees.
Section 8.2 Central Certificate System. Subject to the 1940 Act, the
Trustees may direct the custodian to deposit all or any part of the securities
owned by the Trust in a system for the central handling of securities
established by a national securities exchange or a national securities
association, pursuant to which system all securities of any particular class or
series of any issuer deposited within the system are treated as fungible and may
be transferred or pledged by bookkeeping entry without physical delivery of such
securities, provided that all such deposits shall be subject to withdrawal only
upon the order of the Trust or its custodians, subcustodians or other agents.
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ARTICLE IX
----------
DISTRIBUTIONS AND REDEMPTIONS
-----------------------------
Section 9.1 Distributions.
(a) The Trustees may from time to time declare and pay
dividends or other distributions with respect to any Series, or class thereof.
The amount of such dividends or distributions and the payment of them and
whether they are in cash or any other Trust property shall be wholly in the
discretion of the Trustees.
(b) Dividends and other distributions may be paid or made to
the Shareholders of record at the time of declaring a dividend or other
distribution or among the Shareholders of record at such other date or time or
dates or times as the Trustees shall determine, which dividends or
distributions, at the election of the Trustees, may be paid pursuant to a
standing resolution or resolutions adopted only once or with such frequency as
the Trustees may determine. All dividends and other distributions on Shares of a
particular Series shall be distributed pro rata to the Shareholders of that
Series in proportion to the number of Shares of that Series they held on the
record date established for such payment, except that such dividends and
distributions shall reflect expenses allocated to a particular class of such
Series. The Trustees may adopt and offer to Shareholders such dividend
reinvestment plans, cash dividend payout plans or related plans as the Trustees
shall deem appropriate.
(c) Anything in this Trust Instrument to the contrary
notwithstanding, the Trustees may at any time declare and distribute a stock
dividend pro rata among the Shareholders of a particular Series, or class
thereof, as of the record date of that Series fixed as provided in Section (b)
hereof.
Section 9.2 Redemptions. In case any holder of record of Shares of a
particular Series desired to dispose of his Shares or any portion thereof, he
may deposit at the office of the transfer agent or other authorized agent of
that Series a written request or such other form of request as the Trustees may
from time to time authorize, requesting that the Series purchase the Shares in
accordance with this Section 9.2; and the Shareholder so requesting shall be
entitled to require the Series to purchase, and the Series or the Principal
Underwriter of the Series shall purchase his said Shares, but only at the Net
Asset Value thereof (as described in Section 9.3 of this Article IX). The Series
shall make payment for any such Shares to be redeemed, as aforesaid, in cash or
property from the assets of that Series and payment for such Shares shall be
made by the Series or the Principal Underwriter of the Series to the Shareholder
of record within seven (7) days after the date upon which the request is
effective. Upon redemption, shares shall become Treasury shares and may be
re-issued from time to time.
