Registration Nos. 33-_______
811-______
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 30, 1997.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 /x/
Pre-Effective Amendment No. / /
Post-Effective Amendment No. / /
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 /x/
Amendment No. / /
(Check appropriate box or boxes)
BLUE RIDGE FUNDS TRUST
(Exact name of registrant as specified in charter)
107 North Washington Street
Post Office Box 4365
Rocky Mount, North Carolina 27803-0365
(Address of principal executive offices)
Registrant's Telephone Number, including area code: (800)-525-3863
Jeffrey M. Doyon, President
Blue Ridge Advisors, Inc.
84 Villa Road, B37
Greenville, S.C. 29615
(Name and address of agent for service)
Please send copies of all communications to:
Jane A. Kanter, Esq.
Dechert Price & Rhoads
1500 K Street, N.W.
Suite 500
Washington, D.C. 20005
Approximate date of proposed public offering: As soon as practicable after the
effective date of this 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 under the Investment Company Act of
1940, an indefinite number of shares of beneficial interest is being registered
by this Registration Statement.
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BLUE RIDGE FUNDS TRUST
Contents of Registration Statement
This registration statement consists of the following papers and documents:
Cover Sheet
Contents of Registration Statement
Cross Reference Sheet
Part A - Prospectuses
Part B - Statement of Additional Information
Part C - Other Information
Signature Page
Exhibits
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BLUE RIDGE FUNDS TRUST
CROSS REFERENCE SHEET
REGISTRATION STATEMENT
<TABLE>
<S> <C>
PART A. ITEM NO. AND CAPTIONS CAPTION IN PROSPECTUS
1. Cover Page Cover Page
2. Synopsis Summary
3. Condensed Financial Information Not Applicable
4. General Description of Registrant The Trust and the Fund; Investment Objectives
and Policies; Investment Limitations; General
Information - - The Trust
5. Management of the Fund General Information - - Trustees of the Trust;
General Information - - The Manager; General
Information - - The Administrator; General
Information - - The Transfer Agent. General
Information - - The Distributor
6. Capital Stock and Other Securities General Information - - Voting Rights; General
Information - - Dividends and Distributions;
Taxes
7. Purchase of Securities Being Offered How to Purchase Fund Shares; How to Redeem
Fund Shares; Share Price
8. Redemption or Repurchase How to Purchase Fund Shares; How to Redeem
Fund Shares; Determination of Net Asset Value
9. Pending Legal Proceedings Not Applicable
PART B. ITEM NO. AND CAPTIONS CAPTION IN STATEMENT OF ADDITIONAL INFORMATION
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History The Trust
13. Investment Objectives and Policies Description of Permitted Investments;
Investment Limitations; Description of Shares
14. Management of the Fund Trustees and Officers of the Trust; The
Administrator
16. Investment Advisory and Other Services The Manager; The Administrator and Transfer
Agent; The Distributor
17. Brokerage Allocation and Other Practices Portfolio Transactions
18. Capital Stock and Other Securities Description of Shares
19. Purchase, Redemption, and Pricing of Securities Purchase and Redemption of Shares;
Being Offered Determination of Net Asset Value
20. Tax Status Taxes
21. Underwriters The Distributor
22. Calculation of Performance Data Calculation of Total Return
23. Financial Statements Not Applicable
PART C. Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration Statement.
</TABLE>
<PAGE>
BLUE RIDGE FUNDS TRUST
PROSPECTUS DATED DECEMBER 1, 1997
The Blue Ridge Funds Trust (the "Trust") is an open-end management investment
company currently consisting of one series, the Blue Ridge Total Return Fund (
"Total Return Fund" or "Fund"). The Total Return Fund offers a convenient and
economical means of investing in a professionally managed portfolio of
securities. The investment objective of the Total Return Fund is to seek total
return from a combination of capital appreciation and current income.
The Trust offers two classes of shares on behalf of the Fund: Class _____ shares
offered hereby and Class _____ shares offered pursuant to another prospectus.
This Prospectus sets forth concisely the information about the Trust and the
Fund that a prospective investor should know before investing. Investors are
advised to read this Prospectus and retain it for future reference. A Statement
of Additional Information dated December 1, 1997 has been filed with the
Securities and Exchange Commission and is available upon request and without
charge by calling 1-800-525-3863. The Statement of Additional Information is
incorporated into this Prospectus by reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
Mutual fund shares are not deposits or obligations of, or guaranteed by, any
depository institution. Shares are not insured by the FDIC, The Federal Reserve
Board, or any other agency, and are subject to investment risk, including the
possible loss of principal.
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TABLE OF CONTENTS
Summary............................... How to Redeem Fund Shares ...........
Expense Summary .................... Other Information About Your
The Trust and the Fund................ Account............................
Investment Objectives and Policies.... Determination of Net Asset Value.....
Investment Limitations................ Performance Advertising..............
How to Purchase Fund Shares........... Taxes................................
Shareholder Services.................. General Information..................
Glossary of Permitted Investments....
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SUMMARY
The Trust is an open-end management investment company which provides a
convenient way to invest in a professionally managed diversified portfolio of
securities. This summary provides basic information about the Total Return Fund.
This summary is qualified in its entirety by reference to the more detailed
information provided elsewhere in this Prospectus and in the Statement of
Additional Information.
What is the Investment Objective of the Fund? The Total Return Fund seeks total
return from a combination of capital appreciation and current income.
What Are The Principal Risks Involved With An Investment In The Fund? The Fund
invests in securities that fluctuate in value, and investors should expect the
Fund's net asset value per share to fluctuate. The Fund may write covered call
and put options and may purchase put options on securities and stock indices.
The Fund also may enter into futures contracts for hedging purposes only. The
primary risks associated with the use of futures contracts and options are (i)
imperfect correlation between the change in market value of the stocks held by
the Fund and the prices of the futures contracts and options, and (ii) possible
lack of a liquid secondary market for a futures contract and the resulting
inability to close a futures position prior to its maturity date. See
"Investment Objectives and Policies" and "Glossary of Permitted Investments."
Who Is The Manager? Blue Ridge Advisors, Inc. ("Manager") serves as the
investment manager to the Fund. See "Expense Summary" and "The Manager."
Who Is The Administrator? The Nottingham Company provides administrative and
fund accounting services to the Fund. See "The Administrator."
Who Is the Transfer Agent? NC Shareholder Services, LLC provides the Fund with
transfer agency, dividend disbursing, and shareholder servicing agent services.
See "The Transfer Agent."
Who Is the Distributor? Capital Investment Group, Inc. provides the Fund with
distribution services. See "The Distributor."
Is There A Sales Load? No, shares of the Fund are offered on a no-load basis.
Is There A Minimum Initial Investment? The Fund has a minimum initial investment
of $5,000 for regular accounts and $2,000 for Individual Retirement Accounts
("IRAs") and other tax-deferred retirement plans.
How Do I Purchase And Redeem Shares? Purchases and redemptions may be made on
any day on which the New York Stock Exchange is open for business ("Business
Day"). A purchase order will be effective as of the Business Day received by the
Trust if the Trust receives sufficient information to execute the order and
receives payment by check or readily available funds prior to 4:00 p.m., Eastern
time. Redemption orders placed with the Trust prior to 4:00 p.m., Eastern time
on any Business Day will be effective that day. The purchase and redemption
price for shares is the net asset value per share of the Fund determined as of
the end of the day the order is effective. Purchases and redemptions also may be
made through certain broker-dealers and other financial institutions. The Trust
also offers a Systematic Investment Plan and a Systematic Withdrawal Plan. See
"Shareholder Services."
EXPENSE SUMMARY
The purpose of the following table is to help you understand the various costs
and expenses that you, as a shareholder, will bear directly or indirectly in
connection with an investment in shares of the Fund.
ANNUAL OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees 1.65%
12b-1 Fees None
Other Expenses 0.00%
-----
Total Operating Expenses 1.65%
For a more detailed discussion of the Fund's fees and expenses, see "The
Manager." The Manager, not the Fund, pays for the ordinary expenses of the Fund,
including administrative, fund accounting, transfer agency, dividend disbursing,
custodial, distribution, auditing, and ordinary legal expenses.
Example: An investor in the Fund would pay the following expenses on a $1,000
investment assuming (i) 5% annual return, and (2) redemption at the end of each
period.
----------------------------------------
1 year $17
----------------------------------------
3 years $52
----------------------------------------
This example is designed for information purposes only and should not be
considered a representation of past or future expenses. Actual expenses may be
greater or less than those shown. The purposes of this table is to assist an
investor in understanding the various costs and expenses that may be directly or
indirectly borne by investors in the Fund. See "The Manager."
THE TRUST AND THE FUND
The Trust is an open-end management investment company that currently offers
shares in one separate series, the Total Return Fund. Each share of the Total
Return Fund represents an undivided interest in the Total Return Fund.
Additional information pertaining to the Trust or the Total Return Fund may be
obtained by writing the Trust, 107 North Washington Street, Post Office Box
4365, Rocky Mount, North Carolina 27803-0365, or by calling 1-800-525-3863.
The Trust offers two classes of shares on behalf of the Fund: Class ___shares
and Class ___ shares. Class __shares are offered pursuant to another prospectus
and are subject to the same expenses as the Class ___ shares, but unlike the
Class __shares are subject to a front-end sales load. Inquiries regarding Class
____shares should be addressed to the Trust at 107 North Washington Street, Post
Office Box 4365, Rocky Mount, North Carolina 27803-0365 or by calling
1-800-525-3863.
INVESTMENT OBJECTIVES AND POLICIES
Total Return Fund
The Total Return Fund seeks total return from a combination of capital
appreciation and current income. In seeking to achieve its objective, the Fund
may at times emphasize investments that produce capital appreciation and at
other times may emphasize investments that produce income, or it may do both.
The Fund's Manager does not allocate the Fund's assets according to any formula
or fixed ratio. Under normal circumstances, however, the Fund will invest in
securities to seek both capital appreciation and current income.
The Fund's investments are not limited to any specific type of securities. In
general, when seeking capital appreciation, the Fund emphasizes common stocks of
medium to large capitalization companies (i.e., companies having a minimum
market capitalization of at least $1 billion at the time of purchase). When
seeking income, the Fund may purchase a variety of investment grade debt
securities, convertible securities, preferred stocks, and dividend paying common
stocks.
In selecting securities for the Fund, the Manager may employ a variety of
investment techniques and styles. However, under normal circumstances, the
Manager uses a value-oriented investment approach (searching for companies whose
stocks are undervalued or out-of-favor) in selecting common stocks for capital
appreciation purposes.
The Fund may try to hedge against losses in the value of its portfolio
securities by using various derivative securities, including, writing covered
call options on securities and stock indices, purchasing put options on
securities and stock indices, and purchasing or selling stock index future
contracts and options on such contracts. The Fund may also write covered call
options on up to 50% of the Fund's total assets in order to enhance income and
purchase call options to close open positions. In addition, the Fund may write
covered puts to enhanced income (anticipating that during the option period the
price of the underlying security will remain stable or rise) or to acquire the
underlying security at net cost below the current value.
The Fund may also invest up to 5% of its total assets in securities of foreign
issuers. The Fund may also hold high quality commercial paper, short-term
corporate bonds, short-term securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities, and other cash equivalents for a
variety of purposes, including to provide liquidity, as a temporary investment
pending the purchase of other securities, or when the Manger believes that the
market is unfavorable for other types of investments.
The Fund is designed for investors seeking total return over the long term.
There can be no assurance that the Fund will be successful in meeting its
objective.
For additional information regarding permitted investments for the Fund, and
their risks see "Glossary of Permitted Investments" and the Statement of
Additional Information.
Temporary Defensive Positions
Under normal market conditions, the Fund expects to be fully invested in the
securities described directly above. However, for temporary defensive purposes,
when the Manager determines that market conditions warrant, the Fund may invest
up to 100% of its assets in cash and money market instruments (consisting of
securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities; certificates of deposit, time deposits and bankers'
acceptances issued by banks or savings and loan associations having net assets
of at least $500 million as stated on their most recently published financial
statements; commercial paper rated in one of the two highest rating categories
by at least one nationally recognized statistical rating organization;
repurchase agreements involving such securities; and, to the extent permitted by
applicable law and the Fund's investment restrictions, shares of other
investment companies investing solely in money market securities). To the extent
the Fund is invested in temporary defensive instruments, it will not be pursuing
its investment objective. See "Glossary of Permitted Investments" and the
Statement of Additional Information for further information about such
investments.
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 will tend to rise during periods of economic turbulence and
decline during periods of stable growth. It is expected that under normal market
conditions, the annual portfolio turnover rate for the Fund will not exceed
200%. High rates of portfolio turnover necessarily result in correspondingly
greater brokerage and fund trading costs, which are paid by the Fund. In
addition to greater portfolio trading costs, high rates of portfolio turnover
may result in the realization of short-term capital gains. To the extent
short-term capital gains are realized, any distributions resulting from such
gains will be considered ordinary income for federal income tax purposes.
INVESTMENT LIMITATIONS
The investment objective of the Fund, the investment limitations set forth below
and certain investment limitations contained in the Statement of Additional
Information are fundamental policies of the Fund. The Fund's fundamental
policies cannot be changed without the consent of the holders of a majority of
the Fund's outstanding shares.
The Fund, as a fundamental policy, may not:
1. With respect to 75% of the Fund's total assets, purchase securities of any
issuer (except securities issued or guaranteed by the United States, its
agencies or instrumentalities and repurchase agreements involving such
securities) if, as a result, more than 5% of the total assets of the Fund would
be invested in the securities of such issuer.
2. Purchase any securities which would cause 25% or more of the total assets of
the Fund to be invested in the securities of one or more issuers conducting
their principal business activities in the same industry, provided that this
limitation does not apply to investments in obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities and repurchase agreements
involving such securities. For purposes of this limitation, (i) utility
companies will be divided according to their services, for example, gas
distribution, gas transmission, electric and telephone will each be considered a
separate industry, and (ii) financial service companies will be classified
according to the end users of their services, for example, automobile finance,
bank finance and diversified finance will each be considered a separate
industry. For purposes of this limitation, supranational organizations are
deemed to be issuers conducting their principal business activities in the same
industry.
3. Borrow money except for temporary or emergency purposes and then only in an
amount not exceeding 331/3% of the value of the Fund's total assets. This
borrowing provision is included solely to facilitate the orderly sale of
portfolio securities to accommodate substantial redemption requests if they
should occur and is not for investment purposes. All borrowings in excess of 5%
of the Fund's total assets will be repaid before making investments.
The foregoing percentages will apply at the time of the purchase of a security.
HOW TO PURCHASE FUND SHARES
An investor may purchase shares of the Fund at the public offering price
directly through the Distributor or from a securities firm or broker-dealer
having a sales agreement with the Distributor or a bank having an agency
agreement with the Distributor. Such financial institutions may charge you a fee
for this service in addition to the Fund's public offering price. Except as
provided below, the minimum initial investment for a regular account is $5,000.
The minimum initial investment for a tax-deferred retirement plan (such as IRAs,
SEP-IRAs, Keoghs, 401(k) plans, 403(b) plans and other corporate pension and
profit-sharing plans is $2,000. The minimum initial purchase under the Trust's
Systematic Investment Plan is $1,000. The minimum additional investment for any
account is $100. The Fund, in the Manager's sole discretion, may accept accounts
or investments with less than the stated minimum investment.
You may place orders by mail, wire or telephone. If market conditions are
extraordinarily active, or if severe weather or other emergencies exist, and you
experience difficulties placing orders by telephone, you may wish to consider
placing your order by other means, such as mail or overnight delivery.
Neither the Trust, the Transfer Agent, nor the Distributor will be responsible
for any loss, liability, cost or expenses for acting upon wire instructions or
upon telephone instructions that such entity reasonably believes to be genuine.
The Trust, the Transfer Agent, and the Distributor will each employ reasonable
procedures to confirm that instructions communicated by telephone are genuine
including requiring a form of personal identification prior to acting upon
instructions received by telephone.
Purchases By Mail
Investors may purchase shares of the Fund by completing and signing the Account
Application accompanying this Prospectus and mailing it, along with a check (or
other negotiable bank instrument or money order) payable to the Fund to:
Blue Ridge Funds Trust
107 North Washington Street
Post Office Box 4365
Rocky Mount, North Carolina 27803-0365
The Fund will not accept third party checks, i.e., a check not payable to the
Trust or the Fund for initial or subsequent investments.
Purchases By Wire
Investors may also purchase shares of the Fund by bank wire. Investments by wire
will not be accepted until an Account Application, indicating such election has
been made, has been received by the Fund's [Transfer Agent/Administrator] by
mail or facsimile. Prior to making an initial or additional investment by wire
an investor should telephone the Fund at 1-800-525-3863. Federal funds and
registration instructions should be wired through the Federal Reserve System to:
First Union National Bank of North Carolina
Charlotte, North Carolina
ABA No. 05300219
FBO:
Blue Ridge Funds Trust
Account No. [please provide the Trust's account number]
For further credit to: [your name and social security or
tax identification number]
Your bank may impose a fee for investments by wire.
Additional Purchases By Phone (Telephone Purchase Authorization)
If you have made this election on your Account Application, you may purchase
additional shares by telephoning the Fund at 1-800-525-3863. The minimum
telephone purchase is $100 and the maximum is one (1) times the net asset value
of shares held by the shareholder on the day preceding such telephone purchase
for which payment has been received. The telephone purchase will be made at the
public offering price next computed after the receipt of the telephone call by
the Fund. Payment for the telephone purchase must be received by the Fund within
five (5) days. If payment is not received within five (5) days, you will be
liable for all losses incurred as a result of the cancellation of such purchase.
Purchases by ACH
If you have made this election on your Account Application, shares of the Fund
may be purchased via Automated Clearing House ("ACH"). Investors purchasing via
ACH should complete the bank information section on the Account Application and
attach a voided check or deposit slip to the Account Application. This option
must be established on your account at least fifteen (15) days prior to you
initiating an ACH transaction.
General Information Regarding Purchases
A purchase order will be effective as of the day received by the Trust if the
Trust receives sufficient information to execute the order and receives payment
before 4:00 p.m. Eastern time. Payment may be made by check or readily available
funds. The public offering price of shares of the Fund is the net asset value
per share next determined after a purchase order is effective. Purchases will be
made in full and fractional shares of the Fund calculated to three decimal
places. The Trust will not issue certificates representing shares of the Fund.
In order for your purchase order to be effective on the day you place your order
with your broker-dealer or other financial institution, such broker-dealer or
financial institution must (i) receive your order before 4:00 p.m. Eastern time
and (ii) promptly transmit the order to the Distributor. See "Determination of
Net Asset Value" below. The broker-dealer or financial institution is
responsible for promptly transmitting purchase orders to the Distributor so that
you may receive the same day's net asset value.
If a check received for the purchase of shares does not clear, the purchase will
be canceled, and you could be liable for any losses or fees incurred. The Trust
reserves the right to reject a purchase order when the Trust determines that it
is not in the best interests of the Fund or its shareholders to accept such
order.
SHAREHOLDER SERVICES
Shareholder Inquiries And Services Offered
If you have any questions about the Fund or the shareholder services described
below, please call the Trust at 1-800-525-3863. Written inquiries should be sent
to the Trust at 107 North Washington Street, Post Office Box 4365, Rocky Mount,
North Carolina 27803-0365. The Trust reserves the right to amend the shareholder
services described below or to change the terms or conditions relating to such
services upon sixty (60) days' notice to shareholders. You may, however,
discontinue any service you select, provided that the Trust receives your
notification to discontinue such service(s) at least ten (10) days before the
next scheduled investment or withdrawal date.
Systematic Investment and Systematic Withdrawal Plans
For your convenience, the Trust provides plans that enable you to add to your
investment or withdraw from your account(s) with a minimum of paperwork. You can
utilize these plans by simply completing the appropriate sections of the Account
Application.
(1) Systematic Investment Plan. The Systematic Investment Plan is a convenient
way for you to purchase shares in the Fund at regular monthly or quarterly
intervals selected by you. The Systematic Investment Plan enables you to achieve
dollar-cost averaging with respect to investments in the Fund despite its
fluctuating net asset value through regular purchases of a fixed dollar amount
of shares in the Fund. Dollar-cost averaging brings discipline to your
investing. Dollar-cost averaging results in more shares being purchased when the
Fund's net asset value is relatively low and fewer shares being purchased when
the Fund's net asset value is relatively high, thereby helping to decrease the
average price of your shares. Investors who establish a Systematic Investment
Plan may open an account with a minimum balance of $1,000.
Through the Systematic Investment Plan, shares are purchased by transferring
monies (minimum of $100 per transaction) from your designated checking or
savings account. Your systematic investment in the Fund will be processed on a
regular basis at your option beginning on or about either the first or
twenty-first (21st) day of the month or quarter you select. This Systematic
Investment Plan must be established on your account at least fifteen (15) days
prior to the intended date of your first systematic investment.
(2) Systematic Withdrawal Plan. The Systematic Withdrawal Plan provides a
convenient way for you to receive current income while maintaining your
investments in the Fund. The Systematic Withdrawal Plan permits you to have
payments of $100 or more automatically transferred from your account(s) in the
Fund to your designated checking or savings account on a monthly, quarterly, or
semi-annual basis. The Systematic Withdrawal Plan also provides the option of
having a check mailed to the address of record for your account. In order to
start this Plan, you must have a minimum balance of $10,000 in any account using
this feature. Your systematic withdrawals will be processed on a regular basis
beginning on or about either the first or fifteenth day of the month, quarter or
semi-annual period you select.
Tax-Sheltered Retirement Plans
Shares of the Fund may be purchased by all types of tax-deferred retirement
plans, including IRAs, SEP-IRA plans, Keoghs, 401(k) plans, 403(b) plans and
other corporate pension and profit-sharing plans. Documentation for these types
of plans is available from the Fund's custodian. Investors should consult with
their tax advisors before establishing any of the tax-deferred retirement plans
described above.
Certain Special Accounts
The Trust offers the following special accounts to meet your needs:
(1) Uniform Gift to Minors/Uniform Transfers to Minors. By establishing a
Uniform Gift to Minors Account/Uniform Transfers to Minors Account with the
Trust you can build a fund for your children's education or a nest egg for their
future and, at the same time, potentially reduce your own income taxes.
(2) Custodial and Fiduciary Accounts. The Trust provides a convenient means of
establishing custodial and fiduciary accounts for investors with fiduciary
responsibilities.
For further information regarding any of the above accounts, please call toll
free at 1-800-525-3863.
HOW TO REDEEM FUND SHARES
Shares of the Fund may be redeemed at their net asset value next determined
after a redemption request in proper form is received by the Trust. Payment of
redemption proceeds will be made as promptly as possible and, in any event,
within seven (7) days after the redemption order is received, provided that
redemption proceeds for shares purchased by check or by ACH will be forwarded
only upon collection of payment for such shares; collection of payment may take
up to fifteen (15) days. Shares may also be redeemed through certain
broker-dealers and other financial institutions at which you maintain an
account. Such financial institutions may charge you fee for this service. Any
redemption proceeds may be more or less than the public offering price for the
shares, depending on the market value of the Fund's portfolio securities.
In order for your redemption order to be effective on the day you place your
redemption order with your broker-dealer or other financial institution, such
broker-dealer or financial institution must (i) receive your order before 4:00
p.m. Eastern time and (ii) promptly transmit the order to the Distributor. See
"Determination of Net Asset Value" below. The broker-dealer or other financial
institution is responsible for promptly transmitting redemption orders to the
Distributor so that your shares are redeemed at the same day's net asset value
per share.
You may receive redemption payments in the form of a check or by Federal Reserve
or ACH wire transfer.
Redemption By Mail
There is no charge for having a check for redemption proceeds mailed to you.
Your written redemption request should be addressed to the Blue Ridge Funds
Trust, 107 North Washington Street, Post Office Box 4365, Rocky Mount, North
Carolina 27803-0365. Your request for redemption must include:
* Your letter of instruction specifying 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;
* Any required signature guarantees (see "Signature Guarantees" below); and
* Other supporting legal documents, if required in the case of estates,
trusts, guardianships, custodianships, corporations, partnerships, pension
or profit sharing plans, and other organizations.
Redemption By Telephone
Shares may be redeemed by telephone if you elect that option on the Account
Application and if you confirm all telephonic redemption requests in writing.
Written confirmation of telephone redemption requests may be made by sending a
facsimile to 1-919-972-1908. Shares held in tax-sheltered or retirement accounts
are not eligible for this option and must be redeemed by written request.
Telephone redemption requests may be made by calling the Trust at
1-800-525-3863. The written confirmation must include:
* Shareholder name and account number;
* Number of shares or dollar amount to be redeemed;
* Instructions for transmittal of redemption funds to the shareholder; and
* Shareholder signature as it appears on the Account Application then on file
with the Trust.
The net asset value used in processing the redemption request 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 ($1,000 minimum). Redemption proceeds will only be sent to the person
or bank account designated in your Account Application.
You can change your redemption instructions anytime by sending the Trust a
letter including your new redemption instructions. (See "Signature Guarantees"
below). The Trust reserves the right to restrict or cancel telephone and bank
wire redemption privileges for shareholders, without notice, if the Trust
believes it to be in the best interest of the Fund's shareholders to do so.
You may not close your account by telephone; however, you may close your account
by written request. During periods of drastic economic or market changes or
severe weather or other emergencies, you may find it difficult to implement a
telephone redemption request. If such a case should occur, another method of
redemption, such as written requests sent via an overnight delivery service,
should be considered.
