As Filed with the Securities and Exchange Commission on June 26,
1996
Registration Nos. 33[ ]
811[ ]
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
________________
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No.
Post-Effective Amendment No.
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 X
Amendment No.
(Check appropriate box or boxes)
_______________
FIRST CHOICE FUNDS TRUST
(Exact Name of Registrant as Specified in Charter)
237 Park Avenue
New York, New York 10017
(Address of Principal Executive Offices; Zip Code)
Registrant's Telephone Number, including Area Code: (800)
_______________
John J. Pileggi
237 Park Avenue
New York, New York 10017
(Name and Address of Agent for Service)
Copy to:
Steven R. Howard, Esq.
Baker & McKenzie
805 Third Avenue
New York, New York 10022
Approximate date of proposed public offering: As soon as
practicable after the effective date of the Registration Statement.
Registrant has elected, pursuant to Rule 24f-2 under the
Investment Company Act of 1940, to register an indefinite number of
shares with this registration statement. In accordance with Rule
24f-2, a registration fee in the amount of $500 has previously been
paid.
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 Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
FIRST CHOICE FUNDS TRUST
Registration Statement on Form N-1A
CROSS REFERENCE SHEET
Pursuant to Rule 495(a)
under the Securities Act of 1933
U.S. TREASURY RESERVE FUND
CASH RESERVE FUND
Part A: Prospectus Prospectus Caption
Item 1. Cover Page Cover Page
Item 2. Synopsis Fund Expenses; Fee Table
Item 3. Condensed Financial Not Applicable
Information
Item 4. General Description of The Funds; The Investment
Registrant Policies and Practices of
the Funds
Item 5. Management of the Fund Management of the Funds
Item 5A. Management's Discussion Not Applicable
of Fund Performance
Item 6. Capital Stock and Other Dividends, Distributions and
Securities Federal Income Tax; Other
Information
Item 7. Purchase of Securities Fund Valuation; Pricing and
Being Offered Purchase of Fund Shares
Item 8. Redemption or Repurchase Redemption of Fund Shares
Item 9. Legal Proceedings Not Applicable
U.S. TREASURY RESERVE FUND
CASH RESERVE FUND
Part B: Statement of Additional Statement of Additional
Information Information Caption
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and Not Applicable
History
Item 13. Investment Objective and Investment Policies;
Policies Investment Restrictions
Item 14. Management of the Management
Registrant
Item 15. Control Persons and Management
Principal Holders of
Securities
Item 16. Investment Advisory and Management; Custodian;
Other Services Experts
Item 17. Brokerage Allocation Portfolio Transactions
Item 18. Capital Stock and Shares of Beneficial Interest
Other Securities
Item 19. Purchase, Redemption and Pricing and Purchase of Fund
Pricing of Securities Shares (Part A); Redemption of
Being Offered Fund Shares (Part A);
Determination of Net Asset
Value Per Share
Item 20. Tax Status Taxation
Item 21. Underwriters Management
Item 22. Calculation of Calculation of Yields and
Performance Data Performance Information
Item 23. Financial Statements Not Applicable
Part C
Information required to be included in Part C is set forth under
the appropriate Item, so numbered, in Part C of this Registration
Statement.
<PAGE>
FIRST CHOICE FUNDS TRUST
237 Park Avenue
New York, New York 10017
General and Account Information:
(800) ___-______
PROSPECTUS
First American Capital Management, Inc.--Investment Adviser
("First American" or "Adviser")
FURMAN SELZ LLC--Administrator, Sponsor and Distributor
("Furman Selz")
This Prospectus describes two money market funds ("U.S.
Treasury Reserve Fund" and "Cash Reserve Fund") (collectively, the
"Funds"), both of which are managed by First American. The Funds
and their investment objectives are:
The U.S. Treasury Reserve Fund seeks to provide investors
with as high a level of current income as is consistent
with liquidity, maximum safety of principal and the
maintenance of a stable $1.00 net asset value by investing
in U.S. Treasury securities and related repurchase
agreements.
The Cash Reserve Fund seeks to provide investors with
current income, liquidity and the maintenance of a stable
$1.00 net asset value by investing in high quality, short-term
obligations.
The Fund's investment Adviser is First American Capital
Management, Inc., an affiliate of First American Financial
Management Corporation, a leading provider of real estate financial
services to real property buyers and mortgage lenders (the "First
American Group"). See "Management of Fund" in this Prospectus.
The Funds offer and the Prospectus relates to two classes of
shares the Institutional Class and Service Class. The
Institutional Class of shares are available to customers of
financial institutions or corporations on behalf of their customers
or employees, or on behalf of any trust, pension, profit sharing or
other benefit plan for such customers or employees. The Service
Class of shares are available to all other investors. The
Institutional Class shares and Service Class shares are identical
in all respects, with the exception that the Institutional Class
shares do not impose any shareholder servicing or Rule 12b-1 fees.
The Funds are separate investment funds of First Choice Funds
Trust (the "Trust"), a Delaware business trust and registered
management investment company.
An investment in shares of the Trust is neither insured nor
guaranteed by the U.S. Government. There can be no assurance that
the Funds will be able to maintain a stable net asset value of
$1.00 per share. Shares of the Trust are not deposits or
obligations of, or guaranteed or endorsed by the First American
Group or its affiliates, and are not federally insured by the
Federal Deposit Insurance Corporation, the Federal Reserve Board,
or any other government agency, and may involve investment risk,
including the possible loss of principal.
This Prospectus sets forth concisely the information a
prospective investor should know before investing in either of the
Funds and should be read and retained for information about each
Fund.
A Statement of Additional Information (the "SAI"), dated
, 1996, containing additional and more detailed information
about the Funds has been filed with the Securities and Exchange
Commission ("SEC") and is hereby incorporated by reference into
this Prospectus. It is available without charge and can be obtained
by writing or calling the Funds at the address and information
numbers printed above.
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.
The Date of this Prospectus is , 1996.
Table of Contents
Page
FUND EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . .1
FEE TABLE. . . . . . . . . . . . . . . . . . . . . . . . . . . .1
HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . .2
THE INVESTMENT POLICIES AND PRACTICES OF THE FUNDS . . . . . . .4
INVESTMENT RESTRICTIONS. . . . . . . . . . . . . . . . . . . . .9
RISKS OF INVESTING IN THE FUNDS. . . . . . . . . . . . . . . . 10
MANAGEMENT OF THE FUNDS. . . . . . . . . . . . . . . . . . . . 11
FUND SHARE VALUATION . . . . . . . . . . . . . . . . . . . . . 14
PRICING AND PURCHASE OF FUND SHARES. . . . . . . . . . . . . . 14
MINIMUM PURCHASE REQUIREMENTS. . . . . . . . . . . . . . . . . 15
INDIVIDUAL RETIREMENT ACCOUNTS . . . . . . . . . . . . . . . . 15
EXCHANGE OF FUND SHARES. . . . . . . . . . . . . . . . . . . . 15
REDEMPTION OF FUND SHARES. . . . . . . . . . . . . . . . . . . 16
DIVIDENDS, DISTRIBUTIONS AND FEDERAL INCOME TAX. . . . . . . . 18
OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . . . 20
<PAGE>
FUND EXPENSES
The following expense table lists the costs and expenses that
an investor will incur either directly or indirectly as a
shareholder of each Fund. The information is based upon estimates.
FEE TABLE
U.S. Treasury Cash Reserve
Reserve Fund Fund
Institutional Service Institutional Service
Class Class Class Class
Maximum Sales Load None None None None
Imposed on Purchases (as a
percentage of offering price)
Maximum Sales Load Imposed None None None None
on Reinvested Dividends (as a
percentage of offering price)
Deferred Sales Load (as a None None None None
percentage of redemption proceeds)
Redemption Proceeds1 None None None None
Exchange Fee None None None None
Annual Fund Operating Expenses
(as a percent of average net assets)
Management Fees .30% 30% 30% 30%
12b-1 Fees none 0% none 0%
Other Expenses
Shareholder Servicing
Expenses none .25% none .25%
Other Operating Expenses .20% .20% .20% .20%
Total Fund Operating
Expenses2 .50% .75% .50% .75%
___________
1 Shareholders may be charged a wire redemption fee by their bank
for receiving a wire payment on their behalf.
2 Absent waivers, which may be discontinued at any time, Total
Portfolio Operating Expenses would be __% for the U.S. Treasury
Reserve Fund and __% for the Cash Reserve Fund.
Example:*
You would pay the following expenses on a $1,000 investment,
assuming (1) 5% gross annual return and (2) redemption at the end
of each time period:
U.S. Treasury Cash Reserve
Reserve Fund Fund
Institutional Service Institutional Service
Class Class Class Class
1 year 5 8 5 8
3 years 16 24 16 24
The purpose of this table is to assist a shareholder in
understanding the various costs and expenses that an investor in
the Funds will bear.
__________________
*This example should not be considered a representation of future
expenses which may be more or less than those shown. The assumed
5% annual return is hypothetical and should not be considered a
representation of past or future annual return; actual return may
be greater or less than the assumed amount.
HIGHLIGHTS
Investment Objectives and Policies of the Funds
This Prospectus describes two money market funds -
(collectively, the "Funds"), both of which are managed by First
American. Each Fund has distinct investment objectives and
policies.
U.S. Treasury Reserve Fund. The investment objective of the
U.S. Treasury Reserve Fund is to provide investors with as high a
level of current income as is consistent with liquidity, maximum
safety of principal, and the maintenance of a stable $1.00 net
asset value per share by investing in U.S. Treasury securities and
related repurchase agreements. The Fund invests exclusively in
short-term obligations of the United States Treasury, which are
backed by the full faith and credit of the United States
Government. The U.S. Treasury Reserve Fund my also purchase
securities on a "when issued" basis and purchase or sell them on a
"forward commitment" basis.
Cash Reserve Fund. The investment objective of the Cash
Reserve Fund is to provide investors with current income, liquidity
and the maintenance of a stable $1.00 net asset value per share by
investing in high quality, U.S. dollar-denominated short-term
obligations which are determined by the Adviser to present minimal
credit risks.
The Cash Reserve Fund will invest in obligations permitted to
be purchased under Rule 2a-7 of the Investment Company Act of 1940
(the "1940 Act") including, but not limited to, (1) obligations of
the U.S. Government or its agencies or instrumentalities; (2)
commercial paper, loan participation interests, medium-term notes,
asset-backed securities and other promissory notes, including
floating or variable rate obligations; and (3) domestic, Yankee
dollar and Eurodollar certificates of deposit, time deposits,
bankers' acceptances, commercial paper, bearer deposit notes and
other promissory notes, including floating or variable rate
obligations issued by U.S. or foreign bank holding companies and
their bank subsidiaries, branches and agencies. The Cash Reserve
Fund will invest only in issuers or instruments that at the time of
purchase (1) have received the highest short-term rating by at
least two Nationally Recognized Statistical Rating Organizations
("NRSROs") such as "A-1" by Standard & Poor's and "P-1" by Moody's;
(2) are single rated and have received the highest short-term
rating by a NRSRO; or (3) are unrated, but are determined to be of
comparable quality by the Adviser pursuant to guidelines approved
by the Board. The Cash Reserve Fund may also purchase securities
on a "when-issued" basis and purchase or sell them on a "forward
commitment" basis.
The Cash Reserve Fund will concentrate its investments in
obligations issued by the banking industry. Concentration in this
context means the investment of more than 25% of the Cash Reserve
Fund's assets in such investments. However, for temporary,
defensive purposes during periods when the Adviser believes that
maintaining this concentration may be inconsistent with the best
interest of shareholders, the Cash Reserve Fund will not maintain
this concentration. The Cash Reserve Fund's policy of
concentration in the banking industry increases the Fund's exposure
to market conditions prevailing in that industry.
The Cash Reserve Fund may also invest in variable amount
master demand obligations, which are unsecured demand notes that
permit the indebtedness thereunder to vary, and provide for
periodic adjustments in the interest rate. Because master demand
obligations are direct lending arrangements between the Cash
Reserve Fund and the issuer, they are not normally traded. There
is no secondary market for the notes; however, the period of time
remaining until payment of principal and accrued interest can be
recovered under a variable amount master demand obligation
generally shall not exceed seven days. To the extent this period
is exceeded, the obligation in question would be considered
illiquid. Issuers of variable amount master demand obligations
must satisfy the same criteria as set forth for other promissory
notes (e.g., commercial paper). The Cash Reserve Fund will invest
in variable amount master demand obligations only when such
obligations are determined by the Adviser, pursuant to guidelines
established by the Board of Trustees, to be of comparable quality
to rated issuers or instruments eligible for investment by the Cash
Reserve Fund. In determining weighted average dollar portfolio
maturity, a variable amount master demand obligation will be deemed
to have a maturity equal to the longer of the period of time
remaining until the next readjustment of the interest rate or the
period of time remaining until the principal amount can be
recovered from the issuer on demand.
Amortized Cost Method of Valuation for the Funds
Portfolio investments of each Fund are valued based on the
amortized cost valuation technique pursuant to Rule 2a-7 under the
1940 Act. Obligations in which the Funds invest generally have
remaining maturities of 397 days or less, although instruments
subject to repurchase agreements and certain variable and floating
rate obligations may bear longer final maturities. The weighted
average dollar portfolio maturity of each Fund will not exceed 90
days. See the SAI for an explanation of the amortized cost
valuation method.
Risks of Investing in the Funds
The Funds attempt to maintain the value of their shares at a
constant $1.00 share price, although there can be no assurance that
the Funds will always be able to do so. The Funds may not achieve
as high a level of current income as other funds that do not limit
their investments to the high quality securities in which the Funds
invest.
Management of the Funds
First American Capital Management, Inc. acts as investment
Adviser to both of the Funds. For its services, First American
receives a fee from each Fund based upon each Fund's average daily
net assets. See "Fee Table" in this Prospectus.
Furman Selz LLC acts as administrator, sponsor and distributor
to the Funds. For its services, Furman Selz receives a fee from
the Funds based on each Fund's average daily net assets. See
"Management of the Funds" in this Prospectus. The Distributor
distributes the Funds' shares and may be reimbursed for certain of
its distribution-related expenses.
Guide to Investing in the First Choice Trust Family of Funds
Purchase orders for the Funds received by 12:00 noon Eastern
time will become effective that day, subject to the following
limitations:
Minimum Initial Investment . . . . . . . . . . . . . . . $1,000
Minimum Initial Investment for IRAs. . . . . . . . . . . $ 250
Minimum Subsequent Investment. . . . . . . . . . . . . . $ 50
The Funds are purchased at net asset value.
Shareholders may exchange shares between Funds by telephone or
mail. Exchanges may not be effected by facsimile.
Minimum initial exchange . . . . . . . . . . . . . . . . $500
(minimum for subsequent exchanges)
Shareholders may redeem shares by telephone, mail, wire, or by
writing a check. Shares may not be redeemed by facsimile.
If a redemption request is received by 12:00 noon
Eastern time, proceeds from the Funds will be
transferred to a designated account on that day.
Minimum check amount when using the check
writing service is $500.
The Funds reserve the right to redeem upon not less
than 30 days notice all shares in a Fund's account
which have an aggregate value of $500 or less.
(Redemption by telephone, wire and check writing is not
available for IRAs and trust relationships of First American Trust
Company or its affiliates.)
All distributions will be automatically paid in additional
shares at net asset value of the applicable Fund unless cash
payment is requested.
Distributions for the Funds are paid monthly.
THE INVESTMENT POLICIES AND PRACTICES OF THE FUNDS
Each Fund is a separate investment fund or portfolio, commonly
known as a mutual fund. The Funds are portfolios of a Delaware
business trust, First Choice Funds Trust, organized under the laws
of Delaware as an open-end, investment management company. The
Trust's Board of Trustees oversees the overall management of the
Funds and elects the officers of the Trust.
The investment objective of the U.S. Treasury Reserve
Fund is to provide investors with as high a level of
current income as is consistent with liquidity, maximum
safety of principal, and the maintenance of a stable
$1.00 net asset value per share.
The investment objective of the Cash Reserve Fund is to
provide investors with current income, liquidity and the
maintenance of a stable $1.00 net asset value by
investing in high quality, short-term obligations.
Each Fund follows its own investment objectives and policies,
including certain investment restrictions. The SAI contains
specific investment restrictions which govern the Funds'
investments. The Funds' investment objectives are fundamental
policies, which means that they may not be changed without a
majority vote of shareholders of the affected Fund. Except for the
objectives and those restrictions specifically identified as
fundamental, all other investment policies and practices described
in this Prospectus and in the SAI are not fundamental and may be
changed solely through the approval of the Board of Trustees.
The Adviser selects investments and makes investment
decisions based on the investment objective and policies of each
Fund. The following is a description of securities and investment
practices that the funds can invest in:
U.S. Treasury Obligations (Both Funds). Each Fund may invest
in U.S. Treasury obligations, whose principal and interest are
backed by the full faith and credit of the United States
Government. U.S. Treasury obligations consist of bills, notes, and
bonds and separately traded interest and principal component parts
of such obligations known as STRIPS which generally differ in their
interest rates and maturities. U.S. Treasury bills, which have
original maturities of up to one year, notes, which have maturities
ranging from one year to 10 years, and bonds, which have original
maturities of 10 to 30 years, are direct obligations of the United
States Government.
U.S. Government Securities (Cash Reserve Fund Only). U.S.
Government securities are obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities. U.S.
Government securities include debt securities issued or guaranteed
by U.S. Government-sponsored enterprises and federal agencies and
instrumentalities. Some types of U.S. Government securities are
supported by the full faith and credit of the United States
Government or U.S. Treasury guarantees, such as mortgage-backed
certificates guaranteed by the Government National Mortgage
Association ("GNMA"). Other types of U.S. Government securities,
such as obligations of the Student Loan Marketing Association,
provide recourse only to the credit of the agency or
instrumentality issuing the obligation. In the case of obligations
not backed by the full faith and credit of the United States
Government, the investor must look to the agency issuing or
guaranteeing the obligation for ultimate repayment.
Commercial Paper (Cash Reserve Fund Only). Commercial paper
includes short-term unsecured promissory notes, variable rate
demand notes and variable rate master demand notes issued by both
domestic and foreign bank holding companies, corporations and
financial institutions and United States Government agencies and
instrumentalities. All commercial paper purchased by the Cash
Reserve Fund is, at the time of investment, rated in one of the top
two rating categories of at least one NRSRO, or, if not rated is,
in the opinion of the Adviser, of an investment quality comparable
to rated commercial paper in which the Fund may invest, or, is (i)
rated "P-1" by Moody's Investors Service, Inc. ("Moody's") and "A-1" or
better by Standard &
Poor's Corporation ("S&P") or in a
comparable rating category by any two NRSROs that have rated the
commercial paper or (ii) rated in a comparable category by only one
such organization if it is the only organization that has rated the
commercial paper.
Corporate Debt Securities (Cash Reserve Fund Only). The Cash
Reserve Fund may purchase corporate debt securities, subject to the
rating and quality requirements specified above. The Fund may
invest in both rated commercial paper and rated corporate debt
obligations of foreign issuers that meet the same quality criteria
applicable to investments by the Fund in commercial paper and
corporate debt obligations of domestic issuers. These investments,
therefore, are not expected to involve significant additional risks
as compared to the risks of investing in comparable domestic
securities. Generally, all foreign investments carry with them
both opportunities and risks not applicable to investments in
securities of domestic issuers, such as risks of foreign political
and economic instability, adverse movements in foreign exchange
rates, the imposition or tightening of exchange controls or other
limitations on repatriation of foreign capital, changes in foreign
governmental attitudes toward private investment (possibly leading
to nationalization, increased taxation, or confiscation of foreign
assets) and added difficulties inherent in obtaining and enforcing
a judgment against a foreign issuer of securities should it
default.
Domestic and Foreign Bank Obligations (Cash Reserve Fund
Only). These obligations include but are not restricted to
certificates of deposit, commercial paper, Yankee certificates of
deposit, bankers' acceptances, Eurodollar certificates of deposit
and time deposits, promissory notes and medium term deposit notes.
