As filed with the Securities and Exchange Commission on March 31, 2000
Securities Act File No. 333-36811
Investment Company Act File No. 811-08391
________________________________________________________________________________
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. 2 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 3 [X]
(Check appropriate box or boxes.)
BLUE RIDGE FUNDS TRUST
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(Exact Name of Registrant as Specified in Charter)
105 North Washington Street, P.O. Box 69, Rocky Mount, NC 27802-0069
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code (252) 972-9922
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C. Frank Watson, III
105 North Washington Street, P.O. Box 69, Rocky Mount, NC 27802-0069
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(Name and Address of Agent for Service)
With copies to:
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Jane A. Kanter
Dechert Price & Rhoads
1775 Eye Street, N.W.
Washington, DC 20006-2401
Approximate Date of Proposed Public Offering: As soon as practicable after the
Effective Date of this Amendment
--------------------------------
It is proposed that this filing will become effective: (check appropriate box)
[X] immediately upon filing pursuant to paragraph (b);
[ ] on (date) pursuant to paragraph (b);
[ ] 60 days after filing pursuant to paragraph (a)(1);
[ ] on (date) pursuant to paragraph (a)(1);
[ ] 75 days after filing pursuant to paragraph (a)(2); or
[ ] on (date) pursuant to paragraph (a)(2) of rule 485.
<PAGE>
BLUE RIDGE FUNDS TRUST
Contents of Registration Statement
This registration statement consists of the following papers and documents:
Cover Sheet
Contents of Registration Statement
Blue Ridge Total Return Fund
-Part A - Prospectus
-Part B - Statement of Additional Information
Part C - Other Information and Signature Page
Exhibit Index
Exhibits
<PAGE>
PART A
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Cusip Number 095848107 NASDAQ Ticker Symbol BRTRX
________________________________________________________________________________
BLUE RIDGE TOTAL RETURN FUND
A series of the
Blue Ridge Funds Trust
NL SHARES
________________________________________________________________________________
PROSPECTUS
March 31, 2000
The Blue Ridge Total Return Fund seeks total return from a combination of
capital appreciation and current income.
Investment Manager
------------------
Colonial Asset Management, Inc.
359 South Pine Street
Spartanburg, South Carolina 29302
1-800-773-3863
The Securities and Exchange Commission has not approved the securities being
offered by this prospectus or determined whether this prospectus is accurate and
complete. It is unlawful for anyone to make any representation to the contrary.
<PAGE>
TABLE OF CONTENTS
Page
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THE FUND......................................................................2
Investment Objective....................................................2
Principal Investment Strategies.........................................2
Principal Risks Of Investing In The Fund................................3
Performance Information.................................................4
Fees And Expenses Of The Fund...........................................5
MANAGEMENT OF THE FUND........................................................6
The Investment Manager..................................................6
The Administrator.......................................................7
The Transfer Agent......................................................7
The Distributor.........................................................7
INVESTING IN THE FUND.........................................................8
Minimum Investment......................................................8
Purchase And Redemption Price...........................................8
Purchasing Shares.......................................................9
Redeeming Your Shares..................................................10
OTHER IMPORTANT INVESTMENT INFORMATION.......................................13
Dividends, Distributions, And Taxes....................................13
Financial Highlights...................................................14
Additional Information.........................................Back Cover
<PAGE>
THE FUND
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INVESTMENT OBJECTIVE
The Blue Ridge Total Return Fund (the "Fund") seeks total return from a
combination of capital appreciation and current income.
PRINCIPAL INVESTMENT STRATEGIES
In seeking to achieve its objective, the Fund, which is a diversified separate
investment portfolio of the Blue Ridge Funds Trust (the "Trust"), may at times
emphasize investments that produce the following:
o capital appreciation,
o income, or
o both capital appreciation and income.
The Fund's investments are not limited to any specific type of security and
Colonial Asset Management, Inc. (the "Manager") does not allocate Fund assets
according to any formula or fixed ratio. The Manager will vary the percentage of
the Fund's assets allocated to each of the above based on the Manager's judgment
of market and economic conditions, and based on the Manager's view of which of
the above can best achieve the Fund's objectives.
Capital Appreciation
The Manager uses a growth investment approach in selecting common stocks for
capital appreciation purposes. 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).
Income
When seeking income, the Fund may purchase a variety of convertible securities,
preferred stocks, dividend paying common stocks, and investment-grade debt
securities. For the purpose of determining whether a security is
investment-grade, the Manager will only purchase securities that are rated at
least BBB by Moody's Investor Services, Inc., or Baa by Standard & Poor's Rating
Services, a division of the McGraw-Hill Companies, Inc. or are unrated
securities of similar investment quality. The Fund does not have a maturity
limitation policy regarding the investment-grade securities it selects.
The Fund may also hold short-term investments including: 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.
2
<PAGE>
PRINCIPAL RISKS OF INVESTING IN THE FUND
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.
The Fund may invest in both equity and debt securities and, therefore, has some
exposure to the risks of both equity securities and fixed income instruments.
Equity Securities
Investments in equity securities (i.e., common stocks and preferred stocks) are
particularly subject to the risk of changing economic, stock market, industry,
and company conditions which can adversely affect the value of the Fund's equity
holdings.
Fixed Income Instruments
The value of the Fund's debt holdings (i.e., investment-grade debt securities)
is subject to a number of risks as well:
o Interest Rate Risk: Generally, when interest rates fall, the value of the
Fund's debt holdings rises, and when interest rates rise, the value of the
Fund's debt holdings declines.
o Credit Risk: Another risk such as changes in the perceived creditworthiness
of certain issuers can also affect the value of the Fund's debt holdings.
Investment-grade debt securities, while normally exhibiting adequate
protection parameters, may 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. Like debt securities, the value of convertible securities
fluctuates in relation to changes in interest rates. However, the value of
convertible securities also fluctuates in relation to the underlying common
stock.
o Maturity Risk: Maturity risk is another factor that can affect the value of
the Fund's debt holdings. The Fund does not have a limitation policy
regarding the length of maturity of its debt holdings. In general, the
longer the maturity of a debt obligation, the higher its yield and the
greater its sensitivity to changes in interest rates. Conversely, the
shorter the maturity, the lower the yield but the greater the price
stability.
3
<PAGE>
Additional Risks
o 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 100%. High rates of portfolio
turnover may result in greater Fund trading costs. High rates of portfolio
turnover may also result in the realization of short-term capital gains.
Any distributions resulting from such gains will be considered ordinary
income for federal income tax purposes.
o Liquid or Short-Term Investments. Under normal market conditions, the Fund
expects to be fully invested in the securities described directly above.
For short-term holdings, the Fund may invest a substantial portion 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. Since
investment companies investing in other investment companies pay management
fees and other expenses relating to those investment companies,
shareholders of the Fund would indirectly pay both the Fund's expenses and
the expenses relating to those other investment companies with respect to
the Fund's assets invested in such investment companies. To the extent the
Fund is invested in short-term investments, it will not be pursuing its
investment objective.
PERFORMANCE INFORMATION
Because Colonial Asset Management, Inc. assumed duties as manager on April 1,
1999, there is no calendar year performance information under the current
Manager to be presented for the Fund. However, historical Fund performance
information is included in the latest audited financial statements and are
available upon request by contacting the Fund.
4
<PAGE>
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund:
Shareholder Fees For NL Shares
(fees paid directly from your investment)
-----------------------------------------
Maximum sales charge (load) imposed on purchases
(as a percentage of offering price) ..........................None
Redemption fee ....................................................None
Annual Fund Operating Expenses For NL Shares
(expenses that are deducted from Fund assets)
---------------------------------------------
Management Fees...........................................0.75%
Distribution and/or Service (12b-1) Fees...................None
Other Expenses............................................1.85%
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Total Annual Fund Operating Expenses.............................2.60%*
Fee Waiver and/or Expense Reimbursement.........................(1.15)%
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Net Expenses.....................................................1.45%
======
* "Total Annual Fund Operating Expenses" are based upon actual expenses
incurred by the Fund for the fiscal year ended November 30, 1999. The
Manager has entered into a contractual agreement with the Fund under
which it has agreed to waive or reduce its fees and to assume other
expenses of the Fund, if necessary, in an amount that limits "Total
Annual Fund Operating Expenses" (exclusive of interest, taxes,
brokerage fees and commissions, extraordinary expenses, and payments,
if any, under a Rule 12b-1 Plan) to not more than 1.45% of the NL
Shares average daily net assets for the fiscal year ending November
30, 2000. It is expected that the contractual agreement will continue
from year-to-year provided such continuance is approved by the Board
of Trustees. See "Expense Limitation Agreement" below for more
detailed information.
Example: This Example shows you the expenses you may pay over time by investing
in the Fund. Since all funds use the same hypothetical conditions, it should
help you compare the costs of investing in the Fund versus other funds. The
Example assumes the following conditions:
(1) You invest $10,000 in the Fund for the periods shown;
(2) You reinvest all dividends and distributions;
(3) You redeem all of your shares at the end of those periods;
(4) You earn a 5% total return; and
(5) The Fund's expenses remain the same.
Although your actual costs may be higher or lower, the following table shows you
what your costs may be under the conditions listed above.
-------------------- ------------ -------------- ------------- --------------
Period Invested 1 Year 3 Years 5 Years 10 Years
-------------------- ------------ -------------- ------------- --------------
Your Costs $148 $808 $1,380 $2,934
-------------------- ------------ -------------- ------------- --------------
5
<PAGE>
MANAGEMENT OF THE FUND
----------------------
THE INVESTMENT MANAGER
Colonial Asset Management, Inc., 531 East Main Street, Spartanburg, South
Carolina, 29302, serves as the investment manager to the Fund. The Manager is
registered as an investment adviser with the Securities and Exchange Commission
under the Investment Advisers Act of 1940, as amended. The Manager is organized
under the laws of South Carolina as a corporation and is a wholly owned
subsidiary of Colonial Group, Inc., which is also a South Carolina corporation.
The two main principals of the Colonial Group, Inc. and the Manager are H.
Walter Barre and Barry D. Wynn.
The Manager's clients include trusts, corporations, foundations, charitable
organizations, retirement plans, and individuals.
The Fund is managed by an investment team consisting of Messrs. Barre and Wynn,
Chairman and President, respectively, of the Manager. Messrs. Barre and Wynn
have been with the Manager since its inception in 1996. Prior to 1996, Messrs.
Barre and Wynn served as Chairman and President, respectively, for Colonial
Trust Company.
The Manager's Compensation. For its services, the Manager is entitled to a fee,
which is calculated daily and paid monthly, as an annual rate of 0.750% of the
Fund's average daily net assets up to and including $20 million, 0.625% of the
Fund's average daily net assets on the next $30 million, and 0.500% of the
Fund's average daily net assets over $50 million.
Expense Limitation Agreement. In the interest of limiting expenses of the Fund,
the Manager has entered into an expense limitation agreement with the Trust (the
"Expense Limitation Agreement"), pursuant to which the Manager has agreed to
waive or limit its fees and to assume other expenses so that the total annual
operating expenses of the Fund (other than interest, taxes, brokerage
commissions, other expenditures which are capitalized in accordance with
generally accepted accounting principles, other extraordinary expenses not
incurred in the ordinary course of the Fund's business, and amounts, if any,
payable pursuant to a Rule 12b-1 Plan) are limited to 1.45% of the average daily
assets of the Fund for the fiscal year to end November 30, 2000. The Expense
Limitation Agreement shall continue from year-to-year provided such continuance
is specifically approved by a majority of the Trustees of the Trust who (i) are
not "interested persons" of the Trust or any other party to this Agreement, as
defined in the 1940 Act, and (ii) have no direct or indirect financial interest
in the operation of this Expense Limitation Agreement.
The Fund may at a later date reimburse the Manager for the fees waived or
limited and other expenses assumed and paid by the Manager pursuant to the
Expense Limitation Agreement during any of the previous five (5) fiscal years,
provided that the Fund has reached a sufficient asset size to permit such
reimbursement to be made without causing the total annual expense ratio of the
Fund to exceed the percentage limits stated above. Consequently, no
reimbursement by the Fund will be made unless: (i) the Fund's assets exceed $10
million; (ii) the Fund's total annual expense ratio is less than the percentage
stated above; and (iii) the payment of such reimbursement has been approved by
the Trust's Board of Trustees on a quarterly basis.
6
<PAGE>
THE ADMINISTRATOR
The Nottingham Company, Inc. (the "Administrator") serves as the administrator
and fund accounting agent for the Fund. The Administrator assists the Trust in
the performance of its administrative responsibilities to the Fund, coordinates
the services of each vendor of services to the Fund, and provides the Fund with
other necessary administrative, fund accounting, and compliance services. In
addition, the Administrator makes available the office space, equipment,
personnel, and facilities required to provide such services to the Fund. For
these services, the Administrator is compensated by the Trust pursuant to a Fund
Accounting and Compliance Administration Agreement
THE TRANSFER AGENT
NC Shareholder Services, LLC (the "Transfer Agent") serves as the Fund's
transfer, dividend paying, and shareholder servicing agent. As indicated later
in the section of this Prospectus, "Investing in the Fund," NCSS will handle
your orders to purchase and redeem shares of the Fund, and will disburse
dividends paid by the Fund. The Transfer Agent is compensated for its services
by the Trust pursuant to a Dividend Disbursing and Transfer Agent Agreement.
THE DISTRIBUTOR
Capital Investment Group, Inc. (the "Distributor") serves as the distributor of
the Fund's shares. The Distributor may sell Fund shares to or through qualified
securities dealers or others. With respect to the NL Shares, the Distributor
receives no compensation from the Fund with respect to the sales of such shares.
Other Expenses. In addition to the management fees, the Fund pays all expenses
not assumed by the Fund's Manager, including, without limitation: the fees and
expenses of its administrator, custodian, transfer agent, independent
accountants, and legal counsel; the costs of printing and mailing to
shareholders annual and semi-annual reports, proxy statements, prospectuses,
statements of additional information, and supplements thereto; the costs of
printing registration statements; bank transaction charges and custodian's fees;
any proxy solicitors' fees and expenses; filing fees; any federal, state, or
local income or other taxes; any interest; any membership fees of the Investment
Company Institute and similar organizations; fidelity bond and Trustees'
liability insurance premiums; and any extraordinary expenses, such as
indemnification payments or damages awarded in litigation or settlements made.
7
<PAGE>
INVESTING IN THE FUND
---------------------
MINIMUM INVESTMENT
NL Shares are sold and redeemed at net asset value. 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. The Fund
may, in the Manager's sole discretion, accept certain accounts with less than
the minimum investment.
PURCHASE AND REDEMPTION PRICE
Determining the Fund's Net Asset Value. The price at which you purchase or
redeem shares is based on the next calculation of net asset value after an order
is accepted in good form. Good form includes providing a complete and accurate
application and payment in full of the purchase amount. The Fund's net asset
value per share is calculated by dividing the value of the Fund's total assets,
less liabilities (including Fund expenses, which are accrued daily), by the
total number of outstanding shares of that Fund. The net asset value per share
of the Fund is normally determined at the time regular trading closes on the New
York Stock Exchange (currently 4:00 p.m. Eastern time, Monday through Friday),
except on business holidays when the New York Stock Exchange is closed.
Other Matters. All redemption requests will be processed and payment with
respect thereto will normally be made within seven days after tenders. The Fund
may suspend redemption, if permitted by the 1940 Act, for any period during
which the New York Stock Exchange is closed or during which trading is
restricted by the Securities Exchange Commission ("SEC") or if the SEC declares
that an emergency exists. Redemptions may also be suspended during other periods
permitted by the SEC for the protection of the Fund's shareholders.
Additionally, during drastic economic and market changes, telephone redemption
privileges may be difficult to implement. Also, if the Trustees determine that
it would be detrimental to the best interest of the Fund's remaining
shareholders to make payment in cash, the Fund may pay redemption proceeds in
whole or in part by a distribution-in-kind of readily marketable securities.
8
<PAGE>
PURCHASING SHARES
Regular Mail Orders. Payment for shares must be made by check or money order
from a U.S. bank and payable in U.S. dollars. If checks are returned due to
insufficient funds or other reasons, the Fund will charge a $20 fee or may
redeem shares of the Fund already owned by the purchaser to recover any such
loss. For regular mail orders, please complete the attached Fund Shares
Application and mail it, along with your check made payable to the "Blue Ridge
Total Return Fund," to:
Blue Ridge Total Return Fund
NL Shares
c/o NC Shareholder Services, LLC
107 North Washington Street
Post Office Box 4365
Rocky Mount, North Carolina 27803-0365
The application must contain your Social Security Number ("SSN") or Taxpayer
Identification Number ("TIN"). If you have applied for a SSN or TIN at the time
of completing your account application but you have not received your number,
please indicate this on the application. Taxes are not withheld from
distributions to U.S. investors if certain IRS requirements regarding the TIN
are met.
Bank Wire Orders. Purchases may also be made through bank wire orders. To
establish a new account or to add to an existing account by wire, please call
the Fund at 1-800-773-3863, before wiring funds, to advise the Fund of the
investment, dollar amount, and the account identification number. Additionally,
please have your bank use the following wire instructions:
First Union National Bank of North Carolina
Charlotte, North Carolina
ABA # 053000219
For the Blue Ridge Total Return Fund - NL Shares
Acct. # 2000001067846
For further credit to (shareholder's name and SSN or TIN)
Additional Investments. You may also add to your account by mail or wire at any
time by purchasing shares at the then current public offering price. The minimum
additional investment is $500. Before adding funds by bank wire, please call the
Fund at 1-800-773-3863 and follow the above directions for wire purchases. Mail
orders should include, if possible, the "Invest by Mail" stub that is attached
to your Fund confirmation statement. Otherwise, please identify your account in
a letter accompanying your purchase payment.
Additional Purchases By Phone (Telephone Purchase Authorization). If you have
made this election on your Fund Shares Application, you may purchase additional
shares by telephoning the Fund at 1-800-773-3863. 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 net asset value
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.
9
<PAGE>
Automatic Investment Plan. The Automatic Investment Plan enables shareholders to
make regular monthly or quarterly investment in shares through automatic charges
to their checking account. With shareholder authorization and bank approval, the
Fund will automatically charge the checking account for the amount specified
($100 minimum), which will be automatically invested in shares at the public
offering price on or about the 21st day of the month. The shareholder may change
the amount of the investment or discontinue the plan at any time by writing to
the Fund. Investors who establish an Automatic Investment Plan may open an
account with a minimum balance of $1,000. This Automatic Investment Plan must be
established on your account at least fifteen (15) days prior to the intended
date of your first automatic investment.
Stock Certificates. You do not have the option of receiving stock certificates
for your shares. Evidence of ownership will be given by issuance of periodic
account statements that will show the number of shares owned.
REDEEMING YOUR SHARES
Regular Mail Redemptions. Regular mail redemption requests should be addressed
to:
Blue Ridge Total Return Fund
NL Shares
c/o NC Shareholder Services, LLC
107 North Washington Street
Post Office Box 4365
Rocky Mount, North Carolina 27803-0365
Regular mail redemption requests should include:
(1) Your letter of instruction specifying the account number and number of
shares, or the dollar amount, to be redeemed. This request must be
signed by all registered shareholders in the exact names in which they
are registered;
(2) Any required signature guarantees (see "Signature Guarantees" below);
and
(3) Other supporting legal documents, if required in the case of estates,
trusts, guardianships, custodianships, corporations, partnerships,
pension or profit sharing plans, and other organizations.
10
<PAGE>
Your redemption proceeds normally will be sent to you within 7 days after
receipt of your redemption request. However, the Fund may delay forwarding a
redemption check for recently purchased shares while it determines whether the
purchase payment will be honored. Such delay (which may take up to 15 days from
the date of purchase) may be reduced or avoided if the purchase is made by
certified check or wire transfer. In all cases, the net asset value next
determined after receipt of the request for redemption will be used in
processing the redemption request.
Telephone and Bank Wire Redemptions. You may also redeem shares by telephone and
bank wire under certain limited conditions. The Fund will redeem shares in this
manner when so requested by the shareholder only if the shareholder confirms
redemption instructions in writing.
The Fund may rely upon confirmation of redemption requests transmitted via
facsimile (FAX# 252-972-1908). The confirmation instructions must include:
(1) Fund name,
(2) Shareholder name and account number,
(3) Number of shares or dollar amount to be redeemed,
(4) Instructions for transmittal of redemption funds to the shareholder,
and
(5) Shareholder signature as it appears on the application then on file
with the Fund.
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). Shares of the Fund may not be redeemed by wire on
days in which your bank is not open for business. You can change your redemption
instructions anytime by filing a letter including your new redemption
instructions with the Fund. See "Signature Guarantees" below.
The Fund, in its discretion, may choose to pass through to redeeming
shareholders any charges imposed by the Custodian for wire redemptions. The
Custodian currently charges the Fund $10 per transaction for wiring redemption
proceeds. If this cost is passed through to redeeming shareholders by the Fund,
the charge will be deducted automatically from your account by redemption of
shares in your account. Your 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.
You may redeem shares, subject to the procedures outlined above, by calling the
Fund at 1-800-773-3863. Redemption proceeds will only be sent to the bank
account or person named in your Fund Shares Application currently on file with
the Fund. Telephone redemption privileges authorize the Fund to act on telephone
instructions from any person representing himself or herself to be the investor
and reasonably believed by the Fund to be genuine. The Fund will employ
reasonable procedures, such as requiring a form of personal identification, to
confirm that instructions are genuine, and if it does not follow such
procedures, the Fund will be liable for any losses due to fraudulent or
unauthorized instructions. The Fund will not be liable for following telephone
instructions reasonably believed to be genuine.
11
<PAGE>
Small Accounts. All shares are purchased and redeemed in accordance with the
Fund's Amended and Restated Declaration of Trust and By-Laws. The Board of
Trustees reserves the right to redeem involuntarily any account having a net
asset value of less than $2,000 (due to redemptions, exchanges, or transfers,
and not due to market action) upon 60-days' written notice. If the shareholder
brings his or her account net asset value up to at least $2,000 during the
notice period, the account will not be redeemed. Redemptions from retirement
plans may be subject to federal income tax withholding.
Signature Guarantees. To protect your account and the Fund from fraud, signature
guarantees are required to be sure that you are the person who has authorized a
change in registration or standing instructions for your account. Signature
guarantees are required for (1) change of registration requests, (2) requests to
establish or to change exchange privileges or telephone and bank wire redemption
service other than through your initial account application, and (3) redemption
requests in excess of $50,000. Signature guarantees are acceptable from a member
bank of the Federal Reserve System, a savings and loan institution, credit union
(if authorized under state law), registered broker-dealer, securities exchange,
or association clearing agency, and must appear on the written request for
change of registration, establishment or change in exchange privileges, or
redemption request.
Systematic Withdrawal Plan. A shareholder who owns shares of the Fund valued at
$10,000 or more at the current offering price may establish a Systematic
Withdrawal Plan to receive a monthly or quarterly check in a stated amount not
less than $100. Each month or quarter, as specified, the Fund will automatically
redeem sufficient shares from your account to meet the specified withdrawal
amount. The shareholder may establish this service whether dividends and
distributions are reinvested in shares of the Fund or paid in cash. Call or
write the Fund for an application form.
12
<PAGE>
OTHER IMPORTANT INVESTMENT INFORMATION
--------------------------------------
DIVIDENDS, DISTRIBUTIONS, AND TAXES
The following information is meant as a general summary for U.S. taxpayers.
Additional tax information appears in the Statement of Additional Information
(the "SAI"). Shareholders should rely on their own tax advisers for advice about
the particular federal, state and local tax consequences to them of investing in
the Fund.
The Fund will distribute most of its income and gains to its shareholders every
year. Income dividends, if any, will be paid quarterly and capital gains
distributions, if any, will be made at least annually. Although the Fund will
not be taxed on amounts it distributes, shareholders will generally be taxed,
regardless of whether distributions are received in cash or are reinvested in
additional Fund shares. A particular distribution generally will be taxable as
either ordinary income or long-term capital gains. If a Fund designates a
distribution as a capital gains distribution, it will be taxable to shareholders
as long-term capital gains, regardless of how long they have held their Fund
shares.
If the Fund declares a dividend in October, November or December but pays it in
January, it may be taxable to shareholders as if they received it in the year it
was declared. Every year each shareholder will receive a statement detailing the
tax status of any Fund distributions for that year.
Distributions may be subject to state and local taxes, as well as federal taxes.
Shareholders who hold Fund shares in a tax-deferred account, such as a
retirement plan, generally will not have to pay tax on Fund distributions until
they receive distributions from the account.
A shareholder who sells or redeems shares will generally realize a capital gain
or loss, which will be long-term or short-term, generally depending upon the
shareholder's holding period for the Fund shares. An exchange of shares may be
treated as a sale.
As with all mutual funds, the Fund may be required to withhold U.S. federal
income tax at the rate of 31% of all taxable distributions payable to
shareholders who fail to provide the Fund with their correct taxpayer
identification numbers or to make required certifications, or who have been
notified by the IRS that they are subject to backup withholding. Backup
withholding is not an additional tax; rather, it is a way in which the IRS
ensures it will collect taxes otherwise due. Any amounts withheld may be
credited against a shareholder's U.S. federal income tax liability.
13
<PAGE>
FINANCIAL HIGHLIGHTS
The financial data included in the table below has been derived from audited
financial statements of the Fund. The financial data for the fiscal years ended
November 30, 1999 and 1998 have been audited by Deloitte & Touche LLP,
independent auditors, whose report covering such periods is incorporated by
reference into the SAI. This information should be read in conjunction with the
Fund's latest audited annual financial statements and notes thereto, which are
also incorporated by reference into the SAI, a copy of which may be obtained at
no charge by calling the Fund. Further information about the performance of the
Fund is contained in the Annual Report of the Fund, a copy of which may also be
obtained at no charge by calling the Fund.
