As filed with the Securities and Exchange Commission on July 16, 1997
Securities Act File No. 33-
Investment Company Act File No. 811-
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
NEW PROVIDENCE INVESTMENT TRUST
105 North Washington Street
Post Office Drawer 69
Rocky Mount, North Carolina 27802-0069
Telephone (919) 972-9922
AGENT FOR SERVICE:
C. Frank Watson III, Secretary
105 North Washington Street
Post Office Drawer 69
Rocky Mount, North Carolina 27802-0069
With copies to:
M. Guy Brooks, III, Esq.
Poyner & Spruill, L.L.P.
3600 Glenwood Avenue
Raleigh, North Carolina 27612
Approximate Date of Proposed Public Offering:
As soon as possible after the effectiveness of the Registration Statement
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.
Pursuant to the provisions of Rule 24f-2 of the Investment Company Act of 1940,
as amended, Registrant hereby elects to register an indefinite number of shares
of Registrant and any series thereof hereinafter created.
<PAGE>
PART A
New Providence Capital Growth Fund Cusip Number 66976M8xx
PROSPECTUS
NEW PROVIDENCE CAPITAL GROWTH FUND
A No Load Fund
The investment objective of the New Providence Capital Growth Fund (the "Fund")
is to provide shareholders with maximum capital growth, consisting of any
combination of capital appreciation, both realized and unrealized. Current
income is of secondary importance. The Fund will seek to achieve this objective
by investing primarily in a portfolio of equity securities traded on domestic
U.S. exchanges or on over-the-counter markets. While there is no assurance that
the Fund will achieve its particular investment objective, it endeavors to do so
by following the investment policies described herein. The Fund has a net asset
value that will fluctuate in accordance with the value of its portfolio
securities. An investor may invest, reinvest or redeem shares at any time.
INVESTMENT ADVISOR
New Providence Capital Management, L.L.C.
2859 Paces Ferry Road, Suite 2125
Atlanta, Georgia 30339
The Fund is a no load diversified series of the New Providence Investment Trust
(the "Trust"), a registered open-end management investment company. This
Prospectus sets forth concisely the information about the Fund that a
prospective investor should know before investing. Investors should read this
Prospectus and retain it for future reference. Additional information about the
Fund has been filed with the Securities and Exchange Commission (the "SEC") and
is available upon request and without charge. You may request the Statement of
Additional Information, which is incorporated in this Prospectus by reference,
by writing the Fund at Post Office Box 4365, Rocky Mount, North Carolina
27803-0365, or by calling 1-800-773-3863. The SEC also maintains an Internet Web
site (http://www.sec.gov) that contains the Statement of Additional Information,
material incorporated by reference, and other information regarding the Fund.
Investment in the Fund involves risks, including the possible loss of principal.
Shares of the Fund are not deposits or obligations of, or guaranteed or endorsed
by, any financial institution, and such shares are not federally insured by the
Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other
agency.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus and the Statement of Additional Information is
September **, 1997.
<PAGE>
TABLE OF CONTENTS
PROSPECTUS SUMMARY........................................................ 2
FEE TABLE................................................................. 3
INVESTMENT OBJECTIVE AND POLICIES......................................... 4
RISK FACTORS.............................................................. 9
INVESTMENT LIMITATIONS................................................... 10
FEDERAL INCOME TAXES..................................................... 11
DIVIDENDS AND DISTRIBUTIONS.............................................. 11
HOW SHARES ARE VALUED.................................................... 12
HOW SHARES MAY BE PURCHASED.............................................. 12
HOW SHARES MAY BE REDEEMED............................................... 17
MANAGEMENT OF THE FUND................................................... 18
OTHER INFORMATION........................................................ 20
This Prospectus is not an offering of the securities herein described in any
state in which the offering is unauthorized. No sales representative, dealer or
other person is authorized to give any information or make any representations
other than those contained in this Prospectus.
The Fund reserves the right in its sole discretion to withdraw all or any part
of the offering made by this Prospectus or to reject purchase orders. All orders
to purchase shares are subject to acceptance by the fund and are not binding
until confirmed or accepted in writing.
<PAGE>
PROSPECTUS SUMMARY
The Fund. The New Providence Capital Growth Fund (the "Fund") is a no load
diversified series of the New Providence Investment Trust (the "Trust"), a
registered open-end management investment company organized as a Massachusetts
business trust. See "Other Information - Description of Shares."
Offering Price. Shares of the Fund are offered at net asset value without a
sales charge. The minimum initial investment is $2,500 ($1,000 for IRAs and
Keogh Plans). The minimum subsequent investment is $250 ($100 for those
participating in the Automatic Investment Plan). See "How Shares May be
Purchased."
Investment Objective and Policies. The investment objective of the Fund is to
seek capital appreciation, consisting of both realized and unrealized capital
gains. Current income is of secondary importance. The Fund will seek to achieve
this objective by normally remaining fully invested in a portfolio of equity
securities. Money market, and other short-term instruments will generally
comprise less than 10% of the portfolio. See "Investment Objective and
Policies." The Fund is not intended to be a complete investment program, and
there can be no assurance that the Fund will achieve its investment objective.
Special Risk Considerations. While the Fund will invest primarily in common
stocks traded in U.S. securities markets, some of the Fund's investments may
include foreign securities (in the form traded on domestic U.S. exchanges),
illiquid securities, and securities purchased subject to a repurchase agreement
or on a "when issued" basis, which involve certain risks. The Fund may borrow
only under certain limited conditions (included to meet redemption requests) and
not to purchase securities. It is not the intent of the Fund to borrow except
for temporary cash requirements . Borrowing, if done, would tend to exaggerate
the effects of market and interest rate fluctuations on the Fund's net asset
value until repaid. See "Risk Factors."
Manager. Subject to the general supervision of the Trust's Board of Trustees and
in accordance with the Fund's investment policies, New Providence Capital
Management, L.L.C. of Atlanta, Georgia (the "Advisor"), manages the Fund
investments. The Advisor currently manages approximately $85 million in assets.
For its advisory services, the Advisor receives a monthly fee, based on the
Fund's average daily net assets, at the annual rate of 0.75% of the first $500
million of net assets and 0.65% of all assets over $500 million. John K.
Donaldson controls the Advisor. Mr. Donaldson also controls the Distributor. See
"Management of the Fund - The Advisor."
Dividends. Income dividends, if any, are generally paid quarterly; capital
gains, if any, are generally distributed at least once each year. Dividends and
capital gains distributions are automatically reinvested in additional shares of
the Fund at net asset value unless the shareholder elects to receive cash. See
"Dividends and Distributions."
Distributor and Distribution Fee. Donaldson & Co., Incorporated (the
"Distributor") serves as distributor of shares of the Fund. Under the Fund's
Distribution Plan, expenditures by the Fund for distribution activities and
service fees may not exceed 0.25% of the Fund's average net assets annually. See
"How Shares May Be Purchased - Distribution Plan."
Redemption of Shares. There is no charge for redemptions other than possible
charges associated with wire transfers of redemption proceeds. Shares may be
redeemed at any time at the net asset value next determined after receipt of a
redemption request by the Fund. A shareholder that submits appropriate written
authorization may redeem shares by telephone. See "How Shares May Be Redeemed."
<PAGE>
FEE TABLE
The following table sets forth certain information in connection with the
expenses of the Fund anticipated for the current fiscal year. The information is
intended to assist the investor in understanding the various costs and expenses
borne by the Fund, and therefore indirectly by its investors, the payment of
which will reduce an investor's return on an annual basis.
Shareholder Transaction Expenses
Maximum sales load imposed on purchases
(as a percentage of offering price)................................None
Maximum sales load imposed on reinvested dividends...................None
Maximum deferred sales load..........................................None
Redemption fees*.....................................................None
Exchange fee.........................................................None
* The Fund in its discretion may choose to pass through to redeeming
shareholders any charges imposed by the Custodian for wiring redemption
proceeds. The Custodian currently charges the Fund $7.00 per transaction
for wiring redemption proceeds.
Annual Fund Operating Expenses
After Fee Waivers and Expense Reimbursements
(as a percentage of average net assets)
Management Fees......................................................0.75%1
12b-1 Fees...........................................................0.25%2
Total Other Expenses.................................................0.75%1
Total Fund Operating Expenses........................................1.75%1
EXAMPLE: You would pay the following expenses on a $1,000 investment in the
Institutional Shares of the Fund, whether or not you redeem at the end of the
period, and assuming a 5% annual return:
1 Year 3 Years
-----------------------
$18 $56
THE FOREGOING SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
1 The "Total Fund Operating Expenses" shown above are based upon contractual
amounts and other operating expenses estimated to be incurred by the Fund
for the current fiscal year. The Advisor has voluntarily agreed to a
reduction in the fees payable to it and to reimburse expenses of the Fund,
if necessary, in an amount that limits "Total Fund Operating Expenses"
(other than taxes, brokerage fees and commissions, and extraordinary
expenses) to not more than 1.75% of the Fund's average daily net assets.
There can be no assurance that the Advisor's voluntary fee waivers and
expense reimbursements will continue in the future.
2 The Fund has adopted a Distribution Plan pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended (the "1940 Act"), which provides
that the Fund may pay certain distribution expenses and service fees up to
0.25% of the Fund's average net assets annually. See "How Shares May Be
Purchased - Distribution Plan" below.
See "How Shares May Be Purchased" and "Management of the Fund" below for more
information about the fees and costs of operating the Fund. The assumed 5%
annual return in the example is required by the Securities and Exchange
Commission. The hypothetical rate of return is not intended to be representative
of past or future performance of the Fund; the actual rate of return for the
Fund may be greater or less than 5%. Further information about the performance
of the Fund will be contained in the Annual Report of the Fund, a copy of which,
when available, may be obtained at no charge by calling the Fund.
INVESTMENT OBJECTIVE AND POLICIES
Investment Objective. The investment objective of the Fund is to provide
shareholders with long-term capital appreciation, consisting of both realized
and unrealized capital gains. Current income is of secondary importance. While
there is no guarantee that the Fund will meet its investment objective, it seeks
to achieve its objective through the investment policies and techniques
described herein. The Fund's investment objective and fundamental investment
limitations may not be altered without the prior approval of a majority of the
Fund's shareholders.
Investment Policies. The Fund strives to achieve its investment objective by
investing primarily in equity securities traded on domestic U.S. exchanges or on
the over-the-counter markets. Cash, money market instruments and other
short-term instruments will generally comprise less than 10% of the portfolio.
The Fund's portfolio will generally include a limited number of equity
securities of those companies that, in the opinion of the Advisor, offer
superior prospects for growth.
In selecting portfolio companies, the Advisor relies heavily on both
quantitative and fundamental analysis, focused primarily on quality earnings
growth at a reasonable price. The Advisor begins the process by `screening' the
universe of equity securities to be considered for the portfolio. This universe
comprises approximately 1,700 equities with a history of positive earnings'
characteristics, and with minimum market capitalization of approximately $500
million. The initial universe closely approximates the universe followed by
Value Line. Using a quantitative earnings and momentum ranking model, the
Advisor screens the universe to identify the most attractive 5%-7% of those
stocks with attributes of successful long-term growth, such as long-term
earnings growth consistency, positive earnings surprises, upward earnings
estimate revisions and accelerating sales and earnings growth.
The resulting universe of 80-120 stocks is subjected to fundamental analysis,
including research obtained from Wall Street firms. Such fundamental analysis
typically includes, but is not limited to, qualitative assessments of company
management, projected earnings per share growth, projected company revenue
growth, and projected price to earnings ratio. As a result of this `screen',
approximately 2.5% of the original universe are selected for further analysis.
Of these remaining companies, the Advisor attempts to identify the most
attractive 20-30 stocks using what can best be described as `common sense
valuation', focusing substantially on price to future expected earnings, price
to current earnings, price to sales and price to cash flow.
While portfolio securities are generally acquired for the long term, they may be
sold under any of the following circumstances:
a) the anticipated price appreciation has been achieved or is no longer
probable;
b) the company's fundamentals appear, in the analysis of the Advisor, to
be deteriorating;
c) general market expectations regarding the company's future
performance, as reflected by the security's market price, exceed those
expectations held by the Advisor;
d) alternative investments offer, in the view of the Advisor, superior
potential for appreciation.
The equity securities in which the Fund may invest will generally be comprised
of common stocks traded on domestic U.S. exchanges or on the over-the-counter
markets. The Fund may also invest in preferred stock, convertible preferred
stock, convertible bonds, and other equity equivalents.
Cash, money market and other short-term instruments will typically represent a
portion of the Fund's portfolio, as funds awaiting investment, to accumulate
cash for anticipated purchases of portfolio securities and to provide for
shareholder redemptions and operating expenses of the Fund.
Under normal market conditions the portfolio allocation range for the Fund will
be:
---------------------------------------------------------------
% of Total Assets
---------------------------------------------------------------
Equity securities 90 - 100%
Cash, money market, and
other short-term instruments 0 - 10%
Under certain conditions, the Advisor may choose to temporarily invest up to
100% of the Fund's assets in cash and cash equivalents, investment grade bonds,
U.S. Government Securities, repurchase agreements, or money market instruments
as a temporary defensive position, when the Advisor determines that market
conditions warrant such investments. When the Fund invests in these investments
as a temporary defensive measure, it is not pursuing its stated investment
objective.
Money Market Instruments. Money market instruments may be purchased when the
Advisor believes interest rates are rising, the prospect for capital
appreciation in the equity and longer term fixed income securities' markets are
not attractive, or when the "yield curve" favors short-term fixed income
instruments versus longer term fixed income instruments. Money market
instruments may be purchased for temporary defensive purposes, to accumulate
cash for anticipated purchases of portfolio securities and to provide for
shareholder redemptions and operating expenses of the Fund. Money market
instruments mature in thirteen months or less from the date of purchase and may
include U.S. Government Securities, corporate debt securities (including those
subject to repurchase agreements), bankers acceptances and certificates of
deposit of domestic branches of U.S. banks, and commercial paper (including
variable amount demand master notes) rated in one of the two highest rating
categories by any of the nationally recognized statistical rating organizations
or if not rated, of equivalent quality in the Advisor's opinion. The Advisor
may, when it believes that unusually volatile or unstable economic and market
conditions exist, depart from the Fund's investment approach and assume
temporarily a defensive portfolio posture, increasing the Fund's percentage
investment in money market instruments, even to the extent that 100% of the
Fund's assets may be so invested.
U.S. Government Securities. The Fund may invest a portion of the portfolio in
U.S. Government Securities, defined to be U.S. Government obligations such as
U.S. Treasury notes, U.S. Treasury bonds, and U.S. Treasury bills, obligations
guaranteed by the U.S. Government such as Government National Mortgage
Association ("GNMA") as well as obligations of U.S. Government authorities,
agencies and instrumentalities such as Federal National Mortgage Association
("FNMA"), Federal Home Loan Mortgage Corporation ("FHLMC"), Federal Home
Administration ("FHA"), Federal Farm Credit Bank ("FFCB"), Federal Home Loan
Bank ("FHLB"), Student Loan Marketing Association ("SLMA"), and The Tennessee
Valley Authority. U.S. Government Securities may be acquired subject to
repurchase agreements. While obligations of some U.S. Government sponsored
entities are supported by the full faith and credit of the U.S. Government (e.g.
GNMA), several are supported by the right of the issuer to borrow from the U.S.
Government (e.g. FNMA, FHLMC), and still others are supported only by the credit
of the issuer itself (e.g. SLMA, FFCB). No assurances can be given that the U.S.
Government will provide financial support to U.S. Government agencies or
instrumentalities in the future, other than as set forth above, since it is not
obligated to do so by law. The guarantee of the U.S. Government does not extend
to the yield or value of the Fund's shares.
Repurchase Agreements. The Fund may acquire U.S. Government Securities or
corporate debt securities subject to repurchase agreements. A repurchase
agreement transaction occurs when the Fund acquires a security and
simultaneously resells it to the vendor (normally a member bank of the Federal
Reserve or a registered Government Securities dealer) for delivery on an agreed
upon future date. The repurchase price exceeds the purchase price by an amount
that reflects an agreed upon market interest rate earned by the Fund effective
for the period of time during which the repurchase agreement is in effect.
Delivery pursuant to the resale typically will occur within one to seven days of
the purchase. The Fund will not enter into any repurchase agreement that will
cause more than 10% of its net assets to be invested in repurchase agreements
that extend beyond seven days. In the event of the bankruptcy of the other party
to a repurchase agreement, the Fund could experience delays in recovering its
cash or the securities lent. To the extent that in the interim the value of the
securities purchased may have declined, the Fund could experience a loss. In all
cases, the creditworthiness of the other party to a transaction is reviewed and
found satisfactory by the Advisor. Repurchase agreements are, in effect, loans
of Fund assets. The Fund will not engage in reverse repurchase transactions,
which are considered to be borrowings under the 1940 Act.
Foreign Securities. The Fund may invest in the securities of foreign private
issuers. The same factors would be considered in selecting foreign securities as
with domestic securities. Foreign securities investment presents special
consideration not typically associated with investment in domestic securities.
Foreign taxes may reduce income. Currency exchange rates and regulations may
cause fluctuations in the value of foreign securities. Foreign securities are
subject to different regulatory environments than in the United States and,
compared to the United States, there may be a lack of uniform accounting,
auditing and financial reporting standards, less volume and liquidity and more
volatility, less public information, and less regulation of foreign issuers.
Countries have been known to expropriate or nationalize assets, and foreign
investments may be subject to political, financial, or social instability, or
adverse diplomatic developments. There may be difficulties in obtaining service
of process on foreign issuers and difficulties in enforcing judgments with
respect to claims under the U.S. securities laws against such issuers. Favorable
or unfavorable differences between U.S. and foreign economies could affect
foreign securities values. The U.S. Government has, in the past, discouraged
certain foreign investments by U.S. investors through taxation or other
restrictions and it is possible that such restrictions could be imposed again.
Because of the inherent risk of foreign securities over domestic issues, the
Fund will limit foreign investments to those traded on domestic U.S. exchanges,
including American Depository Receipts ("ADRs"). The prices of such securities
are denominated in U.S. dollars. ADRs are receipts issued by a U.S. bank or
trust company evidencing ownership of securities of a foreign issuer. ADRs may
be listed on a national securities exchange or may trade in the over-the-counter
market. The prices of ADRs are denominated in U.S. dollars while the underlying
security may be denominated in a foreign currency. To the extent the Fund
invests in other foreign securities, it will generally limit such investments to
foreign securities traded on foreign securities exchanges.
Investment Companies. In order to achieve its investment objective, the Fund may
invest up to 10% of the value of its total assets in securities of other
investment companies whose investment objectives are consistent with the Fund's
investment objective. The Fund will not acquire securities of any one investment
company if, immediately thereafter, the Fund would own more than 3% of such
company's total outstanding voting securities, securities issued by such company
would have an aggregate value in excess of 5% of the Fund's assets, or
securities issued by such company and securities held by the Fund issued by
other investment companies would have an aggregate value in excess of 10% of the
Fund's assets. To the extent that a Fund invests in other investment companies,
the shareholders of the Fund would indirectly pay a portion of the operating
costs of the underlying investment companies. These costs include management,
brokerage, shareholder servicing and other operational expenses. Shareholders of
the Fund would then indirectly pay higher operational costs than if they owned
shares of the underlying investment companies directly.
Real Estate Securities. The Fund will not invest in real estate (including
mortgage loans and limited partnership interests), but may invest in readily
marketable securities issued by companies that invest in real estate or
interests therein. The Fund may also invest in readily marketable interests in
real estate investment trusts ("REITs"). REITs are generally publicly traded on
the national stock exchanges and in the over-the-counter market and have varying
degrees of liquidity. Although the Fund is not limited in the amount of these
types of real estate securities they may acquire, it is not presently expected
that within the next 12 months the Fund will have in excess of 10% of its assets
in real estate securities.
RISK FACTORS
Investment Policies and Techniques. Reference should be made to "Investment
Objective and Policies" above for a description of special risks presented by
the investment policies of the Fund and the specific securities and investment
techniques that may be employed by the Fund, including the risks associated with
repurchase agreements and foreign securities. A more complete discussion of
certain of these securities and investment techniques and their associated risks
is contained in the Statement of Additional Information.
Fluctuations in Value. To the extent that the major portion of the Fund's
portfolio consists of common stocks, it may be expected that its net asset value
will be subject to greater fluctuation than a portfolio containing mostly fixed
income securities. Because there is risk in any investment, there can be no
assurance that the Fund will achieve its investment objective.
Portfolio Turnover. The Fund may sell portfolio securities without regard to the
length of time they have been held in order to take advantage of new investment
opportunities. Portfolio turnover generally involves some expense to the Fund,
including brokerage commissions or dealer mark-ups and other transaction costs
on the sale of securities and the reinvestment in other securities. Portfolio
turnover may also have capital gains tax consequences. The Fund's portfolio
turnover rate is not expected to exceed 150% per year.
Borrowing. The Fund may borrow, temporarily, up to 5% of its total assets for
extraordinary purposes and 15% of its total assets to meet redemption requests
which might otherwise require untimely disposition of portfolio holdings. To the
extent the Fund borrows for these purposes, the effects of market price
fluctuations on the portfolio's net asset value will be exaggerated. If, while
such borrowing is in effect, the value of the Fund's assets declines, the Fund
could be forced to liquidate portfolio securities when it is disadvantageous to
do so. The Fund would incur interest and other transaction costs in connection
with borrowing. The Fund will borrow only from a bank. The Fund will not make
any further investments if the borrowing exceeds 5% of its total assets until
such time as repayment has been made to bring the total borrowing below 5% of
its total assets.
Illiquid Investments. The Fund may invest up to 10% of its net assets in
illiquid securities. Illiquid securities are those that may not be sold or
disposed of in the ordinary course of business within seven days at
approximately the price at which they are valued. Under the supervision of the
Board of Trustees, the Advisor determines the liquidity of the Fund's
investments. The absence of a trading market can make it difficult to ascertain
a market value for illiquid investments. Disposing of illiquid securities before
maturity may be time consuming and expensive, and it may be difficult or
impossible for the Fund to sell illiquid investments promptly at an acceptable
price. The Fund may not invest in restricted securities, which are securities
that cannot be sold to the public without registration under the federal
securities laws.
Forward Commitments and When-Issued Securities. The Fund may purchase
when-issued securities and commit to purchase securities for a fixed price at a
future date beyond customary settlement time. The Fund is required to hold and
to maintain in a segregated account until the settlement date cash, U.S.
Government Securities, or high-grade debt obligations in an amount sufficient to
meet the purchase price. Purchasing securities on a when-issued or forward
commitment basis involves a risk of loss if the value of the security to be
purchased declines prior to the settlement date; this risk is in addition to the
risk of decline in value of the Fund's other assets. In addition, no income
accrues to the purchaser of when-issued securities during the period prior to
issuance. Although the Fund would generally purchase securities on a when-issued
or forward commitment basis with the intention of acquiring securities for its
portfolio, the Fund may dispose of a when-issued security or forward commitment
prior to settlement if the Advisor deems it appropriate to do so. The Fund may
realize short-term gains or losses upon such sales.
INVESTMENT LIMITATIONS
To limit the Fund's exposure to risk, the Fund has adopted certain fundamental
investment limitations. Some of these restrictions are that the Fund will not:
(1) issue senior securities, borrow money or pledge its assets, except that it
may borrow from banks as a temporary measure (a) for extraordinary or emergency
purposes, in amounts not exceeding 5% of the Fund's total assets, or (b) to meet
redemption requests which might otherwise require untimely disposition of
portfolio securities in amounts not exceeding 15% of its total assets (the Fund
will not make any investments if borrowing exceeds 5% of its total assets); (2)
make loans of money or securities, except that the Fund may invest in repurchase
agreements (but repurchase agreements having a maturity of longer than seven
days, together with other not readily marketable securities, are limited to 10%
of the Fund's net assets),money market instruments, and other debt securities;
(3) invest in securities of issuers which have a record of less than three
years' continuous operation (including predecessors and, in the case of bonds,
guarantors), if more than 5% of its total assets would be invested in such
securities; (4) purchase foreign securities other than those traded on domestic
U.S. exchanges; (5) with respect to 75% of its total assets, invest more than 5%
of its total assets at cost in the securities of any one issuer nor hold more
than 10% of the voting stock of any issuer; and (6) write, purchase, or sell
puts, calls, straddles, spreads, or combinations thereof, or purchase or sell
commodities, commodity contracts, futures contracts, or related options.
Investment restrictions (1), (5), and (6) are fundamental investment limitations
that cannot be altered without the prior approval of a majority of the Fund's
shareholders. The other investment restrictions listed above are non-fundamental
and can be changed without shareholder approval. See "Investment Limitations" in
the Fund's Statement of Additional Information for a complete list of investment
limitations.
If the Board of Trustees of the Trust determines that the Fund's investment
objectives can best be achieved by a substantive change in a non-fundamental
investment limitation, the Board can make such change without shareholder
approval and will disclose any such material changes in the then current
Prospectus. Any limitation that is not specified in the Fund's Prospectus, or in
the Statement of Additional Information, as being fundamental, is
non-fundamental. If a percentage limitation is satisfied at the time of
investment, a later increase or decrease in such percentage resulting from a
change in the value of the Fund's portfolio securities will not constitute a
violation of such limitation.
FEDERAL INCOME TAXES
Taxation of the Fund. The Internal Revenue Code of 1986, as amended (the
"Code"), treats each series in the Trust as a separate regulated investment
company. Each series of the Trust (the Fund, and any additional Fund or Funds
that may be added at a later date) intends to qualify or remain qualified as a
regulated investment company under the Code by distributing substantially all of
its "net investment income" to shareholders and meeting other requirements of
the Code. For the purpose of calculating dividends, net investment income
consists of income accrued on portfolio assets, less accrued expenses. Upon
qualification, the Fund will not be liable for federal income taxes to the
extent earnings are distributed. The Board of Trustees retains the right for any
series of the Trust to determine for any particular year if it is advantageous
not to qualify as a regulated investment company. Regulated investment
companies, such as each series of the Trust, including the Fund, are subject to
a non-deductible 4% excise tax to the extent they do not distribute the
statutorily required amount of investment income, determined on a calendar year
basis, and capital gain net income, using an October 31 year-end measuring
period. The Fund intends to declare or distribute dividends during the calendar
year in an amount sufficient to prevent imposition of the 4% excise tax.
Taxation of Shareholders. For federal income tax purposes, any dividends and
distributions from short-term capital gains that a shareholder receives in cash
from the Fund or which are re-invested in additional shares will be taxable
ordinary income. If a shareholder is not required to pay a tax on income, he
will not be required to pay federal income taxes on the amounts distributed to
him. A dividend declared in October, November or December of a year and paid in
January of the following year will be considered to be paid on December 31 of
the year of declaration.
Distributions paid by the Fund from long-term capital gains, whether received in
cash or reinvested in additional shares, are taxable as long-term capital gains,
regardless of the length of time an investor has owned shares in the Fund.
Capital gain distributions are made when the Fund realizes net capital gains on
sales of portfolio securities during the year. Dividends and capital gain
distributions paid by the Fund shortly after shares have been purchased,
although in effect a return of investment, are subject to federal income
taxation.
The sale of shares of the Fund is a taxable event and may result in a capital
gain or loss. Capital gain or loss may be realized from an ordinary redemption
of shares or an exchange of shares between two mutual funds (or two series of a
mutual fund).
The Trust will inform shareholders of the Fund of the source of its dividends
and capital gains distributions at the time they are paid and, promptly after
the close of each calendar year, will issue an information return to advise
shareholders of the federal tax status of such distributions and dividends.
Dividends and distributions may also be subject to state and local taxes.
Shareholders should consult their tax advisors regarding specific questions as
to federal, state or local taxes.
Federal income tax law requires investors to certify that the social security
number or taxpayer identification number provided to the Fund is correct and
that the investor is not subject to 31% withholding for previous under-reporting
to the Internal Revenue Service (the "IRS"). Investors will be asked to make the
appropriate certification on their application to purchase shares. If a
shareholder of the Fund has not complied with the applicable statutory and IRS
requirements, the Fund is generally required by federal law to withhold and
remit to the IRS 31% of reportable payments (which may include dividends and
redemption amounts).
DIVIDENDS AND DISTRIBUTIONS
The Fund intends to distribute substantially all of its net investment income,
if any, in the form of dividends. The Fund will generally pay income dividends,
if any, quarterly, and will generally distribute net realized capital gains, if
any, at least annually.
Unless a shareholder elects to receive cash, dividends and capital gains will be
automatically reinvested in additional full and fractional shares of the same
Fund at the net asset value per share next determined. Shareholders wishing to
receive their dividends or capital gains in cash may make their request in
writing to the Fund at 107 North Washington Street, Post Office Box 4365, Rocky
Mount, North Carolina 27803-0365. That request must be received by the Fund
prior to the record date to be effective as to the next dividend. If cash
payment is requested, checks will be mailed within five business days after the
last day of each quarter or the Fund's fiscal year end, as applicable. Each
shareholder of the Fund will receive a quarterly summary of his or her account,
including information as to reinvested dividends from the Fund. Tax consequences
to shareholders of dividends and distributions are the same if received in cash
or in additional shares of the Fund.
In order to satisfy certain requirements of the Code, the Fund may declare
special year-end dividend and capital gains distribution during December. Such
distributions, if received by shareholders by January 31, are deemed to have
been paid by the Fund and received by shareholders on December 31 of the prior
year.
There is no fixed dividend rate, and there can be no assurance as to the payment
of any dividends or the realization of any gains.
HOW SHARES ARE VALUED
Net asset value for each share of the Fund is determined at 4:00 p.m., New York
time, Monday through Friday, except on business holidays when the New York Stock
Exchange is closed. The net asset value of the shares of the Fund for purposes
of pricing sales and redemptions is equal to the total market value of its
investments and other assets, less all of its liabilities, divided by the number
of its outstanding shares.
Securities that are listed on a securities exchange are valued at the last
quoted sales price at the time the valuation is made. Price information on
listed securities is taken from the exchange where the security is primarily
traded by the Fund. Securities that are listed on an exchange and which are not
traded on the valuation date are valued at the mean of the bid and asked prices.
Unlisted securities for which market quotations are readily available are valued
at the latest quoted sales price, if available, at the time of valuation,
otherwise, at the latest quoted bid price. Temporary cash investments with
maturities of 60 days or less will be valued at amortized cost, which
approximates market value. Securities for which no current quotations are
readily available are valued at fair value as determined in good faith using
methods approved by the Board of Trustees of the Trust. Securities may be valued
on the basis of prices provided by a pricing service when such prices are
believed to reflect the fair market value of such securities.
HOW SHARES MAY BE PURCHASED
Assistance in opening accounts and a purchase application may be obtained from
the Fund by calling 1-800-773-3863, or by writing to the Fund at the address
shown below for purchases by mail. Assistance is also available through any
broker-dealer authorized to sell shares in the Fund. Payment for shares
purchased may also be made through your account at the broker-dealer processing
your application and order to purchase. Your investment will purchase shares at
the Fund's net asset value next determined after your order is received by the
Fund in proper form as indicated herein.
The minimum initial investment is $2,500 ($1,000 for IRAs and Keogh Plans). The
minimum subsequent investment is $250. The Fund may, in the Advisor's sole
discretion, accept certain accounts with less than the stated minimum initial
investment. You may invest in the following ways:
Regular Mail Orders. Please complete and sign the Fund Shares Application
accompanying this Prospectus and mail it, with your check made payable to the
Fund, to:
New Providence Capital Growth Fund
c/o North Carolina Shareholder Services
107 North Washington Street
Post Office Box 4365
Rocky Mount, North Carolina 27803-0365
Applications must contain social security and Taxpayer Identification Numbers
("TINs"). If you have applied for a social security or TIN at the time of
completing your account application, the application should so indicate. Taxes
are not withheld from distributions to U.S. investors if certain IRS
requirements regarding TINs are met.
Bank Wire Orders. Investments can be made directly by bank wire. To establish a
new account or to add to an existing account by wire, please call the Fund at
1-800-773-3863, before wiring funds, to advise it of the investment, the dollar
amount of the investment, and the account identification number. This
notification will ensure prompt and accurate handling of your investment. Please
have your bank use the following wire instructions to purchase by wire:
First Union National Bank of North Carolina
Charlotte, North Carolina
ABA # 053000219
For the New Providence Capital Growth Fund
Acct # 2000001068078 For further credit to
(shareholder's name and SS# or EIN#)
It is important that the wire message contain all the relevant information and
that the Fund receive prior telephone notification to ensure proper credit. Upon
opening an account by wire order, you must, as soon as possible, complete and
mail your Fund Shares Application to the Fund as described under "Regular Mail
Orders" above. Investors should be aware that some banks might impose a wire
service fee.
General. All purchases of shares are subject to acceptance and are not binding
until accepted. The Fund reserves the right to reject any application or
investment. Orders become effective, and shares are purchased at, the next
determined net asset value per share after an investment has been received by
the Fund, which is as of 4:00 p.m., New York time, Monday through Friday,
exclusive of business holidays. Orders received by a Fund and effective prior to
such 4:00 p.m. time will purchase shares at the net asset value determined at
that time. Otherwise, your order will purchase shares as of such 4:00 p.m. time
on the next business day. For orders placed through a qualified broker-dealer,
such firm is responsible for promptly transmitting purchase orders to the Fund.
Investors may be charged a fee if they effect transactions in Fund shares
through a broker or agent.
If checks are returned unpaid due to insufficient funds, stop payment or other
reasons, the Trust will charge $20. To recover any such loss or charge, the
Trust reserves the right, without further notice, to redeem shares of any fund
of the Trust already owned by any purchaser whose order is cancelled, and such a
purchaser may be prohibited from placing further orders unless investments are
accompanied by full payment by wire or cashier's check.
Payment must be made by check or money order drawn on a U.S. bank and payable in
U.S. dollars. Under certain circumstances the Fund, at its sole discretion, may
allow payment in kind for Fund shares purchased by accepting securities in lieu
of cash. Any securities so accepted would be valued on the date received and
included in the calculation of the net asset value of the Fund. See the
Statement of Additional Information for additional information on purchases in
kind.
The Fund is required by federal law to withhold and remit to the IRS 31% of the
dividends, capital gains distributions and, in certain cases, proceeds of
redemptions paid to any shareholder who fails to furnish the Fund with a correct
taxpayer identification number, who under-reports dividend or interest income or
who fails to provide certification of tax identification number. Instructions to
exchange or transfer shares held in established accounts will be refused until
the certification has been provided. In order to avoid this withholding
requirement, you must certify on your application, or on a separate W-9 Form
supplied by the Fund, that your taxpayer identification number is correct and
that you are not currently subject to backup withholding or you are exempt from
backup withholding. For individuals, your taxpayer identification number is your
social security number.
Distribution Plan. Donaldson & Co., Incorporated., 2859 Paces Ferry Road, Suite
2125, Atlanta, Georgia 30339 (the "Distributor"), is the national distributor
for the Fund under a Distribution Agreement with the Trust. The Distributor may
sell Fund shares to or through qualified securities dealers or others. John K.
Donaldson, a Trustee of the Trust and an officer of the Fund, controls the
Distributor and the Advisor.
The Trust has adopted a Distribution Plan (the "Plan") for the Fund pursuant to
Rule 12b-1 under the 1940 Act. Under the Plan the Fund may reimburse any
expenditures to finance any activity primarily intended to result in sale of the
shares of the Fund or the servicing of shareholder accounts, including, but not
limited to, the following: (i) payments to the Distributor, securities dealers,
and others for the sale of shares of the Fund; (ii) payment of compensation to
and expenses of personnel who engage in or support distribution of shares of the
Fund or who render shareholder support services not otherwise provided by the
Transfer Agent, Administrator, or Custodian; and (iii) formulation and
implementation of marketing and promotional activities. The Board of Trustees of
the Trust approves the categories of expenses for which reimbursement is made.
Expenditures by the Fund pursuant to the Plan are accrued based on the Fund's
average daily net assets and may not exceed 0.25% of the Fund's average net
assets for each year elapsed subsequent to adoption of the Plan. Such
expenditures paid as service fees to any person who sells Fund shares may not
exceed 0.25% of the Fund's average annual net asset value of such shares.
The Plan for the Fund may not be amended to increase materially the amount to be
spent under the Plan without shareholder approval. The Board of Trustees must
approve the continuation of the Plan annually. At least quarterly the Board of
Trustees must review a written report of amounts expended pursuant to the Plan
and the purposes for which such expenditures were made.
The Distributor, at its expense, may provide additional compensation to dealers
in connection with sales of shares of the Fund. Compensation may include
financial assistance to dealers in connection with conferences, sales or
training programs for their employees, seminars for the public, advertising
campaigns regarding the Fund, and/or other dealer-sponsored special events. In
some instances, this compensation may be made available only to certain dealers
whose representatives have sold or are expected to sell a significant amount of
such shares. Compensation may include payment for travel expenses, including
lodging, incurred in connection with trips taken by invited registered
representatives and members of their families to locations within or outside of
the United States for meetings or seminars of a business nature. Dealers may not
use sales of the Fund shares to qualify for this compensation to the extent such
may be prohibited by the laws of any state or any self-regulatory agency, such
as the National Association of Securities Dealers, Inc. None of the
aforementioned compensation is paid for by the Fund or its shareholders.