The Cash Reserve Fund will not invest in any obligations of its
affiliates, as defined under the 1940 Act.
The Cash Reserve Fund limits its investment in United States
bank obligations to obligations of United States banks (including
foreign branches). The Fund limits its investment in foreign bank
obligations to United States dollar-denominated obligations of
foreign banks (including United States branches of foreign banks)
which in the opinion of the Adviser, are of an investment quality
comparable to obligations of United States banks which may be
purchased by the Fund. There is no limitation on the amount of the
Fund's assets which may be invested in obligations of foreign banks
which meet the conditions set forth herein.
Fixed time deposits may be withdrawn on demand by the
investor, but may be subject to early withdrawal penalties which
vary depending upon market conditions and the remaining maturity of
the obligation. There are no contractual restrictions on the right
to transfer a beneficial interest in a fixed time deposit to a
third party, although there is no market for such deposits.
Investments in fixed time deposits subject to withdrawal penalties
maturing from two days through seven days may not exceed 10% of the
value of the total assets of the Funds.
Obligations of foreign banks involve somewhat different
investment risks than those affecting obligations of United States
banks, including the possibilities that their liquidity could be
impaired because of future political and economic developments,
that the obligations may be less marketable than comparable
obligations of United States banks, that a foreign jurisdiction
might impose withholding taxes on interest income payable on those
obligations, that foreign deposits may be seized or nationalized,
that foreign governmental restrictions such as exchange controls
may be adopted which might adversely affect the payment of
principal and interest on those obligations and that the selection
of those obligations may be more difficult because there may be
less publicly available information concerning foreign banks or the
accounting, auditing and financial reporting standards, practices
and requirements applicable to foreign banks may differ from those
applicable to Untied States banks. In that connection, foreign
banks are not subject to examination by any United States
Government agency or instrumentality.
Investments in Eurodollar and Yankeedollar obligations involve
additional risks. Most notably, there generally is less publicly
available information about foreign companies; there may be less
governmental regulation and supervision; they may use different
accounting and financial standards; and the adoption of foreign
governmental restrictions may adversely affect the payment of
principal and interest on foreign investments. In addition, not
all foreign branches of United States banks are supervised or
examined by regulatory authorities as are United States banks, and
such branches may not be subject to reserve requirements.
Zero Coupon Securities (Both Funds). Each Fund may invest in
zero coupon securities. A zero coupon security pays no interest to
its holder during its life and is sold at a discount to its face
value at maturity. The market prices of zero coupon securities
generally are more volatile than the market prices of securities
that pay interest periodically and are more sensitive to changes in
interest rates than non-zero coupon securities having similar
maturities and credit qualities.
Variable rate demand obligations (Cash Reserve Fund Only).
Variable rate demand obligations have a maturity of 397 days or
less, but carry with them the right of the holder to put the
securities to a remarketing agent or other entity on short notice,
typically seven days or less. Generally, the remarketing agent
will adjust the interest rate every seven days (or at other
intervals corresponding to the notice period for the put), in order
to maintain the interest rate at the prevailing rate for securities
with a seven-day maturity. The remarketing agent is typically a
financial intermediary that has agreed to perform these services.
Variable rate master demand obligations permit a Fund to invest
fluctuating amounts at varying rates of interest pursuant to direct
arrangements between the Fund, as lender, and the borrower.
Because the obligations are direct lending arrangements between the
Fund and the borrower, they will not generally be traded, and there
is no secondary market for them, although they are redeemable (and
thus immediately repayable by the borrower) at principal amount,
plus accrued interest, at any time. The borrower also may prepay
up to the full amount of the obligation without penalty. While
master demand obligations, as such, are not typically rated by
credit rating agencies, if not so rated, the Fund may, under its
minimum rating standards, invest in them only if, in the opinion of
the Adviser, they are of an investment quality comparable to other
debt obligations in which the Fund may invest and are within the
credit quality policies, guidelines and procedures established by
the Board of Trustees. See the SAI for further details on variable
rate demand obligations and variable rate master demand
obligations.
Other Mutual Funds (Both Funds). Each Fund may invest in
shares of other open-end, management investment companies, subject
to the limitations of the 1940 Act and subject to such investments
being consistent with the overall objective and policies of the
Fund making such investment, provided that any such purchases will
be limited to short-term investments in shares of unaffiliated
investment companies. The purchase of securities of other mutual
funds results in duplication of expenses such that investors
indirectly bear a proportionate share of the expenses of such
mutual funds including operating costs, and investment advisory and
administrative fees.
"When Issued" and "Forward Commitment" Transactions (Both
Funds). Each Fund may purchase securities on a when issued and
delayed delivery basis and may purchase or sell securities on a
forward commitment basis. When issued or delayed delivery
transactions arise when securities are purchased by a Fund with
payment and delivery taking place in the future in order to secure
what is considered to be an advantageous price and yield to the
Fund at the time of entering into the transaction. A forward
commitment transaction is an agreement by a Fund to purchase or
sell securities at a specified future date. When a Fund engages in
these transactions, the Fund relies on the buyer or seller, as the
case may be, to consummate the sale. Failure to do so may result
in the Fund missing the opportunity to obtain a price or yield
considered to be advantageous. When issued and delayed delivery
transactions and forward commitment transactions may be expected to
occur a month or more before delivery is due. However, no payment
or delivery is made by a Fund until it receives payment or delivery
from the other party to the transaction. A separate account
containing only liquid assets such as cash, U.S. Government
securities, or other liquid high grade debt obligations equal to
the value of purchase commitments will be maintained until payment
is made. Such securities have the effect of leverage on the Funds
and may contribute to volatility of a Fund's net asset value. For
further information, see the SAI.
Loans of Portfolio Securities (Both Funds). To increase
current income, each Fund may lend its portfolio securities in an
amount up to 33 1/3% of each such Fund's total assets to brokers,
dealers and financial institutions, provided certain conditions are
met, including the condition that each loan is secured continuously
by collateral maintained on a daily mark-to-market basis in an
amount at least equal to the current market value of the securities
loaned. These transactions involve a loan by the applicable Fund
and are subject to the same risks as repurchase agreements. For
further information, see the SAI.
Repurchase Agreements (Cash Reserve Fund Only). Each Fund may
enter into repurchase agreements with any bank and broker-dealer
which, in the opinion of the Trustees, presents a minimum risk of
bankruptcy. Under a repurchase agreement a Fund acquires
securities and obtains a simultaneous commitment from the seller to
repurchase the securities at a specified time and at an agreed upon
yield. The agreements will be fully collateralized and the value
of the collateral, including accrued interest, marked-to-market
daily. The agreements may be considered to be loans made by the
purchaser, collateralized by the underlying securities. If the
seller should default on its obligation to repurchase the
securities, a Fund may experience a loss of income from the loaned
securities and a decrease in the value of any collateral, problems
in exercising its rights to the underlying securities and costs and
time delays in connection with the disposition of securities. Both
Funds may invest up to 100% of their net assets in repurchase
agreements maturing in seven days or less; however, neither Fund
may invest more than 10% of its net assets in repurchase agreements
maturing in more than seven business days and in securities for
which market quotations are not readily available. For more
information about repurchase agreements, see "Investment Policies"
in the SAI.
Reverse Repurchase Agreements (Both Funds). Each Fund may also
enter into reverse repurchase agreements to avoid selling
securities during unfavorable market conditions to meet
redemptions. Pursuant to a reverse repurchase agreement, a Fund
will sell portfolio securities and agree to repurchase them from
the buyer at a particular date and price. Whenever a Fund enters
into a reverse repurchase agreement, it will establish a segregated
account in which it will maintain liquid assets in an amount at
least equal to the repurchase price marked to market daily
(including accrued interest), and will subsequently monitor the
account to ensure that such equivalent value is maintained. The
Fund pays interest on amounts obtained pursuant to reverse
repurchase agreements. Reverse repurchase agreements are
considered to be borrowings by a Fund under the 1940 Act.
INVESTMENT RESTRICTIONS
(Both Funds, except as indicated)
The Funds also operate under certain investment restrictions.
Investment Restriction No. 4 is a fundamental policy of the Funds,
which can be changed only when permitted by law and approved by a
majority of the Funds' outstanding voting securities. The non-fundamental
investment
restrictions can be changed by approval of
a majority of the Board of Trustees. A "majority of the
outstanding voting securities" means the lesser of (i) 67% of the
shares represented at a meeting at which more than 50% of the
outstanding shares are represented in person or by proxy or (ii)
more than 50% of the outstanding shares. See "Other Information --Voting"
(1) No Fund may invest more than 10% of the aggregate value
of its net assets in investments which are illiquid, or not readily
marketable (including repurchase agreements having maturities of
more than seven calendar days, time deposits having maturities of
more than seven calendar days, and securities of foreign issuers
that are not listed on a recognized domestic or foreign securities
exchange).
(2) No Fund may borrow money or pledge or mortgage its
assets, except that a Fund may borrow from banks up to 10% of the
current value of its total net assets for temporary or emergency
purposes and those borrowings may be secured by the pledge of not
more than 15% of the current value of that Fund's total net assets
(but investments may not be purchased by a Fund while any such
borrowings exist).
(3) No Fund may make loans, except loans of portfolio
securities and except that a Fund may enter into repurchase
agreements with respect to its portfolio securities and may
purchase the types of debt instruments described in this
Prospectus.
(4) No Fund will purchase a security if, as a result, more
than 25% of the value of its total assets would be invested in
securities of one or more issuers conducting their principal
business activities in the same industry (except for the Cash
Reserve Fund, which will concentrate its investments in obligations
issued by the banking industry), provided that this limitation
shall not apply to obligations issued or guaranteed by the U.S.
Government or its agencies and instrumentalities;
In addition, each Fund is a diversified fund. As such, each
will not, with respect to 75% of its total assets, invest more than
5% of its total assets in the securities of any one issuer (except
for U.S. Government securities). The Funds are subject to further
diversification requirements with respect to 100% of their assets.
If a percentage restriction on investment policies or the
investment or use of assets set forth in this Prospectus are
adhered to at the time a transaction is effected, later changes in
percentage resulting from changing asset values will not be
considered a violation.
RISKS OF INVESTING IN THE FUNDS
Certain Risk Considerations
The Funds attempt to maintain a constant net asset value of
$1.00 per share, although there can be no assurance that they will
always be able to do so. The Funds may not achieve as high a level
of current income as other funds that do not limit their investment
to the high quality securities in which the Funds invest.
There is, of course, no assurance that a Fund will achieve its
investment objective or be successful in preventing or minimizing
the risk of loss that is inherent in investing in particular types
of investment products. In order to attempt to minimize that risk,
the Adviser monitors developments in the economy, the securities
markets, and with each particular issuer. Also, as noted earlier,
each diversified Fund is managed within certain limitations that
restrict the amount of a Fund's investment in any single issuer.
MANAGEMENT OF THE FUNDS
The business and affairs of each Fund are managed under the
direction of the Board of Trustees. Information about the
Trustees, as well as the Trust's executive officers, may be found
in the SAI under the heading "Management--Trustees and Officers."
The Adviser: First American Capital Management, Inc.
First American Capital Management, Inc. has agreed to
provide investment advisory services to the Funds
pursuant to an Advisory Agreement with the Trust (the
"Advisory Agreement"). Subject to such policies as the
Trust's Board of Trustees may determine, First American
makes investment decisions for the Funds. For the
advisory services it provides to the Funds, First
American receives fees based on average daily net assets
up to the following annualized rates: U.S. Treasury
Reserve Fund, _____%; Cash Reserve Fund, _____%.
First American is a wholly-owned subsidiary of First
American Financial Corporation. [First American acts as
the investment adviser to a wide variety of trusts,
individuals, institutions and corporations.] Its
investment management responsibilities, as of _________
1996, included accounts with aggregate assets of
approximately $___ billion. The principal business
address of First American is 114 East Fifth Street, Santa
Ana, California 92701. The Adviser has no prior
experience as an adviser to an investment company.
Based upon the advice of counsel, First American believes that
the performance of investment advisory services for the Funds will
not violate the Glass-Steagall Act or other applicable banking laws
or regulations. However, future statutory or regulatory changes,
as well as future judicial or administrative decisions and
interpretations of present and future statutes and regulations,
could prevent First American from continuing to perform such
services for the Funds. If First American were prohibited from
acting as investment adviser to the Funds, it is expected that the
Board of Trustees would recommend to shareholders approval of a new
investment advisory agreement with another qualified investment
adviser selected by the Board or that the Board would recommend
other appropriate action.
The Sponsor and Distributor
Furman Selz LLC, 237 Park Avenue, New York, New York 10017,
acts as Sponsor and Distributor (the "Distributor") of the Funds.
Furman Selz is primarily an institutional brokerage firm with
membership on the New York, American, Boston, Midwest, Pacific and
Philadelphia Stock Exchanges. Furman Selz also serves as
administrator and distributor of other mutual funds.
The Distributor may from time to time pay a bonus or other
incentive to dealers that employ registered representatives who
sell a minimum dollar amount of shares of the Funds. Such bonus or
other incentive may take the form of payment for travel expenses,
including lodging, incurred in connection with trips taken by
qualifying registered representatives and members of their families
to places within or without the United States, or other bonuses,
such as gift certificates or the cash equivalent of such bonuses.
The Funds have adopted a Rule 12b-1 Distribution Plan and
Agreement (the "Plan") pursuant to which each Fund may reimburse
the Distributor, or others, on a monthly basis for costs and
expenses of the Distribution in connection with the distribution
and marketing of shares. These costs and expenses, which are
subject to a maximum limit of 0.25% per annum of the average daily
net assets of the Fund, include (i) advertising by radio,
television, newspapers, magazines, brochures, sales literature,
direct mail or any other form of advertising, (ii) expenses of
employees or agents of the Distributor, including salary,
commissions, travel and related expenses, (iii) payments to broker-dealers
and financial
institutions for services in connection with
the distribution of shares, including promotional incentives and
fees calculated with reference to the average daily net asset value
of shares held by shareholders who have a brokerage or other
service relationship with the broker-dealer or other institution
receiving such fees, (iv) costs of printing prospectuses,
statements of additional information and other materials to be
given or sent to prospective investors, (v) such other similar
services as the Trustees determine to be reasonably calculated to
result in the sale of shares of the Funds, (vi) costs of
shareholder servicing which may be incurred by broker-dealers,
banks or other financial institutions, and (vii) other direct and
indirect distribution-related expenses, including the provision of
services with respect to maintaining the assets of the Funds. Each
Fund will pay all costs and expenses in connection with the
preparation, printing and distribution of its Prospectus to current
shareholders and the operation of its Plan, including related legal
and accounting fees. Neither Fund will be liable for distribution
expenditures made by the Distributor in any given year in excess of
the maximum amount payable under the Plan for that Fund year.
Administrative Services
The Funds have also entered into an Administrative Services
Contract with Furman Selz pursuant to which Furman Selz provides
certain management and administrative services necessary for the
Funds' operations including: (i) general supervision of the
operation of the Funds including coordination of the services
performed by the Funds' Advisers, transfer agent, custodian,
independent accountants and legal counsel, regulatory compliance,
including the compilation of information for documents such as
reports to, and filings with, the SEC and state securities
commissions, and preparation of proxy statements and shareholder
reports for the Funds; (ii) general supervision relative to the
compilation of data required for the preparation of periodic
reports distributed to the Funds' Officers and Board of Trustees;
and (iii) furnishing office space and certain facilities required
for conducting the business of the Funds. For these services,
Furman Selz receives from each Fund a fee, payable monthly, at the
annual rate of _____% of each Fund's average daily net assets.
Pursuant to a Services Agreement between the Trust and the
Administrator, Furman Selz assists the Trust with certain transfer
and dividend disbursing agent functions and receives a fee of $____
per account per year plus out-of-pocket expenses. Pursuant to a
Fund Accounting Agreement between the Trust and the Administrator,
the Administrator assists the Trust in calculating net asset values
and provides certain other accounting services for each Fund
described therein, for an annual fee of $______ per Fund plus
out-of-pocket expenses.
Service Organizations
Various banks, trust companies, broker-dealers (other than the
Sponsor) or other financial organizations (collectively, "Service
Organizations") also may provide administrative services for the
Funds, such as maintaining shareholder accounts and records. The
Funds may pay fees to Service Organizations (which vary depending
upon the services provided) in amounts up to an annual rate of .25%
of the daily net asset value of the Funds' shares owned by
shareholders with whom the Service Organization has a servicing
relationship.
Some Service Organizations may impose additional or different
conditions on their clients, such as requiring their clients to
invest more than a Fund's minimum initial or subsequent investments
or charging a direct fee for servicing. If imposed, these fees
would be in addition to any amounts which might be paid to the
Service Organization by the Funds. Each Service Organization has
agreed to transmit to its clients a schedule of any such fees.
Shareholders using Service Organizations are urged to consult with
them regarding any such fees or conditions.
The Glass-Steagall Act and other applicable laws provide that,
among other things, banks may not engage in the business of
underwriting, selling or distributing securities. There is
currently no precedent prohibiting banks from performing
administrative and shareholder servicing functions as Service
Organizations. However, judicial or administrative decisions or
interpretations of such laws, as well as changes in either Federal
or state regulations relating to the permissible activities of
banks and their subsidiaries or affiliates, could prevent a bank
Service Organization from continuing to perform all or a part of
its servicing activities. If a bank were prohibited from so
acting, its shareholder clients would be permitted to remain
shareholders of the Funds and alternative means for continuing the
servicing of such shareholders would be sought. It is not expected
that shareholders would suffer any adverse financial consequences
as a result of any of these occurrences.
Other Expenses
Each Fund bears all costs of its operations other than
expenses specifically assumed by Furman Selz and First American.
The costs borne by the Funds include legal and accounting expenses;
Trustees' fees and expenses; insurance premiums; custodian and
transfer agent fees and expenses; expenses incurred in acquiring or
disposing of the Funds' portfolio securities; expenses of
registering and qualifying the Funds' shares for sale with the SEC
and with various state securities commissions; expenses of
obtaining quotations on the Funds' portfolio securities and pricing
of the Funds' shares; expenses of maintaining the Funds' legal
existence and of shareholders' meetings; and expenses of
preparation and distribution to existing shareholders of reports,
proxies and prospectuses. Each Fund bears its own expenses
associated with its establishment as a series of the Trust; these
expenses are amortized over a five-year period from the
commencement of a Fund's operations. See "Management" in the SAI.
Trust expenses directly attributable to a Fund are charged to that
Fund; other expenses are allocated proportionately among all of the
Funds in the Trust in relation to the net assets of each Fund.
FUND SHARE VALUATION
The net asset value per share of the Funds is calculated at
12:00 noon (Eastern time), Monday through Friday, on each day the
New York Stock Exchange and the New York Federal Reserve are open
for business, which excludes the following business holidays: New
Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Columbus
Day, Veterans Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day. The net asset value
per share is computed by dividing the value of the net assets
(i.e., the value of the assets less the liabilities) by the total
number of outstanding shares. All expenses, including fees paid to
the Adviser, the Administrator and the distributor, are accrued
daily and taken into account for the purpose of determining the net
asset value. Expenses directly attributable to a Fund are charged
to the Fund; other expenses are allocated proportionately among
each Fund within the Trust in relation to the net assets of each
Fund, or on another reasonable basis. These general expenses
(e.g., investment advisory fees) are allocated among the Funds
based on each Fund's relative net asset value.
The Funds use the amortized cost method to value their
portfolio securities and seek to maintain a constant net asset
value of $1.00 per share, although there may be circumstances under
which this goal cannot be achieved. The amortized cost method
involves valuing a security at its cost and amortizing any discount
or premium over the period until maturity, regardless of the impact
of fluctuating interest rates on the market value of the security.
There can be no assurances that at all times the price per share
can be maintained. However, the Board of Trustees has established
procedures designed to stabilize, to the extent reasonably
possible, the $1.00 per share price of each Fund. See the SAI for
a more complete description of the amortized cost method.
PRICING AND PURCHASE OF FUND SHARES
Orders for the purchase of shares will be executed at the net
asset value per share next determined after an order has been
received.
