AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
February 3, 1997
Reg. ICA No. 811-08049 File No. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-1A
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REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / x /
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Pre-Effective Amendment No. / /
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Post-Effective Amendment No. / /
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and
REGISTRATION STATEMENT UNDER THE ----
INVESTMENT COMPANY ACT OF 1940 / X /
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Amendment No. / /
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RENAISSANCE FUNDS
(Exact Name of Registrant as Specified in Charter)
325 Greenwich Avenue
Greenwich, Connecticut 06830
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code: (203) 622-2978
Linda R. Killian, C.F.A.
Renaissance Capital Corporation
325 Greenwich Avenue
Greenwich, Connecticut 06830
Copy to:
Susan Penry-Williams, Esq.
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, New York 10022
(Name and Address of Agent for Service)
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Approximate date of proposed public offering: As soon as practicable
after this registration statement becomes effective.
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An indefinite number of shares of beneficial interest of the Registrant
is being registered by this Registration Statement pursuant to Rule 24f-2
under the Investment Company Act of 1940.
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The 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 the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
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RENAISSANCE FUNDS
CROSS-REFERENCE SHEET
(Pursuant to Rule 404 showing location in each form of Prospectus of the
responses to the Items in Part A and location in each form of Prospectus and
the Statement of Additional Information of the responses to the Items in
Part B of Form N-1A).
Form N-1A Part A Item Prospectus Caption
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1. Cover Page................................Cover Page
2. Synopsis..................................Expense Table; Prospectus
Summary
3. Condensed Financial Information...........Inapplicable
4. General Description of Registrant.........Prospectus Summary; Investment
Objective; Investment Policies
and Techniques; Additional
Information
5. Management of the Fund....................Additional Information
5A. Management's Discussion of Fund
Performance..................................Inapplicable
6. Capital Stock and Other Securities........Investing in the IPO Fund; How
to Redeem IPO Fund Shares;
Dividends and Distributions;
Additional Information
7. Purchase of Securities Being
Offered......................................Prospectus Summary; Investing
in the IPO Fund; How to Redeem
IPO Fund Shares
8. Redemption or Repurchase..................Prospectus Summary; Investing
in the IPO Fund; How to Redeem
IPO Fund Shares
9. Pending Legal Proceedings.................Inapplicable
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Form N-1A Part B Item Prospectus Caption
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10. Cover Page...............................Cover Page
11. Table of Contents........................Table of Contents
12. General Information and History..........Additional Information
13. Investment Objectives and Policies.......Investment Objectives, Policies
and Techniques
14. Management of the Fund...................Trustees and Officers
15. Control Persons and Principal
Holders of Securities........................Inapplicable
16. Investment Advisory and Other
Services.....................................Investment Advisory and Other
Services
17. Brokerage Allocation and Other
Practices....................................Brokerage Arrangements
18. Capital Stock and Other Securities.......How to Buy Shares; How to Redeem
Shares; Valuation of Securities
19. Purchase, Redemption and Pricing
of Securities Being Offered..................How to Buy Shares; How to Redeem
Shares; Valuation of Securities
20. Tax Status...............................Taxes
21. Underwriters.............................Investment Advisory and Other
Services
22. Calculation of Performance Data..........Performance Information
23. Financial Statements.....................Financial Statements
Part C
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.
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RENAISSANCE IPO FUND
325 Greenwich Avenue
Greenwich, CT 06830
Telephone: 1-888-IPO-FUND
E-Mail: [email protected]
Internet: www.ipo-fund.com
PROSPECTUS
, 1997
RENAISSANCE IPO FUND (the "IPO Fund") is a series of Renaissance
Funds, a Delaware Trust, operating as a diversified, open-end investment
company.
The IPO Fund seeks appreciation of capital. It pursues this objective by
investing in the stocks of companies engaged in an initial public offering
("IPO") and public companies affected by the IPOs. As used in this
Prospectus, an IPO refers to both the sale of shares by a company for the
first time to the public and subsequent trading in those shares for a period
of three years.
This Prospectus describes information about the IPO Fund that an investor
ought to know before investing. You should read it and keep it for future
reference. More information about the IPO Fund is contained in a Statement
of Additional Information dated , l997 and filed with the Securities
and Exchange Commission (the "SEC"). It may be obtained free of charge by
calling the Renaissance Funds at 1-888-IPO-FUND, Extension ____, (E-
Mail _______________) or by writing the IPO Fund at the above address.
The Statement of Additional Information, which may be revised from time
to time, is incorporated by reference in this Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
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EXPENSE TABLE
The following table sets forth certain information about the costs and
expenses that a shareholder of the IPO Fund will incur, directly or
indirectly, when investing in the IPO Fund.
Shareholder Transaction Expenses:
(as a percentage of offering price)
Maximum Sales Load on Purchases....................................None
Maximum Sales Load Imposed on Reinvested Dividends.................None
Deferred Sales Load................................................None
Redemption Fees....................................................None
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees.....................................................1.50%
12b(1) Fees (c)..................................................... .50%
Other Expenses (estimated) (a)...................................... .__%
Total Fund Operating Expenses....................................... .__%
Example: (b)
You would pay the following expenses on a $1,000 investment, assuming (1)
5% annual return and (2) redemption at the end of each period:
One Year Three Years
$_____ $_____
(a) The IPO Fund is newly organized and has no operating history. The
percentages set forth in the table above under the caption "Other Expenses"
have been estimated based on the expected asset levels and the amount of
expenses expected to be incurred during the current fiscal period ending
December 31, 1997. Actual expenses may be higher or lower than estimated.
(b) This example should not be considered a representation of past or future
IPO Fund expenses or performance. Moreover, the IPO Fund's actual
performance will vary and may result in an actual return greater or lesser
than 5%.
(c) A long-term shareholder should consider that the fees and costs it will
incur under the 12b-1 plan may result in the shareholder paying more over
time than the equivalent of the maximum front-end sales charges permitted by
the rules and regulations of the National Association of Securities Dealers,
Inc.
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PROSPECTUS SUMMARY
The information below is qualified in its entirety by the detailed
information appearing elsewhere in this Prospectus and Statement of
Additional Information.
THE IPO FUND
Renaissance IPO Fund is a series of Renaissance Funds, a Delaware trust,
operating as a registered, diversified, open-end investment company.
INVESTMENT OBJECTIVE
The IPO Fund seeks appreciation of capital. It pursues this objective by
investing in the stocks of IPOs and public companies affected by IPOs.
The IPO Fund gives individual investors the opportunity to invest in a
diverse selection of IPOs that they would not necessarily have access to as
individuals acting alone. The IPO Fund relies on specialized IPO research
provided by Renaissance Capital Corporation ("Renaissance"), the IPO
Fund's Investment Adviser and a leading provider of institutional research
on IPOs.
MANAGEMENT OF THE IPO FUND
Renaissance, a registered investment adviser, serves as the IPO Fund's
investment adviser. The principals of Renaissance each have more than 17
years of portfolio management, security analysis and relevant corporate
finance experience. Renaissance specializes in researching IPOs and has been
providing its proprietary research, primarily to institutional investors,
since 1992. Renaissance is internationally recognized as a leading
provider of research on initial public offerings.
Renaissance has analyzed and built a proprietary database of more than 1,700
IPOs and 3,400 directly analogous already-public companies whose valuations
were directly affected by the IPO. Renaissance believes it is the leading
provider of such research to institutional investors. This research and
statistical information on IPOs will be used in selecting securities for the
IPO Fund. (See "Management of the IPO Fund")
MINIMAL INITIAL INVESTMENT
The minimum initial investment in the IPO Fund is $2,500 ($500 for an IRA or
Uniform Gift to Minors Act account) and the minimum subsequent investment is
$100. (See "Investing in the IPO Fund")
RISKS
Investing in IPOs entails special risks, including limited operating history
of the companies, unseasoned trading, high portfolio turnover and limited
liquidity. (See "Investment Objective")
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INVESTMENT OBJECTIVE
The IPO Fund seeks appreciation of capital. It pursues this objective by
investing in a diversified portfolio of IPOs and related public companies
affected by IPOs. Investment in the IPO Fund may be best suited to
individuals who are not concerned with or do not require current income.
There is no assurance that the IPO Fund will achieve its investment
objective.
For the purpose of this Prospectus, an IPO refers to both the sale of shares
by a company for the first time to the public and subsequent trading in those
shares for a period of three years. Companies are generally considered to be
IPOs for at least three years following their first offering to the public
for reasons of lack of independent research, unseasoned trading, limited
float, and limited operating history, all of which distinguish these
companies from the companies that trade in the broader stock market, e.g.
those comprising the Standard and Poor's 500. Additionally, the occasion of
an IPO may directly affect the valuations of similar publicly traded
companies. This occurs because underwriters, when determining the projected
price of an IPO, use the valuations of similar public companies as
benchmarks. Related companies eligible for the IPO Fund include these
comparable companies that securities industry professionals may have
identified as benchmarks in valuing IPOs.
Due to intense demand for a limited number of shares, individual investors
acting alone may have difficulty obtaining shares of IPOs at the offering
price. In addition, individual investors may also be limited to those IPOs
underwritten by the broker with whom the individual investor has his or her
account. By virtue of its size and institutional nature, the IPO Fund may
have greater access to IPOs at the offering price.
Additionally, IPOs lack independent research. Prior to an IPO and for a
period of time thereafter, underwriters and brokerage firms involved in the
underwriting are prohibited from providing any commentary or
disseminating research on these companies to the general public. Future
research distributed by an underwriter may not be considered to be
independent due to the financial benefits derived from the underwriting. The
IPO Fund will have the benefit of Renaissance's research and statistical
information on IPOs in selecting securities for its portfolio. This
research, which is performed prior to the pricing of an IPO, analyzes the
business fundamentals, financial results, management control issues and
proposed valuation of the IPO. In addition, Renaissance compares the IPO to
financially or competitively analogous publicly traded comparable
companies. Through this process, Renaissance decides whether the IPO is a
potentially good investment or whether one of the related comparable
companies is more attractive.
Additionally, Renaissance employs proprietary statistical information on IPO
performance trends, number of pending IPOs, industry sectors, and
valuation trends to determine the overall tone of market activity. Other
information sources used by Renaissance may include the IPO's prospectus
filed with the SEC, discussions and meetings with management, periodic
corporate financial reports, press releases, general economic and industry
data supplied by government agencies and trade associations, and research
reports prepared by broker/dealers.
Special Risks of IPOs
By definition, IPOs have not traded publicly until the time of their
offerings. Special risks associated with IPOs may include a limited number
of shares available for trading, unseasoned trading, lack of investor
knowledge of the company, and limited operating history, all of which may
contribute to price volatility. The limited number of shares available for
trading in some IPOs may make it more difficult for the IPO Fund to buy or
sell significant amounts of shares without an unfavorable impact on
prevailing prices. In addition, some IPOs are involved in relatively new
industries or lines of business, which may not be widely understood by
investors. Some of the companies involved in new industries may be regarded
as developmental stage companies, without revenues or operating income, or
the near-term prospects of such. Foreign initial public offerings are
subject to foreign political and currency risks.
INVESTMENT POLICIES AND TECHNIQUES
The IPO Fund will invest principally in the equity securities of IPOs and
related public companies whose valuations may be affected by an IPO.
Investments may be in both large and small capitalization companies. The
IPO Fund seeks to invest under normal conditions at least 65% of its total
assets in securities of IPOs and related companies. The IPO Fund may
modify the policies and techniques described herein without shareholder
approval unless a policy is expressly deemed to be changeable only by
shareholder vote.
THE FOLLOWING PROVIDES A BRIEF DESCRIPTION OF SOME OF THE TYPES OF SECURITIES
IN WHICH THE IPO FUND MAY INVEST INCLUDING CERTAIN TRANSACTIONS IT MAY ENTER
INTO AND TECHNIQUES IT MAY USE:
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Short Term Obligations
When market or economic conditions are unfavorable, the IPO Fund may
assume a defensive position by temporarily investing up to 100% of its assets
in cash, high quality money market instruments, such as short-term U.S.
government obligations, commercial paper, or repurchase agreements,
seeking to protect its assets until conditions stabilize.
Investment in Foreign Issuers
The IPO Fund will invest primarily in securities of companies domiciled in
the United States, but the IPO Fund may also invest up to 25% of its assets,
measured at the time of investment, in securities of foreign issuers. Such
investments will be made either directly in such issuers or indirectly
through American Depository Receipts ("ADRs"), American Depository Shares
("ADSs") or closed-end investment companies. However, investments in
foreign domiciled companies may be made without limitation, provided that
the securities are registered with the SEC and trade on a U.S. stock
exchange.
Foreign securities involve inherent risks that are different from those of
domestic issuers, including political or economic instability of the issuer
or the country of issue, changes in foreign currency and exchange rates and
the possibility of adverse changes in investment or exchange control
regulations. Currency fluctuations will affect the net asset value of the
IPO Fund irrespective of the performance of the underlying investments in
foreign issuers. Typically, there is less publicly available information
about a foreign company than about a U.S. company and foreign companies may
be subject to less stringent auditing and reporting requirements.
Put, Call Options and Futures Contracts
The IPO Fund may buy and sell call and put options to hedge against
changes in net asset value or to attempt to realize a greater current
return. In addition, through the purchase and sale of futures contracts
and related options, the IPO Fund may at times seek to hedge against
fluctuations in net asset value and to attempt to increase its investment
return.
Index Futures and Options
The IPO Fund may buy and sell index futures contracts ("index futures")
and options on index futures and on indices for hedging purposes (or may
purchase warrants whose value is based on the value from time to time of
one or more foreign securities indices). An index future is a contract to
buy or sell units of a particular bond or stock index at an agreed price on a
specified future date. Depending on the change in value of the index between
the time when the IPO Fund enters into and terminates an index futures or
option transaction, the IPO Fund realizes a gain or loss. The IPO Fund may
also buy and sell index futures and options to increase its investment
return.
Illiquid Investments and Restricted Securities
The IPO Fund may invest up to 15% of its net assets in illiquid investments
(investments that cannot readily be sold within seven days) including
restricted securities which do not meet the criteria for liquidity
established by the Board of Trustees. Renaissance, under the supervision of
the Board of Trustees, determines the liquidity of the IPO Fund's
investments. The absence of a trading market can make it difficult to
ascertain a market value for illiquid investments. Disposing of illiquid
investments may involve time-consuming negotiation and legal expenses.
Restricted Securities are securities which cannot be sold to the public
without registration under the Securities Act of 1933. Unless registered
for sale, these securities can only be sold in privately negotiated
transactions or pursuant to an exemption from registration.
Short Selling
The IPO Fund may from time to time sell securities short. A short sale is a
transaction in which the IPO Fund sells borrowed securities in anticipation
of a decline in the market price of the securities. The IPO Fund may make a
profit or incur a loss depending on whether the market price of the security
decreases or increases between the date of the short sale and the date on
which the IPO Fund must replace the borrowed security. All short sales
must be fully collateralized, and the IPO Fund will not sell securities short
if, immediately after and as a result of the sale, the value of all
securities sold short by the IPO Fund exceeds 25% of its total assets. The
IPO Fund may also engage in a technique known as selling short "against the
box". Such a transaction serves to defer gain or loss for Federal income tax
purposes. When selling short "against the box", the IPO Fund will own an
equal amount of securities or securities convertible into or exchangeable,
without payment of any further consideration, for securities of the same
issue as and in an amount equal to, the securities sold short.
Repurchase Agreements
Under the terms of a repurchase agreement, the IPO Fund acquires
securities from financial institutions or registered broker-dealers,
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subject to the seller's agreement to repurchase such securities at a
mutually agreed upon date and price. The seller is required to maintain the
value of collateral held pursuant to the agreement at not less than the
repurchase price (including accrued interest). If the seller were to
default on its repurchase obligation or become insolvent, the IPO Fund would
suffer a loss to the extent that the proceeds from a sale of the underlying
portfolio securities were less than the repurchase price, or to the extent
that the disposition of such securities by the IPO Fund was delayed pending
court action. Repurchase agreements are considered to be loans by the staff
of the SEC.
Convertible Securities
The IPO Fund may invest in all types of common stocks and equivalents
(such as convertible debt securities and warrants) and preferred stocks of
IPOs and related companies. The IPO Fund may invest in convertible
securities which may offer higher income than the common stocks into
which they are convertible. The convertible securities in which the IPO
Fund may invest consist of bonds, notes, debentures and preferred stocks
which may be converted or exchanged at a stated or determinable exchange
ratio into underlying shares of common stock.
Securities Lending
For incremental income purposes, the IPO Fund may lend its portfolio
securities constituting up to 33 1/3% of its total assets to U.S. or foreign
banks or broker/dealers which have been rated within the two highest grades
assigned by Standard & Poor's Corporation or Moody's Investors Service or
which have been determined by Renaissance to be of equivalent quality.
Renaissance is responsible for monitoring compliance with this rating
standard during the term of any securities lending agreement. With any loan
of portfolio securities, there is a risk that the borrowing institution will
fail to redeliver the securities when due. However, loans of securities by
the IPO Fund will be fully collateralized at all times by at least 100% of
the current market value of the lent securities. This policy may not be
changed without shareholder approval.
Leverage
The IPO Fund may, from time to time, use borrowed money to increase its
portfolio positions in an amount not to exceed 33 1/3% of its total assets.
Investment gains realized with borrowed funds that exceed the cost of such
borrowings (including interest costs) will cause the net asset value of IPO
Fund shares to increase more dramatically than would otherwise be the case.
On the other hand, leverage can cause the net asset value of the IPO Fund
shares to decrease more rapidly than normal if the securities purchased with
borrowed money decline in value or if the investment performance of such
securities does not cover the cost of borrowing.
Portfolio Turnover
The IPO Fund may make short-term investments when it is deemed
desirable to do so. The IPO Fund may, from time to time, sell a security
without regard to the length of time that it has been held to realize a
profit or to avoid an anticipated loss. Short-term transactions produce
higher portfolio turnover rates than would otherwise be the case, resulting
in the likelihood of larger expenses (including brokerage commissions) than
are incurred by mutual funds which engage primarily in long-term
transactions. The IPO Fund's portfolio turnover rate will fluctuate annually
and may exceed 200% in any given year.
MANAGEMENT OF THE IPO FUND
Investment Adviser
Renaissance, located at 325 Greenwich Avenue, Greenwich, CT, 06830,
serves as the investment adviser pursuant to an Investment Advisory
Agreement (the "Investment Advisory Agreement"), which provides that
Renaissance will furnish continuous investment advisory services and
management to the IPO Fund, subject to the overall authority of the IPO
Fund's Board of Trustees.
