File No. 333-__
ICA No. 811-08221
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 22, 1997
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
Pre-Effective Amendment No.
Post-Effective Amendment No.
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 |X|
Amendment No.
THE TRAUTMAN KRAMER TRUST
(Exact Name of Registrant as Specified in Charter)
500 Fifth Avenue
New York, New York 10110
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 575-5500
Robert Kramer
500 Fifth Avenue
New York, New York 10110
(Name and Address of Agent for Service)
Copies to:
Louis S. Citron, Esq.
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, New York 10022
Approximate date of proposed public offering: As soon as practicable
after this registration statement becomes effective.
---------------------------------------------------
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.
<PAGE>
THE TRAUTMAN KRAMER TRUST
Registration Statement on Form N-1A
CROSS REFERENCE SHEET
Trautman Kramer Capital Value Fund
Form N-1A
Item Number
- -----------
Part A Prospectus Caption
- ------ ------------------
1. Cover Page
2. Highlights; Fee Table
3. Selected Financial Information
4. Organization and Description of Shares of the Trust;
Investment Objective, Policy and Risks; Additional
Investment Policies and Risks
5.(a)(b)(c) Investment Adviser and Investment Advisory Agreement(s)
(d) Distribution Plans
(e) Custodian, Transfer Agent and Dividend Paying Agent
(f) Investment Adviser and Investment Advisory Agreement(s)
(g) Brokerage Allocation
5A Performance Calculation
6.(a) Organization and Description of Shares of the Trust
(b) Investment Adviser and Investment Advisory Agreement(s)
(c) Organization and Description of Shares of the Trust
(d) Purchase of Shares; Redemption of Shares
(e) Cover Page
(f)(g) Dividend Distribution and Tax Matters
7.(a)(b) Purchase of Shares
(c) Purchase of Shares
(d) Purchase of Shares
(e) *
(f) Distribution Plan
8. Redemption of Shares
9. *
Part B Statement of Additional Information Caption
10. Cover Page
11. Table of Contents
12. *
13. Investment Objective, Policy and Risks; Investment
Restrictions
14. Management
15. General Information
16.(a)(b) Investment Adviser and Investment Advisory
Agreements
(c) *
- 2 -
<PAGE>
(d) *
(e) *
(f) Distribution Plans
(g) *
(h) See Prospectus
(i) *
17.(a) Portfolio Transactions and Brokerage
(b) *
(c) Portfolio Transactions and Brokerage
(d) *
(e) *
18. General Information
19.(a) Purchase and Redemption of Shares
(b) Computation of Net Asset Value
(c) *
20. Tax Matters
21. Distribution Plans
22. Performance Calculation
23. 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.
- --------------------------
* Not Applicable
- 3 -
<PAGE>
THE TRAUTMAN KRAMER TRUST
TRAUTMAN KRAMER VALUE FUND
The Trautman Kramer Trust (the "Trust") is a Delaware business trust
currently consisting of one fund, Trautman Kramer Value Fund, an open-end,
non-diversified management investment company (the "Fund"). The Fund's
investment objective is long-term capital appreciation. Capital appreciation
means an increase in the value of your shares. The Fund seeks to achieve its
objective primarily through investments in securities of United States issuers.
The Fund also intends to invest up to 10% of its assets in illiquid securities.
There is minimal emphasis on current income (dividends).
Investors should read this Prospectus before investing in the Fund. It
contains important information about the Fund and should be kept for future
reference. A Statement of Additional Information, dated July __, 1997, which
contains additional information about the Fund has been filed with the
Securities and Exchange Commission. It is incorporated by reference into this
Prospectus. A copy of the Statement of Additional Information can be obtained
without charge by calling 1-800-________ or writing the Trust at c/o Firstar
Trust Company, P.O. Box 701, Milwaukee, Wisconsin 53201-0701. -----------------
INVESTMENT IN THE FUND IS SUBJECT TO RISK -- INCLUDING POSSIBLE LOSS OF
PRINCIPAL -- AND WILL FLUCTUATE IN VALUE. -----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-----------------
The date of this Prospectus is July __, 1997.
TABLE OF CONTENTS
Page
Highlights....................................................................1
Fee Table.....................................................................2
Performance Calculation.......................................................3
Investment Objective, Policies and Risks......................................3
Additional Investment Policies and Risk
Considerations..............................................................4
Investment Adviser and Investment
Advisory Agreement..........................................................5
Distribution Plan.............................................................5
Shareholder Servicing Plan....................................................5
Administrative Services Agreement.............................................6
Brokerage Allocation..........................................................6
Purchase of Shares............................................................6
Redemption of Shares.........................................................10
Shareholder Privileges.......................................................12
Dividends, Distributions and Tax Matters.....................................13
Custodian, Transfer Agent and Dividend
Paying Agent...............................................................14
Counsel and Independent Accountants..........................................14
Additional Information.......................................................14
-----------------
<PAGE>
HIGHLIGHTS
WHAT IS THE TRAUTMAN KRAMER TRUST?
The Trautman Kramer Trust, a business trust formed under the laws of
the State of Delaware, is currently comprised of one series.
WHAT IS THE TRAUTMAN KRAMER VALUE FUND AND HOW IS ITS INVESTMENT OBJECTIVE
ACHIEVED?
The Trautman Kramer Value Fund is an open-end, non-diversified
management investment company. The Fund seeks to achieve its objective primarily
through investments in securities of United States issuers. The Fund will invest
in common stocks of companies that are considered by its investment adviser or
sub-adviser to be out of favor with investors and which appear to be undervalued
in relation to their potential growth or earning power. The Fund also intends to
invest up to 10% of its assets in illiquid securities. (See "Investment
Objective, Policies and Risks.")
WHO MANAGES THE FUND?
Trautman Kramer (the "Adviser") serves as the Fund's investment
adviser. Trautman Kramer supervises all aspects of the Fund's operations and
provides investment advisory services. As compensation, the Adviser receives a
fee based on the Fund's average daily net assets. To help in providing these
services, the Adviser has entered into a sub-advisory agreement with Tocqueville
Asset Management L.P. on behalf of the Fund (the "Sub-Adviser"). (See
"Investment Adviser and Investment Advisory Contracts.")
BUYING AND SELLING SHARES
Shares of the Fund may be purchased at a price equal to the net asset
value (price) per share which is calculated daily. An initial sales charge may
also be imposed at the time of purchase. As an open-end investment company, the
Fund has an obligation to redeem its shares upon request. Shares are redeemed at
net asset value. (See "Organization and Description of Shares of the Trust.")
DISTRIBUTION PLAN
The Fund has adopted a distribution plan, pursuant to Rule 12b-1 of the
Investment Company Act of 1940 (the "1940 Act"), that allows it to pay for
distribution activities related to the sale of its shares. Such expenses may
total up to .25% per annum of its average daily net assets. (See "Distribution
Plans").
SPECIAL RISK CONSIDERATIONS
Investors should be aware that there are risks associated with certain
investment techniques and strategies employed by the Fund. The Fund's net asset
value per share can be expected to fluctuate. Investors should consider the Fund
a supplement to an overall investment program and should only invest if they are
willing to undertake the risks involved. (See "Investment Objective, Policies
and Risks" and "Additional Investment Policies and Risk Considerations.")
1
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FEE TABLE
The purpose of the fee table provided below is to assist investors in
understanding the various costs and expenses that they will bear directly or
indirectly. Shareholder Transaction Expenses are fees charged directly to an
individual account when shares are bought, sold or exchanged. The "Annual Fund
Operating Expenses" summary shows the advisory fee, Rule 12b-1 fee, and other
operating expenses incurred by the Fund. These expenses are deducted from the
Fund's income before it is paid to shareholders. The expenses shown in the table
are estimates for the current year.
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load on Purchases 4.50%
(as a % of offering price)
Redemption Fee*
Exchange Fee**
ANNUAL FUND OPERATING EXPENSES:
(as a % of average net assets)
Advisory Fee............................................... 1.00%
12b-1 Fee(1)............................................... .25%
Shareholder Servicing Fee.................................. .25%
Other Expenses............................................. .48%
------
Total Operating Expenses(2).................................... 1.98%
(1) Under the Fund's Rule 12b-1 distribution plan, the Adviser is permitted to
carry forward expenses not reimbursed by the distribution fee to subsequent
fiscal years for submission to the Fund for payment, subject to the
continuation of the plan. Such amounts are not recognized in the Fund's
financial statements as expenses and liabilities, since the distribution
plan can be terminated on an annual basis without further liability to the
Fund. The Rule 12b-1 fee may represent the equivalent of an annual
asset-based sales charge to an investor. As a result of distribution fees,
a long-term shareholder in the Fund may pay more than the economic
equivalent of the maximum front-end sales charge permitted by the Rules of
the National Association of Securities Dealers, Inc.
(2) The Adviser has voluntarily undertaken to waive and/or reimburse expenses
during the current fiscal year so that Total Fund Operating Expenses do not
exceed 1.98%. Should the Adviser decide during the current fiscal year that
such waiver and/or reimbursement cannot be maintained, shareholders will
receive 30 days notice of the change.
* The Transfer Agent charges a $12 service fee for each payment of redemption
proceeds made by wire.
** The Transfer Agent charges a $5 fee for each telephone exchange.
EXAMPLE: In the following hypothetical example, assume you would pay the
following expenses on a $1000 investment, assuming (1) 5% annual return and (2)
redemption at the end of each time period.
1 YEAR 3 YEARS
------ -------
$64 $104
The "Example" set forth above assumes all dividends and other
distributions are reinvested and that the percentages under "Annual Fund
Operating Expenses" remain the same in the years shown. The Example includes the
initial sales charge.
The Example should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown.
2
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PERFORMANCE CALCULATION
The Fund calculates performance on a total return basis for various
periods. The total return basis combines changes in principal and dividends and
distributions for the periods shown, as well as the deduction of all charges and
expenses. The total return basis reflects the deduction of the maximum initial
sales charge at the time of purchase. Principal changes are based on the
difference between the beginning and closing net asset value for the period.
Calculations assume reinvestment of all dividends and distributions paid by the
Fund. Dividends and distributions are comprised of net investment income and net
realized capital gains, respectively. In addition, the Fund may calculate
performance on a total return basis at net asset value.
Performance will vary from time to time and past results are not
necessarily representative of future results. A shareholder should remember that
performance is a function of portfolio management in selecting the type and
quality of portfolio securities and is affected by operating expenses.
Comparative performance information may be used from time to time in
the advertising or marketing of the Fund's shares, including data from Lipper
Analytical Services, Inc. and Morningstar Mutual Funds. Such comparative
performance information will be stated in the same terms in which the
comparative data and indices are stated. All advertisements of the Fund will
disclose the maximum sales charge to which investments in shares of the Fund may
be subject.
INVESTMENT OBJECTIVE, POLICIES AND RISKS
The Fund's investment objective is fundamental and may not be changed
without a vote of the holders of a majority of its outstanding voting securities
(as defined in the Statement of Additional Information). There can be no
assurance that the Fund will achieve its investment objective.
The investment objective of the Trautman Kramer Value Fund is long-term
capital appreciation. To achieve its objective the Fund invests in a portfolio
consisting of common stocks of United States companies that are considered by
the Adviser or Sub-Adviser to be out of favor with investors and appear to be
undervalued in relation to their potential growth or earning power. Generally,
the Adviser and the Sub-Adviser consider (a) stocks which have under performed
market indices such as Standard & Poor's Composite Index for at least one year
and (b) companies which have a historically low stock price in relation to such
factors as sales, potential earnings or underlying assets to be out of favor
with investors. The Adviser and Sub-Adviser search for companies based on their
judgment of relative value and growth potential. One method of evaluating the
potential growth and earning power of a company is on the basis of past growth
and profitability, as reflected in its financial statements. Another method is
the determination by the Adviser or Sub- Adviser that the company has achieved
better results than similar companies in a depressed industry which the Adviser
or Sub-Adviser believes will improve within the next two years. There is no
assurance that the evaluation of the Adviser or Sub-Adviser will be accurate or
that the Fund's objective will be achieved. If the stocks in which the Fund
invests never attain their perceived potential or the valuation of such stocks
in the marketplace does not in fact reflect significant undervaluation, there
may be little or no appreciation or there may be a depreciation in the value of
such stocks.
The Fund may invest up to 25% of its total assets in common stock of
foreign companies which are traded in the United States or purchase American
Depository Receipts (ADRs). ADRs are certificates issued by U.S. banks which
represent the right to receive securities of a foreign issuer which have been
deposited with that bank or a correspondent bank. The Fund also intends to
invest up to 10% of its assets in illiquid securities.
In addition, the Fund may invest up to 5% of its net assets in
repurchase agreements which are fully collateralized by obligations of the U.S.
Government or U.S. Government agencies. Under the terms of a repurchase
agreement, the Fund acquires securities from financial institutions or
registered broker-dealers, subject to the seller's agreement to repurchase the
securities at a mutually agreed upon date and price.
The Fund may also invest up to 5% of its total assets in debt
instruments convertible into common stocks such as warrants and convertible
bonds. The Fund may, from time to time, borrow up to 10% of the value of its
total assets
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from banks at prevailing interest rates as a temporary measure for extraordinary
or emergency purposes. The Fund may not purchase securities while borrowings
exceed 5% of the value of its total assets.
ADDITIONAL INVESTMENT POLICIES AND RISK CONSIDERATIONS
The following investment strategies and techniques are not fundamental
policies of the Fund and may be changed without prior shareholder approval. The
Fund will notify shareholders in writing and revise the Prospectus accordingly
should any such modifications in investment strategies or techniques occur.
ILLIQUID SECURITIES
The Fund may invest up to 10% of its net assets in illiquid securities.
Illiquid securities are those securities that are not readily marketable,
including restricted securities and repurchase agreements with maturities in
excess of seven days.
RESTRICTED SECURITIES
The Fund may invest in securities that are subject to restrictions on
resale because they have not been registered under the Securities Act of 1933
(the "1933 Act"). These securities are sometimes referred to as private
placements. Certain restricted securities that may be resold to institutional
investors pursuant to Rule 144A under the 1933 Act may be determined to be
liquid under guidelines adopted by the Board of Trustees.
The Fund may invest in private placements which offer the securities of
companies in which affiliates of the Adviser have an equity position or a place
on the company's board. Affiliates of the Adviser may receive a commission on
the sale of such securities to the Fund. See "Brokerage Allocation".
TEMPORARY INVESTMENTS
The Fund does not intend to engage in short-term trading, which is on
an ongoing basis. Current income is not an objective of the Fund, and any
current income derived from the Fund's portfolio will be incidental. For
temporary defensive purposes, when deemed necessary by the Adviser or
Sub-Adviser, the Fund may invest up to 100% of its assets in U.S. Government
obligations or high-quality debt obligations of U.S. companies.