(For a Share Outstanding Throughout the Period)
- -------------------------------------------------------------------------------
Year ended Period ended
November 30, November 30,
1999 1998(a)
- -------------------------------------------------------------------------------
Net asset value, beginning of period ............. $10.47 $10.00
Income from investment operations
Net investment income ................. 0.05 0.02
Net realized and unrealized gain
on investments 1.16 0.47 (d)
---------- ----------
Total from investment operations . 1.21 0.49 (b)
---------- ----------
Distributions to shareholders from
Net investment income ................. (0.03) (0.02)
---------- ----------
Net asset value, end of period ................... $11.65 $10.47
========== ==========
Total return ..................................... 11.58 % 4.86 %
========== ==========
Ratios/supplemental data
Net assets, end of period .................. $6,351,259 $1,632,407
========== ==========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees..... 2.60 % 1.65 %(c)
After expense reimbursements and waived fees...... 1.48 % 1.58 %(c)
Ratio of net investment income (loss) to average net assets
Before expense reimbursements and waived fees .... (0.47)% 0.03 %(c)
After expense reimbursements and waived fees ..... 0.65 % 0.10 %(c)
Portfolio turnover rate ............................... 85.51 % 116.16 %
(a) For the period from December 15, 1997 (commencement of operations) to
November 30, 1998.
(b) Includes undistributed net investment income of $0.00 per share and
undistributed net realized gains and unrealized gains of $0.00 per share,
from December 1, 1997 (initial seed date) through December 15, 1997
(commencement of operations).
(c) Annualized.
(d) The amount shown in this caption for a share outstanding does not
correspond with the aggregate net realized and unrealized gain (loss) on
security transactions for the period ended November 30, 1998 due to the
timing of sales and repurchases of fund shares in relation to fluctuating
market values of the investments of the fund. Net realized and unrealized
loss of investments includes gains of $0.82 per share due to market
appreciation during the period and losses of $0.35 due to market
depreciation during the period.
14
<PAGE>
ADDITIONAL INFORMATION
________________________________________________________________________________
BLUE RIDGE TOTAL RETURN FUND
NL SHARES
________________________________________________________________________________
Board of Trustees
William B. Bradshaw Geoffrey M. Salkow
Chairman Chief Executive Officer
Capital Consulting Group, Inc. Colonial Capital Management, LLC
Robert D. Inglis Johnnie M. Walters
Member of Congress 1993-1998 Vice President and General Counsel
Shareholder Colonial Trust Company
Leatherwood, Walker, Todd & Mann, P.C.
Additional information about the Fund is available in the Fund's Statement of
Additional Information. The Fund's Annual and Semi-annual Reports include a
discussion of market conditions and investment strategies that significantly
affected the Fund's performance during its last fiscal year. These reports and
the Statement of Additional Information are available free of charge upon
request by contacting us:
By telephone: 1-800-773-3863
By mail: Blue Ridge Total Return Fund
NL Shares
c/o NC Shareholder Services, LLC
107 North Washington Street
Post Office Box 4365
Rocky Mount, NC 27803-0365
By e-mail: [email protected]
On the Internet: www.ncfunds.com
Information about the Fund can also be reviewed and copied at the SEC's Public
Reference Room in Washington, D.C. Inquiries on the operations of the public
reference room may be made by calling the SEC at 1-202-942-8090. Reports and
other information about the Fund are available on the SEC's Internet site at
http://www.sec.gov and copies of this information may be obtained, upon payment
of a duplicating fee, by electronic request at the following e-mail address:
[email protected], or by writing the Public Reference Section of the SEC,
Washington, D.C. 20549-0102.
Investment Company Act file number 811-08391
<PAGE>
PART B
======
STATEMENT OF ADDITIONAL INFORMATION
________________________________________________________________________________
Blue Ridge Total Return Fund
________________________________________________________________________________
March 31, 2000
A series of the
BLUE RIDGE FUNDS TRUST
107 North Washington Street, Post
Office Box 4365
Rocky Mount, North Carolina 27803-0365
Telephone: 1-800-525-3863
TABLE OF CONTENTS
Page
----
THE TRUST ................................................................. 2
DESCRIPTION OF PERMITTED INVESTMENTS ...................................... 2
INVESTMENT LIMITATIONS .................................................... 3
THE INVESTMENT MANAGER .................................................... 5
THE ADMINISTRATOR ......................................................... 6
THE TRANSFER AGENT ........................................................ 6
THE DISTRIBUTOR ........................................................... 6
THE CUSTODIAN ............................................................. 7
THE LEGAL COUNSEL ......................................................... 7
THE INDEPENDENT AUDITORS .................................................. 7
CODE OF ETHICS ............................................................ 7
TRUSTEES AND OFFICERS OF THE TRUST ........................................ 7
CALCULATION OF TOTAL RETURN ............................................... 8
PURCHASE AND REDEMPTION OF SHARES ......................................... 10
DETERMINATION OF NET ASSET VALUE .......................................... 10
TAXES ..................................................................... 11
PORTFOLIO TRANSACTIONS .................................................... 12
DESCRIPTION OF SHARES ..................................................... 13
FINANCIAL STATEMENTS ...................................................... 13
This Statement of Additional Information (the "SAI") is meant to be read in
conjunction with the Prospectus dated March 31, 2000, for The Blue Ridge Total
Return Fund (the "Fund"), and is incorporated by reference in its entirety into
the Prospectus. Because this Statement of Additional Information is not itself a
prospectus, no investment in shares of the Fund should be made solely upon the
information contained herein. Copies of the Fund's Prospectus may be obtained at
no charge by writing or calling the Fund at the address and phone number shown
above. Capitalized terms used but not defined herein have the same meanings as
in the Prospectus.
<PAGE>
THE TRUST
The Trust is a Delaware business trust registered with the Securities and
Exchange Commission (the "SEC") as an open-end diversified management investment
company, commonly known as a "mutual fund." The Trust currently consists of one
series, the Blue Ridge Total Return Fund, which has one class of shares: NL
Shares. In the future, the Trust may establish additional series and classes of
shares. Colonial Asset Management, 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
The primary investment strategies and risks of the Fund are described in the
Prospectus. In addition to the principal investment strategies discussed in the
Fund's Prospectus, the Fund may also employ the use of the financial instruments
described below in order to achieve its objective. The strategies set forth
below are not principal strategies of the Fund.
Money Market Instruments
The Fund may invest in money market instruments that may include U.S. Government
obligations or corporate debt obligations (including those subject to repurchase
agreements), provided that they mature in thirteen months or less from the date
of acquisition and are otherwise eligible for purchase by the Fund. Money market
instruments also may include Banker's Acceptances and Certificates of Deposit of
domestic branches of U.S. banks, Commercial Paper, and Variable Amount Demand
Master Notes ("Master Notes"). Banker's Acceptances are time drafts drawn on and
"accepted" by a bank. When a bank "accepts" such a time draft, it assumes
liability for its payment. When the Fund acquires a Banker's Acceptance, the
bank that "accepted" the time draft is liable for payment of interest and
principal when due. The Banker's Acceptance carries the full faith and credit of
such bank. A Certificate of Deposit ("CD") is an unsecured, interest bearing
debt obligation of a bank. Commercial Paper is an unsecured, short-term debt
obligation of a bank, corporation, or other borrower. Commercial Paper maturity
generally ranges from two to 270 days and is usually sold on a discounted basis
rather than as an interest-bearing instrument. The Fund will invest in
Commercial Paper only if it is rated in one of the top two rating categories by
Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's Ratings Group
("S&P"), Fitch Investors Service, Inc. ("Fitch"), or Duff & Phelps ("D&P"), or
if not rated, of equivalent quality in the Manager's opinion. Commercial Paper
may include Master Notes of the same quality. Master Notes are unsecured
obligations which are redeemable upon demand of the holder and which permit the
investment of fluctuating amounts at varying rates of interest. Master Notes are
acquired by the Fund only through the Master Note program of the Fund's
custodian bank, acting as administrator thereof. The Manager will monitor, on a
continuous basis, the earnings' power, cash flow, and other liquidity ratios of
the issuer of a Master Note held by the Fund.
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
that 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.
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.
INVESTMENT LIMITATIONS
Fundamental Policies
The Fund has adopted certain investment restrictions that, 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.
Non-Fundamental Policies
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. This percentage
restriction is with respect to the Fund's current holdings of illiquid
securities.
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 exceeds 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 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 INVESTMENT MANAGER
Blue Ridge Advisors, Inc., (the "Previous Manager"), 84 Villa Road, B37,
Greenville, South Carolina 29615, served as the investment manager to the Fund
pursuant to an investment management agreement with the Trust from commencement
of operations (December 12, 1997) to March 31, 1999.
On April 1, 1999, Colonial Asset Management, Inc. (the "Manager"), 359 South
Pine Street, Spartanburg, South Carolina 29302, became the investment manager of
the Fund pursuant to a new investment management agreement (the "Management
Agreement") approved by the shareholders of the Fund. Subject to the Management
Agreement and the authority of the Trustees, the Manager provides guidance and
policy direction in connection with its daily management of the Fund's assets.
The Manager coordinates the investment and reinvestment of the Fund's assets.
The Manager is also responsible for the selection of broker- dealers through
which the Fund executes portfolio transactions, subject to the brokerage
policies established by the Trustees, and it provides certain executive
personnel to the Fund.
The Management Agreement will be in effect for an initial term ending April 1,
2001. For its services, the Manager is entitled to a fee, which is calculated
daily and paid monthly, at an annual rate of 0.750% of the Fund's average daily
net assets up to and including $20 million, 0.625% of the Fund's average daily
net assets on the next $30 million, and 0.500% of the Fund's average daily net
assets over $50 million. For the fiscal year ended November 30, 1999, the
Previous Manager and the Manager, combined, received $10,182 (after fee waivers
of $24,879) for services to the Fund, and reimbursed expenses totaling $19,096.
For the period ended November 30, 1998, the Previous Manager was paid $19,148
(after fee waivers of $820) for its services to the Fund.
Under the Management Agreement, the Manager is not liable for any error of
judgment or mistake of law or for any loss suffered by the Fund in connection
with the performance of such Management Agreement, except a loss resulting from
a breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Manager in the performance of its duties or from
its reckless disregard of its duties and obligations under the Management
Agreement.
THE ADMINISTRATOR
The Trust has entered into a Fund Accounting and Compliance Administration
Agreement with The Nottingham Company, Inc. (the "Administrator"), a North
Carolina corporation, whose address is 105 North Washington Street, Post Office
Box 69, Rocky Mount, North Carolina 27802-0069.
The Administrator will perform the following services for the Fund: (1)
coordinate with the Custodian and monitor the services it provides to the Fund;
(2) coordinate with and monitor any other third parties furnishing services to
the Fund; (3) provide the Fund with necessary office space, telephones, and
other communications, facilities, and personnel competent to perform
administrative and clerical functions for the Fund; (4) supervise the
maintenance by third parties of such books and records of the Fund as may be
required by applicable federal or state law; (5) prepare or supervise the
preparation by third parties of all federal, state, and local tax returns and
reports of the Fund required by applicable law; (6) prepare and, after approval
by the Trust, file and arrange for the distribution of proxy materials and
periodic reports to shareholders of the Fund as required by applicable law; (7)
prepare and, after approval by the Trust, arrange for the filing of such
registration statements and other documents with the Securities and Exchange
Commission and other federal and state regulatory authorities as may be required
by applicable law; (8) review and submit to the officers of the Trust for their
approval invoices or other requests for payment of Fund expenses and instruct
the Custodian to issue checks in payment thereof; and (9) take such other action
with respect to the Fund as may be necessary in the opinion of the Administrator
to perform its duties under the agreement. The Administrator will also provide
certain accounting and pricing services for the Fund.
Compensation of the Administrator, based upon the average daily net assets of
the Fund for administration fees, is at the following annual rates: 0.125% of
the Fund's first $50 million of average daily net assets, 0.100% on the next $50
million, and 0.075% on average daily net assets over $100 million. For the
fiscal year ended November 30, 1999, the Administrator received $4,140 in fund
administration fees. In addition, the Administrator currently receives a monthly
fee of $2,250 for accounting and record-keeping services. For the fiscal year
ended November 30, 1999, the Administrator received $18,000 in such fees. The
Administrator also charges the Trust for certain costs involved with the daily
valuation of investment securities and is reimbursed for out-of-pocket expenses.
THE TRANSFER AGENT
The Trust has entered into a Dividend Disbursing and Transfer Agent Agreement
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. As compensation for its services, the Transfer Agent receives a
shareholder record-keeping fee of $15 per shareholder per year with a minimum
total fee of $750 per month.
THE DISTRIBUTOR
Capital Investment Group, Inc. (the "Distributor"), Post Office Box 32249,
Raleigh, North Carolina 27622, acts as an underwriter and distributor of each
Fund's shares for the purpose of facilitating the registration of shares of the
Fund under state securities laws and to assist in sales of Fund shares pursuant
to a Distribution Agreement (the "Distribution Agreement") approved by the Board
of Trustees of the Trust.
In this regard, the Distributor has agreed, at its own expense, to qualify as a
broker-dealer under all applicable federal or state laws in those states which
each Fund shall from time to time identify to the Distributor as states in which
it wishes to offer its shares for sale, in order that state registrations may be
maintained for the Fund.
The Distributor is a broker-dealer registered with the Securities and Exchange
Commission and is a member in good standing of the National Association of
Securities Dealers, Inc.
The Distribution Agreement may be terminated by either party upon 60-days' prior
written notice to the other party.
THE CUSTODIAN
First Union National Bank of North Carolina (the "Custodian"), Two First Union
Center, Charlotte, North Carolina 28288-1151, serves as custodian for each
Fund's assets. The Custodian acts as the depository for the Fund, safekeeps its
portfolio securities, collects all income and other payments with respect to
portfolio securities, disburses monies at the Fund's request, and maintains
records in connection with its duties as Custodian. For its services as
Custodian, the Custodian is entitled to receive from the Fund an annual fee
based on the average net assets of the Fund held by the Custodian.
THE LEGAL COUNSEL
Dechert Price & Rhoads serves as legal counsel to the Trust and the Fund.
THE INDEPENDENT AUDITORS
The firm of Deloitte & Touche LLP, Princeton Forrestal Village, 116-300 Village
Boulevard, Princeton, New Jersey 08540, serves as independent auditors for the
Fund. Deloitte & Touche LLP is responsible for auditing the annual financial
statements of the Fund.
CODE OF ETHICS
The Trust and the Manager each have adopted a code of ethics, as required by
applicable law, which is designed to prevent affiliated persons of the Trust and
the Manager from engaging in deceptive, manipulative, or fraudulent activities
in connection with securities held or to be acquired by the Fund (which may also
be held by persons subject to a code). There can be no assurance that the codes
will be effective in preventing such activities.
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 name, address, and age of each Trustee and
Officer is given below as well as their position(s) with the Trust and/or Fund
and principal occupations for the last five years. Each may have held other
positions with the named companies during that period. Those Trustees who are
"interested persons" (as defined in the 1940 Act) by virtue of their affiliation
with either the Trust or the Advisor are indicated by an asterisk (*).
- --------------------------------------------------------------------------------
Position(s) Principal Occupation(s)
Name, Address, and With During Past 5 Years
Age Fund/Trust
- --------------------------------------------------------------------------------
H. Walter Barre, 51 President Chairman, Colonial Trust
359 South Pine Street Company and CEO of Colonial
Spartanburg, SC 29302 Asset Management.
William Brewer Bradshaw, 37 Trustee Chairman, Capital Consulting
2004 Rolling Pines Drive Group, Inc., (insurance and
Columbia, SC 29206 investment management
consulting service) and
Trustee, Baptist Foundation of
South Carolina.
Robert D. Inglis, 40 Trustee Attorney-Partner, Leatherwood,
461 River Road Walker, Todd & Mann (law firm)
Travelers Rest, SC 29690 and Member, U.S. House of
Representatives (SC-4).
Geoffrey M. Salkow, 34 Trustee President, Colonial Capital
200 Cuddy Court Management, LLC, (registered
Naples, FL 34103 investment advisor).1
Johnnie M. Walters, 80 Trustee* Executive V.P./General
1804 N. Main Street Counsel, Colonial Trust
Greenville, SC 29609 Company, since 1996;
previously, Partner with
Leatherwood, Walker, Todd &
Mann (law firm).
C. Frank Watson, III, 29 Secretary President and Chief Operating
105 N. Washington Street Officer, The Nottingham
Rocky Mount, NC 27802 Company, Inc. (administrator
to the Fund).
Julian G. Winters, 31 Treasurer Legal and Compliance Director,
105 N. Washington Street The Nottingham Company, Inc.
Rocky Mount, NC 27802 (administrator to the Fund),
since 1996; previously,
Manager, Tar Heel Medical
(pharmacy).
Barry D. Wynn, 54 Vice-President President, Colonial Trust
104 Plantation Drive Company.
Spartanburg, SC 29302
- ---------
1. Colonial Capital Management, LLC is not an "affiliate" of
the Manager, as defined in the 1940 Act.
Compensation. Officers and Trustees of the Trust who are interested persons of
the Trust or the Advisor will receive no salary or fees from the Trust. Other
Trustees receive $2,000 each year for services to the Trust. However, during the
fiscal year ended November 30, 1999, none of the Trustees received any
compensation. Each current Trustee of the Trust who is not an "interested
person" of the Trust is expected to received the following compensation during
the fiscal year ending November 30, 2000:
================================================================================
Pension or
Retirement
Benefits Estimated Total
Aggregate Accrued Annual Compensation
Compensation As Part Benefits from the
Name of Person, on from Of Trust Upon Trust Paid to
Position the Fund Expenses Retirement Trustee
- --------------------------------------------------------------------------------
William Brewer $2,000 None None $2,000
Bradshaw
Robert D. Inglis $2,000 None None $2,000
Geoffrey M. $2,000 None None $2,000
Salkow
================================================================================
Principal Holders of Voting Securities. As of March 15, 2000, the Trustees and
Officers of the Trust as a group owned beneficially (i.e., had voting and/or
investment power) less than 1% of the then outstanding shares of the Fund.
Except as provided below, no person is known by the Trust to be the beneficial
owner of more than 5% of the outstanding shares of the Fund as of March 15,
2000.
- --------------------------------------------------------------------------------
Name and Address Amount and Nature
of Beneficial of Beneficial
Owner Ownership Percent
- --------------------------------------------------------------------------------
John M. Shingler, Jr. 52,165.114 shares 7.444%
IRA r/o
210 Lakewood Drive
Spartanburg, South
Carolina 29302
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.
The total return of the Fund for the period from April 1, 1999 (date the Manager
assumed duties as investment manager of the Fund) to November 30, 1999 (the
Fund's most recent fiscal year end) was 4.77%.
The Fund's performance may be compared in advertisements, sales literature,
shareholder reports, and other communications to the performance of other mutual
funds having similar objectives or to standardized indices or other measures of
investment performance. In particular, the Fund may compare its performance to
the S&P 500 Total Return Index. Comparative performance may also be expressed by
reference to a ranking prepared by a mutual fund monitoring service or by one or
more newspapers, newsletters, or financial periodicals. The Fund may also
occasionally cite statistics to reflect its volatility and risk. The Fund may
also compare its performance to other published reports of the performance of
unmanaged portfolios of companies. The performance of such unmanaged portfolios
generally does not reflect the effects of dividends or dividend reinvestment. Of
course, there can be no assurance that any fund will experience the same
results. Performance comparisons may be useful to investors who wish to compare
a Fund's past performance to that of other mutual funds and investment products.
Of course, past performance is not a guarantee of future results.
The Fund's performance fluctuates on a daily basis largely because net earnings
and net asset value per share fluctuate daily. Both net earnings and net asset
value per share are factors in the computation of total return as described
above.
As indicated, from time to time, the Fund may advertise its performance compared
to similar funds or portfolios using certain indices, reporting services, and
financial publications. These may include the following:
o Lipper Analytical Services, Inc. ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes the
reinvestment of all capital gains distributions and income dividends, and it
takes into account any change in net asset value over a specific period of
time.
o Morningstar, Inc., an independent rating service, is the publisher of the
bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
NASDAQ-listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for two
weeks.
Investors may use such indices in addition to the Fund's Prospectus to obtain a
more complete view of the Fund's performance before investing. Of course, when
comparing a fund's performance to any index, factors such as composition of the
index and prevailing market conditions should be considered in assessing the
significance of such comparisons. When comparing funds using reporting services,
or total return, investors should take into consideration any relevant
differences in funds such as permitted portfolio compositions and methods used
to value portfolio securities and compute offering price. Advertisements and
other sales literature for the Fund may quote total returns that are calculated
on non-standardized base periods. The total returns represent the historic
change in the value of an investment in the Fund based on monthly reinvestment
of dividends over a specified period of time.
From time to time, the Fund may include in advertisements and other
communications information, charts, and illustrations relating to inflation and
the effects of inflation on the dollar, including the purchasing power of the
dollar at various rates of inflation. The Fund may also disclose, from time to
time, information about its portfolio allocation and holdings at a particular
date (including ratings of securities assigned by independent rating services
such as S&P and Moody's). The Fund may also depict the historical performance of
the securities in which the Fund may invest over periods reflecting a variety of
market or economic conditions either alone or in comparison with alternative
investments, performance indices of those investments, or economic indicators.
The Fund may also include in advertisements and in materials furnished to
present and prospective shareholders statements or illustrations relating to the
appropriateness of types of securities and/or mutual funds that may be employed
to meet specific financial goals, such as saving for retirement, children's
education, or other future needs.
PURCHASE AND REDEMPTION OF SHARES
The price at which you purchase or redeem shares is based on the next
calculation of net asset value after an order is accepted in good form. The
Fund's net asset value per share is calculated by dividing the value of the
Fund's total assets, less liabilities (including Fund expenses, which are
accrued daily), by the total number of outstanding shares of the Fund. The net
asset value per share of the Fund is normally determined at the time regular
trading closes on the New York Stock Exchange (currently 4:00 p.m. Eastern time,
Monday through Friday), except on business holidays when the New York Stock
Exchange is closed. 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.
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
In valuing the Fund's total assets, portfolio securities are generally valued at
their market value. Instruments with maturities of 60 days or less are valued at
amortized cost, which approximates market value. Securities and assets for which
representative market quotations are not readily available are valued at fair
value as determined in good faith under policies approved by the Board of
Trustees.
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.
o Equity securities are valued at the last sale price on the principal
exchange or market where they are traded.
o 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.
o 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.
o 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.
o 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.
o Future contracts are normally valued at the settlement price on the
exchange on which they are traded.
o 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.
If the Trustees determine that it would be detrimental to the best interest of
the Fund's remaining shareholders to make payment in cash, the Fund may pay
redemption proceeds in whole or in part by a distribution-in-kind of readily
marketable securities. 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 of the Internal
Revenue Code of 1986, as amended (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 non-deductible 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.
For the fiscal year ended November 30, 1999 and the fiscal period ended November
30, 1998, the total dollar amount of brokerage commissions paid by the Fund was
$10,935 and $9,050, respectively.
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.
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.
FINANCIAL STATEMENTS
The audited financial statements for the fiscal year ended November 30, 1999,
including the financial highlights appearing in the Fund's Annual Report to
Shareholders, are incorporated by reference and made a part of this document.
<PAGE>
________________________________________________________________________________
BLUE RIDGE TOTAL RETURN FUND
________________________________________________________________________________
a series of the Blue Ridge Funds Trust
Annual Report 1999
FOR THE YEAR ENDED NOVEMBER 30
INVESTMENT ADVISOR
Colonial Asset Management, Inc.
359 South Pine Street
Post Office Box 1724
Spartanburg, SC 29304
BLUE RIDGE TOTAL RETURN FUND
107 North Washington Street
Post Office Drawer 4365
Rocky Mount, North Carolina 27803-0365
1-800-525-3863
<PAGE>
Blue Ridge Total Return Fund
Letter to Shareholders:
Since assuming management of the Blue Ridge Total Return Fund on April 1,
1999, we have restructured the portfolio to meet the allocation guidelines we
have for the Fund. This allocation is a range of 75% to 80% stocks and 20% to
25% bonds/cash. In doing the restructuring, we have bought stocks that are on
our equity focus list, which we believe to be leaders in their respective
industries.
As of this writing, the recent tech-led rally continues to surprise
investors by its magnitude and duration. However, the breadth of the rally has
been poor, with a small number of stocks providing most of the gains. In fact,
about 60% of the New York Stock Exchange listed shares are down for the year.
Even some blue chips have seen their shares languish, as investors flock to
celebrity tech stocks. The Fund is relatively highly weighted in technology,
with about 25% of the value in that area.
Our outlook for 2000 is for the equity market averages to return to more
normal returns in the 10% - 12% range. This should be possible, even in the face
of probable further Fed tightening in the first quarter, due to continuing
growth in earnings. Although the Fed will likely raise interest rates in
February, inflation will, in all likelihood, remain benign. That will allow the
equity market to make further progress on the upside during the year, as
earnings growth stays in the 10% plus range. Any consolidation during the first
quarter will be viewed as a buying opportunity.
We will continue to participate in the equity markets through high quality,
large capitalization companies which we believe have good potential for earnings
growth, and which are dominant in their markets segments. We will continually
monitor the asset allocation to stay within the ranges specified above. Thank
you for your confidence as expressed in your investment in the Blue Ridge Total
Return Fund. We look forward to further success in the future.
Sincerely,
H. Walter Barre
Barry D. Wynn
Colonial Asset Management
<PAGE>
BLUE RIDGE TOTAL RETURN FUND
Performance Update - $10,000 Investment
For the period from April 1, 1999 (Commencement of Management by
Colonial Asset Management, Inc.) to November 30, 1999
----------------- ----------------------------------------
Blue Ridge 75% S&P 500 Total Return Index /
Total Return Fund 25% Lehman Brothers Aggregate Bond Index
----------------- ----------------------------------------
4/1/99 $10,000 $10,000
4/30/99 10,161 10,254
5/31/99 9,973 10,049
6/30/99 10,215 10,461
7/31/99 9,910 10,201
8/31/99 9,964 10,161
9/30/99 9,641 9,979
10/31/99 10,234 10,462
11/30/99 10,477 10,623
This graph depicts the performance of the Blue Ridge Total Return Fund versus a
combined index of 75% S&P 500 Total Return Index and 25% Lehman Brothers
Aggregate Bond Index. It is important to note that the Blue Ridge Total Return
Fund is a professionally managed mutual fund while the indexes are not available
for investment and are unmanaged. The comparison is shown for illustrative
purposes only.
Cumulative Total Return
--------------------
Since 4/1/99
--------------------
4.77%
--------------------
The graph assumes an initial $10,000 investment at April 1, 1999. All dividends
and distributions are reinvested. The period prior to April 1, 1999, during
which the Fund was advised by another investment advisor, is not shown in the
graph.
At November 30, 1999, the Blue Ridge Total Return Fund would have grown to
$10,477 - total investment return of 4.77% since April 1, 1999.
