Securities Act File No. 333-47415
Investment Company Act File No. 811-8685
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 4 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 6 [X]
(Check appropriate box or boxes)
ROCHDALE INVESTMENT TRUST
(Exact Name of Registrant as Specified in Charter)
570 Lexington Ave.
New York, NY 10022-6837
(Address of Principal Executive Offices) (Zip Code)
(212) 702-3500
Registrant's Telephone Number, including Area Code:
Julie Allecta, Esq.
Paul, Hastings, Janofsky & Walker LLP
345 California St.
San Francisco, CA, 94104
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
[ ] Immediately upon filing pursuant to paragraph (b)
[X] On July 9, 1999 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] On pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] On pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective
date for a previously filed post-effective amendment.
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ROCHDALE MAGNA PORTFOLIO
ROCHDALE ATLAS PORTFOLIO,
SERIES OF ROCHDALE INVESTMENT TRUST
Rochdale Magna Portfolio is a large-cap domestic equity fund. The
Portfolio seeks long-term capital appreciation.
Rochdale Atlas Portfolio is a foreign equity fund. The Portfolio seeks
to long-term capital appreciation.
The Securities and Exchange Commission has not approved or disapproved
of these securities or passed upon the adequacy of this prospectus. Any
representation to the contrary is a criminal offense.
The date of this prospectus is July 9, 1999
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TABLE OF CONTENTS
An Overview of the Portfolios .............................................
Fees and Expenses .........................................................
Investment Objective and Principal Investment Strategies ..................
Principal Risks of Investing in the Portfolios ............................
Investment Advisor ........................................................
Shareholder Information ...................................................
Pricing of Portfolio Shares ...............................................
Dividends and Distributions ...............................................
Tax Consequences ..........................................................
Distribution Arrangements .................................................
Financial Highlights
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AN OVERVIEW OF THE PORTFOLIOS
THE PORTFOLIOS' INVESTMENT GOALS
Each Portfolio seeks long-term capital appreciation.
THE PORTFOLIOS' PRINCIPAL INVESTMENT STRATEGIES
ROCHDALE MAGNA PORTFOLIO
The Portfolio invests primarily in equity securities of large-capitalization
U.S. companies. The Portfolio selects securities which Rochdale believes are the
leading growth and leading value companies relative to growth and value industry
peers. The Portfolio expects over the long term to generate returns greater than
the S&P 500, although there can be no assurance that the Portfolio will do so.
ROCHDALE ATLAS PORTFOLIO
The Portfolio invests primarily in equity securities of companies incorporated
in countries outside of the United States, including those in emerging markets.
The Portfolio invests a minimum of 40% of its assets in securities of foreign
developed markets. In selecting securities, Rochdale focuses on those countries
that appear attractively valued relative to other countries. Rochdale then
selects securities to represent each selected country's broad market. The
Portfolio may also invest in options, futures and other types of derivatives as
a way to efficiently adjust its exposure to various securities, markets, and
currencies without having to actually sell current assets and purchase different
ones.
PRINCIPAL RISKS OF INVESTING IN THE PORTFOLIOS
As with all mutual funds, there is the risk that you could lose money on your
investment in the Portfolios. For example, the following risks could affect the
value of your investment:
* The stock market goes down.
* Interest rates go up, which can result in a decline in the equity
market.
* The market undervalues the stocks held by a Portfolio.
* The stocks held by a Portfolio fail to grow their earnings as Rochdale
expected.
* Adverse developments occur in foreign or emerging markets. These
investments involve greater risk, including currency fluctuation risk
and may affect the securities held by the Atlas Portfolio.
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* Derivatives held by the Atlas Portfolio may vary from Rochdale's
expectation of movements in the securities and interest rates markets.
WHO MAY WANT TO INVEST IN THE ROCHDALE MAGNA PORTFOLIO
The Portfolio may be appropriate for investors who:
* Are pursuing a long-term investment goal.
* Want to create a large-capitalization foundation for their equity
portfolio.
* Are seeking broad-based industry, sector, and market cycle exposure.
* Are willing to accept swings in the value of their portfolio,
commensurate with that of the broad market, with the offsetting goal
of earning higher long-term total return.
The Portfolio may not be appropriate for investors who:
* Are pursuing a short-term goal.
* Wish to have their equity allocation invested in smaller
capitalization stocks only.
* Cannot remain in the Portfolio for a minimum of 3 to 5 years.
WHO MAY WANT TO INVEST IN THE ROCHDALE ATLAS PORTFOLIO
The Portfolio may be appropriate for investors who:
* Are pursuing a long-term investment goal.
* Want to diversify their equity portfolio and enhance return potential
by investing in foreign countries.
* Are seeking access to world economic growth.
* Are willing to accept greater swings in the value of their portfolio
with the offsetting goal of earning higher long-term total return.
The Portfolio may not be appropriate for investors who:
* Need regular income or stability of principal.
* Are pursuing a short-term goal.
* Wish to have their equity allocation invested in domestic stocks only.
* Do not want to invest in foreign issues or emerging markets.
* Cannot remain in the Portfolio for a minimum of 3 to 5 years.
There is no performance shown for the Portfolios because they have not been
existence for a full calendar year.
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FEES AND EXPENSES
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
SHARES OF THE PORTFOLIOS.
<TABLE>
<CAPTION>
Rochdale Magna Rochdale Atlas
Portfolio Portfolio
--------- ---------
<S> <C> <C>
SHAREHOLDER FEES
(fees paid directly from your investment)
Maximum sales charge (load) imposed on purchases
(as a percentage of offering price) ...................... None None
Maximum deferred sales charge (load)
(as a percentage of the lower of original
purchase price or redemption proceeds) ................... None None
Redemption Fee (as a percentage of amount redeemed)*........ 2.00% 2.00%
ANNUAL FUND OPERATING EXPENSES**
(expenses that are deducted from Portfolio assets)
Management Fees ............................................ 1.00% 1.00%
Distribution and Service (12b-1) Fees ...................... 0.25% 0.25%
Other Expenses ............................................. 1.25% 1.75%
----- -----
Total Annual Fund Operating Expenses ....................... 2.50% 3.00%
----- -----
Fee Reduction and/or Expense Reimbursement ................. (0.75)% (1.05)%
----- -----
Net Expenses ............................................... 1.75% 1.95%
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</TABLE>
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* The 2.00% redemption fee applies only to those shares that you have held
for eighteen months or less. The fee is payable to the Portfolios and is
intended to benefit the remaining shareholders by reducing short-term
trading.
** Other expenses have been estimated for the first fiscal year of the
Portfolios. Rochdale has contractually agreed to reduce its fees and/or pay
expenses for each Portfolio's total annual operating expenses (excluding
interest and taxes) to the net expense amounts shown. This contract as a
one-year term, renewable at the end of each fiscal year.
EXAMPLE
This example is intended to help you compare the costs of investing in the
Portfolios with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in a Portfolio for the time periods
indicated, that your investment has a 5% return each year and that the
Portfolio's operating expenses remain the same. This Example uses net annual
operating expenses for the first year and total operating expenses for three
years. Assuming the Advisor continues to reimburse the Portfolios, your actual
expenses could be lower. Although your actual costs may be higher or lower,
under the assumptions, your costs would be:
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Rochdale Magna Rochdale Atlas
Portfolio Portfolio
--------- ---------
If you redeem your shares:
One Year ............................... $378 $398
Three Years ............................ $779 $927
If you do not redeem your shares:
One Year ............................... $178 $198
Three Years ............................ $779 $927
INVESTMENT OBJECTIVE AND PRINCIPAL INVESTMENT STRATEGIES
ROCHDALE MAGNA PORTFOLIO
The Portfolio seeks long-term capital appreciation. The Portfolio seeks to
achieve its investment objective through investment in large-capitalization
companies. By investing in larger companies, the Portfolio attempts to achieve
long-term performance in excess of the broad market such as that measured by the
S&P 500.
The Portfolio invests primarily in equity securities of U.S. companies that have
a market capitalization in excess of $1 billion. The Portfolio may also invest
in smaller companies and in foreign securities, including those of emerging
markets. Investments in common stock are emphasized, but the Portfolio may also
buy other types of equity securities, including preferred stocks, convertible
securities or warrants.
Rochdale approaches large company equities from the top down. Rochdale believes
that the best opportunity for long-term performance when investing in the large
cap asset class is through exposure to both the most attractive companies within
both growth and value industries. Exposure to both sectors is required to
capture the cyclical nature of growth versus value being in favor. By focusing
in the leading companies in each industry, you are well positioned to realize
long-term returns in excess of the S&P 500 as a whole.
Industries are distinguished as growth or value by valuation factors such as
price-to-book. Value industries such as heavy manufacturing tend to be
inherently cheaper due to the nature of industry dynamics. Growth industries
such as pharmaceuticals are fueled by the need for continuous capital investment
and are therefore priced higher relative to book value.
Rochdale employs distinct proprietary fundamental models to both the growth and
value universes to determine which value companies and which growth companies
are most likely to generate higher future returns relative to their respective
peers. Rochdale's research indicates that different fundamental qualities are
predictive of superior performance for growth versus value industries. Rochdale
identifies and invests only in the top-ranked companies out of the growth and
value universes.
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Growth stock performance is most heavily dependent on earnings growth, price
momentum, and analyst sentiment. Rochdale employs a multi-factor model with
elements of each of these three factors to rank companies relative to industry
peers.
Value stocks tend to be the stocks whose earnings prospects outpace their market
recognition. In order to identify this hidden value, Rochdale employs a cash
flow based valuation indicator to remove accounting distortions and assess
company attractiveness relative to industry and value universe peers. Rochdale
also utilizes a momentum indicator to identify which of the mispriced companies
are most likely to realize market recognition first.
The leading companies within respective growth and value industries are combined
in the Portfolio via an optimization process which provides broad sector
diversification and managed variability versus the S&P 500.
Although the Portfolio does not currently intend to, in seeking to meet its
investment goal, the Portfolio may use exchange traded and over-the-counter
derivative instruments and related investment techniques to (i) hedge equity
exposure; (ii) investment gain; and (iii) other purposes where the Advisor
considers it to be appropriate.
Rochdale continuously monitors the fundamentals and business performance of the
companies in which the Portfolio invests. Although the Portfolio's holdings are
long term, Rochdale will rebalance the Portfolio's holdings if company
fundamentals change materially. You can expect to see some companies go in and
out of the Portfolio each year.
Under normal market conditions, portfolio turnover is not expected to exceed
50%. This should result in the realization and distribution to shareholders of
lower capital gains, which would be considered tax efficient. The anticipated
lack of frequent trading also leads to lower transaction costs, which could help
to improve performance.
ROCHDALE ATLAS PORTFOLIO
The Portfolio seeks long-term capital appreciation. The Portfolio seeks to
achieve its investment objective through investment in foreign companies of
foreign developed and emerging markets. By investing in select countries and
companies, the Portfolio attempts to achieve long-term performance in excess of
the broad world markets, such as that measured by the Dow Jones World Index ex
US.
The Portfolio invests primarily in equity securities of foreign-domiciled,
publicly traded companies worldwide. Equity securities include common stock,
Depositary Receipts, warrants, convertible bonds, debentures and convertible
preferred stocks. In general, securities held by the Portfolio have a market
capitalization of $1 billion or more and represent the larger, leading companies
in the countries selected for investment.
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Rochdale has a unique approach to investing internationally. Rochdale's strategy
is to identify and invest in the top quartile of foreign markets with the best
combination of value and economic growth. Rochdale's selectivity creates a
greater potential for higher returns across developed and emerging markets.
Rochdale's research focuses on country selection, which is empirically supported
as the key to earning competitive international returns.
Using its multi-factor country analysis methodology, Rochdale determines which
countries, out of all the world's investable foreign markets, are likely to
generate higher future returns. For each country, Rochdale analyzes aggregate
fundamental, economic, and sentiment measures, including:
* Forecasted GDP growth
* Valuation relative to growth
* Equity risk premiums
* GDP relative to current account
* Analyst sentiment
Rochdale's country selection leads to a portfolio of attractively valued
countries, usually representing several geographically diversifed regions. Under
normal conditions, the Portfolio invests in companies representing five to
fifteen countries. A minimum of 40% is invested in developed markets. There
could be situations where the Portfolio could be heavily invested in emerging
markets. Rochdale priortizes investments to focus on only the most attractive
countries within each region, thereby avoiding the less attractive countries
within each region and extracting return potential from a region even when the
region as a whole may be experiencing a downturn.
After Rochdale identifies the countries in which the Portfolio will invest, it
uses a global equity optimization process to select specific companies to
represent the chosen countries. This process enables Rochdale to capture over
90% of the combined top ranked countries' stock market movements. The companies
selected are only those of larger companies of the highest quality with strong
businesses. Each company must meet Rochdale's standards for market and industry
representation, financial condition, credit rating, and liquidity.
To meet its investment goal, the Portfolio may use derivatives, which are
financial contracts whose value depends upon, or its derived from, the value of
an underlying asset, reference rate or index. Derivatives may relate to stocks,
bonds, interest rates, currencies or currency exchange rates, and related
indices. The Portfolio may also use derivatives as a way to efficiently adjust
its exposure to various securities, markets, and currencies without having to
actually sell current assets and purchase different ones. For a description of
the various derivative instruments that may be used by the Portfolio, please see
the Statement of Additional Information.
The Portfolio may invest a portion of its assets in other open-end and
closed-end country mutual funds if Rochdale deems it appropriate to maximize the
efficiency of its country selection process. In addition to the Portfolio's
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advisory fee, an investment in an underlying mutual fund will involve payment by
the Portfolio of its pro rata share of advisory and administrative fees charged
by such fund.
Rochdale will sell securities of companies of a country if it determines that
holding the securities of another company in that country would provide a more
suitable country representation. Rochdale will sell securities of a particular
country if it determines that having a position in that country is no longer an
attractive investment.
The Portfolio intends to be fully invested in accordance with its investment
strategies. However, the Portfolio may temporarily depart from its principal
investment strategies by making short-term investments in cash equivalents in
response to adverse market, economic or political conditions. This may result in
the Portfolio not achieving its investment objective.
Due to the longer-term nature of the country and stock selection criteria,
Rochdale anticipates that the Portfolio will have a portfolio turnover rate of
less than 100%. A high portfolio turnover rate (100% or more) has the potential
to result in the realization and distribution to shareholders of higher capital
gains. This may mean that you would be likely to have a higher tax liability. A
high portfolio turnover rate also leads to higher transaction costs, which could
negatively affect the Portfolio's performance.
PRINCIPAL RISKS OF INVESTING IN THE PORTFOLIOS
The principal risks of investing in the Portfolios that may adversely affect a
Portfolio's net asset value or total return are discussed above in "Principal
Risks of Investing in the Portfolios." These risks are discussed in more detail
below.