PORTFOLIO TURNOVER
The portfolio turnover rate is a measure of the Fund's buying and
selling activity. It is anticipated that the annual turnover rate for the Fund
should not exceed 150%. A higher rate of portfolio turnover will result in
higher transaction costs, including brokerage commissions. Also, to the extent
that higher portfolio turnover results in a higher rate of net realized capital
gains to the Fund, the portion of the Fund's distributions constituting taxable
capital gains may increase.
SHORT SALES
The Fund may use a technique known as selling short "against the box."
This means that the Fund will not make short sales of securities or maintain a
short position unless, at all times when a short position is open, the Fund owns
an equal amount of such securities or securities convertible into or
exchangeable for, without payment of any further consideration, an equal amount
of the securities sold short. Such a transaction serves to defer a gain or loss
for Federal income tax purposes.
4
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RISKS ASSOCIATED WITH FOREIGN INVESTMENTS
Consistent with its investment objectives and policies, the Fund may
invest indirectly in foreign assets through ADRs. Direct and indirect
investments in securities of foreign issuers may involve risks that are not
present with domestic investments.
INVESTMENT ADVISER AND INVESTMENT ADVISORY AGREEMENTS
Trautman Kramer, 500 Fifth Avenue, New York, New York 10110, acts as
Adviser to the Fund under an investment advisory agreement (the "Advisory
Agreement") which provides that the Adviser identify and analyze possible
investments for the Fund, and determine the amount, timing, and form of such
investments. The Adviser has the responsibility of monitoring and reviewing the
Fund's portfolio on a regular basis and recommending the ultimate disposition of
such investments. It is the Adviser's responsibility to cause the purchase and
sale of securities in the Fund's portfolio, subject at all times to the policies
set forth by the Board of Trustees. The Adviser is a new company and therefore
has a short operating history as an investment manager of mutual funds, but its
officers and employees are persons with extensive experience in managing
investment portfolios. The types of investments the Adviser's officers and
employees offer advice on include [equity securities, corporate debt securities,
commercial paper, U.S. government securities, and options.]
Under the terms of the Advisory Agreement, the Fund pays the cost of
all its expenses (other than those expenses specifically assumed by the Adviser
or the Fund's distributor), including the pro rata costs incurred in connection
with the Fund's maintenance of its registration under the 1933 Act and the 1940
Act, printing of prospectuses distributed to shareholders, taxes or governmental
fees, brokerage commissions, custodial, transfer and shareholder servicing agent
costs, expenses of outside counsel and independent accountants, preparation of
shareholder reports, trustees' fees and shareholder meetings. For its services
under the Advisory Agreement, the Adviser receives a fee of 1.00%. The
investment advisory fee paid by the Fund is higher than the advisory fees paid
by most mutual funds, although the Trust's Board of Trustees believes such fees
to be comparable to advisory fees paid by many funds having similar objectives
and policies. The advisory fees for the Fund has been determined to be fair and
reasonable in light of the services provided to the Fund. The Adviser may
periodically waive all or a portion of its advisory fee.
The Adviser has retained Tocqueville Asset Management L.P., 1675
Broadway, New York, New York 10019, to provide sub-advisory services to the Fund
pursuant to a sub-advisory agreement (the "Sub-Advisory Agreement"). The
Sub-Adviser acts as adviser to mutual funds. Robert W. Kleinschmidt serves as
the portfolio manager of the Fund and has since inception. Mr. Kleinschmidt is
the President of Tocqueville Management Corporation, the general partner of the
sub-adviser. He previously held executive positions at the investment management
firm David J. Greene & Co. since 1978, resigning as a partner in 1991. For its
services under the Sub-Advisory Agreement, the Adviser pays the Sub-Adviser a
fee of .50%.
DISTRIBUTION PLANS
The Fund has adopted a distribution plan (the "Plan") pursuant to Rule
12b-1 of the 1940 Act. Pursuant to the Plan, the Fund may pay for distribution
activities related to the sale of its shares up to an amount equal to .25% per
annum of the Fund's average daily net assets.
The Plan provides that the Fund may finance activities which are
primarily intended to result in the sale of its shares, including, but not
limited to, advertising, printing of prospectuses and reports for other than
existing shareholders, preparation and distribution of advertising material and
sales literature, and payments to dealers and shareholder servicing agents
including Trautman Kramer & Company (the "Distributor"), the Fund's distributor,
who enter into agreements with the Fund or the Distributor. The Plan will only
make payments for expenses actually incurred on a first-in, first-out basis. The
Plan may carry forward for an unlimited number of years any unreimbursed
expenses. If the Plan is terminated in accordance with its terms, the
obligations of the Fund to make payments pursuant to the Plan
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will cease and the Fund will not be required to make any payments past the date
the Plan terminates. (See the Statement of Additional Information--"Distribution
Plan" for further information about the Plan.)
SHAREHOLDER SERVICING PLAN
The Trust has adopted a Shareholder Servicing Plan for the Fund. In
accordance with the Shareholder Servicing Plan, the Fund may enter into
Shareholder Service Agreements under which it pays fees of up to .25% of the
average daily net assets for fees incurred in connection with the personal
service and maintenance of accounts holding the shares of the Fund. Such
agreements are entered into between the Trust and various shareholder servicing
agents, including the Distributor and its affiliates, and other financial
institutions and securities brokers (each, a "Shareholder Servicing Agent").
Among the services provided by Shareholder Servicing Agents are: answering
customer inquiries regarding account matters; assisting shareholders in
designating and changing various account options; aggregating and processing
purchase and redemption orders and transmitting and receiving funds for
shareholder orders; transmitting, on behalf of the Trust, proxy statements,
prospectuses and shareholder reports to shareholders and tabulating proxies;
processing dividend payments and providing subaccounting services for Fund
shares held beneficially; and providing such other services as the Trust or a
shareholder may request. Shareholder Servicing Agents may periodically waive all
or a portion of their respective shareholder servicing fees.
ADMINISTRATIVE SERVICES AGREEMENTS
Under an Administrative Services Agreement, Firstar Trust Company (the
"Administrator") supervises the administration of all aspects of the Fund's
operations, including the Fund's receipt of services for which the Fund is
obligated to pay, provides the Fund with general office facilities and provides,
at the Fund's expense, the services of persons necessary to perform such
supervisory, administrative and clerical functions as are needed to effectively
operate the Fund. Those persons, as well as certain employees and Trustees of
the Trust, may be directors, officers or employees of (and persons providing
services to the Fund may include) the Administrator and its affiliates. For
these services and facilities, the Administrator receives a fee computed and
paid monthly at an annual rate of .05% on the first $200 million of the Fund's
average net assets, .05% on the next $500 million next $500 million of the
Fund's average net assets and .03% on any remaining average net assets in excess
of $700 million, subject to an annual minimum fee of $25,500.
BROKERAGE ALLOCATION
Subject to the supervision of the Board of Trustees, decisions to buy
and sell securities for the Fund are made by the Adviser or Sub-Adviser. The
Adviser or Sub-Adviser, subject to obtaining the best price and execution, may
allocate brokerage transactions in a manner that takes into account the sale of
shares of the Fund. Subject to the supervision of the Trustees, the Adviser and
Sub-Adviser are authorized to allocate brokerage to affiliated broker-dealers on
an agency basis to effect portfolio transactions. The Trustees have adopted
procedures incorporating the standards of Rule 17e-1 of the 1940 Act, which
require that the commission paid to affiliated broker-dealers must be reasonable
and fair compared to the commission, fee or other remuneration received, or to
be received, by other brokers in connection with comparable transactions
involving similar securities during a comparable period of time. It is expected
that brokerage will be allocated to Trautman Kramer & Company, an affiliate of
the Adviser and Tocqueville Securities L.P., an affiliate of the Sub-Adviser.
For a complete discussion of portfolio transactions and brokerage allocation,
see "Portfolio Transactions and Brokerage" in the Statement of Additional
Information.
PURCHASE OF SHARES
GENERAL INFORMATION
Shares are sold to investors at the net asset value next determined
after a purchase order becomes effective (as described below) plus a varying
initial sales charge.
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The minimum initial investment in the Fund is $1,000 except for 401(k),
IRA, Keogh and other pension or profit sharing plan accounts where the minimum
is $750. The minimum subsequent investment in the Fund is $100. The Distributor
may, in its discretion, waive the minimum investment requirements for purchases,
including those made via the Automatic Investment Plan, which is discussed
below.
Shares of the Fund may be purchased from the following entities: (a)
the Fund's Distributor, (b) authorized securities dealers which have entered
into sales agreements with the Distributor on a best efforts basis and brokers
who have entered into agreements with the Trust to provide distribution and
shareholder services (the "Selling Brokers"); and (c) the Fund' transfer agent,
Firstar Trust Company (the "Transfer Agent"). The Fund reserves the right to
cease offering shares for sale at any time or to reject any order for the
purchase of shares.
A purchase order becomes effective upon receipt of the order by the
Distributor, a Selling Broker or the Transfer Agent. Purchase orders received
prior to 4:00 p.m. New York time are priced according to the net asset value per
share next determined on that day. Purchase orders received after 4:00 p.m. New
York time are priced according to the net asset value per share next determined
on the following day.
The net asset value per share is determined by dividing the market
value of the Fund's investments as of the close of trading plus any cash or
other assets (including dividends receivable and accrued interest) less all
liabilities (including accrued expenses) by the number of Fund shares
outstanding. The Fund will determine the net asset value of its shares once
daily as of the close of trading on the New York Stock Exchange (the "Exchange")
on each "Fund business day" which is any day on which the Exchange is open for
business.
Investors who already have a brokerage account with the Distributor or
a Selling Broker may purchase the Fund's shares through such broker. Payment for
purchase orders through the Distributor or the Selling Broker must be made to
the Distributor or the Selling Broker within three business days of the purchase
order. All dealers are responsible for forwarding orders for the purchase of the
Fund's shares on a timely basis.
The Fund's shares normally will be maintained in book entry form and
share certificates will not be issued. The Distributor reserves the right to
refuse to sell shares of the Fund to any person.
INITIAL SALES CHARGES
The initial sales charge imposed upon a sale of shares varies according
to the size of the purchase as follows:
<TABLE>
<CAPTION>
CONCESSION
INITIAL SALES CHARGE TO DEALERS
% OF % OF NET % OF
OFFERING AMOUNT OFFERING
AMOUNT OF PURCHASE PRICE INVESTED PRICE
<S> <C> <C> <C>
Less than $100,000........................................... 4.50 4.67 4.00
$100,000 to $249,999......................................... 3.50 3.63 3.00
$250,000 to $499,999......................................... 2.50 2.56 2.00
$500,000 to $999,999......................................... 1.50 1.52 1.00
$1,000,000 and over.......................................... 1.00 1.01 0.50
</TABLE>
The reduced initial sales charges apply to the aggregate of purchases
of shares of the Fund made at one time by any "person", which includes an
individual, spouse and children under the age of 21, or a trustee or other
fiduciary of a trust, estate or fiduciary account.
Upon notice to Selling Brokers, the Distributor may reallow up to the
full applicable initial sales charge and such Selling Broker may therefore be
deemed an "underwriter" under the 1933 Act, as amended, during such periods. The
Distributor may, from time to time, provide promotional incentives to certain
Selling Brokers whose representatives
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have sold or are expected to sell significant amounts of one or all of the funds
of the Trust. At various times the Distributor may implement programs under
which a Selling Broker's sales force may be eligible to win cash or material
awards for certain sales efforts. The Distributor may also implement programs
under which it will reallow an amount not exceeding the total applicable initial
sales charges generated by the Selling Broker during such programs to any
Selling Broker that sponsors sales contests or recognition programs conforming
to criteria established by the Distributor or participates in sales programs
sponsored by the Distributor. The Distributor may provide marketing services to
Selling Brokers, consisting of written informational material relating to sales
incentive campaigns conducted by such Selling Brokers for their representatives.
PURCHASES OF SHARES AT NET ASSET VALUE
PURCHASES THROUGH CERTAIN BROKERAGE ACCOUNTS. Shares may be purchased
at net asset value through brokerage accounts with the Distributor or Selling
Brokers who have entered into agreements with the Trust to provide distribution
and shareholder services.
QUALIFIED PERSONS. There is no initial sales charge for "Qualified
Persons", which are the following (a) active or retired trustees, directors,
officers, partners or employees (their spouses and children under age 21) of (i)
the Adviser, Sub-Adviser and Distributor or any affiliates or subsidiaries
thereof (the directors, officers or employees of which shall also include their
parents and siblings for all purchases of Fund shares), (ii) Selling Brokers, or
(iii) trade organizations to which the Adviser belongs and (b) trustees or
custodians of any qualified retirement plan or IRA established for the benefit
of a person in (a) above.
PURCHASES THROUGH INVESTMENT ADVISERS. Purchases also may be made with
no initial sales charge through a registered investment adviser who has
registered with the Securities and Exchange Commission or appropriate state
authorities and who (a) clears such Fund share transaction through a
broker/dealer, bank or trust company, (each of whom may impose transaction fees
with respect to such transaction), or (b) purchases shares for its own account,
or an account for which the investment adviser has discretion and is authorized
to make investment decisions.
QUALIFIED AND OTHER RETIREMENT PLANS. In addition, no initial sales
charge will apply to any purchase of shares by an investor through a 401(k)
Plan, a 403(b) Plan or 457 (state deferred compensation) Plan.
RECENTLY REDEEMED SHARES. Shares of the Fund may be purchased at net
asset value by persons who have, within the previous 30 days, redeemed their
shares of the Fund. The amount which may be purchased at net asset value is
limited to an amount up to, but not exceeding, the net amount of redemption
proceeds. Such purchases may also be handled by a securities dealer, who may
charge the shareholder a fee for this service.
REDUCED INITIAL SALES CHARGES
CUMULATIVE QUANTITY DISCOUNT. Shares of the Fund may be purchased by
any person at a reduced initial sales charge which is determined by (a)
aggregating the dollar amount of the new purchase and the greater of the
purchaser's total (i) net asset value or (ii) cost of all shares of such Fund
and the other Funds of the Trust, acquired by exchange from such other Fund,
provided such Fund charged an initial sales load at the time of the exchange
then held by such person and (b) applying the initial sales charge applicable to
such aggregate. The privilege of the cumulative quantity discount is subject to
modification or discontinuance at any time with respect to all shares purchased
thereafter.
GROUP PURCHASES. An individual who is a member of a qualified group (as
defined below) may also purchase shares of the Fund at the reduced initial sales
charge applicable to the group taken as a whole. The reduced initial sales
charge is based upon the aggregate dollar value of shares previously purchased
and still owned by the group plus the securities currently being purchased and
is determined as stated above under "Cumulative Quantity Discount". For example,
if members of the group had previously invested and still held $90,000 of shares
and now were investing $15,000, the initial sales charge would be 3.50%. In
order to obtain such discount, the purchaser or investment dealer must provide
the Transfer Agent with sufficient information, including the purchaser's total
cost, at the time of purchase
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to permit verification that the purchaser qualifies for a cumulative quantity
discount, and confirmation that the order is subject to such verification.