Section 9.3 Determination of Net Asset Value and Valuation of Portfolio
Assets. The term "Net Asset Value" of any Series shall mean that amount of which
the assets of that Series exceeds its liabilities, all as determined by or under
the direction of the Trustees. Such value shall be determined separately for
each Series and shall be determined on such days and at such times as the
Trustees may determine. Such determination shall be made with respect to
securities for which market quotations are readily available, at the market
value of such
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securities; and with respect to other securities and assets, at the fair value
as determined in good faith by the Trustees; provided, however, that the
Trustees, without Shareholder approval, may alter the method of valuing
portfolio securities consistent with the 1940 Act. The Trustees may delegate any
of their powers and duties under this Section 9.3 with respect to valuation of
assets and liabilities. The resulting amount, which shall represent the total
Net Asset Value of the particular Series, shall be divided by the total number
of shares of that Series outstanding at the time and the quotient so obtained
shall be the Net Asset Value per Share of that Series. At any time the Trustees
may cause the Net Asset Value per Share last determined to be determined again
in similar manner and may fix the time when such redetermined value shall become
effective. If, for any reason, the net income of any Series, determined at any
time, is a negative amount, the Trustees shall have the power with respect to
that Series (i) to offset each Shareholder's pro rata share of such negative
amount from the accrued dividend account of such Shareholder, or (ii) to reduce
the number of Outstanding Shares of such Series by reducing the number of Shares
in the amount of each Shareholder by a pro rata portion of that number of full
and fractional Shares which represents the amount of such excess negative net
income, or (iii) to cause to be recorded on the books of such Series an asset
account in the amount of such negative net income (provided that the same shall
thereupon become the property of such Series and shall not be paid to any
Shareholder), which account may be reduced by the amount, of dividends declared
thereafter upon the Outstanding Shares of such Series on the day such negative
net income is experienced, until such asset account is reduced to zero; (iv) to
combine the methods described in clauses (i) and (ii) and (iii) of this
sentence; or (v) to take any other action they deem appropriate, in order to
cause (or in order to assist in causing) the Net Asset Value per Share of such
Series to remain at a constant amount per Outstanding Share immediately after
each such determination and declaration. The Trustees shall also have the power
not to declare a dividend out of net income for the purpose of causing the Net
Asset Value per Share to be increased. The Trustees shall not be required to
adopt, but may at any time adopt, discontinue or amend the practice of
maintaining the Net Asset Value per Share of the Series at a constant amount.
Section 9.4 Suspension of the Right of Redemption. The Trustees may
declare a suspension of the right of redemption or postpone the date of payment
as permitted under the 1940 Act. Such suspension shall take effect at such time
as the Trustees shall specify but not later than the close of business on the
business day next following the declaration of suspension, and thereafter there
shall be no right of redemption or payment until the Trustees shall declare the
suspension at an end. In the case of a suspension of the right of redemption, a
Shareholder may either withdraw his request for redemption or receive payment
based on the Net Asset Value per Share next determined after the termination of
the suspension. In the event that any Series is divided into classes, the
provisions of this Section 9.4, to the extent applicable as determined in the
discretion of the Trustees and consistent with applicable law, may be equally
applied to each such class.
Section 9.5 Redemption of Shares in Order to Qualify as Regulated
Investment Company. If the Trustees shall be of the opinion that direct or
indirect ownership of Shares of any Series has or may become concentrated in any
Person to an extent which would disqualify any Series as a regulated investment
company under the Internal Revenue Code, then the Trustees shall have the power
(but not the obligation) by lot or other means deemed equitable by them (i) to
call for redemption by any such person of a number, or principal amount, of
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Shares sufficient to maintain or bring the direct or indirect ownership of
Shares into conformity with the requirements for such qualification and (ii) to
refuse to transfer or issue Shares to any person whose acquisition of the Shares
in question would result in such disqualification. The redemption shall be
effected at the redemption price and in the manner provided in this Article IX.
The holders of Shares shall upon demand disclose to the Trustees in writing such
information with respect to direct and indirect ownership of Shares as the
Trustees deem necessary to comply with the provisions of the Internal Revenue
Code, or to comply with the requirements of any other taxing authority.
ARTICLE X
---------
LIMITATION OF LIABILITY AND INDEMNIFICATION
-------------------------------------------
Section 10.1 Limitation of Liability. A Trustee, when acting in such
capacity, shall not be personally liable to any person other than the Trust or a
beneficial owner for any act, omission or obligation of the Trust or any
Trustee. A Trustee shall not be liable for any act or omission in his capacity
as Trustee, or for any act or omission of any officer or employee of the Trust
or of any other person or party, provided that nothing contained herein or in
the Delaware Business Trust Act shall protect any Trustee against any liability
to the Trust or to Shareholders to which he would otherwise be subject by reason
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office of Trustee hereunder.