Telephone redemption privileges authorize the Trust to act on telephone
instructions from any person representing himself or herself to be the investor
and reasonably believed by the Trust to be genuine. The Trust and the Transfer
Agent will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine. These procedures may include recording of
the telephone instructions and verification of a caller's identity by asking his
or her name, address, telephone number, Social Security number, and account
number. If reasonable procedures are not followed, the Trust and the Transfer
Agent may be liable for any losses to a shareholder due to unauthorized or
fraudulent instructions. Otherwise, the shareholder will bear all risk of loss
relating to redemptions by telephone reasonably believed to be genuine.
Redemption By Wire
Proceeds of redemption can also be wired to a shareholder's bank ($1,000
minimum). Shares may not be redeemed by wire on days on which your bank is not
open for business. The Trust in its discretion may choose to pass through to
redeeming shareholders any charges imposed by the Trust's custodian for wire
redemptions. The custodian currently charges $8 per transaction for wiring
redemption proceeds. If this cost is passed through to redeeming shareholders by
the Trust, the charge will be deducted automatically from a shareholder's
account by redemption of shares in the shareholder's account. A 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 account.
Redemptions by ACH
The Trust does not charge for ACH transactions; however, such transactions will
not be posted to your bank account until the second Business Day following the
transaction. In order to process a redemption by ACH, banking information must
be established for your account at least fifteen (15) days prior to initiating
an ACH transaction. A voided check or deposit slip must accompany any request to
establish this option.
Signature Guarantees
To protect your account and the Fund from fraud, signature guarantees are
required under certain circumstances. If a shareholder requests a redemption for
an amount in excess of $50,000, a redemption of any amount to be payable to
anyone other than the shareholder of record, or a redemption of any amount to be
sent to any address other than the shareholder's address of record (or in the
case of redemptions by wire, other than as provided in the shareholder's Account
Application), all account holders must sign a written redemption request. In
addition, those signatures must be guaranteed by a member bank of the Federal
Reserve System, a savings and loan association or credit union (if authorized
under state law), or by a member firm of a domestic stock exchange. The Fund
does not accept signature guarantees from notaries public or organizations that
do not provide reimbursement in the case of fraud.
OTHER INFORMATION ABOUT YOUR ACCOUNT
Minimum Account Size
Due to the relatively high costs of handling small investments, the Trust
reserves the right to redeem, at net asset value, the shares of any shareholder
if, because of redemptions of shares by or on behalf of the shareholder (and not
solely because of market declines), the account of the shareholder in the Fund
has a value of less than $5,000 for a period of three consecutive months.
Accordingly, an investor purchasing shares of the Fund in only the minimum
investment amount may be subject to such involuntary redemption if he or she
thereafter redeems any of these shares.
This provision will not apply to shareholders who are participants in the
Trust's Systematic Investment Plan. Before the Trust exercises its right to
redeem such shares and to send the proceeds to the shareholder, the shareholder
will be given notice that the value of the shares in his or her account is less
than the minimum amount and will be allowed sixty (60) days to make an
additional investment in the Fund in an amount that will increase the value of
the account to at least the minimum amount.
Other Information About Redemptions
The right of any shareholder to receive payment with respect to any redemption
may be suspended or the payment of the redemption proceeds postponed during any
period in which the New York Stock Exchange is closed (other than weekends or
holidays) or trading on the New York Stock Exchange is restricted or, to the
extent otherwise permitted by the Investment Company Act of 1940, as amended, if
an emergency exists.
DETERMINATION OF NET ASSET VALUE
The net asset value per share of the Fund is determined by dividing the total
market value of the Fund's investments and other assets, less any liabilities,
by the total outstanding shares of the Fund. Net asset value per share is
determined on each Business Day as of the close of trading on the New York Stock
Exchange (normally 4:00 p.m., Eastern time).
PERFORMANCE ADVERTISING
From time to time, the Fund may advertise its total return. All such total
return figures will be based on historical earnings and are not intended to
indicate future performance. No representation can be made regarding actual
future returns.
The total return of the Fund refers to the average compounded rate of return on
a hypothetical investment for designated time periods (including but not limited
to the period from which the Fund commenced operations through the specified
date), assuming that the entire investment is redeemed at the end of each period
and assuming the reinvestment of all dividend and capital gain distributions.
The Fund may periodically compare its performance to that of other mutual funds
tracked by mutual fund rating services (such as Lipper Analytical Services,
Inc.) or by financial and business publications and periodicals, broad groups of
comparable mutual funds, unmanaged indices which may assume investment of
dividends but generally do not reflect deductions for administrative and
management costs and other investment alternatives. The Fund may quote services
such as Morningstar, Inc., a service that ranks mutual funds on the basis of
risk-adjusted performance, and Ibbotson Associates of Chicago, Illinois, which
provides historical returns of the capital markets in the U.S. The Fund may use
long-term performance of these capital markets to demonstrate general long-term
risk versus reward scenarios and could include the value of a hypothetical
investment in any of the capital markets. The Fund may also quote financial and
business publications and periodicals as they relate to fund management,
investment philosophy, and investment techniques.
The Fund may quote various measures of volatility and benchmark correlation in
advertisements and may compare these measures to those of other funds. Measures
of volatility attempt to compare historical share price fluctuations or total
returns to a benchmark while measures of benchmark correlation indicate how
valid a comparative benchmark might be. Measures of volatility and correlation
are calculated using averages of historical data and cannot be calculated
precisely.
TAXES
The following summary of federal income tax consequences is based on current tax
laws and regulations, which may be changed by legislative, judicial or
administrative action. No attempt has been made to present a detailed
explanation of the federal, state or local income tax treatment of the Fund or
its shareholders. Accordingly, you are urged to consult your tax advisor
regarding specific questions as to federal, state and local income taxes.
See the Statement of Additional Information for further information.
Tax Status of the Fund
The Fund is treated as a separate entity for federal income tax purposes. The
Fund intends to qualify for the special tax treatment afforded a regulated
investment company ("RIC") under Subchapter M of the Internal Revenue Code of
1986, as amended. So long as the Fund qualifies for this special tax treatment,
it will be relieved of federal income tax on that part of its net investment
income and net capital gain (the excess of net long-term capital gain over net
short-term capital loss) which it distributes to shareholders.
Tax Status of Distributions
The Fund will distribute all of its net investment income (including, for this
purpose, net short-term capital gain) to shareholders. Dividends from net
investment income will be taxable to shareholders as ordinary income whether
received in cash or in additional shares. Any net capital gains will be
distributed annually and will be taxed to shareholders as long-term capital
gains, regardless of how long the shareholder has held shares and regardless of
whether the distributions are received in cash or in additional shares. The Fund
will make annual reports to shareholders of the federal income tax status of all
distributions.
Certain securities that may be purchased by the Fund (such as U.S Treasury
STRIPS) are sold with original issue discount and thus do not make periodic cash
interest payments. The Fund will be required to include as part of its current
net investment income the accrued discount on such obligations for purposes of
the distribution requirement even though the Fund has not received any interest
payments on such obligations during that period. Because the Fund distributes
all of its net investment income to its shareholders, the Fund may have to sell
portfolio securities to distribute such accrued income, which may occur at a
time when the Manager would not have chosen to sell such securities and which
may result in a taxable gain or loss.
Income received on direct U.S. obligations is exempt from income tax at the
state level when received directly by the Fund and may be exempt, depending on
the state, when received by a shareholder as income dividends from the Fund
provided certain state-specific conditions are satisfied. Not all states permit
such income dividends to be tax exempt and some require that a certain minimum
percentage of an investment company's income be derived from state tax-exempt
interest. The Fund will inform shareholders annually of the percentage of income
and distributions derived from direct U.S. obligations. You should consult your
tax advisor to determine whether any portion of the income dividends received
from the Fund is considered tax exempt in your particular state.
Dividends declared by the Fund in October, November or December of any year and
payable to shareholders of record on a date in one of those months will be
deemed to have been paid by the Fund and received by the shareholders on
December 31 of that year, if paid by the Fund at any time during the following
January.
The Fund intends to make sufficient distributions prior to the end of each
calendar year to avoid liability for the federal excise tax applicable to RICs.
Tax Treatment of Transactions
Each sale or redemption of the Fund's shares is a taxable event to the
shareholder. Income derived by the Fund from securities of foreign issuers may
be subject to foreign withholding taxes.
GENERAL INFORMATION
The Trust
The Trust is a registered open-end management investment company that was
organized as a Delaware business trust on September ___, 1997. It currently
consists of one series, the Total Return Fund, which has Class ___and Class
_____shares. The Board of Trustees of the Trust has authority to issue an
unlimited number of shares of beneficial interest, without par value. Each share
of each class of the Fund shall be entitled to one vote (or fraction thereof in
respect of a fractional share) on matters that such shares (or class of shares)
shall be entitled to vote. Shareholders of the Fund shall vote together on any
matter, except to the extent otherwise required by the Investment Company Act of
1940, as amended ("1940 Act"), or when the Board of Trustees of the Trust has
determined that the matter affects only the interest of shareholders of one or
more classes, in which case only the shareholders of such class or classes shall
be entitled to vote thereon. Any matter shall be deemed to have been effectively
acted upon with respect to the Portfolio if acted upon as provided in Rule 18f-2
under the 1940 Act, or any successor rule, and in the Trust's Declaration of
Trust. The Trust is not required to hold annual shareholder meetings, but
special meetings may be called for purposes such as electing or removing
Trustees, changing fundamental policies or approving an investment management or
advisory agreement.
Under the Trust's multi-class system, shares of each class of the Fund represent
an equal pro rata interest in the Fund and, generally, shall have identical
voting, dividend, liquidation, and other rights, preferences, powers,
restrictions, limitations, qualifications and terms and conditions, except that:
(a) each class shall have a different designation; (b) each class of shares
shall bear its "Class Expenses;" (c) each class shall have exclusive voting
rights on any matter submitted to shareholders that relates solely to its
distribution arrangements; (d) each class shall have separate voting rights on
any matter submitted to shareholders in which the interests of one class differ
from the interests of any other class; (e) each class may have separate exchange
privileges, although exchange privileges are not currently contemplated; and (f)
each class may have different conversion features, although a conversion feature
is not currently contemplated. Expenses currently designated as "Class Expenses"
by the Trust's Board of Trustees under a plan pursuant to Rule 18f-3 under the
1940 Act are limited to the front-end sales load with respect to the Class ____
shares.
The Manager
Blue Ridge Advisors, Inc., 119 Oregon Street, Greenville, S.C. 29605, serves as
the Manager to the Fund pursuant to an investment management agreement with the
Trust (the "Management Agreement"). The Manager has not previously served as an
investment manager to any other registered investment company. However, the
executives and members of the investment advisory staff of the Manager have
extensive experience in other capacities in managing investments for clients.
Subject to the authority of the Board of Trustees, the Manager supervises and
directs the day-to-day investments and operation of the Fund in accordance with
its investment objective, investment program, polices and restrictions. Pursuant
to the Management Agreement, the Manager is also responsible for providing
administrative and other services necessary for the ordinary operation of the
Fund in addition to investment advisory services. The Manager provides or
procures the overall business management and administrative services and
information necessary for the Fund's operation and the proper conduct of its
business. The Manager is responsible for providing or procuring, at the
Manager's expense, the services reasonably necessary for the ordinary operation
of the Fund, including administrative, fund accounting, transfer agency,
dividend disbursing, custodial, distribution, auditing, and ordinary legal
services. The Manager also acts as liaison among the various services providers
to the Fund. The Manager is also responsible for ensuring that the Fund operates
in compliance with applicable legal requirements. The Manager does not bear the
expense of brokerage fees and other transactional expenses for purchasing or
selling securities or other assets for the Fund, taxes (if any) paid by the
Fund, interest on borrowing, fees and expenses of the independent Trustees, and
extraordinary expenses, such as litigation or indemnification expenses.
For its services, the Manager is entitled to a fee, which is calculated daily
and paid monthly, as an annual rate of : 1.65% of the Fund's average daily net
assets up to and including $20 million and 1.20% of the Fund's average daily net
assets in excess of $20 million.
Jeffrey M. Doyon and Allen R. Gillespie have been primarily responsible for the
day-to-day management of the Total Return Fund's portfolio of securities since
the Fund's inception. Mr. Doyon has served as the President of the Manager since
July, 1997; Chief Financial Officer and General Manager of Janed Enterprises,
Inc., (specialty chemical manufacturing company) since January, 1996; and a
Registered Representative for Royal Alliance Associates (brokerage firm) from
February, 1996 to September, 1997. Prior to that, Mr. Doyon served as a Project
Manager (1990-1992) and General Director (1992-1994) for Sea-Land CIS Logistics,
an international logistics and transport company. Additionally, Mr. Doyon
received his B.A. in Economics from the College of William and Mary in 1985. Mr.
Gillespie, who graduated with a Bachelor of Arts degree in Economics from
Washington & Lee University in 1995, served as a Registered Representative for
Smith Barney/Robinson-Humphrey (brokerage firm) from July, 1995 to September,
1997. Mr. Gillespie is a Chartered Financial Analyst Candidate (Level III).
The Trust is distinct in that the expense structure of the Fund is simpler and
more predictable than most mutual funds. Many of the ordinary expenses of the
Fund, including administrative, fund accounting, transfer agency, dividend
disbursing, custodial, distribution (except for the front-end sales load for the
Class___ shares), auditing, and ordinary legal expenses are paid by the Manager;
whereas, most mutual funds pay for these expenses directly from their own
assets.
The Administrator
The Nottingham Company (the "Administrator"), 105 North Washington Street, Post
Office Drawer 69, Rocky Mount, North Carolina 27802-0069 has been retained by
the Manager to serve as the administrator and fund accounting agent for the
Fund. The Administrator was established as a North Carolina corporation in 1988.
Frank P. Meadows, III is the Managing Director and controlling shareholder of
the Administrator. Services provided by the Administrator include: providing
necessary office facilities, equipment, and personnel to perform its
administrative services; supervising the overall administration of the Fund;
making all necessary filings required to be made with federal and state
regulators; maintaining books of account; calculating the daily net asset value
of shares of the Fund; and providing persons satisfactory to the Board of
Trustees to serve as officers of the Trust. Such officers may be directors,
officers or employees of the Administrator.
For these services, the Administrator is compensated by the Manager and not
directly by the Fund.
The Transfer Agent
NC Shareholder Services, LLC (the "Transfer Agent") has been retained by the
Manager to serve as the Fund's transfer, dividend paying, and shareholder
servicing agent. 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 Fund shares, acts as
dividend and distribution disbursing agent, and performs other shareholder
servicing functions. The Transfer Agent is compensated for its services by the
Manager and not directly by the Fund.
The Distributor
Capital Investment Group, Inc. (the "Distributor"), Post Office Box 32249,
Raleigh, North Carolina, 27622, has been retained by the Manager to serve as the
distributor of the Fund's shares, pursuant to a distribution agreement
("Distribution Agreement") between the Manager and the Distributor. The
Distributor may sell Fund shares to or through qualified securities dealers or
others. For its distribution services with respect to the Class ___ shares, the
Distributor is compensated by the Manager and not directly by the Fund.
Trustees of the Trust
The management and affairs of the Trust are supervised by the Board of Trustees
under the laws of the State of Delaware. The Board of Trustees has approved the
Trust's Management Agreement with the Manager and the Distribution Agreement
between the Manager and the Distributor.
Voting Rights
Each share entitles the shareholder of record to one vote. As a Delaware
business trust, the Trust is not required to hold annual meetings of
shareholders but shareholder approval will be sought for certain changes in the
operation of the Trust and for the election of Trustees under certain
circumstances. In addition, a Trustee may be removed by the remaining Trustees
or by shareholders at a special meeting called upon written request of
shareholders owning at least 10% of the outstanding shares of the Trust. In the
event that such a meeting is requested, the Trust will provide appropriate
assistance and information to the shareholders requesting the meeting.
Financial Reporting
The Trust issues unaudited financial information semiannually, and audited
financial statements annually for the Fund. The Trust also furnishes periodic
reports and, as necessary, proxy statements to shareholders of record.
Shareholder Inquiries
You may direct inquiries to the Trust by writing to 107 North Washington Street,
Post Office Box 4365, Rocky Mount, North Carolina 27803-0365, or by calling
1-800-525-3863.
Dividends and Distributions
Substantially all of the net investment income (exclusive of capital gains) of
the Fund is distributed in the form of quarterly dividends. If any capital gain
is realized, substantially all of it will be distributed by the Fund at least
annually.
Shareholders automatically receive all dividends and capital gain distributions
in additional shares at the net asset value determined on the next Business Day
after the record date, unless the shareholder has elected to take such payment
in cash. Shareholders may change their election by providing written notice to
the Trust at least fifteen (15) days prior to the distribution. Shareholders may
receive payments for cash distributions in the form of a check or by Federal
Reserve wire or ACH transfer.
Dividends and distributions of the Fund are paid on a per share basis. The value
of each share will be reduced by the amount of the payment. If shares are
purchased shortly before the record date for a dividend or distribution of
capital gains, a shareholder will pay the full price for the shares and receive
some portion of the price back as a taxable dividend or distribution.
Counsel and Independent Public Accountants
Dechert Price & Rhoads serves as counsel to the Trust. Deloitte & Touche, LLP
serves as the independent public accountants of the Trust.
Custodian
First Union National Bank of North Carolina, 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 Trust's request and maintains records in
connection with its duties.
Miscellaneous
As of the date of this Prospectus, Blue Ridge Advisors, Inc., 84 Villa Road,
B37, Greenville, S.C. 29615, as the Fund's initial shareholder, owned of record
or beneficially, all of the outstanding shares of the Fund, and may be deemed to
be a controlling person of the Fund for purposes of the 1940 Act.
GLOSSARY OF PERMITTED INVESTMENTS
The following is a description of certain permitted investments of the Fund:
Bankers' Acceptance A bill of exchange or time draft drawn on and accepted by a
commercial bank. It is used by corporations to finance the shipment and storage
of goods and to furnish dollar exchange. Maturities are generally six months or
less.
Certificate of Deposit A negotiable interest bearing instrument with a specific
maturity. Certificates of deposit are issued by banks and savings and loan
institutions in exchange for the deposit of funds and normally can be traded in
the secondary market prior to maturity. Certificates of deposit generally carry
penalties for early withdrawal.
Commercial Paper The term used to designate unsecured short-term promissory
notes issued by corporations and other entities. Maturities on these issues
typically vary from a few days to nine months.
Convertible Securities Convertible securities, including both convertible debt
and convertible preferred stock may be converted into shares of the underlying
common stock at either a stated price or stated rate. Because of this feature,
convertible securities enable an investor to benefit from increases in the
market price of the underlying common stock. Convertible securities provide
higher yields than the underlying common stocks, but generally offer lower
yields than nonconvertible securities of similar quality. Like bonds, the value
of convertible securities fluctuates in relation to changes in interest rates
and, in addition, fluctuates in relation to the underlying common stock.
Subsequent to purchase by the Fund, convertible securities may cease to be rated
or a rating may be reduced below the minimum required for purchase by the Fund.
Neither event will require sale of such securities, although the Manager will
consider such event in its determination of whether the Fund should continue to
hold the securities.
Derivatives Derivatives are securities that derive their value from other
securities. The following, among others, may be considered to be derivative
securities: convertible securities, futures contracts, and options. See
"Investment Objectives and Policies" for more information about the investment
policies and limitations applicable to their use.
Forward Commitments, When-Issued and Delayed Delivery Securities Forward
commitments, when-issued and delayed delivery securities are securities subject
to settlement on a future date. For fixed income securities, the interest rate
realized on forward commitments, when-issued or delayed delivery securities is
fixed as of the purchase date and no interest accrues to the Fund before
settlement. These securities are subject to market fluctuation due to changes in
market interest rates and will have the effect of leveraging the Fund's assets.
The Fund is permitted to invest in forward commitments or when-issued or delayed
delivery securities where such purchases are for investment and not for
leveraging purposes. One or more segregated accounts will be established with
the custodian, and the Fund will maintain liquid assets in such accounts in an
amount at least equal in value to the Fund's forward commitments, when-issued or
delayed delivery commitments.
Futures Contracts and Options The Fund may utilize futures contracts, write call
and put options, purchase put options and purchase call options only to close
open positions. Futures contracts (a type of potentially high-risk security)
enable the investor to buy or sell an asset in the future at an agreed upon
price. Options (another type of potentially high-risk security) give the
purchaser of an option the right, but not the obligation, to buy or sell in the
future an asset at a predetermined price during the term of the option. (The
writer of a put or call option would be obligated to buy or sell the underlying
asset at a predetermined price during the term of the option). The Fund will
write put and call options only if such options are considered to be "covered".
A call option on a security is covered, for example, when the writer of the call
option owns throughout the option period the security on which the option is
written (or a security convertible into such a security without the payment of
additional consideration). A put option on a security is covered, for example,
when the writer of the put has deposited and maintained in a segregated account
throughout the option period sufficient cash or other liquid assets in an amount
equal to or greater than the exercise price of the put option. The risk of loss
in trading futures contracts can be substantial because of the low margin
deposits required and the extremely high degree of leveraging involved in
futures pricing. As a result, a relatively small price movement in a futures
contract may cause an immediate and substantial loss or gain. The primary risks
associated with the use of options and futures contracts are: (i) imperfect
correlations between the change in market value of the securities held by the
Fund and the prices of the options or futures contracts purchased or sold by the
Fund; and (ii) possible lack of a liquid secondary market for a futures contract
and the resulting inability to close a futures position prior to its maturity
day, which could have an adverse impact on the Fund's ability to execute futures
strategies.
Illiquid Securities Securities that cannot be disposed of in the ordinary course
of business within seven (7) days at approximately the price at which the Fund
has valued the security.
Investment Grade Debt Securities The Fund may invest in or hold a portion of its
total assets in investment grade debt securities. Investment grade debt
securities are securities rated Baa or higher by Moody's Investors Service, Inc.
or BBB or higher by Standard & Poor's Ratings Service, a division of McGraw-Hill
Companies, Inc., and comparable unrated securities. Investment grade debt
securities while normally exhibiting adequate protection parameters, have
speculative characteristics, and, consequently, changes in economic conditions
or other circumstances are more likely to lead to a weakened capacity of such
issuers to make principal and interest payments than is the case for higher
grade debt securities.
Repurchase Agreements Agreements by which a person obtains a security and
simultaneously commits to return it to the seller at an agreed upon price
(including principal and interest) on an agreed upon date within a number of
days from the date of purchase. The custodian or its agents will hold the
security as collateral for the repurchase agreement. Collateral must be
maintained at a value at least equal to 102% of the purchase price. The Fund
bears a risk of loss in the event the other party defaults on its obligations
and the Fund is delayed or prevented from its right to dispose of the collateral
securities or if the Fund realizes a loss on the sale of the collateral
securities. The Manager will enter into repurchase agreements on behalf of the
Fund only with financial institutions deemed to present minimal risk of
bankruptcy during the term of the agreement based on guidelines established and
periodically reviewed by the Trustees. Repurchase agreements are considered
loans under the 1940 Act, as well as for federal and state income tax purposes.
Restricted Securities Securities that may not be sold freely to the public
absent registration under the Securities Act of 1933, as amended ("1933 Act"),
or an exemption from registration. The Fund may invest in restricted securities
that the Manager determines are not illiquid, based on guidelines and procedures
developed and established by the Board of Trustees of the Trust. The Board of
Trustees will periodically review such procedures and guidelines and will
monitor the Managers' implementation of such procedures and guidelines. Under
these procedures and guidelines, the Manager will consider the frequency of
trades and quotes for the security, the number of dealers in, and potential
purchasers for, the securities, dealer undertakings to make a market in the
security, and the nature of the security and of the marketplace trades.
Restricted securities may be difficult to value because market quotations may
not be readily available. Because of the restrictions on the resale of
restricted securities, they may pose liquidity problems for the Fund.
Time Deposit A nonnegotiable receipt issued by a bank in exchange for the
deposit of funds. Like a certificate of deposit, it earns a specified rate of
interest over a definite period of time; however, it cannot be traded in the
secondary market. Time deposits with a withdrawal penalty are considered to be
illiquid securities.
U.S. Government Agency Obligations Certain Federal agencies such as the
Government National Mortgage Association ("GNMA") have been established as
instrumentalities of the United States Government to supervise and finance
certain types of activities. Securities issued by these agencies, while not
direct obligations of the United States Government, are either backed by the
full faith and credit of the United States (e.g., GNMA securities) or supported
by the issuing agencies' right to borrow from the Treasury. The securities
issued by other agencies are supported only by the credit of the instrumentality
(e.g., Tennessee Valley Authority securities).
U.S. Government Securities Bills, notes and bonds issued by the U.S. Government
and backed by the full faith and credit of the United States.
Warrants Warrants are securities that give the holder the right, but not the
obligation to purchase equity issues of the company issuing the warrants, or a
related company, at a fixed price either on a date certain or during a set
period. At the time of issue, the cost of a warrant is substantially less than
the cost of the underlying security itself, and price movements in the
underlying security are generally magnified in the price movements of the
warrant. This effect enables the investor to gain exposure to the underlying
security with a relatively low capital investment but increases an investor's
risk in the event of a decline in the value of the underlying security and can
result in a complete loss of the amount invested in the warrant. In addition,
the price of a warrant tends to be more volatile than, and may not correlate
exactly to, the price of the underlying security. If the market price of the
underlying security is below the exercise price of the warrant on its expiration
date, the warrant will generally expire without value.