Information concerning the current initial sales charge applicable to a group
may be obtained by contacting the Transfer Agent.
A "qualified group" is one which: (a) has been in existence for more
than six months; (b) has a purpose other than acquiring shares at a discount;
and (c) satisfies uniform criteria which enables the Distributor to realize
economies of scale in its costs of distributing shares. A qualified group must
have more than 10 members, must be available to arrange for group meetings
between representatives of the Fund and the members, must agree to include sales
and other materials related to the Fund in its publications and mailings to
members at reduced or no cost to the Distributor, and must seek to arrange for
payroll deduction or other bulk transmission of investments in the Fund. This
privilege is subject to modification or discontinuance at any time with respect
to all shares purchased thereafter.
LETTER OF INTENT. Investors may also qualify for reduced initial sales
charges by signing a Letter of Intent (the "LOI"). This enables the investor to
aggregate purchases of shares of the Fund with purchases of shares of any other
Fund of the Trust acquired by exchange, during a 13-month period. The initial
sales charge is based on the total amount invested in shares during the 13-month
period. Shares of the Fund currently owned by the investor will be credited as
purchases (at their current offering prices on the date the LOI is signed)
toward completion of the LOI. A 90-day back-dating period can be used to include
earlier purchases at the investor's cost. The 13-month period would then begin
on the date of the first purchase during the 90-day period. No retroactive
adjustment will be made if purchases exceed the amount indicated in the LOI. A
shareholder must notify the Transfer Agent or Distributor whenever a purchase is
being made pursuant to a LOI.
The LOI is not a binding obligation on the investor to purchase, or on
the Fund to sell, the full amount indicated; however, on the initial purchase
(or subsequent purchases if necessary), 5% of the dollar amount specified in the
LOI will be held in escrow by the Transfer Agent in shares registered in the
shareholder's name in order to assure payment of the proper initial sales
charge. If total purchases pursuant to the LOI (less any dispositions and
exclusive of any distributions on such shares automatically reinvested) are less
than the amount specified, the investor will be requested to remit to the
Transfer Agent an amount equal to the difference between the initial sales
charge paid and the initial sales charge applicable to the aggregate purchases
actually made. If not remitted within 20 days after written request, an
appropriate number of escrowed shares will be redeemed in order to realize the
difference. This privilege is subject to modification or discontinuance at any
time with respect to all shares purchased thereunder. Shareholders will be paid
distributions, either in additional shares or cash, upon such escrowed shares.
METHODS OF PAYMENT
BY CHECK. Investors who wish to purchase shares directly from the
Transfer Agent may do so by sending a completed purchase application (included
with this Prospectus or obtainable from the Trust) to The Trautman Kramer Trust,
c/o Firstar Trust Company, P.O. Box 701, Milwaukee, WI 53201-0701, accompanied
by a check payable to the Fund. Purchase applications sent to the Fund will be
forwarded to the Transfer Agent, and will not be effective until received by the
Transfer Agent. The price per share is the next determined per share net asset
value (plus a varying initial sales charge) after receipt of an application by
Firstar Trust Company. Purchase applications should be mailed directly to: The
Trautman Kramer Trust, c/o Firstar Trust Company, P.O. Box 701, Milwaukee,
Wisconsin 53201- 0701. The U.S. Postal Service and other independent delivery
services are not agents of the Trust. Therefore, deposit of purchase
applications in the mail or with such services does not constitute receipt by
Firstar Trust Company or the Trust. Please do not mail letters by overnight
courier to the post office box address. To purchase shares by overnight or
express mail, please use the following street address: The Trautman Kramer Trust
- - Trautman Kramer Value Fund, c/o Firstar Trust Company, Mutual Fund Services,
Third Floor, 615 East Michigan Street, Milwaukee, Wisconsin 53202. All
applications must be accompanied by payment in the form of a check drawn on a
U.S. bank payable to The Trautman Kramer Trust or by direct wire transfer. No
cash will be accepted. Firstar Trust Company will charge a $20 fee against a
shareholder's account for any payment check returned to the custodian. The
shareholder will also be responsible for any losses suffered by the Fund as a
result.
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BY AUTOMATIC INVESTMENT PLAN. The Fund has an Automatic Investment Plan
which permits an existing shareholder to purchase additional shares of the Fund
(minimum $100 per transaction) at regular intervals. Under the Automatic
Investment Plan, shares are purchased by transferring funds from a shareholder's
checking, bank money market, NOW account, or savings account in an amount of
$100 or more designated by the shareholder. At the shareholder's option, the
account designated will be debited and shares will be purchased on the date
selected by the shareholder. There must be a minimum of seven days between
automatic purchases. If the date selected by the shareholder is not a business
day, funds will be transferred the next business day thereafter. Only an account
maintained at a domestic financial institution which is an Automated Clearing
House member may be so designated. To establish an Automatic Investment Account,
complete and sign Section __ of the Purchase Application and send it to the
Transfer Agent. Shareholders may cancel this privilege or change the amount of
purchase at any time by calling 1-800-o or by mailing written notification to:
The Trautman Kramer Trust, c/o Firstar Trust Company, P.O. Box 701, Milwaukee,
Wisconsin 53201-0701. The change will be effective five business days following
receipt of notification by the Transfer Agent. The Fund may modify or terminate
this privilege at any time or charge a service fee, although no such fee
currently is contemplated. However, a $20 fee will be imposed by Firstar Trust
Company if sufficient funds are not available in the shareholder's account at
the time of the automatic transaction.
While investors may use this option to purchase shares in their IRA or
other retirement plan accounts, neither the Distributor nor the Transfer Agent
will monitor the amount of contributions to ensure that they do not exceed the
amount allowable for Federal tax purposes. Firstar Trust Company will assume
that all retirement plan contributions are being made for the tax year in which
they are received.
BY WIRE. Investors who purchase shares directly from the Transfer Agent
may also purchase shares by wire. Funds should be wired to:
Firstar Bank Milwaukee, N.A.
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
ABA # 075000022
Credit: Firstar Trust Company
Account # 112952137
Further credit: The Trautman Kramer Trust
Name of shareholder and account number (if known)
(Wired funds must be received prior to 4:00 p.m. Eastern time to be
eligible for same day pricing.)
The establishment of a new account or any additional purchases for an
existing account by wire transfer should be preceded by a phone call to Firstar
Trust Company, 1-800-o, to provide information for the account. A properly
signed share purchase application marked "Follow Up" must be sent for all new
accounts opened by wire transfer. Applications are subject to acceptance by the
Fund, and are not binding until so accepted.
REDEMPTION OF SHARES
GENERAL INFORMATION
In order to redeem shares purchased through the Distributor or a
Selling Broker, the broker must be notified by telephone or mail to execute a
redemption. A properly completed order to redeem shares received by the broker's
office will be executed at the net asset value next determined after receipt by
the broker of the order. Redemption proceeds will be held in a shareholder's
account with the Distributor unless the broker is instructed to remit all
proceeds directly to the shareholder.
Shares purchased through the Transfer Agent may be redeemed by the
Transfer Agent at the next determined net asset value upon receipt of a request
in good order. Payment will be made for redeemed shares as soon as practicable,
but in no event later than three business days after receipt of a redemption
notification in good order. If the shares being redeemed were purchased directly
from the Transfer Agent by check, payment may be delayed for the
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<PAGE>
minimum time needed to verify that the purchase check has been honored. This is
not normally more than 15 days from the time of receipt of the check by the
Transfer Agent. "Good order" means that the request complies with the following:
(a) where the shareholder has not elected to permit telephone redemptions, the
request must be in writing, specifying the number of shares or dollar amount to
be redeemed and sent to the Transfer Agent, Attn. The Trautman Kramer Trust at
P.O. Box 701, Milwaukee, Wisconsin 53201-0701. The U.S. Postal Service and other
independent delivery services are not agents of the Trust. Therefore, deposit of
redemption requests in the mail or with such services does not constitute
receipt by Firstar Trust Company or the Trust. Please do not mail letters by
overnight courier to the post office box address. Redemption requests sent by
overnight or express mail should be directed to: The Trautman Kramer Trust c/o
Firstar Trust Company, Mutual Fund Services, Third Floor, 615 East Michigan
Street, Milwaukee, Wisconsin 53202. Requests for redemption by telegram and
requests which are subject to any special conditions or which specify an
effective date other than as provided herein cannot be honored; (b) signatures
on the redemption request and on endorsed certificates submitted for redemption
must be guaranteed by a commercial bank which is a member of the Federal Deposit
Insurance Corporation, a trust company or a member firm (broker-dealer) of a
national securities exchange (a notary public or a savings and loan association
is not an acceptable guarantor); and, (c) the request must include any
additional legal documents concerning authority and related matters in the case
of estates, trusts, guardianships, custodianships, partnerships and
corporations. Any written requests sent to the Fund will be forwarded to the
Transfer Agent and the effective date of a redemption request will be when the
request is received by the Transfer Agent. Shareholders who purchased shares
through the Transfer Agent may arrange for the proceeds of redemption requests
to be sent by Federal Fund wire to a designated bank account by sending wiring
instructions to Firstar Trust Company, P.O. Box 701, Milwaukee, Wisconsin
53201-0701. The Transfer Agent charges a $12 service fee for each payment of
redemption proceeds made by Federal Fund wire. Additional information regarding
redemptions may be obtained by calling 1-800-____________.
Redemption of the Fund's shares or payments therefore may be suspended
at such times (a) when the Exchange is closed, (b) when trading on the Exchange
is restricted, (c) when an emergency exists which makes it impractical for the
Fund to either dispose of securities or make a fair determination of net asset
value, or (d) for such other period as the Securities and Exchange Commission
may permit for the protection of the Fund's shareholders. There is no assurance
that the net asset value received upon redemption will be greater than that paid
by a shareholder upon purchase.
The Fund reserve the right to close an account that has dropped below
$500 in value for a period of three months or longer other than as a result of a
decline in the net asset value per share. Shareholders are notified at least 60
days prior to any proposed redemption and are invited to add to their account if
they wish to continue as shareholders of the Fund.
REDEMPTION IN-KIND
The Fund reserves the right, if conditions exist which make cash
payments undesirable, to honor any request for redemption of its shares by
making payment in whole or in part in securities chosen by the fund and valued
in the same way as they would be valued for purposes of computing its net asset
value. If payment is made in securities, a shareholder may incur transaction
costs in converting these securities into cash after they have redeemed their
shares. The Fund has elected, however, to be governed by Rule 18f-1 under the
1940 Act, so that it is obligated to redeem its shares solely in cash up to the
lesser of $250,000 or 1% of its net asset value during any 90-day period for any
one shareholder.
TELEPHONE REDEMPTION
Shareholders of the Fund will also be permitted to redeem fund shares
by telephone. To redeem shares by telephone, call 1-800-___________ with your
account name, account number and amount of redemption. Redemption proceeds will
only be sent to a shareholder's address or a pre-authorized bank account of a
commercial bank located within the United States as shown on the Transfer
Agent's records. (Available only if established on the account application and
if there has been no change of address by telephone within the preceding 15
days.)
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The Fund reserves the right to refuse a telephone redemption if it
believes it is advisable to do so. Procedures for redeeming shares by telephone
may be modified or terminated by the Fund at any time upon notice to
shareholders. During periods of substantial economic or market change, telephone
redemptions may be difficult to implement. If a shareholder is unable to contact
the Transfer Agent by telephone, shares may also be redeemed by delivering the
redemption request to the Transfer Agent.
In an effort to prevent unauthorized or fraudulent redemption requests
by telephone, the Fund and the Transfer Agent employ reasonable procedures to
confirm that such instructions are genuine. Among the procedures used to
determine authenticity, investors electing to redeem or exchange by telephone
will be required to provide their account number. All such telephone
transactions will be tape recorded. The Fund may implement other procedures from
time to time. If reasonable procedures are not implemented, the Fund and/or the
Transfer Agent may be liable for any loss due to unauthorized or fraudulent
transactions. In all other cases, the shareholder is liable for any loss for
unauthorized transactions.
SHAREHOLDER PRIVILEGES
SYSTEMATIC WITHDRAWAL PLAN. The Fund offers a Systematic Withdrawal
Plan for shareholders who own shares worth at least $10,000 at current net asset
value of any Fund. Under the Systematic Withdrawal Plan, a fixed sum (minimum
$500) will be distributed at regular intervals (on any day, either monthly,
quarterly or annually). In electing to participate in the Systematic Withdrawal
Plan, investors should realize that within any given period the appreciation of
their investment in the Fund may not be as great as the amount withdrawn. A
shareholder may vary the amount of frequency of withdrawal payments or
temporarily discontinue them by notifying Firstar Trust Company at
1-800-___________ . The Systematic Withdrawal Plan does not apply to shares held
in Individual Retirement Accounts of defined contribution retirement plans. For
additional information or to request an application please call Firstar Trust
Company at 1-800-___________ .
EXCHANGE PRIVILEGE. Subject to certain conditions, shares of the Fund
may be exchanged for the shares of another Fund of The Trautman Kramer Trust
offered in the future at such Fund's then current net asset value. No initial
sales charge is imposed on the shares being acquired through an exchange. The
dollar amount of the exchange must be at least equal to the minimum investment
applicable to the shares of the Fund acquired through such exchange. You should
note that any such exchange, which may only be made in states where shares of
the Fund are qualified for sale, may create a gain or loss to be recognized for
federal income tax purposes. Exchanges must be made between accounts having
identical registrations and addresses. Exchanges may be authorized by telephone.
In order to protect itself and shareholders from liability for unauthorized or
fraudulent telephone transactions, the Fund will use reasonable procedures in an
attempt to verify the identity of a person making a telephone exchange request.
The Fund reserves the right to refuse a telephone exchange request if it
believes that the person making the request is not the record owner of the
shares being exchanged, or is not authorized by the shareholder to request the
exchange. Shareholders will be promptly notified of any refused request for a
telephone exchange. As long as these normal identification procedures are
followed, neither the Fund nor its agents will be liable for loss, liability or
cost which results from acting upon instructions of a person believed to be a
shareholder with respect to the telephone exchange privilege. You will not
automatically be assigned this privilege unless you check the box on the
Purchase Application which indicates that you wish to have the privilege. The
exchange privilege may be modified or discontinued at any time.
Shareholders may also exchange shares of any or all of an investment in
the Fund for shares of the Portico Money Market Fund (the "Money Market Fund").