MARKET RISK. The risk that the market value of a security may move up and down,
sometimes rapidly and unpredictably. These fluctuations may cause a security to
be worth less than the price originally paid for it, or less than it was worth
at an earlier time. Market risk may affect a single issuer, industry or sector
of the economy, or the market as a whole.
FOREIGN SECURITIES RISK. The risk of investing in the securities of foreign
companies is greater than the risk of investing in domestic companies. Some of
these risks include: (1) unfavorable changes in currency exchange rates; (2)
economic and political instability; (3) less publicly available information; (4)
less strict auditing and financial reporting requirements; (5) less governmental
supervision and regulation of securities markets; (6) higher transaction costs;
and (7) greater possibility of not being able to sell securities on a timely
basis. These risks are more pronounced when investing in foreign securities in
emerging markets.
DERIVATIVES RISK. The use of derivative instruments involves risks different
from, or greater than the risks associated with invested directly in securities
and other more traditional investments. Derivatives are subject to a number of
risks described elsewhere in this section, including market risk, liquidity risk
and the credit risk of the counterparty to the derivatives contract. Since their
value is calculated and derived from the value of other assets, instruments
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or references, there is greater risk that derivatives will be improperly valued.
Derivatives also involve the risk that changes in the value of the derivative
may not correlate perfectly with relevant assets, rates or indices they are
designed to hedge or to closely track, Also, suitable derivative transactions
may not be available in all circumstances and there can be no assurance that the
Portfolios will engage in these transactions to reduce exposure to other risks
when that would be beneficial.
CREDIT AND COUNTERPARTY RISK. If the issuer, or the counterparty to, the
derivative does not make timely principal, interest or settle payments when due,
or otherwise fulfill its obligations, a Portfolio could lose money on its
investment. Also a Portfolio is exposed to credit risk, primarily because it may
use over-the-counter derivatives (such as swap contracts) and because it may
engage to a significant extent in the lending of Portfolio securities or use of
repurchase agreements.
LIQUIDITY RISK. Liquidity risk exists when particular investments are difficult
to purchase or sell due to a limited market or to legal restrictions, such that
a Portfolio may be prevented from selling particular securities at the price at
which a Portfolio values them. The Portfolios are subject to liquidity risk,
particularly with respect to the use of derivatives.
MANAGEMENT RISK. As noted above, the Advisor may also fail to use derivatives
effectively. For example, the Advisor may choose to hedge or not to hedge at
inopportune times. This will adversely affect the Portfolios' performance.
YEAR 2000 RISK. The Portfolios could be adversely affected if the computer
systems used by the Advisor and other service providers do not properly process
and calculate information related to dates beginning January 1, 2000. This is
commonly known as the "Year 2000 Problem." This situation may negatively affect
the companies in which the Portfolios invest and, by extension, the value of the
Portfolios' shares. Although the Portfolios' service providers are taking steps
to address this issue, there may still be some risk of adverse effects. To the
extent the Portfolios invest in foreign companies, there will be a greater
degree of Year 2000 Problem risk because foreign companies are not as advanced
in dealing with this issue as are U.S.
companies.
INVESTMENT ADVISOR
Rochdale Investment Management Inc. is the investment advisor to the Portfolios.
Rochdale's address is 570 Lexington Avenue, New York, NY 10022-6837. Rochdale
currently manages assets of more than $600 million for individual and
institutional investors, as well as another investment portfolio, the Rochdale
Alpha Portfolio. Rochdale provides advice on buying and selling securities.
Rochdale also furnishes the Portfolios with office space and certain
administrative services and provides most of the personnel needed by the
Portfolios. For its services, each Portfolio pays Rochdale a monthly management
fee based upon the average daily net assets of the Portfolio at the rate of
1.00% annually.
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PORTFOLIO MANAGERS
Mr. Carl Acebes and Mr. Garrett R. D'Alessandro, CFA, are responsible for the
day-to-day management of the Portfolios. Mr. Acebes has been Rochdale's Chairman
and Chief Investment Officer since its founding. Mr. D'Alessandro is Rochdale's
President, Chief Executive Officer, and Director of Research. Mr. D'Alessandro
joined Rochdale in 1986. Both Mr. Acebes and Mr. D'Alessandro are the Portfolio
Managers for one other investment portfolio, the Rochdale Alpha Portfolio.
PORTFOLIO EXPENSES
Each Portfolio is responsible for its own operating expenses. Rochdale has
contractually agreed to reduce its fees and/or pay expenses of the Portfolios to
ensure that each Portfolio's aggregate annual operating expenses (excluding
interest and tax expenses) will not exceed the limits set forth in the Expense
Table. Any reduction in advisory fees or payment of expenses made by Rochdale
are subject to reimbursement by the Portfolio if requested by Rochdale in
subsequent fiscal years. This reimbursement may be requested by Rochdale if the
aggregate amount actually paid by a Portfolio toward operating expenses for such
fiscal year (taking into account the reimbursements) does not exceed the
applicable limitation on Portfolio expenses. Rochdale is permitted to be
reimbursed for fee reductions and/or expense payments made in the prior three
fiscal years. (After startup, each Portfolio is permitted to look for longer
periods of four and five years.) Any such reimbursement will be reviewed by the
Trustees. Each Portfolio must pay its current ordinary operating expenses before
Rochdale is entitled to any reimbursement of fees and/or expenses.
SHAREHOLDER INFORMATION
HOW TO BUY SHARES
You may open a Portfolio account with $25,000. You may make add to your account
at any time with investments of at least $10,000. The minimum investment
requirements may be waived from time to time at the Advisor's discretion.
INVESTMENT ADVISORY CLIENTS OF ROCHDALE SHOULD CONTACT THEIR FINANCIAL ADVISOR
OR ROCHDALE DIRECTLY FOR INVESTMENT INSTRUCTIONS.
There are several ways to purchase shares of the Portfolios. An Application
Form, which accompanies this Prospectus, is used if you send money directly to
the Portfolios by mail or by wire. To open an account by wire, to open a
retirement plan account or to purchase shares by overnight mail (such as FedEx),
call Rochdale at (212) 702-3500 for instructions. If you have questions about
how to invest, or about how to complete the Application Form, please call
Rochdale at (212) 702- 3500. You may also buy shares of the Portfolios through
your financial representative. After your account is open, you may add to it at
any time.
You may send money for investment by mail. If you are making an initial
investment in a Portfolio, complete the Application Form and mail it with a
check (made payable to Rochdale Magna Portfolio or Rochdale Atlas Portfolio) to
the following address:
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Rochdale Magna Portfolio OR
Rochdale Atlas Portfolio
P.O. Box ____
Boston, MA 02105-____
If you wish to send your check via an overnight delivery service (such as
FedEx), you should call Rochdale at (212) 702-3500 for instructions.
You may add to your account by mailing the stub attached to your account
statement, together with your check made payable to Rochdale Magna Portfolio or
Rochdale Atlas Portfolio, to the address noted above. Your account number should
be written on your check.
INVESTMENT ADVISORY CLIENTS OF ROCHDALE SHOULD CONTACT THEIR FINANCIAL ADVISOR
OR ROCHDALE DIRECTLY REGARDING SUBSEQUENT INVESTMENTS.
You may purchase shares of the Portfolios by tendering payment in the form of
shares of stock, bonds or other securities. You may do this provided the
security being offered for the purchase of Portfolio shares is readily
marketable, its acquisition is consistent with the Portfolio's investment
objective, and the Advisor, at its discretion, finds it acceptable.
You may wire money to the Portfolios. If you are making an initial investment in
a Portfolio, you should call (212) 702-3500 between 9:00 a.m. and 4:00 p.m.,
Eastern time, on a day when the New York Stock Exchange ("NYSE") is open for
trading, in order to receive an account number. It is important to call and
receive this account number, because if your wire is sent without it or without
the name of the Portfolio, there may be a delay in investing the money you wire.
You should notify the Portfolios before making any wire transfer. You should
then ask your bank to wire money to:
State Street Bank
ABA Routing Number: 01 1000028
for credit to Rochdale Magna Portfolio
DDA #58407743 OR
Rochdale Atlas Portfolio
DDA #58407750
for further credit to [your name and account number]
You should advise your bank to include the name of the Portfolio and your
account number with the wire. Your bank may charge you a fee for sending a wire
to the Portfolios.
You may buy and sell shares of the Portfolios through certain brokers (and their
agents) that have made arrangements with the Portfolios to sell their shares.
When you place your order with such a broker or its authorized agent, your order
is treated as if you had placed it directly with the Portfolios' Transfer Agent,
and you will pay or receive the next price calculated by the Portfolio. The
broker (or agent) holds your shares in an omnibus account in the broker's (or
agent's) name, and the broker (or agent) maintains your individual ownership
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records. The Portfolios may pay the broker (or its agent) for maintaining these
records as well as providing other shareholder services. The broker (or its
agent) may charge you a fee for handling your order. The broker (or agent) is
responsible for processing your order correctly and promptly, keeping you
advised regarding the status of your individual account, confirming your
transactions and ensuring that you receive copies of the Portfolios' prospectus.
AUTOMATIC INVESTMENT PLAN
For your convenience, the Portfolios offer an Automatic Investment Plan. Under
this Plan, after your initial investment, you authorize the Portfolio to
withdrawal from your personal checking account each month an amount that you
with to invest, which must be at least $1,000. If you wish to enroll in this
Plan, please call ____________ for an application. The Portfolios may terminate
or modify this privilege at any time. You may elect to terminate your
participation in the Plan at any time by notifying the Transfer Agent in
writing. Your termination letter must be received by the Transfer Agent
sufficiently in advance of the next scheduled withdrawal.
RETIREMENT PLANS
The Portfolios offer prototype Individual Retirement Account ("IRA") and Roth
IRA plans. You may obtain information about opening an IRA account by contacting
the Distributor. If you wish to open another type of retirement plan, please
contact your securities dealer.
HOW TO EXCHANGE SHARES
INVESTMENT ADVISORY CLIENTS OF ROCHDALE SHOULD CONTRACT THEIR FINANCIAL ADVISOR
OR ROCHDALE DIRECTLY FOR INSTRUCTIONS ON HOW TO EXCHANGE SHARES.
You may exchange your Portfolio shares for shares of the other Portfolio or for
shares of Rochdale Alpha Portfolio on any day the Portfolio and the NYSE are
open for business. Before making an exchange, you should obtain and read the
prospectus of the Portfolio into which the exchange is to be made. Your exchange
of shares is considered a taxable event for you. In addition, an exchange of
shares held less than 18 months is subject to a redemption fee.
You may exchange your shares by sending a written request to the Portfolios. You
should give your account number and the number of shares or dollar amount to be
exchanged. The letter should be signed by all of the shareholders whose names
appear in the account registration.
If your account has telephone privileges, you may also exchange your shares by
calling (212) 702- 3500 between the hours of 9:00 a.m. and 4:00 p.m. (Eastern
time). If you are exchanging shares by telephone, you will be subject to certain
identification procedures which are listed below under "How to Sell Shares." The
Portfolios may modify, restrict or terminate the exchange privilege at any time.
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HOW TO SELL SHARES
INVESTMENT ADVISORY CLIENTS OF ROCHDALE SHOULD CONTACT THEIR FINANCIAL ADVISOR
OR ROCHDALE DIRECTLY FOR INSTRUCTIONS ON HOW TO REDEEM SHARES.
You may sell (redeem) your Portfolio shares on any day the Portfolio and the
NYSE are open for business either directly to the Portfolio or through your
investment representative. You will pay a 2.00% redemption fee if you are
redeeming shares that you purchased in the past eighteen months. This fee is
paid to the Portfolio. The Portfolios impose a redemption fee in order to reduce
transaction costs and the effects of a short-term investment in the Portfolios.
REDEMPTIONS BY MAIL
You may redeem your shares by sending a written request to the Portfolios. You
should give your account number and state whether you want all or some of your
shares redeemed. The letter should be signed by all of the shareholders whose
names appear in the account registration. You should send your redemption
request to the Portfolios at the following address:
Rochdale Magna Portfolio OR
Rochdale Atlas Portfolio
P.O. Box ______
Boston, MA 02105-_____
REDEMPTIONS BY TELEPHONE
If you have completed the Redemption by Telephone portion of the Account
Application, you may redeem some or all of your shares by telephone. You may
redeem by calling Rochdale at (212) 702- 3500 between the hours of 9:00 a.m. and
4:00 p.m., Eastern time. Redemption proceeds will be mailed to the address that
appears on the Transfer Agent's records. You may also request that your
redemption proceeds be wired to a predesignated bank. The minimum amount that
may be wired is $1,000. Wire charges, if any, will be deducted from your
redemption proceeds. Telephone redemptions cannot be made if you notify the
Transfer Agent of a change of address within 30 days before the redemption
request. You may not use the telephone redemption for retirement accounts.
When you establish telephone privileges, you are authorizing the Portfolios and
their Transfer Agent to act upon the telephone instructions of the person or
persons you have designated in your Account Application. Such persons may
request that the shares in your account be exchanged or redeemed. Redemption
proceeds will be transferred to the bank account you have designated on your
Account Application.
Before executing an instruction received by telephone, the Portfolios and the
Transfer Agent will use procedures to confirm that the telephone instructions
are genuine. These procedures will include recording the telephone call and
asking the caller for a form of personal identification. If the Portfolios and
the Transfer Agent follow these procedures, they will not be liable for any
loss, expense, or cost arising out of any telephone redemption or exchange
request that is reasonably believed to be genuine. This includes any fraudulent
or unauthorized request.
14
<PAGE>
You may request telephone redemption privileges after your account is opened by
calling the Transfer Agent at _________________ for an authorization form. You
will be required to submit the completed authorization form with a signature
guarantee.
You may have difficulties in making a telephone redemption during periods of
abnormal market activity. If this occurs, you may make your redemption request
in writing.
AUTOMATIC WITHDRAWALS
As another convenience, you may redeem your Portfolio shares through the
Automatic Withdrawal Program. If you elect this method of redemption, the
Portfolio will send you check in a minimum of $1,000. You may choose to receive
a check each month or calendar quarter. Your Portfolio account must have a value
of at least $25,000 in order to participate in this Program. This Program may be
terminated or modified by you or the Portfolios at any time without charge or
penalty. A withdrawal under the Systematic Withdrawal Program is treated as a
redemption and is considered a taxable event for you. In addition, a withdrawal
of shares held less than 18 months is subject to a redemption fee.
Payment of your redemption proceeds will be made promptly, but not later than
seven days after receipt of your written request in proper form. If you request
a redemption in writing, your request must have a signature guarantee attached
if the amount to be redeemed exceeds $5,000. Other documentation may be required
for certain types of accounts If you did not purchase your shares with a
certified check or wire, the Portfolios may delay payment of your redemption
proceeds up to 15 days from the date of purchase or until your check has
cleared, whichever occurs first.