At November 30, 1999, a similar investment in the combined index of 75% S&P 500
Total Return Index and 25% Lehman Brothers Aggregate Bond Index would have grown
to $10,623 - total investment return of 6.23% since April 1, 1999.
Past performance is not a guarantee of future results. A mutual fund's share
price and investment return will vary with market conditions, and the principal
value of shares, when redeemed, may be worth more or less than the original
cost. Average annual returns are historical in nature and measure net investment
income and capital gain or loss from portfolio investments assuming
reinvestments of dividends.
<PAGE>
<TABLE>
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BLUE RIDGE TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS
November 30, 1999
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 75.86%
Aerospace & Defense - 1.28%
The Boeing Company ...................................................... 2,000 $ 81,250
----------
Beverages - 3.75%
PepsiCo, Inc. ........................................................... 3,000 103,687
The Coca-Cola Company ................................................... 2,000 134,625
----------
238,312
----------
Brewery - 1.53%
Anheuser-Busch Companies, Inc. .......................................... 1,300 97,256
----------
Chemicals - 0.76%
Air Products and Chemicals, Inc. ........................................ 1,500 48,562
----------
Computers - 3.00%
EMC Corporation ......................................................... 1,000 83,813
International Business Machines ......................................... 500 51,531
Seagate Technology, Inc. ................................................ 1,500 55,500
----------
190,844
----------
Computer Software and Services - 7.99%
(a)America Online, Inc. .................................................... 1,600 116,500
(a)At Home Corporation ..................................................... 1,000 48,500
(a)Cisco Systems, Inc. ..................................................... 2,300 205,131
(a)Microsoft Corporation ................................................... 1,500 136,570
----------
506,701
----------
Cosmetics & Personal Care - 3.62%
Colgate-Palmolive Company ............................................... 2,000 109,750
The Gillette Company .................................................... 3,000 120,375
----------
230,125
----------
Electronics - 3.74%
General Electric Company ................................................ 1,100 143,069
Hewlett-Packard Company ................................................. 1,000 94,750
----------
237,819
----------
Electronics - Semiconductor - 4.75%
Intel Corporation ....................................................... 2,000 153,375
Motorola, Inc. .......................................................... 1,300 148,525
----------
301,900
----------
Entertainment - 1.32%
The Walt Disney Company ................................................. 3,000 83,625
----------
Financial - Banks, Commercial - 1.71%
Wachovia Corporation .................................................... 1,400 108,675
----------
(Continued)
</TABLE>
<PAGE>
<TABLE>
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BLUE RIDGE TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS
November 30, 1999
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Financial - Banks, Money Center - 3.96%
Bank of America ......................................................... 2,000 $ 117,000
Citigroup Inc. .......................................................... 2,500 134,687
----------
251,687
----------
Food - Processing - 2.37%
Campbell Soup Company ................................................... 2,000 89,250
Sara Lee Corporation .................................................... 2,500 61,250
----------
150,500
----------
Food - Wholesale - 1.57%
Wm. Wrigley Jr. Company ................................................. 1,200 99,825
----------
Foreign Securities - 3.84%
Koninklijke (Royal) Philips Electronics N.V. - ADR ...................... 952 113,764
Telefonaktiebolaget LM Ericsson - ADR ................................... 2,700 130,275
----------
244,039
----------
Household Products & Housewares - 1.79%
The Procter & Gamble Company ............................................ 1,050 113,400
----------
Insurance - Multiline - 1.95%
American International Group, Inc. ...................................... 1,200 123,900
----------
Medical - Biotechnology - 1.43%
Pfizer, Inc. ............................................................ 2,500 90,625
----------
Medical - Hospital Management & Services - 1.64%
United HealthCare Corporation ........................................... 2,000 103,875
----------
Medical Supplies - 1.96%
Johnson & Johnson ....................................................... 1,200 124,500
----------
Miscellaneous - Manufacturing - 1.20%
Minnesota Mining and Manufacturing Company .............................. 800 76,450
----------
Office & Business Equipment - 0.43%
Xerox Corporation ....................................................... 1,000 27,062
----------
Oil & Gas - Equipment & Services - 1.13%
Schlumberger Limited .................................................... 1,200 72,075
----------
Oil & Gas - International - 1.87%
Exxon Mobile Corporation ................................................ 1,500 118,969
----------
(Continued)
</TABLE>
<PAGE>
<TABLE>
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BLUE RIDGE TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS
November 30, 1999
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Pharmaceuticals - 3.95%
Bristol-Myers Squibb Company ............................................ 1,500 $ 109,594
Merck & Co., Inc. ....................................................... 1,800 141,300
----------
250,894
----------
Restaurants & Food Services - 1.78%
McDonald's Corporation .................................................. 2,500 112,813
----------
Retail - Department Stores - 2.00%
Wal-Mart Stores, Inc. ................................................... 2,200 126,775
----------
Retail - Specialty Line - 2.12%
The Home Depot, Inc. .................................................... 1,700 134,619
----------
Telecommunications Equipment - 2.30%
Lucent Technologies, Inc. ............................................... 2,000 146,125
----------
Transportation - Miscellaneous - 1.04%
United Parcel Service, Inc. ............................................. 1,000 66,063
----------
Utilities - Telecommunications - 4.08%
AT&T Corporation ........................................................ 1,500 83,906
Bell South Corporation .................................................. 2,000 92,375
MCI WorldCom, Inc. ...................................................... 1,000 82,688
----------
258,969
----------
Total Common Stocks (Cost $4,406,180) ......................................................... 4,818,234
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Interest Maturity
Principal Rate Date
- ------------------------------------------------------------------------------------------------------------------------------------
CORPORATE OBLIGATIONS - 15.34%
Bank of America ...................................... $ 50,000 6.875 % 02/15/2005 49,538
Bank of America ...................................... 50,000 6.125 % 07/15/2004 48,287
Bank of America ...................................... 50,000 7.750 % 11/10/2014 48,476
Bank of New York Co. ................................. 50,000 7.750 % 09/30/2014 49,293
Commercial Credit Company ............................ 50,000 6.250 % 01/01/2008 46,603
Duke Capital Corporation ............................. 100,000 6.250 % 07/15/2005 94,873
Ford Motor Credit Company ............................ 50,000 6.375 % 10/06/2000 49,932
Ford Motor Credit Company ............................ 50,000 6.000 % 01/14/2003 48,655
General Electric Capital Corporation ................. 50,000 7.500 % 09/22/2009 49,285
General Electric Capital Corporation ................. 50,000 7.250 % 10/13/2009 48,791
General Motors Acceptance Corporation ................ 50,000 6.000 % 02/01/2002 49,092
(Continued)
</TABLE>
<PAGE>
<TABLE>
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BLUE RIDGE TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS
November 30, 1999
- ------------------------------------------------------------------------------------------------------------------------------------
Interest Maturity
Principal Rate Date
- ------------------------------------------------------------------------------------------------------------------------------------
CORPORATE OBLIGATIONS - (Continued)
General Motors Acceptance Corp. ....................... $ 50,000 6.150 % 04/05/2007 $ 46,807
Lehman Brothers Holdings .............................. 50,000 8.000 % 09/24/2014 49,375
Merrill Lynch & Company ............................... 50,000 6.000 % 11/15/2004 47,873
Proctor& Gamble Company ............................... 100,000 6.875 % 09/15/2009 99,450
SBC Communications .................................... 50,000 6.250 % 03/01/2005 48,375
The Walt Disney Company ............................... 50,000 6.375 % 03/30/2001 49,848
Wal-Mart Stores, Inc. ................................. 50,000 6.500 % 06/01/2003 49,751
----------
Total Corporate Obligations (Cost $1,003,867) ................................................. 974,304
----------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 8.54%
Federal Home Loan Bank ................................ 100,000 6.500 % 10/19/2009 98,380
United States Treasury Note ........................... 50,000 5.625 % 02/15/2006 48,477
United States Treasury Note ........................... 50,000 6.250 % 02/15/2007 49,883
United States Treasury Note ........................... 50,000 5.500 % 03/31/2003 49,117
United States Treasury Note ........................... 50,000 5.250 % 05/15/2004 48,305
United States Treasury Note ........................... 50,000 6.000 % 07/31/2002 49,977
United States Treasury Note ........................... 50,000 5.750 % 08/15/2003 49,398
United States Treasury Note ........................... 50,000 6.500 % 10/15/2006 50,570
United States Treasury Note ........................... 50,000 5.875 % 11/15/2005 49,180
United States Treasury Note ........................... 50,000 5.625 % 12/31/2002 49,406
----------
Total U.S. Government and Agency Obligations (Cost $558,150) .................................. 542,693
----------
----------
Shares
----------
INVESTMENT COMPANY - 0.64%
Evergreen Money Market Treasury Institutional Money
Market Fund Institutional Service Shares ................................ 40,402 40,402
(Cost $40,402) ----------
Total Value of Investments (Cost $6,008,599 (b)) ................................... 100.38 % $6,375,633
Liabilities in Excess of Other Assets .............................................. (0.38)% (24,374)
------ ----------
Net Assets .................................................................... 100.00 % $6,351,259
====== ==========
(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
BLUE RIDGE TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS
November 30, 1999
(a) Non-income producing investment.
(b) Aggregate cost for financial reporting and federal income tax purposes is the same. Unrealized appreciation
(depreciation) of investments for financial reporting and federal income tax purposes is as follows:
Unrealized appreciation ....................................................................... $ 542,589
Unrealized depreciation ....................................................................... (175,555)
----------
Net unrealized appreciation .................................................... $ 367,034
==========
The following acronym is used in this portfolio:
ADR - American Depository Receipt
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
BLUE RIDGE TOTAL RETURN
STATEMENT OF ASSETS AND LIABILITIES
November 30, 1999
ASSETS
Investments, at value (cost $6,008,599) ........................................................... $6,375,633
Income receivable ................................................................................. 28,363
Receivable for investments sold ................................................................... 21,451
Due from advisor (note 2) ......................................................................... 3,051
----------
Total assets ................................................................................. 6,428,498
----------
LIABILITIES
Accrued expenses .................................................................................. 20,558
Payable for investment purchases .................................................................. 56,340
Other payables .................................................................................... 341
----------
Total liabilities ............................................................................ 77,239
----------
NET ASSETS
(applicable to 545,063 NL class shares outstanding; unlimited
shares of no par value beneficial interest authorized) ........................................... $6,351,259
==========
NET ASSET VALUE, REDEMPTION AND OFFERING PRICE PER NL CLASS SHARE
($6,351,259 / 545,063 shares) ..................................................................... $11.65
==========
NET ASSETS CONSIST OF
Paid-in capital ................................................................................... $6,014,875
Undistributed net investment oincome .............................................................. 9,875
Accumulated net realized loss on investments ...................................................... (40,525)
Net unrealized oappreciation on investments ....................................................... 367,034
----------
$6,351,259
==========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
BLUE RIDGE TOTAL RETURN
STATEMENT OF OPERATIONS
Year ended November 30, 1999
INVESTMENT INCOME
Income
Interest ....................................................................................... $ 42,092
Dividends ...................................................................................... 41,774
---------
Total income ............................................................................. 83,866
---------
Expenses
Investment advisory fees (note 2) .............................................................. 35,061
Fund administration fees (note 2) .............................................................. 4,140
Custody fees ................................................................................... 3,346
Registration and filing administration fees (note 2) ........................................... 1,140
Fund accounting fees (note 2) .................................................................. 18,000
Audit fees ..................................................................................... 8,500
Legal fees ..................................................................................... 5,683
Securities pricing fees ........................................................................ 3,355
Shareholder recordkeeping fees ................................................................. 6,000
Shareholder servicing expenses ................................................................. 3,389
Registration and filing expenses ............................................................... 3,445
Printing expenses .............................................................................. 3,490
Trustee fees and meeting expenses .............................................................. 4,810
Other operating expenses ....................................................................... 1,863
---------
Total expenses ........................................................................... 102,222
---------
Less:
Expense reimbursements (note 2) ..................................................... (19,096)
Investment advisory fees waived (note 2) ............................................ (24,879)
---------
Net expenses ............................................................................. 58,247
---------
Net investment income ............................................................... 25,619
---------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized loss from investment transactions ...................................................... (37,982)
oDecrease in unrealizedo depreciation on investments ................................................ 422,894
---------
Net realized and unrealized ogain on investments ............................................... 384,912
---------
Net oincrease in net assets resulting from operations .................................... $ 410,531
=========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
BLUE RIDGE TOTAL RETURN
STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
Year ended Period ended
November 30, November 30,
1999 1998(b)
- ------------------------------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS
Operations
Net investment income .............................................................. $ 25,619 $ 1,229
Net realized loss from investment transactions ..................................... (37,982) (2,543)
(Decrease) increase in unrealized depreciation on investments ...................... 422,894 (55,860)
---------- ----------
Net increase (decrease) in net assets resulting from operations ................ 410,531 (57,174)
---------- ----------
Distributions to shareholders from
Net investment income .............................................................. (15,744) (1,229)
---------- ----------
Capital share transactions
Increase in net assets resulting from capital share transactions (a) ............... 4,324,065 1,690,810
---------- ----------
Total increase in net assets .............................................. 4,718,852 1,632,407
NET ASSETS
Beginning of period ..................................................................... 1,632,407 0
---------- ----------
End of period (including undistributed net investment income ............................ $6,351,259 $1,632,407
of $9,875 in 1999) ========== ==========
(a) A summary of capital share activity follows:
----------------------------------------------------------------------------
Year ended Period ended
November 30, 1999 November 30, 1998 (b)
Shares Value Shares Value
----------------------------------------------------------------------------
Shares sold ........................................... 547,703 $6,133,477 155,940 $1,690,441
Shares issued for reinvestment
of distributions ................................. 1,441 15,745 107 1,229
---------- ---------- ---------- ----------
549,144 6,149,222 156,047 1,691,670
Shares redeemed ....................................... (160,051) (1,825,157) (77) (860)
---------- ---------- ---------- ----------
Net increase ..................................... 389,093 $4,324,065 155,970 $1,690,810
========== ========== ========== ==========
(b) For the period from December 1, 1997 (initial seed date) to November 30, 1998.
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
BLUE RIDGE TOTAL RETURN
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
- ------------------------------------------------------------------------------------------------------------------------------------
Year ended Period ended
November 30, November 30,
1999 1998(a)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ................................................. $10.47 $10.00
Income from investment operations
Net investment income ..................................................... 0.05 0.02
Net realized and unrealized gain on investments ........................... 1.16 0.47 (d)
---------- ----------
Total from investment operations ..................................... 1.21 0.49 (b)
---------- ----------
Distributions to shareholders from
Net investment income ..................................................... (0.03) (0.02)
---------- ----------
Net asset value, end of period ....................................................... $11.65 $10.47
========== ==========
Total return ......................................................................... 11.58 % 4.86 %
========== ==========
Ratios/supplemental data
Net assets, end of period ...................................................... $6,351,259 $1,632,407
========== ==========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees ............................. 2.60 % 1.65 % (c)
After expense reimbursements and waived fees .............................. 1.48 % 1.58 % (c)
Ratio of net investment income (loss) to average net assets
Before expense reimbursements and waived fees ............................. (0.47)% 0.03 % (c)
After expense reimbursements and waived fees .............................. 0.65 % 0.10 % (c)
Portfolio turnover rate ........................................................ 85.51 % 116.16 %
(a) For the priod from December 15, 1997 (commencement of operations) to November 30, 1998.
(b) Includes undistributed net investment income of $0.00 per share and undistributed net realized gains and unrealized gains of
$0.00 per share, from December 1, 1997 (initial seed date) through December 15, 1997 (commencement of operations).
(c) Annualized.
(d) The amount shown in this caption for a share outstanding does not correspond with the aggregate net realized and unrealized
gain (loss) on security transactions for the period ended November 30, 1998 due to the timing of sales and repurchases of fund
shares in relation to fluctuating market values of the investments of the fund. Net realized and unrealized loss of
investments includes gains of $0.82 per share due to market appreciation during the period and losses of $0.35 due to market
depreciation during the period.
See accompanying notes to financial statements
</TABLE>
<PAGE>
BLUE RIDGE TOTAL RETURN FUND
NOTES TO FINANCIAL STATEMENTS
November 30, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
The Blue Ridge Total Return Fund (the "Fund") is a diversified
series of shares of beneficial interest of the Blue Ridge Funds
Trust (the "Trust"). The Trust, an open-ended investment company,
was organized on September 30, 1997 as a Delaware Business Trust
and is registered under the Investment Company Act of 1940, as
amended. The investment objective of the Fund is to seek total
return from a combination of capital appreciation and current
income. The Fund began operations on December 15, 1997. The
following is a summary of significant accounting policies followed
by the Fund.
A. Security Valuation - The Fund's investments in securities are
carried at value. Securities listed on an exchange or quoted
on a national market system are valued at the last sales price
as of 4:00 p.m. New York time on the day of valuation. Other
securities traded in the over-the-counter market and listed
securities for which no sale was reported on that date are
valued at the most recent bid price. Securities for which
market quotations are not readily available, if any, are
valued by using an independent pricing service or by following
procedures approved by the Board of Trustees. Short-term
investments are valued at cost which approximates value.
B. Federal Income Taxes - No provision has been made for federal
income taxes since substantially all taxable income has been
distributed to shareholders. It is the policy of the Fund to
comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies and to make
sufficient distributions of taxable income to relieve it from
all federal income taxes.
Net investment income (loss) and net realized gains (losses)
may differ for financial statement and income tax purposes
primarily because of losses incurred subsequent to October 31,
which are deferred for income tax purposes. The character of
distributions made during the year from net investment income
or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to
the timing of dividend distributions, the fiscal year in which
amounts are distributed may differ from the year that the
income or realized gains were recorded by the Fund.
C. Investment Transactions - Investment transactions are recorded
on the trade date. Realized gains and losses are determined
using the specific identification cost method. Interest income
is recorded daily on the accrual basis. Dividend income is
recorded on the ex-dividend date.
D. Distributions to Shareholders - The Fund generally declares
dividends quarterly, payable in March, June, September and
December, on a date selected by the Trust's Trustees. In
addition, distributions may be made annually in December out
of net realized gains through October 31 of that year.
Distributions to shareholders are recorded on the ex-dividend
date. The Fund may make a supplemental distribution subsequent
to the end of its fiscal year ending November 30.
E. Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the amount of assets, liabilities, expenses and
revenues reported in the financial statements. Actual results
could differ from those estimates.
(Continued)
<PAGE>
BLUE RIDGE TOTAL RETURN FUND
NOTES TO FINANCIAL STATEMENTS
November 30, 1999
F. Options Transactions - The Fund may write put and call options
only if such options are considered to be covered. A written
call option is considered to be covered when the writer of the
call option owns throughout the option period the security on
which the option is written. A written put option is
considered covered 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 Fund may purchase put options and purchase call options
only to close open positions.
When the Fund writes a covered call or put option, an amount
equal to the premium received is included in the statement of
assets and liabilities as a liability. The amount of the
liability is subsequently marked-to-market to reflect the
current market value of the option. If an option expires on
its stipulated expiration date or if the Fund enters into a
closing purchase transaction, a gain or loss is realized. If a
written call option is exercised, a gain or loss is realized
for the sale of the underlying security and the proceeds from
the sales are increased by the premium originally received. If
a written put option is exercised, the cost of the security
acquired is decreased by the premium originally received. As
writer of an option, the Fund has no control over whether the
underlying securities are subsequently sold (call) or
purchased (put) and, as a result, bears the market risk of an
unfavorable change in the price of the security underlying the
written option.
When the Fund purchases a call or put option, an amount equal
to the premium paid is included in the Fund's statement of
assets and liabilities as an investment, and is subsequently
marked-to-market to reflect the current market value of the
option. If an option expires on the stipulated expiration date
or if the Fund enters into a closing sale transaction, a gain
or loss is realized. If the Fund exercises a call the cost of
the security acquired is increased by the premium paid for the
call. If a Fund exercises a put option, a gain or loss is
realized from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium
originally paid. Written and purchased options are non-income
producing securities.
NOTE 2 - INVESTMENT ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS
Pursuant to an investment advisory agreement, Colonial Asset
Management (the "Manager") provides the Fund with a continuous
program of supervision of the Fund's assets, including the
composition of its portfolio, and furnishes advice and
recommendations with respect to investments, investment policies
and the purchase and sale of securities. Colonial Asset Management
became the Fund's advisor on April 1, 1999. Prior to that date,
Blue Ridge Advisors, Inc. served as the Fund's Advisor. As
compensation for its services, from December 1, 1998 to March 31,
1999 the Blue Ridge Advisors, Inc. received a fee at the annual
rate of 1.65% of the first $20 million of the average daily net
assets of the Fund and 1.20% of average daily net assets over $20
million. As compensation for its services, beginning April 1,
1999, the Manager receives a fee at the annual rate of 0.750% of
the Fund's average daily net assets up to and including $20
million, 0 .625% of the Fund's average daily net assets on the
next $30 million, and 0.500% of the Fund's average daily net
assets over $50 million. From December 1, 1998 to March 31, 1999,
the Manager voluntarily waived a portion of its fee to limit total
Fund operating expenses to 1.65% of the average daily net assets
of the Fund. Beginning April 1, 1999 the Manager intends to
voluntarily waive a portion of its fee to limit total Fund
operating expenses to 1.45%. There can be no assurance that the
foregoing voluntary fee waiver will continue. The manager has
voluntarily waived a portion of its fee amounting to $24,879
($0.07 per share) and has reimbursed expenses totaling $19,096 for
the year ended November 30, 1999.
(Continued)
<PAGE>
BLUE RIDGE TOTAL RETURN FUND
NOTES TO FINANCIAL STATEMENTS
November 30, 1999
The Fund's administrator, The Nottingham Company (the
"Administrator"), provides administrative services to and is
generally responsible for the overall management and day-to-day
operations of the Fund pursuant to an accounting and
administrative agreement with the Trust. The Administrator was
compensated by the Manager and not directly by the Fund from
December 1, 1998 to March 31,1999. Beginning April 1, 1999 as
compensation for its services, the Administrator receives a fee at
the annual rate of 0.125% of the Fund's first $50 million of
average daily net assets, 0.10% of average daily net assets of the
Fund's next $50 million of average daily net assets, and 0.075% of
average daily net assets over $100 million. The Administrator also
receives a monthly fee of $2,000 for accounting and recordkeeping
services. The Administrator also charges the Fund for certain
expenses involved with the daily valuation of portfolio
securities.
North Carolina Shareholder Services, LLC (the "Transfer Agent")
serves as the Fund's transfer, dividend paying, and shareholder
servicing agent. The Transfer Agent, subject to the authority of
the Board of Trustees, provides transfer agency services pursuant
to an agreement with the Administrator, which has been approved by
the Trust. The Transfer Agent maintains the records of each
shareholder's account, answers shareholder inquiries concerning
accounts, processes purchases and redemptions of the Fund shares,
acts as dividend and distribution disbursing agent, and performs
other shareholder servicing functions.
Capital Investment Group, Inc. (the "Distributor") serves as the
Fund's principal underwriter and distributor. The Distributor may
sell Fund shares to or through qualified securities dealers or
others. With respect to the Class NL shares, the Distributor
receives no compensation from the Fund. Certain Trustees and
officers of the Trust are also officers of the Manager, the
Distributor or the Administrator.
NOTE 3 - COVERED CALL OPTIONS
The Fund's activity in written options for the year ended November
30, 1999 was as follows:
Number of Contracts
Contracts Premium
--------- -------
Options outstanding at beginning of period 16 $ 4,898
Options expired prior to exercise 16 (4,898)
----- -------
Options outstanding at end of period 0 $ 0
===== =======
NOTE 4 - PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, other than short-term
investments, aggregated $7,569,503 and $2,938,991, respectively,
for the year ended November 30, 1999.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees of Blue Ridge Funds Trust and Shareholders of Blue
Ridge Total Return Fund:
We have audited the accompanying statement of assets and liabilities Blue Ridge
Total Return Fund(The "Fund")(a portfolio of Blue Ridge Funds Trust), including
the portfolio of investments, as of November 30, 1999 and the related statement
of operations for the year then ended, the statement of changes in net assets,
and the financial highlights for each of the two years then ended. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned as of
November 30, 1999, by correspondence with the custodian and brokers; where
replies were not received from brokers, we performed other auditing procedures.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Blue
Ridge Total Return Fund as of November 30, 1999, the results of its
operationsfor the year then ended, the changes in its net assets, and the
financial highlights for each of the two years in the period then ended, in
conformity with generally accepted accounting principles.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
December 17, 1999
<PAGE>
PART C
======
BLUE RIDGE FUNDS TRUST
FORM N-1A
OTHER INFORMATION
ITEM 23. Exhibits
--------
(a)(1) Declaration of Trust.^1
(a)(2) Certificate of Trust.^1
(b) By-Laws.^1
(c) Certificates for shares are not issued. Articles III and V of the
Declaration of Trust, previously filed as Exhibit (a)(1) hereto, define
the rights of holders of Shares.^1
(d) Investment Management Agreement between the Blue Ridge Funds Trust and
Colonial Asset Management, Inc., as Manager.
(e) Distribution Agreement between the Blue Ridge Funds Trust and Capital
Investment Group, Inc., as Distributor.
(f) Not Applicable.
(g) Custodian Agreement between the Blue Ridge Funds Trust and First Union
National Bank of North Carolina, as Custodian.
(h)(1) Fund Accounting and Compliance Administration Agreement between the
Blue Ridge Funds Trust and The Nottingham Company, Inc., as
Administrator.
(h)(2) Dividend Disbursing and Transfer Agent Agreement between the Blue Ridge
Funds Trust and NC Shareholder Services, LLC, as Transfer Agent.
(h)(3) Expense Limitation Agreement between the Blue Ridge Funds Trust and
Colonial Asset Management, Inc.
(i)(1) Opinion and Consent of Dechert Price & Rhoads, Counsel, regarding the
legality of securities registered.^2
(i)(2) Consent of Dechert Price & Rhoads, Counsel.
(j) Consent of Deloitte & Touche LLP, Independent Public Accountants.
(k) Not applicable.
(l) Stock Subscription Agreement.^2
(m) Not applicable.
(n) Not applicable.
(p) Code of Ethics for the Blue Ridge Funds Trust and Colonial Asset
Management, Inc.
(q) Copy of Power of Attorney.^3
- --------------
1. Incorporated herein by reference to Blue Ridge Funds Trust's Registration
Statement on Form N-1A filed September 30, 1997 (File No. 333-36811).