This Exchange Privilege is a convenient way for shareholders to buy shares in a
money market fund in order to respond to changes in their goals or market
conditions. Before exchanging into the Money Market Fund, shareholders must read
the Portico Money Market Fund's Prospectus. To obtain the Money Market Fund's
Prospectus and the necessary exchange authorization forms, call the Transfer
Agent at 1-800-___________ . The Transfer Agent charges a $5 fee for each
telephone exchange which will be deducted from the investor's account from which
the funds are being withdrawn prior to effecting the exchange. There is no
charge for exchange transactions that are requested by mail. Use of the Exchange
Privilege is subject to the minimum purchase and redemption amounts set forth in
the Prospectus for the Money Market Fund. All accounts opened in the Money
Market Fund as a result of using the Exchange Privilege must be registered in
the identical name and taxpayer identification number as a shareholder's
existing account with the Fund.
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For purposes of the Exchange Privilege, exchanges into and out of the
Money Market Fund will be treated as shares owned in the Fund. For example, if
an investor who owned shares in the Fund moved an investment from the Fund to
the Money Market Fund and then decided at a later date to move the investment
back to one of the Fund, he or she would be deemed, once again, to own shares of
the Fund and may do so without the imposition of any additional sales charges,
so long as the investment has been continuously invested in shares of the Money
Market Fund during the period between withdrawal and reinvestment.
Remember that each exchange represents the sale of shares of one fund
and the purchase of shares of another. Therefore, shareholders may realize a
taxable gain or loss on the transaction. Before making an exchange request, an
investor should consult a tax or other financial adviser to determine the tax
consequences of a particular exchange. The Distributor is entitled to receive a
fee from the Money Market Fund for certain support services at the annual rate
of .20 of 1% of the average daily net asset value of the shares for which it is
the holder or dealer of record. Because excessive trading can hurt the Fund's
performance and shareholders, the Fund reserve the right to temporarily or
permanently limit the number of exchanges or to otherwise prohibit or restrict
shareholders from using the Exchange Privilege at any time, without notice to
shareholders. In particular, a pattern of exchanges with a "market timing"
strategy may be disruptive to the Fund and may thus be restricted or refused.
Excessive use of the Exchange Privilege is defined as more than five exchanges
per calendar year. The restriction or termination of the Exchange Privilege does
not affect the rights of shareholders to redeem shares, as discussed in the
Prospectus.
The Money Market Funds are managed by Firstar Investment Research and
Management Company, an affiliate of Firstar Trust Company. The Portico Funds,
including the Money Market Funds, are unrelated to the The Trautman Kramer
Trust.
CHECK REDEMPTION. A shareholder may request on the Purchase Application
or by later written request to establish check redemption privileges for any of
the Money Market Funds. The redemption checks ("Checks") will be drawn on the
Money Market Fund in which the investor has made an investment. Checks will be
sent only to the registered owner(s) and only to the address of record. Checks
may be made payable to the order of any person in the amount of $250 or more.
Dividends are earned until the Check clears the Transfer Agent. When a Check is
presented to the Transfer Agent for payment, the Transfer Agent, as the
investor's agent, will cause the particular Money Market Fund involved to redeem
a sufficient number of the investor's shares to cover the amount of the Check.
Checks will not be returned to shareholders after clearance. The initial
checkbook is free, additional checkbooks are $5. The fee for additional
checkbooks will be deducted from the shareholder's account. There is no charge
to the investor for the use of the Checks; however, the Transfer Agent will
impose a $20 charge for stopping payment of a Check upon the request of the
investor, or if the Transfer Agent cannot honor a Check due to insufficient
funds or other valid reason. Because dividends on each Money Market Fund accrue
daily, Checks may not be used to close an account, as a small balance is likely
to result.
DIVIDENDS, DISTRIBUTIONS, AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS. The Fund pays dividends at least annually.
The Fund also distributes net capital gains (if any) at least annually.
Dividends and distributions of shares may be reinvested at net asset value
without an initial sales charge. Shareholders should indicate on the purchase
application whether they wish to receive dividends and distributions in cash.
Otherwise, all income dividends and capital gains distributions are
automatically reinvested in the Fund at the next determined net asset value
unless the Transfer Agent receives written notice from an individual shareholder
prior to the record date, requesting that the distributions and dividends be
distributed to the investor in cash.
FEDERAL TAXES. The Fund intends to qualify as a regulated investment
company by satisfying the requirements under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "IRS Code"). The Fund contemplates the
distribution of all of its net investment income and capital gains, if any, in
accordance with the timing requirements imposed by the IRS Code, so that it will
not be subject to federal income taxes or the 4% excise tax on undistributed
income.
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Distributions by the Fund of its net investment income and the excess,
if any, of its net short-term capital gain over its net long-term capital loss
are taxable to shareholders as ordinary income. These distributions are treated
as dividends for federal income tax purposes, but only a portion thereof may
qualify for the 70% dividends-received deduction for corporate shareholders
(which portion may not exceed the aggregate amount of qualifying dividends from
domestic corporations received by the Fund and must be designated by the Fund as
so qualifying). Distributions by the Fund of the excess, if any, of its net
long-term capital gain over its net short-term capital loss are designated as
capital gain dividends and are taxable to shareholders as long-term capital
gain, regardless of the length of time shareholders have held their shares. Such
distributions are not eligible for the dividends-received deduction. If a
shareholder disposes of shares in the Fund at a loss before holding such shares
for more than six months, the loss will be treated as a long-term capital loss
to the extent that the shareholder has received a capital gain dividend on those
shares.
Distributions to shareholders of the Fund will be treated in the same
manner for federal income tax purposes whether received in cash or in additional
shares. Distributions received by shareholders of the Fund in January of a given
year will be treated as received on December 31 of the preceding year provided
that they were declared to shareholders of record on a date in October,
November, or December of such preceding year. The Fund sends tax statements to
its shareholders (with copies to the Internal Revenue Service (the "IRS")) by
January 31 showing the amounts and tax status of distributions made (or deemed
made) during the preceding calendar year.
Income from securities of foreign issuers may be subject to foreign
withholding taxes. Credit for such foreign taxes, if any, will not pass through
to the shareholders.
OTHER TAX INFORMATION. The information above is only a summary of some
of the federal income tax consequences generally affecting the Fund and its U.S.
shareholders, and no attempt has been made to discuss individual tax
consequences. A prospective investor should also review the more detailed
discussion of federal income tax considerations in the Statement of Additional
Information. In addition to the federal income tax, a shareholder may be subject
to state or local taxes on his or her investment in the Fund, depending on the
laws of the shareholder's jurisdiction. INVESTORS CONSIDERING AN INVESTMENT IN
THE FUND SHOULD CONSULT THEIR TAX ADVISERS TO DETERMINE WHETHER THE FUND IS
SUITABLE TO THEIR PARTICULAR TAX SITUATION.
When investors sign their Purchase Application, they are asked to
provide their correct social security or taxpayer identification number and
other required certifications. If investors do not comply with IRS regulations,
the IRS requires the Fund to withhold 31% of amounts distributed to them by the
Fund as dividends or in redemption of their shares.
Because a shareholder's tax treatment depends on the shareholder's
purchase price and tax position, shareholders should keep their regular account
statements for use in determining their tax.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND PAYING AGENT
Firstar Trust Company serves as custodian for the Fund's portfolio
securities and cash, and as transfer and dividend paying agent, and in those
capacities maintains certain financial and accounting books and records pursuant
to agreements with the Trust. Its mailing address is 615 East Michigan Street,
Third Floor, Milwaukee, WI 53202.
COUNSEL AND INDEPENDENT ACCOUNTANTS
Kramer, Levin, Naftalis & Frankel, 919 Third Avenue, New York, N.Y.
10022, is counsel for the Trust. _______, has been appointed independent
accountants for the Trust.
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ADDITIONAL INFORMATION
The Trust may issue an unlimited number of shares and classes of the
Fund. Shares of each class of the 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 Trust 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 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. The Trust and the 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 Trust
Instrument. Under certain circumstances, the Trustees may be removed by action
of the Trustees or by the shareholders. Shareholders holding 10% or more of the
Trust's outstanding shares may call a special meeting of shareholders for the
purpose of voting upon the question of removal of Trustees.
The Trust's Board of Trustees may authorize the Trust to offer other funds which
may differ in the types of securities in which their assets may be invested.
The Code of Ethics of the Adviser, the Sub-Adviser and the Fund prohibit all
affiliated personnel from engaging in personal investment activities which
compete with or attempt to take advantage of the Fund's planned portfolio
transactions. Each entity maintains careful monitoring of compliance with the
Codes of Ethics.
DELAWARE LAW.
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 stockholders of Delaware corporations and the Trust Instrument
provides that shareholders will not be personally liable for liabilities of the
Trust. In light of Delaware law, the nature of the Trust's business, and the
nature of its assets, management of the Trust believes that the risk of personal
liability to the Fund shareholder would be extremely remote.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust will be required to use its property to protect or
compensate the shareholder. On request, the Trust will defend any claim made and
pay any judgment against a shareholder for any act or obligation of the Trust.
Therefore, financial loss resulting from liability as a shareholder will occur
only if the Trust itself cannot meet its obligations to indemnify shareholders
and pay judgments against them.
Delaware law authorizes electronic or telephone communications between
shareholders and the Trust. Under Delaware law, the Trust will have the
flexibility to respond to future business contingencies. For example, the
Trustees will have the power to incorporate the Trust, to merge or consolidate
it with another entity, to cause each fund to become a separate trust, and to
change the Trust's domicile without a shareholder vote. This flexibility could
help reduce the expense and frequency of future shareholder meetings for
non-investment related issues.
MISCELLANEOUS.
As of the date of this Prospectus, the Fund offers only the class of shares that
is offered by this Prospectus. Subsequent to the date of this Prospectus, the
Fund may offer additional classes of shares through a separate prospectus. Any
such additional classes may have different sales charges and other expenses,
which would affect investment performance.
Further information may be obtained by calling 1-800-___________ .
Shareholders will receive Semi-Annual Reports, which are unaudited, and Annual
Reports, which are audited by independent public accountants ("Reports"),
describing the investment operations of the Fund. Each of these Reports, when
available for a particular fiscal year end or the end of a semi-annual period,
is incorporated herein by reference. The Trust may include information in its
Reports to shareholders that (a) describes general economic trends,
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<PAGE>
(b) describes general trends within the financial services industry or the
mutual fund industry, (c) describes past or anticipated portfolio holdings for
the Fund or (d) describes investment management strategies for the Trust. Such
information is provided to inform shareholders of the activities of the Trust
for the most recent fiscal year or semi-annual period and to provide the views
of the Adviser, Sub-Adviser and/or the Trust's officers regarding expected
trends and strategies.
The Trust intends to eliminate duplicate mailings of Reports to an address at
which more than one shareholder of record with the same last name has indicated
that mail is to be delivered. Shareholders may receive additional copies of any
Report at no cost by writing to the Fund at the address listed on the cover page
of this Prospectus or by calling 1-800-___________ .
Inquiries regarding the Trust or the Fund may be directed in writing to the
Trust c/o Firstar Trust Company, P.O. Box 701, Milwaukee, Wisconsin 53201-0701,
or by telephone, toll-free, at 1-800-___________ .
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND THE STATEMENT
OF ADDITIONAL INFORMATION, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST
OR THE DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE TRUST
OR BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE.
16
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION - July __, 1997
THE TRAUTMAN KRAMER TRUST
TRAUTMAN KRAMER VALUE FUND
This Statement of Additional Information is not a prospectus. This
Statement of Additional Information is incorporated by reference in its entirety
into the Prospectus and should be read in conjunction with the Trust's current
Prospectus, copies of which may be obtained by writing The Trautman Kramer
Trust, c/o Firstar Trust Company, 615 East Michigan Street, Milwaukee, Wisconsin
53202 or calling (800) ______.
This Statement of Additional Information relates to the Trust's
Prospectus which is dated July __, 1997.
TABLE OF CONTENTS
PAGE
Investment Policies and Risks................................. 2
Investment Restrictions....................................... 5
Management.................................................... 7
Investment Adviser and Investment Advisory Agreements......... 8
Distribution Plans............................................. 9
Administrative Services Agreement............................. 9
Portfolio Transactions and Brokerage........................... 9
Allocation of Investments..................................... 10
Computation of Net Asset Value................................ 10
Purchase and Redemption of Shares............................. 11
Tax Matters................................................... 11
Performance Calculation....................................... 17
Additional Information........................................ 18
Reports ..................................................... 19
Financial Statements.......................................... 19
<PAGE>
The Trautman Kramer Trust (the "Trust") is a Delaware business trust
currently consisting of one fund, the Trautman Kramer Value Fund (the "Fund").
The Fund is an open-end, non-diversified management investment company. The
Fund's investment objective is long-term capital appreciation. There is minimal
emphasis on current income. Much of the information contained in this Statement
of Additional Information expands on subjects discussed in the Prospectus.
Capitalized terms not defined herein are used as defined in the Prospectus. No
investment in shares of the Fund should be made without first reading the Fund's
Prospectus.
INVESTMENT POLICIES AND RISKS
The following descriptions supplement the investment policies of the Fund
set forth in the Prospectus. The Fund's investments in the following securities
and other financial instruments are subject to the investment policies and
limitations described in the Prospectus and this Statement of Additional
Information.
1. WRITING COVERED CALL OPTIONS ON SECURITIES AND STOCK INDICES
The Fund may write covered call options on optionable securities or
stock indices of the types in which it is permitted to invest from time to time
as the Adviser determines is appropriate in seeking to attain its objective. A
call option written by the Fund gives the holder the right to buy the underlying
securities or index from the Fund at a stated exercise price. Options on stock
indices are settled in cash.
The Fund may write only covered call options, which means that, so
long as the Fund is obligated as the writer of a call option, it will own the
underlying securities subject to the option (or comparable securities or cash
satisfying the cover requirements of securities exchanges).
The Fund will receive a premium for writing a covered call option,
which increases the return of the Fund in the event the option expires
unexercised or is closed out at a profit. The amount of the premium will
reflect, among other things, the relationship of the market price of the
underlying security or index to the exercise price of the option, the term of
the option and the volatility of the market price of the underlying security or
index. By writing a covered call option, the Fund limits its opportunity to
profit from any increase in the market value of the underlying security or index
above the exercise price of the option.
The Fund may terminate an option that it has written prior to the
option's expiration by entering into a closing purchase transaction in which an
option is purchased having the same terms as the option written. The Fund will
realize a profit or loss from such transaction if the cost of such transaction
is less or more than the premium received from the writing of the option.
Because increases in the market price of a call option will generally reflect
increases in the market price of the underlying security or index, any loss
resulting from the repurchase of a call option is likely to be offset in whole
or in part by unrealized appreciation of the underlying security (or securities)
owned by the Fund.