Exchange Feature. Investors will have the privilege of exchanging shares of a
Fund for shares of any other series of the Trust established by the Advisor. An
exchange is a taxable transaction that involves the simultaneous redemption of
shares of one series and purchase of shares of another series at the respective
closing net asset value next determined after a request for redemption has been
received plus applicable sales charge, if any. Each series of the Trust will
have a different investment objective, which may be of interest to investors in
each series. Shares of a Fund may be exchanged for shares of any other series of
the Trust affiliated with the Advisor at the net asset value plus the percentage
difference between that series' sales charge and any sales charge, if any,
previously paid in connection with the shares being exchanged. Investors in
states where shares of the other series are qualified for sale may only make
exchanges. An investor may direct a Fund to exchange his shares by writing to
the Fund at its principal office. The request must be signed exactly as the
investor's name appears on the account, and it must also provide the account
number, number of shares to be exchanged, the name of the Fund or other series
to which the exchange will take place and a statement as to whether the exchange
is a full or partial redemption of existing shares.
A pattern of frequent exchange transactions may be deemed by the Advisor to be
an abusive practice that is not in the best interests of the shareholders of the
Fund. Such a pattern may, at the discretion of the Advisor, be limited by the
Fund's refusal to accept further purchase and/or exchange orders from an
investor, after providing the investor with 60 days prior notice. The Advisor
will consider all factors it deems relevant in determining whether a pattern of
frequent purchases, redemptions and/or exchanges by a particular investor is
abusive and not in the best interests of the Fund or its other shareholders.
A shareholder should consider the investment objectives and policies of any
other series into which the shareholder will be making an exchange, as described
in the prospectus for that other series. The Board of Trustees of the Trust
reserves the right to suspend or terminate, or amend the terms of, the exchange
privilege upon 60 days written notice to the shareholders.
Automatic Investment Plan. The automatic investment plan enables shareholders to
make regular monthly or quarterly investments in shares through automatic
charges to their checking account. With shareholder authorization and bank
approval, the Fund will automatically charge the checking account for the amount
specified ($100 minimum), which will be automatically invested in shares at the
public offering price on or about the 21st day of the month. The shareholder may
change the amount of the investment or discontinue the plan at any time by
writing to the Fund.
Stock Certificates. Stock certificates will not be issued for your shares.
Evidence of ownership will be given by issuance of periodic account statements
that will show the number of shares owned.
HOW SHARES MAY BE REDEEMED
Shares of the Fund may be redeemed (the Fund will repurchase them from
shareholders) by mail or telephone. Any redemption may be more or less than the
purchase price of your shares depending on the market value of the Fund's
portfolio securities. All redemption orders received in proper form, as
indicated herein, by the Fund, whether by mail or telephone, prior to 4:00 p.m.
New York time, Monday through Friday, except for business holidays, will redeem
shares at the net asset value determined at that time. Otherwise, your order
will redeem shares as of such 4:00 p.m. time on the next business day. There is
no charge for redemptions from the Fund other than possible charges for wiring
redemption proceeds. You may also redeem your shares through a broker-dealer or
other institution, which may charge you a fee for its services.
The Board of Trustees reserves the right to involuntarily redeem any account
having a net asset value of less than $1,000 (due to redemptions, exchanges or
transfers, and not due to market action) upon 30 days written notice. If the
shareholder brings his account net asset value up to $1,000 or more during the
notice period, the account will not be redeemed. Redemptions from retirement
plans may be subject to tax withholding.
If you are uncertain of the requirements for redemption, please contact the
Fund, at 1-800-773-3863, or write to the address shown below.
Regular Mail Redemptions. Your request should be addressed to the New Providence
Capital Growth Fund, 107 North Washington Street, Post Office Box 4365, Rocky
Mount, North Carolina 27803-0365. Your request for redemption must include:
1) Your letter of instruction specifying the Fund, the account number, and the
number of shares or dollar amount to be redeemed. This request must be
signed by all registered shareholders in the exact names in which they are
registered;
2) Any required signature guarantees (see "Signature Guarantees" below); and
3) Other supporting legal documents, if required in the case of estates,
trusts, guardianships, custodianships, corporations, partnerships, pension
or profit sharing plans, and other organizations.
Your redemption proceeds will be sent to you within seven days after receipt of
your redemption request. However, the Fund may delay forwarding a redemption
check for recently purchased shares while it determines whether the purchase
payment will be honored. Such delay (which may take up to 15 days from the date
of purchase) may be reduced or avoided if the purchase is made by certified
check or wire transfer. In all cases the net asset value next determined after
the receipt of the request for redemption will be used in processing the
redemption. The Fund may suspend redemption privileges or postpone the date of
payment (i) during any period that the New York Stock Exchange is closed, or
trading on the New York Stock Exchange is restricted as determined by the
Securities and Exchange Commission (the "Commission"), (ii) during any period
when an emergency exists as defined by the rules of the Commission as a result
of which it is not reasonably practicable for a Fund to dispose of securities
owned by it, or to fairly determine the value of its assets, and (iii) for such
other periods as the Commission may permit.
Telephone and Bank Wire Redemptions. The Fund offers shareholders the option of
redeeming shares by telephone under certain limited conditions. A Fund will
redeem shares when requested by the shareholder if, and only if, the shareholder
confirms redemption instructions in writing.
A Fund may rely upon confirmation of redemption requests transmitted via
facsimile (FAX# 919-972-1908). The confirmation instructions must include:
1) Designation of the Fund name;
2) Shareholder names and account number;
3) Number of shares or dollar amount to be redeemed;
4) Instructions for transmittal of redemption fund to the shareholder; and
5) Shareholder signature as it appears on the application then on file with
the Fund.
The net asset value used in processing the redemption will be the net asset
value next determined after the telephone request is received. Redemption
proceeds will not be distributed until written confirmation of the redemption
request is received, per the instructions above. You can choose to have
redemption proceeds mailed to you at your address of record, your bank, or to
any other authorized person, or you can have the proceeds sent by bank wire to
your bank ($5,000 minimum). Shares of the Fund may not be redeemed by wire on
days on which your bank is not open for business. You can change your redemption
instructions anytime you wish by filing a letter including your new redemption
instructions with the Fund. (See "Signature Guarantees" below). The Fund
reserves the right to restrict or cancel telephone and bank wire redemption
privileges for shareholders, without notice, if the Fund believes it to be in
the best interest of the shareholders to do so. During drastic economic and
market conditions, telephone redemption privileges may be difficult to
implement.
The Fund in its discretion may choose to pass through to redeeming shareholders
any charges by the Custodian for wire redemptions. The Custodian currently
charges $7.00 per transaction for wiring redemption proceeds. If this cost is
passed through to redeeming shareholders by the Fund, the charge will be
deducted automatically from the shareholder's account by redemption of shares in
the account. The shareholder's bank or brokerage firm may also impose a charge
for processing the wire. If wire transfer of funds is impossible or impractical,
the redemption proceeds will be sent by mail to the designated address of
record.
You may redeem shares, subject to the procedures outlined above, by calling the
Fund at 1-800-773-3863. Redemption proceeds will only be sent to the bank
account or person named in your Fund Shares Application currently on file with
the Fund. Telephone redemption privileges authorize the Fund to act on telephone
instructions from any person representing him or herself to be the investor and
reasonably believed by the Fund to be genuine. The Fund will employ reasonable
procedures, such as requiring a form of personal identification, to confirm that
instructions are genuine, and, if it does not follow such procedures, the Fund
will be liable for any losses due to fraudulent or unauthorized instructions.
The Fund will not be liable for following telephone instructions reasonably
believed to be genuine.
Systematic Withdrawal Plan. A shareholder who owns shares of a Fund valued at
$2,500 or more at current net asset value may establish a Systematic Withdrawal
Plan to receive a monthly or quarterly check in a stated amount not less than
$100. Each month or quarter as specified, the Fund will automatically redeem
sufficient shares from your account to meet the specified withdrawal amount.
Call or write the Fund for an application form. See the Statement of Additional
Information for further details.
Signature Guarantees. To protect your account and the Fund from fraud, signature
guarantees are required to be sure that you are the person who has authorized a
change in registration, or standing instructions, for your account. Signature
guarantees are required for (1) change of registration requests, (2) requests to
establish or change exchange privileges or telephone redemption service other
than through your initial account application, and (3) requests for redemptions
in excess of $50,000. Signature guarantees are acceptable from a member bank of
the Federal Reserve System, a savings and loan institution, credit union (if
authorized under state law), registered broker-dealer, securities exchange or
association clearing agency, and must appear on the written request for
redemption, establishment or change in exchange privileges, or change of
registration.
MANAGEMENT OF THE FUND
Trustees and Officers. The Fund is a no load diversified series of New
Providence Investment Trust (the "Trust"), an investment company organized as a
Massachusetts business trust on July 9, 1997. The Board of Trustees of the Trust
is responsible for the management of the business and affairs of the Trust. The
Trustees and executive officers of the Trust and their principal occupations for
the last five years are set forth in the Statement of Additional Information
under "Management - Trustees and Officers." The Board of Trustees of the Trust
is primarily responsible for overseeing the conduct of the Trust's business. The
Board of Trustees elects the officers of the Trust who are responsible for its
and the Fund's day-to-day operations.
The Advisor. Subject to the authority of the Board of Trustees, New Providence
Capital Management, L.L.C. (the "Advisor") provides the Fund with a continuous
program of supervision of the Fund's assets, including the composition of its
portfolio, and furnishes advice and recommendations with respect to investments,
investment policies and the purchase and sale of securities, pursuant to an
Investment Advisory Agreement (the "Advisory Agreement") with the Trust.
The Advisor is registered under the Investment Advisors Act of 1940, as amended.
Registration of the Advisor does not involve any supervision of management or
investment practices or policies by the Securities and Exchange Commission. John
K. Donaldson controls the Advisor, which was established as a Georgia
corporation in 1996. The Advisor currently serves as investment advisor to
approximately $85 million in assets. The Advisor has been rendering investment
counsel, utilizing investment strategies substantially similar to that of the
Fund, to individuals, banks and thrift institutions, pension and profit sharing
plans, trusts, estates, charitable organizations and corporations since its
formation. The Advisor's address is 2859 Paces Ferry Road, Suite 2125, Atlanta,
Georgia 30339.
Compensation of the Advisor, based upon the Fund's average daily net assets, is
at the annual rate of 0.75% of the first $500 million of net assets and 0.65% of
all assets over $500 million. The Advisor may periodically voluntarily waive or
reduce its advisory fee to increase the net income of the Fund.
The Advisor supervises and implements the investment activities of the Fund,
including the making of specific decisions as to the purchase and sale of
portfolio investments. Among the responsibilities of the Advisor under the
Advisory Agreement is the selection of brokers and dealers through whom
transactions in the Fund's portfolio investments will be effected. The Advisor
attempts to obtain the best execution for all such transactions. If it is
believed that more than one broker is able to provide the best execution, the
Advisor will consider the receipt of quotations and other market services and of
research, statistical and other data and the sale of shares of the Fund in
selecting a broker. The Advisor may also utilize a brokerage firm affiliated
with the Trust or the Advisor (such as the Distributor) if the Advisor believes
it can obtain the best execution of transactions from such broker. Research
services obtained through Fund brokerage transactions may be used by the Advisor
for its other clients and, conversely, the Fund may benefit from research
services obtained through the brokerage transactions of the Advisor's other
clients. For further information, see "Investment Objective and Policies -
Investment Transactions" in the Statement of Additional Information.
An Investment Committee of the Advisor consisting of Mr. Donaldson (control
member of the Advisor), Kyle A. Tomlin and Shannon D. Coogle is responsible for
day-to-day management of the Fund's portfolio. Messrs. Donaldson and Tomlin have
been with the Advisor since its inception.
Administrator. The Nottingham Company (the "Administrator") serves as the Fund's
administrator. The Administrator, subject to the authority of the Board of
Trustees, provides administrative services to and is generally responsible for
the overall management and day-to-day administrative operations of the Fund,
pursuant to an administration agreement with the Trust.
The Administrator, which was established as a North Carolina corporation in
1988, has been operating (with affiliates) as a financial services firm since
1985. Frank P. Meadows III is the firm's Managing Director and controlling
shareholder.
The Administrator, whose address is 105 North Washington Street, Post Office
Drawer 69, Rocky Mount, North Carolina 27802-0069, provides the Fund with office
space and facilities; provides certain executive personnel to the Fund;
maintains the Fund's accounting records; computes daily the Fund's net asset
value; supervises the preparation of tax returns, financial reports,
prospectuses, and proxy statements; and monitors compliance with certain
recordkeeping and regulatory requirements.
Compensation of the Administrator, based upon the average daily net assets of
the Fund, is at the annual rate of 0.125% on the first $50 million of the Fund's
net assets; 0.10% on the next $50 million; and 0.075% on all assets over $100
million. In addition, the Administrator currently receives a monthly fee of
$2,250 for accounting and recordkeeping services for the Fund. The Administrator
charges $15 per shareholder per year with a minimum of $750 per month for
transfer agency and shareholder services. The Administrator also charges the
Fund for certain costs involved with the daily valuation of investment
securities and is reimbursed for out-of-pocket expenses. The Administrator
charges a minimum annual fee of $50,000 for all of its fees taken in the
aggregate, analyzed monthly.
Transfer Agent. NC Shareholder Services, LLC (the "Transfer Agent") serves as
the Fund's transfer, dividend disbursing, and shareholder servicing agent. The
Transfer Agent, subject to the authority of the Board of Trustees, provides
transfer agency services pursuant to an agreement with the Administrator, which
has been approved by the Trust.
The Transfer Agent, whose address is 107 North Washington Street, Post Office
Box 4365, Rocky Mount, North Carolina 27803-0365, was established as a North
Carolina limited liability company in 1997. John D. Marriott, Jr., is the firm's
controlling member.
The Transfer Agent maintains the records of each shareholder's account, answers
shareholder inquiries concerning accounts, processes purchases and redemptions
of the Fund's shares, acts as dividend and distribution disbursing agent, and
performs other shareholder servicing functions. The Transfer Agent is
compensated for its services by the Administrator and not directly by the Fund.
The Custodian. First Union National Bank of North Carolina (the "Custodian"),
Two First Union Center, Charlotte, North Carolina 28288-1151, serves as
Custodian of the Fund's assets. The Custodian acts as the depository for the
Fund, safekeeps its portfolio securities, collects all income and other payments
with respect to portfolio securities, disburses monies at the Fund's request and
maintains records in connection with its duties. The Advisor, Administrator,
Transfer Agent, Distributor, or interested persons thereof, may have banking
relationships with the Custodian.
Other Expenses. The Fund is responsible for the payment of its expenses. These
include, for example, the fees payable to the Advisor, or expenses otherwise
incurred in connection with the management of the investment of the Fund's
assets, the fees and expenses of the Custodian, the fees and expenses of the
Administrator, the fees and expenses of Trustees, outside auditing and legal
expenses, all taxes and corporate fees payable by the Fund, Securities and
Exchange Commission fees, state securities qualification fees, costs of
preparing and printing prospectuses for regulatory purposes and for distribution
to shareholders, costs of shareholder reports and shareholder meetings, and any
extraordinary expenses. The Fund also pays for brokerage commissions and
transfer taxes (if any) in connection with the purchase and sale of portfolio
securities. Expenses attributable to a particular series of the Trust, such as
the Fund, will be charged to that series, and expenses not readily identifiable
as belonging to a particular series will be allocated by or under procedures
approved by the Board of Trustees among one or more series in such a manner as
it deems fair and equitable.
OTHER INFORMATION
Description of Shares. The Trust was organized as a Massachusetts business trust
on July 9, 1997 under a Declaration of Trust. The Declaration of Trust permits
the Board of Trustees to issue an unlimited number of full and fractional shares
and to create an unlimited number of series of shares. The Board of Trustees may
also classify and reclassify any unissued shares into one or more classes of
shares. The Trust currently has the number of authorized series of shares,
including the Fund, described in the Statement of Additional Information under
"Description of the Trust." Pursuant to its authority under the Declaration of
Trust, the Board of Trustees has authorized the issuance of an unlimited number
of shares representing equal pro rata interests in the Fund.
When issued, the shares of each series of the Trust, such as the Fund, will be
fully paid, nonassessable and redeemable. The Trust does not intend to hold
annual shareholder meetings; it may, however, hold special shareholder meetings
for purposes such as changing fundamental policies or electing Trustees. The
Board of Trustees shall promptly call a meeting for the purpose of electing or
removing Trustees when requested in writing to do so by the record holders of at
least 10% of the outstanding shares of the Trust. The term of office of each
Trustee is of unlimited duration. The holders of at least two-thirds of the
outstanding shares of the Trust may remove a Trustee from that position either
by declaration in writing filed with the Custodian or by votes cast in person or
by proxy at a meeting called for that purpose.
The Trust's shareholders will vote in the aggregate and not by series (fund) or
class, except where otherwise required by law or when the Board of Trustees
determines that the matter to be voted on affects only the interests of the
shareholders of a particular series or class. Matters affecting an individual
series, such as the Fund, include, but are not limited to, the investment
objectives, policies and restrictions of that series. Shares have no
subscription, preemptive or conversion rights. Share certificates will not be
issued. Each share is entitled to one vote (and fractional shares are entitled
to proportionate fractional votes) on all matters submitted for a vote, and
shares have equal voting rights except that only shares of a particular series
or class are entitled to vote on matters affecting only that series or class.
Shares do not have cumulative voting rights. Therefore, the holders of more than
50% of the aggregate number of shares of all series of the Trust may elect all
the Trustees.
Under Massachusetts's law, shareholders of a business trust may, under certain
circumstances, be held personally liable as partners for the obligations of the
trust. The Declaration of Trust, therefore, contains provisions that are
intended to mitigate such liability. See "Description of the Trust" in the
Statement of Additional Information for further information about the Trust and
its shares.
Reporting to Shareholders. The Fund will send to its shareholders Annual and
Semi-Annual Reports; the financial statements appearing in Annual Reports for
the Fund will be audited by independent accountants. In addition, the Fund will
send to each shareholder having an account directly with the Fund a quarterly
statement showing transactions in the account, the total number of shares owned
and any dividends or distributions paid. Inquiries regarding the Fund may be
directed in writing to 107 North Washington Street, Post Office Box 4365, Rocky
Mount, North Carolina 27803-0365, or by calling 1-800-773-3863.
Calculation of Performance Data. From time to time the Fund may advertise its
average annual total return. The "average annual total return" refers to the
average annual compounded rates of return over 1-, 5- and 10-year periods that
would equate an initial amount invested at the beginning of a stated period to
the ending redeemable value of the investment. The calculation assumes the
reinvestment of all dividends and distributions, includes all recurring fees
that are charged to all shareholder accounts and deducts all nonrecurring
charges at the end of each period. If the Fund has been operating less than 1, 5
or 10 years, the time period during which the Fund has been operating is
substituted.
In addition, the Fund may advertise other total return performance data other
than average annual total return. This data shows as a percentage rate of return
encompassing all elements of return (i.e. income and capital appreciation or
depreciation); it assumes reinvestment of all dividends and capital gain
distributions. Such other total return data may be quoted for the same or
different periods as those for which average annual total return is quoted. This
data may consist of a cumulative percentage rate of return, actual year-by-year
rates or any combination thereof. Cumulative total return represents the
cumulative change in value of an investment in a Fund for various periods.
The total return of a Fund could be increased to the extent the Advisor may
waive all or a portion of its fees or may reimburse all or a portion of the
Fund's expenses. Total return figures are based on the historical performance of
the Fund, show the performance of a hypothetical investment, and are not
intended to indicate future performance. The Fund's quotations may from time to
time be used in advertisements, sales literature, shareholder reports, or other
communications. For further information, see "Additional Information on
Performance" in the Statement of Additional Information.
<PAGE>
NEW PROVIDENCE CAPITAL GROWTH FUND
A No Load Fund
PROSPECTUS
September *, 1997
New Providence Capital Growth Fund
105 North Washington Street
Post Office Box 69
Rocky Mount, North Carolina 27802-0069
1-800-773-3863
Investment Advisor
New Providence Capital Management, L.L.C.
2859 Paces Ferry Road, Suite 2125
Atlanta, Georgia 30339
Administrator & Fund Accountant
The Nottingham Company
105 North Washington Street
Post Office Box 69
Rocky Mount, North Carolina 27802-0069
Transfer Agent and Shareholder Servicing Agent
North Carolina Shareholder Services, LLC
107 North Washington Street
Post Office Box 4365
Rocky Mount, North Carolina
1-800-773-3863
Custodian
First Union National Bank of North Carolina
Two First Union Center
Charlotte, North Carolina 28288-1151
Distributor
Donaldson & Co., Incorporated
2859 Paces Ferry Road, Suite 2125
Atlanta, Georgia
Independent Auditors
Deloitte & Touche LLP
2500 One PPG Place
Pittsburgh, Pennsylvania 15222-5401
<PAGE>
PART B
STATEMENT OF ADDITIONAL INFORMATION
NEW PROVIDENCE CAPITAL GROWTH FUND
____________, 1997
A series of
NEW PROVIDENCE INVESTMENT TRUST
107 North Washington Street, Post Office Box 4365
Rocky Mount, North Carolina 27803-4365
Telephone 1-800-773-3863
Table of Contents
INVESTMENT OBJECTIVE AND POLICIES..................................... 2
INVESTMENT LIMITATIONS................................................ 3
MANAGEMENT............................................................ 4
ADDITIONAL INFORMATION ON PERFORMANCE................................. 6
PORTFOLIO TRANSACTIONS................................................ 8
SPECIAL SHAREHOLDER SERVICES.......................................... 9
PURCHASE OF SHARES................................................... 11
REDEMPTION OF SHARES................................................. 11
NET ASSET VALUE...................................................... 11
ADDITIONAL TAX INFORMATION........................................... 11
CAPITAL SHARES AND VOTING............................................ 13
CUSTODIAN............................................................ 13
INDEPENDENT AUDITORS................................................. 14
APPENDIX A - DESCRIPTION OF RATINGS.................................. 15
This Statement of Additional Information (the "Additional Statement") is meant
to be read in conjunction with the Prospectus dated the same date as this
Additional Statement, September **, 1997, and is incorporated by reference in
its entirety into the Prospectus. Because this Additional Statement is not
itself a prospectus, no investment in shares of the Fund should be made solely
upon the information contained herein. Copies of the Fund's Prospectuses may be
obtained at no charge by writing or calling the Fund at the address and phone
number shown above. This Additional Statement is not a prospectus but is
incorporated by reference in each Prospectus in its entirety. Capitalized terms
used but not defined herein have the same meanings as in each Prospectus.
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The investment objective and policies of the Fund are described in the
Prospectus for the Fund. Supplemental information about these policies is set
forth below. The Fund has no prior operating history.
Repurchase Agreements. The Fund may acquire U.S. Government obligations or
corporate debt securities subject to repurchase agreements. A repurchase
transaction occurs when, at the time the Fund purchases a security (normally a
U.S. Treasury obligation), it also resells it to the vendor (normally a member
bank of the Federal Reserve or a registered Government Securities dealer) and
must deliver the security (and/or securities substituted for them under the
repurchase agreement) to the vendor on an agreed upon date in the future. The
repurchase price exceeds the purchase price by an amount which reflects an
agreed upon market interest rate effective for the period of time during which
the repurchase agreement is in effect. Delivery pursuant to the resale will
occur within one to five days of the purchase.
Repurchase agreements are considered "loans" under the Investment Company Act of
1940, as amended (the "1940 Act"), collateralized by the underlying security.
The Trust will implement procedures to monitor on a continuous basis the value
of the collateral serving as security for repurchase obligations. Additionally,
the Advisor to the Fund will consider the creditworthiness of the vendor. If the
vendor fails to pay the agreed upon resale price on the delivery date, the Fund
will retain or attempt to dispose of the collateral. The Fund's risk is that
such default may include any decline in value of the collateral to an amount
which is less than 100% of the repurchase price, any costs of disposing of such
collateral, and any loss resulting from any delay in foreclosing on the
collateral. The Fund will not enter into any repurchase agreement, which will
cause more than 10% of its net assets to be invested in repurchase agreements,
which extend beyond seven days and other illiquid securities.
Description of Money Market Instruments. Money market instruments may include
U.S. Government obligations or corporate debt obligations (including those
subject to repurchase agreements), provided that they mature in thirteen months
or less from the date of acquisition and are otherwise eligible for purchase by
the Fund. Money market instruments also may include Banker's Acceptances and
Certificates of Deposit of domestic branches of U.S. banks, Commercial Paper,
and Variable Amount Demand Master Notes ("Master Notes"). Banker's Acceptances
are time drafts drawn on and "accepted" by a bank. When a bank "accepts" such a
time draft, it assumes liability for its payment. When the Fund acquires a
Banker's Acceptance, the bank which "accepted" the time draft is liable for
payment of interest and principal when due. The Banker's Acceptance carries the
full faith and credit of such bank. A Certificate of Deposit ("CD") is an
unsecured, interest bearing debt obligation of a bank. Commercial Paper is an
unsecured, short-term debt obligation of a bank, corporation, or other borrower.
Commercial Paper maturity generally ranges from two to 270 days and is usually
sold on a discounted basis rather than as an interest-bearing instrument. The
Fund will invest in Commercial Paper only if it is rated in one of the top two
rating categories by Moody's Investors Service, Inc. ("Moody's"), Standard &
Poor's Ratings Group ("S&P"), Fitch Investors Service, Inc. ("Fitch"), or Duff &
Phelps ("D&P"), or if not rated, of equivalent quality in the Advisor's opinion.
Commercial Paper may include Master Notes of the same quality. Master Notes are
unsecured obligations which are redeemable upon demand of the holder and which
permit the investment of fluctuating amounts at varying rates of interest.
Master Notes are acquired by the Fund only through the Master Note program of
the Fund's custodian bank, acting as administrator thereof. The Advisor will
monitor, on a continuous basis, the earnings' power, cash flow, and other
liquidity ratios of the issuer of a Master Note held by the Fund.
Illiquid Investments. The Fund may invest up to 10% of its net assets in
illiquid securities, which are investments that cannot be sold or disposed of in
the ordinary course of business within seven days at approximately the prices at
which they are valued. Under the supervision of the Board of Trustees, the
Advisor determines the liquidity of the Fund's investments, and through reports
from the Advisor, the Board monitors investments in illiquid instruments. In
determining the liquidity of the Fund's investments, the Advisor may consider
various factors including (1) the frequency of trades and quotations, (2) the
number of dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including any
demand or tender features), and (5) the nature of the marketplace for trades
(including the ability to assign or offset the Fund's rights and obligations
relating to the investment). If through a change in values, net assets, or other
circumstances, the Fund were in a position where more than 10% of its net assets
were invested in illiquid securities, it would seek to take appropriate steps to
protect liquidity.
Forward Commitment & When-Issued Securities The Fund may purchase securities on
a when-issued basis or for settlement at a future date if the Fund holds
sufficient assets to meet the purchase price. In such purchase transactions, the
Fund will not accrue interest on the purchased security until the actual
settlement. Similarly, if a security is sold for a forward date, the Fund will
accrue the interest until the settlement of the sale. When-issued security
purchases and forward commitments have a higher degree of risk of price movement
before settlement due to the extended time period between the execution and
settlement of the purchase or sale. As a result, the exposure to the
counterparty of the purchase or sale is increased. Although the Fund would
generally purchase securities on a forward commitment or when-issued basis with
the intention of taking delivery, the Fund may sell such a security prior to the
settlement date if the Advisor felt such action was appropriate. In such a case,
the Fund could incur a short-term gain or loss.
INVESTMENT LIMITATIONS
The Fund has adopted the following investment limitations, which cannot be
changed without approval by holders of a majority of the outstanding voting
shares of the Fund. A "majority" for this purpose means the lesser of (i) 67% of
the Fund's outstanding shares represented in person or by proxy at a meeting at
which more than 50% of its outstanding shares are represented, or (ii) more than
50% of its outstanding shares. Unless otherwise indicated, percentage
limitations apply at the time of purchase.
As a matter of fundamental policy, the Fund may not:
1. Issue senior securities, borrow money, or pledge its assets, except that it
may borrow from banks as a temporary measure (a) for extraordinary or
emergency purposes, in amounts not exceeding 5% of its total assets or (b)
to meet redemption requests in amounts not exceeding 15% of its total
assets. The Fund will not make any investments if borrowing exceeds 5% of
its total assets until such time as total borrowing represents less than 5%
of Fund assets;
2. With respect to 75% of its total assets, invest more than 5% of the value
of its total assets in the securities of any one issuer or purchase more
than 10% of the outstanding voting securities of any class of securities of
any one issuer (except that securities of the U.S. government, its
agencies, and instrumentalities are not subject to this limitation);
3. Invest 25% or more of the value of its total assets in any one industry or
group of industries (except that securities of the U.S. Government, its
agencies, and instrumentalities are not subject to this limitation);
4. Invest for the purpose of exercising control or management of another
issuer;
5. Purchase or sell commodities or commodities contracts; real estate
(including limited partnership interests, but excluding readily marketable
interests in real estate investment trusts or other securities secured by
real estate or interests therein or readily marketable securities issued by
companies that invest in real estate or interests therein); or interests in
oil, gas, or other mineral exploration or development programs or leases
(although it may invest in readily marketable securities of issuers that
invest in or sponsor such programs or leases);
6. Underwrite securities issued by others except to the extent that the
disposition of portfolio securities, either directly from an issuer or from
an underwriter for an issuer, may be deemed to be an underwriting under the
federal securities laws;
7. Participate on a joint or joint and several basis in any trading account in
securities;
8. Invest its assets in the securities of one or more investment companies
except to the extent permitted by the 1940 Act; or
9. Write, purchase, or sell puts, calls, straddles, spreads, or combinations
thereof or futures contracts or related options.
The following investment limitations are not fundamental and may be changed
without shareholder approval. As a matter of non-fundamental policy, the Fund
may not:
1. Invest in securities of issuers which have a record of less than three
years' continuous operation (including predecessors and, in the case of
bonds, guarantors) if more than 5% of its total assets would be invested in
such securities;
2. Invest more than 10% of its net assets in illiquid securities. For this
purpose, illiquid securities include, among others, (a) securities for
which no readily available market exists or which have legal or contractual
restrictions on resale, (b) fixed-time deposits that are subject to
withdrawal penalties and have maturities of more than seven days, and (c)
repurchase agreements not terminable within seven days;
<PAGE>
3. Invest in the securities of any issuer if those officers or Trustees of the
Trust and those officers and directors of the Advisor who individually own
more than 1/2 of 1% of the outstanding securities of such issuer together
own more than 5% of such issuer's securities;
4. Make loans of money or securities, except that the Fund may invest in
repurchase agreements, money market instruments, and other debt securities;
5. Make short sales of securities or maintain a short position, except short
sales "against the box." (A short sale is made by selling a security the
Fund does not own. A short sale is "against the box" to the extent that the
Fund contemporaneously owns or has the right to obtain at no additional
cost securities identical to those sold short.) While the Fund has reserved
the right to make short sales "against the box," the Advisor has no present
intention of engaging in such transactions at this time or during the
coming year; or
6. Purchase foreign securities other than those traded on domestic U.S.
exchanges.
MANAGEMENT
Trustees and Officers. Following are the Trustees and Officers of the New
Providence Investment Trust (the "Trust"), their age, their present position
with the Trust or the Fund, and their principal occupation during the past five
years. An asterisk indicates those Trustees who are "interested persons" (as
defined in the 1940 Act) by virtue of their affiliation with either the Trust or
the Advisor (*).
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Name, Age, Position(s) with Principal Occupation(s)
Fund and/or Trust, and Address During Past 5 Years
- ------------------------------ -------------------
Keith O. Cowan, 41 Corporate Development Officer
Trustee BellSouth Corporation
1155 Peachtree Street, N.E. Suite 1710 Atlanta, Georgia
Atlanta, Georgia 30309-3610 since 1996; previously
Partner, Alston & Bird
1982-1996
John K. Donaldson, 56 President & Chief Investment Officer
Trustee , President & Chairman* New Providence Capital Management, L.L.C.
2859 Paces Ferry Road, Suite 2125 (Advisor to the Fund)
Atlanta, Georgia 30339 Atlanta, Georgia,
since 1996;
President
Donaldson & Co., Incorporated
Atlanta, Georgia, since 1984
Kyle A. Tomlin, 27 New Providence Capital Management, L.L.C.
Portfolio Manager Portfolio Management
2859 Paces Ferry Road, Suite 2125 Atlanta, Georgia
Atlanta, Georgia 30339 since 1997;
Donaldson & Co., Incorporated
Atlanta, Georgia 1994-1997; previously
SEI Corporation
Wayne, Pennsylvania 1993-1994
Shannon D. Coogle, 29 New Providence Capital Management, L.L.C.
Research Analyst Research / Client Services
2859 Paces Ferry Road, Suite 2125 Atlanta, Georgia
Atlanta, Georgia 30339 since 1997; previously
J.O. Patterson & Company
Atlanta, Georgia 1991-1994
J. Hope Reese, 36 Comptroller
Treasurer The Nottingham Company
105 North Washington Street (Administrator to the Fund)
Rocky Mount, North Carolina 27802 Rocky Mount, North Carolina,
since 1995; previously
Cash Manager
Law Companies Group
Atlanta, Georgia,
since 1993; previously
Financial Manager
MGR Food Services
Atlanta, Georgia,
C. Frank Watson, III, 26 Vice President
Secretary The Nottingham Company
105 North Washington Street (Administrator to the Fund)
Rocky Mount, North Carolina 27802 Rocky Mount, North Carolina,
</TABLE>
Compensation. Trustees and Officers of the Trust who are interested persons of
the Trust or the Advisor will receive no salary or fees from the Trust. Other
Trustees will receive $2,000 each year plus $250 per Fund per meeting attended
in person and $100 per Fund per meeting attended by telephone. The Trust will
also reimburse each Trustee for his or her travel and other expenses relating to
attendance at such meetings.
Investment Advisor. Information about New Providence Capital Management, L.L.C.
(the "Advisor"), 2859 Paces Ferry Road, Suite 2125, Atlanta, Georgia 30339, and
its duties and compensation as Advisor is contained in the Prospectus. The
Advisor supervises the Fund's investments pursuant to an Investment Advisory
Agreement (the "Advisory Agreement"). The Advisory Agreement is effective for a
two-year period and will be renewed thereafter only so long as such renewal and
continuance is specifically approved at least annually by the Board of Trustees
or by vote of a majority of the Fund's outstanding voting securities, provided
the continuance is also approved by a majority of the Trustees who are not
parties to the Advisory Agreement or interested persons of any such party. The
Advisory Agreement is terminable without penalty on 60-days' notice by the Board
of Trustees of the Trust or by vote of a majority of the outstanding voting
securities of the Fund. The Advisory Agreement provides that it will terminate
automatically in the event of its assignment.
The Advisor will receive a monthly management fee equal to an annual rate of
0.75% of the first $500 million of the Fund's net assets, and 0.65% of all
assets over $500 million.
Under the Advisory Agreement, the Advisor is not liable for any error of
judgment or mistake of law or for any loss suffered by the Fund in connection
with the performance of such Agreement, except a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services; or a
loss resulting from willful misfeasance, bad faith, or gross negligence on the
part of the Advisor in the performance of its duties; or from its reckless
disregard of its duties and obligations under the Agreement.
John K. Donaldson controls the Advisor. Mr. Donaldson also controls the
Distributor.
Administrator and Transfer Agent. The Trust has entered into a Fund Accounting,
Dividend Disbursing & Transfer Agent and Administration Agreement with The
Nottingham Company (the "Administrator"), 105 North Washington Street, Post
Office Drawer 69, Rocky Mount, North Carolina 27802-0069. Compensation of the
Administrator, based upon the average daily net assets of the Fund, is at the
annual rate of 0.125% on the first $50 million of the Fund's net assets; 0.10%
on the next $50 million; and 0.075% on all assets over $100 million. In
addition, the Administrator currently receives a monthly fee of $2,250 for
accounting and recordkeeping services for the Fund. The Administrator charges
$15 per shareholder per year with a minimum of $750 per month for transfer
agency and shareholder services. The Administrator also charges the Fund for
certain costs involved with the daily valuation of investment securities and is
reimbursed for out-of-pocket expenses. The Administrator charges a minimum
annual fee of $50,000 for all of its fees taken in the aggregate, analyzed
monthly.
The Administrator will perform the following services for the Fund: (1)
coordinate with the Custodian and monitor the services it provides to the Fund;
(2) coordinate with and monitor any other third parties furnishing services to
the Fund; (3) provide the Fund with necessary office space, telephones, and
other communications facilities and personnel competent to perform
administrative and clerical functions for the Fund; (4) supervise the
maintenance by third parties of such books and records of the Fund as may be
required by applicable federal or state law; (5) prepare or supervise the
preparation by third parties of all federal, state, and local tax returns and
reports of the Fund required by applicable law; (6) prepare and, after approval
by the Trust, file and arrange for the distribution of proxy materials and
periodic reports to shareholders of the Fund as required by applicable law; (7)
prepare and, after approval by the Trust, arrange for the filing of such
registration statements and other documents with the Securities and Exchange
Commission and other federal and state regulatory authorities as may be required
by applicable law; (8) review and submit to the officers of the Trust for their
approval invoices or other requests for payment of Fund expenses and instruct
the Custodian to issue checks in payment thereof; and (9) take such other action
with respect to the Fund as may be necessary in the opinion of the Administrator
to perform its duties under the agreement. The Administrator also provides
certain accounting and pricing services for the Fund.
With the approval of the Trust, the Administrator has contracted with North
Carolina Shareholder Services, LLC (the "Transfer Agent"), a North Carolina
limited liability company, to serve as transfer, dividend paying, and
shareholder servicing agent for the Fund. The Transfer Agent is compensated for
its services by the Administrator and not directly by the Fund. The address of
the Transfer Agent is 107 North Washington Street, Post Office Box 4365, Rocky
Mount, North Carolina 27803-0365.