Each Portfolio may redeem the shares in your account if the value of your
account is less than $10,000 as a result of redemptions you have made. This does
not apply to retirement plan or Uniform Gifts or Transfers to Minors Act
accounts. You will be notified that the value of your account is less than
$10,000 before the Portfolio makes an involuntary redemption. You will then have
30 days in which to make an additional investment to bring the value of your
account to at least $10,000 before the Portfolio takes any action.
The Portfolios have the right to pay redemption proceeds in whole or in part by
a distribution of securities from its portfolio. It is not expected that the
Portfolios would do so except in unusual circumstances.
PRICING OF PORTFOLIO SHARES
The price of each Portfolio's shares is based on the Portfolio's net asset
value. The net asset value of the Portfolio's shares is determined by dividing
the Portfolio's assets, minus its liabilities, by the number of shares
outstanding. The Portfolio's assets are the market value of securities it holds,
plus any cash and other assets. The Portfolio's liabilities are fees and
expenses it owes. The number of Portfolio shares outstanding is the amount of
shares which have been issued to shareholders. The price you will pay to buy
Portfolio shares or the amount you will receive when you sell your
15
<PAGE>
Portfolio shares is based on the net asset value next calculated after your
order is received in proper form.
The net asset value of each Portfolio's shares is determined as of the close of
regular trading on the NYSE. This is normally 4:00 p.m., Eastern time. Portfolio
shares will not be priced on days that
the NYSE is closed for trading (including certain U.S. holidays).
DIVIDENDS AND DISTRIBUTIONS
The Portfolios will make distributions of dividends and capital gains, if any,
annually, usually on or about December 31. Distributions are automatically
reinvested in shares of the Portfolio making the distribution. If you wish to
receive your distributions in cash, contact Rochdale at (212) 702-3500 before
the payment of the distribution.
TAX CONSEQUENCES
Dividends are taxable to you as ordinary income. The rate you pay on capital
gain distributions will depend on how long the Portfolio held the securities
that generated the gains, not on how long you owned your Portfolio shares. You
will be taxed in the same manner whether you receive your dividends and capital
gain distributions in cash or reinvest them in additional Portfolio shares.
If you sell or exchange your Portfolio shares, it is considered a taxable event
for you. Depending on the purchase price and the sale price of the shares you
sell or exchange, you may have a gain or a loss on the transaction. You are
responsible for any tax liabilities generated by your transaction.
DISTRIBUTION ARRANGEMENTS
The Portfolios have adopted a distribution plan under Rule 12b-1. This rule
allows the Portfolios to pay distribution fees for the sale and distribution of
their shares and for services provided to their shareholders. The annual
distribution and service fee is an annual rate of 0.25% of each Portfolio's
average daily net assets which is payable to the Advisor, as Distributor.
Because these fees are paid out of a Portfolio's assets on an ongoing basis,
over time these fees will increase the cost of your investment and may cost you
more than paying other types of sales charges. The Advisor does not expect to
charge a distribution fee during the Portfolios' first year of operations.
FINANCIAL HIGHLIGHTS
The tables below show the Portfolio's performance during its past fiscal period.
"Total return" shows much how much your investment in a Portfolio would have
increased or decreased during that period, assuming you have reinvested all
dividends and distributions. This information has been audited by Tait, Weller &
Baker, Independent Certified Public Accountants. Their reports and the
Portfolios' financial statements are included in the Annual Reports, which are
available upon request.
16
<PAGE>
FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT THE PERIOD
- ------------------------------------------------------------------------------
ATLAS MAGNA
PORTFOLIO PORTFOLIO
-------------------------------------
June 29, 1998* through March 31, 1999
- --------------------------------------------------------------------------------
Net asset value, beginning of period ...... $25.00 $25.00
----- -----
Income from investment operations: ........ -- (0.02)
Net investment loss ..................... 5.52 4.30
----- -----
Net realized and unrealized gain ........ $30.52 $29.28
===== =====
Total from investment operations .......... 22.08%** 17.12%***
Net asset value, end of period ............ $ 10.1 $ 8.1
Total return .............................. 22.90% 47.81%
$ .0073 $ .0314
Ratios/supplemental data:
Net assets, end of period (millions) .... 7.79%+ 6.19%+
1.61%+ 1.60%+
Portfolio turnover rate ................... (6.26%)+ (4.88%)+
Average commission rate paid per share .... (0.08%)+ (0.29%)+
Ratio of expenses to average net assets:
Before expense reimbursement and waivers.... 7.79%+ 6.19%+
After expense reimbursement and waivers.... 1.61%+ 1.60%+
Ratio of net investment loss to average net assets:
Before expense reimbursement and waivers.... (6.26%)+ (4.88%)+
After expense reimbursement and waivers..... (0.08%)+ (0.29%)+
* Inception of Portfolios.
** Commencement of investment operations, October 2, 1998.
*** Commencement of investment operations, October 23, 1998.
+Annualized.
17
ROCHDALE MAGNA PORTFOLIO
ROCHDALE ATLAS PORTFOLIO,
SERIES OF ROCHDALE INVESTMENT TRUST (THE "TRUST")
For investors who want more information about the Portfolios, the following
documents are available free upon request:
ANNUAL/SEMI-ANNUAL REPORTS: Additional information about the Portfolios'
investments is available in the Portfolios' annual and semi-annual reports to
shareholders. In each Portfolio's annual report, you will find a discussion of
the market conditions and investment strategies that significantly affected the
Portfolio's performance during its last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI): The SAI provides more detailed
information about the Portfolios and is incorporated by reference into this
Prospectus.
You can get free copies of the Portfolios reports and SAI, request other
information and discuss your questions about the Portfolios by contacting the
Portfolios at:
570 Lexington Avenue
New York, NY 10022-6837
Telephone: 212-702-3500 (Call collect)
You can review and copy information about the Portfolios, including the
Portfolios' reports and SAI at the Public Reference Room of the Securities and
Exchange Commission in Washington, D.C. You can obtain information on the
operation of the Public Reference Room by calling 1- 800-SEC-0330. You can get
copies:
* For a fee, by writing to the Public Reference Room of the Commission,
Washington, DC 20549-6009, or
* For a fee, by calling 1-800-SEC-0330, or
* Free of charge, from the Commission's Internet website at
http://www.sec.gov
(The Trust's SEC Investment
Company Act file number is 811-8685)
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
JULY 9, 1999
ROCHDALE MAGNA PORTFOLIO
ROCHDALE ATLAS PORTFOLIO,
SERIES OF ROCHDALE INVESTMENT TRUST
570 LEXINGTON AVENUE
NEW YORK, NY 10022-6837
(212) 702-3500
This Statement of Additional Information ("SAI") is not a prospectus
and it should be read in conjunction with the Prospectus dated July 9, 1999, as
may be revised, of the Rochdale Magna Portfolio and the Rochdale Atlas Portfolio
(the "Portfolios"), series of Rochdale Investment Trust (the "Trust"). Rochdale
Investment Management Inc. ("Rochdale") is investment advisor to the Portfolios.
A copy of the Portfolios' Prospectus is available by calling the number listed
above or (212) 633-9700.
TABLE OF CONTENTS
The Trust.................................................................. B-
Investment Objective and Policies.......................................... B-
Investment
Restrictions............................................................... B-
Distributions and Tax Information.......................................... B-
Trustees and Executive Officers............................................ B-
The Portfolio's Investment Advisor......................................... B-
The Portfolio's Administrator.............................................. B-
The Portfolio's Distributor................................................ B-
Execution of Portfolio Transactions........................................ B-
Additional Purchase and Redemption Information............................. B-
Determination of Share Price............................................... B-
Performance Information.................................................... B-
General Information........................................................ B-
Appendix A................................................................. B-
Appendix B................................................................. B-
B-1
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THE TRUST
Rochdale Investment Trust (the "Trust") is an open-end management
investment company organized as a Delaware business trust. The Trust may consist
of various series which represent separate investment portfolios. This SAI
relates only to the Rochdale Magna Portfolio and the Rochdale Atlas Portfolio.
The Trust is registered with the SEC as a management investment
company. Such a registration does not involve supervision of the management or
policies of the Portfolios. The Prospectus of the Portfolios and this SAI omit
certain information contained in the Registration Statement filed with the SEC.
Copies of such information may be obtained from the SEC upon payment of the
prescribed fee.
INVESTMENT OBJECTIVE AND POLICIES
Each of the Portfolios has the investment objective of long-term
capital appreciation. The following discussion supplements the discussion of the
Portfolios' investment objective and policies as set forth in the Prospectus.
Each Portfolio is diversified, which under applicable federal law means that as
to 75% of its total assets, not more than 5% may be invested in the securities
of a single issuer and that it may hold no more than 10% of the voting
securities of a single issuer. There can be no assurance that the objective of
either Portfolio will be attained.
CONVERTIBLE SECURITIES AND WARRANTS
The Portfolios may invest in convertible securities and warrants. A
convertible security is a fixed-income security (a debt instrument or a
preferred stock) which may be converted at a stated price within a specified
period of time into a certain quantity of the common stock of the same or a
different issuer. Convertible securities are senior to common stocks in an
issuer's capital structure, but are usually subordinated to similar
non-convertible securities. While providing a fixed income stream (generally
higher in yield than the income derivable from common stock but lower than that
afforded by a similar nonconvertible security), a convertible security also
affords an investor the opportunity, through its conversion feature, to
participate in the capital appreciation attendant upon a market price advance in
the convertible security's underlying common stock.
A warrant gives the holder a right to purchase at any time during a
specified period a predetermined number of shares of common stock at a fixed
price. Unlike convertible debt securities or preferred stock, warrants do not
pay a fixed dividend. Investments in warrants involve certain risks, including
the possible lack of a liquid market for resale of the warrants, potential price
fluctuations as a result of speculation or other factors, and failure of the
price of the underlying security to reach or have reasonable prospects of
reaching a level at which the warrant can be prudently exercised (in which event
the warrant may expire without being exercised, resulting in a loss of a
Portfolio's entire investment therein).
B-2
<PAGE>
INVESTMENT COMPANIES
Each Portfolio may under certain circumstances invest a portion of its
assets in other investment companies, including money market funds. In addition
to a Portfolio's advisory fee, an investment in an underlying mutual fund will
involve payment by a Portfolio of its pro rata share of
advisory and administrative fees charged by such fund.
SECURITIES LOANS
Each Portfolio is permitted to lend its securities to broker-dealers
and other institutional investors in order to generate additional income. Such
loans of portfolio securities may not exceed one-third of the value of a
Portfolio's total assets. In connection with such loans, a Portfolio will
receive collateral consisting of cash, cash equivalents, U.S. Government
securities, or irrevocable letters of credit issued by financial institutions.
Such collateral will be maintained at all times in an amount equal to at least
102% of the current market value plus accrued interest of the securities loaned.
A Portfolio can increase its income through the investment of such collateral. A
Portfolio continues to be entitled to the interest payable or any
dividend-equivalent payments received on a loaned security and, in addition, to
receive interest on the amount of the loan. However, the receipt of any
dividend-equivalent payments by a Portfolio on a loaned security from the
borrower will not qualify for the dividends-received deduction. Such loans will
be terminable at any time upon specified notice. A Portfolio might experience
risk of loss if the institutions with which it has engaged in portfolio loan
transactions breach their agreements with the Portfolio. The risks in lending
portfolio securities, as with other extensions of secured credit, consist of
possible delays in receiving additional collateral or in the recovery of the
securities or possible loss of rights in the collateral should the borrower
experience financial difficulty. Loans will be made only to firms deemed by
Rochdale to be of good standing and will not be made unless, in the judgment of
Rochdale, the consideration to be earned from such loans justifies the risk.
SHORT SALES
Each Portfolio may seek to hedge investments or realize additional
gains through short sales. Each Portfolio may make short sales, which are
transactions in which a Portfolio sells a security it does not own, in
anticipation of a decline in the market value of that security. To complete such
a transaction, the Portfolio must borrow the security to make delivery to the
buyer. A Portfolio then is obligated to replace the security borrowed by
purchasing it at the market price at or prior to the time of replacement. The
price at such time may be more or less than the price at which a Portfolio sold
the security. Until the security is replaced, the Portfolio is required to repay
the lender any dividends or interest that accrue during the period of the loan.
To borrow the security, a Portfolio also may be required to pay a premium, which
would increase the cost of the security sold. To the extent necessary to meet
margin requirements, the broker will retain the net proceeds of the short sale
until the short position is closed out. A Portfolio also will incur transaction
costs in effecting short sales.
B-3
<PAGE>
A Portfolio will incur a loss as a result of the short sale if the
price of the security increases between the date of the short sale and the date
on which the Portfolio replaces the borrowed security. A Portfolio will realize
a gain if the security declines in price between those dates. The amount of any
gain will be decreased, and the amount of any loss increased by the amount of
the premium, dividends, interest, or expenses a Portfolio may be required to pay
in connection with a short sale.
No securities will be sold short if, after effect is given to any such
short sale, the total market value of all securities sold short would exceed 25%
of the value of a Portfolio's net assets.
Whenever a Portfolio engages in short sales, its custodian will
segregate liquid assets equal to the difference between (a) the market value of
the securities sold short at the time they were sold short and (b) any assets
required to be deposited with the broker in connection with the short sale (not
including the proceeds from the short sale). The segregated assets are marked to
market daily, provided that at no time will the amount segregated plus the
amount deposited with the broker be less than the market value of the securities
at the time they were sold short.
ILLIQUID SECURITIES
Each Portfolio may not invest more than 15% of the value of its net
assets in securities that at the time of purchase have legal or contractual
restrictions on resale or are otherwise illiquid. Rochdale will monitor the
amount of illiquid securities held by the Portfolios, under the supervision of
the Trust's Board of Trustees, to ensure compliance with the Portfolios'
investment restrictions.
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 (the "Securities Act"), securities
which are otherwise not readily marketable and repurchase agreements having a
maturity of longer than seven days. Securities which have not been registered
under the Securities Act are referred to as private placement 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 Portfolio might be
unable to sell restricted or other illiquid securities promptly or at reasonable
prices and might thereby experience difficulty satisfying redemption requests
within seven days. A Portfolio might also have to register such restricted
securities in order to sell 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 Securities 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
B-4
<PAGE>
to certain institutions may not reflect the actual liquidity of such
investments. If such securities are subject to purchase by institutional buyers
in accordance with Rule 144A promulgated by the SEC under the Securities Act,
the Trust's Board of Trustees may determine that such securities are not
illiquid securities despite their legal or contractual restrictions on resale.
In all other cases, however, securities subject to restrictions on resale will
be deemed illiquid.