2. PURCHASING PUT AND CALL OPTIONS ON SECURITIES AND STOCK INDICES
The Fund may purchase put options to protect its portfolio holdings
in an underlying stock index or security against a decline in market value. Such
hedge protection is provided during the life of the put option since the Fund,
as holder of the put option, is able to sell the underlying security or index at
the put exercise price regardless of any decline in the underlying market price
of the security or index. In order for a put option to be profitable, the market
price of the underlying security or index must decline sufficiently below the
exercise price to cover the premium and transaction costs. By using put options
in this manner, the Fund will reduce any profit it might otherwise have realized
in its underlying security or index by the premium paid for the put option and
by transaction costs, but it will retain the ability to benefit from future
increases in market value.
-2-
<PAGE>
The Fund may also purchase call options to hedge against an increase
in prices of stock indices or securities that it ultimately wants to buy. Such
hedge protection is provided during the life of the call option since the Fund,
as holder of the call option, is able to buy the underlying security or index at
the exercise price regardless of any increase in the underlying market price of
the security or index. In order for a call option to be profitable, the market
price of the underlying security or index must rise sufficiently above the
exercise price to cover the premium and transaction costs. By using call options
in this manner, the Fund will reduce any profit it might have realized had it
bought the underlying security or index at the time it purchased the call option
by the premium paid for the call option and by transaction costs, but it limits
the loss it will suffer if the security or index declines in value to such
premium and transaction costs.
3. BORROWING
The Fund may, from time to time, borrow up to 10% of the value of its
total assets from banks at prevailing interest rates as a temporary measure for
extraordinary or emergency purposes. The Fund may not purchase securities while
borrowings exceed 5% of the value of its total assets.
4. REPURCHASE AGREEMENTS
The Fund may invest up to 5% of its net assets in repurchase
agreements subject to resale to a bank or dealer at an agreed upon price which
reflects a net interest gain for the Fund. The Fund will receive interest from
the institution until the time when the repurchase is to occur.
The Fund will always receive as collateral U.S. Government or
short-term money market securities whose market value is equal to at least 100%
of the amount invested by the Fund, and the Fund will make payment for such
securities only upon the physical delivery or evidence by book entry transfer to
the account of its custodian. If the seller institution defaults, the Fund might
incur a loss or delay in the realization of proceeds if the value of the
collateral securing the repurchase agreement declines and it might incur
disposition costs in liquidating the collateral. The Fund attempts to minimize
such risks by entering into such transactions only with well-capitalized
financial institutions and specifying the required value of the underlying
collateral.
5. FUTURES CONTRACTS
The 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, currency 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 (the "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 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.
-3-
<PAGE>
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.
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 Fund
expects to earn interest income on its margin deposits.
In addition to the margin restrictions discussed above, transactions
in futures contracts may involve the segregation of funds pursuant to
requirements imposed by the CFTC. Under those requirements, where the 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 CFTC 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 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 CFTC
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 Fund
"covers" a long position. For example, instead of segregating assets, the 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 Fund. In addition, where the 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 Fund holds a short position
in a futures contract, it may cover by owning the instruments underlying the
contract. The 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 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
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 Fund.
When interest rates are expected to rise or market values of
portfolio securities are expected to fall, the 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 Fund, through the purchase of such contracts, can attempt to secure better
rates or prices for the Fund than might later be available in the market when it
effects anticipated purchases.
The Fund will only sell futures contracts to protect securities and
currencies it owns against price declines or purchase contracts to protect
against an increase in the price of securities it intends to purchase.
The 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 Fund could lose more than the original margin deposit
required to initiate a futures transaction.
-4-
<PAGE>
RISK FACTORS IN FUTURES TRANSACTIONS
Positions in futures contracts may 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 Fund would continue to be
required to make daily cash payments to maintain the required margin. In such
situations, if the 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 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 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 purchase 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 Fund are only for hedging purposes, the
Adviser does not believe that the Fund is subject to the risks of loss
frequently associated with futures transactions. The Fund would presumably have
sustained comparable losses 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 Fund does involve the risk
of imperfect or no correlation where the securities underlying futures contract
have different maturities than the portfolio securities being hedged. It is also
possible that the 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 Fund of margin deposits in the event of bankruptcy of a
broker with whom the Fund has an open position in a futures contract or related
option.
CONCLUSION
Unlike the fundamental investment objective of the Fund set forth
above and the investment restrictions set forth below which may not be changed
without shareholder approval, the Fund has the right to modify the investment
policies described above without shareholder approval.
INVESTMENT RESTRICTIONS
The following fundamental policies and investment restrictions have
been adopted by the Fund and except as noted, such policies and restrictions
cannot be changed without approval by the vote of a majority of the outstanding
voting shares of the Fund which, as defined by the Investment Company Act of
1940, as amended (the "1940 Act"), means the affirmative vote of the lesser of
(a) 67% or more of the shares of the Fund present at a meeting at which the
holders of more than 50% of the outstanding shares of the Fund are represented
in person or by proxy, or (b) more than 50% of the outstanding shares of the
Fund.
-5-
<PAGE>
The Fund may not:
1. Purchase or sell physical commodities unless acquired as a
result of ownership of securities or other instruments (but this
shall not prevent the 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 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 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 (as defined in the Investment
Company Act of 1940, as amended (the "1940 Act")), except that (a)
the 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 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 Fund may
borrow money as authorized by the 1940 Act.
4. Borrow money, except that the Fund may borrow money for
temporary or emergency purposes in an amount not exceeding 10% of the
value of its total assets at the time when the loan is made. Any
borrowing representing more than 5% of the Fund's total assets must
be repaid before the Fund may make additional investments.
5. Lend any security or make any other loan but this limitation
does not apply to purchases of publicly issued debt securities or to
repurchase agreements.
6. Underwrite securities issued by others, except to the extent
that the Fund may be considered an underwriter within the meaning of
the Securities Act of 1933, as amended (the "1933 Act") in the
disposition of restricted securities.
7. With respect to 50% of its total assets, 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 Fund's total assets would be
invested in the securities of that issuer, or (b) the Fund would hold
more than 10% of the outstanding voting securities of that issuer.
8. Purchase the securities of an issuer if, as a result, more
than 25% of its total assets would be invested in the securities of
companies whose principal business activities are in the same
industry. These limitations do not apply to securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities.
The following restrictions are non-fundamental and may be changed by
the Fund's Board of Trustees. Pursuant to such restrictions, the Fund will not:
(1) make short sales of securities, other than short sales
"against the box," or purchase securities on margin except for
short-term credits necessary for clearance of portfolio transactions,
provided that this restriction will not be applied to limit the use
of options, futures contracts and related options, in the manner
otherwise permitted by the investment restrictions, policies and
investment program of the Fund;
(2) purchase the securities of any other investment company, if
a purchasing Fund, immediately after such purchase or acquisition,
owns in the aggregate, (i) more than 3% of the total outstanding
-6-
<PAGE>
voting stock of such investment company, (ii) securities issued by
such investment company having an aggregate value in excess of 5% of
the value of the total assets of the Fund, or (iii) securities issued
by such investment company and all other investment companies having
an aggregate value in excess of 10% of the value of the total assets
of the Fund;
(3) invest more than 10% of its total net assets in illiquid
securities. Illiquid securities are securities that are not readily
marketable or cannot be disposed of promptly within seven days and in
the usual course of business without taking a materially reduced
price. Such securities include, but are not limited to, time deposits
and repurchase agreements with maturities longer than seven days.
Securities that may be resold under Rule 144A or securities offered
pursuant to Section 4(2) of the Securities Act of 1933, as amended,
shall not be deemed illiquid solely by reason of being unregistered.
The Investment Adviser shall determine whether a particular security
is deemed to be liquid based on the trading markets for the specific
security and other factors; and
GENERAL. The policies and limitations listed above supplement those
set forth in the Prospectus. Unless otherwise noted, whenever an investment
policy or limitation states a maximum percentage of the Fund's assets that may
be invested in any security or other asset, or sets forth a policy regarding
quality standards, such standard or percentage limitation will be determined
immediately after and as a result of the Fund's acquisition of such security or
other asset except in the case of borrowing (or other activities that may be
deemed to result in the issuance of a "senior security" under the 1940 Act).
Accordingly, any subsequent change in values, net assets, or other circumstances
will not be considered when determining whether the investment complies with the
Fund's investment policies and limitations. If the value of the Fund's holdings
of illiquid securities at any time exceeds the percentage limitation applicable
at the time of acquisition due to subsequent fluctuations in value or other
reasons, the Trustees will consider what actions, if any, are appropriate to
maintain adequate liquidity.
MANAGEMENT
The overall management of the business and affairs of the Fund is
vested with the Board of Trustees. The Board of Trustees approves all
significant agreements between the Trust or the Fund and persons or companies
furnishing services to the Fund, including the Fund's agreement with an
investment advisor, custodian and transfer agent. The day-to-day operations of
the Fund are delegated to the Fund's officers subject always to the investment
objectives and policies of the Fund and to general supervision by the Trust's
Board of Trustees.
The Trustees and officers and their principal occupations are noted
below. Unless otherwise indicated the address of each Trustee and executive
officer is 500 Fifth Avenue, New York, New York 10110.
ROBERT KRAMER, CHAIRMAN. [INSERT BIOGRAPHICAL INFORMATION].
MARK BARBERA, CHIEF FINANCIAL OFFICER. [INSERT BIOGRAPHICAL INFORMATION].
[INSERT TRUSTEES]
GREGORY TRAUTMAN, PRESIDENT. [INSERT BIOGRAPHICAL INFORMATION].
[INSERT OTHER OFFICERS]
* Interested person of the Fund as defined in the 1940 Act.
-7-
<PAGE>
The Fund does not pay direct remuneration to any officer of the Fund.
For the upcoming fiscal year, 1997, each disinterested Trustee will receive $250
per board meeting attended. "Interested" Trustees do not receive Trustees' fees.
The Trust will not reimburse Trustee expenses.
The table below illustrates the proposed compensation to paid to each
Trustee for the Trust's upcoming fiscal year:
<TABLE>
<CAPTION>
Pension or Total
Retirement Compensation
Aggregate Benefits Accrued Estimated Annual from Fund and
Name of Person, Compensation as Part of Fund Benefits Upon Fund Complex
Position from Fund Expenses Retirement Paid to Trustees
- -------- --------- -------- ---------- ----------------
<S> <C> <C> <C> <C>
__ $__ $0 $0 $__
__ $__ $0 $0 $__
__ $__ $0 $0 $__
__ $__ $0 $0 $__
__ $__ $0 $0 $__
</TABLE>
INVESTMENT ADVISER AND INVESTMENT ADVISORY AGREEMENT
Trautman Kramer (the "Adviser"), 500 Fifth Avenue, New York, New York
10110, acts as the The Agreement provide that the Adviser identify and analyze
possible investments for the Fund, determine the amount and timing of such
investments, and the form of investment. The Adviser has the responsibility of
monitoring and reviewing the Fund's portfolio, and, on a regular basis, to
recommend the ultimate disposition of such investments. It is the Adviser's
responsibility to cause the purchase and sale of securities in the Fund's
portfolio, subject at all times to the policies set forth by the Trust's Board
of Trustees. In addition, the Adviser also provides certain administrative and
managerial services to the Fund.
The Adviser receives a fee from Fund, calculated daily and payable
monthly, for the performance of its services at an annual rate of 1.00% of
average daily net assets. The advisory fees are higher than that paid by most
investment companies but the Board of Trustees believes them to be reasonable in
light of the services the Fund receives thereunder.
Under the terms of the Agreement, the Fund pays all of its expenses
(other than those expenses specifically assumed by the Adviser and the Fund's
distributor) including the costs incurred in connection with the maintenance of
its registration under the Securities Act of 1933, as amended, and the 1940 Act,
printing of prospectuses distributed to shareholders, taxes or governmental
fees, brokerage commissions, custodial, transfer and shareholder servicing
agents, expenses of outside counsel and independent accountants, preparation of
shareholder reports, and expenses of Trustee and shareholder meetings.
The Agreement may be terminated without penalty on 60 days' written
notice by a vote of the majority of the Trust's Board of Trustees or by the
Adviser, or by holders of a majority of the Fund's outstanding shares. The
Fund's Agreement will continue for two years from its effective date and from
year-to-year thereafter provided it is approved, at least annually, in the
manner stipulated in the 1940 Act. This requires that the Agreement and any
renewal thereof be approved by a vote of the majority of the Fund's Trustees who
are not parties thereto or interested persons of any such party, cast in person
at a meeting specifically called for the purpose of voting on such approval.
-8-
<PAGE>
[Add Sub-Adviser]
DISTRIBUTION PLANS
The Fund has adopted a distribution plan pursuant to Rule 12b-1 of
the 1940 Act (the "Plan"). The Plan provides that the Fund may incur
distribution expenses related to the sale of shares of up to .25% per annum of
its average daily net assets.
The plan provides that the Fund may finance activities which are
primarily intended to result in the sale of the Fund's shares, including, but
not limited to, advertising, printing of prospectuses and reports for other than
existing shareholders, preparation and distribution of advertising material and
sales literature and payments to dealers and shareholder servicing agents
including Trautman Kramer & Company who enter into agreements with the Fund or
its distributor.
In approving the Plan in accordance with the requirements of Rule
12b-1 under the 1940 Act, the Trustees (including the "disinterested" Trustees,
as defined in the 1940 Act) considered various factors and determined that there
is a reasonable likelihood that the Plan will benefit the Fund and its
shareholders. The Plan will continue in effect from year to year if specifically
approved annually (a) by the majority of the Fund's outstanding voting shares or
by the Board of Trustees and (b) by the vote of a majority of the disinterested
Trustees. While the Plan remains in effect, the Fund's Principal Financial
Officer shall prepare and furnish to the Board of Trustees a written report
setting forth the amounts spent by the 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 each of the Plans must be approved by the Board
of Trustees and by the disinterested Trustees cast in person at a meeting called
specifically for that purpose. While the Plan is in effect, the selection and
nomination of the disinterested Trustees shall be made by those disinterested
Trustees then in office.