2. Incorporated herein by reference to Blue Ridge Funds Trust's Registration
Statement on Form N-1A Pre-Effective Amendment No. 1 filed December 5, 1997
(File No. 333-36811).
3. Incorporated herein by reference to Blue Ridge Funds Trust's Registration
Statement on Form N-1A Post-Effective Amendment No. 1 filed January 29, 1999
(File No. 333-36811).
ITEM 24. Persons Controlled by or Under Common Control with the Registrant
-----------------------------------------------------------------
No person is controlled by or under common control with the Blue Ridge
Funds Trust.
ITEM 25. Indemnification
---------------
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."
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 26. Business and other Connections of the Investment Advisor
--------------------------------------------------------
The description of Colonial Asset Management, Inc. under the caption of
"The Investment Manager" in the Prospectus and 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 Colonial Asset Management, Inc. as set forth in
Colonial Asset Management, 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 27. Principal Underwriter
---------------------
(a) Capital Investment Group, Inc., the Registrant's distributor, is
also the underwriter and distributor for the Chesapeake Aggressive Growth Fund,
Chesapeake Growth Fund, Chesapeake Core Growth Fund, WST Growth Fund, The
CarolinasFund, Capital Value Fund, Investek Fixed Income Trust, The Brown
Capital Management Equity Fund, The Brown Capital Management Balanced Fund, The
Brown Capital Management Small Company Fund, The Brown Capital Management
International Equity Fund, Wisdom Fund, SCM Strategic Growth Fund, and de Leon
Internet 100 Fund.
(b) Set forth below is certain information regarding the directors and
officers of Capital Investment Group, Inc.
POSITION(S) AND OFFICE(S) POSITION(S)
NAME AND PRINCIPAL WITH CAPITAL INVESTMENT AND OFFICE(S)
BUSINESS ADDRESS GROUP, INC. WITH REGISTRANT
================ ======================== ===============
Richard K. Bryant President None
17 Glenwood Avenue
Raleigh, N.C. 27622
E.O. Edgerton, Jr. Vice President None
17 Glenwood Avenue
Raleigh, N.C. 27622
Delia Zimmerman Secretary None
17 Glenwood Avenue
Raleigh, N.C. 27622
Con T. McDonald Assistant Vice-President None
17 Glenwood Avenue
Raleigh, N.C. 27622
W. Harold Eddins, Jr. Assistant Vice-President None
17 Glenwood Avenue
Raleigh, N.C. 27622
(c)
<TABLE>
<S> <C> <C> <C> <C>
-------------------------------------- ------------------ -------------------- ----------------- ------------------
Net Underwriting Compensation on
Discounts and Redemption and Brokerage Other
Name of Principal Underwriter Commissions Repurchases Commissions Compensation
-------------------------------------- ------------------ -------------------- ----------------- ------------------
Capital Investment Group, Inc. None None None None
-------------------------------------- ------------------ -------------------- ----------------- ------------------
</TABLE>
ITEM 28. Location of Accounts and Records
--------------------------------
All account books and records not normally held by First Union National
Bank of North Carolina, the Custodian to the Blue Ridge Funds Trust, are held by
the Blue Ridge Funds Trust, in the offices of The Nottingham Company, Inc., Fund
Accountant and Administrator; NC Shareholder Services, LLC, Transfer Agent; or
Colonial Asset Management, Inc., the Investment Manager to the Blue Ridge Funds
Trust.
The address of The Nottingham Company, Inc. is 105 North Washington
Street, Post Office Box 69, Rocky Mount, North Carolina 27802-0069. The address
of NC Shareholder Services, LLC is 107 North Washington Street, Post Office Box
4365, Rocky Mount, North Carolina 27803-0365. The address of Colonial Asset
Management, Inc. is 359 South Pine Street, Spartanburg, South Carolina, 29302.
The address of First Union National Bank of North Carolina is Two First Union
Center, Charlotte, North Carolina 28288-1151.
ITEM 29. Management Services
-------------------
Not Applicable.
ITEM 30. Undertakings
------------
Not Applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended
("Securities Act"), and the Investment Company Act of 1940, as amended, the
Registrant certifies that it meets all of the requirements for effectiveness of
this registration statement under Rule 485(b) under the Securities Act and has
duly caused this Post-Effective Amendment No. 2 to its Registration Statement to
be signed on its behalf by the undersigned, thereto duly authorized, in the City
of Rocky Mount, and State of North Carolina on this 31st day of March, 2000.
BLUE RIDGE FUNDS TRUST
By: /s/ C. Frank Watson, III
______________________________
C. Frank Watson, III
Secretary
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Post-Effective Amendment No. 2 to the Registration Statement has been signed
below by the following persons in the capacities and on the date indicated.
Signature Title Date
--------- ----- ----
* President March 31, 2000
___________________________
H. Walter Barre
* Trustee March 31, 2000
___________________________
William B. Bradshaw
* Trustee March 31, 2000
___________________________
Robert D. Inglis
* Trustee March 31, 2000
___________________________
Geoffrey M. Salkow
* Trustee March 31, 2000
___________________________
Johnnie M. Walters
* Vice-President March 31, 2000
___________________________
Barry D. Wynn
Treasurer March 31, 2000
/s/ Julian G. Winters
___________________________
Julian G. Winters
* By: /s/ C. Frank Watson, III Dated: March 31, 2000
______________________________
C. Frank Watson, III
Attorney-in-Fact
<PAGE>
INDEX TO EXHIBITS
(FOR POST-EFFECTIVE AMENDMENT NO. 2)
____________________________________
EXHIBIT NO.
UNDER PART C
OF FORM N-1A NAME OF EXHIBIT
- ------------ ---------------
(d) Investment Management Agreement
(e) Distribution Agreement
(g) Custodian Agreement
(h)(1) Fund Accounting and Compliance Administration Agreement
(h)(2) Dividend Disbursing and Transfer Agent Agreement
(h)(3) Expense Limitation Agreement
(i)(2) Consent of Counsel
(j) Consent of Independent Public Accountants
(p) Code of Ethics
Exhibit (d): Investment Management Agreement
-----------
INVESTMENT MANAGEMENT AGREEMENT
THIS AGREEMENT, entered into as of the 1st day of April, 1999, by and between
BLUE RIDGE FUNDS TRUST (the "Trust"), a Delaware Business Trust, and COLONIAL
ASSET MANAGEMENT, INC. a South Carolina Corporation (the "Advisor"), registered
as an investment advisor under the Investment Advisors Act of 1940, as amended
(the "Advisors Act").
WHEREAS, the Trust is registered as an open-end management investment company of
the series type under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, the Trust desires to retain the Advisor to furnish investment advisory
and administrative services to the series of the Trust identified in Appendix A
(each a "Fund"), and the Advisor is willing to so furnish such services;
NOW THEREFORE, in consideration of the promises and mutual covenants herein
contained, it is agreed between the parties hereto as follows:
1. Appointment. The Trust hereby appoints the Advisor to act as Investment
Advisor to the Blue Ridge Total Return Fund (the "Fund"), a series of the
Trust for the period and on the terms set forth in this Agreement. The
Advisor accepts such appointment and agrees to furnish the services set
forth herein, for the compensation as indicated in Appendix A.
2. Delivery of Documents. The Trust has furnished the Investment Advisor with
copies properly certified or authenticated of each of the following:
(a) The Trust's Declaration of Trust, as filed with the State of Delaware
(the "Declaration");
(b) The Trust's By-Laws (the "By-Laws"");
(c) Resolutions of the Trust's Board of Trustees and the resolution
approved by a majority of the outstanding shares of the Fund
authorizing the appointment of the Advisor and approving this
Agreement;
(d) The Trust's Registration Statement on Form N-1A under the 1940 Act and
under the Securities Act of 1933 as amended, (the "1933 Act"),
relating to shares of beneficial interest of the Fund (the "Shares")
as filed with the Securities and Exchange Commission ("SEC") and all
amendments thereto;
(e) The Fund's Prospectus (the "Prospectus").
The Trust will furnish the Advisor from time to time with copies, properly
certified or authenticated, of all amendments of or supplements to the
foregoing at the same time as such documents are required to be filed with
the SEC.
3. Management. Subject to the supervision of the Trust's Board of Trustees,
the Advisor will provide a continuous investment program for the Fund,
including investment research and management with respect to all
securities, investments, cash and cash equivalents in the Fund. The Advisor
will determine from time to time what securities and other investments will
be purchased, retained or sold by the Fund. The Advisor will provide the
services under this Agreement in accordance with the Fund's investment
objectives, policies and restrictions as stated in its Prospectus. The
Advisor further agrees that it:
(a) Will conform its activities to all applicable Rules and Regulations of
the Securities and Exchange Commission and will, in addition, conduct
its activities under this Agreement in accordance with regulations of
any other Federal and State agencies which may now or in the future
have jurisdiction over its activities under this Agreement;
(b) Will place orders pursuant to its investment determinations for the
Fund either directly with the issuer or with any broker or dealer. In
placing orders with brokers or dealers, the Advisor will attempt to
obtain the best net price and the most favorable execution of its
orders. Consistent with this obligation, when the Advisor believes two
or more brokers or dealers are comparable in price and execution, the
Advisor may prefer: (i) brokers and dealers who provide the Fund with
research advice and other services, or who recommend or sell Trust
shares, and (ii) brokers who are affiliated with the Fund or its
Advisor; provided, however, that in no instance will portfolio
securities be purchased from or sold to the Advisor or any affiliated
person of the Advisor in principal transactions;
(c) Will provide certain executive personnel for the Fund as may be
mutually agreed upon from time to time with the Board of Trustees, the
salaries and expenses of such personnel to be borne by the Advisor
unless otherwise mutually agreed upon; and
(d) Will provide, at its own cost, all office space, facilities and
equipment necessary for the conduct of its advisory activities on
behalf of the Fund.
4. Services Not Exclusive. The advisory services furnished by the Advisor
hereunder are not to be deemed exclusive, and the Advisor shall be free to
furnish similar services to others so long as its services under this
Agreement are not impaired thereby; provided, however, that without the
written consent of the Trustees, the Advisor will not serve as investment
advisor to any other investment company having a similar investment
objective to that of the Fund.
5. Books and Records. In compliance with the requirements of Rule 31a-3 under
the 1940 Act, the Advisor hereby agrees that all records which it maintains
for the benefit of the Fund are the property of the Fund and further agrees
to surrender promptly to the Fund any of such records upon the Fund's
request. The Advisor further agrees to preserve for the periods prescribed
by Rule 31a-2 under the 1940 Act the records required to be maintained by
it pursuant to Rule 31a-1 under the 1940 Act that are not maintained by
others on behalf of the Fund.
6. Expenses. During the term of this Agreement, the Advisor will pay all
expenses incurred by it in connection with its investment advisory services
pertaining to the Fund. The Advisor will pay, out of the Advisor's
resources, the entire cost of the promotion and sale of Trust shares,
including the preparation of the prospectus and other documents. The
Advisor will provide other information and services, other than services of
outside counsel or independent accountants or investment advisory services
to be provided by any Adviser under a Management Agreement, required in
connection with the preparation of all registration statements and
Prospectuses, Prospectus supplements, SAIs, all annual, semiannual, and
periodic reports to shareholders of the Trust, regulatory authorities, or
others, and all notices and proxy solicitation materials, furnished to
shareholders of the Trust or regulatory authorities, and all tax returns.
Notwithstanding the foregoing, the Fund shall pay the expenses and costs of the
following:
(a) Taxes, interest charges and extraordinary expenses;
(b) Brokerage fees and commissions with regard to portfolio transactions
of the Fund;
(c) Fees and expenses of the custodian of the Fund's portfolio securities;
(d) Fees and expenses of the Fund's administrator, transfer and dividend
disbursing agent and the Fund's fund accounting agent or, if the Fund
performs any such services without an agent, the costs of the same;
(e) Auditing and legal expenses;
(f) Cost of maintenance of the Fund's existence as a legal entity;
(g) Compensation of trustees who are not interested persons of the Advisor
as law defines that term;
(h) Costs of Trust meetings;
(i) Federal and State registration or qualification fees and expenses;
(j) Costs of setting in type, printing and mailing Prospectuses, reports
and notices to existing shareholders;
(k) The investment management fee payable to the Advisor, as provided in
paragraph 7 herein; and
(l) Plan of Distribution expenses, but only in accordance with the Plan of
Distribution as approved by the shareholders of the Fund.
7. Compensation. The Trust will pay the Advisor and the Advisor will accept as
full compensation an investment advisory fee, based upon the daily average
net assets of each Fund, computed at the end of each month and payable
within five (5) business days thereafter, based upon the schedule attached
hereto as Appendix A.
8.(a)Limitation of Liability. The Advisor shall not be liable for any error of
judgment, mistake of law or for any other loss whatsoever suffered by the
Fund in connection with the performance of this Agreement, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of the Advisor in the performance of
its duties or from reckless disregard by it of its obligations and duties
under this Agreement.
8.(b)Indemnification of Advisor. Subject to the limitations set forth in this
Subsection 8(b), the Fund shall indemnify, defend and hold harmless (from
the assets of the Trust or Trusts to which the conduct in question relates)
the Advisor against all loss, damage and liability, including but not
limited to amounts paid in satisfaction of judgments, in compromise or as
fines and penalties, and expenses, including reasonable accountants' and
counsel fees, incurred by the Advisor in connection with the defense or
disposition of any action, suit or other proceeding, whether civil or
criminal, before any court or administrative or legislative body, related
to or resulting from this Agreement or the performance of services
hereunder, except with respect to any matter as to which it has been
determined that the loss, damage or liability is a direct result of (i) a
breach of fiduciary duty with respect to the receipt of compensation for
services; or (ii) willful misfeasance, bad faith or gross negligence on the
part of the Advisor in the performance of its duties or from reckless
disregard by it of its duties under this Agreement (either and both of the
conduct described in clauses (i) and (ii) above being referred to
hereinafter as "Disabling Conduct"). A determination that the Advisor is
entitled to indemnification may be made by (i) a final decision on the
merits by a court or other body before whom the proceeding was brought that
the Advisor was not liable by reason of Disabling Conduct, (ii) dismissal
of a court action or an administrative proceeding against the Advisor for
insufficiency of evidence of Disabling Conduct, or (iii) a reasonable
determination, based upon a review of the facts, that the Advisor was not
liable by reason of Disabling Conduct by, (a) vote of a majority of a
quorum of Trustees who are neither "interested persons" of the Fund as the
quoted phrase is defined in Section 2(a)(19) of the 1940 Act nor parties to
the action, suit or other proceeding on the same or similar grounds that is
then or has been pending or threatened (such quorum of such Trustees being
referred to hereinafter as the "Independent Trustees"), or (b) an
independent legal counsel in a written opinion. Expenses, including
accountants' and counsel fees so incurred by the Advisor (but excluding
amounts paid in satisfaction of judgments, in compromise or as fines or
penalties), may be paid from time to time by the Fund or Trust to which the
conduct in question related in advance of the final disposition of any such
action, suit or proceeding; provided, that the Advisor shall have
undertaken to repay the amounts so paid if it is ultimately determined that
indemnification of such expenses is not authorized under this Subsection
8(b) and if (i) the Advisor shall have provided security for such
undertaking, (ii) the Fund shall be insured against losses arising by
reason of any lawful advances, or (iii) a majority of the Independent
Trustees, or an independent legal counsel in a written opinion, shall have
determined, based on a review of readily available facts (as opposed to a
full trial-type inquiry), that there is reason to believe that the Advisor
ultimately will be entitled to indemnification hereunder.
As to any matter disposed of by a compromise payment by the Advisor
referred to in this Subsection 8(b), pursuant to a consent decree or
otherwise, no such indemnification either for said payment or for any other
expenses shall be provided unless such indemnification shall be approved
(i) by a majority of the Independent Trustees or (ii) by an independent
legal counsel in a written opinion. Approval by the Independent Trustees
pursuant to clause (i) shall not prevent the recovery from the Advisor of
any amount paid to the Advisor in accordance with either of such clauses as
indemnification of the Advisor is subsequently adjudicated by a court of
competent jurisdiction not to have acted in good faith in the reasonable
belief that the Advisor's action was in or not opposed to the best interest
of the Fund or to have been liable to the Fund or its Shareholders by
reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in its conduct under the Agreement.
The right of indemnification provided by this Subsection 8(b) shall not be
exclusive of or affect any of the rights to which the Advisor may be
entitled. Nothing contained in this Subsection 8(b) shall affect any rights
to indemnification to which Trustees, officers or other personnel of the
Fund, and other persons may be entitled by contract or otherwise under law,
nor the power of the Fund to purchase and maintain liability insurance on
behalf of any such person.
The Board of Trustees of the Trust shall take all such action as may be
necessary and appropriate to authorize the Fund hereunder to pay the
indemnification required by this Subsection 8(b) including, without
limitation, to the extent needed, to determine whether the Advisor is
entitled to indemnification hereunder and the reasonable amount of any
indemnity due it hereunder, or employ independent legal counsel for that
purpose.
8.(c)The provisions contained in Section 8 shall survive the expiration or other
termination of this Agreement, shall be deemed to include and protect the
Advisor and its directors, officers, employees and agents and shall inure
to the benefit of its/their respective successors, assigns and personal
representatives.
9. Duration and Termination. This Agreement shall become effective upon the
date the registration statement of the Trust containing the Fund's
Prospectus is declared effective by the Securities and Exchange Commission
and, unless sooner terminated as provided herein, shall continue in effect
for two years. Thereafter, this Agreement shall be renewable for successive
periods of one year each, provided such continuance is specifically
approved annually:
(a) By the vote of a majority of those members of the Board of Trustees
who are not parties to this Agreement or interested persons of any
such party (as that term is defined in the 1940 Act), cast in person
at a meeting called for the purpose of voting on such approval; and
(b) By vote of either the Board of Trustees or a majority (as that term is
defined in the 1940 Act) of the outstanding voting securities of the
Fund.
Notwithstanding the foregoing, this Agreement may be terminated by the Fund
or by the Advisor at any time on sixty (60) days' written notice, without
the payment of any penalty, provided that termination by the Fund must be
authorized either by vote of the Board of Trustees or by vote of a majority
of the outstanding voting securities of the Fund. This Agreement will
automatically terminate in the event of its assignment (as that term is
defined in the 1940 Act).
10. Amendment of this Agreement. No provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by a written instrument
signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. No material amendment of this Agreement
shall be effective until approved by vote of the holders of a majority of
the Fund's outstanding voting securities (as defined in the 1940 Act).
11. Miscellaneous. The captions in this Agreement are included for convenience
of reference only and in no way define or limit any of the provisions
hereof or otherwise affect their construction or effect. If any provision
of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of the Agreement shall not be
affected thereby. This Agreement shall be binding and shall inure to the
benefit of the parties hereto and their respective successors.
12. Applicable Law. This Agreement shall be construed in accordance with, and
governed by, the laws of the Commonwealth of North Carolina.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
ATTEST BLUE RIDGE FUNDS TRUST
By: ______________________ By: ________________________
Title: ___________________ Title: _____________________
ATTEST COLONIAL ASSET MANAGEMENT, INC.
By: ______________________ By: ________________________
Title: ___________________ Title: _____________________
<PAGE>
APPENDIX A
SERIES OF THE TRUST TO WHICH THE ADVISOR PROVIDES SERVICES AND
INVESTMENT ADVISOR'S COMPENSATION SCHEDULE
For the services delineated in the INVESTMENT MANAGEMENT AGREEMENT, the
Investment Advisor shall be compensated monthly by the Blue Ridge Total Return
Fund, as of the last day of each month, within five business days of the month
end, a fee based upon the daily average net assets of the Fund according to the
following schedule.
Annual
Net Assets Fee
---------- ---
$20 Million and Less 0.750%
Next $30 Million 0.625%
Greater than $50 Million 0.500%
Exhibit (e): Distribution Agreement
-----------
AMENDED AND RESTATED DISTRIBUTION AGREEMENT
AGREEMENT made effective as of the 1st day of April, 1999, by and between BLUE
RIDGE FUNDS TRUST, an business trust organized under the laws of the State of
Delaware (the "Trust"), and CAPITAL INVESTMENT GROUP, INC., a North Carolina
corporation ("Distributor").
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management investment
company and is so registered under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Trust is authorized to issue an unlimited number of shares of
beneficial interest (the "Shares"), in separate series representing the
interests in separate funds of securities and other assets; and
WHEREAS, the Trust is authorized to issue interests in separate classes of
Shares for each of its series now or in the future existing; and
WHEREAS, the Trust offers a series of such Shares representing interests in the
BLUE RIDGE TOTAL RETURN FUND (the "Fund") of the Trust, and has registered the
Shares under the Securities Act of 1933, as amended (the "1933 Act"), pursuant
to a registration statement on Form N-1A (the "Registration Statement"),
including a prospectus (the "Prospectus") and a statement of additional
information (the "Statement of Additional Information"); and
WHEREAS, the Trust may in the future adopt a Plan of Distribution pursuant to
Rule 12b-1 under the 1940 Act (the "Distribution Plan") with respect to the
Shares of the Fund or any other series designated in Schedule A to this
Agreement (each a "Designated Fund"), and may enter into related agreements
providing for the distribution of Shares of any Designated Fund; and
WHEREAS, Distributor has agreed to act as distributor of the Shares of each
Designated Fund for the period of this Agreement;
NOW, THEREFORE, it is hereby agreed between the parties hereto as follows:
1. Appointment of Distributor.
(a) The Trust hereby appoints Distributor its exclusive agent for the
distribution of the Shares of each Designated Fund in jurisdictions
wherein such Shares may be legally offered for sale; provided,
however, that the Trust in its absolute discretion may issue Shares of
each Designated Fund in connection with (i) the payment or
reinvestment of dividends or distributions; (ii) any merger or
consolidation of the Trust or of each Designated Fund with any other
investment company or trust or any personal holding company, or the
acquisition of the assets of any such entity or another fund of the
Trust; or (iii) any offer of exchange permitted by Section 11 of the
1940 Act.
(b) Distributor hereby accepts such appointment as exclusive agent for the
distribution of the Shares of each Designated Fund and agrees that it
will sell the Shares as agent for the Trust at prices determined as
hereinafter provided and on the terms hereinafter set forth, all
according to applicable federal and state laws and regulations and to
the Agreement and Declaration of Trust of the Trust.
(c) Distributor may sell Shares of each Designated Fund to or through
qualified securities dealers or others. Distributor will require each
dealer or other such party to conform to the provisions hereof, the
Registration Statement and the Prospectus and Statement of Additional
Information, and applicable law; and neither Distributor nor any such
dealers or others shall withhold the placing of purchase orders for
Shares so as to make a profit thereby.
(d) Distributor shall order Shares of each Designated Fund from the Trust
only to the extent that it shall have received purchase orders
therefor. Distributor will not make, or authorize any dealers or
others to make: (i) any short sales of Shares; or (ii) any sales of
Shares to any Trustee or officer of the Trust or to any officer or
director of Distributor or of any corporation or association
furnishing investment advisory, managerial or supervisory services to
the Trust, or to any such corporation or association, unless such
sales are made in accordance with the then current Prospectus and
Statement of Additional Information.
(e) Distributor is not authorized by the Trust to give any information or
make any representations regarding the Shares of each Designated Fund,
except such information or representations as are contained in the
Registration Statement or in the current Prospectus or Statement of
Additional Information of each Designated Fund, or in advertisements
and sales literature prepared by or on behalf of the Trust for
Distributor's use.
(f) Notwithstanding any provision hereof, the Trust may terminate, suspend
or withdraw the offering of Shares of each Designated Fund whenever,
in its sole discretion, it deems such action to be desirable.
2. Offering Price of Shares. All Fund Shares sold under this Agreement shall
be sold at the public offering price per Share in effect at the time of the
sale, as described in the then current Prospectus for the Designated Fund.
The excess, if any, of the public offering price over the net asset value
of the Shares sold by Distributor as agent shall be retained by Distributor
as a commission for its services hereunder. Out of such commission
Distributor may allow commissions or concessions to dealers and may allow
them to others in its discretion in such amounts as Distributor shall
determine from time to time. Except as may be otherwise determined by
Distributor from time to time, such commissions or concessions shall be
uniform to all dealers. At no time shall the Trust receive less than the
full net asset value of the Shares, determined in the manner set forth in
the then current Prospectus and Statement of Additional Information.
Distributor shall also be entitled to such commissions and other fees and
payments as may be authorized by the Trustees of the Trust from time to
time under any Distribution Plan adopted by the Trust.
3. Furnishing of Information. The Trust shall furnish to Distributor copies of
any information, financial statements and other documents that Distributor
may reasonably request for use in connection with the sale of Shares of
each Designated Fund under this Agreement. The Trust shall also make
available a sufficient number of copies of each Designated Fund's current
Prospectus and Statement of Additional Information for use by the
Distributor.
4. Expenses.
(a) The Trust will pay or cause to be paid the following expenses: (i)
preparation, printing and distribution to shareholders of the
Prospectus and Statement of Additional Information; (ii) preparation,
printing and distribution of reports and other communications to
shareholders; (iii) registration of the Shares under the federal
securities laws; (iv) qualification of the Shares for sale in certain
states; (v) qualification of the Trust as a dealer or broker under
state law as well as qualification of the Trust as an entity
authorized to do business in certain states; (vi) maintaining
facilities for the issue and transfer of Shares; (vii) supplying
information, prices and other data to be furnished by the Trust under
this Agreement; and (viii) certain taxes applicable to the sale or
delivery of the Shares or certificates therefor.
(b) Except to the extent such expenses are borne by the Trust pursuant to
any Distribution Plan adopted by the Trust with respect to any class
of Shares issued by any Designated Fund, Distributor will pay or cause
to be paid the following expenses: (i) payments to sales
representatives of the Distributor and to securities dealers and
others in respect of the sale of Shares of each Designated Fund; (ii)
payment of compensation to and expenses of employees of the
Distributor and any of its affiliates to the extent they engage in or
support distribution of Fund Shares or render shareholder support
services not otherwise provided by the Trust's transfer agent,
administrator, or custodian, including, but not limited to, answering
routine inquiries regarding each Designated Fund, processing
shareholder transactions, and providing such other shareholder
services as the Trust may reasonably request; (iii) formulation and
implementation of marketing and promotional activities, including, but
not limited to, direct mail promotions and television, radio,
newspaper, magazine and other mass media advertising; (iv)
preparation, printing and distribution of sales literature and of
Prospectuses and Statements of Additional Information and reports of
the Trust for recipients other than existing shareholders of each
Designated Fund; and (v) obtaining such information, analyses and
reports with respect to marketing and promotional activities as the
Trust may, from time to time, reasonably request.