All funds received are invested in full and fractional shares
of the appropriate Fund. Certificates for shares are not issued.
The Administrator maintains records of each shareholder's holdings
of Fund shares, and each shareholder receives a statement of
transactions, holdings and dividends. The Funds reserve the right
to reject any purchase.
An investment may be made using any of the following methods:
Through an Authorized Broker, Investment Adviser or Service
Organization. Shares are available to new and existing
shareholders through authorized brokers, investment advisers and
Service Organizations. To make an investment using this method,
simply complete a Purchase Application and contact your broker,
investment adviser or Service Organization with instructions as to
the amount you wish to invest. Your broker will then contact the
Distributor to place the order on your behalf on that day.
Orders for the Funds received prior to 12:00 noon will become
effective that day. Brokers who receive orders are obligated to
transmit them promptly. You should receive written confirmation of
your order within a few days of receipt of instructions from your
broker.
By Wire. Subject to acceptance by the Trust, shares of each
Fund may be purchased by wiring federal funds to Investors
Fiduciary Trust Company (see instructions below). A completed
Account Application should be forwarded to the Trust at the address
noted below under "Initial Investments by Mail" in advance of the
wire. Notification must be given at 1-800-( ) prior to
4:15 p.m., New York time, on the wire date. (Prior notification
must also be received from investors with existing accounts.)
Funds should be wired through the Federal Reserve Bank to:
Investors Fiduciary Trust Company
ABA #
Account #
F/B/O First Choice Funds Trust
Ref. (Fund Name)
Federal funds purchases will be accepted only on a day on which
each of the Trust, the Distributor and the custodian bank are open
for business.
When new accounts are established by wire, the distribution
options will be set to reinvest and the social security or tax
identification number ("TIN") will not be certified until a signed
application is received. Completed applications should be
forwarded immediately to the Distributor. With the Purchase
Application, the shareholder can specify other distribution options
and add any special features offered by a Fund. Should any
dividend distributions or redemptions be paid before the TIN is
certified, they will be subject to 31% Federal tax withholding.
Institutional Accounts. Bank trust departments and other
institutional accounts may place orders directly with the
Distributor by telephone at (800) _______.
MINIMUM PURCHASE REQUIREMENTS
The minimum initial investment in the Funds is $1,000 unless
the investor is a purchaser who at the time of purchase, has a
balance of $1,000 or more in any of the First Choice Trust Funds,
is a purchaser through a trust investment manager or account
manager or is administered by the Adviser, is an employee or an ex-employee
of First American
or is an employee of any of its
affiliates, the Administrator , or any other service provider, or
is an employee of any trust customer of First American Financial
Corporation or any of its affiliates. Note that the minimum is
$250 for an IRA, other than an IRA for which First American
Financial Corporation or any of its affiliates acts as trustee or
custodian. Any subsequent investments must be at least $50,
including an IRA investment. All initial investments should be
accompanied by a completed Purchase Application. A Purchase
Application accompanies this Prospectus. Different minimums apply,
and a separate application is required for IRA investments. The
Funds reserve the right to reject purchase orders.
INDIVIDUAL RETIREMENT ACCOUNTS
All Funds may be used as a funding medium for IRAs. Shares
may also be purchased for IRAs established with First American or
any of its affiliates or other authorized custodians. Completion
of a special application is required in order to create such an
account, and the minimum initial investment for an IRA is $250.
Contributions to IRAs are subject to prevailing amount limits set
by the Internal Revenue Service. A $7.50 establishment fee and an
annual $15 maintenance and custody fee is payable with respect to
each IRA, and there will be a $12 termination fee when the account
is closed. For more information and IRA information, call the
Funds at (800) ___-______.
EXCHANGE OF FUND SHARES
The Funds offer two convenient ways to exchange shares in one
Fund for shares in another Fund in the Trust. Before engaging in
an exchange transaction, a shareholder should read carefully the
Prospectus describing the Fund into which the exchange will occur,
which is available without charge and can be obtained by writing to
the Fund at 237 Park Avenue, New York, New York 10017, or by
calling (800) ___-____. A shareholder may not exchange shares of
one Fund for shares of the other Fund if the new Fund is not
qualified for sale in the state of the shareholder's residence.
The minimum amount for an initial exchange is $500. No minimum is
required in subsequent exchanges. The Trust may terminate or amend
the terms of the exchange privilege at any time.
A new account opened by exchange must be established with the
same name(s), address and social security number as the existing
account. All exchanges will be made based on the net asset value
next determined following receipt of the request by a Fund in good
order, plus any applicable sales charge. An exchange is taxable as
a sale of a security on which a gain or loss may be recognized.
Shareholders should receive written confirmation of the exchange
within a few days of the completion of the transaction.
Shareholders will receive at least 60 days prior written notice of
any modification or termination of the exchange privilege.
Exchange by Mail. To exchange Fund shares by mail, simply
send a letter of instruction to the Administrator. The letter of
instruction must include: (i) your account number; (ii) the Fund
from and the Fund into which you wish to exchange your investment;
(iii) the dollar or share amount you wish to exchange; and (iv) the
signatures of all registered owners or authorized parties. To
protect shareholder accounts, the Trust and its transfer agent form
fraud, signature guarantees are required to enable the Trust to
verify the identity of the person who has authorized a redemption
from an account. Signature guarantees are required for (1)
redemptions where the proceeds are to be sent to someone other than
the registered shareholder(s) at their registered address, (2)
redemptions of $25,000 or more, and (3) share transfer requests.
Signature guarantees may be obtained from certain eligible
financial institutions, including but not limited to, the
following: banks, trust companies, credit unions, securities
brokers and dealers, savings and loan associations and participants
in the Securities and Transfer Association Medallion Program
("STAMP"), the Stock Exchange Medallion Program ("SEMP") or the New
York Stock Exchange Medallion Signature Program ("MSP").
Shareholders may contact the Trust at 1-800-( ) for
further details.
Exchange by Telephone. To exchange Fund shares by telephone
or if you have any questions simply call the Funds at (800) ___-____.
You should be prepared to
give the telephone representative
the following information: (i) your account number, social security
or tax identification number and account registration; (ii) the
name of the Fund from and the Fund into which you wish to transfer
your investment; and (iii) the dollar or share amount you wish to
exchange. The conversation may be recorded to protect you and the
Funds. Telephone exchanges are available only if the shareholder
so indicates by checking the "yes" box on the Purchase Application.
See "Redemption of Fund Shares--By Telephone" for a discussion of
telephone transactions generally.
Automatic Investment Program. An eligible shareholder may
also participate in the Automatic Investment Program, an investment
plan that automatically debits money from the shareholder's bank
account and invests it in one or both of the Funds in the Trust
through the use of electronic funds transfers or automatic bank
drafts. Shareholders may elect to make subsequent investments by
transfers of a minimum of $50 each month into their established
Fund account. Contact the Funds for more information about the
Automatic Investment Program.
REDEMPTION OF FUND SHARES
Shareholders may redeem their shares, in whole or in part, on
any business day. Shares will be redeemed at the net asset value
next determined after a redemption request in good order has been
received by the applicable Fund. See "Determination of Net Asset
Value." A redemption may be a taxable transaction on which gain or
loss may be recognized. Generally, however, gain or loss is not
expected to be realized on a redemption of shares of the Funds,
both of which seek to maintain a net asset value per share of
$1.00.
Where the shares to be redeemed have been purchased by check,
the redemption request will be returned if the purchasing check has
not cleared, which may take up to fifteen days. Shareholders may
avoid this delay by investing through wire transfers of Federal
funds. During the period prior to the time the shares are
redeemed, dividends on the shares will continue to accrue and be
payable and the shareholder will be entitled to exercise all other
beneficial rights of ownership.
Once the shares are redeemed, a Fund will ordinarily send the
proceeds by check to the shareholder at the address of record on
the next business day. The Funds may, however, take up to seven
days to make payment. This will not be the customary practice.
Also, if the New York Stock Exchange is closed (or when trading is
restricted) for any reason other than the customary weekend or
holiday closing or if an emergency condition as determined by the
SEC merits such action, the Funds may suspend redemptions or
postpone payment dates.
Redemption Methods. To ensure acceptance of your redemption
request, it is important to follow the procedures described below.
Although the Funds have no present intention to do so, the Funds
reserve the right to refuse or to limit the frequency of any
telephone or wire redemptions. Because it may be difficult to
place orders by telephone during periods of severe market or
economic change, a shareholder should consider alternative methods
of communications, such as couriers. The Funds' services and their
provisions may be modified or terminated at any time by the Funds.
If the Funds terminate any particular service, they will do so only
after giving written notice to shareholders. Redemption by mail
will always be available to shareholders.
You may redeem your shares using any of the following methods:
Through an Authorized Broker, Investment Adviser or Service
Organization. You may redeem your shares by contacting your broker
or investment adviser and instructing him or her to redeem your
shares. He or she will then contact the Distributor and place a
redemption trade on your behalf. He or she may charge you a fee
for this service.
By Mail. You may redeem your shares by sending a letter
directly to the Distributor. To be accepted, a letter requesting
redemption must include: (i) the Fund name and account registration
from which you are redeeming shares; (ii) your account number;
(iii) the amount to be redeemed; and (iv) the signatures of all
registered owners. To protect shareholder accounts, the Trust and
its transfer agent from fraud, signature guarantees are required to
enable the Trust to verify the identity of the person who has
authorized a redemption from an account. Signature guarantees are
required for (1) redemptions where the proceeds are to be sent to
someone other than the registered shareholder(s) at their
registered address, (2) redemptions of $25,000 or more, and (3)
share transfer requests. Signature guarantees may be obtained from
certain eligible financial institutions, including but not limited
to, the following: banks, trust companies, credit unions,
securities brokers and dealers, savings and loan associations and
participants in the Securities and Transfer Association Medallion
Program ("STAMP"), the Stock Exchange Medallion Program ("SEMP") or
the New York Stock Exchange Medallion Signature Program ("MSP").
Shareholders may contact the Trust at 1-800-( ) for
further details.
By Telephone. Provided the Telephone Redemption Option has
been authorized by an investor in an account application, a
redemption of shares may be requested by calling the Transfer Agent
at 1-800-( ) and requesting that the redemption process
be mailed to the primary registration address or wired per the
authorized instructions. If the Telephone Redemption Option [or
the Telephone Exchange Option (as described below)] is authorized,
the Transfer Agent may act on telephone instruction from any person
representing himself or herself to be a shareholder and believed by
the Transfer Agent to be genuine. The Transfer Agent's records of
such instructions are binding and the shareholder, and not the
Trust or the Transfer Agent, bears the risk of loss in the event of
unauthorized instructions reasonably believed by the Transfer Agent
to be genuine. The Transfer Agent will employ reasonable
procedures to confirm that instructions communicated are genuine
and, if it does not, it may be liable for any losses due to
unauthorized or fraudulent instructions. The procedures employed
by the Transfer Agent in connection with transactions initiated by
telephone include tape recording of telephone instructions and
requiring some form of personal identification prior to acting upon
instructions received by telephone.
[Check Writing. A check redemption ($500 minimum) feature is
available with respect to the Funds. Checks are free and may be
obtained from the Funds. It is not possible to use a check to
close out your account since additional shares accrue daily.]
The above-mentioned services "By Telephone," "By Wire" [and
"Check Writing"] are not available for IRAs and trust relationships
of the Adviser.
Systematic Withdrawal Plan. An owner of $10,000 or more of
shares of a Fund may elect to have periodic redemptions from his or
her account to be paid on a monthly, quarterly, semi-annual or
annual basis. The minimum periodic payment is $100. A sufficient
number of shares to make the scheduled redemption will normally be
redeemed on the date selected by the shareholder. Depending on the
size of the payment requested and fluctuation in the net asset
value, if any, of the shares redeemed, redemptions for the purpose
of making such payments may reduce or even exhaust the account. A
shareholder may request that these payments be sent to a
predesignated bank or other designated party. Capital gains and
dividend distributions paid to the account will automatically be
reinvested at net asset value on the distribution payment date.
Redemption of Small Accounts. Due to the disproportionately
higher cost of servicing small accounts, each Fund reserves the
right to redeem, on not less than 30 days' notice, an account in a
Fund that has been reduced by a shareholder to $500 or less.
However, if during the 30-day notice period the shareholder
purchases sufficient shares to bring the value of the account above
$500, this restriction will not apply.
Redemption in Kind. All redemptions of shares of the Funds
shall be made in cash, except that the commitment to redeem shares
in cash extends only to redemption requests made by each
shareholder of a Fund during any 90-day period of up to the lesser
of $250,000 or 1% of the net asset value of that Fund at the
beginning of such period. This commitment is irrevocable without
the prior approval of the SEC and is a fundamental policy of the
Funds that may not be changed without shareholder approval. In the
case of redemption requests by shareholders in excess of such
amounts, the Board of Trustees reserves the right to have the Funds
make payment, in whole or in part, in securities or other assets,
in case of an emergency or any time a cash distribution would
impair the liquidity of a Fund to the detriment of the existing
shareholders. In this event, the securities would be valued in the
same manner as the securities of that Fund are valued. If the
recipient were to sell such securities, he or she could receive
less than the redemption value of the securities and could incur
certain transaction costs.
DIVIDENDS, DISTRIBUTIONS AND FEDERAL INCOME TAX
Each Fund intends to qualify annually and to elect to be
treated as a regulated investment company pursuant to the
provisions of Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). By so qualifying and electing, each Fund
generally will not be subject to Federal income tax to the extent
that it distributes investment company taxable income and net
capital gains in the manner required under the Code.
Each Fund intends to distribute to its shareholders
substantially all of its investment company taxable income (which
includes, among other items, dividends and interest and the excess,
if any, of net short-term capital gains (generally including any
net option premium income) over net long-term capital losses). The
Funds will declare distributions of such income daily and pay those
dividends monthly. Each Fund intends to distribute, at least
annually, substantially all net capital gains (the excess of net
long-term capital gains over net short-term capital losses). In
determining amounts of capital gains to be distributed, any capital
loss carryovers from prior years will be applied against capital
gains.
Distributions will be paid in additional Fund shares based on
the net asset value at the close of business on the payment date of
the distribution, unless the shareholder elects in writing, not
less than five full business days prior to the record date, to
receive such distributions in cash. Dividends declared in, and
attributable to, the preceding month will be paid within five
business days after the end of each month.
Shares purchased will begin earning dividends on the day the
purchase order is executed and shares redeemed will earn dividends
through the previous day. Net investment income for a Saturday,
Sunday or a holiday will be declared as a dividend on the previous
business day. In the case of the other Funds that declare daily
dividends, shares purchased will begin earning dividends on the day
after the purchase order is executed, and shares redeemed will earn
dividends through the day the redemption is executed.
Investors who redeem all or a portion of Fund shares prior to
a dividend payment date will be entitled on the next dividend
payment date to all dividends declared but unpaid on those shares
at the time of their redemption.
Distributions of investment company taxable income (regardless
of whether derived from dividends, interest or short-term capital
gains) will be taxable to shareholders as ordinary income.
Distributions of net long-term capital gains properly designated by
a Fund as capital gain dividends will be taxable as long-term
capital gains, regardless of how long a shareholder has held his
Fund shares. The Funds do not anticipate realizing a substantial
amount of net long-term capital gains. Distributions are taxable
in the same manner whether received in additional shares or in
cash.
Earnings of the Funds not distributed on a timely basis in
accordance with a calendar year distribution requirement are
subject to a nondeductible 4% excise tax. To prevent imposition of
this tax, each Fund intends to comply with this distribution
requirement.
A distribution, including an "exempt-interest dividend," will
be treated as paid on December 31 of the calendar year if it is
declared by a Fund during October, November, or December of that
year to shareholders of record in such a month and paid by a Fund
during January of the following calendar year. Such distributions
will be treated as received by shareholders in the calendar year in
which the distributions are declared, rather than the calendar year
in which the distributions are received.
A Fund's distributions with respect to a given taxable year
may exceed the current and accumulated earnings and profits of that
Fund available for distribution. In that event, distributions in
excess of such earnings and profits would be characterized as a
return of capital to shareholders for Federal income tax purposes,
thus reducing each shareholder's cost basis in his Fund shares.
Such distributions in excess of a shareholder's cost basis in his
shares would be treated as a gain realized from a sale of such
shares.
Any gain or loss realized by a shareholder upon the sale or
other disposition of shares of a Fund, or upon receipt of a
distribution in complete liquidation of a Fund, generally will be
a capital gain or loss which will be long-term or short-term,
generally depending upon the shareholder's holding period for the
shares. A loss realized by a shareholder on a redemption, sale, or
exchange of shares of a Fund held six months or less with respect
to which capital gain dividends have been paid will be
characterized as a long-term capital loss to the extent of such
capital gain dividends.
The Funds may be required to withhold for Federal income tax
("backup withholding") 31% of the distributions and the proceeds of
redemptions payable to shareholders who fail to provide a correct
taxpayer identification number or to make required certifications,
or where a Fund or shareholder has been notified by the Internal
Revenue Service that the shareholder is subject to backup
withholding. Most corporate shareholders and certain other
shareholders specified in the Code and regulations are exempt from
backup withholding. Backup withholding is not an additional tax.
Any amounts withheld may be credited against the shareholder's U.S.
Federal income tax liability.
The Cash Reserve Fund, when investing in securities of foreign
issuers, may be subject to withholding and other similar income
taxes imposed by the foreign country. The Fund intends to elect,
if it is eligible to do so under the Code, to "pass-through" to its
shareholders the amount of such foreign taxes paid. If such an
election is made by the Fund, each shareholder of the Fund will be
required to include in gross income the taxable dividends received
and the amount of pro rata share of those foreign taxes paid by the
Fund. Each shareholder would be entitled either to deduct (as an
itemized deduction) their pro rata share of the foreign taxes in
computing their taxable income or to use it (subject to
limitations) as a foreign tax credit against their U.S. Federal
income tax liability. No deduction for foreign taxes may be
claimed by a shareholder who does not itemize deductions. Each
shareholder will be notified within 60 days after the close of a
Fund's taxable year whether the foreign taxes paid by the Fund will
"pass-through" for that year.
Shareholders will be notified annually by the Trust as to the
Federal tax status of distributions made by the Fund(s) in which
they invest. Depending on the residence of the shareholder for tax
purposes, distributions also may be subject to state and local
taxes, including withholding taxes. Foreign shareholders may, for
example, be subject to special withholding requirements. Special
tax treatment, including a penalty on certain pre-retirement
distributions, is accorded to accounts maintained as IRAs.
Shareholders should consult their own tax advisers as to the
Federal, state and local tax consequences of ownership of shares of
the Funds in their particular circumstances.
OTHER INFORMATION
Capitalization Structure
First Choice Funds Trust was organized as a Delaware business
trust on ________________, 1996, and currently consists of two
separately managed portfolios. The Trust's Board of Trustees has
authorized the issuance of multiple series representing shares in
corresponding investment portfolios of the Trust. The Board of
Trustees may establish additional portfolios in the future. The
capitalization of the Trust consists solely of an unlimited number
of shares of beneficial interest with a par value of $0.001 each.
All shares of the Trust have equal voting rights and will be voted
in the aggregate, and not by class, except where voting by class is
required by law or where the matter involved affects only one
class. The Funds offer and the Prospectus relates to two classes
of shares the Institutional Class and the Service Class. The
Institutional Class of shares are available to customers of
financial institutions or corporations on behalf of their customers
or employees, or on behalf of any trust, pension, profit sharing or
other benefit plan for such customers or employees. The Service
Class of shares are available to all other investors. The
Institutional Class shares and Service Class shares are identical
in all respects, with the exception that Institutional Class shares
do not impose any shareholding servicing or Rule 12b-1 fees. All
shares of the Trust issued and outstanding are fully paid and
nonassessable. The Fund will be treated as a separate entity for
Federal income tax purposes.
Under Delaware law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the
Trust. However, the Declaration of Trust disclaims liability of
the shareholders, Trustees or officers of the Trust for acts or
obligations of the Trust, which are binding only on the assets and
property of the Trust and requires that notice of the disclaimer be
given in each contract or obligation entered into or executed by
the Trust or the Trustees. The Declaration of Trust provides for
indemnification out of Trust property for all loss and expense of
any shareholder held personally liable for the obligations of the
Trust. The risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in
which the Trust itself would be unable to meet its obligations and
should be considered remote.