Section 10.2 Indemnification. The Trust shall indemnify each of its
Trustees to the full extent permitted by law against all liabilities and
expenses (including amounts paid in satisfaction of judgments, in settlement, as
fines and penalties, and as counsel fees) reasonably incurred by such Trustee in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, in which the Trustee may be involved or
with which such Trustee may be threatened, while as a Trustee or thereafter, by
reason of being or having been such a Trustee except with respect to any matter
as to which the Trustee shall have been adjudicated to have acted in bad faith,
willful misfeasance, gross negligence or reckless disregard of such Trustee's
duties. In the event of a settlement, no indemnification shall be provided
unless there has been a determination that such Trustee did not engage in
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office, (i) by the court or other body
approving the settlement; (ii) by at least a majority of those Trustees who are
neither interested persons of the Trust nor are parties to the matter based upon
a review of readily available facts (as opposed to a full trial-type inquiry);
or (iii) by written opinion of independent legal counsel based upon a review of
readily available facts (as opposed to a full trial-type inquiry). The rights
accruing to any person under these provisions shall not exclude any other right
to which such Trustee may be lawfully entitled, provided that no person may
satisfy any right of indemnity or reimbursement hereunder except out of the
property of the Trust. The Trustees may authorize advance payments in connection
with the indemnification under this Section 10.2, provided that the indemnified
person shall have given a written undertaking to reimburse the Trust in the
event it is subsequently determined that such Trustee is not entitled to such
indemnification.
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The Trust shall indemnify officers, and shall have the power to
indemnify representatives and employees of the Trust, to the same extent that
Trustees are entitled to indemnification pursuant to this Section 10.2.
Section 10.3 Shareholders. In case any Shareholder or former
Shareholder of any Series shall be held to be personally liable solely by reason
of his being or having been a Shareholder of such Series and not because of his
acts or omissions or for some other reason, the Shareholder or former
Shareholder (or his heirs, executors, administrators or other legal
representatives, or, in the case of a corporation or other entity, its corporate
or other general successor) shall be entitled out of the assets belonging to the
applicable Series to be held harmless from and indemnified against all loss and
expense arising from such liability. The Trust, on behalf of the affected
Series, shall, upon request by the Shareholder, assume the defense of any claim
made against the Shareholder for any act or obligation of the Series and satisfy
any judgment thereon from the assets of the Series.
ARTICLE XI
----------
MISCELLANEOUS
--------------
Section 11.1 Trust Not a Partnership. It is hereby expressly declared
that a trust and not a partnership is created hereby. No Trustee hereunder shall
have any power to bind personally either the Trust's officers or any
Shareholder. All persons extending credit to, contracting with or having any
claim against the Trust or the Trustees may satisfy or enforce any debt,
liability, obligation or expense incurred, contracted for or otherwise existing
with respect to the Trust from the assets of the Trust only; and neither the
Shareholders nor the Trustees, nor any of their agents, whether past, present or
future, shall be personally liable therefor.
Section 11.2 Trustees' Good Faith Action, Expert Advice, No Bond or
Surety. The exercise by the Trustees of their powers and discretions hereunder
in good faith and with reasonable care under the circumstances then prevailing
shall be binding upon everyone interested. Subject to the provisions of Article
X hereof, the Trustees shall not be liable for errors of judgment or mistakes of
fact or law. The Trustees may take advice of counsel or other experts with
respect to the meaning and operation of this Trust Instrument, and subject to
the provisions of Article X hereof, shall be under no liability for any act or
omission in accordance with such advice or for failing to follow such advice.
The Trustees shall not be required to give any bond as such, nor any surety if a
bond is obtained.