(c) Distributor in connection with any Distribution Plan adopted by the
Trust shall prepare and deliver reports to the Trustees of the Trust
on a regular basis, at least quarterly, showing the expenditures with
respect to each Designated Fund pursuant to the Distribution Plan and
the purposes therefor, as well as any supplemental reports as the
Trustees of the Trust, from time to time, may reasonably request.
5. Redemption of Shares. Distributor as agent and for the account of the Trust
may redeem Shares at their net asset value plus any applicable sales load
or redemption fee as specified in the Trust's current Prospectus and
Statement of Additional Information.
6. Indemnification by the Trust. The distributor shall exercise reasonable
care in connection with its responsibilities under this Agreement. In
absence of misfeasance, bad faith, negligence or reckless disregard of
obligations or duties hereunder on the part of Distributor, the Trust
agrees to indemnify Distributor and its officers and partners and to hold
them harmless against any and all claims, demands, liabilities and expenses
that Distributor may incur under the 1933 Act, the 1940 Act, common law or
otherwise arising out of or based upon any alleged untrue statement of a
material fact contained in the Registration Statement or any Prospectus or
Statement of Additional Information of each Designated Fund, or in any
advertisements or sales literature prepared by or on behalf of the Trust
for Distributor's use, or any omission to state a material fact therein,
the omission of which makes any statement contained therein misleading,
unless such statement or omission was made in reliance upon and in
conformity with information furnished to the Trust in connection therewith
by or on behalf of Distributor. Nothing herein contained shall require the
Trust to take any action contrary to any provision of its Agreement and
Declaration of Trust or any applicable statute or regulation.
7. Indemnification by Distributor. Distributor agrees to indemnify the Trust
and its officers and Trustees and to hold them harmless against any and all
claims, demands, liabilities and expenses which the Trust may incur under
the 1933 Act, the 1940 Act, common law or otherwise arising out of or based
upon (i) any untrue statement of a material fact or alleged untrue
statement of a material fact contained in the Registration Statement or any
Prospectus or Statement of Additional Information of each Designated Fund,
or in any advertisements or sales literature prepared by or on behalf of
the Trust for Distributor's use, or any omission to state a material fact
therein, the omission of which makes any statement contained therein
misleading, if such statement or omission to state a material fact was made
in reliance upon and in conformity with information furnished to the Trust
in connection therewith by or on behalf of Distributor; (ii) any act or
deed of Distributor or its sales representatives, or securities dealers and
others authorized to sell Shares hereunder or their sales representatives
that has not been specifically authorized in advance by the Trust in any
Prospectus or Statement of Additional Information of each Designated Fund
or by this Agreement or other written instrument; or (iii) any misfeasance,
bad faith or negligence by the Distributor or reckless disregard by the
Distributor of its obligations or duties hereunder.
8. Term and Termination.
(a) This Agreement shall become effective on the date hereof. Unless
terminated as herein provided, this Agreement shall continue in effect
for one year from the date hereof and shall continue in full force and
effect for successive periods of one year thereafter, but only so long
as each such continuance is approved (i) by either the Trustees of the
Trust or by vote of a majority of the outstanding voting securities
(as defined in the 1940 Act) of each Designated Fund and, in either
event, (ii) by vote of a majority of the Trustees of the Trust who are
not parties to this Agreement or interested persons (as defined in the
1940 Act) of any such party and who have no direct or indirect
financial interest in this Agreement or in the operation of the
Distribution Plan or in any agreement related thereto ("Independent
Trustees"), cast at a meeting called for the purpose of voting on such
approval.
(b) This Agreement may be terminated at any time without the payment of
any penalty by vote of the Trustees of the Trust or a majority of the
Independent Trustees or by vote of a majority of the outstanding
voting securities (as defined in the 1940 Act) of each Designated Fund
or by Distributor, on sixty days' written notice to the other party.
(c) This Agreement shall automatically terminate in the event of its
assignment (as defined in the 1940 Act).
9. Limitation of Liability. The obligations of the Trust hereunder shall not
be binding upon any of the Trustees, officers or shareholders of the Trust
personally, but shall bind only the assets and property of the Trust. The
term "Blue Ridge Funds Trust" means and refers to the Trustees from time to
time serving under the Agreement and Declaration of Trust of the Trust. The
execution and delivery of this Agreement has been authorized by the
Trustees, and this Agreement has been signed on behalf of the Trust by an
authorized officer of the Trust, acting as such and not individually, and
neither such authorization by such Trustees nor such execution and delivery
by such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but
shall bind only the assets and property of the Trust as provided in the
Agreement and Declaration of Trust and by the Delaware Business Trust or
other applicable law.
IN WITNESS THEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above.
BLUE RIDGE FUNDS TRUST
Attest: __________________________
By: ________________________________
CAPITAL INVESTMENT GROUP, INC.
Attest: __________________________
By: ________________________________
<PAGE>
Schedule A
The Amended and Restated Distribution Agreement between Blue Ridge Funds Trust
and Capital Investment Group, Inc. applies to the following series of the Trust:
Series
------
The Blue Ridge Total Return Fund
Exhibit (g): Custodian Agreement
-----------
CUSTODY AGREEMENT
(Mutual Funds)
THIS AGREEMENT is made as of December 1, 1997, by and between BLUE RIDGE FUNDS
TRUST (the "Trust"), a Delaware business trust, with respect to its existing
series as of the date of this Agreement, and such other series as shall be
designated from time to time by the Trust (the "Fund" or "Funds"), and FIRST
UNION NATIONAL BANK OF NORTH CAROLINA, a national banking association (the
"Custodian").
The Trust desires that its securities and funds shall be hereafter held and
administered by the Custodian pursuant to the terms of this Agreement, and,
pursuant to separate agreements, The Nottingham Company, Inc., a North Carolina
corporation ("Nottingham"), has agreed to perform the duties of Accounting
Services Agent and Administrator for the Fund, and NC Shareholder Services,
LLC, a North Carolina limited liability corporation ("NCSS"), has agreed to
perform the duties of Transfer Agent and Dividend Disbursing Agent for the
Funds.
In consideration of the mutual agreements herein, the Trust and the Custodian
agree as follows:
1. DEFINITIONS.
-----------
As used herein, the following words and phrases shall have the meanings
shown in this Section 1:
"Securities" includes stocks, shares, bonds, debentures, bills, notes,
mortgages, certificates of deposit, bank time deposits, bankers'
acceptances, commercial paper, scrip, warrants, participation
certificates, evidences of indebtedness, or other obligations and any
certificates, receipts, warrants or other instruments representing
rights to receive, purchase, or subscribe for the same, or evidencing
or representing any other rights or interests therein, or in any
property or assets.
"Oral Instructions" shall mean an authorization, instruction, approval,
item or set of data, or information of any kind transmitted to the
Custodian in person or by telephone, telegram, telecopy or other
mechanical or documentary means lacking original signature, by an
officer or employee of the Trust, an employee of Nottingham in its
capacity as Accounting Services Agent and Administrator, or an employee
of NCSS in its capacity as Transfer Agent and Dividend Disbursing
Agent, who has been authorized by a resolution of the Board of Trustees
of the Trust or the Board of Directors of Nottingham to give Written
Instructions on behalf of the Trust.
"Written Instructions" shall mean an authorization, instruction,
approval, item or set of data, or information of any kind transmitted
to the Custodian containing original signatures or a copy of such
document transmitted by telecopy including transmission of such
signature, reasonably believed by the Custodian to be the signature of
an officer or employee of the Trust, an employee of Nottingham in its
capacity as Accounting Services Agent and Administrator, or an employee
of NCSS in its capacity as Transfer Agent and Dividend Disbursing
Agent, who has been authorized by a resolution of the Board of Trustees
of the Trust or Board of Directors of Nottingham to give Written
Instructions on behalf of the Trust.
"Securities Depository" shall mean a system for the central handling of
securities where all securities of any particular class or series of
any issuer deposited within the system are treated as fungible and may
be transferred or pledged by bookkeeping entry without physical
delivery of securities.
"Officers' Certificate" shall mean a direction, instruction or
certification in writing signed in the name of the Trust by the
President, Secretary or Assistant Secretary, or the Treasurer or
Assistant Treasurer of the Trust, or any other persons duly authorized
to sign by the Board of Trustees or the Executive Committee of the
Trust.
"Book-Entry Securities" shall mean securities issued by the Treasury of
the United States of America and federal agencies of the United States
of America which are maintained in the book-entry system as provided in
Subpart O of Treasury Circular No. 300, 31 CFR 306, Subpart B of 31 CFR
Part 350, and the book-entry regulations of federal agencies
substantially in the form of Subpart O, and the term Book-Entry Account
shall mean an account maintained by a Federal Reserve Bank in
accordance with the aforesaid Circular and regulations.
<PAGE>
2. DOCUMENTS TO BE FILED BY TRUST.
------------------------------
The Trust shall from time to time file with the Custodian a certified
copy of each resolution of its Board of Trustees authorizing execution
of Written Instructions and the number of signatories required,
together with certified signatures of the officers and other
signatories authorized to sign, which shall constitute conclusive
evidence of the authority of the officers and other signatories
designated therein to act, and shall be considered in full force and
effect and the Custodian shall be fully protected in acting in reliance
thereon until it receives a new certified copy of a resolution adding
or deleting a person or persons with authority to give Written
Instructions. If the certifying officer is authorized to sign Written
Instructions, the certification shall also be signed by a second
officer of the Trust. The Trust also agrees that the Custodian may rely
on Written Instructions received from Nottingham and/or NCSS, as agent
for the Trust, if those Written Instructions are given by persons
having authority pursuant to resolutions of the Board of Trustees of
the Trust.
The Trust shall from time to time file with the Custodian a certified
copy of each resolution of the Board of Trustees authorizing the
transmittal of Oral Instructions and specifying the person or persons
authorized to give Oral Instructions in accordance with this Agreement.
The Trust agrees that the Custodian may rely on Oral Instructions
received from Nottingham and/or NCSS, as agent for the Trust, if those
instructions are given by persons reasonably believed by the Custodian
to have such authority. Any resolution so filed with the Custodian
shall be considered in full force and effect and the Custodian shall be
fully protected in acting in reliance thereon until it actually
receives a new certified copy of a resolution adding or deleting a
person or persons with authority to give Oral Instructions. If the
certifying officer is authorized to give Oral Instructions, the
certification shall also be signed by a second officer of the Trust.
3. RECEIPT AND DISBURSEMENT OF FUNDS.
---------------------------------
(a) The Custodian shall open and maintain a separate account or
accounts in the name of each Fund of the Trust, subject only
to draft or order by the Custodian acting pursuant to the
terms of this Agreement. The Custodian shall hold in
safekeeping in such account or accounts, subject to the
provisions hereof, all funds received by it from or for the
account of the Trust. The Trust will deliver or cause to be
delivered to the Custodian all funds owned by the Trust,
including cash received for the issuance of its shares during
the period of this Agreement. The Custodian shall make
payments of funds to, or for the account of, the Trust from
such funds only:
(i) for the purchase of securities for the portfolio of
the Trust upon the delivery of such securities to the
Custodian (or to any bank, banking firm or trust
company doing business in the United States and
designated by the Custodian as its sub-custodian or
agent for this purpose or any foreign bank qualified
under Rule 17f-5 of the Investment Company Act of
1940 and acting as sub-custodian), registered (if
registerable) in the name of the Trust or of the
nominee of the Custodian referred to in Section 8 or
in proper form for transfer, or, in the case of
repurchase agreements entered into between the Trust
and the Custodian or other bank or broker dealer (A)
against delivery of the securities either in
certificate form or through an entity crediting the
Custodian's account at the Federal Reserve Bank with
such securities or (B) upon delivery of the receipt
evidencing purchase by the Trust of securities owned
by the Custodian along with written evidence of the
agreement by the Custodian bank to repurchase such
securities from the Trust;
(ii) for the payment of interest, dividends, taxes,
management or supervisory fees, or operating expenses
(including, without limitation, Board of Trustees'
fees and expenses, and fees for legal, accounting and
auditing services) and for redemption or repurchase
of shares of the Trust;
<PAGE>
(iii) for payments in connection with the conversion,
exchange or surrender of securities owned or
subscribed to by the Trust held by or to be delivered
to the Custodian;
(iv) for the payment to any bank of interest on all or any
portion of the principal of any loan made by such
bank to the Trust;
(v) for the payment to any person, firm or corporation
who has borrowed the Trust's portfolio securities the
amount deposited with the Custodian as collateral for
such borrowing upon the delivery of such securities
to the Custodian, registered (if registerable) in the
name of the Trust or of the nominee of the Custodian
referred to in Section 8 or in proper form for
transfer; or
(vi) for other proper purposes of the Trust.
Before making any such payment the Custodian shall receive
(and may rely upon) Written Instructions or Oral Instructions
directing such payment and stating that it is for a purpose
permitted under the terms of this subsection (a). In respect
of item (vi), the Custodian will take such action only upon
receipt of an Officers' Certificate and a certified copy of a
resolution of the Board of Trustees or the Executive Committee
of the Trust signed by an officer of the Trust and certified
by the Secretary or an Assistant Secretary, specifying the
amount of such payment, setting forth the purpose for which
such payment is to be made. In respect of item (v), the
Custodian shall make payment to the borrower of securities
loaned by the Trust of part of the collateral deposited with
the Custodian upon receipt of Written Instructions from the
Trust or Nottingham stating that the market value of the
securities loaned has declined and specifying the amount to be
paid by the Custodian without receipt or return of any of the
securities loaned by the Trust. In respect of item (i), in the
case of repurchase agreements entered into with a bank which
is a member of the Federal Reserve System, the Custodian may
transfer funds to the account of such bank, which may be
itself, prior to receipt of written evidence that the
securities subject to such repurchase agreement have been
transferred by book-entry to the Custodian's non-proprietary
account at the Federal Reserve Bank, or in the case of
repurchase agreements entered into with the Custodian, of the
safekeeping receipt and repurchase agreement, provided that
such securities have in fact been so transferred by
book-entry, or in the case of repurchase agreements entered
into with the Custodian, the safekeeping receipt is received
prior to the close of business on the same day.
(b) Notwithstanding anything herein to the contrary, the Custodian
may at any time or times with the written approval of the
Board of Trustees, appoint (and may at any time remove without
the written approval of the Trust) any other bank or trust
company as its sub-custodian or agent to carry out such of the
provisions of Subsection (a) of this Section 3 as instructions
from the Trust may from time to time request; provided,
however, that the appointment of such sub-custodian or agent
shall not relieve the Custodian of any of its responsibilities
hereunder; and provided, further, that the Custodian shall not
enter into any arrangement with any subcustodian unless such
sub-custodian meets the requirements of Section 26 of the
Investment Company Act of 1940 and Rule 17f-5 thereunder, if
applicable.
(c) The Custodian is hereby authorized to endorse and collect all
checks, drafts or other orders for the payment of money
received by the Custodian for the accounts of the Trust.
<PAGE>
4. RECEIPT OF SECURITIES.
---------------------
(a) The Custodian shall hold in safekeeping in a separate account,
and physically segregated at all times from those of any other
persons, firms, corporations or trusts or any other series of
the Trust, pursuant to the provisions hereof, all securities
received by it from or for the account of each series of the
Trust, and the Trust will deliver or cause to be delivered to
the Custodian all securities owned by the Trust. All such
securities are to be held or disposed of by the Custodian
under, and subject at all times to the instructions pursuant
to, the terms of this Agreement. The Custodian shall have no
power or authority to assign, hypothecate, pledge, lend or
otherwise dispose of any such securities and investments,
except pursuant to instructions and only for the account of
the Trust as set forth in Section 5 of this Agreement.
(b) Notwithstanding anything herein to the contrary, the Custodian
may at any time or times with the written approval of the
Board of Trustees, appoint (and may at any time without the
written approval of such Board of Trustees remove) any other
bank or trust company as its sub-custodian or agent to carry
out such of the provisions of Subsection (a) of this Section 4
and of Section 5 of this Agreement, as instructions may from
time to time request, provided, however, that the appointment
of such sub-custodian or agent shall not relieve the Custodian
of any of its responsibilities hereunder, and provided,
further, that the Custodian shall not enter into arrangement
with any sub-custodian unless such sub-custodian meets the
requirements of Section 26 of the Investment Company Act of
1940 or Rule 17f-5 thereunder, if applicable.
5. TRANSFER, EXCHANGE, REDELIVERY, ETC. OF SECURITIES.
--------------------------------------------------
The Custodian shall have sole power to release or deliver any
Securities of the Trust held by it pursuant to this Agreement. The
Custodian agrees to transfer, exchange or deliver Securities held by it
on behalf of the Trust hereunder only:
(a) for sales of such Securities for the account of the Trust upon
receipt by the Custodian of Payment therefor;
(b) when such securities mature or are called, redeemed or retired
or otherwise become payable;
(c) for examination by any broker selling any such securities in
accordance with "street delivery" custom;
(d) in exchange for or upon conversion into other Securities alone
or other securities and cash whether pursuant to any plan of
merger, consolidation, reorganization, recapitalization or
readjustment, or otherwise;
(e) upon conversion of such Securities pursuant to their terms
into other Securities;
(f) upon exercise of subscription, purchase or other similar
rights represented by such Securities;
(g) for the purpose of exchanging interim receipts for temporary
Securities for definitive securities;
(h) for the purpose of effecting a loan of the portfolio
Securities to any person, firm, corporation or trust upon the
receipt by the Custodian of cash or cash equivalent collateral
at least equal to the market value of the securities loaned;
(i) to any bank for the purpose of collateralizing the obligation
of the Trust to repay any moneys borrowed by the Trust from
such bank; provided, however, that the Custodian may at the
option of such lending bank keep such collateral in its
possession, subject to the rights of such bank given to it by
virtue of any promissory note or agreement executed and
delivered by the Trust to such bank; or
(j) for other proper purposes of the Trust.
<PAGE>
As to any deliveries made by the Custodian pursuant to items (a), (b),
(c), (d), (e), (f), (g) and (h), Securities or funds receivable in
exchange therefor shall be deliverable to the Custodian. Before making
any such transfer, exchange or delivery, the Custodian shall receive
(and may rely upon) instructions requesting such transfer, exchange, or
delivery and stating that it is for a purpose permitted under the terms
(a), (b), (c), (d), (e), (f), (g), (h), or (i) of this Section 5, and,
in respect of item (j), upon receipt of instructions of a certified
copy of a resolution of the Board of Trustees of the Trust, signed by
an officer of the Trust and certified by its Secretary or an Assistant
Secretary, specifying the Securities to be delivered, setting forth the
purpose for which such delivery is to be made, declaring such purpose
to be a proper purpose of the Trust, and naming the person or persons
to whom delivery of such Securities shall be made. In respect of item
(h), the instructions shall state the market value of the Securities to
be loaned and the corresponding amount of collateral to be deposited
with the Custodian; thereafter, upon receipt of instructions stating
that the market value of the Securities loaned has increased and
specifying the amount of increase, the Custodian shall collect from the
borrower additional cash collateral in such amount.
6. FEDERAL RESERVE BOOK-ENTRY SYSTEM.
---------------------------------
Notwithstanding any other provisions of this Agreement, it is expressly
understood and agreed that the Custodian is authorized in the
performance of its duties hereunder to deposit in the book-entry
deposit system operated by the Federal Reserve Bank (the "System"),
United States government, instrumentality and agency securities and any
other Securities deposited in the System and to use the facilities of
the System, as permitted by Rule 17f-4 under the Investment Company Act
of 1940, in accordance with the following terms and provisions:
(a) The Custodian may keep Securities of the Trust in the System
provided that such Securities are represented in an account
("Account") of the Custodian's in the System which shall not
include any assets of the Custodian other than assets held in
a fiduciary or custodian capacity.
(b) The records of the Custodian with respect to the participation
in the System through the Custodian shall identify by
Book-Entry Securities belonging to the Trust which are
included with other Securities deposited in the Account and
shall at all times during the regular business hours of the
Custodian be open for inspection by duly authorized officers,
employees or agents of the Trust and employees and agents of
the Securities and Exchange Commission.
(c) The Custodian shall pay for Securities purchased for the
account of the Trust upon:
(i) receipt of advice from the System that such
Securities have been transferred to the Account; and
(ii) the making of an entry on the records of the
Custodian to reflect such payment and transfer for
the account of the Trust. The Custodian shall
transfer Securities sold for the account of the Trust
upon:
(1) receipt of advice from the System that
payment for such Securities has been
transferred to the Account; and
(2) the making of an entry on the records of the
Custodian to reflect such transfer and
payment for the account of the Trust. The
Custodian shall send the Trust a
confirmation of any transfers to or from the
account of the Trust.
(d) The Custodian will provide the Trust with any report obtained
by the Custodian on the System's accounting system, internal
accounting control and procedures for safeguarding Securities
deposited in the System. The Custodian will provide the Trust
with reports by independent public accountants on the
accounting system, internal accounting control and procedures
for safeguarding Securities, including Securities deposited in
the System relating to the services provided by the Custodian
under this Agreement; such reports shall detail material
inadequacies disclosed by such examination, and, if there are
no such inadequacies, shall so state, and shall be of such
scope and in such detail as the Trust may reasonably require
and shall be of sufficient scope to provide reasonable
assurance that any material inadequacies would be disclosed.
<PAGE>
7. USE OF CLEARING FACILITIES.
--------------------------
Notwithstanding any other provisions of the Agreement, the Custodian
may, in connection with transactions in portfolio Securities by the
Trust, use the facilities of the Depository Trust Company ("DTC"), and
the Participants Trust Company ("PTC"), as permitted by Rule 17f-4
under the Investment Company Act of 1940, if such facilities have been
approved by the Board of Trustees of the Trust in accordance with the
following:
(a) DTC and PTC may be used to receive and hold eligible
Securities owned by the Trust;
(b) payment for Securities purchased may be made through the
clearing medium employed by DTC and PTC for transactions of
participants acting through them;
(c) Securities of the Trust deposited in DTC and PTC will at all
times be segregated from any assets and cash controlled by the
Custodian in other than a fiduciary or custodian capacity but
may be commingled with other assets held in such capacities.
Subject to the provisions of the Agreement with regard to
instructions, the Custodian will pay out money only upon
receipt of Securities or notification thereof and will deliver
Securities only upon the receipt of money or notification
thereof;
(d) all books and records maintained by the Custodian which relate
to the participation in DTC and PTC shall identify by
Book-Entry Securities belonging to the Trust which are
deposited in DTC and PTC and shall at all times during the
Custodian's regular business hours be open to inspection by
the duly authorized officers, employees, agents and auditors,
and the Trust will be furnished with all the information in
respect of the services rendered to it as it may require;
(e) the Custodian will make available to the Trust copies of any
internal control reports concerning DTC and PTC delivered to
it by either internal or external auditors within ten days
after receipt of such a report by the Custodian; and
(f) confirmations of transactions using the facilities of DTC and
PTC shall be provided as set forth in Rule 17f-4 of the
Investment Company Act of 1940.
8. CUSTODIAN'S ACTS WITHOUT INSTRUCTIONS.
-------------------------------------
Unless and until the Custodian receives instructions to the contrary,
the Custodian shall on behalf of the Trust:
(a) Present for payment all coupons and other income items held by
it for the account of the Trust which call for payment upon
presentation and hold the funds received by it upon such
payment for the Trust;
(b) collect interest and cash dividends received, with notice to
the Trust, for the accounts of the Trust;
(c) hold for the accounts of the Trust hereunder all stock
dividends, rights and similar Securities issued with respect
to any securities held by it hereunder;
(d) execute as agent on behalf of the Trust all necessary
ownership certificates required by the Internal Revenue Code
or the Income Tax Regulations of the United States Treasury
Department or under the laws of any state now or hereafter in
effect, inserting the name of such certificates as the owner
of the Securities covered thereby, to the extent it may
lawfully do so;
<PAGE>
(e) transmit promptly to the Trust all reports, notices and other
written information received by the Custodian from or
concerning issuers of the portfolio Securities; and
(f) collect from the borrower the Securities loaned and delivered
by the Custodian pursuant to item (h) of Section 5 hereof, any
interest or cash dividends paid on such Securities, and all
stock dividends, rights and similar Securities issued with
respect to any such loaned Securities.
With respect to Securities of foreign issuers, it is expected that the
Custodian will use its best efforts to effect collection of dividends,
interest and other income, and to notify the Trust of any call for
redemption, offer of exchange, right of subscription, reorganization,
or other proceedings affecting such Securities, or any default in
payments due thereon. It is understood, however, that the Custodian
shall be under no responsibility for any failure or delay in effecting
such collections or giving such notice with respect to Securities of
foreign issuers, regardless of whether or not the relevant information
is published in any financial service available to it unless (a) such
failure or delay is due to the Custodian's or any sub-custodians'
negligence or (b) any relevant sub-custodian has acted in accordance
with established industry practices. Collections of income in foreign
currency are, to the extent possible, to be converted into United
States dollars unless otherwise instructed in writing, and in effecting
such conversion the Custodian may use such methods or agencies as it
may see fit, including the facilities of its own foreign division at
customary rates. All risk and expenses incident to such collection and
conversion is for the accounts of the Trust and the Custodian shall
have no responsibility for fluctuations in exchange rates affecting any
such conversion.
9. REGISTRATION OF SECURITIES.
--------------------------
Except as otherwise directed by instructions, the Custodian shall
register all Securities, except such as are in bearer form, in the name
of a registered nominee of the Custodian, as defined in the Internal
Revenue Code and any Regulation of the Treasury Department issued
thereunder or in any provision of any subsequent Federal tax law
exempting such transaction from liability for stock transfer taxes, and
shall execute and deliver all such certificates in connection therewith
as may be required by such laws or Regulations or under the laws of any
State. The Custodian shall use its best efforts to the end that the
specific securities held by it hereunder shall be at all times
identifiable in its records.
The Trust, Nottingham, or NCSS shall from time to time furnish to the
Custodian appropriate instruments to enable the Custodian to hold or
deliver in proper form for transfer, or to register in the name of its
registered nominee, any securities which it may hold for the accounts
of the Trust and which may from time to time be registered in the name
of the Trust.