<PAGE>
BLUE RIDGE FUNDS TRUST
Blue Ridge Total Return Fund
This Statement of Additional Information is not a prospectus and relates to the
Blue Ridge Total Return Fund ( "Total Return Fund" or "Fund"), a series of the
Blue Ridge Funds Trust ("Trust"). It is intended to provide additional
information regarding the activities and operations of the Trust and the Fund,
and should be read in conjunction with the Fund's Prospectus dated December 1,
1997. The Prospectus for the Fund may be obtained without charge by calling
1-800-525-3863.
TABLE OF CONTENTS
THE TRUST...................................................................1
DESCRIPTION OF PERMITTED INVESTMENTS........................................1
INVESTMENT LIMITATIONS......................................................1
THE MANAGER................................................................12
THE ADMINISTRATOR AND TRANSFER AGENT.......................................13
THE DISTRIBUTOR............................................................13
THE CUSTODIAN..............................................................13
INDEPENDENT AUDITORS.......................................................14
TRUSTEES AND OFFICERS OF THE TRUST.........................................14
CALCULATION OF TOTAL RETURN................................................15
PURCHASE AND REDEMPTION OF SHARES..........................................15
DETERMINATION OF NET ASSET VALUE...........................................15
TAXES......................................................................17
PORTFOLIO TRANSACTIONS.....................................................18
DESCRIPTION OF SHARES......................................................19
December 1, 1997
<PAGE>
THE TRUST
The Trust is a Delaware business trust registered with the Securities and
Exchange Commission ("SEC") as a no-load, open-end diversified management
investment company, commonly known as a "mutual fund." It is organized as a
series company and currently consists of one series, the Total Return Fund,
which has two classes of shares: Class __ shares and Class __shares. In the
future, the Trust may establish additional series and classes of shares. Blue
Ridge Advisors, Inc. (the "Manager") serves as the investment manager to the
Fund and directs the Fund's day-to-day operations. Capitalized terms not defined
herein are defined in the Fund's Prospectus.
DESCRIPTION OF PERMITTED INVESTMENTS
Foreign Securities
Foreign securities involve currency risks. The value of a foreign security
denominated in foreign currency changes with variations in the exchange rates.
Fluctuations in exchange rates may also affect the earning power and asset value
of the foreign entity issuing a security, even one denominated in U.S. dollars.
Dividend and interest payments will be repatriated based on the exchange rate at
the time of disbursement, and restrictions on capital flows may be imposed.
Losses and other expenses may be incurred in converting between various
currencies in connection with purchases and sales of foreign securities.
Foreign securities may be subject to foreign government taxes which reduce their
attractiveness. Other risks of investing in such securities include political or
economic instability in the country involved, the difficulty of predicting
international trade patterns and the possibility of imposition of exchange
controls. The prices of such securities may be more volatile than those of
domestic securities. In addition, there may be less publicly available
information about a foreign issuer than about a domestic issuer. Foreign issuers
generally are not subject to uniform accounting, auditing and financial
reporting standards comparable to those applicable to domestic issuers. There is
generally less regulation of stock exchanges, brokers, banks and listed
companies abroad than in the United States, and settlements may be slower and
may be subject to failure. With respect to certain foreign countries, there is a
possibility of expropriation of assets or nationalization, imposition of
withholding taxes on dividend or interest payments, difficulty in obtaining and
enforcing judgments against foreign entities or diplomatic developments which
could affect investment in these countries. The Fund may invest up to 5% of its
total assets in the securities of foreign issuers.
Forward Commitments, When-Issued and Delayed Delivery Securities
Forward commitments, when-issued and delayed delivery transactions arise when
securities are purchased by the Fund with payment and delivery taking place in
the future in order to secure what is considered to be an advantageous price or
yield to the Fund at the time of entering into the transaction. However, the
price of or yield on a comparable security available when delivery takes place
may vary from the price of or yield on the security at the time that the forward
commitment or when-issued or delayed delivery transaction was entered into.
Agreements for such purchases might be entered into, for example, when the Fund
anticipates a decline in interest rates and is able to obtain a more
advantageous price or yield by committing currently to purchase securities to be
issued later. When the Fund purchases securities on a forward commitment,
when-issued or delayed delivery basis it does not pay for the securities until
they are received, and the Fund is required to create a segregated account with
the Trust's custodian and to maintain in that account cash or other liquid
securities in an amount equal to or greater than, on a daily basis, the amount
of the Fund's forward commitments, when-issued or delayed delivery commitments.
The Fund will only enter into forward commitments and make commitments to
purchase securities on a when-issued or delayed delivery basis with the
intention of actually acquiring the securities. However, the Fund may sell these
securities before the settlement date if it is deemed advisable as a matter of
investment strategy. Forward commitments and when-issued and delayed delivery
transactions are generally expected to settle within three months from the date
the transactions are entered into, although the Fund may close out its position
prior to the settlement date by entering into a matching sales transaction.
Although the Fund does not intend to make such purchases for speculative
purposes and the Fund intends to adhere to the policies of the SEC, purchases of
securities on such a basis may involve more risk than other types of purchases.
For example, by committing to purchase securities in the future, the Fund
subjects itself to a risk of loss on such commitments as well as on its
portfolio securities. Also, the Fund may have to sell assets which have been set
aside in order to meet redemptions. In addition, if the Fund determines it is
advisable as a matter of investment strategy to sell the forward commitment or
when-issued or delayed delivery securities before delivery, the Fund may incur a
gain or loss because of market fluctuations since the time the commitment to
purchase such securities was made. Any such gain or loss would be treated as a
capital gain or loss and would be treated for tax purposes as such. When the
time comes to pay for the securities to be purchased under a forward commitment
or on a when-issued or delayed delivery basis, the Fund will meet its
obligations from the then available cash flow or the sale of securities, or,
although it would not normally expect to do so, from the sale of the forward
commitment or when-issued or delayed delivery securities themselves (which may
have a value greater or less than the Fund's payment obligation).
Futures Contracts
Futures Transactions. A futures contract is a bilateral agreement to buy or sell
a security (or deliver a cash settlement price, in the case of a contract
relating to an index or otherwise not calling for physical delivery at the end
of trading in the contracts) for a set price in the future. Futures contracts
are designated by boards of trade which have been designated "contracts markets"
by the Commodities Futures Trading Commission ("CFTC").
No purchase price is paid or received when the contract is entered into.
Instead, the Fund upon entering into a futures contract (and to maintain the
Fund's open positions in futures contracts) would be required to deposit with
its custodian in a segregated account in the name of the futures broker an
amount of cash, United States Government securities, suitable money market
instruments, or liquid, high-grade debt securities, known as "initial margin."
The margin required for a particular futures contract is set by the exchange on
which the contract is traded, and may be significantly modified from time to
time by the exchange during the term of the contract. Futures contracts are
customarily purchased and sold on margin that may range upward from less than 5%
of the value of the contract being traded. By using futures contracts as a risk
management technique, given the greater liquidity in the futures market than in
the cash market, it may be possible to accomplish certain results more quickly
and with lower transaction costs.
If the price of an open futures contract changes (by increase in the case of a
sale or by decrease in the case of a purchase) so that the loss on the futures
contract reaches a point at which the margin on deposit does not satisfy margin
requirements, the broker will require an increase in the margin. However, if the
value of a position increases because of favorable price changes in the futures
contract so that the margin deposit exceeds the required margin, the broker will
pay the excess to the Fund. These subsequent payments called "variation margin,"
to and from the futures broker, are made on a daily basis as the price of the
underlying assets fluctuate making the long and short positions in the futures
contract more or less valuable, a process known as "marking to the market." The
Fund expects to earn interest income on their initial and variation margin
deposits.
The Fund will incur brokerage fees when it purchases and sells futures
contracts. Positions taken in the futures markets are not normally held until
delivery or cash settlement is required, but are instead liquidated through
offsetting transactions which may result in a gain or a loss. While futures
positions taken by the Fund will usually be liquidated in this manner, the Fund
may instead make or take delivery of underlying securities whenever it appears
economically advantageous for the Fund to do so. A clearing organization
associated with the exchange on which futures are traded assumes responsibility
for closing out transactions and guarantees that as between the clearing members
of an exchange, the sale and purchase obligations will be performed with regard
to all positions that remain open at the termination of the contract.
Securities Index Futures Contracts. Purchases or sales of securities index
futures contracts may be used in an attempt to protect the Fund's current or
intended investments from broad fluctuations in securities prices. A securities
index futures contract does not require the physical delivery of securities, but
merely provides for profits and losses resulting from changes in the market
value of the contract to be credited or debited at the close of each trading day
to the respective accounts of the parties to the contract. On the contract's
expiration date a final cash settlement occurs and the futures positions are
simply closed out. Changes in the market value of a particular index futures
contract reflect changes in the specified index of securities on which the
future is based.
By establishing an appropriate "short" position in index futures, the Fund may
also seek to protect the value of its portfolio against an overall decline in
the market for such securities. Alternatively, in anticipation of a generally
rising market, the Fund can seek to avoid losing the benefit of apparently low
current prices by establishing a "long" position in securities index futures and
later liquidating that position as particular securities are in fact acquired.
To the extent that these hedging strategies are successful, the Fund will be
affected to a lesser degree by adverse overall market price movements than would
otherwise be the case.
Options on Futures Contracts. The Fund may purchase exchange-traded call and put
options on futures contracts and write exchange-traded call options on futures
contracts. These options are traded on exchanges that are licensed and regulated
by the CFTC for the purpose of options trading. A call option on a futures
contract gives the purchaser the right, in return for the premium paid, to
purchase a futures contract (assume a "long" position) at a specified exercise
price at any time before the option expires. A put option gives the purchaser
the right, in return for the premium paid, to sell a futures contract (assume a
"short" position), for a specified exercise price, at any time before the option
expires.
The Fund will write only options on futures contracts which are "covered." The
Fund will be considered "covered" with respect to a put option it has written
if, so long as it is obligated as a writer of the put, the Fund segregates with
its custodian cash, United States Government securities or liquid securities at
all times equal to or greater than the aggregate exercise price of the puts it
has written (less any related margin deposited with the futures broker). The
Fund will be considered "covered" with respect to a call option it has written
on a debt security future if, so long as it is obligated as a writer of the
call, the Fund owns a security deliverable under the futures contract. The Fund
will be considered "covered" with respect to a call option it has written on a
securities index future if the Fund owns, so long as the Fund is obligated as
the writer of the call, the Fund of securities the price changes of which are,
in the opinion of the Manager, expected to replicate substantially the movement
of the index upon which the futures contract is based.
Upon the exercise of a call option, the writer of the option is obligated to
sell the futures contract (to deliver a "long" position to the option holder) at
the option exercise price, which will presumably be lower than the current
market price of the contract in the futures market. Upon exercise of a put, the
writer of the option is obligated to purchase the futures contract (deliver a
"short" position to the option holder) at the option exercise price which will
presumably be higher than the current market price of the contract in the
futures market. When the holder of an option exercises it and assumes a long
futures position, in the case of a call, or a short futures position, in the
case of a put, its gain will be credited to its futures margin account, while
the loss suffered by the writer of the option will be debited to its account and
must be immediately paid by the writer. However, as with the trading of futures,
most participants in the options markets do not seek to realize their gains or
losses by exercise of their option rights. Instead, the holder of an option will
usually realize a gain or loss by buying or selling an offsetting option at a
market price that will reflect an increase or a decrease from the premium
originally paid.
If the Fund writes options on futures contracts, the Fund will receive a premium
but will assume a risk of adverse movement in the price of the underlying
futures contract comparable to that involved in holding a futures position. If
the option is not exercised, the Fund will realize a gain in the amount of the
premium, which may partially offset unfavorable changes in the value of
securities held in or to be acquired for the Fund. If the option is exercised,
the Fund will incur a loss in the option transaction, which will be reduced by
the amount of the premium it has received, but which will offset any favorable
changes in the value of its portfolio securities or, in the case of a put, lower
prices of securities it intends to acquire.
Options on futures contracts can be used by the Fund to hedge substantially the
same risks as might be addressed by the direct purchase or sale of the
underlying futures contracts. If the Fund purchases an option on a futures
contract, it may obtain benefits similar to those that would result if it held
the futures position itself. Purchases of options on futures contracts may
present less risk in hedging than the purchase and sale of the underlying
futures contracts since the potential loss is limited to the amount of the
premium plus related transaction costs.
The purchase of put options on futures contracts is a means of hedging the Fund
of securities against a general decline in market prices. The purchase of a call
option on a futures contract represents a means of hedging against a market
advance when the Fund is not fully invested.
The writing of a call option on a futures contract constitutes a partial hedge
against declining prices of the underlying securities. If the futures price at
expiration is below the exercise price, the Fund will retain the full amount of
the option premium, which provides a partial hedge against any decline that may
have occurred in the value of the Fund's holdings of securities. The writing of
a put option on a futures contract is analogous to the purchase of a futures
contract in that it hedges against an increase in the price of securities the
Fund intends to acquire. However, the hedge is limited to the amount of premium
received for writing the put.
Limitations on Purchase and Sale of Futures Contracts and Options on Futures
Contracts. The Fund will not engage in transactions in futures contracts and
related options for speculation. In addition, the Fund will not purchase or sell
futures contracts or related options unless either (1) the futures contracts or
options thereon are purchased for "bona fide hedging" purposes (as that term is
defined under the CFTC regulations) or (2) if purchased for other purposes, the
sum of the amounts of initial margin deposits on the Fund's existing futures and
premiums required to establish non-hedging positions, less the amount by which
any such options positions are "in-the-money" (as defined under CFTC
regulations) would not exceed 5% of the liquidation value of the Fund's total
assets. In instances involving the purchase of futures contracts or the writing
of put options thereon by the Fund, an amount of cash and cash equivalents,
equal to the cost of such futures contracts or options written (less any related
margin deposits), will be deposited in a segregated account with its custodian,
thereby insuring that the use of such futures contracts and options is
unleveraged. In instances involving the sale of futures contracts or the writing
of call options thereon by the Fund, the securities underlying such futures
contracts or options will at all times be maintained by the Fund or, in the case
of index futures and related options, the Fund will own securities the price
changes of which are, in the opinion of the Manager, expected to replicate
substantially the movement of the index upon which the futures contract or
option is based. It is the Fund's current intention to limit its use of options
on futures contracts to no more than 5% of its total assets. For information
concerning the risks associated with utilizing options, futures contracts, and
forward foreign currency exchange contracts, please see "Risks of Transactions
in Option and Futures Contracts" on page 8.
Investment Company Shares
The Fund may invest in shares of money market mutual funds, to the extent set
forth under "Investment Limitations" below. Since such funds pay management fees
and other expenses, shareholders of the Fund would indirectly pay both the
Fund's expenses and the expenses of underlying funds with respect to the Fund's
assets invested therein. Applicable regulations prohibit the Fund from acquiring
the securities of other investment companies that are not "part of the same
group of investment companies" if, as a result of such acquisition, the Fund
owns more than 3% of the total voting stock of the company, more than 5% of the
Fund's total assets are invested in securities of any one investment company; or
more than 10% of the total assets of the Fund are invested in securities (other
than treasury stock) issued by all investment companies.
Non-Publicly Traded And Illiquid Securities
Historically, illiquid securities have included securities subject to
contractual or legal restrictions on resale because they have not been
registered under the Securities Act of 1933, as amended ("1933 Act"), securities
which are otherwise not readily marketable and repurchase agreements having a
maturity of longer than seven days. Securities which have not been registered
under the 1933 Act are referred to as private placements or restricted
securities and are purchased directly from the issuer or in the secondary
market. Mutual funds do not typically hold a significant amount of these
restricted or other illiquid securities because of the potential for delays on
resale and uncertainty in valuation. Limitations on resale may have an adverse
effect on the marketability of portfolio securities and a mutual fund might be
unable to dispose of restricted or other illiquid securities promptly or at
reasonable prices and might thereby experience difficulty satisfying redemptions
within seven days. A mutual fund might also have to register such restricted
securities in order to dispose of them resulting in additional expense and
delay. Adverse market conditions could impede such a public offering of
securities.
In recent years, however, a large institutional market has developed for certain
securities that are not registered under the 1933 Act including repurchase
agreements, commercial paper, foreign securities, municipal securities and
corporate bonds and notes. Institutional investors depend on an efficient
institutional market in which the unregistered security can be readily resold or
on an issuer's ability to honor a demand for repayment. The fact that there are
contractual or legal restrictions on resale to the general public or to certain
institutions may not be indicative of the liquidity of such investments.
Options
Writing Call Options. A call option is a contract which gives the purchaser of
the option (in return for a premium paid) the right to buy, and the writer of
the option (in return for a premium received) the obligation to sell, the
underlying security at the exercise price at any time prior to the expiration of
the option, regardless of the market price of the security during the option
period. A call option on a security is covered, for example, when the writer of
the call option owns the security on which the option is written (or on a
security convertible into such a security without additional consideration)
throughout the option period.
The Fund will write covered call options both to reduce the risks associated
with certain of its investments and to increase total investment return through
the receipt of premiums. In return for the premium income, the Fund will give up
the opportunity to profit from an increase in the market price of the underlying
security above the exercise price so long as its obligations under the contract
continue, except insofar as the premium represents a profit. Moreover, in
writing the call option, the Fund will retain the risk of loss should the price
of the security decline. The premium is intended to offset that loss in whole or
in part. Unlike the situation in which the Fund owns securities not subject to a
call option, the Fund, in writing call options, must assume that the call may be
exercised at any time prior to the expiration of its obligation as a writer, and
that in such circumstances the net proceeds realized from the sale of the
underlying securities pursuant to the call may be substantially below the
prevailing market price.
The Fund may terminate its obligation under an option it has written by buying
an identical option. Such a transaction is called a "closing purchase
transaction." The Fund will realize a gain or loss from a closing purchase
transaction if the amount paid to purchase a call option is less or more than
the amount received from the sale of the corresponding call option. Also,
because increases in the market price of a call option will generally reflect
increases in the market price of the underlying security, any loss resulting
from the exercise or closing out of a call option is likely to be offset in
whole or part by unrealized appreciation of the underlying security owned by the
Fund. When an underlying security is sold from the Fund's securities portfolio,
the Fund will effect a closing purchase transaction so as to close out any
existing covered call option on that underlying security.
Writing Put Options. The writer of a put option becomes obligated to purchase
the underlying security at a specified price during the option period if the
buyer elects to exercise the option before its expiration date. If the Fund
writes a put option, the Fund will be required to "cover" it, for example, by
depositing and maintaining in a segregated account with its custodian cash, U.S.
Government securities or other liquid securities having a value equal to or
greater than the exercise price of the option.
The Fund may write put options either to earn additional income in the form of
option premiums (anticipating that the price of the underlying security will
remain stable or rise during the option period and the option will therefore not
be exercised) or to acquire the underlying security at a net cost below the
current value (e.g., the option is exercised because of a decline in the price
of the underlying security, but the amount paid by the Fund, offset by the
option premium, is less than the current price). The risk of either strategy is
that the price of the underlying security may decline by an amount greater than
the premium received. The premium which the Fund receives from writing a put
option will reflect, among other things, the current market price of the
underlying security, the relationship of the exercise price to that market
price, the historical price volatility of the underlying security, the option
period, supply and demand and interest rates.
The Fund may effect a closing purchase transaction to realize a profit on an
outstanding put option or to prevent an outstanding put option from being
exercised. It is the Fund's current intention to limit its writing of put
options on futures contracts to no more than 5% of its total assets.
Purchasing Put and Call Options. The Fund may purchase put options on securities
to protect their holdings against a substantial decline in market value. The
purchase of put options on securities will enable the Fund to preserve, at least
partially, unrealized gains in an appreciated security in its portfolio without
actually selling the security. In addition, the Fund will continue to receive
interest or dividend income on the security. The Fund may also purchase call
options on securities to close out positions. The Fund may sell put or call
options they have previously purchased, which could result in a net gain or loss
depending on whether the amount received on the sale is more or less than the
premium and other transaction costs paid on the put or call option which was
bought. The Fund will not commit more than 5% of its total assets to premiums
when purchasing call or put options.
Securities Index Options. The Fund may write covered put and call options and
purchase call and put options on securities indexes for the purpose of hedging
against the risk of unfavorable price movements adversely affecting the value of
the Fund's securities or securities it intends to purchase. The Fund writes only
"covered" options. A call option on a securities index is considered covered,
for example, if, so long as the Fund is obligated as the writer of the call, it
holds securities the price changes of which are, in the opinion of the Manager,
expected to replicate substantially the movement of the index or indexes upon
which the options written by the Fund are based. A put on a securities index
written by the Fund will be considered covered if, so long as it is obligated as
the writer of the put, the Fund segregates with its custodian cash, United
States Government securities or other liquid high-grade debt obligations having
a value equal to or greater than the exercise price of the option. Unlike a
stock option, which gives the holder the right to purchase or sell a specified
stock at a specified price, an option on a securities index gives the holder the
right to receive a cash "exercise settlement amount" equal to (i) the difference
between the exercise price of the option and the value of the underlying stock
index on the exercise date, multiplied by (ii) a fixed "index multiplier."
A securities index fluctuates with changes in the market value of the securities
so included. For example, some securities index options are based on a broad
market index such as the S&P 500 Index or the NYSE Composite Index, or a
narrower market index such as the S&P 100 Index. Indexes may also be based on an
industry or market segment such as the AMEX Oil and Gas Index or the Computer
and Business Equipment Index.
For information concerning the risks associated with utilizing options and
futures contracts, please see "Risks of Transactions in Options and Futures
Contracts and Forward Currency Contracts" on page 8.
Repurchase Agreements
Under a repurchase agreement, underlying debt instruments are acquired for a
relatively short period (usually not more than one week and never more than a
year) subject to an obligation of the seller to repurchase and the Fund to
resell the instrument at a fixed price and time, thereby determining the yield
during the Fund's holding period. This results in a fixed rate of return
insulated from market fluctuation during that holding period.
Repurchase agreements may have the characteristics of loans by the Fund. During
the term of the repurchase agreement, the Fund retains the security subject to
the repurchase agreement as collateral securing the seller's repurchase
obligation, continually monitors on a daily basis the market value of the
security subject to the agreement and requires the seller to deposit with the
Fund collateral equal to any amount by which the market value of the security
subject to the repurchase agreements falls below the resale amount provided
under the repurchase agreement. The Fund will enter into repurchase agreements
(with respect to U.S. Government obligations, certificates of deposit, or
bankers' acceptances) with registered brokers-dealers, U.S. Government
securities dealers or domestic banks whose creditworthiness is determined to be
satisfactory by the Manager, pursuant to guidelines adopted by the Board of
Trustees. Generally, the Fund does not invest in repurchase agreements maturing
in more than seven days. The staff of the SEC currently takes the position that
repurchase agreements maturing in more than seven days are illiquid securities.
If a seller under a repurchase agreement were to default on the agreement and be
unable to repurchase the security subject to the repurchase agreement, the Fund
would look to the collateral underlying the seller's repurchase agreement,
including the security subject to the repurchase agreement, for satisfaction of
the seller's obligation to the Fund. In the event a repurchase agreement is
considered a loan and the seller defaults, the Fund might incur a loss if the
value of the collateral declines and may incur disposition costs in liquidating
the collateral. In addition, if bankruptcy proceedings are commenced with
respect to the seller, realization of the collateral may be delayed or limited
and a loss may be incurred.
Risks Of Transactions In Options and Futures Contracts
Options. A closing purchase transaction for exchange-traded options may be made
only on a national securities exchange ("exchange"). There is no assurance that
a liquid secondary market on an exchange will exist for any particular option,
or at any particular time, and for some options, such as over-the-counter
options, no secondary market on an exchange may exist. If the Fund is unable to
effect a closing purchase transaction, the Fund will not sell the underlying
security until the option expires or the Fund delivers the underlying security
upon exercise.
The effectiveness of hedging through the purchase of securities index options
will depend upon the extent to which price movements in the portion of the
securities portfolio being hedged correlate with price movements in the selected
securities index. Perfect correlation is not possible because the securities
held or to be acquired by the Fund will not exactly match the composition of the
securities indexes on which options are written. In the purchase of securities
index options the principal risk is that the premium and transaction costs paid
by the Fund in purchasing an option will be lost if the changes (increase in the
case of a call, decrease in the case of a put) in the level of the index do not
exceed the cost of the option.
Futures. The prices of futures contracts are volatile and are influenced, among
other things, by actual and anticipated changes in the market and interest
rates, which in turn are affected by fiscal and monetary policies and national
and international political and economic events.
Most United States futures exchanges limit the amount of fluctuation permitted
in futures contract prices during a single trading day. The daily limit
establishes the maximum amount that the price of a futures contract may vary
either up or down from the previous day's settlement price at the end of a
trading session. Once the daily limit has been reached in a particular type of
futures contract, no trades may be made on that day at a price beyond that
limit. The daily limit governs only price movement during a particular trading
day and therefore does not limit potential losses, because the limit may prevent
the liquidation of unfavorable positions. Futures contract prices have
occasionally moved to the daily limit for several consecutive trading days with
little or no trading, thereby preventing prompt liquidation of futures positions
and subjecting some futures traders to substantial losses.