ADMINISTRATIVE SERVICES AGREEMENT
Firstar Trust Company ("Firstar") provides administrative services to
the Fund pursuant to an Administrative Services Agreement with the Fund. Under
the Administrative Services Agreement, Firstar provides administrative services
to all aspects of the Fund's operations, including the Fund's receipt of
services for which the Fund is obligated to pay, provides the Fund with general
office facilities and provides, at the Fund's expense, the services of persons
necessary to perform such supervisory, administrative and clerical functions as
are needed to effectively operate the Fund. Those persons, as well as certain
employees and Trustees of the Fund, may be directors, officers or employees of
(and persons providing services to the Fund may include) the Adviser and its
affiliates. For these services and facilities, Firstar receives with respect to
the Fund a fee computed and paid monthly at an annual rate of .05% on the first
$200 million of the Fund's average net asets, .05% on the next $500 million of
the Fund's average net assets and .03% on any remaining average net assets in
excess of $700 million, subject to an annual minimum fee of $25,500.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to the supervision of the Board of Trustees, decisions to buy
and sell securities for the Fund are made by the Adviser or the Sub-Adviser. The
Adviser and the Sub-Adviser are each authorized to allocate the orders placed by
them on behalf of the Fund to such unaffiliated brokers who also provide
research or statistical material, or other services to the Fund or the Adviser
or the Sub-Adviser for the Fund's use. Such allocation shall be in such amounts
and proportions as the Adviser and the Sub-Adviser shall determine and the
Adviser and the Sub-Adviser will report on said allocations regularly to the
Board of Trustees indicating the unaffiliated brokers to whom such allocations
have been made and the basis therefor. In addition, the Adviser may consider
sales of shares of the Fund and of any other funds advised or managed by the
Adviser and the Sub-Adviser as a factor in the selection of unaffiliated brokers
to execute portfolio transactions for the Fund, subject to the requirements of
best execution. The Trustees have authorized the allocation of brokerage to
affiliated
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broker-dealers on an agency basis to effect portfolio transactions. The Trustees
have adopted procedures incorporating the standards of Rule 17e-1 of the 1940
Act, which require that the commission paid to affiliated broker-dealers must be
"reasonable and fair compared to the commission, fee or other remuneration
received, or to be received, by other brokers in connection with comparable
transactions involving similar securities during a comparable period of time."
At times, the Fund may also purchase portfolio securities directly from dealers
acting as principals, underwriters or market makers. As these transactions are
usually conducted on a net basis, no brokerage commissions are paid by the Fund.
In selecting a broker to execute each particular transaction, the
Adviser and the Sub-Adviser will take the following into consideration: the best
net price available; the reliability, integrity and financial condition of the
broker; the size and difficulty in executing the order; and, the value of the
expected contribution of the broker to the investment performance of the Fund on
a continuing basis. Accordingly, the cost of the brokerage commissions to the
Fund in any transaction may be greater than that available from other brokers if
the difference is reasonably justified by other aspects of the portfolio
execution services offered. Subject to such policies and procedures as the Board
of Trustees may determine, neither the Adviser nor the Sub-Adviser shall be
deemed to have acted unlawfully or to have breached any duty solely by reason of
its having caused the Fund to pay an unaffiliated broker that provides research
services to the Adviser or the Sub-Adviser for the Fund's use an amount of
commission for effecting a portfolio investment transaction in excess of the
amount of commission another broker would have charged for effecting the
transaction, if the Adviser or the Sub-Adviser determines in good faith that
such amount of commission was reasonable in relation to the value of the
research service provided by such broker viewed in terms of either that
particular transaction of ongoing responsibilities of the Adviser and the
Sub-Adviser with respect to the Fund.
ALLOCATION OF INVESTMENTS
The Adviser has other advisory clients which include individuals,
trusts, pension and profit sharing funds, some of which have similar investment
objectives to the Fund. As such, there will be times when the Adviser may
recommend purchases and/or sales of the same portfolio securities for the Fund
and its other clients. In such circumstances, it will be the policy of the
Adviser to allocate purchases and sales among the Fund and its other clients in
a manner which the Investment Adviser deems equitable, taking into consideration
such factors as size of account, concentration of holdings, investment
objectives, tax status, cash availability, purchase cost, holding period and
other pertinent factors relative to each account. Simultaneous transactions may
have an adverse effect upon the price or volume of a security purchased by the
Fund.
COMPUTATION OF NET ASSET VALUE
The Fund will determine the net asset value of its shares once daily
as of the close of trading on the New York Stock Exchange (the "Exchange") on
each day that the Exchange is open for business. It is expected that the
Exchange will be closed on Saturdays and Sundays and on New Year's Day,
President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. The Fund may make or cause to be made a more
frequent determination of the net asset value and offering price, which
determination shall reasonably reflect any material changes in the value of
securities and other assets held by the Fund from the immediately preceding
determination of net asset value. The net asset value is determined by dividing
the market value of the Fund's investments as of the close of trading plus any
cash or other assets (including dividends receivable and accrued interest) less
all liabilities (including accrued expenses) by the number of the Fund's shares
outstanding. Securities traded on the New York Stock Exchange or the American
Stock Exchange will be valued at the last sale price, or if no sale, at the mean
between the latest bid and asked price. Securities traded in any other U.S. or
foreign market shall be valued in a manner as similar as possible to the above,
or if not so traded, on the basis of the latest available price. Securities sold
short "against the box" will be valued at market as determined above; however,
in instances where the Fund has sold securities short against a long position in
the issuer's convertible securities, for the purpose of valuation, the
securities in the short position will be valued at the "asked" price rather than
the mean of the last "bid" and "asked" prices.
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Investments in gold bullion will be valued at their respective fair market
values determined on the basis of the mean between the last current bid and
asked prices based on dealer or exchanges quotations. Where there are no readily
available quotations for securities they will be valued at a fair value as
determined by the Board of Trustees acting in good faith.
PURCHASE AND REDEMPTION OF SHARES
A complete description of the manner by a which the Fund's shares may
be purchased and redeemed, including discussions concerning the front-end sales
load appears in the Prospectus under the headings "Purchase of Shares" and
"Redemption of Shares" respectively.
TAX MATTERS [To be renewed by KL tax dept.]
The following is only a summary of certain additional tax
considerations generally affecting the Fund and its shareholders that are not
described in the Prospectus. No attempt is made to present a detailed
explanation of the tax treatment of the Fund or its shareholders, and the
discussions here and in the Prospectus are not intended as substitutes for
careful tax planning.
Qualification as a Regulated Investment Company
The Fund has elected to be taxed as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"). As a regulated investment company, the Fund is not subject to federal
income tax on the portion of its net investment income (i.e., taxable interest,
dividends and other taxable ordinary income, net of expenses) and capital gain
net income (i.e., the excess of capital gains over capital losses) that it
distributes to shareholders, provided that it distributes at least 90% of its
investment company taxable income (i.e., net investment income and the excess of
net short-term capital gain over net long-term capital loss) for the taxable
year (the "Distribution Requirement"), and satisfies certain other requirements
of the Code that are described below. Distributions by the Fund made during the
taxable year or, under specified circumstances, within twelve months after the
close of the taxable year, will be considered distributions of income and gains
of the taxable year and can therefore satisfy the Distribution Requirement.
In addition to satisfying the Distribution Requirement, a regulated
investment company must: (1) derive at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans, gains
from the sale or other disposition of stock or securities or foreign currencies
(to the extent such currency gains are directly related to the regulated
investment company's principal business of investing in stock or securities) and
other income (including but not limited to gains from options, futures or
forward contracts) derived with respect to its business of investing in such
stock, securities or currencies (the "Income Requirement"); and (2) derive less
than 30% of its gross income (exclusive of certain gains on designated hedging
transactions that are offset by realized or unrealized losses on offsetting
positions) from the sale or other disposition of stock, securities or foreign
currencies (or options, futures or forward contracts thereon) held for less than
three months (the "Short-Short Gain Test"). However, foreign currency gains,
including those derived from options, futures and forwards, will not in any
event be characterized as Short-Short Gain if they are directly related to the
regulated investment company's investments in stock or securities (or options or
futures thereon). Because of the Short-Short Gain Test, the Fund may have to
limit the sale of appreciated securities that it has held for less than three
months. However, the Short-Short Gain Test will not prevent the Fund from
disposing of investments at a loss, since the recognition of a loss before the
expiration of the three-month holding period is disregarded for this purpose.
Interest (including original issue discount) received by the Fund at maturity or
upon the disposition of a security held for less than three months will not be
treated as gross income derived from the sale or other disposition of such
security within the meaning of the Short-Short Gain Test. However, income that
is attributable to realized market appreciation will be treated as gross income
from the sale or other disposition of securities for this purpose.
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In general, gain or loss recognized by the Fund on the disposition of
an asset will be a capital gain or loss. However, gain recognized on the
disposition of a debt obligation purchased by the Fund at a market discount
(generally, at a price less than its principal amount) will be treated as
ordinary income to the extent of the portion of the market discount which
accrued during the period of time the Fund held the debt obligation. In
addition, under the rules of Code Section 988, gain or loss recognized on the
disposition of a debt obligation denominated in a foreign currency or an option
with respect thereto (but only to the extent attributable to changes in foreign
currency exchange rates), and gain or loss recognized on the disposition of a
foreign currency forward contract, futures contract, option or similar financial
instrument, or of foreign currency itself, except for regulated futures
contracts or non-equity options subject to Code Section 1256 (unless the Fund
elects otherwise), will generally be treated as ordinary income or loss.
In general, for purposes of determining whether capital gain or loss
recognized by the Fund on the disposition of an asset is long-term or
short-term, the holding period of the asset may be affected if (1) the asset is
used to close a "short sale" (which includes for certain purposes the
acquisition of a put option) or is substantially identical to another asset so
used, (2) the asset is otherwise held by the Fund as part of a "straddle" (which
term generally excludes a situation where the asset is stock and the Fund grants
a qualified covered call option (which, among other things, must not be
deep-in-the-money) with respect thereto) or (3) the asset is stock and the Fund
grants an in-the-money qualified covered call option with respect thereto.
However, for purposes of the Short-Short Gain Test, the holding period of the
asset disposed of may be reduced only in the case of clause (1) above. In
addition, the Fund may be required to defer the recognition of a loss on the
disposition of an asset held as part of a straddle to the extent of any
unrecognized gain on the offsetting position.
Any gain recognized by the Fund on the lapse of, or any gain or loss
recognized by the Fund from a closing transaction with respect to, an option
written by the Fund will be treated as a short-term capital gain or loss. For
purposes of the Short-Short Gain Test, the holding period of an option written
by the Fund will commence on the date it is written and end on the date it
lapses or the date a closing transaction is entered into. Accordingly, the Fund
may be limited in its ability to write options which expire within three months
and to enter into closing transactions at a gain within three months of the
writing of options.
Transactions that may be engaged in by the Fund (such as regulated
futures contracts, certain foreign currency contracts, and options on stock
indexes and futures contracts) will be subject to special tax treatment as
"Section 1256 contracts." Section 1256 contracts are treated as if they are sold
for their fair market value on the last business day of the taxable year, even
though a taxpayer's obligations (or rights) under such contracts have not
terminated (by delivery, exercise, entering into a closing transaction or
otherwise) as of such date. Any gain or loss recognized as a consequence of the
year-end deemed disposition of Section 1256 contracts is taken into account for
the taxable year together with any other gain or loss that was previously
recognized upon the termination of Section 1256 contracts during that taxable
year. Any capital gain or loss for the taxable year with respect to Section 1256
contracts (including any capital gain or loss arising as a consequence of the
year-end deemed sale of such contracts) is generally treated as 60% long-term
capital gain or loss and 40% short-term capital gain or loss. The Fund, however,
may elect not to have this special tax treatment apply to Section 1256 contracts
that are part of a "mixed straddle" with other investments of the Fund that are
not Section 1256 contracts. Gains arising from Section 1256 contracts will be
treated for purposes of the Short-Short Gain Test as being derived from
securities held for not less than three months if the gains arise as a result of
a constructive sale under Code Section 1256.
The Fund may purchase securities of certain foreign investment funds
or trusts which constitute passive foreign investment companies ("PFICs") for
federal income tax purposes. If the Fund invests in a PFIC, it may elect to
treat the PFIC as a qualifying electing fund (a "QEF") in which event the Fund
will each year have ordinary income equal to its pro rata share of the PFIC's
ordinary earnings for the year and long-term capital gain equal to its pro rata
share of the PFIC's net capital gain for the year, regardless of whether the
Fund receives distributions of any such ordinary earning or capital gain from
the PFIC. If the Fund does not (because it is unable to, chooses not to or
otherwise) elect to treat the PFIC as a QEF, then in general (1) any gain
recognized by the Fund upon sale or other disposition of its interest in the
PFIC or any excess distribution received by the Fund from the PFIC will be
allocated ratably over the Fund's holding period of its interest in
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the PFIC, (2) the portion of such gain or excess distribution so allocated to
the year in which the gain is recognized or the excess distribution is received
shall be included in the Fund's gross income for such year as ordinary income
(and the distribution of such portion by the Fund to shareholders will be
taxable as an ordinary income dividend, but such portion will not be subject to
tax at the Fund level), (3) the Fund shall be liable for tax on the portions of
such gain or excess distribution so allocated to prior years in an amount equal
to, for each such prior year, (i) the amount of gain or excess distribution
allocated to such prior year multiplied by the highest tax rate (individual or
corporate) in effect for such prior year plus (ii) interest on the amount
determined under clause (i) for the period from the due date for filing a return
for such prior year until the date for filing a return for the year in which the
gain is recognized or the excess distribution is received at the rates and
methods applicable to underpayments of tax for such period, and (4) the
distribution by the Fund to shareholders of the portions of such gain or excess
distribution so allocated to prior years (net of the tax payable by the Fund
thereon) will again be taxable to the shareholders as an ordinary income
dividend.
Under proposed Treasury Regulations the Fund can elect to recognize
as gain the excess, as of the last day of its taxable year, of the fair market
value of each share of PFIC stock over the Fund's adjusted tax basis in that
share ("mark to market gain"). Such mark to market gain will be included by the
Fund as ordinary income, such gain will not be subject to the Short-Short Gain
Test, and the Fund's holding period with respect to such PFIC stock commences on
the first day of the next taxable year. If the Fund makes such election in the
first taxable year it holds PFIC stock, the Fund will include ordinary income
from any mark to market gain, if any, and will not incur the tax described in
the previous paragraph.
Treasury Regulations permit a regulated investment company, in
determining its investment company taxable income and net capital gain (i.e.,
the excess of net long-term capital gain over net short-term capital loss) for
any taxable year, to elect (unless it has made a taxable year election for
excise tax purposes as discussed below) to treat all or any part of any net
capital loss, any net long-term capital loss or any net foreign currency loss
incurred after October 31 as if it had been incurred in the succeeding year.
In addition to satisfying the requirements described above, the Fund
must satisfy an asset diversification test in order to qualify as a regulated
investment company. Under this test, at the close of each quarter of the Fund's
taxable year, at least 50% of the value of the Fund's assets must consist of
cash and cash items, U.S. Government securities, securities of other regulated
investment companies, and securities of other issuers (as to which the Fund has
not invested more than 5% of the value of the Fund's total assets in securities
of such issuer and as to which the Fund does not hold more than 10% of the
outstanding voting securities of such issuer), and no more than 25% of the value
of its total assets may be invested in the securities of any one issuer (other
than U.S. Government securities and securities of other regulated investment
companies), or in two or more issuers which the Fund controls and which are
engaged in the same or similar trades or businesses. Generally, an option (call
or put) with respect to a security is treated as issued by the issuer of the
security not the issuer of the option.