REPURCHASE AGREEMENTS
Each Portfolio may enter into repurchase agreements. Under such
agreements, the seller of the security agrees to repurchase it at a mutually
agreed upon time and price. The repurchase price may be higher than the purchase
price, the difference being income to a Portfolio, or the purchase and
repurchase prices may be the same, with interest at a stated rate due to a
Portfolio together with the repurchase price on repurchase. In either case, the
income to a Portfolio is unrelated to the interest rate on the U.S. Government
security itself. Such repurchase agreements will be made only with banks with
assets of $500 million or more that are insured by the Federal Deposit Insurance
Corporation or with Government securities dealers recognized by the Federal
Reserve Board and registered as broker-dealers with the Securities and Exchange
Commission ("SEC") or exempt from such registration. Each Portfolio will
generally enter into repurchase agreements of short duration, from overnight to
one week, although the underlying securities generally have longer maturities.
Each Portfolio may not enter into a repurchase agreement with more than seven
days to maturity if, as a result, more than 15% of the value of its net assets
would be invested in illiquid securities including such repurchase agreements.
For purposes of the Investment Company Act of 1940 (the "1940 Act"), a
repurchase agreement is deemed to be a loan from a Portfolio to the seller of
the U.S. Government security subject to the repurchase agreement. It is not
clear whether a court would consider the U.S. Government security acquired by a
Portfolio subject to a repurchase agreement as being owned by the Portfolio or
as being collateral for a loan by the Portfolio to the seller. In the event of
the commencement of bankruptcy or insolvency proceedings with respect to the
seller of the U.S. Government security before its repurchase under a repurchase
agreement, a Portfolio may encounter delays and incur costs before being able to
sell the security. Delays may involve loss of interest or a decline in price of
the U.S. Government security. If a court characterizes the transaction as a loan
and a Portfolio has not perfected a security interest in the U.S. Government
security, the Portfolio may be required to return the security to the seller's
estate and be treated as an unsecured creditor of the seller. As an unsecured
creditor, a Portfolio would be at the risk of losing some or all of the
principal and income involved in the transaction. As with any unsecured debt
instrument purchased for a Portfolio, Rochdale seeks to minimize the risk of
loss through repurchase agreements by analyzing the creditworthiness of the
other party, in this case the seller of the U.S. Government security.
Apart from the risk of bankruptcy or insolvency proceedings, there is
also the risk that the seller may fail to repurchase the security. However, a
Portfolio will always receive as collateral for any repurchase agreement to
which it is a party securities acceptable to it, the market value of which
B-5
<PAGE>
is equal to at least 100% of the amount invested by the Portfolio plus accrued
interest, and the Portfolio will make payment against such securities only upon
physical delivery or evidence of book entry transfer to the account of its
Custodian. If the market value of the U.S. Government security subject to the
repurchase agreement becomes less than the repurchase price (including
interest), a Portfolio will direct the seller of the U.S. Government security to
deliver additional securities so that the market value of all securities subject
to the repurchase agreement will equal or exceed the repurchase price. It is
possible that a Portfolio will be unsuccessful in seeking to impose on the
seller a contractual obligation to deliver additional securities.
WHEN-ISSUED SECURITIES
Each Portfolio may from time to time purchase securities on a
"when-issued" basis. The price of such securities, which may be expressed in
yield terms, is fixed at the time the commitment to purchase is made, but
delivery and payment for the when-issued securities take place at a later date.
Normally, the settlement date occurs within one month of the purchase; during
the period between purchase and settlement, a Portfolio makes no payment to the
issuer and no interest accrues to the Portfolio. To the extent that assets of a
Portfolio are held in cash pending the settlement of a purchase of securities,
the Portfolio would earn no income. While when-issued securities may be sold
prior to the settlement date, a Portfolio intends to purchase such securities
with the purpose of actually acquiring them unless a sale appears desirable for
investment reasons. At the time a Portfolio makes the commitment to purchase a
security on a when-issued basis, it will record the transaction and reflect the
value of the security in determining its net asset value. The market value of
the when-issued securities may be more or less than the purchase price. Rochdale
does not believe that a Portfolio's net asset value or income will be adversely
affected by the purchase of securities on a when-issued basis. A Portfolio will
segregate liquid assets equal in value to commitments for when-issued
securities, which reduces but does not eliminate leverage.
FIXED-INCOME SECURITIES
Although equity securities are the primary focus for the Portfolios,
they may also hold fixed-income securities when Rochdale believes that
opportunities for long-term capital growth exist. The Portfolio's investments in
corporate fixed-income securities of domestic and foreign issuers are limited to
corporate debt securities (bonds, debentures, notes and other similar corporate
debt instruments). Each Portfolio may invest up 25% of its assets in securities
rated B or better by Moody's Investors Services, Inc. ("Moody's") or Standard &
Poor's Ratings Group ("S&P"), or, if unrated, are in Rochdale's view, of
comparable quality.
The market value of debt securities is influenced significantly by
changes in the level of interest rates. Generally, as interest rates rise, the
market value of debt securities decreases. Conversely, as interest rates fall,
the market value of debt securities increases. Factors which could result in a
rise in interest rates, and a decrease in market value of debt securities,
include an increase in inflation or inflation expectations, and increase in the
rate of U.S. economic growth, an expansion in the Federal budget deficit, or an
increase in the price of commodities, such as oil. In addition, the
B-6
<PAGE>
market value of debt securities is influenced by perceptions of the credit risks
associated with such securities. Credit risk is the risk that adverse changes in
economic conditions can affect an issuer's ability to pay principal and
interest. Securities rated B by Moody's or S&P, commonly referred to as "junk
bonds," are speculative and generally involve a higher risk of loss of principal
and income than higher-rated securities. See Appendix A for a description of
corporate bond ratings.
SHORT-TERM INVESTMENTS
Each Portfolio may invest in any of the following securities and
instruments:
CERTIFICATES OF DEPOSIT, BANKERS' ACCEPTANCES AND TIME DEPOSITS. Each
Portfolio may hold certificates of deposit, bankers' acceptances and time
deposits. Certificates of deposit are negotiable certificates issued against
funds deposited in a commercial bank for a definite period of time and earning a
specified return. Bankers' acceptances are negotiable drafts or bills of
exchange, normally drawn by an importer or exporter to pay for specific
merchandise, which are "accepted" by a bank, meaning in effect that the bank
unconditionally agrees to pay the face value of the instrument on maturity.
Certificates of deposit and bankers' acceptances acquired by a Portfolio will be
dollar-denominated obligations of domestic banks, savings and loan associations
or financial institutions which, at the time of purchase, have capital, surplus
and undivided profits in excess of $100 million (including assets of both
domestic and foreign branches), based on latest published reports, or less than
$100 million if the principal amount of such bank obligations are fully insured
by the U.S. Government.
In addition to buying certificates of deposit and bankers' acceptances,
each Portfolio also may make interest-bearing time or other interest-bearing
deposits in commercial or savings banks. Time deposits are non-negotiable
deposits maintained at a banking institution for a specified period of time at a
specified interest rate.
COMMERCIAL PAPER AND SHORT-TERM NOTES. Each Portfolio may invest a
portion of its assets in commercial paper and short-term notes. Commercial paper
consists of unsecured promissory notes issued by corporations. Commercial paper
and short-term notes will normally have maturities of less than nine months and
fixed rates of return, although such instruments may have
maturities of up to one year.
Commercial paper and short-term notes will consist of issues rated at
the time of purchase "A-2" or higher by S&P, "Prime-1" or "Prime-2" by Moody's,
or similarly rated by another nationally recognized statistical rating
organization or, if unrated, will be determined by Rochdale to be of comparable
quality. See Appendix B for a description of commercial paper ratings.
FOREIGN INVESTMENTS AND CURRENCIES
The Portfolios may invest in securities of foreign issuers that are not
publicly traded in the United States. The Portfolios may also invest in
Depositary Receipts, purchase and sell foreign currency on a spot basis, and
enter into forward currency contracts (see "Forward Currency Contracts," below).
The Magna Portfolio's investments in foreign securities is limited to no more
than 25% of its total assets.
B-7
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DEPOSITARY RECEIPTS. The Portfolios may invest in securities of foreign
issuers in the form of American Depositary Receipts ("ADRs"), European
Depositary Receipts ("EDRs"), Global Depositary Receipts ("GDRs") or other
securities convertible into securities of foreign issuers. These securities may
not necessarily be denominated in the same currency as the securities for which
they may be exchanged. The Portfolios may also hold American Depository Shares
("ADSs"), which are similar to ADRs. ADRs and ADSs are typically issued by an
American bank or trust company and evidence ownership of underlying securities
issued by a foreign corporation. EDRs, which are sometimes referred to as
Continental Depository Receipts ("CDRs"), are receipts issued in Europe,
typically by foreign banks and trust companies, that evidence ownership of
either foreign or domestic securities. Generally, ADRs in registered form are
designed for use in U.S. securities markets. The Magna Portfolio's 25%
limitation on investments in foreign securities does not apply to its
investments in Depositary Receipts.
RISKS OF INVESTING IN FOREIGN SECURITIES. Investments in foreign
securities involve certain inherent risks, including the following:
POLITICAL AND ECONOMIC FACTORS. Individual foreign economies of certain
countries may differ favorably or unfavorably from the U.S. economy in such
respects as growth of gross national product, rate of inflation, capital
reinvestment, resource self-sufficiency, and diversification and balance of
payments position. The internal politics of some foreign countries may not be as
stable as those of the United States. Governments in some foreign countries also
continue to participate to a significant degree, through ownership interest or
regulation, in their respective economies. Action by these governments could
include restrictions on foreign investment, nationalization, expropriation of
goods or imposition of taxes, and could have a significant effect on market
prices of securities and payment of interest. The economies of many foreign
countries are heavily dependent upon international trade and are affected by the
trade policies and economic conditions of their trading partners. If these
trading partners enacted protectionist trade legislation, it could have a
significant adverse effect upon the securities markets of such countries.
CURRENCY FLUCTUATIONS. The Portfolios may invest in securities
denominated in foreign currencies. A change in the value of any such currency
against the U.S. dollar will result in a corresponding change in the U.S. dollar
value of a Portfolio's assets denominated in that currency. Such changes will
also affect a Portfolio's income. The value of a Portfolio's assets may also be
affected significantly by currency restrictions and exchange control regulations
enacted from time to time.
EURO CONVERSION. Several European countries adopted a single uniform
currency known as the "euro," effective January 1, 1999. The euro conversion,
that will take place over a several-year period, could have potential adverse
effects on a Portfolio's ability to value its portfolio holdings in foreign
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securities, and could increase the costs associated with a Portfolio's
operations. The Portfolios and Rochdale are working with providers of services
to the Portfolios in the areas of clearance and settlement of trade to avoid any
material impact on the Portfolios due to the euro conversion; there can be no
assurance, however, that the steps taken will be sufficient to avoid any adverse
impact on a Portfolio.
MARKET CHARACTERISTICS. Rochdale expects that many foreign securities
in which a Portfolio invests will be purchased in over-the-counter markets or on
exchanges located in the countries in which the principal offices of the issuers
of the various securities are located, if that is the best available market.
Foreign exchanges and markets may be more volatile than those in the United
States. While growing, they usually have substantially less volume than U.S.
markets, and a Portfolio's foreign securities may be less liquid and more
volatile than U.S. securities. Also, settlement practices for transactions in
foreign markets may differ from those in United States markets, and may include
delays beyond periods customary in the United States. Foreign security trading
practices, including those involving securities settlement where Portfolio
assets may be released prior to receipt of payment or securities, may expose a
Portfolio to increased risk in the event of a failed trade or the insolvency of
a foreign broker-dealer.
LEGAL AND REGULATORY MATTERS. Certain foreign countries may have less
supervision of securities markets, brokers and issuers of securities, and less
financial information available to issuers, than is available in the United
States.
TAXES. The interest and dividends payable on some of a Portfolio's
foreign portfolio securities may be subject to foreign withholding taxes, thus
reducing the net amount of income available for distribution to Portfolio
shareholders.
COSTS. To the extent that a Portfolio invests in foreign securities,
its expense ratio is likely to be higher than those of investment companies
investing only in domestic securities, since the cost of maintaining the custody
of foreign securities is higher.
EMERGING MARKETS. Some of the securities in which a Portfolio may
invest may be located in developing or emerging markets, which entail additional
risks, including less social, political and economic stability; smaller
securities markets and lower trading volume, which may result in less liquidity
and greater price volatility; national policies that may restrict a Portfolio's
investment opportunities, including restrictions on investment in issuers or
industries, or expropriation or confiscation of assets or property; and less
developed legal structures governing private or foreign investment.
OPTIONS AND FUTURES STRATEGIES
Each Portfolio may purchase put and call options, engage in the writing
of covered call options and secured put options, and employ a variety of other
investment techniques. Specifically, a Portfolio may engage in the purchase and
sale of options on securities and stock indices, index future contracts and
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options on such futures, all as described more fully below. Such investment
policies and techniques may involve a greater degree of risk than those inherent
in more conservative investment approaches. Neither Portfolio will engage in
such transactions for the purposes of speculation or leverage.
OPTIONS ON SECURITIES. To hedge against adverse market shifts, a
Portfolio may purchase put and call options on securities held in its portfolio.
In addition, a Portfolio may seek to increase its income in an amount designed
to meet operating expenses or may hedge a portion of its portfolio investments
through writing (that is, selling) "covered" put and call options. A put option
provides its purchaser with the right to compel the writer of the option to
purchase from the option holder an underlying security at a specified price at
any time during or at the end of the option period. In contrast, a call option
gives the purchaser the right to buy the underlying security covered by the
option from the writer of the option at the stated exercise price. A covered
call option contemplates that, for so long as a Portfolio is obligated as the
writer of the option, it will own (1) the underlying securities subject to the
option or (2) securities convertible into, or exchangeable without the payment
of any consideration for, the securities subject to the option. The value of the
underlying securities on which covered call options will be written at any one
time by a Portfolio will not exceed 25% of the Portfolio's total assets. A
Portfolio will be considered "covered" with respect to a put option it writes
if, so long as it is obligated as the writer of a put option, it segregates
liquid assets that are acceptable to the appropriate regulatory authority.
Each Portfolio may purchase options on securities that are listed on
securities exchanges or that are traded over-the-counter ("OTC"). As the holder
of a put option, a Portfolio has the right to sell the securities underlying the
option, and as the holder of a call option, a Portfolio has the right to
purchase the securities underlying the option, in each case at the option's
exercise price at any time prior to, or on, the option's expiration date. A
Portfolio may choose to exercise the options it holds, permit them to expire or
terminate them prior to their expiration by entering into closing sale
transactions. In entering into a closing sale transaction, a Portfolio would
sell an option of the same series as the one it has purchased.
A Portfolio receives a premium when it writes call options, which
increases the Portfolio's return on the underlying security in the event the
option expires unexercised or is closed out at a profit. By writing a call, a
Portfolio limits its opportunity to profit from an increase in the market value
of the underlying security above the exercise price of the option for as long as
the Portfolio's obligation as writer of the option continues. A Portfolio
receives a premium when it writes put options, which increases the Portfolio's
return on the underlying security in the event the option expires unexercised or
is closed out at a profit. By writing a put, a Portfolio limits its opportunity
to profit from an increase in the market value of the underlying security above
the exercise price of the option for as long as the Portfolio's obligation as
writer of the option continues. Thus, in some periods, a Portfolio will receive
less total return and in other periods greater total return from its hedged
positions than it would have received from its underlying securities if
unhedged.