Because of the low margin deposits required, futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a futures contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the time of purchase, 10% of
the value of the futures contract is deposited as margin, a subsequent 10%
decrease in the value of the futures contract would result in a total loss of
the margin deposit, before any deduction for the transaction costs, if the
account were then closed out. A 15% decrease would result in a loss equal to
150% of the original margin deposit, if the contract were closed out. Thus, a
purchase or sale of a futures contract may result in losses in excess of the
amount invested in the futures contract.
A decision of whether, when, and how to hedge involves skill and judgment, and
even a well-conceived hedge may be unsuccessful to some degree because of
unexpected market behavior, market trends or interest rate trends. There are
several risks in connection with the use by the Fund of futures contracts as a
hedging device. One risk arises because of the imperfect correlation between
movements in the prices of the futures contracts and movements in the prices of
the underlying instruments which are the subject of the hedge. The Manager will,
however, attempt to reduce this risk by entering into futures contracts whose
movements, in its judgment, will have a significant correlation with movements
in the prices of the Fund's underlying instruments sought to be hedged.
Successful use of futures contracts by the Fund for hedging purposes is also
subject to the Fund's ability to correctly predict movements in the direction of
the market. It is possible that, when the Fund has sold futures to hedge its
portfolio against a decline in the market, the index, indices, or instruments
underlying futures might advance and the value of the underlying instruments
held in the Fund's portfolio might decline. If this were to occur, the Fund
would lose money on the futures and also would experience a decline in value in
its underlying instruments.
Positions in futures contracts may be closed out only on an exchange or a board
of trade which provides the market for such futures. Although the intends to
purchase or sell futures only on exchanges or boards of trade where there
appears to be an active market, there is no guarantee that such will exist for
any particular contract or at any particular time. If there is not a liquid
market at a particular time, it may not be possible to close a futures position
at such time, and, in the event of adverse price movements, the Fund would
continue to be required to make daily cash payments of variation margin.
However, in the event futures positions are used to hedge portfolio securities,
the securities will not be sold until the futures positions can be liquidated.
In such circumstances, an increase in the price of securities, if any, may
partially or completely offset losses on the futures contracts.
Warrants
Warrants give the holder, under certain circumstances, the right to purchase
equity securities consisting of common and preferred stock. The equity security
underlying a warrant is authorized at the time the warrant is issued or is
issued together with the warrant. Investing in warrants can provide a greater
potential for profit or loss than an equivalent investment in the underlying
security, and, thus, can be a speculative investment. The value of a warrant may
decline because of a decline in the value of the underlying security, the
passage of time, changes in interest rates or in the dividend or other policies
of the company whose equity underlies the warrant or a change in the perception
as to the future priced of the underlying security, or any combination thereof.
Warrants generally pay no dividends and confer no voting or other rights other
than to purchase the underlying security.
INVESTMENT LIMITATIONS
Fundamental Policies
The Fund has adopted certain investment restrictions which, in addition to those
restrictions in the Prospectus, are fundamental and may not be changed without
approval by a majority vote of the Fund's shareholders. Such majority is defined
in the Investment Company Act of 1940, as amended ("1940 Act") as the lesser of
(i) 67% or more of the voting securities of the Fund present in person or by
proxy at a meeting, if the holders of more than 50% of the outstanding voting
securities are present or represented by proxy; or (ii) more than 50% of the
outstanding voting securities of the Fund.
The Fund:
1. May (i) borrow money from banks and (ii) make other investments or engage
in other transactions permissible under the 1940 Act which may involve a
borrowing, provided that the combination of (i) and (ii) shall not exceed
33 1/3% of the value of the Fund's total assets (including the amount
borrowed), less the Fund's liabilities (other than borrowings), except that
the Fund may borrow up to an additional 5% of its total assets (not
including the amount borrowed) from a bank for temporary or emergency
purposes (but not for leverage or the purchase of investments).
2. May not issue senior securities, except as permitted under the 1940 Act.
3. May not act as an underwriter of another issuer's securities, except to the
extent that the Fund may be deemed to be an underwriter within the meaning
of the 1933 Act in connection with the purchase and sale of portfolio
securities.
4. May not purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not prevent
the Fund from purchasing or selling options, futures contracts, or other
derivative instruments, or from investing in securities or other
instruments backed by physical commodities).
5. May not make loans if, as a result, more than 33 1/3% of the Fund's total
assets would be lent to other persons, except through (i) purchases of debt
securities or other debt instruments, or (ii) engaging in repurchase
agreements.
6. May not purchase the securities of any issuer if, as a result, more than
25% of the Fund's total assets would be invested in the securities of
issuers, the principal business activities of which are in the same
industry.
7. May not purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not prohibit
the Fund from purchasing or selling securities or other instruments backed
by real estate or of issuers engaged in real estate activities).
8. May, notwithstanding any other fundamental investment policy or
restriction, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objective, policies, and restrictions as the Fund.
The following are the Fund's non-fundamental operating policies, which may be
changed by the Board of Trustees of the Fund without shareholder approval.
The Fund may not:
1. Sell securities short, unless the Fund owns or has the right to obtain
securities equivalent in kind and amount to the securities sold short, or
unless it covers such short sale as required by the current rules and
positions of the SEC or its staff, and provided that transactions in
options, futures contracts, options on futures contracts, or other
derivative instruments are not deemed to constitute selling securities
short.
2. Purchase securities on margin, except that the Fund may obtain such
short-term credits as are necessary for the clearance of transactions; and
provided that margin deposits in connection with futures contracts, options
on futures contracts, or other derivative instruments shall not constitute
purchasing securities on margin.
3. Invest in illiquid securities if, as a result of such investment, more than
15% of its net assets would be invested in illiquid securities, or such
other amounts as may be permitted under the 1940 Act.
4. Purchase securities of other investment companies except in compliance with
the 1940 Act.
5. Engage in futures or options on futures transactions which are
impermissible pursuant to Rule 4.5 under the Commodity Exchange Act and, in
accordance with Rule 4.5, will use futures or options on futures
transactions solely for bona fide hedging transactions (within the meaning
of the Commodity Exchange Act); provided, however, that the Fund may, in
addition to bona fide hedging transactions, use futures and options on
futures transactions if the aggregate initial margin and premiums required
to establish non-hedging positions, less the amount by which any such
options positions are in the money (within the meaning of the Commodity
Exchange Act), do not exceed 5% of the liquidation value of the Fund's
total assets.
6. Borrow money except (i) from banks or (ii) through reverse repurchase
agreements or mortgage dollar rolls, and will not purchase securities when
bank borrowing exceed 5% of its total assets.
7. Make any loans other than loans of portfolio securities, except through (i)
purchases of debt securities or other debt instruments, or (ii) engaging in
repurchase agreements.
Except for the fundamental investment limitations listed above and in the
Prospectus and the Fund's investment objective, all other investment policies,
limitations and restrictions described in the Prospectus and this Statement of
Additional Information are not fundamental and may be changed with approval of
the Fund's Board of Trustees. Unless noted otherwise, if a percentage
restriction is adhered to at the time of investment, a later increase or
decrease in percentage resulting from a change in the Fund's assets (i.e., due
to cash inflows or redemptions) or in market value of the investment or the
Fund's assets will not constitute a violation of that restriction.
THE MANAGER
The Trust and Blue Ridge Advisors, Inc. have entered into a management agreement
(the "Management Agreement"). The Management Agreement provides certain
limitations on the Manager's liability, but also provides that the Manager shall
not be protected against any liability to the Trust or its shareholders by
reason of willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard of its obligations or
duties thereunder.
The Management Agreement obligates the Manager to: (1) provide overall advice
and guidance with respect to the Fund, and provide advice and guidance to the
Trust's Trustees, in accordance with the Fund's investment objective, program,
policies and restrictions; (2) provide investment advice to the Fund, and manage
the investment of the Fund and the composition of the Fund's portfolio
securities and investments; (3) periodically monitor and evaluate the
performance of the Fund with respect to the Fund's investment objective,
program, policies and restrictions; (4) monitor the compliance of the Manager,
and the Manager's employees acting on behalf of the Manager with the investment
objective, program, policies and restrictions of the Fund, the 1940 Act, and
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"); (5)
provide all supervisory and management services reasonably necessary for the
operation of the Fund; (6) provide or procure on behalf of the Trust and the
Fund, and at the expense of the Manager, administrative and fund accounting
services, transfer agency services, dividend disbursing services, custodial
services, distribution services (except for the front-end sales load paid by
investors in the Class ___ shares) and other services necessary for the ordinary
operation of the Fund; (7) render to the Board of Trustees of the Trust such
periodic and special reports as the Board may reasonably request; and (8) make
available its officers and employees to the Board of Trustees as officers of the
Trust for consultation and discussions regarding the management of the Fund and
services provided to the Trust under the Management Agreement.
The Manager is entitled to a fee which is calculated daily and paid monthly. The
fees to be paid under the Management Agreement are set forth in the Prospectus.
The continuance of the Management Agreement with respect to the Fund after the
first two years must be specifically approved at least annually (i) by the
Trust's Board of Trustees or by vote of a majority of the outstanding voting
securities of the Fund and (ii) by the affirmative vote of a majority of the
Trustees who are not parties to the agreement or interested persons of any such
party by votes cast in person at a meeting called for such purpose. The
Management Agreement with respect to the Fund may be terminated (i) at any time
without penalty by the Trust upon the vote of a majority of the Trustees or by
vote of the majority of the outstanding voting securities of the Fund upon sixty
(60) days' written notice to the Manager or (ii) by the Manager at any time
without penalty upon sixty (60) days' written notice to the Trust. The
Management Agreement will also terminate automatically in the event of its
assignment (as defined in the 1940 Act).
THE ADMINISTRATOR AND TRANSFER AGENT
The Manager has entered into an administration agreement with The Nottingham
Company (the "Administrator"), 105 North Washington Street, Post Office Drawer
69, Rocky Mount, North Carolina 27802-0069, pursuant to which the Administrator
is compensated by the Manager and not directly by the Fund.
Under that agreement, the Administrator will perform the following services for
the Fund: (1) coordinate with and monitor the services of all third parties
furnishing services to the Fund; (2) provide the Fund with necessary office
space, telephones and other communications facilities and personnel competent to
perform administrative and clerical functions for the Fund; (3) supervise the
maintenance by third parties of such books and records of the Fund as may be
required by applicable federal or state law; (4) 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; (5) 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; (6)
prepare and, after approval by the Trust, arrange for the filing of such
registration statements and other documents with the SEC and other federal and
state regulatory authorities as may be required by applicable law; (7) 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 (8) 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 will provide certain accounting and
pricing services for the Fund.
The Manager has also contracted with NC 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 address of
the Transfer Agent is 107 North Washington Street, Post Office Box 4365, Rocky
Mount, North Carolina 27803-0365. The Transfer Agent is compensated for its
services by the Manager and not directly by the Fund.
THE DISTRIBUTOR
Capital Investment Group, Inc. (the "Distributor"), Post Office Box 32249,
Raleigh, North Carolina 27622, serves as the Distributor of the Fund's shares
pursuant to a distribution Agreement (the "Distribution Agreement") entered into
with the Manager. Unless otherwise terminated, the Distribution Agreement for
the Fund will remain in effect for two years from the date of its execution,
and, thereafter will continue from year to year upon annual approval by the
Trust's Board of Trustees, or by vote of a majority of the outstanding voting
securities of the Trust and by the vote of a majority of the Board of Trustees
who are not parties to the Distribution Agreement or interested persons of any
such part, cast in person at a meeting called for the purpose of voting on such
approval. The Distribution Agreement will terminate in the event of its
assignment, as defined in the 1940 Act. The Distributor is compensated for its
services by the Manager and not directly by the Fund, except that investors in
the Class ___ shares pay a front-end sales load that will be used to compensate
the Distributor.
THE CUSTODIAN
The Manager has entered into a Custodian Agreement with First Union National
Bank of North Carolina (the "Custodian"), Two First Union Center, Charlotte,
North Carolina 28288-1151, pursuant to which custodial services are provided for
the Fund. The Custodian is compensated for its services by the Manager and not
directly by the Fund.
INDEPENDENT AUDITORS
The firm of Deloitte & Touch LLP, 2500 One PPG Place , Pittsburgh, Pennsylvania
15222-5401, serves as independent auditors for the Fund, and will 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.
TRUSTEES AND OFFICERS OF THE TRUST
The management and affairs of the Trust are supervised by the Trustees under the
laws of the State of Delaware. The Trustees and executive officers of the Trust
and the principal occupations for the last five years are set forth below. Each
may have held other positions with the named companies during that period. The
age of each Trustee and officer is indicated in the parenthesis.
JEFFREY M. DOYON (33) - Trustee and Chief Financial Officer - President, the
Manager since July, 1997; Chief Financial Officer and General Manager, Janed
Enterprises, Inc. (specialty chemical manufacturing) since January, 1996; and
Registered Representative, Royal Alliance Associates (brokerage) from February,
1996 to September, 1997. Prior thereto, Registered Representative (1994-1996),
Smith Barney/Robinson-Humphrey (brokerage); and Project Manager (1990-1992) and
General Director (1992-1994), Sea-Land CIS Logistics (international logistics &
transport).
ALLEN R. GILLESPIE (25) - Trustee - Vice President, the Manager. Prior thereto,
Registered Representative (1995-1997), Smith Barney/Robinson-Humphrey
(brokerage).
Each current Trustee of the Trust who is not an "interested person" of the Trust
is expected to receive the following compensation during the fiscal year ending
[insert date]:
<TABLE>
<S> <C> <C> <C> <C>
- -------------------------------- ------------------- ------------------- ---------------- --------------------
Pension or
Retirement
Benefits Accrued Estimated [Total Compensation
Aggregate as Part Annual from the Trust
Name of Person, Compensation from of Trust Expenses Benefits Upon Paid to Trustees*]
Position the Fund* Retirement
================================ =================== =================== ================ ====================
[to be provided] $2000
- -------------------------------- ------------------- ------------------- ---------------- --------------------
[to be provided] $2000
- -------------------------------- ------------------- ------------------- ---------------- --------------------
[to be provided] $2000
- -------------------------------- ------------------- ------------------- ---------------- --------------------
</TABLE>
- -------------------
*The Trust is expected to pay approximately $2000 to each Trustee who is not an
"interested person" of the Trust for the fiscal year ending [insert date].
As the Fund's initial shareholder, Blue Ridge Advisors, Inc. holds all of the
outstanding shares, both beneficially and of record, of the Fund as of the date
of this Statement of Additional Information.
CALCULATION OF TOTAL RETURN
The Fund may advertise its total return. The total return of the Fund refers to
the average compounded rate of return to a hypothetical investment for
designated time periods (including but not limited to, the period from which the
Fund commenced operations through the specified date), assuming that the entire
investment is redeemed at the end of each period. In particular, total return
will be calculated according to the following formula: P (1 + T)n = ERV, where P
= a hypothetical initial payment of $1,000; T = average annual total return; n =
number of years; and ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the designated time period as of the end of
such period.
Quotations of total return, which are not annualized, represent historical
earnings and asset value fluctuations. Total return is based on past performance
and is not a guarantee of future results.
PURCHASE AND REDEMPTION OF SHARES
Purchases and redemptions of the Fund's classes of shares may be made on any day
on which the New York Stock Exchange is open for business. Currently, the
following holidays are observed by the Trust: New Year's Day, Martin Luther
King's Birthday, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day. Shares of the Fund are offered on
a continuous basis.
It is currently the Trust's policy to pay all redemptions in cash. The Trust
retains the right, however, to alter this policy to provide for redemptions in
whole or in part by a distribution in-kind of securities held by the Fund in
lieu of cash. Shareholders may incur brokerage charges on the sale of any such
securities so received in payment of redemptions.
The Trust reserves the right to suspend the right of redemption and/or to
postpone the date of payment upon redemption for any period on which trading on
the New York Stock Exchange is restricted, or during the existence of an
emergency (as determined by the SEC by rule or regulation) as a result of which
disposal or valuation of the Fund's securities is not reasonably practicable, or
for such other periods as the SEC has by order permitted. The Trust also
reserves the right to suspend sales of shares of the Fund for any period during
which the New York Stock Exchange, the Manager or any of the Trust's third party
service providers are not open for business.
DETERMINATION OF NET ASSET VALUE
For purposes of calculating net asset value per share, all assets and
liabilities initially expressed in non-U.S. currencies will be converted into
U.S. dollars at the prevailing market rates at the time of valuation.
* Equity securities are valued at the last sale price on the principal
exchange or market where they are traded.
* Securities which have not traded on the date of valuation, or securities
for which sales prices are not generally reported, are valued at the mean
between the current bid and asked prices.
* Securities listed on a non-U.S. exchange are valued at the last quoted sale
price available before the time when net assets are valued.
* Bond and other fixed income securities (other than short-term obligations)
are valued on the basis of valuations furnished by a pricing service, use
of which has been approved by the Board of Trustees. In making such
valuations, the pricing service utilizes both dealer-supplied valuations
and electronic data processing techniques that take into account
appropriate factors such as institutional-size trading in similar groups of
securities, yield, quality, coupon rate, maturity, type of issue, trading
characteristics and other market data, without exclusive reliance upon
quoted prices or exchange or over-the-counter prices, since such valuations
are believed to reflect more accurately the fair value of such securities.
* Short-term obligations (maturing in 60 days or less) are valued at
amortized cost, which constitutes fair value as determined by the Board of
Trustees.
* Future contracts are normally valued at the settlement price on the
exchange on which they are traded.
* Securities for which there are no such valuations are valued at fair value
as determined in good faith by or at the direction of the Board of
Trustees.
Trading in securities on most non-U.S. exchanges and over-the-counter markets is
normally completed before the close of regular trading on the New York Stock
Exchange and may also take place on days on which the New York Stock Exchange is
closed. If events materially affecting the value of non-U.S. securities occur
between the time when the exchange on which they are traded closes and the time
when the Fund's net asset value is calculated, such securities will be valued at
fair value in accordance with procedures established by and under the general
supervision of the Board of Trustees.
Interest income on long-term obligations held for the Fund is determined on the
basis of interest accrued plus amortization of "original issue discount"
(generally, the difference between issue price and stated redemption price at
maturity) and premiums (generally, the excess of purchase price over stated
redemption price at maturity). Interest income on short-term obligations is
determined on the basis of interest accrued less amortization of any premium.
Subject to compliance with applicable regulations, the Trust has reserved the
right to pay the redemption price of shares of the Fund, either totally or
partially, by a distribution-in-kind of readily marketable securities (instead
of cash). The securities so distributed would be valued at the same amount at
that assigned to them in calculation the net asset value of the shares being
sold. If a holder of shares received a distribution in kind, that holder could
incur brokerage or other charges in converting the securities to cash.
TAXES
The following is only a summary of certain income tax considerations generally
affecting the Fund and its shareholders, and is not intended as a substitute for
careful tax planning. Shareholders are urged to consult their tax advisors with
specific reference to their own tax situations, including their state and local
income tax liabilities.
Federal Income Tax
The following discussion of federal income tax consequences is based on the
Code, and the regulations issued thereunder as in effect on the date of this
Statement of Additional Information. New legislation, as well as administrative
changes or court decisions, may significantly change the conclusions expressed
herein, and may have a retroactive effect with respect to the transactions
contemplated herein.
The Fund intends to qualify as a "regulated investment company" ("RIC") as
defined under Subchapter M of the Code. By maintaining its qualifications as a
RIC, the Fund intends to eliminate or reduce to a nominal amount the federal
taxes to which it may be subject.
In order to qualify for treatment as a RIC under the Code, the Fund must
distribute annually to its shareholders at least the sum of 90% of its net
interest income excludable from gross income plus 90% of its investment company
taxable income (generally, net investment income plus net short-term capital
gain) ("Distribution Requirement") and also must meet several additional
requirements. Among these requirements are the following: (i) at least 90% of
the Fund's gross income each taxable year must be derived from dividends,
interest, payments with respect to securities loans and gains from the sale or
other disposition of stock or securities, or certain other income; (ii) at the
close of each quarter of the Fund's taxable year, at least 50% of the value of
its total assets must be represented by cash and cash items, U.S. Government
securities, securities of other RICs and other securities, with such other
securities limited, in respect to any one issuer, to an amount that does not
exceed 5% of the value of the Fund's assets and that does not represent more
than 10% of the outstanding voting securities of such issuer; and (iii) at the
close of each quarter of the Fund's taxable year, not more than 25% of the value
of its assets may be invested in securities (other than U.S. Government
securities or the securities of other RICs) of anyone issuer or of two or more
issuers which are engaged in the same, similar or related trades or businesses
if the Fund owns at least 20% of the voting power of such issuers.
Notwithstanding the Distribution Requirement described above, which requires
only that the Fund distribute at least 90% of its annual investment company
taxable income and does not require any minimum distribution of net capital gain
(the excess of net long-term capital gain over net short-term capital loss), the
Fund will be subject to a nondeductible 4% federal excise tax to the extent it
fails to distribute by the end of any calendar year 98% of its ordinary income
for that year and 98% of its capital gain net income (the excess of short- and
long-term capital gains over short- and long-term capital losses) for the
one-year period ending on October 31 of that calendar year, plus certain other
amounts.
In certain cases, the Fund will be required to withhold, and remit to the U.S.
Treasury, 31% of any distributions paid to a shareholder who (1) has failed to
provide a correct taxpayer identification number, (2) is subject to backup
withholding by the Internal Revenue Service, or (3) has not certified to the
Fund that such shareholder is not subject to backup withholding.
If the Fund fails to qualify as a RIC for any taxable year, it will be taxable
at regular corporate rates on its net investment income and net capital gain
without any deductions for amounts distributed to shareholders. In such an
event, all distributions (including capital gains distributions) will be taxable
as ordinary dividends to the extent of the Fund's current and accumulated
earnings and profits and such distributions will generally be eligible for the
corporate dividends-received deduction.
State Taxes
Distributions by the Fund to shareholders and the ownership of shares maybe
subject to state and local taxes.
PORTFOLIO TRANSACTIONS
The Manager is authorized to select brokers and dealers to effect securities
transactions for the Fund. The Manager will seek to obtain the most favorable
net results by taking into account various factors, including price, commission,
if any, size of the transactions and difficulty of executions, the firm's
general execution and operational facilities and the firm's risk in positioning
the securities involved. While the Manager generally seek reasonably competitive
commissions, the Trust will not necessarily be paying the lowest spread or
commission available. The Manager seeks to select brokers or dealers that offer
the Fund best price and execution or other services which are of benefit to the
Fund. Certain brokers or dealers assist their clients in the purchase of shares
and charge a fee for this service in addition to the Fund's public offering
price. In the case of securities traded in the over-the-counter market, the
Manager expects normally to seek to select primary market makers.
The Manager may, consistent with the interests of the Fund, select brokers on
the basis of the research services they provide to the Manager. Such services
may include analyses of the business or prospects of a company, industry or
economic sector, or statistical and pricing services. Information so received by
the Manager will be in addition to and not in lieu of the services required to
be performed by the Manager under the Management Agreement. If, in the judgment
of the Manager, the Fund or other accounts managed by the Manager will be
benefited by supplemental research services, the Manager is authorized to pay
brokerage commissions to a broker furnishing such services which are in excess
of commissions which another broker may have charged for effecting the same
transaction. These research services include advice, either directly or through
publications or writings, as to the value of securities, the advisability of
investing in, purchasing or selling securities, and the availability of
securities or purchasers or sellers of securities; furnishing of analyses and
reports concerning issuers, securities or industries; providing information on
economic factors and trends; assisting in determining Fund strategy; providing
computer software used in security analyses; and providing Fund performance
evaluation and technical market analyses. The expenses of the Manager will not
necessarily be reduced as a result of the receipt of such information, and such
services may not be used exclusively, or at all, with respect to the Fund or
account generating the brokerage, and there can be no guarantee that the Manager
will find all of such services of value in advising the Fund.
It is expected that the Fund may execute brokerage or other agency transactions
through the Distributor, which is a registered broker-dealer, for a commission
in conformity with the 1940 Act, the Securities Exchange Act of 1934 and rules
promulgated by the SEC. Under these provisions, the Distributor is permitted to
receive and retain compensation for effecting Fund transactions for the Fund on
an exchange if a written contract is in effect between the Distributor and the
Fund expressly permitting the Distributor to receive and retain such
compensation. These rules further require that commissions paid to the
Distributor by the Fund for exchange transactions not exceed "usual and
customary" brokerage commissions. The rules define "usual and customary"
commissions to include amounts which are "reasonable and fair compared to the
commission, fee or other remuneration received or to be received by other
brokers in connection with comparable transactions involving similar securities
being purchased or sold on a securities exchange during a comparable period of
time. The Trustees, including those who are not "interested persons" of the
Trust, have adopted procedures for evaluating the reasonableness of commissions
paid to the Distributor and will review these procedures periodically.
Consistent with the Conduct Rules of the National Association of Securities
Dealers, Inc. and subject to seeking best execution and such other policies as
the Board of Trustees may determine, the Manager may consider sales of the
Fund's shares as a factor in the selection of broker-dealers to execute Fund
transactions for the Fund.
The Board of Trustees has adopted a Code of Ethics governing personal trading by
persons who manage, or who have access to trading activity by the Fund. The Code
of Ethics allows trades to be made in securities that may be held by the Fund,
however, it prohibits a person from taking advantage of Fund trades or from
acting on inside information.
DESCRIPTION OF SHARES
The Trust is an open-end management investment company - - a type of company
commonly known as a "mutual fund." It is registered as such under the 1940 Act.