Renaissance specializes in researching IPOs and has been providing its
proprietary research, primarily to institutional investors, since 1992.
Renaissance is internationally recognized as a leading provider of research
on initial public offerings. Renaissance has analyzed and built a
proprietary database of more than 1,700 IPOs and 3,400 directly analogous
already-public companies whose valuations were directly affected by the IPO.
Renaissance believes it is the leading provider of such research to
institutional investors. This research and statistical information on IPOs
will be used in selecting securities for the IPO Fund.
Renaissance supervises and manages the investment portfolio of the IPO
Fund and directs the day-to-day management of the IPO Fund's investment
portfolio. Since 1992, Renaissance has been providing research on IPOs to
certain institutional investors for an annual retainer fee. This research is
provided to institutional clients prior to the pricing of each IPO. In
addition, Renaissance makes full-length and abridged versions of its
original research available to a wide group of investors through various
electronic delivery media. Although Renaissance has had much experience in
advising institutional investors, it has not previously provided investment
advisory services to registered investment companies or to individuals.
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Under the Investment Advisory Agreement, Renaissance at its own expense
furnishes office space and all necessary office facilities, equipment and
executive personnel for making the investment decisions necessary for
managing the IPO Fund and maintaining its organization. Renaissance will
pay the salaries and fees of all officers and directors of the IPO Fund
(except for fees paid to disinterested directors). For the foregoing,
Renaissance will receive an annual fee of 1.5% on the average daily net
assets of the IPO Fund. The rate of the advisory fee is higher than that
paid by investment companies on average, but is similar to the advisory fees
of certain research-intensive, aggressive growth funds.
Portfolio Managers
The principals of Renaissance each have more than 17 years of relevant
portfolio management, securities analysis and corporate finance experience
prior to forming Renaissance.
Linda R. Killian, C.F.A.
Founder and Principal of Renaissance, her 17 year professional experience
spans investment management and equity research.
Before forming Renaissance, she was a portfolio manager and analyst with
Wertheim Schroder Investment Services, where she managed broadly
diversified equity and balanced accounts for pension, high net worth and not-
for-profit organizations. Her analytic coverage included health care,
retail, telecommunications services, consumer products and media. Prior to
Wertheim Schroder, she was a portfolio manager and equity analyst with
Citicorp Investment Management where she created, managed and researched
the Medium Capitalization Stock Fund, one of the first investment vehicles
focusing on the mid-cap sector. Over the six years at Citicorp, she also
covered a variety of industries as an analyst, including telecommunication
services, special situations, multi-industry companies and mid-capitalization
companies. Before joining Citicorp, she was a member of the Utility
Corporate Finance Group at The First Boston Corporation, where she was
involved in numerous utility debt and equity financings and specialized in
financial issues pertaining to diversification and deregulation. As a public
utility finance professional, she appeared as an expert witness before
public utility commissions and published articles on deregulation in industry
journals.
Ms. Killian earned an M.B.A. from the Wharton School in 1979 and a B.A.
from New York University in 1972, where she was designated an
Outstanding Scholar. She is a Chartered Financial Analyst and is active in
the New York Society of Security Analysts.
Kathleen Shelton Smith
Founder and Principal of Renaissance, her 17-year professional career has
focused on providing investment banking services to and equity research on
technology and emerging growth companies. Her industry expertise is broad
including technology, communications, health care and industrial companies.
Prior to forming Renaissance in 1991, she was a director of Merrill Lynch
Capital Markets' Technology and Emerging Growth Investment Banking
Group. Her experience includes mergers and acquisitions and numerous
public equity offerings. She has been the investment banker for many IPOs
including Cabletron Systems, EMC Corporation and United States Cellular.
Over the years she has been a keynote speaker at many of the highly-
regarded Technologic Conferences including the conferences on Personal
Computers, Communications, Software and Semiconductors.
Ms. Smith earned an M.B.A. from the Wharton School in 1979 and B.A.,
Phi Beta Kappa, from Pennsylvania State University in 1976. She is
certified by the NASD as a general securities principal.
William K. Smith
Founder and President of Renaissance, his 18 year professional experience
covers equity research, investment banking, financial restructuring and
management consulting.
Prior to forming Renaissance, he was an investment banking senior vice
president at Kidder Peabody where he was a founding member of Kidder's
Financial Restructuring Group. This group was involved in many significant
and complex restructuring assignments. His industry experience spans health
care, electrical equipment, retail, steel, energy, automobile, technology,
publishing, banking and insurance. He was a vice president in the Corporate
Finance Group at Bear Stearns prior to Kidder Peabody. While at Bear
Stearns, he specialized in corporate restructurings, valuations and mergers &
acquisitions. Before that, he was a senior manager in management consulting
at the Touche Ross Financial Services Center where he specialized in
valuations and M&A for a broad cross section of clients. He is the author of
"Strategic Growth Through Mergers and Acquisitions", which was published by
Prentice Hall in the United States and Japan.
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Mr. Smith earned an M.B.A. in finance from the Wharton School in 1978
and a B.S. in Electrical Engineering from Villanova University in 1973. He
is certified by the NASD as a general securities principal and a financial
and operations principal.
FUND BROKERAGE AND TRADING
The IPO Fund may pay a portion of its total brokerage commissions to
Renaissance Capital Investments, Inc. (the "Broker/Dealer"), an affiliate of
Renaissance. The Broker/Dealer will clear transactions through unaffiliated
broker/dealers. The IPO Fund will trade directly with dealers making the
most favorable market (both in terms of price and number of shares) at net
prices to the IPO Fund. In regard to transactions on the New York Stock
Exchange or other exchanges, the IPO Fund will select a broker believed to
have the ability to execute orders at favorable prices and at competitive
commission rates. Neither the IPO Fund nor Renaissance, which manages
the IPO Fund's trading operations, are obligated to select a certain broker
solely on the basis of commission rates to be paid, but rather seek a broker
on the basis of the most favorable execution, net of commissions. It is
anticipated that the Broker/Dealer will receive commissions at competitive
rates from the IPO Fund in connection with orders executed on an agency
basis on stock exchanges. The IPO Fund may allocate certain commissions
to brokers for research and other investment services benefiting the IPO
Fund.
Renaissance is authorized to place portfolio transactions with brokerage
firms participating in the distribution of shares of the IPO Fund if it
reasonably believes that the quality of the execution and the commission are
comparable to that available from other qualified brokerage firms.
Renaissance is authorized to pay higher commissions to brokerage firms that
provide it with investment and research information than to firms which do
not provide such services if Renaissance determines that such commissions
are reasonable in relation to the overall services provided.
Section 10(f) of the 1940 Act generally prohibits an investment company
from acquiring, during the existence of any underwriting or selling
syndicate, any securities the principal underwriter of which is affiliated
with the investment company's investment adviser. Rule 10f-3, however,
permits an investment company to purchase such securities if certain
procedures are followed. These conditions include (i) that the securities
to be purchased are part of a registered offering or are municipal
securities; (ii) the securities are purchased at not more than the public
offering price; (iii) the securities are offered pursuant to an underwriting
agreement; (iv) the commissions paid are fair and reasonable; (v) the
securities meet certain qualifications and ratings; (vi) the amount of
securities purchased are limited to up to $500,000; and (vii) the investment
company may not purchase such securities directly or indirectly from certain
affiliated persons. The procedures must be approved and reviewed annually
by the Board of Trustees of the investment company.
FUND ADMINISTRATION
Under an Administration and Fund Accounting Agreement (the
"Administration Agreement"), [Chase Global Funds Services Company (the
"Administrator"), located at 73 Tremont Street, Boston, Massachusetts
02108], generally supervises certain operations of the IPO Fund, subject to
the over-all authority of the Board of Trustees.
For its services, the Administrator receives a maximum annual fee of __%,
computed daily and payable monthly as a percent of assets under
management.
TAXES
The IPO Fund intends to qualify annually for and elect tax treatment
applicable to a "regulated investment company" under Subchapter M of the
Code. Because it intends to distribute substantially all of its net
investment income and capital gains to shareholders, it is not expected that
it will be required to pay any federal income taxes. The IPO Fund would be
subject to a 4% excise tax on the portion of its undistributed income if it
fails to meet certain annual distribution requirements. The IPO Fund intends
to make distributions in a timely manner, and, accordingly, does not expect
to be subject to taxes. Shareholders will normally have to pay federal
income taxes and any state and local income taxes on the dividends and
distributions they receive from a fund. Shareholders not subject to tax on
their income will not be required to pay tax on amounts distributed to them.
At the end of each calendar year, shareholders are sent full information on
dividends and long-term capital gains distributions for tax purposes,
including information as to the portion taxable as ordinary income and the
portion taxable as long-term capital gains.
Prior to purchasing shares of the IPO Fund, prospective shareholders (except
for tax qualified retirement plans) should consider the impact of dividends
or capital gains distributions which are expected to be announced, or have
been announced but not paid. Any such dividends or capital gains
distributions paid shortly after a purchase of shares by an investor prior
to the record date will have the effect of reducing the per share net asset
value by the amount of the dividends or distributions. All or a portion of
such dividends or distributions, although in effect a return of capital, is
subject to taxation.
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Shareholders are advised to consult their own tax advisers with respect to
these matters.
INVESTING IN THE IPO FUND
Shares of the IPO Fund may be purchased directly from The Renaissance
Funds or the Broker/Dealer. They may also be purchased through an
account that you maintain with a securities broker or other financial
institution.
All purchases must be made in U.S. dollars and checks must be drawn on
U.S. banks. No cash will be accepted. A $15 fee may be charged against
an investor's account for any payment check returned to the Transfer Agent
for insufficient funds, stop payment, closed account or other reasons. The
investor will also be responsible for any losses suffered by the IPO Fund as
a result. The IPO Fund reserves the right to reject any purchase order for
IPO Fund shares. No share certificates will be issued.
The minimum purchase requirements, which may be altered in certain
circumstances, are $2,500 for regular accounts; $500 for IRAs and IRA
Rollovers, SEP-IRAs and Gifts to Minors; and $250 for Non-Working
Spouses. Additional investments are $100. If you have any questions, an
IPO Fund telephone representative will be pleased to provide the information
that you need. Please call the following toll-free number: 1-888-IPO-
FUND Extension [____].
How to purchase the IPO Fund Shares
To Open an Account To Add to an Account
------------------ --------------------
BY MAIL Complete and sign the Purchase Make your check payable to
Application (included in the the IPO Fund and mail to the
Prospectus). Make sure your address at the left. Put
check is payable to the IPO your account name, address
Fund and mail to: and Renaissance account
number on your check.
Renaissance Funds
[Chase Global Funds Services
P.O. Box 2798
Boston, MA 02208-2798]
BY COURIER Follow instructions above and Follow the instructions
send to: above and send to the
address at the left.
Renaissance Funds
[Chase Global Funds Services
73 Tremont St.
Boston, MA 02108]
BY TELEPHONE Telephone transactions may not Call 1-888-IPO-FUND
be used for initial purchases. EXT [ ] to make your
To establish, please select purchase from a checking or
this service on your Purchase money market account by
Application. by electronic funds
transfer. Specify name,
address, and Renaissance
account number.
BY WIRE Call [Chase Global Funds Follow the instructions at
Services at 1-800-865-4733] to left. Please note that
notify them of a wire transfer wires may be rejected if
and to verify instructions. they do not contain
You will be given a wire complete account
reference control number. Then information.
wire funds care of [Chase
Manhattan Bank:]
Credit: 02100021
Account No.: 910-2-776128
Wire Reference Control No.:________
Further Credit: IPO Fund Shareholder Account
No.:_____________
Shareholder Name:
Include your name, address, and taxpayer ID.
BY INTERNET Address: www.ipo-fund.com
Then follow procedures for
purchases by mail.
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<PAGE>
Purchases by Mail
Your Purchase Application, if properly filled out and accompanied by
payment in the form of a check made payable to the IPO Fund, will be
processed upon receipt by the Transfer Agent. If the Transfer Agent
receives your order and payment by the close of regular trading (currently
4:00 p.m. New York City time) on the New York Stock Exchange, your
shares will be purchased at the net asset value calculated at the close of
regular trading on that day. If received after that time, your shares will
be purchased at the net asset value determined as of the close of regular
trading on the next business day.
Purchases Through Financial Service Agents
If you are investing through a Financial Service Agent, please refer to their
program materials for any additional special provisions or fees that may be
different from those described in this Prospectus. Certain Financial Service
Agents may receive compensation from the IPO Fund. The Financial Service
agent must promise to send to the Transfer Agent immediately available
funds in the amount of the purchase price within one business day
from the date of the trade.
Purchases by Telephone
Only bank accounts held at domestic financial institutions that are Automated
Clearing House (ACH) members can be used for telephone transactions.
Telephone transactions may not be used for initial purchases. Your account
must already be established prior to initiating telephone transactions. Your
shares will be purchased at the net asset value determined as of the close of
regular trading on the date that the Transfer Agent receives payment for
shares purchased by electronic funds transfer through the ACH system.
Most transfers are completed within three business days after your call to
place the order. To preserve flexibility, the IPO Fund may revise or remove
the ability to purchase shares by phone, or may charge a fee for such
service, although currently, the IPO Fund does not expect to charge a fee.
The IPO Fund will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. Such procedures may
include requiring some form of personal identification prior to acting upon
telephone instructions, providing written confirmations of all such
transactions, and/or tape recording all telephone instructions. Assuming
procedures such as the above have been followed, the IPO Fund will not be
liable for any loss, cost or expense for acting upon an investor's telephone
instructions or for any unauthorized telephone redemption. As a result of
this policy, the investor will bear the risk of any loss unless the IPO Fund
has failed to follow such procedure(s).
Purchases by Wire
If you purchase your initial shares by wire, you must prepare and file a
Purchase Application, marked "follow-up" with the Transfer Agent. The
Transfer Agent must receive the Purchase Application before any of the
shares purchased can be redeemed. You should contact your bank (which
will need to be a commercial bank that is a member of the Federal Reserve
System) for information on sending funds by wire, including any charges
that your bank may make for these services.
HOW TO REDEEM IPO FUND SHARES
You may sell (redeem) your shares at any time. Ordinarily, the IPO Fund
makes payment by check for the shares redeemed within seven days after it
receives your properly completed request. However, the right of redemption
may be suspended or payment may be postponed under unusual
circumstances such as when trading on the New York Stock Exchange is
restricted or when it is not reasonably practical for the IPO Fund to
determine the fair market value of its net assets. Payment of redemption
proceeds with respect to shares purchased by check will not be made until
the check or payment received for investment has cleared, which may take
up to 15 calendar days from the purchase date.
Payment of the redemption proceeds for shares of the IPO Fund where an
investor requests wire payment will normally be made in federal funds on
the next business day. The Transfer Agent will wire redemption proceeds
only to the bank and account designated on the Purchase Application or in
written instructions subsequently received by the Transfer Agent, and only if
is a commercial bank and a member of the Federal Reserve System. The
Transfer Agent currently charges a $10 fee for each payment made by wire
of redemption proceeds, which fee will be deducted from the investor's
proceeds.
Procedure for Requesting Redemption
You may request the sale of your shares either by mail or by overnight
courier or by telephone as described below.
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<PAGE>
By Mail: By Overnight Courier:
Renaissance Funds Renaissance Funds
[Chase Global Fund Services [Chase Global Funds Services
P.O. Box 2798 73 Tremont Street
Boston, Massachusetts 02208] Boston, Massachusetts 02108]
The selling price of each share being redeemed will be the IPO Fund's per
share net asset value next calculated after receipt of all required documents
in good order. Good order means that the request must include:
* Your Renaissance account number
* The number of shares or dollar amount to be sold (redeemed)
* The signatures of all account owners exactly as they are registered
on the account
* Any required signature guarantees
* Any supporting legal documentation that is required in the case of
estates, trusts, corporations or partnerships
* In the case of shares being redeemed from an IRA or IRA/SEP Plan, a
statement of whether or not federal income tax should be withheld (in
the absence of any statement, federal tax will be withheld)
A signature guarantee of each owner is required to redeem shares in the
following situations (i) if you change ownership on your account; (ii) when
you want the redemption proceeds sent to a different address from that
registered on the account; (iii) if the proceeds are to be made payable to
someone other than the account's owner(s); (iv) any redemption transmitted
by federal wire transfer to your bank; and (v) if a change of address request
has been received by the Fund or the Transfer Agent within the last 15 days.
In addition, signature guarantees are required for all redemptions of
$25,000 or more from any shareholder account.
Signature guarantees are designed to protect both you and the IPO Fund
from fraud. Signature guarantees can be obtained from most banks, credit
unions or savings associations, or from broker/dealers, national securities
exchanges, registered securities associations or clearing agencies deemed
eligible by the SEC. Notaries cannot provide signature guarantees.
By Telephone:
Shares of the Fund may also be sold by calling the Transfer Agent at 1-888-
IPO-FUND Extension [____]. To use this procedure for telephone
redemption, a shareholder must have previously elected this procedure in
writing, which election will be reflected in the records of the Transfer
Agent, and the redemption proceeds must be mailed directly to the investor
or transmitted to the investor's predesignated account at a domestic bank,
To change the designated account or address, a written request with
signature(s) guaranteed must be sent to the Transfer Agent. The IPO Fund
reserves the right to limit the number of telephone redemptions by an
investor. Once made, telephone requests may not be modified or canceled.
The selling price of each share being redeemed will be the IPO Fund's per
share net asset value next calculated after receipt by the Transfer Agent of
the telephone redemption request. The IPO Fund will not be liable for
following instructions communicated by telephone that it reasonably believes
to be genuine.
The IPO Fund reserves the right to redeem shares held in any account at its
option upon thirty days written notice if the net asset value of the account
falls below $500 for reasons other than market conditions and remains so
during the notice period.
SHAREHOLDER SERVICES
Money Market Exchange Privilege
Shareholders of The IPO Fund may exchange shares (having a value of
$1,000 or more) for shares of the Renaissance-Vista U.S. Government
Money Market Fund ("Renaissance-Vista U.S. Government").