Distributor. Donaldson & Co., Incorporated (the "Distributor") is the principal
underwriter and distributor of Fund shares pursuant to a Distribution Agreement
with the Trust. The Distributor, which is affiliated with the Advisor, serves as
exclusive agent for the distribution of the shares of the Fund.
John K. Donaldson, affiliated person of the Fund, is also an affiliated person
of the Advisor and the Distributor.
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 of
the 1940 Act (see "How Shares May Be Purchased - Distribution Plan" in the
Prospectus). As required by Rule 12b-1, the Plan (together with the Distribution
Agreement) has been approved by the Board of Trustees and separately by a
majority of the Trustees who are not interested persons of the Trust and who
have no direct or indirect financial interest in the operation of the Plan and
the Distribution Agreement.
Potential benefits of the Plan to the Fund include improved shareholder
services, savings to the Fund in transfer agency costs, savings to the Fund in
advisory fees and other expenses, benefits to the investment process through
growth and stability of assets, and maintenance of a financially healthy
management organization. The Board of Trustees must consider the continuation of
the Plan annually.
Under the Plan the Fund may expend up to 0.25% of the Fund's average daily net
assets annually to finance any activity primarily intended to result in the sale
of Shares and the servicing of shareholder accounts, provided the Trust's Board
of Trustees has approved the category of expenses for which payment is being
made. Such expenditures paid as service fees to any person who sells Shares may
not exceed 0.25% of the Shares' average annual net asset value.
ADDITIONAL INFORMATION ON PERFORMANCE
From time to time, the total return of the Fund may be quoted in advertisements,
sales literature, shareholder reports, or other communications to shareholders.
The Fund computes the "average annual total return" of the Fund by determining
the average annual compounded rates of return during specified periods that
equate the initial amount invested to the ending redeemable value of such
investment. This is done by determining the ending redeemable value of a
hypothetical $1,000 initial payment. This calculation is as follows:
P(1+T)n = ERV
Where: T = average annual total return.
ERV = ending redeemable value at the end of the period
covered by the computation of a hypothetical $1,000
payment made at the beginning of the period.
P = hypothetical initial payment of $1,000 from which the
maximum sales load is deducted.
n = period covered by the computation, expressed in terms
of years.
The Fund may also compute the aggregate total return of the Fund, which is
calculated in a similar manner, except that the results are not annualized.
The calculation of average annual total return and aggregate total return assume
an initial $1,000 investment and that there is a reinvestment of all dividends
and capital gain distributions on the reinvestment dates during the period. The
ending redeemable value is determined by assuming complete redemption of the
hypothetical investment and the deduction of all nonrecurring charges at the end
of the period covered by the computations.
These performance quotations should not be considered as representative of the
Fund's performance for any specified period in the future.
The Fund's performance may be compared in advertisements, sales literature,
shareholder reports, and other communications to the performance of other mutual
funds having similar objectives or to standardized indices or other measures of
investment performance. In particular, the Fund may compare its performance to
the S&P 500 Index, which is generally considered to be representative of the
performance of unmanaged common stocks that are publicly traded in the United
States securities markets. The Fund may also measure its performance against the
Lipper Growth Fund Index, which ranks the performance of mutual funds that have
an objective of growth of capital. Comparative performance may also be expressed
by reference to a ranking prepared by a mutual fund monitoring service or by one
or more newspapers, newsletters, or financial periodicals. The Fund may also
occasionally cite statistics to reflect its volatility and risk. The Fund may
also compare its performance to other published reports of the performance of
unmanaged portfolios of companies. The performance of such unmanaged portfolios
generally does not reflect the effects of dividends or dividend reinvestment. Of
course, there can be no assurance the Fund will experience the same results.
Performance comparisons may be useful to investors who wish to compare the
Fund's past performance to that of other mutual funds and investment products.
Of course, past performance is not a guarantee of future results.
The Fund's performance fluctuates on a daily basis largely because net earnings
and net asset value per share fluctuate daily. Both net earnings and net asset
value per share are factors in the computation of total return as described
above.
As indicated, from time to time the Fund may advertise its performance compared
to similar funds or portfolios using certain indices, reporting services, and
financial publications. These may include the following:
o Lipper Analytical Services, Inc., ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes
the reinvestment of all capital gains distributions and income dividends
and takes into account any change in net asset value over a specific period
of time.
o Morningstar, Inc., an independent rating service, is the publisher of the
bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
NASDAQ-listed mutual funds of all types according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for
two weeks.
Investors may use such indices in addition to the Fund's Prospectus to obtain a
more complete view of the Fund's performance before investing. Of course, when
comparing the Fund's performance to any index, factors such as composition of
the index and prevailing market conditions should be considered in assessing the
significance of such comparisons. When comparing funds using reporting services,
or total return, investors should take into consideration any relevant
differences in funds such as permitted portfolio compositions and methods used
to value portfolio securities and to compute offering price. Advertisements and
other sales literature for the Fund may quote total returns that are calculated
on non-standardized base periods. The total returns represent the historic
change in the value of an investment in the Fund based on monthly reinvestment
of dividends over a specified period of time.
From time to time the Fund may include in advertisements and other
communications charts and illustrations relating to inflation and the effects of
inflation on the dollar, including the purchasing power of the dollar at various
rates of inflation. The Fund may also disclose from time to time information
about its portfolio allocation and holdings at a particular date (including
ratings of securities assigned by independent rating services such as S&P and
Moody's). The Fund may also depict the historical performance of the securities
in which the Fund may invest over periods reflecting a variety of market or
economic conditions either alone or in comparison with alternative investments,
performance indices of those investments, or economic indicators. The Fund may
also include in advertisements and in materials furnished to present and
prospective shareholders statements or illustrations relating to the
appropriateness of types of securities and/or mutual funds that may be employed
to meet specific financial goals, such as saving for retirement, children's
education, or other future needs.
PORTFOLIO TRANSACTIONS
Subject to the general supervision of the Trust's Board of Trustees, the Advisor
is responsible for, makes decisions with respect to, and places orders for all
purchases and sales of portfolio securities for the Fund.
The annualized portfolio turnover rate for the Fund is calculated by dividing
the lesser of purchases or sales of portfolio securities for the reporting
period by the monthly average value of the portfolio securities owned during the
reporting period. The calculation excludes all securities whose maturities or
expiration dates at the time of acquisition are one year or less. Portfolio
turnover of the Fund may vary greatly from year to year as well as within a
particular year, and may be affected by cash requirements for redemption of
shares and by requirements that enable the Fund to receive favorable tax
treatment. Portfolio turnover will not be a limiting factor in making Fund
decisions, and the Fund may engage in short-term trading to achieve its
investment objectives.
Purchases of money market instruments by the Fund are made from dealers,
underwriters, and issuers. The Fund currently does not expect to incur any
brokerage commission expense on such transactions because money market
instruments are generally traded on a "net" basis by a dealer acting as
principal for its own account without a stated commission. The price of the
security, however, usually includes a profit to the dealer. Securities purchased
in underwritten offerings include a fixed amount of compensation to the
underwriter, generally referred to as the underwriter's concession or discount.
When securities are purchased directly from or sold directly to an issuer, no
commissions or discounts are paid.
Transactions on U.S. stock exchanges involve the payment of negotiated brokerage
commissions. On exchanges on which commissions are negotiated, the cost of
transactions may vary among different brokers. Transactions in the
over-the-counter market are generally on a net basis (i.e., without commission)
through dealers, or otherwise involve transactions directly with the issuer of
an instrument.
The Fund may participate, if and when practicable, in bidding for the purchase
of Fund securities directly from an issuer in order to take advantage of the
lower purchase price available to members of a bidding group. The Fund will
engage in this practice, however, only when the Advisor, in its sole discretion,
believes such practice to be otherwise in the Fund's interest.
In executing Fund transactions and selecting brokers or dealers, the Advisor
will seek to obtain the best overall terms available for the Fund. In assessing
the best overall terms available for any transaction, the Advisor shall consider
factors it deems relevant, including the breadth of the market in the security,
the price of the security, the financial condition and execution capability of
the broker or dealer, and the reasonableness of the commission, if any, both for
the specific transaction and on a continuing basis. The sale of Fund shares may
be considered when determining the firms that are to execute brokerage
transactions for the Fund. In addition, the Advisor is authorized to cause the
Fund to pay a broker-dealer which furnishes brokerage and research services a
higher commission than that which might be charged by another broker-dealer for
effecting the same transaction, provided that the Advisor determines in good
faith that such commission is reasonable in relation to the value of the
brokerage and research services provided by such broker-dealer, viewed in terms
of either the particular transaction or the overall responsibilities of the
Advisor to the Fund. Such brokerage and research services might consist of
reports and statistics relating to specific companies or industries; general
summaries of groups of stocks or bonds and their comparative earnings and
yields; or broad overviews of the stock, bond, and government securities
markets; and the economy.
Supplementary research information so received is in addition to, and not in
lieu of, services required to be performed by the Advisor and does not reduce
the advisory fees payable by the Fund. The Trustees will periodically review any
commissions paid by the Fund to consider whether the commissions paid over
representative periods of time appear to be reasonable in relation to the
benefits inuring to the Fund. It is possible that certain of the supplementary
research or other services received will primarily benefit one or more other
investment companies or other accounts for which the Advisor exercises
investment discretion. Conversely, the Fund may be the primary beneficiary of
the research or services received as a result of securities transactions
effected for such other account or investment company.
The Advisor may also utilize a brokerage firm affiliated with the Trust or the
Advisor (including the Distributor, an affiliate of the Advisor) if it believes
it can obtain the best execution of transactions from such broker. The Fund will
not execute portfolio transactions through, acquire securities issued by, make
savings deposits in, or enter into repurchase agreements with the Advisor or an
affiliated person of the Advisor (as such term is defined in the 1940 Act)
acting as principal, except to the extent permitted by the Securities and
Exchange Commission ("SEC"). In addition, the Fund will not purchase securities
during the existence of any underwriting or selling group relating thereto of
which the Advisor, or an affiliated person of the Advisor, is a member, except
to the extent permitted by the SEC. Under certain circumstances, the Fund may be
at a disadvantage because of these limitations in comparison with other
investment companies that have similar investment objectives but are not subject
to such limitations.
Investment decisions for the Fund will be made independently from those for any
other series of the Trust, if any, and for any other investment companies and
accounts advised or managed by the Advisor. Such other investment companies and
accounts may also invest in the same securities as the Fund. To the extent
permitted by law, the Advisor may aggregate the securities to be sold or
purchased for the Fund with those to be sold or purchased for other investment
companies or accounts in executing transactions. When a purchase or sale of the
same security is made at substantially the same time on behalf of the Fund and
another investment company or account, the transaction will be averaged as to
price and available investments allocated as to amount in a manner which the
Advisor believes to be equitable to the Fund and such other investment company
or account. In some instances, this investment procedure may adversely affect
the price paid or received by the Fund or the size of the position obtained or
sold by the Fund.
SPECIAL SHAREHOLDER SERVICES
The Fund offers the following shareholder services:
Regular Account. The regular account allows for voluntary investments to be made
at any time. Available to individuals, custodians, corporations, trusts,
estates, corporate retirement plans, and others, investors are free to make
additions and withdrawals to or from their account as often as they wish. When
an investor makes an initial investment in the Fund, a shareholder account is
opened in accordance with the investor's registration instructions. Each time
there is a transaction in a shareholder account, such as an additional
investment or the reinvestment of a dividend or distribution, the shareholder
will receive a confirmation statement showing the current transaction and all
prior transactions in the shareholder account during the calendar year to date,
along with a summary of the status of the account as of the transaction date. As
stated in the Prospectus, share certificates are not issued.
Automatic Investment Plan. The automatic investment plan enables shareholders to
make regular monthly or quarterly investments in shares through automatic
charges to their checking account. With shareholder authorization and bank
approval, the Fund will automatically charge the checking account for the amount
specified ($25 minimum) which will be automatically invested in shares at the
public offering price on or about the 21st day of the month. The shareholder may
change the amount of the investment or discontinue the plan at any time by
writing to the Fund.
Systematic Withdrawal Plan. Shareholders owning shares with a value of $2,500 or
more may establish a Systematic Withdrawal Plan. A shareholder may receive
monthly or quarterly payments, in amounts of not less than $100 per payment, by
authorizing the Fund to redeem the necessary number of shares periodically (each
month, or quarterly in the months of March, June, September, and December) in
order to make the payments requested. The Fund has the capability of
electronically depositing the proceeds of the systematic withdrawal directly to
the shareholder's personal bank account ($5,000 minimum per bank wire).
Instructions for establishing this service are included in the Fund Shares
Application, enclosed in the Prospectus, or are available by calling the Fund.
If the shareholder prefers to receive his systematic withdrawal proceeds in
cash, or if such proceeds are less than the $5,000 minimum for a bank wire,
checks will be made payable to the designated recipient and mailed within seven
days of the valuation date. If the designated recipient is other than the
registered shareholder, the signature of each shareholder must be guaranteed on
the application (see "Signature Guarantees" in the Prospectus). A corporation
(or partnership) must also submit a "Corporate Resolution" (or "Certification of
Partnership") indicating the names, titles, and required number of signatures
authorized to act on its behalf. The application must be signed by a duly
authorized officer(s) and the corporate seal affixed. No redemption fees are
charged to shareholders under this plan. Costs in conjunction with the
administration of the plan are borne by the Fund. Shareholders should be aware
that such systematic withdrawals may deplete or use up entirely their initial
investment and may result in realized long-term or short-term capital gains or
losses. The Systematic Withdrawal Plan may be terminated at any time by the Fund
upon 60-days' written notice or by a shareholder upon written notice to the
Fund. Applications and further details may be obtained by calling the Fund at
1-800-773-3863 or by writing to:
New Providence Capital Growth Fund
c/o North Carolina Shareholder Services
107 North Washington Street
Post Office Box 4365
Rocky Mount, North Carolina 27803-0365
Purchases in Kind. The Fund may accept securities in lieu of cash in payment for
the purchase of shares in the Fund. The acceptance of such securities is at the
sole discretion of the Advisor based upon the suitability of the securities
accepted for inclusion as a long-term investment of the Fund, the marketability
of such securities, and other factors which the Advisor may deem appropriate. If
accepted, the securities will be valued using the same criteria and methods as
described in "How Net Asset Value is Determined" in the Prospectus.
Redemptions in Kind. The Fund does not intend, under normal circumstances, to
redeem its securities by payment in kind. It is possible, however, that
conditions may arise in the future which would, in the opinion of the Trustees,
make it undesirable for the Fund to pay for all redemptions in cash. In such
case the Board of Trustees may authorize payment to be made in readily
marketable portfolio securities of the Fund. Securities delivered in payment of
redemptions would be valued at the same value assigned to them in computing the
net asset value per share. Shareholders receiving them would incur brokerage
costs when these securities are sold. An irrevocable election has been filed
under Rule 18f-1 of the 1940 Act, wherein the Fund committed itself to pay
redemptions in cash, rather than in kind, to any shareholder of record of the
Fund who redeems during any 90-day period, the lesser of (a) $250,000 or (b) one
percent (1%) of the Fund's net asset value at the beginning of such period.
Transfer of Registration. To transfer shares to another owner, send a written
request to the Fund at the address shown above. Your request should include the
following: (1) the Fund name and existing account registration; (2) signature(s)
of the registered owner(s) exactly as the signature(s) appear(s) on the account
registration; (3) the new account registration, address, social security or
taxpayer identification number, and how dividends and capital gains are to be
distributed; (4) signature guarantees (See the Prospectus under the heading
"Signature Guarantees"); and (5) any additional documents which are required for
transfer by corporations, administrators, executors, trustees, guardians, etc.
If you have any questions about transferring shares, call or write the Fund.
PURCHASE OF SHARES
The purchase price of shares of the Fund is the net asset value next determined
after the order is received. An order received prior to 4:00 p.m. New York time
will be executed at the price computed as of 4:00 p.m. on the date of receipt,
and an order received after 4:00 p.m. New York time will be executed at the
price computed as of that time on the next business day.
The Fund reserves the right in its sole discretion (i) to suspend the offering
of its shares, (ii) to reject purchase orders when in the judgment of management
such rejection is in the best interest of the Fund and its shareholders, and
(iii) to reduce or to waive the minimum for initial and subsequent investments
under circumstances where certain economies can be achieved in sales of Fund
shares.
REDEMPTION OF SHARES
The Fund may suspend redemption privileges or postpone the date of payment (i)
during any period that the New York Stock Exchange (the "NYSE") is closed for
other than customary weekend and holiday closings, or that trading on the NYSE
is restricted as determined by the Securities and Exchange Commission (the
"Commission"); (ii) during any period when an emergency exists as defined by the
rules of the Commission as a result of which it is not reasonably practical for
the Fund to dispose of securities owned by it, or to determine fairly the value
of its assets; and (iii) for such other periods as the Commission may permit.
The Fund may also suspend or postpone the recordation of the transfer of shares
upon the occurrence of any of the foregoing conditions. Any redemption may be
more or less than the shareholder's cost depending on the market value of the
securities held by the Fund. No charge is made by the Fund for redemptions other
than the possible charge for wiring redemption proceeds.
In addition to the situations described in the Prospectus under "How to Redeem
Shares," the Fund may redeem shares involuntarily to reimburse the Fund for any
loss sustained by reason of the failure of a shareholder to make full payment
for shares purchased by the shareholder or to collect any charge relating to a
transaction effected for the benefit of a shareholder which is applicable to
Fund shares as provided in the Prospectus from time to time.
NET ASSET VALUE
The net asset value per share of the Fund is determined at 4:00 p.m., New York
time, Monday through Friday, except on business holidays when the NYSE is
closed. The NYSE recognizes the following holidays: New Year's Day, President's
Day, Good Friday, Memorial Day, Fourth of July, Labor Day, Thanksgiving Day, and
Christmas Day. Any other holiday recognized by the NYSE will be considered a
business holiday on which the net asset value of the Fund will not be
calculated.
The net asset value per share of the Fund is calculated separately by adding the
value of the Fund's securities and other assets belonging to the Fund,
subtracting the liabilities charged to the Fund, and dividing the result by the
number of outstanding shares. "Assets belonging to" the Fund consist of the
consideration received upon the issuance of shares of the Fund together with all
net investment income, realized gains/losses and proceeds derived from the
investment thereof, including any proceeds from the sale of such investments,
any funds or payments derived from any reinvestment of such proceeds, and a
portion of any general assets of the Trust not belonging to a particular
investment Fund. Assets belonging to a Fund are charged with the direct
liabilities of the Fund and with a share of the general liabilities of the
Trust, which are normally allocated in proportion to the number of or the
relative net asset values of all of the Trust's series at the time of allocation
or in accordance with other allocation methods approved by the Board of
Trustees. Subject to the provisions of the Declaration of Trust, determinations
by the Board of Trustees as to the direct and allocable liabilities, and the
allocable portion of any general assets, with respect to a Fund are conclusive.
ADDITIONAL TAX INFORMATION
The following summarizes 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. The discussion here and in the
Prospectus is not intended as a substitute for careful tax planning and is based
on tax laws and regulations that are in effect on the date hereof; such laws and
regulations may be changed by legislative, judicial, or administrative action.
Investors are advised to consult their tax advisors with specific reference to
their own tax situations.
The Fund, and any other series of the Trust, will be treated as a separate
corporate entity under the Code. The Fund intends to qualify and to remain
qualified as a regulated investment company. To so qualify, the Fund must elect
to be a regulated investment company or have made such an election for a
previous year and must satisfy, in addition to the distribution requirement
described in the Prospectus, certain requirements with respect to the source of
its income for a taxable year. At least 90% of the gross income of the Fund must
be derived from dividends; interest; payments with respect to securities loans,
gains from the sale or other disposition of stocks, securities, or foreign
currencies; and other income derived with respect to the Fund's business of
investing in such stock, securities, or currencies. Any income derived by the
Fund from a partnership or trust is treated as derived with respect to the
Fund's business of investing in stock, securities, or currencies only to the
extent that such income is attributable to items of income that would have been
qualifying income if realized by the Fund in the same manner as by the
partnership or trust.
Another requirement for qualification as a regulated investment company under
the Code is that less than 30% of the Fund's gross income for a taxable year
must be derived from gains realized on the sale or other disposition of the
following investments held for less than three months: (l) stock and securities
(as defined in Section 2(a) (36) of the 1940 Act); (2) options, futures, and
forward contracts other than those on foreign currencies; or (3) foreign
currencies (or options, futures, or forward contracts on foreign currencies)
that are not directly related to the Fund's principal business of investing in
stocks or securities (or options and futures with respect to stocks or
securities). Interest (including original issue discount and, with respect to
certain debt securities, accrued market discount) received by the Fund upon
maturity or 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 this requirement. However, any other 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.
An investment company may not qualify as a regulated investment company for any
taxable year unless it satisfies certain requirements with respect to the
diversification of its investments at the close of each quarter of the taxable
year. In general, at least 50% of the value of its total assets must be
represented by cash, cash items, government securities, securities of other
regulated investment companies, and other securities which, with respect to any
one issuer, do not represent more than 5% of the total assets of the investment
company nor more than 10% of the outstanding voting securities of such issuer.
In addition, not more than 25% of the value of the investment company's total
assets may be invested in the securities (other than government securities or
the securities of other regulated investment companies) of any one issuer. The
Fund intends to satisfy all requirements on an ongoing basis for continued
qualification as a regulated investment company.
The Fund will designate any distribution of long-term capital gains as a capital
gain dividend in a written notice mailed to shareholders within 60 days after
the close of the Fund's taxable year. Shareholders should note that upon the
sale or exchange of Fund shares, if the shareholder has not held such shares for
at least six months, any loss on the sale or exchange of those shares will be
treated as long-term capital loss to the extent of the capital gain dividends
received with respect to the shares.
A 4% nondeductible excise tax is imposed on regulated investment companies that
fail to distribute currently an amount equal to specified percentages of their
ordinary taxable income and capital gain net income (excess of capital gains
over capital losses). The Fund intends to make sufficient distributions or
deemed distributions of its ordinary taxable income and any capital gain net
income prior to the end of each calendar year to avoid liability for this excise
tax.
If for any taxable year the Fund does not qualify for the special federal income
tax treatment afforded to regulated investment companies, all of its taxable
income will be subject to federal income tax at regular corporate rates (without
any deduction for distributions to its shareholders). In such event, dividend
distributions (whether or not derived from interest on tax-exempt securities)
would be taxable as ordinary income to shareholders to the extent of the Fund's
current and accumulated earnings and profits.
The Fund will be required in certain cases to withhold and remit to the U.S.
Treasury 31% of taxable dividends or 31% of gross proceeds realized upon sale
paid to shareholders who have failed to provide a correct tax identification
number in the manner required, or who are subject to withholding by the Internal
Revenue Service for failure to include properly on their return payments of
taxable interest or dividends, or who have failed to certify to the Fund that
they are not subject to backup withholding when required to do so, or that they
are "exempt recipients."
Depending upon the extent of the Fund's activities in states and localities in
which its offices are maintained, in which its agents or independent contractors
are located, or in which it is otherwise deemed to be conducting business, the
Fund may be subject to the tax laws of such states or localities. In addition,
in those states and localities that have income tax laws, the treatment of the
Fund and its shareholders under such laws may differ from their treatment under
federal income tax laws.
Dividends paid by the Fund derived from net investment income or net short-term
capital gains are taxable to shareholders as ordinary income, whether received
in cash or reinvested in additional shares. Long-term capital gains
distributions, if any, are taxable as long-term capital gains, whether received
in cash or reinvested in additional shares, regardless of how long Fund shares
have been held.
Under current tax law, certain types of expenses incurred by the Fund must be
proportionately allocated as additional income to shareholders. As a result, the
amounts reportable by the Fund as taxable income, if any, may exceed the
dividends actually paid. Such proportionate allocation of Fund expenses, if any,
will be identified when tax information is distributed by the Fund. The Fund
will send shareholders information each year on the tax status of dividends and
disbursements. A dividend or capital gains distribution paid shortly after
shares have been purchased, although in effect a return of investment, is
subject to federal income taxation. Dividends from net investment income, along
with capital gains, will be taxable to shareholders, whether received in cash or
shares and no matter how long you have held Fund shares, even if they reduce the
net asset value of shares below your cost and thus, in effect, result in a
return of a part of your investment.
CAPITAL SHARES AND VOTING
The Trust's Declaration of Trust currently authorizes the issuance of shares in
one series: the New Providence Capital Growth Fund. Shares of the Fund, when
issued, are fully paid and non-assessable and have no preemptive or conversion
rights. Shareholders are entitled to one vote for each full share and a
fractional vote for each fractional share held. Shares have non-cumulative
voting rights, which means that the holders of more than 50% of the shares
voting for the election of Trustees can elect 100% of the Trustees, and in this
event, the holders of the remaining shares voting will not be able to elect any
Trustees. The Trustees will hold office indefinitely, except that: (1) any
Trustee may resign or retire; and (2) any Trustee may be removed: (a) any time
by written instrument signed by at least two-thirds of the number of Trustees
prior to such removal; (b) at any meeting of shareholders of the Trust by a vote
of two-thirds of the outstanding shares of the Trust; or (c) by a written
declaration signed by shareholders holding not less than two-thirds of the
outstanding shares of the Trust and filed with the Trust's custodian.
Shareholders have certain rights, as set forth in the Declaration of Trust,
including the right to call a meeting of the shareholders. Shareholders holding
not less than 10% of the shares then outstanding may require the Trustees to
call a meeting, and the Trustees are obligated to provide certain assistance to
shareholders desiring to communicate with other shareholders in such regard
(e.g., providing access to shareholder lists, etc.). In case a vacancy or an
anticipated vacancy on the Board of Trustees shall for any reason exist, the
vacancy shall be filled by the affirmative vote of a majority of the remaining
Trustees, subject to certain restrictions under the 1940 Act. Otherwise, there
will normally be no meeting of shareholders for the purpose of electing
Trustees, and the Trust does not expect to have an annual meeting of
shareholders.
CUSTODIAN
First Union National Bank of North Carolina (the "Custodian"), Two First Union
Center, Charlotte, North Carolina 28288-1151, serves as custodian for the Fund's
assets. The Custodian acts as the depository for the Fund, safekeeps its
portfolio securities, collects all income and other payments with respect to
portfolio securities, disburses monies at the Fund's request and maintains
records in connection with its duties as Custodian. For its services as
Custodian, the Custodian is entitled to receive from the Fund an annual fee
based on the average net assets of the Fund held by the Custodian.
INDEPENDENT AUDITORS
The Board of Trustees of the Trust has selected the firm of Deloitte & Touche
LLP, 2500 One PPG Place, Pittsburgh, Pennsylvania 15222-5401, to serve as
independent auditors for the Fund for the current fiscal year and to audit the
annual financial statements of the Fund, prepare the Fund's federal and state
tax returns, and consult with the Fund on matters of accounting and federal and
state income taxation.
Independent auditors audit the financial statements of the Fund at least once
each year. Shareholders will receive annual audited and semi-annual (unaudited)
reports when published and written confirmation of all transactions in their
account. A copy of the most recent Annual Report will accompany the Statement of
Additional Information whenever a shareholder or a prospective investor requests
it.
APPENDIX A
DESCRIPTION OF RATINGS
The Fund will normally be at least 90% invested in equities. As a temporary
defensive position, however, when the Advisor determines that market conditions
warrant such investments, the Fund may invest up to 100% of its assets in
investment grade bonds, U.S. Government Securities, repurchase agreements, or
money market instruments ("Investment-Grade Debt Securities"). When the Fund
invests in Investment-Grade Debt Securities as a temporary defensive measure, it
is not pursuing its investment objective. Under normal circumstances, however,
the Fund may invest in money market instruments as described in the Prospectus.
The various ratings used by the nationally recognized securities rating services
are described below.
A rating by a rating service represents the service's opinion as to the credit
quality of the security being rated. However, the ratings are general and are
not absolute standards of quality or guarantees as to the creditworthiness of an
issuer. Consequently, the Advisor believes that the quality of fixed-income
securities in which the Fund may invest should be continuously reviewed and that
individual analysts give different weightings to the various factors involved in
credit analysis. A rating is not a recommendation to purchase, sell, or hold a
security because it does not take into account market value or suitability for a
particular investor. When a security has received a rating from more than one
service, each rating is evaluated independently. Ratings are based on current
information furnished by the issuer or obtained by the rating services from
other sources that they consider reliable. Ratings may be changed, suspended, or
withdrawn as a result of changes in or unavailability of such information, or
for other reasons.
Standard & Poor's Ratings Group. The following summarizes the highest four
ratings used by Standard & Poor's Ratings Group ("S&P") for bonds that are
deemed to be "Investment-Grade Debt Securities" by the Advisor:
AAA - This is the highest rating assigned by S&P to a debt obligation and
indicates an extremely strong capacity to pay interest and to repay
principal.
AA - Debt rated AA is considered to have a very strong capacity to pay
interest and to repay principal and differs from AAA issues only in a
small degree.
A - Debt rated A has a strong capacity to pay interest and to repay
principal although it is somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than debt in
higher-rated categories.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and to repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and to repay principal for bonds in this category than for debt
in higher rated categories.
To provide more detailed indications of credit quality, the AA, A, and BBB
ratings may be modified by the addition of a plus or minus sign to show relative
standing within these major rating categories.
Bonds rated BB, B, CCC, CC, and C are not considered by the Advisor to be
"Investment-Grade Debt Securities" and are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and C the highest degree of speculation. While such
bonds may have some quality and protective characteristics, these are outweighed
by large uncertainties or major risk exposures to adverse conditions.
Commercial paper rated A-1 by S&P indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted A-1+. Capacity for timely payment on
commercial paper rated A-2 is satisfactory, but the relative degree of safety is
not as high as for issues designated A-1.
The rating SP-1 is the highest rating assigned by S&P to municipal notes and
indicates very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics are given a
plus (+) designation.
Moody's Investors Service, Inc. The following summarizes the highest four
ratings used by Moody's Investors Service, Inc., ("Moody's") for bonds that are
deemed to be "Investment-Grade Debt Securities" by the Advisor:
Aaa - Bonds that are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred
to as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin, and principal is secure. While the various
protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.
Aa - Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high-grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities,
or fluctuation of protective elements may be of greater amplitude, or
there may be other elements present which make the long-term risks appear
somewhat larger than in Aaa securities.
A - Debt that is rated A possesses many favorable investment attributes
and is to be considered as an upper-medium-grade obligation. Factors
giving security to principal and interest are considered adequate, but
elements may be present which suggest a susceptibility to impairment
sometime in the future.
Baa - Debt which is rated Baa is considered as a medium-grade obligation,
i.e., it is neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present, but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such debt lacks outstanding
investment characteristics and, in fact, has speculative characteristics
as well.
Moody's applies numerical modifiers (l, 2 and 3) with respect to bonds rated Aa,
A, and Baa. The modifier 1 indicates that the bond being rated ranks in the
higher end of its generic rating category; the modifier 2 indicates a mid-range
ranking, and the modifier 3 indicates that the bond ranks in the lower end of
its generic rating category.
The Advisor does not consider bonds that are rated Ba, B, Caa, Ca, or C by
Moody's "Investment-Grade Debt Securities". Bonds rated Ba are judged to have
speculative elements because their future cannot be considered as well assured.
Uncertainty of position characterizes bonds in this class because the protection
of interest and principal payments often may be very moderate and not well
safeguarded.
Bonds that are rated B generally lack characteristics of a desirable investment.
Assurance of interest and principal payments or of maintenance of other terms of
the security over any long period for time may be small. Bonds that are rated
Caa are of poor standing. Such securities may be in default, or there may be
present elements of danger with respect to principal or interest. Bonds that are
rated Ca represent obligations that are speculative in a high degree. Such
issues are often in default or have other marked shortcomings. Bonds which are
rated C are the lowest rated class of bonds, and issues so rated can be regarded
as having extremely poor prospects of ever attaining any real investment
standing.
The rating Prime-1 is the highest commercial paper rating assigned by Moody's.
Issuers rated Prime-1 (or related supporting institutions) are considered to
have a superior capacity for repayment of short-term promissory obligations.
Issuers rated Prime-2 (or related supporting institutions) are considered to
have a strong capacity for repayment of short-term promissory obligations. This
will normally be evidenced by many of the characteristics of issuers rated
Prime-1 but to a lesser degree. Earnings' trends and coverage ratios, while
sound, will be more subject to variation. Capitalization characteristics, while
still appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
The following summarizes the highest rating used by Moody's for short-term notes
and variable-rate, demand obligations:
MIG-l; VMIG-l - Obligations bearing these designations are of the best
quality, enjoying strong protection by established cash flows, superior
liquidity support, or demonstrated broad-based access to the market for
refinancing.
Duff & Phelps Credit Rating Co. The following summarizes the highest four
ratings used by Duff & Phelps Credit Rating Co. ("D&P") for bonds that are
deemed to be "Investment-Grade Debt Securities" by the Advisor:
AAA - Bonds that are rated AAA are of the highest credit quality. The
risk factors are considered to be negligible, being only slightly more
than for risk-free U.S. Treasury debt.
AA - Bonds that are rated AA are of high credit quality. Protection
factors are strong. Risk is modest but may vary slightly from time to
time because of economic conditions.
A - Bonds rated A have average but adequate protection factors. The risk
factors are more variable and greater in periods of economic stress.
BBB - Bonds rated BBB have below-average protection factors but are still
considered sufficient for prudent investment. There is considerable
variability in risk during economic cycles.
Bonds rated BB, B, and CCC by D&P are not considered "Investment-Grade Debt
Securities" and are regarded, on balance, as predominantly speculative with
respect to the issuer's ability to pay interest and to make principal payments
in accordance with the terms of the obligations. BB indicates the lowest degree
of speculation and CCC the highest degree of speculation.
The rating Duff l is the highest rating assigned by D&P for short-term debt,
including commercial paper. D&P employs three designations, Duff l+, Duff 1, and
Duff 1- within the highest rating category. Duff l+ indicates highest certainty
of timely payment. Short-term liquidity, including internal operating factors
and/or access to alternative sources of funds, is judged to be "outstanding, and
safety is just below risk-free U.S. Treasury short-term obligations." Duff 1
indicates very high certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors. Risk factors are
considered to be minor. Duff 1- indicates high certainty of timely payment.
Liquidity factors are strong and supported by good fundamental protection
factors. Risk factors are very small.
Fitch Investors Service, Inc. The following summarizes the highest four ratings
used by Fitch Investors Service, Inc., ("Fitch") for bonds that are deemed to be
"Investment-Grade Debt Securities" by the Advisor:
AAA - Bonds are considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability to pay
interest and to repay principal, which is unlikely to be affected by
reasonably foreseeable events.
AA - Bonds are considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and to repay principal is
very strong, although not quite as strong as bonds rated AAA. Because
bonds rated in the AAA and AA categories are not significantly vulnerable
to foreseeable future developments, short-term debt of these issuers is
generally rated F-1+.
A - Bonds that are rated A are considered to be investment grade and of
high credit quality. The obligor's ability to pay interest and to repay
principal is considered to be strong, but may be more vulnerable to
adverse changes in economic conditions and circumstances than bonds with
higher ratings.
BBB - Bonds rated BBB are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and to
repay principal is considered to be adequate. Adverse changes in economic
conditions and circumstances, however, are more likely to have adverse
impact on these bonds and, therefore, impair timely payment. The
likelihood that the ratings of these bonds will fall below investment
grade is higher than for bonds with higher ratings.
To provide more detailed indications of credit quality, the AA, A, and BBB
ratings may be modified by the addition of a plus or minus sign to show relative
standing within a rating category.
Bonds rated BB, B, and CCC by Fitch are not considered "Investment-Grade Debt
Securities" and are regarded, on balance, as predominantly speculative with
respect to the issuer's ability to pay interest and to make principal payments
in accordance with the terms of the obligations. BB indicates the lowest degree
of speculation and CCC the highest degree of speculation.
The following summarizes the three highest ratings used by Fitch for short-term
notes, municipal notes, variable rate demand instruments, and commercial paper:
F-1+ - Instruments assigned this rating are regarded as having the
strongest degree of assurance for timely payment.
F-1 - Instruments assigned this rating reflect an assurance of timely
payment only slightly less in degree than issues rated F-1+
F-2 - Instruments assigned this rating have a satisfactory degree of
assurance for timely payment, but the margin of safety is not as great as
for issues assigned F-1+ and F-1 ratings.
<PAGE>
PART C
NEW PROVIDENCE INVESTMENT TRUST
FORM N-1A
OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits
a) Financial Statements: To be filed by amendment.
b) Exhibits:
(1) Declaration of Trust of Registrant - Enclosed Exhibit 1
(2) By-Laws - Enclosed Exhibit 2
(3) Not applicable
(4) Not applicable - the series of the Registrant do not issue certificates
(see Exhibit 1 and 2 for the relevant portions of the Declaration of Trust
and By-Laws)
(5) Form of Investment Advisory Agreement between the Registrant and New
Providence Capital Management, L.L.C., as Advisor-Enclosed Exhibit 5
(6) Form of Distribution Agreement between the Registrant and Donaldson & Co.,
Inc., as distributor-Enclosed Exhibit 6
(7) Not applicable
(8) Form of Custody Agreement between the Registrant and First Union National
Bank of North Carolina, as Custodian - Enclosed Exhibit 8
(9) Form of Fund Accounting, Dividend Disbursing and Transfer Agent and
Administration Agreement Between the Registrant and The Nottingham Company,
as administrator.-Enclosed Exhibit 9
(10) Opinion and Consent of Counsel - To be filed by amendment.
(11) Consent of Auditors - To be filed by amendment.