The Trust, organized as a Delaware business trust, currently offers two classes
of shares on behalf of the Total Return Fund. The two classes of shares are
currently offered under the Trust's multi-class distribution system approved by
the Trust's Board of Trustees on November ____, 1997. Under the Trust's
multi-class distribution system, shares of each class of the Fund represent an
equal pro rata interest in the Fund and, generally, will have identical voting,
dividend, liquidation, and other rights.
Under Delaware law, annual election of Trustees is not required, and, in the
normal course, the Trust does not expect to hold annual meetings of
shareholders. There will normally be no meetings of shareholders for the purpose
of electing Trustees unless and until such time as less than a majority of the
Trustees holding office have been elected by shareholders, at which time the
Trustees then in office will call a shareholders' meeting for the election of
Trustees. Pursuant to the procedures set forth in Section 16(c) of the 1940 Act,
shareholders of record of not less than two-thirds of the outstanding shares of
the Trust may remove a Trustee by a vote cast in person or by proxy at a meeting
called for that purpose.
Except as set forth above, the Trustees will continue to hold office and may
appoint successor Trustees. Voting rights are not cumulative, so that the
holders of more than 50% of the shares voting in the election of Trustees can,
if they choose to do so, elect all the Trustees of the Trust, in which event the
holders of the remaining shares will be unable to elect any person as a Trustee.
The Declaration of Trust of the Trust requires the affirmative vote of a
majority of the outstanding shares of the Trust.
The shares of the Fund, when issued, will be fully paid and non-assessable and
will have no preference, preemptive, conversion, exchange or similar rights.
<PAGE>
PART C: OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements:
(to be provided by amendment)
(b) Exhibits:
1(a). Agreement and Declaration of Trust.
1(b). Certificate of Trust.
2. By-Laws of the Trust.
3. Not applicable.
4. Not Applicable.
5. Investment Management Agreement between Blue Ridge Funds Trust and
Blue Ridge Advisors, Inc. dated _______, 1997 (to be provided by
amendment).
6. Distribution Agreement between Blue Ridge Advisors, Inc. and Capital
Investment Group, Inc. dated ____________, 1997 (to be provided by
amendment).
7. Not applicable.
8. Custody Agreement between Blue Ridge Advisors, Inc. and First Union
National Bank of North Carolina dated __________, 1997 (to be provided
by amendment).
9. Not applicable.
10. Opinion and Consent of Dechert Price & Rhoads regarding the legality
of the securities being registered (to be provided by amendment).
11. Consent of Deloitte & Touche, LLP, Independent Public Accountants (to
be provided by amendment).
12. Not applicable.
13. Stock Subscription Agreement/Letter of Intent (to be provided by
amendment).
14. Not applicable.
15. Not applicable.
16. Not applicable.
17. Financial Data Schedule (to be provided by amendment).
18. Plan Pursuant to Rule 18f-3 under the 1940 Act (to be provided by
amendment).
Item 25. Persons Controlled by or under Common Control with Registrant.
Blue Ridge Advisors, Inc. controls the Trust by virtue of its ownership of
100% of the Trust's shares as of __________, 1997.
Item 26. Number of Holders of Securities.
NUMBER OF RECORD HOLDERS
TITLE OF CLASS AS OF SEPTEMBER 15, 1997
- ------------------------------ --------------------------
Blue Ridge Total Return Fund None
Item 27. Indemnification.
Declaration of Trust ("Declaration of Trust") and By-Laws.
Article VII, Section 2 of the Trust's Declaration of Trust of Blue
Ridge Funds Trust ("Trust") states, in relevant part, that a "Trustee, when
acting in such capacity, shall not be personally liable to any Person, other
than the Trust or a Shareholder to the extent provided in this Article VII, for
any act, omission or obligation of the Trust, of such Trustee or of any other
Trustee. The Trustees shall not be responsible or liable in any event for any
neglect or wrongdoing of any officer, agent, employee, Manager, or Distributor
of the Trust. The Trust shall indemnify each Person who is serving or has served
at the Trust's request as a director, officer, trustee, employee, or agent of
another organization in which the Trust has any interest as a shareholder,
creditor, or otherwise to the extent and in the manner provided in the By-Laws."
Article VII, Section 4 of the Trust's Declaration of Trust further states, in
relevant part, that the "Trustees shall be entitled and empowered to the fullest
extent permitted by law to purchase with Trust assets insurance for liability
and for all expenses reasonably incurred or paid or expected to be paid by a
Trustee, officer, employee, or agent of the Trust in connection with any claim,
action, suit, or proceeding in which he or she may become involved by virtue of
his or her capacity or former capacity as a Trustee of the Trust."
Article VI, Section 2 of the Trust's By-Laws states, in relevant part,
that "[s]ubject to the exceptions and limitations contained in Section 3 of this
Article VI, every [Trustee, officer, employee or other agent of the Trust] 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 or her
in connection with any proceeding in which he or she becomes involved as a party
or otherwise by virtue of his or her being or having been an agent." Article VI,
Section 3 of the Trust's By-Laws further states, in relevant part, that "[n]o
indemnification shall be provided hereunder to [a Trustee, officer, employee or
other agent of the Trust]: (a) who shall have been adjudicated, by the court or
other body before which the proceeding was brought, to be liable to the Trust or
its Shareholders by reason of willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of his or her office
(collectively, "disabling conduct"); or (b) with respect to any proceeding
disposed of (whether by settlement, pursuant to a consent decree or otherwise)
without an adjudication by the court or other body before which the proceeding
was brought that such [Trustee, officer, employee or other agent of the Trust]
was liable to the Trust or its Shareholders by reason of disabling conduct,
unless there has been a determination that such [Trustee, officer, employee or
other agent of the Trust] did not engage in disabling conduct: (i) by the court
or other body before which the proceeding was brought; (ii) by at least a
majority of those Trustees who are neither Interested Persons of the Trust nor
are parties to the proceeding based upon a review of readily available facts (as
opposed to a full trial-type inquiry); or (iii) by written opinion of
independent legal counsel based upon a review of readily available facts (as
opposed to a full trial-type inquiry); provided, however, that indemnification
shall be provided hereunder to [a Trustee, officer, employee or other agent of
the Trust] with respect to any proceeding in the event of (1) a final decision
on the merits by the court or other body before which the proceeding was brought
that the [Trustee, officer, employee or other agent of the Trust] was not liable
by reason of disabling conduct, or (2) the dismissal of the proceeding by the
court or other body before which it was brought for insufficiency of evidence of
any disabling conduct with which such [Trustee, officer, employee or other agent
of the Trust] has been charged." Article VI, Section 4 of the Trust's By-Laws
also states that the "rights of indemnification herein provided (i) may be
insured against by policies maintained by the Trust on behalf of any [Trustee,
officer, employee or other agent of the Trust], (ii) shall be severable, (iii)
shall not be exclusive of or affect any other rights to which any [Trustee,
officer, employee or other agent of the Trust] may now or hereafter be entitled
and (iv) shall inure to the benefit of [such party's] heirs, executors and
administrators."
UNDERTAKING
Insofar as indemnification for liability arising under the Securities
Act of 1933, as amended (the "Act") may be permitted to Trustees, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a Trustee, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such Trustee, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
Item 28. Business and Other Connections of the Manager.
The description of Blue Ridge Advisors, Inc. under the caption of "General
Information -The Manager" in the Prospectus and under the caption "The Manager"
in the Statement of Additional Information constituting Parts A and B,
respectively, of this Registration Statement are incorporated by reference
herein. Information concerning the directors and officers of Blue Ridge
Advisors, Inc. as set forth in Blue Ridge Advisors, Inc.'s Form ADV filed with
the Securities and Exchange Commission on August 15, 1997 (File No. 801-54829),
and amended through the date hereof, is incorporated by reference herein.
Item 29. Principal Underwriters.
(a) Capital Investment Group, Inc., the Registrant's distributor, is also the
underwriter and distributor for the Chesapeake Growth Fund, The Chesapeake
Fund, Capital Value Fund, ZSA Asset Allocation Fund, The Brown Capital
Management Equity Fund, The Brown Capital Mangement Balanced Fund, The
Brown Capital Management Small Company Fund, The Grandview REIT Index Fund
and the Grandview Reality Growth Fund and the Investek Fixed Income Trust.
(b) Set forth below is certain information regarding the directors and officers
of Capital Investment Group, Inc.
<TABLE>
<S> <C> <C>
NAME AND PRINCIPAL BUSINESS ADDRESS POSITION(S) AND OFFICE(S) WITH POSITION(S) AND OFFICE(S) WITH
CAPITAL INVESTMENT GROUP, INC. REGISTRANT
Richard K. Bryant President NONE
17 Glenwood Avenue
Raleigh, N.C.
E.O. Edgerton, Jr. Vice President NONE
17 Glenwood Avenue
Raleigh, N.C.
</TABLE>
(c) Not applicable.
Item 30. Location of Accounts and Records.
Books or other documents required to be maintained by Section 31(a) of the
Investment Company Act of 1940, and the Rules promulgated thereunder, are
maintained as follows:
(a) With respect to Rules 31a-1(a); 31a-1(b)(1); (2)(a) and (b); (3); (6); (8);
(12); and 31a-1(d), the required books and records are maintained at the
offices of Registrant's Custodian:
First Union National Bank of North Carolina
Two First Union Center
Charlotte, N.C. 28288-1151
(b) With respect to Rules 31a-1(a); 31a-1(b)(1), (4); (2)(C) and (D); (4); (5);
(6); (8); (9); (10); (11) and 31a-1(f), the required books and records are
currently maintained at the offices of the Registrant's Administrator:
The Nottingham Company
105 North Washington Street
Post Office Drawer 69
Rocky Mount, North Carolina 27802-0069
(c) With respect to Rules 31a-1(b)(5), (6), (9) and (10) and 31a-1(f), the
required books and records are maintained at the principal offices of the
Registrant's Manager:
Blue Ridge Advisors, Inc.
84 Villa Road, B37
Greenville, S.C. 29615
Item 31. None.
Item 32. Undertakings.
(a) Inapplicable.
(b) The Registrant hereby undertakes to file a post-effective amendment,
including financial statements which need not be audited, within four
to six months from the later of the commencement of operations of the
Registrant or the effective date of the Registrant's 1933 Act
Registration Statement.
(c) Inapplicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,as amended, and the
Investment Company Act of 1940, as amended, the Registrant has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Greenville, and the State of South Carolina on
the 29th day of September, 1997.
BLUE RIDGE FUNDS TRUST
By: /s/ Jeffrey M. Doyon
Jeffrey M. Doyon
President and Chief
Financial Officer
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/ Jeffrey M. Doyon
- ------------------- President and Chief September 29, 1997
Jeffrey M. Doyon Financial Officer
/s/ Allen R. Gillespie
- ------------------- Trustee September 29, 1997
Allen R. Gillespie
<PAGE>
EXHIBIT LIST
EXHIBIT NUMBER DESCRIPTION
1(a). Agreement and Declaration of Trust.
1(b). Certificate of Trust.
2. By-Laws of the Trust.
EXHIBIT 1(a)
AGREEMENT AND DECLARATION OF TRUST
of
Blue Ridge Funds Trust
a Delaware Business Trust
Principal Place of Business:
107 North Washington Street
Post Office Box 4365
Rocky Mount, North Carolina 27803-0365
<PAGE>
TABLE OF CONTENTS
AGREEMENT AND DECLARATION OF TRUST
<TABLE>
<S> <C>
ARTICLE I.........................................................................................................1
(a) "By-Laws"............................................................................................1
(b) "Certificate of Trust"...............................................................................1
(c) "Class"..............................................................................................1
(d) "Commission".........................................................................................1
(e) "Declaration of Trust"...............................................................................1
(f) "Delaware Act".......................................................................................2
(g) "Interested Person"..................................................................................2
(h) "Manager"............................................................................................2
(i) "1940 Act"...........................................................................................2
(j) "Person".............................................................................................2
(k) "Principal Underwriter"..............................................................................2
(l) "Series".............................................................................................2
(m) "Shareholder"........................................................................................2
(n) "Shares".............................................................................................2
(o) "Trust"..............................................................................................2
(p) "Trust Property".....................................................................................2
(q) "Trustees"...........................................................................................2
ARTICLE II........................................................................................................2
ARTICLE III.......................................................................................................3
1. Division of Beneficial Interest......................................................................3
2. Ownership of Shares..................................................................................3
Section 3. Transfer of Shares...........................................................................4
4. Investments in the Trust.............................................................................4
5. Status of Shares and Limitation of Personal Liability................................................4
6. Establishment and Designation of Series or Class.....................................................4
(a) Assets Held with Respect to a Particular Series.............................................5
(b) Liabilities Held with Respect to a Particular Series........................................5
(c) Dividends, Distributions, Redemptions, and Repurchases......................................6
(d) Equality....................................................................................6
(e) Fractions...................................................................................6
(f) Exchange Privilege..........................................................................6
(g) Combination of Series.......................................................................6
7. Indemnification of Shareholders......................................................................6
ARTICLE IV........................................................................................................7
1. Number, Election and Tenure..........................................................................7
2. Effect of Death, Resignation, etc. of a Trustee......................................................7
3. Powers...............................................................................................7
4. Payment of Expenses by the Trust....................................................................11
5. Payment of Expenses by Shareholders.................................................................11
6. Ownership of Assets of the Trust....................................................................12
7. Service Contracts...................................................................................12
8. Trustees and Officers as Shareholders...............................................................13
ARTICLE V........................................................................................................13
1. Voting Powers, Meetings, Notice, and Record Dates...................................................13
2. Quorum and Required Vote............................................................................14
3. Record Dates........................................................................................14
4. Additional Provisions...............................................................................14
ARTICLE VI.......................................................................................................15
1. Determination of Net Asset Value, Net Income, and Distributions.....................................15
2. Redemptions and Repurchases.........................................................................15
ARTICLE VII......................................................................................................16
1. Compensation........................................................................................16
2. Indemnification and Limitation of Liability.........................................................16
3. Trustee's Good Faith Action, Expert Advice, No Bond or Surety.......................................17
4. Insurance...........................................................................................17
ARTICLE VIII.....................................................................................................17
1. Liability of Third Persons Dealing with Trustees....................................................17
2. Termination of the Trust or Any Series or Class.....................................................17
3. Reorganization......................................................................................18
4. Amendments..........................................................................................18
5. Filing of Copies, References, Headings..............................................................19
6. Applicable Law......................................................................................19
7. Provisions in Conflict with Law or Regulations......................................................20
8. Business Trust Only.................................................................................20
</TABLE>
<PAGE>
AGREEMENT AND DECLARATION OF TRUST
OF
Blue Ridge Funds Trust
THIS AGREEMENT AND DECLARATION OF TRUST is made and entered into as of the
date set forth below by the Trustees named hereunder for the purpose of forming
a Delaware business trust in accordance with the provisions hereinafter set
forth.
NOW, THEREFORE, the Trustees hereby direct that the Certificate of Trust be
filed with the Office of the Secretary of State of the State of Delaware and do
hereby declare that the Trustees will hold IN TRUST all cash, securities, and
other assets which the Trust now possesses or may hereafter acquire from time to
time in any manner and manage and dispose of the same upon the following terms
and conditions for the benefit of the holders of Shares of this Trust.
ARTICLE I
Name and Definitions
Section 1. Name. This Trust shall be known as the Blue Ridge Funds Trust
and the Trustees shall conduct the business of the Trust under that name or any
other name as they may from time to time determine.
Section 2. Definitions. Whenever used herein, unless otherwise required by
the context or specifically provided:
(a) "By-Laws"shall mean the By-Laws of the Trust as amended from time to
time, which By-Laws are expressly herein incorporated by reference as part of
the "governing instrument" within the meaning of the Delaware Act;
(b) "Certificate of Trust" means the certificate of trust, as amended or
restated from time to time, filed by the Trustees in the Office of the Secretary
of State of the State of Delaware in accordance with the Delaware Act;
(c) "Class" means a class of Shares of a Series of the Trust established in
accordance with the provisions of Article III hereof;
(d) "Commission" shall have the meaning given such term in the 1940 Act;
(e) "Declaration of Trust" means this Agreement and Declaration of Trust,
as amended or restated from time to time;
(f) "Delaware Act" means the Delaware Business Trust Act 12 Del. C.ss.ss.
3801 et seq., as amended from time to time;
(g) "Interested Person" shall have the meaning given it in Section 2(a)(19)
of the 1940 Act;
(h) "Manager" means a party furnishing advisory or mangement services to
the Trust pursuant to any contract described in Article IV, Section 7(a) hereof;
(i) "1940 Act" means the Investment Company Act of 1940 and the rules and
regulations thereunder, all as amended from time to time;
(j) "Person" means and includes individuals, corporations, partnerships,
trusts, associations, joint ventures, estates, and other entities, whether or
not legal entities, and governments and agencies and political subdivisions
thereof, whether domestic or foreign;
(k) "Principal Underwriter" shall have the meaning given such term in the
1940 Act;
(l) "Series" means each Series of Shares established and designated under
or in accordance with the provisions of Article III hereof;
(m) "Shareholder" means a record owner of outstanding Shares;
(n) "Shares" means the shares of beneficial interest into which the
beneficial interest in the Trust shall be divided from time to time and includes
fractions of Shares as well as whole Shares;
(o) "Trust" means the Delaware Business Trust established under the
Delaware Act by this Declaration of Trust and the filing of the Certificate of
Trust in the Office of the Secretary of State of the State of Delaware;
(p) "Trust Property" means any and all property, real or personal, tangible
or intangible, which is from time to time owned or held by or for the account of
the Trust; and
(q) "Trustees" means the "Person" or "Persons" who have signed this
Declaration of Trust and all other Persons who may from time to time be duly
elected or appointed to serve as Trustees in accordance with the provisions
hereof, in each case so long as such Person shall continue in office in
accordance with the terms of this Declaration of Trust, and reference herein to
a Trustee or the Trustees shall refer to such Person or Persons in his or her or
their capacity as Trustees hereunder.
ARTICLE II
Purpose of Trust
The purpose of the Trust is to conduct, operate and carry on the business
of a management investment company registered under the 1940 Act through one or
more Series investing primarily in securities, and to carry on such other
business as the Trustees may from time to time determine pursuant to their
authority under this Declaration of Trust.
ARTICLE III
Shares
Section 1. Division of Beneficial Interest. The beneficial interest in the
Trust shall be divided into one or more Series. The Trustees may divide each
Series into two or more Classes. Subject to the further provisions of this
Article III and any applicable requirements of the 1940 Act, the Trustees shall
have full power and authority, in their sole discretion, and without obtaining
any authorization or vote of the Shareholders of any Series or Class thereof;
(i) to divide the beneficial interest in each Series or Class thereof into
Shares, with or without par value as the Trustees shall determine; (ii) to issue
Shares without limitation as to number (including fractional Shares) to such
Persons and for such amount and type of consideration, subject to any
restriction set forth in the By-Laws, including cash or securities, at such time
or times and on such terms as the Trustees may deem appropriate; (iii) to
establish and designate and to change in any manner any Series or Class thereof
and to fix such preferences, voting powers, rights, duties and privileges and
business purpose of each Series or Class thereof as the Trustees may from time
to time determine, which preferences, voting powers, rights, duties and
privileges may be senior or subordinate to (or in the case of business purpose,
different from) any existing Series or Class thereof and may be limited to
specified property or obligations of the Trust or profits and losses associated
with specified property or obligations of the Trust; (iv) to divide or combine
the Shares of any Series or Class thereof into a greater or lesser number
without thereby materially changing the proportionate beneficial interest of the
Shares of such Series or Class thereof in the assets held with respect to that
Series; (v) to classify or reclassify any issued Shares of any Series or Class
thereof into shares of one or more Series or Classes thereof; (vi) to change the
name of any Series or Class thereof; (vii) to abolish any one or more Series or
Classes thereof; and (viii) to take such other action with respect to the Shares
as the Trustees may deem desirable.
Subject to the distinctions permitted among Classes of the same Series as
established by the Trustees, consistent with the requirements of the 1940 Act,
each Share of a Series of the Trust shall represent an equal beneficial interest
in the net assets of such Series, and each holder of Shares of a Series shall be
entitled to receive such holder's pro rata share of distributions of income and
capital gains, if any, made with respect to such Series. Upon redemption of the
Shares of any Series, the applicable Shareholder shall be paid solely out of the
funds and property of such Series of the Trust.
All references to Shares in this Declaration of Trust shall be deemed to be
Shares of any or all Series or Classes thereof, as the context may require. All
provisions herein relating to the Trust shall apply equally to each Series of
the Trust and each Class thereof, except as the context otherwise requires.
All Shares issued hereunder, including, without limitation, Shares issued
in connection with a dividend in Shares or a split or reverse split of Shares,
shall be fully paid and non-assessable. Except as otherwise provided by the
Trustees, Shareholders shall have no preemptive or other right to subscribe to
any additional Shares or other securities issued by the Trust.
Section 2. Ownership of Shares. The Ownership of Shares shall be recorded
on the books of the Trust or those of a transfer or similar agent for the Trust,
which books shall be maintained separately for the Shares of each Series or
Class of the Trust. No certificates certifying the ownership of Shares shall be
issued except as the Trustees may otherwise determine from time to time. The
Trustees may make such rules as they consider appropriate for the issuance of
Share certificates, the transfer of Shares of each Series or Class of the Trust
and similar matters. The record books of the Trust as kept by the Trust or any
transfer or similar agent, as the case may be, shall be conclusive as to the
identity of the Shareholders of each Series or Class of the Trust and as to the
number of Shares of each Series or Class of the Trust held from time to time by
each Shareholder.
Section 3. Transfer of Shares. Except as otherwise provided by the
Trustees, Shares shall be transferable on the books of the Trust only by the
record holder thereof or by his or her duly authorized agent upon delivery to
the Trustees or the Trust's transfer agent of a duly executed instrument of
transfer, together with a Share certificate if one is outstanding, and such
evidence of the genuineness of each such execution and authorization and of such
other matters as may be required by the Trustees. Upon such delivery, and
subject to any further requirements specified by the Trustees or contained in
the By-Laws, the transfer shall be recorded on the books of the Trust. Until a
transfer is so recorded, the Shareholder of record of Shares shall be deemed to
be the holder of such Shares for all purposes hereunder and neither the Trustees
nor the Trust, nor any transfer agent or registrar or any officer, employee, or
agent of the Trust, shall be affected by any notice of a proposed transfer.
Section 4. Investments in the Trust. Investments may be accepted by the
Trust from Persons, at such times, on such terms, and for such consideration as
the Trustees from time to time may authorize.
Section 5. Status of Shares and Limitation of Personal Liability. Shares
shall be deemed to be personal property giving only the rights provided in this
instrument. Every Shareholder by virtue of having become a Shareholder shall be
held to have expressly assented and agreed to the terms hereof. The death,
incapacity, dissolution, termination, or bankruptcy of a Shareholder during the
existence of the Trust shall not operate to terminate the Trust, nor entitle the
representative of any such Shareholder to an accounting or to take any action in
court or elsewhere against the Trust or the Trustees, but entitles such
representative only to the rights of such Shareholder under this Trust.
Ownership of Shares shall not entitle the Shareholder to any title in or to the
whole or any part of the Trust Property or right to call for a participation or
division of the same or for an accounting, nor shall the ownership of Shares
constitute the Shareholders as partners. No Shareholder shall be personally
liable for the debts, liabilities, obligations and expenses incurred by,
contracted for, or otherwise existing with respect to, the Trust or any Series.
Neither the Trust nor the Trustees, nor any officer, employee, or agent of the
Trust shall have any power to bind personally any Shareholders, nor, except as
specifically provided herein, to call upon any Shareholder for the payment of
any sum of money or assessment whatsoever other than such as the Shareholder may
at any time personally agree to pay.
Section 6. Establishment and Designation of Series or Class. The
establishment and designation of any Series or Class of Shares of the Trust
shall be effective upon the adoption by a majority of the then Trustees of a
resolution that sets forth such establishment and designation and the relative
rights and preferences of such Series or Class of the Trust, whether directly in
such resolution or by reference to another document including, without
limitation, any registration statement of Trust, or as otherwise provided in
such resolution.
Shares of each Series or Class of the Trust established pursuant to this
Article III, unless otherwise provided in the resolution establishing such
Series or Class, shall have the following relative rights and preferences:
(a) Assets Held with Respect to a Particular Series. All consideration
received by the Trust for the issue or sale of Shares of a particular Series,
together with all assets in which such consideration is invested or reinvested,
all income, earnings, profits, and proceeds thereof from whatever source derived
(including, without limitation, 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 be held separately with respect to that Series for all purposes,
subject only to the rights of creditors of such Series from the assets of the
Trust and every other Series, and shall be so recorded upon the books of account
of the Trust. Such consideration, assets, income, earnings, profits and proceeds
thereof, from whatever source derived, (including, without limitation, 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, are herein referred to as "assets held with respect to"
that Series. In the event that there are any assets, income, earnings, profits
and proceeds thereof, funds or payments which are not readily identifiable as
assets held with respect to any particular Series (collectively "General
Assets"), the Trustees shall allocate such General Assets to, between or among
any one or more of the Series in such manner and on such basis as the Trustees,
in their sole discretion, deem fair and equitable, and any General Assets so
allocated to a particular Series shall be held with respect to that Series. Each
such allocation by the Trustees shall be conclusive and binding upon the
Shareholders of all Series for all purposes. Separate and distinct records shall
be maintained for each Series and the assets held with respect to each Series
shall be held and accounted for separately from the assets held with respect to
all other Series and the General Assets of the Trust not allocated to such
Series.