If for any taxable year the Fund does not qualify as a regulated
investment company, all of its taxable income (including its net capital gain)
will be subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and such distributions will be taxable to the
shareholders as ordinary dividends to the extent of the Fund's current and
accumulated earnings and profits. Such distributions generally will be eligible
for the dividends-received deduction in the case of corporate shareholders.
Excise Tax on Regulated Investment Companies
A 4% non-deductible excise tax is imposed on a regulated investment
company that fails to distribute in each calendar year an amount equal to 98% of
ordinary taxable income for the calendar year and 98% of capital gain net income
for the one-year period ended on October 31 of such calendar year (or, at the
election of a regulated investment company having a taxable year ending November
30 or December 31, for its taxable year (a "taxable year election")). The
balance of such income must be distributed during the next calendar
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year. For the foregoing purposes, a regulated investment company is treated as
having distributed any amount on which it is subject to income tax for any
taxable year ending in such calendar year.
For purposes of the excise tax, a regulated investment company shall:
(1) reduce its capital gain net income (but not below its net capital gain) by
the amount of any net ordinary loss for the calendar year; and (2) exclude
foreign currency gains and losses incurred after October 31 of any year (or
after the end of its taxable year if it has made a taxable year election) in
determining the amount of ordinary taxable income for the current calendar year
(and, instead, include such gains and losses in determining ordinary taxable
income for the succeeding calendar year).
The Fund intends to make sufficient distributions or deemed
distributions of its ordinary taxable income and capital gain net income prior
to the end of each calendar year to avoid liability for the excise tax. However,
investors should note that the Fund may in certain circumstances be required to
liquidate portfolio investments to make sufficient distributions to avoid excise
tax liability.
Fund Distributions
The Fund anticipates distributing substantially all of its investment
company taxable income for each taxable year. Such distributions will be taxable
to shareholders as ordinary income and treated as dividends for federal income
tax purposes. Such dividends paid by the Fund will qualify for the 70%
dividends-received deduction for corporate shareholders only to the extent
discussed below. Such dividends paid by the Government and the Fund generally
should not qualify for the 70% dividends-received deduction for corporate
shareholders.
The Fund may either retain or distribute to shareholders its net
capital gain for each taxable year. The Fund currently intends to distribute any
such amounts. If net capital gain is distributed and designated as a capital
gain dividend, it will be taxable to shareholders as long-term capital gain,
regardless of the length of time the shareholder has held his shares or whether
such gain was recognized by the Fund prior to the date on which the shareholder
acquired his shares. The Code provides, however, that under certain conditions
only 50% of the capital gain recognized upon the Fund's disposition of domestic
"small business" stock will be subject to tax.
Conversely, if the Fund elects to retain its net capital gain, the
Fund will be taxed thereon (except to the extent of any available capital loss
carryovers) at the 35% corporate tax rate. If the Fund elects to retain its net
capital gain, it is expected that the Fund also will elect to have shareholders
of record on the last day of its taxable year treated as if each received a
distribution of his pro rata share of such gain, with the result that each
shareholder will be required to report his pro rata share of such gain on his
tax return as long-term capital gain, will receive a refundable tax credit for
his pro rata share of tax paid by the Fund on the gain, and will increase the
tax basis for his shares by an amount equal to the deemed distribution less the
tax credit.
Ordinary income dividends paid by the Fund with respect to a taxable
year will qualify for the 70% dividends-received deduction generally available
to corporations (other than corporations, such as S corporations, which are not
eligible for the deduction because of their special characteristics and other
than for purposes of special taxes such as the accumulated earnings tax and the
personal holding company tax) to the extent of the amount of qualifying
dividends received by the Fund from domestic corporations for the taxable year.
A dividend received by the Fund will not be treated as a qualifying dividend (1)
if it has been received with respect to any share of stock that the Fund has
held for less than 46 days (91 days in the case of certain preferred stock),
excluding for this purpose under the rules of Code Section 246(c)(3) and (4):
(i) any day more than 45 days (or 90 days in the case of certain preferred
stock) after the date on which the stock becomes ex- dividend and (ii) any
period during which the Fund has an option to sell, is under a contractual
obligation to sell, has made and not closed a short sale of, is the grantor of a
deep-in-the-money or otherwise nonqualified option to buy, or has otherwise
diminished its risk of loss by holding other positions with respect to, such (or
substantially identical) stock; (2) to the extent that the Fund is under an
obligation (pursuant to a short sale or otherwise) to make related payments with
respect to positions in substantially similar or related property; or (3)
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to the extent the stock on which the dividend is paid is treated as
debt-financed under the rules of Code Section 246A. Moreover, the
dividends-received deduction for a corporate shareholder may be disallowed or
reduced (1) if the corporate shareholder fails to satisfy the foregoing
requirements with respect to its shares of the Fund or (2) by application of
Code Section 246(b) which in general limits the dividends-received deduction to
70% of the shareholder's taxable income (determined without regard to the
dividends-received deduction and certain other items). Since an insignificant
portion of the Fund will be invested in stock of domestic corporations, the
ordinary dividends distributed by the Fund will not qualify for the
dividends-received deduction for corporate shareholders.
Alternative minimum tax ("AMT") is imposed in addition to, but only
to the extent it exceeds, the regular tax and is computed at a maximum marginal
rate of 28% for noncorporate taxpayers and 20% for corporate taxpayers on the
excess of the taxpayer's alternative minimum taxable income ("AMTI") over an
exemption amount. For purposes of the corporate AMT, the corporate
dividends-received deduction is not itself an item of tax preference that must
be added back to taxable income or is otherwise disallowed in determining a
corporation's AMTI. However, a corporate shareholder will generally be required
to take the full amount of any dividend received from the Fund into account
(without a dividends-received deduction) in determining its adjusted current
earnings, which are used in computing an additional corporate preference item
(i.e., 75% of the excess of a corporate taxpayer's adjusted current earnings
over its AMTI (determined without regard to this item and the AMT net operating
loss deduction)) includable in AMTI.
Investment income that may be received by the Fund from sources
within foreign countries may be subject to foreign taxes withheld at the source.
The United States has entered into tax treaties with many foreign countries
which entitle the Fund to a reduced rate of, or exemption from, taxes on such
income. It is impossible to determine the effective rate of foreign tax in
advance since the amount of the Fund's assets to be invested in various
countries is not known. If more than 50% of the value of the Fund's total assets
at the close of its taxable year consist of the stock or securities of foreign
corporations, the Fund may elect to "pass through" to the Fund's shareholders
the amount of foreign taxes paid by the Fund. If the Fund so elects, each
shareholder would be required to include in gross income, even though not
actually received, his pro rata share of the foreign taxes paid by the Fund, but
would be treated as having paid his pro rata share of such foreign taxes and
would therefore be allowed to either deduct such amount in computing taxable
income or use such amount (subject to various Code limitations) as a foreign tax
credit against federal income tax (but not both). For purposes of the foreign
tax credit limitation rules of the Code, each shareholder would treat as foreign
source income his pro rata share of such foreign taxes plus the portion of
dividends received from the Fund representing income derived from foreign
sources. No deduction for foreign taxes could be claimed by an individual
shareholder who does not itemize deductions. Each shareholder should consult his
own tax adviser regarding the potential application of foreign tax credits.
Distributions by the Fund that do not constitute ordinary income
dividends or capital gain dividends will be treated as a return of capital to
the extent of (and in reduction of) the shareholder's tax basis in his shares;
any excess will be treated as gain from the sale of his shares, as discussed
below.
Distributions by the Fund will be treated in the manner described
above regardless of whether such distributions are paid in cash or reinvested in
additional shares of the Fund (or of another fund). Shareholders receiving a
distribution in the form of additional shares will be treated as receiving a
distribution in an amount equal to the fair market value of the shares received,
determined as of the reinvestment date. In addition, if the net asset value at
the time a shareholder purchases shares of the Fund reflects undistributed net
investment income or recognized capital gain net income, or unrealized
appreciation in the value of the assets of the Fund, distributions of such
amounts will be taxable to the shareholder in the manner described above,
although such distributions economically constitute a return of capital to the
shareholder.
Ordinarily, shareholders are required to take distributions by the
Fund into account in the year in which the distributions are made. However,
dividends declared in October, November or December of any year and payable to
shareholders of record on a specified date in such a month will be deemed to
have been
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received by the shareholders (and made by the Fund) on December 31 of such
calendar year if such dividends are actually paid in January of the following
year. Shareholders will be advised annually as to the U.S. federal income tax
consequences of distributions made (or deemed made) during the year.
The Fund will be required in certain cases to withhold and remit to
the U.S. Treasury 31% of ordinary income dividends and capital gain dividends,
and the proceeds of redemption of shares, paid to any shareholder (1) who has
provided either an incorrect tax identification number or no number at all, (2)
who is subject to backup withholding by the IRS for failure to report the
receipt of interest or dividend income properly, or (3) who has failed to
certify to the Fund that it is not subject to backup withholding or that it is a
corporation or other "exempt recipient."
Sale or Redemption of Shares
A shareholder will recognize gain or loss on the sale or redemption
of shares of the Fund in an amount equal to the difference between the proceeds
of the sale or redemption and the shareholder's adjusted tax basis in the
shares. All or a portion of any loss so recognized may be disallowed if the
shareholder purchases other shares of the Fund within 30 days before or after
the sale or redemption. In general, any gain or loss arising from (or treated as
arising from) the sale or redemption of shares of the Fund will be considered
capital gain or loss and will be long-term capital gain or loss if the shares
were held for longer than one year. However, any capital loss arising from the
sale or redemption of shares held for six months or less will be treated as a
long-term capital loss to the extent of the amount of capital gain dividends
received on such shares. For this purpose, the special holding period rules of
Code Section 246(c)(3) and (4) (discussed above in connection with the
dividends-received deduction for corporations) generally will apply in
determining the holding period of shares. Long-term capital gains of
noncorporate taxpayers are currently taxed at a maximum rate 11.6% lower than
the maximum rate applicable to ordinary income. Capital losses in any year are
deductible only to the extent of capital gains plus, in the case of a
noncorporate taxpayer, $3,000 of ordinary income.
If a shareholder (1) incurs a sales load in acquiring shares of the
Fund, (2) disposes of such shares less than 91 days after they are acquired and
(3) subsequently acquires shares of the Fund or another fund at a reduced sales
load pursuant to a right to reinvest at such reduced sales load acquired in
connection with the acquisition of the shares disposed of, then the sales load
on the shares disposed of (to the extent of the reduction in the sales load on
the shares subsequently acquired) shall not be taken into account in determining
gain or loss on the shares disposed of but shall be treated as incurred on the
acquisition of the shares subsequently acquired.
Foreign Shareholders
Taxation of a shareholder who, as to the United States, is a
nonresident alien individual, foreign trust or estate, foreign corporation, or
foreign partnership ("foreign shareholder"), depends on whether the income from
the Fund is "effectively connected" with a U.S. trade or business carried on by
such shareholder.
If the income from the Fund is not effectively connected with a U.S.
trade or business carried on by a foreign shareholder, ordinary income dividends
paid to a foreign shareholder will be subject to U.S. withholding tax at the
rate of 30% (or lower treaty rate) upon the gross amount of the dividend.
Furthermore, such a foreign shareholder may be subject to U.S. withholding tax
at the rate of 30% (or lower treaty rate) on the gross income resulting from the
Fund's election to treat any foreign taxes paid by it as paid by its
shareholders, but may not be allowed a deduction against this gross income or a
credit against this U.S. withholding tax for the foreign shareholder's pro rata
share of such foreign taxes which it is treated as having paid. Such a foreign
shareholder would generally be exempt from U.S. federal income tax on gains
realized on the sale of shares of the Fund, capital gain dividends and amounts
retained by the Fund that are designated as undistributed capital gains.
If the income from the Fund is effectively connected with a U.S.
trade or business carried on by a foreign shareholder, then ordinary income
dividends, capital gain dividends, and any gains realized upon the
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sale of shares of the Fund will be subject to U.S. federal income tax at the
rates applicable to U.S. citizens or domestic corporations.
In the case of foreign noncorporate shareholders, the Fund may be
required to withhold U.S. federal income tax at a rate of 31% on distributions
that are otherwise exempt from withholding tax (or taxable at a reduced treaty
rate) unless such shareholders furnish the Fund with proper notification of
their foreign status.
The tax consequences to a foreign shareholder entitled to claim the
benefits of an applicable tax treaty may be different from those described
herein. Foreign shareholders are urged to consult their own tax advisers with
respect to the particular tax consequences to them of an investment in the Fund,
including the applicability of foreign taxes.
Effect of Future Legislation; Local Tax Considerations
The foregoing general discussion of U.S. federal income tax
consequences is based on the Code and the Treasury Regulations issued thereunder
as in effect on the date of this Statement of Additional Information. Future
legislative or administrative changes or court decisions may significantly
change the conclusions expressed herein, and any such changes or decisions may
have a retroactive effect with respect to the transactions contemplated herein.
Rules of state and local taxation of ordinary income dividends and
capital gain dividends from regulated investment companies often differ from the
rules for U.S. federal income taxation described above. Shareholders are urged
to consult their tax advisers as to the consequences of these and other state
and local tax rules affecting investment in the Fund.
PERFORMANCE CALCULATION
For purposes of quoting and comparing the performance of the Fund to
that of other mutual funds and to other relevant market indices in
advertisements or in reports to shareholders, performance may be stated in terms
of total return. Under rules promulgated by the Securities and Exchange
Commission ("SEC"), a fund's advertising performance must include total return
quotations calculated according to the following formula:
P(1 + T)^n = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years (1, 5 or 10)
ERV = ending redeemable value of a hypothetical $1,000
payment, made at the beginning of the 1,5 or 10 year
period, at the end of such period (or fractional
portion thereof.)
Under the foregoing formula, the time periods used in advertising
will be based on rolling calendar quarters, updated to the last day of the most
recent quarter prior to submission of the advertising for publication, and will
cover 1, 5 and 10 year periods of the Fund's existence or such shorter period
dating from the effectiveness of the Fund's Registration Statement. In
calculating the ending redeemable value, all dividends and distributions by the
Fund are assumed to have been reinvested at net asset value as described in the
Prospectus on the reinvestment dates during the period. Total return, or "T" in
the formula above, is computed by finding the average annual compounded rates of
return over the 1, 5 and 10 year periods (or fractional portion thereof) that
would equate the initial amount invested to the ending redeemable value. Any
recurring account charges that might in the future be imposed by the Fund would
be included at that time.