10. SEGREGATED ACCOUNT.
------------------
The Custodian shall upon receipt of written instructions from the
Trust, Nottingham, or NCSS establish and maintain a segregated account
or accounts for and on behalf of the Trust, into which account or
accounts may be transferred cash and/or Securities, including
Securities maintained in an account by the Custodian pursuant to
Section 4 hereof,
(i) in accordance with the provisions of any agreement
among the Trust, the Custodian and a broker-dealer
registered under the Securities and Exchange Act of
1934 and a member of the NASD (or any futures
commission merchant registered under the Commodity
Exchange Act), relating to compliance with the rules
of The Options Clearing Corporation and of any
registered national securities exchange (or the
commodity Futures Trading Commission or any
registered contract market), or of any similar
organization or organizations, regarding escrow or
other arrangements in connection with transactions by
the Trust;
<PAGE>
(ii) for purposes of segregating cash or government
securities in connection with options purchased, sold
or written by the Trust or commodity futures
contracts or options thereon purchased or sold by the
Trust;
(iii) for the purposes of compliance by the Trust with the
procedures required by the Investment Company Act
Release No. 10666, or any subsequent release or
releases of the Securities and Exchange Commission
relating to the maintenance of segregated accounts by
registered investment companies; and
(iv) for other proper corporate purposes, but only, in the
case of clause (iv), upon receipt of, in addition to
an Officer's Certificate, a certified copy of a
resolution of the Board of Trustees signed by an
officer of the Trust and certified by the Secretary
or an Assistant Secretary, setting forth the purpose
or purposes of such segregated account and declaring
such purposes to be proper corporate purposes.
11. VOTING AND OTHER ACTIONS.
------------------------
Neither the Custodian nor any nominee of the Custodian shall vote any
of the Securities held hereunder by or for the accounts of the Trust,
except in accordance with instructions. The Custodian shall execute and
deliver, or cause to be executed and delivered, to the appropriate
investment advisor of each series of the Trust, all notices, proxies
and proxy soliciting materials with relation to such Securities
(excluding any Securities loaned and delivered by the Custodian
pursuant to item (h) of Section 5 hereof), such proxies to be executed
by the registered holder of such Securities (if registered otherwise
than in the name of the Trust), but without indicating the manner in
which such proxies are to be voted. Such proxies shall be delivered by
regular mail to the appropriate investment advisor of each series of
the Trust.
12. TRANSFER TAX AND OTHER DISBURSEMENTS.
------------------------------------
The Trust shall pay or reimburse the Custodian from time to time for
any transfer taxes payable upon transfers of securities made hereunder
and for all other necessary and proper disbursements and expenses made
or incurred by the Custodian in the performance of this Agreement. The
Custodian shall execute and deliver such certificates in connection
with Securities delivered to it or by it under this Agreement as may be
required under the provisions of the Internal Revenue Code and any
Regulations of the Treasury Department issued thereunder, or under the
laws of any State, to exempt from taxation any exemptible transfers
and/or deliveries of any such securities.
13. CONCERNING THE CUSTODIAN.
(a) The Custodian's compensation shall be paid by the Trust. The
Custodian shall not be liable for any action taken in good
faith upon receipt of instructions as herein defined or a
certified copy of any resolution of the Board of Trustees, and
may rely on the genuineness of any such document which it may
in good faith believe to have been validly executed.
(b) The Custodian shall not be liable for any loss or damage,
resulting from its action or omission to act or otherwise,
except for any such loss or damage arising out of its own
negligence or willful misconduct and except that the Custodian
shall be responsible for the acts of any sub-custodian, or
agent appointed hereunder and approved by the Board of
Trustees of the Trust. At any time, the Custodian may seek
advice from legal counsel for the Trust whose legal fees shall
be paid at the sole expense of the Trust, with respect to any
matter arising in connection with this Agreement, and it shall
not be liable for any action taken or not taken or suffered by
it in good faith in accordance with the opinion of counsel for
the Trust. The Trust and not the Custodian shall be
responsible for any fee or charges by counsel for the Trust in
connection with any such opinion rendered to the Custodian.
<PAGE>
(c) Without limiting the generality of the foregoing, the
Custodian shall be under no duty or obligation to inquire
into, and shall not be liable for:
(i) The validity of the issue of any Securities purchased
by or for the Trust, the legality of the purchase
thereof, or the propriety of the amount paid
therefor;
(ii) The legality of the issue or sale of any Securities
by or for the Trust, or the propriety of the amount
for which the same are sold;
(iii) The legality of the issue or sale of any shares of
the Trust, or the sufficiency of the amount to be
received therefor;
(iv) The legality of the redemption of any shares of the
Trust, or the propriety of the amount to be paid
therefor;
(v) The legality of the declaration of any dividend or
distribution by the Trust, or the legality of the
issue of any Securities of the Trust in payment of
any dividend or distribution in shares;
(vi) The legality of the delivery of any Securities held
for the Trust for the purpose of collateralizing the
obligation of the Trust to repay any moneys borrowed
by the Trust; or
(vii) The legality of the delivery of any Securities held
for the Trust for the purpose of lending said
securities to any person, firm or corporation.
(d) The Custodian shall not be under any duty or obligation to
take action to effect collection of any amount, if the
Securities upon which such amount is payable are in default,
or if payment is refused after due demand or presentation by
the Custodian on behalf of the Trust, unless and until
(i) the Custodian shall be directed to take such action
by written instructions signed in the name of the
Trust on behalf of the Trust by one of its executive
officers; and
(ii) the Custodian shall be assured to its satisfaction of
reimbursement of its costs and expenses in connection
with any such action.
(e) The Custodian shall not be under any duty or obligation to
ascertain whether any securities at any time delivered to or
held by it for the account of the Trust, are such as may
properly be held by the Trust under the provisions of the
Trust's Declaration of Trust or By-Laws as amended from time
to time.
<PAGE>
(f) The Trust agrees to indemnify and hold harmless the Custodian
and its nominees, sub-custodians, depositories and agent from
all taxes, charges, expenses, assessments, liabilities, and
losses (including counsel fees) incurred or assessed against
it or its nominees, sub-custodians, depositories and agents in
connection with the performance of this Agreement, except such
as may arise from its or its nominee's, sub-custodian's,
depositories' and agent's own negligent action, negligent
failure to act, breach of this agreement or willful
misconduct. The Custodian is authorized to charge any account
of the Trust for such items; provided, however, that, except
for overdrafts as to which the Custodian shall have the
immediate right of offset, prior to charging any such account
for such items, the Custodian shall first have forwarded an
invoice for such item to the Trust and 30 days shall have
elapsed from the date of such invoice to the Trust without
payment of the same having been received by the Custodian. In
the event of any advance of funds for any purpose made by the
Custodian resulting from orders or instructions of the Trust,
or in the event that the Custodian or its nominees,
sub-custodians, depositories and agents shall incur or be
assessed any taxes, charges, expenses, assessments, claims or
liabilities in connection with the performance of this
Agreement, except such as may arise from its or its nominee's
own negligent action, negligent failure to act or willful
misconduct any property at any time held for the accounts of
the Trust shall be security therefor. Nothing in this
paragraph, however, shall be deemed to apply to transaction
and asset holding fees or out of pocket expenses of the
Custodian which are payable by Nottingham and/or NCSS, and as
to such fees and expenses the Custodian shall have no right of
offset or security under this paragraph.
(g) The Custodian agrees to indemnify and hold harmless the Trust
and Trust's Trustees and officers from all taxes, charges,
expenses, assessments, claims liabilities, and losses
(including counsel fees) incurred or assumed against any of
them as a result of any breach or violation of this Agreement
by the Custodian or any act or omission by the Custodian or
its Trustees, officers, employees and agents and resulting
from their negligence or willful misconduct.
(h) In the event that, pursuant to this Agreement, instructions
direct the Custodian to pay for securities on behalf of the
Trust, the Trust hereby grants to the Custodian a security
interest in such Securities, until the Custodian has been
reimbursed by the Trust in immediately available funds. The
instructions designating the Securities to be paid for shall
be considered the requisite description and designation of the
Securities pledged to the Custodian for purposes of the
requirements of the Uniform Commercial Code.
(i) The Custodian represents that it is qualified to act as such
under section 26(a) of the Investment Company Act of 1940.
14. REPORTS BY THE CUSTODIAN.
------------------------
(a) The Custodian shall furnish the Trust and the appropriate
investment advisor of each series of the Trust, daily with a
statement summarizing all transactions and entries for the
accounts of the Trust. The Custodian shall furnish the Trust
at the end of every month with a list of the portfolio
Securities held by it as Custodian for the Trust, adjusted for
all commitments confirmed by instructions as of such time. The
books and records of the Custodian pertaining to its actions
under this Agreement shall be open to inspection and audit at
reasonable times by officers of the Trust, its independent
public accountants and officers of its investment advisers.
(b) The Custodian will maintain such books and records relating to
transactions effected by it as are required by the Investment
Company Act of 1940, as amended, and any rule or regulation
thereunder; or by any other applicable provision of the law to
be maintained by the Trust or its Custodian, with respect to
such transactions, and preserving or causing to be preserved,
any such books and records for such periods as may be required
by any such rule or regulation.
<PAGE>
15. TERMINATION OR ASSIGNMENT.
-------------------------
This agreement may be terminated by the Trust, or by the Custodian, on
sixty (60) days' notice, given in writing and sent by registered mail
to the Custodian, or to the Trust, as the case may be, at the address
hereinafter set forth. Upon any termination of this Agreement, pending
appointment by the Trust of a successor to the Custodian or a vote of
the shareholders of the Trust to dissolve or to function without a
Custodian of its funds, the Custodian shall not deliver funds,
Securities or other property of the Trust to the Trust, but may deliver
them to a bank or trust company of its own selection having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report of not less than ten million dollars ($10,000,000) and
otherwise qualified to act as a custodian to a registered investment
company as a Custodian for the Trust to be held under terms similar to
those of this Agreement; provided, however, that the Custodian shall
not be required to make any such delivery or payment until full payment
shall have been made to the Custodian of all its contractual fees,
compensations, costs and expenses, except for fees and expenses all as
set forth in Section 13 of this Agreement.
16. MISCELLANEOUS.
-------------
(a) Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Custodian, shall
be sufficiently given if addressed to the Custodian and mailed
or delivered to it at its office at First Union National Bank
of North Carolina, 401 South Tryon Street, Charlotte, North
Carolina 28288, or at such other place as the Custodian may
from time to time designate in writing.
(b) Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Trust, shall be
sufficiently given if addressed to the Trust and mailed or
delivered to it at 105 N. Washington Street, Rocky Mount,
North Carolina 27802, or at-such other place as the Trust may
from time to time designate in writing.
(c) This Agreement may not be amended or modified in any manner
except by a written agreement executed by both parties with
the same formality as this Agreement, and authorized or
approved by a resolution of the Board of Trustees of the
Trust.
(d) This Agreement shall extend to and shall be binding upon the
parties hereto and their respective successors and assigns,
provided, however, that this Agreement shall not be assignable
by the Trust without the written consent of the Custodian or
by the Custodian without the written consent of the Trust,
authorized or approved by a resolution of its Board of
Trustees.
(e) This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but such
counterparts shall, together, constitute but one instrument.
(f) This Agreement and the rights and obligations of the Trust and
the Custodian hereunder shall be construed and interpreted in
accordance with the laws of the State of North Carolina.
(g) The Declaration of Trust of the Trust has been filed with the
Secretary of State of the State of Delaware. The obligations
of the Trust on behalf of the Funds are not personally binding
upon, nor shall resort be had to the private property of any
of the Trustees, shareholders, officers, employees or agents
of the Trust, but only the Trust's property shall be bound.
<PAGE>
IN WITNESS WHEREOF, the Trust and the Custodian have caused this Agreement to be
signed and witnessed by duly authorized persons as of the date first written
above. Executed in several counterparts, each of which is an original.
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
Attest: By:
___________________________ ______________________________
Title:
__________________________
BLUE RIDGE FUNDS TRUST
Attest: By:
__________________________ ____________________________
Title:
__________________________
Exhibit (h)(1): Fund Accounting and Compliance Administration Agreement
--------------
FUND ACCOUNTING
AND COMPLIANCE ADMINISTRATION
AGREEMENT
THIS AGREEMENT, made and entered into as of April 1, 1999, by and between BLUE
RIDGE FUNDS TRUST, a Delaware business trust (the "Trust"), and THE NOTTINGHAM
COMPANY, INC., a North Carolina corporation (the "Administrator").
WHEREAS, the Trust is an open-end management investment company of the series
type which is registered under the Investment Company Act of 1940 (the "1940
Act"); and
WHEREAS, the Administrator is in the business of providing administrative
services to investment companies.
NOW THEREFORE, the Trust and the Administrator do mutually promise and agree as
follows:
1. Employment. The Trust hereby employs Administrator to act as fund
accountant and fund administrator for each series of the Trust (each a
"Fund"). Administrator, at its own expense, shall render the services and
assume the obligations herein set forth subject to being compensated
therefore as herein provided.
2. Delivery of Documents. The Trust has furnished the Administrator with
copies properly certified or authenticated of each of the following:
a) The Trust's Declaration of Trust, as filed with the State of Delaware
(such Declaration, as presently in effect and as it shall from time to
time be amended, is herein called the "Declaration");
b) The Trust's By-Laws (such By-Laws, as presently in effect and as they
shall from time to time be amended, are herein called the "By-Laws");
c) Resolutions of the Trust's Board of Trustees authorizing the
appointment of the Administrator and approving this Agreement; and
d) The Trust's Registration Statement on Form N-1A under the 1940 Act and
under the Securities Act of 1933 as amended, (the "1933 Act"),
including all exhibits, relating to shares of beneficial interest of,
and containing the Prospectus of, each Fund of the Trust (herein
called the "Shares") as filed with the Securities and Exchange
Commission and all amendments thereto.
The Trust will furnish the Administrator with copies, properly certified or
authenticated, of all amendments of or supplements to the foregoing.
3. Duties of the Administrator. Subject to the policies and direction of the
Trust's Board of Trustees, the Administrator will provide a continuous
executive management program and day to day supervision for each of the
Trust's Funds. Services to be provided shall be in accordance with the
Trust's organizational and registration documents as listed in paragraph 2
hereof and with the Prospectus of each Fund of the Trust. The Administrator
further agrees that it:
a) Will conform with all applicable Rules and Regulations of the
Securities and Exchange Commission and will in addition, conduct its
activities under this Agreement in accordance with regulations of any
other Federal and State agencies which may now or in the future have
jurisdiction over its activities;
b) Will maintain, except as may be required to be maintained by third
parties hired by the Trust under Rule 31a-3 of the 1940 Act, the
account books and records of the Trust and each Fund of the Trust as
required by Rule 31a-1 of the 1940 Act and will preserve such records
in accordance with Rule 31a-2 of the 1940 Act;
c) Will provide, at its expense the necessary non-executive personnel and
data processing equipment and software to perform the Portfolio
Accounting Services, Expense Accrual and Payment Services, Fund
Valuation and Financial Reporting Services, Tax Accounting Services,
Compliance Control Services, Registration Services, SEC Filing
Services, and Proxy Material Services shown on Exhibit A hereof;
d) Will provide, at its expense, certain executive personnel for the
Trust as may be agreed upon from time to time with the Board of
Trustees; and
e) Will provide all office space and general office equipment necessary
for the activities of the Trust except as may be provided by third
parties pursuant to separate agreements with the Trust.
Notwithstanding anything contained in this Agreement to the contrary, the
Administrator (including its directors, officers, employees and agents) shall
not be required to perform any of the duties of, assume any of the obligations
or expenses of, or be liable for any of the acts or omissions of, any investment
advisor of a Fund of the Trust or other third party subject to separate
agreements with the Trust. The Administrator shall not be responsible hereunder
for the administration of the Code of Ethics of the Trust which shall be under
the responsibility of the investment advisors, except insofar as the Code of
Ethics applies to the personnel of the Administrator. It is the express intent
of the parties hereto that the Administrator shall not have control over or be
responsible for the placement, investment or reinvestment of the assets of any
Fund of the Trust. The Administrator may from time to time, subject to the
approval of the Trustees, obtain at its own expense the services of consultants
or other third parties to perform part or all of its duties hereunder, and such
parties may be affiliates of the Administrator.
4. Services Not Exclusive. The management and administrative services
furnished by the Administrator hereunder are not to be deemed exclusive,
and the Administrator shall be free to furnish similar services to others
so long as its services under this Agreement are not impaired thereby.
5. Books and Records. In compliance with the requirements of Rule 31a-3 under
the 1940 Act, the Administrator hereby agrees that all records which it
maintains for the Trust are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the Trust's
request.
6. Expenses. During the term of this Agreement, the Administrator will pay all
expenses incurred by it in connection with the performance of its
obligations under this Agreement.
Notwithstanding the foregoing, the Trust shall pay the expenses and costs
of the following:
a) Taxes;
b) Brokerage fees and commissions with regard to portfolio transaction of
the Funds;
c) Interest charges, fees and expenses of the custodian of the Funds'
portfolio securities;
d) Fees and expenses of the Trust's dividend disbursing and transfer
agent;
e) Fees and expenses of the Trust's fund accounting agent and
administrator, in accordance with paragraph 7 herein;
f) Costs, as may be allocable to and agreed upon in advance by the
Trustees and the Administrator, of all non-executive and clerical
personnel and all data processing equipment and software in connection
with the provision of fund accounting and recordkeeping services
functions as contemplated herein;
g) Auditing and legal expenses of the Trust;
h) Cost of maintenance of the Trust's existence as a legal entity;
i) Cost of special forms, stationery and telephone services (but not
telephone equipment) for the Trust;
j) Compensation of Independent Trustees who are not interested persons of
the Trust as that term is defined by law;
k) Costs of Trust meetings;
l) Federal and State registration fees and expenses;
m) Costs of setting in type, printing and mailing Prospectuses, reports
and notices to existing shareholders;
n) The Advisory fees payable to each Fund's Investment Advisor;
o) Direct out-of-pocket costs in connection with Trust activities, such
as the costs of long distance telephone and wire charges, postage and
the printing of special forms and stationery, copying charges,
financial publications used in connection with Trust activities, etc.,
and
p) Other actual out-of-pocket expenses of the Administrator as may be
agreed upon in writing from time to time by the Administrator and the
Trustees.
7. Compensation. For the services provided and the expenses assumed by the
Administrator pursuant to this Agreement, the Trust will pay the
Administrator and the Administrator will accept as full compensation
the administrative fees and expenses as set forth on Exhibit B attached
hereto. Special projects, not included herein and requested in writing
by the Trustees, shall be completed by the Administrator and invoiced
to the Trust as mutually agreed upon.
8.(a)Limitation of Liability. The Administrator shall not be liable for any
loss, damage or liability related to or resulting from the placement,
investment or reinvestment of assets in any Fund of the Trust or the acts
or omissions of any Fund's investment advisor or any other third party
subject to separate agreements with the Trust. Further, the Administrator
shall not be liable for any error of judgment or mistake of law or for any
loss or damage suffered by the Trust in connection with the performance of
this Agreement or any agreement with a third party, except a loss resulting
directly from (i) a breach of fiduciary duty on the part of the
Administrator with respect to the receipt of compensation for services; or
(ii) willful misfeasance, bad faith or gross negligence on the part of the
Administrator in the performance of its duties or from reckless disregard
by it of its duties under this Agreement.
8.(b)Indemnification of Administrator. Subject to the limitations set forth in
this Subsection 8(b), the Trust shall indemnify, defend and hold harmless
(from the assets of the Fund or Funds to which the conduct in question
relates) the Administrator against all loss, damage and liability,
including but not limited to amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, and expenses, including reasonable
accountants' and counsel fees, incurred by the Administrator in connection
with the defense or disposition of any action, suit or other proceeding,
whether civil or criminal, before any court or administrative or
legislative body, related to or resulting from this Agreement or the
performance of services hereunder, except with respect to any matter as to
which it has been determined that the loss, damage or liability is a direct
result of (i) a breach of fiduciary duty on the part of the Administrator
with respect to the receipt of compensation for services; or (ii) willful
misfeasance, bad faith or gross negligence on the part of the Administrator
in the performance of its duties or from reckless disregard by it of its
duties under this Agreement (either and both of the conduct described in
clauses (i) and (ii) above being referred to hereinafter as "Disabling
Conduct"). A determination that the Administrator is entitled to
indemnification may be made by (i) a final decision on the merits by a
court or other body before whom the proceeding was brought that the
Administrator was not liable by reason of Disabling Conduct, (ii) dismissal
of a court action or an administrative proceeding against the Administrator
for insufficiency of evidence of Disabling Conduct, or (iii) a reasonable
determination, based upon a review of the facts, that the Administrator was
not liable by reason of Disabling Conduct by, (a) vote of a majority of a
quorum of Trustees who are neither "interested persons" of the Trust as the
quoted phrase is defined in Section 2(a)(19) of the 1940 Act nor parties to
the action, suit or other proceeding on the same or similar grounds that is
then or has been pending or threatened (such quorum of such Trustees being
referred to hereinafter as the "Independent Trustees"), or (b) an
independent legal counsel in a written opinion. Expenses, including
accountants' and counsel fees so incurred by the Administrator (but
excluding amounts paid in satisfaction of judgments, in compromise or as
fines or penalties), shall be paid from time to time by the Fund or Funds
to which the conduct in question related in advance of the final
disposition of any such action, suit or proceeding; provided, that the
Administrator shall have undertaken to repay the amounts so paid unless it
is ultimately determined that it is entitled to indemnification of such
expenses under this Subsection 8(b) and if (i) the Administrator shall have
provided security for such undertaking, (ii) the Trust shall be insured
against losses arising by reason of any lawful advances, or (iii) a
majority of the Independent Trustees, or an independent legal counsel in a
written opinion, shall have determined, based on a review of readily
available facts (as opposed to a full trial-type inquiry), that there is
reason to believe that the Administrator ultimately will be entitled to
indemnification hereunder.
As to any matter disposed of by a compromise payment by the Administrator
referred to in this Subsection 8(b), pursuant to a consent decree or
otherwise, no such indemnification either for said payment or for any other
expenses shall be provided unless such indemnification shall be approved
(i) by a majority of the Independent Trustees or (ii) by an independent
legal counsel in a written opinion. Approval by the Independent Trustees
pursuant to clause (i) shall not prevent the recovery from the
Administrator of any amount paid to the Administrator in accordance with
either of such clauses as indemnification of the Administrator is
subsequently adjudicated by a court of competent jurisdiction not to have
acted in good faith in the reasonable belief that the Administrator's
action was in or not opposed to the best interests of the Trust or to have
been liable to the Trust or its Shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in its conduct under the Agreement.
The right of indemnification provided by this Subsection 8(b) shall not be
exclusive of or affect any of the rights to which the Administrator may be
entitled. Nothing contained in this Subsection 8(b) shall affect any rights
to indemnification to which Trustees, officers or other personnel of the
Trust, and other persons may be entitled by contract or otherwise under
law, nor the power of the Trust to purchase and maintain liability
insurance on behalf of any such person.
The Board of Trustees of the Trust shall take all such action as may be
necessary and appropriate to authorize the Trust hereunder to pay the
indemnification required by this Subsection 8(b) including, without
limitation, to the extent needed, to determine whether the Administrator is
entitled to indemnification hereunder and the reasonable amount of any
indemnity due it hereunder, or employ independent legal counsel for that
purpose.
8.(c)The provisions contained in Section 8 shall survive the expiration or
other termination of this Agreement, shall be deemed to include and protect
the Administrator and its directors, officers, employees and agents and
shall inure to the benefit of its/their respective successors, assigns and
personal representatives.
9. Duration and Termination. This Agreement shall become effective as of the
date hereof and shall thereafter continue in effect unless terminated as
herein provided. This Agreement may be terminated by either party hereto
(without penalty) at any time by giving not less than 60 days' prior
written notice to the other party hereto. Upon termination of this
Agreement, the Trust shall pay to the Administrator such compensation as
may be due as of the date of such termination, and shall likewise reimburse
the Administrator for any out-of-pocket expenses and disbursements
reasonably incurred by the Administrator to such date.
10. Amendment. This Agreement may be amended by mutual written consent of the
parties. If, at any time during the existence of this Agreement, the Trust
deems it necessary or advisable in the best interests of the Trust that any
amendment of this Agreement be made in order to comply with the
recommendations or requirements of the Securities and Exchange Commission
or state regulatory agencies or other governmental authority, or to obtain
any advantage under state or federal laws, the appropriate officers of the
Trust shall notify the Administrator of the form of Amendment which it
deems necessary or advisable and the reasons therefor, and if the
Administrator declines to assent to such amendment, the Trust may terminate
this Agreement forthwith.
11. Notice. Any notice that is required to be given by the parties to each
other under the terms of this Agreement shall be in writing, addressed or
delivered, or mailed postpaid to the other party at the principal place of
business of such party.
12. Construction. This Agreement shall be governed and enforced in accordance
with the laws of the State of North Carolina. If any provision of this
Agreement, or portion thereof, shall be determined to be void or
unenforceable by any court of competent jurisdiction, then such
determination shall not affect any other provision of this Agreement, or
portion thereof, all of which other provisions and portions thereof shall
remain in full force and effect. If any provision of this Agreement, or
portion thereof, is capable of two interpretations, one of which would
render the provision, or portion thereof, void and the other of which would
render the provision, or portion thereof, valid, then the provision, or
portion thereof, shall have the meaning which renders it valid.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
by their duly authorized officers effective as of the date indicated above.
BLUE RIDGE FUNDS TRUST
By: (SEAL)
_____________________________
THE NOTTINGHAM COMPANY, INC.
By: (SEAL)
_____________________________
<PAGE>
Exhibit A
FUND ACCOUNTING AND RECORDKEEPING SERVICES
Portfolio Accounting Services:
- -----------------------------
(1) Maintain portfolio records using security trade information communicated
from the investment manager on a timely basis.
(2) For each valuation date, obtain prices from a pricing source approved by
the Board of Trustees and apply those prices to the portfolio positions.
For those securities where market quotations are not readily available, the
Board of Trustees shall approve, in good faith, the method for determining
the fair market value for such securities.
(3) Identify interest and dividend accrual balances as of each valuation date
(4) Determine gain/loss on security sales. Account for periodic distributions
of gain to shareholders and maintain undistributed gain or loss balances as
of each valuation date.
Expense Accrual and Payment Services:
- ------------------------------------
(5) For each valuation date, calculate the expense accrual amounts as directed
by the Trust as to methodology, rate, or dollar amount.