(b) Liabilities Held with Respect to a Particular Series. The assets of the
Trust held with respect to each particular Series shall be charged against the
liabilities of the Trust held with respect to that Series and all expenses,
costs, charges, and reserves attributable to that Series, except that
liabilities and expenses allocated solely to a particular Class shall be borne
by that Class. Any general liabilities of the Trust which are not readily
identifiable as being held with respect to any particular Series or Class shall
be allocated and charged by the Trustees to and among any one or more of the
Series or Classes in such manner and on such basis as the Trustees in their sole
discretion deem fair and equitable. All liabilities, expenses, costs, charges,
and reserves so charged to a Series or Class are herein referred to as
"liabilities held with respect to" that Series or Class. Each allocation of
liabilities, expenses, costs, charges, and reserves by the Trustees shall be
conclusive and binding upon the shareholders of all Series or Classes for all
purposes. Without limiting the foregoing, but subject to the right of the
Trustees to allocate general liabilities, expenses, costs, charges or reserves
as herein provided, the debts, liabilities, obligations and expenses incurred,
contracted for or otherwise existing with respect to a particular Series shall
be enforceable against the assets held with respect to such Series only and not
against the assets of the Trust generally or against the assets held with
respect to any other Series. Notice of this contractual limitation on
liabilities among Series may, in the Trustees' discretion, be set forth in the
certificate of trust of the Trust (whether originally or by amendment) as filed
or to be filed in the Office of the Secretary of State of the State of Delaware
pursuant to the Delaware Act, and upon the giving of such notice in the
certificate of trust, the statutory provisions of Section 3804 of the Delaware
Act relating to limitations on liabilities among Series (and the statutory
effect under Section 3804 of setting forth such notice in the certificate of
trust) shall become applicable to the Trust and each Series. Any person
extending credit to, contracting with or having any claim against any Series may
look only to the assets of that Series to satisfy or enforce any debt, with
respect to that Series. No Shareholder or former Shareholder of any Series shall
have a claim on or any right to any assets allocated or belonging to any other
Series.
(c) Dividends, Distributions, Redemptions, and Repurchases. Notwithstanding
any other provisions of this Declaration of Trust, including, without
limitation, Article VI, no dividend or distribution, including, without
limitation, any distribution paid upon termination of the Trust or of any Series
or Class with respect to, nor any redemption or repurchase of, the Shares of any
Series or Class, shall be effected by the Trust other than from the assets held
with respect to such Series, nor shall any Shareholder or any particular Series
or Class otherwise have any right or claim against the assets held with respect
to any other Series except to the extent that such Shareholder has such a right
or claim hereunder as a Shareholder of such other Series. 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.
(d) Equality. All the Shares of each particular Series shall represent an
equal proportionate interest in the assets held with respect to that Series
(subject to the liabilities held with respect to that Series or Class thereof
and such rights and preferences as may have been established and designated with
respect to any Class within such Series), and each Share of any particular
Series shall be equal to each other Share of that Series. With respect to any
Class of a Series, each such Class shall represent interests in the assets of
that Series and have identical voting, dividend, liquidation and other rights
and the same terms and conditions, except that expenses allocated to a Class may
be borne solely by such Class as determined by the Trustees and a Class may have
exclusive voting rights with respect to matters affecting only that Class.
(e) Fractions. Any fractional Share of a Series or Class thereof, shall
carry proportionately all the rights and obligations of a whole Share of that
Series or Class, including rights with respect to voting, receipt of dividends
and distributions, redemption of Shares and termination of the Trust.
(f) Exchange Privilege. The Trustees shall have the authority to provide
that the holders of Shares of any Series or Class shall have the right to
exchange said Shares for Shares of one or more other Series of Shares or Class
of Shares of the Trust or of other investment companies registered under the
1940 Act in accordance with such requirements and procedures as may be
established by the Trustees.
(g) Combination of Series. The Trustees shall have the authority, without
the approval of the Shareholders of any Series or Class unless otherwise
required by applicable law, to combine the assets and liabilities held with
respect to any two or more Series or Classes into assets and liabilities held
with respect to a single Series or Class.
Section 7. Indemnification of Shareholders. If any Shareholder or former
Shareholder shall be exposed to liability by reason of a claim or demand
relating to such Person being or having been a Shareholder, and not because of
such Person's acts or omissions, the Shareholder or former Shareholder (or such
Person's heirs, executors, administrators, or other legal representatives or in
the case of a corporation or other entity, its corporate or other general
successor) shall be entitled to be held harmless from and indemnified out of the
assets of the Trust against all loss and expense arising from such claim or
demand, but only out of the assets held with respect to the particular Series of
Shares of which such Person is or was a Shareholder and from or in relation to
which such liability arose.
ARTICLE IV
Trustees
Section 1. Number, Election and Tenure. The number of Trustees shall
initially be one, who shall be Allen R. Gillespie. Hereafter, the number of
Trustees shall at all times be at least one and no more than ten (10) as
determined, from time to time, by the Trustees pursuant to Section 3 of this
Article IV. Each Trustee shall serve during the lifetime of the Trust until he
or she dies, resigns, has reached the mandatory retirement age as set by the
Trustees, is declared bankrupt or incompetent by a court of appropriate
jurisdiction, or is removed, or, if sooner, until the next meeting of
Shareholders called for the purpose of electing Trustees and until the election
and qualification of his or her successor. In the event that less than the
majority of the Trustees holding office have been elected by the Shareholders,
the Trustees then in office shall call a Shareholders' meeting for the election
of Trustees. Any Trustee may resign at any time by written instrument signed by
him or her and delivered to any officer of the Trust or to a meeting of the
Trustees. Such resignation shall be effective upon receipt unless specified to
be effective at some other time. Except to the extent expressly provided in a
written agreement with the Trust, no Trustee resigning and no Trustee removed
shall have any right to any compensation for any period following his or her
resignation or removal, or any right to damages on account of such removal. The
Shareholders may elect Trustees at any meeting of Shareholders called by the
Trustees for that purpose. Any Trustee may be removed at any meeting of
Shareholders by a vote of two-thirds of the outstanding Shares of the Trust.
Section 2. Effect of Death, Resignation, etc. of a Trustee. The death,
declination to serve, resignation, retirement, removal or incapacity of one or
more Trustees, or all of them, shall not operate to annul the Trust or to revoke
any existing agency created pursuant to the terms of this Declaration of Trust.
Whenever there shall be fewer than the designated number of Trustees, until
additional Trustees are elected or appointed as provided herein to bring the
total number of Trustees equal to the designated number, the Trustees in office,
regardless of their number, shall have all the powers granted to the Trustees
and shall discharge all the duties imposed upon the Trustees by this Declaration
of Trust. As conclusive evidence of such vacancy, a written instrument
certifying the existence of such vacancy may be executed by an officer of the
Trust or by a majority of the Trustees. In the event of the death, declination,
resignation, retirement, removal, or incapacity of all the then Trustees within
a short period of time and without the opportunity for at least one Trustee
being able to appoint additional Trustees to replace those no longer serving,
the Trust's Manager is empowered to appoint new Trustees subject to the
provisions of Section 16(a) of the 1940 Act.
Section 3. Powers. Subject to the provisions of this Declaration of Trust,
the business of the Trust shall be managed by the Trustees, and the Trustees
shall have all powers necessary or convenient to carry out that responsibility
including the power to engage in securities transactions of all kinds on behalf
of the Trust. Without limiting the foregoing, the Trustees may: adopt By-Laws
not inconsistent with this Declaration of Trust providing for the management of
the affairs of the Trust and may amend and repeal such By-Laws to the extent
that such By-laws do not reserve that right to the Shareholders; enlarge or
reduce the number of Trustees; remove any Trustee with or without cause at any
time by written instrument signed by a least two-thirds of the number of
Trustees prior to such removal, specifying the date when such removal shall
become effective, and fill vacancies caused by enlargement of their number or by
the death, resignation, retirement or removal of a Trustee; elect and remove,
with or without cause, such officers and appoint and terminate such agents as
they consider appropriate; appoint from their own number and establish and
terminate one or more committees, consisting of two or more Trustees, that may
exercise the powers and authority of the Board of Trustees to the extent that
the Trustees so determine; employ one or more custodians of the assets of the
Trust and may authorize such custodians to employ subcustodians and to deposit
all or any part of such assets in a system or systems for the central handling
of securities or with a Federal Reserve Bank; employ an administrator for the
Trust and may authorize such administrator to employ sub-administrators; employ
a Manager to the Trust and may authorize such Manager to employ sub-advisers;
retain a transfer agent or a shareholder servicing agent, or both; provide for
the issuance and distribution of Shares by the Trust directly or through one or
more Principal Underwriters or otherwise; redeem, repurchase and transfer Shares
pursuant to applicable law; set record dates for the determination of
Shareholders with respect to various matters; declare and pay dividends and
distributions to Shareholders of each Series from the assets of such Series; and
in general delegate such authority as they consider desirable to any officer of
the Trust, to any committee of the Trustees and to any agent or employee of the
Trust or to any such custodian, transfer or shareholder servicing agent, or
Principal Underwriter. In addition, without limiting the foregoing, the Trustees
may, in place of separately appointing each and every agent or service provider
of the Trust specified herein, employ a Manager to the Trust that is authorized
to provide or to engage agents to provide administrative, fund accounting,
transfer agency, dividend disbursing agent, custodial, distribution, auditing,
legal and other services to the Trust and its Series. Any determination as to
what is in the interests of the Trust made by the Trustees in good faith shall
be conclusive. In construing the provisions of this Declaration of Trust, the
presumption shall be in favor of a grant of power to the Trustees. Unless
otherwise specified herein or in the By-Laws or required by law, any action by
the Trustees shall be deemed effective if approved or taken by a majority of the
Trustees present at a meeting of Trustees at which a quorum of Trustees is
present, within or without the State of Delaware.
Without limiting the foregoing, the Trustees shall have the power and
authority to cause the Trust (or to act on behalf of the Trust):
(a) To invest and reinvest cash, to hold cash uninvested, and to
subscribe for, invest in, reinvest in, purchase or otherwise
acquire, own, hold, pledge, sell, assign, transfer, exchange,
distribute, write options on, lend or otherwise deal in or
dispose of contracts for the future acquisition or delivery of
fixed income or other securities, and securities of every nature
and kind, including, without limitation, all types of bonds,
debentures, stocks, negotiable or non-negotiable instruments,
obligations, evidences of indebtedness, certificates of deposit
or indebtedness, commercial papers, repurchase agreements,
bankers' acceptances, and other securities of any kind, issued,
created, guaranteed, or sponsored by any and all Persons,
including without limitation, states, territories, and
possessions of the United States and the District of Columbia and
any political subdivision, agency, or instrumentality thereof,
and foreign government or any political subdivision of the United
States Government or any foreign government, or any international
instrumentality, or by any bank or savings institution, or by any
corporation or organization organized under the laws of the
United States or of any state, territory, or possession thereof,
or by any corporation or organization organized under any foreign
law, or in "when issued" contracts for any such securities, to
change the investments of the assets of the Trust; 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
consent and otherwise act with respect thereto, with power to
designate one or more Persons, to exercise any of said rights,
powers, and privileges in respect of any of said instruments;
(b) To sell, exchange, lend, pledge, mortgage, hypothecate, lease, or
write options (including, options on futures contracts) with
respect to or otherwise deal in any property rights relating to
any or all of the assets of the Trust or any Series;
(c) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute
and deliver proxies or powers of attorney to such Person or
Persons as the Trustees shall deem proper, granting to such
Person or Persons such power and discretion with relation to
securities or property as the Trustees shall deem proper;
(d) To exercise powers and right of subscription or otherwise which
in any manner arise out of ownership or securities;
(e) To hold any security or property in a form not indicating any
trust, whether in bearer, unregistered or other negotiable form,
or in its own name or in the name of a custodian or subcustodian
or a nominee or nominees or otherwise;
(f) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or issuer of any
security which is 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;
(g) To 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;
(h) To compromise, arbitrate or otherwise adjust claims in favor of
or against the Trust or any matter in controversy, including, but
not limited to, claims for taxes;
(i) To enter into joint ventures, general or limited partnerships and
any other combinations or associations;
(j) To borrow funds or other property in the name of the Trust
exclusively for Trust purposes and in connection therewith issue
notes or other evidence of indebtedness; and to mortgage and
pledge the Trust Property or any part thereof to secure any or
all of such indebtedness;
(k) To endorse or guarantee the payment of any notes or other
obligations of any Person; to make contracts of guaranty or
suretyship, or otherwise assume liability for payment thereof;
and to mortgage and pledge the Trust Property or any part thereof
to secure any of or all of such obligations;
(l) To purchase and pay for entirely out of Trust Property such
insurance as the Trustees may deem necessary or appropriate for
the conduct of the business, including, without limitation,
insurance policies insuring the assets of the Trust or payment of
distributions and principal on its portfolio investments, and
insurance polices insuring the Shareholders, Trustees, officers,
employees, agents, investment advisers, principal underwriters,
or independent contractors of the Trust, individually against all
claims and liabilities of every nature arising by reason of
holding, being or having held any such office or position, or by
reason of any action alleged to have been taken or omitted by any
such Person as Trustee, officer, employee, agent, investment
adviser, principal underwriter, or independent contractor,
including any action taken or independent contractor, including
any action taken or omitted that may be determined to constitute
negligence, whether or not the Trust would have the power to
indemnify such Person against liability;
(m) To adopt, establish and carry out pension, profit-sharing, share
bonus, share purchase, savings, thrift and other retirement,
incentive and benefit plans and trusts, including the purchasing
of life insurance and annuity contracts as a means of providing
such retirement and other benefits, for any or all of the
Trustees, officers, employees and agents of the Trust;
(n) To operate as and carry out the business of an investment
company, and exercise all the powers necessary or appropriate to
the conduct of such operations;
(o) To enter into contracts of any kind and description;
(p) To employ as custodian of any assets of the Trust one or more
banks, trust companies or companies that are members of a
national securities exchange or such other entities as the
Commission may permit as custodians of the Trust, subject to any
conditions set forth in this Declaration of Trust or in the
By-Laws;
(q) To employ auditors, counsel or other agents of the Trust, subject
to any conditions set forth in this Declaration of Trust or in
the By-Laws;
(r) To interpret the investment policies, practices, or limitations
of any Series or Class; and
(s) To establish separate and distinct Series with separately defined
investment objectives and policies and distinct investment
purposes, and with separate Shares representing beneficial
interests in such Series, and to establish separate Classes, all
in accordance with the provisions of Article III;
(t) To the full extent permitted by Section 3804 of the Delaware Act,
to allocate assets, liabilities and expenses of the Trust to a
particular Series and liabilities and expenses to a particular
Class or to apportion the same between or among two or more
Series or Classes, provided that any liabilities or expenses
incurred by a particular Series or Class shall be payable solely
out of the assets belonging to that Series or Class as provided
for in Article III;
(u) Subject to the 1940 Act, to engage in any other lawful act or
activity in which a business trust organized under the Delaware
Act may engage.
The Trust shall not be limited to investing in obligations maturing before
the possible termination of the Trust or one or more of its Series. The Trust
shall not in any way be bound or limited by any present or future law or custom
in regard to investment by fiduciaries. The Trust shall not be required to
obtain any court order to deal with any assets of the Trust or take any other
action hereunder.
Section 4. Payment of Expenses by the Trust. The Trustees are authorized to
pay or cause to be paid out of the principal or income of the Trust, or partly
out of the principal and partly out of income, as they deem fair, all expenses,
fees, charges, taxes and liabilities incurred or arising in connection with the
Trust, or in connection with the management thereof, including, but not limited
to, the Trustees' compensation and such expenses and charges for the services of
the Trust's officers, employees, investment adviser or Manager, Principal
Underwriter, auditors, counsel, custodian, transfer agent, shareholder servicing
agent, and such other agents or independent contractors and such other expenses
and charges as the Trustees may deem necessary or proper to incur, which
expenses, fees, charges, taxes and liabilities shall be allocated in accordance
with Article III, Section 6 hereof.
Section 5. Payment of Expenses by Shareholders. The Trustees shall have the
power, as frequently as they may determine, to cause each Shareholder, or each
Shareholder of any particular Series, to pay directly, in advance or arrears,
expenses of the Trust as described in Section 4 of this Article IV ("Expenses"),
in an amount fixed from time to time by the Trustees, by setting off such
Expenses due from such Shareholder from declared but unpaid dividends owed such
Shareholder and/or by reducing the number of Shares in the account of such
Shareholder by that number of full and/or fractional Shares which represents the
outstanding amount of such Expenses due from such Shareholder, provided that the
direct payment of such Expenses by Shareholders is permitted under applicable
law.
Section 6. Ownership of Assets of the Trust. Title to all of the assets of
the Trust shall at all times be considered as vested in the Trust, 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 in the name of any other Person as nominee, on such terms as the
Trustees may determine. 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 the resignation, removal or death of a Trustee, he or she 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
Section 7. Service Contracts.
(a) Subject to such requirements and restrictions as may be set forth
under federal and/or state law and in the By-Laws, including,
without limitation, the requirements of Section 15 of the 1940
Act, the Trustees may, at any time and from time to time,
contract for exclusive or nonexclusive advisory, management
and/or administrative services for the Trust or for any Series
(or Class thereof) with any corporation, trust, association, or
other organization; and any such contract may contain such other
terms as the Trustees may determine, including, without
limitation, authority for the Manager or administrator to
delegate certain or all of its duties under such contracts to
qualified investment advisers and administrators and to determine
from time to time without prior consultation with the Trustees
what investments shall be purchased, held sold or exchanged and
what portion, if any, of the assets of the Trust shall be held
uninvested and to make changes in the Trust's investments, or
such other activities as may specifically be delegated to such
party.
(b) The Trustees may also, at any time and from time to time,
contract with any corporation, trust, association, or other
organization, appointing it exclusive or nonexclusive distributor
or Principal Underwriter for the Shares of one or more of the
Series (or Classes) or other securities to be issued by the
Trust. Every such contract shall comply with such requirements
and restrictions as may be set forth under federal and/or state
law and in the By-Laws, including, without limitation, the
requirements of Section 15 of the 1940 Act; and any such contract
may contain such other terms as the Trustees may determine.
(c) The Trustees are also empowered, at any time and from time to
time, to contract with any corporations, trusts, associations or
other organizations, appointing it or them the custodian,
transfer agent and/or shareholder servicing agent for the Trust
or one or more of its Series. Every such contract shall comply
with such requirements and restrictions as may be set forth under
federal and/or state law and in the By-Laws or stipulated by
resolution of the Trustees.
(d) Subject to applicable law, the Trustees are further empowered, at
any time and from time to time, to contract with any entity to
provide all of the services specified above in paragraphs (a),
(b), and (c) hereof and such other services to the Trust or one
or more of the Series (and Classes), as the Trustees determine to
be in the best interests of the Trust and the applicable Series
(and Classes), or to authorize such entity to engage agents to
provide such services to the Trust and its Series (and Classes).
(e) The fact that:
(i) any of the Shareholders, Trustees, or officers of the Trust
is a shareholder, director, officer, partner, trustee,
employee, Manager , Principal Underwriter, distributor, or
affiliate or agent of or for any corporation, trust,
association, or other organization, or for any parent or
affiliate of any organization with which an advisory,
management, or administration contract, or Principal
Underwriter's or distributor's contract, or transfer agent,
shareholder servicing agent or other type of service
contract may have been or may hereafter be made, or that any
such organization, or any parent or affiliate thereof, is a
Shareholder or has an interest in the Trust; or that
(ii) any corporation, trust, association or other organization
with which an advisory, management, or administration
contract or Principal Underwriter's or distributor's
contract, or transfer agent or shareholder servicing agent
contract may have been or may hereafter be made also has an
advisory, management, or administration contract, or
Principal Underwriter's or distributor's or other service
contract with one or more other corporations, trusts,
associations, or other organizations, or has other business
or interests, shall not affect the validity of any such
contract or disqualify any Shareholder, Trustee or officer
of the Trust from voting upon or executing the same, or
create any liability or accountability to the Trust or its
Shareholders, provided approval of each such contract is
made pursuant to the requirements of the 1940 Act.
Section 8. Trustees and Officers as Shareholders. Any Trustee, officer or
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
and cause to be issued and sold Shares to, and redeem such Shares from, any such
Person or any firm or company in which such Person is interested, subject only
to the general limitations contained herein or in the By-Laws relating to the
sale and redemption of such Shares.
ARTICLE V
Shareholders' Voting Powers and Meetings
Section 1. Voting Powers, Meetings, Notice, and Record Dates. The
Shareholders shall have power to vote only: (i) for the election or removal of
Trustees as provided in Article IV, Section 1 hereof, and (ii) with respect to
such additional matters relating to the Trust as may be required by applicable
law, this Declaration of Trust, the By-Laws or any registration of the Trust
with the Commission (or any successor agency), or as the Trustees may consider
necessary or desirable. Each whole Share shall be entitled to one vote as any
matter on which it is entitled to vote and each fractional Share shall be
entitled to a proportionate fractional vote. Notwithstanding any other provision
of this Declaration of Trust, on any matters submitted to a vote of the
Shareholders, all Shares of the Trust then entitled to vote shall be voted in
aggregate, except: (i) when required by the 1940 Act, Shares shall be voted by
individual Series; (ii) when the matter involves the termination of a Series or
any other action that the Trustees have determined will affect only the
interests of one or more Series, then only Shareholders of such Series shall be
entitled to vote thereon; and (iii) when the matter involves any action that the
Trustees have determined will affect only the interests of one or more Classes,
then only the Shareholders of such Class or Classes shall be entitled to vote
thereon. There shall be no cumulative voting in the election of Trustees. Shares
may be voted in person or by proxy. A proxy may be given in writing. The By-Laws
may provide that proxies may also, or may instead, be given by an electronic or
telecommunications device or in any other manner. Notwithstanding anything else
contained herein or in the By-Laws, in the event a proposal by anyone other than
the officers or Trustees of the Trust is submitted to a vote of the Shareholders
of one or more Series or Classes thereof or of the Trust, or in the event of any
proxy contest or proxy solicitation or proposal in opposition to any proposal by
the officers or Trustees of the Trust, Shares may be voted only by written proxy
or in person at a meeting. Until Shares are issued, the Trustees may exercise
all rights of Shareholders and may take any action required by law, this
Declaration of Trust or the By-Laws to be taken by the Shareholders. Meetings of
the Shareholders shall be called and notice thereof and record dates therefor
shall be given and set as provided in the By-Laws.
Section 2. Quorum and Required Vote. Except when a larger quorum is
required by applicable law, by the By-Laws or by this Declaration of Trust,
thirty-three and one-third percent (33-1/3%) of the Shares entitled to vote
shall constitute a quorum at a Shareholders' meeting. When any one or more
Series (or Classes) is to vote as a single Class separate from any other Shares,
thirty-three and one-third percent (33-1/3%) of the Shares of each such Series
(or Class) entitled to vote shall constitute a quorum at a Shareholders' meting
of that Series (or Class). Except when a larger vote is required by any
provision of this Declaration of Trust or the By-Laws or by applicable law, when
a quorum is present at any meeting, a majority of the Shares voted shall decide
any questions and a plurality of the Shares voted shall elect a Trustee,
provided that where any provision of law or of this Declaration of Trust
requires that the holders of any Series shall vote as a Series (or that holders
of a Class shall vote as a Class), then a majority of the Shares of that Series
(or Class) voted on the matter (or a plurality with respect to the election of a
Trustee) shall decide that matter insofar as that Series (or Class) is
concerned.
Section 3. Record Dates. For the purpose of determining the Shareholders of
any Series (or Class) who are entitled to receive payment of any dividend or of
any other distribution, the Trustees may from time to time fix a date, which
shall be before the date for the payment of such dividend or such other payment,
as the record date for determining the Shareholders of such Series (or Class)
having the right to receive such dividend or distribution. Without fixing a
record date, the Trustees may for distribution purposes close the register or
transfer books for one or more Series (or Classes) at any time prior to the
payment of a distribution. Nothing in this Section shall be construed as
precluding the Trustees from setting different record dates for different Series
(or Classes).
Section 4. Additional Provisions. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters.
ARTICLE VI
Net Asset Value, Distributions and Redemptions
Section 1. Determination of Net Asset Value, Net Income, and Distributions.
Subject to applicable law and Article III, Section 6 hereof, the Trustees, in
their absolute discretion, may prescribe and shall set forth in the By-Laws or
in a duly adopted vote of the Trustees such bases and time for determining the
per Share or net asset value of the Shares of any Series or Class or net income
attributable to the Shares of any Series or Class, or the declaration and
payment of dividends and distributions on the Shares of any Series or Class, as
they may deem necessary or desirable.
Section 2. Redemptions and Repurchases.