Renaissance-Vista is described in a separate prospectus which contains more
complete information about such fund. Investors may obtain a copy of the
prospectus for the Vista U.S. Government fund by calling 1-888-IPO-FUND
Extension [____] and are advised to read it carefully before authorizing any
investment in shares of such fund. Investors may subsequently exchange
such shares and shares purchased with reinvested dividends for shares of the
IPO Fund. To make a telephone exchange, the Telephone Exchange option
must have been selected on the Purchase Application when the account was
opened. Otherwise, a written request, including signature guarantees, must
be completed and sent to the Transfer Agent prior to making telephone
exchanges. There is no fee for telephone or written exchange requests. To
make a telephone exchange, call the Transfer Agent at 1-888-IPO-FUND
Extension [____] or to make a written exchange, write to the Renaissance
Funds, Inc., [Chase Global Fund Services, P.O. Box 2798, Boston,
Massachusetts 02208], for overnight delivery, Renaissance Funds, [Chase
Global Fund Services, 73 Tremont Street, Boston, Massachusetts 02108.]
The exchange privilege is only available in states where the IPO Fund may
be legally sold.
Automatic Investment Plan
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<PAGE>
The IPO Fund offers an Automatic Investment Plan whereby an investor
may automatically purchase shares of the IPO Fund on a regular basis ($100
minimum per transaction). Applications to establish the Automatic
Investment Plan are available from the IPO Fund.
Retirement Plans
The IPO Fund offers various tax-sheltered retirement plans that allow
investors to invest for retirement and to shelter some of their income from
taxes. Application forms, as well as descriptions of applicable service fees
and certain limitations on contributions and withdrawals, are available from
the Transfer Agent of the IPO Fund upon request. These Retirement Plans
include: Individual Retirement Accounts (IRAs), Rollover IRAs, Non-
Working Spouse IRAs, Simplified Employee Pension Plan (SEP/IRA), and
Salary Reduction SEPs.
Service and Distribution Plan
The IPO Fund has adopted a Service and Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the 1940 Act. The Plan authorizes payments by
the IPO Fund in connection with the distribution of its shares at an annual
rate, as determined from time to time by the Board of Trustees, of up to
0.50% of the IPO Fund's average daily net assets.
Payments may be made by the IPO Fund under the Plan for the purpose of
financing any activity primarily intended to result in the sales of shares
of the IPO Fund as determined by the Board of Trustees. Such activities
typically include advertising; compensation for sales and sales marketing
activities of Financial Service Agents and others, such as dealers or
distributors who have entered into selected dealer agreements; shareholder
account servicing; production and dissemination of prospectuses and sales
and marketing materials; and capital or other expenses of associated
equipment, rent, salaries, bonuses, interest and other overhead. To the
extent any activity is one which the IPO Fund may finance without a Plan,
the IPO Fund may also make payments to finance such activity outside of the
Plan and not subject to its limitations. Payments under the Plan are not
tied exclusively to actual distribution and service expenses, and the
payments may exceed distribution and service expenses actually incurred.
DIVIDENDS AND DISTRIBUTIONS
Net asset value for the IPO Fund is determined as of the end of regular
trading hours on the New York Stock exchange (currently 4:00 p.m. New
York City time) on days that the New York Stock Exchange is open. The
net asset value per share is determined by dividing the market value of the
IPO Fund's securities as of the close of trading plus any cash or other
assets (including dividends and accrued interest) less all liabilities
(including accrued expenses) by the number of the IPO Fund's shares
outstanding. The IPO Fund intends to pay dividends from net investment
income and net realized capital gains (not offset by capital loss carryovers)
on an annual basis in December. Investors may elect to reinvest all income
dividends and capital gains distributions in shares of the IPO Fund or in
cash as designated on the Purchase Application. If the investor does not
specify an election, all income dividends and capital gains distributions
will automatically be reinvested in full and fractional shares of the IPO
Fund and calculated to the nearest 1,000th of a share. Shares will be
purchased at the net asset value in effect on the business day after the
dividend record date and will be credited to the investor's account on such
date. Reinvested dividends and distributions receive the same tax treatment
as those paid in cash.
An investor may change his or her election at any time by sending written
notification to Renaissance Funds c/o [Chase Global Fund Services, 73
Tremont Street, Boston, Massachusetts 02108.] The election is effective for
distributions with a dividend record date on or after the date that the
Transfer Agent receives notice of the election.
IPO FUND PERFORMANCE
From time to time, the IPO Fund may advertise its "average annual total
return" over various periods of time. This total return figure shows the
average percentage change in value of an investment in the IPO Fund from
the beginning date of the measuring period to the ending date of the
measuring period. The figure reflects changes in the price of the IPO Fund's
shares and assumes that any income dividends and/or capital gains
distributions made by the IPO Fund during the period are reinvested in
shares of the IPO Fund. Figures may be given for recent one, three, five
and ten-year periods (when applicable), and may be given for other periods
(such as from commencement of the IPO Fund's operations, or on a year-
by-year basis). When considering "average" total return figures for periods
longer than one year, investors should note that the IPO Fund's annual total
return for any one year in the period might have been greater or less than
the average for the entire period. The IPO Fund also may use "aggregate"
total return figures for various periods, representing the cumulative change
in value of an investment in the IPO Fund for the specific period (again
reflecting changes in the IPO Fund's share price and assuming reinvestment
of dividends and distributions). Aggregate total returns may be shown by
means of schedules, charts or graphs, and may indicate subtotals of the
various components of total return (that is, the change in value of initial
investment, income dividends and capital gains distributions).
The IPO Fund may quote the IPO Fund's average annual total and/or
aggregate total return for various time periods in advertisements or
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<PAGE>
communications to shareholders. The IPO Fund may also compare its
performance to that of other mutual funds with similar investment objectives
and to stock and other relevant indices or to rankings prepared by
independent services or industry publications. For example, the IPO Fund's
total return may be compared to data prepared by Lipper Analytical Services,
Inc., Morningstar, Value Line Mutual Fund Survey and CDA Investment
Technologies, Inc. as well as other providers of mutual fund total return
data. The IPO Fund's total return may also be compared to such indices as
the Dow Jones Industrial Average, the Standard & Poor's 500 Composite
Index, the NASDAQ Composite OTC Index, and the Russell 2000 Index.
ADDITIONAL INFORMATION
Renaissance Funds, a Delaware Trust organized on February 3, 1997, may
issue an unlimited number of shares and classes of the IPO Fund. Shares of
each class of the IPO Fund participate equally in dividends and distributions
and have equal voting, liquidation and other rights. When issued and paid
for, shares will be fully paid and nonassessable by the Renaissance Funds
and will have no preference, conversion, exchange or preemptive rights.
Shareholders are entitled to one vote for each full share owned and
fractional votes for fractional shares owned. For those investors with
qualified trust accounts, the trustee will vote the shares at meetings of
the IPO Fund's shareholders in accordance with the shareholder's instructions
or will vote in the same percentage as shares that are not so held in trust.
The trustee will forward to these shareholders all communications received by
the trustee, including proxy statements and financial reports. Renaissance
Funds and the IPO Fund are not required to hold annual meetings of
shareholders and in ordinary circumstances do not intend to hold such
meetings. The Trustees may call special meetings of shareholders for action
by shareholder vote as may be required by the 1940 Act or the Declaration of
Trust. Under certain circumstances, the Trustees may be removed by action
of the Trustees or by the shareholders. Shareholders holding 10% or more of
Renaissance Fund's outstanding shares may call a special meeting of
shareholders for the purpose of voting upon the question of removal of
Trustees.
The Board of Trustees may authorize Renaissance Funds to offer other funds
which may differ in the types of securities in which their assets may be
invested.
Renaissance and the IPO Fund have adopted a Code of Ethics (the "Code")
which requires investment personnel (a) to pre-clear all personal securities
transactions, (b) to file reports regarding such transactions, and (c) to
refrain from personally engaging in (i) short-term trading of a security,
(ii) transactions involving a security within seven days of an IPO Fund
transaction involving the same security, and (iii) transactions involving
securities being considered for investment by the IPO Fund. The Code also
prohibits investment personnel from purchasing securities in an initial
public offering. Personal trading reports are reviewed periodically by
Renaissance and the Board of Trustees reviews annually such reports
(including information on any substantial violations of the Code).
Violations of the Code may result in censure, monetary penalties, suspension
or termination of employment.
Counsel
Kramer, Levin, Naftalis & Frankel, 919 Third Avenue, New York, New
York 10022-3852, serves as counsel to Renaissance Funds.
Independent Certified Public Accountants
Tait, Weller & Baker, Two Penn Plaza, Suite 700, Philadelphia, PA 19102-
1707 has been selected to serve as independent certified public accountants
of the Renaissance Funds.
Custodian, Transfer and
Dividend Disbursing Agent
[Chase Global Fund Services, which has its principal custodial address at 73
Tremont Street, Boston, MA 02108-3913,] has been retained to act as
custodian of the IPO Fund's investments, and also serves a the IPO Fund's
Transfer and Dividend Disbursing Agent.
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Table of Contents
Expense Table
Prospectus Summary
Investment Objective
Investment Policies and Techniques
Management of the IPO Fund
Fund Brokerage and Trading
Fund Administration
Taxes
Investing in the IPO Fund
How to Redeem IPO Fund Shares
Shareholder Services
Dividends and Distributions
IPO Fund Performance
Additional Information
<PAGE>
Renaissance Capital
The IPO Experts*
Renaissance Funds
Renaissance IPO Fund
*Trademark Pending
<PAGE>
RENAISSANCE IPO FUND
325 Greenwich Avenue
Greenwich, CT 06830
1-888-IPO-FUND
E-Mail: [email protected]
Internet: www.ipo-fund.com
FORM N-1A
PART B
STATEMENT OF ADDITIONAL INFORMATION
, 1997
RENAISSANCE IPO FUND (the "IPO Fund") is a series of Renaissance
Funds, a Delaware Trust, operating as a diversified, open-end investment
company ("Renaissance Funds").
This Statement of Additional Information is not a prospectus but
contains information in addition to and more detailed than that set forth in
the Prospectus and should be read in conjunction with the Prospectus for
Renaissance Funds also dated , 1997. A Prospectus may be obtained
without charge by writing Renaissance Funds at
________________________________________, or by calling 1-888-IPO-
FUND, extension [____].
TABLE OF CONTENTS
INVESTMENT OBJECTIVE, POLICIES AND TECHNIQUES
INVESTMENT RESTRICTIONS
TRUSTEES AND OFFICERS
INVESTMENT ADVISORY AND OTHER SERVICES
BROKERAGE ARRANGEMENTS
HOW TO BUY SHARES
HOW TO REDEEM SHARES
VALUATION OF SECURITIES
TAXES
ADDITIONAL INFORMATION
PERFORMANCE INFORMATION
FINANCIAL STATEMENT
<PAGE>
INVESTMENT OBJECTIVE, POLICIES AND TECHNIQUES
The following information supplements, and should be read in conjunction
with, the sections in the Prospectus entitled "Investment Objective" and
"Investment Policies and Techniques".
Foreign Issuers
The value of securities denominated in or indexed to foreign currencies, and
of dividends and interest from such securities, can change significantly when
foreign currencies strengthen or weaken relative to the U.S. dollar. Foreign
securities markets generally have less trading volume and less liquidity than
U.S. markets, and prices on some foreign markets can be highly volatile.
Many foreign countries lack uniform accounting and disclosure standards
comparable to those applicable to U.S. companies, and it may be more
difficult to obtain reliable information regarding an issuer's financial
condition and operations. In addition, the costs of foreign investing,
including withholding taxes, brokerage commissions, and custodial costs, are
generally higher than for U.S. investments. Foreign markets may offer less
protection to investors than U.S. markets. Foreign issuers, brokers, and
securities markets may be subject to less government supervision. Foreign
security trading practices, including those involving the release of assets
in advance of payment, may involve increased risks in the event of a failed
trade or the insolvency of a broker-dealer, and may involve substantial
delays. It may also be difficult to enforce legal rights in foreign
countries. Investing abroad also involves different political and economic
risks. Foreign investments may be affected by actions of foreign governments
adverse to the interests of U.S. investors, including the possibility of
expropriation or nationalization of assets, confiscatory taxation,
restrictions on U.S. investment or on the ability to repatriate assets or
convert currency into U.S. dollars, or other government intervention. There
may be a greater possibility of default by foreign governments or foreign
government-sponsored enterprises. Investments in foreign countries also
involve a risk of local political, economic, or social instability, military
action or unrest, or adverse diplomatic developments.
Futures Contracts
The IPO Fund may enter into futures contracts, options on futures contracts
and stock index futures contracts and options thereon for the purposes of
remaining fully invested and reducing transaction costs. Futures contracts
provide for the future sale by one party and purchase by another party of a
specified amount of a specific security, class of securities, or an index at
a specified future time and at a specified price. A stock index futures
contract is a bilateral agreement pursuant to which two parties agree to
take or make delivery of an amount of cash equal to a specified dollar
amount times the difference between the stock index value at the close of
trading of the contracts and the price at which the futures contract is
originally struck. Futures contracts which are standardized as to maturity
date and underlying financial instrument are traded on national futures
exchanges. Futures exchanges and trading are regulated under the Commodity
Exchange Act by the Commodity Futures Trading Commission ("CFTC"), a U.S.
Government agency.
Although futures contracts by their terms call for actual delivery and
acceptance of the underlying securities, in most cases the contracts are
closed out before the settlement date without the making or taking of
delivery. Closing out an open futures position is done by taking an opposite
position ("buying" a contract which has previously been "sold," or "selling"
a contract previously purchased) in an identical contract to terminate the
position. A futures contract on a securities index is an agreement obligating
either party to pay, and entitling the other party to receive, while the
contract is outstanding, cash payments based on the level of a specified
securities index. The acquisition of put and call options on futures
contracts will, respectively, give the IPO Fund the right (but not the
obligation), for a specified price, to sell or to purchase the underlying
futures contract, upon exercise of the option, at any time during the option
period. Brokerage commissions are incurred when a futures contract is bought
or sold.
Futures traders are required to make a good faith margin deposit in cash or
government securities with a broker or custodian to initiate and maintain
open positions in futures contracts. A margin deposit is intended to assure
completion of the contract (delivery or acceptance of the underlying
security) if it is not terminated prior to the specified delivery date.
Minimal initial margin requirements are established by the futures exchange
and may be changed. Brokers may establish deposit requirements which are
higher than the exchange minimums. Initial margin deposits on futures
contracts are customarily set at levels much lower than the prices at which
the underlying securities are purchased and sold, typically ranging upward
from less than 5% of the value of the contract being traded.
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<PAGE>
After a futures contract position is opened, the value of the contract is
marked-to-market daily. If the futures contract price changes to the extent
that the margin on deposit does not satisfy margin requirements, payment of
additional "variation" margin will be required. Conversely, change in the
contract value may reduce the required margin, resulting in a repayment of
excess margin to the contract holder. Variation margin payments are made
to and from the futures broker for as long as the contract remains open. The
IPO Fund expects to earn interest income while its margin deposits are held
pending performance on the futures contract.
When interest rates are expected to rise or market values of portfolio
securities are expected to fall, the IPO Fund can seek through the sale of
futures contracts to offset a decline in the value of its portfolio
securities. When interest rates are expected to fall or market values are
expected to rise, the IPO Fund, through the purchase of such contracts, can
attempt to secure better rates or prices for the IPO Fund than might later
be available in the market when it effects anticipated purchases.
The IPO Fund's ability to effectively utilize futures trading depends on
several factors. First, it is possible that there will not be a perfect
price correlation between the futures contracts and their underlying stock
index. Second, it is possible that a lack of liquidity for futures contracts
could exist in the secondary market, resulting in an inability to close a
futures position prior to its maturity date. Third, the purchase of a
futures contract involves the risk that the IPO Fund could lose more than
the original margin deposit required to initiate a futures transaction.
Restrictions on the Use of Futures Contracts. The IPO Fund will only
sell futures contracts to protect securities it owns against price declines
or purchase contracts to protect against an increase in the price of
securities it intends to purchase. The IPO Fund will not enter into futures
contract transactions for purposes other than bona fide hedging purposes to
the extent that, immediately thereafter, the sum of its initial margin
deposits on open contracts exceeds 5% of the market value of the IPO Fund's
total assets. In addition, the IPO Fund will not enter into futures
contracts to the extent that the value of the futures contracts held would
exceed 1/3 of the IPO Fund's total assets. Futures transactions will be
limited to the extent necessary to maintain the Fund's qualification as a
regulated investment company.
Renaissance Funds, on behalf of the IPO Fund, has undertaken to restrict its
futures contract trading as follows: first, the IPO Fund will not engage in
transactions in futures contracts for speculative purposes; second, the IPO
Fund will not market its funds to the public as commodity pools or otherwise
as vehicles for trading in the commodities futures or commodity options
markets; third, the IPO Fund will disclose to all prospective shareholders
the purpose of and limitations on its commodity futures trading; fourth,
the IPO Fund will submit to the CFTC special calls for information.
Accordingly, registration as a commodities pool operator with the CFTC is
not required.
In addition to the margin restrictions discussed above, transactions in
futures contracts may involve the segregation of funds pursuant to
requirements imposed by the Securities and Exchange Commission (the "SEC").
Under those requirements, where the IPO Fund has a long position in a futures
contract, it may be required to establish a segregated account (not with a
futures commission merchant or broker, except as may be permitted under
SEC rules) containing cash or certain liquid assets equal to the purchase
price of the contract (less any margin on deposit). For a short position in
futures or forward contracts held by the IPO Fund, those requirements may
mandate the establishment of a segregated account (not with a futures
commission merchant or broker, except as may be permitted under SEC
rules) with cash or certain liquid assets that, when added to the amounts
deposited as margin, equal the market value of the instruments underlying
the futures contracts (but are not less than the price at which the short
positions were established). However, segregation of assets is not required
if the IPO Fund "covers" a long position. For example, instead of
segregating assets, the IPO Fund, when holding a long position in a futures
contract, could purchase a put option on the same futures contract with a
strike price as high or higher than the price of the contract held by the IPO
Fund. In addition, where the IPO Fund takes short positions, or engages in
sales of call options, it need not segregate assets if it "covers" these
positions. For example, where the IPO Fund holds a short position in a
futures contract, it may cover by owning the instruments underlying the
contract. The IPO Fund may also cover such a position by holding a call
option permitting it to purchase the same futures contract at a price no
higher than the price at which the short position was established. Where
the IPO Fund sells a call option on a futures contract, it may cover either
by entering into a long position in the same contract at a price no higher
than the strike price of the call option or by owning the instruments
underlying the futures contract. The IPO Fund could also cover this
position by holding a separate call option permitting it to purchase the
same futures contract at a price no higher than the strike price of the call
option sold by the IPO Fund.
Risk Factors in Futures Transactions. Positions in futures contracts may
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<PAGE>
be closed out only on an exchange which provides a secondary market for
such futures. However, there can be no assurance that a liquid secondary
market will exist for any particular futures contract at any specific time.