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In purchasing a put option, a Portfolio seeks to benefit from a decline
in the market price of the underlying security, whereas in purchasing a call
option, a Portfolio seeks to benefit from an increase in the market price of the
underlying security. If an option purchased is not sold or exercised when it has
remaining value, or if the market price of the underlying security remains equal
to or greater than the exercise price, in the case of a put, or remains equal to
or below the exercise price, in the case of a call, during the life of the
option, a Portfolio will lose its investment in the option. For the purchase of
an option to be profitable, the market price of the underlying security must
decline sufficiently below the exercise price, in the case of a put, and must
increase sufficiently above the exercise price, in the case of a call, to cover
the premium and transaction costs. Because option premiums paid by a Portfolio
are small in relation to the market value of the investments underlying the
options, buying options can result in large amounts of leverage. The leverage
offered by trading in options could cause a Portfolio's net asset value to be
subject to more frequent and wider fluctuations than would be the case if the
Portfolio did not invest in options.
OTC OPTIONS. OTC options differ from exchange-traded options in several
respects. They are transacted directly with dealers and not with a clearing
corporation, and there is a risk of non-performance by the dealer. However, the
premium is paid in advance by the dealer. OTC options are available for a
greater variety of securities and foreign currencies, and in a wider range of
expiration dates and exercise prices than exchange-traded options. Since there
is no exchange, pricing is normally done by reference to information from a
market maker, which information is carefully monitored or caused to be monitored
by Rochdale and verified in appropriate cases.
A writer or purchaser of a put or call option can terminate it
voluntarily only by entering into a closing transaction. In the case of OTC
options, there can be no assurance that a continuous liquid secondary market
will exist for any particular option at any specific time. Consequently, a
Portfolio may be able to realize the value of an OTC option it has purchased
only by exercising it or entering into a closing sale transaction with the
dealer that issued it. Similarly, when a Portfolio writes an OTC option, it
generally can close out that option prior to its expiration only by entering
into a closing purchase transaction with the dealer to which it originally wrote
the option. If a covered call option writer cannot effect a closing transaction,
it cannot sell the underlying security or foreign currency until the option
expires or the option is exercised. Therefore, the writer of a covered OTC call
option may not be able to sell an underlying security even though it might
otherwise be advantageous to do so. Likewise, the writer of a covered OTC put
option may be unable to sell the securities pledged to secure the put for other
investment purposes while it is obligated as a put writer. Similarly, a
purchaser of an OTC put or call option might also find it difficult to terminate
its position on a timely basis in the absence of a secondary market.
Each Portfolio may purchase and write OTC put and call options in
negotiated transactions. The staff of the SEC has previously taken the position
that the value of purchased OTC options and the assets used as "cover" for
written OTC options are illiquid securities and, as such, are to be included in
the calculation of a Portfolio's 15% limitation on illiquid securities. However,
the staff has eased its position somewhat in certain limited circumstances. A
Portfolio will attempt to enter into contracts with certain dealers with which
it writes OTC options. Each such contract will provide
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that a Portfolio has the absolute right to repurchase the options it writes at
any time at a repurchase price which represents the fair market value, as
determined in good faith through negotiation between the parties, but which in
no event will exceed a price determined pursuant to a formula contained in the
contract. Although the specific details of such formula may vary among
contracts, the formula will generally be based upon a multiple of the premium
received by a Portfolio for writing the option, plus the amount, if any, of the
option's intrinsic value. The formula will also include a factor to account for
the difference between the price of the security and the strike price of the
option. If such a contract is entered into, a Portfolio will count as illiquid
only the initial formula price minus the option's intrinsic value.
Each Portfolio will enter into such contracts only with primary U.S.
Government securities dealers recognized by Federal Reserve Banks. Moreover,
such primary dealers will be subject to the same standards as are imposed upon
dealers with which a Portfolio enters into repurchase
agreements.
STOCK INDEX OPTIONS. In seeking to hedge all or a portion of its
investment, a Portfolio may purchase and write put and call options on stock
indices listed on securities exchanges, which indices include securities held by
the Portfolio.
A stock index measures the movement of a certain group of stocks by
assigning relative values to the securities included in the index. Options on
stock indices are generally similar to options on specific securities. Unlike
options on specific securities, however, options on stock indices do not involve
the delivery of an underlying security; the option in the case of an option on a
stock index represents the holder's right to obtain from the writer in cash a
fixed multiple of the amount by which the exercise price exceeds (in the case of
a put) or is less than (in the case of a call) the closing value of the
underlying stock index on the exercise date.
When a Portfolio writes an option on a stock index, it will segregate
liquid assets in an amount equal to the market value of the option, and will
maintain liquid assets with a value sufficient
at all times to cover its potential obligations while the option is open.
Stock index options are subject to position and exercise limits and
other regulations imposed by the exchange on which they are traded. If a
Portfolio writes a stock index option, it may terminate its obligation by
effecting a closing purchase transaction, which is accomplished by purchasing an
option of the same series as the option previously written. The ability of a
Portfolio to engage in closing purchase transactions with respect to stock index
options depends on the existence of a liquid secondary market. Although a
Portfolio generally purchases or writes stock index options only if a liquid
secondary market for the options purchased or sold appears to exist, no such
secondary market may exist, or the market may cease to exist at some future
date, for some options. No assurance can be given that a closing purchase
transaction can be effected when a Portfolio desires to engage in such a
transaction.
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RISKS RELATING TO PURCHASE AND SALE OF OPTIONS ON STOCK INDICES.
Purchase and sale of options on stock indices by a Portfolio are subject to
certain risks that are not present with options on securities. Because the
effectiveness of purchasing or writing stock index options as a hedging
technique depends upon the extent to which price movements in a Portfolio's
portfolio correlate with price movements in the level of the index rather than
the price of a particular stock, whether the Portfolio will realize a gain or
loss on the purchase or writing of an option on a stock index depends upon
movements in the level of stock prices in the stock market generally or, in the
case of certain indices, in an industry or market segment, rather than movements
in the price of a particular stock. Accordingly, successful use by a Portfolio
of options on stock indices will be subject to the ability of Rochdale to
correctly predict movements in the direction of the stock market generally or of
a particular industry. This requires different skills and techniques than
predicting changes in the price of individual stocks. In the event Rochdale is
unsuccessful in predicting the movements of an index, a Portfolio could be in a
worse position than had no hedge been attempted.
Stock index prices may be distorted if trading of certain stocks
included in the index is interrupted. Trading in stock index options also may be
interrupted in certain circumstances, such as if trading were halted in a
substantial number of stocks included in the index. If this occurred, a
Portfolio would not be able to close out options which it had purchased or
written and, if restrictions on exercise were imposed, might be unable to
exercise an option it holds, which could result in substantial losses to the
Portfolio. However, it will be each Portfolio's policy to purchase or write
options only on indices which include a sufficient number of stocks so that the
likelihood of a trading halt in the index is minimized.
FUTURES CONTRACTS. Each Portfolio may purchase and sell stock index
futures contracts and interest rate futures contracts ("futures contracts"). The
purpose of the acquisition or sale of a futures contract by a Portfolio is to
hedge against fluctuations in the value of its portfolio without actually buying
or selling securities. The futures contracts in which a Portfolio may invest
have been developed by and are traded on national commodity exchanges. A
Portfolio may assume both "long" and "short" positions with respect to futures
contracts. A long position involves entering into a futures contract to buy a
commodity, whereas a short position involves entering into a futures contract to
sell a commodity.
A stock index futures contract is a bilateral agreement pursuant to
which one party agrees to accept, and the other party agrees to make, delivery
of an amount of cash equal to a specified dollar amount times the difference
between the stock index value at the close of trading of the contract and the
price at which the futures contract is originally struck. No physical delivery
of the stocks comprising the index is made. Generally, contracts are closed out
prior to the expiration date of the contract.
An interest rate futures contract is a bilateral agreement pursuant to
which one party agrees to make, and the other party agrees to accept, delivery
of a specified type of debt security at a specified future time and at a
specified price. Although such futures contracts by their terms call for
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actual delivery or acceptance of debt securities, in most cases, the contracts
are closed out before the settlement date without the making or taking of
delivery.
The purpose of trading futures contracts is to protect a Portfolio from
fluctuations in value of its investment securities without necessarily buying or
selling the securities. Because the value of a Portfolio's investment securities
will exceed the value of the futures contracts sold by it, an increase in the
value of the futures contracts could only mitigate, but not totally offset, the
decline in the value of the Portfolio's assets. No consideration is paid or
received by a Portfolio upon trading a futures contract. Instead, upon entering
into a futures contract, a Portfolio is required to deposit an amount of cash or
U.S. Government securities generally equal to 10% or less of the contract value.
This amount is known as "initial margin" and is in the nature of a performance
bond or good faith deposit on the contract that is returned to a Portfolio upon
termination of the futures contract, assuming that all contractual obligations
have been satisfied; the broker will have access to amounts in the margin
account if the Portfolio fails to meet its contractual obligations. Subsequent
payments, known as "variation margin," to and from the broker, will be made
daily as the price of the currency or securities underlying the futures contract
fluctuates, making the long and short positions in the futures contract more or
less valuable, a process known as "marking-to-market." At any time prior to the
expiration of a futures contract, a Portfolio may elect to close a position by
taking an opposite position, which will operate to terminate the Portfolio's
existing position in the contract.
Each short position in a futures contract entered into by a Portfolio
is secured by the Portfolio's ownership of underlying securities. A Portfolio
does not use leverage when it enters into long futures contracts; the Portfolio
segregates, with respect to each of its long positions, liquid
assets having a value equal to the underlying commodity value of the contract.
Each Portfolio may trade futures contracts to the extent permitted
under rules and interpretations adopted by the Commodity Futures Trading
Commission (the "CFTC"). U.S. futures contracts have been designed by exchanges
that have been designated as "contract markets" by the CFTC, and must be
executed through a futures commission merchant, or brokerage firm, that is a
member of the relevant contract market. Futures contracts trade on a number of
contract markets, and, through their clearing corporations, the exchanges
guarantee performance of the contracts as between the clearing members of the
exchange.
Each Portfolio intends to comply with CFTC regulations and avoid
"commodity pool operator" or "commodity trading advisor" status. These
regulations require that a Portfolio use futures positions (a) for "bona fide
hedging purposes" (as defined in the regulations) or (b) for other purposes so
long as aggregate initial margins and premiums required in connection with
non-hedging positions do not exceed 5% of the liquidation value of a Portfolio's
portfolio.
RISKS OF TRANSACTIONS IN FUTURES CONTRACTS. There are several risks in
using futures contracts as hedging devices. First, all participants in the
futures market are subject to initial margin and variation margin requirements.
Rather than making additional variation margin payments, investors may close the
contracts through offsetting transactions which could distort the normal
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relationship between the index or security and the futures market. Second, the
margin requirements in the futures market are lower than margin requirements in
the securities market, and as a result the futures market may attract more
speculators than does the securities market. Increased participation by
speculators in the futures market may also cause temporary price distortions.
Because of possible price distortion in the futures market and because of
imperfect correlation between movements in stock indices or securities and
movements in the prices of futures contracts, even a correct forecast of general
market trends may not result in a successful hedging transaction over a very
short period.
Another risk arises because of imperfect correlation between movements
in the value of the futures contracts and movements in the value of securities
subject to the hedge. With respect to stock index futures contracts, the risk of
imperfect correlation increases as the composition of a Portfolio's portfolio
diverges from the securities included in the applicable stock index. It is
possible that a Portfolio might sell stock index futures contracts to hedge
against a decline in the market, only to have the market advance and the value
of securities held by the Portfolio decline. If this occurred, a Portfolio would
lose money on the contracts and also experience a decline in the value of its
portfolio securities. While this could occur, Rochdale believes that over time
the value of a Portfolio will tend to move in the same direction as the market
indices and will attempt to reduce this risk, to the extent possible, by
entering into futures contracts on indices whose movements they believe will
have a significant correlation with movements in the value of the portfolio
securities sought to be hedged.
Successful use of futures contracts by a Portfolio is subject to the
ability of Rochdale to predict correctly movements in the direction of the
market. If a Portfolio has hedged against the possibility of a decline in the
value of the stocks it holds and stock prices increase instead, the Portfolio
would lose part or all of the benefit of the increased value of its security
which it has hedged because it will have offsetting losses in its futures
positions. In addition, in such situations, if a Portfolio has insufficient
cash, it may have to sell securities to meet daily variation margin
requirements. Such sales of securities may, but will not necessarily, be at
increased prices which reflect the rising market. A Portfolio may have to sell
securities at a time when it may be disadvantageous to do so.
LIQUIDITY OF FUTURES CONTRACTS. Each Portfolio may elect to close some
or all of its contracts prior to expiration. The purpose of making such a move
would be to reduce or eliminate the hedge position held by a Portfolio. A
Portfolio may close its positions by taking opposite positions. Final
determinations of variation margin are then made, additional cash as required is
paid by or to a Portfolio, and the Portfolio realizes a loss or a gain.
Positions in futures contracts may be closed only on an exchange or board of
trade providing a secondary market for such futures contracts. Although each
Portfolio intends to enter into futures contracts only on exchanges or boards of
trade where there appears to be an active secondary market, there is no
assurance that a liquid secondary market will exist for any particular contract
at any particular time.
In addition, most domestic futures exchanges and boards of trade limit
the amount of fluctuation permitted in futures contract prices during a single
trading day. The daily limit establishes the maximum amount that the price of a
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futures contract may vary either up or down from the previous day's settlement
price at the end of a trading session. Once the daily limit has been reached in
a particular contract, no trades may be made that day at a price beyond that
limit. The daily limit governs only price movement during a particular trading
day and therefore does not limit potential losses because the limit may prevent
the liquidation of unfavorable positions. It is possible that futures contract
prices could move to the daily limit for several consecutive trading days with
little or no trading, thereby preventing prompt liquidation of futures positions
and subjecting some futures traders to substantial losses. In such event, it
will not be possible to close a futures position and, in the event of adverse
price movements, a Portfolio would be required to make daily cash payments of
variation margin. In such circumstances, an increase in the value of the portion
of the portfolio being hedged, if any, may partially or completely offset losses
on the futures contract. However, as described above, there is no guarantee that
the price of the securities being hedged will, in fact, correlate with the price
movements in the futures contract and thus provide an offset to losses on a
futures contract.
Investments in futures contracts by their nature tend to be more
short-term than other securities investments made by a Portfolio. A Portfolio's
ability to make such investments, therefore, may result in an increase in
portfolio activity and thereby may result in the payment of additional
transaction costs.