(12) Not Applicable
(13) Form of Initial Share Purchase Agreement - To be filed by amendment
(14) Not applicable
(15) Form of Distribution Plan-Enclosed Exhibit 15
(16) Computation of Performance - To be filed by amendment
(17) Financial Data Schedule - To be filed by amendment
(18) Not applicable
(19) Copies of Powers of Attorney - To be filed by amendment
ITEM 25. Persons Controlled by or Under Common Control with Registrant
Not applicable
ITEM 26. Number of Holders of Securities
Number of
Title of Class Record Holders
New Providence Capital Growth Fund.............................1
ITEM 27. Indemnification
The Declaration of Trust and Bylaws of the Registrant contain
provisions covering indemnification of the officers and trustees.
The following are summaries of the applicable provisions.
The Registrant's Declaration of Trust provides that every person
who is or has been a trustee, officer, employee or agent of the
Registrant and every person who serves at the trustees' request as
director, officer, employee or agent of another enterprise will be
indemnified by the Registrant to the fullest extent permitted by
law against all liabilities and against all expenses reasonably
incurred or paid by him in connection with any debt, claim, action,
demand, suit, proceeding, judgment, decree, liability or obligation
of any kind in which he becomes involved as a party or otherwise or
is threatened by virtue of his being or having been a trustee,
officer, employee or agent of the Registrant or of another
enterprise at the request of the Registrant and against amounts
paid or incurred by him in the compromise or settlement thereof.
No indemnification will be provided to a trustee or officer: (i)
against any liability to the Registrant or its shareholders by
reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his
office ("disabling conduct"); (ii) with respect to any matter as to
which he shall, by the court or other body by or before which the
proceeding was brought or engaged, have been finally adjudicated to
be liable by reason of disabling conduct; (iii) in the absence of a
final adjudication on the merits that such trustee or officer did
not engage in disabling conduct, unless a reasonable determination,
based upon a review of the facts that the person to be indemnified
is not liable by reason of such conduct, is made by vote of a
majority of a quorum of the trustees who are neither interested
persons nor parties to the proceedings, or by independent legal
counsel, in a written opinion.
The rights of indemnification may be insured against by policies
maintained by the Registrant, will be severable, will not affect
any other rights to which any trustee, officer, employee or agent
may now or hereafter be entitled, will continue as to a person who
has ceased to be such trustee, officer, employee, or agent and will
inure to the benefit of the heirs, executors and administrators of
such a person; provided, however, that no person may satisfy any
right of indemnity or reimbursement except out of the property of
the Registrant, and no other person will be personally liable to
provide indemnity or reimbursement (except an insurer or surety or
person otherwise bound by contract).
Article XIV of the Registrant's Bylaws provides that the Registrant
will indemnify each trustee and officer to the full extent
permitted by applicable federal, state and local statutes, rules
and regulations and the Declaration of Trust, as amended from time
to time. With respect to a proceeding against a trustee or officer
brought by or on behalf of the Registrant to obtain a judgment or
decree in its favor, the Registrant will provide the officer or
trustee with the same indemnification, after the same
determination, as it is required to provide with respect to a
proceeding not brought by or on behalf of the Registrant.
This indemnification will be provided with respect to an
action, suit proceeding arising from an act or omission or alleged
act or omission, whether occurring before or after the adoption of
Article XIV of the Registrant's Bylaws.
ITEM 28. Business and other Connections of Investment Advisor
See the Statement of Additional Information section entitled
"Management" of the Fund and the Investment Advisor's Form ADV
filed with the Commission for the activities and affiliations of
the officers and directors of the Investment Advisor of the
Registrant. Except as so provided, to the knowledge of Registrant,
none of the directors or executive officers of the Investment
Advisor is or has been at any time during the past two fiscal years
engaged in any other business, profession, vocation or employment
of a substantial nature. The Investment Advisor currently serves as
investment advisor to numerous institutional and individual
clients.
ITEM 29. Principal Underwriter
(a) Donaldson & Co., Inc. is underwriter and distributor for The New
Providence Capital Growth Fund,
Name and Principal Position(s) and Offices Position(s) and Offices
Business Address with Underwriter with Registrant
John K. Donaldson, President Trustee, President and
2859 Paces Ferry Road Chairman
Suite 2125
Atlanta, Georgia
ITEM 30. Location of Accounts and Records
All account books and records not normally held by First Union
National Bank of North Carolina, the Custodian to the Registrant,
are held by the Registrant, in the offices of The Nottingham
Company, Fund Accountant and Administrator, North Carolina
Shareholder Services, Transfer Agent to the Registrant,. or by New
Providence Capital Management, L.L.C., the Advisor to the
Registrant.
The address of The Nottingham Company is 105 North Washington
Street, Post Office Drawer 69, Rocky Mount, North Carolina
27802-0069. The address of North Carolina Shareholder Services is
107 North Washington Street, Post Office Box 4365, Rocky Mount,
North Carolina 27803-0365. The address of New Providence Capital
Management, L.L.C. is 2859 Paces Ferry Road, Suite 2125, Atlanta,
Georgia 30339 . The address of First Union National Bank of North
Carolina is Two First Union Center, Charlotte, North Carolina
28288-1151.
ITEM 31. Management Services
Not Applicable
ITEM 32. Undertakings
The Registrant hereby undertakes to file a post-effective amendment to this
Registration Statement, financial statements that need not be certified, within
four to six months following the effective date of this Registration Statement.
The Registrant hereby undertakes to comply with Section 16(c) of the Investment
Company Act of 1940.
The Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of the Registrant's latest annual report to shareholders
upon request and without charge.
NOTICE
A copy of the Declaration of Trust for New Providence Investment Trust is on
file with the Secretary of State of The Commonwealth of Massachusetts and notice
is hereby given that this Registration Statement has been executed on behalf of
the Trust by an officer of the Trust as an officer and by its Trustee as trustee
and not individually and the obligations of or arising out of this Registrations
Statement are not binding upon any of the Trustees, officers, or Shareholders
individually but are binding only upon the assets and property of the Trust.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereto duly authorized, in the
City of Rocky Mount, State of North Carolina on the 16th day of July 1997.
NEW PROVIDENCE INVESTMENT TRUST
/s/ Frank P. Meadows III
----------------------------------
By: Frank P. Meadows III
Trustee and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the date indicated.
/s/ Frank P. Meadows III
- -----------------------------------------------------------------
Frank P. Meadows III, Trustee
Dated: July 16, 1997
<PAGE>
NEW PROVIDENCE INVESTMENT TRUST
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
EXHIBIT 1 DECLARATION OF TRUST
EXHIBIT 2 BY-LAWS
EXHIBIT 5 INVESTMENT ADVISORY AGREEMENT
EXHIBIT 6 DISTRIBUTION AGREEMENT
EXHIBIT 8 CUSTODY AGREEMENT
EXHIBIT 9 ADMINISTRATION AGREEMENT
EXHIBIT 15 DISTRIBUTION PLAN
DECLARATION OF TRUST
OF
NEW PROVIDENCE INVESTMENT TRUST
TABLE OF CONTENTS
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
ARTICLE I
The Trust.............................................................................................. 1
1.1 Name.......................................................................................... 1
1.2 Definitions................................................................................... 1
1.3 Purpose....................................................................................... 2
ARTICLE II
Trustees............................................................................................... 2
2.1 Management of the Trust....................................................................... 2
2.2 Election of Trustees.......................................................................... 2
2.3 Term of Office of Trustees.................................................................... 3
2.4 Termination of Service and Appointment of Trustees............................................ 3
2.5 Temporary Absence of Trustee.................................................................. 3
2.6 Number of Trustees............................................................................ 3
2.7 Vacancy in Board of Trustees.................................................................. 3
2.8 Effect of Death, Resignation etc. of a Trustee................................................ 3
2.9 Ownership of the Trust........................................................................ 3
2.10 Meetings...................................................................................... 4
2.11 Officers...................................................................................... 4
2.12 By-Laws....................................................................................... 4
2.13 Other Activities of Trustees.................................................................. 4
ARTICLE III
Powers of Trustees..................................................................................... 4
3.1 General....................................................................................... 4
3.2 Investments................................................................................... 5
3.3 Legal Title................................................................................... 5
3.4 Issuance and Repurchase of Securities......................................................... 6
3.5 Borrow Money.................................................................................. 6
3.6 Delegation; Committees........................................................................ 6
3.7 Collection and Payment........................................................................ 6
3.8 Expenses...................................................................................... 6
3.9 Miscellaneous Powers.......................................................................... 6
3.10 Further Powers................................................................................ 7
3.11 Ownership of Shares by Trustees, Officers, and Agents......................................... 7
ARTICLE IV
Advisory, Service, Management and Distribution Arrangements............................................ 7
4.1 Advisory, Service, and Management Arrangements................................................ 7
4.2 Distribution Arrangements..................................................................... 7
4.3 Parties to Contract........................................................................... 8
4.4 Provisions and Amendments..................................................................... 8
ARTICLE V
Limitations of Liability of Shareholders, Trustees and Others.......................................... 8
5.1 Limitation of Personal Liability and Indemnification of Shareholders.......................... 8
5.2 Limitation of Personal Liability of Trustees, Officers, Employees or Agents of the
Trust......................................................................................... 8
5.3 Express Exculpatory Clauses and Instruments................................................... 9
5.4 Mandatory Indemnification..................................................................... 9
5.5 No Bond Required of Trustees.................................................................. 10
5.6 No Duty of Investigation; Notice in Trust Instruments, etc.................................... 10
5.7 Reliance on Experts, etc...................................................................... 10
ARTICLE VI
Shares of Beneficial Interest.......................................................................... 11
6.1 Beneficial Interest........................................................................... 11
6.2 Series Designation............................................................................ 11
6.3 Rights of Shareholders........................................................................ 12
6.4 Trust Only.................................................................................... 12
6.5 Issuance of Shares............................................................................ 12
6.6 Register of Shares............................................................................ 13
6.7 Transfer Agent and Registrar.................................................................. 13
6.8 Transfer of Shares............................................................................ 13
6.9 Notices....................................................................................... 13
ARTICLE VII
Custodians............................................................................................. 14
7.1 Appointment and Duties........................................................................ 14
7.2 Action Upon Termination of Custodian Agreement................................................ 14
7.3 Central Certificate System.................................................................... 14
7.4 Acceptance of Receipts in Lieu of Certificates................................................ 14
ARTICLE VIII
Redemption............................................................................................. 15
8.1 Redemptions................................................................................... 15
8.2 Redemption of Shares; Disclosure of Holding................................................... 15
8.3 Redemptions of Accounts of Less than an Amount Specified by the Trustees...................... 15
8.4 Redemptions Pursuant to Constant Net Asset Value.............................................. 15
8.5 Redemption in Kind............................................................................ 15
ARTICLE IX
Determination of Net Asset Value, Net Income and Distributions......................................... 16
9.1 Net Asset Value............................................................................... 16
9.2 Distributions to Shareholders................................................................. 16
9.3 Constant Net Asset Value; Reduction on Outstanding Shares..................................... 16
9.4 Power to Modify Foregoing Procedures.......................................................... 17
ARTICLE X
Shareholders........................................................................................... 17
10.1 Voting Powers................................................................................. 17
10.2 Meetings...................................................................................... 17
10.3 Quorum and Required Vote...................................................................... 18
10.4 Record Date for Meetings...................................................................... 18
10.5 Proxies....................................................................................... 18
10.6 Additional Provisions......................................................................... 18
10.7 Reports....................................................................................... 18
10.8 Shareholder Action by Written Consent......................................................... 18
10.9 Inspection of Records......................................................................... 18
ARTICLE XI
Duration; Termination of Trust; Amendment; Mergers; Etc................................................ 19
11.1 Duration...................................................................................... 19
11.2 Termination................................................................................... 19
11.3 Merger, Consolidation and Sale of Assets...................................................... 19
11.4 Amendment Procedure........................................................................... 20
11.5 Incorporation................................................................................. 20
ARTICLE XII
Miscellaneous.......................................................................................... 21
12.1 Filing........................................................................................ 21
12.2 Resident Agent................................................................................ 21
12.3 Governing Law................................................................................. 21
12.4 Counterparts.................................................................................. 21
12.5 Reliance by Third Parties..................................................................... 21
12.6 Provisions in Conflict With Law or Regulations................................................ 22
</TABLE>
<PAGE>
DECLARATION OF TRUST
OF
NEW PROVIDENCE INVESTMENT TRUST
THIS DECLARATION OF TRUST of NEW PROVIDENCE INVESTMENT TRUST is made as
of the 9th day of July 1997 by the parties signatory hereto, as trustees (such
persons, so long as they shall continue in office in accordance with the terms
of this Declaration of Trust, and all other persons who at the time in question
have been duly elected or appointed as trustees in accordance with the
provisions of this Declaration of Trust and are then in office, being
hereinafter called the "Trustees").
WHEREAS, the Trustees hereby established a trust fund under the laws of
Massachusetts for the investment and reinvestment of funds contributed thereto
under this Declaration of Trust;
NOW, THEREFORE, the Trustees hereby declare that all money and property
contributed to the trust fund under said Declaration of Trust shall be held and
managed under this Declaration of Trust as herein set forth below.
ARTICLE I
The Trust
Name. The name of the trust created hereby (the "Trust", which term shall be
deemed to include any Series of the Trust when the context requires) shall be
"NEW PROVIDENCE INVESTMENT TRUST", and so far as may be practicable the Trustees
shall conduct the activities of the Trust, execute all documents and sue or be
sued under that name, which name (and the word "Trust" wherever hereinafter
used) shall refer to the Trustees as Trustees, and not individually, and shall
not refer to the officers, agents, employees or Shareholders of the Trust or any
Series thereof. Each Series of the Trust that shall be established and
designated by the Trustees pursuant to Section 6.2 shall conduct its activities
under such name as the Trustees shall determine and set forth in the instrument
establishing such Series. Should the Trustees determine that the use of the name
of the Trust or any Series is not advisable, they may select such other name for
the Trust or such Series as they deem proper, and the Trust or Series may
conduct its activities under such other name. Any name change shall be effective
upon the execution by a majority of the then Trustees (or by an officer of the
Trust pursuant to the vote of a majority of the then Trustees) of an instrument
setting forth the new name. Any such instrument shall have the status of an
amendment to this Declaration.
Definitions. As used in this Declaration, the following terms have the following
meanings:
The terms "Affiliated Person", "Assignment", "Commission", "Interested Person",
"Investment Advisor", "Majority Shareholder" (the 67% or 50% requirement of the
third sentence of Section 2(a) (42) of the 1940 Act, whichever may be
applicable) and "Principal Underwriter" shall have the meanings given them in
the 1940 Act.
"By-Laws" shall mean the By-Laws of the Trust as amended from time to time.
"Class" shall mean the separate classes into which the Shares of any Series may
be divided as provided in Section 6.2.
"Commission" shall mean the United States Securities and Exchange Commission.
"Declaration" shall mean this Declaration of Trust as amended from time to time.
References in this Declaration to "Declaration", "hereof", "herein" and
"hereunder" shall be deemed to refer to the Declaration rather than the article
or section in which such words appear.
"Net Asset Value" shall mean the net asset value of each Series or Class of the
Trust determined in the manner provided in Article IX, Section 9.1 hereof.
"Person" shall mean and include individuals, corporations, partnerships, trusts,
associations, limited liability companies, joint ventures and other entities,
whether or not legal entities, and governments and agencies and political
subdivisions thereof.
"Prospectus" shall mean the currently effective Prospectus of any Series or
Class of the Trust under the Securities Act of 1933, as amended.
"Series" shall mean the separate series that may be established and designated
pursuant to Section 6.2.
"Shareholders" shall mean as of any particular time all holders of record of
outstanding Shares at such time.
"Shares" shall mean the transferable units of interest into which the beneficial
interest in any Series or Class of the Trust shall be divided from time to time
and includes fractions of Shares as well as whole Shares. All reference to
Shares shall be deemed to be Shares of any or all Series or Classes as the
context may require.
"Trust" shall have the meaning set forth in Article I, Section 1.1 hereof.
"Trustees" shall mean the signatories to this Declaration of Trust, so long as
they shall continue in office in accordance with the terms hereof, and all other
persons who at the time in question have been duly elected or appointed and have
qualified as Trustees in accordance with the provisions hereof and are then in
office, and reference in this Declaration to a Trustee or Trustees shall refer
to such person or persons in their capacity as Trustees hereunder.
"Trust Property" shall mean as of any particular time any and all property, real
or personal, tangible or intangible, which at such time is owned or held by or
for the account of the Trust, any Series thereof or the Trustees.
The "1940 Act" shall mean the Investment Company Act of 1940 and the rules and
regulations promulgated thereunder, as amended from time to time including
exemptions granted therefrom.
Purpose. The Trust is a Massachusetts business trust of the type described in
Section 1 of Chapter 102 of the General Law of the Commonwealth of Massachusetts
formed for the purpose of acting as a management investment company under the
1940 Act; provided, however, that the Trust may exercise all powers that are
ordinarily exercised by or permissible for Massachusetts business trusts.
ARTICLE II
Trustees
Management of the Trust. The Trustees shall manage the business and affairs of
the Trust, and they shall have all powers necessary and desirable to carry out
that responsibility. Each Trustee named herein (or his successor appointed
hereunder) shall serve until the election of Trustees at the first meeting of
Shareholders of the Trust called for the purpose of electing Trustees after the
date hereof, and until his successor is elected and qualified, or until he
sooner dies, resigns or is removed.
Election of Trustees. Shareholders of the Trust shall elect Trustees at
Shareholder meetings called for that purpose. The Trustees need not be elected
annually or at regular intervals. Except as provided in Section 10.2, the
Trustees shall not be required to call a meeting of Shareholders for the purpose
of electing Trustees; provided, however, that if at any time, other than the
time preceding the first meeting of Shareholders for the purpose of electing
Trustees, less than a majority of the Trustees holding office at that time were
elected by the Shareholders, a meeting of the Shareholders for the purpose of
electing Trustees shall be held promptly and in any event within 60 days (unless
the Commission shall by order extend such period). No election of a Trustee
shall become effective, however, until the person elected shall have accepted
such election and agreed in writing to be bound by the terms of this
Declaration. If re-elected, a Trustee may succeed himself. Trustees need not own
Shares. During any period in which the Trust may act as distributor of the
securities of which it is the issuer, the selection and nomination of Trustees
who are not interested persons shall be made by disinterested Trustees in
accordance with the 1940 Act.
Term of Office of Trustees. Each Trustee shall hold office during the lifetime
of this Trust and until its termination as hereinafter provided or, if sooner,
until the next meeting of Shareholders called for the purpose of electing
Trustees and the election and qualification of his successor; 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 become mentally or physically incapacitated may be retired by
written instrument signed by a majority of the other Trustees, specifying the
date of his retirement; and (d) a Trustee may be removed at any meeting of
Shareholders of the Trust by a vote of two-thirds of the outstanding Shares.
Termination of Service and Appointment of Trustees. In case of death,
resignation, retirement, removal or mental or physical incapacity of any of the
Trustees, or in case a vacancy shall, by reason of an increase in number, or for
any other reason, exist, the remaining Trustees shall fill such vacancy by
appointing for the remaining term of the predecessor Trustee such other person
as they in their discretion shall see fit. Such appointment shall be effective
upon the signing of a written instrument by a majority of the Trustees in office
and the written acceptance to this Declaration by the appointee. 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 and the written acceptance of this Declaration by
the appointee. As soon as any Trustee so appointed shall have accepted this
Trust, the trust estate shall vest in the new Trustee or Trustees, together with
the continuing Trustees, without any further act or conveyance, and he shall be
deemed a Trustee hereunder. Any appointment authorized by this Section 2.4 is
subject to the provisions of Section 16(a) of the 1940 Act.
Temporary Absence of Trustee. Any Trustee may, by power of attorney, delegate
his power for a period not exceeding six months at any one time to any other
Trustee or Trustees, provided that in no case shall less than two of the
Trustees personally exercise the power hereunder except as herein otherwise
expressly provided.
Number of Trustees. The Trustees themselves shall determine the number of
Trustees serving hereunder at any time.
Vacancy in Board of Trustees. Whenever a vacancy on the Board of Trustees shall
occur and until such vacancy is filled, or while any Trustee is physically or
mentally incapacitated by reason of disease or otherwise, the other Trustees,
regardless of their number, shall have all the powers granted to the Trustees
and shall discharge all the duties imposed upon them by this Declaration. The
certificate of the other Trustees of such vacancy or incapacity shall be
conclusive.
Effect of Death, Resignation etc. of a Trustee. The death, resignation,
retirement, removal, or mental or physical incapacity of the Trustees, or any
one of them, shall not operate to annul the Trust or to revoke any existing
agency created pursuant to the terms of this Declaration.
Ownership of the Trust. The assets of the Trust 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 by any successor Trustees. All of the assets of the
Trust shall at all times be considered as vested in the Trustees. No Shareholder
shall be deemed to have a severable ownership in any individual asset of the
Trust or any right of partition or possession thereof, but each Shareholder
shall have a proportionate undivided beneficial interest in the Trust.
Meetings. Meetings of the Trustees shall be held from time to time upon the call
of the Chairman, the Secretary, such other officers as may be thereunto
authorized by the By-Laws or vote of the Trustees, or any two Trustees, or
pursuant to a vote of the Trustees adopted at a duly constituted meeting of the
Trustees. Regular meetings of the Trustees may be held without call or notice at
a time and place fixed by the By-Laws or by resolution of the Trustees. Notice
of any other meeting shall be mailed or otherwise given not less than 48 hours
before the meeting but may be waived in person or in writing by any Trustee
either before or after such meeting. The attendance of a Trustee at a meeting
shall constitute a waiver of notice of such meeting except where a Trustee
attends a meeting for the express purpose of objecting to the transaction of any
business on the ground that the meeting has not been lawfully called or
convened. The Trustees may act with or without a meeting. A quorum for all
meetings of the Trustees shall be a majority of the Trustees. Unless provided
otherwise in this Declaration, any action of the Trustees may be taken at a
meeting by vote of a majority of the Trustees present (a quorum being present)
or without a meeting by written consents of a majority of the Trustees.
Any committee of the Trustees, including an executive committee, if any, may act
with or without a meeting. A quorum for all meetings of any such committee shall
be a majority of the members thereof. Unless provided otherwise in this
Declaration, any action of any such committee may be taken at a meeting by vote
of a majority of the members present (a quorum being present) or without a
meeting by written consent of a majority of the members.
With respect to actions of the Trustees and any committee of the Trustees,
Trustees who are Interested Persons of the Trust within the meaning of Section
1.2 hereof or otherwise interested in any action to be taken may be counted for
quorum purposes under this Section and shall be entitled to vote to the extent
permitted by the 1940 Act.
All or any one or more Trustees may participate in a meeting of the Trustees or
any committee thereof by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to such
communications systems shall constitute presence in person at such meeting.
Officers. The Trustees shall elect such officers or agents, who shall have such
powers, duties, and responsibilities as the Trustees may deem to be advisable,
and as they shall specify by resolution or in the By-Laws. Except as may be
provided in the By-Laws, any officer or agent elected by the Trustees may be
removed at any time with or without cause. The same individual may hold any two
or more offices.
By-Laws. The Trustees may adopt, and from time to time amend or repeal, By-Laws
for the conduct of the business of the Trust.
Other Activities of Trustees. Trustees may also serve as officers, employees,
and agents of the Trust, and may hold multiple offices within the Trust; and may
hold any office or be employed by any other business entity, and engage in any
other business activity.
ARTICLE III
Powers of Trustees
General. 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 be bound or
limited by present or future laws or customs with regard to investment by
trustees or fiduciaries. The enumeration of any specific power herein shall not
be construed as limiting the aforesaid powers.
Investments. The Trustees shall have power to:
(a) conduct, operate and carry on the business of an investment company,
including any activity incidental to the business of an investment company
or conducive to or expedient for the benefit or protection of the Trust or
its Shareholders;
(b) subscribe for, invest in, reinvest in, purchase or otherwise acquire, hold,
pledge, sell, assign, transfer, exchange, lend, mortgage, hypothecate,
purchase or sell options on, lease, distribute or otherwise deal in or
dispose of any or all of the assets of the Trust, including, but not
limited to, cash, negotiable or non-negotiable instruments, obligations,
evidences of indebtedness, certificates of deposit or indebtedness,
commercial paper, repurchase agreements, reverse repurchase agreements,
equity securities, option contracts, futures contracts, indices of
securities and other securities, including, without limitation, those
issued, guaranteed or sponsored by any state, territory or possession of
the United States and the District of Columbia and their political
subdivisions, agencies and instrumentalities, or by the United States
Government or its agencies or instrumentalities, or international
instrumentalities, or by any bank, savings institution, corporation or
other business entity organized under the laws of the United States or
organized under foreign laws; and to exercise any and all rights, powers
and privileges of ownership or interest in respect of any and all such
investments of every kind and description, including, without limitation,
the right to vote, execute and deliver proxies or powers of attorney,
consent and otherwise act with respect thereto, with power to designate one
or more persons, firms, associations or corporations to exercise any of
said rights, powers and privileges in respect of any of said instruments;
(c) hold any security or property in a form not indicating any trust, whether
in bearer, unregistered or other negotiable form, or in the name of the
Trustees or of the Trust or in the name of a custodian, sub-custodian or
other depositary or a nominee or nominees or otherwise;
(d) consent to or participate in any plan for the reorganization, consolidation
or merger of any corporation or issuer, any security or property of which
is or was held in the Trust; to consent to any contract, lease, mortgage,
purchase or sale of property by such corporation or issuer, and to pay
calls or subscriptions with respect to any security held in the Trust;
(e) join with other security holders in acting through a committee, depositary,
voting trustee or otherwise, and in that connection to deposit any security
with, or transfer any security to, any such committee, depositary or
trustee, and to delegate to them such power and authority with relation to
any security (whether or not so deposited or transferred) as the Trustees
shall deem proper, and to agree to pay, and to pay, such portion of the
expenses and compensation of such committee, depositary or trustee as the
Trustees shall deem proper;
(f) act as distributor of Shares, and as underwriter of, or broker or dealer
in, securities or other property.
The Trustees shall not be limited to investing in obligations maturing before
the possible termination of the Trust or any Series or Class, nor shall the
Trustees be limited by any law limiting the investments that may be made by
fiduciaries.
Legal Title. Legal title to all the Trust Property shall be vested in the
Trustees as joint tenants except that the Trustees shall have power to cause
legal title to any Trust Property to be held by or in the name of one or more of
the Trustees, or in the name of the Trust or any Series thereof, or in the name
of any other Person as nominee, on such terms as the Trustees may determine,
provided that the interest therein of the Trust or any Series thereof is
appropriately protected.
The right, title and interest of the Trustees in the Trust Property shall vest
automatically in each person who may hereafter become a Trustee upon his due
election and qualification. Upon the resignation, removal or death of a Trustee
he shall automatically cease to have any right, title or interest in any of the
Trust Property, and the right, title and interest of such Trustee in the Trust
Property shall vest automatically in the remaining Trustees. Such vesting and
cessation of title shall be effective whether or not conveyancing documents have
been executed and delivered.
Issuance and Repurchase of Securities. The Trustees shall have the power to
issue, sell, repurchase, redeem, retire, cancel, acquire, hold, resell, dispose
of, transfer, and otherwise deal in, Shares, including shares in fractional
denominations, and, subject to the more detailed provisions set forth in
Articles VIII and IX, to apply to any such repurchase, redemption, retirement,
cancellation or acquisition of Shares any funds or property of the applicable
Series of the Trust.
Borrow Money. The Trustees shall have power to borrow money or otherwise obtain
credit and to secure the same by mortgaging, pledging or otherwise subjecting as
security the assets of the Trust or any Series thereof, including the lending of
portfolio securities, and to endorse, guarantee, or undertake the performance of
any obligation, contract or engagement of any other person, firm, association or
corporation.
Delegation; Committees. The Trustees shall have power, consistent with their
continuing exclusive authority over the management of the Trust and the Trust
Property, to delegate from time to time to such of their number or to officers,
employees or agents of the Trust the doing of such things and the execution of
such instruments either in the name of the Trust or the names of the Trustees or
otherwise as the Trustees may deem expedient. The Trustees may appoint
committees consisting in each case of such number of Trustees (but not less than
the minimum required by any applicable law) and having and exercising, to the
extent permitted by law, such powers as the Trustees may determine in the
resolution appointing any such committees. The Trustees shall have power to
appoint members and alternate members of any such committee, and, to the extent
permitted by law, at any time to change the members, alternate members, and
powers of any such committee.
Collection and Payment. The Trustees shall have power to collect all property
due to the Trust or any Series thereof; to pay all claims, including taxes,
against the Trust Property; to prosecute, defend, compromise or abandon any
claims relating to the Trust Property; to foreclose any security interest
securing any obligations, by virtue of which any property is owed to the Trust
or any Series thereof; and to enter into releases, agreements and other
instruments.
Expenses. The Trustees shall have power to incur and pay any expenses which in
the opinion of the Trustees are necessary or incidental to carry out any of the
purposes of this Declaration, and to pay reasonable compensation from the funds
of the Trust to themselves as Trustees. The Trustees shall fix the compensation
of all officers, agents, employees and Trustees. The Trustees may pay themselves
such compensation for special services, including legal, underwriting,
syndicating and brokerage services, as they in good faith may deem reasonable
and reimbursement for expenses reasonably incurred by themselves on behalf of
the Trust.
Miscellaneous Powers. The Trustees shall have the power to: (a) employ or
contract with such Persons as the Trustees may deem desirable for the
transaction of the business of the Trust or any Series or Class thereof; (b)
enter into joint ventures, partnerships and any other combinations or
associations; (c) purchase, and pay for out of Trust Property, insurance
policies insuring the Shareholders, Trustees, officers, employees, agents,
investment advisors, distributors, selected dealers or independent contractors
of the Trust or any Series or Class thereof against all claims arising by reason
of holding any such position or by reason of any action taken or omitted by any
such Person in such capacity, whether or not constituting negligence, or whether
or not the Trust would have the power to indemnify such Person against such
liability; (d) establish pension, profit-sharing, share purchase, and other
retirement, incentive and benefit plans for any Trustees, officers, employees
and agents of the Trust; (e) make donations, irrespective of benefit to the
Trust, for charitable, religious, educational, scientific, civic or similar
purposes; (f) guarantee indebtedness or contractual obligations of others; (g)
determine and change the fiscal year of the Trust and the method in which its
accounts shall be kept; (h) act as distributor of Shares and as underwriter of,
or broker or dealer in, securities or other property; (i) determine in
accordance with generally accepted accounting principles and practices what
constitutes net profits or net earnings and to determine what accounting periods
shall be used by the Trust for any purpose, whether annual or any other period,
including daily; (j) remove officers and terminate agents as the Trustees deem
appropriate; (k) adopt a seal for the Trust but the absence of such seal shall
not impair the validity of any instrument executed on behalf of the Trust; and
(l) engage in any other lawful activity in which trusts organized under
Massachusetts General Laws, Chapter 182, or any successor statute thereto, may
engage.
Further Powers. The Trustees shall have power to conduct the business of the
Trust or any Series thereof and carry on its operations in any and all of its
branches and maintain offices both within and without the Commonwealth of
Massachusetts, in any and all states of the United States of America, in the
District of Columbia, and in any and all commonwealths, territories,
dependencies, colonies, possessions, agencies or instrumentalities of the United
States of America and of foreign governments, 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 or any Series or Class thereof
although such things are not herein specifically mentioned. Any determination as
to what is in the interests of the Trust or any Series or Class thereof made by
the Trustees in good faith shall be conclusive. In construing the provisions of
this Declaration, the presumption shall be in favor of a grant of power to the
Trustees. The Trustees will not be required to obtain any court order to deal
with the Trust Property. No Trustee shall be required to give any bond or other
security for the performance of any of his duties hereunder.
Ownership of Shares by Trustees, Officers, and Agents. 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
By-Laws.
<PAGE>
ARTICLE IV
Advisory, Service, Management and
Distribution Arrangements
Advisory, Service, and Management Arrangements. The Trustees may in their
discretion from time to time enter into advisory, service, administration or
management contracts whereby the other party to such contract shall undertake to
furnish the Trustees such advisory, administrative, management or other
services, with respect to one or more Series or Classes as the Trustees shall
from time to time consider desirable and all upon such terms and conditions as
the Trustees may in their discretion determine, subject to Majority Shareholder
Vote to the extent required by the 1940 Act. The investment advisor may enter
into a sub-investment advisory contract to receive investment advice from a
sub-investment advisor upon such terms and conditions and for such compensation
as the Trustees may in their discretion approve, subject to Majority Shareholder
Vote to the extent required by the 1940 Act. Notwithstanding any provisions of
this Declaration, the Trustees may authorize any advisor, sub-investment
advisor, administrator or manager (subject to such general or specific
instructions as the Trustees may from time to time adopt) to effect purchases,
sales, loans or exchanges of portfolio securities of any Series of the Trust on
behalf of the Trustees or may authorize any officer, employee or Trustee to
effect such purchases, sales, loans or exchanges pursuant to recommendations of
any such advisor, sub-investment advisor, administrator or manager (and all
without further action by the Trustees). Any such purchases, sales, loans and
exchanges shall be deemed to have been authorized by all of the Trustees.
Distribution Arrangements. The Trustees may in their discretion from time to
time enter into a contract providing for the sale of the Shares of the Trust or
any Series or Class of the Trust to net the Trust not less than the par value
per share, whereby the Trust may either agree to sell the 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
the Trustees may in their discretion determine not inconsistent with the
provisions of this Article IV or the By-Laws; 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 and may provide that such other party may enter into selected
dealer agreements with registered securities dealers to further the purpose of
the distribution or repurchase of the Shares.
Parties to Contract. Any contract of the character described in Sections 4.1 and
4.2 of this Article IV or in Article VII hereof may be entered into with any
corporation, firm, company, trust or association, although one or more of the
Trustees or officers of the Trust may be an officer, director, trustee,
shareholder, manager, or member of such other party to the contract, and no such
contract shall be invalidated or rendered voidable by reason of the existence of
any such relationship, 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
reasonable and fair and not inconsistent with the provisions of this Article IV
or the By-Laws. The same person (including a firm, corporation, trust, company,
or association) may be the other party to contracts entered into pursuant to
Sections 4.1 and 4.2 above or Article VII, 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 4.3.
Provisions and Amendments. Any contract entered into pursuant to Sections 4.1
and 4.2 of this Article IV shall be consistent with and subject to the
requirements of the 1940 Act with respect to its continuance in effect, its
termination, and the method of authorization and approval of such contract or
renewal thereof, and any amendment to any contract entered into pursuant to
Section 4.1 shall be assented to by a Majority Shareholder Vote of the
applicable Series or Class to the extent required by the 1940 Act.
ARTICLE V
Limitations of Liability of
Shareholders, Trustees and Others
Limitation of Personal Liability and Indemnification of Shareholders. The
Trustees, officers, employees or agents of the Trust 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 agree to pay by way of subscription to any Shares or otherwise.
No Shareholder or former Shareholder of the Trust shall be liable solely by
reason of his being or having been a Shareholder for any debt, claim, action,
demand, suit, proceeding, judgment, decree, liability or obligation of any kind,
against, or with respect to, the Trust arising out of any action taken or
omitted for or on behalf of the Trust, and the Trust shall be solely liable
therefor and resort shall be had solely to the Trust Property for the payment or
performance thereof.
Each Shareholder or former Shareholder of the Trust (or their heirs, executors,
administrators or other legal representatives or, in case of a corporate entity,
its corporate or general successor) shall be entitled to indemnity and
reimbursement out of the Trust Property to the full extent of such liability and
the costs of any litigation or other proceedings in which such liability shall
have been determined, including, without limitation, the fees and disbursements
of counsel if, contrary to the provisions hereof, such Shareholder or former
Shareholder of the Trust shall be held to personal liability.
Limitation of Personal Liability of Trustees, Officers, Employees or Agents of
the Trust. No Trustee, officer, employee or agent of the Trust shall have the
power to bind any other Trustee, officer, employee or agent of the Trust
personally. The Trustees, officers, employees or agents of the Trust in
incurring any debts, liabilities or obligations, or in taking or omitting any
other actions for or in connection with the Trust, are, and each shall be deemed
to be, acting as Trustee, officer, employee or agent of the Trust and not in his
own individual capacity.
Provided they have acted under the belief that their actions are in the best
interest of the Trust, the Trustees and officers shall not be responsible for or
liable in any event for neglect or wrongdoing by them or any officer, agent,
employee, investment advisor or principal underwriter of the Trust or of any
entity providing administrative services for the Trust, but nothing herein
contained shall protect any Trustee or officer against any liability to which he
would otherwise be subject by reason of willful malfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of his
office.
Express Exculpatory Clauses and Instruments. The Trustees shall use every
reasonable means to assure that all persons having dealings with the Trust shall
be informed that the property of the Shareholders and the Trustees, officers,
employees and agents of the Trust shall not be subject to claims against or
obligations of the Trust to any extent whatsoever. The Trustees shall cause to
be inserted in any written agreement, undertaking or obligation made or issued
on behalf of the Trust (including certificates, if any, for Shares of the Trust)
an appropriate reference to this Declaration, providing that neither the
Shareholders, the Trustees, the officers, the employees nor any agent of the
Trust shall be liable thereunder, and that the other parties to such instrument
shall look solely to the Trust Property for the payment of any claim thereunder
or for the performance thereof; but the omission of such provisions from any
such instrument shall not render any Shareholder, Trustee, officer, employee or
agent liable, nor shall the Trustees, or any officer, agent or employee of the
Trust be liable, to anyone for such omission. If, notwithstanding this
provision, any Shareholder, Trustee, officer, employee or agent shall be held
liable to any other person by reason of the omission of such provision from any
such agreement, undertaking or obligation, the Shareholder, Trustee, officer,
employee or agent shall be entitled to indemnity and reimbursement out of the
Trust Property, as provided in this Article V.