Thus, it may not be possible to close a futures position. In the event of
adverse price movements, the IPO Fund would continue to be required to
make daily cash payments to maintain the required margin. In such
situations, if the IPO Fund has insufficient cash, it may have to sell
portfolio securities to meet daily margin requirements at a time when it may
be disadvantageous to do so. In addition, the IPO Fund may be required to
make delivery of the instruments underlying futures contracts it holds. The
inability to close options and futures positions also could have an adverse
impact on the ability to effectively hedge them. The IPO Fund will minimize
the risk that it will be unable to close out a futures contract by only
entering into futures contracts which are traded on national futures
exchanges and for which there appears to be a liquid secondary market.
The risk of loss in trading futures contracts in some strategies can be
substantial, due both to the low margin deposits required, and the extremely
high degree of leverage involved in futures pricing. Because the deposit
requirements in the futures markets are less onerous than margin
requirements in the securities market, there may be increased participation
by speculators in the futures market which may also cause temporary price
distortions. A relatively small price movement in a futures contract may
result in immediate and substantial loss (as well as gain) to the investor.
For example, if at the time of purchase, 10% of the value of the futures
contract is deposited as margin, a subsequent 10% decrease in the value of
the futures contract would result in a total loss of the margin deposit,
before any deduction for the transaction costs, if the account were then
closed out. A 15% decrease would result in a loss equal to 150% of the
original margin deposit if the contract were closed out. Thus, a purchaser
or sale of a futures contract may result in losses in excess of the amount
invested in the contract. However, because the futures strategies engaged
in by the IPO Fund are primarily for hedging purposes, Renaissance believes
that the IPO Fund is generally not subject to risks of loss exceeding those
that would be undertaken if, instead of the futures contract, it had
invested in the underlying financial instrument and sold it after the
decline.
Utilization of futures transactions by the IPO Fund does involve the risk of
imperfect or no correlation where the securities underlying futures contracts
have different maturities than the portfolio securities being hedged. It is
also possible that the IPO Fund could both lose money on futures contracts
and also experience a decline in value of its portfolio securities. There
is also the risk of loss by the IPO Fund of margin deposits in the event of
bankruptcy of a broker with whom the IPO Fund has an open position in a
futures contract or related option.
Options
The IPO Fund may purchase and sell put and call options on its portfolio
securities to enhance investment performance and to protect against changes
in market prices.
Covered Call Options. The IPO Fund may write covered call options on its
securities to realize a greater current return through the receipt of
premiums than it would realize on its securities alone. Such option
transactions may also be used as a limited form of hedging against a decline
in the price of securities owned by the IPO Fund.
A call option gives the holder the right to purchase, and obligates the
writer to sell, a security at the exercise price at any time before the
expiration date. A call option is "covered" if the writer, at all times while
obligated as a writer, either owns the underlying securities (or comparable
securities satisfying the cover requirements of the securities exchanges),
or has the right to acquire such securities through immediate conversion of
securities.
In return for the premium received when it writes a covered call option, the
IPO Fund gives up some or all of the opportunity to profit from an increase
in the market price of the securities covering the call option during the
life of the option. The IPO Fund retains the risk of loss should the price
of such securities decline. If the option expires unexercised, the IPO Fund
realizes a gain equal to the premium, which may be offset by a decline in
price of the underlying security. If the option is exercised, the IPO Fund
realizes a gain or loss equal to the difference between the IPO Fund's cost
for the underlying security and the proceeds of sale (exercise price minus
commissions) plus the amount of the premium.
The IPO Fund may terminate a call option that it has written before it
expires by entering into a closing purchase transaction. The IPO Fund may
enter into closing purchase transactions in order to free itself to sell the
underlying security or to write another call on the security, realize a
profit on a previously written call option, or protect a security from being
called in an unexpected market rise. Any profits from a closing purchase
transaction may be offset by a decline in the value of the underlying
security. Conversely, because increases in the market price of a call option
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<PAGE>
will generally reflect increases in the market price of the underlying
security, any loss resulting from a closing purchase transaction is likely
to be offset in whole or in part by unrealized appreciation of the underlying
security owned by the IPO Fund.
Covered Put Options. The IPO Fund may write covered put options in
order to enhance its current return. Such options transactions may also be
used as a limited form of hedging against an increase in the price of
securities that the IPO Fund plans to purchase. A put option gives the
holder the right to sell, and obligates the writer to buy, a security at the
exercise price at any time before the expiration date. A put option is
"covered" if the writer segregates cash and high-grade short-term debt
obligations or other permissible collateral equal to the price to be paid if
the option is exercised.
In addition to the receipt of premiums and the potential gains from
terminating such options in closing purchase transactions, the IPO Fund also
receives interest on the cash and debt securities maintained to cover the
exercise price of the option. By writing a put option, the IPO Fund assumes
the risk that it may be required to purchase the underlying security for an
exercise price higher than its then current market value, resulting in a
potential capital loss unless the security later appreciates in value.
The IPO Fund may terminate a put option that it has written before it expires
by a closing purchase transaction. Any loss from this transaction may be
partially or entirely offset by the premium received on the terminated
option.
Purchasing Put and Call Options. The IPO Fund may also purchase put
options to protect portfolio holdings against a decline in market value.
This protection lasts for the life of the put option because the IPO Fund, as
a holder of the option, may sell the underlying security at the exercise
price regardless of any decline in its market price. In order for a put
option to be profitable, the market price of the underlying security must
decline sufficiently below the exercise price to cover the premium and
transaction costs that the IPO Fund must pay. These costs will reduce any
profit the IPO Fund might have realized had it sold the underlying security
instead of buying the put option.
The IPO Fund may purchase call options to hedge against an increase in the
price of securities that the IPO Fund wants ultimately to buy. Such hedge
protection is provided during the life of the call option since the IPO Fund,
as holder of the call option, is able to buy the underlying security at the
exercise price regardless of any increase in the underlying security's market
price. In order for a call option to be profitable, the market price of the
underlying security must rise sufficiently above the exercise price to cover
the premium and transaction costs. These costs will reduce any profit the
IPO Fund might have realized had it bought the underlying security at the
time it purchased the call option.
The IPO Fund may also purchase put and call options to attempt to enhance
its current return.
Risks Involved in the Sale of Options. Options transactions involve certain
risks, including the risks that Renaissance will not forecast interest rate
or market movements correctly, that the IPO Fund may be unable at times to
close out such positions, or that hedging transactions may not accomplish
their purpose because of imperfect market correlations. The successful use
of these strategies depends on the ability of Renaissance to forecast market
and interest rate movements correctly.
An exchange-listed option may be closed out only on an exchange which
provides a secondary market for an option of the same series. There is no
assurance that a liquid secondary market on an exchange will exist for any
particular option or at any particular time. If no secondary market were to
exist, it would be impossible to enter into a closing transaction to close
out an option position. As a result, the IPO Fund may be forced to continue
to hold, or to purchase at a fixed price, a security on which it has sold an
option at a time when Renaissance believes it is inadvisable to do so.
Higher than anticipated trading activity or order flow or other unforeseen
events might cause The Options Clearing Corporation or an exchange to
institute special trading procedures or restrictions that might restrict the
IPO Fund's use of options. The exchanges have established limitations on the
maximum number of calls and puts of each class that may be held or written
by an investor or group of investors acting in concert. It is possible that
Renaissance Funds and other clients of Renaissance may be considered such
a group. These position limits may restrict the IPO Funds' ability to
purchase or sell options on particular securities. Options which are not
traded on national securities exchanges may be closed out only with the other
party to the option transaction. For that reason, it may be more difficult
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to close out unlisted options than listed options. Furthermore, unlisted
options are not subject to the protection afforded purchasers of listed
options by The Options Clearing Corporation.
Short Sales. The IPO Fund may seek to hedge investments or realize
additional gains through short sales. Short sales are transactions in which
the IPO Fund sells a security it does not own, in anticipation of a decline
in the market value of that security. To complete such a transaction, the
IPO Fund must borrow the security to make delivery to the buyer. The IPO
Fund then is obligated to replace the security borrowed by purchasing it at
the market price at or prior to the time of replacement. The price at such
time may be more or less than the price at which the security was sold by
the IPO Fund. Until the security is replaced, the IPO Fund is required to
repay the lender any dividends or interest that accrue during the period of
the loan. To borrow the security, the IPO Fund also may be required to pay a
premium, which would increase the cost of the security sold. The net
proceeds of the short sale will be retained by the broker (or by the IPO
Fund's custodian in a special custody account), to the extent necessary to
meet margin requirements, until the short position is closed out. The IPO
Fund also will incur transaction costs in effecting short sales.
Securities Lending. The IPO Fund may lend its portfolio securities to
broker-dealers, banks or institutional borrowers of securities. The IPO Fund
must receive a minimum of 100% collateral, plus any interest due in the
form of cash or U.S. Government securities. This collateral must be valued
daily and should the market value of the loaned securities increase, the
borrower must furnish additional collateral to the IPO Fund. During the
time portfolio securities are on loan, the borrower will pay the IPO Fund
any dividends or interest paid on such securities plus any interest
negotiated between the parties to the lending agreement. Loans will be
subject to termination by the IPO Fund or the borrower at any time. While
the IPO Fund will not have the right to vote securities on loan, it intends
to terminate the loan and regain the right to vote if that is considered
important with respect to the investment.
Convertible Securities. The IPO Fund may be required to permit the
issuer of a convertible security to redeem the security, convert it into the
underlying common stock or sell it to a third party. Thus, the IPO Fund
may not be able to control whether the issuer of a convertible security
chooses to convert that security. If the issuer chooses to do so, this
action could have an adverse effect on the IPO Fund's ability to achieve its
investment objective.
Investment Company Securities. The IPO Fund may invest up to 5% of
its total assets in the securities of any one investment company, but may not
own more than 3% of the securities of any one investment company or
invest more than 10% of its total assets in the securities of other
investment companies. Because such other investment companies employ an
investment adviser, such investment by the IPO Fund will cause shareholders
to bear duplicative fees, such as management fees.
Borrowing. The IPO Fund may, from time to time, borrow money to the
maximum extent permitted by the Investment Company Act of 1940, as
amended (the "1940 Act") from banks at prevailing interest rates for
temporary or emergency purposes and investing in additional securities. The
IPO Fund's borrowings are limited so that immediately after such
borrowings the value of assets (including borrowings) less liabilities (not
including borrowings) is at least three times the amount of the borrowings.
Should the IPO Fund, for any reason, have borrowings that do not meet the
above test then, within three business days, the IPO Fund must reduce such
borrowings so as to meet the necessary test. Under such a circumstance, the
IPO Fund may have to liquidate portfolio securities at a time when it is
disadvantageous to do so. Gains made with additional funds borrowed will
generally cause the net value of the IPO Fund's shares to rise faster than
could be the case without borrowings. Conversely, if investment results fail
to cover the cost of borrowings, the net asset value of the Fund could
decrease faster than if there had been no borrowings.
INVESTMENT RESTRICTIONS
The IPO Fund has adopted the following restrictions and policies relating to
the investment of the assets of the IPO Fund and its activities. These are
fundamental restrictions and may not be changed without the approval of the
holders of a majority of the outstanding voting shares of the IPO Fund means
the lesser of (1) the holders of more than 50% of the outstanding shares IPO
Fund or (2) 67% of the shares present if more than 50% of the shares are
present at a meeting in person or by proxy.
The IPO Fund may not:
1. Purchase or sell physical commodities unless acquired as a result of
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ownership of securities or other instruments (but this shall not prevent the
IPO Fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical commodities).
2. Purchase or sell real estate unless acquired as a result of ownership of
securities or other instruments (but this shall not prevent the IPO Fund from
investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business). Investments by
the IPO Fund in securities backed by mortgages on real estate or in
marketable securities of companies engaged in such activities are not hereby
precluded.
3. Issue any senior security except that (a) the IPO Fund may engage in
transactions that may result in the issuance of senior securities to the
extent permitted under applicable regulations and interpretations of the 1940
Act or an exemptive order; (b) the IPO Fund may acquire other securities, the
acquisition of which may result in the issuance of a senior security, to the
extent permitted under applicable regulations or interpretations of the 1940
Act; (c) subject to the restrictions set forth below, the IPO Fund may borrow
money as authorized by the 1940 Act.
4. Lend any security or make any other loan if, as a result, more than 33
1/3% of the IPO Fund's total assets would be lent to other parties, but this
limitation does not apply to purchases of publicly issued debt securities or
to repurchase agreements.
5. Underwrite securities issued by others, except to the extent that the IPO
Fund may be considered an underwriter within the meaning of the Securities
Act of 1933 (the "1933 Act") in the disposition of restricted securities.
6. With respect to 75% of the IPO Fund's total assets, the IPO Fund may
not purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, (a) more than 5% of the IPO Fund's total
assets would be invested in the securities of that issuer, or (b) the IPO
Fund would hold more than 10% of the outstanding voting securities of that
issuer.
7. Purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities, or repurchase agreements secured thereby) if, as a result,
more than 25% of the IPO Fund's total assets would be invested in the
securities of companies whose principal business activities are in the same
industry. In the utilities category, the industry shall be determined
according to the service provided. For example, gas, electric, water and
telephone will be considered as separate industries.
TRUSTEES AND OFFICERS
Overall responsibility for management of the IPO Fund rests with the
Trustees who are elected by the shareholders. The Trustees, in turn, elect
the officers of the IPO Fund to actively supervise its day-to-day
operations.
The Trustees and Officers of the IPO Fund and their principal occupations
during the past five years are set forth below.
Name and Address Position held with Principal Occupations During the
the IPO Fund Past Five Years
- ---------------- ------------------ --------------------------------
William K. Smith * Chairman of the Chairman of the Board, President
325 Greenwich Avenue Board, President and Director, Renaissance
Greenwich, CT 06830 and Trustee Capital (1991-Present); Senior
Vice President, Kidder Peabody
(1989-1991); Vice President,
Bear Stearns (1986-1989)
Linda R. Killian * Vice President, Vice President and Director,
325 Greenwich Avenue Secretary, co-Chief Renaissance Capital (1992-
Greenwich, CT 06830 Investment Officer Present); Senior Vice President,
and Trustee Wertheim Schroder (1989-1992);
Vice President and Portfolio
Manager, Citicorp Investment
Management (1984-1989)
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<PAGE>
Name and Address Position held with Principal Occupations During the
the IPO Fund Past Five Years
- ---------------- ------------------ --------------------------------
Kathleen Shelton Smith* Vice President, Vice President, Treasurer,
325 Greenwich Avenue co-Chief Investment Secretary and Director,
Greenwich, CT 06830 Officer and Trustee Renaissance Capital (1991-
Present); Director, Merrill
Lynch Capital Markets (1983-
1991)
Martin V. Alonzo Trustee Chairman, Chase Brass (1990-
c/o Chase Brass Present); Adviser to Maxxam
300 Park Avenue Group (1987-1990); Senior Vice
New York, NY 10022 President and President, AMAX
(1967-1987)
Warren K. Greene Trustee Senior Vice President,
c/o Trendlogic Trendlogic Associates, an
One Fawcett Place investment advisory firm (1995-
Greenwich, CT 06830 Present); Consultant to Mutual
Funds, (1993-1994); President,
Chief Executive Officer and
Investment Officer, American
Investor Funds (1965-1993)
Philip D. Gunn Trustee Founder and President, Philip D.
c/o Philip D. Gunn & Co. Gunn, a merchant banking firm
529 Madison Avenue (1982-present)
New York, N.Y. 10022
*Trustees are "interested persons" of the IPO Fund, as defined in the 1940
Act. The Trustees of the IPO Fund who are officers of employees of the
investment adviser receive no remuneration from the IPO Fund. Each of the
other Trustees is paid an annual retainer of $1,500 and is reimbursed for the
expenses of attending the meetings. Kathleen S. and William K. Smith are
married.
The following table indicates the estimated compensation to be paid to each
Trustee from the Renaissance Funds for a 12 month period ended
_____________, 1997.
<TABLE>
<CAPTION>
Pension or Retirement Estimated Annual Total Total Compensation
Benefits Accrued as Benefits Upon Compensation From Fund
Portfolio Expenses Retirement From Fund "Complex" (1)
--------------------- ---------------- ------------ -------------------
<S> <C> <C> <C> <C>
William K. Smith, Trustee -0- -0- $ -0- $ -0-
Linda R. Killian, Trustee -0- -0- -0- -0-
Kathleen Shelton Smith, Trustee -0- -0- -0- -0-
Martin V. Alonzo, Trustee -0- -0-
Warren K. Greene, Trustee -0- -0-
Philip D. Gunn, Trustee -0- -0-
(1) Currently there is only the IPO Fund in the Renaissance Fund Complex.
</TABLE>
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INVESTMENT ADVISORY AND OTHER SERVICES
As described in the Prospectus, Renaissance is the IPO Fund's investment
adviser, providing services under the advisory and service contracts.
Renaissance has been a registered investment adviser since August 1994 and
it and its predecessor have been operating since September, 1991.
The principal executive officers and directors of Renaissance are: William
K. Smith, Chairman and President; Kathleen Shelton Smith, Director, Vice
President, Secretary and Treasurer; and Linda R. Killian, Director and Vice
President. Renaissance is wholly owned by the three principals.
The investment advisory agreement between the IPO Fund and Renaissance
dated _______ , 1997 provides for an advisory fee at an annual rate of
1.50% of the IPO Fund's average daily net assets during the year.
Renaissance shall reimburse the IPO Fund for expenses (exclusive of
interest, taxes, brokerage expenses, distribution expenses and extraordinary
expenses) which in any year exceed the limits prescribed by any state in
which shares of the IPO Fund are qualified for sale.
The investment advisory agreement provides that Renaissance shall render
investment advisory and other services to the IPO Fund including, at its
expense, all administrative services, office space and the services of all
officers and employees of the IPO Fund. The IPO Fund pays all other
expenses not assumed by Renaissance, including taxes, interest, brokerage
commissions, insurance premiums, fees and expenses of the custodian and
shareholder servicing agent, legal, audit and fund accounting expenses, fees
and expenses in connection with qualification under federal and state
securities laws and costs of shareholder reports and proxy materials. The
IPO Fund has agreed that it will use the names "Renaissance IPO Funds"
and "Renaissance IPO Fund" so long as Renaissance serves as investment
adviser to the IPO Fund.
It is possible that certain of Renaissance's clients may have investment
objectives similar to the IPO Fund and certain investments may be
appropriate for the IPO Fund and for other clients advised by Renaissance.