Voting
Shareholders have the right to vote in the election of
Trustees and on any and all matters on which, by law or under the
provisions of the Declaration of Trust, they may be entitled to
vote. The Trust is not required to hold regular annual meetings of
the Funds' shareholders and does not intend to do so. The Trustees
are required to call a meeting for the purpose of considering the
removal of a person serving as Trustee if requested in writing to
do so by the holders of not less than 10% of the outstanding shares
of the Trust and in connection with such meeting to comply with the
shareholders' communications provisions of Section 16(c) of the
Act. See "Other Information--Voting Rights" in the SAI.
Shares entitle their holders to one vote per share (with
proportionate voting for fractional shares). As used in this
Prospectus, the phrase "vote of a majority of the outstanding
shares" of a Fund (or the Trust) means the vote of the lesser of:
(1) 67% of the shares of a Fund (or the Trust) present at a meeting
if the holders of more than 50% of the outstanding shares are
present in person or by proxy; or (2) more than 50% of the
outstanding shares of a Fund (or the Trust).
Performance Information
A Fund may, from time to time, include its yield and total
return in advertisements or reports to shareholders or prospective
investors. The methods used to calculate the yield and total
return of the Funds are mandated by the SEC.
Quotations of "yield" for the Funds will be based on the
income received by a hypothetical investment (less a pro-rata share
of Fund expenses) over a particular seven-day period, which is then
"annualized" (i.e., assuming that the seven-day yield would be
received for 52 weeks, stated in terms of an annual percentage
return on the investment).
"Effective yield" for the Funds is calculated in a manner
similar to that used to calculate yield, but includes the
compounding effect of earnings on reinvested dividends.
Quotations of yield and effective yield reflect only a Fund's
performance during the particular period on which the calculations
are based. Yield and effective yield for a Fund will vary based on
changes in market conditions, the level of interest rates and the
level of that Fund's expenses, and no reported performance figure
should be considered an indication of performance which may be
expected in the future.
Performance information for a Fund may be compared to various
unmanaged indices, such as those indices prepared by Lipper
Analytical Services and other entities or organizations which track
the performance of investment companies. Any performance
information should be considered in light of the Fund's investment
objectives and policies, characteristics and quality of the Funds,
and the market conditions during the time period indicated, and
should not be considered to be representative of the future. For
a description of the methods used to determine yield and total
return for the Funds, see the SAI.
Account Services
All transactions in shares of the Funds will be reflected in
a statement for each shareholder. In those cases where a Service
Organization or its nominee is the shareholder of record for its
customer, the Funds have been advised that the statement may be
transmitted to the customer at the discretion of the Service
Organization.
Furman Selz acts as the Funds' transfer agent. The Trust
compensates Furman Selz, the Trust's administrator, pursuant to a
Services Agreement described in "Management of the Fund --
Administrative Services" of this Prospectus, for providing
personnel and facilities to perform dividend disbursing and
transfer agency-related services for the Trust.
Shareholder Inquiries
All shareholder inquiries should be directed to the Funds at 237
Park Avenue, New York, New York 10017. General and Account
Information: (800) ___-_____.
FIRST CHOICE FUNDS TRUST
Investment Adviser
First American Financial A FAMILY OF MUTUAL FUNDS
Management, Inc.
114 East Fifth Street
Santa Ana, California 92701
The U.S. Treasury Reserve Fund
seeks to provide investors with
as high a level of current income
as is consistent with liquidity,
maximum safety of principal,
and the maintenance of a stable
$1.00 net asset value per share.
Administrator and Sponsor
and Distributor
Furman Selz LLC
237 Park Avenue
New York, New York 10017 The Cash Reserve Fund seeks to
provide investors with current
income, liquidity and the
maintenance of a stable $1.00
net asset value by investing in
high quality, short-term
obligations.
Custodian
Counsel
Baker & McKenzie
805 Third Avenue
New York, New York 10022
Independent Accountants
PROSPECTUS
_____________, 1996
Investment Adviser:
First American Financial
Management, Inc.
FIRST CHOICE FUNDS TRUST
237 Park Avenue, New York, New York 10017
General and Account Information: (800) ___-_____
First American Financial Management, Inc.--Investment Adviser
("First American" or "Adviser")
FURMAN SELZ LLC -
Administrator, Sponsor and Distributor
("Furman Selz" or "Administrator" or "Distributor")
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information (the "SAI") describes
two money market funds (the "Funds"), both of which are managed by
First American. The Funds are:
U.S. Treasury Reserve Fund
Cash Reserve Fund
Each Fund constitutes a separate investment portfolio with
distinct investment objectives and policies. Each Fund offers two
classes of shares -- the Institutional Class and the Service Class.
The Institutional Class shares are available to financial
institutions while the Service Class shares are available to all
other investors. The Institutional Class and Service Class shares
are identical in all respects except that the Institutional Class
shares do not impose any shareholder servicing or Rule 12b-1 fees.
See "Other Information Capitalization" herein.
This SAI is not a prospectus and is only authorized for
distribution when preceded or accompanied by a prospectus for the
applicable Fund dated ________________, 1996 (the "Prospectus").
This SAI contains additional and more detailed information than
that set forth in each Prospectus and should be read in conjunction
with the applicable Prospectus. The Prospectus may be obtained
without charge by writing or calling the Funds at the address and
information numbers printed above.
___________________, 1996<PAGE>
TABLE OF CONTENTS
Page
INVESTMENT POLICIES. . . . . . . . . . . . . . . . . . . . . . .1
INVESTMENT RESTRICTIONS. . . . . . . . . . . . . . . . . . . . .5
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Trustees and Officers . . . . . . . . . . . . . . . . . . .6
Investment Adviser. . . . . . . . . . . . . . . . . . . . .7
Distribution of Fund Shares . . . . . . . . . . . . . . . .7
Distribution Plan . . . . . . . . . . . . . . . . . . . . .8
Administrative Services . . . . . . . . . . . . . . . . . .8
Service Organizations . . . . . . . . . . . . . . . . . . .9
EXPENSES AND EXPENSE LIMITS. . . . . . . . . . . . . . . . . . .9
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . 10
PORTFOLIO TRANSACTIONS . . . . . . . . . . . . . . . . . . . . 11
Portfolio Turnover. . . . . . . . . . . . . . . . . . . . 12
TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . . . 16
Capitalization. . . . . . . . . . . . . . . . . . . . . . 16
Voting Rights . . . . . . . . . . . . . . . . . . . . . . 16
Custodian Transfer Agent and Dividend
Disbursing Agent. . . . . . . . . . . . . . . . . . . . 16
Experts . . . . . . . . . . . . . . . . . . . . . . . . . 16
Yield and Performance Information . . . . . . . . . . . . 16
<PAGE>
INVESTMENT POLICIES
The Prospectus discusses the investment objectives of the
Funds and the policies to be employed to achieve those objectives.
This section contains supplemental information concerning certain
types of securities and other instruments in which the Funds may
invest, the investment policies and portfolio strategies that the
Funds may utilize, and certain risks attendant to such investments,
policies and strategies.
U.S. Government Agency Obligations (Cash Reserve Fund Only).
The Cash Reserve Fund may invest in obligations of agencies of the
United States Government. Such agencies include, among others,
Farmers Home Administration, Federal Farm Credit System, Federal
Housing Administration, Government National Mortgage Association,
Maritime Administration, Small Business Administration, and The
Tennessee Valley Authority. The Funds may purchase securities
issued or guaranteed by the Government National Mortgage
Association, which represent participations in Veterans
Administration and Federal Housing Administration backed mortgage
pools. Obligations of instrumentalities of the United States
Government include securities issued by, among others, Federal Home
Loan Banks, Federal Home Loan Mortgage Corporation, Federal Land
Banks, Federal National Mortgage Association and the United States
Postal Service. Some of these securities are supported by the full
faith and credit of the United States Treasury (e.g., Government
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 the value of the obligation
prior to maturity.
Commercial Paper (Cash Reserve Fund Only). Commercial paper
includes short-term unsecured promissory notes, variable rate
demand notes and variable rate master demand notes issued by
domestic and foreign bank holding companies, corporations and
financial institutions and similar taxable instruments issued by
government agencies and instrumentalities. All commercial paper
purchased by the Cash Reserve Fund is, at the time of investment,
rated in one of the top two rating categories of at least one
Nationally Recognized Statistical Rating Organization ("NRSRO") or,
if not rated, are, in the opinion of the Adviser, of an investment
quality comparable to rated commercial paper in which the Funds may
invest, or, with respect to the Cash Reserve Money Market Fund, (i)
rated "P-1" by Moody's Investors Service, Inc. ("Moody's") and "A-1" or
better by Standard &
Poor's Corporation ("S&P") or in a
comparable rating category by any two NRSROs that have rated the
commercial paper or (ii) rated in a comparable category by only one
such organization if it is the only organization that has rated the
commercial paper (and provided the purchase is approved or ratified
by the Board of Trustees).
Corporate Debt Securities (Cash Reserve Fund Only). The
Fund's investments in these securities are limited to corporate
debt securities (corporate bonds, debentures, notes and similar
corporate debt instruments) which meet the rating criteria
established for the Cash Reserve Fund.
After purchase by the Fund, a security may cease to be rated
or its rating may be reduced below the minimum required for
purchase by the Fund. Neither event will require a sale of such
security by the Fund. However, the Fund's Adviser will consider
such event in its determination of whether the Fund should continue
to hold the security. To the extent the ratings given by a NRSRO
may change as a result of changes in such organizations or their
rating systems, the Fund will attempt to use comparable ratings as
standards for investments in accordance with the investment
policies contained in the Prospectus and in this SAI.
Bank Obligations (Cash Reserve Fund Only). A description of
the bank obligations which the Cash Reserve Fund may purchase is
set forth in the Prospectus. These obligations include, but are
not limited to, domestic, Eurodollar and Yankeedollar certificates
of deposits, time deposits, bankers' acceptances, commercial paper,
bank deposit notes and other promissory notes including floating or
variable rate obligations issued by U.S. or foreign bank holding
companies and their bank subsidiaries, branches and agencies.
Certificates of deposit are issued against funds deposited in an
eligible bank (including its domestic and foreign branches,
subsidiaries and agencies), are for a definite period of time, earn
a specified rate of return and are normally negotiable. A bankers'
acceptance is a short-term draft drawn on a commercial bank by a
borrower, usually in connection with a commercial transaction. The
borrower is liable for payment as is the bank, which
unconditionally guarantees to pay the draft at its face amount on
the maturity date. Eurodollar obligations are U.S. Dollar
obligations issued outside the United States by domestic or foreign
entities. Yankeedollar obligations are U.S. dollar obligations
issued inside the United States by foreign entities. Bearer
deposit notes are obligations of a bank, rather than a bank holding
company. Similar to certificates of deposit, deposit notes
represent bank level investments and, therefore, are senior to all
holding company corporate debt.
Variable and Floating Rate Demand and Master Demand
Obligations (Both Funds). Each Fund may, if consistent with their
permitted investment policies, buy variable rate demand obligations
issued by corporations, bank holding companies and financial
institutions and similar taxable and tax-exempt instruments issued
by government agencies and instrumentalities. These securities
will typically have a maturity of 397 days or less, but carry with
them the right of the holder to put the securities to a remarketing
agent or other entity on short notice, typically seven days or
less. The obligation of the issuer of the put to repurchase the
securities may or may not be backed by a letter of credit or other
obligation issued by a financial institution. The purchase price
is ordinarily par plus accrued and unpaid interest.
The Funds may also buy variable rate master demand
obligations. The terms of these obligations permit the investment
of fluctuating amounts by the Funds at varying rates of interest
pursuant to direct arrangements between a Fund, as lender, and the
borrower. They permit weekly, and in some instances, daily changes
in the amounts borrowed. The Funds have the right to increase the
amount under the obligation at any time up to the full amount
provided by the note agreement, or to decrease the amount, and the
borrower may prepay up to the full amount of the obligation without
penalty. The obligations may or may not be backed by bank letters
of credit. Because the obligations are direct lending arrangements
between the lender and the borrower, it is not generally
contemplated that they will be traded, and there is no secondary
market for them, although they are redeemable (and thus,
immediately repayable by the borrower) at principal amount, plus
accrued interest, upon demand. The Funds have no limitations on
the type of issuer from whom the obligations will be purchased.
The Funds will invest in variable rate master demand obligations
only when such obligations are determined by the Adviser or,
pursuant to guidelines established by the Board of Trustees, to be
of comparable quality to rated issuers or instruments eligible for
investment by the Funds.
When-Issued and Delayed-Delivery Securities (Both Funds). The
Funds may purchase securities on a when-issued or delayed-delivery
basis. For example, delivery of and payment for these securities
can take place a month or more after the date of the transaction.
The securities so purchased are subject to market fluctuation
during this period and no income accrues to the Fund until
settlement takes place. To facilitate such acquisitions, the Funds
will maintain with the custodian a separate account with a
segregated portfolio of securities in an amount at least equal to
the value of such commitments. On the delivery dates for such
transactions, each Fund will meet obligations from maturities or
sales of the securities held in the separate account and/or from
cash flow. While the Funds normally enter into these transactions
with the intention of actually receiving or delivering the
securities, they may sell these securities before the settlement
date or enter into new commitments to extend the delivery date into
the future, if the Adviser considers such action advisable as a
matter of investment strategy. Such securities have the effect of
leverage on the Funds and may increase the volatility of a Fund's
net asset value.
Loans of Portfolio Securities (Both Funds). The Funds may
lend their portfolio securities to brokers, dealers and financial
institutions, provided: (1) the loan is secured continuously by
collateral consisting of U.S. Government securities or cash or
approved bank letters of credit maintained on a daily
mark-to-market basis in an amount at least equal to the current
market value of the securities loaned; (2) the Funds may at any
time call the loan and obtain the return of the securities loaned
within five business days; (3) the Funds will receive any interest
or dividends paid on the loaned securities; and (4) the aggregate
market value of securities loaned will not at any time exceed 33
1/3% of the total assets of a particular Fund.
The Funds will earn income for lending their securities
because cash collateral pursuant to these loans will be invested in
short-term money market instruments. In connection with lending
securities, the Funds may pay reasonable finders, administrative
and custodial fees. Loans of securities involve a risk that the
borrower may fail to return the securities or may fail to provide
additional collateral.
Repurchase Agreements (Cash Reserve Fund Only). The Funds may
invest up to 100% of their net assets in repurchase agreements
maturing in seven days or less; however, neither Fund may invest
more than 10% of its net assets in repurchase agreements maturing
in more than seven business days and in securities for which market
quotations are not readily available. The Funds may enter into
agreements with any bank or registered broker-dealer who, in the
opinion of the Trustees, present a minimal risk of bankruptcy.
Such agreements may be considered to be loans by the Funds for
purposes of the Investment Company Act of 1940, as amended (the
"1940 Act"). A repurchase agreement is a transaction in which the
seller of a security commits itself at the time of the sale to
repurchase that security from the buyer at a mutually agreed-upon
time and price. The repurchase price exceeds the sale price,
reflecting an agreed-upon interest rate effective for the period
the buyer owns the security subject to repurchase. The agreed-upon
rate is unrelated to the interest rate on that security. The
Adviser will monitor the value of the underlying security at the
time the transaction is entered into and at all times during the
term of the repurchase agreement to insure that the value of the
security always equals or exceeds the repurchase price. In the
event of default by the seller under the repurchase agreement, the
Fund may have problems in exercising their rights to the underlying
securities and may incur costs and experience time delays in
connection with the disposition of such securities.
Reverse Repurchase Agreements (Both Funds). The Funds may
also enter into reverse repurchase agreements to avoid selling
securities during unfavorable market conditions to meet
redemptions. Pursuant to a reverse repurchase agreement, a Fund
will sell portfolio securities and agree to repurchase them from
the buyer at a particular date and price. Whenever a Fund enters
into a reverse repurchase agreement, it will establish a segregated
account in which it will maintain liquid assets in an amount at
least equal to the repurchase price marked to market daily
(including accrued interest), and will subsequently monitor the
account to ensure that such equivalent value is maintained. The
Fund pays interest on amounts obtained pursuant to reverse
repurchase agreements. Reverse repurchase agreements are
considered to be borrowings by a Fund under the 1940 Act.
Illiquid Securities (Both Funds). Each Fund has adopted a
non-fundamental policy with respect to investments in illiquid
securities. Historically, illiquid securities have included
securities subject to contractual or legal restrictions on resale
because they have not been registered under the Securities Act of
1933, as amended ("Securities Act"), securities that are otherwise
not readily marketable and repurchase agreements having a maturity
of longer than seven days. Securities that have not been
registered under the Securities Act are referred to as private
placements or restricted securities and are purchased directly from
the issuer or in the secondary market. Mutual funds do not
typically hold a significant amount of these restricted or other
illiquid securities because of the potential for delays on resale
and uncertainty in valuation. Limitations on resale may have an
adverse effect on the marketability of portfolio securities and a
mutual fund might be unable to dispose of restricted or other
illiquid securities promptly or at reasonable prices and might
thereby experience difficulty satisfying redemptions within seven
days. A mutual fund might also have to register such restricted
securities in order to dispose of them resulting in additional
expense and delay. Adverse market conditions could impede such a
public offering of securities.
In recent years, however, a large institutional market has
developed for certain securities that are not registered under the
Securities Act, including repurchase agreements, commercial paper,
foreign securities, municipal securities and corporate bonds and
notes. Institutional investors depend on either an efficient
institutional market in which the unregistered security can be
readily resold or on the issuer's ability to honor a demand for
repayment. The fact that there are contractual or legal
restrictions on resale to the general public or to certain
institutions may not be indicative of the liquidity of such
investments.
Each Fund may also invest in restricted securities issued
under Section 4(2) of the Securities Act, which exempts from
registration "transactions by an issuer not involving any public
offering." Section 4(2) instruments are restricted in the sense
that they can only be resold through the issuing dealer and only to
institutional investors; they cannot be resold to the general
public without registration. Restricted securities issued under
Section 4(2) of the Securities Act will be treated as illiquid and
subject to the Fund's investment restriction on illiquid
securities.
The Commission has adopted Rule 144A, which allows a broader
institutional trading market for securities otherwise subject to
restrictions on resale to the general public. Rule 144A
establishes a "safe harbor" from the registration requirements of
the Securities Act applicable to resales of certain securities to
qualified institutional buyers. It is the intent of the Funds to
invest, pursuant to procedures established by the Board of Trustees
and subject to applicable investment restrictions, in securities
eligible for resale under Rule 144A which are determined to be
liquid based upon the trading markets for the securities.
Pursuant to guidelines set forth by and under the supervision
of the Board of Trustees, the Adviser will monitor the liquidity of
restricted securities in a Fund's portfolio. In reaching liquidity
decisions, the Adviser will consider, inter alia, the following
factors: (1) the frequency of trades and quotes for the security
over the course of six months or as determined in the discretion of
the Investment Adviser; (2) the number of dealers wishing to
purchase or sell the security and the number of other potential
purchasers over the course of six months or as determined in the
discretion of the Investment Adviser; (3) dealer undertakings to
make a market in the security; (4) the nature of the security and
the marketplace in which it trades (e.g., the time needed to
dispose of the security, the method of soliciting offers and the
mechanics of the transfer); and (5) other factors, if any, which
the Adviser deems relevant. The Adviser will also monitor the
purchase of Rule 144A securities to assure that the total of all
Rule 144A securities held by a Fund does not exceed 10% of the
Fund's average daily net assets. Rule 144A securities which are
determined to be liquid based upon their trading markets will not,
however, be required to be included among the securities considered
to be illiquid for purposes of Investment Restriction No. 1.
Investments in Rule 144A securities could have the effect of
increasing Fund illiquidity.
INVESTMENT RESTRICTIONS
The following restrictions restate or are in addition to those
described under "Investment Restrictions" in the Prospectus.