Mandatory Indemnification.
(a) Subject only to the provisions hereof, every person who is or has been a
Trustee, officer, employee or agent of the Trust and every person who
serves at the Trustees request as director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
shall be indemnified by the Trust to the fullest extent permitted by law
against all liabilities and against all expenses reasonably incurred or
paid by him in connection with any debt, claim, action, demand, suit,
proceeding, judgment, decree, liability or obligation of any kind in which
he becomes involved as a party or otherwise or is threatened by virtue of
his being or having been a Trustee, officer, employee or agent of the Trust
or of another corporation, partnership, joint venture, trust or other
enterprise at the request of the Trust and against amounts paid or incurred
by him in the compromise or settlement thereof.
(b) The words "claim", "action", "suit", or "proceeding" shall apply to all
claims, actions, suits or proceedings (civil, criminal, administrative,
legislative, investigative or other, including appeals), actual or
threatened, and the words "liabilities" and "expenses" shall include,
without limitation, attorneys' fees, costs, judgments, amounts paid in
settlement, fines, penalties and other liabilities.
(c) No indemnification shall be provided hereunder to a Trustee or officer:
(i) against any liability to the Trust or the Shareholders by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office ("disabling
conduct");
(ii) with respect to any matter as to which he shall, by the court or other
body by or before which the proceeding was brought or engaged, have
been finally adjudicated to be liable by reason of disabling conduct;
(iii)in the absence of a final adjudication on the merits that such
Trustee or officer did not engage in disabling conduct, unless a
reasonable determination, based upon a review of the facts that the
person to be indemnified is not liable by reason of such conduct, is
made:
(A) by vote of a majority of a quorum of the Trustees who are neither
Interested Persons nor parties to the proceedings; or
(B) by independent legal counsel, in a written opinion.
(d) The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not affect any
other rights to which any Trustee, officer, employee or agent may now or
hereafter be entitled, shall continue as to a person who has ceased to be
such Trustee, officer, employee, or agent and shall inure to the benefit of
the heirs, executors and administrators of such a person; provided,
however, that no person may satisfy any right of indemnity or reimbursement
granted herein except out of the property of the Trust, and no other person
shall be personally liable to provide indemnity or reimbursement hereunder
(except an insurer or surety or person otherwise bound by contract).
(e) Expenses in connection with the preparation and presentation of a defense
to any claim, action, suit or proceeding of the character described in
paragraph (a) of this Section 5.4 may be paid by the Trust prior to final
disposition thereof upon receipt of a written undertaking by or on behalf
of the Trustee, officer, employee or agent to reimburse the Trust if it is
ultimately determined under this Section 5.4 that he is not entitled to
indemnification. Such undertaking shall be secured by a surety bond or
other suitable insurance or such security as the Trustees shall require
unless a majority of a quorum of the Trustees who are neither Interested
Persons nor parties to the proceeding, or independent legal counsel in a
written opinion, shall have determined, based on readily available facts,
that there is reason to believe that the indemnitee ultimately will be
found to be entitled to indemnification.
No Bond Required of Trustees. No Trustee shall, as such, be obligated to give
any bond or surety or other security for the performance of any of his duties
hereunder.
No Duty of Investigation; Notice in Trust Instruments, etc. No purchaser,
lender, transfer agent or other person dealing with the Trustees or any officer,
employee or agent of the Trust shall be bound to make any inquiry concerning the
validity of any transaction purporting to be made by the Trustees or by said
officer, employee or agent or be liable for the application of money or property
paid, loaned, or delivered to or on the order of the Trustees or of said
officer, employee or agent. Every obligation, contract, undertaking, instrument,
certificate, Share, other security of the Trust or any Series or Class, and
every other act or thing whatsoever executed in connection with the Trust or any
Series or Class shall be conclusively taken to have been executed or done by the
executors thereof only in their capacity as Trustees under this Declaration or
in their capacity as officers, employees or agents of the Trust. Every written
obligation, contract, undertaking, instrument, certificate, Share, other
security of the Trust or any Series or Class made or issued by the Trustees or
by any officers, employees or agents of the Trust, in their capacity as such,
shall contain an appropriate recital to the effect that the Shareholders,
Trustees, officers, employees and agents of the Trust shall not personally be
bound by or liable thereunder, nor shall resort be had to their private property
for the satisfaction of any obligation or claim thereunder, and appropriate
references shall be made therein to this Declaration, and may contain any
further recital which they may deem appropriate, but the omission of such
recital shall not operate to impose personal liability on any of the Trustees,
Shareholders, officers, employees or agents of the Trust. The Trustees may
maintain insurance for the protection of the Trust Property, its Shareholders,
Trustees, officers, employees and agents in such amount as the Trustees shall
deem adequate to cover possible tort liability, and such other insurance as the
Trustees in their sole judgment shall deem advisable.
Reliance on Experts, etc. Each Trustee and officer or employee of the Trust
shall, in the performance of his duties, be fully and completely justified and
protected with regard to any act or any failure to act resulting from reliance
in good faith upon the books of account or other records of the Trust, upon an
opinion of counsel, or upon reports made to the Trust by any of its officers or
employees or by any advisor, administrator, manager, distributor, selected
dealer, accountant, appraiser or other expert or consultant selected with
reasonable care by the Trustees, officers or employees of the Trust, regardless
of whether such counsel or expert may also be a Trustee.
ARTICLE VI
Shares of Beneficial Interest
Beneficial Interest. The interest of the beneficiaries hereunder shall be
divided into transferable shares of beneficial interest with par value $.01 per
share. The number of such shares of beneficial interest authorized hereunder is
unlimited. All Shares issued hereunder including, without limitation, Shares
issued in connection with a dividend in Shares or a split of Shares, shall be
fully paid and nonassessable.
Series Designation. The Trustees, in their discretion from time to time and
without Shareholder approval, may authorize the division of Shares into two or
more Series, each Series relating to a separate portfolio of investments; and
may further authorize the division of the Shares of any Series into two or more
Classes. The different Series and Classes shall be established and designated,
and the variations in the relative rights and preferences as between the
different Series and Classes shall be fixed and determined, by the Trustees;
provided, that all Shares shall be identical except that there may be variations
between different Series and Classes as to purchase price, determination of net
asset values, the price terms and manner of redemption, special and relative
rights as to dividends and on liquidation, conversion rights, and conditions
under which the several Series and Classes shall have separate voting rights.
All references to Shares in this Declaration shall be deemed to be shares of any
or all Series or Classes as the context may require.
If the Trustees shall divide the Shares into two or more Series, or divide the
Shares of any Series into two or more Classes, the following provisions shall be
applicable:
(a) The number of Shares of each Series and Class that may be issued shall be
unlimited.
(b) The power of the Trustees to invest and reinvest the Trust Property of each
Series that may be established shall be governed by Section 3.2 of this
Declaration.
(c) 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
irrevocably belong to that Series for all purposes, subject only to the
rights of creditors, and shall be so recorded upon the books of account of
the Trust. If there are any assets, income, earnings, profits, and proceeds
thereof, funds, or payments that are not readily identifiable as belonging
to any particular Series, the Trustees shall allocate them among any one or
more of the Series established and designated from time to time in such
manner and on such basis as they, in their sole discretion, deem fair and
equitable. Each such allocation by the Trustees shall be conclusive and
binding upon the Shareholders of all Series for all purposes.
(d) The assets belonging to each particular Series shall be charged with the
liabilities of the Trust in respect of that Series and all expenses, costs,
charges and reserves attributable to that Series, and any general
liabilities, expenses, costs, charges or reserves of the Trust that are not
readily identifiable as belonging to any particular Series shall be
allocated and charged by the Trustees to and among any one or more of the
Series established and designated from time to time in such manner and on
such basis as the Trustees in their sole discretion deem fair and
equitable. Each allocation of liabilities, expenses, costs, charges and
reserves by the Trustees shall be conclusive and binding upon the holders
of all Series for all purposes. The Trustees shall have full discretion, to
the extent not inconsistent with the 1940 Act, to determine which items
shall be treated as income and which items as capital; and each such
determination and allocation shall be conclusive and binding upon the
Shareholders.
(e) To the extent necessary or appropriate to give effect to the relative
rights and preferences of the Classes of Shares into which any Series may
be divided, the income, earnings, profits, and proceeds thereof, or the
liabilities, expenses, costs, charges and reserves, belonging to any Series
may be allocated to a particular Class of Shares, or apportioned among two
or more Classes of Shares, of that Series. Each such allocation or
apportionment by the Trustees shall be conclusive and binding upon the
Shareholders of all Classes for all purposes.
(f) The power of the Trustees to pay dividends and make distributions with
respect to any one or more Series or Classes shall be governed by Section
9.2 of this Declaration. Dividends and distributions on Shares of a
particular Series or Class may be paid with such frequency as the Trustees
may determine, which may be daily or otherwise, pursuant to a standing
resolution or resolutions adopted only once or with such frequency as the
Trustees may determine, to the holders of Shares of that Series or Class,
from such of the income and capital gains, accrued or realized, from the
assets belonging to that Series (or attributable to that Class, as the case
may be), as the Trustees may determine, after providing for actual and
accrued liabilities belonging to that Series (or attributable to that
Class). All dividends and distributions on Shares of a particular Series
shall be distributed pro rata to the holders of that Series in proportion
to the number of Shares of that Series held by such holders at the date and
time of record established for the payment of such dividends or
distributions, except to the extent otherwise required or permitted by the
relative rights and preferences of any Classes of that Series, and any
dividends and distributions on shares of a particular Class shall be
distributed pro rata to the holders of that Class in proportion to the
number of Shares of that Class held by such holders at the date and time of
record established for the payment of such dividends or distributions.
Without limiting the authority of the Trustees to establish and designate
further Series, there is hereby established the following Series: New Providence
Growth Fund. The establishment and designation of any further Series or Class of
Shares shall be effective upon the execution by a majority of the then Trustees
(or by an officer of the Trust pursuant to the vote of a majority of the then
Trustees) of an instrument setting forth the establishment and designation of
such Series or Class. Such instrument shall also set forth any rights and
preferences of such Series or Class that are in addition to the rights and
preferences of Shares set forth in this Declaration. At any time that there are
no Shares outstanding of any particular Series or Class previously established
and designated, the Trustees may by an instrument executed by a majority of
their number (or by an officer of the Trust pursuant to the vote of a majority
of the then Trustees) abolish that Series or Class and the establishment and
designation thereof.
Rights of Shareholders. The ownership of the Trust Property of every description
and the right to conduct any business hereinbefore described are vested
exclusively in the Trustees, and the Shareholders shall have no interest therein
other than the beneficial interest conferred by their Shares with respect to a
particular Series or Class, and they shall have no right to call for any
partition or division of any property, profits, rights or interests of the Trust
nor can they be called upon to share or assume any losses of the Trust or suffer
an assessment of any kind by virtue of their ownership of Shares. The Shares
shall be personal property giving only the rights in this Declaration
specifically set forth. The Shares shall not entitle the holder to preference,
preemptive, appraisal, conversion or exchange rights.
Trust Only. It is the intention of the Trustees to create only the relationship
of Trustee and beneficiary between the Trustees and each Shareholder from time
to time. It is not the intention of the Trustees to create a general
partnership, limited partnership, joint stock association, corporation, limited
liability company, bailment or any form of legal relationship other than a
business trust. Nothing in this Declaration shall be construed to make the
Shareholders, either by themselves or with the Trustees, partners or members of
a joint stock association.
Issuance of Shares. The Trustees, in their discretion, may from time to time
without vote of the Shareholders issue Shares with respect to any Series or
Class that may have been established pursuant to Section 6.2, in addition to the
then issued and outstanding Shares and Shares held in the treasury, to such
party or parties and for such amount not less than par value and type of
consideration, including cash or property, at such time or times (including,
without limitation, each business day in accordance with the maintenance of a
constant net asset value per share as set forth in Section 9.3 hereof), and on
such terms as the Trustees may deem best, 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. The Trustees may from time
to time divide or combine the Shares of any Series or Class into a greater or
lesser number without thereby changing the proportionate beneficial interests in
such Series or Class of the Trust. Reductions in the number of outstanding
Shares may be made pursuant to the constant net asset value per share formula
set forth in Section 9.3. Contributions to the Trust may be accepted for, and
Shares shall be redeemed as, whole Shares and/or 1/1,000ths of a Share or
multiples thereof.
Register of Shares. A register shall be kept at the Trust or any transfer agent
duly appointed by the Trustees under the direction of the Trustees that shall
contain the names and addresses of the Shareholders and the number of Shares
(with respect to each Series and Class that may have been established) held by
them respectively and a record of all transfers thereof. Separate registers
shall be established and maintained for each Series and Class of the Trust. Each
such register shall be conclusive as to who are the holders of the Shares of the
applicable Series or Class and who shall be entitled to receive dividends or
distributions or otherwise to exercise or enjoy the rights of Shareholders. No
Shareholder shall be entitled to receive payment of any dividend or
distribution, nor to have notice given to him as herein provided, until he has
given his address to a transfer agent or such other officer or agent of the
Trustees as shall keep the register for entry thereon. It is not contemplated
that certificates will be issued for the Shares; however, the Trustees, in their
discretion, may authorize the issuance of share certificates and promulgate
appropriate rules and regulations as to their use.
Transfer Agent and Registrar. The Trustees shall have power to employ a transfer
agent or transfer agents, and a registrar or registrars, with respect to the
Shares of the various Series and Classes. The transfer agent or transfer agents
may keep the applicable register and record therein the original issues and
transfers, if any, of the said Shares of the applicable Series or Class. Any
such transfer agent and registrars shall perform the duties usually performed by
transfer agents and registrars of certificates of stock in a corporation, except
as modified by the Trustees.
Transfer of Shares. Shares shall be transferable on the records of the Trust
only by the record holder thereof or by his agent thereto duly authorized in
writing, upon delivery to the Trustees or a transfer agent of the Trust of a
duly executed instrument of transfer, together with such evidence of the
genuineness of each such execution and authorization and of other matters as may
reasonably be required. Upon such delivery the transfer shall be recorded on the
applicable 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 hereof,
and neither the Trustees 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.
Any person becoming entitled to any Shares in consequence of the death,
bankruptcy, or incompetence of any Shareholder, or otherwise by operation of
law, shall be recorded on the applicable register of Shares as the holder of
such Shares upon production of the proper evidence thereof to the Trustees or a
transfer agent of the Trust, but until such record is made, the Shareholder of
record shall be deemed to be the holder of such Shares for all purposes hereof,
and neither the Trustees nor any transfer agent or registrar nor any officer or
agent of the Trust shall be affected by any notice of such death, bankruptcy or
incompetence, or other operation of law.
Notices. Any and all notices to which any Shareholder hereunder may be entitled
and any and all communications shall be deemed duly served or given if mailed,
postage prepaid, addressed to any Shareholder of record at his last known
address as recorded on the applicable register of the Trust.
ARTICLE VII
Custodians
Appointment and Duties. The Trustees shall at all times employ a custodian or
custodians, meeting the qualifications for custodians for portfolio securities
of investment companies contained in the 1940 Act, as custodian or custodians
with respect to each Series of the Trust. Separate custodians may but need not
be employed for the different Series of the Trust. Each Series may, but need
not, employ more than one custodian. Any custodian, acting with respect to one
or more Series, or portions thereof, shall have authority as agent of the Trust
or the Series with respect to which it is acting, but subject to such
restrictions, limitations and other requirements, if any, as may be contained in
the By-Laws and the 1940 Act:
(1) to hold the securities owned by the Trust or the Series and deliver the
same upon written order;
(2) to receive and receipt for any moneys due to the Trust or the Series and
deposit the same in its own banking department (if a bank) or elsewhere as
the Trustees may direct;
(3) to disburse such funds upon orders or vouchers;
(4) if authorized by the Trustees, to keep the books and accounts of the Trust
or the Series or any Class and furnish clerical and accounting services;
and
(5) if authorized to do so by the Trustees, to compute the net income of the
Trust or the Series or any Class;
all upon such basis of compensation as may be agreed upon between the Trustees
and the custodian. If so directed by a Majority Shareholder Vote of any Series
with respect to which the custodian is acting, the custodian shall deliver and
pay over all property of the Trust held by it as specified in such vote.
The Trustees may also authorize each 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 meet the qualifications for custodians
contained in the 1940 Act.
Action Upon Termination of Custodian Agreement. Upon termination of any
custodian agreement with respect to any Series or inability of any custodian to
continue to serve, the Trustees shall promptly appoint a successor custodian,
but if no successor custodian can be found who has the required qualifications
and is willing to serve, the Trustees shall call as promptly as possible a
special Shareholders' meeting to determine whether said Series shall function
without a custodian or shall be liquidated.
Central Certificate System. Subject to such rules, regulations and orders as the
Commission may adopt, the Trustees may direct the custodian to deposit all or
any part of the securities owned by the Trust or any Series 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, or such other person as may be permitted by the
Commission, or otherwise in accordance with the 1940 Act, pursuant to which
system all securities of any particular class or series of any issuer deposited
within the system are treated as fungible and may be transferred or pledged by
bookkeeping entry without physical delivery of such securities, provided that
all such deposits shall be subject to withdrawal only upon the order of the
Trust or its duly authorized agents (which may include an investment advisor).
Acceptance of Receipts in Lieu of Certificates. Subject to such rules,
regulations and orders as the Commission may adopt, the Trustees may direct the
custodian to accept written receipts or other written evidences indicating
purchases of securities held in book-entry form in the Federal Reserve System in
accordance with regulations promulgated by the Board of Governors of the Federal
Reserve System, and the local Federal Reserve Banks in lieu of receipt of
certificates representing such securities.
ARTICLE VIII
Redemption
Redemptions. All outstanding Shares of any Series of the Trust may be redeemed
at the option of the holders thereof, upon and subject to the terms and
conditions provided in this Article VIII. The Trust shall, upon application of
any Shareholder or pursuant to authorization from any Shareholder of a
particular Series, redeem or repurchase from such Shareholder outstanding Shares
of such Series or Class for an amount per share determined by the application of
a formula adopted for such purpose by the Trustees with respect to such Series
or Class (which formula shall be consistent with the 1940 Act); provided that
(a) such amount per Share shall not exceed the cash equivalent of the
proportionate interest of each Share in the assets of the Series or of the
assets of that Series attributable to the Shares of the particular Class) of the
Trust at the time of the purchase or redemption and (b) if so authorized by the
Trustees, the Trust may, at any time and from time to time, charge fees for
effecting such redemption, at such rates as the Trustees may establish, as and
to the extent permitted under the 1940 Act, and may, at any time and from time
to time, pursuant to such Act, suspend such right of redemption. The procedures
for effecting redemption shall be as set forth in the Prospectus with respect to
the applicable Series or Class from time to time.
Redemption of Shares; Disclosure of Holding. If the Trustees shall, at any time
and in good faith, be of the opinion that direct or indirect ownership of Shares
or other securities of the Trust has or may become concentrated in any person to
an extent that would disqualify the Trust as a regulated investment company
under the Internal Revenue Code, then the Trustees shall have the power by lot
or other means deemed equitable by them (i) to call for redemption a number, or
principal amount, of Shares or other securities of the Trust sufficient, in the
opinion of the Trustees, to maintain or bring the direct or indirect ownership
of Shares or other securities of the Trust into conformity with the requirements
for such qualification and (ii) to refuse to transfer or issue Shares or other
securities of the Trust to any Person whose acquisition of the Shares or other
securities of the Trust in question would in the opinion of the Trustees result
in such disqualification. The redemption shall be effected at a redemption price
determined in accordance with Section 8.1.
The holders of Shares or other securities of the Trust shall upon demand
disclose to the Trustees in writing such information with respect to direct and
indirect ownership of Shares or other securities of the Trust as the Trustees
deem necessary to comply with the provisions of the Internal Revenue Code, or to
comply with the requirements of any other taxing authority.
Redemptions of Accounts of Less than an Amount Specified by the Trustees. Due to
the relatively high cost of maintaining small investment accounts, the Trustees
shall have the power to redeem shares at a redemption price determined in
accordance with Section 8.1 if at any time the total investment in such account
does not have a value in excess of any minimum account size that the Trustees
may from time to time establish; provided, however, that the Trustees may not
exercise such power with respect to Shares of any Series or Class if the
Prospectus of such Series or Class does not describe such power. If the Trustees
determine to exercise their power to redeem Shares provided in this Section 8.3,
Shareholders shall be notified that the value of their account is less than the
minimum account size then in effect and allowed at least 14 days to make an
additional investment before redemption is processed.
Redemptions Pursuant to Constant Net Asset Value. The Trust may also reduce the
number of outstanding Shares of any Series or Class pursuant to the provisions
of Section 9.3.
Redemption in Kind. Subject to any generally applicable limitation imposed by
the Trustees, any payment on redemption, purchase or repurchase by the Trust of
Shares may, if authorized by the Trustees, be made wholly or partly in kind,
instead of in cash. Such payment in kind shall be made by distributing
securities or other property, constituting, in the opinion of the Trustees, a
fair representation of the various types of securities and other property then
held by the Series of Shares being redeemed, purchased or repurchased (but not
necessarily involving a portion of each of the Series' holdings) and taken at
their value used in determining the net asset value of the Shares in respect of
which payment is made.
ARTICLE IX
Determination of Net Asset Value,
Net Income and Distributions
Net Asset Value. The net asset value of each outstanding Share of each Series
and Class of the Trust shall be determined at such time or times on such days as
the Trustees may determine, in accordance with the 1940 Act, with respect to
each Series and Class. The method of determination of net asset value shall be
determined by the Trustees and shall be as set forth in the Prospectus with
respect to the applicable Series or Class. The power and duty to make the daily
calculations for any Series or Class may be delegated by the Trustees to the
advisor, administrator, manager, custodian, transfer agent or such other person
as the Trustees may determine. The Trustees may suspend the daily determination
of net asset value to the extent permitted by the 1940 Act.
Distributions to Shareholders. The Trustees may from time to time distribute
among the Shareholders of any Series or Class such proportion of the assets
belonging to such Series (or attributable to the particular Class) held by the
Trustees as they may deem proper. Such distribution may be made in cash or
property (including without limitation any type of obligations of the Trust or
any assets thereof), and the Trustees may distribute among the Shareholders of
any Series or Class additional Shares of such Series or Class in such manner, at
such times, and on such terms as the Trustees may deem proper. Such
distributions may be among the Shareholders of record at the time of declaring a
distribution or among the Shareholders of record at such later date as the
Trustees shall determine. Except as necessary or appropriate to give effect to
the relative rights and preferences of the Classes of Shares into which any
Series may be divided, all distributions shall be made ratably among the
Shareholders of the relative Series or Class based on the number of Shares of
the relative Series or Class held by such Shareholder. The Trustees may always
retain such amount as they may deem necessary to pay the debts or expenses of
the Trust or to meet obligations of the Trust, or as they may deem desirable to
use in the conduct its affairs or to retain for future requirements or
extensions of the business. The Trustees may adopt and offer to Shareholders of
any Series or Class such dividend reinvestment plans, cash dividend payout plans
or related plans at the Trustees shall deem appropriate for such Series or
Class.
Inasmuch as the computation of net income and gains for Federal income tax
purposes may vary from the computation thereof on the books, the above
provisions shall be interpreted to give the Trustees the power in their
discretion to distribute for any fiscal year as ordinary dividends and as
capital gains distributions, respectively, additional amounts sufficient to
enable the Trust to avoid or reduce liability for taxes.
The Trustees shall be authorized to withhold from the payment of any dividend an
amount necessary to pay the expenses of the Trust that are not deductible for
Federal income tax purposes or otherwise to afford the Trust the full tax
benefits of a regulated investment company as defined in the Internal Revenue
Code of 1986.
Constant Net Asset Value; Reduction on Outstanding Shares. The Trustees shall
have the power, but shall not be required, to determine the net income of any
Series or Class of the Trust on each day the net asset value of such Series or
Class is determined as provided in Section 9.1 and at each such determination
declare such net income for such Series or Class as dividends with the result
that the net asset value per share of the Series or Class of the Trust, taking
into account withholdings authorized by Section 9.2 hereof, shall remain at a
constant dollar value. The determination of net income and the resultant
declaration of dividends shall be as set forth in the Prospectus. In such event
fluctuations in value may be effected in the number of outstanding Shares in
each Shareholder's account. It is expected that each Series or Class of the
Trust will have a positive net income at the time of each determination. If for
any reason such net income is a negative amount, the Trust may offset such
amount against dividends accrued in the account of the Shareholder of the
applicable Series or Class. If and to the extent such negative amount exceeds
such accrued dividends, the Trust shall have authority to reduce the number of
outstanding Shares of the Series or Class. Having each Shareholder
proportionately contribute to the Series or Class capital the necessary Shares
that represent the amount of the excess upon such determination will effect such
reduction. Each Shareholder will be deemed to have agreed to such contribution
in these circumstances by his investment in the Series or Class of the Trust.
This procedure will permit the net asset value per share of the Series or Class
of the Trust to be maintained at a constant dollar value per share.
The Trustees, by resolution, may discontinue or amend the practice of
maintaining the net asset value per share at a constant dollar amount with
respect to any Series or Class at any time, and such modification shall be
evidenced by appropriate changes in the Prospectus.
Power to Modify Foregoing Procedures. Notwithstanding any of the foregoing
provisions of this Article IX, the Trustees may prescribe, in their absolute
discretion, such other bases and times for determining the per share net asset
value of the Trust's Shares or net income, or the declaration and payment of
dividends and distributions as they may deem necessary or desirable to enable
the Trust to comply with any provision or rule of the 1940 Act, or any
securities association registered under the Securities Exchange Act of 1934, or
any order of exemption issued by the Commission, all as in effect now or
hereafter amended or modified.
ARTICLE X
Shareholders
Voting Powers. The Shareholders shall have the power to vote (i) for the
election of Trustees as provided in Article II, Section 2.2; (ii) for the
removal of Trustees as provided in Article II, Section 2.3(d); (iii) with
respect to any investment advisor as provided in Article IV, Section 4.1; (iv)
with respect to the amendment of this Declaration as provided in Article XI,
Section 11.4; (v) to the same extent as the shareholders of a Massachusetts
business corporation as to whether or not a court action, proceeding or claim
should be brought or maintained derivatively or as a class action on behalf of
the Trust or the Shareholders (except that a Shareholder of a particular Series
shall not in any event be entitled to maintain a derivative or class action on
behalf of any other Series or the Shareholders thereof); and (vi) with respect
to such additional matters relating to the Trust as may be required by law, by
this Declaration, or the By-Laws of the Trust or any regulation of the Trust by
the Commission or any State, or as the Trustees may consider desirable. Any
matter affecting a particular Series, including, without limitation, matters
affecting the investment advisory arrangements or investment policies or
restrictions of a Series, shall not be deemed to have been effectively acted
upon unless approved by the required vote of the Shareholders of such Series. To
the extent required by the 1940 Act or necessary or appropriate to give effect
to the relative rights and preferences of the Classes of Shares into which any
Series may be divided, any matter affecting a particular Class (unless the
interests of each Class of such Series in the matter are substantially
identical), including, without limitation, matters affecting the distribution
plan of that Class shall not be deemed to have been effectively acted upon
unless approved by the required vote of the Shareholders of such Class.
Notwithstanding the foregoing, to the extent permitted by the 1940 Act, each
Series and Class shall not be required to vote separately on the selection of
independent public accountants, the election of Trustees and any submission with
respect to a contract with a principal underwriter or distributor. 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. Until
Shares are issued, the Trustees may exercise all rights of Shareholders and may
take any action to be taken by Shareholders which is required or permitted by
law, this Declaration or any By-Laws of the Trust.
Meetings. Shareholder meetings shall be held as specified in the By-Laws and in
Section 2.2 hereof at the principal office of the Trust or at such other place
as the Trustees may designate. Meetings of the Shareholders may be called by the
Trustees or by officers of the Trust given such authority in the By-Laws and
shall be called by the Trustees at a place designated by them upon written
request specifying the purpose of such meeting and submitted by Shareholders of
any Series or Class holding in the aggregate not less than 10% of the
outstanding Shares of such Series or Class having voting rights.
Quorum and Required Vote. Except as otherwise provided by law, the holders of a
majority of the outstanding Shares of the Trust, or, as to any matter to be
voted on by a Series or Class, a majority of the outstanding Shares of such
Series or Class, present in person or by proxy shall constitute a quorum for the
transaction of any business at any meeting of Shareholders. If a quorum, as
above defined, shall not be present for the purpose of any vote that may
properly come before the meeting, the Shareholders present in person or by proxy
and entitled to vote at such meeting on such matter holding a majority of the
Shares present entitled to vote on such matter may vote to adjourn the meeting
from time to time to be held at the same place without further notice than by
announcement to be given at the meeting until a quorum, as above defined,
entitled to vote on such matter shall be present, whereupon any such matter may
be voted upon at the meeting as though held when originally convened. Subject to
any applicable requirement of law, this Declaration or the By-Laws, a plurality
of the votes cast shall elect a Trustee and all other matters shall be decided
by a majority of the votes cast entitled to vote thereon.
Record Date for Meetings. For the purpose of determining the Shareholders who
are entitled to notice of and to vote at any meeting, or to participate in any
distribution, or for the purpose of any other action, the Trustees may from time
to time close the transfer books for such period, not exceeding 30 days, as the
Trustees may determine; or without closing the transfer books the Trustees may
fix a date not more than 90 days prior to the date of any meeting of
Shareholders or declaration of daily dividends or other action as a record date
for the determination of the persons to be treated as Shareholders of record for
such purposes, except for dividend payments, which shall be governed by Section
9.2 hereof.
Proxies. Any vote by a Shareholder of the Trust may be made in person or by
proxy, provided that no proxy shall be voted at any meeting unless it shall have
been placed on file with the Trustees or their designee prior to the time the
vote is taken. Pursuant to a resolution of a majority of the Trustees, proxies
may be solicited in the name of one or more Trustees or one or more officers of
the Trust. Only Shareholders of record shall be entitled to vote. A proxy
purporting to be executed 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.
Additional Provisions. The By-Laws may include further provisions for
Shareholders, votes, meetings and related matters.
Reports. The Trustees shall cause to be prepared with respect to each Series and
Class at least annually a report of operations containing a balance sheet and
statement of income and undistributed income of the applicable Series or Class
of the Trust prepared in conformity with generally accepted accounting
principles and an opinion of an independent public accountant on such financial
statements. It is contemplated that separate reports may be prepared for the
various Series and Classes. Copies of such reports shall be mailed to all
Shareholders of record of the applicable Series or Class within the time
required by the 1940 Act. The Trustees shall, in addition, furnish to the
Shareholders at least semiannually, interim reports containing an unaudited
balance sheet of the Series or Class as of the end of such period and an
unaudited statement of income and surplus for the period from the beginning of
the current fiscal year to the end of such period.
Shareholder Action by Written Consent. Any action that may be taken by
Shareholders may be taken without a meeting if a majority of Shareholders of
each Series or Class entitled to vote on the matter (or such larger proportion
thereof as shall be required by any express provision of this Declaration)
consent to the action in writing and the written consents are filed with the
records of the meetings of Shareholders. Such consent shall be treated for all
purposes as a vote taken at a meeting of Shareholders.
Inspection of Records. 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.
ARTICLE XI
Duration; Termination of Trust;
Amendment; Mergers; Etc.
Duration. Subject to the provisions of Sections 11.2 and 11.3 hereof, the Trust
created hereby shall continuewithout limitation of time.
Termination.
(a) The Trust may be terminated by the affirmative vote of the holders of not
less than a majority of the Shares of each Series of the Trust at any
meeting of Shareholders or by an instrument in writing, without a meeting,
signed by a majority of the Trustees (or by an officer of the Trust
pursuant to a vote of a majority of the Trustees) and consented to by the
holders of not less than a majority of such Shares. Any Series or Class may
be so terminated by vote or written consent of not less than a majority of
the Shares of such Series or Class. Upon the termination of the Trust or
any Series or Class:
(i) The Trust or such Series or Class shall carry on no business except
for the purpose of winding up its affairs.
(ii) The Trustees shall proceed to wind up the affairs of the Trust or such
Series or Class and all of the powers of the Trustees under this
Declaration shall continue until the affairs of the Trust or such
Series or Class shall have been wound up, including the power to
fulfill or discharge the contracts of the Trust or such Series or
Class, collect its assets, sell, convey, assign, exchange, transfer or
otherwise dispose of all or any part of the remaining Trust Property
to one or more persons at public or private sale for consideration
that may consist in whole or in part of cash, securities or other
property of any kind, discharge or pay its liabilities, and do all
other acts appropriate to liquidate its business; provided that any
sale, conveyance, assignment, exchange, transfer or other disposition
of all or substantially all the Trust Property shall require approval
of the consideration by vote or consent of the holders of a majority
of the Shares entitled to vote; and
(iii)After paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities and
refunding agreements, as they deem necessary for their protection, the
Trustees may distribute remaining Trust Property of any Series (or
attributable to the Shares of any Class), in cash or in kind or partly
each, among the Shareholders of such Series or Class according to
their respective rights.
(b) After termination of the Trust or any Series or Class and distribution to
the Shareholders as herein provided, a majority of the Trustees (or an
officer of the Trust pursuant to a vote of a majority of the Trustees)
shall execute and lodge among the records of the Trust an instrument in
writing setting forth the fact of such termination. Upon termination of the
Trust, the Trustees shall thereupon be discharged from all further
liabilities and duties hereunder, and the rights and interests of all
Shareholders shall thereupon cease. Upon termination of any Series or
Class, the Trustees shall thereupon be discharged from all further
liabilities and duties with respect to such Series or Class, and the rights
and interests of all Shareholders of such Series or Class shall thereupon
cease.
Merger, Consolidation and Sale of Assets. The Trust may merge or consolidate
with any other corporation, association, trust or other organization or may
sell, lease or exchange all or substantially all of the Trust Property,
including its good will, upon such terms and conditions and for such
consideration when and as authorized at any meeting of Shareholders called for
that purpose by the affirmative vote of the holders of not less than a majority
of the Shares of each Series, or by an instrument or instruments in writing
without a meeting, consented to by the holders of not less than a majority of
such Shares of each Series. Any Series may so merge, consolidate or effect a
sale or exchange of assets by the vote or written consent of not less than a
majority of the Shares of such Series.
Amendment Procedure
(a) This Declaration may be amended by the affirmative vote of the holders of
not less than a majority of the Shares at any meeting of Shareholders or by
an instrument in writing, without a meeting, signed by a majority of the
Trustees (or by an officer of the Trust pursuant to the vote of a majority
of the Trustees) and consented to by the holders of not less than a
majority of such Shares. The Shareholders of each Series and Class shall
have the right to vote separately on amendments to this Declaration to the
extent provided by Section 10.1. The Trustees may also amend this
Declaration at any time (whether or not related to the rights of
Shareholders) without the vote or consent of Shareholders if they deem it
necessary to conform this Declaration to the requirements of applicable
federal laws or regulations or the requirements of the regulated investment
company provisions of the Internal Revenue Code (but the Trustees shall not
be liable for failing so to do), or for any other reason determined by the
Trustees so long as such amendment does not adversely affect the rights of
any Shareholder with respect to matters to which such amendment is or
purports to be applicable and so long as such amendment is not in
contravention of applicable law, including the 1940 Act.
(b) All rights granted to the Shareholders under this Declaration are granted
subject to the reservation of the right to amend this Declaration as
hereinabove provided, subject to the following limitations. No amendment
may be made, under Section 11.4(a) above, which would change any rights
with respect to all Shares of the Trust by reducing the amount payable
thereon upon liquidation of the Trust, by diminishing or eliminating any
voting rights pertaining thereto, or by otherwise adversely affecting the
rights of Shareholders, except with the vote or consent of the holders of a
majority of all the Shares of the Trust without regard to Series, or if
said amendment adversely affects the rights of the Shareholders of less
than all of the Series, except with the vote or consent of the holders of a
majority of all the Shares of each Series or Class so affected. An
instrument establishing and designating any Series or Class of Shares and
authorizing the Shares thereof shall not constitute an amendment to this
Declaration that adversely affects the rights of any Shareholder. Nothing
contained in this Declaration shall permit the amendment of this
Declaration to impair the exemption from personal liability of the
Shareholders, Trustees, officers, employees and agents of the Trust or to
permit assessments upon Shareholders (otherwise than as permitted under
Section 9.3).
(c) A certification in recordable form signed by a majority of the Trustees (or
by an officer of the Trust pursuant to the vote of a majority of the
Trustees) setting forth an amendment and reciting that it was duly adopted
by the Shareholders or by the Trustees as aforesaid or a copy of the
Declaration, as amended, in recordable form, and executed by a majority of
the Trustees, shall be conclusive evidence of such amendment when lodged
among the records of the Trust.
Notwithstanding any other provision hereof, until such time as a Registration
Statement under the Securities Act of 1933, as amended, covering the first
public offering of Shares of the Trust shall have become effective, this
Declaration may be terminated or amended in any respect by the affirmative vote
of a majority of the Trustees or by an instrument signed by an officer of the
Trust pursuant to the vote of a majority of the Trustees.