From time to time, a particular security may be bought or sold for only one
client's portfolio or in different amounts and at different times for more
than one but less than all such clients. In addition, a particular security
may be bought for one or more clients when one of more clients are selling
such security, or purchases or sales of the same security may be made for
two or more clients at the same time. In such an event, such transactions,
to the extent practicable, will be averaged as to price and allocated as to
amount in proportion to the amount of each order. In some cases, this
procedure could have a detrimental effect on the price or amount of the
securities purchased or sold by the IPO Fund. In other cases, however, it
is believed that the ability of the IPO Fund to participate, to the extent
permitted by law, in volume transactions will produce less expensive
brokerage costs.
The officers, directors, employees of Renaissance and its affiliates may from
time to time own securities which are also held in the IPO Fund's portfolio.
Renaissance has adopted a Code of Ethics which requires among other
things, duplicate confirms of security transactions for each account and
restricting trading in various types of securities to avoid possible
conflicts of interest.
Renaissance may from time to time, directly or through affiliates, enter into
agreements to furnish for compensation special research or financial services
to companies, including services in connection with acquisitions, mergers, or
financings. In the event that such agreements are in effect with respect to
issuers of securities held in the portfolio of the IPO Fund, specific
reference to such agreements will be made in the "Schedule of Investments" in
shareholder reports of the IPO Fund. As of the date of this Statement of
Additional information, no such agreements exist.
BROKERAGE ARRANGEMENTS
Orders for the purchase and sale of portfolio securities are placed with
brokers and dealers who, in the judgment of Renaissance, are able to execute
them as expeditiously as possible and at the best obtainable price.
Purchases and sales of securities which are not listed or traded on a
securities exchange will ordinarily be executed with primary market makers
acting as principal, except when it is determined that better prices and
executions may otherwise be obtained. Renaissance is also authorized to place
purchase or sale orders with brokers or dealers who may charge a commission
in excess of that charged by other brokers or dealers if the amount of the
commission is reasonable in relation to the value of the brokerage and
research services provided. Such services may include but are not limited
to information as to the availability of securities for purchase and sale;
statistical or factual information or opinions pertaining to investments;
and appraisals or evaluations of portfolio securities. Such allocations
will be in such amounts and in such proportions as Renaissance may determine.
Orders may also be placed with brokers or dealers who sell shares of the IPO
Fund's or other funds for which Renaissance acts as investment adviser, but
this fact, or the volume of such sales, is not a consideration in their
selection. A portion of the IPO Fund's brokerage commissions may be paid to
Renaissance Capital Investments, Inc. (the "Broker/Dealer"), an affiliate of
Renaissance.
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<PAGE>
Renaissance undertakes that such higher commissions will not be paid by the
IPO Fund unless (1) Renaissance determines in good faith that the amount is
reasonable in relation to the services in terms of the particular transaction
or in terms of Renaissance's overall responsibilities to the IPO Fund,
(2) such payment is made in compliance with the provisions of Section 28 (e)
of the Securities and Exchange Act of 1934 and other applicable state and
federal laws, and (3) in the opinion of Renaissance the total commissions
paid by Renaissance IPO Funds are reasonable in relation to the expected
benefits to Renaissance IPO Funds over the long term. The investment
advisory fees paid by the IPO Fund under the investment advisory agreement
are not reduced as a result of Renaissance IPO Fund's receipt of research
services.
Consistent with both the Rules of Fair Practice of the National Association
of Securities Dealers, Inc. and such policies as the Board of Trustees may
determine, and subject to seeking best execution, Renaissance may consider
sales of shares of Renaissance IPO Funds as a factor in the selection of
dealers to execute portfolio transactions for Renaissance IPO Funds.
The Board of Trustees has adopted procedures incorporating the standards of
Rule 17e-1 under the 1940 Act which requires that the commissions paid to
the Broker/Dealer or any other "affiliated person" be "reasonable and fair"
compared to the commissions paid to other brokers in connection with
comparable transactions. The procedures require that Renaissance furnish
reports to the Trustees with respect to the payment of commissions to
affiliated brokers and maintain records with respect thereto.
HOW TO BUY SHARES
(See also "Share Price and Determination of Net Asset Value", "Investing in
the IPO Fund", "Service and Distribution Plan" and "Shareholder Services"
in the IPO Fund's Prospectus)
Shares of the IPO Fund are purchased at the net asset value next calculated
after receipt of a purchase order. The IPO Fund reserves the right to reduce
or waive the minimum purchase requirements in certain cases such as pursuant
to payroll deduction plans, etc., where subsequent and continuing purchases
are contemplated. Shares of the IPO Fund may be purchased by various
tax-sheltered retirement plans. Upon request, the Broker/Dealer will
provide information regarding eligibility and permissible contributions.
Because a retirement plan is designed to provide benefits in future years,
it is important that the investment objective of the IPO Fund be consistent
with the participant's retirement objectives and time horizon. Premature
withdrawals from a retirement plan may result in adverse tax consequences.
For more complete information, contact the Broker/Dealer at 1-888-IPO-
FUND extension [ ] during New York business hours.
HOW TO REDEEM SHARES
(See also "How to Redeem IPO Fund Shares" in the IPO Fund's Prospectus)
The right of redemption may be suspended, or the date of payment
postponed beyond the normal two-day period by the IPO Fund under the
following conditions authorized by the 1940 Act: (1) for any period (a)
during which the New York Stock Exchange is closed, other than customary
weekend and holiday closures, or (b) during which trading on the New York
Stock Exchange is restricted; (2) for any period during which an emergency
exists as a result of which (a) disposal by the IPO Fund of securities owned
by it is not reasonably practical, or (b) it is not reasonably practical for
the IPO Fund to determine the fair value of its net assets; (3) for such
other periods as the SEC may by order permit for the protection of the IPO
Fund's shareholders.
[It is possible that conditions may exist in the future which would, in the
opinion of the Board of Trustees, make it undesirable for the IPO Fund to
pay for redemptions in cash. In such cases the Board may authorize
payment to be made in portfolio securities or other property of the IPO
Fund. However, the IPO Fund has obligated itself under the 1940 Act to
redeem for cash all shares presented for redemption by any one shareholder
up to $250,000 (or 1% of the IPO Fund's net assets if that is less) in any
90-day period. Securities delivered in payment of redemptions are valued at
the same value assigned to them in computing the net asset value per share.
Shareholders receiving such securities may incur brokerage costs on their
sales.]
VALUATION OF SECURITIES
Portfolio securities are valued at the last sale price on the securities
exchange or national securities market on which such securities primarily are
traded. Securities not listed on an exchange or national securities market,
or securities in which there were no transactions, are valued at the average
ofthe most recent bid and asked prices, except in the case of open short
positions where the asked price is used for valuation purposes. Bid price is
used when no asked price is available. Short-term investments are carried at
amortized cost, which approximates value. Any securities or other assets for
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which recent market quotations are not readily available are valued at fair
value as determined in good faith by the IPO Fund's Board of Trustees.
Expenses and fees, including the management fee and distribution and
service fees, are accrued daily and taken into account for the purpose of
determining the net asset value of the IPO Fund's shares.
Restricted securities, as well as securities or other assets for which market
quotations are not readily available, or are not valued by a pricing service
approved by the Board of Trustees, are valued at fair value as determined in
good faith by the Board of Trustees. The Board of Trustees will review the
method of valuation on a current basis. In making their good faith valuation
of restricted securities, the Trustees generally will take the following
factors into consideration: restricted securities which are, or are
convertible into, securities of the same class of securities for which a
public market exists usually will be valued at market value less the same
percentage discount at which purchased. This discount will be revised
periodically by the Board of Trustees if the Trustees believe that it no
longer reflects the value of the restricted securities. Restricted
securities not of the same class as securities for which a public market
exists usually will be valued initially at cost. Any subsequent adjustment
from cost will be based upon considerations deemed relevant by the Board of
Trustees.
SERVICE AND DISTRIBUTION PLAN
(See also "Service and Distribution Plan" in the IPO Fund's Prospectus)
Under a plan adopted by the Board of Trustees pursuant to Rule 12b-1 under
the 1940 Act (the "Plan"), the IPO Fund pays the Broker/Dealer for
distributing IPO Fund shares and for providing personal services to, and
maintaining accounts of, IPO Fund shareholders a fee at the annual rate of
.50% of the average daily net assets of the IPO Fund. Under the Plan, the
Broker/Dealer may pay third parties in respect of these services such amount
as it may determine. The fees paid to the Broker/Dealer under the Plan are
payable without regard to actual expenses incurred. Renaissance understands
that these third parties also may charge fees to their clients who are
beneficial owners of IPO Fund shares in connection with their client
accounts. These fees would be in addition to any amounts which may be
received by them from the Broker/Dealer under the Plan.
In approving the Plan in accordance with the requirements of Rule 12b-1
under the 1940 Act, the Trustees (including the Independent Trustees, being
Trustees who are not "interested persons", as defined by the 1940 Act, of
the Renaissance Funds and have no direct or indirect financial interest in
the operation of the Plan or in any agreements related to the Plan)
considered various factors and determined that there is a reasonable
likelihood that the Plan will benefit the IPO Fund and its shareholders.
The Plan will continue in effect from year to year if specifically approved
annually (a) by the majority of the IPO Fund's outstanding voting shares or
by the Board of Trustees and (b) by the vote of a majority of the Independent
Trustees. While the Plan remains in effect, the Principal Financial Officer
shall prepare and furnish to the Board of Trustees a written report setting
forth the amounts spent by the IPO Fund under the Plan and the purposes for
which such expenditures were made. The Plan may not be amended to increase
materially the amount to be spent for distribution without shareholder
approval and all material amendments to the Plan must be approved by the
Board of Trustees and by the Independent Trustees cast in person at a
meeting called specifically for that purpose. While the Plan is in effect,
the selection and nomination of the Independent Trustees shall be made by
those Independent Trustees then in office.
TAXES
The IPO Fund intends to qualify each year as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended (the
"Code"). By so qualifying, the IPO Fund will not be subject to Federal
income taxes to the extent that it distributes its net investment income and
realized net capital gains.
Distributions of investment income and of the excess of net short-term
capital gain over net long-term capital loss are taxable as ordinary income
(whether or not reinvested in additional IPO Fund shares). Distributions of
the excess of net long-term capital gain over net short-term capital loss
(net capital gains) are taxable to shareholders as long-term capital gain,
regardless of the length of time the shares of the IPO Fund have been held
by such shareholders and regardless of whether the distribution is received
in cash or in additional shares of the IPO Fund. It is expected that
dividends will constitute a small portion of the IPO Fund's gross income.
The Code requires each regulated investment company to pay a nondeductible
4% excise tax to the extent the company does not distribute, during each
calendar year, 98% of its ordinary income, determined on a calendar year
basis, and 98% of its capital gains determined, in general, on a December
31 year end, plus certain undistributed amounts from previous years. The IPO
Fund anticipates that it will make sufficient timely distributions to avoid
imposition of the excise tax.
Options and futures contracts entered into by the IPO Fund will be subject to
special tax rules. These rules may accelerate income to the IPO Fund, defer
-11-
<PAGE>
IPO Fund losses, cause adjustments in the holding periods of IPO Fund
securities, convert capital gains into ordinary income and convert short-term
capital losses into long-term capital losses. As a result, these rules could
affect the amount, timing and character of IPO Fund distributions.
A distribution by the IPO Fund will result in a reduction in the IPO Fund's
net asset value per share. Such a distribution is taxable to the
shareholder as ordinary income or capital gain as described above even
though, from an investor standpoint, it may constitute a return of capital.
In particular, investors should be careful to consider the tax implications
of buying shares just prior to a distribution. The price of shares
purchased at that time includes the amount of the forthcoming distribution.
Those purchasing just prior to a distribution will then receive a return of
capital on the distribution which nevertheless is taxable to them. All
distributions, whether received in cash or reinvested in shares, must be
reported by each shareholder on his or her federal income tax. Under the
Code, dividends declared by the IPO Fund in October, November and December
of any calendar year, and payable to shareholders of record in such a month,
shall be deemed to have been received by the shareholder on December 31 of
such calendar year if such dividend is actually paid in January of the
following calendar year. The IPO Fund intends to pay all dividends during
the month of December so that it will not be impacted by this rule.
A shareholder may realize a capital gain or capital loss on the sale or
redemption of shares of the IPO Fund. The tax consequences of a sale or
redemption depend on several factors, including the shareholder's tax basis
in the shares sold or redeemed and the length of time the shares have been
held. Basis in the shares may be the actual cost of those shares (net asset
value of the IPO Fund shares on purchase or reinvestment date), or under
certain circumstances, a loss on the sale or redemption of shares held for
six months or less may be treated as a long-term capital loss to the extent
that the IPO Fund has distributed long-term capital gain dividends on such
shares. Moreover, a loss on sale or redemption of IPO Fund shares will be
disallowed to the extent the shareholder purchases other shares of the IPO
Fund within 30 days before or after the date the shares are sold or redeemed.
For Federal income tax purposes, distributions paid from net investment
income and from any realized net short-term capital gains are taxable to
shareholders as ordinary income, whether received in cash or in additional
shares. Dividends are taxable as ordinary income, whereas capital gain
distributions are taxable as long-term capital gains. The 70% dividends-
received deduction for corporations will apply only to the proportionate
share of the dividend attributable to dividends received by the IPO Fund
from domestic corporations.
Any dividend or capital gain distribution paid shortly after a purchase of
shares of the IPO Fund will have the effect of reducing the per share net
asset value of such share by the amount of the dividend or distribution.
Furthermore, even if the net asset value of the shares of the IPO Fund
immediately after a dividend or distribution is less than the cost of such
shares to the investor, the dividend or distribution will be taxable to the
investor.
The IPO Fund is required to withhold federal income tax at a rate of 31%
("backup withholding") from dividend payments and redemption and
exchange proceeds if an investor fails furnish the IPO Fund with his social
security number or other tax identification number or fails to certify under
penalty of perjury that such number is correct or that he is not subject to
backup withholding due to the underreporting of income. The certification
form is included as part of the share purchase application and should be
completed when the account is opened.
This section is not intended to be a full discussion of present or proposed
federal income tax laws and the effect of such laws on an investor.
Investors are urged to consult with their respective tax advisers for a
complete review of the tax ramifications of an investment in the IPO Fund.
ADDITIONAL INFORMATION
Description of Shares
Renaissance Funds is a Delaware business trust. The Delaware Trust
Instrument authorizes the Trustees to issue an unlimited number of shares,
which are units of beneficial interest, without par value. The Trust
Instrument authorizes the Trustees to divide or redivide any unissued shares
of the Renaissance Funds into one or more additional series by setting or
changing in any one or more aspects their respective preferences, conversion
or other rights, voting power, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption.
-12-
<PAGE>
Shares have no subscription or preemptive rights and only such conversion
or exchange rights as the Trustees may grant in their discretion. When
issued for payment, as described in the Prospectus and this Statement of
Additional Information, Renaissance Fund's shares will be fully paid and
non-assessable. In the event of a liquidation or dissolution of Renaissance
Funds, shares of the IPO Fund are entitled to receive the assets available
for distribution belonging to the IPO Fund, and a proportionate distribution,
based upon the relative asset values of the respective funds of the
Renaissance Funds, of any general assets not belonging to any particular
fund which are available for distribution.
Shares of the Renaissance Funds are entitled to one vote per share (with
proportional voting for fractional shares) on such matters as shareholders
are entitled to vote. On any matter submitted to a vote of the shareholders,
all shares are voted separately by individual series (funds), and whenever
the Trustees determine that the matter affects only certain series, may be
submitted for a vote by only such series, except (1) when required by the
1940 Act, shares are voted in the aggregate and not by individual series; and
(2) when the Trustees have determined that the matter affects the interests
of more than one series and that voting by shareholders of all series would
be consistent with the 1940 Act, then the shareholders of all such series
shall be entitled to vote thereon (either by individual series or by shares
voted in the aggregate, as the Trustees in their discretion may determine).
The Trustees may also determine that a matter affects only the interests of
one or more classes of a series, in which case (or if required under the 1940
Act) such matter shall be voted on by such class or classes. There will
normally be no meetings of shareholders for the purpose of electing Trustees
unless and until such time as less than a majority of the Trustees have been
elected by the shareholders, at which time the Trustees then in office will
call a shareholders' meeting for the election of Trustees. In addition,
Trustees may be removed from office by a vote of the holders of at least
two-thirds of the outstanding shares of the Renaissance Funds. A meeting
shall be held for such purpose upon the written request of the holders of
not less than 10% of the outstanding shares. Upon written request by ten or
more shareholders meeting the qualifications of Section 16(c) of the 1940
Act, (i.e., persons who have been shareholders for at least six months, and
who hold shares having a net asset value of at least $25,000 or constituting
1% of the outstanding shares) stating that such shareholders wish to
communicate with the other shareholders for the purpose of obtaining the
signatures necessary to demand a meeting to consider removal of a Trustee,
Renaissance Funds will provide a list of shareholders or disseminate
appropriate materials (at the expense of the requesting shareholders).
Except as set forth above, the Trustees shall continue to hold office and
may appoint their successors.
Shareholder and Trustee Liability
The Delaware Business Trust Act provides that a shareholder of a Delaware
business trust shall be entitled to the same limitation of personal liability
extended to shareholders of Delaware corporations, and the Delaware Trust
Instrument provides that shareholders of Renaissance Funds shall not be
liable for the obligations of Renaissance Funds. The Delaware Trust
Instrument also provides for indemnification out of the trust property of any
shareholder held personally liable solely by reason of his or her being or
having been a shareholder. The Delaware Trust Instrument also provides
that Renaissance Funds shall, upon request, assume the defense of any claim
made against any shareholder for any act or obligation of Renaissance
Funds, and shall satisfy any judgment thereon. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
considered to be extremely remote.
The Delaware Trust Instrument states further that no Trustee, officer, or
agent of Renaissance Funds shall be personally liable in connection with the
administration or preservation of the assets of the IPO Fund or the conduct
of Renaissance Funds's business; nor shall any Trustee, officer, or agent be
personally liable to any person for any action or failure to act except for
his own bad faith, willful misfeasance, gross negligence, or reckless
disregard of his duties. The Delaware Trust Instrument also provides that
all persons having any claim against the Trustees or Renaissance Funds shall
look solely to the assets of Renaissance Funds for payment.
PERFORMANCE INFORMATION
General
From time to time, quotations of the IPO Fund's performance may be
included in advertisements, sales literature or reports to shareholders or
prospective investors. These performance figures are calculated in the
following manner.