Investment Restriction No. 12 is a fundamental policy of the Funds,
which can be changed only when permitted by law and approved by a
majority of the Funds' outstanding voting securities. The non-fundamental
investment
restrictions can be changed by approval of
a majority of the Board of Trustees. A "majority of the
outstanding voting securities" means the lesser of (i) 67% of the
shares represented at a meeting at which more than 50% of the
outstanding shares are represented in person or by proxy or (ii)
more than 50% of the outstanding shares.
Each Fund, except as indicated, may not:
(1) Invest more than 10% of the value of its net assets
in investments which are illiquid (including repurchase
agreements having maturities of more than seven calendar days,
variable and floating rate demand and master demand notes not
requiring receipt of principal note amount within seven days
notice);
(2) Borrow money or pledge, mortgage or hypothecate its
assets, except that a Fund may enter into reverse repurchase
agreements or borrow from banks up to 10% of the current value
of its net assets for temporary or emergency purposes and
those borrowings may be secured by the pledge of not more than
15% of the current value of its total net assets (but
investments may not be purchased by the Fund while any such
borrowings exist);
(3) Issue senior securities, except insofar as a Fund
may be deemed to have issued a senior security in connection
with any repurchase agreement or any permitted borrowing;
(4) Make loans, except loans of portfolio securities and
except that a Fund may enter into repurchase agreements with
respect to its portfolio securities and may purchase the types
of debt instruments described in its Prospectus or the SAI;
(5) Invest in companies for the purpose of exercising
control or management;
(6) Invest more than 10% of its net assets in shares of
other investment companies;
(7) Invest in real property (including limited
partnership interests but excluding real estate investment
trusts and master limited partnerships), commodities,
commodity contracts, or oil, gas and other mineral resource,
exploration, development, lease or arbitrage transactions;
(8) Engage in the business of underwriting securities of
other issuers, except to the extent that the disposal of an
investment position may technically cause it to be considered
an underwriter as that term is defined under the Securities
Act of 1933;
(9) Sell securities short, except to the extent that a
Fund contemporaneously owns or has the right to acquire at no
additional cost securities identical to those sold short;
(10) Purchase securities on margin, except that a Fund
may obtain such short-term credits as may be necessary for the
clearance of purchases and sales of securities;
(11) Purchase or retain the securities of any issuer, if
those individual officers and Trustees of the Trust, the
Adviser, the Sponsor, or the Distributor, each owning
beneficially more than 1/2 of 1% of the securities of such
issuer, together own more than 5% of the securities of such
issuer;
(12) Purchase a security if, as a result, more than 25%
of the value of its total assets would be invested in
securities of one or more issuers conducting their principal
business activities in the same industry (except for the Cash
Reserve Fund, which will concentrate its investments in
obligations issued by the banking industry), provided that
this limitation shall not apply to obligations issued or
guaranteed by the U.S. Government or its agencies and
instrumentalities;
(13) Invest more than 5% of its net assets in warrants
which are unattached to securities, included within that
amount, no more than 2% of the value of the Fund's net assets,
may be warrants which are not listed on the New York or
American Stock Exchanges;
(14) Write, purchase or sell puts, calls or combinations
thereof.
MANAGEMENT
Trustees and Officers
The principal occupations of the Trustees and executive
officers of the Trust for the past five years are listed below. The
address of each, unless otherwise indicated, is 237 Park Avenue,
New York, NY 10017. Trustees deemed to be "interested persons"
of the Trust for purposes of the 1940 Act are indicated by an
asterisk.
_______________, Chairman of the Board of Trustees -
_______________________________________________
________________________________________________________________________
_____________________
_______________________________________________________________________
______________________
_______________, Trustee -
_____________________________________________________________________
____________________________________________________________________
_________________________
_______________, Trustee -
_____________________________________________________________________
____________________________________________________________________
_________________________
_______________, Trustee -
______________________________________________________________________
_____________________________________________________________________
________________________
_______________, Principal Financial and Accounting Officer-
____________________________________________
______________________________________________________________________
_______________________
_______________, Secretary -
_______________________________________________________________________
______________________________________________________________________
_______________________
_______________, Assistant Secretary
- -________________________________________________________________
__________________________________________________________________
___________________________
_______________, Assistant Secretary
- -_____________________________________________________________
____________________________________________________________________
_________________________
_______________, Assistant Secretary
- -________________________________________________________________
_____________________________________________________________________
________________________
Trustees of the Trust not affiliated with the Sponsor receive
from the Trust an annual retainer of $1,000 and a fee of $1,000 for
each Board of Trustees meeting and $1,000 for each Board committee
meeting of the Trust attended and are reimbursed for all out-of-pocket
expenses relating to
attendance at such meetings. Trustees
who are affiliated with the Sponsor do not receive compensation
from the Trust.
Officers and Trustees of the Trust, as a group, own less than
1% of the outstanding shares of the Funds.
Investment Adviser
First American Financial Management, Inc.
First American Financial Management, Inc. ("First American")
has provided investment advisory services to the Funds since
inception pursuant to an Advisory Agreement with the Trust (the
"Advisory Agreement"). Subject to such policies as the Trust's
Board of Trustees may determine, First American makes investment
decisions for the Funds. The Advisory Agreement provides that, as
compensation for services thereunder, First American is entitled
to receive from each Fund a monthly fee at an annual rate based
upon average daily net assets of the Fund as set forth in the table
of Fund Expenses in the Prospectus.
First American is located at 114 East Fifth Street, Santa Ana,
California 92701 and is a wholly-owned subsidiary of First
American Financial Corporation, and was organized in ______ to
provide business management, advisory, administrative and asset
management consulting services.
As of ____________, 1995, First American provided investment
advice with respect to over $____ billion in assets including
approximately $____ billion of assets on behalf of First American
Financial Corporation.
The Investment Advisory Contracts for the Funds will continue
in effect for a period beyond two years from the date of their
execution only as long as such continuance is approved annually (i)
by the holders of a majority of the outstanding voting securities
of the Funds or by the Board of Trustees and (ii) by a majority of
the Trustees who are not parties to such Contract or "interested
persons" (as defined in the 1940 Act) of any such party. The
Contracts may be terminated without penalty by vote of the Trustees
or the shareholders of the Funds, or by the Adviser, on 60 days
written notice by either party to the Contract and will terminate
automatically if assigned.
Distribution of Fund Shares
The Trust retains Furman Selz LLC to serve as principal
underwriter for the shares of the Funds pursuant to a Distribution
Contract. The Distribution Contract provides that the Distributor
will use its best efforts to maintain a broad distribution of the
Funds' shares among bona fide investors and may enter into selling
group agreements with responsible dealers and dealer managers as
well as sell the Funds' shares to individual investors. The
Distributor is not obligated to sell any specific amount of shares.
Distribution Plan
The Trustees of the Fund have voted to adopt a Master
Distribution Plan (the "Plan") pursuant to Rule l2b-1 of the 1940
Act after having concluded that there is a reasonable likelihood
that the Plan will benefit the Fund and its shareholders. The Plan
provides for a monthly payment by the Fund to the Distributor in
such amounts that the Distributor may request or for direct payment
by the Fund, for certain costs incurred under the Plan, subject to
periodic Board approval, provided that each such payment is based
on the average daily value of the Fund's net assets during the
preceding month and is calculated at an annual rate not to exceed
0.25%. (Certain expenses of the Fund may be reduced in accordance
with applicable state expense limitations. See "Fees and
Expenses"). The Distributor will use all amounts received under
the Plan for payments to broker-dealers or financial institutions
(but not including banks) for their assistance in distributing
shares of the Fund and otherwise promoting the sale of Fund shares,
including payments in amounts based on the average daily value of
Fund shares owned by shareholders in respect of which the
broker-dealer or financial institution has a distributing
relationship. The Distributor may also use all or any portion of
such fees to pay Fund expenses such as the printing and
distribution of prospectuses sent to prospective investors or the
preparation, printing and distribution of sales literature and
expenses associated with media advertisements.
The Plan provides for the Distributor to prepare and submit to
the Board of Trustees on a quarterly basis written reports of all
amounts expended pursuant to the Plan and the purpose for which
such expenditures were made. The Plan provides that it may not be
amended to increase materially the costs which the Fund may bear
pursuant to the Plan without shareholder approval and that other
material amendments of the Plan must be approved by the Board of
Trustees, and by the Trustees who neither are "interested persons"
(as defined in the 1940 Act) of the Trust nor have any direct or
indirect financial interest in the operation of the Plan or in any
related agreement, by vote cast in person at a meeting called for
the purpose of considering such amendments. The selection and
nomination of the Trustees of the Trust has been committed to the
discretion of the Trustees who are not "interested persons" of the
Trust. The Plan and the related Administrative Services Contract
between the Trust and the Sponsor have been approved, and are
subject to annual approval, by the Board of Trustees and by the
Trustees who neither are "interested persons" nor have any direct
or indirect financial interest in the operation of the Plan or in
the Administrative Services Contract, by vote cast in person at a
meeting called for the purpose of voting on the Plan. The Board of
Trustees and the Trustees who are not "interested persons" and who
have no direct or indirect financial interest in the operation of
the Plan or in the Administrative Services Contract voted to
approve the Plan at a meeting held on [___________, 1996]. The
Plan was submitted to the shareholders of the Fund and approved at
a special meeting held on [___________, 1996]. The Plan is
terminable with respect to the Fund at any time by a vote of a
majority of the Trustees who are not "interested persons" of the
Trust and who have no direct or indirect financial interest in the
operation of the Plan or in the Administrative Services Contract or
by vote of the holders of a majority of the shares of the Fund.
Administrative Services
Furman Selz provides management and administrative services
necessary for the operation of the Funds, including among other
things, (i) preparation of shareholder reports and communications,
(ii) regulatory compliance, such as reports to and filings with the
Securities and Exchange Commission ("SEC") and state securities
commissions and (iii) general supervision of the operation of the
Funds, including coordination of the services performed by the
Adviser, the Distributor, transfer agent, custodians, independent
accountants, legal counsel and others. In addition, Furman Selz
furnishes office space and facilities required for conducting the
business of the Funds and pays the compensation of the Funds'
officers, employees and Trustees affiliated with Furman Selz . For
these services, Furman Selz receives from each Fund a fee, payable
monthly, at the annual rate of ____% of each Fund's average daily
net assets.
The Administrative Services Contract is terminable with
respect to the Funds without penalty, at any time, by vote of a
majority of the Trustees who are not "interested persons" of the
Trust and who have no direct or indirect financial interest in the
operation of the Administrative Services Contract upon not more
than 60 days written notice to the Administrator or by vote of the
holders of a majority of the shares of the Funds, or, upon 60 days
notice, by the Administrator. The Administrative Services Contract
will terminate automatically in the event of its assignment.
Service Organizations
The Trust also contracts with banks, trust companies,
broker-dealers (other than Furman Selz) or other financial
organizations ("Service Organizations") to provide certain
administrative services for the Funds. Services provided by
Service Organizations may include among other things: providing
necessary personnel and facilities to establish and maintain
certain shareholder accounts and records; assisting in processing
purchase and redemption transactions; arranging for the wiring of
funds; transmitting and receiving funds in connection with
shareholders orders to purchase or redeem shares; verifying and
guaranteeing client signatures in connection with redemption
orders, transfers among and changes in shareholders designating
accounts; providing periodic statements showing a shareholder's
account balance and, to the extent practicable, integrating such
information with other client transactions; furnishing periodic and
annual statements and confirmations of all purchases and
redemptions of shares in a shareholder's account; transmitting
proxy statements, annual reports, and updating prospectuses and
other communications from the Funds to shareholders; and providing
such other services as the Funds or a shareholder reasonably may
request, to the extent permitted by applicable statute, rule or
regulation. Neither Furman Selz , nor the Distributor will be a
Service Organization or receive fees for servicing.
Some Service Organizations may impose additional or different
conditions on their clients, such as requiring their clients to
invest more than the minimum initial or subsequent investments
specified by the Funds or charging a direct fee for servicing. If
imposed, these fees would be in addition to any amounts which might
be paid to the Service Organization by the Funds. Each Service
Organization has agreed to transmit to its clients a schedule of
any such fees. Shareholders using Service Organizations are urged
to consult them regarding any such fees or conditions.
[The Glass-Steagall Act and other applicable laws, among other
things, prohibit banks from engaging in the business of
underwriting, selling or distributing securities. There currently
is no precedent prohibiting banks from performing administrative
and shareholder servicing functions as Service Organizations.
However, judicial or administrative decisions or interpretations of
such laws, as well as changes in either Federal or state statutes
or regulations relating to the permissible activities of banks and
their subsidiaries or affiliates, could prevent a bank from
continuing to perform all or a part of its servicing activities.
In addition, state securities laws on this issue may differ from
the interpretations of federal law expressed herein and banks and
financial institutions may be required to register as dealers
pursuant to state law.
If a bank were prohibited from so acting, its shareholder
clients would be permitted to remain shareholders of the Trust and
alternative means for continuing the servicing of such shareholders
would be sought. In that event, changes in the operation of the
Trust might occur and a shareholder serviced by such a bank might
no longer be able to avail itself of any services then being
provided by the bank. It is not expected that shareholders would
suffer any adverse financial consequences as a result of any of
these occurrences.
EXPENSES AND EXPENSE LIMITS
Currently, California is the only state imposing limitations
on the expenses of the Funds. Those expense limitations are 2.5%
of the first $30 million of a Fund's average net assets, 2% of the
next $70 million and 1.5% of a Fund's remaining average net assets.
If in any fiscal year expenses of the Funds (excluding taxes,
interest, expenses under the Plan, brokerage commissions and other
portfolio transaction expenses, other expenditures which are
capitalized in accordance with generally accepted accounting
principles and extraordinary expenses, but including the advisery
and administrative fees) exceed the expense limitations applicable
to the Funds imposed by the securities regulations of any state,
Furman Selz and _________________ will reimburse the Funds for a
portion of the excess with ___________________ paying 60% and
Furman Selz the remaining 40% of the excess.
Except for the expenses paid by the Adviser and Furman Selz,
the Funds bear all costs of their operations.
DETERMINATION OF NET ASSET VALUE
As indicated under "Fund Share Valuation" in the Prospectus,
the Funds will use the amortized cost method to determine the value
of their portfolio securities pursuant to Rule 2a-7 under the 1940
Act. The amortized cost method involves valuing a security at its
cost and amortizing any discount or premium over the period until
maturity regardless of the impact of fluctuating interest rates on
the market value of the security. While this method provides
certainty in valuation, it may result in periods during which the
value, as determined by amortized cost, is higher or lower than the
price which the Funds would receive if the security were sold.
During these periods, the yield to a shareholder may differ
somewhat from that which could be obtained from a similar fund
which utilizes a method of valuation based upon market prices.
Thus, during periods of declining interest rates, if the use of the
amortized cost method resulted in lower value of a Fund's portfolio
on a particular day, a prospective investor in the Fund would be
able to obtain a somewhat higher yield than would result from an
investment in a fund utilizing solely market values and existing
Fund shareholders would receive correspondingly less income. The
converse would apply during periods of rising interest rates.
Rule 2a-7 provides that in order to value its portfolio using
the amortized cost method, each Fund must maintain a
dollar-weighted average portfolio maturity of 90 days or less,
purchase securities having remaining maturities of 397 days or less
and invest only in U.S. dollar denominated eligible securities
determined by the Trust's Board of Trustees to be of minimal credit
risks and which (1) have received the highest short-term rating by
at least two Nationally Recognized Statistical Rating Organizations
("NRSROs"), such as "A-1" by Standard & Poor's and "P-1" by
Moody's; (2) are single rated and have received the highest short-term
rating by a NRSRO; or (3)
are unrated, but are determined to
be of comparable quality by the Adviser pursuant to guidelines
approved by the Board.
In addition, a Fund will not invest more than 5% of its total
assets in the securities (including the securities collateralizing
a repurchase agreement) of a single issuer, except that, a Fund may
invest in U.S. Government securities or repurchase agreements that
are collateralized by U.S. Government securities without any such
limitation. Furthermore, the limitation does not apply with
respect to conditional and unconditional puts issued by a single
issuer, provided that no more than 10% of a Fund's total assets are
invested in securities issued or guaranteed by the issuer of the
put. Investments in rated securities not rated in the highest
category by at least two rating organizations (or one rating
organization if the instrument was rated by only one such
organization), and unrated securities not determined by the Board
of Trustees to be comparable to those rated in the highest rating
category, will be limited to 5% of a Fund's total assets, with
investment in any one such issuer being limited to no more than the
greater of 1% of a Fund's total assets or $1,000,000.
Pursuant to Rule 2a-7, the Board of Trustees is also required
to establish procedures designed to stabilize, to the extent
reasonably possible, the price per share of the Funds, as computed
for the purpose of sales and redemptions, at $1.00. Such
procedures include review of the Fund's portfolio holdings by the
Board of Trustees, at such intervals as it may deem appropriate, to
determine whether the net asset value of the Funds calculated by
using available market quotations deviates from $l.00 per share
based on amortized cost. The extent of any deviation will be
examined by the Board of Trustees. If such deviation exceeds 1/2 of
1%, the Board of Trustees will promptly consider what action, if
any, will be initiated. In the event the Board of Trustees
determines that a deviation exists that may result in material
dilution or other unfair results to investors or existing
shareholders, the Board of Trustees will take such corrective
action as it regards as necessary and appropriate, which may
include selling portfolio instruments prior to maturity to realize
capital gains or losses or to shorten average portfolio maturity,
withholding dividends or establishing a net asset value per share
by using available market quotations.
PORTFOLIO TRANSACTIONS
The Trust has no obligation to deal with any dealer or group
of dealers in the execution of transactions in portfolio
securities. Subject to policies established by the Trust's Board
of Trustees, First American is primarily responsible for portfolio
decisions and the placing of portfolio transactions. In placing
orders, it is the policy of the Trust to obtain the best results
taking into account the dealer's general execution and operational
facilities, the type of transaction involved and other factors such
as the dealer's risk in positioning the securities involved. While
First American generally seeks reasonably competitive spreads or
commissions, the Funds will not necessarily be paying the lowest
spread or commission available. The policy of each Fund of
investing in securities with short maturities may result in high
portfolio turnover.
Purchases and sales of securities will usually be principal
transactions. Portfolio securities normally will be purchased or
sold from or to issuers directly or to dealers serving as market
makers for the securities at a net price. Generally, money market
securities are traded on a net basis and do not involve brokerage
commissions. The cost of executing portfolio securities
transactions for the Funds primarily consists of dealer spreads and
underwriting commissions. Under the 1940 Act, persons affiliated
with the Trust or First American are prohibited from dealing with
the Trust as a principal in the purchase and sale of securities
unless a permissive order allowing such transactions is obtained
from the Securities and Exchange Commission.
First American may, in circumstances in which two or more
dealers are in a position to offer comparable results, give
preference to a dealer which has provided statistical or other
research services to First American. By allocating transactions in this
manner, First American is able to supplement its research and
analysis with the
views and information of securities firms.
TAXATION
The Funds intend to qualify and elect annually to be treated
as regulated investment companies under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"). To qualify
as a regulated investment company, a Fund must (a) distribute to
shareholders at least 90% of its investment company taxable income
(which includes, among other items, dividends, taxable interest and
the excess of net short-term capital gains over net long-term
capital losses); (b) derive in each taxable year at least 90% of
its gross income from dividends, interest, payments with respect to
securities loans and gains from the sale or other disposition of
stock, securities or foreign currencies or other income derived
with respect to its business of investing in such stock, securities
or currencies; (c) derive less than 30% of its gross income from
the sale or other disposition of certain assets (namely, (i) stock
or securities; (ii) options, futures, and forward contracts (other
than those on foreign currencies), and (iii) foreign currencies
(including options, futures, and forward contracts on such
currencies) not directly related to the Fund's principal business
of investing in stock or securities (or options and futures with
respect to stocks or securities)) held less than 3 months; and (d)
diversify its holdings so that, at the end of each quarter of the
taxable year, (i) at least 50% of the market value of the Fund's
assets is represented by cash and cash items (including
receivables), U.S. Government securities, the securities of other
regulated investment companies and other securities, with such
other securities of any one issuer limited for the purposes of this
calculation to an amount not greater than 5% of the value of the
Fund's total assets and not greater than 10% of the outstanding
voting securities of such issuer, and (ii) not more than 25% of the
value of its total assets is invested in the securities of any one
issuer (other than U.S. Government securities or the securities of
other regulated investment companies). In addition, a Fund earning
tax-exempt interest must, in each year, distribute at least 90% of
its net tax-exempt income. By meeting these requirements, the
Funds generally will not be subject to Federal income tax on their
investment company taxable income and net capital gains which are
distributed to shareholders. If the Funds do not meet all of these
Code requirements, they will be taxed as ordinary corporations and
their distributions will be taxed to shareholders as ordinary
income.