FORWARD CURRENCY CONTRACTS
Each Portfolio may enter into forward currency contracts in
anticipation of changes in currency exchange rates. A forward currency contract
is an obligation to purchase or sell a specific currency at a future date, which
may be any fixed number of days from the date of the contract agreed upon by the
parties, at a price set at the time of the contract. For example, a Portfolio
might purchase a particular currency or enter into a forward currency contract
to preserve the U.S. dollar price of securities it intends to or has contracted
to purchase. Alternatively, it might sell a particular currency on either a spot
or forward basis to hedge against an anticipated decline in the dollar value of
securities it intends to or has contracted to sell. Although this strategy could
minimize the risk of loss due to a decline in the value of the hedged currency,
it could also limit any potential gain from an increase in the value of the
currency.
SWAP CONTRACTS
TYPES OF SWAPS. Swaps are a specific type of OTC derivative involving
privately negotited agreements with a trading counterparty. The Portfolios may
use the following: (i) Long equity swap contracts: where a Portfolio pays a
fixed rate plus the negative performance, if any, and receives the positive
performance, if any, of an index or basket of securities; (ii) Short equity swap
contracts: where a Portfolio receives a fixed rate plus the negative
performance, if any, and pays the positive performance of an index or basket of
securities; and (iii) Contracts for differences: equity swaps that contain both
a long and short equity component.
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USES. The Portfolios may use swaps for (i) tradition hedging purposes -
short equity swap contracts used to hedge against an equity risk already present
in a Portfolio; (ii) anticipatory purchase hedging purposes - where a Portfolio
that anticipates significant cash purchase transactions enters into long equity
swap contracts to obtain market exposure until such a time where direct
investment becomes possible or can be made efficiently; (iii) anticipatory
redemption hedging purposes where a Portfolio that expects significant demand
for redemptions enters into short equity swap contracts, to allow it to dispose
of securities in a more orderly fashion; (iv) direct investment - where a
Portfolio purchases (particularly long equity swap contracts in place of
investing directly in securities; (v) risk management - where a Portfolio uses
equity swap contracts to adjust the weight of the Portfolio to a level the
Advisor feels is the optimal exposure to individual markets, sectors and
equities.
LIMITATIONS ON USE. There is generally no limit on the use of swaps
except to the extent such swaps are subject to the liquidity requirement of a
Portfolio.
INVESTMENT RESTRICTIONS
The following policies and investment restrictions have been adopted by
each Portfolio and (unless otherwise noted) are fundamental and cannot be
changed without the affirmative vote of a majority of the Portfolio's
outstanding voting securities as defined in the 1940 Act. Neither Portfolio may:
1. Make loans to others, except (a) through the purchase of debt
securities in accordance with its investment objectives and policies, (b)
through the lending of portfolio securities, or (c) to the extent the entry into
a repurchase agreement is deemed to be a loan.
2. (a) Borrow money, except temporarily for extraordinary or emergency
purposes from a bank and then not in excess of 10% of total assets (at the lower
of cost or fair market value; any such borrowing will be made only if
immediately thereafter there is an asset coverage of at least 300% of all
borrowings and no investments may be made while any borrowings are in excess of
5% of total assets).
(b) Mortgage, pledge or hypothecate any of its assets except in
connection with any such borrowings.
3. Purchase securities on margin, participate on a joint or joint and
several basis in any securities trading account, or underwrite securities,
except that this restriction does not preclude a Portfolio from obtaining such
short-term credit as may be necessary for the clearance of purchases
and sales of its portfolio securities.
4. Purchase or sell real estate, or commodities or commodity contracts,
except that a Portfolio may purchase or sell currencies (including forward
currency exchange contracts), futures
contracts, and related options.
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5. Invest 25% or more of the market value of its assets in the
securities of companies engaged in any one industry, except that this
restriction does not apply to investment in the securities of the U.S.
Government, its agencies or instrumentalities.
6. Issue senior securities, as defined in the 1940 Act except that this
restriction shall not be deemed to prohibit a Portfolio from (a) making any
permitted borrowings, mortgages or pledges, (b) entering into repurchase
transactions, or (c) engaging in options or futures transactions.
7. Invest in any issuer for purposes of exercising control or
management.
8. With respect to 75% of its total assets, invest more than 5% of its
total assets in securities of a single issuer or hold more than 10% of the
voting securities of such issuer, except that this restriction does not apply to
investment in the securities of the U.S. Government, its agencies or
instrumentalities.
Each Portfolio observes the following policies, which are not deemed
fundamental and which may be changed without shareholder vote. Neither Portfolio
may:
9. Invest in securities of other investment companies except as
provided for in the 1940 Act.
10. Invest, in the aggregate, more than 15% of its net assets in
securities with legal or contractual restrictions on resale, securities which
are not readily marketable, and repurchase agreements with more than seven days
to maturity.
If a percentage restriction set forth in the prospectus or in this SAI
is adhered to at the time of investment, a subsequent increase or decrease in a
percentage resulting from a change in the values of assets will not constitute a
violation of that restriction, except with respect to borrowing
and illiquid and restricted securities, or as otherwise specifically noted.
DISTRIBUTIONS AND TAX INFORMATION
DISTRIBUTIONS
Dividends from net investment income and distributions from net profits
from the sale of securities are generally made annually. Also, each Portfolio
expects to distribute any undistributed net investment income on or about
December 31 of each year. Any net capital gains realized through the one-year
period ended October 31 of each year will also be distributed by December 31 of
each year.
Each distribution by a Portfolio will be accompanied by a brief
explanation of the form and character of the distribution. In January of each
year the Portfolios will issue to each shareholder a statement of the federal
income tax status of all distributions made during the preceding calendar year.
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TAX INFORMATION
Each Portfolio is treated as a separate entity for federal income tax
purposes. Each Portfolio intends to continue to qualify and elect to be treated
as a "regulated investment company" under Subchapter M of the Internal Revenue
Code (the "Code"), provided that it complies with all applicable requirements
regarding the source of its income, diversification of its assets and timing of
distributions. It is each Portfolio's policy to distribute to its shareholders
all of its investment company taxable income and any net realized capital gains
for each fiscal year in a manner that complies with the distribution
requirements of the Code, so that the Portfolio will not be subject to any
federal income tax or excise taxes based on net income. To avoid the excise tax,
each Portfolio must also distribute (or be deemed to have distributed) by
December 31 of each calendar year (i) at least 98% of its ordinary income for
such year, (ii) at least 98% of the excess of its realized capital gains over
its realized capital losses for the one-year period ending on October 31 during
such year and (iii) any amounts from the prior calendar year that were not
distributed and on which the Portfolio paid no federal excise tax.
Each Portfolio's ordinary income generally consists of interest,
dividend income and income from short sales, less expenses. Net realized capital
gains for a fiscal period are computed by taking
into account any capital loss carry forward of the Portfolio.
Each Portfolio may write, purchase, or sell certain option, futures and
foreign currency. Such transactions are subject to special tax rules that may
affect the amount, timing, and character of distributions to shareholders. For
example, such contracts that are "Section 1256 contracts" will be
"marked-to-market" for Federal income tax purposes at the end of each taxable
year (i.e., each contract will be treated as sold for its fair market value on
the last day of the taxable year). In general, unless certain special elections
are made, gain or loss from transactions in such contracts will be 60% long term
and 40% short-term capital gain or loss. Section 1092 of the Code, which applies
to certain "straddles," may also affect the taxation of a Portfolio's
transactions in option, futures, and foreign currency contracts. Under Section
1092 of the Code, a Portfolio may be required to postpone recognition for tax
purposes of losses incurred in certain of such transactions.
Distributions of net investment income and net short-term capital gains
are taxable to shareholders as ordinary income. In the case of corporate
shareholders, a portion of the distributions may qualify for the intercorporate
dividends-received deduction to the extent a Portfolio designates the amount
distributed as a qualifying dividend. This designated amount cannot, however,
exceed the aggregate amount of qualifying dividends received by the Portfolio
for its taxable year. The deduction, if any, may be reduced or eliminated if
Portfolio shares held by a corporate investor are treated as debt-financed or
are held for fewer than 46 days.
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Any long-term capital gain distributions are taxable to shareholders as
long-term capital gains regardless of the length of time they have held their
shares. Capital gains distributions are not eligible for the dividends-received
deduction referred to in the previous paragraph. Distributions of any ordinary
income and net realized capital gains will be taxable as described above,
whether received in shares or in cash. Shareholders who choose to receive
distributions in the form of additional shares will have a cost basis for
federal income tax purposes in each share so received equal to the net asset
value of a share on the reinvestment date. Distributions are generally taxable
when received. However, distributions declared in October, November or December
to shareholders of record on a date in such a month and paid the following
January are taxable as if received on December 31. Distributions are includable
in alternative minimum taxable income in computing a shareholder's liability for
the alternative minimum tax.
Under the Code, each Portfolio will be required to report to the
Internal Revenue Service all distributions of ordinary income and capital gains
as well as gross proceeds from the redemption or exchange of Portfolio shares,
except in the case of exempt shareholders, which includes most corporations.
Pursuant to the backup withholding provisions of the Code, distributions of any
taxable income and capital gains and proceeds from the redemption of a
Portfolio's shares may be subject to withholding of federal income tax at the
current maximum federal tax rate of 31 percent in the case of non-exempt
shareholders who fail to furnish the Portfolio with their taxpayer
identification numbers and with required certifications regarding their status
under the federal income tax law. If the backup withholding provisions are
applicable, any such distributions and proceeds, whether taken in cash or
reinvested in additional shares, will be reduced by the amounts required to be
withheld. Corporate and other exempt shareholders should provide Portfolios with
their taxpayer identification numbers or certify their exempt status in order to
avoid possible erroneous application of backup withholding. Each Portfolio
reserves the right to refuse to open an account for any person failing to
certify the person's taxpayer identification number.
Each Portfolio will not be subject to corporate income tax in the State
of Delaware as long as it qualifies as a regulated investment company for
federal income tax purposes. Distributions and the transactions referred to in
the preceding paragraphs may be subject to state and local income taxes, and the
tax treatment thereof may differ from the federal income tax treatment.
If more than 50% of the value of a Portfolio's total assets at the
close of the taxable consists of stock or securities in foreign corporation, the
Portfolio may elect to pass through to shareholders the right to take the credit
for any foreign taxes paid by the Portfolio. If a Portfolio does not qualify for
or does not make the election, only the Portfolio and not the shareholder may
take the credit.
Generally, a credit for foreign taxes may not exceed the portion of the
shareholder's U.S. federal income tax (determined without reward to the
availability of the credit) attributable to his or her total foreign source
taxable income. For this purpose, the portion of distributions paid by a
Portfolio from foreign source income will be treated as foreign source income. A
Portfolio's gains from the sale of securities will generally be treated as
derived from U.S. sources, and certain currency fluctuation gains and losses,
including fluctuation gains from foreign currency
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denominated debt securities, receivables and payables will be treated as derived
from U.S. sources. The limitation on the foreign tax credit is applied
separately to foreign source "passive income," such as the portion of dividends
received from a Portfolio which qualifies as foreign source income. In addition,
the foreign tax credit is allowed to offset only 90% of the alternative minimum
tax imposed on corporations and individuals. Because of these limitations,
shareholders may be unable to claim a credit for the full amount of their
proportionate shares of foreign income taxes paid by a Portfolio even if the
Portfolio is eligible and makes the election to pass through those credits.
The foregoing discussion of U.S. federal income tax law relates solely
to the application of that law to U.S. citizens or residents and U.S. domestic
corporations, partnerships, trusts, and estates. Each shareholder who is not a
U.S. person should consider the U.S. and foreign tax consequences of ownership
of shares of a Portfolio, including the possibility that such a shareholder may
be subject to a U.S. withholding tax at a rate of 30 percent (or at a lower rate
under an applicable income tax treaty) on amounts constituting ordinary income.
In addition, the foregoing discussion of tax law is based on existing
provisions of the Code, existing and proposed regulations thereunder, and
current administrative rulings and court decisions, all of which are subject to
change. Any such charges could affect the validity of this discussion. The
discussion also represents only a general summary of tax law and practice
currently applicable to the Portfolios and certain shareholders therein, and, as
such, is subject to change. In particular, the consequences of an investment in
shares of a Portfolio under the laws of any state, local or foreign taxing
jurisdictions are not discussed herein. Each prospective investor should consult
his or her own tax advisor to determine the application of the tax law and
practice in his or her own particular circumstances.
TRUSTEES AND EXECUTIVE OFFICERS
The Trustees of the Trust, who were elected for an indefinite term by
the initial shareholders of the Trust, are responsible for the overall
management of the Trust, including general supervision and review of the
investment activities of the Portfolios. The Trustees, in turn, elect the
officers of the Trust, who are responsible for administering the day-to-day
operations of the Trust and its separate series. The current Trustees and
officers, their ages and affiliations and principal occupations for the past
five years are set forth below.
Carl Acebes*, 51, Chairman and Trustee
570 Lexington Ave, New York, NY 10022. Chairman and Chief Investment Officer of
Rochdale.
Maxime C. Baretge, 57, Trustee
Hastings, W13, Barbados, West Indies. President, P.A. Pommares Agencies, S.A.
(luxury goods distribution).
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Benedict T. Marino, 55, Trustee
144 Fairmount Rd., Ridgewood, NJ 07450. President, BTM Investment Company
(private investments) since January, 1995; formerly Managing Director,
Donaldson, Lufkin, Jenrette Securities Corp. (securities and investment banking)
from 1983-1995.
Garrett R. D'Alessandro*, CFA, 40, President, Secretary and Treasurer
570 Lexington Ave., New York, NY 10022. President, Chief Executive Officer, and
Director of Research of Rochdale.
* Indicates an "interested person" of the Trust as defined in the 1940 Act.
Set forth below is the rate of compensation the following Disinterested
Trustees were entitled to receive from the Portfolios. The Trustees have waived
these fees during the Portfolios' initial fiscal period ended March 31, 1999.
Disinterested Trustees receive an annual retainer of $1,000 and a fee of $500
for each regularly scheduled meeting. Disinterested Trustees are also reimbursed
for expenses in connection with each Board meeting attended. No other
compensation or retirement benefits are received by any Trustee or officer from
the Portfolios or any other portfolio of the Trust.
TOTAL COMPENSATION
FROM PORTFOLIO AND
AGGREGATE COMPENSATION PORTFOLIO COMPLEX PAID
NAME OF TRUSTEE FROM EACH PORTFOLIO* TO TRUSTEES*
- --------------- -------------------- ------------
Maxime C. Baretge $2,800 $5,600
Benedict T. Marino $2,800 $5,600
- ----------
* With respect to the Alpha Portfolio, for the period October 2, 1998
(commencement of operations) through March 31, 1999. With respect to the
Magna Portfolio, for the period October 23, 1998 (commencement of
operations) through March 31, 1999.