Section 11.3 Establishment of Record Dates. The Trustees may close the
Share transfer books of the Trust for a period not exceeding ninety (90) days
preceding the date of any meeting of Shareholders, or the date for the payment
of any dividends or other distributors, or the date for the allotment of rights,
or the date when any change or conversion or exchange of Shares shall go into
effect; or in lieu of closing the stock transfer books as aforesaid, the
Trustees may fix in advance a date, not exceeding ninety (90) days preceding the
date of any meeting of Shareholders, or the date for payment of any dividend or
other distribution, or the
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date for the allotment of rights, or the date when any change or conversion or
exchange of Shares shall into effect, as a record date for the determination of
the Shareholders entitled to notice of, and to vote at, any such meeting, or
entitled to receive payment of any such dividend or other distribution, or to
any such allotment of rights, or to exercise the rights in respect of any such
change, conversion or exchange of Shares, and in such case such Shareholders and
only such Shareholders as shall be Shareholders of record on the date so fixed
shall be entitled to such notice of, and to vote at, such meeting, or to receive
payment of such dividend or other distribution, or to receive such allotment or
rights, or to exercise such rights, as the case may be, notwithstanding any
transfer of any Shares on the books of the Trust after any such record date
fixed as aforesaid.
Section 11.4 Termination of Trust or Series.
(a) This Trust shall continue without limitation of time but
subject to the provisions of sub-section (b) of this Section 11.4.
(b) The Trustees may
(i) sell and convey all or substantially all of the
assets of the Trust or any Series to another trust,
partnership, association or corporation, or to a separate
series of shares thereof, organized under the laws of any
state, for adequate consideration which may include the
assumption of all outstanding obligations, taxes and other
liabilities, accrued or contingent, of the Trust or any
Series, and which may include shares of beneficial interest,
stock or other ownership interests of such trust, partnership,
association or corporation or of a series thereof; or
(ii) at any time sell and convert into money all of
the assets of the Trust or any Series.
Upon making reasonable provision, in the determination of the Trustees,
for the payment of all such liabilities in either (i) or (ii), by such
assumption or otherwise, the Trustees shall distribute the remaining proceeds or
assets (as the case may be) of each Series (or class) ratably among the holders
of Shares of that Series then outstanding.
(c) Upon completion of the distribution of the remaining
proceeds or the remaining assets as provided in subsection (b), the Trust or any
affected Series shall terminate and the Trustees and the Trust shall be
discharged of any and all further liabilities and duties hereunder and the
right, title and interest of all parties with respect to the Trust or Series
shall be cancelled and discharged.
Upon termination of the Trust, following completion of winding up of
its business, the Trustees shall cause a certificate of cancellation of the
Trust's certificate of trust to be filed in accordance with the Delaware
Business Trust Act, which certificate of cancellation may be signed by any one
Trustee.
Section 11.5 Reorganization. Anything in this Trust Instrument to the
contrary
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notwithstanding, the Trustees, in order to change the form of organization
and/or domicile of the Trust, may, without prior Shareholder approval, (i) cause
the Trust to merge or consolidate with or into one or more trusts, partnerships,
associations or corporations which is formed, organized or existing under the
laws of a state, commonwealth possession or colony of the United States or (ii)
cause the Trust to incorporate under the laws of Delaware. Any agreement of
merger or consolidation or certificate of merger may be signed by a majority of
the Trustees. Pursuant to and in accordance with the provisions of Section
3815(f) of the Delaware Business Trust Act, and notwithstanding anything to the
contrary contained in this Trust Instrument, an agreement of merger or
consolidation approved by the Trustees in accordance with this Section 11.5 may
effect any amendment to the Trust Instrument or effect the adoption of a new
trust instrument of the Trust if it is the surviving or resulting trust in the
merger or consolidation. Any merger or consolidation of the Trust other than as
described in the foregoing provisions of this Section 11.5 shall, in addition to
the approval of the Trustees, require the approval of the holders of a majority
of the Outstanding Shares.