Amounts, other than tax-exempt interest, not distributed on a
timely basis in accordance with a calendar year distribution
requirement are subject to a nondeductible 4% excise tax. To
prevent imposition of the excise tax, each Fund must distribute for
each calendar year an amount equal to the sum of (1) at least 98%
of its ordinary income (excluding any capital gains or losses) for
the calendar year, (2) at least 98% of the excess of its capital
gains over capital losses (adjusted for certain ordinary losses)
for the one-year period ending October 31 of such year, and (3) all
ordinary income and capital gains net income (adjusted for certain
ordinary losses) for previous years that were not distributed
during such years. A distribution, including an "exempt-interest
dividend," will be treated as paid on December 31 of a calendar
year if it is declared by a Fund during October, November or
December of that year to shareholders of record on a date in such
a month and paid by the Fund during January of the following year.
Such distributions will be taxable to shareholders in the calendar
year in which the distributions are declared, rather than the
calendar year in which the distributions are received.
Distributions of investment company taxable income generally
are taxable to shareholders as ordinary income. Distributions from
the Funds may be eligible for the dividends-received deduction
available to corporations. Distributions of net long term capital
gains, if any, designated by the Funds as long term capital gain
dividends are taxable to shareholders as long-term capital gain,
regardless of the length of time the Funds' shares have been held
by a shareholder. All distributions are taxable to the shareholder
in the same manner whether reinvested in additional shares or
received in cash. Shareholders will be notified annually as to the
Federal tax status of distributions.
Distributions by a Fund reduce the net asset value of the
Fund's shares. Should a distribution reduce the net asset value
below a shareholder's cost basis, such distribution, nevertheless,
would be taxable to the shareholder as ordinary income or capital
gain as described above, even though, from an investment
standpoint, it may constitute a partial return of capital. In
particular, investors should be careful to consider the tax
implications of buying shares just prior to a distribution by the
Funds. The price of shares purchased at that time includes the
amount of the forthcoming distribution. Those purchasing just
prior to a distribution will receive a distribution which will
nevertheless generally be taxable to them.
Upon the taxable disposition (including a sale or redemption)
of shares of a Fund, a shareholder may realize a gain or loss
depending upon his basis in his shares. Such gain or loss
generally will be treated as capital gain or loss if the shares are
capital assets in the shareholders hands. Such gain or loss will
be long-term or short-term, generally depending upon the
shareholder's holding period for the shares. However, a loss
realized by a shareholder on the disposition of Fund shares with
respect to which capital gain dividends have been paid will, to the
extent of such capital gain dividends, be treated as long term
capital loss if such shares have been held by the shareholder for
six months or less. A loss realized on the redemption, sale or
exchange of Fund shares will be disallowed to the extent an
exempt-interest dividend was received with respect to those shares
if the shares have been held by the shareholder for six months or
less. Further, a loss realized on a disposition will be disallowed
to the extent the shares disposed of are replaced (whether by
reinvestment of distributions or otherwise) within a period of 61
days beginning 30 days before and ending 30 days after the disposal
of the shares. In such a case, the basis of the shares acquired
will be adjusted to reflect the disallowed loss. Shareholders
receiving distributions in the form of additional shares will have
a cost basis for Federal income tax purposes in each share received
equal to the net asset value of a share of the Funds on the
reinvestment date.
The Funds are required to report to the Internal Revenue
Service ("IRS") all distributions except in the case of certain
exempt shareholders. All such distributions generally are subject
to withholding of Federal income tax at a rate of 31% ("backup
withholding") in the case of non-exempt shareholders if (1) the
shareholder fails to furnish the Funds with and to certify the
shareholder's correct taxpayer identification number or social
security number, (2) the IRS notifies the Funds or a shareholder
that the shareholder has failed to report properly certain interest
and dividend income to the IRS and to respond to notices to that
effect, or (3) when required to do so, the shareholder fails to
certify that he is not subject to backup withholding. If the
withholding provisions are applicable, any such distributions,
whether reinvested in additional shares or taken in cash, will be
reduced by the amounts required to be withheld. Backup withholding
is not an additional tax. Any amount withheld may be credited
against the shareholders U.S. Federal income tax liability.
Investors may wish to consult their tax advisers about the
applicability of the backup withholding provisions.
The foregoing discussion relates only to Federal income tax
law as applicable to U.S. persons (i.e., U.S. citizens and
residents and U.S. corporations, partnerships, trusts and estates).
Distributions by the Funds also may be subject to state and local
taxes and their treatment under state and local income tax laws may
differ from the Federal income tax treatment. Distributions of a
Fund which are derived from interest on obligations of the U.S.
Government and certain of its agencies and instrumentalities may be
exempt from state and local taxes in certain states. Shareholders
should consult their tax advisers with respect to particular
questions of Federal, state and local taxation. Shareholders who
are not U.S. persons should consult their tax advisers regarding
U.S. and foreign tax consequences of ownership of shares of the
Funds including the likelihood that distributions to them would be
subject to withholding of U.S. tax at a rate of 30% (or at a lower
rate under a tax treaty).
OTHER INFORMATION
Capitalization
The Trust is a Delaware business trust established under a
Declaration of Trust dated June 5,1996 and currently consists of
two separately managed portfolios. The capitalization of the Trust
consists solely of an unlimited number of shares of beneficial
interest with a par value of $0.001 each. The Board of Trustees may
establish additional Funds (with different investment objectives
and fundamental policies) at any time in the future. Establishment
and offering of additional Funds will not alter the rights of the
Trust's shareholders. When issued, shares are fully paid,
non-assessable, redeemable and freely transferable. Shares do not
have preemptive rights or subscription rights. In any liquidation
of a Fund, each shareholder is entitled to receive his pro rata
share of the net assets of that Fund.
Each Fund offers and the SAI relates to two classes of shares
- -- the Institutional and the Service classes of shares. The
Institutional Class shares are available to customers of financial
institutions or corporations on behalf of their customers or
employees, or on behalf of any trust, pension, profit sharing or
other benefit plan for such customers or employees. The Service
Shares are available to all other investors. The Fund's Service
Shares are subject to a Rule 12b-1 fee and a shareholder service
fee.
Expenses incurred in connection with each Fund's organization
and the public offering of its shares have been deferred and are
being amortized on a straight-line basis over a period of not more
than five years.
Voting Rights
Under the Declaration of Trust, the Trust is not required to
hold annual meetings of each Fund's shareholders to elect Trustees
or for other purposes. It is not anticipated that the Trust will
hold shareholder meetings unless required by law or the Declaration
of Trust. In this regard, the Trust will be required to hold a
meeting to elect Trustees to fill any existing vacancies on the
Board if, at any time, fewer than a majority of the Trustees have
been elected by the shareholders of the Trust. In addition, the
Declaration of Trust provides that the holders of not less than
two-thirds of the outstanding shares of the Trust may remove
persons serving as Trustee either by declaration in writing or at
a meeting called for such purpose. The Trustees are required to
call a meeting for the purpose of considering the removal of
persons serving as Trustee if requested in writing to do so by the
holders of not less than 10% of the outstanding shares of the
Trust. To the extent required by applicable law, the Trustees
shall assist shareholders who seek to remove any person serving as
Trustee.
The Trust's shares do not have cumulative voting rights, so
that the holders of more than 50% of the outstanding shares may
elect the entire Board of Trustees, in which case the holders of
the remaining shares would not be able to elect any Trustees.
Custodian, Transfer Agent and Dividend Disbursing Agent
_____________________ acts as custodian of the Trust's assets.
Furman Selz acts as transfer agent for the Funds. The Trust
compensates Furman Selz for providing personnel and facilities to
perform transfer agency related services for the Trust at a rate
intended to represent the cost of providing such services.
Experts
_____________________ has been selected as the independent
accountants for the Trust. __________________ provides audit
services, tax return preparation and assistance and consultation in
connection with review of certain SEC filings.
____________________ is located at
_____________________________________.
Yield and Performance Information
The Funds may, from time to time, include their yield,
effective yield, tax equivalent yield and average annual total
return in advertisements or reports to shareholders or prospective
investors.
Current yield for the Funds will be based on the change in the
value of a hypothetical investment (exclusive of capital changes
such as gains or losses from the sale of securities and unrealized
appreciation and depreciation) over a particular seven-day period,
less a pro-rata share of each Fund's expenses accrued over that
period (the "base period"), and stated as a percentage of the
investment at the start of the base period (the "base period
return"). The base period return is then annualized by multiplying
by 365/7, with the resulting yield figure carried to at least the
nearest hundredth of one percent. "Effective yield" for the Funds
assumes that all dividends received during the base period have
been reinvested. Calculation of "effective yield" begins with the
same "base period return" used in the calculation of yield, which
is then annualized to reflect weekly compounding pursuant to the
following formula:
Effective Yield = [(Base Period Return + 1)365/7] - 1.
Quotations of average annual total return will be expressed in
terms of the average annual compounded rate of return of a
hypothetical investment in a Fund over periods of 1, 5 and 10 years
and since inception (up to the life of the Fund), calculated
pursuant to the following formula:
P (1 + T)n = ERV
(where P = a hypothetical initial payment of $l,000, T = the average
annual total return, n = the number of years, and ERV = the ending
redeemable value of a hypothetical $1,000 payment made at the
beginning of the period). All total return figures will reflect the
deduction of the maximum sales charge and a proportional share of
Fund expenses (net of certain reimbursed expenses) on an annual
basis, and will assume that all dividends and distributions are
reinvested when paid.
Quotations of yield and total return will reflect only the
performance of a hypothetical investment in the Funds during the
particular time period shown. Yield and total return for the Funds
will vary based on changes in the market conditions and the level of
the Fund's expenses, and no reported performance figure should be
considered an indication of performance which may be expected in the
future.
In connection with communicating its yields or total return to
current or prospective unit holders, the Funds also may compare
these figures to the performance of other mutual funds tracked by
mutual fund rating services or to other unmanaged indices, which may
assume reinvestment of dividends but generally do not reflect
deductions for administrative and management costs.
Performance information for the Funds may be compared, in
reports and promotional literature, to: (i) other groups of mutual
funds tracked by Lipper Analytical Services, a widely used
independent research firm which ranks mutual funds by overall
performance, investment objectives, and assets, or tracked by other
services, companies, publications, or persons who rank mutual funds
on overall performance or other criteria; and (ii) the Consumer
Price Index (measure for inflation) to assess the real rate of
return from an investment of dividends but generally do not reflect
deductions for administrative and management costs and expenses.
Investors who purchase and redeem shares of the Funds through
a customer account maintained at a Service Organization may be
charged one or more of the following types of fees as agreed upon by
the Service Organization and the investor, with respect to the
customer services provided by the Service Organization: account
fees (a fixed amount per month or per year); transaction fees (a
fixed amount per transaction processed); compensating balance
requirements (a minimum dollar amount a customer must maintain in
order to obtain the services offered); or account maintenance fees
(a periodic charge based upon a percentage of the assets in the
account or of the dividends paid on those assets). Such fees will
have the effect of reducing the yield and average annual total
return of the Funds for those investors. Investors who maintain
accounts with the Trust as transfer agent will not pay these fees.
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a)
(1) Financial Statements included in Part A of this
Registration Statement: None.
(2) Financial Statements included in Part B of this
Registration Statement: None.
(b) Exhibits
(1) Trust Instrument.
(2) Bylaws of Registrant.
(3) None.
(4) None.
* (5)(a) Form of Master Investment Advisory Agreement and
Supplements between Registrant and Adviser.
* (5)(b) Form of Master Administration Agreement and
Supplements between Registrant and
Administrator.
* (6) Form of Master Distribution Contract and Supplements
between Registrant and Distributor.
(7) None.
* (8) Form of Custodian Contract between Registrant and
Custodian.
* (9)(a) Form of Transfer Agency and Service Agreement
between Registrant and Transfer Agent.
* (10)(a) Consent of Baker & McKenzie, counsel to
Registrant.
* (11) Consent of Independent Accountants.
(12) None
* (13) Subscription Agreement.
(14) None.
* (15) [Form of Rule 12b-1 Distribution Plan and Agreement
between Registrant and Distributor.]
* (16) Schedule of Computation of Performance Calculation.
* (17) Financial Data Schedule.
* (18) Rule 18f-3 Plan.
Other Exhibits
* (A) Power Of Attorney.
______________
* To be filed by Amendment.
Item 25. Persons Controlled by or under Common Control with
Registrant.
None.
Item 26. Number of Holders of Securities at June 26, 1996.
U.S. Treasury Reserve Fund ___
Cash Reserve Fund ___
Item 27. Indemnification.
As permitted by Section 17(h) and (i) of the Investment Company
Act of 1940 (the "1940 Act") and pursuant to Article X of the
Registrant's Trust Instrument (Exhibit 1 to the Registration
Statement), Section 4 of the Master Investment Advisory Contract
between Registrant and [the Adviser] (Exhibit 5(a) to this
Registration Statement), Section 9 of the Investment Advisory
Agreement between Registrant and [the Adviser] and Section 9 of the
Master Distribution Contract between Registrant and [the
Distributor] (Exhibit 6 to this Registration Statement), officers,
trustees, employees and agents of the Registrant will not be liable
to the Registrant, any shareholder, officer, trustee, employee,
agent or other person for any action or failure to act, except for
bad faith, willful misfeasance, gross negligence or reckless
disregard of duties, and those individuals may be indemnified
against liabilities in connection with the Registrant, subject to
the same exceptions.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Securities Act") may be permitted to
trustees, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant
understands that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses
incurred or paid by a trustee, officer or controlling person of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling
person in connection with the securities being registered, 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 Securities Act
and will be governed by the final adjudication of such issue.
The Registrant will purchase an insurance policy insuring its
officers and trustees against liabilities, and certain costs of
defending claims against such officers and trustees, to the extent
such officers and trustees are not found to have committed conduct
constituting willful misfeasance, bad faith, gross negligence or
reckless disregard in the performance of their duties. The
insurance policy also insures the Registrant against the cost of
indemnification payments to officers under certain circumstances.
Section 4 of the Master Investment Advisory Contract between
Registrant and [the Adviser], Section 9 of the Investment Advisory
Agreement between Registrant and [the Adviser] and Section 9 of the
Master Distribution Contract between Registrant and [the Adviser]
Distributor limit the liability of [the Adviser], and the
Distributor to liabilities arising from willful misfeasance, bad
faith or gross negligence in the performance of their respective
duties or from reckless disregard by them of their respective
obligations and duties under the agreements.
The Registrant hereby undertakes that it will apply the
indemnification provisions of its Declaration of Trust, By-Laws,
Investment Advisery Contracts and Distribution Contract in a manner
consistent with Release No. 11330 of the Securities and Exchange
Commission under the 1940 Act so long as the interpretations of
Section 17(h) and 17(i) of such Act remain in effect and are
consistently applied.
Item 28. Business and Other Connections of [the Adviser].
First American Management, Inc. is a subsidiary of First
American Financial Corporation, a provider of real estate
financial services to real property buyers and mortgage lenders
headquartered in Santa Ana, California.
The executive officers of First American and
_____________________ and such executive officers' positions
during the past five years are as follows:
Name Position and Offices
[To be provided by Amendment]
Business and Other Connections of [the Adviser].
[To be provided by Amendment]
Principal Occupation
Name and Position During Past Two Years
[To be provided by Amendment]
Item 29. Principal Underwriter
(a) [The Distributor] does not act as Distributor/Underwriter
for other registered investment companies.
(b) Officers and Directors.
Name and Principal Positions and Offices Positions and
Business Address** with Registrant Offices with
Underwriter
[To be provided by Amendment.]
(c) Not applicable.
Item 30. Location of Accounts and Records
All accounts, books and other documents required to be maintained
by Section 31(a) of the Investment Company Act of 1940 and the rules
thereunder are maintained at the offices of [ADMINISTRATOR].
Item 31. Management Services
Not applicable.
Item 32. Undertakings.
(a) Registrant undertakes to call a meeting of shareholders for
the purpose of voting upon the removal of a trustee if
requested to do so by the holders of at least 10% of the
Registrant's outstanding shares.
(b) Registrant undertakes to provide the support to
shareholders specified in Section 16(c) of the 1940 Act as
though that section applied to the Registrant.
(c) Registrant hereby undertakes to file a post-effective
amendment, using financial statements which need not be
certified, within four to six months from the effective
date of the Registrant's 1933 Act Registration Statement.
_______________
** 237 Park Avenue, New York, New York 10017.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, Registrant has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, and State of New
York, on June 26, 1996.
FIRST CHOICE FUNDS TRUST
By:_______________________________
John J. Pileggi, President
and Sole Trustee
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
Signature Title Date
____________________ Trustee and Principal June 26, 1996
John J. Pileggi Executive Officer
____________________ Vice President and June 26, 1996
Donald Brostrom Treasurer (Principal
Financial and Accounting
Officer)
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
to
FORM N-1A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
AND
THE INVESTMENT COMPANY ACT OF 1940
FIRST CHOICE FUNDS TRUST<PAGE>
EXHIBIT INDEX
Exhibit
Number Document
1 Trust Instrument
2 Bylaws of Registrant
FIRST CHOICE FUNDS TRUST
TRUST INSTRUMENT
DATED JUNE 5, 1996
FIRST CHOICE FUNDS TRUST
DATED JUNE 5, 1996
TRUST INSTRUMENT, made June 5, 1996 by John J. Pileggi (the
"Trustees"). The registered agent's name and address is Corporation
Service Company,1013 Centre Road, Wilmington, DE, 19805.
WHEREAS, the Trustees desire to establish a business trust
for the investment and reinvestment of funds contributed thereto;
NOW, THEREFORE, the Trustees declare 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
NAME
Section 1.01. The name of the trust created hereby is
"First Choice Funds Trust".
DEFINITIONS.
Section 1.02. Wherever used herein, unless otherwise
required by the context or specifically provided:
(a) "Bylaws" means the Bylaws referred to in
Article IV, Section 4.01(e) hereof, as from time to time amended;
(b) The term "Commission" has the meaning given
it in the 1940 Act (as defined below). The terms "Affiliated Person",
"Assignment", "Interested Person" and "Principal Underwriter" shall
have the meanings given them in the 1940 Act, as modified by or
interpreted by any applicable order or orders of the Commission or any
rules or regulations adopted or interpretive releases of the
Commission thereunder. "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, as modified by or interpreted
by any applicable order or orders of the Commission or any rules or
regulations adopted or interpretive releases of the Commission
thereunder.
(c) The "Delaware Act" refers to Chapter 38 of
Title 12 of the Delaware Code entitled "Treatment of Delaware Business
Trusts," as it may be amended from time to time.
(d) "Net Asset Value" means the net asset value
of each Series (as defined below) of the Trust determined in the
manner provided in Article IX, Section 9.03 hereof;
(e) "Outstanding Shares" means those Shares
shown 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 series of Shares (as
defined below) of the Trust established in accordance with the
provisions of Article II, Section 2.06 hereof.
(g) "Shareholder" means a record owner of
Outstanding Shares of the Trust;
(h) "Shares" means the equal proportionate
transferable units of beneficial 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 all Triumph Funds
Trust (Delaware)'s Funds and reference to a Fund, when applicable to
one or more Series of the Trust, shall refer to any such Series;
(j) The "Trustees" means the person or persons
who has or have signed this Trust Instrument, so long as he or they
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.