As of the date of this SAI, the Trustees and officers of the Trust as a group
owned less than 1% of each Portfolio's outstanding shares.
THE PORTFOLIOS' INVESTMENT ADVISOR
As stated in the Prospectus, investment advisory services are provided
to the Portfolios by Rochdale Investment Management Inc., pursuant to an
Investment Advisory Agreement ("Advisory Agreement").
The Advisory Agreement continues in effect after its initial two year
term from year to year so long as such continuation is approved at least
annually by (1) the Board of Trustees of the Trust or the vote of a majority of
the outstanding shares of Portfolios to which the Advisory Agreement applies,
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and (2) a majority of the Trustees who are not interested persons of any party
to the Advisory Agreement, in each case cast in person at a meeting called for
the purpose of voting on such approval. The Advisory Agreement may be terminated
at any time, without penalty, by either Portfolio or Rochdale upon sixty days'
written notice and is automatically terminated in the event of its assignment as
defined in the 1940 Act.
Rochdale has agreed to reduce fees payable to it or reimburse the
Portfolios' operating expenses to the extent necessary to limit the ratio of
operating expenses to average net assets to no more than 1.75% annually for the
Magna Portfolio and 1.95% annually for the Atlas Portfolio. Any such reduction
of fees or payment of expenses may be subject to reimbursement by the Portfolios
within the following three years provided that a Portfolio is able to do so and
remain in compliance with applicable expense limitations then in effect.
For the period October 23, 1998 (commencement of operations) through
March 31, 1999, the Magna Portfolio accrued advisory fees of $15,295, all of
which were waived by the Advisor. For the same period, the Advisor reimbursed
the Fund an additional $49,053 in expenses in accordance with its voluntary
undertaking to limit the Portfolio's expenses.
For the period October 2, 1998 (commencement of operations) through
March 31, 1999, the Atlas Portfolio accrued advisory fees of $16,156, all of
which were waived by the Advisor. For the same period, the Advisor reimbursed
the Fund an additional $78,308 in expenses in accordance with its voluntarily
undertaking to limit the Portfolio's expenses.
THE PORTFOLIOS' ADMINISTRATOR
The Portfolios have entered into an Administration Agreement with
Investment Company Administration LLC (the "Administrator"). The Administration
Agreement provides that the Administrator will prepare and coordinate reports
and other materials supplied to the Trustees; prepare and/or supervise the
preparation and filing of all securities filings, periodic financial reports,
prospectuses, statements of additional information, tax returns, shareholder
reports and other regulatory reports or filings required of the Portfolios;
prepare all required notice filings necessary to maintain each Portfolio's
ability to sell shares in all states where the Portfolios currently do or intend
to do business; coordinate the preparation, printing and mailing of all
materials (e.g., annual reports) required to be sent to shareholders; coordinate
the preparation and payment of Portfolio-related expenses; monitor and oversee
the activities of the Portfolios' servicing agents (e.g., transfer agent,
custodian, fund accountants, etc.); review and adjust as necessary each
Portfolio's daily expense accruals; and perform such additional services as may
be agreed upon by the Portfolios and the Administrator. For its services, the
Administrator will receive a monthly fee from each Portfolio at the annual rate
of 0.10% of average daily net assets with a minimum annual fee of $40,000.
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For the period October 2, 1998 (commencement of operations) through
March 31, 1999, the Atlas Portfolio accrued $30,247 in administration fees, of
which $10,776 was voluntarily waived by the Administrator. For the period
October 23, 1998 (commencement of operations) through March 31, 1999, the Magna
Portfolio accrued $30,247 in administration fees, of which $12,647 was
voluntarily waived by the Administrator.
THE PORTFOLIOS' DISTRIBUTOR
Rochdale also acts as the Portfolios' principal underwriter in a
continuous public offering of the Portfolios' shares. The Distribution Agreement
between the Portfolios and Rochdale will continue in effect from year to year if
approved at least annually by (i) the Board of Trustees or the vote of a
majority of the outstanding shares of the Portfolio to which the Distribution
Agreement applies (as defined in the 1940 Act) and (ii) a majority of the
Trustees who are not interested persons of any such party, in each case cast in
person at a meeting called for the purpose of voting on such approval. The
Distribution Agreement may be terminated without penalty by the parties thereto
upon sixty days' written notice, and is automatically terminated in the event of
its assignment as defined in the 1940 Act.
The Portfolios have adopted a Distribution Plan in accordance with Rule
12b-1 under the 1940 Act. The Plan provides that each Portfolio will pay a fee
to the Distributor at an annual rate of up to 0.25% of the average daily net
assets of the Portfolio. The fee is paid to the Distributor as reimbursement for
or in anticipation of, expenses incurred for distribution related activities.
Expenses permitted to be paid by the Portfolios under their Plan include:
preparation, printing and mailing or prospectuses, shareholder reports such as
semi-annual and annual reports, performance reports and newsletters; sales
literature and other promotional material to prospective investors; direct mail
solicitation; advertising; public relations; compensation of sales personnel,
advisors or other third parties for their assistance with respect to the
distribution of the Portfolios' shares; payments to financial intermediaries for
shareholder support; administrative and accounting services with respect to the
shareholders of the Portfolios; and such other expenses as may be approved from
time to time by the Board of Trustees.
The Plan allows excess distribution expenses to be carried forward by
the Distributor and resubmitted for payment by a Portfolio in a subsequent
fiscal year provided that (i) distribution expenses cannot be carried forward
for more than three years following initial submission; (ii) the Board of
Trustees has made a determination at the time of initial submission that the
distribution expenses are appropriate to be carried forward; and (iii) the Board
of Trustees makes a further determination, at the time any distribution expenses
which have been carried forward are resubmitted for payment, to the effect that
payment at the time is appropriate, consistent with the objectives of the Plan
and in the current best interests of shareholders.
For the period October 2, 1998 (commencement of operations) through
March 31, 1999, fees of $4,040 accrued by the Atlas Portfolio pursuant to the
Plan were voluntarily waived by the Distributor. For the period October 23, 1998
(commencement of operations) through March 31, 1999, fees of $3,942 accrued by
the Magna Portfolio pursuant to the Plan were voluntarily waived by the
Distributor.
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<PAGE>
EXECUTION OF PORTFOLIO TRANSACTIONS
Pursuant to the Advisory Agreement, Rochdale will determine which
securities are to be purchased and sold by each Portfolio and which
broker-dealers are eligible to execute its portfolio transactions. Purchases and
sales of securities in the over-the-counter market will generally be executed
directly with a "market-maker" unless, in the opinion of Rochdale, a better
price and execution can otherwise be obtained by using a broker for the
transaction.
Purchases of portfolio securities for each Portfolio also may be made
directly from issuers or from underwriters. Where possible, purchase and sale
transactions will be made through dealers (including banks) which specialize in
the types of securities which a Portfolio will be holding, unless better
executions are available elsewhere. Dealers and underwriters usually act as
principal for their own account. Purchases from underwriters will include a
concession paid by the issuer to the underwriter and purchases from dealers will
include the spread between the bid and the asked price. If the execution and
price offered by more than one dealer or underwriter are comparable, the order
may be allocated to a dealer or underwriter that has provided research or other
services as discussed below.
In placing portfolio transactions, Rochdale will use its best efforts
to choose a broker-dealer capable of providing the services necessary to obtain
the most favorable price and execution available. The full range and quality of
services available will be considered in making these determinations, such as
the size of the order, the difficulty of execution, the operational facilities
of the firm involved, the firm's risk in positioning a block of securities, and
other factors. In those instances where it is reasonably determined that more
than one broker-dealer can offer the services needed to obtain the most
favorable price and execution available, consideration may be given to those
broker-dealers which furnish or supply research and statistical information to
Rochdale that it may lawfully and appropriately use in its investment advisory
capacities, as well as provide other services in addition to execution services.
Rochdale considers such information, which is in addition to and not in lieu of
the services required to be performed by it under its Advisory Agreement with
the Portfolios, to be useful in varying degrees, but of indeterminable value.
Portfolio transactions may be placed with broker-dealers who sell shares of a
Portfolio subject to rules adopted by the National Association of Securities
Dealers, Inc.
While it is each Portfolio's general policy to seek first to obtain the
most favorable price and execution available, in selecting a broker-dealer to
execute portfolio transactions for a Portfolio, weight may also be given to the
ability of a broker-dealer to furnish brokerage and research services to the
Portfolios, other portfolios of the Trust or to Rochdale, even if the specific
services were not imputed just to the Portfolios and may be useful to Rochdale
in advising other clients. In negotiating commissions with a broker or
evaluating the spread to be paid to a dealer, a Portfolio may therefore pay a
higher commission or spread than would be the case if no weight were given to
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<PAGE>
the furnishing of these supplemental services, provided that the amount of such
commission or spread has been determined in good faith by Rochdale to be
reasonable in relation to the value of the brokerage and/or research services
provided by such broker-dealer. The standard of reasonableness is to be measured
in light of Rochdale's overall responsibilities to a Portfolio.
Investment decisions for each Portfolio will be made independently from
those of other client accounts or mutual funds managed or advised by Rochdale.
Nevertheless, it is possible that at times identical securities will be
acceptable for both a Portfolio and one or more of such client accounts or other
funds. In such event, the position of the Portfolio and such client account(s)
or other funds in the same issuer may vary and the length of time that each may
choose to hold its investment in the same issuer may likewise vary. However, to
the extent any of these client accounts or other funds seek to acquire the same
security as a Portfolio at the same time, a Portfolio may not be able to acquire
as large a portion of such security as is desired, or may have to pay a higher
price or obtain a lower yield for such security. Similarly, a Portfolio may not
be able to obtain as high a price for, or as large an execution of, an order to
sell any particular security at the same time. If one or more of such client
accounts or other funds simultaneously purchases or sells the same security that
a Portfolio is purchasing or selling, each day's transactions in such security
will be allocated between such Portfolio and all such client accounts or other
funds in a manner deemed equitable by Rochdale, taking into account the
respective sizes of the accounts and the amount being purchased or sold. It is
recognized that in some cases this system could have a detrimental effect on the
price or value of the security insofar as a Portfolio is concerned. In other
cases, however, it is believed that the ability of a Portfolio to participate in
volume transactions may produce better executions for the Portfolio.
Neither Portfolio places securities transactions through brokers in
accordance with any formula, nor do they effect securities transactions through
such brokers solely for selling shares of either Portfolio, although either
Portfolio may consider the sale of shares as a factor in allocating brokerage.
However, as stated above, broker-dealers who execute brokerage transactions may
effect purchase of shares of a Portfolio for their customers.
Subject to overall requirements of obtaining the best combination of
price, execution and research services on a particular transaction, either
Portfolio may place eligible portfolio transactions through its affiliated
broker-dealer, Rochdale Securities Corporation, under procedures adopted by
the Board of Trustees pursuant to the 1940 Act and related rules.
For the period October 2, 1998 (commencement of operations) through
March 31, 1999, the Atlas Portfolio paid $31,506 in brokerage commissions to
non-affiliated broker-dealers.
For the period October 23, 1998 (commencement of operations) through
March 31, 1999, the Magna Portfolio paid $5,452 in brokerage commissions to
non-affiliated broker-dealers.
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<PAGE>
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
The information provided below supplements the information contained in
the Portfolios' Prospectus regarding the purchase and redemption of Portfolio
shares.
HOW TO BUY SHARES
You may purchase shares of a Portfolio from selected securities
brokers, dealers or financial intermediaries. Investors should contact these
agents directly for appropriate instructions, as well as information pertaining
to accounts and any service or transaction fees that may be charged by those
agents. Purchase orders through securities brokers, dealers and other financial
intermediaries are effected at the next-determined net asset value after receipt
of the order by such agent before the Portfolio's daily cutoff time. Orders
received after that time will be purchased at the next-determined net asset
value.
The public offering price of Portfolio shares is the net asset value.
Each Portfolio receives the net asset value. Shares are purchased at the public
offering price next determined after the Transfer Agent receives your order in
proper form. In most cases, in order to receive that day's public offering
price, the Transfer Agent must receive your order in proper form before the
close of regular trading on the New York Stock Exchange ("NYSE"), normally 4:00
p.m., Eastern time. If you buy shares through your investment representative,
the representative must receive your order before the close of regular trading
on the NYSE to receive that day's public offering price. Orders are in proper
form only after funds are converted to U.S. funds.
The NYSE annually announces the days on which it will not be open for
trading. The most recent announcement indicates that it will not be open on the
following days: New Year's Day, Martin Luther King Jr. Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. However, the NYSE may close on days not included in that
announcement.
If you are considering redeeming, exchanging or transferring shares to
another person shortly after purchase, you should pay for those shares with a
certified check to avoid any delay in redemption, exchange or transfer.
Otherwise the Portfolios may delay payment until the purchase price of those
shares has been collected or, if you redeem by telephone, until 15 days after
the purchase date. To eliminate the need for safekeeping, the Portfolios will
not issue certificates for your shares unless you request them.
The Trust reserves the right in its sole discretion (i) to suspend the
continued offering of the Portfolios' shares, (ii) to reject purchase orders in
whole or in part when in the judgment of Rochdale such rejection is in the best
interest of a Portfolio, and (iii) to reduce or waive the minimum for initial
and subsequent investments for certain fiduciary accounts, for employees of
Rochdale or under circumstances where certain economies can be achieved in sales
of a Portfolio's shares.
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HOW TO SELL SHARES
You can sell your Portfolio shares any day the NYSE is open for regular
trading, either directly to a Portfolio or through your investment
representative.
SELLING SHARES THROUGH YOUR INVESTMENT REPRESENTATIVE
Your investment representative must receive your request before the
close of regular trading on the NYSE to receive that day's net asset value. Your
investment representative will be responsible for furnishing all necessary
documentation to the Transfer Agent, and may charge you
for its services.
SIGNATURE GUARANTEES
If you sell shares having a net asset value of $5,000 or greater, a
signature guarantee is required. Certain other transactions also require a
signature guarantee. The Portfolios may require additional documentation for the
sale of shares by a corporation, partnership, agent or fiduciary, or
a surviving joint owner. Contact Rochdale for details.
Signature guarantees may be obtained from a bank, broker-dealer, credit
union (if authorized under state law), securities exchange or association,
clearing agency or savings institution. A notary
public cannot provide a signature guarantee.
DELIVERY OF REDEMPTION PROCEEDS
Payments to shareholders for shares of a Portfolio redeemed directly
from the Portfolio will be made as promptly as possible but no later than seven
days after receipt by the Portfolio's Transfer Agent of the written request in
proper form, with the appropriate documentation as stated in the Prospectus,
except that a Portfolio may suspend the right of redemption or postpone the date
of payment during any period when (a) trading on the NYSE is restricted as
determined by the SEC or the NYSE is closed for other than weekends and
holidays; (b) an emergency exists as determined by the SEC making disposal of
portfolio securities or valuation of net assets of a Portfolio not reasonably
practicable; or (c) for such other period as the SEC may permit for the
protection of Portfolio's shareholders. Under unusual circumstances, a Portfolio
may suspend redemptions, or postpone payment for more than seven days, but only
as authorized by SEC rules.