Section 11.6 Filing of Copies, References, Headings. The original or a
copy of this Trust Instrument and of each amendment hereof or Trust Instrument
supplemental hereto shall be kept at the office of the Trust where it may be
inspected by any Shareholder. Anyone dealing with the Trust may rely on a
certificate by an officer or Trustee of the Trust as to whether or not any such
amendments or supplements have been made and as to any matters in connection
with the Trust hereunder, and with the same effect as if it were the original,
may rely on a copy certified by an officer or Trustee of the Trust to be a copy
of this Trust Instrument or of any such amendment or supplemental Trust
Instrument. In this Trust Instrument or in any such amendment or supplemental
Trust Instrument, references to this Trust Instrument, and all expressions like
"herein," "hereof" and "hereunder," shall be deemed to refer to this Trust
Instrument as amended or affected by any such supplemental Trust Instrument. All
expressions like "his", "he" and "him", shall be deemed to include the feminine
and neuter, as well as masculine, genders. Headings are placed herein for
convenience of reference only and in case of any conflict, the text of this
Trust Instrument rather than the headings, shall control. This Trust Instrument
may be executed in any number of counterparts each of which shall be deemed an
original.
Section 11.7 Applicable Law. The trust set forth in this instrument is
made in the State of Delaware, and the Trust and this Trust Instrument, and the
rights and obligations of the Trustees and Shareholders hereunder, are to be
governed by and construed and administered according to the Delaware Business
Trust Act and the laws of said State; provided, however, that there shall not be
applicable to the Trust, the Trustees or this Trust Instrument (a) the
provisions of Section 3540 of Title 12 of the Delaware Code or (b) any
provisions of the laws (statutory or common) of the State of Delaware (other
than the Delaware Business Trust Act) pertaining to trusts which relate to or
regulate (i) the filing with any court or governmental body or agency of trustee
accounts or schedules of trustee fees and charges, (ii) affirmative requirements
to post bonds for trustees, officers, agents or employees of a trust, (iii) the
necessity for obtaining court or other governmental approval concerning the
acquisition, holding or disposition of real or personal property, (iv) fees or
other sums payable to trustees, officers, agents or employees of a trust, (v)
the allocation of receipts and expenditures to income or principal, (vi)
restrictions or limitations on the permissible nature, amount or concentration
of trust investments or requirements relating to the titling, storage or other
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manner of holding of trust assets, or (vii) the establishment of fiduciary or
other standards or responsibilities or limitations on the acts or powers of
trustees, which are inconsistent with the limitations or liabilities or
authorities and powers of the Trustees set forth or referenced in this Trust
Instrument. The Trust shall be of the type commonly called a "business trust",
and without limiting the provisions hereof, the Trust may exercise all powers
which are ordinarily exercised by such a trust under Delaware law. The Trust
specifically reserves the right to exercise any of the powers or privileges
afforded to trusts or actions that may be engaged in by trusts under the
Delaware Business Trust Act, and the absence of a specific reference herein to
any such power, privilege or action shall not imply that the Trust may not
exercise such power or privilege or take such actions.
Section 11.8 Amendments. Except as specifically provided herein, the
Trustees may, without shareholder vote, amend or otherwise supplement this Trust
Instrument by making an amendment, a Trust Instrument supplemental hereto or an
amended and restated trust instrument. Shareholders shall have the right to vote
(i) on any amendment which would affect their right to vote granted in Section
7.1 of Article VII hereof, (ii) on any amendment to this Section 11.8, (iii) on
any amendment as may be required by law and (iv) on any amendment submitted to
them by the Trustees. Any amendment required or permitted to be submitted to
Shareholders which, as the Trustees determine, shall affect the Shareholders of
one or more Series shall be authorized by vote of the Shareholders of each
Series affected and no vote of shareholders of a Series not affected shall be
required. Anything in this Trust Instrument to the contrary notwithstanding, any
amendment to Article X hereof shall not limit the rights to indemnification or
insurance provided therein with respect to action or omission of Covered Persons
prior to such amendment.
Section 11.9 Fiscal Year. The fiscal year of the Trust shall end on a
specified date as determined from time to time by the Trustees.