Incorporation. With the approval of the holders of a majority of the Shares, the
Trustees may cause to be organized or assist in organizing a corporation or
corporations under the laws of any jurisdiction or any other trust, partnership,
association or other organization to take over all of the Trust Property or to
carry on any business in which the Trust shall directly or indirectly have any
interest, and to sell, convey and transfer the Trust Property to any such
corporation, trust, association or organization in exchange for the shares or
securities thereof or otherwise and to lend money to, subscribe for the shares
or securities thereof or otherwise, and to lend money to, subscribe for the
shares or securities of, and enter into any contracts with any such corporation,
trust, partnership, association or organization, or any corporation,
partnership, trust, association or organization in which the Trust holds or is
about to acquire shares or any other interest. The Trustees may also cause a
merger or consolidation between the Trust or any successor thereto and any such
corporation, trust, partnership, association or other organization if and to the
extent permitted by law, as provided under the law then in effect. Nothing
contained herein shall be construed as requiring approval of Shareholders for
the Trustees to organize or assist in organizing one or more corporations,
trusts, partnerships, associations or other organizations and selling, conveying
or transferring a portion of the Trust Property to such organizations or
entities.
ARTICLE XII
Miscellaneous
Filing. This Declaration and any amendment hereto shall be filed in the office
of the Secretary of the Commonwealth of Massachusetts and in such other places
as may be required under the laws of Massachusetts and may also be filed or
recorded in such other places as the Trustees deem appropriate. Each amendment
so filed shall be accompanied by a certificate signed and acknowledged by a
Trustee or officer of the Trust stating that such action was duly taken in a
manner provided herein, and unless such amendment or such certificate sets forth
some later time for the effectiveness of such amendment, such amendment shall be
effective upon its filing. A restated Declaration, containing the original
Declaration and all amendments theretofore made, may be executed from time to
time by a majority of the Trustees and shall, upon filing with the Secretary of
the Commonwealth of Massachusetts, be conclusive evidence of all amendments
contained therein and may thereafter be referred to in lieu of the original
Declaration and the various amendments thereto.
Resident Agent. The Trust shall maintain a resident agent in the Commonwealth of
Massachusetts, which agent shall initially be CT Corporation System, Two Oliver
Street, Boston, Massachusetts 02109. The Trustees may designate a successor
resident agent; provided, however, that such appointment shall not become
effective until written notice thereof is delivered to the office of Secretary
of the Commonwealth of Massachusetts.
Governing Law. This Declaration is executed by the Trustees and delivered in the
Commonwealth of Massachusetts and with reference to the laws thereof, and the
rights of all parties and the validity and construction of every provision
hereof shall be subject to and construed according to the laws of said
Commonwealth, and reference shall be specifically made to the business
corporation law of the Commonwealth of Massachusetts as to the construction of
matters not specifically covered herein or as to which an ambiguity exists.
Counterparts. This Declaration may be simultaneously executed in several
counterparts, each of which shall be deemed to be an original, and such
counterparts, together, shall constitute one and the same instrument, which
shall be sufficiently evidenced by any such original counterpart.
Reliance by Third Parties. Any certificate executed by an individual who,
according to the records of the Trust, or of any recording office in which this
Declaration may be recorded, appears to be a Trustee hereunder, certifying to:
(a) the number or identity of Trustees or Shareholders, (b) the name of the
Trust or any Series or Class thereof, (c) the establishment of any Series or
Class, (d) the due authorization of the execution of any instrument or writing,
(e) the form of any vote passed at a meeting of Trustees or Shareholders, (f)
the fact that the number of Trustees or Shareholders present at any meeting or
executing any written instrument satisfies the requirements of this Declaration,
(g) the form of any By-Laws adopted by or the identity of any officers elected
by the Trustees, or (h) the existence of any fact or facts that in any manner
relate to the affairs of the Trust or any Series or Class, shall be conclusive
evidence as to the matters so certified in favor of any person dealing with the
Trustees and their successors.
Provisions in Conflict With Law or Regulations.aw or Regulations
(a) The provisions of this Declaration are severable, and if the Trustees shall
determine, with the advice of counsel, that any of such provisions is in
conflict with 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 Declaration; provided however, that such determination shall not
affect any of the remaining provisions of this Declaration or render
invalid or improper any action taken or omitted prior to such
determination.
(b) If any provision of this Declaration shall be held invalid or unenforceable
in any jurisdiction, such invalidity or unenforceability shall attach only
to such provision in such jurisdiction and shall not in any manner affect
such provision in any other jurisdiction or any other provision of this
Declaration in any jurisdiction.
This Declaration of Trust establishing New Providence Investment Trust provides
that the name New Providence Investment Trust refers to the Trustees under the
Declaration collectively as Trustees, but not as individuals or personally; and
no Trustee, shareholder, officer, employee or agent of New Providence Investment
Trust, shall be held to any personal liability, nor shall resort be had to their
private property for the satisfaction of any obligation or claim or otherwise in
connection with the affairs of New Providence Investment Trust, but the Trust
Property only shall be liable.
/S/ Frank P. Meadows III
Frank P. Meadows III
The address of the principal place of business of the Trust is:
105 North Washington Street
PO Drawer 69
Rocky Mount, North Carolina 27802
BYLAWS
OF
NEW PROVIDENCE INVESTMENT TRUST
<PAGE>
BYLAWS
OF
NEW PROVIDENCE INVESTMENT TRUST
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
TABLE OF CONTENTS
Page
ARTICLE I TRANSACTION CONFIRMATIONS, ACCOUNT STATEMENTS,
CERTIFICATES AND DIVIDEND DISTRIBUTIONS .................................................... 1
ARTICLE II FISCAL YEAR................................................................................... 1
ARTICLE III SEAL.......................................................................................... 2
ARTICLE IV SHAREHOLDER MEETINGS.......................................................................... 2
ARTICLE V TRUSTEES...................................................................................... 3
ARTICLE VI COMMITTEES.................................................................................... 5
ARTICLE VII NOTICES....................................................................................... 5
ARTICLE VIII OFFICERS....................................................................................... 6
ARTICLE IX INVESTMENT AND OTHER RESTRICTIONS............................................................. 8
ARTICLE X CUSTODIAN..................................................................................... 8
ARTICLE XI INVESTMENT ADVISOR............................................................................ 10
ARTICLE XII DISTRIBUTOR................................................................................... 11
ARTICLE XIII TRANSACTIONS OF TRUSTEES, OFFICERS AND OTHERS.................................................. 11
ARTICLE XIV INDEMNIFICATION............................................................................... 12
ARTICLE XV AUDITOR....................................................................................... 13
ARTICLE XVI AMENDMENTS.................................................................................... 13
ARTICLE XVII MISCELLANEOUS.................................................................................... 14
</TABLE>
<PAGE>
BYLAWS
OF
NEW PROVIDENCE INVESTMENT TRUST
ARTICLE I
TRANSACTION CONFIRMATIONS, ACCOUNT STATEMENTS,
CERTIFICATES AND DIVIDEND DISTRIBUTIONS
1. Every shareholder of record will receive a confirmation of each new
transaction in their account with the Trust, and an account statement at
least quarterly, which will show the total number of shares of the Trust
owned by the shareholder and being held by the transfer agent for the
account of the shareholder. Shareholders may rely on these confirmations
and statements in lieu of certificates, which will not be issued, except as
may be authorized from time to time as determined by the Board of Trustees
of the Trust for any particular series of the Trust.
2. Certificates evidencing shares of a particular series of the Trust shall be
in the form prescribed by the Board of Trustees and shall be signed by the
Chairman and the Secretary or Treasurer or such officers as the Board of
Trustees may designate in authorizing such certificates. The signature of
any officer of the Trust and the seal of the Trust thereon may be
facsimiles.
3. In the event any officer authorized to sign certificates of shares shall
die, resign or be removed from office, otherwise valid certificates bearing
the signature, or facsimile thereof, of such officer shall remain valid and
may be issued. ARTICLE II FISCAL YEAR
The fiscal year of the Trust or any particular series of the Trust shall be as
provided by the Board of Trustees.
ARTICLE III
SEAL
The Trust seal shall, subject to alteration by the Board of Trustees, consist of
a flat-faced circular die upon which shall be engraved or cut the word,
"Massachusetts," together with the name of the particular series of the Trust
and the year of its Declaration (Viz., 1997).
ARTICLE IV
SHAREHOLDER MEETINGS
1. Meetings of shareholders will only be held as necessary to approve
fundamental policy changes, elect trustees and other matters requiring
approval of the shareholders in accordance with the Investment Company Act
of 1940, as amended.
2. Meetings of shareholders of the Trust shall be held at such time and on
such day as shall be designated in the notice of said meeting. At such
meetings, shareholders may elect a Board of Trustees or transact such other
business as may properly be brought before the meeting and which is stated
in the notice of the meeting.
3. Special meetings of shareholders of the Trust, or of any particular series
of the Trust, unless otherwise prescribed by statute, rule or regulation,
may be called for any purpose or purposes by the Chairman of the Board, any
Vice Chairman, or the President of the particular series of the Trust in
question at any time and shall be called by the Chairman of the Board, any
Vice Chairman, or the President of the particular series of the Trust in
question at the request of a majority of the Board of Trustees, or at the
request in writing of one or more shareholders who collectively hold at
least ten percent (10%) of the shares of a particular series of the Trust
issued and outstanding and entitled to vote. Such request shall state the
purpose or purposes of the meeting. Business transacted at all special
meetings shall be confined to the objects stated in the notice of such
meeting.
4. Written notice of every meeting of the shareholders, stating the time,
place and purpose or purposes for which the meeting is called, shall be
given by the Secretary to each shareholder entitled to vote thereat and to
any shareholder entitled by law to such notice. Such notice shall be given
to each shareholder by mailing the same, postage prepaid, to the address of
the shareholder as it appears on the books of the Trust not less than ten
(10) days nor more than forty-five (45) days before the time fixed for such
meeting.
5. The holders of a majority of the shares issued and outstanding and entitled
to vote thereat, present in person or represented by proxy, shall be
requisite and shall constitute a quorum at all meetings of the shareholders
for the transaction of business, except as otherwise provided by statute.
If such quorum shall not be present or represented at any meeting of the
shareholders, the shareholders entitled to vote thereat, present in person
or represented by proxy, shall have power to adjourn the meeting from time
to time (provided no adjournment shall be for more than three (3) months)
without notice other than announcement at the meeting, until a quorum shall
be present or represented. At such adjourned meeting at which a quorum
shall the present or represented, any business may be transacted which
might have been transacted at the meeting as originally notified.
6. When a quorum is present at any meeting, the vote of the holders of a
majority of the shares having the right to vote thereat, present in person
or represented by proxy, shall determine any question brought before such
meeting, unless the question is one upon which, by express provision of the
applicable statutes, rules and regulations, Declaration of Trust or these
Bylaws, a different vote is required, in which case such express provision
shall control.
7. At any meeting of the shareholders, every shareholder having the right to
vote shall be entitled to vote in person or by proxy appointed by an
instrument in writing subscribed by such shareholder and bearing a date not
more than eleven (11) months prior to said meeting, which instrument shall
be filed with the secretary of the meeting before being voted. Each
shareholder shall have one vote or fraction thereof for each share or
fraction thereof held.
8. The Board of Trustees may fix a record date, not more than ninety (90) nor
less than ten (10) days prior to the date for which a meeting is called, as
of which the shareholders entitled to vote at such meeting or any
adjournment thereof, shall be determined, notwithstanding any transfer or
the issue of any share occurring after such record date.
ARTICLE V
TRUSTEES
1. The number of trustees which shall constitute the entire Board of Trustees
of the Trust shall be such number as shall be fixed from time to time by a
vote adopted by a majority of the then Trustees. Any trustee may be removed
by a two-thirds (2/3) majority of all trustees, at a regular or special
meeting called for that purpose, for cause by them deemed sufficient.
Subject to death, resignation or removal, each trustee shall hold office
indefinitely and until his successor is elected and qualified. Trustees
need not be shareholders of the Trust.
2. If the office of any trustee or trustees becomes vacant for any reason, a
majority of the remaining trustees, though less than a quorum, may choose a
successor or successors, who shall hold office for the unexpired term in
respect to which such vacancy occurred or until the next election of
trustees, provided that, immediately after filling any such vacancy, at
least two-thirds (2/3) of the trustees then holding office shall have been
elected to such office by the shareholders of the Trust entitled to vote;
otherwise such vacancy shall be filled by vote of the shareholders at a
special meeting called for such purpose.
3. The property and business of the Trust shall be managed by its Board of
Trustees which may exercise all powers of the Trust and do all lawful acts
and things as are not by applicable statute, rule or regulation, the
Declaration of Trust or these Bylaws prohibited, or directed or required to
be exercised or done by the shareholders.
4. The Board of Trustees may hold their meetings and keep the books of the
Trust at the office of the Trust in the City of Rocky Mount, State of North
Carolina, or at such other places as they may from time to time determine,
and telephone meetings may be held except that the Board of Trustees may
not hold telephone meetings to approve or renew an investment advisory
agreement or any rule 12b-1 plan or any agreements relating to such plan.
The original or duplicate stock ledger shall be kept at the office of the
Trust in the City of Rocky Mount, State of North Carolina or at the office
of any transfer agent which may be employed by the Trust.
5. The first meeting of the newly elected Board of Trustees shall be held at
the place of, and immediately following the meeting of the shareholders at
which such Board of Trustees was elected, either within or without the
State of North Carolina; provided the trustees may hold their meeting at
such other place and time as they may determine. No notice of such meeting
shall be necessary to the newly elected trustees in order to legally
constitute the meeting, provided a quorum shall be present. Regular
meetings of the Board of Trustees shall be held without notice at such time
and place, either within or without the State of North Carolina as shall
from time to time be determined by the board.
6. Special meetings of the Board of Trustees may be held at any time when
called by the Chairman, any Vice Chairman, any President, the Secretary or
any two (2) trustees (or if there shall be fewer than three (3) trustees,
by any trustee). Not less than twenty-four (24) hours' notice of any
special meeting shall be given by the Secretary or other officer calling
such meeting to each trustee either in person, by telephone, by mail or by
telegram. Such notice may be waived by any trustee either in person or in
writing or by telegram. Such special meetings shall be held at such time
and place, within or without the State of North Carolina, as the notice
thereof or waiver shall specify. Unless otherwise specified in the notice
thereof, any and all business may be transacted at any meeting of the Board
of Trustees.
7. At all meetings of the Board of Trustees, a majority of the trustees shall
be necessary and sufficient to constitute a quorum for the transaction of
business, and the act of the majority of trustees present at any meeting at
which there is a quorum shall be the act of the Board of Trustees, except
as may be otherwise specifically provided by an applicable statute, rule,
or regulation, by the Declaration of Trust or by these Bylaws. If a quorum
shall not be present at any meeting of the Board of Trustees, the trustees
present thereat may adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present.
ARTICLE VI
COMMITTEES
The Board of Trustees may elect from their own number, by resolution or
resolutions passed by a majority of the board, an executive committee to consist
of two (2) or more trustees, which shall have the power to conduct the current
and ordinary business of the Trust while the Board of Trustees is not in
session. The Board of Trustees may also in the same manner elect from their own
number from time to time other committees, the number composing such committees
and the powers conferred thereon to be determined from the resolution creating
the same. ARTICLE VII NOTICES
1. Whenever, under the provisions of an applicable statute, rule, or
regulation, the Declaration of Trust or these Bylaws, notice is required to
be given to any shareholder or trustee, it shall not be construed to mean
personal notice unless the context otherwise provides such notice may be
given in writing, by mail, by depositing the same in a post office or
letter box, in a postage prepaid envelope, addressed to such shareholder or
trustee at such address as appears on the books of the Trust, and such
notice shall be deemed to be given at the time when the same shall be thus
mailed.
2. Whenever any notice is required to be given under the provisions of an
applicable statute, rule or regulation, the Declaration of Trust or by
these Bylaws, a waiver thereof in writing signed by the person or persons
entitled to said notice, whether before or after the time stated therein,
shall be equivalent thereto.
ARTICLE VIII
OFFICERS
1. The Board of Trustees shall elect officers of the Trust for such term in
office, which may be indefinite, as determined by the board. The Board of
Trustees shall elect one of its own members as Chairman of the Board and
shall elect a Secretary and Treasurer of the Trust and a President for each
series of the Trust. The Treasurer shall be the Chief Accounting Officer of
the Trust. The Board of Trustees may also elect or appoint or authorize the
Chairman, the Vice Chairman, if any, or any President to appoint such other
officers, including a Vice Chairman, Vice Presidents and one or more
Assistant Secretaries and Assistant Treasurers, as the Board of Trustees
deems advisable. Two or more offices may be held by the same person. The
Chairman of the Trust and any Vice Chairman shall be a trustee. All other
officers may be, but need not be, trustees.
2. The Board of Trustees may appoint such other officers, agents and
representatives of the Trust as shall be deemed necessary, with such powers
for such term and to perform such acts and duties on behalf of the Trust as
the Board of Trustees may see fit to the extent authorized or permitted by
statute, rule, or regulation, the Declaration of Trust and these Bylaws.
3. The Chairman of the Board shall preside at all meetings of the shareholders
and Board of Trustees. In addition, the Chairman shall be the chief
executive officer of the Trust and shall have general charge and
supervision of the business, property, and affairs of the Trust and such
other powers and duties as the Board of Trustees may from time to time
prescribe.
4. If the trustees shall elect one or more Vice Chairmen, the Vice Chairman or
if there shall be more than one, such Vice Chairmen in the order of their
seniority or as designated by the Board of Trustees, in the absence of the
Chairman, shall preside at meetings of the shareholders and Board of
Trustees and shall exercise such other powers and duties as the Chairman
shall determine.
5. The President of each series of the Trust shall be the chief executive
officer of the Trust for matters pertaining to that particular series and
shall have general charge and supervision of the business, property and
affairs of the series and such other powers and duties as the Board of
Trustees shall from time to time prescribe.
6. The Vice Presidents of each series of the Trust, in the order of their
seniority or as designated by the Board of Trustees, shall in the absence
or disability of the President perform the duties and exercise the powers
of the President and shall perform such other duties as the Board of
Trustees or the President of such series may from time to time prescribe.
7. The Secretary shall record all votes and proceedings of meetings of the
shareholders and of the Board of Trustees in the Trust records. The
Secretary shall give, or cause to be given, notice of all meetings of the
shareholders and meetings of the Board of Trustees when notice thereof is
required. The Secretary shall have custody of the seal of the Trust and may
affix the same to any instrument requiring the seal and attest to the same
with his or her signature. The Secretary shall perform such other duties as
the Board of Trustees may from time to time prescribe.
8. The Assistant Secretaries, in order of their seniority or as directed by
the Board of Trustees, shall in the absence or disability of the Secretary
perform the duties and exercise the powers of the Secretary and shall
perform such other duties as the Board of Trustees may prescribe.
9. The Treasurer shall deliver all Trusts and securities of the Trust which
may come into the Treasurer's hands to such bank or trust company as the
Board of Trustees may designate as Custodian. The Treasurer shall keep such
records of the financial transactions of the Trust as the Board of Trustees
shall prescribe. The Treasurer shall perform such other duties as the Board
of Trustees may from time to time prescribe.
10. The Assistant Treasurers, in order of their seniority or as directed by the
Board of Trustees, shall in the absence or disability of the Treasurer
perform the duties and exercise the powers of the Treasurer and shall
perform such other duties as the Board of Trustees may prescribe.
11. The officers of the Trust shall hold office until their successors are
chosen and qualified. Any officer elected or appointed by the Board of
Trustees may be removed at any time with or without cause by the
affirmative vote of a majority of the entire Board of Trustees. If the
office of any officer shall become vacant for any reason, the vacancy shall
be filled by the Board of Trustees.
ARTICLE IX
INVESTMENT AND OTHER RESTRICTIONS
The investment limitations for each particular series of the Trust are set forth
in each of the Trust's current Prospectuses or Statements of Additional
Information for the particular series as approved by the Trustees.
ARTICLE X
CUSTODIAN
1. The Trust shall employ a Custodian pursuant to a written contract that
shall contain in substance the following provisions:
(a) The Trust will cause all securities and Trusts owned by the Trust to
be delivered or paid to the Custodian.
(b) The Custodian will receive any monies due to the Trust and deposit the
same in an account in its own banking department or in such other
banking institution, if any, as the Board of Trustees may direct.
(c) The Custodian shall release and deliver securities owned by the Trust
in the following cases only:
(1) Upon the sale of such securities for the account of the company
and the receipt of payment therefor;
(2) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable, provided
that in any such case the cash proceeds thereof shall be
delivered to the Custodian;
(3) To the issuer thereof or its agent for transfer into the name of
the Trust or the Custodian, or a nominee of either, or in
exchange for a different number of certificates representing the
same number of shares or aggregate face amount, provided that in
any such case the new securities replacing such securities are
delivered to the Custodian and approval of the Trust is received;
(4) To any broker selling the same for examination in accord with the
"street delivery" custom;
(5) For exchange or conversion pursuant to any plan of merger,
consolidation, reorganization, recapitalization or readjustment
of the securities of the issuer of such securities, or pursuant
to provisions for conversion contained in such securities,
provided that in any such case the new securities and cash, if
any, are delivered to the Custodian;
(6) In the case of warrants, rights or similar options, the surrender
thereof shall be only for the exercise of such warrants, rights
or other options on behalf of the Trust upon interim receipts or
temporary securities for definitive securities;
(7) For any other proper purpose approved by the Trust.
(d) The Custodian shall pay out monies of the Trust only upon the purchase
of securities for the account of the Trust and the delivery in due
course of such securities to the Custodian, or in connection with the
conversion, exchange or surrender of securities owned by the Trust as
set forth herein, or for the repurchase of shares issued by the Trust,
or for the making of any disbursements authorized by the Board of
Trustees for expenses or liabilities incurred by the Trust pursuant to
all applicable statutes, rules and regulations.
(e) The Custodian shall make deliveries of securities and payments of cash
only upon proper written instructions signed by such officer or
officers or other agent or agents of the Trust, including the
investment advisor, as may be authorized to sign such instructions by
resolution of the Board of Trustees. The Trustees may, from time to
time, authorize different persons to sign proper instructions for
different purposes. 2. The contract between the Trust and the
Custodian may contain any other provisions notinconsistent with all
applicable statutes, rules, and regulations, the Declaration of Trust
or with these Bylaws which the Board of Trustees may approve.
3. Such contract shall be terminable by either party upon written notice to
the other; provided, however, that upon termination of the contract or
inability of the Custodian to continue to serve, the Custodian shall
deliver and pay over to such successor Custodian all securities and monies
held by it for the account of the Trust. In the event that the Custodian
terminates its contract with the Trust: (a) the Board of Trustees shall
promptly appoint a successor Custodian; (b) in the event that the Trust
cannot find a successor Custodian having the required qualifications and
willing to serve, the Board of Trustees shall promptly call a special
meeting of the shareholders to determine whether the Trust shall function
without a Custodian or shall be liquidated; (c) in the event that such vote
of shareholders shall be held the Custodian shall deliver and pay over all
property of the Trust held by it as directed by, and in accordance with,
the vote of a majority of the outstanding shares of the Trust.
ARTICLE XI
INVESTMENT ADVISOR
The Board of Trustees, with the approval of the shareholders, as provided by
applicable statutes, rules and regulations, and consistent with the Declaration
of Trust, may enter into a contract or contracts with one or more persons, firms
or corporations to act as Investment Advisor or Investment Advisors for each
particular series of the Trust and to perform such duties and render such
services as shall be deemed necessary. Any such contract shall provide that it
may be terminated at any time by the Trust without penalty and upon not more
than sixty (60) days' written notice, and shall be automatically terminated in
the event of its assignment. Any such contract shall continue in effect only if
approved in accordance with the provisions of all applicable statutes, rules,
and regulations, the Declaration of Trust and these Bylaws.
ARTICLE XII
DISTRIBUTOR
The Board of Trustees, as consistent with all applicable statutes, rules, and
regulations, and the Declaration of Trust, may enter into a contract or
contracts with any one or more persons, firms or corporations to act as
Distributor or Distributors for the Trust, or any particular series of the
Trust, and to perform such other duties and render such other services as shall
be deemed necessary. Any such contract shall provide that it shall be
automatically terminated in the event of its assignment by such person, firm or
corporation, and that, if it shall continue in effect for a period of more than
two (2) years from the date of its execution, it shall be specifically approved
at least annually by vote of the outstanding voting securities of the Trust or
the particular series of the Trust in question or by the Board of Trustees in
accordance with all applicable statutes, rules and regulations. Such contract
may be exclusive, and may be, with the same person, firm or corporation that is
a party to an investment advisor's contract with the Trust. Such contract may
also contain any other provisions not inconsistent with all applicable statutes,
rules and regulations, the Declaration of Trust and these Bylaws.
ARTICLE XIII
TRANSACTIONS OF TRUSTEES, OFFICERS AND OTHERS
1. No trustee or officer of the Trust, nor the Investment Advisor(s), nor any
member, officer, director, or shareholder of such Investment Advisor(s)
shall take a long or short position in the securities issued by any series
of the Trust, except that any trustee or officer of this Trust, or member,
officer, director or shareholder of the Investment Advisor(s) may purchase
from the Trust at any time, shares issued by any series of the Trust: (a)
at the price available to the public at the moment of such purchase; or (b)
to the extent that such person is a shareholder, at the price available to
shareholders generally at the moment of such purchase; or (c) at a price
determined as set forth in the Trust's current Prospectus for a particular
series of the Trust. In any event, such purchase shall not be in
contravention of any applicable federal or state statute, rule or
regulation.
2. The Trust shall not lend any of its assets to the Distributor(s) or
Investment Advisor(s) or to any officer, director or trustee of the
Distributor(s) or the Investment Advisor(s) or the Trust and shall not
permit any officer or trustee, or any officer or director of the
Distributor(s) or the Investment Advisor(s), to deal for or on behalf of
the Trust with himself as principal or agent, or with any partnership,
association or corporation in which he has a financial interest. The
foregoing provisions shall not prevent: (a) officers and trustees of the
Trust from buying, holding or selling shares in any series of the Trust, or
from being partners, officers or directors of or otherwise financially
interested in the Distributor(s) or the Investment Advisor(s); (b)
employment of legal counsel, registrar, transfer agent, dividend disbursing
agent or custodian who is, or has a partner, shareholder, officer or
director who is, an officer or trustee of the Trust, if only customary fees
are charged for services to the Trust; or (c) purchases or sales of
securities or other property if such transaction is permitted by or is
exempted under any applicable statute, rule or regulation.
3. Any officer, trustee or agent of the Trust may acquire, own and dispose of
shares of any series of the Trust to the same extent as if he or she were
not such officer, trustee or agent. The Board of Trustees may issue,
purchase and sell or cause to be issued, purchased and sold shares of any
series of the Trust and from any person, or to and from any firm or company
of which such person is an officer, director, trustee or shareholder
subject only to all applicable statutes, rules, and regulations, any
limitations contained in the Declaration of Trust and the limitations and
restrictions in these Bylaws.
ARTICLE XIV
INDEMNIFICATION
1. The Trust shall indemnify each trustee and officer to the full extent
permitted by applicable federal, state and local statutes, rules and
regulations and the Declaration of Trust, as amended from time to time.
2. With respect to a proceeding against a trustee or officer brought by or on
behalf of the Trust to obtain a judgment or decree in its favor, the Trust
shall provide the officer or trustee with the same indemnification, after
the same determination, as it is required to provide with respect to a
proceeding not brought by or on behalf of the Trust.
3. The Board of Trustees, in its discretion, may authorized or provide the
above-described indemnification to an employee or agent.
4. Any indemnification provided by this Article:
(a) Continues as to a trustee, officer, employee or agent who has ceased
to be such, and inures to the benefit of his heirs and personal
representative; and
(b) Does not exclude any other rights to which a person is or may be
entitled by any applicable statute, rule, regulation, agreement, vote
of shareholders or disinterested trustees, or otherwise, as to:
(1) Actions in his official capacity; and
(2) Actions in any other capacity while holding such office.
5. The indemnification provided by this Article shall be provided with respect
to an action, suit or proceeding arising from an act or omission or alleged
act or omission, whether occurring before or after the adoption of this
Article. 6. Nothing in this Article protects, or purports to protect, or
may be interpreted or construed to protect, any trustee or officer 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 XV
AUDITOR
The independent auditor of the particular series of the Trust shall be selected
annually in accordance with all applicable statutes, rules and regulations.
ARTICLE XVI
AMENDMENTS
The Board of Trustees may make, amend, alter or repeal these Bylaws, at any
meeting duly held; provided, that the provisions concerning investment and other
restrictions contained in Article IX of these Bylaws shall only be amended,
altered or repealed by the vote of a majority of the outstanding voting
securities of the particular series of the Trust involved, as defined in the
Investment Company Act of 1940, or as otherwise provided by any applicable
statute, rule or regulations. ARTICLE XVII MISCELLANEOUS
1. When used in these Bylaws, the term "applicable statutes, rules and
regulations" shall mean any and all federal and state statutes, rules and
regulations that are applicable to, govern or otherwise regulate the
conduct of the Trust's business as a regulated, diversified, open-end
investment company of the management type. Such statutes, rules and
regulations shall include, but are not limited to: The Investment Company
Act of 1940, the Investment Advisors Act of 1940, the Securities Act of
1933, the Securities Exchange Act of 1934, all as amended to date and as
may be hereafter amended, and all rules and regulations promulgated by the
Securities and Exchange Commission thereunder; Subchapter M of the Internal
Revenue Code, and all rules and regulations promulgated by the Internal
Revenue Service thereunder; the Annotated Code of Massachusetts, and all
rules and regulations promulgated by any commission, organization, or
division of such, which has been authorized by the State of Massachusetts
to formulate or to enforce same; and any and all other statutes, rules or
regulations enacted or promulgated by any state, commission or division
that shall or may be deemed to govern or regulate the conduct of the Trust.
2. Each Article, section or portion of these Bylaws shall be deemed severable,
and the invalidity of any such Article, section or portion shall not affect
the validity of the remainder of these Bylaws.
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT, entered into as of the date the registration statement of the
New Providence Capital Growth Fund of the New Providence Investment Trust
becomes effective with the Securities and Exchange Commission, by and between
NEW PROVIDENCE INVESTMENT TRUST (the "Trust"), a Massachusetts Business Trust,
and NEW PROVIDENCE CAPITAL MANAGEMENT, INC., a Georgia corporation (the
"Advisor"), registered as an investment advisor under the Investment Advisors
Act of 1940, as amended (the "Advisors Act").
WHEREAS, the Trust is registered as a diversified, open-end management
investment company of the series type under the Investment Company Act of 1940,
as amended (the "1940 Act"); and
WHEREAS, the Trust desires to retain the Advisor to furnish investment advisory
and administrative services to NEW PROVIDENCE CAPITAL GROWTH FUND series of the
Trust, and the Advisor is willing to so furnish such services;
NOW THEREFORE, in consideration of the promises and mutual covenants herein
contained, it is agreed between the parties hereto as follows:
1. Appointment. The Trust hereby appoints the Advisor to act as Investment
Advisor to NEW PROVIDENCE CAPITAL GROWTH FUND (the "Fund") series of the
Trust for the period and on the terms set forth in this Agreement. The
Advisor accepts such appointment and agrees to furnish the services herein
set forth, for the compensation herein provided.
2. Delivery of Documents. The Trust has furnished the Investment Advisor with
copies properly certified or authenticated of each of the following:
(a) The Trust's Declaration of Trust, as filed with the State of
Massachusetts (such Declaration, as presently in effect and as
it shall from time to time be amended, is herein called the
"Declaration");
(b) The Trust's By-Laws (such By-Laws, as presently in effect and as
they shall from time to time be amended, are herein called the
"By-Laws");
(c) Resolutions of the Trust's Board of Trustees and the resolution
approved by a majority of the outstanding shares of the Fund
authorizing the appointment of the Advisor and approving this
Agreement;
(d) The Trust's Registration Statement on Form N-1A under the 1940
Act and under the Securities Act of 1933 as amended, (the "1933
Act"), relating to shares of beneficial interest of the Fund
(herein called the "Shares") as filed with the Securities and
Exchange Commission ("SEC") and all amendments thereto;
(e) The Fund's Prospectus (such Prospectus, as presently in effect
and all amendments and supplements thereto are herein called the
"Prospectus").
The Trust will furnish the Advisor from time to time with copies, properly
certified or authenticated, of all amendments of or supplements to the
foregoing at the same time as such documents are required to be filed with
the SEC.
3. Management. Subject to the supervision of the Trust's Board of Trustees,
the Advisor will provide a continuous investment program for the Fund,
including investment research and management with respect to all
securities, investments, cash and cash equivalents in the Fund. The Advisor
will determine from time to time what securities and other investments will
be purchased, retained or sold by the Fund. The Advisor will provide the
services under this Agreement in accordance with the Fund's investment
objectives, policies and restrictions as stated in its Prospectus. The
Advisor further agrees that it:
(a) Will conform its activities to all applicable Rules and
Regulations of the Securities and Exchange Commission and will,
in addition, conduct its activities under this Agreement in
accordance with regulations of any other Federal and State
agencies which may now or in the future have jurisdiction over
its activities under this Agreement;
(b) Will place orders pursuant to its investment determinations for
the Fund either directly with the issuer or with any broker or
dealer. In placing orders with brokers or dealers, the Advisor
will attempt to obtain the best net price and the most favorable
execution of its orders. Consistent with this obligation, when
the Advisor believes two or more brokers or dealers are
comparable in price and execution, the Advisor may prefer: (i)
brokers and dealers who provide the Fund with research advice and
other services, or who recommend or sell Trust shares, and (ii)
brokers who are affiliated with the Fund or its Advisor;
provided, however, that in no instance will portfolio securities
be purchased from or sold to the Advisor or any affiliated person
of the Advisor in principal transactions;
(c) Will provide certain executive personnel for the Fund as may be
mutually agreed upon from time to time with the Board of
Trustees, the salaries and expenses of such personnel to be
borne by the Advisor unless otherwise mutually agreed upon; and
(d) Will provide, at its own cost, all office space, facilities and
equipment necessary for the conduct of its advisory activities
on behalf of the Fund.
4. Services Not Exclusive. The advisory services furnished by the Advisor
hereunder are not to be deemed exclusive, and the Advisor shall be free to
furnish similar services to others so long as its services under this
Agreement are not impaired thereby; provided, however, that without the
written consent of the Trustees, the Advisor will not serve as investment
advisor to any other investment company having a similar investment
objective to that of the Fund.
5. Books and Records. In compliance with the requirements of Rule 31a-3 under
the 1940 Act, the Advisor hereby agrees that all records which it maintains
for the benefit of the Fund are the property of the Fund and further agrees
to surrender promptly to the Fund any of such records upon the Fund's
request. The Advisor further agrees to preserve for the periods prescribed
by Rule 31a-2 under the 1940 Act the records required to be maintained by
it pursuant to Rule 31a-1 under the 1940 Act that are not maintained by
others on behalf of the Fund.
6. Expenses. During the term of this Agreement, the Advisor will pay all
expenses incurred by it in connection with its investment advisory services
pertaining to the Fund. In the event that there is no distribution plan
under Rule 12b-1 of the 1940 Act in effect for the Fund, the Advisor will
pay, out of the Advisor's resources generated from sources other than fees
received from the Fund, the entire cost of the promotion and sale of Trust
shares.
Notwithstanding the foregoing, the Fund shall pay the expenses and costs of the
following:
(a) Taxes, interest charges and extraordinary expenses;
(b) Brokerage fees and commissions with regard to portfolio
transactions of the Fund;
(c) Fees and expenses of the custodian of the Fund's portfolio
securities;
(d) Fees and expenses of the Fund's administrator, transfer and
dividend disbursing agent and the Fund's fund accounting agent
or, if the Fund performs any such services without an agent, the
costs of the same;
(e) Auditing and legal expenses;
(f) Cost of maintenance of the Fund's existence as a legal entity;
(g) Compensation of trustees who are not interested persons of the
Advisor as law defines that term;
(h) Costs of Trust meetings;
(i) Federal and State registration or qualification fees and
expenses;
(j) Costs of setting in type, printing and mailing Prospectuses,
reports and notices to existing shareholders;
(k) The investment advisory fee payable to the Advisor, as provided
in paragraph 7 herein; and
(l) Plan of Distribution expenses, but only in accordance with the
Plan of Distribution as approved by the shareholders of the Fund.
7. Compensation. The Trust will pay the Advisor and the Advisor will accept as
full compensation an investment advisory fee, based upon the daily average
net assets of each Fund, computed at the end of each month and payable
within five (5) business days thereafter, based upon the schedule attached
hereto as Exhibit A.
8.(a)Limitation of Liability. The Advisor shall not be liable for any error of
judgment, mistake of law or for any other loss whatsoever suffered by the
Fund in connection with the performance of this Agreement, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of the Advisor in the performance of
its duties or from reckless disregard by it of its obligations and duties
under this Agreement.