Average Annual Total Return
Average annual total return is the average annual compound rate of return
for periods of one year, five years, and ten years, all ended on the last
day of a recent calendar quarter. Average annual total return quotations
reflect changes in the price of the IPO Fund's shares and assume that all
dividends and capital gains distributions during the respective periods were
reinvested in IPO Fund shares. Average annual total return is calculated by
computing the average annual compound rates of return of a hypothetical
-13-
<PAGE>
investment over such periods, according to the following formula (average
annual total return is then expressed as a percentage):
1/n
T = (ERV/P) -1
Where:
T = Average annual total return
P = A hypothetical initial investment of $1,000
n = Number of years
ERV = Ending redeemable value: ERV is the value, at the end of the
applicable period, of a hypothetical $1,000 investment made at the beginning
of the applicable period.
It should be noted that average annual total return is based on historical
earnings and based on changes in market conditions and the level of the IPO
Fund's expenses.
In connection with communicating its average annual total return to current
or prospective shareholders, the IPO Fund also may compare these figures to
the performance of other mutual funds tracked by the mutual fund rating
services or to unmanaged indices which may assume reinvestment of
dividends but generally do not reflect deductions for administrative and
management cost.
Comparison of Portfolio Performance
Comparison of the quoted non-standardized performance of various
investments is valid only if performance is calculated in the same manner.
Because there are different methods of calculating performance, investors
should consider the effect of the methods used to calculate performance
when comparing performance of the IPO Fund with performance equated
with respect to other investment companies or types of investments.
Marketing and other IPO Fund literature may include a description of the
potential risks and rewards associated with an investment in the IPO Fund.
The description may include a "risk/return spectrum" which compares the
IPO Fund to other Funds investing in IPO's or broad categories of funds,
such as money market, bond or equity funds, in terms of potential risk and
returns. Money market funds are designed to maintain a constant $1.00
share price and have a fluctuating yield. Share price, yield and total
return of a bond fund will fluctuate. The share price and return of an
equity fund also will fluctuate. Risk/return spectrums also may depict
funds that invest in both domestic and foreign securities or a combination
of bond and equity securities.
-14-
<PAGE>
FINANCIAL STATEMENT
THE RENAISSANCE IPO FUNDS
STATEMENT OF ASSETS AND LIABILITIES
, 1997
TO BE FILED BY AMENDMENT
<PAGE>
PART C. OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits
(a) Financial statements.
In Part A:
None.
In Part B:
None.
In Part C:
None.
(b) Exhibits
EX-99.B1(a) Certificate of Trust is filed herewith.
EX-99.B1(b) Delaware Trust Instrument is filed herewith.
EX-99.B2 Bylaws are filed herewith.
EX-99.B3 None.
EX-99.B4 None.
EX-99.B5 To be filed.
EX-99.B6 To be filed.
EX-99.B7 None.
EX-99.B8 To be filed.
EX-99.B9(a) To be filed.
EX-99.B9(b) To be filed.
EX-99.B9(c) To be filed.
EX-99.B10(a) To be filed.
EX-99.B10(b) To be filed.
EX-99.B11 Consent of Kramer, Levin, Naftalis & Frankel is filed herewith.
EX-99.B12 None.
EX-99.B13 To be filed.
EX-99.B14 None.
EX-99.B15 To be filed.
EX-99.B16 To be filed.
EX-99.B17 None.
EX-99.B18 None.
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<PAGE>
ITEM 25. Persons Controlled By or Under Common Control with Registrant
None.
ITEM 26. Number of Holders of Securities
Title of Class; Shares of Number of Record Holders
beneficial interest as of January __, 1997
------------------------- ------------------------
Renaissance IPO Fund 0
ITEM 27. Indemnification
Article X, Section 10.02 of the Registrant's Delaware Trust
Instrument, incorporated herein as Exhibit 2 hereto, provides for
the indemnification of Registrant's Trustees and officers, as
follows:
"Section 10.02 Indemnification.
(a) Subject to the exceptions and limitations contained in
Subsection 10.02(b):
(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).
(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
C-2
<PAGE>
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 Subsection (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 (i) such Covered Person shall have provided
appropriate security for such undertaking, (ii) the Trust is insured
against losses arising out of any such advance payments or (iii)
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."
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to trustees, officers,
and controlling persons or Registrant pursuant to the
foregoing provisions, or otherwise, Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Investment Company Act of 1940, as
amended, and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than
the payment by Registrant of expenses incurred or paid by a
trustee, officer, or controlling person of 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, 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 of whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
Item 28. Business and Other Connections of Investment Adviser
Renaissance Capital Corporation, Registrant's investment adviser, is a
registered investment adviser providing research on initial public offerings
to institutional and individual investors.
Name Position with the Adviser Other Employment
- ---- ------------------------- ----------------
William K. Smith Chairman of the Board, Chairman of the Board
President and Director and President of
Renaissance Capital
Investments, Inc., the
distributor
Kathleen Shelton Smith Vice President, Secretary, Secretary, Treasurer,
Treasurer and Director and Director of
distributor
Linda R. Killian Vice President, Assistant Vice President,
Secretary and Director Assistant Secretary, and
Director of the
distributor
The business address of each of the officers and directors is 325
Greenwich Avenue, Greenwich, CT 06830.
Item 29. Principal Underwriters
(a) ________________ acts as principal underwriter for the
Renaissance Funds.
(b)
(c) Not applicable.
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<PAGE>
ITEM 30. Location of Accounts and Records
The majority of the accounts, books and other documents required to
be maintained by Section 31(a) of the Investment Company Act of 1940 (the
"1940 Act") and the Rules thereunder are maintained at the offices of
_________ (the Transfer Agent) and ___________ (the Administrator). The
records required to be maintained under Rule 31a-1(b)(1) with respect to
journals of receipts and deliveries of securities and receipts and
disbursements of cash are maintained at the offices of the Registrant's
custodian, as listed under "Investment Advisory and Other Services" in
Part B to this Registration Statement.
ITEM 31. Management Services
Not applicable.
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<PAGE>
ITEM 32. Undertakings
Registrant 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 registrant's 1933 Act registration statement.
C-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Registration Statement on Form N-1A to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Greenwich, and the
State of Connecticut on this 6th day of February, 1997.
RENAISSANCE FUNDS
By:/s/William K. Smith
William K. Smith, President
- ---------------------------------------------------------------------------
As required by the Securities Act of 1933, this Registration Statement has
been signed by the following persons in the capacities indicated on the 6th
day of February, 1997.
/s/William K. Smith Chairman, Trustee, President and
Chief Financial Officer
William K. Smith
/s/ Kathleen Shelton Smith Trustee
Kathleen Shelton Smith
/s/ Linda R. Killian Trustee
Linda R. Killian
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<PAGE>
EXHIBIT INDEX
EX-99.B1(a) Certificate of Trust.
EX-99.B1(b) Delaware Trust Instrument.
EX-99.B2 Bylaws.
EX-99.B11(a) Consent of Kramer, Levin, Naftalis & Frankel.
C-7
CERTIFICATE OF TRUST
OF
RENAISSANCE FUNDS
This Certificate of Trust is being executed as of February 3, 1997 for
the purpose of organizing a business trust pursuant to the Delaware Business
Trust Act, 12 Del. C. Sections 3801 et seq.
The undersigned hereby certifies as follows:
1. Name. The name of the business trust is Renaissance Funds ("Trust").
2. Registered Investment Company. The Trust is or will become a
registered investment company under the Investment Company Act of 1940, as
amended.
3. Registered Office and Registered Agent. The registered office of the
Trust in the State of Delaware is located at 1201 North Market Street, P.O.
Box 1347, Wilmington, Delaware 19899-1347. The name of the registered agent
of the Trust for service of process at such location is Delaware Corporation
Organizers, Inc.
4. Notice of Limitation of Liabilities of Series. Notice is hereby given
that the Trust is or may hereafter be constituted a series trust. The debts,
liabilities, obligations and expenses incurred, contracted for or otherwise
<PAGE>
existing with respect to any particular series shall be enforceable against
the assets of such series only, and not against the assets of the Trust
generally.
IN WITNESS WHEREOF, the undersigned, being the sole trustees of the
Trust, have duly executed this Certificate of Trust as of the day and year
first above written.
Trustee Trustee
/s/Kathleen Shelton Smith /s/Linda R. Killian
______________________ ___________________
Kathleen Shelton Smith Linda R. Killian
Trustee
/s/William K. Smith
______________________
William K. Smith
-2-
RENAISSANCE FUNDS
TRUST INSTRUMENT
DATED February 3, 1997
<PAGE>
RENAISSANCE FUNDS
TABLE OF CONTENTS
Page
ARTICLE I - NAME AND DEFINITION..........................................1
Section 1.01 Name......................................................1
Section 1.02 Definitions...............................................1
ARTICLE II - BENEFICIAL INTEREST.........................................2
Section 2.01 Shares of Beneficial Interest.............................2
Section 2.02 Issuance of Shares........................................2
Section 2.03 Register of Shares and Share Certificates.................3
Section 2.04 Transfer of Shares........................................3
Section 2.05 Treasury Shares...........................................3
Section 2.06 Establishment of Series...................................3
Section 2.07 Investment in the Trust...................................4
Section 2.08 Assets and Liabilities of Series..........................4
Section 2.09 No Preemptive Rights......................................5
Section 2.10 No Personal Liability of Shareholder......................5
Section 2.11 Assent to Trust Instrument................................5
ARTICLE III - THE TRUSTEES...............................................6
Section 3.01 Management of the Trust...................................6
Section 3.02 Initial Trustees..........................................6
Section 3.03 Term of Office............................................6
Section 3.04 Vacancies and Appointments................................7
Section 3.05 Temporary Absence.........................................7
Section 3.06 Number of Trustees........................................7
Section 3.07 Effect of Ending of a Trustee's Service ..................7
Section 3.08 Ownership of Assets of the Trust..........................7
ARTICLE IV - POWERS OF THE TRUSTEES......................................8
Section 4.01 Powers....................................................8
Section 4.02 Issuance and Repurchase of Shares........................11
Section 4.03 Trustees and Officers as Shareholders....................11
Section 4.04 Action by the Trustees...................................11
Section 4.05 Chairman of the Trustees.................................11
Section 4.06 Principal Transactions...................................11
ARTICLE V - EXPENSES OF THE TRUST.......................................12
ARTICLE VI - INVESTMENT ADVISER, PRINCIPAL UNDERWRITER,
ADMINISTRATOR AND TRANSFER AGENT...........................12
Section 6.01 Investment Adviser.......................................12
Section 6.02 Principal Underwriter....................................13
Section 6.03 Administration...........................................13
Section 6.04 Transfer Agent...........................................13
Section 6.05 Parties to Contract......................................13
Section 6.06 Provisions and Amendments................................14
ARTICLE VII - SHAREHOLDERS' VOTING POWERS
AND MEETINGS..............................................14
Section 7.01 Voting Powers............................................14
Section 7.02 Meetings.................................................15
i
<PAGE>
Section 7.03 Quorum and Required Vote.................................15
ARTICLE VIII - CUSTODIAN................................................16
Section 8.01 Appointment and Duties...................................16
Section 8.02 Central Certificate System...............................16
ARTICLE IX - DISTRIBUTIONS AND REDEMPTIONS..............................17
Section 9.01 Distributions............................................17
Section 9.02 Redemptions..............................................17
Section 9.03 Determination of Net Asset Value and Valuation
of Portfolio Assets......................................17
Section 9.04 Suspension of the Right of Redemption....................18
Section 9.05 Redemption of Shares in Order to Qualify as Regulated
Investment Company.......................................19
Section 9.06 Redemption of Small Accounts.............................19
ARTICLE X - LIMITATION OF LIABILITY AND
INDEMNIFICATION.............................................19
Section 10.01 Limitation of Liability.................................19
Section 10.02 Indemnification.........................................19
Section 10.03 Shareholders............................................21
ARTICLE XI - MISCELLANEOUS..............................................21
Section 11.01 Trust Not A Partnership.................................21
Section 11.02 Trustee's Good Faith Action, Expert Advice,
No Bond or Surety.......................................21
Section 11.03 Establishment of Record Dates...........................21
Section 11.04 Termination of Trust....................................22
Section 11.05 Reorganization..........................................23
Section 11.06 Filing of Copies, References, Headings..................23
Section 11.07 Applicable Law..........................................24
Section 11.08 Amendments..............................................24
Section 11.09 Fiscal Year.............................................24
Section 11.10 Name Reservation........................................25
Section 11.11 Provisions in Conflict With Law.........................25
ii
<PAGE>
RENAISSANCE FUNDS
February 3, 1997
TRUST INSTRUMENT, made by Linda R. Killian, Kathleen Shelton Smith and
William K. Smith (the "Trustees").
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 DEFINITION
Section 1.01 Name. The name of the trust created hereby is "Renaissance
Funds."
Section 1.02 Definitions. Wherever used herein, unless otherwise
required by the context or specifically provided:
(a) The "1940 Act" means the Investment Company Act of 1940, as amended
from time to time. Whenever reference is made hereunder to the 1940 Act,
such references shall be interpreted as including any applicable order or
orders of the Commission or any rules or regulations adopted by the
Commission thereunder or interpretive releases of the Commission staff;
(b) "Bylaws" means the Bylaws of the Trust as adopted by the Trustee,
as amended from time to time;
(c) "Commission" has the meaning given it in the 1940 Act. In addition,
"Affiliated Person," "Interested Person" and "Principal Underwriter" shall
have the respective meanings given them in the 1940 Act;
(d) "Delaware Act" means the Delaware Business Trust Act, to Chapter 38
of Title 12 of the Delaware Code, as amended from time to time;
(e) "Net Asset Value" means the net asset value of each Series of the
Trust determined in the manner provided in Article IX, Section 9.03 hereof;
(f) "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;
(g) "Series" means a series of Shares of the Trust established in
accordance with the provisions of Article II, Section 2.06 hereof;
(h) "Shareholder" means a record owner of Outstanding Shares of the
Trust;
(i) "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;
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(j) The "Trust" means Renaissance Funds, a Delaware business trust, and
reference to the Trust when applicable to one or more Series of the Trust,
shall refer to any such Series;
(k) 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 respective capacity
as Trustees hereunder;
(l) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of one
or more of the Trust or any Series, or the Trustees on behalf of the Trust
or any Series.
ARTICLE II
BENEFICIAL INTEREST
Section 2.01 Shares of Beneficial Interest. The beneficial interest in
the Trust shall be divided into such Shares of one or more separate and
distinct Series or classes of a Series as set forth in Section 2.06 or as
the Trustees shall otherwise from time to time create and establish as
provided in Section 2.06. The number of Shares of each Series and class
thereof authorized hereunder is unlimited. Except as otherwise determined
by the Trustees, each Share shall have no par value. All Shares issued
hereunder, including without limitation Shares issued in connection with a
dividend paid in Shares or a split or reverse split of Shares, shall be
fully paid and nonassessable.
Section 2.02 Issuance of Shares. The Trustees in their discretion may,
from time to time, without a 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 1/1000th of a Share or integral multiples
thereof. The Trustees or any person the Trustees may authorize for the
purpose may, in their discretion, reject any application for the issuance of
shares.
Section 2.03 Register of Shares and Share Certificates. A register shall
be kept at the principal office of the Trust or an office of the Trust's
transfer agent which shall contain the names and addresses of the
Shareholders of each Series, the number of Shares of that Series (or any
class or classes thereof) held by them respectively and a record of all
transfers thereof. No share certificates shall be issued by the Trust
except as the Trustees may otherwise authorize, and the persons indicated as
shareholders in such register 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
officer or other agent of the Trustees as shall keep the said register for
entry thereon.
Section 2.04 Transfer of Shares. Except as otherwise provided by the
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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 and such evidence of the genuineness of
such execution and authorization and of such other matters as may be required
by the Trustees. Upon such delivery the transfer shall be recorded on the
register of the Trust. Until such record is made, the Shareholder of record
shall be deemed to be the holder of such Shares for all purposes hereunder
and neither the Trustees nor the Trust, nor any transfer agent or registrar
nor any officer, employee or agent of the Trust shall be affected by any
notice of the proposed transfer.
Section 2.05 Treasury Shares. 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.
Section 2.06 Establishment of Series and Classes. The Trust created
hereby shall consist initially of one Series which is specified by name on
Schedule A attached hereto, and such Series shall initially consist of such
classes of Shares as are designated on Schedule A. Such initial Series (or
class thereof, as applicable) shall have the investment objectives, purposes
and policies, and such relative rights, powers, duties and other attributes,
as are specified in the Registration Statement and related prospectus and
statement of additional information approved by the Trustees in connection
with the registration and offer of Shares of such Series (or class thereof).
Distinct records shall be maintained by the Trust for each Series and the
assets and liabilities associated with the Series shall be held and
accounted for separately from the assets and liabilities 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, to establish and designate and to change in any
manner any Series or any classes of initial or additional Series and to fix
such preferences, voting powers, rights and privileges of such Series or
classes thereof as the Trustees may from time to time determine, to divide
or combine the Shares or any Series or classes thereof into a greater or
lesser number, to classify or reclassify any issued Shares or any Series or
classes thereof into one or more Series or classes of Shares, and to take
such other action with respect to the Shares as the Trustees may deem
desirable. The establishment and designation of any Series (other than
those established pursuant to the first sentence of this Section 2.06) 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, but 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 proportionate share of all
distributions made with respect to such Series, based upon the number of
full and fractional Shares of the Series held. Upon redemption of his
Shares, such Shareholder shall be paid solely out of the funds and property
of such Series of the Trust.
Section 2.07 Investment in the Trust. The Trustees shall accept
investments in any Series 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
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Section 9.03 hereof. Investments in a Series shall be credited to each
Shareholder's account in the form of full and fractional Shares at the net
asset value per Share next determined after the investment is received or
accepted as may be determined by the Trustees; provided, however, that the
Trustees may, in their sole discretion, (a) fix minimum amounts for initial
and subsequent investments or (b) impose a sales charge upon investments in
such manner and at such time determined by the Trustees.