(6) Issue payments for Fund expenses upon receipt of funds from the Trust's
Custodian.
(7) Account for Fund expenditures and maintain expense accrual balances at the
level of accounting detail specified by the Fund.
(8) Support periodic expense accrual review, i.e., comparison of actual expense
activity versus accrual amounts.
(9) Provide expense accrual and payment reporting.
Fund Valuation and Financial Reporting Services:
- -----------------------------------------------
(10) Account for Fund share purchases, sales, exchanges, transfers, dividend
reinvestments, and other Fund share activity, for each of the Funds, as
reported by the Trust on a timely basis.
(11) Determine net investment income (earnings) for each of the Funds as of each
valuation date. Account for periodic distributions of earnings to
shareholders and maintain undistributed net investment income balances as
of each valuation date.
(12) Maintain a general ledger for each of the Funds in the form defined by the
Trust and assist in producing a set of financial statements as may be
agreed upon from time to time as of each valuation date.
(13) For each day the Funds are opened as defined in the prospectuses, determine
the net asset value of each of the Funds according to the accounting
policies and procedures set forth in the prospectuses.
(14) Calculate per share net asset value, per share net earnings, and other per
share amounts reflective of fund operation at such time as required by the
nature and characteristics of the Funds. Perform the calculations using the
number of shares outstanding reported by the Trust to be applicable at the
time of calculation.
(15) Communicate, at an agreed upon time, the per share price for each valuation
date to parties as agreed upon from time to time.
(16) Prepare monthly reports which document the adequacy of accounting detail to
support month-end ledger balances.
Tax Accounting Services:
- -----------------------
(17) Maintain tax accounting records for each of the Funds' investment
portfolios so as to support tax reporting required for IRS defined
regulated investment companies.
(18) Maintain tax lot detail for the investment portfolio.
(19) Calculate taxable gain/loss on security sales using the tax cost basis
defined for each Fund.
(20) Report the taxable components of income and capital gains distributions to
the Trust to support tax reporting to the shareholders.
Compliance Control Services:
- ---------------------------
(21) Maintain accounting records to support compliance monitoring by the Trust.
(22) Support reporting to regulatory bodies and support financial statement
preparation by making the Fund accounting records available to the Trust,
the Securities and Exchange Commission, and the outside auditors.
(23) Maintain accounting records according to the Investment Company Act of 1940
and regulations provided thereunder.
Registration Services:
- ---------------------
(24) Assist in the preparation of all reports and filings required to maintain
the registration and qualification of the Fund and its shares under federal
and state securities laws, including the annual amendment to its
Registration Statement on From N-1A containing an updated Prospectus and
Statement of Additional Information.
SEC Filing Services:
- -------------------
(25) Assist in the preparation of periodic SEC filings, including Form N-SAR,
annual and semi-annual shareholder reports, other shareholder reports, and
fidelity bond amendments but not including preparation and filing of any
sales literature and preparation of President's letter contained in
shareholder reports.
Proxy Material Services:
- -----------------------
(26) Assist in the preparation of any proxy material and related shareholder
meetings and records.
<PAGE>
Exhibit B
ADMINISTRATOR'S COMPENSATION SCHEDULE
For the services delineated in the FUND ACCOUNTING AND COMPLIANCE ADMINISTRATION
AGREEMENT, the Administrator shall be compensated monthly a base fee plus a fee
based upon net assets according to the following schedule. The fee is calculated
based upon the average daily net assets of each Fund:
Base fee: $2,250 per month per Fund
--------
Class Fee: $750 per month for each additional Class
---------
Asset based fee:
---------------
Annual
Net Assets Fee
---------- ---
On the first $50 million 0.125%
On the next $50 million 0.100%
On all assets over $100 million 0.075%
Securities pricing:
------------------
$0.20 per equity per pricing day priced
$0.70 per foreign security per pricing day
$0.20 per U.S. Treasury
$1.00 per asset backed security per pricing day
$0.40 per corporate bond per pricing day
$2.00 per equity per month for corporate action
Blue Sky administration:
-----------------------
$150 per registration per state per year
Exhibit (h)(2): Dividend Disbursing and Transfer Agent Agreement
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DIVIDEND DISBURSING
AND TRANSFER AGENT
AGREEMENT
THIS AGREEMENT, made and entered into as of April 1, 1999, by and between BLUE
RIDGE FUNDS TRUST, a Delaware business trust (the "Trust"), and NC SHAREHOLDER
SERVICES, LLC, a North Carolina limited liability company (the "Transfer
Agent").
WHEREAS, the Trust is an open-end management investment company of the series
type which is registered under the Investment Company Act of 1940 (the "1940
Act"); and
WHEREAS, the Transfer Agent is in the business of providing dividend disbursing,
transfer agent, and shareholder services to investment companies.
NOW THEREFORE, the Trust and the Transfer Agent do mutually promise and agree as
follows:
1. Employment. The Trust hereby employs Transfer Agent to act as dividend
disbursing and transfer agent for each series of the Trust (each a "Fund").
Transfer Agent, at its own expense, shall render the services and assume
the obligations herein set forth subject to being compensated therefore as
herein provided.
2. Delivery of Documents. The Trust has furnished the Transfer Agent with
copies properly certified or authenticated of each of the following:
a) The Trust's Declaration of Trust, as filed with the State of Delaware
(such Declaration, as presently in effect and as it shall from time to
time be amended, is herein called the "Declaration");
b) The Trust's By-Laws (such By-Laws, as presently in effect and as they
shall from time to time be amended, are herein called the "By-Laws");
c) Resolutions of the Trust's Board of Trustees authorizing the
appointment of the Transfer Agent and approving this Agreement; and
d) The Trust's Registration Statement on Form N-1A under the 1940 Act and
under the Securities Act of 1933 as amended, (the "1933 Act"),
including all exhibits, relating to shares of beneficial interest of,
and containing the Prospectus of, each Fund of the Trust (herein
called the "Shares") as filed with the Securities and Exchange
Commission and all amendments thereto.
The Trust will furnish the Transfer Agent with copies, properly certified or
authenticated, of all amendments of or supplements to the foregoing.
3. Duties of the Transfer Agent. Subject to the policies and direction of the
Trust's Board of Trustees, the Transfer Agent will provide day to day
supervision for the dividend disbursing, transfer agent, and shareholder
servicing operations of each of the Trust's Funds. Services to be provided
shall be in accordance with the Trust's organizational and registration
documents as listed in paragraph 2 hereof and with the Prospectus of each
Fund of the Trust. The Transfer Agent further agrees that it:
a) Will conform with all applicable rules and regulations of the
Securities and Exchange Commission and will, in addition, conduct its
activities under this Agreement in accordance with regulations of any
other federal and state agency which may now or in the future have
jurisdiction over its activities.
b) Will provide, at its expense the non-executive personnel and data
processing equipment and software necessary to perform the Shareholder
Servicing functions shown on Exhibit A hereof; and
c) Will provide all office space and general office equipment necessary
for the dividend disbursing, transfer agent, and shareholder servicing
activities of the Trust except as may be provided by third parties
pursuant to separate agreements with the Trust.
Notwithstanding anything contained in this Agreement to the contrary, the
Transfer Agent (including its directors, officers, employees and agents)
shall not be required to perform any of the duties of, assume any of the
obligations or expenses of, or be liable for any of the acts or omissions
of, any investment advisor of a Fund of the Trust or other third party
subject to separate agreements with the Trust. The Transfer Agent shall not
be responsible hereunder for the administration of the Code of Ethics of
the Trust which shall be under the responsibility of the investment
advisors, except insofar as the Code of Ethics applies to the personnel of
the Transfer Agent. It is the express intent of the parties hereto that the
Transfer Agent shall not have control over or be responsible for the
placement (except as specifically directed by a Shareholder of the Trust),
investment or reinvestment of the assets of any Fund of the Trust. The
Transfer Agent may from time to time, subject to the approval of the
Trustees, obtain at its own expense the services of consultants or other
third parties to perform part or all of its duties hereunder, and such
parties may be affiliates of the Transfer Agent.
4. Services Not Exclusive. The services furnished by the Transfer Agent
hereunder are not to be deemed exclusive, and the Transfer Agent shall be
free to furnish similar services to others so long as its services under
this Agreement are not impaired thereby.
5. Books and Records. In compliance with the requirements of Rule 31a-3 under
the 1940 Act, the Transfer Agent hereby agrees that all records which it
maintains for the Trust are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the Trust's
request.
6. Expenses. During the term of this Agreement, the Transfer Agent will pay
all expenses incurred by it in connection with the performance of its
obligations under this Agreement.
7. Compensation. For the services provided and the expenses assumed by the
Transfer Agent pursuant to this Agreement, the Trust will pay the Transfer
Agent and the Transfer Agent will accept as full compensation the fees and
expenses as set forth on Exhibit B attached hereto. Special projects, not
included herein and requested in writing by the Trustees, shall be
completed by the Transfer Agent and invoiced to the Trust as mutually
agreed upon.
8.(a)Limitation of Liability. The Transfer Agent shall not be liable for any
loss, damage or liability related to or resulting from the placement
(except as specifically directed by a Shareholder of the Trust), investment
or reinvestment of assets in any Fund of the Trust or the acts or omissions
of any Fund's investment advisor or any other third party subject to
separate agreements with the Trust. Further, the Transfer Agent shall not
be liable for any error of judgment or mistake of law or for any loss or
damage suffered by the Trust in connection with the performance of this
Agreement or any agreement with a third party, except a loss resulting
directly from (i) a breach of fiduciary duty on the part of the Transfer
Agent with respect to the receipt of compensation for services; or (ii)
willful misfeasance, bad faith or gross negligence on the part of the
Transfer Agent in the performance of its duties or from reckless disregard
by it of its duties under this Agreement.
8.(b)Indemnification of Transfer Agent. Subject to the limitations set forth in
this Subsection 8(b), the Trust shall indemnify, defend and hold harmless
(from the assets of the Fund or Funds to which the conduct in question
relates) the Transfer Agent against all loss, damage and liability,
including but not limited to amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, and expenses, including reasonable
accountants' and counsel fees, incurred by the Transfer Agent in connection
with the defense or disposition of any action, suit or other proceeding,
whether civil or criminal, before any court or administrative or
legislative body, related to or resulting from this Agreement or the
performance of services hereunder, except with respect to any matter as to
which it has been determined that the loss, damage or liability is a direct
result of (i) a breach of fiduciary duty on the part of the Transfer Agent
with respect to the receipt of compensation for services; or (ii) willful
misfeasance, bad faith or gross negligence on the part of the Transfer
Agent in the performance of its duties or from reckless disregard by it of
its duties under this Agreement (either and both of the conduct described
in clauses (i) and (ii) above being referred to hereinafter as "Disabling
Conduct"). A determination that the Transfer Agent is entitled to
indemnification may be made by (i) a final decision on the merits by a
court or other body before whom the proceeding was brought that the
Transfer Agent was not liable by reason of Disabling Conduct, (ii)
dismissal of a court action or an administrative proceeding against the
Transfer Agent for insufficiency of evidence of Disabling Conduct, or (iii)
a reasonable determination, based upon a review of the facts, that the
Transfer Agent was not liable by reason of Disabling Conduct by, (a) vote
of a majority of a quorum of Trustees who are neither "interested persons"
of the Trust as the quoted phrase is defined in Section 2(a)(19) of the
1940 Act nor parties to the action, suit or other proceeding on the same or
similar grounds that is then or has been pending or threatened (such quorum
of such Trustees being referred to hereinafter as the "Independent
Trustees"), or (b) an independent legal counsel in a written opinion.
Expenses, including accountants' and counsel fees so incurred by the
Transfer Agent (but excluding amounts paid in satisfaction of judgments, in
compromise or as fines or penalties), shall be paid from time to time by
the Fund or Funds to which the conduct in question related in advance of
the final disposition of any such action, suit or proceeding; provided,
that the Transfer Agent shall have undertaken to repay the amounts so paid
unless it is ultimately determined that it is entitled to indemnification
of such expenses under this Subsection 8(b) and if (i) the Transfer Agent
shall have provided security for such undertaking, (ii) the Trust shall be
insured against losses arising by reason of any lawful advances, or (iii) a
majority of the Independent Trustees, or an independent legal counsel in a
written opinion, shall have determined, based on a review of readily
available facts (as opposed to a full trial-type inquiry), that there is
reason to believe that the Transfer Agent ultimately will be entitled to
indemnification hereunder.
As to any matter disposed of by a compromise payment by the Transfer Agent
referred to in this Subsection 8(b), pursuant to a consent decree or
otherwise, no such indemnification either for said payment or for any other
expenses shall be provided unless such indemnification shall be approved
(i) by a majority of the Independent Trustees or (ii) by an independent
legal counsel in a written opinion. Approval by the Independent Trustees
pursuant to clause (i) shall not prevent the recovery from the Transfer
Agent of any amount paid to the Transfer Agent in accordance with either of
such clauses as indemnification of the Transfer Agent is subsequently
adjudicated by a court of competent jurisdiction not to have acted in good
faith in the reasonable belief that the Transfer Agent's action was in or
not opposed to the best interests of the Trust or to have been liable to
the Trust or its Shareholders by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in its
conduct under the Agreement.
The right of indemnification provided by this Subsection 8(b) shall not be
exclusive of or affect any of the rights to which the Transfer Agent may be
entitled. Nothing contained in this Subsection 8(b) shall affect any rights
to indemnification to which Trustees, officers or other personnel of the
Trust, and other persons may be entitled by contract or otherwise under
law, nor the power of the Trust to purchase and maintain liability
insurance on behalf of any such person.
The Board of Trustees of the Trust shall take all such action as may be
necessary and appropriate to authorize the Trust hereunder to pay the
indemnification required by this Subsection 8(b) including, without
limitation, to the extent needed, to determine whether the Transfer Agent
is entitled to indemnification hereunder and the reasonable amount of any
indemnity due it hereunder, or employ independent legal counsel for that
purpose.
The provisions contained in Section 8 shall survive the expiration or other
termination of this Agreement, shall be deemed to include and protect the
Transfer Agent and its directors, officers, employees and agents and shall
inure to the benefit of its/their respective successors, assigns and
personal representatives.
9. Duration and Termination. This Agreement shall become effective as of the
date hereof and shall thereafter continue in effect unless terminated as
herein provided. This Agreement may be terminated by either party hereto
(without penalty) at any time by giving not less than 60 days' prior
written notice to the other party hereto. Upon termination of this
Agreement, the Trust shall pay to NCSS such compensation as may be due as
of the date of such termination, and shall likewise reimburse NCSS for any
out-of-pocket expenses and disbursements reasonably incurred by NCSS to
such date.
10. Amendment. This Agreement may be amended by mutual written consent of the
parties. If, at any time during the existence of this Agreement, the Trust
deems it necessary or advisable in the best interests of the Trust that any
amendment of this Agreement be made in order to comply with the
recommendations or requirements of the Securities and Exchange Commission
or state regulatory agencies or other governmental authority, or to obtain
any advantage under state or federal laws, the appropriate officers shall
notify the Transfer Agent of the form of Amendment which it deems necessary
or advisable and the reasons therefor, and if the Transfer Agent declines
to assent to such amendment, the Trust may terminate this Agreement
forthwith.
11. Notice. Any notice that is required to be given by the parties to each
other under the terms of this Agreement shall be in writing, addressed or
delivered, or mailed postpaid to the other party at the principal place of
business of such party.
12. Construction. This Agreement shall be governed and enforced in accordance
with the laws of the State of North Carolina. If any provision of this
Agreement, or portion thereof, shall be determined to be void or
unenforceable by any court of competent jurisdiction, then such
determination shall not affect any other provision of this Agreement, or
portion thereof, all of which other provisions and portions thereof shall
remain in full force and effect. If any provision of this Agreement, or
portion thereof, is capable of two interpretations, one of which would
render the provision, or portion thereof, void and the other of which would
render the provision, or portion thereof, valid, then the provision, or
portion thereof, shall have the meaning which renders it valid.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
by their duly authorized officers effective as of the date indicated above.
BLUE RIDGE FUNDS TRUST
By: (SEAL)
_______________________
NC SHAREHOLDER SERVICES, LLC
By: (SEAL)
_______________________
<PAGE>
Exhibit A
SHAREHOLDER SERVICING FUNCTIONS
(1) Process new accounts.
(2) Process purchases, both initial and subsequent in accordance with
conditions set forth in the Fund's prospectus.
(3) Transfer shares of capital stock to an existing account or to a new account
upon receipt of required documentation in good order.
(4) Distribute dividends and/or capital gain distributions. This includes
disbursement as cash or reinvestment and to change the disbursement option
at the request of shareholders.
(5) Process exchanges between funds, (process and direct purchase/redemption
and initiate new account or process to existing account).
(6) Make miscellaneous changes to records, including, but not necessarily
limited to, address changes and changes in plans (such as systematic
withdrawal, dividend reinvestment, etc.).
(7) Prepare and mail a year-to-date confirmation and statement as each
transaction is recorded in a shareholder account as follows: original to
shareholder. Duplicate confirmations to be available on request within
current year.
(8) Handle telephone calls and correspondence in reply to shareholder requests
except those items otherwise set forth herein.
(9) Daily control and reconciliation of Fund shares.
(10) Prepare address labels or confirmations for four reports to shareholders
per year.
(11) Mail and tabulate proxies for one Meeting of Shareholders annually,
including preparation of certified shareholder list and daily report to
Fund management, if required.
(12) Prepare and mail annual Form 1099, Form W-2P and 5498 to shareholders to
whom dividends or distributions are paid, with a copy for the IRS.
(13) Provide readily obtainable data which may from time to time be requested
for audit purposes.
(14) Replace lost or destroyed checks.
(15) Continuously maintain all records for active and closed accounts according
to the Investment Company Act of 1940 and regulations provided thereunder.
(16) Furnish shareholder data information for a current calendar year in
connection with IRA and Keogh Plans in a format suitable for mailing to
shareholders.
<PAGE>
Exhibit B
TRANSFER AGENT'S COMPENSATION SCHEDULE
For the services delineated in the DIVIDEND DISBURSING AND TRANSFER AGENT
AGREEMENT, the Transfer Agent shall be compensated monthly a fee calculated
based upon 1/12 of the annual fee calculated using the then current number of
shareholders:
Shareholder servicing fee:
-------------------------
$15.00 per shareholder per year; minimum fee of $750 per month per fund
Exhibit (h)(3): Expense Limitation Agreement
--------------
EXPENSE LIMITATION AGREEMENT
BLUE RIDGE FUNDS TRUST
EXPENSE LIMITATION AGREEMENT, effective as of April 1, 1999 by and
between Colonial Asset Management, Inc. (the "Manager") and Blue Ridge Funds
Trust (the "Trust"), on behalf of each series of the Trust set forth in Schedule
A attached hereto (each a "Fund," and collectively, the "Funds").
WHEREAS, the Trust is a Delaware business trust organized under the
Declaration of Trust ("Declaration of Trust"), and is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management company of the series type, and each Fund is a series of the Trust;
and
WHEREAS, the Trust and the Manager have entered into an Investment
Management Agreement dated April 1, 1999, as amended ("Management Agreement"),
pursuant to which the Manager provides investment management services to each
Fund listed in Schedule A, which may be amended from time to time, for
compensation based on the value of the average daily net assets of each such
Fund; and
WHEREAS, the Trust and the Manager have determined that it is
appropriate and in the best interests of each Fund and its shareholders to
maintain the expenses of each Fund, and, therefore, have entered into this
Expense Limitation Agreement, in order to maintain each Fund's expense ratios at
the levels specified Schedule A attached hereto; and
NOW THEREFORE, the parties hereto agree that the Expense Limitation
Agreement provides as follows:
1. Expense Limitation.
1.1. Applicable Expense Limit. To the extent that the aggregate expenses of
every character incurred by a Fund in any fiscal year, including but
not limited to investment management fees of the Manager (but
excluding interest, taxes, brokerage commissions, other expenditures
which are capitalized in accordance with generally accepted accounting
principles, other extraordinary expenses not incurred in the ordinary
course of such Fund's business, and amounts, if any, payable pursuant
to a plan adopted in accordance with Rule 12b-1 under the 1940 Act)
("Fund Operating Expenses"), exceed the Operating Expense Limit, as
defined in Section 1.2 below, such excess amount (the "Excess Amount")
shall be the liability of the Manager.
1.2. Operating Expense Limit. The maximum Operating Expense Limit in any
year with respect to each Fund shall be the amount specified in
Schedule A based on a percentage of the average daily net assets of
each Fund.
1.3. Method of Computation. To determine the Manager's liability with
respect to the Excess Amount, each month the Fund Operating Expenses
for each Fund shall be annualized as of the last day of the month. If
the annualized Fund Operating Expenses for any month of a Fund exceed
the Operating Expense Limit of such Fund, the Manager shall first
waive or reduce its investment management fee for such month by an
amount sufficient to reduce the annualized Fund Operating Expenses to
an amount no higher than the Operating Expense Limit. If the amount of
the waived or reduced investment management fee for any such month is
insufficient to pay the Excess Amount, the Manager may also remit to
the appropriate Fund or Funds an amount that, together with the waived
or reduced investment management fee, is sufficient to pay such Excess
Amount.
1.4. Year-End Adjustment. If necessary, on or before the last day of the
first month of each fiscal year, an adjustment payment shall be made
by the appropriate party in order that the amount of the investment
management fees waived or reduced and other payments remitted by the
Manager to the Fund or Funds with respect to the previous fiscal year
shall equal the Excess Amount.
2. Reimbursement of Fee Waivers and Expense Reimbursements.
2.1. Reimbursement. If in any year during which the total assets of a Fund
are greater than $10 million and in which the Management Agreement is
still in effect, the estimated aggregate Fund Operating Expenses of
such Fund for the fiscal year are less than the Operating Expense
Limit for that year, subject to quarterly approval by the Trust's
Board of Trustees as provided in Section 2.2 below, the Manager shall
be entitled to reimbursement by such Fund, in whole or in part as
provided below, of the investment management fees waived or reduced
and other payments remitted by the Manager to such Fund pursuant to
Section 1 hereof. The total amount of reimbursement to which the
Manager may be entitled (the "Reimbursement Amount") shall equal, at
any time, the sum of all investment management fees previously waived
or reduced by the Manager and all other payments remitted by the
Manager to the Fund, pursuant to Section 1 hereof, during any of the
previous five (5) fiscal years, less any reimbursement previously paid
by such Fund to the Manager, pursuant to Sections 2.2 or 2.3 hereof,
with respect to such waivers, reductions, and payments. The
Reimbursement Amount shall not include any additional charges or fees
whatsoever, including, e.g., interest accruable on the Reimbursement
Amount.
2.2. Board Approval. No reimbursement shall be paid to the Manager with
respect to any Fund pursuant to this provision in any fiscal quarter,
unless the Trust's Board of Trustees has determined that the payment
of such reimbursement is in the best interests of such Fund and its
shareholders. The Trust's Board of Trustees shall determine quarterly
in advance whether any reimbursement may be paid to the Manager with
respect to any Fund in such quarter.
2.3. Method of Computation. To determine each Fund's payments, if any, to
reimburse the Manager for the Reimbursement Amount, each month the
Fund Operating Expenses of each Fund shall be annualized as of the
last day of the month. If the annualized Fund Operating Expenses of a
Fund for any month are less than the Operating Expense Limit of such
Fund, such Fund, only with the prior approval of the Trust's Board of
Trustees, shall pay to the Manager an amount sufficient to increase
the annualized Fund Operating Expenses of that Fund to an amount no
greater than the Operating Expense Limit of that Fund, provided that
such amount paid to the Manager will in no event exceed the total
Reimbursement Amount.
2.4. Year-End Adjustment. If necessary, on or before the last day of the
first month of each fiscal year, an adjustment payment shall be made
by the appropriate party in order that the actual Fund Operating
Expenses of a Fund for the prior fiscal year (including any
reimbursement payments hereunder with respect to such fiscal year) do
not exceed the Operating Expense Limit.
3. Term and Termination of Agreement.
This Agreement with respect to the Funds shall continue in effect on April
1, 1999, and from year to year thereafter provided each such continuance is
specifically approved by a majority of the Trustees of the Trust who (i)
are not "interested persons" of the Trust or any other party to this
Agreement, as defined in the 1940 Act, and (ii) have no direct or indirect
financial interest in the operation of this Agreement ("Non-Interested
Trustees"). Nevertheless, this Agreement may be terminated by either party
hereto, without payment of any penalty, upon ninety (90) days' prior
written notice to the other party at its principal place of business;
provided that, in the case of termination by the Trust, such action shall
be authorized by resolution of a majority of the Non-Interested Trustees of
the Trust or by a vote of a majority of the outstanding voting securities
of the Trust.
4. Miscellaneous.
4.1. Captions. The captions in this Agreement are included for convenience
of reference only and in no other way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
4.2. Interpretation. Nothing herein contained shall be deemed to require
the Trust or the Funds to take any action contrary to the Trust's
Declaration of Trust or By-Laws, or any applicable statutory or
regulatory requirement to which it is subject or by which it is bound,
or to relieve or deprive the Trust's Board of Trustees of its
responsibility for and control of the conduct of the affairs of the
Trust or the Funds.
4.3. Definitions. Any question of interpretation of any term or provision
of this Agreement, including but not limited to the investment
management fee, the computations of net asset values, and the
allocation of expenses, having a counterpart in or otherwise derived
from the terms and provisions of the Management Agreement or the 1940
Act, shall have the same meaning as and be resolved by reference to
such Management Agreement or the 1940 Act.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed
by their respective officers thereunto duly authorized and their respective
corporate seals to be hereunto affixed, as of the day and year first above
written.
BLUE RIDGE FUNDS TRUST
ON BEHALF OF EACH OF ITS SERIES
By:
COLONIAL ASSET MANAGEMENT, INC.
By:
<PAGE>
SCHEDULE A
OPERATING EXPENSE LIMITS
This Agreement relates to the following Funds of the Trust:
Maximum Operating
Name of Fund Expense Limit
------------ ----------------
Blue Ridge Total Return Fund 1.45%
Exhibit (i)(2): Consent of Counsel
--------------
[LETTERHEAD]
Law Offices of
DECHERT PRICE & RHOADS
1775 Eye St., N.W.
Washington, DC 20006-2401
Telephone: (202) 261-3300
Fax: (202) 261-3333
March 31, 2000
Blue Ridge Funds Trust
107 North Washington Street
Post Office Box 4365
Rocky Mount, NC 27803-0365
Re: Post-Effective Amendment No. 2 to Registration Statement on Form N-1A for
Blue Ridge Funds Trust ("Trust") (File Nos. 333-36811 and 811-08391)
Dear Sirs and Madams:
We hereby consent to the reference to our firm as counsel in the Trust's
Statement of Additional Information contained in the Post-Effective Amendment
No. 2 to the Trust's Registration Statement.