Section 11.10 Use of the Name "Sage/Tso Trust". The name "Sage/Tso
Trust," and all rights to the use thereof belong to Sage/Tso Investment
Management L.P. ("Sage"), the investment adviser of the Trust. Sage has
consented to the use by the Trust of such name.
Section 11.11 Provisions in Conflict with Law. The provisions of this
Trust Instrument are severable, and if the Trustees shall determine, with the
advice of counsel, that any of such provisions is in conflict with the 1940 Act,
the regulated investment company provisions of the Internal Revenue Code or with
other applicable laws and regulations, the conflicting provision shall be deemed
never to have constituted a part of this Trust Instrument; provided, however,
that such determination shall not affect any of the remaining provisions of this
Trust Instrument or render invalid or improper any action taken or omitted prior
to such determination. If any provision of this Trust Instrument shall be held
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision in such jurisdiction and
shall not in any manner affect such provisions in any other jurisdiction or any
other provision of this Trust Instrument in any jurisdiction.
IN WITNESS WHEREOF, the undersigned, being the initial Trustee of the
Trust, has executed this instrument this 9th day of February, 1996.
---------------------------
James C. Tso, Trustee
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EXHIBIT 3.(ii)
BY-LAWS
<PAGE>
SAGE/TSO TRUST
--------------
BY-LAWS
These By-laws of Sage/Tso Trust (the "Trust"), a Delaware
Business Trust, are subject to the Trust Instrument of the Trust dated February
9, 1996, as from time to time amended, supplemented or restated (the "Trust
Instrument"). Capitalized terms used herein which are defined in the Trust
Instrument are used as therein defined.
ARTICLE I
---------
PRINCIPAL OFFICE
----------------
The principal office of the Trust shall be located in such
location as the Trustees may from time to time determine. The Trust may
establish and maintain such other offices and places of business as the Trustees
may from time to time determine.
ARTICLE II
----------
OFFICERS AND THEIR ELECTION
---------------------------
Section 2.1 Officers. The officers of the Trust shall be a
President, a Treasurer, a Secretary, and such other officers as the Trustees may
from time to time elect. It shall not be necessary for any Trustee or other
officer to be a holder of Shares in the Trust.
Section 2.2 Election of Officers. Two or more offices may be
held by a single person. Subject to the provisions of Section 2.3 hereof, the
officers shall hold office until their successors are chosen and qualified and
serve at the pleasure of the Trustees.
Section 2.3 Resignations. Any officer of the Trust may resign
by filing a written resignation with the President, the Secretary or the
Trustees, which resignation shall take effect on being so filed or at such later
time as may be therein specified.
ARTICLE III
-----------
POWERS AND DUTIES OF OFFICERS AND TRUSTEES
------------------------------------------
Section 3.1 Chief Executive Officer. Unless the Trustees have
designated the Chairman as the chief executive officer of the Trust, the
President shall be the chief executive officer of the Trust. Subject to the
direction of the Trustees, the chief executive officer shall have general
administration of the business and policies of the Trust. Except as the Trustees
may otherwise order, the chief executive officer shall have the power to grant,
issue, execute or sign
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such powers of attorney, proxies, agreements or other documents as may be deemed
advisable or necessary in the furtherance of the interests of the Trust or any
Series thereof. He shall also have the power to employ attorneys, accountants
and other advisers and agents and counsel for the Trust. If the President is not
the chief executive officer, he shall perform such duties as the Trustees or the
chief executive officer may from time to time designate and, at the request or
in the absence or disability of the chief executive officer, may perform all the
duties of the chief executive officer and, when so acting, shall have all the
powers of and be subject to all the restrictions upon the chief executive
officer.