(a) The Trust shall purchase such Shares as are offered by any Shareholder
for redemption, upon the presentation of a proper instrument of transfer
together with a request directed to the Trust, or a Person designated by the
Trust, that the Trust purchase such Shares or in accordance with such other
procedures for redemption as the Trustees may from time to time authorize; and
the Trust will pay therefor the net asset value thereof as determined by the
Trustees (or on their behalf), in accordance with any applicable provisions of
the By-Laws and applicable law. Unless extraordinary circumstances exist,
payment for said Shares shall be made by the Trust to the Shareholder in
accordance with the 1940 Act and any rules and regulations thereunder or as
otherwise required by the Commission. The obligation set forth in this Section 2
is subject to the provision that, in the event that any time the New York Stock
Exchange (the "Exchange") is closed for other than weekends or holidays, or if
permitted by the rules and regulations or an order of the Commission during
periods when trading on the Exchange is restricted or during any emergency which
makes it impracticable for the Trust to dispose of the investments of the
applicable Series or to determine fairly the value of the net assets held with
respect to such Series or during any other period permitted by order of the
Commission for the protection of investors, such obligation may be suspended or
postponed by the Trustees. In the case of a suspension of the right of
redemption as provided herein, a Shareholder may either withdraw the request for
redemption or receive payment based on the net asset value per share next
determined after the termination of such suspension.
(b) The redemption price may in any case or cases be paid wholly or partly
in kind if the Trustees determine that such payment is advisable in the interest
of the remaining Shareholders of the Series or Class thereof for which the
Shares are being redeemed. Subject to the foregoing, the fair value, selection
and quantity of securities or other property so paid or delivered as all or part
of the redemption price may be determined by or under authority of the Trustees.
In no case shall the Trust be liable for any delay of any Manager or other
Person in transferring securities selected for delivery as all or part of any
payment-in-kind.
(c) If the Trustees shall, at any time and in good faith, determine that
direct or indirect ownership of Shares of any Series or Class thereof has or may
become concentrated in any Person to an extent that would disqualify any Series
as a regulated investment company under the Internal Revenue Code of 1986, as
amended (or any successor statute thereto), then the Trustees shall have the
power (but not the obligation) by such means as they deem equitable (i) to call
for the redemption by any such Person of a number, or principal amount, of
Shares sufficient to maintain or bring the direct or indirect ownership of
Shares into conformity with the requirements for such qualification, (ii) to
refuse to transfer or issue Shares of any Series or Class thereof to such Person
whose acquisition of the Shares in question would result in such
disqualification, or (iii) to take such other actions as they deem necessary and
appropriate to avoid such disqualification. Any such redemption shall be
effected at the redemption price and in the manner provided in this Article VI.
(d) The holders of Shares shall upon demand disclose to the Trustees in
writing such information with respect to direct and indirect ownership of Shares
as the Trustees deem necessary to comply with the provisions of the Internal
Revenue Code of 1986, as amended (or any successor statute thereto), or to
comply with the requirements of any other taxing authority.
ARTICLE VII
Compensation and Limitation of Liability of Trustees
Section 1. Compensation. The Trustees in such capacity shall be entitled to
reasonable compensation from the Trust and they may fix the amount of such
compensation. However, the Trust will not compensate those Trustees who are
Interested Persons of the Trust, its Manager, sub-advisers, distributor or
Principal Underwriter. Nothing herein shall in any way prevent the employment of
any Trustee for advisory, management, legal, accounting, investment banking or
other services and payment for such services by the Trust.
Section 2. Indemnification and Limitation of Liability. A Trustee, when
acting in such capacity, shall not be personally liable to any Person, other
than the Trust or a Shareholder to the extent provided in this Article VII, for
any act, omission or obligation of the Trust, of such Trustee or of any other
Trustee. The Trustees shall not be responsible or liable in any event for any
neglect or wrongdoing of any officer, agent, employee, Manager, or Principal
Underwriter of the Trust. The Trust shall indemnify each Person who is serving
or has served at the Trust's request as a director, officer, trustee, employee,
or agent of another organization in which the Trust has any interest as a
shareholder, creditor, or otherwise to the extent and in the manner provided in
the By-Laws.
All persons extending credit to, contracting with or having any claim
against the Trust of the Trustees shall look only to the assets of the
appropriate Series of the Trust for payment under such credit, contract, or
claim; and neither the Trustees nor the Shareholders, nor any of the Trust's
officers, employees, or agents, whether past, present, or future, shall be
personally liable therefor.
Every note, bond, contract, instrument, certificate or undertaking and
every other act or thing whatsoever executed or done by or on behalf of the
Trust or the Trustees by any of them in connection with the Trust shall
conclusively be deemed to have been executed or done only in or with respect to
his or their capacity as Trustee or Trustees, and such Trustee or Trustees shall
not be personally liable thereon. At the Trustees' discretion, any note, bond,
contract, instrument, certificate or undertaking made or issued by the Trustees
or by any officer or officers may give notice that the Certificate of Trust is
on file in the Office of the Secretary of State of the State of Delaware and
that a limitation on liability of Series exists and such note, bond, contract,
instrument, certificate or undertaking may, if the Trustees so determine, recite
that the same was executed or made on behalf of the Trust by a Trustee or
Trustees in such capacity and not individually and that the obligations of such
instrument are not binding upon any of them or the Shareholders individually but
are binding only on the assets and property of the Trust or a Series thereof,
and may contain such further recital as such Person or Persons may deem
appropriate. The omission of any such notice or recital shall in no way operate
to bind any Trustees, officer, or Shareholders individually.
Section 3. Trustee's Good Faith Action, Expert Advice, No Bond or Surety.
The exercise by the Trustees of their powers and discretions hereunder shall be
binding upon everyone interested. A Trustee shall be liable to the Trust and to
any Shareholder solely for his or her own willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
office of Trustee, and shall not be liable for errors of judgment or mistakes of
fact or law. The Trustees may take advice of counsel or other experts with
respect to the meaning and operation of this Declaration of Trust, and shall be
under no liability for any act or omission in accordance with such advice nor
for failing to follow such advice. The Trustees shall not be required to give
any bond as such, nor any surety if a bond is required.
Section 4. Insurance. The Trustees shall be entitled and empowered to the
fullest extent permitted by law to purchase with Trust assets insurance for
liability and for all expenses reasonably incurred or paid or expected to be
paid by a Trustee, officer, employee, or agent of the Trust in connection with
any claim, action, suit, or proceeding in which he or she may become involved by
virtue of his or her capacity or former capacity as a Trustee of the Trust.
ARTICLE VIII
Miscellaneous
Section 1. Liability of Third Persons Dealing with Trustees. No Person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the Trust or upon
its order.
Section 2. Termination of the Trust or Any Series or Class.
(a) Unless terminated as provided herein, the Trust shall continue without
limitation of time. The Trust may be terminated at any time by vote of a
majority of the Shares of each Series entitled to vote, voting separately by
Series, or by the Trustees by written notice to the Shareholders. Any Series of
Shares or Class thereof may be terminated at any time by vote of a majority of
the Shares of such Series or Class entitled to vote or by the Trustees by
written notice to the Shareholders of such Series or Class.
(b) Upon the requisite Shareholder vote or action by the Trustees to
terminate the Trust or any one or more Series of Shares or any Class thereof,
after paying or otherwise providing for all charges, taxes, expenses, and
liabilities, whether due or accrued or anticipated, of the Trust or of the
particular Series or any Class thereof as may be determined by the Trustees, the
Trust shall in accordance with such procedures as the Trustees may consider
appropriate reduce the remaining assets of the Trust or of the affected Series
or Class to distributable form in cash or Shares (if any Series remain) or other
securities, or any combination thereof, and distribute the proceeds to the
Shareholders of the Series or Classes involved, ratably according to the number
of Shares of such Series or Class held by the Shareholders of such Series or
Class on the date of distribution. Thereupon, the Trust or any affected Series
or Class shall terminate and the Trustees and the Trust shall be discharged of
any and all further liabilities and duties relating thereto or arising
therefrom, and the right, title, and interest of all parties with respect to the
Trust or such Series or Class shall be canceled and discharged.
(c) Upon termination of the Trust, following completion of winding up of
its business, the Trustees shall cause a certificate of cancellation of the
Trust's Certificate of Trust to be filed in accordance with the Delaware Act,
which Certificate of Cancellation may be signed by any one Trustee.
Section 3. Reorganization.
(a) Notwithstanding anything else herein, the Trustees may, without
Shareholder approval unless such approval is required by applicable law, (i)
cause the Trust to merge or consolidate with or into one or more trusts (or
series thereof to the extent permitted by law), partnerships, associations,
corporations or other business entities (including trusts, partnerships,
associations, corporations or other business entities created by the Trustees to
accomplish such merger or consolidation) so long as the surviving or resulting
entity is an investment company as defined in the 1940 Act, or is a series
thereof, that will succeed to or assume the Trust's registration under the 1940
Act and that is formed, organized, or existing under the laws of the United
States or of a state, commonwealth, possession or colony of the United States,
unless otherwise permitted under the 1940 Act, (ii) cause any one or more Series
(or Classes) of the Trust to merge or consolidate with or into any one or more
other Series (or Classes) of the Trust, one or more trusts (or series or classes
thereof to the extent permitted by law), partnerships, associations,
corporations, (iii) cause the Shares to be exchanged under or pursuant to any
state or federal statute to the extent permitted by law or (iv) cause the Trust
to reorganize as a corporation, limited liability company or limited liability
partnership under the laws of Delaware or any other state or jurisdiction. Any
agreement of merger or consolidation or exchange or certificate or merger may be
signed by a majority of the Trustees and facsimile signatures conveyed by
electronic or telecommunication means shall be valid.
(b) Pursuant to and in accordance with the provisions of Section 3815(f) of
the Delaware Act, and notwithstanding anything to the contrary contained in this
Declaration of Trust, an agreement of merger or consolidation approved by the
Trustees in accordance with this Section 3 may (i) effect any amendment to the
governing instrument of the Trust or (ii) effect the adoption of a new governing
instrument of the Trust if the Trust is the surviving or resulting trust in the
merger or consolidation.
(c) The Trustees may create one or more business trusts to which all or any
part of the assets, liabilities, profits, or losses of the Trust or any Series
or Class thereof may be transferred and may provide for the conversion of Shares
in the Trust or any Series or Class thereof into beneficial interests in any
such newly created trust or trusts or any series of classes thereof.
Section 4. Amendments. Except as specifically provided in this Section 4,
the Trustees may, without Shareholder vote, restate, amend, or otherwise
supplement this Declaration of Trust. Shareholders shall have the right to vote
on (i) any amendment that would affect their right to vote granted in Article V,
Section 1 hereof, (ii) any amendment to this Section 4 of Article VIII; (iii)
any amendment that may require their vote under applicable law or by the Trust's
registration statement, as filed with the Commission, and (iv) any amendment
submitted to them for their vote by the Trustees. Any amendment required or
permitted to be submitted to the Shareholders that, as the Trustees determine,
shall affect the Shareholders of one or more Series shall be authorized by a
vote of the Shareholders of each Series affected and no vote of Shareholders of
a Series not affected shall be required. Notwithstanding anything else herein,
no amendment hereof shall limit the rights to insurance provided by Article VII,
Section 4 hereof with respect to any acts or omissions of Persons covered
thereby prior to such amendment nor shall any such amendment limit the rights to
indemnification referenced in Article VII, Section 2 hereof as provided in the
By-Laws with respect to any actions or omissions of Persons covered thereby
prior to such amendment. The Trustees may, without Shareholder vote, restate,
amend, or otherwise supplement the Certificate of Trust as they deem necessary
or desirable.
Section 5. Filing of Copies, References, Headings. The original or a copy
of this instrument and of each restatement and/or amendment hereto shall be kept
at the office of the Trust where it may be inspected by any Shareholder. Anyone
dealing with the Trust may rely on a certificate by an officer of the Trust as
to whether or not any such restatements and/or amendments have been made and as
to any matters in connection with the Trust hereunder; and, with the same effect
as if it were the original, may rely on a copy certified by an officer of the
Trust to be a copy of this instrument or of any such restatements and/or
amendments. In this instrument and in any such restatements and/or amendments,
references to this instrument, and all expressions such as "herein," "hereof,"
and "hereunder," shall be deemed to refer to this instrument as amended or
affected by any such restatements and/or amendments. Headings are placed herein
for convenience of reference only and shall not be taken as a part hereof or
control or affect the meaning, construction or effect of this instrument.
Whenever the singular number is used herein, the same shall include the plural;
and the neuter, masculine and feminine genders shall include each other, as
applicable. This instrument may be executed in any number of counterparts each
of which shall be deemed an original.
Section 6. Applicable Law.
(a) The Trust is created under, and this Declaration of Trust is to be
governed by, and construed and enforced in accordance with, the laws of the
State of Delaware. The Trust shall be of the type commonly called a business
trust, and without limiting the provisions hereof, the Trust specifically
reserves the right to exercise any of the powers or privileges afforded to
business trusts or actions that may be engaged in by business trusts under the
Delaware Act, and the absence of a specific reference herein to any such power,
privilege, or action shall not imply that the Trust may not exercise such power
or privilege or take such actions.
(b) Notwithstanding the first sentence of Section 6(a) of this Article
VIII, there shall not be applicable to the Trust, the Trustees, or this
Declaration of Trust either the provisions of Section 3540 of Title 12 of the
Delaware Code or any provisions of the laws (statutory or common) of the State
of Delaware (other than the Delaware Act) pertaining to trusts that relate to or
regulate: (i) the filing with any court or governmental body or agency of
trustee accounts or schedules of trustee fees and charges; (ii) affirmative
requirements to post bonds for trustees, officers, agents, or employees of a
trust; (iii) the necessity for obtaining a court or other governmental approval
concerning the acquisition, holding, or disposition of real or personal
property; (iv) fees or other sums applicable to trustees, officers, agents or
employees of a trust; (v) the allocation of receipts and expenditures to income
or principal; (vi) restrictions or limitations on the permissible nature,
amount, or concentration of trust investments or requirements relating to the
titling, storage, or other manner of holding of trust assets; or (vii) the
establishment of fiduciary or other standards or responsibilities or limitations
on the acts or powers or liabilities or authorities and powers of trustees that
are inconsistent with the limitations or liabilities or authorities and powers
of the Trustees set forth or referenced in this Declaration of Trust.
Section 7. Provisions in Conflict with Law or Regulations.
(a) The provisions of this Declaration of Trust are severable, and if the
Trustees shall determine, with the advice of counsel, that any such provision is
in conflict with the 1940 Act, the regulated investment company provisions of
the Internal Revenue Code of 1986, as amended (or any successor statute
thereto), and the regulations thereunder, the Delaware Act or with other
applicable laws and regulations, the conflicting provision shall be deemed never
to have constituted a part of this Declaration of Trust; provided, however, that
such determination shall not affect any of the remaining provisions of this
Declaration of Trust or render invalid or improper any action taken or omitted
prior to such determination.
(b) If any provision of this Declaration of Trust 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 of Trust in any jurisdiction.
Section 8. Business Trust Only. It is the intention of the Trustees to
create a business trust pursuant to the Delaware Act. It is not the intention of
the Trustees to create a general partnership, limited partnership, joint stock
association, corporation, bailment, or any form of legal relationship other than
a business trust pursuant to the Delaware Act. Nothing in this Declaration of
Trust shall be construed to make the Shareholders, either by themselves or with
the Trustees, partners, or members of a joint stock association.
IN WITNESS WHEREOF, the Trustee named below does hereby make and enter into
this Agreement and Declaration of Trust as of the 29th day of September, 1997.
/s/ Allen R. Gillespie
---------------------------
Allen R. Gillespie
Trustee
THE PRINCIPAL PLACE OF BUSINESS OF THE TRUST IS:
107 North Washington Street
Post Office Box 4365
Rocky Mount, North Carolina 27803-0365
EXHIBIT 1(b)
CERTIFICATE OF TRUST
OF
BLUE RIDGE FUNDS TRUST
This Certificate of Trust is being executed as of the 29th day of September
1997 for the purpose of organizing a business trust pursuant to the Delaware
Business Trust Act, 12 Del. C. ss.ss. 3801 et seq. (the "Act").
The undersigned hereby certify as follows:
1. Name. The name of the business trust is the Blue Ridge Funds
Trust (the "Trust").
2. Registered Investment Company. The Trust is or will become a
registered investment company under the Investment Company
Act of 1940, as amended.
3. Registered Office and Registered Agent. The registered
office of the Trust in the State of Delaware is located at
1209 Orange Street, Wilmington, Delaware 19801. The name of
the registered agent of the Trust for service of process at
such location is The Corporation Trust Company. The business
address of the sole trustee, Allen R. Gillespie, is 84 Villa
Road, B37, Greenville, S.C. 29615.
4. Notice of Limitation of Liabilities of Series. Notice is
hereby given that the Trust is or may hereafter be
constituted a series trust. The debts, liabilities,
obligations, and expenses incurred, contracted for or
otherwise existing with respect to any particular series of
the Trust shall be enforceable against the assets of such
series only, and not against the assets of the Trust
generally.
5. The sole initial Trustee of the Trust, as set forth in the
Trust's governing instrument, reserves the right to amend,
alter, change, or repeal any provisions contained in this
Certificate of Trust, in the manner now or hereafter
prescribed by statute.
6. This Certificate of Trust shall become effective immediately
upon filing with the Office of the Secretary of State of the
State of Delaware.
IN WITNESS WHEREOF, the undersigned, being the sole initial Trustee of the
Trust, has duly executed this Certificate of Trust as of the day and year first
above written.
/s/ Allen R. Gillespie
------------------------
Allen R. Gillespie
Trustee
Exhibit 2
BY-LAWS
of
Blue Ridge Funds Trust
a Delaware Business Trust
<PAGE>
TABLE OF CONTENTS
BY-LAWS
<TABLE>
<S> <C>
Page
ARTICLE I.........................................................................................................1
Principal Office.........................................................................................1
Delaware Office..........................................................................................1
Other Offices............................................................................................1
ARTICLE II........................................................................................................1
Place of Meetings........................................................................................1
Call of Meetings.........................................................................................1
Notice of Meetings of Shareholders.......................................................................2
Manner of Giving Notice; Affidavit of Notice.............................................................2
Adjourned Meeting; Notice................................................................................3
Voting...................................................................................................3
Waiver of Notice; Consent of Absent Shareholders.........................................................3
Shareholder Action by Written Consent Without a Meeting..................................................3
Record Date for Shareholder Notice, Voting and Giving Consents...........................................4
Proxies..................................................................................................4
Inspectors of Election...................................................................................5
ARTICLE III.......................................................................................................6
Powers...................................................................................................6
Number of Trustees.......................................................................................6
Vacancies................................................................................................6
Place of Meetings and Meetings by Telephone..............................................................6
Regular Meetings.........................................................................................6
Special Meetings.........................................................................................6
Quorum...................................................................................................7
Waiver of Notice.........................................................................................7
Adjournment..............................................................................................7
Notice of Adjournment....................................................................................7
Action Without a Meeting.................................................................................7
Fees and Compensation of Trustees........................................................................7
Delegation of Power to Other Trustees....................................................................7
ARTICLE IV........................................................................................................8
Committees of Trustees...................................................................................8
Meetings and Action of Committees........................................................................8
ARTICLE V.........................................................................................................8
Officers.................................................................................................9
Election of Officers.....................................................................................9
Subordinate Officers.....................................................................................9
Removal and Resignation of Officers......................................................................9
Vacancies in Offices.....................................................................................9
Chairman.................................................................................................9
President................................................................................................9
Vice Presidents.........................................................................................10
Secretary...............................................................................................10
Treasurer...............................................................................................10
ARTICLE VI.......................................................................................................10
Agents, Proceedings, Expenses...........................................................................11
Indemnification.........................................................................................11
Limitations, Settlements................................................................................11
Insurance, Rights Not Exclusive.........................................................................12
Advance of Expenses.....................................................................................12
Fiduciaries of Employee Benefit Plan....................................................................12
ARTICLE VII......................................................................................................12
Inspection by Shareholders..............................................................................12
Inspection by Trustees..................................................................................12
Financial Statements....................................................................................12
Checks, Drafts, Evidence of Indebtedness................................................................13
Contracts and Instruments; How Executed.................................................................13
Fiscal Year.............................................................................................13
Seal....................................................................................................13
ARTICLE IX.......................................................................................................13
</TABLE>
<PAGE>
BY-LAWS
OF
Blue Ridge Funds TrustA Delaware Business Trust
INTRODUCTION
A. Agreement and Declaration of Trust. These By-Laws shall be subject to
the Agreement and Declaration of Trust, as from time to time in effect (the
"Declaration of Trust"), of the Blue Ridge Funds Trust , a Delaware business
trust (the "Trust"). In the event of any inconsistency between the terms hereof
and the terms of the Declaration of Trust, the terms of the Declaration of Trust
shall control.
B. Definitions. Capitalized terms used herein and not herein defined are
used as defined in the Declaration of Trust.
Article I
Offices
Section 1. Principal Office. The Trustees shall fix and, from time to time,
may change the location of the principal executive office of the Trust at any
place within or outside the State of Delaware.
Section 2. Delaware Office. The Trustees shall establish a registered
office in the State of Delaware and shall appoint as the Trust's registered
agent for service of process in the State of Delaware an individual who is a
resident of the State of Delaware or a Delaware corporation or a corporation
authorized to transact business in the State of Delaware; in each case the
business office of such registered agent for service of process shall be
identical with the registered Delaware office of the Trust.
Section 3. Other Offices. The Trustees may at any time establish branch or
subordinate offices at any place or places within or outside the State of
Delaware where the Trust intends to do business.
Article II
Meetings of Shareholders
Section 1. Place of Meetings. Meetings of Shareholders shall be held at any
place designated by the Trustees. In the absence of any such designation,
Shareholders' meetings shall be held at the principal executive office of the
Trust.
Section 2. Call of Meetings. There shall be no annual Shareholders'
meetings. Special meetings of the Shareholders may be called at any time by the
Trustees or by the President for the purpose of taking action upon any matter
requiring the vote or authority of the Shareholders as herein provided or
provided in the Declaration of Trust or upon any other matter as to which such
vote or authority is deemed by the Trustees or the President to be necessary or
desirable. Meetings of the Shareholders may be called for any purpose deemed
necessary or desirable upon the written request of the Shareholders holding at
least ten percent (10%) of the outstanding Shares of the Trust entitled to vote.
To the extent required by the Investment Company Act of 1940, as amended ("1940
Act"), meetings of the Shareholders for the purpose of voting on the removal of
any Trustee shall be called promptly by the Trustees upon the written request of
Shareholders holding at least ten percent (10%) of the outstanding Shares of the
Trust entitled to vote.
Section 3. Notice of Meetings of Shareholders. All notices of meetings of
Shareholders shall be sent or otherwise given to Shareholders in accordance with
Section 4 of this Article II not less than ten (10) nor more than ninety (90)
days before the date of the meeting. The notice shall specify (i) the place,
date and hour of the meeting, and (ii) the general nature of the business to be
transacted. The notice of any meeting at which Trustees are to be elected also
shall include the name of any nominee or nominees whom at the time of the notice
are intended to be presented for election.
If any action is proposed to be taken at any meeting of Shareholders for
approval of (i) a contract or transaction in which a Trustee has a direct or
indirect financial interest, (ii) an amendment of the Agreement and Declaration
of Trust of the Trust, (iii) a reorganization of the Trust, or (iv) a voluntary
dissolution of the Trust, the notice shall also state the general nature of that
proposed action.
Section 4. Manner of Giving Notice; Affidavit of Notice. Notice of any
meeting of Shareholders shall be (i) given either by hand delivery, first-class
mail, telegraphic or other written communication, charges prepaid, and (ii)
addressed to the Shareholder at the address of that Shareholder appearing on the
books of the Trust or its transfer agent or given by the Shareholder to the
Trust for the purpose of notice. If no such address appears on the Trust's books
or is not given to the Trust, notice shall be deemed to have been given if sent
to that Shareholder by first-class mail or telegraphic or other written
communication to the Trust's principal executive office, or if published at
least once in a newspaper of general circulation in the county where that office
is located. Notice shall be deemed to have been given at the time when delivered
personally or deposited in the mail or sent by telegram or other means of
written communication or, where notice is given by publication, on the date of
publication.
If any notice addressed to a Shareholder at the address of that Shareholder
appearing on the books of the Trust is returned to the Trust by the United
States Postal Service marked to indicate that the Postal Service is unable to
deliver the notice to the Shareholder at that address, all future notices or
reports shall be deemed to have been duly given without further mailing if such
future notices or reports shall be kept available to the Shareholder, upon
written demand of the Shareholder, at the principal executive office of the
Trust for a period of one year from the date of the giving of the notice.
An affidavit of the mailing or other means of giving any notice of any
meeting of Shareholders shall be filed and maintained in the minute book of the
Trust.
Section 5. Adjourned Meeting; Notice. Any meeting of Shareholders, whether
or not a quorum is present, may be adjourned from time to time by the vote of
the majority of the Shares represented at that meeting, either in person or by
proxy.
When any meeting of Shareholders is adjourned to another time or place,
notice need not be given of the adjourned meeting at which the adjournment is
taken, unless a new record date of the adjourned meeting is fixed or unless the
adjournment is for more than sixty (60) days from the date set for the original
meeting, in which case the Trustees shall set a new record date. Notice of any
such adjourned meeting shall be given to each Shareholder of record entitled to
vote at the adjourned meeting in accordance with the provisions of Sections 3
and 4 of this Article II. At any adjourned meeting, the Trust may transact any
business which might have been transacted at the original meeting
Section 6. Voting. The Shareholders entitled to vote at any meeting of
Shareholders shall be determined in accordance with the provisions of the
Declaration of Trust of the Trust, as in effect at such time. The Shareholders'
vote may be by voice vote or by ballot, provided, however, that any election for
Trustees must be by ballot if demanded by any Shareholder before the voting has
begun. On any matter other than election of Trustees, any Shareholder may vote
part of the Shares in favor of the proposal and refrain from voting the
remaining Shares or vote them against the proposal, but if the Shareholder fails
to specify the number of Shares which the Shareholder is voting affirmatively,
it will be conclusively presumed that the Shareholder's approving vote is with
respect to the total Shares that such Shareholder is entitled to vote on such
proposal.