Section 2.08 Assets and Liabilities of Series. All consideration
received by the Trust for the issue or sale of Shares of a particular Series,
together with all assets in which such consideration is invested or
reinvested, all income, earnings, profits, and proceeds thereof including
any proceeds derived from the sale, exchange or liquidation of such assets,
and any funds or payments derived from any reinvestment of such proceeds in
whatever form the same may be, shall be held and accounted for separately
from the other assets of the Trust and of every other Series and may be
referred to herein as "assets belonging to" that Series. The assets
belonging to a particular Series shall belong to that Series for all
purposes, and to no other Series, and shall be subject only to the rights of
creditors of that Series. In addition, any assets, income, earnings,
profits or funds, or payments and proceeds with respect thereto, which are
not readily identifiable as belonging to any particular Series shall be
allocated by the Trustees between and among one or more of the Series in
such manner as the Trustees, in their sole discretion, deem fair and
equitable. Each such allocation shall be conclusive and binding upon the
Shareholders of all Series for all purposes, and such assets, income,
earnings, profits or funds, or payments and proceeds with respect thereto
shall be assets belonging to that Series. The assets belonging to a
particular Series shall be so recorded upon the books of the Trust, and
shall be held by the Trustees in trust for the benefit of the holders of
Shares of that Series. The assets belonging to each particular Series shall
be charged with the liabilities of that Series and all expenses, costs,
charges and reserves attributable to that Series. Any general liabilities,
expenses, costs, charges or reserves of the Trust which are not readily
identifiable as belonging to any particular Series shall be allocated and
charged by the Trustees between or among any one or more of the Series in
such manner as the Trustees in their sole discretion deem fair and equitable.
Each such allocation shall be conclusive and binding upon the Shareholders
of all Series for all purposes. Without limitation of the foregoing
provisions of this Section 2.08, but subject to the right of the Trustees in
their discretion to allocate general liabilities, expenses, costs, changes
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, 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.
Section 2.09 No Preemptive Rights. Shareholders shall have no preemptive
or other right to subscribe to any additional Shares or other securities
issued by the Trust or the Trustees, whether of the same or other Series.
Section 2.10 No Personal Liability of Shareholder. No Shareholder shall
be personally liable for the debts, liabilities, obligation and expenses
incurred by, contracted for, or otherwise existing with respect to, the
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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
understanding issued by or on behalf of the Trust or the Trustees relating
to the Trust or to a Series shall include a recitation limiting the
obligation represented thereby to the Trust or to one or more Series and
its or their assets (but the omission of such a recitation shall not operate
to bind any Shareholder or Trustee of the Trust).
Section 2.11 Assent to Trust Instrument. Every Shareholder, by virtue
of having purchased a Share shall become a Shareholder and shall be held to
have expressly assented and agreed to be bound by the terms hereof.
ARTICLE III
THE TRUSTEES
Section 3.01 Management of the Trust. The Trustees shall have
exclusive and absolute control over the Trust Property and over the business
of the Trust to the same extent as if the Trustees were the sole owners of
the Trust Property and business in their own right, but with such powers of
delegation as may be permitted by this Trust Instrument. The Trustees shall
have power to conduct the business of the Trust and carry on its operations
in any and all of its branches and maintain offices both within and without
the State of Delaware, in any and all states of the United States of America,
in the District of Columbia, in any and all commonwealths, territories,
dependencies, colonies, or possessions of the United States of America, and
in any foreign jurisdiction and to do all such other things and execute all
such instruments as they deem necessary, proper or desirable in order to
promote the interests of the Trust although such things are not herein
specifically mentioned. Any determination as to what is in the interests of
the Trust made by the Trustees in good faith shall be conclusive. In
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 and except as otherwise provided
in Section 3.02 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. Any Shareholder meeting held for such purpose 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
in accordance with the provisions of the 1940 Act.
Section 3.02 Initial Trustees. The initial Trustees shall be the
persons named herein. The initial Trustees shall appoint additional or
substitute Trustees at an organizational meeting of Trustees. Thereafter,
Trustees shall be appointed or elected as provided in Sections 3.01 and 3.04
of this Article III.
Section 3.03 Term of Office. 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
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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 illness 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 of
the Trust.
Section 3.04 Vacancies and Appointments. In case of a Trustee's
declination to serve, death, resignation, retirement, removal, physical or
mental incapacity by reason of illness, disease or otherwise, or if a Trustee
is otherwise unable to serve, or if there is 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 a vacancy, the remaining
Trustees shall fill such vacancy by appointing such other person as they in
their discretion see fit, to the extent consistent with the limitations
provided 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 person appointed as a Trustee 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 such person shall be deemed a Trustee.
Section 3.05 Temporary Absence. Any Trustee may, by power of attorney,
delegate his power for a period not exceeding six months at any time to any
other Trustee or Trustees, provided that in no case shall fewer than two
Trustees personally exercise the other powers hereunder except as herein
otherwise expressly provided.
Section 3.06 Number of Trustees. From and after the date of appointment
of Trustees by the initial Trustees named herein, the number of Trustees
shall be at least three (3), 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).
Section 3.07 Effect of Ending of a Trustee's Service. The declination
to serve, death, resignation, retirement, removal, incapacity, or inability
of the Trustees, or any one of them, shall not operate to terminate the Trust
or to revoke any existing agency created pursuant to the terms of this Trust
Instrument.
Section 3.08 Ownership of Assets of the Trust. 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 based
upon the number of Shares owned. The Shares shall be personal property
giving only the rights specifically set forth in this Trust Instrument.
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ARTICLE IV
POWERS OF THE TRUSTEES
Section 4.01 Powers. The Trustees in all instances shall act as
principals, and are and shall be free from the control of the Shareholders.
The Trustees shall have full power and authority to do any and all acts and
to make and execute any and all contracts and instruments that they may
consider necessary or appropriate in connection with the management of the
Trust. The Trustees shall 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 the power and authority:
(a) To invest and reinvest cash and other property (including investment,
notwithstanding any other provision hereof, of all of the assets of any
Series in a single open-end investment company, including investment by means
of transfer of such assets in exchange for an interest or interests in such
investment company), and to hold cash or other property of the Trust
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 (with power of
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subdelegation) to any officers or employees 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 XI, subsection 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 provided herein;
(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
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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 as objects and powers, and the
foregoing enumeration of specific powers shall not be held to limit or
restrict in any manner the general powers of the Trustees. Any action by
one or more of the Trustees in their capacity as such hereunder shall be
deemed an action on behalf of the Trust or the applicable Series, and not
an action in an individual capacity.
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 the
application of any payments made or property transferred to the Trustees or
upon their order.
Section 4.02 Issuance and Repurchase of Shares. 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.
Section 4.03 Trustees and Officers as Shareholders. Any Trustee,
officer or other agent of the Trust may acquire, own and dispose of Shares
to the same extent as if 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.
Section 4.04 Action by the Trustees. In any action taken by the
Trustees hereunder, unless otherwise specified, 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 of the Board of 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 person calling the meeting to each Trustee by
telephone, facsimile or other electronic mechanism 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
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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 facsimile or other similar electronic
mechanism.
Section 4.05 Chairman of the Trustees. The Trustees shall appoint one
of their number to be Chairman of the Board of Trustees. The Chairman shall
preside at all meetings of the Trustees, 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.
Section 4.06 Principal Transactions. Except to the extent prohibited by
applicable law, the Trustees may, on behalf of the Trust, buy any securities
from or sell any securities to, or lend any assets of the Trust to, any
Trustee or officer of the Trust or any firm of which any such Trustee or
officer is a member acting as principal, or have any such dealings with any
investment adviser, administrator, 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,
administrator, distributor, transfer agent, dividend disbursing agent,
custodian or in any other capacity upon customary terms.
ARTICLE V
EXPENSES OF THE TRUST
Subject to the provisions of Article II, Section 2.08 hereof, the
Trustees are authorized to pay or cause to be paid from the Trust estate or
the assets belonging to the appropriate Series, expenses and disbursements,
including, without limitation, interest charges, taxes, brokerage fees and
commissions; expenses of issue, repurchase and redemption of Shares; certain
insurance premiums; applicable fees, interest charges and expenses of third
parties, including the Trust's investment advisers, managers, administrators,
distributors, custodian, transfer agent and fund accountant; fees of pricing,
interest, dividend, credit and other reporting services; costs of membership
in trade associations; telecommunications expenses; funds transmission
expenses; auditing, legal and compliance expenses; costs of forming the
Trust and maintaining its existence; costs of preparing and printing the
Trust's prospectuses, statements of additional information and shareholder
reports and delivering them to existing Shareholders; expenses of meetings
of Shareholders and proxy solicitations therefor; costs of maintaining books
and accounts; costs of reproduction, stationery and supplies; fees and
expenses of the Trust's trustees; compensation of the Trust's officers and
employees and costs of other personnel performing services for the Trust;
costs of Trustee meetings; Commission registration fees and related expenses;
state or foreign securities laws registration fees and related expenses 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.
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ARTICLE VI
INVESTMENT ADVISER, PRINCIPAL UNDERWRITER,
ADMINISTRATOR AND TRANSFER AGENT
Section 6.01 Investment Adviser. (a) The Trustees may in their
discretion, from time to time, enter into an investment advisory 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 investment advisory, statistical and research facilities
and services and such other facilities and services, if any, all upon such
terms and conditions (including any Shareholder vote) that may be required
under the 1940 Act, as may be prescribed in the Bylaws, or as the Trustees
may in their discretion determine (such terms and conditions not to be
inconsistent with the provisions of this Trust Instrument or of the Bylaws).
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.
(b) The Trustees may authorize 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 subadviser (such terms
and conditions not to be inconsistent with the provisions of this Trust
Instrument or of the Bylaws). Any reference in this Trust Instrument to the
investment adviser shall be deemed to include such sub-advisers, unless the
context otherwise requires; provided that no Shareholder approval shall be
required with respect to any sub-adviser unless required under the 1940 Act
or other law, contract or order applicable to the Trust.
Section 6.02 Principal Underwriter. The Trustees may in their
discretion from time to time enter into an exclusive or non-exclusive
underwriting contract or contracts providing for the sale of Shares, whereby
the Trust may either agree to sell Shares to the other party to the contract
or appoint such other party its sales agent for such Shares. In either case,
the contract shall be on such terms and conditions as may be prescribed in
the Bylaws and as the Trustees may in their discretion determine (such terms
and conditions not to be inconsistent with the provisions of this Trust
Instrument 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.
Section 6.03 Administration. The Trustees may in their discretion from
time to time enter into one or more management or administrative contracts
whereby the other party or parties shall undertake to furnish the Trustees
with management or administrative services. The contract or contracts shall
be on such terms and conditions as may be prescribed in the Bylaws and as
the Trustees may in their discretion determine (such terms and conditions
not to be inconsistent with the provisions of this Trust Instrument or of
the Bylaws).
Section 6.04 Transfer Agent. The Trustees may in their discretion from
time to time enter into one or more transfer agency and shareholder service
contracts whereby the other party or parties shall undertake to furnish the
Trustees with transfer agency and shareholder services. The contract or
contracts shall be on such terms and conditions as may be prescribed in the
Bylaws and as the Trustees may in their discretion determine (such terms and
conditions not to be inconsistent with the provisions of this Trust
Instrument or of the Bylaws).
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Section 6.05 Parties to Contract. Any contract of the character
described in Sections 6.01, 6.02, 6.03 and 6.04 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 corporation, firm, partnership, trust, or
association) may be the other party to contracts entered into pursuant to
Sections 6.01, 6.02, 6.03 and 6.04 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 6.05.
Section 6.06 Provisions and Amendments. Any contract entered into
pursuant to Section 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, if applicable,
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
Section 7.01 Voting Powers. (a) The Shareholders shall have power to
vote only (a) for the election of Trustees to the extent provided in Article
III, Section 3.01 hereof, (b) for the removal of Trustees to the extent
provided in Article III, Section 3.03(d) hereof, (c) with respect to any
investment advisory contract to the extent provided in Article VI, Section
6.01 hereof, (d) with respect to an amendment of this Trust Instrument, to
the extent provided in Article XI, Section 11.08, and (e) with respect to
such additional matters relating to the Trust as may be required by law, by
this Trust Instrument, or any registration of the Trust with the Commission
or any State, or as the Trustees may consider desirable.
(b) Notwithstanding paragraph (a) of this Section 7.01 or any other
provision of this Trust Instrument (including the Bylaws) which would by its
terms provide for or require a vote of Shareholders, the Trustees may take
action without a Shareholder vote if (i) the Trustees shall have obtained an
opinion of counsel that a vote or approval of such action by Shareholders is
not required under (A) the 1940 Act or any other applicable laws, or (B) any
registrations, undertakings or agreements of the Trust known to such counsel,
and the Trustees determine in good faith that the taking of such action
without a Shareholder vote would be consistent with the best interests of the
Shareholders.
(c) On any matter submitted to a vote of the Shareholders, all Shares
shall be voted separately by individual Series, and whenever the Trustees
determine that the matter affects only certain Series, may be submitted for
a vote by only such Series, except (i) when required by the 1940 Act, Shares
shall be voted in the aggregate and not by individual Series; and (ii) when
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the Trustees have determined that the matter affects the interests of more
than one Series and that voting by shareholders of all Series would be
consistent with the 1940 Act, then the Shareholders of all such Series shall
be entitled to vote thereon (either by individual Series or by Shares voted
in the aggregate, as the Trustees in their discretion may determine). The
Trustees may also determine that a matter affects only the interests of one
or more classes of a Series, in which case (or if required under the 1940
Act) 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, 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.
Section 7.02 Meetings. Meetings of Shareholders may be held within or
without the State of Delaware. Special meetings of the Shareholders of any
Series for the purpose of voting upon the removal of a Trustee or Trustees
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 of the Trust 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 10 days prior to any such meeting.
Notwithstanding anything to the contrary in this Section 7.02, the Trustees
shall not be required to call a special meeting of the Shareholders of any
Series or to provide Shareholders seeking the opportunity of furnishing the
materials to other Shareholders with a view to obtaining signatures on a
request for a meeting except to the extent required under the 1940 Act.
Section 7.03 Quorum and Required Vote. One-third of Shares outstanding
and entitled to vote in person or by proxy as of the record date for a
Shareholders' meeting shall be a quorum for the transaction of business at
such 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 meeting of
Shareholders may be adjourned from time to time by a majority of the votes
properly cast upon the question of adjourning a meeting to another date
and time, whether or not a quorum is present. 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 at a
meeting at which a quorum is present 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 voted in person or by proxy at a
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meeting of that Series (or class), at which a quorum is present shall decide
that matter insofar as that Series (or class) is concerned. Shareholders may
act by unanimous written consent, to the extent not inconsistent with the
1940 Act, and any such actions taken by a Series (or class) may be consented
to unanimously in writing by Shareholders of that Series (or class).
ARTICLE VIII
CUSTODIAN
Section 8.01 Appointment and Duties. The Trustees shall employ a bank,
a company that is a member of a national securities exchange, or a trust
company, that in each case shall have capital, surplus and undivided profits
of at least twenty million dollars ($20,000,000) and that is a member of the
Depository Trust Company (or such other person or entity as may be permitted
to act as custodian of the Trust's assets under the 1940 Act) 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: (a) to hold the securities owned by the Trust and deliver the same
upon written order or oral order confirmed in writing; (b) 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 (c) to
disburse such funds upon orders or vouchers.
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 twenty million
dollars ($20,000,000) and that is a member of the Depository Trust Company
or such other person or entity as may be permitted by the Commission or is
otherwise able to act as custodian of the Trust's assets in accordance with
the 1940 Act.
Section 8.02 Central Certificate System. Subject to the 1940 Act and
such other 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, sub-custodians or other agents.
ARTICLE IX
DISTRIBUTIONS AND REDEMPTIONS
Section 9.01 Distributions.
(a) The Trustees may from time to time declare and pay dividends or other
distributions with respect to any Series and/or class of a 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
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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 share dividend to the
Shareholders of a particular Series, or class thereof, as of the record date
of that Series fixed as provided in Subsection 9.01(b) hereof.
Section 9.02 Redemptions. 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, subject to Section 9.04
hereof, 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 such Shares to be redeemed, as aforesaid, in cash or property
from the assets of that Series and, subject to Section 9.04 hereof, 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 and unless otherwise
determined by the Trustees shares shall become Treasury shares and may be
re-issued from time to time.
Section 9.03 Determination of Net Asset Value and Valuation of Portfolio
Assets. 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. The Trustees may delegate any of
their powers and duties under this Section 9.03 with respect to valuation of
assets and liabilities. 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. 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.
The Trustees shall not be required to adopt, but may at any time adopt,
discontinue or amend a practice of seeking to maintain the Net Asset Value
per Share of the Series at a constant amount. 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 (a) to offset each
Shareholder's pro rata share of such negative amount from the accrued
dividend account of such Shareholder, (b) 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 that number of full and fractional
Shares which represents the amount of such excess negative net income, (c) 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; (d) to combine the methods described in clauses (a) and
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(b) and (c) of this sentence; or (e) 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.
In the event that any Series is 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 the 1940 Act and other applicable law,
may be equally applied to each such class.
Section 9.04 Suspension of the Right of Redemption. The Trustees may
declare a suspension of the right of redemption or postpone the date of
payment if 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.
Section 9.05 Redemption of Shares in Order to Qualify as Regulated
Investment Company. 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 (a) 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 (b) to refuse to transfer
or issue Shares to any person whose acquisition of 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 requirements of any
taxing authority or this Section 9.05.
Section 9.06 Redemption of Small Accounts. Subject to the requirements
of the 1940 Act, the Trustees may cause the Trust to redeem, at the price and
in the manner provided in this Article IX, Shares of any Series or class of a
Series held by any Shareholder (i) if such Shareholder is no longer qualified
to hold such Shares in accordance with such qualifications as may be
established by the Trustees, (ii) if the net asset value of such Shares is
below $500 or such other amount as determined by the Trustees or (iii) if
otherwise deemed by the Trustees to be in the best interest of the Trust or
that particular Series (or class) as a whole.
ARTICLE X
LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 10.01 Limitation of Liability. Neither a Trustee nor an officer
of the Trust, when acting in such capacity, shall be personally liable to any
person other than the Trust or the Shareholders for any act, omission or
obligation of the Trust, any Trustee or any officer of the Trust. Neither a
Trustee nor an officer of the Trust shall be liable for any act or omission
or any conduct whatsoever in his capacity as Trustee or as an officer of the
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Trust, provided that nothing contained herein or in the Delaware Act shall
protect any Trustee or any officer of the Trust 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 or officer of the
Trust hereunder.
Section 10.02 Indemnification.
(a) Subject to the exceptions and limitations contained in Subsection
10.02(b):
(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).
(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 Subsection (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 (i) such Covered Person shall have provided appropriate
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security for such undertaking, (ii) the Trust is insured against losses
arising out of any such advance payments or (iii) 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.