Section 3.2 Treasurer. The Treasurer shall be the principal
financial and accounting officer of the Trust. He shall deliver all funds and
securities of the Trust which may come into his hands to such company as the
Trustees shall employ as Custodian in accordance with the Trust Instrument and
applicable provisions of law. He shall make annual reports regarding the
business and condition of the Trust, which reports shall be preserved in Trust
records, and he shall furnish such other reports regarding the business and
condition of the Trust as the Trustees may from time to time require. The
Treasurer shall perform such additional duties as the Trustees or the chief
executive officer may from time to time designate.
Section 3.3 Secretary. The Secretary shall record in books
kept for the purpose all votes and proceedings of the Trustees and the
Shareholders at their respective meetings. He shall have the custody of the seal
of the Trust. The Secretary shall perform such additional duties as the Trustees
or the chief executive officer may from time to time designate.
Section 3.4 Vice President. Any Vice President of the Trust
shall perform such duties as the Trustees or the chief executive officer may
from time to time designate. At the request or in the absence or disability of
the President, the most senior Vice President present and able to act may
perform all the duties of the President and, when so acting, shall have all the
powers of and be subject to all the restrictions upon the President.
Section 3.5 Assistant Treasurer. Any Assistant Treasurer of
the Trust shall perform such duties as the Trustees or the Treasurer may from
time to time designate, and, in the absence of the Treasurer, the most senior
Assistant Treasurer present and able to act may perform all the duties of the
Treasurer.
Section 3.6 Assistant Secretary. Any Assistant Secretary of
the Trust shall perform such duties as the Trustees or the Secretary may from
time to time designate, and, in the absence of the Secretary, the most senior
Assistant Secretary present and able to act may perform all the duties of the
Secretary.
Section 3.7 Subordinate Officers. The Trustees from time to
time may appoint such other officers or agents as they may deem advisable, each
of whom shall have such title, hold office for such period, have such authority
and perform such duties as the Trustees may determine.
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Section 3.8 Surety Bonds. The Trustees may require any officer
or agent of the Trust to execute a bond (including, without limitation, any bond
required by the Investment Company Act of 1940 ("1940 Act") in such sum and with
such surety or sureties as the Trustees may determine, conditioned upon the
faithful performance of his duties to the Trust including responsibility for
negligence and for the accounting of any of the Trust's property, funds or
securities that may come into his hands.
Section 3.9 Removal. Any officer may be removed from office at
any time by the Trustees.
Section 3.10 Remuneration. The salaries or other compensation,
if any, of the officers of the Trust shall be fixed from time to time by
resolution of the Trustees.
ARTICLE IV
----------
SHAREHOLDERS' MEETINGS
----------------------
Section 4.1 Notices. Notices of any meeting of the
Shareholders shall be given by the Secretary by delivering or mailing, postage
prepaid, to each Shareholder entitled to vote at said meeting, written or
printed notification of such meeting at least fifteen days before the meeting,
to such address as may be registered with the Trust by the Shareholder. Notice
of any Shareholder meeting need not be given to any Shareholder if a written
waiver of notice, executed before or after such meeting, is filed with the
record of such meeting, or to any Shareholder who shall attend such meeting in
person or by proxy. Notice of adjournment of a Shareholders' meeting to another
time or place need not be given, if such time and place are announced at the
meeting or reasonable notice is given to persons present at the meeting.