Section 7. Waiver of Notice; Consent of Absent Shareholders. The
transaction of business and any actions taken at a meeting of Shareholders,
however called and noticed and wherever held, shall be as valid as though taken
at a meeting duly held after regular call and notice provided a quorum is
present either in person or by proxy at the meeting of Shareholders and if
either before or after the meeting, each Shareholder entitled to vote who was
not present in person or by proxy at the meeting of the Shareholders signs a
written waiver of notice or a consent to a holding of the meeting or an approval
of the minutes. The waiver of notice or consent need not specify either the
business to be transacted or the purpose of any meeting of Shareholders.
Attendance by a Shareholder at a meeting of Shareholders shall also
constitute a waiver of notice of that meeting, except if the Shareholder objects
at the beginning of the meeting to the transaction of any business because the
meeting is not lawfully called or convened and except that attendance at a
meeting of Shareholders is not a waiver of any right to object to the
consideration of matters not included in the notice of the meeting of
Shareholders if that objection is expressly made at the beginning of the
meeting.
Section 8. Shareholder Action by Written Consent Without a Meeting. Except
as provided in the Declaration of Trust, any action that may be taken at any
meeting of Shareholders may be taken without a meeting and without prior notice
if a consent in writing setting forth the action to be taken is signed by the
holders of outstanding Shares having not less than the minimum number of votes
that would be necessary to authorize or take that action at a meeting at which
all Shares entitled to vote on that action were present and voted provided,
however, that the Shareholders receive any necessary Information Statement or
other necessary documentation in conformity with the requirements of the
Securities Exchange Act of 1934 or the rules or regulations thereunder. All such
consents shall be filed with the Secretary of the Trust and shall be maintained
in the Trust's records. Any Shareholder giving a written consent or the
Shareholder's proxy holders or a transferee of the Shares or a personal
representative of the Shareholder or their respective proxy holders may revoke
the Shareholder's written consent by a writing received by the Secretary of the
Trust before written consents of the number of Shares required to authorize the
proposed action have been filed with the Secretary.
If the consents of all Shareholders entitled to vote have not been
solicited in writing and if the unanimous written consent of all such
Shareholders shall not have been received, the Secretary shall give prompt
notice of the action approved by the Shareholders without a meeting. This notice
shall be given in the manner specified in Section 4 of this Article II.
Section 9. Record Date for Shareholder Notice, Voting and Giving Consents.
(a) For purposes of determining the Shareholders entitled to vote or act at
any meeting or adjournment thereof, the Trustees may fix in advance a record
date which shall not be more than ninety (90) days nor less than ten (10) days
before the date of any such meeting. Without fixing a record date for a meeting,
the Trustees may for voting and notice purposes close the register or transfer
books for one or more Series (or Classes) for all or any part of the period
between the earliest date on which a record date for such meeting could be set
in accordance herewith and the date of such meeting.
If the Trustees do not so fix a record date or close the register or
transfer books of the affected Series or Classes, the record date for
determining Shareholders entitled to notice of or to vote at a meeting of
Shareholders shall be the close of business on the business day next preceding
the day on which notice is given or if notice is waived, at the close of
business on the business day next preceding the day on which the meeting is
held.
(b) The record date for determining Shareholders entitled to give consent
to action in writing without a meeting, (a) when no prior action of the Trustees
has been taken, shall be the day on which the first written consent is given, or
(b) when prior action of the Trustees has been taken, shall be (i) such date as
determined for that purpose by the Trustees, which record date shall not precede
the date upon which the resolution fixing it is adopted by the Trustees and
shall not be more than twenty (20) days after the date of such resolution, or
(ii) if no record date is fixed by the Trustees, the record date shall be the
close of business on the day on which the Trustees adopt the resolution relating
to that action. Nothing in this Section shall be construed as precluding the
Trustees from setting different record dates for different Series or Classes.
Only Shareholders of record on the record date as herein determined shall have
any right to vote or to act at any meeting or give consent to any action
relating to such record date, notwithstanding any transfer of Shares on the
books of the Trust after such record date.
Section 10. Proxies. Subject to the provisions of the Declaration of Trust,
every Person entitled to vote for Trustees or on any other matter shall have the
right to do so either in person or by proxy, provided that either (i) an
instrument authorizing such a proxy to act is executed by the Shareholder in
writing and dated not more than eleven (11) months before the meeting, unless
the instrument specifically provides for a longer period or (ii) the Trustees
adopt an electronic, telephonic, computerized or other alternative to the
execution of a written instrument authorizing the proxy to act, and such
authorization is received not more than eleven (11) months before the meeting. A
proxy shall be deemed executed by a Shareholder if the Shareholder's name is
placed on the proxy (whether by manual signature, typewriting, telegraphic
transmission or otherwise) by the Shareholder or the Shareholder's
attorney-in-fact. A valid proxy which does not state that it is irrevocable
shall continue in full force and effect unless (i) revoked by the Person
executing it before the vote pursuant to that proxy is taken, (a) by a writing
delivered to the Trust stating that the proxy is revoked, or (b) by a subsequent
proxy executed by such Person, or (c) attendance at the meeting and voting in
person by the Person executing that proxy, or (d) revocation by such Person
using any electronic, telephonic, computerized or other alternative means
authorized by the Trustees for authorizing the proxy to act; or (ii) written
notice of the death or incapacity of the maker of that proxy is received by the
Trust before the vote pursuant to that proxy is counted. A proxy with respect to
Shares held in the name of two or more Persons shall be valid if executed by any
one of them unless at or prior to exercise of the proxy the Trust receives a
specific written notice to the contrary from any one of the two or more Persons.
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.
Section 11. Inspectors of Election. Before any meeting of Shareholders, the
Trustees may appoint any persons other than nominees for office to act as
inspectors of election at the meeting or its adjournment. If no inspectors of
election are so appointed, the Chairman of the meeting may appoint inspectors of
election at the meeting. The number of inspectors shall be two (2). If any
person appointed as inspector fails to appear or fails or refuses to act, the
Chairman of the meeting may appoint a person to fill the vacancy.
These inspectors shall:
(a) Determine the number of Shares outstanding and the voting power of each,
the Shares represented at the meeting, the existence of a quorum and the
authenticity, validity and effect of proxies;
(b) Receive votes, ballots or consents;
(c) Hear and determine all challenges and questions in any way arising in
connection with the right to vote;
(d) Count and tabulate all votes or consents;
(e) Determine when the polls shall close;
(f) Determine the result; and
(g) Do any other acts that may be proper to conduct the election or vote with
fairness to all Shareholders.
ARTICLE III
Trustees
Section 1. Powers. Subject to the applicable provisions of the 1940 Act,
the Declaration of Trust and these By-Laws relating to action required to be
approved by the Shareholders, the business and affairs of the Trust shall be
managed and all powers shall be exercised by or under the direction of the
Trustees.
Section 2. Number of Trustees. The exact number of Trustees within the
limits specified in the Declaration of Trust shall be fixed from time to time by
a resolution of the Trustees.
Section 3. Vacancies. Vacancies in the authorized number of Trustees may be
filled as provided in the Declaration of Trust.
Section 4. Place of Meetings and Meetings by Telephone. All meetings of the
Trustees may be held at any place that has been selected from time to time by
the Trustees. In the absence of such a selection, regular meetings shall be held
at the principal executive office of the Trust. Subject to any applicable
requirements of the 1940 Act, any meeting, regular or special, may be held by
conference telephone or similar communication equipment, so long as all Trustees
participating in the meeting can hear one another and all such Trustees shall be
deemed to be present in person at the meeting.
Section 5. Regular Meetings. Regular meetings of the Trustees shall be held
without call at such time as shall from time to time be fixed by the Trustees.
Such regular meetings may be held without notice.
Section 6. Special Meetings. Special meetings of the Trustees for any
purpose or purposes may be called at any time by the President or any Vice
President or the Secretary or any two (2) Trustees.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each Trustee or sent by first-class mail, by
telegram or telecopy (or similar electronic means) or by nationally recognized
overnight courier, charges prepaid, addressed to each Trustee at that Trustee's
address as it is shown on the records of the Trust. If the notice is mailed, it
shall be deposited in the United States mail at least seven (7) calendar days
before the time of the holding of the meeting. If the notice is delivered
personally or by telephone or by telegram, telecopy (or similar electronic
means), or overnight courier, it shall be given at least forty-eight (48) hours
before the time of the holding of the meeting. Any oral notice given personally
or by telephone must be communicated only to the Trustee. The notice need not
specify the purpose of the meeting or the place of the meeting, if the meeting
is to be held at the principal executive office of the Trust. Notice of a
meeting need not be given to any Trustee if a written waiver of notice, executed
by such Trustee before or after the meeting, is filed with the records of the
meeting, or to any Trustee who attends the meeting without protesting, prior
thereto or at its commencement, the lack of notice to such Trustee.
Section 7. Quorum. One third (1/3) of the authorized number of Trustees
shall constitute a quorum for the transaction of business, except to adjourn as
provided in Section 9 of this Article III. Every act or decision done or made by
a majority of the Trustees present at a meeting duly held at which a quorum is
present shall be regarded as the act of the Trustees, subject to the provisions
of the Declaration of Trust. A meeting at which a quorum is initially present
may continue to transact business notwithstanding the withdrawal of Trustees if
any action taken is approved by at least a majority of the required quorum for
that meeting.
Section 8. Waiver of Notice. Notice of any meeting need not be given to any
Trustee who either before or after the meeting signs a written waiver of notice,
a consent to holding the meeting, or an approval of the minutes. The waiver of
notice or consent need not specify the purpose of the meeting. All such waivers,
consents, and approvals shall be filed with the records of the Trust or made a
part of the minutes of the meeting. Notice of a meeting shall also be deemed
given to any Trustee who attends the meeting without protesting, prior to or at
its commencement, the lack of notice to that Trustee.
Section 9. Adjournment. A majority of the Trustees present, whether or not
constituting a quorum, may adjourn any meeting to another time and place.
Section 10. Notice of Adjournment. Notice of the time and place of holding
an adjourned meeting need not be given unless the meeting is adjourned for more
than forty-eight (48) hours, in which case notice of the time and place shall be
given before the time of the adjourned meeting in the manner specified in
Section 6 of this Article III to the Trustees who were present at the time of
the adjournment.
Section 11. Action Without a Meeting. Unless the 1940 Act requires that a
particular action be taken only at a meeting at which the Trustees are present
in person, any action to be taken by the Trustees at a meeting may be taken
without such meeting by the written consent of a majority of the Trustees then
in office. Any such written consent may be executed and given by telecopy or
similar electronic means. Such written consents shall be filed with the minutes
of the proceedings of the Trustees. If any action is so taken by the Trustees by
the written consent of less than all of the Trustees, prompt notice of the
taking of such action shall be furnished to each Trustee who did not execute
such written consent, provided that the effectiveness of such action shall not
be impaired by any delay or failure to furnish such notice.
Section 12. Fees and Compensation of Trustees. Trustees and members of
committees may receive such compensation, if any, for their services and such
reimbursement of expenses as may be fixed or determined by resolution of the
Trustees. This Section 12 of Article III shall not be construed to preclude any
Trustee from serving the Trust in any other capacity as an officer, agent,
employee, or otherwise and receiving compensation for those services.
Section 13. Delegation of Power to Other Trustees. Any Trustee may, by
power of attorney, delegate his or her power for a period not exceeding one (1)
month at any one time to any other Trustee. Except where applicable law may
require a Trustee to be present in person, a Trustee represented by another
Trustee, pursuant to such power of attorney, shall be deemed to be present for
purpose of establishing a quorum and satisfying the required majority vote.
ARTICLE IV
Committees
Section 1. Committees of Trustees. The Trustees may by resolution designate
one or more committees, each consisting of two (2) or more Trustees, to serve at
the pleasure of the Trustees. The Trustees may designate one or more Trustees as
alternate members of any committee who may replace any absent member at any
meeting of the committee. Any committee to the extent provided for by resolution
of the Trustees, shall have the authority of the Trustees, except with respect
to:
(a) the approval of any action which under applicable law requires
approval by a majority of the entire authorized number of Trustees or
certain Trustees;
(b) the filling of vacancies of Trustees;
(c) the fixing of compensation of the Trustees for services generally or
as a member of any committee;
(d) the amendment or termination of the Declaration of Trust or any Series
or Class or the amendment of the By-Laws or the adoption of new
By-Laws;
(e) the amendment or repeal of any resolution of the Trustees which by its
express terms is not so amendable or repealable;
(f) a distribution to the Shareholders of the Trust, except at a rate or
in a periodic amount or within a designated range determined by the
Trustees; or
(g) the appointment of any other committees of the Trustees or the members
of such new committees.
Section 2. Meetings and Action of Committees. Meetings and action of
committees shall be governed by, held and taken in accordance with the
provisions of Article III of these By-Laws, with such changes in the context
thereof as are necessary to substitute the committee and its members for the
Trustees generally, except that the time of regular meetings of committees may
be determined either by resolution of the Trustees or by resolution of the
committee. Special meetings of committees may also be called by resolution of
the Trustees. Alternate members shall be given notice of meetings of committees
and shall have the right to attend all meetings of committees. The Trustees may
adopt rules for the governance of any committee not inconsistent with the
provisions of these By-Laws.
ARTICLE V
Officers
Section 1. Officers. The officers of the Trust shall be a President, a
Secretary, and a Treasurer. The Trust may also have, at the discretion of the
Trustees, a Chairman of the Board (Chairman), one or more Vice Presidents, one
or more Assistant Secretaries, one or more Assistant Treasurers, and such other
officers as may be appointed in accordance with the provisions of Section 3 of
this Article V. Any number of offices may be held by the same person. The
Chairman, if there be one, shall be a Trustee and may be, but need not be, a
Shareholder; and any other officer may be, but need not be, a Trustee or
Shareholder.
Section 2. Election of Officers. The officers of the Trust, except such
officers as may be appointed in accordance with the provisions of Section 3 or
Section 5 of this Article V, shall be chosen by the Trustees, and each shall
serve at the pleasure of the Trustees, subject to the rights, if any, of an
officer under any contract of employment.
Section 3. Subordinate Officers. The Trustees may appoint and may empower
the President to appoint such other officers as the business of the Trust may
require, each of whom shall hold office for such period, have such authority and
perform such duties as are provided in these By-Laws or as the Trustees may from
time to time determine.
Section 4. Removal and Resignation of Officers. Subject to the rights, if
any, of an officer under any contract of employment, any officer may be removed,
either with or without cause, by the Trustees at any regular or special meeting
of the Trustees or by the principal executive officer or by such other officer
upon whom such power of removal may be conferred by the Trustees.
Any officer may resign at any time by giving written notice to the Trust.
Any resignation shall take effect at the date of the receipt of that notice or
at any later time specified in that notice; and unless otherwise specified in
that notice, the acceptance of the resignation shall not be necessary to make it
effective. Any resignation is without prejudice to the rights, if any, of the
Trust under any contract to which the officer is a party.
Section 5. Vacancies in Offices. A vacancy in any office because of death,
resignation, removal, disqualification or other cause shall be filled in the
manner prescribed in these By-Laws for regular appointment to that office. The
President may make temporary appointments to a vacant office pending action by
the Trustees.
Section 6. Chairman. The Chairman, if such an officer is elected, shall if
present, preside at meetings of the Trustees, shall be the chief executive
officer of the Trust and shall, subject to the control of the Trustees, have
general supervision, direction and control of the business and the officers of
the Trust and exercise and perform such other powers and duties as may be from
time to time assigned to him by the Trustees or prescribed by the Declaration of
Trust or these By-Laws.
Section 7. President. Subject to such supervisory powers, if any, as may be
given by the Trustees to the Chairman, if there be such an officer, the
President shall be the chief operating officer of the Trust and shall, subject
to the control of the Trustees and the Chairman, have general supervision,
direction and control of the business and the officers of the Trust. He or she
shall preside at all meetings of the Shareholders and, in the absence of the
Chairman or if there be none, at all meetings of the Trustees. He or she shall
have the general powers and duties of a president of a corporation and shall
have such other powers and duties as may be prescribed by the Trustees, the
Declaration of Trust or these By-Laws.
Section 8. Vice Presidents. In the absence or disability of the President,
any Vice President, unless there is an Executive Vice President, shall perform
all the duties of the President and when so acting shall have all powers of and
be subject to all the restrictions upon the President. The Executive Vice
President or Vice Presidents, whichever the case may be, shall have such other
powers and shall perform such other duties as from time to time may be
prescribed for them respectively by the Trustees or the President or the
Chairman or by these By-Laws.
Section 9. Secretary. The Secretary shall keep or cause to be kept at the
principal executive office of the Trust, or such other place as the Trustees may
direct, a book of minutes of all meetings and actions of Trustees, committees of
Trustees and Shareholders with the time and place of holding, whether regular or
special, and if special, how authorized, the notice given, the names of those
present at Trustees' meetings or committee meetings, the number of Shares
present or represented at meetings of Shareholders and the proceedings of the
meetings.
The Secretary shall keep or cause to be kept at the principal executive
office of the Trust or at the office of the Trust's transfer agent or registrar,
a share register or a duplicate share register showing the names of all
Shareholders and their addresses, the number and classes of Shares held by each,
the number and date of certificates issued for the same and the number and date
of cancellation of every certificate surrendered for cancellation.
The Secretary shall give or cause to be given notice of all meetings of the
Shareholders and of the Trustees (or committees thereof) required to be given by
these By-Laws or by applicable law and shall have such other powers and perform
such other duties as may be prescribed by the Trustees or by these By-Laws.
Section 10. Treasurer. The Treasurer shall be the chief financial officer
and chief accounting officer of the Trust and shall keep and maintain or cause
to be kept and maintained adequate and correct books and records of accounts of
the properties and business transactions of the Trust and each Series or Class
thereof, including accounts of the assets, liabilities, receipts, disbursements,
gains, losses, capital and retained earnings of all Series or Classes thereof.
The books of account shall at all reasonable times be open to inspection by any
Trustee.
The Treasurer shall deposit all monies and other valuables in the name and
to the credit of the Trust with such depositaries as may be designated by the
Board of Trustees. He or she shall disburse the funds of the Trust as may be
ordered by the Trustees, shall render to the President and Trustees, whenever
they request it, an account of all of his or her transactions as chief financial
officer and of the financial condition of the Trust and shall have other powers
and perform such other duties as may be prescribed by the Trustees or these
By-Laws.
ARTICLE VI
Indemnification of Trustees, Officers,
Employees and Other Agents
Section 1. Agents, Proceedings, Expenses. For the purpose of this Article,
"agent" means any Person who is or was a Trustee, officer, employee or other
agent of the Trust or is or was serving at the request of the Trust as a
trustee, director, officer, employee or agent of another organization in which
the Trust has any interest as a shareholder, creditor or otherwise; "proceeding"
means any threatened, pending or completed claim, action, suit or proceeding,
whether civil, criminal, administrative or investigative (including appeals);
and "expenses" includes, without limitation, attorneys' fees, costs, judgments,
amounts paid in settlement, fines, penalties and all other liabilities
whatsoever.
Section 2. Indemnification. Subject to the exceptions and limitations
contained in Section 3 of this Article VI, every agent 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 or her in connection
with any proceeding in which he or she becomes involved as a party or otherwise
by virtue of his or her being or having been an agent.
Section 3. Limitations, Settlements. No indemnification shall be provided
hereunder to an agent:
(a) who shall have been adjudicated, by the court or other body before
which the proceeding was brought, to be liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct
of his or her office (collectively, "disabling conduct"); or
(b) with respect to any proceeding disposed of (whether by settlement,
pursuant to a consent decree or otherwise) without an adjudication by
the court or other body before which the proceeding was brought that
such agent was liable to the Trust or its Shareholders by reason of
disabling conduct, unless there has been a determination that such
agent did not engage in disabling conduct:
(i) by the court or other body before which the proceeding was brought;
(ii) by at least a majority of those Trustees who are neither Interested
Persons of the Trust nor are parties to the proceeding based upon a
review of readily available facts (as opposed to a full trial-type
inquiry); or
(iii)by written opinion of independent legal counsel based upon a review
of readily available facts (as opposed to a full trial-type inquiry);
provided, however, that indemnification shall be provided hereunder to an agent
with respect to any proceeding in the event of (1) a final decision on the
merits by the court or other body before which the proceeding was brought that
the agent was not liable by reason of disabling conduct, or (2) the dismissal of
the proceeding by the court or other body before which it was brought for
insufficiency of evidence of any disabling conduct with which such agent has
been charged.
Section 4. Insurance, Rights Not Exclusive. The rights of indemnification
herein provided (i) may be insured against by policies maintained by the Trust
on behalf of any agent, (ii) shall be severable, (iii) shall not be exclusive of
or affect any other rights to which any agent may now or hereafter be entitled
and (iv) shall inure to the benefit of the agent's heirs, executors and
administrators.
Section 5. Advance of Expenses. Expenses incurred by an agent in connection
with the preparation and presentation of a defense to any proceeding may be paid
by the Trust from time to time prior to final disposition thereof upon receipt
of an undertaking by, or on behalf of, such agent that such amount will be paid
over by him or her to the Trust if it is ultimately determined that he or she is
not entitled to indemnification under this Article VI; provided, however, that
(a) such agent shall have provided appropriate security for such undertaking,
(b) the Trust is insured against losses arising out of any such advance
payments, or (c) either a majority of the Trustees who are neither Interested
Persons of the Trust nor parties to the proceeding, or independent legal counsel
in a written opinion, shall have determined, based upon a review of the readily
available facts (as opposed to a trial-type inquiry or full investigation), that
there is reason to believe that such agent will be found entitled to
indemnification under this Article VI.
Section 6. Fiduciaries of Employee Benefit Plan. This Article does not
apply to any proceeding against any trustee, investment manager or other
fiduciary of an employee benefit plan in that person's capacity as such, even
though that person may also be an agent of this Trust as defined in Section 1 of
this Article. Nothing contained in this Article shall limit any right to
indemnification to which such a trustee, investment manager, or other fiduciary
may be entitled by contract or otherwise, which shall be enforceable to the
extent permitted by applicable law other than this Article VI.
ARTICLE VII
Inspection of Records and Reports
Section 1. Inspection by Shareholders. The Trustees shall from time to time
determine whether and to what extent, and at what times and places, and under
what conditions and regulations the accounts and books of the Trust or any of
them shall be open to the inspection of the Shareholders; and no Shareholder
shall have any right to inspect any account or book or document of the Trust
except as conferred by law or otherwise by the Trustees or by resolution of the
Shareholders.
Section 2. Inspection by Trustees. Every Trustee shall have the absolute
right at any reasonable time to inspect all books, records, and documents of
every kind and the physical properties of the Trust. This inspection by a
Trustee may be made in person or by an agent or attorney and the right of
inspection includes the right to copy and make extracts of documents.
Section 3. Financial Statements. A copy of any financial statements and any
income statement of the Trust for each semi-annual period of each fiscal year
and accompanying balance sheet of the Trust as of the end of each such period
that has been prepared by the Trust shall be kept on file in the principal
executive office of the Trust for at least twelve (12) months and each such
statement shall be exhibited at all reasonable times to any Shareholder
demanding an examination of any such statement or a copy shall be mailed to any
such Shareholder.
The semi-annual income statements and balance sheets referred to in this
section shall be accompanied by the report, if any, of any independent
accountants engaged by the Trust or the certificate of an authorized officer of
the Trust that the financial statements were prepared without audit from the
books and records of the Trust.
ARTICLE VIII
General Matters
Section 1. Checks, Drafts, Evidence of Indebtedness. All checks, drafts, or
other orders for payment of money, notes or other evidences of indebtedness
issued in the name of or payable to the Trust shall be signed or endorsed in
such manner and by such person or persons as shall be designated from time to
time in accordance with the resolution of the Board of Trustees.
Section 2. Contracts and Instruments; How Executed. The Trustees, except as
otherwise provided in these By-Laws, may authorize any officer or officers,
agent or agents, to enter into any contract or execute any instrument in the
name of and on behalf of the Trust and this authority may be general or confined
to specific instances; and unless so authorized or ratified by the Trustees or
within the agency power of an officer, no officer, agent, or employee shall have
any power or authority to bind the Trust by any contract or engagement or to
pledge its credit or to render it liable for any purpose or for any amount.
Section 3. Fiscal Year. The fiscal year of the Trust shall be fixed and
refixed or changed from time to time by the Trustees. The fiscal year of the
Trust shall be the taxable year of each Series of the Trust.
Section 4. Seal. The seal of the Trust shall consist of a flat-faced dye
with the name of the Trust cut or engraved thereon. However, unless otherwise
required by the Trustees, the seal shall not be necessary to be placed on, and
its absence shall not impair the validity of, any document, instrument or other
paper executed and delivered by or on behalf of the Trust.
ARTICLE IX
Amendments
Section 1. Amendment. Except as otherwise provided by applicable law or by
the Declaration of Trust, these By-Laws may be restated, amended, supplemented
or repealed by a majority vote of the Trustees, provided that no restatement,
amendment, supplement or repeal hereof shall limit the rights to indemnification
or insurance provided in Article VI hereof with respect to any acts or omissions
of agents (as defined in Article VI) of the Trust prior to such amendment.