Section 10.03 Shareholders. In case any Shareholder of any Series shall
be held to be personally liable solely by reason of his being or having been
a Shareholder of such Series and not because of his acts or omissions or for
some other reason, the Shareholder or former Shareholder (or his heirs,
executors, administrators or other legal representatives, or, in the case of
a corporation or other entity, its corporate or other general successor)
shall be entitled out of the assets belonging to the applicable Series to be
held harmless from and indemnified against all loss and expense arising from
such liability. The Trust, on behalf of the affected Series, shall, upon
request by the Shareholder, assume the defense of any claim made against the
Shareholder for any act or obligation of the Series and satisfy any judgment
thereon from the assets of the Series.
ARTICLE XI
MISCELLANEOUS
Section 11.01 Trust Not A Partnership. It is hereby expressly declared
that a trust and not a partnership is created hereby. No Trustee hereunder
shall have any power to bind personally either the Trust 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 the
Trust or a Shareholder 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.
Section 11.02 Trustee's Good Faith Action, Expert Advice, No Bond or
Surety. The exercise by the Trustees or the officers of the Trust of their
powers and discretion 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 and the officers of the Trust shall not be liable
for errors of judgment or mistakes of fact or law. The Trustees and the
officers of the Trust 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 and the officers
of the Trust shall not be required to give any bond as such, nor any surety
if a bond is obtained.
Section 11.03 Establishment of Record Dates. 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,
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or to receive such allotment or rights, or to exercise such rights, as the
case may be, notwithstanding any transfer of any Shares on the books of the
Trust after any such record date fixed as aforesaid.
Section 11.04 Termination of Trust.
(a) This Trust shall continue without limitation of time but subject to
the provisions of Subsection 11.04(b).
(b) The Trustees may, subject to any necessary Shareholder, Trustee, and
regulatory approvals:
(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;
(ii) enter into a plan of liquidation in order to terminate and
liquidate any Series (or class) of the Trust, or the Trust; or
(iii) 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 liabilities by 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 the affected Series,
based upon the ratio that each Shareholder's Shares bears to the number of
Shares of such Series (or class) then outstanding.
(c) Upon completion of the distribution of the remaining proceeds or the
remaining assets as provided in Subsection 11.04(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.
Section 11.05 Reorganization.
(a) Notwithstanding anything else herein, the Trustees, in order to
change the form or jurisdiction of organization of the Trust, may (i) cause
the Trust to merge or consolidate with or into one or more trusts,
partnerships (general or limited), associations or corporations so long as
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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.
(b) The Trustees may, subject to a vote of a majority of the Trustees and
any shareholder vote required under the 1940 Act, if any, cause the Trust to
merge or consolidate with or into one or more Trusts, partnerships (general
or limited), associations, limited liability companies or corporations
formed, organized or existing under the laws of a state, commonwealth,
possession or colony of the United States.
(c) Any agreement of merger or consolidation or certificate of merger or
consolidation may be signed by a majority of Trustees and facsimile
signatures conveyed by electronic or telecommunication means shall be valid.
(d) 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 paragraph (a) or (b) 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.
Section 11.06 Filing of Copies, References, Headings. The original or
a copy of this Trust Instrument and of each amendment hereof or Trust
Instrument supplemental hereto shall be kept at the office of the Trust
where it may be inspected by any Shareholder. Anyone dealing with the Trust
may rely on a certificate by an officer or Trustee of the Trust as to whether
or not any such amendments or supplements have been made and as to any
matters in connection with the Trust hereunder, and with the same effect as
if it were the original, may rely on a copy certified by an officer or
Trustee of the Trust to be a copy of this Trust Instrument or of any such
amendment or supplemental Trust Instrument. In this Trust Instrument or in
any such amendment or supplemental Trust Instrument, references to this Trust
Instrument, and all expressions such as "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 such as "his," "he"
and "him," shall be deemed to include the feminine and neuter, as well as
masculine, genders. Headings are placed herein for convenience of reference
only and in case of any conflict, the text of this Trust Instrument, rather
than the headings, shall control. This Trust Instrument may be executed in
any number of counterparts each of which shall be deemed an original.
Section 11.07 Applicable Law. The trust set forth in this instrument is
made in the State of Delaware, and the Trust and this Trust Instrument, and
the rights and obligations of the Trustees and Shareholders hereunder, are to
be governed by and construed and administered according to the Delaware 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 or principal, (vi) restrictions or limitations on the permissible
nature, amount or concentration of trust investments or requirements relating
to the titling, storage or other manner of holding of trust assets, or
(vii) the establishment of fiduciary or other standards of responsibilities
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or limitations on the acts or powers of trustees, which are inconsistent with
the limitations or liabilities or authorities and powers of the Trustees set
forth or referenced in this Trust Instrument. The Trust shall be of the type
commonly called a "business trust," and without limiting the provisions
hereof, the Trust may exercise all powers which are ordinarily exercised by
such a trust under Delaware law. The Trust specifically reserves the right
to exercise any of the powers or privileges afforded to trusts or actions
that may be engaged in by trusts under the Delaware Act, and the absence of a
specific reference herein to any such power, privilege or action shall not
imply that the Trust may not exercise such power or privilege or take
such actions.
Section 11.08 Amendments. Except as specifically provided herein, the
Trustees may, without shareholder vote, amend or otherwise supplement this
Trust Instrument by making an amendment, a Trust Instrument supplemental
hereto or an amended and restated trust instrument. Shareholders shall have
the right to vote (a) on any amendment which would affect their rights to
vote granted in Section 7.01 of Article VII hereof, (b) on any amendment to
this Section 11.08, (c) on any amendment as may be required by law or by the
Trust's registration statement filed with the Commission and (d) 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 any other
provision of this Trust Instrument, any amendment to Article X hereof shall
not limit the rights to indemnification or insurance provided therein with
respect to action or omission of Covered Persons prior to such amendment.
Section 11.09 Fiscal Year. The fiscal year of the Trust shall end on a
specified date as set forth in the Bylaws, provided, however, that the
Trustees may change the fiscal year of the Trust.
Section 11.10 Name Reservation. The Trustees on behalf of the Trust
acknowledge that Renaissance Capital Corporation has licensed to the Trust
the non-exclusive right to use the word "Renaissance" as part of the name of
the Trust, and has reserved the right to grant the non-exclusive use of the
word "Renaissance" or any derivative thereof to any other party. In
addition, Renaissance Capital Corporation reserves the right to grant the
non-exclusive use of the word "Renaissance" to, and to withdraw such right
from, any other business or other enterprise. Renaissance Capital
Corporation reserves the right to withdraw from the Trust the right to use
said word "Renaissance" and will withdraw such right if the Trust ceases to
employ, for any reason, Renaissance Capital Corporation, an affiliate or any
successor as adviser of the Trust.
Section 11.11 Provisions in Conflict With Law. The provisions of this
Trust Instrument are severable, and if the Trustees shall determine, with the
advice of counsel, that any of such provisions is in conflict with the 1940
Act, the regulated investment company provisions of the Internal Revenue Code
or with other applicable laws and regulations, the conflicting provision
shall be deemed never to have constituted a part of this Trust Instrument;
provided, however, that such determination shall not affect any of the
remaining provisions of this Trust Instrument or render invalid or
improper any action taken or omitted prior to such determination. If any
provision of this Trust Instrument shall be held invalid or unenforceable in
any jurisdiction, such invalidity or unenforceability shall attach only to
such provision in such jurisdiction and shall not in any matter affect such
provision in any other jurisdiction or any other provision of this Trust
Instrument in any jurisdiction.
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IN WITNESS WHEREOF, the undersigned, being the initial Trustees of the
Trust, have executed this instrument as of date first written above.
/s/Linda R. Killian
__________________
Linda R. Killian, as Trustee
and not individually
/s/Kathleen Shelton Smith
__________________
Kathleen Shelton Smith,
as Trustee and not
individually
/s/William K. Smith
__________________
William K. Smith, as Trustee
and not individually
RENAISSANCE FUNDS
BYLAWS
February 3, 1997
<PAGE>
RENAISSANCE FUNDS
BYLAWS
These Bylaws of Renaissance Funds (the "Trust"), a Delaware business
trust, are subject to the Trust Instrument of the Trust, dated February 3,
1997, 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 Greenwich,
Connecticut 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
Section 2.01 Officers. The officers of the Trust shall be a President,
a Treasurer, a Secretary, and such other officers as the Trustees may from
time to time elect. 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.
Section 2.02 Election of Officers. 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
3.13 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.
Section 2.03 Resignations. Any officer of the Trust may resign,
notwithstanding Section 2.02 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
Section 3.01 Management of the Trust. 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
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responsibilities, so far as such powers are not inconsistent with the laws of
the State of Delaware, the Trust Instrument or with these Bylaws.
Section 3.02 Executive And Other Committees. The Trustees may elect from
their own number an executive committee, which shall have any or all of the
powers of the Board of Trustees while the Board of Trustees is 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.
Section 3.03 Compensation. 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.
Section 3.04 Chairman Of The Trustees. The Trustees may 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.
Section 3.05 President. 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, process,
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 advisors 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 time
designate.
Section 3.06 Treasurer. The Treasurer shall be the principal financial
and accounting officer of the Trust. He shall deliver all funds and
securities of the Trust which may come into his hands to such company as the
Trustees shall employ as Custodian in accordance with the Trust Instrument
and applicable provisions of law. He shall make annual reports regarding
the business and condition of the Trust, which reports shall be preserved in
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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.
Section 3.07 Secretary. The Secretary shall record in books kept for
the purpose all votes and proceedings of the Trustees and the Shareholders
at their respective meetings. He shall have the custody of the seal of the
Trust. The Secretary shall perform such additional duties as the Trustees
may from time to time designate.
Section 3.08 Vice President. 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.
Section 3.09 Assistant Treasurer. Any Assistant Treasurer of the Trust
shall perform such duties as the Trustees or the Treasurer may from time to
time designate, and, in the absence of the Treasurer, the senior Assistant
Treasurer, present and able to act, may perform all the duties of the
Treasurer and, when so acting, shall have all the powers of and be subject
to all the restrictions upon the Treasurer.
Section 3.10 Assistant Secretary. Any Assistant Secretary of the Trust
shall perform such duties as the Trustees or the Secretary may from time to
time designate, and, in the absence of the Secretary, the senior Assistant
Secretary, present and able to act, may perform all the duties of the
Secretary and, when so acting, shall have all the powers of and be subject
to all the restrictions upon the Secretary.
Section 3.11 Subordinate Officers. The Trustees from time to time may
appoint such 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.
Section 3.12 Surety Bonds. The Trustees may require any officer or agent
of the Trust to execute a bond (including without limitation, any bond
required by the 1940 Act and the rules and regulations of the 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
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Trust including responsibility for negligence and for the accounting of any
of the Trust's property, funds or securities that may come into his hands.
Section 3.13 Removal. Any officer may be removed from office, with or
without cause, 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 3.10 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.
Section 3.14 Remuneration. The salaries or other compensation, if any,
of the officers of the Trust shall be fixed from time to time by resolution
of the Trustees.
ARTICLE IV
SHAREHOLDERS' MEETINGS
Section 4.01 Special Meetings. A special meeting of the shareholders
shall be called by the Secretary whenever (a) ordered by the Trustees or
(b) requested in writing by the holder or holders of at least 10% of the
Outstanding Shares entitled to vote for the purpose of voting upon the
question of removal of Trustees. 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 classes shall be called and only the
shareholders of such one or more Series or classes shall be entitled to
notice of and to vote at such meeting.
Section 4.02 Notices. Except as provided in Section 4.01, 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 ten (10)
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 records of such meeting, or to any Shareholder
who shall attend such meeting in person or by proxy. Notice of adjournment
of a Shareholder's meeting to another time or place need not be given, if
such time and place are announced at the meeting or reasonable notice is
given to persons present at the meeting and the adjourned meeting is held
within a reasonable time after the date set for the original meeting.
Section 4.03 Voting-Proxies. Subject to the provisions of the Trust
Instrument, shareholders entitled to vote may vote either in person or by
proxy, provided that either (a) an instrument authorizing such proxy to act
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is executed by the Shareholder in writing and dated not more than eleven (11)
months before the meeting, unless the instrument specifically provides for a
longer period or (b) the Trustees adopt by resolution an electronic,
telephonic, computerized or other alternative to execution of a written
instrument authorizing the proxy to act, which authorization is received not
more than eleven (11) months before the meeting. Proxies shall be delivered
to the Secretary of the Trust or other person responsible for recording the
proceedings before being voted. A proxy with respect to shares held in the
name of two or more persons shall be valid if executed by one of them unless
at or prior to exercise of such proxy the Trust receives a specific written
notice from any one of them. Unless otherwise specifically limited by their
terms, proxies shall entitle the holder thereof to vote at any adjournment
of a meeting. A proxy purporting to be exercised by or on behalf of a
Shareholder shall be deemed valid unless challenged at or prior to its
exercise and the burden of proving invalidity shall rest on the challenger.
At all meetings of the Shareholders, unless the voting is conducted by
inspectors, all questions relating to the qualifications of voters, the
validity of proxies, and the 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 Bylaws or such Trust Instrument may be
amended or supplemented from time to time, all matters relating to the
giving, voting or validity of proxies shall be governed by the General
Corporation Law of the State of Delaware relating to proxies, and judicial
interpretations thereunder, as if the Trust were a Delaware corporation and
the Shareholders were shareholders of a Delaware corporation.
Section 4.04 Place of Meeting. 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.
Section 4.05 Action Without a Meeting. 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
Shareholders held at the principal place of business of the Trust.
ARTICLE V
TRUSTEES' MEETINGS
Section 5.01 Special Meetings. 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.
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Section 5.02 Regular Meetings. 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.
Section 5.03 Quorum. A majority of the Trustees shall constitute a
quorum for the transaction of business at any meeting and an action of a
majority of the Trustees in attendance constituting a quorum shall
constitute action of the Trustees.
Section 5.04 Notice. Except as otherwise provided, notice of any special
meeting of the Trustees shall be given by the party calling the meeting to
each of the Trustees, 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.
Section 5.05 Place of Meeting. 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.
Section 5.06 Special Action. 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 records of such meeting, the acts of such meeting shall be valid as
if such meeting had been regularly held.
Section 5.07 Action by Consent. 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.
Section 5.08 Participation in Meetings By Conference Telephone. Except
when presence in person is required at a meeting under the 1940 Act or other
applicable laws, 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.
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ARTICLE VI
FISCAL YEAR; REGISTERED OFFICE AND
REGISTERED AGENT
Section 6.01 Fiscal Year. The fiscal year of the Trust and of each
Series of the Trust shall end on ________ of each year; provided that the
last fiscal year of the Trust and each Series shall end on the date on which
the Trust or each such Series is terminated, as applicable; and further
provided that the Trustees by resolution and without a Shareholder vote may
at any time change the fiscal year of the Trust and of any or all Series
(and the Trust and each Series may have different fiscal years as determined
by the Trustees).
Section 6.02 Registered Office and Registered Agent. The initial
registered office of the Trust in the State of Delaware shall be located at
1201 North Market Street, P.O. Box 1347, Wilmington, Delaware 19899-1347.
The registered agent of the Trust at such location shall be Delaware
Corporation Organizers, Inc.; provided that the Trustees by resolution and
without a Shareholder vote may at any time change the Trust's registered
office or its registered agent, or both.
ARTICLE VII
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 VIII
INSURANCE OF OFFICERS, TRUSTEES, AND
EMPLOYEES
The Trust may purchase and maintain insurance on behalf of any Covered
Person (as defined in Section 10.02 of the Trust Instrument) 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 claimed 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 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 his office.
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ARTICLE IX
SEAL
The seal of the Trust shall be circular in form bearing the inscription:
"RENAISSANCE FUNDS, FEBRUARY 3, 1997
THE STATE OF DELAWARE"
ARTICLE X
AMENDMENTS
These Bylaws may be amended from time to time by action of the Trustees,
without requirement for the vote or approval of shareholders.
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TABLE OF CONTENTS
ARTICLE I
PRINCIPAL OFFICE..........................................................1
ARTICLE II
OFFICERS AND THEIR ELECTION...............................................1
Section 2.01 Officers................................................1
Section 2.02 Election of Officers....................................1
Section 2.03 Resignations............................................1
ARTICLE III
POWERS AND DUTIES OF OFFICERS AND TRUSTEES................................1
Section 3.01 Management of the Trust.................................1
Section 3.02 Executive and Other Committees..........................2
Section 3.03 Compensation............................................2
Section 3.04 Chairman of the Trustees................................2
Section 3.05 President...............................................2
Section 3.06 Treasurer...............................................2
Section 3.07 Secretary...............................................3
Section 3.08 Vice President..........................................3
Section 3.09 Assitant Treasurer......................................3
Section 3.10 Assistant Secretary.....................................3
Section 3.11 Subordinate Officers....................................3
Section 3.12 Surety Bonds............................................3
Section 3.13 Removal.................................................4
Section 3.14 Remuneration............................................4
ARTICLE IV
SHAREHOLDERS' MEETINGS....................................................4
Section 4.01 Special Meetings........................................4
Section 4.02 Notices.................................................4
Section 4.03 Voting-Proxies..........................................5
Section 4.04 Place of Meeting........................................5
Section 4.05 Action Without a Meeting................................5
ARTICLE V
TRUSTEES' MEETINGS........................................................6
Section 5.01 Special Meetings........................................6
Section 5.02 Regular Meetings........................................6
Section 5.03 Quorom..................................................6
Section 5.04 Notice..................................................6
Section 5.05 Place of Meeting........................................6
Section 5.06 Special Action..........................................6
Section 5.07 Action by Consent.......................................6
Section 5.08 Participation in Meetings by Conference Telephone.......6
ARTICLE VI
FISCAL YEAR; REGISTERED OFFICE AND REGISTERED AGENT.......................7
Section 6.01 Fiscal Year.............................................7
Section 6.02 Registered Office and Registered Agent..................7
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ARTICLE VII
INSPECTION OF THE BOOKS...................................................7
ARTICLE VIII
INSURANCE OF OFFICERS, TRUSTEES, AND EMPLOYEES............................7
ARTICLE IX
SEAL......................................................................8
ARTICLE X
AMENDMENTS................................................................8
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New York, New York
February 5, 1997
Renaissance Funds
325 Greenwich Avenue
Greenwich, Connecticut 06830
Re: Renaisance Funds
Gentlemen:
We hereby consent to the reference to our firm as Counsel in this
Registration Statement on Form N-1A.
Very truly yours,
/s/Kramer, Levin, Naftalis & Frankel