(l) The "1940 Act" refers to the Investment
Company Act of 1940, as amended from time to time.
ARTICLE II
BENEFICIAL INTEREST
SHARES OF BENEFICIAL INTEREST
Section 2.01. 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 a par value of $0.001. 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.
ISSUANCE OF SHARES
Section 2.02. The Trustees in their discretion may, from
time to time, without vote of the Shareholders, issue Shares, in
addition to the then issued and outstanding Shares and Shares held in
the treasury, to such party or parties and for such amount and type
of consideration, subject to applicable law, including cash or
securities, 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 acquisition of assets subject to, and in connection
with, the assumption of liabilities) and businesses. 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 into a greater or lesser number without
thereby changing the proportionate beneficial interests in the Trust.
Contributions to the Trust may be accepted for, and Shares shall be
redeemed as, whole Shares and/or 1/1,000th of a Share or integral
multiples thereof.
REGISTER OF SHARES AND SHARE CERTIFICATES
Section 2.03. 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 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 Bylaws 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 registrar 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. Such certificates
may be issuable for any purpose limited in the Trustees discretion.
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.
TRANSFER OF SHARES
Section 2.04. 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 registrar 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.
TREASURY SHARES
Section 2.05. Shares held in the treasury shall, until
reissued pursuant to Section 2.02 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.
ESTABLISHMENT OF SERIES
Section 2.06. 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 such Series of
Shares or any classes of initial or additional Series and to fix such
preferences, voting powers, right and privileges of such Series or
classes thereof as the Trustees may from time to time determine, to
divide and 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 a majority of 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. At any time that there are no Shares
outstanding of any particular Series previously established and
designated, the Trustees may by a majority vote abolish that Series
and the establishment and designation thereof.
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.
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 his pro rata share of
distributions of income and capital gains, if any, made with respect
to such Series. Upon redemption of his Shares, such Shareholder shall
be paid solely out of the funds and property of such Series of the
Trust.
INVESTMENT IN THE TRUST
Section 2.07. 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 9.03 hereof. Investments
in a Series shall be credited to each Shareholder's account in the
form of full 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, (b) impose a sales charge upon
investments in the Trust in such manner and at such time determined
by the Trustees or (c) issue fractional Shares.
ASSETS AND LIABILITIES OF SERIES
Section 2.08. 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, changes or reserves
of the Trust which are not readily identifiable as belonging to a
particular Series shall be allocated and changed by the Trustees
belonging to 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 2.08, 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 may, in the Trustee's sole
discretion, 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 to
the Delaware Act, and upon the giving of such notice in the
certificate of trust, the statutory provisions of Section 3804 of the
Delaware Act relating to limitations on inter-Series liabilities (and
the statutory effect under Section 3804 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 look only to the assets of
that Series to satisfy or enforce any debt, liability, obligation or
expense incurred, contracted for or otherwise existing with respect
to that Series. 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.
NO PREEMPTIVE RIGHTS
Section 2.09. 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.
PERSONAL LIABILITY OF SHAREHOLDERS
Section 2.10. 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).
ASSENT TO TRUST INSTRUMENT
Section 2.11. Every Shareholder, by virtue of having
purchased 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
MANAGEMENT OF THE TRUST
Section 3.01. 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 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 Trustees named herein or appointed to fill
vacancies pursuant to Section 3.04 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. Such a meeting shall
be held on a date fixed by the Trustees. In the event that less than
a majority of the Trustees holding office have been elected by
Shareholders, the Trustees then in office will call a Shareholders'
meeting for the election of Trustees.
INITIAL TRUSTEES
Section 3.02. The initial Trustees shall be the persons
named herein. On a date fixed by the Trustees, the Shareholders shall
elect at least one but not more than twelve Trustees, as specified by
the Trustees pursuant to Section 3.06 of this Article III.
TERM OF OFFICE OF TRUSTEES
Section 3.03. The Trustees shall hold office during the
lifetime 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 other Trustees, 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.
VACANCIES AND APPOINTMENT OF TRUSTEES
Section 3.04. In case of the declination to serve, death,
resignation, retirement, removal, physical or mental incapacity by
reason of disease or otherwise, 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. Such appointment shall be evidenced
by a written instrument signed by a majority of the Trustees in office
or by resolution of the Trustees, duly adopted, which shall be
recorded in the minutes of a meeting of the Trustees, whereupon the
appointment shall take effect.
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 3.04 shall have accepted this trust, the
trust estate shall vest in the new Trustee or Trustees, together with
the continuing Trustees, without any further act or conveyance, and
he shall be deemed a Trustee hereunder. The power to appoint a
Trustee pursuant to this Section 3.04 is subject to the provisions of
Section 16(a) of the 1940 Act.
TEMPORARY ABSENCE OF TRUSTEE
Section 3.05. 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.
NUMBER OF TRUSTEES
Section 3.06. The number of Trustees shall be at least one
(1), and thereafter shall be such number as shall be fixed from time
to time by a majority of the Trustees, provided, however, that the
number of Trustees shall in no event be more than twelve (12).
EFFECT OF DEATH, RESIGNATION, ETC. OF A TRUSTEE
Section 3.07. 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.
OWNERSHIP OF ASSETS OF THE TRUST
Section 3.08. The assets of the Trust and of each Series
shall be held separate and apart from any assets now or hereafter held
in any capacity other than as Trustee hereunder by the Trustees or any
successor Trustees. Legal title in all of the assets of the Trust and
the right to conduct any business shall at all times be considered as
vested in the Trustees on behalf of the Trust, except that the
Trustees may cause legal title to any Trust Property to be held by,
or in the name of the Trust, or in the name of any person as nominee.
No Shareholder shall be deemed to have a severable ownership 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.
ARTICLE IV
POWERS OF THE TRUSTEES
POWERS
Section 4.01. 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 not
in any way be bound or limited by present or future laws or customs
in regard to trust investments, but 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
without recourse to any court or other authority. Subject to any
applicable limitation in this Trust Instrument or the Bylaws of the
Trust, the Trustees shall have power and authority:
(a) To invest and reinvest cash and other
property, and to hold cash or other property uninvested, without in
any event being bound or limited by any present or future law or
custom in regard to investments by trustees, 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 operations;
(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
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 Bylaws 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; such Bylaws shall be deemed
incorporated and included in this Trust Instrument;
(f) To elect and remove such officers and
appoint and terminate such agents as they consider appropriate;
(g) To employ one or more banks, trust
companies or companies that are members of a national securities
exchange or such other entities as the Commission may permit as
custodians of any assets of the Trust subject to any conditions set
forth in this Trust Instrument or in the Bylaws;
(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 Bylaws;
(j) To delegate such authority as they consider
desirable to any officers of the Trust and to any investment adviser,
manager, custodian, underwriter or other agent or independent
contractor;
(k) To sell or exchange any or all of the
assets of the Trust, subject to the provisions of Article IX, Section
11.04(b) hereof;
(l) 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;
(m) To exercise powers and rights of
subscription or otherwise which in any manner arise out of ownership
of securities;
(n) 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, subject in either case
to proper safeguards according to the usual practice of Delaware
business trusts or investment companies;
(o) 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;
(p) Subject to the provisions of Section 3804
of the Delaware Act, to allocate assets, liabilities and expenses of
the Trust to a particular Series or to apportion the same between or
among two or more Series, provided that any liabilities or expenses
incurred by a particular Series shall be payable solely out of the
assets belonging to that Series as provided for in Article II hereof;
(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, to
delegate any of the powers of the Trustees to said committees and to
adopt a committee charter providing for such responsibilities,
membership (including Trustees, officers or other agents of the Trust
therein) and any other characteristics of said committees as the
Trustees may deem proper. 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 adjudicatory 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
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
power, 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.
The Trustees shall not be limited to investing in
obligations maturing before the possible termination of the Trust.
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.
ISSUANCE AND REPURCHASE OF SHARES
Section 4.02. The Trustees shall have the power to issue,
sell, repurchase, redeem, retire, cancel, acquire, hold, resell,
reissue, dispose of, 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.
TRUSTEES AND OFFICERS AS SHAREHOLDERS
Section 4.03. Any Trustee, officer or other agent of the
Trust may acquire, own and dispose of Shares to the same extent as if
he 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 he is interested,
subject only to the general limitations herein contained as to the
sale and purchase of such Shares; and all subject to any restrictions
which may be contained in the Bylaws.
ACTION BY THE TRUSTEES
Section 4.04. The Trustees shall act by majority vote at
a meeting duly called or by unanimous written consent without a
meeting or by telephone meeting provided a quorum of Trustees
participate in any such telephone meeting, unless the 1940 Act
requires that a particular action be taken only at a meeting at which
the Trustees are present in person. At any meeting of the Trustees,
a majority of the Trustees shall constitute a quorum. Meetings of the
Trustees may be called orally or in writing by the Chairman and/or
Trustees or by any two other Trustees. Notice of the time, date and
place of all meetings of the Trustees shall be given by the party
calling the meeting to each Trustee by telephone, telefax, or telegram
sent to his home or business address at least twenty-four hours in
advance of the meeting or by written notice mailed to his home or
business address at least seventy-two hours in advance of the meeting.
Notice need not be given to any Trustee who attends the meeting
without objecting to the lack of notice or who executes a written
waiver of notice with respect to the meeting. Any meeting conducted
by telephone shall be deemed to take place at the principal office of
the Trust, as determined by the Bylaws or by the Trustees. Subject
to the requirements of the 1940 Act, the Trustees by majority vote may
delegate to any one or more of their number their authority to approve
particular matters or take particular actions on behalf of the Trust.
Written consents or waivers of the Trustees may be executed in one or
more counterparts. Execution of a written consent or waiver and
delivery thereof to the Trust may be accomplished by telefax.
CHAIRMAN OF THE TRUSTEES
Section 4.05. 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, shall be responsible for the
execution of policies established by the Trustees and the
administration of the Trust, and may be (but is not required to be)
the chief executive, financial and/or accounting officer of the Trust.
PRINCIPAL TRANSACTIONS
Section 4.06. 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
Trustees 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
TRUSTEE REIMBURSEMENT
Section 5.01. Subject to the provisions of Article II,
Section 2.08 hereof, the Trustees shall be reimbursed from the Trust
estate or the assets belonging to the appropriate Series for their
expenses and disbursement, 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 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
an 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 AND TRANSFER AGENT
INVESTMENT ADVISER
Section 6.01. 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 Trustees 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 all of the Trustees.
The Trustees may authorize, subject to applicable
requirements of the 1940 Act, including those relating to Shareholder
approval, 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.
PRINCIPAL UNDERWRITER
Section 6.02. 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 shall be on such terms and conditions,
if any, as may be prescribed in the Bylaws, and such further terms and
conditions as the Trustees may in their discretion determine not
inconsistent with the provisions of this Article VI, or of the Bylaws;
and such contract may also provide for the repurchase or sale of
Shares by such other party as principal or as agent of the Trust.
TRANSFER AGENT
Section 6.03. 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 not inconsistent with the
provisions of this Trust Instrument or of the Bylaws.
PARTIES TO CONTRACT
Section 6.04. Any contract of the character described in
Sections 6.01, 6.02 and 6.03 of this Article VI or any contract of the
character 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 or of the Bylaws. The same person
(including a firm, corporation, partnership, trust or association) may
be the other party to contracts entered into pursuant to Sections
6.01, 6.02 and 6.03 of 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 6.04.
PROVISIONS AND AMENDMENTS
Section 6.05. Any contract entered into pursuant to
Sections 6.01 or 6.02 of this Article VI shall be consistent with and
subject to the requirements of Section 15 of the 1940 Act or other
applicable Act of Congress hereafter enacted with respect to its
continuance in effect, its termination, and the method of
authorization and approval of such contract or renewal thereof, and
no amendment to any contract, entered into pursuant to Section 6.01
of this Article VI shall be effective unless assented to in a manner
consistent with the requirements of said Section 15, as modified by
any applicable rule, regulation or order of the Commission.
ARTICLE VII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
VOTING POWERS
Section 7.0l. The Shareholders shall have power to vote
only (i) for the election of Trustees as provided in Article III,
Sections 3.01 and 3.02 hereof, (ii) for the removal of Trustees as
provided in Article III, Section 3.03(d) hereof, (iii) with respect
to any investment advisory or management contract as provided in
Article VI, Sections 6.01 and 6.05 hereof, and (iv) with respect to
such additional matters relating to the Trust as may be required by
law, by this Trust Instrument, or the Bylaws or any registration of
the Trust with the Commission or any State, 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 for in the Bylaws. A proxy may be
given in writing. The Bylaws may provide that proxies may also, or
may instead, be given by any electronic or telecommunications device
or in any other manner. Notwithstanding anything else herein or in
the Bylaws, 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 Bylaws of the Trust to be taken by Shareholders.
MEETINGS
Section 7.02. The first Shareholders' meeting shall be held
in order to elect Trustees as specified in Section 3.02 of Article III
hereof at the principal office of the Trust or such other place as the
Trustees may designate. Meetings 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, as the same may be amended from time to time, 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 First Class Mail or such other means determined by the
Trustees, at least 15 days prior to any such meeting.
QUORUM AND REQUIRED VOTE
Section 7.03. 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, within a reasonable
time after the date set for the original meeting, without the
necessity of further notice. Except when a larger vote is required
by law or by any provision of this Trust Instrument or the Bylaws, 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. Shareholders may act by
unanimous written consent. Actions taken by Series (or class) may be
consented to unanimously in writing by Shareholders of that Series.
ARTICLE VIII
CUSTODIAN
APPOINTMENT AND DUTIES
Section 8.0l. 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, but subject to such restrictions, limitations
and other requirements, if any, as may be contained in the Bylaws of
the Trust:
(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.
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, provided that in every case such
sub-custodian shall be a bank, a company that is a member of a
national securities exchange, or a trust company organized under the
laws of the United States or one of the states thereof and having
capital, surplus and undivided profits of at least two million dollars
($2,000,000) or such other person as may be permitted by the
Commission, or otherwise in accordance with the 1940 Act.
CENTRAL CERTIFICATE SYSTEM
Section 8.02. Subject to such rules, regulations and orders
as the Commission may adopt, 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
registered with the Commission under the Securities Exchange Act of
1934, as amended, or such other person as may be permitted by the
Commission, or otherwise in accordance with the 1940 Act, 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.
ARTICLE IX
DISTRIBUTIONS AND REDEMPTIONS
DISTRIBUTIONS
Section 9.0l.
(a) The Trustees may from time to time declare
and pay dividends or other distributions with respect to any Series.
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. 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.
REDEMPTIONS
Section 9.02. In case any holder of record of Shares of a
particular Series desires 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
9.02; 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 9.03 of this Article IX).
The Series shall make payment for any 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.
DETERMINATION OF NET ASSET VALUE
AND VALUATION OF PORTFOLIO ASSETS
Section 9.03. The term "Net Asset Value" of any Series
shall mean that amount by which the assets of that Series exceed 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 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 insofar
as permitted under the 1940 Act and the rules, regulations and
interpretations thereof promulgated or issued by the Commission or
insofar as permitted by any Order of the Commission applicable to the
Series. The Trustees may delegate any of their powers and duties
under this Section 9.03 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 account of each Shareholder by
a pro rata portion of the 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 with respect to 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 the
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.
SUSPENSION OF THE RIGHT OF REDEMPTION
Section 9.04. 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 are divided into classes,
the provisions of this Section 9.03, 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.
REDEMPTION OF SHARES IN ORDER TO
QUALIFY AS REGULATED INVESTMENT COMPANY
Section 9.05. If the Trustees shall, at any time and in
good faith, 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 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
LIMITATION OF LIABILITY
Section 10.01. 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
or any conduct whatsoever in his capacity as Trustee, provided that
nothing contained herein or in the Delaware Act shall protect any
Trustee against any liability to the Trust or to Shareholders to which
he would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved
in the conduct of the office of Trustee hereunder.
INDEMNIFICATION
Section 10.02.
(a) Subject to the exceptions and limitations
contained in Section (b) below:
(i) every Person who is,
or has been, a Trustee or officer of the Trust (hereinafter
referred to as a "Covered Person") shall be indemnified by the
Trust to the fullest extent permitted by law against liability
and against all expenses reasonably incurred or paid by him in
connection with any claim, action, suit or proceeding in which
he becomes involved as a party or otherwise by virtue of his
being or having been a Trustee or officer and against amounts
paid or incurred by him in the settlement thereof;
(ii) the words "claim,"
"action," "suit," or "proceeding" shall apply to all claims,
actions, suits or proceedings (civil, criminal or other,
including appeals), actual or threatened while in office or
thereafter, and the words "liability" and "expenses" shall
include, without limitation, attorneys' fees, costs, judgments,
amounts paid in settlement, fines, penalties and other
liabilities.
(b) No indemnification shall be provided
hereunder to a Covered Person:
(i) who shall have been
adjudicated by a court or body before which the proceeding was
brought (A) to be liable to the Trust or its Shareholders by
reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his
office or (B) not to have acted in good faith in the reasonable
belief that his action was in the best interest of the Trust; or
(ii) in the event of a
settlement, unless there has been a determination that such
Trustee or officer did not engage in willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office,
(A) by the court or other
body approving the settlement;
(B) 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
(C) by written opinion of
independent legal counsel based upon a review of readily
available facts (as opposed to a full trial-type inquiry);
provided, however, that any Shareholder may, by appropriate
legal proceedings, challenge any such determination by the
Trustees or by independent counsel.
(c) The rights of indemnification herein
provided may be insured against by policies maintained by the trust,
shall be severable, shall not be exclusive of or affect any other
rights to which any Covered Person may now or hereafter be entitled,
shall continue as to a person who has ceased to be a Covered Person
and shall inure to the benefit of the heirs, executors and
administrators of such a person. Nothing contained herein shall
affect any rights to indemnification to which Trust personnel, other
than Covered Persons, and other persons may be entitled by contract
or otherwise under law.
(d) Expenses in connection with the preparation
and presentation of a defense to any claim, action, suit or proceeding
of the character described in paragraph (a) of this Section 10.02 may
be paid by the Trust or Series from time to time prior to final
disposition thereof upon receipt of an undertaking by or on behalf of
such Covered Person that such amount will be paid over by him to the
Trust or Series if it is ultimately determined that he is not entitled
to indemnification under this Section 10.02; provided, however, that
either (a) such Covered Person shall have provided appropriate
security for such undertaking, (b) the Trust is insured against losses
arising out of any such advance payments or (c) either a majority of
the Trustees who are neither Interested Persons of the Trust nor
parties to the matter, or independent legal counsel in a written
opinion, shall have determined, based upon a review of readily
available facts (as opposed to a trial-type inquiry or full
investigation), that there is reason to believe that such Covered
Person will be found entitled to indemnification under this Section
10.02.
SHAREHOLDERS
Section 10.03. 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
TRUST NOT A PARTNERSHIP
Section 11.01. 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 shall look only to
the assets of the appropriate Series or (if the Trustees shall have
yet to have established Series) of the Trust for payment under such
credit, contract or claim; and neither the Shareholders nor the
Trustees, nor any of their agents, whether past, present or future,
shall be personally liable therefor. Nothing in this Trust Instrument
shall protect a Trustee against any liability to which the Trustee
would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved
in the conduct of the office of Trustee hereunder.
TRUSTEE'S GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR SURETY
Section 11.02. 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 and to
Section 11.01 of this Article XI, 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 and Section 11.01 of this Article XI, 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.
ESTABLISHMENT OF RECORD DATES
Section 11.03. The Trustees may close the Share transfer
books of the Trust for a period not exceeding sixty (60) days
preceding the date of any meeting of Shareholders, or the date for the
payment of any dividends or other distributions, 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 sixty (60) days preceding the date of any meeting
of Shareholders, or the date for payment of any dividend or other
distribution, or the date for the allotment of rights, or the date
when any change or conversion or exchange of Shares shall go 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.
TERMINATION OF TRUST
Section 11.04.
(a) This Trust shall continue without
limitation of time but subject to the provisions of sub-section (b)
of this Section 11.04.