At various times, a Portfolio may be requested to redeem shares for
which it has not yet received confirmation of good payment; in this
circumstance, the Portfolio may delay the redemption until payment for the
purchase of such shares has been collected and confirmed to the Portfolio.
The value of shares on redemption or repurchase may be more or less
than the investor's cost, depending upon the market value of the Portfolio's
portfolio securities at the time of redemption or
repurchase.
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<PAGE>
TELEPHONE REDEMPTIONS
Shareholders must have selected telephone transaction privileges on the
Account Application when opening a Portfolio account. Upon receipt of any
instructions or inquiries by telephone from a shareholder or, if held in a joint
account, from either party, or from any person claiming to be the shareholder,
the Portfolios or their agent is authorized, without notifying the shareholder
or joint account parties, to carry out the instructions or to respond to the
inquiries, consistent with the service options chosen by the shareholder or
joint shareholders in his or their latest Account Application or other written
request for services, including purchasing, exchanging or redeeming shares of a
Portfolio and depositing and withdrawing monies from the bank account specified
in the Bank Account Registration section of the shareholder's latest Account
Application or as otherwise properly specified to a Portfolio in writing.
The Transfer Agent will employ these and other reasonable procedures to
confirm that instructions communicated by telephone are genuine; if it fails to
employ reasonable procedures, the Portfolios may be liable for any losses due to
unauthorized or fraudulent instructions. An investor agrees, however, that if
such procedures are used, neither the Portfolios nor their agents will be liable
for any loss, liability, cost or expense arising out of any redemption request,
including any fraudulent or unauthorized request.
During periods of unusual market changes and shareholder activity, you
may experience delays in contacting the Transfer Agent by telephone. In this
event, you may wish to submit a written redemption request, as described in the
Prospectus, or contact your investment representative. The Telephone Redemption
Privilege is not available if you were issued certificates for shares that
remain outstanding. The Telephone Redemption Privilege may be modified or
terminated without notice.
REDEMPTIONS-IN-KIND
Each Portfolio has reserved the right to pay the redemption price of
its shares, either totally or partially, by a distribution in kind of portfolio
securities (instead of cash). The securities so distributed would be valued at
the same amount as that assigned to them in calculating the net asset value for
the shares being sold. If a shareholder receives a distribution in kind, the
shareholder could incur brokerage or other charges in converting the securities
to cash. The Trust has filed an election under SEC Rule 18f-1 committing to pay
in cash all redemptions by a shareholder of record up to amounts specified by
the rule (approximately $250,000).
DETERMINATION OF SHARE PRICE
As noted in the Prospectus, the net asset value and offering price of
shares of each Portfolio will be determined once daily at the close of public
trading on the NYSE, normally 4:00 p.m., Eastern time, on each day the NYSE is
open for trading. It is expected that the NYSE will be closed on Saturdays and
Sundays and on New Year's Day, Martin Luther King Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas. Each Portfolio does not expect to determine the net asset value of
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its shares on any day when the NYSE is not open for trading even if there is
sufficient trading in its portfolio securities on such days to materially affect
the net asset value per share. However, the net asset value of Portfolio shares
may also be determined on days the NYSE is closed or at times other than 4:00
p.m. if the Board of Trustees decides it is necessary.
In valuing each Portfolio's assets for calculating net asset value,
readily marketable portfolio securities listed on a national securities exchange
or NASDAQ are valued at the last sale price on the business day as of which such
value is being determined. If there has been no sale on such exchange or on
NASDAQ on such day, the security is valued at the closing bid price on such day.
Readily marketable securities traded only in an over-the-counter market and not
on NASDAQ are valued at the current or last bid price. If no bid is quoted on
such day, the security is valued by such method as the Board of Trustees of the
Trust shall determine in good faith to reflect the security's fair value. All
other assets of the Portfolios are valued in such manner as the Board of
Trustees in good faith deems appropriate to reflect their fair value.
The net asset value per share of each Portfolio is calculated as
follows: all liabilities incurred or accrued are deducted from the valuation of
total assets, which includes accrued but undistributed income; the resulting net
assets are divided by the number of shares of the Portfolio outstanding at the
time of the valuation; and the result (adjusted to the nearest cent) is the net
asset value per share.
PERFORMANCE INFORMATION
From time to time, a Portfolio may state its total return in
advertisements and investor communications. Total return may be stated for any
relevant period as specified in the advertisement or communication. Any
statements of total return will be accompanied by information on the Portfolio's
average annual compounded rates of return over the most recent year and the
period from the Portfolio's inception of operations. A Portfolio may also
advertise aggregate and average total return information over different periods
of time. A Portfolio's average annual compounded rate of return is determined by
reference to a hypothetical $1,000 investment that includes capital appreciation
and depreciation for the stated periods, according to the following formula:
n
P(1+T) = ERV
Where: P = a hypothetical initial purchase order of $1,000 from
which the maximum sales load is deducted
T = average annual total return
n = number of years
ERV = ending redeemable value of the hypothetical $1,000 purchase
at the end of the period
B-30
<PAGE>
Aggregate total return is calculated in a similar manner, except that
the results are not annualized. Each calculation assumes that all dividends and
distributions are reinvested at net asset value on the reinvestment dates during
the period.
For the period October 2, 1998 (commencement of operations) through
March 31, 1999 the total return for the Atlas Portfolio was 22.08%. For the
period October 23, 1998 (commencement of operations) through March 31, 1999, the
total return for the Magna Portfolio was 17.12%.
A Portfolio's total return may be compared to relevant domestic and
foreign indices, including those published by Lipper Analytical Services, Inc.
From time to time, evaluations of a Portfolio's performance by independent
sources may also be used in advertisements and in information furnished to
present or prospective investors in the Portfolio.
Investors should note that the investment results of the Portfolios
will fluctuate over time, and any presentation of a Portfolio's total return for
any period should not be considered as a representation of what an investment
may earn or what an investor's total return may be in any future
period.
GENERAL INFORMATION
Investors in a Portfolio will be informed of the Portfolio's progress
through periodic reports. Financial statements certified by independent public
accountants will be submitted to shareholders
at least annually.
State Street Bank & Trust Company acts as Custodian of the securities
and other assets of the Portfolios as well as the Portfolios' transfer and
shareholder service agent.
Tait, Weller & Baker, 8 Penn Center, Suite 800, Philadelphia, PA 19103,
is the independent auditors for the Portfolios.
Paul, Hastings, Janofsky & Walker LLP, 345 California Street, 29th
Floor, San Francisco, California 94104, is legal counsel to the Portfolios.
As of June 14, 1999, DLJ Securities Corp. owned of record 96.7%of the
outstanding shares of the Magna Portfolio. As of June 14, 1999, DLJ Securities
Corp. owned of record 98.7% of the outstanding shares of the Atlas Portfolio.
FINANCIAL STATEMENTS
The annual reports to shareholders for the Portfolios for the fiscal
period ending March 31, 1999 is a separate document supplied with this SAI and
the financial statements, accompanying notes and report of independent
accountants appearing therein are incorporated by reference in this
SAI.
B-31
<PAGE>
APPENDIX A
CORPORATE BOND RATINGS
MOODY'S INVESTORS SERVICE, INC.
Aaa-Bonds which are rated Aaa are judged to be of the best quality and
carry the smallest degree of investment risk. Interest payments are protected by
a large or by an exceptionally stable margin, and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position of such
issues.
Aa-Bonds rated Aa are judged to be high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation or protective
elements may be of greater amplitude or other elements present which make the
long-term risks appear somewhat larger than in Aaa securities.
A-Bonds rated A possess many favorable investment attributes and are to
be considered as supper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the
future.
Baa-Bonds rated Baa are considered medium-grade obligations (i.e., they
are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba-Bonds rated Ba are judged to have speculative elements; their future
cannot be considered well-assured. Often the protection of interest and
principal payments may be very moderate, and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B-Bonds rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or maintenance of other
terms of the contract over any long period
of time may be small.
B-32
<PAGE>
STANDARD & POOR'S RATINGS GROUP
AAA-Debt rated AAA has the highest rating assigned by S&P to a debt
obligation. Capacity to pay interest and repay principal is extremely strong.
AA-Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher-rated issues only in small degree.
A-Debt rated A has a strong capacity to pay interest and repay
principal, although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
BBB-Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas, it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in the higher-rated categories.
BB-Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB rating.
B-Debt rated B has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
BB- rating.
STANDARD & POOR'S RATINGS GROUP
AAA-Debt rated AAA has the highest rating assigned by S&P to a debt
obligation. Capacity to pay interest and repay principal is extremely strong.
B-33
<PAGE>
APPENDIX B
COMMERCIAL PAPER RATINGS
MOODY'S INVESTORS SERVICE, INC.
Prime-1--Issuers (or related supporting institutions) rated "Prime-1"
have a superior ability for repayment of senior short-term debt obligations.
"Prime-1" repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries, high
rates of return on funds employed, conservative capitalization structures with
moderate reliance on debt and ample asset protection, broad margins in earnings
coverage of fixed financial charges and high internal cash generation, and
well-established access to a range of financial markets and assured sources of
alternate liquidity.
Prime-2--Issuers (or related supporting institutions) rated "Prime-2"
have a strong ability for repayment of senior short-term debt obligations. This
will normally be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternative liquidity is
maintained.
STANDARD & POOR'S RATINGS GROUP
A-1--This highest category indicates that the degree of safety
regarding timely payment is strong. Those issues determined to possess extremely
strong safety characteristics are denoted with
a plus (+) sign designation.
A-2--Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-1".
B-34
<PAGE>
ROCHDALE INVESTMENT TRUST
FORM N-1A
PART C
ITEM 23. EXHIBITS.
(1) Agreement and Declaration of Trust (1)
(2) By-Laws (1)
(3) Specimen Share Certificate (2)
(4) Form of Investment Advisory Agreement (3)
(5) Form of Distribution Agreement (3)
(6) Not applicable
(7) Custodian Agreement (2)
(8) (1) Form of Administration Agreement (1)
(2) Form of Transfer Agency and Service Agreement (2)
(9) Opinion and consent of counsel (3)
(10) Consent of Accountants
(11) Not applicable
(12) Letter of Understanding relating to initial capital (2)
(13) Form of Plan pursuant to Rule 12b-1 (3)
(14) Not Applicable
(15) Not Applicable
1 Incorporated by reference from Registration Statement on Form N-1A filed on
March 6, 1998
2 Incorporated by reference from Pre-Effective Amendment No. 2 to the
Registration Statement on Form N-1A filed on June 30, 1998
3 Incorporated by reference from Post-Effective Amendment No. 2 to the
Registration Statement on Form N-1A filed on April 30, 1999
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
As of the date of this Amendment to the Registration Statement, there
are no persons controlled or under common control with the Registrant.
ITEM 25. INDEMNIFICATION
Article VII, Section 2 of the Trust's Declaration of Trust provides as follows:
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 ("Securities Act") may be permitted to directors, 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
<PAGE>
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable. In the event
that a claim for indemnification against such liabilities (other than payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in connection with the successful defense
of any action, suit or proceeding) is asserted against the Registrant by such
director, officer or controlling person in connection with the shares 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 Securities Act and will be governed by the final
adjudication of such issue.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
With respect to the Investment Adviser, the response to this item is
incorporated by reference to the Adviser's Form ADV as amended, File No.
801-27265.
ITEM 27. PRINCIPAL UNDERWRITERS.
(a) The Advisor also acts as the Registrant's principal underwriter and
does not act in that capacity for other investment companies.
(b) The following information is furnished with respect to the officers
and directors of the Advisor and Underwriter. Each such person's principal
business address is 570 Lexington Avenue, New York, NY 10022.
Position and Offices Position and
Name and Principal with Principal Offices with
Business Address Underwriter Registrant
- ---------------- ----------- ----------
Carl Acebes Chairman and Chief Investment Chairman and Trustee
Officer
Garrett R. D'Alessandro President and Chief Executive President, Secretary
Officer & Treasurer
Peter J. McGough Vice President None
Andrew Miranda Vice President & Controller None
(c) Not applicable.
<PAGE>
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.
The accounts, books, and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940 and
the rules promulgated thereunder are in the possession the Registrant's
custodian and transfer agent, except those records relating to portfolio
transactions and the basic organizational and Trust documents of the Registrant
(see Subsections (2) (iii). (4), (5), (6), (7), (9), (10) and (11) of Rule
31a-1(b)), which, with respect to portfolio transactions are kept by the Fund's
Advisor at its address set forth in the prospectus and statement of additional
information and with respect to trust documents by its administrator at 2020 E.
Financial Way, Ste. 100, Glendora, CA 91741.
ITEM 29. MANAGEMENT SERVICES.
There are no management-related service contracts not discussed in
Parts A and B.
ITEM 30. UNDERTAKINGS
The Registrant undertakes:
(a) To furnish to each person to whom a prospectus is delivered a copy
of the Fund's latest annual report to shareholders, upon request and without
charge.
(b) If requested to do so by the holders of at least 10% of the Trust's
outstanding shares, to call a meeting of shareholders for the purposes of voting
upon the question of removal of a trustee and assist in communications with
other shareholders.
<PAGE>
EXHIBITS
Exhibit No. Description
- ----------- -----------
99.B10 Accountant's Consent
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this amendment to this registration
statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this amendment to this Registration Statement to be signed on its behalf
by the undersigned, thereto duly authorized, in the City of New York in the
State of New York on July 1, 1999.
ROCHDALE INVESTMENT TRUST
By: /s/Garrett R. D'Alessandro
----------------------------------
Garrett R. D'Alessandro
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
/s/Carl Acebes Trustee July 1, 1999
- ----------------------------
Carl Acebes
/s/Benedict T. Marino Trustee July 1, 1999
- ----------------------------
Benedict T. Marino
Maxime C. Baretge Trustee July 1, 1999
- ----------------------------
*Maxime C. Baretge
/s/Garrett R. D'Alessandro Principal Financial Officer July 1, 1999
- ----------------------------
Garrett R. D'Alessandro
/s/Garrett R. D'Alessandro
- -------------------------------
by Garrett R. D'Alessandro
*Pursuant to Powers of Attorney
dated June 24, 1998
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the reference to our firm in the Post-Effective Amendment to the
Registration Statement on Form N-1AS of Rochdale Investment Trust and to the use
of our report dated May 19, 1999 on the financial statements and financial
highlights of the Rochdale Atlas Portfolio and Rochdale Magna Portfolio series
of the Rochdale Investment Trust. Such financial statements and financial
highlights appear in the 1999 Annual Report to Shareholders which is
incorporated into the Statement of Additional Information.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
June 29, 1999