8.(b)Indemnification of Advisor. Subject to the limitations set forth in this
Subsection 8(b), the Fund shall indemnify, defend and hold harmless (from
the assets of the Trust or Trusts to which the conduct in question relates)
the Advisor against all loss, damage and liability, including but not
limited to amounts paid in satisfaction of judgments, in compromise or as
fines and penalties, and expenses, including reasonable accountants' and
counsel fees, incurred by the Advisor in connection with the defense or
disposition of any action, suit or other proceeding, whether civil or
criminal, before any court or administrative or legislative body, related
to or resulting from this Agreement or the performance of services
hereunder, except with respect to any matter as to which it has been
determined that the loss, damage or liability is a direct result of (i) a
breach of fiduciary duty with respect to the receipt of compensation for
services; or (ii) willful misfeasance, bad faith or gross negligence on the
part of the Advisor in the performance of its duties or from reckless
disregard by it of its duties under this Agreement (either and both of the
conduct described in clauses (i) and (ii) above being referred to
hereinafter as "Disabling Conduct"). A determination that the Advisor is
entitled to indemnification may be made by (i) a final decision on the
merits by a court or other body before whom the proceeding was brought that
the Advisor was not liable by reason of Disabling Conduct, (ii) dismissal
of a court action or an administrative proceeding against the Advisor for
insufficiency of evidence of Disabling Conduct, or (iii) a reasonable
determination, based upon a review of the facts, that the Advisor was not
liable by reason of Disabling Conduct by, (a) vote of a majority of a
quorum of Trustees who are neither "interested persons" of the Fund as the
quoted phrase is defined in Section 2(a)(19) of the 1940 Act nor parties to
the action, suit or other proceeding on the same or similar grounds that is
then or has been pending or threatened (such quorum of such Trustees being
referred to hereinafter as the "Independent Trustees"), or (b) an
independent legal counsel in a written opinion. Expenses, including
accountants' and counsel fees so incurred by the Advisor (but excluding
amounts paid in satisfaction of judgments, in compromise or as fines or
penalties), may be paid from time to time by the Fund or Trust to which the
conduct in question related in advance of the final disposition of any such
action, suit or proceeding; provided, that the Advisor shall have
undertaken to repay the amounts so paid if it is ultimately determined that
indemnification of such expenses is not authorized under this Subsection
8(b) and if (i) the Advisor shall have provided security for such
undertaking, (ii) the Fund shall be insured against losses arising by
reason of any lawful advances, or (iii) a majority of the Independent
Trustees, or an independent legal counsel in a written opinion, shall have
determined, based on a review of readily available facts (as opposed to a
full trial-type inquiry), that there is reason to believe that the Advisor
ultimately will be entitled to indemnification hereunder.
As to any matter disposed of by a compromise payment by the Advisor
referred to in this Subsection 8(b), pursuant to a consent decree or
otherwise, no such indemnification either for said payment or for any other
expenses shall be provided unless such indemnification shall be approved
(i) by a majority of the Independent Trustees or (ii) by an independent
legal counsel in a written opinion. Approval by the Independent Trustees
pursuant to clause (i) shall not prevent the recovery from the Advisor of
any amount paid to the Advisor in accordance with either of such clauses as
indemnification of the Advisor is subsequently adjudicated by a court of
competent jurisdiction not to have acted in good faith in the reasonable
belief that the Advisor's action was in or not opposed to the best interest
of the Fund or to have been liable to the Fund or its Shareholders by
reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in its conduct under the Agreement.
The right of indemnification provided by this Subsection 8(b) shall not be
exclusive of or affect any of the rights to which the Advisor may be
entitled. Nothing contained in this Subsection 8(b) shall affect any rights
to indemnification to which Trustees, officers or other personnel of the
Fund, and other persons may be entitled by contract or otherwise under law,
nor the power of the Fund to purchase and maintain liability insurance on
behalf of any such person.
The Board of Trustees of the Trust shall take all such action as may be
necessary and appropriate to authorize the Fund hereunder to pay the
indemnification required by this Subsection 8(b) including, without
limitation, to the extent needed, to determine whether the Advisor is
entitled to indemnification hereunder and the reasonable amount of any
indemnity due it hereunder, or employ independent legal counsel for that
purpose.
8.(c)The provisions contained in Section 8 shall survive the expiration or
other termination of this Agreement, shall be deemed to include and protect
the Advisor and its directors, officers, employees and agents and shall
inure to the benefit of its/their respective successors, assigns and
personal representatives.
9. Duration and Termination. This Agreement shall become effective upon the
date the registration statement of the Trust containing the Fund's
Prospectus is declared effective by the Securities and Exchange Commission
and, unless sooner terminated as provided herein, shall continue in effect
for two years. Thereafter, this Agreement shall be renewable for successive
periods of one year each, provided such continuance is specifically
approved annually:
(a) By the vote of a majority of those members of the Board of
Trustees who are not parties to this Agreement or interested
persons of any such party (as that term is defined in the 1940
Act), cast in person at a meeting called for the purpose of
voting on such approval; and
(b) By vote of either the Board of Trustees or a majority (as that
term is defined in the 1940 Act) of the outstanding voting
securities of the Fund.
Notwithstanding the foregoing, this Agreement may be terminated by the Fund
or by the Advisor at any time on sixty (60) days' written notice, without
the payment of any penalty, provided that termination by the Fund must be
authorized either by vote of the Board of Trustees or by vote of a majority
of the outstanding voting securities of the Fund. This Agreement will
automatically terminate in the event of its assignment (as that term is
defined in the 1940 Act).
10. Amendment of this Agreement. No provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by a written instrument
signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. No material amendment of this Agreement
shall be effective until approved by vote of the holders of a majority of
the Fund's outstanding voting securities (as defined in the 1940 Act).
11. Miscellaneous. The captions in this Agreement are included for convenience
of reference only and in no way define or limit any of the provisions
hereof or otherwise affect their construction or effect. If any provision
of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of the Agreement shall not be
affected thereby. This Agreement shall be binding and shall inure to the
benefit of the parties hereto and their respective successors.
12. Applicable Law. This Agreement shall be construed in accordance with, and
governed by, the laws of the State of North Carolina.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
ATTEST: NEW PROVIDENCE INVESTMENT TRUST
By: By:
Title: Title:
ATTEST: NEW PROVIDENCE CAPITAL MANAGEMENT, INC.
By: By:
Title: Title:
<PAGE>
EXHIBIT A
INVESTMENT ADVISOR'S COMPENSATION SCHEDULE
For the services delineated in the INVESTMENT ADVISORY AGREEMENT, the Investment
Advisor shall be compensated monthly, as of the last day of each month, within
five business days of the month end, a fee based upon the daily average net
assets of the Fund according to the following schedule.
Annual
Net Assets Fee
On the first $500 million 0.75%
On all assets over $500 million 0.65%
DISTRIBUTION AGREEMENT
AGREEMENT made effective as of the _________________, 1997, by and between NEW
PROVIDENCE INVESTMENT TRUST, an unincorporated business trust organized under
the laws of The Commonwealth of Massachusetts (the "Trust"), and DONALDSON &
CO., a Georgia corporation ("Distributor").
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management investment
company and is so registered under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Trust is authorized to issue an unlimited number of shares of
beneficial interest (the "Shares"), in separate series representing the
interests in separate funds of securities and other assets; and
WHEREAS, the Trust offers a series of such Shares representing interests in the
NEW PROVIDENCE GROWTH FUND (the "Fund") of the Trust, and has registered the
Shares under the Securities Act of 1933, as amended (the "1933 Act"), pursuant
to a registration statement on Form N-1A (the "Registration Statement"),
including a prospectus (the "Prospectus") and a statement of additional
information (the "Statement of Additional Information"); and
WHEREAS, the Trust has adopted a Plan of Distribution Pursuant to Rule 12b-1
under the 1940 Act (the "Distribution Plan") with respect to the Institutional
Shares of the Fund, and may enter into related agreements providing for the
distribution of Institutional Shares of the Fund; and
WHEREAS, Distributor has agreed to act as distributor of the Shares of the Fund
for the period of this Agreement;
NOW, THEREFORE, it is hereby agreed between the parties hereto as follows:
1. Appointment of Distributor.
(a) The Trust hereby appoints Distributor its exclusive agent for the
distribution of the Shares of the Fund in jurisdictions wherein such
Shares may be legally offered for sale; provided, however, that the
Trust in its absolute discretion may issue Shares of the Fund in
connection with (i) the payment or reinvestment of dividends or
distributions; (ii) any merger or consolidation of the Trust or of the
Fund with any other investment company or trust or any personal
holding company, or the acquisition of the assets of any such entity
or another fund of the Trust; or (iii) any offer of exchange permitted
by Section 11 of the 1940 Act.
(b) Distributor hereby accepts such appointment as exclusive agent for the
distribution of the Shares of the Fund and agrees that it will sell
the Shares as agent for the Trust at prices determined as hereinafter
provided and on the terms hereinafter set forth, all according to
applicable federal and state laws and regulations and to the Agreement
and Declaration of Trust of the Trust.
(c) Distributor may sell Shares of the Fund to or through qualified
securities dealers or others. Distributor will require each dealer or
other such party to conform to the provisions hereof, the Registration
Statement and the Prospectus and Statement of Additional Information,
and applicable law; and neither Distributor nor any such dealers or
others shall withhold the placing of purchase orders for Shares so as
to make a profit thereby.
(d) Distributor shall order Shares of the Fund from the Trust only to the
extent that it shall have received purchase orders therefor.
Distributor will not make, or authorize any dealers or others to make:
(i) any short sales of Shares; or (ii) any sales of Shares to any
Trustee or officer of the Trust or to any officer or director of
Distributor or of any corporation or association furnishing investment
advisory, managerial or supervisory services to the Trust, or to any
such corporation or association, unless such sales are made in
accordance with the then current Prospectus and Statement of
Additional Information.
(e) Distributor is not authorized by the Trust to give any information or
make any representations regarding the Shares of the Fund, except such
information or representations as are contained in the Registration
Statement or in the current Prospectus or Statement of Additional
Information of the Fund, or in advertisements and sales literature
prepared by or on behalf of the Trust for Distributor's use.
(f) Notwithstanding any provision hereof, the Trust may terminate, suspend
or withdraw the offering of Shares of the Fund whenever, in its sole
discretion, it deems such action to be desirable.
2. Offering Price of Shares. All Fund Shares sold under this Agreement shall
be sold at the public offering price per Share in effect at the time of the
sale, as described in the then current Prospectus of the Fund. The excess,
if any, of the public offering price over the net asset value of the Shares
sold by Distributor as agent shall be retained by Distributor as a
commission for its services hereunder. Out of such commission Distributor
may allow commissions or concessions to dealers and may allow them to
others in its discretion in such amounts as Distributor shall determine
from time to time. Except as may be otherwise determined by Distributor
from time to time, such commissions or concessions shall be uniform to all
dealers. At no time shall the Trust receive less than the full net asset
value of the Shares, determined in the manner set forth in the then current
Prospectus and Statement of Additional Information. Distributor shall also
be entitled to such commissions and other fees and payments as may be
authorized by the Trustees of the Trust from time to time under the
Distribution Plan.
3. Furnishing of Information. The Trust shall furnish to Distributor copies of
any information, financial statements and other documents that Distributor
may reasonably request for use in connection with the sale of Shares of the
Fund under this Agreement. The Trust shall also make available a sufficient
number of copies of the Fund's current Prospectus and Statement of
Additional Information for use by the Distributor.
4. Expenses.
(a) The Trust will pay or cause to be paid the following expenses: (i)
preparation, printing and distribution to shareholders of the
Prospectus and Statement of Additional Information; (ii) preparation,
printing and distribution of reports and other communications to
shareholders; (iii) registration of the Shares under the federal
securities laws; (iv) qualification of the Shares for sale in certain
states; (v) qualification of the Trust as a dealer or broker under
state law as well as qualification of the Trust as an entity
authorized to do business in certain states; (vi) maintaining
facilities for the issue and transfer of Shares; (vii) supplying
information, prices and other data to be furnished by the Trust under
this Agreement; and (viii) certain taxes applicable to the sale or
delivery of the Shares or certificates therefor.
(b) Except to the extent such expenses are borne by the Trust pursuant to
the Distribution Plan, Distributor will pay or cause to be paid the
following expenses: (i) payments to sales representatives of the
Distributor and to securities dealers and others in respect of the
sale of Shares of the Fund; (ii) payment of compensation to and
expenses of employees of the Distributor and any of its affiliates to
the extent they engage in or support distribution of Fund Shares or
render shareholder support services not otherwise provided by the
Trust's transfer agent, administrator, or custodian, including, but
not limited to, answering routine inquiries regarding the Fund,
processing shareholder transactions, and providing such other
shareholder services as the Trust may reasonably request; (iii)
formulation and implementation of marketing and promotional
activities, including, but not limited to, direct mail promotions and
television, radio, newspaper, magazine and other mass media
advertising; (iv) preparation, printing and distribution of sales
literature and of Prospectuses and Statements of Additional
Information and reports of the Trust for recipients other than
existing shareholders of the Fund; and (v) obtaining such information,
analyses and reports with respect to marketing and promotional
activities as the Trust may, from time to time, reasonably request.
(c) Distributor in connection with the Distribution Plan shall prepare and
deliver reports to the Trustees of the Trust on a regular basis, at
least quarterly, showing the expenditures with respect to the Fund
pursuant to the Distribution Plan and the purposes therefor, as well
as any supplemental reports as the Trustees of the Trust, from time to
time, may reasonably request.
5. Repurchase of Shares. Distributor as agent and for the account of the Trust
may repurchase Shares of the Fund offered for resale to it and redeem such
Shares at their net asset value.
6. Indemnification by the Trust. In absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties hereunder
on the part of Distributor, the Trust agrees to indemnify Distributor and
its officers and partners against any and all claims, demands, liabilities
and expenses that Distributor may incur under the 1933 Act, or common law
or otherwise, arising out of or based upon any alleged untrue statement of
a material fact contained in the Registration Statement or any Prospectus
or Statement of Additional Information of the Fund, or in any
advertisements or sales literature prepared by or on behalf of the Trust
for Distributor's use, or any omission to state a material fact therein,
the omission of which makes any statement contained therein misleading,
unless such statement or omission was made in reliance upon and in
conformity with information furnished to the Trust in connection therewith
by or on behalf of Distributor. Nothing herein contained shall require the
Trust to take any action contrary to any provision of its Agreement and
Declaration of Trust or any applicable statute or regulation.
7. Indemnification by Distributor. Distributor agrees to indemnify the Trust
and its officers and Trustees against any and all claims, demands,
liabilities and expenses which the Trust may incur under the 1933 Act, or
common law or otherwise, arising out of or based upon (i) any alleged
untrue statement of a material fact contained in the Registration Statement
or any Prospectus or Statement of Additional Information of the Fund, or in
any advertisements or sales literature prepared by or on behalf of the
Trust for Distributor's use, or any omission to state a material fact
therein, the omission of which makes any statement contained therein
misleading, if such statement or omission was made in reliance upon and in
conformity with information furnished to the Trust in connection therewith
by or on behalf of Distributor; or (ii) any act or deed of Distributor or
its sales representatives, or securities dealers and others authorized to
sell Fund Shares hereunder, or their sales representatives, that has not
been authorized by the Trust in any Prospectus or Statement of Additional
Information of the Fund or by this Agreement.
8. Term and Termination.
(a) This Agreement shall become effective on the date hereof. Unless
terminated as herein provided, this Agreement shall continue in effect
for one year from the date hereof and shall continue in full force and
effect for successive periods of one year thereafter, but only so long
as each such continuance is approved (i) by either the Trustees of the
Trust or by vote of a majority of the outstanding voting securities
(as defined in the 1940 Act) of the Fund and, in either event, (ii) by
vote of a majority of the Trustees of the Trust who are not parties to
this Agreement or interested persons (as defined in the 1940 Act) of
any such party and who have no direct or indirect financial interest
in this Agreement or in the operation of the Distribution Plan or in
any agreement related thereto ("Independent Trustees"), cast at a
meeting called for the purpose of voting on such approval.
(b) This Agreement may be terminated at any time without the payment of
any penalty by vote of the Trustees of the Trust or a majority of the
Independent Trustees or by vote of a majority of the outstanding
voting securities (as defined in the 1940 Act) of the Fund or by
Distributor, on sixty days' written notice to the other party.
(c) This Agreement shall automatically terminate in the event of its
assignment (as defined in the 1940 Act).
9. Limitation of Liability. The obligations of the Trust hereunder shall not
be binding upon any of the Trustees, officers or shareholders of the Trust
personally, but shall bind only the assets and property of the Trust. The
term "New Providence Investment Trust" means and refers to the Trustees
from time to time serving under the Agreement and Declaration of Trust of
the Trust, a copy of which is on file with the Secretary of the
Commonwealth of Massachusetts. The execution and delivery of this Agreement
has been authorized by the Trustees, and this Agreement has been signed on
behalf of the Trust by an authorized officer of the Trust, acting as such
and not individually, and neither such authorization by such Trustees nor
such execution and delivery by such officer shall be deemed to have been
made by any of them individually or to impose any liability on any of them
personally, but shall bind only the assets and property of the Trust as
provided in the Agreement and Declaration of Trust.
IN WITNESS THEREOF, the parties hereto have caused this Agreement to be executed
as of the date first written above.
NEW PROVIDENCE INVESTMENT TRUST
Attest:
By:________________________________
NEW PROVIDENCE CAPITAL GROWTH FUND
Attest:
By:________________________________
DONALDSON & CO.
Attest:
By:________________________________
EXHIBIT 8
CUSTODY AGREEMENT
(Mutual Funds)
THIS AGREEMENT is made as of _______, by and between NEW PROVIDENCE INVESTMENT
TRUST (the "Trust"), a Massachusetts business trust, with respect to its
existing series as of the date of this Agreement, and such other series as shall
be designated from time to time by the Trust (the "Fund" or "Funds"), and FIRST
UNION NATIONAL BANK OF NORTH CAROLINA, a national banking association (the
"Custodian").
The Trust desires that its securities and funds shall be hereafter held and
administered by the Custodian pursuant to the terms of this Agreement, and,
pursuant to a separate agreement, The Nottingham Company, Inc., a North Carolina
corporation ("Nottingham"), has agreed to perform the duties of Transfer Agent,
Accounting Services Agent, Dividend Disbursing Agent and Administrator for the
Fund.
In consideration of the mutual agreements herein, the Trust and the Custodian
agree as follows:
1. DEFINITIONS.
As used herein, the following words and phrases shall have the
meanings shown in this Section 1:
"Securities" includes stocks, shares, bonds, debentures, bills, notes,
mortgages, certificates of deposit, bank time deposits, bankers'
acceptances, commercial paper, scrip, warrants, participation
certificates, evidences of indebtedness, or other obligations and any
certificates, receipts, warrants or other instruments representing
rights to receive, purchase, or subscribe for the same, or evidencing
or representing any other rights or interests therein, or in any
property or assets.
"Oral Instructions" shall mean an authorization, instruction,
approval, item or set of data, or information of any kind transmitted
to the Custodian in person or by telephone, telegram, telecopy or
other mechanical or documentary means lacking original signature, by
an officer or employee of the Trust or an employee of Nottingham in
its capacity as Transfer Agent, Accounting Services Agent,
Administrator and Dividend Disbursing Agent who has been authorized by
a resolution of the Board of Trustees of the Trust or the Board of
Directors of Nottingham, as the case may be, to give Written
Instructions on behalf of the Trust.
"Written Instructions" shall mean an authorization, instruction,
approval, item or set of data, or information of any kind transmitted
to the Custodian containing original signatures or a copy of such
document transmitted by telecopy including transmission of such
signature, reasonably believed by the Custodian to be the signature of
an officer or employee of the Trust or an employee of Nottingham in
its capacity as Transfer Agent, Accounting Services Agent,
Administrator or Dividend Disbursing Agent who has been authorized by
a resolution of the Board of Trustees of the Trust or Board of
Directors of Nottingham, as the case may be, to give Written
Instructions on behalf of the Trust.
"Securities Depository" shall mean a system for the central handling
of securities where 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 securities.
"Officers' Certificate" shall mean a direction, instruction or
certification in writing signed in the name of the Trust by the
President, Secretary or Assistant Secretary, or the Treasurer or
Assistant Treasurer of the Trust, or any other persons duly authorized
to sign by the Board of Trustees or the Executive Committee of the
Trust.
"Book-Entry Securities" shall mean securities issued by the Treasury
of the United States of America and federal agencies of the United
States of America which are maintained in the book-entry system as
provided in Subpart O of Treasury Circular No. 300, 31 CFR 306,
Subpart B of 31 CFR Part 350, and the book-entry regulations of
federal agencies substantially in the form of Subpart O, and the term
Book-Entry Account shall mean an account maintained by a Federal
Reserve Bank in accordance with the aforesaid Circular and
regulations.
2. DOCUMENTS TO BE FILED BY TRUST.
The Trust shall from time to time file with the Custodian a certified
copy of each resolution of its Board of Trustees authorizing execution
of Written Instructions and the number of signatories required,
together with certified signatures of the officers and other
signatories authorized to sign, which shall constitute conclusive
evidence of the authority of the officers and other signatories
designated therein to act, and shall be considered in full force and
effect and the Custodian shall be fully protected in acting in
reliance thereon until it receives a new certified copy of a
resolution adding or deleting a person or persons with authority to
give Written Instructions. If the certifying officer is authorized to
sign Written Instructions, the certification shall also be signed by a
second officer of the Trust. The Trust also agrees that the Custodian
may rely on Written Instructions received from Nottingham as Agent for
the Trust if those Written Instructions are given by persons having
authority pursuant to resolutions of the Board of Trustees of the
Trust.
The Trust shall from time to time file with the Custodian a certified
copy of each resolution of the Board of Trustees authorizing the
transmittal of Oral Instructions and specifying the person or persons
authorized to give Oral Instructions in accordance with this
Agreement. The Trust agrees that the Custodian may rely on Oral
Instructions received from Nottingham, as agent for the Trust, if
those instructions are given by persons reasonably believed by the
Custodian to have such authority. Any resolution so filed with the
Custodian shall be considered in full force and effect and the
Custodian shall be fully protected in acting in reliance thereon until
it actually receives a new certified copy of a resolution adding or
deleting a person or persons with authority to give Oral Instructions.
If the certifying officer is authorized to give Oral Instructions, the
certification shall also be signed by a second officer of the Trust.
3. RECEIPT AND DISBURSEMENT OF FUNDS.
(a) The Custodian shall open and maintain a separate account or
accounts in the name of each Fund of the Trust, subject only to
draft or order by the Custodian acting pursuant to the terms of
this Agreement. The Custodian shall hold in safekeeping in such
account or accounts, subject to the provisions hereof, all funds
received by it from or for the account of the Trust. The Trust
will deliver or cause to be delivered to the Custodian all funds
owned by the Trust, including cash received for the issuance of
its shares during the period of this Agreement. The Custodian
shall make payments of funds to, or for the account of, the Trust
from such funds only:
(i) for the purchase of securities for the portfolio of the
Trust upon the delivery of such securities to the Custodian
(or to any bank, banking firm or trust company doing
business in the United States and designated by the
Custodian as its sub-custodian or agent for this purpose or
any foreign bank qualified under Rule 17f-5 of the
Investment Company Act of 1940 and acting as sub-custodian),
registered (if registerable) in the name of the Trust or of
the nominee of the Custodian referred to in Section 8 or in
proper form for transfer, or, in the case of repurchase
agreements entered into between the Trust and the Custodian
or other bank or broker dealer (A) against delivery of the
securities either in certificate form or through an entity
crediting the Custodian's account at the Federal Reserve
Bank with such securities or (B) upon delivery of the
receipt evidencing purchase by the Trust of securities owned
by the Custodian along with written evidence of the
agreement by the Custodian bank to repurchase such
securities from the Trust;
(ii) for the payment of interest, dividends, taxes, management or
supervisory fees, or operating expenses (including, without
limitation, Board of Trustees' fees and expenses, and fees
for legal, accounting and auditing services) and for
redemption or repurchase of shares of the Trust;
(iii)for payments in connection with the conversion, exchange or
surrender of securities owned or subscribed to by the Trust
held by or to be delivered to the Custodian;
(iv) for the payment to any bank of interest on all or any
portion of the principal of any loan made by such bank to
the Trust;
(v) for the payment to any person, firm or corporation who has
borrowed the Trust's portfolio securities the amount
deposited with the Custodian as collateral for such
borrowing upon the delivery of such securities to the
Custodian, registered (if registerable) in the name of the
Trust or of the nominee of the Custodian referred to in
Section 8 or in proper form for transfer; or
(vi) for other proper purposes of the Trust.
Before making any such payment the Custodian shall receive (and
may rely upon) Written Instructions or Oral Instructions
directing such payment and stating that it is for a purpose
permitted under the terms of this subsection (a). In respect of
item (vi), the Custodian will take such action only upon receipt
of an Officers' Certificate and a certified copy of a resolution
of the Board of Trustees or the Executive Committee of the Trust
signed by an officer of the Trust and certified by the Secretary
or an Assistant Secretary, specifying the amount of such payment,
setting forth the purpose for which such payment is to be made.
In respect of item (v), the Custodian shall make payment to the
borrower of securities loaned by the Trust of part of the
collateral deposited with the Custodian upon receipt of Written
Instructions from the Trust or Nottingham stating that the market
value of the securities loaned has declined and specifying the
amount to be paid by the Custodian without receipt or return of
any of the securities loaned by the Trust. In respect of item
(i), in the case of repurchase agreements entered into with a
bank which is a member of the Federal Reserve System, the
Custodian may transfer funds to the account of such bank, which
may be itself, prior to receipt of written evidence that the
securities subject to such repurchase agreement have been
transferred by book-entry to the Custodian's non-proprietary
account at the Federal Reserve Bank, or in the case of repurchase
agreements entered into with the Custodian, of the safekeeping
receipt and repurchase agreement, provided that such securities
have in fact been so transferred by book-entry, or in the case of
repurchase agreements entered into with the Custodian, the
safekeeping receipt is received prior to the close of business on
the same day.
(b) Notwithstanding anything herein to the contrary, the Custodian
may at any time or times with the written approval of the Board
of Trustees, appoint (and may at any time remove without the
written approval of the Trust) any other bank or trust company as
its sub-custodian or agent to carry out such of the provisions of
Subsection (a) of this Section 3 as instructions from the Trust
may from time to time request; provided, however, that the
appointment of such sub-custodian or agent shall not relieve the
Custodian of any of its responsibilities hereunder; and provided,
further, that the Custodian shall not enter into any arrangement
with any subcustodian unless such sub-custodian meets the
requirements of Section 26 of the Investment Company Act of 1940
and Rule 17f-5 thereunder, if applicable.
(c) The Custodian is hereby authorized to endorse and collect all
checks, drafts or other orders for the payment of money received
by the Custodian for the accounts of the Trust.
4. RECEIPT OF SECURITIES.
(a) The Custodian shall hold in safekeeping in a separate account,
and physically segregated at all times from those of any other
persons, firms, corporations or trusts or any other series of the
Trust, pursuant to the provisions hereof, all securities received
by it from or for the account of each series of the Trust, and
the Trust will deliver or cause to be delivered to the Custodian
all securities owned by the Trust. All such securities are to be
held or disposed of by the Custodian under, and subject at all
times to the instructions pursuant to, the terms of this
Agreement. The Custodian shall have no power or authority to
assign, hypothecate, pledge, lend or otherwise dispose of any
such securities and investments, except pursuant to instructions
and only for the account of the Trust as set forth in Section 5
of this Agreement.
(b) Notwithstanding anything herein to the contrary, the Custodian
may at any time or times with the written approval of the Board
of Trustees, appoint (and may at any time without the written
approval of such Board of Trustees remove) any other bank or
trust company as its sub-custodian or agent to carry out such of
the provisions of Subsection (a) of this Section 4 and of Section
5 of this Agreement, as instructions may from time to time
request, provided, however, that the appointment of such
sub-custodian or agent shall not relieve the Custodian of any of
its responsibilities hereunder, and provided, further, that the
Custodian shall not enter into arrangement with any sub-custodian
unless such sub-custodian meets the requirements of Section 26 of
the Investment Company Act of 1940 or Rule 17f-5 thereunder, if
applicable.
5. TRANSFER, EXCHANGE, REDELIVERY, ETC. OF SECURITIES.
The Custodian shall have sole power to release or deliver any
Securities of the Trust held by it pursuant to this Agreement. The
Custodian agrees to transfer, exchange or deliver Securities held by
it on behalf of the Trust hereunder only:
(a) for sales of such Securities for the account of the Trust upon
receipt by the Custodian of Payment therefor;
(b) when such securities mature or are called, redeemed or retired or
otherwise become payable;
(c) for examination by any broker selling any such securities in
accordance with "street delivery" custom;
(d) in exchange for or upon conversion into other Securities alone or
other securities and cash whether pursuant to any plan of merger,
consolidation, reorganization, recapitalization or readjustment,
or otherwise;
(e) upon conversion of such Securities pursuant to their terms into
other Securities;
(f) upon exercise of subscription, purchase or other similar rights
represented by such Securities;
(g) for the purpose of exchanging interim receipts for temporary
Securities for definitive securities;
(h) for the purpose of effecting a loan of the portfolio Securities
to any person, firm, corporation or trust upon the receipt by the
Custodian of cash or cash equivalent collateral at least equal to
the market value of the securities loaned;
(i) to any bank for the purpose of collateralizing the obligation of
the Trust to repay any moneys borrowed by the Trust from such
bank; provided, however, that the Custodian may at the option of
such lending bank keep such collateral in its possession, subject
to the rights of such bank given to it by virtue of any
promissory note or agreement executed and delivered by the Trust
to such bank; or
(j) for other proper purposes of the Trust.
As to any deliveries made by the Custodian pursuant to items (a), (b),
(c), (d), (e), (f), (g) and (h), Securities or funds receivable in
exchange therefor shall be deliverable to the Custodian. Before making
any such transfer, exchange or delivery, the Custodian shall receive
(and may rely upon) instructions requesting such transfer, exchange,
or delivery and stating that it is for a purpose permitted under the
terms (a), (b), (c), (d), (e), (f), (g), (h), or (i) of this Section
5, and, in respect of item (j), upon receipt of instructions of a
certified copy of a resolution of the Board of Trustees of the Trust,
signed by an officer of the Trust and certified by its Secretary or an
Assistant Secretary, specifying the Securities to be delivered,
setting forth the purpose for which such delivery is to be made,
declaring such purpose to be a proper purpose of the Trust, and naming
the person or persons to whom delivery of such Securities shall be
made. In respect of item (h), the instructions shall state the market
value of the Securities to be loaned and the corresponding amount of
collateral to be deposited with the Custodian; thereafter, upon
receipt of instructions stating that the market value of the
Securities loaned has increased and specifying the amount of increase,
the Custodian shall collect from the borrower additional cash
collateral in such amount.
6. FEDERAL RESERVE BOOK-ENTRY SYSTEM.
Notwithstanding any other provisions of this Agreement, it is expressly
understood and agreed that the Custodian is authorized in the
performance of its duties hereunder to deposit in the book-entry
deposit system operated by the Federal Reserve Bank (the "System"),
United States government, instrumentality and agency securities and any
other Securities deposited in the System and to use the facilities of
the System, as permitted by Rule 17f-4 under the Investment Company Act
of 1940, in accordance with the following terms and provisions:
(a) The Custodian may keep Securities of the Trust in the System
provided that such Securities are represented in an account
("Account") of the Custodian's in the System which shall not
include any assets of the Custodian other than assets held in a
fiduciary or custodian capacity.
(b) The records of the Custodian with respect to the participation in
the System through the Custodian shall identify by Book-Entry
Securities belonging to the Trust which are included with other
Securities deposited in the Account and shall at all times during
the regular business hours of the Custodian be open for
inspection by duly authorized officers, employees or agents of
the Trust and employees and agents of the Securities and Exchange
Commission.
(c) The Custodian shall pay for Securities purchased for the account
of the Trust upon:
(i) receipt of advice from the System that such Securities have
been transferred to the Account; and
(ii) the making of an entry on the records of the Custodian to
reflect such payment and transfer for the account of the
Trust. The Custodian shall transfer Securities sold for the
account of the Trust upon:
(1) receipt of advice from the System that payment for such
Securities has been transferred to the Account; and
(2) the making of an entry on the records of the Custodian
to reflect such transfer and payment for the account of
the Trust. The Custodian shall send the Trust a
confirmation of any transfers to or from the account of
the Trust.
(d) The Custodian will provide the Trust with any report obtained by
the Custodian on the System's accounting system, internal
accounting control and procedures for safeguarding Securities
deposited in the System. The Custodian will provide the Trust
with reports by independent public accountants on the accounting
system, internal accounting control and procedures for
safeguarding Securities, including Securities deposited in the
System relating to the services provided by the Custodian under
this Agreement; such reports shall detail material inadequacies
disclosed by such examination, and, if there are no such
inadequacies, shall so state, and shall be of such scope and in
such detail as the Trust may reasonably require and shall be of
sufficient scope to provide reasonable assurance that any
material inadequacies would be disclosed.
7. USE OF CLEARING FACILITIES.
Notwithstanding any other provisions of the Agreement, the Custodian
may, in connection with transactions in portfolio Securities by the
Trust, use the facilities of the Depository Trust Company ("DTC"), and
the Participants Trust Company ("PTC"), as permitted by Rule 17f-4
under the Investment Company Act of 1940, if such facilities have been
approved by the Board of Trustees of the Trust in accordance with the
following:
(a) DTC and PTC may be used to receive and hold eligible Securities
owned by the Trust;
(b) payment for Securities purchased may be made through the clearing
medium employed by DTC and PTC for transactions of participants
acting through them;
(c) Securities of the Trust deposited in DTC and PTC will at all
times be segregated from any assets and cash controlled by the
Custodian in other than a fiduciary or custodian capacity but may
be commingled with other assets held in such capacities. Subject
to the provisions of the Agreement with regard to instructions,
the Custodian will pay out money only upon receipt of Securities
or notification thereof and will deliver Securities only upon the
receipt of money or notification thereof;
(d) all books and records maintained by the Custodian which relate to
the participation in DTC and PTC shall identify by Book-Entry
Securities belonging to the Trust which are deposited in DTC and
PTC and shall at all times during the Custodian's regular
business hours be open to inspection by the duly authorized
officers, employees, agents and auditors, and the Trust will be
furnished with all the information in respect of the services
rendered to it as it may require;
(e) the Custodian will make available to the Trust copies of any
internal control reports concerning DTC and PTC delivered to it
by either internal or external auditors within ten days after
receipt of such a report by the Custodian; and
(f) confirmations of transactions using the facilities of DTC and PTC
shall be provided as set forth in Rule 17f-4 of the Investment
Company Act of 1940.
8. CUSTODIAN'S ACTS WITHOUT INSTRUCTIONS.
Unless and until the Custodian receives instructions to the contrary,
the Custodian shall on behalf of the Trust:
(a) Present for payment all coupons and other income items held by it
for the account of the Trust which call for payment upon
presentation and hold the funds received by it upon such payment
for the Trust;
(b) collect interest and cash dividends received, with notice to the
Trust, for the accounts of the Trust;
(c) hold for the accounts of the Trust hereunder all stock dividends,
rights and similar Securities issued with respect to any
securities held by it hereunder;
(d) execute as agent on behalf of the Trust all necessary ownership
certificates required by the Internal Revenue Code or the Income
Tax Regulations of the United States Treasury Department or under
the laws of any state now or hereafter in effect, inserting the
name of such certificates as the owner of the Securities covered
thereby, to the extent it may lawfully do so;
(e) transmit promptly to the Trust all reports, notices and other
written information received by the Custodian from or concerning
issuers of the portfolio Securities; and
(f) collect from the borrower the Securities loaned and delivered by
the Custodian pursuant to item (h) of Section 5 hereof, any
interest or cash dividends paid on such Securities, and all stock
dividends, rights and similar Securities issued with respect to
any such loaned Securities.
With respect to Securities of foreign issuers, it is expected that the
Custodian will use its best efforts to effect collection of dividends,
interest and other income, and to notify the Trust of any call for
redemption, offer of exchange, right of subscription, reorganization,
or other proceedings affecting such Securities, or any default in
payments due thereon. It is understood, however, that the Custodian
shall be under no responsibility for any failure or delay in effecting
such collections or giving such notice with respect to Securities of
foreign issuers, regardless of whether or not the relevant information
is published in any financial service available to it unless (a) such
failure or delay is due to the Custodians' or any sub-custodians'
negligence or (b) any relevant sub-custodian has acted in accordance
with established industry practices. Collections of income in foreign
currency are, to the extent possible, to be converted into United
States dollars unless otherwise instructed in writing, and in effecting
such conversion the Custodian may use such methods or agencies as it
may see fit, including the facilities of its own foreign division at
customary rates. All risk and expenses incident to such collection and
conversion is for the accounts of the Trust and the Custodian shall
have no responsibility for fluctuations in exchange rates affecting any
such conversion.
9. REGISTRATION OF SECURITIES.
Except as otherwise directed by instructions, the Custodian shall
register all Securities, except such as are in bearer form, in the name
of a registered nominee of the Custodian, as defined in the Internal
Revenue Code and any Regulation of the Treasury Department issued
thereunder or in any provision of any subsequent Federal tax law
exempting such transaction from liability for stock transfer taxes, and
shall execute and deliver all such certificates in connection therewith
as may be required by such laws or Regulations or under the laws of any
State. The Custodian shall use its best efforts to the end that the
specific securities held by it hereunder shall be at all times
identifiable in its records.
The Trust or Nottingham shall from time to time furnish to the
Custodian appropriate instruments to enable the Custodian to hold or
deliver in proper form for transfer, or to register in the name of its
registered nominee, any securities which it may hold for the accounts
of the Trust and which may from time to time be registered in the name
of the Trust.
10. SEGREGATED ACCOUNT.
The Custodian shall upon receipt of written instructions from the Trust
or Nottingham establish and maintain a segregated account or accounts
for and on behalf of the Trust, into which account or accounts may be
transferred cash and/or Securities, including Securities maintained in
an account by the Custodian pursuant to Section 4 hereof,
(i) in accordance with the provisions of any agreement among the
Trust, the Custodian and a broker-dealer registered under the
Securities and Exchange Act of 1934 and a member of the NASD (or
any futures commission merchant registered under the Commodity
Exchange Act), relating to compliance with the rules of The
Options Clearing Corporation and of any registered national
securities exchange (or the commodity Futures Trading Commission
or any registered contract market), or of any similar
organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Trust;
(ii) for purposes of segregating cash or government securities in
connection with options purchased, sold or written by the Trust
or commodity futures contracts or options thereon purchased or
sold by the Trust;
(iii)for the purposes of compliance by the Trust with the procedures
required by the Investment Company Act Release No. 10666, or any
subsequent release or releases of the Securities and Exchange
Commission relating to the maintenance of segregated accounts by
registered investment companies; and
(iv) for other proper corporate purposes, but only, in the case of
clause (iv), upon receipt of, in addition to an Officer's
Certificate, a certified copy of a resolution of the Board of
Trustees signed by an officer of the Trust and certified by the
Secretary or an Assistant Secretary, setting forth the purpose or
purposes of such segregated account and declaring such purposes
to be proper corporate purposes.