(b) The Trustees may, subject to a Majority
Shareholder Vote of each Series affected by the matter or, if
applicable, to a Majority Shareholder Vote of the Trust, and subject
to a vote of a majority of the Trustees,
(i) sell and convey all
or substantially all of the assets of the Trust or any affected
Series to another trust, partnership, association or
corporation, or to a separate series of shares thereof,
organized under the laws of any state which trust, partnership,
association or corporation is an open-end management investment
company as defined in the 1940 Act, or is a series thereof, for
adequate consideration which may include the assumption of all
outstanding obligations, taxes and other liabilities, accrued or
contingent, of the Trust or any affected 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
affected 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 sub-section
(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 Act, which certificate of cancellation
may be signed by any one Trustee.
REORGANIZATION
Section 11.05. Notwithstanding anything else herein, the
Trustees, in order to change the form of organization 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 so long as the surviving or resulting
entity is an open-end management investment company under the 1940
Act, or is a series thereof, that will succeed to or assume the
Trust's registration under that Act and 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 Trustees and
facsimile signatures conveyed by electronic or telecommunication means
shall be valid.
Pursuant to and in accordance with the provisions of Section
3815(f) of the Delaware 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 11.05 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.
FILING OF COPIES, REFERENCES, HEADINGS
Section 11.06. 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,
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.
APPLICABLE LAW
Section 11.07. 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 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 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 and principal, (vi)
restrictions or limitations on the permissible nature, amount or
concentration of trust investments or requirements relating to the
titling, storage or other 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 or privileges afforded to trusts or
actions that may be engaged in by trusts under the Delaware 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.
AMENDMENTS
Section 11.08. 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 7.01 of Article
VII hereof, (ii) on any amendment to this Section 11.08, (iii) on any
amendment as may be required by law or by the Trust's registration
statement filed with the Commission 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.
Notwithstanding anything else herein, any amendment to Article 10
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.
FISCAL YEAR
Section 11.09. The fiscal year of the Trust shall end on
a specified date as set forth in the Bylaws, provided, however, that
the Trustees may, without Shareholder approval, change the fiscal year
of the Trust.
PROVISIONS IN CONFLICT WITH LAW
Section 11.10. 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 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, 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 all of the
initial Trustees of the Trust, have executed this instrument this 5th
day of June, 1996.
John J. Pileggi, as Trustee and not
individually
TABLE OF CONTENTS
Page
ARTICLE I -- NAME AND DEFINITIONS . . . . . . . . . . . . . . . . . . 2
Section 1.01 Name. . . . . . . . . . . . . . . . . . . . . . 2
Section 1.02 Definitions . . . . . . . . . . . . . . . . . . 2
ARTICLE II -- BENEFICIAL INTEREST. . . . . . . . . . . . . . . . . . . 5
Section 2.01 Shares of Beneficial Interest . . . . . . . . . 5
Section 2.02 Issuance of Shares. . . . . . . . . . . . . . . 6
Section 2.03 Register of Shares and Share
Certificates. . . . . . . . . . . . . . . . . . 7
Section 2.04 Transfer of Shares. . . . . . . . . . . . . . . 8
Section 2.05 Treasury Shares . . . . . . . . . . . . . . . . 9
Section 2.06 Establishment of Series . . . . . . . . . . . . 9
Section 2.07 Investment in the Trust . . . . . . . . . . . .11
Section 2.08 Assets and Liabilities of Series. . . . . . . .12
Section 2.09 No Preemptive Rights. . . . . . . . . . . . . .15
Section 2.10 Personal Liability of
Shareholders. . . . . . . . . . . . . . . . . .15
Section 2.11 Assent to Trust Instrument. . . . . . . . . . .16
ARTICLE III -- THE TRUSTEES . . . . . . . . . . . . . . . . . . . . .17
Section 3.01 Management of the Trust . . . . . . . . . . . . 17
Section 3.02 Initial Trustees. . . . . . . . . . . . . . . .19
Section 3.03 Term of Office of Trustees. . . . . . . . . . .19
Section 3.04 Vacancies and Appointment of
Trustees. . . . . . . . . . . . . . . . . . . .20
Section 3.05 Temporary Absence of Trustee. . . . . . . . . .21
Section 3.06 Number of Trustees. . . . . . . . . . . . . . .22
Section 3.07 Effect of Death, Resignation, etc.
of a Trustee. . . . . . . . . . . . . . . . . .22
Section 3.08 Ownership of Assets of the Trust. . . . . . . .23
TABLE OF CONTENTS (cont'd.)
Page
ARTICLE IV -- POWERS OF THE TRUSTEES. . . . . . . . . . . . . . . . .24
Section 4.01 Powers. . . . . . . . . . . . . . . . . . . . .24
Section 4.02 Issuance and Repurchase of Shares . . . . . . .32
Section 4.03 Trustees and Officers as
Shareholders. . . . . . . . . . . . . . . . . .32
Section 4.04 Action By The Trustees. . . . . . . . . . . . .33
Section 4.05 Chairman of the Trustees. . . . . . . . . . . .34
Section 4.06 Principal Transactions. . . . . . . . . . . . .35
ARTICLE V -- EXPENSES OF THE TRUST . . . . . . . . . . . . . . . . .36
Section 5.01 Trustee Reimbursement . . . . . . . . . . . . .36
ARTICLE VI -- INVESTMENT ADVISER, PRINCIPAL
UNDERWRITER AND TRANSFER AGENT. . . . . . . . . . . . .38
Section 6.01 Investment Adviser. . . . . . . . . . . . . . .38
Section 6.02 Principal Underwriter . . . . . . . . . . . . .39
Section 6.03 Transfer Agent. . . . . . . . . . . . . . . . .40
Section 6.04 Parties to Contract . . . . . . . . . . . . . .41
Section 6.05 Provisions and Amendments . . . . . . . . . . .42
ARTICLE VII - SHAREHOLDERS' VOTING POWER AND
MEETINGS. . . . . . . . . . . . . . . . . . . . . . . .43
Section 7.01 Voting Powers . . . . . . . . . . . . . . . . .43
Section 7.02 Meetings. . . . . . . . . . . . . . . . . . . .45
Section 7.03 Quorum and Required Vote. . . . . . . . . . . .46
ARTICLE VIII - CUSTODIAN . . . . . . . . . . . . . . . . . . . . . . .47
Section 8.01 Appointment and Duties. . . . . . . . . . . . .47
TABLE OF CONTENTS (cont'd.)
Page
Section 8.02 Central Certificate System. . . . . . . . . . .50
ARTICLE IX - DISTRIBUTIONS AND REDEMPTIONS . . . . . . . . . . . . . .51
Section 9.01 Distributions . . . . . . . . . . . . . . . . .51
Section 9.02 Redemptions . . . . . . . . . . . . . . . . . .52
Section 9.03 Determination of Net Asset Value and
Valuation of Portfolio Assets . . . . . . . . .53
Section 9.04 Suspension of the Right of
Redemption. . . . . . . . . . . . . . . . . . .56
Section 9.05 Redemption of Shares in Order
to Qualify as Regulated
Investment Company. . . . . . . . . . . . . . .57
ARTICLE X - LIMITATION OF LIABILITY AND
INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . .58
Section 10.01 Limitation of Liability . . . . . . . . . . . .58
Section 10.02 Indemnification . . . . . . . . . . . . . . . .59
Section 10.03 Shareholders. . . . . . . . . . . . . . . . . .63
ARTICLE XI - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . .64
Section 11.01 Trust Not a Partnership . . . . . . . . . . . .64
Section 11.02 Trustee's Good Faith Action,
Expert Advice, No Bond or Surety. . . . . . . .65
Section 11.03 Establishment of Record Dates . . . . . . . . .65
Section 11.04 Termination of Trust. . . . . . . . . . . . . .67
Section 11.05 Reorganization. . . . . . . . . . . . . . . . .69
Section 11.06 Filing of Copies, References,
Headings. . . . . . . . . . . . . . . . . . . .70
Section 11.07 Applicable Law. . . . . . . . . . . . . . . . .71
Section 11.08 Amendments. . . . . . . . . . . . . . . . . . .73
Section 11.09 Fiscal Year . . . . . . . . . . . . . . . . . .74
Section 11.10 Provisions in Conflict with Law . . . . . . . .74
BY-LAWS
OF
FIRST CHOICE FUNDS TRUST
These Bylaws of First Choice Funds Trust (the "Trust"),
a Delaware business trust, are subject to the Trust's Instrument
of Trust dated June 5, 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
New York, New York or such other 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
Officers
Section 1. The officers of the Trust shall be
President, a Treasurer, a Secretary, and such other officers as
the Trustees may from time to time elect. The Trustees may
delegate to any officer or committee the power to appoint any
subordinate officers or agents. It shall not be necessary for
any Trustee or other officer to be a holder of Shares in the
Trust.
Election of Officers
Section 2. The Treasurer and Secretary shall be chosen
by the Trustees. The President shall be chosen by and from the
Trustees. Two or more offices may be held by a single person
except the offices of President and Secretary. Subject to the
provisions of Section 12 hereof, the President, the Treasurer and
the Secretary shall each hold office until their successors are
chosen and qualified and all other officers shall hold office at
the pleasure of the Trustees.
Resignations
Section 3. Any officer of the Trust may resign,
notwithstanding Section 2 hereof, by filing a written resignation
with the President, the Trustees or the Secretary, which
resignation shall take effect on being so filed or at such time
as may be therein specified.
ARTICLE III
POWERS AND DUTIES OF OFFICERS AND TRUSTEES
Management of The Trust-General
Section 1. The business and affairs of the Trust shall
be managed by, or under the direction of, the Trustees, and they
shall have all powers necessary and desirable to carry out their
responsibilities, so far as such powers are not inconsistent with
the laws of the State of Delaware, the Trust Instrument or with
these Bylaws.
Executive and Other Committees
Section 2. The Trustees may elect from their own
number an executive committee, which shall have any or all the
powers of the Trustees while the Trustees are not in session.
The Trustees may also elect from their own number other
committees from time to time. The number composing such
committees and the powers conferred upon the same are to be
determined by vote of a majority of the Trustees. All members of
such committees shall hold such offices at the pleasure of the
Trustees. The Trustees may abolish any such committee at any
time. Any committee to which the Trustees delegate any of their
powers or duties shall keep records of its meetings and shall
report its actions to the Trustees. The Trustees shall have
power to rescind any action of any committee, but no such
rescission shall have retroactive effect.
Compensation
Section 3. Each Trustee and each committee member may
receive such compensation for his services and reimbursement for
his expenses as may be fixed from time to time by resolution of
the Trustees.
Chairman of the Trustees
Section 4. The Trustees shall appoint from among their
number a Chairman who shall serve as such at the pleasure of the
Trustees. When present, he shall preside at all meetings of the
Shareholders and the Trustees, and he may, subject to the
approval of the Trustees, appoint a Trustee to preside at such
meetings in his absence. He shall perform such other duties as
the Trustees may from time to time designate.
President
Section 5. The President shall be the chief executive
officer of the Trust and, subject to the direction of the
Trustees, shall have general administration of the business and
policies of the Trust. Except as the Trustees may otherwise
order, the President shall have the power to grant, issue,
execute or sign 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. The
President shall perform such duties additional to all of the
foregoing as the Trustees may from time to designate.
Treasurer
Section 6. 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 may from time to time designate.
Secretary
Section 7. 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 may from time to time
designate.
Vice President
Section 8. Any Vice President of the Trust shall
perform such duties as the Trustees or the President may from
time to time designate. At the request or in the absence or
disability of the President, the Vice President (or, if there are
two or more Vice Presidents, then the senior of the Vice
Presidents 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.
Assistant Treasurer
Section 8. 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
senior Assistant Treasurer, present and able to act, may perform
all the duties of the Treasurer.
Assistant Secretary
Section 9. 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
senior Assistant Secretary, present and able to act, may perform
all the duties of the Secretary.
Subordinate Officers
Section 10. 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. The Trustees from time to time may delegate to one or
more officers or committees of Trustees the power to appoint any
such subordinate officers or agents and to prescribe their
respective terms of office, authorities and duties.
Surety Bonds
Section 11. 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, as amended ("the 1940 Act") and the rules and regulations
of the Securities and Exchange Commission ("Commission")) to the
Trust 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.
Removal
Section 12. Any officer may be removed from office
whenever in the judgment of the Trustees the best interest of the
Trust will be served thereby, by the vote of a majority of the
Trustees given at any regular meeting or any special meeting of
the Trustees. In addition, any officer or agent appointed in
accordance with the provisions of Section 10 hereof may be
removed, either with or without cause, by any officer upon whom
such power of removal shall have been conferred by the Trustees.
Remuneration
Section 13. 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
Special Meetings
Section 1. A special meeting of the shareholders shall
be called by the Secretary whenever (i) ordered by the Trustees
or (ii) requested in writing by the holder or holders of at least
10% of the Outstanding Shares entitled to vote. If the
Secretary, when so ordered or requested, refuses or neglects for
more than 30 days to call such special meeting, the Trustees or
the Shareholders so requesting, may, in the name of the
Secretary, call the meeting by giving notice thereof in the
manner required when notice is given by the Secretary. If the
meeting is a meeting of the Shareholders of one or more Series or
classes of Shares, but not a meeting of all Shareholders of the
Trust, then only special meetings of the Shareholders of such one
or more Series or any Classes thereof shall be entitled to notice
of and to vote at such meeting.
Notices
Section 2. Except as above provided, 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 and reasonable notice is given to
persons present at the meeting and the adjourned meeting is held
within a reasonable time after the date set for the original
meeting.
Voting-Proxies
Section 3. 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 this 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 no more than eleven months before the
meeting. Proxies shall be delivered to the Secretary of the
Trust or other persons 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 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 in 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 voting, the validity
of proxies, and the acceptance or rejection of votes shall be
decided by the Chairman of the meeting. Except as otherwise
provided herein or in the Trust Instrument, as these By-laws or
such Trust Instrument may be amended or supplemented from time to
time, all matters relating to the giving, voting or validity or
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.
Place of Meeting
Section 4. All special meetings of the Shareholders
shall be held at the principal place of business of the Trust or
at such other place in the United States as the Trustees may
designate.
Action Without a Meeting
Section 5. Any action to be taken by Shareholders may
be taken without a meeting if all shareholders entitled to vote
on the matter consent to the action in writing and the written
consents are filed with the records of meetings of Shareholders
of the Trust. Such consent shall be treated for all purposes as
a vote at a meeting of the Trustees held at the principal place
of business of the Trust.
ARTICLE V
TRUSTEES' MEETINGS
Special Meetings
Section 1. Special meetings of the Trustees may be
called orally or in writing by the Chairman of the Board of
Trustees or any two other Trustees.
Regular Meetings
Section 2. Regular meetings of the Trustees may be
held at such places and at such times as the Trustees may from
time to time determine; each Trustee present at such
determination shall be deemed a party calling the meeting and no
call or notice will be required to such Trustee provided that any
Trustee who is absent when such determination is made shall be
given notice of the determination by the Chairman or any two
other Trustees, as provided for in Section 4.04 of the Trust
Instrument.
Quorum
Section 3. A majority of the Trustees shall constitute
a quorum for the transaction of business and an action of a
majority of the quorum shall constitute action of the Trustees.
Notice
Section 4. Except as otherwise provided, notice of any
special meeting of the Trustees shall be given by the party
calling the meeting to each Trustee, as provided for in Section
4.04 of the Trust Instrument. A written notice may be mailed,
postage prepaid, addressed to him at his address as registered on
the books of the Trust or if not so registered, at his last known
address.
Place Of Meeting
Section 5. All special meetings of the Trustees shall
be held at the principal place of business of the Trust or such
other place as the Trustees may designate. Any meeting may
adjourn to any place.
Special Action
Section 6. When all the Trustees shall be present at
any meeting, however called or wherever held, or shall assent to
the holding of the meeting without notice, or shall sign a
written assent thereto filed with the record of such meeting, the
acts of such meeting shall be valid as if such meeting had been
regularly held.
Action By Consent
Section 7. Any action by the Trustees may be taken
without a meeting if a written consent thereto is signed by all
the Trustees and filed with the records of the Trustees' meeting.
Such consent shall be treated, for all purposes, as a vote at a
meeting of the Trustees held at the principal place of business
of the Trustees.
Participation in Meetings By Conference Telephone
Section 8. Trustees may participate in a meeting of
Trustees by conference telephone or similar communications
equipment by means of which all persons participating in the
meeting can hear each other, and such participation shall
constitute presence in person at such meeting. Any meeting
conducted by telephone shall be deemed to take place at and from
the principal office of the Trust.
ARTICLE VI
SHARES OF BENEFICIAL INTEREST
Beneficial Interest
Section 1. The beneficial interest in the Trust shall
at all times be divided into such transferable Shares of one or
more separate and distinct Series, or classes thereof, as the
Trustees shall from time to time create and establish. The
number of Shares is unlimited, and each Share of each Series or
class thereof shall be without par value and shall represent an
equal proportionate interest with each other Share in the Series,
none having priority or preference over another, except to the
extent that such priorities or preferences are established with
respect to one or more classes of shares consistent with
applicable law and any rule or order to the Commission.
Transfer of Shares
Section 2. The Shares of the Trust shall be
transferable, so as to affect the rights of the Trust, only by
transfer recorded on the books of the Trust, in person or by
attorney.
Equitable Interest Not Recognized
Section 3. The Trust shall be entitled to treat the
holder of record of any Share or Shares of beneficial interest as
the holder in fact thereof, and shall not be bound to recognize
any equitable or other claim or interest in such Share or Shares
on the part of any other person except as may be otherwise
expressly provided by law.
Share Certificate
Section 4. 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
certificate 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.
In lieu of issuing certificates for Shares, the
Trustees or the transfer or shareholder services agent may either
issue receipts therefor or may keep accounts upon the books of
the Trust for the record holders of such Shares, who shall in
either case be deemed, for all purposes hereunder, to be holders
of certificates for such Shares as if they had accepted such
certificates and shall be held to have expressly assented and
agreed to the terms hereof.
Loss of Certificate
Section 5. In the 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.
Discontinuance of Issuance of Certificates
Section 6. 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 in the Trust.
ARTICLE VII
OWNERSHIP OF ASSETS OF THE TRUST
The Trustees, acting for and on behalf of the Trust,
shall be deemed to hold legal and beneficial ownership of any
income earned on securities held by the Trust issued by any
business entity formed, organized or existing under the laws of
any jurisdiction other than a state, commonwealth, possession or
colony of the United States or the laws of the United States.
ARTICLE VIII
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 have any right to inspect any account or
book or document of the Trust except as conferred by law or
otherwise by the Trustees or by resolution of the Shareholders.
ARTICLE IX
INSURANCE OF OFFICERS, TRUSTEES, AND EMPLOYEES
The Trust may purchase and maintain insurance on behalf
of any Covered Person or employee of the Trust, including any
Covered Person or employee of the Trust who is or was serving at
the request of the Trust as a Trustee, officer or employee of a
corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and
incurred by him in any such capacity or arising out of his status
as such, whether or not the Trustees would have the power to
indemnify him against such liability.
The Trust may not acquire or obtain a contract for
insurance that protects or purports to protect any Trustee or
officer of the Trust against any liability to the Trust or its
Shareholder to which he would otherwise be subject by reason or
willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office.
ARTICLE X
SEAL
The seal of the Trust shall be circular in form bearing
the inscription:
"FIRST CHOICE FUNDS TRUST
THE STATE OF DELAWARE"
The form of the seal shall be subject to alternation by
the Trustees and the seal my 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 XI
FISCAL YEAR
The fiscal year of the Trust shall end on such date as
the Trustees shall from time to time determine.
ARTICLE XII
AMENDMENTS
These Bylaws may be amended at any meeting of the
Trustees of the Trust by a majority vote.
ARTICLE XIII
REPORT TO SHAREHOLDERS
The Trustees shall at least semi-annually submit to the
Shareholders a written financial report of the Trust including
financial statements which shall be certified at least annually
by independent public accountants.
XIV
HEADINGS
Headings are placed in these Bylaws for convenience of
reference only and in case of any conflict, the text of these
Bylaws rather than the headings shall control.