Very truly yours,
/S/ Dechert Price & Rhoads
Dechert Price & Rhoads
Exhibit (j): Consent of Independent Public Accountants
-----------
Exhibit 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Post-Effective Amendment
No. 2 to Registration Statement No. 33-36811 of Blue Ridge Total Return Fund of
our report dated December 17, 1999, appearing in the Annual Report for the
period ended November 30, 1999, and to the reference to us under the heading
"Financial Highlights" in the Prospectus, which is part of such Registration
Statement.
/s/ Deloitte & Touche LLP
Princeton, New Jersey
March 30, 2000
Exhibit (p): Code of Ethics
-----------
CODE OF ETHICS
WHEREAS, Blue Ridge Funds Trust (the "Trust"), is a registered
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"), which is authorized to issue its shares of beneficial interest in
separate series representing the interests in separate funds of securities and
other assets (each a "Fund");
WHEREAS, Rule 17j-1 under the 1940 Act makes it unlawful for certain
persons, including Trustees, officers, and other investment personnel of the
Trust and any Fund of the Trust, to engage in fraudulent, manipulative, or
deceptive conduct in connection with their personal trading of securities "held
or to be acquired" by any Fund of the Trust;
WHEREAS, Rule 17j-1 under the 1940 Act requires the Trust, and the
investment adviser of and principal underwriter for each Fund of the Trust, to
adopt a Code of Ethics and procedures reasonably designed to prevent trading
prohibited by the Rule and to use reasonable diligence to prevent violations of
such Code;
WHEREAS, the Investment Company Institute (the "ICI") has also
suggested that investment companies adopt additional measures to obviate
conflicts, prevent and detect abusive practices, and preserve the confidence of
investors; and
WHEREAS, the policies, restrictions, and procedures included in this
Code of Ethics are designed to prevent violations of Rule 17j-1 under the 1940
Act and to conform in substantial part to the additional measures suggested by
the ICI;
NOW, THEREFORE, the Trust hereby adopts this Code of Ethics for the
Trust and each Fund of the Trust to read in its entirety as follows:
I. RULES APPLICABLE TO TRUSTEES, OFFICERS, AND OTHER ACCESS PERSONS OF THE TRUST
1. Definitions
a. "Access Person" shall mean (i) any trustee, director, officer,
general partner, or advisory person (as defined below) of the
Trust or any Fund of the Trust or an investment adviser thereof,
or (ii) any director, officer, or general partner of a principal
underwriter for the Trust or any Fund of the Trust who, in the
ordinary course of his or her business, makes, participates in,
or obtains information regarding the purchase or sale of
securities for any Fund of the Trust for which the principal
underwriter so acts or whose functions or duties as part of the
ordinary course of his or her business relate to the making of
any recommendation to any Fund of the Trust regarding the
purchase and sale of securities, or (iii) notwithstanding the
provisions of clause (i) above, where an investment adviser is
primarily engaged in a business or businesses other than advising
registered investment companies or other advisory clients, any
director, officer, general partner, or advisory person of the
investment adviser who, with respect to any Fund of the Trust,
makes any recommendation, participates in the determination of
which recommendation shall be made, or whose principal function
or duties relate to the determination of which recommendation
shall be made to any Fund of the Trust, or who, in connection
with his or her duties, obtains any information concerning
securities recommendations being made by such investment adviser
to any Fund of the Trust.
b. An "Advisory Person" is any employee of the Trust or any Fund of
the Trust or of an investment adviser thereof (or of any company
in a control relationship thereto) who, in connection with his or
her regular functions or duties, makes, participates in, or
obtains information regarding the purchase or sale of securities
for any Fund of the Trust or whose functions relate to the making
of any recommendations with respect to such purchases or sales,
and any natural person in a control relationship with the Trust
or any Fund of the Trust or an adviser thereof who obtains
information concerning recommendations made to any Fund of the
Trust regarding the purchase or sale of securities.
c. "Beneficial Ownership" shall be interpreted subject to the
provisions of Rule 16a-1(a)(exclusive of Section (a)(1) of such
Rule) of the Securities Exchange Act of 1934, as amended, which
generally speaking, encompasses those situations in which the
beneficial owner has the right to enjoy some direct or indirect
"pecuniary interest" (i.e., some economic benefit) from the
ownership of a security. A direct pecuniary interest is the
opportunity, directly or indirectly, to profit, or share in any
profit, from the transaction. An indirect pecuniary interest is
any indirect financial interest in the transaction. For example,
a person is normally regarded as the beneficial owner of
securities held in the name of a member of his or her immediate
family living in his or her household. Moreover, a person is
normally regarded as the beneficial owner of securities held by a
partnership to the extent he or she is a general partner or of
securities held by a trust of which the person is settlor of the
trust with the power to revoke the trust without the consent of
another person, or is a beneficiary of the trust, in both cases
if the person also has or shares investment control over the
securities in the trust. A person may also have an indirect
pecuniary interest in securities that such person may acquire
upon exercise of an option or other right or through conversion
of a security. A report of beneficial ownership hereunder may
disclaim such beneficial ownership.
d. "Control" shall have the meaning set forth in Section 2(a)(9) of
the 1940 Act.
e. "Disinterested Trustee" of the Trust means a Trustee who is not
an "interested person" of the Trust within the meaning of Section
2(a)(19) of the 1940 Act. An "interested person" of the Trust
includes any person who is a trustee, director, officer,
employee, or owner of 5% or more of the outstanding stock of an
investment adviser of or principal underwriter, if any, for any
Fund of the Trust. Affiliates of brokers or dealers are also
"interested persons" of the Trust, except as provided in Rule
2a19-1 under the 1940 Act.
f. "Portfolio Manager" means the person or persons who have or share
direct responsibility and authority to make investment decisions
affecting any Fund of the Trust.
g. "Purchase or sale of a security" includes, among other things,
the writing of an option to purchase or sell a security or the
purchase or sale of a future or index on a security or option
thereon.
h. "Review Officer" means, with respect to the Trust, the Secretary
of the Trust or such other person(s) as may be designated by the
Board of Trustees of the Trust. In this regard, each investment
adviser of and principal underwriter for each Fund of the Trust
shall appoint a compliance officer of each such adviser or
underwriter, which person shall be designated by the Board of
Trustees of the Trust as the "Review Officer" with respect to
such adviser or underwriter. The purpose of this arrangement is
for each such compliance officer to monitor compliance with this
Code of Ethics in connection with all persons covered hereunder
associated with such compliance officer's particular associated
adviser or underwriter. For example, the investment adviser of
each Fund of the Trust shall appoint a compliance officer of such
adviser to serve as the Review Officer hereunder with respect to
that adviser and Fund, who shall approve transactions, receive
reports, and otherwise monitor compliance with this Code of
Ethics in connection with all Access Persons associated with such
adviser and Fund. In turn each such compliance officer shall
report at least quarterly to the Secretary of the Trust all
violations of this Code that occurred during the past quarter. As
Review Officer with respect to the Trust, the Secretary of the
Trust shall approve transactions, receive reports, and otherwise
monitor compliance with this Code of Ethics in connection with
all Access Persons not otherwise associated with an investment
adviser of or principal underwriter to any Fund of the Trust;
receive reports from all other Review Officers designated
hereunder; report at least quarterly to the Board of Trustees of
the Trust all violations of this Code that occurred during the
past quarter; and report at least annually to the Board of
Trustees the information listed under Section II-F below.
i. "Security" shall have the meaning as set forth in Section
2(a)(36) of the 1940 Act, except that it shall not include
securities issued by the U.S. Government (or any other "U.S.
Government security" as the term is defined in the 1940 Act),
bankers acceptances, bank certificates of deposit, commercial
paper, and shares of registered open-end investment companies
(i.e., other mutual funds generally).
j. A security is "held or to be acquired" by any Fund of the Trust
if within the most recent 15 days it (i) is or has been held by a
Fund of the Trust or (ii) is being held or has been considered by
a Fund of the Trust or its investment adviser for purchase by the
Fund.
k. A security is "being considered for purchase or sale" when, among
other circumstances, the assigned analyst or Portfolio Manager is
seriously considering a change in the rating of the security.
l. All references herein to an "investment adviser" of a Fund of the
Trust shall be deemed to include any "co-adviser" or
"sub-adviser" of such Fund as the case may be.
2. Statement of General Principles on Personal Investment Activities
NO ACCESS PERSON OF THE TRUST OR ANY FUND OF THE TRUST SHALL ENGAGE IN ANY
ACT, PRACTICE, OR COURSE OF CONDUCT THAT VIOLATES THE PROVISIONS OF RULE
17j-1 OF THE 1940 ACT. IN ORDER TO EFFECTUATE THIS PROHIBITION, THE
FOLLOWING GENERAL PRINCIPLES AND SPECIFIC PROHIBITED ACTIVITIES, AND
RELATED COMPLIANCE PROCEDURES, SHALL GOVERN THE PERSONAL INVESTMENT
ACTIVITIES OF SUCH PERSONS.
PERSONAL INVESTMENT ACTIVITIES ENGAGED IN BY AN ACCESS PERSON SHALL BE
SUBJECT TO THE FOLLOWING GENERAL PRINCIPLES:
a. NO PERSONAL INVESTMENT ACTIVITIES SHALL CONFLICT WITH THE DUTY TO
PLACE THE INTERESTS OF THE INVESTMENT COMPANY BEFORE ANY PERSONAL
INTERESTS;
b. ALL PERSONAL INVESTMENT ACTIVITIES SHALL BE CONDUCTED CONSISTENT WITH
THE REQUIREMENTS AND STANDARDS SET FORTH IN THIS CODE AND IN SUCH A
MANNER AS TO AVOID ANY ACTUAL OR POTENTIAL CONFLICT OF INTEREST OR ANY
ABUSE OF AN INDIVIDUAL'S POSITION OF TRUST AND RESPONSIBILITY; AND
c. NO ACCESS PERSON SHALL, DIRECTLY OR INDIRECTLY, OTHERWISE TAKE
INAPPROPRIATE ADVANTAGE OF HIS OR HER POSITION WITH THE INVESTMENT
COMPANY.
3. Avoiding Conflicts of Interest
WITHOUT LIMITING THE FOREGOING SECTION I-B, NO TRUSTEE, OFFICER, OR OTHER
ACCESS PERSON SHALL ENTER INTO OR ENGAGE IN A SECURITY TRANSACTION OR
BUSINESS ACTIVITY OR RELATIONSHIP THAT MAY RESULT IN ANY FINANCIAL OR OTHER
CONFLICT OF INTEREST BETWEEN SUCH PERSON AND THE INVESTMENT COMPANY, AND
EACH SUCH PERSON SHALL AT ALL TIMES AND IN ALL MATTERS ENDEAVOR TO PLACE
THE INTERESTS OF THE INVESTMENT COMPANY BEFORE HIS OR HER PERSONAL
INTERESTS.
4. Prohibited Activities
a. Interested Transactions: No Trustee, officer, or other Access Person
shall recommend any securities transactions by any Fund of the Trust
without having disclosed his or her interest, if any, in such
securities or the issuer thereof, including without limitation:
1. any direct or indirect Beneficial Ownership of any securities of
such issuer;
2. any contemplated transaction by such person in such securities;
3. any position with such issuer or its affiliates; and
4. any present or proposed business relationship between such issuer
or its affiliates and such person or any party in which such
person has a significant interest.
b. Blackout Periods: No Trustee, officer, or other Access Person shall
purchase or sell, directly or indirectly, any security in which he or
she has, or by reason of such transaction acquires, any direct or
indirect Beneficial Ownership:
1. and which to his or her knowledge at the time of such purchase or
sale is being considered for purchase or sale by any Fund of the
Trust; or
2. and which to his or her knowledge at the time of such purchase or
sale is being purchased or sold by any Fund of the Trust; or
3. on a day during which, to his or her knowledge, any Fund of the
Trust has a pending "buy" or "sell" order in that same security
until that order is executed or withdrawn.
No Portfolio Manager shall purchase or sell, directly or indirectly,
any security in which he or she has, or by reason of such transaction
acquires, any direct or indirect Beneficial Ownership within three (3)
business days before or after any Fund of the Trust that he or she
manages trades in that security.
Unless the Trust's Board approves otherwise, any trades made in
violation of this Section I-D(2) shall be unwound or, if that is not
practical, any profit so realized shall be paid over to the affected
Fund of the Trust or to a charitable organization of the Access
Person's choosing.
c. Initial Public Offerings: No Advisory Person who is an employee of an
investment adviser of any Fund of the Trust shall acquire any
securities in an initial public offering for his or her personal
account.
d. Private Placements: No Advisory Person who is an employee of an
investment adviser of any Fund of the Trust shall acquire, directly or
indirectly, Beneficial Ownership of any securities in a private
placement without the prior approval of the Review Officer, who has
been provided by such Advisory Person with full details of the
proposed transaction (including written certification that the
investment opportunity did not arise by virtue of the Advisory
Person's activities on behalf of such Fund of the Trust) and has
concluded after consultation with other investment advisory personnel
of such Fund of the Trust (who have no personal interest in the issuer
involved in the private placement) that such Fund of the Trust has no
foreseeable interest in purchasing such securities.
e. Gifts: No Advisory Person who is an employee of an investment adviser
of any Fund of the Trust shall receive any gift or other things of
more than de minimis value from any person or entity that does
business with or on behalf of such Fund of the Trust; provided,
however, that the foregoing shall not prohibit receipt of:
1. an occasional breakfast, luncheon, dinner, or reception, ticket
to a sporting event or the theater, or comparable entertainment,
attended in the company of the giver of the entertainment in
question, that is not so frequent, costly, or extensive as to
raise any question of impropriety;
2. a breakfast, luncheon, dinner, reception, or cocktail party in
conjunction with a bona fide business meeting;
3. a promotional item, such as a mug, pen, or other article bearing
the logo or advertising of any such person or entity, having a
value not in excess of $100; or
4. a gift approved in writing by the Review Officer.
5. Service as a Director: No Advisory Person who is an employee of
an investment adviser of any Fund of the Trust shall serve on the
board of directors of any publicly traded company without prior
authorization from the Review Officer based upon a determination
that such board service would be consistent with the interests of
such Fund of the Trust and its shareholders.
5. Exempted Transactions:
The prohibitions of Sections I-D(2) through I-D(4) above shall not apply to:
a. purchases or sales effected in any account over which such person has
no direct or indirect influence or control;
b. purchases or sales that are nonvolitional on the part of the person or
any Fund of the Trust;
c. purchases that are part of an automatic dividend reinvestment plan;
d. purchases effected upon the exercise of rights issued by an issuer pro
rata to all holders of a class of its securities, to the extent such
rights were acquired from such issuer, and sales of such rights so
acquired;
e. sales effected pursuant to a tender offer or similar transaction
involving an offer to acquire all or a significant portion of a class
of securities;
f. purchases and sales previously approved in writing by the Review
Officer (a) as only remotely potentially harmful to a Fund of the
Trust because they would be very unlikely to affect a highly
institutional market or because they clearly are not economically
related to the securities to be purchased or sold or held by such Fund
of the Trust or (b) as not representing any danger of the abuses
proscribed by Rule 17j-1 under the 1940 Act;
g. purchases or sales of securities that are not eligible for purchase or
sale by a Fund of the Trust. In this regard, this exemption shall be
applied on a Fund-by-Fund basis, since the Trust may have separate
series of Funds, with unaffiliated investment advisers, that are
affiliated only by virtue of their affiliation with the Trust or a
common underwriter. For example, an Advisory Person who is an employee
of an investment adviser of one Fund of the Trust shall not otherwise
be restricted in trading securities that are not eligible for trading
by that Fund merely because another otherwise unaffiliated Fund of the
Trust is entitled to trade such securities, provided that, at the time
of each such transaction, the Advisory Person has no actual knowledge
that the same security is being purchased or sold or considered for
purchase or sale by such other Fund of the Trust.
II. COMPLIANCE PROCEDURES
1. Preclearance
An Advisory Person who is an employee of an investment adviser of any Fund of
the Trust may directly or indirectly, acquire or dispose of Beneficial Ownership
of a security only if (1) such purchase or sale has been approved by the Review
Officer, (2) the approved transaction is completed within three (3) business
days of the day approval is received, and (3) the Review Officer has not
rescinded such approval prior to execution of the transaction. The requirements
of this Section II-A shall not apply to (i) transactions described in Sections
I-E(l), (2), and (3), and (ii) transactions involving purchases or sales of
capital stock of issuers with aggregate market capitalizations of at least $5
billion or of investment grade debt securities, provided that the aggregate
amount of such transactions by the Advisory Person in any one calendar week does
not exceed $10,000 and provided further that, at the time of each such
transaction, the Advisory Person has no actual knowledge that the same security
is being purchased or sold or considered for purchase or sale by any Fund of the
Trust.
2. Quarterly Reporting Requirements for all Trustees, Executive Officers, and
Other Access Persons (Other than Disinterested Trustees)
a. Coverage. All Trustees, executive officers, and other Access Persons,
other than Disinterested Trustees, shall file with the Review Officer
confidential quarterly reports containing the information required in
this Code with respect to all transactions during the preceding
quarter in any securities in which such person has, or by reason of
such transaction acquires, any direct or indirect Beneficial
Ownership, except for exempted transactions listed under Section
I-E(l) above. However, an Access Person who is an Access Person of an
investment adviser of any Fund of the Trust shall file such Access
Person's reports with the investment adviser unless such reports would
duplicate information recorded pursuant to Rules 204-2(a)(12) or
204-2(a)(13) of the Investment Advisers Act of 1940, in which case no
such reports need be filed by such Access Person pursuant to this
Code, and an Access Person who is an Access Person of a principal
underwriter of the Trust shall file such Access Person's reports with
the principal underwriter.
b. Filings: Every report shall be made no later than 10 days after the
end of the calendar quarter in which the transaction being reported
was effected, and shall contain the following information:
1. the date of the transaction, the title and the number of shares
and the principal amount of each security involved;
2. the nature of the transaction (i.e., purchase, sale, or any other
type of acquisition or disposition);
3. the price at which the transaction was effected; and
4. the name of the broker, dealer, or bank with or through whom the
transaction was effected.
Such report shall be in the form attached hereto as Exhibit A, or if
the Access Person is an Access Person of an investment adviser of or
principal underwriter for any Fund of the Trust, in such form as is
provided by such adviser or underwriter if it contains the information
requested herein. In lieu of providing such quarterly reports, an
Access Person may arrange for duplicate confirmations and account
statements to be provided directly to the Review Officer.
c. Disclaimer of Beneficial Ownership: Any report may contain a statement
that it shall not be construed as an admission by the person making
the report that he or she has any direct or indirect Beneficial
Ownership in the security to which the report relates.
d. Brokerage Statements: Each Advisory Person who is an employee of an
investment adviser of any Fund of the Trust shall cause copies of all
of such person's brokerage statements and confirmations to be
furnished to the Review Officer on at least a quarterly basis.
3. Quarterly Reporting Requirements for Disinterested Trustees
a. Every Disinterested Trustee shall file with the Review Officer a
report containing the information required by Section II-B(2) above
with respect to transactions in any securities in which such person
has, or by reason of such transactions acquires, any direct or
indirect Beneficial Ownership, except for exempted transactions listed
under Section I-E(l) above, if such Trustee, at the time of that
transaction, knew or, in the ordinary course of fulfilling his or her
official duties as Trustee, should have known, that during the 15 day
period immediately preceding or after the date of the transaction by
the Trustee:
1. such security is or was being purchased or sold by any Fund of
the Trust; or
2. such security is or was being considered by of any Fund of the
Trust or its investment adviser for purchase or sale.
3. Notwithstanding the preceding sentence, any Disinterested Trustee
may, at his or her option, report the information described in
Section II-B(2) with respect to any one or more transactions and
may include a statement that the report shall not be construed as
an admission that the person knew or should have known of
portfolio transactions by any Fund of the Trust in such
securities.
4. Disclosure of Personal Holdings
Upon commencement of employment and annually thereafter, each Advisory
Person who is an employee of an investment adviser of any Fund of the Trust
shall be required to disclose his or her current personal securities
holdings.
5. Certification of Compliance
Each Access Person is required to certify annually that he or she has read
and understands this Code and recognizes that he or she is subject to this
Code. Further, each Access Person is required to certify annually that he
or she has complied with all the requirements of the Code and that he or
she has disclosed or reported all personal securities transactions required
to be disclosed or reported pursuant to the requirements of the Code. Such
certification shall be in the form attached hereto as Exhibit B, which
shall be delivered annually to the Review Officer. This requirement applies
to all Trustees, including Disinterested Trustees.
6. Review by the Board of Trustees
At least quarterly, the Review Officer shall report to the Board of
Trustees all violations or apparent violations of this Code that occurred
during the past quarter. Upon discovery of a violation of this Code, the
Board of Trustees may impose such sanctions as it deems appropriate. At
least annually, the Review Officer shall report to the Board of Trustees:
a. All existing procedures concerning Access Persons' personal investing
activities and any procedural changes made during the past year;
b. Any recommended changes to this Code or procedures; and
c. A summary of any violations that occurred during the past year
requiring significant remedial action.
7. Notice by Review Officer
The Review Officer shall notify each Access Person who may be required to
preclear transactions and/or make reports pursuant to this Code of Ethics
that such person is subject to this Code and shall deliver a copy of this
Code to each such person. Any amendments to the Code shall be similarly
furnished to each such person.
III. REVIEW
In reviewing transactions, the Review Officer shall take into account the
exemptions allowed under Section I-E above. Before making a determination
that a violation or apparent violation has been committed by a Trustee, the
Review Officer shall give such person an opportunity to supply additional
information regarding the transaction in question.
IV. SANCTIONS
1. Sanctions for Violations by Trustees, Executive Officers, and Other Access
Persons (Other than Disinterested Trustees)
If the Review Officer determines that a violation or apparent violation of
this Code has occurred, he or she shall so advise the Board of Trustees of
the Trust, and if a violation is determined, such persons may be subject to
sanctions, including, inter alia, a letter of censure or suspension or
termination of the employment of the violator. As provided in Section
I-D(2) above, any financial profits realized by an Access Person or
Advisory Person through the prohibited personal trading activities
described in such Section may be required to be disgorged. All material
violations of the Code and any sanctions imposed as a result thereto shall
be reported periodically to the Board of Trustees.
2. Sanctions for Violations by Disinterested Trustees
If the Review Officer determines that any Disinterested Trustee, has
violated or apparently violated this Code, he or she shall so advise the
Chairman of the Trust, the President of any affected Fund of the Trust, and
also the Disinterested Trustees (other than the person whose transaction is
at issue) and shall provide such persons with the report, the record of
pertinent actual or contemplated portfolio transactions of any affected
Fund of the Trust, and any additional information supplied by such person.
If a violation is determined, the Disinterested Trustees, at their option,
shall either impose such sanctions as they deem appropriate or refer the
matter to the full Board of Trustees of the Trust, which shall impose such
sanctions as it deems appropriate.
V. MISCELLANEOUS
1. Records
The administrator of the Trust shall maintain records in the manner and to
the extent set forth below, which records may be maintained on microfilm
under the conditions described in Rule 31a-2(f) under the 1940 Act, and
shall be available for examination by representatives of the Securities and
Exchange Commission:
a. a copy of this Code and any other code that is, or at any time within
the past five years has been, in effect shall be preserved in an
easily accessible place;
b. a record of any violation of this Code, and of any action taken as a
result of such violation, shall be preserved in an easily accessible
place for a period of not less than five years following the end of
the fiscal year in which the violation occurs;
c. a copy of each report made pursuant to this Code shall be preserved
for a period of not less than five years from the end of the fiscal
year in which it is made, the first two years in an easily accessible
place; and
d. a list of all persons who are required, or within the past five years
have been required, to make reports pursuant to this Code shall be
maintained in an easily accessible place.
2. Confidentiality
All reports of securities transactions and any other information filed
pursuant to this Code shall be treated as confidential, except that the
same may be disclosed to the Board of Trustees of the Trust, to any
regulatory or self-regulatory authority or agency upon its request, or as
required by law or court or administrative order.
3. Interpretation of Provisions
The Board of Trustees of the Trust may from time to time adopt such
interpretations of this Code as it deems appropriate.
<PAGE>
EXHIBIT A
CODE OF ETHICS
SECURITIES TRANSACTION REPORT
For the Calendar Quarter Ended: _______________________________
(mo./day/yr.)
During the quarter referred to above, the following transactions were
effected in securities of which I had, or by reason of such transaction
acquired, direct or indirect Beneficial Ownership, and which are required to be
reported pursuant to the Trust's Code of Ethics:
========= ============ =========== ============= ============= ======= =========
Broker,
Dealer
No. of or
Shares Nature of Bank
or Dollar Transaction Through
Date of Principal Amount of (Purchase, Whom
Security Transaction Amount Transaction Sale, Other) Price Effected
- --------- ------------ ----------- ------------- ------------- ------- ---------
========= ============ =========== ============= ============= ======= =========
This report (i) excludes transactions with respect to which I had no direct or
indirect influence or control, (ii) excludes other transactions in securities
not required to be reported because such securities are excluded from the
definition of "security" under the Code of Ethics, and (iii) is not an admission
that I have or had any direct or indirect Beneficial Ownership in the securities
listed above.
Date: _________________________ Signature: _______________________________
<PAGE>
EXHIBIT B
CODE OF ETHICS
ANNUAL CERTIFICATE OF COMPLIANCE
For the Calendar Year Ended December 31, 1998
As an Access Person as defined in Section I-A(1) of the Trust's Code of Ethics
adopted pursuant to Rule 17j-1 under the Investment Company Act of 1940, as
amended (the "Code"), I hereby certify that I have read and understand the Code,
recognize that I am subject to the Code, and intend to comply with the Code. I
further certify that, during the calendar year specified above, and since my
last Certificate of Compliance under the Code, I have complied with the
requirements of the Code and have disclosed or reported all personal securities
transactions required to be disclosed or reported pursuant to the requirements
of the Code.
______________________________
Signature
______________________________
Name (Please Print)
______________________________
Date