Any quotation of performance stated in terms of yield will be given
no greater prominence than the information prescribed under the SEC's rules. In
addition, all advertisements containing performance data of
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<PAGE>
any kind will include a legend disclosing that such performance data represents
past performance and that the investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost.
INDEPENDENT ACCOUNTANTS
___________________ serves as independent accountants to the Funds.
LEGAL COUNSEL.
Kramer, Levin, Naftalis & Frankel, 919 Third Avenue, New York, New York 10022 is
counsel to the Trust.
EXPENSES.
The Fund bears certain expenses relating to its operations; such expenses
include, but are not limited to, the following: taxes, interest, brokerage fees
and commissions, fees of the Trustees, Commission fees, state securities
qualification fees, costs of preparing and printing prospectuses for regulatory
purposes and for distribution to current shareholders, outside auditing and
legal expenses, advisory fees, fees and out-of-pocket expenses of the custodian,
administrators and transfer agent, certain insurance premiums, costs of
maintenance of the Fund's existence, costs of shareholders' reports and
meetings, and any extraordinary expenses incurred in the Fund's operation.
ADDITIONAL INFORMATION
DESCRIPTION OF SHARES.
The Trust 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 presently has one series of
shares, which represents interests in the Trautman Kramer Value Fund. The
Trust's Trust Instrument authorizes the Trustees to divide or redivide any
unissued shares of the Trust 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.
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, the Trust's shares will be fully paid and
non-assessable. In the event of a liquidation or dissolution of the Trust,
shares of the Fund are entitled to receive the assets available for distribution
belonging to the Fund, and a proportionate distribution, based upon the relative
asset values of the respective funds of the Trust, of any general assets not
belonging to any particular fund which are available for distribution.
Shares of the Trust 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.
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<PAGE>
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 Trust. 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, the Trust 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.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted to the holders of the outstanding voting securities of an investment
company such as the Trust shall not be deemed to have been effectively acted
upon unless approved by the holders of a majority of the outstanding shares of
each fund of the Trust affected by the matter. For purposes of determining
whether the approval of a majority of the outstanding shares of a fund will be
required in connection with a matter, a fund will not be deemed to be affected
by a matter unless it is clear that the interests of each fund in the matter are
identical, or that the matter does not affect any interest of the fund. Under
Rule 18f-2, the approval of an investment advisory agreement or any change in
investment policy would be effectively acted upon with respect to a fund only if
approved by a majority of the outstanding shares of such fund. However, Rule
18f-2 also provides that the ratification of independent public accountants, the
approval of principal underwriting contracts, and the election of Trustees may
be effectively acted upon by shareholders of the Trust voting without regard to
series.
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 the Trust shall not be liable for
the obligations of the Trust. 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 the Trust shall, upon request,
assume the defense of any claim made against any shareholder for any act or
obligation of the Trust, 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 the Trust shall be personally liable in connection with the
administration or preservation of the assets of a Fund or the conduct of the
Trust'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
Declaration of Trust also provides that all persons having any claim against the
Trustees or the Trust shall look solely to the assets of the Trust for payment.
REPORTS
Shareholders receive reports at least semi-annually showing the
Fund's holdings and other information. In addition, shareholders receive
financial statements examined by the Trust's independent accountants.
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<PAGE>
FINANCIAL STATEMENTS
[INSERT SEED CAPITAL AUDIT].
-20-
<PAGE>
PART C. OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits
List all financial statements and exhibits filed as part of the
Registration Statement.
(a) Financial statements:
In Part A: None.
In Part B: To be filed by amendment.
In Part C: None.
(b) Exhibits
Ex-99.B1(a) Certificate of Trust (1)
Ex-99.B1(b) Trust Instrument (1)
Ex-99.B2 By-laws. (1)
Ex-99.B3 None.
Ex-99.B4 None.
Ex-99.B5(a) Investment Advisory Agreement between
Registrant and Trautman Kramer & Company.(2)
Ex-99.B5(b) Sub-Advisory Agreement between Trautman
Kramer & Company and Tocqueville Asset
Management L.P.(2)
- --------------------
(1)Filed herewith.
(2)To be filed by amendment.
- 4 -
<PAGE>
Ex-99.B6. Distribution Agreement between the Registrant and
Trautman Kramer & Company.(2)
Ex-99.B7. None.
Ex-99.B8. Custodian and Transfer Agency Agreements between
Registrant Firstar Trust Company.(2)
Ex-99.B9. Administration Agreement between Registrant and Firstar
Trust Company.(2)
Ex-99.B10. Opinion of Kramer, Levin, Naftalis & Frankel, (2)
Ex-99.B11(a) Consent of Kramer, Levin, Naftalis & Frankel, Counsel
for the Registrant.(1)
Ex-99.B11(b) Consent of _________, independent accountants for the
Registrant.(2)
Ex-99.B12. None.
Ex-99.B13. Investment Letter re: initial $100,000 capital.(2)
Ex-99.B14. None.
Ex-99.B15. Rule 12b-1 Plan for the Trautman Kramer Capital Value
Fund.(2)
Ex-99.B16. Schedule for computation of performance quotation.(2)
Ex-99.B17. Not applicable.
Ex-99.B18. None.
ITEM 25. Persons Controlled By or Under Common Control with Registrant
[Please provide detail.]
- 5 -
<PAGE>
ITEM 26. Number of Holders of Securities
Number of Record Holders
Title of Class as of May 21, 1997
- -------------- ------------------------
Shares of beneficial interest
Trautman Kramer Capital Value Fund 0
($.001 par value)
ITEM 27. Indemnification
Section 10.02 of the Registrant's Trust Instrument provides as
follows:
(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).
- 6 -
<PAGE>
(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 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
ITEM 28. Business and Other Connections of Investment Adviser
[Please provide detail.]
ITEM 29. Principal Underwriters
(a) None.
(b) The following information is furnished with respect to the
officers and partners of Trautman Kramer & Company, the Registrant's
principal underwriter. The business address for all persons listed below is 500
Fifth Avenue, New York, NY 10110.
Name and Principal Positions and Offices with Positions and Offices
Business Address Principal Underwriter with Registrant
Robert Kramer Chairman Chairman
Mark Barbera CFO CFO
Gregory Trautman President President
(c) Not Applicable. The Registrant's principal underwriter is an
affiliated person of the Registrant.
- 7 -
<PAGE>
ITEM 30. Location of Accounts and Records
As required by Section 31(a) of the Investment Company Act of
1940, the accounts, books or other documents relating to the Trautman Kramer
Capital Value Fund's budget and accruals will be kept by Firstar Trust Company,
615 East Michigan Street, Milwaukee, Wisconsin 53202. The accounts, books or
other documents of the Fund relating to shareholder accounts and records and
dividend disbursements will also be kept by Firstar Trust Company at the above
address.
ITEM 31. Management Services
There are no management-related service contracts not discussed
in Parts A and B.
ITEM 32. Undertakings
(1) Registrant undertakes to call a meeting of shareholders for
the purpose of voting upon the question of removal of a director or directors if
requested to do so by the holders of at least 10% of the Registrant's
outstanding voting securities, and to assist in communications with other
shareholders as required by Section 16(c) of the 1940 Act.
(2) 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.
- 8 -
<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 New York, and the State of New York on this 21st
day of May, 1997.
THE TRAUTMAN KRAMER TRUST
By:/s/Robert Kramer
----------------
Robert Kramer
================================================================================
As required by the Securities Act of 1933, this Registration Statement
has been signed by the following persons in the capacities indicated on the 21st
day of May, 1997.
/s/Robert Kramer Chairman
- -------------------------
Robert Kramer
/s/Louis S. Citron Trustee
- -------------------------
Louis S. Citron
/s/Joanne Doldo Trustee
- -------------------------
Joanne Doldo
/s/Mark Barbera Chief Financial Officer
- -------------------------
Mark Barbera
<PAGE>
INDEX TO EXHIBITS
Exhibit Caption
EX-99B.1(a) Certificate of Trust
EX-99B.1(b) Trust Instrument
EX-99B.2 Bylaws of Registrant
EX-99B.11(a) Consent of Kramer, Levin, Naftalis & Frankel, counsel
for Registrant.
CERTIFICATE OF TRUST
OF
THE TRAUTMAN KRAMER TRUST
This Certificate of Trust is being executed as of May 1, 1997 for the
purpose of organizing a business trust pursuant to the Delaware Business Trust
Act, 12 Del. C. ss.ss. 3801 et seq.
The undersigned hereby certifies as follows:
1. Name. The name of the business trust is The Trautman Kramer Trust
("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 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.
<PAGE>
IN WITNESS WHEREOF, the undersigned, being all the trustees of the
Trust, have duly executed this Certificate of Trust as of the day and year first
above written.
Trustees
Louis S. Citron
---------------
Joanne Doldo
---------------
- 2 -
THE TRAUTMAN KRAMER TRUST
TRUST INSTRUMENT
DATED MAY 1, 1997
as amended May 21, 1997
<PAGE>
THE TRAUTMAN KRAMER TRUST
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
i
<PAGE>
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
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............................................... 18
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...................................... 20
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.................................. 24
Section 11.11 Provisions in Conflict With Law................... 25
ii
<PAGE>
THE TRAUTMAN KRAMER TRUST
May 1, 1997
TRUST INSTRUMENT, made by Louis S. Citron and Joanne Doldo (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 "The
Trautman Kramer Trust."
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;
1
<PAGE>
(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;
(j) The "Trust" means The Trautman Kramer Trust, 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 a par value $.001. 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
2
<PAGE>
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
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
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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
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.
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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 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.
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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 person
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 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
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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
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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.
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;
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(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 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;
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(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 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.
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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 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
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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.
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
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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 sub- adviser (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).
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
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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 the
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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
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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 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
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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 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
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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 (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
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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 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;
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(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 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
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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,
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or to any such allotment of rights, or to exercise the rights in respect of any
such change, conversion or exchange of Shares, and in such case such
Shareholders and only such Shareholders as shall be Shareholders of record on
the date so fixed shall be entitled to such notice of, and to vote at, such
meeting, or to receive payment of such dividend or other distribution, or to
receive such allotment or rights, or to exercise such rights, as the case may
be, notwithstanding any transfer of any Shares on the books of the Trust after
any such record date fixed as aforesaid.
SECTION 11.04 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
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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 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.
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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 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 Trautman Kramer & Company has licensed to the Trust the
non-exclusive right to use the words "Trautman Kramer" as part of the name of
the Trust, and has reserved the right to grant the non-
24
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exclusive use of the words "Trautman Kramer" or any derivative thereof to any
other party. In addition, Trautman Kramer & Company reserves the right to grant
the non-exclusive use of the words "Trautman Kramer" to, and to withdraw such
right from, any other business or other enterprise. Trautman Kramer & Company
reserves the right to withdraw from the Trust the right to use said words
"Trautman Kramer" and will withdraw such right if the Trust ceases to employ,
for any reason, Trautman Kramer & Company, 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.
IN WITNESS WHEREOF, the undersigned, being the initial Trustees of the
Trust, have executed this instrument as of date first written above.
/s/ Louis S. Citron
---------------------------
Louis S. Citron, as Trustee
and not individually
/s/ Joanne Doldo
---------------------------
Joanne Doldo, as Trustee
and not individually
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SCHEDULE A
Trautman Kramer Capital Value Fund
26
THE TRAUTMAN KRAMER TRUST
BYLAWS
May 1, 1997
<PAGE>
THE TRAUTMAN KRAMER TRUST
BYLAWS
These Bylaws of The Trautman Kramer Trust (the "Trust"), a
Delaware business trust, are subject to the Trust Instrument of the Trust, dated
May 1, 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 New York,
New York or such other location as the Trustees may, from time to time,
determine. The Trust may establish and maintain such other offices and places of
business as the Trustees may, from time to time, determine.
ARTICLE II
OFFICERS AND THEIR ELECTION
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
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powers necessary and desirable to carry out their responsibilities, so far as
such powers are not inconsistent with the laws of the State of Delaware, the
Trust Instrument or with these Bylaws.
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 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.
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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 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.
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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 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
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<PAGE>
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.
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.
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<PAGE>
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.
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 December 31 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.
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<PAGE>
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.
ARTICLE IX
SEAL
The seal of the Trust shall be circular in form bearing the
inscription:
"THE TRAUTMAN KRAMER TRUST, MAY 1, 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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<PAGE>
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 Assistant 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 Quorum................................................. 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
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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
ARTICLE VII
INSPECTION OF BOOKS........................................................ 7
ARTICLE VIII
INSURANCE OF OFFICERS, TRUSTEES, AND EMPLOYEES............................. 7
ARTICLE IX
SEAL....................................................................... 8
ARTICLE X
AMENDMENTS................................................................. 8
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Kramer, Levin, Naftalis & Frankel
919 THIRD AVENUE
NEW YORK, N.Y. 10022 - 3852
(212) 715 - 9100
Arthur H. Aufses III Monica C. Lord Sherwin Kamin
Thomas D. Balliett Richard Marlin Arthur B. Kramer
Jay G. Baris Thomas E. Molner Maurice N. Nessen
Philip Bentley Thomas H. Moreland Founding Partners
Saul E. Burian Ellen R. Nadler Counsel
Barry Michael Cass Gary P. Naftalis _____
Thomas E. Constance Michael J. Nassau
Michael J. Dell Michael S. Nelson Martin Balsam
Kenneth H. Eckstein Jay A. Neveloff Joshua M. Berman
Charlotte M. Fischman Michael S. Oberman Jules Buchwald
David S. Frankel Paul S. Pearlman Rudolph de Winter
Marvin E. Frankel Susan J. Penry-Williams Meyer Eisenberg
Alan R. Friedman Bruce Rabb Arthur D. Emil
Carl Frischling Allan E. Reznick Maxwell M. Rabb
Mark J. Headley Scott S. Rosenblum James Schreiber
Robert M. Heller Michele D. Ross Counsel
Philip S. Kaufman Max J. Schwartz _____
Peter S. Kolevzon Mark B. Segall
Kenneth P. Kopelman Judith Singer M. Frances Buchinsky
Michael Paul Korotkin Howard A. Sobel Abbe L. Dienstag
Shari K. Krouner Jeffrey S. Trachtman Ronald S. Greenberg
Kevin B. Leblang Jonathan M. Wagner Debora K. Grobman
David P. Levin Harold P. Weinberger Christian S. Herzeca
Ezra G. Levin E. Lisk Wyckoff, Jr. Jane Lee
Larry M. Loeb Pinchas Mendelson
Lynn R. Saidenberg
Special Counsel
-----
FAX
(212) 715-8000
---
WRITER'S DIRECT NUMBER
(212)715-9100
-------------
May 22, 1997
The Trautman Kramer Trust
500 Fifth Avenue
New York, New York 10110
Re: The Trautman Kramer Trust
-------------------------
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
------------------------------------
Kramer, Levin, Naftalis & Frankel