Section 4.2 Voting-Proxies. Subject to the provisions of the
Trust Instrument, Shareholders entitled to vote may vote either in person or by
proxy, provided that either (i) an instrument authorizing such proxy to act is
executed by the Shareholder in writing and dated not more than eleven months
before the meeting, unless the instrument specifically provides for a longer
period or (ii) the Trustees adopt by resolution an electronic, telephonic,
computerized or other alternative to execution of a written instrument
authorizing the proxy to act, which authorization is received not more than
eleven months before the meeting. Proxies shall be delivered to the Secretary of
the Trust or other person responsible for recording the proceedings before being
voted. A proxy with respect to Shares held in the name of two or more persons
shall be valid if executed by one of them unless at or prior to exercise of such
proxy the Trust receives a specific written notice to the contrary from any one
of them. Unless otherwise specifically limited by their terms, proxies shall
entitle the holder thereof to vote at any adjournment of a meeting. A proxy
purporting to be exercised by or on behalf of a Shareholder shall be deemed
valid unless challenged at or prior to its exercise and the burden of proving
invalidity shall rest on the challenger. At all meetings of the Shareholders,
unless the voting is conducted by inspectors, all questions relating to the
qualifications of voters, the validity of proxies, and the
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acceptance or rejection of votes shall be decided by the Chairman of the
meeting. Except as otherwise provided herein or in the Trust Instrument, all
matters relating to the giving, voting or validity of proxies shall be governed
by the General Corporation Law of the State of Delaware relating to proxies, and
judicial interpretations thereunder, as if the Trust were a Delaware corporation
and the Shareholders were shareholders of a Delaware corporation.
Section 4.5 Place of Meeting. All meetings of the Shareholders
shall be held at such places as the Trustees may designate.
ARTICLE V
---------
SHARES OF BENEFICIAL INTEREST
-----------------------------
Section 5.1 Share Certificate. No certificates certifying the
ownership of Shares shall be issued except as the Trustees may otherwise
authorize. The Trustees may issue certificates to a Shareholder of any Series or
class thereof for any purpose and the issuance of a certificate to one or more
Shareholders shall not require the issuance of certificates generally. In the
event that the Trustees authorize the issuance of Share certificates, such
certificates shall be in the form prescribed from time to time by the Trustees
and shall be signed by the President or a Vice President and by the Treasurer,
Assistant Treasurer, Secretary or Assistant Secretary. Such signatures may be
facsimiles if the certificate is signed by a transfer or shareholder services
agent or by a registrar, other than a Trustee, officer or employee of the Trust.
In case any officer who has signed or whose facsimile signature has been placed
on such certificate shall have ceased to be such officer before such certificate
is issued, it may be issued by the Trust with the same effect as if he or she
were such officer at the time of its issue.
Section 5.2 Loss of Certificate. In case of the alleged loss
or destruction or the mutilation of a Share certificate, a duplicate certificate
may be issued in place thereof, upon such terms as the Trustees may prescribe.
Section 5.3 Discontinuance of Issuance of Certificates. The
Trustees may at any time discontinue the issuance of Share certificates and may,
by written notice to each Shareholder, require the surrender of Share
certificates to the Trust for cancellation. Such surrender and cancellation
shall not affect the ownership of Shares of the Trust.
ARTICLE VI
----------
INSPECTION OF BOOKS
-------------------
The Trustees shall from time to time determine whether and to
what extent, and at what times and places, and under what conditions and
regulations the accounts and books of the Trust or any of them shall be open to
the inspection of the Shareholders; and no Shareholder shall
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have any right to inspect any account or book or document of the Trust except as
conferred by law or otherwise by the Trustees.
ARTICLE VII
-----------
SEAL
----
The seal of the Trust shall be circular in form bearing the inscription:
"SAGE/TSO TRUST -- 1996
THE STATE OF DELAWARE"
The form of the seal shall be subject to alteration by the
Trustees and the seal may be used by causing it or a facsimile to be impressed
or affixed or printed or otherwise reproduced.
Any officer or Trustee of the Trust shall have authority to
affix the seal of the Trust to any document, instrument or other paper executed
and delivered by or on behalf of the Trust; however, unless otherwise required
by the Trustees, the seal shall not be necessary to be placed on, and its
absence shall not impair the validity of, any document, instrument, or other
paper executed by or on behalf of the Trust.
ARTICLE VIII
------------
AMENDMENTS
----------
These By-laws may be amended from time to time by the Trustees.
ARTICLE IX
----------
HEADINGS
--------
Headings are placed in these By-laws for convenience of
reference only and, in case of any conflict, the text of these By-laws rather
than the headings shall control.
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