11. VOTING AND OTHER ACTIONS.
Neither the Custodian nor any nominee of the Custodian shall vote any
of the Securities held hereunder by or for the accounts of the Trust,
except in accordance with instructions. The Custodian shall execute and
deliver, or cause to be executed and delivered, to the appropriate
investment advisor of each series of the Trust, all notices, proxies
and proxy soliciting materials with relation to such Securities
(excluding any Securities loaned and delivered by the Custodian
pursuant to item (h) of Section 5 hereof), such proxies to be executed
by the registered holder of such Securities (if registered otherwise
than in the name of the Trust), but without indicating the manner in
which such proxies are to be voted. Such proxies shall be delivered by
regular mail to the appropriate investment advisor of each series of
the Trust.
12. TRANSFER TAX AND OTHER DISBURSEMENTS.
The Trust shall pay or reimburse the Custodian from time to time for
any transfer taxes payable upon transfers of securities made hereunder
and for all other necessary and proper disbursements and expenses made
or incurred by the Custodian in the performance of this Agreement. The
Custodian shall execute and deliver such certificates in connection
with Securities delivered to it or by it under this Agreement as may be
required under the provisions of the Internal Revenue Code and any
Regulations of the Treasury Department issued thereunder, or under the
laws of any State, to exempt from taxation any exemptible transfers
and/or deliveries of any such securities.
13. CONCERNING THE CUSTODIAN.
(a) The Custodian's compensation shall be paid by the Trust. The
Custodian shall not be liable for any action taken in good faith
upon receipt of instructions as herein defined or a certified
copy of any resolution of the Board of Trustees, and may rely on
the genuineness of any such document which it may in good faith
believe to have been validly executed.
(b) The Custodian shall not be liable for any loss or damage,
resulting from its action or omission to act or otherwise, except
for any such loss or damage arising out of its own negligence or
willful misconduct and except that the Custodian shall be
responsible for the acts of any sub-custodian, or agent appointed
hereunder and approved by the Board of Trustees of the Trust. At
any time, the Custodian may seek advice from legal counsel for
the Trust whose legal fees shall be paid at the sole expense of
the Trust, with respect to any matter arising in connection with
this Agreement, and it shall not be liable for any action taken
or not taken or suffered by it in good faith in accordance with
the opinion of counsel for the Trust. The Trust and not the
Custodian shall be responsible for any fee or charges by counsel
for the Trust in connection with any such opinion rendered to the
Custodian.
(c) Without limiting the generality of the foregoing, the Custodian
shall be under no duty or obligation to inquire into, and shall
not be liable for:
(i) The validity of the issue of any Securities purchased by or
for the Trust, the legality of the purchase thereof, or the
propriety of the amount paid therefor;
(ii) The legality of the issue or sale of any Securities by or
for the Trust, or the propriety of the amount for which the
same are sold;
(iii)The legality of the issue or sale of any shares of the
Trust, or the sufficiency of the amount to be received
therefor;
(iv) The legality of the redemption of any shares of the Trust,
or the propriety of the amount to be paid therefor;
(v) The legality of the declaration of any dividend or
distribution by the Trust, or the legality of the issue of
any Securities of the Trust in payment of any dividend or
distribution in shares;
(vi) The legality of the delivery of any Securities held for the
Trust for the purpose of collateralizing the obligation of
the Trust to repay any moneys borrowed by the Trust; or
(vii)The legality of the delivery of any Securities held for the
Trust for the purpose of lending said securities to any
person, firm or corporation.
(d) The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount, if the Securities upon
which such amount is payable are in default, or if payment is
refused after due demand or presentation by the Custodian on
behalf of the Trust, unless and until
(i) the Custodian shall be directed to take such action by
written instructions signed in the name of the Trust on
behalf of the Trust by one of its executive officers; and
(ii) the Custodian shall be assured to its satisfaction of
reimbursement of its costs and expenses in connection with
any such action.
(e) The Custodian shall not be under any duty or obligation to
ascertain whether any securities at any time delivered to or held
by it for the account of the Trust, are such as may properly be
held by the Trust under the provisions of the Trust's Declaration
of Trust or By-Laws as amended from time to time.
(f) The Trust agrees to indemnify and hold harmless the Custodian and
its nominees, sub-custodians, depositories and agent from all
taxes, charges, expenses, assessments, liabilities, and losses
(including counsel fees) incurred or assessed against it or its
nominees, sub-custodians, depositories and agents in connection
with the performance of this Agreement, except such as may arise
from its or its nominee's, sub-custodian's, depositories' and
agent's own negligent action, negligent failure to act, breach of
this agreement or willful misconduct. The Custodian is authorized
to charge any account of the Trust for such items; provided,
however, that, except for overdrafts as to which the Custodian
shall have the immediate right of offset, prior to charging any
such account for such items, the Custodian shall first have
forwarded an invoice for such item to the Trust and 30 days shall
have elapsed from the date of such invoice to the Trust without
payment of the same having been received by the Custodian. In the
event of any advance of funds for any purpose made by the
Custodian resulting from orders or instructions of the Trust, or
in the event that the Custodian or its nominees, sub-custodians,
depositories and agents shall incur or be assessed any taxes,
charges, expenses, assessments, claims or liabilities in
connection with the performance of this Agreement, except such as
may arise from its or its nominee's own negligent action,
negligent failure to act or willful misconduct any property at
any time held for the accounts of the Trust shall be security
therefor. Nothing in this paragraph, however, shall be deemed to
apply to transaction and asset holding fees or out of pocket
expenses of the Custodian which are payable by Nottingham, and as
to such fees and expenses the Custodian shall have no right of
offset or security under this paragraph.
(g) The Custodian agrees to indemnify and hold harmless the Trust and
Trust's Trustees and officers from all taxes, charges, expenses,
assessments, claims liabilities, and losses (including counsel
fees) incurred or assumed against any of them as a result of any
breach or violation of this Agreement by the Custodian or any act
or omission by the Custodian or its Trustees, officers, employees
and agents and resulting from their negligence or willful
misconduct.
(h) In the event that, pursuant to this Agreement, instructions
direct the Custodian to pay for securities on behalf of the
Trust, the Trust hereby grants to the Custodian a security
interest in such Securities, until the Custodian has been
reimbursed by the Trust in immediately available funds. The
instructions designating the Securities to be paid for shall be
considered the requisite description and designation of the
Securities pledged to the Custodian for purposes of the
requirements of the Uniform Commercial Code.
(i) The Custodian represents that it is qualified to act as such
under section 26(a) of the Investment Company Act of 1940.
14. REPORTS BY THE CUSTODIAN.
(a) The Custodian shall furnish the Trust and the appropriate
investment advisor of each series of the Trust, daily with a
statement summarizing all transactions and entries for the
accounts of the Trust. The Custodian shall furnish the Trust at
the end of every month with a list of the portfolio Securities
held by it as Custodian for the Trust, adjusted for all
commitments confirmed by instructions as of such time. The books
and records of the Custodian pertaining to its actions under this
Agreement shall be open to inspection and audit at reasonable
times by officers of the Trust, its independent public
accountants and officers of its investment advisers.
(b) The Custodian will maintain such books and records relating to
transactions effected by it as are required by the Investment
Company Act of 1940, as amended, and any rule or regulation
thereunder; or by any other applicable provision of the law to be
maintained by the Trust or its Custodian, with respect to such
transactions, and preserving or causing to be preserved, any such
books and records for such periods as may be required by any such
rule or regulation.
15. TERMINATION OR ASSIGNMENT.
This agreement may be terminated by the Trust, or by the Custodian, on
sixty (60) days' notice, given in writing and sent by registered mail
to the Custodian, or to the Trust, as the case may be, at the address
hereinafter set forth. Upon any termination of this Agreement, pending
appointment by the Trust of a successor to the Custodian or a vote of
the shareholders of the Trust to dissolve or to function without a
Custodian of its funds, the Custodian shall not deliver funds,
Securities or other property of the Trust to the Trust, but may
deliver them to a bank or trust company of its own selection having an
aggregate capital, surplus, and undivided profits, as shown by its
last published report of not less than ten million dollars
($10,000,000) and otherwise qualified to act as a custodian to a
registered investment company as a Custodian for the Trust to be held
under terms similar to those of this Agreement; provided, however,
that the Custodian shall not be required to make any such delivery or
payment until full payment shall have been made to the Custodian of
all its contractual fees, compensations, costs and expenses, except
for fees and expenses all as set forth in Section 13 of this
Agreement.
16. MISCELLANEOUS.
(a) Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Custodian, shall be
sufficiently given if addressed to the Custodian and mailed or
delivered to it at its office at First Union National Bank of
North Carolina, 401 South Tryon Street, Charlotte, North Carolina
28288, or at such other place as the Custodian may from time to
time designate in writing.
(b) Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Trust, shall be sufficiently
given if addressed to the Trust and mailed or delivered to it at
105 N. Washington Street, Rocky Mount, North Carolina 27802, or
at-such other place as the Trust may from time to time designate
in writing.
(c) This Agreement may not be amended or modified in any manner
except by a written agreement executed by both parties with the
same formality as this Agreement, and authorized or approved by a
resolution of the Board of Trustees of the Trust.
(d) This Agreement shall extend to and shall be binding upon the
parties hereto and their respective successors and assigns,
provided, however, that this Agreement shall not be assignable by
the Trust without the written consent of the Custodian or by the
Custodian without the written consent of the Trust, authorized or
approved by a resolution of its Board of Trustees.
(e) This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but such
counterparts shall, together, constitute but one instrument.
(f) This Agreement and the rights and obligations of the Trust and
the Custodian hereunder shall be construed and interpreted in
accordance with the laws of the State of North Carolina.
(g) The Declaration of Trust of the Trust has been filed with the
Secretary of State of the Commonwealth of Massachusetts. The
obligations of the Trust on behalf of the Funds are not
personally binding upon, nor shall resort be had to the private
property of any of the Trustees, shareholders, officers,
employees or agents of the Trust, but only the Trust's property
shall be bound.
<PAGE>
IN WITNESS WHEREOF, the Trust and the Custodian have caused this Agreement to be
signed and witnessed by duly authorized persons as of the date first written
above. Executed in several counterparts, each of which is an original.
Attest: FIRST UNION NATIONAL BANK OF NORTH CAROLINA
_____________________
By:_________________________________________
Title:______________________________________
Attest: NEW PROVIDENCE INVESTMENT TRUST
_____________________
By:
Title: TREASURER
EXHIBIT 9
FUND ACCOUNTING
DIVIDEND DISBURSING & TRANSFER AGENT,
AND COMPLIANCE ADMINISTRATION
AGREEMENT
THIS AGREEMENT, made and entered into as of the ____________________ by and
between NEW PROVIDENCE INVESTMENT TRUST, a Massachusetts business trust (the
"Trust"), and THE NOTTINGHAM COMPANY, INC., a North Carolina corporation (the
"Administrator").
WHEREAS, the Trust is an open-end management investment company of the series
type which is registered under the Investment Company Act of 1940 (the "1940
Act"); and
WHEREAS, the Administrator is in the business of providing administrative
services to investment companies.
NOW THEREFORE, the Trust and the Administrator do mutually promise and agree as
follows:
1. Employment. The Trust hereby employs Administrator to act as fund
accountant, dividend disbursing and transfer agent and fund administrator
for each Fund of the Trust, unless the Administrator and an individual Fund
of the Trust determine it is in the best interests of that individual Fund
to negotiate a separate Schedule of Compensation under Exhibit C.
Administrator, at its own expense, shall render the services and assume the
obligations herein set forth subject to being compensated therefore as
herein provided.
2. Delivery of Documents. The Trust has furnished the Administrator with
copies properly certified or authenticated of each of the following:
(a) The Trust's Declaration of Trust, as filed with the State of
Massachusetts (such Declaration, as presently in effect and as it
shall from time to time be amended, is herein called the
"Declaration");
(b) The Trust's By-Laws (such By-Laws, as presently in effect and as they
shall from time to time be amended, are herein called the "By-Laws");
(c) Resolutions of the Trust's Board of Trustees authorizing the
appointment of the Administrator and approving this Agreement; and
(d) The Trust's Registration Statement on Form N-1A under the 1940 Act and
under the Securities Act of 1933 as amended, (the "1933 Act"),
including all exhibits, relating to shares of beneficial interest of,
and containing the Prospectus of, each Fund of the Trust (herein
called the "Shares") as filed with the Securities and Exchange
Commission and all amendments thereto.
The Trust will furnish the Administrator with copies, properly certified or
authenticated, of all amendments of or supplements to the foregoing.
3. Duties of the Administrator. Subject to the policies and direction of the
Trust's Board of Trustees, the Administrator will provide a continuous
executive management program and day to day supervision for each of the
Trust's Funds. Services to be provided shall be in accordance with the
Trust's organizational and registration documents as listed in paragraph 2
hereof and with the Prospectus of each Fund of the Trust. The Administrator
further agrees that it:
(a) Will conform with all applicable Rules and Regulations of the
Securities and Exchange Commission and will, in addition, conduct its
activities under this Agreement in accordance with regulations of any
other Federal and State agencies which may now or in the future have
jurisdiction over its activities;
(b) Will maintain, except as may be required to be maintained by third
parties hired by the Trust under Rule 31a-3 of the 1940 Act, the
account books and records of the Trust and each Fund of the Trust as
required by Rule 31a-1 of the 1940 Act and will preserve such records
in accordance with Rule 31a-2 of the 1940 Act;
(c) Will provide, at its expense the necessary non-executive personnel and
data processing equipment and software to perform the Portfolio
Accounting Services, Expense Accrual and Payment Services, Fund
Valuation and Financial Reporting Services, Tax Accounting Services,
Compliance Control Services Registration Services, SEC Filing
Services, Drafting of Board of Trustee Meeting Minutes, and Proxy
Material Services shown on Exhibit A hereof;
(d) Will provide, at its expense the non-executive personnel and data
processing equipment and software necessary to perform the Shareholder
Servicing functions shown on Exhibit B hereof;
(e) Will provide, at its expense, certain executive personnel for the
Trust as may be agreed upon from time to time with the Board of
Trustees; and
(f) Will provide all office space and general office equipment necessary
for the activities of the Trust except as may be provided by third
parties pursuant to separate agreements with the Trust.
Notwithstanding anything contained in this Agreement to the contrary, the
Administrator (including its directors, officers, employees and agents) shall
not be required to perform any of the duties of, assume any of the obligations
or expenses of, or be liable for any of the acts or omissions of, any investment
advisor of a Fund of the Trust or other third party subject to separate
agreements with the Trust. The Administrator shall not be responsible hereunder
for the administration of the Code of Ethics of the Trust which shall be under
the responsibility of the investment advisors, except insofar as the Code of
Ethics applies to the personnel of the Administrator. It is the express intent
of the parties hereto that the Administrator shall not have control over or be
responsible for the placement (except as specifically directed by a Shareholder
of the Trust), investment or reinvestment of the assets of any Fund of the
Trust. The Administrator may from time to time, subject to the approval of the
Trustees, obtain at its own expense the services of consultants or other third
parties to perform part or all of its duties hereunder, and such parties may be
affiliates of the Administrator.
4. Services Not Exclusive. The management and administrative services
furnished by the Administrator hereunder are not to be deemed exclusive,
and the Administrator shall be free to furnish similar services to others
so long as its services under this Agreement are not impaired thereby.
5. Books and Records. In compliance with the requirements of Rule 31a-3 under
the 1940 Act, the Administrator hereby agrees that all records which it
maintains for the Trust are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the Trust's
request.
6. Expenses. During the term of this Agreement, the Administrator will pay all
expenses incurred by it in connection with the performance of its
obligations under this Agreement. Notwithstanding the foregoing, the Trust
shall pay the expenses and costs of the following:
(a) Taxes;
(b) Brokerage fees and commissions with regard to portfolio transaction of
the Funds;
(c) Interest charges, fees and expenses of the custodian of the Funds'
portfolio securities;
(d) Fees and expenses of the Trust's dividend disbursing and transfer
agent, fund accounting agent and administrator, in accordance with
paragraph 7 herein;
(e) Costs, as may be allocable to and agreed upon in advance by the
Trustees and the Administrator, of all non-executive and clerical
personnel and all data processing equipment and software in connection
with the provision of fund accounting and recordkeeping services and
shareholder servicing functions as contemplated herein;
(f) Auditing and legal expenses of the Trust;
(g) Cost of maintenance of the Trust's existence as a legal entity;
(h) Cost of special forms, stationery and telephone services (but not
telephone equipment) for the Trust;
(i) Compensation of Independent Trustees who are not interested persons of
the Trust as that term is defined by law;
(j) Costs of Trust meetings;
(k) Federal and State registration fees and expenses;
(l) Costs of setting in type, printing and mailing Prospectuses, reports
and notices to existing shareholders;
(m) The Advisory fees payable to each Funds' Investment Advisor;
(o) Direct out-of-pocket costs in connection with Trust activities, such
as the costs of long distance telephone and wire charges, postage and
the printing of special forms and stationery, copying charges,
financial publications used in connection with Trust activities, etc.,
and
(p) Other actual out-of-pocket expenses of the Administrator as may be
agreed upon in writing from time to time by the Administrator and the
Trustees.
7. Compensation. For the services provided and the expenses assumed by the
Administrator pursuant to this Agreement, the Trust will pay the
Administrator and the Administrator will accept as full compensation the
administrative fees and expenses as set forth on Exhibit C attached hereto.
Special projects, not included herein and requested in writing by the
Trustees, shall be completed by the Administrator and invoiced to the Trust
as mutually agreed upon.
8.(a)Limitation of Liability. The Administrator shall not be liable for any
loss, damage or liability related to or resulting from the placement
(except as specifically directed by a Shareholder of the Trust), investment
or reinvestment of assets in any Fund of the Trust or the acts or omissions
of any Fund's investment advisor or any other third party subject to
separate agreements with the Trust. Further, the Administrator shall not be
liable for any error of judgment or mistake of law or for any loss or
damage suffered by the Trust in connection with the performance of this
Agreement or any agreement with a third party, except a loss resulting
directly from (i) a breach of fiduciary duty on the part of the
Administrator with respect to the receipt of compensation for services; or
(ii) willful misfeasance, bad faith or gross negligence on the part of the
Administrator in the performance of its duties or from reckless disregard
by it of its duties under this Agreement.
8.(b)Indemnification of Administrator. Subject to the limitations set forth in
this Subsection 8(b), the Trust shall indemnify, defend and hold harmless
(from the assets of the Fund or Funds to which the conduct in question
relates) the Administrator against all loss, damage and liability,
including but not limited to amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, and expenses, including reasonable
accountants' and counsel fees, incurred by the Administrator in connection
with the defense or disposition of any action, suit or other proceeding,
whether civil or criminal, before any court or administrative or
legislative body, related to or resulting from this Agreement or the
performance of services hereunder, except with respect to any matter as to
which it has been determined that the loss, damage or liability is a direct
result of (i) a breach of fiduciary duty on the part of the Administrator
with respect to the receipt of compensation for services; or (ii) willful
misfeasance, bad faith or gross negligence on the part of the Administrator
in the performance of its duties or from reckless disregard by it of its
duties under this Agreement (either and both of the conduct described in
clauses (i) and (ii) above being referred to hereinafter as "Disabling
Conduct"). A determination that the Administrator is entitled to
indemnification may be made by (i) a final decision on the merits by a
court or other body before whom the proceeding was brought that the
Administrator was not liable by reason of Disabling Conduct, (ii) dismissal
of a court action or an administrative proceeding against the Administrator
for insufficiency of evidence of Disabling Conduct, or (iii) a reasonable
determination, based upon a review of the facts, that the Administrator was
not liable by reason of Disabling Conduct by, (a) vote of a majority of a
quorum of Trustees who are neither "interested persons" of the Trust as the
quoted phrase is defined in Section 2(a)(19) of the 1940 Act nor parties to
the action, suit or other proceeding on the same or similar grounds that is
then or has been pending or threatened (such quorum of such Trustees being
referred to hereinafter as the "Independent Trustees"), or (b) an
independent legal counsel in a written opinion. Expenses, including
accountants' and counsel fees so incurred by the Administrator (but
excluding amounts paid in satisfaction of judgments, in compromise or as
fines or penalties), shall be paid from time to time by the Fund or Funds
to which the conduct in question related in advance of the final
disposition of any such action, suit or proceeding; provided, that the
Administrator shall have undertaken to repay the amounts so paid unless it
is ultimately determined that it is entitled to indemnification of such
expenses under this Subsection 8(b) and if (i) the Administrator shall have
provided security for such undertaking, (ii) the Trust shall be insured
against losses arising by reason of any lawful advances, or (iii) a
majority of the Independent Trustees, or an independent legal counsel in a
written opinion, shall have determined, based on a review of readily
available facts (as opposed to a full trial-type inquiry), that there is
reason to believe that the Administrator ultimately will be entitled to
indemnification hereunder.
As to any matter disposed of by a compromise payment by the Administrator
referred to in this Subsection 8(b), pursuant to a consent decree or otherwise,
no such indemnification either for said payment or for any other expenses shall
be provided unless such indemnification shall be approved (i) by a majority of
the Independent Trustees or (ii) by an independent legal counsel in a written
opinion. Approval by the Independent Trustees pursuant to clause (i) shall not
prevent the recovery from the Administrator of any amount paid to the
Administrator in accordance with either of such clauses as indemnification of
the Administrator is subsequently adjudicated by a court of competent
jurisdiction not to have acted in good faith in the reasonable belief that the
Administrator's action was in or not opposed to the best interests of the Trust
or to have been liable to the Trust or its Shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in its conduct under the Agreement.
The right of indemnification provided by this Subsection 8(b) shall not be
exclusive of or affect any of the rights to which the Administrator may be
entitled. Nothing contained in this Subsection 8(b) shall affect any rights to
indemnification to which Trustees, officers or other personnel of the Trust, and
other persons may be entitled by contract or otherwise under law, nor the power
of the Trust to purchase and maintain liability insurance on behalf of any such
person.
The Board of Trustees of the Trust shall take all such action as may be
necessary and appropriate to authorize the Trust hereunder to pay the
indemnification required by this Subsection 8(b) including, without limitation,
to the extent needed, to determine whether the Administrator is entitled to
indemnification hereunder and the reasonable amount of any indemnity due it
hereunder, or employ independent legal counsel for that purpose.
8.(c)The provisions contained in Section 8 shall survive the expiration or
other termination of this Agreement, shall be deemed to include and protect
the Administrator and its directors, officers, employees and agents and
shall inure to the benefit of its/their respective successors, assigns and
personal representatives.
9. Duration and Termination. This Agreement shall be continued, as amended and
restated as provided herein, effective as of the date first above written,
and shall continue in force and effect for a period of one year thereafter
and shall be continued on its terms from year to year thereafter unless
sooner terminated as permitted herein. This Agreement may be terminated at
any time, without payment of any penalty, by the Trust or the Administrator
upon ninety days' written notice to the other party.
10. Amendment. This Agreement may be amended by mutual written consent of the
parties. If, at any time during the existence of this Agreement, the Trust
deems it necessary or advisable in the best interests of the Trust that any
amendment of this Agreement be made in order to comply with the
recommendations or requirements of the Securities and Exchange Commission
or state regulatory agencies or other governmental authority, or to obtain
any advantage under state or federal laws, and shall notify the
Administrator of the form of Amendment which it deems necessary or
advisable and the reasons therefor, and if the Administrator declines to
assent to such amendment, the Trust may terminate this Agreement forthwith.
11. Notice. Any notice that is required to be given by the parties to each
other under the terms of this Agreement shall be in writing, addressed or
delivered, or mailed postpaid to the other party at the principal place of
business of such party.
12. Construction. This Agreement shall be governed and enforced in accordance
with the laws of the State of North Carolina. If any provision of this
Agreement, or portion thereof, shall be determined to be void or
unenforceable by any court of competent jurisdiction, then such
determination shall not affect any other provision of this Agreement, or
portion thereof, all of which other provisions and portions thereof shall
remain in full force and effect. If any provision of this Agreement, or
portion thereof, is capable of two interpretations, one of which would
render the provision, or portion thereof, void and the other of which would
render the provision, or portion thereof, valid, then the provision, or
portion thereof, shall have the meaning which renders it valid.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
by their duly authorized officers effective as of the date indicated above.
NEW PROVIDENCE INVESTMENT TRUST
By:
(SEAL)
THE NOTTINGHAM COMPANY, INC.
By:
(SEAL)
<PAGE>
Exhibit A
FUND ACCOUNTING AND RECORDKEEPING SERVICES
Portfolio Accounting Services:
(1) Maintain portfolio records on a trade date basis using security trade
information communicated from the investment manager on a timely basis.
(2) For each valuation date, obtain prices from a pricing source approved by
the Board of Trustees and apply those prices to the portfolio positions.
For those securities where market quotations are not readily available, the
Board of Trustees shall approve, in good faith, the method for determining
the fair market value for such securities.
(3) Identify interest and dividend accrual balances as of each valuation date
and calculate gross earnings on investments for the accounting period.
(4) Determine gain/loss on security sales and identify them as to short-short,
short or long term status. Account for periodic distributions of gain to
shareholders and maintain undistributed gain or loss balances as of each
valuation date.
Expense Accrual and Payment Services:
(5) For each valuation date, calculate the expense accrual amounts as directed
by the Trust as to methodology, rate, or dollar amount.
(6) Issue payments for Fund expenses upon receipt of funds from the Trust's
Custodian.
(7) Account for Fund expenditures and maintain expense accrual balances at the
level of accounting detail specified by the Fund.
(8) Support periodic expense accrual review, i.e., comparison of actual expense
activity versus accrual amounts.
(9) Provide expense accrual and payment reporting.
Fund Valuation and Financial Reporting Services:
(10) Account for Fund share purchases, sales, exchanges, transfers, dividend
reinvestments, and other Fund share activity, for each of the Funds, as
reported by the Trust on a timely basis.
(11) Determine net investment income (earnings) for each of the Funds as of each
valuation date. Account for periodic distributions of earnings to
shareholders and maintain undistributed net investment income balances as
of each valuation date.
(12) Maintain a general ledger for each of the Funds in the form defined by the
Trust and produce a set of financial statements as may be agreed upon from
time to time as of each valuation date.
(13) For each day the Funds are opened as defined in the prospectuses, determine
the net asset value of each of the Funds according to the accounting
policies and procedures set forth in the prospectuses.
(14) Calculate per share net asset value, per share net earnings, and other per
share amounts reflective of fund operation at such time as required by the
nature and characteristics of the Funds. Perform the calculations using the
number of shares outstanding reported by the Trust to be applicable at the
time of calculation.
(15) Communicate, at an agreed upon time, the per share price for each valuation
date to parties as agreed upon from time to time.
(16) Prepare monthly reports which document the adequacy of accounting detail to
support month-end ledger balances.
Tax Accounting Services:
(17) Maintain tax accounting records for each of the Funds' investment portfolio
so as to support tax reporting required for IRS defined regulated
investment companies.
(18) Maintain tax lot detail for the investment portfolio.
(19) Calculate taxable gain/loss on security sales using the tax cost basis
defined for each Fund.
(20) Report the taxable components of income and capital gains distributions to
the Trust to support tax reporting to the shareholders.
Compliance Control Services:
(21) Maintain accounting records to support compliance monitoring by the Trust.
(22) Support reporting to regulatory bodies and support financial statement
preparation by making the Fund accounting records available to the Trust,
the Securities and Exchange Commission, and the outside auditors.
(23) Maintain accounting records according to the Investment Company Act of 1940
and regulations provided thereunder.
Registration Services
(24) Prepare all reports and filings required to maintain the registration and
qualification of the Fund and its shares under federal and state securities
laws, including the annual amendment to its Registration Statement on From
N-1A containing an updated a Prospectus and Statement of Additional
Information.
SEC Filing Services
(25) Prepare and make periodic SEC filings, including From N-SAR, annual and
semi-annual shareholder reports, other shareholder reports, and fidelity
bond amendments but not including preparation and filing of any sales
literature and preparation of President's letter contained in shareholder
reports.
Minutes, Proxy Material Services
(26) Preparation of minutes and other records of meetings of the Board of
Trustees.
(27) Preparation of any proxy material and related shareholder meetings and
records.
<PAGE>
Exhibit B
SHAREHOLDER SERVICING FUNCTIONS
(1) Process new accounts.
(2) Process purchases, both initial and subsequent in accordance with
conditions set forth in the Fund's prospectus.
(3) Transfer shares of capital stock to an existing account or to a new account
upon receipt of required documentation in good order.
(4) Distribute dividends and/or capital gain distributions. This includes
disbursement as cash or reinvestment and to change the disbursement option
at the request of shareholders.
(5) Process exchanges between funds, (process and direct purchase/redemption
and initiate new account or process to existing account).
(6) Make miscellaneous changes to records, including, but not necessarily
limited to, address changes and changes in plans (such as systematic
withdrawal, dividend reinvestment, etc.).
(7) Prepare and mail a year-to-date confirmation and statement as each
transaction is recorded in a shareholder account as follows: original to
shareholder. Duplicate confirmations to be available on request within
current year.
(8) Handle telephone calls and correspondence in reply to shareholder requests
except those items otherwise set forth herein.
(9) Daily control and reconciliation of Fund shares.
(10) Prepare address labels or confirmations for four reports to shareholders
per year.
(11) Mail and tabulate proxies for one Meeting of Shareholders annually,
including preparation of certified shareholder list and daily report to
Fund management, if required.
(12) Prepare and mail annual Form 1099, Form W-2P and 5498 to shareholders to
whom dividends or distributions are paid, with a copy for the IRS.
(13) Provide readily obtainable data which may from time to time be requested
for audit purposes.
(14) Replace lost or destroyed checks.
(15) Continuously maintain all records for active and closed accounts according
to the Investment Company Act of 1940 and regulations provided thereunder.
(16) Furnish shareholder data information for a current calendar year in
connection with IRA and Keogh Plans in a format suitable for mailing to
shareholders.
<PAGE>
Exhibit C
ADMINISTRATOR'S COMPENSATION SCHEDULE
For the services delineated in the FUND ACCOUNTING, DIVIDEND DISBURSING &
TRANSFER AGENT AND COMPLIANCE ADMINISTRATION AGREEMENT, the Administrator shall
be compensated monthly, as of the last day of each month, within five business
days of the month end, a base fee plus a fee based upon net assets according to
the following schedule. The fee is calculated based upon the average daily net
assets of each Fund:
Base fee $2,250 per month
Class Fee: $ 750 per month for each additional Class
Asset based fee
Annual
Net Assets Fee
On the first $50 million 0.125%
On the next $50 million 0.100%
On all assets over $100 million 0.075%
Shareholder servicing fee
$15.00 per shareholder per year; minimum fee of $750 per month
Securities pricing
$0.15 per equity per pricing day priced
$0.20 per U.S. Treasury
$0.40 per asset backed security per pricing day
$0.40 per corporate bond per pricing day
$2.00 per equity per month for corporate action
Blue Sky administration
$150 per registration per state per year
EXHIBIT 15
PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1
WHEREAS, New Providence Investment Trust, an unincorporated business trust
organized and existing under the laws of the Commonwealth of Massachusetts (the
"Trust"), engages in business as an open-end management investment company and
is registered as such under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Trust is authorized to issue an unlimited number of shares of
beneficial interest (the "Shares"), in separate series representing the
interests in separate funds of securities and other assets; and
WHEREAS, the Trust offers a series of such Shares representing interests in the
NEW PROVIDENCE GROWTH CAPITAL FUND (the "Fund") of the Trust;
WHEREAS, the Trustees of the Trust as a whole, and the Trustees who are not
interested persons of the Trust (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of this Plan or in any
agreement relating hereto (the "Non-Interested Trustees"), having determined, in
the exercise of reasonable business judgment and in light of their fiduciary
duties under state law and under Section 36(a) and (b) of the 1940 Act, that
there is a reasonable likelihood that this Plan will benefit the Trust and its
shareholders, have approved this Plan by votes cast at a meeting called for the
purpose of voting hereon and on any agreements related hereto; and
NOW, THEREFORE, the Trust hereby adopts this Plan in accordance with Rule 12b-1
under the 1940 Act, on the following terms and conditions:
1. Distribution and Servicing Activities. Subject to the supervision of the
Trustees of the Trust, the Trust may, directly or indirectly, engage in any
activities primarily intended to result in the sale of Institutional Shares
of the Fund, which activities may include, but are not limited to, the
following: (a) payments to the Trust's Distributor and to securities
dealers and others in respect of the sale of Institutional Shares of the
Fund; (b) payment of compensation to and expenses of personnel (including
personnel of organizations with which the Trust has entered into agreements
related to this Plan) who engage in or support distribution of
Institutional Shares of the Fund or who render shareholder support services
not otherwise provided by the Trust's transfer agent, administrator, or
custodian, including but not limited to, answering inquiries regarding the
Trust, processing shareholder transactions, providing personal services
and/or the maintenance of shareholder accounts, providing other shareholder
liaison services, responding to shareholder inquiries, providing
information on shareholder investments in the Fund, and providing such
other shareholder services as the Trust may reasonably request; (c)
formulation and implementation of marketing and promotional activities,
including, but not limited to, direct mail promotions and television,
radio, newspaper, magazine and other mass media advertising; (d)
preparation, printing and distribution of sales literature; (e)
preparation, printing and distribution of prospectuses and statements of
additional information and reports of the Trust for recipients other than
existing shareholders of the Trust; and (f) obtaining such information,
analyses and reports with respect to marketing and promotional activities
as the Trust may, from time to time, deem advisable. The Trust is
authorized to engage in the activities listed above, and in any other
activities primarily intended to result in the sale of Institutional Shares
of the Fund, either directly or through other persons with which the Trust
has entered into agreements related to this Plan.
2. Maximum Expenditures. The expenditures to be made by the Trust pursuant to
this Plan and the basis upon which payment of such expenditures will be
made shall be determined by the Trustees of the Trust, but in no event may
such expenditures exceed an amount calculated at the rate of 0.25% per
annum of the average daily net asset value of the Institutional Shares of
the Fund for each year or portion thereof included in the period for which
the computation is being made, elapsed since the inception of this Plan to
the date of such expenditures. Notwithstanding the foregoing, in no event
may such expenditures paid by the Trust as service fees exceed an amount
calculated at the rate of 0.25% of the average annual net assets of the
Institutional Shares of the Fund, nor may such expenditures paid as service
fees to any person who sells Institutional Shares of the Fund exceed an
amount calculated at the rate of 0.25% of the average annual net asset
value of such shares. Such payments for distribution and shareholder
servicing activities may be made directly by the Trust or to other persons
with which the Trust has entered into agreements related to this Plan.
3. Term and Termination.
(a) This Plan shall become effective as of the _________ October, 1997.
Unless terminated as herein provided, this Plan shall continue in
effect for one year from the date hereof and shall continue in effect
for successive periods of one year thereafter, but only so long as
each such continuance is specifically approved by votes of a majority
of both (i) the Trustees of the Trust and (ii) the Non-Interested
Trustees, cast at a meeting called for the purpose of voting on such
approval.
(b) This Plan may be terminated at any time with respect to the Fund by a
vote of a majority of the Non-Interested Trustees or by a vote of a
majority of the outstanding voting securities of the Investor Class of
the Fund as defined in the 1940 Act.
4. Amendments. This Plan may not be amended to increase materially the maximum
expenditures permitted by Section 2 hereof unless such amendment is
approved by a vote of the majority of the outstanding voting securities of
the Investor Class of the Fund as defined in the 1940 Act with respect to
which a material increase in the amount of expenditures is proposed, and no
material amendment to this Plan shall be made unless approved in the manner
provided for annual renewal of this Plan in Section 3(a) hereof.
5. Selection and Nomination of Trustees. While this Plan is in effect, the
selection and nomination of the Non-Interested Trustees of the Trust shall
be committed to the discretion of such Non-Interested Trustees.
6. Quarterly Reports. The Treasurer of the Trust shall provide to the Trustees
of the Trust and the Trustees shall review quarterly a written report of
the amounts expended pursuant to this Plan and any related agreement and
the purposes for which such expenditures were made.
7. Recordkeeping. The Trust shall preserve copies of this Plan and any related
agreement and all reports made pursuant to Section 6 hereof, for a period
of not less than six years from the date of this Plan. Any such related
agreement or such reports for the first two years will be maintained in an
easily accessible place.
8. Limitation of Liability. Any obligations of the Trust hereunder shall not
be binding upon any of the Trustees, officers or shareholders of the Trust
personally, but shall bind only the assets and property of the Trust. The
term "New Providence Investment Trust" means and refers to the Trustees
from time to time serving under the Agreement and Declaration of Trust of
the Trust, a copy of which is on file with the Secretary of The
Commonwealth of Massachusetts. The execution of this Plan has been
authorized by the Trustees, and this Plan has been signed on behalf of the
Trust by an authorized officer of the Trust, acting as such and not
individually, and neither such authorization by such Trustees nor such
execution by such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but
shall bind only the assets and property of the Trust as provided in the
Agreement and Declaration of Trust.
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IN WITNESS THEREOF, the parties hereto have caused this Plan to be executed as
of the date written above.
NEW PROVIDENCE INVESTMENT TRUST
By__________________________________
NEW PROVIDENCE GROWTH CAPITAL FUND
By__________________________________
